Obama's Socialism Assessed

Richard Eskow offers a sensible assessment of the alleged socialism of President Obama at AlterNet. Eskow's analysis highlights the failure to comprehend history and economic terminology that is on display in popular expressions by those who will say anything to rally those who lament the election of America's first Black President (see "The Joker," for example).

The Republican presidential candidates keep calling Barack Obama a socialist. If they're trying to invoke the Red Menace like Republicans of past campaigns, they're a generation too late. Americans between the ages of 19 and 29 have no memory of the Cold War. Today they have a more positive impression of socialism than they do of capitalism.

The word “socialism” can be applied to a range of economic models, from Cuban collectivism to the Western European social democracies that are the home of some of the world's most successful corporations.

Read the rest at "Why Obama's the Least Socialistic President in Modern History (And That's a Shame)"

One wonders what those who deem President Obama a Socialist, despite the evidence, might have said a century ago after hearing President Roosevelt speak (see "Malefactors of Great Wealth").

Factory Wages and Stock Value

What would Henry Ford do?

Robert Reich poses this question in "Stock Tip: Be Worried. Workers are Consumers."

Meanwhile, students in the Freshman seminar at UC Berkeley with Professor J. Bradford DeLong are reading, among many other texts, an 1821 letter by Jean-Baptiste Say that suggests consumers are producers:

All those who, since Adam Smith, have turned their attention to Political Economy, agree that in reality we do not buy articles of consumption with money, the circulating medium with which we pay for them. We must in the first instance have bought this money itself by the sale of our produce.

To a proprietor of a mine, the silver money is a produce with which he buys what he has occasion for. To all those through whose hands this silver afterwards passes, it is only the price of the produce which they themselves have raised by means of their property in land, their capitals, or their industry. In selling them they in the first place exchange them for money, and afterwards they exchange the money for articles of consumption. It is therefore really and absolutely with their produce that they make their purchases: therefore it is impossible for them to purchase any articles whatever, to a greater amount than those they have produced, either by themselves or through the means of their capital or their land.
Letter 1, "Letters to Malthus on Political Economy and Stagnation of Commerce"

"Malefactors of Great Wealth"

 Before the Pilgrims landed at Plymouth, they spent several weeks exploring Cape Cod. On this day in 1907, President Theodore Roosevelt visited Provincetown, Massachusetts to set the cornerstone of the Pilgrim Monument for a 252 foot tower that was completed three years later. Upon this occasion, Roosevelt gave a speech in which he first traced a view of the significance of the Pilgrims, and then proceeded to defend his anti-Trust policies. I am Provincetown.com has a detailed timeline of the process of planning and building the monument, including a description of Roosevelt's arrival.

Unlike my post three weeks ago in which I pasted the entirety of Alexander Hamilton's "Report on the Public Credit" into this blog, I am here pasting a few short excerpts. Using Roosevelt's own words, I aim to offer through the rhetoric of his speech a context for his bullying of corporate interests who believe the Roosevelt administration and Congress overstepped its Constitutional bounds in the regulations they put forth.

The text of President Roosevelt's speech was published by the Government Printing Office and is available online through the Internet Archive.

He eloquently expressed a basic element of the craft of history: judging people of the past by their own standards.

... there is nothing easier than to belittle the great men of the past by dwelling only on the points where they come short of the universally recognized standards of the present. Men must be judged with reference to the age in which they dwell, and the work they have to do. (6)
Address of President Roosevelt on the occasion of the laying of the corner stone of the Pilgrim Memorial Monument (1907)

The President wisely observed a shift from standing for oneself to standing for others.

That liberty of conscience which [the Pilgrim] demanded for himself, we now realize must be as freely accorded to others as it is resolutely insisted upon for ourselves. (7-8)

He drew from the Pilgrims and from the Puritans who followed in their wake a lesson of duty: doing good.

