This post is the fourth in a series of five considering what the shape of progressive political-economic thought might look like following the neoliberalism of the Reagan Era.
In this post, I would like to note a few distinctive features of this view of markets and how it relates to other economic and political positions.
First, the idea is counterintuitive. The opposition between government and markets is so deeply rooted in our public economic discourse today that it may take some explanation and illustrations to show what is meant by the claim that our markets are government creations. But the idea is no more counterintuitive than Reagan-era claims were at the time of their introduction, such as the slogan that “government is not the solution to our problem; government is the problem.” In addition, the idea has the virtue of being in some sense obviously true. No one can deny — and sophisticated neoliberal theorists like Hayek do not deny — that the functioning of modern economic markets depends on and is shaped by state enforcement of property, contract, corporate, criminal, and many other laws.
Second, the view of markets as government creations, and the legal rules of markets as political choices, frames economic debates in a way that favors progressives but leaves room for conservatives to participate — just as the neoliberal framing of economic debates in terms of a choice between government and the market favored conservatives but left room for progressives to participate. Conservatives in a new progressive era would be free to argue (unappealingly) that we should choose rules for our markets that favor billionaires over working families, because of the merits of wealth accumulation, for example; just as progressives in the neoliberal era have always been free to argue (unappealingly) that high taxes and big government are actually a good thing, because certain parts of the economy are better left to government management.
In order for an intellectual framework for political-economic debate to take hold, it may be necessary for it to leave room for its opponents to participate. This allows for the dynamic that Bruce Ackerman has described in the context of changing constitutional regimes in American history. You know that the contested transformation has succeeded when its opponents accept its premises and begin to argue from within them — as Bill Clinton and Obama so often attempted to argue from within the general intellectual framework of Reaganism.
(Incidentally, the relation of Ackerman’s constitutional regime theory to Skowronek’s periodization of presidential regimes, mentioned in an earlier post, and the relation of both to a more global historical category such as “the neoliberal era,” deserves further thought. If analogous political-economic transformations take place in the United States, the United Kingdom, and across much of the world — as happened at the dawn of neoliberalism in the late 1970s and early 1980s, and as may be happening again with Trump, Brexit, and related developments today — is the explanatory power of Skowronek’s presidential leadership model diminished? And how do all of these regime-narratives relate to more quantitatively grounded studies such as Poole and Rosenthal’s presentation of the changing second dimension in their historical maps of U.S. political space?)
Third, the view of market rules as political choices opens the door to experimentation in the design of markets. Those on the old-fashioned far Left who oppose markets as a matter of principle may not find this appealing. But for everyone else, the possibility of experimentation in market design allows progressives to be on the side of innovation, creativity, the new — to take the side of Emerson’s “American Scholar,” to embrace the pragmatist spirit of James and Dewey, rather than being stuck with an incessant, uninspiring mantra of “no.” A political-economic framework may need some element of hope in order to be politically effective. Focusing on the use of higher taxes to pay for direct government provision of welfare benefits may have many merits, but political inspiration is probably not one of them.
In fact, if what follows neoliberalism encompasses more than a set of economic policies, but is associated with a broader climate of thought and practices, then it seems to me that experimentation might be a central practice. More specifically, I wonder whether there might be a role for the expanded use of randomized controlled trials to continually evaluate and improve the effectiveness of government policies. If the use of behavioral economics-based “nudges” captures the moderately progressive late-neoliberal spirit of the Obama administration, the use of RCTs to test bold policy innovations — such as higher minimum wages, a job guarantee, or even a universal basic income — might be an exemplary practice of post-neoliberal progressivism.
Fourth, having referred to “the old-fashioned far Left,” it may also be worth emphasizing the difference between the view of markets as government creations and the traditional leftist view of markets. The traditional leftist opposes neoliberalism by inverting its values. Where the neoliberal favors markets and criticizes government, the traditional leftist favors government and criticizes markets. As Corey Robin, one of the leading voices of the contemporary American anti-liberal Left, wrote in 2011: “We must develop an argument that the market is a source of constraint and government an instrument of freedom.”
The view of markets as government creations, by contrast, rejects the neoliberal opposition between government and markets. I would argue that this shift has a number of conceptual and rhetorical advantages, some already mentioned. An additional possible rhetorical advantage is that the reframing of the relationship between government and markets removes the need to offer a blanket denunciation of business (Robin: “the businessman imposes concrete and personal constraints on the freedom of individual citizens”) — a denunciation that I suspect would be politically problematic in the United States, given its longstanding, widely shared narrative traditions celebrating business innovations and innovators.
