Capitalism

Democracy. Capitalism. Socialism. Choose Any Three of the Above

If you don’t have a big bathtub of oil in the ground, you need all three to deliver widespread economic well-being.

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By Steve Roth

In the millennias-long evolution of human societies and economic systems, we find ourselves today at a pass where three systems predominate, and fitfully cohabit: democracy, capitalism, and socialism. Most countries in the world operate with large doses of all three.

Given that, it might seem odd that there are so many loud and prominent political voices who talk about eradicating one or more of the three. These voices often represent these isms as mutually exclusive (they aren’t), and envision vaguely utopian nirvanas of true, complete socialism, true complete capitalism, or Platonic, non-democratic polities administered by benign, elite philosopher kings (and perhaps even queens).

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All of those anti-ism-istic voices are spouting incoherent claptrap. Anti-capitalists on the left, anti-socialists on the right, and anti-democrats along their own fringe, are all simply loony.

Assume for the moment: the dream-goal of a polity, or at least of an economy, is to deliver widespread or even universal thriving and prosperity, economic security, and economic well-being. Now take a look at the countries that have achieved one admittedly rough and flawed measure of that: high GDP per capita. Aside from some petro-states (and their achievements are deeply contestable), no country has ever achieved or approached that goal without all three of the above. Take a look, here from the IMF ranking (middle-east petro-states excluded):

GDP/Capita
Luxembourg $98,987
Singapore 85,253
Norway 68,430
Switzerland 58,551
Hong Kong 56,701
United States 55,805
Ireland 55,533
Netherlands 49,166
Sweden 47,922
Australia 47,389
Austria 47,250
Germany 46,893
Taiwan 46,783
Iceland 46,097
Denmark 45,709
Canada 45,553
Belgium 43,585
France 41,181
United Kingdom 41,159
Finland 41,120
Japan 38,054
South Korea 36,511
New Zealand 36,172

Now consider, in turn, what each of the anti-ism crowds thinks we should get rid of.

Anti-socialists. While these voices (pretend to) take aim at the notions of anti-capitalist “socialists” who want to “seize the means of production,” in practice and reality this crowd is attacking socialist institutions that are ubiquitous in every prosperous country: government-provided retirement and health care/insurance systems, free public education, government spending on infrastructure and research, programs for economic security, and — in every case — huge redistribution programs. Judging by those countries’ success, these are not the components of a Maoist or Stalinist hellhole or serfdom state. Quite the contrary.

No country has ever achieved much less maintained widespread thriving and prosperity without massive doses of this kind of “socialism.” (Obligatory proleptic response to Singapore and Hong Kong: see concluding note here.) All the history we’ve got suggests that those institutions are necessary to modern prosperity. To suggest that they should be dismantled in fond hopes of some imagined, purely capitalistic, free-market utopia that has never existed on this earth is…lunacy.

Anti-capitalists. There is a “seize the means of production” “socialist” contingent that envisions an imaginary, eventual end to something vaguely defined as capitalism. But despite endless smoldering dumpster-loads of obfuscatory Marxist and neo-Marxist tomes and tracts (yes, there is some good thinking scattered about in them), and vague intellectual gestures towards distinguishing ill-defined things like “private” vs. “personal” property, it’s completely unclear exactly what laws they want to get rid of, or replace.

They might concede, for instance, somewhat reluctantly, that you will be legally allowed to own your Kenny Loggins records. (That’s kind of them.) You might even be free to buy and sell records. But are you allowed to make a profit doing so? Or should we pass laws to make that illegal? If you run a record store or a plumbing business, are you allowed to hire employees for hourly wages? Are you allowed to “own” that business? Are you allowed to make profits based on the sweat of those employees’ brows? Crucially, if not: is jail time the punishment for doing so? If we’re going to “end capitalism,” what laws are they suggesting we should actually put in place, today? Despite (or because of) all those tomes and tracts, their answer remains radically unclear.

As with anti-socialists, the notions of “anti-capitalists” inevitably envision the eradication of institutions that are ubiquitous in (and hence presumably necessary to) thriving, prosperous economies. And as with anti-socialists, that mushy, broad-brush utopianism obscures what’s truly important: the ten thousand institutional details — specific laws, norms, and strictures of property and corporate structure — that make capitalism (and yes, corporatism) both benevolent and pernicious.

