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The Essential Podcast, Episode 64: The Rise and Fall of the Neoliberal Order


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Listen: The Essential Podcast, Episode 64: The Rise and Fall of the Neoliberal Order

About this Episode

Gary Gerstle of Cambridge University joins the Essential Podcast to talk about the nature of political orders and the collapse of the political order known as neoliberalism that came to power with Ronald Reagan.

The Essential Podcast from S&P Global is dedicated to sharing essential intelligence with those working in and affected by financial markets. Host Nathan Hunt focuses on those issues of immediate importance to global financial markets—macroeconomic trends, the credit cycle, climate risk, ESG, global trade, and more—in interviews with subject matter experts from around the world.

Listen and subscribe to this podcast on Apple PodcastsSpotifyGoogle Podcasts, and Deezer.

Show Notes
  • Read The Rise and Fall of the Neoliberal Order and other works by Gary Gertstle, here

The Essential Podcast is edited and produced by Kurt Burger.

Transcript provided by Kensho.

Nathan Hunt: This is The Essential Podcast from S&P Global. My name is Nathan Hunt. President Joe Biden has defined this moment in history as an inflection point, but that begs the question, an inflection point from what to what? It is very difficult to understand the historical significance of the moment you are living through. We are trapped in new cycles and we don't have the perspective to take the long view, unless that is you're my guest today.

Gary Gerstle is the Paul Mellon Professor of American History Emeritus and Paul Mellon Director of Research at the University of Cambridge. He is the author and editor of more than 10 books, including 2 prizewinners, American Crucible and Liberty and Coercion.

His latest book, The Rise and Fall of the Neoliberal Order, has been called an instant classic by the Financial Times. Typically, they are more stingy with their praise. This book defines the inflection point by looking backwards at the order we are leaving and begins to look forward towards the order that will come next.

Gary, let's dive right in, and I want to start with intellectual history, which, as we both know, is just catnip for podcast listeners. There's a challenge of stepping outside of history and observing it, in this case, the rise and fall of neoliberalism, which you lived through.

I'm reminded of this quote from David Foster Wallace, "There are two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, 'Morning, boys. How's the water?' And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, 'What the hell is water?'" I guess my question is, how do you as a historian identify the water when you're living through it?

Gary Gerstle: Well, that's a great question, and we could spend an hour or 2 talking about that. It's perilous to write contemporary history because on the one hand, we have to understand the world that we're swimming through. And if we're trying to identify important changes and some direction of travel for the world in this moment of inflection, it's very hard to distinguish between what we might call the phenomena and the epiphenomena.

By phenomena, I mean, those things that are real, that are really structuring our world in the process of change. And those that are just epiphenomenal, noise, temporary, transitory, here today, gone tomorrow. I think the challenge is to think as hard as I can about how to separate out what is fundamental from what is not. And there's no single theory that allows you to do that. You have to be a very close observer and scrutinizer of events.

I think it helps, in this case, to be a historian and to have spent time as I have studying other moments of transition. And the fact that I had a way of thinking about political order, how it arises, how it dominates, how it comes apart, I had developed this theory in an earlier book that I published in 1989, the predecessor to this one, The Rise and Fall of the New Deal Order, that helped me to think through this moment of transition and fragmentation of a political order going on around us.

In that 1989 book, and this underscores the quote or the story, the anecdote you just told me, I coedited that book with another historian by the name of Steve Fraser, and we were living through the disintegration of the new deal order and what I now call the rise of the neoliberal order. But we wrote in the epilogue of that book, we wrote, "The new deal order is dead. We do not know what's coming next." This was written in 1989.

But whatever it is, it will be very different from what had come before. What's interesting to me now is that I look back on 1989, 1990, 1991, I can see what -- exactly what was -- what is emerging. But at the moment in which it was happening, I had trouble grasping what -- we had trouble grasping what was going on. We had trouble separating what was essential from what was ephemeral.

So that underscores the difficulty of writing contemporary history. And with the assistance of my theory of political orders, that has given me a way into the subject and helped me think through the world that I've been living in and to recognize the water all around me.

Nathan Hunt: So Gary, what is the political order?

Gary Gerstle: I developed the concept of political order to step outside what is so common in the writing about politics and political history in the United States, and that is to focus on elections as the be-all and end-all, which means that you're always focused on the next election for the presidency, most obviously, but also the off-year elections as the ones that are coming in 2022.

