[It’s time for Americans to call socialism by its name. Like
Sisyphus, the best we can expect is that the rock may stay where
we’ve put it for a long while, sometimes for entire generations of
decency, as the struggle continues.] [[link removed]]

CAPITALISM VS. LIBERTY  
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Robert Kuttner
December 1, 2021
American Prospect
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_ It’s time for Americans to call socialism by its name. Like
Sisyphus, the best we can expect is that the rock may stay where
we’ve put it for a long while, sometimes for entire generations of
decency, as the struggle continues. _

,

 

All of my adult life, I’ve considered myself a left-liberal, tending
toward social democrat. Much of that sensibility reflects the era of
my early adulthood, a time when reformed capitalism seemed plausible
and practical. The New Deal had created a fundamental shift of power
and ideology. Free-market ideologues and Wall Street moguls were
discredited and disgraced by the Great Crash. Financial markets were
tightly regulated. Labor unions were empowered. Government
demonstrated the value of public investment and social insurance. The
mixed economy had arrived, seemingly for keeps, well defended by
grateful voters.

But that moment turned out to be all too transient and fragile. What
followed was not just a reversion to the laissez-faire of the 1920s.
What has ensued is hyper-capitalism, impervious to the usual
strategies of reform, turning humans and social institutions into
expendable commodities, destroying the ability of people to thrive.
Saving democracy, the planet, and decent lives for regular people
requires moving beyond capitalism. To be an effective liberal today,
you need to be a socialist.

I’ve long resisted the socialist label, on several grounds—partly
because the habit of sectarian infighting sometimes makes socialism
seem a caricature of itself; partly because the word “socialism”
gives the right too fat a target in a country without much of a
socialist tradition. Then again, socialist-baiting is standard
Republican playbook even when Democrats propose the most timid of
programs. After the House belatedly passed a badly stripped-down
infrastructure bill, scores of Republicans absurdly claimed that this
was socialism. If only.

I’m also uneasy in the company of some people to my left who indulge
self-defeating slogans like “defund the police,” which are gifts
to the right; or who are unhelpfully scornful of President Biden’s
efforts. (Where do they expect him to find the votes in Congress for
an even more robust left program?) Conversely, some admired friends
from my generation who were once founders of Students for a Democratic
Society and who are unabashed socialists are fervent Biden supporters.
They’re political realists, while also pushing Biden to be more
progressive in his aspirations. That’s my stance, too. So this essay
is an exploration of the deepening toxicity of capitalism and the
alternatives, not a brief for no-enemies-on-the-left.

When I was young, the liberal tradition was far more robust.
“Liberal” evoked FDR. There was no Trumpism because New Deal
liberalism delivered for the working class. This magazine was born
very much in the liberal tradition. When Paul Starr, Bob Reich, and I
founded the _Prospect_ in 1989, we paid calls on two iconic older
liberals to seek their blessing, Arthur Schlesinger Jr. and John
Kenneth Galbraith, and not on socialists Michael Harrington and Irving
Howe (though both were personal heroes of mine as well as friends, and
I’d written several pieces for Howe’s _Dissent_).
A _Prospect_ slogan, emblazoned on our cover, was _A Journal for
the Liberal Imagination_.

That era and those assumptions have been overtaken by events. The
system’s excesses are becoming steadily more grotesque. The profit
maximization strategies of Amazon repeat the worst sweatshop
conditions of a century ago, as if the labor movement had never
existed. Likewise today’s slaughterhouses. Ultra-commercialization
is infecting every corner of the medical system, harming patients and
health workers alike, mocking the idea that markets are efficient. The
supply chain crisis is the result of excessive globalization and
deregulation. The platform monopolies have built their business models
around surveillance capitalism and cultivation of addictive behaviors.
Private equity firms and hedge funds are taking over sector after
sector, from retail to nursing homes to newspapers, undermining
workers and the viability of underlying enterprises. Wealth has never
been more concentrated. What’s needed is substantial social
ownership and a political consciousness to animate it.

