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What’s Left

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Among other services, Senator Bernie Sanders has freed up some banned political terminology. Suddenly we can talk about socialism and the ruling class. Can Karl Marx be far behind?

marx_lenin_stalin_mao_castro_all_partying_up_it_communist_styleConsidering the variety of systems in Western Europe and elsewhere, socialism is an elastic concept. The traditional definition, I would argue, is the least relevant today. That is, if socialism is the means of production owned and run by the State on the basis of a centrally formulated economic plan, then there is no socialism, and there isn’t going to be. At the risk of losing several score Facebook friends, I have to say nobody of consequence is campaigning for such a transformation.

I spent some time in graduate school studying economic planning. It’s not going to happen. Too many variables to enumerate, too much data required, too many equations to solve. That might change with super-duper computing advances, but as far as I can see, it’s science fiction for the foreseeable future.

The relevant, forward component of socialist program today is state ownership of limited types of enterprises. Public broadband. Postal savings banks. The power grid. Sovereign wealth funds. We can also imagine worker ownership and/or management of individual firms or places of work. All of these are visible in different forms today. They are not a stretch to imagine. The irony is that they have been mostly outside the scope of the Sanders campaign.

While Bernie would probably be congenial to all of these approaches, his actual campaign is focused on building out our current, feeble welfare state and getting to full employment. Expanding Social Security, health care, support for higher education, etc. Is that democratic socialism”? Hey it’s America. We’re all entitled to our own definitions. I think the term “social-democratic” is more appropriate, if a little awkward as phraseology.

The heart of the U.S. welfare state, as well as social-democratic systems in other countries, is social insurance. Here it includes Social Security, Medicare, and Unemployment Compensation. The basic features are universality and benefits requited by contributions. The most prominent components of the Sanders platform are single-payer health insurance and “free college.”

We could have nice wonky discussions about the myriad, hairy details of these proposals, but the Clintons’ objections did not hinge on technical policy design. They opposed the basic principle of universality. This came in the form of denunciations of such program benefits being available to the rich, or worse, to “Donald Trump’s kids.” This should not be accepted as a progressive view. It is unworthy of any respectable Democrat. You might even say it is “right out of Karl Rove’s playbook.”

The criticism is a superficial appeal to progressive policy and economic equality. The fact is that the great, social-democratic systems of Europe are powered by mass consumption taxes that finance big spending programs. The most powerful, time-tested tool against inequality is universal social insurance, not means-tested benefits. The prominence of the latter in the U.S. welfare state is a bug, not a feature. Trading social insurance for means-testing is a concession to inequality. Sometimes such concessions can facilitate reasonable bargains for greater benefits, sometimes concessions are required in adversity. The problem is elevating such a device as a basic ideal.

A principled progressive would have welcomed discussion of Sanders’  proposals, rather than revert to bromides about fiscal austerity. The simple truth is that any universal benefit financed by progressive taxation will retain a net, progressive redistributive impact. This is not an economic theory; it’s arithmetic. Nobody has suggested that Sanders’ tax proposals are not progressive. Of course the practicality of any proposal is fair game, but that was not the basis for most criticism. Instead we had ostensibly liberal Democratic Party politicians upholding the tenets of neoliberalism.

Noam Chomsky NeoliberalismI should offer a definition, perhaps idiosyncratic, of neoliberalism, since I will be referring to it again. My preferred definition is an ideology that prioritizes market arrangements over state provision of public services, state ownership of capital, and expansive public budgets, including universal social benefits. There are perfectly reasonable neoliberal arguments that apply to particular cases. Progressive does not imply good and good is not limited to ‘progressive.’ I would simply insist that neoliberal positions be distinguished from progressive ones. A little consistency in labeling ought to facilitate conversation.

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  • Derelict

    In the US, we’ve been experimenting with a new and very different form of socialism. Under this new system, corporations are viewed as people, and actual people are viewed as worthless. All extrinsic costs associated with business are socialized and, whenever possible, even direct costs of doing business are socialized. All profits are privatized. For “financial services” businesses, all risks and losses are socialized while all profits are privatized–and profits are even guaranteed via tax dollars should a large enough concern lose everything at the casino.

