Bush a Socialist? Don't Make Me Laugh By Joel Wendland --------------------------------------------------------------------------------
click here for related stories: socialism 1-02-09, 10:14 am The Republican Party is lashing out again. This time at itself. Several media sources recently reported that at an upcoming Republican National Convention meeting a resolution has been submitted that accuses George W. Bush of promoting socialism through the Wall Street bailout. This move is remarkably ironic given that Republicans unabashedly supported Bush until just weeks ago. Many had accused his critics of anti-Americanism and of supporting terrorism. A host of Republican ideologues and right-wing media outlets even took to calling Barack Obama a communist for a variety of reasons, but especially for his plan to give 95 percent of Americans a tax cut. Here is what the resolution reportedly said, in part: "WHEREAS, the Bank Bailout Bill effectively nationalized the Nation's banking system, giving the United States non-voting warrants from participating financial institutions, and moving our free market based economy another dangerous step closer toward socialism." Now it is tempting to laugh at this nonsense and let it go. But the chance offered by these circumstances to explain a socialistic response to the economic crisis is too tempting to do so. Additional resources: Podcast #89 – Auto Bailout: Why and What's the Reason For PA Editors Blog Obama Admin. and the Employee Free Choice Act Ten Best and Worst of Marxism for 2008 Act Now! Imminent Vote on Fair Pay Legislation Subscribe to this Feed In a recent article, we here at PoliticalAffairs.net reported recently on a new campaign to halt the bailout because of the lack of oversight in the Troubled Assets Relief Program, or TARP. Almost $350 billion in taxpayer money has been given to the world's richest banks without the least bit of curiosity on the part of the Bush administration about what they have done with the cash. According to some accounts the application for taxpayer money is a surprisingly uninquisitive two-page document that can be submitted online. Also, a recent media survey of several major banks who have taken the money revealed that they are flat out refusing to explain what they have done with the cash. A little deeper digging found, however, that many banks have hoarded the money rather trying to stimulate economic activity by loosening credit. Others have used the cash to buy smaller banks or expand their holdings in others. And the most corrupt have simply used the money to pad their profit margins or to pay outrageous executive bonuses, stockholder dividends, and for corporate jets and getaways. It is what Political Affairs contributing editor Norman Markowitz, in a recent article, called "vulture capitalism." This isn't socialism. Those are the fundamentals of the Republican ideology of the free market – with direct government assistance. Far from being a "dangerous step toward socialism," that's how Republican free market concept works. Privatize benefits and profits; socialize costs and pain. No government oversight. Some actual socialist thinkers have called this type of economic activity the state monopoly stage of capitalism. It is the worst, most exploitative stage. Smaller businesses are gobbled up or eliminated; workers' rights are squashed. Rules and laws designed to reign in the worst excesses are discarded. Monopolies grow increasingly large and powerful. It is also this stage of capitalism that is most vulnerable to change, a stage in which socialist solutions to crises seem most feasible and even necessary. A socialist program for resolving the crisis in the banking industry would possibly have begun by using the TARP funds to gain public ownership and oversight of the banks. It would not have been a handout. Further, the socialist approach would have originated with the interest of working families. If indeed the TARP project had been a socialist one, it would have been embedded in, controlled by, and enacted with working people's interests at its center. The guiding principle would be the socialization of benefits and profit. For example, if TARP were handled in a socialistic way, homeowners who now face the loss of their homes would be a top priority. Mortgages would have been renegotiated with greater urgency than that which the Bush administration rushed to give payouts to the JP Morgans, Citigroups, and Bank of Americas. Credit with good terms for small farmers and small businesses would have been prioritized above the bottom lines of Wall Street. Capitalism is based on a couple of basic building blocks. Wealth is socially created and privately accumulated. Simply put, workers, for example, make all of the value accumulated by the auto companies, but the Ford family (and stockholders who rarely add an significant value to the end product) get the profit. Profit, then, is the difference between the total value created by the workers and what they are paid (minus taxes). Finance capitalism, while it exploits labor in the process of its accumulation of wealth, mainly thrives on speculation, monopolization and wealth accumulated elsewhere. Think about the high prices of oil driven by speculation, which had nothing to do with the actual extraction of petroleum or the production and distribution of gasoline, over this past summer as an example of the central dynamic of finance capitalism. Today's crisis of capitalism was driven primarily by speculation in the housing industry. Rules overseeing this industry were eliminated or ignored. Homeowners were allowed to refinance or purchase new homes with so-called subprime loans