Neoliberalism and the Left
I don’t know about you guys, but I’d like to talk about something other than the Norway incident (aside from a little spleen-venting earlier, all I can say about that is killing innocent people is wrong, and people who do it should be condemned, and there’s no way even someone as verbose as I am can make a blog post out of that). So instead, I thought I’d reply to Erik and Elias’s thoughtful posts on the issue of neoliberalism and the left. As a foreigner I don’t map easily onto the American left-right spectrum so I’m coming at this from a different perspective to most people who discuss the issue. Though my soft-libertarian leanings make me naturally sympathetic to the principles of neoliberalism.
Before I dig in, I think it would be helpful to define our terms . Neoliberalism is something of a chimera, the phrase is used more as an epithet than a term of self-description (though there are certainly some who use it as such). I’m going to use it to mean a combination of (largely) free markets, and a large welfare state (with the taxes to match). By largely free market, I mean no attempts to enact wide-scale control over the economy. Market regulations exist, but are tailored to specific problems (ideally markets failures under the standard economics definition), and try to fix the problem with as little intervention as possible. So Neoliberalism is a blend of moderate free-market economics and “pity-charity” liberalism. The closest real-world ideal of neoliberalism under this definition is perhaps Sweden, and Sweden is, by all accounts, a pretty good place to live.
I think that to a large extent neoliberalism (in the Anglosphere at least) was a reaction to the failures of socialism, both the extreme (communism) and more moderate (industrial policy, price controls) forms. It turns out that Hayek (and the other Mont Perelain economists) were right about the calculation problem – it’s just too hard to plan an economy, there are too many variables and you can’t assemble or analyse the information necessary to do the job even tolerably well. But that leaves a problem for those who want to preserve the very poor – there’s no guarantee markets will produce a living wage (if your Marginal Product of Labour is below your subsistence requirements, no amount of market competition will save you), so how do you help those the market will forsake? Welfare is effectively the last option standing, it lifts incomes for the poor, but does far less violence to the market’s functioning than any of the alternatives (provided marginal taxes don’t get too high, the distortionary effects of tax-and-welfare are slight).
The major point of discussion on the old liberal vs. neoliberal issue is the role of unions. The unions were a major plank of the left’s power base in the US since the New Deal (at least), and many on the left fear their loss. I’m afraid I can offer no comfort. I’ve written in previous posts of my lack of interest in unions, it’s not that I hate them so much as doubt their ability to do a lot of good any more. I see the primary benefit of unions being allocating monopoly rents from owners to workers, and as markets have grown more competitive over time that power is becoming less useful. Furthermore it would appear the patterns of comparative advantage in the US are moving away from labour-intensive manufacturing to very capital-intensive manufacturing, a natural process but one that is decimating the industries that were the heart of the union movement. Ultimately I believe the death of unions over the past few decades to be an organic phenomenon, and one that can’t be stopped without doing substantial damage to the American economy. Whatever the merits of unions, I don’t think they will be a major political force in the future, or at least a much weaker force than they were for most of the 20 Century. And if you don’t believe this story, if you think unions have been killed by anti-worker legislation consider this – if unions couldn’t save themselves from political attack, they can’t have been very powerful anyway. After all if they couldn’t protect themselves, how can they protect anyone else?
So how will the left cope without unions? In the short run, I don’t see a problem. It would appear the Republican party is spiralling into insanity, and while much of the base might love it, it will be poison to the independent voters who ultimately decide elections. The Republicans still have policies that alienate black and Latino voters, which are a large and increasing fraction of the voting pool. I don’t think the political left will have an unusually large trouble winning elections without major union support for a decade or so.
After that, it gets hard to say. A fiscal crisis is looming for the US (assuming the Republicans acquire some sense and don’t precipitate the crisis by holding fast on the debt limit), and those have serious consequences for politics and economics. When New Zealand had its crisis in the 1980s we expereinced not one, but two major realignments of the left-right spectrum. I can’t imagine what the American left might look like after a major crisis, and I doubt anyone else can either.
So what does this mean for neoliberalism? Fundamentally, I think it’s what you have left to you. The unions are fading, the bold economic management of the 1930s – 1970s is dead, and welfare is the best flexible tool for helping the poor (apart from a few structural reforms I’ve mentioned previously). The old ways are gone and they’re not coming back.
