Gods That Fail

Harold Meyerson in the Washington Post has a column titled “Gods That Failed.” He’s referring to a famous book:

In 1949, a number of famous writers, among them Arthur Koestler, André Gide, Richard Wright, Stephen Spender and Ignazio Silone, wrote essays explaining why they were no longer communists. The essays were collected in a volume entitled “The God That Failed.”

And then he makes this analogy: “Today, conservative intellectuals might want to consider writing a tome on the failure of their own beloved deity, unregulated capitalism. “

Where to begin? Certainly we haven’t had any unregulated capitalism lately. As I put it the other day, the kind of capitalism that has encountered the current crisis is “the kind in which a central monetary authority manipulates money and credit, the central government taxes and redistributes $3 trillion a year, huge government-sponsored enterprises create a taxpayer-backed duopoly in the mortgage business, tax laws encourage excessive use of debt financing, and government pressures banks to make bad loans.”

As for conservative intellectuals, some of them may wish for some form of “unregulated capitalism,” though plenty of them – from Russell Kirk to David Brooks and Michael Gerson and that Arkansas Aristotle, Mike Huckabee – have been pretty darn skeptical about capitalism. But whatever the more free-market conservatives may have dreamed of, they didn’t get laissez-faire. Nor did they ever make capitalism their deity, the way communists truly did make the workers’ state their god.

But let’s think about the comparison that Meyerson is making. Some intellectuals once supported communism, and that failed. Some intellectuals, we’ll concede for the moment, were just as enraptured with capitalism; and that system, too, in Meyerson’s view, has failed. Are these equivalent failures?

Communism’s failure involved Stalin’s terror-famine in Ukraine, the Gulag, the deportation of the Kulaks, the Katyn Forest massacre, Mao’s Cultural Revolution, Che Guevara’s executions in Havana, the flight of the boat people from Vietnam, Pol Pot’s mass slaughter – a total death toll of 94 million people, according to the Black Book of Communism. Prominent American leftists – from Lillian Hellman and Dalton Trumbo and lots of other writers to Alger Hiss of the State Department and FDR speechwriter Michael Straight, who became the publisher of The New Republic – were members of the party that did these things. And that party had total control in the countries that it ruled. There were no opposition parties, no filibusters, no election-related maneuverings that prevented the party in power from getting what it wanted.

What the Communist Party wanted, it got. Communism in practice was communist theory made real.

In the United States, on the other hand, economic and political outcomes are always the result of jockeying between parties and interest groups. So even if Ronald Reagan and his advisers wanted to give Americans “unregulated capitalism,” they had to deal with Tip O’Neill and the Democrats, and with critics in the media, and with many other players. As these forces played out, in the late 1970s and early 1980s some deregulation did occur, along with some tax-cutting. And indeed there was some financial deregulation in the Clinton years as well.

And what is the ”failure,” as Meyerson puts it, of this semi-deregulated capitalism? Does it involve mass starvation? Does it involve terror-famines? Does it involve millions of deaths? No, so far it involves a sharp decline in the stock market from record levels. Taking 1980 as the starting point for Meyerson’s nightmare vision of “unregulated capitalism,” here’s what has happened to the S&P 500. It’s had some dips, but it still reflects vast wealth creation, and vast increases in the assets of our IRAs and 401(k)s.

(click for larger version)

The “failure” of capitalism and the failure of communism are not morally equivalent, and Meyerson should be embarrassed to even imply such a comparison.