Social democrats and capitalism

by Henry on February 18, 2009

While we’re waiting for Jonah to pronounce, Sheri Berman, whose arguments about 1930s social democrats and fascists is the issue of debate, has a piece in Dissent that I’d like to respond to. Sheri argues that the current crisis is a major opportunity for the left, but that it is hampered in its ability to respond because of internecine arguments over whether we should try to reform capitalism, or get rid of it altogether. She singles out Michael Harrington as her main exemplar of a leftist whose failure to appreciate the benefits of capitalism led him to irrelevance and political near-incoherence.

While I think that Harrington’s legacy is more complicated than Sheri’s essay suggests (see the discussion of Harrington’s involvement in policy making in this reappraisal of The Other America by David Glenn), a bit of broad-brush generalization is perfectly fine in an essay of this kind. What I want to push back on is something different. I don’t think that the “incomplete victory” of social democracy over Harrington style democratic socialism “has constrained the left’s ability to respond to political challenges” as Sheri suggests. Instead (and I say this as a social democrat) I think that the fault lies in social democracy itself.

European style social democracy used to have a positive (if also somewhat vague) vision of social and economic transformation. Karl Polanyi, who is clearly one of Sheri’s most important influences, is a nice case in point – he foresaw a future in which the obsolete market mentality would be replaced, and human beings would subordinate the market to society again. They’ve lost this – there is little sense among social democrats today that politics can do more than mitigate the excesses of the market around the edges. And indeed, the sense I get from Sheri’s essay is of a kind of social democracy that runs along behind the market, always trying to catch up but never succeeding, because it has to stop again and again to pick up the broken pieces that the market leaves behind.

Sheri recognizes this, I think, when she suggests that social democrats could do with a little bit of Harrington’s idealism. But I don’t see how this idealism can be grafted onto social democracy without a more radical sense of transformative possibilities than Sheri’s essay suggests is possible. Nor do I know where this sense of transformative possibilities might emerge from. One of the many good things about Sheri’s work on social democracy is that it always tries to locate ideas in concrete situations, pointing to the actors that are propounding them, paying particular attention to political parties. But Europe’s formerly great social democratic parties are exhausted, with the possible exception of the Swedes (who are merely comfortable and set in their ways). French social democrats have been trapped in a bitter and ideologically empty set of personality disputes for well over a decade. German social democrats are stuck in a coalition with the right, where they vacillate incoherently between trying to become a credible election opponent for their putative colleagues and trying to stop Die Linke from gobbling their remaining support base. The British Labour party … well we don’t need to go there, do we.

It may well be, as Sheri suggests, that the time is ripe for social democracy. But I fail to see any social democratic actors out there who are ideologically prepared (let alone politically organized) enough to take advantage of these opportunities. Hence, we’re seeing what might be described as parodic social democracy – many of the organizational forms of social democracy (temporary stimuli, nationalization of major chunks of the economy) being undertaken by right leaning and centrist administrations as stop-gap measures to save capitalism and markets, rather than to subordinate them to broader social and democratic needs. If I had to lay bets, I’d be putting my money on opportunistic statist right-wingers like Sarkozy (and yes, Bill Emmott, how is that working out for you?) making out like bandits rather than on a social democratic resurgence.



Matt 02.18.09 at 8:20 pm

_German social democrats are stuck in a coalition with the right_
It certainly doesn’t help them that their last leader was apparently more concerned with getting huge deals from gazprom than anything else!


John Emerson 02.18.09 at 8:35 pm

“political near-incoherence”


Henry 02.18.09 at 8:40 pm

John, thanks, and Matt, yes, indeed.


Barry 02.18.09 at 8:44 pm

How about – Dissent is a dead magazine walking? After supporting the invasion of Iraq, they’ve plumbed the depths of irrelevancy.


B 02.18.09 at 8:56 pm

Don’t forget about the influence of the smaller parties in a multi-party system. I hope the Left and the Green party in Sweden may push the Social Democrats to be less complacent; especially as their votes are needed to beat the right wing alliance.


Rich Puchalsky 02.18.09 at 9:01 pm

I think that in some sense you’re asking politicians to do something they can’t do. This seems to me to be squarely in the “following dead economists” category. Ever since Marxist economics was largely discredited, for social democrats to have a radical sense of transformative possibilities with regard to the market is going to require an economist who gives some sort of framework for a sense of transformative possibilities.

Of course this may well be the cue for various people to haul out their favorite obscure economist and say “Look, this person could have been the next Marx, if only the system had been able to recognize him or her”, and blame it on ideological resistance rather than the failure of people to provide a real alternative. But it’s not my sense that the heterodox economists are really that heterodox anymore. Once you get to the point of making the right-wingers progress from economics 101 to a sophomore-level course — admitting that market failures routinely exist, and so on — I don’t see a bold new framework as such.

Well, actually. I think that some combination of environmental economics for certain things and post-scarcity for certain other things is probably going to be where it’s at. But the social democrats can be almost as bad as everyone else in this regard, what with their connection to “workers” and “work”.


Davy 02.18.09 at 9:13 pm

Does it matter who does the social democratization (for want of a better term) as long as it gets done? My understanding was that much of the groundwork of 20th century social democracy in Europe (e.g. health services etc.) was laid down by conservative parties as as a protective against the social dislocation caused during the depression (which ultimately led to the rise of Fascism, and war). In other words, it was at least somewhat motivated by ‘conservative’ security concerns. The result, however, was social democracy.

Whatever the justification is for the left-leaning policies of today (saving banks etc.), mightn’t the outcome act as a shot in the arm for social democratic movements, whether the left is leading the change or not?


bianca steele 02.18.09 at 9:45 pm

I’m not exactly sure what “social democracy” refers to — something like progressivism as many current contributors to The American Prospect view it? This? If my sense about it is correct, at least in the 1980s, most American social democrats were concerned with (a) spreading knowledge about Marxist versions of critique, (b) reducing the influence of anticommunism, and (c) supporting certain movements opposed to racism, etc. I don’t know what changes the end of the Cold War brought (not to mention postmodernism, if such a thing exists). Were there any other organizations supporting people who would have liked to call themselves “social democrats”?


roger 02.18.09 at 9:50 pm

If you have no international labor to oppose international captial, you get little boxed sets of socialists who, of course, can never deal with the totality of the relations of capital because they simply don’t have that scale. But who knows. As the slump keeps going, as it seems likely to, and the liberal/conservative convention that the market is self adjusting and the most efficient way of allocating capital gets repeatedly KO-ed by reality, perhaps the idea of international labor – which would be, for the kleptocrats, a spectre that they thought they’d done away with – might return. Of course, the legal set up is against it, and with the decline in democratic governance in places like the UK, organizing for such a thing is going to get harder and harder – hell, Nu Labour (a wholly owned subsidiary of Nu Feudalism) is hyping a bill that would make taking photos of policemen in action a terrorist act – one way to solve the future Rodney King cases! But the fraud race is on, between the neo-liberal elites, the undertakers of democracy, the international humanitarian interveners, and the hedge funders, so who knows? The international humanitarians, having plumped for the Iraq invasion, are pretty much exhausted. The neo-liberal elites are still going strong, pumping the financial sector with state money that will never return, which is going to be their Iraq. And the hedge funders are exposing financial innovation for what it is – pickpocketing that has been blessed by some University of Chicago popes. There is no media outlet for an international labor movement at the moment, but there are media resources lying around that could be used as organizing tools. And you know, as the 401(k) set contemplates DJIA 6,000 – they might see the advantage in fighting established power, and getting out of what Thomas Friedman, in that chilling dystopia, the Lexus and the Olive Tree, called the “golden straightjacket.”

The gold has turned to lead.


bianca steele 02.18.09 at 9:50 pm

Cool! I not only messed up the italics in my own comment, I turned your contributor list and blogroll into italics too. Probably this comment will fix it. I’m pretty sure it looked fine in preview though.


bill 02.18.09 at 10:20 pm

(temporary stimuli, nationalization of major chunks of the economy).

Just for education’s sake, are there good sources for, e.g., how much and which parts of the economy should be nationalized, and exactly what that entails? I’m sure there must be millions of words written about this, but are there good “social democracy” starting points?


bianca steele 02.18.09 at 11:11 pm

Looking back at that first post, I should have put “anticommunism” in scare quotes, or written ‘reflexive “anticommunism’”, rather than assume the word means the same thing to everybody and everybody of good faith knows how what to think of those who use it with application to themselves.


