"Socialism in America" By Richard Sale

 

Most people live life day by day. They are too busy and harassed to ever form a general outlook about the human existence that they are part of. Their ideas have no intellectual scope. Their minds manifest little or no penetrating perspective. They don’t have the knowledge to criticize the world at large. They live in a busy flatland with mountains arising all around, but they don’t know how to climb them, don’t have the means to gain a height from which you can see an endless vista of alternatives and possibilities.

Social reformers are different from the ordinary person. They see beyond the usual constricted view of life. They are inspired to try and remodel the world. They are sensitive to human suffering, and are dismayed by human inequities and groups that dominate and exploit others. The true reformers have the imagination that tries to picture very different possibilities and alternatives to the life that we currently live. They yearn for a world in which creation is revered rather than mere possession, where work gives the joy and the satisfaction of accomplishment rather than a record of cheerless exertion in which workers have no voice in the work’s direction. They were emotional people, enthusiastic, mental active, gifted with a high degree of imagination, and they deployed their minds with the goal of lessening the suffering in the workplace. They think of the world not as it is, but as it could be made. Without a sense of what is valuable, a sense of what is to be preserved and treasured, any society is on the verge of cultural and political suicide.

And then there are people like Mr. Gregg. Notice the name. Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee. On a site called, The Hill, he warned us against the supporters of presidential candidate Bernie Sanders and his menacing socialism: “They might start with the experience of the Union of Soviet Socialist Republics. Notice the name. Or the National Socialist movement called Nazism. Notice the name again. Or Maoist China, a socialist state again in name. Millions of people died under these banners of socialism and millions more were impoverished.” Gregg says that socialism impoverishes the masses and lowers their standard of living. He names Greece, Spain and Portugal as an example of socialist failure and added, “The list goes on and on. Country after country, where the demagogues of class warfare and “something for nothing” economics have sold their bill of goods to a frustrated electorate, has seen not only a drop in its standard of living, but in many instances peoples’ freedoms and lives destroyed. He ends with this baleful warning, “Try to find such opportunity or such prosperity in a socialist nation. It does not happen.”

But it does, and Mr Gregg reveals himself as a meathead. He doesn’t seems to know of any other kinds of socialism except the totalitarian, which is hugely disappointing. A sense of objectivity should compel you to study a subject before you denounce it, but Gregg is not aware of any such obligation.

You would think a man as dogmatic as Gregg would take the pains to find out that in Denmark there are a rapidly rising number of millionaires whose wealth exceeds one million U.S. dollars and has a thriving equities market. In fact, 69.00 Dames describe themselves as millionaires according to the RBC’s annual World Health Report, according to news reports.

Socialism in America

Socialism in the U.S. has a long history, dating back to 1694 when German Second Adventists founded two Utopian colonies including the Women in the Wilderness, which had a great influence in setting up the Pennsylvania colony. They believed America was the land of the Second Coming and made ready. Two centuries later, such groups flourished from Maine to Texas, about 80 of them in all.

In Europe, socialism dates back to the French Revolution to the writer Babeuf and his expounder Buonanarotti who were the first reported socialists on the Continent of Europe and whose writings were read by Marx and Engels. In 19^th century, Europe wanted to complete the political revolution by a social one, and many different people tried to promote this. There was Abbe Lamennais who wanted to establish a Christian society, and there was the Frenchman Paul Leroux whose writings were read with approval by Goethe. Leroux fought for equality for women, the elimination of property, reincarnation, and the rehabilitation of Satan. The novelist, George Sand, was his lover.

