by Don Mayer
March 23, 2019
Republicans are in attack mode against some Democratic candidates for election in 2020. By calling them “socialist,” they hope to brand them as less-than-fully-American, not “freedom loving” enough, and thus unelectable.
But the contrasting concept to “socialist” or “socialism” is “capitalism,” and the public “discussion” of all this will surely be full of deliberately misleading rhetoric. Because our First Amendment protects political speech to the max, a lot of the mindless squawking about “Democrat socialism” you will hear is “perfectly legal.” But beware: there are many kinds of socialism, and many kinds of capitalism, and it’s important to know the differences as we head toward another pre-election 24/7 cable news talking heads apocalypse.
First, understand that there are many varieties of capitalism. Steve Pearlstein captured this perfectly in the run up to the Romney-Obama election, with its “discussion” of takers and makers and “the 1%.”
Likewise, there are many varieties of socialism, not only exemplified by the communism of the Union of Soviet Socialist Republics (USSR) with whom the United States waged a Cold War from 1946 to 1991. Some of these include communism, market socialism, Christian Socialism, eco-Socialism, and socialist anarchism. To quote the Philosophy Terms website, “Although many people think that socialism and capitalism are completely incompatible systems, the fact is that most developed nations operate on a combination of both. For example, nearly every major city in the developed world has some system of government-run public transportation, such as bus lines or a subway. There are also laws against child labor, unsafe workplaces, and reckless pollution, and government programs that help provide education, food, and healthcare to the poor. All of these are socialist ideas that exist in relative harmony with capitalist economies. Capitalism vs. socialism is a question of balance, not an “either/or” question.”
https://philosophyterms.com/socialism/
As the Pearlstein piece on variants of capitalism tells us, the kind of capitalism we have is largely a function of our politics. That is, what kind of capitalism we have in this country is up to us. When I first started teaching business law at Western Carolina University (Go Catamounts!) our wonderful economics professors (thank you Professors John Wade and Duncan Tye) would tell students that we had “mixed capitalism” or “regulated capitalism.” But that was in the 1980s, and much of “government regulation” has been consistently attacked since as a violation of the “freedom” of businesses to innovate without government “interference.” (We saw how well that worked in the innovations of credit default swaps and synthetic residential backed mortgage securities in the lead up to the financial meltdown of 2008.)
Today’s G.O.P. and its donors seem mostly to believe in a more radical form of capitalism, once known as laissez-faire capitalism. Lower (or no) taxes and less (or no) regulation are de rigeur, regardless of the social or environmental consequences. Here’s some essential (albeit left-leaning) perspective on G.O.P. “freedom-talk” from Thom Hartmann.
Here, freedom is essentially the freedom to do what you want with your property: government taxation is seen as theft, pure and simple, and unions exercising collective bargaining power are sometimes depicted as robbers of the capitalist owners’ assets, and “interference” with what Marjorie Kelly has called the “divine right of capital.”
This is the by-now familiar tension in our public policy between absolute freedom and absolute equality. See James O’Toole’s comprehensive look at operative public policy values in “The Executive’s Compass,” advice to corporate CEOs who actually want to see a balance between the two.
https://global.oup.com/academic/product/the-executives-compass-9780195096446?cc=us&lang=en&
The great virtue of capitalism is that entrepreneurs and visionaries in our society can create something new, taking a risk with their own money or money volunteered by friends and/or stockholders, and earn great rewards. People celebrate innovators like Steve Jobs for a reason: he might have failed, but in so doing, he would not take down others with him, unless they had voluntarily offered their money in exchange for shares. In short, we have no problem with entrepreneurial “capitalists” who leverage their skills and ingenuity to get fabulously rich; they have done so while taking the risk that they might lose all of their time and money invested, and they have done so while creating jobs for others, better products and services for society, and harming no one in the process.
Currently, however, the G.O.P. politicians adhere to the more extreme versions of unregulated capitalism; worse, they are almost uniformly loyal to a President who, as a business person, consistently broke or bent the rules of the capitalist game to enrich himself and defraud others. Milton Friedman, the Nobel Prize winning author of Capitalism and Freedom, noted in his now-famous NY Times article from 1970 that leaders in a public company should maximize profits for their shareholders without “deception or fraud.” As he put it,
“. . .there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits as long as it stays within the rules of the game, which is to say, engages in open and free competition without deception and fraud.”[1]
There are too many articles to cite here that demonstrate that Trump has consistently flaunted those basic capitalist principles. He has deceived and been fraudulent with countless people, including employees, suppliers, tenants, and customers.
One such article is from the New Yorker, dating from October 2018, in which Adam Davidson notes that “. . . .many of the Trump Organization’s international deals also bore the hallmarks of financial fraud, including money laundering, deceptive borrowing, outright lying to investors, and other potential crimes.”
Any way you look at it, Trump’s business practices did not follow the basic tenets of capitalism: he took the reward while others paid the price for his “success;” again, he has deceived and been fraudulent with countless people, including employees, suppliers, tenants, and customers. Accordingly, he has been sued frequently, and frequently lost.
Nor did Trump start from scratch, as our capitalist entrepreneur heroes have: he had a $200,000 annual allowance from the time he was 3 years old, and if he had simply invested all the money he inherited from Fred Trump, his net worth would have been at least 2 billion dollars today.
His actual net worth today is a subject of much speculation, and is probably less than he claims.
In any case, regardless of his total wealth, he is hardly a role model for the virtuous capitalist, and his “freedom” to defraud and deceive others is surely not more “American” and “freedom loving” than the “socialists” who would embrace FDR’s “four freedoms.”
https://www.history.com/this-day-in-history/franklin-d-roosevelt-speaks-of-four-freedoms
The ugly irony of G.O.P.name-calling Democratic candidates as “socialists” becomes clear as they follow a “leader” who, in Milton Friedman’s terms, is no capitalist, but in Michael Cohen’s (also ironic) testimony and in the history of his business dealings, a cheat and a liar. All of our political parties, and you the voting citizen, must understand that the benefits of a capitalist system are not built on lying and cheating, and that elements of “socialism” are already serving the public good in many industrial democracies today.
[1] Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” New York Times Magazine, Sept. 13, 1970.