EUROPE & AMERICA: SOCIALISM v. CAPITALISM - May 4, 2009

In a classic display of “throwing the baby with the bathwater” the current economic crisis and the panic that always comes with situations like that are threatening to undo 50 years of progress in the world economic structure. Even more threatening is the lurking, constantly barely beneath the surface, social engineering of unrepentant socialist engineers.  They think and they gleefully proclaim that the global economic crisis has aided the cause of ‘European’ socialism and dented trust in ‘American’ capitalism. And it did not take long for EU leaders, political and media elites, even the Pope, to queue to read the last rites over the corpse of American Capitalism. 

But what most surprised general observers and anti-capitalist socialists alike was the shocking readiness with which the US Bush administration, allegedly the muscular wing of American conservatism – and thus pro-free market capitalism – opted for a radically socialist response. Once the UK socialist leader Gordon Brown took the path of Keynesian monetarism – injecting massive stimuli of public money into the banking and financial sectors – Europe and America duly followed suit.  

Even so, to borrow from Mark Twain, “Reports of the death of capitalism have been greatly exaggerated”.  First because, as British economist Samuel Brittan pointed out in a speech in 2003, “The Bush administration is much more a pro-business government than it is a genuine supporter of competitive free markets.” Note former President Bush’s refusal to relinquish protectionism for American farmers.  But Brittan also noted the “ultra-Keynesian fervour of the Bush Administration” – a distinct preference for government to provide financial impetus and stimulation of the economy.  Second, at time of writing, all the economic signs are that the various financial stimuli packages – the socialist answer – are not likely to deliver much of the promised results. The banks are not responding to the stimulus by lending and, consequently, businesses are laying thousands off work. Quite simply, the queue for public handouts is growing weekly. All the signs are that far from ‘easing the pain’ all the socialist answer is doing is anaesthetizing it and greatly extending the potential period of suffering. Though it is not our purpose here to discuss these matters in the detail they need, no discussion of socialism and capitalism could possibly begin without addressing the current crisis. We are concerned with focusing on how the respective ideologies and the policies they underpin have created a great divide between Europe and America more generally. To that we must return.

IDEOLOGY OVER COMPETITIVENESS

As the economic crisis deepens, President Obama has been given powerful mandate for ‘change’, one that may mean European-style socialism has a window of opportunity to eclipse American capitalism, by default rather than as a superior system.  None of which is likely, anytime soon, to reverse the anti-American, anti-capitalist themes of European policies.    While the EU has used Kyoto and alleged US ‘obligations’ under it  – a treaty that was only ever meant to be voluntary – as a stick with which to beat the US, it has also tied environmental themes in with its broader anti-capitalist agenda.  And nowhere has this been given greater impetus recently than in the EU’s ‘unbundling’ campaign for industry.  The essence of ‘unbundling’ is the enforced political break up of often successful global business conglomerates in the name of greater competition, a policy at odds with the spirit of deregulated American capitalism.  Enforced unbundling, by definition, remains the hand-tool of centralist control. And in an increasingly global economy, one that can easily pressure successful industries to leave home soil or become wide open to foreign takeover. Chief among the EU’s targets have been some of the world’s leading, and to date, most successful energy companies, including oil giants BP, Royal Dutch Shell, Total and Eni. Together with Europe’s equally successful power companies, all have felt the hot breath of EU centralist pressure to divest themselves of major parts of their business.    

Other European heavy industry too has been targeted by the Eurocracy, especially high energy users who are therefore also high carbon dioxide emitters.  Such is the relentless pursuit of central control in socialist Europe that the EU appears willing even to sacrifice the global competitiveness of its top companies in pursuit of its market ideology.  EU leaders have, however, been so worried by the strength of opposition from European business leaders that protectionism has, once again, reared its ugly head. Protectionism against foreign takeovers and public subsidies and other publicly funded ‘perks’ to prevent a mass exodus of energy and other companies openly threatening as much.  Not surprisingly, the impasse between socialist Eurocrat and capitalist industrialist, combined with inevitable impact of the economic crisis, has run the energy and business unbundling program, for the moment, into the sand. 

