Liberties There's nothing Artificial about our Intelligence

A Conceptual Trash Heap

Toni Morrison was wrong when she intoned that language is violence. But let’s give her this: the reckless use of words can do violence, idiomatically speaking, to clear thinking and therefore to political analysis. Slinging about words whose meaning is muddled, misleading, or tendentious — or whose usage is meant to oversimplify or to inflame — makes it impossible to think rationally, coherently, and productively.

It is a tall order in this age of slogans and shibboleths to select one word to expunge from our political vocabulary, but if asked to do so I would nominate “neoliberalism.” A coinage of the late 1970s and early 1980s, the term remained fairly limited in its use for two decades, gaining currency at first in academic circles and then exploding in popularity after the financial crash in 2008 and Bernie Sanders’ rise to celebrity. Then, just when it was fading from overexposure, it surged back into fashion. Critics, scholars, consultants, and commentators now finger neoliberalism as the reason for practically all our political problems, especially the Democrats’ failure to keep the presidency out of the hands of Donald Trump. 

“What Trump is attacking is neoliberalism. Economic neoliberalism underpins the past seventy years of Western economic and cultural order,” declares America’s most overrated senator, Chris Murphy, who alleges that neoliberalism has bequeathed a “very real epidemic of American unhappiness.” (Struggling with his cognitive dissonance over a concept he doesn’t quite understand, Murphy added: “Though it contains the word liberal, neoliberalism was devised by libertarian-conservative economists.”) Ro Khanna, another ambitious, out-of-his-depth operator, calls for “the rejection of neoliberalism. For forty years, we made a mistake. Frankly, it was both parties.” (Forty? Wasn’t it seventy? But what are a few decades among friends?) The Hewlett Foundation, which bankrolls efforts to replace neoliberalism with something else — the left hates billionaires except when they fund the left — defines neoliberalism as “free-market fundamentalism” and “the free-market, anti-government, growth-at-all-costs approach to economic and social policy.” Search the horizonless steppes of the internet and you will find countless pundits, politicians, and even ostensibly knowledgeable policymakers invoking the bogeyman of neoliberalism to explain where the Democrats and America went wrong. 

The promiscuous use of the word “neoliberalism” has plagued our discourse since well before Trump. Over the years several intrepid explicators have pointed up its semiotic bankruptcy. Back in 2009, in an academic article titled, “Neoliberalism: From New Liberal Philosophy to Anti-Liberal Slogan,” the political scientists Taylor Boas and Jordan Gans-Morse concluded that “neoliberalism has become a conceptual trash heap capable of accommodating multiple distasteful phenomena without much argument as to whether one or the other component really belongs.” A decade later, the fine intellectual historian Daniel Rodgers warned that “the success of ‘neoliberalism’ is a measure of its substantive hollowness” and noted “four distinctly different phenomena” that fly under its banner: an economic theory; a set of economic policies; the capitalist economy itself; and — take a breath — “the hegemonic force of the culture that surrounds and entraps us.” The journalist Jonathan Chait meanwhile traced how “neoliberal” morphed into an off-the-shelf slur used to denigrate regular Democrats. “The ubiquitous epithet is intended to separate its target — liberals — from the values they claim to espouse,” he shrewdly observed. “By relabeling self-identified liberals as ‘neoliberals,’ their critics on the left accuse them of betraying the historic liberal cause.” In his Substack newsletter, Matthew Yglesias continues valiantly to puncture what he calls “anti-neoliberal” thinking. Yet for all these debunkings, the term has only gotten more popular, leaping out of academic tracts and leftist polemics and into the vernacular. 

As it is used today, “neoliberalism” contains at least three assumptions that its users hope to promulgate but which are, in fact, wrong. The first concerns what historians call periodization: reliance on neoliberalism as a historical framework depends on the flawed premise that in or about 1980, with the election of Ronald Reagan, the American ethos changed. Second, the invocation of neoliberalism incorporates a critique of liberals and Democrats, who, it is insinuated, supinely acquiesced in Reaganism, creating a “Washington consensus” by jettisoning the party’s historic commitment to using government to better people’s lives. Third, the neoliberal mantra implies that the economic policies pursued by Democrats when they had power were an economic, political, and even moral failure. 

Each of these ideas may contain kernels of truth. But none holds up as an overarching and empirically demonstrable proposition. If we want to understand liberalism and liberal governance over the last half century — and there is no denying that it is now facing a crisis — we should start by euthanizing this unenlightening word. The sooner we clarify our thinking about our recent economic and political history, the more intelligently we can debate what should come next. 

The Origins of Neoliberalism 

To understand where “neoliberalism” came from, we must return to the 1970s, when American voters were repudiating liberalism — known ominously in those days as “the L word” — in droves. 

By the late 1970s, the enormous achievements of Lyndon Johnson’s Great Society had become clear — but it was no less clear that they had failed to stanch the spread of social maladies such as divorce, out-of-wedlock births, drug use, and violent crime. The civil rights movement had secured formal equality for black Americans and invigorated efforts to do likewise for women, gays, and other groups, but liberals suffered when they counseled more intrusive governmental measures to guarantee not only political and legal equality but also economic and social equality. Keynesian policies that had fueled prosperity since World War II proved powerless to combat the beast of stagflation, and the rise of a post-industrial economy — which had shifted away from heavy manufacturing and toward white-collar jobs that demanded a college education for the new hordes of “symbolic analysts” — triggered a long series of painful geographic and professional dislocations. In foreign policy, the Vietnam War stained the luster of liberal internationalism, leaving many Americans leery of wielding power abroad and voters leery of trusting the Democrats as a younger generation of leaders slouched toward isolationism. 

