Melinda Cooper’s new book Counterrevolution: Extravagance and Austerity in Public Finance is a history of how this kind of thinking about public spending came to be. Since the 1970s, support for tax revolts has been drummed up by those who want to restore the authority of men, especially white men, in the face of declining wages and perceived threats to their social centrality. In the process, the suburban home has been coded as the domain of the hard-working family man and his wife; helped along by tax policy, this ideal took literal form as a private asset–based wealth system that secured homeownership and control over local tax spending as the best routes to generational wealth. Meanwhile, public employees, especially schoolteachers, have been vilified, presented as part of a well-funded Left—what Cooper calls “the fiefdom of the overly powerful white-collar woman, whose wages posed a direct threat to the authority of husbands and fathers.”
In Cooper’s treatment, debates over taxation were always indirect expressions of “anxieties around the racial and sexual politics of redistribution,” at once playing on and exacerbating divisions between property owners and the “nonpropertied poor.” What regressive taxation enabled at a national level is a fundamentally new regime of accumulation—one organized not around measurable growth in industrial production or wage levels but instead by asset price appreciation and capital gains. In fact, the decline in capitalist productivity is what has enjoined people to secure conditions favorable to the appreciation of their own assets, and to work against a variety of profligate enemies ostensibly leeching off their hard work and taking what they haven’t earned. The result has been a willful dismantling of the relatively generous public-spending regime that came into being in the boom years after World War II, and that expanded yet further after militant labor, feminist, and anti-racist movements fought exclusions from existing welfare provision and from a living wage. In other words, the gains that were made within these movements were not defeated by rhetoric alone: they simply could not be maintained when economic conditions changed in a way that favored instead the steady erosion of direct public-sector spending and the rise of an “asset-based democracy.”
Cooper’s argument adds to a considerable literature on neoliberalism that studies declining union membership, the diminishing labor share of income, spreading underemployment and contingent work, and deficits that continue to grow despite austerity-era spending levels. What is unique here is her extensive work on the moralization of taxation via the nuclear family, which concentrates wealth in ways that parallel and subtend the privatization of care. Cooper argues that private family wealth has become the preferred form in the United States, supported by a tax regime that is “so regressive it must be considered an instrument of wealth generation in the hands of the rich.” Indeed, the US has witnessed a “resurgence of dynastic wealth” that Cooper suggests is the clearest symptom of the success of the regressive counterrevolution.
One seedbed for the policy environment that soon spread throughout the United States was the “urban laboratory” of New York City in the 1970s, when planners sought to save the city from total economic meltdown. Here the tax regime was overhauled via a “crusade” against progressive taxation. The outcome came to favor people like Donald Trump, who was able to build his real estate fortune through preferential tax policies such as bankruptcy protection and absurdly generous terms for writing off highly fictionalized asset depreciation values. A triumph of Cooper’s book is its emphasis on tax policies as enabling what are in effect expenditures. The growth in tax expenditures that benefit the wealthy helps to explain why a massive national debt continues to accumulate. Though it may be relatively unusual to treat tax breaks as government subsidies for the wealthy, Cooper argues that they are and that, as a portion of government spending, they have grown considerably since the 1970s. “Tax deductions, exclusions, preferences, exemptions, deferrals, and credits are all deliberate departures from a baseline rate of income taxation,” she writes. They function in ways that are essentially equivalent to public spending, but they disproportionately benefit the well-off via a “hidden welfare state.” It seems that there are no limits when it comes to this kind of spending, nor to funds supporting the military and police that protect this private wealth. In the case of New York City, where real estate moguls present themselves as plucky entrepreneurs who built something out of nothing, the truth is that they benefit from preposterously generous tax expenditures. Trump alone received more than $885 million in tax breaks in the construction of his real estate empire, not to mention enjoying the protection of laws that shielded him when his projects dramatically failed, as so many did.
Another seedbed that Cooper identifies is suburban California, where a tax revolt resulted in the passing of Proposition 13 in 1978, presaging a national wave of new tax-cutting policies. Proposition 13 reduced property taxes, but, more important than this, it stipulated that property taxes could only be spent within the districts where they were collected. Cooper describes homeowners refusing to fund schools that didn’t directly serve their needs, while construing public spending that benefited poorer neighborhoods as irresponsible and unearned. People fought “to segregate their tax dollars within the family and local community,” she writes. This necessarily entailed some papering over of the role of federal money in making homeownership accessible to begin with—via, for instance, highway construction, mortgage insurance, income-tax breaks for homeowners, and the waiving of taxes on the sale of a primary residence. Cooper writes that, because they are usually unmarked, “asset-based subsidies to white homeowners flattered them into thinking that their lifestyles were sustained only by private initiative and the intergenerational transmission of familial wealth,” while any money “disbursed to inner-city renters was heavily marked as unearned” in contrast.
