About Democratic Socialism

So what is Democratic Socialism? Democratic Socialists believe that both the economy and society should be run democratically — to meet public needs, not to make profits for a few. Obviously, it is a reaction to the excesses and failures of Capitalism.

So what does it involve? I’ve heard a few things. I think a good place is to start with its intent just like the American Constitution starts with a moral statement of the reason it was written and what it is supposed to accomplish. It seems that what they are calling socialism is described by that part of the Preamble to the Constitution where it says — “promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”. The purpose of Democratic Socialism could include policies about health care, infrastructure, retirement, education, housing, preserving the environment for future generations, and other basic needs. Just as the Preamble of the Constitution says the Constitution has a purpose, this is not about these being rights and responsibilities of the government, these things are a purpose that We The People, as the government, should be working together to create and achieve.

Democratic Socialism is not a novel idea in America. America has actually been a Democratic socialist society for about 75–80 years now, ever since FDR’s New Deal and the advent of Social Security and a bit later, Medicare. The Interstate highway system may have been built for the military, but you can see what a huge and productive infrastructure investment it was. Every time the government has invested in its people or infrastructure for whatever reason, there has been an incredible return on the investment for America. Think of the Rural Electrification Administration and the Tennessee Valley Authority. Can you imagine America being the technological powerhouse it is now without that kind of investment? Think of the GI Bill to deal with all the returning soldiers. It largely created the middle class, the greatest wealth generator of all time that is now threatened by the current form of capitalism. The investment in the space program produced unimaginable wealth from technical development that could only have followed the Electrification Program and the GI Bill. Democratic Socialism has worked well so far in America, especially for the working class. It is most of social progress.

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So why do we need Democratic Socialism? Because of the failures of what is called Capitalism. For that matter, I wish they would stop calling it “Capitalism”. The most useful meaning of Capitalism is using capital as a tool of production. That is, as an investment. All economic systems have to do that whether you call them socialist or even communist. It is how economics work. “Capitalism” seems just used these days to describe an ownership system which might currently be better referred to as an oligarchy — a few people owning most of the wealth, something unrelated to productivity… or probably even bad for productivity. The media has been calling it “extreme wealth inequality”, but it is just a feature of the current winner takes all economic system you naturally get from unregulated Capitalism. The system works that way and the capital gives it the power to grow like a living thing. Unfortunately, its natural growth pattern is towards concentration of wealth.

It isn’t magical. Ownership is a mechanism, an institution, for solving a problem. It is a way of creating the necessary order for managing resources. What is called Capitalism is just one way ownership can be managed. Really, when speaking of real estate, ownership is vested, that is it is given by the national authority, but in ways, the nation owns it still. The vesting of ownership just confers rights to the property. It is not some kind of magical Natural Law. It is a human law that provides a stable system of organization. In a way, Democratic Socialism differs from more traditional systems of Socialism in that it sees no problem with private ownership. The problem is when the capital takes on a life of its own and sucks resources and wealth from the majority, concentrating far more wealth than they can possibly use in the hands of a few. You could solve much of the problems by making a realistic estate tax instead of a hereditary aristocracy of wealth. That could recycle the wealth almost like a natural biological system. I mean, was this country made to be an oligarchy, an aristocracy of wealth? Oh yes, it was created to escape an aristocracy.

Capitalism, as it is now, is a widespread disaster destroying the future of the non-wealthy and destroying the environment for profit. A lot of people aren’t having children or having less because they can’t afford them. Wages are stagnant while prices rise, child poverty is at an all time high, wealth inequality is ridiculous and this is all before automation really kicks in and shreds the social contract between employers and workers. Now a medical problem can throw you into poverty. Education that is essential to people’s future and a fantastic investment is priced out of reach. The cost of housing is crippling. The result of this kind of capitalism is that everyone is a profit center for a few wealthy, leading to everyone eventually being wage slaves (Uber or “staffing on demand”, employers love that idea) until automation makes most people unemployed.

I really do think we need a new system. This is not an economic system that will work much longer. It does not have a pretty future. We have seen where it goes in the past.

The economy is very productive, creating great wealth, far more than the oligarchs can use or even invest in production. Much of the real wealth is being used to do financial manipulation like quants and day traders do, to create money instead of creating real wealth. That makes sense because only so much can be consumed and the system is geared towards producing as much as possible. Now competition must be for markets because that is what is limited more than production. That is why the big three new corporations, FB, Alphabet, and Amazon, are based on marketing. The only real way to invest that much wealth is in the people and the nation. Unfortunately, that is not how the legacy system works. Capitalism as it is, is like warfare, just too destructive without producing much. There is a fantastic amount for capital available around the world, but it is like Voldemort without a body looking for an adequate investment to make itself corporeal.