The political wreckage was immense. During the presidency of Richard Nixon — who, though loathed by liberals and already tainted by Watergate, cruised to reelection in 1972 — the Democratic Party hemorrhaged support from key constituencies, including white Southerners, blue-collar workers, Catholics, and the intellectuals soon to be known as neoconservatives. Watergate allowed the Democrats a brief reprieve, but Jimmy Carter’s hapless White House sojourn propelled more voters rightward. In 1980 and 1984, Ronald Reagan twice routed the Democrats, while the Republicans also seized the Senate for the first time since the 1950s. Between 1968 and 1988, Democrats lost every presidential election but one, almost all in landslides. “Unless they recover their partisan energies and intellectual vigor, the Democrats could enter a long historical passage of declining influence and relevance,” warned Lance Morrow of Time magazine in 1980, “becoming the political equivalent of some of the decaying cities of the Northeast, once flourishingly productive, the exuberant places where the modern Democratic Party originated.” 

Projects arose to ask where the Democratic Party had gone astray. Politicians and analysts drew up new strategies and policies that they hoped could restore confidence in an affirmative if more realistic vision of government’s capacities. These efforts are commonly described as designed to steer the Democratic Party to the political center. Exhibit A is the founding in 1985 of the Democratic Leadership Council, a group led by Southern moderates aiming to win back Reagan Democrats by stressing values such as patriotism, religion, work, discipline, and responsibility. But the call for internal reform did not come only from centrists; it was heard across the center-left spectrum, urged by liberal stalwarts as well as middle-of-the-roaders. In the late 1970s, Edward Kennedy, the liberal lion, took up airline decontrol and criminal sentencing reform, breaking with recently enshrined left-wing orthodoxies. In the 1980s, his aide Paul Kirk, as Democratic Party chairman, implemented a platform emphasizing “traditional values.” Barney Frank, another quintessential liberal, wrote a book called Speaking Frankly urging Democrats to swallow their unease about brandishing their patriotism or condemning criminals. The civil rights hero John Lewis, elected to Congress in 1986, prodded his fellow Georgian Sam Nunn — maybe the most conservative Democrat in the Senate — to run for president in 1988. Lewis also attended DLC events, offering the insurgent group advice on forging biracial coalitions. Notwithstanding its sobriquet as the “Southern White-Boys Caucus,” the DLC included many pragmatic dyed-in-the-wool liberals who, like Lewis, wanted to build a big tent in order to win again — including prominent African Americans such as Tom Bradley, Maynard Jackson, Kurt Schmoke, Andrew Young, Mike Espy, Floyd Flake, Bill Gray, Doug Wilder, and Ron Brown. Refashioning the party’s public philosophy, in other words, was a goal pushed by Democrats of all stripes. 

This crisis was what gave rise to the impulses that came to be known as “neoliberalism.” Apart from the DLC, the most prominent group of reformers in these years were those who hoisted the neoliberal flag. (The DLC included some neoliberals, such as Al Gore and Dick Gephardt, but the two groups were not identical.) The word itself was invented around 1979 by Charlie Peters, majordomo of the Washington Monthly, a scrappy little policy magazine and popularized by Peters and Randall Rothenberg, who wrote a defining article and book on the topic. (Peters’ and Phillip Keisling’s A New Road for America: The Neoliberal Movement and Rothenberg’s The Neoliberals: Creating the New American Politics are the ur-texts for understanding the phenomenon.) Even then, the meaning was vague. No hard-and-fast set of doctrines united neoliberals. “There are no meetings, no dues, no constitution,” said Gephardt, a Missouri congressman who was among those tagged with the label. Voting patterns in Congress revealed neoliberals to be no more conservative than other Democrats. 

Despite the lack of a membership roster, the same people typically appeared in discussions of the movement: officials such as Gephardt, Gore, Gary Hart, Bill Bradley, Paul Tsongas, and Bruce Babbitt; academics such as Lester Thurow, Robert Reich, and Amitai Etzioni; and the journalists trained by Peters at the Washington Monthly, including James Fallows, Nicholas Lemann, and Michael Kinsley. The New Republic, then a weekly magazine at the center of Washington debates, published neoliberal policy proposals alongside critiques of the movement. Of course these people often disagreed about policies, candidates, and even principles. But a few commonalities among the neoliberals could be discerned. 

For the most part, neoliberals focused not on cultural issues or foreign policy or judicial fights but on economics. Reacting to the crises of the 1970s, they called for policies suited for the emerging post-industrial landscape centered on technology and information. In the 1970s, many on the left had hailed an “age of limits” and called for relinquishing the hope of ever-rising living standards. Neoliberals, without forsaking the goal of economic fairness, reemphasized growth as a cornerstone of their agenda and message. 

Neoliberals also extolled efficiency. They excoriated bureaucracy, public and private, and allowed themselves to defy their allied interest groups such as government workers, unions, public-interest lawyers, and pro-regulation lobbyists. They favored investments in education and research and development. Many championed what was clunkily called “industrial policy,” or having the government select up-and-coming sectors of the economy for support. Technology captivated them, giving rise to the phrase “Atari Democrats.” They foresaw that high-tech innovation could help maintain America’s global competitiveness. They were far-sighted, too, in acknowledging the tightening interdependence of nations — a condition that spawned the word “globalization,” a close cousin of neoliberalism — and the need to adapt. In the 1970s, in deference to the unions, congressional Democrats had begun discarding liberalism’s traditional commitment to free trade; but most neoliberals, underscoring the folly of protectionism, countered that lowering trade barriers and opening markets would help both the United States and its international partners. 