Harry 02.18.09 at 11:26 pm

bianca — I have a very good sense of what social democracy refers to in Europe (basically the social democratic parties of Northern Europe, the Eurocommunists in southern Europe and some bits of the Labour Party in the UK — universal and generous benefits, a strong welfare state, full employment and strong unions (and in the UK case a fondness for state ownership).

But I’ve very little sense of what social democracy is in the US – I’d have called Harrington a social democrat. Who is a social democrat here if Harrington wasn’t one?


bob mcmanus 02.19.09 at 12:49 am

9:Ooh, I really like you Roger. Stick around.

“Consent of the governed” “governed” meaning the minority, or even majority in the instances where the polity is radically factionalized, is a necessary condition for democracy. In circumstances like Iraq until recently, if a sufficiently empowered minority does not consent to be ruled, democracy is impossible. “Majority rule” will not work. It will not work, as democracy, even if the 55% has all the powers legitimate process can afford them.

At such times, in such circumstances, process and law become unaffordable luxuries of the nostalgic and sentimental.


bob mcmanus 02.19.09 at 12:54 am

Wall Street and Republicans, especially Republicans in California, are refusing to be ruled, cannot in fact be ruled under the cover of law with the existing institutions. But we cannot legitimately change either the law or institutions without the consent of the Republicans, and under most reasonable liberal conceptions, probably should not.

So much for liberalism.


bianca steele 02.19.09 at 1:14 am

From your description, I don’t see why left-liberalism or progressivism, well within the comfort zone of large enough segments of the Democratic Party, aren’t “social democratic.” If I understand what social democratic parties are in Europe and the UK, a major difference would, however, be a willingness to work with parties to the left, extending possibly at times to the Communists, which as we all know isn’t an option in US politics. There may also be some style differences, which I don’t seem to be able to express without coming across as snarky.


harry b 02.19.09 at 1:32 am

Go ahead, be snarky. I’m curious. I’m not being rude, btw, just puzzling about it — Henry reports Berman as if she has a real sense of what US social democracy is, but it excludes Harrington, who is my paradigm US social democrat insofar as I have a paradigm. Well, apart from late Max Shachtman. I guess I think of left-liberalism as being too mixed up in the new social movements to be social democratic, and progressivism as covering term for all sorts, some of which probably are social democrats, but that leaves the question open.


Leo Casey 02.19.09 at 2:08 am

The notion that Dissent supported the war in Iraq belongs in the realm of political fiction, not in an honest discussion of politics.

Having worked closed with Michael Harrington for a number of years, I think it is fair to say that while his interventions in the world of American politics could be fairly and accurately described as social democratic, his theoretical ruminations would have to be classified as democratic socialist, with a tinge of Marxian utopianism. In this context, the distinction is important and real, and one Harrington himself would have made in describing his own politics. Part of the problem with Berman’s essay is her failure to recognize the disjunction between Harrington the political actor and Harrington the political philosopher. The political actor was a man who coined the term the “left wing of the possible”; the political philosopher was a man who still waxed poetic over the Economic and Philosophic Manuscripts.


William U. 02.19.09 at 3:15 am

This is timely. On the one hand, I crave a New Deal-style recovery plan, an sweeping effort to reorient the American order along social democratic lines. Nationalize and clean up the insolvent banks; repair our neglected infrastructure; flatten Gilded Age income inequality; fix the industrial relations system; forge universal health care — mostly, put an end to a political culture that gives capital what capital demands without hesitation. (The Geithner and Summers-led attempt to breathe new life into the old neoliberal dispensation has been, obviously, a disappointment.)

On the other hand, there is this nagging question: why did the Keynesian/social democratic post-war order sputter circa 1975? Berman suggests it was a matter of forgetting; neoliberalism enticed us with promises of vast riches; etc. — a moral lapse. But the Marxists may yet have a more compelling explanation: secular crisis, anyone? I’ve been meaning to read “Capitalism Unleashed” (along with similar books) ever since it was mentioned on CT..


bianca steele 02.19.09 at 3:36 am

I probably should have kept quiet if I wasn’t willing to go into as much detail as I really would have to. The most concrete example that comes to mind is Martin Amis proclaiming his superiority over American writers who leave the neighborhood of their childhood as soon as they “make it big,” saying “when an English writer succeeds, he buys a new typewriter.”


John Emerson 02.19.09 at 5:17 am

“I guess we should nationalize the banks after all”, said Greenspan. “Recent events have been very interesting and unexpected. They’ve certainly surprised me, but of course, if you know what the answers are going to be, you don’t need to do the experiment.”

“I’m reminded of a story about Thomas Edison’s early attempts to come up with the lightbulb”, he went on. “Edison had tried a thousand different elements, and all had failed. A colleague asked him if he felt his time had been wasted, since he had discovered nothing. ‘Hardly,’ Edison answered. ‘I have discovered a thousand things that don’t work.’ “

“So Jeffrey Sachs does one experiment in Russia and finds one thing that doesn’t work, and Domingo Cavallo does another experiment in Argentina and finds another thing that doesn’t work, and the Mont Pelerin Society does another experiment in Iceland and finds yet another thing that doesn’t work, and it’s all good! We’re all contributing to the same research program. It’s just part of the march of science.”

“If we’re allowed to continue our work, without interference from Luddites and know-nothings, sooner or later we’ll certainly find something that works. There’s never been a better time to be an economist than right now!


Lee A. Arnold 02.19.09 at 6:06 am

Henry, I think it’s unlikely that most people will trust grand solutions now, due to the enormous complexity of the world system. But as to where “transformative possibilities might emerge from,” it’s possible to pick out a few things which are clearly occurring, and which are bound together to create a new psychological effect and social evolution:

(1) Computer media is instantaneous and two-way, not scheduled and one-way like the old mass media, and that means a lot. Events in the world are more quickly and widely seen, and more easily transparent to inspection and personal evaluation. The number, the similarities and the repetitions of the events become redundant, and so people become readier for intellectual syntheses.

(2) Materially-aggrandizing egotism is becoming seen as a poisonous stage of life — as opposed to a permanent disability — because of #1, and because of the rise of psychology and, curiously, the rise of psych meds.

(3) The effects of wildlife ecosystem diminution and destruction is making people realize that we are not going to have anything left which was not originated by human beings. This makes a profound impression, even upon those who do not consider themselves to be nature-lovers, because something which should be preserved, and some sense of the other-than-human, is being lost.

(4) It turns out that the sources of efficiency are not quite what mainstream economics teaches they are. It turns out that, like new tools or new machines, new institutions such as universal healthcare can cut costs and make life much better than otherwise. Overweening bureaucratic power, hidden decisions and lost innovation can be mitigated by better institutional design — partly by using #1 above, better transparency.

President Obama appears to understand that transparency is going to be a key to real transformation. This is a continuation of the line of thought pursued by the Founding Fathers. His supporters would do well to help him out on this, because it is much more important than the cynics realize.

I don’t think it’s possible to predict where this is all going, but I will guess one thing: there will be a redefinition of how money is to be created, and it won’t be solely restricted to bank deposit creation. (Hazel Henderson, a brilliant, prescient observer and critic, predicted this about 20 or 30 years ago.)


Tracy W 02.19.09 at 9:35 am

and the liberal/conservative convention that the market is self adjusting and the most efficient way of allocating capital gets repeatedly KO-ed by reality

Actually these conventions, or theories, can’t be KO-ed by reality over the next few years. No major economy appears to be trying the “market is self-adjusting” policy at the moment, except maybe Germany (which has its own existing rigidities), and small economies get bucketed around by what the big ones are doing. If no one tries an experiment, we can’t deduce any results from it. And the “most efficient way of allocating capital” requires a comparison with other ways of allocating capital. Recent years and the next few years do not make the failure of planned economies suddenly disappear, and it would be stupid to base economic theories or policies merely on the most recent data, ignoring everything that has been learnt before. New economic theories should at least try to explain all known facts, if they are to be in any use in understanding the future.

