Sunday, April 19, 2009

Synthesis emerges - time for Obamanomics?

For the thesis in free-market capitalism and the anti-thesis in command economy socialism, there have been many attempts at the Hegelian synthesis, most famously in mainland Europe's social democratic capitalism and more recently in the Blairite Third Way movement. With unbridled free-market, limited government, American style capitalism crumbling in the face of the worst economic crisis since the Great Depression, the search for alternatives has intensified.

It is in this context that Barack Obama has weighed in with his version to reshape American capitalism - Obamanomics. It seeks to reduce consumerism and encourage savings and investment ("move from an era of borrow and spend to an era of save and invest"); redistribute wealth towards the middle class; make rest of the world less dependent on the US market for their growth; markets are not self-correcting and are vulnerable to market failures; and a recongnition that an activist government is an acceptable and necessary partner for a stable, market-based economy. His advocacy is for a more healthy and sustainable expansion of the economy, with more widely shared benefits and free from the macroeconomic imbalances and distortions that marked growth over the past two decades, and where people are far less exposed to the vicissitudes of a market economy.

While accepting the fundamental tenets of free-market capitalism about the power of markets as an engine of innovation and prosperity, and the necessity of economic growth for improving incomes and living standards, it clearly breaks with the Reaganite tradition that viewed government as part of the problem and not solution. The challenge for Obama would remain in implementing this ambitious center-left (or center-right) agenda.

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