PETER BRIMELOW On Post-Communist Neosocialism, 1989: "A Green Face Instead Of A Red Face?"
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Earlier (2015) by Peter Brimelow: A Guilty Elite: Immigration Beyond Economics

James Fulford writes: editor Peter Brimelow’s 1989 commentary below notes that socialism, although it seemed to have been killed by the economic failures that led to the fall of the Soviet Union, refuses to lie down. One reason: it mutated into environmentalism, and while “Socialism used to claim to be a science, justified in the name of efficiency. Now it is justified in the name of equity.” Nowadays that seems to always mean racial equityreparations and Affirmative Action, etc.—and that means that if this were written today it would have to be called something like “Socialism With A Brown Face, Not A Red One”… and that means that Forbes wouldn’t print it.

A Green Face Instead Of A Red Face?

This story originally appeared in the December 11, 1989, issue of Forbes magazine.

If socialism is dead, as so many pundits claim, why won’t it lie down?

Or is socialism alive and well and living in (among other places) Washington, D.C.?

At first glance, the spectacle of joyful Germans waltzing through the Berlin Wall seems conclusive proof that Soviet-style socialism has failed. Only such a catastrophe could have forced Moscow to put at risk its 1945 partition of Germany, the foundation of its foreign policy in Europe, which it established only at the price of millions from the Red Army dead.

Indeed, events in East Germany appear to support this year’s intellectual sensation: State Department analyst Francis Fukuyama’s essay in National Interest magazine [Summer 1989] arguing that the worldwide “unabashed victory of economic and political liberalism” meant, in the words of his title, “The End of History?”

Mankind, Fukuyama suggested, has reached its ultimate social form. There are no “viable systematic alternatives” to the West’s “pro-market, anti-statist” way of organizing society.

Fukuyama’s daring thesis has attracted a lot of attention. Let’s just focus on the economics.

Note that when Fukuyama says that “liberalism” has triumphed he doesn’t mean the Teddy Kennedy kind. He means the old-fashioned kind, which advocated free markets and a minimal role for government.

In other words, he is endorsing the verdict that economist Robert Heilbroner, himself a longtime socialist sympathizer, offered in the New Yorker early this year: “Less than 75 years after it officially began, the contest between capitalism and socialism is over: Capitalism has won.” [The Triumph of Capitalism, January 16, 1989].

But what is (or was) “socialism”?

A lot of coffee has been drunk debating this question. But, from an economic point of view, the answer is simple and precise. Webster’s defines socialism as “governmental ownership and administration of the means of production and distribution of goods.” Socialism is usually associated with a belief that the economy can be better organized by government planning than by reliance on market forces, and by a government-organized redistribution of income.

In totalitarian socialist societies like the Soviet Union, the government owns and operates virtually everything. In democratic socialist societies like Sweden, the government and private business both own and operate their own sectors.

One measure of the extent of socialism in a given society is the size of the government sector: its spending as a proportion of gross domestic product. The CIA estimates that in the Soviet Union government spending would probably amount to as much as 92% of GDP. Organization of Economic Cooperation & Development figures for 1987 show that in Sweden government spending was some 60% of GDP.

Even in the U.S., government spending (including state and local governments) was 37% of GDP in 1987. You could say we are a bit over one-third socialist.

Which leads us to Forbes‘ first question:

  • If socialism is dead, then why isn’t it lying down?

Federal spending was boosted by World War II to a peak of 45.2% of gross national product. But it never returned to prewar levels. Korea and Vietnam had a similar effect. And after Vietnam, under President Carter, federal spending began to climb and didn’t stop till it peaked at 24.3% of GNP in 1983, under the alleged budget-cutter Ronald Reagan. Subsequently, it dropped slightly, to 22.3% of GNP in 1988.

And this wasn’t all. During the Reagan years, state and local governments stepped up their spending. The result was that total government outlays in the U.S. achieved the record level of 36.9% of GDP in 1986. They fell only slightly, to 36.7%, in 1987.

By this measure, the U.S. economy had much more of a socialist element than most Americans realize—and, far from lying down, that element has been growing stronger.

