From a recent Charter Cities Institute report:
From India’s independence from the British Raj in 1947 to the early 1990s, the country’s economic policy was largely socialist. In the 1980s some early steps were taken to open the Indian economy to increased trade, reduce controls over industry, and set a more realistic exchange rate. In 1991, more widespread economic reforms were introduced. These reforms included the end of government monopolies over certain sectors of the economy, reductions in barriers to entry for new firms, increased foreign investment was allowed, and tariffs and other barriers to trade were reduced or eliminated. After liberalization, exports increased substantially, and various service sector industries saw significant growth.
India’s growth has not just been good for the more educated segment of the population. Datt, Ravallion, and Murgai (2016) argue that India has made substantial progress in reducing the incidence of absolute poverty, and that this trend exists in both urban and rural areas. Historically higher rates of rural poverty have been converging with urban rates of poverty, and the overall poverty rate has been declining at an accelerating rate in the post-1991 reform era. In the 1970s over 60 percent of Indians were living in extreme poverty. As of 2011, only 20 percent of the population lived in extreme poverty. Between 2005 and 2016, an estimated 271 million Indians rose out of multidimensional poverty, which accounts for various health, education, and living standard indicators rather than just income (UNDP and OPHI 2018). Infant mortality has fallen from 161.4 deaths per 1,000 births in 1960 to just 32 deaths per 1,000 births in 2017, and India should soon converge with the world average if the current trend continues. Life expectancy has also improved dramatically, rising from 41 years in 1960 to nearly 69 years today. Like with infant mortality, India is close to converging with the world average in life expectancy. Literacy has improved from just 41 percent in 1981 to 72 percent in 2015, an increase of 75 percent. Here too, India is converging with the world average. Female literacy in particular rose from just 25 percent in 1981 to nearly 60 percent in 2011, and female primary school enrollment has increased from 65 percent in 1990 to over 98 percent today. Across the board of development measures, India has made tremendous strides.
Reading this surprised me. I was vaguely aware that India had done relatively well, but I didn’t grasp the scale. This should be up there with the rise of China as one of the most important (and most encouraging) news stories of my lifetime. And if it was really due to the 1991 reforms, they should go down alongside Deng Xiaoping’s liberalization of China as one of the century’s great achievements.
Looking into it further, the progress against poverty is on firm ground, but the attribution to the 1991 reforms is controversial. Here’s India’s rate of GDP growth over time:
And here’s its poverty rate over time:
Neither looks like much happened in 1991. Both show, if anything, gradual progress from around 1980. Kotwal, Ramaswami and Wadhwa have an especially clear presentation of this:
For their claim about 1991, CCI cites Indian-American economist Arvind Panagariya’s 2004 paper. Panagariya is aware that the graphs don’t back him up, and cites other economists like Brad DeLong and Dani Rodrik making approximately this point. But he argues that liberalization deserves credit for India’s growth anyway, on two grounds. First, he says that there was “stealth reform” in the mid-1980s, when reformers opened the economy without publicizing what they were doing in order to avoid a crackdown from angry leftists. These were complete by 1987, leading to a boom from 1987 – 1991. Second, this growth was unsustainable, and ended in a 1991 crash. Only after the major 1991 reforms did India enter a sustained period of economic growth.
But Panagariya’s panegyric is founded on the growth starting in 1987; the graphs don’t support that story either. He can only note that:
It is difficult to pinpoint the timing of the upward shift in India’s growth rate. Thus, in a recent attempt to pinpoint structural breaks in the growth series, Wallack (2003) is able to achieve at best partial success. She finds that with a 90 percent probability the shift in the growth rate of GDP took place between 1973 and 1987. The associated point estimate of the shift, statistically significant at 10 percent level, is 1980. When Wallack replaces GDP by gross national product (GNP), however, the cutoff point with 90 percent probability shifts to the years between 1980 and 1994. The associated point estimate, statistically significant at 10 percent level, now turns out to be 1987.
In other words, statistics is hard, and random upward swings can segue into real changes in trend in hard-to-analyze ways. It’s impossible to say for sure from the GDP numbers that there wasn’t a (random) boom in 1980 that gradually merged with the (real) boom starting in 1987. This works with the GDP numbers, but I find it basically impossible to square with the graph on poverty (which is from 2016 and which Panagariya didn’t have access to).
CCI also cites Datt, Ravillion, and Murgal (paper, article), which claims that “economic reforms following the macroeconomic crisis of 1991-92 marked a significant change in India’s economic landscape, ushering in a new phase of high economic growth. The growth rate of NDP per capita more than doubled in the period since 1992.” But on closer inspection, they are just comparing an average for the period 1957 – 1991 with an average for the period 1992 – 2012, and finding the latter average is higher. They make no effort to establish that the break point is actually in 1991. Since people had been complaining about this for about ten years before the publication of their paper, I’m not sure what their excuse is, other than that they’re mostly making an unrelated point about poverty and this is not super relevant.
More recent work seems to agree that there is something fishy here. Agarwal and Whalley (2013) concludes that:
We do not find persuasive the contention of manyanalysts that growth accelerated after the mid-1980s when reforms were initiated. Nor does statisticalanalysis support the contention that reforms in the mid-1980s resulted in a growth acceleration. Weshow that there is an accelerating rate of growth of GDP after the mid 1970s and it is difficult to relate this gradual acceleration to specific policy changes. The changed policies in the 1980s did not meana basic change in the policy framework. Furthermore, since corporate investment as a share of GDP did not increase in the 1980s it is difficult to identify the mechanism by which the more pro-business policies of the government were translated to higher growth.
And Kotwal, Ramaswami, and Wadhwa (2016) says basically the same:
Formal econometric tests also indicate a structural break around 1980. Using an F-test, Wallack (2003) finds the highest value of the F-statistic in 1980. Rodrik and Subramanian (2004) use a procedure of Bai and Perron(1998, 2003) and they report a single structural break in 1979. Balakrishnan and Parameswaran (2007) also used the Bai and Perron procedure and they too locate a single structural break in GDP in 1978-79. The authors also estimate structural breaks for sectoral GDP. Their principal finding is that structural break in agricultural output occurs in the mid-1960s while it occurs in the early to mid-1970s for various sub-sectors of services. On the other hand, the first positive structural break in manufacturing occurs after the GDP break in 1982-83.
Basu (2008) and Sen (2007), however, point out that GDP fell by 5.2% in 1979-80 (due to a combination of a drought and the second oil price shock). If this outlier is disregarded, then the trend break occurs in 1975-76. The average annual growth rate during the period 1975-78 is 5.8% – a rate more in line with the post-1980 experience than with the earlier period.
Is the timing of the structural break important? The discussion in the literature about the structural break takes place in the belief that it could offer clues about what policies led to the shift in the economy’s growth rate. Such inference is problematic because statistical methods alone are unlikely to provide a precise timing. Judgments about outliers, the period of analysis, and the sectors that are considered, matter. An additional complication is that policy measures do not have instantaneous results. The delay would be especially pronounced if the benefits flow from a structural change. It is therefore unwise to correlate the changes in economic variables to the policy changes that immediately preceded them. These caveats notwithstanding, the economy does seem to have moved to a higher growth trajectory sometime in the mid to late 1970s or early 1980s, well before the economic reforms of 1991.
So what did cause the Indian economic boom, save 200 million people from poverty, and accomplish an almost unmatched victory over misery and mortality? After discussing a series of possibilities, Kotwal, Ramaswami, and Wadhwa…admit that they are confused:
Although it is clear that GDP growth rates increased sometime in the ‘70s or early ‘80s, the precise timing is hard to establish and depends on one’s prior. Various explanations have been proposed and it is impossible to be sure which of these is the most important one. The economic orthodoxy would favor one that credits trade liberalization, limited as it was, that decreased the cost of capital equipment but it is hard to disentangle the effects of this from more heterodox factors such as public investment and rise in savings rate (due to bank nationalization), the diffusion of agricultural technology (entirely due to public research and dissemination) or indeed to rule out the role of political attitudes towards business. It is also indisputable that there was an unsustainable fiscal expansion through 1980’s and any income growth resulting from it should be considered qualitatively different from the much more sustainable growth that occurred in the next decade.
Of the various papers they cite, the one I find most interesting is Rodrik and Subramanian (2004). After a while describing the problem, they look at it from a different angle: which Indian states boomed first? They find it was the states most closely allied with the ruling Congress Party, and tell a story where floundering Prime Minister Indira Gandhi decided she needed support from Big Business and adopted a pro-Big-Business attitude. They do excellent work establishing the plausibility of every link in the chain of assumptions here except the one where they admit that this attitude wasn’t reflected in any pro-business policies until the late 1980s at the earliest. Somehow Gandhi’s pro-Big-Business attitude is supposed to have helped business without being reflected in any major economic reforms. Maybe it changed the way existing laws were enforced? Maybe it signalled to businesses that they should get started on long-term strategies because they could expect favorable laws in the future? Or maybe Prime Minister Gandhi just sort of sat in New Delhi, telepathically willing Big Business to succeed, and it worked? Rodrik and Subramanian are kind of agnostic about this. Everything else seems to fit pretty well, though. This might be a good time to reread Does Reality Drive Straight Lines On Graphs, Or Do Straight Lines On Graphs Drive Reality?
This is also a good time to reread The History Of The Fabian Society, because the problem might be their fault to begin with. In the waning days of the British Empire, bright young leaders from all over the developing world (including India’s Jawaharlal Nehru) came to study at Oxford and Cambridge, got inducted into Fabian socialism, went home to their newly independent countries, and pursued socialist policies. All those countries did terribly and became the Third World basketcases of today. Only over the last few decades is the damage starting to be reversed.
