Malcolm Harris: In your narrative, in the last quarter of the 20th century, American capital faces a crisis of “too much” and “not enough.” The ruling class feels it’s giving up too much and the working class thinks it’s not getting enough. Likewise with racial progress: white people in general feel like they’re giving up too much and racial minorities, particularly Black people, feel like they’re not getting enough. What moves does capital make to break out of this impasse?

Melinda Cooper: I describe the response as counterrevolutionary. The Southern neoliberal economist James M. Buchanan talks at this time about the need to counter the Keynesian fiscal revolution of the 1960s with a revolution from the right. He even proposes what he calls an “internal exit” as an alternative to Southern territorial secession from the US. The term captures his sense that the right had lost certain battles in the 1960s—on voting rights, civil rights, desegregation—but could still maintain racial hierarchy by using budgetary and monetary mechanisms to block public spending and the expansion of the welfare state in the South. Similarly, after Southern defeat in the Civil War, all these budgetary shackles and locks were maintained to keep Blacks and poor whites in poverty.

MH: What links this fiscal secession of the post-Great Society era to the Civil War secession, intellectually and practically?

MC: Buchanan is not echoing the Civil War itself so much as the counterrevolutionaries of the post-Reconstruction South. I see him as a kind of successor to the Redeemer Democrats, who used municipal and state government finance to claw back the power they had lost after the Civil War. The Redeemers made powerful strategic use of supermajority voting rules in state legislatures, which effectively blocked public spending that would have threatened the wealth of the white elite.

The neoliberal counterrevolution also extends to monetary politics. When the Nixon Administration phases out the convertibility of the dollar to gold in the early 1970s, many right-wing economists fear this will allow the government to spend without restraint. Some new means of imposing discipline on central bank money creation is needed, and the solution that emerges is the permanent war on inflation—that is, wage inflation. This new, inflation-focused era of central bank policy has sometimes been described as a gold standard without gold.

MH: How does supply-side tax reform become a tool in that secessionist effort? And how does this both complement and complicate our idea of austerity?

MC: The supply-side movement complicates the idea of austerity because on the one hand, it sells itself as a tax cut movement. It seems to align with the idea of rejecting state power and refusing government aid. But as soon as you make selective cuts to a baseline rate of income taxation, the result is tantamount to direct public spending: in budget accounting terms, both serve to increase deficits. So what supply siders call tax incentives are really government subsidies to the holders of capital income, in particular those who “earn” profits in the form of capital gains. What looks like spending austerity is actually spending extravagance by other means.

MC: Which connects to your work on the rise in asset prices and the relative decline in operating profits. How does this stealth spending through tax cuts camouflage the attack on social spending?

MH: The supply-siders were literate practitioners of government budgeting and public debt finance. Many were based in Republican treasury departments and had links to the bond markets; they knew how these things worked. They were hardly about to oppose government debt issuance outright, because that’s how bond traders make money. And they knew that after Nixon abandoned the dollar convertibility of gold, the US dollar could play this newly hegemonic role in world markets. The economist Robert Mundell, a profound influence on the early supply-side movement, was the first to recognize that the US could exploit this position to issue debt at will, which would always find buyers. But the trade-off was that the U.S government would have to pursue a relentless campaign against domestic inflation. At the time, supply-side economists saw inflation as driven by overly powerful trade unions and excessive welfare provision.

It’s a myth to think of the US as uniquely free from monetary and fiscal constraints. The US has special powers to issue debt and find willing purchasers, of course, but freedom to issue debt is not the same as freedom to spend. In 1978, the world’s central banks were prepared to abandon their dollar reserves if the US continued to pursue an inflationary politics, as it did under Carter. So in the supply-side view, the US as dollar hegemon is quite limited in the kinds of spending it can support. Off the table is anything that’s too redistributive or liberating—welfare, or investment in free education and health care—because these empower labor and the poor.

By contrast, spending on defense, police, and prisons was fine, as were so-called tax cuts, which are really tax expenditures. The supply siders proposed a budget that was extremely generous in subsidizing financial wealth holders—creating these government-subsidized markets for capital gains—and extremely austere in subsidizing wages or spending on the poor. I think this captures the real motives behind the business revolt of the 1970s. Despite appearances, supply siders weren’t screaming for less government; they were screaming for government to subsidize capital income on a new basis. Hence this shift from industrial profits to capital gains.

Compared to the supply siders, Virginia School neoliberals had a much more naive vision of how modern economies work. They wanted to eradicate almost all kinds of deficit spending. While supply siders couldn’t agree with that, they could at least agree that certain kinds of spending should be forbidden.

MH: One thing I think the book does well is analyze the present US political moment, and especially the Republican Party, as a synthesis of these tendencies. On one hand, someone like Trump is fully familiar with the debt markets, but on the other, he has inherited this tradition of social austerity and budget cuts as a main strategy for policymaking. How has the current GOP adapted these late-20th-century trends to create something new?