    Perhaps we need a name for this bold new economic system?

    • How about Lemon-Socialist F’k Job?

    • BigHank53

      What, are you tired of ancien régime already?

    • DrDick

      In the US, we’ve been experimenting with a new and very different form of socialism. Under this new system, corporations are viewed as people, and actual people are viewed as worthless.

      That is only socialist in the way the German National Socialist Party was.

  • I have no problem with taxing the shit out of the rich and giving them free tuition at a state school with everyone else. No problem with that at all.

    • FlipYrWhig

      I’d rather tax the shit out of the rich and give them free childcare and preschool along with everyone else, though.

      • That, too!

        • FlipYrWhig

          I really think that’s the biggest missing piece in the social welfare system of America. In a 21st-century world where both halves of a child-wanting couple have jobs that they may even like and almost certainly need, reliable low-cost caregivers would open up so many possible paths. And this is as true for most of the top 10% of earners as it is for the bottom 90%.

          • Karen24

            This is soooo important! I’m a lawyer with a decent-paying job, but when my kids were little I paid more than half my salary for decent daycare for them. Generous family leave policies would also be wonderful! (Some day I’ll tell you all about how that fact induced me to support draconian welfare reform, but that’s not for today.)

          • keta

            But what’s next? Maternity/paternity leave? Paid maternity/paternity leave?

            Have you lost contact with your bootstraps?

  • J. Otto Pohl

    That is, if socialism is the means of production owned and run by the State on the basis of a centrally formulated economic plan, then there is no socialism, and there isn’t going to be.

    What about the DPRK? Also while about a quarter of the economy is now in private hands, I would think Cuba would still qualify. I can see maybe excluding the PRC and Vietnam now as having crossed the Rubicon. But, North Korea and Cuba still seem fairly socialist to me.

    • MaxSpeak

      Cuban socialism isn’t going to last, and the DPRK is not an enviable system. What I was trying to get at is the trend especially in the advanced industrial countries is not towards centrally-planned state ownership.

      • J. Otto Pohl

        Why would Cuban socialism not last? It is in much better shape today than it was 20 years ago. It could be 40 more years before most of the means of production on the island are in private hands.

        A good argument could be made that none of the socialist states were enviable systems compared to the US, Western Europe, and Japan going back to the 1950s. That doesn’t make the DPRK non-socialist.

        • bernard

          Cuban socialism is not going to last. The economy is opening up to private business and there is a very strong interest in private enterprise of one kind or another, albeit on a small scale at this point.

          In addition, the income dynamics have to change. A common Cuban joke concerns the brain surgeon whose dream is to become a hotel doorman. Currently professionals earn the equivalent of $20-30/month in a government salary. The doorman probably gets that in tips in a day or two.

          Can the government continue to control large-scale enterprises? Maybe, but with private partners, and it remains to be seen whether this is a stable situation.

          A big part of the reason Cuba is better off than it was 20 years ago is that at that time it was suffering a serious downturn, the “special period,” from the loss of Soviet subsidies. A major growth in tourism did a lot to improve the island’s economy, but that has also given rise to the preference for cleaning rooms in hotels over becoming an engineer or physician.

    • nanute

      I can’t speak for Max, but I’m pretty sure he’s talking about pure socialism not being a workable solution in our political system. And neither of your two examples meet the criteria for a socialist system as defined in this piece.

      • J. Otto Pohl

        How so? State ownership of the means of production and central planning have been hall marks of both the Cuban and North Korean economies for longer than I have been alive.

        • andrew97

          In DPRK, as is the case in many centrally planned economies (cf. Venezuela), the only thing keeping the economy going is a roaring black market.

          • J. Otto Pohl

            This is a feature not a bug and a result of copying the original Soviet model.

        • nanute

          In the sense that neither of your examples uses the proceeds of the means of production to benefit the community. DPKR more so than Cuba. Neither will survive in the long run under those pseudo-socialist frameworks.

    • DrDick

      North Korea is more of an feudal imperial system than actual socialism. The owners of everything are not the people, but the royal family and nobility (Party elites).

