An Unwritten History – (4) Breaching the Social Contract

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          Most Americans understand very little about economics, and are easily misled into believing they live in a “free market” economy which benefits them, and into believing that alternatives, like “communism” and “socialism” will harm them.  These ideas are held at an amorphous conceptual level only, and experts are finding that, once such ideas are hardened into ideology (like fundamentalist religion), for many people it is simply impossible to grasp contrary ideas, or to allow facts and observations from their experience to disturb such iron-clad conclusions.

          One thing to remember is that the underlying objective in capitalism is to profit from investment.  There often is an option between public sector and private sector provision of services enhancing social welfare.  For example, a town might directly provide for trash collection or snow removal services, or the town could contract with an investor to provide such services for a return on capital invested in the enterprise.  Both options might be provided in the same town.

          Such a choice between community-based and market-based services is not of great ideological consequence, so decisions would normally be made on cost and related considerations, not on the basis of abstract impressions about the evils or benefits of  “socialism” versus “capitalism.”  The best part of the traditional American political system has been that residents  have both options available.   

          Local governments, as provided for in the constitutions of each state, have always provided this “social” function for communities, and it is nothing more than a democratic way for people to decide how to live and work among one another.  This is where grass-roots democracy takes place.  To negatively attach a label like “socialism” to local government, as if to imply there is something sinister or evil about the traditional American way of life, would be nonsensical.   

          If, however, as has been recently proposed by Michigan’s new governor, a town’s entire government could be dissolved upon the governor’s decision that a financial “emergency” exists, its employees fired and replaced without recourse by people (or even corporations) of his choice, local government as we know it, upon the exercise of such power, would cease to exist.  Residents would have no say over any community matters that affect them in their daily lives.  This would constitute elimination of democracy and institution of authoritarian rule, a system historically referred to as “fascism.”  For those holding dear the freedom and democracy America has traditionally stood for, such an option would be unquestionably sinister and evil.    

          From the perspective of Karl Marx, who lived at the beginning of the industrial revolution (1818-1883), the owners of the land and the means of production (the capitalists) were so overwhelming able to suppress and control the labor force, that the best solution was simply to abolish the private sector.  As the people of the Soviet Union and elsewhere would eventually learn, however, oppression could and would arise from within a communist system too, as it did with Stalin’s dictatorship in the Soviet Union.  Moreover, it turned out that a controlled economy could not work as well for generating creativity and prosperity as one in which people are free to respond to market forces.

          The optimal solution is a “free enterprise” system in which the excesses of capitalism are restrained by the people through their governments, and the United States seemed a perfect place for the realization of such a “social democracy,” a place where the needs of the people could live in harmony with the interests of investors and capital.  Such a system would work if the government, funded by and representing the people, acted to curb the excesses of wealth and corporate power, and provided for a reasonable distribution of wealth between the owners of the means of production (capital) and those who do the actual producing (labor). [1]

          But that has not worked consistently well in America. Power and wealth accumulated at the top during the industrial revolution, and the United States economy collapsed in 1928, leading to the Great Depression.  Shortly after recovery from the depression, with the help of World War II, that same process started up again, this time involving the new military-industrial complex.  In the last thirty years, the final stages of the process have accelerated, embracing something called “the Reagan Revolution.” 

          In the name of laissez-faire economics, the radical corporate elite has been taking control of government and dismantling the free enterprise system.  Today we are witnessing a wholesale breach of the social contract needed to sustain a prosperous and free America.  The American economy is highly controlled, with few vestiges of real competition, and radical capitalists are attempting to extend their control down form the national government and the media into the state and local governments.

          This could not have been taking place without control of the media and a systematic brainwashing of the American people.  “In politics, whoever frames the debate tends to win the debate,” George Lakoff has recently observed: “Over the past thirty-five years, conservatives have framed most of the issues in American political discourse.” [2]   Thus, it was both informative and alarming to hear Wisconsin governor Scott Walker, in the tape of his telephone conversation with someone he took to be one of the billionaire Kock brothers who brought him to power, to hear Walker speak proudly of his attack on unions and the middle class as a war on “communism.”  One can only guess at the false frames deeply embedded in his mind.

           That the voters of Wisconsin and around America saw fit to elect such people in 2010 shows that all of us can fall prey to false perceptions of reality because of how the issues have been framed.  “Facts matter,” Lakoff continues, “and proper framing – both deep and surface – is needed to communicate the truth about our economic, social, and political realities.” [3] 

                JMH – 2/26/11

[1] The “arbitrary and inequitable distribution of wealth and incomes” was identified by the founder of modern macro-economics, along with its failure to provide for full employment, as one of “[t]he outstanding faults of the economic society in which we live.”  John Maynard Keynes, The General Theory of Employment, Interest, and Money, written 1935, first published 1936, Harcourt, Inc., 1991, p. 372. 

[2] George Lakoff, Whose Freedom: The Battle Over America’s Most Important Idea, Farrar, Strauss and Giroux, 2006, p. 12.

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[3] Id. at 14.

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