The philosophy just described bears scant resemblance to the caricatures proffered by Chris Murphy, Ro Khanna, and their ilk. Contrary to current mythology, the neoliberals were not libertarians, conservatives, free-marketeers, supply-siders, rampant deregulators, Reaganites, Thatcherites, Friedmanites, Hayekians, or enemies of the New Deal or the welfare state. More than other liberals, they saw a role for markets in their new policies, but they rejected the axiom that the market was all wise. “First of all — and most important of all — we are liberals,” Peters explained, noting “large areas” of policy in which neoliberals scarcely differed from other liberals. “We criticize liberalism not to destroy it but to renew it.” Babbitt defended the “welfare state” from the Republicans who would gut it, calling for sustaining “an activist federal government in areas such as environmental matters, health, and entitlements.” Morton Kondracke of The New Republic in 1980 called neoliberalism “an attempt to combine the traditional Democratic compassion for the downtrodden and outcast elements of society with different vehicles than categorical aid programs . . . or new federal bureaucracies.” Neoliberals sometimes derided their liberal forbears: “We are not a bunch of little Hubert Humphreys,” Gary Hart famously railed. But more often they affirmed the values and the principles that had animated twentieth-century liberalism — coupled with a desire to devise new ways to meet the demands of a new economic reality. Far from Reaganites, neoliberals were practical-minded welfare-state anti-Reagan liberals seeking to adjust their means to meet their traditional ends. Neoliberalism was a revision that took place within the liberal tradition. This may be why many of the detractors of neoliberalism on the left and the right are really just old-fashioned enemies of liberalism. 

So why do so many people misunderstand neoliberalism? Why is it now equated with what we normally call economic conservatism? For that, as we shall see, the fault lies, at least partly, with Michel Foucault. 

A Little Knowledge Is a Dangerous Thing 

By the early 1990s, as Bill Clinton emerged as the Democrats’ standard-bearer, the word “neoliberalism” took a backseat to a more capacious label: “New Democrat.” Clinton had not often been listed among the neoliberals and didn’t quite fit the bill. He appears in neither Rothenberg’s nor Peters’ books. In the Democratic primaries in 1992, on economic issues Clinton ran to the left of his closest rival, the card-carrying neoliberal Paul Tsongas, contrasting his own pledge to protect Social Security with Tsongas’ dour fixation with trimming entitlements. Some Clinton aides, such as Robert Reich and Ira Magaziner, were called neoliberals, and as a governor and a presidential candidate Clinton had found promise in neoliberal ideas about growth, high-tech investment, government reform, and globalization. But he balanced his technocratic side with a visceral economic populism and a critique of Reaganomics for catering to corporations and the rich. Clintonism was a synthesis of several strands of liberal reformism, of which neoliberalism was only one. A chairman of the DLC, Clinton stressed the values of community, opportunity, and responsibility. He also captured the loyalty of a diverse mix of other groups: the black community, the nation’s governors, assorted academics and intellectuals. During his presidency, Clinton’s program was described not as neoliberal but as that of a New Democrat or, starting in his second term, as a “Third Way” — a label also used by center-left leaders in Britain and Germany. 

In short, Clinton’s ascent rendered “neoliberalism” obsolete as a taxonomic category. A different strain of updated liberalism — call it Clintonism — now held sway. Yet just as Washington journalists were retiring “neoliberalism,” it got picked up, by sheer coincidence, by European leftists — people who had no familiarity with the legislation once bandied about by Bradley, Gephardt, Hart, and the others; who were not well-versed in American policy debates about military reform or education reform or “reinventing government”; who hadn’t read the neoliberal books and journals. Some of them probably had not even kept up with the decades-old shift in the meaning of the word “liberalism” itself, which in the nineteenth century had meant an assertion of individual rights, including economic rights, against the state, but in the Progressive Era had also come to encompass a belief in an active governmental role in the economy. Tethering liberalism to its former and now-antiquated meaning, these left-wing European academics thus felt none of Chris Murphy’s addlement in applying a word rooted in liberalism to a non-liberal philosophy. 

These European academics glommed onto “neoliberalism” to name a school of conservative or right-of-center economic thought that they traced back to the 1930s. It turned out that neoliberalism — or more precisely the French néo-libéralisme — had been fleetingly applied in 1938 to a group of intellectuals who attended a conference in Paris called, charmingly, the “Colloque Walter Lippmann,” which debated the ideas in the American journalist’s book The Good Society. Like Lippmann, the convener of the conference, a French philosopher named Louis Rougier, hoped to develop an “essentially progressive” alternative both to rigid nineteenth-century laissez-faire doctrines and to socialism. To this end, Rougier invited twenty-six thinkers, ranging from the liberal humanist Raymond Aron to the free-market economists Friedrich Hayek and Ludwig von Mises, for a long weekend in Paris in late August. But Rougier’s dreams went unrealized. The discussion in Paris “remained vague and broad,” according to the historian Angus Burgin’s well-researched account, “because of both the relative brevity of the individual contributions and a general sense of uncertainty about whether . . . [to] focus on a reexamination of foundational principles or . . . practical policies.” A follow-up symposium the next year was canceled after Hitler and Stalin invaded Poland. So much for néo-libéralisme. 

