Social Democracy as High-Overhead “Socialism”

by Kevin Carson
Social Democracy as High-Overhead “Socialism”

Around a hundred years ago, guild socialist G.D.H. Cole argued that social democrats had made a major strategic decision not to contest the way property was distributed or production organized under corporate capitalism. Instead, they would limit their agenda to a (partial) equalization of the way the rents on concentrated property, the output of these institutions, was distributed.

One reason was that challenging the actual ownership of property would be politically impossible. But another reason, Cole suggested, was that the original socialist project of attacking the institutional structures of capitalism itself, and putting labor in direct control of the production process, would undermine the power of the managerial and professional classes who made up so much of the social democratic, Fabian and Progressive movements.

Thinkers ranging from Hilaire Belloc to William English Walling argued that such calculations resulted in a grand strategic bargain by which the capitalists were guaranteed some minimum profit and stable oligopoly markets, the managerial-professional classes retained control of the large organizations that dominated society, and the working class was guaranteed job security and a minimum subsistence income. The managerial classes, for all intents and purposes, were coopted into corporate capitalism as Overseers of the Poor.

The social democratic model leaves the basic structure of power intact — and then guarantees everybody access to some minimum package of the output.

When social democrats or “Progressives” say that this or that thing — healthcare, education, etc. — is a “basic human right,” what they mean is that particular good or service remains organized on the old institutional model: High overhead, authoritarian, hierarchical, bureaucratic, inefficient, riddled with Weberian/Taylorist work rules, and controlled by a technocratic priesthood. But all citizens, even the most destitute, will have access to at least a defined minimum of that good or service.

So we get a public school system Ivan Illich and John Taylor Gatto so aptly described, designed to process human raw material into the kinds of “human resources” needed by corporate employers — but the student can get as much of it as she wants, all the way through free and universally available higher education. We get a healthcare system in which doctors are guaranteed upper class incomes via state-enforced licensing cartels, and drug companies are guaranteed high profits by means of patents — but you’re guaranteed free healthcare.

The problem is that this high-overhead production model, even though it’s “free” in the sense of not being funded by fee-for-service, weighs heavily on workers indirectly though a high general tax burden. Even though the average work week is shorter and the average vacation time considerably longer for (say) Germans than for Americans, the average work week is still far longer than it would be if unnecessary unit costs and waste production were simply eliminated by eliminating the monopolies they depend on.

That’s the dark side of this right to free services: They’re also quite frequently compulsory to some degree. Even when new technical possibilities of production drastically reduce the capital outlays, skills or labor time required to produce a given consumption goods, the state guarantees the return on capital, the income and prestige of the professional classes, and the “full employment” of the working class by enforcing artificial scarcity. The threat posed by technologies of abundance is neutralized either by outlawing them, or by giving existing producers a monopoly over them.

The more some particular good like education becomes free, the more it becomes, in a sense, compulsory. Free, universally available higher education leads to the inflation of credentials required for doing even the most basic jobs. It strengthens the institutional nexus between university administrations and corporate human resources departments, and tightens the control of licensing cartels over the freedom to take up a trade. And the state is under constant pressure to suppress private, cooperative, and other self-organized educational alternatives, as well as private insurance, alternative medicine, and nutritional supplements. Of course such measures are always defended as protecting the consumer for her own good — and not to protect the drug companies or professional licensing cartels from loss of income!

As a genuine free market libertarian, I want labor to receive the full value of its product, without paying tribute to big landlords and usurers or the holders of artificial “property” rights like patents, copyrights and licenses. I want the prices of goods and services to be driven by competition down to the real cost of supplying them, without state-enforced artificial scarcities to enclose technical progress as a source of rents. I want the average work week to reflect the time actually required to produce our standard of living, without the monkey of rentiers and subsidized waste on our backs.

That is to say, as a genuine free market libertarian, I am — unlike social democrats and “Progressives” — a genuine socialist.

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4 responses to “Social Democracy as High-Overhead “Socialism”

  1. That is to say, as a genuine free market libertarian, I am — unlike social democrats and “Progressives” — a genuine socialist.

    I’m sure Sean will be along presently to explain why the rest of us calling Kevin an overt left wing socialist “don’t understand him”.

    As a genuine free market libertarian, I want labor to receive the full value of its product, […] I want the prices of goods and services to be driven by competition down to the real cost of supplying them,

    And here again is Kevin’s appalling economic ignorance, as he cleaves to the long known to be wrong costs-driven theory of value in which he has, overtly and proudly, stated in his writings that he believes. And though the filiter of which he will never be able to understand how the economy actually works.

    Kevin is right (for the same reason a broken clock is right twice a day) to criticise the cartels, the licensing systems, the education system, and all the rest of it. But he will never understand how free market economics actually functions, and thus will never understand why his dream of an overtly socialist “labour owning their production” utopia is simply impossible. Not least, because they already do own it; but in a free market the oppressors that exploit them are not the capitalists, and not the rentiers, but the consumers; that is, themselves.

