From the Spring Democracy: A Journal of Ideas symposium, "What Happened?": Obama can still redefine liberalism, but he must bring economic power to heel.
Imagine a president, or a presidential candidate, taking on Wall Street in blunt language such as this: "We have been dreading all along the time when the combined power of high finance would be greater than the power of the government. Have we come to a time when the president of the United States or any man who wishes to be the president must doff his cap in the presence of this high finance, and say, 'You are our inevitable master, but we will see how we can make the best of it'?"
Or this: "The supreme political task of our day is to drive the special interests out of our public life."
Or this: "Through new uses of corporations, banks, and securities," a privileged economic elite has "reached out for control over government itself," rendering political equality "meaningless in the face of economic inequality. A small group [has] concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor -- other people's lives."
Today, mainstream commentators and editorial writers would disparage such talk as irresponsible populist rhetoric. But American political leaders have not always been as deferential toward economic power as they are expected to be today. The statements quoted above were not made by far-out radicals, but by Woodrow Wilson (1912), Theodore Roosevelt (1910), and Franklin D. Roosevelt (1936).
It is striking to notice the difference between their liberalism and ours. For these icons of twentieth-century liberalism, the first question of politics was how to subject economic power to democratic control.
When Louis D. Brandeis spoke of "the curse of bigness," he meant that monopolies and big banks posed a danger to democracy. Today, we still worry about bigness, but not in the same way. When we say that Citigroup, Bank of America, Goldman Sachs, and AIG are "too big to fail," we mean that their failure would wreak havoc with the economy, so the government must bail them out rather than let them go down. The problem with having banks that are too big to fail is that it violates the rules of the capitalist game. When times are good, they make outsized profits, but when things go badly, the taxpayer has to pick up the tab.
During the second half of the twentieth century, the focus of liberalism changed. Liberals stopped regarding bigness as a curse, and they made their peace with concentrated economic power. The agenda of postwar American liberalism was set out by FDR in 1944, when he called for an "economic bill of rights." True individual freedom required more than the political rights enumerated in the Constitution, he argued. Under modern conditions, it also required basic social and economic rights, including "the right to a useful and remunerative job...the right of every family to a decent home, the right to adequate medical care...the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment" and "the right to a good education."
Unlike the anti-bigness liberalism of the progressive era and early New Deal, the social-welfare liberalism of FDR in 1944 is recognizable as the liberalism of our time. The great liberal causes of the 1950s, '60s, and '70s -- civil rights, Medicare and Medicaid, racial and gender equality, federal support for education, a more generous welfare state -- were about using government to provide equal opportunity and a social safety net, not about using government to rein in the political influence of big banks and corporations.
Social-welfare liberalism seems a more practical doctrine than the anti-bigness version of earlier progressives. It is hard to imagine how to break up the large financial institutions and corporations that dominate modern economic life. And yet I believe it's a mistake for contemporary liberals to give up on the old progressive project of exerting democratic control over economic institutions. In fact, it's a mistake that has backfired on the Obama presidency. The initial reluctance of Barack Obama and his economic advisers to take a tougher line on the banks has led to a populist backlash that now threatens his agenda.