By: Alan Nichols
An initial draft of this paper was used in a summer 2017 study series by members of Wisconsin Citizen Action who are trying to build power for a transformative political vision in the state. The current version incorporates that group’s input and is currently (January. 2018) in use as part of a leadership-level study on neoliberalism and the current political situation in the U.S. The goal is to firm up the political perspective of the group and face it more toward the left in preparation for the 2018 election season. Initial work along these lines, inspired by the study over the summer, is already underway.
The version of the paper published here is heavily edited for length. The full version, along with citations, a bibliography and a syllabus for study groups, is available; for a copy and/or to be put in touch with the author and other activists in Wisconsin Citizen Action, write Organizing Upgrade at email@example.com.
We stand in a moment of tremendous danger and tremendous opportunity. The danger is obvious: a xenophobic, racist, sexist, heavily armed, highly mobilized and mass-based right-wing extremist movement has taken over the government. This did not happen by a coup, but by an election; and it happened in the context of the growth and success of similar right-wing movements around the world and a crisis of legitimacy for the dominant ruling consensus.
We have not had to face off against an internal enemy like the modern right wing since the Civil War. However, the opportunity in the current moment lies in the fact that people all over the country are taking up this fight. The January 2017 women’s marches and the airport protests in the wake of Trump’s first Muslim ban demonstrated the enormous pool of people who are available for mass action in the age of Trump. The vast majority of these people are not part of any organization, but the work of building these organizational forms and bringing people into them is just beginning. The rise of “Indivisible,” for example, demonstrates that large numbers of people will join an organization if they are presented with a plausible pathway to collective action that goes beyond signing petitions, writing letters or calling legislative representatives.
If we are going to survive the Trump administration (and the Walker administration for those of us in Wisconsin), we will have to build united fronts anchored among the people who will be harmed the most by their policies. But as long as they hold no political power, our united fronts can fight until the end of time and see nothing in front of them but – more fights. Without power, embodied in control over governmental decision-making institutions, there is no way of consolidating gains. If we want that kind of power we have to be able to win elections. If we want to be able to win elections, we have to have access to a line on the ballot, and a political party to marshal a fight on the electoral front. However, the 2016 election demonstrated – once again – that our winner-take-all electoral system is designed to transfer power between the two major parties while it marginalizes the minor parties. These latter groupings continue on as vanity projects even when they fail, and rise to no higher level than spoilers when they succeed. If winning does not matter to us, we are in the wrong game; if it does matter to us, third party politics is not an option. This means we have to come to grips with the crisis of the Democratic Party and do something about it
To move forward, we need to explore the roots of today’s dilemmas in history and political economy, develop a strategy for gaining power, and then move to implement it with all the energy we can muster. Toward that end this paper tackles the following topics:
- What Is neoliberalism?
- How did neoliberalism become dominant the paradigm of late 20th century U.S. capitalism?
- The current crisis of neoliberalism, the rise of a right-wing insurgency and the failures of the Democratic Party.
- Wisconsin as a prime example of the Democratic Party’s shifts and decline.
- Forward-looking strategy: an alternative vision and the fight for power
1. WHAT IS NEOLIBERALISM?
For roughly 40 years after the Roosevelt administration’s reform response to the Great Depression and mass struggles of the 1930s, New Deal liberalism was the pre-eminent economic and political paradigm in the U.S. This model offered a regulated capitalism, backed by guarantees of a “social safety net” and a rising standard of living in return for a class truce whereby labor conceded capital’s right to run the country (and the world). But beginning in the 1970s, this model fell victim to changes in the global capitalist system. Especially after 1978-80, neoliberalism replaced it as the dominant paradigm under which the global economy operates.
Neoliberalism is a political-economic philosophy that dates back to the late 1930s. Though it calls itself “neo,” it is in no way “new.” It is also hardly “liberal” in the sense in which the word had been used in the wake of the New Deal. In the current context, it refers to a policy of radical lassiez-faire capitalism and free-market economics characterized by “privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to increase the role of the private sector in the economy.”
