economics, europe, philosophy, politics, scandanavia, socialism
This meme seems to be far too accurate when I see socialism discussed in the media and by politicians. I hope this blog will give people clarity on what socialism is and how an economy can be “mixed.” Let’s start with the relevant definitions of socialism from Merriam Webster:
“1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2a: a system of society or group living in which there is no private property
b: a system or condition of society in which the means of production are owned and controlled by the state…”
Politicians talking about socialism today are talking about government control not private communes. Accordingly I think we can focus in on : “governmental ownership and administration of the means of production and distribution of goods.” Or 2b “a system or condition of society in which the means of production are owned and controlled by the state.”
Ok so does Norway’s government “own” the means of production and distribution of goods? The answer is they partly do. A government can partly “own” production and distribution of goods in at least two important ways:
First, it can entirely own a single sector of the economy such as health care or education or it can completely own businesses within a sector such as the post office in the United States or some public schools.
Second, it can partially exert ownership rights over certain property that we still considered “owned” by private people. The second aspect is a bit more complicated and will be addressed a bit more in depth.
The first way is the easy to identify method of mixing socialism. The government completely owns a particular sector of the economy or even a specific business within a sector. So they may completely own the health care sector or the education sector. Or they may own some businesses in these sectors. For example in the US we have some schools completely owned by the state and some privately owned schools. We have some VA hospitals and some privately owned hospitals. We have government run police but also private security options and even private businesses that sell locks, fences and pepper spray in a security industry. The post office is owned by the United states government but we also have private businesses like Federal Express that also transport packages. So “soft socialism” can happen when there are some completely government owned businesses or sectors that operate along side private businesses or sectors. That is the first and more straightforward form of “soft socialism.”
The second form of soft socialism requires us to examine what it means to “own” something. What it means to “own” something is not as straightforward as it seems. There are degrees of ownership and ownership is often not absolute. But again lets start with a standard working definition. Merriam Webster says you own something if you “have power or mastery over” it.
The legal definition is very similar to the Merriam Webster definition. See for example:
“The complete dominion, title, or proprietary right in a thing or claim.”
“OWNERSHIP the full and complete right of dominion over property. It has been said that ownership is either so simple as to need no explanation or so elusive as to defy definition. At its most extreme and absolute, it means the power to enjoy and dispose of things absolutely…..”
Does the government have “power or mastery” over our means of production and distribution of goods? Now we are starting to see that “ownership” might be a bit fuzzier than we thought.
But before we get into ownership as it relates to socialism let’s consider basic ownership claims that have no political implications. Consider my claim that “I own this house.” Ok normally we say you still “own” the house even if you allow someone to rent it from you. But clearly you are giving up “power or mastery” over the property when you rent it. You are giving up some aspects of your ownership in exchange for money. The notion of having mastery or dominion over the thing is important to ownership. You are the one who decides what happens to it. If you own a house, you decide who can go in it. However, if you rent it then you can no longer decide that and instead the renter can invite who they like. If you own a car you decide who can go in your car and where the car goes. But if you rent it then you give up some of those rights of ownership. But you still retain some rights – specifically the right to eventually sell/alienate the item at the price you would like.
Control over the terms of alienating/selling the property is important. In fact, it is so important we still say the renter does not “own” the property even though he or she may be able to control what happens to the property due to a prepaid 100 year lease. The renter still can’t sell the property. Control of how the property is sold is so important that we still don’t call the renter who can exclude the “landlord” from setting foot on the property for decades the “owner.” Even though the law still calls the landlord the owner, I think it is fair to say if you let someone rent your property you are giving up mastery and control of it – that is you are giving up certain characteristics of ownership. But the ability to choose the terms under which I will completely alienate the property to someone else is retained so the landlord is still considered the “owner” even though I think ownership is really shared in these examples.
If I have a mortgage on my home that means I gave up some of my right to alienate the property in exchange for getting the loan. I can’t legally sell the property unless I pay off the loan. Again the bank gains a share of ownership. If I own one third of a company (one third of the stock) then I am entitled to one third of the proceeds of the sale of the company.
Ownership is not complete if I do not control or receive the benefit of sale. My ownership is shared with someone else. In a documentary I saw on Cuba they said the people “own” their apartments. But the catch was they could only sell it to the government. If you can only sell something to one entity then that greatly diminishes your “dominion”. The item may become worthless if that entity has no interest in acquiring the property and you have no use for it. Clearly the Cuban government has a huge amount of mastery over that property. The person who lives there is much more like a prepaid renter than an owner.
