On Neoliberalism

First things first: I absolutely loathe the term ‘neoliberal’ and its derivatives. For one thing, neoliberals are much more akin to classical liberals than traditional leftists, and there’s an obvious dissonance between ‘classical’ and ‘neo’. In some sense, ‘neo’ makes it sound like something of an upstart, usurper ideology rather than a throwback to an older form of liberalism.

This leads me to a very smart post in the ongoing Great Neoliberalism Debate of 2011 from Noah Millman, who rightly observes:

The broad point is: alternatives to neoliberalism won’t be as liberal. They be less-likely to prioritize efficiency. They will also be less-likely to prioritize positive-sum solutions. They will also be less-likely to prioritize basic fairness or democratic principles or whatever else. They will assign a higher priority to increasing the economic and political power of the people they are trying to represent (or their designated representatives).

And Will Wilkinson, who writes:

Purist libertarians, who profess to envision a feasible path to libertopia, regularly argue that moderate libertarians entrench state power and impede the path to a truly free society by supporting taxpayer-funded school-voucher schemes, or government-mandated “personal account” retirement savings programmes. If social-democratic welfare-state capitalism and libertarian laissez faire capitalism are terminal positions on a continuum of liberalisms, it seems that “neo-liberalism” is something of a catchall that applies to pretty much everyone a sufficient distance from these poles. Perhaps this helps explain why pragmatic, non-utopian progressives sometimes sound like savage libertarians to their idealistic social-democratic comrades, while pragmatic, non-utopian classical liberals sometimes sound like liberal fascists to their purist libertarian friends.

This debate inevitably stretches back to the old debate over pity-charity liberalism vs. union liberalism (or leftism, really) that puts the revitalization of organized labor at the heart of its project. For a while I was quite enamored with this idea, partly because I found the argument that front-end distribution of resources (negotiated between employee and employer) was preferable to back-end distribution of resources (welfare benefits). And how better to achieve this than a more vital labor movement?

There are problems with this idea, however.

1) Organized labor creates a labor cartel, restricting the supply of jobs and wages and limiting the opportunities of non-union workers. The argument against this is essentially ‘a rising tide lifts all ships’. Non-union workers, the argument goes, benefit from the competitive wages at union firms. I think this is true to some degree, but I think it’s also true that in order to create a system wherein organized labor has clout, artificial labor scarcity has to be created. To do that you have to limit the number of slots. This was traditionally done by excluding women and minorities from many jobs. In other countries it has been politically feasible to push full-employment policies. I doubt that it is either politically or culturally feasible in this country.

2) Critics of pity-charity liberalism argue a few things. One is that work gives people more dignity than welfare. This is true enough, but I would direct you to the previous point. If policies lead to artificial labor scarcity, that may lead to fewer people with meaningful work.

Critics also argue that what the state gives, the state can take away. A welfare program that benefits the poor is vulnerable since the poor are ill-represented in our political system. This is true as well. The problem is, favorable labor laws are also vulnerable, as are state-backed unions. We may as well call it pity-charity unionism. The difference, of course, is that once you have a bunch of organized workers you also have an organized political bloc that will be easier to mobilize.

I think that last point is a strong one in favor of the anti-neoliberals, and I think it’s what they mean, at least to some degree, when they argue that neoliberalism can’t create a sustaining politics.

3) I find Kevin Carson’s free-market unionism quite compelling, but the sort of organized labor movement that the anti-neoliberals are talking about tends to be quite different in nature than anything Kevin is talking about, more along the lines of corporate unionism or the sort of pro-business unionism you see in social democracies in Europe. I find this breed of organized labor very illiberal, actually, and far less likely to expand opportunity to the most Americans possible.

In any case the question inevitably becomes, what policies will reinvigorate organized labor, and what will be the cost of those policies? If the cultural and political will to push full-employment policies via increased unionization don’t exist in this country, what would happen if labor laws were strengthened? How would this even work outside of the public-employee realm?

