Cowboy capitalism rides into sunset
Robert Reynolds
October 21, 2008

This is the story of five presidential speeches - one pending - marking the 
ends of political and economic super-cycles, and the beginnings of others.

Franklin D. Roosevelt's speech to the 1932 Democratic convention wasn't, 
strictly speaking, presidential. Accepting his party's nomination for 
president, FDR still had the office to win, but his victory was a lay-down 

The Republican president Herbert Hoover presided over the crash of 1929 and 
spiralling unemployment and poverty. In popular memory, Hoover often gets a raw 
deal. He assumed power at the tail end of a boom, declaring at his 
inauguration, "I have no fears for the future of our country. It is bright with 

More culpable were his two Republican predecessors, who steered the country 
into a "new era" of capitalism, marked by the retreat of government and a 
consumer and equity boom.

Historians have noted how the inflated optimism of the 1920s produced theories 
of permanent economic growth, a mania of real estate speculation, and a 
turbo-charged sharemarket oblivious to early warning signs of trouble.

If all of this sounds familiar - sickeningly so - it should. It's time to get 
reacquainted with the cyclical nature of capitalism - and emotions.

When FDR declared: "I pledge myself to a new deal for the American people," it 
wasn't simply the devastation of the Depression he was promising to roll back, 
but also the excesses of rampant market capitalism. Historians argue about the 
effectiveness the New Deal, with conservatives suggesting it prolonged the 
Depression and radicals lamenting a lost opportunity to knobble capitalism. But 
its chief legacy was the return of government as a prime player in the 
operation of the market and everyday life. Government was back.

The talk was of government as the "broker state" between competing interests 
and the protection and advancement of society through welfare capitalism.

This compact remained in place for decades, accepted by both Democrats and 
Republicans. Depression and war (hot and cold) cemented the notion of 
democratic government as the final guarantor of security and freedom.

In many ways, the sequel to Roosevelt's New Deal came in 1964. Six months after 
hastily assuming office on a jet in Dallas, President Lyndon Johnson outlined 
his vision for America in an age of uneven affluence.

His Great Society speech proposed deploying government to ensure "abundance and 
liberty for all. The Great Society demands an end to poverty and racial 
injustice, to which we are fully committed in our time."

This was the apotheosis of big government in America and the conviction that 
collective action could positively reshape individuals' lives and 
opportunities. Historians have been more equivocal in their assessment.

On January 20, 1981 Ronald Reagan trashed tradition by holding his inauguration 
on the west terrace of the US Capitol rather than the east. Greater visitor 
capacity, apparently; Reagan always loved an audience. He also trashed the long 
era of big government: "In this present crisis," Reagan intoned, "government is 
not the solution to our problem; government is the problem." Barely beyond the 
troubled '70s - a decade of oil shocks, persistent inflation, low growth, 
mounting unemployment, and a conservative reaction to the ills of 
permissiveness - Reagan's election marked the decisive turn of a political 
cycle that had begun with Roosevelt's New Deal.

The notion that government was the problem, not the solution, became the 
political aphorism of our age. "It's my intention to curb the size and 
influence of the federal government," Reagan promised. The reality was a little 
different, not least with ballooning government debt. Nevertheless, the 
anti-government sentiment took hold.

Just as the Eisenhower interregnum of the '50s did not seriously disrupt 
Roosevelt's compact, nor did the slippery triangulation of the Clinton years 
undermine Reagan's dictum. Cowboy capitalism did not end when the Gipper 
sauntered into seclusion at his Californian ranch.

Today, some commentators - including leading American election analysts - think 
we are on the cusp of another turn of the cycle. "I believe the conservative 
era in American politics that began with the election of Ronald Reagan in 1980 
will come to an end in 2008, that this is a transforming election, not just a 
change of parties," predicts Professor Allan Lichtman of the American 

Nothing is certain, but let's speculate that a President Obama will be sworn 
into office on January 20, 2009. No doubt his inauguration speech will be a 
soaring piece of oratory, delivered with compelling cadence, and imagining a 
new, more united America. But don't be surprised if there is a not so subtle 
sub-text: government is back.

Dr Robert Reynolds is a senior research fellow in the faculty of arts and 
social sciences at the University of NSW.

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