A moment of stunning LOOG clarity. Well done, sir.
As for the rest of yr contentions, perhaps later. This “neo-liberalism” aligns perfectly with the “pragmatism” spoken of so approvingly previously. It is what is, making the best of what is, with a little “ought” mixed in.
Corporatism creates wealth, politics siphons off what it can for its constituency. For the “general welfare,” of course, and I’m not saying that’s a bad thing.
How much “ought” is sustainable, even in Sweden, well, that’s the “pragmatic” question of the moment, of course…Report
Neo-liberalism, is, or should be, very much aligned and guided by pragmatism: you are quite right, TVD. I was going to point that out when I gave my understanding of the term the other day, but I decided to just avoid a word that has become I think undeservedly if understandably radioactive of late. Thanks for making the connection, Tom.Report
I think this post is pretty close to right, much as it doesn’t bring me any pleasure to have to say so. i do think labor organization remains a very socially valuable activity, and that people should keep at it, trying new forms and methods. Who knows, maybe the structural fatalist view expressed here (which I tend toward myself) is wrong, and through collective agency the future belongs to new (or not so new) organizations that embody a united worker consciousness of some sort. I guess we’ll find out.
As an aside, I am always a bit confused in your posts, James, about the extent to which you are *or aren’t!* writing from a perhaps not-explicitly stated American perspective despite your residence. In the first few paragraphs here, you address neo-liberalism from an international perspective, but when you turn to unions the discussion turns suddenly quite U.S.-focussed. The fate of “the Left” in your views seems to have quite a surprising lot to do with the behavior of the U.S. Republican Party, given the presumably global dimensions of the processes that will determine it. It’s not that I expect you to always address questions from an international perspective merely because you’re neither in America nor American, nor to avoid conducting your analysis to a set of American assumptions whenever you see fit. You should do only and exactly as you see fit. It’s just I’m just never sure how to be reading you at any given moment unless you make clear: here I’m talking about the American perspective; here the New Zealand; here I’m speaking in terms that I think apply globally. Just one reader’s experience. I’d be curious whether you think labor unions’ strength and influence is on just the same waning track all over the world, or perhaps the Western world, or were you here indeed simply proceeding from an assumption that we are pretty much just talking about the American experience in this discussion.Report
Awsome post James K. as a self identified neo-liberal I agree heartily with the lot of it.Report
I don’t know why this comment got put here… I must be irresistably drawn to Michael Drew.Report
I think I agree.
It is my impression that in the U.S. at least, “unions” have come to mean “labor organizations certified as the exclusive bargaining unit after an NLRB election” even though worker organization can be, and sometimes is, something very different from that, and maybe be able to offer new and different opportunities.Report
I was probably a little scattered, that’s what happens when I write a post at 9:30 on a Sunday night. I mean to focus on the US experience with most of what I write, since I know more about US politics than any country besides my own, and I have to be careful about discussing New Zealand politics (plus I know most of you guys are Americans). But I should have been clearer here.
I know unions have been waning in New Zealand; there are two unions of significance still in New Zealand, the Post Primary Teachers’ Association (note – a public sector union) and the Engineering, Printing and Manufacturer’s Union (which has close political linkages to New Zealand’s major left-wing party). I understand this is true pretty much everywhere in the West, though the degree varies from country to country.Report
The reason why unions matter, and the reason why it’s silly to restrict analysis to how likely it will be for “the political left” to win elections, is because the type of interests that will be represented in the political system matters.
All the income growth of the last forty years went to the top 10% of income earners. That’s insane and nonsensical and not something that “the political left” should be comfortable with, right? A big reason why it occurred is because of the shuttering of political groups which represented the economic interests of the middle class and the poor in the political system. So “the political left” needs to be concerned not just with winning elections, but in the development of political groups that can represent the economic interests of the middle class and the poor .
Unions, obviously, can fill that role and did for the middle part of the twentieth century. You can be blase about their political strength if you want, but they kept income inequality in check for decades while under constant political and economic assault. That’s not a record to sneeze at.
You’re right in that bringing unions back from the dead is a difficult proposition, but unions are in a unique position to claw back economic and political power for the middle class and the poor. It’s worth it to at least think through how trying to increase union penetration would work. It might hurt too much economically, it might not be feasible politically, but it can’t just be dismissed out of hand.