And because Americans regard their elections with a sacred attitude, they are the litmus test of our democracy. The tendency is to treat all elections as though they are equally significant and important. The concept of political order flies in the face of that approach. It says some political events and tendencies cannot be understood in 2- and 4- and 6-year election cycles. They have to be understood over much longer periods of time.

And central to my conception of political order is the notion that certain elections, certain moments, usually borne out of economic crisis, generate new ideas or allow ideas that have been on the margins to come into the center of politics. And they acquire such legitimacy, such support among constituencies, such ideological dominance, that they are able to dominate and in a sense, control politics beyond the 2-, 4- and 6-year election cycles.

When I talk about a new deal order, I -- in the 1930s and '40s, which I do at the beginning of this new book, this is something that arises in the 1930s and '40s and gets consolidated and shapes politics through the '50s and '60s, only to fragment in the 1970s. The neoliberal order that I write about is something that emerges in the 1970s and '80s, dominates in the 1990s and 2000s and then disintegrates in the period between 2010 and 2020.

These are, in other words, what we might consider to be 40-year-long waves. And at the heart of each of the political orders I study is a particular program of political economy, which I can say more about in a moment. But the litmus test of a political order is what happens when the opposition party comes into power.

So with the new deal, the question is, what happens when the first Republican President, in this case, Dwight D. Eisenhower, comes into office, first time in 20 years after 20 years of Democratic rule? Is he going to begin to try to take apart the new deal that was put in place during those years? Or is he going to acquiesce to it?

And one knows that the new deal had moved from a movement to a political order when Eisenhower acquiesces and rather than try and take apart the new deal, ratifies it, demands that the Republican Party endures its key principles. And similarly, with the neoliberal order, which emerges under Reagan, in particular, in the 1980s, the litmus test for whether that is going to become an order and have its ideas endure and dominate American politics and exercise a kind of hegemony, the question is what's Bill Clinton going to do when he comes into office in 1993?

And the answer to that, that I give in my book, is that he acquiesces to the core principles of political economy that Reagan had done so much to promote in the 1980s. I call Clinton the Democratic Eisenhower. And what that means is just as Eisenhower acquiesced to the principles of the new deal, so too does Bill Clinton acquiesced to the neoliberal principles that the Republican Party under Reagan had put into place.

And when you can get the opposition party to play on your turf, that is a sign of ideological and political dominance and it can't be understood simply within 2- and 4- and 6-year political cycles. These are forms of dominance that extend over 20, 30 years, and they come to dominate the thinking, not just of one political party, but of 2. And thus, the concept of political order helps us to understand long periods of sway for particular programs of political economy.

Nathan Hunt: So that allows us to identify a political order. It is accepted by both parties. It is continued by both parties when they are in power. But what is the benefit of a political order to the citizenry? Why would such a thing gain such power that both political parties would feel invested in it?

Gary Gerstle: Well, that's a good question. A set of ideas put forward by one party has to be able to persuade a large majority of citizens that this is the right way for America to do politics. The key political economic idea of the new deal was the idea that capitalism left to its own devices was too chaotic, too destructive, too vulnerable to booms and busts -- well, you're not vulnerable to booms, but too vulnerable to busts to be left to its own devices. And it required a strong central state to manage capitalism in the public interest.

And the new deal put this program forward. It took a while for the key economic policies of the new deal to demonstrate success. That success really only came when they were fully embraced, these are Keynesian political ideas, and when they were fully embraced, in the 1940s.

So the first key factor in terms of a political order holding sway is the ability to demonstrate economic success and to persuade large majorities of American or a significant majority of Americans, that they would be well advised to vote for these policies.

And what happens is that the opposition political party tries to stick to its older principles and then get smashed in elections and beaten up pretty badly. And they begin to think that the only way we can survive and the only way that we can come back into office is if we take certain pages from the opposition party's playbook.

And in that respect, in the 1940s and '50s, there were 2 interesting politicians on the Republican side or 2 -- 1, 2 vying for leadership: Robert Taft, who wanted to dismantle the new deal and was thought of as Mr. Republican; and then Eisenhower, and people didn't really know what he was, except an extraordinarily successful general.

And if you're a betting person in the 1940s, you're betting on Robert Taft, the one who wants to dismantle the new deal, as being the favored figure to become President of the United States. But that does not happen. He falls out of favor very deeply because his continuing adherence to old Republican principles proves to be very unpopular.

