Trump’s administration has issued a spate of economic policies, including tax reductions for the wealthiest Americans, deep cuts to the social welfare net, and protectionist policies and tariffs. The right has taken up resistance to globalization, which has, historically, been a leftist position.
The response to these policies has been mixed. Labor leaders from Sean O’Brien to Shawn Fain have rallied to a varying extent behind Trump’s protectionist policies.1“Teamsters Statement on President Trump’s Union Job-Protecting Film Tariffs,” International Brotherhood of Teamsters, May 25 2025, https://teamster.org/2025/05/teamsters-statement-on-president-trumps-union-job-protecting-film-tariffs/; United Autoworkers, “In a Victory for Autoworkers, Auto Tariffs Mark the Beginning of the End of NAFTA and the ‘Free Trade” Disaster,’ UAW, March 26 2025, https://uaw.org/tariffs-mark-beginning-of-victory-for-autoworkers/. At the same time, many of the features of this new economic plan have a longer history, reaching back to the 1970s and ’80s. These two decades saw the radical restructuring of the global monetary system alongside the rise of coalitions against globalization. Labor leadership made increasing calls for protectionist policies, often taking conciliatory positions towards employers. What are the links between the contemporary turn towards protectionism and the earlier policies of Richard Nixon and Ronald Reagan? What can the left learn from popular responses to these economic programs?
Spectre Editorial Board member Izzy Plowright sat down with Rohan Shah to hammer out the roots of our contemporary moment in the 1970s and ’80s.
Rohan Shah is an assistant professor at the Gallatin School of Individualized Study at New York University. He earned his PhD in history at Columbia University. His research interests include twentieth century US social and political history, the history of capitalism, and modern intellectual history.
Although those decades were in many ways catastrophic for the left, there is nonetheless a lot to learn from this period. I tend to see those decades as politically dynamic, indeterminate, and marked by real contestation—intellectual and political—over how to respond to the crises of postwar capitalism that emerged in that era. Unlike in the 1990s and 2000s, the neoliberal formation was still inchoate and in flux in this earlier period, and that gives us a window into the internal differentiation and fragmentation of this order in ways that can be obscured when one looks at the more recent past. One of the key areas of contestation was free trade, as the widely supported prointegration consensus after World War II began to break with the growing trade competition and commodity shocks in the early 1970s. The period that followed saw strong protectionist and economically nationalist sentiment from a number of quarters. Slowing wage growth, inflation, and domestic economic instability—all of which had quite complex causes—were often laid at the door of new trade rivals, especially Japan and West Germany. And these antiglobalist pressures often found expression in executive policy. Even noted free-trader Reagan banned semiconductor imports from Japan for a time, negotiated restraints on auto imports, and drew on defense spending and export subsidies to forge a foreign economic policy that was by no means straightforwardly laissez-faire. One of the things that sticks out when you consider the 1970s and ’80s is that the period from the mid-1990s to 2008 was quite unusual in that managed globalization or antiglobalization coalitions were marginalized from mainstream politics rather than bargained with.
Looking to our present then, a few things jump out: first, struggles over the extent of global integration played an important role in deflecting and dampening class conflict in the 1970s and the ’80s. It encouraged alliances between workers and executives in countering perceived foreign threats and in extracting concessions from the state. This often resulted in a defensive union posture, which deflected attention from organizing workers in other parts of the economy, and often led to wage concessions ostensibly made to make these industries competitive again. Second, antiglobalization sentiment can’t be disentangled from what is happening to the bulk of people in the domestic economy. That was true in the 1970s, and is true now. Protectionism is as much about sending signals to domestic coalitions —signals about who is in, who is out, and who the economy is being run in the interest of—as it is about the discrete economic consequences of this or that decision. Third, a willingness to deviate from laissez-faire and from rules-based global integration in the interest of American capital has been a pretty long-standing feature of US policy, even among avowed free-traders. In that sense what we are seeing now isn’t so much unprecedented as an amped up version of an existing tendency. Fourth, characterizing what we are now seeing as the backlash of the nation-state against globalization isn’t necessarily a helpful rubric; you can have lots of different types of backlash, but what’s important is who is driving that backlash and whose interest it stands for.
