Socialism vs Corporatism
Lately many have characterized this administration as socialist, or having strong socialist leanings.  I differ with this characterization.  This is not to say Mr. Obama believes in free-markets by any means.  On the contrary, he has done and said much that demonstrates his fundamental misunderstanding and hostility towards the truly free market.  But a closer, honest examination of his policies and actions in office reveals that, much like the previous administration, he is very much a corporatist.  This in many ways can be more insidious and worse than being an outright socialist…

Is Obama a Socialist?
More like a corporatist.
In an April 14 Washington Post column , Norman Ornstein of the American Enterprise Institute, a conservative think tank, took issue with conservatives (and presumably some libertarians) who call President Obama a socialist.  Ornstein’s counterargument largely consisted of demonstrating that most of Obama’s policies, from health care to the “stimulus” to foreign policy, were based on ideas proposed by conservatives or Republicans, or passed with their cooperation or approval.

Obama Is Another Corporatist, Not a Socialist
Corporatism hardly began with the current administration, of course, or its predecessor. In an article published in 2002, which deserves far more attention than it has ever received, commentator Robert Locke outlined the basic ideas behind corporatism and traced some of its history and influence.

According to Locke, corporatism “has the outward form of capitalism in that it preserves private ownership and private management, but with a crucial difference: as under socialism, government guarantees the flow of material goods, which under true capitalism it does not.” (Emphasis in original.) Corporatism does not really trust the marketplace to provide. It manipulates the marketplace “to deliver goods to political constituencies [which now include] basically everyone from economic elites to ordinary consumers.”

What has made corporatism so tempting is thus not hard to see. Locke explains further:

"Big business, whatever its casuists at the Wall Street Journal editorial page may pretend, likes big government, except when big government gets greedy and tries to renegotiate the division of spoils. Although big business was an historic adversary of the introduction of the corporatist state, it eventually found common ground with it. The first thing big business has in common with big government is managerialism. The technocratic manager, who deals in impersonal mass aggregates, organizes through bureaucracy, and rules through expertise without assuming personal responsibility, is common to both. The second thing big business likes about big government is that it has a competitive advantage over small business in doing business with it and negotiating favors. Big government, in turn, likes big business because it is manageable; it does what it is told. It is much easier to impose affirmative action or racial sensitivity training on AT&T than on 50,000 corner stores. This is why big business has become a key enforcer of political correctness."

Locke traces the history of corporatism to the idea that the marketplace is not really self-regulating, since the "big boys" will not "play fair"; hence economic activity requires outside management, be it through regulation, subsidy, or control over the monetary system. The first major corporatist enterprise of the 20th century was none other than the Federal Reserve, a private corporation that is embedded within the federal government — as its own literature states, “independent within the government.”

Then, in the 1930s, the (Fed-caused) Great Depression further eroded confidence in the marketplace to deliver material goods without government intervention. That period gave us Social Security and Medicare: the beginnings of the intergeneration redistribution of wealth we have been stuck with ever since. As political constituencies both large and small have grown, the corporatist edifice has grown along with them, often with the full support of the mainstream voting public both liberal and conservative.

The Left likes corporatism for three reasons, says Locke: (1) it satisfies government’s (i.e., politicians’) lust for power; (2) its machinery makes redistribution of wealth to favored constituencies possible; and (3) it enables politicians to accomplish this while remaining personally affluent.

The Right likes corporatism for three different reasons, says Locke: (1) big business can achieve enormous profits, capitalist-style, while unloading some of the cost and risk onto government; (2) the merger of business and government enables those at the helm of big business to influence government in ways favorable to themselves (e.g., thwarting true competition, which big business has seen as a nuisance since John D. Rockefeller, Sr. was heard to pronounce competition a “sin”); and (3) this merger seems able to minimize or dissipate whatever social unrest its policies create in the masses.

Locke provides several examples of corporatist endeavors besides the Federal Reserve. Some are even more obvious in today’s post-bailout climate: Fannie Mae, Freddie Mac, the insurance industry generally (especially evident given Obama/Pelosi-care!), real estate, federal financing of scientific research, agricultural price-supports, and many others; we would probably want to add to our list so-called "free trade" agreements (e.g., NAFTA, CAFTA, etc.).

The point to all this is that if we going to criticize the Obama administration’s economic policies, we need to be sure we have its economics right — and if we are paying attention, we see far more continuity with past administrations than we do change. There have been no fundamental changes, despite candidate-Obama’s mantra about “change you can believe in.”  (For this reason, many on the Left have grown as uneasy with this administration as any Tea Partier, even if for different reasons.)