Le Figaro, France

Is There a 'Socialist' Revival in America?

"Is socialism, which was banished from minds and hopes by the collapse of the Soviet system some years ago, rising again out of the spectacular transformations taking place at the center of global capitalism itself, the United States?"

The Chronicle of Alexandre Adler

Translated By Kate Davis

March 29, 2008

France - Le Figaro - Original Article (France)

Here’s a provocation. Not a gratuitous one, but one that has some grounding: Is socialism, which was banished from minds and hopes by the collapse of the Soviet system some years ago, rising again out of the spectacular transformations taking place at the center of global capitalism itself, the United States?

Several factors, in fact, are emerging and simultaneously coming into play to challenge the foundations of the way Americans live and produce. Remaining faithful to the theory of Marx, we will begin with the infrastructure.

Pressed by the imperial necessity of saving the financial system - which hasn't been this vulnerable since 1930 - FED chairman Ben Bernanke just took the historic decision to socialize the losses of commercial banks. Up to now and to curb panics of global dimensions, the central bank [the FED] only gave loans to banks of deposit [savings banks]. Today, the necessity of saving the entire banking system not only requires a state guarantee for the past investments of investment banks, it also requires the Federal Reserve to loan these commercial banks money for its newer and riskier operations, without which the entire machine threatens to come to a screeching halt.

It must be understood that the financial slight-of-hand now in force has created such imbalance between the equity of major financial institutions and the outstanding loans that they have already incurred, that the state must be transformed into the creditor of last resort, in defiance of the entire doctrine of the free market.

Americans, we know, are much less doctrinaire when it comes to themselves than they are toward their Latin American partners, for example. The outcome of the current crisis will result in such a reinforcement of the state’s freedom of action, that past nationalizations, like that under [former Socialist President François] Mitterand [in 1981] will look like nothing but small potatoes. In effect, under the threat of an impending catastrophe, the FED has become the owner of virtually all of the most dynamic financial institutions, mainly the investment banks, where the debt incurred by the Treasury Department is equal to the strategic equity of the banks.

And the second major turning point ahead: fiscal restraint. Even if in the months ahead, everything possible is done to permit the system to be maintained, it is finished, given the level of decline in the dollar and the mistrust of international financial markets, which is what finances America's external budget deficit.

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To summarize things a bit, we can say that China has used its trade surplus to finance increasingly untenable trade deficits in the United States by buying Treasury bonds from the FED, which has had the effect of artificially depreciating the value of the Chinese currency. The rapid deterioration of China's competitiveness, which could unfortunately be accompanied by a political crisis during the Olympic Games, is in the process of putting an end to Beijing’s goodwill.

Confronted with this situation, America can raise interest rates in the short term (without doubt, shortly after the presidential election in November) but mainly it will have to cover its shortfalls with higher taxes. In a new blow to the basic American contract, the state is obliged to take into its hands much greater financial power than classic methods of monetary policy and, more importantly, fiscal policy, allow.

Third point: the looming end of globalist interdependence as well as the surge in electoral support for some protection for American industry is altering moves to lift the barriers between nations. If one adds to this the legislative arsenal to prevent the indiscriminate entry of sovereign funds into national economies, the U.S. presidential candidates must embrace programs that are farther left than American policy has been in decades. Thus is born a well-tempered isolationism that, for the moment, has only been fully formulated by Barack Obama. If we assume a certain stabilization of global markets and the maintenance of the same fiscal policies, we will also see an increasingly extensive redistribution by the state, including a considerable expansion of social security benefits.

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The reader will understand that this is Obama’s program, which comes at the end of an economic cycle where, according to recent statistics, salary increases for Blacks and Whites since 2001 have been less than 2.8 percent and less than 1.2 percent, respectively.

And what if America, in a now inevitable backlash, chooses to revive the two pillars of Socialist thought, voluntarism and statism?

[Editor's Note: Statism can be defined as significant state intervention in personal, social or economic matters.]

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[Posted by WORLDMEETS.US April 3, 6:51am]