‘The GOP [Republican Party] Leads A “Socialist” Bailout’
– Wall Street Journal
So ‘we’re socialists’ say the naive commentators now that the banks are partly nationalised, in what must be the silliest myth of the current crisis. Yet so many are convinced. Conservative Republican Jeb Hensarling even fought the US bailout because, it ‘puts the country “on the slippery slope to socialism. If you lose your ability to fail, soon you will lose your ability to succeed.”’
Jeb’s right that bankers gambled on the state bailing them out in the way a frustrated parent might bailout a son or daughter with an unaffordable credit card bill; reluctantly and with harsh words, but hey, they had a good time building up all that debt and it was probably time to move on from all that partying anyway. The American right has worked hard to portray socialism as the state taking control of business and replacing entrepreneurship and innovation with inefficient bureaucracy; it clearly believes its own propaganda.
In truth, by value our economy was already 42.6 per cent nationalised before we bought the banks. That our economy is a mix of privately owned and publicly owned capital does not mean some of us are living under socialism and some under capitalism; it’s all capitalism.
What makes the difference is our relationship to the means of production and that remains the same whether you find yourself in a state capitalist or a private capitalist environment.
In fact, working in this allegedly socialist sector of the economy sounds far from utopian. Pay is not great, says the TUC, but most tellingly: ‘they feel that public service reform is something done to them, not with them.’
Having the state as a major – or worse, the only – shareholder in your employer is bad news for bank workers. Upon nationalising Northern Rock, government instructed management to downsize as it set about asset stripping in an effort to recover its investment ASAP. Here the state behaves as the worst kind of short-term investor.
Private capitalists can’t deliver key social goals like healthcare or education free at the point of access, but there is no reason why state capitalists should behave any better than private capitalists. The state is politicised and finds it difficult to justify paying workers well, let alone taking the risks with taxpayers’ money that innovation requires. The role of the state at this point in human history is not to own and run business, but to provide those services private capital can’t deliver and to create and maintain the smartest regulatory systems.