Naomi Klein & The New Yorker

Naomi Klein, was recently interviewed by the New Yorker. When asked about the financial crisis she says,

"The New Deal is usually told as a history of F.D.R., she said, but we don’t talk enough about the pressure from below. Neighborhoods organized, and when their evicted neighbors’ furniture was put on the streets they moved it back into their homes. It was that kind of direct action that won victories like rent control, public housing, and the creation of Fannie Mae. The other thing that’s important to remember, she said, is that the organizers were a threat—of socialist revolution—and it was that which allowed F.D.R. to say to Wall Street, “We have to compromise, or else we’ve got a revolution on our hands.”

During the massive boom on Wall Street during the late 20's adjusting the existing free market model would of been impossible. Then, a majoroty of people were acquiring huge amounts of wealth from the stock market either directly or indirectly. Moreover, people were generally happy. But the crash changed all that.

Now people were willing to accept government intervention because there was now a consensus that called for a change. This call for change was primarliy caused by the unprecendted wealth destruction that was occuring before their very eyes. And a realization that the existing model was broken.

Thus, F.D.R could shift the economy away from an unstable laissez-faire approach towards a new equilibrium that had a significant humanistic element.