The Consensus Liberals

How champions of markets and technology lost sight of the fundamental challenge of protecting democracy, and what we must do to save it.

For over forty years, American politics has been dominated by what we might call the consensus liberals—a governing class whose core beliefs transcended the traditional left-right divide. From Reagan to Biden, these consensus liberals shared a common worldview: faith in markets, global integration, and technocratic governance. Their basic economic insights weren't wrong—markets do generate prosperity, innovation does solve problems, global trade does create value. Their fatal flaw lay elsewhere: in their blithe assumption that these forces would naturally promote and protect democratic values.

The crisis we face today stems from a fundamental shift in American political life. We have moved from what should be healthy debates about distribution—how society allocates resources and regulates their use for the common good—to dangerous fights about raw power—who controls whom, and to what extent. This shift reveals the crucial blind spot of consensus liberals: their failure to understand how market success could generate concentrations of power that threaten democracy itself.

From 1945 to roughly 2016, American federal politics primarily engaged in the politics of distribution. We argued about healthcare policy, education funding, environmental regulation, and tax rates. These were legitimate debates within a shared liberal framework. What consensus liberals missed was how their very success in these distributional debates was gradually undermining the power structures that made such debates possible.

Perhaps the most striking aspect of consensus liberalism's power blindness is how thoroughly it forgot the lessons of early American liberalism. The Founders understood exactly what consensus liberals would later forget: the danger of concentrated economic power to democratic governance.

When the Founders wrote explicit powers of taxation and commercial regulation into the Constitution, they weren't adding controversial innovations. They were responding to clear lessons from history. The example of the British East India Company—whose monopolistic power helped spark the American Revolution—demonstrated how unchecked economic power could threaten political liberty.

Within three years of the Constitution's adoption, Congress was already exercising these powers: standardizing weights and measures, regulating railroads, imposing banking regulations. These weren't accidents or overreach—they reflected a sophisticated understanding that market freedom requires a strong democratic state to prevent the accumulation of dangerous private power.

This understanding persisted through much of American history. The Progressive Era's trust-busting, the New Deal's financial regulations, the post-war era's corporate governance rules—all reflected an understanding that markets work best when their tendency toward power concentration is actively checked by democratic institutions.

This sophisticated understanding of power began to erode during the Cold War, when the stark contrast with Soviet communism gradually changed how liberals thought about markets and state power. The valid critique of central planning morphed into something more extreme: a reflexive suspicion of any state action to check economic power.

Ayn Rand's influence here was particularly significant. Her compelling narratives about the dangers of government overreach resonated deeply in the Cold War context. But her framework made a crucial error: it collapsed all forms of state economic intervention into a single spectrum running from freedom to communism. This prevented many from distinguishing between legitimate democratic oversight of markets and authoritarian control of the economy.

The success of the post-war economic order ironically contributed to this blindness. The careful balance between market dynamism and democratic control that characterized the post-war era worked so well that many forgot it was a balance at all. Consensus liberals increasingly treated market success as naturally aligned with democratic values rather than requiring active democratic maintenance.

The neoliberal reforms of the 1980s and 1990s weren't inherently wrong. Many government regulations had become inefficient and counterproductive. The push for market-based solutions often led to better outcomes. The error wasn't in promoting markets—it was in forgetting why democratic oversight of markets matters.

Reagan and Thatcher's successes in deregulation and privatization seemed to validate a simpler view of markets as self-regulating systems that naturally disperse power. The fall of the Soviet Union appeared to confirm this view definitively. Consensus liberals increasingly treated markets not just as efficient economic tools but as naturally democratic forces.

This view shaped policy across the political spectrum. Clinton's Democrats and Blair's Labour Party embraced market mechanisms just as enthusiastically as conservatives. The differences between left and right narrowed to technical disputes about the size of the welfare state rather than fundamental questions about power.

Perhaps nothing reveals the consensus liberals' power blindness more clearly than their approach to China. The belief that market reform would inevitably lead to political liberalization wasn't completely foolish—markets do create pressures for certain kinds of openness. But consensus liberals missed how thoroughly authoritarian systems could harness market efficiency while actively suppressing democratic values.

The decision to bring China into the World Trade Organization reflected this blind spot perfectly. The massive disruption to Western manufacturing bases was justified by the assumption that economic integration would naturally lead to political liberalization. What consensus liberals missed was that the Chinese Communist Party had studied the Soviet collapse carefully and understood exactly what we had forgotten: that market efficiency could be separated from democratic values.

The evolution of Silicon Valley perfectly captures both the promises and perils of consensus liberalism's blindness to power. From its countercultural roots in the 1960s to its current status as a center of unprecedented private power, Silicon Valley's transformation mirrors the larger story of how consensus liberals lost their way.

The early tech pioneers genuinely believed in technology's democratizing potential. Their vision wasn't wrong—digital technology has created remarkable tools for connection, expression, and organization. The error was in assuming these tools would naturally serve democratic ends rather than potentially enabling new forms of control.