Politically, socialism is no longer fringe. Bernie Sanders, a
democratic socialist, very nearly won the Democratic presidential
nomination twice, because he articulated the frustrations and
aspirations of working people. There is a good case that he had a
better shot at beating Trump than Hillary Clinton. In 2019, YouGov
reported that 70 percent of millennials, ages 23 to 38, have a
positive view of socialism—not surprisingly, given their lifelong
experience of hyper-capitalism. (Our friend John Judis goes more
deeply into this shift in his 2020 book, _The Socialist Awakening_.)
Standard economics has a concept called “revealed preference.” New
products and prices reveal preferences people didn’t know they had.
Same with ideologies, evidently. The surprise support for Bernie and
democratic socialism was a revealed preference.

Biden has attempted to govern with expansive spending, taxing, and
regulatory measures in the spirit of FDR. But his aspirations and
credibility are being blunted by the corporate Democrats in his own
party, reflecting the persistent undertow of capitalism. Biden’s
heroic efforts, like Roosevelt’s, are well worth
supporting—without illusions. The deeper sickness of the economy and
society is hyper-capitalism, and we need to supplant it.

I’ve come around to this view gradually, not because my values have
changed but because reality has changed. I’m a child of the New
Deal. My parents and grandfather cashed in their war bonds in 1948 for
a down payment on a 900-square-foot house in suburbia, financed with
my dad’s 2.5 percent GI loan. When my father was stricken with
cancer in 1952, the VA, which provided high-quality socialized
medicine for an entire generation of men, paid for all of his
excellent care. After he died, my mom was able to keep our house with
a part-time job, thanks to his veterans pension and Social Security.

So I was a New Dealer in my bones before ever studying Roosevelt. Two
sacred words in my house were _VA_ and _Social Security_. I also
acquired a sense of social class growing up as a poor kid in a rich
town. Yet this was an era of substantial upward mobility. Like others
of my generation, I was able to go to college with no debt.

Despite the loss of my father, despite the vague worry of being blown
to hell in a nuclear exchange, despite the persistent racism and the
inconclusive struggles for civil rights, America seemed like a hopeful
place when I went off to college in 1961. When I became a journalist
and for a time a Senate investigator, my sensibility continued to be
left-liberal. Reform seemed worth the struggle, and it seemed
possible.

One of my proudest achievements was an investigation and a series of
hearings for the Senate Banking Committee on redlining and community
disinvestment. Guided by local activists, we demonstrated that banks
in many urban neighborhoods were pulling savings out of the community
but refusing to put mortgage loans back in. Under the leadership of a
great progressive, Wisconsin Sen. William Proxmire, we passed three
bills. One required banks to disclose where they were making their
loans, so that activists could pressure them. A second created an
affirmative obligation for banks to reinvest in communities. A third
created a housing assistance program for moderate-income homeowners.

One of our star witnesses was an idealistic and smart community banker
named Ron Grzywinski, who had built the South Shore National Bank in
Chicago (later renamed ShoreBank) as a model institution to finance
low-income homeownership and local business on Chicago’s mostly
Black South Side. A little later, after I moved back to journalism,
other legislation used that bank as a template for a new kind of
lender, the community development financial institution, spawning
dozens of others following the ShoreBank model.

This was heady stuff. Working with local organizers, you could
actually legislate, and it could make a difference on the ground. And
then it all turned to shit. And how it turned to shit is instructive.

While we liberals were idealistically promoting community
reinvestment, the real power players on Wall Street and their allies
in Washington were inventing subprime. Bill Clinton was supporting
ShoreBank and kindred community lenders with one hand. (He actually
made the ShoreBank model part of his 1992 campaign stump speech.) But
with the other, he was promoting the extreme financial deregulation
and speculation that led to fraudulent mortgage-backed securities and
the 2008 financial collapse. Subprime “exploding” mortgages
designed to default were cynically targeted at exactly the populations
and communities our work on community reinvestment sought to help. In
the wake of the collapse, close to ten million families,
disproportionately Black and brown, lost their homes. Three decades of
work increasing homeownership for working people was wiped out.

