A new political and economic model, a new New Deal, at the government and corporate level, is urgently needed.
This model will favor working people, the racially and nationally oppressed, women, youth, seniors, immigrants, small and medium businesses, sections of industrial capital, and other social groupings too. People and nature would come before profits and militarism.
Much like Roosevelt’s New Deal, it will be a product of a series of struggles over time, including within the broad coalition of forces that drives the process.
The opposition will be formidable. Most sections of corporate capital (oil, military, mining, health insurance, pharmaceutical, and transportation among others), the Republican Party, and elements within the Democratic Party too, will resist any basic political and economic restructuring that impedes profit and war-making.
But for this article I want to focus on finance capital – Wall Street. It ascended to the apex of power in tandem with right-wing extremism three decades ago and has remained there since.
As the right wing and finance capital tightened their grip on the levers of power, U.S. economic expansion came to depend on massive debt, unprecedented income inequality, huge imbalances in trade, successive bubbles (high tech, then housing), growing military budgets, mind bending jobs losses, especially in manufacturing, the disempowerment of the working class, racial minorities, women, youth, immigrants, and many others, and, not least, state intervention on the side of the corporate class.
For a while the economy grew, albeit slowly and unevenly, but in the end it ran into built-in limits to the further accumulation of capital (out of which profits come) and economic growth.
The housing bubble – resting on mountains of debt, highly toxic financial securities, and wage stagnation – burst and spread its havoc to hundreds of millions who had no directing role in this tragic drama.
To describe what the financial moneybags did as criminal is almost a sugarcoating; it doesn’t really capture the pain and hardship that their actions have caused.
And yet, though they brought the world to its knees, the tycoons of finance are not about to yield – or even slightly diminish – their power and privileged position in the global economy. In fact, their aim is to extend and consolidate their power in the midst of this crisis.
Their memory isn’t so short that they have forgotten that the regulatory regime established in the Roosevelt years hemmed them in for four decades. None of them starved, of course. But during those four decades, they did not hold the nearly unchallenged political and economic sway that they were able to regain in recent years. Any thought of a repetition of that New Deal experience sends them into fits.
So far they have done quite well. The financial reform measures passed in Congress establish some limits on finance capital, but they don’t go far enough. Much tougher regulations are imperative. But it would be unwise to stop with a new regulatory regime, no matter how tough it is.
Financial institutions – and here I include the Federal Reserve Bank – play too large a role in the national and global economy for them to remain in private (corporate) hands.
Like the captains of the Titanic, the masters of finance had their chance and blew it. They ran the ship into an iceberg, leaving the rest of us to drown or barely afloat in a churning sea. By any measure of justice, they should be relieved of any further duties – at the least.
A new captain and crew should be assembled from a pool that includes everyone who has a stake in a sound and people-friendly financial system.
In other words, the nation’s financial system should be democratically owned and operated in the public interest.
Two years ago such a step would probably have found only a few supporters, but the meltdown of Lehman Brothers and the financial crisis that followed changed everything. Tens of millions are losing confidence in the nation’s financial czars and in the financial system they constructed and manipulated.
The environmental and economic catastrophe in the Gulf, daily reports of corporate negligence and criminality, lower living standards and generalized feelings of insecurity have only added to this crisis of confidence. More and more people wonder if the corporate form of organizing and managing the economy is workable anymore.
A socialist transformation isn’t around the corner, nor have radical ideas become today’s common sense in every instance. But it is fair to say that old ideas – for example, the idea that private corporations are the indispensible pillar of a healthy and just economy – are competing in the public mind with new ideas – for example, the widely held view now that deep-going anti-corporate democratic reforms are a necessary response to the financial mess, and the idea that we need a people-friendly economy.
Which ideas become dominant is still to be decided in the trenches of mass struggles.
Right now, the struggle to curb the financial elite as well as for jobs and relief is focusing on the mid-term congressional elections. The main task is to increase the Democratic majority and enlarge its progressive current in both the House and Senate. That may not sound “sexy,” but the truth is – a favorable outcome in November will position the broad people’s coalition to fight with new vigor and strength against concentrated financial power and corporate power in general, for a new New Deal.