People need to work hard, they need to play by the rules, and those of us with responsibility for economic policy need to do everything we can to make the economy work.

-Lawrence Summers, President Barack Obama's top economic advisor, "Meet the Press" (NBC Television), January 25, 2009

Beneath the drama over how to make the U.S. economy "work again," we hear nothing in the dominant corporate-mediated political discourse about the state-capitalist authoritarianism that is on sharper-than-usual display (for those willing to look beneath "mainstream" coverage and commentary) in relation to the current economic crisis.

Finance capital and its many supporters and agents in the second Bush II and first Obama administrations advanced and supported the $350 billion bailout of leading U.S. banks on the grounds that this massive public transfer was required to make the economy "work." 

This giant public infusion hasn't worked, thanks in part to the leading banks' practice of using their taxpayer windfalls not to "jumpstart the economy" but to cushion their reserves through the deepening recession.

MAJORITY SHAREHOLDERS WITHOUT VOTES

But put that little difficulty aside for a moment if you can and contemplate also the despotism of what's going on behind the scenes. We the allegedly sovereign People have become - or are about to be - the majority shareholder of key U.S. financial institutions. As NBC's David Gregory noted on "Meet the Press" last Sunday, "the government is effectively the owner of most of America's banks." [1] The nation's great banking houses have become what Nobel Prize-wining economist and New York Times columnist Paul Krugman calls "wards of the state, utterly dependent on taxpayer support." [2]

And the citizenry is a most curious sort of majority shareholder in this era of escalated Wall Street Welfare: it can't even vote its shares.  It has no right to appoint directors, set policy, or exercise meaningful oversight.

It's called nationalization for the rich. The divided, distracted, depressed, and ever-more back-on-its heels and pink-slipped populace gets all the bad sides of nationalization and none of the good.

Colossal piles of the Peoples' money are handed over to the nation's leading financial institutions with no serious requirement that those "too-big- [and powerful]-to-fail" entities fundamentally change their behavior. The "world's greatest democracy" grants its populace no meaningful control over the public wealth granted to the very institutions whose reckless conduct in service to the rich and powerful Few drove the economic system off the cliff.

This is a problem, one would think, in a nation whose founding document declares that government derives its just powers only from the consent of the governed.  As Noam Chomsky notes in the latest issue of Z Magazine: "If the government - in a functioning democracy, the public - does not have a degree of control, the banks can pour the public funds into their own pockets for recapitalization or acquisitions or loans to government-guaranteed borrowers, thus undermining the alleged purpose of the bailout.  This is what happened, though details are obscure because the recipients refuse to say what they are doing with the gift from taxpayers.  Indeed, they regard the question as outrageous..." [3]

THE "CHINESE MODEL"

According to the capitalist Anglo-American weekly magazine The Economist, the current economic crisis could "increase the attractiveness of the Chinese model of authoritarian capitalism for many emerging markets" - a model wherein the central state expands its directive role without any parallel increase in popular governance. In a report on "The Financial Crisis and the Risks for Democracy," the journal's "intelligence unit" worries about a "discrediting of Western values" (meaning "democracy") across the "developing world" [4].  The term "emerging markets" is curious and revealing code language for poor nations on the periphery of the world capitalist system.

But how democratic are the West's own core political economies?  Capitalism has always been about the authoritarian concentration of wealth and power, militantly opposed to the democratic ideal. [5]  Nationalization for the rich without popular oversight and public responsibility is precisely what one should expect, under the terms of what Alex Carey called "corporate-managed democracy" more than 20 years ago.[6]  It is richly consistent with the conduct of what Sheldon Wolin recently described as "Democracy Incorporated" - a new form of "inverted totalitarianism" under which the citizenry is converted into a business-coordinated "electorate" and both pro-business wings of Superpower's dominant "one-and-a-half party system" serve the interests of the corporate and financial Few. [7]

The so-called "Chinese model" of authoritarian capitalism holds no small appeal to the bourgeoisie within core states of the world system, not just in "emerging markets."  As Le Monde environmental editor Herve Kempf observed two years ago, before the latest recession formally began: 