Neoliberalism originally began as a critique of Keynesianism, the economic philosophy that sought to prevent global economic instability and the outbreak of global military conflicts by using government to regulate supply and demand within and between the world’s capitalist economies. Keynesian economists urge and justify government intervention in the economy through public policies that aim to achieve full employment and price stability, and through measures such as deficit spending that stimulate aggregate demand. In practice this meant that
“A ‘class compromise’ between capital and labor was generally advocated as the key guarantor of domestic peace and tranquility. States actively intervened in industrial policy and moved to set standards for the social wage by constructing a variety of welfare systems (health care, education, and the like)….”
Keynesianism was the philosophical basis of the postwar liberal project.
In contrast, the intent of neoliberalism is to free capital from all regulation or restraint. Neoliberalism maintains that
“Human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices…. if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary.”
The goals of neoliberalism are couched in terms of “human well-being,” “liberation of the individual,” and “freedom of choice.” But in practice the actual beneficiaries of all this freedom, well-being and liberation are restricted to the dominant class.
“Attempts to limit competition … as inimical to liberty. Tax and regulation should be minimized, public services should be privatized. The organization of labor and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth,”
In this way neoliberal theory delegates powers of almost supernatural omniscience to markets – powers which markets do not have. Markets, in fact, create arbitrary havoc. The Keynesians understood this, having lived through it: market havoc was what the Depression was about and World War II was its result.
Markets also privilege some groups as they disenfranchise others. So under neoliberalism the government takes on a much stronger role in protecting the winners from the justifiable outrage of the losers.
In a society such as ours in which white people are institutionally privileged, a social arrangement such as this will inevitably tend to expand and re-enforce white supremacy. Neoliberalism’s rise to its position as the dominant ideology is not just the outcome of an academic debate; it’s also a victory for the ruling elite in its battle to assert its political control. And white supremacy is a very central part of how elite political control operates in our society.
The liberal/Keynesian project offered a “decent family wage for a docile, productive, middle-class workforce that would have the means to consume a mass-produced set of basic commodities.” The only terms neoliberalism offers are, “you’ll take what we pay you.” For that reason, one of the key goals of neoliberalism is the destruction of trade unions and all other popular organizations; and the substitution of an ideology of individual liberty (to buy commodities, to sell time) for a vision of social solidarity and mutual support.
2. HOW DID NEOLIBERALISM BECOME DOMINANT?
The transformation of neoliberalism from a minor critique to the dominant paradigm came about during the 1970s, a period marked by an economic crisis of capital accumulation and a political crisis of capitalist legitimacy. The economic crisis was “stagflation,” the combination of high unemployment, high inflation, and no economic growth: a condition that Keynesian theory could neither explain nor correct. President Carter tried, and failed, to address stagflation by neoliberal means: deregulating the airline (1978) and trucking (1980) industries. He also, in August 1979, named Paul Volcker to head the Federal Reserve Board. It was Volcker and the Federal Reserve who purposefully drove the economy into a deep recession (the “Volcker Shock” of 1980-82) which had devastating effects on the working class as it halted inflation.
The “supply-side economics” of the Reagan administration beginning in 1981 accelerated the transition further.
“Reagan wanted to give more money to the already-rich as a way of stimulating economic growth, the assumption being that they would invest it in productive capacity and create a windfall that would gradually ‘trickle down’ to the rest of society (which didn’t work). The lesser known correlate was that Reagan also raised payroll taxes on the working class…”
If it was Reagan who institutionalized neoliberalism, then it was the Clinton administration which later normalized it, legitimized it, and made it a thoroughly bipartisan project. Clinton supporting passage of the NAFTA, continued the deregulation of the financial sector through passage of the Commodity Futures Modernization Act and the repeal of the Glass–Steagall Act, and cut assistance to the most vulnerable U.S. people by “ending welfare as we know it.”
If there could be said to be a high-water mark of neoliberalism, it was the 1990s “Washington Consensus,” the agreement reached between the U.S. Treasury Department, the IMF, and the World Bank, after the latter two institutions were captured by the neoliberals. This consensus became the global framework for “proper” economic development. In exchange for much-needed loans and debt-restructuring schemes, governments in the Global South were required to adhere to a 10-point program which included a guarantee of fiscal discipline, a curb on budget deficits (in other words, guaranteed austerity) and financial and trade “liberalization” (which meant giving transnational corporations more leverage).
The advent of an economic order based on the liberation of capital from regulation or control led to the tech-sector asset bubble of the late 1990s, which in turn led to the crash of the early 2000s. It should not be surprising that 1999 saw the birth of mass mobilizations against leading international neoliberal institutions like the World Trade Organization and were reborn in 2011 with the Occupy Wall Street movement.
