The Cancerous Growth of a Neoliberal War Machine

With Professor Mehrsa Baradaran

Whoa, Nelly — one of my favorite authors, Mehrsa Baradaran, just published a new book, The Quiet Coup: Neoliberalism and the Looting of America. In The Quiet Coup, and in conversation, Professor Baradaran (UC Irvine Law) traces how backlash to integrating schools led to the rise of neoliberal economic theory — which was essentially one giant excuse to maintain the status quo. As neoliberals accrued more power, they eradicated check after check on capitalism, ultimately leading to a quiet, legal coup and the growth of a cancerous war machine.

A condensed transcript edited for clarity is below. You can also listen to the audio of our conversation, which includes discussion of how the Nobel Prize in Economics isn’t a real Nobel Prize, why there were no banking crises until neoliberals took over, Marjorie Taylor Greene misunderstanding space lasers but intuiting that the game is rigged, how Professor Baradaran’s Iranian background informs her work, why the most cited legal scholar ever somehow assumes people who drink Mountain Dew are rational, and more:

Some people will always find a way to press the big red button

Ben: To begin, can you explain how neoliberalism grew as a response to challenges to racial hierarchy? 

MB: So I claim that neoliberalism started as policy and rhetoric in the late `60s, early `70s. Economic theory was the cover, but the motive of neoliberalism was really to maintain empire and racial hegemony in new ways.

The 1960s was a time of national crisis. There was the Civil Rights Movement and protests across the nation, very much connected to protests across the world — international struggles for independence as the era of empires ended abroad and the era of Jim Crow ended in America.

There was this interregnum where people wondered what’s going to happen next? In that decade, Richard Nixon came to power, and neoliberalism became the rhetoric, theory, and later on the policy of maintaining supremacy. How do you maintain the status quo while so many struggles demand freedom? Neoliberalism’s answer was market freedom. 

That’s what neoliberalism promises, right? A free market, free from government regulation, more competition, more profits — more for everybody.

Ben: You write, “In 1968, the issue was an old one: how to maintain and justify a racially segregated society in a democracy. How to do nothing instead of something.” 

MB: Yes. The Nixon administration said racism of course exists but that exploitation cannot be proved. Alan Greenspan, later chairman of the Fed, was instrumental in drafting Nixon’s policy on race. He argued that to do anything (other than violently quell unrest), to invest in lower-income communities, to change the status quo — which was poverty in the Black ghetto and wealth in the white suburb — was anticapitalist. 

Of course, that’s bullshit. And what I'm showing is how this theory embedded itself into policy and destroyed other ways of doing economics.

Ben: In the book, you talk at length about Supreme Court Justice Lewis Powell. How did he begin to translate neoliberal economic theories into law?

MB: Your listeners might know of the Powell Memo, which was a secret, wildly influential conservative call to arms in defense of corporations.

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Editor’s note: learn more about the Powell Memo below…

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Before becoming a Supreme Court Justice, Powell was Philip Morris's lawyer. He helped Philip Morris throw doubt on studies about the carcinogenic effects of tobacco. He was also chairman of the Richmond School Board. When parents threatened to resist SCOTUS’ decision to desegregate schools in Brown v. Board of Education, he was like, yo, cool it. I can fix this with the law. He prevented the integration of the Richmond schools. 

And that was all before Nixon appointed him to the Court. Legal academics viewed him as a middle-of-the-road guy. I mean, he sided with the majority in Roe v. Wade. But when you go in and track the cases, his whole jurisprudence was planting bombs one at a time that would explode later. For example, his opinions were integral in granting corporations freedom of speech rights, later leading to unlimited corporate political spending. That's one strand. 

The other strand was basically overturning Brown without saying so. In 1973, through San Antonio Independent School District v. Rodriguez, Powell said affirmative action could not be done to remedy past wrongs. He refused to acknowledge there is such a thing as “the rich” and “the poor.” That's the kind of abstraction he was into.

Ben: Related, you chronicle how much neoliberals began to nitpick over the meaning of specific words. 15 percent of your book seems to be about them looking things up in dictionaries. How did that tactic emerge?

MB: So you've got this whole ideology of racial hierarchy that was legal for hundreds of years, right? And supported by the Supreme Court. And Brown v. Board of Ed overturned all of that precedent.

