Socialism in one country

When I tweeted the other day that the crisis of capitalism consists of a decade-long stagnation in productivity (which has given us falling wages), a wise man replied that this is true only in one country. Which set me wondering: might there be a case for socialism in one country?

Yes, I know the phrase has unhappy connotations. But what I mean is simply that (some form of*) capitalism suits some countries better than others. And perhaps the UK is not one of these.

We can think of this from two different perspectives.

One is the Smithian one, as suggested by Jesse Norman. This says that a healthy capitalism requires particular norms and culture. For example, a society in which there are norms against tax-dodging, rent-seeking or egregious exploitation will have a healthier capitalism than ones in which such norms are weak or absent. Also, for cultural and historical reasons some nations might have a bigger pool of managerial talent or greater entrepreneurial spirit than others. They too will be more suited to capitalism.

Where these conditions are lacking, however, (some form of) socialism might be needed. If some businesses cannot be regulated effectively by self-restraint, market forces or regulation (such as banks or utilities), nationalization might be an option. Where management is bad, worker democracy is needed. And where entrepreneurship is weak, the state must do more (pdf) of the job.

A nation whose ruling class produces people like Johnson, Farage, Cameron or Rees-Mogg is more in need of revolution than one whose ruling class produces better men.

The other is the Marxian perspective. He saw that capitalism was an immense force for economic progress. But, he wrote:

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. 

Some countries have not yet reached this stage of development. In these – such as China – capitalism is a progressive force. The fact that the UK has suffered a decade of stagnation, however, suggests we might have reached that stage and that we need some changes in property relations if we are to generate further progress. These changes might be in a socialistic direction**.

The appropriate modes of economic organization vary from country to country. In saying this, I’m following Edmund Burke, who wrote:

Circumstances (which with some gentlemen pass for nothing) give in reality to every political principle its distinguishing colour and discriminating effect. The circumstances are what render every civil and political scheme beneficial or noxious to mankind.

These considerations mean it is perfectly coherent to argue that the UK needs more socialism whilst Venezuela needs more capitalism.

Why, then, do so few do this? The answer might lie in a distinction made by Burke as described (pdf) by Jesse. He distinguished between “embodied” reason – which proceeds from concrete actually-existing conditions – and abstract reason which began from theory. Those who give blanket, worldwide support to either capitalism or socialism are perhaps too prone to abstract reason and too little to embodied reason.

* In practice of course most countries are some mixtures of capitalism and socialism (and even feudalism). I’m thinking here of a spectrum between capitalism and socialism, not a sharp distinction.

** In fact, many intelligent free marketeers agree with this. Many of these favour relaxing planning laws to permit more housebuilding or less strict copyright laws. Both are, in effect, curbs on some people’s property rights.

Comments

[Ibod Catooga]

NOugat negro nugget. What I say is fuggit, fuggit all

[Tony of CA]

Capitalism is well past sell by date. It's time to define a new system.

[D]

Good post.

The general point about circumstances needs to be made more to everyone. And particularly to libertarians.

[Ralph Musgrave]

Tony of CA,

If you can't explain exactly what a new or better system consists of, you're not in a good position to claim capitalism is "past its sell by date".

[D in Reno]

* I’m thinking here that ... SOCIALISM IS THE SPECTRUM between pure capitalism (100% private economy, no public spending) and pure communism (100% public economy, no private spending).

See OECD dataset 103 to see how much of a country's GDP is a direct result of public spending. By this measure, the US has averaged 38% socialism since 1990; the UK about 40%. Nobody is 0% or 100%. Yikes — watch out for that slippery slope!

[Hinheckle Jones]

I lived for a year near the border of the U.S. and Mexico. One rich and one poor. The people, the language, the religion, the main businesses and the weather were the same on both sides.

The government was the only real difference other than the relative wealth of the people on either side of the border.

Capitalism and socialism and communism are overused words that have devolved into meaninglessness.

The correct measure is the badness of the goverment. It is properly measured on a scale of 1 (not too bad -- the best you can get ) to 10 (very very bad) Zimbabwe and Venezuela today are both 9ish, they could get worse.

A few old sayings seem pertinent:
Government at its very best is but a necessary evil.
The government that governs least governs best.
Government can only give what first it takes.

[alan]

The power of large corporations, the need for new ideas through science and research and the need to ensure growth is environmentally sustainable all require a degree of international cooperation. Sustainable socialism has to go beyond one country...

[Jake]

Either the author is indulging in agnotology or is completely effing ignorant of history. WAGES HAVE BEEN FALLING EVEN BEFORE THE PRODUCTIVITY FALL OF 2008!! 1970s was when the back of labour was broken! You talk as if this graph doesn't exist!! - https://4.bp.blogspot.com/-sNBYIYPRojE/WbW7J9AUzjI/AAAAAAAAFaI/9zaukuxznWMjDbx3vTR8hZAFoNJLGzRvgCLcBGAs/s640/Worker-Productivity-Annual-Wage-Compensation.png

[Jake]

Here's another post showing very clearly how wages in manufacturing haven't kept up with increases in productivity. Hope this doesn't break your solipsistic bubble - https://touchstoneblog.org.uk/2013/05/the-progress-of-exploitation/

[George Carty]

How would _relaxing_ planning laws be a curb on anyone's property rights: surely it would _restore_ the right of property owners to build on their land?

Under the present system a person whose house overlooks the green belt may gain a nice view, but (given that they don't own the green belt land itself) isn't that a government-granted privilege rather than a property right?