Pro-Market Third Way Policies Caused Electoral Disaster

Stephanie L. Mudge

Sociologist Stephanie L. Mudge examines how and why center-left parties across the world swallowed the neoliberal gospel — only to demolish their own social base.

US president Bill Clinton greets British prime minister Tony Blair following his arrival to Belfast, September 3, 1998. (Barbara Kinney / White House Photograph Office via Wikimedia Commons)

Interview by
Daniel Denvir

The world we live in today was made possible by the neoliberalization of historically left parties. Why that happened is what sociologist Stephanie L. Mudge examines in her monumental book Leftism Reinvented: Western Parties From Socialism to Neoliberalism. Leftism Reinvented traces the long history of the UK’s Labour Party, the Swedish Social Democratic Party, the Social Democratic Party of Germany, and even our very own Democratic Party.

To understand why these parties became neoliberalized, however, she first examines how they were founded — in all cases but the Democratic Party — as thoroughly socialist parties, and how they made the switch from socialism to Keynesianism in the mid-twentieth century. What she found out might surprise you.

The changing position and role of party economic experts, she argues, was critical. And it proved critical again with the shift from Keynesianism to neoliberalism. Mudge writes that the power of these experts was destabilized by economic crises, which put reigning orthodoxies into sudden question. First, the gold standard–bound economic crises of the early twentieth century, which culminated in the Great Depression and the rise of fascism. And then, second, the oil shock–fueled stagflation crisis that dominated the 1970s. Each of these crises opened an interpretive battle that saw incumbent experts and their ideologies dethroned. First, the Marxists were displaced by the Keynesians. And then the Keynesians were displaced by a neoliberalized combination of finance experts, wonks, and strategist spin doctors.

Mudge argues that we should take very seriously the fact that purveyors of the Third Way, like Bill Clinton, Tony Blair, and Gerhard Schröder, never described themselves as neoliberal. She writes that there is a “tendency to present what should be a puzzle, namely, why people who oppose neoliberalism or have never heard of it might nevertheless act on the world in ways that conform with neoliberal thinking as a fact. Third-wayers are neoliberal, even if they say they’re not.”

Mudge is not saying that we should refrain from calling Third-Wayers names. What she argues is that we can only understand how neoliberalism became so hegemonic by looking at how it came to encompass the leaders of left parties who never, unlike many of their conservative opponents, formally embraced neoliberalism.

Neoliberalized left parties turned toward finance and away from labor, severed their connection with their base, and intensified neoliberal globalization, driving voter turnout down and boosting support for the far right. This is the world we live in today, a world where a new generation of leftists has found that neoliberalism has severed the very bonds that make left politics intelligible to people. Rebuilding those relationships will require incredibly deep organizing, something that we have found out we cannot reconstruct from scratch in a single election cycle.

For the Jacobin Radio podcast the Dig, Daniel Denvir interviewed Mudge about these arguments. This interview has been edited for length and clarity.

Left, Right, and Center

Daniel Denvir

You write, “Insofar as left parties are checks on plutocracy, they are also linchpins of democracy writ large.” Is this book that you wrote then not only the history of the neoliberalization and decline of left parties, but also a history of the rise of the far right?

Stephanie L. Mudge

So the short answer to the question you posed there is yes, it is. I do think that it’s both an account of the neoliberalization and decline of left parties and therefore the rise of the far right. And the reason for that has to do with the sort of specific historical role of left parties and democratic systems as the parties that at least make a claim to the representation of people who otherwise lack voice, lack power, lack resources. I don’t just mean their economic power — I mean also the sort of time and space and what we might call sort of cultural capital that allows people to participate meaningfully in democratic processes.

So left parties kind of hold out a special place as the parties that claim to be sort of representatives of people who otherwise wouldn’t necessarily have voice or would have more difficulty having a voice in democratic processes. It’s distinctive with respect to right parties, especially conservative parties, which aren’t necessarily built on the same kinds of claims.

And so what that means is, if you understand democracy to be a meaningful way to characterize a political system, then it’s not very meaningful if it’s only people who are the best resourced. And the wealthiest are the ones who actually have meaningful representation. If democracy requires that the disempowered and less resourced and otherwise marginalized or excluded populations also have meaningful representation, then you simply have to have left parties or something like them to have any kind of meaningful democratic system.

So the story of the neoliberalization of left parties, in shorthand, is the story of how left parties came to represent markets as their central constituencies, as opposed to their historical constituencies, including especially organized labor, but also working people in general and less powerful and less privileged people.

And so if you have left parties that kind of hold out the space and democratic systems for the representation of people who otherwise would lack it, if those entities start speaking first and foremost for the interests of markets, understood as these sort of unterritorial things that operate sort of out there, as opposed to speaking for the interests of constituencies, then what you have then is this big kind of void in democratic representation.

This is the reason that you see the rise of far-right parties originating in the same period as the rise of the Third Ways on the center left. So in the 1980s and 1990s that’s directly related to this kind of void created by the turn of left parties to the representation of markets instead of constituencies.

Daniel Denvir

You call American Democrats, the Swedish Social Democratic Party (SAP), the German Social Democratic Party (SPD), and the UK Labour Party “neoliberalized left parties.”

So what makes these left parties at all, since they are indeed neoliberalized, and since Third-Wayers explicitly define their politics as “beyond left and right”? What do we gain analytically by describing them as neoliberalized left parties rather than merely as parties that were once left that became right or center?

Stephanie L. Mudge

So my definition of left and right has to do with where they sit in the electoral landscape and their respective countries, regardless of the positions that they occupy. The way that I think about it is that within any particular national context over the course of the twentieth century, regardless of the sort of particular policy positions that left parties took, they were still understood as being main left parties of the major parties in the electoral system and in those countries’ public discourse.

And so in short, if you define left parties or center-left parties in terms of the sort of standard understanding of a European center-left or social democratic party — as it being, there’s a party on the one hand, and then there’s organized labor on the other, and there’s sort of twinned organizations that work together in the electoral system — then by that definition, it’s true that the United States never had a dominant socialist party or left party.

But if you define it in terms of a party where you have on the one hand a sort of party organization that cooperates with or at least claims to represent working people or organized labor on the one hand, then on the other hand makes investments in knowledge production, then you have a kind of infrastructure for intellectual production paired with the representation of working people and the organizations that represent working people. That kind of comes together in the form of a left party. Then the Democratic Party becomes left in the 1930s and 1940s, not because it has a cultural arm that’s invested in socialist knowledge production, but because it has a cultural arm that’s linked to the social sciences, among other things, and especially the deep connection that develops between the sort of New Deal liberal faction of the Democratic Party and Keynesian economics.

Daniel Denvir

To what extent is the lack of a socialist party in the United States in the late nineteenth and early twentieth centuries related to the United States not having a normal party system at all more generally?

Stephanie L. Mudge

This is grounded in this specific sort of history of Western European political development where parties and democratic institutions develop an opposition to the power of a monarchical or aristocratic state, as opposed to in the United States, which of course was at its founding meant to be a democratic political system.

In those two contexts, what you get in Europe and the parliamentary system are these sort of party organizations that are bureaucratic organizations that have an organizational existence and membership-based parties. They have a definite hierarchy. They have executive committees or top-level positions.

And those positions exist, whether or not the parties are in government. And it’s not the case of course, for American political parties, which were mass parties from the start, except one has to remember that the right to vote was much more restricted in the nineteenth and early twentieth centuries than it is now.

But in any case, they were mass parties from the start, but they were not centralized, bureaucratic organizations operating in a parliamentary system. They didn’t have definite bureaucratic structure. They’re kind of loose networks of factions when compared to their European counterparts, much more anchored on the local and state and regional level, as opposed to being national organizations.

And so given that, you’re right — American party organizations didn’t have an organizational capacity to invest in knowledge production, or indeed in the production of what I call party experts, because they weren’t these membership-based bureaucratic organizations that had this organizational capacity to, for example, establish their own theoretical journals, or their own party schools, which is what the SPD did in the early 1900s.

So they are entirely organizationally different kinds of animals. And I do think that that is an important part of the story of the absence of a left party or a socialist party in the United States, which again, the reference point for that has always been the European model, which has a certain organizational underpinning that just never existed in the American party system.

Party Theoreticians and Socialist Culture

Daniel Denvir

You argue that left parties were twice reinvented, first from socialist leftism to economistic leftism, and then from economistic leftism to neoliberalized leftism. And you argue that what was key in these shifts were changes in who party experts were and what party experts did. Why were such a small number of experts so important, and what makes it so that parties play such a key role in “the move from ideology to hegemony”?

Stephanie L. Mudge

My interest is less in the people themselves and more about what their trajectories into positions of influence inside party networks can tell us about the broader institutional forces that generated these reinventions.

So for instance, in the case of socialist leftism, which is my starting point in the European case, the institutional or historical conditions that are the basis out of which social democratic parties and labor parties emerge is a world in which there’s relatively low education levels. So not very many people have elite university education. The social sciences exist, especially economics, but they’re not the fully autonomous disciplines that they come to be by the mid-twentieth century. And so in that first transition that you mentioned from socialist to economistic leftism, what I emphasize is that the starting point for socialist leftism was this particular figure that I call the party theoretician.

And what I mean by that is in each of the cases that I look at in Western Europe, there’s a sort of figure, especially I focus on ministers of finance — or in the British case, chancellors of the exchequer. And what you find is that those folks don’t have specific training in economics. Many of them have certainly more education, more elite education than is true of the general population, but many of them don’t necessarily even have university training.

That’s the case, for instance, in the case of Philip Snowden in the UK. But they achieve status as intellectuals and as party intellectuals through journalism, and especially through journalistic activities that are connected to parties in some way. So the figures themselves are important in their own right, because they’re very prominent and powerful figures in the context of their respective parties.

But what’s interesting to me is: What are their conditions of possibility? What are the institutions and the institutional arrangements that make them possible, that create institutional pathways to the positions that they end up in social democratic parties on the one hand, but also the development of socialist journalist outlets, many of which were either dependent on party resources or were actually in-house activities operating through the party and funded through the party?

And so what I’m interested in, by following the figure of the party expert, is tracking the institutional transformations that drove these reinventions. So in the case of the party expert, one of the things that’s remarkable about them is that there are folks who have the title “economist” in their time, and they tend to be liberal — as in they’re connected to liberal parties. And so there’s opposition actually at that time between socialist or left party organizations and academic economics. With the transition to economistic leftism, the thing that’s underpinning that — the institutional transformation that’s underpinning that — is a newfound relationship that I characterize as an interdependence between academic economics and leftism and center-left parties. And this is true also at this point with the Democratic Party by the time you get into the 1940s and 1950s. That was simply nonexistent in the 1920s or before.

And so the figure of the expert is a vector or something, right? That gives me a way to kind of see what I characterize as an inside-out kind of analysis. By following their trajectory and placing them in context, we can discover the sort of institutional processes that drove these reinventions.

