The engine of neoliberalism, in both its left- and right-inflected versions, is money. Deregulating finance and busting unions, for example, leads to rapid increases in the share of income going to corporate executives and shareholders, who can then put that money behind more neoliberal policy. The result is a self-perpetuating cycle of inequality.
There was genuine ideological zealotry behind the neoliberal turn in the 1970s, but the fuel behind it was (and remains) the money of the ultra-rich, especially on Wall Street, which goes to campaign contributions as well as funding various think tanks, political nonprofit groups, and economics departments.
Clinton was no exception—in some cases, his policy amounted to top-down class war. In particular, he cemented the idea that antitrust law should mostly be abandoned as a bipartisan consensus. Only upper-class power can explain the wide acceptance of Robert Bork’s absolutely preposterous attack on antitrust law as somehow harming the consumer.
Worse still was Clinton’s approach to finance. He signed broad financial deregulation in 1994 and again in 1999, both times resulting in a wave of consolidation across the industry. Wall Street got huge—and hugely profitable, soaring to a peak of around 40 percent of corporate profits after the second round of deregulation. One resulting irony was the increasing fragility of the financial sector, leading to failures requiring more government intervention. This was clear during Clinton’s presidency with the huge failure of Long-Term Capital Management in 1998—with contagion averted only by a bailout coordinated by Greenspan’s Federal Reserve. But that, of course, was only a tiny preview of the literally trillions in cash and credit that was jammed into the failing financial system during the 2008 crisis.
That process was started by George W. Bush, but it was Barack Obama who would oversee the full response to the crisis. In doing so, he followed the Clinton playbook almost to the letter—and in the process he became the fullest incarnation of Clintonism. In terms of raw political talent, Obama was head and shoulders above either Clinton or, indeed, every president since Franklin Roosevelt: An oratorical grandmaster, an inspirational organizer, and personally squeaky-clean, he sought to create a bipartisan politics that might transcend (one could also say “triangulate”) differences on the right and left. Partly as a result, Obama managed to deliver on health-care reform—long the liberal lodestar.
But unlike the Clinton presidency, Obama’s strain of New Democrat politics, implemented in the wake of the 2008 crash, did not deliver the economic goods as advertised. Both output and job growth were pathetically weak after the immediate crisis and remained so throughout Obama’s two terms. Not only was there no catch-up growth to heal the damage of the Great Recession; it has actually been far below the postwar average. As a result, today American output is further below the pre-2007 trend than it was in 2010. However, corporate profits, which had dipped badly during the crisis, quickly soared to the greatest fraction of total output in postwar history, and have stayed nearly that high.
In similar circumstances, the Obama Democrats—following the basic formula of Clintonism—rescued the banks with gobs of public money. They did not return to vigorous antitrust enforcement. They largely stood aside while financial criminals plowed a ragged hole through the rule of law. The Dodd-Frank financial-reform bill, though it did many laudable things, did not meaningfully restrain Wall Street’s power. (And many of its key regulations were effectively slow-walked by Obama’s regulatory czar.)
This disastrous record proved to be Hillary’s main problem in 2016. Unlike Obama, she had all the Clinton baggage, yet without her husband’s personal touch or charisma. Suddenly bereft of anyone to sell it, the economic record of the Democratic Party stood on its own—and the party lost to the most unqualified buffoon in the history of presidential politics (helped by FBI director James Comey and Russian hackers, it should be noted). At this point, it should also be clear that the route to long-term electoral success lies not in doubling down on Clintonism, but in returning to New Deal–style policy and politics, updated for a modern age (especially by removing the racist elements intended to appeal to Southern Democrats in the 1930s and ’40s).