In a perfect final touch, the government bailed out all the big
investment banks that had bankrolled the subprime lenders and
underwritten the faked mortgage-backed bonds that collapsed in 2008.
They were too big to fail. But ShoreBank, which had not participated
in subprime at all, got caught in the general downdraft of falling
property values. It was deemed too small to matter. Barack Obama was
not embarrassed to bail out Wall Street. But since ShoreBank was in
his old neighborhood, his handlers were concerned that saving the
local community bank might not look good. So ShoreBank got no federal
aid and was allowed to fail.

Look at the past century, and you see good people doing hard and noble
work that produces results that stick—for a time: labor organizers,
community activists, civil rights workers. And then much of it, even
most of it, gets wiped out and worse.

[ND21 Kuttner2.jpeg]

The liberal tradition, as represented by Franklin Roosevelt, was once
far more robust (AP Photo)

DURING A LIFETIME that has blended journalism, activism, scholarly
research, and teaching, I’ve tried to get my mind around the
relationship between markets, social justice, and democracy. My most
ambitious book, published in 1997, was called _Everything for
Sale_:_ The Virtues and Limits of Markets_. In that book, I looked at
every sector of the economy and demonstrated that contrary to the
conceits of orthodox economics, “market failure” was not an
exceptional case; in much of the economy, market inefficiency was the
norm. You could improve on it with social investment and regulation.
As one reviewer aptly wrote
[[link removed]], my quarrel “is not
with capitalism per se.”

Rereading that book after 25 years, I now realize that my conclusions
were right but my framing was off. The problem was not “markets”
or the technical mistakes of economists. It was _capitalism as a
system_. Why, after all, would a nation come up with a health system
like ours that is so staggeringly inefficient, inconvenient, and
brutal? What kind of system would tolerate surprise billing that
bankrupts families, or deny sick people lifesaving drugs that cost a
few cents to manufacture? What kind of system would overuse profitable
procedures for the insured, such as endoscopies, while disallowing
lifesaving surgeries and drugs for people who can’t pay? A
capitalist one.

All of these seeming inefficiencies are in fact highly
efficient—from the perspective of profit maximization. They are so
totally ingrained that efforts at incremental reform only make the
system that much more convoluted. Recently, _The New York Times_ ran
an obtuse piece
[[link removed]] titled
“Why Aren’t More People Comparison Shopping for Health Plans?”
The piece, by Paula Span, quoting a Kaiser study, reported that 71
percent of recipients did not shop around for Medicare Advantage and
Part D drug plans, even though they might have saved money. The author
added: “Some of that inertia may reflect people’s satisfaction
with their coverage; it might also indicate an overwhelming amount of
choice. For 2022, beneficiaries face an average of 33 Medicare
Advantage plans to select from (but 56 in Philadelphia and 63 in
Cincinnati) and 30 stand-alone Part D plans.”

Rather than including even a paragraph on how our absurd system got
this way, she concluded by urging people to shop around: “[I]t’s
open enrollment season. SHIP programs in every state, with 12,500
trained team members, represent the best source of unbiased
information and work with more than 2.5 million people each year.”

What the piece did _not_ point out is that the private insurance
industry uses a trusted public brand, Medicare, to market for-profit
products, offering bewildering “choices” precisely to confuse and
manipulate subscribers; and that the idea of shopping around for drug
benefits is preposterous on its face. Far superior would be universal
drug benefits under public Medicare; or even better, under national
health insurance, with prices negotiated by the system. Still more
efficient would be a socialized drug industry with no profit motive at
all.

But all of this is precluded by the sheer political power of the
insurance and drug industries, which have corrupted Democrats and
Republicans alike. The assumptions that this is how the system has to
work are so deeply engrained that our most serious newspaper, rather
than explaining the real choices that ought to be on the table,
provides anodyne advice on how to shop around within a rigged system.

