This post is part of a symposium on Melinda Cooper’s Counterrevolution: Extravagance and Austerity in Public Finance. Read the rest of the symposium here.
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Melinda Cooper’s fascinating new book offers a much-needed examination of the Virginia School of constitutional economics. Associated most closely with the work of James M. Buchanan, the Virginia School advocated a range of restrictions on the government’s ability to tax its citizens, including constitutional limits on income and property taxes, as well as a federal balanced budget amendment. In assessing the influence of this strain of thought on public policy, Cooper’s work prompts three questions: how did their “counterrevolution” win, what would happen if they really won, and are they still winning?
On the first question, Cooper’s contribution to the scholarship on neoliberalism is a laser-like focus on the fiscal state and, above all, the question of taxes. In the past half-century, she argues, the function of the tax-collecting state in the United States was stood on its head. From its origins before World War I and amid the postwar development of the welfare state, the fiscal state was a project of producing collectivities. In the U.K., William Beveridge famously described social insurance as a “pooling of risk.”
By making contributions from our paycheck, at the cash register, or with our annual tax filing, we performed a small act of civic belonging. Crucially, as FDR stressed when he introduced America’s Social Security system, this was not an act of charity but was done with the knowledge that one was paying into an account that one would eventually draw from. Taxes were once a recognition of the tidal cycle of life. We contributed as life waxed and withdrew as it waned.
This was part of the genius of the social contract as mediated through taxation at midcentury: redistribution could also be motivated by self-interest. Not everyone gave willingly, and no cosmic balancing of accounts actually took place, but what Foucault might call the governmentality of the welfare state was one where gains were recycled through the organs of the state to be re-consumed in the form of healthcare, roads, public education, and so on.
What Cooper shows us is how, through arcane transformations of the tax code, the American public came to think of the fiscal state as an unjust burden, even as its redesign perpetuated a new genre of redistribution. The new state created by Reagan and cemented by his successors conjures a powerful illusion: that wealth accumulation happens without—or even in spite of—any mediation through the state. Thus, even as depreciation allowances, pass-throughs, earned income tax credits, mortgage interest deductions, and countless other policies helped to funnel wealth to those who already had assets and left in the cold those without them, the neoconservative state hid from view and the individual appeared to walk on air.
This counterintuitive vision of a subtractive redistributive state is the biggest contribution of Cooper’s book. She tracks it both in its theory and its realization. Among the consequences she describes is the return of family fortunes and the rise of family capitalism as the privately-owned firm becomes the preferred way to retain wealth and pass it on to succeeding generations, free of earlier, confiscatory tax rates. This is what Thomas Piketty calls “patrimonial capitalism” and Mike Savage calls more pithily “the weight of the past.”
Cooper casts Donald Trump as the natural product of this entire system. His success has been his ability to play both sides of the pas de deux. One minute, he is the self-made man, fashioned purely out of high IQ and hard work. The next minute, he confesses that he avoids paying taxes because he knows how the system works. In the screenplay of the counterrevolution, he is Charlie Chaplin’s Tramp and Ryan Reynolds’s Deadpool, winking at the audience through the fourth wall on the path of his hero’s voyage.
The second question that Cooper’s book makes us ask: what would happen if the Virginia School actually won? It is well-known that neoliberal policy entrepreneurs are never satisfied with their victories. They are always spotting a new enemy on the horizon, be it degrowth, anti-fascism, feminism, or the catch-all the French call “le wokisme.” Moreover, both friend and foe of the counterrevolution frequently point to the fact that state expenditure as a percentage of GDP continues to rise from decade to decade as evidence that these efforts at austerity were only ever partial.
Yet to paraphrase William Gibson, the victory is here, it’s just unevenly distributed. Cooper takes us to Ferguson, Missouri, the site of convulsive protest against police brutality and murder in 2014. She shows how the over-pruning of tax revenue over the years left local government dependent on fees and fines as “invisible taxation.” These punitive forms of revenue creation were disproportionately born by the poor with the result that, as she puts it, they “are plunged into states of cumulative indebtedness by the mere act of existing in and traversing public space.” The de-collectivization of risk leads to the re-individualization of risk with higher stakes.
Here we see the flipside of the asset economy—the assetless economy—where not only do those who have receive more, but those who have nothing, receive even less. In her cool rhetoric and methodical argumentation, Cooper offers us one of the bleakest visions of America during and after the shredding of the social contract.
The third question that Cooper’s book raises is whether, despite all of the book’s gloomy exegesis, neoliberals of the James M. Buchanan strain are still winning in America. Here we can be less sure. The last four years of the Biden presidency have shown that, at least at the top level, there is a motility of elite opinion and the possibility exists to, as the saying goes, “replace the existing paradigm” with another one.
Virginia School economics may have had the Republican and Democratic parties in a double headlock from 1980 to the global financial crisis, but there are signs of movement around the role of the government in directing investment and offering greater support for the cost of social reproduction than has long been the case.
Thus we are left with a final question: will the Republican Party in the thrall of Trump stick to subtractive redistribution or will some version of “national conservatism” bring back an attenuated version of the welfare state? This would not necessarily be a victory for the left or progressives. To sell such a program, national conservatives would require a narrow vision of the recipients of state care and redistribution. The revolution against the current counterrevolution would be a restrictive welfare chauvinism. More likely is the persistence of what Cooper, building constructively on Corey Robin, sees as the core of Clarence Thomas’s black nationalist conservatism: a defiance of federal oversight over reproductive rights and a defensive crouch around an order that stands for private ownership and the natural law principle of what Buchanan called “the extended family…as the relevant tribal unit.” Plant the American flag here.
