Waking Up From Our Neoliberal Nightmare

On November 9, after Hillary Clinton is likely elected, those who I suspect will be celebrating the most are not the millions of people in the lower and middle classes that largely voted for her out of fear of Donald Trump-it will be the heads of Wall Street, corporate America, and the rest of the economic and political establishment, who are eager to see their empire keep smoothly humming along. Because while both candidates can of course be relied upon to help the interests of big business, Trump's annoying habit of disrupting markets by simply being a major presence on the national stage makes Clinton Wall Street's favored option.

And so, as most Americans give themselves a (largely unenthusiastic) pat on the back for vanquishing Trump and getting a woman into the White House, things go back to business-as-usual. The president-elect and the other representatives of the corporate state can get started on planning the latest series of wars, anti-worker trade deals, corporate tax cuts, and other policies which will further the interests of the super-rich. For most people, the fact that Trump has been avoided will ultimately come as little comfort; either way, the 2016 election will be yet another defeat for those who are being hurt by the unrestrained model of capitalism that most countries have embraced for the last four decades or so, and a victory for those who benefit from this economic system, whose relatively little-known but important to understand name is neoliberalism.

This term, though not to be confused with capitalism, can be considered the logical conclusion of it; whereas capitalism merely allows private corporations to be the chief players in the economy, neoliberalism takes things many steps further by saying that corporations and the wealthy have more rights than ordinary people. Another way to describe it is an economic system which is based purely on competition. In a neoliberal society, if anyone gets ahead or falls behind in the economic game, the rules are essentially re-written to favor the winner and punish the loser.

Anis Shivani assesses how neoliberalism, which originated as a term in the 20th century and was more or less implemented for the first time during that period, is different from past economic systems that have favored elites in his brilliant article This Is Our Neoliberal Nightmare: Hillary Clinton, Donald Trump, And Why The Market and the Wealthy Win Every Time:

Neoliberalism has been more successful than most past ideologies in redefining subjectivity, in making people alter their sense of themselves, their personhood, their identities, their hopes and expectations and dreams and idealizations. Classical liberalism was successful too, for two and a half centuries, in people’s self-definition, although communism and fascism succeeded less well in realizing the “new man.”

It cannot be emphasized enough that neoliberalism is not classical liberalism, or a return to a purer version of it, as is commonly misunderstood; it is a new thing, because the market, for one thing, is not at all free and untethered and dynamic in the sense that classical liberalism idealized it. Neoliberalism presumes a strong state, working only for the benefit of the wealthy, and as such it has little pretence to neutrality and universality, unlike the classical liberal state.

I would go so far as to say that neoliberalism is the final completion of capitalism’s long-nascent project, in that the desire to transform everything—every object, every living thing, every fact on the planet—in its image had not been realized to the same extent by any preceding ideology. Neoliberalism happens to be the ideology—unlike the three major forerunners in the last 250 years—that has the fortune of coinciding with technological change on a scale that makes its complete penetration into every realm of being a possibility for the first time in human history.

Perhaps it's this aspect of neoliberalism, wherein corporations and the state work together to concentrate power and resources, that has made it so that inequality is now higher than it's ever been in American history. And according to Shivani, it can only get worse from here. "Neoliberalism has its end-game in sight," he writes, "letting inequality continue to escalate past the crash point (meaning the point where the economy works for most people), past any tolerable degradation of the planet (which is being reconceptualized in the shape of the market)."

In this piece, I'm going to discuss why I believe the future will in fact be the opposite of what he describes.

The reasoning behind Shivani's prediction (which he admits is only speculative) of a long-term victory for the corporate state is that neoliberalism, it seems to him, is too powerful an ideology for people to turn against. The economic elite, by getting so many in the lower classes to buy into neoliberalism's philosophy of profit at any cost, has essentially persuaded much of the public to surrender to its oppressors. In a culture that puts individual gain above all else and considers things like human beings and the environment to be commodities, it can become easy for those who are being left behind in the neoliberal system to rationalize its existence.