Look around the entire economy, and you find case after case where the
sheer power of capital is precluding more social approaches that are
not only more decent and fair, but far more efficient and streamlined,
and less costly to citizens and the economy. The for-profit sector
keeps crowding out public and not-for-profit alternatives. And because
they need to swim in a market pool defined by profit-maximizing
corporations, large not-for-profits are increasingly indistinguishable
from their for-profit cousins. (“The creatures outside looked from
pig to man, and from man to pig, and from pig to man again; but
already it was impossible to say which was which.” —George
Orwell, _Animal Farm_)

The Massachusetts General Hospital, nominally one of the great
nonprofits, plays exactly the same games as the commercial
for-profits: buying up referral networks, gaming insurance
reimbursements, investing in more profitable specialties, and
maximizing market share. Back in the day, when the entire health
system was less commercialized, when did community hospitals worry
about market share? When did they buy up medical practices? It isn’t
just that market institutions crowd out non-market ones. It’s that
market norms crowd out other norms and other values. As someone once
said, all that is solid melts into air.

THAT, OF COURSE, WAS MARX. I never went through a Marxian phase. In
the 1960s, at the peak of the postwar boom when I was in college and
graduate school, the concepts and language of Marxism seemed quaint
and silly. The proletariat, rather than rising up against the
bourgeoisie, had joined the middle class via effective trade unions.
The middle class, far from being immiserated, was content and growing.
Nations that invoked Marx were economic failures. They were not
dictatorships of the proletariat but plain old corrupt dictatorships.
The reserve army of the unemployed had not materialized, nor had the
law of the falling rate of profits, nor the hegemony of capitalist
ideas. In Europe, social democracy was alive and well. Thanks to
countervailing power, the state was far from Marx’s executive
committee of the working class. It was the instrument of workers and
citizens working to tame capitalism in the public interest.

Well, gentle reader, that era turned out to be a blip—the
consequence of historically anomalous constraints on the economic and
political power of capital in a capitalist economy. In the intervening
years, I haven’t become more Marxian. The world has become more
Marxian.

The era of social democracy and managed capitalism lasted barely a
generation before capitalists recovered their normal immense power in
economies whose ownership remained fundamentally capitalist. With
hyper-globalization, a worldwide reserve army of the unemployed does
batter down wages and marginalizes the political power of labor in the
democracies. A _lumpenproletariat_ of the homeless and stateless
migrants rends the social fabric. Even elite professions are becoming
proletarianized. It is no longer risible to use “capital,”
Marx-style, as a collective noun. Far too much of society is indeed
becoming commodified. The idea that things have to be this way,
perhaps with social buffers around the edges, is close to hegemonic.

But while Marxism provides some useful insights, I would not call
myself a Marxist. The Marxian characterization of historical laws is
far too mechanistic. Marx neglected to attend to how democracy would
actually work, if socialism ever arrived. And he got the most
important thing of all dead wrong. Marx thought that when the crisis
finally came, workers of all countries would unite in their collective
interest. But as the history of the past century proves again and
again, when market forces overwhelm the security and livelihoods of
working people, they are far more likely to turn to ultra-nationalism
and fascism.

The great prophetic critic of that dynamic is not Karl Marx but Karl
Polanyi. Like Marx, Polanyi astutely explained the tendency of
capitalism to commodify things that needed to operate by other norms
and values, such as human society and human labor. Unlike Marx,
Polanyi appreciated the risks of fascism. Most importantly, Polanyi
saw tendencies rather than iron laws. He left room for human agency
and diverse experimentation.

Polanyi came of age as a journalist and public intellectual in the
1920s, in what was then known as Red Vienna. The city of Vienna had
socialist municipal governments from 1919 until 1934. During this
remarkable period, the city government created social housing for the
middle class as well as the working class, a model to this day. Vienna
levied taxes on employers of private servants as well as taxes on
cars, horse racing, and other luxuries, to help finance an array of
services, including family allowances for parents, preschools, and
unemployment insurance run through the trade unions. Electricity, gas,
and water were socially owned. None of this undermined Austria’s
private economy, which was far more endangered by the austerity
policies criticized by Polanyi. In his theoretical work, Polanyi
viewed democratic socialism as the system to carry out the political
liberalism of the Enlightenment, and economic liberalism
(laissez-faire) as corrosive of political liberalism.

