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Stiglitz writes: "Through much of this spring, President Trump has made a big deal out of Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Bernie Sanders (I-Vt.) calling themselves democratic socialists."

Democratic Socialist Rep. Alexandria Ocasio-Cortez. (photo: ACLU)
Democratic Socialist Rep. Alexandria Ocasio-Cortez. (photo: ACLU)


A 'Democratic Socialist' Agenda Is Appealing. No Wonder Trump Attacks It.

By Joseph E. Stiglitz, The Washington Post

10 May 19

 

hrough much of this spring, President Trump has made a big deal out of Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Bernie Sanders (I-Vt.) calling themselves democratic socialists. He likens them to Venezuelan dictator Nicolás Maduro. But no one in the United States is advocating a government takeover of coal mines or oil fields — not Ocasio-Cortez, not Sanders, not anybody. Trump is merely engaging in an old-fashioned smear campaign, hoping to turn voters against democratic socialism by conflating ideas.

I prefer another name, “progressive capitalism,” to describe the agenda of curbing the excesses of markets; restoring a balance among markets, government and civil society; and ensuring that all Americans can attain a middle-class life. The term emphasizes that markets with private enterprise are at the core of any successful economy, but it also recognizes that unfettered markets are not efficient, stable or fair.

It is no surprise that the extremes of capitalism and its dysfunction have given rise to questions such as: Can capitalism be saved from itself? Is it inevitable that the materialistic greed that it breeds will lead to ever-increasing pay packages for chief executives? Or that those with money will use their political influence to shape our tax system so that the richest pay proportionately less than everyone else? Progressive capitalism can, I believe, save capitalism from itself — if only we can get the political will behind it.

Research over the past 40 years has explained why markets on their own don’t deliver rising economic benefits for all. Adam Smith, the founder of modern economics, recognized how, if unregulated, businesses would conspire against the public interest by raising prices and suppressing wages. Yet he also suggested that at times markets would lead, as if by an invisible hand, to the well-being of society. Now we understand why markets often fail to deliver on their promise and why Smith’s invisible hand often seems invisible: because it simply isn’t there. Modern theories of industrial organization have taught us how firms construct barriers to entry to enhance their market power. Twenty years into this new century, the empirical evidence is overwhelming: There is increasing market concentration in sector after sector, with increasing profits and increasing markups in prices.

American democratic socialists are probably slightly to the right of the center of European social democrats. Forty years ago, France’s “socialists” under François Mitterrand disavowed classical socialism as they privatized many of France’s government enterprises. But virtually every European politician now recognizes that access to medical care is a basic human right. This new breed of American democratic socialists — or call them what you will — is simply advocating a model that embraces government’s important role in social protection and inclusion, environmental protection, and public investment in infrastructure, technology and education. They recognize the public’s regulatory role in preventing corporations from exploiting customers or workers in a multitude of ways, whether it’s through data collection by the new tech companies or excessive risk-taking, as exemplified by banks in the run-up to the 2008 financial crisis.

Of course, while reforms that curb such excesses and make greater investments, for example, in science and technology will increase growth rates in a sustainable way, they will not suffice to restore the middle-class lifestyle increasingly out of reach for large numbers of Americans. That’s why democratic socialists talk about reforms in education (including doing something about the $1.5 trillion of student debt), in housing, in ensuring access to employment for everyone who is able to work, and in retirement programs.

My generation sometimes forgets that the Cold War ended 30 years ago with the fall of the Berlin Wall. Those hard-fought, ideological battles are long over. Millennials respond to the label “democratic socialist” in a pragmatic way. They say, if it means ensuring a decent life for all Americans, then we’re for it. If it means ensuring that we have a future — because we work to curb climate change — we’re for that, too.

Some on the right will respond that it’s just a 21st-century version of economic populism. That it’s popular is clear — many of these ideas have the support of a majority of Americans, especially the young. But variants of these ideas are economically feasible — indeed, the kinds of investments and regulations that are being advocated are necessary if we intend to have sustainable shared prosperity.

A key component to the democratic socialist agenda is democracy. Democracy is more than having elections every four years. It includes systems of checks and balances — ensuring that no one, not even a president, has unbridled power — and a deep belief that no one can be above the law. It also includes protections of the rights of minorities, and a Congress and a healthy news media holding everyone to account. But it also embraces fair representation, because a system of voter suppression, gerrymandering and money-dominated politics, where the views of the minority can dominate the majority, is antidemocratic.

