U.S. Capitalism Called into Question

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by Glynn Wilson

Editor’s Note: Why is it that in the United States of America, where free speech is part of our national psyche as well as the Constitution, and the most successful style of democracy in the history of the world was created, the debate on TV and in the nation’s news media seems so limited and fake about the current economic meltdown and President Bush’s bailout of Wall Street banks and insurance companies?

Noam Chomsky and other scholars have discussed this problem in the past in obscure academic texts most citizens have never heard about. But what if blogging software could provide a forum to bring this debate to the masses and go beyond the sound bites and actually foster a real debate on the past and future of American capitalism?

Are privatized free markets really better for people than government institutions?

As Chomsky once said, “In a totalitarian state, it doesn’t matter what people think, since the government can control people by force using a bludgeon. But when you can’t control people by force, you have to control what people think, and the standard way to do this is via propaganda (manufacture of consent, creation of necessary illusions), marginalizing the general public or reducing them to apathy of some fashion.”

He has also said, “It’s the primary function of the mass media in the United States to mobilize public support for the special interests that dominate the government and the private sector.”

Of course he is right, and we could point to a number of national and local examples, including the coverage of the prosecution of former Alabama Governor Don Siegelman in the Alabama press, or the coverage of the state of the economy by any number of U.S. news outlets.

But what I have found interesting over the past few days is the language creeping into mainstream news outlets questioning American-style capitalism. Here are a few examples.

“It’s a bitter pill for all those to claim that unfettered free markets were the best, that we don’t need regulation,” said Dan Seiver, finance professor at San Diego State University. “But perhaps this idea that unfettered capitalism is the way to go has finally been put to rest.”

“While Wall Street celebrates, the man in the street should be crying in his beer,” said Seiver. “It’s socialism for the rich, capitalism for the poor.”

Was that reported in some obscure leftist magazine? No, it was reported by Reuters, the conservative financial wire service started in Great Britain.

Bush Bailout A Bitter Pill for Free Market Capitalists

Yes, some alternative online news sites have found writers to take on this same theme. At AlterNet.org, here’s one recent headline.

“Free-market extremists brought us this needless economic collapse. Here’s a rundown of the mistakes we’ve made and the reforms we need now.”

The current carnage on Wall Street, with dire spillover effects on Main Street, is the result of a failed ideology — the idea that financial markets could regulate themselves. Serial deregulation fed on itself. Deliberate repeal of regulations became entangled with failure to carry out laws still on the books. Corruption mingled with simple incompetence. And though the ideology was largely Republican, it was abetted by Wall Street Democrats.

Only a Roosevelt-Scale Counterrevolution Can Prevent Another Depression

But even Newsweek, owned by the Washington Post company, published a special edition on this issue.

“Does the crisis on Wall Street mean that the American style of capitalism is no longer the model for the world?”

American Style Capitalism Called Into Question

The German magazine Der Spiegel, hardly a left-wing rag, reported this.

In fact, it really does look as if the foundations of US capitalism have shattered. Since 1864, American banking has been split into commercial banks and investment banks. But now that’s changing. Bear Stearns, Lehman Brothers, Merrill Lynch — overnight, some of the biggest names on Wall Street have disappeared into thin air. Goldman Sachs and Morgan Stanley are the only giants left standing. Despite tolerable quarterly results, even they have been hurt by mysterious slumps in prices and — at least in Morgan Stanley’s case — have prepared themselves for the end.

“Nothing will be like it was before,” said James Allroy, a broker who was brooding over his chailatte at a Starbucks on Wall Street. “The world as we know it is going down.”

Many are drawing comparisons with the Great Depression, the national trauma that has been the benchmark for everything since. “I think it has the chance to be the worst period of time since 1929,” financing legend Donald Trump told CNN.

Depression: Foundations of US Capitalism Shattered?

The Political Economy of the Mass Media, a book by Edward S. Herman and Noam Chomsky, first published in 1988, presents an analysis its authors call the “propaganda model.”

The book argues that since mass media news outlets are now run by large corporations, they are under the same competitive pressures as other corporations.

The pressure to create a stable, profitable business invariably distorts the kinds of news items reported, as well as the manner and emphasis in which they are reported.

This occurs not as a result of conscious design but simply as a consequence of market selection: those businesses who happen to favor profits over news quality survive, while those that present a more accurate picture of the world tend to become marginalized.

The book further points out issues with the dependency of mass media news outlets upon major sources of news, particularly the government. If a particular outlet is in disfavor with a government, it can be subtly “shut out” and other outlets given preferential treatment. (This has been particularly true in Bush’s two terms as president).

Since this results in a loss in news leadership, it can also result in a loss of readership/viewership. That can itself result in a loss of advertising revenue, which is the primary income for most of the mass media (newspapers, magazines, television).

To minimize the possibilities of lost revenue, therefore, outlets will tend to report news in a tone more favorable to government and business, and giving unfavorable news about government and business less emphasis.

So we have asked several scholars who know something about these issues to join us in a discussion here that we hope can go beyond the sound bites and start a more informed discussion around this country about how our economy should be structured in this democratic republic.

As I have reported before, the $700 billion Bush is about to spend on bailing out the Wall Street financial firms would be enough money to provide free health care and a free college education to every man, woman and child in this country. And we would be a smarter and more healthy country as a result.

But the key question is this: Is it even possible to discuss national health care or public college education in this country when any plan will just be dismissed as “socialism?”

According to my own training in political science, I learned that this country is in fact a socialist-democracy. We have Social Security, Medicaid, Medicare and other safety-net programs that actually prop up the weak end of our society and allow the rest of the private economy to function.

And every time the banks get into trouble, the federal government bails them out anyway. That could hardly be called “free-market capitalism,” since in a true free market, a business that can’t make enough profit to survive is allowed to fail and go out of business. But that’s what we continue to call it anyway in what is obviously a serious distortion of the truth — for propaganda purposes.

Other relevant recent columns:
America Needs a New Pill, Not Corporate Welfare
Media Bashing 501
Workers of the World Unite!

This discussion will continue in the comments section. Please feel free to join us…

© 2008 – 2015, Glynn Wilson. All rights reserved.

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