In 1964, long before the New Deal era reached its high-water mark, the seeds of the Reagan era were planted. Barry Goldwater won the Republican presidential nomination on a small-government platform. Voters rejected him. His supporters and intellectual allies then retreated into think tanks, journals, and other civil society organizations funded by wealthy donors. From there, they built the modern conservative movement.
Or at least, that is one way of telling the beginning of the story.
The political successes of the conservative movement have always had more to do with cultural backlash than economics. Two forms of backlash stand out in particular: racial hostility toward blacks in the wake of the civil rights movement, and a more general revulsion toward the upending of traditional authorities and norms during the cultural liberalization of the 1960s and 1970s. Against this backdrop, however, the public intellectual face of modern conservativism has been strongly defined by economic policy.
The intellectual foundations of the modern conservative economic ideology can be found in works like Milton Friedman’s Capitalism and Freedom, published in 1962. As the title suggests, the book argues that classical liberal markets and political freedom go hand in hand. This argument also appears in Friedrich Hayek’s The Road to Serfdom, another keystone of modern conservative economic thought, although one that lies outside the American economic mainstream.
Capitalism and Freedom offers a high-level theory about the need for small government and classical liberal markets—and presents this theory in easily communicated rhetoric that appeals to widely shared American values, especially freedom. The book also offers an assortment of concrete policy prescriptions, such as the use of school vouchers, and the replacement of progressive income taxes with a flat tax. By connecting an overarching theory of modern government with specific policy prescriptions, Friedman offers something extremely powerful: a unified vision of the proper role of government to contrast with the vision of the New Deal. While the New Deal presents government as a force for freedom, Friedman’s vision places government largely in opposition to freedom. The smaller the government, the more free citizens will be. What makes Friedman’s book so powerful, I would argue, is that it offers a widely appealing general framework for thinking and talking about the role of government, alongside policy prescriptions that are concrete enough to be included in a campaign platform or a bill.
Two decades after the publication of Friedman’s book, and in the same year that PBS broadcast a popular series in which Friedman expounded on his views, Ronald Reagan succeeded where Goldwater had failed. Drawing on the institutional, intellectual and rhetorical capital built up by the conservative movement during its decades in the wilderness, Reagan took advantage of the window of opportunity created by the splintering and failures of New Deal and Great Society liberalism in the 1970s. Echoing Friedman’s vision, Reagan set forth the defining idea of the new era in his first inaugural address: “Government is not the solution to our problem; government is the problem.”
Just as the fiery opposition on the right to the New Deal and its expansion gradually gave way to acquiescence, so the left’s opposition to the intellectual realignment of the Reagan era gradually softened into resignation and acceptance. If the right’s capitulation to the New Deal can be symbolized in Nixon’s creation of the EPA, the left’s capitulation to Reagan’s vision of government can be symbolized by Bill Clinton’s statement in the 1996 State of the Union address that “the era of big government is over.” By framing the question of the proper role of government as a question about the size of the government—and in particular, as a choice between “big” and “small” government—the New Democrats and their allies adopted the premises of the Reagan era. They could at most push back against the scope of Reagan’s vision, just as Eisenhower conservatives were once confined to pushing back against the scope of the New Deal.