No but seriously congrats! The reason I knew you would end up here, and the reason I put you on my blogroll, is because I've walked a very similar path from social liberal, to social democrat, to democratic socialist. The only real difference is that you treaded more carefully, which given your larger audience, seems totally reasonable. Kudos man!
I love people like you Bob and also econoboi. I like your state socialism. Marxist-Leninists are cool with the economic side of your stuff. The only thing a ML socialist like me doesn't like from you both is some of the political views you have such as, you both seem to believe that the pluralistic democracy and free speech is really important (basically a kind of liberal belief), but to me, I want the state to actively combat reactionaries and fascists like how China and Vietnam do with their democratic centralism and decent amount of censorship.
I think you should consider adopting the label liberal-socialist instead of democratic-socialist or market-socialist.
It would signal a more serious political intent of cooperation with existing liberals, having respect for liberal-democracy and market-forces. Misunderstandings will still happen but it's a better starting place for conversations with most people I think. To get them to seriously consider why wealth-inequality should be addressed and how it could be done.
Simultaneously it would alienate leftists with unserious views on economics that say things like "Read theory! Marx already solved economics 150 years ago, something something material conditions..." which in my experience is a fair bit of them, including many DSA-types. While other leftist, more confused and intrigued by the label, might still be persuaded of better solutions to wealth-inequality than just praying for a revolution...
I was coincidentally watching your video with Bruenig this morning, before you published this, and I found it pretty persuasive.
As for the management of socialized wealth, are you particularly concerned about how individual firms invest their excess earnings? Or are you talking about the allocation of capital by banks to new firms? Because it seems to me that both of these mechanisms largely work in the same way under socialist and capitalist models (if the banking system is split into many competing chartered banks, whose equity is held by one or more sovereign wealth funds).
I think many of the issues with the efficient allocation of collectively owned capital go away when we recognize that collective ownership doesn't imply centralized allocation. Also probably we can move some of the burden of investment from dispersed actors to the government's fiscal authority. There are many societal-level problems (like climate change and pandemic preparedness) that could probably be best addressed through centralized action.
I think the best policy would be for the state to have a loose dividend target and performance-based compensation for management and executives throughout to incentivize value creation and risk management.
The state would also have a regular sale of the portfolio (say 3% per year) to facilitate social objectives.
This, by function, would not be far different from how we already organize capital ownership/management. The big difference would be the dividend payments/capital gains trickle to the public rather than a select class of private investors.
Who would the state sell the portfolio to though? Are you anticipating there still be private investment conglomorates and other rich people that still buy these assets, or that while all wealth is socialized through a Social Wealth Fund, independent holding corporations, and peoples individual retirements through something like a backloaded social security, they sell these assets to each other? Would the returns associated from the sale just returned to each respective shareholder that is a institution of collective wealth, whether it be a Social Wealth Fund, a backloaded social security payment, or returns to a independent holding corporation owned by the government?
The state would announce a planned divestment of 3% (as an example) and this would be a structured sell of likely mostly liquid assets for their current strike price. The various capital holding corps would market the assets and they could either buy the assets between each other or private investors or foreign investors could buy them.
Very interesting and I agree its a better vision for socialism than nearly any one else articulates.
But the core criticism remains for me. If you give government control over capital, what happens when bad leadership gets empowered and things go authoritarian?
One of the best points in defense of private ownership of the means of production is that it is decentralized, a de facto check on government power and tyranny. The other is that government ownership of all capital would amount to centralized planning, which history shows us is dramatically inefficient compared to free markets, leaving populations impoverished and cynical, sometimes even starving.
I’ll address this in subsequent parts. The short answer is that I think inefficient allocation is more of a concern than authoritarianism.
It seems to me the authoritarian governments of the world didn’t build economic power first. It was more about the capture of a weaker state and hard power through the military. Countries with strong democratic traditions first tend to keep them.
Hitler wasn't fussed by German Capitalists. Capitalism concentrates power in the hands of a small group of people, and when this small group decides they want an authoritarian they have a lot of power to make that a reality. We're seeing this in America right now.
Also, Econoboi explicitly argued against the universal owner. He wants the government to passively buy shares in companies. No monopoly on capital. No central planning.