There are typically four ways of seeing neoliberalism: first, as a set of discrete policies, like privatization, deregulation, free trade, and so on; second, as a broader intellectual movement which revolves around key economic thinkers, especially Friedrich Hayek and Milton Friedman, but also the ideas (often contrasting) of various intellectuals in the Mont Pelerin Society; third, as a particular mode of capitalism which is especially financialized; and fourth, as a whole historical era which began sometime in the 1970s and either ended at some point (maybe 2008?) or is still ongoing. While Marxists don’t necessarily depart from these standard definitions, they emphasize the fact that neoliberalism was a political project to restore class power and the conditions for capital accumulation in the context of the 1970s crises.2Gérard Duménil and Dominique Lévy, The Crisis of Neoliberalism (Harvard University Press, 2013); David Harvey, A Brief History of Neoliberalism (Oxford University Press, 2005), https://doi.org/10.1093/oso/9780199283262.001.0001; David McNally, Global Slump: The Economics and Politics of Crisis and Resistance (PM Press, 2010).
In terms of the end of neoliberalism now, I certainly don’t want to underplay the significance of our current moment, and there is clearly something new, chaotic, and different going on under this administration. However, I think the temptation to label our current moment the end of neoliberalism is often rooted in a mistaken but surprisingly resilient idea—that is, that neoliberalism is essentially market fundamentalism and opposition to state intervention. If one looks at our moment with that definition of neoliberalism, then the Trump tariffs and the slew of chaotic executive actions would indeed suggest the end of something. But a better understanding of neoliberalism would define it according to something like these two “tests,” which are not anchored in market versus state binaries and better map the historical pattern since the late 1970s: first, do the interventions made by the state suggest shifts in the balance of class power? And second, is economic democracy being meaningfully expanded? In other words, are we getting a set of policies or interventions which accord with popular desires? On both those scores the answer appears to be an emphatic “no.” I don’t like to get too hung up on definitions because this can sometimes get in the way of a more concrete discussion, and because different definitions have different strengths. But generally speaking I think class discipline needs to be a key part of any definition of neoliberalism that one employs, and that understanding of neoliberalism leaves room for quite a range of state interventions.
Neoclassical economists had fairly idealized conceptions of the world economy that followed from their relatively minimal models. It was these sorts of abstract frameworks, which obscured the continued role of the state, that helped popularize the Friedmanite (Thomas, not Milton) idea of globalization as a process of flattening. In this view the real impetus behind globalization was reducing the barriers to international commerce. Alongside this you have the diminishing importance of nation states as a result of technological advancements, which made capital controls and other forms of intervention impractical. It is a simple and powerful kind of framing, but it neglects both the absolutely central role states played in the making of global integration and the contentious and politically uneven navigation of global integration in practice. States don’t go away, they are fundamental to the making of integration. They structure and enforce markets, and often use their enormous leverage to force integration; the United States has vastly more leverage in this regard than other states. So we shouldn’t see this as a process in which all states become equally unimportant and ineffectual vis-à-vis markets. Just as importantly, proliberalization actors were persistently forced to compromise or find other ways to overcome antiglobalization coalitions. The result is a much messier and more chaotic form of global integration—not at all flat—with a fairly persistent pattern of neomercantilist-style interventions. What is important to stress is that globalization isn’t some exogenous force that emerges and starts eroding the policy autonomy of states. It is the product of political choices and contestation, and in the US case, there was surprisingly deep-rooted opposition to global integration that persisted in many ways.
