ILLUSTRATIONS BY NICOLAS ORTEGA
Conservatives have convinced most Americans that the free market means personal freedom. And it does, for those with the means to eat at high-end locavore restaurants or purchase the right to skip the lines at Disney World. But that isn’t most people. Most people live with a constant, low-level anxiety about potential job loss or unexpected bills. An ongoing Economic Anxiety survey sponsored by American Public Media’s Marketplace found in October 2020 that more than half of all Americans were fearful of losing their jobs, and nearly half couldn’t cover an unexpected $250 expense. Yes, this was during the pandemic, when economic anxiety was certainly nudged higher, but anxiety has been a fixture for many Americans since the survey began in 2015. Millions of Americans live in towns where the free market has produced for them the career options of working at the Dollar Store or selling a little Oxy.
What sort of freedom is that?
Democrats need to change that—to change, as Joe Biden was fond of saying when he unveiled his ambitious economic plans in the spring of 2021, the “economic paradigm.” The Biden administration has made some commendable progress in altering the economic circumstances of Americans, even if inflation understandably dulled the luster of the biggest GDP increase in almost 40 years and record employment gains (6.6 million jobs). But the immense difficulty the administration has faced, even within the Democratic Party, in passing the legislation it has passed—having to downsize the (originally) $3.5 trillion Build Back Better bill to the Inflation Reduction Act, which invests a little more than one-tenth of that amount—showed that the battle of ideas will be a long one.
Here is a truism of our political discourse that is not widely enough recognized: The right thinks in terms of morals, while the left tends to see matters through an economic lens. That is, ask someone on the right what ails the United States, and he or she will almost certainly begin with a discussion of moral decay: We’ve lost our way, left God, abandoned the old values of thrift and hard work that made America great. Ask someone on the left the same question, and she or he will much more likely start by citing statistics on wage stagnation and the transfer of wealth from the middle class to the rich over the last 50 years.
It’s not hard to see why, to your average person, the right-wing argument is more compelling. It’s emotional. It resonates. Everyone in the world thinks things were better when they were young. Nearly everyone is patriotic in a basic, uncomplicated way. Most people are religious to one degree or other. So the right’s rhetoric along these lines hits home. And the hypocrisy argument doesn’t work. No matter how many evangelical preachers are caught in love nests, no matter how much un-Jesus-like hatred some of them spew from their pulpits—this perception will never be dislodged.
So the broad left, by which I mean everyone from the House members who make up the Squad to more centrist senators, can’t win a morals argument. True, Joe Biden’s deeply held Catholicism has helped bulletproof him against charges of radicalism. Nonetheless, religious morality is not the terrain on which the left will win political arguments. We can win, though, on economics.
Here’s why. People have two lives: material and spiritual. Modern liberalism is ill-equipped to make people’s lives spiritually better. But it can make people’s lives materially better—with better wages and health care, less fear of financial crisis, better roads, a faster internet, and more. If liberalism can deliver those things, I believe it can cobble together an electoral coalition that can win most of the time. But we can’t do it solely by citing statistics. We—more precisely, elected Democrats, because they’re the ones who have the megaphone—can win by tying economic policies to the larger ideas that Americans care most deeply about: democracy and freedom.
Democrats tend to see these as separate fights. Their view reflects to a considerable extent the way the progressive infrastructure is organized: Some people and organizations work on economic issues; other people and other organizations take on democracy issues; and as for freedom issues, well, pretty much no one works on those. The concept of freedom, as I’ll explain, is one the left has almost completely ceded to the right. What Democrats and progressives have to understand is that, today, they cannot afford to abandon it, and these aren’t separate fights. It’s all one argument: Economic inequality and concentration of wealth and political power in the hands of the few weaken democracy and limit freedom. Conservatism has tended to recognize these connections and to fuse them into one argument, and it has done so to considerable success. It’s time for Democrats to seize that high ground. Recognizing these connections and arguing that strengthening the working and middle classes also strengthens democracy and expands freedom are the surest ways to advance all three goals.
