Trump’s Economist Advisors Seeing Red Everywhere
The word ‘socialism’ is more attractive than scary these days—and that has the White House worried.
Two hundred years after the birth of Karl Marx, socialism is making a comeback in the United States.
That is not our optimistic claim, but rather the view expressed by the Trump White House in a report issued in October by its Council of Economic Advisors (CEA). The stated aim of the report, titled ‘The Opportunity Costs of Socialism,’ is to examine socialism, its ‘economic incentives,’ and its ‘impact around the world on economic performance.’
In the opening paragraph the authors note with concern that, ‘Detailed policy proposals from self-declared socialists are regaining support in Congress and among much of the younger electorate.’ It would seem a hopeful sign—to socialists at least—that the White House is worried about the growing attraction of socialism.
The state of socialism
But if socialism seems to be ‘making a comeback in American political discourse’ in the eyes of the authors, to the point where socialists are seen lurking in the halls of Congress, it is probably because their definition of ‘socialism’ is broad enough to include nearly every sort of capitalist reform.
The CEA report claims that, ‘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’. In short, the greater the state’s intervention in production and distribution, the more ‘socialist’ is the country or industry. Indeed, ‘state’ and ‘socialist’ are nearly synonymous for Trump’s economic advisors.
It is important to also note the emphasis on the ’question of degree’. The report claims that that ‘socialism is a continuum’, not a ‘zero-one designation’, since ‘no country has zero state ownership, zero regulation, and zero taxes’. The authors point out that under ‘modern models of capitalism’, including the United States, there is an ‘ample role for government’, since there are ‘public goods and goods with externalities that will be inefficiently supplied by the free market’. And, conversely, ‘even the most highly socialist countries have retained elements of private property’.
The report claims there are ‘highly’ or ‘extreme’ socialist countries, where the state intervenes in many areas and ‘moderate’ ones where its role is more limited. This clearly suggests that ‘socialism’ is not so much a separate form of society or a ‘mode of production’ in itself, as a set of economic policies employed under capitalism. And the success or failure of such policies will ultimately have to be judged on capitalist terms, such as whether they raise or lower productivity and profitability. The logic of capitalism, as a system of production for profit, is the unchanging base of society, whereas socialism is merely a means of directing the system toward certain outcomes.
Although the authors blur the line between capitalism and socialism, they are at least scrupulous enough to insert the following footnote on the meaning of ‘communism’:
‘For classical socialists, “communism” is a purely theoretical concept that has never yet been put into practice . . . Communism is, in their view, a social arrangement where there is neither a state nor private property; the abolition of property is not sufficient for communism’. . . This report therefore avoids the term “communism”’.
The report recognises, in other words, that state-owned property or state-run enterprises have nothing to do with communism—a point that is not often clear in the mind of a typical Republican red-baiter. Of course, we are still stuck with a false distinction between ‘socialism’ and ‘communism’, but the blame for that confusion cannot be laid at the door of the CEA. It was rather Lenin who insisted that socialism was the first stage, to be followed by communism as the second. The Bolsheviks had to make that distinction to account for why money, wage labour, property relations, profit, and all the other capitalist economic forms continued to exist after the supposedly ‘socialist’ Russian Revolution.
We reject Lenin’s distinction, in favour of a view not so uncommon before 1917 that ‘socialism’ and ‘communism’ are basically synonymous, as both indicate a money-free world of production for use in which all the social wealth is held in common. It makes little sense, from a logical standpoint, to use the separate term ‘socialist’ to refer to societies that remain in essence capitalist. We prefer to use the term ‘state capitalism’ to refer to Stalin’s Russia, Mao’s China, and other countries described by the report as ‘highly socialist’.
One could hardly pin the blame for the confused understanding of ‘socialism’ on the authors of the report, however, since they are expressing a view that holds sway across the political spectrum. Where the authors are quite negligent, however, is in claiming that Karl Marx also understood socialism as a sort of state-run capitalism. One need only read his sketch of a post-capitalist society in the first chapter of Capital to know that he saw no need for a state existing over the heads of an association of free individuals producing to meet their own needs. Marx labels that new society a ‘free Association of men’—not socialism or communism—but the key point is not the word itself but the fundamental distinction between capitalism and what will replace it.
Marx has in mind a new mode of production, not a reformed version of capitalism. In contrast, the ‘Left’ shares the CEA’s view of ‘socialism’ as a set of policies under capitalism, so their criticism of the report tends to centre on defending the benefits of ‘socialist’ state intervention in the capitalist economy.
Incidentally, the CEA also makes a complete muddle of the theory of capitalist ‘exploitation’, offering the claim that Marx or Marxists view ‘state ownership of the means of production’ as a means for ‘ending worker exploitation by leveraging scale economies’. But to try to unravel all the confusion surrounding their vague but jargon-ridden claims, while presenting Marx’s actual view of exploitation, would require a whole separate article.
