The White House has published a document, entitled “The Opportunity Costs of Socialism,” which recognizes the rising popularity of socialism in the United States (particularly among the youth) and attempts to provide a scientific rebuttal in favor of capitalism. Alan Woods, editor of In Defense of Marxism, replies to this document’s slanders, and investigates why socialist ideas are gaining ground in the USA.
Recently a group of specialists in Donald Trump’s White House produced a 76-page report on socialism, which they evidently see as a growing threat in the United States of America. The report can be read in full here.
The authors of the report are members of what is called the Council of Economic Advisers presents This is how the Council describes itself:
The Council of Economic Advisers, an agency within the Executive Office of the President, is charged with offering the President objective economic advice on the formulation of both domestic and international economic policy. The Council bases its recommendations and analysis on economic research and empirical evidence, using the best data available to support the President in setting our nation’s economic policy. (Our emphasis.)
In view of the fact that the policies pursued by the present incumbent of the Oval Office are considered to be highly questionable from the point of view of many strategists of capital, one might suspect that the objective advice provided by the CEA is not of the highest possible quality. These suspicions are amply confirmed by their advice in relation to socialism.
But let us suspend judgement until we have examined at least the main lines of this interesting document.
In the children’s story, the brave little tailor—the hero, annoyed by the buzzing of flies around his jam sandwich—swats them with the newspaper or something (we’re not sure that newspapers were available in those days), killing seven of the pesky insects. Proud of his exploits, he parades around the town with a belt that says “seven at one blow.” People naturally assume that this refers to seven men, not seven flies. Consequently, his fame grows exponentially, he faces and defeats several giants, marries a princess, becomes king, and lives happily ever after.
The achievements of the CEA (as we will call it henceforth) are comparable to those of the brave little tailor, only on a far vaster scale. The intellectual representatives of the White House (if we may be so bold as to describe them thus) do not walk around the streets with a belt, but publish their adventures in the realm of ideas in the mass media.
But despite superficial resemblances, there is a difference between the two. Whereas the little tailor in the story was quite unconscious of his actions, the ones in the White House who stitched together this sorry document are very conscious of the fact that in order to discredit the ideas of socialism, they must resort to the most brazen kind of trickery. These tricks may well serve to deceive gullible folks, but for those of us who still have a brain with which to think, the deceit is so transparent as to verge on the comical, like so much that emerges from the White House these days.
It is very significant that they would go to such lengths to “scientifically” debunk socialism, although this boils down to a vulgar caricature, or, as some folks like to describe it, fake news. It sets up a straw man in order to knock it down again. The main trick is to equate socialism either with bureaucratic-totalitarian Stalinism or social-democratic reformism. Both analogies are false, as we will show.
The document commences with a striking flourish:
Coincident with the 200th anniversary of Karl Marx’s birth, socialism is making a comeback in American political discourse. (My emphasis, AW.)
On this judgement they can be no two opinions. The striking success of Bernie Sanders’s campaign, the growth of the Democratic Socialists of America and many other symptoms show a striking change of attitudes in America towards socialism.
Not so long ago, socialism in the USA was equated with Communism, which in turn was equated with Stalinist Russia, which in turn was equated with the Evil Empire, which, as we all know, was equated with the sinister realm of Satan, the Antichrist and everything that was contrary to apple pie, motherhood, and every other well-known American value.
For decades, the American public has been fed on a steady diet of this kind of thing. It is therefore surprising to many that recent opinion polls have indicated a significant shift in the attitude of ordinary Americans to socialism. This is causing rising alarm among conservative commentators, including in Donald Trump’s White House.
The fears are well founded. The growing support for socialist ideas is well documented. Here are just a few examples. Nearly half of millennial Democrats say they identify as a socialist or democratic socialist, according to a new poll from BuzzFeed News and Maru/Blue. Almost half, 48 percent, said they would call themselves a democratic socialist or socialist, compared to 39 percent who said they identified as neither.
The percentages were naturally lower among Republican millennials, although, amazingly, 23 percent of those say they would call themselves a democratic socialist or socialist! Nearly twice as many millennials said they at least leaned toward Democrats instead of Republicans, 48 to 25 percent, while 19 percent of those surveyed identified as independent.
