Neoliberalism’s License to Ill

“Something is profoundly wrong with the way we live today.” With this remark, historian Tony Judt begins his polemical jeremiad Ill Fares the Land. The book is at once a sustained lamentation for the seemingly moribund ideals of social democracy and a clarion call to conserve the successes of the progressive initiatives of the West in the aftermath of the World War II. Judt, who passed away in August of 2010, dictated this book while suffering from ALS (commonly known as Lou Gehrig’s disease); a disease that eventually rendered him immobile. Judt was proudly a man of the Left, yet his encomium for social democracy is infused with a certain British conservatism. He wishes to preserve the collective achievements of social democrats in the US and Europe before they are fully eroded by the forces of unfettered capitalism. Social democracy is the best we can hope for in our current epoch. It is essentially a compromise to preserve the market while protecting those most vulnerable to its competitive forces. Not only must we alter the discourse, but we must also change our values and how we define these problems.

For Judt, the past three decades, beginning with the Reagan-Thatcher years, Anglo-American society (and increasingly other parts of Western Europe) can best be described as “materialistic and selfish.” The two decades following the fall of the Berlin Wall have been rife with rapaciousness and “consumed by locusts.” The financial catastrophe of 2008 and the attendant economic maladies—unemployment, underemployment, tightening lines of credit, the loss of homeowner equity etc.— may only be the harbinger of decades to come if we refuse to challenge the market-oriented status quo. To be sure, there are those who made it out of the crisis better off than they were before. The CEOs and executives of the major financial institutions, whose capricious and morally repugnant financial chicanery catalyzed the crash, are posting higher earning quarters and passing out billions in bonuses to their cronies. Meanwhile, unemployment in the US continues to hover near 10% and poverty rates are the highest they have been in 50 years. As inequality rises and the vast and notable accomplishments of social democrats in the 1940s, 50s and 60s crumble before our very eyes, Judt asserts “We cannot go on living like this.” No, we can’t. The ravages of unfettered capitalism and deregulation have led to a baleful present and a foreboding future.

Perhaps what is most remarkable today is the sheer fecklessness of the debate. The US government spends profligately on ineffectual military campaigns in Afghanistan and Iraq and simultaneously politicians upbraid any increase in public spending on social services or infrastructure improvement. Bridges are collapsing from lack of maintenance and the US public education continues to fall behind country after country in every measurable indicator. Yet, we shower the Pentagon with hundreds of billions of dollars every year. The societal effects of this are far-reaching. As social services are declining at a time period when the poor direly need them, unregulated capitalism is vampirically consolidating the wealth of the country into fewer and fewer hands. A “commitment to the unraveling of decades of social legislation and economic oversight” has resulted in conspicuously high levels of inequality. Judt utilizes a host of charts and figures that demonstrate the societal pathologies caused by high levels of inequality. Many of the ills of inequality are meaningless in our current politico-economic discourse. Economists and politicians either do not care or do not consider the psycho-maladies ramified by deep inequality. Nonetheless, a moral consideration of its effects suggests that mistrustfulness and humiliation rise in unequal societies. In short, inequality “rots societies from within.”

Thirty years of perdurable inequality have resulted in an acclimated acceptance of this state as a natural condition. The welfare states of the post World War II era eschewed the coldly materialistic notion of defining civic status in solely economic terms. Over the past 30 years, a meme has arisen and reified in Anglo-American discourse demonizing and stigmatizing government “handouts.” The epithet “Welfare Queen” perhaps best epitomizes this phenomenon. Those who crafted the policies of the New Deal and the Great Society were working to ensure that the downtrodden were not only able to survive, but able to retain a measure of self-respect. The dominance of supply side economics in the past three decades has coincided with vastly increasing levels of inequality. This is not an ideological difference; it is simply a matter of empirically verifiable fact. The study linked above notes that the top percentile now account for 23.5% of wealth (as of 2007). Since 1913, the only other year inequality was higher was 1928. Thus, 1928 and 2007, the years that predated the Great Depression and the Great Recession respectively, income distribution was at its most unequal. Inequality not only rots societies, but for those more concerned with markets, it also can shatter the foundations of the capitalist economy.

Yet, we have reached a point in our politico-economic discourse where the mere mention of raising taxes or (Reagan forbid) redistributing wealth is met with a cacophony of opprobrium. What is stunning is the inability to conceptually grasp all that has been and can be provided through the mildly redistributive policies advocated by social democrats. Judt notes, “in the US, taxes are typically regarded as uncompensated income loss.” This notion completely belies the provisions of collective goods that individuals, and in some cases small communities, could never afford on their own, such as police, post offices, schools, libraries and the military. Indeed the Democrats of the 1960’s Congress created food stamps, Medicare, the Civil Rights Act, Medicaid, Head Start, the National Endowments for the Humanities and the Arts and the Corporation for Public Broadcasting. This slew of publicly funded initiatives made America bear “a curious resemblance to ‘old Europe.’” The United States has also socialized the most comprehensive and prestigious higher education system in the world that is responsible for internationally renowned institutions like the University of California, Indiana University and the University of Michigan. Another triumph of American public programs is the taxpayer-financed freeway system. Today, many of these programs are crumbling as taxes are slashed and deficit hawks croon about the rising national debt. “Public programs” is a phrased more often used as a pejorative now. Judt demurs, “it has not always been this way.”