What I feel Shivani doesn't sufficiently take into account is the fact that, for the most part, such a culture does not exist in America.

The most recent Gallup poll on income inequality shows that only 31% of Americans do not think wealth should be more equally distributed. Another survey from Gallup shows just 21% of Americans think the rich pay their fair amount in taxes, while 15% think they pay too much. So is the case with virtually every other issue, from the idea of universal health care to ending the wars to raising the minimum wage to reforming campaign finance; the majority of Americans, in spite of the neoliberal propaganda that elites have tried to sell to them for so many years, know which kinds of policies benefit them.

But perhaps as Shivani was also meaning to point out, the surveys notwithstanding, the public has yet to stage a serious effort to overthrow the neoliberal order. Americans have believed in things like redistributing the wealth and raising taxes on the wealthy for about as long as neoliberalism was the dominant system, and yet no successful effort to challenge it has materialized.

I addressed this seemingly discouraging fact in my previous article, wherein I argued that because the current levels of economic inequality so closely resemble that of past unequal eras, which were followed by populist uprisings that brought inequality back down, our society is on the cusp of just such a revolt. This somewhat outdated chart (inequality has gotten worse since 2013) illustrates my point:

It's hard to look at that picture and not think that a turning point is near.

However, that piece mainly focused on the effects that I believe this coming period of class revolt will have on electoral politics. And as everyone should know when attempting to bring about true systemic change, this is just one aspect of the larger movements that will need to take place within society before meaningful improvement occurs.

Even the political future that income inequality has led me to believe will be realized in the next several years, wherein America's two corporate parties are overtaken by a populist party, is not enough; due to Republican gerrymandering, America's liberal party, be it the Democrats or the Greens, will have zero chance of taking the House until 2030. We can't wait until then to try to make Washington work for the people; in addition to electing Greens to high positions in government, we'll need to persuade the Republicans who will control congress for the next decade-and-a-half to stop helping their wealthy donors. And in this article, which can be considered a follow-up to my last one, I'll discuss how that is completely doable.

A good case study to use in this guide to reversing inequality in the 21st century is the last period of major economic unfairness, which took place in the 20th century. This era, whose levels of income disparity can be observed in the chart above, indeed required factors much bigger than electoral politics to make it end. After more than a half-century of increasing economic exploitation under the proto-neoliberal ideology of classical liberalism, the economy fell apart. The Great Depression, which, like many other economic collapses, was caused by economic inequality, can be considered the "rock bottom" that this debt-dependent, economically concentrated society needed to turn itself around.

It's no coincidence that income inequality in the 20th century peaked in 1928, the year before the crisis started. Peter Turchin explains how the aftermath of the recession led to redistribution in his essay Return Of The Oppressed:

The US elites entered into an unwritten compact with the working classes. This implicit contract included the promise that the fruits of economic growth would be distributed more equitably among both workers and owners. In return, the fundamentals of the political-economic system would not be challenged (no revolution). The deal allowed the lower and upper classes to co-operate in solving the challenges facing the American Republic — overcoming the Great Depression, winning the Second World War, and countering the Soviet threat during the Cold War.

The really notable thing about this change of attitudes among the country's leaders, though, is how it didn't take an overthrow of the political establishment to change how the government worked.

During that time, both parties, as is the case now, were in service of big business. The representatives of neither party were willing to challenge the centers of power, with Franklin Roosevelt being no exception. At the time of Roosevelt's first presidential campaign in 1932, he was in fact a fiscal conservative who was funded by Wall Street and considered a balanced budget to be more important than helping the American people in their greatest time of need. As the populist anger of the public loomed ever larger during his term, though, he and the rest of the Washington establishment decided to change their economic approach, enacting the New Deal policies that brought down income inequality and began a thirty-year period where keynesianism was the dominant ideology in American politics.

