I’ve just received a copy of Lane Kenworthy’s latest back Would Democratic Socialism be Better (Shorter LK: “capitalism, and particularly social democratic capitalism, is better
than many democratic socialists seem to think”).
The book is a follow-up to his Social Democratic Capitalism, which made the case that the USA would be better off moving to a Nordic model of social democracy.
I’m hoping to make a longer response soon, but I thought I’d begin by summing up the argument as I see it, and the reasons I’m unconvinced.
The way Kenworthy approaches the question is, I think, bound to lead to a negative answer. Since we haven’t had any experience of anything that could really be called democratic socialism, as opposed to social democratic capitalism, it’s hard to make any stronger response than “we don’t know, but it’s worth a try”.
But Kenworthy puts the burden of proof entirely on the advocates of socialism. The book is full of statements like “ I’m not
aware of a convincing case” and “I don’t see a compelling reason”. Given this general approach, it’s hard to imagine that any radical alternative to the status quo would pass muster.
To get a bit more specific, the central approach of this book, as with Social Democratic Capitalism, is a set of cross-country comparisons between developed capitalist countries, with the USA at one pole, and the Nordic countries, most notably Sweden, at the other (Korea is also included, which tends more to confuse than enlighten, given that it’s an outlier in most of the comparisons, with a minimal welfare state). The problem here is that, while these countries differ radically in terms of the way their health and welfare systems are organized, they all have much the same division between public and private production of marketed goods and services.
In the absence of significant international differences on this score, cross-country comparisons don’t tell us much about whether public ownership of industry is beneficial, harmful or neutral. Indeed, having stated in the introductory chapter that ‘the core distinguishing features of contemporary democratic socialist ideas are public ownership of firms and economic democracy’, Kenworthy barely mentions public ownership in the body of the book, and only as a hypothetical feature of socialism. Nationalization, the archetypal socialist policy, fares worse, not even making it into the index (a search reveals two mentions.)
By contrast with the lack of cross-country variation, the role of public ownership has varied widely over time, reaching a peak around 1970, before being rolled back by the rise of financialised capitalism from the 1980s onwards. The decline of public ownership is correlated with adverse trends in most of the measures socialists would like to consider: inequality, union membership, unemployment, financial stability and the strength of democratic institutions. An analysis with some discussion of the causal relation ships involved would be a worthwhile contribution to the discussion. But when Kenworthy notes these trends, he treats them as natural, if rather mysterious, tendencies of the economic system. A typical quote
Will the rise in income inequality between the top 1 percent and the bottom 99 percent continue? There is no way to know. Perhaps a new development— a deep economic downturn, a shift in political priorities, or something else— will produce another reversal like the one in the middle of the twentieth century. All we can say with confidence is that this hasn’t happened yet.
It seems unlikely that such a shrug of the shoulders is going to convince many advocates of democratic socialism to change their views.
But even if his answer is unsatisfying, Kenworthy’s question is one that needs to be asked, and answered with more than rhetoric. In a subsequent instalment, I plan to attempt or at least start to attempt, an answer.
John Quiggin 
A two country comparison between the US and Sweden? Thats weak. Sweden is kind of small and kind of not that social democratic unless one define social democratic capitalism as “lots of income redistribution, and stuff like that but dont ever touch inequal capital ownership or corporate profits”. One does not need to got to nationalication to get to a very different nation. The things the Ikea founder got away with and could even move back to Sweden in terms of tax evasion -_-. One could also argue Swedens industry stands and falls with the interests and competence of the current Wallberg heir. The way the Wallbergs control the Swedish corporate sector through a/b shares and the Investor pyradmid has little to do with one Euro one vote either, so for better or worse, that is not real capitalism either.
[…] up my initial response to Lane Kenworthy, I decided to approach the question from a different direction and ask “Would we be better off […]
Good afternoon John,
I believe that our pre Neo Liberalism with much o economic activities, social and manufacturing in public hands much superior to our, the USA and GB systems. However the Scandinavian systems are far superior (even taking Hix’s comments into account)
I believe what makes the Scandinavians better is that they are not victims of the Westminster system of government. The Westminster system is about winning, not good outcomes. It is confrontational and driven by power (and paranoia of losing it!)