    Kevin is of course entitled to plough his own lonely furrow. It is just kind of depressing to watch him drive the horse team off over the same cliff in every article.

  2. Also-

    The threat posed by technologies of abundance is neutralized either by outlawing them, or by giving existing producers a monopoly over them.

    I’m beginning to wonder whether Kevin has one of those water-powered engines that Big Oil have been suppressing for the past century, so we’re told.

  3. Well “Social Democrat” once meant socialist – it was not till (I think) 1959 that the German SPD finally gave up the aim of taking collective control of the means of production, distribution and exchange (although doubts as to the sincerity of the socialist aim had indeed been expressed from the start of “Revisionism” a century ago). The leader of the British Labour party tried to repeal Clause Four of the Labour Party Contitution (which committed the Labour party to the control of the means of production, distribution and exchange), but he got defeated in a famous Conference dispute.

    It was not till the time of Mr Blair that the old Clause Four was finally ditched – although Hayek (in his “Constitution of Liberty” back in 1960) had correctly pointed out that the dispute in Britain (as in Germany) was moveing from control of the production to control of the results of production.

    After all why go to the bother of directly owning industry and so on, if one can order them about with regulations and tax the incomes of the rich (and the not so rich – indeed it is less difficult to tax the incomes of the not so rich).

    This had been the form of “German Socialism” as far back as the First World War, and whilst it had not performed well (German military output actually compared badly to “anarchic” France in the same conflict) Social Democrats on the left (as well as National Socialist on “the right”) refused to accept that it had performed badly.

    Modern states have pushed the tax and spend road (perhaps road started by such people as Bismark in Germany) to its “logical” conciusion.

    About 50% of the economy is made up of govermment spending (actually higher in Britain than in Germany today) – mostly on the Welfare State, and the rest of the economy is saturated with regulations. The financial system has been “liberated” from real savings and is now dependent on government mmonetary expansion. It is a weird fact that Mr Osbourne and Mr Cameron have opinions on monetary policy much close to those of Kevin Carson than to evil hard money “reactionary” such as myself.

    Of course Kevin still needs his revolution for other things – but on liberarting boorrowing from saving? No that “achievement” has already been done.

    The 50% of the economy that goes on government spending?

    Totally unsustainable – that is not the question.

    The question is do the social democrats know it is unsustainable?

    DId they always know?

    Was it a “Cloward and Piven” style plot to destroy capitalism – by creating a “Losing Ground” style Underclass?

    In Britain (with the “Minority Report”) and in the United States (the home of “Cloward and Piven”) perhaps – but in other major nations (such as Germany) the Social Democratic appears to have been sincere (and much the same as the Christian Democratic project ont he other side).

    An effort to marry a market economy with private ownership of the means of production and so on – with some “Social Justice” in the “distribution” of income and wealth.

    It does not work – not in theory (see Hayek 2nd Volume of “Law,. Legistlation and Liberty” or way back in “Constitution of Liberty” for that matter) or in practice either – as we are seeing,

    Neither fiscal or monetary policy are sustainable – so, I suppose, the question of whether Social Democracy (what Americans call “liberalism”) was sincere is now beside the point.

    As for “Mutualism”.

    Efforts to attack large scale production (by de facto denying economies of scale) will just make the collapse (and the horror) come faster.

    But bankruptcy is going to come anyway – whether “Mutualism” is tried or not.

    So even the threat of Kevinism is now (formallyspeaking) beside the point.

    At least for the present – for there is such a thing as life after the collapse.

    If the demented notions of socialism (social justice) are clung to then recovery will be made impossible.

    As Rothbard pointed out long ago – egalitiarianism (the life blood of the left) is a “Revolt Against Nature”.

    Even if people start from nothing – some of them will become employers and some employees. Unless collectivist dogma tries to stop this.

    Human beings may be equal in rights from God – but they are equal in no other respect.

    “But even if some people are better at making money than others – they will pass this money on to their children who may be useless and incapable of doing anything if they had not been handed everything on a plate”.

    Yes – quite so.

    Life is “not fair”.

    Lazy and stupid people sometimes have comfortable lives inherited from their parents (or what not). Whereas hard working and intelligent people often face lives of terrible handicap (with dire poverty and parents who do not even teach them to read, and…….).

    Oh dear, how sad, never mind.

    Not exactly a new story – after all “Letter to a Noble Lord” (the waste-of-space Duke of Bedford) covers the matter centuries ago.

    Efforts to make the world “fair” do not turn the world in the direction of Heaven – just in the direction of Hell.

  4. One thing that might be interesting would be if Kevin were to write a post describing how his “Mutualism” is different from Cole’s “Guild Socialism” (the system so mocked by Mises and others).