Archive for the ‘Socialism’ Category

Dont Call Scandinavian Countries Socialist – Foundation for Economic Education

One of the great delusions of our day is that Scandinavian countries are socialist and so America should be socialist too. Senators Bernie Sanders and Elizabeth Warren and others of the ultra-Left repeatedly claim that Norway, Sweden and Denmark (sometimes they include Finland and Iceland too) are prosperous because they are socialist.

Lars Rasmussen knows better. As Danish Prime Minister, he declared in 2015, I know that some people in the U.S. associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.

A market economy is a capitalist one in which property is largely private and prices are free to reflect supply and demand. It is synonymous with free enterprise. In a socialist economy, by contrast, government owns or controls the means of production and heavily regulates and redistributes everything else. We sometimes call that a planned or command economy because the plans of market participants are bulldozed by the commands of those in political power.

The Heritage Foundations annual Index of Economic Freedom is one of two excellent sources for comparing how capitalist or how socialist a country is. The US, which showed up among the top ten (freest or most capitalist) for years, now ranks #25 in the latest (2023) Index. Denmark and Sweden are more capitalist than America, at #9 and #10, respectively. Norway comes in at #11. Nearby Finland, technically not a Scandinavian nation, checks in at #12. The worlds socialist countriesCuba (#175), Venezuela (#174) and North Korea (#176)are at the other end of the scale; and not by coincidence, they are also among the very poorest.

The other go-to source is the Fraser Institutes Economic Freedom of the World Index. The methodologies and categories of the two indices differ somewhat, producing in turn some differences in country rankings, but the findings are broadly similar: In Frasers most recent Index, Denmark is #10, Finland is #21, Norway and Sweden are tied at #37. Iceland, like the other four a Nordic nation, ranks #19. At #6, the US does better in the Fraser Index than it does in the Heritage Index.

Type Scandinavia socialism or Nordic socialism into the search engine at FEE.org, and youll find numerous articles that address the misinformation on this topicarticles not authored by charlatans, demagogues and class warriors who deploy obsolete data, but thoughtful and well-researched pieces by actual economists and native Scandinavians who know what theyre talking about.

The allegedly socialist countries that seem to work do so not because of the socialism they have but because of the capitalism they possess in abundancestrong evidence that the freer economies are, the better off the people are. Go full socialism and you get a miserable basket case such as Venezuela. The fact is that while Nordic nations dabbled in welfare-state style socialism a half-century ago, they learned some lessons from the resulting stagnation. They reversed course. They are now among the freest, most capitalist countries on the planet according to both the Fraser and Heritage Indexes.

Ive said it before and Ill say it again: Socialism devastates an economy until some form of capitalism is allowed to rescue it. Thats the story of such places as post-war Japan, Hong Kong, and Germany. I can think of no instance in all of history in which capitalism produced economic disaster that socialism subsequently remedied. It just never happens, and that should be totally predictable. Socialism offers no theory of wealth creation; its nothing more than crackpot schemes for the concentration of power and income redistribution, robbing Peter to pay Paul for Pauls vote.

Free markets and small government made Sweden rich, explains Swedish economist and Cato Institute fellow Johan Norberg. The experiment with socialism crashed us.

In another revealing article Norberg quotes a top Swedish official:

Voicing a conclusion of people across the political spectrum, the Social Democratic Minister of Finance KjellOlof Feldt stated That whole thing with democratic socialism was absolutely impossible. It just didnt work.

Nima Sanandaji, author of Scandinavian Unexceptionalism, tells us that Nordic societies did not become successful after introducing large welfare states. He writes,

They were economically and socially uniquely successful already in the mid-20thcentury when they combined low taxes and small welfare states with free-market systems. Over time, the generous welfare states of Nordic nations have created massive welfare dependency, gradually eroding the strong norms of responsibility that undermine the region's success. This, combined with the growth-reducing effects of a large state, explains why Nordic countries have gradually, over the past decades, moved towards less-generous welfare, market reforms, and tax cuts.

The Economistmagazine described the Scandinavian countries in 2013 as stout free traders who resist the temptation to intervene even to protect iconic companies. They are amongthe easiest countries to do business in. Through tax cuts, deregulation, and privatization, theyve dismantled much of the socialism that nearly ruined their economies.

