May 22, 2013
Steve Fraser on the Crisis of Capitalism
Posted on Nov 6, 2009
By Steve Fraser
On a mid-December day in 1932, ex-President Calvin Coolidge confided to a close friend, “We are in a new age to which I do not belong.” He punctuated that insight a few weeks later when he died.
History has confirmed Coolidge’s premonition. The Great Depression and the New Deal are considered watershed events in America. Only the Civil War had a more profound effect on the character of American society and on the nature of its political culture and political economy. Only the trauma of the Civil War left behind memories even more enduring than those associated with the cataclysm of the Great Depression. One speaks of antebellum and pre-Depression America to signify how different the country looked before the abolition of slavery and the advent of the New Deal. Both moments are rightly identified with the passing away of an ancien régime and the birth of a new order of things.
Today virtually every reflection on the nature of the current global financial collapse and what, for the moment at least, is being called the “Great Recession” invokes the specter of the first Great Depression and the promise (or for some the threat) of the New Deal. Is our dilemma like that one, as severe or less so? Will it reform or even revolutionize public policy? Does it call capitalism itself into question? Should we expect the kind of social upheaval that made the 1930s so unforgettable? Will it go down as a turning point in American political history the way the elections of 1860 or 1932 did?
Every early-on-the-ground indication suggests otherwise. The first 100 days (now as I write the first 200 days and counting) of the Obama administration are a failure. At least that’s so when they are measured against the only other first 100 days anyone really cares about, namely Franklin Roosevelt’s. Those famous few months compacted together an extraordinary legislative/executive response proportionate to the unprecedented dilemma facing the country even if those responses were not always consistent, coherent or effective. It included a national bank holiday and law guaranteeing bank deposits, an “Economy Act” severely slashing government expenditures, legislation separating commercial from investment banking, two recovery acts aimed at reviving industry and agriculture, a securities bill to bring the stock market under public scrutiny, an agency that saved hundreds of thousands from foreclosure and eviction, a lightning-fast work relief program, a major infrastructure-building project, and an unprecedented federally directed effort at regional economic planning and development. The atmosphere was electric with a sense of alarm, anger and accomplishment. Walt Disney’s “Three Little Pigs” cartoon debuted in 1933 to wild popular enthusiasm because it seemed to allegorize the country’s plight: Its regrettable recklessness during the intoxicated devil-may-care Jazz Age ’20s, its rediscovery of the virtues of frugality, and its determination to confront the “big bad wolf,” those Wall Street financiers who had laid the country low.
Matters couldn’t seem more different now. On every major issue from health insurance to financial regulation, from energy policy to foreign policy, from economic recovery to labor law reform, the new regime and its sizable majority in Congress equivocate, seek allies on the right where there are none, and convey a sense of paralysis. If top officials talk plenty about historic opportunity, they seem incapable of seizing it. On the contrary, after some official verbal rebukes directed at the financial oligarchs responsible for the crisis, the “big bad wolf” has so far escaped unscathed; indeed the “bailout” state has resuscitated those “too-big-to-fail” institutions on extraordinarily generous terms at taxpayer expense and left them largely under the old management, which continues to reward itself with unseemly sums for its repeated failures.
Despite the sluggishness and ambiguity of these dolorous 200 days, it is still tempting to view the global crash and election of 2008 as one of those rare turning points. And in some sense it is. That someone of Barack Obama’s racial origins occupies the presidency speaks volumes. Thanks to the debacles of the final Bush years, the political demography of the country has shifted dramatically, shrinking the electoral map for the Republican Party to the Old South and portions of the Mountain West and Great Plains. If the country’s financial overlords continue to wield enormous power, their moral stature approaches zero and their faith in the free market now seems like a cultic delusion, damaging to their intellectual credibility. Ideas about government regulation and government economic stimulus, so recently anathematized, are now mainstreamed.
Yet something more profoundly disillusioning has emerged. Even as the atmospherics of the Obama phenomenon promise a daring break with the old order—“yes we can”—the new regime seems a captive of a more distant past. Its political imagination extends no further than the New Deal and often not even that far. Rather than revolution, it seems more often to be talking about restoration. This is strikingly at odds with the expectations normally associated with previous turning points in U.S. political history.
Beneath its surface electoral hurly-burly, the United States has enjoyed a distinctly placid political life. Most of the time, its two-party system has effectively proscribed serious alterations in the prevailing political economy, the balance of power among social classes, the regional distribution of wealth and influence, and the fundamental direction of public policy. Only on rare occasions has the country’s political equilibrium been stressed enough to rupture and open up the possibility of some entirely new order: a new reigning ideology, a new political demography, a new relationship between government and civil society, a new distribution of wealth and income. Three such moments stand out: the elections of 1860, 1896 and 1932. The first abolished slavery, the second promised but failed to replace tooth-and-claw industrial capitalism with a Populist vision of the cooperative commonwealth, and the third succeeded in supplanting laissez-faire industrial autocracy with an American version of social democracy, or what might be called the Keynesian commonwealth.
All three of these turning-point elections were distinguished by a pervasive and concrete sense that American society might look like quite a different place as a consequence. Visions of a new order—one of “free soil, free labor, free men” in the case of Lincoln’s victory, one in which mankind would no longer be “crucified on a cross of gold” should William Jennings Bryan actually win the presidency, one that would chase “the money-changers from the temples of our civilization” as vowed by FDR in his first inaugural address—are what made these elections so thrilling, so fraught, so feared by some and so passionately embraced by others. These visions of a new way of life had gestated for a long time inside the old society. In all three cases, a general crisis of the ancien régime—disunion, a revolt of the producing classes, and the Great Depression—turned great expectations into real political flesh and blood.
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