Geopolitical Economy is Brutalist Neoliberalism: Part II

The “New Washington Consensus’ is Not as Post-Neoliberal as You Think

This is Part II of my analysis of Jake Sullivan’s speech about America’s new disposition toward political economy. You can read Part I here.

To recap, here were my one-liner takeaways from the speech:

1.     Neoliberal policies are politically unpopular and leftist critiques of capitalism are being selectively wielded by the Biden administration.

2.     There is no consensus on political economy moving forward.

3.     The Biden administration is quite explicitly subordinating the economy to great-power war preparations.

4.     By instrumentalizing the economy for military purposes, the Biden administration is not transcending what neoliberalism wrought but rather re-introducing a brutalist form of capitalism that promises to have neoliberalism-like consequences. You could variously call this geopolitical economy, national security Keynesianism, or military capitalism.

In the previous post, I addressed the first of these.

There are only a couple things I hasten to add on that first point.

One is that to say neoliberal policies are unpopular—and that the Biden administration isn’t going to do them—is not the same thing as saying we’re post-neoliberal. There’s no New Deal Order on the horizon as yet. Sullivan was critical of the most gratuitous capital-friendly policies occurring under neoliberalism—the best points in the speech.

But he also went out of his way to praise the power of markets…he just wants them put in service of national security objectives. That means embracing the state planning functions that the neoliberal version of capitalism desiccated (more on this in point 4, behind the paywall).

Sullivan was also right to note that policy officials used to believe that “the type of growth did not matter,” and that this led them to:

privilege some sectors of the economy, like finance, while other essential sectors, like semiconductors and infrastructure, atrophied.

This is true; the problem is why he cares. It’s not because semiconductors are vital to a flourishing democracy, and it’s not because he thinks manufacturing will furnish full employment (AFAIK he doesn’t think that).

There was one other thing I left out of the previous post. Sullivan said:

The second challenge we faced was adapting to a new environment defined by geopolitical and security competition, with important economic impacts.

What the hell is he talking about? It takes a special kind of…exceptionalism…to not realize that we have been actively responding to China in ways that securitize what used to be normal economic relations (yes, China was non-reciprocal in a lot of ways, did it first, but we used to think of that as the price of doing business).

Even if you think our geopolitical moves are necessary, there’s nothing natural about how Washington has been dealing with China. Since 2010, we’ve been making the China project geopolitical and trying to sell the rest of the world on it. So we’re “adapting” to a trend of our own making.

The No-Consensus Consensus

If Sullivan’s diagnosis of what’s wrong with political economy was 85% praiseworthy and 15% wrong/disturbing, the rest of his speech reverses those numbers.

First, he tried to make the phrase “New Washington Consensus” a thing—people are saying!  Reminded me of that Mean Girls gif.

But Branko Milanovic called it the no-consensus consensus for a reason. As I see it, there is at least grudging agreement among the Democratic political class that the winnowing of the administrative state is not really an answer to anything. It’s probably even be bad.

Beyond that, however, there’s no agreement about what to move toward. Or even whether neoliberal policies are as dead as Jake declared. It’s not clear to me that the conservative Democrats like Joe Manchin are actually anti-neoliberal.

After all, the Build Back Better Act (a producerist affirmation) was rebranded the Inflation Reduction Act (a Scrooge McDuck affirmation) because of those very Democrats. The moderates in the Party were never on board with the vision of a Green New Deal, even if we were able to smuggle some of its parts into the IRA. And, of course, with few exceptions, the Congressional Progressive Caucus is opposed to the Sino-US rivalry framework that justifies most of what the Biden administration has been doing on economic policy.

This lack of consensus reflects a larger disagreement about vision—about models of economic order and the priorities that different models accord. I have a journal article coming soon where I try to lay this out. If I’m lucky someone might even read it!

But the Democrats aren’t the main problem. The bigger share of the non-consensus is the Republicans, who definitely don’t agree with what’s happening. They did a line vote against the IRA, and very explicitly supported the CHIPS and Science Act because it’s anti-China and an important part of a permanent war economy. Whoever’s supposed to be in this “New Washington Consensus,” it ain’t Republicans.

The only thing about which there’s a mainstream consensus is China rivalry, which has been naturalized in the most disturbing ways imaginable. This brings me to points 3 and 4 from my recap above.

Alright, the final two points are for paid subscribers!