By Professor K. Sabeel Rahman
In these opening months of the Trump administration we have witnessed no shortage of political drama: the administration’s assault on Muslims and immigrants; concerns over corruption and conflicts of interest; and the attempts to dismantle the Obama administration’s signature achievements from healthcare reform to financial regulation. While these battles certainly represent new challenges, many of today’s political cleavages are in fact starker and more heightened manifestations of tensions and cleavages that were already very much present in American politics.
At times hidden, at times more open, three underlying anxieties shaped politics throughout the Obama era and in the 2016 election itself: first, a growing anxiety over worsening economic inequality and declining opportunity, particularly in the face of the globalized, post-financial crisis economy; second, deepening concerns about democratic accountability, government corruption, and the failure of public institutions to be responsive to these concerns; and third, a latent conflict over membership, inclusion, and exclusion: who counts as a full-fledged member of “we the people” that our government and our politics are in theory committed to empowering and serving.
We can see in the rise of Donald Trump one particular response to these anxieties in the form of an “exclusionary populism”—a view that in response to these deep economic inequalities and loss of faith in political institutions, we must turn to a singular powerful leader who can sweep away ossified and corrupted “politics as usual,” and restore the promise of opportunity and democracy to all, but do so by drawing a sharp line that excludes “undesirable” communities from the body politic: immigrants, communities of color, Muslims, and various other “Others.” This exclusionary populism is sadly not new; rather, it represents a durable and real legacy in American history.
But we have another tradition as well, one that has surfaced at various moments of radical change, crisis, and attempts at social transformation. From the cataclysm of Civil War, abolition, and Reconstruction; to the upheavals of industrialization in the late 19th century eventually leading to the New Deal; to the Civil Rights movement, this tradition focuses not on reform through exclusion, but on the quest for constructing a more genuinely inclusive—and democratic—politics, economics, and society. This is the tradition of today’s explosion of multiracial, cross-constituency mobilizing, in part provoked by Trump’s actions, but more accurately building on long-term efforts to organize many communities in response to the inequities of the 21st-century economy.
Just eight years ago, as Barack Obama swept into the White House on the heels of a catastrophic financial collapse, the idea of a “New New Deal” reinventing liberalism for the 21st century seemed within reach—as it did in the detailed policy briefs of Hillary Clinton’s campaign. But this aspiration overlooks the very real limits of a modern form of “New Deal—lite” governance. Instead, we need to recover a deeper tradition of more radical, progressive populism to transform our economy and government. The promise of this more radically egalitarian, inclusive, democratic political economy depends on more than counteracting the ideologies of elite-serving privatization of the safety net or the exclusionary populism that we see emergent in the new administration. It also requires asking some hard questions about the ways in which modern-day liberalism itself—particularly its New Deal-inspired faith in top-down, technocratic expertise—has failed to diagnose, let alone address, these deeper concerns of inequality, exclusion, and democratic failure.
The financial crisis and the limits of managerial liberalism
In many ways, our current predicament and our current politics are animated by the continued repercussions of the 2008-9 financial crisis. We are still living in the hangover of that crisis, which wiped out many Americans’ wealth and savings—particularly in communities of color. The sluggish recovery in the years since the crash has been manifested in the continued shift to low-wage, precarious work.
This exclusionary populism is sadly not new; rather it represents a durable and real legacy in American history."
But there is an equally troubling conceptual and ideological ripple effect of the crisis, and the battles over the bailout and financial reform efforts that ensued. For many Americans, the financial crisis crystallized the sense there is a “rigged” economy that is extractive, exploitative, and fundamentally unfair. This is further complicated by a sense that government itself has at best fallen short in its response, or at worst, actively contributed to the rigging of the economy. The bailouts of Wall Street firms—critical as they may have been to stave off a deeper depression—nevertheless came without longer-term and more structural transformations of the financial sector. These concerns combine into a deeper loss of faith in politics and they are rooted as much in Tea Party populism as in failures within the liberal political economy itself.
In April 2010, Barack Obama visited the Cooper Union to deliver a make-or-break sales pitch for his financial reform package, which was working its way through Congress at the time. Seated in the front row of the lecture hall were the leaders of all the major Wall Street banks, and outside, throngs of protesters chanting for the heads of those very CEOs. The president outlined an aggressive reform agenda, arguing that the central problem leading to the crisis was that financial markets “operated in the shadows … invisible to regulators, invisible to the public.” Thus, “risks accrued until they threatened our entire financial system.” The financial reform package, Obama argued, was focused on preventing such “reckless risk taking,” specifically by expanding the oversight and enforcement powers of expert regulators at the Federal Reserve and elsewhere.