Enter Foucault, four decades later, who appears to have been the first European to misapply the resurrected term “neoliberal” not simply to the Paris conferees of 1938 but specifically, and inaccurately, to the conservatives in attendance — Hayek, von Mises, and their intellectual allies. Foucault did so in a series of lectures from 1979, published in 2004 as The Birth of Biopolitics, which included an account of the Colloque Walter Lippmann. (Biopolitics describes the — inevitably sinister — workings of political and governmental power upon the body and organic life more generally, as states manage their populations through policies relating to reproduction, sexuality, public health, and the like.) Foucault’s core point was a reasonable one: that unlike the nineteenth-century apostles of pure laissez-faire, who had theorized a weak state, these economists of the 1930s believed that governments had to take an active role in underwriting any market-based system. “The problem of neo-liberalism,” Foucault argued in one of his lectures, “was not how to cut out or contrive a free space in the market within an already given political society, as in the liberalism of Adam Smith and the eighteenth century. The problem of neo-liberalism is rather how the overall exercise of political power can be modeled on the principles of a market economy.” His blunder in choosing the label “neoliberal” — which was just then coming into circulation in the United States with a categorically different and indeed nearly opposite meaning — can be understood when we recall that he was resuscitating a forgotten French term and was surely unaware of neoliberalism’s contemporary American meaning. 

Foucault’s application of this appellation to twentieth-century free-market economists such as Hayek, Ludwig von Mises, and (later) Milton Friedman was historically ignorant — and triply so. First, Foucault seemed not to have known that, as Burgin tells us, neoliberalism as “a formal designation” for the ideas at the Lippman Colloquium was “raised and rejected” at the time. Second, the Hayekians in fact did not call themselves neoliberals; those who had briefly flirted with that name were those on the center-left, like Lippmann and Rougier, not those on the right. Finally, for most of the century nobody else called these conservatives neoliberal either. Foucault’s was thus a highly peculiar and misleading usage. Yet just as with some of his other dubious theories, he got away with it. 

It took time for this weird use of “neoliberalism” to catch on and still longer for it to reach American shores. By the 2000s, books by the eccentric British Marxist geographer David Harvey, the barrister Daniel Steadman Jones, and then Angus Burgin, along with a zillion academic articles and conference papers, had fused the idea of “neoliberalism” to market-based economics — and specifically with a genealogical narrative centered on Hayek, von Mises, Friedman, and their kind that ran from the Lippmann colloquium to the Mont Pelerin Society of the 1940s (a Switzerland-based hub of conservative thought) to the University of Chicago in the 1960s and 1970s. Interestingly, there were a few superficial points of overlap between Washington Monthly neoliberalism and Mount Pelerin pseudo-neoliberalism. As the historian Kevin Schultz remarks in his new book, Why Everyone Hates White Liberals (Including White Liberals): “Both prioritized economic growth. Both hated excessive government intrusion. Both were attempts, in rhetoric at least, to expand individual freedoms. But the Democratic ‘neo-liberals’ were more welcoming to social welfare programs, national allegiance, and government intervention to assist people.” More importantly, the Foucault/Harvey/ Steadman-Jones/Burgin conception of neoliberalism had no actual historical or intellectual connection to the standard meaning of neoliberalism in American political analysis. That the same word was used for both was a deeply confusing coincidence. 

Yet perhaps unavoidably, the two were confused, and conflated and commingled. That commingling created a conceptual error that has since warped our discourse. Imagine dusting off the old meaning of “filibuster” — originally from the Dutch word for “freebooter,” used to refer to eighteenth-century pirates in the Caribbean — and concluding that today’s speechifying U.S. senators are all sword-swinging buccaneers. Or merging two meanings of “gay,” so that all happy people are deemed homosexual or all homosexual people are deemed happy. A half-knowledgeable Washington observer could see the absurdity of saddling a genuine neoliberal such as Gary Hart with the views of Milton Friedman. But the Europeans and academics bruiting about the label were not knowledgeable, or even half-knowledgeable, about these matters. And after 2000, the political climate made the merging of the two meanings of “neoliberalism” irresistible to some. Cursory understandings of the concept allowed left-wing critics to brand Obama as a neoliberal because he had bailed out the banks. Clinton’s support for the North American Free Trade Agreement (even though it was negotiated by his predecessors) and his repeal of the Glass-Steagall Act (enacted in 1933 to separate commercial banking from investment banking) were cast as pivotal moments when Democrats surrendered to market forces and set us on a path to where we are now. The misnomer stuck. 

The leftist academics who tossed about “neoliberalism” almost always used it as a pejorative. As it bled into popular usage and the commingling continued, it became a malaprop cocktail to lob at anyone associated with the post-1980s intellectual ferment among Democrats. This meant that Bill Clinton, Al Gore, Robert Rubin, Larry Summers, Gene Sperling, and the rest of the Clinton economic team were not only branded “neoliberals” but cast as the ideological progeny of Hayek, von Mises, and Friedman. Multisyllabic and Latinate, “neoliberalism” posed as a sophisticated idea harboring profound and subtle analyses, but by the 2010s it had hardened into a blunt rhetorical tool, a form of invective, with which anti-capitalist writers could bash anyone they deemed to have betrayed the cause. This tendency reached its delicious reductio ad absurdum in 2017 in an online contretemps between Cornel West and Ta-Nehisi Coates, with the former charging the latter with possessing a “myopic political neoliberalism” and the latter responding by quitting Twitter. 

Witting or unwitting, the wrongheaded conflation of neoliberalism with free-market conservatism has continued to flourish. The practice yokes together two groups who are clear ideological enemies. A category that embraces such stark opposites as Ronald Reagan and Bill Clinton, or Hillary Clinton and Donald Trump, can only obfuscate. And, besides, good names already exist for market-friendly economics: free-market conservatism, economic libertarianism, classical liberalism, laissez-faire. But leftists prefer “neoliberal” because it enfolds liberal Democrats in their blunderbuss critique. If to a hammer everything looks like a nail, then to a Marxist every non-Marxist looks like a neoliberal. One suspects, as Jonathan Chait has written, that “the whole trick is to bracket the center-left together with the right as ‘neoliberal,’ and then force progressives to choose between that and socialism.” 

