View from
The Left

Social Democracy and Capitalism: A Reply To Richard Burcik

If capitalism doesn’t work for us all, it doesn’t work at all.”

Introduction

Firstly, I would like to thank Richard Burcik for his recent letter to the editor of Merion West responding to my earlier piece previewing What Is Post-Modern Conservatism?: Essays on Our Hugely Tremendous Times for Zero Books. Mr. Burcik doesn’t comment on the major issue of the piece but took issue with my concluding comments calling for the emergence of a “robust social democracy.” To quote the respective section:

In my mind, [the only thing that can replace post-modern conservatism] can only be a robust social democracy, where wealth is distributed more fairly and citizens are granted greater opportunities to frame the laws that govern them. We should also be agitating for greater international cooperation and integration to meet the challenges of the 21st century like climate change, regional inequality, and persistent xenophobia. These steps must be taken if neoliberalism is to be transcended and the vulgarities of post-modern culture erased.”

Now, I should observe that the book previewed does not primarily make a moral or economic argument about the need for social democracy. Rather, it is a piece of cultural commentary concerning the need to stymie the socio-political, economic, and technological transformations which generate a reactionary post-modern culture. This includes the destabilization of identity brought about by neoliberal capitalism, and exacerbated by the imposition of constraints on democratic participation and rising levels of economic and political inequality. My book argues these transformations and the culture allied to them generate reactionary forms of post-modern conservatism which pose a serious danger to everyone from classical liberals to egalitarian leftists. Economic transformations are only a part-albeit a significant one-of this story. None the less, I will respond to Mr. Burcik on the terms he has established in the letter.

As far as I can discern, Mr. Burcik makes three major points in his op-ed. The first is that I have ignored the actual history of social democracy, which according to him has consistently failed to deliver the goods and often brought tyranny and impoverishment.  The second point is that narratives about income inequality are overstated. And the third is that individualism and market based systems have brought about tremendous wealth. I will deal with each in turn.

The History of Social Democracy

Mr. Burcik brings up an admirable number of examples to try and make his case that social democracy is flawed. Unfortunately, not many of them really pertain to social democracy.  At various points Mr. Burcik it doesn’t even seem like Mr. Burcik and I are really talking about the same thing. He refers to collectivism, then moves on to talking about socialist economies, Maoist and Marxist Leninist command economies, Baath style Arab socialism, revolutionary France in the 18th century, Indian “third way” blended economies under Nehru and others, “sub Saharan Africa,” the Nordic model economies of Sweden and Denmark, Latin America between 1998-2015 and so on. This is a bewildering number of case studies, and it would take a very thorough analysis to make sense of even a few of them.

But there is no need since very few pertain to what I, or most commentators mean, when calling for a social democracy.  A social democracy is a system a multiparty political system where private markets and ownership will continue, primarily to provide incentives for individuals to generate higher levels of wealth. This wealth will then be heavily taxed and distributed through a variety of state and international mechanisms to provide a high quality of life for all while ameliorating the disadvantages many individuals face for arbitrary reasons such as disabilities, discrepancies in natural talents and so on. 

Now admittedly, the kind of social democracy I would want would be more robust and participatory than even what one finds in the Nordic countries; with tax rates ranging well into 50 per cent with top marginal rates at 60 to 70 per cent and impressive civic cultures (something Mr. Burcik brushes past when discussing these countries in his op-ed). While I admire these states, I feel there is a greater need to push for further democratization of legislative and economic processes. But, in either case, no social democrat I know would call for a return to the command economies of the Soviet Union, with state ownership of most industries, or Baath style tribalist nepotism where industry and jobs are auctioned off by the state to independents for loyalty or to raise cash. I am not sure how to respond to the comments about sub-Saharan Africa or Latin America since there is little specificity to go on.

Some left wing governments in Latin America were failures. Others achieved important successes; for instance Lula, who Mr. Burcik briefly refers to, may have been brought down by a corruption scandal. But had he been able to run for election most polls suggest he would have beaten Bolsonaro, probably due in part because his redistributive policies did a great deal to help the country’s poor

Inequality

The second element of Mr. Burcik’s argument concerns whether inequality is rising and how we should interpret it. It is worth noting there are significant flaws to his approach. Firstly, he  ignores that many commentators are concerned not just with inequality in the United States, but inequality across the globe. Here the disparities between countries and the individuals within them varies depending on the comparators. A recent OECD report demonstrates that while inequality between rich and poor countries is generally thought to have shrunk, inequality within rich and poor countries has grown. Moreover the gap between the world’s richest people and the world’s poorest has increased dramatically

But lets look just at the United States for a moment, since that is the country Mr. Burcik focuses on. To support his argument that inequality is growing, Mr. Burick cites a 2013 blog post from “Political Calculations” which contends that the GINI coefficient measuring income inequality between individuals has remained mostly constant since the 1960. It is extremely unclear to me how the author of the blog came to this conclusion, given GINI coefficients are typically determined by measuring inequalities between households not individuals. Perhaps he is right, but we have no way of knowing how this conclusion was reached and whether it is trustworthy.

