The populists dominate

It wasn’t exactly Robbespierre, but when French President Nicholas Sarkozy called on global “citoyens” to reform the economic system, he seemed to be calling for an international populist movement. I wouldn’t call his tone “anti-globalization,” but the speech he gave was the clearest signal I’ve seen yet that in the aftermath of the economic crisis, we are entering a “post-globalization” moment when the rules are up for grabs.

Who but Sarkozy could make this diatribe on international economics so entertaining? The man is the most interesting person to watch in international politics: On stage, he scowls, he shrugs, he points, he struts -- all with the most animated gestures. Dressed in one of his skinny “Rat Pack” suits, a la Dean Martin or Peter Lawford, he was spellbinding. I can’t remember an anti-capitalist speech that got a standing ovation from an audience made up mostly of wealthy capitalists. But that’s the Davos magic, you might say.

Sarkozy’s speech was like a bad dream for partisans of the American Entreprise Institute. He called for global regulation of a capitalist system that he said had “skidded out of control” with the 2008 financial crisis. He said that over-emphasis on free trade had “weakened democracy.” He urged the world to “leave behind the culture of experts” that created the crisis. He proposed a values-based capitalism that treats free-markets as a means, not an end. He blasted currency manipulators (read Chinese leaders) and soulless speculators for whom “the present was all that mattered” (read American bankers).

Sarko’s prescription was a classic French dose of interventionism. Indeed, he said, this traditional European social democratic approach had been the pathway out of the 2008 crisis. “Without state intervention, everything would have collapsed,” he said.

This sort of anti-market talk is the patter of this year’s Davos, and it scares me a little, frankly. I heard versions of it today from financier George Soros, World Economic Forum president Klaus Schwab, Swiss President Doris Leuthard, and various business leaders and economists. Combined with the new wave of born-again populism from President Obama and the Democrats after the Massachusetts blowout, this talk suggests that we are in for a period of after-the-fact overreaction.

You have to remind yourself that for Europeans this financial crisis has proved a point they have been arguing for decades -- that economic “liberalism,” of the sort found in Britain and the United States, creates a dangerous over-reliance on the market. They say, as Sarkozy did today, that this extreme Anglo-Saxon liberalism (yes, the French give it a racial-cultural face) subordinates human values to economic ones. Looking at Lehman Brothers and AIG, it’s hard now to make the counter-argument.

This is a moment in which all the usual Davos talk about how a rising economic tide has lifted all the boats, about how free trade has created wealth and improved incomes in nearly every country. That pro-market rhetoric is played out, for now. Citoyens, to the barricades!