What happens to democracy when people can no longer afford the basics of everyday life?
Economist Isabella Weber argues that the affordability crisis isn’t just an economic problem—it’s a threat to democracy itself. Drawing on her new book, Anti-Fascist Economics, she joins Nick and Goldy to explore how inflation, austerity, and corporate profiteering fuel the rise of the far right, and why protecting democracy requires more than defending its institutions. From housing and groceries to energy and healthcare, Weber makes the case for an economy that puts people’s livelihoods, dignity, and democratic power ahead of corporate profits.
Isabella Weber is an associate professor of economics at the University of Massachusetts Amherst and founding director of Essential Economics. Her research focuses on inflation, corporate pricing power, and economic policy. She is the author of Anti-Fascist Economics: In Defense of Affordability, Dignity, and Democracy and How China Escaped Shock Therapy.
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Further reading:
Anti-Fascist Economics: In Defense of Affordability, Dignity, and Democracy
Best of Times, Worst of Times: Record Fossil-Fuel Profits, Inflation and Inequality
How China Escaped Shock Therapy
The Wall Street Journal – America Made Me Very Rich. There’s a Pro-Market Way to Give Back.
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Goldy:
Hey, Pitchfork listeners, Goldy here. Be sure to stay tuned at the end of the episode for our new segment, Ask Me Anything with Nick Hanauer.
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.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Goldy:
So Nick, fuel prices are in the news a lot today. Most particularly diesel fuel, which is heading towards $7 a gallon nationally, $8 a gallon here in Seattle. That means heating oil-
Nick Hanauer:
Yeah.
Goldy:
… prices are rising too, because heating oil and diesel oil are essentially the same fuel. And that means that coming this winter, you’re going to see a lot of suffering throughout much of the country, particularly in the cold regions where a lot of people use oil to heat their homes. I’ll give you an example. Up until a few years ago I had a oil furnace. I converted to a heat pump, which is great. Thank you very much, Nick, for paying me-
Speaker 3:
Yeah.
Goldy:
… enough to be able to afford that conversion. But filling that 600 gallon tank, which is what I might go through in mild Seattle, it’d be costing me over $4,000 this winter if I still had that tank. Imagine you’re living in Maine, or Vermont, or New Hampshire, or-
Nick Hanauer:
Michigan-
Goldy:
… Michigan-
Nick Hanauer:
… or wherever. Yeah.
Goldy:
… Wisconsin, whatever, and you’ve got-
Nick Hanauer:
Where it gets actually cold?
Goldy:
Where it gets actually cold. If you’re still relying on home heating oil, people are going to have to make a real choice this winter between heating their home and paying their mortgage, or their rent, or purchasing food. You’ve got heating oil at $8 a gallon and you have ground beef at $8 a pound, and these aren’t exaggerations.
Nick Hanauer:
Yeah. No, this is what brings fascism to countries. I mean, we’ve been arguing this for a long time, is that in a world where life gets shittier and harder for the majority of citizens every year for 50 years while a few people make out like bandits, who needs democracy? And I guess the reason we’re chatting about this is that today on the pod we get to talk to the economist, Isabella Weber, who has this fantastic new book out called Anti-Fascist Economics: In Defense of Affordability, Dignity, and Democracy. And her core point is this, that economics and democratic governance are inextricably intertwined, that you can’t hope to have a functioning democracy without an economy that is organized around making sure that ordinary people benefit from that arrangement, and clearly that’s the opposite of what we have today. And as a consequence, not only is our country under threat of fascism, but it’s obviously rising all over the world, which is such a terrifying and serious problem.
This is something that’s so important for us to acknowledge and to address. And so, that’s why it’s super fun to get to talk to somebody like Isabella about this problem and how we might get out from under it.
Isabella Weber:
Hi everybody, my name is Isabella Weber. I’m an economist. I just wrote Anti-Fascist Economics, which is about to come out in October, and I’ve been doing work on inflation and profits.
Nick Hanauer:
So Isabella, we’ve taken a look at an early copy of your book, and there is so much to cover in this conversation. And we are in, I think pretty obviously, so much alignment around the ideas that you express. Why don’t you start by sort of laying out your general thesis and then we’ll take the conversation wherever you want to go.
Isabella Weber:
So, this book really started with a tweet on the night when Donald Trump was reelected, and I posted, “Can we finally have a serious conversation about anti-fascist economics?” And that was really a spontaneous reaction to the election recite, but it was also a reflection to the experience that I’ve had in economic policymaking in the years prior where I have been quite involved in the debate around inflation. And I got quite frustrated, to be blunt, how the economics debate was completely separate from the democracy debate. So, it was as if we could do one thing for the economy and then do something else for democracy. I don’t know, call Trump a fascist and hope that that’s enough for him not to be reelected.
