November 18, 2008
When the Soviet Union’s ramshackle empire imploded, and what Louis Bromfield called the “worldwide psychopathic cult” of Communism fell into an embarrassed quietude, it seemed the socialist dream was over. As it turned out, however, we should only have been so lucky. Socialism, the seizure of the means of production by the State, was by no means dead and buried: Indeed, it was strengthened, as it no longer had to bear the guilt of the gulag and the supposedly deviant doctrine of Leninism. It could return to its democratic and egalitarian roots, and find new life in fresh soil”American soil.
This is precisely what has occurred, and with such suddenness that the impact has yet to hit all concerned. If the crisis of the Leninist project was telescoped into a few months time, with crowds tearing down the Berlin Wall and the Russians rising in the streets, then the West has experienced its own crisis in the form of an economic meltdown of similar proportions. With a single vote of Congress, and a few bureaucratic edicts from the Treasury Department, the commanding heights of the US economy”the banks”have effectively been nationalized. Not only that, but huge swathes of American industry are up for a government takeover; and the Captains of Industry are getting in line for handouts, all described as “rescue” packages. There are serious proposals on the table to seize the entire housing sector, with the government guaranteeing individual mortgages, in effect nationalizing the real estate industry.
Socialism in all its previous forms has notoriously failed, albeit not without exacting a high toll of human misery wherever its been tried. Certainly the Soviet form was remarkably brutal, even by the bloody standards of the twentieth century, rivaled in its bloodthirstiness only by its twin brother, German National Socialism, and actually exceeded in murderousness by the second wave Communist regimes in Asia. The more pacific forms, such as the utopian variety, never really got off the ground, or only achieved small-scale localized hegemony, in out of the way places like Denmarck. In England, the old Labor party has renounced its socialist past, and none of the Social Democratic parties of Europe refer any more to their socialist “principles,” not even on ceremonial occasions. Indeed, the Blairite “modernizing” faction of the British Labor party is in favor of the market, albeit in a form very far from the laissez-faire ideal evoked by libertarians. Theirs” is a corporate socialism with egalitarian windowdressing, and, in this sense, its ascension to power prefigured the Obama-revolution that has upended the political landscape in America.
What is completely different, however, about this incarnation of the socialist idea is that it has taken on a new and quite unusual form, one that at first appears so counterintuitive as to be virtually impossible”one that seems to negate the very essence of the socialist ideal, which is”or has been”egalitarianism. Everyone will be made more equal: all will be responsible for all. None will go hungry, and production for use and not for profit is the rule law and morality. That ideology, however, seems to have died along with the old Soviet Union, never to rise again. In its place, however, the mutant offspring of Western materialism and social democracy is arising to take its place, which can only be described as plutocratic socialism.
As a political program, socialism for the rich, and capitalism for the middle class would seem to have a strictly limited appeal. This, however, belies the power of fear, and of the catastrophism that has overtaken our thought processes in the course of the economic meltdown. We were told that unless Congress immediately coughed up $700 billion, pronto, the sky would fall, the economy would collapse, and we”d be in for America’s Second Great Depression. Oh, but don”t worry, because we”re going to use the money to buy shares in the banks, and the taxpayers will get their money back “ with interest. Think of it as a gigantic financial toxic spill, which can only be cleaned up by government action: We”re going to buy up those bad ol” “toxic” loans and make them “green” and profitable again. And they all lived happily ever after.
Except that it didn”t work out that way, and the disillusion came in record time. A few weeks later the story switched: Oh, never mind, they said. We aren”t going to buy shares, no one’s getting any money back, we”re just going to give the banks lots of cash and hope they don”t fail “ oh, and, this is just the beginning. The auto industry is next: We”re going to let them declare themselves banks, which they practically are as far as the unions are concerned. Except their account is overdrawn, the money spigot is run dry, and so it’s up to the government to guarantee their wages, their standard of living, and the perks and privileges they have retained against all economic pressure and common sense.
This is a socialist revolution from the top down, a revolution led by the bankers, who were the first to throw off their chains and declare they had a world to win. Liberated from the tyranny of the system of profits and losses, and refusing to let their surplus labor be exploited any longer, they rose up, and, as one, seized control of the machinery of government, or specifically the U.S. Treasury, which they proceeded to loot to their heart’s desire. They did this in the midst of a presidential election, with both “major” party candidates signing on to this singular act of grand larceny, and to the loud hosannas of the punditariat. The vanguard party of this socialist revolution wasn”t some Marxist-Leninist outfit, but Goldman Sachs, whose former CEO, Treasury Secretary “Hank” Paulson, handed over some ten billion in bailout money to his corporate alma mater. Along with a brace of Wall Street firms deemed “too big to fail””including Bear Stearns, AIG, and the country’s major banks”the Money Power secured its interests, even as the financial house of cards they had spent the last decade or so building collapsed around them. The common folks would be dragged under, but the golden parachutes of the ruling elites unfolded without a hitch. Here was a great revolutionary upsurge whose slogans were “Save the rich!” and “Billionaires first!”
How in the name of all that’s holy did they manage to pull it off?