A lot of scholarship and popular writing recycles the view that the United States embraced free markets, privatization, and deregulation and then exported this formula to other countries by persuasion or force. This is certainly true in some places—the former Soviet Union for example. More broadly though neoliberalism emerged in the form that it came to take from the late 1970s due to processes that emerged between states. Demands for economic restructuring grew as the postwar welfare state came under severe pressure in late 1960s and the early 1970s from declining manufacturing profits, inflation, and high energy prices. Yet the precise direction of that restructuring was by no means obvious. For example, the United States, was still attempting to forge a sort of new international Keynesianism under Carter in the late 1970s with the so-called “locomotive theory,” but it failed in part because other states had other objectives which blocked these efforts—even if those objectives were not neoliberal per se. Julian Germann’s book Unwitting Architect does a nice job mapping out the German side of this whole story.3Julian Germann, Unwitting Architect: German Primacy and the Origins of Neoliberalism (Stanford University Press, 2021). In short, neoliberalism emerged not because it embodied some comprehensive hegemonic common sense projected out from the United States, but because other routes out of the 1970s crisis were foreclosed. That foreclosure is an international story. It also encourages us to take the different forms neoliberalism takes in different geographical contexts seriously, rather than seeing neoliberalism as either monolithic or coherent.
This is a nice example of the flaws in viewing Trump as the end of neoliberalism. This bill is continuous with a lot of what we have seen since the 1980s in its patently regressive and disciplinary character. Deregulation and austerity at home combined with an explosion in defense spending is very much in line with what Reagan, for example, did. Resuming student loan interest accrual while offering loan cancellations to new ICE employees is an embodiment of the logic of this process. It isn’t even remotely about fiscal discipline or a smaller state; it is about deciding who gets to be the recipients of government largesse and who doesn’t. The beneficiaries are, of course, the wealthiest Americans, but also those willing to police, silence, and persecute anyone with an interest in redistributive or emancipatory politics. What is new is perhaps the short-sightedness of these policies in terms of long-term economic health and the willingness to favor certain portions of the capitalist class over others.
Since the “Volcker shock” in 1979, when Federal Reserve Chairman Paul Volcker ramped up interest rates in an effort to wring out inflation, the dollar has come to play a specific role in the international financial system. Volcker’s decision aggressively asserted the scarcity value of money and signaled that the Fed would focus on maintaining price stability rather than enabling full employment. The tight monetary environment and the associated recession that followed seriously dampened labor’s bargaining power. That fact has subsequently been a persistent feature of the neoliberal era. But the decision had other effects. High interest rates and the deregulation of capital controls acted like a hoover, sucking in capital from across the advanced industrial world to buy treasury bonds and other dollar-denominated assets. This arrangement allowed the United States to borrow, in effect, unlimited amounts of money with little consequence and amplified the purchasing power of US citizens. Conversely the “strong dollar” that this produced also made US exports less competitive on world markets. It remains central to the functioning of neoliberalism because US treasury bonds are safe assets, which has allowed for the growth of liquidity across the international economy. As a result, the dollar is the de-facto global reserve currency. This also places the Federal Reserve in a pivotal role in overseeing the system and places a unique set of imperial tools at the United States’ disposal. We saw this in the outsized role the Fed played in responding to the 2008 financial crisis and COVID using swap lines. But we can also see its more punitive edge in the use of targeted sanctions, which are only possible because of the scale of dollar-denominated assets.
One of the effects of Nixon’s New Economic Policy (NEP) in 1971, where he untethered the dollar from gold and effectively ended the Bretton Woods currency system, was years of dollar devaluation. The timing was crucial because it coincided with a serious tide of labor protectionism at the start of the decade and an amping up of trade competition. The NEP ended up reducing some of that pressure, and it did produce a temporary improvement in the country’s trade position. In fact the politics of dollar devaluation hung over US politics well into the 1980s, and the strong dollar remained a source of anxiety and frustration for export coalitions. The Reagan administration was forced to intervene to bring the dollar down in 1985. The value of the dollar is perennially an object of concern for actors that see the trade deficit as a marker of broader national decline.