With the coming of the Industrial Revolution, many ordinary people were tyrannized by the Machine and Classical Economics. In the mid-1840s, there was a phrase that galvanized many of the truly morally thoughtful in Europe, “Poverty in the Midst of Plenty.” The industrial revolution had transformed social and political life of Europe, and the individual was increasingly powerless and helpless before the Age of Machines. Some critics urged political action be taken to improve the “mute masses,” such as expanding the suffrage, while others felt that political change was impotent in the face the evils of the new economic order. The industrial machine was wielded by a body of ruthless owners who were undermining the social bond and isolating and crushing the individual. In fact, abundant production didn’t produce prosperity especially since overproduction produced so many economic failures. Anyone who reads even a smidgen of the first volume of Das Kapital will read narratives of young children being worked almost to death, putting in 16 hours a day and kept at their tasks by beatings from factory thugs. Indeed, some parents would beat their children in order to avoid such beatings at their place of work. There were many groups involved in this ferment of protest against economic inequities: English Chartists, German Burshenschaten, and the Carbonari of Italy among others.

One of its first socialist theorist in America was Charles Fourier, (not to be confused with Jean, who was a mathematician.) Fourier wanted to equalize labor and rewards by classifying tasks, talents, impulses and adapt the work assigned to the individual’s’ temperament and emotional satisfaction in a society of common consent. His ideas didn’t involve using force to impose its ideals. August Comte, his secretary, added his own ideas for such a program, and, over time, Fourier’s ideas were lumped together with the Utopian Socialist, Robert Owen.

The ideas of Fourier came to life during the age of American Romanticist with such figures as Emerson, Hawthorne, Margaret Fuller, C.A. Dana. In New York, Brisbane, and Horace Greeley and Henry James were believers of the ideas as well. One socialist community was set up at Brook Farm which ended up being the setting for Hawthorne’s Blithdale Romance (which turned out to be a tragedy in the book.)

Another socialist project was named New Harmony, set up in Indiana by the British utopian socialist Robert Owen. He was an extremely successful businessman with a kind and generous heart. Back in Britain, he had created a group in Britain called New Lanark, a society where he had provided his workers with good housing, schools, recreation, and a good livelihood. His followers set up ‘cooperatives” where the consumer members reaped the benefit of wholesale prices and shared profits.

One of Fourier’s disciples was the duke St. Simon, who wrote a book, New Christianity which depicted a society in which tasks and goods would be insured by bankers and scientists whose callings made them expert planners and calculators whose role was to be central in a society dominated by machines. He then realized that the expert planners could only succeed if they were backed by widespread public support. Knowing that most people are indifferent to public affairs, they enlisted the help of artists who portrayed the new order as fashionable, attractive and fulfilling. Fourier’s ideas were to be fulfilled in America because it had land, cheap labor, and whose political tradition tolerated (or ignored) groups outside the political mainstream.

The followers of Fourier all agreed that the economic ideas of Adam Smith, Ricardo, and Malthus, John Stewart Mill, were in error.   (Malthus, for example, wanted to reduce the number of poor by urging them to practice sexual abstinence. Too many children made a family even poorer, he said. ) All were thought to be apologists for economic inequities which they mistakenly believed were the laws of nature. They rejected the doctrine of ‘lassez-faire’ because it was a system in which workers were mercilessly exploited and turned into treadmill animals. Capitalism had inflicted untold miseries on innocent workers. Early socialists were friends of the workers, eager trying to alleviate the needless misery inflicted on them by industrial leaders. They were idealists, not cynics. They were animated by love, not greed for fame.

Sanders

Sanders is suspicious of massive financial power only because such power exhibits all the shortcomings and faults of those who wield it. His protest against the inequities of wealth is based on this perception. He is suspicious when one group constantly dominates all over groups by their wealth rather than by their merit. The compliancy of the wealthy, their attitude that they are the most important segment of the country, irks him, and it does me. The belief that the wealthy are above the law irks him even more.

I think by the term “revolution” he doesn’t want a sort of rebellion which might use force; he wants a new examination of the American political system that has passed from a democracy to an oligarchy. Like today’s Russia, America now has its own oligarchs. What he urges is a moral regeneration on the part of the rich and ordinary citizens as well. He wants a spirit that creates rather than merely possessing. Surely, that is a fair point.

