Wednesday, November 12, 2008

Opportunity Knocks

Rahm Emanuel, Obama's newly appointed White House chief of staff, candidly said the other day that a crisis was a great opportunity that shouldn't go to waste. Sounds cynical, and probably a risky thing to say in public. But the point is that big transformations often come out of terrible crises - in many respects the post-WWII Keynesian welfare state, which delivered unprecedented and almost universal growth in living standards in western societies, probably wouldn't have been possible without the tragedy of the war. In crises, old conventional wisdom loses its legitimacy and new ideas get the benefit of the doubt (Yes we can....!).
So will we get any of this here in the UK? Some chance. Labour has been in power for too long to be a transformational force, and bears too much responsibility for our version of the crisis (allowing over-leveraging of households, letting the banks take on too much risk). But the Conservatives are just as trapped in the 'old' discourse - after all, 'prudence' was Brown's way of heading off Conservative scaremongering about Labour's ability to manage the economy without causing inflation and instability. And, lest we forget, the City of London is still instinctively Tory, rather than New Labour. So it's hard to see who can provide the push to get some real change out of this mess. Maybe our only hope is that Brown himself realizes that he over-compensated on neoliberalism and can only save himself by lurching back to a populist left discourse, a la Obama. I'm not optimistic, but...