 If we follow most statistical analyses which measure the GINI coefficient between households, income inequality in the U.S. has risen sharply since the 1960s. A U.S. Census Bureau study published in 1996 noted that inequality between households had been increasing since 1968, a trend which continued through 2012 when the GINI index was at 0.476, and to 0.482 where it stood in 2017. So if we follow the interpretation of the data given by the U.S. Census, inequality between U.S. households has been increasing since the 1960s until now. And the GINI is of course only one metric for measuring the impact of economic inequality.

The gap between the life expectancy of the rich and poor has grown dramatically, inequality widens discrepancies in educational achievement, and of course it exacerbates political tensions as my original article pointed out. Mr. Burcik then concludes his paragraph by suggesting that the French Economist Thomas Piketty-not mentioned in my article, but still a good source-has changed his mind about the critique of inequality developed in his Capital in the 21st Century. Since Mr. Burcik provides no reference to this shifting position, so I am unsure what he means.  The most recent piece I’ve seen on Piketty from October 2018 sees him still talking about “rising inequality,” criticizing Donald Trump’s “pro rich” agenda and expressing support for social democrats and democratic socialists like Bernie Sanders. So, barring some pretty extensive evidence, I am unsure Piketty has undergone a road to Damascus worthy conversion from his earlier concerns about inequality. 

The rest Burcik’s argument on this point is difficult to make out. For instance, after condemning that left’s “baseless trope” regarding income inequality, he goes on to concede that inequality has increased between households and families, but tries to chalk it up to sociological factors. The single example brought up is the growing proportion of women who are unmarried, but have children. Burcik argues that this splits household income and results in each parent being poorer than they would have been together. But this is a flawed argument for a number of reasons.

Firstly, Burcik never really establishes how this “sociological” development is causally related to income inequality. He asserts that it is based on the assumption that a growing number split families will lead to greater poverty for both parents. Even if that were the case-which it may not be, at least for both parents-more evidence would be need to be presented.

Secondly, Burcik doesn’t look deeply enough beyond this data to the more complicated story. Just because people aren’t married when they have children, doesn’t mean this necessarily results in the “formation of two families.” For instance many unmarried people actually do cohabitate with their partner and share incomes, and the number has been increasing since 1968.

Thirdly, Burcik ignores the possibility than many of these unmarried people with children may well choose to get married later in life, whether to the co-parent of their child or someone else. This would naturally impact their income status quite dramatically, and mitigate the long term effect of being single Burcik stresses so heavile. So there are many reasons to be skeptical of the claim that a “single” sociological example can be relied on to tell us much about income inequality. Finally, this emphasis ignores the fact that many women at least may choose to not get married or leave marriages for a variety of reasons related to abuse. In such cases normalizing the increasing poverty such women may face by leaving abusive partners is at the very least highly problematic. 

In the last section, Mr Burcik cites an article listing the most of the wealthy people in history. The lesson to be drawn from this is that most of these figures are not alive today, which apparently suggests income inequality has always been with us. Firstly, that hardly suggests we need do nothing about it. If anything, it just testifies to how long we’ve let the problem go unresolved and undertheorized.

Moreover, the list doesn’t even really suggest what Mr.Burcik claims it does. He ignores that three out of the 10 individuals listed as the wealthiest men in all human history lived during the highly unequal so called American Gilded Age, with another 4 living between the 20th and 21st century. Interestingly enough Piketty’s book on capitalism in the 21st century is largely about his fears that we are returning to the aforementioned Gilded Age, which suggests the list might give us pause. Few would argue we need a return to the conditions that enabled the butchery surrounding the Homestead Strike

Capitalism and the Production of Wealth

Mr. Burcik’s final point is that overall levels of wealth have been increasing the last few years. To support this argument his cites economist Raghuram Rajan’s claims in The Third Pillar: How Markets and the State Leave Communities Behind that we have never before been richer.  Unfortunately Mr. Burcik doesn’t also cite Professor Rajan’s more arguments about the need to tackle rising economic and social inequalities if capitalism is to survive growing attacks from the left and the right. Lastly, Mr Burcik references an article in The Economist referring to a recent jobs boom that has resulted in improving economic opportunities and labor conditions. This may well be true, and if so the development should be applauded. But as I will point out, it doesn’t really get to the point of my contention.

