As the national conversation begins about what needs to be done to "reform" the abuses of our broken financial structures, we can be sure that much of the rhetoric will attempt to perpetuate one of the hardest of the hard core myths that inform the American experience - that the ideology of capitalism is best left unfettered so that the genius of the free enterprise system will not be encumbered as it restores prosperity to the nation. That argument, this time, will be challenged by many of those who in the past staunchly defended it, because the enormous scope and transparency of corporate America's need for a bailout by the rest of us has exposed a previously well obscured truth: American capitalism routinely depends on the protective cocoon of socialism.
If that statement seems counter-intuitive, it is because the word "socialism" has had its functional meaning vigorously distorted over the history of America. American society has always recognized the reality that some basic community needs could never be met within the parameters of simple capitalism. Free enterprise was never going to electrify rural areas, deliver the mail, set up fire departments, provide for law enforcement, defend the nation, or even, for that matter, pay the salaries of those elected to write laws, execute the legal mandates, and adjudicate the conflicts of the individuals who live within the community dependent on that governmental system. Seen in this light, "socialism" is an elemental component of American government, and capitalism is merely one of the contentious institutions under the umbrella of American government whose interests must be protected even while its excesses must be restrained.
A lesson of the current crisis is that capitalism, as a primary societal engine, is worse than inadequate. Capitalism has no conscience, and no concern for societal well-being. The quest for profit, as has been amply demonstrated in recent years, is indifferent to norms of civilized behavior, which in many other cultural institutions, are taken for granted or at least protected by law and custom. When the financial community, with apocalyptic fervor, threatened the social stability of the American experience, not to mention the international community, the only solution was to infuse public funds into private enterprise. The only solution, that is, was to use socialism, concern for the many at whatever cost, to redress a failure of capitalism.
Some will attempt to portray the present financial crisis as an anomaly, but in fact it exposes a systemic defect, an inevitable consequence of a deliberate and successful effort by corporate America over the years to protect capitalism by changing its nature, specifically, by selectively minimizing or eliminating risk. The "financial instruments" that recently brought us to the brink of a worldwide depression were designed to minimize or eliminate the risk to private investors. And it worked. The combination of institutions "too big to fail" and investment entities with "no skin in the game," entities which took real dollars as "profits" from transactions based on imaginary "assets," together transferred the consequence of private malfeasance to the public, to us. Predictably, the financial community shows neither instruction nor remorse. Most of the individual players salted away their short-term winnings long before the house of cards collapsed, and resistance to the structural changes such as meaningful oversight and regulation are fiercely opposed by corporate America.
None of this should have come as a surprise. Ideologically, capitalism is a system designed to reward risk takers in an environment of free enterprise where robust competition keeps everyone honest, but in practice, and for a long time, corporate America has done all that it could to employ the mechanisms of government to mitigate risk and, when possible, to remove competition. In the recent health debate, for example, the "socialist" concern that the quality of health care should not be in direct proportion to the wealth of the patient was scarcely addressed. The single payer model, which would directly have challenged the exorbitant profits of the "free enterprise" health industry was conceded before the debate began. The "public option" was never seriously advocated by the administration, and in the end, health care "reform" included protecting the pharmaceutical industry from competition with Canada, and provided, gratis, a universal clientele to the nation's health insurers. So much for "free enterprise."
Of course, in the almost half century since President Eisenhower gave his iconic warning to beware the liaison formed by the "military industrial complex," even the casual observer could scarcely deny the appropriateness of his vision. After decades of non-existent cost controls, no-bid contracts, and the flagrant abuses of contractors in the pursuit of profits sans competition or financial risk, Americans are more likely to feel shame than pride for this corner of the "free enterprise" system. It's hard to argue that the mendacity that has characterized the behavior of military contractors would have, or could have, advanced to its present extraordinary level without the protective cover of the socialistic decision that whatever the cost Americans need to be defended.
Those who think that "corporate welfare" is simply a rhetorical locution would do well to read David Cay Johnston's Free Lunch, a comprehensive and persuasive analysis of the ways in which corporate America's expensive and multitudinous army of professional lobbyists inundate the halls of government at all levels to insure that capitalism does not have to succeed while enduring the risk and competition it would face without the enabling legislation of sympathetic legislators, and executives, and most recently, the imprimatur of Supreme Court of the United States in declaring that corporations deserved the full protections offered by the government to its biologically human constituents.
In sum, the fact that politicians are afraid to use the word does not alter the fact that "socialism" is an honored and necessary component of the American experience, and always has been.