Daniel Denvir

Returning to the beginning of the story with these socialist theoreticians who played these key roles in socialist left parties, you write that they were far more oriented to the socialist parties than they were to the labor unions that formed those parties’ mass base. And then in fact it was through the socialist parties that these intellectuals played such a key role in making European labor unions socialist in the first place. You argue that it’s a common misperception that left parties emerged from labor: “Marx and Engels are partly to blame. They foster the notion that parties, socialist or not, were the ideological extensions of classes. Ignoring the conditions of his own existence, Marx viewed socialism as a refined, scientific expression of working-class experience. That is, a way of thinking grounded in class, but articulated by intellectuals.”

What did Marx miss, and how did he miss it by downplaying the role of intellectuals like himself, the very kind of obvious role played by him, by intellectuals who led the SPD, or the Fabians who shaped the British Labour Party? And why was it that journalism was this de facto profession for so many socialist leaders from Marx to Kautsky to Lenin?

Stephanie L. Mudge

I want to say first that my argument is not that the story of social democratic and labor party formation is not a story of the development of labor movements. My argument isn’t that that is incorrect in any way. I think that would actually be kind of a silly argument to make for anyone who knows the history of these parties. My argument is just that it’s not the whole story, right? When you read about the history of social democratic movements and social democratic parties, it’s common to emphasize the relationship with the labor movement for obvious historical reasons.

And the labor movement is treated as an actual set of organizations and people doing things and producing stuff. And then when there’s discussion of socialism, it gets treated as an ideology — as sort of a set of ideas, a way of thinking. So I want to first just kind of correct the record in terms of my argument, which is not that unions weren’t important, it was just that socialism wasn’t just a way of thinking. It was also a set of organizations and people doing stuff.

And so, also, I want to historicize it a little bit and point out that it couldn’t be taken for granted, therefore, that socialism would become the sort of intellectual — or the way Marx understood it, scientific — basis of the labor movement. That alliance had to be forged, and there was a lot of contention in that process.

There was nothing about the experience of being a wage laborer that necessarily led you to an analysis that Marx provides in Das Kapital. It’s just, you know, those were two different things. So Marx himself and intellectuals like him had to persuade labor movements that their particular line of analysis was indeed an analysis that represented their interests or was capable of speaking for them, and that took work and contention, and there were all kinds of rifts and oppositions about whether parties should be worker-led or whether parties should be intellectual-led.

This is a very old kind of tension. So if you look at it from Marx’s perspective, of course he’s going to argue that his perspective is an expression of the experience of working people.

Daniel Denvir

Marx was an inconsistent standpoint epistemologist, but aren’t we all?

Stephanie L. Mudge

Right. Exactly. We are. We all tend to kind of find ways of intellectualizing our positions in a way that legitimates those positions. And I don’t think Marx is any exception to that. So I think that downplaying it one could read it as sort of a tactical move. In other words, given the context that he was in — in the effort to form these parties that really only existed in his imagination at the time that he wrote the Communist Manifesto.

So that’s my answer to the question of why he downplayed it. On the question of journalism, it’s one of the many things in the book that as I was writing it, it was something I wasn’t planning on writing about it. It just became clear that that was the case — that journalism really was the organizational basis of the socialist intellectual arm or cultural arm of social democratic parties in their formation period from the 1860s to 1920s.

So the question of why journalism: I think there are a few different answers for that. One goes back to what I was saying before about an opposition between socialist intellectual production of you know, people like Marx, and the academy. So the developing social sciences, as I said before, are mainly allied — if they were allied with parties at all — with liberal parties. So part of what’s going on there, I think, is maybe even something similar to recent times: you have in Germany, for instance, a whole bunch of children of the middle class accessing higher education, nothing like the scale now, but it was increasing then. And then you have these sort of radical, highly educated, young intellectuals like Marx, who don’t have a place in the academy, whose positions are actually sort of opposed to the academy, who still need to make a living.

So you get the development of this radical print journalism, I think, partly because you have these new cadres of radical intellectuals who are politically involved, who are trained like Marx in philosophy, among other things, and who don’t have an outlet in the academy. And the other thing that is probably an important part of that story is antisemitism.

Also there’s the important role of political repression. So, for instance, in the German case, there were the anti-socialist laws from I think about 1878 to 1890 that were issued by the Prussian government, and part of what the Prussian government did as an explicit part of that effort was to try to demolish the apparatus of intellectual production that the Social Democratic Party had developed.

So they went in and took all of the party’s printing presses and things like that to make sure that it couldn’t continue in its educational and cultural activities. And then what happens in the wake of that repression is increasing radicalism, and you get these networks of international exiles pushed underground, and a little bit of sponsorship by various wealthy donors.

And then they established things like new socialist theoretical journals that are more explicitly Marxian. And it’s actually in that context that the Erfurt Program — the first explicitly Marxian, in a way that Marx approved of, party program — of the SPD is written.

You know, the other thing is that I think we tend now to see the past in terms of the present. When we say economics now, we think of a certain set of established academic disciplines, and we tend to kind of extend that understanding of what economics was back in time. But that’s not actually the case. In the 1910s and 1920s, economics and the social sciences weren’t really well-developed autonomous professions the way they are now. The social sciences were around, but in general they weren’t so well developed, and they weren’t so influential in politics as they were in later decades.

Daniel Denvir

Another piece of context that I found really interesting is that while liberals were obviously the socialists’ rivals, the socialist intellectuals of that era were waging their struggle for working-class and union support in a world of “clubs, lecturing societies, and journalism, often seeded by liberal elites and associations, which then served as sites of representative struggle between socialists and liberals.”

Stephanie L. Mudge

Yeah, that also emerges as one of these things that probably wouldn’t be a discovery for historians of socialism, but was a discovery for me as I was working out the book. When you look at, for instance, the original development of the German Social Democratic Party or the Swedish Social Democratic Party, what you find is that they are going to these organizations established by liberal parties and liberal activists — liberal here not meaning liberal in the sort of American New Deal sense, but liberal in this sort of classic European sense of advocating for the expansion of democratic voting rights.

Before social democratic parties came along, liberals were involved in the same kind of socialization efforts that figures like Marx and his compatriots also engaged in, which was to try to educate working people to think in a liberal way. And so one of the things that extended out of that was the establishment of all kinds of educational associations and societies and book clubs and things like that that were meant to be talk shops in which liberal politicians and activists could engage and try to educate working people who wouldn’t otherwise have much education.

Daniel Denvir

This is prompted by liberal elite concern over the what was thought of as the social question of the time: these new dilemmas posed by the rise of industrial capitalism.

Stephanie L. Mudge

Exactly. So there’s a lot of concern about the social consequences of those developments, and the liberal solution to that was education. You know, “We have to educate workers so that they can navigate this new world and improve their lot and so that they can also become meaningful participants in the political process.”

Daniel Denvir

Sounds familiar.

Stephanie L. Mudge

Yep. Right. And so they create these organizations, and then they would invite someone like August Bebel to come in and give a lecture, and then they would come in and say, “Actually this whole liberalism thing is a lie.” And so it’s really socialism or specifically Marxian socialism that, they would say, gives you a better way of thinking about the world and understanding your experience. There’s almost an invasion of some of these organizations established by liberal parties. And then in the UK one of the expressions of that process you can also see is with the decline of the Liberal Party and the rise of the Labour Party in its place.

Daniel Denvir

Was it because of the important role played by these cosmopolitan bohemian intellectuals that parties like the SPD emphasized intellectualism and culture so much? They created, you write, “a total environment for their members, an entire socialist subculture.” It’s just really remarkable, because I don’t think intellectualism has ever again been so pervasive in European left parties.

Stephanie L. Mudge

Yeah, this is something that’s just endlessly fascinating to me. The way I think about it is sort of grounded in a certain understanding of political parties as forming for lots of reasons, but one of them is to pursue political power, to pursue political office. And so if we keep in mind that social democratic parties in Europe form before that was possible, or they started forming before there was enough of an extension of the voting rights such that it was possible for them to do that, they were limited in terms of what was possible in terms of power-seeking and office-seeking. And so what they invested in instead was cultivating socialist voters, right? Cultivating a socialist culture. And we should remember also that this is before widespread mass education. It’s before the development of the modern welfare state. And so one of the ways to cultivate a subculture, or to socialize people, is to provide de facto educational institutions and to provide de facto welfarist institutions. And it was a very explicit strategy. So that way when electoral systems made it possible for them to seek office, they already had a socialized mass movement that thought in socialist frames of reference.

It’s an incredible achievement if you think about it. If you go to Europe or you go to some of the libraries of socialist, social democratic parties, what you see is that it really is a lifestyle. It’s a whole way of living. There was an idea of how you raised a family in a socialist way and there were calendars so that you could think of time and the passage of time in a socialist frame of reference. So it was much further than just questions of this or that economic policy or working hours or whatever. It was a lifestyle. It was a way of thinking, and it was explicitly cultivated to be that. And I really think that was foundational to the durability of social democratic politics for the whole twentieth century.

Gold-Standard Orthodoxy and the Keynesian Shift

Daniel Denvir

Where the story got really surprising for me and — as a leftist, rather sad — is that you write that the downfall of socialist party theoreticians resulted from their odd dedication to classical orthodox economics and staunch opposition to deficit spending. And it really turns our contemporary understandings of Left and Right on their head, since Marxists at the time were balanced-budget obsessives, fiscal conservatives who opposed heterodox calls to deficit spend that came from inside and outside of these parties. What was the economic orthodoxy in the late nineteenth and early twentieth centuries? And why were Marxists of all people so wedded to it, even as it created a massive crisis for left parties with economic conditions becoming impossible?

Stephanie L. Mudge

So the classical orthodoxies at the turn of the twentieth century were very similar to what we might call fiscal conservatism now. If things start taking a downturn, then you want to consolidate your finances. So you either cut spending, or you raise taxes, or some combination of those two things. It’s what we might now call austerity. It’s an entirely different sort of economic system, because the gold-standard system is different than what we have now.

But the logic that underpinned the gold-standard order was very similar to what we would now understand as fiscally conservative, a sort of austerity politics in the context of a crisis or recession. And it is really fascinating that when you look at figures like Rudolf Hilferding, who was broadly recognized as a premier Marxian intellectual or Marxian economist, when they’re confronted with the crises of the late 1920s and 1930s, they go back to the same fiscal orthodoxies that we recognize now.

I think there’s a lot going on in there. One of them is that by that time, the parties that they are a part of are parties of government. And to break with gold-standard orthodoxies meant potentially also breaking with the gold standard itself, which was just outside the bounds of common sense.

It was extremely radical. It was like looking over a cliff and not knowing what was on the other side; you didn’t really know what was there. And so if you’re a party of government where you’re actually in charge, as opposed to a sort of party of agitation and socialization, you don’t want to be the person who sinks the ship.

So it is remarkable that in the late 1920s and early 1930s, Hilferding (a Marxian theoretician in Germany), Fredrik Thorsson in Sweden (who is not a Marxian intellectual but is certainly a social democratic intellectual and the Swedish minister of finance), and Philip Snowden in the UK are all fiscal conservatives.