What is the purpose of this report—and the reason for the authors’ apparent anxiety—if ‘socialism’ is just a set of policies that poses no real threat to capitalism itself? It seems to us that part of the answer is ideological and the other part simply concerns practical politics.
Clearly, the authors seem worried that the younger generation has become immune to the negative image of socialism that was fostered through decades of propaganda in the United States. The authors want to educate this younger generation about the dangers of embracing socialism. And the tone throughout the report is like that of a concerned parent trying to prevent a child from taking a wrong turn in life.
A sentence might begin with the concession that ‘present-day socialists do not want dictatorship or state brutality’ or that ‘proponents of socialism acknowledge that the experiences of the USSR and other highly socialist countries are not worth repeating’, only to end with the not-so-subtle implication that such negative results will occur despite socialists’ good intentions.
For example: ‘Historical socialists such as Lenin, Mao, and Castro ran their countries without democracy and civil liberties. Modern democratic socialists are different in these important ways. Nevertheless, even when socialist policies are peacefully implemented under the auspices of democracy, economics has a lot to say about their effects’.
Socialism: Extreme and Moderate
In seeking to tarnish the image of socialism, the first part of the report looks at the ‘dismal track record’ of the ‘most highly socialist cases’ such as Maoist China, Cuba, and the USSR. The report concentrates on the failed agricultural experiments related to ‘state and collective farming’. This historical example is intended to show the ‘misalignment between the promises of highly socialist regimes to eliminate the misery and exploitation of the poor and the actual effects of their policies’—with the suggestion that similar disappointments could occur today.
The authors point to history and recognise that the ‘highly socialist’ countries were mainly agricultural, but do not ponder the riddle of why agricultural—rather than industrial—countries would embrace socialism. It is a riddle not so hard to unravel once it is clear that ‘socialism’ was nothing more than state capitalism, and that the overriding aim of such systems initially was usually to rapidly industrialise, thereby laying the groundwork for modern capitalism.
Of course, the victims of that crude form of ‘primitive accumulation’ are many, starting with the peasantry, and there is no need to quibble with many of the terrifying statistics thrown out by the CEA report. The problem is that the authors do not pause to consider the significance of the historical facts they are listing. The history of the ‘highly socialist’ countries is in fact that of ‘backward capitalist countries’ trying to catch up rapidly. It is a history that has nothing to do with ‘socialism’—apart from the fact that the leaders of those countries used the term to conceal the harsh social reality.
The section on the extreme cases of socialism is followed by a look at the more ‘moderate’ socialism of the Nordic countries. In this case, the task is a bit more difficult for the authors because there are not many scare stories that can be pointed to and the image that many have of those countries is positive. So instead of listing up problems of socialism, the authors spend much of their time laying the successes at the doorstep of capitalism, arguing that Nordic countries have been turning away from socialist policies to allow more freedom for the market economy.
They claim, for instance, that the ‘Nordic countries themselves recognised the economic harm of high taxes in terms of creating and retaining businesses and motivating work effort’. At the same time, the report argues that the Nordic model of taxation ‘relies heavily . . . on imposing high rates on households in the middle of the income distribution’ rather than imposing punitive rates on high-income households. The aim of this part of the report is clearly to pour some cold water on the Bernie Sanders supporters who look to northern Europe as an economic model.
The final section of the report turns squarely to a pressing political issue: the debate over a ‘single-payer healthcare plan’. And here the timing of the report’s publication, just prior to the Mid-Term elections, is certainly no coincidence. Trump himself felt obliged to write a rare newspaper article around the same time for USA Today, in which he claimed that the ‘Medicare for all’ plan of the Democrats—those ‘radical socialists who want to model America’s economy after Venezuela’—would threaten the existing Medicare program for seniors.
The logic of Trump’s article and the CEA report is a bit odd, since they attack what they call ‘socialised medicine’ by drawing on fears of older Americans that the existing Medicare program would be gutted. According to their own ‘market’ principles they should really be attacking Medicare, too. But here we are in the realm of practical politics, not pure economic theory.
Several articles responding to the CEA report have already noted that the authors point to the relatively short waiting times at hospitals for seniors in the United States as an argument against single-payer healthcare, even though those patients are covered by the single-payer Medicare plan.
The point to note here, as far as this article is concerned, however, is that it is a misuse of the term ‘socialist’ to attach it to the example of government-run healthcare. Whatever concern the state might have for the physical well-being of its citizens is connected to the needs of capital for a reasonably maintained workforce. The debate among the American capitalist class over healthcare, much like the 19th century debate over labour laws in England that Marx describes in Capital, centres on that issue of the ‘reproduction’ of labour power. And much like that earlier debate, today’s clash over single-payer healthcare is a complex and contradictory battle that involves conflicting interests among individual capitalists and differing views of what would benefit the capitalist class as a whole.
It would be naïve and dangerous for socialists to imagine that any of the parties involved are motivated by a genuine concern for the interests of workers.