Sanders’ Socialism vs Crony Capitalism

It was almost exactly nine years ago that I wrote called “Corporatism masquerading as liberty” at Credit Writedowns. The gist was that, as I put it then the “‘Corporatist’ is a kleptocrat masquerading as a believer in liberty. He uses terminology based in liberty to construct an ideology solely as a means of furthering the gains of a specific strata of society allied with the corporatist and at the expense of other strata, by coercion if necessary.”

I want to talk about this in the context of the political events since then and the 2020 election.

Generational priors and corporatism

Here’s how I’ll start off. Earlier today I was reading a 2016 New York Times Op-Ed about the 1994 Crime Bill, trumpeted by Bill Clinton, sponsored by Joe Biden and voted for by Bernie Sanders. The article suggested the crime bill was not just a travesty but one that the likes of Biden should have known was a travesty.

This legislation further entrenched the idea that vulnerable urban communities are best managed through harsh punishment and heightened surveillance…

As we debate how to switch course, our popular understanding of the rise of “get tough” laws should not layer selective memory atop selective hearing of the past by justifying black incarceration with trite references to black voices.

When I looked at the comments section, they were very negative, implying the authors probably don’t even remember what it was like in the early 1990s because they were too young.

I remember what it was like though. I remember be followed around in stores in Manhattan under suspicion, lest I steal something. I remember being stopped by the police and frisked for weapons in Georgetown. I remember freezing because I was unable to get a taxi for over 30 minutes, not because they were busy but because they were afraid to pick me up. I remember feeling like I should walk around late at night with my hand in my jacket pocket like I might have a gun – just in case someone wanted to fuck with me. And I especially remember being followed by the police down the block where I lived until I waled up to my house door and opened it with a key while I was being trained as a diplomat to represent our country abroad. That was my experience.

So I looked up the authors and found that they were indeed relatively young, probably all in middle school or younger when the crime bill was passed. So, it occurred to me that maybe they had different priors than I had about the crime bill. When it passed, I was in Bonn, Germany, in the Economics Section of the US Embassy, having just spent a year vetting visas in the consular section. Coincidentally, seven years earlier in 1987, I had briefly worked in the Congressional office of Kwiesi Mfume, who was the Congressional Black Caucus leader in 1994 responsible for getting black congressman to vote for this legislation, the subject of the op-ed. Those were my priors. And it biased me, and still biases me about what was feasible and what was preferable then. I imagine the authors, having not had my experiences didn’t have those same biases.

So when I think about “corporatism masquerading as liberty”, I am thinking about from the position of someone who remembers ‘capitalism’ as having made America great and our having lost our way. Millennials like the authors of the Op-Ed would be hard pressed to remember when ‘capitalism’ wasn’t actually corporatism aka crony capitalism.

So that has to have a deep impact on how you see the world.

I mean, without looking it up on the Internet, in my mind I grew up in the 1980s when CEOs made $3 million a year to the $30,000 a year their employees made. That’s not a ridiculously huge discrepancy. But I also remember Michael Milken making $550 million one year, and that being the personification of greed. He was a banker, of course. They’re a different breed. But, I remember Lou Gerstner of IBM making gobs of money too – for ending IBM’s protective job-for-life culture. And that was sort of the beginning of the corporatist phase – the only phase of American (and global capitalism) Millennials know.

Again, without looking it up, I remember the CEO of Mannesmann getting a ridiculously rich golden parachute when Vodafone took them over at the height of the Internet bubble in the 1990s. And I remember that being a scandal that produced lawsuits – lawsuits that would never happen today because this behavior is well-entrenched. That was sort of the beginning of the corporatist phase in Europe to my mind. But, again, that would be the only world a Millennial would remember.

Sanders’ Socialism and Collectivism

 So, when people call Bernie Sanders a socialist as if that’s an insult – if you’re a Millennial – you’d be forgiven for thinking it’s a compliment. American-style capitalism hasn’t exactly covered itself in glory in the last twenty or twenty-five years, has it?

So, that’s the gist of what I am thinking today on President’s day – that my priors are very much influenced by the ideology of my childhood which told me that capitalism was good and socialism was bad and that the collapse of the Soviet Union was evidence of why all of that was true. I contrast that to people who became adults in this Millennium and the picture looks very different.

That makes them very open to Bernie Sanders.

