Reinventing Socialism

By Rupert Murdoch
web posted April 1998

The 1990s increasingly reminds me of the 1890s--that decade, exactly one hundred years ago, when Joseph Pulitzer was directing the New York World from his yacht and Lord Northcliffe was founding the Daily Mail. That, too, was an era of new technology and new markets when peace seemed universal and everything seemed possible. The French still call it la Belle Epoque.

That world was mostly divided between the great European powers. But they were, after all, liberal powers. They generally operated according to a rule of law, certainly more so than most of their subjects had seen before--or, in all too many cases, have seen since.

The other day, someone showed me this quotation from a book called The History of the Freedom of Thought by the great Cambridge historian J. B. Bury, published at the tail end of that era, in 1913: "The struggle of reason against authority has ended in what appears to be a decisive and permanent victory for liberty."

Sound familiar? How about this?

"Less than 75 years after it officially began, the contest between socialism and capitalism is over: capitalism has won." That's from Robert Heilbroner, the author and economist at New York's New School, writing in The New Yorker in 1989.

Or this?

"The century that began full of self-confidence in the ultimate triumph of Western liberal democracy seems at its close to be returning full circle to where it started: not to an 'end of ideology' or convergence between capitalism and socialism, as earlier predicted, but to an unabashed victory of economic and political liberalism. The triumph of the West, of the Western idea, is evident first of all in the total exhaustion of viable systematic alternatives to Western liberalism." That comes from Francis Fukuyama's much-discussed essay "The End of History."

The note of liberal capitalist triumphalism is identical in all three quotations. And, frankly, it's chilling. Because look what happened last time.

In 1914, the year after Bury's book appeared, the First World War broke out in Europe. It was followed by the Russian Revolution, the invention of totalitarianism, Hitler's rise to power, the Second World War, the Cold War, the Chinese Cultural Revolution-all this entailing tens of millions of deaths.

Let's be clear about this. The first half of this century at least, was an unspeakable tragedy.

We naturally hope that today's liberal capitalist triumphalists are right. Indeed, many of us have contributed to that triumphalism. But you have to wonder. Could anything unforeseen unexpected, be coming at us today?

Caspar Weinberger's book The Next War, published last year, sketched out several alarming scenarios for a sudden collapse in world order over the next few years. Some of these scenarios are triggered by rogue countries that acquire nuclear weapons. But all of them are made possible by an American military and intelligence build-down that is of course, already under way.

It is easy enough to shrug off this sort of exercise as far-fetched and alarmist But, of course, practically no one in 1913 had heard of Sarajevo--or would have thought that a political muscle there could plunge the world into fifty years of devastation.

(Incidentally, a foreign-policy scenario that everyone does seem to have hear of is the idea that China is going to be our enemy in the twenty-first century To be sure, it is theoretically possible that any two countries might come into conflict. But it seems to me that to have a serious rivalry, you have to have serious, ineluctable conflicts of interest. Where arc these ineluctable conflicts of interest with the Chinese? Are they showing any real interest in the world beyond their immediate environs--other than to trade with it?

Not that trade will solve everything. It was President Reagan's military build-up, rather than President Ford's détente, that broke the will of the Soviet Union. But China is not the Soviet Union. It is not the country that went into Czechoslovakia, Afghanistan, and Angola, that built a worldwide navy, that strove for nuclear parity.

So I say, give trade a chance and give the Chinese credit for the almost unimaginable progress they have made in the last twenty years.)

No, the danger that I want to disccuss is not external, not foreign, and not military. It is operating within our own societies, right under our noses. Let me put it in this way: If socialism is dead, why won't it lie down?

Or, in terms of my own petty preoccupations: If we're living in such a paradise of free enterprise, why can't I get my Fox TV news service onto more American cable systems and compete?

Well, the answer in both cases is the same. Socialism is not dead, but alive and well and living in the regulatory agencies. It is because of regulation-and the monopolies and oligopolies it inevitably fosters-that there are such formidable barriers to entry in the TV news business.

The classical definition of socialism, of course, is that contained in clause four of the old British Labour Party's constitution: public ownership of the means of production, distribution, and exchange. Socialism in that sense is dead. No one talks about nationalizing industries any more.

But then no one has to nationalize industries--because the extraordinary growth of regulation has given effective control of them to the government without its having to assume the hassle of ownership. Socialism has effectively reinvented itself. We can call it "Neosocialism. " And it's right here.