Whatever it’s called, it’s an appealing combination. No wonder the president spends so much time issuing slurs against it.

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+38 # DongiC 2019-05-10 10:15
Because the President is basically unfair, he militates against reform and elevating vast numbers of people into the middle class. He wants all he can get for the lowest price possible. He prizes goods and things and luxuries of all kinds. He stands for selfishness and egoism and is a curse to our culture. We must defeat him and his philosophy of accumulation in 20/20 if we want an America worth fighting for. We need to replace Trump's darkness with Sanders' light. Else, why have a country at all?
 
 
+5 # Jim Young 2019-05-11 08:34
Well said.
 
 
+26 # John Cosmo 2019-05-10 12:16
"Progressive Capitalism" is a great term to use. I've heard others use the the term "Viking Politics" to refer to the kind of social programs that the Scandinavian countries have. It's sad that the term "socialism" has such negative connotations in the minds of many.
 
 
+7 # AldoJay69 2019-05-11 07:58
Maybe it's best not to use "terms."

Labeling requires 1) defining the term, and 2) universal acceptance/agre ement on that definition.

Absent those two requirements, you will believe you are communicating, when you're not.

What's a "liberal?"
What's a "conservative?"
What's a "socialist?"
Ask 10 people, get 10 answers.

Terming and labeling are name-calling and, as such, are childish distractions which effectively cut off dialogue.

"Crooked Hilary."
"Lying Ted."
"Sleepy Joe."
"Witch hunt."
"Hoax."

If we take the bait, we surrender control of the narrative and allow ourselves to be played.

Instead, let's seize control and never let it go.
No names, no terms, no labels.
Just good ideas and good policies.
 
 
-7 # Caliban 2019-05-11 18:42
Very idealistic, AldoJay69, and worthy of a statesman. But idealism with Donald?
Trump has no copyright on insulting nicknames; nor should they be only his to use.

So, what about Dummy Donald, Whitey Donnie or Johnny the Jerk? And is DT not surrounded by folks like Sleazy Sarah, Minichin Mnuchin? Pesky Pence, No Stones Stone, Molten Bolton.

This name-play is actually kind of fun, but maybe we idealists should continue to set a positive rhetorical example for the leader of the free world.

Maybe.
 
 
+6 # economagic 2019-05-10 13:32
Stiglitz is one of the most realistic among classically-tra ined economists now living, far better than (e.g.) Krugman. But he still fails to grapple with the fact that zero "government interference" in markets (regulation) is a fundamental tenet of capitalISM, as opposed to markets as such and in general. It is what distinguishes capitalism from other kinds of economies in which buying and selling for profit is not seen as the primary source of personal and societal well-being.

Smith is all over the map, and while he did indeed posit a role for government in setting the rules under which markets operate, he also endorsed the French doctrine of "Laissez-faire, " which is non-intervention.

As for the "invisible hand," Stiglitz is certainly correct that it is invisible because it doesn't exist. But in the one single use of that term in 900 pages Smith makes much of the claim that he has "never known much good to be done by those who affected to trade for the public good," but that a person pursuing only his own interest "frequently promotes that of the society" more effectively than if he had attempted to do so on purpose.

As a professor of Moral Philosophy in 1776 Smith surely was referring to "the Divine hand of Providence," and as such he should have known better.
 
 
+4 # Rodion Raskolnikov 2019-05-11 07:11
Thanks for the sanity on Adam Smith. He was better known in his time for his book, "The Theory of Moral Sentiments." Here he makes the claim that in all people sentiments or just simple feelings are moral. You feel bad when you do something bad. Of course, there are people who are corrupted by many factors but he says that even the most hardened criminals know when they are doing wrong.

Moral sentiments is the invisible hand that governs all rational people. Smith was in the tradition of Lord Shaftsbury, definitely not the tradition of social darwinism which much later came to define capitalism.

Today, we have privileged and elevated sociopaths. These are not rational people. Many of them should be confined to mental institutions so they don't hurt people any more. Trump is one of these, but he's a minor example when compared to lots of others.

The term "progressive capitalism" is just hog wash. It is an Orwellian oxymoron. As you say, Stiglitz is good, but here is he is just off base. Socialism and capitalism are two different principles of organizing the production and distribution of goods and services. They work simultaneously and they impose a checks and balances on each other. So for example, capitalistic healthcare in the US is failing; socialists want to replace it with a public or socialist system. Most wealthy nations have socialist systems and they work fine.
 