EU HYPOCRISY

But if the ideological bent of EU philosophy is happy to threaten the global competitiveness of its own ‘capitalist’ success stories, it has not stopped the EU acting with unmitigated pragmatic hypocrisy when it suits.  Many governments are finding it difficult to ‘square the circle’ and marry preferred new energy policies and aspirational climate targets. But the EU’s own failure to achieve coherent energy and climate policies has not stopped it from persistently berating the US for its failure to ratify Kyoto – even though, in practice, no major economy has carried through on its Kyoto commitments.  That’s because the EU seems more interested in getting America to do penance for being the world’s leading carbon dioxide ‘polluter’ – and bankrupt itself in the process.  The fact that the link between carbon dioxide and temperature rises is mere theory has not prevented the EU from designating CO2 Public Enemy No 1. Of course, the chief culprit in producing carbon emissions is the burning of fossil fuel, more specifically, coal. King Coal, however, is currently making a revolutionary comeback with a whole new generation of coal-fired, carbon emitting power plants being built across Europe – and, perversely, with the EU’s blessing.  The EU will tell us that it will insist on carbon capture or sequestration facilities (adding a billion dollars of extra cost for which yet more public funding may be made available) being a precondition for the building of such plants. But the reality is that carbon sequestration is by and large yet another political slogan. Storing CO2 below ground is far more difficult and an extra-ordinarily more expensive process than has been discussed.

As if this energy-climate policy ‘contradiction’ is not enough, last year, to fuel the industrial plants, the EU agreed its biggest coal importing deal in a decade – with America, for high-grade American coal.   The same coal President Obama does not want Americans using for any new coal-fired plants in America, plants he has threatened to bankrupt.   Just socialist inconsistency – or rank EU hypocrisy?

The unbundling policy, however, has become a ubiquitous tool that, elsewhere, has developed into an even more overt anti-US edge.  In 2008 a complaint was filed with the European Commission claiming Microsoft was breaking EU Antitrust laws by bundling its Internet Explorer browser with its own Windows operating system.   In January 2009, the Commission ruled against Microsoft.  Faced with paying a massive fine for ‘anti-competitive behavior’ Microsoft may, at the time of writing, have struck a compromise deal.  It involves what the European weekly New Europe called “helping to spread the European spirit, by incorporating the EU flag into the next Windows 7 logo.” Not a bad move.  Vastly American capitalist enterprise coupled with European socialist free advertising.  But here’s the thing.  Most modern electronic gizmos bundle together with their product an array of associated paraphernalia that render it instantly useable for the buyer. That’s how good ‘capitalist’ practice works. But the EU chose to pick a high profile fight with the doyen of successful global American capitalist enterprise, the Microsoft Corporation, to make its highly illogical point. 

But then the American ownership of the Net has long been a target for EU ire. While the Net does have a degree of regulation, it still bears the ‘free enterprise’ (and that means free speech) hallmark of its American controllers. The EU wants far more central control of those twin ‘hated’ elements of capitalism; free enterprise and, above all, free speech. In 2005 European Union regulators formally proposed stripping the US of their control of the Internet.  The EU demanded what all socialists want, ’intergovernmental control’ or centralized control by a group of socialists. Control the information and you control the people has always been a socialist maxim. The Internet today is perhaps the only mass medium where genuine debate and free speech operates. And, once again, it is the liberty-loving Americans who are standing in the EU’s way.

The EU, of course, has no legislative mandate for any of these anti-capitalist policies. It doesn’t need it, of course because, though the EU may have a Parliament, it is not a democratic institution.  Just a handful of individuals give the EU Commissioners their power.  The EU Commission does not have to answer to ‘the people’ for either its policies or power – for that is not how socialism, at root, works. As Britain’s ‘Iron Lady’, Margaret Thatcher pointed out in the 1980s: “Socialists don’t like ordinary people choosing, for they might not choose socialism.” A comment which perfectly explains Mrs Thatcher’s abiding hostility towards the whole European Union project. At the same time, she described the USA as, “The greatest force for liberty the world has ever known.”  We believe Mrs Thatcher’s insight has never been more valid than today.

Michael J. Economides and Peter C. Glover

--------------------

Michael J. Economides is a professor at the University of Houston, author of "The Color of Oil", editor-in-chief at Energy Tribune and a regular political and energy analyst for the U.S. media.    

Peter C. Glover is a British writer specializing in political, energy and climate issues. He is European Associate Editor at Energy Tribune and author of "The Politics of Faith: Essays on the morality of key current affairs."

--------------------