And: with those at least vaguely ridiculous notions, anti-capitalists aid and abet their very enemies — delivering live, loaded rhetorical ammunition unto the anti-socialists. Vague, wooly-headed anti-capitalism delivers a wonderfully easy, target-rich environment for hippy-punching.

Anti-democrats. This faction does exist in the political ecosystem of modern, advanced countries. It’s largely an expression, in the intellectual halls of libertarianism, of the anti-“socialist,” pro-property rights, pro-“capitalist” school. Given its logical foundations, taken to their inevitable conclusions, libertarianism ultimately resolves to anti-democratic authoritarianism. (Try a Google search for endless discussions of this manifest reality.) This is why lengthy discussions with libertarians tend to devolve into claims that they should be the benevolent dictators. (With the inevitable Churchill quotation in response).

None of this is to suggest that there is a political parity or symmetry among these anti-ists — at least in the United States. Anti-democrats are essentially invisible and voiceless, their message a fatal political non-starter. As for anti-capitalism, try naming one successful politician this side of the Seattle city council (one member) who even makes noises about “eradicating capitalism.” Certainly on a national stage, doing so would be political suicide. (The Bernie movement is, rather, all about the ubiquitous social institutions detailed above, and about pushbacks to corporate power within our heavily capitalistic system.) Anti-socialists, on the other hand, stand at the very pinnacles of power; their voices are manifold, loud, and widely broadcast.

But regardless of their relative political power, all of these these ill-considered, utopian, faith-based, tribalistic anti-isms are a bane on the body politic. At this point in our evolution, capitalism, socialism, and democracy are necessary for any country’s prosperity, economic freedom, and economic well-being. And they all need improvement — just as we’ve been fitfully improving things for hundreds, even thousands of years.

To quote my millennial daughter: “People need to stop throwing out the baby with the bathwater.”

Or — if you’re Grover Norquist — drowning the baby in the bathwater.

2016 October 2


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  • I think this is the worst article I have seen on this site.

    Steve frames opposing views as “incoherent claptrap” and the holders of differing views as “loony”.

    I thought this site was about promoting discussion, and tolerance of diversity – how did something like this get in.

    And to top it off, it is entirely backward looking.

    He has looked at the first line of rice grains on the chess board, and has seen there are only about 500 grains – almost nothing.
    Technology is doubling in computational capacity and performance in under a year.
    It may not have emerged above the 5% noise level for most people yet, and when it does, it will only be 4 years from emergence to saturation.

    4 years is not long for major social change.
    We need to be prepared much sooner.
    We do not have many years left.

    Using linear analysis from the past is a guarantee of failure when dealing with exponential trends.

    I agree with one of the themes – that markets and capitalism must stop being the dominant force in our social systems; and I do so from an entirely different perspective – one that is respectful of diversity, tolerant of difference, and accepting that real freedom must lead to increased diversity (exponentially expanding over time).

    Under such conditions, the only safety any of us have is if we all accept a fundamental respect for life (all sapient life – every individual – no exceptions) and a fundamental respect for freedom.

    Sure, in history, markets and freedom were often strongly associated, and that is changing with exponential development of automation.

    Automation allows the production of universal abundance of anything fully automated, and anything universally abundant has zero market value.

    Clash.

    In such an environment, if individuals are using market values to guide there decisions, there will emerge meta level incentives to remove any universal abundance. The evidence for such things is overwhelming for anyone prepared to look beyond the many levels of “spin” at the actual effects of most legislation in most jurisdictions.

    And such freedom comes with responsibility, it is not about whim, but rather has strong elements of social and ecological responsibility.

    It requires active tolerance of diversity, active respect – not name calling.

    • Larry

      you are 100% correct…

    • worldcitizen55

      All fair comment Ted… however, Steve Roth does have a point as far as a lot of the general public discourse goes. Ignorance and incoherence are rife in the mainstream, especially in *macro* economics, media and politics. Which of course also means that there is no meaningful ‘democracy’ at all, and largely never has been. How can there be be when no Fourth Estate fit for purpose has ever existed, or an education system that hasn’t studiously destroyed citizens’ ability to participate in civic society?

