Jonathan Chait Is Wrong: Neoliberalism Is Real and Fundamentally Opposed to Left Principles

Neoliberalism stands in direct conflict with socialism. We must name it so we can overcome it.

Meagan Day

Demonstrators take part in a Trade Union Congress march in protest against the government's austerity measures on October 20, 2012 in London, England. (Photo by Warrick Page/Getty Images)

In 2010, the Nation­al Reviews Stan­ley Kurtz pub­lished a book titled Rad­i­cal-in-Chief: Barack Oba­ma and the Untold Sto­ry of Amer­i­can Social­ism, in which he argued that then-Pres­i­dent Oba­ma embod­ied a stealthy, prag­mat­ic and grad­u­al­ist socialism.”

The neoliberal center is actively supportive of market freedom, while the Left isn’t. That distinction matters.

At the time, main­stream lib­er­als want­ed noth­ing to do with the polit­i­cal­ly poi­so­nous term, and the Oba­ma campaign’s own fact-check­ing web­site Fight the Smears” strong­ly denied Kurtz’s claims that the pres­i­dent shared the social­ist pol­i­tics of the com­mu­ni­ty orga­niz­ers he’d worked with in Chicago.

That was sev­en years ago, and things have changed. Now, in the wake of Bernie Sanders’ unex­pect­ed­ly his­toric cam­paign, social­ism has lost some of its tox­i­c­i­ty among main­stream liberals.

Pop­u­lar web­sites such as Vox and The Huff­in­g­ton Post reg­u­lar­ly pub­lish sto­ries debat­ing social­ist poli­cies. In a post on Medi­um ear­li­er this year, one self-described lib­er­al solu­tion­ist” even used the same phrase­ol­o­gy as Kurtz, cit­ing Barack Oba­ma and Elon Musk approv­ing­ly as the kind of prag­mat­ic social­ists” — unfair­ly derid­ed as neolib­er­als” by absolute social­ists” — that the world needs.

At first glance, it’s encour­ag­ing that in 2017 social­ism has enough polit­i­cal cur­ren­cy that some lib­er­als are com­fort­able open­ly acknowl­edg­ing its rel­a­tive mer­its rather than dis­tanc­ing them­selves for fear of con­t­a­m­i­na­tion. But, on the oth­er hand, this for­mu­la of sep­a­rat­ing the broad Left into prag­ma­tists and purists is patron­iz­ing — and wrong. We want what you want,” it heck­les, only we’re smarter and more realistic.”

Such a for­mu­la­tion obscures the fact that social­ism and neolib­er­al­ism are dis­tinct polit­i­cal-eco­nom­ic ori­en­ta­tions, opposed to each oth­er on crit­i­cal issues — par­tic­u­lar­ly the role of the state in reg­u­lat­ing mar­kets and the role of pri­vate enter­prise in pro­vid­ing essen­tial goods and services.

On July 16, Jonathan Chait pulled a sim­i­lar maneu­ver in an arti­cle for New York Mag­a­zine, round­ly dis­miss­ing the term neolib­er­al” as an emp­ty insult devised by the puri­ty Left to attack its stead­fast allies in the Demo­c­ra­t­ic Par­ty. (The piece was art­ful­ly dis­as­sem­bled by both Paul Blest at The Out­line and Mike Kon­czal at Vox, who refute Chait’s claim that the Demo­c­ra­t­ic Par­ty hasn’t moved right on eco­nom­ic issues since the 1970s.)

Where lib­er­al com­men­ta­tors have his­tor­i­cal­ly been uncom­fort­able asso­ci­at­ing with social­ists, they now demon­strate a grow­ing ten­den­cy to elide the oppo­si­tion­al nature of the Left and the cen­ter to insist on shared pur­suit of com­mon goals. To hear some lib­er­als tell it, the dif­fer­ence is pri­mar­i­ly one of method, not sub­stance. This over­fa­mil­iar­i­ty gives lib­er­als spe­cial license to scold the Left for attack­ing the cen­ter, which is on its side for heaven’s sake.