Nor is it surprising that the advent of a social order based on individual opportunity would create a “meritocracy” – a sorting of the winners and losers in the new markets. This sorting creates the material basis for the inequality of income that has become more evident since the rosy glow of neoliberalism’s early years. The losers appear as the modern “precariat,” wandering through what we have come to call the “gig economy,” if they are lucky enough to be wandering through any economy at all. The winners appear as the modern professional class of knowledge workers and managerial technocrats.
As industrial capitalism declined, and their old industrial union base declined with it, the Democratic Party shifted its political focus to align with the interests of the businesses in the emerging tech/financial/entertainment sector and this emerging group of professionals who were running them — because that’s where the money was going. Thus at the same time neoliberalism was becoming the dominant ideology in the Democratic Party, the managerial/professional class was becoming the dominant class in its coalition.
This professional class is educated by definition, and fancies itself to be rationalist, hip, sophisticated, secular; both urban and urbane. It tends to be “progressive” in the late 19th-century meaning of the word, where “progressive” implied support of a set of reforms meant to prevent capitalism from chewing society to pieces, while keeping capitalist social relations intact. It may be said to be socially liberal on a number of issues, which distinguishes it from the base of the Republican Party. But it is not economically populist or pro-working class at all.
3. THE CURRENT CRISIS OF NEOLIBERALISM, THE RISE OF A RIGHT-WING INSURGENCY AND THE FAILURES OF THE DEMOCRATIC PARTY.
In the wake of the 2007-2008 financial crisis and the steady intensification of inequality worldwide that followed it, the neoliberal paradigm has started to face a crisis of legitimacy not unlike the crisis of legitimacy faced by Keynesianism in the 1970s. The global financial crash of 2007-2008 demonstrated that “the omniscient and infallible neoliberal market” is in fact nothing but an engine of rapacious greed, and is completely fallible even at that. Furthermore, the crash demonstrated that when the market does fail, the elite benefit at the expense of common people, just as they do when it succeeds.
Thus neoliberalism completely betrayed the claims of its founders to be a tool for advancing human well-being. But it has worked brilliantly as a tool for restoring power to the elite that they did not have under the Keynesian post-war class compromise.
In the context of neoliberalism’s ravages, both the Republican and Democratic parties have been shaken by insurgencies (of very different types) against their neoliberal establishments.
In the Republican orbit, the insurgency was a right-wing populist one with roots in the backlashes against the Civil Rights/anti-racist, women’s, antiwar and LGBT movements of the 1960s.
Beginning with Goldwater in 1964, through Nixon in 1968 and ’72, and later under Reagan, the Republicans were able to finesse the contradiction between their elite constituents and their voters by appealing to racial prejudice and cultural conservatism among many white people, blaming African-Americans (and now immigrants, too) for whites hardships struggle and targeting “big government” and “the liberal elite” as favoring people of color. These appeals gave Republicans many electoral victories and the GOP establishment was able to keep control of the party even while providing no economic benefit to most of their white constituents. Beginning with the Tea Party mobilizations targeting the first Black President, however, a far right racist insurgency gathered steam, found a demagogic leader in Donald Trump and captured the party.
With Trump’s victory, the far right captured the Presidency, both houses of Congress, governorships and both houses of the legislature in 25 states, and the Supreme Court. In that process Trump has reshaped the far right on a blatantly racist and authoritarian program. And once in office, Trump’s actual policies have shed any pretense of challenging neoliberalism; to the contrary, his economic program has accelerated the shift of wealth upward, the deregulation of remaining controls on big capital and the assault on the labor movement and social programs. In return, the overwhelming bulk of the GOP establishment has fallen in line behind Trump, and a set of extreme right-wing billionaires – the Koch and Mercer empires, Art Pope and Sheldon Adelson – have achieved tremendous influence.
This Trumpist coalition is a threat not only to every radical and progressive movement but to the democratic norms that have prevailed in the U.S. for many decades. Our central priority must be this coalition’s defeat.
