Post No.: 0888
Democracy and communism concern who decides who rules. Capitalism and socialism concern economic systems. So democracy and socialism aren’t actually mutually exclusive, and communism and socialism aren’t really synonyms of each other.
The Nordic model is relatively socialist compared to staunchly capitalist systems, yet it isn’t pure socialism by definition. It just achieves a better balance between capitalist and socialist welfare mechanisms, of serving private and collective interests, and a market economy and a planned economy. The political ideology often associated with it is a ‘social democracy’, or a democratic country where its citizens are well cared for by the government. (Be advised that the terms ‘socialist democracy’ and ‘democratic socialism’ each mean something different.) Many extremist advocates of capitalism consider the Nordic model as extreme rather than moderate socialism, but that’s analogously like religious extremists viewing any moderates as siding with the infidels.
Each Nordic country isn’t identically governed but they share some elements in common – there’s a comfortable social security or safety net for the unemployed, public pensions are generous, public services are well-funded, there’s free global trade balanced with state-ownership and collective risk-sharing, strong property rights and contract laws, unionisation is extremely common, and there’s more of a community spirit where everyone is involved and feels invested in matters of national interest. This does mean a relatively high personal tax burden, but wages are relatively high too. There may or may not be a national minimum wage, and taxation is relatively less progressive than in some other Western countries – but trade unions negotiate strongly with employers to set wages, workers’ rights and working conditions, which results in a higher effective wage on average to begin with.
(Majority) state-owned entities don’t necessarily mean not-for-profit, such as in the case of Norway’s Equinor energy company. (Norway’s sovereign wealth fund isn’t just for today’s public expenditure either because it’s mostly a fund for the future, to ease the transition to the day when the oil inevitably runs out.)
There are also high levels of trust between citizens and the government in both directions, and low levels of corruption. And Denmark, Finland, Iceland, Norway and Sweden regularly sit in the top 10 in global happiness surveys so it’s not all about productivity. Some may attribute the success of the Nordic model to the Nordic people and culture rather than to their politico-economic systems. But our cultures are a key part of what shapes us, our attitudes towards our communities, our work ethic, etc., and thus politics, and it’s no different here. Surveys of immigrants show comparable levels of happiness to the native population (despite the relatively cold weather and long, dark winters!)
These countries aren’t perfect but no country or system of governance we so far know of is (nor any private firm or industry, or person or puppy). Denmark’s refugee policy circa 2022 was uncooperative. Sweden’s 2022 General Election saw a rise in anti-immigration support too. Immigration policies here generally heavily favour high-skilled rather than any low-skilled workers. Although hardly unique to these countries – an ageing population and a declining birth rate are exacerbating the imbalance between current workers and current pensioners, and globalisation means competing with countries that can provide cheaper labour.
The key points are that income inequality is relatively low, trust in the government is relatively high, and feelings of personal liberty are high. It’s a system that works for the people rather than for an elite, and it’s a system that’s run by the people.
Trust is the main key – but some will argue that this is a chicken-and-egg situation. Does trust in the government or low levels of corruption come first? Does trust in the population or high levels of freedom come first? It’s about how to kick-start these virtuous cycles of reciprocal trust. It’s however difficult to build high-quality, trusted public institutions when people don’t trust in their government. And it’s difficult to allow populations the liberty to do whatever they want if people would rather only do what’s best for themselves rather than each other. (Many corrupt countries have a vicious cycle of low trust, reinforced by cultures of only serving individual self-interests and avarice with few limits.) So it’s about the people and the system in a shared journey, which will make it tough for another country to instantly emulate the same outcomes as these Nordic countries if one thinks that one can just shoehorn in some similar policies when the people aren’t all onboard to make it work. Woof.
Trusting untrustworthy people is of course problematic – but so is not trusting trustworthy people. There’s also a self-fulfilling prophecy – assume with hostility that everybody is bad and they’ll likely behave so. The approach should really be to deter and punish any free-riders (e.g. aggressive tax dodgers) rather than deny everyone all the collective gains that could be made through cooperation – read Post No.: 0876 for more about the free-rider problem. Laws can help protect trust by punishing defectors of trust. In experiments, people do behave better the more they believe and remember they’re being monitored; although surveillance overreach is a problematical thing too.
Gross levels of inequality and societal segregation between the rich and poor means that these two groups interact even less with each other, leading to different perceptions of reality, with the rich having even greater misperceptions of the poor (e.g. ‘they’re stupid, lazy and deserve to be poor’) and the poor having even greater misperceptions of the rich (e.g. ‘the inequality gap is large but not that large’).
