Obama Rescuing Capitalism: That’s a Lot of Weight for One Brother

There are a lot of useful things that we can begin now that would not require funneling taxpayer money through the near-comatose banking system and would stave off ghastly rising unemployment. The government could simply set up shop and start building things we need and providing needed services. As with the eventual nationalization of the banks – now an almost a foregone conclusion – the people in Washington could pledge to return the new facility assets to private enterprise as soon as they become going concerns. That way they could avoid being tagged with the “s” word (socialism) which some people consider a bad thing. Of course, along the way we just might decide democratically that an only-marginally profitable enterprise serving a public need well might just as well stay in public hands.

While not all would agree with assigning Obama the responsibility for saving capitalism, few observers shrink from asserting that what his administration is able to accomplish amid this crisis will affect the entire world. Neanderthal Russ Limbaugh and the screaming meanies might hope Obama fails, but most of the rest of the planet seems to be praying he does not.

“Pity President Barack Obama,” wrote Martin Wolf, associate editor and chief economics commentator at the Financial Times as the year began. “He won power partly because of the global economic crisis. He himself, most of his fellow citizens and much of the rest of the world agree that the US broke the world economy and now has the duty to fix it. Unhappily, this consensus is false. The crisis is a product of the global economy. It cannot be cured by the US alone.”

“Happily, Mr. Obama has the authority needed to lead the world towards a resolution: his hands are clean, and his lack of desire to exculpate his country is evident,” Wolf continued. “It is also in the interest of his country and the world that the world economy be put on a sounder footing. Should this effort fail, I fear a resurgence of protectionism will be the outcome.”

“Now think what will happen if, after two or more years of monstrous fiscal deficits, the US is still mired in unemployment and slow growth,” Wolf continued. “People will ask why the country is exporting so much of its demand to sustain jobs abroad. They will want their demand back. The last time this sort of thing happened – in the 1930s – the outcome was a devastating round of beggar-my-neighbor devaluations, plus protectionism. Can we be confident we can avoid such dangers? On the contrary, the danger is extreme. Once the integration of the world economy starts to reverse and unemployment soars, the demons of our past – above all, nationalism – will return. Achievements of decades may collapse almost overnight.

“…Welcome to 2009. This is a year in which the fate of the world economy will be determined, maybe for generations. Some entertain hopes that we can restore the globally unbalanced economic growth of the middle years of this decade. They are wrong. Our choice is only over what will replace it. It is between a better balanced world economy and disintegration. That choice cannot be postponed. It must be made this year.”

When people in the business and financial media rue the possibility of “protectionism” – which they do with increased frequency and shrillness these days – they mean something quite specific.

“Let us be clear about what is at stake,” writes Wolf. “It is essential to clean up the huge current mess. But it is also evident that an open world economy will be unsustainable if it remains dependent on bubbles. Collapse of globalization is now no small risk.”

Well, there’s globalization and then there’s globalization. The transnational capitalists may want to keep it going but much of the planet recognizes that the neo-liberal policies global capitalism has fostered have resulted to gross inequities and are partly responsible for the current crisis.

There are many indications that the world economic situation is a lot worse than we’re being told. It’s probably enough to note that billionaire Warren Buffett says the U.S. economy is in “shambles” and will remain so for a least the rest of this year. “The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time,” Pascal Lamy, the head of the World Trade Organization (WTO) said recently.

The current situation is what German Chancellor Angela Merkel calls terms an “extraordinary international crisis.” As the Financial Times put it last week, “All of Europe is heading towards its worst economic crisis since the 1930s.” On Sunday The Independent (UK) said editorially, “Collapsing global demand has hammered the exports of the emerging economies of Central and Eastern Europe. Investors are frantically pulling out their money, pushing down the value of national currencies. Almost all of these former darlings of global capitalism are likely to see their economies contract sharply in 2009. The quicker you rise the harder you can fall, and these former Soviet satellites are falling hard indeed. Unemployment is rising and borrowers are being cruelly squeezed.” The Japanese economy is in a tailspin. Industrial collapse is driving millions of Chinese workers back into rural poverty.

One government change is worth noticing, The Central Intelligence Agency now gives the President daily briefing on the world economic situation and its implications for international security.

British Prime Minister Gordon Brown is in Washington this week where he says he and President Obama will discuss “a global new deal” the impact of which “can stretch from the villages of Africa to reforming the financial institutions of London and New York – and giving security to the hard-working families in every country.”

“I see this global new deal as an agreement that every continent injects resources into its economy,” says Brown. “I believe that central to this new investment is that every country backs a green recovery for the future, that every country that wishes to participate in the international financial system agrees common principles for financial regulation, coordinated internationally, and changes to their own banking system that will bring us shared prosperity once again. And that, together, we must agree to reform the mandate and governance of global institutions to recognize the changing shape of the world economy and the emergence of new players.”

That’s a tall order. Assuming it’s possible, it won’t be accomplished by the “special relationship” between Washington and London. It will require the collaboration of the nations of the European Union (the governments of which Brown is at frequent loggerheads) and the Chinese, the Russians, and the Brazilians, and the South Africans and others. The problem is that capitalism as it currently operates is an impediment to such international cooperation – just as it is to dealing with climate change, AIDs, and world hunger.

“Mr. Obama is present at the re-creation of the global economic system.” writes Wolf of the Financial Times. “It is a challenge he has to take up,” Like I said, that’s a lot of weight.

by Carl Bloice

BlackCommentator.com Editorial Board member Carl Bloice is a writer in San Francisco, a member of the National Coordinating Committee of the Committees of Correspondence for Democracy and Socialism and formerly worked for a health care union.

This article first appeared in The Black Commentator and is republished with permission.

Published by the LA Progressive on March 6, 2009
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About Carl Bloice

Carl Bloice is a writer in San Francisco, a member of the National Coordinating Committee of the Committees of Correspondence for Democracy and Socialism and formerly worked for a healthcare union.