Fifth, I have grappled before with the question of whether the intellectual foundations of a new progressive era must be focused on economic thought and policy — as opposed to other concerns, such as group recognition and the emancipation of subordinated identity groups (including through confronting racial injustice), or national security, or the environment. Whether progressives need to choose between focusing more on justice for subordinated identity groups or on economic issues is obviously a live issue. My sense is that regardless of how things develop, a new progressive economic vision will be useful. It is striking that, at least according to proponents of the DW-NOMINATE system for mapping changes in American political ideology throughout our history, one of the two axes has always been the liberal-conservative economic axis — even as the second axis has changed over time. If this is correct, then economic thought will almost inevitably play an important role in any post-neoliberal progressivism, regardless of whether it is the primary focus of progressive activism.
Sixth and finally, there remains a lot to be said regarding the relation between progressive economic policies and the distribution of political power, including questions about how to reform the many systemic and even hard-wired constitutional flaws in the American political system — the undemocratic Senate, life tenure for federal judges, pervasive gerrymandering, campaign finance corruption, agency capture, the Electoral College, the lack of ranked voting or proportional representation, the unintended consequences of presidential primary reforms in the 1970s, our unusually high hurdles for constitutional amendment, the excessive difficulty of removing a dangerous president who has lost the support of the public, and so on — not to mention the current pathologies in the spread of information through social media, the destructive effects of right-wing propaganda outlets… and any number of other challenges to our democracy that are currently the focus of public and scholarly concern among progressives.
Is there a novel view of political power that somehow “fits” conceptually with the view of markets as government creations? After all, if I am right that Milton Friedman’s Capitalism and Freedom provides a model for progressives, then it is worth noting that the influence of Friedman’s book resulted in part from its synthesis of economic thought with political theory. (The influence of Friedman’s popular work may also have depended on his professional reputation, which suggests that the Capitalism and Freedom of a new progressive era might need to be written by a respected economist — as Noah Smith has suggested in a slightly different context.)
At least rhetorically, a connection could be drawn between rewriting the rules of markets, or of the economy in general, and rewriting the rules of our democracy — in both cases, to make the rules more fair, more just to those who are excluded from economic and political power. In fact, development economists like Acemoglu and Robinson in Why Nations Fail? make a persuasive case that inclusive institutions of political power are effectively a prerequisite to establishing inclusive (rather than extractive) economic institutions. Should progressives think of the ultimate goal of institutional redesign as inclusiveness?
I think Corey Robin is right that successful political movements in the United States have nearly always rallied under the banner of “freedom”:
From Emerson and Douglass to Reagan and Goldwater, freedom has been the keyword of American politics. Every successful movement–abolition, feminism, civil rights, the New Deal–has claimed it. A freewheeling mix of elements–the willful assertion and reinvention of the self, the breaking of traditional bonds and constraints, the toppling of old orders and creation of new forms–freedom in the American vein combines what political theorists call negative liberty (the absence of external interference) and positive liberty (the ability to act).
Drawing on some earlier thoughts, I would now say that the emphasis of neoliberalism has been on negative liberty, while the emphasis of a new progressivism should be on positive liberty, in the sense Robin suggests: the ability to act.
In other words, once it is accepted that the design of markets is a political choice, to be resolved through the political workings of democracy, the next question becomes: what goals should we pursue in our choice of market rules? One answer might simply be: freedom — with the challenge then to develop the meaning of this freedom, and its relation to concrete market rules and other economic policies.
Other posts in this series:
- After Neoliberalism (Nov. 17, 2017)
- Markets Are Government Creations: An Introduction (Nov. 19, 2017)
- Markets Are Government Creations: A Resource Guide (Nov. 20, 2017)
- The Intellectual Foundations of a New Progressive Era? (Nov. 22, 2017)
- The Tragedy of the Obama Administration (Nov. 24, 2017)
 In this series of posts, as in earlier ones, I have used the phrase “new progressive era” as shorthand for what American progressives might wish to see come after the neoliberalism of the Reagan Era. Of course, the first Progressive Era has a complicated historical legacy marked by racism and even the support of eugenics. Despite this problematic heritage, I use terms like “new progressive era” and “progressivism” for two reasons: first, I prefer the term “progressive” to “liberal,” because I would like to see the latter term used just to refer to liberalism as opposed to the various forms of illiberalism that are currently proliferating on the Left and Right, especially on the Right; and second, to suggest that in the wake of our new Gilded Age, something like the grassroots political engagement, bold policy innovations, and even constitutional reforms of the first Progressive Era may be needed.