And it's Eisenhower who understands that the success of the Republican Party is tied to bringing the principles of the Democratic new deal as into the Republican Party, that therein lies the road to success. So there are calculations made similarly when Bill Clinton comes into office in the 1990s.

The core neoliberal idea is the opposite from the idea of the new deal. The core neoliberal idea is that government constraints market, prevents growth, prevents capitalism from unleashing its full power of innovations, productivity increases. So the goal of the neoliberal era is to get the government out of the economy. And this is what Reagan -- this is at the heart of Reagan's project of political economy.

It's not quite certain what Clinton is going to do in the '90s when he comes into office. He has certain attractions to neoliberal principles, but he also has a left wing to his administration. Robert Reich is there. Joseph Stiglitz is there. George Stephanopoulos is there. He has this massive and quite liberal and progressive health care plan that he wants to make the signature of his administration.

And then he's got the spectacular loss over health care. He gets drubbed in the 1994 election, worse that any sitting Democratic President has been drubbed since Harry Truman in 1946, and off-year election losing both houses of Congress. And then he switches, he changes, and he says the only way forward is for me, as a Democrat, to adopt the neoliberal principles of the Republicans because this is what I perceive the majority of the American people want.

So there's a set of calculations made, and politicians who want to get elected and get into office are making these calculations so that they can gain political power. Part of what's interesting, however, is, about a political order, is that, sometimes, the ideas that are perceived to be successful gain such authority that they continue on even beyond their lifespan, even when they no longer appear to be working, even when there seem to be alternatives.

They develop a kind of dominance, a kind of hegemony, a kind of control of politics that conveys a kind of momentum. These are unstoppable ideas. This is what you have to do to enter politics. In other words, the ideas take on a life of their own.

And it usually takes some kind of crisis, usually an economic crisis, to shake things up in politics to the point where alternative ideas on the margins can begin to become more central and vie for popularity and begin to give alternative candidates the conviction that bringing these new ideas into politics can actually work for them.

The crisis of the new deal order comes in the 1970s, during the long recession of those years, and the crisis of the neoliberal order comes in the 20teens, when -- in the wake of the 2008, 2009 Great Recession and all the economic effects, which breaks up the hegemony of neoliberal ideas and allows ideas that have been on the margins to enter the political mainstream.

Nathan Hunt: So Gary, let's talk about terminology, which is almost famously controversial. It feels like in political economy, every 50 years or so, all the labels flip sides. You chose neoliberal. You could have chosen conservative, which is a way that these ideas have been referred to in the past. But I'm wondering if you can explain your choice of words and explain what neoliberalism is.

Gary Gerstle: That's a very important question, Nathan. I could have written this book as the rise and fall of the conservative order because its rise is associated with Reagan. Reagan is usually thought of as a conservative. I could have written the book from that perspective or with that terminology, but obviously, I chose not to. And why not?

I should say, by way of introduction, that political terminology in America is a perpetual problem. There's something odd about our politics that ends up playing with the meaning of ideas. So what we call liberal in America, associated with the Democratic Party, is not really called liberal in Europe. It's called social democracy. And much of what is considered conservative in America is associated in other parts of the world with classical liberalism.

If I had chosen the term "conservative," I would have been drawn to the genuinely conservative elements of the Republican Party. And what are those genuinely conservative elements? They are those elements that seek to maintain tradition that are opposed to change, that have high regard for existing institutions and want to preserve those institutions at all costs.

And any form of change that is to be contemplated needs to be gradual and have due respect for the institutions because the institutions are the carriers of our values. What I've just expressed to you is a classical definition of "conservative." In the Republican Party, if you want to point to those genuinely conservative elements, where would you point to?

You would point to the determination in the Southern states to maintain white supremacy, to maintain Jim Crow, to oppose civil rights legislation and the campaign for racial equality, or to tolerate only the most gradual form of the movement to full racial equality because you have concern that the existing institutions of the Southern states will be so seriously upended, so as to disfigure and introduce too much chaos into society.

One sees genuinely conservative elements also in the Republican Party's opposition to what we might call the liberation movement, so the late 20th century feminism, gay rights, different forms of sexuality and a desire to restore traditional forms of family life, traditional forms of sexuality, traditional conceptions of motherhood and manhood. These are all real elements in American politics, and they are very prominent in the Republican Party.