Anyone who owns or manages a business must be aware of this neosocialism. They find hiring, firing, buying, selling, just trying to operate, vastly more complicated than they were fifteen or twenty years ago.

We can even see it in our hobbies. I have been involved in a small way with ranching cattle virtually all my adult life, first in Australia and now also in California. In that time, the change in what you can do and what you can't do has been simply extraordinary-whether it is digging a well or trying to get rid of a gopher. Farmers, whether they be in the United States, Europe, or Australia, now spend a day a week in their offices filling in forms.

Farmers in the U.S. are now outnumbered bby employees of the Department of Agriculture.(Sure, they have computers to help them cope. But are they any further ahead? And are we as a society further ahead? Maybe this is part of the answer to the Great Computer Conundrum that you hear economists discussing: why the spread of computers does not seem to have increased service-sector productivity very much.)

Here in the U.S., of course, we have a characteristically American touch: regulation through litigation. Trial lawyers (with a little help from the way legislators write the laws) become in effect private vigilantes, enforcing neosocialist writ. It takes a lawyer-a whole village of lawyers-to create the ludicrous situations we now see in employment law.

For example: "In January, a former truck driver for Ryder Systems Inc. won a $5. 5-million jury verdict after claiming under the Americans with Disabilities Act that Ryder unfairly removed him from his position after he suffered an epileptic seizure, saying that his health condition could be a safety hazard. During the time he was blocked from his job at Ryder, the driver was hired by another firm, had a seizure behind the wheel, and crashed into a tree."

(I am not making this up. It was a front-page story in the Washington Post on April 8 of this year.)

Maybe 30 or 40 per cent of that $5.5 million will go to the lawyers in expenses and contingent fees. So the profit motive is in good shape, but private enterprise less so.

Why do we hear so little about this surging neosocialism? One reason is that it is quite new. The regulatory revolution in the United States really only began in the 1960s. Many people now prominent in the media and public life were already adults when it started. Yet it may take a new generation to discern the pattern beneath a phenomenon as important as neosocialism.

Socialism was advanced the first time under the banner of efficiency. It was supposed to be scientific. Planning was supposed to be rational. The waste of capitalism--epitomized by the Great Depression--was to be eliminated.

Today, neosocialism is being advanced, under the banner not of efficiency, but of equity. It is supposed to make things fairer, more just, according to some non-economic scheme of values, as in the case of the environment. And this turns out to be an argument that is very difficult to resist.

The common thread, of course, is that the government still gets to tell the rest of us what to do. It has just changed its rationale and wrapped itself in a new all-embracing doctrine of political correctness. But it still asserts that individuals cannot be relied on to make their own decisions. Or as Chairman Mao said, "Put politics in command."

What is the underlying pattern behind this neosocialism?

It seems to me that the central sociological fact about modern societies is the rise of what Irving Kristol has called "the New Class"-that group that makes its living from running the government and its ancillary manifestations. In Kristol's view, the New Class includes career professional politicians, who are a relatively recent development in democracies. It includes the government bureaucracy, which in most countries is now large enough to constitute a special-interest group of its own ... perhaps the largest group of all.

(For the record, there were more people employed in the federal regulatory apparatus at the end of President Bush's term than at the end of President Carter's. President Reagan's efforts had simply been erased. Today, of course, the number is higher.)

The New Class also extends to most of the educational establishment, which is in the business of extracting tax money from the rest of us. It has a strategic alliance with groups like the trial bar and other lawyers, who need legislative support and patronage. And it embraces members of the media, both for cultural reasons and because there is a constant interchange of personnel.

Significantly, the New Class is beginning to be noticed as the force behind neosocialism. There is a phenomenon in the history of science called synchronicity in which several researchers independently stumble on a new discovery. I have cited Irving Kristol already. Also, while I was writing this, John O'Sullivan in National Review (April 21, 1997) explained the GOP's current troubles as a result of its servitude to New Class orthodoxy. Synchronicity is usually a sign that the discoverers are really onto something--like seconding a motion.

How does the New Class get its way? Sometimes you see the groups making it up acting together dramatically. For example, the two main funders of the so-called Taxpayers Against 187, which tried to stop Californians from voting to deny illegal immigrants certain government benefits, were the California Teachers Association and the California Public Employees Union. To both unions, of course, illegal immigrants mean more clients--and more reasons to demand more money from taxpayers.

