Goodbye to all that?
The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era by Gary Gerstle (Oxford University Press, 2023)
Reviewed by William M. Knoblauch
After the 2016 election, scholars scrambled to make sense of American politics. Some produced essays, and even online syllabi, to help citizens understand political theory, populism, media influence, and dictatorships. Some historians, like Heather Cox Richardson, fought back against haters and doxxers to chronicle America’s political maelstrom in real time. Trump’s first election effectively triggered the return of many historians to the public arena. Now, after something of a four-year reprieve, many scholars again find themselves again asking, “How did this happen?” Gary Gerstle’s The Rise and Fall of the Neoliberal Order is one such attempt to again make sense of our current political situation.
Gerstle opens by retreading his past work, 1989’s The Rise and Fall of the New Deal Order. The date is important. 1989 is the year Neoliberal ideas reached their first delirious apex. The fall of communism across the Eastern Bloc mixed with the literal crumbling of the Berlin Wall signaled to the world that neoliberal ideas—that promoted free trade between nations, the free flow of ideas across borders, and the sanctity of unfettered capitalism—had finally won. Some pundits were so elated that they proclaimed a heady “end of history.”
By “neoliberalism,” Gerstle pinpoints a specific set of economic and political ideas that promote free trade, deregulation, and globalization. But neoliberalism is a loaded term; it demands deconstruction. “Liberalism,” broadly defined, refers to the rise of scientific and humanistic thinking that arose from the Enlightenment in Europe during the 17th and 18th centuries. Its tenets were self-governance, individuality, secularism, free trade, and rationality. “Conservatism,” by comparison, connoted tradition in western culture that predated Liberalism. It promoted stability through tradition, hierarchy, religion, and a more controlled economy. By the 1920s, American liberalism, with its hands-off economic policies and business-driven success, seemed (a few Progressive Era inroads aside) poised to rule unchallenged.
Then the Great Depression struck, leaving world leaders to scramble for radical alternatives. Some trended further toward the authoritarian left (like Stalin’s Soviet Union), others dangerously right (like Mussolini and Hitler’s fascist regimes). Franklin D. Roosevelt remained, by comparison, moderate. His enigmatic personality helped to navigate several social democratic programs through Congress to manage parts of the economy. While scholars continue to debate the New Deal’s efficacy, what is undeniable is that during the Great Depression, FDR so effectively pushed fiscal policies, relief programs, and pro-labor initiatives, that government responsiveness to economic hardship became almost assured.
When Keynesianism, that heady mix of fiscal spending and government programs aimed to stimulate a stagnant economy, ensued for decades after WWII, not everyone was pleased. Some intellectuals and elites argued that the tradeoff of individualism for economic management was too much. Soon, disgruntled thinkers attacked FDR’s agenda for running afoul of classical liberal norms. The earliest adopters of “neoliberalism,” then, sought a return to the 19th century tenets of unchecked individuality, free markets, and government deregulation that Keynesian orthodoxy shunned.
In its earliest incarnations, neoliberalism had two key promoters, Friedrich Hayek and Ludwig von Mises, who pushed these ideas in highly selective think tanks in the 1940s and 1950s. While von Mises might be an esoteric name for some, Hayek has become a mythic figure in Libertarian circles; that is why it was so refreshing to see Gerstle assess the Austrian’s initial impact soberly and accurately. Hayek’s initial influence was at best marginal when compared to contemporaries like Keynes, Joseph A. Schumpeter, or Paul Samuelson. Still, after decades of neoliberal orthodoxy guiding American politics, today Hayek stands as a pillar of neoliberal thinking for being one of its most stalwart early promoters.
As American economic dominance abated in the 1960s, critics of government involvement in economic matters—such as those who were now more widely imbibing Hayek, von Mises, and their contemporaries—became much louder. By the 1970s, with the added pressures of stagflation, an energy crisis, and an ongoing Cold War, leaders sought alternatives to seemingly broken Keynesian approaches. It took Ronald Reagan’s election in 1980 to formalize a coalition to do just that. Reagan’s gift was that he could package and sell these radical ideas from fringe Austrian economists in a simple, non-threatening ways. “Supply Side” became the ideology’s pseudonym, enticing unhappy voters with a change of approach that might just kickstart the economy. Later, Reagan would pass sweeping tax cuts thanks to his rhetorical gift (well, that and his luck in surviving an assassination attempt which made battling his policies, at least for a time, political suicide). Like other historians, Gerstle recognizes that Reagan was the indispensable figure, a “soft sell” populist who took ideas that would benefit Wall Street and sold them convincingly to Main Street. In short, in Gerstle’s words, Reagan’s presidency marks the true beginning of a neoliberal dispensation.