I don’t disagree that fascism can be seen as a form of hyper-capitalism, where corporate leadership teams with an authoritarian government to dominate everyone else. One might even argue that fascism is an inevitable feature of late stage capitalism when a critical mass of economic power has consolidated into so few free market participants, that it no longer functions as a free market, a bunch of monopolies that want to do business with the government to maintain their dominance. I really think there is something to this, but I’d argue against that it is inevitable. Small d democrats need to jealously guard against this, but have been unsuccessful in stopping Trump, like the Weimar Republicans were unsuccessful with stopping Hitler.
As for the second point, I guess I just don’t understand how that works practically without centralized planning when the process is completed. The government buys up the stock market and owns these companies, then it owns the decision making and strategic direction too, right? As it stands today, corporate upper management reports to a board that represents the ownership. If the government is the owner, then they are the board and de facto bosses of the operation. How else can it work? I believe if you totally separate the corporate decision-making from parties directly interested in profiting from those decisions, you will have a highly dysfunctional economy that will tank standard of living very quickly. Practically speaking, socialism is a great equalizer, but in practice, it has equalized at a very low standard compared to market economies.
I really appreciate the Nordic model, which rests on a foundation of free market, but is heavily unionized and mixed economy.
You're still not hearing. No universal owner. Econoboi is not advocating that the government buy all financial capital. He's only arguing that the government should buy shares in companies.
Econoboi's point is that sovereign wealth funds are socialist institutions and socialist institutions exist alongsude capitalist institutions in ALL economies. All economies are mixed mode production economies. He wants a sovereign wealth fund to act like vanguard. Vanguard doesn't want a monopoly of the financial market and they don't do anything like central planning. They just agree to passive strategy and implement it.
Econoboi thinks that it's enough to have the public have an ownership stake in it's own economy. He doesn't like Bruenig's concept of the universal owner.
I guess my point is that Norway and the Nordic model are mixed economies but fundamentally based in free market principles. Perhaps that is what Econoboi is advocating for here. But I think if you go to Norway and ask people there what kind of economy they have, they don’t say Democratic socialist. They say they have mixed free markets. They say social democrats, not democratic socialists.
Check out Norways political parties and who controls parliament:
Social democrats are socialists engaged in electoralism, that was the original definition. They're not capitalists who want big safety nets.
It doesn't really matter what happens when you poll the average Norwegian since the average Norwegian doesn't know much about their own economy.
You brought along a lot of baggage when you read the word socialism. You're reading things between the lines that just aren't there. Econoboi thinks that some sectors are better served by non market solutions like healthcare and education but most sectors should remain as markets. Again, stick to what he has actually said. He just wants the government to buy some stock.
You still have prices to reflect different factors of production in a mixed economy between different public and private firms to signal where to allocate what. Facts though, we love dispersed power.
This "gradual public buyout" model inevitably means that the public owner makes management decisions, since at minimum it always has to choose the board. This is certainly true at 100% public ownership, and in practice also for smaller stakes like 90%, unless you are happy to let the 5% stake direct the company at 1:20 leverage. Passive public ownership at such high percentages is not feasible, so you end up with public management, whether you want it or not.
This very much mirrors my journey towards being market-socialism-curious, but I'm still not ready to call myself a "socialist" because in common parlance, socialism doesn't just imply the existence of publicly owned wealth - if that's what "socialism" means, then everybody who isn't an ancap is a socialist. What we call socialism is more like "social ownership maximalism" - the position that private ownership of productive wealth should be completely abolished. I don't agree with this position for two reasons:
1) The abolition of all private productive wealth is essentially an income tax (it's a 100% tax on the interest on your savings) which is both anti-freedom (*income* taxation really is theft) and socially inefficient (income taxes produce deadweight loss, unlike land taxes, Pigouvian taxes, etc. etc.).
2) Under the "nationalize Vanguard" model of financial socialism, going from the state owning 0% to 90% of publicly traded equities is in fact a tiny institutional leap compared to going from 90% to 100% because passive investors like Blackrock and Vanguard are management free riders - 100% of companies can't be owned by passive investors, so under this model the state would have to actively manage - something which I think history has shown it is bad at.
