This House Believes Socialism is Dead

There is clearly a difference between the general malaise of those protesting the result of the financial crisis and any form of coherent ideology or manifesto for government. The only people pretending that protesters in Athens or Rome – or the Occupy movement worldwide – are in some meaningful way Socialists are aging class warriors from the seventies.

The Occupy movement may well count many social liberals[i] among its members, and these individuals are almost certainly unhappy about many aspects of modern Capitalism but that doesn’t make Occupy, or the Athens street protestors Socialist.

[i] Occupy Wall Street Website. “Forum Post Liberalism is Not Socialism”. 12 November 2011.

Socialism has frequently been defined by its opponents and as Capitalism has changed so have the political responses made to it. The fact that this iteration of socialism is different should come as no surprise to anyone who has studied the history of Socialism. That earlier generations of Socialists would not have recognised a blog or a Twitter account doesn’t change the fact that they recognise the flaws of Capitalism and reject the widely accepted views of the last twenty years or so that if everything is left to the market then everything will come out just fine.

The world has moved on; it is inconceivable that the protests of the seventies and eighties could be refought again. This issue was settled at the end of the eighties. It wasn’t just the collapse of the Soviet Union, although that no doubt played a major role in shaping the future of socialism in Europe.

In a globalised world the traditional ideas about class and the nature of the labour market have moved on and politics moved on with it.

Socialists may have won many of the arguments over social issues, but arguments on the advantages of free trade, deregulation, the role of the state, the relationship between government and industry all line up firmly in the Capitalist column.

There were some remnants of dogmatic, “classical” socialism left in continental Europe, especially amongst its union movements, which are now collapsing. As Margaret Thatcher put it, “The problem with Socialism is that you will eventually run out of other people’s money.”[i]

[i] Quoted in: James Turk. “Will Sovereign Debt Defaults Bring The End Of Socialism?” Free Gold Money Report. 19 December 2009.

It seems odd to quote the wife of an investment banker commenting about the abuse of other people’s money. What is becoming increasingly clear in critiques both from the left and the right is that we can actually afford a welfare state just fine but not at the same time as allowing a bunch of Wall Street wideboys to play fast and loose with the nation’s money.

In terms of twentieth century ideologies, certainly there have been changes on both sides of the political fence – the rise of moralising neo-cons and a growing far right is nothing for Conservatives to write home about – but the idea that Capitalism now reigns supreme rather than having the guts of it corpulent excesses scattered across the capitals of Europe is simply laughable.

As the high priests of Capital write themselves yet another cheque, an increasing number of people are objecting to the idea that public services should be closed so that the very rich can have their taxes reduced simply won’t wash.

Even the leaders of those European political parties that still call themselves socialist tend to avoid the word. Broadly speaking even the leaders of the left- outside Cuba and Colombia- accept the basic principles of Market economics and recognise that high-tax, high-spend economics simply does not work.

Like it or not borders are now open and the idea that the state can control the flow of capital is a thing of the past. As a result people generally are richer and the idea that there a solid class block is simply no longer relevant to their lives.

Remembering that those  states that dashed after the illusory prize of low taxes and deregulated banking are currently only being propped up by the ratings agencies should give politicians around the world- both radical and conventional- something to think about. However, even the most casual wander around the blogosphere makes clear that the principles of market economics are a long way from being universally agreed.

The intellectual recovery from the assault posed by Thatcherism and Reaganomics has taken time but is certainly taking place and it is increasingly the Right that appears intellectually bankrupt.

Organisations like the New Economics Foundation are approaching old problems in new ways alongside a whole range of popular movements – environmental, youth led, immigrant led and others. The fact that modern socialism has as much to do with the industrial struggles of the seventies as it does with the Spanish Civil War in the thirties should really come as no surprise.

There is clearly a difference between the general malaise of those protesting the result of the financial crisis and any form of coherent ideology or manifesto for government. The only people pretending that protesters in Athens or Rome – or the Occupy movement worldwide – are in some meaningful way Socialists are aging class warriors from the seventies.

The Occupy movement may well count many social liberals[i] among its members, and these individuals are almost certainly unhappy about many aspects of modern Capitalism but that doesn’t make Occupy, or the Athens street protestors Socialist.

[i] Occupy Wall Street Website. “Forum Post Liberalism is Not Socialism”. 12 November 2011.

