First, when taken to an extreme, social fracturing into identity groups can be used to divide people and prevent the creation of a shared civic identity. Self-government requires uniting through our commonalities and aspiring to achieve a shared future. When individuals fall back onto clans, tribes, and us-versus-them identities, the political community gets fragmented.
It becomes harder for people to see each other as part of that same shared future. Demagogues rely on this fracturing to inflame racial, nationalist, and religious antagonism, which only further fuels the divisions within society. The second problem is that neoliberals on right and left sometimes use identity as a shield to protect neoliberal policies. Of course, the result is to leave in place political and economic structures that harm the very groups that inclusionary neoliberals claim to support.
The U. Neither Afghanistan nor Iraq is a liberal democracy, nor did the attempt to establish democracy in Iraq lead to a domino effect that swept the Middle East and reformed its governments for the better. Instead, power in Iraq has shifted from American occupiers to sectarian militias, to the Iraqi government, to Islamic State terrorists, and back to the Iraqi government—and more than , Iraqis are dead.
Or take the liberal internationalist intervention in Libya. The result was not a peaceful transition to stable democracy but instead civil war and instability, with thousands dead as the country splintered and portions were overrun by terrorist groups. On the grounds of democracy promotion, it is hard to say these interventions were a success. And for those motivated to expand human rights around the world, it is hard to justify these wars as humanitarian victories—on the civilian death count alone.
Indeed, the central anchoring assumptions of the American foreign policy establishment have been proven wrong. Foreign policymakers largely assumed that all good things would go together—democracy, markets, and human rights—and so they thought opening China to trade would inexorably lead to it becoming a liberal democracy. They were wrong. They thought Russia would become liberal through swift democratization and privatization. And to be clear, Donald Trump had nothing to do with them.
All of these failures were evident prior to the election. In spite of these failures, most policymakers did not have a new ideology or different worldview through which to comprehend the problems of this time. So, by and large, the collective response was not to abandon neoliberalism. After the Great Crash of , neoliberals chafed at attempts to push forward aggressive Keynesian spending programs to spark demand.
About one-third of the stimulus ended up being tax cuts, which have a less stimulative effect than direct spending. After Republicans took back the Congress in , the U. When it came to affirmative, forward-looking policy, the neoliberal framework also remained dominant.
Take the Obamacare health care legislation. Obamacare was built on a market-based model that the conservative Heritage Foundation helped develop and that Mitt Romney, the Republican governor of Massachusetts, had adopted.
There was no single-payer system, and centrists like Senator Joe Lieberman blocked the creation of a public option that might coexist and compete with private options on the marketplaces.
Fearful of losing their seats, centrists extracted these concessions from progressives. Little good it did them. For their caution, centrists both lost their seats and gave Americans fewer and worse health care choices.
On the right, the response to the crash went beyond ostrichlike blindness in the face of the shattering of the assumptions undergirding their public policy views. Indeed, most conservatives seized the moment to double down on the failed approaches of the past. The Republican Party platform in , for example, called for weaker Wall Street, environmental, and worker safety regulations; lower taxes for corporations and wealthy individuals; and further liberalization of trade.
It called for abolishing federal student loans, in addition to privatizing rail, western lands, airport security, and the post office. Republicans also continued their support for cutting health care and retirement security. After 40 years moving in this direction—and with it failing at every turn—you might think they would change their views. Although neoliberalism had little to offer, in the absence of a new ideological framework, it hung over the Obama presidency—but now in a new form.
The term itself is somewhat oxymoronic, as technocrats seem like the opposite of ideologues. But an ideology is simply a system of ideas and beliefs, like liberalism, neoliberalism, or socialism, that shapes how people view their role in the world, society, and politics. As an ideology, technocracy holds that the problems in the world are technical problems that require technical solutions. Second, the problems are not a function of deep moral conflicts that require persuading people on a religious, emotional, or moral level.
Together, the result is that the technocratic ideology largely accepts the status quo as acceptable. The technocratic ideology preserves the status quo with a variety of tactics. The most frequent uses of this tactic are in sectors that economists have come to dominate—international trade, antitrust, and financial regulation, for example. It brought the global capitalist economy to its knees, it shook belief and faith in the capitalist system itself, and raised serious doubts about neoliberalism.
The hope that the crisis would give rise to a more progressive capitalism, however, proved to be premature. Contemporary welfare states now exist within a world in which austerity as a broad set of ideas, encompasses the liberal in a Hayekian sense desire to shrink the social welfare state, deregulate labour and promote private markets as the driver of growth.
This has forced a reconfiguration of the fortunes of the wealthy, the interests of capital, the position of middle-income and poorer citizens, and the state itself. And the biggest losers have been the poorest citizens.
Nor is this new politics driven simply by economic austerity. An austere politics has sapped the political imagination and robbed people of hope that things might, one day, get better. At every level austerity restricts the terms of debate. Or does it? Whilst the critical voices are often quiet, there remains a powerful counter-narrative which suggests that in exposing the limitations of neoliberalism, the global crisis and subsequent austerity created a backlash against globalisation and brought the wider costs of unfettered capitalism into public focus.
Nationalism, protectionism, and trade wars are widely reported and international organisations are taking a more obvious interest in inequality. More solid emerging evidence of a possible paradigmatic shift came most recently from none other than the IMF , perhaps the archetypal and unapologetic neoliberal institution , and one with the power to shape and frame the relationship between economies and welfare states.
However, as our research shows, there is little to feel optimistic about as far as the expansion of social policy is concerned. Neo-austerity implies not less, but more reliance on the state to enforce, support and compensate for social, political and economic losses. This is the key policy problematic that governments and international organisations are currently grappling with — this rather than the morality of inequality is the major contradiction within neoliberalism.
The rise of the nationalist Right is, in many ways a response to this counter-narrative. In turn, this has shifted the age curve of businesses further out, with firms over years-old accounting for 70 percent of workers in but 75 percent of workers in Labor market dynamism has fallen as well, with workers less likely to quit and move their jobs over the past two decades.
But what is most telling is the effect on the economy overall. If it is ever over 1, it means that firms are too profitable and they should invest more to bring it down back to 1. More broadly, there are several other puzzles that, taken together, point to extensive market power in the economy. Another way to look at it: Corporate profits remain high, even as real interest rates have declined over the past several decades.
All of these factors together—high markups and profits, low interest rates, weak investment—point to a significant market power problem that impacts the macroeconomy. These background assumptions have been losing their power since around the middle of the Obama administration. Whether it was ever reasonable to believe them is a good question but besides the point, as these ideas are no longer able to convince liberals to the point that they shut down alternative ideas.
Why always presume business and markets are the leaders in innovation and dynamism if the corporate sector looks like an increasingly bloated, shareholder-dominated rent machine? One reaction is to say nothing has changed, or that the last 40 years since Reagan have been even more about government and socialism rather than a turn to neoliberalism.
These arguments are not very convincing and certainly not up to the challenge of describing or mitigating against what has happened.
United conservative governance failed to do anything meaningful to correct for failed ideas. The current shift Left would have happened even without Trump—though he does accelerate the need for a new set of ideas, because it is ideas about a whole economic regime that are what we need now.
Skip to content Blog. We are still here, but it is not our time to lead. Where This Leaves Us These background assumptions have been losing their power since around the middle of the Obama administration. Read More. Join us in rewriting the rules. Stay updated on the fight for an inclusive economy and democracy. Search for: Press enter to search.
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