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Lily Geismer

The fallout from the 2016 election has created many surreal moments for historians of American politics and parties, but surely one of the oddest has been the introduction of the term neoliberal¹ into the popular discourse. Even stranger still is that it has become a pejorative largely lobbed by the left less at Republicans and more at Democrats.² As neoliberal has come to describe a wide range of figures, from Bill and Hillary Clinton³ to Ezra Klein⁴ and Ta-Nehisi Coates,⁵ its meaning has become stretched thin and caused fuzziness and disagreement. This muddle of meanings creates an opportunity to seek a more precise understanding of what I call “Democratic neoliberalism.”

It is actually not the first time Democrats have been called neoliberal. In the early 1980s, the term emerged to describe a group of figures also called the Watergate Babies, Atari Democrats, and New Democrats, many of whom eventually became affiliated with the Democratic Leadership Council(DLC). In this iteration, the term neoliberal was embraced not as opprobrium. Rather, it used a form of self-description and differentiation to imply that they were “new Democrats.” In 1982, Washington Monthly Editor Charles Peters published “A Neo-Liberal’s Manifesto,”⁶ which aimed to lay out the core principles of this group; two years later, journalist Randall Rothenberg wrote a book called The Neoliberals⁷ that sought to codify and celebrate this cohort’s ascendency.

The DLC and its allies have largely received attention from political historians for their electoral strategy instead of their policies. Yet, even more than electoral politics, this group had an impact on shaping the ideas and policy priorities of the Democratic Party in key issues of economic growth, technology, and poverty. They also created a series of initiatives that sought to fuse these arenas together in lasting ways.

The realm of policies is where parties can have an impact that reaches beyond elections to shape the lives of individual people and intensify structures and patterns of inequality. It thus points to the importance of expanding the study of U.S. political parties writ large, beyond simply an examination of political strategy and electoral returns and instead thinking about the ways in which parties come to reflect and shape ideas and policy. It also demonstrates the importance of treating neoliberalism less as an epithet and more as a historical development.

Unlike their counterparts in fields like sociology and geography and even in other historical subfields, historians of the United States were long reluctant to adopt the term neoliberal. Many still argue that the neologism has become, in the words of Daniel Rodgers, “a linguistic omnivore”⁸ that is anachronistic and potentially “cannibalizing.” In the past few years, scholars of twentieth century American political history, however, have increasingly embraced neoliberalism and sought to understand its historical evolution. Building and drawing on the work of influential theorists like David Harvey,⁹ these inquiries have been important in the efforts to understand the relationship between capitalism and politics and the power dynamics within them.

Yet these accounts have largely depicted the rise of neoliberalism in the 1970s as inextricably intertwined with conservative ascent and the Reagan Revolution, and situated the Clinton era and the rise of the New Democrats as a piece of a larger story about the dominance of the free market and the retreat of government. This approach flattened and obscured the important ways that the Clintons and other New Democrats’ promotion of the market and the role of government was distinct from Ronald Reagan, Milton Friedman, and their followers.

The principles and policies Clinton and the DLC espoused were not solely a defensive reaction to the Republican Party or merely a strategic attempt to pull the Democratic Party to the center. Rather, their vision represents parts of a coherent ideology that sought to both maintain and reformulate key aspects of liberalism itself. In The Neoliberals, Rothenberg observed that “neoliberals are trying to change the ideas that underlie Democratic politics.” Taking his claim seriously provides a means to think about how this group of figures achieved that goal and came to permanently transform the agenda and ideas of the Democratic Party.

The group of policymakers and politicians that circulated around the DLC suggests that the roots of many aspects of neoliberalism emerged less from free market conservatism than from the ideology, institutions, and social commitments of liberalism. This group updated and extended many of the core tenets of post-New Deal liberalism, especially the emphasis on technocratic expertise, individualist solutions to structural problems, growth over redistribution, and development of strong partnerships between public and private sectors, particularly nonprofits, businesses, and foundations. The efforts to portray the DLC as indicative of the rightward shift of the party, therefore, fail to acknowledge the ways in which they advocated retaining key aspects of liberalism.

This faction emerged in the early 1970s as a response to the economic problems and political realities of the decade. This group, first called the Watergate Babies, swept into capitals and statehouses around the country in 1974 largely with a base in the white suburban areas. They promised to stop the war in Vietnam, end corruption, and make government more efficient and transparent.

The group took aim not just at Richard Nixon and Republicans, but also at the Democratic establishment. While they agreed with the postwar liberals’ commitment to stimulating economic growth, they eschewed the Great Society for increasing bureaucracy and begun shifting away from the party’s traditional emphasis on industrial manufacturing and labor unions in the 1970s and 1980s. Figures like Michael Dukakis, Paul Tsongas, Bill Bradley, Tim Wirth, and Al Gore abided by the maxim “the solutions of the thirties will not solve the problems of the eighties.”

The group received criticism and consternation from more traditional liberals and members of the left who feared they were simply “rejiggering” the ideas of Reagan. Yet as Gary Hart explained, “what is changing are not our principles, goals, aspirations, or ideals, but methods.” He and his allies believed that New Economy sectors and tools such as finance and tech and market-based policies and global trade offered the means to create not just economic growth but also justice, individual opportunity, and rights.