The Periodization Problem 

If neoliberalism is a hot mess as a category of economic thought and political classification, it also flops as a tool of historical analysis. Here we come to the question of periodization, the way in which historians segment the past into units. Those who hold up neoliberalism as a tool for organizing recent events insist that it has hegemonically governed our era. But, as we can see from Chris Murphy’s and Ro Khanna’s failure to get their stories straight, there’s no consensus on when this supposed hegemony began or ended, or indeed if it has ended at all. Some place the beginning in the Clinton ’90s. Others point to the late 1970s. Most will say Reagan’s election in 1980 was the turning point, since he came into office preaching lower taxes and smaller government (even though he followed through much less than is supposed), and people talked about a Reagan Revolution as if seismic changes were underway. 

But was Reagan’s ascendancy really the major break point of the recent past? To organize our recent history around Reagan’s rise — that is, around Reaganomics — enshrines a crude economicist mentality. It subordinates historical events of manifestly greater historical magnitude to trends in economic thought and policymaking. (There are people who believe that Watergate was a less significant episode in Nixon’s presidency than the end of the gold standard.) Specifically, the 1980s-centric periodization ignores the most transformational decade of the post-World War II era — the 1960s, when dramatic changes occurred in culture, foreign policy, law, and society, though somewhat less so in economics. Before the vogue for the neoliberal periodization came along, historians agreed that the span of the late 1960s and early 1970s was a hinge in American history. That was when the Cold War began to thaw, when Vietnam shattered belief in American virtue, when old manners and morals were overturned, when cultural backlash politics scuttled dreams of expanding the Great Society, when so-called hard hats beat up antiwar protesters, when lifelong Democrats gave Nixon his landslide, when the liberal vision fell on hard times. Debates today about the Democrats’ electoral struggles to recapture the working class should recall that those struggles, too, date to the early 1970s and not to the later “neoliberal” period. 

Even by strictly economicist measures, the historical focus on Reagan instead of Nixon fails key explanatory tests. Today’s critics blame neoliberal policies for “hollowing out” manufacturing communities, sending onetime Democrats into the Republican column. But manufacturing began collapsing long before Reagan. The steel and auto industries faced competition from Japan and West Germany in the 1960s. By the 1970s, magazine stories, think-tank studies, and congressional hearings proliferated about plant closures and job losses in Rust Belt cities. When neoliberals came along in the 1980s, they were reacting to manufacturing losses, not driving them. Neoliberalism’s detractors have their chronology backwards. 

The Reagan–Bush years were not the start of an historical era but the end of one. Beginning in 1992, with Bill Clinton’s election, a long stretch of Republican dominance ended. Presidential politics became competitive again. Since 1992, Democrats have lost the popular vote just twice. Divided government has reigned, with control of the White House and Congress seesawing between the parties. Our talk of red states and blue states and polarization dates to the year 2000 and the knife’s-edge contest between Al Gore and George W. Bush. 

The 1990s amounted to a break, too, in America’s economic fortunes. The wage stagnation now blamed on neoliberalism actually occurred in the 1970s and 1980s, not in the 1990s. The Clinton years sparked a run of higher productivity and wage growth, along with stiffer taxes on the rich, reductions in poverty, and growth that has outpaced Europe’s. Whatever was happening in the 1990s, it marked a sharp reversal from the doldrums of the 1970s and the uneven recovery of the 1980s — historical shifts that the neoliberal periodization does not take the trouble to accommodate. 

The Myth of the Washington Consensus 

Once we recognize that the 1990s constituted a departure from — much more than a continuation of — the 1980s, more problems with neoliberalism as an operating concept emerge. Related to the claim that no real economic policy differences have separated the two parties is the corollary that Democrats guzzled the Reagan Kool-Aid, joining in a “Washington consensus” by ditching liberalism’s commitments to the welfare state, progressive taxation, regulation, and helping blue-collar workers. 

This is more nonsense. The last quarter of a century has been defined not by consensus but, famously, by polarization. Americans sorted into red and blue camps, telling one another that each election was the most important of our lives, with each contest fought as if the entirety of the republic’s fate hung in the balance. In part, these stark and inflamed partisan divisions have been about sociocultural issues such as abortion, gay rights, racial progress, and immigration, as well as about political-legal questions such as civil liberties, civil rights, and the scope of presidential power. But they have also been about economics. Since Clinton’s presidency, knock-down, drag-out fights have occurred over core differences in fiscal and regulatory policy. The Democrats press for progressive taxation, increased social provision, and restraints on business; the Republicans seek to cut taxes, domestic spending, and restrictive rules. Clinton’s first major action as president was to raise taxes on the rich. Bush’s was to cut them. Obama then ended Bush’s tax cuts. Trump passed new ones, and then passed them again. Equally bright lines have separated the parties over health care, Social Security, and the whole litany of kitchen-table issues. Only on one major issue — trade — have the parties’ leaders been relatively united. (More on that below.) Yet the enveloping partisan rancor of our times is seldom noted by tellers of the neoliberalism tale, since they have no way to account for it in their fantasy of a seamless elite bipartisan comity. 