Socialism has frequently been defined by its opponents and as Capitalism has changed so have the political responses made to it. The fact that this iteration of socialism is different should come as no surprise to anyone who has studied the history of Socialism. That earlier generations of Socialists would not have recognised a blog or a Twitter account doesn’t change the fact that they recognise the flaws of Capitalism and reject the widely accepted views of the last twenty years or so that if everything is left to the market then everything will come out just fine.

The world has moved on; it is inconceivable that the protests of the seventies and eighties could be refought again. This issue was settled at the end of the eighties. It wasn’t just the collapse of the Soviet Union, although that no doubt played a major role in shaping the future of socialism in Europe.

In a globalised world the traditional ideas about class and the nature of the labour market have moved on and politics moved on with it.

Socialists may have won many of the arguments over social issues, but arguments on the advantages of free trade, deregulation, the role of the state, the relationship between government and industry all line up firmly in the Capitalist column.

There were some remnants of dogmatic, “classical” socialism left in continental Europe, especially amongst its union movements, which are now collapsing. As Margaret Thatcher put it, “The problem with Socialism is that you will eventually run out of other people’s money.”[i]

[i] Quoted in: James Turk. “Will Sovereign Debt Defaults Bring The End Of Socialism?” Free Gold Money Report. 19 December 2009.

It seems odd to quote the wife of an investment banker commenting about the abuse of other people’s money. What is becoming increasingly clear in critiques both from the left and the right is that we can actually afford a welfare state just fine but not at the same time as allowing a bunch of Wall Street wideboys to play fast and loose with the nation’s money.

In terms of twentieth century ideologies, certainly there have been changes on both sides of the political fence – the rise of moralising neo-cons and a growing far right is nothing for Conservatives to write home about – but the idea that Capitalism now reigns supreme rather than having the guts of it corpulent excesses scattered across the capitals of Europe is simply laughable.

As the high priests of Capital write themselves yet another cheque, an increasing number of people are objecting to the idea that public services should be closed so that the very rich can have their taxes reduced simply won’t wash.

Even the leaders of those European political parties that still call themselves socialist tend to avoid the word. Broadly speaking even the leaders of the left- outside Cuba and Colombia- accept the basic principles of Market economics and recognise that high-tax, high-spend economics simply does not work.

Like it or not borders are now open and the idea that the state can control the flow of capital is a thing of the past. As a result people generally are richer and the idea that there a solid class block is simply no longer relevant to their lives.

Remembering that those  states that dashed after the illusory prize of low taxes and deregulated banking are currently only being propped up by the ratings agencies should give politicians around the world- both radical and conventional- something to think about. However, even the most casual wander around the blogosphere makes clear that the principles of market economics are a long way from being universally agreed.

The intellectual recovery from the assault posed by Thatcherism and Reaganomics has taken time but is certainly taking place and it is increasingly the Right that appears intellectually bankrupt.

Organisations like the New Economics Foundation are approaching old problems in new ways alongside a whole range of popular movements – environmental, youth led, immigrant led and others. The fact that modern socialism has as much to do with the industrial struggles of the seventies as it does with the Spanish Civil War in the thirties should really come as no surprise.

It should perhaps come as no surprise that the days of standing outside shopping centres and train stations handing out soggy newspapers have passed into the annals of political history – although some still do it.

Equally, trades union are no longer seen as being as central to European Socialism as they once were. However, the militancy seen over the last few years suggest, if anything, that what was a diversified ‘anti-capitalist’ movement is now coalescing around a rather clearer set of goals of which the basics of the anti-capitalism movement are merely a part. In the light of the globalisation of Capitalism, the left is increasingly rediscovering its internationalist roots which were lost to a great extent in the seventies and eighties in national struggles to save industries and jobs.

Trying to pretend that absolutely anyone who disagrees in some way with the architects of the banking bubble can be described as a Socialist is simply taking things too far.

Many people are suffering as a result of austerity measures and it is interesting that in countries with left wing governments the protests support the right and vice versa. This has nothing to do with the emergence of Socialism for the 21^st century – however desperately the Socialists of the 20^th century may wish it.

The closest even the most ardent supporters of the current protests can get is that ‘things should be different’ other than that it tends to be a round of decidedly nineteenth century solutions to nineteenth century problems

In the model of Blair and Clinton, it didn’t matter if the rich got a lot richer, as long as the poor got a bit richer. That model has now been shown not to work and the rather timid new leaders of the left are starting to return to concepts of fairness and equality rather than the rather bland concepts of ‘opportunity’ and ‘choice’.

