by Marc Chandler
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The American political discourse has changed since the 2018 midterm election. Enthusiasm and passion were to be found on the left-wing of the Democratic Party. A new sense of hope and mission replaced the defeatism and cynicism seen in 2016. Some identified with democratic socialism, but in the political rhetoric the broad brush of “socialism” has been used to paint the entire party. The 2020 contest is already being framed as a struggle for America’s soul between capitalism and North Korean/Venezuelan socialism.
It seems that eastern Europe and Russia have shown one can still have anti-Semitism even if there are no Jews. Similarly, America’s rabid anti-communism can survive the fall communist experiments in the Soviet Union, Vietnam, and Cuba. And yet, judging from the popular discourse, most do not have a clue as to what socialism, let alone communism means.
Allusions to statist solutions and labor unions are often made. More recently, calls to raise the marginal tax rate on income over $70 mln a year were dismissed by many as socialist. It is often depicted as a un-American foreign ideology.
Unbundling Socialism
To begin to unbundling “socialism,” we begin with the commonsense definition of socialism. It is what socialists advocate. In reviewing the US Socialist Party platform of 1928, when the party was already past its peak of support, Milton and Rose Friedman found, much to their chagrin, that most of the economic planks had been at least partially enacted. The Socialist Party platform included calls for public unemployment insurance and employment agencies, health and accident insurance, old-age pensions, laws against child labor, and a shorter workday. It was sensitive to environmental issues too, calling for a national program of flood control and relief, reforestation, irrigation, and reclamation.
‘‘In our opinion,’’ they wrote in Free to Choose (1980), ‘‘the Socialist Party was the most influential political party in the United States in the first decades of the twentieth century.’’ Even though the Socialist Party’s presidential candidate never received more than 6 percent of the popular vote (Eugene Debs, 1912), they concluded that the party program had largely been embraced by both the Democratic and Republican parties.
But one need not take the Friedmans’ word for the existence of socialism in the United States. Consider the less ideological student of business and social theory Peter Drucker. Among his last books (Post-Capitalist Society,1993), Drucker is explicit: if one accepts Marx’s definition of socialism as workers’ owning the means of production, then ‘‘the United States has become the most ‘socialist country around—while still remaining the most capitalist’ one as well.’’
Pension funds, of which employees are the beneficiary owners, have become the single largest owners of US businesses, or what Marxists call the means of production. Through pension funds and other savings and investment vehicles, workers share in the earnings stream generated by capital.
The idea that capitalism and socialism are not mutually exclusive anticipates and arguably more intellectually rigorous discourse. American historian Martin Sklar develops this line of argument in a collection of essays published under the title The United States as a Developing Country (1992) and in some subsequent work. Capitalism and socialism co-evolved and co-developed in the United States after the turn of the twentieth century, Sklar argues, and did so in both complementary and competing roles.
Capitalism is a social organization where power emanates from the ownership and control of private property. Socialism, Sklar argues, are those forces that supplement or to some degree supplant the property stake as the bedrock of one’s role and status in society. Socialism comprises those tendencies, forces, and institutions that blunt, mitigate or adapt market relations to social goals.
Sklar understood socialism as the redefinition of property rights in ways that make the market socially accountable and responsible. It broadens the meaning of human rights and citizenship. He finds socialism in the ways in which we celebrate our identities as citizens and not simply as factors of production, like breathing appendages to machines. Socialism lies in those various political, associational and contractual relationship that mediate, restrain and redirect the rights of property and the cash nexus.
The part-conflicting, part-symbiotic relationship between capitalism and socialism does not only take place between classes and institutions but within them as well. Sklar explicated argues against equating capitalism with markets or business and equating socialism with the state or unions. He suggests that each sphere may embody the capitalist-socialist mix that characterizes the modern American political economy.
In fact, Sklar argues, the large modern corporation, which many consider a defining institution of capitalism, is itself an embodiment of both capitalism, and socialism: Its very origins lie in self-conscious attempts on the part of individual capitalists to escape the vagaries of the ‘‘free market.’’ Even the drive to globalization reflects this mix. It is at one and the same time an affirmation of the mobility of capital and an attempt to escape the omnipresent marketplace. Multinational companies internalize activities, such as trade, that previously took place between companies with separate legal identities.
The basic characteristics of modern business, like corporate ownership, management, employment, investment policy, and revenue distribution, cannot be understood simply in terms of market forces. Public policy and pressure from various associational groups have helped shape the modern corporation and influence its operations and goals. This does not mean that power no longer emanates from the control of private property. Rather, the presence of socialist relations means that such power is tempered, checked and sometimes even redirected.
The Other Socialism
Two types of socialism emerged early in the 20th century. There was the socialist revolution in Russia in 1914. Russia was primarily an agricultural quasi-feudal society of mostly peasants. And it is Lenin and Stalin’s violent, oppressive, totalitarian, statist regime that many associate with socialism. But there was another type of socialism that was being articulated and implemented in the early 1920s. It was called fascism in Italy and later, National Socialism in Germany.
National socialism was understood to be a bigger threat that left-wing socialism. The Allies in WWII were willing to join forces with left-wing socialism of the USSR to defeat the national socialism of Germany. However, after the defeat of Nazi Germany, the Soviet Union and its left-wing communism came to be understood by the US as the very definition of un-American.
Remember the Cold War maps. The US was in the center and to the west, east and north were the USSR. A funny thing happened on the way to victory against the Soviet Union. Many high-income countries embraced Keynesian state mechanisms to manage aggregate demand, and although they did this to avoid a return to the Great Depression and prevent the spread of Communism, they backed into fascism.
This is not an expression of cynicism or political rhetoric. John Barnes, who studied fascism in the 1920s, wrote: “Fascism entirely agrees with Mr. Maynard Keynes, despite his prominent position as a Liberal. In fact, Mr. Keynes’ excellent little book, “The End of Laissez-Faire” might, so far as it goes, serve as a useful introduction to Fascist economics. There is scarcely anything to object to, and there is much to applaud.”
As the state sector grew in response to the Great Financial Crisis, the financial press and the blogosphere was full of warnings about left-wing socialism. Yet profits remained privatized even as losses were socialized. Wage growth remains lackluster though unemployment levels have fallen sharply. The state has allowed monopolies and monopsonies to emerge and profits are at record highs.
The political and economic elites are failing to deliver the goods–rising living standards-, and people are upset. However, rather than aim their criticism at their local elites, the rise of the virulent nationalism and the visceral anti-immigration deflects the domestic struggle and projects it onto a foreign enemy. Capital has gone on an offensive and has captured the state to a greater extent. Any attempt to roll it back is called “socialism” in the US. The American political spectrum appears relatively narrow and mostly on what would be regarded as the right in Europe (more like German Free Democrats rather than the CDU ). The so-called radicals that are advocating the return of marginal tax rates to where they were before Reagan would be social democrats in most European countries.
The accusations of left-wing socialism serve a political purpose. It is not a lesson in political philosophy, but political activism. Demonize one’s enemy with the hot-button emotional labels, which distracts from the real struggle. Despite a generation of young people who have grown up since the collapse of the Soviet Union, there are few more vile things besides “socialist” to call an adversary in the US.
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