To see how badly some people misremember even recent history, consider Clinton’s campaign in 1992. Jennifer Harris, who served in the Biden White House and now works for the Hewlett Foundation, recently wrote in Foreign Affairs that Clinton “won election in 1992 in part by stressing his adherence to Reagan’s free-market dictums.” Come again? The opposite is the case. Here is Clinton debating George Bush before seventy million viewers in 1992: “We’ve had twelve years of trickle-down economics. We’ve gone from first to twelfth in the world in wages. We’ve had four years where we’ve produced no private-sector jobs. Most people are working harder for less money than they were making ten years ago. It is because we are in the grip of a failed economic theory.” Clinton’s economic plan, published as Putting People First, excoriated Reaganism, promising instead a bottom-up path to growth including higher taxes on the rich, universal health care, and investment in transportation and communication infrastructure — which became key pieces of his blueprint for governing. 

Neoliberalism is said nowadays to denote the rejection of New Deal economics, but neither under Clinton nor in the years after did the Democratic Party allow the dismantling of the postwar liberal tentpoles of a mixed economy, progressive taxation, robust regulation, and a welfare state. Consider the case of regulation. Contrary to the neoliberal mythology, Democrats since Clinton have reliably lined up against the Republicans’ anti-government agenda. To be sure, Clinton did loosen some constraints on business, as in repealing Glass-Steagall. His “Reinventing Government” initiative trimmed other requirements, too — not to allow business a free hand but to prune bureaucracy so that the public would again trust the government to be efficient and responsive. (It is hard to come up with any regulations phased out by the Reinventing Government project that anyone misses today.) Overall, however, the pattern of the past three decades shows Democrats fairly consistently promoting environmental protection, workplace safety, civil rights safeguards, public health, and financial oversight. In 2010 Obama gave us the Dodd-Frank legislation, which imposed tougher capital and oversight requirements on big banks and created the Consumer Financial Protection Bureau. 

Count the pages in the Federal Register, which lists new governmental rules. Under Ronald Reagan, the count fell from 87,000 to 53,000. Under Clinton it climbed from 63,000 to 77,000, and under Obama from 80,000 to 98,000. “It’s pretty clearly true,” Matthew Yglesias observes, “that the overall scope of regulation is larger in 2024 than it was in 1974.” Think about it: if the 1990s and 2000s had been such an orgy of slash-and-burn, how could Trump’s first term have witnessed such a barrage of headlines about the trashing of vital protections? “E.P.A. to Lift Obama-Era Controls on Methane, a Potent Greenhouse Gas.” “Consumer Bureau Scraps Restrictions on Payday Loans.” “How the White House Rolled Back Financial Regulations.” “Trump Says His Regulatory Rollback Already Is the ‘Most Far-Reaching.’” Whose rules do they think Trump was undoing? 

One can tick off the different policy areas. Fiscal policy? Democrats in the 1990s raised the minimum wage, boosted taxes on the rich, and expanded the Earned Income Tax Credit — all over Republican objections. Social provision? As he had in his primary race against Tsongas, Clinton continually prioritized the protection of Social Security: “Save Social Security first,” he vowed in his State of the Union address in 1998, revealing his intention for his newfound budget surpluses. He bested Newt Gingrich and Robert Dole in budget battles mainly by defending Medicare and Medicaid. Clinton and Obama both made universal health care a top priority — Clinton unsuccessfully, Obama triumphantly. Investment in infrastructure, science, and technology? Clinton poured money into building the internet and mapping the human genome; Obama’s stimulus package in 2009 was so sweeping that the journalist Michael Grunwald wrote a book about it called The New New Deal. Labor? The Clinton administration enacted the Family and Medical Leave Act, fought right-to-work laws, appointed union allies to the National Labor Relations Board, and curtailed sweatshop labor. Obama backed a controversial law to let workers unionize without a secret ballot. In none of these cases did Democrats receive much Republican help. Partisan division — not consensus — was the Washington norm. 

Believers in the fiction of neoliberalism-as-Reaganism sometimes believe they have a smoking gun in Clinton’s statement in 1996 that “the era of big government is over.” But never has a sentence been more grossly distorted. Rarely quoted is the next line, a rebuke to the laissez-faire ideologues: “But we cannot go back to the time when our citizens were left to fend for themselves.” Clinton’s original draft had contained the punchier “But we can’t go back to ‘every man for himself.’” That formulation, however, was deemed sexist and rewritten, and the graceless new iteration got dropped from headlines and soundbites. In any case, the snippet was never meant as a death knell for government’s role in helping citizens; it was an acknowledgment that ambitious Great Society–style projects such as Clinton’s failed health-care initiative were, given the congressional log-jams and insuperable deficits, unlikely to be forthcoming. As John Lewis said at the time, the “era” of big government might be over — the climate of opinion that had birthed programs like Medicare in the 1960s was now in the past — but the “role” of big government was not going to change. 

In each of the policy realms noted above, Republicans firmly opposed the Democrats’ agenda and vice versa: it was a Washington dissensus. In one realm, though, bipartisan majorities did exist: trade. And when you peer closely at the charges of Democratic perfidy, they usually boil down to the fact that Clinton, Obama, and other party leaders backed NAFTA in 1993, and permanent most-favored-nation status for China in 2000, and the Trans-Pacific Partnership in 2016. In these cases, a hefty majority of Republicans and a sizable minority of Democrats came together in favor of a freer trade regime. 

A few complicating points bear mention. First, there is near-unanimity among economists about the benefits of free trade, just as there is among public health officials on the danger of lead exposure and among education researchers on the worth of early-childhood schooling. Although certain constituencies have over the decades called for tariffs, leading to pitched political fights, the recent trade deals all had strong expert justification and scholarly support. This reality vitiates the charge that Democrats were cravenly acquiescing in Republican dogma. If conservatives today were to stop questioning the danger of a warming planet, would they be capitulating to a Democratic ideology? Or would they simply be grounding their policymaking in an accurate, objectively established set of facts? We should at least entertain the idea the Democrats backed free trade because it was good policy. The alternative is to understand policy and politics only cynically. 