The claim that socialism is alive and doing well in Scandinavian countries is shameless propaganda, hopelessly wrong and out of date. Those who make such ridiculous claims betray their real agenda of government control by never telling you these facts: 1) Sweden has a 100 percent nationwide school voucher program for schooling instead of the costly, underperforming socialized education system we have here; 2) None of the Scandinavian countries has a nationally-imposed minimum wage law; 3) Scandinavian countries all have lower corporate income tax rates than the US; and 4) In these nations, property rights, business freedom, monetary freedom, and trade freedom are strong, as Sanandaji points out. The same folks hawking Scandinavian socialism never tell you to check out those Fraser and Heritage indexes either.

For more on this topic, see Socialism: Force or Fantasy, especially the recommended readings at the bottom. Dont miss this additional and very important point: So-called democratic socialism is at war with itself; the longer and deeper that any nation pursues it, the more the socialist aspect squeezes out the democratic part. Whenever they come to power, democratic socialists steal not only your stuff but anything they can get their hands onelections, the media, the schools, your children, even your vocabulary.

The Nordic countries of Denmark, Norway, Sweden, Finland and Iceland have generous welfare stateswhich they have purposely been reducingbut its not socialism that pays the bills. As always, capitalism pays the bills that socialism piles upthat is, until, as Margaret Thatcher put it, the socialists run out of other peoples money.

This article was adapted from an issue of the FEE Daily email newsletter. Clickhereto sign up and get free-market news and analysis like this in your inbox every weekday.

I have my own way of expressing that same truth: The only thing socialism does for poor people is give them lots of company. Or, Socialism irons out the business cycle by eliminating the boom part.

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Dont Call Scandinavian Countries Socialist - Foundation for Economic Education

China, Laos jointly promote the cause of socialism: Senior diplomat Wang Yi – CGTN

The successful development of China and Laos is the success of the socialist cause as China and Laos are both socialist countries under the leadership of their respective communist parties, and share the same ideals, beliefs and pursuits, Wang Yi, director of the Office of the Foreign Affairs Commission of the Communist Party of China (CPC) Central Committee, told Lao Deputy Prime Minister and Minister of Foreign Affairs Saleumxay Kommasith on Monday.

Wang, also a member of the Political Bureau of the CPC Central Committee, called on the two sides to implement the strategic consensus reached by the top leaders of the two parties and countries, carry forward the traditional friendship, deepen political mutual trust, and synergize development strategies to lift bilateral ties to a new level.

He noted that as a socialist country, China is willing to work with Laos to firmly support each other in safeguarding their core interests, oppose external interference and containment, strengthen governance exchanges and deepen practical cooperation, Wang added.

He also mentioned the China-Laos railway, saying the two countries should fully leverage the role of the railway as a model and bond, and speed up the building of the China-Laos Economic Corridor, so as to bring benefit to the peoples of the two countries.

"China is ready to work with Laos to uphold ASEAN centrality, uphold open regionalism, safeguard our shared home, and create a better environment for regional development and revitalization," Wang said.

For his part, Saleumxay said Laos is ready to strengthen cooperation with China in various fields, jointly build a high-quality Belt and Road, construct a Laos-China community with a shared future, and promote the development of the cause of socialism.

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China, Laos jointly promote the cause of socialism: Senior diplomat Wang Yi - CGTN

Is a capitalist-socialist economy inevitable? – Big Think

There are a number of economic problems facing our society. Income inequality, both within and between nations, is rising to levels seen in the 14th century. The side effects of many industries, such as pollution, exploitation, and other social harms, continue to devastate large parts of the world. And an increasing number of people are having trouble making ends meet while being surrounded by material wealth.

As the debate around these problems and potential solutions continues, it begs the question: Is a capitalist-socialist economy inevitable? A few Big Thinkers have weighed in on the topic.

The current economic system simply isnt working for a lot of people, according to Timothy Snyder, the Levin Professor of History at Yale:

The United States is a country which is among the least equal in the world. According to Credit Suisse, which is a Swiss bank and not some kind of crazy left-wing organization, we are second in the world in wealth inequality after the Russian Federation. In the United States since the 1980s, basically 90 percent of the American population has seen no improvement in either wealth or income. Almost all of the improvement in wealth and income has been in the top ten percent and most of thats been in the top one percent and most of that has been in the top 0.1 percent and most of that has been in the top 0.01 percent, which means that not only are people not moving forward objectively, but the way they experience the worldand this is very powerfulis that other people are on top.

That the economy isnt working for everyone isnt a new idea. Still, according to author Anand Giridharadas, the notion that markets would fix all has been pushed even when the evidence against it is at hand:

There is a way in which American elites, and this is not just a couple of greedy hedge fund billionaires, the American intelligentsia also has been complicit in a false story. Rich people and wealthy corporations spent a generation waging a war on government, defunding government, allowing social problems to fester and allowing their own profits to soar.I was sitting in Michigan in Econ 101 and I remember getting this lecture on how all this stuff was for the good and we would be better off. And right around us, all around us in Michigan in 1999 the state was falling apart.