If we had a better understanding of what exactly happened and how it was reversed, it could be an important source of information for developing countries in the future. Also, and more selfishly, it would be an important source of information for the US. Historically-informed anti-socialism arguments have tended to hinge on things like socialist China killing 60 million people, or socialist Russia killing 15 million people, or socialist Cambodia killing 1.5 million people, or [insert other socialist regimes killing 6-7 digit numbers of people]. But nobody thinks that Bernie Sanders plans to kill a six to seven digit number of people. To respond to Bernie-Sanders-style-socialism, we need to study and raise awareness of the history of democratic, comparatively “nice” countries that did nothing worse than overregulate business a bit – and investigate whether even these best-case scenarios still doomed millions of people to live in poverty. My (biased) guess is that careful study will show this to be true. But I don’t think this study has been done, I don’t think the facts are in yet, and I don’t think it was appropriate for the Charter Cities Institute to cite Panagariya’s argument on this point without any challenges or caveats.
On China vs India changes in poverty, life expectancy, and liberalization I highly recommend this:
http://glasgow.faculty.polsci.ucsb.edu/ps15/DrezeSen.pdf
Thank you for sharing it !
There’s usually a lot of focus on when bad policies start getting drawn back, reforms start being made, etc. But my feeling (total conjecture on my part) is that the more significant change is when the government stops actively making things worse. A lot of times socialist governments have a habit of consistently digging themselves deeper holes.
Even very onerous regulation and bad policy can usually be worked around to some extent (at least in the “nice” socialist countries), but you can’t easily work around policy that doesn’t exist yet but might still kill your business.
Of course, it’s a lot harder to identify when this happens as opposed to locating the year when massive sweeping reforms occured… but still, it might worth looking into.
I get the feeling this comment needs some supporting data before I can accept it.
Agreed, but OP said it’s total conjecture, so can’t really complain…
Socialism leads to learned helplessness. You have some nice idea that isn’t even technically illegal, it’s just… you expect that as soon as you’d start succeeding, it would be declared illegal, so why bother trying.
Strongly agree with this. My guess is that the conditions that made economic reforms possible are what’s important here, not the package of reforms itself.
In that sense, of course the economic reform laws didn’t noticeably improve conditions because the project of sound economic reforms was well underway before the law was ever changed. The laws described existing institutional momentum rather than altering it.
Possibly then, instead of looking for when certain regulations were relaxed, we need to find the period where there was a lower rate of change in regulations, due to the government not putting as much effort into the “socialism” thereby allowing business to adapt to the regulations that already existed, however numerous or onerous they were.
Incredible.
One way to start, is to compare countries poverty levels with the percent of national wealth that is publicly owned (i.e., the percent a country is “socialist”).
Of course, you would want to try to match up countries of relatively similar levels of economic development. So for example you could compare the US to Norway, as opposed to comparing the US to say Turkmenistan.
This is actually relatively easy to do, and the results may surprise you!
It turns out its easier to fund a welfare system when the state doesn’t have to worry so much about capital flight.
I don’t think the percent of wealth that’s publicly owned is very interesting in this respect. The policies that get early India called “socialist” had little to do with public ownership of wealth. It’s possible that means I’m misusing the term “socialist”, but in that case I’m in good company.
If you are using “socialist” to mean something other than the public ownership of wealth, then you are indeed misusing the term, or at least using it in an ahistorical way. That the Charter City Institute also chooses to misuse (or at least play fast and loose) with this term should heighten your already healthy skepticism of whatever analysis they are attempting.
Perhaps a better first step would be to clearly define your question: What aspect about a country’s economy are you trying to measure here? What does it mean for the policies of a government to be “more socialist” or “less socialist” to you, if it does not relate to state ownership?
I think once more people misuse a term than use it correctly, they’re no longer misusing it, the meaning has just shifted. Unless Bernie Sanders just means he wants the government to own more wealth, I think it’s fair to use the same word he’s using.
You Americans should erase the world “Socialism” from your vocabulary. It is completely impossible to have a meaningful discussion around the topic when your definition of the term ranges from “mass killings of 6-7 digit numbers of people” to ” one payer healthcare”.
Please, Scott, if this is going to become a regular topic, write a post or something where you define a subset of the spectrum for your use of the world “socialism” so everybody here can follow it. That would elevate the level of sanity in the discussion so much.
And maybe it will spread to the rationalist sphere. And from there to the SV community. And then to the rest of the internet!! A man can dream…
But that is exactly what Bernie Sanders wants. The question of state ownership the main axis of differentiation between him, the accurately-self-described socialist, and Elizabeth Warren, the accurately-self-described capitalist. He wants the state to begin accumulating ownership of the means of production, while Warren does not.
I want to emphasize that this is the normal usage of the word.Wikipedia, Webter’s dictionary, Encyclopedia Britannica. If you find that this usage of the word is unusual to you, that suggests to me that your diet of political dialogue has become dangerously insular to economic extremists to the point that the normal is unfamiliar.
But regardless, I’m not trying to get into a pissing match over what the “correct” definition of a word is. You claim to want to be able to analyze County A vs. County B on some axis, and that this axis will show that Sanders and the Left are wrong, and that the economic liberals and libertarians are right, and all we know is that your axis is not collective vs. private ownership of wealth but something else.
Okay. Well, good luck with that…
This is completely different from ownership of wealth. In Norway, the government does not own the means of production, it owns a sovereign wealth fund (right?). In the U.S., the government owns the majority of land in the country, so its ownership of wealth is also very high. But neither is remotely socialist.
Cliff – “In Norway, the government does not own the means of production, it owns a sovereign wealth fund (right?). In the U.S., the government owns the majority of land in the country, so its ownership of wealth is also very high.”
Isn’t the Norwegian sovereign wealth fund primarily invested in corporate shares? (Partially) owning corporations *is* (partially) owning the means of production.
In the United States, the land that the government owns is mostly the least economically valuable land. The federal government does own some office buildings in many major cities, as well as large chunks of the land in one of the top ten largest metro areas (DC), but this is a very tiny fraction of the overall productivity of land in the United States, so it doesn’t contribute much to state ownership of the means of production. (If they had 25% shares in Google and Apple, that might be bigger.)
keaswaran – Being a passive minority investor in various corporations, many of them overseas, is qualitatively vastly different from actively managing and/or entirely owning whole industries within a country. Are you aware of any situation in which the Norwegian government used their stake in a company via the sovereign wealth fund to dictate the way that Norwegian company does business?
LOL, no. Those companies have maybe $1T value each? The Bureau of Economic Analysis concluded that the value of all federal lands was $1.8 trillion in 2009.
link text
So by this estimate the U.S. federal government owns well over 50% of the total wealth of the U.S. – comparable to that in Norway
On what do you base this assertion? Wiki says “Many have examined his political platform … and found it to be based on tax-funded social benefits rather than social ownership of the means of production.”
Your source here is inane. It basically calculates a theoretical value the USG could raise if it basically decided that making money was it’s primary goal and pursed that goal by selling off a substantial percentage of its assets, immediately allowing unrestricted mineral exploitation on federal land and taking no action that would stand in the way of hydrocarbon extraction.
This is a highly theoretical and downright unrealistic estimation of wealth and shouldn’t (IMO) be compared to the tangible and liquid estimations of the Norwegian government’s assets.
Cliff:
In terms of land value in the US, the estimate I found is that it is worth ~23 trillion in total, and the US gov’t owns around 1.8 trillion of it (https://www.bea.gov/research/papers/2015/new-estimates-value-land-united-states). Your offshore oil and gas argument is interesting but we’d have to see what percent is privately owned for that number to be meaningful.
And yes, the Norwegian government owns plenty of industry. Quote from an oped:
Dacyn:
A key part of Sander’s platform includes the forced transfer of company ownership to employees, called the Democratic Employee Ownership Fund. True, this isn’t state ownership per se, but worker ownership of the means of production certainly qualifies as socialism. Wiki is wrong here.
Not “on and offshore”, but rather “very very deeply buried beneath land and sea”. The federal government of the United States of America does not have the ability to acquire or use these theoretically-valuable resources, and the people who could do so can only afford to do so if they are allowed to keep the lion’s share (and most of the hyenas’) of the gross revenue for themselves.
If the United Nations were to decide to grant me legal title to Amun 3554, that wouldn’t make me a trillionaire. And if that’s not obvious to you, then you aren’t actually trying to understand the practical wealth of the United States Government.
@Guy in TN: Well you are moving the goalpoasts slightly, but I didn’t know about DEOF, so thanks for the info. Though I’m not sure that it’s fair to call it a “key part” of his platform, given that I’ve never heard of it before (though to be fair I don’t follow the races all that closely). And as a minor quibble, Wiki only says that people say he is not a socialist, and it doesn’t appear to be wrong about that.
A large part of the Norwegian state wealth is the “petroleum fund”, worth approximately 1 trillion dollars, or two-and-a-half times the GDP¹.
In addition the state owns shares in 73 corporations, many of these are cultural or scientific institutions, or the public part of the health sector, railways and airports, the national broadcaster, energy – but also partial (usually 50.1% or 67% in order to retain control) ownership in some of the largest commercial corporations that compete with private companies – banks, oil, telecom. Total value of this is a bit less than one tenth of the petroleum fund.
ETA2: Oh, and a bit over 31% of employees work in the public sector, not counting the 73 corporations mentioned above. I guess that counts as owning the means of production.
As for “socialized medicine” and the like, hospitals are largely state owned (but smaller private ones exist, and the government often buys their services). Patients are free to select a different hospital (but usually not a private one, I think) at their own discretion, e.g. if there is waiting time. GPs are private but paid for mostly by the state, and dental health is mostly not covered at all. Similar for education, child care, and care for the elderly – mostly state/publicly owned institutions that compete with a few private ones, often with various kinds of subsidies to even things out a little.
ETA: I think some differences to the US that actually matter is a) strong protection of employment. Employers can’t just fire employees without good reason, so we are less vulnerable to Twitter mobs and the like. And b) health insurance is via the government, not by some insurance tied to your employer. Especially the combination of little job security and health insurance tied to employment seems suboptimal to me.
¹ Yeah, I know. I checked it this time.
I wonder if there’s a term for a phenomenon that goes something like this:
There’s a word that starts out used in a fairly specific way.
Around the same time or sometime later there’s an unnamed idea space people want to talk about and which bears some resemblance to that more specific term.
