Every era runs on an economic story. For the last half-century, ours has been neoliberalism — the belief that if you free markets from constraints, prosperity will follow.
This week, we revisit a bracing conversation with historian Gary Gerstle about how neoliberalism took hold, why it once felt inevitable, and why it’s now breaking down in plain sight. Drawing on his book The Rise and Fall of the Neoliberal Order, Gerstle joins Nick and Goldy to trace how a seductive promise of “freedom” — economic, cultural, and political — helped neoliberalism crowd out the New Deal order, even as it hollowed out communities, deepened inequality, and set the stage for today’s volatility. Along the way, they explore how economic crises create openings for new ideas, why the collapse of an old order is never smooth, and what it will take to build a post-neoliberal, middle-out economy that actually delivers for working people.
Gary Gerstle is an author, historian, and scholar of American political and economic history. He is the Paul Mellon Professor of American History Emeritus at the University of Cambridge and a Professor Emeritus of History at Vanderbilt University.
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Writing the History of Neoliberalism: A Comment
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The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
Goldy:
The last five decades of trickle-down economics haven’t worked, but what’s the alternative?
Nick Hanauer:
Middle out economics is the answer.
Goldy:
Because the middle class is the source of growth, not its consequence.
Nick Hanauer:
That’s right.
Announcer:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Freddy:
Hey, Pitchfork listeners. I’m Freddy, producer at Pitchfork Economics. Every society runs on a story about how the economy works. Today, we’re revisiting the rise and fall of the neoliberal order, a conversation with historian Gary Gerstle about how neoliberalism became our governing economic regime and why it’s breaking down. This episode makes sense of why today’s economic and political chaos feels so familiar and why it isn’t random.
Goldy:
It’s a new year, Nick, and what better way to ring it in than a conversation about neoliberalism?
Nick Hanauer:
I know, I know. And we’ve got just this killer guest today. We’re talking with Gary Gerstle, who’s the author of the Rise and Fall of Neoliberal Order. But what’s cool about Gary and is a little bit different than our usual guest is that Gary is not an economist. He’s an historian. And so he comes to us with that perspective, which I think is a little different. He’s the Paul Mellon professor of American History at the University of Cambridge and a professor of history at Vanderbilt University as well. Absolutely fascinating guy. Let’s chat with him.
Gary Gerstle:
I’m Gary Gerstle. I am a historian of the United States, 19th and 20th and 21st centuries, but increasingly I’m writing about the most recent period. And that encompasses my most recent book, The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era, which is really a history, tries to be a history of our time beginning in the 1970s and carrying through to the Biden presidency. Actually covers almost a hundred years if we include the rise of all of the New Deal order from the 1930s to the ’70s before then. Trying to use my historical skills to make sense of what is a very volatile and uncertain political moment that we’re living in.
Goldy:
I was a history major in college, and I’m wondering if you’re writing a history of now, because the fall is happening as we speak, how does history differ from journalism? I have my own ideas, but I’m curious what you would say.
Gary Gerstle:
Well, I actually regard the work that journalists do. They often take the first cuts at historical perspective. And there’s a book published, I think, in 1973, written by a British journalist by the name of Godfrey Hodgson, who was covering the United States through an earlier period of Talmud, the ’60s and the ’70s. And he wrote a book called America in Our Time. And I thought it was one of the most extraordinary histories of America from 1945 to 1973. And I taught it probably for 20 or 25 years in the courses that I was teaching. So I think it is possible to be immersed in current events and to write with a historical perspective and vantage point. But it is, I will acknowledge a perilous enterprise because one has to distinguish between the signal and the noise. The signal is what you really want to focus on, but every signal is surrounded by noise. And it’s very hard to disentangle the noise, especially in a supersaturated media environment in which we live.
And so some things I think I get right writing about the history of the contemporary moment and some things I get wrong. And you just have to be prepared to live with your frailty. What I think I can do, and what I try and do in my book, The Rise and Fall of the Neoliberal Order, is to try and bring a historical perspective to the current moment. And I think that can be quite valuable. And that’s what I’ve been trying to do.