Dr. Ioannis Yanis Varoufakis, former Minister of Finance for Greece and currently a left-wing member of that nations parliament, told Big Think that the failures of our current system affect everybody:

We have billions of people working like headless chickens, driving themselves into depression and going home and crying themselves to sleep at night if they have a job, or consuming antidepressants and becoming obese and seeing shrinks if they dont have a job. In the end, we have a joyless economy. Even those who are extremely powerful, in theory, the haves of the world, are increasingly feeling insecure. They have to live in gated communities because they fear all the have-nots out there that envy their wealth. In the end, we have developed fantastic means of escaping need and escaping want which we are not putting to good use because, in the end, we are developing new forms of depravity and deprivation and universalized depression, psychological depression, which is incongruent with our fantastic advances at the technological level.

So, now that were discussing alternatives to neo-liberalism, what options are on the table?

The current economic system favored by most industrialized countries is the mixed economy. This is best described as a capitalist system with elements of a planned economy thrown in. Its nothing new; versions of it predate Rome. The question being debated in most countries is not whether there should be a mixture of markets and state intervention but rather what that mixture should be. Today, we are in an era where freer markets and less intervention are popular approaches, but this is a fairly new development.

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A few decades ago, even capitalist countries employed planning. For example, in France, the government guided the market-centered economy through the use of indicative planning, a type of economic planning in which the government sets general targets and priorities for economic development but does not directly control the production and distribution of goods and services. This policy was in effect for decades now known as the Thirty Glorious Years. Similar policies existed in Japan and India.

In the Nordic countries and China, the state owns or controls a large share of many enterprises. In Norway, the oil industry is owned by the government and actively invests in other companies. While state ownership has declined in Scandinavia, the various national governments still own many businesses across many industries. In the southern United States, the federal government still owns and operates the Tennessee Valley Authority.

Even the more market-oriented countries rely on state intervention such as regulation, welfare, and macroeconomic policy to correct market failures. Moving to a model with more intervention would be fairly easy in terms of policy implementation. Weve done it before, it is merely a question of if we want to again.

Most major economies today are operating on a blend of capitalism and socialism. Given the problems many industrial economies face today, a reevaluation of which blend we are using may well be in order. Dr. Varoufakis party calls for market socialism. John Fullerton has pushed for a re-imagination of how we approach economics and recently wrote a book on regenerative economics. Wendell Pierce, an actor and businessman, considers himself a true capitalist while also calling for increased social services, such as improved public education.

Whatever we pick, wed do well to remember the words of former Chinese leader Deng Xiaoping: It doesnt matter if a cat is black or white, so long as it catches mice.

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Is a capitalist-socialist economy inevitable? - Big Think

A Socialist Judge Is a Contradiction in Terms – Econlib

The decision of a Russian court to keep Wall Street Journal reporter Evan Gershkovich in jail suggests a few reflections. I put court in scare quotes for reasons to be explained below. Political economists are interested in such issues because they widely consider an impartial justice system as one of the essential institutions of a free and free-market society.

The Wall Street Journal writes (Russian Court Upholds WSJ Reporter Evan Gershkovichs Detention, April 18, 2022):

The hearing was held behind closed doors, as is typical for most hearings connected with espionage charges. It is also exceedingly rare for defendants to win appeals or be acquitted in such cases in Russia, where espionage laws are increasingly wielded for political purposes, according to Western officials, activists and Russian lawyers.

Russias Federal Security Service, the successor to the KGB, said the journalist acting on the instructions of the American side, collected information constituting a state secret about the activities of one of the enterprises of the Russian military-industrial complex.

Thats what journalists from free countries do, isnt it, even without instructions of the American side?

In my review of Volume 2 of Friedrich Hayeks Law, Legislation and Liberty, I emphasize why the Nobel economist considered a socialist (or fascist) judge as a contradiction in terms (see also his The Constitution of Liberty):

Hayek wages a frontal attack against the doctrine of legal positivism, represented by Hans Kelsen, John Austin, and other legal theorists. The doctrine claims that law is simply what is decreed by the sovereign. As Thomas Hobbes put it, no Law can be Unjust. In the same vein, Soviet legal theorist Evgeny Pashukanis, wrote that under socialism laws are converted into administration, all fixed rules into discretion and utility. Not protected by law, Pashukanis was later eliminated by Stalin. Contrary to state decrees, Hayek argues, law can only be made of general rules that meet general agreement among the public.