I agree with Machiavelli's point in Discourses that the best policy is to "keep the state rich and the private person poor" - LVT & severance taxes would imply de facto public ownership of land and natural resources, estate taxes are good because breaking up dynastic wealth is good, and a very large SWF is a good idea to reduce our reliance on distortionary income taxes. All these policies together would mean that the vast majority of wealth would de facto or de jure be socially owned - but I wouldn't completely eliminate private investment and ownership, which is what most people mean when they say "socialism" and definitely what they mean when they say "anti-capitalism"
I'm kind of curious about how you reconciled some of the questions you had in your conversation with Bruenig.
Like, you asked Bruenig about whether the ultimate goal was to ban private ownership - did you answer that question?
Did you resolve the question about over-investment?
Did you resolve questions regarding innovation? Bruenig brought up the idea that innovation is often done within an industry, but what about the incentive to create new industries that may disrupt old ones? Wouldn't that incentive disappear in a broad-based ownership system?
Also, your example of countries like Norway being an example to follow makes sense given their large natural resource wealth - the natural resources should belong to everyone - but does it make sense for other kinds of industries that aren't resource-extraction related? What if a country has resource extraction as a relatively minor part of their economy? Does it make sense to treat other types of industries in the same way?
Would the economy of the PRC then be the closest to an existing ideal socialism for you considering they represent the largest scale application of 'collectively owned' state run enterprises? Or is it still closer to the scandanavian model?
Norway actually has more collective ownership than China as a proportion of the economy.
Even if they didn’t, my socialism is highly democratic, which I think is really important for the social ownership to be truly social and also to make the social ownership function well.
You are picking and choosing isolated examples that seem to fit your narrative, then calling yourself a socialist. It seems dishonest (whether intentional or not). Norway's sovereign wealth fund comes 100% from oil revenues. Public schools are funded through tax revenue. Where does that tax revenue come from? Markets.
It seems like you just happen to like Norway. The country has completely different demographics than the US. It also has massive oil revenues per capita. You can't compare outcomes that easily because of this. Public goods can exist in any economic system. They are not inherent to socialism. "Free money from oil" is not an economic system.
I'm not picking isolated examples. In The Public Wealth of Nations, Dag Detter goes through, in totality, hundreds of examples of public wealth management. There are tens of thousands of SOEs and tens of trillions of dollars of wealth (probably a hundred plus trillion) publicly managed.
I think we could take the ideal models of public wealth management and extend those to the vast bulk of the economy.
So you're really just someone who wants the government to buy large shares in companies that still operate under capitalist pressures within the free market?
For your example, why did you use a fund that is 100% funded by oil revenues?
The point of discussing policies is so you can implement them elsewhere. "Go find a giant oil reserve" is not a policy position.
A group of government employees deciding which bonds and stocks to buy/sell is not very impressive. I don't understand why you think this is an argument for central planning of real industries
By labelling yourself, you are opening yourself up to ideological capture by declaring bedfellows and actively associating with sociocultural contextualization (aka baggage) that risks hurting any single policy that's worth pursuing. I was an anarchist, then a socialist, then a progressive, I found common cause with the YIMBY movement who were ostensibly neoliberal, then was made aware of the success of SWF's and never let go of a desire for state capacity for working services, where do I end up? I don't know, I'm just on the left, maybe some vague notion of being directionally "progressive". That's good enough, and has the benefit of not having expectations of conforming to a bucket weighing down anywhere I might personally deviate from the ideological group I've declared to be within. Just know that fighting for individual policies now comes with additional considerations regarding declared ideological alignment, whether you like it or not.
Say it ain’t so.. 🥀🥀
<3
Ladies and gentlemen... we got him!
No but seriously congrats! The reason I knew you would end up here, and the reason I put you on my blogroll, is because I've walked a very similar path from social liberal, to social democrat, to democratic socialist. The only real difference is that you treaded more carefully, which given your larger audience, seems totally reasonable. Kudos man!
And Bob I give you credit (along with Bruenig and my introduction to post-Keynesian economics) for getting me here too.