So, this is a book that really tries to bring the two together by covering the history, telling the story that actually one of the lessons of the horrors of the Nazi time was that never again is an economics question, and then kind of illustrating how in economic policymaking, we too often treat people’s livelihoods as collateral damage in market adjustments, and that actually puts our democracies and really our dignity at risk.
Goldy:
We’re weirdly seeing this right now with the Federal Reserve raising interest rates, which I don’t mind them doing that to troll Trump, that’s great, heading up to the midterms. But as an economic policy, I mean, the whole goal of raising interest rates is to reduce demand, raise unemployment. It’s basically to put it on the backs of workers and consumers as if that’s our only tool.
Isabella Weber:
I mean, we are seeing an inflation that was unleashed by an illegal war against Iran that led to the closure of the Strait of Hormuz, and all the fallout from there, from oil to fertilizers, to all sorts of key ingredients across production lines. The idea that we could fight that kind of inflation by making the cost of credit higher is quite frankly just absurd. And I mean, it is bad economics, I think. It’s quite straightforwardly bad economics. But I also think, well, it might be useful to throw Trump ahead of the midterms, but we have to recognize that extreme right is in a global alliance and is on the rise globally. I mean, I’m speaking here with a German accent and we just had the worst elections in post-war history where an openly right-wing extremist party with clear neo-Nazi elements has won 44 and more than 38% in two states.
So, that kind of moment when in the heartland of Western democracies where we thought we had learned the lessons, this is the election results that we get. I don’t think that we can think the fact hiking interest rates, which I mean, exerts enormous pressure on people’s livelihoods, it’s basically following the logic that we have to throw people out of work in order to cool down the economy. And we know that there’s a link between economic insecurity and support for the extreme rate. So in that kind of situation, pursuing that kind of economic policy is really putting democracy at the line globally in ways that I think is truly dangerous.
Goldy:
It’s interesting, because the historical lesson that we’re told Germany learned from the rise of fascism was that it was the inflation of the Weimar Republic that brought the Nazis to power. But you basically argue in the book that it was the austerity of the German government and the German economy that was at the heart of it.
Isabella Weber:
Well, I mean, you had more than one economic insecurity shock. Just like right now, I mean we have had more than one economic insecurity shock. We first had the global financial crisis, which was the first booster to the rights of the extreme right. And then we had an inflation, that I’ve been labeling centers inflation, because it’s basically an inflation that is in large parts accounted for by profits, that was another major economic insecurity and inequality shock that came down on us or that was allowed to happen by the ways in which we do economic policy. Now historically, I mean, there was hyperinflation, which was obviously undoing the economy, destroying the ways the economy worked, I mean, creating enormous economic hardship. But then there was the Great Depression and the unemployment crisis. And then in the middle of that, we had Chancellor Bruning, who imposed the most obscene forms of austerity.
But the interesting thing is that even in Germany, even then there actually was an alternative. There was an economist named Vojtinskij who was proposing [inaudible 00:09:39] a key to a job guarantee. He later on actually went to the U.S. and it’s a program that Roosevelt of course eventually picked up on. But so, there was an alternative to going down the austerity route, and Hitler at the time was very conscious that austerity was what was going to get him elected.
Nick Hanauer:
It’s interesting. And I think what I’d love to do is just interrogate more about the connection between economics and democracy, because I think that’s the biggest strand through the book. And what we’ve been saying for a long time on this podcast and elsewhere is in a world where for 50 years the circumstances of the majority of citizens get worse while a few people at the very top do infinitely better, after 50 years of that, who needs a democracy? If this is what democracy buys you, then clearly it’s not delivering what it should. And I’m very taken by your analysis, which I think in some ways goes deeper than ours, which tends to be a little bit instrumental in the sense that our view has been for a long time that the big problem is wages. And I think you may have heard us say or know that if the median income had simply stayed the same proportion of the economy for the last 50 years, people would earn in the range of twice as much per citizen per year as they do today.
And I think it’s fair to say that if that was the case, then we would be in much less deep shit than we are today. But I think the point that you make is that it’s deeper than just the dollars and cents, it has a lot to do with agency, power, and how people feel about how they interact in the economy. And because at the end of the day the economy is a power structure, and we have for 50 years left most people behind in that.