In real­i­ty, it’s not sim­ply that the cen­ter is more pro-cap­i­tal­ist than the Left — as though the two sides exist on a gra­dat­ed spec­trum, impos­si­ble to pin­point where one ends and the oth­er begins. The dif­fer­ence is actu­al­ly quite clear: the neolib­er­al cen­ter is active­ly sup­port­ive of mar­ket free­dom, while the Left isn’t. That dis­tinc­tion matters.

Neolib­er­al­ism is an eco­nom­ic phi­los­o­phy that has its ori­gins in Ger­many, France and the Unit­ed King­dom. After World War II, the doc­trine migrat­ed to the Uni­ver­si­ty of Chica­go, where neolib­er­al econ­o­mists, chief among them Friedrich von Hayek and Mil­ton Fried­man, estab­lished what became known as the Chica­go School. This bas­tion of free-mar­ket fun­da­men­tal­ism proved mas­sive­ly influ­en­tial in advanc­ing neolib­er­al ide­ol­o­gy around the world, most notably in Chile fol­low­ing the U.S.-backed over­throw of Sal­vador Allende’s social­ist gov­ern­ment in 1973

Neolib­er­al ide­ol­o­gy is root­ed in the belief that the cap­i­tal­ist econ­o­my should be but­tressed and pro­tect­ed from col­lapse by state assis­tance. But the state should oth­er­wise allow mar­ket forces to move freely, unim­ped­ed by gov­ern­ment regulation.

In A Brief His­to­ry of Neolib­er­al­ism, Marx­ist schol­ar David Har­vey points out that the 1970s glob­al finan­cial crises appeared to point towards the emer­gence of a social­ist alter­na­tive,” and neolib­er­al­ism surged in pop­u­lar­i­ty among cap­i­tal­ists who were unwill­ing to lose the social com­pro­mise between cap­i­tal and labor that had ground­ed cap­i­tal accu­mu­la­tion so suc­cess­ful­ly in the post-war period.”

In the Unit­ed States, neoliberalism’s rai­son d’être — espe­cial­ly as it began migrat­ing out of acad­e­mia and into polit­i­cal-pol­i­cy-mak­ing in the 1970s and 1980s — was to dis­man­tle trade union­ism and New Deal social demo­c­ra­t­ic pro­grams, and to dereg­u­late busi­ness at every opportunity.

Through­out his­to­ry, neolib­er­al­ism has proven to be anti-social­ist at its core.

The area where social­ism and neolib­er­al­ism inter­sect is their insis­tence that the econ­o­my requires some degree of state inter­ven­tion and plan­ning, as opposed to clas­si­cal lib­er­al­ism, which puts full faith in the belief that the invis­i­ble hand” of the mar­ket should guide and sus­tain cap­i­tal­ist economies with­out state assistance.

But the sim­i­lar­i­ties stop there, because the next dif­fer­ence is fun­da­men­tal: Neolib­er­als believe that, wher­ev­er pos­si­ble, the state should sup­port pri­vate enter­prise tak­ing on vital func­tions in soci­ety. Social­ists, on the oth­er hand, believe in elim­i­nat­ing these pri­vate enter­pris­es wher­ev­er pos­si­ble and replac­ing them with demo­c­ra­t­i­cal­ly-run pub­lic institutions.

Just so we’re clear, neolib­er­al­ism means cap­i­tal­ism — a spe­cif­ic form of cap­i­tal­ism, where the busi­ness-friend­ly state encour­ages the com­mod­i­fi­ca­tion of sphere after sphere of both pub­lic and pri­vate life.

So, are Democ­rats neolib­er­als? Well, yes, many of them are, as is the par­ty on the whole. Con­sid­er the gov­ern­ment bailouts after the 2008 eco­nom­ic col­lapse. The Oba­ma admin­is­tra­tion took a neolib­er­al approach by bail­ing out the big banks large­ly respon­si­ble for the cri­sis rather than break­ing them up. In doing so they demon­strat­ed their belief that the gov­ern­ment has a hal­lowed respon­si­bil­i­ty to pre­serve the integri­ty of cor­po­rate finan­cial institutions.

We can also look to the Trans-Pacif­ic Part­ner­ship, the failed inter­na­tion­al trade agree­ment backed by Oba­ma and many nation­al Democ­rats that would have empow­ered cor­po­ra­tions to chal­lenge any nation’s eco­nom­ic reg­u­la­tions before an inter­na­tion­al tri­bunal. The result, Noam Chom­sky not­ed, would have been to max­i­mize prof­it and dom­i­na­tion, and to set the work­ing peo­ple in the world in com­pe­ti­tion with one anoth­er so as to low­er wages to increase insecurity.”

