An extract from my soon to be published Alfred Deakin Research Institute Working Paper on American liberalism:
American liberalism has been shaped by both the crises and triumphs of capitalism. In the 1970s Democratic President Jimmy Carter like Grover Cleveland in the 1890s was unable to effectively respond to an economic crisis and thus encouraged the mass defection of working-class voters to the right. The 1930s provided the opposite example as the successful response of the Democrats to the Great Depression initiated a fundamental realignment. The establishment of the Federal Reserve was an effective response by Wilson to the panic of 1907 and contributed to Wilson’s re-election in 1916. The capitalist boom of the 1950s and 1960s underpinned the rapprochement between unions and business in the core industrial sector that sustained the liberal gains of the New Deal. The economic boom of the later 1990s contributed to Bill Clinton’s success and established in the mind of voters a connection between the Democrats and economic prosperity that powerfully advantaged Obama in 2008 as economic issues came to preoccupy voters. This was despite the fact that the roots of the panic of 2007 lay in the financialised and debt-fuelled capitalism that Clinton had celebrated.
By late 2011 the crisis of American capitalism, like those of the 1890s, 1930s and 1970s, had inspired a crisis of liberalism, but whether this crisis would result in renewal as in the 1930s or collapse as in the 1890s remained unclear. The resurgent Republicans echoed the themes of McKinley’s 1896 campaign, including advocacy of a deflationary monetary policy and accused the ‘anti-business’ Democrats of responsibility for the recession. Mitt Romney, the leading candidate for the 2012 Republican nomination, more directly represented corporate capitalism than almost any other past Republican nominee. Romney may have been personally distant from the evangelical conservatism of the Republican base but contrary to what theorists of corporate liberalism would have predicted he was untroubled to pledge allegiance to socially conservative values. As the euphoria of Obama’s election dissipated a renascent radical left, although still tiny, echoed the themes of the new left’s critic of liberalism. ‘Occupy Wall Street’ might presage the emergence of a new economic populism of the left.
Despite these trends it would be too early to write off either American liberalism or American capitalism. Even in the midst of the current severe recession an international study that tracked 10,000 firms in twenty countries across a decade identified American management as still the best in the world. The hyper-rationalisation and individualisation characteristic of late capitalist culture undercut the left’s hopes for collective agency but it also undercut popular support for the pietistic social conservatism of the Republicans. A year out from the 2012 Presidential election the American future was more contested and uncertain that at any time since the 1890s and 1930s.