Harness capital as a tool of productivity. Invest it in infrastructure, tools of productivity and people. Make it available to those that want to create, especially those that want to fill the needs of the citizens of the society. There will be plenty of wealth left over for less essential things like arts, entertainment, vacations, sports, etc., especially as automation becomes more common.

Too much of the wealthy want everyone to be a profit center for themselves. They want “staffing on demand”. That kind of economy does not work. There needs to be a balance. Capital is a tool that can be used in a number of ways. It can build a society by investment or it can control by bribery and manipulation to maintain the power of the wealthy. We have the latter kind.

The foundation of economics is changing. Economics through all of history has always been resource limited. Now it is rapidly becoming market limited. Capital, instead of being used as a tool of production is being used as a bludgeon to control markets or to corrupt politics to buy laws for the same reason. Modern wars since WWII have mostly been about energy supplies. That is because, in terms of economics, the value of energy to productivity is multiplied about six times the value of other resources because it is the key to using those other resources. Energy technology is very rapidly developing to be independent of limited resources that can be fought over like oil and the potential supply is rapidly growing. The legacy system of economics cannot handle that.

*** So how could you make a democratic socialism work?

No one knows exactly, but then Democracy in America was an experiment. It is a work in progress and we know it has flaws such as the gridlock that comes from the winner take all Presidential system that is not as much of a problem in the Parliamentary forms of Democracy such as we gave Japan, Germany, and Italy after WWII.

Do it in steps. Learn, especially about administration. The health care system in the US is a financial disaster that is getting worse while not providing the level of care that it could. A medical issue can throw a family into poverty. Helping a working age person recover from a medical issue is an investment, but care is often delayed until it is too late. Often people work for years paying for medical insurance through their employment, but then when they get sick or injured, their employment ends and they have no health care. The current system is messed up partly because it was created so haphazard. It’s one of those prices America has paid for being a leader. We find the pitfalls and cliffs first. Our medical system is as jury-rigged as the early phone systems. If you calculate all the costs of the medical system, it’s about the same as the cost of Universal Care. The thing is though that over time you would be able to get better results and control costs more if you change to a single payer or Medicare For All system just by raising efficiency and reducing the waste that comes from the administrative layers and profit requirements that lead to waste and poor outcomes. Consider with it that Big pharma does not create much in the way of new drugs. They do not do research. They are mostly an investment vehicle that buys smaller companies that develop promising products usually based on basic research paid for by the government. It’s such a bad system that it seems the perfect candidate for an experiment appropriate to Democratic Socialism.

Don’t tell me Socialism cannot be efficient. The bar is set pretty low when considering medical care and Medicare has one of the lowest administrative costs of any institution in America. When you calculate all that is spent on national medical costs, for the same amount spent yearly, we could have single payer health care for everyone.

Note that there is an important major difference between Democratic Socialism and traditional Socialism. A primary point of traditional Socialism is a centrally planned economy. This has often been a major source of problems for socialisms in the past. Democratic Socialism says that some parts of the society are better centrally planned such as medical care, some infrastructure and many other laws governing the market of necessities that serve the major part of the public. Most other commerce would be left to market forces. In ways you might argue that Democratic Socialism is some form of regulated Capitalism. It is not meant as an alternative to capitalism.

The next step might be a strengthening of Social Security and existing Medicare because it is already in place and the system is going to get stressed more and more as the baby boomers retire. It works pretty well as it is, but is under attack. Strengthen it and allow people more options to invest in it. Private retirement investment seems to be too often seen as a profit center for the administrators of the money people are trying to invest in their futures. Most people don’t want to devote the time to necessary to managing and protecting their investments. The government, that is the people working together, could offer an investment that might not be as flashy, but is better than is available to most people. Diverse offerings and transparency would help ensure efficiency.

The next step would be to build the educational system. I’m not sure if education is a right, but I know it is only a sensible investment in its people by the nation. Over and over again, investment in education has paid off for America. China is going to eat our economic lunch if we keep limiting access to education by making it just a profit center. America needs to shed the streak of anti-intellectualism it has had for a long time. You could get by in the past with just the luck of good health and a willingness to work hard, but now you need to be smart and educated as well. It’s just a more complicated world now. People need a basic financial, civic and social education by their teens, yet education spending is being cut. A socialism will have a wealth that people will need to understand must be worked for, husbanded and used wisely or it will be wasted. Community colleges are a great institution, but they too are fulfilling a role they were not made for. Luckily the internet offers a great deal of help, but what is needed really is an investment in good teachers as well as institutions.

Note that a lot of the price of housing relates directly to education. Taxes that support schools come from taxing property. So there is an incentive to live in the most expensive neighborhoods because they naturally have the most money for education. This connection is wasteful and should be broken. Making financing of schools a priority would do that.