People start using the originally specific term to refer to the usually bigger, vaguer idea space they want to talk about, in some cases more than they want to talk about the original referent.
Endless debate ensues about the real meaning of socialism, capitalism, racism, etc., though it’s not only abstract, philosophical, politically contested words and phrases this happens to: “begs the question” refers to a specific error in argumentation but sounds like it means something else people frequently want to say but have no quick and easy way to say.
I don’t know much about the history of the word socialism, but one often hears “no, no, socialism only means when government owns the means of production.” But there is also a related phenomenon where the cost of something gets “socialized” by e.g. collecting taxes and having the government pay for it rather than having everyone use their own money to pay for their own x. People, both opponents and proponents, want to talk about this latter thing too, so they use the word “socialism.” As for the “real” socialism that means the government owns the means of production, opponents and proponents are generally content to conflate or distinguish the two as seems advantageous to their cause.
This latter idea space for which there is seemingly no better word than “socialism” is, in some sense, the nature of government itself, so governments can’t actually be “not socialist,” they can only be more or less socialist on this definition. This fact, in turn, is a bug or a feature depending on how you feel about government and how positively or negatively you feel about the word.
But there are words for when the government acts as a mechanism of transfer besides “socialism”. You could call it “the welfare state”, or if you want to be broader, just say “taxation” or “government spending”. And a government that tries minimize such things can be called “neoliberal”, while a government which embraces them can be called “social democratic”.
These are fine words and phrases. We are not desperate for a lack of terminology on this front. If Scott wanted to say “we should investigate whether countries with high taxation have more poverty” or “we should see whether large welfare states make poverty worse”, that would be very simple to articulate.
But, as with what I point out below, that course of action is highly time dependent. It doesn’t say whether those policies are good/bad (it might), but it also might just be testing the theory that large welfare states are a governmental example of a “luxury good”, or that high taxation levels come to be because the government can’t collect enough money to operate because its citizens are so poor, etc.
The problem is that what we are talking about is the opposite of “privatization,” which is typically called “nationalization,” but if it’s not too confusing to call someone in favor of “privatizing” lots of things a “capitalist,” it obviously would be to call someone in favor of nationalizing a lot of things a “nationalist.” Since they are in favor of socializing things like the cost of health care, it makes sense to call them “socialists.”
If one were in a mostly socialist country where the government owned all the factories and someone suggested privatizing healthcare and education, that person would likely be called a “capitalist,” even if he didn’t advocate privatizing the factories. In a mostly capitalist country where the factories are privately owned, it makes sense to call someone who wants to nationalize/socialize healthcare by creating e.g. a single payer system a “socialist” even if he isn’t also advocating nationalizing the factories.
Phrases are another matter: it’s a losing battle to insist people use long, descriptive phrases every time they refer to something for which there is a short word that colloquially means the thing they are talking about. Of course, labeling itself is a power struggle: generally you want your opponents’ position oversimplified by a catchy label and your own position always treated with nuance.
@onyomi
So communism was national socialist? 😛
—
Seriously though, from my perspective, workers having some say in their company’s policies and them getting a substantial part of the profits, is social democracy. This includes (voluntary) cooperations.
Of course, social democracy always has an internal conflict between liberalism and regulation, unlike Marxist-Leninism, which is pretty much fully on the side of regulation.
As long as we limit ourselves to social democracy, which both Sweden and the US are examples of, then a fair question is what balance between liberalism and regulation is optimal, although presumably, not all kinds of liberalism and regulation are created equal. So most likely, you have to look at specific policies, rather than at broad categories, such as capitalist vs socialist or liberalism vs regulation.
Onyomi:
It’s worse than that, because it’s definitions all the way down. What counts as a ‘means of production’? What does ‘ownership’ mean, precisely? At what point does a government represent the ‘public’?
Even if we agree on a definition for socialism, we need to agree on the definition of the components of the definition (and so on) for the definition to work.
The idea of a Democratic Employee Ownership Fund, for example, how does that translate to actual ownership for me, an employee (or worker)? This goes back into the whole ‘worker ownership of the means of production’ part of socialist theory; if I truly own something, I can sell, rent, or mortgage it, at which point it’s no longer entirely mine; telling me I own something I’m stuck with means I don’t truly own it. As such, to have true worker ownership of the means of production means changing the definition of the word ‘own’.
Tiamandas is entirely correct. Socialism as a term is in US english completely bloody useless because the useage has deliberately been made overly broad in order to allow the cramming together in one category of people who feel walmart workers should unionize and Stalin. Imagine for a moment that the only term for anyone on the right from Eisenhower to Hitler was “conservative”. It is an impressive feat of propaganda but if you want a not utterly vacous debate, the word socialist ought to be tabooed out of the discussion entirely in favor of narrower and more specific ones
Somewhat true, but from my observation the reason is as much the fault of the ways high level political progressives use rhetoric that blends them. Like, Elizabeth Warren has been using the phrase “Medicare for all” for several years now. She has all sorts of detailed plans on her website related to minor issues, but on that one she does not. Same with her green energy initiatives. Or someone like Sanders points to Sweden, but none of this plans have a coherent vision on regulatory reform, which is important, because Swedish taxation & spending + American regulation = Chavezism.
What is the difference between a government owning wealth and a government taxing at rates that and restricting behaviors such that is in essence de facto the owner? It is certainly not that one is socialism and one is capitalism.
Measuring “de facto ownership” in a quantifiable way is pretty difficult. We don’t have good measurement units for how much power a given individual has in a society.
I’ve usually considered that arrangement to be the economic platform of fascism, although it doesn’t have to include all the other elements that form fascism.
Because the government owning wealth usually refers to nationalization, which would mean direct control over how that wealth is used. With taxes, unless they were 100% (somehow against the laffer curve) this would never happen, and restricting behavior with regulations in practice leaves a lot of room for corporations and private individuals to act.
Theoretically they would converge at some point, but in practice they don’t because it costs a lot to try to collect taxes and enforce regulations, and businesses can always just move their assets abroad. There’s a big valley to cross between overtaxation/overregulation (themselves different things), and nationalization.
You can have ownership without control and control without ownership. I think that these concepts need to be well distinguished.
It’s about state ‘control’. Ownership is a technical term. If I am nominally in charge of a resource/asset but the government can dictate on any terms how that resource can be used, then yeah I think it’s fair to call that arrangement socialist.
Similarly, there’s a reason Bernie Sanders and Warren are called socialists by their opponents, and Bernie accepts that term. Because they want to nationalize healthcare and make private insurance illegal. Healthcare is 20% of the U.S. economy. That’s a huge step towards socialism.
It’s not ‘all the way to nationalizing everything to point where millions of people die because no one has incentives to produce anything’ socialism, but it’s still something.
“they want to nationalize healthcare and make private insurance illegal. Healthcare is 20% of the U.S. economy.”
I think you’re equivocating on “healthcare” here. My understanding is that they want to nationalize health *insurance*, but leave the *providers* and pharmaceutical companies private. As I understand it from a bit of googling, the entire health *insurance* industry has about $23 billion in annual profits, while individual pharmaceutical companies make more than $5 billion in annual profits, and many providers make lots of profits too. So the whole health*care* industry may be 20% of the economy, but health *insurance* is not.
This is how property law works in literally every capitalist country though.
I agree that such a situation is more socialist than the alternative of anarcho-capitalism. But if you are going to try to compare countries along such an axis, surely outright state ownership (e.g. the Nordics) should way far heavier than this “soft” form of ownership of property regulation.
But also in non capitalist countries. There are lots of privately owned companies in China and Venezuela, but something like Tencent is still an arm of the Chinese government and if it does something the CCP doesn’t like that thing gets shut down immediately.
That may be the stated goal, and may end up being the policy implementation. But I can guarantee you that the government, acting as sole insurer and thus responsible for the majority of payments, will have a significant impact on how healthcare is performed.
My understanding (and I need to read more to confirm) is that changes in Medicare/Medicaid reimbursement schedules have effectively led to my State (PA) changing the Scope of Practice for EMS.
If we’re going to use this definition of socialism, then we are compelled to talk in terms of “more socialist” and “less socialist”. The black and white assignment only makes sense if we’re talking strictly about whether a worker’s state has abolished private property in the means of production. It has either taken this step or it hasn’t.
So we shouldn’t be questioning whether socialism is good or bad, but how much, when, and where. If Denmark, Venezuela, and the current USA are all indeed socialist, then we need something else to tease out what was behind the varied outcomes.
Goodhardt’s Law at work.
If socialism is measured by total assets owned by government, and some government wants to say “ha ha, we are not socialist,” for some reason, they can make sure they maintain control without ownership.
There is another critique I make from time to time, where people want to measure government interference based on tax rates. In situation 1, the government takes all food 0.1% and uses it to run food banks. In situation 2, the government mandates all restaurants to feed the hungry, with a series of exceptions that people can apply for (and the restaurants where the lawmakers eat always manage to get the exceptions). Situation 1 is way less onerous than situation 2, but on a silly one-single-measure rule, situation 2 has less interference.
I feel it’s important to point out here that it’s perfectly consistent to be a socialist while simultaneously believing that the state shouldn’t even, like, exist. See An Anarchist FAQ, sec. A.1.4, for example.
(And, yes, you could theoretically have “public ownership” without “state ownership,” I suppose, for a very loose definition of “ownership.”)
I disagree
This is because 19th Century socialism was about ending “exploitation” by making cost equal to price. Marxist socialists made the definition of socialism into “when the state owns things” because they took that path in practice. If Proudhon’s socialism had remained the most popular then actually existing socialism in the 20th Century might have been different and we would use the word to refer to a different thing.
Socialism has been further redefined into a high regulation welfare state in modern times, which every country already has, just at different degrees, making the issue one of how much socialism and not capitalism vs socialism.
Socialsm isn’t about public ownership of wealth. It’s about workers being the owners of their means of production. Publix and co-operatives are socialist companies. State ownership of the means of production is the weakest possible form of socialized ownership, since your share of it is so small and your control is so tenuous. Well, maybe if UN owned some factories…
A farmer working their land alone satisfies both libertarian and socialist requirements. The differences start when that farmer has to hire additional help.