You are welcome to argue that markets aren’t self-adjusting, and that there is a more efficient way of allocating capital. Just you’ll need to draw on more data points than what’s happening now and over the next few years. For example, say that current interventions in the market are followed by a sharp rebound in employment figures, increases in environmental quality, and any other good things you like. You could then gather this data, add in other historical occasions where governments have interferred with the markets, and compare those with historical occasions where governments have left markets alone, and from that mount an argument that markets aren’t self-adjusting. But since governments are interferring with markets, reality over the next few years will only tell us about what happens when governments interfere, not when they don’t.


harry b 02.19.09 at 1:23 pm

Come on bianca, if Martin Amis is a social democrat I’m a monkey’s uncle. There is no world in which Martin Amis is a social democrat and Michael Harrington isn’t. Amis is just a ….


bianca steele 02.19.09 at 3:29 pm

Well, I don’t know what Martin Amis is, politically, but I have heard the same sentiment from at least one Brit, as well as from some leftist or left-leaning Americans. I don’t know where the Brit was on the spectrum either, but it was in a women’s studies class, so I don’t think it’s unreasonable to start by assuming she was to the left of center. Of course, it’s within the bounds of possibility that she wasn’t being entirely ingenuous, in which case all bets would be off.


harry b 02.19.09 at 3:45 pm

Oh, right wing Brits, despite their Atlanticism, are frequently far more anti-American than lefties (though as an American living for 2 years in the UK my wife encountered a kind of visceral, and mostly remarkably ignorant, anti-americanism from many quarters). When I moved to America (1985), the only people of my acquaintance who expressed positive views about America were Marxists and social democrats (Tories, third worldy lefties, feminists, all completely contemptuous). This isn’t the place (or rather the time, I have some meetings to prepare for) to go into detail, but social democracy is quite specific, and I would say that relatively few of the intellectual literati belong within it (certainly not Amis). Having finally read the Berman piece that Henry linked to I don’t think it is as bizarre as I did think to exclude Harrington. Anyway the true founders of British social democracy (Attlee and Bevin) were hard-line Atlanticists.

Finally, Amis’s autobiography is an amazing read, for several reasons, and I recommend it wholeheartedly (it was recommended to me because he suffers a lot of dental pain, and I am known to be obsessed with dental care, but that is only one of many fascinating aspects of it).


novakant 02.19.09 at 3:51 pm

universal and generous benefits, a strong welfare state, full employment and strong unions

Hmm, in Germany the SPD/Green Party government cut more benefits and welfare in three years than Kohl did in all of his 16 years in office. Now one might think that this supports Henry’s point that the Social Democratic parties of Europe are exhausted and have lost their vision, but a closer look would reveal that the SPD simply happened to be in power when the bill for Kohl’s rather generous and lazy fiscal management combined with the cost of reunification came in and something had to be done about it. And the current grand CDU/SPD coalition is characterized less by a struggle between social democratic and conservative ideas than by a muddle-through approach to the economic problems facing the country. The time for great visions is over.


Lee A. Arnold 02.19.09 at 4:09 pm

John Emerson, Greenspan’s push quotes are great. You could add:

“This was supposed to be about how only the few SUPERIOR people can create money disconnected from value! If we can keep them arguing over whether markets can be self-adjusting, we’ll win, again!”


JoB 02.19.09 at 5:01 pm

The time for great visions is over.

That’s about the tag-line of social-democracy of the past decades isn’t it?

I had the misfortune of joining a forum of European social-democrats a couple of months ago & it was bo-ho-ring. That’s when it hit me: the problem of social-democrats is that they are a sorry boring lot of uninspired people that get together in self-help groups discussing whether they are or should be social-democrats, socialists, progressives or what have you. Basically, they do not give a shit about anything but getting elected. They don’t give a shit about critical thinking since they are not the types that think (they’re the types that get elected because they feel they have a calling to protect others from the evils outside, and because it’s a good living).

They continue to rehash the fact that society can/should be made into something, and then they go ‘not the time for great visions’. The great vision they should have is society can and should not be made into anything and that therefore it’s: goodbye capitalism as we know it because capitalism wants to make all of us into jealous standardized producers for the good of the labour ‘market’.

How long ago is it that somebody in politics dared to challenge the abomination of selling hours of our lifes to the best bidder? Wasn’t the left at some time motivated to get us as much freedom as possible from such evil trading?


roger 02.19.09 at 5:03 pm

Tracy W, to my mind the business cycle is itself evidence that the private sector alone is not the most efficient allocator of capital.

However, the experiment you mention will, of course, never be run. In spite of the seemingly incorrigible delusions of Fresh water economists, the U.S., since the Great Depression – which is, of course, a great monument to the 20s delusion that the private sector is the most efficient allocator of capital – has created an economic system in which, in good years and bad, the government has a strong place. Indicative of this, I think, is employment, which is certainly a telling parameter of economic activity. Since the later forties, the number of people employed by the government on all levels in the U.S. has gone from 13 percent to around 17 – last I looked, that is 22 million people in the U.S. If the average unemployment rate for this period is around 5-6 percent, then we get the employment share for the private sphere of around 80 percent. At the moment, of course, it is more like 73 or 75 percent.

To me, the meaning of this is simple. There is not and there won’t be a developed economy that is not mixed. If the U.S., the most laissez faire of the developed nations, tacitly recognizes the inability of the private sector to pull more than about 80 percent of the economy, I take that as strong evidence for classifying sentences about the most efficient allocator of capital as nonsense. As in many economic “models”, ceteris paribas does all the heavy lifting, while fantasy is translated into equations that translate a set of class interests into mythology. Economics is a branch of literature, and in nothing is this more true than the production of the bad poetry that economists so fondly call models
Of course, nonsense refers to the meaningful content of the efficiency phrase. Rather than an observation about a social fact, the phrase is propaganda meant to push forward a set of programs, the end result of which is to favor established power. In this way, it gains a social meaning, one on par with “the divine right of kings”.


Sebastian 02.19.09 at 5:12 pm

“Tracy W, to my mind the business cycle is itself evidence that the private sector alone is not the most efficient allocator of capital.”

This is an interestingly strong statement. Anyone else agree with it? What are you comparing it to? (I suppose it might be saved by various interpretations of ‘alone’?)


novakant 02.19.09 at 5:24 pm

This is an interestingly strong statement. Anyone else agree with it?

Well, unless you can tolerate masses of people begging on the streets or dying from diseases, it’s quite obvious that we also need other ways of allocating capital.


Christopher Colaninno 02.19.09 at 5:29 pm

This is an interestingly strong statement. Anyone else agree with it?

It’s not stronger position then is reflected by Keynes or any model that advocates counter cyclical government action.


roger 02.19.09 at 5:30 pm

Sebastian, since the whole frickin comment goes on to “interpret’ alone, yeah, I guess your observation is right.


GK 02.19.09 at 5:32 pm

I think Berman’s distinction between Michael Harrington’s politics & social democracy is quite useful. My impression is that within DSA, the people who most look to Harrington as an influence are emphatically socialists-not-mere-social-democrats, in the sense that their politics are premised on the prospect of a transformation to a society qualitatively different from welfare state capitalism. People with those politics tend to identify with a lineage that goes: Eugene Debs, Norman Thomas, Michael Harrington.

And as an alternative, there certainly has been a loose lineage of labor and civil rights leaders who had brief or uneasy ties to socialist parties or organizations and who had (operationally, if not so-called) social democratic politics. I’m thinking of Sidney Hillman, A. Philip Randolph, the Reuther brothers, Martin Luther King. If you want to list intellectuals as part of that lineage too, Irving Howe & Michael Walzer would both seem to fit.

If I’m right, then there’s a social democratic politics available in the US today — but it is (and this matters) disorganized and it dare not speak its name. It would arguably include some or maybe most of the people around the American Prospect & Dissent, but more importantly it would include a lot of people within those provinces of the labor movement (& allied organizations, like EPI, US Action, WFP of New York, etc.) that are most interested in broad coalition politics. Much of the SEIU & UNITE leadership would fall in this category, I’d think, but also many people in the organizing-oriented AFL-CIO unions, like CWA & AFT.

How much sway people with this politics will have during the Obama years remains to be seen, but it’s likely to be more than zero.


Righteous Bubba 02.19.09 at 5:39 pm

Finally, Amis’s autobiography is an amazing read, for several reasons, and I recommend it wholeheartedly

Off an a tangent I’d be interested in why you think this is so (I thought otherwise, but I don’t think I want to argue my case).


Sebastian 02.19.09 at 5:47 pm

You’re right, I apologize.


