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Was There Ever a Neoliberal Order?

Academic Gary Gerstle’s new book, The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era, is wholly shaped by his claim that American political history since 1930 has been dominated by two political orders, each “a constellation of ideologies, policies, and constituencies that shape American politics in ways that endure . . . beyond election cycles.” That the whole of the last nearly 100 years of American political history can be neatly accounted for in a discussion of just two political orders is startling.

According to Gerstle, the two American political orders—the New Deal order (1930-1980) and the neoliberal order (1980-2020)—were, in their essence characterized by a “distinctive program of political economy.” The New Deal was fashioned in the wake of the Great Depression during the administration of Franklin D. Roosevelt. The architects of the New Deal laid the foundations for a strong central state with sweeping regulatory power to manage the economy in the public interest. As a reaction to laissez-faire capitalism, regulatory controls—developed, codified, and administered by altruistic technical experts—were seen as the means to counter economic vagaries, ensure more equitable distribution of resources, and promote social welfare.

The Rise and Fall of the Neoliberal Order traces the start of the neoliberal movement from the administration of Ronald Reagan. The political economy of the coming neoliberal order was focused on undoing “government regulatory controls that were stymieing growth, innovation, and freedom.” Now, Gerstle argues, in the wake of the Great Recession (2008-2009); the political, social, and racial turmoil of the years that followed; and the election of Donald Trump, the neoliberal order is “at a tipping point.”

Gerstle’s narrative is mainly fixed on the political economies of each order. But the author does nothing to explain the complex and shifting nature of the constituencies of these orders. He does not explore the full ramifications and existential need for a political order to be supported and sustained by its constituencies. Social and cultural dynamics that create upheavals in American politics and become the impetus for changes in the political order are sometimes discussed in the book, but not fully dissected. Instead, Gerstle treats them as narrower influences that shape the policies of political economies.

The Rise and Fall of the Neoliberal Order, then, never provides a wholly adequate framework for understanding the 1930-2020 period in American political history, nor does it offer a wholly convincing argument that a fully developed neoliberal order ever emerged. That is to say, the neoliberal political philosophy never rose to the level of a political order, and so, neither has it fallen. The political history of twentieth and twenty-first-century America is not a contest of two political orders—New Deal and neoliberalism—but of the rise and power of the administrative state and the enduring opposition it engendered.

The Administrative State

The modern American Administrative State is rooted in the New Deal constituencies that embraced a strong central government, staffed by technical experts, in agencies given immense regulatory powers. The New Deal order was a manifestation of what political theorists like Herbert Croly saw as the need for the federal government to amass enough power of its own, as Gerstle writes, “to curb corporate power, to grant labor unions the right to collective bargaining, to inaugurate schemes of social insurance, and to establish a welfare state.”

It also represented the full flowering of what theorist Frank J. Goodnow described in his influential 1900 book, Politics and Administration, A Study in Government, as the primary functions of the central state. In this view, which became a credo among New Dealers and their political successors, there were only two functions of government: politics—the means to determine the will of the people, and administration—those actions needed to execute that will. This view does not embrace the constitutional separation of powers into the legislative, executive, and judicial branches of government. As a result, decades after the enactment of the New Deal, the administrative state remains a virtual oligarchy that makes citizens—and vast reaches of society and the economy—the subject of the rules, regulations, and polices of unelected and unaccountable administrators.

What Gerstle describes throughout the book as political economy driven by the New Deal order is more clearly viewed as the workings of the administrative state envisioned by Croly and Goodnow. The administrative state maintains its power—and the power of elected leaders—by distributing benefits to shifting coalitions of sustaining constituents: labor unions, government contractors, federal employees, welfare recipients, activists, senior citizens, corporations, etc. Those benefits come in the form of government programs and services, regulatory rules and agency policies, favorable legislation, subsidies, and the distribution of tax dollars.

So, when President Ronald Reagan made his 1981 Inaugural Address, he was not announcing the beginning of a neoliberal political movement, as Gerstle argues. Instead, Reagan was voicing the frustration of millions of citizens with a government that had become a huge, unwieldy, impersonal, bureaucracy managed by and for an elite class that is both insulated from and indifferent to the average American:

In this current crisis, government is not the solution to our problem; government is the problem.  From time to time, we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?

What Gerstle mistakes for a neoliberal movement driven by the need to re-establish the primacy of market demand over central economic control is, instead, something quite different. It is the recognition of average Americans that self-determination—Gerstle describes this as the full realization of the individual in society—requires the transfer of the responsibility for self-governance from the central government back to state and local government, the private sector, families, and individuals.