Before we get to our current times, let’s examine how the concept of freedom became so wholly owned by the right. It goes back to the 1930s, and it was through an effort led by free-market economists who fretted that individual liberty was threatened in the modern world possibly to the point of extinction. Remember, this was a time, the mid-1930s, when Stalin and Hitler had consolidated their holds on power. So the concern about individual freedom, with respect to the Soviet Union and Nazi Germany, had a lot of merit to it. More controversially and dubiously, the free-market economists extended the critique to New Deal liberalism. Ludwig von Mises, for example, generally the most uncompromising libertarian of the bunch, acknowledged that the New Deal was small-ddemocratic, in the narrowly electoral sense, according to the author Daniel Stedman Jones, but he emphasized that “it is obvious that delegation of power can be used as a quasi-constitutional disguise for dictatorship.” Henry Simons of the University of Chicago “firmly believed,” writes the historian Angus Burgin, “that the main direction of New Deal policies was toward authoritarian collectivism.”
In 1944, Friedrich Hayek, one of the most famous of this cohort, produced The Road to Serfdom, his broadside against state interventionism. In 1947, these men and other colleagues formed the Mont Pelerin Society, an international group of economists committed to free-market principles. They called themselves “neoliberals,” which is a confusing label today, because in our parlance, we’d call them conservatives; they were referring back to an older meaning of the word “liberal.” Like any group of intellectuals, they argued about this and that, including whether they should even attempt to influence public events in the first place, but they agreed on four core principles: rejection of collectivism; defense of markets; insistence on a link between economic and political freedom; and “an acknowledgment of the importance of moral absolutes.”
These thinkers were building on a very old idea, one that went back to John Locke politically and Adam Smith economically: that “freedom” meant freedom from—freedom from undue interference in one’s political or economic life by the state (usually the king, in those days). There’s another meaning of freedom, which is freedom to—the freedom to live up to one’s full human potential. This is a newer and more liberal definition of freedom (more liberal because it presumes that a vehicle is needed to best help people achieve this particular freedom, by offering them free community college and a safe place to stash their children while they attend class, and more; and that that vehicle is necessarily the state). But the conservative definition is older and, as is usually the case with conservative notions, a lot easier to explain.
In the United States, the most celebrated champion of these ideas was Milton Friedman. His famous 1962 book, which had sold half a million copies by the time the fortieth anniversary edition was published in 2002, was called Capitalism and Freedom. That is, Friedman didn’t merely extol a set of economic principles. He tied them to an idea Americans cherish. Not just Capitalism. Or Capitalism and Growth. Or Capitalism and Sound Monetary Policy. Capitalism and Freedom. The title announced, in other words, that the book wasn’t really about economics at all. It was about politics. It was about life. And the title of the book’s first chapter, which cuts right to the heart of things, is “The Relation Between Economic Freedom and Political Freedom.” That chapter’s very first paragraph gets right to the point; it’s a punch in Keynesian liberalism’s nose:
It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem; and that any kind of political arrangements can be combined with any kind of economic arrangements…. The thesis of this chapter is that such a view is a delusion, that there is an intimate connection between economics and politics, that only certain combinations of political and economic arrangements are possible, and that in particular, a society which is socialist cannot be democratic, in the sense of guaranteeing individual freedom.
I disagree with every single word of that thesis, including the “and”s and “the”s, and believe it to be—know it to be—demonstrably wrong. To take but one of many available examples from recent human history, look at the U.K. in the mid-1960s: arguably at its dour socialistic nadir under the Labour Prime Minister Harold Wilson (he “nationalised” 90 percent of the British steel industry), but undergoing one of the most gobsmacking explosions of personal freedom in human history (rock and roll, loud amps, long hair, fashion, homosexuality decriminalized, and so on). Friedman’s argument is balderdash. While Wilson was crushing market freedom under the state’s remorseless jackboot, the young people of Swinging London were shagging their brains out. There are so many other examples. If Friedman were correct, the Scandinavian countries—liberal social democracies, and as such economic nightmares by Friedman’s lights—would all be gulags. But personal freedom is doing just fine in those nations. In fact, in the World Population Review’s Personal Freedom Index for 2021, Denmark, Finland, Norway, and Sweden all have higher personal freedom rankings than the United States. Friedman was either a liar or a fool, or both (yes, brilliant people can be fools).
