The Poverty of Neoliberalism

In the late 1970s, a group of one-time liberals began describing themselves as neoliberals. 'We criticize liberalism," Charles Peters, editor of the neoliberal Washington Monthly, wrote in 1983, "not to destroy it but to renew it by freeing it from its myths, from its old automatic responses..." Neoliberals often join conservatives in lambasting public programs, skewering bureaucrats, and celebrating the power of the market. They also attack special interest groups in the name of a more embracing public interest, untainted by politics. Much of their criticism is entertaining; some of it is even fair. But in the end neoliberalism often seems only to reinforce the conservative impulses of our day Where it remains liberal, it disdains constituencies that liberals need not only to address, but also to inspire. It is just the sort of politically innocent liberalism conservatives eat for lunch.

Though the term "neoliberal" has not found its way into most voters' vocabulary, neoliberal ideas have gained considerable influence among policy intellectuals and some Democratic political circles, such as the centrist Democratic Leadership Council (DLC) and its new Progressive Policy Institute. Journalists have been particularly influenced by neoliberal ideas. Much of the press seems to have accepted the claim that liberals need to distance themselves from liberalism itself and that even popular liberal approaches should be muted or disguised as merely pragmatic responses to particular conditions.

On Memorial Day The Boston Globe ran a page-one feature, "Congress Goes Domestic, but the L-Word is Out." According to correspondent Michael K. Frisby, "Congress is marching to a different drummer these days as legislators switch from their recent conservative beat to vote for child care, clean air, parental leave... But don't use the L-word." Frisby then explains, "Liberalism, the ideology blamed for the repeated presidential defeats of Democrats, remains a dreaded word that most observers say has little to do with Congress' recent actions. Even self-proclaimed liberals distance themselves from the past."

One is always a bit skeptical of views attributed to "most observers," who usually echo the reporter's own preconceptions. Frisby, however, may be right about the observers, if not the observation. For nearly two decades, the usual observers have blamed the Democratic Party's presidential decline on a bogeyman called liberalism. It then logically follows that even as politicians rediscover that liberal ideas, values, and policies are necessary and popular, they must use some word other than "liberal" to describe them -- because reasonable people know liberalism is moribund.

This chain of logic leads to a political dead end. If liberal policies and approaches must be divorced from a coherent worldview, they lose self-confidence as well as intellectual clarity and political force. The neoliberal search for ad hoc "new ideas" as a substitute for ideology, epitomized in the Gary Hart campaign of 1984, added up to less than the sum of its parts because the particular small ideas were disconnected from any convincing big idea. Likewise the Dukakis claim that what voters wanted was "not ideology, but competence" in 1988.

The time is overdue to reclaim liberalism, without prefixes, qualifiers, or apologies. My neoliberal friends are right to ask hard questions and to search for creative new approaches. We can certainly debate which strategies make most sense. But that effort needs to begin with a set of clear convictions and a sense of political realism. Liberalism will not gain in persuasiveness by abandoning its past achievements, its key constituencies, or its core ideas.

Liberals ought to remain committed to a few big ideas. Liberals and conservatives agree, in principle, about the value of liberty. But where liberals differ is their insistence that liberty requires greater equality than our society now generates and that liberty may be threatened, not only by arbitrary government, but also by concentrations of private wealth and power. A second big idea that liberals ought to share is that the invisible hand of Adam Smith is an imperfect way to organize a society. Yes, the price system of the free market does a great deal -- but not everything. Partly to counteract the market, government is a necessary instrument of a democratic community, and it must be made to deliver more effectively for its citizens, rather than ritually excoriated. A third big idea is that civic society is under assault on a broad front from market society and must be reclaimed if political democracy and a sense of common responsibility are to be part of the American prospect.

Correspondent Frisby's list of domestic policy initiatives -- clean air, child care, parental leave -- all happen to be instructive expressions of core liberal ideas. The market, on its own, provides none of them in adequate degree. Yet environmental survival requires that we not choke on our own waste products. Social survival requires that the imperatives of the private market economy be reconciled with those of family life. The only institution capable of brokering a decent outcome is democratic government, relying on its usual mechanisms -- deliberation, regulation, taxation, and expenditure.

Stripped of a broad liberal vision and squeezed into a conservative frame, the specific policy interventions often come out sounding contradictory, defensive, and apologetic. Right-thinking people everywhere know regulation is supposed to be a loser, but breathable air and the rearing of the next generation regrettably require it. Tax-and-spend may be politically incorrect, but child care, unfortunately, isn't free.

Why not just admit that this is liberalism? Indeed, why not take the opportunity to help interpret and reinforce the public's intuitive sense that the unfettered free market isn't doing the job? Why not teach? Here the public seems ahead of the politicians and eager for leadership. But leadership can't make the connection if a clear public philosophy is disdained. And teaching can't occur when the teacher is confused about the lesson.