And Sanders’s suspicions are justified. It is clear that America’s economy doesn’t function properly. In an April 18 piece by Paul Krugman, he points out: “You see, profits are at near-record highs, thanks to a substantial decline in the percentage of G.D.P. going to workers. You might think that these high profits imply high rates of return to investment. But corporations themselves clearly don’t see it that way: their investment in plant, equipment, and technology (as opposed to mergers and acquisitions) hasn’t taken off, even though they can raise money, whether by issuing bonds or by selling stocks, more cheaply than ever before.

“How can this paradox be resolved? Well, suppose that those high corporate profits don’t represent returns on investment, but instead mainly reflect growing monopoly power. In that case many corporations would be in the position I just described: able to milk their businesses for cash, but with little reason to spend money on expanding capacity or improving service. The result would be what we see: an economy with high profits but low investment, even in the face of very low interest rates and high stock prices.

I am including the site and urge everyohe to read it. Robber Baron Recessions

Paul Krugman, New York Times

Comments

[charly]

South Korea was seriously third world & socialist and Belgium or Germany aren't exactly homogenous

[MRW]

In that case many corporations would be in the position I just described: able to milk their businesses for cash, but with little reason to spend money on expanding capacity or improving service.

Where has Krugman been? This has been going on since 1980 when compensation and bonuses for execs was now based on the value of the shares, the vaunted ’shareholder value'. It’s called taking a public company private. The value of shares rise when that happens and middle management and above get monster bonuses while the workerbee gets the shaft.

Another trick was using excess cash, not for product development or breaking into new markets--why take the risk?--but instead to invest in derivatives and other financial instruments and raise the share value that way. Queue the bonuses.

As economics historian Michael Hudson describes it, finance capitalism replaced industrial capitalism. It started with Reagan, but Clinton put the institutional infrastructure in to make it all happen. (Current Treasury Secretary Jack Lew was one of Clinton’s architects.) People vote for Clinton at their peril.

[different clue]

Doug,

Over the coming decades you describe, where super artificially-intelligent automation mass-slaughters tens of millions of jobs; what happens to the tens of millions of people who lose their jobs and have no other jobs in existence to go find and get?

How does a society which has always believed people must earn their daily bread cope with tens of millions of its members having no access to any way to earn any bread at all because the robots are earning all the bread now?

[different clue]

Will Reks,

The people who hope to live long enough to collect Social Security and Medicare are the people who have been paying FICA and Medicare taxes their whole working lives on the understanding that they would receive Social Security and Medicare when they couldn't work so effectively any more. I wonder if a large number of non-rich non-white FICA/MCare Tax Payers are also secretly planning to vote for Trump on the strength of that promise and just don't want to say so in public.

[Babak Makkinejad]

Yes, it began in late 1970s when Finance Capital, instead of a Hand-Maiden to Production, became its Mistress.

I suppose the leaders of the United States, in both politics and economics, had envisioned the United States to become the Financial Center of the World - manufacturing production be damned.

But likely London is going to claim that prize.

[Will Reks]

Yep.. people love socialism as long as it benefits them.

[Will Reks]

Maybe, but its to early to say. Protecting SS and Medicare while bringing back jobs is popular with the working class, regardless of race.

[Tyler]

Mark,

I have no clue how you came to that conclusion, moon man. What color is the sky in your world?

[Tyler]

Charly,

You're splitting hairs here and we all know it. SK "was". Belgium is the center of NATO and the EU, but about to go under sharia. Germany is running on EU fumes and also about to go under shariah. Both countries are borrowing money to pay the dhimmi tax of welfare.

[Tyler]

Elkern,

Now young people are terrified of being called "islamophobes" "racist" or "homophobe".

The real counter culture is on /pol/ by the new generation of reactionaries.

[readerOfTeaLeaves]

Gregg seems to have been a political careerist who mistook money for prosperity.
I'm inclined to the more recently articulated views that prosperity comes from 'solving problems'.

We are living at a time of momentous shifts in economic thinking -- extraordinary times, indeed.