Friedman’s idea of freedom, by the way, very much included freedom of school choice for Southern whites who fought tooth and nail to resist school integration after the Brown v. Board decision. He endorsed in Capitalism and Freedom Virginia’s diabolical “freedom of choice” plan to skirt Brown; elsewhere, he referred to “forced nonsegregation” and “forced segregation” as “evils,” allowing that, if forced to choose between them, he “would choose the former as the lesser” evil.
He was a malignant force in many ways. But I admit that he came up with a great way to open a book. Friedman is no cagey welterweight feeling the opponent out in round one. He’s a heavyweight who comes out swinging right at the opening bell. This is not about economics, he wrote. It’s about freedom. Your freedom, citizen. And by the way, how contemporary it still feels, with that reference to democratic socialism, made back when Bernie Sanders was still in college, probably just starting to dig into his Marcuse. And Friedman had a skill most economists, in my experience, do not: He could write, and speak, plain English. No wonder he won so many converts—along with the fact that his message was exactly what rich people wanted to hear!
So free-market economics took over. And liberals have never really had an answer. Joe Biden, of all improbable people, has tried to provide one. Never a crusading liberal, Biden always found the center lane of where his party was as a whole. If Ted Kennedy was over here to his left, and Sam Nunn was over there to his right, Biden would usually land in a place equidistant between them. But now the party had moved left overall, after the Great Recession and the torrent of activism unleashed in its wake (Occupy Wall Street, the Fight for $15 minimum-wage effort), so Biden did, too. In fact, he did something very unusual as a presidential candidate. The conventional wisdom is that candidates tack to left or right during the primaries but sidle toward the center in the general. But Biden, once he secured the nomination, moved left. And he won. And that’s why so many of us thought Build Back Better would pass—pared back, sure, but more or less intact, changing the economic paradigm and people’s assumptions about the free market.
And yet the roadblocks the administration hit—including within its own party—show how heavy a lift it will be to change those assumptions. Recall Senator Joe Manchin’s words, from late September 2021, when budget negotiations were grinding their way through the sausage machine: “I cannot accept our economy, or basically our society, moving towards an entitlement mentality. That you’re entitled. I’m more of a rewarding, because I can help those that really need help.” The sentiments expressed here tell us a lot about Manchin’s assumptions about the proper role of the public sector in an economy. From a neoliberal point of view, they are perfectly reasonable sentiments. If the government’s role should be limited to ameliorating market failure, then what Manchin says is right; one could hardly, in fact, expect him to say anything else. But if one sees a different and larger role for the public sector in providing supports for working people—supports that aren’t tied to employment in an era when far fewer people are working at the same factory for 45 years than when Manchin was growing up—then one would not talk the way he talked there. The intra-Democratic debate in the fall of 2021, excruciating as it could be to watch, showed that most congressional Democrats have embraced new economic thought to one degree or another. But not all have. And the public hasn’t; yes, the particular elements of the bill, universal pre-K and so on, poll very well, but there is little evidence so far that the broader public has been persuaded that what they have been taught for the last 40 years about the merits of the free market and limited government and the evil of deficits is wrong.
The individual elements of Build Back Better all polled well, as noted above. And arguably, if there had been just one more Democratic senator, or certainly two, a major bill would have passed. For those given to despairing about the Democrats—the default position of people on the broad left—I say take heart in at least this: The party has moveddramatically to the left on economic questions in the last decade (to some extent on cultural ones, too, which is more complicated politically). All House Democrats but one voted in favor of a $2.2 trillion Build Back Better bill, and 48 or maybe 49 out of 50 senators were prepared to vote yes as well. That’s a sea change from a decade ago.
