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Neoliberalism Is Dying. What Comes Next?


Since the Great Recession, observers have examined the unrelenting challenges to the liberal order. The historian Gary Gerstle’s new study, The Rise and Fall of the Neoliberal Order, scrutinizes neoliberalism’s collapse, offering a historical perspective on this inquiry. Looking ahead, the United States and the rest of the world, he concludes, face another turbulent decade. In Gerstle’s telling, political orders—his term for electoral coalitions and economic arrangements underwritten by a worldview—arise and then break down after a few decades when a system loses its purchase. The University of Cambridge scholar thinks we’re living through such a breakdown, and the evidence is squarely on his side. Worse still, as neoliberalism wanes, it leaves a void that dangerous alternatives like ethno-nationalism can fill. Neoliberalism, an ideology that privileges markets, the individual, and private property over government and community, led to the financial crisis and is proving inadequate to handle COVID-19, climate change, racial inequality, and other key challenges of our time. It’s just the latest in Gerstle’s longtime examination of shifting economic patterns since the Great Depression and how they can trigger electoral realignments.

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era
By Gary Gerstle
Oxford University Press, 432 pp.

Further, the book proffers a tale of how ordinary citizens enacted their visions of freedom and opportunity, a narrative of the great and not-so-great (who remembers the once-powerful Senator Robert Taft today?) political leaders who rose and fell, shaped the swells of sweeping political-economic forces. It’s also a partial intellectual history of liberalism in the United States. Looking at the wider world, Gerstle presses a rethink of the relationship between geopolitics and domestic matters by bringing the dynamics of global Communism into the plot. Though the book is written for the advanced generalist, it takes up interesting debates among historians and impressively integrates a generation of historical scholarship on 20th-century U.S. history. 

To fully appreciate this new release, it helps to turn to 1989, not only because that’s when the Berlin Wall fell or when the Nintendo Game Boy was introduced. That year, Gerstle and coeditor Steve Fraser released a 10-essay volume called The Rise and Fall of the New Deal Order, 1930–1980. By the tail end of the Reagan years, historians had enough distance from what had happened in the 1970s and ’80s to write a “historical autopsy,” as the editors called it, of New Deal liberalism. Their New Deal order book was significant for a couple of reasons. It introduced the concept of political orders in the historical profession at a time when scholars sought to make sense of the wreckage around them. (Sounds familiar.) The idea itself wasn’t especially novel, for as Fraser and Gerstle noted, they were drawing on existing traditions in political science. But at this juncture, the deployment of political orders as a term carried a certain explanatory power. The authors were challenging “great man” theories of politics and also revivifying political history after the rise of the new social history, so-called history from below, in the 1960s and ’70s. The volume’s contributors looked at the New Deal from a range of vantage points, locating multiple seeds of subsequent decline across the era. Summing up their thinking, Gerstle and Fraser wrote that “fundamental changes in political life—those which produce a change in party systems—are seen as issuing from crises in the nation’s economy, social structure, and political culture.”

Neoliberalism, an ideology that privileges markets, the individual, and private property over government and community, led to the financial crisis and is proving inadequate to handle COVID-19, climate change, questions of race, and other key challenges of our time.

Importantly, The Rise and Fall of the New Deal Order inaugurated decades of work by historians to excavate the ways in which the New Deal was brought down. For example, scholars looking at the crucial role of labor found that the roots of the New Deal’s defeat emerged in 1946–48 when the labor movement failed to consolidate recent gains. Operation Dixie, the plan to organize workers across the South, was soundly defeated. A massive postwar strike wave was contained, with the GOP making gains in the 1946 midterms. In 1947, Congress passed the anti-labor Taft-Hartley Act over President Harry Truman’s veto. Meanwhile, neoliberal intellectuals organized themselves in an intellectual network called the Mont Pelerin Society, valorizing the market and excoriating “collectivisms”—New Deal, socialist, or otherwise. 

Alongside them, conservative businesspeople and corporations also backed free market think tanks and conservative media, as well as the politicians and political networks of the right. More interesting still, historians showed the less visible, powerful ways that economic, social, and political forces ripped apart New Deal liberalism. The growth of Silicon Valley, deindustrialization, and the growing power of finance all disrupted the economic base of Keynesianism. So too did the growth of the Sun Belt, the Naderite consumer critique of government, and even nonunion truckers looking for a foothold in a regulated industry. Studying the fall of the New Deal, one wonders how it held together as long as it did. Fortunately, Gerstle synthesizes this fascinating scholarship with his new book.


The Rise and Fall of the Neoliberal Order first tackles the birth and subsequent death of the New Deal order, 1930–1970. Here, Gerstle elucidates the three primary drivers of New Deal liberalism’s undoing: the Vietnam War, race, and an economic crisis less severe than the Great Depression but still vexing to elites and the public alike. Gerstle confirms what many observers have noted—that the Jimmy Carter presidency marked a turn away from the New Deal in important respects, especially with deregulation in key industries. 

Tracing the genealogy of neoliberalism after 1970, Gerstle centers on Ronald Reagan as a crucial historical actor. The Californian built the neoliberal order; George H. W. Bush extended it; and, Gerstle writes, Bill Clinton consolidated it. Gerstle cites Clinton’s signing of the repeal of Glass-Steagall and the less familiar 1996 Telecommunications Act, which marked the Democrats’ turn to Silicon Valley as a rich vein of corporate fund-raising. This wasn’t just the rump group of “Atari Democrats” from the 1980s; this was a much larger cross-section of the party persuaded by the prospects of the internet and willing to overlook the warning signs. And yet, as Gerstle writes, 

there was nothing in the bill that facilitated putting a brake on corporate power—except for a blind faith first in the ability of the market itself to impose such limits and second in the ability of the FCC, if needed, to rise to the occasion, supported by a Congress willing to give it new powers to enforce the public’s will on the private sector. The 1996 Telecom Act also explicitly relieved corporations controlling the telecommunications network from the obligation to police content flowing across their domains if it originated with independent users or promoters. This exemption held even if such content was deemed to be hateful, false, or incendiary.

