Surprising Things To Know About Robert Reich…And Some Notes on Neoliberalism

Robert Reich is oftentimes assumed to be on the left wing of the classic Rubin vs left wingers camp. And he was on this side in the Clinton White House. That’s because he supported more public investments, while Rubin was a deficit hawk. This used to be the central Democratic economic debate. But it’s since moved on to the question of trade. And while the divisions are roughly the same, Rubin, Furman, Summers et al want more, freer trade while Baker, Bernstein and Robert Kuttner are more skeptical. But there’s the exception of Robert Reich, the original casualty of the wonk wars. He, of course, is something of an unabashed free trader whose rhetoric on the issue is very similar to that of Rubin/Summers:

Well, I‘m still a free trader, although I will tell you, Chris, it is becoming—there are fewer and fewer of us. It‘s a very unpopular position.

In Michigan, you can find almost as many free traders as you can chicken hawks. There are not many. The trouble is that most people blame free trade and blame free trade for the failure of American middle class to expand, the decline of middle-class wages, all of the problems, theeconomic problems, we have.

This presents something of a problem for those (Steve Clemons, Chris Hayes) that call the centrist wing of the party “neoliberal.” That’s because neoliberalism has two distinct meanings that can often be confused. One definition of neoliberal is the domestic, political one. It describes those liberals who, in the early 1980s, turned on many liberal orthodoxies such as unions and welfare and advocated a more centrist approach to economic issues for Democrats. They mainly coalesced, originally, around Charlie Peters and the Washington Monthly. Bill Clinton was, in many ways, the apotheosis of the neoliberal vision. He embraced welfare reform, made a point of repudiating the left wing economic elements of the Party in the New Orleans Declaration he gave as head of the DLC and was a true third way politician. Furman and Summers are orthogonal to these original neoliberals, who were mainly political appointees, policy wonks and journalists, not academic economists.

The second definition of neoliberalism that is often intertwined with the first is the international, economic one. Neoliberalism in this context means adhereing to a vision of economics and economic policy which supports freer markets, less government control of the economy, free trade and privatization. In short, liberal economics that is rooted in the thought of 19th century liberals like Bastiat and Mill. It’s often argued the purest expressions of neoliberal economics were in the privizatization and deregulation pushes started by Carter and followed out by Reagan, the reforms of Thatcher’s Britain and the promulgation of the Washington Consensus in international development circles starting in the 1990s. It’s this vision of neo-liberalism that The Nation and much of the true Left (capital L is very deliberate) have a particular distaste for. Of course, they don’t like domestic neo-liberalism much either, which overlaps with the international version on some issues: namely trade - and entitlement reform and welfare  reform, but only somewhat. But even though they overlap on some issues, they are not the same and really don’t have much to do with each other. One’s an approach to development and economic policy on a global scale for all countries, while the other is a domestic political strategy for the Democratic Party . So one could be like Reich, a traditional liberal in terms of Democratic politics, and still support free trade (like a neo liberal!)

So when Clemons and Hayes are calling Furman a “neoliberal” they should make it clear whether he wants a centrist leaning (but still liberal) domestic economic policy, or whether he wants to implement the Shock Doctrine.