This group was heavily influenced by the work of figures like Lester Thurow, whose 1980 book The Zero-Sum Society¹⁰ essentially became something of a guidebook. Thurow argued that the solution to the multifaceted problems of the 1970s lay in “accelerating the growth of productivity,” which he believed could happen by investing public and private resources in sunrise rather than sunset industries. No arena seemed more on the rise than computers and high tech, and the group’s intense promotion of the technology would lead to their nickname of “Atari Democrats.”¹¹ Also influenced by the work of Robert Reich,¹² these politicians stressed education and retraining as a way to address the problems of deindustrialization and make the United States a leader in the global economy.

In the early 1980s, Rep. Gillis Long (D-La.) and his chief of staff Al From brought together several members of this cohort in Congress as part of the Committee on Party Effectiveness. The group met weekly to develop a unified platform in order to “rejuvenate”¹³ the party. They eventually issued a series of reports titled “Rebuilding the Road to Opportunity,”¹⁴ primarily authored by Wirth and From. While the reports did call for full employment (something this wing of the Democratic Party would later abandon), the thrust of “Rebuilding” bore the direct influence of Thurow and Reich in its commitment to national investment in high-tech and job retraining and stemming the growth of government. The leaders of the effort built upon its institutional infrastructure to form the DLC in 1985 with the goal of reconstructing the party’s electoral coalition and recapturing the White House.

In the aftermath of Dukakis’s defeat in the 1988 election, the DLC leadership came to realize that it needed to develop a more coherent set of principles and policies in order to achieve its larger goals. Thus, the DLC leadership founded a think tank called the Progressive Policy Institute (PPI) led by DLC policy director Will Marshall to help it further deepen its intellectual infrastructure and formulate clearer policy proposals.

David Osborne, an early fellow at PPI, was especially influential in helping achieve and shape this mission. Osborne’s research centered largely on the rise of public-private partnerships and “third sector institutions”¹⁵ such as nonprofits and other community organizations, which he argued offered a more effective means of providing social services and economic development than traditional government bureaucracies. Osborne reduced the argument of his 1988 book, Laboratories of Democracies, to a slogan: “if the thesis was government as solution and the antithesis was government as problem, the synthesis is government as partner.”

Along with co-author Ted Gaebler, Osborne expanded on this argument in Reinventing Government: How the Entrepreneurial Spirit Is Reinventing the Public Sector,¹⁶ published in 1992. The book’s model of “entrepreneurial government” advocated both efficiency techniques to make government more results-oriented and less costly as well as ways to decentralize authority and to shift more responsibility and control onto the community. It also suggested that the government should serve not as a service provider but as a “catalyst” in connecting the public and private sectors. Clinton, who served as the head of the DLC in the early 1990s, emerged as the most influential advocate of the ideas in Reinventing Government, praising it as a “blueprint” to “revitalize government.”

When Clinton and Gore made their bid for the White House in 1992, these themes were central to their campaign. Clinton repeatedly promised “a new approach to government” that “offers more empowerment and less entitlement … that expands opportunity, not bureaucracy.”¹⁷ The DLC and PPI continued to exert an influence as Clinton made the transition to Washington. In fact, From and DLC staffer Bruce Reed headed the domestic policy transition team. In a homage to Reagan, From and Reed penned a report called “The Clinton Revolution” with a clear plan for the new president’s first 100 days.

Just after the election, PPI also published “Mandate for Change,”¹⁸ as a more public-facing guidebook for the incoming administration. Fusing the arguments of Reinventing Government with the DLC’s other principles, “Mandate for Change” called for “introducing choice, competition and market incentives into the public sector” and the need to “emphasize economic growth generated in free markets as the prerequisite for opportunity for all.” The book outlined programs and initiatives for shoring up economic growth through the high-tech sector and for advancing free trade, as well as programs for addressing poverty and other social issues.

During the late 1980s and early 1990s, the PPI actively promoted ideas like enterprise zones, microenterprise in both the United States and the developing world, welfare-to-work, charter schools, and cap and trade. These proposals came to directly influence many of the policies the Clinton administration advocated and implemented during its tenure.

The version of neoliberalism embedded in these policies understood a distinct role for government to stimulate market-oriented solutions to address social ills such as unemployment and poverty. It thereby aimed not to eradicate the welfare state but rather to reformulate it. It extended the importance of poverty alleviation, which had long served as a benchmark of liberal policy, and had many similarities with the basic ideas of the war on poverty.

In a clear divergence from previous liberal initiatives, however, this approach largely sought to use the tools and techniques of the New Economy to address problems like economic inequality, capital flight, and racial segregation. It also advocated a collaborative and mutually constitutive vision of the relationship between the public and private sectors, which in the process made private sector actors and ideas deeply embedded in government policy.

Although questionable if it fully “reinvented government,” the Democratic version of neoliberalism forged in the 1970s that came to fruition in the Clinton era has had an enduring influence. It lasted well beyond when Bill Clinton left office and the DLC officially closed up shop in 2011. The mainstream Democratic Party—as demonstrated by the Obama administration and its allies—remained committed to growth and investment over redistribution and celebrated market-orientated solutions, public-private partnership, especially with the tech industry, and nonprofits and foundations as the main mechanism for addressing problems of inequality. In promoting the market and private sector as a means to do good and solve problems of poverty, the Democrats helped make market ever more embedded in government policy and American life.

Historians and pundits have often overemphasized the ideological coherence of the Republican Party, but there has been less willingness to recognize the ways Democrats have maintained a consistent vision through much of the past 30 years. Bernie Sanders’s campaign in 2016 represented one of the first sustained challenges to the party’s orthodoxy, especially on economic matters. Sanders and many of the other candidates in the crowded 2020 Democratic presidential primary field have tried to provide an alternative to the party’s longtime approach. It remains to be seen if there will be a true break or more of the same.