Marxism has enjoyed an noteworthy resurgence in the past several years. The 2008 financial crisis, and the widespread distrust of economic institutions it engendered, has created a desire for a more significant revision of capitalism, something that goes beyond mere piecemeal reforms. The signs of this revival are everywhere. A self-declared socialist was just elected to the Seattle City Council. According to a recent survey, younger people are now more favorably disposed to the term "socialism" than to "capitalism." Finally, a recent survey showed that Karl Marx remains the most influential academic of all time, garnering the most citations and references (Freud came in second).
This revival of Marxism has not, however, produced any kind of far reaching model of socialism akin to those proffered by early revolutionaries like Lenin. Indeed, many are still wary of grand schemes to transform society. This is why I want to propose a plan for achieving socialism that is, in a sense, rather conservative: it essentially leaves in place the essentials of the current free market, free enterprise system of private ownership of the means of production while building a socialist structure of public ownership and social egalitarianism on top of it. The way to achieve this is simple: if socialism in the strong sense means that the government owns the means of production, then the government should simply buy the means of production.
It may seem that this is impossible to do without disturbing the existing economy, but there are many ways in which preserving and strengthening a free market, free enterprise system with limited regulation and private ownership is actually quite compatible with, even conducive to, socialism. The major reason for this is that, as you will notice, nothing in the previous description excludes adding a component of the public ownership of the means of production: it merely suggests that this should be done in a way that does not threaten the autonomy and integrity of the current market structure and system of private property. Furthermore, the class blog posts today suggest that the very understanding of capitalism today actually can lead to proposals for strengthening private ownership while pushing in a quasi-socialist direction: many of you assumed that CEOs were owners and shareholders were employees, but the case is actually the opposite, and the Swiss proposal is arguably one that strengthens private ownership rights. Finally, there are many ways in which a functional socialist system will promote trust in economic institutions that will foster attitudes that promote further free market and pro-growth reforms (ending licensing laws, moving to a consumption based tax system, encouraging saving and investment).
Separation One: Ownership and Management
The basic idea behind this proposal is a simple one: the way to socialize the means of production is to socialize the means of production. In the current economic system, if you want to own something, you buy it. Therefore, the people, acting through their government, should buy the means of production. There are many considerations here, but the essential idea is that the government should sponsor an investment fund, modeled on the government sponsored enterprises, that issues debt in order to purchase equities. The plan could start out modestly, focusing primarily on purchasing stock, and then could grow more aggressive as it achieves its objectives, gradually adding in the purchases of private businesses.
Socialists may object that this is really just a type of corporatism, or that it is a watered down version of the actual thing. Indeed, the proposal would have to start out slow, and at first it would own a small portion of the means of production. But over time it could increase its shares. As Seth Ackerman noted in a well received Jacobin piece, any economic system needs a way of allocating goods, creating new firms, and shutting down existing ones that are failing. My proposal is not all that different from Ackerman's, except for the fact that the government would finance this proposal not by issuing new currency but rather by issuing bonds (although this section of Ackerman's proposal is not actually totally developed), and I am not advocating that this program should necessarily force business owners to sell at a certain point.
Rather than having private groups be the shareholders, the investors in this equity fund would be limited to public-sector organizations: pension funds, rainy day funds, etc. The fund would basically work like a bank: it would use seed money from its investors, and use this as a backing to go about and borrow money. It would use this money to buy equities and other ownership stakes. And the public would be a direct beneficiary.
Other people might object that Fannie and Freddie and other government sponsored entities were failures. But the problem was more that the taxpayer only picked up the losses: when they were making money, these profits went to private institutions. (Insert Stuff about objections to Fannie/Freddie -)
Separation Two: Consumption and Ownership
This program, of course, would still leave a substantial amount of the means of production in private hands, and so no doubt socialists at this points will object that this is not really a form of socialism at all. The rich are left with the large proportion of the means of production in their hands.
Of course, as the public ownership increased, the percentage of public ownership would as well. But is still the case that some portion of the means of production would be privately owned. This may, however, be a good thing. In order to ensure a continually functional capital market, it is necessary to have multiple participants, and this would mean multiple participants. Indeed, one of the features of Ackerman's proposal that is problematic is that, aside from its general vagueness, it is not clear how a functional capital market would exist once everything was basically owned by a single player. So we would need to have a fair number of participants, more than likely.
So we both need to keep capital in private hands while also encouraging thinking of it as a public good. The way to do this is to separate ownership from consumption, something that can be achieved through tax policy. We need many individual managers of the means of production, but at the same time we do not want them to have unrestricted access. The difference between a manger and and owner is that the manager still has to ask permission to use the resource for his personal gain. Of course, ownership is precisely what we are trying to encourage, so we would have to focus here on the personal gain aspect. The way to do this would be to switch to a consumption based system of taxation, and to one with a heavy progressive element.
The first priority would be to implement a series of taxes that are not only economically efficiency but perhaps even necessary for our survival: I am thinking of, first and foremost, a carbon tax, one that was sufficiently high to reduce carbon emissions the requisite amount. After this, we could consider some other types of consumption tax: a tax on other forms of pollution, a processed food tax, a tax on alcohol and tobacco, a tax on newly legal marijuana, on congestion, on natural resources, and land rents, and so on. All of these taxes are economically efficient and will raise money.
