“Socialism!” the House Republicans cried when the financial bailout was proposed — and they were right, if you define socialism as the takeover of part of the economy by the government. We’ll be in for much more of this sort of thing if the House Republicans and the rest of the federal government keeps worshiping at the altar of the “free market.” Here’s the lesson of the financial mess we’re in: A free market with no regulations leads to socialism, as presently defined.

Well, doggone it, we have a bunch of huge problems that need regulation and public investment, or else we’ll be headin’ for some more socialism. You betcha!

As global warming leads to more Katrinas and Ikes, not to mention more droughts and crop failures, we’ll head closer and closer to a permanent state of central planning. As oil becomes more expensive and more scarce, and suburbia continues to stick its collective head firmly in the sand, then much more government intervention will be needed to bail out large parts of the society. We’ll have socialism by necessity, not by choice.

There is a point beyond which even re-regulating the economy won’t fix the problem. We may not be beyond that point in the financial system, although time will tell. But in order to solve the global warming and peak oil problems, we’re going to have to go beyond carbon pricing — the market-based solution — and even regulation. We’ll have to use a hefty dose of public investment too (I’m using Gar Lipow’s “carbon pricing, regulation, public investment” troika here, although as usual he is not responsible for the way I might mangle his idea).

Now that the Reagan revolution has had its financial Reign of Terror, perhaps it will be possible to talk about using government funds to build a decent public transit network, a high-speed rail system that is at least as comprehensive as the Interstate Highway System, a reliable national electrical grid, urban residential developments, and to invest public funds in a renewable energy system.

Intervention in the energy infrastructure could be accomplished by using subsidies for renewable energy, as the Europeans do. It could even involve re-municipal-izing the electricity system, and giving cities and towns the resources to install photovoltaics on every building and wind farms in every neighborhood. But those sorts of ideas are so far beyond the current ideological environment, no serious environmental organization would even consider them.

And that brings us back to the House Republicans. Think about how the debate would move in a more progressive direction if there was a solid progressive majority in Congress. When the League of Conservation Voters identified the original Congressional “Dirty Dozen” in 1970, and most of them were defeated, the rest of Congress got the message and passed the Clean Air Act of 1970 and several other important pieces of legislation. Perhaps a few more “Dirty Dozens” need to go down.

The lessons of the unregulated markets before WWII were understood by some important thinkers of that time. Karl Polanyi, in his book The Great Transformation, argued that free market capitalism just about destroyed itself without regulation. Joseph Schumpeter came up with the phrase “creative destruction” to describe the vibrant process of capitalism — but in the same book in which he coined the phrase that is endlessly repeated by pundits, he also pessimistically predicted that socialism would triumph over capitalism because capitalism would creatively destroy itself.

Ironically, the people who most want to defend the purity of the free market are the ones most likely to destroy capitalism. By preventing government from intervening democratically, rationally, and with long-term systemic perspective, the House Republicans and their fellow travelers are checkmating the actions that the market needs in order to survive and thrive. We need to be penny-wise — by passing the necessary regulations and carbon pricing — and pound-wise, by publicly investing in a green transformation of the economy.