Primary voters going to the polls starting next week face the prospect of voting for candidates who have been unseen in the past 35 years of presidential politics: Donald Trump and Bernie Sanders.
But even if Trump and Sanders are denied the White House, their campaigns will have been extremely significant, perhaps even changing presidential politics forever. Their success in building a following in their parties is an early warning sign of discontent with the outlook that has dominated American politics for decades.
Sanders and Trump differ dramatically on many issues — from immigration to climate change— but both are critical of how wealthy donors and lobbyists dominate the political process, and both favor some form of campaign finance reform. Both decry corporations moving overseas for cheap wages and to avoid American taxes. Both reject trade treaties that favor multinational corporations over workers. And both want government more, rather than less, involved in the economy.
Sanders is a left-wing populist. He wants to defend the "collapsing middle class" against the "billionaire class" that controls the economy and politics. He is not a liberal who wants to reconcile Wall Street and Main Street, or a socialist who wants the working class to abolish capitalism.
Trump is a right-wing populist who wants to defend the American people from rapacious CEOs and from Hispanic illegal immigrants. He is not a conventional business conservative who thinks government is the problem and who blames America’s ills on unions and Social Security.
Both men are foes of what they describe as their party’s establishment. And both campaigns are also fundamentally about rejecting the way economic policy has been talked about in American presidential politics for decades.
Sanders and Trump both reject widely accepted economic policies that favor business interests
Both Sanders and Trump have challenged the main assumptions that have knit together American politics over the past 35 years. Some European political scientists describe these as a "neoliberal consensus," but there has not really been consensus — it’s more a case of a dominant or hegemonic view — and the term "neoliberal" has sometimes been applied indiscriminately. So let me use the term "market liberalism" — a cross between "third way" liberalism among Democrats and Cato Institute libertarianism among Republicans — to describe this point of view.
From the 1930s through the '60s, American politics revolved around a New Deal liberal view that stressed managed capitalism, labor-business cooperation, and political pluralism.
During the late 1970s, however, that view began to be displaced by one that stressed the superiority of market self-regulation and the extension of market relations to global capitalism, particularly with respect to trade, immigration, and foreign investment. Government regulation and taxes were increasingly seen as hampering growth. Government’s role was to remove regulations on business and get rid of barriers that prevented immigration, tariffs, and foreign investment.
Economic policy over the past 35 years has largely embraced these objectives.
- In 1977 the Occupational Safety and Health Agency had 37 inspectors for every million workers; now it has only 22. OSHA's effectiveness depends entirely on its inspectors.
- Marginal rates on the largest incomes have fallen from 70 percent during the 1970s to 39 percent today. Taxes on capital gains, which primarily affect the wealthy, have dropped from 40 percent in 1977 to 20 percent today.
- Trade agreements have eased the way for companies to move their businesses overseas. From 1990 to 1995, spanning the Republican George H.W. Bush and Democratic Bill Clinton administrations, 27 bilateral investment treaties were signed removing obstacles to American companies relocating overseas. Attempts to tax American corporations’ overseas earnings have been consistently beaten back during Democratic and Republican administrations.
- Major industries, including airlines and telecommunications, have been freed from price regulation.
There have been short interruptions in this neoliberal trend — for instance, during the first two years of the Carter and Obama administrations — but these brief exceptions have, if anything, proven the rule.
How this orthodoxy came to be so dominant in both parties
What allowed these market liberal views to gain hegemony was, above all, the offensive that business undertook against labor unions and public interest groups. As I have recounted in The Paradox of American Democracy, it began in the early 1970s.
Business used hardball tactics, including moving factories out of the unionized Midwest, hiring replacement workers, and firing labor organizers to block union drives and to decertify existing unions. In 1955, about a third of non-farm workers belonged to unions; by 1989, it was down to 16.4 percent. Business also dramatically increased its lobbying presence on Washington’s K Street. In 1971, only 175 businesses had lobbies in Washington. By 1982, 2,445 did.