"Capitalism no longer needs democracy....Since the fall of the Soviet Union, the ruling class has become convinced that it no longer needs democracy.  Before then, freedom was the best argument to counter the collectivist model.  It was good fort individuals and it promoted much greater economic success.  But during the 1990s, the paradigm that linked freedom and capitalism dissolved.  On the one hand, the extreme right, under the influence of ‘neoconservatives,' elaborated an ideology that made its priorities maintenance of the existing social order and of U.S. dominance.  On the other hand, the impressive surge of the Chinese economy in a context of continual repression and one-party rule accustomed minds to a possible uncoupling of public freedoms and economic dynamism."  [8]

Lest we exaggerate the novelty of "capitalism's" problematic connection to "democracy," let us recall that Benito Mussolini's fascism received early praise from sections of the American and European bourgeoisie for "making the trains run on time." As far as the Italian henchman's capitalist fans were concerned within and beyond the U.S., the key question to ask of government policy was "does it work and get things done?'" not "does it reflect the needs and the aspirations of the non-affluent and working class majority?" Beneath Western bourgeois fondness for Italian and later German fascism lay the capitalist oligarchy's longstanding hatred of the dangerous and meddlesome rabble - the noxious citizenry. The same basic loathing explained the impressive support elite-managed U.S. foreign policy has long granted to repressive ("Third World Fascist" in the words of Chomsky and Edward S. Herman)  regimes (e.g. Suharto, Trujillo, the Brazilian generals, the Shah of Iran, Saddam Hussein, Pinochet, the current rulers of Egypt,  the Saudi monarchy...the list seems endless) across the planet.

THE IRRELEVANT PROGRESSIVE MAJORITY

The cordoning off of the people from meaningful oversight and influence on what is being done with "their" money makes perfect sense from the perspective of the U.S. investor class.  Republican commentators and politicos insistently claim that the United States is "a center-right nation." But abundant survey data has long showed that the American working class majority is quite progressive ("left-center" at the very least) on key policy issues, supporting universal national health insurance (preferably on the single-payer model), a reduction of "excessive" corporate power, the privileging of social programs over corporate welfare and the "defense" (empire) budget (currently $1 trillion per year), the restoration and expansion of union organizing and collective bargaining rights, the regular price-indexed increase of the minimum wage, expanded government investment in livable-wage job creation and infrastructure, and so on [9].

The citizenry hardly supports handing over vast public sums with no real accountability to big financial, real estate, and insurance conglomerates.  It would prefer to see government (the "public" in "a functioning democracy") attack the current epic recession (carrying very real potential to become a full-blown depression) by doing a massive New Deal-style jobs program and passing a meaningful universal health care program.  Along the way, it would certainly support significant expanded public regulation of economic activity - including restrictions on capital's capacity to evade public control by fleeing across national boundaries - and real popular voice in the management of "private" financial institutions receiving significant public monies.

"CHANGE WE CAN BELIEVE IN" FROM STATUS QuOBAMA?

Fiscal Czarism and Status Quo Appointments

Will the "deeply conservative" Obama break from deepening authoritarian  capitalism in regard to the current economic crisis? The signals he has sent so far are less than encouraging. Late last summer, candidate Obama joined John McCain in supporting the original George W. Bush-Hank Paulson bailout plan, replete with its dictatorial demand (explicitly laid out in a hastily constructed three-page bill) that Congress supply the banks with hundreds of billions of taxpayer dollars without any public oversight, hearings and investigation ever.  When public outrage forced Congress to reject rejected Bush and Paulson's (and Obama and McCain's) Czarist proposal, Obama gave his "progressive" imprimatur to a subsequently passed version that cloaked the authoritarian bailout deal in oversight measures loaded with loopholes leaving big banking capital free to do pretty much whatever it wished with its new taxpayer injections.

