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Presidents, constitutions, and economic systems

By Wayne Mccormack

Published March 31, 2012 1:01 am
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
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The painting of President Obama burning the Constitution that ran on the front page March 24 raises a number of disturbing questions. Other than artist Jon McNaughton's constitutional right to be malicious, the question that fits within my own field of inquiry is this: Where does it say in the U.S. Constitution that socialism is prohibited or that capitalism is the established ideology of the nation?

In fact, there is much more in the Constitution to support the notion of social welfare than there is to support a notion of cut-throat individualism.

There are two relevant provisions (each is repeated, so a total of four references). First, in the Preamble the purpose of the document is stated to include "promote the general Welfare." That thought is repeated in the very first clause setting out Congress' power to tax and spend to "provide ... for the general Welfare of the United States."

Those are provisions that sound very much like some versions of "socialism" (about which I will say more below).

So what about protection of private property? In addition to the two due-process clauses (one applying to the state and one to the federal government), there is the assurance that "nor shall private property be taken for public use without just compensation." It could hardly be more clear that it is permissible to put private property to public uses. That power has been exercised when many nations have "nationalized" industries for a variety of reasons (sometimes to "bail out" a failing industry but also occasionally to take advantage of a highly successful technology).

An easy way to frame my own conclusions about the difference between the horrors of "socialism" and the wonders of "capitalism" is that capitalism is a wonderful way to develop resources and a terrible way to distribute resources, so the trick for government is to find a successful blend of approaches. But that's still irrelevant to the question of whether one form of system is embedded in our Constitution.

Various authors have described four widely varying forms of capitalism: state-managed (Russia and China are well known for this recent approach to privatizing some phases of industry), oligarchic (the Middle East oil sheikdoms are classics), big firm (the American-European hegemony of the 20th century is a terrific example), and entrepreneurial (both struggling and emerging economies need infusions of innovation with new firms to "stoke the fires").

Socialism offers four similar variations: state ownership (only North Korea continues to disallow any private ownership; Cuba recently began modest reforms), "state-directed" public management with some private ownership (much like Brazil, Russia, India and China approach capitalism), "self-managed" (co-ops and worker ownership of most large firms only slightly different from the "big firm" days of capitalism), and "market" socialism (which allows buying and sale of goods but not of factories).

It is possible to find horrific examples of both privatized and socialized industries. We in the U.S. are accustomed to regulated monopolies for public utilities such as gas and electricity because unbridled competition would be not only wasteful but potentially quite dangerous (gas and electric lines crossing each other would not be a good idea).

Urban transportation is one easy way of demonstrating that there is little magic in either public or private ownership of industries. The greatest irony in U.S. political economy has to be the initial formation of private transportation lines in the cities, followed by public domain acquisition to reduce waste and competition. That was followed by the privatization of these companies in the hands of a "conspiracy" (so labeled by a federal court) that removed all mass transit to promote the automobile, thus now forcing us back into creating publicly owned or at least publicly financed urban transit systems.

We can make good choices and we can make bad choices. The range of options is really all on the table for political choice. Good decisions along with bad ones will exist in both socialism and capitalism settings.

Wayne McCormack is E.W. Thode Professor of Law at the University of Utah.



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