Part I - The Good Old Bad Days
In the 132 years between 1797 and
1929, there was no effective regulation of U.S. economy. No federal agencies
existed to control corruption, fraud and exploitation on the part of the
business class. Even during the Civil War, economic management on a national
level was minimal and war profiteering common. As a result the
country experienced 33 major economic downturns which impacted roughly 60 of
the years in question. These included 22 recessions, 4 depressions, and 7
economic "panics" (bank runs and failures).
Then came the Great
Depression starting with the crash of the New York stock market in 1929. This
soon became a worldwide affair which lasted until the onset of World War II.
Millions were thrown out of work, agricultural production partially collapsed,
and the fear of rebellion and revolution was palpable both in the U.S. and
Europe.
The Great Depression was a real moment of truth for the capitalist West because it suggested to the open-minded that the free market ideology was seriously flawed. Free market practices had brought the economic system to the brink of collapse, and Russia's newly triumphant communists represented serious competition. So the question that had to be answered was how best to modify the capitalist system so as to preserve the position of the ruling elite.
It was President Franklin Delano Roosevelt who came up with an answer, at least for the United States. Through a series of economic and social experiments he crafted the New Deal and promoted the notion of the welfare state. It should be emphasized that this was not socialism. In essence, the New Deal was capitalism with safety nets and subsidies. It meant that some entrepreneurs in areas such as agriculture, defense, and other businesses, actually got money from the government to produce their products.
Part II -- How Quickly We Forget
Essentially, Roosevelt and
the New Deal saved capitalism from itself. Left to those, such as Herbert
Hoover, who could not escape the paradigm of free market ideology, capitalism in
the U.S. may well have followed much of Europe in succumbing to the
revolutionary movements of the right or the left.
It has been 67 years
since the end of WWII and during that time there
have been 11 recessions impacting only 10 years of that timespan. Most of
these recessions have been mild affairs compared to the 33 that came prior to
the onset of the Great Depression, and the welfare safety net has helped the
hardest hit to survive. However, since the 1980s, the U.S. economy has become
more unstable and some of the downturns more severe.
What of the
steadfast adherents to the free market ideology? It would have been nice for the
world if the Great Depression had put an end to them all -- but that was not to be.
For those who can understand things only with the help of rigid and all
inclusive paradigms, ideology is what makes sense of an otherwise chaotic world.
Ideology is also what defines good and evil for such minds. So it stood to
reason that many committed free marketeers would retreat into a temporary
silence and wait for a time to reassert their beliefs.
It did not take
long. In fact, counting from 1939 and the outbreak of the World War II (the
event that finally marked the end of the Great Depression), it took only until
1980 or 41 years. That is two generations which is actually just about right.
Unless purposefully passed on from one generation to the next, both skills and
memories tend to dim and lose their meaning. So it has been with the memories of
what unregulated capitalism cost the nation in the years before the New
Deal.
Why did things change for the worse in 1980? That was the year Ronald Reagan, a
B-grade actor and man of little intelligence, surrounded by neoconservatives and
free marketeer ideologues, was elected president. Working within the context of
generational forgetfulness, he set us all on a path toward deregulation and a
resurgence of the free market ideology. It is to be noted that the country's
most recent recession (2007-2009) has been the worst of the post war era and a
direct result of prior deregulation.
We are still on that path and the
living proof of this fact is that the Republican presidential candidate, Mitt
Romney has just selected Congressman Paul Ryan as his
running mate. Ryan is the Chairman of the Budget Committee in the Republican
controlled House of Representatives, and author of a proposed federal budget
that would slash social spending (and those safety nets) by some $3.3 trillion,
ditch Medicare and Medicaid, while simultaneously cutting taxes for the wealthy.
Ryan is no less than the reincarnation of a free marketeer who wants to recreate
the circumstances that brought us all 33 major economic downturns crowned by the
Great Depression. How quickly people forget.
Part III -- Social Darwinism As Well
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