(,,>﹏<,,)👉👈
I love people like you Bob and also econoboi. I like your state socialism. Marxist-Leninists are cool with the economic side of your stuff. The only thing a ML socialist like me doesn't like from you both is some of the political views you have such as, you both seem to believe that the pluralistic democracy and free speech is really important (basically a kind of liberal belief), but to me, I want the state to actively combat reactionaries and fascists like how China and Vietnam do with their democratic centralism and decent amount of censorship.
I think you should consider adopting the label liberal-socialist instead of democratic-socialist or market-socialist.
It would signal a more serious political intent of cooperation with existing liberals, having respect for liberal-democracy and market-forces. Misunderstandings will still happen but it's a better starting place for conversations with most people I think. To get them to seriously consider why wealth-inequality should be addressed and how it could be done.
Simultaneously it would alienate leftists with unserious views on economics that say things like "Read theory! Marx already solved economics 150 years ago, something something material conditions..." which in my experience is a fair bit of them, including many DSA-types. While other leftist, more confused and intrigued by the label, might still be persuaded of better solutions to wealth-inequality than just praying for a revolution...
NORWAY IS ONLY 35.89% SOCIALIST
That’s 35.89% B-B-B-B-BASED
I was coincidentally watching your video with Bruenig this morning, before you published this, and I found it pretty persuasive.
As for the management of socialized wealth, are you particularly concerned about how individual firms invest their excess earnings? Or are you talking about the allocation of capital by banks to new firms? Because it seems to me that both of these mechanisms largely work in the same way under socialist and capitalist models (if the banking system is split into many competing chartered banks, whose equity is held by one or more sovereign wealth funds).
I think many of the issues with the efficient allocation of collectively owned capital go away when we recognize that collective ownership doesn't imply centralized allocation. Also probably we can move some of the burden of investment from dispersed actors to the government's fiscal authority. There are many societal-level problems (like climate change and pandemic preparedness) that could probably be best addressed through centralized action.
I think the best policy would be for the state to have a loose dividend target and performance-based compensation for management and executives throughout to incentivize value creation and risk management.
The state would also have a regular sale of the portfolio (say 3% per year) to facilitate social objectives.
This, by function, would not be far different from how we already organize capital ownership/management. The big difference would be the dividend payments/capital gains trickle to the public rather than a select class of private investors.
Who would the state sell the portfolio to though? Are you anticipating there still be private investment conglomorates and other rich people that still buy these assets, or that while all wealth is socialized through a Social Wealth Fund, independent holding corporations, and peoples individual retirements through something like a backloaded social security, they sell these assets to each other? Would the returns associated from the sale just returned to each respective shareholder that is a institution of collective wealth, whether it be a Social Wealth Fund, a backloaded social security payment, or returns to a independent holding corporation owned by the government?
The state would announce a planned divestment of 3% (as an example) and this would be a structured sell of likely mostly liquid assets for their current strike price. The various capital holding corps would market the assets and they could either buy the assets between each other or private investors or foreign investors could buy them.
Very interesting and I agree its a better vision for socialism than nearly any one else articulates.
But the core criticism remains for me. If you give government control over capital, what happens when bad leadership gets empowered and things go authoritarian?
One of the best points in defense of private ownership of the means of production is that it is decentralized, a de facto check on government power and tyranny. The other is that government ownership of all capital would amount to centralized planning, which history shows us is dramatically inefficient compared to free markets, leaving populations impoverished and cynical, sometimes even starving.
I’ll address this in subsequent parts. The short answer is that I think inefficient allocation is more of a concern than authoritarianism.
It seems to me the authoritarian governments of the world didn’t build economic power first. It was more about the capture of a weaker state and hard power through the military. Countries with strong democratic traditions first tend to keep them.
Hitler wasn't fussed by German Capitalists. Capitalism concentrates power in the hands of a small group of people, and when this small group decides they want an authoritarian they have a lot of power to make that a reality. We're seeing this in America right now.
Also, Econoboi explicitly argued against the universal owner. He wants the government to passively buy shares in companies. No monopoly on capital. No central planning.
