The Legacies and Lessons of Neoliberal Realignment

The story of how Democrats lost that trust and support in the ’80s and ’90s offers clues to how they might gain it back today. Back then, a faction of the party saw short-term gains in abandoning the legacy of the New Deal for a “Third Way” neoliberal strategy. Today, a progressive faction of the party sees electoral gains in abandoning the failed politics of the neoliberal era. Our latest report shows they may just be right — but more on that later.

In the wake of Walter Mondale’s resounding defeat in the 1984 presidential election, a group of mostly southern and western centrist Democrats, growing increasingly dissatisfied with the party’s lackluster performance at the national level, formed the Democratic Leadership Council (DLC). The DLC saw an opportunity to gain seats and electoral-college votes by appealing to a constituency that had hitherto proved elusive: highly educated, knowledge professionals.

These politicos turned away from old commitments to redistribution, regulation, industrial policy, and tariffs and instead pursued an aggressive policy of deregulation in the most dynamic sectors of the economy — telecommunications and finance — which today constitute their primary donor base. At best, the DLC’s architects sought to “compensate the losers” of economic transformation through modest tax and transfer policies. By the end of the ’90s, DLC-affiliated representatives constituted the largest bloc in the Democratic caucus.

The campaign managers and strategists that cooked up the new DLC politics were not stupid: There is ample evidence to suggest that their strategies picked up House seats in affluent and highly educated districts that had been hitherto unwinnable for Democrats and that these constituencies contributed to Bill Clinton’s electoral victories. Ironically, these victories have proved simultaneously durable and Pyrrhic: in 2016, Hillary Clinton was able to boast that she had won the “most optimistic, diverse, and dynamic” districts that “represent two-thirds of America’s gross domestic product” even as she lost the presidency.

The sweeping majorities that the DLC had envisioned never came to pass; and on the way to those nonexistent majorities, the DLC successfully lost the working class and helped to destroy the political and civic institutions, particularly labor unions, upon which the New Deal Democratic coalition rested. By conspiring with Republicans to eviscerate the universal character of the New Deal welfare state — by transforming renters into mortgage-burdened homeowners, by financializing retirements and making aspiring future retirees subject to the volatility of the stock market, by undermining unions and watching passively as they were replaced with gun clubs in the civic life of industrial regions, through their active or passive complicity — Democrats destroyed their own former coalition. They helped turn American society more conservative and, by realigning the American political system, contributed to today’s polarized and schizophrenic politics.

Contrary to mainstream narratives, the roots of polarization aren’t solely to be found in “radical” Democratic policy proposals on “cultural issues,” and in the attendant Republican “cultural backlash” to these particular proposals. Polling shows that Democratic policy positions on most cultural issues are not unpopular, at least in a vacuum.

However, cultural signifiers like “wokeism” (which do not directly translate into any particular policy position) are extremely polarizing and unpopular. The problem, then, might not be the particular substantive policy positions taken by some Democrats; instead it might have to do with the symbolic politics that the party represents.

Over the past decades, Democrats have been running more candidates that look, act, and speak like the elite portions of their affluent, highly educated, and “cosmopolitan” base. Without any positive economic agenda, they increasingly differentiated themselves from Republicans on cultural and identity grounds, branding themselves as more open-minded, diverse, and interested in expanding equality of opportunity. In the process, the union worker was replaced by the urban knowledge professional as the “image” of the quintessential Democrat.

The worldview and cultural positions of this kind of Democrat became associated with a disdain for those working-class Americans who were unable to prove their economic and moral merit in the postindustrial economy — being neither professional nor “woke” enough. Feeling left behind by the “winners” of cultural change, technological transformation, and globalization, these voters increasingly view the “winners” as a foreign or illegitimate element within American society; and, crucially, growing portions of the working class increasingly see the Democrats as the party of the winners.

Winning back working-class voters, defusing the “culture wars,” and saving democracy will require the Democratic Party to distance its politics from the professional parts of its base, run different kinds of candidates, and project a new vision of the good society — one capable of including all the “losers” of the neoliberal era. This means a broad coalition of production and service workers, disaffected professionals, and any class traitors that might come along for the ride.

