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.

Translations for this article:

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory