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LAST GASP

Is the Neoliberal Era Over Yet?

The current political order may have proven a failure. But neither party has presented an alternative yet.

Illustration by Julian Gower

If you ever find yourself in the unusual circumstance of needing to start a fight among scholars of American politics, ask them when the New Deal era ended. In the ensuing chaos of competing dates, one thing will stand out: Nobody claims it is still ongoing. Despite a clear lack of consensus on when it ended, we all know it’s over. Only with the perspective afforded by time can we try to pinpoint when.

Does the “when” matter? Arguably it does not; declaring the moment when a particular political order died is the kind of thing that only interests academics. For other purposes, it can be extremely enlightening simply to tease out the significance of the change, the what and why if not the when. That’s the spirit to bring to Gary Gerstle’s The Rise and Fall of the Neoliberal Order, which makes the ambitious assertion that the 2020 Covid pandemic signaled the death knell of neoliberalism as the defining political-economic framework of our world. If he’s right, the significance of such a shift can’t be understated.

Neoliberalism, which rose to intellectual, political, and economic prominence in the 1970s as a response to both socialism and the welfare state liberalism exemplified by the New Deal, preached a message of free markets and disdain for government regulation and spending, both of which stifled innovation and growth. Gerstle walks us through how the promises of neoliberalism—boundless economic growth, globalization, greater individual liberty, widely shared prosperity, private-sector innovation solving problems where bureaucratic meddling could not—have gone unfulfilled for too many people for too long. The past decades of spiraling inequality, expanding poverty and economic precarity, and failures of markets to solve collective problems like climate change have disillusioned too many for neoliberalism to recover. The jig is up, in other words, and no promises or soothing words can convince people to have faith in the old nostrums again.

The Rise and Fall of the Neoliberal Order
by Gary Gerstle
Oxford University Press, 432 pp., $27.95

Whether neoliberalism ended specifically in 2020 or we are still living through its death throes, Gerstle makes an all but indisputable case that neoliberalism has had its lamentable time in the sun. The question that remains is: What comes next? As things stand at present, you’re probably not going to like it.


A political order is an extended period of time in which one vision of political economy reigns. One dominant political party (in a two-party system, at least) rises as its champion, and, crucially, the opposing party is forced to concede to survive. After Democrats ushered in the New Deal era, Dwight Eisenhower signaled Republican acquiescence to the basics of the welfare state (Ike famously predicted any party that tried to end old-age pensions and farm subsidies would cease to exist). Similarly, after Ronald Reagan’s rise signaled neoliberalism’s victory over the liberalism of the Great Depression and World War II era, Bill Clinton reconciled Democrats to its basic elements: free markets, globalization, smaller government, deregulation, and cultural cosmopolitanism as an extension of the free movement of ideas, people, and capital.

This dynamic explains why, even when Democrats hold the White House, Congress, or both, they have so much difficulty achieving meaningful change. Under the dominant political order, the minority party’s latitude to alter the country’s course is extremely limited. If that sounds like the Democrats are off the hook for their past four decades of accommodationist politics, they aren’t. We’ll return to that.

The decline of the New Deal order and the rise of neoliberalism is a simple enough story that, frankly, is well-trodden ground even if few tell the story as deeply, concisely, and well as Gerstle. From its spiritual founding in Mont Pèlerin, Switzerland, in 1947 by now-famous economic thinkers like Ludwig von Mises, Friedrich Hayek, and Milton Friedman, neoliberalism presented an alarmed reaction to the growing post–World War II popularity of the social welfare state, socialism, and Soviet-style central planning. To neoliberals, the state bureaucracies necessary to administer such political-economic systems were first and foremost grievous threats to individual liberty, and flawed economics to boot. They rejected Keynesianism—the belief that economic contractions should be met with increased government spending—in favor of austerity, presaging our current debt- and deficit-obsessed limits on what is politically possible.

As the years of economic growth (and expansion of the welfare state) that followed World War II petered out into the economic malaise of the 1970s, voices from the political right extolling the virtues of neoliberalism as an alternative grew louder until leaders like Ronald Reagan and Margaret Thatcher rose to power promising to rid their societies of what they saw as a burdensome, indulgent nanny state. With time, liberal and center-left parties led by figures like Bill Clinton and Tony Blair embraced the fundaments of neoliberalism as a matter of survival. The worldview was too obviously right, too enthusiastically embraced by voters to argue any alternative.

