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Saturday, May 29, 2010

Ron Paul: Obama Is Another Corporatist, Not a Socialist

Ron Paul: Obama Is Another Corporatist, Not a Socialist
Written by Steven Yates
Tuesday, 13 April 2010 11:59

The idea that President Barack Obama is a socialist is popular
among many conservatives; all of us have seen automobiles
sporting the bumper sticker reading, Don’t Blame Me; I Didn’t
Vote For the Socialist — obviously referring to Obama. Not so
fast, says, of all people, Ron Paul (R-Texas).

Addressing the Southern Republican Leadership Conference during
its third day, Dr. Paul told the audience, “The question has been
raised about whether or not our president is a socialist…. I am sure
there are some people here who believe it. But in the technical
sense, in the economic definition of a what a socialist is, no, he's
not a socialist.”

Dr. Paul continued, “He's a corporatist. And unfortunately we have
corporatists inside the Republican party and that means you take
care of corporations and corporations take over and run the country.”

What he means, and whether or not he is right, depends on what
we mean by socialism and what by corporatism.

In its classical usages (classical here meaning within classical
Marxist usage and its derivatives) socialism means: an economic
system that is abolishing or has abolished the private ownership of
the means of production in favor of public (i.e., state) ownership,
with all wealth shared.

In this classical sense, Obama is clearly not a socialist. Nothing he
has done, not even in the recent healthcare bill, seems aimed at
abolishing private ownership of the means of production.

Much of what he has done since taking office, however, has vastly
increased government control over the means of production — e.g.,
when he personally demands that a CEO step down (think General
Motors). Is this what we mean by corporatism?

Ron Paul described the healthcare bill as containing many
corporatist provisions: “We see [corporatism] in the financial
institutions, we see it in the military-industrial complex. And
now we see it in the medical-industrial complex.”

Corporatism is often seen as monopolistic capitalism in which
business and governmental elites partner with each other.

This isn't too far from the mark.

Business elites possess what we might call the power of the purse —
they have the money. Governmental elites possess what we might
call the power of the sword — they write the rules.

We might debate which one, if either, is truly dominant since both
scratch each other’s backs and benefit handsomely from having
thwarted both genuine marketplace competition and a truly open
political and electoral process.

Corporatism hardly began with the current administration, of
course, or its predecessor.

In an article published in 2002, which deserves far more attention
than it has ever received, commentator Robert Locke outlined the
basic ideas behind corporatism and traced some of its history and

According to Locke, corporatism “has the outward form of
capitalism in that it preserves private ownership and private
management, but with a crucial difference: as under socialism,
government guarantees the flow of material goods, which under
true capitalism it does not.” (Emphasis in original.) Corporatism
does not really trust the marketplace to provide. It manipulates
the marketplace “to deliver goods to political constituencies
[which now include] basically everyone from economic elites to
ordinary consumers.”

What has made corporatism so tempting is thus not hard to see.

Locke explains further:

Big business, whatever its casuists at the Wall Street Journal
editorial page may pretend, likes big government, except when
big government gets greedy and tries to renegotiate the division
of spoils.

Although big business was an historic adversary of the introduction
of the corporatist state, it eventually found common ground with it.

The first thing big business has in common with big government is
managerialism. The technocratic manager, who deals in impersonal
mass aggregates, organizes through bureaucracy, and rules through
expertise without assuming personal responsibility, is common to both.

The second thing big business likes about big government is that it
has a competitive advantage over small business in doing business
with it and negotiating favors. Big government, in turn, likes big
business because it is manageable; it does what it is told.

It is much easier to impose affirmative action or racial sensitivity
training on AT&T than on 50,000 corner stores. This is why big
business has become a key enforcer of political correctness.

Locke traces the history of corporatism to the idea that the
marketplace is not really self-regulating, since the "big boys"
will not "play fair"; hence economic activity requires outside
management, be it through regulation, subsidy, or control over
the monetary system.

The first major corporatist enterprise of the 20th century was
none other than the Federal Reserve, a private corporation that is
embedded within the federal government — as its own literature
states, “independent within the government.”

Then, in the 1930s, the (Fed-caused) Great Depression further
eroded confidence in the marketplace to deliver material goods
without government intervention.

That period gave us Social Security and Medicare: the beginnings
of the intergeneration redistribution of wealth we have been stuck
with ever since.

As political constituencies both large and small have grown, the
corporatist edifice has grown along with them, often with the
full support of the mainstream voting public both liberal and

The Left likes corporatism for three reasons, says Locke: (1) it
satisfies government’s (i.e., politicians’) lust for power; (2) its
machinery makes redistribution of wealth to favored constituencies
possible; and (3) it enables politicians to accomplish this while
remaining personally affluent.