Isabella Weber:
Yeah, absolutely. I mean, we are in the middle of a deep crisis of livelihoods. I mean, we are facing climate change, we are facing geopolitical turmoil on a scale that was hard to imagine just a couple of years ago. And all of this feeds into a real crisis of the material foundations of our lives. And in the middle of this, we are still kind of captured by the neoliberal mindset where the idea is that the best that we can do is to subordinate people to the market, because the moment that someone steps in and takes agency and acts, it’s somehow ruled by man over men. So in other words, we are still captured in this Hayekian way of seeing the world. Now, what I’m arguing is that by focusing on the essentials, which is what we need to restore and to reorganize to address the crisis of livelihoods, we can at the same time achieve very concrete change.
If you make groceries affordable, this is something that people can register at the check-out counter in very concrete ways. But at the same time, you establish the possibility of elected governments acting in the interest of the people. And this sounds banal, right? But it-
Nick Hanauer:
No, but it’s the whole point.
Isabella Weber:
Yes, exactly.
Nick Hanauer:
This is the whole point.
Isabella Weber:
It’s all banal, but it is the whole point.
Nick Hanauer:
No, when democratic governments surrender economic decision making to supposedly natural market forces, they effectively surrender part of democracy itself. And that’s what’s driving everybody crazy, right?
Isabella Weber:
Exactly. And I mean, it is inequality, because under these obscene levels of inequality that we face, we know, as you just said, that some people have just outrageous amounts of power. So in that sense, the neoliberal ideology is not coming out of nowhere, because behind the rhetoric of the invisible hand of the market hides profit fundamentalism, because ultimately when we say we have to organize this through the market, what we are really saying is we need to organize this through gigantic private companies whose primary goal is to make profits. So in that sense, it’s a subordination under capital and profits that at some point becomes incompatible with any serious notion of democracy.
Nick Hanauer:
Democracy, right. And this is why people like Peter Thiel hate democracy, because it conflicts with the unrestrained ability to make ever more profit. I think this is the biggest issue facing Western democracies today is that we have allowed … Economists, I think traditionally will tell you that the existing economic framework does not contain a moral framework, that morality and economics are different. But of course we did smuggle a moral framework into neoclassical economics, and it is the primacy of capital returns. I mean, the word efficiency simply means returns to capital. It doesn’t mean environmentally efficient, it doesn’t mean efficient for workers, it doesn’t mean efficient for consumers, it means do I maximize my returns on capital? And that is the moral framework that guides not just the economy but our societies most generally today.
Isabella Weber:
Yeah. And I mean, to go back to your earlier question, why is what I’m saying different from just expansionary macro policy? Because if we say, “Okay, we just have expansionary fiscal policy, where just the responsibility of the state is to make sure that the government is spending enough so that we don’t get into a slum,” then basically the job of the government is to somehow pump money into the economy to keep the music playing. But the logic of profit fundamentalism stays intact.
Nick Hanauer:
Yes.
Isabella Weber:
Now, what I am arguing in a very much Polanyian spirit is to say that the essentials of life are things that people cannot do without. That’s kind of the definition. I mean, no one can do without shelter, no one can do without food, no one can do without energy and utility needs, transportation, care and so on. So, these are the areas. I mean, Polanyi defines it more abstractly in terms of labor, money and nature, but I think we can break this down into these concrete things. And these are the areas where the market basically is a lie because you don’t have an option to say, “Oh, today I’m choosing not to eat.” You don’t have an option of saying, “Today I’m choosing not to heat by home,” when it’s extremely cold outside. So in that sense, in these areas, by the nature of these areas, the markets is destined to fail.
And as we are in this combination of crisis, this failure is becoming very eminent and it’s actually failing in ways where people are pushed into extreme anxieties over their material security, where at the same time, the same shocks, the same crises are the pretext for windfall profits on a scale that … Extraordinary. And that then leads to a situation where if you look at the unit profits, I mean, everybody’s now talking about the massive jump in unit profits under Trump, and that is absolutely scandalous and that shows you where the extreme right stands. They very much stand on the side of profit fundamentalism, when push comes to shove. But during the inflation, we have seen a jump in the unit profits. So, the share of every dollar that is going to profits from 0.14 or 14 cents per dollar, to 23 cents per dollar. So, this is extraordinary.
This is basically unprecedented in the data series for the United States. And this is possible because of these shocks, because of these crises that unravel our essentials.
Goldy:
Nick, you brought up Peter Thiel and you said he doesn’t support democracy because it’s good for his profits. It’s good for maximizing his profits. I think there’s something you’re missing in that, which is there’s always been this psychological component to neoliberalism. Foundationally, it’s the belief that because it’s a meritocracy, the best and the brightest and the most capable are the wealthy, are people like you, Nick. And so, you should be running the economy. And I think that is fundamental to neoliberalism and has infiltrated Orthodox economics that people like Thiel and Musk, and yes, you, it’s your wealth that actually means you should be making the decisions. And so, there is this weirdly, in Hayek with The Road to Serfdom, there is this fundamentally undemocratic idea embedded in the Friedman and Hayek ideology.
