Once in a Lifetime: Why a Sea Change in Economics Is Happening Now

July 6, 2021

“Few expected Biden would be at the helm of the Democratic Party’s biggest left turn since LBJ,” Rebecca Traister writes in a just-published New York Magazine feature.

“But here we are, with a federal-budget proposal representing the highest sustained government spending since World War II being negotiated in the Senate and historic investments in a care economy and climate policy on the table via an imperiled reconciliation bill.”

For economic policy and politics nerds, Traister’s account of how we got here is a trove. As surprised and amazed as anyone by the direction the Biden administration has taken, she set off to understand the people, ideas, and history that have pushed Biden to the left.

Hers is a character-driven tale, balancing Biden himself (“so old that he’s a pre-neoliberal” was how I described him) with an ensemble cast of bold scholars, idea generators, and organizers who now find themselves on the inside, or close to it.

I’m proud to say that many of the progressives Traister describes are Roosevelters, friends, and allies—people like Heather Boushey (now a member of President Biden’s Council of Economic Advisers), Lina Khan (newly appointed Federal Trade Commission chair), Roosevelt Fellow Darrick Hamilton, and Community Change President Dorian Warren.

The truth is, we’ve all been working together for a long time now to bring new ideas into being and shape a “once-in-a-lifetime paradigm shift in economic thinking,” as I say in the piece.

Traister’s narrative focuses on the people. Here, I’d like to take one more step toward unpacking the ideas driving the economic sea change: what they are, where they come from, and how the players Traister writes about have pushed them to the fore.

Lots of people throughout the progressive ideas ecosystem will have their own versions of this story or focus on different particulars; below is how we at Roosevelt have been thinking about it.


There’s No Such Thing as a “Free” Market

First and foremost, Roosevelters and allies are rethinking the role of government in our economy. Since the 1980s, policymakers have acted—or not acted—on the neoliberal premise that economic “freedom” means freedom from government “interference” and rules.

Neoliberalism’s sleight-of-hand myth is that it’s “small government” and rules-free. Not true. Neoliberalism has plenty of rules: rules that allow corporations to legally buy back their own stock, juicing executive compensation outrageously high; rules that let companies legally headquarter themselves all kinds of places where they don’t have to pay taxes; rules that prioritize low inflation over a strong, high-wage labor market.

What we want is better rules: rules that acknowledge there’s no such thing as a “free” market because government structures our most basic economic interactions—who counts as an employed worker, who gets legal protection and access to all kinds of shared infrastructure, who pays taxes and how much, etc.

Roosevelt has been arguing this for a long time. As Roosevelt Chief Economist Joseph Stiglitz explained in his 2015 book Rewriting the Rules of the American Economy, the dysfunction of our economy lies in power dynamics and rules that favor corporate power and short-termism over long-term prosperity and innovation.

The Rewriting the Rules framework got a lot of attention back then. As Jim Tankersley wrote in his coverage at the time, “Liberals have a new manifesto for fighting inequality, and it’s very liberal.”

Note that a lot of people hear “government role” and think, right away, that this is about government control of the economy, government provision of all goods and services. But this is more nuanced. It’s about government’s purpose and its design. We must remember the role government always plays in structuring the economy, and ensure that it privileges people and the planet rather than only those at the top.


Economic Policy Cannot be Separated from Equity Policy

The recognition that government creates and structures the economy quickly reveals another falsehood: the idea that economic health and racial equity can somehow be separated, either analytically or politically.

In reality, our economy has long been built on racialized rules, from whites-only property covenants and mortgage redlining to tax laws that prioritize wealth rather than capital. In 2016, Andrea Flynn, Dorian Warren, Susan Holmberg, and I wrote Rewrite the Racial Rules: Building an Inclusive American Economy. Our racial rules frame described the ways in which powerful Americans, mostly white, knowingly and deliberately excluded, and continue to exclude, Black, brown, Asian, and Indigenous people—including and especially new immigrants to the United States—from the mainstream economy.

Today, Black Lives Matter, the 1619 Project, and many other movement organizers have made our history of racial exclusion painfully clear. It’s why the “opportunity” argument for our economy is, for a lot of people of color, especially women of color, a cruel mirage. As Nell Abernathy, Darrick Hamilton, and Julie Margetta Morgan argued in Roosevelt’s 2018 report New Rules for the 21st Century: Corporate Power, Public Power, and the Future of the American Economy, we need explicit inclusion and new rules to build power in long-marginalized communities and ensure they can thrive.


These Are Well-Established Arguments, and Lots of People Are Making Them

As I noted in early 2020, in a landscape analysis of 200+ economic thinkers titled The Emerging Worldview: How New Progressivism Is Moving Beyond Neoliberalism, many of these arguments have been around for a long time. But instead of siloed criticisms of bad economic policymaking, these arguments were cohering into an alternative economic ideology. The “new progressivism” landscape showcases four basic points:

  1. Politics and power shape markets—and the economic outcomes that markets create. With new rules that curb corporate power and boost public power, we can rightsize markets, reduce inequality, and create more broadly shared prosperity.
  2. Contrary to neoliberal thinking, government can provide some goods and services more efficiently and universally than the private sector; this is the genesis of universal health care, public housing, and public broadband policies that many of our friends and allies have advanced.
  3. Government has unique abilities to change our national direction: setting goals and spurring changes that are both necessary and economically beneficial—from decarbonization to research and development. By making public investments now in new industries, and reevaluating the true risk in carbon-intensive sectors, government can make sure the economy is more green and less racist.
  4. But to do all this, our institutions must be more democratic (small-d). We must ensure that collective action is possible, that the labor market is strong and that labor rights are strengthened, and that social movements have feedback loops that interact with policy to allow organizers to keep building the outside power that pushes, proactively, for continued change.

You see all of these arguments threaded throughout the Traister piece.

You see them in the American Rescue Plan, which is creating economic security for families and positioning the government to actually manage an economic boom.

You see them in the American Jobs Plan and the American Families Plan proposals, which would increase the pay and bargaining power of home care workers, who are mostly low-income women of color, and invest billions in everything from clean drinking water facilities to critical industries, like semiconductors and biotechnology. 

You see them in the US Innovation and Competition Act and in the pro-green, pro-equity industrial strategy the White House is publicly touting.

New progressivism is in motion.


The Post-Neoliberal World Is Already Here

There’s no going back to the old system. “The post-neoliberal world is already here,” as I wrote for a Democracy Journal symposium featuring Heather Boushey, Darrick Hamilton, Jennifer Harris, Chris Hughes, K. Sabeel Rahman, and Dorian Warren.

COVID has accelerated the paradigm shift, but the roots go far deeper.

To create a new, more democratic economy, we must continue building new and stronger alliances and institutions.

Which gets us right back to the heart of Rebecca Traister’s piece: The people and the relationships matter, and they’ve brought us to an unprecedented moment of opportunity.

Traister describes a network of people working together. That collaborative work matters perhaps most of all. We will keep strategizing and organizing and writing and cajoling and weeping and pushing in the hopes that a better world is possible before it’s too late—for suffering people, for a burning planet, and for the ideal of democratic justice that we all hold dear.