MC: Trump and other Republican politicians, people who aren’t formally trained in these schools of neoliberal thought, seem to speak these languages of debt and austerity quite syncretically, almost like a creole. But they all seem to understand intuitively that the fiscal extravagances they can allow themselves are prohibited when it comes to certain forms of domestic spending. They have a deep fear and abhorrence of wage inflation. And as we saw with Jerome Powell, they’re most alarmed by the specter of wage inflation at the very lowest-paid levels of the service sector.

MH: This seems like a real roadblock on any sort of American Peronism or right-wing populism. But some observers are always waiting for Trump or the Republicans to make their populist turn. Do you see that as misguided?

MC: My argument is a corrective to the idea that the US is alone in its capacity for extravagant domestic spending. My vision is darker; I think the US is just as constrained as other countries, except in its military spending. The move to US dollar hegemony in the 1970s was enacted by an international alliance of capital interests, represented by the IMF and the major central banks. And these interests were prepared to abandon the dollar in 1978 if the US pursued a domestic spending politics that was too generous to labor.

The only countervailing force would be an international alliance of labor and leftist interests, of the poor against capital. The creation of another hegemonic currency bloc is not in itself an answer, although I can see that greater currency competition might create more bargaining space. The problem is that the bargaining space opened up during the cold war involved a capitalist and a communist bloc, which forced the capitalist countries toward greater social democracy. Today, we would be picking and choosing between varieties of authoritarian, far-right, and center-right blocs.

In the current conjuncture, I think a right-wing populism would be possible only via the expansion of military spending. There is a welfarist dimension to US military spending of course—from military employment to domestic weapons manufacturing—and welfare chauvinism might be enacted in this way.

MH: In your previous book Family Values, you rewrite the relationship between neoliberalism and the family. Contrary to popular belief that neoliberalism was anti-family, you present the family as a neoliberal vehicle for wealth transmission and accumulation. What did the family mean to the 1970s counterrevolution and the counterrevolutionaries?

MC: There’s a very old and remarkably common idea in the liberal tradition that the welfare state needs to be dismantled in favor of family responsibility. The supply-siders orchestrated this turn by turning one class of workers against another around issues of taxation and inflation. They were very attentive to the fault lines between private- and public-sector labor unions in the 1970s: the private sector was primarily blue-collar, male, and white; the public sector disproportionately non-white and female. Total union membership in blue-collar industries peaked at the beginning of the 1970s. By 1975, it was declining sharply, while the public-sector movement was on the rise. The populist wing of the supply-siders could easily turn to blue-collar men and say, look, these people in the public sector are starting to strike. Every strike action they take will increase your taxes—and you are already suffering from inflation. You are not winning wage gains; they are, at your expense. It was a very strategic move to divide these groups of workers and undermine the New Deal Democratic coalition.

All this resonated with the lived experience of disruption within the family. A factory or construction worker might have a wife or girlfriend who was a schoolteacher, so these macroeconomic tensions playing out in the public sphere were also tensions within the heterosexual couple. There was a widespread feeling that the growing power of women, whether they were receiving higher welfare benefits or demanding equal wages, was undermining men’s earnings at a time when male economic centrality was in question.

MH: What about the family home specifically, as a tool to resolve that conflict?

MC: There were a lot of testing grounds for the tax revolt of the 1970s—Buchanan himself had tried to instigate something of the sort for years—but no one predicted that it would turn on property taxes. This proved to be the most useful lever because property taxes affect the family home. People had real reasons to be upset about rising property taxes at the time. But you can see how the issue of property taxes can also feed all kinds of other anxieties about parents’ authority over children, the solidity of the heterosexual couple, the balance of gender power in the home, the kinds of neighbors you want. Property taxes came to crystallize all these issues: where, how, and on whom do I want my hard-earned tax dollars to be spent?

MH: I wonder if you see the current backlash against queer youth and their teachers as part of the same tendency.

MC: Yes, these kinds of conflicts were routine in the 1970s, and the language was almost identical. In fact these conflicts tend to recur every ten years or so, with a different cast of characters, but always involving the idea that taxpayer money is being spent on a public institution that undermines the private authority of parents—abortion clinics, child care centers, public libraries, public schools. In these episodes, the tax issue and the issues of family authority, sexuality, and race all blend together. The preoccupation with child abuse was already there in the 1990s. The only thing that might differentiate the current wave of attacks is that in some ways they seem more dangerous, because the far-right fringes of the Republican Party have been so empowered, certainly judicially.

MH: Some people have been surprised that Silicon Valley tech capitalists—though they’re traditionally known as social libertarians—have gone really hard right, particularly around gender identity, schools, and race.