For the first time in Gallup’s measurement over the past decade, self-identified Democrats have a more positive image of socialism than they do of capitalism. Attitudes toward socialism among Democrats have not changed materially since 2010, with 57 percent today having a positive view. The major change among Democrats has been a less favorable attitude toward capitalism, dropping to 47 percent positive this year—lower than in any of the three previous measures, although Republicans remain much more positive about capitalism than about socialism (16 percent are positive about socialism), with little sustained change in their views of either since 2010.
An article that appeared in the pages of The National Review on March 18, 2017, under the interesting headline: Socialism’s Rising Popularity Threatens America’s Future, comments:
“The most alarming result, according to [George] Barna, was that four out of every ten adults say they prefer socialism to capitalism,” the ACFI noted in its commentary on the poll. “That is a large minority,” Barna said, “and it includes a majority of the liberals—who will be pushing for a completely different economic model to dominate our nation. That is the stuff of civil wars. It ought to set off alarm bells among more traditionally oriented leaders across the nation.” That 40% of Americans now prefer socialism to capitalism could spell major change to the policies advanced by legislators and political leaders and to the interpretations of judges ruling on the application of new and pre-existing laws.
In case anyone has not understood the seriousness of the situation, the article is introduced by a suitably dramatic subheading: Too many of us have forgotten the lessons of the Cold War. The White House document underlines the point:
Detailed policy proposals from self-declared socialists are gaining support in Congress and among much of the electorate.
Insofar as the document refers to the electorate (i.e., the population at large) this observation is correct. But the notion that the US Congress is awash with Reds stretches the imagination of even the most fertile brain. Evidently, what the White House intellectuals mean to say is that there are some people in Congress who favor such revolutionary ideas as the right of the American people to universal healthcare, free education, guaranteed minimum income, and other such preposterous proposals that are clearly subversive to free market ideals.
Sad to say, there is not a great deal of evidence to support the view that the Democrats in Congress are about to raise the red flag over Capitol Hill. The modest proposals mentioned above are very far from revolutionary, or at least they would not be regarded as such by any relatively civilized society. Many of them exist, to one degree or another, in Scandinavia, Britain, France, and Germany, and do not appear to have subverted the capitalist order in the slightest degree.
That there is now a degree of tepid support for “socialism” among some Democrats in Congress is obviously an indication of a change as compared to virtually zero support in the past. But it by no means represents a sudden conversion of the Democrats to genuine socialism. What it does indicate is a growing pressure from below on Congress by millions of Americans who are increasingly discontented with the law of the jungle that has dominated their lives until now.
The report continues: “It is unclear, of course, exactly what a typical voter has in mind when he or she thinks of ‘socialism.’” This is regrettably true. But while it may be the case that most people do not know exactly what they want, it is also true that they know perfectly well what they don’t want. They do not wish to live in a society where millions of people are denied elementary healthcare, which ought to be the inalienable right of people in any semi-civilized society. They do not want to be exploited by rapacious capitalist employers who pay pittance wages for long hours of hard labor.
Nor do they want to be lorded over by a tiny clique of obscenely rich bankers and capitalists who produce nothing but own and control everything. They are fed up with the old system whereby well-heeled politicians—both Republicans and Democrats—are in the pockets of Wall Street, and rule according to the interests of their class to the detriment of the interests of the overwhelming majority.
Decades of anger, indignation, and frustration, which have been accumulating gradually beneath the surface, are finally begun to explode. In a peculiar way, even the election of Donald Trump reflected this anger. But Trump, himself a billionaire, does not represent the interests of the majority of working-class Americans. In essence, he represents the same class interests as Hillary Clinton: those of the bankers and capitalists, although he does this in his own particular way that is not always to their liking.
Having dispensed with the preliminaries, the CEA now starts to get down to business:
[…] economists generally agree about how to define socialism, and they have devoted enormous time and resources to studying its costs and benefits. With an eye on this broad body of literature, this report discusses socialism’s historic visions and intents, its economic features, its impact on economic performance, and its relationship with recent policy proposals in the United States.
One of the unfortunate characteristics of modern capitalism and its intellectual gurus is the constant debasing of the English language. Words are constantly being twisted and distorted beyond all recognition, frequently turning into their opposites. Thus, nobody has any problems these days, but only “issues.” People are no longer killed, but merely “taken out.” There are no innocent civilian casualties in wars any more, but only “collateral damage.” This kind of thing carries George Orwell’s Newspeak to a new level of sublimity.