This is where the neoliberal project begins to make more sense. Lane Kenworthy writes:

Here’s what we know from the experiences of the world’s rich democracies: Relative to other nations, those in which labor is highly organized are more likely to have an influential social democratic and/or Catholic center-right (emphasis on center) political party, a proportional representation electoral system, well-organized employers, formal or informal-but-institutionalized participation by labor and business associations in the policy-making process, generous social insurance programs and complementary programs to help households that fall between the social insurance cracks, expansive public services, similar long-run economic growth, a fairly egalitarian distribution of individual wages and household incomes, reliable economic security, extensive economic mobility, and generous holiday and vacation time.

Sorting out the causality is a bit tricky, but it seems probable that labor organization has contributed to most, if not all, of these outcomes. If you want progressive policies, the comparative historical evidence suggests it’s very helpful to have a strong labor movement. Indeed, after democracy, it might well be the single most valuable thing to have.

But what if you live in a country with labor unions that are weak, and getting weaker? What if your country is the United States?

You might choose to focus on strengthening the union movement. Or you might seek an alternative view (“theory of politics”) about conditions for feasible and sustainable progressive policy change. Is there any such view? I think so.

Forge whatever electoral coalition you can, including but not necessarily centered on unions. Organize sympathetic interest groups into single- or multi-issue movements and coalitions. Build up a network of think tanks, journalists, bloggers, and other organizations and individuals to identify and expose the strategies and plans of opposing forces. Offer worthy, workable policy ideas and try to get them (or some acceptable version of them) passed when possible. Aim for big policy advances in rare favorable moments and small ones the rest of the time. (Examples of big ones in American social policy: universal public K-12 schooling, Social Security, unemployment insurance, AFDC, minimum wage, Medicare, Medicaid, Food Stamps, Affordable Care Act. Examples of smaller ones: Head Start, indexing of Social Security benefits to inflation, EITC (it later got big), expansion of EITC and indexing it to inflation, child tax credit, S-CHIP, periodic minimum wage increases.) If your favored programs work well, people will like them. They’ll therefore be difficult — not impossible, but difficult — for the other side to weaken or remove when it’s in power. This last element of the strategy, avoiding policy reversals, is critical, and it’s aided by the array of veto points in the American policy-making process (though there’s also this).

This is a second-best strategy, to be sure. But in the American context it may be the only practicable one.

I don’t agree with Lane’s assessment of the relationship between organized labor and rich democracies. Or, rather, I don’t think the cause-and-effect is at all clear. The countries in question are invariably small, prosperous, and fairly homogenous at least in comparison to the United States. Those that are more diverse still have a fairly homogenous political culture, which allows them to pass consensus policies much more easily. And the history of labor in these countries is quite different, with labor/business relations much more sympathetic than in the American context. Either way, I agree with his conclusions, at least insofar as they are the most practical steps liberals can take in the American system.

One other thing that’s bothered me about this debate is that you have on the one hand the anti-neoliberals arguing that the neoliberals are market-friendly technocrats. But how are anti-neoliberals any less technocratic? In what sense is someone like Matt Yglesias any more technocratic than his critics to the left? They may be more ideological, and they may be critical of markets, but they are just as technocratic, at least so far as I can tell.

I prefer a less-technocratic, more market-friendly “bottom-up” liberalism myself, but I also believe there is a great deal of space between the libertarian purism and the leftist purism that Wilkinson describes, and within that space there is a great deal of policy debate to be had. How the social safety net functions, monetary policy, deregulation, climate change, the tax code – these are the inevitable battlegrounds of policy wonks and legislators. Political philosophy helps us define where we’re coming from, and helps us spy our end-goals, but Matt is still right that policy is where those ideologies collide and where the real meat of the discussion happens.

To the question of a sustaining politics, I would simply say well of course neoliberalism can be sustained. It offers a broad tent with many different interests represented, including immigrants and minorities and women and social liberals and so forth. Really, I see the inevitable lines drawn much differently than many leftists do. I see the broadly neoliberal movement on one side, and a more nativist, protectionist right emerging on the other (somewhere down the road). Either way, there are only so many choices. I don’t see how liberals will gain more converts by pushing pro-union policies when they are doing fairly well on social issues, immigration, and the welfare state.

I would go on, but I’ve run out of digital ink. There are a lot more smart pieces floating around on this subject. Mike Konczal, Kevin Drum, Elias Isquith, Ned Resnikoff and many others have weighed in, and you should read them all.