John Steinbeck’s last novel was called “The Winter of Our Discontent.” It focused on one man, Ethan Hawley, who had to accept a job as a grocery clerk when someone bought the grocery his family owned. Ethan was a good man in all the ways we should and admire. He worked hard, was honest, and would never take advantage of anyone’s weakness. But the forces of greed and power eventually recruited him to lie and even murder just to get back what many told him was rightfully his – the family business. He succeeded in his goal, but as Steinbeck showed earlier in “East of Eden,” the price was too high to pay. “The Winter of Our Discontent,” published in 1961, received mixed reviews. People have recently reevaluated it, considering how America and the world have changed since 1961. Back then it was still summer; today it is winter in America, and the neoliberal takeover of our economic policy has erased our moral character as a nation, just as it did to Ethan Hawley. This begs the question: when was fall and when did winter start? Fall began with the deaths of Martin Luthor King and Robert F. Kennedy. Bill Clinton proudly introducing Fleetwood Mac’s “Don’t Stop Thinking about Tomorrow” as his inauguration theme song also presaged the start of winter.
The term neoliberalism is used to describe the economic teachings of Milton Friedman and the Chicago School of Economics. This model resurrects much of the mid-19th century thinking about how a capitalist economy should operate. Most of us learned about that in high school or college as ‘laissez-faire’ (hands off), as a failure because of its tendency to put business success as the primary aim of economic policy. It turned out that less regulation and lowered labor costs did not benefit businesses. Instead, it resulted in dramatic income inequality and worsening living conditions for workers. In modern times, they rebranded ‘laissez-faire’ as ‘free market’ capitalism, adapting it to the modern, Post WW2 economy. Politically, the ideas were first introduced by Barry Goldwater in his 1964 presidential bid. Richard Nixon partially adopted neoliberal policies during his first term. The years leading up to Nixon’s election during the transition from summer to fall saw three critical upheavals that planted seeds for neoliberalism’s rise. The social changes arising from the Civil Rights movement, the anti-war movement generated by the Vietnam War, and economic disruption from high inflation and the Arab oil embargo briefly marked the upheavals. Lewis Powell wrote a plan to implement a neoliberal future for America, and it outlined what would be necessary to impose neoliberal policies throughout the entire economy. It describes the need to establish Think Tanks to produce white papers that support neoliberal policy, assert neoliberal ideas in the mass media and on college campuses. It outlines corralling a TV network to push their agenda and monetarily endowing colleges and universities to present neoliberal policy in the classroom. The Powell Memo was the game plan, and the conditions of the post-MLK and RFK America set the stage to move America in a new direction. Lewis Powell won first, and then President Nixon appointed him to the Supreme Court. The American people lost when a major economic event changed our economy — the dissolution of the Bretton Woods Agreement. This move ended the gold Standard altering how macroeconomics operates. Economists developed a study of how macroeconomics works after a fiat currency replaced the gold standard. It is called Modern Monetary Theory (MMT). As opposed to neoliberalism, which is a set of policy choices, MMT describes how an economy operates on a macro or aggregate level. After the US ended the gold standard, it adopted a sovereign fiat floating currency and could only denominate all federal spending and collections in dollars. This has since become common throughout the world, with other nations such as the United Kingdom, China, Russia, Canada, Japan, and Australia choosing the same monetary regime in their own currencies. Unlike commodity-based currencies, fiat currencies change spending constraints to national productivity or as it is commonly called, resources. All other economic participants are currency users, including cities and states. In the US, our productive capacity far outstrips the value of gold reserves it holds now or when the Gold Standard was in place. That means that the US could spend more on the private sector economy than it did under a gold standard regime. Neoliberalism operates on the assumption that the increased spending capacity should advance the wealth of the wealthy, rather than the general welfare, as the US Constitution prescribes.
Because neoliberalism includes microeconomic policy choices, and MMT explains how a macroeconomy functions, it’s important to know that MMT does not replace neoliberalism. Instead, I will discuss replacing neoliberalism with microeconomic choices that consider the economic limits MMT identifies, while also benefiting the public.
The most important component that keeps neoliberalism in place and prevents the American populace from searching elsewhere is fear. Before winter set in under Clinton, Reagan began employing neoliberalism throughout the economy. He and the Fed chair Volker set about reining in inflation by dramatically reducing jobs, a process begun by Volcker during the Carter administration. Inflation was the first bugaboo neoliberal advocates used to place fear into people. Ever since the high inflation of the 70s, people have reflexively feared inflation. The next manufactured fear was unemployment, strengthened by Volker’s intentionally harsh solution to inflation. Intentional, because any other solution would have infringed on the profits of businesses, a Neoliberal no-no. After that, Reagan himself weakened labor unions by firing striking air traffic controllers. A symbolic gesture that served notice to the unions that their power in America’s future was uncertain. Over the years, people have presented items to fear that contradict the macroeconomic realities of a sovereign fiat currency. The deficit, the debt, foreign debt, government “expansion”, government regulation, the media, obligations of the US to individual Americans such as Social Security, Medicare, Food Stamps, Unemployment compensation, and public education. Everyone framed these things as harmful to the financial stability of the United States. Currently, they are cutting funding, dismantling regulations, and corporations are taking over the tasks formerly performed by government in each of these categories. Their profits are greater than ever before, while wages relative to inflation have decreased. The institutions that Powell described pushed out the narratives of fear.
