The Rise of Market Populism

The Rise of Market Populism

It offers a blatant apologia for economic inequality–but few question the faith.


When Richard Hofstadter wrote thirty years ago that “conflict and consensus require each other and are bound up in a kind of dialectic of their own,” he was offering advice to historians examining the American past, but he might as well have been describing the culture of the 1990s. If there was anything that defined us as a people, we came to believe in that decade, it was our diversity, our nonconformity, our radicalism, our differentness. It was an era of many and spectacular avant-gardes, of loud and highly visible youth cultures, of emphatic multiculturalism, of extreme sports, extreme diets and extreme investing.

But even as Americans marveled at the infinite variety of the Internet and celebrated our ethnic diversity, we were at the same time in the grip of an intellectual consensus every bit as ironclad as that of the 1950s. Across the spectrum, American opinion leaders in the nineties were coming to an unprecedented agreement on the role of business in American life. The leaders of the left parties, both here and in Britain, accommodated themselves to the free-market faith and made spectacular public renunciations of their historic principles. Organized labor, pounded by years of unionbusting and deindustrialization, slipped below 10 percent of the US private-sector work force and seemed to disappear altogether from the popular consciousness. The opposition was ceasing to oppose, but the market was now safe, its supposedly endless array of choice substituting for the lack of choice on the ballot. Various names were applied to this state of affairs. In international circles the grand agreement was called the “Washington Consensus”; economics writer Daniel Yergin called it the “market consensus”; New York Times columnist Thomas Friedman coined the phrase “golden straitjacket” to describe the absence of political options. While once “people thought” there were ways to order human affairs other than through the free market, Friedman insisted, those choices now no longer existed. “I don’t think there will be an alternative ideology this time around,” he wrote in August 1998. “There are none.”

It is this intellectual unanimity about the nature and the purpose of economies, as much as the technological advances of recent years, that we refer to when we talk so triumphantly about the “New Economy.” It is this nearly airtight consensus–this assurance that no matter what happens or who wins in November, a strong labor movement and an interventionist government will not be returning–that has made possible the unprecedented upward transfer of wealth that we saw in the Clinton years, that has permitted the bull market without end, and that has made the world so safe for billionaires.

This is not to say that in the nineties Americans simply decided they wanted nothing so much as to toil for peanuts on an assembly line somewhere, that they loved plutocracy and that robber barons rocked after all. On the contrary: At the center of the “New Economy” consensus was a vision of economic democracy as extreme and as militant-sounding as anything to emanate from the CIO in the thirties. From Deadheads to Nobel-laureate economists, from paleoconservatives to New Democrats, American leaders in the nineties came to believe that markets were a popular system, a far more democratic form of organization than (democratically elected) governments. This is the central premise of what I call “market populism”: that in addition to being mediums of exchange, markets are mediums of consent. With their mechanisms of supply and demand, poll and focus group, superstore and Internet, markets manage to express the popular will more articulately and meaningfully than do mere elections. By their very nature markets confer democratic legitimacy, markets bring down the pompous and the snooty, markets look out for the interests of the little guy, markets give us what we want.

Many of the individual components of the market-populist consensus have been part of the cultural-economic wallpaper for years. Hollywood and Madison Avenue have always insisted that their job is simply to mirror the public’s wishes, and that movies and ad campaigns succeed or fail depending on how accurately they conform to public tastes. Similarly, spokesmen for the New York Stock Exchange have long argued that stock prices reflect popular enthusiasm, that public trading of stocks is a basic component of democracy. And ever since William Randolph Hearst, newspaper tycoons have imagined themselves defenders of the common man.

But in the nineties these ideas came together into a new orthodoxy that anathematized all alternative ways of understanding democracy, history and the rest of the world. An example of the market-populist consensus at its most cocksure can be found in “Fanfare for the Common Man,” the cover story that Newsweek used to mark the end of the twentieth century. The story’s title comes from a Depression standby (a 1942 work by Aaron Copland), and its writing recalls the militant populism of that era. Looking back on the events of the “people’s century,” it occurred to Kenneth Auchincloss, the story’s author, that for once in the human experience “ordinary folks changed history.” To nail it down he singled out a succession of popular heroes who changed things: Suffragettes, feminists, the antiwar and civil rights movement, and, finally, “the entrepreneurs”–this last group illustrated with a drawing of Bill Gates. Even while hailing the richest man in the world as a champion of the common people, Auchincloss took pains to point out that the New Deal wasn’t nearly as wonderful as everyone thought it was. The other hero of the thirties, the labor movement, was not mentioned in the story at all.

