Governments propping up the economy by buying stakes in the banks is not socialism. It's liberalism.
By LARRY DERFNERlarry derfner 88(photo credit: )
I don't understand all these analyses of why the world stock market crashed and what needs to be done to fix it - and when I read some of these analyses, I begin to suspect that some of the analysts really don't understand it, either.
But one thing I do know is that the market - the free market - has hit a very, very serious ditch and has been spinning its wheels, getting deeper and deeper into the mud. The universal fear is that if left to its own devices, the market will keep spinning its way down until it drags the world into a depression the likes of which hasn't been seen since the 1930s.
What? What are these commies talking about? I thought the free market was God's own design. I thought the free market doesn't fail - that it has its little ups and downs, but that it naturally adjusts itself, it inexorably fixes itself, it automatically finds its own level, and that you have to leave the free market alone. The worst thing you can do is let government try to fix it, because all government ever does to the free market, we've been told for decades, is screw it up.
The above, by the way, isn't supposed to be an opinion, it's supposed to be a fact. It's part of what's called correct economics.
So what just happened this week? Stock markets around the world suddenly began streaking back up again, and why? Because the leaders of government decided to leave the market alone to adjust, to fix, to find its own level? No! The markets rebounded right after the governments of the world, or at least those in Europe and - God must be beside Himself now - the United States of America, decided to buy part ownership of their countries' biggest, most devastated banks.
WHOSE MONEY are these governments using? The public's! The US, led by the Republican Party - by the Bush administration, for God's sake - is going to take a quarter-trillion dollars of its taxpayers' money and buy a piece of America's banks! Governments in Europe, led by England, are going to spend trillions to do the same on their end.
And what did the free market say to that? "Hurrah!" Whatever happens over the next few months or years, there is now a consensus in the world, beginning with the big financiers and businesspeople, that government has to step in and save the world economy - by force. With the taxpayers' money.
Until a month or so ago, Americans, starting with the Bush administration, along with true-blue economic conservatives everywhere else, would have called this "socialism." Today, it seems, everybody is a socialist.
It seems that way, though, only if you believed all that hogwash about the infallibility of the free market in the first place. Because what's going on now with governments propping up the economy by buying up stakes in the banks is not socialism. Socialism is when the state, via the government, owns everything, from the banks to the candy stores, and there is no private ownership of anything. No, what's happening now isn't socialism, it's liberalism. Social democracy. Not a socialist economy but a mixed economy - an economy in which the great majority of a nation's assets are owned privately, but some - like utilities, or part of the utilities, or banks, or part of the banks, may be owned publicly. By the state. By the government.
WHAT'S HAPPENING in the world economy today - with government now being accepted as the market's only possible savior - does not represent the victory of socialism or the defeat of capitalism. Instead, it represents the victory of liberalism and the defeat of fundamentalist capitalism - of the idea that the free market is the economic equivalent of a just, benevolent God.
The truth is that today, we are all liberals. Even the Republicans. Even George W. Bush.
This is an earthquake, folks. This is a rejection of the economic doctrine that has ruled America for nearly 30 years, since the rise of Ronald Reagan. ("Big government isn't the solution to the problem; big government is the problem.") For the last decade or so, this doctrine has also ruled Israel. It was imported from America mainly by Binyamin Netanyahu, whose watchword was privatization - getting government out of the economy, selling every publicly-owned asset, from the ports to the ground under our feet, to private investors. For Netanyahu, as for Reagan, Bush and fundamentalist capitalists everywhere, the idea was that "government should be run like a business."
But now that the stock market has lost its bearings, business is no longer the model for how anything should be run. Today, business is listening to government. Today, capitalist America is learning from social democratic Europe. It is Europe, which understands the difference between a mixed economy and a socialist economy, that's leading the way out of this crisis. The hero emerging out of all this is Britain's Gordon Brown, who didn't hesitate to prop up his country's banks by buying chunks of them with taxpayer money. His success is a walloping rebuke to the legacy of Margaret Thatcher, who, with Reagan, turned economic conservatism into right-wing economic radicalism.
Before Thatcher and Reagan, conservatives were naturally skeptical of government intervention in the economy, but they didn't preach that government intervention was all bad. They didn't hold a seemingly religious belief that there's no such thing as too much economic freedom.
NOW, WATCHING the biggest financial titans in America fall to their knees, begging for government handouts, no reasonable person believes anymore that there is no such thing as too much economic freedom.
A new consensus is forming around the idea that the key adjustment to be made in an economy is not by the market, but by society, which has to find the right adjustment between economic freedom and government control.
Whatever adjustment is made, though, the result will still be capitalism. In 1989, the world finished with the radical economic idea that freedom was the problem and government the solution. Now, in 2008, the world has finished with the radical economic idea that was communism's opposite.
From now on, solutions will be sought in the middle. The mixed economy is back. After being pronounced dead a long time ago in America - and more recently in Israel - liberalism lives again.
if(catID != 151){
var cont = `Take Israel home with the new Jerusalem Post Store
