They're All The Same... There's No Difference... Right?

Friday Digby turned me on to a couple of fascinating historical documents about the Red Referendum that nudged Germany along the path towards Nazism. Here's the contemporaneous (August 1931) writing on it from Trotsky. And here's the history of the Red Referendum and its impact from 1927-1940. What fascinated me about it was how the Stalinists, in Moscow and in the puppet parties throughout the world, decided there was no difference between the Social Democrats and the fascists. The arguments are startlingly similar to what we're hearing in some leftist circles today about how there is no difference between a horribly conflicted Democratic establishment and the Republican Party, ideological inheritors of the 20th Century fascist movement.

In July 1924, the Fifth Congress of the Comintern followed in Zinoviev’s footsteps and declared:

As bourgeois society decays, all bourgeois parties, particularly social democracy, take on a more or less Fascist character ... Fascism and social democracy are two sides of the same instrument of big capitalist dictatorship.

In September 1924 Stalin paraphrased Zinoviev’s statement:

Social-Democracy is objectively the moderate wing of fascism. There is no ground for assuming that the fighting organisation of the bourgeoisie can achieve decisive successes in banks, or in governing the country, without the active support of Social-Democracy. There is just as little ground for thinking that Social-Democracy can achieve decisive successes in battles, or in governing the country, without the active support of the fighting organisation of the bourgeoisie. These organisations do not negate, but supplement each other. They are not antipodes, they are twins.

In July 1929 the Tenth Plenum of the ECCI declared: ‘In countries where there are strong Social-Democratic parties, Fascism assumes the particular form of Social Fascism’.

In 1930 Ernst Thälmann, the General Secretary of the KPD, asserted that ‘the German bourgeoisie, like the bourgeoisie in all other countries, is trying to utilise two methods, the method of social-Fascism and the method of Fascism’, and that the latest developments in Germany demonstrated the progressive growing together of social-Fascism with national Fascism’.

The Stalinists kept to the same line even after the great advance of the Nazis. In the elections held on 14 September 1930, the Nazis, who had polled only 800,000 votes in 1928, won six and a half million votes; from being the smallest party in the Reichstag they became its second largest. How did the KPD react to this ominous development?

They saw in it no significant change in the situation. It was only a ‘regrouping of the bourgeois class forces’. As Julian Braunthal explains:

The only thing that mattered to them was their own success in winning one and a quarter million votes while the Social Democrats had lost more than half a million Thus Hermann Remmele, a member of the ruling triumvirate in the party, drew the following somewhat amazing conclusion from the elections: ‘The only victor in the September elections is the Communist party.’

That said, I want do bring you on a 180 degree that explains why leftists get frustrated enough to start equating Social Democrats/Democrats and fascists/Republicans. You wouldn't be far from correct by blaming the financial and economic collapse on conservative policies and the Republican Party agenda. But there is another piece of that, the Democratic piece. And I'm not even going to start bashing Obama. Instead, let's go to David Korten's new book, Agenda For A New Economy and 2 subchapters he calls, "Modernizing The Economy" and "Rolling Back New Deal Reforms." We start with the right-wing [Republican Party] coalition:

They [an alliance of corporate CEOs, religious fundamentalists, antitax libertarians, and neocon militarists] began mobilizing in the 1970s and launched a political takeover during the 1980s under the banner of the Reagan revolution [counter-revolution to be more precise].

Wall Street corporate interests provided the money and largely controlled the real agenda. The religious fundamentalists provided the votes in return for lip service to a conservative social agenda on abortion, family planning, and gay marriage. The libertarians provided the ideological framework. The neocons provided justification for outsized military expenditures that swelled the profits of the defense industry and secured corporate access to resources and markets. The alliance played up cultural and racial divisions to fragment opposition and divert attention from the real agenda of the moneyed interests, which was to roll back the New Deal restraints on the concentration of economic power and reclaim the power and privilege they had enjoyed during the earlier Gilded Age. [If you've read Corey's Robin's brilliant new book, The Reactionary Mind, you are aware how the sense of loss all rightists feel is their most powerful motivation.]

Once in power, the Reagan administration ended robust antitrust enforcement in the United States. This unleashed a flood of corporate mergers and acquisitions in a consolidation of Wall Street power. Between 1980 and 2005, there were some 11,500 bank mergers in the United States, an average of 442 per year. To give the remaining banks greater power, capital ratios were reduced to give them greater lending capacity. As the banking system consolidated, its focus shifted from providing financial services for productive activity on Main Street to funding speculation on Wall Street. Banks called it "financial innovation."

