In April, in a speech at the Brookings Institution, Jake Sullivan, the national security adviser, somewhat formally declared the death of that old “Washington Consensus.” For a generation, American leaders of both parties had spoken of the country’s global economic interests in terms that were as high-minded and even messianic as they were simplistic and prescriptive: What was good for markets was good for America and what was good for America was good for the world. This was always something of an alibi for the country and its self-congratulatory ruling class, as anyone looking under the hood could have told you — a way of dressing up economic policy powered by financial interests as something approaching charity, or at least noblesse oblige (and, perhaps by design, overlooking the very real costs to American workers and the climate as well).
But it is striking, even so, just how naked the emerging “new consensus” looks, with those costumes discarded and the masks off. In January, at Davos, before the assembled and entrenched global business caste, the U.S. trade representative, Katherine Tai, called it bluntly “a new economic world order.” In April, just after the International Monetary Fund and World Bank spring meetings, Janet Yellen declared that America could tolerate continued Chinese growth — but perhaps only as long as the United States remained the world’s predominant superpower, she implied. Sullivan, too, has tried to speak softly — suggesting that the United States wanted to disengage from China in only a few key areas of strategic significance (computer chips, green tech, A.I.) and that the new policy of economic rivalry was conflict over a “small yard” protected by a “high fence.” But he also has bluntly stated that his job is to serve not Goldman Sachs and its partners in China but the workers of America. This month, a longtime Biden aide, Jennifer Harris, approvingly tweeted a photo of a graduate student’s tattoo: “Death to neoliberalism,” it read.
What follows is not entirely clear. The “new consensus” has meant enormous state investment, directed toward industrial revival all around the postindustrial world. But it’s not yet obvious that such a revival is truly workable — “Can the World Make an Electric-Car Battery Without China?” a headline in The Times recently wondered — which is one reason many regard that new economic world order as an expression of geopolitical rivalry more than industrial policy pursued for its own sake. Not long ago, China’s green-tech manufacturing boom looked like a possible climate lifeline; today it is more likely to be described by American bureaucrats as a suspicious display of rivalrous statecraft. And it is somewhat disorienting, even for critics of neoliberalism, to be heading into an escalating trade war without an ideological banner flying above. Hardly anyone at any point on the American political spectrum is talking about open markets and free trade in those once-familiar absolutes.
Skepticism has spread to market acolytes overseas too. Earlier in April, Christine Lagarde, president of the European Central Bank, called for a new industrial policy across the continent; this month, President Emmanuel Macron of France, long the international face of neoliberalism, echoed the call. Five years ago, sanctimonious neoliberals mocked Donald Trump’s zero-sum view of the world as a kind of Dunning-Kruger geopolitics. But today, you hear few invocations among politicians or diplomats or bureaucrats of any truly universal positive-sum model of free markets or economic growth.
How profound is the change, beyond the rhetorical turn? In many ways, perhaps smaller than it may sound — the ships of state and business are large and hard to redirect, with small turns often hailed (or denounced) as total reversals. And the turn is motivated by some genuine and indeed progressive reckoning with the shortcomings of the old consensus, or at least its promises and presumptions, which Sullivan was careful to highlight in his speech: that markets were always efficient and productive, that all growth was good growth and that globally, more of it would mean more prosperity and inevitably a liberalization of the world’s more autocratic and repressive regimes. On the domestic front, the implication is clear: a recognition that the free-market policies of the past several decades have punished the American working and middle classes, particularly in politically sensitive areas of the Rust Belt. Or, in the language of the campaign trail: Trade deals need to benefit the people of Pennsylvania and Michigan rather than those of Shenzhen and Shanghai.