Neoliberals often profess allegiance to core liberal principles. But in the course of separating themselves from the now familiar set of alleged liberal excesses, they often seem to endorse the conservative reaction. At the core of neoliberalism is a paradox. Like liberals, neos are for better public education, day care, a more robust civic culture, political reform, and limitations on corporate excess. But, oddly, many self-identified neoliberals seem to think this enterprise requires dismantling much of the liberal legacy rather than building on it, as if liberalism could recover simply by becoming more like conservatism -- more reverential towards the market, more generically critical of government, more hostile towards liberal inventions such as social insurance. Neoliberal writers and such political groups as the DLC seek to define a kind of liberalism that is ideologically elusive and presumably a little less offensive. But in the process of distinguishing themselves from "traditional" liberalism, they misrepresent recent history and create an unconvincing contrast between their own and other liberal views.

According to the now familiar neoliberal litany of what wrecked the New Deal coalition (which much of the press has accepted as gospel), liberals of the Great Society era overreached, became captive of special interests, and strove too hard for a more equal America. The policy initiatives were too bureaucratic, expensive, and ineffective. Social conflict developed as the middle class was alienated by both the higher tax burden and the growth of a new dependent underclass spawned by the welfare state.

This view scarcely portrays how politics works or what actually happened in the 1960s. Neoliberals at times seem to suggest that political change comes straight from a small circle of policy intellectuals, isolated from the rough-and-tumble of politics. In the 1960s, supposedly, the too-liberal policy advisors then in ascendance made mistakes, and we all pay the consequences.

But, of course, policy is never made in a political vacuum. It is the end result of -- pardon the term -- a dialectic. A problem reaches the political arena, demands are made, sympathizers propose remedies, opponents dig in, and out of these opposing forces policy is forged. The civil rights bills of the 1960s did not spring full grown from the brows of policy intellectuals. They became law because a popular struggle finally touched the national conscience and reformers briefly enjoyed a working legislative majority, at least for civil rights. Medicare perpetuated a fragmented health care system and helped to set off an inflationary time-bomb -- not because its sponsors wanted it that way, but because organized medicine and the insurance industry succeeded in blocking a more basic reform (and continue to). The low-rent housing programs of that era were astronomically expensive because that was the private sector's price of joining the coalition. The antipoverty program of the 1960s tended to isolate the poor as a separate constituency because there weren't the votes for a more embracing program of full employment.

Neoliberals also tend to be far too cavalier in blaming liberals for the devastating impact of the Vietnam War on the New Deal coalition. If the first casualty of war is truth, the second casualty is often liberal reform. War sets off nationalistic impulses, imposes financial costs, divides economic coalitions, and leaves bad memories. The populist revolt of the 1890s was short-circuited by regional and racial divisions left over from the Civil War. World War I obliterated Progressive Era reform, almost overnight. The Vietnam War diverted resources, divided college-educated liberals from their blue-collar allies, stimulated an atmosphere of riotous protest, and created a chaotic era in which one strand of liberal reformism was wrecked by fiscal stress and social backlash, while another turned first politically radical, then culturally radical, and eventually saw its own symbols absorbed into the pop culture and rendered hedonistic and trivial. Here, too, there was something of a dialectic of action and reaction -- one that rendered a domestic liberal like Hubert Humphrey illegitimate to many of his natural constituents.

The resulting schisms, the bitterness, the bad personal memories of protagonists on both sides are now part of our own era's political legacy. They are beginning to heal -- though that healing is delayed by an even greater scarcity of resources caused by the more recent legacy of Reaganism. But it is preposterous to attribute the fallout from the 1960s to something called liberalism. What occurred was a sprawling, chaotic, spontaneous reaction to a war that most Americans now believe was not in the national interest, as well as a belated and costly coming to terms with the greatest and most shameful American dilemma.

This is not to say government never errs, or that competing public goods mustn't be balanced. But here neoliberals and conservatives have hardly done ' better than liberals, either at making good policy or at solving real problems. Deregulation, a popular cause that finds neos eager to demonstrate their conservative bona fides, is no panacea. Even using the most charitable calculus, all the efficiency gains claimed for arguably beneficial cases of deregulation were cancelled out many times over by the cost of the savings and loan scandal -- a child of deregulatory excess.


