Socialism’s all the rage. “We Are All Socialists Now,” Newsweek declares. As the right wing tells it, we’re already living in the U.S.S.A. But what do self-identified socialists (and their progressive friends) have to say about the global economic crisis? In the March 4, 2009, issue, we published Barbara Ehrenreich and Bill Fletcher Jr.’s “Rising to the Occasion” as the opening essay in a forum on “Reimagining Socialism.” TheNation.com will feature new replies to their essay over the coming weeks, fostering what we hope will be a spirited dialogue.
Neoliberal capitalism–whose defining features were Wall Street greed and big business domination of government policy-making–is dead. But what comes next?
Solidarity, equality and freedom have always been the fundamental principles animating the left. It is from these principles that the left has constructed its various visions of a truly democratic, egalitarian social order–i.e., the only type of society that deserves to be called “socialist.” Given the collapse of neoliberalism, shouldn’t the left now advance a case for full-throttle socialism?
While socialism is desirable as a longer-term vision of a just society, it is unrealistic in my view to expect it to take shape today. The problem is that, at this stage in history, we do not know what a socialist economy would look like, nor do we know how to move from our current disintegrating neoliberalism to something approximating socialism. Socialism should be seen as a series of challenges and questions as we push a social justice agenda forward amid the ongoing crisis. It should not be seen as a package of obvious and ready-made answers.
This becomes clear in considering the collapsed financial system. In the short term, there are no longer any viable alternatives to government takeovers of failing banks. But nationalizing the banks, by itself, is neither a panacea nor an advance toward socialism. The fact that former Federal Reserve chair Alan Greenspan now supports nationalization should at least give pause to its enthusiasts on the left. Over the longer term, a nationalized financial system presents daunting problems.
Realistically, such a system will inevitably produce failures and scandals tied to “crony capitalism”–privileged back-dealings with well-connected nonfinancial businesses. In addition, individual financial enterprises, as with all business entities, require micro-management. The government would have to create an incentive system for the managers of the publicly owned banks that would substitute for the very straightforward profit motive that guides managers of private banks. If the nationalized bank managers are not committed to maximizing profits, how should their performance be evaluated?
Resolving such questions would require years of experimentation and fine tuning. In the meantime, taxpayers would pay for the inevitable breakdowns. This, in turn, could be the very thing–perhaps the only thing–that could shift the target of public outrage over the collapse of the financial system off Wall Street and onto the government. At this historical juncture, it is therefore preferable to fight for a new financial regulatory regime with primarily private bank ownership as the means of promoting financial stability and channeling credit to priority areas such as affordable housing and the green economy.