The Strange, Transatlantic Career of "Neoliberalism"*

In 1956, Arthur Schlesinger, Jr., in many ways the leading theorist of Cold War liberalism, published an essay entitled “Liberalism in America: A Note for Europeans” in Perspectives USA, one of the many Cold War-era publications that sought to enhance the reputation of American thought and culture on the other side of the Atlantic.**  The essay is a kind of thumbnail history and celebration of American liberalism. And Schlesinger emphasizes a point that was essential for a European understanding of American liberalism:

Enough should have been said by now to indicate that liberalism in the American usage has little in common with the word as used in the politics of any European country, save possibly Britain. Liberalism in America has been a party of social progress rather than of intellectual doctrine, committed to ends rather than to methods. When a laissez-faire policy seemed best calculated to achieve the liberal objective of equality of opportunity for all — as it did in the time of Jefferson — liberals believed, in the Jeffersonian phrase, that that government is best which governs least. But, when the growing complexity of industrial conditions required increasing government intervention in order to assure more equal opportunities, the liberal tradition, faithful to the goal rather than to the dogma, altered its view of the state.

Indeed, for most of the period since the New Deal, the notion that “liberalism” has a fundamentally different meaning on the two sides of the Atlantic has been something of a commonplace. With the partial exception of the British “New Liberal” tradition associated with thinkers like T.H. Green, L.T. Hobhouse, and J.A. Hobson, European liberalism has tended to stick closer to the model of the “Classical Liberals,” emphasizing laissez faire economics and often deprecating the kind of activist government that has characterized American liberalism since the 1930s.  Self-described European liberals have thus tended to be  politically closer to American conservatives.

But in recent years, there’s been an odd terminological and philosophical confluence of U.S. and European usages that has centered around the term “neoliberalism.”  Though the word “neoliberalism” had separate U.S. and European births (corresponding, in each case, to a reimagining of each side’s notion of “liberalism”) there has been a remarkable convergence of these two “neoliberalisms,” such that, while 20th-century discussions of “liberalism” on the two sides of the Atlantic often concerned different things, the discussion of “neoliberalism” on both sides has come to focus on a single, global phenomenon.

Given the long and complicated history of liberalism, it’s not surprising that the word “neoliberalism” has appeared at various times to designate a variety of ideas and movements, varying both in terms of the (unmodified) liberalism with which they stood in contrast and the ways in which they differed from it.  The OED lists uses of the term in English going back to the 1890s.  And in the early 20th-century the term was sometimes used, at least in the US, to describe the British figures like Hobhouse and Hobson more usually referred to as “New Liberals.”

Eighties American Neoliberalism

As far as I can tell it was only in the early 1980s that a distinct tendency in American politics began to label itself “neoliberal.”  In the wake of the 1980 elections which featured not only the apparent triumph of Reaganite conservatism, but–in the Kennedy-Carter primary race–the latest major battle in the ongoing intra-Democratic war over the legacy of American liberalism, a number of more conservative Democrats began to adopt the label “neoliberal” to describe their position.***  Probably the single most important articulation of this tendency was “A Neoliberal’s Manifesto” (.pdf here) published in the May 1983 issue of The Washington Monthly by that journal’s founding editor, Charles Peters.****  But the term was also important in the first half of the 1980s in places like the New Republic, which seemed at times to embrace the term to describe its own politics, as in the April 9, 1984 TRB column (then written, I believe, by the magazine’s Editor, Michael Kinsley) entitled “Neoliberals, Paleoliberals,” which declared that the two leading Democratic presidential candidates, Gary Hart and Walter Mondale, respectively represented these two tendencies and expressed a clear preference for the former.

The New York Times, too, got in on the action.  In a May 15, 1984 article entitled “As Neoliberals Search for Closest Fit, Hart is Often Mentioned,” Walter Goodman described neoliberalism as “a political spirit in search of a candidate.”  In addition to the aforementioned Charles Peters and Michael Kinsley, Goodman lists Amitai Eztioni and James Fallows among the spirit’s “apostles,” “a small but prolific group of journalists and scholars, know what they don’t like, a category that includes President Reagan and Walter F. Mondale.”  During the early ’80s, the Grey Lady’s conservative columnist and language maven William Safire seemed particular fond of the term, writing, for example, in his July 11, 1982 “On Language” column that “the hot new word in political science is neoliberal, whose appearance was predicted in this space after the triumph of neoconservatism.”

Indeed, the entire conversation about “neoliberalism” during these years seems haunted by the specter of neoconservatism. “The neoliberals stand today in somewhat the position neoconservatives occupied a decade ago,” wrote Goodman in the above-mentioned May 1984 article, “Their ambition is to attain the influence in liberal politics that the neoconservatives have attained in conservative politics.”

