The decline and fall of neoliberalism in the Democratic Party
Cross posted from Real Economics.
If you are snow-bound in USA today, and want something to read, I highly recommend Ryan Cooper's excellent short summary of USA political and economic history since the New Deal, posted last week, The decline and fall of neoliberalism in the Democratic Party
It is the first of a four-part series examining the four major factions in the Democratic Party and American left today. In this first installment, Cooper captures the essence of the New Deal:
Nations took various roads out of the Great Depression. Every one involved ditching liberal orthodoxy — deficit spending and the abandonment of the gold standard being the key two policies in most instances, which had to overcome resistance from business. In Germany, fascism removed "capitalist objections to full employment," wrote economist Michal Kalecki, by routing all deficit spending into rearmament and by keeping labor quiescent with political repression and permanent dictatorship.
In the United States, the replacement ideology was the New Deal. After some initial failed experimentation with planning, New Dealers settled on a framework of stimulus, regulation, unionization, progressive taxation, and anti-trust, heavily influenced by Louis Brandeis (to be covered in the next article in this series). To get people back to work and prime the economic pump, vast new public works were built, and millions were directly employed by the state. Business — especially finance — was regulated, above all to prevent concentration. Unions were protected under a new legal regime created by the National Labor Relations Act. Taxes on the rich were sharply increased, both to raise revenue and to deliberately prevent the accumulation of vast fortunes. Finally, world trade was managed under the Bretton-Woods system.
Cooper includes all the most important points of this history, with the exception of the race to the bottom initiated by NAFTA and free trade. Also, Cooper does not fully grasp that the prosperity of the tech boom under Clinton was mostly the result of the phase shift in the national economy resulting from the 1950s through 1980s build-out of the new technology of computers, which -- like all phase shifts in the economy -- began with government support and promotion of new technologies (in this case, computers are developed in military research programs during World War for ballistics calculations, fire control, aircraft simulation, radar, code breaking, and physics calculation for the Manhattan Project, as covered in my chronology HAWB 1940s-1950s Timeline of computer development shows crucial role of government.)
Cooper's article is the first of a four-part series examining the four major factions in the Democratic Party and American left today. This first part considers the neoliberals, which of course is the faction which currently dominates the Democratic Party leadership, though it is in a dwindling minority. It dominates because it has money, but not votes.
The second part is The Return of the Trust Busters, the faction around Elizabeth Warren, which Cooper brilliantly traces back to Louis Brandeis.
The fourth and final installment is The Dawn of American Socialism, which focused on the faction led by the Democratic Socialists of America.
There is no consideration of the historically crucial role of the American School of political economy, which helps explain why Cooper does not include the disastrous "race to the bottom" initiated by NAFTA and free trade.
I also highly recommend Cooper's How to Crush Trump from December 27, 2017, especially this paragraph:
Then in 2020, Trump must be crushed at the ballot box. His corrupt administration must be thoroughly investigated, and any criminal acts punished. More importantly, the economic base of Republican plutocracy — Wall Street, monopolist corporations, and idle rich heirs and heiresses — must also be crushed. Monopolies must be broken up, taxes on the rich and corporations dramatically increased, and the size, profitability, and power of Wall Street sharply reduced with cricket bat regulations.
None of Obama's "don't look back, only forward," pursuit of bipartisan unicorns. Criminal activity must be ruthlessly targeted and vigorously prosecuted, ESPECIALLY by our political enemies.