Ralph Nader, the famous American consumer advocate and perennial presidential candidate, writing recently in The Nation, recalled sitting at the family dining table when he was growing up and listening to his father talk about capitalism and socialism. “Capitalism will never die,” his father would say, “because socialism will always be used to save it.”
Nader cited the recent worldwide multi-billion-dollar bailouts of the banks and other floundering financial institutions as proof of the validity of his father’s claim. The bankers, financiers, tycoons, and major investors whose unrestrained greed caused the money market meltdown should have been punished. Instead the world’s governments gave them a lavish infusion of public funds—most of it coming from the tax payments of the bankers’ middle- and lower-class victims.
This policy of “socialism for the rich, capitalism for the poor” also flourishes in Canada. It was no coincidence that Stephen Harper, in his first press conference after the re-election of his minority government, announced plans for a similar multi-billion-dollar rescue plan for Canada’s money lenders, should they need it.
Typically, Harper, like most other political leaders around the world, made not the slightest reference to the unbridled greed that is the root cause of the global financial turmoil. Why not? Because greed is not just tolerated in the money markets, but actually encouraged and rewarded. The greedier a money lender is, according to the “greed-is-good” gospel, the better the financial system works—at least for the biggest lenders, investors and speculators. The market’s financial wheelers and dealers must be free to move money in ways that generate the highest returns.
When their avarice goes too far and turns the market’s booms into busts, the financiers can count on their political pals to bail them out. The big savings and loans meltdown in the U.S. in the 1980s cost taxpayers hundreds of billions to bail out the major S&L institutions. The latest global rescue package for the sub-prime-mortgage peddlers is much bigger, but the fact that it was considered necessary to prevent a total economic collapse is significant. It shows that the political response to the financial crises caused by venal money brokers hasn’t changed since the 1970s.. It still consists of simply applying quick-fix trillion-dollar patches to the system’s leaky pipes, instead of firing the plumbers and installing a new latrine.
Of course it’s still heresy to disagree with the basic free enterprise tenet that the captains of free enterprise, when they run out of private money, must have it all replaced with public money. The fanatical adherents of neoliberalism still have a tight grip on the economic and political levers, and they keep insisting—despite all evidence to the contrary—that all that’s needed is a bigger bailout package, not a serious reform of the capitalist system itself. Once we get over this latest downturn, they assure us, it will be back to business as usual.
Well, maybe, maybe not. The recent meltdown probably won’t be as catastrophic or prolonged as the Crash of ’29 and the ensuing Great Depression, if only because so many governments have poured so much public money into cash-depleted private vaults. But what Harper and most other bailout-besotted politicians around the world seem to be forgetting is that, when governments in the 1930s finally did come to capitalism’s rescue, it was not just by providing emergency funding. It was by resorting to large-scale government intervention in ways that were clearly and undeniably socialist.
The preservation of capitalism from the consequences of the disastrous slump it caused more than 80 years ago was engineered by the brilliant British economist John Maynard Keynes. His radical welfare-state policies were first implemented in the mid-1930s by U.S. President Franklin D. Roosevelt, whose “New Deal” measures created more jobs and provided a better social safety net. (They also served to dampen the growing appeal of communism, which at that time was widely viewed as a humane alternative to job-destroying capitalism.) Other countries, including Canada, then jumped on the Keynesian bandwagon, and their combined adoption of socialism—though they never called it that--led to a few decades of prosperity shared by most people in the industrialized world.
The corporate and financial barons, however, were not content with a system that forced them to share the wealth a bit less inequitably with the common folk. So, with the help of their political allies, they set about demolishing the welfare state and shedding its constraints on their rapacity. Through deregulation, privatization, and business-biased free trade deals, they were able, by the late ‘70s, to re-establish the same freebooting form of capitalism that was rampant in the 1920s—this time on a global scale. And, as in the 1920s, it has had the same calamitous results.
The current colossal bailouts of the banks and other money managers may avert another full-blown depression, but a return to long-term global financial stability can only be achieved by the full reinstatement of Keynesian-style economics. If capitalism is once again to be saved from itself for more than a few years, it must be forced once again to agree to the kind of social (socialist) contract that was its salvation in the immediate post-war period. That means accepting a redistribution of wealth that, if not perfectly fair, would be much less unfair than it has been for the past 30 years. And it also means repairing and expanding the social safety net that has been so savagely shredded by a succession of neoliberal governments.
In the United States, this realization has prompted progressives (liberals) to call for the adoption of a new New Deal. What that country urgently needs at this time, they argue, is another F.D.R. To elect a neoconservative like John McCain as U.S. president this month would be like electing a far-right-winger like Herbert Hoover in 1932 instead of Roosevelt.
Let’s hope the Americans don’t make the same mistake in November that Canadians did in October when they re-elected a neocon government led by arch-neocon Stephen Harper. At a time when the rebuilding of the welfare state should be the Canadian government’s top priority, we chose as our P.M. a right-wing extremist committed to dismantling the last vestiges of a just society. He will not be diverted from that destructive course. Even without a majority, and no matter how bad the financial crisis may get, he will find ways to make more cuts to our social programs.
He will certainly block any attempt by the opposition parties to bring in Pharmacare or a truly national child care program, to improve unemployment insurance benefits and coverage, to reduce child poverty, or take any other action that would make life less arduous for low- and middle-income Canadians. They will pay a terrible price for the election of the worst prime minister and government at the worst possible time.
And it’s not much consolation to know that, in doing the opposite of what’s needed to make our society more fair and compassionate, Harper will also be doing the opposite of what’s needed to save capitalism once again from its own greed-driven excesses.
(Ed Finn is the CCPA’s Senior Editor.)