Europe is increasingly governed by unelected technocrats who seem to think that the opinions of a handful of international bankers are somehow more important than the jobs and livelihoods of millions. This may always have been the case but it tends not to show during times of plenty. Now these latent inequalities are becoming apparent and people are angry.

It is perhaps one of the great ironies of history that one of the aspirations of early nineteenth century Socialists- nationalising the banks- required Capitalists to actually achieve it.

Setting the crises of the last few years against decades of prolonged growth under market capitalism really shows the lie of this idea. There is no doubt that certain sectors over-reached themselves in the latter part of the last decade but to suggest that this is a collapse of the Capitalist model makes about as much sense as the idea that a handful of idealists camped outside St Pauls are the emergence of a new political movement.

Both ideas are preposterous and  only give credence to some of the madder parts of the Right whom would like nothing more than to be able to demonise the protesters and their demands.

It has rarely been so clear that the interests of the few are not the same as those of the vast bulk of either European societies or the world outside it. At a time of rising unemployment, a handful of people who are already fantastically rich continue to pay themselves obscene salaries and bonuses. Of course there is nothing in this that is unusual, it’s just not usually done in so cavalier a fashion.

Although there  is nothing mechanical in the process, most Socialist thinkers have been clear that the popular realisation that there really is a class distinction between what the Occupy protesters refer to as the 1% and the rest of us is an important first step towards establishing Socialism.

Whatever the media and political classes may pretend, Socialism is not – and never was – a single party or policy. It is a process. And that process is being seen on the streets across Europe

As has so often been the case in the history of Socialism, the moment one form is comprehensively beaten, its adherents announce, “Oh that wasn’t really Socialism”. The reality is that Socialism fell with the Berlin Wall it just took a few years for the impact of that to ripple all the way across Europe.

The last stage of that process is now taking place as the economies that continued to believe that social systems would pay for themselves realize that not only is that fantasy not the case, it never was.

It may have taken a crisis in Capitalism to demonstrate that Socialism is a luxury Europe cannot afford but the result is the same anyway.

Global economic forces have rendered socialism powerless. Financial speculation, and investment flows can make or break economies, and the agents who channel these monies want to see countries liberalise, privatise and de-regulate more. This is being shown by the speculative attacks on Eurozone countries where the markets are showing they can force governments to implement tough austerity or even force changes in government without an election as has happened in Greece and Italy where technocrats have taken over as Heads of Government.[1]

These more flexible markets generate higher levels of growth and prosperity, and provide higher returns on investment, encouraging more. Countries which try to resist globalisation and liberal economic markets, as in ‘old Europe’, suffer stagnant growth and higher unemployment as a result. Old socialist-style economic models of tight economic regulation and central planning are unsustainable.

[1] Frankel, Jeffrey, ‘Let European technocrats weave their magic’, The Sydney Morning Herald, 29 November 2011, http://www.smh.com.au/business/world-business/let-european-technocrats-weave-their-magic-20111128-1o37s.html

What investors want more than anything is a stable economy and skilled workforce. Ironically it is the European nations where socialist thought remains strongest (the Nordic Countries) that are consistently ranked as the most competitive economies in the world.[1] Careful state management of the economy, provision of infrastructure and investment in exceptional health and education systems through high taxation have created a dynamic and highly qualified workforce, and attracted huge investment from technologically advanced industries.

[1] World Economic Forum, ‘The Global Competitiveness Report 2011-2012’, http://www3.weforum.org/docs/WEF_GCR_CompetitivenessIndexRanking_2011-12.pdf

A planned economy requires that the planners have the information necessary to allocate resources in the right way.  This is a virtually impossible task.

The world contains trillions of different resources: my labour, iron ore, Hong Kong harbour, pine trees, satellites, car factories – etc.  The number of different ways to use, combine and recombine these resources is unimaginably vast. 

And almost all of them are useless.  For example, it would be a mistake to combine Arnold Schwarzenegger with medical equipment and have him perform brain surgery.  

Centralised planning cannot possibly sort through the myriad of way of arranging resources to arrive at the most efficient usage.   Only a decentralised price system can achieve this via the institution of private property and associated duties and rights.[1]

[1] Boudreaux, Donald J, ‘Information and Prices’.  http://econlib.org/library/Enc/InformationandPrices.html

While there are a vast number of potential combinations of resources, the ones that are useless are mostly obvious and do not need a market to tell us so.  Nobody would attempt to generate power by burning bicycles, for example.

An economy that is organised by prices will be organised by those with enough capital to out-bid all others, not those willing to pay the best price because they can make the most use of the resource