And so I think that you have to relate that to their power positions as no longer socialist agitators, but as actual figures responsible for financial and economic questions in government. Nobody breaks with that orthodoxy until the collapse of the gold standard. And the field of center-left parties and social democratic governments, the first party that breaks with those orthodoxies of the cases that I look at is the Swedish Social Democrats, and the explanation for that is what some sociologists might call the opening up of a vacancy chain. Essentially, the party leadership — both the leading party figure, Thorsson, who is the default minister of finance, and the head of the party, Hjalmar Branting — both died in 1925.

So that creates a set of vacancies that the next generation moves into. And one of the figures who moves into that vacancy into the position of minister of finance is Ernst Wigforss, who’s not trained as an economist, but who has a university education and moves in university-educated circles, including circles that include economists. So, he’s kind of versed on what’s then called “the new economics,” which in Sweden is its own sort of organic line of economic thinking that looks a lot like Keynesianism, but Keynes comes later. This becomes a new orthodoxy, which is that what you do in a recession is not to either raise taxes or cut spending or both, but what you do in a recession is you spend, you borrow to spend and then when you kick-start economic growth or you restore economic growth, you reap the benefits.

Daniel Denvir

In case this isn’t clear to all listeners, the commitment to orthodoxy in the case of Hilferding in Germany turned out to be world-historically disastrous.

Stephanie L. Mudge

Yes, and I don’t think we can put that entirely just on Hilferding’s shoulders. He’s kind of symptomatic of a broader problem. So the options for a socialist or social democratic party, if they had these, these sort of orthodox commitments, they’re committed to a way of thinking about the economy that essentially ties their hands so that they cannot respond to the demands of their constituencies.

And it is disastrous. It’s disastrous also in the UK. It’s disastrous for the Labour Party as well. And it creates all kinds of rifts between the union arm and party leadership, because the party leadership essentially digs in, and in some cases is unwilling to even embrace claims that unemployment was a large-scale problem no matter how much evidence they had to the contrary presented to them by their labor arms. So it was completely disastrous, and in the Swedish case, historically the way Thorsson handled that was he just said, “Well, we just have to step down. You know, social democratic parties can’t govern in times like this in ways that are consistent with our principles.”

Daniel Denvir


Stephanie L. Mudge

Yeah, so when Keynesianism comes along, it’s sort of new economic orthodoxy. It’s absolutely revolutionary. It unties the hands of social democratic parties such that in bad times they can govern in ways that are consistent with social democratic principles.

Daniel Denvir

And you describe this in theoretical terms as a Polanyian moment in the 1920s that put market and human society into a major contradiction.

Stephanie L. Mudge

Right. Yeah. So that’s a reference to the political economist, amongst other things, Karl Polanyi, who talked about the tensions of the gold-standard order and has this famous analysis in this book, The Great Transformation, of how that leads to near civilizational collapse. So I call it a Polanyian moment in his spirit. There’s this thing that emerges in the early 1930s where it seems to politicians at the time, especially social democratic or, you know, labor politicians, that you can either save the gold-standard order or you can respond to the democratic demands of your constituencies, but you can’t do both. And so they had to make a decision. And until a younger generation economists who are trained in statistical economics and what would later be called Keynesianism came along, the understanding was that it was not an option to sacrifice the gold-standard order.

Daniel Denvir

You write “All four parties, American Democrats included, converged on a shared language that was non-socialist, strikingly optimistic, and distinctly economistic.” And indeed, I think as you noted earlier, the Democrats’ Keynesian turn was what made them into a left party for the first time. How did this bedrock understanding that the economy could be scientifically managed to ensure full employment add up to something that you call “the Keynesian ethic,” and what role did the Keynesian economic theoretician play within reinvented left parties as a result?

Stephanie L. Mudge

So in the book, I typify experts who sort of bear out these different kinds of left politics across the three periods: the economists, the sort of typical expert that I try to characterize as a dominant figure by the time you get to the 1950s and early 1960s. And one of the things that I note about them is that they had a certain way of thinking about the economy as an engine, something that could overheat. Or you could hit the brakes. Something like this engine that requires engineers or mechanics. People, in other words, required management according to the priorities of government. Then this way of thinking about the economy was carried by the person of the economist theoretician.

What I emphasize about their institutional location is that, especially in contrast with the party theoretician, they have one foot in politics — and not just in government, but specifically in political parties — and the other foot in the academy. So they’re academics and recognized as scientific economists on the one hand, and on the other hand, they’re also deeply invested in the programmatic development and policymaking decisions of social democratic and center-left parties, and by extension, center-left and social democratic governments.

And so the Keynesian ethic refers to a kind of way of seeing one’s role in the political world or in political life in a way that’s consistent with this position in between the academy and parties — the navigation of that line. So in other words, the Keynesian ethic was a way of seeing one’s professional role in public life as being the job of bringing what we know about the science of economic management into political decision-making, but not in a way that ties the hands of governments or politicians — rather in a way that allows them to weigh strategic trade-offs and make compromises in ways that still allow them to respond to their constituencies.

Daniel Denvir

Did left parties’ adoption of Keynesianism and the rise of the role of the economist theoretician constitute a move to the right and away from socialism? And, if so, why, given that the Great Depression wasn’t so much a failure of socialism as of the gold standard?

Stephanie L. Mudge

So I think it was a departure from socialism in a specific sense of being a rejection of socialist language and frames of reference. We’re not going to talk about capital and the problem of ownership anymore, right? Our political language is not going to be formulated using the language of Marx or of socialist theory. The language we’re going to use when we talk about the economy is going to be a technical Keynesian economic language.

And so it’s why it was characterized by some people at the time as a so-called end of ideology, where we’re socialist Marxists — even though Marx and people after him understood it as a science, Marxism was characterized as ideology as opposed to Keynesian economics, which wasn’t ideology.

It was technical. So it was certainly a move away from socialism in that specific sense. And it generated discontent. The most famous example of that is probably the Bad Godesberg Program in Germany.

Daniel Denvir

Of 1959.

Stephanie L. Mudge

Right, exactly. Which was characterized by party discontents at the time as the replacement of one ideology with a new one.

Daniel Denvir

Instead of socialist goals, “as much competition as possible. So much planning as necessary.”

Stephanie L. Mudge

Part of the complaint at the time of the move toward Keynesianism is that it wasn’t so much grounded in a shared way of speaking anymore. It was an elite way of speaking. It was an academic way of speaking. It was a technical and exclusive way of speaking. So that said — especially if you compare it to now — the ways in which, through social democratic government or in the United States in the John F. Kennedy years, for instance, the way in which the language of technical Keynesian economics becomes part of a general political and popular discourse is really striking. One of the things that I emphasize about the Keynesian economist theoretician is that because they had to play this dual role, they were kind of strategists and public speakers.

They weren’t just economists, and they weren’t just policymakers. For instance, Walter Heller and Karl Schiller, his German counterpart, were famous for their direct communications with the public and also the willingness to communicate directly with and work directly with the leadership of organized labor.

So I think, to the specific answer to your question, that absolutely the move to Keynesianism was a move away from socialism, especially in that specific sense of a kind of conscious “We’re going to reject one theoretical language and replace it with another.” But it also made it possible for economists and politicians at that time to do things that weren’t possible for people who were party theoreticians, for instance, who were kind of really grounded in the party.

So it gave them a certain latitude, a certain freedom to do things on the basis of scientific and technical claims instead of the basis of just partisanship or just, you know, because they want to please one constituency and not another.

From Keynesianism to Neoliberalism

Daniel Denvir

It’s remarkable that the same thing happens in all four countries that you’re looking at, because the conditions in each country are in some ways very particular, like in Germany, where the economist-theoretician is destroyed as a role under the Third Reich. And you have the economics that emerges from the Nazi era as this highly scientized discipline split in two directions: Keynesianism, on the one hand, and ordoliberalism, on the other hand (neoliberalism’s German cousin, to put it simplistically). And the Christian Democratic Party, or CDU, integrates with ordoliberalism and the SPD with Keynesianism. How is it that, given how different the conditions are, particularly in Germany, but really in every country, that the same thing is happening at around the same time?

Stephanie L. Mudge

So that’s where my argument about the novelty of the interdependence of academic economics and partisan politics — not governments and not government agencies, but party organizations — becomes really important. My argument there in the book is that underpinning the condition of possibility for the existence of the economist-theoretician is a novel, organizational, networked relationship between social democratic labor parties and the Democratic Party in the United States and academic economics, which, remember, in the European case — if you look at the 1920s — that relationship is, if anything, oppositional.

There’s a specific institutional development that’s common to all the cases that I deal with, which is this emergent interconnection between academic economics departments and academic economists and center-left political parties, social democratic parties, labor parties, and the US Democratic Party. So that’s really, to me, the institutional underpinning of the emergence of this very similar figure.

One of the things I do in the book is compare the way that Karl Schiller in Germany characterizes the role of the economist in politics and public life with how Walter Heller, in a very different institutional context, characterizes his role, and it’s strikingly similar. They talk about navigating the line between science and politics, and they talk about the necessity of informing recent decision-making and allowing politicians still the freedom to make decisions about strategic trade-offs.

They talk about things in a very similar way, and my argument in the book is that that reflects their very similar institutional position, despite the fact that the countries are very different, the parties are very different, and the history of the parties are very different. The common factor underlying that is this relationship where instead of social democratic parties producing their intellectuals in house, they’re instead more and more connected to the academy, to the academic social sciences, and specifically to economics. So part of what I emphasize there is that there’s a development over time. In the 1920s as the social democratic parties are consolidating as powerful parties that rotate in and out of government, they also start establishing a presence on university campuses, and they start establishing clubs and ways of recruiting new people, young cohorts of leadership. And so part of what happens there is that as economics departments and social sciences are also developing, as they had developed this presence, they’re also reaching into those departments.

With all of those sort of crises and instabilities of the 1930s, the younger generation of economists starts becoming concerned about problems of unemployment, problems of poverty, and things like that that aren’t really concerns of their classical liberal mentors. So the development of those ties is such that economics departments produce economists who then track directly into the leadership of political parties, making it possible for these very similar kinds of figures to become dominant figures in their respective parties, despite other kinds of institutional differences.

Daniel Denvir

One reason that this dynamic was international in the way that it was, you write, is that Keynesianism became the ideology for managing this newly conceived world economy made up of national economies. This was a new idea at the time that emerged after World War II amid decolonization and the rise of the Cold War.

You write, “The Keynesian era was significant in part because an academic profession generated guiding metaphors, technical devices, and terminological shortcuts that helped to organize a whole era of modern Western history. In this sense, postwar economics was not merely a technology of government or a tool of policymakers. It was constitutive of political life and conceptions of what it meant to govern.”

Was it this new world order of the time that made the first reinvention of leftism an international one?

Stephanie L. Mudge

Yeah. So there what I’m talking about is that even though we might think of the economy in sort of transhistorical terms, actually the general commonsense or ontological understandings of what the “economic” is have changed pretty dramatically over time, and that’s not arbitrary or random. It’s linked to the organization of political power, basically.

