Stephen Moore recently wrote a Wall Street Journal column comparing our current economic situation to the one described in Ayn Rand’s novel Atlas Shrugged. Moore writes that “[t]he current economic strategy is right out of "Atlas Shrugged… [A]s "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls." This article was quite popular in the conservative blogosphere, and echoed what many conservatives feel about the economic condition.
My feelings about Atlas Shrugged are mixed—I hate the book, and consider it a literary enormity advocating an evil and stupid philosophy. Frankly, I can’t imagine how anyone could admire, or even finish, the book. But evidently there are people who can do both, and many people I admire, such as Rush Limbaugh, Charles Murray, and Clarence Thomas, are among then. So, evidently, the book has some value, though I can’t see it.
But whether or not Atlas Shrugged is worth reading, it is not a fifty-year-old prophecy for the present day. What is happening now is not very desirable—but it’s not socialism either. It is something quite different.
Actually, anyone who seriously thinks that what the federal government is doing right now is really socialism shows how little they understand of socialism. According to Wikipedia, socialism is “a set of economic theories advocating state or collective ownership and administration of the means of production and distribution of goods, and an egalitarian society characterized by equal opportunities for all individuals and a fair or egalitarian distribution of wealth.” The federal government is not guilty of any of these things.
There is no government takeover of production, nor of distribution. There is no “egalitarian distribution of wealth” (or at least no more than usual); on the contrary, President-elect Obama is pushing for tax cuts. So most of the conditions for socialism aren’t even close to being met here.
And more importantly, true socialism can be (very) broadly defined as government taking over business. But here, it’s the opposite (or at least very close to it)—business is taking over government.
For years, Fannie Mae and Freddie Mac operated under the certain assumption that the federal government would bail them out if necessary, and they were right. All the banks and insurance companies that were bailed out simply asked Washington for the cash—there were few conditions placed upon the money. Even when the federal government partially nationalized nine of the country’s largest banks, the “nationalization” took the form of a massive cash infusion, more a gift than a seizure of assets.
When GM and Chrysler needed money, they jumped aboard the bailout gravy train. Did the government take over these corporations? Did it give them money with strings attached? Did it set rules for the companies to follow? No, it did none of these things. Instead, it forked over thirteen billion dollars essentially unconditionally, even though neither company changed its business habits in the least.
The federal government isn’t taking over private enterprise—if anything, the opposite is true. Big business is taking over, or at least looting, government. The federal government has spent around eight trillion on various bailouts, most of which inject money directly into failing companies. That isn’t socialism.
Of course, just because it isn’t socialism doesn’t mean that it’s desirable. The merger of government and corporations is usually called fascism, but true fascism usually gives the state more influence. (It’s hard to imagine Mussolini, or Franco, simply giving half of their countries GDP to corporations. They would almost certainly demand something in return). A better name, perhaps, would be corporatism, where the government is influenced by large interest groups.
In Ayn Rand’s novel, Atlas represents business, and the book revolves around the ways that business leaders fight against socialism. (If that makes the book sound interesting, it isn’t). But in America in 2009, Atlas isn’t shrugging off socialism’s chains—on the contrary, he’s using them to help support his burden.
Corporatism is no better than socialism, but it is different. (Biggest difference: socialism tries to bolster equality, corporatism tries to help the rich). It might not be much comfort to know that the federal government is embracing corporatism instead of socialism—but it is, I think, important to know the difference.