Wayne M. O’Leary

The ‘S’ Word

Earlier this year, a Rasmussen poll indicated that 20% of Americans thought socialism was a better system than capitalism; the percentage was even higher among younger respondents, up to a third of whom favored a socialist approach. In a country whose citizens are taught from birth to fear and loath socialism while equating capitalism with Americanism, this was a startling development. We apparently now have nearly as many “socialists” as Republicans in the land of the free.

The poll suggests a number of things. First, the GOP crusade to demonize Barack Obama as the spiritual descendant of a scary Karl Marx appears doomed to failure. More consequentially, it’s obvious many of us are beginning to question the received wisdom about our existing economic order, whose performance fails to match the rhetoric associated with it. Since the start of the Great Recession, capitalism as we know it has been shown to be analogous to the fabled emperor who had no clothes: it succeeds as a system only if everyone agrees to accept its mythologies, ignore its philosophical contradictions, and look past the failed application of its supposed economic laws, which are observed mostly in the breach. The practice of capitalism, in other words, bears no relationship to the theory.

For instance, under modern American capitalism, there is no such thing as entrepreneurial risk except for very small business ventures. The mom and pop enterprise may go bust, but the large corporation will be kept whole at all costs through government action; it’s deemed “too big to fail,” and besides, the psychological well-being of Wall Street depends on its continued existence. The federal bank-rescue program of recent months is a classic example of this sort of “capitalism” at work. Based on its debts, losses, and massive mismanagement, Citigroup should in theory have died; yet miracle of miracles, it lives, in obvious violation of all the self-satisfied bromides about free enterprise and market discipline issued by the Business Roundtable, the Club for Growth, and the US Chamber of Commerce. The same is true for General Motors, our zombie auto company, which prior to its reorganization under the business-friendly bankruptcy laws, survived only as a ward of the state.

Such corporate socialism, a pale imitation of the real thing, would be unobjectionable if the public really benefitted, but it self-evidently does not. The bailed-out banks are continuing their wayward behavior; credit remains tight, mortgages remain unrenegotiated, executive salaries remain high, and taxpayers remain on call for more bailouts, as needed. At GM, the blue-collar workforce is taking it in the neck; its union has been gutted, its wages and benefits cut, its ranks hollowed out. These considerations are irrelevant, however, compared to guaranteeing the permanent viability of the existing corporate entities and the enhancement of their stock prices.

There are other glaring inconsistencies in what passes for capitalism in the Great Republic. The immutable law of supply and demand, the heavenly concept passed down like the tablets of Moses, barely functions at the higher levels of real economic life. Prices go up at the least pretext (the weather, the state of the world), but they rarely come down over time. Competition has little effect because in a fixed market, corporations cooperate or merge; they seldom engage in economic trench warfare. When necessary, prices are kept high by Government intervention or a lack thereof; current moves in Congress to insulate private insurers in advance from the adverse price effects of any public-option health-insurance plan are a case in point. Another is the officially sanctioned setting of fuel prices, which are governed not by natural forces, but by international cartels, futures-market speculation, and oligopolistic behavior; they (mostly) rise according to what a manipulated market will bear.

What’s most starkly evident in the latest economic crisis is that capitalist countries like the US can’t provide sufficient meaningful or remunerative work for their populations, which eliminates the core justification for capitalism, the ameliorating offset to its eternally rapacious downside. For the last several recessions, wages have not returned to their pre-recession levels, and the latest downturn promises to repeat that experience in spades. More concerning is that employment itself may not revert to prior levels.

The constant impetus under capitalism is for business and industry to eliminate as many jobs as possible in the shortest time possible, and they’ve become increasingly creative at doing so. From the viewpoint of capital, the best enterprise would be one without any labor force at all, since labor is the ultimate overhead-cost factor; wages and benefits have a way of cutting into profit maximization, the fundamental capitalist impulse. Outsourcing or offshoring through globalized “free” trade can reduce that impact, while automation and computer technology can eliminate it entirely. That’s where we’re heading, and deep down, workers know it.

The immediate antidote is unionization, which forces capital to acknowledge labor as a collection of human beings and not as so many entries on a balance sheet; that accounts for the vehemence with which corporate interests in this country resist it and why passage of the Employee Free Choice Act has become such a political death struggle. But organizing the American work force once more may do little good if other measures of a broad regulatory nature aren’t also taken to keep American capitalists from regularly driving the economy into the sewer through their so-called irrational exuberance and animal spirits - - that is, their uncontrolled greed. That’s where we stand at the moment, up to our necks in the latest excretion of economic muck generated by unabashed, unrepentant, and unsupervised capitalism’s “rational” investors and “efficient” markets.

Which brings us back to the meaning of this spring’s Rasmussen poll of Americans on the comparative virtues of socialism and capitalism. Since 53% of those questioned (a bare majority, but nevertheless a majority) remain loyal to the only economic system they’ve ever known, it’s apparent Americans are not quite ready to storm capitalism’s Bastille. On the other hand, 47% (including those expressing neutrality on the subject) are evidently open to substantive change, perhaps to something approximating European-style social democracy, with its tighter economic regulations and more generous safety nets. That possibility should cause considerable nervousness and consternation in conservative bastions on Capitol Hill, and in corporate boardrooms and gated communities everywhere.

Wayne O’Leary is a writer in Orono, Maine.

From The Progressive Populist, September 15, 2009

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