The Neoliberal Retreat

I wrote a book review for The Nation on the rise and fall of Clintonism, in which I labeled his general political tendency as a sort of left-neoliberalism. I argued (in part) that neoliberal Democrats, who gained hegemonic ideological power within the party from Clinton through Obama, advocated laissez faire-inflected policies that contrasted sharply with the old New Deal approach. That explains both stuff like the goofy market mechanisms in Obamacare, as well as repeal of New Deal items under Clinton like the Glass-Steagall banking regulation (passed in 1933) and Aid to Families with Dependent Children (1935).

Turbo-loyal centrist Dem apparatchik Tom Watson glommed onto the article several days after publication and insisted that neoliberalism does not exist (and spent hours flipping out about it).

In this Watson follows the lead of Jonathan Chait, who has previously insisted that neoliberalism is merely an epithet, and that there was no significant ideological change between FDR and Obama within the Democratic Party. He quotes the classic history Franklin D. Roosevelt and the New Deal, by William Leuchtenburg, citing FDR's "determination to serve as a balance wheel between management and labor … Despite the radical character of the 1934 elections, Roosevelt was still striving to hold together a coalition of all interests, and, despite rebuffs from businessmen and the conservative press, he was still seeking earnestly to hold business support."

As history, this is absolutely preposterous. Aside from neoliberal Clinton literally dismantling several New Deal programs, one can just read a bit further in the book Chait is citing. FDR was no socialist or even much of a labor unionist, and did want to include some business elements in his New Deal coalition initially. What Chait does not mention was that FDR was consistently skeptical of big finance (blaming them for the 1929 crash), and more importantly, he failed to receive the other business support he craved.

The whole point of the section of the book Chait is quoting is to tell the story of how FDR lost his "balance wheel" notions. The denouement starts on the page just after the latter portion of the quote: "It was less the dismay of Roosevelt's progressive supporters than business' own actions that led him to question the viability of the all-class alliance," Leuchtenburg writes, detailing the decision of the U.S. Chamber of Commerce to denounce the New Deal in 1935. More left-wing advisers like Felix Frankfurter seized the opportunity to argue the time had come to ditch business:

The Harvard professor insisted that the attempt at business-government co-operation had failed, and urged Roosevelt to declare war on business. Once the president had understood that business was the enemy, he would be free to undertake the Brandeisian program to cut the giants down to size ...

By Black Monday, the president had already begun to move decisively in a new direction ... Roosevelt insisted on the passage of four major pieces of legislation: the social security bill, the Wagner labor proposal, a banking bill, and a public-utility holding company measure. A few days later, he added a fifth item of "must" legislation: a "soak the rich" tax scheme. In addition, he demanded a series of minor measures, some of them highly controversial, which in any other session would have been regarded a major legislation ... Thus began the "Second Hundred Days." Over a long period Congress debated the most far-reaching reform measures it had ever considered. In the end, Roosevelt got every item of significant legislation he desired. 

This is elementary historiography of the New Deal, and Chait's use of quotes here is borderline dishonest. Indeed, as Corey Robin discovered, all this was old hat to Chait himself as recently as 2013:

[T]he neoliberal project succeeded in weaning the Democrats of the wrong turn they took during the 1960s and 1970s. The Democrats under Bill Clinton -- and Obama, whose domestic policy is crafted almost entirely by Clinton veterans -- has internalized the neoliberal critique. 

Aside from the odd choice of decades here — the neoliberal turn started in the 1970s, and what they were turning against was as much the product of the 1930s as it was the 1960s — that is more or less exactly the scheme in my article. 

So what is going on here? 

As I argued in my article, it's basically impossible nowadays to ignore the carnage wreaked by the neoliberal turn. Inequality is way, way up, growth is down, welfare reform increased extreme poverty by 150 percent, free trade helped wreck the American industrial base, and so on. Not all that is Democrats' fault of course, but they collaborated on most of them. Especially since the rise of Black Lives Matter, the role of neoliberal Democrats like Joe Biden and the Clintons in stoking mass incarceration has come under severe criticism.

It's also clear that by far the greatest energy among Democrats is on the left. New Deal-ish Bernie Sanders is the most popular working politician in the country — and largely on the strength of gargantuan margins among the young. Just in the last few days, a brushfire outbreak of labor militancy has swept from West Virginia to Virginia and Oklahoma.

These are trying circumstances for the advocates of education "reform" (and teacher union busting), means testing, and other such free-markety claptrap. So advancing a ridiculous revisionist history of Democratic Party ideology is, in the first place, a way to hide behind FDR's skirts, where one can continue to attack the left as interlopers instead of heirs to a legitimate tradition.

But that also makes it, partially at least, a tacit admission that the whole neoliberal project has failed. Even a warped version of 1930s-style policy would be a gigantic change from the Democratic status quo, no matter what bizarre label Chait and Watson try to pin on it. And it needs to happen, quite obviously, because the neoliberal turn was a disastrous mistake that needs to be reversed.