Socialism

I wanted to write something thoughtful about socialism. Socialism seems to be sexier than ever and so I had a lot of motivation. And then like reading a four hundred page textbook on sexual dysfunction, I soon glassed over and wondered why I had begun the project in the first place.

That got me thinking again about Bernie Sanders, his supporters and critics, and the possible usefulness of understanding socialism better. I began by searching around for definitions of socialism and that didn’t seem to help very much. If you read enough you soon find that like drugs and bourbons – there are many different kinds of socialism. So I started looking for a common refrain or set of words that were party to most of the definitions and I hit on “state or social ownership” and “democratic control over the means of production”. These are interesting words but hardly ones that we use very much today.

One theme or set of words that made more sense to me was something like “a way of organizing society in which major industries are owned and controlled by the government rather than by individual people and companies.” Now that one I could sink my teeth into. Immediately China and Vietnam come to mind. In Russia the government owns Gasprom and in Venezuela PDVSA is one of many large companies owned by the government. In Sweden and Norway the government owns many companies too. According to that definition there are many socialist countries.

But as I said above, there is no single definition of socialism and as it turns out there is no simple manifestation of it either. Some countries own many companies while in other countries the government owns only a few. But the differences go even further than number of companies owned. Nowadays we would say that a country is more socialist if the government plays a large and active role in society. One might say that Germany is socialist not so much because the national government owns some banks but more so because government spending is a large percentage of the national economy (as it also is in Belgium, France, Finland and several other countries). In this case the notion of socialism has more to do with the size and reach of government. In this definition a country is less socialist and more market-oriented if it has relatively less government spending and regulation.

I draw two conclusions from the above. First, socialism is not a binary yes/no answer.  Countries are more or less socialist and there are few extreme cases today in which 100% or 0% of all activity is within the government sphere. Thus all countries are at least a wee bit socialist. Second one can always discuss how socialist a country is by looking at how much of national activity is done or largely affected by the the control of government. 

The reason for going through all the verbal torture above is to make the point that “we are all socialists.” The US is already socialist if you agree that about 17% of all US employees work for a local, state or federal government office. Or that the federal government’s debt is approaching 80% of the size of the economy. Or that federal, state, and local government tax revenues will soon reach $6.6 trillion or 36% of the national economy.

So this whole thing about the US becoming a social state is a red herring – no offense intended to small fish. Most of us operate in an environment of markets with a medium to heavy involvement of government. Thus we are both capitalist and socialist. Even China, once the leader of the Communist world, has deregulated many state-owned enterprises and has allowed market forces to effect prices, wages, and other key economic indicators.

So forget that Bernie Sanders is called a socialist or that America is going to become a socialist country. The real question is how to make America’s economy better or how to address our worst economic problems and make the economy work better for all of us. In pursuit of those goals we have a choice but it isn’t between capitalism or socialism. 

The choices are about how we use government to pursue these goals. On the far left we have ideas that essentially greatly increase government reaches. On the far right we have the opposite. There used to be a day when we had a middle approach that took it for granted that we probably should not greatly increase or decrease the role of government but should find ways to make the current extent of government work much better.

A more moderate approach is a compromise and that satisfies almost no one. We could find solutions for the middle class and we could find ways to deal with global competition and industrialization. There are ways to create fairer taxes and more economic growth. But the sad thing is that we will never get any of these things because we would rather argue about who is socialist and who is not. 

One last point about socialism. It seems odd that the people who seem to yell loudest about wanting socialism are the ones who do not live in socialist systems. In Cuba and China, for example, citizens would not be able to broadcast their opinions especially if they questioned socialist policies. And while capitalism may not be perfect it has a long way to go to equalize the economic sins of some socialist systems. In the Soviet Union one could go to the ballet for free -- but many people had to wait decades to receive an apartment or replacement parts for their dilapidated Ladas. Imagine the chagrin of Venezuelans today as the government stopped the expensive practice of virtually giving away goods to the people (7 cents per gallon of gasoline!). And finally, I just saw a report that China has more billionaires than the US. What does that tell you about distribution of income in China?

I see some of you folks at the gym now and then. A couple of you approached me the other day and asked me about my solutions. They were frustrated that I point out the defeatist nature of warring ideologies without suggesting any remedies. I have to admit that I don’t have any real solutions. But I can say that I wonder if democracy is still a viable system when the voters themselves line up in ideological extremes. We haven’t always been that way in America. How did we get there? And if I am right, is there a path back to compromise and meaningful negotiation among people with different opinions and solutions? No I don't have the answer. Do you? It might be the question of our times!