Is America becoming socialist?
In an attention-grabbing headline, Rasmussen Reports recently announced that only 53 percent of Americans believe that capitalism is better than socialism. Apparently, 80 percent of investors allegedly root for capitalism, as do more than 90 percent of Republicans, while a whopping 30 percent of Democrats supposedly prefer socialism.
Do these survey results, following close on the heels of the passage of the Obama administration's massive fiscal stimulus and industry bailout package, herald the end of capitalism? I think not.
Truth is, the respondents to the survey seemed a little confused. For example, 70 percent apparently preferred a free-market economy and only 15 percent endorsed a government-managed economy.
In this context, it's worth noting that, while the survey used the terms "capitalism" and "socialism," it never really explained what they mean. Then again, any attempt to explain might have only confused the issue; after all, the dominant perspective over the past 30 years has held that capitalism and socialism are irreconcilable opponents, locked in an eternal deathmatch.
On the one side, there is pure capitalism: the free and unrestrained market, allowed to create and sell, set values and determine policies. On the other side, there is pure socialism: total governmental control of markets, products, the means of production and, ultimately, individuals.
The biggest myth that needs to be dissolved is this notion that capitalism and socialism are absolutes. Admittedly, pure Ayn Rand-style capitalism and full-bore, Marxian state-led economic planning can never be reconciled. In reality, numerous things that Americans take for granted are, effectively, intrusions into the free market economy. Even beyond Social Security, the FDIC, and other bugaboos, programs as true-blue as the space program, the military, and the FDA represent very real manipulations of the economy, industry, and even individual citizens.
After all, when the government enlists a soldier, it must clothe, feed, shelter, pay, train, and transport him or her. Each of these actions sets into motion a series of government contracts, which then lead to hirings and firings, purchases and construction, and an ever-increasing web of interactions. Some segments of the economy see an influx of cash and others are allowed to wither. Either way, the economy is manipulated.
The same goes for government regulation. Look at the Drug Enforcement Administration: when the government determined that cocaine should be illegal, it effectively manipulated the market, funneling money to law enforcement, prisons, border control, and coffee producers. On the other hand, it effectively took money from Latin America, undermined Coca-Cola, cut a swath through the dental industry, and forced the pharmaceutical companies to retool. The same went for the U.S. Food and Drug Administration's refusal to permit Thalidomide, its decision to require polio vaccinations, and its recent recall of pistachios.
Ronald Reagan, the patron saint of reduced government and increased market control, is actually a pretty good example of centralized government planning. Under the Gipper, the federal deficit hit $1 trillion for the first time, and the federal civilian work force increased by about 200,000, or almost 10 percent. Granted, a huge proportion of this money and manpower went to the development of military hardware, as opposed to traditionally liberal priorities like infrastructure and daycare programs, but one could easily position much of Reagan's federal spending as a huge government-funded welfare program for the military-industrial complex.
And how was this spending spree funded? Well, with a huge increase in tax collection. While taxes as a share of GDP dropped by about 1.3 percent during Ronnie's eight years, federal tax collection increased by about 20 percent in real terms. This points to two things: an impressive growth in the GDP and a similarly impressive growth in the size of the federal government. While the first is a traditionally capitalist goal, the second most certainly was not.
More recently, some pundits have presented our current historical moment as the beginning of the end of capitalism, suggesting that a huge stimulus program and an even larger bailout will essentially signal the emergence of socialism as America's dominant economic system. The irony, of course, is that ground zero for this argument is Wall Street, the ultimate bastion of capitalism, and Detroit, the poster-boy for American industry.
In truth, however, neither the bailout, nor the stimulus program, nor even the New New Deal (or whatever Obama will end up calling it) heralds the end of capitalism. Actually, the stimulus plan is designed to recharge the market. By developing a smart grid, improving infrastructure and investing in education, it will, hopefully, provide the conditions necessary for the market's next period of growth. The ultimate irony will be if today's socialist stimulus proves tomorrow's capitalist salvation.