Throughout Rise and Fall, Gerstle looks at shifting political economies—as he does with his eight-page deep dive on the Telecom Act—urging the reader to see underneath the frothier issues that draw greater attention. Importantly, Gerstle challenges the notion that neoliberalism was a strictly elite creation. Historians have spilled much ink examining the intellectual origins of neoliberal thinking, tracing it from economists like Friedrich Hayek, dean of the free market Austrian School, and Milton Friedman, who made the “Chicago School” of economics a household name. We now know that sectors of the public called for things like lower property taxes, deregulation, and the privatization of public goods such as schools and swimming pools in a racialized response to the civil rights movement. Gerstle reminds us how politicians like Reagan mined this discontent to great political effect. More surprisingly, he points out that calls to roll back the state also came from New Left cultural strands that had a critique of “corporate liberalism” or of “corporate capture” of the state. The combined effect of these developments, Gerstle shows, is that neoliberal precepts developed a popular base across the ideological spectrum.


Perhaps the most helpful aspect of Rise and Fall is its attention to geopolitics as it played out in the United States during the New Deal and neo-liberal eras. A critical aspect of the Cold War confrontation with Communism was, of course, McCarthyism and purges of left-wing labor activists, which disempowered the political left. But Gerstle also argues that the threat of Communism bound capital and labor together in relative peace for 60 years, through 1990, with the red threat scaring corporate leaders into bargaining with unions for high wages and worker-friendly reforms. When the Berlin Wall fell, corporations felt freer to push back from the bargaining table and attack a wobbling labor movement. Gerstle doesn’t overclaim here, knowing that the assault on labor had begun earlier. Reagan famously fired striking air traffic controllers in 1981, capping decades of pushback against the union movement that began in the immediate aftermath of World War II. Although the collapse of Communism on the eve of the Clinton presidency facilitated neoliberal consolidation in the 1990s, the tides had been turning since at least the mid-1970s and earlier. Gerstle’s argument, then, is less a radical revision of how to think about the 1970s and ’80s than a further explanation as to why inequality accelerated after 1989. 

Four years ago, in an article that previewed Rise and Fall, Gerstle wrote that 2018 might mark the end of the neo-liberal era—and that it would take a decade for the next order to emerge. He was writing, of course, after Donald Trump’s assaults on Republican orthodoxies around free trade but before COVID-19 wreaked its havoc. 


Living through this chaos makes it hard to predict the future. But Rise and Fall nonetheless offers resources to help grasp what lies ahead. In addition to looking at evolving economic, political, and technological dynamics, Gerstle’s analysis questions the American role in world affairs.

In a contest among global models, one option is the state-authoritarian capitalist model represented by China. A second one would be a neoliberalism retooled for the 21st century. But because neoliberalism has failed on its most central promise (growth) and other important tests (climate, inequality, and race), it is increasingly marginalized, if still persistent in the public imagination and the structures of important national and international institutions. A third option—which seems ascendant—is the ethno-nationalism of Trump, Viktor Orbán, Jair Bolsonaro, and company. The economic track record of ethno-nationalism in power has often proved anti-neo-liberal—especially on trade, but often on public investment, the social safety net, and even industrial policy—but that hasn’t foreclosed tax cutting or deregulation. And while the racialist and exclusionary politics of ethno-nationalism are disqualifying, its record of governance is, with some exceptions, poor.

None of these geopolitical arrangements will serve America or the world well in the third decade of the 21st century. For those who share Gerstle’s critique of neoliberalism, the task is to chart a fourth way that is inclusive, sustainable, and consonant with strong democratic governance and pluralistic societies. At present, this fourth way appears to be the harder road. That said, Rise and Fall offers guidance for how it might still win the day. 

Gerstle reminds us that geopolitics can have unpredictable economic side effects. The war in Ukraine has accelerated inflationary dynamics in the global economy, increasing the price of everything from energy to wheat. It’s too soon to assess the long-term consequences of the Russian invasion. Still, one optimistic reading of the potential by-
products of the war might be accelerated investments—at least in Europe—in the green energy sector. 

It took the neoliberals decades to reach the mountaintop, and today’s crises don’t afford the luxury of time. Fortunately, Rise and Fall shows that although complex and poorly understood forces are powerful in the shaping of political orders, so too is concerted human activity.

Gerstle also offers a perspective on how international competitive dynamics play out in domestic politics. The Cold War at once provided leverage to the civil rights and labor movements in the U.S. while dividing the left and bolstering the military-industrial complex. How will complex, competitive dynamics play out in the 2020s, and how will the champions of democracy, inclusion, and sustainability leverage these? Perhaps environmentalists and labor can leverage global competition in the emerging energy economy to promote economic development that’s good for workers, communities, and the climate in the U.S. and around the world? One task, then, for small-d democrats, is to analyze these global forces and make big plans.

The interregnum before the emergence of the next political order will be messy. It will get worse before it gets better. It took the neoliberals decades to reach the mountaintop, and today’s crises don’t afford the luxury of time. Fortunately, Rise and Fall shows that although complex and poorly understood forces are powerful in the shaping of political orders, so too is concerted human activity.



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