Yet, as the New Deal order spanned tensions within the Democratic Party—constituents with vastly different positions on race and social order rallied around a shared economic ideal—neoliberalism contained a tension between the enhancement of elite power and the promise of personal liberation. Despite frantic efforts to make emancipation seem attainable for all, neoliberalism tends toward a system that promises the right people who make the right choices an opportunity to enter the rarefied air. Go to Harvard and maybe you, too, will get a turn wearing the boot.

The “Great Recession” of the late Bush and early Obama years is identified as the crucial moment when the promises were decisively revealed to be lies at worst, overly optimistic at best. Globalization and free trade didn’t replace Rust Belt manufacturing jobs with something even better. Cool, socially conscious corporations didn’t arrest the degradation of the environment. Privatization of public functions didn’t make them better, merely cheaper in theory and remunerative to politically connected contractors. Whereas economic growth was once enthusiastically pitched as a panacea, inequality grew to levels unseen since the Gilded Age.

The disparity between what neoliberalism promised and what it delivered led more or less directly to the rise of movements from Occupy Wall Street, Black Lives Matter, and Democratic Socialists of America to Trumpism. Despite the ideological grab bag these movements represent, all fundamentally rejected neoliberalism in one or more ways. Progressive or left groups rejected the failed promises that free markets would create a tide that lifted all boats and foster innovations that solved problems like crime, poverty, and climate change, while the right increasingly rejected the core neoliberal ideas of globalization, internationalism, and cosmopolitan social attitudes in favor of insular, nationalist, and “traditional” views.

Despite the seismic event of the financial crisis of 2008, the Democratic Party failed to usher in a competing new order. Unable or unwilling to use the collapse of economic institutions to steer a new path away from free-market orthodoxy, center-left governments around the world responded with vaguely populist promises that quickly segued into doubling down on neoliberal ideas they saw as fundamentally sound. There was no big shake-up, only stern words before the keys were handed right back to the people who had driven the economy off a cliff. An emergent nationalist brand of right-wing politics cast itself as the protector of the powerless against rapacious elites, culminating with Donald Trump in the United States, Brexit in the U.K., and right-wing nationalist movements in numerous other countries.

The rise-and-fall narrative is convincing and largely unobjectionable, a seamless journey from the Depression to Mont Pèlerin to the era of deregulation to Trump and the pandemic that exposed neoliberalism’s failings once and for all. The old world is dead, the new one struggles to be born. But at that point—now—the view becomes muddy. If the neoliberal order has come to an end, why is it still here?


The core of the concept of political order is that eventually the dominant idea and party succumb to hubris and other human foibles, people lose faith, and the out-party sees its chance to strike. It takes its alternative worldview, previously consigned to the ideological extremes, and mainstreams it. The once-dominant, once-majority party then collapses and, with time, is forced to bend to the will of the dominant new idea.

The unaddressed problem for the Democratic Party of the neoliberal era is that it had and has no alternative worldview that the mainstream of the party is eager to establish as neoliberalism’s successor. Gerstle attempts to place the progressive wing, particularly Bernie Sanders, at the center of his story. In his telling, the neoliberal order is set to give way to a new regime of Medicare for All, student debt cancellation, demands for racial justice, and a return to focusing on core economic issues like housing affordability. Yet those visions run headlong into the reality of a Democratic Party that, as of now, continues to work hard to marginalize anything it fears will alienate moderates.

The result is an unprecedented, not to say unprecedentedly dangerous, situation in which the Republican Party that has had its way for several decades (particularly in state-level elections) may be moving on from the neoliberal era to embrace the insular ethno-nationalist politics that have flowered around the world in recent years. The Democrats, unwilling to commit to abandoning the neoliberal order that it believes remains appealing to the moderate center, are stumbling forward as the bag holders for a failed and broadly discredited political worldview. Imagine, if you can, the Republican Party emerging from the wreckage of the New Deal defending Roosevelt’s worldview rather than forcefully arguing for an alternative to replace it. That is, unbelievably, our current political moment.

After an energetic start, the Biden administration and the Democratic Party in Congress have reverted to an obsessively cautious approach that insists victory is found only in the ideological center. Initially, hopes ran high that Joe Biden had learned from the mistakes of the Obama presidency and truly turned the page. From the vantage point of spring 2021, that argument was at least plausible. The Biden presidency began with an emphatic rejection of the Obama-era obsession with futilely seeking Republican buy-in on legislative priorities, with the Democratic Senate instead passing the mammoth American Rescue Plan (ARP) with 50 votes via reconciliation. But now, a year-plus into Biden’s term, there is much more room for doubt. After the initial success in passing the ARP, Congress (and particularly the Senate) reverted to its role as a place where legislation, along with any hopes at staving off the future that the far right has in store for all of us, goes to quietly die.