The Rise and Fall of the Neoliberal Order is largely a work of political commentary artfully masquerading as a serious historical study.

Questionable Scholarship

Gerstle is an academic researcher, Paul Mellon Professor of American History Emeritus at the University of Cambridge, and the author of two previous, prize-winning books: American Crucible: Race and Nation in the Twentieth Century and Liberty and Coercion: The Paradox of American Government from the Founding to the Present. As such, many readers of The Rise and Fall of the Neoliberal Order might expect both rigorous scholarship and insightful objectivity in the pages of this book. These readers will be disappointed.

This work was published with one hundred pages of notes for reference and explanation, but without even a single-page bibliography. The absence of the bibliography obscures the fact that this work is highly derivative. Very few primary data sources were used as references (odd for a book that professes to discuss political economy), hundreds of notes for articles come from newspapers, magazines, and journals with decidedly liberal editorial views, and Gerstle references his own previous works, and works he co-authored or edited, more than sixty times.

This partly explains why the credibility of Gerstle’s arguments is repeatedly undercut by dubious, spurious, and erroneous statements: that the Marshall plan was only offered to democratic nations; that Churchill and Roosevelt were “eager” to see the Soviets fight alone in WWII; that Dwight Eisenhower’s military career “languished” until “big government regimes” were instituted; or that in a single month the Soviet Union “dissolved itself quickly and peacefully”—a claim that belies the years of cancerous rot that consumed that polity, the sacrifice of thousands who died on Afghan and other war-torn fields, and the valiance of the struggle of Solidarity and other movements against Soviet oppression.

Gerstle also errs when he describes Hillary Clinton’s “use of a private e-mail server for official business during her tenure as Secretary of State” as “technically illegal.” In addition to her regular e-mail, however, Clinton used the server to receive, store, and transmit classified information on an unapproved, unsecured system, outside of the tight controls of a Sensitive Compartmented Information Facility. This is a felony: contractors, government officials, and federal employees without Clinton’s political clout have been indicted, arrested, convicted, fined, and imprisoned for this crime. Given this full context, the cries of “Lock Her Up” were not just one of the “galvanizing refrains” of a Trump rally. It was, instead, evidence of the growing anger among Americans who sensed the principle of equal justice under law was fading away.

Gerstle also laces the pages of his book with unwelcome and pointless sarcasm devoid of any historical insight. For example, in describing the state of the nation at the time of the Arab Oil Embargo (1973), the author focuses not on the energy requirements of the manufacturing, transportation, or utility sectors of the economy, but on suburban America:

The postwar American economy and way of life were both built on the belief that cheap oil would last forever. This belief had made America the land of large, heavy, high-powered, and gas-guzzling automobiles. It had underwritten a vast postwar project of road building and sprawling suburbanization that aimed to make every American man a homeowner with a garage large enough to accommodate two, and sometimes three, family cars. If these homes sat in bucolic countrysides at long distances from urban centers where work was concentrated, so much the better. American (and mostly male) breadwinners who trekked into and back from the city every day could make believe that ownership of their green piece of suburban land allowed them to re-enact the Jeffersonian dream. They imagined themselves as a new yeomanry, affluent and independent, pillars of the republic.

Gerstle’s unabashed admiration for the New Deal order and the vast administrative state it produced is coupled with other obvious biases. He repeatedly engages in speculation and suggests rosier alternative histories if Democratic rather than Republican administrations had come into power. He lionizes Barack Obama as “handsome and self-evidently intelligent,” a man who moved easily among the cultures of the world, “more than any other previous occupant of the oval office.” By comparison, Gerstle claims Donald Trump cultivated his presidential image in the “bombastic performance art dominating the World Wrestling Entertainment empire” and footnotes his claims with references that include YouTube videos. As appealing as these descriptions may be to partisans, more discerning readers may wonder why any of these gratuitous comments are relevant to a purported work of political economy and history.

In the end, The Rise and Fall of the Neoliberal Order provides little in the way of new insights or objective historical assessment. While this book may garner plaudits in academia and among readers who share Gerstle’s partisan beliefs and worldview, other readers looking for carefully researched, measured, and thoughtfully nuanced assessments of American history, politics, and political economy will come away dissatisfied. This is largely a work of political commentary artfully masquerading as a serious historical study.