The consensus liberals enthusiastically embraced the tech sector's self-image as a liberating force. They saw the decentralizing potential of the internet, the creative destruction of startups, the innovative potential of entrepreneurship. What they missed was how these same forces could generate unprecedented concentrations of private power—how network effects and scale advantages could create new forms of monopoly more powerful than anything the Progressive Era reformers had faced.

Today, we face a dangerous convergence of forces that consensus liberals failed to anticipate. Domestic economic power has reached levels that threaten democratic governance. Foreign authoritarian capitalism demonstrates how market efficiency can be harnessed for anti-democratic ends. Technology companies have evolved from champions of openness to potential threats to democratic discourse.

This has forced a return to explicit power politics—exactly what consensus liberals thought we had moved beyond. Instead of healthy debates about distribution within a shared democratic framework, we increasingly face fundamental fights about who controls whom. The right increasingly sees politics as an existential struggle between groups for ultimate control. Economic elites increasingly view democratic oversight as an impediment rather than a necessity.

To understand our current crisis, we must recover the crucial distinction between the politics of distribution and the politics of power. Healthy liberal democracy requires that fundamental questions of power be settled enough that we can focus on distributional debates—how to regulate markets, what public goods to provide, how to balance competing interests.

When power itself becomes the primary subject of politics, democracy is in danger. This is what consensus liberals missed. By assuming markets and technology would naturally disperse power, they allowed concentrations of private power to grow to the point where they threaten the democratic framework itself.

This crisis is compounded by another consequence of consensus liberal blindness: the erosion of state capacity. In their enthusiasm for market solutions, consensus liberals often supported policies that weakened the state's ability to check private power. The result is a democratic state increasingly unable to perform its essential function of preventing dangerous concentrations of private power.

This creates a vicious cycle. Weakened state capacity leads to greater private power concentration, which further undermines democratic governance, which further weakens state capacity. The consensus liberal assumption that markets naturally check power concentration prevents many from even seeing this dynamic, let alone addressing it.

Understanding this crisis doesn't mean abandoning markets or technology. Both remain crucial tools for human progress and prosperity. What's needed is a return to the sophisticated understanding of power that early liberals possessed—an understanding that sees markets as powerful tools that require democratic oversight to serve public ends.

This means several things:

First, we must recover the distinction between market efficiency and political power. Markets are excellent mechanisms for allocating resources and driving innovation. But their tendency to concentrate power requires active democratic counterbalance. This isn't anti-market—it's pro-market in the deepest sense, ensuring markets serve their proper function rather than undermining democratic governance.

Second, we need to rebuild state capacity while maintaining market dynamism. The answer isn't heavy-handed regulation or state control, but rather sophisticated institutional frameworks that harness market efficiency while preventing dangerous concentrations of private power. The early American republic provides examples: systematic regulation of weights and measures, banking systems, and transportation networks that enabled markets while preventing private tyranny.

Third, we must confront the challenge of authoritarian capitalism directly. China's success in combining market efficiency with authoritarian control isn't an argument against markets—it's a warning about what happens when we forget the crucial role of democratic institutions in making markets serve human flourishing rather than power concentration.

Nowhere is this challenge more urgent than in the technology sector. The same tools that can empower citizens can also enable unprecedented surveillance and control. The same network effects that create valuable services can also generate dangerous concentrations of private power.

This requires moving beyond both techno-utopianism and anti-tech reaction to a sophisticated understanding of how technological power interacts with democratic governance.

This means recovering what early liberals understood: that markets work best when embedded in strong democratic institutions that prevent private power from overwhelming public good.

Perhaps most importantly, we need to recover liberalism's revolutionary spirit. The original liberal project wasn't about managing existing systems—it was about transforming society to better serve human flourishing. Consensus liberals lost this spirit, becoming defenders of a status quo rather than champions of continuous democratic renewal.

This doesn't mean abandoning market principles or technological progress. It means remembering that these are tools for human flourishing, not natural forces that automatically promote democratic values. It means actively working to ensure these tools serve democratic ends rather than assuming they will do so automatically.

The consensus liberals weren't wrong about the value of markets and technology. Their critical error was forgetting what early liberals understood: that these powerful tools require active democratic oversight to serve human flourishing rather than enabling private tyranny.

Moving forward requires maintaining faith in markets and progress while being clear-eyed about power. We need frameworks that ensure these forces serve democratic ends rather than assuming they will do so automatically. This isn't about choosing between markets and democracy—it's about ensuring markets serve democratic values rather than undermining them.

The task ahead is challenging but essential. We must rebuild the sophisticated understanding of power that early liberals possessed while maintaining the dynamism that markets and technology enable. This means moving beyond both naive market fundamentalism and crude anti-market reaction to create institutions that harness these forces for human flourishing while preventing dangerous concentrations of private power.

The future of democracy depends on getting this balance right. The consensus liberals had their moment, but their blind spot about power has created serious vulnerabilities in democratic systems. Liberalism depends on whether a needle can be threaded between a faith in markets and progress while actively working to ensure they serve democratic ends and, most importantly, getting broad cultural and political buy-in to that project.