Socialism and the Current Crisis

...Popular anger will be seen on the streets and at the ballot box...

...China has certainly found another path, with public banks being far more important than the planning department...

...The rescue package staved off the crisis, and nearly all the direct investments have paid off, so that the Treasury and Federal Reserve actually made a profit...

...Norway's State Pension Fund, worth over $230 billion, stands ready to guarantee future social security needs...

...And better pay and conditions for China's producers would boost the circuits of global demand...

...Socialism and the Current Crisis ROBIN BLACKBURN Today, because of the crisis, the relevance of socialism can and must be addressed not simply as a desirable long-term goal but as a question of practical policy, focused on securing jobs, benefits, and social provision...

...The crucial instrument here may well prove to be truly accountable networks of public funds, with the latter the beneficiary of taxes on financial transactions and share levies...

...Real-world shocks do not necessarily lead to progressive, let alone socialist, outcomes...

...The UN Declaration of Human Rights is impressive and registers critical contributions made by Latin American socialists, North American feminists, and Bukharinite communism, but does not mention environmental issues and offers little to stateless persons and aboriginal peoples...

...Whereas Britain has spent all its oil revenues, Norway has saved these windfall gains...

...subprime borrowers and the low earnings of Chinese workers and farmers...

...federal authorities with major assets that included a huge stake in Citigroup, the country's largest bank...

...Of course, Pope was conservative and one-sided in a different way...

...In an article for New Left Review, I calculated how the cost of such a global scheme could be met by modest taxes on airline fuel and international financial transactions...

...The history of socialism in the twentieth century is an extremely mixed bag but nonetheless valuable for that...

...It involves large amounts of public ownership but with the state delegating and ceding much more authority to local public bodies than has been characteristic of social democracy or state socialism...

...The countries of the European Union face an even stiffer fiscal crisis, one that could break apart the Eurozone...

...And who is insisting on these human sacrifices but the high priests of banking and finance whose blow-out created the problem in the first place and who continue to claim heroic levels of "compensation" when they are villains not heroes...

...A weak recovery will mean weak revenues to cover ballooning deficits at both the state and federal level...

...I examined a number of possibilities in these pages ("How to Tax the Rich—and Live Happily Ever After," Summer 2007...

...Therefore, the most appropriate taxes would be taxes on capital, not earned income...

...The regional network of the Federal Reserve should also play a role in the United States, while in Europe the EU authorities need new taxing powers, with large funds earmarked for the European Development Bank...

...The classic French formula that a socialist order would be based on the principle "from each according to their ability, to each according to their need" retains value and goes beyond liberalism or compassionate conservatism...

...Weak recovery will be bad for many but especially so for public sector workers, because their jobs and benefits will be cut first...

...The banking sector is rescued at taxpayers' expense but survives with only a regulatory slap on the wrist...

...In this critical juncture, saving capitalism is likely to require further drastic installments of state intervention...

...The American Declaration of Independence urged that all men were created equal and had the unalienable right to life, liberty, and the pursuit of happiness...

...They would be wrong, of course...

...So here are some brief reflections on the need for values that go beyond the necessary but incomplete watchwords of freedom and human rights...

...Although it is ridiculous to label these desperate—and temporary—measures "socialism," it would be equally absurd not to see that public ownership on this scale presented an element of a distinctly socialist approach, especially given the rapid success of the intervention...

...Another public fund in Norway benefits from the country's bank bailout in the late 1980s...

...and in G.M., the world's largest automobile concern...

...Reconstruction Finance Corporation of the 1930s and 1940s, capable of making huge productive investments in return for commensurate equity holdings—combined with a determined move to the "public utility finance system," embracing public ownership of the large banks, proposed by Hyman Minsky...

...If his doctrine that "true self-love and social are the same" enunciates a strand of socialist philosophy, the colonial revolt asserted a right of rebellion of which there is no hint in Pope...

...I would add a social reform that would give a big boost to productivity, domestic tourism, and home improvements—one month's paid annual holiday for all employees...

...These steps leave robust markets in many commodities, albeit combined with the progressive "decommodification" of education and health care as they become free at the point of use...

...Trying to cure the problem and balance the budget via austerity rather than recovery will provoke an uproar as already seen in Greece...

...This needs to be set at stiff and serious rates...

...A program of adequate scale would obviously involve major investment in clean energy, transport infrastructure, education, research, and health care facilities...

...I have not said much about the philosophical values that would have to imbue a socialist— rather than technocratic—rescue effort...

...There's not a blessing Individuals find, / But some way leans or hearkens to the kind...

...Today's crisis was brought on by ceding to the sovereign claims of financial institutions and markets to be above regulation...

...Even better is the declaration by Marx and Engels in The Communist Manifesto that socialism recognizes that the free development of each requires the free development of all...

...After giving some examples of this I will look at what remains valid and what needs to be changed in classic socialist values...

...These funds are required to satisfy socially responsible criteria when making investments...

...Proposals for a banking levy are already floating around...

...Likewise, financial services would be offered by low cost public agencies without the marketing expense and profit that drive up the cost of commercial finance...

...Fannie Mae, the mortgage giant, was returned to public hands...

...mortgage market instead of limiting assistance only to servicing payments...

...There was also a large—but not large enough—stimulus package, too much in the form of tax cuts and too little in the form of investment in infrastructure and new manufacturing...

...In many ways the program I have outlined is a plan for reconstruction and for installments of economic democracy...

...In Europe the problem is especially tough because the EU has very slender fiscal resources, with its revenue capped at a little over 1 percent of GDP...

