Before we can get to the heart of this question we must first have a discussion on what neoliberalism is. At base, it’s a political school of thought that believes society is best served by transferring the economy to the private sector from the public sector. Confused? If you define yourself as a liberal you should be. Historically, the motivations for neoliberalism were grounded in a desire to reshape the human condition. But the unintended and unfettered consequences have played a starring role in climate change, the banking meltdown, income inequality, wars, nation building abroad and, indeed, the unlikely appeal of Trump.
Neoliberalists view all citizens as consumers and competition as the main driver of human interaction. Ergo, buying and selling is viewed as a democratic process by which merit is rewarded and inefficiency punished. Attempts to thwart competition are frowned upon- including government regulation and unions. Inequality is seen as something we simply accept as an outcome of merit based market efficiency. The fact we are all born into different social starting places is ignored. Legacy wealth and its unbridled gifts are a mere inconvenience. “Work harder! You will get there!” they say while further dismantling our equality of opportunity via legislation. If you think this sounds like a perverted bastardization of Adam Smith you would be correct (Smith, well-known for immortalizing the invisible hand of the free market also writes extensively from a pro-labor viewpoint). And if this appalls you as a liberal- congratulations. You are beginning to understand the inherent problems with the left embracing this as its main ideology. And why so many on both the left and the right are angry. Britain- which embraced neoliberalism more heartily than we did- is now imploding via Brexit. This is hardly shocking. But no one wants to discuss its neoliberal roots- only its superficial xenophobia.
Neoliberalism is married to all types of market failure. Its not just the banks that are too big to fail- it is also the privatized utilities and most corporations. Given this reality, how can Hayek’s market actually run its course? Is it market efficiency when taxpayers have to step in and financially bail them out every time they implode? The clear answer is “no”. So, the real failure lies in believing that our markets are actually free. They are not. They are rigged. Just not for labor and the working classes.
So when exactly did the left decide that this was the best political strategy? The roots lie with Ludwig Von Mises and Friedrich Hayek in the 1930s. as neoliberalism was conceived in response to FDRs social democracy. Tellingly, Mises is currently a darling of libertarians who prefer him to Keynes. These Austrian exiles viewed FDR’s social contract with the same disdain they had for communism and Nazism. In 1947, Hayek founded the first organization devoted to neoliberalism, the Mont Pelerin Society. Millionaires busied themselves funding think tanks and the like. Yet, it took the economic disasters of the 1970s for this school to become truly dominate. For, up until this time, Keynesian beliefs held sway. No one should be troubled by the Reaganites adopting these positions as it fits their belief system. Whats astonishing is that the left chose to embrace them as well. Third Way policy ala Clinton is really just an extension of Reagan and Thatcher.
The million dollar question is why the left so robustly embraced such a philosophy- a philosophy so opposed to their traditional core ideals- and why they continue to defend it. Although Reagan started the ball rolling on neoliberalism, Bill Clinton did more than any modern president to further it. As a “New Democrat” he dismantled what was left of FDR’s New Deal. And he did so proudly. He embraced banking deregulation, the rise of private for-profit prisons, ill fated trade deals ala NAFTA, lowering tax rates for corporations and the wealthy, while dismantling welfare for the very poorest. Many of his actions led to the massive export of US capital to countries with much cheaper labor. Did we have an increased economic burst in the short term? Of course. And this was the reason given. But this burst came at a grave cost. The poorest among us were devastated as corporations and the uber wealthy fed at the pig trough. And, more importantly, the long term income inequality it spawned continues to weigh on us both economically and socially.
The superficial answer as to why they continue to defend it is that they are married to corporate quid pro quo. The Democrats abandoned the middle and poor classes for corporations and their money. The outcome of this decision has been anemic economic growth, compared to the preceding decades, for everyone but the exceedingly rich. And this is an indisputable fact of the matter.
As a case study, lets examine the effects of NAFTA. Under this poor trade agreement workers on both sides of the border have suffered. The job losses and wage decreases here in the United States are well documented. As is the upward redistribution of wealth. Yet- how was this made possible? NAFTA legislatively established that U.S. corporations had the right relocate production to Mexico- thereby accessing a much cheaper labor pool with no penalty- and sell back into the United States. This ability devasted the bargaining power of American workers. And it did so in the name of Hayek’s previously discussed market efficiency.