that inflated after a short period. Banks became predatory lenders. Many banks specifically targeted African American and Latino families for these predatory practices. Bankers then began to sell investment securities backed by these faulty loans to other banks and investment firms. Capitalist ideologues, like they always do, legitimized these stupid practices by insisting the housing boom would never end. Economists who warned about looming problems were ridiculed and scoffed at. Then the bubble burst, and the rest is history. The economic situation worsened due to a stagnating economy that had been ignored by the Bush administration for several years. Public ownership of the banks would quite probably have prevented predatory lending. Planning for adequate liquidity in credit markets (and sectors like housing, auto, and small businesses) organized by experts with an eye on the common good not private profits would have prevented the actions of Wall Street, not just over the past few months but over the course of the recent economic cycle. A socialistic economic policy would also likely have lessened the impact of the bursting housing bubble (if there would have been one in the first place), because working families and their needs would have been prioritized all along. The growing unemployment problem, which really began in early 2007, would have been addressed sooner. Stagnating wages, which had been hurting working families since the previous recession in 2001, would also have been addressed sooner. Worker protections, such as the right to join or organize unions, would have promoted a stronger standard of living among working families that would have created a basic safety net for working families against the changes in and unpredictability of the markets. Capitalist ideologues rationalized the necessity of the Wall Street bailout by saying that the major banks in the financial services industry were simply too big to let them fail. A socialist viewpoint would argue that there are some industry just too important to allow into the hands of people seeking private profit: basic industries, finance, health care, defense, energy, environment, and education probably top such a list. Some who read this are going to scream, "to hell with socialism" and "what about my freedom?" Fact is, freedom without equality is simply freedom to exploit. Freedom without equality means that big insurance companies can force you to pay higher insurance premiums for fewer health care services whenever they feel like it. Freedom without equality means that JPMorgan can use its TARP funds to fly its CEO around on fancy vacations and make dividend payments to stockholders with taxpayer money and not have to give an accounting for it. Freedom without equality means that predatory lenders get billions in tax dollars while shoplifters go to jail. There must be a proper balance struck between freedom and equality; and capitalism simply isn't the system under which such a balance can be struck. Response: TARP, Full Employment and Other Sticky Details By John Case -------------------------------------------------------------------------------- click here for related stories: socialism 1-05-09, 9:16 am In an otherwise excellent article debunking Bush as a phony socialist [as he is being dubbed on right-wing talk radio], Joel Wendland writes the following theses that I think deserve "a deeper look." "A socialist program for resolving the crisis in the banking industry would possibly have begun by using the TARP funds to gain public ownership and oversight of the banks. It would not have been a handout. Further, the socialist approach would have originated with the interest of working families. If indeed the TARP project had been a socialist one, it would have been embedded in, controlled by, and enacted with working people's interests at its center. The guiding principle would be the socialization of benefits and profit." A lot of virtue, perhaps, but much sin and confusion too, can be masked by the phrase "public ownership and oversight of the banks." In fact the TARP funds have been used to indeed "gain public ownership" of decisive shares of some of the largest US financial corporations. And the right of oversight was indeed given to the US Treasury Department by Congress. But either through inclination, interest, or a simple lack of available human, organizational and technical resources, or a combination of all three, oversight has been far less effective than expected or hoped, or required. Improvements in credit markets have been very slow, and conditions in the real economy are rapidly deteriorating. Additional resources: Podcast #90 - Depression Economics and Fundamental Change PA Editors Blog Obama Admin. and the Employee Free Choice Act Ten Best and Worst of Marxism for 2008 Act Now! Imminent Vote on Fair Pay Legislation Subscribe to this Feed No doubt if a socialist government were to assume power on the 20th, instead of Obama's, the same challenge of resources to manage and direct the TARP public investment in the financial industry would have to be met. How would such a government distinguish itself? Well, if only a class disinclination to nationalization or public control, or demonstrable personal conflict of interest stand in the way, then Wendland's formulation is home free: Wendland says "it would have been embedded in, controlled by, and enacted with working people's interests at its center. The guiding principle would be the socialization of benefits and profit." However, I think there are real institutional and control challenges in restructuring and re-directing investment in ways that serve the broadest and most