All across the political spectrum, those who think about and implement economic policy are rapidly gravitating toward a new consensus. Ideological opposites such as Senator Marco Rubio and Representative Alexandria Ocasio-Cortez now agree that the "free market" is not capable of powering or guiding our nation's economic progress. Joe Biden's centrist economic advisors are almost there. The new consensus is evolving rapidly but it remains a diagnosis of what's wrong. The prescription for how to fix the world alludes us because of one missing concept.
You might find what I said about Marco Rubio rejecting the free market hard to believe. Rubio has published several reports detailing how the financialization of American capitalism "tilts business decision-making towards returning money quickly and predictably to investors rather than building long-term...capabilities," and warning that, “less investment in our own future productivity represents a lack of will to build an economy and country that can sustain and renew itself for generations to come.” He condemns corporations for preferring stock buy-backs over investment: "They're eating themselves — they’re committing suicide."
Rubio is not the only one. His senate colleague Josh Hawley laments, "the Right celebrates hyper-globalization and promises that the market will make everything right in the end, eventually, perhaps," and that, "an economy driven by money changing on Wall Street ultimately benefits those who have the money to start with, and that economy will not support a great nation." Many other high profile conservatives are headed their way.
The new consensus is gathering to replace the old consensus which was called the Washington Consensus or neoliberalism. It has become common for neoliberals, or people who've recently realized they no longer want to be associated with neoliberalism, to complain that "neoliberal" is a meaningless pejorative without a clear definition. Don't buy it. "Neoliberalism" was a well-defined economic consensus created by a generation of economists who chose to call themselves neoliberals and built a global network of think tanks that changed the world's mind about economics.1
Societies tend to live by a single economic consensus. Either they need to have one or they can't help but have one, no one knows which it is. All across the political spectrum, everyone breathes in and thinks using a shared set of concepts, analogies, imagery, feelings and values. Frederick Hayek, Ludvig Mises, Milton Friedman and other founders of neoliberalism constructed their consensus around the central image analogy of players competing against each other on a sports field. The "free market" was the field. The state was the referee. The players were individuals and corporations. The feelings and values associated with this game play were fun, freedom, safety, and predictability.
While the neoliberal consensus reigned, everyone believed the game analogy described economic life, whether they liked it or not. The right and center cheered it. The center left wanted to improve it. The left wanted to talk about how the players were recruited.
The neoliberal consensus was preceded by a consensus around the power and promise of expert-driven, scientific planning. Everyone from communists on the left to fascists on the right and the original progressives believed that central planning by experts would naturally out-compete economic systems based on tradition, local control, democracy, markets, competition, or anything else. Early 20th century aristocrats and business leaders struggled to enjoy the final years of their dominance knowing they'd soon be forced to hand the reins over to central planners.
As neoliberalism rose to replace its predecessor, worship of the game, free and fun, replaced worship of scientific planning by experts. On the right, Nobel prizes were awarded to theorists of games and decentralized markets. On the left, organizers stopped dreaming of proletarian dictatorships planning workers' Utopias and started dreaming of a global marketplace populated by worker-owned cooperatives in which ideas and innovation would bubble up from individuals to push humanity forward--as if guided by an invisible hand.
In other words, left or right, your vision of the best possible world and how to get there is determined by the ideas, analogies, and imagery made available by the current consensus.
Today, though, we're still in transition from one consensus to the next. We don't have a full set of ideas and pictures to work with. That's why policy makers in this moment are having a difficult time figuring out what to do.
As I've said, the half-formed new consensus has diagnosed the various diseases killing the economic world neoliberalism made. The foundation of that diagnosis is that markets and competition don't optimize for long-term outcomes for the whole society, let alone the whole world. In the game analogy: on the field, the players are trying to score points, and that's all they're trying to do. The rules of the game can't do anything for, say, the comfort and safety of the fans or the economics of the sports industry.
To become complete, and to become useful, the new consensus needs to acquire its own full set of concepts, analogies, imagery, feelings and values that make it possible to imagine a whole new world, just as the neoliberal consensus did. It can not be a step backwards to a blind faith in expert planners or "science." It cannot be a random assortment of ideas and images. They need to fit together coherently. And they need to connect to human experiences, aspirations, and fantasies--just as the planning consensus and neoliberal consensus did. Only then will the new consensus be able to guide decisions and action, for better (in the hands of good people) or worse (in the hands of bad people).
Neoliberalism activated the everyday, benign fantasy of being a player in a game, running free and having fun. Central planning activated the narcissistic fantasy of omniscience and omnipotence.
I think the new consensus will do best if it connects with the human experience and dream of innovating, creating, cooperating, and accomplishing. Game play should be a key part of it, but with a limited purpose: games are for fun and can be helpful for developing skills or making work enjoyable.
But I don't know what the exact images will be. The problem is that innovation and creation is not a part of most people's lives, the way games are. And the fantasy to create and build is not as emotionally powerful as the fantasy of controlling the world one lives in that allows ordinary people to connect emotionally with the logic of central planning.
The ideas, analogies, and imagery of the new consensus are still to come. There are probably some big obvious clues sitting right in front of our faces that we're not seeing. When the neoliberal consensus was being forged, its founders scoffed at the simplicity of the game analogy. They were so wrapped up in the mindset of planning that it was very difficult for them to take a leap of faith in unplanned markets. For example, as hard as this is to believe now, many of the founders believed that markets could only play a positive role in society if governments nationalized all major corporations and ran them according to the principles of scientific planning.
We can only assume we are similarly blinded by neoliberal thinking today. Part of our work at New Consensus is devoted to figuring out what the ideas, analogies, and images of the new consensus could be. If you have thoughts about this, please share them with me at email@example.com
To learn more about this story check out Kim Philips-Fein Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan or The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective by Philip Mirowski.