And so the liberal orthodoxies of the gold-standard period made sense in the context of a period of colonial empire. And then with the decline of colonial empires it’s only in that world that it starts to make sense to think of economies as specifically national engines, as specifically national units. And the thing that comes along with that is a capacity to characterize national economies statistically. So you had to have things like national accounts, which only really came into existence in the wartime period. Also the technical ability to describe the economy in a statistical way and describe all the economies of the world as national things in statistical units — that only makes sense in a context where the dominant political form is a nation-state. In other words, there’s an ontological argument in the book where the characterization of the gold-standard years of the economic world in terms of capitalism, that’s a different kind of thing than characterizing the world in terms of a set of national economies that are like engines that can be manipulated. And that is very different from the thing that emerges in the 1980s and 1990s, where the economic world is conceived in terms of markets that are increasingly nonterritorial, not as connected to any particular national boundary, but are these global things that exist out there.

Daniel Denvir

And that whole period has been described as “the end of ideology.” And for sure, that’s how it was dressed up and portrayed. But you write that that was just a reflection of how dominant the ideology had become. And indeed, after these parties all take their neoliberal turns, it was Keynesianism that was tarred as a rigid ideological orthodoxy. And suddenly their partisan attachments become a liability.

In retrospect, why was it that the height of Keynesianism, the height of the dominance of the economist-theoretician, why in retrospect does that turn out to have been a moment of such great vulnerability?

Stephanie L. Mudge

There’s this constant tension that underpins the story of the book, which is between that which is characterized as ideology and that which is characterized as science.

And ideology in that framing is, by definition, not science. And it often means “partisan.” It’s linked to the interests of a particular group or a particular movement or a particular side of the political fence. That flexibility that I was describing before — that the economist-theoretician had to put on their hat as a scientific economist and therefore be heard as someone who wasn’t just speaking in a partisan way — was necessary for their existence, for their ability to do what they did.

It was really important: as I referred to earlier where I compare Schiller and Heller, where they both talk about how important it is that they have the backing of a consensual scientific profession, that makes it possible. But then if you look at their actual location in the world, what you see is that they were partisan. They were deeply invested in the fortunes of the political parties to which they were connected. Schiller eventually breaks with the SPD, but before that, they’re clearly partisan actors. Yet, they are able to act like bearers of objective economic science in public life.

And so one of the stories I try to tell is that — both in the political world and in the academic world — there were discontents. There were people who didn’t like this marriage of Keynesian economics to, specifically, the parties and governments of the center-left — people who understood that as a dilution or a threat to the scientific standing of the profession as the pursuit of discovery of economic and scientific truths about the world. So there’s an opposition that develops.

Now I’ll speak more specifically about the American case that develops between the Keynesian economists who are doing this kind of moving in between politics and government, specifically Democratic governments and Democratic Party politics and the academy. There’s an opposition between that and economists who are strictly academic economists — and here the story of the Chicago School and people like Milton Friedman is really important — who see that as a sort of socialist economics in disguise. So there’s a marriage that I’ve been talking about, or interdependence between Keynesian economics and partisan politics.

It creates these kind of fractures in economics, and then also in politics (and this is very clear, for instance, in how Margaret Thatcher handles things when she comes into government), where Keynesianism is recognized by the political right as an economics of the Left. So Thatcher comes in and purges the government of Keynesian economists who have been brought in, in early years, especially by the Harold Wilson governments.

Daniel Denvir

And because of this interdependence that’s been established by Keynesians between economics and left parties, ironically, that same interdependence lays the groundwork for neoliberalism to transform both economics and left parties.

Stephanie L. Mudge

Right. It makes it possible. So one of the ways I explain this is that, look, in the 1910s or in the 1920s, it didn’t matter what was happening in economics for left parties.

The two worlds were not connected in any meaningful way. But by the time you get this interdependence, then it starts to matter a whole lot what’s going on in economics. Because of this fact of interdependence, you get, in the American academy, instead of that consensual scientific profession that Heller describes, instead it’s a fractured profession where eventually, under the influence of Chicago School especially, you get a new kind of dominant scientific economics that specifically casts Keynesian economists like Heller as not scientific economists.

Then it’s created a dynamic that doesn’t just change right politics — and we know that Friedman was an adviser to Nixon and all of that — but it also changes the whole kind of intellectual infrastructure of left politics as well, of left parties. Where if then, when you went to appoint the economist to your Council of Economic Advisers or whatever, you went to appoint the ones with the most intellectual credentials, the most academic prestige. They have to have academic recognition.

So if Keynesian economics becomes tarred and feathered as a nonacademic or nonscientific version of economics that’s just outdated — there’s this new economics in its place all about the science of markets — then you’re going to get those economists in left governments just like you had economists in left governments in the 1950s and 1960s, but they’re going to see the world in a very different way.

Daniel Denvir

It was the “neoliberal ethic,” you write, that was at least as important as neoliberal economics. What was this neoliberal ethic, and why did the neoliberals’ ethical challenge prove so damaging to Keynesianism’s standing and to the standing and role of a very particular sort of Keynesian economist that you called an “economist-theoretician”?

Stephanie L. Mudge

So just like with the “Keynesian ethic,” the reason I use “ethic” to refer to the neoliberal period is because, again, I’m talking about the understandings of party experts — and at this point specifically economists — about what their role is in public life. So in the same way that for a Keynesian economist, you conceive of the economy as this national thing that can and should be manipulated and driven, if you will, in a way that allows left parties to govern according to their priorities, the imagined neoliberal imagination of the market is that it is this thing out there, and it operates according to its own natural laws, right? So it’s like the sun. It’s this thing out there, and you don’t manipulate it and you can’t. And if you try to, it’s probably going to backfire. That’s a very different way of thinking about the economic world. And the implication of that is that the economist’s job in public life is to leave room for markets to operate freely.

So instead of their job being well, “We inform political and policy decision-making with good scientific economic analysis and we offer trade-offs,” instead their job is to just stop politics and policy from interfering in the workings of the market, because that’s the only thing that that will produce the best economic results.

That’s a very different conception of one’s role in public life, and so I call it a “neoliberal ethic” because my argument here isn’t that it’s because of the policies they espouse, or what they actually do. That’s a little bit of a distortion. It only works if you’re willing to ignore what they actually say about themselves. And it sets aside a really important question, which is: How can you have people who understand themselves as, in the American case, working in this tradition of neutral liberalism, or in the Swedish case, social democratic political actors who explicitly oppose the logic of neoliberalism — which is especially associated with the governments of Thatcher and Reagan — and yet still advance policies that are all about freeing up international capital and sacrificing wages in order to increase profits and all of these things that are totally consistent with the neoliberal understanding of the world? How do you explain that?

And so my argument about these new kinds of economists is that many of them are social democratic in the European context or Labour economists in the British context or understand themselves as liberal leaning in the American context. But they see the economic world in terms of these deterritorialized markets. And the best thing that they can do in public life is set those markets free and make other policies conform to the demands of markets.

So they understand their role in life is becoming a limiting role. Their job is to limit the interference of politics in the workings of markets. And so the neoliberal ethic describes their way of seeing the world and the way in which that translates into a certain understanding of their professional role in public life, which is different from calling them neoliberals, which does have this problem of distorting or ignoring what they say about themselves.

Daniel Denvir

You’re right that there’s “a tendency to present what should be a puzzle, namely why people who oppose neoliberalism or have never heard of it might nevertheless act on the world in ways that conform with neoliberal thinking as a fact. Third-Wayers are neoliberal, even if they say they’re not.”

Stephanie L. Mudge

So there it’s grounded in certain epistemological commitments, which have to do with the conviction that we should take first-person accounts, actors’ own accounts of their motivations and how they see things and why they did things as not necessarily objective truth, but as their truth, which I think is debatable in the context of political speech, because political speech is its own separate thing. But I do think for a question like this (a question that’s so thorny because the question of neoliberalism is wrapped up with all kinds of politics, with political positions in ways that are totally inseparable), if academics doing analyses of public life or political life or of neoliberalism don’t take the first-person accounts of actors into account, what they end up doing is engaging in what the sociologist Pierre Bourdieu characterizes as “the logic of the trial.” They end up participating in this political game of blaming as opposed to explaining.

So in the book, when I talk about figures like Larry Summers, what I’m trying to do there is situate him and people like him of his generation with some similar institutional positions, situate them in time and place and ask: What is it about the way they saw the world or their experience with the world that made this make sense to them, that they could say, “I’m progressive or I’m a Democrat or I’m a social democrat and also I think we should set markets free because that’s all we can do”?

Daniel Denvir

The key context for this turn is the 1970s economic crises, particularly stagflation, which combined high unemployment and high inflation and so, seemingly — especially if you ignore the role of the oil shock in the whole thing — defied the rules of Keynesianism. But you write, “The collapse of Keynesianism did not simply present itself as the self-evident consequence of inflation troubles. It emerged from a series of interpretive struggles in the context of left party economics’ interdependence.”

What was the stagflation crisis and how did theretofore marginal neoliberals, along with other opponents of Keynesianism (because all of Keynesianism’s opponents, you emphasize, were not neoliberals), win these interrelated struggles over interpreting the crisis?

Stephanie L. Mudge

Yeah, so the story of stagflation is really interesting. It’s a term that emerges in the 1960s, actually, in the British context as a way of characterizing an economic moment that simply made no sense according to Keynesian logic. It was an economic moment in which you get increasing rates of inflation at the same time as increasing rates of unemployment. And the Keynesian logic was that if you had one, you couldn’t have the other. That was kind of understood as the logic of how the economic world worked. And in the 1960s, before the oil shocks, a lot of the debate about stagflation has to do partly with the overinvolvement of Keynesian economists in government — in the British case, especially in Labour governments — and it also has to do, especially in the American case, with a lot of debate over what they called “wage push inflation.” Basically, organized labor was too powerful — workers were too powerful, and they were pushing wages too high.

So in the 1970s, it takes on a very different tone, because you get the oil price shocks. And what that does is it kicks up prices, and you get a new period of what was called stagflation, characterized by this dual problem of rising inflation rates and rising rates of unemployment. And then if you look at the debates going on in economics, especially in American economics at this time, it’s really interesting because it’s characterized by certain academic economists saying, “Well, what this means is that Keynesianism was always wrong. It was always a faulty science.” Which means that if you do things in a Keynesian way as an economist, if you cling to this way of thinking, you’re no longer a scientific economist. So in other words, instead of it being read, as it was in many political circles, as a problem having to do with — in the American case — dependence on oil in the Middle East, or the general problem of energy dependencies, inside economics, it was read as a reason to dismiss Keynesian economics, and especially this idea of a trade-off and certain understandings of the role of expectations.

What you get then is a discrediting of Keynesian economists in public life — not just by the political right, but also by academic economists, who were not all Milton Friedmanites, who were not all economists who are allied with right parties or with right political actors. There were also economists who understood themselves to be Democratic progressives. So it isn’t that stagflation just kind of walks in the room and everybody, you know, is like, “Clearly Keynesianism is wrong. And we’re going to have to put Paul Volcker in the Fed and let him jack up interest rates.” It wasn’t nearly that smooth or obvious.