It’s a tidy term, “dispensation.” Other historians have used more unwieldy jargon—worldview, hegemony, and even weltanschauung —but “dispensation” fits. It applies to what politicians and intellectuals considered possible in the milieu of their times. For example, Franklin D. Roosevelt’s New Deal dispensation lasted far longer than his four terms; Republican presidents like Dwight D. Eisenhower and Richard M. Nixon both accepted Keynesian economics, fiscal spending bills, and collectivist labor recognition. Likewise, well after Reagan’s presidency, Democratic leaders like Bill Clinton, still high on the surprising end of the Cold War and riding the wave of a 1990s tech boom, almost drunkenly embraced neoliberalism by promoting globalization, free trade, and deregulation, ideas made manifest in Clinton’s signing of the first North American Free Trade Agreement (NAFTA) bill and his signing Congress’ repeal of the Glass-Stegal Act in 2000.
Gerstle assesses neoliberalism’s impact on both sides. As wealth disparities grew throughout the 2000s, many disgruntled citizens on the left flocked to Bernie Sanders’ campaign, which promoted economic populism by criticizing domestic wealth disparities. While Bernie broke through politically, and the fringe left made more headlines with its Occupy Wall St. protests, neoliberalism was no longer simply a bugbear of the left. On the right, calls for protectionism arose through the Steel Belt as it became the Rust Belt, propelling Trump’s candidacy. Tariffs, by design, run counter to neoliberalism’s goal of free trade, and will almost certainly raise prices on consumer goods for voters. No matter; a disgruntled working class is seeking retribution, not cheaper beer. Problematically, it was rampant protectionism that deepened our Great Depression in the early 1930s, a fact that seems to be largely forgotten by politicians and the public alike.
The Rise and Fall of the Neoliberal Order is certainly not the first attempt by a historian to try to make sense of our current political landscape. Curious readers might also examine Daniel T. Rogers’ Bancroft-winning 2012 book Age of Fracture. Rogers outlines the emergence of new, critical ideas—about the market, economics, education, even art—throughout the 1970s, and how these ideas laid the groundwork for a “fracturing” of America’s body politic. Historian Kevin Mattson made a similar and persuasive claim in his book Rebels All!, which proclaims that by the mid-1970s, those on the fringe right, such as the Neoconservatives, had adopted the New Left’s politics of outrage, demonstration, and indignation. It is a worthwhile read, as is Nicole Hemmer’s more recent Partisans, which identifies the roots of today’s populist rhetoric, replete with its falsehoods, outright lies, take-no-prisoners and give no quarter attitude to a few 1990s political leaders, such a Newt Gingrich and Pat Buchanan. For readers seeking a purely political assessment of how we got here, it is essential reading. But so is Gerstle’s book. While it raises almost as many questions as it attempts to answer, it is a coherent roadmap explaining the ideas behind the economic and political policies that led to today.
Is neoliberalism as dead as Gerstle predicts? I’m not so sure. Neoliberalism’s legacy, in which microeconomic laws can, should, and must be applied to all individuals as they are to firms, seems firmly rooted in American culture. Are you maximizing your potential? Are you getting the best return on your investment, be that investment a piece of stock, a bond, a workout at your Crossfit gym, or your grocery savings on double coupon day? The neoliberal faith in omnipotent markets could in secular circles take the place of an Almighty; both have a mystical ability to work everything out as it should be. Here, the difference between miracles and equilibrium seem to blur.
Even as Trump yet again promises tariffs on imports from China, his promoters don’t seem to be losing faith in their market solutions in all other realms of life. Just look at dating apps, flight price comparisons, or restaurant reviews—all market-based metrics. Look at the media landscape: Facts don’t matter; the market will decide which idea is “best” based on clicks, likes, and shares. In our politics, most ethical behavior is cited as churlish or inauthentic. Do away not just with tariffs, but pleasantries and respect; let’s get down to the cold, hard economic facts. Neoliberal ideas shape and constrain possibilities for a generation living in the “gig economy,” those seeking to monetize all waking hours by turning once-purely human lives into Youtube channels, naked pay site pictures, or monetized activities. Behind every Uber ride, every Airbnb booking, behind every Vrbo vacation stay, there is neoliberalism’s legacy.
Gerstle suggests that America is about to give way to a new dispensation, but the calculus behind that impending change isn’t yet clear. Neoliberalism might last longer than previous hegemonic dispensations, as its indoctrination of citizens throughout all walks of life—from the tech bros to CEOs, from common laborers to gig-economy hustlers—still permeates the American psyche. While neoliberal trade policies might be on their way out, the mindset of neoliberalism still has a near-mythic pull for everyday Americans. Gerstle has done a magisterial job in tracing neoliberalism’s rise; its fall, I fear, may be less predictable and less certain.
William M. Knoblauch is a Visiting Assistant Professor at Northland College. He is the author of Nuclear Freeze in a Cold War: The Reagan Administration, Cultural Activism, and the End of the Arms Race, and co-editor of The Routledge History of World Peace since 1750. He researches and writes about Cold War politics, culture, and foreign policy. He can be reached at wknoblauch@northland.edu
