Autocrats Like Trump, Putin, and Le Pen Exploit Failures of Neoliberalism

A bit over 40 years ago the UK and the United States--followed within a few years by most of the rest of western Europe--embarked on a radical experiment in governance and economics.

The nations of the world would be turned over, practically speaking, to the biggest corporations and richest billionaires.

"Neoliberalism" was the word invented by a small group of utopian economists at a 1938 meeting in France, and it was turned into a movement at a 1947 meeting in Mont Pelerin, Switzerland. At that time the world had been shaken by the rise of Communism in the Soviet Union (and China) and the disaster Fascism brought to Germany and then all of Europe.

The hope of neoliberalism's founders was that it would prevent the rise of both communism and fascism in the developed democracies of the world: a sort of magic formula for governance that would keep the world safe and free forever.

As I laid out in The Hidden History of Neoliberalism: How Reaganism Gutted America, the Mont Pelerin Society neoliberals believed that if most government functions and decisions were simply turned over to the most powerful economic players in a country, the "magic of the marketplace" would ensure that everything ran smoothly and thus guarantee an abundance of life, liberty and the pursuit of happiness.

To get to that elevated place, neoliberals said, required privatizing as much of government as possible and ending most all government regulation of international trade, money in politics, and the movement of money across borders.

It also called for widespread deregulation of business along with slashing most taxes on corporations and the morbidly rich. The nations of the world would be turned over, practically speaking, to the biggest corporations and richest billionaires.

Margaret Thatcher brought neoliberalism to the UK in 1978, destroying that nation's largest and most powerful labor union (the coal miners) in an epic battle, and beginning a privatization spree that has largely held to this day.

Reagan started us down the same path when he won the election of 1980 and crushed the PATCO union (which had endorsed him), then began the privatization of the Pentagon's functions (which is at about 50% now). George W. Bush doubled-down by starting the privatization of Medicare, which is also about half done with the private "Medicare Advantage" scam.

Russia embraced neoliberalism at the insistence of the GHW Bush administration in the early 1990s and is arguably the best example of what happens at the end point of neoliberalism.

The experiment has been, to be charitable, a failure. In every country where it was tried inequality has exploded, workers have fallen behind, corporate monopolies have strangled competition and destroyed small businesses, and political systems have been corrupted by big money.

• In France, the Macron government is the current face of neoliberal policies.
• Here in the US, both parties embraced neoliberalism from 1980 to 2021, when the Biden administration began a rapid turn back toward classical economics (with a long way still to go).
• Russia has, over the past decade, completed the natural transition from neoliberalism to neofascism.

If turning most government functions over to private industry is neoliberalism, its opposite is "the people" seizing back control of their government and making it work for them in the way they want. Populist movements have emerged to do just this on both the right and the left.

On the left, the anti-neoliberalism movement to turn back towards the classical economics of Adam Smith, Alexander Hamilton and John Maynard Keynes has been led by Bernie Sanders in the US and Jean-Luc Melenchon in France.

On the right, the anti-neoliberalism movement to push the system to its logical endpoint of neofascism has been championed by Donald Trump in the US and Marine Le Pen in France.

Most citizens of the US and France have no idea what neoliberalism is, where it came from, or when it was put into place. All they know is that the billionaires are doing really, really well but their lives have been stuck in a rut for decades. And they want out of that rut.

In France the battle is acute because of the presidential election that will be resolved in two weeks in a choice between Macron and Le Pen. Macron has been one of Europe's most aggressive neoliberal "reformers," as Didier Fassin wrote in The New York Times:

"Among Mr. Macron's first decisions in office was the abolition of the wealth tax and [institution of] a flat tax on capital income, which benefited the rich. At the same time he pursued a reduction in the housing allowance for the poor and a reduction in pensions for retirees.
"Halfway through his first year in power, he had become the 'president of the rich.' The image stuck, burnished by his reform of labor law, which limited workers' rights and weakened representative organizations, curtailment of unemployment benefits and diminution of employers' social security contributions."

So, along come neofascists like Trump and Le Pen telling their country's citizens--correctly--that "free trade" has shipped jobs out of the country, "low taxes" have made the rich even richer, and that deregulation and the destruction of legal protections for organized labor have screwed working people.

Not knowing how it all worked or got sold to us back in the 1970s, most Americans and French citizens simply go with whoever is loudest at pointing out the flaws of neoliberalism.