The authors of the present report did their level best to continue developing the gentle art of linguistic obfuscation. A case in point is the phrase “opportunity costs.” But at least they make an attempt at a dictionary definition of their strange vocabulary. An “opportunity cost” is defined as “the loss of potential gain from other alternatives when one alternative is chosen.”
That we are faced with several different opportunities is self-evident even to a not-very-intelligent child of six. But what specific alternatives are we talking about? One alternative is what already exists. It is known as capitalism. That means, in very simple language: an economic system where everything depends on one thing: production for profit. The lives of millions of men and women are determined under capitalism by this simple fact.
As long as the capitalists and bankers can obtain what they consider to be suitable level of profit by squeezing the labor of the workers, they will continue to produce, people will have jobs, and may even get a few crumbs from the rich man’s table. But if the capitalists are not getting what they consider to be a suitable reward for their “labor” (what that labor actually consists of is a debatable question), they will close the factories as if they were matchboxes, throwing workers onto the streets without the slightest compunction, destroying whole communities and reducing an entire generation to despair.
This is actually what has happened to many American workers. Formerly prosperous areas, where large-scale industries produced goods on a massive scale, have been reduced to industrial deserts. In Pennsylvania, Ohio and Michigan, northern Indiana, eastern Illinois, and Wisconsin, mines and factories have been closed, communities decimated and millions of American citizens reduced to levels of poverty, misery and despair not seen since the 1930s.
It was the rejection of this so-called alternative that was largely behind the desperate search for another way that was very clear during the last presidential election. It was expressed in the rise of Donald Trump, who demagogically appealed to the millions of Americans that had been thrown on the scrapheap by the capitalist system. His rhetoric struck a chord with people that other politicians failed to notice or did not even mention. It was this, and not any “Russian interference” that determined the results of the presidential election.
However, there is another side to this question. When Bernie Sanders first announced his candidature, very few Americans had even heard of him. On the other hand, everybody had heard of Hillary Clinton. Yet within a very short space of time, Bernie Sanders shot up in the polls. His meetings were attended by tens of thousands of enthusiastic people, overwhelmingly young in age, who are looking for an alternative.
In these mass meetings, Sanders spoke about socialism, attacked the rich and powerful, and even spoke of the need for a political revolution against the billionaire class. And the speeches struck as a responsive chord, not only with his own supporters, but also with many people who supported Donald Trump. In fact, Sanders was the only candidate who could have defeated Trump. In the end, predictably, the establishment of the Democratic Party did the dirty on Bernie Sanders, who, unfortunately, accepted it and called on people to vote for Hillary Clinton—correctly seen by many people as the candidate of Wall Street. The result is well known.
The great American writer Gore Vidal once explained that “our republic has one party—the property party—with two right wings. There is not much more one could add to that remarkable definition of American politics. Sanders’ big mistake was to tie his campaign to the Democrat Party, which is a capitalist party no less than the Republican Party.
Now, at last, the authors of the document attempt to tell us what socialism actually is:
To economists, socialism is not a zero-one designation. Whether a country or industry is socialist is a question of the degree to which (a) the means of production, distribution, and exchange are owned or regulated by the state; and (b) the state uses its control to distribute the economic output without regard for final consumers’ willingness to pay or exchange (i.e., giving resources away “for free”). As explained below, this definition conforms with both statements and policy proposals from leading socialists, ranging from Karl Marx to Vladimir Lenin to Mao Zedong to current American socialists.
The definition of socialism provided by these anonymous economists comes straight out of the “Red Scare” era of American politics. Under socialism, we are informed, everything will be in the hands of the state—that monstrous, oppressive, bureaucratic state that wishes to control every aspect of our lives and reduce us to the level of slaves. Worse still, in an economy where production, distribution and exchange are “owned or regulated by the state,” the “economic output” (whatever that might mean) will be distributed “without regard for final consumers’ willingness to pay.” That is to say—horror of horrors! — “giving resources away for free.”
