The Great Democracy Read online

  Copyright

  Copyright © 2019 by Ganesh Sitaraman

  Cover design by Chin-Yee Lai

  Cover copyright © 2019 Hachette Book Group, Inc.

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  First Edition: December 2019

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  Library of Congress Control Number: 2019948649

  ISBNs: 978-1-5416-1811-4 (hardcover), 978-1-5416-1810-7 (ebook)

  E3-20191024-JV-NF-ORI

  CONTENTS

  Cover

  Title Page

  Copyright

  Introduction: The Edge of a New Era

  1. The Origins and Meaning of Neoliberalism

  2. The Neoliberal Ideology

  3. The Last Days of Neoliberalism

  4. After Neoliberalism

  5. Toward a Great Democracy

  6. United Democracy

  7. Economic Democracy

  8. Political Democracy

  9. Defending Democracy

  Conclusion: The Politics of Achieving a Great Democracy

  Acknowledgments

  Discover More

  About the Author

  Also by Ganesh Sitaraman

  Notes

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  INTRODUCTION

  THE EDGE OF A NEW ERA

  This is not an ordinary political moment. Everywhere around us, the old order is collapsing. The golden age of postwar economic growth is over, replaced by a new Gilded Age of inequality and stagnation. The long march toward justice and equality now faces intolerant resistance storming the streets. People once united by common culture and information are now fractured into social media echo chambers. The liberal international order is cracking as nationalism grows in strength and global institutions decay. The United States’ role as a global superpower is challenged by the rising strength of China and a new era of Russian assertiveness. Optimists hope that generational and demographic change will restore inexorable progress. Pessimists interpret the current moment as the decline and fall of democracy.

  Moments of extraordinary political change, moments like this one, have long fascinated political observers. Since the time of the Greeks and Romans, political observers believed that history was cyclical. Monarchies, aristocracies, and republics would degrade into tyrannies, oligarchies, and mob rule, leading ultimately to revolution and the creation of a new regime. In the United States, Henry Adams—the grandson and great-grandson of presidents and a distinguished historian—thought history was like a pendulum, oscillating between unity and complexity. Arthur Schlesinger Jr. argued that history moved in phases, periods in which one approach to politics dominated only to be replaced by another. The idea came from his father, who had once written that politics moved like the tides, ebbing and flowing between periods of public purpose and private interest.1

  Nor has this way of thinking been limited to historians. The economist Joseph Schumpeter understood capitalism through the business cycle, emphasizing entrepreneurs and creative destruction rather than stability and equilibrium. Thomas Kuhn described the march of science as a series of revolutionary paradigm shifts. One framework would dominate for a time, but exceptions would eventually undermine the paradigm, and another would take its place.2

  The premise and argument of this book is that we are currently in the midst of one of these epochal transitions. We live on the edge of a new era in politics—the third since the Great Depression and World War II. The first era is probably best described as liberal. Liberal is a complicated word, with almost as many meanings as there are individuals who use it. But from the 1940s through the 1970s, a version of political liberalism provided the paradigm for politics. Charting a path between the state control of communists and fascists and the laissez-faire market that dominated before the Great Depression, liberals adopted a form of regulated capitalism. Government set the rules of the road for the economy, regulated finance, invested to create jobs and spark consumer demand, policed the bad behavior of businesses, and provided a social safety net for Americans. Big institutions—big government, big corporations, big labor—cooperated to balance the needs of stakeholders in society. In the United States, it was called New Deal Liberalism. In Europe, social democracy. There were differences across countries, of course, but the general approach was similar.

  The best proof that this was a liberal era is that even the conservatives of the time were liberal. Republican president Dwight Eisenhower championed the national highway system and warned of the military-industrial complex. President Richard Nixon said, “I am now a Keynesian in economics.” His administration created the EPA and expanded Social Security by indexing benefits to inflation. The Tory prime minister Harold Macmillan in Britain didn’t undo the National Health Service; he passed the 1956 Clean Air Act and supported full employment. On the international stage, economic policy was a form of embedded liberalism, markets wrapped in the political and social needs of states and individuals, empowering national welfare states while facilitating international economic cooperation. Containment—which involved accepting the existence of the Soviet Union—was the North Star of foreign policy across the political spectrum.3

  In the United States, the liberal era reached its end with Democratic president Jimmy Carter. In control of the House, Senate, and presidency, Democrats could only pass a watered-down Full Employment Act that abandoned their long-held goals, and they failed to pass modest labor law reforms altogether. Their coalition seemed increasingly fractured between more conservative Democrats like Carter and old liberals like Senator Ted Kennedy (who challenged Carter for the presidency in 1980). An increasing number of people worried that liberalism’s solutions were unsuited to the challenges of the time.4