Senator Sanders has evidently immersed himself in much of this newer economic thinking, as evidenced by his selection of Univ of Missouri at Kansas City's (UMKC) Prof Stephanie Kelton as his head economic advisor back in 2015. Although Judd Gregg is oblivious, there is currently a ferment in economic thinking, partly because databases now make it easier to get better analysis (think Piketty), and partly because it is easier for people around the world to engage in economic conversations and exchange data sets.

The model of economics that Judd Gregg expresses is based on fluid dynamics and the physics of the 1890s: closed system, inputs, outputs, humanity stripped out of all economic behavior (ergo, no need for moral conversations). This kind of thinking has shaped the US tax code, and leads to economic cannibalism of the 'stock buyback' variety that MRW so eloquently scorns.

Sanders' thinking appears to be grounded in his personal experience, but he appears to be somewhat quirky in his mastery of economic theory and economic data. (The same could be said of Elizabeth Warren.)

Anyone curious about new shifts in economic thinking would find this a good starting point; one of the authors is a multimillionaire weary of bad business models and the social havoc they wreak:
http://democracyjournal.org/magazine/31/capitalism-redefined/

I'd also 'second' MRW's Wall Street on Parade links -- the Martens are former Wall Streeters, and fearless about what they write. Michael Hudson comes at economics from a depth of knowledge about ancient economies, so he has fewer blinders and less ideology than the Judd Greggs who inadvertently wreak so much havoc.

I'm definitely in agreement with MRW's views about voting for Hillary: support her at your peril. If you want someone who does not fundamentally question dangerous, outdated assumptions, she's your candidate.

[drpuck]

Thank you Mr. Sale.

(My sense.) Socialism is a broad label, and it covers the various socialisms, most of which represent hybrid experiments at integrating economics at the level of a country with the larger economic context the country is embedded within. In my opinion, this makes the broad brush framing (and smacking down,) unhelpful.

Socialized approaches to economic management are historically related to communalism, tribalism, and the various local structures for informally, in a sense, "insuring" welfare at the scale of extended families, kin groups, and other scales of local identity. Such structures might be viewed as proto-socialisms, and these follow from a shared ethic, something like, "we're in this together." After all, once hunter-gatherers, we are social animals.

Are there contemporary examples, where there is high unemployment, not much of a welfare state, but hardly any starvation?

(There is very little reason "left or right" ideological propositions should be expected to be well fit to the task of guiding dynamic economies able to sustain benefits at the level of the household. It seems to me, this will be especially true with respect to the dynamics of a highly automated, post-consumer first world economy.)

Mr. Sale, there is a deep strain of social-economic history that reached a first crest in the British 17th century and would inform the utilitarians of the 19th century. This is part of the history of socialism and has to do with the the diggers and levellers, Winstanley, and a kind of Christian socialism. Later, I believe it was Bertrand Russell, who termed Marxism to be a 'Christian heresy.'

Of China, it is said their system is: state-planned capitalism; or, maybe better, state-planned confucian capitalism.

[LeaNder]

Thanks, MRW. Interesting links.

Shadow banking versus "too big to fail" surfaced in Clinton's debate with Sanders. Mind you, I wondered about the arguments of both concerning minimum wage. It seems slightly idealistic to double it short term. But then I looked a little closer into the issue and found out that Krugman seems to shift his position on the issue forward and backwards, too.

I do not really grasp your position concerning the Federal Reserve. Slightly obsessive? What alternative structure do you have in mind? A state own institution?

Besides you made a point concerning QE (Quantative Easing, I guess) that puzzled me as much as the terminology the SST member you responded to used.

[LeaNder]

MRW, I don't think he has bonuses and compensation in mind, but an established product that does not need any more investment and thus is a "Cash Cow" versus innovation and investment in future "Stars", and they will be "stars" and no "question marks" because the demand is already there.

"Verizon has shown a remarkable lack of interest in expanding its Fios high-speed Internet network, despite strong demand."

**********
this may be more what you are looking for, his linked praise of Larry Summers:
http://krugman.blogs.nytimes.com/2013/11/16/secular-stagnation-coalmines-bubbles-and-larry-summers/

"But as Larry emphasizes, there’s a big problem with the claim that monetary policy has been too loose: where’s the inflation? Where has the overheated economy been visible?

