Trump and “National Neoliberalism”

Sasha Breger Bush

Sasha Breger Bush is an assistant professor in political science at the University of Colorado-Denver.

John Galbraith once noted that, “The only function of economic forecasting is to make astrology look respectable.” I’ve decided that I cannot heed his advice. I take solace in writing and am feeling empowered by it during these dark and strange times. I hope that my notes below contribute to the conversation that’s begun about what we can expect following Trump’s election. If these comments ever make it into history’s dustbin, perhaps those who find them will look upon them sympathetically, for these are uncertain times and no one really knows what will happen next.

I take as my starting point two assumptions:

1. Despite all the talk of Trump’s election being a backlash to a failed neoliberal project, I believe that neoliberalism is here to stay, at least for a while. Neoliberalism is far too embedded in American society and psyche to disappear with the mere choice of a new president, no matter how historic his election or how different his platform may seem. Neoliberalism is not poised to disappear, I think, but rather to change in form. This is related to my second assumption, which is:
2. Trump’s xenophobia, nationalism and isolationism will be reflected in new policies and initiatives that start to unfold after he takes office. The extent to which these values will be embraced in the United States and around the world, the manner in which they are incorporated into policy, and the potential national and international backlash to them are uncertain.

Trump’s election doesn’t mean the end of neoliberalism

Many writers and pundits are currently framing Trump’s election in terms of a dispossessed and disenfranchised white, male working class, unsatisfied with neoliberal globalization and the insecurity and hardship it has unleashed, particularly across regions of the United States that were formerly manufacturing powerhouses (like the Rust Belt states of Pennsylvania, Michigan, Ohio, and Wisconsin, four states believed to have cost Hillary Clinton the election) (See here and here and here, for example.) While there is much truth to this perspective and substantial empirical evidence to support it, it would be a mistake to see Trump’s election wholly in these terms.

In several important ways, Trump’s election represents a triumph of neoliberal thinking and values. Perhaps most importantly, we should all keep in mind the fact that Americans just elected a businessman to the Presidency. In spite of his Wall Street background and billionaire status, Trump successfully cast himself as the “anti-establishment” candidate. This configuration—in which a top-one-percenter real estate tycoon is accepted as a political “outsider”—is a hallmark of neoliberal thinking. The fundamental opposition between market and government is central dichotomy in the neoliberal narrative. In electing Trump, American voters are reproducing this narrative, creating an ideological cover for the closer connections between business and the state that are inevitably in store moving forward. As states and markets further fuse in coming years, this representation of Trump and his administration—as being anti-government—will help immunize his administration from accusations of too-cozy relationships with big business. Trump’s attempts to “drain the swamp” by imposing Congressional term limits and constraints on lobbying activities by former political officials will also help to hide this relationship. Has anyone else noticed that Trump only addresses half of the “revolving door”, i.e., he plans to limit the lobbying of former politicians, but not the political roles of businessmen?

Trump’s Contract with the American Voter, his plan for the first 100 days in office, discusses policies and programs many of which are consistent with neoliberal thinking. I understand neoliberalism to emphasize at its core the importance of private property rights, market-based social organization, and the dangers of government intervention in the economy. Trump’s plan redirects the activities of the U.S. government along the lines touted by neoliberal “market fundamentalists” like Milton Friedman, who advocate limiting government’s role to market-supportive functions like national defense (defense stocks are doing very well since the election) and domestic law and order (Trump’s proposals have a lot to do with altering immigration policy to “restore security”). Trump also plans to use government funds to revitalize physical infrastructure and create jobs. Other government functions, for example health care provision and education as well as prison operation, protecting the environment and public lands, are open for privatization and defunding in Trump’s agenda. Under Trump, the scope of federal government activities will narrow, likely to infrastructure, national defense, and domestic policing and surveillance, even if overall government spending increases (as bond markets are predicting).

But, this is not to say that neoliberalism will continue going in a “business as usual” fashion. The world is about to get much more dangerous, and this has serious implications for patterns of global trade and investment.

Trump’s election does mean the end of globalism

The nationalism, xenophobia and isolationism of Donald Trump are about to replace the significantly more cosmopolitan outlook of his post-WWII predecessors. While Trump is decidedly pro-business and pro-market, he most certainly does not see himself as a global citizen. Nor does he intend to maintain the United States’s extensive global footprint or its relatively open trading network. In other words, while neoliberalism is not dead, it is being transformed into a geographically more fragmented and localized system (this is not only about the U.S. election, but also about rising levels of global protectionism and Brexit, among other anti-globalization trends around the world). I expect that the geographic extent of the U.S. economy in the coming years will coincide with the new landscape of U.S. allies and enemies, as defined by Donald Trump and his administration.

Trump’s Contract with the American Voter outlines several policies that will make it more expensive and riskier to do business abroad.  All of these need not occur; I think that even one or two of these changes will be sufficient to alter expectations in business communities about the benefits of certain cross-border economic relationships. Pulling the United States out of the TPP and the Paris Climate Agreement, along with attempts to renegotiate NAFTA, will signal to other countries that we are not interested in international cooperation and collaboration. A crackdown on foreign trading abuses will prompt retaliation. Labelling China a currency manipulator will sour relations between the two countries and likely also prompt retaliation by China. As Trump goes forward with his anti-immigration and anti-Muslim rhetoric and policies, he will alienate the United States’s traditional allies in Europe (at least until Europe elects its own nationalist and xenophobic leaders) and alienate communities across the Global South. The U.S. election has already undermined performance in emerging markets, and bigoted rhetoric and policy will only increase anti-American sentiment in struggling economies populated largely by people of color. Add to this the risk of conflict posed by any number of the following: his antagonizing China, allying with Russia, striving to stop ISIS, pulling out of the Korean DMZ, and reducing U.S. peacekeeping and humanitarian interventions, among other initiatives that seem likely to result in confrontation and violence.

All of this is to say that Trump will not have to intervene directly in the affairs of business in order to nationalize it (as many fascist governments have done historically). The new global landscape of conflict and risk (defined by increased international conflict and growing anti-American policy and sentiment in foreign countries) combined with elevated domestic spending on infrastructure and security, will bring U.S. business and investment back home nonetheless.

National neoliberalism and state-market relations

Fascist states are corporatist in nature, a state of affairs marked by a fusion of state and business functions and interests. In the fascist states on the European continent in the 1930s and 1940s—systems that fall under the umbrella of “national socialism”—the overwhelming power of the state characterized this relationship. In Trump’s America—where “national neoliberalism” may be the system towards which we are moving—we can expect a similar fusion of state and market interests, but one in which the marketplace and big business are given significant freedom of movement. State and market will fuse together not because of heavy handed dictates and interventions, but rather because domestic privatization initiatives, appointments of businessmen to government posts, fiscal stimulus and the business community’s need for protection abroad will bring them closer. Corporate interests will come to serve the needs of the state more closely not because they are told to, but rather because the landscape of risk and reward will shift and redirect investment patterns to a similar effect.  Of course it helps that much of the fusion of state and market in the US is already complete, what with decades of privatization initiatives spanning the military, police, prison, healthcare and educational sectors, among others. It will not take much to further cement the relationship.

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