There were interpretive debates over what it meant. There were people in the Jimmy Carter administration, like the secretary of labor and other folks, who were saying, “Look, this is an energy problem. This has to do with the problem of oil dependence. And that’s where the problem is. We know why prices are going up.” And the response to that, including in the Nixon years, was wage and price controls. But in the Carter administration, there were figures who complained about this in their exit interviews, who said, “We kind of did wage and price controls, sort of, except they weren’t obligatory. We didn’t require them. We just said, ‘This would be nice.’ And then we never backed that up.”

So they didn’t employ the Keynesian solutions that even Nixon employed. Carter accepts the diagnosis that the problem is something to be resolved by essentially appointing Volcker to the Fed. My argument is that stagflation wasn’t just this self-evident thing. It was something that was a matter of interpretive contention. And there was the economists’ interpretation, or some economists’ interpretation that it was a failure of Keynesian economics and Keynesian economic science. But there were other competing interpretations that had nothing to do with that, that this is obviously about the price of oil. So the way that it gets interpreted as a reason to reconfigure economics and rework the orthodoxies of academic economics is a contingent historical thing that for reasons we’ve been talking about has incredible consequences for the dominant ways of economic thinking inside left and center-left circles.

Daniel Denvir

One thing that’s important here is that I think we tend to think of neoliberalized leftists like Clinton and Tony Blair as having followed right-wing neoliberal governments like Thatcher and Reagan, who kind of invent neoliberal governance, and then neoliberalized Democrats then ratify it, making it hegemonic. But Carter’s interest rate hike, when he puts Volcker in charge of the Fed, which so immiserated American workers, of course preceded Reagan and helped make sure that Carter would lose to Reagan. And in the UK case, Labour leader James Callaghan ended up alienating unionized workers and repudiating his party’s own economic theories ahead of Thatcher’s rise to power. And so you don’t call people like Bill Clinton or Tony Blair “neoliberals,” but instead more neoliberalized leftists. Why is that distinction important given that neoliberal colloquially has very much come to mean precisely figures like Clinton and Blair? What does understanding them as bearers of the neoliberal ethic reveal that is obscured when we just call them neoliberals?

Stephanie L. Mudge

To me, the difference is in whether your aim is to engage in the politics of Third-Wayism. That is, Third-Wayism, both the Clinton version and the Blair version and its various other versions in other places, all kicked up in Labour, social democratic, or — in the American context — liberal circles, the question of whether it was a break or a betrayal.

And you see that in the academic literature as well, this question of betrayal of principles or history or constituencies. And those questions are important, but to me those questions are different from the historical explanatory question of what was going on and why. So in other words, on the one hand, one has to acknowledge that the Third Way has adopted positions and policies that had a neoliberal flavor — that they spoke in terms of the market, that they spoke about the market as a dominant force that couldn’t be managed or manipulated. They would sometimes talk about the market and sometimes talk about globalization as a force bearing down on us that had to be adapted to. One should ask why they adopted those kinds of positions at the same time that they were also expressing their own anti-neoliberal or anti-neoconservative positions.

So that’s not the same thing as Thatcher announcing that Hayek had defined the new philosophy of Tory conservatism or Reagan giving Milton Friedman pride of place and the Presidential Medal of Freedom. That’s different. What you get on the center-left side or on the Third Way side is an adoption of some of what we’d recognize now as pro-market neoliberal kinds of positions, but also an insistence that they’re working in the tradition of their parties and in center-left traditions in their various countries.

The reason I think the distinction between calling someone a neoliberal versus talking about neoliberalized politics is important is because I think if we want to explain it, if we understand why it happened, then we can’t just substitute a label for the complexity of the actual politics underlying it, including the complexity of the perspectives of the people we’re talking about.

In other words, I think it’s perfectly fair to call Reagan and Thatcher neoliberal politicians for good historical reasons. But I don’t think that the same rationale holds for figures like Blair and Clinton. And to me, if we want to understand this historically in a way that might help us move things forward, then we need to address the explanatory question. We need to acknowledge the differences and we need to understand this disjuncture between what leading figures associated with the Third Way said about themselves and what they actually did. We need to understand how it made sense to them, in other words, that they could say — as far as I or anyone else as an outsider knows, with sincerity — that you could be a social democrat or a Labour politician, or Clinton would kind of move in between calling himself “liberal” and “progressive,” and also adopt pro-market policies that clearly didn’t work in the interest of many of their traditional constituencies. Even if they said they did, and still understand themselves to be doing something consistent, coherent.

The Transformation of the US Democratic Party

Daniel Denvir

Your book is about four parties in four countries, but I want to drill down a bit more into the neoliberalism of our very own Democrats. The neoliberal Democrats, aka “the New Democrats,” were organized in a group called the Democratic Leadership Council (DLC), and they rose to power alongside Bill Clinton. They learned lessons, you write, from the Carter experience, certainly not the lessons I would have learned. What did they determine to be Democrats’ problem? And why did they believe that the solution lay in this voter base that they called “the mainstream”?

Stephanie L. Mudge

One of the things that I do to try to carve a path through that trajectory is I look especially at one of the founding figures of DLC, Al From.

The DLC was established in 1985. Al From had been in the world of Democratic aides and advisers in congress and connected to various federal agencies for a while. One of those involvements had been working on inflation in the Carter years, and From tells his own story in various venues. He’s told the story of the experience with inflation, and a few things about it stand out to me.

One is that he saw inflation and the Democrats’ inability to deal with the problem as a central cause of the decline of middle-class or mainstream support for the Democratic Party. Essentially it was a failure. And the other thing that you see in his accounts and those of some other people around him is a frustration with the ability of economists in the Carter White House to deal with the problem. And that’s a frustration you see not only coming from Al From, but also from other people in the Carter White House.

People like Stuart Eizenstat, Carter’s labor secretary Ray Marshall, and Carter himself were talking about, “Well, we went to economists to ask about what to do about macroeconomic problems,” and Carter says, “You ask five economists, and they give you five different answers.” And so what they’re referring to there is a fractiousness within economics that I’ve described as an important shift.

One of the things that’s going on there, and you can see this trajectory, is a disaffection with economists, a move away from them in a new search for ways of thinking or ways of developing policy positions or strategizing about policy solutions that would be both effective and politically sensitive (in other words, sensitive to the strategic concerns of the Democratic Party). You can see that in the Al Froms, they kind of trace his trajectory from the Carter White House and back into work as a congressional aide and a Democratic strategist, and then into the establishment of the DLC, which then becomes a basis for the ascendance of Clinton to the presidency.

The other thing that’s going on, the other thing they’re reacting to, is the rise of what’s sometimes called “New Politics,” liberalism under the Democratic tent. And by that, what I mean is after 1968 and the 1970s, the rise of various kinds of what were perceived by folks involved in establishing the DLC as fractious interest groups who represented the interests of particular people, especially women and non-white racial ethnic groups. So there are these new groups that were representative of what they called in Democratic circles “New Politics,” groups that they also saw as moving the party in a direction that was detrimental to the party’s ability to appeal to what they characterize as the mainstream or middle-class voter.

I should note that there’s obviously a racial aspect to this. If you look at the accounts of folks who were involved in making the DLC at this time, when they talk about the mainstream voter, invariably the figure who gets raised as the model or the embodiment of that is a working-class white man: the same constituency, in other words, that became so prominent in the wake of the 2016 presidential election.

There are a lot of things that are feeding into that. Part of what’s going on (aside from the concern with the insensitive or not useful policy advice of economists) is also what I describe as, and what other people have described as, intraparty struggle, where figures like Al From and people around him are worried about the trajectory of the Democratic Party, that it’s becoming overly driven by the politics of what they characterize as the fringe. And I should note here that, of course, if the fringe is everyone except for a working-class white man, then you are talking about a whole lot of people.

Daniel Denvir

All of these divisive particularities instead of the universal subject of the American white middle class.

Stephanie L. Mudge

Right. And so what this amounts to is an effort eventually in the 1980s to try to work through the Democratic National Committee (DNC). They try to work through the main, organizational body of the party on a national level, and then they’re frustrated with that. And so what they did is they established the Democratic Leadership Council, the DLC, and they mean it. They meant it to be explicitly a competitor organization with the DNC.

And one of the projects that they pursue in the early 1980s in the Reagan years is the shifting of power inside the party and especially nominating power away from the “ideologues and interest groups” and back toward what they call “the elected.” So they mean the office-holding Democrats.

Daniel Denvir


Stephanie L. Mudge

Exactly. So this is the creation of the superdelegates, and the idea — a little bit counterintuitively, I think you could argue — is that the way to shift the Democratic Party back into a more representative stance was to shift power away, and the nominating process away, from anyone who wasn’t already an establishment elected Democrat.

Daniel Denvir

One thing I find confusing is the role of New Politics liberals in this story, because first, beginning in the late 1960s, you have New Left and New Politics advocates who undercut the power of the New Deal liberal establishment, which included entities like the AFL-CIO. Then, the ultimate champions of the neoliberal turn include some New Politics veterans like Bill Clinton. But that also incorporates, as you mentioned, this kind of neoconservative reaction to New Politics and a neoliberal reaction against Keynesianism in organized labor. How did these really disparate forces coalesce to neoliberalize the Democratic Party?

Stephanie L. Mudge

It becomes a really difficult story to tell in a way, because what’s really happening through the 1970s and through the Reagan years is this intense power struggle inside the Democratic Party and inside the Democratic networks, and it’s not clear what the alignments are going to be.

So one of the things that I emphasize in the story of the establishment of the DLC is that it has a very different organizational structure and set of financial dependencies relative to the closest predecessor that I identify in the book, a sort of comparative counterpoint: the ADA, the Americans for Democratic Action.

And in that comparison, one of the things I notice is that the ADA has a lot of union support, at least initially. It’s heavily dependent on union funding. But the DLC is noted at the time for having a lot of support from Wall Street financial donors. And so one of the things that I think is happening in there is that the DLC, once it’s established, is not clearly anti-union, but it groups union influencers or Democratic politicians who represent union interests as part of the New Politics problem, as yet another interest group.

Daniel Denvir

Which is ironic, given how George Meany felt about George McGovern, right?

Stephanie L. Mudge

Yeah. There’s all kinds of twists and turns in there; when you look at it historically, it would have been difficult to forecast how this would unfold if you were in it. So I think what happens there is that basically the DLC is not union dependent. And in fact, it’s dependent on a very different set of donors who also understand themselves as Democrats and progressives, but they understand themselves as Democrats and progressives who are in opposition to “old liberals” — sometimes the line between New Politics groups and pro-union old liberalism becomes one thing in the perspective of at least some of the financial backers of the DLC.

And so there’s kind of this progression where unions, the AFL-CIO, are involved. For instance, they’re involved in the Hunt Commission. That’s the commission that is responsible for the creation of the superdelegates. They’re involved, but they’re marginalized. They’re sidelined. The result that they get out of that isn’t what they want. And then you can see, in the DLC’s trajectory, how it increasingly takes a stance against pro-union Democratic politics. In other words, them being the new Democrats by definition, they were contrasting themselves with old Democrats, which meant New Deal prolabor Democrats alongside the New Politics Democrats.

Daniel Denvir

If Al From and the rest of the DLC were so concerned with political strategy, if a lack of political strategy is what they learned from the Carter administration, why didn’t they consider the possibility that the Volcker shock drove working-class people into Reagan’s arms and learn some lessons from that?