I don’t disagree that fascism can be seen as a form of hyper-capitalism, where corporate leadership teams with an authoritarian government to dominate everyone else. One might even argue that fascism is an inevitable feature of late stage capitalism when a critical mass of economic power has consolidated into so few free market participants, that it no longer functions as a free market, a bunch of monopolies that want to do business with the government to maintain their dominance. I really think there is something to this, but I’d argue against that it is inevitable. Small d democrats need to jealously guard against this, but have been unsuccessful in stopping Trump, like the Weimar Republicans were unsuccessful with stopping Hitler.
As for the second point, I guess I just don’t understand how that works practically without centralized planning when the process is completed. The government buys up the stock market and owns these companies, then it owns the decision making and strategic direction too, right? As it stands today, corporate upper management reports to a board that represents the ownership. If the government is the owner, then they are the board and de facto bosses of the operation. How else can it work? I believe if you totally separate the corporate decision-making from parties directly interested in profiting from those decisions, you will have a highly dysfunctional economy that will tank standard of living very quickly. Practically speaking, socialism is a great equalizer, but in practice, it has equalized at a very low standard compared to market economies.
I really appreciate the Nordic model, which rests on a foundation of free market, but is heavily unionized and mixed economy.
You're still not hearing. No universal owner. Econoboi is not advocating that the government buy all financial capital. He's only arguing that the government should buy shares in companies.
Econoboi's point is that sovereign wealth funds are socialist institutions and socialist institutions exist alongsude capitalist institutions in ALL economies. All economies are mixed mode production economies. He wants a sovereign wealth fund to act like vanguard. Vanguard doesn't want a monopoly of the financial market and they don't do anything like central planning. They just agree to passive strategy and implement it.
Econoboi thinks that it's enough to have the public have an ownership stake in it's own economy. He doesn't like Bruenig's concept of the universal owner.
I guess my point is that Norway and the Nordic model are mixed economies but fundamentally based in free market principles. Perhaps that is what Econoboi is advocating for here. But I think if you go to Norway and ask people there what kind of economy they have, they don’t say Democratic socialist. They say they have mixed free markets. They say social democrats, not democratic socialists.
Check out Norways political parties and who controls parliament:
https://en.m.wikipedia.org/wiki/List_of_political_parties_in_Norway
Social democrats are socialists engaged in electoralism, that was the original definition. They're not capitalists who want big safety nets.
It doesn't really matter what happens when you poll the average Norwegian since the average Norwegian doesn't know much about their own economy.
You brought along a lot of baggage when you read the word socialism. You're reading things between the lines that just aren't there. Econoboi thinks that some sectors are better served by non market solutions like healthcare and education but most sectors should remain as markets. Again, stick to what he has actually said. He just wants the government to buy some stock.
I didn’t bring the baggage
The Soviets, Chinese, North Koreans, Venezuelans etc brought it
You still have prices to reflect different factors of production in a mixed economy between different public and private firms to signal where to allocate what. Facts though, we love dispersed power.
This "gradual public buyout" model inevitably means that the public owner makes management decisions, since at minimum it always has to choose the board. This is certainly true at 100% public ownership, and in practice also for smaller stakes like 90%, unless you are happy to let the 5% stake direct the company at 1:20 leverage. Passive public ownership at such high percentages is not feasible, so you end up with public management, whether you want it or not.
This very much mirrors my journey towards being market-socialism-curious, but I'm still not ready to call myself a "socialist" because in common parlance, socialism doesn't just imply the existence of publicly owned wealth - if that's what "socialism" means, then everybody who isn't an ancap is a socialist. What we call socialism is more like "social ownership maximalism" - the position that private ownership of productive wealth should be completely abolished. I don't agree with this position for two reasons:
1) The abolition of all private productive wealth is essentially an income tax (it's a 100% tax on the interest on your savings) which is both anti-freedom (*income* taxation really is theft) and socially inefficient (income taxes produce deadweight loss, unlike land taxes, Pigouvian taxes, etc. etc.).
2) Under the "nationalize Vanguard" model of financial socialism, going from the state owning 0% to 90% of publicly traded equities is in fact a tiny institutional leap compared to going from 90% to 100% because passive investors like Blackrock and Vanguard are management free riders - 100% of companies can't be owned by passive investors, so under this model the state would have to actively manage - something which I think history has shown it is bad at.
