Seven More Things Everyone Should Know About 21st Century Economics

Why the Future is an Inescapable Choice Between Fascism and Social Democracy (and What Those Really Are)

By Umair Haque

In this essay, I’m going to pick up where the last one left off.

Social democracy is the most powerful engine of human prosperity the world has even known, period, full stop. Just a few decades, Europe was reduced to rubble by war. Today, Western Europeans live the longest, happiest, richest, stablest lives ever, of anyone, in human history, ever, period. No, that’s not “just my opinion”, Tucker — that’s empirical reality. What does it mean?

It’s a stunning accomplishment — one of history’s greatest. We’ve discovered the recipe for human prosperity, after many long millennia of being locked into kings making wars on one another for land, palaces, and slaves. Only some backwards countries, like America, do not want to use this recipe. And they are telling the very people who made this discovery that they should not want it either. Will the discoverers of the recipe for human prosperity be foolish enough to listen to the falling empire that rejects it — and join it in collapsing?

The future is a choice between fascism and social democracy — but not everyone is going to make the right one. Why not? Let’s start small, and zoom out.

Social democracy is the next stage of progress after feudalism, mercantilism, and Cold War capitalism vs socialism. Marx was wrong — but also right. There are stages to history. But history doesn’t proceed from capitalism to socialism to communism. Instead, it proceeds like this. From feudalism, to colonialism, to totalist capitalism or totalist capitalism — the Cold War — to social democracy. Both Russia and America collapsed, in remarkably similar ways: authoritarian ethno-states with imploded middle classes, isolated from the world. Why is that? Either socialism or capitalism as the sole way to order a society failed in precisely similar ways. But what came out of the rubble, in the place between these two totalist empires, was a new synthesis of socialism and capitalism. And in that way Marx, a dialectical thinker, was righter than he knew. Thesis, antithesis — synthesis. Socialism, capitalism? Fail. Socialism plus capitalism? Boom! Progress.

Social democracy is the synthesis of the best parts of both capitalism and socialism. It allows people to invest more in themselves. They can spend their time, energy, creativity, ideas on worthier things than maximizing profits. The story of human progress has always been about people struggling to invest more of what they produce in themselves — instead of having it skimmed off by predatory elites. Capitalism and socialism have both failed at that task: they both devolved to predatory elites skimming off most of what people “made” — hence, in America today, wages aren’t even keeping paces with inflation, which is another way to say that people can’t invest their creativity, time, energy, and passion in anything other than survival. Social democracy breaks those shackles — and continues the forward motion of progress. How?

What’s “socialized” in social democracy are public goods — the basic things that we all need to live good lives. Social democracy means that a society reinvests its gains, collectively, in providing the basics of life, healthcare, education, finance, media, energy, transport, and so on, at higher standards, to everyone, every year. That is how the quality of life skyrockets up, in record time, just as it did in Europe — to reach the highest levels in all of human history. But that doesn’t mean “capitalism goes away!” In fact, capitalism is left to do what it does best — not try vainly to provide things, like healthcare and education, it will never be able to, which waste’s a society’s resources massively.

What’s “democratized” in social democracy is collective human action. The result is a vast toolbox — instead of just capitalism’s single blunt instrument, profit-seeking — with which to build the house of prosperity. Under capitalism, only one kind of “corporation”, or institution, is possible, really — a profit-maximizing one. Under social democracy, endless kinds are possible. Want to maximize human longevity? Go for it. Trust? Belonging? Meaning? Knowledge? Truth? Go for it. Because the goal isn’t just to maximize profit, the “owners” of such “corporations” aren’t just “shareholders.” And that means that boards, in turn, can be composed of regular people — not just “owners of financial capital”. Patients, doctors, journalists, readers, academics, and so on — not just a tiny number of CEOs. That means that the institutions of a social democracy are far more genuinely democratic — more representative, more flexible, more inclusive. They’re not just stuffed with suits — but with all the kinds of people that make up a democracy.

