Is Capitalism Without a Socialist Backbone Impossible?

[Darat]

Problem here seems to be conflating various meanings of the words capitalism and socialism.

There are economic theories that are labelled “capitalism” and “socialism”, now we know those economic theories are wrong as they do not model reality accurately. For instance capitalism as expounded by Smith does not remove “wasteful” resource allocation, socialism as von Mises pointed out will not ensure equilibrium in resource allocation. Then we have the “political” definitions and again none of these ideologies actually model reality accurately.

So what we are left with at best are two rather vague terms - as people have already pointed out social security schemes are not socialism in either economic nor political senses, the stock market is not capitalism either.

I think people like to use the two words because they have become “weaponised” to use in arguments about political policies, but they really have become nothing more than “bad” words to call your ideological opponents.

My personal view is that they are now so poisonous and have so much baggage if you want an actual discussion or good-faith debate about various political policies you are best avoiding using either of them.

 

[psionl0]

I still think that would just be another phrase for Socialism though.

Not all forms of government intervention can be classified as "socialism" so unless you wish to spell out exactly what forms of government intervention you wish to discuss, we should leave the more emotional word to the zealots to argue over.

 

[The Great Zaganza]

would it be Socialism if the Government issued each citizen upon birth a stack of Government Bonds that yield $10,000/year in interest?

 

[Roboramma]

Socialism has long been the boogeyman of the Right. However, many have argued that all of the "Capitalist" Countries throughout history have all required a considerable amount of Socialist systems to be functional. Including very notably regulations, roads, schools, and police.

The question is:
1) How "Socialist" are the government programs that are set up to allow businesses to function? Specifically as it relates to Socialism, how critical are these services and programs in controlling the "means of production?"
2) Is a Capitalist society without these types of Government social services impossible (In other words, is pure Libertarianism a myth)?
3) If you agree that the social structures set up by all Governments are at least partially Socialist, than are pretty much all Societies just different levels of Socialism?

I think this question is strongly related to Tyler Cowen's framing of the issue regarding State Capacity:

https://marginalrevolution.com/marg...ill-become-state-capacity-libertarianism.html

Along the way, I believe the smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism. I define State Capacity Libertarianism in terms of a number of propositions:

1. Markets and capitalism are very powerful, give them their due.

2. Earlier in history, a strong state was necessary to back the formation of capitalism and also to protect individual rights (do read Koyama and Johnson on state capacity). Strong states remain necessary to maintain and extend capitalism and markets. This includes keeping China at bay abroad and keeping elections free from foreign interference, as well as developing effective laws and regulations for intangible capital, intellectual property, and the new world of the internet. (If you’ve read my other works, you will know this is not a call for massive regulation of Big Tech.)

[...]

9. State Capacity Libertarians are more likely to have positive views of infrastructure, science subsidies, nuclear power (requires state support!), and space programs than are mainstream libertarians or modern Democrats. Modern Democrats often claim to favor those items, and sincerely in my view, but de facto they are very willing to sacrifice them for redistribution, egalitarian and fairness concerns, mood affiliation, and serving traditional Democratic interest groups. For instance, modern Democrats have run New York for some time now, and they’ve done a terrible job building and fixing things. Nor are Democrats doing much to boost nuclear power as a partial solution to climate change, if anything the contrary.

(That link is worth reading in it's entirely for those interested)

What we want is healthy, functioning markets, and healthy, functioning government. To some extent each is necessary for the other.

 

[xjx388]

I think this question is strongly related to Tyler Cowen's framing of the issue regarding State Capacity:

https://marginalrevolution.com/marg...ill-become-state-capacity-libertarianism.html


(That link is worth reading in it's entirely for those interested)

What we want is healthy, functioning markets, and healthy, functioning government. To some extent each is necessary for the other.

Great link, thanks for the info.

 

[Brainster]

Fair point. I was definitely speaking more broadly though. In my city for example, we have been discussing new bike lanes. The bike lanes to some are definitely an example of Socialism, while the roads for cars are not.

Biden has been declared a massive Socialist. While it is true that he does support more socialist programs, and he resumed some food assistance that was ended by Trump, it certainly is not at the scare tactics levels being used to describe him.

Careful with that line of thinking, you're liable to conclude that maybe the Republicans aren't Nazis either, and that both sides tend to exaggerate the danger the other side poses.

 

[lomiller]

2 key things to remember

Government regulations are not Socialism.
Social safety nets are not Socialism


These two things are indeed required for Capitalism to function properly.


