What America Still Doesn’t Understand About 21st Century Prosperity
Here’s a funny, strange, inconvenient truth. If you want more capitalism, you should also want more socialism. Yes, really. I’ll prove it, in just a second.
First, a tiny qualification. “More capitalism” doesn’t mean bigger monopolies sending you bigger bills that make you have bigger panic attacks. It means quite the opposite. Better, truer, healthier capitalism: more of the innocuous, even fun, mom-and-pop kind, which made my favorite guitars and synthesizers, which keeps my neighborhood buzzing with restaurants, boutiques, clubs, and bars.
So: if you want more capitalism, the first thing you should want is more socialism. Don’t believe me? Let’s think about it. How capitalist is America, in the sense above? The answer is: not much. The Heritage Institute’s Freedom Index — which we can think of as a pretty good proxy for how capitalist a society is — puts it at 18th in the world. Below, for example, Denmark and Canada. You’re perfectly correct to say that the Heritage Institute is a libertarian thinktank, and this index measures a kind of idealized, no-holds-barred, free-market capitalism. And yet America doesn’t even really score very highly on their definition of “capitalism” anymore. (That definition is something like capitalism in its idealized, romanticized form. As an art which most people can practice, at a small scale, and thus, live decent lives. Drycleaners, discos, plumbers.)
Think about this for a second. Both Denmark and Canada are more capitalist and more socialist than America, according to the logic above. How strange. A country can score highly on both — or neither. But do you see what it means? There’s an old myth. It goes like this. Capitalism is the opposite of socialism. If you want more capitalism, you have to want less socialism (and vice versa). But all this proves that the myth isn’t true. It never was. It’s a relic of Cold War thinking — but the Cold War is over, and no one won. Russia and America are mirror images of each other collapsing into authoritarianism — but I’ll get to that.
So America isn’t really good at capitalism — even in the idealized sense capitalists want. But quite obviously, it’s not really good at “socialism” one, either. Do you see the weird paradox? America scores low on both capitalism and socialism, whereas Canada and Denmark score more highly on both capitalism and socialism. How can that be true? It’s completely contrary to the mythology, oppositional binary thinking we’re so often taught to believe.
The truth, as it so often is, subtler. The tale above already tells us that capitalism isn’t the opposite of socialism. The old idea was that to not choose socialism, a society had to choose capitalism (and vice versa). But America seems to have disproven that — because it scores low on both capitalism and socialism, while Canada and Denmark score higher on both, and therefore, capitalism and socialism can’t be opposites. They’re something more like mutually reinforcing complements — to a degree, at least. You can choose both, or neither — the old dichotomy is dead. And it seems that countries which choose to develop both capitalism and socialism are the real winners of this age — and countries that, like America, choose to develop neither, are the losers.
So if America’s not really capitalist, and not really socialist, while Denmark and Canada are more of both, then what the heck is it? Well, it’s something more like predatory capitalist. That means gigantic monopolies sending you those gigantic bills which make you have gigantic panic attacks, precisely because you know your income’s flatlined for decades, since those very monopolies are hoarding the economy’s gains wholesale at this point. While it’s true that this is a degenerate capitalism — and the old Marxist idea that capitalism inherently tends to degenerate just this way is also probably even true — what it’s not is healthy, sane, balanced capitalism.
Predatory capitalism combines both capitalism and socialism, but in all the wrong ways. Gigantic monopolies are subsidized by imploding middle classes so that they can extract more value, and the vicious cycle keeps going. That’s how a country ends up being neither capitalist nor socialist, at least in the healthy sense — both operate together destructively, not constructively.
It seems that for capitalism to exist at its best — small-scale, artisanal, genuinely innovative, passionate, not just relentlessly extractive, authentic, competitive, creative — there needs to be (wait for it) socialism. Isn’t that just what all the above really says? Denmark and Canada score higher on both capitalism and socialism, remember. If you don’t have a little socialism to balance out an economy, then capitalism degenerates, just like it has in America.
Now. Why would that be? I think the reasons are pretty simple. When people don’t have working safety nets, healthcare, retirement, savings — they can’t really amass capital. So capitalism becomes a thing for the few, instead of for the many. That’s where America is today — 80% of people live paycheck to paycheck — which is another way to say: they’re proletarians, wage slaves, not capitalists. Hence, just 10% of Americans are genuine capitalists — who own shares, bonds, have significant savings to invest in the first place.
If life is a constant struggle not to fall off the razor’s edge, into the abyss, then of course capitalism soon degenerates. Who can bear the risk of entrepreneurship? Of creating what doesn’t yet exist? Nobody sticks their neck out. If your healthcare is tied to your job, who but the already rich and safe can go out and write a great novel, invent a better mousetrap, pen that world-shaking film, and so forth? Capitalism’s dynamism, creativity, and energy depend squarely on a little bit of socialism, in just this way.
If regular people don’t have the capital to sustain capitalism at a small scale, as something they themselves practice, then soon enough, capitalism turns predatory. Yet without socialism to let capital flow to people, that degeneration seems to be capitalism’s inherent destiny. That’s what Denmark and Canada seem to understand that America doesn’t.
Hence, capitalism and socialism aren’t opposites. The presence of capitalism is not the absence of socialism. They never really were, and it never really was. We shouldn’t think of the as poles of an antagonistic dichotomy anymore — and those countries who don’t are prospering, while those who do are falling. The Cold War is over — and you can see who won. No one. Both Russia and America have devolved to the very same kind of predatory capitalism — and they are collapsing as a result.
If you want more capitalism, you should also want more socialism. That’s one of the great lessons this century’s trying to teach us. Are we ready to learn it?