So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? "Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s."

******
Bubbles of course increase bonuses too. No?

[MRW]

@LeaNder,

I do not really grasp your position concerning the Federal Reserve. Slightly obsessive?

Obsessive? No. 99% of Americans don’t understand how federal money, how federal accounting works. You’ve obviously heard about our deficit fights. They’re bogus! Even the current president went on TV in his first year and claimed that the US was broke, and that the federal government should tighten its belt like households have to do. Nothing could be further from the truth. Dead wrong. The federal government issues its own currency, something that state and local govts, businesses and households can’t do. (Wish I could.) How can the US go broke? It can pay all debts denominated in its own currency just fine.

So Americans are enduring austerity measures they don't need to endure. Or you hear chest-thumping Christians and publicly-pious people denigrate 'poor people' for being too stupid or lazy to get jobs, when only the federal government can increase jobs in a bad economy, as the Republicans understood in the 1950s when it was creating the middle-class. Because ONLY the federal government can SPEND into the real economy when things are bad to provision itself. No business--no good businessman--is going to hire people when they are no sales. Name one who would. That’s another thing Paul Krugman doesn’t understand. Businesses don’t invest in Plant and Materials when there are no sales, when people don’t have jobs to buy goods and services. Period. Why? Why spend the money? As a businessman, would you? Trickle-down is a fantasy and fairy-tale that Milton Friedman electrified a state governor with: Reagan. Reagan, like state govs Clinton and George W Bush, didn’t understand federal accounting either. Reagan, like the other two schmucks, thought you run a federal government the way you run a state govt (which has to earn income in order to survive). That you should balance the federal budget the way you need to balance a state govt. Bullshit.

What alternative structure do you have in mind?

None. I want people to understand the structure we’ve got. Only when you understand what you’ve got can you make intelligent ideas about how to improve upon it. I want people to understand how the people they’ve voted into Congress have ruined their children’s futures (for example) with their unforgivable ignorance about how federal accounting works. Kids with $30,000 to $200,000 student debt? You serious? Criminal. One in four children going hungry every night? In the United States of America? Criminal. 96,000,000 people still out of work and losing skills, income, and hope since 2008, and Americans think that is acceptable when the ability to reduce that underutilization of human capital is a fast vote away? (Hell, tack it onto one of the endless pro-Israel votes.) And won’t “cost taxpayers” a goddam dime? Criminal. But instead we get truly heinous moral and religious incompetents declaring that the reason why po’ people can’t get jobs, and riot in the streets, is because they are too lazy to work. When it is these moral and religious incompetents who are too fucking uneducated to even know what they are talking about. The Dunning-Kruger Effect. Look that up on Wikipedia.

A state own institution?

The Federal Reserve already is.

[William R. Cumming]

Richar! And ALL! Could Franklin [FDR] and Eleanor be more accurately described historically as SOCIALISTS?

[MRW]

Larry Summers is an idiot, and one of the architects of the Global Financial Crisis. He started under Clinton’s time. I have as much respect for Summers as I do for Clinton, which is zilch. Summers admitted to Tom Daschle years ago that he doesn’t understand reserve accounting (what the Fed does). And Obama used him as an advisor? Krugman’s respect for him? Member of the tribe.

Summers is the guy who ditched Christine Romer’s (head of Obama’s Council of Economic Advisors) memo to the Prez in 2009 that the stimulus needed to be $1.8 trillion to get the US out of the mess. Wouldn’t let Obama see it. Instead, Summers recommended an utterly insufficient $800 billion to Obama, who didn’t even spend that. Meantime, 10 million people lost their jobs and their homes, and over $14 trillion in wealth and retirements went up in smoke.

All completely unnecessary.

[Fred]

MRW,

"...Clinton put the institutional infrastructure in to make it all happen."

Say it ain't so, Joe.

[MRW]

Bubbles of course increase bonuses too. No?