Here’s food for thought though. Where I live, there is a neighborhood swimming pool. The only people who can use the pool are members. And the only people who can be members are people who are owners of houses in my neighborhood. All around me there are neighborhoods just like that, with private community pools for residents. And, that’s right in the American tradition, where communities band together privately to fund things they see as important – without taxpayer money.

But, right down the street, maybe a mile from where I live is a big county pool, funded and maintained by taxpayer money, available for everyone for a nominal charge. In fact, when I grew, there was just such a pool four blocks from my house. And every summer we went there for hours at a time for free, enjoying the benefits of collectivization. 

When I use the word ‘collectivism’, I am being provocative because it’s defined as “the political principle of centralized social and economic control, especially of all means of production.” That’s the definition of communism. But, I wasn’t paying for the swimming pool. It was funded under the political principle of centralized social and economic control. My municipality believed that swimming was a ‘right’ of citizens like ‘sanitary streets, sewers and garbage collection. And so swimming pools were funded and maintained via taxpayer money so that people like me could use them for free.

Just across the street from the pool were a bunch of tennis courts and basketball courts that I used a lot in my youth too. I could literally just walk up to the courts and start playing, no questions asked. How amazing is that? Collectivism at work. 

Millennials who believe in Bernie Sanders style socialism want more of that – a lot more of it. In fact, I would say they want to use the power of the state to ‘fix’ things they believe markets can’t fix – like the environmental externalities of industrial scale farming. In their view, we can ‘collectivise’ a lot more than we are currently doing and still call it “capitalism”. They thinks the environmental cataclysm that baby Boomers have left behind for their generation demands it. And that’s why Bernie Sanders is getting so much support from Millennials.

The Brokered Convention

So, I am looking at this as a generational struggle – where different generations have fundamentally different understandings of how well the existing system works or can work. In 2016, one could argue that the emergence and victory of Donald Trump represented a wholesale dissatisfaction with the way the system is working. But, it was fueled, by in large by older Americans who wanted to return to the days when the system ‘worked’. Some of the Sanders folks don’t see the system – American-style capitalism – as ever having worked. And they’re looking to overthrow that system.

So, what if, as I postulated, not enough people in the Democratic Party throw their lot in with Sanders? What if, come convention time, no one has enough delegates to lock up the Democratic nomination? Here’s the scenario:

Consider this: 57.6 percent of all pledged delegates will be allocated between March 3 and March 17, and unlike Republicans, every state will assign them proportionally. Suddenly, it becomes impossible to see how anyone could emerge from this process with an outright majority.

Am I getting ahead of myself? Sure. But getting ahead is important. It’s an increasingly likely scenario that ought to be addressed with a handshake in February, not a horror show in July.

Now is the moment for Democrats to state unequivocally that our nominee will not be chosen through 11th hour bargaining by ‘party elites’—that whoever enters the convention having duly earned the most delegates shall be nominated by acclamation. Yes, even if it’s a certain disheveled revolutionary from Vermont.

I don’t know if the establishment will commit to Bernie Sanders in that outcome. And if they don’t, it’s anybody’s guess what the consequences would be. However you look at it though, it helps Trump.

My view

My own opinion here is that American-style capitalism is broken, and that Barack Obama had a chance to meaningfully fix it. But he didn’t. Trump has had a chance to fix it too. He hasn’t. The same issues that existed in 2008 regarding healthcare, inequality, or economic insecurity are all still there. In some cases, they’re worse. So, an establishment candidate isn’t going to quell the thirst for change.

And when I look at other developed economies, 1st recently Germany, it’s clear that the exact same issues are at play there as well. So, it isn’t something unique to the US. Issues like Brexit or the election of Trump are simply localized and idiosyncratic manifestations of the same global phenomenon – which is the breakdown in moral legitimacy of the American-style and Western globalized capitalism. People the world over are suspicious of a world of free capital flows, free trade, and so-called laissez-faire capitalism in which wealth and material accumulation are the goal and in which some can achieve that goal in extreme measure while others live paycheck to paycheck.

I just don’t know how this ends. The last time we had anything like this level of angst, it ended in a global depression and war. I’m not convinced it has to end that way this time. But I am equally unconvinced that we can coalesce around some alternative before we get to economic depression and war. And I think we are about to enter the most tumultuous phase of this journey.