A Fabulous Failure: The Clinton Presidency and the Transformation of American Capitalism

In the late 1990s, I had lunch with a vice president of one of the Big Three auto companies. Drawing together two major problems of the decade, health care and deindustrialization, he explained that he could locate a factory almost anywhere in the world and not worry about paying health-care costs—except for one country, the United States. By 1989, Nelson Lichtenstein and Judith Stein show, health-care insecurity caused four-fifths of all strikes of more than a thousand workers—including the famous Pittston Coal strike. Even Chrysler CEO Lee Iacocca saw the problem, noting that each of his firm's automobiles contained triple the health-care costs of comparable Japanese cars. By the early 1990s, the low road of US capitalist development seemed to be helping nobody.Ideas and solutions to problems like these, according to Lichtenstein and Stein, were flying thick and fast in the early days of the Clinton administration. Although hardly interested in creating a workers’ paradise, the center-left policy champions of the 1990s focused on building a system of managed capitalism. The idea of running the economy on a solid foundation for both business and workers—through infrastructure, managed trade, health care, an educated workforce, and incentives for responsible corporate behavior—seemed like a real possibility. Before the administration's imaginative range of thinking hardened into narrowly conceived market-based solutions for nearly all social problems, Lichtenstein and Stein see the clear outlines of a higher road not taken.What happened? This delightful wonkfest of a book, written by two masters of the field, tries to figure it out. Fabulous Failure centers on this mystery: How did the opportunity for a progressive vision slip through the Democrats’ hands, allowing for our present catastrophic situation? It's a rich and enjoyable tale of hopes and plans, showing that neoliberalism was not the entirety of the early Clinton agenda. Yet along with their mystery, there is a problem: Was there really an opportunity for a different path in the first place?The story begins with what the Lichtenstein and Stein call an “adventuresome range of ideas” for Clinton and the Democrats (1). As the authors write, “A new kind of liberalism—skeptical and distrustful of government, yet still committed to a set of progressive social and economic goals—had emerged in the heart of the liberal establishment” (46). It takes a bit of historical imagination to return to those thrilling early days of the Clinton administration. There was a post-1989 peace dividend, national health-care debates, managed trade thinking, industrial policy, and even labor rights proposals (including outlawing striker replacement). Supply-side developmentalism was in the air, with ideas for building a highly skilled labor force rather than a cheap low-wage economy. By the time of the Newt Gingrich congressional revolution in 1994, a rebuke less than two years into Clinton's first term, that progressive smorgasbord was on its way to becoming a much darker set of policies: the (popular) crime bill, “the end of welfare as we know it,” the deregulation of telecom and finance, government privatization, balanced budgets, and the granting of most-favored-nation status to China. In place of managed capitalism came unrestrained and unregulated growth as the single solution to all things.There's a catch-22 at the heart of this book. It's hard to imagine Clinton's version of a populist developmental state without a strong mobilization of labor. Yet without enabling legislation restoring the right to organize and strike, or some corporatist plan for dealing with jobs and inequality, there could be no such mobilization. Neither Clinton nor Congress was prepared or able to provide that political space for workers, while organized labor was on the verge of complete irrelevancy under the myopic beltway leadership of Lane Kirkland (who was finally overthrown in a revolt from below for not fighting Clinton enough). There's a reason that Robert Reich, Clinton's old friend, industrial policy advocate, and secretary of labor, titled his memoir Locked in the Cabinet.Clinton never took a gamble on labor, but early on he aggressively pursued capital's agenda in the form of the North American Free Trade Agreement (NAFTA). Lichtenstein and Stein rightly downplay the economic impact of NAFTA, explaining that the rise of China was more important. Like the book in general, however, this allows the specifics of economic policy to trump political reality. Go into any former industrial town in the Midwest today, and you'll still find an older generation of workers spitting nails about the Clintons for codifying their job losses with NAFTA. In the eyes of the American industrial working class, Clinton went to the mat for the worst idea imaginable. It does not matter that the impact was negligible if the politics were devastating. If your town is having a jobs crisis, how about a Democratic stamp of approval on the apocalypse?The symbolism of NAFTA speaks to my biggest concern with this otherwise erudite book. If one wants to understand the 1990s, it is not enough to look at left-center scheming. Context matters. And here the context includes not just issues of political economy but also the great silence in this book: culture. While the industrial policy types were running blue-sky grad seminars, the rest of the country was digesting Pat Buchanan's declaration of cultural war, Rush Limbaugh's radio bullying, Gingrich's media tricks, and a fifth column of right-wing warriors no longer restrained by Reagan. In 1994, all of this delivered the end of four decades of House Democratic rule. We must recall it wasn't just the right playing these games. The main 1992 Clinton-Gore campaign ad promised that “a new generation of Democrats” would put an “end to welfare as we know it,” “reject the old tax and spend politics,” promote “spending cuts,” and back the death penalty as a deterrent to crime. A lot of that sounds pretty close to proto-neoliberalism.The new Republicans of the 1990s, as Nicole Hemmer argues in Partisans (a book that should be read alongside Fabulous Failure), sought political polarization and scorched earth policies, not eggheads talking about a better way to run capitalism. The rabid kind of neo-Confederate conservatism made for a serious obstacle no matter how rich and promising the early Clinton policy menu may have been. This is not to dismiss the glimmers of a managed capitalism; it is to say that the real question is how they got lost in the forces the Clintonians could not, or would not, control. As growth became the core and best solution available in the 1990s, the remaining fragments of the New Deal dissolved into the forgettable milquetoast of what Clinton liked to call the “New Covenant.”Lichtenstein and Stein's knowledge and authority on issues of political economy are unsurpassed. The intelligence and nuance exhibited in Fabulous Failure will long stand as a penetrating corrective to simple assumptions about the nature of the Clinton era. Even if Fabulous Failure chooses depth over breadth in explaining the Clinton years, when it comes to analysis of true policy grit, there are no finer guides than Lichtenstein and Stein.