The Right likes corporatism for three different reasons, says Locke: (1) big business can achieve enormous profits, capitalist-style, while unloading some of the cost and risk onto government; (2) the merger of business and government enables those at the helm of big business to influence government in ways favorable to themselves (e.g., thwarting true competition, which big business has seen as a nuisance since John D. Rockefeller, Sr. was heard to pronounce competition a “sin”); and (3) this merger seems able to minimize or dissipate whatever social unrest its policies create in the masses.

Locke provides several examples of corporatist endeavors besides the Federal Reserve. Some are even more obvious in today’s post-bailout climate:

Fannie Mae, Freddie Mac, the insurance industry generally (especially evident given Obama/Pelosi-care!), real estate, federal financing of scientific research, agricultural price-supports, and many others; we would probably want to add to our list so-called "free trade" agreements (e.g., NAFTA, CAFTA, etc.).

The point to all this is that if we going to criticize the Obama administration’s economic policies, we need to be sure we have its economics right — and if we are paying attention, we see far more continuity with past administrations than we do change.

There have been no fundamental changes, despite candidate-Obama’s mantra about “change you can believe in.” (For this reason, many on the Left have grown as uneasy with this administration as any Tea Partier, even if for different reasons.)

Isn’t corporatism just a form of fascism? Yes and no.

The most famous quote attributed to Italy’s Mussolini (the quote appears to be apocryphal) is that “fascism should more properly be called corporatism because it is the merger of state and corporate power.”

Under fascism, unlike socialism, government did not assume ownership over corporations but controlled them, allowing nominal ownership.

I would submit that if there is a difference, it is that in the English-speaking world more of a partnership between the two has emerged, and over a longer period of time — perhaps born of the quiet realization that many in the upper echelons of the corporate domain are as interested in power as any statist authoritarian has ever been, and that the two can achieve far more working together than they can separately.

Working separately will, in fact, ensure that the two will butt heads more often than not.

Corporatism may be thought of as “soft fascism,” which is oligarchic but not totalitarian.

Part of its genius has been to win acceptance from the voting public through (1) having created a mass and organizing it into groups, or political constituencies; (2) delivering goods to those constituencies; (3) all the while creating a sense of security for them if they play ball; and (4) (although the idea calls for a separate article) corporatism has sponsored “public schools,” further encouraging its acceptance through consistent ratcheting down of education not just about our founding principles but absent clear thinking about economics and even personal finance, while ratcheting up the current mixture of pop culture and job skills training (e.g., school-to-work, no-child-left-behind, etc.).

The vast majority of teenagers educated this way will not question the system; the few who do can be safely marginalized.

Ron Paul has been the one Republican operating clearly outside
the corporatist mindset. This might help explain why he and his supporters have been marginalized within the Republican Party,
the mainstream of which serves corporatist interests. There are probably Democrats who are not corporatists. Dennis Kucinich
might be an example.

All of which brings us to the question: If corporatism really is the
best name for the economic system currently throttling America,
can it be fought — and perhaps undermined?

Of course, we have to identify it first. Most people have never heard the term. Then we might argue that corporatism is, in the long run, unsustainable: Social Security and Medicare, those two 1930s corporatist standbys, are both technically broke and on the federal equivalent of life support.

As Baby Boomers retire, the situation will grow progressively worse! It was not without reason that Keynes said, "In the long run, we are all dead."

Corporatism incorporates Keynesian economics and encourages
massive spending by both government and consumers as the key
to rising prosperity without looking far into the future.

When people will not spend, generally because they cannot spend, there is an incentive to get money into their pockets; otherwise the economy falls into crisis. Spending money one does not have creates debt. The temptation is to monetize government debt.

The result is the slow erosion of our dollars' purchasing power. The dollar in fact has lost 10 percent of its value in just the past year. Massive and still-growing indebtedness has the potential to be our downfall and the downfall of corporatism.

These considerations are all imminently rational, but the
corporatist edifice we now live under has been built up
under such a long period of time — several generations, in
fact — that dismantling it all at once would precipitate chaos.

Moreover, the public is now accustomed to it. They fear the loss
of their safety nets, and might argue reasonably that they spent
their lives paying into Social Security and are now entitled to
benefit from it.

Healthcare costs are indeed astronomical; moreover, without
Medicare (or some type of government aid), they would be
priced beyond the reach of many elderly people.

These are the main reasons Social Security and Medicare are
politically untouchable, and that any politician proposing to
abolish them would be rejected immediately by the majority
of voters except for libertarians.

This issue is much larger than Obama. One way or another, he'll be gone in a few years.

The problems will remain, and would have worsened even if McCain had been elected in 2008.

How do we “turn back the clock”? Can we?

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