Nick Hanauer:
Yeah.
Isabella Weber:
Yeah. Thank you for bringing this up, Goldy. I think this is a really important point. And in fact, as I argue in the book, I think this is kind of where neoliberalism and fascism converge, because the ideology of neoliberalism is social Darwinist at the end of the day. It’s the idea that whoever prevails on the market is the strongest and therefore should have the most resources and the most power. And then the ideology of fascism is to add a racist interpretation to this and a group-based, hate-based interpretation to this, where it’s then no longer just the people who happen to perform best on the market, but the superior race, the group that is meant to rule, the group that is meant to be on top of the hierarchy, and everything that is going wrong with society is projected on this mythical hierarchy being undermined by whatever policies they can identify.
So as such, we have this convergence between neoliberalism that is willing to treat people’s livelihoods as collateral damage, as the interest rate policy is actually established very clearly. When Larry Summers goes on TV and says, “X percentage point of people have to be unemployed in order for the economy to get back to a more stable place,” then he’s saying those people’s livelihoods are collateral damage. We don’t care what is happening to their communities, we don’t care whether they’re able to put food on their kitchen table, we don’t care whether their children lose three years of critical child development while this unemployment prevades. And that’s actually this willingness to treat people’s lives as collateral damage is where Polanyi locates the fascist virus already in the 19 … He projects us back on the 19th century and says that with this logic, if you take this to its conclusion and you add racism and racist ideology, you arrive at fascism.
And that’s why I think it’s not so surprising that someone like Thiel is at the same time a libertarian, and someone that quite openly embraces fascist ideology.
Nick Hanauer:
Yeah.
Goldy:
As does Musk. I mean, I don’t think anybody’s gone more openly Nazi than Musk.
Isabella Weber:
Absolutely. And I mean, this is actually also one of the things that I was grappling with in the book. I mean, everybody has seen these pictures of the inauguration where suddenly the world’s richest man, the tech elite, the tech CEOs were standing in front of elected officials, had a front row seat when Trump was being re-inaugurated. And at the time there was this big kind of surprise, like how did all of these people who until recently had donated to the Democrats in support of the Democrats jumped ship? And I think there are people like Peter Thiel who have very clear fascist ideology that they have embraced and expressed openly, and there are people like Musk who I think has also turned quite explicitly racist and fascist. And then there are others who surprisingly are actually more kind of followers, who basically don’t have any core ideology, but their ideology is profit fundamentalism. So whenever power changes, they will be on the side of power.
Nick Hanauer:
Pure greed.
Goldy:
And this is actually really familiar historically. There were many American industrialists who supported fascism and supported the Nazi regime, and Hitler in particular, most famously Henry Ford, who was an infamous anti-Semite. So, that was ideological support among others. But you had, of course, Fred Koch, the Koch family, you had the head of General Motors, of Standard Oil of New Jersey. You had Thomas Watson, the head of IBM, who actually received a medal from Hitler in 1937. Most of that support wasn’t from ideological grounds, it was they were heavily tied up in business in Germany and the Nazis were good for business, until of course they weren’t and they basically seized control of their German investments. Though of course, these American companies continued to share in the profits.
Isabella Weber:
Yeah. And I mean, we saw something similar in Germany in the sense that there was a core group of industrialists that supported Hitler, a small core group, but the brunt of them really came around to either openly supporting or at least very pragmatically accommodating in ways that ultimately propped up fascism once Hitler was in power. So, that’s-
Nick Hanauer:
And you’re watching American corporations do that today, just roll over for Trump.
Isabella Weber:
Exactly. So, that’s why I have this chapter in the book that is Capital Won’t Save Democracy. We can’t wait for capitalists to save democracy. We have to realize that the only choice for democracies to survive is to organize the economies in the interest of the people. And at the end of the day, this means going up against capital interests, and this means confronting profit fundamentalism heads on. It doesn’t mean nationalizing everything, it doesn’t mean you’re turning everything into a planned economy, but it means reorganizing the economy essentials in ways that it can work for the majority of people.
Nick Hanauer:
Yeah.
Goldy:
And this means not just redistributing incomes, it means redistributing power in the economy, because that’s where this all starts.