MC: I mean, with Elon Musk: I forget the details from Walter Isaacson’s book, but Musk’s girlfriend ran off with someone, his kid transitioned and became a Marxist, and then he got his dick out on a plane and someone complained about it. It was a trifecta. I think that’s sufficient.

But in other ways, tech’s right turn is about the institutional form of the business world in which these people circulate. The new wave of founder-controlled tech firms are quite frighteningly cultish and hierarchical. Peter Thiel even spells this out in Zero to One: he describes these firms as little cults and “feudal monarchies.” They’re very secretive, with very little public accountability, and that allows for a lot of executive power. As with Elon Musk, these owners and founders can preside over the social-media infrastructure of millions of people around the world. They can elect themselves chief censor and arbiter of content and insert themselves into the everyday communications of hapless users. The concentrations of wealth and power are so extreme that you can see how these people start to feel messianic.

MH: The idea that private power and individual freedom are the same thing and not in conflict is quickly falsified when, say, your kid wants the freedom to transition regardless of what their dad says. And if we think of the public sector as providing the actual foundation for individual freedom, regardless of one’s place in the capitalist hierarchy or the patriarchal home, then that becomes a threat to private power—say in the form of a supportive teacher.

MC: You’re right.

MH: I was really struck by your use of the terms communism (and the compound term anarcho-communism) as a political horizon for the book, especially in the intro. I wonder why you landed on that term, because a lot of the left-wing sources in the book are closer to what I’d call social democratic.

MC: To that last point: a lot of the historiographic work that I find very enabling recently has been from left post-Keynesians, who tend to be very astute observers of the workings of capitalism. I’m not only talking about the Modern Monetary Theory people, but also Gerald Epstein and Thomas Palley, or—in a class of their own—Adam Tooze and Daniela Gabor, or the new historians of capitalism. All these thinkers have been very helpful in thinking about the place of money and debt in the current moment, and the role of the US in global debt markets and shadow banking.

My political affinities are with the anti-capitalist revolutionary tradition. But I’ve found that, in its recent guises, that tradition is less than exciting in thinking about the question of money. There’s a scholastic, philological bent, a tendency to go back and ask, “What did Marx think?” or “What would the council communists have done?” I certainly don’t know enough about the history of communist perspectives on public finance. But I think that Marxists can’t afford to sneer at Keynesian reformism when the post-Keynesians are doing much more work to understand the political-economic state of play.

So how can we use that expertise as Marxists? What is our vision for collectivized public finance? Because it seems to me that for the last hundred years and more we’ve been living in a modern social-fiscal state that would be difficult to unwind. I don’t know if we would even want to. There’s a double bind, too, with anarchist strategies like mutual aid in the current conjuncture. On the one hand, there can be no left activism without mutual aid and solidarities of care. But without a strategy of offense, mutual aid alone can easily become compatible with neoliberalism, which is all about devolving welfare to local communities and helping people to be self-sufficient.

The social state has almost always developed as a kind of preemptive or retroactive response to the revolutionary left. All the way back to Bismarck, and throughout the 1920s, the formation of welfare states across Western Europe was a way to block socialists or communists from coming to power, but was also a response to organized pressure from leftist parties and the labor movement. So why would we abandon that legacy? Of course, historically it took a compromised and distorted form, but the original impetus surely belongs to Marxists. In fact, I don’t think it matters if it belongs to Marxists or not—you should use what you have.

Many people have reached this conclusion by different paths. It’s not just a question of blueprints, because I think a lot of people now are making technical blueprints for a more collectivized form of public central banking, or for a better system of federal transfers to state and municipal governments, and so on. And I think that’s an incredible advance. But I also think the global left is in a real cul-de-sac strategically. So the strategic question is really what I’m interested in right now.

MH: The question I’m left with at the end of the book is: were the counterrevolutionary anti-communists correct? Were they right about the stakes of public social spending in the ’70s? If you’re saying that, left unchecked, these Keynesian or post-Keynesian programs—the Great Society, state-led wage inflation, welfare spending—will ultimately collapse into communism, does that mean that these anticommunists really did understand what they were dealing with? I think about the early Black Panther Party emerging pretty directly out of Office of Economic Opportunity anti-poverty programs, for example. I think your book usefully gets us all on the same page, left and right. Many people hear these claims from the right, and think, that’s crazy—the right thinks that if America does welfare spending, it will lead to global communist revolution. And you’re sort of saying, we should do this, so that that does happen!

MC: I mean, you do have to put a little bit of work in. And you need a sense of where you want to arrive.

MH: It’s not automatic. But tell me about it, because I think that that’s an interesting view of the right and the right’s understanding.

