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American Collectivism

Corporatism is to Capitalism as Collectivism is to Socialism.  This might be startling or even very radical to some people, but there really is no practical difference between collectivism and corporatism.  I have heard some people call the current system in the United States “Corporate Communism” because we bail out corporations when our system is supposed to be designed to let the most efficient thrive and the least competitive fail.  That’s a good phrase, and I have used it myself many times, but I believe we need something more accurate, which, by the way, turns out to be even more shocking.

The only real difference between collectivism and corporatism is the platform system from which each develops, and the status of the elite who benefit from it.  In the former Soviet Union, they called their system “socialism” and created methods which benefited only their Communist Party elite.  In the United States today, we call our system “capitalism” and have methods which benefit only the corporate elite.  In both instances, the labor and resources of the many are forcibly taken from them and handed over wholesale to the few, who then use them for their own selfish ends.

The system by which this was accomplished under the former Soviet Union was called collectivism.  A practical barebones definition of which is: The forced taking from a group of people (workers) for the benefit of the state.  In practice, one would hope that the “state” would include the group from which goods and services are taken, but that is not required under this definition.  What happened in the Ukraine under Stalin was a particularly brutal example of collectivism, which actually led to mass starvation of populations forced to serve the state.

The system we use in the United States to accomplish the wholesale taking is called corporatism.  A practical definition of which is: The forced taking from a group of people (taxpayers) for the benefit of corporate stakeholders (a very small group of people). While it would be a stretch to compare today’s corporatist American state with the collectivism of Stalin, we do have people homeless and hungry because of the economic collapse caused by the corporate elite and the government’s inexcusable response in fretting only about how to protect corporate interests in its wake.

In the United States, we have bailed out corporations with no strings attached by forcing the American taxpayers to underwrite (and sometimes just directly assume) the debts, obligations, and risks of private for-profit companies, while leaving the management of these companies unchanged—complete with the promise of private profit—all with no guarantee that any benefits will accrue to the public who saved them.  That may be a slight exaggeration because there was one hoped-for benefit: The hope of preventing another Great Depression, the conditions for which were created by the very private companies we prop up and keep in business at enormous taxpayer expense.

And our propping-up method includes one important factor:  Removing the risks of the “free market” from their capitalist business models.  The gigantic banks are borrowing from the “free market” at much lower rates than they would pay if the United States government were not giving them a backstop.  And don’t forget the literal handout of direct loans from the Fed at criminally low interest rates , the proceeds from which many banks use to purchase Treasuries; they make profit simply off the spread between the rate they pay the taxpayer-sponsored Fed and the rate the taxpayers pay on the national debt.  I want risk-free government-sponsored profit, so how can I get a signature line of credit account at the Fed?

There will be people (most of which are free market fundamentalists, by the way) who will argue that the bailouts were a brutal practicality: To do otherwise would be foolish.  They may be right on that point, but that’s not the point I am arguing.  The need for collectivist measures in order to save a “capitalist” system from itself requires that we question many things, not the least of which is the language we use to describe our system.

We never really had a capitalist system in the United States, and today we have nothing approaching even a rudimentary approximation of the concept.  We have the great masses on their own, living day-to-day under government policies which force them to pay for the excesses of the corporate elite and with an ever-shrinking social safety net.  We have decreased economic opportunity, decreased government services for the same price we were paying before, and we pay direct taxpayer handouts to companies that turn around and use the proceeds to lobby congress to intensify “free market” policies of little-to-no government oversight of their corporate activities (and even the ex post facto legalization of naked fraud).

This is nothing short of collectivism in America:  The many are forced to toil for the benefit of the few.  If a corporation is considered too systemically important to the functioning of our society to allow it to fail, citizens would be justified in owning it so that the risks are spread across the entire system and the perversion of private incentives would be eliminated.  The mechanism of eminent domain could be called upon, if necessary, but it would be just as easy to mop up a failed company by wiping out the stock- and bondholders who risked failure by investing or lending to irresponsible management that drove their companies into the ground; we could just keep the stock in the Treasury and develop a system to appoint a Board of Directors which would be charged with looking out for the public good.

Just because the control of a government-propped up failed corporation remains in private hands does not mean we have capitalism, and just because the citizenry owns a corporation through their government doesn’t mean the system could be called socialism.

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About Gary S. Barkley