Rich Puchalsky 02.19.09 at 6:10 pm

I still think that people aren’t really looking at the full range of what is possible — that helps one to see why the current options on offer seem so restrained. Other than, say, Lee Arnold’s comments in 21 above, a lot of this is still about concepts like unemployment. It seems pretty obvious to me that what we want is a new system in which everyone is fed and has health care and so on, and not many people are really employed in the classic way. Employment means economic activity, and the world is pretty much filled to the brim with economic activity which greater productivity means isn’t really needed except in order to prop up ever-growing distributional inequities. Too much of social democratic sentiment seems to me to be like people talking about how to organize one more good old-style cavalry charge into the barbed wire and machine guns.


notsneaky 02.19.09 at 6:14 pm

If by capital you mean physical capital than the traditional Keynesian view would be more that the business cycle is evidence of inefficient allocation of labor. Now, capital may still be inefficiently allocated but that’d have more of a level/growth effect rather than a fluctuation effect. There’s exceptions to this view and that’s just meant very roughly.

Also I’m not sure about your explanation of ‘alone’. Does the high proportion of government in output really have to do with some kind of counter cyclical policy? Or is it simply provision of public goods, income transfers and the usual self interested rent seeking? Once you take those out, how much of that 20% has to do with the business cycle?


notsneaky 02.19.09 at 6:16 pm

“world is pretty much filled to the brim with economic activity which greater productivity means isn’t really needed except in order to prop up ever-growing distributional inequities.”

Ummmm… yeah, tell that to people in poor countries.


Rich Puchalsky 02.19.09 at 6:35 pm

Yes, telling that to people in poor countries would be a good idea.

It’s a testament to how much nonthought is ingrained in even the “left” that you can propose something in which you specifically say that everyone is fed and has health care and still have someone reply like this.


notsneaky 02.19.09 at 6:44 pm

Who you calling ‘left’? But you know, it might just be the case that in order to feed everyone and give them health care, you might have to actually ‘produce’ those things with a thing called ‘productivity’. Not my fault if one of your sentences contradicts the next.


raivo pommer 02.19.09 at 6:55 pm

Von Raivo Pommer

Die Länder wollen sich ihre Zustimmung zum zweiten Konjunkturpaket der Bundesregierung und zur Reform der Kfz-Steuer mit weiteren 200 Millionen Euro bezahlen lassen.

Die Finanzminister der Länder halten bei einer Übertragung der ihnen zustehenden Kfz-Steuer auf den Bund die bisher verabredeten Ausgleichszahlungen in Höhe von 8,84 Milliarden Euro für zu gering. Der Finanzausschuss des Bundesrates empfahl daher am Donnerstag, eine Entscheidung über eine entsprechende Grundgesetzänderung zu vertagen und wegen der Kfz-Steuerreform den Vermittlungsausschuss von Bundestag und Bundesrat anzurufen. Für das eigentliche Konjunkturpaket II zeichnete sich aber eine Mehrheit ab.


roger 02.19.09 at 7:09 pm

notsneaky – “If by capital you mean physical capital than the traditional Keynesian view would be more that the business cycle is evidence of inefficient allocation of labor.”

No. See the chase after high yield that gave us, in the twenties, the Florida real estate boom and the boom in ‘cartels”, or the 00s, which gave us the boom in “financial innovations” – which, of course, I’d put down under your convenient rent seeking category. And of course, it isn’t some fabulous coincidence that, after the Great Depression, every developed country established a heavy government presence in the economy. Of course, there are reasons that the governance of any developed society should get more expensive – governance has to adapt, after all. But the structural presence of the government has much more to do with the fact that the private sector can neither provide full employment nor, in an efficient and equal way, a number of social goods – retirement, education, health care. The attempt over the last thirty years to make retirement a matter of the private sphere only is a nice experiment in how much the private sphere can do. You can look at the collapse of the Chilean social security system, which sucked, anyway, in terms of providing decent retirement for the working closs, or of the 401(k) supplement, as pretty good evidence that the private sphere cannot allocate retirement units, so to speak, very well – it is much too volatile, and it cannot, through some alchemy, transform a negative externality into a profitmaker, however hard it tries.

But there is another, supply dimension that should be mentioned. Unfortunately, most discussions about government intervention in the economy end up as discussions of poverty or welfare, which overshadows the governments role in creating and adding dynamism to the residual. Again, it would be stupid to suggest that the question is whether the government or the private sphere should do all the work, but it is obvious that in the last decade, the private sphere in the U.S. has been increasingly unwilling to invest in long term R and D – unsurprisingly, in light of an atmosphere so heavily weighted towards short term yields. Surprisingly, given what we know about global warming, and given the political disasters and economic vulnerability inherent in the U.S. dependence on oil, there’s been no major endogenous move to transform this into an opportunity for new energy technologies. The SUV is a symbol not only of ecological blindness, but of an engineering dead end – this is the path technological innovation has gone down in American capitalism. It is mid as if, instead of railroads, the private sector in the mid nineteenth century had concerned itself solely with trying to make prettier horse drawn carriages.


notsneaky 02.19.09 at 7:28 pm

You have a tendency to go off on irrelevant tangents (like the stuff about economists writing poetry). So keeping to the points actually relevant to the argument, first, the Florida boom is usually NOT considered one of the main causes of the Great Depression. Second, I specifically said physical capital, not financial capital. Third I didn’t say that the present level of government is not justified (though it might be) I just said that the existence of the business cycle is probably not the main explanatory variable for the size of government. Um, yeah, SUVs bad.

Since we’re going off on tangents, it might as well be worth mentioning that say, 40 or 50 years ago, a government share in income of 20% would’ve been considered pretty damn low, even by some free market folks. Certainly by any “true” leftists. But I guess sometimes it’s necessary to move the goalposts.


beezer 02.19.09 at 7:42 pm

“Again, it would be stupid to suggest that the question is whether the government or the private sphere should do all the work, but it is obvious that in the last decade, the private sphere in the U.S. has been increasingly unwilling to invest in long term R and D – unsurprisingly, in light of an atmosphere so heavily weighted towards short term yields. Surprisingly, given what we know about global warming, and given the political disasters and economic vulnerability inherent in the U.S. dependence on oil, there’s been no major endogenous move to transform this into an opportunity for new energy technologies. The SUV is a symbol not only of ecological blindness, but of an engineering dead end….”

The concept of “public goods” seems to be making a comeback in the US. The terminology isn’t the same as socialists might use, for practical reasons, but Obama is constantly talking about public goods. As this free market induced collapse works it’s way downward, the concept of what’s good for the community, the nation as a whole, will be moving front and center. Right now Obama refers to “down payments.” But what he’s talking about is government national policy taking a front burner role.

This will include a forward looking energy policy. It will include a strong move towards universal health care. It will include policies aimed at reducing income inequalities. There’s much stamping of feet by the opposition, but all the working and middle class need to be reminded of is the value of their private retirement accounts.

And an entire generation of Americans now believe the relationship between Wall Street and Washington has and continues to be poisonous. And they’re right. It will be a political opportunity Obama will not miss. Trust me.


roger 02.19.09 at 7:48 pm

Ah, tangents. As in, discuss what I want to discuss in the terms that I want to discuss it in – otherwise, I’m gonna give you an F! I love both the smugness and the silliness. Of course you wouldn’t like the idea that a model is a poem, or a fiction, although of course it is, because far from being a tangent, it is at the center of the whole mood of your response. Your ersatz seriousness. Because how can one be a serious person who is all about relevance and this is the way things are if you are referencing a poem? Instead, you are doing physics or something! Pretty funny.

As for your points (oh sir, I hope I don’t go off on a tangent! please forgive me if I do!), the Florida boom, as Galbraith poiinted out, was indicative of a national mood for speculating – it was not in itself a driver of the collapse, but an example that physical and financial capital go together, rather like the straight man and the funny man in a comedy routine (o noes! tangenting again. I meant to say, as Keynes remarked once. It is all very Keynseian. Also, throw in Frank Knight, too.)

As for your argument that the increase in the size of the government was not countercyclc, I notice that it depends on you quoting yourself. So it has to be true. Otherwise – and I admit, I am so crushed by the logic of that argument – you will notice that the government increase was in just those social services that are effected by the volatility of the business cycle – such as the ability to educate one’s children (which was dependent in the 19th centuries and before on the economic conditions in which the average family was living – in bad years, the children didn’t go to school), health care (I’d spell this out, but I fear I’d go off on a tangent. Let me use an argument you would approve of and say that I’ve said so before, so it must be true), retirement (ditto). The justification for governments doing these things explicitly referenced the effects of the Depression, in the post depression years. Now, that iswhat I’d call, responding to the business cycle. The effect of this spending turned out, not surprisingly, to have an effect on the business cycle -which then became a further driver for this kind of government expenditure. This is called a feedback.

