problem.Photo: r000pertThere’s been an interesting online debate over neoliberalism in the past few months. OK, people have been debating neoliberalism for decades now, but for some reason there’s been a recent flurry of activity. I’d like to weigh in with some thoughts on an under-discussed aspect of the debate: how climate change and climate policy change the equation.

But first, some background (in extremely crude terms). In the late ’70s and early ’80s, a new kind of politics emerged, seen as a middle path between the excesses of post-war statist liberalism and the brutality of conservative laissez-faire. Neoliberalism, as it came to be known (mostly by its opponents), accepted the neoclassical economic doctrine that open markets and minimal government intervention produce the greatest economic growth. Neoliberals generally oppose price and wage controls, support international free-trade agreements, are suspicious/hostile toward unions and industrial policy, and support the privatization of public services and resources.

Where (the leftier sort of) neoliberals diverged from conservatives was in their support for progressive taxation and post-tax redistribution of wealth to ease the inequalities and injustices that markets produce. The idea is to let markets maximize growth and use redistribution to insure that all boats rise with the tide, a model that’s worked quite well for, say, Sweden.

(I should note that this characterization of neoliberalism is far more charitable than most of its critics would allow.)

Grist thanks its sponsors. Become one.

The problem is that international market liberalization has tended to free capital to travel freely while labor gets stuck in place, which massively advantages capital and drives the cost of labor down to the lowest common denominator. Developed countries have seen their middle classes hollowed out as labor-intensive industries shift to cheap labor markets. National governments and international bodies like the World Trade Organization have increasingly tilted policy in capital’s favor, as nations compete to lower taxes and deregulate labor markets. Redistribution has not kept pace with widening inequality.

To make matters worse, the institutions that support redistributive policy, like unions, have withered. And this gets at a persistent flaw in neoliberalism: it contains no credible theory of politics. If organized labor is degraded and the middle class rendered less secure, what political force remains to push redistribution over the inevitable objections of the rentier class? The global-average worker may see their circumstances improve (and that’s not nothing), but neoliberalism weakens domestic progressive groups in developed countries. Political constituencies seeking wage, health, and environmental interventions see themselves as fighting for their rights. It is, or can be, a proud fight. Political constituencies seeking post-tax redistribution are seen as parasites and welfare cases playing identity politics. It’s easy to stoke resentment against them, as the right has so amply shown.

A neoliberal might respond that critics are simply wrong: Neoliberalism has reliably generated growth where it’s been tried (though that somewhat elides other lines of criticism). Or a neoliberal might acknowledge the corruption and rising inequality in the current system but argue, as Matt Yglesias does, that there’s no clear alternative. Kevin Drum, once a neoliberal in good standing, now agrees that figuring out some way of counterbalancing corporate power is a “central task of the new decade,” but as to what the alternative to neoliberalism is, well, “Obama certainly hasn’t figured out an answer” and “I don’t know the answer either.” Sigh.

I’m sure there are lots of people proposing lots of alternatives. God knows I haven’t even scratched the surface of what is an immense and complicated debate. (Grist readers: Send me links to your favorite alternative to neoliberalism!)

Grist thanks its sponsors. Become one.

Anyhow, that’s all by way of some (as I said, extremely crude) background on the issue. What rarely comes up, particularly among today’s left pundits, is the way climate change might scramble the picture. That shall be the subject of my next post!