In this view, the problems of economic inequality were primarily matters of market failures—failures that needed to be remedied by deploying neutral, scientific, expert regulators to manage the excesses of the modern market system. This idea of managerialism has a long pedigree. Franklin Roosevelt and his New Dealers established the prestige of the idea of government expertise and regulation to serve the public good, and rework the dynamics of a complex and at times harmful modern economy. To James Landis, one of Roosevelt’s key advisors and the architect of the Securities and Exchange Commission, the expert-based regulatory state represented “our generation’s answer to the inadequacy of the judicial and legislative process.” More recently, following conservative attacks on the New Deal state in the 1970s and 1980s, pro-regulation liberals reformulated the muscular faith of Landis in top-down regulation in more chastened—but no less technocratic—terms. Today, in place of New Deal—style technocracy, we see appeals not to “big government” but rather to “smart government”—the judicious and limited deploying of expertise to facilitate, rather than fundamentally alter, the way markets function.
Obama’s operation within the managerialist vision is thus not surprising, but it did come at a price. In focusing on the goal of optimizing market functioning, this view of public policy tends to overlook the more fundamental moral and political problem of power. Economic issues like the financial crisis or the rise of too-big-to-fail banks represent a concentration of economic power, which undermines the life chances and agency of communities and individuals and expands the ability of powerful corporations and wealthy elites to entrench their economic—and often political privilege. The popular anger against Wall Street spoke to this deeper sense of injustice and unaccountability of “big banks” and private power more generally, a moral violation that Obama-era reform did little to appease or address. The second problem with managerialism is that it bases the viability of its substantive policy agenda on a foundation that is increasingly brittle: a faith in the responsiveness, effectiveness, and expertise of regulators themselves. We have very good reason to doubt that presumption. The fear of interest group capture of regulators is a long-standing concern motivating decades of attack on regulation itself. But capture can manifest itself in regulatory inaction as much as action. Arguably the financial crisis itself was a product of regulators who were overly friendly with financial-sector interests, leading to lax enforcement of existing laws.
Consider what Obama and the mainstream financial reform package did not include. Calls for “breaking up” too-big-to-fail banks were dismissed.
More aggressive structural limits on the kinds of powers, permitted activities, and combinations of financial activities within firms, such as the Volcker Rule ban on proprietary trading, were not mandated by statute, but instead offered as recommendations to regulators. However, these measures were subsequently watered down under pressure on the regulators themselves from financial-sector actors. Senators Elizabeth Warren and Bernie Sanders led calls for a more structural overhaul of the financial sector. These voices evoked a very different tradition of progressive economic policy: not the managerialism of Landis or post-Reagan liberals, but rather a more democratic and egalitarian progressivism that had its roots much earlier.
Populists, progressives, and the problem of economic power
Over a century ago, in what historians term the Progressive Era (roughly 1880—1920), the country faced a similar confluence of crises. The upheavals of industrialization created new and terrifying forms of inequality, dislocation, and immiseration. They also created new concentrations of economic power, evident in the rise of oligarchs such as Vanderbilt, Rockefeller, and J.P. Morgan. These economic concerns bled into the political, as many Americans feared the influence that these elites would have on party bosses, legislators, and elected officials. Indeed, finance was the ultimate evil of evils, seen as the puppeteer behind the economic and political inequities of the moment.
In this setting, a variety of thinkers, lawyers, reformers, and activists developed a sophisticated critique of the confluence of economic and political power. They identified the problem of private power, characterized by the growth of powerful new monopolies and mega-corporations like Standard Oil, and market power—the “market” itself was not a natural system like the weather, but rather a product of law, policy, and human-made decisions. Progressive Era thinkers also condemned the failure of political institutions to address these economic concerns. Thus, these economic and political conditions produced what we might term a problem of actionability. In the face of the vast powers of monopoly corporations, the diffuse system of the market itself, and the dysfunction of existing democratic institutions, the idea that “we the people” could in fact reassert control, ownership, and accountability over these powers and systems seemed remote indeed. This was what philosopher John Dewey called the “problem of the public”—that a “scattered, mobile, and manifold public” lacked the means of “effective political action” necessary to organize, assert, and realize their aspirations.
Democracy, then, for these radical reformers was an urgent necessity—a vital means by which communities would have to wrest control over their economic and political destinies back from these powers and systems that had made a lie of the idea of popular sovereignty and self-determination. The central challenge for economic policy is the problem of power and domination—the accumulation of unchecked power, whether in the form of concentrated corporate and monopoly power or in the more diffused form of the market system itself. Democracy is the primary means we have for organizing a response to this problem of domination.
Toward a 21st-century progressivism?
The idea of “democracy against domination” takes a very different approach to problems such as financial reform. The purpose of financial regulation is not merely to optimize market functioning and protect against risk, but more broadly to tackle the problem of domination and economic power. To address the problem of economic power, we must rely not only on the delegated and distant expertise of regulatory agencies, but on more direct and empowered forms of democracy.
