Bill Clinton Did More To Sell Neoliberalism Than Milton Friedman
In recent years, the term “neoliberalism” has reverberated across academia, Twitter, and major media outlets. It has increasingly become shorthand for describing and dismissing the centrist and corporatist bent of the Democratic Party, symbolized by Bill and Hillary Clinton. This popularization has also stretched it thin. Broadly, neoliberalism describes the theory of political economy that free markets and government austerity are the best way to create individual freedom and choice. The term also has become a way to define the historical period since the 1970s when these ideas of market fundamentalism, disseminated by Milton Friedman and the Chicago school of economics, came to structure seemingly all aspects of governance and spheres of human activity in the United States and much of the world.
The seeming pervasiveness of these ideas has produced a tendency to treat neoliberalism as monolithic and totalizing, which obscures the spectrum of market-oriented thinking and policy. The “New Democrats,” who helped found the market-focused Democratic Leadership Council (DLC), held a distinctive view of the market and the role of government, which has been consistently overlooked. The roots of this Democratic version of neoliberalism were rooted less in the free-market conservatism of Ronald Reagan and Milton Friedman and more in the liberalism of the New Deal and the Great Society, with its commitment to public-private partnerships and its faith in technocratic expertise to solve social problems — and capitalism to create economic stability, security, and growth. In fact, a faith in markets as a vehicle for social change was not “new” to the New Democrats, but a fundamental feature of liberalism through much of the twentieth century.
More than the increasingly fraught term “neoliberalism,” the phrase “doing well by doing good” better crystallizes the approach of the New Democrats. The phrase has become so frequently invoked in the speeches of Silicon Valley executives and the mission statements of their companies that it seems like a timeless adage. Yet, it came into popular usage in the 1990s largely through the help of Bill Clinton, who readily adopted it. Clinton used it to describe both his administration’s approach of enlisting the private sector to address poverty domestically and using free trade and globalization to promote freedom, democracy and human rights around the world. The phrase encapsulates the aspirational belief that it is possible for the market to do good and to achieve traditional liberal goals of equality and providing for those in need.
Since the New Deal, liberals had advocated for doing well and doing good. However, the form of political economy enacted during the New Deal and, later, the New Frontier and Great Society, understood these as distinct goals. The architects of mid-twentieth century liberalism believed that stimulating capital markets was the best path to creating economic growth and security (doing well). The job of the federal government, as they saw it, was to fill in the holes left by capitalism with compensatory programs to help the poor, like cash assistance and Head Start, and to enact laws that ended racial and gender discrimination (doing good). In contrast, the New Democrats sought to merge those functions and thus do well by doing good. This vision contended that the forces of banking, entrepreneurialism, trade, and technology, which had created the economic growth and prosperity of the 1990s, could substitute for traditional forms of welfare and aid, and better address structural problems of racial and economic segregation. In this vision, government did not recede but served as a bridge connecting the public and private sectors.
The New Democrats treated poverty and other forms of discrimination largely as a market failure. In response, its adherents looked for ways to both bring the market to poor people of color and to integrate them into the capitalist system. This thinking led to the promotion of programs like “microenterprise,” which aimed to transform marginalized people into entrepreneurs and savers, and inspired initiatives such as Empowerment Zones and New Markets, which sought to make distressed urban and rural places profitable. The New Democrats also applied market-based tools to areas like public housing, education, and regulation of business, where capitalism had been seen as the problem, not the solution.
Clinton and his allies extended the values of what historians call racial liberalism: the argument that for marginalized groups, especially African Americans, inclusion in American society and the legal system provided the best means for creating racial equality. At the same time, proponents contended that giving poor people of color the tools to start businesses, open bank accounts, get mortgages, and increase their purchasing power would generate profits and allow them to become engines of economic growth. This approach built on a long-standing liberal tradition of drawing on ideas from international development to address poverty in the United States and vice versa. Policies trying to tap emerging markets and stimulate entrepreneurship show how ideas that see poor countries, places, and people as sites of profit came to ricochet globally.
The New Democrats were genuinely convinced that the market could improve the lives of poor people, alleviate the problems of racial segregation, improve the functioning of government, and maintain traditional liberal ideals of egalitarianism and individual choice and freedom. In fact, the New Democrats often argued that they were simply using new means to achieve the same liberal aims. Unlike free-market fundamentalists like Milton Friedman, the New Democrats believed that both government and corporations had a fundamental obligation to do good. They aimed to enlist the private sector to not just line the pockets of large corporations but to also use the resources and techniques of the market to make government more efficient and better able to serve the people.
Clinton and his allies routinely referred to microenterprise, community development banking, Empowerment Zones, mixed-income housing, and charter schools as revolutionary ideas that had the power to create large-scale change. These programs, nevertheless, uniformly provided small or micro solutions to large structural or macro problems. Time and again, the New Democrats overpromised just how much good these programs could do. Suggesting market-based programs were a “win-win” obscured the fact that market capitalism generally reproduces and enhances inequality. Ultimately, the relentless selling of such market-based programs prevented Democrats from developing policies that addressed the structural forces that produced segregation and inequality and fulfilled the government’s obligations to provide for its people, especially its most vulnerable.
Although Clinton started the New Markets tour visiting Ray Pennington, a white Appalachian coal miner, the New Democrats’ agenda overwhelmingly focused on Black and brown women who had become the face of the poor in the 1980s and 1990s. In speeches and photo-ops, Bill and Hillary Clinton and their allies routinely celebrated people like a Black welfare recipient in rural Arkansas who started her own catering business, a poor seamstress in Chile who used a loan from a microenterprise organization to buy a sewing machine and provide for her family, and a Latinx charter school student in Los Angeles receiving a top score on a state achievement test. These images and descriptions of poor people aligned with the meritocratic ethos of the Ivy League graduates of Wall Street, Silicon Valley and the White House. However, these celebrations falsely suggested that market forces could give the vast majority of poor people the power to move out of poverty, overcome racial segregation and control their own lives.