It was a revolution made possible by the post-9/11 mentality that sees the apocalypse as imminent: the “end times” mindset of anticipation and fear that is the spirit of the age. Remember how we were told, in the aftermath of the terrorist attacks on the World Trade Center and the Pentagon, that unless we signed over our liberties and our fate to the federal government, we were all doomed to become victims of an as-yet-unrealized terrorist apocalypse, one that would dwarf 9/11 in its physical and historical consequences. The so-called PATRIOT Act was passed overwhelmingly, without even being read or reviewed by those voting “aye.” The government started examining peoples” emails, and prying into their financial affairs, under the general rubric of “fighting terrorism.” The president assumed dictatorial powers, claiming the “right” to detain “unlawful combatants””including American citizens”without charge or trial, indefinitely “ and the US embarked on a worldwide crusade, which the President defined as a “generational” struggle, that shows no signs of ending: indeed, under the new Democratic administration, it shows every sign of expanding, spilling into Pakistan and the steppes of Central Asia.
All these disastrous and criminal acts”the suspension of hallowed constitutional rights, the launching of a new world war, the invasion and occupation of Iraq and Afghanistan”were justified on the grounds of necessity: if we didn”t undertake them, horrific consequences would follow. It’s either suspend the Constitution, and invade the Middle East, or else face the looming threat of near certain annihilation.
The bank bailout followed a similar pattern. Unless we immediately handed over some 700 billion bucks, we were told, the entire international financial structure would collapse under the weight of its own hubris. We had no choice: It was either that, or financial annihilation. After riding high for a good decade and more as the Greenspan Bubble expanded, the banksters and their cronies in government and the corporate world went straight to the head of the bread line when it burst. First the big banks, then the insurance company AIG, followed by American Express and various “too big to fail” hedge funds (which received official status as “banks”), and lining up right behind them the three big auto companies, Ford, GM, and Chrysler. As the scent of free money fills the air, the line gets longer. During the late and lamentable presidential campaign, the Republican candidate brought this theory of trickle down socialism to its logical conclusion by demanding that the government buy up individual home mortgages, so that Joe the Plumber could get in on the bailout racket. Bailouts for everyone! And he had the nerve to call Obama a “socialist”! The only proper answer to that was and is: Look who’s talking!
Which brings us to the subject of the opposition to the socialist resurgence, such as it is “ and it can hardly be said to exist at all. Even that august bastion of unfettered capitalism, the Cato Institute, expressed support for the bank bailout, with one of their policy analysts declaring that Paulson was “forced” to bail out Fannie Mae and Freddie Mac, because they”re “too big to fail but also too costly to keep.” The Heritage Foundation had even less trouble reconciling this orgy of crony capitalism with their particular brand of “conservatism””which seems to consist of a burning desire to conserve the ill-gotten gains of Wall Street whiz kids and leverage artists, at taxpayers” expense.
The only real opposition to the bailout has come from the “extreme” Right, the libertarians and the Austrian school of economists headquartered over at the Ludwig von Mises Institute. As for the financial analyst who saw the meltdown coming, Peter Schiff was in a party of one. Of course, Ron Paul has been predicting just such an economic Armageddon for quite some time now, and the Austrian school”followers of Ludwig von Mises and his theory of the business cycle as the product of bank credit expansion” has gained new prominence and respect on account of its record of anticipating the crisis”and prescribing the cure”well in advance of anyone else.
In the popular mind, however, the market is discredited, and the bromides of the 1930s have come back into fashion. The markets have “failed,” the government must step in, all our problems are due to the lack of regulations: Washington knows best, and will take things in hand. That Washington is the problem, not the solution, is lost in the noise, a fact shouted down by the popular demand for instant relief from a problem that can only be solved through suffering”that is, through deflation.
The economic bubble caused by bank credit expansion of the money supply, and the actions of the Federal Reserve over the past decade or so, has burst, and the only solution is to flush all that malinvestment out of the system. These are the “toxic” investments”concentrated in, but not limited to the housing market”that were undertaken in response to false market signals sent out by all that cash sloshing around during the heyday of the Greenspan Bubble. By bailing out the banks, and then the others, in turn, including the individual homeowner who took out a mortgage on a five-bedroom luxury home he couldn”t really afford, the government is seeking to freeze the economic status quo in the moment before the meltdown hit, to repeal the downturn by legislative fiat”a hopeless quest that can only delay the inevitable correction and prolong the pain of the depression.
The cover of the current Time magazine sports a photoshopped version of Obama decked out as FDR, an historical analogy that, like all such analogies, lacks precision, but has some basis in reality. For the resemblance is there, albeit only in a limited sense: Obama’s program mirrors the second phase of FDR’s New Deal”large scale government projects like the WPA, the privileging of Big Labor, and promises to bypass the first altogether. By that time, “the country squire in the White House“ had already made his peace with big business and acquiesced to making his New Deal an instrument in their hands. Together with the lords of Wall Street, he and his Brain Trust imposed an unprecedented degree of economic and social regimentation and prepared the nation for war. From that moment on, the nation would be ruled by a triumverate of Big Government, Big Business, and Big Labor. This coalition is being revived, today, in the Obama administration: as I pointed out in a recent piece for Taki’s Magazine, there’s a reason why the big financial players put their money on Obama, bigtime. They”re going to recoup every penny of their investment, of that you can be sure. Indeed, they already have.
So this is the fate of the socialist idea, the old egalitarian anthem of the poor and the oppressed: to become an instrument in the hands of a bunch of avaricious plutocrats, who glory in their status as “masters of the universe” and exemplify the vulgarity and hubris of a civilization that values excess for its own sake, with their gold-plated bathrooms, outsized yachts, and high-priced call-girls. In our Bizarro World, where the old moral codes are not only repealed but seemingly inverted, the irony of this is lost as we march into the glorious socialist future.