A study into how the implementation of the neo-liberal agenda has led to a rise in populism in the

US over the last 50 years.

Orlando Firth 101672

Introduction

In recent years some western democracies have experienced a new wave of support for populist
politics in their political discourse. It has been argued by many scholars that populism presents a
direct threat to liberal democracy. Much of the support for populism can be said to come from the
“losers” of globalisation and the long-term neo-liberal agenda dating back to the 1980’s. Indeed, in
the words of Fukuyama, “I concur with the commonplace judgment that the rise of populism has
been triggered by globalization and the consequent massive increase in inequality in many rich
countries.”1 In the US, the foundation of the neoliberal agenda can be traced back to the aftermath
of the second world war. In the early 1980’s in the wake of growing discontent with the post-war
status quo, the move towards full-fledged neoliberal policies became apparent with the election of
Ronald Reagan in 1981. This agenda was broadly left unchallenged until the 2008 financial crash
where there was a shift in the political paradigm. The change was ultimately completed with the
election of Donald Trump in 2016, signalling that a new age of populist politics had arrived in the US.
This paper attempts to trace the story from the implementations of the neoliberal agenda, its core
aims and how it led to the election of a populist President in the US. Firstly, this paper examines the
theoretical framework of both neoliberalism and populism. Then it looks at the historical context in
the US from the post war period to the 2008 financial crisis. Finally we look at how the neoliberal
theory may have contributed to a rise of populist politics in the US.

Theoretical framework

In their book “Never Ending Nightmare: The Neoliberal Assault on Democracy”, Pierre Dardot and
Christian Laval argue that the neoliberal project, from its very roots, is an anti-democratic one
(Dardot and Laval, 2019)2. They argue that from the outset, the neoliberal agenda seeks only to
protect the market and its rules from unnecessary intervention from governments by placing the
aforementioned rules in the bedrock of the nation, thus making them inviolable. In doing so, the will
of majority is to be ignored so as to preserve these fundamental rules should the need arise.
Neoliberal theorists have what appears to be a deeply hostile attitude towards democracy because
they claim, if democracy is left unbound from certain laws it will undoubtedly lead to unlimited
democracy and then totalitarian democracy even. Friedrich Hayek articulates this point by defining
democracy in purely procedural terms, that it is nothing more than a procedure for selecting rulers
that may, in certain cases, be used for ends contrary to the original intention. Walter Lippmann
argued that rulers are bound to follow the will of the majority and that therefore the power given to
the people to choose their leaders should be curbed. Hayek took this argument further, shifting the
focus from one ruler to the legislature, who has the monopoly of power over the minority to look
after its own interests. If stringent limits are not placed on institutions, we will undoubtedly arrive at
an unlimited democracy or worse. In the words of Dardot and Laval, this is a “visceral mistrust of
representative democracy” resulting in non-negotiable limits on democracy, something somewhat
contrary to western political thought which has so often championed representative democracy in
more recent years.

1
Fukuyama. (2019). Fukuyama replies. Foreign Affairs, 98(2), 168-170.
2
Dardot, P., & Laval, C. (2019). Never Ending Nightmare ([edition unavailable]). Verso.
https://www.perlego.com/book/918379/never-ending-nightmare-the-neoliberal-assault-on-democracy-pdf
The nature of these limits is to be analogous with the rules of the highway code according to Louis
Rougier3, which is to say that the rules should be unchanging and binding on everyone including
governments. They are unchanging because, to change them would require a new position to be
taken by individuals creating chaos, in the same way that changing the highway code periodically
would also create chaos. The type of rules that should bind the state favoured by neoliberals are
those of private and criminal law for the simple reason that this type of law is the same that
regulates the market and protection of property, the two key pillars of neoliberal thought. Unlike
public law, which concerns itself with the workings of the state, private and criminal law are the only
laws that can govern the individual. The state is somewhat compelled to bind itself to the same law
to legitimately coerce individual to follow said laws. Thus, there is an a priori limit placed on all
government legislation by private law. The prevalence of private law in this context is something at
odds with traditional constitutional thinking but Hayek claims that existing constitutions have failed
to guarantee individual liberty because they have been unsuccessful in defining the limits of power
for different institutions (Hayek, 2020)4. He suggests a revision of the system placing a constitutional
court at the centre with supreme power over executive and legislative bodies to prevent the tyranny
of the legislative power. The central role of the court is to protect against the encroachment of the
fundamental principles that limit government. This is a key divergence away from democracy as it
replaces government by the people to government by the law. Hayek chooses to place the law
supreme above everything else, including the will of the people and in doing so, diverges from
“democracy” to “demarchy,” which limits the will of the people using private law. In practice, what
comes about is rule by a minority over the majority with the aim of protecting the law. The
justification for this position comes from the alternative, at least according to Hayek, which is much
worse; in a representative democracy, the majority has supreme power over a minority whereas in
his conception, the judges can act as safeguards against a tyranny of the majority. In his works,
Hayek went even further, suggesting that there ‘can sometimes be many instances of authoritarian
governments under which personal liberty was safer than under many democracies’ (Chamayou,
2021)5, using this position to justify the regime under Augusto Pinochet. Hayek critically redefines
what we mean by ‘personal liberty’ to include only economic freedom, arguing that this type of
freedom should prevail over all others even if others (such as political freedom) are being
suspended. In his logic, we should prefer any form of government that is economically limited over
any form of economically ‘unlimited’ government’ liberal authoritarianism is thus favoured over
totalitarian democracy. Hayek says that whilst it is possible, but unlikely, that an autocratic
government with restrain itself, an all-powerful democratic government, at the mercy of the
majority, can never do so. This neoliberal philosophy will prove critical when examining the rise of
populism in the US (as well as other western countries, namely the UK).

