1932, 1968, 1980... 2008
The huge, historic shift that Obama's impending victory will signify.
Obama: Ushering in a new age?
If the next two weeks fail to produce yet another astonishing change, we are on the verge of an Obama landslide that will also produce a Democratic landslide in the congressional elections. This will be not merely an electoral event but a watershed election, one of the infrequent but profoundly altering basic changes in American political history.
Be patient, please. I am a history professor and this is an historical analysis, a useful terrain few journalists explore.
The resemblance of 2008 to the 1932 election is almost eerie. President Herbert Hoover, a true believer in laissez faire capitalism, had presided with almost complete passivity over the ever-deepening depression triggered by the 1929 stock market crash (when the Dow lost 87 per cent of its worth), and the ensuing industrial and banking catastrophe. Hoover had been preceded by 70 years of Republican hegemony, decades of wildfire capitalist development coursing along boom and bust cycles. Government had stayed clear of regulation while also handing out land and other resources to the private sector. The occasional Democratic president had played variations on Republican themes.
1932 changed everything. Franklin Roosevelt, a good-looking, pragmatic and centrist political figure swept to victory on the most vague of platforms. However, when he took power, he initiated the New Deal, massive government intervention in the financial sector of the economy, with macro-economic projects for the unemployed. Actually, the New Deal never ended the depression, but it gave people hope.
Previous age of liberalism
Also during the 1930s, John Maynard Keynes, an internationally influential British economist, developed a full theory of government intervention in the economy, including deficit financing during economic bad times and tight regulation of banking and finance. Whether this should be considered socialism or state capitalism is a matter of argument. The usual term applied was a "mixed economy." The ideology was "liberalism."
This political period lasted until either 1968 or 1980, depending on how you look at it.
When the Republicans returned to power in 1952, after 20 years in the wilderness, the Eisenhower administration endorsed rather than reversed Democratic governance using an economically engaged state. And then the Kennedy/Johnson years saw a revitalization of the activist state, with a serious War on Poverty producing a plethora of new federal institutions. Unfortunately, Lyndon Johnson sank his popularity with a shooting war in Asia, and anger with him and the Democrats produced Richard Nixon in 1968. While Nixon did not reverse every element of the Johnson policies, he ran against Washington and set the political ground for a reversal of the state interventionist policies that had been dominant since 1932.
Reagan and his Democrats
It was the election of Ronald Reagan in 1980, however, that proved to be the political and economic watershed. The state was the problem not the solution, Reagan urged with his actor's reassuring shuck and smile. The Republicans reversed the whole New Deal mentality, the belief in state action that had characterized American political life for nearly 50 years. Liberalism became a curse word; deregulation was going to free the marketplace to perform wonders of wealth-creation never seen before. Taxes were slashed for the very rich and for corporations. Wealth was redistributed upwards, reaching back to the salad days of the 1890s and the 1920s.
Bill Clinton signed on to this program, killing many more financial regulations and creating the housing program that has led to the current catastrophe. He was a Reagan Democrat, proving the hegemony of the Republican New Order.
Until the financial crisis that is now about a month old -- although it feels like a decade -- it had been unclear what the meaning would be of an Obama election. Clearly people are sick and tired of W, clearly McCain is a weak candidate, but Obama seems to be an instinctive centrist politician planning to reach across the aisle to introduce moderate reforms.
The coming veer to the left
It is the economic crisis that will make 2008 another watershed election. Circumstances will drive Obama and the Democratic congress to the left. An interventionist state is returning with a rush; Reaganite, anti-state, deregulated capitalism, it is now clear, is a catastrophe and a dead letter. A new era has begun.
This time the Republicans have adapted to the economic and political sea change even before they have left office. In dire straits, somewhat reluctantly following the British lead, the Goldman Sachs element of finance capitalism that runs the W. treasury has signed on to massive state intervention, and a bewildered Congress agreed. Henry Paulson et al are of course saving themselves through state intervention -- Keyensianism in the foxhole -- but such rapid reformulation of their self-interest proves my point.
Therefore when the Obama administration deepens this new departure, many influential elements of the Republican Party will not be able to rail against the state as the enemy and the Democrats as high spending state activists.
Conservatives for Obama
When Republican warhorses like George Will, Christopher Buckley, Colin Powell and the Chicago Tribune (for the first time in its 157 year history) endorse Obama, you can measure the depths of this adaptation to the emerging new political economy.
Moreover, unlike during the Great Depression, the world's major economies have all responded in coordinated fashion to the crisis in financial capitalism. Under European leadership, during the next year or two, we will see the development of an international system of financial regulation to respond to the ever-increasing internationalization of capitalism.
