[A brief history of how the Democratic Party’s turn to market
capitalism wrecked everything.]
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BILL CLINTON DID MORE TO SELL NEOLIBERALISM THAN MILTON FRIEDMAN  
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Lily Geismer
June 14, 2022
In These Times
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_ A brief history of how the Democratic Party’s turn to market
capitalism wrecked everything. _

, LUKE FRAZZA/AFP via Getty Images

 

In recent years, the term ​“neoliberalism” has reverberated
across academia, Twitter, and major media outlets. It has increasingly
become shorthand for describing and dismissing the centrist and
corporatist bent of the Democratic Party, symbolized by Bill and
Hillary Clinton. This popularization has also stretched it thin.
Broadly, neoliberalism describes the theory of political economy that
free markets and government austerity are the best way to create
individual freedom and choice. The term also has become a way to
define the historical period since the 1970s when these ideas of
market fundamentalism, disseminated by Milton Friedman and the Chicago
school of economics, came to structure seemingly all aspects of
governance and spheres of human activity in the United States and much
of the world.

The seeming pervasiveness of these ideas has produced a tendency to
treat neoliberalism as monolithic and totalizing, which obscures the
spectrum of market-oriented thinking and policy. The ​“New
Democrats,” who helped found the market-focused Democratic
Leadership Council (DLC), held a distinctive view of the market and
the role of government, which has been consistently overlooked. The
roots of this Democratic version of neoliberalism were rooted less in
the free-market conservatism of Ronald Reagan and Milton Friedman and
more in the liberalism of the New Deal and the Great Society, with its
commitment to public-private partnerships and its faith in
technocratic expertise to solve social problems — and capitalism
to create economic stability, security, and growth. In fact, a faith
in markets as a vehicle for social change was not ​“new” to the
New Democrats, but a fundamental feature of liberalism through much
of the twentieth century. 

More than the increasingly fraught term ​“neoliberalism_,” _the
phrase ​“doing well by doing good” better crystallizes the
approach of the New Democrats. The phrase has become so frequently
invoked in the speeches of Silicon Valley executives and the mission
statements of their companies that it seems like a timeless adage.
Yet, it came into popular usage in the 1990s largely through the help
of Bill Clinton, who readily adopted it. Clinton used it to describe
both his administration’s approach of enlisting the private sector
to address poverty domestically and using free trade and globalization
to promote freedom, democracy and human rights around the world. The
phrase encapsulates the aspirational belief that it is possible for
the market to do good and to achieve traditional liberal goals of
equality and providing for those in need. 

Since the New Deal, liberals had advocated for doing well _and _doing
good. However, the form of political economy enacted during the New
Deal and, later, the New Frontier and Great Society, understood these
as distinct goals. The architects of mid-twentieth century liberalism
believed that stimulating capital markets was the best path to
creating economic growth and security (doing well). The job of the
federal government, as they saw it, was to fill in the holes left by
capitalism with compensatory programs to help the poor, like cash
assistance and Head Start, and to enact laws that ended racial and
gender discrimination (doing good). In contrast, the New Democrats
sought to merge those functions and thus do well _by _doing good. This
vision contended that the forces of banking, entrepreneurialism,
trade, and technology, which had created the economic growth and
prosperity of the 1990s, could substitute for traditional forms of
welfare and aid, and better address structural problems of racial and
economic segregation. In this vision, government did not recede but
served as a bridge connecting the public and private sectors. 

The New Democrats treated poverty and other forms of discrimination
largely as a market failure. In response, its adherents looked for
ways to both bring the market to poor people of color and to integrate
them into the capitalist system. This thinking led to the promotion of
programs like ​“microenterprise,” which aimed to transform
marginalized people into entrepreneurs and savers, and inspired
initiatives such as Empowerment Zones and New Markets, which sought to
make distressed urban and rural places profitable. The New Democrats
also applied market-based tools to areas like public housing,
education, and regulation of business, where capitalism had been seen
as the problem, not the solution. 

