Gerstle (2022) reviews the history of The Rise and Fall of both The New Deal Order (balanced heavily toward Government) which framed the political economic order from 1930-1980, and The Neoliberal Order (balanced heavily toward Market) which framed the order from 1970-2020. The fact both Orders failed --- the contemporary political economic chaos, especially revealed in the 2016 US election --- points to the need for a New Order, The Metaeconomic Order, a political economic order with better balance in Market & Community : Government.
Essence: Both The New Deal Order and The Neoliberal Order Failed Due to Imbalance
Gerstle (2022, p. 294) brings it all together at the end of the Book in the following:
"The New Deal Order sold a large majority of Americans on the proposition that a strong central state (i.e., Government ) could manage a dynamic but dangerous capitalist economy in the public interest. The Neoliberal Order persuaded a large majority of Americans that free markets (i.e., Market) would unleash capitalism from unnecessary state controls and spread prosperity and personal freedom (i.e., in the private interest, not necessarily the public interest) throughout the ranks of Americans and then throughout the world. Neither of these propositions today commands the support or authority that they once possessed. Political disorder and dysfunction reign. What Comes Next is the most important question the United States, and the world, now face."
Metaeconomics points to what needs to be considered in deciding on What Comes Next, in The Metaeconomic Order. It is about rebalancing the joint private & public interest, Market & Government. What Comes Next recognizes the need for tempering the inherent excesses of the political economy, both in culture and economy, the main theme in Metaeconomics: Tempering Excessive Greed (Lynne 2020). Moving too far toward Government as some claim characterized The New Deal Order, or too far toward the Market in The Neoliberal Order (especially when its precepts of self-interest only are applied in the Government, too), ensures disorder and dysfunction, and overall political economic chaos. Said chaos, in turn, is predictably followed by Authoritarianism which always comes next, unless proactively slowed and hopefully stopped before it takes control.
Examples include Xi’s China, Putin’s Russia, Orban’s Hungary, and Trump’s America --- all with substantive cultural and economic turmoil. It seems many places on the Spaceship Earth are toying with (actually voting same into political office), or being attacked by (e.g., recent coup attempt in Germany, and the January 6 coup attempt in the US), Authoritarianism framed “leaders” who promise to fix both culture and economy. Other places on the Spaceship include Italy, France, UK, and, even in Sweden. A better What Comes Next is one based in sufficient reason built on a foundation of facts (as in working to determine which “ism” actually works) & ethics. A better What Comes Next recognizes the need to pick a best point on the continuum between pure communism (a controlling collectivism) and pure capitalism (a laissez-faire individualism). A better What Comes Next seeks sufficient reason, and it never occurs at either extreme, with any move toward said extreme always leading to Authoritarianism: The Con always appears and promises to fix it. What Comes Next based on sufficient reason points to the essential role of good balance in a joint Market & Government, with too little or too much of either one ensuring political (economic) disorder and dysfunction. And, it is about a joint Free (Tempered) Market & Community : Inclusive Democracy Government.
And, why have both The New Deal Order and The Neoliberal Order failed? Gerstle (2022) gives the detailed history of the two Orders, in a 300 page book with 100 pages of notes (summarized in the Details). Overall, both have failed because of the failure to temper the ego-based self-interest, the possessive individualism (after Bromley 2019) of utility maximizing consumers, in both market and cultural choices. The failure to temper self-interest is Why (Old Classical as well as more recent versions like the New Deal and Neoliberal Variants of) Liberalism Failed (both Cultural and Market Neoliberalism failed, as made clear in Deneen 2019; see Review in Lynne 2022), and why there is A Crisis of Capitalism (Bromley 2019; see Review in Lynne 2021).