There is no use in our coming here to pay homage to the men who founded this nation unless we first of all come in the spirit of trying to do our work to-day as they did their work in the yesterdays that have vanished. The problems shift from generation to generation, but the spirit in which they must be approached, if they are to be successfully solved, remains ever the same. The Puritan tamed the wilderness, and built up a free government on the stump-dotted clearings amid the primeval forest. His descendants must try to shape the life of our complex industrial civilization by new devices, by new methods, so as to achieve in the end the same results of justice and fair dealing toward all. (17-18)

Roosevelt asserted that the Puritans were not "laissez-faire theorist[s]" (19). They sought regulation of conduct that violated the public interest.

The spirit of the Puritan was a spirit which never shrank from regulation of conduct if such regulation was necessary for the public weal; and this is the spirit which we must show to-day whenever it is necessary. (20-21)

He appealed to common sense as he delved into thorny issues of federalism in the regulation of corporate activity.

The utterly changed conditions of our national life necessitate changes in certain of our laws, of our governmental methods. Our federal system of government is based upon the theory of leaving to each community, to each State, the control over those things which affect only its own members and which the people of the locality themselves can best grapple with, while providing for national regulation in those matters which necessarily affect the nation as a whole. It seems to me that such questions as national sovereignty and state's rights need to be treated not empirically or academically, but from the standpoint of the interests of the people as a whole. National sovereignty is to be upheld in so far as it means the  sovereignty of the people used for the real and ultimate good of the people; and state's rights are to be upheld in so far as they mean the people's rights. Especially is this true in dealing with the relations of the people as a whole to the great corporations which are the distinguishing feature of modern business conditions.

Experience has shown that it is necessary to exercise a far more efficient control than at present over the business use of those vast fortunes, chiefly corporate, which are used (as under modern conditions they almost invariably are) in interstate business. When the Constitution was created none of the conditions of modern business existed. They are wholly new and we must create new agencies to deal effectively with them. There is no objection in the minds of this people to any man's earning any amount of money if he does it honestly and fairly, if he gets it as the result of special skill and enterprise, as a reward of ample service actually rendered. But there is a growing determination that no man shall amass a great fortune by special privilege, by chicanery and wrongdoing, so far as it is in the power of legislation to prevent; and that a
fortune, however amassed, shall not have a business use that is antisocial. (21-25)

The core of his criticism of corporations, and his expressions of resolve to stay the course through the balance of his years as President, are found in two key paragraphs. The second and longer of these two is the source of my title, an oft-remembered phrase. Brief passages from this paragraph are commonly quoted in editorials and essays. Some of the passages left out of such editorials, however, make Roosevelt seem quite radical by today's standards. The paragraph deserves to be read as a whole. Roosevelt is quite clear that he views the aim of government to promote the interests of virtuous business and to prosecute to the full extent of the law (and to legislate in order to facilitate such prosecution) practices which are not virtuous.

In the last six years we have shown that there is no individual and no corporation so powerful that he or it stands above the possibility of punishment under the law. Our aim is to try to do something effective; our purpose is to stamp out the evil; we shall seek to find the most effective device for this purpose; and we shall then use it, whether the device can be found in existing law or must be supplied by legislation. Moreover, when we thus take action against the wealth which works iniquity, we are acting in the interest of every man of property who acts decently and fairly by his fellows; and we are strengthening the hands of those who propose fearlessly to defend property against all unjust attacks. No individual, no corporation, obeying the law has anything to fear from this Administration. (44-46)