There was a real backlash to the decision. Inspired by the Powell Memo, right-wing groups started funding institutes at elite law schools like Yale and Harvard. Members of the institutes generated ostensibly neutral theories.

One was textualism, which started in the `70s with the Federalist Society. Textualism is basically originalism: the idea that you have to go to the original constitutional meaning of the word. It's as slippery as anything, but it does allow for a judge to say, well, I'm just sticking to the text. The entire Court now abides by textualism. 

To put a dark filter on this, the memos that authorized the use of torture during the Iraq War are examples of textualism. Lawyers in the Bush administration hairsplit the meaning of the Geneva Conventions, which prohibit any act “specifically intended to inflict severe physical or mental pain.” And the Bush lawyers were like, what does it mean to inflict “pain”? Do you have to intend for there to be pain?

Ben: You get the feeling that if you told them, Don’t press the big red button, they'd—

MB: Press it?

Ben: Yes! And then explain that, Well, according to Benjamin Moore, “red” can be a thousand different things.

MB: Ha, right. 

Ben: I thought it was noteworthy, too, that part of neoliberalism is promising to get rid of government — all the while, in practice, creating more and more complicated laws.

MB: Yes, people have gone into how trickle-down economics doesn't work. Still, the assumption is that under Reagan there was less government bureaucracy. But if you track the number of laws, the number of agencies, the money spent on law and lawmaking, it's exponentially larger now, right? The regulators are bigger. The laws are more complex. Glass-Steagall, a banking act written in the 1930s, was 44 pages or something. Dodd-Frank, from 2010, is 2,500 pages and is still being enacted. 

That’s what neoliberalism does: take power that's always been the people's and erect barriers of understanding and complexity around it.

And all across the board, when Reagan came into office, staffers brought in thousand-page books to change laws. They created a system whereby only lobbyists, big law firms, and industry members created the rules they had to abide by. 

It's classic corruption. We don't call it that because it’s technically legal, but it’s not any less dangerous. And when you take the limits off capitalism, which neoliberals began to do in the `80s, it becomes cancerous. Capital needs growth.

Ben: You describe capital as operating “without heart or head, driven by a singular mission of self-replication.” Maybe instead of calling it “cancerous,” you could’ve just called it a Tupperware top.

MB: Ha! For me, it’d be a Tupperware bottom. But the point remains. Unlimited capital growth hurts democracy. People become distrustful. Governments start lying to people. They start more wars. And all of that is sort of late-stage cancer of democracy itself.

Ben: You also argue that we’ve “become unwitting accomplices to the looting of our own society given how opaque the financialized market has become.” What do you mean? And what’s your solution?

MB: I'm the same as a lot of people — I don't invest in specific stocks. I have a 401(k) that I kind of put money in with the click of a button. 

But in 2021, I was vetted by the Biden administration to become the nation’s top bank regulator. They didn’t have the votes to confirm my nomination, but in the process, I needed to go into my 401(k) and see what the actual stocks were. I was shocked to see that I had been invested in JPMorgan, Raytheon, Exxon — all of these blue-chip companies that are strangling democracy.

I thought, I bet I’m not unique. I went to TIAA-CREF to give a talk. TIAA-CREF is the public employees' pension, and they have over $1 trillion of assets. I asked the CEO, where do you invest that money? They said we give it to this private equity firm. And I was like, oh my God. It’s a self-cannibalizing machine. Workers’ retirement savings were fed into the same financialized market that threatened their livelihoods. 

We have to rethink that whole economy; our whole war machine. Long-term venture funds are betting on a future that’s the same as the past but with more guns and rockets... I don’t think that’s a safe bet. And I don’t want to live in a world where, when I’m 65, Exxon and Raytheon are profitable. 

We need to go to the market and say, everything that the neoliberals taught you was not just immoral and bullshit, but also unprofitable. We need to start thinking that investing in communities, in equitable housing and education is what will be most profitable in the long run.

Ben: A fitting note to end on, Professor Baradaran. Thank you so much for being here. I’d keep talking, but I have to go empty my 401(k).

MB: Ha, thank you for shining light on these topics, Ben. As a fan, I appreciate it.