 
0 # dbrize 2019-05-11 13:08
You lend intelligent thoughts to the discussion. Stieglitz and all the rest aside, it seems to me an error to assign either morality or immorality to capitalism.

Capitalism in its essence is quite simple: the effort to provide a better product or service to a willing customer at a price they are willing to pay. Now, moral or immoral individuals may participate in these transactions for either good or bad. But there is no inherent moral code or violation in producing something and offering it at a price at which it will sell.

So, what we find “immoral” in present times may not be capitalism but actually “crony capitalism”. Successful attempts with the help of others, including government, to game the system.

With the ongoing plethora of complaints regarding income inequality now taken up by the benefactors themselves i.e, Warren Buffet, Jamie Dimon, Ray Dalio et al, who among them have noted the quickest way to “equalize” income would be for the FED to announce an immediate end to policies propping up the asset prices by which the inequality exists? Presto! The rich within days, lose half their wealth.

Capitalism is neither moral nor immoral. It merely marks to market a price by which decisions are made. The greatest clearinghouse stabilizer in the world is price. When humans distort it, intervene in it and otherwise manipulate it, bad things always follow. The cure for “Capitalism” is...capitalism.

As sayeth Pogo, “we have met the enemy, and it is us”.
 
 
+4 # Rodion Raskolnikov 2019-05-12 07:51
db -- I have a different definition of capitalism, one that comes more directly from Marx. It is simply the profiting from someone else's labor. "Rent Seeking" is the technical term for it in economics. As Marx says, capitalism alienates labor from the worker. Someone else (i.e., the capitalist) controls all the conditions of making and selling, takes all the profits. Under capitalism, the ideal wages is a subsistence wage, just enough for a worker to buy enough food and clothes in order to be able to keep working. Not a penny more.

Capitalism, to me, is theft and is inherently immoral. We do not live in a perfect world. There will always be some capitalism. It can be regulated and made somewhat tolerable. It can't be eliminated entirely.

To me, it is a matter of dealing with capitalism, not hoping to eliminate it. Take my own case. I work a job and I create wealth or value that is about 10 times my salary. The money goes to the institution that employs me and to pay the executives who make salaries many times what I make. But I could not do what I do without the institution and the infrastructure that makes my work possible, so I deal with it. But I understand the relations of production that prevail.

Price only makes sense in the very immediate sense. What really matters is the extent to which the capitalist can exploit the laborer. Labor is the great key to economics. That's why we are being replaced by robots.
 
 
+2 # dbrize 2019-05-12 16:42
Of course you are not alone at this site in your endorsement of Marx. And I mean that in a non pejorative sense.

Back in the good old days at RSN there was a regular, dkonstuction as I remember his handle, who was quite good on Marx. I didn’t agree with him on much but he was intelligent, well versed and interesting to read and engage. Sadly, folks like him, once prevalent here have gone their merry way.

I claim no great expertise though I have labored mightily to read Marx as well as his greatest contemporary critic von Bohm-Bawerk. These debates are certainly tendentious but imo, Bohm-Bawerk pretty well slices and dices the labor value theory.

Earlier in this thread AldoJay69 makes an important point. These terms have been so diffused into meaningless pejorative that we are better off discussing ideas rather than systems. By my definition of Socialism the state controls the means of production which means Sanders is most certainly NOT a socialist. He is a social democrat which is a far different thing and the reason why dogmatic Marxists have little use for him.

Anyway, I appreciate your thoughts though I disagree. At least we prove that a “socialist” and a “market based” pair can still agree we would be better off with a Sanders or Gabbard at the helm than a Clinton or Trump.

Peace.
 
 
+1 # AF38 2019-05-14 13:42
I agree with Rodion that capitalism is basically a system in which some people (Owners and Financial capitalists) profit off of the labor of others (workers) in an asymmetrical way. You can characterize the social relations of capitalist economic production that way without agreeing with Marx's Labor Theory of Value which is an economists' dispute.
 
 
0 # allanmillard 2019-05-20 00:08
AldoJay has a good point about "terms", and to that I would add "left" and "right" as devoid of meaning. Further, as soon as one attempts to define them one finds as many definitions as there are definers.

At university in the 1950s I advanced a theory one day in a political science seminar that the political spectrum is not two-dimensional but rather a three-dimension al ring. At the front and centre is a concept of a balance between individual liberty and state or corporate power. At the back of the ring is the totalitarian state and it does not matter whether you go around the ring to the left from the centre or to the right from centre you end up with totalitarianism . The road to serfdom goes either way.
 

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