Democratic Primaries In The Shadow Of Neoliberalism

The Democratic Party primary battle between Hillary Clinton and Bernie Sanders is being fought in the shadow of “neoliberalism” – in the shadow, that is, of the economic policies and general economic philosophy successfully espoused by Ronald Reagan in the United States and by Margaret Thatcher in the United Kingdom. Neoliberalism is that economic philosophy that prefers markets to governments as allocators of resources, and prefers individual and private – rather than collective and public – solutions to social problems. For the last three decades, it has been the ruling orthodoxy on both sides of the Atlantic, but when neoliberalism was first advocated – in the second half of the 1970s – it was not. It marked then a revolutionary break with an earlier orthodoxy: one linked to the writings of John Maynard Keynes and to the politics of the New Deal; one that had markets managed by governments, and had social problems solved by public spending and policy.

The Reagan/Thatcher neoliberal revolution kept Democrats out of the White House and kept Labour out of power in London, for three whole electoral cycles; and by the end of the third of those, leading politicians in both parties had come to the same view. They had decided that their only way back to power was to meet Reagan- and Thatcher-shaped electorates on neoliberal terms. Under Bill Clinton’s leadership in the US, and Tony Blair’s in the UK, each center-left party abandoned their earlier and more progressive sets of policies in favor of an explicit acceptance of, and accommodation with, the major tenets of the new conservative orthodox. They gave up their role as “tax and spend” progressives in favor of “new” positions. They pulled back from active industrial policies that regulated business. They “ended welfare as we know it”; and they even began to call themselves “New/Centrist Democrats” and “New Labour” to make that accommodation to neoliberal principles clear to those who would vote for them.

For Bill Clinton and Tony Blair, being a progressive in the 1990s meant being a more civilized and kind-hearted Reaganite/Thatcherite. It meant taking for granted, and never challenging, core neoliberal principles and practices that included:

(List A)

• Lower corporate and personal taxation to encourage innovation, enterprise and job creation
• A thinning of the welfare net to avoid welfare dependency and increase the incentive to work
• The deregulation of labor markets by the weakening of trade unions
• The parallel deregulation of the business community, and the celebration of income inequality
• The privatization of publicly-owned industries and companies, and the exposure of public bodies to market forces.

That ‘third way’ acceptance of Reaganite/Thatcherite policies worked for a while. There was great job growth in the US in the 1990s, and New Labour actually grew the UK economy without a recession from 1997-2007. But then the wheels really came off the neoliberal bus. Lightly regulated financial institutions triggered first a major credit crisis, and then the deepest recession either economy had known since the 1930s. In late 2008 and early 2009, no one was a passionate neoliberal anymore. Keynesian demand management, big injections of public spending, and the tight direction of the banking system – all three were briefly back in vogue. But only briefly. For quite quickly, conservatives in both countries found other explanations for the crisis, and told their electorates that it was the government spending that caused the crisis (and not, as in reality was the case, the other way round). Even moderate Democrats like Barack Obama then found themselves unable to govern across the aisle, because the Republican wing of the political class was in full retreat to even more extreme neoliberal positions again.

Divergence

Two things then happened that frame the choices before us now. On the Democratic side of the aisle here in the US, both a moderate and a more radical challenge to the earlier neoliberal orthodoxy began to crystallize. Hillary Clinton and Bernie Sanders may now personify those different challenges, but they are not their sole architects. On the contrary, across the Democratic coalition as a whole, the last seven years have witnessed the increasing presence in the progressive policy debate of two linked but competing lists of policy preferences. The moderate list includes:

(List B)

• The maintenance of demand through public spending and the toleration of public debt
• The avoidance of further financial crisis by tighter financial oversight
• The infrastructure route to growth (public spending to modernize roads, bridges, rail & internet)
• Progressive taxation to reduce excessive inequality and to spread the cost of welfare provision to those best able to bear it
• Greater rights for women and minorities at work, more childcare & paid parental leave
• Moves towards a carbon-free energy policy

The more radical list includes the moderate agenda, but adds some/all of the following:

(List C)

• Greater rights for trade unions, and a major hike in both the minimum wage & Social Security
• Systemic attack on the sources of poverty, with affirmative action while poverty persists
• The deconstruction of the system of mass incarceration and the ending of the war on drugs
• New trade policy to reverse the outsourcing of well-paying jobs
• The break up of banks that are too big to fail
• Less spending on the military & on foreign wars: more nation-building at home, less abroad

Those lists contain very specific American dimensions (not least the ending of mass incarceration and the winding down of foreign wars). But they are not, in all their essentials, American lists alone. Parallel changes in understanding and policy are in debate and dispute in many western European center-left parties right now. They certainly are in the British Labour Party, where leadership has recently switched to Jeremy Corbyn, in many ways the UK’s Bernie Sanders equivalent. Similarly, French economy minister Emmanuel Macron, potential presidential candidate, is pushing a ‘third way’ strategy for the Parti Socialiste against rivals from the centre or the left like Arnaud Montebourg – and meeting fierce resistance. Sigmar Gabriel, leader of Germany’s social democrats or SPD, is under sustained attack from the left in and out of his party for his accommodation as vice-chancellor with Angela Merkel’s conservative policies. For the post-2008 struggle, in all advanced capitalist economies, to return to generalized prosperity and job security is indeed obliging the center-left everywhere to re-examine the wisdom of its earlier enthusiastic accommodation to neoliberalism. It is that re-examination that lies at the heart of the current clash, in the ongoing series of Democratic Party presidential primaries, between Clinton and Sanders.

Foreseeable challenges

The three policy lists now in play are not the same. Their centers of gravity are different because the analyses underpinning them also differ. And because they are different, and because of the history in which they sit, Clinton in particular has a double problem with her potential electoral base.

Her first problem is this. When she was the politically active first lady to her husband’s presidency, economic policy under that presidency operated on List A. So one question that Hillary Clinton has to answer now is whether economic policy under a second Clinton presidency (namely hers) will be similar, or will it be different? Her Republican opponents will attempt to tar her with the Bill Clinton brush, pointing to sexual infidelity and possibly financial corruption or worse. Her progressive critics should worry more about the extent to which the current global activities of the Clinton Foundation point to her husband’s on-going commitment to neoliberal principles. Because if he hasn’t made the break, and he remains among her counsellors, how much of a break has she really made, or how much of a break will she be able to sustain?

Then there is the second problem, the really big one: if the answer to the first question is that yes, next time policy will be very different, will it be different by operating on List B (which is basically the blocked economic policy of the Obama presidency), or will it stretch out to encompass some dimensions (or the totality, indeed) of List C, as so many radical supporters of Bernie Sanders now believe to be essential? Just how radicalized has Clinton become? How much is show, and how much is real?

The great fear, on the left of the Democratic coalition, is that the rupture with the original Clinton list (List A) is still paper-thin and that Clinton will say radical things (from the other two lists, including List C) simply to win office. Then, when in office, she will go back to List A, triangulating with neoliberal Republicans in the manner of the first Clinton presidency. Reassuring her progressive supporters that she will not do any of this is therefore a vital task for her between now and November, because only if that reassurance is forthcoming – only if the depth of her rupture with her own past is unambiguously clear – will the vast majority of those mobilized by Sanders act as willing foot-soldiers in the electoral battle to save America from a Trump presidency. And she will need those foot-soldiers.