Polanyi published his epic book on capitalism, _The Great
Transformation_, in 1944. He lived another 20 years, long enough to
see some evidence that the democracies were taking history’s lessons
to heart and constraining capitalism’s destructive tendencies, and
to hope that we would go beyond social democracy to democratic
socialism. He did not live long enough to see it all reversed,
confirming his darker insights.

[ND21 Kuttner3.jpeg]

In the 1920s, Karl Polanyi’s Red Vienna featured socially owned
housing, water, and electricity, and used taxes on the rich to finance
child allowances, preschools, and other social services.

One of Polanyi’s most powerful concepts is what he called the
“double movement.” Capitalism overwhelms other social institutions
on which ordinary life and economic security depend. Eventually, the
common people revolt and are willing to sacrifice democracy for a
measure of security and respect. Thus does capitalism destroy
democracy in a bank shot. Capitalism also destroys democracy directly,
by substituting money and power for citizenship, precluding reformist
remedies, and signaling the common people that they are fools to think
that voting could make a difference.

Polanyi’s double movement uncannily describes our own era. Ordinary
people are disaffected from the dislocations and excesses of
capitalism but unsure whom to blame or whom to trust. Ever since
Carter, much of the Democratic Party has been so compromised and
bedded down with Wall Street that displaced middle- and working-class
people are skeptical that Democrats and liberal remedies can make much
of a difference in their lives. The cumulative result is Trumpism, a
weird combination of racist nationalism and redoubled corporate rule.
Libertarians like to teach that liberal democracy and free markets are
handmaidens. But autocrats from Trump to Hitler to Xi demonstrate that
dictatorship and market modes of production and employment can coexist
all too well. The signal disgrace of our era is the ease with which
the corporate center-right has gone along with Trump and the
Republican efforts to destroy what remains of democracy. If it’s
possible to oust unions, cut taxes, and gut regulation, losing
democracy is a price worth paying, if it’s a price at all.

Yet Polanyi’s sensibility gives me some hope. Looking at the
tendency of capitalism to crush efforts to build decent human
economies, you can become a defeatist and a cynic; or you can keep at
it, appreciating that sometimes solidarity produces results and that
nothing lasts forever. The 15 years of Polanyi’s Red Vienna stand as
a model. Likewise the 40 years between the 1930s and the 1970s when
the New Deal system contoured America. Swedish social democracy has
been around for almost a century. While global capitalism keeps
chipping away at the Swedish model, that model continues to provide
decent lives for most Swedes. As capitalism goes, a century of decency
is pretty good.

When we had a 30th anniversary testimonial dinner for
the _Prospect_ in October 2019, I gave a talk invoking Camus’s
celebrated essay _The Myth of Sisyphus_. As you will recall, Sisyphus
is condemned to push a rock up a hill, only to have it roll back down.
His every effort is futile. Yet Camus ends his essay with the words
“One must imagine Sisyphus happy.” When I first read that, it
seemed preposterous. Happy? Then I appreciated the insight that the
joy is in the struggle. And then, I finally got the larger point. The
rock, ultimately, is death. In the end, it crushes us all. But along
the way, we build the best life and the best society that we can,
recognizing that nothing lasts forever.

So with that credo, _Sisyphus Happy_, what is to be done? For if we
can’t even produce reformed capitalism, how on earth do we move
toward democratic socialism?