sustainable recovery. Wendland's expression does not seem at all sufficient and begs more questions, both immediate and profound, than it answers. First of all, who gets excluded from the "center"? What is the "center"? Second, here are the possible interpretations of the sentence: "The guiding principle would be the socialization of benefits and profit" that occur to me, and its likely I have missed the one intended and others as well. 1. Declare public the "benefits" of a TARP investment (what are the benefits?), as well as capture all "profits" to the Treasury Department. (To be used to do what?) 2. Assume the "benefits" of a TARP investment are just narrowly construed to be "jobs" – Jobs doing what, in an investment bank? In the overall economy? What principle will guide the determination of wages and salaries? What "profit" gets socialized if wages are correct? 3. Assume the benefit of a TARP investment are just narrowly construed to be "financial stability." What useful purposes do finance profits, and thus financial markets, serve, if any? Despite promising "open source" innovation trends, much innovation requires both competition and a means of funding a wide range of risk in its actual deployment, with appropriately high rewards for success. How to make "stability" more profitable than instability? How to reduce risk, but potentially reduce innovation and net growth as well? Can a "slower, more stable" growth prevail in a world without a global "slower growth," or with uneven rates of growth bent toward bringing lower-income countries up relative to the whole? 4. Assume the benefit from a TARP investment to be a public good, like universal, single-payer health care – does it still need to be profitable? How about a new United States Car and Transportation Company, or network of Companies – should it be profitable? How profitable? Conversely, If a TARP investment competes with private goods, in either domestic or international trade, what are the terms of trade? 5. Assume all profits on public wealth to be purchasable in shares by the public at discounts calculated to distribute assets proportional to productivity by vocation and avocation, from each according to his ability, to each according to his work – and ability to navigate risk successfully (the profits). The big change here is in the human composition of capital, considered narrowly in terms of shares of ownership, or broadly incorporating human capital and creativity internationally. I think the socialist guiding principles for minimum demands in this democratic struggle need to be more closely, immediately drawn, and made easily understandable in straightforward language: sponsored ad 1. TARP Investments must be subordinated to the Stimulus Program. The Stimulus Program will set both broad and specific investment targets for public funds and mandates. The "benefits" of TARP investments must be in harmony with the Stimulus Program. 2. The most important objectives of the Stimulus Program are a) restoration of full employment, and b) enactment of universal health coverage, while c) lessening global economic inequality, instability and tendencies towards war. Overall this will mean for some time a smaller investment relative to consumption based economy, more demand, than supply, oriented. It may mean a slower, though more sustainable growth in the US economy. The cheap oil, easy credit, bubble days are gone beyond the horizon. In addition, the values expressed in cleaner, safer, greener, more peaceful environments, the advancement of sports, culture and science, the improvement of cooperation, general health and well-being in communities will have to consume greater space in the standard-of-living indexes alongside standard commodity consumption metrics. 3. Both 2.a) and 2.b) above require grass roots organization and action approaches of a kind communists, socialists and radical social-democrats are justly famous for developing. Neither can be achieved without such approaches. It is here that the distinctions between phony socialists and real ones can be made manifest. The phony socialists not only include Bush, of course, but also the more liberal (than Bush) representatives of the Obama Economic team, who are endorsing socialist-like public interventions in the economy, but whose class interests and training compromise their ability to carry through on the key tasks of recovery. The full employment task compels government to set an absolute floor on poverty, and to become an employer of last resort, even at the expense of private prerogatives. The Obama National Service plans coincide with the immediate foundation for mobilization for full employment. An multi-million agitational sign-up "Application for Employment In National Service," for example, addressed to the Obama Team and the incoming Congress would be a worthy organizing tool, around which American youth and seniors, unemployed and underemployed, and those simply dedicated to public service to their country, could volunteer and help shape the vision of a diverse and many sided national service program. Similar tactics for a serious single-payer national health care campaign can also garner immediate mass support and participation. Both campaigns bear heavily on ways in which the practical impact of socialist leadership on the overall recovery effort can be measured and judged by the public, and especially by working people. 4. 2.c) requires a vigilant peace movement with much broader internationalist ties and coordination that currently exists. This message has been scanned for malware by SurfControl plc. www.surfcontrol.com _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
