Not surprisingly, the swift unraveling of the global economy combined with the ascent to the US presidency of an African-American liberal has left millions anticipating that the world is on the threshold of a new era. Some of President Barack Obama's appointees--in particular ex-Treasury Secretary Larry Summers to lead the National Economic Council, New York Federal Reserve Board chief Tim Geithner to head Treasury, and former Dallas Mayor Ron Kirk to serve as trade representative--have certainly elicited some skepticism. But the sense that the old neoliberal formulas are thoroughly discredited has convinced many that the new Democratic leadership in the world's biggest economy will break with the market fundamentalist policies that have reigned since the early 1980s.
One important question, of course, is how decisive and definitive the break with neoliberalism will be. Other questions, however, go to the heart of capitalism itself. Will government ownership, intervention, and control be exercised simply to stabilize capitalism, after which control will be given back to the corporate elites? Are we going to see a second round of Keynesian capitalism, where the state and corporate elites along with labor workout a partnership based on industrial policy, growth, and high wages--though with a green dimension this time around? Or will we witness the beginnings of fundamental shifts in the ownership and control of the economy in a more popular direction? There are limits to reform in the system of global capitalism, but at no other time in the last half century have those limits seemed more fluid.
President Nicolas Sarkozy of France has already staked out one position. Declaring that "laissez-faire capitalism is dead," he has created a strategic investment fund of 20 billion euros to promote technological innovation, keep advanced industries in French hands, and save jobs. "The day we don't build trains, airplanes, automobiles, and ships, what will be left of the French economy?" he recently asked rhetorically. "Memories. I will not make France a simple tourist reserve." This kind of aggressive industrial policy aimed partly at winning over the country's traditional white working class can go hand in hand with the exclusionary anti immigrant policies with which the French president has been associated.
Global Social Democracy
A new national Keynesianism along Sarkozyan lines, however, is not the only alternative available to global elites. Given...