The question of whether or not we are all socialists now is not as silly as it may sound. Jon Meacham and Evan Thomas argue in their cover story for Newsweek that the United States, though remaining a center-right nation culturally, is increasingly coming to resemble the European social-democratic welfare states. While conservatives blast the Obama Administration’s new bailout and stimulus plan as filled with pork and not doing enough to produce real stimulus of the economy, and those on the Left argue it has not gone far enough and has capitulated to conservatives who want more tax cuts, most Americans simply want something to pass, and are deferring to the corporate based economic advisers who put it together.
But I think that Meacham and Thomas are right about their main point: the American economic system is not one based on laissez-faire economics, but a mixed economy that has long accepted the contours of a modern welfare state. Years ago, in a pathbreaking but not too well known book, The United States as a Developing Country, the historian Martin J. Sklar argued that at the turn of the century, the United States was transformed from a country based on a “proprietary-competitive market” system to that of an emerging “corporate administered market.”
The result, according to Sklar, was the emergence of a new “corporate capitalism” that mixed together elements of both populism, capitalism and socialism. The modern American state, he concludes in an essay he wrote for this book, was a system that mixed public and private, socialism and capitalism- “A Mix,” Sklar calls it, that has made the United States not only stable and dynamic, but the most progressive of any nation in the world.
Some conservatives might gripe- the Newsweek authors quote Sean Hannity as calling the new stimulus package the “European Socialist Act of 2009,” but the fact is that our system has functioned in the tradition of a mix between capitalism and socialism for a long time- sometimes leaning in one direction, sometimes in the other. Conservatives who fight this reality are tilting at windmills. Rather than fight necessary regulatory measures, it would be better to see that they work efficiently, and not be so restrictive and punitive as to threaten business enterprise itself.
Thus, as Meacham and Thomas argue, Obama has to pump up the economy, while at the same time move to cut the growth of entitlements, spending on health care, and retirement costs—something many on the Left will try to prevent.
Decades ago, in the years of FDR’s New Deal experiments, one self-styled conservative businessman wrote the following to one of the main drafters of the National Industrial Recovery Act. “I think I am still a conservative,” businessman and Republican Charles L. Brown claimed, “but I believe that a new set of plans is essential to preserve the conservative order of things. The trouble is that most of our business and professional friends do not understand that the old methods will not serve. New arrangements are necessary to save the economic structure. I think it is not radical, certainly not revolutionary, to change the methods of business leadership….the methods you and your associates are inaugurating are necessary in order to retain the existing industrial order.”
Today, in different and yet equally difficult times, Mr. Brown’s advice is still well taken. Maybe, like FDR, Obama will be looked at as the president who once again saved capitalism.