The neoliberal era is ending. What comes next?

The next era in American history can look entirely different. It's up to us to choose.

GANESH SITARAMAN: I wrote this book, "The Great Democracy," because I think that we're on the edge of a new era in American history. I think it's really important for people to understand what's at stake in this moment right now. Since World War II, we've actually lived through two distinct eras in our history. The first was from the end of the war until the 1970s. And it's probably best described as a liberal era.

It was an era of regulated capitalism that operated between the state control that we saw in the Soviet Union, and the laissez faire free market system that caused the Great Depression. It was an era in which big government, big business and big labor worked together to try to provide social goods for Americans. And in fact, even conservatives during this era were basically liberal. Eisenhower built the highway system. Nixon said, "I am now a Keynesian in economics." And then what happened was we went through a period of crisis in the 1970s. Wars, the oil shocks, stagflation. The end of this era was during the presidency of Jimmy Carter. Democrats controlled government completely, but the party was increasingly fractured, and they couldn't actually accomplish many of their long held goals.

The second era was an era defined by neoliberalism and it emerged with Margaret Thatcher and Ronald Regan in the early 1980s. Now neoliberalism is a tough word for a lot of people. And I think it has a lot of meanings to different people. But really what it comes down to in policy are four things: deregulation, liberalization, privatization, and austerity.

The basic idea of neoliberalism started to emerge in the mid-20th century. It was partly a reaction to the New Deal, and moves to create social democracy in the United States and other western countries. And under neoliberalism, the basic idea is that individuals would be on their own. They would be responsible for themselves. So instead of government, corporations, and unions balancing the interest of stakeholders, the primary regulator of social interests would be the marketplace. And the consequence of this it turned out, however, was actually not what many of the proponents claimed it would be to start, which was greater competition and a more free society. In fact, what we've seen over time is increasing inequality, a reduction in opportunity for many people, and increasing consolidation in markets. And in this period, the neoliberal area, even the liberals were neoliberal. It was Bill Clinton who said the era of big government is over, and deregulated Wall Street and Telecom. It was Tony Blair who transformed the Labour Party in England into New Labour. And again, we then faced crises. Wars, the great recession, massive levels of inequality, social fracturing. And the end of this area is the presidency of Donald Trump. Republicans at the beginning of this time controlled everything in government, and they could not pass some of their long held goals. Their party is also increasingly fractured.

So where I think we are now is that we've lived through a neoliberal era for the last 40 years, and that era is coming to an end. People are challenging neoliberal ideas in lots of different ways. There are people challenging it in politics, putting forward bold new political ideas and policy ideas for how to shape the rules in a different way. But there are also people who are challenging neoliberal ideas in their own lives and in the private sector. Thinking about corporations differently, thinking about having workers be on the boards of corporations. Thinking about goals of corporations as being broader than just expanding profits for shareholders. But actually having social good and other kinds of social and public benefits.
Part of the way we get beyond neoliberalism is by seeing that there are other ways to think about the economy, and by recognizing that our democratic choices shape the economy in the first place. And I think that is how we move forward, is we have to see this as really a function of democracy. What kind of society do we want to live in? Rather than just passively accepting the market and its outcomes as something we must deal with. We don't have to. We can actually choose to have a different kind of structure.

So what happens in this moment right now could actually set the terms of politics for a generation. And that is a set of big stakes and big choices that are on the table for us.

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  • The timeline of America post-WWII can be divided into two eras, according to author and law professor Ganesh Sitaraman: the liberal era which ran through the 1970s, and the current neoliberal era which began in the early 1980s. The latter promised a "more free society," but what we got instead was more inequality, less opportunity, and greater market consolidation.
  • "We've lived through a neoliberal era for the last 40 years, and that era is coming to an end," Sitaraman says, adding that the ideas and policies that defined the period are being challenged on various levels.
  • What comes next depends on if we take a proactive and democratic approach to shaping the economy, or if we simply react to and "deal with" market outcomes.

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