It’s “do everything feasible” time. Another decade of a political left that allows the top 10% to hoover all the economic growth shouldn’t be acceptable.
Finally:Report
So “the political left” needs to be concerned not just with winning elections, but in the development of political groups that can represent the economic interests of the middle class and the poor .
Count me fully for this, except let me add what I think is apoint you are gesturing toward – that part of what is important woth unions is the way they have objectively improved the lives of working people. politics bedamned. I’m all for organizing politically to improve one’s condition (unless you’re already rich, and I mean that!), but in reality unions achieved what they have largely by directy affecting the market conditions their members faced. In that sense, the Left needs to be concerned “not just with winning elections,” *AND not just* “in the development of political groups that can represent the economic interests of the middle class and the poor,” but also in the development (and maintenance) of economic groups that can directly influence the economic conditions faced by the working class and the poor (however uphill that task might be at this moment), like they did in the middle of the twentieth century.
Unions, obviously, can fill that role and did for the middle part of the twentieth century. You can be blase about their political strength if you want, but they kept income inequality in check for decades while under constant political and economic assault. That’s not a record to sneeze at.
I don’t want to sneeze at unions, and indeed I do hope to see them filling the role, in theory and actuality, that I describe in my previous paragraph. but I do think we need to be careful about making broad claims about what was behind the pattern of income distribution that obtained at various times in the past, as well as changes that have occurred over the last few decades. I absolutely believe unions are part of that story, but to say that unions “kept income inequality in check for decades” I think rather boldly overstated what was a hugely complex, dynamic system going thru phases of equilibrium. Unions may have played causal roles in all of that to some extent, but equally they may have been parties in the economy which were acted-upon by larger economic forces, and their successes partially results of the conditions created by those forces, as much as acting-upon them to shape them to their members’ (or even the class of people to whom their members belonged) benefit. It is a very large discussion.Report
I agree with all of this. I talked about groups working for economic interests and not just political ones in a comment to the previous neoliberalism post, and probably should have thrown it in here.
And obviously the causes of levels of income inequality are huge and complex and I definitely overstated unions’ role in keeping them lower than they are now. Nonetheless, the correlation between rates of unionization and income inequality rates internationally is pretty strong, and there’s probably a good case to be made that unions are one of the primary factors in determining income inequality. As you point out that might be for complex and diffuse reasons.Report
But did they really? I mean, the decades after the war were certainly highly unionized times, when corporate unionism really had found its feet. But the reason inequality of incomes wasn’t as great is not because of unions. It’s because women and blacks and other minorities were kept out of most of the labor market. It’s also because the global economy had been destroyed by the war, and America was at the top of its game. Huge state-granted monopolies ruled the roost, and because they had so little competition were able to give their mostly white, mostly males employees good wages and promise them lavish (but often unsustainable) retirement packages.
The unions were simply part of this grand bargain, a useful way for the General Corporations of the world to organize their labor force.
And sure, in other countries unions still remain, but I suspect that in a place like Sweden you’d have policies that pushed full employment and long maternity and paternity leave even without unions. The same political culture that put those benefits in place keeps the unions in place (and vice versa).Report
It’s because women and blacks and other minorities were kept out of most of the labor market.
For the record, a third of the workforce in 1957 was female. Then, as now, clerical jobs were generally held by women and then, as now, the trades were a masculine preserve. The major difference is in the prevalence of women in professional-managerial employments. Those sorts of employments comprehend about 13% of the workforce. There were women in these employments then as well; it is just that women in these employments tended to be drawn from a small minority of spinsters.
Again, ‘minorities’ in 1960 might have referred to a black population that made up perhaps 11% of the total, Puerto Rican population amounting to 1% of the total, and a disparate mestizo population that likely did not exceed 4% of the total. Labor force participation rates among black youth in 1960 were no different than what they were on the other side of the color bar. That disparity appeared later.
The occupational profile of the black population in 1960 differed from that of the majority. It still does. In our own time, people in salaried occupations and small business make up perhaps 30% of the workforce. Among blacks, it is about half that. You had a black bourgeoisie in 1960 – it is just that it was modally a group of professionals and small business that served a black clientele rather than a group predominantly composed of civil servants.
Again, the bourgeoisie are not ‘most of the labor market’. They were a minority fifty years ago and are a minority now. Blacks were not kept out of wage employment in 1960. The majority on both sides of the color bar were made up of self-supporting wage earners. What it was was that they were seldom if ever foremen and had a harder time getting into the right apprenticeships.Report
No, I think you can be justifiably upset about that.
