Those who predicted revolutionary socialist uprising after the financial crisis haven’t exactly been vindicated. Eight years on from the crisis, a Conservative government has just been re-elected in the UK, Hillary Clinton looks likely to move back into the White House in November, and the ‘Occupy’ movement is little more than a distant memory. While Sanders, Corbyn and Trump rage against the perceived unfairness of neoliberalism, none of them are likely to end up in the White House or 10 Downing Street.
Despite the current dominance of economically liberal thought in the West, these illiberal, anti-free-market, anti-globalisation grumblings must not be ignored. Whatever the fate of the anti-establishment insurgents, their rise – were it even to carry on no further – is astonishing in itself. The ‘neoliberal elite’ may have won this round, but the public is no longer willing to give them the benefit of the doubt. Another economic crisis is seen as the direct result of the free market and the tide could well turn. And that’s why politicians in the centre need to speak up. Just as Clinton has allowed herself to be dragged to the left on issues like the Trans-Pacific Partnership, the minimum wage and even gun control, the rivals to Jeremy Corbyn during the Labour leadership election allowed themselves to be blown off course as well. This is no winning strategy. Faced with opponents who have railed against capitalism since the 1980s, it is not right for these moderates to undersell and criticise an economic system which has achieved so much for so many. They need to start tackling the illiberal, reactionary wails with cold, hard facts.
The term ‘neoliberalism’ is a favourite on the Left and is becoming increasingly popular amongst some of the disenfranchised sections of the old Right. Poorly defined and overused in equal measure, it has become a kind of go-to insult for a wide variety of people, and very few can escape the label while defending the use of common sense and pragmatism in political and economic discourse. It must surely grind when moderate, centre-left politicians like Hillary Clinton – who was ranked more liberal than seventy percent of her colleagues during her final term in the Senate – are called ‘moderate Republicans’ or ‘Red Tories.’
The party political systems in the US and the UK mean that these irritations become real threats to politicians’ careers. If they don’t reach out to these anti-free-market, disenfranchised voters, they may well find themselves without their parties’ nominations. But this is a slippery slope. For every populist statement of the problems of capitalism, the free market goes without defence. For every condemnation of the failures of the free market, the very principle of a liberal economy is neglected. Eventually, voters will forget that the free market has any merits at all.
So, those who’ve been cast aside and mocked as ‘neoliberals’ must, while pointing out the merits of selective state intervention, staunchly defend capitalism as the best system of economic organisation for wealth creation and poverty reduction. And as the memories of Soviet communism fade and Generation Y grow up ignorant of the failures of socialism, the case for the free market must be made with renewed energy.
Where, then, should the members of the ‘neoliberal elite’ start?
They might like to start with the debate around inequality – often considered the home turf of the anti-capitalist crowd. Indeed, it’s now received wisdom that all inequality is bad and that inequality has grown thanks to capitalism. The second of those charges – that inequality has risen – is hard to counter thanks to the mass of data kicking around. Gini coefficients (which measure income inequality) in the UK have continually grown since the sixties, and wealth inequality has increased even faster than that. However, it is now generally accepted that global income inequality is falling, not rising. It seems, then, that a more visible super-rich make the difference seem greater than it is. But it is the first charge – that inequality is always bad – which is where more questions must be asked: namely, what is wrong with inequality? If the rich get much richer, but the poor get richer, too, why is that inherently bad? There is a convincing case to be made that those who see inequality as an end in itself simply want to see the rich pummelled irrespective of the wider costs to the economy.
These ‘neoliberal elites’ must also show how capitalism has proven itself time and again as the best engine of wealth creation and poverty reduction. Mountains of data now show that poverty rates are tumbling across the world – particularly in the developing BRIC nations as well as those in Africa. Since the late seventies, income poverty, measured by the percentage of the world’s population living under $1.90 per day (2011 prices) has fallen at a faster rate than any time before. Some two hundred million people have been lifted out of income poverty in the last three years alone. The evidence then points to capitalism which has not only reduced global inequality but which has massively reduced global poverty. Combined with a strong counter to the argument that inequality is always bad, suddenly the case for capitalism looks more secure. Moderate politicians need to put now forward this case.
But they need to go further. They cannot only tell people that capitalism works. Those anti-free-market populists have had such a dramatic rise over the last year is reason enough to conclude that people cannot just be told what to think. They ought to be convinced. It is up to the ‘neoliberal’ leaders of the West to make sure people do feel the benefits of capitalism. Call it popular capitalism. Just as Thatcher recognised the need for people to be able to own their homes, the current incumbents must find a way to ensure voters feel engaged in the economy. The ‘neoliberal elite’ looks set to hold onto power in the next few years, but future election cycles are far less predictable. They need to tackle the dissatisfaction now.
It might be perverse to paraphrase Marx at this point, but in a bizarre sense, it is most appropriate. Neoliberals of the world must unite. There is much to be gained and – unlike in the case of Marx’s proletariat – much to be lost, too.