Anyway, I hope this hasn’t wasted your time with too many tangents! That would be so awful. Especially as you are here, as part of your busy day, to instruct. I’m grateful. I really am.

As for your points: Of course, physical capital arbitrarily separated from financial capital makes economic activity impossible to understand. This is the kind of mysstification that makes it seem l


roger 02.19.09 at 7:50 pm

Oops. I thought I’d erased that last paragraph. Consider it erased.


notsneaky 02.19.09 at 7:55 pm

“Of course you wouldn’t like the idea that a model is a poem, or a fiction”

No, I’m fine with it, it’s just completely irrelevant to what we’re talking about. And usually those kind of rhetorical tricks are just ways of hiding that one doesn’t know what they hey they’re talking about.


roger 02.19.09 at 8:04 pm

No, I’ve made a very good case for its relevance, I think. The argument is that any model that takes, as the ceteris paribus conditional, full employment, and uses it to argue against government spending is using a conditional that depends, very much, on government spending.
It is a simple argument. It is a bad poem.
You can like it or not, but pretending that it is not an argument is, I find, pretty typical of people who “don’t know what they are talking about.”


notsneaky 02.19.09 at 8:04 pm

And which social services are exactly not affected by economic downturns? Or goods in general (though there is some countercyclical ones). Anyway, at the end of the day, if you’re right then the size of the business cycle (say, as measured by st. dev. of consumption or income) should at least be correlated with the long run government’s share in output though that would be a pretty weak test. Once you got that correlation you can take get the chunk of gov that is explained by counter cyclical motives (maybe). I doubt it’d be huge.


Rich Puchalsky 02.19.09 at 8:40 pm

I don’t think it’s worth trying, Roger. I mean, as in my case, you could start to try to point out obvious things like greater productivity meaning that you don’t really need everyone to work in order to provide necessities for everyone, as long as those necessities are well distributed. And that currently the effort to keep everyone employed is mainly just going towards piling up more riches for rich people, beyond what the planet will support. And that we’d be better off just letting some people not work and supporting them in doing so. But why bother?


notsneaky 02.19.09 at 8:59 pm

Rich, the thing is that we don’t get greater productivity in a lot of places. And in places where that’s not true we already provide necessities for everyone who doesn’t work. The “effort to keep everyone employed” is not “just going towards piling up more riches for rich people” it’s going into providing a higher standard of living for individuals of modest income. The fact that they choose to work suggests that maybe, just maybe, people like to have a bit more than just the necessities. It’s worth recalling part of the definition of unemployment – it’s involuntary. It’s people who WANT a job but don’t have one. Give the people what they want.

Back to places where we don’t get higher productivity. A country like Chad has an annual income of around 700$ (ppp adjusted). Even if you could redistribute the income perfectly equally, everyone in the country would still have… well, 700$ (in fact the only reason that poverty rates aren’t 100% in a country like that is precisely because there’s is some income inequality). Redistribution of income isn’t going to do much here, even if it was possible.


Sebastian 02.19.09 at 9:19 pm

“I mean, as in my case, you could start to try to point out obvious things like greater productivity meaning that you don’t really need everyone to work in order to provide necessities for everyone, as long as those necessities are well distributed. “

The problem here is ‘necessities’. We are fairly close to providing necessities for everyone already if you mean food, shelter, basic clothing, and maybe even things as non-necessary as cable television. If that was really all that progressives wanted, we’d be dangerously close to done especially in some of the European countries. It doesn’t even require massive further redistribution. You really can live on the dole in a number of countries and live much better than human beings have lived for most of the history of the human race.

But I don’t really believe that is all you want…


Righteous Bubba 02.19.09 at 9:23 pm

Even if you could redistribute the income perfectly equally, everyone in the country would still have… well, 700$ [...] Redistribution of income isn’t going to do much here, even if it was possible.

I’m not sure why the second part should follow from the first: it’s going to do something for the $200 earners certainly.

Stats to 2008:


Rich Puchalsky 02.19.09 at 9:31 pm

What’s wrong with being dangerously close to done? Of course, we haven’t started redistributing from Europe to Chad. The whole thing doesn’t make much sense if “talking to people in poor countries” means telling them that hey, the contemporary distribution of riches followed some kind of perfectly moral historical process and if they want anything they can get it from other poor people.

And the reason that such a large percentage of people want to work is because the safety net really isn’t developed well enough in most places so that they can live long-term without it. “Give the people what they want” is Newspeak if there is no good alternative.


roger 02.19.09 at 9:40 pm

Sebastian, you make an excellent point. In the post war years, we have had a set of trajectories in which we have seen the government/private mix of different numbers in different developed economies, from 20 -30 percent in the U.S. to 50-60 in Sweden. What difference has this made in lifestyle? in actuality, all have succeeded in creating opulence well above anything ever seen before. So the questions are what to do within those parameters. If, like me, you want more equality, better health care and education for everyone, and are suspicious the ability of the rich to entrench themselves politically and economically, you will want to go more towards Sweden. We’ve experimented, in the U.S., with trying to underinvest in public goods, and it has led to lesser social mobility, a broken health care system, and threats to the previously successful system or retirement. If we go in direction S, it is not going to be the case that we will become Chadlike. If we go in direction U, it is unlikely that we will become Chadlike, either. There are restraints on both directions. Direction U, for instance, uses the slogan of “small government” to cover up policies that can only be done, politically, by actually enlarging the government – which is why the goverment enlarges under such small government men as Reagan and Bush. In actuality, they are fighting to give the upper class more of a share of the national wealth, and small government is the meaningless mantra that covers this central project. I’m confident that small government will never happen – that is, a government that isn’t above the 20 percent level. More than 60, as the Swedish experience seems to indicate, and the economy stagnates, government bureaucracies become deadening, the human use of human capital – creativity – is stifled.

Chad probably should be more Swedenlike in the size of its intervention in the economy, because its needs are all basic human capital requirements. Putting it in the cruel dilemma that, to attract investment, in the short run, it has to cut back on government investments that are needed in the long run.


Sebastian 02.19.09 at 9:47 pm

I’m not sure that you can really count Sweden, it is more like a state in the US than a comparable STATE. It is largely at the mercy of what goes on around it. But if you want to compare France and Germany and the UK and the US and say that we could be any of those models, fine.

But again what is your real goal? It doesn’t require massive redistribution or levelling of incomes to get to the point where all the necessities are covered. Hell, if that is the endpoint I’m on board.


notsneaky 02.19.09 at 9:54 pm

Bubba, fair point. What I mean is that you’re not going to be able to get far with just redistribution when there isn’t much to redistribute (that was the ‘even if’ part)

Rich, no one’s said that “distribution of riches follow(s) some kind of perfectly moral historical process”. Don’t make shit up and attribute it to others. It’s not nice. And it’s dishonest. But as far as international redistribution, well, aid really is not that effective (perhaps a bit more effective than some people give it credit for and usually more effective in places that need it less) and there really isn’t any political will to up that ineffective amount substantially. Until those two constraints are overcome, any kind of redistribution’s gonna have to be within-state distribution.

As to your second assertion – got anything that would remotely support that? Most people work because they want a big tv, second car, bigger house, steak dinner, etc. Unless you consider those things something that should be part of the safety net you’re pretty way off.
(Yes, I know, health care. Doesn’t really change it all that much)


Rich Puchalsky 02.19.09 at 10:16 pm

Sebastian, the point is that by keeping people in the richer countries on a treadmill — which is what “full employment” does — you’re exhausting the capabilities of the planet. People say un-thought-out things like “where is the food and health care going to come from if no one works?” as in this thread, but at the same time they implicitly seem to believe that all of this comes out of nowhere in the sense that you can just have more and more of it globally and never reach a limit.

In fact, given a choice, I’d bet that most people in rich countries would rather have a lot more leisure time than a second car or a bigger house. But if some people want to work really hard, great. They can have more monetary rewards and support everyone else. Even after redistribution, they will still end up with enough more than other people to give them social status, which is really mainly what this is about at this point in the rich countries.