None of this was even vaguely plausible a month ago. Gordon Brown, who had presided over reckless British deregulation for a decade as Finance minister, suddenly rediscovered and enacted Keynesian interventionism. Along with Nicholas Sarkozy, the conservative French leader, Europeans are leading the charge for what the French president calls a New Capitalism. Bush, however reluctantly, is following along and will soon convene the first conference in the international reorganization of capitalism that will take months or years to institutionalize.
The meaning of 'change'
Barack Obama will preside over this change, and he will raise the taxes of the rich, punish a whole raft of corporate thieves, and begin a true national health care system. This will not be another Clintonian endorsement of Reaganism but a reversal of its premises and policies.
As for the Republicans, they will either follow the lead of the current shift in thinking and action initiated by the dying W. regime or they will regroup rightwards in reaction against the new internationalism that they will define as treason to American sovereignty and American world domination. With a charismatic leader -- NOT Sarah Palin -- they could become an even more dangerous assault army attacking the new political order that has just begun to emerge.
The alternative and more likely scenario, if history is any guide, is that Republicans will continue to seek the new centre, which has just jolted to the left.
We certainly live in amazing times. I am awe-struck by the suddenness of this fundamental economic and political re-orientation. And I am reassured by memories of what my father told me, that the depression he lived through was a very creative and exciting as well as dislocating and disheartening human experience. The next few years are likely to produce a deep recession, but the mechanisms for combating it are already being mobilized. In that sense the world's leaders have indeed learned from history that we are all in this together and that the people who play with our money need to be watched like hawks.
Barack Obama never has articulated exactly what he means by Change. History is doing it for him.
Related Tyee stories:
- Reading Obama
Review: The Audacity of Hope - Obama Is Your Trudeau, I Tell American Friends
For an expat Canadian, it all comes rushing back. - Is Obama Good for Canada?
How the US choice for president really affects us up here.
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Luke Skywalker
19-10-2008
Good Article!
That sums it up perfectly.
Who would have ever imagined those "outside of the box" Obama endorsements... even just a short few months ago???
jsinger
20-10-2008
Thanks for the uplifting
Thanks for the uplifting historical overview. The financial wheeling and dealing of the world is always incomprehensible to me, but it has seemed to me that this 'collapse' (or whatever it is) might be an opportunity to correct some of the obviously wrong and ugly things about our present system - like the fact that big tobacco, for instance, could be so wealthy simply for trapping people in childhood to a lifetime of expensive addiction that ends in premature suffering and death, while at the same time denouncing other, ultimately lesser drug users and legalization advocates as evil. Many other obvious examples (though how much more obvious could any example be) exist that seem to me to be direct results of our present system.
I've never heard anything but negatives about the depression. This is the first time I've heard it mentioned as a time of creativity, which actually makes sense. I want your version of upcoming events to be true, and I hope increasingly right wing Canada will be watching and learning.
Van Isle
20-10-2008
Good article, but you forgot
Good article, but you forgot to mention that Nixon unpegged the dollar to the gold standard and sent Kissinger off to Saudi Arabia to make a deal with OPEC to have all oil bought and sold in US dollars. Of course this benefitted the Int'l banks in London and New York because currencies now had to be exchanged. Guess what 2 countries didn't like the deal and didn't sign on? You're right, Iran and Iraq. Saddam Hussein signed his fate in the spring of 2001 when he came out of a cabinet meeting and mentioned that in the future, Iraqi oil was going to be sold in Euros. Have you also noticed that Putin, and that little fella in Iran, mentioned a couple of years ago that their oil should be traded in some other currency, other than the US dollar. Now they're on the US administrations shit list? If you want to have a good read, try Petro-dollar Warfare by William Clarke.
lynn
20-10-2008
Life in the trenches of capitalism
Quote:
"And I am reassured by memories of what my father told me, that the depression he lived through was a very creative and exciting as well as dislocating and disheartening human experience."
Yes, an interesting and good point from Mr. Fellman's father about the potential creativity involved in a time of crisis.
Quote:
"In dire straits, somewhat reluctantly following the British lead, the Goldman Sachs element of finance capitalism that runs the W. treasury has signed on to massive state intervention, and a bewildered Congress agreed. Henry Paulson et al are of course saving themselves through state intervention -- Keyensianism in the foxhole -- but such rapid reformulation of their self-interest proves my point."
My dispute with this is that this is nothing new - capitalism and its companies "have been saving themselves" through state intervention and the grand theft of taxpayer monies under both Republican and Democratic governments for eons - using the protection of unspoken, invisible, behind-closed-doors manipulations that effectively blindside and hinder public scrutiny.