Goldy:
I think ownership matters too. And I think the fact that your paycheck isn’t dependent on some sociopathic billionaire kowtowing to Trump probably gives you a little more freedom than what we’re seeing in a lot of modern journalism. But that’s… I’m just… Opinion. We’ll let you… Nick.
Gary Gerstle:
Well, there’s another freedom. And I wrote that book in the UK. And that actually spared me a good deal of noise. I mean, the peril is you could have an owner, someone who runs your newspaper who’s not sympathetic to what you want to do and is telling you what to say. But there’s another kind of problem, which is to just be so saturated with the endless media cycle.
Nick Hanauer:
The bullshit, yeah.
Gary Gerstle:
And one of the things that is true, oddly, about the world in which we live is that media markets remain incredibly national or abounded by national borders. And so even though Brits are fully informed about the United States, the degree of noise that is there and the saturation of media that one experiences in one’s home country is not the same. So I do actually think it gave me more space and allowed me a greater degree of independence than I would have had if I was trying to write this book in the US.
Goldy:
Anyway, Nick, you want to kick us off starting about the book?
Nick Hanauer:
Gary, as you must know, we talk about neoliberalism a lot on this podcast. Our podcast is largely devoted to tearing down neoliberalism and replacing it with a new thing. But for the purposes of this interview, it would be useful to start with your personal definition of neoliberalism. So what do you think it is and how should we… And we’ll proceed from there.
Gary Gerstle:
Neoliberalism is an ideology that calls for freeing capitalism from virtually all constraints, free the animal spirits of capitalism and the market out of the belief that the greatest economic growth and thus the greatest good for the greatest number of people will result from that kind of emancipation. And by freeing it from constraints, I’m thinking of regulatory constraints imposed by governments and states during the golden era of social democracy in Europe. And then we might say the golden era of the New Deal order in the United States. It was from the start a global project. Dismantling control of capital has to be accomplished both domestically, but also internationally out of the belief that you cannot have the full yield of capitalist affluence unless the whole world is committed to this project. And so at the core of neoliberalism is commitment to the free movement of goods, the free movement of people, the free movement of information, and the free movement of capital across all borders.
And it could not really become a global project and thus aspire to the success it had in the 1990s and first decade of the 21st century until the Soviet Union fell and communism as a relevant ideology in the world collapsed. Because central to the communist project was not just state management of economies and the public interest, but the exclusion of capital and capitalist penetration from any countries that were under communist rule. So the 1989 to 1991 period of transition is crucial.
I’ll say one other thing about it, and then you can let me know your own thoughts about neoliberalism because you do talk about it a lot. Is it entirely an elite project? The proponents of neoliberalism acknowledge that it increases inequality in the world, that the gap between the rich and the poor would widen. But the supporters say, “That’s okay because all boats will rise. Everyone at the end of the day will be better off.” That was the claim of neoliberalism. And from that perspective, you can see it as an elite project in the sense that there would be benefits for everyone, but the richest would have the greatest share of the benefits.
There was not an acknowledgement that there would be trade-offs, that this was a zero-sum game, that the gains of some classes domestically and some nations internationally would be at the cost of other nations or portions of nations suffering. That belief in the validity of neoliberalism and its value characterized the 1990s and first decade of the 21st century. It was believable and sellable as an ideology until the global financial crash of 2008, 2009, which gave a lie to the claim that all boats would rise and that no one would suffer under this new regime.
And there’s no doubt that the neoliberal age dramatically increased inequality, left a lot of the parts of the world, both in the United States and elsewhere to rot. And the world in which we’re living in now has to do with the consequences. But I also think that there’s an emancipatory element of the neoliberal creed, which distinguishes my view of neoliberalism from some other people, that it carries with it a promise of freedom, of freeing the individual from constraints, of allowing that individual to fully flourish. And especially in the United States, that has enormous appeal. That was part of Reagan’s popularity. “You convert to my vision of market freedom,” meaning Reagan’s vision of market freedom, “you will be free. You will have opportunity that you did not have before. You will be free of artificial constraints, which are not simply imposed by large private institutions, but by large public institutions as well.”
