The Rise and Fall of the Neoliberal Order | Gary Gerstle

Summary of: The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era
By: Gary Gerstle

Introduction

Delve into the fascinating world of political orders and their impact on the American society and the global economy through the summary of Gary Gerstle’s compelling book, ‘The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era’. This captivating read takes you on a journey through the essential components of the New Deal order, the emergence and rise of the neoliberal order, and its eventual decline. From the key political figures, economists and ideological forces that shaped these orders, to the significant events and challenges that marked their transitions, this book summary provides a comprehensive and engaging understanding of how political orders evolve and adapt over time, forever changing the landscape of politics, economics, and social structures.

Building a Political Order

Building a political order is a gradual process where a group of people with distinctive ideas build an inner circle and shape the political landscape over time. This group includes economists, politicians, and intellectuals who use think tanks, raise funds, and propagate their message through the media. A political order becomes concrete when both political parties adopt and embrace the ideology, and it can last for decades. However, during times of crises, the existing order is challenged, creating opportunities for the next ideology to rise and shape the political discourse.

The Emergence of the New Deal Order

The New Deal order rose to power in the 21st century due to the failings of classical liberalism and the impact of communism. It involved an alliance between capital and labor and was based on the government playing a larger role in managing markets and distributing wealth. Even after prosperity returned to America, the New Deal order remained dominant and expanded through the Great Society efforts of the 1960s. The success of this political order depended on its proficiency in shaping what broad majorities of elected officials and voters on both sides of the partisan divide regarded as politically possible and desirable.

The Rise and Fall of the New Deal Order

The New Deal era ended in the 1960s, with white southerners defecting from the Democratic Party due to Johnson’s efforts to end segregation. The Vietnam War and broad opposition led to Nixon’s presidency, where the New Deal order remained intact. However, stagflation led to the fall of the New Deal order in the 1970s during Carter’s administration, paving the way for the neoliberal ideas of Reagan. Reagan’s commitment to neoliberal economists Hayek and Friedman helped craft a return to small government, free markets, and open trade. The Soviet empire’s fall aided the growth of the neoliberal ideology, with the labor unions’ gains gone by the year 2000, and CEOs’ pay soaring.

The Rise of Neoliberalism

Neoliberalism advocates for minimal government intervention, free market, and globalization. Its proponents believe that capitalism promotes growth and wealth, and extreme poverty can be eliminated through free trade. In contrast to conservatism, neoliberalism rejects traditions and promotes individualism and innovation.

Neoliberalism is an economic ideology that aims to weaken government, the welfare state, organized labor, wealth redistribution, and regulation. Followers believe that freeing capitalism to operate will lead to rapid economic growth and benefit both the rich and the poor, although it may result in some economic inequality. Neoliberals support global free trade to eradicate extreme poverty and offer prosperity to all.

Neoliberalism differs from conservatism, which emphasizes preserving traditions and respecting existing hierarchies and institutions. In contrast, neoliberalism advocates for individualism, innovation, movement of people across borders, creativity, and iconoclasm. It is a dynamic philosophy that closely aligns with classical liberalism’s principles of free exchange and trade.

Thus, the political order that prevailed from the 1980s to the 2010s departed from the conventional definition of conservatism. Neoliberalism embraces creative destruction and rejects tradition, advocating for minimal government intervention, free markets, and globalization.

Bill Clinton’s Neoliberalism Legacy

In the book, the author highlights how President Clinton, in his quest for presidency, adopted Reagan’s neoliberal economics. After taking over the White House, he continued Reagan’s neoliberal policies with relish. Clinton knew that he needed to adapt to the existing political order to win elections, and his policies helped advance the neoliberal order and extend it further. The author argues that Clinton’s policies of free trade agreements and the repeal of the Glass-Steagall Act not only undermined the economic standing of working-class Americans but also paved the way for the 2008 financial crisis. Under Clinton’s presidency, the markets were freed from labor’s influence, with no worries about communist infiltration. Clinton has been described as neoliberalism’s key facilitator, standing alongside Reagan, its ideological architect.

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