Socialism is characterized by public or social ownership of the means of production. IOW business themselves are publically or socially owned. Mainly we think about this in terms of government owned, but other forms like co-operative ownership could also apply.

While not strictly required for Capitalism to function properly, there are cases where these structures result in higher economic efficiency then private ownership. Higher economic efficiency means more goods\services to go around so people are overall better off. By and large though, regulated private ownership usually, (but again not always) yields the best economic efficiency.

 

[lomiller]

Military is the domain of the Government. Protecting the country is one of its core functions. That’s not Socialism.

Even if we assume military and defence are the domain of government (The US founding fathers didn't really agree with this) Socialism describes HOW this is provided.

A similar function could be served by hiring private security firms and mercenaries. It could be argued that the fact that the government provides the service itself makes it socialist. I tend to think not though, because it isn't really a service you could sell people, it's essentially a public good

 

[theprestige]

Another thing to remember is that capitalism is not a soci-political system. It's an economic system. The political stuff still needs to be worked out somehow. Unlike socialism, capitalism has nothing to say about how a government should be formed, what human rights are and how they should be protected, etc. All of that stuff has to be figured out separate from the basic principles of private property and free enterprise.

This is distinct from, say, communism, which is both an economic system and a socio-political system.

The point is that humans are entrepreneurs, but they are also douchebags. Entrepeneurs, given freedom to act, are good for society. Douchebags are bad for society. Capitalism is a system for enabling entrepreneurs. It works best when coupled with a socio-political system that restrains douchebags and mitigates their impacts.

In the early 20th century, both fascism and communism were seen as next steps in the evolution of human society. They were expected to inaugurate new socio-economic and political systems that would maximize prosperity and minimize douchebaggery. Both of them failed miserably, and it turns out that capitalism+democracy is still the best option.

Fascism probably comes a close second (ignoring the Hitlerian perversion), but it doesn't appear sustainable, and comes at a much higher humanitarian price than most people are comfortable with. I think that's basically where China is today.

What progressives like to call "socialism!" in their well-poisoning is often just capitalists having a democratic consensus on how much of their profits to divert towards sustaining a common infrastructure in support of their free enterprise.

 

[Darat]

Another thing to remember is that capitalism is not a soci-political system. It's an economic system. The political stuff still needs to be worked out somehow. Unlike socialism, capitalism has nothing to say about how a government should be formed, what human rights are and how they should be protected, etc. All of that stuff has to be figured out separate from the basic principles of private property and free enterprise.

This is distinct from, say, communism, which is both an economic system and a socio-political system.

The point is that humans are entrepreneurs, but they are also douchebags. Entrepeneurs, given freedom to act, are good for society. Douchebags are bad for society. Capitalism is a system for enabling entrepreneurs. It works best when coupled with a socio-political system that restrains douchebags and mitigates their impacts.

In the early 20th century, both fascism and communism were seen as next steps in the evolution of human society. They were expected to inaugurate new socio-economic and political systems that would maximize prosperity and minimize douchebaggery. Both of them failed miserably, and it turns out that capitalism+democracy is still the best option.

Fascism probably comes a close second (ignoring the Hitlerian perversion), but it doesn't appear sustainable, and comes at a much higher humanitarian price than most people are comfortable with. I think that's basically where China is today.

What progressives like to call "socialism!" in their well-poisoning is often just capitalists having a democratic consensus on how much of their profits to divert towards sustaining a common infrastructure in support of their free enterprise.

Smith did make those claims I doubt that anyone would these days agree.

 

[dann]

I don't know of a lot of capitalists who oppose socializing costs where it makes sense, for example in defense or road maintenance. There are a lot of things that government does well, and that really only the government can or should handle.

It makes very obvious sense in health care, too, and yet there are a lot of capitalists who oppose socializing health care. It is often because those capitalists profit from keeping health care private.

 

[dann]

Nope, it's the military. By far the biggest chunk of consolidated US tax revenue (i.e. socialistic community contribution) goes to paying for all things military (i.e. for the benefit of the society as a whole). And I rather doubt any patriotic Americans would prefer to pay for their own privately-owned and run armies to protect themselves. Who can afford a nuke carrier themselves these days besides, perhaps, Jeff Bezos.

You do know that the military is there for invading other countries rather than to protect patriotic Americans, don't you?
There's also this: Private military company (Wikipedia)

 

[theprestige]

It makes very obvious sense in health care, too, and yet there are a lot of capitalists who oppose socializing health care. It is often because those capitalists profit from keeping health care private.