So I talk about the new left of the 1960s and ’70s, which opposed not just capital, but big government and saw the New Deal as oppressive because in the language of the time, there was a system of corporation and government alliance, which was squashing the individuality and the individual opportunity of particular people. There’s a cosmopolitan vision, which is part of the neoliberal dream, the ability of people to travel everywhere in the world to mix with other peoples, other cultures, other ways of living, which the left finds enormously appealing. If you’re on the left, this is a world in which you want to live. So there’s a component of the neoliberal worldview, which is appealing to people on the left side of the political spectrum. And there’s a kind of seduction that goes on that this will benefit not just corporate capitalists, accumulating capital, but this promises an enlarged vision of freedom that a lot of people can partake of.
Nick Hanauer:
So that thing that you just said is really interesting to me. And if I could just play it back to you… And I may be misinterpreting what you just said, but it never occurred to me that the cultural freedom that people were looking for in the ’60s and ’70s was in some ways part of what animated or was connected to the rise of so called economic freedom of neoliberalism, right? Because you think about the ’60s and ’70s as being very lefty, sort of, “Express yourself, be free, don’t conform,” all that stuff. But I guess I’d never thought to connect that to Milton Friedman, if you know what I mean. So are you suggesting that, or am I over-interpreting?
Gary Gerstle:
No, I am suggesting this. It’s not at the… I don’t want to suggest conspiracy. I don’t-
Nick Hanauer:
No, no, no, no, no, no. I just mean the Gestalt.
Gary Gerstle:
The Gestalt. At the free speech movement in Berkeley in 1964, which is one of the early great moments of the new left. And I came in at the tail… Goldy, you look closer to my age, so you may have connections. Nick, you look younger than-
Goldy:
No, no,
Nick Hanauer:
Sadly, I’m the oldest one.
Goldy:
He just has hair.
Nick Hanauer:
Yeah, yeah, yeah. I just have freakish-
Gary Gerstle:
Okay. Well, then we got to go-
Goldy:
You know what it is?
Nick Hanauer:
… freakish genes.
Goldy:
It’s the super rich can afford that-
Nick Hanauer:
That’s right.
Goldy:
… secret elixir that keeps them young looking.
Gary Gerstle:
Yeah. Okay. Okay. Well, this means you’ve got to go with the video version of this. The audio version is not going to be enough. My point is that I came in at the tail end of the New Left. I was part of the New Left. So I don’t say this as someone who’s looking at the New Left antagonistically because it was part of the world in which I grew up and I took many of its principles to heart. One of the signature mottos of the 1964 free speech movement at Berkeley was, “I will not be folded, spindled, or mutilated.” Now, if you have young listeners to your program, they have no idea what I’m talking about, but if you’re looking at your ages, or Nick, you too now, since you’ve revealed yourself, that was on every IBM punch card and you needed one IBM cardboard punch card for every step in a computer program that you were processing at the time.
IBM was the enemy. It sort of embodied massive machines, massive centralization. What was the dream of Steve Jobs and where was he at this time? He was a tree hugger at Reed College. He was a hippie. He wasn’t going to classes. He was on fruitinarian diets. His dream of the personal computer was releasing the IT revolution from the tyranny of what was IBM and a close connection between government and the private sector to manage our lives. And this dream of individuality and emancipation was very profoundly bound up with the creators of the IT revolution and the personal computer who began on the left. Another figure in this firmament is Stewart Brand who created the Whole Earth catalog. And I think Steve Jobs would later describe the Whole Earth catalog as Google before there was Google. It was, again, a lot of your listeners won’t know what we’re talking about, a massive book that had everything in it that you needed to know in order to live the kind of life you wanted to live. And Steve Jobs described it as Google before Google.
Goldy:
That was the coffee table book in my parents’ living room, yeah.
Gary Gerstle:
I still have my original copy purchased in 1970. Yep.
Goldy:
Yeah. Yeah. It’s funny. I never thought of Apple’s 1984 ad as a neoliberal-
Nick Hanauer:
Neoliberal. No, I was just thinking about… It was the first thing I thought of when we started talking about Apple is that 1984 ad, again, that many of our listeners will not have seen.
Goldy:
Oh, I’m sure. Come on. That’s such a classic.