Stephanie L. Mudge

I don’t think they talk about Volcker and the question of Federal Reserve policy too much. I think it was kind of a done deal. And again, going back to our earlier discussion, of course, Volcker was a Carter appointee, and he was a Democratic Party–aligned economist in the tradition of many people before him. And so I think it was taken for granted that that had to be done, that that was just the medicine that the American people had to take. And I think that does bring us back to this market-centered, new neoliberal consensus that markets couldn’t be governed, that economies couldn’t be governed anymore the way they were governed through the 1960s. I don’t think they really called that into question. As I note in the book, Carter knew what Volcker was going to do, he knew that it wouldn’t play out well for him, and there were people in his administration who thought it was a bad idea and continued believing it was a bad idea afterward.

But he did it anyway, and I think in some ways that kind of is symptomatic of my argument that the leading faction of the Democratic Party and professional economics were deeply interdependent. So the conventional or orthodox understanding of the economy that had emerged in economics or was becoming dominant in economics by the 1980s was taken for granted in Democratic circles. And so then the question is: Once you set that train in motion, how do you respond to the demands of your constituencies?

Maybe part of what’s going on there is that even though Clinton spoke in a language of economics all the time in his famously wonky way, if you look at his campaign, one of the things you note that you might note in comparison, for instance, with JFK’s campaign, is that credentialed economists weren’t nearly so important or so influential in his campaign as other kinds of figures were. One of the kinds of figures that becomes influential in the Clinton years and in the Clinton campaign is something that had been in the works for a while, which is the rise of strategic advisers — advisers who were going on polling and focus groups.

Daniel Denvir

People like James Carville, who famously said, “It’s the economy, stupid.”

Stephanie L. Mudge

Right, exactly. So Clinton’s economic language often came from people who weren’t actually economists, which is notable by contrast with, for instance, JFK’s economic language, which is very much a language that he learned directly by training by Keynesian economists. I think this is symptomatic of this break with and disillusionment with economists and economics that’s rooted in the Carter years. Even by the time you get the DLC in the Clinton years, you get a lot of language referencing economists and the economy, but actually, if you look at the networks, economists aren’t nearly so prominent and influential as they are in prior years. Their jurisdiction kind of narrows. So they can speak about what to do with, for instance, interest rate policies and they can speak about matters having to do with international markets and things like that, but their multiple roles that I described in the era of the Keynesian economist-theoretician — the figures bearing Keynesian ethics, where they’re strategists and speechwriters and economic advisers — get circumscribed.

Daniel Denvir

And who become installed under Franklin D. Roosevelt and remain sort of institutionally intact even during the Eisenhower years through groups like Americans for Democratic Action. And then continue on to be at the center of both politics and policymaking for JFK and Lyndon B. Johnson.

Stephanie L. Mudge

Right. So one of the things I point out in the book is that this actually gives even the Eisenhower administration a little bit of a Keynesian flavor, even though it’s a Republican administration. I guess the argument when you get to the Third Way years is not so much that economists are no longer influential, just that their role was circumscribed and transformed.

And that had a direct connection with the fact that prominent economists saw the world very differently and could no longer offer the kind of economic advice that could be reconciled with strategic political demands. There’s an argument in the book that there’s an affinity or a functional relationship between, on the one hand, economists who are advisers in Democratic networks or in center-left party networks who see the world in terms of markets and believe in making interventions and policymaking processes that are all about securing policies that are market friendly, and, on the other hand, the rise of what comes in the 1990s to be referred to as “spin,” the rise of political experts who are all about spinning otherwise unpopular messages in order to win elections. One sort of necessitated the other.

Daniel Denvir

As a ’90s studies obsessive, one point that you make that I found really interesting is that Clinton’s election in 1992 was obviously a big win for the DLC. Clinton had been the head of the DLC, but it wasn’t the only decisive moment for the party’s neoliberalization. Really important was the 1994 Republican Revolution, when Newt Gingrich Republicans took back the House for the first time in forty years.

Stephanie L. Mudge

Yeah, I think this is something that sometimes folks don’t realize, especially because of the Reagan years. Everyone thinks when Reagan came to power, that was sort of the end for the Democrats. But they were actually dominant in the House right up until the Clinton years. Clinton stayed relatively popular, except the voter turnout was going down. And Democratic power in Congress was also tanking.

Daniel Denvir

It was a huge conjuncture in this factional fight within the Democratic Party. The DLC said that Republicans had won because Clinton and the Democrats were too liberal. Liberals, by contrast, said that it was the North American Free Trade Agreement (NAFTA), which, you note, was sold to Clinton, not by economists, but by advisers with no economics background. And liberals argued that that had alienated unionized workers and working-class voters. What was the balance of power within the party at the beginning of the Clinton administration? Because I think we tend to think of it as having a foregone neoliberal conclusion. But what was the balance of power then, and how did the neoliberalized faction so decisively win out after 1994?

Stephanie L. Mudge

My take on it is the balance of power was essentially still, in Congress, on the side of not the New Democrats, but instead the side of liberals and old New Deal prolabor liberals.

Daniel Denvir

And House Democrats in particular were seen as sort of the standard-bearers of the liberal faction.

Stephanie L. Mudge

Right. Clinton is now remembered as a standard-bearer of American Third Way–ism. But his appeal, if you look at the way he was recruited by the DLC, it was because he’s understood as you one of the new leading figures of New Politics. And it is still called liberalism at that time. And one of the appeals of Clinton in particular was that they thought he could appeal both to the old liberals and the New Democrats, or the folks who the New Democrats wanted to appeal to. But he could also kind of bridge that with old liberals in the Clinton administration.

Daniel Denvir

And the whole kind of Boomer hippie nostalgic infatuation with the saxophone-playing cool Bill Clinton, which I recall as a small child.

Stephanie L. Mudge

I would characterize this in the first years of the administration, before the arrival of Gingrich, as an administration that in a certain sense had become a power base for the New Democrats in the DLC, but even inside the administration there were still plenty of people who understood themselves as classic New Deal liberals working in the vein of FDR. And so there were tensions inside the Clinton White House between those two kinds of groups. Those tensions were expressed especially in opposition over questions of what to do about balancing the budget and how important was reducing the deficit versus funding various kinds of programs.

And then in Congress, especially in the House, the dominant Democratic forces were still what the DLC would have considered old liberals, who were very much Keynesian in their arguments and understandings about deficits and deficit spending. So when Clinton comes into the White House and brings in this administration, there’s a fracture between the New Democrat folks and the old liberals. It seems, at first, that the New Democrat folks are kind of worried that maybe the old liberals have still won, that they’re going to win out in their influence over Clinton.

So there’s a series of policy disputes that starts with the deficit, and then there’s the question of NAFTA that was disputed inside the White House between these two factions, where you had people like Robert Reich who was all about not worrying so much about balancing the budget and cutting deficits and instead doing things to help working people versus people like Larry Summers, who was more of a deficit hawk.

And then the story that I tell is that actually, in a certain way, when Gingrich comes into the House with a clear Republican majority, from the perspective of the New Democrats in the White House, that can be leveraged in order to decisively defeat the old liberals. It’s a way that they can strengthen their position. And so then I tell the story about how this plays out. And I tell the story, first of all, about how deficit reduction and balanced budgets win out over things like massive infrastructure investments and pro-employment policies of that nature.

And then with NAFTA, initially the way that Clinton sold it to organized labor especially was that it’s going to take into account of the demands of labor. There were also environmental groups. But NAFTA as it actually emerged did take into account some of the concerns of environmental groups, but it didn’t include the policies that organized labor wanted.

That was seen inside the White House as a New Democrat win. And then you get the Mexican peso crisis, and those same folks organize in order to find ways to bail out Mexico at a cost of $20 billion. And so the story I tell is a sort of shifting of power toward the New Democratic faction of the Democratic Party over the course of the Clinton White House. In a way, the rise of Gingrich and the rise of Republicans in the House feed into that, especially because the New Democrats were in favor of the kind of welfare reform that Gingrich advocated — the “from welfare to workfare” kinds of policies. Clinton’s famous claim to “end welfare as we know it” — that was actually a Republican set of policies, but the New Democrats were happy to adopt that because they saw it as something that would cement their power inside the Democratic Party.

Daniel Denvir

So what’s the upshot here for conventional analyses on the Left today — that neoliberalized Democrats looked to Republicans and then triangulated? And that’s how we got the party’s move to the right? Does your analysis comport with that? Or does it complicate that?

Stephanie L. Mudge

In some ways it tells that story in a different way. What I’m interested in is what’s actually underneath that. How do you get this triangulation? Because triangulation is this term, I think, that’s most closely associated with one of Clinton’s most notorious strategic advisers, Dick Morris. And so Clinton’s turn to strategy, at least if you read insider accounts of the Clinton White House, is something that happens after Gingrich and the Republicans take over. It’s a source of frustration for people inside the Clinton administration, especially those old liberals who see Dick Morris as being all about strategy — as in he doesn’t have any sort of loyalty to New Deal liberalism, he’s just a pure strategist. He’s all about spinning things in order to make sure Clinton retains power.

There’s this angst within advisory networks in the Clinton administration about Clinton increasingly consulting with Dick Morris. But I think one of the interesting things is that the folks who are most worried about that are the old liberals. So from the perspective of the New Democrats, that turn to strategy, in a way, worked in their interests. It was the final repudiation of New Deal liberalism. So what I want to add to that story of the rise of strategy and triangulation and all of that is that what’s going on underneath there is a set of factional struggles where you get a shift inside Democratic networks away from not only Keynesian economists, but also away from “the fringe,” which happens to be a large majority of the voting population, and instead toward this trinity meeting of advisers in New Democratic networks: one of them is a think tank–based wonk or policy specialist. One of them is comprised of strategic advisers like Dick Morris, and the other one is the TFE, or the transnational finance–oriented economist who’s still sort of a Democratic economist, but has a very different way of thinking about the world.

Daniel Denvir

And you write that left parties creating think tanks of their own, this leads to the rise of the policy wonk, and that that was really a response to the success that neoliberals had in creating free-market think tanks.

Stephanie L. Mudge

I characterize that in sort of sociological organizational terms as a case of what they would call mimetic isomorphism, just meaning that it’s a competitive strategy and organizational strategy where new organizations are founded, and they copy the successful strategies of existing ones. Not just through professional economics, which is one route through which there’s a kind of influence of what I call the neoliberal project, the sort of intellectual side of neoliberalism. But there’s also another route, which is the establishment of free-market think tanks, which really start to proliferate in the late 1970s forward, and especially 1980s and 1990s. And there was a response to the perceived success of those think tanks — places like the American Enterprise Institute and the Heritage Foundation in the United States or the Institute of Economic Affairs in London — in terms of trying to establish a new Democratic or Labour or progressive voter. The hope was that they would provide resources that would make for a successful politics and policymaking the same way the free-market think tanks were doing for the neoconservative. It’s a much smaller network, but one of the things I do in the book is that I say the new world of “progressive think tanks” is not nearly as huge as the network of free-market think tanks, and I think probably a lot of the explanation for that has to do with money, but it tracks historically alongside the proliferation of free-market think tanks. In other words, they coevolve, they codevelop.