A major component of this struggle is that we simply do not know how to address or discuss these issues outside of the hegemonic discourse. Public policy is diluted, bereft of moral considerations, to issues of “profit and loss—economic questions in the narrowest sense.” This has removed the ethical questions away from political questions and couched them in the language of classical economics. As Judt notes, sanctimonious politicians in the US and UK take great pride in their “difficult choices” to welfare cuts, forgetting (or perhaps not) that the poor vote in small numbers – often rendering the political consequences moot. Policy decisions cannot continue to be made in moral vacuums and ignore “what men and women want for themselves and under what conditions those wants may be addressed.”

It is largely forgotten (or ignored) that capitalism was once saved by the economic policies, most often associated with the British economist John Maynard Keynes, that can be called nothing but socialism. The market could not always be relied on to produce equilibrium. The depression taught Keynes, and politicians like Franklin Roosevelt, Charles De Gaulle and Clement Atlee, that some measures would needed to be taken by the liberal state to address depressions. The interjection of the state into economics was not to inaugurate a socialist era, indeed it was to ensure the vitality of the capitalist system. In the 1950’s, under Republic President Dwight Eisenhower, taxes for the top bracket reached 90%. Americans paid lip service to the virtues of the free market but heavily depended upon government regulation, subsidies, price supports, and protectionism. These policies were not divisive, as Americans generally prospered during this time. The ‘American way of life’ was born in the generation following 1945 and the gap separating the rich and poor dramatically shrank in Europe, the UK and the US. In the US and much of the West, the market was viewed as unable to achieve collective ends. One mechanism for addressing this inadequacy was a progressive income tax that, through a moderate redistribution of wealth, would eliminate extremes between rich and poor for the benefit of society in general.

This was the success of social democracy. The United States flourished as a country, rising to global preeminence, largely due to the ideals of social democracy. As recently as the 1970s, it would have been unconscionable to allow the social services, welfare provisions, state-funded cultural and educational resources dissipate in the name of austerity or “freedom,” the abused concept of the modern Right. These public provisions were almost taken for granted by the post World War II generation. Judt attributes much of this paradigm shift to what he calls the “ironic legacy of the 60s.”

In the 1960s, the New Left emerged in a comfortable world with sense of political, economic and societal security. The New Left “took on a rather selfish air.” Focusing on maximizing individual freedom, the New Left ignored the collective purposes of the Left of yesteryear. Utterly ignoring the debt they owed the welfare states they were born into, the New Left’s radical individualism and the primacy it placed on private interests inadvertently merged with incipient Right. Keynes believed that an increased role for the state, including countercyclical economic intervention, was the best defense against both economic collapse and political extremism. The economists of the Austrian thought the exact opposite. The economists and philosophers of the Austrian school—notably Friedrich Hayek, Ludwig Von Mises, Joseph Schumpeter, Karl Popper and Peter Drucker– extrapolated from the historical lessons of their own country. After a brief flirtation with socialism, Austria fell to a reactionary coup and then was invaded and occupied by the Nazis in 1938. For these men, this catastrophe had been brought on because of the Left. Socialist intervention into the economy, with its belief in historical laws and reliance on the reason of men, crippled the state and allowed it to be trampled by Fascism. Thus, the most efficacious way to protect the liberal state was to keep it out of economic life. Thus from the historical extrapolation of the Austrians, we have a school of thought that has in large part driven the ideology of political elites in the US. Judt retorts:

Thus when we recapitulate conventional clichés about free markets and western liberties, we are in effect echoing—like light from a fading star—a debate inspired and conducted seventy years ago by men born for the most part in the late 19th century (p. 102).

In the US, much less so than in the UK and Western Europe, the maxims of the Austrians have become dogma and allowed for any minor mention of state intervention to be vituperatively censured. The intellectual paradigm shift that has its roots in the Austrian school has engendered a lionization of the private sector, what Judt calls “the cult of privatization.” This cult of privatization and the concomitant derision and destruction aimed at the state has fundamentally undermined the public sector and public life in general. The evisceration of the public sector devolves society into segmented individuals. No longer is the welfare of all intrinsically connected. This myopic focus on the individual is disintegrating the very foundation of society, leading to world more and more like the Hobbesian state of nature.