During the present trouble with the stock market I have, of course, received countless requests and suggestions, public and private, that I should say or do something to ease the situation, There is a world-wide financial disturbance; it is felt in the bourses of Paris and Berlin; and British consols are lower than for a generation, while British railway securities have also depreciated. On the New York Stock Exchange the disturbance has been peculiarly severe. Most of it I believe to be due to matters not peculiar to the United States, and most of the remainder to matters wholly unconnected with any governmental action; but it may well be that the determination of the Government (in which, gentlemen, it will not waver), to punish certain malefactors of great wealth, has been responsible for something of the trouble; at least to the extent of having caused these men to combine to bring about as much financial stress as possible, in order to discredit the policy of the Government and thereby secure a reversal of that policy, so that they may enjoy unmolested the fruits of their own evil-doing. That they have misled many good people into believing that there should be such reversal of policy is possible. If so I am sorry; but it will not alter my attitude. Once for all let me say that so far as I am concerned, and for the eighteen months of my Presidency that remain, there will be no change in the policy we have steadily pursued, no let up in the effort to secure the honest observance of the law; for I regard this contest as one to determine who shall rule this free country — the people through their governmental agents or a few ruthless and domineering men, whose wealth makes them peculiarly formidable, because they hide behind the breastworks of corporate organization. I wish there to be no mistake on this point; it is idle to ask me not to prosecute criminals, rich or poor. But I desire no less emphatically to have it understood that we have sanctioned and will sanction no action of a indictive type, and above all no action which shall inflict great and unmerited suffering upon innocent stockholders or upon the public as a whole. Our purpose is to act with the minimum of harshness compatible with attaining our ends. In the man of great wealth who has earned his wealth honestly and uses it wisely we recognize a good citizen of the best type, worthy of all praise and respect. Business can only be done under modern conditions through corporations, and our purpose is heartily to favor the corporations that do well. The Administration appreciates that liberal but honest profits for legitimate promoting, good salaries, ample salaries, for able and upright management, and generous dividends for capital employed either in founding or continuing wholesome business ventures, are the factors necessary for successful corporate activity and therefore for generally prosperous business conditions. All these are compatible with fair dealing as between man and man and rigid obedience to the law. Our aim is to help every honest man, every honest corporation, and our policy means in its ultimate analysis a healthy and prosperous expansion of the business activities of honest business men and honest corporations. (46-52)

Finally, Roosevelt steers a course between excessive individualism and excessive collectivism.

It will be highly disastrous if we permit ourselves to be misled by the pleas of those who see in an unrestricted individualism the all-sufficient panacea for social evils; but it will be even more disastrous to adopt the opposite panacea of any socialistic system which would destroy all individualism, which would root out the fiber of our whole citizenship. (58)

President Roosevelt, a Republican, was far more radical than President Obama. Those who disparage Obama as a Progressive have much to learn about American history.

Reagan Mythology

Paul Rosenberg offers an assessment of President Reagan's legacy far more realistic than the one driving Tea Partiers and even President Obama, whom Rosenberg opines, "is as drunk on Reagan's kool-aid as anyone else in Washington today."

He explains,

Reagan was a disaster for the American economy in at least four fundamental ways:

... Under Ronald Reagan, the US went from being the world's largest creditor nation to the largest debtor nation in just a few years

... the number of unionised jobs and the number of jobs with American companies declined even further.

... The income stagnation that began under Reagan has had a devastating impact on personal savings.

... Before Reagan, debt really wasn't a problem for America.

The article begins:

As things stand today, the US is hurtling toward a budget showdown in less than a month. Either President Obama will once again capitulate to extreme Republican budget-slashing demands, making Democrats seem as much of a threat to Medicare as Republicans, and virtually ensuring a GOP electoral sweep in 2012, or the US will default on its debt for the first time in its history, most likely plunging the world economy back into another five-continent recession, also costing Democrats the 2012 elections.

Read the rest at Reagan mythology is leading US off a cliff - Opinion - Al Jazeera English


Hat tip to Millard Fillmore's Bathtub for bringing this editorial to my attention.

"small land holders are the most precious"

One text always leads to another. As I continue my efforts to comprehend the incomprehensible, to probe into the foundations of the hyper-conservatism of the present American political landscape, I set out to peruse a classic text: Ludwig von Mises, Liberalism: The Classical Tradition (1962). The text was originally published as Liberalismus (1927) and initially the English translation was titled The Free and Prosperous Commonwealth, but Mises sought to "reclaim" the term liberal from those he regarded as socialists, and so the present title. I'm reading the etext edition from the Online Library of Liberty.