Historians writing about conservatism have written about these subjects a lot. What they have written far less about is the extraordinary transformation of American capitalism in the late 20th and early 21st century. And I don't think that one can encompass and understand the magnitude of that transformation by applying the label "conservative" to it because there was nothing conservative about this transformation.

It was insurgent. It was disruptive. It was innovative. It carried with it all sorts of new industries, new technologies, which for them to be successful, had upend customary, traditional, institutional, conservative ways of doing things. And for me to capture the full magnitude of that transformation, which I consider to be one of the central elements of American life over the last 50 years, I didn't feel that the label "conservative" could capture that.

And thus, I chose the term "neoliberal." Well, you might ask why, what is neo about liberal? Neo literally means new. It's a new liberal. I need to use the phrase "neoliberal" because the phrase "liberal" have been captured by the Democrats and the Democratic Party during Franklin Roosevelt's presidency and during the years of the new deal.

Before that time, "liberal" had meant classical liberalism, had meant removing government from the economy. It meant freeing up the individual from constraint. It meant opening up markets, developing new markets, getting the government out of the way, allowing people and corporations to make the decisions that were most to their advantage, to maximize their returns, to maximize the possibilities of innovation, invention, new technologies, new products, new markets.

That was what classical liberalism, going back to the late 18th century, was all about and wanted to do. But I couldn't call my project, "The Rise and Fall of the Liberal Order," because people would be thinking I would be talking about the Democratic Party and something to do with Franklin Roosevelt and the new deal or Lyndon Johnson or John F. Kennedy.

So my choice of term, "neoliberalism," is meant to capture the ideology that best describes support for enthusiasm, for unleashing capitalist powers to transform the economy. And while I recognize that "neoliberalism" is not a perfect term and also one not widely accepted in the United States, but one of the tests in my book is whether my book has got to make it something that people are more comfortable talking about.

For me, it is the best term to describe the extraordinary capitalist transformation in America in the late 20th and 21st century. And I believe that, that is what was at the core of the story that I needed to tell and conservative was simply not adequate to the task of carrying the significance of that transformation.

Nathan Hunt: Gary, you said earlier that the collapse of an order allows ideas that are on the margins to enter the mainstream. To that point, the neoliberal order didn't just emerge spontaneously in Ronald Reagan's brain in 1980 or 1976, for that matter. How and where and with whom did this school of thought develop?

Gary Gerstle: Well, its origins lie in Austria and Switzerland in the 1930s and '40s. There are 2 Viennese economists, Friedrich Hayek and Ludwig von Mises, who are architects of neoliberalism and they are among the first people to call themselves neoliberals. They don't want to call themselves liberals and simply liberals in the classical sense because by that time, that form of liberalism had a bad odor attached to it.

It was seen as synonymous with laissez-faire, just get all government completely out of the way and let the economy be a Wild West. And they acknowledge that, that had grown deeply unpopular, which is one reason why ideologies of the far left and the far right had gained so much appeal in the time in which they were writing. I'm thinking of communism on the left and fascism on the right.

And they said that a new liberalism, which is what they meant by neoliberalism, needed a more active state to help structure markets, to bring order to capitalist economies when they needed it, to provide some institutions, both national and international, that would be essential to guarantee contracts, in terms of trade, other things that are essential for a smooth functioning of the capitalist economy.

So this is their vision, and they call themselves neoliberals. And Hayek is the key person, and in 1947, he gathers a group of like-minded intellectuals, mostly economists, some social scientists, on an isolated mountain in Switzerland, Mont Pèlerin, and they formed the Mont Pèlerin Society.

And they think of themselves as a thought collective that's got to be disciplined about figuring out ways to reintroduce ideas of classical liberalism into the politics of modern nations, these ideas of classical liberalism, made more sophisticated by a more intelligent use of state powers to support capitalist development.

And they imagine that if they are disciplined, focused, speak as one voice, they will become politically influential. And one of their most important converts and acolytes on the American scene is Milton Friedman, who is then a young Graduate student and then Professor at the University of Chicago. The University of Chicago economics department is going to be a very important seedbed for the development of these ideas.

Another early convert is none other than Ronald Reagan, who I think has been given an unfair rap as not being a very intelligent President. He was reading Hayek on train rides in the 1950s when he was going from one GE plant to another to preach the virtues of free market capitalism. This was a much more serious and educated man than those of us who lived through the 1980s understood the man to be at the time.