This move apparently came without remorse. As veteran liberal-progressive Washington- and Obama-watcher David Sirota recently noted, Obama's "first exercise of presidential power was, right before he came into office, he threatened to veto any bill that Congress passed rejecting or limiting more bailout funds from going to Wall Street." [10]

Obama's economic appointments do not bode well. His top economic advisor, former chief World Bank economist and Harvard University president Lawrence Summers and his Treasury Secretary Timothy Geithner are both veteran implementers of the basic "neoliberal" tenet:  state protection and subsidy for the Few and market discipline for the Many. Working in the Clinton administration under Treasury Secretary (and Goldman Sachs CEO) Robert Rubin (Geithner's mentor), Summers helped develop and advance the very financial -de-regulation that was a major contributor to the current crisis. Geithner shares with Summers a history of responding to economic crisis by bailing out large financial institutions with no serious questions asked, something that helps explain the popularity of his appointment on Wall

Street.[11]

"Collective Failure" and "Bait and Switch"

Obama's Inaugural Address absurdly claimed that the economic crisis was partly the consequence of the "collective failure" of the American people "to make hard choices and prepare the nation for a new age." This ignored the fact that, as Krugman notes, "this is first and foremost a crisis brought on by a runaway financial industry.  And if we failed to rein in that industry, it was wasn't because Americans ‘collectively' refused to make hard choices; the American public had no idea what was going on, and the people who did know what was going on mostly thought deregulation was a good idea." 

By Krugman's account, the new Obama age policymakers are "gearing up to attempt a bait and switch" whereby the federal government moves hyper-inflated ("bad") assets off of private banks' balance sheets and into a publicly owned "bad bank."  The plan will be sold to the bewildered and bamboozled citizenry as a virtuous form of fiscal housecleaning but will amount to "making huge grants to bank shareholders at taxpayer expense, disguised as ‘fair value' purchase of toxic assets."  [12]

Labor Rights Off the Table

Obama has made no effort to link his economic stimulus plan to the Employee Free Choice Act (EFCA). This critical and long-overdue bill, which Obama embraced during his campaign to win labor support, would counter the deep workplace tyranny of employers and boost wages (and thus domestic effective demand) by significantly restoring union organizing and collective bargaining rights in the U.S. Reflecting his sensitivity to Republican and well-financed, highly class-conscious business opposition to the EFCA, Obama has deleted the bill from his policy package to "jumpstart the economy.". Having reassured the editor of The Wall Street Journal that that the new president "can stand up to" progressive Congressional Democrats (described by the editor as "left wing barons with their own agenda"), Obama's chief of staff Rahm Emmanuel has tellingly refused to say whether the Obama administration will actually support the labor law reform measure on which Obama campaigned [13]

Tax Cuts Over Health Care

Also curiously off the table of economic stimulus are any proposals for the universal health care that Obama made a central theme of his quest for the presidency  Obama seems to be letting his campaign promise of guaranteed coverage quietly fade even as the deepening recession guarantees that millions of Americans will lose their health insurance along with their jobs. The U.S. is unique among wealthy nations in allocating health coverage primarily through employment. 

Obama's neoliberal advisors, with Summers in the lead, are certainly telling him that expanding health care is too expensive given the vast sums being spent to "rescue the economy." They are likely also counseling the rookie president that health care is not a priority in the face of the economic meltdown.

But, as Krugman notes, enacting Obama's campaign proposals for universal coverage would not cost a great amount ($1-4 billion in 2010) "compared with, say, the tax cuts in the Obama stimulus plan." And "helping families purchase health insurance as part of a universal coverage plan would be at least as effective a way of boosting the economy as the tax cuts that make up a third of the stimulus plan - and it would have the added benefit of directly helping families get through the crisis, ending one of the major sources of Americans' current anxiety." [14]

The real solution - single-payer national insurance on the Canadian model - is naturally beyond the parameters of serious debate at the leftmost margins (The New York Times) of acceptable debate in the United States' corporate-managed political culture.

