I’ll take a stab at this. The above is seems basically true.
As for how and why the parties have changed up to our current Republican/Democrat two-party system, political scientists speak of “realignments,” electorial realignments where this or that constituency shifts between the parties, often due to a dynamic process (a party recognizes the potential of appealing to a given constituency that formerly had primarily voted for the other, and adopts policies aimed at appealing to that constituency, or a constituency sees the potential in leaving the former party it had given its allegence to, and ‘taking over’ the other, or gaining influence in it).
People speak of all sorts of re-aligning elections/moments, but really the prototypical one – the one that still shapes the parties to this day – was the election of 1896. I thought that even before I listened to Rothbard’s lecture; this whole series (start at the bottom and work your way up; they’re in reverse order) is really good at explaining the development of America’s political-economy, including the party system. If I remember correctly, this one specifically talks about the shift in constituencies, both elite and popular, and the reasons for them. None of the re-alignments since 1896 that political scientists and historians talk about have really come close to that one in significance; most of them have just represented an extension and deeping of the logic of the 1896 realignment.
Really that’s the “backbone” of America’s party structure to this day; Williams Jennings Bryan and so on gained control of the Democratic Party, but did not win the election. Wilson succeeded in winning. The FDR “realignment” did involve shifts in some constituency groups, but really, ideologically, represented the triumph of the 1896 ideology, “Democrat-wing.”
The Reagan Era saw a partial re-alignment, but really it was a shift of some constituencies, but not a ideological shift. I may get in a bit of trouble here, but the impact of neoconservative intellectuals on the conservative movement is, in this respect, often overblown. Rather, they were influential because as Scoop Jackson/JFK Democrats, they were the intellectual wing of the “Reagan Democrat” voter. The typical Reagan Democrat was not convinced of small government/Washingtonian Foreign Policy. They remained “Jacksonians” (in Walter Russell Mead’s breakdown of the four types of American policy views). (Note I know some people here won’t like WRM, but his breakdown still has analytical value, IMO).
“Jacksonians” were as described in some of the America Since 1877 lectures here – particularly the ones on the Vietnam War: they turned against the war because it did not seem that we were willing to do what they believed it would take to win it, but they despised hippies and “peace activists” (many of whom were, lets be honest now, really “victory for the other side” activists). They were not convinced militarism was wrong, they were just convinced that the Democrats were no longer a home for people who believed in a “Big Stick” foreign policy.
Similarly, they despised the excesses of the Great Society…but they were never convinced that small government and mutual aid societies were the way to go in general; they just disliked programs for the undeserving poor, but felt programs that “helped the common man” were just fine – they even liked medicare for grandma, social security, and the “social safety net, just not the hammock.”
In addition, there were the “values voters” who were turned off by increasing Democrat secularism and anti-virtue campaigns, which culminated in this election where the Democrats explicitly endorsed the slut vote. They saw the New Left Democrat Party as deliberately aimed at destroying their social and cultural structures. And they were not wrong (many libertarians – not Tom, I think – but many – think that people should ‘de-emphasize” social issues; but it is the left which has always been the aggressor in the “culture wars,” while the right has simply been trying to defend itself and its institutions from these aggressions, which, again, culminated in the “gimmiedat or you’re waging war against me” election memes). However, the unfortunate thing is that many, many of these voters do not see the connection between non-agression on social/cultural issues and non-agression on economic ones; in fact, many of them are on the left economically (just read most of the posts that touch on economic matters at, for example, What’s Wrong With the World to illustrate this point).
So Tom Woods et al look negatively at, say, Reagan, for his actions not following through on his better rhetoric of small government. And they have a point. And people have a point about how worthless and counter-productive the existence of the Republican Party is. But they’re not leading people down the garden path. Neocons aren’t manipulating an electorate that otherwise would not be militaristic and would not support FDR-TR style government programs. Neocons et al are just the intellectual spokesmen of that view. The 1980 Electoral Realignment just represented the Republican Party taking on the role of the pre-New Left Democrats, while the Democratic Party continued it’s shift towards the Progressive Ultras. Reagan himself embodied this shift in the phrase “I didn’t leave the Democrats, the Democrats left me” – and millions of voters looked at things the same way. (the Overton Window has continually shifted Left throughout this century.*)
What would happen if, say, the Republicans of today were to follow the “wise” advice many are giving them in the wake of this election? That they de-emphasize social issues and emphasize libertarian economics? That they drop, say, opposition to abordion and don’t make a big point of churches and private people being forced to pay for Sandra Fluke’s lifestyle choices? Well what would happen is a large constituency would either not vote at all, or would decamp back to the Democrat Party, because the reason they are Republicans has nothing to do with a sound grasp of economics, but with opposition to what they see as infanticide and cultural degeneration. So the Republicans are locked in a vice.
Now, it is true that the Ron Paul movement, IMO, does represent the way the freedom movement should go: it is able to reach a large number of young people, by being frank and honest. But it does that by being persuasive. People – at least some of them – will listen to the message. So one of the failures of the Republican Party in our time (the last generation or so) has been that it lacks people who use the platform available to them to speak persuasively about freedom in all facets of life. Rather they are dominated by drones with their fingers in the wind, who are at best apologetic about the beliefs they supposedly stand for, and at worst don’t really hold those beliefs themselves but think they have to utter them in order to appeal to their base (most if not all of the apparatchiks – campaign managers et al, fall into this category; they hate having the electoral base that they have, which is an embarrassment to them at cocktail parties in DC, NYC, LA, and other circles of the fashionable. Indeed, the idea that Progressivism represents “the people vs the powerful” is and always has been a cruel joke; it’s not hard to tell which beliefs are fashionable in high social circles, and have been since at least 1896. And those beliefs aren’t Jeffersonian-libertarian. Oh-ho, no. It’s also a cruel joke, a mockery, to believe that the Democrats are somehow ‘anti-big-business’ – they never have been; indeed, the biggest businesses are generally Democratic, the biggest financial houses are generally Democratic; the moderately-big are generally Republican, but really both parties have their big-business supporters, it’s just that it’s one faction vs another, rather than “we’re sticking up for the little guy and sticking it to the rich” – it’s a cruel mockery to write a book, like one historian recently did, “FDR – traitor to his class” – portraying him as somehow for the working man, when really he was just the exemplar of one class of wealthy progressive elitists, using power to enrich his allies and crush his opponents).
Now, I myself rip the current party structure up and down. And I think there is a bigger constituency for liberty than hacks realize – when it is articulated, and articulated sincerely. But really there’s a lot of work to be done persuading people. Maybe the majority “really does, if they think about things properly, support liberty and oppose statism,” but they need to be persuaded to see things that way and to identify the problem with the things they think they believe work: that they want X, but the way they’re going about it (supporting policies N) do not produce X, but instead produce Y outcomes, which they do not like, and they ought to support policies L instead.
*Yes yes I agree with people who think the left-right spectrum is not analytically accurate, that there may instead be a three-dimensional spectrum, or an up-down spectrum; up being freedom and down being statist control. But for the purpose of this post it is useful to speak in terms of left-right for clarity.