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Redefining American capitalism post-crisis

Redefining American capitalism post-crisis
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First Published: Sun, Apr 19 2009. 11 45 PM IST
Updated: Mon, Apr 20 2009. 10 51 AM IST
Washington: The recession will end. No one is marking the calendar, least of all Barack Obama, but the US President is hinting at an audacious ambition as he waits for that inevitable if distant day: a redefining of American capitalism.
Obama has begun to sketch a vision of where he would like to drive the economy once this crisis is past. His goals include diminishing the consumerism that has long been the main source of growth in the US, and encouraging more savings and investment. He would redistribute wealth toward the middle class and make the rest of the world less dependent on the American market for its prosperity. And he would seek a consensus recognizing that an activist government is an acceptable and necessary partner for a stable, market-based economy. “We cannot rebuild this economy on the same pile of sand,” he said last week.
Obama is putting an early stamp on a debate of historic importance, and ideological underpinnings, just getting under way in the US and around the world.
For the better part of half a century after World War II, democratic capitalism built its modern framework against the backdrop of its death match with totalitarian communism. In the two decades since the fall of the Berlin Wall, the American model of capitalism, largely unchallenged by ideological alternatives and increasingly dominant around the world, drifted towards what conservatives viewed as a more pure form of economic liberty and what liberals came to view as misguided free-market fundamentalism.
Obama is stepping into the debate characteristically intent on avoiding polarizing labels, and his advisers describe his philosophy in terms of pragmatism rather than ideology. Conservative activists whipped up emotional anti-tax, anti-Obama “tea parties” around the country to mark tax-filing day last week, saying the White House was headed down a path of fiscal profligacy that would ultimately require broad tax increases. And the prospect of a Democratic administration pushing the US to the left is seen by many as a political rallying cry.
Arthur C. Brooks, president of the American Enterprise Institute, the conservative research organization, said of the administration, “They want much more of a European-style social democracy in which people are far less exposed to the vicissitudes of a market economy, and they want to have much easier access to manipulating the private-market economy.”
Those on the left who have criticized Obama for being too timid in addressing the crisis are similarly concerned that he will miss an opportunity to reshape American capitalism more fundamentally once the economy recovers.
Yet if Obama’s position brings the US full circle from Ronald Reagan’s nostrum that government is the problem, it also stresses continuity and a commitment to the most basic conservative tenets: the power of markets as an engine of innovation and prosperity, and the necessity of economic growth for improving incomes and living standards.
He would be willing to use the usual liberal policy tools to redistribute wealth after a recent period in which the gains have gone primarily to a relative few at the top of the income scale. But he would stress personal responsibility rather than entitlement. Embedded in that approach is a far-reaching implication: that the rest of the world should no longer count on the US to snap up imported goods or run up large trade deficits.
Even with the economy and the markets showing a few signs of improvement, it will be some time before Obama has the luxury of focusing on the long run. Still, in his first three months he has not been reluctant to think big, and there may be no better time to start redirecting an economy as huge and complex as this one than when it is in flux.
©2009/THE NEW YORK TIMES
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First Published: Sun, Apr 19 2009. 11 45 PM IST