I agree with Machiavelli's point in Discourses that the best policy is to "keep the state rich and the private person poor" - LVT & severance taxes would imply de facto public ownership of land and natural resources, estate taxes are good because breaking up dynastic wealth is good, and a very large SWF is a good idea to reduce our reliance on distortionary income taxes. All these policies together would mean that the vast majority of wealth would de facto or de jure be socially owned - but I wouldn't completely eliminate private investment and ownership, which is what most people mean when they say "socialism" and definitely what they mean when they say "anti-capitalism"
How qualified are you in economics? Just undergrad or PHD?
Masters in economics and masters in finance.
I'm kind of curious about how you reconciled some of the questions you had in your conversation with Bruenig.
Like, you asked Bruenig about whether the ultimate goal was to ban private ownership - did you answer that question?
Did you resolve the question about over-investment?
Did you resolve questions regarding innovation? Bruenig brought up the idea that innovation is often done within an industry, but what about the incentive to create new industries that may disrupt old ones? Wouldn't that incentive disappear in a broad-based ownership system?
Also, your example of countries like Norway being an example to follow makes sense given their large natural resource wealth - the natural resources should belong to everyone - but does it make sense for other kinds of industries that aren't resource-extraction related? What if a country has resource extraction as a relatively minor part of their economy? Does it make sense to treat other types of industries in the same way?
I’ll tackle these questions in part 3.
Sorry to hear about that
Would the economy of the PRC then be the closest to an existing ideal socialism for you considering they represent the largest scale application of 'collectively owned' state run enterprises? Or is it still closer to the scandanavian model?
Norway actually has more collective ownership than China as a proportion of the economy.
Even if they didn’t, my socialism is highly democratic, which I think is really important for the social ownership to be truly social and also to make the social ownership function well.
You are picking and choosing isolated examples that seem to fit your narrative, then calling yourself a socialist. It seems dishonest (whether intentional or not). Norway's sovereign wealth fund comes 100% from oil revenues. Public schools are funded through tax revenue. Where does that tax revenue come from? Markets.
It seems like you just happen to like Norway. The country has completely different demographics than the US. It also has massive oil revenues per capita. You can't compare outcomes that easily because of this. Public goods can exist in any economic system. They are not inherent to socialism. "Free money from oil" is not an economic system.
I'm not picking isolated examples. In The Public Wealth of Nations, Dag Detter goes through, in totality, hundreds of examples of public wealth management. There are tens of thousands of SOEs and tens of trillions of dollars of wealth (probably a hundred plus trillion) publicly managed.
I think we could take the ideal models of public wealth management and extend those to the vast bulk of the economy.
So you still see huge value in competitive, privately owned firms?
So you're really just someone who wants the government to buy large shares in companies that still operate under capitalist pressures within the free market?
This doesn't sound like you're socialist
I think when production is owner collectively it’s socialist in nature. I don’t think having competitive markets makes something not socialist.
For your example, why did you use a fund that is 100% funded by oil revenues?
The point of discussing policies is so you can implement them elsewhere. "Go find a giant oil reserve" is not a policy position.
A group of government employees deciding which bonds and stocks to buy/sell is not very impressive. I don't understand why you think this is an argument for central planning of real industries
Pretty much every society has a means to socialize capital through the mechanism I advocate for.
You just need to use tax revenue and form the holding corporation.
By labelling yourself, you are opening yourself up to ideological capture by declaring bedfellows and actively associating with sociocultural contextualization (aka baggage) that risks hurting any single policy that's worth pursuing. I was an anarchist, then a socialist, then a progressive, I found common cause with the YIMBY movement who were ostensibly neoliberal, then was made aware of the success of SWF's and never let go of a desire for state capacity for working services, where do I end up? I don't know, I'm just on the left, maybe some vague notion of being directionally "progressive". That's good enough, and has the benefit of not having expectations of conforming to a bucket weighing down anywhere I might personally deviate from the ideological group I've declared to be within. Just know that fighting for individual policies now comes with additional considerations regarding declared ideological alignment, whether you like it or not.
Yeah I'm not super interested in the semantics of what defines 'socialist', but obviously I have a view in that regard.
I am glad to read this! Love you, brother! You are a comrade now!