In an otherwise excellent article debunking Bush as a phony socialist [as he is being dubbed on right-wing talk radio], Joel Wendland writes the following theses that I think deserve "a deeper look."
"A socialist program for resolving the crisis in the banking industry would possibly have begun by using the TARP funds to gain public ownership and oversight of the banks. It would not have been a handout.
Further, the socialist approach would have originated with the interest of working families. If indeed the TARP project had been a socialist one, it would have been embedded in, controlled by, and enacted with working people's interests at its center. The guiding principle would be the socialization of benefits and profit."
A lot of virtue, perhaps, but much sin and confusion too, can be masked by the phrase "public ownership and oversight of the banks." In fact the TARP funds have been used to indeed "gain public ownership" of decisive shares of some of the largest US financial corporations. And the right of oversight was indeed given to the US Treasury Department by Congress. But either through inclination, interest, or a simple lack of available human, organizational and technical resources, or a combination of all three, oversight has been far less effective than expected or hoped, or required. Improvements in credit markets have been very slow, and conditions in the real economy are rapidly deteriorating.
No doubt if a socialist government were to assume power on the 20th, instead of Obama's, the same challenge of resources to manage and direct the TARP public investment in the financial industry would have to be met. How would such a government distinguish itself? Well, if only a class disinclination to nationalization or public control, or demonstrable personal conflict of interest stand in the way, then Wendland's formulation is home free:
Wendland says "it would have been embedded in, controlled by, and enacted with working people's interests at its center. The guiding principle would be the socialization of benefits and profit."
However, I think there are real institutional and control challenges in restructuring and re-directing investment in ways that serve the broadest and most sustainable recovery. Wendland's expression does not seem at all sufficient and begs more questions, both immediate and profound, than it answers.
First of all, who gets excluded from the "center"? What is the "center"?
Second, here are the possible interpretations of the sentence: "The guiding principle would be the socialization of benefits and profit" that occur to me, and its likely I have missed the one intended and others as well.
1. Declare public the "benefits" of a TARP investment (what are the benefits?), as well as capture all "profits" to the Treasury Department. (To be used to do what?)
2. Assume the "benefits" of a TARP investment are just narrowly construed to be "jobs" – Jobs doing what, in an investment bank? In the overall economy? What principle will guide the determination of wages and salaries? What "profit" gets socialized if wages are correct?
3. Assume the benefit of a TARP investment are just narrowly construed to be "financial stability." What useful purposes do finance profits, and thus financial markets, serve, if any? Despite promising "open source" innovation trends, much innovation requires both competition and a means of funding a wide range of risk in its actual deployment, with appropriately high rewards for success. How to make "stability" more profitable than instability? How to reduce risk, but potentially reduce innovation and net growth as well? Can a "slower, more stable" growth prevail in a world without a global "slower growth," or with uneven rates of growth bent toward bringing lower-income countries up relative to the whole?
4. Assume the benefit from a TARP investment to be a public good, like universal, single-payer health care – does it still need to be profitable? How about a new United States Car and Transportation Company, or network of Companies – should it be profitable? How profitable? Conversely, If a TARP investment competes with private goods, in either domestic or international trade, what are the terms of trade?
5. Assume all profits on public wealth to be purchasable in shares by the public at discounts calculated to distribute assets proportional to productivity by vocation and avocation, from each according to his ability, to each according to his work – and ability to navigate risk successfully (the profits). The big change here is in the human composition of capital, considered narrowly in terms of shares of ownership, or broadly incorporating human capital and creativity internationally.
I think the socialist guiding principles for minimum demands in this democratic struggle need to be more closely, immediately drawn, and made easily understandable in straightforward language:
1. TARP Investments must be subordinated to the Stimulus Program. The Stimulus Program will set both broad and specific investment targets for public funds and mandates. The "benefits" of TARP investments must be in harmony with the Stimulus Program.
2. The most important objectives of the Stimulus Program are a) restoration of full employment, and b) enactment of universal health coverage, while c) lessening global economic inequality, instability and tendencies towards war. Overall this will mean for some time a smaller investment relative to consumption based economy, more demand, than supply, oriented. It may mean a slower, though more sustainable growth in the US economy. The cheap oil, easy credit, bubble days are gone beyond the horizon. In addition, the values expressed in cleaner, safer, greener, more peaceful environments, the advancement of sports, culture and science, the improvement of cooperation, general health and well-being in communities will have to consume greater space in the standard-of-living indexes alongside standard commodity consumption metrics.
3. Both 2.a) and 2.b) above require grass roots organization and action approaches of a kind communists, socialists and radical social-democrats are justly famous for developing. Neither can be achieved without such approaches. It is here that the distinctions between phony socialists and real ones can be made manifest. The phony socialists not only include Bush, of course, but also the more liberal (than Bush) representatives of the Obama Economic team, who are endorsing socialist-like public interventions in the economy, but whose class interests and training compromise their ability to carry through on the key tasks of recovery.
The full employment task compels government to set an absolute floor on poverty, and to become an employer of last resort, even at the expense of private prerogatives. The Obama National Service plans coincide with the immediate foundation for mobilization for full employment. An multi-million agitational sign-up "Application for Employment In National Service," for example, addressed to the Obama Team and the incoming Congress would be a worthy organizing tool, around which American youth and seniors, unemployed and underemployed, and those simply dedicated to public service to their country, could volunteer and help shape the vision of a diverse and many sided national service program. Similar tactics for a serious single-payer national health care campaign can also garner immediate mass support and participation. Both campaigns bear heavily on ways in which the practical impact of socialist leadership on the overall recovery effort can be measured and judged by the public, and especially by working people.
4. 2.c) requires a vigilant peace movement with much broader internationalist ties and coordination that currently exists.