Isabella Weber:
Exactly. And I think that’s also where I’m trying to push us beyond a tax the rich agenda. I mean, I’m obviously very much on board with taxing the rich, but I think it’s not enough to keep the machine running as it is running and then have this … I mean, if you think of it as kind of a water pumping machine, you have large parts of the water constantly being pumped into one bucket, and then take a little scoop and you scratch a little bit out of it and put it back in the other bucket. No, we have to actually work on how the machine is designed, and that’s what I’m trying to get at. But it’s also not possible to change the whole machine overnight. We have to do this in a gradual fashion because we have to restore power.
I mean, democratic power is extremely fragile at this point. We have to regain people’s trust. That’s I think why Mamdani’s New York is so inspiring when he insists that with every pothole that is being filled, a little trust in democracy is being restored and in the ability of governments to deliver for the elected constituencies, and I think he’s exactly getting at that. So, we have to have these immediate steps that we can take. But at the same time, in addition to these quick fixes and relief measures, we need structural change that actually transforms the ways in which we organize the economy and transforms very concretely the ways in which we provision essentials, because that’s also something that we have to do because climate change is a reality and the crisis of livelihoods that we face in considerable parts is driven by climate change.
Goldy:
And just adding like everything else, it’s the people with the lower incomes who are going to suffer most both from rising prices and from the-
Nick Hanauer:
Rising sea levels.
Goldy:
… impending climate catastrophe. Yeah, Nick’s going to be fine.
Nick Hanauer:
Well, maybe I will.
Goldy:
You’re going to be in your bunker somewhere, but yeah.
Nick Hanauer:
On my mountaintop.
Isabella Weber:
Absolutely. And again, that’s why what Naomi Klein and Astra Taylor call anti-fascism is something that also converges with this neoliberal logic. When the anti-fascists say, “We are going to be in our bunker, we are going to be on our island, we are going to be in our freedom city and we are just going to be fine,” and we let the planet burn and we let the pandemics run through populations and have herd immunity, which really means people just buying in swaths. And we let the energy prices explode and we let the fishermen in the Philippines go without diesel after three days and go without food after two weeks, then this idea of anti-fascism actually converges with the idea of markets on nation and the neoliberalism.
Nick Hanauer:
So Isabella, if you were going to do three big things to get this mess cleaned up, what would those be?
Goldy:
And this is a without political constraints.
Nick Hanauer:
Yeah. If you were-
Goldy:
So, just the magic wand question.
Nick Hanauer:
Yeah, the queen of the world.
Goldy:
We used to call this the benevolent dictator question, but politics have degraded to the point where the word dictator is becoming too much of a realistic outcome. So, the metaphor doesn’t work for us anymore.
Isabella Weber:
Okay, I’ll make one meta point. I don’t know if I can squeeze this in as a fourth point, and then I go into my actual points. So, I think the first point is actually going back to something that you said, Nick, is that we need to realize that economics is a moral science. And for a reason, Smith didn’t only write The Wealth of Nations but also The Theory of Moral Sentiments, and pretending that there are no moral implications from economics is part of what has led us into this crisis. Now, of course every discipline will overstate their own importance. And as an economist, I’m bound to think it’s all about economists. But having been in the room in the energy crisis when important government decisions were being taken in the German context, I have become quite convinced that economic ideas have to change, that we need a mind shift in order to get change in the real world. Now in terms of what kind of-
Nick Hanauer:
Just to say, we are in violent agreement with that.
Goldy:
Right. We are all about paradigm.
Nick Hanauer:
100% in agreement that the biggest part of this problem was a bunch of terrible economic ideas that were taken seriously, enacted into policy, and ridden for a long time. So, we’re completely with you on that.
Isabella Weber:
I mean, to add one more of these meta points, I think on the paradigm shifting, on the broadly progressive side, I think we are very good at finding division. So oh, you are Brandeisian antitrust person and I am a green planning person, so therefore really there’s nothing that unites us, and I think this is exactly wrong. When it comes to the question of how can economics help to fight fascism, I think we have to recognize that whatever is moving the needle towards power for the people and away from profit fundamentalism, and away from overburdening corporate power and towards public control over the essentials of our lives, these are good things. And this means all courts on decks, and the toolbox has to be as broad and as versatile and as united as we can be. Now, in terms of concrete policy measures, I mean, as at this point of the conversation you will not be surprised to hear, I would start from the essential.
So, I would start from what has now become termed the affordability agenda. I would start from the question of housing, the question of energy, the question of food, transportation and care. And I would argue that we need quick interventions to stabilize the prices of these things. And at the same time, for each of these sectors we need policies that change structurally the ways in which provisioning happens in these sectors. So if you take the example of housing, I do think that in a city like New York we need rent control, but we also need a build out of public housing. We need to limit the amount of housing that can be owned by private equity. We need zoning reforms. We need incentives for landlords to refurbish apartments that they have in a great way, and ideally incentives that actually empower tenants. So for example, you could say tenants have the right to demand from the landlords that they build in heat pumps, which can cool in the summer and heat in the winter.