But the race to the lowest dollar has no respect for boundaries. Chris Hedges , in a telling conversation with Mexican activist Jessica Alcazar, makes this clear. In the interview Jessica states, “As a result of the signing of [NAFTA] in Mexico, all possibilities of sovereignty were taken from us, even food sovereignty….Since NAFTA, the majority of the food we eat comes from the United States. There is also a big migration problem for the indigenous people, with small farmers leaving to the United States. Such is NAFTA’s vortex. There is a bloom of sweatshop factories, mainly car factories, an important industry. These corporations bring in employment but offer low wages. The majority of workers have no rights. They are paid by the hour—seven pesos an hour [about 39 U.S. cents]. This is nothing compared to what people used to make.”
Yet as neoliberalism is failing globally it is being replaced with something even more dangerous- far right nationalism. Many of our uneducated masses do not understand that the roots of their economic trouble lie in failed neoliberal policy so are blaming immigrants and minorities. Ironically, the increased cost of tuition at public universities due to state defunding has exasperated this. Yet another prong on the neoliberal pitchfork. This phenomena has been sweeping across Europe. Brexit ultimately isn’t about xenophobia or values- it’s about money. Likewise with Trumpism here in the United States.
The argument can be made that Trump is racist demagogue and neofascist. Im not disputing that- because prima facie it is true. However, if you stop there and engage in no further reasoning, you are failing to see why he has gained such a large audience.- including some historically Democratic voters. Moreover, you are failing to understand why so many deep thinkers refuse to support Clinton. I get it. Its an uncomfortable conversation. Yet, it is undeniable that the roots of Trump’s racist appeal are embedded in neoliberalism and its twin- American Imperialism abroad. When a worker is given the false choice of keeping his decent paying job at the expense of being called a racist or embracing multiculturalism and losing and/or lowering his wages- he is going to choose the first. He isn’t going to stop and think deeply about why bad trade agreements have corroded his paycheck. Why globalization exists. The ways in which thwarting unions and government regulation have been detrimental. Why freedom from collective bargaining isn’t really freedom but rather a corporations right to suppress wages. Or why his inability to afford a college degree isn’t about his personal choices. He is simply going to grasp for help. And that isn’t on him. It isn’t on Trump. Its on the lefts unquestionable embrace of failed neoliberal policy. The roosters have come home to roost.
Had the elites chosen to be more democratic 30 years ago we would not be facing what we are today. Traditional forms of liberalism and conservatism would have continued to butt heads- but we wouldn’t be seeing the scary strains of Trumpism currently taking hold. The distribution of power inherent in our current corporate oligarchy guarantees it. Economic anxiety, continually suppressed by both parties, has brought us this manifestation because it has had no healthy outlet. The richest continue to get richer at the expense of the working class as our equality of opportunity gives way. And the elites continue to ignore the reasons why.
Internationally neoliberalism has lead us in the same direction as neoconservativism. Indeed, they may be considered one and the same. It has led to never ending wars- to the tune of 14.4 trillion USD over the last 15 years- and nation building abroad. These wars have ravaged countries, created more terrorism, displaced refugees, and depleted government coiffures. It has led to Fracking being sold internationally as good for the environment. A Violent and corporate desired coup in Honduras. Wage monitoring in Haiti. And probably the most gregarious thing of all- ignoring true humanitarian disasters, such as Sudan, simply because there were no financial gains or natural resources to be had or protected.
So my plea to the left is to face facts. Stop pretending that bad trade deals and legislation written by corporate lobbyists for the benefit of corporations hasn’t lead us to this. Stop ignoring the ever increasing income inequality and wage gaps. Stop pushing the false narrative that industry can adequately regulate itself and that privatization has benefitted anyone other than the economic elite. Stop telling the angry masses “let them eat cake” and get serious about reshaping policy. If you don’t- Trump, xenophobia and hard right nationalism will win. It is the inevitable consequence.