Essence: Move Toward The Metaeconomic Order
And, What Comes Next? It is about rebalancing the possessive individualism which has too much focus on self-interest (the “I”) toward the other (shared with others, the ethics that everyone can go along with) – interest (the “We”). Ethics are key (Bromley 2019). Neoliberalism in the culture and/or the market fails because of too much "I." Fixing it is about finding a better balance in the joint I & We --- better balance in the joint self & other (shared, ethical)-interest --- perhaps toward something more akin to that in mid-1950s, at the top of the Upswing (Putnam and Garrett 2020). It is about better balance in the Market & Community:Government, each seen as essential to the other. It is essential to do the things made clear in The Metaeconomic Order, as in the following List:
Business community needs to engage the rebalancing effort. Organizations composed of business and thought leaders like the Leadership Now Project (Co-Founder and CEO Daniela Ballou-Aares) taking action to protect and renew American democracy need to be further developed and supported by the Business Community
Business leaders like the Business Roundtable composed of CEOs need to make it clear that the social responsibility of business goes far beyond just increasing shareholder (stock price P) wealth. The Business Roundtable needs to acknowledge the responsibility of business is not only to shareholders but also to labor, consumers, citizens (recognize workers as citizens, too, giving time to engage in labor-citizen efforts), community, and, to sustaining the Spaceship atmosphere and ecosystem.
Business leaders need to work at better managing the supply-side issues, as arising from things like the Pandemic; China not taking on global responsibility, due to dealing with internal economic supply issues; energy-transition issues as the system moves away from carbon fuels toward renewable energy; not relying completely on globalization, working for balance in domestic and foreign production and supply; and, overall structural changes in labor supply.
Business leaders need to acknowledge and embrace the key role of Government, seeing it as a viable partner, as in the notion of a joint Market & Government. As Fukuyama (2022) says, it is time to stop demonizing Government.
Labor unions need to be brought back into substantive play, viewing same as a positive to a viable business community. It is about offsetting the power of capital with the power of labor, as in capital & labor, seeing each essential to the other. It is about building a shared other-interest between capital and labor. It is about tempering the primal tendency of business toward excessive greed, as well as tempering the labor union on the same front: It is about balance, and empathy-with going in both directions. It is about finding optimal (keeping adequate incentives while seeking a more balanced and reasonable) inequality in income and wealth.
Cooperatives need to be brought back as viable business competitors to shareholder companies. Cooperatives provide a way for both labor and consumers to obtain capital in business, and make said people true partners in making the business work better for everyone.
Multi-national corporations need to invest more in factories and businesses in Central America, providing employment opportunities and the building of a middle-class, to help stem the immigration pressure on the southern US border.
Bring back the trade schools to also being framed as a meritorious choice: One does not need a university education to be a productive person and contributing citizen (i.e., meritorious), albeit university educations will still serve to work better for some.
Public education re-oriented (bring the liberal education back, essential to making citizens: It is not just about making consumers) to ensure citizens as well as consumers come out of the school system. Being a full participant as a citizen in a Representative Democracy needs to be recognized as having value V, and not just preparing people to be consumers for participating in the Market focused only on price P.
Recognize the value V contributed by teachers, health care works, first responders, social workers, garbage haulers, service workers of all kinds. It is essential to increase the price P to be more commensurate with the value V of said contributions, e.g., making for substantive increases in elementary school teacher pay, and everyone else who contribute in ways not easily measured in money terms.
Politicians need to again become citizens, and work to represent citizens, with the political system all about seeking the common ground found by being in empathy-with the other. Also, it is as citizens that the culture wars are turned into finding common ground, a widely shared other-interest across all heretofore warring groups, while still facilitating more narrowly defined other-interest as shared within smaller groups.
Citizens need to form 4-6 political parties which would facilitate, and actually it would require the shared other-interest formed through empathy be brought back into the political system. Said empathy-with people in the other party (each now much smaller) is essential to forming coalitions across multiple party lines, and getting things done. The 2-party system is guaranteed to only produce chaos, as ego-based self-interest drives such a system, and empathy plays essentially little to no role.
Details: On How Both The New Deal Order and The Neoliberal Order Failed, and the Need to Move Toward The Metaeconomic Order
For the story and argument leading to the List, go to the Details. The References are also listed at the end of the Details. The Details are about the length of a standard journal article, so, it will take some time to read it, but it is worth it! And, also see other items in the Blog, including Balancing Scroogism & Socialism, and finding Optimal Inequality in Income and Wealth. And, then, there is the Book, which pulls it all together! https://www.metaeconomics.info/post/just-in-time-for-xmas-presents