And then landlords might get some subsidies in return for this, but we are doing this in a way that actually strengthens tenant power. So, this is just one example. Then I think all of this essential stuff is at the end of the day about putting a floor under people’s livelihoods, but we also need a ceiling that limits extreme profits and ultimately extreme forms of wealth. So, that’s where the whole taxation agenda comes in, but also where the public options agenda comes in, because we see that in this era of overlapping emergencies and shocks, in essentials, profits explode, windfall profits explode. We have done research on the fossil fuel industry where we show that off the record, record fossil fuels in 2022, 50% went to the top 1% and the bottom 50% only got 1% of those profits, which meant that for the top 1% the claims on fossil fuel profits was enough to compensate their whole inflation burden. But of course the bottom income-
Nick Hanauer:
Yeah, they were totally screwed. Yep.
Isabella Weber:
… has a higher inflation burden because they spent more on essentials where the prices go up disproportionately, and they don’t get anything from those profits. So, that means that public options in energy, in housing, in care, but also I think experimentally and importantly in grocery and food commodity trading are things that can deliver both affordability and levers to actually change the ways in which our machine is running and change the way that returns from those essentials are being distributed.
Nick Hanauer:
Thank you so much for your work on this, and your book.
Goldy:
Got the final question?
Nick Hanauer:
We have one final question, that’s right. Why do you do this work?
Isabella Weber:
Thank you for that question. I mean, I did all this technical inflation work. I could have quite easily written a book about profits and inflation, and made it kind of a technical issue. Something where after having been called basically insane by some fellow economists, I was vindicated on because central banks came around, even the IMF came around saying that this is correct. So, that would’ve been a very easy choice. But what’s happening in terms of the economic policy debate, in the late Biden years and with Kamala Harris’s campaign and watching what’s happening around the world, and having grown up in Nuremberg were the idea that anti-fascism is my first civic duty in a city where … I grew up in the inner city of Nuremberg within the medieval city walls where 70% of the city was bumped down to the ground. And when I grew up, it wasn’t like, oh, the evil Americans came and bumped down our city.
It was like something so terrible, so horrendous happened that we needed this destruction on a civilizationist scale from the perspective of our city, like the old infrastructure that literally goes back to the 13th, 14th century being completely destroyed, to come out of this horror. So in that sense, the question of never again was really one of my first experiences as a person. So, I got to the point where I was like, “I can no longer pretend that on the one hand I’m an economist and I’m doing these technical things. And on the other hand, there’s all this politics going on and this has nothing to do with it.” Meanwhile, the threat of fascism is as imminent as it hasn’t been since World War II.
Goldy:
So Nick, you recently published a piece in the Wall Street Journal in which you basically make the argument that if you can’t explain why markets can deliver the kind of economy that the American people want, that voters say they want, with affordable housing, healthcare, education, food, transportation, the essentials that Isabella talks about, if you can’t defend market capitalism you’re not the right person to defend it.
Nick Hanauer:
Correct.
Goldy:
And I think Isabella makes this other argument that you’re not the right person to defend democracy, because-
Nick Hanauer:
Right, both. Either.
Goldy:
Right, because it’s democracy that actually sets the rules and enforces the rules of the market, and sets the priorities and so forth. And if democracy is going to allow this economy to continue to do with what it’s doing, you’re going to give up on it in the same way that people are giving up on capitalism. The reason why socialism is no longer as dirty a word as it used to be, the reason why people like Mamdani are winning elections and are so popular is because they’re actually offering a different economic solution. They’re saying, Hey, no, we can deliver these things. Right?
Nick Hanauer:
Yes, we absolutely can.
Goldy:
Right. And the reason why Trump was able to rise to power was on his faux populism. Economic distress fuels fascism, it always has. It is right now. It’s doing it here, it’s doing it in Germany. You’re in London right now? It could be the next election-
Nick Hanauer:
For sure, for sure.
Goldy:
… you could see the far right in charge for really the first time ever.
Nick Hanauer:
Yeah. Or Farage, who’s about that. Yeah. No, the whole thing is really deeply worrying. Lots of work to do to get things back on track. But I just really appreciated also the way in which Isabella connects power and agency in her book to these issues, because I think that sometimes we can be a little bit too instrumental in our analysis in the sense that by saying effectively that, well, if all it was is wages were higher everything would be better. And I do, just to be clear, I think if wages were way higher things would be better, but that’s not enough.