Although the valorization of poor women of color as hardworking entrepreneurs and savers seemed more compassionate than the infamous Reagan-era image of the “welfare queen,” it proved no less detrimental. The focus on transforming poor people of color into financial actors contributed to making what was left of the social safety net in the 1990s and beyond only available to those people willing or able to operate within the imperatives and strictures of market capitalism. The celebration of a few individuals who managed to achieve success through market-based programs obscured the fundamental barriers and forms of structural discrimination and uneven development of global capitalism that made it impossible for most people of color in the United States and around the world to succeed.
Clinton’s efforts to reward those “who played by the rules” also continued to stigmatize those poor people who, allegedly, did not. The “doing well by doing good” ethos, therefore, further legitimized — and operated hand in hand — with punitive policies like those contained in the 1996 welfare reform law. It also fit with the tough-on-crime politics of the DLC and the Clinton administration, including the passage of the 1994 crime bill, which led to the vastly disproportionate surveillance and incarceration of millions of African-American men, whom the New Democrats deemed unable to become entrepreneurs, savers, or valuable contributors to the New Economy.
The veneration of entrepreneurship to solve social problems also revealed the type of work and worker that the New Democrats valued, and the types of constituencies to which they aimed to appeal. Beginning in the 1970s, this brand of Democrats consistently advocated that the future of both the economy and the Democratic Party lay in shoring up the entrepreneurial postindustrial economy and its college-educated nonunionized workforce. Starting in the New Deal, organized labor and working-class constituents played a pivotal role in shaping the base and values of the party. The New Democrats deliberately aimed to constrain the power and influence of the labor movement, and stressed that white middle-class professionals were key to the party’s viability going forward. Bill Clinton’s capturing of the presidency and the soaring of the New Economy in the 1990s seemed to offer affirmation of this theory and strategy. However, it came with major long-term costs and repressions, not least of which are the current fractures within the Democratic Party.
The labor movement and other social justice groups pushed back on the electoral strategy and policy agenda of the New Democrats. These groups came out in full force to support Jesse Jackson’s two presidential bids, in 1984 and 1988, and the different future for the Democratic Party that his candidacy embodied. During the Clinton years, groups mounted protests to specific issues, such as welfare reform, charter schools, free trade and sweatshop abuses. By the 1990s, however, the increased dominance of the New Democrats’ approach prevented a unified coalition of social movements representing the interests of the poor and working class from coalescing to pressure the Clinton administration into either meaningfully shifting its policy agenda on the economy and poverty or changing its political strategy. Likewise, consistent claims by the Clinton administration and the New Democrats that they were doing good, coupled with concerns about the alternatives offered by the Republicans, blunted the power of these groups and progressive politicians of the Democratic Party to bring more redistributive solutions to the table.
More than trying to build common ground with social movements on the left, the New Democrats’ commitment to doing well by doing good ushered in new partnerships among government, corporations, nonprofits, and philanthropic organizations like the Ford and Gates Foundations. The growing popularity of the notion that corporations could both fulfill social goals and make a profit meant that policymakers could rely on, and often encourage, business and philanthropy to perform functions that were once the domain of the public sector.
This trend opened new funding streams for solving problems of social inequality. Marshaling companies like America Online, Nike, and Citicorp to improve public education, combat sweatshops, and revitalize distressed urban neighborhoods reinforced the idea that the private sector was better at solving these problems than government. In doing so, it legitimated these private actors to become central players in the development of public policy, especially concerning poverty and inequality. This leaning on large corporations, wealthy tech entrepreneurs, and large private foundations, therefore, removed important mechanisms of democratic accountability and transparency from the policy process. Upon leaving the White House, Clinton, through his own foundation, substantially refined and expanded this model. The Clinton Foundation made it its mission to “woo the world’s most powerful interests to help the powerless” through partnerships among private companies, wealthy donors, NGOs and underserved communities.
The efforts of the New Democrats became critical to solidifying the idea that markets could “do good” in the popular consciousness. By the end of the 1990s, this consistent celebration of the power of markets would contribute to fortifying the belief among a generation of idealistic college graduates that the most effective path for enacting social change was to attend business school and work for a socially responsible company, rather than work in the public sector or become a union or community organizer. This trend is but one example of how Clinton and his allies ultimately did more to sell free-market thinking than even Friedman and his acolytes.
On the surface, “doing well by doing good” and “win-win” are phrases that call on corporations to assume more responsibility for social problems in ways that benefit all parties. But all the policies that flowed from that vision created clear winners and losers. The commitment to doing well by doing good did little to address the unequal distribution of wealth in the United States and around the world. Indeed, this inequity has only intensified since the 1980s, in part due to the economic agenda and unyielding commitment to globalization by the Clinton administration.
At the heart of the call for doing well by doing good is the idea of erasing the barriers between the public and private sectors. But rather than affirming this idea, the past 30 years have instead shown the power in resurrecting those barriers and the need for creating new ones that limit the reach of the private sector, restore faith in government — and truly create a more equal society.
This piece is a slightly edited excerpt from Lily Geismer’s book Left Behind: The Democrats’ Failed Attempt to Solve Inequality, available to order from PublicAffairs here.
Reprinted with permission from In These Times. All rights reserved.