A “political order,” U.S. historian Gary Gerstle writes, “is meant to connote a constellation of ideologies, policies and constituencies that shape American politics in ways that endure beyond the two-, four-, and six-year election cycles.” The New Deal met that definition from the 1930s to the 1970s, and neoliberalism, he asserts, did so from the 1970s to the 2010s, when it began to splinter after the war in Iraq and the economic crash of 2008.
In “The Rise and Fall of the Neoliberal Order” Gerstle offers a rich and sophisticated discussion of neoliberalism, which he says is based on “the belief that market forces had to be liberated from government regulatory controls that were stymieing growth, innovation, and freedom” — in other words, the mirror image of the New Deal that came before it.
It was Gerstle himself (with historian Steve Fraser) who originated the idea of a specific, modern U.S. “political order” in a 1989 book, “The Rise and Fall of the New Deal Order, 1930-1980.” Thirty years later he expands on that concept. A political order, he says, must have “consensus across the political spectrum” to “produce elections-proof structural realignments.” It must have a “protean character,” which enhances “its appeal, allowing its proponents to move in directions both old and new, right and left.” In doing so, it bends the opposition party to the will of the new dominant party.
The neoliberal order was no exception. Despite being a project incubated in Republican circles and launched under Ronald Reagan, its full-scale consolidation occurred under the Democratic presidency of Bill Clinton in the 1990s.
The fundamental requirement of this neoliberal project, Gerstle writes, was the radical expansion of the “terrain of human activities subject to market principles.” Personal freedom and fulfillment depended on it: An unconstrained market would unleash the individual creativity and energy that had been sedated under the New Deal order. But this liberation — of the market’s transformative power and of individual liberty — paradoxically required a strong and energetic state, “necessary to free individuals from the encroachments of government.” Finally, the emphasis on individual emancipation — “the thrill and adventure of throwing off constraints from one’s person and one’s work” — could (and did) appeal to a New Left prone to denounce corporate liberalism’s suffocating conformism.
The conditions for the rise of a new order had been prepared in the 1960s and ’70s, when an anti-New Deal counter-establishment began to lay the ground for a radical turn. Its “constituent parts” — “the capitalist donors, the intellectuals, the think tanks, the politicians, the media, and the personal networks linking them together” — were visible and influential well before Reagan’s election in 1980. Reagan’s predecessor, Jimmy Carter, ran on a promise to drastically reduce the number of federal agencies and tested some of the policies that these neoliberal thinkers were advocating; think airline deregulation and the adoption of aggressive monetary policies, which empowered the Federal Reserve as never before.
But it was not until Reagan that neoliberalism actively shaped the policy agenda of the federal government. Deregulation became the mantra of the decade, its most visible manifestation being the assault on collective bargaining and the further weakening of already struggling unions. Progressive taxation was contested ideologically and dismantled politically: When Reagan was elected, the income tax system was structured in 15 different brackets, with the highest reaching 70 percent; after his presidency, the country was left with just two brackets, 15 and 28 percent.
To facilitate these changes and make them unassailable, key institutions were drastically reconfigured — beginning with the judiciary, with the appointments of numerous conservative, “originalist” judges. Order and stability, enforced through quasi-authoritarian tools, such as an aggressive, zero-tolerance policy against crime, provided the structure within which these changes could take place. “Neoliberals,” Gerstle writes, “had long argued for the need to ringfence free markets, limiting participation to those who could handle its rigors.” Now they also embraced a religiously imbued neo-Victorian moral code, setting themselves in opposition to the permissiveness and moral relativism of the 1960s and 1970s. The race-biased mass incarceration of an “underclass” — regarded as unfit to handle those rigors — seemed to offer the ultimate solution. Liberation and repression, freedom and order, were not incompatible; in the neoliberal equation they were strictly interdependent.
Under Clinton — “America’s neoliberal president par excellence,” Gerstle writes — the project was perfected. Cosmopolitanism and diversity did reverse some of the conservative neoliberal cultural trends of the previous decade. But the neoliberal order was consolidated. Further deregulation followed, from finance to telecommunication; the compromise between labor and capital collapsed; inequality skyrocketed along with an increasingly finance-centered economy; tough anti-crime legislation was passed; free trade flourished, if to the detriment of workers’ rights. All of this happened on Clinton’s watch.
But the ascent and ultimate triumph of the neoliberal order was short-lived. Some of its inner fragilities and contradictions were all too visible. George W. Bush’s hubristic, inept policies aggravated them and accelerated the downfall of the post-1970s order. Disastrous foreign policy choices, epitomized by the Iraq fiasco, reckless financial deregulation, the speculative frenzy feeding the stock market bubble and the intensification of income inequality, collaborated to delegitimize the neoliberal order, eroding its ideological foundations and discrediting its political promises. In 2008, the chickens finally came home to roost. The economic crash affected millions of Americans and shattered the global economy.
In the last, more impressionistic part of the book, Gerstle examines Barack Obama’s response to the almost impossible challenges of the post-2008 years as well as the unexpected rise of Donald Trump. The ethno-nationalism of the Trump era, Gerstle rightly stresses, was a response to the delegitimization of the post-1970s neoliberal order. It was just one of the many byproducts of a crisis — of democracy, globalization, cosmopolitanism — whose long shadow still hovers over the United States and the rest of the world.
It’s an apt and convincing closure for an important and beautifully written book, whose only, although not marginal, flaw is the limited engagement with the global context to which America’s story is tightly interconnected. In discussing this aspect, Gerstle makes far too much of the collapse of the Soviet Union and its socialist model, which he claims removed a powerful barrier to the full unfolding of neoliberalism. But this overlooks the much more consequential transformation of the world economy that began in the 1970s and led to industrial outsourcing, cheap imports, low inflation, financial speculation, irresponsibly deregulated credit, booming private consumption, Sino-American interdependence and much else. These are the conditions that resulted in the neoliberal order’s rise, success and ultimate downfall.
Mario Del Pero is a professor of international history at Sciences Po in Paris, where he teaches modern global history and the history of U.S. foreign relations.
The Rise and Fall of the Neoliberal Order
America and the World in the Free Market Era