Is America Setting Up a “Planned Economy”?

Four years ago, Obama shouted out his slogan “Change” during the American presidential election, thereby winning admission as the owner of the White House. In that case, what was the change that Obama advocated? Is America experiencing change, or not? I believe, looking from the dimension of the economic systems, the American market economy is currently undergoing serious transformations, with the direction of change being a strengthening of national intervention.

America is consistently advertising that its own practice is the purest form of a free market economy, and it has come to be known as a “model” in the Western world. However, the eruption of the subprime mortgage crisis gave rise to people strongly calling into question the American-style free market economy and neoliberalism. After Obama’s rise to power, people publicly expressed that government intervention and market regulation were not actually completely antagonistic and that it didn’t matter whether the government was big or small, only whether or not it was useful and could guarantee to provide more job opportunities and medical insurance. Because of this, the Obama administration adopted a series of counter-crisis economy exciting policies, turning the American free market economy in a direction of unceasingly increasing government intervention.

First, he prevented the decline of economic power. America’s strengthening of national intervention and implementation of protectionist policy are the natural representations of its decline in national power. Looking from the history of the development of capitalism, when a country is on its way up, for the most part it tends to implement liberalist policies, and when it is disadvantaged and declining, for the most part it tends toward protectionism. As a result of the financial crisis accelerating America’s decline, the Obama administration further increased national intervention. Internally, they increased the level of nationalization by increasing the nation’s involvement with the deteriorating financial institutions and major industries; externally, they implemented a strict economic protectionism policy, avoided competing with upcoming economic institutions like China and reduced a large amount of foreign trade deficit. In addition, in order to avoid Chinese products taking over America, America set up all kinds of trade barriers, forcing the RMB to rise in value. All these examples of intervening behavior make clear that, due to considerations of its own interests, America already abandoned without the slightest hesitation its previously energetically carried out free trade policy, choosing to walk on the path of national intervention oriented toward protectionism.

Second, he reinvigorated the manufacturing industry. America concluded that the main reason for the decline in national power was the withering of the manufacturing industry and the reduction of employment opportunities. Therefore, Obama’s core economic policy was to promote reindustrialization through increased national intervention. In order to do this, America increased the construction of its governmental institution, established the White House Office of Manufacturing Policy in the National Economic Council and, in a historical sense, continuously refused to formulate and implement industrial policy, as it was believed that this was a characteristic act of socialism. From Obama’s declaration of the “return of the manufacturing industry” to the formulation of an investment promotion plan and the establishment of a policy bureau, if there were another concrete plan for industrial promotion, it would certainly have the flavor of a planned economy. This marks the enormous increase in the depth and breadth of the American government’s economic involvement.

Third, he blocked the fall of the middle class. The middle class is the core of American society, but starting in 2007, the economic situation of the middle class has worsened one step further. In order to save the middle class, the Obama administration very early on established a small government organization especially for working middle class families and put Vice President Biden in charge. By means of national intervention, the organization provided more job opportunities, increased the families’ salary level and improved their economic status, thereby maintaining the stability of American society.

Clearly, the American free market economic system strengthening national intervention is not a plan of convenience, but the inevitable choice decided by the system’s deeper levels of conflict. Strengthening national intervention is, in the context of the financial crisis, the concrete embodiment of America’s momentum-changing mechanism for the economy and its strategy for national economic development. This symbolizes the beginning of a transformation of the free market economic system that has been controlled by the traditional notion of emphasizing the market and not the government. In the process of this adjustment and transformation, the American government’s intervention in trade, the manufacturing industry, and international finance will not be readily accepted, but will definitely not come to a halt just because of the American government’s general changes. China and other rising economic systems need to recognize this point in order to prepare for a long-term contest with America in the context of “trade then peace,” “currency manipulating country,” “sweatshop,” and other discussion points created by America.