Top Economist Alan Blinder wrote this article last week supporting letting the Bush tax cuts on the rich expire.

The Basic idea behind it is that an unemployed person or a lower income person will spend any extra money he gets right away (he doesn’t have a choice) and thus stimulate the economy, whereas a rich person will save it and thus not stimulate the economy.

One thing that’s left out in almost all discussions is class. Most of the rich people that received the Bush tax cuts will make most of their money through investments and controlling businesses for a profit, most of the poor make their money on their labor. Any sound businessman knows the way you make a profit is to spend the least amount of money while profiting the most, any of the money you give to businessmen will be used to make them more money. That money won’t trickle down, hiring won’t increase simply because those doing the hiring have more money, hiring will only increase if those doing the hiring must hire more in order to make more profit, which will only happen when demand increases.

In fact even if demand increases and unemployment is high, chances are what will happen first is that workers with jobs will have to work harder before they hire, and because of job insecurity, workers won’t really have choice but to comply. The money will only trickle down when the rich have made as much profit possible before it trickles down, and generally that ceiling is never reached, especially since investing in financial schemes is generally more profitable than investing in productive industries, the derivatives market doesn’t trickle down (if anything it will end up costing the poor more when those markets blow up and the government has to bail them out).

Obviously letting the tax cuts expire is the right thing to do, obviously unemployment benefits must continue. But things need to be done to change the way business is done in the United States, as long as industry is run completely by and for the rich and the business class, unemployment will stay high, wages will stay low, and any economic growth will shoot straight to the top (why wouldn’t it, they control where it goes). One way to change this is Co-Determination (In Germany where the practice started it’s called Mitbestimmungsgesetz), which is a policy of companies being required to include representatives of the workers in the board of directors. With worker participation in companies the interests change, when more demand is needed, chances are the workers will prefer hiring more workers rather than wanting to work more, when company profits go up chances are they won’t want all of those profits going to CEO bonuses, when profits go down chances are layoffs are not the first option.

These sorts of policies, increasing democracy in the economy, lessening the economic power of the business class, that’s what’s going to get the economy out of the dump. We don’t need to just pump more money into the economy, we need to change whose interests the economy serves, and the only way that will happen is changing who controls the economy.

Some people would say its government control over the economy, or state ownership, others would say it’s the welfare state or government regulation, but these definitions generally come from people that do not identify as socialists. So we have to go to the source, what do socialists say socialism means. Eugene Debs was probably the most well known socialist in American history, he ran for president from Prison (he was put away for speaking out against WWI) and received 6% of the vote in 1920 (in the middle of the first red scare), and this is his definition of the goals of socialism. “The working class must get rid of the whole brood of masters and exploiters, and put themselves in possession and control of the means of production, that they may have steady employment without consulting a capitalist employer, large or small, and that they may get the wealth their labor produces, all of it, and enjoy with their families the fruits of their industry in comfortable and happy homes, abundant and wholesome food, proper clothing and all other things necessary to “life, liberty and the pursuit of happiness.”

So what does that mean? Well he went a little bit further about the choice of Capitalism and Socialism by saying “It is simply a question of capitalism or socialism, of despotism or democracy.” So to Eugene and other Socialists, putting the economy in the hands of the people is not just a question of sound economics it’s a question of democracy or despotism, how so? As we’ve seen in the last couple of years public policy is extremely susceptible to big business pressure, the public option had overwhelming support, yet somehow it was politically difficult for the government, and we all know it was from the insurance companies had something with more power than public pressure, money. Right now the insurance companies are entirely driven by profit, which means take as much money from you and give you as little care, and they have a stranglehold on the government because of their money. A public option however would be different, it would be run by the government, which means it would be run by the electorate, to the electorate the government health care’s profit isn’t the biggest concern, its the efficiency and quality of the healthcare, . Now imagine if the Oil companies were put under public control, how would energy policy be run, right now its for short term profits with out thinking about the effects on the environment, or even what’s best for the consumer (just what will get the most money out of the consumer), if it was controlled democratically, then the concerns of people would necessarily be concerns of the industry. If you take the major industries and resources and put them in public control then its not the big corporations that now control those industries and resources that will be able to buy public policy, it will be the public.

What about the Free Market? Isn’t the free market kind of a democracy? You vote with your cash? In a way, it is. Here’s the problem More than 70% of the wealth of the United States is controlled by the top 10% of the country, the bottom 50 % of the country control only 2.5% of the nations wealth, and the top 1% control 33.8% of the wealth, this isn’t getting better its getting worse. Usually these statistics are used just to show wealth disparity, look at these statistics from the viewpoint of political power, its more than just wealth disparity, it’s a lack of democracy. When it comes to the market, there is no Free Market, at least for the bottom 90% of Americans, its a market controlled by the rich, they have over 70% of the vote, so they control the market, your money is your vote, if you don’t have a significant amount of disposable wealth, you have no vote.

This is what socialism is primarily about, its not about taking care of the poor, its not about compassion, its not about making things equal, nor is it about government control, its about democracy, and a recognition that economic power needs to be democratic in order for political democracy to function, its also a recognition that the market is far from free, its a tyranny of the wealthy, real economic freedom comes when people have a say over what affects their lives, and that includes the government through political democracy, and the economy, through socialism.

Here is what socialism is not. National Socialism was not socialism at all, was there democratic control over the economy? Nope, its not socialism, the Nazis added socialism to their name to take advantage of the positive connotations that the word ’socialism’ had at the time, their application of it was nothing more than general welfare, however, what the Nazis DID practice was Corporatism i.e. collaboration between the State and big business to further the “national interests,”
It wasn’t economic democracy or public control that socialists wanted, it was corporate control along with an undemocratic state collaborating, not even close to Socialism, and in fact its closer to what goes on here in the United States, the government and big business in bed with one another.

Soviet style “communism” was also not socialism, the Soviet Union almost immediately after the Russian revolution killed any chance of socialism by destroying any real democracy and individual freedom in the country, and after that’s taken away all that was left was the State replacing the Big industrialists as the controllers of the economy as opposed to the people. That’s why most socialists in the world denounced the USSR.

So that’s what socialism is about, its about democracy, and if we want to have a functioning serious democracy in the United States, and not one controlled by corporate interests, we’re going to have to start having the discussion of whether we want socialism or capitalism, democracy or despotism.