Building The Post-Neoliberal World

Last week, I spent a lovely three days in Sausalito California, at a conference sponsored by the Hewlett Foundation, which has become a kind of Mont Pelerin Society for people who want to move beyond neoliberalism, broadly defined as the “market knows best, government out of the way” approach to political economy. Back in the 1930s, philanthropic interests played a key role in supporting the ideas and thinkers that would build the neoliberal world, and ultimately the Washington Consensus institutions that came to define it.

Today, Hewlett is playing that role in reverse, supporting a variety of academics such as UCL’s Mariana Mazzucato, to Harvard’s Dani Rodrik and Gordon Hanson, MIT professor Simon Johnson, and Johns Hopkins’ Henry Farrell, as well as big think-tanks like the Roosevelt Institute and the Open Markets Institute (I sit on the board of the latter) that are working on aspects of a post-neoliberal future. This year, it decided to bring some of those grantees, as well as others on this bandwagon (me included) to have a post-neoliberal powwow.

Many people who’ve served in the Joe Biden administration are unabashedly post-neoliberal, such as FTC chair Lina Khan, CFPB head Rohit Chopra, White House antitrust adviser Tim Wu, CEA member Heather Boushey, and National Security Council chief economist Jen Harris, who just stepped down from her role a couple of weeks ago to continue supporting new post-neoliberal policymakers (Harris, a progressive China hawk who co-wrote War by Other Means, helped nurture many of the economists and legal minds currently in the administration during her stint heading up the Hewlett Foundation’s economics and society programme (watch for my Economist Exchange interview with her in a few weeks).

Some of these folks were in attendance, along with economists, lawyers, political philosophers, historians, journalists and others sympathetic to the idea that the forces of the free market have been unchecked for far too long, distorting our economy, our society, and our democracy.

Many attendees were looking for a better balance between capital and labour. Some wanted to revamp the global trading system and Bretton Woods. Racial justice types were there, along with financial reform advocates, place-based economists, new Brandeisians, old leftists, Working Family Party proponents and any number of others who believe that our laissez-faire approach to the political economy over the last 40-odd years has yielded far too many negative externalities, from deaths of despair, to a cost of living crisis, to more extreme politics.

One of the big treats for me was to have the opportunity to interview US national security adviser Jake Sullivan. I really hadn’t thought of Sullivan as a post-neoliberal (and I’m still not sure that he is). But I was impressed by the forcefulness with which he outlined a broken neoliberal system. He cited several principles core to the Biden administration which jibe with the post-neoliberal ethos — first, the notion that the market system doesn’t always produce the best outcome, particularly when it comes to public goods such as healthcare, education and infrastructure.

He was also clear that more trade hasn’t resulted in more freedom at a global level (a reference to the mistaken belief that China and other state-run societies would get freer as they got richer). As Berkeley professor David Grewal, also in attendance, put it, “the great convenience” of the cold war era, in which simply cutting new trade deals with non-Soviet bloc nations was considered a foreign-policy success, is over. Market access is a privilege, not a right, and entre to the world’s largest consumer market is increasingly seen as both a carrot and a stick in US foreign affairs.

Sullivan was also more unequivocal than I’ve ever heard him be that the US was now committed first and foremost to supporting US workers in any new trade deals. I pressed him in particular about the US needing to create a new Indo-Pacific trade bloc, and whether this would mean that we have to do deals with countries that, say, throw people in jail that try to unionise or take US white collar service work in a race to the bottom. He made it pretty clear that if labour standards can’t be preserved, new trade deals aren’t getting cut. Fingers crossed.

The other thing that Sullivan stressed was that GDP alone is no longer a metric of economic success. The administration is all about creating more inclusive and sustainable growth. The statement of co-operation around clean energy supply chains and critical minerals issued by Biden and EU president Ursula von der Leyen a couple of weeks ago shows that the Europeans are relaxing a bit about the Inflation Reduction Act, and that the Biden administration may be able to square the circle between attending to domestic economic interests and European allies.

Ed, am I being too optimistic? Europe is nothing if not a neoliberal project — will this warming between Washington and Brussels on a post-neoliberal future be brief, or lasting?

Recommended reading

• I’m digging into MIT academics Daron Acemoglu and Simon Johnson’s new book Power and Progress, which looks at how the rich have captured and controlled technological innovation over the centuries. Fascinating stuff so far, but I’m hoping for some good news by the end (I’ll be doing a Lunch With Daron Acemoglu in May, so watch for that).

• The new (and last — sob!) season of Succession has started, and you know I’m binging.

• And in the FT, check out James Kynge’s worrisome look at the deepening authoritarian axis between Russia and China, as well as this great weekend essay on why the current riots in France underscore the need to change not only retirement age, but the country’s form of government

Edward Luce responds

Rana, I am not sure what to make of your description of the EU as a “neoliberal project”. The motivation for the 1957 Treaty of Rome that led to the EU was to prevent the continent’s return to war. That eventually resulted in the creation of a single market, which is still a work in progress. The free movement of goods, capital, services and people is both a logical and necessary corollary to a multinational project of integration. To be frank, repeated use of the terms “neoliberal” and “post-neoliberal” throw me off. They sound more like slogans than useful descriptors.

You say that post-neoliberalism has produced the insight that “the market system doesn’t always produce the best outcome, particularly when it comes to public goods like healthcare, education and infrastructure”. All kinds of economists have recognised market failure for decades, centuries even (including Adam Smith). That is why European states to varying degrees treat healthcare, education and infrastructure as public goods. Does that make the EU neoliberal or post-neoliberal?

You say that trade has not led to more freedom globally. Such a claim was never at the heart of trade liberalisation, which was about raising standards of living. Many more people have been lifted out of poverty in the last few decades than at any time in human history. It is a breathtaking achievement. The Biden administration’s aversion to trade deals is a deeply unfortunate overlap with Donald Trump’s administration. Fiscal policy, not trade, has failed America. In most but not all of the EU, governments provide far better social safety nets and opportunities for worker retraining than in the US. As a result, trade is far less scapegoated by politics in most European countries than it is in America. Does this make the EU neoliberal or post-neoliberal? I have no idea. I don’t find such labels enlightening.