Searching for perspective about all these bailouts and huge deficits, I thought I would pick the brain of the ultimate big-government guy, Karl Marx. Of course, the famous communist philosopher died in 1883, which forced me to get creative.
So I pulled out my Ouija Board, and the next thing I knew, there he was, big beard and all--wreathed, too, in pungent cigar smoke. I coughed a bit. Marx, always famous for taking charge of the conversation, pointed to his stogie and started talking: "They say that these things will kill you, but what do I care?" And then he blew a puff my way, as if to remind me that I had called him, that he was doing me a favor, and that a little second-hand smoke was a small price to pay for his wisdom.
KM: "So what do you want to know about this crisis of capitalism?"
Me: "Well, first off, are you happy with the recent turn of events here in the United States? The stock market has crashed, government spending is soaring, power is concentrating in Washington in a way not seen for 70 years. So are we moving closer to your communist vision?"
KM: "Funny you should ask. In fact, I have just been sitting here re-reading my favorite pamphlet, The Communist Manifesto, which I published back in 1848. I am going through my ten-point action plan that I wrote back then, which I called 'first steps' on the road to communism."
Me: "So how are you doing on those 10 steps?"
KM: "Well, some good, some not so good. One of my points, #2, was "a heavy progressive or graduated income tax"; unfortunately, tax rates are way down in recent decades. I was a lot happier when the top income rate was 90 percent or more in your country." He paused and frowned. "Damn those big tax-rate cutters, John F. Kennedy and Ronald Reagan!"
Then Marx brightened again. "But there are other points in my Manifesto plan that are coming along nicely, especially lately. Such as #5, 'Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.' Can you spell 'Troubled Asset Relief Program'?"
I couldn't help but laugh. Obviously Marx keeps up with contemporary idiom, as well as current economic events.
Me: "Well, you've got a good point there. So what do you think of Treasury Secretary Hank Paulson? He has presided over the biggest-ever 'centralization of credit in the hands of the state'--at least in the West."
KM: "Yes. Paulson has done wonders for us. And he's a Republican, right?"
I nodded ruefully.
KM: "Then Paulson is a great example of what my disciple V.I. Lenin called 'a useful idiot.' You know, somebody who does your work for you, out of ignorance, not intention. And we communists look forward to Paulson's replacement at Treasury, Herr Geithner. He seems loyal to Paulsonite policies.
"And of course, if we are making progress on #5, 'centralization of credit,' then #6, too, seems to be falling into place: 'centralisation of the means of communication and transport in the hands of the State.'"
Marx paused to reflect: "There's still way too much capitalist freedom of communication for my taste, but when it comes to transport, well that's a different story--your auto companies are begging to be owned by the state. And of course, now the media, which once prided itself on its independence from state power, is bellying up to the bailout bar, as you might say it. I see in Reuters--there's a name I remember from my days in Victorian London--that there are now plans afoot to have the government buy up the media, too. More collective ownership of the means of production, both for manufacturing and for knowledge. Excellent!"
Me: "I will admit, it looks bleak today for believers in limited government."
Marx just smiled.
Me: "But here's the thing I don't understand. How can you be happy about the way things are going? I mean, in all these bailouts, wealth isn't being transferred downward, from the rich to the poor; it's being transferred upward, from the middle class to the rich. I mean, if you look at the Pro Publica map of who's getting TARP money, it's pretty clear that wealth is being drained out of the heartland and pumped to the richer coasts. We're seeing a flow of money from Peoria and Emporia and toward Manhattan and Beverly Hills. Is this what you had in mind for social justice?"
Marx looked thoughtful, and then answered: "You know, I have had a long time to think about the question of the best way forward for communism. Back in the day, my friend Engels and I were sure that communist revolution would come to Western Europe first--you know, England or Germany. Well, it didn't. It came to Russia, only those guys, try as they might, didn't really know what they were doing. And the same with all the others who tried communism, in Hungary, or China, or Cuba, or Ethiopia, or Cambodia."