  Since the 1980s, we have lived in a second era—that of neoliberalism. In economic and social policy, neoliberalism’s tenets are simple: deregulation, privatization, liberalization, and austerity. Under neoliberalism, individuals are on their own and should be responsible for themselves. Instead of governments, corporations, and unions balancing the interests of all stakeholders, the primary regulator of social interests should be the marketplace. Neoliberals opposed unions and unionization, they wanted to pursue vouchers instead of public provision of services, and they sought to shrink the size and functioning of government, even if it meant a less effective government. Markets worked like magic, and market logic would be applied to all aspects of life. Around the world, the neoliberal era came with an aggressive emphasis on expanding democracy and human rights, even by military force. Expanding trade and commerce came with little regard for who the winners and losers were—or what the political fallout might be.<
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  Although many of them chafe at this label, even the liberals were neoliberal during this era. It was President Bill Clinton who said that the “era of big government is over” and who celebrated legislation deregulating Wall Street. Prime Minister Tony Blair pioneered the Third Way in Britain, transforming Labour into New Labour and embracing market principles. After the Great Recession, the United States and Europe toyed with Keynesian spending but soon opted for austerity. Even core aspects of the Affordable Care Act—the signature achievement of President Barack Obama—were originally developed by the Heritage Foundation, a conservative think tank. Obamacare’s central feature is not public provision of health insurance; it is a system of private markets with targeted subsidies. Around the world, the Washington Consensus united liberals and conservatives who pushed liberalization policies on developing countries through economic diplomacy and the International Monetary Fund. Both parties also adopted aggressive foreign policies to expand democracy and human rights abroad; the main difference was that neoconservatives were willing to go it alone while liberal internationalists preferred to operate through the United Nations.5

  With the election of Donald Trump, the neoliberal era has reached its end. While in control of the House, Senate, and presidency, Republicans neither repealed the Affordable Care Act nor privatized Social Security and Medicare. Their party is increasingly fractured between Trumpist conservatives, who are far more nationalist, and the never-Trump old-line conservatives like Bill Kristol or Jeb Bush. An increasing number of people recognize that neoliberalism’s solutions are unsuited to the challenges of our time.6

  Liberalism and neoliberalism each rose to power in response to specific problems. Each grew dominant, overextended, and, unable to adapt to new realities, ultimately collapsed. Liberalism lost its force as the crisis of the 1970s brought economic challenges—oil shocks, unemployment and inflation, competition from rising economies, personal anxieties, and family insecurity. Neoliberalism lost its force with the economic crisis and the Great Recession; with deregulation, privatization, and liberalization proving a failure at maintaining economic stability and security for all; and with increasing social fracturing. In the wake of both crises, people floundered for years before a new paradigm took hold. They were, as Matthew Arnold once wrote, “wandering between two worlds, one dead, the other powerless to be born.”7

  The central question of our time is what comes next. The transition between eras is never sharp, and the collapse of the old regime often contains within it the seeds of the new. Neoliberalism has left us with a social crisis, a breakdown of community values and solidarity. And it has left us with a political and economic crisis in which both arenas are rigged to work for the wealthy and well connected rather than the general public.

  Four possible responses to these crises could define the next era of politics. The first possibility is reformed neoliberalism, keeping the system essentially intact while sanding off some of the rough and inhumane edges. This approach, with its nostalgic wish to get things back to “normal,” simply threatens more of the same: persistent disaffection, further erosions of trust and social solidarity, and demagogues waiting in the wings.

  The second possibility is nationalist populism, which combines ethnic, religious, or cultural nationalism with economic populism. This approach, most associated with Steve Bannon, might be compelling to significant swaths of the population. But it seems unlikely, as political and economic elites oppose both tenets of the framework. Indeed, Candidate Trump campaigned in 2016 on this agenda only to abandon it as president.

  The third possibility, which many refer to as authoritarianism, has gotten the most attention. Scholars and commentators have argued that there is a global rise in autocracy. Political insurgents around the world are channeling popular unrest to win surprising victories. Strongman regimes are breaking constitutional constraints and norms. Meanwhile, constitutional democracies are on the ropes. There is a proliferation of books and pamphlets with titles such as How Democracies Die, Fascism: A Warning, and On Tyranny, all seeking to awaken Americans to the looming threat. They argue that electoral rules, political institutions, the free press, and constitutional norms are critical to the functioning of democracy—and that their erosion comes with a creeping authoritarianism.8

  These accounts are alarming, but they misdiagnose the problem. Getting the diagnosis right is critical because an inaccurate description of this ascendant form of government will lead to a flawed response. The rise-of-authoritarianism story focuses almost exclusively on political and constitutional constraints. These commentators worry about the breaking of constitutional and political norms, assaults on the independent media, and the politicization of the judiciary. Each is hugely important. But they largely ignore the economic and social aspects of these so-called authoritarian countries. They rarely discuss that these nations are run by a small number of oligarchs who rely on crony capitalism and political corruption to get rich and then use divide-and-conquer nationalist tactics to mobilize the people and stay in power.

