by Patrick Martin
23 October 2008
For the past month, a long-demonized word has been increasingly injected into political discussion in the United States—socialism. The Treasury bailout of Wall Street was initially defeated in the House of Representatives, largely through the votes of the ultra-right faction of the Republican Party, which declared the massive government intervention into the financial markets to be … “socialism.”
This language was reflected in the media, with descriptions of the bailout, by both opponents and defenders, as “socialism for the rich,” or “Wall Street socialism.” ABC News commentator Sam Donaldson declared, “Socialism has now washed over free-market capitalism.” The Washington Post’s financial columnist, Steven Pearlstein, commented sarcastically, “A little bit of well-timed, well-crafted socialism is just the thing to save capitalism from itself.”
In the minds of the McCain campaign strategists, this may be nothing more than the thousand and first instance of McCarthy-style red-baiting, a staple of the Republican right for more than half a century. But there are deeper factors at work.
The federal bailout of Wall Street—despite the hysteria of the House Republicans—has nothing to do with socialism. The measures could be more correctly characterized, not as nationalization of the banks, but as privatization of the US Treasury, turning over its vast resources to billionaires and speculators.
The charges of “socialism” demonstrate the degree to which the eruption of financial crisis has confused and frightened the political representatives of the ruling elite. They recognize that the near-breakdown of the credit markets has discredited the capitalist system in the eyes of the working people, the vast majority of the population, and they react nervously to anything that might provide an opening for the expression of anti-capitalist sentiment.
This political disorientation underlies the latest denunciations of Obama for his endorsement of marginally higher taxes on the rich to “spread the wealth around.” In his radio address Saturday, McCain quoted this comment and then declared that it “sounded a lot like socialism.” Obama has replied defensively, citing his support from paragons of big business like billionaire Warren Buffett, the richest man in America, former Federal Reserve Board chairman Paul Volcker, and a host of corporate chieftains.
Obama’s denial of any connection to socialism is the truest statement he has made in the course of the campaign. He is, like McCain, a defender of the profit system and, if anything, the preferred candidate of Wall Street and finance capital. According to a report Wednesday in the Washington Post, some three quarters of the record $600 million raised by the Obama campaign has come from the wealthy and corporate interests.