ONE THING THAT NEEDS to be done is to keep pushing outward the
boundaries of the possible. In a seeming paradox, the more socialistic
elements of Biden’s full $3.5 trillion program are the most
popular—the paid family leave, the child allowance, the social
provision of child care, the free tuition for community college, the
social enhancements to health care. Revealed preference. Yet the
press, in its myopia, concluded that the Democrats had a rough
election in November because Biden’s program was too left-wing.
Sorting out the Democrats’ election defeat, _The New York Times_,
channeling Fox, published a monumentally stupid editorial titled
“Face Reality, Democrats.” It claimed, “Tuesday’s results are
a sign that significant parts of the electorate are feeling leery of a
sharp leftward push …”

In fact, the Democrats were repudiated because they and Biden
couldn’t get their act together and looked like a party that
couldn’t govern. And the reason they couldn’t reach agreement on a
budget reflected the perverse influence not of “moderates,” as the
press keeps calling them, but of corporate Democrats. Most of Rep.
Josh Gottheimer’s gang of obstructionists in the House represent
districts whose constituents support Biden’s program. The Gottheimer
naysayers oppose it not because that’s what it takes to get elected,
but because of their corporate debts and alliances.

In individualistic America, the citizenry supposedly mistrusts
government. But once socialistic programs are enacted, they are
immensely popular. Chattanooga has the country’s cheapest and
fastest broadband provided by the local public power company—pure
socialism. Ask the citizens if they want to return to slower, more
costly, and less reliable private broadband. Our most popular programs
are the most socialistic—Social Security and Medicare. Revealed
preference again.

That same _Times_ editorial quotes Rep. Abigail Spanberger, a
centrist Virginia Democrat, saying, “Nobody elected him [Biden] to
be F.D.R.” Maybe not, but last spring when the pandemic emergency,
the recession, and the progressive movement impelled Biden to govern
in the spirit of FDR, the citizenry liked what they saw. It was only
when the momentum was stalled by Republicans and corporate Democrats
that Biden started looking feckless.

Given the immense corporate undertow in American politics, Biden’s
program, even if fully enacted, would be necessary but not sufficient.
He has made a good beginning with his regulatory appointments aimed at
breaking up extreme corporate concentration. He needs to go a lot
further by getting rid of the dark financial pools of private equity
and hedge funds, and by constraining private capital generally.

[ND21 Kuttner4.jpeg]

Bernie Sanders has been a champion of social ownership going back to
land trusts during his mayoralty in Burlington (J. Scott Applewhite/AP
Photo)

ONE BASIC STRATEGY, I think, is to keep creating islands of social
ownership and to limit capitalist ones. Our colleague Ganesh Sitaraman
calls these “public options.” Ideas like postal banking and other
forms of public banking, such as establishing individual accounts
directly at the Federal Reserve or a green development bank, can do
that. Likewise public power and public broadband. Or the original
public option of socialized health care. Or direct public development
and distribution of patent-free drugs. Social institutions like these
demonstrate the superior equity and efficiency of socially owned
alternatives; they also weaken competing private ones and thus the
political power of capital. As Chattanooga suggests, this can be done
at the municipal level, as well as by states and the national
government.

Social ownership doesn’t mean just government institutions, but
incudes others that are noncapitalist in their logic and ownership
structure. Once, such institutions were plentiful in America. The New
Deal created islands of public ownership, such as public power, public
housing, and public financial institutions like the original Fannie
Mae and a much enlarged Reconstruction Finance Corporation. But the
first half of the 20th century was also an era of noncapitalist mutual
and nonprofit institutions.

Most savings and loans were nonprofits; most insurance companies were
mutually owned. The first wave of prepaid group health plans were
co-ops. These embodied values other than capitalist ones; they
promoted direct democratic governance in ways that bureaucracies
don’t; and they stood as xxxxxxs against the relentless incursion
of capitalist institutions. In recent decades, however, financial
capital viewed these institutions as pools of money they wished to
appropriate. The stewards of these institutions saw a chance to cash
in and enrich themselves. Congress obliged by making such conversions
legal. Most mutual financial institutions have become conventional
for-profits. Most nonprofit health plans were converted to for-profit
HMOs. This sector needs to be reclaimed.