It’s further complicated by the possibility of workers owning their own businesses on a capitalist model of shares, which wouldn’t solve the major problem of socialists with capitalism. Socialism (classically, radically speaking) also wants to abolish profit, which co-operatives can make. Something internally socialist isn’t the same as a socialist society, which is why the big banners read “Another World Is Possible” and not “Another Kind Of Company Is Possible”.
This isn’t a problem for Bernie Sanders style vague socialism, but most Marxists and anarchists I’ve talked to have called the co-operative model “vulgar workerism” that allows groups of workers to become the bourgeoisie.
OK, I’m confused. This is not a definition of socialism that I’ve ever heard. By this definition, a despot (or medieval ruler) who claims to own all the land in the country – and maybe the people, too – would be socialist.
The crucial difference that must be added to the definition is that socialism claims to end exploitation and that the workers should control the means of production in some underspecified way (socialists vary on what this should mean). We can tell this is important because no socialist would be happy with a despot owning all the land. They’d probably call that state of affairs “state capitalism” or something like that.
People get confused on this point, because socialists who follow Marxism generally call for public ownership as an intermediate step, but the public ownership is simply a consequence of the more important defining characteristic of socialism; opposing exploitation. Any situation where cost is not equal to price, any situation where profit can be gleaned is a form of exploitation. This is why anarcho-communists, mutualists, individualists and Marxists all uphold different views on state and even public ownership, but would be defined as socialist due to the common thread of various labor derived theories of value being used to create a theory of exploitation that provides the moral impetus for their policies.
Socialism can (and in practice always does) involve public ownership, but this public ownership should be paired with a minimization of profit and something like non-transferable labor notes. Otherwise, McDonalds could take over the entire government and run it as a profit maximizing entity that would still be socialist, but that’s easily shown to be silly by going to your local radical socialist meeting and proposing this as a positive hypothetical to looks of pure horror and confusion.
@Dinonerd
The key word here is “public”, typically manifest in the form of democracy.
The composition of the state is very important. Monarchism, juntas, ect, are not socialism.
This explains why many of the modern states run by self-identified socialists are fond of using the term “Democratic Republic” in their name. The People’s Republic of China is in theory governed by the National People’s Congress, a legislative body of several thousand individuals.
If you want claim that socialism is to blame for mass impoverishment based on historical examples, you would be well advised to not then change the definition.
All right. But Norway in particular has stashed vast income from oil and gas into a national fund, compounded by general returns on investments, and currently amounting to something like four GDPs. I’m not sure it’s correct to call this ‘socialism’. And it sounds to me that in many ways the US (or at least California) is more socialist than Norway, with stronger regulations of housing and energy, for instance.
And why wealth and not income, btw?
ETA: nice map here. Note it varies quite a bit by year, so don’t draw conclusions just from 2011.
You could look at the percentage of GDP being public, but there too there is a difference between a state handing out checks to people (which I think Norway does to a fairly large extent), and the state having people work in state-owned factories and living in state-owned and price-regulated apartments (which Norway does much less).
I’m not sure why these things are always conflated, Sanders and other socialist call for the end of capitalism and socialism, because they then point to fairly free-market states as evidence that socialism works. This is very motte-and-bailey to me — it is perfectly possible to have a capitalist free-market economy while using fiscal means (viz., taxation and benefits) to reduce economic inequality.
IIRC Norway [and all Nordic countries] are socialist to the extent that their Government spending per capita is highest in the world and make up more than 50% of GDP. you can say that in a sense, the Norwegian government is the Norwegian Economy.
in contrast, USA and other relatively capitalist countries [say the UK] are capitalist to the extent that about 30-35% of their GDP is government spending and their government spending per capita is about 30-50 th in the world.
If you just put these countries on a spectrum of government spending as part of GDP you can tentatively label one side capitalist and the other socialist.
I am a big fan of the Nordic model so I can not enter the conversation un biased.
Did you check out the link? Government spending as a fraction of GDP is in the Nordic countries not markedly different from other European countries like the UK, Netherlands or Germany. The real difference is between Western countries in 1980 and the same countries in 1960 – while actual numbers fluctuate (they all peak during the 2009 recession), everycountry (us, uk, se, dk, no, de, nl, jp) in 1960 spent a smaller fraction than any country in 1980.
In 2011 (the latest year available), Dk leads the pack with 57%, UK has 48%, No 46%, US 43%. But note there’s a lot of year-to-year noise, and I agree US and Jp stand out on the low side, with Se and Dk, and in the 80s, NL on the high side, the differences aren’t all that large.
Possibly these data are biased or otherwise open to criticism, but if that is your argument, please be specific and point to alternative sources.
Edit to add:
…and I’m not sure I agree with the definition of “socialist”. You could have a command/plan economy where the government used non-fiscal means (quotas, forced labor, dictates) to control the economy, and you could have a market economy where the government plays a large part.
I think it would be useful to disentangle these, but I’m not sure what are good/more precise terms to use.
Scandinavian countries generally have freer markets than the U.S.
It’s only a motte-and-bailey if you assume that U.S. socialists agree with you, in that the Nordics are examples of more capitalist economies. But we don’t.
Like, what is the axis you are measuring here? Is it a meaningful one?
State ownership of wealth? Norway has it in droves.
State control of companies? Plenty of that in the Nordics.
High taxation: Check
High welfare: Check
The one thing I hear about is the lack of minimum wage in some Nordic countries, but that’s because the Ghent System (the government tying old age benefits to union membership, resulting in wages being set sector-wide) rendered it unnecessary. I am absolutely sure that if Sanders proposed the Ghent System in the US, it would be decried as socialism in the extreme.
You know, us Leftists see a lot of a motte-and-bailey of our own. We propose a policy that involves government ownership or regulation of private property (often copy-and-pasted from the Nordic model), but get told we cannot do that because it’s “socialism”. And then when we try to make the argument that the Nordics are doing quite well actually, the liberals are like “of course they are, that’s because they are capitalist”. smh
I suspect that this has to do with separate, but related issues. Slightly making up terms because I’m not sure what the correct ones are:
Having full ownership in something involves a bundle of rights, including both title as well as control. By “title”, I mean being recognized as the person who “owns” it. Think of car title or property deed registration, or receipt of purchase. But it also means being able to do with it what you want. Contrast to “regulation” or zoning or whatever.
Socialism, in the sense of “public ownership of the means of production” classically goes whole-hog and takes full ownership via title as well as control. But current government policies which are referred to as “socialist” aren’t usually taking title. Instead, they are taking control. This hollows out the concept of ownership without disturbing the “title” aspect. This likely allows for similar policy goals to be achieved while preserving some aspects of private ownership.
I’d note that the reverse can occur as well, where the government may own something but allow private organizations to have some degree of control over it. In the worst cases, it ends up as political corruption where control of something gets handed to a supporter who then gets to siphon money off for themselves.
Thank you for making this comment. Decrying policy X because ‘that’s socialism!’ has lead to the term becoming meaningless enough in a general sense that defining it is very necessary if you don’t want your statements to become empty.
What’s the opposite of “thank you” that’s polite enough not to use the f-word?
Approximately no one outside certain narrow academic realms defines the word “socialist” in terms of nominal ownership of property or productive resources. The term “socialist” in common usage is, as others have noted, defined by control and entirely consistent with all property having a title certificate naming a private owner. This is a fuzzy definition, but still a useful one. As with pornography, we generally know it when we see it, and we’re not going to stop using the term.
Socialists trying to no-true-Scotsman their way out of the failures of socialism by saying “but we mostly didn’t own the valuable property so it wasn’t really socialism!”, contributes nothing useful to the discussion and should not be thanked.
It’s not a snarky comment like the one I quoted here, that’s for sure.
You have people upthread claiming that Norway is more capitalist than the US because reasons. You have socialists claiming X isn’t socialism because other reasons. You have people who, to this day, call everyone to the left of Reagan socialist, because further reasons. There are literal millions of people born well after the Soviet Union’s collapse for whom socialism is basically what the US has now but with cheaper healthcare/education. A term covering everything from Marx to Tito to Sanders isn’t something we just know when we see. It isn’t merely fuzzy, it is a monstrous amalgamation of down and cotton balls and compressed kittens. We don’t know it when we see it, and asking people to clarify just what they mean isn’t meaningless pedantry.
Or pedantry at all, for that matter.
If “socialism” involves government ownership of (everything in sight), how is that to be distinguished from “communism”? Or is the whole point of all the above that the two terms are synonymns, and every bad thing ever attributed to communism is equally true of socialism? (Thus for example, the US should repeal Medicare ASAP since it’s certain to lead to gulags.)
[Note – I don’t agree with such a definition, or such a conclusion; that was supposed to be a reductio ad absurdum.]
Communism is a specific set of plans, claims, and arguments about socialism and capitalism, e.g. that the socialism will lead to material abundance and the withering away of the state. All communists are socialists, but not all socialists are communists.
This seems to me very dubious. Isn’t it hindcasting? An apt example would be US vs. Argentina vs. England. Today you would exclude Argentina, but in 1900 they would have fit into that group perfectly (with some sources and trends, such as where immigrants chose to go to suggesting Argentina was at the top).
If the government lets anyone own a restaurant, but will kill anyone who runs their restaurant wrong, those restaurant’s are really under control of the government and owned by them, even though they don’t exist on their official books.
Killing people is a bit gauche, but the government will absolutely close your restaurant down if it turns out there’s mice all over the kitchen floor and your dishes give everyone salmonella. Is the Italian place down the road now owned by the government because of this?
No. But if you can be sent to a worker-reeducation camp at will, or the government nationalized a restaurant down the street without no Fifth Amendment challenge, then all the restaurants assets are under the government control as soon as the government wants.
