In 1971, after announcing wage and price caps to curb inflation, Richard Nixon famously declared, “We are all Keynesians now.” But moments after the phrase escaped his lips, it was no longer true. Indeed, the thirty-seven years since then have seen a nearly full-scale repudiation of Keynes at home and abroad, as neoliberalism remade our political economy and ushered in the new Gilded Age.
In the past few weeks, however, it has seemed quite clear that this chapter is over or at least on its last few pages. But as Nixon showed, old ideological habits die hard. Which is why, when faced with the prospect of imminent financial collapse, the Treasury initially designed a bizarre, jerry-rigged, quasi-free-market solution that would have involved setting up a government-run reverse auction to buy troubled assets. From the beginning, people on the left pointed to a far more efficient, fair and tested approach: direct injection of capital into banks. Or, to use a word that still retains a frisson of the taboo, nationalization.
Of course, anyone calling for a major part of the economy to be nationalized just six months ago would have been swiftly relegated to the margins of American political discourse. And yet here we are in 2008, with old Wall Street hand Hank Paulson, of all people, suddenly seeming to embrace the idea. On Monday, October 13, he called a meeting with the heads of the nation’s nine largest banks and announced that the government would be purchasing $250 billion in their preferred stock. The devil, of course, is in the details (see William Greider, “Dr. Paulson’s Magic Potion,” page 4), and if the banks’ alacrity in accepting the deal is any indication, taxpayers ought not to let down their guard anytime soon. Still, this departure from neoliberal orthodoxy was a shift worth savoring.
It’s not just Paulson and others in the Bush administration who have been forced to throw their philosophical principles on the pyre. Who’d have thought that the Republican presidential candidate would be pushing a plan to buy up bad mortgages (as poorly designed and thought out as that plan is), or that the congenitally cautious Obama campaign would put out a call for a three-month foreclosure moratorium?
It’s been remarkable to watch the way the right’s ideological bankruptcy, with its painful real-world consequences, has pushed the center firmly in a progressive direction. Put another way, it’s becoming clearer by the day that the left was right.
All of this raises the question: if nationalizing banks is suddenly on the table, what else might be placed there? Inspired by the sense of new possibilities, The Nation convened an emergency town hall at New York City’s Brecht Forum on October 10, drawing together some of the left’s most insightful and prescient thinkers and writers. In classic organizer fashion, we asked, What are our demands? And while some were familiar but still unfulfilled, others were bracing in their novelty and ambition. There were calls for a debt strike movement and domestic debt relief; the restoration of unions and the social welfare state, as part of a renewed campaign for the redistribution of wealth; a ban on lobbyists from any involvement with the bailout, and on former Clintonite deregulators Robert Rubin and Lawrence Summers, specifically, from any role in devising the nation’s economic policy; the revocation of the Fed’s charter and the dedication of monetary policy to the interests of the people; and the “internationalization” of the oil companies, with proceeds to be used to create a trust for a sustainable global economy. There Is No Alternative? Try these.