Quoting Hayek directly Volume 1 of the same work:

[A judges] task is indeed one which has meaning only within a spontaneous and abstract order of actions such as the market produces. A judge cannot be concerned with the needs of particular persons or groups, or with reasons of state or the will of government, or with any particular purposes which an order of actions may be expected to serve. Within any organization in which the individual actions must be judged by their serviceability to the particular ends at which it aims, there is no room for the judge. In an order like that of socialism in which whatever rules may govern individual actions are not independent of particular results, such rules will not be justiciable because they will require a balancing of the particular interests affected in the light of their importance. Socialism is indeed largely a revolt against the impartial justice which considers only the conformity of individual actions to end-independent rules and which is not concerned with the effects of their application in particular instances. Thus a socialist judge would really be a contradiction in terms.

In my review, I wrote:

I would add that this crucial point would also apply to a fascist judge, and Hayek would certainly agree.

This is why Russian courts are courts in name only. They are instruments of government policy. For the same reason, what the apparatchiks call law is synonymous with government commands, its not law in the classical sense. When Vladimir Putin is said to be a trained lawyer, the second term also cries for scare quotes. When Putin said that he wanted a dictatorship of the law, he meant nothing more than a dictatorship of the dictator (and perhaps of the majority). In Russia, this is not new. Their plagiarism of Western law is a Potemkin village.

Was Gershkovich a spy for the American government? I dont know, but I know two reasons why it is very unlikely. First, the Wall Street Journal has a reputation and a brand-name value to maintain, which serving as a CIA cover would destroy. After all, the WSJ is not Fox News even if, alas, the two publications have shared a common ownership since late 2007. To sell information, as opposed to entertainment or confirmation bias, a financial newspaper needs to be, and perceived to be, independent. The second reason is that we cannot count on the unrestricted liars in the Russian government nor on their judicial minions to tell us anything useful about journalistic activities.

It is true that, over the last 100 years or so in history of the free world, the law has not moved in the right direction, as Hayek detected long ago, even crying wolf too early in the opinions of some. Like virtually everything, the liberal rule of law is a matter of degree, at least up to a point. But there is no doubt that Western countries are still freer than Russia, which is why you read this blog. Like many economists who have studied the question (including James Buchanan and, yes, Anthony de Jasay too), we should continue to defend the endangered ideal of (classical) liberalism.

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A Socialist Judge Is a Contradiction in Terms - Econlib

Karl Marx Knew That the Struggle for Reforms Was Part of the … – Jacobin magazine

Last week, the New Left Reviews Dylan Riley published a brief, barbed polemic against those adherents of neo-Kautskyite socialism a tendency with which this magazine is reputed to be associated who cling to illusory visions of new New Deals, green or otherwise.

Riley was categorical: No socialist should advocate an industrial policy of any sort. Any future attempted New Deals will prove self-defeating. And those who dont see this have fallen victim to a fatal error: theyve failed to reckon with the structural logic of capital.

Rileys admonition is a reminder of the strange itinerary that the structural logic of capital has traced over the past century and a half. Karl Marx was the great pioneer of the concept of course. His lifelong intellectual project was to uncover the systems inner laws of motion and then to ask: If you have a society propelled by such inner dynamics, in what direction is it likely to go?

His answers to that question almost always involved some mechanism by which capitalism could be shown to be undermining itself or preparing the ground for socialism: Competition bred ever-bigger factories that required ever-more sophisticated planning of production. Capital accumulation gathered up scattered proletarians from the global countryside and concentrated them in crowded factory towns where they could learn of their common interests and organize against the system. And so on.

For Marx, reform was another of these dialectical boomerangs. Capitalism could not stop breeding movements to reform capitalism. These movements had the effect of strengthening the political muscles and sense of self-efficacy of the working class, and this, for Marx, was yet another example of the system putting shovels in the hands of its own gravediggers.

The leading instance of such reforms in Marxs writings was the English Ten Hours Bill (in its several iterations), the object of a great working-class movement in the era of Owenism and Chartism a thirty-years struggle fought with admirable perseverance, as Marx recounted in his 1864 inaugural address to the International Workingmens Association.

And he was unequivocal about the outcome: the reform legislation limiting the length of the working day had been a smashing success. The immense physical, moral, and intellectual benefits hence accruing to the factory operatives, half-yearly chronicled in the reports of the inspectors of factories, are now acknowledged on all sides.

But besides all this, the movement yielded another great benefit.

Throughout the struggle for ten hours, a constant line of attack by bourgeois writers opposed to the reform had been that, if enacted and enforced, the legislation, by driving up production costs, would spell economic calamity for British industry harming the very factory hands it was designed to protect.