That’s tyrannical but even if you are killing people, many definitions of running the restaurant “wrong” will leave a lot of freedom of choice and differentiation between restaurants. This only converges on direct control when “wrong” is an exhaustive laundry list that defines exactly what should be done in every circumstance. Most states would just give up and nationalize the thing at that point, because then they can make sure a party member is running the business and has a more general awareness of what to do and what not to do as the state’s assigned manager for the restaurant.
A certain amount of regulation can converge on nationalization, but the severity of the individual regulations has nothing to do with it. If our existing society made the penalty for existing food code violations a “death camp”, this wouldn’t make the restaurant sector functionally socialist, it would just make the government evil.
@Edward Scizorhands
Is the wrong comment chain?
I am questioning the premise of comparing the US to Norway instead of Turkmenistan, because current poverty levels, GDP, etc have little to do with current policy choices. They are more related to past policy choices.
Maybe you would want to do a dynamic ranking where we could just take a wealth measurement and a % state ownership measurement and track them over time and rank order countries as they move up and down the lists. But the point is that, at some point, the US and Argentina were about equally rich, but now they aren’t, so often you can stack the deck by citing something simple like current GDP/Capita.
Nashville and Detroit have about the same population right now, but its extremely misleading (IMO) to say they are good comparisons. They are trending in opposite directions.
I have no idea why my comment was there. I blame gremlins.
It’s a rough estimate, sure. Its true that you have to be careful with countries that have undergone recent policy changes. For example the recent conservative turn of some Nordic countries compared to their left-wing heydays of the 1970s-80s can be deceptive, i.e. in some respects they may be coasting on the remnants of past policy decisions.
Certainly if you look at their per country rankings they’ve been coasting since the 70s or so.
Sweden was equal on GDP/Capita compared to the US in the early 70s, steadily fell until around the early 90s at ~75% of the US and began turning upwards around the turn of the century, to about 90% in 2010. This is also with Swedish-Americans being on the higher end of the American spectrum, meaning they beat Swedish comparisons in Sweden by even greater numbers.
“Ownership” should have room for degrees, here: take someone who nominally owns, say, a bicycle. If they are required to fill out a “I do not grow my own food” form every time they ride it to a grocery store, that is less ownership than if they aren’t so required; there’s a sense in which the bicycle is partially owned by whoever’s doing the requiring, and the bicycle owner is not as much better off as they could be.
I’m likely going a little far in speculating here, but it seems to me that the situation gestured at by those using “socialism” as a boo-light is as much about the accumulation of restrictions on use as it is about higher taxes.
This is not exclusive to governments either; consider people who get upset about Windows updates or software DRM, even when it’s commonly accepted that the alternative (computer gets hacked or crashes) is worse.
Centralized bureaucracies kinda work a lot like this. Telepathically willing something works, because (unlike in democratic bureaucracies) each member is incentivised to guess the direction the things are moving and act accordingly. If the prime minister managed to send clear signals that things are moving towards big businesses, well, the bureaucracy aligned. It could do so by enacting internal regulations too small to enter history, or, more likely, due to each member’s individual choice – even the fact that they become more easily bribe-able in certain contexts. You’re not likely to find records of that, but it’s a likely outcome.
E.g., Bolsonaro, whose stated intent to allow more industry/agriculture in Brazil’s Amazon area, caused (or is blamed for) an increase in forest fires.
Trust in the future is an important part of an investment decision, and even in modern, western, liberal economies (such as, say, the US or France), the election of a president perceived as “pro-business” (such as, say, Trump or Macron) produced results before any policy was even drafted.
China is famous for just this kind of “telepathic bureaucracy.” The national leader announces priorities; local officials are expected to change what they enforce or reward to match.
It doesn’t take new laws. It just takes new preferences about which laws you enforce.
This is a little true even in the United States. We see it in which regulations the current Administration enforces seriously, compared to the one before. But in a country like China, where there are enough laws to simultaneously protect and outlaw everything, the effect is enormous.
India was a lot more regulation-heavy than the United States, but not as totalitarian as China. I’d guess that “bureaucratic telepathy” would have fairly strong but not overwhelming force in India.
In China, this all got blackly comic under Mao. All the local officials, terrified of being seen as disloyal, tried to outdo whatever priority Mao set. (“Fifty thousand Stalins!”) If it wasn’t yet clear what actual policy would fit his high-flown pronouncements, they would try all sorts of things, then double down on whatever the higher-ups chose to praise. They called it “working toward the Chairman.”
They can work that way. But they can also work the opposite way, with leadership saying everything will be different and passing big re-organizations/rule changes, only for ground level behavior to stay the same because the basic culture/incentives haven’t changed. It’s a tricky thing, power.
This is absolutely true in New Zealand in my experience, even though it is meant to be one of the least corrupt countries. When labour got into power it made a big difference to how the Department of Conservation worked. Old management plans were reinterpreted, things that had been agreed to under the previous government were no longer acceptable, all sorts of things changed which affected lots of businesses even though there was no regulatory change.
The department actually stalled some of its key decisions for a few months until the election had passed, just so they could be in line with whatever party won.
From what I’ve understand, China might have hit on a winning formula. You don’t want your country to go full socialist; you just keep it at mostly socialist, with pockets of economic innovation here and there. Ruthlessly crush any ideological dissent that such pockets might breed, and offer your people a deal: don’t make waves, don’t stick out, follow the party line, sing the right songs — and in exchange, you’ll have continued prosperity and a better future for your children. This is a bargain that most sane people will gratefully accept. Meanwhile, you can channel some of the resulting cash into buying out third-world countries and chunks of Western democracies. In the long run, it’s much cheaper than fighting endless proxy wars.
What evidence do you base that one?
Of all the places that have Chinese people (eg PRC, Taiwan, Hong Kong, Singapore) the more capitalist places tend to do better.
Economic conditions in PRC also improved as they gradually moved away from socialism to more capitalism.
Any argument that the remaining levels of socialism in the PRC are optimal has a high burden of proof to clear.
There’s a major confound in this comparison because the economic growth rate of these four places has largely tracked their degree of urbanization. I don’t think Taiwan had nearly as high a fraction of its population rural as PRC did for most of the second half of the twentieth century, and much of the current economic growth of PRC is just urbanization.
And much of that is due to the craziness of Maoism:
“Between 1960 and 1978 the urban share of the national population actually fell, from 20 percent to 18 percent. This repression of city growth in the 1960s and 1970s is one of the main reasons why even today China’s urban population is lower than is normal for a country of its income.”
http://www.unz.com/akarlin/kroeber-chinas-economy/
In addition to what the others had said:
I would argue that “the remaining levels of socialism in the PRC” are exactly what allows it to maintain and expand its cultural hegemony over the rest of the world; as well as invest into long-term projects such as the Belt and Road initiative. More capitalist/democratic countries generally have a much shorter attention span.
What hegemony would that be?
Foreign policy, except in the most extreme circumstances, is usually governed far more by domestic political concerns than serious strategic logic, and I think it is a mistake to assume that that is less true of china anywhere else, especially given how well initiatives like one belt one slot into the normal style of chinese practice.
I don’t think it’s remotely fair to compare the task of dragging a nation of 1 billion plus people to prosperity versus two smallish tax havens and a medium sized country with borderline US base characteristics.
The people drag themselves out of poverty by their own hard work.
If you want to imply that we ought to split up big countries into smaller countries to make development easier, I’m all in favour of that.
I think there are two parts to the China model:
1. Export driven development of KEY (typically start with textiles) industries that can succeed abroad, using protectionist measures to drive up domestic competitive advantage, aka mercantilism. Authoritarian oversight not necessarily a prerequisite but helps more than it harms. This is basically the only proven and widely applicable development model. Nearly every Developed western country and the Asian Tigers followed this model to become where they are. In Asia this started with Japanese Manchukuo development success which was copied by Japan, South Korea, Taiwan and then PRC.
2. Everything else you mentioned is a byproduct of PRC scale, i.e. 1.4 billion people. That’s the secret sauce of “with Chinese characteristics”. Scale is what allows China to flood patents and academic research papers where 90% maybe bad, but the remaining 10% means in absolute terms China is still competitive with world players. Refine those proportions by a 5% over a few years and now you have China leading in innovative research papers in key industries and 5g patents around the world. Scale allows big risks where even minor pay offs are net wins. Coordination of this scale = failing upwards incredibly fast. The Chinese leadership knows the Chinese model is context dependent this way, there’s been no real effort to export the Chinese model because it cannot be replicated without scale. Except maybe India, but I don’t think Indian democracy can coordinate the same way authoritarian CPC can, i.e. compare the various problems India has building subway in their major cities.
Dirtyid – Your assertion that development can only happen through mercantilism is one I am well familiar with thanks to my time working in developing countries. Their governments used this argument all the time to impose import tariffs.But it was obvious to me that protectionism was mostly about protecting the local rich well connected business men from world competition entirely at the cost of the common man by pushing up food and basic goods in price. Where development seems to happen best in my experience comes in sectors where international companies can provide well paid employment and training. Of course there were places that are now rich that had such protectionist policies in place during their development, but many economists argue that these were actually drags not promotors of performance and such countries would be developing anyway.
My assertion is that mercantilism is necessary but not sufficient to becoming a developed (not just developing) country. There are many cases where mercantilism, weak institutions and mismanagement led an oligarchical extraction system causing overall stagnation. Just like how there are many countries that experienced some uplift via world bank and foreign corporate intervention, but that only works up to a point, usually debt traps. There are no examples of “rich” countries who got there without this phase. If we examine all the case studies, both models could lead development traps, but mercantilism has occasional spectacular successes (which depend on a variety of geopolitical factors), where as alternate models have never (to my knowledge) been successful. That’s not to say some development is better than none at all, but mercantilism when properly utilized clearly has the higher ceiling for development. And personally, it’s hard to endorse models that is dependent upon foreign corporate / NGO charity.
The most famous development story, the first, occurred in a avowedly free market anti mercantilism country, the UK. The 19C UK liberal party adapted this program as a progressive one, in terms of lowering food prices for the poor. Another example is Hong Kong which also developed through the free trade route. Yet another example was Japan which grew rapidly into a developed country only after it was forced to open its markets by Commander Perry.