  • MPAVictoria

    This is the best thing to happen here in months. Thank you so much Max.

  • J. Otto Pohl

    I am an historian not an economist. But, it seems to me that while centralized planning completely breaks down in larger more complicated economies exactly like you described this is not the case in less developed ones. The classic example is the USSR which only ran into the types of problems you describe really starting in the 1950s and 1960s and they only became critical in the 1970s and 1980s. The high price of oil allowed them to paper over most of the problems during the 1970s but the drop in oil prices in the 1980s ended this. Forced state industrialization at the expense of the peasantry was quite successful although extremely inhumane. From a purely utilitarian view most of the descendants of the 90% of the Soviet population that physically survived Stalinism had a far better material life than their parents or grandparents. It of course wasn’t evenly distributed either. There was a lot of ethno-racial discrimination about who even survived. For most Kyrgyz, Uzbeks, and of course Russians things were better. That wasn’t the case for ethnic Germans, Crimean Tatars, Estonians or a number of other small groups.

    • Vance Maverick

      Which are the “less developed” economies in which centralized planning has not broken down? Serious question.

      [Though of course this is a tangent from the OP’s focus on what “socialism” might mean in the US.]

      • J. Otto Pohl

        It didn’t break down in the USSR until the 1980s. In terms of industrialization, urbanization, medical care, literacy, education, and material standards of living the USSR of 1970 was an immense improvement over 1930 despite the massive human suffering of 1930 to 1953. Socialism is only sustainable until it reaches a certain level of complexity.

        Cuba still hasn’t completely broken down and a good argument could be made that here is a model of a poor former colony employing a socialist model to make great strides in education, health care, and equalizing income. The model doesn’t look attractive to the US. But, it was to many people in poor countries in Latin American and Africa for decades.

  • FlipYrWhig

    Instead we had ostensibly liberal Democratic Party politicians upholding the tenets of neoliberalism.

    Why is opposition (either pragmatic or ideological) to providing public benefits for affluent people “neoliberalism,” though? It’s not an affirmative defense of “market arrangements” based on the belief that they are wonderful and just. I would say that Obamacare is “neoliberal” insofar as it attempts to solve a problem in the distribution of resources by creating more transparent and competitive markets for them. But why is “rich people should pay for their own college educations” “neoliberal” per se? It’s not an attempt to allocate scarce resources via markets, is it?

    • AndersH

      I would call it neoliberal because it adheres to the orthodoxy of “most efficient allocation of resources” – without taking into account political economy and thus long-term viability.
      It also puts into question the dynamic of free, universal public services of a set standard funded by likewise universal taxation.

      • FlipYrWhig

        I can agree that it puts the principle of universal public services into question, but IMHO for something to qualify as “neoliberal” it has to be _predicated_ on the belief that markets and marketplaces will work these things out, because that’s the magic of the market. I don’t think anyone says “Instead of free [public?] college for everyone, we should have a lot of colleges providing different things at different prices and let the market sort them out, and if you don’t get a spot, sucks to be you.” I think they say “Providing free [public?] college for everyone has a lot of logistical problems with fairness and will cost a lot of money, and if we had the opportunity to grab the money it would cost, we should spend it elsewhere instead, so in the meantime let’s do something smaller, like partially subsidizing the people who have the most trouble affording it now.” Is that “neoliberal”? It may be sub-par or unimaginative, but it doesn’t strike me as neoliberal.

        • MPAVictoria

          “Providing free [public?] college for everyone has a lot of logistical problems with fairness and will cost a lot of money”

          Providing police services for everyone has a lot of logistical problems with fairness and will cost a lot of money

          Providing roads for everyone has a lot of logistical problems with fairness and will cost a lot of money

          Providing healthcare for everyone has a lot of logistical problems with fairness and will cost a lot of money

          • FlipYrWhig

            All true, which is why the wanting of those things had to be accompanied by a vigorous argument about how to pay for them, rather than a lot of bleating about how they were good things that someone probably would have done by now if not for the meddling neoliberals, or a lot of implying that asking how they’ll happen is a sign of faint-hearted ideological faithlessness.