On the other side of partisan divide, the consequences of the Democratic Party’s accommodation to neoliberalism, slowly building for years, exploded in the course of the 2016 election. In his two terms Obama had implemented a number of reforms that went in a more progressive direction – ACA the most substantial – but had never broken with the overall neoliberal paradigm. Then Hilary Clinton’s candidacy – due to a combination of historical burden, bad luck, and sexism on top of the fundamental bad judgment that shaped her campaign – brought every contradiction within the party to the fore.
Clinton’s candidacy simply did not speak to the rising economic hardship of the traditional base of the Democratic Party. In fact, she positioned herself against the movement that gave voice to the discontent of millions – the insurgency that took shape around the candidacy of Bernie Sanders. Sanders’ attacks on Wall Street and the 1% and his fierce advocacy of economic justice resonated with large sectors of the Democratic base, especially in organized labor and among youth. His weaknesses in tackling racism and sexism with the same urgency as he tackled economic injustice limited his support among people of color and women, factors which helped Clinton in her establishment-backed push for the nomination. Though Sanders did not win the nomination, his effort showed the depth of anger at the neoliberal Democratic establishment among those at the base of the Democratic Party and in its orbit. And it has led numerous analysts to speculate that a general election campaign by Sanders, or at least one infused much more strongly with his economic justice message, would have prevailed over Trump’s demagogic presidential bid.
4. WISCONSIN: A PRIME EXAMPLE OF THE DEMOCRATIC PARTY’S SHIFTS AND DECLINE.
The decline of the Wisconsin Democratic Party both reflects and grows out of the broader legitimacy crisis of the neoliberal model that the party’s leaders and apparatus embraced.
In its present condition the Democratic Party of Wisconsin (DPW) is incapable of much more than tepid efforts against the Republicans. The DPW has become an organization that exists purely as a ballot line, rentable by the next opportunist with an eye to building a political career. Yes, there remain elected officials in the DPW who represent the interests of their constituents and fight for a progressive political agenda. And there are activists in the DPW who struggle to promote that agenda and seek to make the organization a better representative of the ideals it claims to support. But given the current balance of forces in the DPW, these commendable individuals lack the power to move their organization in a direction consistent with their values.
As a result, the DPW exhibits the worst features of a “rentable ballot line” organization unable to escape the neoliberal grip. Several factors have led to this:
- Wisconsin, like the other Rust Belt states, was hit hard economically beginning with the deindustrialization of the early 1980s, Reagan’s trickle-down economic policies, and Clinton’s embrace of NAFTA and Most Favored Nation status for China. A lot of people in the southeast part of Wisconsin depended on industrial jobs; now they’re gone and never coming back. One can see the economic effects in Milwaukee, Racine/Kenosha, and Janesville/Beloit. In the Fox River Valley cities it’s basically the same, only these places were never as unionized and never as historically Democratic.
- Income disparity grew in Wisconsin during the neoliberal era. The three counties to the west and north of Milwaukee County (Waukesha, Washington, and Ozaukee) are populated by the nouveau riche winners sorted out by the meritocracy. Their political stance is straight-up “I’ve Got Mine, Fuck You.” They’re willing to vote, in huge numbers, for the politics of Scott Walker and the Republicans because they speak directly and unequivocally to their class interests. Their political power has increased dramatically as (and because) the power of the Democrats has declined.
- Wisconsin leads the nation in incarcerating people of color and the DPW is both directly responsible and complicit in enacting the policies that led to that.
- The DPW collaborated with Republican Governor Tommy Thompson in the late 1990’s to gut AFDC but left no means for the people who were dependent upon it to move on to any other, better life.
- Outside of the larger cities, Wisconsin is functionally a depressed area and has been for years. The farm crisis in the mid-1980s broke down a lot of the rural economy as family farms were driven out of business and replaced by corporate operations. The towns that were the commercial centers for these rural areas were torn apart economically by big-box retailers like Wal-Mart, which put an end to the small local businesses. The professional class in these towns did not have a source of support anymore so it went too. What you see in these areas now is the anger, frustration, and resentment of people who work their asses off to make ends meet, in a depressed economy where their towns are dying as their kids move away looking for school, for work, for a chance to make a better life. The DPW did nothing to support farmers in the middle 1980s when the rural agricultural economy collapsed, or rural voters when the small towns started to sink into decline. And it did not anticipate or address the politics of resentment that grew up in rural areas of the state as local economies stagnated.
