Louis Proyect: The Unrepentant Marxist

October 1, 2008

Are bailouts Marxist?

Filed under: economics,socialism — louisproyect @ 7:45 pm

Just after the federal takeover of Fannie Mae and Freddie Mac, rightwing ideologues began to rail against this and other supposedly socialist measures.

One of the more agitated among them is a Houston based venture capitalist named Bill Perkins who has bought a couple of full-page N.Y. Times ads warning about the communist threat to American capitalism. Here’s the latest that includes a cartoon exploiting the famous (but bogus) photo of wartime troops planting the stars and stripes on Iwo Jima:

It took me a moment to figure out that the rightmost soldier was President Bush since the features were decidedly Semitic, especially the nose. Just a couple of days ago I told my wife to expect a spasm of anti-Semitism around the bailout since so many of the hated Wall Street firms have traditionally been Jewish-owned, such as Bear-Stearns, Lehman Brothers and Goldman-Sachs. Furthermore, AIG’s past chairman was Maurice Greenberg, a Jew whose close ties to the Reagan administration (the Gipper offered him the job of Deputy Director of the CIA) would probably not compensate for having killed Jesus and destroying the livelihoods of good (Christian, in other words) Americans. (For more on this angle, check New Zealander Scott Hamilton’s blog entry “Why is Radio Live spreading anti-Semitic lies?“)

In a September 24th Guardian article, Perkins explains: “I think it’s a kind of trickle-down version of socialism or communism, when you say certain institutions can’t fail, when you have the government nationalising more institutions than Venezuela, I don’t see why you shouldn’t call a duck a duck.”

Ironically (although maybe not so ironically) Perkins hosted a fund-raiser for Barack Obama recently despite the Democratic candidate’s full-throated endorsement of the 700 billion dollar bailout.

Taking a step up from Perkins intellectually (we are being charitable) is a blog commentary that appeared in the Canadian National Post on September 29th. Written by Martin Masse, the publisher of the libertarian webzine Le Québécois Libre, it makes Henry Paulson a latter-day member of the Communist League:

In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.

Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dot-com bubble in 2001.

“Whatever happened to the modern followers of my free-market opponents?” Marx would likely wonder.

In some ways, the amalgam between people like Henry Paulson and Karl Marx reminds me a bit of what I also read in the National Post shortly after the invasion of Iraq, when Jeet Heer, a leftist who was on Doug Henwood’s list, compared Paul Wolfowitz to Leon Trotsky:

As evidence of the continuing intellectual influence of Trotsky, consider the curious fact that some of the books about the Middle East crisis that are causing the greatest stir were written by thinkers deeply shaped by the tradition of the Fourth International.

In seeking advice about Iraqi society, members of the Bush administration (notably Paul D. Wolfowitz, the Deputy Secretary of Defence, and Dick Cheney, the Vice-President) frequently consulted Kanan Makiya, an Iraqi-American intellectual whose book The Republic of Fear is considered to be the definitive analysis of Saddam Hussein’s tyrannical rule.

As the journalist Christopher Hitchens notes, Makiya is “known to veterans of the Trotskyist movement as a one-time leading Arab member of the Fourth International.” When speaking about Trotskyism, Hitchens has a voice of authority. Like Makiya, Hitchens is a former Trotskyist who is influential in Washington circles as an advocate for a militantly interventionist policy in the Middle East. Despite his leftism, Hitchens has been invited into the White House as an ad hoc consultant.

Returning to Martin Masse’s argument, the only way that it can be taken seriously (again being charitable) is to assume that statism is anti-capitalist. When Marx was writing in the mid-1800s, the vanguard of the bourgeoisie was most certainly for free trade and against the kind of state monopolies that the East India Company epitomized. For capitalist ideologues of the libertarian bent like Masse, the early 1800s serve as a kind of Lost Eden when the state supposedly allowed the free market to operate unfettered.

However, since the beginning of the 20th century at least, there has been very little in the way of laissez-faire in the more advanced capitalist countries. Late capitalism has been marked by more than anything by the intersection of large corporations and the federal government.

Although examples abound, there is probably no better example than the computer revolution that most libertarians like Masse would hold up as an example of unfettered capitalism. But as Gar Alpervowitz pointed out in an article “Distributing Our Technological Inheritance” that appeared in the Oct. 94, Technology Review, the personal computer has the stamp of Big Government all over it:

The personal computer itself–without which Gates’s software would not be possible–owes its development to sustained federal spending during World War II and the Cold War. “Most of [the] ‘great ideas in computer design’ were first explored with considerable government support,” according to historian Kenneth Flamm in a Brookings Institution study. Now a specialist in technology policy in the Department of Defense, Flamm estimates that 18 of the 25 most significant advances in computer technology between 1950 and 1962 were funded by the federal government, and that in most of these cases the government was the first buyer of new technology. For example, Remington Rand Corp. delivered UNIVAC, the original full-fledged U.S. computer, under contract to the U.S. Census Bureau in 1951.