I happen to love public libraries, not just because I love books, but
because when you enter a library nobody is trying to sell you
anything. It is free and the ethic is noncommercial. It is like
breathing different air. Public radio, despite the annoyance of
encroaching quasi-commercials, is still light years away from
commercial broadcasting in its basic ethic. We need more such
institutional oases of non-market norms.

Housing is an emblematic area where America’s attempts to graft some
social objectives onto a for-profit system controlled by developers
and financiers are inefficient and pitiful. Our subsidies to create
affordable housing include a low-income tax credit that is complex and
bureaucratic for community housing developers to use, and that
delivers much of the subsidy to financial operators who syndicate the
tax shelter to other rich people. A second instrument, housing
vouchers, does not meet the need and bids up prices and profits to
landlords. A third gimmick, requiring developers of luxury housing to
set aside some affordable units, is woefully inadequate. Far better
would be the creation of a large, genuinely social housing sector that
need not be traditional public housing. We have a model for this in
the form of housing land trusts that create diverse forms of social
housing permanently protected from market pressures—pioneered in
Bernie Sanders’s Burlington and in Karl Polanyi’s Red Vienna.

We also need to resist and reverse privatization. Institutions that
should be public have been increasingly privatized, with results that
provide windfall gains to private capital. For everyone else, the flip
side is added costs, debased public values, and degraded services to
ordinary citizens. These include privatized prisons, privatized
Medicaid and Medicare, privatized voucher schools, privatized highways
and parking meters, privatized management of public-transit systems,
and a great deal more. Regulation itself has been increasingly
privatized, as public agencies have delegated their authority to
“self-regulatory agencies” that are thinly disguised trade
associations. A comprehensive and depressing guide to this is the
superb new book _The Privatization of Everything_, by Donald Cohen
and Allen Mikaelian. Here again, it’s important to appreciate that
this tendency is not just “privatization,” a neutral-sounding term
that suggests well-intentioned policy strategies that sometimes went
awry. What’s at work here is yet another realm of the relentless
encroachment of capitalism as a system.

It would be good to get more creative in devising new forms of social
ownership. Peter Barnes’s latest book, _Ours: The Case for
Universal Property_, provides some ingenious ways to think about this
goal. It was Barnes who first pointed to the Alaska Permanent Fund as
a more general model. When oil was discovered on Alaska’s North
Slope in the 1970s, the governor, a renegade Republican named Jay
Hammond, rather than hand all the profits to the oil companies,
sponsored a public fund that would pay all Alaskans annual dividends
in equal amounts. Barnes calls for collective sources of wealth (such
as sunlight) that are privately exploited to generate dividends and
trust funds for all. Thomas Piketty, in his new book, _Time for
Socialism_, calls for a “universal capital endowment” of about
$150,000, to be paid to every adult at age 25, financed by taxes on
extreme wealth.

These ideas are ingenious technical policy solutions. But to gain
political traction, they require a movement built on a coherent
understanding of capitalism as a system. The labor movement is one
such movement and, just between us, much of it is socialist. A
weakness of the American liberal tradition, even at its apex under
FDR, was that it was disconnected from a comprehensive critique of
capitalism as a system. As Albert Hirschman pointed out, FDR sold his
reforms as merely pragmatic. Writing in the 1980s, as Reagan was
reversing the New Deal, Hirschman observed, “Today, of course, we
can appreciate the high cost of Roosevelt’s maneuver. The New Deal
reforms … were never truly consolidated as an integral part of a new
economic order or ideology.”

MORE THAN 20 YEARS AGO, Paul Starr and I had an exchange in
the _Prospect_ on the relationship between liberalism, social
democracy, and socialism. Both pieces are well worth rereading in
light of subsequent events. Paul, in a piece
[[link removed]] titled
“Liberalism After Socialism,” was writing not that long after the
collapse of communism. His basic argument was that liberalism and
socialism come out of entirely different traditions; that it’s a
categorical and political mistake to blur them with something called
social democracy; and that the liberal tradition is capacious enough
to include all the reform that we need. He concluded
his _Prospect_ essay with these words: “While the house of
liberalism in America has many rooms, it should not be allowed to
become the last refuge of a defeated and disappointed socialism. When
socialism was young and full of fervor, some liberals were
understandably infatuated and thought of marrying their political
values to socialist economics. But the romance should be over once and
for all.”

