The Once and Future Liberalism: We need to get beyond the dysfunctional and outdated ideas of 20th-century liberalism

February 29, 2012

The American Interest:

Writing about the onset of the Great Depression, John Kenneth Galbraith famously said that the end had come but was not yet in sight. The past was crumbling under their feet, but people could not imagine how the future would play out. Their social imagination had hit a wall.

The same thing is happening today: The core institutions, ideas and expectations that shaped American life for the sixty years after the New Deal don’t work anymore. The gaps between the social system we inhabit and the one we now need are becoming so wide that we can no longer paper over them. But even as the failures of the old system become more inescapable and more damaging, our national discourse remains stuck in a bygone age. The end is here, but we can’t quite take it in.

In the old system, most blue-collar and white-collar workers held stable, lifetime jobs with defined benefit pensions, and a career civil service administered a growing state as living standards for all social classes steadily rose. Gaps between the classes remained fairly consistent in an industrial economy characterized by strong unions in stable, government-brokered arrangements with large corporations—what Galbraith and others referred to as the Iron Triangle. High school graduates were pretty much guaranteed lifetime employment in a job that provided a comfortable lower middle-class lifestyle; college graduates could expect a better paid and equally secure future. An increasing “social dividend”, meanwhile, accrued in various forms: longer vacations, more and cheaper state-supported education, earlier retirement, shorter work weeks, more social and literal mobility, and more diverse forms of affordable entertainment. Call all this, taken together, the blue model.

In the heyday of the blue model, economists and social scientists assumed that from generation to generation Americans would live a life of incremental improvements. The details of life would keep getting better even as the broad outlines of society stayed the same. The advanced industrial democracies, of which the United States was the largest, wealthiest and strongest, had reached the apex of social achievement. It had, in other words, defined and was in the process of perfecting political and social “best practice.” America was what “developed” human society looked like and no more radical changes were in the offing. Amid the hubris that such conceptions encouraged, Professor (later Ambassador) Galbraith was moved to state, in 1952, that “most of the cheap and simple inventions have been made.”1 If only the United States and its allies could best the Soviet Union and its counter-model, then indeed—as a later writer would put it—History would end in the philosophical sense that only one set of universally acknowledged best practices would be left standing.

Life isn’t this simple anymore. The blue social model is in the process of breaking down, and the chief question in American politics today is what should come next.

One large group, mainly “blue state” self-labeled liberals who think the blue model is the only possible, or at least the best feasible, way to organize a modern society, wants to shore it up and defend it. This group sees the gradual breakup of the blue social model as an avoidable historical tragedy caused by specific and reversible policy errors. Supporters of the model point to the rising inequality and financial instability in contemporary American life as signs that we need to defend the blue system and enlarge it.

Others, generally called conservatives and often hailing from the “red states”, think the model, whatever its past benefits or general desirability, is no longer sustainable and must give way to an earlier, more austere but also more economically efficient pre-“big government” model. Often, backers of this view see the New Deal state as a great wrong turn. Their goal is to repair the errors of the 1930s and return to the more restrictive constitutional limits on Federal power from an earlier time.

But even as the red-blue division grows more entrenched and bitter, it is becoming less relevant. The blue model is breaking down so fast and so far that not even its supporters can ignore the disintegration and disaster it now presages. Liberal Democrats in states like Rhode Island and cities like Chicago are cutting pensions and benefits and laying off workers out of financial necessity rather than ideological zeal. The blue model can no longer pay its bills, and not even its friends can keep it alive.

Our real choice, however, is not between blue or pre-blue. We can’t get back to the 1890s or 1920s any more than we can go back to the 1950s and 1960s. We may not yet be able to imagine what a post-blue future looks like, but that is what we will have to build. Until we remove the scales from our eyes and launch our discourse toward the future, our politics will remain sterile, and our economy will fail to provide the growth and higher living standards Americans continue to seek. That neither we nor the world can afford.