      In my opinion, the root of it all is media. What we have now is an extreme monoculture, literally run by a mere handful of vastly wealthy interests. Meaningful democracy requires the opposite – as much plurality and diversity as possible, and that cannot be imposed or regulated into existence by any central authority, private or public. Hence this binary choice, where even made, has resulted in the same monoculture. (Eg the UK’s BBC is a failure, as many people are now realising, if they participate with the Web and Social Media.)
      But there are solutions. One such I call a ‘Democratic Commons’ funding model. Where funding support comes from public funds, but rather than being centrally issued, it is instead disbursed by individual citizens, via a, say, annual voucher system, to the media provider(s) of their choice. No doubt, Corporate media would get some of the money. But I can g’tee that independent media providers like RealNewsNetwork, DemocracyNow etc. would likely see a hundred fold increase in their resources. That would be paradigm changing.
      A growing number of people, as a result of the information technology revolution, are realising how badly governed our societies are, even to the point where humanity faces serious existential threats. Unfortunately, I seem to be a lone voice in offering any solutions to achieve resolution of that thru’ meaningful democracy.

      • I completely agree that ignorance is rife in society.
        To the degree that such ignorance is intentional, it is to be deplored and rectified, however, one thing I have noticed in my 50+ years of active enquiry is that the more I know, the more I know I don’t know, and the less confident I become about much of what I once accepted as Truth.
        I don’t do Truth now.
        Now the best I have is “useful approximation in the current context”.

        When I first entered national level politics in this country in 1984 I was reported in the major daily newspapers 9 times. I read each of those articles carefully, and in one of them I could say that was something like what I talked to the reporter about, the other 8 bore no relationship that I could find to the discussion had.

        After that experience it became clear to me that by reading newspapers I was becoming more ignorant, not less. Haven’t bought one since.

        Very few institutions actively pursue diversity – most aim for conformity (religious, political, educational, legal, spiritual, scientific, …….).

        As a child I cursed my inability to talk. I had a small flap of skin under my tongue that prevented me from making the sounds “r”, “t”, “l”, “d”,”j”,”n” and so my first teacher labelled me as a “retard” in front of my classmates. I was also the smallest kid in my class for most of my primary and secondary school years. I was 6 when they cut the flap of skin, and by 9 most of the speech impediments had gone. But that experience of social isolation, of being picked on, being rejected socially, allowed me to develop the intellectual habit of relying on my own judgement, and not trusting the establishment, or the group. It also meant I spent a lot of time in libraries reading as they were usually safe from the activity of bullies. It took me about 20 years to appreciate what a gift that actually was.

        Social agreement is not a major driver for me. Nice when it happens, and almost incidental.

        Making systems work is what drives me.
        Creating systems that might actually stand a reasonable chance of delivering a safe environment for everyone who wants to to live as long as they choose.

        So yes – the media is distorted. And from the deep systems perspective – why is that?

        The answer is really simple, it is the natural outcome of a set of strategies based around market values and competition.

        Human nature is complex. It has two major modalities – competitive or cooperative, and an infinite spectrum of mixes of those possible across time and context.

        If one chooses to support cooperation over competition, and chooses to value human life and liberty above markets, universally – mine and everyone else’s, then that creates a very different set of strategic drivers and outcomes.

        The thing to get is, any system of exchange must necessarily promote competition, rather than cooperation.
        And competitive systems must promote winners and losers, and the majority of the population must end up losers.
        Any system with losers is dangerous for everyone, because losers have nothing left to lose, and can use very high risk strategies.

        In this deepest of strategic senses, security for anyone demands security for everyone.

        Such security is impossible in a competitive market based (exchange based, scarcity based) system.

        Such security is trivial in an automation based, abundance based, cooperative system; where the reasonable needs of everyone are met by fully automated systems, and such boundaries as are necessary are a matter of ongoing conversations.

        No market based system can ever deliver such security.
        No competitive system can ever deliver such security.