But the relationship of neoliberalism to neoconservatism was more than merely structural. It is no accident (as some of the first neocons might have put it in their Old Left salad days) that the very first figure associated with the term in the pages of TNR, in October 1981, appears to have been Daniel Patrick Moynihan, who had, during the 1970s, frequently been called a neoconservative, but who had always rejected that description and who, following a long, slow rightward journey during much of the previous two decades, was then planting his flag as a major player in the Democratic opposition to (at least some of) Reaganism.*****

Some of the politics of ’80s US neoliberalism resembled the very earliest stages of what Justin Vaïsse (in his book Neoconservatism: the Biography of a Movement) calls the “First Age of Neoconservatism”: erstwhile leftists turned Cold War liberals who in the mid-1960s attempted to stand athwart the New Left (and later the New Politics) and yell “STOP.”  If anything the ’80s neoliberals had more in common with conservatives than the first-wave of the neoconservatives had had in the 1960s.   In addition to rejecting much of the legacy of the New Left, neoliberals seemed suspicious of some of the legacy of the New Deal.  Though they wanted (like the early neoconservatives, it should be said) to retain liberalism’s idealism, they were critical of welfare and Social Security (at least as we knew them), and sought to distance the Democratic Party from organized labor.

“If neoconservatives are liberals who took a critical look at liberalism and decided to become conservatives,” Charles Peters wrote in the opening of his 1983 “Manifesto,”

we are liberals who took the same look and decided to retain our goals but to abandon some of our prejudices. We still believe in liberty and justice and a fair chance for all, in mercy for the afflicted and help for the down and out.  But we no longer automatically favor  unions and big government or oppose the military and big business.  Indeed, in our search for solutions that work, we have come to distrust all automatic responses, liberal or conservative.

After the 1984 presidential campaign, discussions of “neoliberalism” began to peter out.  Hart’s association with the term–which helped buoy its usage in 1984–probably came to do more harm than good. And “liberalism,” for decades one of the most powerful, positive buzzwords in American life, had become almost a pejorative in American politics by the end of the Eighties. But the ideas that were associated with neoliberalism in the early-to-mid 1980s stuck around and received new labels. And their advocates became more and more powerful within the Democratic Party.

By the time the spirit of neoliberalism achieved something of an apotheosis in the Clinton administration, the word “neoliberalism” had largely been replaced by such terms as the “Third Way” and “New Democrat.” And to a great extent, these ideas are still dominant in the Democratic Party today, even as the Clinton-era labels themselves have passed.

In March 2007, David Brooks wrote a column in the New York Times, entitled “The Vanishing Neoliberal,” which argued that neoliberalism was dead. Charles Peters himself responded in an interview with Ezra Klein that appeared in the Washington Monthly:

I think in many, many areas, the neoliberals, in effect, won. But in some cases we won too much. For instance, the rebirth of capitalism produced such extremes that we then had to turn around and say no, that is wrong. But where we clearly haven’t won is with the government bureaucracy, the teacher’s unions. We have hardly made a dent, and they still have terribly strong power. You have to be able to fire incompetent teachers and incompetent civil servants. 

Both sides of this 2007 debate, I think, underestimated the continued power of what used to be called “neoliberalism” in the Democratic Party.  Certainly the Obama Administration has embraced the anti-teacher’s union policies that pass for educational reform in the era of No Child Left Behind and Waiting for Superman.******

European-Style Neoliberalism

Meanwhile, in Europe, a conversation about an entirely different thing called “neoliberalism” was brewing. Not surprisingly, this use of the word “neoliberalism” flowed out of the more European meaning of “liberalism,” roughly what we in America often call “classical liberalism,” the free-market doctrines associated with Smith, Ricardo, and company.   If that’s the “liberalism” in European “neoliberalism,” then what accounted for its “neo”?

The early history of the term “neoliberalism” in the European sense is associated with attempts in the 1930s and 1940s by members of the Austrian School of Economics like Friedrich Hayek, Ludwig von Mises, and Wilhelm Röpke,  to revive liberal economics in the European sense, i.e. laissez faire economics, in the face of the challenges posed by socialism (including social democracy) and fascism.  I say “is associated with” because, as far as I can tell, these thinkers did not always (or even usually) describe themselves as “neoliberal” (or “neo-liberal”).  They certainly were aware that they were renewing what they called liberalism. But they often used more descriptive neologisms (e.g. the German Ordoliberalism) or simply stuck with “liberalism.”  For example, Hayek’s Individualism and Economic Order (Chicago: University of Chicago Press, 1948) (inefficiently available for free in .pdf form from the Mises Institute) contains numerous uses of the words “liberal” and “liberalism” and not a single use of “neo-liberal” or “neo-liberalism” (with or without the hyphen).