ChrisA
UK had some of the highest tariff and protectionist measures in 18c (~50%) to established it’s extremely profitable wool industry / exports that paved way for British industrialization. It had the highest tariff rate of all industrialized western countries to build it’s base.
Japan development success was explicitly based of protecting domestic industries. It wasn’t allowed to use tariff due to unequal treatises but heavily subsidized domestic model factories in shipbuilding, mining, textiles, arms etc. Manchuku development pre-war, something similar coalesced as Zaibatsu postwar.
Hong Kong was unique in that it was the gateway to Chinese exploitation, no other country has this advantage. Once they lost it post handover, and China made HK manufacturing Detroit, their GDP went from 40% of China in the 90s to 2% today. That 2% is still mostly based of channeling financial products via China.
Free trade laissez-fair origin stories are often repeated, but none of them are true. The wealthy countries that are popularly claimed to have depended on tools like export subsidies, tariff rebates, cartel & monopolies, R&D support and other institutional support behind the scenes. The only exception maybe Switzerland because they started with extremely strong technological advantages than most European peers during their industrial revolution. Their major policy was no IP /patent system which allowed ferocious domestic competition to maintain edge which is basically the story of Silicon Valley.
Dirtyid – we all know that correlation does not equal causation so you are going to have to show some causal link between the 18C wool tariffs and the 19C industrial revolution in things like coal, steel and locomotives. Remember when the UK entered the free trade era in the 1840’s they were a desperately poor country by modern terms, poorer than any country today I would guess. But they managed fast development during that period despite the rise of competitors like Germany and the US. Remarkably, rather than being an after the fact theory, the theory of free trade being a promotor of growth and boost to the poorest was actually the initiation of the free trade era. And it worked spectacularly. This era really only came to an end during the 1930’s with what we all know to be disastrous consequences for all nations.
On Hong Kong, during its early development (which I understand your theory says is the critical period) China was flat broke, undergoing the cultural revolution. Hong Kong thus industrialised via exports to western countries. And that was all against various tariff barriers in the west. So we have two examples, one country at the technological frontier (the UK during the IR) and one adapting existing technology (Hong Kong) doing well by adapting free trade.
On Japan, again the growth occurred after they loosened the trade barriers. If protected trade was what they needed, why were they not a rich developed country when Perry arrived?
This is an important topic because, as I said above, the protectionist argument is often used to fool less sophisticated people into support welfare for rich incumbent business in poor countries. Thanks to initiatives like the World Trade organisation, tariff barriers have come down significantly in the last 30 years, causing an unprecedented boom in the human condition with less poor people and more middle class than ever before. We do not want to put that in jeopardy.
ChrisA
Why would you compare UK’s starting position to modern terms instead of relative terms at the time? UK mercantile wool industry made the country relatively developed by standards of the time, and the competitive advantage gained through mercantilism what allowed later free trade to flourish. Having a protectionist phase to establish new domestic industries and then pivoting to free trade is not incompatible. I did not claim free trade doesn’t work, I am stating it does not work as a starting model for developing a developing nations economy.
HK exported mostly to mainland China. A city state of 5 million had unparalleled access to a poor but massive market of 985 million. No one else has these conditions to bootstrap via free trade. Hence, free trade will not help most developing countries.
Free trade alleviates poverty, I am not disputing that. The question is whether free trade and organizations like the WTO can elevate countries from developing into developed status, it absolutely doesn’t – only export driven mercantilism that later pivots to free trade does, but the protectionist phase is necessary. WTO is a benevolent debt trap that uplifts people from subsistence while preventing them from flourishing. It has it’s uses, but also limitations. Many countries will never dig their way out of World Bank loans, they will effectively remain stagnantly undeveloped, they won’t starve, which of course is important, but they will also not blossom.
“fool less sophisticated people ”
O_o
Less sophisticated people believe in end of history fukuyama, one system to rule them all etc etc. Different countries in different development situations need different development philosophies at different times. There’s different moral payouts to alleviating poverty now but dooming multiple generations to low QoL, versus just powering through the sweatshop phase and redirecting those funds to rapidly elevate a country into better conditions.
The exporting isn’t the key. Plenty of countries spent the 20th century trying plenty of different things to drive up exports. Most of them failed, and had china built their own textile mills, they would have failed. In fact, they did exactly that under mao and it failed catastrophically.
The key to chinese (and many other country’s) success was FDI led exports. That is, allowing in foreign companies with that actually know how to run globally competitive industries, giving them access to your cheap labor, and not insisting on strings like onerous taxes, technology transfers, or telling them how to run their businesses. In the short run, this employs a lot of your people, and in the long run, they learn the industries in question at other people’s expense.
“of key industries” not “export is key”
We’re not in disagreement, export must be strategic. Draw FDI of key industries – industries that has a proven market success abroad, typically texiles due to cheap labour – via trade concessions like you suggest. Redirect state resources and policies to protect orphan domestic industries and build from there.
the second part of that is unnecessary if you do the first, and often actively harmful. If you protect domestic industry it won’t be truly competitive. the protected areas of the chinese economy, the giant state run industries, are the parts that are usually in the worst shape and reforming them is the biggest challenge china faces in the medium to long run.
The second part is absolutely necessary, building domestic capital to curtail foreign extraction sets a country on the path for self sufficiency. Big countries like China can accrue enough wealth to experiment on SOEs gambles, some industries under perform, others are spectacular moonshots. But that’ an uniquely Chinese problem. Most countries don’t have the scale to take the risks China does, but they won’t even be in a position to take those risks unless their economy operates off a few domestic champions that stimulates incredible growth by keeping wealth domestic. Otherwise it’s just a debt trap.
Sane people will gratefully accept this bargain as long as they get material growth of their personal wealth and quality of life in return, which is easy (*) as long as you are a developing country playing catch up with the First World.
Once you reach the technology frontier and your per capita GDP growth rate stabilizes around 2% with cyclic recessions, many people will think they aren’t getting money’s worth out of the deal. We are already seeing this with the HK protests.
(* provided that you have first-world average Voldemort)
Could the spike in Indian growth be related to oil prices? 1986 is about when the Saudis really open the taps in order to try to destroy Texan oil production. Maybe India was spending a lot of money on oil – it produces little energy on its own, even today – and it needed oil prices to fall below a certain level before it could escape economic “stall speed”, so to speak.
Based on IEA data, it also looks like 1986/1987 is about when India’s energy importation stops being flat and starts spiking year-by-year. I realize that this is kind of a chicken-and-egg problem, but the timeline fits.
A quick look at the UNPD data suggests that the growth rate of working age population (crudely defined as age 20-64), increased from ~7.4% per 5 years between 1955-1965 to 14% in the 5 years ending 1975, and stayed around 12% through 2010. Its now starting to come off. Could that be a reason for the trend break in 1975 and part of the explanation for the disappointing outcomes in the last 3-4 years?
For readable analysis of East Asian economic success, I recommend How Asia Works, by Joe Studwell.
Never mind the cute name – it’s good, and well-written. Basically he sifts out the shared predictors of growth and stagnation across nine different East Asian countries — Japan, South Korea, Taiwan, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, and China.
It turns out you can make a pretty good case for “key policies” that separated the big economic success cases (above all South Korea and Taiwan) from the mid-performers and laggards. Of course there’s also some “key politics” that explains why only some countries adopted those policies.
But if you’re enjoying the riddle of growth in India, I think you’d enjoy Studwell’s book. He writes well and his analysis is both thoughtful and convincing.
Seconding How Asia Works.
For anyone who reads Studwell and wants more books to fill in the gaps in How Asia Works:
Ordering Power: Contentious Politics and Authoritarian Leviathans in Southeast Asia, by Dan Slater. Helps explain why some states had “strong” central governments that could do land reform and other pro-growth policies, and others had “weak” or “status quo” governments that held back from major reform.
Dictators and their Secret Police, by Sheena Chestnut Greitens. Good to read after Slater. A close-in look at “crush the people, or side with the people?” in the post-WW2 governments of South Korea, Taiwan, and the Philippines.
Escape from Rome, by Walter Scheidel. Economic growth causes – but on a much longer timescale. Explains how the Roman Empire’s fall peculiarly seeded the distinctive Western European pro-technology states that followed, the necessary precursor of all the later industrial growth and European world takeover. The Western Roman Empire was the one great old empire that fell and was not replaced. In so doing, it left behind grounds peculiarly suited for government accountability – and technological progress. Not a cutesy Rube-Goldberg “because of Rome” argument, but a serious, well-researched and well-reasoned analysis. Beautifully done. If you like tracing deep causes in history, especially about the technology-powered triumph of Western Europe, this is the book I recommend.
The Fix: How Countries Use Crises to Solve the World’s Worst Problems, by Jonathan Tepperman. A lot breezier than the others, more a set of anecdotes than hard analysis, but also less work to read. Looks at the politics of successful government reform efforts, including anti-corruption in Singapore, finance reform in South Korea, and several other intiatives in other countries.
This post seems to have broken the RSS feed due to some invisible characters between each sentence from “Like with infant mortality…” until the end of that quote.
Thanks, fixed.
Corruption.
It greases the wheels of the socialist machine and when done with the outside resources, usually trickles down enough to helps bring child mortality under a two-digit percent.
It might not help build space elevators, but uplifting people from mud hutts? Sure.
Source : my ass & growing up in a post-soviet country during a transition to a modern, free market economy.
There’s something to this: corruption was in fact part of the system in the early years of China’s rise. Since bureaucrats weren’t elected you couldn’t make their economic performance accountable to the people. What you could do, however, is encourage them to facilitate economic growth by letting them skim a bit off the top.
My understanding has been that getting promoted in China in recent decades has heavily depended on your county/city making its growth targets. Don’t make your GDP target? Early retirement for you.
There are other measures too, of course, especially these days – e.g. pollution and social unrest measures. Exactly how much each measure counts for promotion in a given review year is, well, very political. As is the question of how often good connections matter more than good performance.