Businesses initially found useful allies in a Republican party that was bringing together local business, rural voters, and white working-class voters disillusioned with the Democrats. But as labor lost members and money, businesses also assumed a larger role in funding Democratic candidates.
In 1992, Bill Clinton’s single biggest bloc of contributions came from the employees of Goldman Sachs. And Clinton didn’t disappoint his funders when he named Goldman Sachs president Robert Rubin as the head of his new National Economic Council and later as Treasury secretary, where he championed bringing China into the World Trade Organization (even as it continued to manipulate its currency and saving rates to achieve trade surpluses) and the deregulation of the financial industry.
Business’s influence was magnified by a series of Supreme Court rulings — handed down by a court whose members had been nominated by Republican presidents. It began in 1976, when the court’s decision in Buckley v. Valeo threw out the campaign finance reforms of 1971 and 1974, which had established limits on both total contributions and total spending, and has continued through Citizens United and McCutcheon, which repealed, in effect, a century-old restriction on corporate contributions. As a result, businesses and the very wealthy are able to use their financial advantage to sway both Republicans and Democrats on economic legislation that is important to them.
The changes wrought in America’s international position after 1971 also reinforced business’s political dominance. As capital became mobile, companies could move overseas or south of the border to cut costs; they could also use the threat of moving overseas, or of competition from low-wage production overseas, to force wage concessions in the United States.
Businesses also took advantage of the influx of legal and illegal immigrants that poured into the country after the new immigration laws of 1965 to drive down the wages of production and service workers in industries like construction, hotels and restaurants, and meatpacking. These measures contributed to overall inequality, and they struck at industries like auto, textiles, and meatpacking that had been heavily unionized.
The New Deal liberal order had depended upon labor functioning as a countervailing force to business. Business had still reigned supreme — as E.E. Schattschneider wrote in 1960, "The flaw in the pluralist heaven is that the heavenly chorus sings with a strong upper-class accent" — but the balance between them still undergirded America’s pluralist democracy and made possible a spate of popular reforms.
These reforms ranged from Medicare during Lyndon Johnson’s administration to the 12 new regulatory agencies, including OSHA and the Environmental Protection Agency, that originated during the Nixon and Ford administrations. With the transition to a market liberal order, the prospect for these kind of reforms has dramatically diminished, and America’s pluralism has increasingly lost its mooring.
How Trump fights against the free market policies Republicans embraced
Billionaire Donald Trump would seem an unlikely candidate to challenge this market liberal framework, but he is an outlier in a Republican Party that had become a bastion of free market economics. He is a former Democrat and political independent who seems to have gravitated to the Republican Party because it afforded him a better opportunity for political advancement. He has had little contact with, and shown little interest in, conservative ideology. He also comes from industries — real estate and construction — that depend on government largesse.
During his presidential campaign, much attention has been focused on Trump calling Mexican immigrants rapists and on his proposing to bar Muslims temporarily from immigrating to the United States, but in his speeches and his campaign books, he has taken positions that run directly counter to neoliberalism and Republican libertarianism.
Trump attacked corporate "inversions," when a company relocates its headquarters overseas in order to avoid taxes in the US. And he declared that Wall Street "has caused tremendous problems for us. We’re going to tax Wall Street." He criticized Ford and Nabisco for moving jobs out of the United States in search of lower wages.
Some of Trump’s appeal, like that earlier of independent candidate Ross Perot, rests on his being able to finance his own campaign so he is not dependent on campaign contributions from the wealthy and from business lobbyists.
"I don’t want lobbyists. I don’t want any special interests. I don’t want any strings attached," Trump told Face the Nation last August. And he wants to curb the power of PACs and Super PACs. As a billionaire, he is making the case against the business- and lobby-dominated political system.
Trump’s attacks on illegal immigrants have a hard edge of xenophobia, but he is addressing an issue that is integral to the neoliberal framework. Trump has not only targeted undocumented immigrants for driving down services workers’ wages and burdening social services; he has also criticized H-1B visas for taking jobs away from American high-tech workers.