"The Dollar Value" of "a Player"

None of this should be surprising for anyone who seriously and honestly investigates Obama's six-year (at least) history of wooing "the moneyed and political establishment" (David Mendell) by proving his "reasonableness" to the masters of the Washington-Wall Street money-politics nexus. "Reasonableness" is code language with a useful translation for Obama's many wealthy: friendly to capitalism and its opulent masters. 

"It's not always clear what Obama's financial backers want," Ken Silverstein noted in the fall of 2006, "but it seems safe to conclude that his campaign contributors are not interested merely in clean government and political reform."

"On condition of anonymity," Silverstein reported, "one Washington lobbyist I spoke with was willing to point out the obvious: that big donors would not be helping out Obama if they didn't see him as a ‘player.' The lobbyist added: ‘What's the dollar value of a starry-eyed idealist?'"[15]

It's not for nothing that Obama became the most prolific corporate fundraiser in U.S. political history.  He received more than $37.5 million from "FIRE" - the finance, real estate, and insurance industries - and got nearly $955, 000 just from the super-powerful Wall Street firm Goldman Sachs. [16]. This was part of the deeper plutocratic reality beneath his deeply misleading claim to have developed "a parallel system of public financing" during the presidential campaign.

This does not mean that circumstances and popular pressure could not combine with Obama's narcissistic desire to be known as a "transformative" leader on the model of Lincoln or Franklin Roosevelt to push him in a more leftward and progressive direction on economic policy.  Anything is possible. We are free to HOPE, and, preferably and more importantly, to push the president from below.

"THOSE OF US WITH THE RESPONSIBILITY"

Meanwhile, in the interest of knowing our bipartisan authoritarian-capitalist enemy, let us listen to the chilling commentary of Obama's top economic guru Lawrence Summers in response to Gregory's question last Sunday about how ordinary people should think about the (deepening) crisis and the new administration:

MR. GREGORY: "what do you say to somebody's whose trying to prepare for their future?  Maybe it's a couple that wants to send their child to college in five years, they've' been saving in their 529, perhaps they've lost a lot of money in the markets and they have lost confidence, and they're thinking...'What do I do?'" 

MR. SUMMERS:...( after a painfully long pause and then a dramatic flash of eyebrows).... "This is, I believe, why President Obama was elected.  And this is why his call for an age of responsibility in what government does for all of us as we manage our own finances, as we do our own jobs is, is so very important.  People need to work hard, they need to play by the rules, and those of us with responsibility for economic policy need to do everything we can to make the economy work. And I've got no doubt that our economy's best days are ahead of us...." [17]

There you have it fellow citizen-subjects, from your new "commander in chief's" [18] top economic brain: "You peons out there need to work hard and responsibly on your little jobs and on your paltry personal finances, leaving us super-empowered Chosen Ones to make the system work from the top down.  You need to do your little jobs so that we can do our big ones. You need to play by the rules we Masters have set for you, whereby the top 1 percent of the population owns 40 percent of the nation's wealth and 57 percent of all claims on wealth.  We have your best interests at heart: focus on your little tasks so we can focus on our big ones.  And if you do that, children, the great wells of growth and abundance will be flowing again. Sleep now.  The benevolent experts are in charge again to make the trains run on time and get you buying cars once more."

Never mind that Summers is one of the architects and operatives of regressive policies that helped create the current economic meltdown! [19]

Reading Summers' comment, I was reminded of Alex Carey's observation (in an essay titled "The Orwell Diversion") that the leading totalitarian dangers to democracy have "always come" NOT from "the left of politics" but rather from "the Respectable Right" in "the form of a widespread social and political indoctrination which promotes business' interests as everyone's interests and in the process fragments the community and closes off individual and critical thought." [20]

"IT WASN'T MUCH"

Summers' new boss, the heavily status-quo-oriented Republican-wooing Obama has never been especially impressed with the peoples' concern or capacity for democracy and self-rule.  As he explained in the prologue to his best-selling and conservative campaign book [21] The Audacity of Hope, "no blinding insights emerged from" his "months of conversations" with ordinary American voters during his campaign for the U.S, Senate in 2003 and 2004.  By Obama's condescending account:

