Whenever I’m with my liberal Gen-X sons, the conversation inevitably turns towards the topic: capitalism vs. socialism. They see me as a socialist – a product of my times rooted in the post-depression era and in the 1960s.
Similarly embedded in the Reagan counter-revolution, they argue that socialism is hopelessly impractical. Their arguments echo Margaret Thatcher’s famous dictum about capitalism, “There is no alternative.”
“Just give me one example of any country in the world where socialism has worked,” they demand. . . “See, you can’t,” they continue triumphantly, “because socialism might be great in theory, but it never works in practice.”
Well, I’m tired of that conversation. My dear partners never listen when I mention Sweden, Norway, Denmark, or Iceland. They don’t hear me out when I cite the wildly successful Mondragon workers’ cooperative in Spain. “Never heard of it,” they say.
Even more: they can’t even entertain the possibility that Cuba in comparison to other former colonies is actually the envy of most peers in Africa, Latin America, South Asia – and yes, Puerto Rico, which is part of the capitalist United States. People in Puerto Rico are far worse off than in Cuba. Of course, that’s because of the latter’s socialist system of education, health care, environmental protection, centrally-planned hurricane measures, efficient first-responders, and housing. And this despite decades-long, extremely active efforts by the United States and CIA to make the island’s economy scream.
So, in my argument here that socialism actually does work, I promise to minimize mention of those tired examples. Let me instead take the bull by the horns and simply say: socialism has worked in Russia, China – and (get ready) here in the United States.
There, I’ve said it. Now let me make my case.
[Before I get into that, however, allow me a word of clarification about capitalism and socialism themselves.
Neither system exists in any pure form. I mean, if we understand the three basic elements of capitalism to be (1) private ownership of the means of production, (2) free and open markets, and (3) unlimited earnings, we must conclude that the system exists nowhere outside the world’s black markets. (And everyone considers those to be somehow criminal.)
Instead, especially since the Great Depression, all we have are mixed economies – i.e. blends of capitalism and its opposite on every point, viz. socialism. More specifically, I’m referring to capitalism’s inclusion of socialism’s own three basic elements: (1) public ownership of the means of production, (2) controlled markets, and (3) earnings limited by income ceilings or redistributive taxes. This means that Sweden has a mixed economy, so does Russia, China, Cuba – and the United States.
That is, at least since the 1930s, the world has agreed that capitalism cannot succeed without incorporating elements of socialism. And so, we have the U.S. government filling the role of the country’s largest land-owner; we find ourselves cherishing the Social Security System; and then there’s the IRS. . . Similarly, socialism cannot make it without absorbing the capitalist components of private ownership, markets, and incentivized incomes.
Does this mean that all economies are the same? Obviously, not.
No, what distinguishes the mixed economy of Cuba, for example, from our own, is that Cuba’s is mixed in favor of the working classes, while our economy in the U.S. is mixed in favor of the rich (on the familiar theory that the wealth they “create” will eventually trickle down to the rest of us).
In other words, what my debate with my sons is really about is this: can I offer an example of economies mixed in favor of the poor that have actually worked?
My answer is, of course, that I can.]
So, let me proceed.
Begin with Russia. Yes, Russia. When its revolution triumphed in 1917, it was the most backward country in Europe. Moreover, after the revolution, it faced not only its own civil war but invasions by anti-socialist forces including troops from the United States, Great Britain, France, Japan, Italy, Romania, Greece, Poland, China, and Serbia. At the time, Winston Churchill said that the point of such incursion was to “strangle the baby in its crib.”
Add to that the fact that following World War II, Russia lay in ruins from Hitler’s devastating invasion. Nonetheless, the country’s heroic resistance to Nazism not only was the key element in defeating the Third Reich; it had cost Russia 20 million lives. Greater devastation can hardly be imagined, especially for a country attempting to emerge from cruel Czarist feudalism and to implement a system never before tried on a national scale.
However, despite such overwhelming set-backs, after only 40 years of “socialism,” the USSR assumed the position of the world’s second leading super-power. It was treated as a peer and rival by the United States, Japan and the rest of Europe. That is to say: in purely economic terms, Russia enjoyed success that was historically unprecedented.