Whereas the financial reforms coming out of the crisis sought to expand the expertise and insulation of regulators, we might instead try to democratize regulatory agencies, creating more hooks and levers through which politically marginalized groups such as workers, consumers, and student-debt holders could have a more direct voice in shaping economic policy, and where regulators see their purpose as tackling these concentrations of power that restrict opportunity to the few rather than the many. Indeed, the most radical element of the post-2009 financial reform effort sought to do just that. The Consumer Financial Protection Bureau (CFPB) is in effect tasked with exactly this mission of empowering a politically diffuse and often disempowered constituency of consumers, students, retirees, and minorities, among others, to counteract the economic power of credit card companies, mortgage companies, and financiers who otherwise would have an easier time extracting fees, engaging in fraud, and undermining economic equity. Furthermore, the CFPB has invested much of its expertise in more democratic and participatory modes of engaging citizens in its agenda-setting and policymaking, through online and offline consultations, town halls, and proactive engagement with grassroots community groups. It is no wonder that the CFPB is one of the top targets of the vociferous financial sector seeking to dismantle Obama-era reforms.
This democratic, anti-domination view has implications beyond finance. In a variety of areas, we are seeing a growing focus by activists, reformers, and progressive policy thinkers on the problems of concentrated power and unequal market structures."
More important, this democratic, anti-domination view has implications beyond finance. In a variety of areas, we are seeing a growing focus by activists, reformers, and progressive policy thinkers on the problems of concentrated power and unequal market structures. First, we can see this reorientation in several distinct but related movements tackling questions of concentration, antitrust, and corporate power in issues such as net neutrality and the problem of concentrated private power over the control of the Internet by giants such as Comcast and Verizon, and platforms like Amazon; rural efforts to tackle the increasing power of “big agriculture” over farmers and rural economies; and continued mobilization around finance and the problem of financialization. Second, despite the well-noted decline of unions, we are seeing a new “alternative labor” movement on the rise, seeking to tackle the worsening inequities in the world of work and the eroding social contract. The “Fight for $15” has pushed a $15 minimum wage with increasing success across the country at the state and local level. New groups have emerged to mobilize and organize workers in low-wage, highly insecure sectors like restaurant work, fast-food work, domestic work, and on-demand “gig economy” work.
It is in these movements and battlegrounds that we see the beginnings of a more radically democratic, egalitarian, and inclusive progressive movement for the 21st century. Like reformers of the Progressive Era, it evokes a focus on deep economic structures, dynamics, and the problem of power—and premises social change on the building of democratic power and capacity on the part of communities themselves through bottom-up movement building, and on the part of policymaking institutions by demanding greater participation and representation of these groups in democratic institutions themselves. Yet we must not forget that many of the reformers of the Progressive Era, for all their valuable insights, were also conflicted at best (and supportive at worst) of the systematic racial exclusion of the Jim Crow era. In this sense, today’s emerging progressive movements reflect something even more radical and vital: a recovery of this old progressive focus on power and democracy, combined with a commitment to multiracial, cross-constituency organizing that makes this vision of anti-domination and expanded democracy truly inclusive. Movements like the battle for net neutrality or the Fight for $15 are self-consciously and distinctively multiracial movements, investing in the often-difficult spade work of forging these alliances and solidarities in the course of tackling deeper forms of economic power and inequality.
The opportunity—and the stakes—for this alternative vision of 21st-century progressivism could not be higher. The specter of exclusionary populism of the resurgent far right raises the costs of the failure to develop a cross-constituency vision and movement that takes seriously the problems of a rigged economy and a sclerotic government but does so with a commitment to values of inclusion, equality, and democracy. Without this alternative, we leave too much of a moral vacuum for misguided appeals to exclusion and upheaval. Conventional liberal politics in the New Deal and post New Deal vein are no longer compelling enough to meet either the challenge of 21st-century inequality or of right-wing populism. Indeed, for a country that counts democracy as its birthright, we have so rarely met the highest ideals of that concept.
The ferment and struggles of Roosevelt’s era made possible the gains under the New Deal. Now in 2017, we face a similar moment and turning point of economic transformation and political upheaval—a moment that will set the terms of inclusion, equality, opportunity, and democracy for decades to come. The stakes are enormous. Whether we can do better than our forebears remains to be seen.
K. Sabeel Rahman is assistant professor of law at Brooklyn Law School, where he teaches constitutional law, administrative law, and courses on law, inequality, and social change. His academic research focuses on questions of democratic and participatory governance, public law, and economic policymaking. He holds a J.D. and Ph.D. from Harvard University and is a Rhodes Scholar. He is also a fellow at the Roosevelt Institute and New America. His articles have appeared in the Boston Review, the Atlantic, the American Prospect, and the Nation.
This article was adapted from Professor Rahman’s book, Democracy Against Domination (Oxford University Press 2016).