- As the private-sector industrial unions collapsed, the DPW increasingly hitched their funding and policy wagon to the public-sector unions. But the “divide and conquer” politics of resentment always responds to inequality by ratcheting down. The GOP has exploited this masterfully, linking attacks on public workers with racist messages about people of color and “elitist liberal intellectuals.”
- The DPW’s focus is strictly on elections. They never engage in any other area of advocacy, struggle, or confrontation and have ceded the terrain ongoing organizing to the right.
These weaknesses – and the constant electoral defeats that are their result – cannot be corrected by top-down reforms or changes in messaging. Only a thorough transformation of the party, driven by activists and candidates with a different political vision and commitment to gain governing power for that vision will do the trick.
5. FORWARD-LOOKING STRATEGY: AN ALTERNATIVE VISION AND THE FIGHT FOR POWER
The vision underlying our work must be a conception of left-wing populism that we can pose as a credible alternative to the racist, nationalist, xenophobic politics of the right and the “socially progressive” neoliberal agenda of the corporate Democrats.
This vision of left-wing populism cannot be backward looking in the same way that right-wing populism (and the revival of old-school liberalism) is. Crucially, we have to incorporate a thorough critique of neoliberalism at the center of our thinking:
“When laissez-faire economics led to catastrophe in 1929, Keynes devised a comprehensive economic theory to replace it. When Keynesian demand management hit the buffers in the 70s, [neoliberalism was] ready. But when neoliberalism fell apart in 2008 there was … nothing. This is why the zombie walks. The left and center have produced no new general framework of economic thought…”
To address today’s dangers and opportunities, we have to stand for four things that would form the major categorical components of our political program:
- Economic justice: We need to pose economic justice against the idea of the successful individual’s freedom to beggar-thy-neighbor under the protection of the state.
- Social justice: We need to pose social justice against the neoliberal vision of the meritocracy and all the varieties of supremacy and hierarchy it incorporates and legitimates. The fights against white supremacy and male supremacy in particular are not sidebars to the class struggle, they are thoroughly integral to it.
- Peace and internationalism. We need to rebuild the peace movement by recasting the battle against imperialism as a battle against neoliberalism, based on the solidarity of workers and peoples across the globe.
- Environmental justice and environmental sustainability. Every day makes clearer the urgency of developing clear programmatic components to address global warming and the overall crisis of our natural environment.
To flesh out this general vision and make it a powerful political force, we absolutely must build organizations we control – just as the right wing has been doing for the past 50-odd years. If we want something done, we will have to do it ourselves. Any contribution that DPW activists or elected officials want to make to elaborate an alternative to neoliberalism should be valued and appreciated, and these people should be aggressively enlisted in our drive for serious change. But we cannot wait for them to get things rolling. The DPW is not adapted for the changed conditions of class warfare that we face in the 21st century. It is too compromised by its internal contradictions to be able to move as quickly as the situation requires. We need to construct new formations or alignments based on our own politics and that will spearhead the drive to elect candidates that support those politics and gain governing power.
In an “open primary” state such as Wisconsin there are many opportunities to do that, since anyone can contend for the Democratic ballot line.
In moving forward, there is much to learn from Bernie Sanders’ campaign. Though he ultimately lost, his effort proved that a tremendous terrain exists for electoral organizing. Thanks to Sanders, the left was able to clear some electoral space – something that we haven’t seen since the Jesse Jackson campaigns of 1984 and 1988 (and just down the road in Chicago, Harold Washington’s successful mayoral campaigns in 1983 and 1987). Now we have to find the imagination to enlarge this space.
The Sanders campaign proved that an “outsider” could galvanize voters by boldly and unapologetically asserting a political program that spoke to their felt needs. The same internal contradictions that prevent the neoliberals that control DPW from being an effective opposition to the Republicans will prevent them from being an effective opposition to us – if we are organized and determined.
We have to start taking ourselves seriously in the electoral space. We cannot be content with a tokenistic or decorative presence. We have to establish a decisive presence; we have to think about seizing and exercising power, not merely making symbolic statements. We are not in electoral politics to say something; we are in electoral politics to do something.
Nobody is going to do this for us: this is our job. Furthermore: We should want this job. If we succeed, we can define the politics of the future. We can fill the political and organizational vacuum that the failure of neoliberalism has created. If we succeed, we can build a resistance and we won’t have to play defense forever.