But can this kind of politics actually win elections? And do Democrats that pursue this progressive vision win working-class voters in the here and now?

Progressive Economics Are Popular

Some commentators have argued that pursuing a “radical” economic agenda will not bring back working-class voters, and will only further contribute to party polarization. These arguments tend to come in two forms. The first asserts that the white working class is driven largely by racist resentments and is therefore a lost cause; the second, slightly less defeatist version argues that working-class voters (of all races) have gradually slid rightward along a unidimensional scale of political preferences — they simply don’t want transformative economic policy. To win them back, so the argument goes, the best strategy is to pursue a centrist agenda.

Our previous research at the Center for Working Class Politics (CWCP) suggests that this line of reasoning misses the mark. A recent survey experiment we conducted found that bold progressive economic policies, like a federal jobs guarantee, increased support for Democratic candidates among voters across the political spectrum. An earlier CWCP experiment found the same with respect to Medicare for All among potential Democratic voters without a four-year college degree. These results are consistent with polling by Data for Progress showing strong support for these policies across the partisan divide.

In our latest report, we examine how candidates who ran on progressive economic policies actually fared in the 2022 congressional elections. We find that candidates who stood for progressive economic policies ranging from Medicare for All and the PRO Act to a jobs guarantee and a higher minimum wage fared better on average than candidates who did not, especially in highly working-class, noncollege, and rural/small-town districts — precisely the kinds of districts that Democrats have struggled to win in the past several decades.

Economic progressives outperformed nonprogressives by around ten percentage points across all districts and by even larger margins in districts with high proportions of working-class and white, non-college-educated voters. The gains in rural/small-town districts were also substantial, with economic progressives outperforming nonprogressives by five points, suggesting that economic progressives may have the potential to win back some of the kinds of districts that Democrats have lost in recent decades. This is underscored by the fact that economic progressives also did around ten points better than other Democrats in safe Republican districts, suggesting that these districts may not remain safe for long if Democrats continue to run progressive candidates. So much for the argument that Democrats need to tack to the middle in order to win in red America.

Why Democrats Shy Away From Progressive Economics

Unfortunately, however, despite recent shifts away from the neoliberal orthodoxy of past decades, not many Democrats are running on progressive economic issues. In our most recent study, the CWCP analyzed the most commonly used phrases by Democratic congressional candidates across a range of issue dimensions and types of rhetoric.

The results show an unmistakable aversion to highlighting progressive economic policies in general, even as most Democrats did discuss jobs and the economy in a vague or general way. The most frequently invoked progressive economic issue was high-paying/living-wage/union jobs, mentioned by around a quarter of Democratic congressional candidates on their campaign websites. Medicare for All appeared on just over 20 percent of candidate websites, paid family/medical leave and the Green New Deal on around 15 percent, followed by free higher education, the PRO Act, a $15 minimum wage, and a jobs guarantee, which were featured on between 5 and 10 percent of websites. The overwhelming majority of Democrats did not want to touch progressive economics.

With the important exceptions of high-paying/good/union jobs and paid family/medical leave, candidates running in competitive districts were even less likely to employ progressive economic language than other Democrats. Indeed, the economic policies most closely associated with the progressive wing of the party (like Medicare for All and the Green New Deal) virtually never appeared in the rhetoric of candidates in competitive districts. Perhaps candidates in competitive districts fear that doing so will be a political liability with moderate voters who are leery of tax-and-spend Democrats. This may be true in some cases, but, in general, indulging such fears seems counterproductive, since, as we described above, when candidates do run on these issues, they tend to perform better than other Democratic contenders.

Other candidates may view progressive economics with trepidation not because they fear voters, but because they worry about alienating wealthy donors. For conservative Democrats, the Third Way, neoliberal turn of the ’90s paid massive dividends over the past three decades, bringing in a huge influx of large contributions, particularly from the finance and information sectors. Not so for progressives. Indeed, the economic progressive House candidates in our study underperformed nonprogressives by nearly $250,000 on average in fundraising from large contributors and political action committees. Such shortfalls may help explain why we find that candidates’ likelihood of running on progressive economic issues was generally lower when they ran in competitive districts — where races are abnormally expensive. However, economic progressives more than compensated for big-money shortfalls by pivoting toward small contributors, bringing in a ~6 percent greater share of small contributions than nonprogressives. In other words, candidates interested in pursuing an economically progressive platform have nothing to fear — grassroots support for their campaigns will more than make up for big-money shortfalls.

