Liberalism and Wall Street

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Liberalism and Wall Street
By Barry Grey
16 January 2010

In an op-ed piece published January 10 entitled “The Other Plot to
Wreck America,” New York Times columnist Frank Rich denounces the
criminal actions of Wall Street executives and the official cover-up
of their operations. He correctly asserts that the havoc created by
the bankers poses a threat to the American people “on a more
devastating scale than any Al Qaeda attack.”

He writes: “Americans must be told how Wall Street gamed and inflated
the housing bubble, made out like bandits, and then left millions of
households in ruin.”

He accuses both parties and, by implication, the Obama administration
of aiding and abetting the looting of the country by the banks. He
points out, for example, the key role played by Clinton’s treasury
secretary and former Citigroup executive, Robert Rubin, in dismantling
the last vestiges of the Roosevelt-era bank reforms, and the
complicity of Obama’s treasury secretary, Timothy Geithner, in
secretly funneling tens of billions of taxpayer dollars to Wall Street
banks in the government bailout of the insurance giant AIG.

Rich paints an accurate picture of the American political system,
“where the banking lobby rules in both parties and the revolving door
between finance and government never stops spinning.”

Among liberal commentators, including fellow columnists at the New
York Times, Rich is unusual. A talented writer, he has the ability, no
doubt related to his past career as the newspaper’s drama critic, to
make acute observations.

Yet when it comes to drawing political conclusions from his portrait
of a society dominated by a financial oligarchy, his analysis
collapses into banality.

What is his answer to the irresponsible and destructive tyranny of the
banks? It is to entrust his hopes, and the fate of the American
people, to the deliberations of the latest bipartisan congressional
panel set up to carry out an official whitewash. “It is against this
backdrop,” he writes, “that this week’s long-awaited initial public
hearings of the Financial Crisis Inquiry Commission are so critical.”

No serious observer can place the slightest confidence in this body,
set up almost as an afterthought last May by the Democratic leadership
of Congress, after they had authorized the doubling of both the
federal budget deficit and the national debt to rescue Wall Street.
Rich admits that the panel’s funding is derisory. Its $8 million
budget, he points out, is less than the combined amount spent by three
of the major banks in the first nine months of 2009 to lobby Congress
against any genuine banking reform.

In the event, the commission’s first hearing, held Wednesday, provided
yet another occasion for the bankers to equivocate, lie and lord it
over their servile inquisitors. (See: “Wall Street CEOs testify before
financial crisis commission”).

The strange and obvious contrast between Rich’s ability to make astute
observations about American society and the intellectually and
politically impoverished conclusions he draws reflects more than his
personal limitations. It reflects the fate of liberal thought in America.

A hundred years ago, it was widely accepted that the roots of poverty,
exploitation and political corruption lay in the nature of the
capitalist system. There was any number of liberal and left thinkers
who clearly understood that the profit system was fundamentally at
odds with socially progressive and democratic values. Muckrakers such
as Upton Sinclair and Ida Turnbull, while by no means revolutionaries,
contributed to the development of a socialist movement through their
brilliant exposures of the crimes of big business.

In the 1920s and 1930s, the liberal philosopher and educator John
Dewey argued that liberalism had to disassociate itself from
capitalist private ownership and production for profit. He insisted
that liberal values were incompatible with capitalist economics.

Dewey criticized Roosevelt’s New Deal from the left, correctly
characterizing it as a palliative that did not fundamentally alter the
structure of American society. He sought to develop, on the basis of
liberal thought, a perspective for socialism to be achieved by
reformist means.

In his 1935 essay, “The Crisis in Liberalism,” Dewey wrote: “Organized
social planning, put into effect for the creation of an order in which
industry and finance are socially directed in behalf of institutions
that provide the material basis for the cultural liberation and growth
of individuals, is now the sole method of social action by which
liberalism can realize its professed aims.”

The following year, he wrote: “Humane liberalism in order to save
itself must cease to deal with symptoms and go to the causes of which
inequalities and oppressions are but the symptoms. In order to endure
under present conditions, liberalism must become radical in the sense
that, instead of using social power to ameliorate the evil
consequences of the existing system, it shall use social power to
change the system.”

The radical strand of liberalism associated with Dewey was
fundamentally flawed and unviable. As a leading exponent of
pragmatism, a branch of idealist philosophy, Dewey rejected a
materialist conception of history as well as the class struggle. His
ideal of a non-revolutionary transition to a form of socialism through
legislation, etc., had already been overtaken by historical events by
the time of the United States’ entry into World War II.

Even the most principled representatives of American liberalism could
not theoretically or programmatically go beyond the limits of a
petty-bourgeois perspective. This prepared the ground for the post-war
embrace by American liberalism of US imperialism.

When the United States emerged from the war as the dominant world
power, American liberals for the most part lined up behind the global
hegemonic aims of the ruling class, which took the most reactionary
forms within the US. American liberalism backed the establishment of
the national security state and supported the ferocious assault on
socialist thought that accompanied the launching of the Cold War
against the Soviet Union.

Leading liberals supplied the “democratic” rationalizations for the
anti-communist witch-hunt and supported the purge of socialists and
leftists from the trade unions, the film and entertainment industry,
the schools and academia.

The damage to American political, intellectual and cultural life from
the post-war alliance of the liberals with the most reactionary forces
within the US ruling elite was immense, and its legacy continues to
play a destructive and suffocating role.

The 1960s saw the beginnings of a rebellion against the stultifying
and repressive legacy of McCarthyism. This was bound up with the
emergence of revolutionary struggles of the working class
internationally beginning in the late 1960s—most notably, the French
General Strike of 1968—and the upsurge of the American working class
and student youth during the same period.

The betrayal of these struggles by the Stalinist, social democratic
and trade union bureaucracies enabled capitalism to stabilize itself
and go on the offensive against the working class in the late 1970s
and 1980s. Substantial sections of liberals saw their personal wealth
rise considerably as a result of the policies associated with Reagan
and his successors, and this change in social position was reflected
in an accelerated turn to the right politically.

American liberalism accommodated itself to the free market nostrums of
the right wing and the rapid growth of social inequality, and
repudiated any serious program for social reform.

Rich is a product of this historical process. The banal political
prescriptions that he offers are, in an objective sense, a reflection
of the bankruptcy of liberalism.

There is no solution to the crisis of American society outside of the
mobilization of the working class on the basis of a revolutionary
program to abolish private ownership of the means of production and
put an end to the socially destructive accumulation of personal wealth
by the financial oligarchy.

http://wsws.org/articles/2010/jan2010/rich-j16.shtml

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