The government’s shouldering of huge development costs and risks paved the way for the growth of Digital Equipment Corp., which created its powerful PDP line of 1960s computers. In turn, Gate’s colleague [and now fellow billionaire] Paul Allen created a simulated PDP-10 chip that allowed Gates to apply the programming abilities of a mainframe to a small, homemade computer. Gates used this power to make his most important technical contribution: rewriting the BASIC language, itself funded by the National Science Foundation, to run Altair, the first consumer-scaled computer. And indeed, Micro Instrumentation and Telemetry Systems, Altair’s developer, could never have placed a microcomputer of any variety on the market without the long preceding period of technological incubation.

Finally, a word should be said about the “nationalization” of Fannie Mae and Freddie Mac, which arguably is the case that most closely conforms to Masse’s worries over Washington being seduced by the Communist Manifesto’s demand for “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.” Even Masse is forced to include Marx’s proviso that this measure (and 9 others) must be “implemented after the proletariat takes power” Maybe I haven’t been paying careful attention, but the American proletariat most certainly not has taken power and will not be closer to that goal even with the election of Barack Obama.

In fact, all that has happened to these enormous companies is that they have come under Conservatorship of the Federal Housing Finance Agency, whose website describes as:

A conservatorship is the legal process in which a person or entity is appointed to establish control and oversight of a Company to put it in a sound and solvent condition. In a conservatorship, the powers of the Company’s directors, officers, and shareholders are transferred to the designated Conservator.

Conservatorship was described by the Washington Post as akin to Chapter 11 bankruptcy and adds that it “would not resolve the larger question about the future of the two companies — whether they should be nationalized, privatized or maintain their current structure.”

Now I could be wrong about this, but given the statements of the two candidates running for office, nationalization has the proverbial chance of a snowball in hell. Few people have any illusions in John McCain, but it is worth noting that Barack Obama chose a forum organized by the Alliance for American Manufacturing to tell steelworkers: “The truth is, trade is here to stay. We live in a global economy. … Not every job that has left is coming back. If somebody tells you they are they’re not telling the truth.”

Vote Nader!

16 Comments »

  1. Unrepentant Marxist,

    I have an honest question – how can you nationalize industries without the state? Every socialist government is making a path toward communism, where there is no state. Assuming they have a Marxist understanding of communism. Is the plan to nationalize everything with the state and then cut the ties with the state once you have achieved a special kind of solidarity?

    Sincerely,
    an anarchist

    Comment by acumensch — October 2, 2008 @ 1:02 am

  2. The deep imbrication of the State and capital has been effectively masked by the ideology of the free market. The façade is now transparent, however, as government rushes to preserve fictional capital in the face of its collapse. Neo-Keynesianism and Socialism are now linked in the American imaginary, thanks to the (apparent) success of neoliberalism, itself now revealed as yet another variant of State capitalism.

    On the disturbing connection between capitalism (or reactionary anticapitalism) and anti-Semitism, see Moishe Postone, “The Holocaust and the Trajectory of the Twentieth Century.”

    Comment by J.D. — October 2, 2008 @ 2:51 am

  3. Marx didn’t say the state should takeover the unpayable debt of the banks.

    I like the term state capitalist, to describe the government’s action.

    Comment by Renegade Eye — October 2, 2008 @ 5:01 am

  4. Here, in a province of the Empire in the south of Europe some people is very sure this collapse will not affect our imported neoliberalism because of our strong economic institutions. In the other hand, the desemployment increase until the levels of ten years ago and there are strong tentations of privatization of the health system in important places of the country.

    I hope we learn from these big mistakes.

    Salud

    Comment by Alberto — October 2, 2008 @ 9:37 am

  5. I will, indeed vote for Nader in spite of the fact that he is using “the bailout is socialist” rhetoric as a talking point against Paulson, Bernacke, Bush, Obama, et. al. By the way, I also heard Nader engage in some mild Trotsky baiting the other night. My vote is for the political party (California Peace and Freedom) who ballot line he is using where I live.

    Comment by Bob Richard — October 2, 2008 @ 8:28 pm

  6. How anyone can argue that bailing out bankrupt capitalists is socialism?

    If the government seized all of the banks instead of arranging their sale to other banks, then I could see their line of argument.

    Also, this whole “neocons as the progeny of Trotskyists” thing is such bullshit. It’s something liberals, anarchists, and libertarians love to mention to distract from their own pathetic records and awful politics.

    This is just a form of state capitalism. Anytime the capitalist state takes something over, it’s a form of state capitalism, because the class relations in society and in the industry/firm in question haven’t changed. Anyone who thinks the workers are now running Freddie and Fannie, or AIG, needs to get their head examined or start their methadone treatments.