The bit about no political will to go across national boundaries is, of course, just re-stating that there is no real international left right now. I don’t think that this is the product of some kind of facts about how societies work. I think it’s just ideology.


notsneaky 02.19.09 at 10:35 pm

Speaking of un-thought out things, you seem to think that production of more food and health care has some kind of ecological limit yet at the same time argue that these things can just ‘pop up’ naturally due to higher productivity without any working. I’m also not sure how the statement “there is no global limit on food and health care” is suppose to follow from the statement “if no one works, food and health care won’t be produced”. You have a little straw-crowd going on over there.

The fact that people do in fact choose to work for that second car seems to belie your completely unsupported assertion. Sure, people want more leisure. But they want more leisure AND a second car and when it comes down to it they seem to take the second car. I guess at this point you got to argue some kind of false consciousness.

There is no political will not because there’s no real international left right now (when and for how long did a “real” international left really exist? Given the propensity of “real” leftists to bicker, squabble and break up into factions on tiny questions of doctrine of much less importance than nationalities, I don’t think the “real” international left managed to stick around for that long) but because for better or worse it’s human nature. That’s why we have states which more or less FORCE people to be charitable to each other by using that ol’ monopoly on force. Until we get ourselves a world government, international charity on a significant scale is going to be a no go.


Sebastian Holsclaw 02.19.09 at 11:22 pm

“Sebastian, the point is that by keeping people in the richer countries on a treadmill—which is what “full employment” does”

But we don’t. In quite a few richer countries you can go most of your life without working and still have the basics covered. So we could beef that up a little and there would still be plenty of room for rich people, including really really rich people. But I have trouble believing that you are really talking about the basics. (And there is a political problem. There will be incentive problems if enough people aren’t working, but still get to vote on what stuff they get from the government.) If you are really talking about just the basics, you could probably get a good consensus for aid. But I have the nagging thought that you either aren’t going to stop there, or are going to have a very very expansive view of the basics.


Soilid 02.19.09 at 11:51 pm

The conservatives who have been in power over the last few decades have made us believe that ANY government spending is socialism. That’s just not true. This country was built through strong government programs and spending. The conservative myth that all private spending is wise and productive and public spending foolish and wasteful is what has gotten us into the economic mess we find ourselves in today. There is nothing socialist about having a government that serves the people – we live in a democracy, not a socialist state. It’s the decline in national investments that has led us to a place where from 1989 to 2006, the highest-earning 10 percent of U.S. households collected over 90 percent of the nation’s income gains. Today the top 1 percent of American families receives 23 percent of all personal income, up from just 10 percent in 1979. Corporate executives earn 275 times as much as average workers, compared with 27 times in 1973 (these facts are taken from the downloadable book Thinking Big from the Progressive Ideas Network.


roger 02.20.09 at 2:04 am

I’m not sure what Sebastian’s point is, or the point of conservative politics in the past 8 years. Conservatives will quickly dish up bogus hedonistics to tell you that the median household is doing better – 2 x, 10 x better – now than in the 70s. Which surely means that a milionaire is a 10 millionaire, a 10 millionaire is a 100 millionaire, etc. If half the wealth of the top 5 percent were simply expropriated, it would make no difference to their life styles. Hell, if the upper 5 percent merely held five percent of the national wealth, they would still be wealthy. So the question is: why the crazy protectiveness about them? The Russian revolution is not on the horizon.

Myself, I think the point is that we can’t afford, much longer, to be a developed country and one in which the income distribution mirrors Mexico or Turkey more than France or Germany. Our rich have become too expensive to keep.

I’m pretty sure nobody in a couple of generations has ever seen the politics that lies ahead in the U.S. as savings just evaporates, destroying the last thirty years of carefully cultivated ties between middle class america and the highflying investors on Wall Street. The next couple years will be good for socialistic solutions – typical of Dissent to advocate holding your punches at just this moment. Now is the time to punch away.


geo 02.20.09 at 3:00 am

notsneaky: for better or worse it’s human nature

I disagree with you often enough, but this is the first unintelligent thing you’ve ever said, at least in my hearing. “Human nature” refers to things that are invariably true of humans: eg, when raised socially, we use language; we need food for fuel; we walk rather than fly, etc. It does not refer to a wildly variable characteristic like social solidarity. I suppose you just meant: at our current stage of economic and cultural development, most people, at least in the United States, don’t take the deprivations of distant others all that seriously. Put that way, it sounds a lot less dogmatically laissez-faire.

By the way, there’s fine new book by Peter Singer, The Life You Can Save, that engages these questions in a way that would interest many on CT.


roger 02.20.09 at 4:29 am

“Most people work because they want a big tv, second car, bigger house, steak dinner, etc. ” – while many an 18 year old boy thinks this, mostly no. Very few people work to get themselves the steak dinner – rather, it is steak for the family. Or saving up not to work, for retirement, with spouse. Taking care of a sick parent. Etc. It is very very rare that anybody is so alone that they work in order to accumulate stuff just for themselves. By and large, agents come with their connections, which is why methodological individualism is such a silly doctrine. It would probably surprise notsneaky that this very minute, in millions of households, kids are wolfing down meat they didn’t pay for and, at the end of the meal, their parents don’t charge them! Incredible, but true.


notsneaky 02.20.09 at 6:02 am

I’ll take that as a complement I guess. But yeah you’re right.

Actually, Jimmy Stewart once smuggled out a hand of Yeti stolen from a Buddhist monastery out of India.


Tracy W 02.20.09 at 9:05 am

Roger – you need to compare the business cycle to some alternative. The market is of course less efficient than a world in which we have everything as good as it is now or better except no business cycle. And current wind turbines are ridiculously inefficient at converting wind energy to electricity compared to the ideal of 100% efficiency. This however is not an argument against markets allocating capital, any more than the failure of wind turbines to reach 100% efficiency is an argument against building wind turbines. The relevant question is “is the market better or worse than an alternative we can actually reach?”

If the U.S., the most laissez faire of the developed nations,

Actually it isn’t. According to the Heritage Institute’s Index of Economic Freedom, it’s about 6th in the world, below Hong Kong, Singapore, Australia, Ireland and NZ. (If you don’t like the Index of Economic Freedom, please tell me what was your empirical basis is for claiming that the US is the most laissez faire nation).

Economics is a branch of literature, and in nothing is this more true than the production of the bad poetry that economists so fondly call models

Nope. Economic hypotheses have been disproved. For example, the hypothesis that there is a stable trade-off between unemployment and inflation, the hypothesis that planned economies are inherently superior to market economies, the hypothesis that people in risky situations make decisions according to expected utility theory (albeit this is a microeconomic theory). In literature you don’t get novels or poems being disproved.

Now macroeconomics is a hard science to make any real progress in. For example, just because there is no stable trade-off between unemployment and inflation doesn’t tell us that there isn’t an unstable trade-off, so people can build models in which there is a trade-off and then argue that the world is currently in a situation where that model applies. And just because some planned economies turned out to be worse than some market economies doesn’t tell us that every single planned economy is inferior to all market economies – you can design a new theoretical planned economy and then argue that this is better. And in macroeconomics it is impossible to do experiments, and we struggle to even measure some aspects of the whole economy (eg see the normal criticisms of GDP?). So there is lots of space particularly in macroeconomics for personal biases to cause problems. But it’s still a science, which means we can hope for a better quality of policy advice than that which consists of making up stories that we like to support policies that we want to do anyway.


John Quiggin 02.20.09 at 10:31 am

“According to the Heritage Institute’s Index of Economic Freedom, it’s about 6th in the world, below Hong Kong, Singapore, Australia, Ireland and NZ.”

Of these Hong Kong isn’t a nation at all, and the ranking of Australia and NZ is ludicrous (NZ was a ‘free market miracle’ back in the 80s, but a decade or more of recession/slow growth put a stop to the miracle part of it, and the Labour government that ruled from about 99 to last year dragged the place back to the centre). I’ll let our Irish contingent comment, but it certainly doesn’t seem as if the free-market miracle is looking too crisp either there or in Singapore at present.


Hidari 02.20.09 at 4:28 pm

This is obviously a huge and complex topic and I will return to it (requests begging me not to will be ignored).

However, looking at the Dissent piece, it has the flaws of most of the ‘pro-war’ or ‘Decent’ left: i.e. it is hopelessly Eurocentric and simply ignores the facts of imperialism and colonialism. For example.

‘It (i.e. Capitalism) emerged stronger than ever from a long depression in the 1870s and 1880s, and then revolutions in transportation and communication led to a wave of globalization sweeping over not just Europe but the world at large. Several advanced bourgeois states, meanwhile, had started to enact important economic, social, and political reforms, and, for most of the public, life was actually getting not worse but better (however slowly and fitfully).’ (emphasis added).

