The dawn of American socialism

Let's beat Norway at their own game

Socialist dawn.
(Image credit: Illustrated | Images courtesy iStock)

The Russian revolution was the most utopian left-wing project in history, and it was a cataclysmic disaster. When the Soviet Union collapsed in 1991, many Western observers concluded that the old Marxist dream was dead forever.

But they spoke too soon. History is not over, and with the absence of any Soviet competition, Western capitalist countries — and especially the United States — have become hideously unequal, misery-ridden, and economically stagnant. In many ways, socialists in the early 21st century stand just about where they were in the early 20th century: politically marginalized, but leveling an economic critique that becomes more convincing with each passing year.

I have previously covered the two major schools of thought on the American left: the Brandeisians, who would reform American capitalism with anti-trust policy and regulated competition; and the social democrats, who would reform it by jacking up taxes to create an enormously more generous welfare state. There is substantial overlap between these groups, and indeed they are more complementary than in direct conflict.

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Socialists, by contrast, stand somewhat apart from both groups. They are not so much united around the traditional socialist objective of collective ownership of the means of production as in pushing the political boundaries leftwards far beyond their current limits, either in Europe or America.

Socialists have as yet few truly high-profile adherents. America's most left-wing politician in the top ranks, Bernie Sanders, self-identifies as a "democratic socialist," but in practice he is much more concerned with bringing America up to the top standard of the developed world rather than leapfrogging past it. In his speeches and writings, the fact that America is the "richest country in the world" and yet fails to achieve a European standard of decency is a constant refrain.

Socialists aim higher than this. Instead of merely building out a Europe-style welfare state, they would make it the most generous on Earth. Where it makes sense, they would directly build and own things like housing. And instead of merely taxing capital, they would bring a considerable portion of the national wealth under direct democratic control.

For the first time since the 1930s, socialists have some real political traction — at least in terms of grassroots enthusiasm. Their first objective, as Jacobin's Bhaskar Sunkara and Democratic Socialists of America's Joseph Schwartz argue, is helping organize and strengthen left-wing movements. DSA and other socialists groups have grown explosively over the past two years, but are still quite small. Mass organizing — above all, helping workers build unions that have deep political commitments and aren't just out for self-protection — is a critical task if socialists are ever going to exert real influence.

But what would they do with that power?

Consider health care policy: Many have pointed to the fact the America spends more than any other country on health care, and receives mediocre results for all that spending. Socialists have been advancing the argument that not only should an American health-care system match the developed world standard, it should set a new benchmark for the best system in the world.

As physician Adam Gaffney argues, an American Medicare-for-all system ought to aim for the most generous treatment standard — one which completely divorces the quality of care from the socio-economic position of the sick person. Therefore, there should be no cost-sharing of any kind at the point of service (no co-pays, co-insurance, or deductibles), and universal accessibility to the most expensive quality treatments, paid for with progressive taxation. (These sort of arguments are probably part of why Bernie Sanders' Medicare-for-all proposal was so generous.)

Given the fact that America spends something like twice the OECD average on health care, this ought to be possible. It would entail profound and highly disruptive reform of the system, but the money is there.

Now consider another socialist proposal: Building out or improving state-owned enterprises. Many countries have a state-operated airline or rail network, which generally perform decently. While neglected and underfunded Amtrak needs work, European state-owned rail generally performs far better — and is much, much cheaper to ride — than privatized British rail. Indeed, European state companies have long been snatching up all sorts of British contracts, to run them for easy profits.

The case for state enterprises in certain areas is actually fairly strong even on ordinary economic grounds, reflecting the fact that certain functions might be economically viable on a national basis, but not on an individual corporate one. A national post office or rail service might require a subsidy to remain in business, but they increase the overall national productivity and wealth so as to easily "pay for itself" through a strengthened tax base. Even Sanders, however, does not focus much on building out a portfolio of state enterprises.

Another potential socialist objective is a return to public housing. Residents of cities like New York are strangled with high rents, but new private construction is slow, and generally on the luxury market. Liberal ideas like "inclusive zoning," where developers are required to include a few affordable units, are too small to make much difference. Rent control also helps, but does not create new capacity.

What cities like New York need is a ton of decent new apartments at a reasonable price. Socialists would attack the problem head-on by directly building them on public land. They would be modest, but in contrast to the traditional practice of a sharp means test for public housing, they would be open to a wide socioeconomic spectrum, and priced accordingly.