In fact, the rapidity of its development remained unsurpassed anywhere in the less developed world – until the emergence of “socialist” China whose largely controlled economy today dwarfs that of the U.S. and Europe in terms of annual growth percentage.
None of this is to say that huge mistakes were not made by both Russia and China. Like the victims of capitalism, for instance in Dickensian Manchester and Liverpool, labor paid a huge price as an emergent system’s leaders attempted to develop a new economic form – industrial capitalism in Manchester, socialism in Leningrad and Peking.
The reason for such failures is obvious. All economic systems develop by trial and error. For instance, in Russia, socialist theoreticians had thought that the root of worker exploitation was found in greedy captains of industry. Replacing them with government officials would solve that problem. It didn’t. Instead, workers soon awoke to find that they had merely exchanged one set of oppressors for another. Very little had changed for them on the factory floor. After Stalin, Nikita Khrushchev was about changing that. So was Mikhail Gorbachev. In the end, though, it was all too little, too late.
In spite of that, however, the rapid economic successes of both Russia and China must be acknowledged. In this country, they never are.
But even more importantly, what is never acknowledged here in the U.S. is the success of those elements of socialism that were incorporated into our economic system with Roosevelt’s New Deal.
Recall that after the Great Stock Market Crash of 1929, capitalism was in its death throes.
Emboldened by the collapse, the U.S. Communist Party along with the country’s two strong socialist parties and powerful trade unionists led by the CIO (Congress of Industrial Workers)pressured F.D.R. with the following proposition: “Either you persuade your fellow upper-class Wall-Streeters to meet our (socialist) demands or you’ll be forced to accept a revolution here like the one in Russia.”
Roosevelt and most (though by no means all) in his economic class, found the argument distasteful, but persuasive. The result was the New Deal with all its socialist programs including Social Security, legalized unions, minimum wages, consumer and worker protections, universal public schooling, environmental protection, government-sponsored jobs programs, and eventually a G.I. Bill that provided free university education and healthcare for veterans.
The New Deal created a large middle class with an unprecedentedly high standard of living. That represented a triumph not principally for the capitalist component of the U.S. mixed economy, but for its socialist elements.
In other words, the U.S. provides a shining example of a place where socialism has worked.
But there’s more.
During times of extreme crisis represented by a truly threatening war such as WWI and WWII, even the most ardent defenders of “capitalism” in our country have chosen to implement “war socialism.” That is, they chose military conscription, wage and price controls, rationing, and direction of privately owned productive facilities away from luxury goods towards military manufacture. They chose to do so evidently because the central planning embodied in such measures is far more efficient than laissez-faire “capitalism.”
And finally, even Wall Street bankers, when it’s a question of their own survival, will opt for socialist programs every time. That was illustrated during the Great Recession of 2008. With the capitalist economy in its worse condition since the Great Depression, the Wall-Streeters all came to the government with hat-in-hand. They wanted a bailout that completely contradicted capitalist theory. The latter would have the inefficient among them fail only to be replaced by something better. That’s capitalist theory.
Behind the bankers’ socialist begging, however, was the implied recognition that such theory really doesn’t work. In fact, their petitions for bailout suggested that the actual implementation of capitalist principles would do irreparable harm to the world’s economy. It would ruin us all!
Keep all of this in mind the next time you get into an argument about capitalism vs. socialism:
• Neither system exists in its pure form.
• It is questionable whether either ever did exist.
• All the world has are mixed economies.
• The question is: will a particular economy be mixed in favor of the rich or the poor.
• Economies mixed in favor of the poor have historically proven more efficient in times of national crisis,
• And in raising the tide that lifts all boats.
• That’s been demonstrated in Russia, China, Cuba – and even in the United States.
I’m hoping my Gen-X sons (who btw have unsubscribed from my blog) may one day transcend their unconscious Reaganite roots to read and ponder this particular entry. At the very least, it supplies context for our interminable debate.