        Complexity can only survive in a cooperative context – if the history of the evolution of life on this planet teaches us anything, it demonstrates that lesson in spades.

        Democracy has many forms.
        For the last 11 years I have been deeply involved in a community consensus governance process. Every decision taken by the group had to be agreed by all parties, commercial, recreational, conservation, traditional. Such things take time. The process can only work if there is a set of agreed values that everyone shares.
        I am currently a candidate for mayor of my town, and will find out next week if enough people think I’m worth the risk.

        You are not a lone voice.

        There are a growing number of us, and there has been for many years.

        40 years ago I found few people willing to have such conversations (less than 1% – significantly so).

        Now I find most people are willing to engage (over 50%).

        That is a huge change.
        Still a considerable distance to go from conversation to action, and it is well down the path.

        • worldcitizen55

          Interesting reading Ted. Nothing I’d disagree with there, either.

    • Fool2242

      Spot on Ted. Never read such a poorly written piece of propasganda.
      To the dunderhead, shill that wrote the article – Please explain to me how you/we can have continuous growth (the modern economic/capitalistic paradigm) on a finite planet with finite resources?

      You may like to think of your daugter and her future when you start off spouting about maintaining the current failed system

  • Larry
    • Dr. Mohinder Kumar

      Steve Roth, your Money and Property essays were fine and well received; but this one is sheer liberty that you can take on a public forum as a matter of democracy, liberty, diversity and tolerance. What Councilors, Politicians and Municipal Corporators think or common ill-informed persons asks in FAQs cannot be taken as an informed view.

      The essence of capitalism and socialism is untouched in your essays. By positing three systems in black & white categories (the third element of trinity i.e. “democracy” as independent ideological system) you’ve only revealed your depth of understanding and courage. Is “democracy” any way absent from empirical “capitalist” systems that you observe? People do have right to own property. But how many Americans feel free to join in protests against corruption, government secret intelligence on privacy, etc.? Is the difference b/w “private” property and “personal” property not really clear to the author? Then there is no point in writing this essay.

      Roth, you really did not read someone who wrote about “emancipation” of all humanity (not just wage labor class) from the chains of capitalism? You really did not read about full democracy envisioned under socialism by someone? You really didn’t read about future society deciding its own course/ freedom/ action/ programme for which no blueprint/ roadmap was proposed by someone? Who was he?

      If you equate basic facilities (Scandanavian countries are ahead in that) with “socialism” them you’re back to the USSR brand experimental socialism or State Capitalism.

      Arguments in this essay are simplistic and childish. What prompted you to draft this essay? Can you think of publishing it in some reputed social science journal or even a newspaper to see its editorial team acceptance, leave aside public acceptance which is taken for granted? Why not?

  • Martin Hensher

    So I started to write an intemperate and cross response to some of the comments below, and just in time spotted quite how foolish that would have been…

    I think this is an excellent piece that I thoroughly enjoyed, and thank you to Steve for putting it up.

    I agree with him that history is the only source – however imperfect – that we have to guide our faltering stumble into the future. And I tend to agree with his essential arguments, including the use of the word “loony”. To those that took issue with his tone, I would ask you this. All around us, there are forces rising up who absolutely will not treat others with respect. I agree that, as individuals, we must treat other humans with the utmost respect. But surely this cannot and must not preclude us from calling out what is wrong, especially now, as ever-darker forces circle and infiltrate the tattered encampment of western democracy?

  • JDSousa

    Social democracy, the so called Health state, is NOT socialism.

    Terrible article.

  • C. D. Carney

    I do like the way they present anti-capitalists. It’s the dumbest thing in the world to say “maybe we should get rid of capitalism.” Capitalism is simply this- providing a good or service in exchange for something else. No one is going to do anything for nothing. The more money the government takes from someone the more those with money try to hide it. Take Warren Buffet for example. He is constantly saying YOU need to pay more in taxes. Well, he’s a multibillionaire who is only taxed on his salary of around 110k per year. That’s it. That’s all he pays because he has structured his wealth so that his income is pathetically small. You and I can’t do that. The call for more socialism and less capitalism generally comes from people who money doesn’t mean anything to or who don’t want to be a part of the system and require more of your money. Capitalism isn’t perfect but it got us where we are today. Why everyone wants to keep trying pure socialism is insane. History shows it doesn’t work or at least not for very long.

