Historical Context of the Economic Crisis

Prominent historian Sean Wilentz summarizes the current economic situation within its proper historical context.


In his classic study "The Coming of the New Deal," the historian Arthur M. Schlesinger Jr. succinctly described FDR's mission: "To save capitalism from the capitalists." That mission had been Theodore Roosevelt's as well. And until the Age of Reagan dawned in the 1970s, the underlying principle of the Rooseveltian mission—that left unchecked, the system could self-destruct—came as second nature to American policymakers. Then, after years of regressive tax cuts and deregulation, followed by the advent of the Newt Gingrich congressional Republicans, those principles began to fade—despite the stupendous costs of the savings and loan crisis of the 1980s, the Enron meltdown of 2001 and other depredations by capitalist buccaneers.
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The sudden intrusion of reality in 2008 has been politically costly for John McCain. Supposedly chastened by his links to the S&L debacle, McCain had fashioned a reputation for independence and toughness, and proclaimed his admiration for TR. Yet to secure the nomination of a badly fractured Republican Party, McCain embraced Ronald Reagan's political legacy of tax cuts and small government—exactly as the Age of Reagan was coming to an end. Although he has tried to switch gears since the financial crisis hit by denouncing Wall Street greed and proposing government intervention, McCain's outrage is less than Rooseveltian, and his continued recital of Reaganite dogma makes him sound archaic, like a golden-oldies act. His running mate, although youthful and spirited, seems caught in the same time warp.

Last week in Toledo, Ohio, Barack Obama, after more than a year of campaigning, offered a specific plan of action for economic recovery and rescuing the middle class. He has even been willing to embrace proposals, such as Hillary Clinton's moratorium on house foreclosures, which he disdained during the Democratic primaries. It was an encouraging first step.
Yet Obama must adjust swiftly on other fronts as well if he is fully to update the Rooseveltian legacy.

The symbol of change has shown himself to be changeable, and there is plenty he can alter. Franklin Roosevelt, for example, was an unashamed politician from the anti-Tammany wing of the New York Democratic Party, one who made no bones about his love of party as well as politics, and who eventually redefined the very meaning of partisanship with his New Deal policies. Obama, on the contrary, has touted a fuzzy postpartisanship and promised to end "politics as usual" in Washington. If he is to be more Rooseveltian, he will need to master the arts of transactional politics (and not "transformational" posturing) at both ends of Pennsylvania Avenue, take his inevitable place as Democratic Party leader (especially if the Democrats win large congressional majorities) and assume responsibility as such.

There are also lessons that Obama can learn from the example of Theodore Roosevelt. Obama has thus far enjoyed what looks like an extremely lucky career in politics. The only truly difficult battle he has fought until now was with Hillary Clinton for the nomination, a contest he won only barely. When his campaign against John McCain ran into trouble, the financial collapse completely altered the electoral calculus. Through it all, Obama has been able to be very much the detached, cool customer, the same man who, in his brief time in the Senate, showed no zeal for risky political conflict.

Theodore Roosevelt sometimes had a weakness for tough-guy bombast and braggadocio. But he also knew, from experience as well as temperament, that a successful president cannot always be cool, detached and Olympian, let alone bipartisan, and that events will force him to take risks. To transcend what he called "the twister pride of cynicism," Roosevelt proclaimed in 1910 it is not enough to be thoughtful or even popular; it requires becoming what he called the man "in the arena, whose face is marred by dust and sweat and blood," who fights with the certainty that, even if he fails, "his place shall never be with those cold and timid souls who neither know victory nor defeat." Should Barack Obama become president next January, as now looks almost certain, he will be the man in the cruel arena whether he likes it or not.