A further indicator of political innocence and gratuitous division is the view, which enjoys great currency in neoliberal circles, that universal programs such as Social Security and Medicare merely "bribe" the middle classes, as Charles Peters has instructed generations of Washington Monthly interns, writers, and editors. Historically, universal, cross-class programs have helped unify a broad liberal coalition; they have always been understood as earned benefits for citizens, not as alms to the poor. But in the Monthly's conception, public outlays should be narrowly targeted to the certifiably needy, even though the political effect of targeting is precisely the opposite of the intended one of relieving the isolation and dependence of the poor. Theda Skocpol's article in this issue, "Sustainable Social Policy: Fighting Poverty Without Poverty Programs," is an elegant exposition of the logic of universal social programs.

In the press coverage of the launch of this magazine, some people found it hard to grasp that we were not some new mutation of "neos," abashed about the liberal tradition. Many critics insisted on reading their own neoliberal views onto us. In an otherwise respectful piece, Newsweek's Jonathan Alter scolded us for not uttering more mea culpas for past liberal sins. New York Times writer Richard Bernstein, in another generally friendly article, described us as believing that a major element of the liberal "malaise" of the 1970s and 1980s "was an overemphasis on the concept of redistribution of wealth."

Commentators seem to think that repentant liberals view equality as the enemy of efficiency. But if any core idea is necessary to a resurgent liberalism, it is that equality and efficiency can and must be complements. If liberals concede the claim that efficiency requires gross and ever widening inequality, it is a short, slippery slope to the rest of the conservative recipe -- liberate entrepreneurial energies, deregulate, privatize, eliminate progressive taxes, slash public services, and get government out of the market's way. To be sure, this is not to argue for a program of static redistribution. History suggests that liberalism has done best in a climate of high growth that was broadly shared, in which greater equality was achieved via inclusion.

However, the view dies hard that liberals need only give up on greater equality. Recently, The New Republic featured a lengthy piece by Mickey Kaus calling for a neoliberalism that essentially cedes income and wealth distribution to the marketplace. Kaus begins by itemizing all the forces in a market economy that create extremes of wealth and poverty -- the globalization of commerce, the weakness of unions, the limitations on tax progressivity, the gaps in levels of education, and the star system that pays windfall incomes to a fortunate few. He then suggests that there are really two kind of liberals -- "money liberals" who unaccountably seek greater equality of income; and "civic liberals" who cherish realms in which money differences somehow don't matter. "Money Liberalism," he declaims, condemns its advocates "to a futile and often incoherent struggle against the basic forces of our economy"

Kaus' alternative, "civic liberalism," would attempt to "restrict the sphere in which money matters." Falling back on a favorite neoliberal theme, Kaus has in mind "class-mixing" institutions, such as public education, subsidized day care, national service, and universal health insurance. The argument falls apart on close examination. There is no such division among liberals. It is not as if one faction of liberals supports progressive taxation and opposes universal health insurance. Politically and programmatically, Kaus' two conceptions of equality are necessary complements. Civic equality cannot exist amid gross extremes of money equality. When relatively well-to-do people don't need public schools, or public health, they don't support public outlay. They simply buy their way out and resist paying taxes. Like so much of neoliberalism, Kaus's argument is oblivious to the politics. How does abandoning greater equality of wealth and income produce more votes for day care or health insurance? The claim is also ahistorical. Yes, the marketplace does tend to produce extremes of wealth and poverty. But in the long, uneasy marriage between capitalism and political democracy, majorities have often invented policies to temper these extremes -- policies like the Homestead Acts, universal education, or social insurance that straddle Kaus' artificial distinction and serve both to equalize resources and build civic community. All of Kaus' "immutable" factors generating inequality, of course, were extreme in 1890. Yet for the first two-thirds of the twentieth century, public policy was able to foster more equality, not less.


There is a self-defeating irony at the core of neoliberalism. Neoliberal intellectuals, like their partisan confreres at the DLC, set out to lead liberalism out of the political wilderness by making it over into something more mainstream, more conservative, and less afflicted by interest group fragmentation. Yet by demonizing what William Galston calls "liberal fundamentalists" (civil rights groups, advocates of broad social insurance, feminists, trade unionists), and by attacking the proudest and most inclusive liberal achievements like Social Security, neoliberals become part of the problem they set out to solve. They become one more splinter, one more source of self-righteous division, as well as a force for the further fragmentation of policy constituencies.

Stranger still, their own policy agenda, supposedly purged of fundamentalist liberal heresies, keeps backing into egalitarian goals and interventionist means. Neoliberals, like liberals, are for reporter Frisby's litany of child care, clean air, and mandatory parental leave as well as good liberal ideas like progressive taxation and universal health care, competent government, and reinvigoration of civic life. By disdaining politics, rejecting much of the liberal tradition, and attacking key members of the liberal coalition, the neos do not reap a convincing new public philosophy or program -- only political confusion. It's time to leave infighting to the conservatives and the far left; they are better at it, anyway. Liberals have too much in common for needless factionalism. Nineteen ninety would be a good year to retire the "neo" label.

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