Nick Hanauer:
Yeah, it is a classic. So Gary, our focus is usually on the economics, on the academic economics, and you’re obviously taking a historical view. How do these two things relate? And were there historical drivers that led naturally to the neoclassical economic framework from which neoliberalism was derived, right? I guess the way we think about it is that you have got this layer, if you will, of neoclassical economics, which is based on a bunch of underlying theoretically empirical scientifically verified assumptions about human behavior, about the dynamics of human social systems, about the origins and nature of prosperity, so on and so forth. And from that, you derive neoliberalism, which is its ideological companion, right? The sort of social, cultural, political, and moral framework from which we allow to govern ourselves. And so how does the academic layer, economic academic layer, relate to the ideology? Which came first, for example? It’s sort of a chicken and egg problem a little bit, isn’t it?
Gary Gerstle:
You mean the other dimension referring to the cultural dimension, this dream of freedom? Is that…
Nick Hanauer:
Yeah. Yeah. Well, and just-
Gary Gerstle:
Well, I think they both arose at the same moment if the new left moment is the 1960s and ’70s. I would say the cultural component came first from university students, many of them privileged growing up in what they took to be a massively bureaucratized society that did not deliver on the promise of individuality and freedom that they had been led to expect would be part of their American birthright. So this yearning for personal freedom was there in the ’60s during a moment of great affluence. But then you have the economic crisis of the 1970s, and that economic crisis is profound in terms of eliminating the dominance of a different system of economics, Keynesian economics that had been integral to the New Deal order. And there are two sources of crises in the 1970s, which upend the New Deal and Keynesianism. One is that America has serious industrial competitors in the world for the first time since prior to the Second World War.
After World War II, the US is the only industrial economy still standing, and the world is its oyster. It can do whatever it wants to in the world, or I should say, in the non-communist world. And one of the things it does is that it builds up the competitors that had defeated Germany and Japan. And it needs to do this because it can’t sell enough goods to international consumers unless those consumers are out there. And in the 1970s, Japanese cars and electronics and German machinery and cameras and other things begin to… They have become serious competitors to the United States. And the US industry is not ready for it because they’ve had a 30-year period of control, an oligopoly behavior where two or three firms which control entire industries. And over the long term, that’s not a good recipe for economic growth and prosperity because you dull innovation, the imperative of productivity.
The other thing that happens in the 1970s is a reordering of relations between consumers of resources in the global north and the suppliers of those resources in the global south. And here, the critical event is the Yom Kippur War of 1973, which leads Saudi Arabia to boycott, refuse to sell its oil to the West and the West’s prosperity had been built on the promise of unending supplies of cheap oil from the Middle East, which were still at that time under the control of Anglo-American oil companies. And they made the decisions, how much oil to extract from the ground and what price to charge. That ends in 1973 with the rise of OPEC and the determination that these resources belong to the producers, and we are going to set the terms. And that is part of a larger reconfiguration of relations between the global source and global south that makes the 1970s a double whammy, competition for the US from industrial competitors and need to radically rethink the availability and cost of vital resources to prosperity.
And that plunges the American economy into a very severe crisis. It’s not just inflation. It’s the beginnings of massive deindustrialization of economic centers of the north and the Keynesian toolkit is no longer working. Now, I have idea, a theory of what I call political orders. And when a political order establishes itself, it is able to compel agreement from all parts of the relevant political spectrum. And during the heyday of the New Deal Order, the Keynesian tools were thought to be so powerful and so effective that when Dwight D. Eisenhower becomes the first Republican president to regain the presidency in 1952, the big question is he going to roll back the New Deal or is he going to endorse its core features? And he endorses its core features because he feels there is no other future. There’s no future for the GOP if he doesn’t do that.
Well, that consensus explodes in the 1970s and ideas, these neoliberal ideas, versions of the neoclassical ideas that you talked about, which had been around and which had been incubating, but had been utterly irrelevant to the conduct of American politics or the conduct of the American economy, this is their moment when they can bid for power. And they had a strategy for gaining power. They had think tanks. They were developing links between think tanks and politicians. They had a general who could command the field forces. Ronald Reagan was his name. They were ready for the opportunity that the 1970s gave them. And in my theory of political orders, there are certain economic crises of such magnitude that they crack up the orthodoxy that had been dominant and allow ideas that have been considered till that moment dangerously heterodox to enter the mainstream. This becomes the neoliberal moment of ascent.
