The Return of Bottom-up Liberalism

This week left-of-center bloggers have been abuzz over this lengthy treatise about the supposed absence of genuinely left-wing voices in the online conversation. Freddie DeBoer complains that the lefty blogosphere is dominated by “neoliberals” like Matt Yglesias, Jonathan Chait and Kevin Drum who show inadequate fealty to labor unions, big government, and the dictatorship of the proletariat.

What I find most interesting about DeBoer’s post is what it says about the successes of libertarian ideas over the last half-century. It has become a cliché in libertarian circles that we’re constantly playing defense against the ever-expanding welfare state. Yet if that were true, welfare state advocates like DeBoer wouldn’t be so gloomy.

I think DeBoer is basically right. We obviously don’t live in a perfectly libertarian world, but libertarians have had a pretty impressive winning streak in recent decades, especially on economic policy. Income tax rates are way down. Numerous industries have been deregulated. Most price controls have been abandoned. Competitive labor markets have steadily displaced top-down collective bargaining. Trade has been steadily liberalized.

Simultaneously, the intellectual climate has shifted to be dramatically more favorable to libertarian insights. Wage and price controls were a standard tool of economic policymaking in the 1970s. No one seriously advocates bringing them back today. The top income tax bracket in the 1950s was north of 90 percent. Today, the debate is whether the top rate will be 35 percent or 39 percent. There’s plenty to criticize about proposals for government-mandated network neutrality, but no one is seriously proposing that we return to the monopoly model of telecommunications that existed for most of the 20th century. At mid-century, intellectuals idealized large, bureaucratic firms like General Motors and AT&T. Today, intellectuals across the political spectrum argue that their preferred proposals will promote competition and foster the creation of small businesses.

This isn’t to say there are no longer disagreements about economic policy; clearly there are. But what’s striking is that the left’s smartest intellectuals and policy advocates now largely make their arguments from libertarians’ intellectual turf. Tech policy scholar Tim Wu explicitly casts himself as a heir to Friedrich Hayek, defending bottom-up competition against the monopolistic tendencies of large corporations. The urbanist left has increasingly focused on the (largely correct!) argument that we’d have a lot more walkable neighborhoods if not for government regulations that tilt the playing field toward suburban living patterns. Environmentalists have begun championing relatively free-market mechanisms like cap and trade as more efficient ways to achieve their goals. The policies being advocated aren’t always libertarian, but many non-libertarians sell their non-libertarian policy proposals using libertarian arguments.

Probably the best illustration of this is Matt’s response to DeBoer’s post. Matt lists 10 economic policy goals that he favors. What’s striking about the list is that about half of them are straight-up libertarianism (less occupational licensure, fewer subsidies for suburbanism) and there’s only one item on the list (“more redistribution of money from the top to the bottom”) that Milton Friedman would have strongly opposed. One way to interpret this is to say that Matt is a moderate libertarian with a redistributionist streak, but I don’t think that’s the right way to look at it. Rather, what’s happened is that liberalism in general has internalized key libertarian critiques of earlier iterations of liberal thought, with the result that a guy with a largely Friedmanite policy agenda can plausibly call himself a liberal. And actually, this shouldn’t surprise us at all, because Friedman called himself a liberal too.

Liberalism in the 19th century focused on opposing concentrated power and entrenched privilege, whether it was monarchy, slaveholding, or protectionism. In the 20th century, the American left became infatuated with concentrating power in the hands of democratically-elected governments. The libertarian movement arose to counter this trend and defend the original, bottom-up conception of liberalism. Since the fall of communism, the left has largely (though not entirely) backed away from its 20th century infatuation with central planning. And the result is what critics call “neoliberalism”: a left-of-center ideology whose egalitarianism is balanced by a healthy skepticism of concentrated power.