Socialism is not exactly lying down in the other major industrial economies either. Government spending in the countries constituting the European community rose from over 36% of GDP in 1967 to a peak of 51% in 1987. This in spite of recent privatization policies in Britain (peak spending: 48% of GDP in 1984) and France (53% in 1984), plus a burst of exceptional economic growth in West Germany. But spending is still safely above 1960s levels.

Canadian government spending was only 32% in 1967; in 1987 it was 46%. And even Japanese spending rose from 18% to over 33%.

Government spending is a form of expropriation. But is it the same thing as owning the means of production? This raises Forbes‘ second question:

  • Is socialism alive and well and living in Washington, D.C.?

The real point of socialism, after all, is political control of the economy—”Put politics in command,” as Chairman Mao said. But ownership is not necessary for control. Taxing and spending are control mechanisms too.

And regulation also puts politics in command of the economy. Rent control, for example, can nullify property rights without altering a cent in the government accounts.

Measuring regulation is inherently difficult. One accepted guidepost for regulation is the gross number of pages in the Federal Register, which records all rules and notices issued by federal agencies. In the U.S., regulation bubbled in World War II—and erupted in the 1970s under Presidents Nixon, Ford and Carter. The Reagan years saw a subsidence—but not to previous levels, and only temporarily.

The Center for Study of American Business at Washington University in St. Louis measures regulation by looking at the cost of the regulatory agencies. The idea is that regulators don’t sit around doing nothing, so that regulatory impact on the economy rises in proportion to the money spent on regulation. By this measure, regulation increased rapidly in the 1970s, stalled in the early Reagan years, and then resumed its upward march. President Bush’s 1990 budget projects a small decrease. But Bush will still spend more on regulation in real terms than President Carter.

The ultimate extension of political control: to force business to spend money in ways that it would not otherwise do. In this way, policymakers can manipulate the economy to solve social problems—or buy votes, depending on your point of view—without having to tax or borrow, both increasingly unpleasant options (Forbes, April 6, 1987). Instead, business gets to pass on the cost and take the heat in place of the politicians.

“Mandated benefits” have been around for years, but have increased in recent years. The U.S. Chamber of Commerce estimates that legally required benefits paid by employers rose from nearly 4% of overall payrolls in 1951 to about 9% in 1988. And this is just the beginning.

One current example of politicians’ spending employers’ money now before Congress: the Americans with Disabilities Act supported by Sen. Kennedy. This legislation defines “handicapped” so broadly as to include an estimated 43 million people. It proposes to prevent “discrimination” against them, for example by compelling landlords, bus operators and telephone companies to pay for special facilities.

The emotional atmosphere surrounding the disability act is typical of socialism in its new, mutated form. Socialism used to claim to be a science, justified in the name of efficiency. Now it is justified in the name of equity. But the result remains the same—government control.

And new, mutated socialists find brand-new problems that they insist can be solved only through government control. “They tell the same lies about the environment that they used to tell about the market,” says Paul Craig Roberts of the Center for Strategic and International Studies, an expert on the Soviet economy and a veteran of many such arguments. He compares popular scares such as acid rain and global warming, which he says ignore scientific evidence in their enthusiasm for an expensive fix, to allegations that “market failure” is responsible for capitalism’s periodic slumps.

Socialism with a green face instead of a red face?

Conclusion: Fukuyama is wrong. History is not over in the sense he meant it. One of the antagonists has simply mutated.

This mutated socialism needs a name. We’ve had neoconservatism and neoliberalism. How about neosocialism? Isn’t that a better term than “liberal” to define what it stands for?

After all, as Princeton Professor Lawrence Stone recently told The New York Times: “Some of my young colleagues call themselves neo-Marxists. I can’t see much difference between their views and mine, and I call myself a liberal Democrat” [EDUCATION; The Mainstreaming of Marxism in U.S. Colleges, by Felicity Barringer, October 25, 1989].

Peter Brimelow [Email him] is the editor of His best-selling book, Alien Nation: Common Sense About America’s Immigration Disaster, is now available in Kindle format.


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