I thought I might take a step back this week from my more purely economic pursuits and say a few words in support of traditional, leftist, American, economic “liberalism.” Not post liberalism, neoliberalism, classical liberalism, European liberalism, or any other sort of liberalism. Just plain, old school, American-style, liberalism.
Why? I did a little online poll on popular interpretations of “neoliberal,” “liberal,” and “conservative” in the realm of economic policy and found, as I suspected I might, that the only readers from the USA who cared enough to register an opinion (three) considered them to be all the same thing. It’s a result that should be interesting at least to relative old timers in the US like me, who may recall the days our entire public conversation about economic issues was characterized as a matter of “liberals” versus “conservatives.” Wasn’t so long ago, really.
Let’s break it down, shall we? Traditional American (leftist, progressive) “liberals” support active democratic government, appropriate regulation, “intervention” in the economy and in particular markets to address issues including “market failures,” but also equity, welfare, fairness, ethics in general. From the liberal perspective, one can think of democratic government involvement in the economy at two levels. First, at the level of establishing the definition, distribution, and use of economic power in markets. Deciding what issues should be resolved on the basis of economic power in markets, the ethics involved, etc. That first level of issues addressed by democratic government is external or exogenous to the normative arguments presented in neoclassical welfare economics, which is an ethical half-theory that holds such issues in abeyance. Second, once those issues have been addressed, delving into the characteristics of market solutions, market structures, “market failures,” information, rationality, the whole nine years of normative or ethical issues endogenous to neoclassical welfare economics. That doesn’t mean voters are constrained to agree with the ethical half-theory of neoclassical welfare economics on ethical issues endogenous to that theory. It’s still an ethical theory subject to evaluation with reference to the subjective moral sense or moral sensibilities of the voters, but something to consider, at least. Traditional, American economic “liberalism” corresponds to what would be called in many foreign countries social democracy, or democratic socialism, or some such formulation, impossible in the USA because of the popular opinion anything even remotely “social” is entirely unacceptable and indeed unworthy of serious consideration.
In contrast, traditional American economic “conservatives” oppose democratic government involvement in the economy, in general, which they characterize as a matter of government “interfering” with the economy. However, there is some variation in what they consider acceptable government activity in that area. Conservatives operating under a form of bad economics closely tracking or mimicking real neoclassical welfare economics often support government activity and regulation addressing “market failures,” addressing the normative or ethical issues endogenous to neoclassical welfare economics. They tend to not associate that activity with what they call “activist” democratic government, presumably because they view such interventions, incorrectly by the way, as issues that can be resolved on a purely technocratic basis, not involving referring ethical issues to the voters, and thus not involving democratic government, in particular. However, they object to democratic government addressing the very significant and controversial normative or ethical issues exogenous to neoclassical welfare economic, which are much more obviously contentious ethical issues voters may have opinions about. Other economic conservatives have views rather more distinct and philosophically distant from neoclassical welfare economics and use alternative, heterodox economic reasoning to establish any “activist” democratic government involvement with institutions or arrangements they call “the Free Market” or “capitalism” unacceptable, or in some cases not involvement per se, but attempts to revise specifically. A distinction can be drawn in this context between conservatives who follow and promulgate bad economics in the conservative style, at various levels of obfuscation and confusion, and those who present explicit conservative alternatives to neoclassical welfare economics.
Finally, the “neoliberals” were historically simply erstwhile economic “liberals” who adopted conservative economics circa 1980 but perhaps carried on arguably liberal positions on non-economic matters. As far as I know, there is no distinct “neoliberal” theory of economics.
What appears to have happened is that the “neoliberal” turn away from traditional “liberal” economic thinking seems to have obliterated the traditional meaning of liberalism in an economic context for many in the USA, helped no doubt by foreign and often Marxian writers, who use the word differently. Well, helped as well surely by many rhetorically clever conservative writers, who in my experience typically spend just as much time trying to create confusion and sow conflict as more sincere writers spend trying to dispel confusion and resolve conflict. Indeed, conservatives here in the USA are reportedly attracted to a rhetorical technique they call “flooding the zone with ... ,” let’s say, “garbage,” in place of the evocative word they actually use in this context. Fomenting confusion about terminology would, of course, be right up their alley.
Whatever the mechanism or mechanisms at play, it seems for many in the USA now, neoliberalism = liberalism = conservatism, leading them to suppose “all political parties are the same,” etc., and in funny directions like anarchism, fascism, non-democratic communism, etc. Basically, what was once considered the mainstream, moderate, reasonable, centrist view of the relationship of democratic government to the economy and the market system in the USA appears to have gone missing entirely, leading to a great deal of confusion and conflict. Little wonder the public conversation about politics and economics in the USA has become so odd, simplistic, emotional, extreme. It’s like we’ve all agreed to take the most reasonable solutions off the table and consider only the most unlikely, childish, confused, and bizarre.
What’s my point? Well, one is that traditional American economic liberals should step up their game and reclaim their brand, fight bad economic in the conservative style, explain better how they differ from neoliberals and conservatives as far as their economic thinking. Another point is that words change, and although I and old timers like me will likely always consider ourselves traditional liberals in the economic sense, we should be prepared to acknowledge overlapping terminology: progressive, social democrat, democratic socialist, etc. The important bit is not the label but the underlying ethos. If one supports political democracy and understands the role democratic government should, and indeed must, play in market systems and the economy, then one is the equivalent of a traditional American liberal. Call yourself whatever you like, but don’t get confused with funny name games. Don’t waste your precious time railing against liberals because you suppose they’re the same as neoliberals and conservatives. Focus on the underlying theories of government, economics, ethics.
