My colleagues Frank Foer and Noam Scheiber have written a compelling account of the Obama administration's approach to economic policy. And although I don't pretend to know the president's mind, I might agree with their summary statement that "Obama has no intention of changing the nature of capitalism." Still, I want to make what may seem to be a paradoxical argument: that regardless of the president's intentions, he will change American capitalism in fundamental ways--in particular, he will alter the relationship between the government and the economy. My argument rests on what he has actually proposed to do and how his proposals, if enacted, would situate his administration in the history of American economic reform.
Americans have been notoriously loath to undertake reforms that increase the role of government. That goes back partly to our Lockean liberal heritage of minimal government that marks us off from Europe with its absolutist past. The only times that Americans have permitted major changes in government's role have been during economic crises, social upheavals, and war--that is to say, during the Civil War, the Progressive Era and World War I, the New Deal and World War II, and the Sixties (circa 1961-1974). If you look at these periods, and at the intervals between them, you find certain patterns that may help explain what is going on today.
Reform and reaction: Periods of major reform have invariably been followed by periods of reaction: the Civil War by the era of Robber Barons and Social Darwinism; the Progressive Era and World War I by the Twenties of Calvin Coolidge and Andrew Mellon; the New Deal and World War II by the Robert Taft Congresses and the Eisenhower presidency; and the Sixties by Ronald Reagan, Newt Gingrich, and George W. Bush.