“The Great Realignment.”
Shifts in political allegiance.
As Democrats continue their transformation into the party of the 1 percent, Republicans appear poised to become the party of the working class. This profound shift in American politics, historic in proportion and significance, will have repercussions for years to come. Marshall Auerback and James Carden consider the epochal shifts and their consequences.
This is the first of two parts. Part 2 will examine alternatives to the neoliberal/fusionist consensus that has defined our political economy since the end of the Cold War.
The results of the 2016 and 2020 presidential elections indicate that a major realignment in American politics is under way. It is a realignment driven, in large part, by the divergent approaches Democrats and Republicans are taking toward America’s political economy.
The lens of history is essential. Each of the major political parties has, at different times and in a different way, broken with the economic orthodoxies it once championed. No one now living will have witnessed changes so drastic and unexpected.
We begin with the Republican Party. Long the party of free trade and finance capital, under President Trump and possibly under future leaders—a Josh Hawley, perhaps a Tucker Carlson—it is in the process of taking a starkly different direction. Why? What will come of this? These are our questions.
We will then turn to the Democrats and explore how the once-proud party of labor, has, over the course of the last three decades, transformed itself into a party that champions Silicon Valley, Wall Street, and predatory free-trade agreements at the expense of America’s industrial and manufacturing heartland.
In Part 2 we will consider the possible electoral repercussions of what we see as a Great Realignment of the two great American political parties.
The long reign of Catholic–libertarian fusionism: 1955–2016
WE MAY COME to remember 2016 as the year the GOP made a fundamental break with its past. The #Resistance’s relentless focus on Trump’s coarseness and vulgarity—the Twitter rants, the gaudy lifestyle—obscured the deeper reality: The 2016 election result augured a sharp break in policy, particularly economic policy, within the Republican Party. Many missed this. The party’s departure should have gotten more attention than it did, particularly among Democrats.
For the 70 years leading up to Trump’s surprise victory, Republican Party economic policy had been shaped by what is known as the fusionist consensus. Fusionism arose in the mid–1950s as a kind of compromise between the libertarian and traditionalist factions at William F. Buckley’s National Review, which he founded in 1955 with a $100,000 dollar loan (equivalent to nearly $1 million today) from his father, a staunchly conservative oil tycoon. The intra-ideological battles between NR editors and columnists, particularly between Frank Meyer (libertarian) and Russell Kirk (traditionalist) were the starting point for the fusionist consensus that was first to shape the magazine, then the conservative movement, and ultimately the Republican Party.
As E.J. Dionne observes in his seminal book Why Americans Hate Politics, NR “brought together [Friedrich] Hayek and Kirk, [Ludwig] Von Mises and [Richard] Weaver in an alliance sanctified by anti–Communism.” It was, in retrospect, a revolutionary fusion of capitalism and Catholicism, but one that elevated free-market economists such as Hayek, Von Mises, and Milton Friedman at the expense of the social-justice teachings of the Church.
Fusionism reached it apotheosis during the administration of Ronald Reagan. Reagan and Buckley had been friends since the early 1960s—a nexus of Bel Air and Park Avenue, where Hollywood met Yale. Glamorous? Sure. But the policies that resulted—deregulation, privatization, massive marginal tax cuts for corporations and the wealthy, combined with cuts in social provision for the poor—were the logical outcome of fusionism, and did quite a bit of harm to “the least among us.”
In retrospect, it does seem hard to reconcile how the devoutly Catholic Buckley spent a lifetime trying to turn the Rerum Noverum on its head. But one could see that this kind of fusionism had become intellectually exhausted even during Buckley’s lifetime. Perhaps the moment fusionism finally descended into full-on absurdity was the release of Michael Novak’s 1994 Business as a Calling: Work and the Examined Life. Novak, even more than Buckley, became the leading apologist for the fusionist alliance of Christianity and capital during the final decades of the 20th century. Yet in view of the series of financial and economic disasters that have befallen the U.S. in subsequent years, such arguments have not aged well.
Indeed, it is possible that Paul Ryan, the former House speaker and self-advertising Catholic, will be remembered as the last major Republican figure to hold aloft the flag of this old-style fusionism. During his run for the vice-presidency on Mitt Romney’s ticket in 2012, countless articles in the mainstream press made much of Ryan’s devotion to the work of Hayek. The New York Times Magazine went so far so to declare:
Ryan has repeatedly suggested that many of his economic ideas were inspired by the work of Friedrich von Hayek, an awkwardly shy (and largely ignored) economist and philosopher who died in 1992. A few years ago, it was probably possible to fit every living Hayekian in a conference room. Regardless of what happens in November, that will no longer be the case.
As is often true of predictions emanating from the Times, the exact opposite occurred: In the next presidential cycle, Trump swept the GOP primary. But he did so by bundling together political strands very different from those of recent Republican predecessors.
As a candidate in the 2016 election, Trump’s message represented a break from his party’s traditional corporate interests. Not only did he proclaim his love for “the poorly educated”; he also campaigned, in effect, as an old Rust Belt Democrat, sounding almost like Ohio Senator Sherrod Brown in Republican robes. Opposed to illegal immigration and offshoring, Trump attacked globalization, free trade, and Wall Street, especially Goldman Sachs. The GOP’s shift was under way. No longer was this the party of Reaganite supply-siders, or Atlas Shrugged libertarian enthusiasts.