Goldy:
And going forward then, how important and how much of it was inevitable or just an accident of historical timing? The collapse of the Soviet Union in the late ’80s pretty much cemented the neoliberal order globally.
Gary Gerstle:
Yes, absolutely. In the ’50s, the Soviet Union was a genuine competitor to the United States, not just militarily, but economically. And there’s this incredible moment in, I think it’s 1959, when Nixon goes to Moscow with all the latest American appliances in an American kitchen, and they have a debate on a Moscow stage about who’s going to provide better consumer goods to their people. What’s so amazing is that the US felt compelled to enter this debate because it was worried that the Soviet model of central planning might offer their people a better future than what America could afford. By the 1980s, there is no competition of that sort. There’s no point in having that kind of debate. The ability of the US to turn out consumer goods far outstrip the capacity of the Soviet Union. And here, I think the IT revolution brings a lot of pressure on the Soviet Union.
I think in 1989, the Soviet Union had 250,000 personal computers, the US had 25 million. Once you get into that level of disparity and entering the internet revolution, it changes the terms of competition and the Soviet Union with its command economy, which was not just controlling production, but controlling the flow of information everywhere, could not compete with where the US was going. And so this is what was accelerated in the 1970s and ’80s, the deregulation, the IT revolution makes it harder and harder for the Soviet Union. It’s interesting in this regard, we used to laugh at Reagan’s idea of Star Wars, that he could build a shield over the US that would stop all incoming Soviet missiles. I remember the 80s, we thought, “This guy’s a jokester, that can’t be done. It’s just a waste of money.” And every rocket he tried to launch to intercept a mock missile coming from the Soviet Union crashed and failed. And so there was a lot of laughter about that.
Star Wars scared the Soviet Union to death because they-
Nick Hanauer:
Yeah. It was a very good strategy.
Gary Gerstle:
Yeah. They didn’t feel they had the equipment, the knowledge to compete with that.
Nick Hanauer:
Yeah. So let’s talk about, where are we now? Where are we now? Where are we now?
Gary Gerstle:
We’re in a whole lot of trouble.
Nick Hanauer:
Yeah, that’s true.
Gary Gerstle:
And for left liberal forces, this is a big defeat, but it’s not the end of the story.
Goldy:
It’s not the end of history? Because I-
Gary Gerstle:
It’s not the end of history. It’s not the end of the story. It’s not the end of the search for a post neoliberal paradigm. Volatility still rules our moment and it’s not clear Trump… First of all, it’s not clear what Trump’s policies are going to look like economically, and he also does not have the kinds of majorities that Roosevelt or Reagan had to usher in a different kind of political economy to the degree that I think some of his supporters would like to accomplish. Let me first say that 2016 is a moment of real change in the United States, and that it’s the moment that really breaks the hold of the neoliberal orthodoxy. And you have Trump on the right and Bernie Sanders on the left. And it’s a one, two combo that sort of explodes the neoliberal synthesis, privileging, free trade, free movement of people, free flow of information, free movement of capital.
Those two figures are diametrically opposed in many respects, but if you listen to a Trump and Sanders speech on the evils of free trade and why we should move away from a globalized world of free trade for the sake of some kind of fair trade, some of their speeches are indistinguishable from each other. And until that moment, protectionism had been a dirty word. If you were identified as a protectionist in American politics, you were out of the mix. And Trump levies many tariffs and Biden doesn’t remove them. And the 2020 election is very important because it unveils an alliance between the left and center of the Democratic Party to really break from… Biden breaks under the influence of Sanders from his Democratic predecessors, both Obama and Clinton. And there’s a major effort to rethink the proper relationship of states to markets of what governments can do to control direct markets in the public interest.
And this is where the middle out discussion and synthesis began and the Biden administration had major, major initiatives in this area. One of the mysteries to me, and maybe you have an answer for it, because I don’t have a good answer for it, is why these major initiatives of the Biden administration have garnered so little popular support. And here I have in mind the reshoring of chips manufacturing, the trillion dollar infrastructure project, and the biggest investment in green energy in this country’s history.
Nick Hanauer:
I think the answer is that nobody knew.