Daniel Denvir

We’ve come such a long way with Biden nominating Neera Tanden to head the Office of Management and Budget.

Stephanie L. Mudge

Yeah, the Center for American Progress is a crowning achievement of the effort to build progressive think tanks in the United States.

Daniel Denvir

You just use the word “progressive” to define the Center for American Progress, and you write that Third-Wayers everywhere adopted the term “progressive” in part because of the influence from the United States, where the word “socialist” was unspeakable. But today in the United States, “progressive” typically refers to Elizabeth Warren or Bernie Sanders or Alexandria Ocasio-Cortez, sort of a broad swath of the leftward end of the party, in specific contrast to a neoliberalized Democratic establishment.

So the term has always felt slippery and confusing for me, including because of its antecedents in the Progressive Era, which are not things that I particularly want to associate myself with. But your book made me even more confused about its colloquial usage. What do you make of this term’s odd trajectory?

Stephanie L. Mudge

The way I think about things like that is similar actually to how I think about a term like neoliberalism. In political language, things like that get thrown around as if they are a category that has a stable essence and that stands in for the same thing across time and space, which of course isn’t true. What progressivism means now is different from what it meant in the DLC years and the Clinton years. The language of progressivism has been around since the turn of the twentieth century. So the way I think about the terms progressivism and neoliberalism and really any of these -isms is that to really understand where they come from and see their trajectory, you have to see them as things that are struggled over. It sort of stakes out a thing to be defined, and then you have various people and groups that invest themselves and orient themselves toward asserting a winning definition of the term.

When you think about it that way — so that it’s not this single essential thing that just travels through time, but rather a category that is mainly defined by contestation over its meaning — then you ask different questions about, okay, so who are the contestants? And who’s winning? But you’re right; one of the things that I highlight in the book — and this is a story that is grounded in my knowledge of how the Third Way internationalized, especially the axis between Blair and Clinton — is how Clinton wins in 1992, then New Labour borrows directly political language and adopts some of the strategic machinery of the Clinton campaign, and then wins in 1997. And so there’s an understanding that emerges that this is the new way forward for center-left politics, and they want to draw Clinton into a more international and especially European discussion over prospects for center-left politics and the Third Way. And they can’t do that using the category “socialism”; there’s just no way that Clinton could have been involved with something like that.

There’s this process then by which the language of progressivism starts to stand in for the language of socialism and social democracy in European politics, the more that the Third Way becomes a transnationalized political network. There’s new events, there’s conferences, and it all takes on this language of progressivism. And it becomes almost synonymous with Third Way–ism. So that’s one strand of different networks of people and organizations that are invested in this category of progressivism.

But then progressivism now is associated with figures like Elizabeth Warren. So in the United States, I think right now with the folks who are really winning in their effort to define what the term means, it is much further left than what Clinton and Blair and the DLCers would have imagined. In other words, these terms travel. And so the only way that I know to deal with that analytically and historically is to not take it for granted that they have any sort of eternal essence, but rather to treat them as these historical things that are defined and pushed in different directions over time by different groups or networks.

European Neoliberalization

Daniel Denvir

We obviously can’t do justice to all of your incredible book, but for some helpful comparative perspective, I want to briefly go over some of the neoliberalization of left parties in Europe. In Germany, the SPD’s neoliberal turn came when party leader Gerhard Schröder became chancellor in 1998. The next year, party leader and finance minister Oskar Lafontaine quit in protest of the party’s right turn. And what followed was a rapid neoliberalization, including the infamous 2002 Hartz IV law, which ended long-term unemployment benefits for German workers. There were huge protests across the former East Germany. Lafontaine went on to help found the left-wing party Die Linke, the Left, and the SPD has, since that period under Merkel, fallen into a kind of permanent marginality even as the far-right AfD, the Alternative for Germany party, has gained so much strength. Why did the SPD shift right when it did, and what have the consequences been?

Stephanie L. Mudge

So the story of the SPD is difficult, and part of the reason that it’s different from the other cases in the book is because of Germany’s place in European integration, especially market integration. Germany is not only an important driver of the whole integration process, but also it becomes home to the European Central Bank (ECB) when it’s established. And central bankers associated with the central bank, the whole sort of authority relationships in those networks, it’s shifted so that the ECB becomes this superordinate monetary authority, whose leading authority figures are not only central bank presidents, but they’re also credentialed economists, and they see the world in terms of markets in the way that I’ve described as being the sort of imagination of the TFE.

Part of what’s happening there is that the balance of power among bases of economic and financial policymaking in Germany shifts in a way that isn’t true, for instance, in the UK. The UK never adopted the Euro. But then there’s this interesting story about the descendants of Willy Brandt. Lafontaine and Schröder and another guy, Rudolf Scharping, are known as “Brandt’s grandchildren.” They’re the next generation after Brandt. The other thing I should note is that in the very tumultuous late 1960s and early 1970s, the SPD pretty effectively shut out its youth wing. It shut out these sort of rebellious, radical factions. And so Lafontaine, Schröder, and Scharping are the ones who survived that process, but they’re of that generation. And at first, it’s kind of understood that Lafontaine seems to be sort of the modernizer, but then it becomes clear when Schröder becomes chancellor that Lafontaine as finance minister is clearly more left-wing, and he gets cast as doing this “old economics,” because he wants to do things like harmonize taxation across Europe. He wants the Ministry of Finance to still have some input over interest-rate decisions, even though the ECB is by then in existence, as is the euro, and so the internal party split becomes the modernizers versus the traditionalists. And Lafontaine becomes the traditionalist and Schröder becomes the embodiment of the modernizer.

With Lafontaine’s advocating for these policies that are cast as being the policies of the old economics that aren’t workable anymore, he finally resigns in frustration, and it’s a major defection. It’s an unprecedented defection and a very highprofile defection that shakes the party a little bit. It’s understood then as a victory on Schröder’s side for the modernizers in the same way that there’s a victory of the New Democrats in the Clinton years. What you see in the aftermath of the German case is the implementation of the Hartz reforms. With all of the European cases and all the cases also analyzed there’s a proactive advancement of the liberalization of finance. This is true in Sweden, and it’s true in the UK, and also, in the British case, the freeing up of the Bank of England — and by extension the Treasury — to have more power over interest-rate setting, among other things.

One of the things that happens actually under center-left party auspices in Europe is this liberalization of finance that then has the effect of ushering in the very same globalization that Third Way politicians say is this force beyond our control. But one of the interesting things then is that they move into power and they actually make that a reality.

Daniel Denvir

Thus creating the very sort of political-economic architecture that leads to the European debt crisis.

Stephanie L. Mudge

They also, with the advancement of financial liberalization, open themselves up to massive interconnected financial crises. And again, I don’t want this to be a story of blame. I think it is important to understand the orientations of actors on the ground. Like in Gordon Brown’s case, I think he really believed that freeing up the Bank of England was the right thing to do and possibly the only thing to do. But the effect of these beliefs, which were beliefs very akin to what we understand as neoliberalism, was that they ushered in the world that made the last financial crisis possible. They contributed to that process in a really important way.

Daniel Denvir

I do want to ask one question about the SAP, because that party turns toward neoliberalism first, which is surprising to me because we still think of the Swedish Social Democrats as more left than today’s Democratic Party. And you write that more than any other country, the Swedish Social Democrats’ neoliberalization was driven by a conflict within the discipline of economics that then shaped a conflict between the party and the Swedish Trade Union Confederation, or LO, and this conflict really crystallized around economist Rudolf Meidner’s famous union-backed proposal to create these things called “wage earner funds,” which I’ve talked about in the past in the show, that would gradually socialize ownership of Swedish corporations.

So it’s seen by many on the Left today as this moment of one of the last great hopes for a parliamentary road to actual socialism, and you write that it’s typically reported that the Meidner Plan failed because there was a huge conservative business mobilization against it. But you argue that “a key background fact to the SAP’s break with Meidner from 1976 was the LO economists’ loss of the backing of the mainstream profession manifested in the open opposition of well-known social democratic economists.”

How did this conflict over economics and over the Meidner Plan in particular ultimately push the SAP toward neoliberalism in the 1980s — a period when the SAP prime minister was Olof Palme, who before his assassination in 1986 made a point of rhetorically attacking neoliberalism and really is still considered this lion of the pre-neoliberal European left?

Stephanie L. Mudge

One of the things to note about the Swedish case is the incredible power of the Social Democratic Party there for the entire postwar period. It’s basically the governing party for pretty much that whole time, with a few breaks. So one of the things that sets the Swedish case or the Swedish Social Democratic Party apart from the other cases in the 1980s is that they’re in government as opposed to [the center left in] the UK and the Reagan years in the United States, for instance. And the other sense in which it’s different is that in the literature on the history of economics in the Swedish case, one of the things that you’ll often see is it’s noted that Swedish politics is really “the economist intensive.”

In other words, this goes back all the way back to the story of the Stockholm School and the SAP’s precocious turn to deficit spending to deal with the problems of the Great Depression. From that time forward, there’s an unusually deep intersection, maybe even deeper than any of the cases I deal with in the book, between professional economics and the major Swedish political parties. And so when Meidner developed the plan for the wage earner funds, he was working in a tradition that was well established and that had been incredibly influential in the making of Swedish economic policy and matters of economic governance. One of the things that I suggest is that what’s changed is the background position of the LO economists.

In other words, trade-union economists managed to play an outsize role in Swedish politics and policymaking, even though they weren’t academics. And so because economics is sort of politicized in Sweden, just like it is in other places, there are other Swedish social democratic economists by the 1980s who oppose the wage earner funds.

In other words, it’s very clear — and they’re very public about it. They do a series of high-profile public interventions in major Swedish newspapers, and there are debates about it. In other words, in some ways you can tell the story of the neoliberalization of the Swedish Social Democratic Party in terms of the factional politics inside the party that really is a struggle that is waged between different kinds of social democratic economists.

It’s a story that actually in some ways is reminiscent of the story I tell about Hilferding, the opposition between party leadership that is more on the intellectual side of the party versus party leadership that’s more grounded in leadership of the trade unions. Just the institutions are very different.

Spin Doctors and the Myth of the “Median Voter”

Daniel Denvir

And in both the cases of the SAP and Hilferding, and obviously this is a subjective political assessment, we could argue that it was the people tied to organized labor rather than party intelligentsia who were right. What does that reveal about this problem of the relationship between party intellectuals and organized labor, a problem that has been identified for a long time, as you reference all the way back to Robert Michels’s famous argument about “the iron law of oligarchy”?

Stephanie L. Mudge

Yeah, so that’s this thorny problem that there’s a sort of opposition. Maybe this is actually just all parties or all politics? There’s potentially a tension between doing things on the basis of principle, and that can include principles grounded in one’s intellectual commitments, versus strategy, which will probably involve compromising on one’s principles or intellectual commitments. So there’s a long tension between those two things that’s especially profound in discussions on the Left and in Marxian scholarship, because the people being represented are groups that are historically not represented, or they’re less powerful, less resourced.