So all this -- all these ideas are percolating, but Hayek and Reagan and the rest of their ilk are utterly irrelevant in American politics at this time because this is the time when the new deal order is riding high and they form a perfect example of coherent ideas, bodies of ideas that are on the margins and can't find a way to enter the mainstream.

Milton Friedman is going to get some popular attention in the 1960s when he writes his manifesto about capitalism, the freedom to choose. But their opportunities does not come until the 1970s, when the new deal order is in an advanced state of breakup, when the recession of the 1970s is generating economic outcomes that no textbook has an answer for.

This crisis was characterized by stagflation, which simply meant that unemployment and inflation were both going up at the same time, and that was not supposed to happen according to the reigning economic textbooks. And as the toolkit of the Keynesian economists faltered and as a lot of suffering was being experienced by ordinary Americans in the 1970s, this allows those ideas that have been percolating on the margins for 20 or 30 years to enter the mainstream.

And they do so through advisers who are close to Reagan. William Simon is one, from Wall Street, Salomon Brothers, I believe, who's going to become Secretary of the Treasury. And these ideas come in from the margins and have an opportunity that have been denied them for many years before.

So it's a story of ideas being carefully cultivated, carefully honed, extensively discussed, but remaining largely irrelevant until an economic crisis upsets the dominant ideological applecart and allow these new ideas to bid for influence in the mainstream.

Nathan Hunt: One of the fascinating points you make in the book is that neoliberalism isn't actually strictly a right-wing phenomenon, that, in fact, there are elements on the left, self-realization, a kind of individualism, that has manifested over time in a variety of ways, but among others, sort of a techno-utopianism that is also core to the neoliberal order.

Gary Gerstle: This is a controversial and provocative point I make in the book, will not be well received by certain legatees of the new left or people who identify with that movement. But it is a very important part of the analysis I put forward. Those who study neoliberalism, they're mostly on the left or have a progressive political bent to them of one sort or another.

And neoliberalism is often thought of as a conspiracy by elites to undermine the democratic rights of the masses of American citizens. It's something that's seen as unleashing capitalism's power, increasing inequality, putting many more of the rewards of American economics and politics in the hands of the rich.

I don't deny that those tendencies are in play, but I do insist that some of the energy and some of the innovation of neoliberalism comes from the left, and not just any left, but the new left that emerges on university campuses in the 1960s. And this new left prizes the integrity of the individual, wants to free each individual from the constraints of tradition, of corporations.

And frequently, the new left targets not just the traditional enemy of the left, corporations, employers, capital, Wall Street. There are many elements of the new left that target government as well, and they see an alliance between government and corporations in the 1960s that have established these big bureaucracies, they interpret government agency of the new deal, established to regulate capital. They think that these agencies have been captured by the corporations they were meant to regulate.

And thus, there's a critique of state power conjoined with corporate power and hence, within the ranks of the new left, the desire to upend the entire system. And that system is a set of public bureaucracies, private corporations, that are suffocating the individuality and the opportunities of individual Americans.

And the new left also connects in ways to traditional notions of American freedom, of the frontier, of America as a place where an individual can strike out on their own. And this is not altogether different from what Ronald Reagan is talking about on the right. And thus, one sees quite a lot of interest in the ranks of the new left and getting rid of states and governments that have become too big and freeing the individual from its constraints.

And one example of this is Ralph Nader, who makes his name fighting General Motors over issues of seatbelts and the lack of car safety. But Nader is one of these people who, by the '70s, feels as though the government is in a kind of cahoots with corporations, and that his goal becomes to render the consumer sovereign. This is not a traditional program of working class emancipation to make the consumer sovereign.

And one way in which you do that is to break up these alliances between government agencies and private corporations. And how do you do that? You begin to call for deregulation of the trucking industry, of the airline industry. Let new upstart competitors enter the fray, let them innovate. Let them come up with new pricing plans, new routes, new techniques of flying that are going to make it much cheaper and give the consumer a much wider range of choices.

And Ralph Nader becomes one of the whisperers of Jimmy Carter, when he's President of the United States. And at one point, about 40 of Nader's Raiders are serving in the Carter administration, helping to promote agent -- programs of deregulation. This is an example of how elements of the new left are finding their way toward working with what we might consider more conventional supporters of neoliberalism, to bring a more deregulated, freer economy into existence.