So far, that's largely been the neofascists: Donald Trump and Marine Le Pen.

But the neofascists' solutions aren't going to solve the problem: as Russians have discovered, authoritarian governments don't do any better than neoliberal governments at meeting the needs of their people and eventually cut off any possibility of a return to either classical economics or anything resembling a true democratic republic.

Even worse, history shows that once the transition is made from neoliberalism to neofascism, the road back to democratic principles and regulated economies is extraordinarily choppy. Just look at the neoliberal regime the CIA imposed on Chile in 1973 and that country's recovery from the end of Pinochet's neoliberal/neofascist rule to the past decades; one could argue that Pinochet was Putin before there was a Putin.

Progressives committed to undoing the neoliberal "reforms" foisted on their countries over the past 40 years must be every bit as aggressive as the neofascists are at calling out the failures of neoliberalism.

Both Bernie and Melenchon have been outspoken in identifying the failures of neoliberalism while only rarely mentioning the word, as it's not so well known in either country (although better known in France).

Bernie, for example, laid it out brilliantly in an opening statement to his Budget Committee in the US Senate:

"Today in America, while the very rich are getting richer, over half of our people are living paycheck to paycheck. Millions of workers are trying to get by on $8, $9, or 10 bucks an hour, which, in my view, is a starvation wage. ...
"Today in America, income and wealth inequality is at its highest level in over 100 years. The two richest men in America now own more wealth than the bottom 42 percent - over 130 million Americans.
"During this terrible pandemic, when thousands of essential workers died doing their jobs, over 700 billionaires in America became nearly $2 trillion richer.
"While we hear a lot of talk about the need to take on the oligarchs in Russia - something I strongly support - anyone who thinks we don't have an oligarchy right here in our country is sorely mistaken.
"Today in America, multi-billionaires like Elon Musk, Jeff Bezos and Richard Branson are off taking joy rides on rocket ships to outer space, buying $500 million super-yachts and living in mansions with 25 bathrooms.
"In his budget, the President has proposed a 20% minimum tax on those who are worth at least $100 million. That is a step forward. I would go further.
"In 2020, I introduced a 60% tax on the obscene wealth gains billionaires made during the pandemic - legislation I will soon be re-introducing and which is enormously popular. ...
"Now, I understand that some of my colleagues believe this is a terrible idea because it would redistribute wealth. But the reality is that over the last 45 years there has been a massive redistribution of wealth in America. The problem is that it has gone in the wrong direction.
"According to the RAND Institute, since 1975, $50 trillion in wealth has been redistributed from the bottom 90% to the top 1% - primarily because corporate profits and CEO compensation has grown much faster than the wages of average workers.
"But it's not just income and wealth inequality. It is economic and political power. As we discussed at a hearing in this committee last month, three Wall Street firms control assets of over $21 trillion which is basically the GDP of the United States, the largest economy on Earth. Three Wall Street firms.
"In terms of health care, over 72 million Americans today are either uninsured or under-insured while more than 60,000 Americans die each and every year because they cannot afford to go to a doctor when they need to.
"We remain the only major country on Earth not to guarantee health care to all people, and yet we pay the highest prices in the world for health care."

Bernie, of course, is not the only progressive populist in America; he's just the most well-known. The Congressional Progressive Caucus (which Bernie co-founded) has around 100 members including superstars like Pramila Jayapal, Ro Khanna, and Mark Pocan, and prominent progressives like Sherrod Brown, Jeff Merkley, and Elizabeth Warren wield considerable power in the Senate.

And the Biden administration has been quick to realize the crises America is facing because of neoliberal policies: the President's embrace of the massive Build Back Better program that came out of Bernie's Budget Committee is a great example, although it was blocked by Joe Manchin and Kirsten Sinema.

As Trump, Bernie, Melenchon, and Le Pen all demonstrate, populism--telling people the truth about their situation and promising to fix it--is the most powerful way for politicians to challenge neoliberalism.

The danger, though, is that the neofascist populism of Trump and Le Pen lead, ultimately, to a very different place from the progressive populism of Bernie and Melenchon.

Neoliberalism has failed and is going away. The question is whether we'll return to sane and humane economic policies and ban big money from politics, or if we'll embrace the authoritarian populist policies of Trump, Putin, and Le Pen.

To a large extent that decision is up to the people of the US and France, and they'll make the best decision if they're well informed about the history and stakes going forward. So, please pass this along, far, and wide.