When Trump rounds on China, he sometimes seems to be encouraging a new "yellow peril," but his criticisms of China’s trade practices challenge the market liberal framework that has turned a blind eye to Chinese mercantilism and to American firms that take advantage of China’s cheap labor to export goods back to the United States that used to be produced in the US.
Trump’s remedies may not work, but his Republican rivals refused to recognize the problem he is addressing. In the January 14 Republican debate, sponsored by Fox Business News, Trump charged that "China is ripping us on trade." Noting that the United States had lost "thousands and thousands" of companies, he said he would consider imposing a tariff to bring down the $505 billion trade deficit with China.
Fox’s moderator brought up the usual business response — that imposing a tariff would penalize the consumer. Jeb Bush, Marco Rubio, and Ted Cruz agreed. Rubio said, "The best thing we can do to protect ourselves against China economically is to make our economy stronger, which means reversing course from all the damage Barack Obama is doing to this economy."
Trump has also rejected the typical center-right view of government. He has opposed cuts to Social Security and Medicare, and he has not fretted about debt and deficits. Instead, he has advocated massive government spending on infrastructure. He attacked Obama’s health care plan for subsidizing insurance companies and drug companies, and has joined Sanders and Clinton in calling for curbing drug prices.
Some of the Republican opposition to Trump stems from a fear that his harsh rhetoric about Hispanics and women would condemn the party to defeat in November. But much of it also comes from opposition to his positions on government, trade, and foreign investment.
The Club for Growth, which backs free market candidates, explained its opposition to Trump by citing his support for "universal health care," the idea that "government can take over companies," his proposal to raise taxes on individuals with a worth greater than $10 million, and his proposal to impose a tariff on goods from China. In National Review's brief against Trump, conservatives cited his support for "universal health care," "his know-nothing protectionism" and "his plans for spending but no serious proposals for spending cuts or entitlement reforms."
How Sanders tugs Democrats back to their economic roots
Sanders, with his New Left pedigree, is a much more predictable foe of market liberalism among Democrats as well as Republicans. Until he ran for president, Sanders was an independent, not a Democrat. He has no endorsements from current senators or governors (even in his home state) and only two endorsements from House members. Some Democrats share some of his political ideas, but as a whole, what Sanders thinks runs counter to the prevailing ideology of the past three Democratic administrations.
Sanders still calls himself a socialist, although he has abandoned the Marxist conception of socialism as public ownership and control of the means of production. He also calls himself a progressive and was a founder of the House Progressive Caucus, but he is not exactly in the tradition of progressives or liberals. Progressives and liberals want to reconcile the competing demands of capital and labor.
Sanders is much more of a left-wing populist who sees a virtuous people arrayed against an establishment. Asked by NBC’s Chuck Todd why he thought he had no Senate endorsements, Sanders replied: "It tells me that we are taking on the political establishment, we're taking on the economic establishment, the financial interest in this country, and we're taking on the corporate establishment."
In an exchange with Martin O’Malley in one of the January debates, Sanders drew a clear distinction between his outlook and that of a conventional liberal or a neoliberal. When O’Malley declared that the "biggest challenge we face as a people … is to heal the divisions and wounds in our country," Sanders said he disagreed. "Where I disagree with you, Governor O’Malley, is we do have to deal with the fundamental issues of a handful of billionaires who control the economic and political life of this country."
Sanders, like Trump, takes positions on specific issues that put him at odds with market liberalism. His proposals, whether or not they are immediately feasible, challenge an approach that prioritizes the private market. He unblushingly favors huge government spending — $1 trillion worth — on infrastructure and would pay for that and for free public college tuition by tax hikes on speculation and the wealthy that Clinton, for one, opposes. He wants Medicare for all, which would mean eliminating private health insurers except as they might supplement government programs.
Sanders opposes trade agreements that he believes encourage American companies to invest overseas rather than at home, and wants to close tax loopholes that would allow "corporate deserters" to avoid American taxes. Like Trump, he promises to be tough on China. He wants to break up the biggest banks by reinstating the Glass-Steagall Act that the Clinton administration and Congress repealed. And while he favors comprehensive immigration reform, he joins Trump in charging that the H-1B program, cherished by Silicon Valley Democrats, deprives Americans of jobs.