Another very important element of this is the personal computer industry. IBM is, in the mainframe, is identified as the enemy, and Steve Jobs is, until he settles on Apple, is a tree-hugging hippie at Reed College, who spends a lot of time meditating and doing all sorts of other things that young hippies at the time were doing. And he celebrates a kind of hacker paradise of individuals using the tools that this new technology is making available, to create a world of almost unimaginable freedom.

And that's the techno-utopianism associated with the personal computer revolution. And this too feeds very powerfully into neoliberals thriving, especially as the IT revolution gathers steam in the late '80s and early '90s. And this is an example of how elements of the new left begin to coalesce with the more traditional proponents of neoliberalism, to give power and a much broader base of support to what is becoming the neoliberal order.

Nathan Hunt: Gary, there's something satisfying about a narrative with both a rise and fall. You identify the great financial crisis of 2008 as, in some ways, the fall of the neoliberal order or the impetus for the fall of the neoliberal order. But when did you, as an individual, become aware that the neoliberal order was a spent force?

Gary Gerstle: 2016. I'm an American living in England in 2016. I'm teaching at the University of Cambridge. Your listeners will know that I am an American. What am I dealing with in 2016? I am dealing with Brexit on the one hand, and I'm dealing with Donald Trump on the other hand. They're both happening in the same year, and what unites them is that both were unimaginable developments in politics 20 years earlier.

And here, I'm talking obviously both about British politics and American politics. But I do think, my understanding, that this was not just a national event, but an international event, and there's some close parallels between Brexit and Trump. And what united those 2 events was how the unimaginable had become real. That's when this project took shape in my mind, and that's when I began to think that something had broken.

And we also have to throw into the mix, Bernie Sanders, who is also a 2016 phenomenon, a late 2015, early 2016 phenomenon. Bernie Sanders, who is he? Who had he been before 2016? The only socialist in Congress, utterly irrelevant. He could be a pest when he flew too close to the ears of Clinton and Bush and then Obama, but they would simply swat him away. They had to pay him no attention.

And suddenly, he is the most dynamic force in Democratic Party politics in 2015 and 2016 and the only one in the country who could attract crowds with the intensity, enthusiasm to match those of Donald Trump. He makes himself, in a matter of months, over the course of the year, into the second most important socialist in all of American history, second only to Eugene Victor Debs, who lived 100 years before him.

How is this happening? That's what I'm asking. And what I began to see at that point is an illustration of what we had talked about earlier in this conversation, how ideas that had been utterly on the margins break through from the margins into the mainstream. If that is happening on the scale in which it was happening in 2016, 2015 and 2016, that is a sign that the usual way of doing American politics was breaking up.

I do locate now the origins of that breakup in the Great Recession of 2008 and 2009. But as you will understand and as your listeners will understand, the angry responses to the recession of 2008 and 2009 were slow in developing. They didn't appear all at once. It took a while for them to cohere. It took a while for people to make sense that the world's financial system had just been pushed to the edge of the abyss.

It took a while to make sense that a lot of the promises of neoliberalism, that it would lift all boats, and even if it increased inequality, the poor would benefit as much as well as the rich, it took a while for those -- the sense that those ideas were wrong to penetrate. So it took a while for protests to develop.

The Tea Party came first, the thunder on the right, 2010, occupy Wall Street. The thunder on the left came in 2011. 2012, Elizabeth Warren has her race for the Senate. Black Lives Matter comes in 2014. You have these political shocks to the system that are not happening all at once. They're happening among different groups of people. It takes a while for the sense of political crisis to reach the point where figures like Trump and Sanders could enter national politics in such a powerful way.

So even as I now analyze this crack-up as beginning in 2008, 2009, it's a slow-burning fuse whose explosion is not going to fully come until 2016. In 2016, I had a very powerful vivid sense that the world in which I was living was breaking up and something else was taking root. And that's the precise moment when I said, "I know what book I have to write."

Nathan Hunt: So I have to ask, neoliberalism has fallen. On the right, we have what you might call the ethno-nationalism of Donald Trump. On the left, you would see increasingly socialist and identity movement. What is the big theme? What will be the character of the next political order?

Gary Gerstle: Well, the -- this is the point where I dodge and say I'm a historian, not a futurist. There are 3 possibilities. One is an order built on authoritarianism, ethno-nationalism, a future that is associated with Trump and the forces that he has unleashed. There is a progressive alternative to that associated with Joe Biden, in dialogue with Bernie Sanders.