This may seem egregious, but it was hardly atypical. Wherever one looked in the nineties entrepreneurs were occupying the ideological space once filled by the noble sons of toil. It was businessmen who were sounding off against the arrogance of elites, railing against the privilege of old money, protesting false expertise and waging relentless, idealistic war on the principle of hierarchy wherever it could be found. Their fundamental faith was a simple one: The market and the people–both of them understood as grand principles of social life rather than particulars–were essentially one and the same. As journalist Robert Samuelson wrote in 1998, “the Market ‘R’ Us.” This is how a “Fanfare for the Common Man” could turn into yet another salute to Bill Gates and his fellow billionaires; how the New York Stock Exchange, long a nest of privilege, could be understood in the nineties as a house of the people; how any kind of niche marketing could be passed off as a revolutionary expression–an empowerment, even–of the demographic at which it was aimed.

And as business leaders melded themselves theoretically with the people, they found that market populism provided them with powerful weapons to use against their traditional enemies in government and labor. Since markets express the will of the people, virtually any criticism of business could be described as an act of “elitism” arising out of despicable contempt for the common man. According to market populism, elites are not those who, say, watch sporting events from a skybox, or spend their weekends tooling about on a computer-driven yacht, or fire half their work force and ship the factory south. No, elitists are the people on the other side of the equation: the labor unionists and Keynesians who believe that society can be organized in any way other than the market way. Since what the market does–no matter how whimsical, irrational or harmful–is the Will of the People, any scheme to operate outside its auspices or control its ravages is by definition a dangerous artifice, the hubris of false expertise.

This fantasy of the market as an anti-elitist machine made the most sense when it was couched in the language of social class. Businessmen and pro-business politicians have always protested the use of “class war” by their critics on the left; during the nineties, though, they happily used the tactic themselves, depicting the workings of the market as a kind of permanent social revolution in which daring entrepreneurs are endlessly toppling fat cats and picking off millions of lazy rich kids. Wherever the earthshaking logic of the “New Economy” touched down, old money was believed to quake and falter. The scions of ancient banking families were said to be finding their smug selves wiped out by the streetwise know-how of some kid with a goatee; the arrogant stockbrokers of old were being humiliated by the e-trade masses; the WASPs with their regimental ties were getting their asses kicked by the women, the Asians, the Africans, the Hispanics; the buttoned-down whip-cracking bosses were being fired by the corporate “change agents”; the self-assured network figures were being reduced to tears by the Vox Populi of the web. A thousand populist revolts shook the office blocks of the world, and the great forums of market ideology overflowed with praise for in-your-face traders from gritty urban backgrounds, for the CEO who still retained the crude manners of the longshoreman.

How did populism ever become the native tongue of the wealthy? Historically, of course, populism was a rebellion against the corporate order, a political tongue reserved by definition for the nonrich and the nonpowerful. It was a term associated with the labor movement and angry agrarians. But in 1968, at the height of the antiwar movement, this primal set piece of American democracy seemed to change its stripes. The war between classes somehow reversed its polarity: Now it was a conflict in which the patriotic, blue-collar “silent majority” (along with their employers) faced off against a new elite, a “liberal establishment” with its spoiled, flag-burning children. This new ruling class–a motley assembly of liberal journalists, liberal academics, liberal foundation employees, liberal politicians and the shadowy powers of Hollywood–earned the people’s wrath not by exploiting workers or ripping off the family farmers but by contemptuous disregard for the wisdom and values of average Americans.

Counterintuitive though it may have been, the backlash vision of class conflict was powerful stuff. Until recently American politics remained mired in the cultural controversies passed down from the late sixties, with right-wing populists forever reminding “normal Americans” of the hideous world that the “establishment” had built, a place where blasphemous intellectuals violated the principles of Americanism at every opportunity, a place of crime in the streets, of unimaginable cultural depravity, of epidemic disrespect for the men in uniform, of secular humanists scheming to undermine family values and give away the Panama Canal, of judges gone soft on crime and politicians gone soft on communism. The thirty-year backlash brought us Ronald Reagan’s rollback of government power as well as Newt Gingrich’s outright shutdown of 1995. But for all its accomplishments, it never constituted a thorough endorsement of the free market or of laissez-faire politics. Barbara Ehrenreich, one of its most astute chroniclers, points out that the backlash always hinged on a particular appeal to working-class voters, some of whom were roped into the Republican coalition with talk of patriotism, culture war and family values. Class war worked for Republicans as long as it was restricted to cultural issues; when economic matters came up the compound grew unstable very quickly. Lee Atwater, an adviser to Presidents Reagan and Bush, is said to have warned his colleagues in 1984 that their new blue-collar constituents were “liberal on economics” and that without culture wars to distract them “populists were left with no compelling reason to vote Republican.”

Fortunately for the right, as the culture wars finally began to subside in the aftermath of the impeachment fiasco, a new variation on the populist theme was reaching its triumphant zenith. Market populism was promulgated less by a political party than by business itself–through management theory, investment literature and advertising–and it served the needs of the owning community far more directly than had the tortured populism of the backlash. While the right-wing populism of the seventies and eighties had envisioned a scheming “liberal elite” bent on “social engineering”–a clique of experts who thought they knew what was best for us, like busing, integration and historical revisionism–market populism simply shifted the inflection. Now the crime of the elite was not so much an arrogance in matters of values but in matters economic. Still those dirty elitists thought they were better than the people, but now their arrogance was revealed by their passion to raise the minimum wage; to regulate, oversee, redistribute and tax.