In contrast to libertarian market fundamentalists, who decried the country’s dependence on “big government” and the corresponding need to fix (i.e., cut) entitlements, Trump made repeated campaign promises to protect Medicare and Social Security. These put him on the side of core adherents of the welfare state. That is one of the major factors that rapidly increased the migration of white working-class support from the Democrats in 2016. As Professors Herbert Kitschelt and Philipp Rehm explained to New York Times columnist Thomas Edsall, the perception that Trump was less prone to cut popular entitlement programs (in contrast to his failed GOP predecessors in previous campaigns), “would have removed cognitive dissonance and inhibitions that would have prevented them from supporting an economic conservative in the mold of Mitt Romney.”
It is also true that Trump’s campaign rhetoric was intended to mobilize and inflame resentment of immigrants and was underpinned by explicit appeals to racism. But Trump also put forward strong criticisms of the American economy and American economic policy. And, unlike nearly every establishment Republican—including all his primary-election opponents and most leading Republicans in Congress—Trump took highly popular, pro-worker stands on two major issues of economic policy: reducing economic harm to American workers from immigration and protecting workers from the wage-reducing impact of international trade. He also promised to build up jobs through an infrastructure program.
Trump was afforded this opening because the Democrats made a conscious decision to abandon one of its key New Deal constituencies, blue-collar workers. In the words of the historian and social critic Thomas Frank, “new Democrats… enshrined the meritocracy, meaning not only the brilliant economists who designed their policies, but also the financiers and technologists that the new liberalism tried to serve, together with the highly educated professionals who were now its most prized constituents.” Gone were the old Southern economic nationalists, such as “Fritz” Hollings, who had little compunction in resorting to protectionism to safeguard his constituents’ textile interests from an onslaught of Asian-led imports; in came the Route 128 suburbanites and Silicon Valley enthusiasts, many of them working on behalf America’s defense contractors while championing America’s new “innovation economy.”
Social Democracy Repudiated: 1992–present
FREE-MARKET ORTHODOXY captured the Democratic Party, and perhaps for good, in 1992. It was observable during the presidential primary between former California governor Jerry Brown and Arkansas governor Bill Clinton that change was afoot. As Joan Didion wrote of the Democrats’ 1992 nominating convention in New York City:
…it was four days and nights devoted to heralding the perfected “centrism” of the Democratic Party, no hint of what had once been that party’s nominal constituency was allowed to penetrate prime time, nor was any suggestion of what had once been that party’s tacit role, that of assimilating immigration and franchising the economically disenfranchised…
As Didion intuited, a wholesale repudiation of the FDR/LBJ welfare state by the Democrats was not far off. And indeed, it wasn’t. A mere three years later, during his 1996 State of the Union address, Clinton declared an end to “the era of big government” and (courtesy of his treasury secretary, Robert Rubin), ceded control of fiscal policy to the so-called “bond vigilante,” the mythical figure who was said to protest monetary or fiscal policies considered inflationary by selling bonds, thus increasing yields and thereby keeping governments on the path toward fiscal probity.
Even as Clinton shredded the safety net, therefore, he made the country safe for finance capitalism. According to the economist Robert Wade, during the Clinton years, the top 1 percent by income captured 45 percent of the total growth of pre-tax income. And it was during these years that the Democrats, who once took their inspiration for a moral political economy from such figures as Keynes and J.K. Galbraith, began to sound eerily similar to the Randian libertarians on the Right.
The 1990s were to become the decade of the Washington Consensus, a gathering of policies laid out by the economist John Williamson that recommended governments the world over pursue the following: fiscal discipline (i.e., austerity), re-ordering (i.e., minimizing) public expenditure, tax reform (i.e., cuts), liberalizing interest rates (e.g., allowing credit card companies to abuse their position with the public), a competitive exchange rate, liberalizing trade (i.e., pursuing free-trade agreements), privatization (e.g., selling off utilities to private companies and turning public goods into private economic rents), and financial deregulation (which encouraged the nonenforcement of securities law and augmented corporate looting).
It was these policies that laid the groundwork for the Great Recession of 2008–09. The Obama administration’s response was not to push for a massive countercyclical intervention, which was sorely needed; it was to tinker around the edges of a neoliberal economy via redistribution programs from winners to losers, all the way avoiding structural changes that gave rise to these problems in the first place. While the banks that were the proximate cause of the crisis received billions in bailouts, millions of Americans, victimized by the predatory lending practices of Bank of America–Countrywide, JPMorgan Chase, Washington Mutual, Citibank, Morgan Stanley, and Wells Fargo, were thrown out of their homes—often at the point of a gun by local sheriffs and police acting at the behest of these financial institutions.
What the neoliberals shared with the old-guard Republican fusionists was an abiding belief in the power and rightness of market fundamentalism. This was the basis of the bipartisan consensus that prevailed until 2016. It consisted of little more than a fetishizing of free-trade agreements, Wall Street deregulation, offshoring the American manufacturing base, and turning a blind eye to tax arbitrage schemes.
Both parties, then, have shattered the old norms of what it used to mean to be a “Democrat” or a “Republican.” But neither has yet found the secret elixir to create a durable new coalition that transcends today’s divisions. That is the political task ahead for both parties.
Which of the two parties, if either, are better able to surmount existing fractures and come up with a better winning formula that goes beyond selling out to the highest bidder? The answer to that question will determine if American democracy is beyond salvaging, even without the toxic presence of Trump in the White House.
