Why “Socialism” is Not the Argument You Are Looking For: American Capitalism and Socialism is a Both/And, not an Either/Or.

Accusations of “socialism” are particularly popular right now. Here’s why everyone needs to calm down and think: bank accounts, bond market, public works, corporate law, and much else.

Starting with Webster’s would be too easy: it would be no fun simply to point out that, obviously, no one reading this post on Medium (or originally Facebook, a private company with a net value of a half a trillion dollars; note: value you personally create for it to privatize) can seriously claim that we exist anywhere near, as Webster says, “a system of society or group living in which there is no private property” or “in which the means of productions are owned and controlled by the state.” Conversation over — because obviously this is a privatized conversation, right?

No. That would be no fun. Let’s make the argument a bit harder. Let’s say Wittgenstein is right about words: the meaning of a word is how it is used. If that is true, there is no clear definition for what the term socialism means at present. Sometimes the s-word means that your uncle doesn’t like taxes and sometimes it means for scholars of political economy, well, what Webster said: the government owns and controls the means of production (raw materials, facilities, factories, tools, etc.). These are very different uses. So, before determining where we end, let’s pause on to remind ourselves of a few basic facts around the accusation of socialism.

The first line of “American economy” Wikipedia article claims that the US economy is a “highly developed country with a ‘mixed economy’” (my emphasis). You cannot even get one sentence into the most public resource on the US economy without tripping over actually existing socialism (not bugbear scare tactics).

(If you want to dismiss this claim because it comes from Wikipedia, go ahead and try to edit out that line: we can wait. Until then, Wikipedia is perfectly fine place to begin as well as a bad place to end one’s search for highly vetted public knowledge.)

What does “mixed economy” mean? The history of American economy is a history of attempts to combine socialist and capitalist economic ideas in the development and exploitation of our country’s many resources. That history is the best (and probably shortest) way to describe how the US has become such an economically “highly developed country.” Capitalist and socialist practices, or the combination of private enterprise and public welfare, have been uneasy yet productive partners for well over two hundred years. The wealth of the modern world has been built on their combination, not their opposition. Anyone who says otherwise can be safely ignored. It’s not an either/or, it’s a both/and.

Here are some examples of how our economy depends on capitalism and socialism not being separated.

A. Like your FDIC-insured bank account? If the bank fails, the government will bail you out. The state compensating you for a market failure is an example of mixed socialist-capitalism and please note: this is a form of public-insured finance that principally benefits the monied classes.

B. Like the bond market, where the government sells you notices of debt in a countercyclical check to the stock market? This is another obvious example of how the stock market — perhaps the pinnacle of abstracted capitalism — is matched and shadowed by a complementary, not antagonistic, public market of government-insured debts. When I read about Alexander Hamilton, I do not think “socialist” and yet, there it is. The financial system he helped design is inseparable from the state. Note again: public finance principally benefits the already wealthy.

C. Like the US military, where the state gives top-down command and control orders over a clear state-mandated mission? Consider our valiant soldiers, whose retirements are guaranteed so long as they return all the state property, do not vary from the military line, and wear the uniform. Does this not sound socialist? Well, it’s not only socialist either: consider the billions in private contracts profit off of the military budget. Here’s the rub: we should and must be proud of our soldiers — and that requires, you guessed it, not knee-jerk reacting to the fact our military is also perhaps the most obvious example of American socialism-capitalism today.

D. How about countless public work projects? The interstate high system, the Hoover dam, national parks, and public parks? Or, public education, the firefighters, the emergency response teams, the ambulances, emergency room visits, and public libraries? Doctors and forest rangers do not strike me as particularly nefarious socialists, and yet, by virtue of the fact they get paid in part by the government, they must be for those allergic to all forms of socialism.

E. How about the law? Imagine a world in which private capital and the state were fully separated — imagine, in other words, the natural consequences of every capitalism-only argument. Lawyers, as interpreters of the state codex, would only be paid by the state; no company would have an in-house council. As tempting as it would be to imagine the bankrupting of some corporate lawyers (you know who you are), this thought experiment is basically unthinkable. The mere existence of a billion-dollar corporate law industry drives home the same point: the state (the law) and the market (corporations) are not separate. In fact, perhaps the most common fact in the history of corporations and states is just how long they have been digging around in one another’s pockets. Perhaps the first formal international corporation in the world was an extension of the British state and empire — and its attempt to exploit natural resources from its colonies in India. Perhaps the first international corporation in America, at least, is also the US State Department.

