Tag Archives: socialism

The Different Types Of Socialism

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To most of us, socialism conjures up many images. These range from modern American politicians, to the Social Democracy nations of Scandinavia, to communist countries such as modern-day North Korea, and then to the most famous socialist in history…Karl Marx. Undoubtedly, with so many images created by the word socialism, it’s hard to know who owns the definition of the term.

Although Marxian socialism as practiced in communist countries is probably the most famous example, Marx is hardly the last word. Throughout history, the concept of socialism has had many adherents dating back to ancient Greece and the philosopher Plato.

Over the past 200 years there have been many socialist thinkers that not only differed in impact from Marx, they also differed in their ideas about free-markets and democracy. When one looks at leaders such as John Stuart Mill, Bertrand Russell, and Clement Attlee, one discovers thinkers who looked at socialism as something to be used in combination with both capitalism and democracy. These leaders were influential in the evolution of Social Democracy. At times, some advocates for Social Democracy call themselves Democratic Socialists.

What makes the practice and rhetoric of Marxian socialism different is its emphasis that capitalism is exploitive. In addition, the rigid way that communism has been practiced is another way it’s differed from other forms of socialism. Although its been proven since the fall of the Soviet Union that Marxian communism is weak economically, there are many who still adhere to the Marxian premise that capitalism creates exploitation.

Therefore, although the economic premise of Marxism is problematic, the influence of Marx historically and on contemporary culture looms large. Although many people may not describe themselves as Marxists, they may agree with Marx’s theory that capitalist culture is exploitive. As a result, on many issues that address social change, a common way to challenge tradition is to claim that a certain practice is exploitive. And yes, exploitation does exist in many areas and needs to be addressed. However, it’s fair to say that the levels of exploitation some claim exist, are not always apparent to all.  

Obviously, socialism and capitalism can co-exist. As many know, the products and ideas of a capitalist system enhance the creative way we lead our lives. On a daily basis, we express our freedom and make decisions about how to live based on our interactions with a free-market. Therefore, in light of these positive aspects, its obvious capitalism’s not as exploitive as some claim. Where aspects of socialism have a role in modern life is in ensuring a social safety net, regulating marketplaces to ensure equality of opportunity, and upholding common environmental standards. This ability to rely on free-market capitalism to provide most of the goods and services of society, while also ensuring a moderate level of government services for infrastructure, security, human services and defense, is the hallmark of the most successful and least radical form of socialism…Social Democracy. Most democracies, including America, have aspects of Social Democracy

In modern America there’s now a strong push for what some envision as more Social Democracy. Interestingly though, the rhetoric these advocates use is sometimes similar to the rhetoric Marxian socialists use. This is shown when they infer that both capitalists and capitalism are exploitive and greedy. Hopefully, when people nowadays advocate for more Social Democracy, they’ll realize that demonizing capitalism often turns many practical people off. In reality, the ideal of Social Democracy is often best achieved by first acknowledging the useful role that capitalism plays in modern life.

 

 

 

 

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Towards a More Practical View of Economics

Economics, Theory and History, , , , , , , , , , ,

When some people hear the term economic theory, they often act indifferent or roll their eyes. This is because for years, many have equated it with a type of intellectual game playing.

Unfortunately, few modern theories have as much day-to-day impact on people’s lives as economics. Also, since economics is the silent partner of politics, few issues escape its grasp. In fact, when one applies a follow-the-money approach to political topics, they often find that across the spectrum, many issues have their origin in economic theory.

Because economics is misunderstood, it can be hard to discuss beyond the usual clichés. Therefore, when anyone mentions the possibility it can become more practical, many shrug and say, “Here we go again.” This confusion is compounded by how some theorists seem to setup axioms out of premises before all data is collected. As a result, economics is sometimes viewed as a statistical mishmash of competing ideas arranged in an arbitrary fashion.

But is economics really just a game? How can it be just a game when so much of what we do in life revolves around some kind of monetary exchange?

One of the reasons modern economic theory puzzles many is that much of it seems counter-intuitive. The abstract nature of modern economics, just like the abstract nature of modern physics, proves to be a barrier.

For instance, to the average American who’s struggling to pay down debt, the fact that our government can seem to function with a large amount of growing debt appears somewhat illogical. When politicians and economic experts talk about Debt-to-GDP ratios, and favorable levels of debt, many average Americans shrug as if it’s yet another example of political-economic gamesmanship.

In addition, to the average American that looks upon their family as a self-enclosed economic entity, the ever-present concept of globalism seems confusing. To many, the American nation is still the largest economic entity we envision. Therefore, getting used to the whole globe as an economic entity can appear abstract. Yes, most Americans understand globalist trade concepts and the importance of global trade. After all, since the days of Marco Polo and the Silk Road, individuals and countries have enriched themselves through trade. However, that’s not what creates confusion for many.

What puzzles many about globalism is how some American-based multinational corporations pursue loopholes to drastically lower their taxes. On occasion, these companies hint at the fact that such tax practices are a necessary part of globalist trade. Although the American corporate tax rate is high on paper, they often pay much less than what the official rate implies. Unfortunately, the reputation of corporations that pay taxes fairly is damaged by the tax avoidance pursued by some.

Adding to the bewilderment many have with modern economics is the fact that corporations are now viewed as people in legal terms. Therefore, many think that as people, corporations could pay a fair share for the roads, bridges, ports, and airports they use to conduct trade.

Probably the most confusing part of economic theory is how it’s used in the political arena. As is well known, both parties have economic experts and economists at their disposal who polish the rhetoric politicians employ. As most Americans attest to, there’s a tug-of-war between the Republican embrace of the more Free-Market approach of the Supply-Side revolution starting in 1980, and the more socialist Democratic approach of government-based Keynesian ideas used to maintain economic demand. 

In reality, although America has swung between Republican and Democratic directions the past 30 years, the economic dogma espoused by both seems to have resulted in the system that some call Corporatism. In a sense, Corporatism, as reflected in the political talk of Public-Private partnerships, has arisen since implementing the economic views of both parties in total has proven difficult. Therefore, the political-economic theorists that predicted Corporatism are correct to say this system could grow out of modern political rivalries. Although some say Corporatism resembles Socialism insofar as there’s a strong government hand in the economy, it differs by leaving the means of production in private hands.

As for developing a more practical economic view if indeed we’re living in the age of Corporatism, there are many proposals.

First off, since the post-Keynesian economic model has allowed for large amounts of unstable debt to accumulate in many advanced countries, there’s a need for debt limits that are achieved transitionally without imposing high levels of austerity. In line with keeping debt lower, the debt-risk posed by those wanting more finance deregulation needs to be recognized. After all, if another finance crash creates a freezing of liquidity assets similar to what we had in 2008, billions of dollars of outstanding derivatives contracts may trigger the need for another bank bailout. Obviously, another bailout would be added to our nation’s debt again.

Regarding debt reduction, we could actually increase tax revenue from corporations by both cutting their official tax rate, and then closing certain loopholes. This policy could help reduce debt, while also improving the negative public image many have of corporations due to how some pursue tax avoidance.

In addition, since many central banks have been pushing for lower interest rates the past 15 years as a means to stimulate certain areas of the business cycle, there needs to be recognition that we need to slowly allow interest rates to return to historic levels so the natural ebb and flow between saving and spending can be restored. As many economists note, such unnaturally low levels of interest rates, if continued, will make it hard for us to not only stimulate the economy for future growth, it’ll make it hard to stimulate the economy to reduce the chronically high levels of underemployment we now have.

Since chronic underemployment has become an outgrowth of globalism in many advanced countries, it’s apparent that relying on historically low interest rates as the main way to boost employment has led to a situation begging for creative solutions. As many have said, America could deal with its high level of underemployment by borrowing ideas from both right and left of the political-economic spectrum. These ideas include creating infrastructure improvement jobs and streamlining small business regulations to encourage true entrepreneurship. 

And finally, although globalism’s here to stay and has benefits, it’s obvious that although recent trade pacts reinforce large multinational entities, that the most important entity for each nation… remains that nation. Therefore, if politicians can honestly find ways to look out for all aspects of our nation more, America’s economic outlook could improve. 

Hopefully, with more involvement from ordinary citizens, economics will start to lose its reputation as a confusing line of thought, and become more an everyday part of everyone’s lives.