...Robin Blackburn teaches at the New School in New York and the University of Essex in the United Kingdom...

...Socialism in the twenty-first century should respect the goals of the 1948 Declaration and subsequent attempts to address racism and minority rights, but socialism itself must address the vital issue of the workings of the global economy in ways that go beyond respect for human rights...

...The classic goals of the French republic— liberty, equality, and fraternity—take us part of the way but are also not specifically socialist...

...The large banks and financial houses show no sign of stepping up investment in the real economy sufficient to ensure a strong recovery, so further intervention will be needed to avoid continuing, indeed worsening, pain...

...Practical goals are essential to sustaining movements and coherent values are needed to evaluate results...

...Ensuring sufficient funds will also require new sources of tax revenue...

...Jobs and benefits will be trashed...

...The second path would be to construct a public utility finance system and mount a new and more ambitious stimulus package...

...The misery caused by weak revenues will lead state authorities to impose the sort of reckless cutbacks to vital programs already seen in California and New Jersey...

...It has been built up from revenue from public assets and enterprises...

...Both the European Union and the United States need new sources of tax revenue and new institutions for channeling and managing public investment—something akin to the U.S...

...security rather than strengthen it...

...Chalmers Johnson and Andrew Bacevich have urged that huge savings can be made in the military budget by withdrawing U.S...

...Polanyi warned that land, labor, and money should not be left to the anarchic sway of the market, but rather be decommodified...

...The Soviet planned economy had some successes, but its appalling costs and final debacle make any repeat of this experiment very unlikely and undesirable...

...It builds on proposals made by such writers as Paul Krugman (who supported nationalization of the banks and a bigger stimulus package in the early months of 2009) and Joseph Stiglitz (whose recent Stiglitz Report fleshes out many notions briefly noted above—but for their theoretical basis see his important but neglected book Socialism...

...I am not at all prescribing a Soviet-style command economy...

...In the weeks and months after September 2008, capitalism as we know it was saved from a near-death experience by massive state intervention that left the U.S...

...This formula is not just a blank check but a distinctly socialist insight into the nature of human flourishing...

...in A.I.G., the largest insurer...

...In my view there should also be a global drive against poverty, led by a universal old age pension and youth grant of one dollar a day...

...Feminism, the peace movements, gay liberation, and the Greens have opened up vital issues without rendering obsolete the classic socialist project or the need for a new political economy not based on heedless accumulation and the socialization of losses...

...Here, Karl Polanyi's insights in The Great Transformation stand the test of time...

...The resulting funds, which would be substantial, could be managed by the regional network in order to make them accountable and effective...

...troops from overseas and closing foreign bases that compromise U.S...

...The most appropriate tax would be a share levy through which every corporation employing more than a hundred people or with a turnover of over $100 million would issue new shares equivalent to 10 percent of its annual profit to the network of state level trust funds...

...It might be thought that such a modest sum could not possibly make a difference...

...The measures I propose are quite moderate, but we can be sure that those who already denounce the timid palliatives taken by Washington as socialism would find them to be rampant Bolshevism...

...In the United States or United Kingdom, the better off would barely notice such a sum, but even in these countries a quarterly check for, say, $90 would still be welcome to poorer youth or pensioners...

...Of course governments everywhere know they have to plan and now do so over longer periods than the five years typically favored by the Soviet Gosplan...

...But when we consider that a billion people live on a dollar a day and two billion on $2 a day, the global pension (and youth grant) would make a big difference to those who are most in need...

...The visible bailout was huge but was greatly exceeded by the invisible bailout whereby banks could borrow money from the Federal Reserve's discount window at only 0.5 percent interest, while lending out that same money at 4 percent or 8 percent or 16 percent...

...These can take two forms: First, and most probably, there is the neoliberal path of state authorities stepping in and using their fiscal powers to guarantee private sector business and profits...

...Nor have I broached the issue of agency...

...His most recent book is Age Shock: How Finance Is Failing Us, Verso, 2007...

...Responsible global governance will need to engage in rigorous resource planning, as classically proposed by Otto Neurath...

...The crisis has confirmed that a continent-wide currency needs an EU-wide tax regime At a time of weak recovery, it is important to find taxes that do not drastically reduce demand and thus inhibit sustained growth...

...It is worth pointing out that states that accumulated future funds or sovereign funds—countries like Australia and Norway—have generally also found it much easier to navigate the current crisis...

...The roots of the current crisis lie in poverty at home and abroad: the poverty of U.S...

...Unfortunately the inadequacy and inap-propriateness of the stimulus means that unemployment is still above 9 percent, and the recovery is weak...

...Indeed, the multitude of crimes and blunders perpetrated in the name of socialism offer great instruction and allow for the possibility of a more chastened and complex approach...

...Moreover, fraternity needs considerable elaboration to distinguish it from communalism and nationalism...

...The socialist aim should be to tame and "socialize" market forces on a national, regional, and global basis—but not to aim at outright suppression of the market...

...A socialist could not aspire to anything less but would have to be sure that the happiness proposed was not conceived in some narrow individual mode but fully embraced Alexander Pope's warning that the "Happiness we justly call / Subsist[s] not in the good of one, but all...

...Indeed, socialists must go further and use ownership as well as regulation to direct a responsible path of accumulation...

...There needs to be massive forgiveness of principal in the U.S...

...Public ownership stakes should not all be retained in the hands of the federal authorities but should rather be distributed to trust funds in each state according to its population...