A dystopia is a utopia in reverse. The post-1980 era is likely to be remembered as a free market dystopia--a headlong compulsion to throw away the mixed economy that was built on the ruins of depression and world war in favor of a marketized society. This compulsion has been ground into the lenses of the press, the economics profession, and the political class generally. It is presumed that greater marketization is desirable and in any case inevitable, despite accumulating evidence to the contrary. And though we now have a Democratic president of liberal spirit, who is well placed to reverse the conservative assumptions of the 1980s, the White House is providing scant intellectual revision. Much of the New Democrat creed accepts the premise that more of society should be marketized; it just wants to do the job more humanely. To look at today's economic conundrums, against the turbulent economic history of the twentieth century, is to appreciate the continuities of a recurring malady:...

There are two great fiscal legacies of American liberalism since Franklin Roosevelt. One is the invention and broad public acceptance of social insurance—notably Social Security, unemployment compensation, and Medicare. The other is the use of public spending, both to increase human and physical productivity over the long term and for macroeconomic stimulus during recessions. There are of course other activist uses of modern government—to regulate economic inefficiency and to advance social justice—but social insurance and social investment are the two fiscal pillars of modern liberalism. Unfortunately, the Clinton administration, seconded by far too many nominally liberal economists, is needlessly sacrificing the latter to salvage the former. In order to "save Social Security," such conservative conceits as permanent surpluses and the discrediting of public and social investment are suddenly conventional wisdom at the White House. Some of this is merely tactical; some of it is...