For communities around the world, especially in the global south, it’s been clear for decades that the neoliberal “Washington Consensus,” which emerged in the 1980s and focused on deregulation, privatization, austerity, and trade liberalization, was a predatory and destructive model.
For communities around the world, especially in the global south, it’s been clear for decades that the neoliberal “Washington Consensus,” which emerged in the 1980s and focused on deregulation, privatization, austerity, and trade liberalization, was a predatory and destructive model.
The unfairness of this system was the message of the global justice movement that protested global north-controlled economic institutions like the World Trade Organization, World Bank, and International Monetary Fund in the 1990s and early 2000s. The same ideas have powered multiple waves of global protest since then, including Occupy Wall Street. The system of neoliberalism inspired outrage for being prone to corruption, unresponsive government, environmental destruction, and elite self-dealing—for creating safety net for the rich and doling out market discipline for everyone else.
For four decades, the dominant view in both U.S. parties was a neoliberal approach to economics at home and abroad. But April 27, 2023, marked the day that the global justice movement’s memo finally landed in Washington. National Security Advisor Jake Sullivan gave the most significant foreign policy speech thus far by any Biden administration official. It effectively announced that the era of neoliberal foreign policy is over.
In doing so, it hearkened back to April 2021, when President Biden marked the first 100 days of his administration with an address to a joint meeting of Congress. While most media attention focused on the early steps his administration had taken on the COVID-19 pandemic and resulting economic crisis, the clear subtext of the speech was that the U.S. government would be investing in the American people again, and heavily.
Sullivan’s speech made the subtext of Biden’s speech into text. At first glance, it may seem odd that the national security advisor would give a landmark speech on global economic policy, rather than national security policy as traditionally understood. But economic policy and foreign policy have always been interrelated, as have domestic and foreign policy.
Consider Sullivan’s description of the Biden administration’s approach to trade policy. Sullivan said that it was “the wrong question” to focus on how the administration could reduce tariffs further. The right question, he said, was “how does trade fit into our international economic policy, and what problems is it seeking to solve?” Sullivan’s answer focused on resilience of supply chains, investing in a clean energy, creating good jobs, addressing corporate taxation, and addressing corruption. These are, of course, all areas closely related to domestic policy. By breaking down the siloes separating economic policy at home and abroad, Sullivan’s analysis offers a more realistic foundation for confronting today’s challenges.
Sullivan confronted head-on the flawed assumptions that underlay the neoliberal global economic order that dominated foreign policy over the last 40 years: “that markets always allocate capital productively and efficiently—no matter what our competitors did, no matter how big our shared challenges grew, and no matter how many guardrails we took down.” Sullivan rejected the philosophy that “championed tax cutting and deregulation, privatization over public action, and trade liberalization as an end in itself,” and observed that this approach had also failed as a geopolitical strategy. “Economic integration didn’t stop China from expanding its military ambitions in the region, or stop Russia from invading its democratic neighbors,” Sullivan said.
When Sullivan acknowledged “the challenge of inequality and its damage to democracy” generated by the old economic thinking, he was echoing a critique sounded by progressives for decades. The 2016 U.S. election finally provided a wake-up call that the establishment, at least some of it, could no longer ignore. It has taken a long time for foreign-policy makers in Washington to come around to the idea that markets should be crafted for the benefit of human beings rather than the other way around. Sullivan’s speech should therefore be a welcome statement not only in the United States, but for much of the world as well.
The hard part for the Biden administration, of course, will be turning this rhetoric into a sustainable reality. Old habits die hard, and there remain many neoliberal commentators and corporate lobbyists who are deeply invested in the old order and its ideology, and thus likely to fight this new, post-neoliberal foreign policy tooth and nail. Indeed, there have already been reports that Big Tech companies are lobbying for a so-called “digital trade” agreement, which could stymie the emerging cross-partisan movement in the United States to regulate them.
Despite the premature declarations of some commentators, there is no “new Washington consensus”—at least, not yet. There is, instead, a contest for what will be the next paradigm for U.S. foreign policy. There are some, mostly driven by worries about China, who wish to organize the world into democratic and authoritarian blocks or to subordinate all other concerns to the imperatives of great-power competition. There are others who want significant retrenchment and withdrawal from global affairs. Of course, there remain those who cling to every scrap of the neoliberal international order.
There are still others who focus on building resilience, at home and with allies and friends, in order to withstand and flourish in the face of climate change, pandemics, cybersecurity, and great-power competition. For progressives, Sullivan’s speech should be cause for cautious celebration and a redoubling of effort. Years of persuasion and work have paid off in getting to this point, but the struggle to define the new paradigm is still underway.
In order to move beyond neoliberalism, the Biden administration will have to stand firm against those, both inside and outside the government, who are more attached to an old ideology than to confronting the problems of our time. But it will also have to keep in mind that the choices it makes in confronting today’s problems could set in motion the paradigm that defines the next period of U.S. foreign policy.
