On the afternoon of the 13th July, former U.S. President and Republican presidential candidate Donald Trump was injured by a gunshot during a campaign rally in Pennsylvania. A shard of glass from a teleprompter caused him to bleed from his right ear. U.S. media characterized the incident as an “assassination attempt,” which has resulted in one death and two serious injuries in the audience; the suspect was killed.
This event is likely to boost Trump’s already strong poll numbers. Incumbent President Joe Biden condemned the shooting and announced the suspension of campaign rallies, indicating a shift towards more online canvassing and televised debates as the November election approaches.
This assassination attempt highlights a serious political divide within the U.S. and is expected to intensify the political climate, potentially exacerbating global tensions on the eve of the election. The U.S. election, held every four years, significantly impacts both domestic and international affairs.
Some believe Trump’s populism marks the end of the neoliberal era, a shift difficult to reverse despite Biden’s policies. Since Trump’s first term, the U.S. has moved away from free markets and trade towards industrial policy and protectionism.
However, it is Biden’s policies that more clearly signify the end of the neoliberal era. Since taking office, Biden has passed significant legislation, such as the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act, achieving more legislative success than previous presidents.
His administration’s efforts to rebuild America represent a comprehensive ideological shift, critiquing neoliberalism and moving towards a post-neoliberalism. Historically, neoliberalism’s dominance depended largely on the choices of international leaders, supporting the liberalization of the global economic system. With the U.S. government moving away from neoliberalism, its influence as the dominant global ideology has waned.
However, this shift does not mean the immediate disappearance of neoliberal influence. The U.S. remains deeply divided, and the assassination attempt adds to the uncertainty. Neither major political party has developed a coherent theoretical paradigm to replace neoliberalism. In this turbulent international economic climate, the debate over neoliberalism should be viewed in a complex historical context rather than a simplistic “state vs. market” paradigm.
Why do Biden’s policies signify the end of the neoliberal era? Trump’s administration initiated a trade war in 2018 by increasing tariffs, particularly against China, while still accusing other countries of violating neoliberal competition rules. Though Trump’s approach deviated from the neoliberal paradigm, it lacked theoretical support and was driven by populist politics. Recently, European countries have promoted industrial policies to address climate change, yet the U.S. remains the global leader in this ideological shift.
The Biden administration’s policy direction differs significantly from Trump’s. Upon taking office in 2021, Biden enacted the Infrastructure Investment and Jobs Act, followed by the Inflation Reduction Act and the CHIPS and Science Act, amounting to more than two trillion dollars. This remarkable legislative achievement surpasses those of his predecessors.
Biden’s vision of Rebuilding for a Better Future draws inspiration from Roosevelt’s New Deal, aiming to invest massively in society, infrastructure, the economy, and the environment. This policy emerged in response to the COVID-19 pandemic, which highlighted the U.S.’s dependence on China and global supply chains, the challenges posed by China’s rise, the need to upgrade U.S. infrastructure, address climate change, and societal disenchantment with neoliberal policies.
In line with this ambitious program, the Biden administration presented a corresponding thesis, exemplified by National Security Advisor Jake Sullivan’s speech at the Brookings Institution in April 2023. Sullivan argued that the U.S. economy had been weakened since World War II and that the post-war international order needs to be rebuilt. He highlighted challenges such as the hollowing out of the U.S. industrial base, increasing economic dependence on China, the urgent need for a clean energy system, and the unequal distribution of economic growth benefits, exacerbated by China’s impact on U.S. jobs, which threatens democracy.
The Biden administration’s countermeasures focus on an “industrial strategy” to promote industrial development by selecting target industries based on national security considerations and using public resources to boost investment and innovation in these sectors. Key industries include semiconductors and clean energy, aiming to build a resilient and secure industrial supply chain. The strategy involves subsidizing companies to produce in the U.S. and limiting the use of Chinese raw materials. To address concerns about protectionism, Sullivan emphasized coordination with allies and promoting several unilateral agreements. Additionally, the U.S. will continue to prevent China from acquiring advanced technologies through stringent controls.
Over the past four decades, the U.S. has periodically violated the neoliberal paradigm by imposing unilateral trade restrictions or sanctions on adversaries. For example, in the 1970s, the U.S. implemented Section 301 of the Trade Act to limit export growth in East Asia and other regions. In the 1980s, it curbed the development of Japan’s semiconductor industry.
However, these actions were exceptions and did not change neoliberalism’s dominance as the global ideology. In contrast, the Biden administration’s program represents a clear and comprehensive ideological shift, driven by a critique of neoliberalism. It argues that liberalization policies have failed to meet U.S. challenges.
The debate between neoliberalism and structuralism centers on the role of the state. Neoliberals argue that the state should avoid market intervention, as market outcomes are most efficient, while state intervention may lead to rent-seeking behavior. They view industrial policy as the worst form of state intervention. Structuralists, on the other hand, advocate for state intervention to promote industrialization, especially in late-developing countries where markets are imperfect, and private investment is risky.
Biden’s industrial policy differs from that of latecomers, who implemented industrial policy to catch up with advanced nations. Although the U.S. has declined in some aspects, it remains a global superpower with a strong position in many industries’ value chains. U.S. multinational corporations have moved manufacturing abroad but continue to profit from intellectual property and financial rents. For instance, U.S. firms still account for about 40% of the global semiconductor value chain. The U.S. targets semiconductor and green energy industries mainly for national security reasons, aiming to maintain its global leadership position, which differs from the motivations of late-developing countries.
Post-World War II U.S. industrial policy prioritized national security during the Cold War, focusing on technological leadership to maintain military supremacy, rather than commercial development. After the Soviet Union’s 1957 launch of Sputnik, the U.S. established agencies like DARPA and NASA to compete in the space and arms race. However, due to a tradition of opposing big government, U.S. society finds it challenging to support long-term economic industrial policy, despite backing national security programs.
Moreover, despite the strength of the Biden administration’s major legislative efforts, they have not garnered substantial social acceptance. In contrast, industrial policy implementation in East Asia generally receives high social support, likely because it aligns more closely with societal needs. In the U.S., populist politics plays a dominant role, and the Democratic Party is perceived as representing the highly educated elite.
Since taking office in 2021, the Biden administration has actively promoted industrial policy while criticizing past neoliberal policies. As the leader of the international economic order, the U.S. ‘s shift signals the end of neoliberalism’s decades-long status as the dominant global ideology.
While neoliberalism will continue to be influential, it is now viewed differently, given the social conflict, upheaval in the international economic system, and attempts by global leaders to change the dominant ideology. In this period of international economic disruption, it is crucial to examine the controversies surrounding neoliberalism beyond the simplistic “state vs. market” debate and consider them within a more complex historical context.
Source: BBC, CNN, The New York Times