Populism in recent years has taken the political landscape by storm with multiple events across the
western world. In 2016 when Donald Trump was elected and the UK voted to leave the European
Union, many scholars agreed that this was a new era of politics. Further movements across Europe
surfaced (in France with Le Pen for example) but with arguably less obvious success. However, what
was clear was the populism was not merely a transitional phase but a permanent feature of the
democratic struggle. In the world of academia, populism continues to be a difficult concept to define
with several scholars debating the issue. One of the most used definitions suggests that populism is
a thin, anti-establishment ideology that ultimately divides society into two groups: the ‘pure people’
and the ‘elite corrupt’. It calls for a national policy that reflects the ‘general will of the people’
3
Denord, F. (2001). The Origins of Neoliberalism in France: Louis Rougier and the 1938 Walter Lippmann
Conference. Le Mouvement Social, 195, 9-34. https://www.cairn-int.info/journal--2001-2-page-9.htm.
4
Hayek, FA. (2020). The Constitution of Liberty (1st ed.). Taylor and Francis.
https://www.perlego.com/book/1698536/the-constitution-of-liberty-the-definitive-edition-pdf
5
Chamayou, G. (2021). The Ungovernable Society (1st ed.). Polity Press.
https://www.perlego.com/book/2105289/the-ungovernable-society-a-genealogy-of-authoritarian-liberalism-
pdf
(Mudde, C. 2004)6. The implications of the word ‘thin’ suggest that populism always works alongside
or on the back of other ideologies. This is a very minimalist definition of democracy which by nature
is not exclusive (hence a good definition) but is arguably too broad to really provide a clear picture of
what populism is. Other scholars have attempted to define populism as a political style focussing on
its performative features such as its appeal to ‘the people’ and its so-called ‘bad manners’ (Moffitt &
Tormey, 2013)7. However, what most scholars agree on is that one of the key features of populism is
the separation of the ‘true people’ from everyone else and joining them to a strong leader.

Historical Context

The foundations of the neoliberal agenda in America are often thought to have been laid in the early
1980’s with the arrival of President Reagan and his particular brand of economic reform, aptly
named Reaganomics. However, this interpretation is too simplistic and it is necessary to trace the
birth of the neoliberal regime further back in history. In the wake of the Second World War, America
emerged victorious and flew onto the world stage with virtually no international competition. While
prior to the war, labour unions had possessed a certain degree of power when it came to facing their
industry counterparts, anti-communist feeling inside the US served to drive out more militant
leaders of unions leaving firms with far more scope to dictate the rules of the game. At points the
pressure boiled over, most notably with the strikes during the Vietnam War where many hundreds
of thousands of workers walked out to sharp criticism for being unpatriotic during a period of war.
The demand of goods brought on by the war and the removal of men from the workforce served to
alleviate the inherent contradictions of the capitalist model (Spector, A. 2019) 8, but as the war came
to an end and the men returned, unemployment began to rise. The US economy was also facing stiff
competition from the so-called losers of the Second World War, Germany and Japan, who had both
managed to recover and rebuild, taking business away from US firms. Coupled with the oil crisis,
towards the end of the 1970’s the US economy was in a state stagflation.

