Using Technology to Deepen Democracy, Using Democracy to Ensure Technology Benefits Us All

Sunday, September 07, 2008

Nationalizations, Not Bailouts

One of the reasons our criminally neglected anti-trust laws are so important is that they help keep enterprises from growing so large and so ubiquitous that they come to seem, or even actually to be, indispensable to society. In their presumed indispensability such enterprises acquire a catastrophic immunity from the terms of reality altogether because they are insulated from the possibility of failure. Since they will always be able to claim that their failure would undermine the economy as a whole and so that general welfare demands their protection -- however reckless, wasteful, fraudulent, stupid, profligate, uninspired, short-sighted their conduct -- they will never be checked in their excesses by the corrective force of failure.

This is not, of course, the attitude of enterprise, properly so-called, but of aristocracy.

Needless to say, if an enterprise truly is so indispensable to general welfare that we cannot risk its failure and so must exclude it from the corrective forces of competition in the first place then that exclusion should be made consistent and the enterprise nationalized altogether. Otherwise, such quasi-aristocratic monopolistic enterprises derive their status and their profits more from their relationship to the supportive state they disdain in theory (in their paeans to free enterprise and innovative risk-taking ruggedly individualistic CEOs and so on) than from their performance in the interplay of competition they disdain in actual practice (in demanding endless supports, deregulation, subsidies, and bailouts from government, come what may).

At the very least, one would think that whenever enterprises are bailed out from the consequences of their recklessness by the state they should be nationalized and subject thereafter to a strict regime of state auditing and austerity measures until such time when they actually can function competitively again. At that point, it seems to me perfectly reasonable to propose that they should be sold back to private interests, but only at a profit the benefits of which should then be distributed back to the people from whom the resources for the bailout was taken in the first place.

Banking, energy provision, insurance, and healthcare clearly need to be radically re-regulated for conflicts of interest and fraud incubated by the market fundamentalist looting spree of the last twenty years, and some of their key institutions nationalized altogether and permanently so. That taxation demands representation creates a structural guarantee of corrective feedback against corruption and error in the provision of genuinely needed services at least as reliable as market signals under systems of rigged crony capitalism. Notice that I did not say "perfectly reliable" and so all you dot-eyed Randroidal handwavers and libertopians can keep your straw men to yourselves.

Zealous free marketeers who will want to respond to this critique by bemoaning the impurity of our system rather than actually learning any kind of lesson at all from our catastrophic generational experiment in neoliberal deregulation, financialization, and regressive taxation need to realize the basic fact that there is no, nor can there be any, more pure and less cronyist kind of capitalism whose more puritanical implementation would somehow circumvent the pathologies that have brought us to the brink of financial ruin, ecological disaster, and the tyrannical aftermath of failed democracy. I will expand on this more general point a bit in my next post.

5 comments:

Anonymous said...

One of the reasons our criminally neglected anti-trust laws are so important is that they help keep enterprises from growing so large and so ubiquitous that they come to seem, or even actually to be, indispensable to society. In their presumed indispensability such enterprises acquire a catastrophic immunity from the terms of reality altogether because they are insulated from the possibility of failure. Since they will always be able to claim that their failure would undermine the economy as a whole and so that general welfare demands their protection -- however reckless, wasteful, fraudulent, stupid, profligate, uninspired, short-sighted their conduct -- they will never be checked in their excesses by the corrective force of failure.

This is not, of course, the attitude of enterprise, properly so-called, but of aristocracy.


Agreed.

nor can there be any, more pure and less cronyist kind of capitalism whose more puritanical implementation would somehow circumvent the pathologies that have brought us to the brink of financial ruin, ecological disaster, and the tyrannical aftermath of failed democracy.

Not bailing out anybody, ever, could prevent this, which might help the first problem, but I agree that "better capitalism" can't solve the others.

Dale Carrico said...

It is precisely because the provision of certain services is indispensable to the maintenance of consensual democracy in a diverse planetary technoscientific society that there always will be, come what may, enterprises that we cannot permit to fail. It just seems to me that such enterprises must either be forced to remain competitive via anti-trust laws or, failing that, be nationalized outright and so beholden to the governed that way instead.

Anonymous said...

Why all this doom and gloom? Bobcats will bail mortgage industry out!

Anonymous said...

Just came across the news wire: the US government will take over Fannie Mae and Freddie Mac.

Dale Carrico said...

Indeed, this news prompted the post.