The current moment would be a remarkable and revealing one for any United States government, and is even more so when the current administration has been so firm in proclaiming its desire to keep out of the economy. The fact that the White House, the treasury and the Federal Reserve want to inject at least $700 billion of taxpayers’ money into the economy in order to stabilise a fragile and exposed financial system is a stunning departure from long-held neo-liberal mantras. But astonishment at this turn of events, far less satisfaction at the belated acknowledgment of the state’s proper role in the market, should not lead critics of financial capitalism astray. Rather, they should argue firmly that this plan must not be a golden parachute for a small elite of people and firms paid for by the country’s already hard-pressed citizens: rather, it must become a golden opportunity to create a new model of and a new phase in the US economy itself.

The taxpayers’ money should not go to bail out a financial sector that has brought the country to the most severe crisis since 1929 – and which will have (like the great-depression era) economic and political reverberations across the world. The US has a strong banking sector, whose regulation and capital requirements have allowed it to survive the crisis of the financial sector. The fact that the two titans of Wall Street, Goldman Sachs and Morgan Stanley, have voted with their feet by joining the banking sector is another indication of a possibility of returning to a financial model centred more on banking – with more regulation, stiffer capital-reserves requirements, and fewer leveraging options.

The early signs of congressional scepticism about the “troubled asset relief program” (Tarp) proposed by Hank Paulson, US treasury secretary, are hopeful in this regard; but they need to go much further, and become part of a coherent counter-proposal to reshape the very direction of economic activity in the United States – to the immediate benefit of tens of millions of people across the land, and of the long-term sustainability of their social and environmental livelihoods.

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