The original cover of Biggie’s first album

An ever-mindful historian, Judt recognizes the failures of socialism as much as capitalism. However, he wishes to disabuse the notion that capitalism is the “best” framework for organizing society or the most effective way to ensure freedom. What is freedom in a world where unregulated markets increase inequality and poverty and disintegrate society? The Right has been able to co-opt words like “freedom” and “liberty.” The working class and middle frequently vote against their own economic interests in order to “preserve their freedom.” Without being able to reclaim this lexicon the Left will continue to struggle to promulgate its message.

The question remains: Where does the Left go from here? Frankly, Judt asserts, we need to be vociferously perturbed by our present condition. This is certainly a start. The Left has become complacent as an important component, young people, has become apathetic and indolent. Blinded by consumer goods, many young people are nothing but zombies of a materialistic, self-indulgent, post-modern society, happy to float on with their iPads and vapid Twitter posts. Those of us on the Left need to stand up and resoundingly say that we do not want to live in a society where tax cuts for the rich have primacy over ensuring that all people have access to affordable healthcare and all children are given an education that gives them opportunities in life to succeed. If we are unwilling to demand a redress of these grievances we forfeit politics “and thereby abandon our society to its most mediocre and venal public servants.” We cannot rely on our elites to affect change. Look no further than the US Senate, full of political pygmies, concerned more with procedure, gossip and vacuity than legislating and addressing the challenges our country faces.

As noted above, Judt implores our society to reconsider its values. Perhaps we cannot quantify the sheer humiliation that one must experience when taking stigmatized “government handouts,” but that does not mean that it should not factor into our debate. By redistributing wealth, societies diminish social tension and provide more equal access to services once reserved for the few. This redistribution is certainly not theft and to suggest that those most advantaged by our society should not have to give back should induce a sense of moral vertigo. In the 19th century, Karl Marx believed the only way to address the inequities of capitalism was by revolution. The New Deal and the Great Society proved that we could preserve the market and find a medium between unfettered capitalism and state-controlled economies. As the successes of these enterprises have been dismantled piece by piece, poverty has risen. Concomitantly, we are experiencing the manifold pathologies of unequal societies—crime, violence, alcoholism and mental health problems have all risen dramatically.

Our values and the aims of public policy must make a tectonic shift from a myopic fixation on economic utility. Society and the state can and should be able to provide man with the necessary groundwork for a life well lived. The inability of the Left to articulate such a vision has resulted in the loss of a moral narrative. A new moral narrative, with an imperative emphasis on reducing societal inequality, is what social democrats need to craft and cultivate. While Americans on the Right continue to disparage the state, social democrats need to emphasis all the it does and the central role it has played in the rise of this country. Washington supported and subsidized American industry, from railroads to the steel industry, from the auto industry to farmers, much of America’s economic success is because of the state, not the mythical free market. Markets eventually have a self-distorting effect that only the state can save. It is simply clear that the market cannot solely provide for the collective interest, while we have seen that the mixed economies of social democrats provide a drastically superior model to promoting collective interests.Judt believes we must get past the word “socialism” in our discourse. Its reference instantly conjures up images of Stalin and the Soviets and sullies the conversation. However, this is arguably part of the problem in our societies. The inability to recognize that socialism, in some forms, has existed in this country for decades and that it is capable of providing for the collective while preserving individual freedom is in large part due to the Left’s unwillingness to explain it. Elsewhere Judt has suggested that capitalism has not collapsed and will not. Yet, what happened in 2008? If it was not for state intervention we would have undoubtedly experienced a collapse of the economic system. Nonetheless, Judt understands that in the US, where opportunist politicians hurl invectives like “socialist” or “fascist” with alacrity, using these words renders the conversation obsolete.

There is hope for the Left and for social democracy and Judt is right when he says that we cannot yield to those who wish to dismantle its successes. The Left must conserve these gains. Moreover, people look to the state during times of great economic calamity. It was the Great Depression that made millions of Americans rely on the state in the 1930’s and 40’s. We are experiencing a time of great uncertainty with millions of Americans in debt, unemployed, and uninsured. Are we to believe that the market will provide solutions to these fundamental maladies of our society? In reality, it is the excesses and pathologies of unfettered capitalism that have caused these problems. In the closing pages of Ill Judt quotes Tolstoy: “there are no conditions of life to which man cannot get accustomed, especially if he sees them accepted by everyone around him.” We must ensure that our society and its people do not become acclimated to inequality. Judt recognized that we must conserve and build upon the successes of social democracy or our society will continue to crumble.

Adam Gallagher is a doctoral student in political science at George Mason University.  Better Homes & Gardens magazine has described him as “philosophically overwhelming, the giant on whose shoulders Newton must have stood,” while Gawker has called his work “as challenging as the cosmos itself… clearly the offal of an interconnected mind of meta brilliance.”