The California tax revolts were, for Cooper, the real beginning of “the American neoliberal counterrevolution”: their primary feature was homeowners fighting to control how their family wealth was marshaled and spent and how their children were educated. When schoolteachers, among others, were “cast as tax-funded usurpers of the rights of parents and agents of the liberal elite,” this solidified the boundary between one’s “own” and everyone else’s, opposing any form of taxation that didn’t directly benefit one’s family and local community. Here Cooper continues and deepens the argument of her previous book, Family Values: Between Neoliberalism and the New Social Conservatism (2017), which established that the neoliberal age is not just about the monadic entrepreneur of the self. Rather, it has also entailed, as a fundamental feature, the concentration of wealth and care within relatively small family units planning their estates. Weaponizing the idea of the family in crisis, the Right has idealized the perseverance of the traditional nuclear family as inseparable from the health of the nation’s economic future.
Counterrevolution adds to Cooper’s earlier work on the material conditions that benefit family-based households an extensive account of the crucial role played by tax and inheritance laws. These tend increasingly to consolidate the family as “conduit in the process of class stratification,” by “endowing the legal institution of the family with unique powers to shield capital gains from taxation.” The tax regime is now premised upon support for the bequest motive: taxing estates, gifted behests, and capital gains would be “penalizing the transfer of wealth from one generation to the next” and would thus inhibit capital formation, policymakers believe. “The family is truly a tax haven in a heartless world,” Cooper writes—a play on the conventional idealization of the home as a place of rest and respite from the world of work. Here, instead, this “haven” shows its real face as a product of racialized class warfare, with a predominantly white asset-owning class doing everything in its power to pay as few taxes as possible while bending every remaining tax policy to serve its special interests.
In this regard, Cooper claims, the public choice theory of the so-called Virginia School has been considerably more influential than has previously been acknowledged. More than any other intellectual formation, it has provided justification for the moralization of the family as the key site of wealth generation and protection. In the view of James M. Buchanan, the primary beacon of public choice theory studied by Cooper, rampant public spending and accumulating deficits were evidence of a broader social decay. Liberalized sexual attitudes and a poor work ethic were linked to welfare provision so generous that it disincentivized labor and family-based saving. For Buchanan, the “Keynesian abundance of long-term unemployment insurance had loosened the discipline of waged work,” Cooper writes, “weaken[ing] the obligations of the husband and father as breadwinner” and fostering a “flight from the responsibilities of breadwinner masculinity.”
At the national level, the tax revolts backed by such thinking soon manifested in changes like the 1981 Economic Recovery Tax Act (ERTA), which, among other policies favoring private wealth hoarding, raised the estate tax exemption and lowered the capital gains tax. In this context, the corporate phenomenon of the hostile takeover is instructive because ERTA added to the appeal of the stock option as a form of executive compensation by “restoring its tax status as investor income.” This promoted the “substitution of investor (capital) income for salaried (labor) income” and meant that executives were even more personally incentivized to always prioritize the value of shares over any other consideration. In Cooper’s argument, the rise of venture capital and private equity investment is a corporate form of the changes reshaping the nation at every level, as people are increasingly inclined to be managers of their own private assets first and foremost, and those without the means to accumulate private wealth are basically screwed. Personal investment came to serve as an answer to wage stagnation and as an alternative to welfare via “credit democratization,” in which “capital gains could replace wages as the vector of social mobility.” So, instead of focusing on declining wages (or on bosses as exploiters of their labor), people were induced to focus on the threats to their savings posed by taxes on their wealth and property—taxes that funded greedy and wasteful public-sector unions, as well as institutions like universities and libraries, which these people had no personal interest in or control over.
For some municipalities, the consequences of counterrevolution have been totally disastrous. In Ferguson, Missouri, for example, where police killed Michael Brown in 2014, the local government, “struggling to reconcile mounting public service responsibilities and dwindling tax resources in the long aftermath of the tax revolt,” covers shortfalls with mounting fines and user fees, including court costs and fines for expired licenses and unpaid utility bills—all imposed disproportionately on those already struggling to afford the things they need. In cities like Ferguson, Cooper argues, taxation itself no longer has “redistributive pretensions”; it has become instead “a pure act of confiscation, indistinguishable from punishment.” “If we can speak of a public service here” she acidly observes, “it has become so threadbare as to consist almost entirely of the act of extracting tax itself.” Cooper links this decimation of anything like redistribution to a longer tradition of Southern conservatism, which “had always preferred balanced budgets and low taxes” as the “recipe for fiscal austerity”—a policy posture motivated by a racial animus against social spending on the nonproductive and nonpropertied poor. The modern Tea Party is among the inheritors of this tradition, their opposition to most kinds of government spending grounded in a sense that the “rightful gains” of hard-working white Americans have been “confiscated” by lazy others who don’t belong to one’s family and community. Propelled by the remaking of taxation in places like New York and California, then, a form of racist polity already firmly established in the US South “moved nationwide, by riding the wave of white suburban resentment across the country.” That the results were highly racialized was by design: the public sector “was not only the last redoubt of American unionism but also a leading employer of African Americans”; thus, “to shrink and disarm” this workforce “was always going to impact the employment and wages of African Americans to a disproportionate degree.”