At any rate, accounts of neoliberalism in this sense tend to begin with the Austrian School and then cross the Atlantic to discuss the Chicago School and its many intellectual and political progeny, including, e.g., the Mont Pelerin Society and Pinochet’s Chile, and ending with the so-called Washington Consensus that has guided mainstream economic thinking in the developed world for most of the last three decades.   This is the basic shape of Antina von Schnitzler’s entry on “Neoliberalism” in the International Encyclopedia of the Social Sciences (Ed. William A. Darity, Jr. Vol. 5. 2nd ed.  Detroit: Macmillan Reference USA, 2008. p473-475), and also of David Harvey’s standard A Brief History of Neoliberalism (Oxford: Oxford University Press, 2005), which features on its cover pictures of Ronald Reagan, Deng Xiaoping, Augusto Pinochet, and Margaret Thatcher (see also the French image attached to this post).  Charles Peters, Gary Hart, and Michael Kinsley are nowhere in sight…nor should they be.  Simply put, “neoliberalism” in this sense is an entirely different phenomenon from “neoliberalism” in the ’80s American sense.

Convergence….or Something Else?

Then why has this second sense of “neoliberalism” become so important in American political talk today?  This is an interesting question for at least two related reasons: First, the term has the rather different American history and meaning attached to it that I map out above…a history and meaning that has not been entirely forgotten as the recent David Brooks-Charles Peters debate suggests. Second, what I’ve been calling the European meaning of “neoliberalism” is dependent for its meaning on an entirely European use of the word “liberal,” a usage that self-decribed liberals in the European sense like Hayek and Friedman fought hard for in this country in the ’40s and ’50s and distinctly lost.  Even the most classically liberal Republicans these days call themselves “conservative” not “liberal”  (if they feel the need to use an “l” word, it’s almost always “libertarian,” a term that is so popular across the U.S. right these days that it’s virtually devoid of any real meaning…but that’s another story).   At any rate, the Americans most associated with neoliberalism in the European sense are almost entirely figures who, in the American context, we refer to as “conservatives” not “liberals,” e.g.  Milton Friedman and Ronald Reagan,  

So why have Americans so easily adopted the European meaning of “neoliberalism”?  Partly it’s a question of globalization. Although it has European terminological origins, the phenomenon of neoliberalism is truly global and, like the world economy itself, its center has been the United States.  At some level we should just be glad that our country, which still insists on imperial measurements, is willing to adopt the vocabulary the rest of the world uses to describe its economic thought.

And yet this is not simply a matter of strategically adopting someone else’s vocabulary.  Because neoliberalism (in the “European” sense) turns out to be related to liberalism…and neoliberalism…in the American sense. We’ve seen that in Andrew’s posts on neoliberalism and the Sixties. And we see it when we look at the economic positions of the neoliberals (in the 1980s American sense) and their successors in the Clinton and Obama administrations, which have been (often brutally) neoliberal in the “European” sense.  Somehow American neoliberalism, which grew–ideologically and terminologically–out of American liberalism, and which defined itself at least in part in opposition to Reaganism, has converged with neoliberalism in the European sense, which is exemplified by Reaganism.

Is this convergent evolution, or do we have to question the view–held not simply by Arthur Schlesinger, Jr., but by nearly everyone else in the middle-to-late 20th century–that “liberalism in the American usage has little in common with the word as used in the politics of any European country”?
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* This overly long post is inspired both by Tim’s challenge to get us talking about liberalism in America and by Andrew’s entirely appropriate, but nonetheless oddly European, use of the word “neoliberal,” a usage that has started appearing in both academic and blogospheric discussions of American politics in the last several years.

** This essay was reprinted in Schlesinger’s collection The Politics of Hope (Boston: Riverside Press, 1962).

*** I should note that the ’80s neoliberals would probably not have described themselves as “more conservative” than the “paleoliberals” (indeed their choice of the “neoliberal” moniker was indicative of their desire to describe their relative position within the Democratic Party in other-than left-and-right terms).

**** Peters became an important spokesperson for neoliberalism in the 1980s (see, for example, this cover-story debate with “radical Democrat” Robert Kuttner in the May 1985 issue of Mother Jones) and his “Manifesto” remains a touchstone of what “neoliberalism” meant in ’80s America for both conservatives and liberals today.

***** Fred Barnes, “Pat Moynihan, Neoliberal,” The New Republic, October 21, 1981, pp. 15-18.

****** Nevertheless, Matthew Continetti, blogging at the neoconservative Weekly Standard last May, declared that “the neoliberal tendency is pretty much extinguished these days” in the Democratic Party.  As with so much else printed by his magazine, I suppose I’ll just have to disagree.