column today patiently explains to the skeptics on the left that Obama’s first term was actually (invoking Joe Biden) “a big fucking deal”. But Krugman only betrays the fundamentally static conception of the world that lurks behind his analysis. (This is also the problem with his critique of Stiglitz’s argument for the role of inequality in continuing economic stagnation, and the source of his failure to connect the dots between capital’s growing share of income at labor’s expense and the dysfunctions in the economy, as well as for his far too sanguine view on the prospects of a near-term return to economic health.)
For Krugman, the baseline “normal” for our society is a growing neoliberal economy. When things go wrong, it’s because of policy mistakes: the failure of the Fed to reign in the real estate bubble in the mid-oughts, inadequate regulation of finance, not enough stimulus to put things back on the right track after the crash of 2008. There’s a sort of natural equilibrium of the economy that’s just waiting to be brought into being by the right kind of macroeconomic management. Other realms of society, like cultural trends and popular ideologies, are unrelated to the neoliberal economy, whether functioning normally or not — like any mainstream economist, subjectivity lies beyond the scope of Krugman’s models.
From this assumption, Obama’s first term has been a pretty big deal. Health reform, which had been impossible for decades, was passed. Tax changes will reduce the incomes of the top one percent of earners by 6 percent, and 9 percent for the top one-tenth of the top one percent. A reregulation of the financial industry inconceivable less than a decade ago is now being implemented. To Krugman’s list we could add the consolidation of acceptance for gay rights, the end of the war in Iraq, the successful avoidance of a complete collapse in 2008-2009.
So yes, if we take 2003 as the baseline by which we measure the first Obama term, there are some major accomplishments. But what if we reconceptualize the years 2009-2012 not as a time in which policy was being steadily stretched beyond the limits of 2003, but instead as a period in which the entire social system that produced the social terrain of 2003 was disintegrating? The centrifugal forces tearing the system apart were incredibly powerful, and this opened up huge new possibilities for the way our economy, our culture, our politics might operate. On this line of thought, we might conclude that the reforms of the first Obama term were not that significant at all — far more noteworthy is that every realm of our society has seen almost no change at all.
Of course Obama alone can’t be blamed for the all-around failure of a new ethos to emerge that would be adequate to the historical tasks posed by the collapse of neoliberal society. But someone more attuned to the rapidly expanding political possibilities before him, rather than someone like Obama, who believes on principle in neoliberalism (with a human face) and who made it his task to put all the pieces back together again, could have easily accomplished far more sweeping changes. Widespread anger was just waiting to be mobilized into a populist whirlwind that could be directed against the banks and the insurance companies. Even on the starvation diet that the Obama campaign of 2012 allowed it, and after his administration’s repeated admonitions against it, this populist impulse secured his easy reelection. Likewise, the Republican Party would have been destroyed by a more confrontational strategy on the part of the Obama administration.
But at each moment of decision — the choice to avoid real relief for victims of the housing bubble, the healthcare fight, the debate over financial regulation, the prospect of a debt ceiling default, the numerous opportunities to prosecute law-breaking banks, the fiscal cliff negotiations — Obama hesitated before the possibilities and chose to draw back. His allegiance to a decomposing system always overrode what limited desire he may have had to pursue truly progressive reforms. The fear always won out that pushing further would lead to the total collapse of neoliberalism. In this he was probably right: at any number of junctures, an aggressive pursuit of progressive policy would have precipitated a new financial crisis, though it is likely that either the banks themselves or their political backers would have received the blame.
Where Obama will, perhaps relatively soon, prove to be wrong is that such a final collapse can be avoided, and that neoliberalism can be restored to health. The historical tasks that Obama has shrugged off will still remain, but their achievement will now probably prove much more arduous, and perhaps much more sanguinary as well.