There are other reasons we need new systems than just that what we have is usually as archaic as landline phones. There are changes occurring. Changes have already occurred and our present systems don’t work. A good example is in health care. Kaiser Aluminum created health insurance when people worked at one company for a long time. Now workers are far more mobile and very often do not have employee status. It’s not by choice. The archaic system of health insurance developed for a different time and circumstance just doesn’t exist anymore for a lot of people. That is nothing compared to other challenges we face from past changes and changes to come such as increasing automation. Yes, what about automation? Will it make jobs or destroy them? You can find supporting research for whatever opinion you want. Will it bring a golden age for society based on the productive potential of machines or will it make a small number of wealthy while pauperizing most of the population? I can tell you what the current “Capitalist” system will do without much research. Employers consider employees to be expenses to be shed when machines can replace them. It’s easy to see how the digital revolution has made a very wealthy minority while most worker’s wages stagnate while inflation continues. That is how it is regardless of any research. All industries are going through a “Digital Transformation” right now. Rarely is it to create a benefit to the consumer except as it serves the primary purpose, which is basic business survival in a hyper-competitive business world fueled on the potential of automation. The Internet has no moving parts perhaps, but it is the biggest piece of automation in existence and it is causing changes we aren’t dealing well with in terms of benefiting the society. That is what Democratic Socialism is about, benefiting the society.

It’s not just about taming Capitalism. we also need to tame the rising Social Darwinism that is just a prominent feature of America and has been since its founding. I’ve read about the possibility of nations going to war with America. In ways, it seems a bit amusing. If you want to go to war with America, you had better be tough. We’ve been practicing a nasty form of Social Darwinism on the citizens of this county since its start. Unfortunately, it is now too often mostly just rewarding the ruthless and greedy at the cost to the society and the individual.

Notice the contrast. We have two moral systems on display. One common moral system of citizens raising their children to be helpful, honest, productive, family oriented with a belief in service to the community and society. The other system is materialistic and considers people to just be a part of material wealth. Society is just something to extract wealth from. The balance between the two systems is failing as the power of money overwhelms all other values. There is no place for the family-oriented moral system. The struggle for family life, security, stability, and happiness is being left behind as the wealth of the middle class is being sucked out by the wealthy. The middle class, the society, must work together for their benefit instead of the benefit of the ownership class that spends that wealth on competition to come out on top of the corporate world.

The problem is not just the people. It’s not as simple as greed, though too often it is that, simple naked greed. Even without that though, it’s what the system leads to. Some companies were started with simply making a profit in mind with no consideration of the cost to society. One of the most famous banks in the U.S. got its start based on selling defective rifles to the Union Army. The thing is though, that is usually not the case. Most companies have to start out selling a product or service that the society wants or needs. The charter document of most corporations include moral statements about their function in society and it is a positive one. The trouble is that the corporate system takes over and the purpose of the organization changes from fulfilling a need to making a profit. It is very Darwinian. A corporation is a machine It is a software machine rather than a mechanical one, but it is a machine controlling the corporation none the less.

I’ve chattered enough. Capitalism is heading quickly to a previous time that was very very ugly. It is when the term wage slave was coined. It was the time of the Robber Baron and we are creating a new aristocracy of wealth that has been practicing a form of class war for too long and too effectively. The middle class is struggling to survive. There is a lot more going on though. This is part of a far bigger problem as humanity transitions from the tribal world and methods we came from and a new world we must create to develop and thrive in the future. (Also, there is another great form of wealth, actually two, that humanity will learn about that cannot be hoarded. It can only be owned by the individual.) What we face is actually a moral crisis … happening while we are entering an environmental crisis, a little before we discover another crisis that is going to change everything again. To survive, we are going to need to work together. Some type of Democratic Socialism is going to be needed to solve not just the problem of Capitalism, but also other problems are known and some not yet widely known. As I always end my rants, I will say that for all the problems and dangers, there is a potential for a human future that is as great as our aspirations.

There are also problems with Democratic Socialism that are known and unknown. Like Democracy itself at the beginning of this nation, it is an experiment. We have seen some of the ways socialism can fail. It must be democratic instead of autocratic. Money must be limited in that political system. I actually study this as one problem of many in a larger context, but that is another longer issue. Democratic Socialism is one necessary solution of many we need to make a good future for humanity.

The long short and long-term survival of humanity is not going to be solved by a system or a technology, though they will be essential parts. It is not a problem to be solved. It is a moral problem and as such the future of humanity will be insured by the ongoing efforts of all good men and women struggling to make it a good world. That is what Social Democracy is about rather than the great fortunes that the Capitalist parts of our society seem so focused on now.