They lost in the ballot box. Significantly, though, Prop. 187 has since been tied up in the courts. Whatever you think of the measure itself, that is a striking expression of the government's (and the New Class's) power to frustrate the popular will.

It is the self-interest of this bureaucratic class that drives neosocialism. These are the people who benefit from proliferating regulations because they administer them. They want to see the nanny state, because they are the nannies. They want to see "politics in command," because they are the commanders-elected and unelected.

If we had been having this conversation in the 1890s, we would probably have been talking about the Rise of the Proletariat, the labor unions, and the Socialist parties. Today, the rise of the New Class is just as ominous. As in the 1890s, we don't really know where it will take us. But we can see reason for real concern.

To begin with, the New Class is an international phenomenon. Take the European Union-this is a quintessential New Class creation. It is basically a supra-national bureaucracy built above the heads of the national legislatures. It is constantly having to circumvent national insurrections. But its impact on everyday life in those national communities is tremendous through ubiquitous and detailed regulation.

For example, EU regulations dictate that British farmers not allow their fields to be used as parking lots for country fairs because land "set aside" under an EU program to reduce production cannot be used for commercial purposes. This applies even if the car park is free.

British commercial growers of oak-a patriotic symbol in England--can't use British acorns because Brussels says they're not pure enough. Caerphilly cheese is no longer made in Caerphilly because EU rules required uneconomic production changes. It is illegal to sell small Cox's orange pippin apples-- Britain's most famous apple-because EU regulations require apples to be more than 55 millimeters in diameter.

All Wellington boots sold in Britain must come with a user's manual which includes this advice: "Each boot should be tried for fitting before use."

Now, 18 000 European Union officials spend their time on this sort of invasive nonsense. They, incidentally, were not tried for fitting before use.

The New Class is also a party political phenomenon. Many commentators are puzzled by the success of Center-Left parties--in Britain, the United States, Canada--at a time when capitalism was supposed to have triumphed. Well, one answer is that capitalism has not triumphed. Neosocialism is triumphing. And the parties that are most firmly based on the new social force that underlies it are reaping the benefits.

In fact, one of the interesting things about recent politics is how completely the traditional parties of the Center-Right--which are also, after all, run by professional politicians--have been subverted by the New Class and its values.

George Bush, who used to say, "I'm a government guy," presided over a vast rebound in regulation.

I guess he wasn't joking.

In Britain you see the utter inability of the Conservative Party, at least until now, to handle the gulf between the grass roots' and the elite's views of the European Union.

Some of you may have noticed that our London Sun endorsed the Labour Party in the recent election. One reason is that Prime Minister Tony Blair is a much-needed new broom. The Blair party repositioned itself brilliantly as the voice not of the old working class, but of the frustrated lower middle class which Margaret Thatcher had captured and John Major abandoned. The Conservative government was simply not giving us--and more to the point our readers--much to get excited about.

What, then, is to be done?

The current situation is not particularly stable. Neosocialism is prone to economic breakdown, just as the old model was. It confronts an inexorable reality. If the farmer is filling out forms, he cannot be raising cattle--let alone getting rid of gophers.

For another thing, there are obvious signs that New Class monopolization of politics causes the party structure to break down, as people look for new vehicles to express their discontents. New parties are making waves in Australia, New Zealand, Canada, Austria, Italy, and France. In Britain--unnoticed over here, and indeed over there amid the carnage of the last elections small anti-European Union party cost the Conservatives perhaps twenty seats. And in the U.S., of course, we have seen Ross Perot.

Not all these parties will amount to anything, and no doubt some are led by undesirables of one type or another. But, as a head of a mass-media business, I tell you: something is stirring out there.

Still--what is to be done?

Let me put it this way. As a boy in Australia during World War II, I dimly remember the headlines about the fall of Singapore where the great guns notoriously faced out to sea. Nobody had ever imagined an attack could come over-land. Nobody imagined this new neosocialist attack on life, liberty, and the pursuit of happiness, either.

Let me suggest that, as a first step, all of us who believe in private enterprise and individual responsibility make sure our guns are facing the right way.

Rupert Murdoch is the chairman and CEO of News Corp. This article was originally published in The National Review, adapted from a speech Murdoch gave at a Forbes CEO conference

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