Trump is picking up on a long line of actors who see the trade deficit as a symptom of national decline. It syncs nicely with his view of China as taking advantage of us by maintaining a trade surplus. In reality the United States are getting a lot out of this arrangement—including cheap consumer goods and low interest rates—and it is not obvious who the primary beneficiaries are. Incidentally this echoes a lot of what folks said about the trade deficit in the 1970s and 1980s vis-à-vis Japan and Germany. Trump was himself a vocal critic of Japan in the 1980s. Emphasizing the “unfair competition” of other nations has consistently been a way for the United States to break laissez-faire norms while still claiming that it is in the ultimate interest of free trade. Robert Lighthizer, Trump’s former trade representative, was also Reagan’s and was infamous for driving hard bargains in negotiations with the Japanese. The Trump approach seems less about reestablishing manufacturing employment (which isn’t happening), than it does with pushing for an economic decoupling from China while using tariffs to force “better deals” and concessions from other countries. Much of this seems to be based on an overestimation of the size and clout of the US market. Although Trump has clearly escalated this to a new order of magnitude, it is worth noting that the softening enthusiasm for globalization actually has bipartisan support and Biden also sought to forge an industrial policy aimed at resilience as part of a confrontation with China during his presidency.
It is tempting to see the Volcker shock as something imposed purely from above, against popular sentiment, and in the naked interest of global capital accumulation. In a number of ways that was in fact its effect. But I think that the Volcker shock was only initially possible because of a widespread mandate to do something aggressive to overcome inflation. That isn’t the same thing as endorsing either the specific approach that Volcker took or its longterm consequences (which no one really foresaw in the 1970s). It is just to reckon with the complexity of the inflation of the 1970s. There were a lot of groups which were arrayed against inflation for very different reasons. You had groups like the Gray Panthers, who organized the American elderly and were frustrated with inflation for eating into the real value of social security checks. You had consumer groups like Consumers Opposed to Inflation in the Necessities (COIN) that were more concerned with things like price gouging. And these groups were effectively aligned with creditors who just wanted to restore the scarcity value of money because the real value of their loans was getting eaten into. It’s hard to offer a clear takeaway from this but one thing that comes to mind—and this is related to our recent inflationary bout after COVID—is that it is unfortunate and inadequate that interest rates are basically the exclusive tool we use for dealing with inflation. Price controls, which were on the menu (at least as a voluntary tool) in the 1970s are off the table now. But more granular tools would be able to get at the very different types of price increases that get lumped together under the overall heading of inflation.
Monetary policy has long been technically independent of presidential control, but this started really counting for something in 1971 when Nixon ended the dollar–gold peg. Since then, there have been no hard constraints on money creation, leading to the Fed’s independence taking on new significance. Through the 1970s US presidents, especially Nixon, pushed the Federal Reserve to relax monetary policy for political reasons. The success of such informal lobbying likely explains some of the persistence of inflation during the decade. The Volcker Shock represented a new assertion of Federal Reserve independence, which signaled a willingness to bear the hard costs of high interest rates and an unwillingness to yield to democratic pressures or presidential pleas to relax interest rates ahead of elections. Volcker underlined the Fed’s determination to combat inflation by wringing it out with a tight monetary policy purchased at extreme, recessionary costs. He let unemployment rates rise into the double-digits, with the Black unemployment rate almost reaching 20 percent in 1983. This hardnosed approach was something that his predecessors, Arthur Burns and G. William Miller, had not been willing to countenance. The Volcker shock set a new precedent for central banks to make policy independently of the pressures of the political cycle. Nonetheless, the Federal Reserves’s independence and the political scrutiny it faces go hand in hand. Even in the early 1980s there was continued pressure on Volcker to reduce interest rates, including from members of the Reagan administration. Trump’s bullying of Powell seems to be a little in this vein, although, admittedly, his attempt to fire Lisa Cook is a more extreme version of this. Trump doesn’t really have to take much responsibility for antagonistic rhetoric precisely because the Fed is independent—it’s an easy target and an especially easy scapegoat when growth slows down.