In order to gain the requisite money to finance the various proposals, though, we would likely still need more money. The way to fill this gap would be with a progressive consumption tax. We would count income, subtract savings and investments, and then figure a tax that sharply increased after the first 50000 dollars of consumption. Furthermore, we could have a higher tax rate on consumption funded by sales of capital assets than on income. This would be economically, but more importantly it would create and perpetuate the norm that individual wealth is something the people have the right to consume only up to a point: beyond that, they would still be able to consume, but they would face steeper penalties. We could even, theoretically, have indefinitely increasing taxes on consumption funded by sales of assets--the tax rate could gradually rise to infinity.
Separation Three: Work and the Labor Market
One of the goals of social democracy was the right to employment. One of the main ideals of the Soviet Union was the requirement to labor: it was not simply that one needed to work, but that one had to work.
My proposal aims at something between the two: we don't want to see work merely as a right, a kind of goodie that people are entitled to receive. This makes it seem like it is some kind of special treat. IN reality, work is just a requirement of the human condition, and work is something that we should both require of people and yet also recognize that they are always doing whether or not they participate in the labor market. We want to see work as a duty, without necessarily jailing people who we judge to be parasites not working toward the common good.
Separating the consumption of individuals from the wealth they own would be one step toward this: those who consume their wealth would not necessarily be able to consume their wealth as an inherent right. They would, in a sense, earn a certain amount of consumption each year, and while they would also be free to consume their wealth, they would pay a slightly higher consumption tax on it, and they would thus face discouragement from consumption.
On the other end of the spectrum, we want to recognize that a job is not a naturally occurring product of the labor market. A variety of tax incentives, for example, create what we think of as a "good job": tax breaks on employer provided health insurance, and regulations affecting the way this health insurance works, ensure that employees in certain circumstances receive a total package that we call a job. This comes not just with pay, but with benefits, and the satisfaction that comes from having a good career.
The notion of a job, of a career, often at one company that one pursues for his or her whole life, is a social construct. We can construct it for individuals who currently don't have this privilege as well. The difficulty, though, is to do so without excessive interference in the labor market. how do we do this?
As Edmund Burke noted, "labor is a commodity." Any free market approach, socialist or otherwise, would had to recognize this fundamental fact. We still want business to encourage people to hire others for productive purposes so that the market directs individuals to where they are needed. One simple form of minimal intervention is to modestly raise the minimum wage. Studies have shown that raising the minimum wage modestly will not increase unemployment. We'd also want to establish stable monetary policy, such as an NGDP level targeting regime, in order to eliminate the business cycle as much as possible. This would help to encourage a vigorous, relatively high wage private sector employment.
This will lift the standards of the labor market part of the way up to the standards of meaningful work and that highly unnatural social construction we call a job. But it won't lift it the entire way. The other part of the task will be to boost wages further than the minimum wage can. That means wage subsidies such as the earned income tax credit. Every individual is already receiving a cash refund in advance from the government in the form of a generous basic income, so we are part of the way there. In order to encourage work, though, we would want to subsidize the lower income brackets fairly heavily through something like the earned income tax credit. We should also phase it out more slowly so more people are eligible for these subsidies.
Finally, for those who are failed by the labor market, we would want to offer them government jobs. We could pay these workers slightly less in order to discourage relying on this form of employment, but we could also focus on making this work more meaningful. These jobs could focus on things like community service. They could be determined in part by the needs of local communities. If a person could not find a job in the current labor market, they would at least still have meaningful work.
Conclusion: It's the Economic Norms, Stupid!
This plan is small-c conservative in the Burkean sense: it would lead to a gradual change, a smooth and non-disruptive increase in the public ownership of the means of production. It would also focus as much on norms and on values as on laws and formal structures of ownership: through encouraging people to think about their own wealth as a form of public trust, we would tend to see all non-personal wealth (anything above and beyond our own personal items, clothes, car, house, and other effects) as social goods. They would still be privileged to own these things, but they would not see them, at least to the same extent, as something that they had an inherent right to use for their own pleasure. Wealth would not exist to foster consumption solely, and while the wealthy could still support themselves with their wealth, they would owe that consumption not to an inherent right, but rather to the fulfillment of their social role, just as a worker would owe their consumption not to the vicissitudes of the labor market, but to the performance of his or her social duties.
The best thing about this plan is that such norms would begin to take hold once any portion of these separations were put into place. This path to socialism is not an all or nothing proposition, a way of thinking that has been so damaging to socialism in the past. Rather, each step would create a new sensibility, one that would help to cement a new understanding of the relationship between public ownership and private work, wealth, and labor. It may not even be necessary to enact all of these elements in the end, for any single one, in and of itself, could exert a powerful enough effect on norms to effectively bring many of the benefits of the other features of this plan.
This small-c conservative Marxism also should have plenty of appeal to the right and to libertarians. First and foremost, it puts entitlements on a sound footing by connecting their funding to the equities market. This will give the population a direct interest in a sound, productive economy. Furthermore, the population will be less susceptible to fallacies that lead to interventionism, because they will recognize the difference between a problem of distribution and a problem of scarcity: if the people own the means of production, they can always take advantage of them. But they will have to recognize that spending more of their wealth, as in the case of all individuals, will mean less in the future. It will also mean less investment and less growth, encouraging individuals to focus on programs that boost growth rather than redistribute resources. Finally, the policy will encourage the type of trust in the free market, and discourage the narrow economic resentments that are such a big part of poor economic policy. Conservatives, Marxists, and right wingers of the world unite: you have nothing to lose but your chains!
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