My apologies to T. S. Eliot, but September, not April, is the cruelest month. Before 9/11/2001, there was 9/11/1973, when Gen. Pinochet toppled the Allende government in Chile and ushered in a 17-year reign of terror. More recently, on 9/15/2008, Lehman Brothers went bust and torpedoed the global economy, turning what had been a Wall Street crisis into a near-death experience for the global financial system.
Two years after the collapse of the global economy, prospects for economic recovery remain distant. Despite modest upturns at the end of 2009, the end of public stimulus spending in the United States, China, and other states has renewed fears of a double-dip recession. All major sectors in the economy remain cautious; firms are not investing, banks are not lending, and consumers are not spending. Partly to blame for the continued mess is a lack of coherent, focused, and directed government action.
The debate continues to rage over the merits of government intervention. While many assert that stagnation presents a significant threat to future economic stability, and can only be countenanced by direct public stimulus, others argue that widening deficits and the risk of default present a bigger problem. Anti-spending groups in the United States, relying on thoroughly discredited neoclassical economic principles, have built a wide base of support from Wall Street bankers, doctrinaire neo-liberals, Tea Party enthusiasts, and small-government supporters in the American middle class.
Meanwhile, Obama's nascent steps toward Keynesian interventionism have been compromised by the absence of an inspiring alternative to the predominant neoliberal paradigm. The Obama administration made the mistake of accepting responsibility for the crisis. Accusations leveled at greedy bankers directly clashed with the assertions that those same banks were "too big to fail" and focused too much attention on personality flaws rather than structural problems. Meanwhile, the administration watered down reform legislation, eliminating the very provisions that would have addressed the problem.
Therefore, while the Obama administration did attempt to use public resources to jumpstart the economy, it relied on a pallid Keynesianism, failing to present its policies as part of a convincing narrative. A more coherent approach should supplement purely technocratic management with democratic decision-making at all levels of the economy, greater income and distribution equality, and a more cooperative business ethnic.
If progressives fail to reclaim the narrative for government management and populism, these ideas may well be co-opted by other movements that also welcome state intervention, but coupled with a reactionary social and cultural program. The result is a well-known political outcome: fascism.
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