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The ‘bailing out bankers is socialism’ myth

Published Nov 9, 2008 4:08 PM

Capitalism is in disrepute these days because of the chaos it is causing everywhere. Since no one wants to go back to feudalism or slavery—the two previous forms of class society that once prevailed in much of the world—the concept of socialism is arousing new interest. So of course the enemies of socialism are trying to sow confusion about it.

There is nothing socialistic in throwing money down the rathole of a capitalist economic crisis to rescue institutions that have been key to the process of exploiting the working class

In the United States, this has taken the form of labeling the government’s recent bailout of the banks and other financial institutions as socialism. It is a ridiculous assertion, since the bailout, which is very unpopular, is in fact a tremendous shift of public funds into the hands of private capitalists—funds that could be used for social programs to help out the mass of the people in these troubled times.

It is generally right-wing demagogues who raise the specter of socialism—the very folks who are quite comfortable with the government spending trillions of dollars on the military, prisons and police so they can repress the workers and poor at home and abroad. That kind of “big government” they welcome.

Nor do they really object to the bailout of the banks. They just want it done without any government regulation or oversight.

But is such government “intervention” into the economy a form of socialism, even if a distorted one?

The answer is no, both in form and in essence.

Even if this bailout contained all kinds of restrictions on the bankers, which it doesn’t, and even if it limited their profit-taking, it still would be nothing more than a capitalist effort to strengthen the system of capitalist rule.

There is nothing socialistic in throwing money down the rathole of a capitalist economic crisis to rescue institutions that have been key to the process of exploiting the working class—a process that has brought about an obscene accumulation of society’s wealth in the hands of a small class of superrich.

Socialism is, above all, an economic and social system that comes out of the struggle of the working class, in alliance with all the oppressed, against the capitalist exploiters.

There have been many examples of the capitalist class turning to the government for rescue in times of crisis. For instance, there was an earlier and smaller version of the recent bailout of the banks in 1987, during the Reagan administration. The then newly appointed head of the Federal Reserve System, Alan Greenspan, injected “liquidity” into the markets after stocks crashed in October of that year. The Fed bought up the stocks of failing companies and also offered them loans at a discount rate. The bailout led stocks to rally on Wall Street, erasing some of their losses. The big money men engineered and welcomed this government “intervention” and no one accused Reagan, who had built his career largely on anti-communism, of being a secret socialist.

Government intervention in a capitalist economy, and even the takeover of key industries, like the British Labour Party government’s nationalization of the coal mines, railroads and steel industry after World War II, does not constitute socialism or the transfer of power from the hands of one class to another. The British capitalist ruling class remained firmly seated. It was fully compensated—in truth overcompensated—for the nationalized property, which was in poor condition after years of depression and war. It was free to continue to exploit the workers through other avenues.

The function of a government, whether it is elected or not, is to manage the state for a certain period of time. But what is the state? In essence, it is organized force and violence to preserve and promote the interests of the class in power. It is the army, the police, the courts, the many institutions that apply force and pressure both domestically and internationally.

The state appeared fairly recently in human history. In early communal society, before people became divided into classes—into those who owned property and those who didn’t—there was no state, no standing army, no jails.

In modern times, especially, the state has had to take on many other functions besides its essential role as enforcer. The day-in, day-out process of exploiting the working class and making profits requires that the capitalist state provide much of the economic infrastructure like roads, bridges, levees and airports. Also, in order to collect taxes from the people without provoking rebellion, the state has to be seen as providing funds for necessary services like education, health care, libraries, parks, medical care, social security and so on.

However, none of these things were instituted just because the capitalists were convinced that would be the rational thing to do in order to protect their own interests. No, every social gain came through sustained and often militant struggles. Eventually, the powers-that-be yielded a little, often kicking and screaming, to some of the workers’ demands in order to pacify them.

Without struggle, there is no progress, as the great abolitionist Frederick Douglass observed. And if the struggle ebbs, gains made by the workers and the oppressed can be taken away under this capitalist system. In recent decades, the proportion of the state’s funds allocated to social programs has dwindled down in relation to the enormous expenditures on the military and the repressive state apparatus.

Schools and hospitals are overcrowded and understaffed; public housing has been virtually dismantled; the safety net provided by welfare against abject poverty has been shredded; Social Security and Medicare are in danger even as trillions of dollars are being handed out to the banks and corporations.

This is further proof, if any is needed, that the U.S. government and the state it manages do not stand above classes. They are “of the people, by the people and for the people” only if, by people, one means the ruling capitalist class. Yes, Bill Gates is a person. The Rockefellers are people. So, to avoid confusion, let’s be specific and say this is a capitalist government, it serves the interests of the superrich, and it has absolutely nothing in common with socialism.

The objective of revolutionary socialists, of Marxists, is to accelerate the struggle of the working class against the ravages of capitalism, which means not only taking on the bosses in economic struggles but also raising the political level of the workers’ movement so as to challenge and disintegrate the capitalist state and replace it with a workers’ state.

This is what is necessary to liberate the means of production from the hands of private capital and use them to satisfy the needs of the people and not the bankers. It is what will allow the true reorganization of society and the ultimate dissolving of class differences and antagonisms—so that eventually the state itself will have no further function and can pass into ancient history.