It was undoubtedly time for a change, and large firms seized on the opportunity, seeking to exploit
the economic turmoil and weak labour unions by turning to the seemingly new, but in fact old idea
that a strong economy can only be achieved by letting the markets function free of state regulation,
or as minimal regulation was possible beyond the protection of property rights theorised by the likes
of Hayek and Friedman. The safeguards put in place following the Wall Street Crash in 1929 by
Roosevelt were somewhat disregarded in favour of new policies of privatisation and lower welfare
spending. The New Deal was designed to safeguard certain institutions that although were not
turning a profit, were none-the-less necessary to protect certain members of society – such
institutions were quickly done way with or turned over to firms in the 1980’s. the arrival of President
Reagan brought the dismantling of the labour unions who were considered to be a threat to the
well-functioning of the market, a decision which would have consequences for decades. Much of the
neoliberal propaganda would suggest that the government was very fiscally conservative during that
period and too many American it may well have seemed so as social welfare and health programs
were cut to the bone. However, much of the money that was cut in the budget for such programs
was reinvested into military expenditure, so much so, that the national debt doubled during
Reagan’s six years as President.

6
Mudde, C. (2004). The Populist Zeitgeist. Government and Opposition, 39(4), 541-563. doi:10.1111/j.1477-
7053.2004.00135.x
7
Moffitt, B., & Tormey, S. (2013). Rethinking Populism: Politics, Mediatisation and Political Style. Political
Studies, 62(2), 381–397. https://doi.org/10.1111/1467-9248.12032
8
Spector, A. (2019). NEOLIBERALISM AND THE RISE OF AUTHORITARIANISM IN THE UNITED STATES.
International Review of Modern Sociology, 45(1), 71–92. https://www.jstor.org/stable/48636763
Interestingly, what started off as a right-wing agenda quickly became the political norm; the next
democratic president after Reagan, Clinton perpetuated the neoliberal agenda and here is a critical
turning point where instead of rejecting the status quo, the political left decides to incorporate it
instead. The focus on the protection, development and flourishing of the market led to an increasing
focus on globalisation to maximise market efficiency. Production was outsourced in many western
countries meaning that traditional homegrown industries suddenly dried up leaving many people left
behind. These people are the so-called ‘losers’ of globalisation and as time went on, they found
themselves increasingly under-represented. One of the key principles key principles that had been
embedded into society was the idea of meritocracy - that the system would reward those who
applied themselves and therefore, if you weren’t succeeding, you weren’t doing enough. In this way,
the status quo was allowed to survive for far longer than it probably should have because the onus
was on the people to change themselves, and not the system itself. This ultimately came to the fore
during the 2008 financial crisis where it became quite apparent that the unchallenged status quo
had inherently huge problems. The political climate seen today ultimately represents the fallout
from 2008 which was the boiling point from nearly 40 years of tension.

Findings and Discussion

One of the responses of the American government as a response to the 2008 financial crisis was
massive state intervention which although was arguably completely necessary to save the American
economy but was not well-received by the American electorate. Of course, after so many years of
minimal state intervention, this could easily be seen as something fundamentally anti-neoliberal.
However, it could be argued that the neoliberal agenda was so prominent in the mechanisms of
government, the supposed huge state intervention was just the neoliberal system protecting itself.
Besides offering huge bailouts for banks, what followed was a period of austerity where social
programs were cut to the bone in an effort to save money. To the taxpayer, it is easy to see why they
felt they were being penalised for someone else’s mistake. One of the key aspects to populism is the
ability of populist leaders to connect to their supporters on a seemingly personal level in times of
crisis. Indeed, Moffitt and Tormey highlight specifically the political style of populism saying that
populist leaders will often use ‘crisis, breakdown or threat’ in their rhetoric to cut through the ‘highly
instrumentalised’ political landscape. In one of his many political speeches, Donald Trump used the
term “Drain the swamp”9 which became a sort of catchphrase for his whole campaign. He was
highlighting the overly bureaucratic nature of American politics which had become a seemingly
exclusive club, protecting its own interests at the expense of the masses. The neoliberal focus on
minimising the power of the people and maximising the protection of the market ultimately led to
the over-bureaucratisation of democratic institutions led by an elite political class who had lost sight
of their original purpose as well as the people they claimed to represent. Because populism claims to
be anti-elite and anti-institutions favouring a leader with a strong connection to the ’people’, it is
easy to see how the ideology was ideally suited to answer the frustrations of the American public in
the wake of the 2008 financial crisis.

