Bailout: Are we 'all socialists now?'
Roger McCain
Issue date: 10/3/08 Section: Ed-Op
Another thing that socialism is not very good at is initiative - starting new things. Most people would say that the successes of capitalism arise from "entrepreneurship:" the freedom and willingness of people to start new businesses, bringing new technologies into use and reorganizing markets. But entrepreneurship is risky, and if people are going to risk resources on innovative initiatives (most of which will fail), it is essential that there is some check. In a capitalist market system, in theory, if the enterprise does not produce what people want, the entrepreneur will lose his money. Therefore, he has a motive to sift the possibilities carefully, and not go ahead unless there is a good chance of success. If the enterprise is to be public property, this review will have to be political. And experience teaches us that politics is not kind to innovations, especially successful ones.
That leads me to the conclusion that there has to be an arm's length relationship between government and economic decision-making. In fact, one of the things I believe is wrong with our "capitalism" is that it is too often a "partnership of government and business."
The American future may or may not be socialist. That depends on how you define the word "socialist," not so much on what the future will be like. Karl Marx thought that the organization of corporations was in itself a step toward socialism. Perhaps he was right after all. Our huge corporations are indeed the products of capitalist entrepreneurship, but if they are "too big to fail," then we are certain to see an increased government role in their ownership and management. But we must find ways to organize our "socialism" (or whatever you want to call it) so that we have more - not less - initiative, stronger - not weaker - motives to move resources from less to more productive uses, greater - not less - separation of economic decisions from politics, and more saving matched by more investment. If we do not, we can expect more crises and an even more drastic restructuring of our economy.
Whether we want to call it "socialism" or not, we need to think carefully and deeply about what the economic system in our future should be. And that's not something we can do in the midst of crisis. It will take time and calm conditions to figure it out. But we had better start now.
Roger McCain is a professor in the department of economics and international business. He can be reached at op-ed@thetriangle.org.
That leads me to the conclusion that there has to be an arm's length relationship between government and economic decision-making. In fact, one of the things I believe is wrong with our "capitalism" is that it is too often a "partnership of government and business."
The American future may or may not be socialist. That depends on how you define the word "socialist," not so much on what the future will be like. Karl Marx thought that the organization of corporations was in itself a step toward socialism. Perhaps he was right after all. Our huge corporations are indeed the products of capitalist entrepreneurship, but if they are "too big to fail," then we are certain to see an increased government role in their ownership and management. But we must find ways to organize our "socialism" (or whatever you want to call it) so that we have more - not less - initiative, stronger - not weaker - motives to move resources from less to more productive uses, greater - not less - separation of economic decisions from politics, and more saving matched by more investment. If we do not, we can expect more crises and an even more drastic restructuring of our economy.
Whether we want to call it "socialism" or not, we need to think carefully and deeply about what the economic system in our future should be. And that's not something we can do in the midst of crisis. It will take time and calm conditions to figure it out. But we had better start now.
Roger McCain is a professor in the department of economics and international business. He can be reached at op-ed@thetriangle.org.
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