The blue social model rested on a novel post-World War II industrial and economic system. The “commanding heights” of American business were controlled by a small number of sometimes monopolistic, usually oligopolistic firms. AT&T, for example, was the only serious telephone company in the country, and both the services it offered and the prices it charged were tightly regulated by the government. The Big Three automakers had a lock on the car market; in the halcyon days of the blue model there was virtually no foreign competition. A handful of airlines divided up the routes and the market; airlines could not compete by offering lower prices or by opening new routes without government permission. Banks, utilities, insurance companies and trucking companies had their rates and, essentially, their profit levels set by Federal regulators. This stable economic structure allowed a consistent division of the pie. Unionized workers, then a far larger percentage of laborers than is the case today, got steady raises in steady jobs. The government got a steady flow of tax revenues. Shareholders got reasonably steady dividends.

There were problems with the blue model. It abided systematic discrimination against women and minorities, and a case can be made that it depended on that discrimination to some degree. Consumers had little leverage: If you didn’t like the way the phone company treated you, you were free to do without phone service, and if you didn’t like poorly made Detroit gas guzzlers that fell apart in a few years, you could get a horse. The system slowed innovation, too; AT&T discouraged investments in new telecommunications technologies. Rival companies and upstart firms were barred from controlled markets by explicit laws and regulations intended to stabilize the position of leading companies. By some accounts, too, the quarter century after World War II was a period of stultifying cultural conformity. In this prologue to the end of History, some “last men”, from the Beatniks to Lennie Bruce to Andy Warhol to Lou Reed, were already bored, resenting the pressure to conform that the mass consumption, Fordist era entailed.

The blue model began to decay in the 1970s. Foreign manufacturers recovered from the devastation of World War II and in many cases had more efficient and advanced factories than lazy, sclerotic American firms. German and Japanese goods challenged American automobile and electronic companies. The growth of offshore financial markets forced the U.S. financial services industry to become more flexible as both borrowers and lenders were increasingly able to work around the regulations and the oligopolies of the domestic market. Demand for new communications services created an appetite for competition against Ma Bell. The consumer movement attacked regulations designed to protect big companies. As a sign of the times, Ted Kennedy, of all people, cosponsored a bill to deregulate the airlines. Anti-corporate liberals rebelled at the way government power and regulation allowed corporations to give consumers the shaft. The new environmental movement pointed to the problem of privately caused but publicly paid-for externalities like air and water pollution…

Read it all.

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3 Responses to “The Once and Future Liberalism: We need to get beyond the dysfunctional and outdated ideas of 20th-century liberalism”

  1. Booger Says:

    Insightful article! Quite true, the Blue Liberals of the Democrat Party are fighting a battle they have already lost. Unfortunately, the Republican Party is not in any position to highlight a better vision. They’re also focused upon the past.

    What we have here are new economic realities and a need to redefine our social structures and institutions according to those realities. And neither side seems to have good answers that acknowledge those realities and how we can work with them effectively.

    I am reminded of this quote from Abba Eban: “History teaches us that men and nations behave wisely once they have exhausted all other alternatives.”

    I’m waiting for both parties to realize that there are no other alternatives.

  2. [...] higher living standards Americans continue to seek. That neither we nor the world can afford. The Once and Future Liberalism: We need to get beyond the dysfunctional and outdated ideas of 20th-c… Tess __________________ Pity the poor Agnostic dyslexic insomniac who lies awake at night [...]

  3. Laura S. Says:

    This is one of the best blog articles on the web I have read so far. It is finally able to move beyond the religion of free market or socialism and approach the core problem distinctively.
    I agree with Booger that we are now living a completely distinct reality from what our politicians are used to. They are not able to shape their thinking in a new and progressive way.
    We can not keep on with Privatizing Profits, Socializing Losses, as Joseph Stiglitz said.
    CUrrent US political system is clearly in a moment of deep stagnation. Republican candidates with their ideas could clearly become presidents in 19th century. I miss somebody with a vision and a plan. Nothing to do with Obama, because he clearly did not have any plan at all.

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