There is lots to say here. US labor unions were consistently pro free trade in the postwar period, but this had a lot to do with the insularity of the American economy. At that time, free trade was more or less a win-win. When trade competition began to heat up in the late 1960s and early 1970s there was a quick erosion of that proglobalization line. In the early 1970s labor groups backed the Burke-Hartke Bill, which attempted to limit imports but also proposed some more ambitious measures like changing multinational tax rules. It was a bill that explicitly aimed at managing and slowing down globalization, and it drew wide Democratic support. There were big distinctions between unions and federations as well. Under George Meany the AFL-CIO tended to be more aggressively nationalist while the United Autoworkers at least gestured towards a more cosmopolitan approach. Even so, as the decade went on, the UAW backed measures like domestic content bills and pressured the executive for import restraints and other forms of protection. Labor leaders found they often had common cause with industrial executives in trying to protect these industries from competition. For example, I was just at the UAW archives and union president Doug Fraser said some surprisingly complementary things about the CEO of Chrysler Lee Iacocca’s response to globalization in the early 80s. So class conflict often got relegated to the back burner as labor leaders and industrial executives looked for common solutions, which had fairly dire consequences. For one it set the stage for the concessionary contracts of the 1980s, but also the unions become quite focused on particular sectors. This means less emphasis on unionizing new jobs emerging outside of the manufacturing sector.
There is still ongoing discussion about the relative importance of international trade or automation for the job loss associated with deindustrialization in the neoliberal era. I don’t necessarily have an answer to that question, although I am sympathetic to the argument that globalization was often scapegoated in ways that deflected responsibility from other factors that contributed to deindustrialization, including incompetent management by the Big Three auto manufacturers. What is clear is that both international trade pressures and automation were weaponized to increase disciplinary pressures on labor. Whatever their real effect, the threat of job loss to low-wage zones was crucial in both forcing concessionary labor contracts in the 1980s and turning union attention to protectionism and “buying American” rather than toward opposition to executives or building some kind of international labor response. The connection to automation is also interesting because one of the things that economists close to the “New Democrats” like Robert Recih and Lester Thurow liked to say in the 1980s was that Japanese success in taking US manufacturing share had a lot to do with their workers willingness to adopt new technologies which were resisted in the United States.4Robert Reich, “The Next American Frontier,” Atlantic, March 1983, https://www.theatlantic.com/past/docs/issues/83mar/reich.htm; Lester Thurow, “Losing the Economic Race,” New York Review of Books, September 27, 1984, https://www.nybooks.com/articles/1984/09/27/losing-the-economic-race/. That resistance had a great deal to do US companies’ desire to introduce automation as a replacement, rather than a complement, to labor. This echoes the current politics of AI in some ways. It is hard to know whether AI will provide the sort of real productivity gains and labor saving advances its boosters are claiming. I like Aaron Benanav’s work on this question. He notes that at various previous moments of automation, the gap between what boosters claim it will do in terms of labor productivity and what it actually ends up doing is very large.5Aaron Benanav, Automation and the Future of Work (Verso, 2022). But regardless of AI’s actual potential as a labor saving technology, the question of who gets to implement it, and on what terms, is the all-important one. In that sense it is not so different to automation in the auto industry in an earlier period. At the moment, those decisions about implementation and use are being driven almost exclusively by investors and entities seeking to recoup their massive capital outlays, with little interest in any of the consequences for people’s livelihoods, or really any of AIs other harmful implications. Regardless of how effective AI is as a labor saving tool, investors will be intent on making us reliant on it because it will offer the surest avenue to consistent future profit streams. One thing that is worth noting, and this is true of my own experience as an educator, is that the workers who are actually being asked to incorporate AI into their work are often the most clear-eyed about its limitations. Given that the chances of regulation coming from within government are negligible, it seems that much of the pushback will have to come from individual workplaces.