Although communism, when practised in reality by humans rather than theorised on paper, may purport to be all for equality but really ‘some are more equal than others’ – capitalism is openly about ‘some are more equal than others’! (As a side note, George Orwell, author of Animal Farm, was actually personally in favour of democratic socialism and against Leninist totalitarianism. But the West presented his book as a critique against socialism generally – it became anti-leftwing propaganda, facilitated by an animation aimed at the minds of young kids!) Capitalism doesn’t guarantee freedom for all because those who are poor have fewer options, and thus less freedom, and power, than the rich. Democracy improves when economic equality improves. Inequality undermines democracy – with greater wealth equality, there’d be less ability to abuse power because there’d be smaller differentials of power, like lobbying and bribery power. And attacking and making scapegoats out of the poor, disabled, unemployed and maybe pensioners is easy because they’re easier targets compared to super-rich tax avoiders or children with large trust fund inheritances.
The relatively socialist Nordic social democracy countries consistently rate amongst the happiest partly because of experiencing less social status insecurity directly because of their greater redistributive policies and thus narrower inequality levels. (Either smaller income differentials in the first place and/or greater redistributive polices can work to reduce gross levels of inequality.) Nordic countries also rate well in the Corruption Perceptions Index, which surveys the perception of the frequency of corruption. Whether a low (perception of) corruption and high happiness is due to a causal, effect, bi-directional, or purely coincidental, relationship isn’t answered via such surveys though.
The welfare state includes public services, cash transfers and taxation systems. Higher progressive taxation and higher public spending and cash transfers for the benefit of the less fortunate reduces inequality and increases social mobility. (‘The American Dream’ and ‘the land of opportunity’ relate to social mobility, thus in America, it’s perhaps indeed merely a dream for most!) And governments are in the best position to implement policies that can redistribute resources amongst a population, over time and across generations (social insurance), via taxation (progressive taxes), cash transfers (e.g. benefits, tax credits, subsidies), public services and infrastructure projects (these benefit both the rich and poor) and legislation (e.g. via a cap on bonuses, minimum wages, rules for buying and selling shares, employment laws, laws on investment incomes). Some governments are better at doing this than others though.
It doesn’t call for everything to be publicly provided or regulated – just the basic moral things for living and working with dignity, like education, health, social care, defence, housing for the poor, the ability and affordability to travel to work, and environmental protection, for instance – so no need for any fallacious slippery slope arguments.
Supporting socialist policies can legitimately be the will of the people i.e. they can be democratically voted for rather than imposed from above. These overall successful examples of social democracy show us how it can work. Humans are corruptible. The concept of dictatorship isn’t itself bad but, in reality, finding an incorruptible and benevolent dictator is unlikely. Conversely, socialism can work if it’s governed by strong democratic systems of checks and balances.
Meanwhile, the failed experiments of the Soviet Union show us how it can be disastrous if a vision is imposed primarily from above; and if a system is deeply corrupt, unnecessarily bureaucratic and/or insulated from dissent or reform when required or demanded.
Really, the vast majority of an electorate ought to rationally support more socialist policies like a more progressive taxation system and welfare state because most people in this current world own less than the average, all because a small percentage of super-rich individuals own a super-large percentage of all the capital in this world.
One can understand the knee-jerk 180° flip reaction of aversion against socialism after the failures of past authoritarian regimes in the 20th century; just like the knee-jerk 180° flip reaction of aversion against believing that genetics plays a key role in people’s outcomes so as to not associate oneself with the beliefs and atrocities of Hitler’s Nazi regime (there was a trend of leaning heavily onto the side of believing that upbringing and environmental factors played the overwhelming role in shaping people’s outcomes in the scientific literature in the decades following WWII) – but the truth or best answer is quite frequently somewhere inbetween. (As a side note, the Nazis despised communism because they thought it was a Jewish conspiracy (Jewish Bolshevism). Don’t conflate socialism with authoritarianism or totalitarianism either.) It’s not that every correct or best answer is always inbetween two competing views but in these cases it is – a balance between capitalism and socialism (and looking after the planet); and it’s both genes and environmental factors that shape a person’s outcomes.
China is presently considered a centrally-planned ‘socialist market economy’ – it’s considered ‘socialist’ but only due to its heavy public ownership more than its welfare policies. Inequality is thus high in China; as it also is in the USA. The country’s economy is hyper-competitive and capitalist, and seems to be quite good at it too – beating many Western countries at ‘their own game’.
Communists want to own and run virtually everything centrally. Libertarians want virtually everything to be owned and run privately. Meanwhile, social democrats want to merely regulate and moderate the capitalist system so that it works fairer for more citizens – this approach tends to be considered ‘centre-left’, which just contestably highlights how far skewed to the rightwing Western politics generally is because the ‘centre’ is considered ‘centre-left’ (in a similar way that anywhere above London is considered ‘the North’ to some English folk who’ve only ventured no higher than the M25 motorway!)
…In short, the problem with the communist socialist model is that power especially corrupts when power is concentrated within the hands of a few (e.g. Stalin, Mao). This is why, although not perfect, the model we need is a social democratic model, as found to work stably and peacefully well in the Nordic countries presently. It’s arguably the fairest model we currently know of. So the question with the UK and other nations is how to get an electorate to democratically back a better balance between capitalism and socialism? It’s a cultural thing, and national cultures can be the hardest things to change – it’s tantamount to changing one’s identity.