The new capitalism

For weeks, political pundits—both liberal and conservative—have been rambling on about their belief that Obama’s policies are going to create a new form of American capitalism, the likes of which have never been seen before. Conservative pundits have attempted to use this as a fear-mongering technique, spreading the dire warning that Obama is peddling socialism. Until now I have looked upon these claims with skepticism—after all, during the Great Depression FDR used socialistic policies to create consumerism, which became the biggest boost to American capitalism in all of American history. Though his policies where based around government intervention, at heart FDR was still an avid defender of capitalism.

But Obama is not FDR. Though both are using government intervention to save capitalism, it is becoming clearer every day that Obama does not plan to return to the status quo after the recession ends. I am not worried that Obama is a radical leftist who will destroy American economic freedom, but I think it is clear that we will not be returning to business as usual.

The first and most obvious sign of this is the G20 Summit. Not only did Obama wholeheartedly support the conference, but he supported mandates to regulate global trade, support the International Monetary Fund, and encourage government spending to end the global recession. This is a far cry from “Reaganomics,” where government is viewed as the problem, not the solution. Next, Obama has clearly stated his intent of guiding American industry and banking to prosperity. He demanded the resignation of a prominent auto executive, and has supported bailouts for banks and financial institutions, something even Democratic Presidents would be hesitant about.

These signs (warning signs, to conservatives) hint at a future paradigm shift in American economic policy. Clearly, Obama is planning to re-invent capitalism and the way America interacts with the world, probably through legislation.  

When will these changes occur? I don’t know for sure, but I believe it will be soon. Recall that immediately after the election Obama promised to “fix” the US economy and declared that the American people could hold him responsible for the result of his administration. What this means is simple: he acknowledges that if he can’t “fix it” in 4 years, he won’t be re-elected. However, it is probably impossible to bring us back to where we were in 2008 in 4 years, so many Americans will be unhappy even if Obama manages to slow or stop the recession (and decide not to vote for him again anyway). Also, Obama probably realizes that if things do not begin to turn around by 2010, the Democrats may lose their majority in Congress. Thus, I believe that Obama plans to implement his reforms sometime the next year or so. I am not sure exactly how or even what he plans to do, but I think we are going to see a major economic policy shift in the next few years. 

Will Obama’s reforms be for the best? This is a very difficult question, and we can only speculate. For one thing, it is obvious that the world is no longer going to depend on the US economy as much as it used to. Though this reduces our role in world politics, I believe it is for the best because our economic growth can no longer match that of developing countries. However, this economic influence may be crucial in the potential cold war against China, in which the US will probably be hard-pressed (once again) from preventing an authoritarian government from expanding its influence. As always, though only time will tell the real result of Obama’s reform. One thing is clear, though: we will see change soon, be it for the better or worse.