The New Socialism Is The New Capitalism
QUESTION: What's the difference between capitalism and socialism according to Henry Paulson?
ANSWER: Socialism is when big government steals from the banks to bail out the people; capitalism is when big government steals from the people to bail out the banks.
At the bottom of the over-leveraged credit tower (where people don't have the cash to pay their debts) are ordinary erstwhile home owners and mortgage holders who made foolish decisions to buy houses they couldn't afford and have now lost their homes. Then come the banks that issued the bad mortgages by convincing guileless citizens the prices of their homes could only go up, and variable rate mortgages had no down sides. Then come all the secondary markets whose oblivious denizens bought all the bad paper apparently having no idea what they were buying.
The bailout makes nice noises about the poor saps at the bottom, but proceeds top down, because unless the banks and hedge funds and insurance companies are saved, the whole system crashes (sort of like it already did).
Besides, bailing out the bottom is socialism -- can't have that; while bailing out the banks is capitalism, or the kind of capitalism that lets taxpayers shoulder all the risk and banks keep all the profit. Well, to be sure, with the Democrats whining so much, Paulson has agreed to demand an equity position in the banks he bails so that at least some of the eventual profits, if there ever are any, come back into the Federal Treasury.
But real oversight, regulation, control, ownership by our government over the corporate institutions that precipitated the crisis -- that won't happen. The foolish corporate riders who rode us over the cliff will remain in the saddle while the foolish consumer victims are being pulled from the chasm and prepared for a new round of spending.
Which is to say we are not going to see any recognition that overproduction and over consuming by a capitalist system that manufactures needs rather than goods to sell all the stuff it has to sell to stay afloat is what really lies behind the crisis. Or that capitalism must change its ways -- like producing goods we actually need and taking responsibility for bad decisions it makes. On the contrary, the market's heading up (for a day at least), and the credit pump is being primed so consumers will start spending again, and we can go back to where we were before phase one of the crisis started. Back to spending our way to phase two of the crisis.
The blind greed is already evident in the vicissitudes of the market, where hysterical gloom on Friday is inevitably succeeded by hysterical exuberance on Monday. For all the chaos and sense of impending doom, no fundamental lessons have been learned.
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
We, in the USA, have had a tradition of gov't financing of private enterprises such as canals, railways, airlines, etc, aka socialism for the rich. None of these schemes or the names used for them is new. Some of the schemes benefited the USA & its people; others were & are rip-offs, rip-offs of tax money. Much of this money will never paid back to the USA; that will be a rip-off, a great swindle.
Facisms is Socialism! A market economy isn't a Free Market!
You're being polite! We don't have socialism, we have fascism.
But I whole heartedly disagree with you that greed is the cause and deregulation is the culprit. History has always had greed, and it will never be regulated away. In fact, it can only be regulated to perform.
From Steven Horowitz, St. Lawrence University, Professor of Economics:
http://myslu.stlawu.edu/~shorwitz/open_letter.htm
Corporatism
Washington Post Headline: "U.S. Forces Nine Major Banks To Accept Partial Nationalization."
This reality, more than anything else, must be compete anathema to a true dyed-in-the-wool Republican Conservative .... kind of like pouring Holy Water on the Devil.
"we are not going to see any recognition that overproduction and over consuming by a capitalist system that manufactures needs rather than goods to sell all the stuff it has to sell to stay afloat is what really lies behind the crisis."
Right. This is the heart of the matter. The Federal Reserve and most other central banks loans money into existence as interest-bearing debt, so the economy has to keeping growing at an exponential rate in order to pay the interest and prevent monetary collapse.
Contrary to the understanding of many progressives, regulating the banks to ensure more responsible lending practices would almost immediately crash the entire banking industry. Banks conjure into existence the new money necessary to pay the interest on the existing money supply by making loans. If they can't loan at an exponential rate, they fail.
The Fed isn't a real bank. They can't foreclose on banks that are unable to make their interest payments, so they have to recapitalize them with new debt money to replace the money that disappeared in the bankruptcy. There is no penalty or limit associated with the Fed replenishing destroyed wealth.
Which brings me to the reason why the taxpayers have to pledge $700B of our own money when the Fed can simply make unlimited amounts of vanishing capital reappear like magic: if people realize that money is a lie representing nothing but debt, there would be a mass uprising of debtors.
Excellent topic. Corporate welfare are social programs by government to benefit corporations. Social welfare are social programs to benefit citizens. America does not tolerate corporate welfare. On September 19, 2008, Paulson demanded entitlement for Bush's $1 trillion dollar going away present for his cronies. That's the day the RNC admitted the Republican Party is the Party of Corporate Welfare. Conservatives that do not want to belong to the Party of Corporate Welfare will have to find another party. America does not tolerate corporate welfare.
This is a trickle down (Reaganomics) bailout/rescue package. The guy I just passed up with a NOBAMA sticker on his belching 1980s Chevy won't be buying a new car soon(if ever), but the republicans have been great to him(he probably lives in a double-wide). America is doomed.
I prefer to interpret the NOBAMA stickers as advocating the boycott of Alabama.
Seriously, the sloganism in this society grows increasingly facile.
How 'bout revamping your banking system to match Canada's (the "most stable in the world" according to the World Economic Forum.)..with stringent rules.