I’m sure the Indian and African and Chinese ‘publics’ would be surprised to hear that life got ‘better’ in the 1870s, 1880s and 1890s.

Reading through the rest of the piece the same myopia applies. Literally everyone quoted and discussed is either European or American (and almost all of them are white and male). It’s as if Chinese, Japanese, African, Indian and South American intellectuals simply don’t exist, or that if they do, they could contribute nothing to ‘our’ political debate.

Again the examples used invariably European or American. It’s not that the socio-political set up of Denmark or Sweden don’t have anything to teach us: they do. It’s also not as if Swedish society and Danish society are not in many ways superior to British and American (and Australian) society: they are, and this holds for the Scandanavian and Nordic countries generally. However the idea that social democracy exists at present only in Europe is ridiculous.

I mean take this sentence:

‘Despite current disillusionment with capitalism, this is precisely the situation the left finds itself in today, given the loss of its vision of a postcapitalist society. Many of its parties win elections, but few inspire much hope or offer more than a kinder, gentler version of a generic centrist platform.’ (emphasis added).

But to talk about the condition of the ‘left’ and simply to ignore what has happened in South America in recent years is farcical. In Venezuela, Bolivia, and numerous other countries in South America (and Central America, increasingly) more or less ‘radical’ socialist/Marxist political parties have come to power democratically, as Marx always thought might happen, and this red tide is strengthening, not weakening. Or what about Nepal? Or Cyprus? Or Kerala? Whatever one might think of the political situation in these places, the governing parties are hardly ‘centrist’.

It should be added that even in the United States things aren’t as clear as they might seem. We are still in a period of decolonisation. Eventually (and we may have to wait decades but it will happen) the American Empire will have to fall or radically restructure itself because Empires, in the modern world, are simply unsustainable, morally, politically, and, most importantly, economically. It’s not at all clear how ordinary Americans will react to this state of affairs, but a turn to the Left seems at least plausible.


Hidari 02.20.09 at 4:34 pm

Another point worth making is that, in 100 years, our grandchildren/great grandchildren may stumble on this blog entry and scream ‘why didn’t anyone mention the environment!!!’ at the screen: assuming they still have computers to browse the internet on. Or electricity.

Writers at Dissent may not like it, but, unless the computer modellers are all wrong (which I suppose they may be) in the second half of the 20th century we are going to be faced with a more or less unparalleled economic catastrophe caused by environmental collapse. Again, in this context, people will turn as frequently to the radical right as to the radical left, but the basic point is that radical political change will once more come back onto the political agenda.


geo 02.20.09 at 10:12 pm

Soilid: There is nothing socialist about having a government that serves the people – we live in a democracy, not a socialist state.

Judging from the rest of your post, we see eye to eye, except terminologically. I’d say that the definition of “socialism” is something like: “a society in which the government serves — ie, is accountable to and controlled by — the people, to a far greater extent than is possible given drastic economic inequality.” In other words, socialism is just radical democracy, applied to economic life as well as political.


roger 02.21.09 at 1:52 am

I lived in the afrtermath of the Bush collapse. Trust me, it wasn’t the democratic bowl of cherries that we all imagine now. Generally, laissez faire is only achieved by theft and enormous expenditures for the military. Iraq, anybody?

One of the things I like about economics talk is eventually it gets down to stories that are told around a bar, with each story teller assuming that he is among friends. We all know that we want the frickin’ big car. And the stake. The ladies, the wives, the kids. Give it away in a heartbeat if divorce wasn’t so biased against a guy! Science has proven that males have to compete this way, I read it in Newsweek.

All bs. Alas, that is what has ruled during the Reagan years.


geo 02.21.09 at 4:31 am

LF: I lived through the aftermath of eastern European socialism.

Actually, I was trying to say that what you lived through the aftermath of wasn’t socialism at all. The original socialists — Marx, Morris, Bellamy, Luxemburg, Debs — were radical democrats, whose idea of socialism was to give more substance to political democracy and then extend it to the economy. The Bolsheviks and their successors in Russia, China, Eastern Europe, etc. were frauds, who appropriated the prestige of the term “socialism” to rationalize their party dictatorship. Of course their capitalist opponents were happy to call them “socialists,” too, either from ignorance or in order to discredit the socialist ideal.


novakant 02.21.09 at 8:13 am

socialism is just radical democracy, applied to economic life as well as political.

Democratic socialism is an oxymoron, try social democracy instead.


John Emerson 02.21.09 at 3:07 pm

Healthcare that’s designed to optimize economic health of the system rather than your own health

Please come to the US and tell us WTF it is that our health-care system is optimized for. We’re genuinely curious about that.

I suggest that you vet your whines more carefully before releasing them to the public. Plausibility is important, and onee bad whine ruins the whole barrel.


engels 02.21.09 at 3:39 pm

How’d you like to pay double-price for an automobile?—yes, double!

Since I don’t own a car and don’t plan to I suppose my answer would be: “who gives a shit”? The 25 euro haircut argument against socialsim otoh — that it is pretty devastating.


harry b 02.21.09 at 4:29 pm

Well, I do own a car, and if I had to pay twice as much, I probably wouldn’t, nor would many other people, and the relative appeal of public transport would be much greater, and my, and their, quality of life would be considerably better in that respect. Of course if I were the only one having to pay double for a car, that would be a pain, which is the silly sleight of hand on which the argument depends.


Chris Baldwin 02.21.09 at 4:36 pm

“It may well be, as Sheri suggests, that the time is ripe for social democracy. But I fail to see any social democratic actors out there who are ideologically prepared (let alone politically organized) enough to take advantage of these opportunities. Hence, we’re seeing what might be described as parodic social democracy – many of the organizational forms of social democracy (temporary stimuli, nationalization of major chunks of the economy) being undertaken by right leaning and centrist administrations as stop-gap measures to save capitalism and markets, rather than to subordinate them to broader social and democratic needs.”

Alas, you couldn’t be more right. The moment is here, but we aren’t.


John Emerson 02.21.09 at 4:54 pm

I have said elsewhere and will repeat, if you don’t have a left, the middle becomes the left and the new middle is right-center at best. Ever since WWII liberals have been doing what they could to destroy the American left, and they have been successful indeed, except for a tiny blip 1965-1975. So now the average American thinks that Schumer is an extreme leftist and many think that he’s a Communist.

Social Democrats / Democratic Socialists really need a hard left to scare people with. Maybe if the economy collapses entirely, they’ll get one. Until then, Social Democrats are horrible, unspeakable Communists in American eyes.


geo 02.21.09 at 5:06 pm

Look here, Novakant, who are you calling an oxymoron?

Seriously, I was just trying to point out that the word “socialism” originally meant popular, democratic control over the whole of social life, including the economy. Bolsheviks, Nazis, and Maoists misappropriated the term to legitimate their party dictatorship over the whole of social life, allegedly in the name of the people. Apologists for capitalism were happy to go along with this usage, since it identified a noble ideal — radical democracy — with tyranny. There’s no reason for contemporary radical democrats like you and me to acquiesce in this terminological travesty.


sg 02.21.09 at 5:47 pm

Hey LF, what about adding an analysis of Australian or Japanese social democracy to your rant? There’s more to this kind of discussion than contrasting the US and Sweden.


Henry 02.22.09 at 4:44 am

LF – We aren’t very appreciative of anti-Semites around here. You’re banned. All future comments will be deleted (as have been all past comments that I can find).


chris y 02.22.09 at 12:33 pm

Please come to the US and tell us WTF it is that our health-care system is optimized for. We’re genuinely curious about that.

Was it not until recently optimised for the maximum profitability of the insurance market, in part so that pension funds had a reliable market in which to invest, so that they could deliver on their policies? (obviously also in part so that insurance company directors could get rich at the expense of the people they were denying health care.)

Now of course, not so much, and given that it was always pessimised(?) for delivering a healthy population, there should be a tremendous opportunity for BHO and his buddies to point out that since it no longer does the one thing it was good for well, it might be a good time to look at some assumptions again.

We shall see.