Fucking Republican asshole crooks... right? Well sure. And now "Rolling Back New Deal Reforms."

Basic derivative securities are not new and can provide a useful service. For example, commodity futures are a form of derivative that, when properly regulated, can help both farmers and food processors reduce risk by locking in prices before a harvest. In the 1990s, ever more complex and exotic derivatives of ever less utility to real-wealth economy began to proliferate.

During the Clinton administration, the Commodity Futures Trading Commission initiated modest regulatory pressures. It was blocked, however, by Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Federal Reserve chair Alan Greesnpan on the ground that the market can regulate itself and any such action would stifle financial innovation. In 2000, Senator Phil Gramm pushed through legislation that prohibited the regulation of derivatives.

An explosive growth of derivatives followed, resulting in the complex entanglement of Wall Street institutions that created the systemic risk that ultimately threatened the entire global economy and forced massive public bailouts. Most derivatives trades served no purpose other than generating commissions and speculative profits.

As the attention of the larger banks turned to the easy and profitable business of financing the derivatives markets, their interest in Main Street was reduced to extracting as much money as possible to put into play in the global casino. Because the derivatives shifted the risk to others, and the primary interest of the bankers was to maximize their bonuses, the ability of those to whom they were peddling mortgages and consumer debt to repay them was immaterial.

In 2004, at the urging of Goldman Sachs and other big investment banks, the established requirement that investment banks maintain a 12-to-1 leverage ratio of debt to equity was repealed, leaving them free to make much greater use of borrowed money. At the time, Goldman Sachs was headed by Hank Paulson, who went on to become secretary of the treasury under George W. Bush.

In 1995, soon after he was appointed secretary by President Clinton, Robert Rubin recommended to Congress that it "modernize" the country's financial system by repealing the Glass-Steagall Act, a Depression-era law that mandated the separation of commercial banking and investment banking. Before he joined the Clinton administration as assistant to the president for economic policy and director of the National Economic Council, Rubin was co-chair of Goldman Sachs. Rubin's recommendation received strong support from Alan Greenspan and from Larry Summers, who was then Rubin's deputy and eventual successor at Treasury.

On April 6, 1998, Citicorp (the parent of Citibank) announced a merger with Travelers, the world's largest financial services company. It was the largest corporate merger in history and exactly the kind of merger that Glass-Steagall was intended to prevent. Indeed, the merger was arguably illegal. Citicorp and Travelers launched an intensive campaign to repeal Glass-Steagall with the support of Treasury Secretary Rubin, The Fed, chaired by free market fundamentalist [and Ayn Rand cultist] Alan Greenspan, has been systematically eroding Glass-Steagall compliance and on September 23, 1998, approved the merger to form Citigroup.

Rubin resigned from his Treasury post on July 2, 1999, and soon thereafter joined Citigroup as a board member and high-level adviser. The repeal of Glass-Steagall was signed into law by President Clinton on November 12, 1999. Rubin reportedly received more than $126 million in cash and stock during his eight-year tenure at Citigroup. This is an iconic example of the revolving door that links the interests and players in a Wall Street-Washington axis of corruption.

A couple weeks ago we looked at Congress' role in ending Glass-Steagall and saw, very clearly, that it was pretty bipartisan, at least in the House, where it passed 343-86, only 70 Democrats voting against this. Among the Democrats who voted for this disastrous Republican policy are not just the regular Blue Dog shills but powerful party leaders Steny Hoyer (now 2nd ranking Democrat in the House), Jim Clyburn (now 3rd ranking Democrat in the House), Robert Menendez (now the senior senator from New Jersey), Joseph Crowley and Ron Kind (leaders of the New Dems & caucus/DCCC up-and-comers), and Shelley Berkley (current Democratic candidate for Senate from Nevada).

I'd like to hear Trostky's analysis of the difference between the Democrats and the Republicans in light of the repeal of Glass-Steagall. I guess someone would have to explain to him that progressives-- like Tammy Baldwin (WI), Sherrod Brown (OH), Mike Capuano (MA), John Conyers (MI), Rosa DeLauro (CT), Barney Frank (MA), Jesse Jackson, Jr. (IL), Dennis Kucinich (OH), Barbara Lee (CA), John Lewis (GA), Jim McDermott (WA), George Miller (CA), Jerry Nadler (NY), Bernie Sanders (VT), Jan Schakowsky (IL), Pete Stark (CA), Maxine Waters (CA) and Henry Waxman (CA)-- did vote against repeal and are part of the Democratic Party... along with the 138 Members who joined in a united front with the fascists.