The 2016 Election As A Vote of No-Confidence for Neo-Liberalism

The year 2015 appears to have been a turning point of sorts for the West. Early in the year Greece went through a financial crisis caused by demands for austerity from European central bankers. German bankers prevailed by sheer economic force – the Greeks had no plans to leave the Euro and float their own currency– but the legitimacy of the neo-liberal model was severely damaged. The crisis was followed by the cresting of a wave of Syrian, Iraqi and Afghan refugees that left Europe with a million new unexpected residents, forcing European nations to question the very idea of open borders and a unified Europe. .

And in the process to begin to question some of the ontological underpinnings of contemporary neo-liberal capitalism, particularly the obsolescence of socialism on one hand and the redefinition of nationalism as a form of racism on the other.  It can be no accident that the campaigns of two outsider political candidates in the United States, Bernie Sanders and Donald Trump, both caught fire after Americans spent the summer of 2015 being treated to headlines of these events across the Atlantic. A closer look at both campaigns can show us how this crisis of legitimacy is playing out.

Bernie Sander’s essential innovation has been to take the term “socialist”, which has been used as a perjorative in American politics for over 100 years and redefine it to mean something positive, much as gay rights activists turned the term “queer” from an epithet into a badge of defiacace (“We’re here! We’re queer!). In doing so, Sanders has given voice to what most Americans know – that the growth of neo-liberal capitalism has benefited the few who are the most wealthy and that most Americans have not shared in the recovery.

In doing so, he has made economic inequality an issue, when Democrats as well as Republicans have consensually treated inequality as a non-issue since the early 1990s. In addition, he has motivated a major segment of the younger millennial generation to identify as “socialist”, something that would have been unthinkable even three years ago when even the substitute term “liberal” was an accusation.

Meanwhile, on the Republican side, Donald Trump has provocatively called for the deportation of 11 million undocumented immigrants (which is probably impractical) and the building of walls, which are not only physical but amount to the restoration of the trade barriers that neo-liberalism has been breaking down with free trade agreements since the 1990s.   To accomplish this goal, Trump in his rallies gives his audience permission to discard any inhibitions they feel about expressing nationalist sentiment, rejecting an extension of the opprobium that racism deserves to include nationalism as well.

It is this extension of racism to encompass nationalism that Trump rejects as “political correctness”. And that is a sentiment that is resonating with a major segment of the American electorate. Trump’s targets for exclusion are not United States citizens. We do not see the kind of dog whistling against African-Americans from Trump that we have seen from other Republican candidates in the past.

Trump’s targets are mainly non-citizens who, because they are non-citizens, cannot vote. And most particularly he has challenged the tacit compromise, which opponents of Trump such as Marco Rubio and Jeb Bush have endorsed, that undocumented immigrants can stay as long as they never become citizens and never vote.

It is this endorsement of a permanent underclass that keeps wages and benefits depressed for citizens that raises many voters’ ire the most., whether they favor deportation or “a path to citizenship” for those undocumented workers who have raised families in the US.

Ironically, there is a great deal of common ground between Trump voters and Sanders voters. Both reject the neo-liberal orthodoxy that has given the world ever increasing inequality within nations, even as equality between nations has increased. Both reject an interventionist American foreign policy centered on protecting the petrodollar – the pricing of oil exclusively in US dollars which creates a strong dollar that makes imports to the United States extremely cheap and in doing so, creates a perverse incentive in a largely tariff free world for companies to locate factories in foreign nations at the expense of domestic employment.

-In short, both reject the neoliberal consensus, a consensus their opponents such as Hillary Clinton and John Kasich defend believing that there is “no alternative” to it. And the opponents of both Trump and Sanders continue to defend the redefinition of the terms “socialist” (as anyone who does not support neo-liberal free market economics) and racist (as anyone who supports ANY differentiation between human beings who are part of the nation and social contract and those who are not). The latter, by nullifying the validity of a common national consciousness, makes collective bargaining with multi-national enterprise impossible at the same time that it promotes the presence of non-voting underclasses.

While they do not realize it yet, both Bernie Sanders’s and Donald Trump’s supporters agree on more than they disagree on.  On the fundamental issues of the necessity of reviving trade barriers, on a retreat from US interventionism that amounts to the shedding of American blood (and a lot of non-American blood) to maintain the petrodollar that undergirds neo-liberal transnational enterprise (and even, if we take Trump’s earlier pronouncements at face value, single-payer health care) Trump and Sanders are basically on the same page.

Whether neo-liberals can play the politics of division in the US well enough to cling to power for another two to four years, or whether Trump or Sanders can make it into the White House and make no-confidence in neoliberalism policy in the next US Administration, these critiques will not go away, in either America or in Europe.

Martin Katchen is an independent scholar, teacher, and researcher living in Los Angeles.  He specializes in Middle Eastern affairs and international politics.  He holds a PhD from the University of Sydney (Australia).