Clinton and his allies extended the values of what historians call
racial liberalism: the argument that for marginalized groups,
especially African Americans, inclusion in American society and the
legal system provided the best means for creating racial equality. At
the same time, proponents contended that giving poor people of color
the tools to start businesses, open bank accounts, get mortgages, and
increase their purchasing power would generate profits and allow them
to become engines of economic growth. This approach built on
a long-standing liberal tradition of drawing on ideas from
international development to address poverty in the United States and
vice versa. Policies trying to tap emerging markets and stimulate
entrepreneurship show how ideas that see poor countries, places, and
people as sites of profit came to ricochet globally. 

The New Democrats were genuinely convinced that the market could
improve the lives of poor people, alleviate the problems of racial
segregation, improve the functioning of government, and maintain
traditional liberal ideals of egalitarianism and individual choice and
freedom. In fact, the New Democrats often argued that they were simply
using new means to achieve the same liberal aims. Unlike free-market
fundamentalists like Milton Friedman, the New Democrats believed that
both government and corporations had a fundamental obligation to do
good. They aimed to enlist the private sector to not just line the
pockets of large corporations but to also use the resources and
techniques of the market to make government more efficient and better
able to serve the people. 

Clinton and his allies routinely referred to microenterprise,
community development banking, Empowerment Zones, mixed-income
housing, and charter schools as revolutionary ideas that had the power
to create large-scale change. These programs, nevertheless, uniformly
provided small or micro solutions to large structural or macro
problems. Time and again, the New Democrats overpromised just how much
good these programs could do. Suggesting market-based programs were a
​“win-win” obscured the fact that market capitalism generally
reproduces and enhances inequality. Ultimately, the relentless selling
of such market-based programs prevented Democrats from developing
policies that addressed the structural forces that produced
segregation and inequality and fulfilled the government’s
obligations to provide for its people, especially its
most vulnerable. 

Although Clinton started the New Markets tour visiting Ray Pennington,
a white Appalachian coal miner, the New Democrats’ agenda
overwhelmingly focused on Black and brown women who had become the
face of the poor in the 1980s and 1990s. In speeches and photo-ops,
Bill and Hillary Clinton and their allies routinely celebrated people
like a Black welfare recipient in rural Arkansas who started her own
catering business, a poor seamstress in Chile who used a loan from
a microenterprise organization to buy a sewing machine and provide
for her family, and a Latinx charter school student in Los Angeles
receiving a top score on a state achievement test. These images and
descriptions of poor people aligned with the meritocratic ethos of the
Ivy League graduates of Wall Street, Silicon Valley and the White
House. However, these celebrations falsely suggested that market
forces could give the vast majority of poor people the power to move
out of poverty, overcome racial segregation and control their
own lives. 

Although the valorization of poor women of color as hardworking
entrepreneurs and savers seemed more compassionate than the infamous
Reagan-era image of the ​“welfare queen,” it proved no less
detrimental. The focus on transforming poor people of color into
financial actors contributed to making what was left of the social
safety net in the 1990s and beyond only available to those people
willing or able to operate within the imperatives and strictures of
market capitalism. The celebration of a few individuals who managed
to achieve success through market-based programs obscured the
fundamental barriers and forms of structural discrimination and uneven
development of global capitalism that made it impossible for most
people of color in the United States and around the world
to succeed. 

Clinton’s efforts to reward those ​“who played by the rules”
also continued to stigmatize those poor people who, allegedly, did
not. The ​“doing well by doing good” ethos, therefore, further
legitimized — and operated hand in hand — with punitive
policies like those contained in the 1996 welfare reform law. It also
fit with the tough-on-crime politics of the DLC and the Clinton
administration, including the passage of the 1994 crime bill, which
led to the vastly disproportionate surveillance and incarceration of
millions of African-American men, whom the New Democrats deemed unable
to become entrepreneurs, savers, or valuable contributors to the
New Economy. 