"If anything what struck me was just how modest people's hopes were...Most of them thought that anybody willing to work should be able to find a job that paid a livable wages.  They figured that people shouldn't have to file for bankruptcy because they got sick.  They believed that every child should have a genuinely good education - that it shouldn't just be a bunch of talk - and tat those same children should be able to go to college even if their parents weren't rich.  They wanted to be safe, from criminals and from terrorists; they wanted clean air, clean water, and time with their kids.  And when they got old, they wanted to be able to retire with some dignity and respect."

"That was about it.  It wasn't much...."

"I told them that...with a slight change in priorities we would make sure every child had a decent shot at life." [22].

Wow - a "decent shot at life."

There was nothing, of course, in the "progressive" Obama's not-so audacious Audacity of Hope about citizens' belief in, passion for, and right to a democratic existence over and against the inherently authoritarian power of state capitalism. But then, bringing such genuine popular governance into being over "corporate-managed democracy" involves something more than "a slight change in priorities."  It requires what Dr. Martin Luther King Jr. considered near the end of his life "the real issue to be faced" beyond "superficial" questions: "the radical reconstruction of society itself." [23]. Pursuing that issue - probably now a requirement for human survival - is about a politics that goes beneath and beyond quadrennial corporate-crafted narrow-spectrum candidate-centered electoral spectacles and into the more urgent tasks of dedicated movement- building and alternative vision for "a world upside down": beyond authoritarian directives and the endless arrogance and oppression of concentrated class-state power.

Paul Street (paulstreet99@yahoo.com) is a veteran radical historian in Iowa City, IA.  Street's books include Empire and Inequality: America and the World Since 9/11 (Boulder, CO: Paradigm, 2004); Racial Oppression in the Global Metropolis (New York: Rowman & Littlefield, 2007); Segregated Schools: Educational Apartheid in the Post-Civil Rights Era (New York: Routledge, 2005); and Barack Obama and the Future of American Politics (Boulder, CO: Paradigm, September 2008), which can be ordered at www.paradigmpublishers.com/Books/BookDetail.aspx?productID=186987

NOTES

1.  NBC, "Meet the Press," January 25, 2009, read transcript at http://www.msnbc.msn.com/id/28841300/

2.  Paul Krugman, "Wall Street Voodoo," New York Times, January 18, 2009.

3.  Noam Chomsky, "Elections 2008 and Obama's ‘Vision,'" Z Magazine (February 2009).

4.  The Economist, Economist Intelligence Unit, "Crunch Time for Democracy?  The Financial Crisis and the Risks for Democracy," Press Release (October 22, 2008), read at http://www.eiuresources.com/mediadir/default.asp?PR=2008102201

 5.  Paul Street, "Capitalism and Democracy ‘Don't Mix Very Well': Reflections on Globalization," Z Magazine (February 2000): 20-24; "‘The Economy is Doing Fine, It's Just the People that Aren't: Towards a Social-Democratic Alternative to the Indexes of Leading Economic and Cultural Indicators," Z Magazine (November 2000): 27-31.

6. Alex Carey, Taking the Risk Out of Democracy: Corporate Propaganda Versus Freedom and Liberty (Urbana, IL: University of Illinois Press, 1997), p. 139.

7. Sheldon Wolin, Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism (Princeton, NJ: Princeton university Press, 2008)

8. Herve Kempf, How the Rich Are Destroying the Earth (White River Junction, VT: Chelsea Green, 2007), 93.

9.  For a useful survey of relevant opinion data see Katherine Adams and Charles Derber, The New Feminized Majority (Boulder, CO: Paradigm, 2008), pp. 67-75.  See also Chicago Council on Foreign Relations, "Global Views" (October 2004).

10. Sirota is quoted in quoted in Public Broadcasting System, "Bill Moyers' Journal" (January 23, 2009), read transcript at http://www.pbs.org/moyers/journal/01232009/transcript4.html.