Scandinavians and a number of other north European countries have the luxury of non-binary governments which has created collaborative minority governments where all parties have a seat at the table. The result is a high focus on reducing inequality, superior community services like health, education, housing. They have high levels of rehabilitation and low levels of incarceration. They pay high levels of taxation and thriving economies.
Their systems of government embrace forms of Inclusive Growth about which Stiglitz said: “There has been a long held belief that inequality is a problem, but if we do anything about it, it will weaken our economy. However we now realise this is wrong. In fact inequality, and the magnitude it has grown in, actually undermines economic activity”.
This enables Government/community services and business to sit at the same table with common objectives even if for different reasons!
I believe that our new Labor government is gently moving in this direction. The large number of independents makes it attractive and early signs seem to confirm it.
I will try to answer this without resort to ideology, left or right. Rather, I will try to answer guided by what the real system is empirically telling us. The real system we are concerned with, in total, is the biosphere with all its subsystems including the global civilization system which means all of its people, its real economy (as a system of regional and national sub-system economies) and its regulatory/financial system(s) as signals and decision systems. As signals and as decision systems used for choosing and overseeing real actions from possible choices or generated choices, the regulatory/financial system is a real system, notwithstanding that it works with and manipulates formal quantities, formal rules, formal logic, formal quantification and on on.
A key problem today is to determine the proper ambit of the market. Attempts have been made at minimizing free markets (communism or state capitalism as some call it) and attempts have been made at maximizing free markets (neoliberal capitalism). It is fair to say that neither program has been successfully carried to a conclusion which would suit the purist advocates on each side of the argument. Each program met obstacles and limits. The complexity of possible (and emergent) human and economic behaviors cannot, it seems, be compressed into one homogeneous dynamic system.
If we look at what money can and cannot measure, even with the aid of good markets (they are never perfect), we may get an idea of the limits to markets. If we look at what objective, scientific quantification can and cannot measure we may get an idea of the limits to centralized command systems (socialist, state capitalist, private oligarchic). In summary and to simplify, I am suggesting markets are good for subjective and qualitative decisions and command systems, scientifically directed, are good for objective, scientific decisions.
To again oversimplify, markets are good for satisfying wants and indeed for proliferating them. Planning, as scientific planning, is good for satisfying essential human needs,especially ones of a broad societal to natural monopoly nature and also is good for setting limits so as to not damage natural systems (e.g. climate). We die without a viable biosphere system. We don’t die without ice-cream or footy matches. Again this is simplistic to avoid a TLDR wall of text.
This suggests placing the regulatory system over and above the market system; pretty much where it is anyway in any really existing sociology-economic system, except perhaps the USA where it is breaking out into a sort corporate oligarchy shark tank where the sharks make the rules. The regulatory system must set the limits on the market; a controlled market within regulated limits.
None of this is rocket science. I rightly could be accused of laboring mightily, or for a short space, to prove that we need a mixed economy. That is not an original thought. The other issue is to decide the proper ambit of the rights of private property. What rights should it confer? What rights should it not confer? How extensive should personal domains of private property and its rights be?
In practice, we need to progress social ownership back to its historical high in the modern West. That is to the general situation pertaining in the 1960s in Australia for example, with allowances for progress, technological and social. Then we would need to take it further. Why? Because that 1960s situation was able to degenerate, relatively rapidly in historical perspective, back to elite plutocratic ownership and high levels of inequality. As wealth equals power and power equals wealth, this indicates the rich elites still had too much power and wealth even at the height of the Keynesian welfare state. They were able to reverse social, democratic and egalitarian gains. Their wealth and power must be reduced to the point where they cannot ever again successfully effect such a regressive program. Their individual wealths and powers must be squeezed (taxed, wealth taxed) down to an unprecedented small size.