If mayors got “re-elected” in the United States on the basis of how their city’s performance targets compared to other mayors, we might see some interesting effects too. (Not to mention some of the same financial shenanigans China is now facing.)
Right, economic metrics were (and still are, along with a lot of others) used to ding and promote bureaucrats. But it’s important to note that this went hand-in-hand with a system of semi-official corruption that materially rewarded growth.
Which means I expect China to become a poster child for Goodhart’s Law on GDP.
Precisely this. It’s also why we shouldn’t be suprised by (or exaggerate the cleverness of) foreign policy initiatives like one belt one road that look like exactly the sort of thing you’d expect from people whose careers have centered around about pushing growth numbers and cultivating patronage through large government contracts.
Basically. In China, corruption is the mechanism used to transfer state resources to local officials who are largely meritocratically promoted based on performance. It’s a “socialist economy” hack. China is the only country where increased corruption is correlated with substantial growth. Bureaucrats can gaft a little on the side but they better build X new residential units and Y infrastructure to meet Z urbanization goals dictated by the politburo. Coordinated corruption is effective. This is posited by Yukon Huang, former World Bank director for China, Russia, and Former Soviet Union Republics. He’s not sure corruption + state vision is as coordinated in India though.
Corruption may be useful in getting things done in socialist countries, but it certainly isn’t exclusive. For example, Pinochet in Chile was widely regarded as “right wing”, yet also experienced a lot of corruption.
Is there any good research on what factors lead to corruption or which are effective for reducing it? Especially for poor countries?
I think in poor countries (also Rome and stuff) it’s not like it is here.
It’s not an aberration from normal decisionmaking protocols overseen by impersonal institutions.
In much of the world, those institutions do not exist (or nobody trusts them, so they have no power).
It becomes a form of patronage, using personal relationships and power where the West uses institutional processes and power.
It often seems to be people adding capitalism to a broken system to either improve it, exploit its faults or both. For example, many poorer countries have socialized medicine, but manage costs by paying doctors an absurdly low salary (lower than people with similar levels of education get in the private sector). Then doctors tend to demand payment by the patient before they actually treat them (or in emergency situations, afterwards), because they deem their actual fair salary to be far in excess of what the government pays them.
Without this corruption, but with those low salaries, it seems to me that doctors would leave the profession or never enter it. So then the system only functions because of corruption, although it would be better if the taxes were higher and the doctors got paid a decent salary. Yet in many countries, it is very hard to collect taxes, so corruption may then be an indirect way to tax the populace in a way that they can’t avoid so easily, by only giving government services if they pay, while the government can still claim to have free healthcare.
“It’s not an aberration”
+1 to this. Corruption doesn’t need explaining. It’s just the ways things are, the way humans are in this world, their default settings. Ancient Roman Senators, ancient Persian satraps, Renaissance Popes and Cardinals, Mongol ilkhans, Soviet nomenklatura, medieval English judges, Ottoman Turkish atabegs, Mexican/ Indian/ Chinese bureaucrats, African politicians etc etc. – all of them knew just how to use their positions for personal/ family advantage, and (with a few honourable exceptions) expected to do so, and were expected to do so by everyone else.
The same goes for xenophobia, poverty, tyranny and superstition. It’s the opposites that need explaining.
Thinking about the straight line thing.
Maybe the metaphor is, you’re adrift in a boat with a little rudder, in a sea of strong currents. These represent “complicated economic feedback loops controlled by differential equations no-one can really write down in total”. You can’t just… go somewhere. But you can try to steer “get out of current current” or “stay in current current”.
That would mean, big trends start when conditions just happen to get ripe for them. And need a steady influx of appropriate interventions to keep going. If you look at a graph, this would look like, “a lot of meaningless ups and downs but sometimes it drives into a straight line for a long time”. But that’s probably due to (a) decades of preparing the ground and (b) decades of carefully nurturing the flame to keep it going.
Unfortunately, that’s almost unfalsifiable. So, it’s hard to come to any conclusions.
One traditional view of economic development is that increasing agricultural productivity allows/drives former peasants to go into other sectors, and eventually kickstarts an industrial revolution.
Norman Borlaug brought the green revolution to India and Pakistan in the 1960s. That works out well with the timelines mentioned in the article.
I wonder what other evidence and econometric studies we’d need to do to verify / falsify this story of a boom in agriculture kickstarting Indian development? It is a pretty simple story, it’s economic orthodoxy and consistent with experience in other places, like Britain or Japan.
For comparison, Deng Xiaoping’s reforms also started with agriculture.
It doesn’t match the graphs in this post well. India had higher national, and rural poverty rates in 1980 than it did in 1960 and Urban rates are only a little below.
Not if you’re stuck in Malthusianism. As Braudel has shown, increases in pre-industrial agricultural productivity eventually turn into new mouths to feed…
…unless you hit the sweet spot and start industrializing right after an agricultural revolution when population has yet to catch up. This occurred in 18th-century English (the Agricultural Revolution preceded the Industrial), 20th-century China (one-chid policy + Deng-era agricultural reforms), in a sense 19th-century America (vast swaths of free land = highest living standards on earth). It seems likely that industrial development must follow an increase in living standards and cannot start one from nothing.
(unless you have an influx of foreign capital, I suppose–cf. postwar Korea, which started from virtually the Neolithic)
[Warning: Random and scattered non-expert armchair comments based on folk-lore/hearsay; check everything before you trust]
One of the biggest poverty-reducers in India has been acknowledged to be the green revolution, and for the India of the 1960’s (consistently with the quote from Kotwal-Ramaswami-Wadhwa) and a couple of decades thence, the green revolution was a low hanging fruit, that too one that directly impacted a less educated and hence larger chunk of the economy than did the 1991 reforms. However, the folk-lore is that India’s green revolution had started saturating by the 1980’s, and for the momentum to continue, the 1990 reforms were necessary (in fact, the 1990 reforms themselves were precipitated by a Balance of Payments crisis).
Another example: Consider the following quote from wikipedia about the information technology and business process outsourcing sector in India – “The sector has increased its contribution to India’s GDP from 1.2% in 1998 to 7.7% in 2017”. The employees of this sector have tended to spend more than Indians tended to do conventionally, so there is also the multiplier effect from there.
Aside: I think it was in the 1980s that “family planning” took off in a big way. I am not happy about it since India is moving towards European TFR without all that development, but it could have made temporary contributions to educational and health outcomes.
Another aside: Though I don’t have anything decent to offer myself, this post is much less, not more, than I wanted to know about Indian economic reform.
EDIT: Took too long to comment, and Mathias above beat me to it.
I’m surprised the Green Revolution wasn’t mentioned.
Maybe some of the benefits take time to materialise.
Like young adults not having grown up in poverty or something.
Objection: what Indian government did after independence seems much closer to Soviet Union minus widespread deadly purges (i.e. something similar to postwar Czechoslovakia or Poland), than to Sanders´s platform.
> So what did cause the Indian economic boom, save 200 million people from poverty, and accomplish an almost unmatched victory over misery and mortality?
Couldn’t those graphs be the result of worldwide technological progress rather any policy or reform?
Growth takeoffs are individual to countries, with little worldwide coordination.
India’s growth takeoff happens at a different time from South Korea or Taiwan (who surged from 1960 on), or sub-Saharan Africa (lousy growth until the 1990s, but in recent decades quite good on average despite individual disaster zones), or Mexico (high growth from about 1940 to 1970, if I remember correctly, but disappointingly slow since).
For that matter, India’s neighbors – Pakistan, Bangladesh, Myanmar – have all had themselves very different experiences from India, despite the cultural and colonial overlaps. That’s a bit exceptional, actually – more common is what you get in East Asia or Latin America, where several (though not all) countries often have noticeably similar economic policies and outcomes. But there’s definitely no worldwide coordination. And any common regional export usually doesn’t surge in value long enough to create a decades-long growth in incomes – oil is the obvious exception here.
Now, none of these places could have done this so fast without rich countries to trade with and background technology (better crops! Better fertilizer!) to exploit. And some diseases are so bad that you can think of PEPFAR and the Gates Foundation as worldwide economic contributors in their own right. And sometimes countries do imitate their neighbors’ best ideas, in Africa or Asia just as in the EU. But overall, if a country suddenly has a couple great decades of economic progress, the answer is that country’s own policies.
Were there even “a couple great decades”? The first two graphs look just like steady improvement for most of the time. The third graph *is* suggestive of some kind of takeoff, not sure how to square it with the first. Maybe the “takeoff” is just an exponential term that doesn’t really begin at well defined point.
for ideological reasons, nobody wants to advocate for, or even much investigate, it, but the combination of a generation or two of socialism (to develop human capital) followed by liberalization (to unleash that capital) makes logical sense as a recipe for an undeveloped country’s net success–and fits the available data
How exactly do you think India’s human capital was developed when it was socialist?
Accessible (free/cheap) education seems to be the most successful socialist program that has ever existed.
Do you think India has (had) a better education system than comparable non-socialist countries? I haven’t seen evidence of that.
I suspect that they had a better education system than Pakistan and Afghanistan, as Orthodox madrassas seem to teach very poorly.
This assertion I would highly question. The ability of people to homeschool to great effect, and the cheap and successful schools set up in impoverished nations suggest that the West has settled on an education system that is ridiculously expensive and minimally effective. Its biggest advantage being that it is REALLY good for politicians who scream, “think of the children.”
I think there’s a selection effect in who chooses to homeschool that mean we shouldn’t assume that homeschooling would always work if done more broadly.
More importantly, the cost of homeschooling needs to take into account the labor of the parent involved. Total $/pupil/year spent in most states is between 10,000 to 20,000. So whatever parent is homeschooling instead earning money some other way during that time needs to either have low earning power or be super efficient to not be spending more than public school costs. Homeschooling may have benefits, but I don’t think being cheap is one of them.
There are likely cheaper solutions, but I don’t think homeschooling is it.