Winter came to America with the election of Bill Clinton. The remaining Liberals / Progressives in America pinned their hopes on him dismantling everything that Reagan had put in place. Instead, Clinton continued on the same economic path of neoliberal policies, squandering the opportunity afforded him to re-examine the objectives of existing economic policy. Instead, he doubled down on neoliberal policy by allowing the media to become a monopoly trust with only six corporations running over 90% of the industry. He ended welfare payments and introduced workfare. He dismantled Glass-Steagall, which protected consumers from the risks of speculative banking and allowed banking derivatives to be expanded, setting up the bubbles that resulted in the 2008 market crash. These are neoliberal policies, and he pushed through the first neoliberal free trade agreement, NAFTA. Bill Clinton’s three successors have done nothing to alter the course of or change the frame of imposing neoliberal policy.
Had we adopted policies that acknowledged the US’s sovereign currency, the government could have increased its obligations to provide for the general welfare instead of reducing them. After over 25 years of winter, it is time to jump-start spring by adopting policies that recognize our economic potential. In fact, if there is anything to fear it is not running deficits or worrying about a debt that is only the sum of all dollars not collected in taxes since 1792; it is not money the US has to collect from its citizens to pay off debtors. It is also not our debt to China, which is a savings account the Chinese government has at the Federal Reserve. And it certainly is not the Federal Reserve, which is the US government’s central bank, and which answers to Congress; it is not a private bank. Spring will begin when we recognize that misdirected fears and lies have been the tool used by moneyed interests to hijack the wealth of America for themselves by taking advantage of the post-gold standard macroeconomy. It is unequivocally neoliberalism we need to fear.
But if we do not act soon, there will be diminished gains from not stepping away from neoliberalism and going in a different direction. A direction that recognizes that at its core neoliberalism is amoral. An economy based on morality will choose to implement healthcare as a right, post-high school education as a right, a guaranteed job if you want one as a right, shelter, and food as a right, and so much more. But beyond morality, a post-neoliberal economy must embrace both democratic socialist principles for what we need, and free enterprise capitalism for what we want. Free-enterprise capitalism recognizes the government’s role in creating an environment that enforces competitive markets and levels the playing field with regulations along issues such as work and product safety. The longer we wait, the fear you should have is not that our debt will make all our grandchildren paupers.
The thing you should fear the most is atrophy. While we wait to institute economic policies based on morality, Democratic Socialism, and Free Enterprise, our infrastructure is crumbling. Climate disruption is bringing larger storms that will inflict more damage on our already decaying infrastructure. Every day we hesitate to begin the rebuild, the more it will cost, and the more resources that will be required to rebuild. Allowing millions to wallow in debt paying back their college loans forces choices of people who, if freed from that debt, might choose to create new enterprises improving the entire nation’s ability to adapt and create new technologies. Millions of Americans are living on the streets, hopelessness pushing them to drugs and alcohol to dull the daily fear their lives have become. Many are dying way before their time. Providing them four walls, a roof, and a door they can lock along with assurances of food, a job, and medical care will save a good many of those lives, making them productive participants. To treat them like we currently do, as non-entities, takes away from our productive capacity, and increases the atrophy we must not allow.
Back in 1974 when the US was in turmoil from years of war and social disruption, back when we were facing high inflation and our President was about to be impeached, Gil Scott Heron recorded a song that not only captured that era but captures today’s as well. Like a fine wine, it pairs well with Steinbeck’s “The Winter of Our Discontent”. It was called “Winter in America”. Heron wrote poetry and then set it to music; it plays well in both mediums.
From the Indians who welcomed the pilgrims And to the buffalo who once ruled the plains Like the vultures circling beneath the dark clouds Looking for the rain Looking for the rain
Just like the cities staggered on the coastline Living in a nation that just can’t stand much more Like the forest buried beneath the highway Never had a chance to grow Never had a chance to grow
And now it’s winter Winter in America Yes and all of the healers have been killed Or sent away, yeah But the people know, the people know It’s winter Winter in America And ain’t nobody fighting ‘Cause nobody knows what to save Save your soul, Lord knows From Winter in America
The Constitution A noble piece of paper With free society Struggled but it died in vain And now Democracy is ragtime on the corner Hoping for some rain Looks like it’s hoping Hoping for some rain
And I see the robins Perched in barren treetops Watching last-ditch racists marching across the floor But just like the peace sign that vanished in our dreams Never had a chance to grow Never had a chance to grow
And now it’s winter It’s winter in America And all of the healers have been killed Or been betrayed Yeah, but the people know, people know It’s winter, Lord knows It’s winter in America And ain’t nobody fighting ‘Cause nobody knows what to save Save your souls From Winter in America
And now it’s winter Winter in America And all of the healers done been killed or sent away Yeah, and the people know, people know It’s winter Winter in America And ain’t nobody fighting ‘Cause nobody knows what to save And ain’t nobody fighting Cause nobody knows, nobody knows And ain’t nobody fighting ‘Cause nobody knows what to save