So we can see owning property can be mixed. What about ownership of “the means of production and distribution of goods.” How do we produce goods? One way is by our labor. We think we own our labor. But government often steps in and takes some of that ownership. Income tax is like a mortgage on our labor. We can’t sell our labor unless we pay the government a percentage of the sale proceeds. So income tax an ownership interest the government takes in our labor much like a mortgage is an ownership interest the bank takes our land or a stock holder takes in a company. The larger the percentage the more ownership and thus the more socialism. This applies to sales taxes, property taxes (which is similar to us paying rent to the government for the right to use the property) and property you sell at a profit but have to pay income tax on. So taxes are a direct way the government owns part of your labor and property. The higher the taxes the more socialist the economy is. But taxes are not the only way government takes an ownership interest in what we normally call private property.
What about control over my ability to sell my labor? Do I control the terms of when and how it will be sold? Partially. I might want to work in a field I have little experience in, but would be willing to do that for cheap. I might be able to find someone who will hire me to do that. But the government might come in and say “no we have a minimum wage so you are not allowed to sell your labor to that person at that price.” Thus they are controlling the terms of the sale of my labor. I read in Germany the government limits the amount of hours you can work. https://knowledge.leglobal.org/wp-content/uploads/sites/2/LEGlobal-Employment-Law-Overview_Germany_2019-2020.pdf If you want to work more than that you need permission from them to sell more of your labor. Overtime laws are another example of the government not allowing people to control the sale of their own labor. As the government takes more and more control over our ability to sell our labor they are taking control/ownership over the production and distribution of goods and services.
So Governments that take more control over the sale of our labor are more socialist. They take ownership rights of the labor from the individual and give it to the government. That is moving in a socialist direction.
So is Norway socialist? Well not completely but they are likely more socialist than the US. With a few exceptions Western Europe is more socialist than the US. Their economies are not as bad as full on socialist countries. But they are considerably more socialist than the US and, unsurprisingly, their economies are substantially worse than the US economy. As the data I offered here and here demonstrated. So I agree that Scandinavian and Western European countries are, with some exceptions, in fact more socialist than the USA. My question is why are we only looking at tiny homogenous Norway (or some other tiny Scandinavian country) and not all the other European countries that are also considerably more socialist than the US and whose economies are doing much worse? The US has over three times as many people with Italian ancestry as we do people with Norwegian ancestry. In fact we have three times more people of Italian ancestry than Norway has Norwegians. https://en.wikipedia.org/wiki/Race_and_ethnicity_in_the_United_States#Ancestry So it just seems odd indeed to assume socialist policies in the US would work out closer to how they work in Norway rather than in how it is working for Italy or Spain or France or England. Italy would need a 47% boost to their economy to match the US gdp per capita and the UK would need a 35% boost to their economy to match the US gdp per capita. By my rough calculations the average Western European/Scandinavian would need about a 40% boost to their countries economy to equal the USA’s economy. That is a fairly dramatic difference in prosperity.
Just a few points of clarification on what socialism is not.
- Socialism is not the only factor that determines how healthy an economy is. Other factors are important including resources, education, culture, corruption, crime, legal system that respects property rights etc.
- Socialism and democracy are different concepts. People can democratically elect a soft socialist or even a hard socialist. This happened when Salvador Allende was elected in Chile. https://en.wikipedia.org/wiki/Salvador_Allende So saying someone is a “democratic socialist” doesn’t necessarily mean the socialism they are pushing for is less severe than a vanilla hard socialist. Democracy is a political system not an economic system. However “democratic socialist” can be a label that attaches to a political party. And then it can mean whatever that party decides it means. Just like a “Republican” or “Democrat” is a label for a party that can mean whatever the party decides it will stand for and this can and does change over time.
- Socialism is not the same as to helping the poor. Often socialists try to argue that socialism will help the poor. I think that view is mistaken, but regardless people of all different sorts of economic views can help the poor. Socialism is certainly not the only way to help the poor and indeed there is nothing in the definition of socialism that suggests the government will help the poor. A socialist government is still a socialist government whether it helps the poor with the property it takes from citizens or not.