The notion of giving anything away for free will send shivers up the spine of every self-respecting businessman and banker from the Florida Keys to Alaska. This monstrous idea would spell the end of civilization as we know it! But let us analyze the question in a little more detail. First of all, let us advance our own very simple definition of the fundamental difference between socialism and capitalism. Capitalism, as we have said, is production for private profit. Socialism is production for the satisfaction of human needs. If we stick to these two fundamental ideas, there can be no question of any confusion on the issue.
Let us take the present situation. In the first decades of the 21st century, we live in a world where the productive forces have been developed to such an extent that, for the first time in human history, we can honestly say there is no need for anyone to starve, there is no need for anybody to be homeless, there is no need for any child to die for the lack of clean water or elementary medical care, and there is no need for anyone to be illiterate.
There is no need for any of these things in the modern world. And yet all of these things exist on a vast scale, not only in what used to be called the “Third World”—Africa, Asia and Latin America—but also in the advanced capitalist countries, including the United States, the richest country on earth.
There is an unbridgeable gulf separating the theory of capitalist “free market economy” and its practice. The document speaks of the “willingness” of consumers to pay. What they really mean is their ability to pay. Everybody would be willing to pay for a comfortable apartment in New York or San Francisco—if only they could. The problem is that the monstrous price of accommodation in big American cities places even such an elementary requirement as a home beyond the reach of many, if not most, Americans.
Here we return to the fundamental difference between socialism and capitalism. Under capitalism, commodities are only produced where there is a demand for them. But here, the word demand must be defined correctly. There is a huge difference between demand in the abstract, and what the economists refer to as effective demand. There is obviously a huge demand for housing in the USA, as there is in Britain and all other countries. Unfortunately, effective demand is another thing altogether.
The celebrated French writer, Anatole France, once wrote that: “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” This phrase is highly applicable to the present situation in the USA. Of course, everybody under capitalism enjoys freedom of choice. But for millions of poor people, the much-vaunted choice offered by the market economy is to choose whether to sleep in a doorway or under a bridge.
The high cost of housing is one of the main scandals of the period in which we live. The millions of homeless people who display a most fervent willingness to acquire a roof over their heads, are regrettably lacking in the wherewithal to transform this abstract willingness into an actual purchase.
The document continues:
We find that historical proponents of socialist policies and those in the contemporary United States share some of their visions and intents. They both characterize the distribution of income in market economies as the unjust result of “exploitation,” which should be rectified by extensive state control.
We note that the word exploitation is placed in inverted commas. This implies that capitalist exploitation does not exist. According to this, the profits of the capitalist class must come out of thin air. The relationship between capital and wage labor is supposed to be entirely harmonious, equal and equitable. And we all lived happily ever after.
Any American worker knows that this is just a fairy tale. The relations between workers and capitalists are not at all harmonious, but entirely antagonistic. This must be the case, for the simple reason that the profits of the capitalists are derived from the unpaid labor of the working class. And they cannot be derived from anything else. The authors of the document dismiss the concept of “exploitation” as a “complaint” by the left. They refer coyly to the “distribution of income in market economies.” But they do not tell us what this distribution is. Let us take a moment to enlighten them.
The statistics show that there is a long-term increase in inequality between the wealthiest layers of American society and the poorest. After the Great Depression of the 1930s, the gap between rich and poor actually narrowed. Now the opposite tendency can be seen. At present, one quarter of American workers make less than $10 per hour, which is below the federal poverty level. Between 1979 and 2007, household income increased 275 percent for the wealthiest 1 percent of households. It rose 65 percent for the top fifth. The bottom fifth increased by just 18 percent.
According to the US Census Bureau’s 2017 estimates, 12.3 percent of America’s population (39.7 million people) were living in poverty according to the official measure. The survey is sent to US households, so the poverty estimates do not include those who are homeless. These figures also exclude military personnel who do not live with at least one civilian adult, as well as incarcerated adults.
Other estimates are still higher. According to the Census Bureau, 18.5 million people reported deep poverty, which means a household income below 50 percent of their 2017 poverty threshold. These individuals represented an estimated 5.7 percent of all Americans and 46.7 percent of those in poverty. Most low-wage workers receive no health insurance, sick pay or pension plans from their employers. These workers cannot afford to be ill and have no hope of ever retiring.
This is the first in a series of articles responding to the White House document. In the next part, Alan Woods will deal with capitalist exploitation in the USA and the end of the so-called American dream. Continue to part two.