Building a New Democratic Coalition for a Postindustrial America

The CWCP’s findings show that progressive economic messaging is a winning strategy, particularly in the districts that Democrats have struggled to win in recent decades. For the individual candidate in any given cycle, this fact alone would be enough to recommend pursuing a more economically progressive politics.

But progressive economic politics — and, crucially, policy — could also be part of a much broader coalition-building strategy that represents something far more significant than short-term electoral gains. As the neoliberal order gradually crumbles — evidenced most recently by the Biden administration’s pivot toward industrial policy and support for large-scale government programs to revamp the United States’ infrastructure and create good jobs — and as the progressive wing of the Democratic Party has started to acquire new heft, the direction that the party takes in the next few election cycles could reshape the landscape of American politics, beyond Trump and Trumpism.

In the ’90s, the short-term incentives motivating the DLC led to many disastrous long-term consequences, including rising inequality, the defection of the working class, and the polarization of American politics. Today, we are faced with the exact opposite situation.

Our report shows that it is in candidates’ short-term electoral interest to pursue a bold progressive economic agenda. And this politics fits into a long-term strategy that could undo many of the ills of the neoliberal era by realigning Democratic (and small-d democratic) politics and creating institutions that could sustain a new realigned majority. Like the DLC in the ’80s and ’90s, the progressive wing of the Democratic party today holds the possibility of transforming not only the party, but the entire landscape of American politics.

On the policy front, we already see some breaks with neoliberal orthodoxy. Key provisions in the landmark legislation of the Biden administration would not have been conceivable even a decade ago, particularly 2021’s ill-fated American Jobs Plan, with its nearly $2 trillion price tag including historic investments in infrastructure and jobs creation. But a critical mass of the Democratic Party has yet to align itself with a genuinely transformative vision of an American social democracy, and the legislation that Democrats have passed, while significant, is a long way away from New Deal–style institutions that create their own self-sustaining constituencies. Onetime checks in the mail aren’t enough.

The CHIPS Act, the Bipartisan Infrastructure Bill, and the Inflation Reduction Act are important, but the constituencies they create are limited to narrow sectors of the economy and often benefit capitalists looking for derisked investment possibilities more than labor unions hoping to use the provisions of some of this legislation to build worker power (even as some unions have acquired a much more significant role in directing government investment and the conditions attached to it than they have had in recent decades). In order to overcome the legacies of neoliberalism, Democrats will need to pursue a more vigorously prolabor industrial and regulatory policy combined with universal expansions of social and welfare services.

But as long as Democrats are identified as the party of the winners of postindustrial society, they will not be able to put together the kind of transformative electoral majorities necessary to pursue such an ambitious policy agenda. While economic progressive candidates already perform better than their nonprogressive counterparts, they could do even better if a critical mass within the party were to move in their direction and rebrand the party as a whole. In order for progressive candidates to be credible, and for their strategy to be even more effective, especially with working-class voters, it is necessary for the party to align itself with a new vision for the role of government in peoples’ lives — one that emphasizes equality, social protection, community, and control rather than economic dynamism, opportunity, mobility, and free trade.

In other words, electoral politics, policy, institution building, and organizing all need to reinforce one another in any effort to replace the neoliberal order with something new. It is essential, but not sufficient, to run on and deliver progressive policies — Democrats must also pivot toward a genuinely working-class symbolic politics that helps place policy, organizing, and institution building in a larger vision of the good society.

Today, the short-term electoral interests of candidates are aligned with a long-term strategy that could restore the health of American democracy. More than the electoral fortunes of the Democratic Party, the promise of a humane, social democratic future hangs in the balance. American democracy itself may not survive unless progressives find a way to make their economic vision the new common sense, and in so doing finally help working-class communities across the United States recover from the economic and social decline wrought by decades of neoliberalism.