F. Medicaid and other public-private partnerships: I doubt many exclusive capitalists would be willing to give it up. Public-private partnerships have helped. out the US and EU economy for centuries. Much of that growth has since been unevenly distributed: no surprise, the combination of socialism and capitalism has historically advantaged the wealthy. In other words, it is both true that the net historical prosperity in the US is due to the combination of public and private interests, and, at the same time, that uneven division of that growth in favor of private over public interests has itself been a product of careful, non-panicked public-private interests combinations, both public-oriented and private-serving.

So why then do we insist on marshaling so loudly capitalism as the opposite of socialism, when in fact they are much more like the hydrogen and the oxygen that compose the water of our economy? (To spell out that analogy: hydrogen and oxygen do not determine whether water is used for good or bad, but their precise combination does determine the nature of water itself; similarly, the precise combinations of socialism and capitalism does shape the US economy — and who benefits from that economy.) In order for the idea of the cold war to endure in the minds of two generations, it needed to invent a convenient allergy of us vs. them ideologies: Soviet socialism vs. American capitalism. Americans were taught to detest socialism publicly without acknowledging that, in practice, military Keynesianism was powering the US economy to victory in World War II, or that state investments in science and technology were state-subsidizing the space race and information race that defined that very opposition. (Similarly, the Soviets were taught to detest American capitalism without realizing that their billowing informal or grey economy — worth as much as a third of the Soviet GDP by some counts by the end — was among the least regulated and most competitive in the world.)

If the cold war were a duel between two cowboys facing off on a dusty main street at high noon — one with a black hat, the other, a white hat — here’s the plot twist: the camera zooms out and suddenly we realize the main street itself is built out of a mix of black and white hats: there are grey and colorful hats everywhere. That’s the cold war. The ideological opposition of capitalism and socialism is a useful analytic heuristic, but in practice, that duel is also mostly nonsense, then and today.

So what should we do now? Four suggestions.

Just breathe: neither socialism nor capitalism is bad or good in itself. It depends on how they are used — and in the US and most other highly developed countries, they are almost always used together. (Most of the scary counterexamples of where Marxist socialism went dreadfully wrong — Russia, China, Lao, Cuba, etc. — come from not highly developed countries; most avowedly socialist governments — PDR, Nicaragua, Sri Lanka, Nepal, Bangladesh — do not enjoy highly developed economies, but do enjoy growing economies; meanwhile, most highly developed economies — Germany, the Nordic countries, the US, and increasingly Vietnam and China — are also mixed economies.) Sometimes they serve the most people (that’s public or social), sometimes they serve the people with the most (that’s capital). Most of the time, they do both in uneven measure.

Just stop reacting to (or spreading accusations of) “socialism” as a category. Paying taxes is by definition not socialist: taxes, or what Oliver Wendell Holmes called the price of civil society, do not exist in either a fully socialist or capitalist society. We pay taxes as the aqueduct for transferring wealth between the stores of private capital and the public good. This, again, does not mean that all taxes are good or bad. It means that taxes exist because our economy is neither socialist nor capitalist: taxes exist because it is both.

Do not reject or embrace socialism as a term. Instead, let’s just focus on calmly assessing the values and the evidence surrounding the idea at hand. The thoughtful, careful, self-checking matrix of socialism and capitalism is exactly what already built America, the prosperous and the exploitative alike. It is American, very American, to keep up that tradition.

Meanwhile, remind everyone with ears to hear. The cold war ended thirty years ago: neither capitalism nor socialism triumphed; in retrospect, everyone lost the cold war: Russia was arguably more shock-therapied capitalist than any other country in the world in the 1990s, and the US still does not have the language to check the excesses of its old and own bugbears. Instead, let’s be sure to inoculate ourselves against generational wishful thinking: let’s help one another — the average Facebook user and our aging congressmen alike — stop conjuring tired arguments that resonate from a halcyon youth when the world made sense? (Hint: it didn’t.)

Fighting yesterday’s bad guys won’t make our backaches go away. Using a combination of hot and cold water (the economy) wisely might help, though.

It’s time to set aside the scare tactics — and to assess ideas based on their values and the evidence.


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Ben Peters

Media prof (TU), author, editor, theorist, historian, ultimate frisbeeist