Socialism is one of the most misunderstood words used in our national conversation.
Usually it’s spat out like a four-letter word, the ‘queen- mother- of- all- swear- words’ in regards to an economic system. While there are some valid reasons to be wary of socialism, we miss the point that a certain amount of socialism has always been part of America’s economic fabric. In fact, there is a middle ground in every social structure that is quite conducive to socialism and it has proven to produce healthy, viable economies. It is my hope that we can embrace the fresh concept that socialism absolutely has a place in the United States economy. It is my belief that we cannot move forward as a nation until we do.
A quick examination of the basic meaning of the concept is necessary before we take a look at its stale interpretation. The original definition of socialism referred to the idea of an economic system whereby the government controls the production and distribution of goods. Socialism was suppose to be just a step – merely a simple step – between a capitalist society that Karl Marx saw as abusive towards most of its people, and a communist society that he held up as an ideal perfect social structure. In order to wrangle the free market society and transform it into a communal society, there had to be the necessary transitional step of socialism.
The entire world watched as the Soviet Union experimented with Marx’ ideas, implemented socialism as the road to communism and discovered that a communist society isn’t sustainable and would never be perfect.
It turns out that a free market really does do the best job of determining the production and distribution of goods because it turns out that governments are miserable judges of what the market wants and more importantly, what it needs. Slavenka Drakulic lets us in on the effects of government control of goods as it played out under Soviet control:
A friend, a Yugoslav living in Warsaw, told me that some years ago vinegar and mustard were almost all you could find in the stores. At another point, my friend noticed that shelves were stocked with prune compote. One might easily conclude that this is what Poles probably like the best or why else would it be in the stores in such quantities? But the reason was just the opposite: Prune compote was what they had, not what they liked. (How We Survived Communism and Even Laughed)
In a capitalist society, where only the demand of the Polish population dictated what was on store shelves, it is entirely possible that stores wouldn’t even carry prune compote! Instead the government took on the role of determining what goods ended up on store shelves and consumers were forced to comply with the decision. There was no choice in the matter.
Socialism, in the form of government control of goods turned out to be a disaster. Lesson learned.
NEWSFLASH! Fresh concept! Socialism, in the form of government controlled services turns out to be an inarguable success.
Services is another category altogether of human needs: National defense, education, local law enforcement, roads and sewers and electricity and water systems, pension programs, unemployment, and medical care all fall under the services category and without a doubt, a certain amount of government control and even provision of these services leads to healthier, more balanced and sustainable economic systems.
Much of this is due to the nature of the services industries. It just makes sense to have a central body managing things such as national freeway systems and education because the demand for these services is equal across the nation. We all need safe roads to drive on in order to go to work to get the money to spend on those goods and keep our free market thriving. We are all thankful to our local law enforcement agencies to keep our communities safe. We have all benefited from a public education system.
In the case of providing services, socialism works by allowing the government to collect our tax monies and then distribute them to pay for the services we all need and use. For example, the service of national protection – keeping our borders and skies and seas safe – is provided by the national government but paid for by its citizens (this particular service takes up over half of our tax dollars).
Over the course of the last century, most modernized nations, including the United States, have combined both capitalism and socialism for healthy, sustainable economic balance. Governments allow the free market to dictate the supply and demand of goods (capitalism) while providing its citizens with specific services that are needed by all (socialism).
Many would ask: Why not allow corporations to provide these services? The answer is quite simple: Just as we realized that government does a horrible job with determining market needs for goods, we must realize that private corporations do a horrible job with managing market needs of services.
Keeping criminals off the streets where they impose a danger to society is a service that has mostly been kept socialized by our government. Part of our taxes go to local governments to pay for prisons and jails and their upkeep. When this service is allowed a ‘free market’ approach and provided instead by a private corporation, corruption and unwarranted prison sentences become commonplace. Most private prison companies who contract with states do so with an elephant size string attached: keep our facilities full (some contracts call for a 90% capacity, some 100% capacity). It doesn’t matter that crime rates are down, prison cells must be occupied according to these private contracts. In some states, their government run prisons contain hundreds of empty cells, wasted space mind you, because criminals are housed in the private run facilities to ‘keep up their numbers’ according to contract. Wasted space = wasted taxpayer money. Under this system, we’ve also watched corrupt judges unnecessarily sentence teenagers to prisons because they get a monetary kickback from the corporation running the prison.
The service of providing water to American homes has typically been organized and administered by the government in a socialist manner. When this service is privatized by a corporation, our fellow citizens become victims of greed. A senior woman on a fixed income might be arbitrarily charged a two thousand dollar water bill for a month. She has no recourse to fight it. Under private/corporate ownership, the company isn’t mandated to keep records of water usage which means there are no official records to review in a court case.
Consider: the first and foremost goal of any corporation is to make money. This is their mission, their mandate, and their standard. By allowing corporations instead of governments to provide services to its national citizens we enable corporate greediness to the point that its citizens become victims.
The balance lies in a mixed economy where free market takes care of the goods in the best way possible and socialism takes care of services in the best way possible.
Socialism, in the form of government provided services, has proven to be a huge success, historically and across all nations. I would add that there is another layer to the idea of socialism that plays a vital role in successful economies.
At its simplest explanation we can reduce the term socialism to simply mean government interference. The news is full of corporate owners and free market supporters who loudly complain about any attempt at government interference or what we know as ‘regulations’. Their claim is that regulations strangle the economy by interfering with free market principles.
Yet government interference in the form of some regulation of the free market is absolutely necessary and has been a part of our national fabric since our nation’s first settlement in Jamestown. Tobacco was the big product back then, and though the free market was allowed to manage the price of the crop and its distribution, local governing bodies were still forced to impose regulations to keep the market balanced.
Without regulations, economic sustainability and balance are impossible to achieve. Our current system demonstrates this concept perfectly since the gradual loosening of regulations is a direct cause of the damaging cycle of bubble economics that we are witnessing (see Epstein, Palley, Krippner, Taibbi, and Lewis).
For consideration purposes, I would add a personal observation for the need of some government interference in the free market system: We humans can be selfish bastards and as such it’s perfectly acceptable to set boundaries.
If we take the time to read the transcripts and backroom dealings of these bubbles, the element of absolute human greed involved in the process becomes obviously apparent (see Klein, Lewis,Taibbi). There is nothing wrong with having regulations in place to provide disciplined boundaries for that greed. Without them, national economies become unhealthy and imbalanced at the hands of just a few people.
History has proven time and again that a mixed economy of capitalism and socialism is best business practice for a nation. There really is no argument over the matter, the numbers are in, the tally has been taken. It is time to embrace a fresh concept of socialism and its place in American economics. We will remain stale, we will become moldy, we will lose our value if we do not – and the Financialization Revolution will have reached its objective of turning the United States into a third world nation.