After Neoliberalism

It’s time for a new theory of capitalism, power, and the dynamics that repeatedly produce both growth and social dislocation

An excerpt from Professor Yochai Benkler’s closing remarks during the “After Neoliberalism: From Right to Left” conference at Harvard in December, hosted by the Allen Lab for Democracy Renovation. Benkler is the Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School, where he is faculty director of the Program on Law and Political Economy and a co-director of the Berkman Klein Center for Internet and Society.

Academics have not led the conceptual reorientation this moment requires. In prior crises, we’ve had major theoretical explanations and new accounts of how the economy works. In her opening comments, Jen Harris challenged us that new ideas are coming from politicians, not academics. When you look at it, after 1929, after the Great Depression, it took six years for Keynes and The General Theory. It took 15 years for Schumpeter’s Capitalism, Socialism, and Democracy; Polanyi’s The Great Transformation, and Hayek’s The Road to Serfdom to be published. In other words, it took 15 years until some of the most influential and important rethinkings of how the system works and how to rebuild it were developed. I think this is about the right time, since the Global Financial Crisis, for us to be able to do that. The question is how much we can learn from today, and how much we can pull together, intellectually.

Jen talked about markets as being focused on power and always concentrating power, and on this question of not only growing the pie but also what’s in it — what we make, not only how large and how quickly we make it. I would add the continuous tradeoff between growing the pie and grabbing a bigger slice, because these both go to the bottom line when you have a profit-driven framework. Since the 17^th century, waves of technological innovation always included struggles not only over how productive a new technology would be, but also over how it would distribute power over production, primarily between skilled workers and craft smallholders, on the one hand, and capitalists and rentiers, on the other hand.

What struck me from the first panel was Aaron Hedlund talking about crisis as shifting the Overton window — crisis being a moment of actually being able to think in transformative ways. He put on the table something that recurred in almost all of the panels, which is the centrality of work. Not as opposed to leisure. Not just as a source of wages — and there was conflict here over whether it’s just about wages, what the tradeoff is, with Jason Furman — but Hedlund, like Oren Cass in his conversation with Rebecca Henderson and Dani Rodrik and Manuel Pastor in a later panel, all insisted on this idea of work as a source of meaning, on the need to create work as a place of dignified life, of creating meaning. There was agreement, even on that earlier panel, with Heather Boushey and Aaron Hedlund, around this idea of shared purpose through some form of high-road production. Oren Cass and Rebecca Henderson really jumped into the question of how. Cass raised the notion of industrial policy, unions, and a certain kind of focus on workers.

One of the things that came out quite clearly in the morning was that in this crisis, what we had lost completely in the last 50 years is a meaningful politics of class and a meaningful program around working families and the working class as a major question that needs to be resolved. Interestingly, this was a question not mapped onto who was from which party. Rather, within each of what are today still neoliberalism’s two parties, there seem to be sub-parties who are really focused and interested in that — in reviving a politics and programmatic agenda around class — that’s quite central.

Another thing that stood out very clearly in the conversation between Rebecca Henderson and Oren Cass was this notion of high-road capitalism, something Rebecca has written a lot about. The point is: How do we structure things such that high-road approaches become sustainable as a business model for profit-seeking organizations, by creating an institutional framework that makes it less profitable to exploit, less profitable to grab a bigger slice instead of growing the pie? This was when they went into the question of industrial policy, unions, and a focus on workers.

After lunch, Dean Jeremy Weinstein talked to us about tech and how we enable the growth of tech while living a decent life. That reminded me of a point central to what Graham Burnett talked about in the morning — the notion that if a grandma had developed the iPhone, it would have been to call home. But that’s not how we do it. What happens is the incessant drive of profit creating imperatives that consistently and incessantly force us to instrumentalize our lives, our labor, our knowledge, our meaning, our relations.

We came from very different perspectives on how to contain that imperative to commodify everything. For some it was religion. For others it was state investment. If you saw the last panel, Anne-Marie Slaughter was focused on decommodifying care through state investment. Brad Littlejohn was focused on decommodifying care through a traditional family. Alisha Holland was saying, look at Colombia — a context in which at the municipal level there are different ways of doing things, but the core is substantial decommodification of basic needs.

We talked about decommodification of basic needs in the context of care, but there’s no reason why it shouldn’t extend to health care, clean water, clean air, and energy. A core driving force of capitalism is market dependence for subsistence — everybody is forced to sell their labor in some form just to keep body and soul together. Brad talked about couples being forced to go to work, trapped in work. Matt Stoller, on a very different side of the political map, talked about coercion and the coercive force of markets. How do we create a situation in which that imperative is significantly muted?

The question many of us seemed to share, then, was how do we create enough freedom from markets by decommodifying basic needs, so that every one of us can explore, learn, and shape our own path to meaningful work? How do we tie lifelong learning and continuous change to socializing the risk of necessary change and obsolescence of skills — not leaving each individual to ask: did I do the right thing, did I not, could I take on enough debt? But rather recognizing this is something we all need to do as a society.

There were tensions around this question of security versus opportunity. I think one of the things that comes out — and I think it was Rebecca who put the Great Gatsby curve on the table — is that social mobility is actually higher in the Nordic social democracies than in mainland European states, and all these have much higher intergenerational social mobility than the United States. It is also false to say that equality is inconsistent with productivity growth — the Nordics had higher average annual labor productivity growth over the 40 years between the Reagan-Thatcher revolution and the eve of the Covid-19 pandemic. It is false, then, to say that a significant measure of freedom from want and a significant measure of economic equality are inconsistent with either social mobility or productivity growth. It is a false choice.

It is also a false choice to imagine that to constrain profit, to constrain the freedom of profit-seeking organizations to do what they want, will necessarily cost reduced productivity. Instead, what we’re seeing when we look around is a crowding in of investment when power-seeking strategies are less readily available. Remember that capitalism is indifferent between growing the pie and grabbing a bigger slice. Only when grabbing becomes more expensive than growing, when power-seeking becomes less profitable than productivity-seeking, will profit-seeking enterprises systematically seek profit through productivity growth.

Matt Stoller talked about shutting off the dependence on finance. He talked about bailouts as the example. But we should recognize that bailouts respond to structural imperatives, rather than to crass corruption. We’ve had bailouts since the Act to Restore Public Credit of 1721 after the South Sea Bubble. As long as governments sell debt into financial markets, they cannot afford sustained collapse of financial markets, and find themselves bound to provide bailouts. They have to consider the needs of the financial rentiers who buy their sovereign obligations. Oligarchy, not democracy, is the gravitational well toward which capitalist societies move, and we will keep our democracy only if we fight against that pull.

So that leaves us with this question: What do we need to do to fight our system’s oligarchic tendencies? In the afternoon, Dani Rodrik talked about good jobs as a major aspect of policy. We talked about access to credit and access to care. I think we need this idea of looking for some form of real freedom from markets, from the imperatives of markets, through socializing the labor market — wage coordination and unions as well, a sectoral framework. We need a similar model of partial socialization for infrastructure and energy as well.

We talked about technology this afternoon and how to govern it. There are people here — I see Bruce Schneier, I saw Joshua Tan earlier — talking about public AI. How do we actually make this work, if it is going to transform the world? How do we govern it democratically?

Daron Acemoglu talked about how hard it is to steer organic processes. Certainly, but yet that’s what we’ve done with the National Institutes of Health. If we look at robotics in the U.S., for example, we are well behind European manufacturing centers in the use of industrial robots, and the best evidence, from Acemoglu and Restrepo, shows that the robotics we do deploy in the U.S. come at the expense of jobs and wages. European studies, however, suggest that in Europe, with higher levels of robotics density, there is a positive relationship to labor productivity and wages, and, by some of the studies, higher employment levels through reshoring as well. None of these studies find the negative effects we see in the United States.

Technologies do not have uniform results or applications, and do not operate exogenously on market societies. They are always part of techno-institutional waves that involve struggle over power, as well as productivity, and how they shape class power and class relations reflects the inherited institutional political economy of the societies that adopt them. Acemoglu and Johnson made the distributive aspect of these dynamics clear in their Power and Progress, but the dynamic operates even before the question of distributing the gains from otherwise uniformly increased productivity. Institutional political economy operates at the level of how technologies are instantiated, which technological affordances and constraints are adopted and rejected, and how these structure power in social relations. If you want an example of what technology steering can achieve, look at what happened with clean energy technology in China. The idea that we cannot steer the path of technology but must adapt to whatever technological development deals us flies in the face of our own history of accelerating technology through public investment, what we’ve seen in East Asia, and the diverse ways in which technology and social relations of production developed across different institutional political economies at the same technological frontier over the past 250 years.

All of which is to come back to my basic point. When we look together, we have a lot of specific ideas. We have a lot of insights. And I think we have a real shared sense that we need a new theory of capitalism — a new theory of how power is central, how market imperatives, rather than individual contractual choice, shapes life in capitalism, and how building the institutions that structure social relations matter. Programmatically, that new theory must orient us toward significant decommodification of basic needs combined with significant socialization of labor markets, of credit, of knowledge, of infrastructure—not in order to fully displace markets, but in order to contain the destructive effects of profit-seeking and harness its productive effects.

---

As we continue our series on “After Neoliberalism,” check out Danielle’s fantastic debrief essay from the conference. And, though The Renovator is free & decommodified, becoming a paid subscriber still goes a long way to supporting the community that produces this work!