            • MPAVictoria

              Yes but what he is talking about is the people saying they CANNOT BE DONE. Or that if they were done THEY WOULD BE A BAD IDEA.

              Clinton has attacked universal post secondary this way. Not that you will admit it.

              • FlipYrWhig

                I don’t think “if they were done THEY WOULD BE A BAD IDEA” is the actual reaction. I think the actual reaction is “getting the money for the good idea will be politically impossible” or “if we did manage to get the money for those things we should spend it on better ideas.”

    • xq

      There’s actually a strong neoliberal argument against income cutoffs: they distort the market. If you need to make less than $X to get a benefit, there’s less incentive to make $X.

      When I think of welfare proposals advocated by neoliberals, they tend to be universal. For example, UBI, catastrophic health insurance, and school vouchers are all universal benefits famously advocated by neoliberals.

  • Mike in DC

    Is the Corporate Reform/Corporate Social Responsibility movement more neoliberal or progressive in your view? I suppose it may depend upon whether the corporatists are being lured or being pushed.

    • J. Otto Pohl

      In Ghana it is definitely neo-liberal.

  • keta

    Maybe Max is planning on addressing this in another post today, but here’s my question: can Sanders and his supporters advance their agenda in any meaningful way post-November? If yes, how?

    I ask because so much of what Sanders promotes flies directly in the face of what I perceive to be deeply rooted American beliefs about money, the accumulation of wealth, and American liberty.

    • FlipYrWhig

      [snippy remark deleted — too early for me]

    • cleek

      let them elect local and state representatives and use that to affect policy at the state and national level. like every other political movement has to.

      • FlipYrWhig

        BUT THAT’S SO BOURGEOIS

        • cleek

          they’re the most important generation, evah!

      • DrDick

        Which is exactly what Sanders has advocated.

    • efgoldman

      I ask because so much of what Sanders promotes flies directly in the face of what I perceive to be deeply rooted American beliefs about money, the accumulation of wealth, and American liberty

      Yes. The biggest unanswered question about Bernie (besides the fact that he didn’t really have any policy proposals, just slogans) is, in what universe is/was he going to get a US Congress to pass the kinds of sweeping changes in the tax and budget structure he (sort of) proposes. Even if by some miracle, Combover Caligula gifts us with both houses of congress this November, nothing like that is going to pass. Suggesting Bernie could have gotten it done is just Green Lanternism.

      ETA: And cleek is quite right just above. I always hate to give the Republiklowns credit for anything, but they did it right: first school boards and county commissions, then state legislatures and on up. Demographics may keep them out of the White House (I hope so) but they’re still winning over the long haul, by hard work and patience.

      • FlipYrWhig

        Well, I think the point (from a lot of Berniacs if not from Max, who may have a different answer) is that Bernie Sanders plays the role of goal-setter, more so than that he “could have gotten it done.” So if there’s a movement, the movement is supposed to keep pressuring the political establishment to try to accomplish the things the movement wants. And most Bernie Sanders people genuinely want various good things on a large scale, and were elated that Bernie Sanders talked about how he wanted them too. (For a while. It’s been a shit-show for months.)

        But I’m not sure why wanting things is supposed to get so much credit and deference. When wanting things, the easy part, hits the meatgrinder of Capitol Hill, where lots of people don’t want those things and don’t much care that you or the millions of people who support you do–that’s when you need (“bourgeois”) politicians to do their best and get disappointing results for their efforts. Because there’s no alternative. There aren’t enough social democrats in America for social democracy to take off in America. Make more. It’s hard. Stop complaining about it.

        • ColBatGuano

          There aren’t enough social democrats in America for social democracy to take off in America.

          This point just can’t be emphasized enough. The idea that a majority of this country is going to adopt Scandinavian social democracy when 40% of it thinks D. Trump is a perfectly acceptable Presidential candidate is crazy.

  • Mike in DC

    I think it could be argued that neoliberalism was an attempt to coopt corporatism to social democratic purposes, but it largely resulted in a coopting of neoliberalism to corporatist purposes.