It’s good that all that has happened. What hasn’t happened, however, is that, while Democrats propose generally good policies, they make no attempt to change people’s economic thinking; they haven’t really made a concerted effort to convince the broader electorate that the economic presumptions that have prevailed these last 40-plus years have failed them. It can be hard to make that case; the market these days produces an endless stream of bright, shiny objects for us to marvel over, to make us think we’re living in good times. We are living in a time of amazing innovation; but we are not living in a time of broadly shared prosperity. The central political-economic fact of the last 40 years in the United States is the massive transfer of wealth from the middle to the top. A Rand Corporation study in 2020 concluded that from 1975 to 2018, nearly $50 trillion in income had been moved from the middle class to the top 1 percent. Put another way, using numbers people can grasp: If all this money had not been shifted away from the middle class, the median individual income in 2018 would have been not the $36,000 it was, but about $57,000. That’s what neoliberal economics has done to the middle class. And while Republicans are far more responsible for this than Democrats, Democratic administrations bought into many neoliberal precepts, too; Bill Clinton privileged deficit reduction early in his term to reassure the bond market, pushed for free trade, and deregulated banks; Barack Obama proceeded cautiously out of the meltdown and pivoted toward deficit reduction during his first term. Both also made some bold Keynesian moves, but during both their terms, inequality rampaged and monopoly power intensified.
The statistics in the above paragraph are alarming, or should be; but this fight won’t be won with facts and figures. People don’t respond to those. What they respond to, even though many politicians tend not to believe this, are broad philosophical and moral arguments that connect specific policies to a vision of society as a place where a certain set of values obtains. In the 1970s, after the OPEC crisis and stagflation made Keynesianism vulnerable to attack, conservatives kicked the door down with exactly that: policy arguments (lower taxes, less government) made in service of a broader point about the kind of society they wanted to build (greater dynamism and freedom, as they defined it). Democrats have to do the same today. Here are three core arguments they need to make.
HOW DEMOCRATS CAN BE SUCCESSFUL
1. Destroy the myth of Homo economicus and replace it with a human being.
Economic debates in our political discourse proceed from the old assumption of neoclassical economics that individuals are rational actors who have perfect information and always act in their own self-interest and make choices that optimize their gain. There is a name for this rational actor: Homo economicus, or “economic man.” It assumes that we are all self-interested, and that acting selfishly promotes the common good. Adam Smith argued this; John Maynard Keynes disputed it. It is inherently right-wing, because it tells people this: Just fend for yourself, and your family. That is your only commitment to society. This idea is pernicious. Besides, it doesn’t reflect most people’s lived reality. Most of us spend part of our lives being dependent on others: when we are children, when we are sick, when we are old. Most of us also understand and accept that we are members of a broader society, and that membership carries certain obligations. We accept the idea that there is such a thing as the common good. People often act not out of self-interest but out of generosity. We are social creatures who crave not just material comfort and more stuff, but friendships and love and the approval of those around us.
Even most businesses—that is to say, even market capitalism—are governed not by relentless self-maximizing but by reciprocity and cooperation. Think of the chain of cooperation required to deliver, say, a television from a factory in China to your family room. That takes a series of actors working together—yes, all behaving in their self-interest, but all also working cooperatively to ensure that they get their share of the profit. In their 2012 book, The Rainforest: The Secret to Building the Next Silicon Valley, the venture capitalists Victor W. Hwang and Greg Horowitt write that cooperation is more important to successful capitalism than competition. “Rainforests” is their metaphor for successfully innovative firms and ecosystems. And rainforests, they write, “depend on people notbehaving like rational actors” (my italics). They continue:
Extra-rational motivations—those that transcend the classical divide between rational and irrational—are not normally considered critical drivers of economic value-creation.… These motivations include the thrill of competition, human altruism, a thirst for adventure, a joy of discovery and creativity, a concern for future generations, and a desire for meaning in one’s life, among many others. Our work over the years has led us to conclude that these types of motivations are not just “nice to have.” They are, in fact, “must have” building blocks of the Rainforest.