How 'bout getting over the hysteria dictating that a mixture of capitalism and socialism is bad? Works well for Canada as well.
Of course, having a system that allows only two political parties (which fosters an either-or philosophy) with absolutely no room for the millions with a foot in BOTH camps and nowhere to go with their more subtle, tolerant points of view, makes for a very rigid society.
Cheers!
Sounds like a good idea to me! From now on the USA is going to be run like Canada!!!
Works reasonably well all over Europe: more economic equality, access to health care, education, next to no homelessness
One has to recognize that corporations are efficient organizational mechanisms but also narrow minded sociopaths driven by self-interest only. So corporations are gaming the system whenever they can get away with it legally and often beyond that it seems to have been proven again recently. Markets are vulnerable to this gaming. Look how the Wall Street investment banks/brokers often combined being the market and the counter party just like Enron did. Cooking the books with SIV off balance is part of that.
So both markets and corporations have to be regulated so that they will serve citizens efficiently. Society has to define and maintain the framework within both market and corporations operate.
Society has to recognize that its primary role is to promote the interests of it citizens only.
The regulation of both markets and corporations has to be defined from the perspective of aforementioned primary role.
No thanks, we'll take liberty, and all the volatility that that implies.
From Economic Fascism by Thomas J. DiLorenzo
Despite the fascist rhetoric about "national collaboration" and working for the national, rather than private, interests, the truth is that mercantilist and protectionist practices riddled the system. Italian social critic Gaetano Salvemini wrote in 1936 that under corporatism [also known as fascism], "it is the state, i.e., the taxpayer, who has become responsible to private enterprise. In Fascist Italy the state pays for the blunders of private enterprise." As long as business was good, Salvemini wrote, "profit remained to private initiative." But when the depression came, "the government added the loss to the taxpayer's burden. Profit is private and individual. Loss is public and social." The Italian corporative state, The Economist editorialized on July 27, 1935, "only amounts to the establishment of a new and costly bureaucracy from which those industrialists who can spend the necessary amount, can obtain almost anything they want, and put into practice the worst kind of monopolistic practices at the expense of the little fellow who is squeezed out in the process." Corporatism, in other words, was a massive system of corporate welfare. "Three-quarters of the Italian economic system," Mussolini boasted in 1934, "had been subsidized by government."
It's kind of hard to see your point here. I have read that even FDR was somewhat interested in pure Economic Fascism. I think the real problem with "fascism" and "communism" is that they were abused by monsters like Hitler, Mussolini, and Stalin.
The term "fascism" is derived from a Latin term that signifies "bundling together"- based on the old Roman idea that a single stick can be broken, but a bundle of sticks is much harder to break. This is sort of saying "let's all stick together so they can't break us", mostly in an economic sense. The idea in pure form is that government owns the means of production, the infrastructure, and controls the economy for the common good. The historical problem has been nationalism, demagoguery by narcissistic megalomaniacs, and a lust for power. Hitler, Mussolini, and Stalin are obvious cases. But the pure economic theory, as you point out, was anything but "sticking together", and was rife with the cronyism and oligarchic tendencies that we see today.
It's the megalomania, the narcissism, the cronyism and oligarchic tendencies that need to be addressed. And I would submit that we need to re-examine economic objectives. The writer points out correctly that the days of "produce and consume" economics may be over. I think governments around the world need to ask themselves if this is the correct objective of a functioning economy, instead of, say, the well-being of individuals and the now global society.
So-called "corporatism" as practiced by Mussolini and revered by so many intellectuals and policy makers had several key elements: The state comes before the individual. Webster's New Collegiate Dictionary defines fascism as "a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized, autocratic government." This stands in stark contrast to the classical liberal idea that individuals have natural rights that pre-exist government; that government derives its "just powers" only through the consent of the governed; and that the principal function of government is to protect the lives, liberties, and properties of its citizens, not to aggrandize the state.
Mussolini viewed these liberal ideas (in the European sense of the word "liberal") as the antithesis of fascism: "The Fascist conception of life," Mussolini wrote, "stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. It is opposed to classical liberalism [which] denied the State in the name of the individual; Fascism reasserts the rights of the State as expressing the real essence of the individual."
Mussolini thought it was unnatural for a government to protect individual rights: "The maxim that society exists only for the well-being and freedom of the individuals composing it does not seem to be in conformity with nature's plans." "If classical liberalism spells individualism," Mussolini continued, "Fascism spells government."
So, you see, you are no incorrect. However, these individuals saw themselves *as* the State, and therefore their well-being represents the well-being of the people themselves. Only megalomaniacs will ever put themselves into the position of supreme ruler in that sense, and so I see megalomania is inseparable from fascism itself.
DiLorenzo again:
One of the most outspoken American fascists was economist Lawrence Dennis. In his 1936 book, The Coming American Fascism, Dennis declared that defenders of "18th-century Americanism" were sure to become "the laughing stock of their own countrymen" and that the adoption of economic fascism would intensify "national spirit" and put it behind "the enterprises of public welfare and social control." The big stumbling block to the development of economic fascism, Dennis bemoaned, was "liberal norms of law or constitutional guarantees of private rights."
You must be logged in to comment. Log in or connect with