Goldy:
And it didn’t impact people short term. I mean, you have a political system where we have elections every two years, and you had an economic agenda which will take a decade, maybe decades to fully benefit people. And this is a problem with democratic politics in general, you’re elected short term, but the policies that you really need to do are long term. And the fact that we had a New Deal Order for so long allowed us to build all this infrastructure and build these social programs that paid off for decades. And now there’s no consensus on anything. If you’re going to switch policies every two to four years, you’ll never get anything done.
Nick Hanauer:
Yeah. But Gary, I think that the most important thing to remember is that for nine out of 10 Americans, the economy does not exist as an abstraction in the way that the three of us think about it. It is my job and the expenses. That’s it. That’s all they know. And it is just objectively true that under Trump, people’s lives were better because the pandemic and the global supply shocks that that created harmed people in a pretty direct and visceral way. And it wasn’t inflation, it turns out, it was just higher prices. But that reality is what most people process, and they don’t think about chips. I’ll bet you even the most sophisticated people couldn’t describe for me the economic achievements of the Biden administration. The most switched on people I knew had no idea. At the end of the day, that was the problem.
Gary Gerstle:
I used to do a trivia test. Across the political spectrum, everyone I was talking to, “How many projects were started under the Biden trillion dollar infrastructure plan?” And the answers range from two to 100. The most anyone gave was I think 5,000. The figure-
Nick Hanauer:
It’s like 50,000, isn’t it?
Gary Gerstle:
It’s over that. It’s close to 70,000 projects now. And even elite opinion makers had no knowledge of that.
Nick Hanauer:
They had no idea. And like I said, if Joe Manchin and Kyrsten Sinema weren’t such terrible people, the Democratic Party would have been able to deliver a series of much more directly felt viscerally experienced.-
Goldy:
The child tax credit.
Nick Hanauer:
Higher minimum wage, higher overtime.
Goldy:
Childcare.
Nick Hanauer:
All these things.
Goldy:
Yeah. All the things that people benefited from during the pandemic. Instead of having it all cut off at once and now suddenly you have to pay your student loans, you have to pay your rent, you don’t get the child tax credit anymore.
Gary Gerstle:
And one of the things I heard Biden is that all that ended under his presidency.
Nick Hanauer:
That’s right. That’s right.
Goldy:
Yeah.
Gary Gerstle:
And he wanted to extend those. That’s what you’re saying. But a lot of people, this is in terms of what people are feeling, they just know those benefits. There was a great re-imagining of work and relationship of work to family life that was occurring in the first two years of the pandemic. And then all the benefits from the American Rescue Plan ran out and people probably blame Biden for that as
Nick Hanauer:
That’s right.
Gary Gerstle:
As to what’s coming, I think we have… If we look at the political economy of the incoming Trump administration, there is the Elon Musk wing, which I frame as this is a rogue form of neoliberalism.
Goldy:
That was my question, whether these Silicon Valley tech billionaires, whether-
Nick Hanauer:
They’re just neoliberals.
Goldy:
… they are neoliberal-
Nick Hanauer:
Yeah, of course they are.
Goldy:
… or something different.
Nick Hanauer:
No.
Gary Gerstle:
I think they’re a version-
Nick Hanauer:
Cut taxes.
Gary Gerstle:
I think they’re a version of… And Ramaswamy fits in this category, they’re a version of neoliberal. There is, however, another vector in the Trump administration, and this is embodied in Vance, who may be a powerful player. And I go back to his acceptance speech for the VP nomination where he said very clearly the Republican Party has to begin putting Main Street over Wall Street. Now he himself has ties to Silicon Valley venture capital. So when push come to shove, will the GLP ever abandon this? And the answer may… And you’re shaking your head, Nick, saying, “No, they never will.”
Nick Hanauer:
Yeah, no.
Gary Gerstle:
And 80% chance that you’re right about that. But there is a serious move within portions of the Republican Party to develop a genuine populist politics of the right that privileges ordinary Americans as they imagine ordinary Americans, primarily white-
Nick Hanauer:
White men.
Gary Gerstle:
… white men, patriarchal households. But there are the beginnings of bridge building between the left and right on this issue.