Tracy W 02.22.09 at 12:57 pm

John Quiggin,
Hong Kong may not be a nation, but it still has a separate legal structure to China.
What is ludicrous about NZ and Australia’s rankings? Or about Ireland’s, for that matter? I am a NZ citizen, I have lived for a few months in the USA, and I know a lot of people who live or have lived in Australia or Singapore or Ireland; nothing in my experience has led me to think that the USA is obviously more free-market than any of the other countries. I am prepared to consider that the Heritage Foundation is measuring the wrong thing, or measuring the right thing but wrongly, but from your later comment you appear to be muddling up the question of whether a country is more free-market than the USA with the question of whether it is performing better in an economic sense. If NZ’s poor economic performance tells us that the Hertiage Foundation’s rankings are ludicrous as you appear to be implying, then that means that NZ is not a free-market economy and thus its poor economic performance isn’t an argument against free markets. You can’t have it both ways: NZ and Ireland can’t be both examples of the failure of free markets and evidence that the Heritage Foundation’s rankings are wrong. Of course, it is possible that free market economies are a bad idea and the Heritage Foundation simultaneously has stuffed up its rankings, but to make that case you’re going to need to bring in some outside evidence.


roger 02.22.09 at 4:32 pm

Tracy W., I was discussing the U.S. over the long run, and I’m not sure if the Heritage poll is over the long run or a yearly comparison. I know Australia used to be much more socialistic than the U.S., and then it went in the other direction.
However, this doesn’t really make too much of a difference to the point, which is that the United States is among the most laissez faire of developed nations. In fact, laissez faire nations like Ireland are not going to look very laissez faire next year, unless the Heritage Foundation overlooks the financial sector entirely.


bianca steele 02.22.09 at 6:46 pm

But if people think Sen. Schumer is a Communist, then people who think they want to be Communists will gravitate to Schumer. Which I guess is support for your point.


StevenAttewell 02.22.09 at 8:20 pm

I think G.K at 35 is right – the lineage of social democracy in the U.S runs through the union movement, as opposed to social democratic political parties. Hence, the Reuthers, Sidney Hillman, even John L. Lewis (instrumentally, as a union leader), A.P Randolph, and many if not most of the CIO’s activists and leadership in the 1930s (those who weren’t out-and-out C.P members, although arguably the C.P of the Popular Front era was social-democratic in rhetoric). They tended to follow similar pathways: they generally were in the orbit of the Socialist Party in the early 30s, they either joined or were allies of the C.P during the big organizing drives of 1935-1937, they broke with the C.P over various issues (the Hitler-Stalin Pact, leadership struggles over “front” organizations, domestic politics, etc.), and they then became the left-most edge of the Democratic Party.

What makes this confusing is that a lot of left liberals in the U.S were social democrats in all but name (and perhaps a less developed sense of class politics) – John Kenneth Galbraith, the Keyserlings, Paul Douglas, and a lot of the other surviving New Dealers who continued in politics through the 40s-60s. What makes things even more confusing is that a lot of social democrats became liberals out of survival when the Cold War took off and anti-communist witch hunts made being a social anything the political kiss of death.

Interestingly, one of the things that ties the union figures together is that they tended to come out of industrial unions in industries that were dysfunctional in some fashion – the extreme seasonal swings of the auto industry, the fragmentation and cut-throat competition of the textile and garment industries, and so on. Workers in more stable industries had the luxury of focusing entirely upon the labor vs. capital struggle, but these leaders had to turn to the state out of both ideology and necessity.
In regards to the article, am I the only one who sees a contradiction in Berman’s argument. On the one hand, she wants “the left [to] regain its old optimism and historical vision.” On the other, she wants the left to focus on”Helping people adjust to capitalism, rather than engaging in a hopeless and ultimately counterproductive effort to hold it back…managing globalization—promoting economic growth and increased competitiveness even as they ensure high employment and social security…[and]agitating for policies—like reliable, affordable, and portable health care; tax credits or other government support for labor-market retraining; investment in education; and unemployment programs that are both more generous and better incentivized.”

The policy just doesn’t match the politics here. From the list of remedies, the political spirit that links them together is a heavy brand of technocratic pragmatism, making the best of the situation as it is. But there is such a thing as politics created by policy – and this kind of policy isn’t conducive to optimism and historical vision. Indeed, these policies aren’t new; they’re more or less what the mainstream of European social democracy and the U.S Democratic Party have been pushing for almost 15 years now. Arguably, one of the reasons why the left has been in such shabby shape recently (with the noted exception of the U.S, ironically), is that these policies lack either the size or scope to deal with the problem, and thus do not sufficiently impress a majority of working class voters.

Consider the list. Among the items, universal health care is the only really major systemic reform. Retraining, education, and better unemployment benefits are all small-bore attempts to deal with the major issue of our time – the “new social question” of increasing unemployment, underemployment, and employment insecurity, to say nothing of increasing inequality and economic insecurity. The first two are basically labor supply measures but without any understanding that the labor demand isn’t there in the private sector. The current incarnation of capitalism just isn’t producing enough living wage jobs, and increasing the number of college grads isn’t the answer, especially when the earnings of college grads have become stagnant/declining. Likewise, retraining credits/U.I/”wage insurance” are unlikely to make up for the lost income that should have been coming, given increases in productivity.


DC 02.22.09 at 10:03 pm

What about universal basic income as a policy capable of restoring some radical ambition to social democratic politics while also being compatible with acceptance of markets (whatever about capitalism)?

(Cf Erik Wright’s argument for “basic income as a socialist project”.)


StevenAttewell 02.23.09 at 7:27 am

Sure, universal basic income is an example. It’s big, bold, something that’s easy to explain – abolish poverty now! Moreover, it deals with a major issue – stagnant/declining incomes and increasing job/wage insecurity.

Another example might be establishing a right to a job, with the government as employer of last resort. Again, the idea is something big, bold, easy to explain, that deals with a central problem with the current economy.

Support for a 100% carbon-free alternative energy economy might be another.

You get the idea.


DC 02.23.09 at 1:20 pm

One thing I like about UBI is that it attracts lefties who “get” the merit of markets (since it can help eliminate poverty and unemployment traps created by the welfare state) and similtaneously works as a Trojan Horse for the abolition of labour (“the capitalist road to communism”).


StevenAttewell 02.23.09 at 4:05 pm

Yeah, but that’s something I never understood about the “abolition of labor.” At least from my reading of Marx, the idea wasn’t that humans would cease to work for a living; I was always under the impression that Marx thought the emotional desire to create was a basic human drive, // to Smith’s propensity to truck and barter. Rather, the idea would be that everyone would work only at some skilled craft that they derived personal satisfaction from, for say 4 hours a day, and then go off to read Shakespeare and fish in the afternoon.

I guess that’s why I”ve always preferred ELR, because it emphasizes shifting the economy from a private sector “create more useless widgets for people to buy” only model to more of a public sector public-goods model.


Tracy W 02.23.09 at 5:43 pm

Roger – time trend data from the Heritage Foundation is available at
The USA and Australia have been rather similar by this index for most of that period, although they swapped places, Australia started off slightly less free than the USA according to the Index. Singapore and Hong Kong have remained at the top of the index, above the USA for the time period covered.
The Heritage Foundation’s measures look at things like financial regulation, corruption, level of tariffs, corruption, etc, it doesn’t look at output measures like GDP, growth in GDP, or for that matter the share of the financial sector in GDP. I do not know what financial regulations the Irish are planning to introduce this year, they may or may not wind up lower in the rankings than the USA, that is dependent also on what the USA does this year in the field of financial regulation.
I picked up on your statement about the USA being the most laissez faire of developed nations because if you are going to do macroeconomies properly as a science you need to be able to be careful about what you are saying about the world and why you are saying it. (I’m not saying that no scientist ever makes a mistake, but generally it adds to confusion if you get facts about the world even slightly wrong).


Patrick S. O'Donnell 02.24.09 at 12:23 am

Vis-a-vis the New Left and in light of his concrete political activities, Michael Harrington was a social democrat, pure and simple. In theory, however, he was firmly committed to socialism and considered himself, with sufficient reason, a socialist (in short, that means he could not rest content with any of the current versions of the welfare state and believed capitalism could in fact be transcended by a socialist society; incidentally, while he thought such a society would have a place for ‘markets,’ he explained what is troubling about the phrase ‘market socialism’). And he did, in fact and contra Berman, appreciate the virtues of capitalism. Please see, for instance, his last book, written while he was dying of cancer: Socialism: Past and Future (New York: Arcade, 1989). I suspect very few people have actually read this book.

Comments on this entry are closed.