Goldy:
But the point is there’s a reason why they’re not higher, and that is-
Nick Hanauer:
Which is power.
Goldy:
Which is power. And our failure in the neoliberal era to provide the, well, not even to provide, but the success at dismantling other forms of power, dismantling countervailing power, dismantling the eroding away the power of organized labor, and eroding the minimum wage and the overtime threshold, and antitrust enforcement, we have essentially allowed power to concentrate in the hands of the few, intentionally. That’s a policy choice that we’ve made for more than 50 years, basically informed by a set of really shitty ideas. And core to our argument is that shitty ideas lead to shitty policies, and shitty policies lead to shitty outcomes. And the shittiest outcome of them all would be a long collapse into fascism. Because it-
Nick Hanauer:
Yes, absolutely. That would be very, very bad.
Goldy:
It’s not going to address the economic issues. It’s not going to make our lives better. It’s certainly not going to address the climate crisis. So, we agree that there’s like three crises going on simultaneously, this crisis of inequality, this crisis of democracy, and this crisis of climate and anti-fascist economics if we’re going to deal with this, because fascism-
Nick Hanauer:
No, that’s true.
Goldy:
… certainly isn’t going to make it better.
Nick Hanauer:
That’s right.
Goldy:
Anyway, I’m sure it will help Isabella, if you order her new book, Anti-Fascist Economics: In Defense of Affordability, Dignity and Democracy. Nick and I both had a chance to look in an advanced copy, we can’t recommend it more highly.
So, judging by the hundreds of comments left on YouTube and other social media, Nick, I apparently don’t do a very good job asking you questions, because our listeners have a ton of questions for you.
Nick Hanauer:
Okay.
Goldy:
So, we’re going to start answering these on a regular basis, starting with a question that in one form or another dozens of our listeners have asked. And it’s a two-part question, Nick.
Nick Hanauer:
Okay.
Goldy:
First, could you explain exactly how we use the term neoliberalism, what we mean by neoliberalism? And I’d suggest maybe how that might be sometimes a little different from how other people use it and the alternative terms. And following on that up, where the hell did market humanism come from? The term, not the idea.
Nick Hanauer:
Oh, golly.
Goldy:
Yeah. So, let’s start with neoliberalism. What is it, Nick?
Nick Hanauer:
So great question, hard to answer, but I will do it my best. So, neoliberalism and neoclassical economics are inextricably intertwined. So, if you go and take economics in college, they teach you classical neoclassical economics. So, your Econ 101 textbook is a textbook of economics that teaches you a variety of things about the world. Neoliberalism is the ideology, the sort of political narrative, the heuristics, the rules of thumb that emerge from that academic framework. So, you can think of neoliberalism-
Goldy:
You’re pissing off a lot of economists here, Nick-
Nick Hanauer:
Maybe.
Goldy:
… because they would disagree with you.
Nick Hanauer:
So, neoliberalism is sort of the weaponized ideological framework that emerges logically and naturally from the underlying economic theory that today is mostly taught in universities. Let me give you an example. In the textbook, the economy is understood as a Pareto optimal equilibrium system. And-
Goldy:
Which means?
Nick Hanauer:
Which means in neoliberal terms, raising wages kills jobs.
Goldy:
Right. Technically, you can’t make one person better off without making somebody worse off. That’s when you’re at a Pareto equilibrium.
Which is what has happened-
Nick Hanauer:
Yeah.
Goldy:
… during the neoliberal era. The way I would summarize this, Nick, is that neoliberalism is an economic ideology that is built atop a flawed economic model. So, neoclassical economics is this equilibrium model. And what you’re saying is that it inevitably leads to neoliberalism is basically that if you believe in its assumptions and theories, if you believe its model is correct, it drives you towards a neoliberal worldview-
Nick Hanauer:
Correct.
Goldy:
… this market fundamentalist worldview, that’s another term that people use, where the market always has primacy and you only use government to interfere or impede it to fix market failures, or to make a societal choice where you are knowingly and willingly giving up efficiency. You’re making everybody a little worse off in order to achieve some other kind of societal goal.
Nick Hanauer:
That’s right.
Goldy:
That’s the only reason why you would interfere in the market, because left to its own devices it will magically deliver societal welfare for everybody. I will say there was a history to this of course, and that is the term started being used by Friedrich Hayek, and it was his objection to the way the word liberal had changed in America. When he called himself neoliberal, he was re-embracing classical liberalism. The rest of the world uses the word liberal differently than we do. It doesn’t mean progressive, it means more like libertarianism. So he was reclaiming that word, and that’s why he used neoliberal instead of liberal to make that distinction that he’s an old-timey liberal, not the newfangled new deal kind.