Vance talking to Elizabeth Warren about banking reform, Josh Hawley having an unexpectedly warm relationship with Lena Khan about antitrust. Tom Cotton fits into this. Marco Rubio fits into this. There is a small but not insignificant group of senators who are imagining a future for the American economy that is not simply restorative of neoliberalism. And I think one of the things to look for once they actually take power is whether this main street faction of the Republican Party, this genuinely populous faction is defeated by the neoliberals or whether they actually gain in strength and whether there are battles that emerge between the neoliberals who want to eliminate social security. I mean, it’s got to be a flashpoint over those sorts of issues, social security, Medicaid, and whether when Vance has his opportunity, whether he’s going to take on someone like Elon Musk over these issues.
And there are ideas… There are thinkers in the Republican Party who are trying to push this. Oren Cass is one, Julius Krein, who edits American affairs as another. So there’s some movement along those lines. And this may mean that the initiatives of the Biden administration may not disappear as quickly as everybody is predicting. And plus there’s a bunch of Republicans, Congressmen, and Senators who are beginning to say, “You’re not taking away the chips factory that’s going up in my district. You’re not taking away the battery plant.” And the Biden did a very good job of placing about 90% of those battery plants and chips manufacturing plants in red districts in the United States.
Goldy:
Not that it’s helped Democrats in the 2024 election, but yes, the majority of the investments are in red counties.
Nick Hanauer:
Well, we shall see. We always ask the benevolent dictator question, Gary. If you were in charge of the world and were unconstrained by politics, what would you do? How would you get us back on track?
Gary Gerstle:
Well, if I was the dictator of the world, I would just order people around.
Goldy:
Benevolent dictator.
Gary Gerstle:
I would double the green energy program and I would deepen and broaden the initiatives that the Sanders-Biden alliance began and broaden out to something closer to Sanders’ original vision of what that could be. That path is there. I’m actually convening… I’m not a dictator, but I’m organizing a big conference at the University of Cambridge called Beyond Neoliberalism; Pathways to a New Economy and Politics for late May, where we’re going to get into the nitty gritty of what we’re going to do in different areas of economic and political life.
So all the energy that has been generated over the last four or five years, once the Democrats recover from the enormity of their defeat, and one has to admit that it’s an enormous defeat. And I was worried that after the election, people would be less interested in coming to this conference. The reverse is true. There is a desire to come back together and do planning. And I think here it’s important to keep in mind that the neoliberals who had had enormous success were in the wilderness for 20 or 30 years, and they were prepared for the long march. They took a page from Mao’s book and they said, “You have to be prepared for the long march.” And I would say the same thing to those people who want to build a different political economy today. Don’t be discouraged by the defeat.
The part of this that worries me the most because I think the ideas that have been generated over the last five or six years are not going away. They’re going to continue to be discussed. Ideas will be hatched. I have two concerns and they’re interrelated. And that is, are we going to have a real election in 2026 and 2028? Are we going to be able, if we have these ideas and the American people show interest in them, are we going to be having a sufficiently free election? So if the people want this, they can actually vote for it. And the related question is, why does authoritarianism in the world seem to have the upper hand at this moment? In other words, the Trump issue is not simply a US problem. We can-
Nick Hanauer:
Gary, I think the answer is neoliberalism because for 50 years, Democratic governments have not delivered the goods to most citizens.
Goldy:
Well, I think also neoliberalism favors authoritarianism. And Hayek was very clear on that, that he would prefer a liberal dictatorship.
Nick Hanauer:
Okay. But I think at the end of the day, Goldy, if your wages are stagnant or declining for 50 years, while a few people at the very tippy-top get rich beyond the dreams of avarice, who needs a democracy?
Goldy:
Yeah. They had decades to build an authoritarian order because neoliberalism is implicitly elitist. They think the wealthy should be in charge. And I mean, that is clearly written into the core documents.
