Bring Back Countervailing Powers

Roger Berkowitz

Michael Lind is one of the few thinkers today who has consistently understood that the fault line of American politics is neither racial nor economic, but educational and cultural. His book, The New Class War: Saving Democracy from the Managerial Elite is one of the best guides to our current political horror show. And one trend he puts at the center of our political dysfunction is the retreat of countervailing powers. Countervailing powers are institutional power centers beyond the centralized power of government. Alexis De Tocqueville and Hannah Arendt also argued that free government is predicated on countervailing powers, the dispersion and expansion of political power throughout society. For Lind, Republican and Democratic elites have given up on granting power to the people, whether that be in the power of unions or the power of local assemblies. To save Democracy, Lind argues, we must “Bring Back Countervailing Power.” He writes:

On the left, right, and center in American politics, there is growing agreement that, after nearly half a century, the neoliberal consensus is crumbling—but there is no agreement about what neoliberalism is. Many on the left treat neoliberalism as a synonym of capitalism, while the right tends to denounce “woke” business, on the assumption that the problem is the progressive attitudes of corporate managers, not the structure of the economy itself. The best way to understand neoliberalism is to compare it to what it replaced—New Deal liberalism between the 1930s and the 1980s, a consensus broad enough to include “modern Republicans” like Eisenhower and Nixon. And the best way to understand New Deal liberalism is the concept of “countervailing power,” which should be the fundamental principle of a post-neoliberal order in the decades ahead.

The phrase “countervailing power” was coined in the 1952 book American Capitalism: The Concept of Countervailing Power by the economist and social thinker John Kenneth Galbraith. Galbraith argued that, in a modern technological society, most important markets would be dominated by a few large firms. Their market power and political influence could be checked, however, by countervailing power—both public, in the form of a strong regulatory state, and private, in the form of labor unions and consumer cooperatives. Arguing that measures to strengthen the bargaining power of unions and farmer groups were “among the most important legislative acts of the New Deal, all designed to give a group a marketing power it did not have before,” Galbraith asserted that “the support of countervailing power has become…perhaps the major peacetime function of the Federal Government.”

The equation of the New Deal with government-supported checks and balances in the market may seem surprising today, when many associate the New Deal with social insurance programs like Social Security or Keynesian deficit spending in downturns. But this view was the conventional wisdom (another phrase coined by Galbraith) of many New Dealers. For example, in 1940, the journalist John Chamberlain wrote: “The labor union, the consumers’ or producers’ cooperative, the ‘institute,’ the syndicate—these are the important things in a democracy. If their power is evenly spread, if there are economic checks and balances to parallel the political checks and balances, then society will be democratic.”

Between the New Deal and the 1970s, the “broker state” (in Chamberlain’s phrase) prevailed as the major method for limiting the potential harm of economic concentration in the United States, rather than antitrust or the technocratic planning favored by some progressives. In the last half century, however, the decline of organized labor has led to an upward shift of political power on the center-left to college-educated progressives, whose preferred mode of politics consists of technocratic measures to reach pre-ordained numerical targets—quotas for minorities and women in the name of Diversity, Equity and Inclusion, specified increases in atmospheric temperature in the case of climate change. At the same time, despite the emergence of populist Republicans like J.D. Vance, Josh Hawley, and Marco Rubio, who sometimes side with unions, the mainstream GOP remains captive to the anti-labor agenda of libertarian donors. 

Virtue-signaling, technocratic progressivism and anti-labor neoliberalism have been synthesized in “woke capitalism,” exemplified by Starbucks, which has strenuously fought the unionization of its coffee shops while spending lavishly on philanthropic initiatives related to diversity and climate change.

Technocratic neoliberalism, which is hegemonic in corporate and financial circles, universities, and the prestige media, reflects the values of the college-educated overclass, which tends to be culturally progressive but wary of higher taxes or organized labor. 

Technocratic neoliberalism ignores the values and interests of the two core constituencies of the New Deal—the working class and rural Americans. Unrepresented in either party, these groups are drawn to outsider populists, including maverick old-school New Dealers like Sanders and right-wing demagogues like Trump.