When Republican Congressman Ron Paul recently
introduced legislation to audit the Federal Reserve, diverse sections of the
political spectrum applauded. And rightfully so. The Fed's role in the
still-developing bank bailouts is one of utter secrecy; the
total cost of which -- as estimated by the bailout's Special Inspector General, Neil Barofsky -- could
cost taxpayers $23.7 trillion. The fact that legislation needed to be
introduced to raise the question of the whereabouts of these funds points to a
larger breakdown in U.S. democracy.
Ron Paul's
legislative maneuver is consistent with his larger political philosophy, which
he attributes to the Austrian
school of economics. Central to this economic outlook is a focus
on monetary policy, and the blaming of central banks for much of our economic
troubles. Paul's popularity has increased exponentially, rising in
consequence to the bank bailouts and the Federal Reserve's role in the Great
Recession. The title of his recent book, "End the Fed," was also used as
the slogan of protests held around the country -- many organized by Ron Paul supporters -- outside of central banks.
As elite-controlled as the Federal Reserve system is, it's "ending
cannot be the final goal of a progressive political movement. Larger
social/economic forces must be considered too -- and be dealt with.
For instance, a cursory glance at the history of the Federal Reserve shows its
inadequacy as a goal for any social
movement. After Andrew Jackson abolished the U.S. Central
Bank in 1833, the market-economy [capitalism] continued to evolve; small companies out-competed and incorporated others, continued
growing, and soon morphed into the giant corporations that we know today -- driving down wages, boosting profits, and increasing social inequality.
Recessions/depressions do not happen because of bad monetary policy, which can
accentuate them. Instead, recessions occur naturally under capitalism,
which produces a nearly unlimited amounts of goods and services for a very
limited market. As wages are driven down by the demands of profit-seeking
corporations, the ability of the market to consume the produced goods shrinks
(of course).
As wages continue their downward spiral, the demand for credit rises, as
workers look to compensate for their lowered standard of living. But
banks will issue only so much credit, and will shut off the money-valve when
their loans come back unpaid (the "credit crunch ).
When this happens, a recession begins.
Austrian economics looks at the last
stage of the economic cycle -- the credit crunch -- as its cause. Thus, the
money lenders receive all the blame, while the other corporate culprits -- functioning according to the "rules of the market -- are left
unblemished. Bankers are blamed for what is ultimately the natural
processes of capitalism: too many goods are produced to be consumed within the
confines of the market.
Every major economic goal of Ron Paul would fail to alter the above
dynamic. For example, if the U.S. were to
return to the gold standard -- another policy of Ron Paul -- would giant
corporations cease to dominate social life? Would the undemocratic power of the
super-rich be somehow restricted? Would workers wages increase, enabling
them to consume all the goods produced? Paul never asks such questions, but the
answers are obvious. Mega-corporations and the billionaires who own them will
continue to wield more than votes to steer society in their favor, at the
continued expense of workers' wages.
It must be noted that a hero of Ron Paul, Austrian economist Friedrich Hayek, was also a hero to
Margaret Thatcher, Ronald
Reagan, and other founders of the neo-con movement. Workers
will recognize these figures as natural enemies, who destroyed social programs,
attacked unions, and drastically lowered taxes for the super-rich -- helping to
create the current budget deficits.
Austrian economics is simply one of the many variations of free-market
capitalism. The goal being an unregulated market economy, where there
would be no limit to the mega-employers' greed for profits, no minimum wage, no
social security, no workplace protections, no social safety net,
etc. The super-rich, however, would be "free to do whatever they liked
with their money, since the "free market doesn't levy income taxes.
Since Paul is for a "pure form of capitalism, he lavishes god-like praise on
the power of the market. For him, society must produce goods only if they
can be sold on a market, and offer an individual (or corporation) a
profit. Human needs thus belong to the realm of charities, churches,
etc. The market remains the decider, and the super-rich who own the
corporations control the workings of the market.
Ultimately, it's unrealistic to focus on one aspect of our economic
system in isolation, as if it were un-connected -- and not
subservient -- to larger economic forces. In doing so, a simple cure-all
is offered for the systemic breakdown of the international economy. But
like all easy answers, ending the Federal Reserve is a false
remedy. It thus serves as a distraction to the above workings of
Paul's revered capitalism, in the same way that his constant scapegoating of
immigrants does.
The tremendous anger towards our economic system is currently directed at the
banks, which deserve the hatred. But they are not the only giant corporations
demanding that workers get paid less, have little or no health insurance, no
pensions, no time off, etc. The mega-corporations in general deserve our
attention, for they are every bit as undemocratic as the Federal Reserve, and
benefit from its policies. The end goal is to boost profits by dominating
the market, so that a very small number of people get incredibly rich at the
great expense of the rest of society.
Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org). He can be reached at shamuscook@yahoo.com
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