Me: "Sorry to interrupt, but with all due respect, I can't resist asking: Doesn't that suggest that maybe communism doesn't work so well?"
KM: "Well, all it proves for sure is that it hasn't worked yet. But we'll keep trying! And, as I always said in my lifetime, communism should start in the most advanced country--and today, that's the U.S. Where, interestingly enough, everyone now seems to believe that government spending is the answer to every problem.
"And so I might put the question back to you, Herr Pinkerton: How's free-market capitalism working out? If the laissez-faire economic model is so wonderful, why has a Republican President put it on the ash heap of history? Why did he wish feel the need to dish out $8.5 trillion in bailouts and subsidies of various kinds? That's more than half your gross domestic product. And this is your idea of a conservative Republican?"
Me: "Well, uh, er..."
Marx knew that he had me on the run: "See? Political economy is hard. But my intellectual hero, Georg Hegel, had a great phrase to sum up a situation such as this: He emphasized 'the cunning of history.' That is, you just never know what twists and turns history will take, but you have to be ready for any of them, to exploit every possibility.
"And in fact," the dead economist continued, "amidst all the complexities and ironies of history, the Owl of Minerva, as Hegel put it, has finally taken flight. I think that here, in the twilight of American capitalism, we've found a new dawn for Marxism."
KM: "Yes, really. And here's how: We print lots of money, and then borrow a lot more, and then give most of it to the rich!"
Me: "Wow. That does seem, however, to be kind of a logical stretch for a communist."
KM: "Oh, but it's not. We communists have learned the hard way that we have to use cunning, to make our own history. We have figured out over the past century-and-a-half: If you bail out (to use your term), only the poor, well then, the bourgeoisie and the rich will be against you. And even if you bail out the bourgeoisie--or, as you call them, the middle class--as well as the poor, you still have the rich against you, and the rich are often powerful enough to countermand the class-interest of the majority. But if we give the money to the rich, the political dynamic is completely different."
I was completely lost by now. Wanly, I asked, "How so?"
Blowing another big blast of cigar smoke my way, Marx answered eagerly: "If we give money to the rich, the middle and the lower classes will be jealous--they will want money, too! But once the bailout process is established, it will take on a permanent logic of its own. Everybody will have their hand out. And at that point, if the rich object to such further income distribution, well, their hypocrisy will be so obvious that they will have no politically acceptable principle on which to stand in opposition."
Marx was on his feet now, jabbing the air for emphasis. "So bailout the rich! I wish I had thought of that in time to tell Lenin, or at least Gorbachev. If I had, the communists might still be in power in Russia!
"The huge mistake that the communists of the past made was in taking me too literally, when I wrote, 'expropriate the expropriators.' That is, take away the wealth of the rich, or worse. But now we know from history that if you do expropriate the rich, you will make enemies, martyrs, and then more enemies. Hello, counter-revolution, rollback, and 'tear down this wall.' So let's do the opposite: Let's put the rich on the payroll first! Get them on our side! And tell everyone, that such bailing out is the key to social justice! The non-rich will fall for it, that's been proven."
Me: "Are you serious? Do you really think this plan will work?"
KM: "It's working already! Look, here in your America, your national Chamber of Commerce, that self-declared citadel of rugged individualism, lobbied furiously last fall for the $700 billion 'TARP' bailout. And now the Big Three auto companies, onetime symbol of American capitalist might, are groveling in Washington, DC for their billions. It's pathetic for them, but fun to watch for me!"
Marx paused for effect, making a fist, clenching his tobacco-stained fingers around his imaginary enemies: "We've got them right where we want them."
Still a bit staggered by this vision of new-model of communism, I managed to ask: "But how is such an upward transfer of wealth, from workers to owners, to be defined as in any way 'progressive'?"