Those who object to the term neolib­er­al” are appalled that, for instance, defend­ers of Oba­macare could be lumped togeth­er with its would-be destroy­ers. Oba­macare, remem­ber, con­sists main­ly of tax-fund­ed sub­si­dies meant to plug Amer­i­cans into pri­vate health insur­ance networks.

Democ­rats and Repub­li­cans are bit­ter­ly divid­ed over the issue, and lives lit­er­al­ly hang in the bal­ance. Dif­fer­ences in opin­ion on Oba­macare are nei­ther small nor unim­por­tant. But make no mis­take: Oba­macare is a com­pro­mise intend­ed to extend cov­er­age and pre­serve the integri­ty of the pri­vate health insur­ance industry.

Social­ists want uni­ver­sal social pro­grams, fund­ed and used by every­one, with­out the intru­sion of prof­it-dri­ven enti­ties. They want goods and ser­vices such as health­care, edu­ca­tion, hous­ing and even com­mod­i­ty pro­duc­tion to be shel­tered from the con­stant com­pul­sion to gen­er­ate prof­it at the expense of all else.

Neolib­er­als believe that soci­ety func­tions best when cor­po­ra­tions are pub­licly fur­nished with what they need to sur­vive and thrive. Social­ists feel this way about the pub­lic, not corporations.

Neolib­er­al Democ­rats are not fun­da­men­tal­ly opposed to wel­fare, but they dif­fer strong­ly from social­ists in this are­na too. Where social­ists tend toward uni­ver­sal­ism in pro­gram design, neolib­er­als like to split the baby with means-test­ing: the pub­lic (but non-uni­ver­sal) pro­vi­sion of a min­i­mal social safe­ty net, so long as it doesn’t intrude on pri­vate industry.

These Democ­rats pre­fer to assess people’s needs and divide them into two camps — those who qual­i­fy for pub­lic ser­vices and those who don’t. This form of means-test­ing is a neolib­er­al solu­tion pre­cise­ly because it doesn’t under­mine the prof­it-seek­ing cor­po­ra­tions that pro­vide ser­vices to peo­ple above a cer­tain income thresh­old, such as health insur­ance companies.

Social­ists’ pro­posed health­care solu­tion, Medicare for All, would wipe out the pri­vate health insur­ance indus­try. This is clear­ly not a neolib­er­al propo­si­tion, as it results in less cap­i­tal­ism, not more. Social­ists’ ide­al health­care solu­tion, nation­al­ized med­i­cine, is entire­ly anath­e­ma to neolib­er­als, who only make allowances for the wel­fare state when it runs par­al­lel to and sup­ports, rather than sup­plants, pri­vate industry.

So no, social­ists and neolib­er­als are not unit­ed in shared pur­suit of com­mon goals. Neolib­er­al­ism is not prag­mat­ic” social­ism any more than a char­ter school is a prag­mat­ic” pub­lic school, or Oba­macare is prag­mat­ic” Medicare for All. They are alto­geth­er dif­fer­ent approach­es to the pro­vi­sion of ser­vices and care.

Since Chait’s arti­cle was pub­lished, lib­er­al com­men­ta­tors have been increas­ing­ly echo­ing his argu­ment that neolib­er­al­ism” is a mean­ing­less term. But it’s far from mean­ing­less. In fact, we need it as a way to dis­tin­guish between mar­ket-friend­ly state solu­tions and mar­ket-unfriend­ly state solu­tions — espe­cial­ly as social­ism gains trac­tion among a new gen­er­a­tion of thinkers and activists.

Neolib­er­al” is at base a neu­tral descrip­tor of the dom­i­nant strain of polit­i­cal-eco­nom­ic think­ing in the mod­er­ate fac­tions of both major polit­i­cal par­ties. When it is used as an insult, we can blame neoliberalism’s poor record of pro­vid­ing a decent stan­dard of liv­ing for all people.

Mea­gan Day is a free­lance writer who focus­es on pol­i­tics, social move­ments, labor, law and history.
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