While Trump has financed his own campaign, Sanders, unlike Clinton, has relied on small donors and avoided PACs or Super PACs. He wants public funding of campaigns and promises to make overturning Citizens United a litmus test in a Supreme Court nomination.
But the heart of his case against the current political arrangement comes in his call for "political revolution," which he regularly defines as "involving millions and millions of people in the political process today in a way that has never been the case before." Sanders is referring not simply to election turnout, but to the kind of popular presence between elections that could counter the power of the "billionaire class." Sanders’s view, however vague, is a call to reverse the oligarchic tendencies of the past decades. Only an organized movement from below could conceivably do that.
The two messages draw in different kinds of voters
Sanders and Trump appeal to very different constituencies.
According to a January Pew poll, Trump’s voters tend on average (but not exclusively) to be white, male, older, without a college degree, and in the middle or lower-middle income quintile. They are the descendants of the white working-class Reagan Democrats who made possible — but didn’t constitute the bulk of — the Republican majorities of the past 35 years. As a new RAND survey has shown, Trump’s supporters are more likely to express resentments toward racial minorities and undocumented immigrants and to favor "progressive economic policies."
Sanders’s voters, on the other hand, tend to be younger, are attending or have graduated from college, and are in the upper-middle income quintile. There are signs of some blue-collar support, but for the most part Sanders’s supporters are more likely to be potential or existing professionals that as a group have played a similar role in Democratic majorities as the white working class in Republican majorities. In surveys, they currently tend to be white and male, but that is largely out of comparison with Hillary Clinton, who enjoys widespread support among women and minorities.
In New Hampshire, I found some voters who said they would support either Trump or Sanders, and some other reporters have come up with additional examples of potential crossover voters, but I don’t think at present the bulk of either candidate's voters would favor the other. The gulf on minorities, immigrants, climate change, and the general attitude toward women is too great. The Sanders and Trump constituencies are parts of a whole that doesn’t yet exist, but if it were to come into being it could potentially shake the foundations of present market liberal politics.
A fear of a similar coalition — in this case between New Left student activists and striking blue-collar workers — motivated the business offensive of the '70s. In December 1969 in a special issue on "The Seventies," Businessweek speculated that "the blacks, the labor unions and the young" could "make the Seventies one of the tumultuous decades in American history."
Of course, business’s quick and determined response prevented that from happening, but over the next decades, if market liberal policies lead to further downturns like the Great Recession, as some economists predict, the Trump and Sanders voters could come together. The question is, however, what form the new politics would take.
What might a Sanders/Trump constituency look like?
What is happening in the United States is very similar to what is happening in Europe. In Europe, right-wing populist parties are on the march in much of the northern tier, including France, Belgium, the Netherlands, Denmark, Norway, Finland, and even Sweden, as well as in Austria and Eastern Europe. In the southern tier of Spain, Italy, and Greece, left-wing and centrist populism predominates.
If anything, the issues in Europe are more complicated because of the euro and the European Union and the predominance of Germany, but basically what these different populist movements are advocating is an economic nationalism very similar to that which Trump and Sanders are calling for.
What is happening to the United States and Western Europe now can be compared to what happened from the 1870s to the beginning of World War II. During this earlier period, capital and a laissez faire view of the economy initially reigned supreme, and, as Thomas Piketty has demonstrated, economic inequality grew apace, as it has over the past 40 years.
There were initial outbursts similar to those that the United States and Western Europe are experiencing now — the populists and socialists in the United States, the socialist and Labour parties in Europe — but they didn’t cohere into a powerful challenge until the decades after World War I and the onset of the Great Depression.
When they did come together, however, the challenge took two very different forms. In the United States, the breakdown of the old order led to the triumph of the New Deal on the left. In Europe, it resulted in the rise of fascism.
So the breakup of a political-economic order can turn left or right, and which direction the revolt will take in the United States remains to be seen. What can be said is that the Trump and Sanders campaigns, taken together, could be harbingers of that revolt.