The populist movement that has been prominent in the US is right wing by nature. Due to the anti-
establishment, ant-elite nature of populism, the fact that the movement is right wing suggests that it
sees its opponent on the left (Joppke, 2023)10. This would indicate that there has been a shift in the
perception of neoliberalism on the political spectrum: during its initial implementation, it was
associated with right-wing figures (Reagan and Thatcher) and policies (privatisation and laissez faire
economic policy). After that, the neoliberal agenda was incorporated into the moderate left wing or

9
Widmer, T. (2017). Draining the Swamp. The New Yorker.
https://www.newyorker.com/news/news-desk/draining-the-swamp
10
Joppke, C. (2023). Explaining the Populist Right in the Neoliberal West. Societies, 13(5), 110.
https://doi.org/10.3390/soc13050110
the ‘third way’ where the neoliberal political order has been established. It is from this point that the
populist right can set itself against the supposedly left-wing neoliberal order. As part of the ‘third
way’ agenda, governments focussed on developing social policies which have been argued to be
mainly a response to the increasingly loud voice from the post-materialist cleavages of society
(Inglehart, 2015)11. There was, however, a less discussed, counter-revolution which only became
apparent much later. While a neoliberal agenda favoured more trade and greater movement of
people in the pursuit of market optimisation, the counter revolution positioned itself opposite the
post-materialist cleavage with concerns about immigration and law enforcement. In much of his
rhetoric, Donald Trump has been highly critical of a lax attitude towards immigration, suggesting that
many immigrants are unskilled and risk taking jobs reserved for hardworking Americans. Indeed, he
even went so far as to impose a travel ban, nicknamed the “Muslim ban” on people coming from
several Muslim countries on the basis of protecting the nation. One of his most famous election
commitments was also the building of a wall on the southern US border with Mexico to slow down
immigration as well. These types of policies are immensely popular with his support base, many who
belong to the “non-materialist” cleavage.

Conclusion

In conclusion, it appears evident that one of the main contributing factors to the populist landscape
of American politics we see today is attributable to a long-term neoliberal agenda. As discussed
above, one of the key features of neoliberalism is its attempt to remove control from the people for
fear of an unlimited democracy which could turn into a totalitarian regime. In doing so, it places
more power in the hands of institutions and therefore with a small group of elites. What has
happened in the US is that the small governing elite has got carried away in perpetuating its own
self-serving regime. The increasing frequency of populist politics not only in the US but around the
world can be seen as a call for the power to be returned to the people who it seems have been
ostracised from the political process. The electoral success of people like Donald Trump can be seen
as a clear indication of a shift in the political paradigm. Whilst we cannot say conclusively that the
rise of populist politics is solely due to a long-standing neoliberal agenda and that there are
undoubtedly other factors at play which this paper does not investigate, we feel confident in arguing
that neoliberalism has been one of the key factors.

Bibliography

11
Inglehart, R. (2015). The silent revolution: Changing values and political styles among Western publics.
Princeton University Press.
Chamayou, G. (2021). The Ungovernable Society (1st ed.). Polity Press.
https://www.perlego.com/book/2105289/the-ungovernable-society-a-genealogy-of-authoritarian-
liberalism-pdf

Dardot, P., & Laval, C. (2019). Never Ending Nightmare ([edition unavailable]). Verso.
https://www.perlego.com/book/918379/never-ending-nightmare-the-neoliberal-assault-on-
democracy-pdf

Denord, F. (2001). The Origins of Neoliberalism in France: Louis Rougier and the 1938 Walter
Lippmann Conference. Le Mouvement Social, 195, 9-34. https://www.cairn-int.info/journal--2001-2-
page-9.htm.

Fukuyama. (2019). Fukuyama replies. Foreign Affairs, 98(2), 168-170.

Hayek, FA. (2020). The Constitution of Liberty (1st ed.). Taylor and Francis.
https://www.perlego.com/book/1698536/the-constitution-of-liberty-the-definitive-edition-pdf

Inglehart, R. (2015). The silent revolution: Changing values and political styles among Western
publics. Princeton University Press.

Joppke, C. (2023). Explaining the Populist Right in the Neoliberal West. Societies, 13(5), 110.
https://doi.org/10.3390/soc13050110

Moffitt, B., & Tormey, S. (2013). Rethinking Populism: Politics, Mediatisation and Political Style.
Political Studies, 62(2), 381–397. https://doi.org/10.1111/1467-9248.12032

Mudde, C. (2004). The Populist Zeitgeist. Government and Opposition, 39(4), 541-563.
doi:10.1111/j.1477-7053.2004.00135.x

Spector, A. (2019). NEOLIBERALISM AND THE RISE OF AUTHORITARIANISM IN THE UNITED STATES.
International Review of Modern Sociology, 45(1), 71–92. https://www.jstor.org/stable/48636763

Widmer, T. (2017). Draining the Swamp. The New Yorker. https://www.newyorker.com/news/news-