MC: Did they understand more than most people on the left? Yeah. Because the left in the 1970s was ambivalent about welfare, to say the least—often for good reasons, but sometimes for quite stupid reasons. That’s why I’ve found the recent revival of interest in the anarcho-communist tradition of working “in and against the state” so valuable. The political theorist and historian Katrina Forrester is working on a book about this, and she describes how British feminists at the time were demanding the redistribution of resources without the discipline this typically came with. So I’m of two minds. The left could have been more cognizant of what it was doing. I think that would have helped, though I don’t know if it would have avoided the race and gender divisions that I think ultimately doomed the left in the late 1970s.

The right’s assessment of the threat of revolution should also be taken with a grain of salt, because it is very hysterical. It can be very flattering to look through the eyes of the right and see left-wing revolution everywhere. This is evident today in the red-state campaign against the allegedly “woke” BlackRock. Yes, it would be nice if unions became much more strategic about their pension assets, and asserted more pressure on an institutional asset manager like BlackRock; but unions have barely begun to do this, and their leverage will be limited as long as they keep entrusting their pension savings to third-party asset managers. Meanwhile, the right is already spooked. In fact, they should be worried that by cracking down on “environmental, social, and governance” investing, they’re giving unions bad ideas—like taking charge of pension savings and withdrawing them from financial markets altogether, to invest in collectivized resources and fund a universal system of social insurance.

MH: Do you think that hysteria is part of the right’s winning strategy? They say the left wants to destroy the family and turn all our kids trans; they want the kids to trust public schoolteachers more than their parents; they want to institute communism. And they’re going to do it all by giving teachers raises. And you say, like, yes, that’s our plan.

MC: No, what I say is: I wish! It’s hard to know what they’re so scared of sometimes. In general it’s a bad idea to read your politics off the hysteria of the right, but in the ’70s at least, the left had more footholds of institutional power, and there was a forward momentum. In the book I quote a 1973 Wall Street Journal editorial that raised the specter of “wage-wage inflation,” where wage rises in one sector would push up wages in another. It was a moment when capital could no longer rely on this reserve-army strategy of pitting one class of workers against another.

I don’t see that now. But I do see a lot of energy and passion, which hasn’t been there for a long time. There are exciting breakthroughs happening everywhere—in unions, and in universities, with the Gaza protests.

MH: I found the final paragraph of the book really exciting. You talk about a whole series of strategies and tactics, from formal trade-union strikes to urban riots to occupations of public space to squats. I was ready to open up a whole other book, so I hope you’re writing the next one.

MC: I am.

MH: That’s very exciting. So my final question is: how do we think about the relationship between the peoples and groups enacting the strategies and tactics you describe? How do you hold all these strategies and tactics together? Is it important that they be held together? Can they just operate on their own parallel terms, or do you see a political formation emerging?

MC: Do you mean a party?

MH: I don’t know; do you mean a party?

MC: No, I don’t tend to think in those terms. I don’t want to overstep the mark. I feel that institutions crystallize in the wake of struggles or alongside them.

MH: I don’t mean institutionally, necessarily. Even intellectually, part of the book’s project seems to be the telling of a history in which we can understand these activities as part of the same work. Some people would say that squatting and building occupations are totally different and separate from a trade-union strike. But you’re holding these strategies and tactics together in a way that I find really generative and forward-looking.

MC: I think it has always been hard to separate these things, but it’s especially hard today because the issue of consumer inflation is back on the table, and a lot of that comes from rising rents. Wage gains mean very little when people can’t afford housing or transport or schools.

At another level, I think it’s impossible to build real solidarity when one group of people is under the illusion that they are not state dependents. I am trying to promote a historical view of the social functions of the state that suggests that we are all dependents of state spending in one form or another. In fact, the more you are subsidized, the less you tend to be aware of it. Homeowners often see themselves as uniquely independent of welfare, despite the much larger volumes of spending they receive, via tax breaks, in comparison to people on welfare. Marxists often promote the idea that some workers are more productive than others because they work in the “private” industrial sector, completely ignoring the centuries-long history of government support to private corporations.

If we start to think of the different ways that we all depend on public spending decisions, even under conditions of austerity, then it becomes easier to build connections between “producers” and “consumers”—teachers and students, for instance, or patients and nurses. This is not to say that everyone is in the same boat, but if you can recognize the ways in which different people are subject to austerity, then it is harder to be kettled into horizontal conflicts.

There is something clarifying about the current conjuncture, however bleak. A lot of the staying power of neoliberal economic policies comes from the “third way” Clintonite promise of shareholder democracy, or of expanding home ownership. This promise is always time-limited, because it tends to promote the kinds of asset price rises that progressively block people from borrowing their way into asset ownership in the first place. But it’s hard to recognize that when you’re in the grip of aspiration. Today, the closure of this aspirational option means that class distinctions are hard to avoid, and that’s a good thing.

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