Dean Baker's post this morning discusses about how Gordon Brown's government in the UK is handling the economic/banking crisis. It was fascinating to be in London during the past weeks to see the fall of the Tory Party and the rise (practically from the dead) of Gordon Brown, surrounded by Tony Blair's new Labourites, Peter Mandelson and Alistair Campbell among others.

The Tories, with fresh and promising (if you happen to be a supporter of the Tories) new leadership, David Cameron, literally had the wind knocked out of them at their annual party conference since they were unable to stand with their heads high as the party of the "City", London's Wall Street, just as the banks were collapsing. Gordon Brown, whose reputation as Chancellor under the Blair government far outweights his reputation now as Prime Minister, acted swiftly to put together a team that brought support from the City and the question now is will it also benefit those whose life savings are couched in the banks, the very people whom social democracy is supposed to be assisting. So far, it looks good for the latter.

Albeit reluctantly, New Labour is turning its back--slightly, too, on the City, where it set its fortunes during the Blair years away from its traditional union funding base. Truth is, the unions in England still fund close to the majority of the Labour Party, even during their difficult tenure with New Labour. How they hash out an ongoing agenda with Labour--and how Labour navigates this new terrain--will be fascinating to watch, especially for progressives in America.

It would be an amazing fete, were the Labour Party able to navigate things right now--not only for England, but as a model for Europe and America. For those of us who care about reinventing social democracy for the 21st century, we should be looking very closely at New Labour to see if indeed it can provide a social safety net, justice and liquidity at the same time--a very tall order with the capitalist world collapsing around and not certain it will go. One thing we know for sure now, though, capitalism, especially the Thatcherite model so beloved by conservatives in the U.S. too, has completely failed. What will rise from its ashes, as another Brit once remarked, we must wait to discover.