I wonder if the number of capitalists invested in private health care actually works out to "a lot" as a percentage of total number of capitalists.

Around here, one of the biggest healthcare providers is a multi-state network with hundreds of thousands of employees. It's also a non-profit. There's not a capitalist investor anywhere in sight.

 

[xjx388]

I wonder if the number of capitalists invested in private health care actually works out to "a lot" as a percentage of total number of capitalists.

Around here, one of the biggest healthcare providers is a multi-state network with hundreds of thousands of employees. It's also a non-profit. There's not a capitalist investor anywhere in sight.

Right. But since it isn’t owned and controlled by the State, it’s not a socialist thing either. It’s a bunch of people who got together and formed a Capitalist entity for a non-Capitalist purpose. It still operates as any other company, buying property, employing people, paying and bonusing management, etc. They just don’t need to worry about shareholder profits.

I have no problem with that.

 

[Hlafordlaes]

The history of the last few centuries is nothing but a story involving intertwined systems and dynamics. The academic separation of domains is for modelling convenience; reality is all at once, all together, and without abstractions. For example, the struggle for property rights by an emerging mercantile class starts the story of both capitalism and democracy, as well as that of science and the Age of Discovery, as well as colonialism and the struggle for human rights and full recognition of the other.

Intense agriculture in densely populated Europe eventually polluted main rivers, theretofore a main source of protein. Land scarcity also went hand in hand with either serfdom or minifundism. A hungry, packed Europe launched its ships into the sea, until then not seen as a major source outside the Mediterranean, and the Age of Discovery/Colonialim ensued. This gave small merchants financing the earliest voyages an opportunity for wealth, even if competing madly for royal favor and land grants in the New World, Africa and Asia. Thus a new, mercantile class was born, generating wealth to rival that of the landed gentry, until then rulers supreme.

And so the great game we play now began in earnest. New wealth and property now sought some way to overcome, avoid or escape absolutism and royal whim, ever fickle and willing to confiscate and reward based on royal interest, not always the fair workings of trade. Some refuge was to be found in the scouring of the planet for gold and precious trade, but soon enough overseas colonies saw the arrival of the rule of royal law, er, whim. It is no coincidence that some of the leading voices in, for example, the American Revolution were businessmen and entrepreneurs, with just the interests above in mind. Democracy was the answer to royal whim, or that of some Cromwell, as the rule of law could protect property in a fair and equitable manner.

Fast forward to the late Industrial Revolution and its foundations in the division of capital and labor, and witness the new struggle between financial and human capital with the labor movements of the 1840s, the birth of the first form of socialism, pre-Marx, involving a potporri of ideas, some involving worker ownership of the means of production. It was also a time of great democratic revolutions and the birth of nation states founded around peoples, not monarchs. The Revolutions of 1848^WP, "known in some countries as the Springtime of the Peoples or the Spring of Nations, were a series of political upheavals throughout Europe in 1848. It remains the most widespread revolutionary wave in European history." The mercantile class, now capitalists in the modern sense, had a new opponent, a new force to counter in the protection of wealth and property.

Fast forward to the hyper-competition among well-armed colonial powers vying to both put down labor and democracy movements, and the 20th century is born, in the US witnessing a brutal return to keeping n-words in their place, part of the larger trend of the times. The first major war of capitalism breaks out, and long story short, all those in shining armor, from church to crown to elected official, lose their lustre. Capital is now able to take the unemployed and disaffected and make its first attempt at creating a new bulwark against the erosion of wealth and power, fascist dictatorships in Germany, Austria, Spain, Italy, and Portugal.

Perfect! Industrial might, wealth, slave labor in colonies, the best! Only... there came royal whim in the form of a strutting nitwit out of control, puppet no longer. Favor to one industrialist meant the ruin of the next, with punishment potentially worse than under a monarch. Oh, for democracy! "I know, let's get Mikey! Hey, Yank, fancy a second round as hero?" Even if the whole story is also one of another dictator, Stalin, churning through millions of bodies to actually defeat Hitler and leave him for a last punch from Churchhill and de Gaulle, protectors of African colonies, ahem.

And so on, and so forth. Economic and political power have forever been inextricably intertwined, and democracy, for all its good intentions, is a child of mercantile colonialism, land theft, and slavery. Socialism, for what it is worth, has many forms, as mentioned in the thread, and in some measure can be a solution to a specific problem. However, until such time as 17th, 18th and 19th century political philosophies are not reexamined or abandoned for models offering a better fit to a truly complex military, social and post-industrial milieu, it will be rinse and repeat the old BS, with all the same outcomes.

