As I argued recently, the decline of soft neoliberalism in the US Democratic Party can be explained largely in terms of generational replacement. What about hard neoliberalism and the Republican Party? After four years of the Trump Administration, and a few months of post-election madness, the Republican Party has completed a transition that has been going on for decades. In the 1980s and 1990s, the Republicans were a hard neoliberal party, spending most of their policy effort on tax cuts and deregulation and using white grievance politics to attract votes. Now the situation is reversed. The Republicans are a white grievance party, whose targets include ‘woke corporations’, However, they still attempt to attract support from corporations by advocating tax cuts. While any pretence
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John Quiggin writes Generational replacement and the leftward shift of the Democrats
As I argued recently, the decline of soft neoliberalism in the US Democratic Party can be explained largely in terms of generational replacement. What about hard neoliberalism and the Republican Party?
After four years of the Trump Administration, and a few months of post-election madness, the Republican Party has completed a transition that has been going on for decades. In the 1980s and 1990s, the Republicans were a hard neoliberal party, spending most of their policy effort on tax cuts and deregulation and using white grievance politics to attract votes. Now the situation is reversed. The Republicans are a white grievance party, whose targets include ‘woke corporations’, However, they still attempt to attract support from corporations by advocating tax cuts. While any pretence of principled aversion to regulation has been abandoned, crony capitalist exemptions from regulation are still on offer if the price is right
The core claim of hard neoliberalism was that a free market economy with a modest ‘safety net’ could do a better job of delivering broad prosperity than the welfare state built on the New Deal and Keynesian economics. The optimism of this message, reflected in Reagan’s ‘Morning in America’ turned into triumphalism with the end of the Cold War.
Hard neoliberals supported globalisation, and cheered on the idea that borderless capital would bring governments under control, and put an end to budget deficits. In particular, Republicans supported trade deals like NAFTA https://www.washingtonpost.com/news/fact-checker/wp/2016/05/09/history-lesson-more-republicans-than-democrats-supported-nafta/
The high point of hard neoliberalism was the 1994 Contract with America, the slogan under which the Republicans gained control of Congress for the first time since 1952. The Contract called for balanced budgets and reduced welfare spending for single-parent families, but also proposed positive measures including an expanded child tax credit.
The commitment to balanced budgets was the first element of hard neoliberalism to be ditched. Responding to the collapse of the dotcom boom, the Bush Administration introduced large, and effectively permanent (fn: the most regressive elements were allowed to expire under Obama) tax cuts. These cuts, along with massive expenditure on the ‘forever wars’ that began after the 2001 terror attacks, pushed the government budget from the surplus that had been achieved under the Clinton Administration into permanent deficit.
For a brief period, the ‘Tea Party’ revolt against the Obama Administration appeared as a reversion to hard neoliberalism, with a non-partisan focus on sound finance. In reality, the Tea Party was a mixture of Republican activists and grifters who used its appeal to solicit donations, largely used to fund well-paid jobs for themselves. Both groups have been prominent among the support base for Donald Trump.
By the time the Republicans turned to Trump, grievance politics were already dominant. Trump discarded long held beliefs about free trade and the need for government to stay out of business. But even during Trump’s Presidency, Congressional Republicans held on to a few elements of the old mixture, such as corporate tax cuts and pro-corporate changes to regulation. It is only in the aftermath of Trump’s attempt to overturn the 2020 election that the alliance between Republicans and big business has been broken.
On the one hand, corporations regularly run afoul of grievance politics, by taking initiatives seen as ‘woke’. On the other hand, the threat posed to constitutional government by the Republican party is now so obvious as to arouse corporate resistance. Corporations with a long-term view of their prospects correctly prefer to risk higher tax rates than to operate in a Trumpist banana republic.
A puzzle remains. On the one hand, as we have seen, Trumpism is the culmination of trends going back many decades. On the other hand, today’s far right Republican party is clearly different in kind from the party that nominated moderate globalist Mitt Romney for the presidency in 2012
One useful metaphor for this process is that of a phase transition, such as from liquid to gas, or dissolved solid to crystal) in physics and chemistry.
To develop the metaphor, think of the Eisenhower-era Republican party as a complicated mixture of many dissolved ingredients, in which the dominant element was the business establishment, and the Trump era party as a crystallised mass of plutocratic economics, racism and all-round craziness. The development over the 60 years between the two has consisted of keeping the mixture simmering, while adding more and more appeals to racial animus and magical thinking (supply-side economics, climate denial, the Iraq war and so on). In this process various elements of the original mix have boiled off or precipitated out and discarded as dregs.
Boiling off is the process by which various groups (Blacks and Northeastern liberal Republicans in C20, liberaltarians more recently) have left the Republican coalition in response to its racism and know-nothingism. The dregs that have precipitated out are ideas that were supposed to be important to Republicans (free trade, scientific truth, classical liberalism, moral character and so on) that turned out not to matter at all.
Trump’s arrival is the catalyst seed crystal that produces the phase change. The final product of the reaction emerges in its crystallised form.