    Comment by Binh — October 3, 2008 @ 2:47 pm

  7. Nice comment, Binh. This is not socialism. What we are seeing is just a bunch of crooks stealing taxpayer money – a lot of it too! – to cover the losses from their foolish financial adventure with derevative instruments that had make-believe value, attached to nonexistent collateral, bought and sold in a phony marketplace. They’re not called The Ruling Class for nothing. You don’t take a loss when you run a rigged game. As Mel Brooks said, “It’s good to be King.”

    Comment by Richard Greener — October 3, 2008 @ 4:53 pm

  8. Didn’t all the “neo-cons” used to be Democrats who worked for Senator Henry “Scoop” Jackson before they jumped ship for Ronald Reagan. Yet another example of the vast “differences” separating Demo-cans from Republi-crats. Make’s it hard to decide who the “lesser evil” is.

    Oh yeah, vote Nader (or McKinney)…too bad the spineless ISO won’t say that since it might alienate them from the middle-class “progressive” milleau they tail-end after.

    Comment by MN Roy — October 3, 2008 @ 8:13 pm

  9. I think right-wingers use the “government action X is socialist” cliche because they think it discredits both X and socialism at the same time — two rhetorical thrusts for the price of one. It’s painful to hear Nader using the same cliche for the same dual purpose.

    Comment by Bob Richard — October 3, 2008 @ 11:32 pm

  10. Agreed on Nader’s unfortunate use of ‘socialist’ as an implied pejorative – I hope some of the good people around him are getting to him on that.

    Nader is a guy who doesn’t come from a left/socialist tradition, but that Jefffersonian/idealized capitalist/New England town meeting one, as did Mike Gravel. These guys are excellent partners, though, in an anti-imperial, anti-corporate front. To see Nader trashed by the likes of The Nation earns him campaign ribbons.

    Ralph’s choice of running mates has been instructive with regard to his philosophical outlook, as that of the major parties has been for theirs.

    Comment by jp — October 4, 2008 @ 1:46 pm

  11. […] Proyect. Are Bailouts Marxist? Just after the federal takeover of Fannie Mae and Freddie Mac, rightwing ideologues began to rail […]

    Pingback by Chto Delat Weekly Reader No. 2 « chtodelat news — October 4, 2008 @ 7:01 pm

  12. Oh yeah, vote Nader (or McKinney)…too bad the spineless ISO won’t say that since it might alienate them from the middle-class “progressive” milleau they tail-end after.

    Backing Nader in 2004 should’ve been proof that the ISO doesn’t tail-end the middle-class “progressives” you’re referring to, but for some facts are inconvenient things.

    Comment by Binh — October 6, 2008 @ 3:32 pm

  13. Why not call the bailouts socialist? Marx already observed this kind of socialism in his time, which in the section on “Socialist an Communist Literature” of the Communist Manifesto he called “Conservative or Bourgeois Socialism.” “State Capitalism” is only limitedly useful as a term, and I think we need to do more than offer it as an alternative designation to these bailouts. People are calling the bailouts socialist, but are not allowing for the historical nuance that separates this socialism from radical, proletarian socialism—i.e. marxism. So long as this equivocation goes on, we may offer “State Capitalism” as an alternative designation, but we short change the socialist alternative.

    To state that all a bit different and a bit more succinctly: tackling the way these bailouts and similar government interventions are being framed as socialist is a perfect opportunity to actually teach Marx, particularly what he said about this very conflation of different kinds of “socialism” and his political vision.

    Comment by Joe — October 10, 2008 @ 3:33 pm

  14. ^^^ Indeed. I don’t like using the term “socialist” because of its vagueness. I prefer “social-[insert label]-ists,” like the former revolutionary social democracy used to be, in order to describe the various “socialists.” As for us, what about social-abolitionists?

    Comment by Jacob Richter — October 11, 2008 @ 9:40 pm

  15. Thank you, Jacob. I’m not complaining about using the term “socialism” period. I think the apparent vagueness is a product of inattention to historical and theoretical nuance, but not because it actually doesn’t point towards definite, often very different political programs. That’s why I’m saying that instead of not using the designation “socialist” because of it seems vagueness, to argue for a better understanding of what is differently at stake when a Marxist calls her program “socialist” and David Sirota calls the current bailout “socialist.” In other words, “socialism” is not strictly vague, and that Marx understood this underpins the section in the Manifesto I mentioned.

    Comment by Joe — October 12, 2008 @ 9:44 pm

  16. Jacob, after reading your comment a second time, I think I understand it a bit differently. We agree that there is a need to designate “the various ‘socialists.'” I’m not sure we need to invent a whole new nomenclature to do it though. Marx did a pretty good job already.

    Comment by Joe — October 12, 2008 @ 9:47 pm


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