 

[Hlafordlaes]

Another thing to remember is that capitalism is not a soci-political system. It's an economic system. The political stuff still needs to be worked out somehow. Unlike socialism, capitalism has nothing to say about how a government should be formed, what human rights are and how they should be protected, etc. All of that stuff has to be figured out separate from the basic principles of private property and free enterprise.

Not really. See above.

This is distinct from, say, communism, which is both an economic system and a socio-political system.

Both are socio-political.

The point is that humans are entrepreneurs, but they are also douchebags. Entrepeneurs, given freedom to act, are good for society. Douchebags are bad for society.

Yes, all carry and often channel their inner Jekyll and Hyde. All, meaning that to elevate entrepreneurs by nature in motive, method and outcome is naive at best, and relies on imaginary history.

Capitalism is a system for enabling entrepreneurs. It works best when coupled with a socio-political system that restrains douchebags and mitigates their impacts.

Restrain and mitigate the impact of douchebags, yes. Now including entrepreneurs, of course; no übermensch, thanks. We know where that takes us. See above.

In the early 20th century, both fascism and communism were seen as next steps in the evolution of human society. They were expected to inaugurate new socio-economic and political systems that would maximize prosperity and minimize douchebaggery. Both of them failed miserably, and it turns out that capitalism+democracy is still the best option. ... Fascism probably comes a close second (ignoring the Hitlerian perversion), but it doesn't appear sustainable, and comes at a much higher humanitarian price than most people are comfortable with. I think that's basically where China is today.

You actually admit to the closer relation of capitalism with fascism, yet remain non-analytical throughout the above, small relation to actual history. I would not argue the relation is necessary, but close to it; see today's (recent) Trump calling winners and losers among US companies... royal friends and enemies.

What progressives like to call "socialism!" in their well-poisoning is often just capitalists having a democratic consensus on how much of their profits to divert towards sustaining a common infrastructure in support of their free enterprise.

Strawman to the point of pontificating pap.

 

[Hlafordlaes]

For the record, capitalism, like democracy, is the least worst alternative.

 

[The Great Zaganza]

The flaw of Capitalism is that what we define as Capital is not broad enough.

Social Capital, Reputational Capital, Expertise Capital etc. are all forms of wealth that might be have for useful for a Capitalist Society to be used instead of just forms of money.

 

[TruthJonsen]

It is easy and understandable to point fingers at the current US capitalist system and complain about growing income disparities and the need for more socialism. But it is unfair to label it as simply capitalism. It is a sick and broken form of capitalism. Wouldn't it make sense to first try and fix it before retreating to more socialism? The current broken crony capitalism includes:

• A bi-partisan establishment machine of neoliberal economic policy and neoconservative war policy
• A revolving door between lobbyist and lawmakers
• Law makers get huge contributions; corporations get corporate welfare at every opportunity
• Out of control globalization destroys American jobs
• Excessive H1b Visa workers displace American workers
• Excessive illegal immigrant workers lower labor rates and displace American workers
• This shortage of decent jobs fuels recruitment into the military to allow the Military Industrial Complex endless wars

 

[Norman Alexander]

It is easy and understandable to point fingers at the current US capitalist system and complain about growing income disparities and the need for more socialism. But it is unfair to label it as simply capitalism. It is a sick and broken form of capitalism. Wouldn't it make sense to first try and fix it before retreating to more socialism? The current broken crony capitalism includes:

• A bi-partisan establishment machine of neoliberal economic policy and neoconservative war policy
• A revolving door between lobbyist and lawmakers
• Law makers get huge contributions; corporations get corporate welfare at every opportunity
• Out of control globalization destroys American jobs
  
  This isn't confined to the USA. The problem really is that those jobs are no longer useful or in demand nowadays. The peak of the chimney-sweep industry has also passed us by. Not due to globalisation but progress.
  
• Excessive H1b Visa workers displace American workers
  
  I suspect you have this slightly backwards. Unemployment in the USA means there's millions of potential US workers without jobs, often local to the work. So why would immigrant workers be needed to do the work if that pool exists?
  
  This isn't unique to the USA.
  
• Excessive illegal immigrant workers lower labor rates and displace American workers
  
  As above, you have it backwards.
  
• This shortage of decent jobs fuels recruitment into the military to allow the Military Industrial Complex endless wars

Some notes