  • I have written an extensive response: Democracy, socialism, and (anti-)capitalism.

    I argue (at much greater length than this comment permits) that Roth has failed to connect the dots: capitalism (actual capitalism, not just Roth’s vague definition by contrast) is the cause of both anti-socialism and anti-democracy, which I argue is more prevalent than Roth admits. Indeed, because people will vote for socialism, anti-socialism requires anti-democracy.

    And if anti-capitalists have failed to put forth a detailed, unified, and comprehensive alternative, that is because anti-capitalism as a practical political program has been so thoroughly suppressed, not only socially but by imprisonment and murder.

    Cherry-picking a few theoretical points that superficially appear silly (the only actual example behind a paywall) is not a critique. And while the academic exploration of anti-capitalism (the only expression currently permitted) is broad, conflicted, and disorganized (i.e. quintessentially academic), it is not so broad and disorganized as to be “completely” or “radically” unclear; even a new student can identify patterns and themes.

    Yes, anti-capitalists do in fact advocate dismantling many capitalist institutions. Capitalism is a set of institutions; to oppose capitalism is to oppose those institutions. But we definitely reject Roth’s blithe assertion that if an institution is ubiquitous, it is necessary to actually existing prosperity. If capitalism, socialism, and democracy are all obvious goods, why do we have so much of the former and so little of the latter? Why do anti-socialists “stand at the pinnacle of power”?

    The anti-capitalist critique of capitalism deserves more than Roth’s snide and trivial dismissal.

    • Kimock

      > people will vote for socialism

      Really? Genuine socialists, who self-identify as such, have not had much electoral success worldwide, especially in recent years. (Yes there are some exceptions.)

      • I mean “socialism” in the sense that Roth uses it, and despite the efforts of the bourgeoisie, that kind of socialism has had terrific electoral success, e,g. Social Security, Medicare, Bernie Sanders, etc.

  • Kimock

    There are some, but not deep, tensions between capitalism and democracy, and between socialism and democracy. However, socialism and capitalism are in tension. Yes, an economy can be mixed, such as those of the Nordic countries. But using the percent of annual economic activity that is controlled by government decisions as a guide, the more that is determined by such administration, the less that is determined by the market.

  • John Davies

    An interesting idea, redolent of the “radical middle”, but spoiled by tendentious, extreme & emotional claims – and some pretty bad grammar.

  • DiegoVan

    The author writes, “socialist institutions that are ubiquitous in every prosperous country: government-provided retirement and health care/insurance systems, free public education, government spending on infrastructure and research, programs for economic security, and — in every case — huge redistribution programs. ”

    We have murder and theft as part of our society, but most of us would consider them non-productive. The point is that mere existence is not synonymous with productive.

    Douglass C. North, Nobel winning economist says that some societies get stuck in economic and political patterns that reward the rulers and not necessarily the society. He uses this to explain the large number of societies that are poor. Piracy may rewrad the pirates and the rulers, but it does not advance the society. We may have reached this point with socialist govt programs.

    I make the claim the while govt runs public education and municipal transit systems, neither are as productive as private alternatives may be. The vast majority of municipal transit systems run at significant loses where tge revenues cover only about half the operating costs. The routes, rates, hiring and subsidues are all politically and not economically chosen. One important way to see this is that people will pay 10 times the cost of a bus ticket to go to the same place by taxi or Uber. Why? The bus is slow, dirty and uncomfortable.

    So, tell me again with the bus company fares are so low, the drivers over paid and the routes are poorly picked how this contributes to a productive society?

    The point I am making is that just because we have socialism, doesn’t mean it is necessary or productive. A positive case can be made for socialism, but making the case through existence is not supportive.

  • William Ellis

    I think Childish or naive would have been a better word choice than Loony… but other wise I loved this. It simplifies things in a communicable way…. You really don’t have to have a very deep knowledge of political taxonomy to understand it… but no matter how deep your knowledge, it’s hard to argue with…