From Karl Marx onward no one has denied the tremendous capacity of capitalism to create wealth and raise the quality of living for many. The contention has always been on whether capitalism alone is responsible the improving quality of life we have seen since the Industrial Revolution, whether capitalism has flaws, and the extent to which we have principled and consequentialist reasons to compensate for these flaws.  Here I think the answers are fairly clear. Recent economic literature has increasingly moved away from the conceit that there ever was a golden period where markets existed without government interference; the state, international institutions and so on has always played a vital important in establishing the capitalist system.

This is true even of neoliberalism, as Quinn Slobodian points out in his great recent book Globalists: The End of Empire and the Birth of Neoliberalism. There was never a period of unadulterated individualism and market based systems, and certainly isn’t now as capitalism comes to dictatorial countries like China.  Secondly, capitalism has always had deep and serious flaws that have required serious intervention. Even Adam Smith recognized the necessity of these practices. From the Factory Acts passed in 19th century Britain to criminalize the employment of children to the institution of the minimum wage, markets have needed regulation and intervention to make sure they work for most people. 

This brings me to my last point, which is why we have compelling moral reasons to move past capitalism towards social democracy. Many people argue that we shouldn’t care about inequality as long as overall wealth increases, but I think that is deeply wrong. Firstly, the fact that tremendous wealth exists in the world that could be used to end endemic poverty and suffering means we are guilty of inaction and indifference if such efforts aren’t taken. Secondly,  what matters isn’t just that wealth increases, but as economist Amartya Sen would put it, that everyone actually benefits from greater wealth.

If capitalism doesn’t work for us all, it doesn’t work at all. If the wealth exists, we have no moral basis to ask people to simply live their lives in poverty to keep the alleged purity of the market system intact, promising them that one day things will get better for them or their descendants. GDP growth means nothing if only a few people actually benefit from it, while the remainder see their real incomes stagnate or shrink. This is why figures like Bernie Sanders and Pedro Sanchez are inspiring, and we should work to achieve their vision of a fair social democracy that leaves no one behind.

Matt McManus is currently Professor of Politics and International Relations at TEC De Monterrey. His book Making Human Dignity Central to International Human Rights Law is forthcoming with the University of Wales Press. His books, The Rise of Post-modern Conservatism and What is Post-Modern Conservatism, will be published with Palgrave MacMillan and Zero Books, respectively. Matt can be reached at mattmcmanus300@gmail.com or added on Twitter via @MattPolProf.

6
Leave a Reply

avatar
4000

This site uses Akismet to reduce spam. Learn how your comment data is processed.

newest oldest most voted
Darren Iversen
Guest
Darren Iversen

“Recent economic literature has increasingly moved away from the conceit that there ever was a golden period where markets existed without government interference; the state, international institutions and so on has always played a vital important in establishing the capitalist system.” Yes, if your frame excludes the system from which capitalism grew; the feudal state established the faulty practice of taxing labour and capital in order to exempt land. Due to the existential importance of land this transmits huge imbalances into capitalism. This is why the state has to “intervene” – it has to put on a show of patching… Read more »

richard W. burcik
Guest
richard W. burcik

I thank Prof. McManus for his thoughtful and cogent response thereby proving yet again that people can disagree respectfully. My first repost to Dr. McManus is that he did not react to my quotations from Prof. Richard Baldwin’s (2016) book “The Great Convergence” in which Baldwin asserts that “From 1820 to 1990 the share of world income going to today’s wealthy nations soared from 20% to 70% and that share has recently been plummeting. Today their share is now back to where it was in 1914.” And that “This trend … is surely the dominate economic fact of the last… Read more »

Darren Iversen
Guest
Darren Iversen

Richard, what’s your opinion re why the Georgist perspective is completely missing from this debate?

richard W. burcik
Guest
richard W. burcik

Darren,

Sorry, but I do not idea why the Georgist perspective is missing from the debate.

Darren Iversen
Guest
Darren Iversen

Richard, great let’s debate it then. Fred Harrison’s account of poverty / inequality says that there really is a subsidy paid by the poor to the rich, and it is caused by the tax system. What do you think?
Ricardo’s Law ~ The Great Tax Clawback Scam

George
Guest
George

Social democracy will fail for both practical reasons and ethical reasons. You assume that taxing the wealthiest will allow the government to redistribute money to make up for arbitrary discrepancies. First, practically speaking, government programs typically provide poor quality services which enrich government employees more than they help the people they are supposed to help. They are also tremendously wasteful and inefficient bureaucracies. Next, how to you get ththe money from the rich? You say “taxes,” but what you really are doing is using the force of the government to take people’s money against their will. Now let’s consider human… Read more »