In 1922, Lenin, attacked from the left because he was allowing some small-scale private enterprise and agriculture, promised that the state would control the Soviet economy's "commanding heights." In 1945, Britain's Labour Party explained its nationalization policies by saying that socialism should include government "control of the commanding heights of the economy."
In 1945 Britain, this meant the stuff of industrialism -- iron, steel, coal, railroads, etc. In 1945, Aneurin Bevan, a leading Labour politician, said: "Britain is an island bedded on coal and surrounded by fish; only an organizing genius could produce a coal shortage and a fish shortage simultaneously." Socialism soon produced that.
Today, the commanding heights of America's economy are financial services, and regarding them the line between the public and private sectors is being blurred to indistinctness. What is the American equivalent of coal and fish? We might find out.
An enormous range of complex judgments will have to be made about who will decide -- and by what criteria -- to whom money will be directed, and how to value and price the financial instruments, and the assets behind them, that the government might soon own. But these micro problems, although quite huge, pale next to the macro problem, which is:
This crisis has arrived during the ninth month of a vast demographic deluge -- the retirement of 78 million baby boomers. As the population ages, the welfare state -- primarily, a transfer-payments pump providing pensions and medical care for the elderly -- requires more rapid economic growth to generate increasing revenues. To the extent that today's crisis results in large amounts of capital being allocated by considerations other than those of economic efficiency, the nation will be consigned to less-than-optimal economic growth.
The next administration, but especially an Obama administration, will chafe under severely narrowed economic restrictions. But subsequent generations will pay the radiating costs of the rising role of the state in allocating financial resources.