The veneration of entrepreneurship to solve social problems also
revealed the type of work and worker that the New Democrats valued,
and the types of constituencies to which they aimed to appeal.
Beginning in the 1970s, this brand of Democrats consistently advocated
that the future of both the economy and the Democratic Party lay in
shoring up the entrepreneurial postindustrial economy and its
college-educated nonunionized workforce. Starting in the New Deal,
organized labor and working-class constituents played a pivotal role
in shaping the base and values of the party. The New Democrats
deliberately aimed to constrain the power and influence of the labor
movement, and stressed that white middle-class professionals were key
to the party’s viability going forward. Bill Clinton’s capturing
of the presidency and the soaring of the New Economy in the 1990s
seemed to offer affirmation of this theory and strategy. However, it
came with major long-term costs and repressions, not least of which
are the current fractures within the Democratic Party. 

The labor movement and other social justice groups pushed back on the
electoral strategy and policy agenda of the New Democrats. These
groups came out in full force to support Jesse Jackson’s two
presidential bids, in 1984 and 1988, and the different future for the
Democratic Party that his candidacy embodied. During the Clinton
years, groups mounted protests to specific issues, such as welfare
reform, charter schools, free trade and sweatshop abuses. By the
1990s, however, the increased dominance of the New Democrats’
approach prevented a unified coalition of social movements
representing the interests of the poor and working class from
coalescing to pressure the Clinton administration into either
meaningfully shifting its policy agenda on the economy and poverty or
changing its political strategy. Likewise, consistent claims by the
Clinton administration and the New Democrats that they were doing
good, coupled with concerns about the alternatives offered by the
Republicans, blunted the power of these groups and progressive
politicians of the Democratic Party to bring more redistributive
solutions to the table. 

More than trying to build common ground with social movements on the
left, the New Democrats’ commitment to doing well by doing good
ushered in new partnerships among government, corporations,
nonprofits, and philanthropic organizations like the Ford and Gates
Foundations. The growing popularity of the notion that corporations
could both fulfill social goals and make a profit meant that
policymakers could rely on, and often encourage, business and
philanthropy to perform functions that were once the domain of the
public sector. 

This trend opened new funding streams for solving problems of social
inequality. Marshaling companies like America Online, Nike, and
Citicorp to improve public education, combat sweatshops, and
revitalize distressed urban neighborhoods reinforced the idea that the
private sector was better at solving these problems than government.
In doing so, it legitimated these private actors to become central
players in the development of public policy, especially concerning
poverty and inequality. This leaning on large corporations, wealthy
tech entrepreneurs, and large private foundations, therefore, removed
important mechanisms of democratic accountability and transparency
from the policy process. Upon leaving the White House, Clinton,
through his own foundation, substantially refined and expanded this
model. The Clinton Foundation made it its mission to ​“woo the
world’s most powerful interests to help the powerless” through
partnerships among private companies, wealthy donors, NGOs and
underserved communities. 

The efforts of the New Democrats became critical to solidifying the
idea that markets could ​“do good” in the popular consciousness.
By the end of the 1990s, this consistent celebration of the power of
markets would contribute to fortifying the belief among a generation
of idealistic college graduates that the most effective path for
enacting social change was to attend business school and work for
a socially responsible company, rather than work in the public sector
or become a union or community organizer. This trend is but one
example of how Clinton and his allies ultimately did more to sell
free-market thinking than even Friedman and his acolytes. 

On the surface, ​“doing well by doing good” and ​“win-win”
are phrases that call on corporations to assume more responsibility
for social problems in ways that benefit all parties. But all the
policies that flowed from that vision created clear winners and
losers. The commitment to doing well by doing good did little to
address the unequal distribution of wealth in the United States and
around the world. Indeed, this inequity has only intensified since the
1980s, in part due to the economic agenda and unyielding commitment to
globalization by the Clinton administration. 

At the heart of the call for doing well by doing good is the idea of
erasing the barriers between the public and private sectors. But
rather than affirming this idea, the past 30 years have instead shown
the power in resurrecting those barriers and the need for creating new
ones that limit the reach of the private sector, restore faith in
government — and truly create a more equal society. 

_This piece is a slightly edited excerpt from Lily Geismer’s _book
Left Behind: The Democrats’ Failed Attempt to Solve Inequality_,
available to order from PublicAffairs here
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Reprinted with permission from _In These Times_
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All rights reserved.

* Bill Clinton; Neoliberalism; Market Capitalism;
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