Capitalism is a hammer, or maybe a chainsaw — it can only operate in one rigid, totally inflexible way, “boards” of “owners” of “capital” maximize” profits. Can you build the house of prosperity with just that one tool? America tried — and all it did was burn the house down. Social democracy means that a political economy has many more, and better, tools to accomplish its manifold tasks — provide people healthcare, education, trust, purpose, and so on — which are far sharper, more accurate, less costly, and strike truer than capitalism’s single, clumsy, fumbling blunt instrument.

Social democracy creates something Americans don’t understand at all, because they have no experience with it: more and better competition than under capitalism alone. How can that be? Public goods are offered by social-scale public institutions — but the private sector must compete with them. Britain’s NHS doesn’t mean, as Americans so often think, that there’s no such thing as a private, for-profit doctor in London. Sure there are. Harley Street’s full of them. Only they have to compete with free public healthcare, so they what happens in America — massive inflation for healthcare — doesn’t happen. The BBC doesn’t mean there are no other TV channels or radio stations. There are hundreds.

Public and private organizations compete in social democracy — remember, it synthesizes both, instead of totalizes either — and that’s crucial, because it’s a better kind of competition than under capitalism. Public goods provide a floor of quality the private sector has to better. You’ve seen the BBC’s amazing documentaries — Blue Planet, and so on. Capitalists now have a high bar to meet: they have to outdo the BBC. Imagine competing Blue Planet. Do you think NBC could do it? The Discovery Channel? Don’t kid yourself. So European organizations, even corporations, can’t simply compete by bottom-feeing, and end up at Ancient Aliens, Alex Jones, Walmart, and police-state TV. A race to the top ensues in social democracy, unlike capitalism’s (and socialism’s) race to the bottom.

But we can also get the synthesis of socialism and capitalism fatally wrong. Social democracy: a better allocation of resources, truer competition, better incentives, more tools to accomplish higher purposes. But what happens if synthesize all the worst parts of capitalism and socialism?

The perverse synthesis of socialism and capitalism is fascism. It is the most destructive form of political economy known to humankind. Can you think of another ideology that has killed so many so fast? So synthesizing socialism and capitalism has great rewards — but if we get it wrong, the price is unthinkably high, too. In fascism, the state becomes a tool of repression — not liberation. It’s used to subjugate, expropriate, segregate, ghettoize, demonize, encamp, and ultimately, exterminate. But all those things are “jobs”, too — not just for blue-collar guards and soldiers, but also for white-collar lawyers, accountants, and chief executives.

Thus, under fascism, life appears to get better. Middle classes had imploded. But now they prosper again. Yet they turn a blind eye to the fact that their prosperity comes at the price of the subjugation of minorities, immigrants, and others. What is “socialized”, unlike in social democracy, isn’t healthcare, education, transport, and media — but the agencies, jobs, departments, and tools of human repression and subjugation. What is “capitalized” is the gains taken from others — the homes and savings and possessions and ultimately lives taken from Jews and immigrants and others, and the work done to take them.

Now. What does all the above really mean?

If anyone tells you that the choice between social democracy and fascism is a difficult one — as American pundits do today — they are either an ignoramus or an ideologue, and probably both. The choice couldn’t be easier, simpler, or clearer. Social democracy is the next stage of human political economy, after binary capitalism and socialism. That is because it is the most powerful engine of human progress history has ever known. But fascism is the precise opposite — the single most destructive form of political economy history has ever known. It is an implosive, self-destructive synthesis of capitalism and socialism, which creates the illusion of prosperity. By using the tools of the state to subjugates and repress those who are different, more every year, to recapitalize a stagnant economy for the “pure”. But this game ends in ruin for all who play it, because nothing new is ever created.

There is absolutely no doubt as to which one of these things, social democracy, or fascism, is better. It’s like asking: “is it better to build a concentration camp in my town, or build hospitals, schools, libraries, and parks?” American pundits might think that’s an oh so smart question to ask, but the truth is this.

If you have to ask, my friend — smile for the camera. Because history is laughing at you, taking your picture for its great hall of fools, as it presses rewind.

Umair
August 2018