And this refers to what you started the program with, Biden senses that this is an inflection point, and that, one, he can't go back to the Democratic politics of Obama and Clinton because they will not be well received anymore and he understands as well that the greatest periods of Democratic success in America have come when the center of the Democratic Party has been in dialogue with the left as it was in the 1930s and again, under Lyndon Johnson in the 1960s.

And his first 6 months in office were a very energetic moment of trying to put together an ambitious program, grounded in progressive principles, to establish a new political order that Biden, I think, has meant to look a lot like the new deal. That has got stalled now and may even be defeated, and for the very simple reason that you can't enact transformative politics in America when you don't have a majority of senators, which is the reality of Biden's presidency.

The third possibility is that we live in an extended period of disorder, which neither an authoritarian, ethno-nationalist, order of the right, nor a progressive Democratic, order of the left, is able to establish itself. And I think we can -- we, here, I'm speaking of Americans. We, as Americans, can feel what it's like to live in a period of disorder.

And what is the inability of America to do anything to save its children from gunfire death, what is that, but a sign of the deep disorder and paralysis on key issues that is currently engulfing American society. I can't tell you which of those 3 possibilities is going to triumph.

The best I can do, I can tell you which one I would like to see triumph. You have probably guessed it already, but I can't say at this point which one of those will triumph because that would be the substitute, a form of wishful thinking for hard analysis.

What I can say is how much the world is changing and why I feel convinced that we are moving out of the neoliberal era. Sometimes, I think of neoliberalism as encompassing 4 freedoms. And these are not the 4 freedoms of Roosevelt that he articulated in 1941, which is -- which are really a form of social democracy, especially in his talking about the freedom from one.

The 4 freedoms of neoliberalism are these 4 freedoms: it's a free movement of goods, would be one; free movement of people across borders, would be two; free movement of information is three; and the free movement of capital is four. So the 4 freedoms are free movement of trade, people, information and capital.

When the neoliberal order was riding high, none of those freedoms could be seriously challenged within a neoliberal space in a serious way. I mean that doesn't mean that people weren't opposed to immigration. But these views had authority. You could not, in 2010 or 2000, you could not be a protectionist believing in sharp curbs on international trade and have a chance at national political office.

Each of those freedoms is now under siege. Trump and Sanders have made protectionism and opposition to a world of global free trade respectable. Borders against the free movement of people are going up everywhere, including the Southern border of the U.S. and all across the Southern border of the European Union and many other places as well.

Something that was imaginable 10 or 15 years ago during the heyday of techno-utopianism, so much energy and so much hope went into the creation of a single digital world where you could get any information, you want it and in any part of the world at any moment of the day or night.

China is busy now creating its own Internet sphere. Russia is trying to create its own Internet sphere. Erdogan in Turkey would like to do the same. If they are successful in doing this, in ceiling off their countries from the free movement of information, other countries may well follow suit.

And so suddenly, one world of communication may become 4 or 5 major blocks of communication, with gates between those blocks set for many people are going to be locked. And the Ukraine crisis has revealed a willingness on the part of governments to enact curbs on the free movement of capital, that also would have been unimaginable in the heyday of the neoliberal order.

The clamping down on Russian assets in terms of the reserves they hold abroad, the pressure being brought to bear on American corporations operating in Russia to pull out, to pull their capital out of those countries, again, we're seeing a much greater willingness on the part of governments to interfere with the free movement of capital across borders.

So for each of the 4 freedoms that I consider to be essential to the successful functioning of the neoliberal order, each of these freedoms has been seriously eroded in the last 10 years. And that is the surest indication to me that we are moving into a different era, even though I cannot tell you whether the future lies with the authoritarians or the progressives.

Nathan Hunt: The book, once again, The Rise and Fall of the Neoliberal Order, Gary Gerstle, thank you so much for joining me on the podcast today.

Gary Gerstle: Thank you. It's been a pleasure, Nate. And thank you very much.

Nathan Hunt: The Essential Podcast is produced by Kurt Burger, with assistance from Kyle May and Camille McManus. At S&P Global, we accelerate progress in the world by providing intelligence that is essential for companies, governments and individuals, to make decisions with conviction. From the majestic heights of 55 Water Street in Manhattan, I am Nathan Hunt. Thank you for listening.