There are critical differences between market populism and the earlier right-wing dispensation, of course. While the backlash was proudly square, market populism is cool. Far from despising the sixties, it broadcasts its fantasies to the tune of a hundred psychedelic hits. Its leading think tanks are rumored to pay princely sums to young people promising to bring some smattering of rock-and-roll street cred to the market’s cause. And believing in markets rather than God, it has little tolerance for the bizarre ideas of the Christian right or the Moral Majority. Market populism has also abandoned the overt race-baiting of the backlash: Its “Southern strategy” involves shipping plants to Mexico or Guatemala and then describing this as a victory for the downtrodden Others of the planet. Market populists generally fail to get worked up about the persecution of Vietnam vets (they sometimes even equate new-style management theories with the strategy of the Vietcong); they have abandoned the “family values” of Reagan; they give not a damn for the traditional role of women or even of children. The more who enter the work force the merrier.

By the middle of the nineties, this was a populism in the ascendancy. Leftoid rock critics, Wall Street arbitrageurs and just about everyone in between seemed to find what they wanted in the magic of markets. Markets were serving all tastes, markets were humiliating the pretentious, markets were permitting good art to triumph over bad, markets were overthrowing the man, markets were extinguishing discrimination, markets were making everyone rich.

In the right hands, market populism could explain nearly any social phenomenon. The “tiger economies” of Asia had collapsed, market populists told us, because they had relied on the expertise of elites rather than the infinite wisdom of the people. Similarly, the economies of Western Europe were stagnant because the arrogant aristocrats every red-blooded American knows run those lands were clinging to old welfare-state theories. Meanwhile, the NASDAQ was soaring because the buy-and-hold common man had finally been allowed to participate. And when the House of Morgan was swallowed up by Chase Manhattan, we were told this was because it was a snooty outfit that had foolishly tried to resist the democracy of markets.

More important, market populism proved astonishingly versatile as a defense of any industry in distress. It was the line that could answer any critic, put over any deregulatory initiative, roll back any tax. Thus economist Stanley Lebergott used it to blast a 1998 warning by Hillary Clinton against the values of consumerism. The consumer culture, he informed the First Lady from the New York Times Op-Ed page, and by extension the free market generally, was the righteous collective product of the people themselves. “Who creates this ‘consumer-driven culture’ but 270 million Americans?” he asked. Taking an indignant swipe at the carping snobbery of the “best and the brightest,” Lebergott then asserted that criticism of business was in fact criticism of “other consumers,” and that simply by participating in American life–by driving “a 1-ton car to the theater” or by “accumulat[ing] books and newspapers printed on million-dollar presses”–we authorize whatever it is that the market chooses to do.

On the Wall Street Journal editorial page, where the behavior of markets is consistently understood as a transparent expression of the will of the people, one saw market populism wheeled out to defend the advertising industry, to defend the auto industry, to bolster demands that the software industry be permitted to import more workers, to hail stock options as the people’s true currency and, most remarkably, to defend Microsoft from its antitrust pursuers. Since a company’s size (like the value of a billionaire’s pile) was simply a reflection of the people’s love, antitrust itself was fundamentally illegitimate, a device used by elitist politicians, the Journal once proclaimed, “to promote the interests of the few at the expense of the many.” Even after the Microsoft verdict had been announced, the Journal continued to assert that the company “should have argued that we have a monopoly because our customers want us to have one.” And when Al Gore began annoying the men of privilege with his recent attacks on big business, the paper responded in the most direct manner imaginable. “Mr. Bush should tell Americans,” online Journal executive James Taranto opined in an Op-Ed late last summer, “when my opponent attacks ‘big corporations,’ he’s attacking you and me.”

Market populism can seem quite absurd at times. We are, after all, living through one of the least populist economic eras in the past hundred years. The “New Economy” has exalted the rich and forgotten about the rest with a decisiveness that we haven’t seen since the twenties. Its greatest achievement–the booming stock market of recent years–has been based in no small part on companies’ enhanced abilities to keep wages low even while CEO compensation soars to record levels. Market populism is, in many ways, the most blatant apologia for economic inequality since social Darwinism. But there can be no doubting the intensity of the true believers’ faith. Only a few paragraphs after identifying “you and me” with “big corporations,” for example, the Journal‘s Taranto went on to declare that “thanks to the democracy of the market” and the widespread ownership of stock, “the U.S. is now closer to [the] Marxian ideal than any society in history.” And unless you have a spare billion to tell the world otherwise with a thirty-second spot during the Super Bowl, you can count on listening to proclamations like that for years to come.

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