So if principle wins out over strategic willingness to negotiate between groups, including constituencies, then you have a very difficult problem. This goes back to the Italian theorist Antonio Gramsci, where he talks about the organic intellectual. There what he’s really talking about are intellectuals who are grounded in the working class, who have a specific class position. And what I argue in the book is that, actually, what intellectuals do in the context of political parties, if they’re doing things well, is they intermediate. In other words, they move in between party leadership, the electeds, the officeholders, and constituencies on the ground, and they provide this communicative connection between the two where they’re grounded enough in represented constituencies that they kind of speak for their experience and help them try to inform their own understanding of their experience and their political identity. But then they can also feed that understanding into policymaking.

The way I think about it is that you always have intellectuals in political life because one of the things that parties do is they speak for people. And they aren’t just speaking through the voices of people. There’s an intellectual process where they’re interpreting people’s situations and what they want and what’s going to work in their interest.

There’s a translation process that goes on, and that translation can be effective. It can effectively articulate the interests of people, or it can not really represent those groups at all. You can have intellectuals who represent markets, which are not groups of any kind. And those figures don’t have the kind of translating, communicative intermediary capacity that intellectuals who speak for constituencies do. In other words, if your key intermediary intellectual in left party networks is an intellectual that speaks for the interests of these nonterritorial forces out there called “markets,” then what they’re really doing is they’re limiting the scope of those parties to deal directly with the concerns, experiences, and problems of constituency. So what you have instead is a pivot where party leadership starts on the basis of an acceptance of the necessity of representing the interests of markets.

Daniel Denvir

So why did neoliberalized left parties turn to wonks and spin doctors instead of realizing that the reason they needed strategists was because their economic policies were not popular and that they were, in fact, eroding their working-class base of support? What’s the driving cause?

Stephanie L. Mudge

I think one of the driving causes that underpins this is what I sometimes call the atomization of politics. And I do talk in the book about the professionalization of politics. In other words, when you move up from FDR to Clinton, what you see is that politicians of Clinton’s generation are moving in this political world that is completely unlike the national political world in the FDR years.

I’m not saying here that one is better or one is worse. I’m simply saying that it’s different, and one of the major things that’s different is the extent to which the world of democratic politics is professionalized. So there’s all these different think tanks, and they specialize in producing specific policy recommendations on specific policy questions. And there’s a world of political consultants that doesn’t really exist before the 1970s and 1980s, and that becomes incredibly dominant in the world.

The role of political consultants now is impossible to deny. You could even see it if you were to look at the trajectory of presidential debates, the extent to which debates become a spectacle where the people afterward who are commenting on who won. It’s not just quietly left to voters to decide who wins the debate. You have the representative of this campaign and the consultant to the other campaign, and they’re debating afterward. So it’s this echo chamber, and you see that in the Clinton years. You see it developing in Sweden in the 1990s. You see it developing in Germany. You see it developing in the UK, this professionalized world of politics where if you’re a politician like Blair or Clinton, you’re immersed in this sort of world: a professionalized politics that’s closed off from everything else and becomes internally referential.

And so they move in a world where the policy possibilities — the common sense of that world, the language you can use — becomes very constrained. Why did it occur to them that they suddenly need these lying type of people to sell our economic policies to people who won’t like them?

The short answer is these are people like everyone else. And we tend to interpret the meaning of things according to our immediate experience. We evaluate what’s possible and what is unthinkable according to what makes sense in our world, that enclosed world where the parameters of political discussion and policy debate are so narrow and are increasingly controlled or increasingly dominated by professionals who are not real concerned about the longevity of a particular political party in terms of developing great techniques of economic management.

Daniel Denvir

Dick Morris being a case in point.

Stephanie L. Mudge

Right. They’re hired to help the politicians win and stay in power and help them win on certain issues. There’s basically this whole layer of networks that do all this interpreting of what is possible and prioritizing winning over governing in the interests of constituents.

Daniel Denvir

And what’s ironic is that their job is to bridge the gap to voters, when in fact they’re fundamentally part of this machine that is creating the gap between voters and the party. There’s this prevalent idea, including in Third-Wayers’ own telling, that left parties’ neoliberal turn was simply following voters to the center. And this is something I think you write that’s replicated in the political-science notion of the median voter.

But you write that this is not at all the case, and you have a lot of data and graphs in your book. A lot. Left party support actually fell after Third-Wayers transformed their parties. Voter turnout also fell, and support for far-left and far-right third parties rose. And you write that in this way, “third road policies amounted to the self-sabotage of center-left parties that then had to depend on PR to win elections.” Neoliberalized left parties said that the old model didn’t work in a newly globalized economy, but actually, in each case, you write, it was the Third-Wayers who helped create the economic conditions of globalization in particular that they claimed they were responding to. And while in the United States, union density did begin to fall in the 1960s, the decline came much later in the UK and Germany and never came at all in Sweden. Indeed, you write that Sweden’s neoliberal turn came as union density was on the rise.

So you argue that indeed the key factor here was this divorce between unions and left parties, but that it was neoliberalizing left parties — not external, out of their control, purely economic conditions that drove the process. It was politics. How did this causal, or these causal relationships, get turned upside down?

Stephanie L. Mudge

One of the first things you mentioned was this idea of the median voter or “the center.” The DLC is concerned with rebuilding the party’s appeal to the middle class or to the mainstream. Then it turns out if you look at it now, historically speaking, the rush of center-left parties in the Third Way years toward “the center” — there wasn’t really anybody there.

The idea of “the median voter” comes out of a market idea of democratic politics where the parties or the politicians are suppliers and the voters are demanders and parties will converge on the median position or “the median voter,” which works nicely mathematically and abstractly. But in practice, as a statistical category, the median voter doesn’t really exist in any stable way. That’s a igment of the social-scientific imagination. It’s similar to the substitution of the imagination of the market for the economic interests of people. It’s substituting this category of the median voter for actual voters.

Daniel Denvir

An abstraction.

Stephanie L. Mudge

Right. And then it leaves people to fill in all kinds of things. So in the case of the DLC, when they put a face to that abstraction, what’s the face? It’s the middle-class or working-class white man. That’s the median voter. It’s a term that’s untethered to the actual political realities or the actual interests of voters. And I think it can actually obscure politicians’ own understanding of their place in history, of the consequences or implications of the decisions that they’ve made. Because they can always say, “But we had no choice. We had no choice. We had no choice.”

That’s their reality, and I can’t persuade them that it’s not the case. And I’m not sure what good that would do. It’s the story of a progressive substituting of abstractions — the median voter and the market — for meaningful two-way communication with voters and constituencies. It wasn’t a strategic decision to do that. But that’s what was happening. And so what you get then, and I’ve been especially influenced by the political scientist Peter Mair, is this void. He has this article, “Ruling the Void,” about governments and parties that are ruling in the interests of a democratic terrain that’s basically emptied of people. Where you get voter turnout declining, and you get declining party membership, and you get increasing signs of alienation. It’s a politics that was damaging in the short term, but it’s also damaging in the long term. Because once you get these long-established parties, where people’s experience with them is that they less and less speak for you in any meaningful way, you can’t come back from that. You can’t then come back and say, “Oh, sorry, now we’re actually in favor of investing in infrastructure and domestic manufacturing. And we’re in favor of unions.” You can’t come back from that. There’s a generational memory. You’ve lost their trust.

Daniel Denvir

Is this the backstory then to the collapse of Labour’s “red wall” in the 2019 elections or to West Virginia or Minnesota’s “Iron Range” or the Mahoning Valley in Ohio? Because in the UK case, Labour’s defeat was blamed on Corbyn being too left wing. But is a more accurate way to look at it that it was, in fact, Labour’s neoliberal turn beginning decades prior that actually laid the groundwork for this historic loss? This neoliberalized severing of Labour from its union base that ultimately undermined Corbyn’s anti-neoliberal appeal?

It seems like in the UK and the United States that the neoliberalization of left parties has played this key role in remaking the terms of the debate — remaking people’s political subjectivities, remaking political relationships in such a way that there’s no longer an institutionalized mechanism with which union, working class–based left politics can happen.

Stephanie L. Mudge

Yeah, I think what you’re talking about with the collapse of Labour’s “red wall” is that in 2019 the Conservatives won places like the Midlands and the North, places that had been for generations solid Labour areas. But there’s this thing that happens with New Labour and afterward, which is that — no matter what happens, no matter what the electoral result is, no matter how Labour does — the dominant argument is always, “They went too far left.” It’s impervious to experience. It doesn’t matter if they win, doesn’t matter if they lose. The reason is always, “If they win, it’s because they went center enough. If they lose, it’s because they’ve gone too far left.”

Part of what’s happening is that people, when they’re making that argument, they’re thinking in terms of policy positions. But a lot of what I’m arguing here is that it’s partly about policy, but it’s partly about the extent to which parties are organized in a way that they actually communicate with people and facilitate communication between parties and the people they want to represent or do represent. There’s an argument that could be made that the story of the 2019 result in the UK had to do with the pro-market policies. That basically Labour undermined its own base when it did that.

But I think the argument that I’m making is slightly different, which is closer to Peter Mair’s really, and which is that what’s underlying this pulling up of the party’s roots is a collapsing of its ability to meaningfully communicate with constituencies. In the process, what they do is they substitute these imaginaries for constituents — they substitute the imaginary of the market, they substitute the imaginary of the median voter — and then they end up doing what feels like, to people on the ground, a sort of bait-and-switch kind of politics, where they argue with conviction: “This is what the people want. This is the solution. And it’ll work in your interests.” But it hasn’t worked in their interests.

And the same thing is true in West Virginia. West Virginia used to be a solid-blue Democratic voting state, especially among coal miners. And that’s collapsed. It’s partly about policies and policy failures, but it’s partly about the politics of bait and switch. The voters don’t trust the Democrats, even if the Democrats say, “We’re pro union,” even if they say, “We’ll see you through, we’ll help you into new opportunities, we’ll invest in new activities that will provide employment opportunities, and we’ll do training.” They don’t believe them. You can’t just press a policy button and say the right phrases or the right words or give this right list of policies and get those people back.

Daniel Denvir

Yeah. Bernie and Corbyn are fighting against the politics that created this void. But the void is there and they’re not credible in that context.

Stephanie L. Mudge

I still think — and here I’ll speak especially about the American case because it’s the one I know best — that there’s a kind of tone deafness. There’s still this idea that, “If we just press the right buttons, if we say the right thing, if we give the right list of policies, and also if we just wait for the demographics to move in our direction . . .” As if the more the electorate becomes increasingly diverse with more non-white voters, then things are just going to move in our direction. As if there’s something about being born into the census category Hispanic that means that you are genetically a Democratic voter. That’s absurd.

But there’s this idea that the combination of their analysis of demographics and the political leanings that they attribute to certain demographic categories — and then if they just hit the highlights on certain policy questions — is somehow going to reestablish trust, and people are going to come back. But from the ground up, the experience of voters is a whole different thing. It’s a relationship. It’s a culture. It’s a language. It’s an identity. It bleeds into all kinds of other things outside of your voting decisions on an election day.