For Obama as "deeply conservative," see Larissa MacFarquhar, "The Conciliator: Where is Barack Obama Coming From?" The New Yorker (May 7, 2007).  By MacFarquhar's carefully researched account, "In his view of history, in his respect for tradition, in his skepticism that the world can be changed any way but very, very slowly, Obama is deeply conservative. There are moments when he sounds almost Burkean. He distrusts abstractions, generalizations, extrapolations, projections. It's not just that he thinks revolutions are unlikely: he values continuity and stability for their own sake, sometimes even more than he values change for the good." This helps explain why Obama's action as president "have," in Sirota's words to Moyers, "been ones that are much more towards the status quo."

11. Robert Pollin (on Clinton) Contours of Decent: U.S. Economic Fractures and the Landscape of Global Austerity (New York: Verso, 2003), pp. 31-33; Chomsky, "Elections 2008."

12. Paul Krugman, "Stuck in the Muddle," New York Times, January 22, 2009; Krugman, "Wall Street Voodoo."

13. Chomsky, "Elections 2008."

14.  Paul Krugman, "Health Care Now," New York Times, January 30, 2009, A23.

15. Ken Silverstein, "Barack Obama, Inc.: The Birth of a Washington Machine," Harper's (November 2006).  See also David Mendell, Obama: From Promise to Power (New York: HarperCollins, 2007), pp.248-49.

16. See Center for Responsive Politics, Open Secrets.org., "Banking on Becoming President" (accessed January 29, 2009): http://www.opensecrets.org/pres08/indus.php?cycle=2008&cid=N00009638 (for "FIRE" data); http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638 (for Goldman Sachs data)

17.  NBC, "Meet the Press."

18   A very dangerous habit in U.S. political culture is continuing into the Age of Obama - the authoritarian tendency of journalists, politicos, pundits, and citizens (and others) to constantly use the term "commander in chief" as a synonym for "president."  As Garry Wills noted two years ago, "the president is not commander in chief of civilians.  He is not even commander in chief if National Guard troops unless and until they are federalized.  The Constitution is clear on this...the representative is accountable to citizens.  Soldiers are accountable to their officer.  The dynamics are different and to blend them is to undermine the basic principles of our Constitution."  Garry Wills. "At Ease, Mr. President," New York Times, January 27, 2007, read at www.nytimes.com/2007/01/27/opinion/27wills.html?ex=1327554000&en=5b8f7083944b1473&ei=5090&partner=rssuserland&emc=rss

19. Candidate Obama deceived voters by repeatedly attributing the economic crisis just to the failed economic policies of "the last eight years." Critical steps in the dysfunctional corporate-neoliberal deregulation of American financial and investment practices took place under the Clinton administration and were carried out to no small extent by people at the top of Obama's economic advisory team - Rubin and Summers. See Pollin, Contours of Descent.   Some other things to keep in mind about Summers: besides once claiming that females lack the genetic equipment required for advanced academic work in math and science, he authored a December 12, 1991 World Bank memorandum arguing that Africa was "under-polluted" since its deeply impoverished residents didn't live long enough to be all that significantly damaged by toxic waste.  Read the full Summers memo at http://www.whirledbank.org/ourwords/summers.html

20. Carey, Taking the Risk, p. 133.

21.  For an (I hope) useful and highly critical review from the left, see Paul Street, "Obama's Audacious Deference," ZNet Magazine (January 24, 2007), read at http://www.zmag.org/content/showarticle.cfm?ItemID=11936

22. Barack Obama, The Audacity of Hope: Thoughts on Reclaiming the American Dream (New York: Crown, 2006), pp. 6-7.

23. Martin Luther King, "A Testament of Hope" (January 1969), reproduced in Martin Luther King, Jr.., A Testament of Hope: The Essential Writings and Speeches of Martin Luther King, Jr., ed. By James M. Washington (San Francisco, CA: Harper Collins, 1991), p. 315.