The Rise Of American Socialism

by Paul R. Gregory

Tuesday, May 10, 2016

Obama’s recent impromptu remarks to a Latin American audience provide a fleeting glimpse into how the American Left is preparing mainstream America for socialism.

In his unscripted talk in a town hall meeting in Argentina, Obama downplayed the “sharp division between left and right, between capitalist and communist or socialist.” Notably, Obama characterized such divisions as “of the past,” as if they do not exist anymore. Per Obama, we supposedly live in a post-modern ideology-free world. Although capitalist-socialist-communist divisions “are interesting intellectual arguments,” he advised the young people of Argentina: “You don't have to worry about whether it neatly fits into socialist theory or capitalist theory—you should just decide what works.” As an illustration, Obama praised Cuba’s universal health care system as a “huge achievement” while regretting that Cuba is “a very poor country.” Obama’s implication: If Cuba just picked and chose wisely, it could have both its medical care system and a prosperous growing economy—no changes in the political system necessary.

So what to do in such a post-ideology world? According to Obama, we must create “new forms that are adapted to the new conditions that we live in today.” Although economies “rooted in market-based systems” are the most successful, “a market does not work by itself. It has to have a social and moral and ethical and community basis, and there must be inclusion.” No system is perfect; so we must craft an economic system that uses market forces to produce results that are inclusive and socially, morally, and ethically correct. In Obama’s value-free world, practical judgments of what “works” should replace ideological considerations.

The Left’s Fundamental Misunderstanding

Obama appears not to understand that ideology is alive and well and shapes life in profound ways. Societies are based on core ideological principles that cannot be randomly combined according to “what works.”

Economic, political, and social systems are like three-legged stools. The three legs of the capitalist or free enterprise stool are democratic/pluralistic public choice, a non-interventionist state, and a rule of law that protects personal and economic liberty. The three legs of the socialist stool are a one-party state, pervasive intervention in economic affairs, and a lack of a rule of law to guard personal and economic freedom.

The capitalist stool stands higher and is more stable than its socialist counterpart. Centuries of history show that capitalist, free enterprise economies have been able to grow, provide rising living standards, and innovate new technologies, contrary to Karl Marx’s belief they would inevitably collapse. Consider Germany and Korea: At the time of separation, North and South Korea had thesame per capita income. Today, the Communist North has the same subsistence income as 65 years earlier, while the capitalist South’s has increased ten-fold with a thriving middle class. When the Berlin wall fell in 1989, curious West German visitors to the elite Wandlitz housing compound were surprisedthat East Germany’s top leaders did not live much better than they. In fact, their greatest privilege was a store stocked with West German goods within the compound grounds. Even the countries cited by the Left as positive examples of “democratic socialism”—Sweden and Denmark—gained their affluence through a century of free-enterprise growth, and they revert back to first principles when they stray too far from the model.

What Obama fails to understand is that a society’s core values will constrain its policy landscape. A rule of law challenges the power of dictators, both communist and of other stripes, such as Russia’s Vladimir Putin. Limited government does not produce results that Obama and his ilk accept as moral, ethical, and inclusive. Capitalist welfare states that go overboard on redistribution and fairness lose the efficiency of the market economy. The freedom of entrepreneurs to start businesses and for corporations to work in the interests of shareholders conflict with a communist/socialist state’s control of the economy.

Why the Soviet System Rejected Transplants from Capitalism

The Soviet Union is another good example of how Obama is wrong. The Soviet experiment with state ownership, national economic planning, and Communist Party dictatorship was the greatest failure of the twentieth century. Communism burst on the world scene with the Bolshevik Revolution of 1917 and Stalin’s forced industrialization of the 1930s. The leaders of the Soviet Union vowed to bury capitalism. Their promise of rapid growth, victory over poverty, and a worker state captured one third of the world’s population at its peak. Today, it accounts for a fraction of one percent because its sixty-year experience revealed Soviet-style planning could not deliver its promises, and it could not be amended to do so.

When the Soviet leaders realized in the mid-1960s that the internal weaknesses of their communist system were sending them into a death spiral, they did what Obama recently advised his Argentinian audience. They decided to take over what “worked” in capitalist systems—the profit motive and managerial freedom—only to have vested interests reject these capitalist reforms, much as a living organism rejects a foreign transplant.

Twenty years later, reform communist leader Michael Gorbachev decided to restructure the Soviet economy into a new form of “socialism with a human face.” He allowed political dissent, destroyed the central planning system, and freed up enterprises, while continuing to set prices, refusing to give market forces free rein, and failing to establish a rule of law. The result was a huge black hole, which sucked the remnants of the Soviet planned economy into a world of chaos that plagued Russia for decades. Notably, Gorbachev, like Sanders today, cited Sweden and Denmark as his model.

Why China Rejects the Rule of Law

(read the rest at link): http://www.hoover.org/research/rise-american-socialism