The Obama administration is pursuing a Center-Left Keynesian policy. using massive public investments in both infrastructure and crisis ridden social services (which in the U.S. are largely organized and funded at the state and local level) along with huge direct subsidies to the banks and the auto industry. Will this be enough?
We are just at the beginning of a fast moving crisis and there is no clear answer. The stock market is continuing to drop, which Republicans are pointing to, even though President Obama's intelligent comment that the stock market is like tracking polls, shifting rapidly and not in itself the best indicator of what is happening in the economy, is certainly true, as any stock broker could inform the Republicans.
Unemployment is a much more important indicator and it is certainly rising, but (and this is my analysis) not anywhere near as fast as it would be had right-wing Republican policies continued (in the aftermath of the 1929 crash for example, official unemployment rose from about 500,000 before crash t o four million about six months after, a comparable time period in which the Hoover administration intensified the very credit and trade policies that had helped to bring about the crash while doing nothing about regulation and more importantly nothing beyond official good wishes to aid the unemployed and those who were beginning to lose their savings in the collapsing banks and their farms and homes through foreclosures.)
But the news and some trends today are generally not good. Auditors see General Motors', the largest U.S. automaker, survival in "substantial doubt." Retail sales are off significantly in February (although not as bad as January or what had been expected) except for the anti-labor discount store chain, Wal-Mart, which was, as of a few years ago the largest private employer in the U.S., with over one million employees.
Wal-Mart sells a wide variety of goods ranging from groceries to electronics to clothing and hardware, mostly made abroad with cheap labor. Those who shop there are overwhelmingly moderate and low income people. Its workers are cheap service labor. It has been seen for years as part of the U.S. economic problem, not any solution. GM, which was for a long time the leading industrial corporation in the World (it was that when CPUSA members led autoworkers to victory in the Flint GM strike of 1937, the breakthrough strike for industrial unionism in the U.S.) lived off military contracts and high profit gas guzzlers in the decades immediately following WWII. It then exported capital with the same enthusiasm that Wal-Mart imported goods, using union givebacks to help subsidize its de-industrialization policies.
The ripple effect of a GM collapse to the economy would be devastating, undermining president Obama's strategy to increase domestic demand through social spending. Perhaps it is time to turn GM into a public corporation, to nationalize it and develop policies to finance the sale of its cars to Americans and also the production of large numbers of public transportation vehicles. Such nationalization connected to infrastructure development might both revive and also hugely improve the quality and social utility of U.S. auto production, while increasing employment and mass purchasing power. This may be necessary for other threatened industries. While this is not socialism, in the sense that it is not an economy in which public ownership and planning for use while be the norm, selected nationalization of industry as a way to both bring about recovery in an economy and protect existing jobs and consumer purchasing power was a characteristic of social democratic led governments in many parts of the world, particularly in the post WWII period. It may very well be vital part of the answer to the present crisis.
The purchasing power of consumers is directly related to their wages and salaries as workers. Government support for trade union organization and a high wage economy was a staple of left Keynesian theory in the 1930s and 1940s as a _central _mechanism to both sustain and increase mass purchasing power. Unionizing Wal-Mart's million workers and tens of millions of others through comprehensive federal labor legislation (repealing Taft-Hartley, Landrum-Griffin and all over federal level anti-labor legislation and drafting new legislation that would negate state anti-labor laws) can and should be seen as an essential feature of a national economic policy that will protect the people from depression, not just an advance of trade union or even workers rights.
In the twelve years of the New Deal, the number of workers in unions increased by about five times, from under three million to nearly fifteen million. Comprehensive labor and social legislation was enacted where none had really existed before. There was also one remarkable and successful experiment in public ownership of energy production, the Tennessee Valley Authority (TVA) Corporate capitalist expansion during WWII and the political consequences of the cold war would first contain and eventually reverse much of this, but it remains, as millions of Americans understand, the only serious model that we have to confront this crisis at this moment, a crisis which is taking place in an economy which is far more interdependent, one characterized by much larger concentrations of capital and rapid flows of capital, than was true seventy years ago. We can't repeat the past or look at it narrowly as a guide to action. But we can learn from it to act in the present and to prepare for the necessary next steps to defend the interests of working people. Nationalization as public ownership and control (and that is my meaning of nationalization of key industries and of course finance and the government-labor cooperation in the drafting of comprehensive new labor laws and policies to multiply the number of workers in trade unions should be steps that we begin to contemplate today.