But then, of course, came society's new and latest descent into inequality. Starting with Jimmy Carter's pro-big business policies, neoliberalism became the driving force in the actions of most government officials, eventually leading to the sad state of affairs that we're in today.

What remains to be seen, though, is exactly what the fall of neoliberalism will look like. The events that brought about the downfall of classical liberalism are set to repeat themselves soon, with a possibly Great Depression-level economic collapse sure to take place sometime within the next president's first term. Due to the unwillingness of government officials to meaningfully reform the country's banking system after the 2008 crash, along with the many other factors that make the global economy unsustainable (income inequality being a notable player), the continuation of the status quo that Hillary Clinton's presidency will bring is certain to result in a breakdown of the fragile, largely illusory economic order that elites have constructed.

"The potential for wrecking markets and currencies around the world is extreme at this moment," wrote James Kunstler last month, who thinks that this crash will happen quite soon. "It may only be a matter of whether it happens before or after the election. Then we’ll see what happens when financial institutions can’t trust each other. Trade stops. Economies crumble. Pretenses evaporate. If it gets bad enough, the shelves of the supermarkets go bare in three days and you’re living in a permanent hurricane disaster without the wind and rain. Believe me, that will be bad enough."

What Kunstler thinks things will look like in the aftermath of the (somewhat dramatized) scenario that he describes is similarly pessimistic: "Hillary, if elected, will not get to play FDR-2. Rather, she’ll be stuck in the role of Hoover, the Return, presiding over a freight elevator of an economy with a broken cable. Expect problems with the US dollar. Expect 'emergency' actions. Expect the unintended consequences of those actions."

That may well be the case. But given how the public is sure to react to this disaster, I believe major governmental reforms will result from it as well. After the collapse occurs, the economically populist movements that we've witnessed in the past several years such as Occupy Wall Street and Democracy Spring will likely experience massive reboots, with hundreds of millions of people across the country from all sides of the political spectrum coming together in opposition to the destructive and tremendously unfair economic system. This revolt, in addition to resulting in the rise of a populist third party, will force the leaders of the Democratic and Republican parties to comply with the demands of their base, with President Clinton and the other corporatists in Washington suddenly taking on a less neoliberal approach to governing amid overwhelming public pressure. At least to an extent, and not by choice, Hillary may get to "play FDR-2" after all.

Of course, such dramatic changes in the right direction will not come easily or quickly, and that will create additional problems. Economic inequality tends to lead to the rise of fascist regimes, and Trump's campaign only represents the beginning of what will happen to American politics as faith in established institutions and  the ideological "center" continues to erode in the coming years; reactionary populism is bound to succeed in future elections in addition to progressive populism, and the next time the political demons that neoliberalism has summoned have an opportunity to come out, they will have a much better chance to win than has been the case in 2016.

"There must be many others out there like myself wondering who will emerge from the rubble?" writes Kunstler regarding the person who's waiting in the wings to fill the role of Trump's ideological heir four years from now. "I suspect it will be someone we haven’t heard of before, just as Bonaparte was unheard of in France in 1792."

Thankfully, though, as Peter Turchin concludes in his essay, such a fate for our society, wherein the public reacts to income inequality by blowing up the system rather than changing it, is entirely avoidable:

Our society, like all previous complex societies, is on a rollercoaster. Impersonal social forces bring us to the top; then comes the inevitable plunge. But the descent is not inevitable. Ours is the first society that can perceive how those forces operate, even if dimly. This means that we can avoid the worst — perhaps by switching to a less harrowing track, perhaps by redesigning the rollercoaster altogether.

In any case, though, the neoliberal paradigm's chances of surviving the next five or ten years is the same as the chance a car will continue traveling upward after it's reached the top of a hill. Those who have been left behind by neoliberalism already want it replaced by something better, and while economic meltdown appears to be the only thing that can motivate them to take sufficient action, it will all be worthwhile in the long run.