  • a_paul_in_mtl

    Hello MaxSpeak,

    First of all, although I disagree with your earlier characterization of LGM as a pro-Clinton “hive” (in fact the writers here generally support Clinton for the general on the same pragmatic grounds that you do), this discussion of socialism is interesting and not something one would normally see here.

    One quibble: while I agree with universality of social insurance programs on the merits, I cannot agree with the claim that opposition to same “is unworthy of any respectable Democrat.” This is a rhetorical device often used by leftists claiming that, in essence, the Democratic party MUST BE a social democratic party, despite the fact that it has never actually been one. Does HRC’s rejection of universality really represent a betrayal of core historical Democratic Party principles? I don’t see a historical basis for such an insinuation.

    Another quibble: I understand neo-liberalism as being a far more aggressive ideology than the one you describe. To my mind, neo-liberalism is the drive to make “market forces” king of more and more aspects of human life, whether through privatization or certain forms of deregulation and entrenchment of corporate rights. While the Clintons did broadly support a neoliberal ideology in the 1990’s any such support now is on the margins. So HRC might support charter schools, for example, which I would say qualifies as a neo-liberal initiative, but by and large the platform HRC is running on actually moves us away slightly from an embrace of “market forces” and the supremacy of corporate capitalism.

  • cleek

    splitters

  • andrew97

    Can someone explain to me the idea of the state-owned “postal savings bank”? To me it seems like a desperation move to give the post office relevance in an era when (a) nobody sends letters anymore and (b) the post office let the private sector eat its lunch on web delivery services. It’s an extra weird idea to me because brick-and-mortar retail banking is just as doomed as mail delivery, and for the same reason.

    • cleek

      there’s a lot of fist-waving because the postal banking would stick it to the (evil) big banks.

      and a lot of promoters seem to think it will bring banking to areas not currently served by private banks. maybe. but my local post office is literally a counter at the gas station (run by the same guy who sells lottery tickets, beer and gas). i’m not sure i want him handling my money.

      also, i have to drive past two banks to get there.

    • Murc

      The idea behind a specifically postal savings bank is simple; it provides a state-run, not-for-profit bank in order to give people access to banking services without them being gouged by things like “this checking account is only no-fee if you jump through all these hoops” and “minimum balance of a thousand dollars” and “so many fees, you guys, all the fees” that hit you with private banks and even credit unions.

      I’ve been poor. You still need a bank account, but you’ll often have a balance of like, ten bucks in it. I once ended up a couple hundred bucks in the hole because my bank charged me a fee for not using my debit card enough in a single month.

      The reason it’s specifically postal is because the post office already has a shit-ton of physical locations that are designed to secure mail, and one can easily repurpose them to securing money as well. They also have much of the same infrastructure as banks do already in place.

      • wjts

        All this. The US used to have this system, and it’s still in place (so far as I know) in the UK and several other European countries. I’d bank with the Post Office in a heartbeat, if I could.

    • Shirley0401

      I work at a school that serves families across the socio-economic system. I have very little doubt in my mind that a lot of low-income and immigrant families would benefit greatly from postal banking.
      There are a lot of people in the country for whom payday lenders are the closest thing in their lives to a bank. For most banks, serving poor people with low balances is simply not part of their business plan, unless it’s by sticking them with all kinds of fees and charges. A public banking option would, hopefully, not use fees for things like low balances and overdrafts as a source of profits.
      While a lot of middle-class people probably never go to the physical bank, there is still a significant percentage of the population that isn’t all that tech-savvy and/or lacks internet access. A place to which they could easily travel and deposit their paycheck without being charged a fee (which at my local convenience store is $5, if I’m not mistaken) would be of immense value to some.

  • slothrop1

    Oh God. Thank you for this post.

  • AdamPShort

    Neoliberalism to me is an ideology that redefines capitalism as a system where labor mobility is limited while capital mobility is unlimited, that is, the opposite of capitalism.

    The political consequences are well known, but the technical economic consequences are frequent banking crises, since countries don’t have meaningful control over their currency.

    • twbb

      Really? The kind of people who support extreme capital mobility also tend to support extreme labor mobility, since both tend to advantage them.