In my own piece
[[link removed]], I
wrote that social democracy is a more robust heir to the aspirations
of liberalism. “Europe’s social democrats, developing a welfare
state and a Keynesian strategy of economic stabilization roughly in
parallel with American liberals, nonetheless had a somewhat different
understanding of what they were about. As part socialist and part
liberal, they understood the enterprise not just as spreading social
benefits or fighting unemployment, but as taming capitalism and as
building a durable political constituency to make that enterprise
electorally possible … I am sympathetic to social democracy, not as
a bridge to socialism, but as a bridge to a more durable
liberalism.”

Two decades after that exchange, events have not been kind to either
essay. Not only is liberalism too weak to resist the predations of
metastatic capitalism; so is social democracy. Paul wrote, “Western
European countries that have had Socialist and Labour parties in power
have drifted progressively further away from a commitment to socialism
… indeed, some nominally Socialist governments have been actively
privatizing public enterprises.” This is precisely the problem. The
great destroyer of liberal values that Paul and I both hold dear has
been rampant capitalism.

In a recent _Prospect_ piece
[[link removed]],
“The Agony of Social Democratic Europe,” I concluded that the
cause of the social democratic near collapse was the pervasive spread
of neoliberalism as embraced by watered-down “center-left” parties
as well as by conservative ones. As the lives of ordinary people
became more and more precarious thanks to ultra-capitalism spread by
globalism, they had no good reason to vote for social democrats.

In the 1980s, when Swedish social democracy was coming under threat by
the general turn to the right and the deregulation of global financial
markets, two of the smartest Swedish economists, Rudolf Meidner and
Gösta Rehn, realized that to defend social democracy you needed
something more like socialism. But as Swedes, they did not want
statism. Meidner and Rehn both came out of the trade union movement,
the central pillar of the Swedish model. Their idea was to build
socialism on what they called “wage-earner funds.” Every year, a
set percentage of all profits of Swedish corporations would be
directed to funds collectively owned by workers. These would not only
enhance pensions. More fundamentally, in less than a generation, they
would lead to collective worker ownership of Swedish industry, but
without undermining Swedish entrepreneurship. On the contrary, as a
source of patient capital they would be far better than private
financial markets impatient for quick returns. But by the 1980s, the
Swedish Social Democrats were already becoming more neoliberal, and
the social democratic leadership killed the plan.

The difference between democratic socialism and social democracy is
that the former grasps the need for substantial social ownership to
supplant capitalism as a system. The latter tends to deteriorate into
welfare capitalism, which becomes an impossible straddle fiscally and
vulnerable politically, and gets eroded over time.

In 1972, a young Christopher Jencks, who later became a frequent
contributor to these pages, wrote an influential book
called _Inequality_. He closed by delicately calling for “what
other countries call socialism.” It’s time for Americans to call
socialism by its name. Like Sisyphus, the best we can expect is that
the rock may stay where we’ve put it for a long while, sometimes for
entire generations of decency, as the struggle continues.

_ROBERT KUTTNER is co-founder and co-editor of The American
Prospect, and professor at Brandeis University’s Heller School. His
latest book is The Stakes: 2020 and the Survival of American
Democracy
[[link removed]].
In addition to writing for the Prospect, he writes for HuffPost, The
Boston Globe, and The New York Review of Books.  Follow Bob at his
site, robertkuttner.com [[link removed]], and on
Twitter.  Follow @rkuttnerwrites
[[link removed]]_

_This article appears in the November/December 2021
[[link removed]] issue of The
American Prospect magazine. Subscribe here
[[link removed]].  _

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