The bailout wake-up to real world capitalism

The post I wrote yesterday about Eric Hobsbawm’s article was picked-up by Tobin Harshaw writing in the New York Times Opinionator Blog which looks at the interesting issue of what socialism really is and what it means to Americans.

Harshaw quotes a Rasmussen poll that found only 53% of Americans feel that capitalism is better than socialism. This result and the results of an earlier poll perhaps indicate that more and more Americans are starting to question whether they really live in a capitalist society. The earlier poll found that 70% of Americans would prefer a “free-market economy” to “capitalism” indicating that Americans feel that the system they’re living in is not as “free” as it’s made out to be.

As the Rasmussen poll notes:

The fact that a “free-market economy” attracts substantially more support than “capitalism” may suggest some skepticism about whether capitalism in the United States today relies on free markets. Other survey data supports that notion. Rather than seeing large corporations as committed to free markets, two-out-of-three Americans believe that big government and big business often work together in ways that hurt consumers and investors.

Although the telephone poll is hardly representative of the whole country, it should be no surprise that many Americans feel this way. As far back as 1996, Noam Chomsky made a speech on this subject at Harvard University on what he calls “really existing free market theory”. Chomsky points-out that time after time, the public are made to pay for the financial troubles and misadventures of corporations:

So, if Third World debt gets out of control, you socialize it. It’s not the problem of the banks that made the money. When the S&Ls collapse, you know, same thing. The public bails them out. When American investment firms get into trouble because the Mexican bubble bursts, you bail out Goldman Sachs. And — the latest Mexico bail out, and on and on. I mean, there’s case after case of this.

Of course, the latest round of high profile bailout packages passed by the Bush and Obama administrations have brought this fact into the American consciousness more than ever. If this makes them question the authenticity of real-world capitalism, then it may be at least one silver lining in the economic crisis.


6 thoughts on “The bailout wake-up to real world capitalism

  1. My thinking on the Rasmussen poll is that plenty of those surveyed would think a “free market economy” is better than capitalism probably just because it has the word “free” in it. It’s easy to associate freedom as being naturally a good thing, forgetting that there is “freedom from…(eg.hunger or fear of poverty from unemployment) just as there is “freedom to…(eg. make money.)

    There’s certainly more realism in two out of three of the US public realising that “big government and big business often work together in ways that hurt consumers and investors.” Maybe some are finally waking up to Chomsky’s and others warnings over the past few decades. The question is whether government has either the will or the power to do anything to genuinely change the situation. In my opinion they don’t.

  2. I think the government does have the power to do something but the will will have to come from the general population. What Obama needs right now is the same popular movements and groups that help elect him to keep applying pressure on the issues that matter. Without this public support and pressure, Obama will have neither the will or the confidence to push through the kind of reforms that may upset a lot of powerful interests.

  3. I tend to think that is now only in theory that governments have the power to significantly affect the running of the world economy. The events in the UK and the USA have shown that these nations “leadership” has actually been following the dictates of the money markets (such as huge ‘bailouts’) rather than giving them orders to comply with, or else face legal consequences.

    Of course with a genuine will perhaps they can influence some aspects of capitalism, through taxation and public spending but this barely affects the most rich and powerful. So few prosecutions against white-collar criminals have been launched, though the authorities are clever enough to make it look like they are going after the worst offenders (Madoff, is a rare case.)

    Pressure from interest groups will be at the margin because there is always an election just a few years away and US candidates all need corporate finance to get elected: Obama included.

  4. If people are to take the attitude that nothing can be done though, that makes the whole concept of democracy redundant. While most Western democracies aren’t functioning as well as they could be, that doesn’t mean it can’t be reformed. We don’t live in a dictatorship after all.

    Oppressed groups in the past have suffered far greater problems that are currently faced today. If throughout history slaves, workers and other oppressed groups had decided that there was nothing that could be done, then nothing would have changed for the better.

    You’re right that corporate financing dictates election campaigns to a large extent but if it was the deciding factor, then I’m not sure Obama would have been elected. His campaign received a huge amount of public donations and financial support via the internet proving that another model is possible.

  5. Well, I’m enjoying this exchange of ideas, the debate. I fully agree with you when you say:

    “If throughout history slaves, workers and other oppressed groups had decided that there was nothing that could be done, then nothing would have changed for the better.”

    The big difference between that time and now is that there was a kind of direct accountability for this kind of social evil. It was clear where the blame had to lie and the law was able to be changed in a way that genuinely affected the slave business. Of course now we have international corporations who have mastered the art of image and spin and keeping secrets well hidden. We also have investors and bankers who are shadows: untouchable and out of the reach of the law.

    I never suggested that “nothing can be done” but surely we have to realise that the big ‘democracies’ such as the UK and the US are virtual non-democracies, despite a relatively free media which most citizens (at least in those two countries) take little notice of when it comes to social and political issues.

    We chatter amongst ourselves and write things for each other that the average person is completely uninterested in. We have to realise that writers and journalists are nowadays largely writing for themselves.

  6. I agree that we don’t live in a functioning democracy but there is still a direct form of accountability in the form of government which is a good starting point for reform. Corporations may only be accountable to shareholders but unfortunately for them, governments are still accountable to those that they govern no matter how imperfect the democracy. As you say though, the democratic process has been severely derailed by the close relationship of governments with corporations and is in desperate need of reform.

    You say that it’s not clear who is “accountable for social evils” nowadays but I think most people are pretty clear on who is accountable for many social problems. The Rasmussen poll that found 2 out of 3 Americans believe that big business and the government often work in ways that hurts consumers is a case in point.

    I think there’s widespread belief that corporations and governments put their own interests ahead of the general population. The problem is that the democratic system is not responding to those feelings which is why there is a great deal of cynicism and apathy.

    Most people are desperate for solutions and answers as the wave of expectation that brought Obama to power proved. Maybe in the end people will find that the answer doesn’t lie within the current political system as it stands and a new model needs to be found.

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