Gerstle’s argument that the GOP has rejected neoliberalism is similarly risky. As he notes repeatedly, Trump’s rejection of the neoliberal worldview was rhetorical and did not translate into policy even when Trump had opportunities to do so. Trump talked a big game but only followed through on his rejection of cosmopolitanism, a position that availed him of the lowest-hanging fruit in electoral politics (immigrant-bashing, mocking the East Coast liberal elite, increasingly explicit racism, the rejection of expertise). Free trade? Largely untouched, election-year railing about “bad deals” that screwed American workers notwithstanding. Financialization of the global economy? Continuing unabated. Income inequality? Badly exacerbated by Trump’s signature tax policy.

Like all efforts to brand the modern GOP as populist or even populism-curious, arguing that the party has abandoned the core of its last half-century of politics requires credulous and contorted readings of statements intended as mere rhetoric. A motivated reader can see nascent pro–working class populism in a Josh Hawley tweet if determined to find it, but that doesn’t make it real. The right’s embrace of rhetorical faux-populism functions at present as a new bottle for the old wine, and the moment at which the rhetoric translates into an updated Republican ideological mission does not appear imminent.

Much of the institutional, leadership, and ideological turnover that signaled the end of the New Deal order is missing now as well. Ronald Reagan is widely recognized for articulating and mainstreaming a conservative ideology that was diametrically opposed to the New Deal, but equally important was a guard-changing among GOP congressional leaders. Bob Michel, the longtime accommodationist who treated Democratic House majorities as an unalterable fact of life, faded away, and the pugilistic Newt Gingrich ascended. Michel and his generation accepted the New Deal and sought to cut the best deals they could from the minority; Gingrich argued that only after fully rejecting every tenet of the New Deal Democratic order could Republicans achieve the majority.

Perhaps such a transition is brewing within the Democratic Party today, with the likes of Alexandria Ocasio-Cortez or Pramila Jayapal potentially rising to take the reins from the party’s ancient, accommodation-minded congressional leaders at some point. But it certainly hasn’t happened yet, nor does the old guard show any signs of being ready to step aside. Biden similarly has been no Reagan, failing to articulate a distinctly new, different, non-neoliberal worldview. The strongest argument, then, against Gerstle’s thesis is the example of the New Deal order he uses as a springboard. If the neoliberal order is over, why has the rise of Occupy Wall Street, Black Lives Matter, and the gig economy precariat so far done so little to move the Democratic Party away from neoliberalism as the core of its ideological brand? If anything, the party is doubling down on it and simply demanding, as ever, that the disenchanted suck it up and loyally Vote Blue anyway.


In short, Gerstle has given us a book based on a development that may not actually have happened—that the neoliberal order has collapsed in American politics, with the Covid pandemic officially marking its end after years of splintering. Yet somehow what sounds like a fatal flaw barely diminishes what Gerstle accomplishes here. At worst, he has been overly ambitious about declaring neoliberalism dead. So be it; during the collapse of the New Deal order, it was declared “dead” and “over” so many times between 1960 and 2000 that writing its obituary became a running joke among political journalists. It is risky to assert that a historical pivot point has been reached while events are still unfolding. Gerstle takes that risk. The reality is that American politics is likely to continue to take place in the context of the old world dying with no clear sense yet of what new world is struggling to be born.

Where does that leave us? Whether neoliberalism’s death is impending, ongoing, or already behind us, no political party can succeed by clinging to the frayed threads of a disintegrating rope. Factions from across the ideological spectrum have emerged in the last decade-plus to reject neoliberalism. Yet it’s entirely unclear that either party is truly ready to move beyond it. Republicans energetically reject the cosmopolitanism in favor of the kind of ethno-nationalism embodied in Brexit, Narendra Modi’s India, Viktor Orbán’s Hungary, and all the rest. But they remain tied to the anti-government, market-worshipping approaches of their partisan forefathers, while Democrats continue to embrace all aspects of neoliberalism, at least for now.

The next decade will resolve this dilemma, as clinging to neoliberalism becomes electorally untenable. Center-left liberal parties will have to figure out what they are and what they believe in its stead, while the right will continue backsliding into managed democracy even as many of its supporters claim to believe in small government and free markets. It will feel as if we are living through an era of uncertainty and change, because we will be. What emerges on the other side remains to be seen, but the longer the Democrats retain their commitment to Clinton- and Obama-era politics, the worse the outcome is likely to be. The time to figure out how to present an appealing alternative to the ascendant anti-democratic right without falling back on the failed ideas of neoliberalism is not now; it was yesterday.