The history of neoliberalism — with its origins in Austrian neoclassical economics, its aggressive patronage by the propertied classes in the form of private think tanks, pseudo-academic institutions, and societies like Mount Pelerin (named for the Swiss spa where its members met), and its ultimate victory following the stagflation of the 1970s — has been well-told, most notably by David Harvey. What concerns us here is the need for neoliberal regimes to liquidate national traditions of social and economic identity, security and belonging in order to free up capital while obtaining the consent of those whose way of life is being liquidated. Harvey writes that replacing local and class identities with a revived nationalism,
is [an] obvious answer, but this is profoundly antagonistic to the neoliberal agenda. This was Margaret Thatcher’s dilemma, for it was only through playing the nationalism card in the Falklands . . . and in the campaign against economic integration with Europe, that she could win re-election and promote further neoliberal reforms internally . . . Nationalist sentiment . . . can be seen as an antidote to the dissolution of former bonds of social solidarity under the impact of neoliberalism.
Obama didn’t say quite as much in a controversial remark made during his 2008 campaign, but the implications were clear: “You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them. And it’s not surprising, then, they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”
In the U.S., this process has metastasized in the years since September 11th. The resulting volcano of nationalism and patriotic consumption saw through the implementation of the Bush tax cuts, the wars in Iraq and Afghanistan and the Fed’s maintenance of extraordinarily low interest rates. Faced with stagnant wages and exploding costs, Americans could either surrender their way of life or buy a house and invest the equity in maintaining it. This quickly gave rise the boom in the housing market, the explosion of predatory lending to minorities mand the securitization and dissemination of these loans throughout the economy.
Almost all of the $8 in added debt since 2000 can be traced to policies enacted under the cover of post-September 11th nationalism; these policies cemented the transition from neoliberalism to full-blown neoconservatism. Nothing more accurately illustrates the contradictory movements of the neoliberal project than the biography of the fundamentalist son of an American-owned autocrat, who spent millions of American dollars expelling the Soviets from Afghanistan, then bankrolled and organized September 11th, then was assassinated by the U.S. and dumped into the ocean.
Today, attacks organized by fundamentalist thugs against their conservative patrons no longer seem so exceptional. The Tea Party has been mocked for its nostalgia for a former America of great freedom and opportunity, but from a solely economic perspective, their diagnosis is not incorrect: the country memorialized endlessly on talk radio, Fox News and in the steady stream of high-gloss World War II moral pornography — that is, the U.S. before neoliberalism — really was a more equitably prosperous nation, especially, as it happens, for white people. Having fostered a burning desire for the world they helped destroy, the neoconservative patrons of the Tea Party now face blowback of their own. The Tea Party Caucus really believes that government, as such, is the problem, rather than understanding such extremism as a rhetorical position necessary to keep the money moving upwards. In the same way, bin Laden really believed in his version of national self-determination in Afghanistan, Saudi Arabia and elsewhere, rather than understanding that commitment as a rhetorical position taken by the U.S. in order to defeat the Soviet Union.
While preaching the beauty of small government, neoliberals and conservatives redistributed wealth upwards by expanding the government’s reach, paying for tax cuts with mountains of debt. When they were ostensibly booted from power in 2008, it was not only easy and smart to turn quickly and point to the relative size of the government debt as the source of the problem, but also in some sense correct, in that the majority of government debt looted from the Treasury by the neoconservative regime and its allies. This strategy has been a brilliant success. Having stolen nearly $5 (that is, $4.53 trillion) while in power and despite controlling only the House, the right has recast retirement and healthcare savings as “entitlements,” outlawed tax increases by fiat and, as recently as two weeks ago, found itself perched on the edge of its greatest victory within a living memory full of them.
This was the so-called “grand bargain,” in which Obama offered more than $3 in spending cuts from Medicare, Social Security and other services in order to secure a $0.80 increase in tax revenues. The deal was so wildly favorable to the Republicans that members of the old neoliberal order couldn’t believe it. The New York Times quoted Mickey Edwards, a House Republican leader under Reagan and Bush I, “If I were there I would say, ‘My God, declare victory.’” The fact that John Boehner walked away shouldn’t obscure the facts: A Democratic president offered to pay for the Bush tax cuts by handing over the health care, education, safety and savings of the American people. (The deal he eventually reached was not radically different, except that it contains no new revenues at all and strip-mines government agencies in the short term, with the distinct possibility of the big name programs again facing cuts in the near future.)
After Boehner walked out, we saw some black comedy, as high finance grew increasingly desperate to reign in its servants. On Tuesday, July 26, The New York Times reported that “the U.S. Chamber of Commerce, which spent millions of dollars last year helping elect Republicans to Congressional seats, is struggling to convince the House it helped to build that the debt ceiling must be increased . . . They have cataloged the consequences of default at meetings, parties and dinners and over drinks.”