  • DrDick

    Nicely done and, as a Fabian syndicalist socialist, I completely endorse this. It is worth noting that Marx never advocated for state socialism, what we know as “communism”, which was a Leninist innovation, in large part reflecting the social-historical conditions in revolutionary Russia. These fail for the same reason that monopoly (or oligopoly) capitalism does, over centralization. Diversity is the key to a vibrant economy. While he was never explicit about it, what Marx seems to have advocated was a system based on workers collectives (syndicalism) like the Paris Communes or the modern Mondragon Corporation.

  • I think the last two paragraphs are confusing and suspect one sentence was intended to read differently. Suppose a progressive thinks a neoliberal argument is good: can he embrace it as part of progressivism or must he relinquish it to the other side? The same is at least as true in reverse: is the defender of a good argument doomed both to defend it because it’s good and to be cast out of progressivism lest the definitions be blurred?

  • mds

    I spent some time in graduate school studying economic planning. It’s not going to happen. Too many variables to enumerate, too much data required, too many equations to solve.

    This seems to be based on a couple of the usual premises I encounter, which is that (1) there is one correct global optimum for resource allocation; and (2) it’s mathematically intractable to find it, even though markets are supposedly able to do so.

    It’s that point (2) especially where my lack of expertise in economics hampers my understanding. If resources are being allocated, then there must be an underlying mathematical process, no? So how is “the market” managing to do it? I never found either Hayek or Mises to give a satisfactory answer to this, but that could simply be down to their own lack of serious mathematical expertise.

    To take the example that I always think of due to my own background: determining the three-dimensional structure of proteins. It’s not going to happen. Too many variables to enumerate, too much data required, too many equations to solve. That might change with super-duper computing advances, but as far as I can see, it’s science fiction for the foreseeable future. The energy surface available to a macromolecule is just too big to explore exhaustively.

    Now, in reality, the Protein Data Bank is actually chock full of structures. Almost all of them are constrained by experimental data (crystallography, NMR, EM), but refinement has traditionally run afoul of the parameters/data ratio. So people get “close enough” by some measure, which usually seems to be adequate to answering questions of interest. Even without direct experimental data, there are ongoing efforts in molecular modeling, protein folding, and the like, usually using experimentally-constrained structures as inputs. Approximation, iteration, and comparison to already-known results are the structural biologist’s friend.

    So, naively, from the perspective of an overly-reductive outside field, what’s wrong with a process that can find adequate-by-some-measure local optima? As I alluded to above, I’m highly skeptical of the strong version of the Efficient Markets Hypothesis and the like (and I’m not alone). So why would planners necessarily do worse?

    (Sufficient political action to counteract market outcomes would more provably work, of course, assuming the political power is available. Which is where the market-accepting left can play a role, especially as Sanders isn’t actually proposing central planning and state-owned industries.)

  • No Longer Middle Aged Man

    You pretty much had me agreeing on all this, some quibbles re the definition of neoliberalism, but the photo and quote from the Murray Rothbard of the left caused me to pull back. He’s a brilliant analyst, obviously, but every time I’ve ever heard him, going back 40 years, I’ve come away with the awful feeling that I should not trust him because he simply can’t/won’t hear/absorb counter arguments and opinions.

  • Quite Likely

    Excellent point. The issue of universal vs means tested programs really gets the core of the difference between the ideologies of the Clinton and Sanders wings of the Democratic Party. In the Clinton view social spending is there to fill holes in the market system. Oh, you can’t afford insurance? Let’s subsidize you a bit so you can. Can’t afford education, or rent, or food, or whatever? Same thing. On the other hand the Sanders view is about taking some of these things away from market control altogether. You have a right to healthcare, a place to live, a decent education, a job, etc. and we will guarantee that right now and figure out the details of paying for it later.

    • Shirley0401

      I think it has a lot to do with how Sanders went from 40% of primary voters. It strikes me as being tied up with where the party went wrong in the last few decades, too, as successful universal programs would go a long way towards reminding people that government is capable of greatly improving people’s lives.
      Unfortunately, it’s a distinction Clinton and her advisors seem not to have appreciated, or simply aren’t interested in adopting. Medicare for all will “never, ever happen” because she honestly seems not to want it to happen.

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