Momentous change is approaching in American politics. Conceivably, the turning point has already arrived, too indistinct to recognize. We are witnessing the demise of the reigning economic ideology. A deep shift of this kind is a very rare event, one that comes along only every thirty or forty years. Economic disorders accumulate that the orthodoxy cannot answer and may even have caused. Eventually, the ideological presumptions are discredited by real-world contradictions.
The last time this happened was in the 1970s, when economic liberalism foundered and collapsed. Ossified intellectually, unable to adjust to changed circumstances, the liberal order did not know how to deal with economic consequences like inflationary stagnation. As the long postwar prosperity lost its energy, so did liberal politics.
Something similar is happening now to the Republicans. Their problem is the underperforming economy, which must borrow to stay afloat and, roughly speaking, lifts only half the boats. The conservative order–inspired two generations ago by Milton Friedman and Friedrich von Hayek and brought to power by Republican ascendancy–pushed government aside so business and capital would be free to generate more lasting prosperity. But their utopian promise was not fulfilled. Instead, the right’s principal product, one can say, was economic inequality.
The breakdown won’t necessarily produce an immediate shift in power. When the bottom fell out of liberal doctrine thirty years ago, what first unfolded was confusion and political paralysis, then an awkward retreat by the Democrats until they were finally displaced by the aggressive new conservatives under Ronald Reagan. But it does mean that Republicans have lost the political cohesion to advance their more extreme measures (privatizing Social Security, freeing capital entirely of taxation).
More to the point, the way is now open for alternative thinking: the new ideas that can lead to a new governing order. These ideas must be grounded in a determination to give people back their future. The strange paradox of our times is that despite America’s fabulous wealth, most people’s lives are shadowed by economic anxieties and real confinements, the wounds that market ideology has imposed. They fear that much worse is ahead for their children. Reform must re-establish this fundamental principle: The economy exists to support society and people, not the other way around. Only government can liberate them from the harsh rule of the marketplace, the demands imposed by capital and corporations that stunt or stymie the full pursuit of life and liberty in this complex industrial society. This very wealthy country has the capacity to insure that all citizens, regardless of status or skills, have the essential needs to pursue secure, self-directed lives. This starts with the right to health, work, livable incomes and open-ended education, and to participate meaningfully in the decisions that govern their lives. The marketplace has no interest in providing these. It is actively destroying them.
A coherent alternative agenda that will fulfill these principles does not yet exist. Nor will a liberal-progressive program emerge miraculously if the Democratic Party should somehow regain power in the next few years, since many Democrats in Congress have internalized the market ideology and collaborate with the right. But elements of that alternative agenda are already ripe for discussion. Before we explore some of them, however, we should examine the economics of why the right failed.