  The better term for this third future is nationalist oligarchy. This form of government feeds nationalism to the people but delivers oligarchy—special privileges to the rich and well connected. Its economic approach is a corrupt outgrowth of neoliberalism. Its social policy is nationalist backlash. Its political program involves rigging the rules so popular majorities cannot overthrow the powerful. Nationalist oligarchy is undesirable, to say the least—but it could easily define the next era of politics.

  The final possibility is that a new era of democracy will follow the age of neoliberalism. Just as it is a mistake to reduce nationalist oligarchy to authoritarian politics, it is wrong to think that preserving elections, voting, the free press, and constitutional norms will be sufficient for democracy. Democracy has always demanded much more of societies and individuals. For thousands of years, since at least the ancient Greeks, political leaders and philosophers have recognized that democracies could not succeed in the presence of extreme economic inequality. In an unequal society, either the rich would oppress the poor and democracy would descend slowly into oligarchy, or the masses would overthrow the rich, with a demagogue leading the way to tyranny. Economic democracy is therefore critical to the persistence of democracy.

  Similarly, when a society is deeply divided by race, religion, clan, tribe, or ideology, democracy becomes difficult to sustain. Democracy requires us to determine our own destiny. But when the people are so divided that we aim toward diametrically opposed futures, politics increasingly becomes a zero-sum conflict, the equivalent of warfare rather than the exercise of freedom. “A house divided against itself,” Lincoln famously noted, “cannot stand.” A measure of social solidarity, a united democracy, is thus essential to the functioning of democracy.

  An economic and united democracy cannot be achieved or sustained without a political process that is responsive to the people. Political democracy means more than just the right to vote. It requires that elections capture the popular will rather than the will of interest groups and wealthy individuals, that elected officials act in the public interest rather than doing the bidding of lobbyists, and that civil servants and judges do not stray from their popular mandates. As important as constitutional restraints and protections of minorities are, majoritarianism is critical to democracy. A system of government that is mostly unresponsive to the people is not a democracy at all.

  The core problem with our democracy today is that we have never truly achieved what democracy requires. Democracy in America was severely restricted before the liberal era. But the people of that era reined in economic power during the New Deal, expanded economic opportunity through the GI Bill and investments in the New Frontier, and fought a war on poverty to promote economic equality and build a Great Society. And in the midst of these reforms, they struggled fiercely to end Jim Crow, integrate the nation racially, and promote equal rights for women and minorities—because they knew that segregation cou
ld never mean equality, let alone solidarity. Their efforts caused massive upheaval, and democracy—real democracy—was visible on the horizon.

  But the late 1960s and early 1970s also brought warfare and economic, social, and political crises—and with them, the exhaustion of the liberal era and the ultimate emergence of the neoliberal era. The neoliberal era’s individualistic and market-focused ideology then prevented the realization of democracy. It put economic growth above a strong middle class, leading to century-high levels of inequality. It emphasized individuals over communities and divided us by race, class, and culture. And because it preferred markets to democracy, it looked away as the wealthiest people and corporations rigged the government to serve their own interests, even at the expense of everyone else.

  If a new era of democracy is to take hold, we will need an agenda commensurate with the scope of our challenges. We must become a united democracy by creating opportunities for civic engagement across our differences and by refusing to fall prey to divide-and-conquer tactics that perpetuate rule by the rich and powerful. We must create an economic democracy by breaking up economic power and expanding opportunity for people of all races and from all geographies. We must reclaim political democracy from lobbyists, interest groups, and wealthy donors while ensuring that everyone can participate. And we must defend democracy from national oligarchies abroad. This agenda does not look backward to a bygone era with promises to make America great again. Instead, it looks forward to the future. As Theodore Roosevelt once said, “A great democracy has got to be progressive, or it will soon cease to be either great or a democracy.”9

  The neoliberal era has put us in this moment of crisis, and the central battle of our time is now between nationalist oligarchy and democracy. The fight for a great democracy will require boldness and creativity, courage and resolve. It cannot be nostalgic because at the very moment democracy was last within reach, it eluded our grasp. If we want to save democracy, we will need to achieve democracy.