The three political-economic philosophies that are being offered to US voters are:
- Neoliberalism: The current political-economic philosophy which has been in play since the 1980s but which started to unravel during the Bush II years.
- Neoconservativism: The philosophy of the Republican Party, dominant during the Bush II years.
- Social Democracy: The current version of Embedded Liberalism, the philosophy that dominated US politics from the end of WWII until the 1970s.
If you understand these philosophies, make a decision about which one you support and place the candidates in the philosophy they support, your decisions will be a lot easier. First, follow the links above to understand the philosophies (if this is new territory) then use the following cheat sheet to classify candidates:
The Embedded Liberalism of the post-WWII era failed during the 1970's in the US after a period of stagflation. Neoliberalism ran from the 1980s until the Financial Crisis of 2008. Follow the graphs below to see why Neoliberalism began failing after 2008. The choices are to continue with a political-economic philosophy with this track record (a don't-kill-the-golden-goose strategy for some), re-ignite the Neoconservativism of the Bush II years that ended in Financial Crisis or return to Embedded Liberalism, possibly with some Social Democratic updates.
These are the political-economic philosophies that seem to be in play in the current US presidential election. Inform yourself, understand the choices, locate confusing issues within the philosophies and it will be easier to motivate support of a candidate and voting. Think of the different philosophies as strategies that might, if pursued, either benefit or not benefit you, the US and the World (not necessarily all the same thing). Vote and support your political-economic interests. To me this is the essence of Democracy since we do not all have the same political-economic interests.
THE TRACK RECORD OF NEOLIBERALISM
Neoliberalism emerged in the 1980's and started failing after the Financial Crisis of 2008 as a result of internal contradictions (Harvey, 2005). Neoliberalism was originally sold on the basis of widely accepted economic theory, a theory used to advise governments on policy. In practice, Neoliberalism did not perform as predicted by it's theory.
The most important consequence of Neoliberalism in the US has been an increase in Income Inequality as measured by the GINI index, plotted in the graph below. Notice that income inequality in the US is approaching levels not seen since then end of the 1920s. During the 1980's, Neoliberalism was sold on the basis of trickle-down theory: policies that benefited the wealthy would benefit everyone.
If you are a wealthy person or come from a wealthy family, then Neoliberalism has been a great success for you and you should be interested in seeing it continue. If not, your political-economic interests may be elsewhere.
Another chart that displays a similar historical pattern is the share of Gross Domestic Product (GDP) in the Financial Industry, a measure of Financialization (the dominance of US Finance Capital or the power of Wall Street). There are the familiar "twin peaks" in both the inequality and the financialization graphs: one just before the Great Depression and another right before the Financial Crisis of 2008. The important enabling legislation: regulation that separated investing from banking, passed after the Great Depression (the Glass-Stegall Act passed in 1933), was eventually repealed during the Clinton Administration in 1999, nine years before the Financial Crisis of 2008.
If you work in or derive your income from the Financial Sector or live off the earnings of a Trust Fund, it will probably be in your interest to see Neoliberalism continue. If your only contact with the US Financial sector is through high-interest credit card debt and poor returns on savings accounts, your political-economic philosophy might not align with Wall Street.
Just to make clear the importance of the last two graphs graphs and one to follow, in an economic system where growth is "balanced" (a balanced-growth equilibrium or balanced-growth path in Neoclassical Economics), all variables should grow at a constant rate. Unbalanced growth is considered a failure of the economic system typical in "undeveloped" economies. Any policy derived from Neoclassical Economics should not produce unbalanced growth.
A final example of unbalanced growth is the comparison of worker productivity to hourly compensation. The graph below shows that the two started to diverge in the 1970s, again the start of Neoliberalism in the US. Neoclassical Economics, the theoretical foundation of Neoliberalism taught in all major US universities, requires that wages keep pace with productivity, that is, workers should receive their marginal product.
Other economic theories can be used to explain constant wages or hourly compensation (see the Dual-Sector model of Arthur Lewis or Paul Samuelson's Dissection of Marxian Economics) but Marxian economics is not widely embraced in either Academia or the US Government. Breaking Labor Unions and exporting jobs to low-wage peripheral countries was supposed to benefit workers through trickle-down theory. In practice, the theory was flawed.
Another key part of the Neoliberal philosophy was the placement of all social services in the free-market private sector where competition can supposedly control prices. The result of free-market forces in health care has, for example, been opposite what was predicted. The US saw a large increase in the price of medical care commodities after the Health Maintenance Organization Act of 1973 which was inspired by Neoliberal thinking. If you work in the health care industry and have benefited from these increases in prices charged to consumers, then you will want to see Neoliberalism continue. If you are a consumer of health care services and either have increasingly large co-payments or must pay out-of-pocket medical expenditures, you might favor a political-economic strategy other than Neoliberalism.
The result of market forces in higher education has been a steep increase in college tuition, again starting in the 1970s. If you work in higher education and have benefited from the increases in expenditures, then you would like to see Neoliberalism continue. If you are a college student, a family who wants to send their children to college or a lower ranking employee in Higher Education (non-star faculty and academic staff), you have not benefited from market forces in education and would probably prefer some political-economic philosophy other than Neoliberalism.
Finally, there has been an increase in gun ownership within the US. The trend started after 9/11 (the September 11 Terrorist Attacks on the World Trade Center) and was not a direct result of Neoliberalism. However, the personal freedom and responsibility emphasized by Neoliberalism looks at the trend positively. If you are a gun owner or are concerned about arming yourself defensively, you will probably find Neoconservativism attractive. If you are intimidated by armed citizens carrying loaded weapons in US streets and are inclined to favor gun control, then you will probably find Social Democracy more attractive.
The topic of gun ownership fits well with consideration of US military expenditures. The graph below shows that the US, by far, outspends the rest of the world on the military. It is a cost of being the hegemonic leader of the world system. If you think this level of expenditure is correct or should even be higher, you will be comfortable with Neoconservativism or Neoliberalism. If you think the expenditures are too high then you will probably favor Social Democracy. However, it is important to note that even during the period of Embedded Liberalism after WWII, a high level of military expenditure has always been part of US political culture. The question is whether that should change at this point in history.
EXERCISES
Where candidates fall on the three philosophies is somewhat difficult to determine. Especially if candidates are good politicians, they and their supporters will attempt to obscure their positions to gain votes. I have refrained from putting candidates in boxes for you. You will need to inform yourself on the political philosophies and do your best to make judgment calls. Here are some exercises that might help.
- Using web sites that compare candidates on various issues (here, here, here and here), try to identify the political-economic philosophies of each presidential candidate (use the table at the beginning of this post).
- Using candidate's own web sites (Bernie Sanders, Hillary Clinton, Donald Trump, Ted Cruz, Marco Rubio, Jeb Bush, etc.) and the party platforms (Republican Party, Democratic Party or a site that compares all party platforms here) test your understanding of their political-economic philosophies. Compare candidates to their parties.
- Evaluate past presidents and their administrations (Reagan, Carter, Bush I, Clinton, Bush II, and Obama administrations). How clear was their political-economic philosophy when they entered office? How did their political-economic philosophy change over time, if at all? How easy was it to predict their major decisions based on a political-economic philosophy?
Good luck!