After the amusing Introduction, the meat of the argument begins with a chapter titled "Property". There Mises offers:

The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production (for in regard to commodities ready for consumption, private ownership is a matter of course and is not disputed even by the socialists and communists). All the other demands of liberalism result from this fundamental demand.

Such a yoking of notions of freedom and liberty to notions of private property immediately brings to my recall Charles A Beard, An Economic Interpretation of the Constitution of the United States (1913). Simultaneously, I think of Thomas Jefferson and his celebration of the Yeoman farmer as the backbone of American self-government.

Consequently, I find myself reading a letter that Thomas Jefferson wrote to James Madison from Fontainebleau outside of Paris, France. Jefferson wrote a nine where he meant to write an eight, and so the letter appears in volume 8 rather than volume 4 of Paul Leicester Ford, The Works of Thomas Jefferson (1904-5). As with the works of Mises, the Online Library of Liberty has a digitized and searchable edition. Here is the complete letter, as published there.

Dear Sir,—

Seven o’clock, and retired to my fireside, I have determined to enter into conversation with you. This is a village of about 5000 inhabitants when the court is not here & 20,000 when they are, occupying a valley thro’ which runs a brook and on each side of it a ridge of small mountains most of which are naked rock. The King comes here, in the fall always, to hunt. His court attend him, as do also the foreign diplomatic corps. But as this is not indispensably required & my finances do not admit the expense of a continued residence here, I propose to come occasionally to attend the King’s levees, returning again to Paris, distant 40 miles. This being the first trip I set out yesterday morning to take a view of the place. For this purpose I shaped my course towards the highest of the mountains in sight, to the top of which was about a league. As soon as I had got clear of the town I fell in with a poor woman walking at the same rate with myself & going the same course. Wishing to know the condition of the laboring poor I entered into conversation with her, which I began by enquiries for the path which would lead me into the mountain: & thence proceeded to enquiries into her vocation, condition & circumstances. She told me she was a day labourer, at 8. sous or 4d sterling the day; that she had two children to maintain, & to pay a rent of 30 livres for her house, (which would consume the hire of 75 days) that often she could get no emploiment, and of course was without bread. As we had walked together near a mile & she had so far served me as a guide, I gave her, on parting, 24 sous. She burst into tears of a gratitude which I could perceive was unfeigned because she was unable to utter a word. She had probably never before received so great an aid. This little attendrissement, with the solitude of my walk led me into a train of reflections on that unequal division of property which occasions the numberless instances of wretchedness which I had observed in this country & is to be observed all over Europe. The property of this country is absolutely concentrated in a very few hands, having revenues of from half a million of guineas a year downward. These employ the flower of the country as servants, some of them having as many as 200 domestics, not labouring. They employ also a great number of manufacturers, & tradesmen, & lastly the class of labouring husbandmen. But after all there comes the most numerous of all the classes, that is, the poor who cannot find work. I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are undisturbed only for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the encrease of their revenues by permitting these lands to be laboured. I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers & sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, & to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour & live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed. It is too soon yet in our country to say that every man who cannot find employment but who can find uncultivated land shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small land holders are the most precious part of a state.
Jefferson to Madison, 28 October 1785

My first question concerned the correspondence of Jefferson's views with those of Mises. Jefferson seeks the good of all. Mises asserts, "liberalism was the first political movement that aimed at promoting the welfare of all" (Liberalism, 22). Mises admits that liberalism and socialism share this goal, differing principally in their methods.

Both Mises and Jefferson emphasize the rights of property. But Jefferson's notion of the commons ("The earth is given as a common stock for man to labour & live on") is an idea that I have yet to encounter in my reading of Mises. Moreover, one gets the impression from Mises that Jefferson's scheme of progressive taxation might proceed from principles that he would call socialist, distinguishing them from liberal.

Reading this letter of Jefferson's creates doubts concerning some of Mises' historical claims with respect to eighteenth century classical liberalism, but it does offer evidence for some of his claims. Mises labors to see all economic theory as bipartite: liberalism vs. socialism. Jefferson draws from and engages with a somewhat more nuanced view.