The Early Days of a Better Nation

Monday, September 08, 2008

Comrade Bush

Picture credit: The White House.

President George H. W. Bush carried out what was then biggest single nationalization in history with the Savings and Loan rescue. President George W. Bush has now effectively nationalised even more property than his illustrious father.

This was not, of course, the result of any excess of leftist zeal:
“Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe,” said Treasury Secretary Henry Paulson Jr., at a Washington press conference. “A failure would be harmful to economic growth and job creation. That is why we have taken these actions today.”

This explanation irresistibly reminds me of the words of Frederick Engels:
The period of industrial high pressure, with its unbounded inflation of credit, not less than the crash itself, by the collapse of great capitalist establishments, tends to bring about that form of the socialization of great masses of the means of production which we meet with in the different kinds of joint-stock companies. Many of these means of production and of distribution are, from the outset, so colossal that, like the railways, they exclude all other forms of capitalistic expansion. At a further stage of evolution, this form also becomes insufficient. [...]

In the trusts, freedom of competition changes into its very opposite — into monopoly; and the production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society. Certainly, this is so far still to the benefit and advantage of the capitalists. But, in this case, the exploitation is so palpable, that it must break down. No nation will put up with production conducted by trusts, with so barefaced an exploitation of the community by a small band of dividend-mongers.

In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. [...]

The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.


Well, yes, but they started as government agencies and were privatized (under Reagan?); Krugman talks about "deprivatization". Also, these aren't industrial trusts. Does this analysis really apply to the US housing market?

Not directly, agreed, but the general point about socialization remains apposite. The banks and mortagage lenders have become 'too big to fail'. Of course, since that was written there's a lot of literature in a similar vein about finance capital, and about the turn to finance in recent decades.

I think a fair case can be made, though, that FNMA and FHLMC started as socialist agencies, and are, as it were, returning to their roots. I suppose if their privatization was regulatory capture, their deprivitization is regulatory recapture. The capitalists--at least in the sense of people who actually own the means of production--who seem to be benefiting from this are mostly Chinese

Very astute observation. Another book which has described and prophesied the present financial maladies well is this book(let) from Austrian school economist Richard Salsman:

It's not a great book by any means, but it does a good job of summing up the creeping nationalization of the financial industry in the US, from the banks of the 1800s until today.

Running a Libertarian (L.P.) simulation for a moment: State actions, particularly regulations that discourage smaller, more efficient, competitors to large actors, tend to create monopolies that then are nationalised because they are too big to fail. Conspiracy? Probably not, but likely an unfocussed but real perception of the State's eventual interests on the part of its human actors.

Returning to my own persona, I'll point out that accepting a "get out of bankruptcy much closer to free than otherwise" card from the State, any limited-liability entity is, to an even greater extent than the Property to which Ben Franklin referred, a '...Creature* of Society, and is subject to the Calls of that Society, whenever its Necessities shall require it, even to its last Farthing....'

*The term "Creation" or "Construct" is more appropriate for modern ears, though the original's invocation of Frankenstein's Creature's is neither irrelevant nor unwelcome---you may pick Boris Karloff, Robert DeNiro, Peter Boyle, Glenn Strange...---and the Black Lagoon beckons as well.

Welcome to left libertarianism, fnord! For which I refer you to Mutualist Militants in the sidebar.

I don't think privatization is regulatory capture. That term should be reserved for the takeover of a regulatory agency by the supposedly regulated, while the regulator remains in place posing as a regulator, rather than being abolished.

The United States Government itself is a better candidate for outing as a case of regulatory capture.

You're right, Del. Another misused economics term is 'moral hazard', which The Independent's editorial pages seem to use in the completely opposite sense to how it's used on the paper's own business pages (and everywhere else).

The materials used in this Christian Louboutin
are of superior quality making it the most durable of all kinds. The Christian Louboutin


had been designed to resist harsh weather conditions. Christian Louboutin Boots
were initially meant for people. The Christian Louboutin Sandals
has also become famous.1

Post a Comment