This would accomplish several objectives. First, it would drastically expand the housing stock while creating new socio-economically-integrated neighborhoods — no more projects with heavily concentrated poverty. Second, cities generally own a good deal of land, and can borrow relatively cheaply, so financing wouldn't be a problem. Third, because there would be non-poor people occupying the majority of the units and paying something closer to market-rate rents, the investment would pay for itself — indeed, in tighter rental markets it would quickly become a huge revenue source. Fourth, it would take some pressure off the private market, and help keep rents down there as well.

Bernie Sanders does support much public action on housing, but that does not include directly building and owning housing for the masses.

Now what about the heart of capitalism, private companies? An evolution of the traditional socialist priorities on this question is what might be called "sovereign wealth fund socialism," whereby the government scoops up ownership of a broad swathe of the economy by simply buying lots of stock. Owners of capital receive income from that ownership — which generally hovers at around one-third of the entire national income, a very large amount.

A sovereign wealth fund would allow the government to capture some of that money, and use it to the country's benefit. Either you could simply kick it back out to the population, or spend it on public works without needing to raise taxes, or whatever goodies you want.

For an example of how this works, albeit on a small scale, you need only look to the 49th state. Funded by oil revenue, Alaska's wealth fund has about $55 billion in assets, and pays out a yearly dividend to every Alaskan; in 2016 the figure was $1,022.

Now, conservatives and liberals are certain to raise the objection that a national sovereign wealth fund on the scale envisioned by socialists would destroy the competition that pushes economic growth forward. It's also a major disagreement with the Brandeisians, who believe that businesses should be kept in private hands to maximize freedom. And Bernie Sanders virtually never mentions the idea one way or the other.

That's really the eternal criticism of socialism: that it diminishes freedom.

Yet of all countries in existence, Norway has gone perhaps the furthest in the world towards the overall vision of socialism I've outlined, and it's not notably un-free. Some 35 percent of its workers are employed directly by the government, and 70 percent of its workers are unionized. It has state-owned enterprises whose total value adds up to 88 percent of GDP (as compared to 0.4 percent in the U.S.). Most notably, Norway has considerable oil reserves, and has used them to build up a tremendous sovereign wealth fund, which owns about $950 billion in assets — among them about 1.3 percent of all the listed equities in the world.

Contrary to the red-baiting of The New York Times' Bret Stephens, who insists that anything even slightly socialistic is a short route to Soviet gulags, Norway is not a totalitarian hellscape. On the contrary, it's one of the most decent, free societies on the planet, and was ranked the happiest country on the globe by the United Nations in 2017 — rather remarkable especially given how cold and dark the place is much of the year.

Bernie Sanders and his fellow social democrats generally say that America ought to be able to reach Denmark's standard (which is somewhat less socialist than Norway). But the full-throated socialists would insist on going past it, and even exceeding Norway's high-water mark.

In 1994, probably the historical low tide of socialism since the mid-19th century, Ralph Miliband defined it with two fundamental principles: "democratization far beyond anything which capitalist democracy can afford; and egalitarianism, that is to say the radical attenuation of immense inequalities of every kind which is are part of capitalist democracy."

That is the future utopia that socialists are striving for — not some gray Soviet drudgery, but a thoroughly free and democratic world where the fruits of economic technology are as widely shared as possible. A place where people can, for the most part, do whatever they have reason to value. To somewhat misuse John Maynard Keynes, in such a future, "We shall honor those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin."

It ought to be possible. America remains the keystone of the global economy: its economy is much larger than any other country's, and the U.S. government has much more strategic leverage over global capital markets — meaning less exposure to international currency fluctuations and less risk of sparking capital flight. We ought to be able to direct a considerably greater share of the economic product to democratic ends than a small European country — and set a new standard for the most decent, egalitarian country on the planet, without sacrificing the productivity or technology that we currently have.

If the Brandeisians and the social democrats achieve some measure of success in the next few years, how much further to press things will be a natural question. I say you might as well try — especially given the wretched performance of American neoliberalism over the past generation.

Let us experiment boldly, and see how perfect we can make this union.

This is the final article in a four-part series on the future of the American left. You can read the first article here, the second here, and the third here.

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