News & Politics

The U.S. Economy Is Socialism for the Rich

Free market capitalism in the United States is by no means "free." It's time we recognize this and move past the destructive neoliberal agenda.
This post is part of a larger document that was prepared for the Convening on Community Values in May 2008.

In the United States, far-Right Republicans and Democratic liberals alike have sold many people on the notion that the market should be the main force to drive the economy and define social relationships. They maintain that government should stay off people's backs and out of our wallets. They promote rugged individualism and consumerism couched in terms like "personal responsibility," "freedom" and "independence." "Greed is good!" was the mantra of Michael Douglas' character, Gordon Gecko, in the 1980s movie "Wall Street," and those became the words to live by in the '80s and '90s. The philosophy and value of greed was taken to heart by many a corporate CEO, and, over the past three decades, this twisted logic -- underlined by the values of individualism and the culture of consumerism -- has turned back the clock on human development with devastating consequences.

The Chicago Boys' Disaster

Naomi Klein's landmark work The Shock Doctrine: The Rise of Disaster Capitalism summarizes the last 30 years of the neoliberal (aka neoconservative) project. These policies have had a stranglehold on the global economy for decades. But Klein argues persuasively that it is primarily in moments of societal or natural upheaval that capitalist extremists, trained by gurus like Milton Friedman at the University of Chicago, have been most able to impose their political and economic agenda. Even if a natural disaster didn't present itself, Friedman's disciples, like Kissinger, Nixon, Reagan, Bush and Clinton, had no problem wreaking their own violent havoc on vulnerable countries.

By now, the mantra of the "Chicago Boys" has become all too familiar: Eliminate regulations, cut taxes, slash public spending, privatize public services, etc. Their policies dominated the global political landscape, unraveling the gains of centuries of social movements, while a new global elite has been enriched beyond imagination. A handful of people have become super-wealthy, and megacorporations have become even bigger and more powerful.

"Free trade" policies and the loan sharks that have run the World Bank and the International Monetary Fund have destroyed national economies. Millions of people have been forced into poverty, and entire communities have been displaced from the countryside. Multinationals and northern industrial nations siphon wealth from the developing countries. Those that migrate from their homelands to make a living in the north are greeted with walls, bullets and racism. In the United States, millions are homeless, unemployed, in prison, or one paycheck away from bankruptcy. The social wage has been beaten down to unsustainable levels -- real wages are lower now than they were 30 years ago. Yet the costs of fuel and raw materials have skyrocketed, causing worldwide food shortages. We have wiped out public budgets by eliminating taxes on those who profit most. Vital public infrastructure and services cannot meet basic needs like maintaining the levees in New Orleans and reconstructing the Gulf Coast, or controlling the devastating blazes in Southern California. Yet the majority of our federal budget sponsors the wars and occupation in the Middle East, the warehousing of generations of the poor and people of color, the witch hunt of immigrant refugees of U.S. foreign and trade policy, and the growing national debt.

Capitalism unchecked has given us Big Oil, Blood Diamonds, Enron and Halliburton. They have given us Afghanistan, Iraq, Guantanamo and the Wall of Death on the U.S.-Mexico border.

The rise of the neoliberal regime has occurred in the same era that we are experiencing the decline of the economic and political dominance of the United States empire. Scholar Immanuel Wallerstein observes that economically the United States has been losing its top economic position since the 1970s as other regional economies have expanded. The country is staring economic collapse in the face, driven by the bursting of the housing bubble. This bust is enough to make even billionaire George Soros nervous, arguing that there is a profound difference between this downturn and other recent ones:
... the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.
Soros argues that with the deregulation of the financial industry, many of the mechanisms put in place to withstand a significant bust cycle have been eliminated. The Federal Reserve and the government may no longer have the tools to stave off a recession.

Today, the United States is the leader in a number of shameful statistics: the highest percentage and total numbers of its population in prison, the highest consumption of the world's natural resources, the only industrialized nation without universal health care, the biggest military budget. It seems that the greatest product that the United States is capable of producing today is war, and this makes us a very dangerous country. Our primary role in the global community is as a mercenary army in the interests of big business.

The hyper-consumerist culture of the United States has led to predatory lending and credit schemes that have put millions of people on the brink of bankruptcy and the sacking of the Global South for exploited, underpaid workers and natural resources to make cheap products. The U.S. population represents 6 percent of the world's population, yet consumes 30 percent of the world's resources and produces the greatest amount of carbon pollution.

And while we're at it, let's just be clear that the free market capitalism we have seen in the United States is by no means "free." In reality, the U.S. economy functions as a form of socialism for the rich. Taxpayers have bailed out the savings and loan industry, banks and airlines. We finance at least two federal social security programs: the one to which most of us contribute through each paycheck, and the one for United Airlines employees (since that company no longer pays its pension obligations). We give huge government contracts to the prison and military industrial complexes, and increasingly to private education and health care companies.

The "land of the free" is also one of only two countries in the world building walls between themselves and their neighbors (the other being Israel). This fortress mentality is a telling sign of an empire in decline. At a time when the U.S. population needs to be reaching out to the rest of the world more than ever, our government leaders are circling the wagons.

The Chicago Boys and their friends have made a terrible mess, and we haven't even touched on the destruction caused by unchecked industrialization, gutted environmental regulations, and the addiction to fossil fuels that have pushed life on the planet to the edge of oblivion. Fixing this disaster will take generations and a fundamental shift in the values and premises on which we base our politics.

A Cultural Shift: Reintroducing Community Values

It's clear that a profound change in the U.S. political direction is necessary. A fundamental shift in the political and economic direction of the country will require a cultural shift and a redefinition of social and political relationships. We need to challenge the values of individualism and competition and the culture of consumerism and reintroduce key values in defining our economic and social relationships -- values such as reciprocity, community, cooperation and solidarity. We need to affirm that as a society we share collective and community responsibilities. We must confront the underlying premises that have sustained the neoliberal/neoconservative agenda -- namely that taxes, unions and government are all bad. As Donald Cohen has outlined, we need to assert that taxes, organized labor, regulations and government are in fact necessary to keep the greedy in check and to achieve a just and democratic society.

A significant political and cultural shift in the United States will also require us to redefine the "American Dream." The dream is not about a motivated individual being able to strike it rich. The dream that would benefit most Americans (including Latin Americans and Canadians) would be closer to the dream outlined by Dr. Martin Luther King Jr. The dream should include racial, gender and queer liberation, meeting the basic needs of everyone in the community, and achieving peace in our local and global community.
In the Story of Stuff, Annie Leonard beautifully explains the cycle of production and consumption that is driving the planet toward destruction. She describes how the values of consumerism were engineered during the 1950s and have become part of our social DNA today. Consumerism was designed as a deliberate political strategy, and must be challenged by a deliberate political strategy. The cycle of consumption is sustained by externalizing costs by exploiting communities for cheap raw materials and labor. Challenging this model will mean supporting the struggles of exploited and displaced communities and their right to organize.

Shifting our values will allow us to make bold policy changes that are absolutely necessary.

Read Guerrero's recommendations for bold policy change (including the creation of public wealth, building sustainable economies and more), or download the entire document.
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