To change the culture of American politics: that was the radical promise on which Barack Obama was elected president. Ever since his days as a Chicago organizer and state senator, his first mission has been to bring people back in as participants in democracy, to clear out corruption, to restore trust in government, and to replace empty partisanship with a real debate about national priorities.
But along the way, a second mission emerged, one he surely couldn't have anticipated when he launched his presidential campaign two years ago: to change the culture of American capitalism. The news that the Wall Street banks saw the Bush administration's bailout funds solely as a way to pay their customary millions in bonuses was a stunning reminder that even after the financial sector destroyed itself and came to Washington begging for public relief, the underlying all-you-can-grab mentality remained unaffected.
But to change politics is alone almost an impossible project. How can the Obama administration -- any administration -- achieve both of these transformative goals at once?
It may turn out, though, that these two missions are linked and easier to achieve together rather than separately. For one thing, the sicknesses in both cultures are connected. Recent politics has mirrored the attitudes of modern business. Wall Street and K Street had in common a winner-take-all mentality: a disregard for long-term consequences in favor of short-term results; a contempt for the very institutions -- including government -- that make wealth-creation possible. Awash in money and consumption, the most pernicious attitude on both Wall Street and K Street was that these things had been earned and were a mark of merit.
Over the last 15 years or so, the small-potatoes character of Washington, where rich once meant a lobbyist who made $300,000 and upper-middle-class was an assistant Cabinet secretary who made half that, gave way to the wealth scale of New York, where "real money" starts well into the millions. The phrase "entering the private sector" gained a unique meaning in Washington, where it involves making millions in a few years by providing "strategic advice" to firms that depend on government regulation or contracts.
The sickness in both cultures also has a common root. It can be traced to the late 1970s, when Reaganomics was born and the doctrine of "shareholder responsibility" (that a public corporation's only obligation was to deliver short-term profits to its current owners) took hold. The late 1970s also gave us the cult of the CEO-as-hero that led to Merrill Lynch boss John Thain's $1.2 million office renovation.
Changing a culture isn't easy. It's not the same as changing formal rules or prohibiting certain activities. The White House's tight restrictions on lobbying send a strong message but won't touch those who operate at such a high level that they never have to register as lobbyists or cool their heels in a congressional reception area while waiting for a 10-minute meeting. During the election, Obama found success in creating an alternative to the dominant political culture. His base and his fundraising system, which mostly bypassed the traditional brokers, will have a far more long-term impact on political culture than will lobbying or campaign-finance rules.
The same is true in the economy. Obama has proposed restrictions on executive pay for banks that get federal welfare, which Wall Street might follow to the letter while ignoring in spirit. Changing the cultural assumptions and norms of Wall Street will take more than a hundred days, more than a few new regulations, and more than populist slap-downs. But while Obama's years of thinking about renewing democracy paid off, neither he nor anyone else has yet figured out exactly how to do the same for capitalism.
Fortunately for Obama, both the old politics and the old capitalism lie in ruins; their assumptions cannot be salvaged. He has already come some way in changing the culture of politics, including acting with respect toward those whose party was defeated in the last election. Though Obama has frustrated some progressive Democrats who see him as caving to the enemy, this is his attempt to defuse the winner-take-all culture of Karl Rove-era politics. To do the same in the economy, he'll have to create an alternative to this particular form of capitalist culture. Obama will have to build institutions that foster a new culture, one still driven by the quest for growth, innovation, and profit but where the returns are more broadly shared and where stewardship and sustainability are valued more than today's share price. And if this time it is politics that reshapes capitalism, then the new culture that emerges will be one where even the winners in the economy appreciate that their wealth was made possible by a collective enterprise, government.