Relatedly — and here the periodization problem again rears its head — the neoliberal era is alleged to have begun in the 1980s or 1990s. But support for free trade was the standard liberal position since the nineteenth century. One of Woodrow Wilson’s first steps as president in 1913 was to sign the Underwood Act reducing tariffs. Franklin Delano Roosevelt produced the Reciprocal Trade Act in 1934 and the Bretton Woods Agreement in 1944. Harry Truman signed the General Agreement on Tariffs and Trade in 1947. John F. Kennedy enacted the Trade Expansion Act of 1962. If any position represents an abandonment of liberal principles, it is the protectionism that some Democrats began adopting under pressure from organized labor in the 1970s. Thus, the Democrats’ support for trade, too, turns out to be a flimsy peg on which to hang the weighty conceptual behemoth of “neoliberalism.” 

The Fiction of Liberal Failure 

Neoliberalism, as we have seen, can no longer be said to accurately describe a coherent body of economic thought. Nor does it designate a clear-cut political affiliation. Nor does the notion of an “age of neoliberalism” linked to Reagan’s rise survive scrutiny. And the critique implicit in today’s pejorative use of “neoliberalism” — that contemporary Democrats junked their values for pro-market cheerleading — also unravels once we review the countless policy conflicts that have riven the two parties in our fevered times. 

But let us allow that, even if it has been grossly overstated, the Democrats of the 1990s and 2000s did tilt their party in a somewhat more pro-market direction. That’s true enough. What of the criticism that their modifications to their party’s governing philosophy wrought horrendous economic damage, especially to society’s lower strata? Even if the Clinton–Obama agenda wasn’t the brainchild of Milton Friedman, even if it does not deserve the opprobrious epithet “neoliberalism,” didn’t it nonetheless buoy the rich and oppress the poor? 

Here, too, history undermines the anti-neoliberal arguments. The Clinton and Obama presidencies boasted some of the strongest economic records of recent times. The Clinton numbers are so phenomenal, so jaw-droppingly enviable, that they beggar belief. Clinton presided over the longest continuous peacetime economic expansion in history, with growth averaging 4 percent annually. Unemployment fell from 7.3 to 4 percent and inflation stayed low. The stock market boomed, but prosperity also extended to the lowest rungs of the ladder: poverty fell by nearly one quarter, from 15.1 to 11.3 percent, and the two lowest-income quintiles saw their earnings increase nearly 17 percent. Real median household income grew by 13.9 percent. Blacks and Hispanics made especially strong gains. All of this was achieved as once-crippling budget deficits turned into record surpluses and Americans’ trust in government spiked for the first time since the 1960s. As Hillary Clinton later said when her husband’s record came under fire, “I always wonder what part of the 1990s they didn’t like: the peace or the prosperity?” 

These policies succeeded politically, too. Clinton wooed many Reagan Democrats back into the fold. In both of his races, he drew more than 40 percent of the working-class white vote — a quantum leap over Carter, Mondale, and Dukakis, and a high-water mark that no subsequent Democratic presidential nominee would match. These voters had been drifting from the Democratic column before Clinton and would drift away again afterward, but Clintonomics was not the reason for their defection. 

Obama’s economic legacy, though not as strong, also holds up well. His presidency kicked off an expansion that, while less robust than Clinton’s, lasted longer, extending into Trump’s first presidency until the pandemic hit in 2020. Taking office just after the 2008 recession, Obama, in Rooseveltian fashion, followed through on the bank rescue and the auto industry rescue. Those efforts, including Obama’s huge stimulus bill, constitute, along with the Affordable Care Act, his most important achievements. Whatever name we affix to his economic policy, it, too, worked. Unemployment fell; inflation remained modest; median household income rose by 5.3 percent. Politically, Obama’s performance was also a bit weaker than Clinton’s; his reluctance in the early days to rhetorically balance the bailouts with a dose of Clinton-style left-populism gave an emergent right-wing proto-Trump movement, the Tea Party, room to grow. But Obama’s economy still performed well enough to win him reelection in 2012, thanks to a decent showing among the white working class, especially in states like Michigan and Ohio where the auto bailout saved jobs. To be sure, the slow growth of Obama’s second term hurt Hillary Clinton in 2016, a year when the economy merely inched along. But his was hardly an economic program geared toward the superrich. 

Given this mostly admirable economic record, can it really be said that the last thirty-five years have amounted to failure — especially on the Democrats’ part? It is worth addressing two economic failures of the recent era that have been especially salient. In both cases we can fairly criticize Democratic governance, although in neither case more so than Republican governance. First is the fallout from the trade regime of the twenty-first century. While globalization benefited Americans overall, fueling growth and lowering consumer costs, the downsides hit hardest in the de-industrializing regions. The stories of constricted job opportunities, impoverished civic life, family dysfunction, and drug and alcohol abuse in these communities are legion and heartbreaking. In post-industrial cities and towns, rural areas, low-income suburbs, and other lagging regions from Appalachia to swaths of the South, the toll has been severe. 

The second problem is also one of inequality, but on a broader societal level. We have all seen the statistics that portray the yawning gaps between the top 1 percent and everyone else, the growing chasms between CEO pay and the going hourly wage. Inequality has also deepened a sense of deprivation among the working and middle classes. As important, it has meant that a large segment of Americans has been prosperous enough to shoulder the high costs of child-care, health care, housing, college, and retirement, but that a much bigger group has watched those elements of the American Dream recede from their grasp. 