Gary Gerstle:
That may be, but let me reframe the question. There were in the second decade of the 21st century was a decade of populist revolts on the right and on the left, and let us not forget that. So we can all name the revolts on the right from Brexit to Modi, to Trump, to Bolsonaro, Erdogan, Orban, list goes on and on. But there was also Occupy Wall Street. There was Tahrir Square. There was the Bernie Sanders run in 2016. There was Corbyn in Britain in 2017. There was also Lula coming back into power and defeating Bolsonaro in Brazil, but those triumphs seem to have less enduring power than the triumphs of the right. And Goldy, your answer may be the right one, that there’s… I would say the neoliberal order is over in the sense that we no longer face a world that thinks this is the only way forward, but the institutions of neoliberalism that were built over a 50-year period, many of them are still very powerful and influential and controlling.
So that may be the answer. But I find myself thinking, “Why are the populist revolts of the left more evanescent, less successful than those on the right?”
Goldy:
You’re a historian, you look at the Ancien Régime had failed by the late 18th century, but it took a long time to establish a real democracy in France. It was revolution after revolution after revolution and come back after comeback after comeback. So it took a lot of time and a lot of suffering to… Historically, no, a century is not that much time, but for the people living through it is.
Gary Gerstle:
For us, it’s a long time.
Goldy:
Yeah.
Gary Gerstle:
We’re not facing a century. So we’re back to the long march.
Nick Hanauer:
Yeah, we are. We are. Absolutely. One final question.
Goldy:
Final question?
Nick Hanauer:
Why do you do this work?
Gary Gerstle:
Why do I do this work? There are two components to it. I care tremendously about American democracy and democracy in the world and its future. I’m deeply committed to the proposition that people should be sovereign over their own affairs, we the people of popular sovereignty. And then I chose the right vocation for myself. I love thinking and writing about history as much today as when I began in this endeavor 40 to 50 years ago. And I’m posing questions to you because these are questions I’m posing to myself and I love to puzzle through the key questions of different historical eras. And I don’t want to be finished with my life’s work until I have satisfactory or better answers than I do right now to the extraordinary importance and volatility of our own time.
Nick Hanauer:
Well, Gary, thank you for being with us and thanks for the book. It was a fascinating conversation. Fascinating stuff.
Gary Gerstle:
Great talking to you. I appreciate the opportunity.
Nick Hanauer:
Gary’s such an interesting guy and that historical perspective is always so refreshing.
Goldy:
Fortunately, he gets to write the first draft of history instead of a lot of the journalists who are responsible for this. I’m a little angry. I’m still… It’s the new year. I’m still a little angry at the profession of journalism for how they failed American democracy.
I think it’s interesting. We’re in this moment, obviously we are very disappointed by the outcome of the election. We saw Biden as the most consequential president since FDR and had the Democrats continued to hold power, we would have seen a lot more of those… Move to a new, hopefully middle out order, gained traction. So it’s hard to know what’s going to come out of this. I think the first Trump administration was mostly neoliberal apart from the tariffs. It’s hard to think of anything else that Trump actually did that defied the neoliberal order. And obviously there’s that schism in his new administration between the billionaires who funded him, Elon Musk, who put $250 million of his own money into reelecting Trump and is being apparently rewarded for it, and that other anti-neoliberal populist wing of Trumpism. So we’ll see which one comes out on top. I suspect it will be the neoliberals.
Nick Hanauer:
Yeah. I just don’t see how anything else happens. I mean, I think tariffs? Yes. We’ll see tariffs.
Goldy:
Tax cuts?
Nick Hanauer:
We’re going to see tax cuts for the rich. We’re not going to see a raise in the minimum wage. We’re not going to see labor protections. We’re not going to see any power shift from capital to labor. We’re going to see a massive increase in the amount of consolidation. There’s no way, no way that they’re going to do anything else.
Goldy:
So to poorly quote, paraphrase one of the great neoliberal founders, Milton Friedman, “When a crisis occurs, what fills the void are the ideas that have been left lying around.” When the Keynesian consensus collapsed in the early 1970s, it was neoliberalism. There will be a crisis… There is a crisis, but there will be a bigger crisis. And the hope is that the middle out ideas that are lying around will be the ones that fill that void assuming, as Gary said, we actually have free and fair elections from here on out, and I’m not so confident about that.
Nick Hanauer:
Well, we shall see.
Goldy:
Yeah. Again, if you want to read more from Gary Gerstle, his book, there’s a link in the show notes, The Rise and Fall of the Neoliberal Order.
Freddy:
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