Thursday, July 25, 2019

Can Socialism and Capitalism Coexist? Yes, they can and do.

Socialism and capitalism: can they be mutually compatible, or are they like matter and antimatter, unable to coexist in the same place?  In the heated  climate of today’s political discourse, voices from the left condemn capitalism for all the ills of humankind.  Voices from the right assert all things liberal are socialist, which is Cuban communism in disguise.  For terms that generate such strong emotional reaction, one would expect them to be fairly well understood.  But ask any acquaintance to define what they mean, then stand by for garbled non sequiturs and vague obfuscations.  And why not?  Both have multitudes of meanings covering a lot of territory.  What interests me today is how people fill them with opprobrium to be lobbed into the public debate.

Vague, but strongly felt prejudices about capitalism and socialism come in part from popularization of ideas and phrases taken from works by people such as Weber and Schumpeter.  Weber’s 1905 “The Protestant Ethic and the Spirit of Capitalism,” was skimmed by political science and sociology majors for what was likely to be on the final.  It contributed to the myth that Calvinism equated wealth accumulation with evidence of divine election thus driving the development of modern Western style capitalism.  Schumpeter’s 1942 “Capitalism, Socialism and Democracy” contributed to popular magazine articles and pamphlets warning about the Red Danger.  Students didn’t actually read Schumpeter – they read about him.  Echoes of each float around in the political ether infecting conversations of people who have no idea where they came from.  

For the record: capitalism and democracy are not the same thing; socialism and communism are not the same thing; capitalism and socialism coexist, more or less harmoniously, in every Western democracy.  Forms of capitalism profitably exist in nations claiming to be Marx loving communists.  Saying that doesn’t seem to penetrate very far into the understanding of those who prefer to believe otherwise.

For some people, capitalism is demonic oppression of the people, and needs to go.  But asked if it means they would do away with private property, private enterprise, mutual fund retirement accounts, and entrepreneurship, they’re aghast at the very idea of it.  What seems to enrage them is the amoral monopolistic power of giant corporations able to invade and control every aspect of life.  Add to it excessive inequality of income and wealth, and it’s not capitalism they dislike, it's the injustice of conditions present in our democratic society’s private enterprise economy.  They want to change the conditions, not do away with private enterprise.

To other people, liberal ideology leads to socialism, which may not be communism but heads in that direction.  It puts private enterprise in straitjackets of heavy handed regulation, and over taxation that strips owners and managers of the freedom to make decisions they think best for business.  It subjects investors, savers, and entrepreneurs to the whims of greedy workers, government bureaucrats, and social do-gooders who have no skin in the game.  It appropriates hard earned wealth to provide benefits for those unwilling to provide for themselves.

There is truth in both views, but only partial truth.

Italian social philosopher Giorgio Agamben notes that capitalism, per se, is amoral and has no purpose other than for private hands to manipulate the flow of money in pursuit  of profit.  Borrowing from Walter Benjamin, he calls it a religion without dogma.  Business people, and businesses large and small, may be committed to socially worthwhile purposes, but capitalism, the ill defined skeleton within which they exist, is concerned only with maximizing return to invested parties.  It has no moral interest in what a business is or how it’s run.

Things falling under the equally ill defined umbrella of socialism do have a moral purpose.  Advocates believe they will make quality of life better, more just, and more economically rewarding for more people, especially those who are on the lower rungs of society.  They intend to open doors to self sufficiency that have been closed to many.  Within the context of American progressivism, the fundamental rights of private property and private enterprise are never in doubt, but the amorality of capitalism requires that it be regulated to protect the rights and well being of people, the environment, and the long term health of the economy.  

Libertarian advocates of capitalism often talk about the free market.  They believe free market capitalism, operating with very little (preferably no) government oversight, can rely on competitive markets to sort out inefficiencies and provide the best products and services at the lowest cost to rational willing buyers.  It’s an article of faith that ignores reality: markets are easily manipulated to hobble competition, and consumers are not rational.  Moreover, the myth of free market capitalism is uncomfortable accommodating conflicting public interests that jeopardize profit potential. 

Therefore, governments have always and everywhere intervened on behalf of the public good to regulate how markets are structured and business is conducted.  Greater complexities in markets, with increasing conflicts between public and private interests, require a more comprehensive menu of regulation.  It also means some services are better provided by government, or through public/private partnerships, because they don’t lend themselves to privatization that endangers some and excludes others to the detriment of the public good.  Conservative restraint is one thing, but obsessing about it becoming out of control socialism is rational only as a tool to incite fear for political gain. 

In like measure, liberal outrage against capitalism as such ignores its essential role in guiding the ebb and flow of money to meet the needs of a demanding public.  However imperfect, reasonably free market forces create opportunity for entrepreneurial improvements in goods and services that no other economic system has been able to match.  With them comes greater economic well being for more people.  Crafting economic policy to accomplish social goals that protect the environment, workers and consumers is not antithetical to capitalism.  Resolving issues like education, health care, and access to necessities of life with public financing is not free stuff for the undeserving.  It’s the nation’s collective investment in its own well being.


And what is there to say about hard core libertarians and hard core Marxists?  In my opinion, they have nothing useful to contribute to the conversation, but can be dangerous fomenters of anti-democratic violence.  The Marxists are a faint echo of a former time, but they still make useful bogeymen.  The libertarians have generated a powerful core of followers who think they have a man in the White House.  They don’t.

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