These hardships must not be minimized. They pose urgent challenges — of politics and policy, of solidarity and sympathy — for both parties. The Democrats as well as the Republicans failed to do enough to address the privations and the struggles that, while not new to our times, continued to afflict the de-industrializing regions into the 2000s. Both parties also failed to deliver effective solutions to the skyrocketing costs of big-ticket life-event costs such as health care and housing. But the critics of “neoliberalism” imply that remedies were readily at hand for Clinton and Obama and other Democratic leaders, who turned away from them. Yet no such obvious remedies existed (or exist today). For one thing, these inequality trends stem mainly from factors other than public policy. The manufacturing decline long preceded the controversial trade deals, and its recent acceleration derives more from automation, technological advances, and turbocharged worker productivity than from Chinese imports. Drawing an analogy, the Harvard economist Robert Lawrence notes that the number of agricultural jobs in the United States has plummeted not because of trade but because of a transformation in farming technology. 

Wealth inequality, similarly, has widened not primarily owing to any public policy decisions but owing to the huge spikes in stock market and real estate valuations. Democrats, left, liberal, or centrist, have generally wanted to do more to address these serious inequities, but since the Reagan years we have been hobbled by divided government. We have had no period like the 1930s or the 1960s when one party could work its will; the congressional majorities that Clinton, Obama, and Biden all briefly enjoyed were never large enough to overcome the threats of the filibuster. (Alas, we may now be embarking on such a period, led by the other side.) Democrats may pass redistributionist taxes or expand spending programs, but when the Republicans return they get blunted or reversed. Most of the time, it is simply impossible to pass a large-scale social program in the first place. That is why we say that the era of big government is over. It is a description of reality, not a wish. 

Of the two parties, the Democrats are the ones who have consistently favored measures to mitigate the burgeoning inequality. Their efforts, unfortunately, have not helped them much politically; ironically, the hard-hit communities in places such as Arkansas, West Virginia, and rural Wisconsin have gravitated toward the GOP — worse, toward the MAGA GOP. But these voters are not moving rightward because the Republicans are delivering higher wages or more bountiful health insurance. There are many other reasons for this realignment, rooted in values, culture, identity, and style. Politics never consists entirely in economics. The Democrats’ noble words about economic fairness will not win them elections in the absence of creative and effective new ideas. (Kamala Harris’ campaign proposal of $25,000 handouts for down payments isn’t going to cut it.) But if working-class and non-college-educated voters have been abandoning the Democrats because of their economic record, they are not going to find the Republicans’ solutions any more congenial. 

The acute suffering in these afflicted communities demands our attention. It also creates rhetorical space for the continued bashing of Democratic policies. It has provided justification, for example, for the Hewlett Foundation to pour millions into a project groping for a “post-neoliberal” vision that it hopes will amount to a reverse DLC for the 2020s. The Hewlett project — regrettably based on the sort of murky understanding of “neoliberalism” that pervades our discourse — was expected to bear fruit under Biden. Yet despite a lot of hyperventilating in early 2021 about a “transformational” Biden presidency and absurd comparisons of his decidedly non-radical program to the New Deal, Biden governed mostly in the same center-left mode as Clinton and Obama, albeit less effectively. 

Biden touted a purportedly new economic vision, saying he would build the economy “from the middle out.” He failed to acknowledge that Obama had used and popularized the exact same phrase, and Clinton had propounded the same basic idea. Biden also hyped the value of his child tax credit, which was more generous than past iterations, but which also had first been implemented by Clinton and then expanded by succeeding presidents. Biden talked up anti-trust actions against the tech giants, but this, too, was something Clinton had pioneered with a lawsuit against Microsoft, the Goliath of its day. Apart from keeping some of Trump’s tariffs, Biden’s main claim to policy innovation was to jack up the domestic outlays in his spending bills to dwarf even Obama’s $800 billion Recovery Act of 2009 — something that he could do because we were stumbling forth out of the pandemic. Unfortunately, just the year before Trump had signed the gargantuan CARES Act, and, on top of that, Biden’s two huge spending bills combined with pandemic-related shortages to produce inflation rates higher than they had been since 1981 — one of the main reasons that Harris lost the election in 2024. If his approach was designed to improve on the “neoliberalism” of his Democratic predecessors, it failed. 

The historian Tara Zahra has written about the backlash against progressivism and globalization in the aftermath of World War I. Where goods and people had moved freely across borders, restrictions now limited exchange. Governments framed migration not as an opportunity but as a threat to national strength and social cohesion. Nations pulled back from international bodies and treaties. Democracies and dictatorships alike preached self-reliance. This inward turn promised order amid chaos, rootedness in place and tradition, and protection from the dislocations of global capitalism. Fascism, communism, and anti-semitism flourished. It was not the age of Trump, but it was the age of Ford, Lindbergh, Coughlin, and Mussolini. The worst war in history followed. 

Now, too, an anti-globalization backlash is in flower. Liberal democracy is regularly derided. Elites are demonized. Strongmen are admired. Pluralism is regarded as weakness. Trade is blamed for poverty. Borders are walled and fortified. Illegal immigrants are targeted. On the left, voters flock to fantastic promises of free rent, free buses, and free food. Or they hear prophecies of a future liberated from work, so that we can all enjoy a government-provided universal basic income. On the right, Trump recklessly plays around with tariffs, wreaks economic havoc, and impulsively decimates government agencies. These are only a few of the latest proposed replacements for what has come to be disparaged as neoliberalism. If we persist now in trashing the many things that liberals, whatever their failings and flaws, have done rightly and reasonably well, we will breathe life into the poisonous ideologies that liberalism once rose up to defeat.