Now due to this crisis it's just out in the open.
So there has been no real "re-formulation of their self-interest"..it's just another coy marketing ploy/public sell job to once again get want they want.
In the world according to Henri Paulsen et al: a foxhole is just another great monetary opportunity not to be missed.
Booker
20-10-2008
Sudden
This sea-change is not all that sudden. The recent financial melt-down is simply the exclamation point at the end of the sentence. The shift started with the Iraqi insurgency. That was followed by Katrina, which had a profound effect on the American psyche. The latest shift, in which some conservatives have switched sides, is the result not just of the financial crisis, but of the nastiness of John McCain, combined with the attractiveness of Obama.
It will be interesting to see how the Republicans regroup. The crazies are a big part of their party, and they won't give up their influence without a fight.
seemstome
20-10-2008
catastrophic event
In their book "Blood in the Streets" (1989) Davidson and Rees-Moog discuss the possible end of PAX-Americana. What we may be seeing is the catastrophic event that will galvanize opposition and create the momentum for a long-desired change in the world's financial systems.
ME2
21-10-2008
PAX Americana's Dollars are a gone goose.
So one can only hope, seemstome. But since there's not supposed to be enough Gold around to go back to a gold-based currency, the only alternative appears to be the Euro, which is the same kind of fiat currency as the US Dollar that's gotten us into trouble in he first place.
But then, maybe there's lots of Gold in Dubai, which advertises itself as the world's coming financial center? Ever since the Yanks nixed large scale Arab investment (boy, I bet they'd welcome some now), the Arabs have been squirreling away Gold.
Has Dubai investment been just blowing away soon-to-be-worthless US dollars, or does it know something we don't?
murdock
21-10-2008
Fixing a date...
In the effort to fix a date for an end to market capitalism the authors seemstome mentioned have set out, in their book "The Sovereign Individual" they argue that 1989 and the tearing down of the Berlin Wall was the 'defining moment' for the end.
Others, such as Gore Vidal, have also argued that the WWII actions of the US and more accurately their actions after the end of the war under Truman are the seeds of Empire. All that has followed since about 1950 has been the continued crumbling of the US Republic, only now has the financial collapse shown the utter weakness of Congress and the danger that such weakness presents.
Fiat lux
21-10-2008
It is a long standing
It is a long standing historical fact that empires always go that one fatal step too far and self destruct.
The history of all empires, and also of all competitive systems, is always the same: Takeoff with stolen energy, usually "ordained" by some deity, stealing more energy to remain competitive, and then as the energy supply dwindles and the opposition grows, running out and burnout.
Practically all European countries have at one point been empires. Look at them now. Where are the great empires of the past? Living off stolen resources for 500 years, crying over past greatness and prying for more.
Unfortunately, the human exports of Europe, as here in the Americas, have still not learned the the simple lesson of not pissing against the wind, trying to break elementary physical laws with faith, on the orders and advice of their priests and ideologues.
Ed Deak.
springer
21-10-2008
hopeful
Thanks for the article and the political/financial history lesson. Many people are hopeful that the tides are shifting; we've been waiting for decades - perhaps now is the time. These are, indeed, interesting times we live in.
lynn
22-10-2008
The real challenge
I agree with vegguy in relation to the sound of hope being expressed here that signifies nothing if the necessary hard work is not done with it ...the hard work and honesty to admit that our system is not working...that our system is self-destructing, in fact.
Neither McCain or Obama is honest enough to admit that. In Canada the same phony game playing is going on.
The hope being expressed here is akin to religious fervour that believes that God will miraculously "come through"....and save our souls....so we will not have to.
No, "we must change our lives", as Rilke once said.
Let's stop all the false gods stuff.
It is the system itself that must be challenged and changed....changing the actor in the main part is just a consoling distraction.
As John Pilger recently wrote:
Quote:
"Truly exciting and historic moments have been fabricated around US presidential campaigns for as long as I can recall, generating what can only be described as bullshit on a grand scale. Race, gender, appearance, body language, rictal spouses and offspring, even bursts of tragic grandeur, are all subsumed by marketing and “image-making”, now magnified by "virtual" technology. Thanks to an undemocratic electoral college system (or, in Bush’s case, tampered voting machines) only those who both control and obey the system can win. This has been the case since the truly historic and exciting victory of Harry Truman, the liberal Democrat said to be a humble man of the people, who went on to show how tough he was by obliterating two cities with the atomic bomb.....
It is time the wishful-thinkers grew up politically and debated the world of great power as it is, not as they hope it will be. game.....
The "truly exciting and historic moment in US history" will only occur when the game itself is challenged. "