In other words, though they may not have used the phrase, the bourgeois opponents of the Ten Hours Bill were appealing to the structural logic of capital to demonstrate the folly of the reform.

For Marx, one of the great achievements of the ten-hours agitation on a par with the actual improvements in the health and happiness of the workers that resulted was precisely how it discredited that kind of critique, and how it vindicated the idea of social production controlled by social foresight even within the bourgeois mode of production:

There was something else to exalt the marvelous success of this workingmens measure. Through their most notorious organs of science, such as Dr. Ure, Professor Senior, and other sages of that stamp, the middle class had predicted, and to their hearts content proved, that any legal restriction of the hours of labor must sound the death knell of British industry, which, vampirelike, could but live by sucking blood, and childrens blood, too. . . .

This struggle about the legal restriction of the hours of labor raged the more fiercely since, apart from frightened avarice, it told indeed upon the great contest between the blind rule of the supply and demand laws which form the political economy of the middle class, and social production controlled by social foresight, which forms the political economy of the working class.

Hence the Ten Hours Bill was not only a great practical success; it was the victory of a principle; it was the first time that in broad daylight the political economy of the middle class succumbed to the political economy of the working class.

If any structural logic of capital was at work in the saga of the ten-hours movement, for Marx, it lay in capitals endemic tendency to generate reform movements in opposition to itself not, as the middle-class sages of science had claimed, in condemning any reform measure to futility.

If we fast-forward a century or so, however, we find these intellectual positions drastically reconfigured.

By the middle of the twentieth century, the political economies of the industrialized world had been transformed by forms of state intervention that Marx and his comrades in the International Workingmens Association could scarcely have imagined. Wide swathes of industry were nationalized. Wage schedules were set in national agreements. Capital-controlled banking systems were under the thumb of national central banks, now accountable to finance ministries that answered to parliaments elected by universal suffrage. Governments committed to full employment held jobless rates to levels once thought impossible.

Intellectuals on the right wing of the socialist and labor movements neo-revisionists like the British author and politician Anthony Crosland began claiming that in this new era of full employment and uninhibited economic management, capitalism had ceased to be capitalism and the workers movement no longer needed to push for any deeper transformation beyond an endless series of piecemeal reforms.

It was in this context, in the 60s and 70s, that self-consciously revolutionary writers on the Left seized on the notion of a structural logic of capital as a weapon in the fight against the new revisionism.

If the capitalist mode of production can ensure, with or without government intervention, continual expansion and full employment, then the most important objective argument in support of revolutionary socialist theory breaks down, wrote David Yaffe, a key figure in the capital logic current of intellectual Marxism, in a 1973 article.

It was thus vital to furnish arguments showing why such a stabilization was impossible, and this was done in works by such writers as Paul Mattick and Roman Rosdolsky by plucking out of relative obscurity a suggestion that could be found in scattered passages of Marxs voluminous economic writings but had, until then, only occasionally been the focus of sustained consideration from Marxists: the idea of a lawlike tendency for the profit rate to fall.

The great nineteenth- and early twentieth-century defenders of Marxist orthodoxy, most prominently Karl Kautsky and Rosa Luxemburg, had been dismissive of falling-profit-rate theories on the rare occasions when they felt the need to acknowledge them at all, and certainly did not believe that such a tendency could be granted a central role in Marxist crisis theory. (Luxemburg was especially biting in her disdain for the idea. Responding to an enthusiast of the theory who had reviewed her Accumulation of Capital in a German socialist newspaper, she wrote: There is still some time to pass before capitalism collapses because of the falling rate of profit roughly until the sun burns out.)

But since the 1970s, the canonical status of falling-profit theory in the corpus of orthodox Marxism has become a kind of invented tradition. Its centrality in the pantheon of Marxist ideas, though widely seen as primordial, is no more than a few decades old, and its function has always been ideological: to demonstrate the futility, perversity, or jeopardy of social democratic reforms.

Ill save for a subsequent article a more thorough discussion of the various theories of falling profit including the novel version advanced by the UCLA economic historian Robert Brenner, which has become something of a house theory at the New Left Review over the past twenty-five years.

Suffice it to say that when the New Left Review invokes it to warn that the structural logic of capital will somehow render futile measures to promote green technologies, due to a massive exacerbation of the problems of overcapacity on a world scale, it illustrates the rhetorical dilemma of an anti-reformist left whose struggle against anachronism has forced it to stand Marx on his head.

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Karl Marx Knew That the Struggle for Reforms Was Part of the ... - Jacobin magazine