LeaNder, if you want to understand this from an American point-of-view, listen to this. Clearest explanation you are going to get about what caused the housing bubble, and highly entertaining to boot. You’ll actually enjoy it. Put it on while you’re doing the dishes, or tidying up.
http://harryshearer.com/le-shows/may-1/

[MRW]

Yup.

You ever see this?
https://www.ssa.gov/history/Gulick.html

[MRW]

Say it ain't so, Joe.

In no particular order, and these are just the biggies that come immediately to mind:

• Bought Greenspan and Rubin’s bullshit two weeks before he was inaugurated (Adam Curtis recorded Rubin recounting this) that the US was broke, so had to let the markets run unregulated. If Greenspan had said this to a sitting president, which Clinton wasn’t then, he would be in jail for sedition. But Greenspan and Rubin knew he had a state-governor mindset about balancing the budget. Manipulated him.

• Ripped up the welfare safety-net without replacing it with a jobs program, impoverishing millions of low-income families whose jobs were flying overseas.

• NAFTA

• WTO

• China Most Favored Nation Status, courtesy of that miserable POS and then private citizen Rahm Emanuel

• Dismantled Glass-Steagall

• Made it against the law to regulate derivatives (budget addendum December 2000, snuck it in)

• Passed the Balanced Budget Act with the help of lawyer-architect financial idiot Jack Lew

• Produced a federal government surplus and bragged about it. When the federal government is in surplus, the private sector is in deficit. Take that to the bank. And vice versa. Has to be. Think about it. When the US federal government has a surplus of US dollars, who has a lack of them? Everyone else: the non-federal government sector, both domestic and foreign. But it’s when the private domestic sector is in deficit that poverty and destitution in the US erupts. And what was Greenspan’s response to this looming disaster? He told everyone to take out secondary mortgages to make up for the lack of sufficient living wages; the very same debt that came back to bite them horrifically in 2008.

The monthly US Treasury Statement actually records a government surplus as a negative. That ought to tell you something.

[Mark Gaughan]

Tyler,
It was easy coming to that conclusion. How could you not?
Arthur Sulzberger Jr. in his article, “Builders and Titans” wrote that Carlos Slim “has funded extensive public-health education programs and why he’s helped thousands of students throughout Latin America get their own laptops and learn more about digital technology.”
He’s had “a profound and lasting effect on millions of individuals in Mexico and neighboring countries…”
Krugman’s article is titled, “Robber Baron Recessions”
Krugman wrote that corporate behavior in the U.S. isn’t doing any of what Mr. Slim is doing.
Sulzberger’s piece doesn’t “take down” Krugman at all. It does verify Krugman.
It was quite clever of you calling me moon man.
Today, Tyler, the sky is clear blue, no clouds.
You’re right. You have no clue.
Mark

[Farooq]

".....the ability to reduce that underutilization of human capital is a fast vote away? "

What are your thoughts on universal basic income?

You once posted a talk by Bill Mitchell on the concept of "full employment" which I found interesting and worth pondering over. Lacking background in economics I am hard pressed to understand all implications of the concept in a more holistic fashion.

Bill used the example of cotton production in Australia and how government would buy and store the excess commodity when market was flooded and then release when the commodity was scarce to smoothen the impact on producers and buyers all year round.

How would a similar government intervention can be devised to ensure "full employment" for the workers in your opinion? Will government work with companies and pay them while demand is low for their service/product so they don't lay off workers? Or will government "buy and stock" products and services by intervening in the market as buyer? How would the later work for services I am unable to comprehend.

One criticism I can level on the above method based on my increasing realization is that the number of jobs is decreasing(permanently lost) all round due to automation. The above approach may smoothen the fluctuations caused by demand supply cycle but does not address the permanent job loss in economy. Perhaps government can invest and grow newer industries to make up for job loss but given the nature of new industries that have emerged in recent past, the large number of low/medium skilled people cannot benefit from them.

Would appreciate your response.

[Mark Gaughan]

Yep.. people love capitalism as long as it benefits them.

[Mark Gaughan]

Thanks for the links.