In 1919, John Reed published his classic Ten Days that Shook the World. It told the story of Revolutionary Russia from October 25-November 5, 1917, during the Bolshevik seizure of power. Those ten days were supposed to spread Lenin’s socialist revolution to the world, yet they were remarkable only for the oppression that flowed from the regime that came to power. Russia was bogged down in an unpopular war, and the people were starving for both food and land ownership. The Bolsheviks responded with mixed policies of nationalization and privatization.
Fast-forward 90 years to the United States where we are facing a similar situation. We are bogged down in an unpopular war that costs $10 billion a month. Americans are crying for peace. Our economy is now in a perfect storm that has been brewing since home values started plummeting in 2006. We've all heard of loans to unqualified buyers and the bundling of bad debt as assets.
Fannie Mae and Freddie Mac were seized in a $200 billion bailout. Then the insurance giant AIG failed. The crisis spread from mortgage markets to investment banks when Lehman Brothers declared a $600 billion bankruptcy. This has had many effects, one of which has been a doubling in the number of home repossessions. Near Chicago, the Sheriff’s office has decided to not proceed further with evictions because of the 'unfairness' of this whole process. People who have faithfully paid their rent are losing their homes. Americans are hungry for land.
On October 1st, the U.S. Senate responded to the crisis by approving the infamous $700 billion bailout proposal. The bill passed the House on October 3rd. The fears had spread worldwide with Britain's nationalization of one of their large mortgage lenders. The European governments responded on October 6th with a crisis-summit. On October 10th, the Dow Jones plummeted 700 points in the first 15 minutes of trading- just as the G-7 nations gathered in Washington to discuss the crisis. Leaders are under enormous pressure to act. The executives of our global financial institutions have behaved irresponsibly and, as one analyst put it, “have lost their legitimacy”. The decisions coming from this summit will involve the leaders of 90% of the world’s economy.
Global food prices are also a major concern. Though costs have recently subsided, fears remain that excessive government restrictions and involvement in countries with bountiful harvests will reverse the progress and increase prices yet again.
Have things come full circle in 90 years? Capitalism flourished where socialism failed. Now it seems our hands-off approach to capitalism is failing as well as many continue to lose their homes and savings. There are protests in the streets. Anderson Cooper has gone so far as to identify ten corporate executives that are primarily responsible for our woes and plaster their faces on TV screens across America. Are we really seeing the end of American capitalism?
Peace. Land. Food. These cries led to nationalization in Russia. The policy failed miserably for the Bolsheviks. Their revolution never spread, it never shook the world. Decisions to nationalize, such as those being made today, are poised to have a much deeper impact worldwide than Lenin could have ever dreamed. I'm in no position to say whether our experiment with nationalization will succeed or fail, but I believe it is already clear that ten days this October will be seen as the 10 days that truly shook the world.