Marx paused and looked at me coolly. To him, I think, I was beginning to seem like an un-useful idiot, somebody who just wanted to argue. "In and of itself, I will admit, giving subsidies to Goldman Sachs, or Citigroup, or the hedge-fund that owns Chrysler, is not in itself progressive. But if we can get those darn low income rates back up to a suitably confiscatory level, giving money to the rich won't be so bad, because we can reclaim it for the workers on April 15." But then he smiled again, as he said, "Of course, our real victory will come down the road."
I gulped. "Down the road? What road?"
KM: "The road to revealing capitalism for what it is--or at least your capitalists for what they are. First we prove that all capitalists are whores, that all their free market rhetoric is just that--rhetoric, dished out by propagandistic lackeys to fool the masses."
Me: "But there are some who oppose these bailouts, on principle. There are some who make the moral case for laissez-faire capitalism--the freedom to succeed, coupled, of course, with the freedom to fail."
KM: "Oh, you mean, like your Ayn Rand. She was an interesting woman. And your Milton Friedman, too, always linked capitalism and freedom."
Me: "And so did other famous free-marketeers, such as Friedrich Hayek and Ludwig von Mises. Hayek wrote that socialism and communism were akin to serfdom, while Mises linked his economic ideas to what he called "'the constitution of liberty.'"
KM: "Yeah, yeah, but they're all gone now, aren't they? And their followers these days are mostly on the fringes, exiled to a few ivory towers. The practical men of power have no time for what they dismiss as mere 'ideology.' They just want the bailout money, as we have seen. And so, happily, the mask of 'free enterprise' has fallen away, and the naked face of greedy and unprincipled finance capitalism has been revealed."
Me: "Well, right now, I will admit, the principled defenders of free enterprise--as a moral system in which people can justly keep the fruits of their own labor--seem few and far between, but they are out there," I said bravely, as best I could.
KM: "OK, you all can go off to Mont Pelerin for a little conclave of diehards. But the rest of us, old communists and new acolytes alike, have our experiment to launch. We will print money, bail out everyone, and then, when people see that capitalism is just one name for a certain kind of state-controlled distribution of wealth, people will be open to other ideas for the distribution of wealth, such as my beloved communism. If we can show that the capitalists just want to drain the treasury for their benefit, then surely the proletariat will wake up one day and decide to drain the treasury for its benefit. Having established the principle of bailouts as the key economic policy, it just becomes a question of who gets it. As Lenin said in that delightful way of his, all politics boils down to the question of, 'Who eats whom.' And when the rich are fat and happy, engorged to the point of helplessness by government subsidies, then they, like the aristocrats of old, will make a delicious meal for the rest of us."
Boy, that Marx could always come up with a theory.
Me: "But what if the rich today prove smarter than the decadent and stupid aristocrats of centuries past? What if they take all the money they're getting in bailouts and use some of it to entrench themselves into power? Oh, of course, these bailout capitalists would talk a good game, about 'social justice' and 'democracy' and everything, but their real agenda would be the perpetuation of their own power.
"And so what if this new bailed-out power elite would fix elections, buy what remains of the media, and throw a few subsidies to think tanks and other opinion mongers? And if that leveraged buyout of the chattering classes didn't work fully, they'd maybe create a private army or two, just to further guarantee their power.
"In other words, what if we had a smart aristocracy of wealth--wealth by political fiat, government-granted wealth, but administered and perpetuated by a new tough-minded establishment? What would happen then?"
Marx paused. "Hmmm." He frowned and puffed, and then said, "Well, that would be bad. A permanent dictatorship of bailout capitalists. No, not good."
Another long pause.
"If your scenario were to play itself out, my capitalist friend, we would both be losers: those, like you, who believe in free-market libertarianism, and those, like me, who believe in proletarian communism. Instead, we would have an ugly synthesis: Call it bailout communism for the rich--enforced, if need be, at gunpoint. Not good."
An end of history enforced at gunpoint. No, not good, not good at all.