This I’m not so sure about. I think the middle class has stagnated due to your with health care system, I’ll write a post about it some time. In any case the bottom 90% of people almost certainly contains the median voter, which makes me leery of any explanation relying on disenfranchisement.Report
I’m on a phone so can’t really reply, but look up unequal democracy and winner take all politics. Median voter arguments in the face of bartels’ and hacker&pierson’s evidence is weak beer indeedReport
Sorry, I forgot to delete that “Finally:” when I was revising the comment.Report
Good post and thanks for the response, J.K.
I agree with MD that, much as it kind of worries me, I’m inclined to a large degree to agree with you. This was what I was hoping to convey with my Eden metaphor.
It strikes me — and I hope this doesn’t sound too glib — that if the lot of working and middle class people in America is to change, it will have to come about primarily through their showing a willingness to force change, to a degree they’ve before in the past (often using unions as the tool) but, in my opinion, don’t seem quite ready to do now. Yet.
Pointy-headed little elites like us can kvetch all we want and wring our hands, but the only people who can adequately claim dignity and power for the less-privileged are and have always been the less-privileged themselves. If they’re going to do it, they’ll do it — with or without unions.Report
That’s a very important point, Elias. It comes from Alinsky who I (relative to others in the American Right) hold in high regard. As things stand, it’s a significant Achilles Heel for the left, and one that they haven’t come to grips with. What is the left supposed to do when those for whom they want to speak are capable of speaking for themselves, and do not necessarily want what the left means to provide for them.
Specifically in America, the unspoken socio-political goal of the lower-middle class is to preserve their families, ie, no legalized abortion and no gay marriage. At what point should you, or the left in general, stand aside and let the various classes speak on their own behalf.Report
If it’s unspoken Koz then how do you know it exists? I suspect the lower middle class is infinitely more concerned about employment, education costs, healthcare costs and housing values then they are about whether two gay guys can get married or what women do with their bodies though that’s only conjecture on my part.
Fortunately the left is sitting pretty on both issues: I’m unaware of any left politician suggesting mandatory abortions for the lower middle class and I can assure you that no gays have any desire to force lower middle class men or women to enter into same sex marriages.Report
‘What women do with their bodies’ is a euphamism for ‘hire a perverted OBGYN to kill their child in utero’, and people do care deeply about that. The people who do are not well-represented in our rancid appellate judiciary and law faculties (and evidently not in your social circle).Report
In an effort to not hijack the thread to the question of abortion in general Art I’ll note merely that your definition and mine are each respectively held by roughly half the country give or take a modest percentage that fluctuates depending on how much headway restrictionist forces are perceived as having made. With that in mind I don’t find the muddled mess of this country’s laws regarding abortion all that surprising. The inversion, though, of having the party of individual freedom advocating use of government force for the purpose of enslaving women to a clump of cells is quite a curious phenomena as if the idea of having the party of government protecting the helpless advocating tirelessly for individuals to have the right to do what they will to helpless potential lives. American politics, what can ya say?Report
[I]what women do with their bodies [/I]
Both parties are equally bad on that issue just in different ways. One wants to ban abortion the other wants ban transfats and tax tanning beds.Report
I would object that abortion banning is one of the pretty much central pillars of the GOP and a national politician of that party not paying at least some lip service to it will be damaged electorally. Banning of transfats and tanning bed nannyism on the other hand, while common, has nothing approaching the centrality in the Democratic Party and is loathed and opposed by significant swaths of it. A Dem politician who denounced such things would probably benefit rather than suffer.
So I don’t think the equivalency quite works without even going into the fact that the one involves annoyingly compromising women’s abilities to have really fatty food or darker skin versus the other requiring women to bloat up and suffer a laundry list of physiological effects including a small but present risk of death.Report
So then, neoliberalism is the economic End of History, where all we do is tweak around the edges? Sounds about right to me.Report
I believe that the end of history will only come when the last proton in the universe finally decays.
I’m thinking more of punctuated equilibrium – a big event shakes up existing political coalitions, which then settle into a new equilibrium. Neoliberalism is the left settling into a new equilibrium after the fall of socialism, eventually things will be shaken up anew.Report