Face it, the US economy is socialist

The real debate is not whether the US economy has socialist attributes, but choosing which form of socialism to employ.

Allen West Waits for Start of House Armed Services Committee Hearing
Republican Congressman Allen West said many congressional Democrats are members of the Communist Party [EPA]

New Haven, CT
– Two things happened to suggest the Republican Party had finally gone over the deep end. One was Republican Congressman Allen West’s claim that around 80 Democrats are members of the Communist Party. The other was the GOP’s indifference to his claim, as if West were pointing out the obvious. Water is wet, sky is blue, and the Dems are communists.

This inspired two long-time political observers, a liberal and a conservative, to write in the Washington Post that, since the 2008 crisis, many of our most pressing problems can be traced to one place: the radicalisation of the GOP. Both sides are not to blame for partisan gridlock, they wrote, and journalists should stop distorting reality with false equivalency.

I agree: Republicans are the new radicals. I agree, too, that journalistic balance can be problematic when one side is extremist. But I’d go one step further and suggest the importance of perspective outside the presumed rhetorical framework. It would help if journalists actually knew what “socialism” was and could challenge radical Republicans with the fact that “socialism” is already here. The real debate, therefore, isn’t about “socialism” but rather the kind of “socialism” we want.

Different socialisms

Let’s start with “socialism”, as understood by libertarians like Allen West, who has views so far to the right he can see no difference between liberals, progressives, Marxists, socialists and communists. These can overlap a lot, of course, but you can’t say they are the same. But to West, they are.

“There is a very thin line [between them]. It’s about nationalising production, it’s about creating and expanding the welfare state. It’s about this idea of social and economic justice,” he told Reuters, expounding on his earlier remarks.

That’s a narrow view of the political left but a typical one for a libertarian. Whenever the government gets involved in a free-market economy, a little bit more individual liberty is lost.

By this standard, the US is a socialist country, because to some degree or another, the government has always got involved in the economy: the railroads, the Homestead Act, the power grid, the interstate highway system, and the internet. These are products of the government creating markets or meeting demand, and then getting out of the way to allow capitalism to work. Most in the US wouldn’t call this socialism, however. They would call it good governance.

“No matter what they say about closeted communists in Congress or in the White House, Republicans – even the libertarians – heartily approve of socialism.”

That the US has shepherded the economy in one way or another exemplifies its economy’s mixed nature. It’s mostly capitalist, but partly socialist when the profit-motive is detrimental to human need. The best example is Medicare. The older you are, the less insurable you are. In a free market, in which government coercion is completely absent from the exchange of commodities and securities, the elderly would die sooner. That’s how markets work, and that’s why Lyndon Johnson didn’t want the elderly to be at the mercy of the markets.

So far, we’ve talked about a faux socialism and a real socialism. One is defined as socialism by those to the right of Ayn Rand and Milton Friedman. The other serves human needs, not the potentially dehumanising demands of shareholders. But there is yet another kind of socialism that libertarian Republicans approve of. Socialism for corporations and the rich.

The real debate

This is where the real debate is. Knowing that this is the real debate is exactly what Republicans don’t want (most Democrats, such as the very Wall Street-friendly Chuck Schumer, would also rather avoid the subject). They talk about socialists and communists with the intent of scaring people away from the debate, but the fact is that state and federal governments spend billions on corporate welfare.

No matter what they say about closeted communists in Congress or in the White House, Republicans – even the libertarians – heartily approve of socialism. The question in their view is about which way the money is flowing, up or down. If it’s agribusiness or oil corporations getting bucks from federal subsidies, then money is going to the top. Hoorah for socialism. If it’s single working mothers getting food stamps and housing credits, then money is going to the bottom. That’s a damn government handout – we can’t have that.

On the state level, corporate welfare is often wrapped in the rhetoric of job creation. Let’s make the state attractive to businesses, because businesses create jobs, workers spend money and the economy gets better. Voila. Except that taxpayers end up giving more to corporations than they end up receiving. Perhaps the most egregious example is the practice among 16 states to let companies keep some or all of the income tax that the state would normally levy. These programmes, in effect, allow corporations to tax their own workers.

Of the top five states doing this, four have Republican governors. Chris Christie’s New Jersey gives away the most, with $178m compared with the next state’s $89m. When David Cay Johnston asked General Electric about taxing its workers in Ohio, a spokesman said that GE was investing around $300m in Ohio and “the resulting taxes the state will receive will far exceed the tax credits provided to GE”. To which the Pulitzer Prize-winning Johnston said, in his best libertarian impersonation: “That response, I think, misses the point – GE should pay its own bills without taking welfare.”

Once you accept the fact that some kind of socialism is part of the US economy, we no longer have to suffer silly debates over whether it is or it not partly socialist. It is. End of story. This would be a good place for journalists to be, because then it begs the real question: What kind of socialism do we want?

John Stoehr is a lecturer in political science at Yale and a frequent contributor to the American Prospect, theNew StatesmanReuters Opinion and the New York Daily News.

Follow him on Twitter: @johnastoehr