Nick Hanauer:
Now, as for market humanism, it’s a great question.
Goldy:
I can give you a little insight into that, Nick.
Nick Hanauer:
Okay.
Goldy:
Because we struggled with what to call this for a-
Nick Hanauer:
No, exactly.
Goldy:
… very long-
Nick Hanauer:
For a very long time. We had some really bad-
Goldy:
We had some ideas.
Nick Hanauer:
Terrible ideas, terrible ideas. So, you can argue that market humanism isn’t wonderful, but it is so much-
Goldy:
But it’s better.
Nick Hanauer:
… with everything else-
Goldy:
Than all the other crap that we came up with.
Nick Hanauer:
Yeah.
Goldy:
And I’ll tell you, it first occurred to me, Nick, as an alternative to market capitalism.
Nick Hanauer:
Yeah. Right.
Goldy:
To make the distinction that it’s not capital and capitalists that are at the center of the economy, but actual human beings.
Nick Hanauer:
Exactly.
Goldy:
But that’s not really how we use it, use that term.
Nick Hanauer:
Yeah. So our listeners, I think know that most of my career was devoted to commerce and businesses, and I’ve helped start a whole lot of them. And I have named so many things, so many companies, so many products, and it is always messy and hard. And I’ll tell you what, you think about the name amazon.com, which is what we named amazon.com. And I was in the room, I just want to say, when we did decide to do that.
Goldy:
And what was the alternative, Nick?
Nick Hanauer:
Oh my God. Well, Cadabra was one of our alternatives. Cadabra, but it sounds too much like cadaver. And we came up with Amazon because it was like Earth’s biggest river, Earth’s biggest bookstore. That was literally it. But believe me, when we came up with that name, there were a lot of people that were like, “God, that is a dumb name.” And I’ve named so many things that in the beginning sounded really, really dumb and terrible, and after a while you just get used to them. Is Zillow a good name? I remember when my friend Rich Barton came up with that one, he was like, “Yeah, it’s like Zillow and pillow, and had something to do with Dr. Seuss and who knows, but today we use it quite easily. But I do think that market humanism really is a good name, because it has the two things we care about in it, a commitment to markets, which we believe if well managed are an extraordinarily important social technology, and humans, which is the whole point of the system, that we want a market economy that is dedicated to human flourishing.
And so, market humanism I think goes together quite well. But if it doesn’t roll off the tongue quite as well as you might hope it was, it’s definitely better than solutionism, which was another idea that we had, because prosperity is-
Goldy:
Or, you want the worst one?
Nick Hanauer:
I can’t remember what it was.
Goldy:
Eucapitalism.
Nick Hanauer:
Oh yes, yes. E-U, E-U-
Goldy:
As in eugenics.
Nick Hanauer:
No.
Goldy:
It’s the same. Yeah.
Nick Hanauer:
It means for you social. Eusocial.
Goldy:
I know that’s where we got it from, but-
Nick Hanauer:
That’s right. For those who don’t know, believe me, in our work we go deep on crazy things, but eusociality, E-U-S sociality is a very important concept from the study of cooperation in the animal kingdom. Bees and ants and creatures like that are eusocial. And because we felt so strongly about cooperation as the origins of prosperity in human societies, eusociality is a thing that we talk about a little bit in the big book. And anyway, so eucapitalism was one of our terrible ideas that we quickly got out from under. Solutionism because prosperity in human societies is best understood as the accumulation of solutions to human problems. So, we went with that for a while. True capitalism was something we tried, that didn’t work out. So anyway, I feel very strongly that market humanism is the least worst idea we had.
Goldy:
And you know what, Nick? It’s descriptive. It does what it says on the tin.
Nick Hanauer:
Yeah, exactly.
Goldy:
It describes a market economy that centers human beings, and we mean humanism in both senses of the word. It is both a narrative that is grounded in science like the humanists were, and it scientifically puts human beings at the center of the economy, not capital or capitalists.
Nick Hanauer:
Yes. All right. So, hopefully that completely satisfies-
Goldy:
Yeah, we only went twice, two to three times as long as we intended.
Freddy :
Pitchfork Economics is produced by Civic Ventures. If you liked the show, follow us and leave a rating or review wherever you get your podcasts. You can also find Pitchfork Economics on Facebook, Instagram, Threads, Blue Sky and YouTube. For the latest economic news and analysis and ideas for building an economy from the middle out, subscribe to our weekly newsletter, The Pitch, on Substack. If you’d like to read more from Nick, subscribe to his writing and commentary at nickhanauer.substack.com. And for links to everything we just mentioned, plus episode transcripts and more, visit pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.