Debates over abortion enter here as one of the clearest instances of the moralization of tax policy at the national level. The pro-life Right—politicians, spokespeople, media outlets—have worked exceedingly hard to argue that state-based healthcare such as the Affordable Care Act would basically mean doling out abortion willy-nilly. Since hard-working Americans do not get to opt entirely out of income and property taxation, this would mean that, against their will, they are participating in what amounts to the killing of future generations. Cooper shows definitively that these arguments irresponsibly play on decades of association between public spending and liberalized attitudes toward race and sex, associating pro-choice arguments with anti-family profligacy and overspending on the undeserving poor. In other words, this is one of the consequences of the way that, when public-sector unions would fight for better contracts, the mainstream news media would position them against “ordinary, average American families” whose wages were ostensibly being “taxed away to subsidize the nonworking poor and those who catered to them—welfare workers, teachers, nurses.” These workers were associated with progressive values that would be imposed on whichever members of the public they happened to encounter—hence, in the anti-abortion fight, the specific targeting of Planned Parenthood, star enemy of the pro-life media that has been encouraging people to oppose having their tax dollars pay for anyone’s abortion.
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The Right’s assault on public-sector workers continues apace. They attack librarians for recommending the wrong books, teachers for devising anti-racist curricula, medical professionals for offering gender-affirming care, and on and on. Given her own presentation of how the United States has arrived at this conjuncture, Cooper’s thoughts about what our response should be are quite surprising. Marxists have too often succumbed to “eschatology,” she argues, waiting for capitalism’s “long slowdown” to “release us from capture.” She is gesturing here toward the work of Robert Brenner, whose long downturn thesis she pushes back against, because its sharp emphasis on imminent decline risks downplaying the dynamism to be observed in other areas. “Average rates of growth, capital stock investment, and industrial profits have all performed dismally since 1973,” she concedes. “But what if the real action were happening elsewhere, invisible to these metrics?” With the new organization of economic life that Counterrevolution charts, “in which asset price appreciation through debt leverage came to replace growth in the national product as the catalyst of wealth creation,” the expansion of industrial profits become a “weak measure of dominant economic trends.” As a result, and in opposition to end-times narratives of decline, Cooper asks us to consider the untapped potential within what has undoubtedly grown immeasurably—namely, the state’s capacity to tolerate and even orchestrate deficit spending when it is deemed necessary.
In her view, the Left should make use of the “hidden possibilities of public finance and central bank money creation” to “release the social wage.” With sufficient political will, it should be possible to “collectivize public debt issuance, to monetize that debt, to channel that money into collective spending on education, health care, welfare, and the transition to renewable energy, or to redistribute the ensuing social wealth.” This would be a step beyond Keynesian policies that balance the relationship between labor and capital; instead, “central bank money creation and the state’s power to tax and spend”—those “formidable powers of wealth creation”—would tip over into “the full-blown socialization of finance,” allowing Americans to collectivize and redistribute wealth beyond gendered and racialized class limits. This would be real “monetary and fiscal extravagance” from the Left.
Americans would continue to live in a money-based society, then, but under a socialist redistributive state with social supports guaranteed by a bottomless debt mechanism. This would, it seems, not require massive expropriation of the assets of the wealthy, who have worked so tirelessly to make every government policy function in their own favor. Yet if, as Jamie Merchant writes, and as Cooper’s book seems to concede, the final bits of surplus produced by a shrinking workforce are being “extracted upward into private hands,” with the US Federal Reserve and Treasury acting as “a life support apparatus for the private, market-based system on which the survival and political legitimacy of the US state itself depends,” what kind of gargantuan political turn would need to take place for this to be seized and put to collective ends?
The question may itself be irrelevant. Debts are meant to be repaid when profits return. In Merchant’s words, “As governments are forced to mortgage an ever rising portion of the social product to the needs of the credit system, as total debt rises while total profits fall, there will be ever less social wealth available to provide the basic resources that society needs to materially reproduce itself.” This suggests that the wealth disparities Cooper charts will only become more acute, attended by a host of familiar and extensively studied effects, including rising costs of living and declining wages, growing surplus populations surviving outside the formal economy, retrenched political divides, and decimation of state-supported programs and institutions.
In this light, is it not realistic to imagine that the privatized regime of asset ownership is just as likely to end in some total rupture or breaking point than in deficit spending for socialism? This is the wager, in any case, of vibrant recent articulations of communist futurism, which exceed mere eschatology. These assume that the downturn thesis is broadly correct but urge more than mere visionless waiting for release from capture by capitalism. They argue instead that there will not be a meaningful long-term recovery of profitability that would otherwise result in better lives for most people globally, not to mention a mode of relation to the natural environment that is conducive to the ongoing existence of life on this planet—and, from this, everything follows.
