Pages Menu
Categories Menu

Posted by on Sep 24, 2009 in At TMV | 9 comments

What is the difference between socialism and modern liberalism?

So I just laid out in another post the classically liberal origins of modern liberalism and now a regular commenter at TMV has asked, perceptively, how is modern liberalism different from socialism. Surely socialism also has roots in classical liberalism too, so the common ancestry is of little meaning on its own.

So what is the difference between socialism and modern liberalism? There are two very different strains of socialism historically – revolutionary socialism promulgated by Karl Marx, Friedrich Engels and V. I. Lenin, and incrementalist or “Fabian” socialism of the sort that took off in western Europe after World War II. Few outside the hopelessly uninformed and unhinged believe that modern liberalism is akin to revolutionary socialism or communism. But what about the more moderate Fabian socialism (Fabius Maximus was a Roman politician famous for his incrementalism and moderation)?

The difference is here: socialists believe in the abolition of private property. Modern liberals do not.

As recently as the 1980s the British Labour Party included the call for the abolition of private property in its official party platform. Socialist parties elsewhere in Europe – from Spain to France to Germany and on – either still call for the abolition of private property or did so until very recently.

Note that abolition of private property does not mean progressive taxation or a generous social safety net. It does not mean old age pensions or even universal health care per se, though all socialist countries have those (Bismarck adopted the world’s first welfare state to stave off the growing threat of German Socialists in the 1870s). No, socialism means the government literally takes possession of the means of production.

In practice, this has meant government ownership of telecommunications, power companies, transportation networks and in some cases health delivery systems (British NHS is socialist in a way most other national health care systems are not).

In America the best example of genuine socialism is the Tennessee Valley Authority. The TVA “bought” millions of acres of land and waterways, reconfigured rivers, built dams, and to this day continues to provide electricity, control floods, and create space for recreation. Knoxville is actually the third-best boating city in America after San Diego and Ft. Lauderdale thanks to the plethora of lakes in the area. Yes, in heavily Republican East Tennessee the greatest form of recreation is due to socialism.

But efforts to replicate the TVA in the Columbia River and the Missouri River failed for a variety of reasons. TVA is a case unto itself. And other previously government-owned entities have been privatized, while highly regulated utilized have been de-regulated by both liberal Democratic and conservative Republican politicians alike.

There is very little call for government ownership of property in America today, with the exception of national parks and wildlife refuges (and considering the land in these cases is to be used NOT for productive capacities but for preservation it’s hard to really call them socialist either).

The closest the Obama Administration has come to socialism is the automotive bailout. But even that plan was initiated only because of bankruptcy in the private sector, and the ultimate goal is to release the company back to the private marketplace. It is emergency and short-term socialism, perhaps – but hardly more than that.

As for the banks – the other recipient of bailouts – the government decided against nationalization. Though they are subsidized by the Federal Reserve, they are still in private hands and will likely be returned to even more private control in the near future as they pay back TARP money.

Welfare state liberalism is predicated on the belief that free market capitalism is superior to state-run socialism…BUT, that it must be regulated to ensure against monopoly and abuse. The policy differences between conservative Republicans and liberal Democrats are matters of degree – how MUCH should the government intervene in the private sector – not a matter of kind.

Some suggest that the bailouts are actually more like corporatism than socialism. Corporatism was the economic model favored by Fascist Italy, Peronist Argentina and Vargas’s Brazil. While it’s certainly true that government action tends to favor certain private companies over others, there is little call for large-scale state management of wages, hours and production usually seen in a corporatist system. There is plenty of corporate welfare and corporate cronyism out there. But we are far from a corporatist/Fascist economy and I don’t see anybody holding it out as an ideal.

So, yes, modern liberalism and socialism both trace their roots to classical liberalism. But modern liberalism explicitly rejects the fundamental defining element of socialism: state ownership of the means of production. Policy debates over government regulation and taxation between liberals and conservatives are just that: debates between liberals and conservatives over the EXTENT of government intervention in the private sector. Absent calls for outright state ownership of large swaths of the American economy modern liberalism is nothing like socialism.