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Reconnecting to the World

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Crowding Out Liberalism at Home

About the Author

Sherle R. Schwenninger
Sherle R. Schwenninger is director of the Economic Growth Program at the New America Foundation and a senior fellow at...

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Instead of addressing the real problems, Obama and Romney are focusing on deficit reduction. 

The crisis was caused by weak governance, excessive speculation and lax regulation. Austerity will only make the disease worse.

Eight months after American forces entered Iraq, New York Times columnist Thomas Friedman urged liberals to get on board what he called "the most important liberal, revolutionary U.S. democracy-building project since the Marshall plan." In exhorting liberals to support occupation and nation-building in Iraq, Friedman perhaps unwittingly revealed the emptiness of the neoliberal hawk worldview: Liberalism from this point forward would be defined not by new programs to strengthen America at home but by noble activism abroad. The neoliberal agenda, in fact, has stood the traditional relationship between foreign policy and domestic society on its head. Traditionally, the overarching purpose of American foreign policy has been to shape a world order favorable to the American democratic way of life. But now our foreign policy ambitions are to define our domestic society, not vice versa.

Thus in the view of many neoliberals, it is perfectly reasonable to spend more than $200 billion and to send young men and women to die in Iraq but unthinkable for budgetary reasons to commit even a smaller sum to rural or urban redevelopment at home. In foreign policy, neoliberals are guided by a triumphalist can-do spirit; on domestic policy they display an uncharacteristic modesty: In their view, it is possible for the United States to re-engineer centuries of political culture in the Middle East and navigate the difficult shoals of Shiite, Sunni and Kurdish political currents in Iraq but not at all feasible to change the gang culture in East LA or to end poverty in America.

This same set of misplaced priorities is also evident in the area of international economic policy. In the 1990s the Clinton Administration embarked on a revolutionary agenda to liberalize the world's financial and trading system, an effort that continued until the world financial crisis of 1997-98. As seen by the Clintonites, it was thinkable to change decades of economic practice in East Asia in a few short years, but not at all thinkable to design economic policies that would insure rising wages and economic security in both developed and emerging economies. Globalization, we were told, was a natural and immutable force, and domestic society must bend to the demands of globalization, not vice versa.

Put together, this mix of neoliberal activism abroad and inaction at home has created a very unhealthy Democratic Party agenda, offering rank-and-file Democrats fantasies about American greatness and nobility while forcing them to accept ever more economic insecurity and lower wages. But what if middle-class prosperity--jobs, rising wages, economic security--is intimately connected to global stability, as Franklin Roosevelt and John Maynard Keynes believed? Then what happens to the great liberal project globally? It gets overrun by rising disaffection at home and greater extremism abroad--which is exactly what is beginning to occur today.

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