So yes, motivations “include” competition, but they include those other factors as well
Democrats need to talk expressly and directly about how capitalism isn’t simply about competition and how most human beings are not solely relentless self-maximizers. Today’s economic discourse in the realm of politics proceeds entirely from the old neoclassical, neoliberal, and Friedmanesque assumptions. Democrats have to insert new assumptions into that discourse.
Here’s why this is so crucial. If we proceed from the neoliberal presumption that we all should stick to pursuing our self-interest, then the only policy solutions that make sense are Republican ones. If people need only to advance their self-interest, then the state should mainly just get out of their way and let them pursue away. But if we proceed from a different set of assumptions built around the ideas that we are both self-interested and other-directed, and that our motivations for our economic decisions are multifaceted, then the policy solutions that make sense are more liberal.
This means Democrats need to talk not just about policies but about the ideas behind them. After all, it’s ideas, not lower prescription drug prices, that change the world. History’s greatest leaders have found ways to boil high-flung ideas down into language that most people could understand, and that is what Democrats have to do here: “My Republican friends believe that all we need to do is selfishly pursue our own interests, and everything will work out fine. We Democrats have a different view. We think people are more generous than that. We think people thrive on competition, yes, but we believe they value cooperation, trust, and the esteem in which they are held by others. And we think that the way we shape economic policy should reflect this more complex view of what motivates our behavior in the marketplace.” I promise you—the right would freak out if Democrats began aggressively talking like this. They would freak out because they would know deep down that most people feel this way about themselves and do not see themselves as simply self-interested creatures. If Democrats can put a fuller view of human nature back into economics—and into politics—they can put the right on the defensive and change the starting point from which debates about economics proceed..
2. Tie economics to democracy.
In the early days of the 2020 presidential campaign, Pete Buttigieg was asked by NBC’s Chuck Todd: “Are you a capitalist?” His answer was pretty brilliant, I thought: “Sure. Yeah. Look, America is a capitalist society. But: It’s got to be democratic capitalism. And that part’s really important, and it’s slipping away from us. In other words, when capitalism comes into tension with democracy, which is more important to you? I believe democracy is more important. And when you have capitalism capturing democracy, when you have the kind of regulatory capture where powerful corporations are able to arrange the rules for their benefit, that’s not real capitalism. If you want to see what happens when you have capitalism without democracy, you can see it very clearly in Russia. It turns into crony capitalism, and that turns into oligarchy.” In a little more than 100 words there, Buttigieg expressed a profound point. Economics and democracy are not the separate issues they are taken to be in the media. They are the same issue. The Mont Pelerin Society argued that once economic freedom was threatened (by a tax, or a new government program), political freedom was by definition under threat, and that as long as economic freedom—which they defined as a minimal state with low taxation—was maintained, political freedom would be safe. They were wrong. As we look around the world, from Hong Kong to Hungary, Georgia to Guatemala, we see that it is quite possible, indeed not uncommon, for countries to have economies that are essentially market-based even while they clamp down on political freedoms. Buttigieg invokes Russia above, and it, along with China, are perhaps the most obvious examples of countries with basically capitalist economies (state-capitalist, in China’s case) where political freedoms are severely curtailed. But there are many other such countries.
Recent experience right here in the United States is also on point. Donald Trump’s idea of capitalism is rapacious and almost completely unchecked by state intervention. Yet his idea of political freedom, as we have seen, is one of total disdain for concern about the rights of those who don’t support him politically. Trump has decoupled the ideas of economic freedom and political freedom more aggressively by far than any president in the history of the United States. This just makes it all the more urgent that Democrats re-couple economics and democracy.
Democratic elected officials need to explain to Americans, as Buttigieg said, that if the economic and political systems become too controlled by the wealthy; if inequality continues unchecked; if we don’t build a robust middle class; if we can’t deliver to middle- and working-class people the kinds of policies on offer in every other developed democracy, and on a permanent basis; if we can’t properly tax wealth; if we can’t create an ethos wherein businesses understand that their long-term interests are better served by a healthy democracy to which they contribute their share than by a corrupted and out-of-kilter one that asks little of them, then the impacts on democracy will be severe, and it will fail. This is a connection few politicians make. It’s of vital importance that they do.
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