Probably true that homeschooling is not cheap particularly for small families. My point on that was that its effective (with the caveat that my mental model for “effective education” is essentially, do no harm) and not socialized. Parochial schools are generally cheaper, even with the huge amount of regulation done to them.
A huge problem for predicting education innovation is you, as a parent, don’t get that 10-20k back so private schools are generally thought of as an option for the rich (because it is kinda like throwing money away), so generally only elite options exist.
I think that you could homeschool your kids almost for free.
Reading is 20x more efficient at instilling knowledge than giving lectures. You don’t need to waste time giving lectures to your kids. Just tell them what books they need to read for a given ‘semester’. If they do not read the assigned materials, you deny them video games or whatever until they do. You have now successfully given them a world-class education without lifting a finger.
Admittedly, there are some subjects that do require direct instruction. Of the core subjects, math is the only one where direct instruction would probably be required. Writing would benefit from direct instruction, but if your only objective was to reach parity with average highschool students then it would by no means be required.
Wouldn’t homeschooling, first need educated partents?
If your parents, can’t neither read, nor perfomr more than the most basic computation, how would they teach their kids?
Then they just go spend all day at their friend’s house, the one with the lots of video games and the permissive parents. And you can’t stop them without literally keeping them in chains, because you and your wife both have to be at work and you can’t afford a full-time babysitter/tutor. Now what?
@John Schilling
If they want to forego all privileges in their own house in order to achieve tenuous privileges at their friend’s house, that sounds like maybe they were doomed to begin with? It says that they do not have high conscientiousness.
My point, though, is that schools waste a lot of time and money on providing inefficient lectures by mediocre lecturers. For instilling knowledge historical, sociological, political, etc., you could easily beat them by having your homeschooled kid read. And this wouldn’t just outclass the school system in terms of the quality of education offered, it would beat them in terms of cost, as well. Maybe saying that it requires no work on the parents’ part to ensure that their children reads the assigned material is hyperbole, but it certainly requires less effort on their part than having them dedicate their complete attention to their children for eight hours per day. They don’t need to be focusing on their children while their children read. They can come up with some system where they quiz their children over the dinner table about what they’ve read, or spend an hour after dinner in the same room as their children while their children read (and they do their own thing). They can find time-efficient ways of monitoring their children like that. And if they wield any authority over their children at all they can find ways to effectively cajole them into putting in at least a modicum of effort into the programme. I also believe that reading, even for mediocre children, is rewarding and that as long as the materials are aptly chosen mediocre children should develop at least some sort of personal desire to engage with them. This is to say that learning itself is rewarding and the only reason schools fail to motivate many children is that very little learning at all goes on in them.
My point is, “having your homeschooled kid read” is easier said than done, particularly if both you and your wife work, and will often result in your unattended kid not actually reading as much as you think he ought to. And that your proposed solution to this problem does not give me any confidence that you’ve thought about what it would actually take to put a workable solution in place.
I suspect typical-minding, where you inhabit a mental universe where all kids are either generally-obedient bibiophiles like yourself, or close enough to generally-obedient bibliophiles that all it takes is a minor nudge, and thus homeschooling becomes a one-size-fits-all solution to the problem that is America’s dysfunctional educational system.
If “just have them read” was a more effective and easier (that part, especially) method to get kids to learn good, teachers would already be doing it.
Shouldn’t by similar logic Eastern Europe currently rule the world?
If you look at current economic growth rates of European countries, nearly every Eastern European country is above every Western European country but Ireland. Not nearly as sharply as China and India are, but China and India have catchup to do from much worse absolute poverty during the Cold War era.
https://en.wikipedia.org/wiki/List_of_European_countries_by_GDP_growth
Eastern Europe now has a shared market (the EU) with Western Europe, which gives a large boost to its economic growth, not due to its communist past.
So the countries starting from moderate Cold War-era poverty have lower catch up growth rates than do those starting from extreme Cold War-era poverty; that seems a sufficient explanation by itself.
Does it fit the available data?
My experience of socialism coloured the first half of my life. One rarely thinks of the UK as a radical socialist society, but the breadth and depth of Clement Attlee’s reforms starting in 1945 are quite staggering. A cradle to grave welfare state, including the NHS. Nationalisation of steel, mining, railways, all power utilities, water utilities, railways, road haulage. Long waits for everything became part of life, and were borne with a sense that such were necessary if we were to have access for all. Some aspects were a great benefit – for example university entrance was competitive and strictly based on ability, but once there tuition was paid and a means-tested grant would keep you fed and housed. No student debt, but only possible when a minority went on to higher education. But the sclerotic bureaucracy, and powerful union, in every state-run enterprise became an ever heavier burden to their function and dissatisfaction with this, along with the rapid inflation associated with the effort to maintain full employment meant it could not go on. Despite their imposition of such a workers’ paradise, the government was able to maintain a punitive attitude towards those who tried, with an 83% top tax rate, and a 98% rate for ‘unearned’ investment income. If there were anything left when you died, inheritance tax could be as high as 80% of an estate in 1969. Unsurprisingly, the economy ground to a halt.
I’m still not sure how to feel about Margaret Thatcher. We hated her at the time, and she was one of the reasons I left the UK and moved to Canada. But looking back I realise she was exactly what was needed at the time, and it seems certain she created the kind of economic change occurring at a slower rate in India as described above. With the advantage of age, hindsight and perspective, it seems rather clear we were whipped up into a fashionable, right-on, revulsion at everything about her: appearance, accent, twin-sets, pearls, handbags, policies, condescension and all. (There is a parallel to Trump today. I haven’t a good word to say about Trump, but I do see the media making a firestorm about every tiny little thing to keep up the hate – and goodness knows, there are enough whopping big faults with the man that they need not pretend to be fainting over the small infractions.)
I wouldn’t recommend anyone choose to live in the grim country of Attlee and Wilson, and equally I can’t see the relatively unregulated capitalism of extreme inequality being any use in the long term. The politicians of the ‘third way’ have been wolves in sheep’s clothing (Clinton and Obama being more conservative than advertised, and Blair far more radically left than supposed), and there is no reason to believe that a stable compromise or happy medium exists between the Attlees and the Thatchers. We must bounce back and forth between them, never letting either side make too many changes before swapping governments.
for personal reasons, I’d prefer the socialism side of things, but if I look at it with clear eyes and objectivity it’s really hard for me to deny that this sort of see-saw is what would really be best for the largest number of people
socialism to build people up, capitalism to let those people make the most of the skills socialism gave them. that capitalism builds up material wealth, then you turn back to socialism to channel that material wealth into more human development on a wide and equitable scale. rinse and repeat
Lancelot – my experience mirrors yours and I agree with most of your points. The only difference was that I was a supporter of Thatcher in the day. Thinking back on that time though I can’t help wondering if it could have been done in a better way, with less all round hatred and less of an economic cost.
Can you unpack the Blair comment? Found that interesting and wondering what you meant. For someone coming of age in new labour years it must be said that compared to both my impressions of what came before and what seem to be the options now,.it feels like something of a golden age…
Was there ever a golden age that didn’t turn out to be gilt? Beware nostalgia, which will eventually turn the worst experiences into happy memories!
Blair was sold as a third way politician in the serious media, but it was always noted that, learning from Clinton, he was willing to say whatever the focus groups indicated would be popular. Short on principle, perhaps, or maybe that responsiveness to popular sentiment is the true hallmark of the third way. Traditional lefties regard him as right wing, and conservatives have indicated they might have some grudging respect for him. Economically, the Thatcher boom was slowing, and the downsides of an economy linked to Europe were being felt, so he had little choice except to be fiscally responsible.
However, he had a very strong desire to permanently change some aspects of British society, and the changes he made to parliament are not to be underestimated. The Lords is now like the Canadian Senate – an appointed body with a few hereditaries in there to keep them quiet and maintain appearances. Instead of the Lords as the highest court of the land we have a Supreme Court which also permits appointments to colour its tone just as in the USA. The official immigration policy was to allow mass migration. The underlying thread behind this was all left wing populism, and we see one aspect remaining in the use of the term ‘The People’s [fill in blank]” today. Such a label still carries an automatic weight with the British public, the desirability of the blank notwithstanding. Simple, but clever, manipulation. It wasn’t just Thatcher that made me leave; the persistence of class mattering far more than it ought was also a factor, and perhaps I should approve of his wiles. But it turns out I dislike politicians who always tell me what I want to hear even more!
Blair explicitly marketed himself as a break with existing social democracy, calling his politics the Third Way.
It’s pretty interesting how several countries had similar politicians at roughly the same time. I see Reagan, Thatcher and the Ruud Lubbers as moderate right-libertarian reformers of a bloated welfare system, to be followed by Third Way politicians like Clinton, Blair and Wim Kok from left-wing parties, but who explicitly chose to break with traditional social democracy.
The first thing I would mention is that the trend in the graph on poverty (the second graph) is really reliant on one data point in what looks like 1985 plus the rise in poverty from 1960 to 1970.
If Bernie Sanders style socialism is enacted in the US I predict the resulting death toll will easily be in the millions.
Could anyone send me the link to the large ethnically diverse country that has embraced socialism and thrived? because every single one I can think of has lead to the widespread slaughter along ethnic lines?
The State department and MSM told us South Africa was going to become a diverse paradise,
Hugo Chavez was a light of hope,
and that Iraq and Libya could finally be “free” without dictators.
but actually they were all Trillion dollar disasters. Now these same Phules are convinced that leftism will succeed, but every time I check who these people are they live in rich neighborhoods and send their children to schools that poor hispanics and ADOS can’t attend.
To quote a comment above that is needed here:
Obviously mass killings are, in a definitional sense, orthogonal
Are you arguing for apartheid? Because I can’t take any other interpretation from your South Africa point.
Also, “Phules”?
https://slatestarcodex.com/2019/10/23/indian-economic-reform-much-more-than-you-wanted-to-know/#comment-812933
Wait, what? Became? They already were! Capitalist Britain turned those places into dumps via capitalist exploitation. Any former colony of the Britain did far better without the yoke of Capitalist British oppression.
You are whitewashing colonialism to put it lightly.
If we’re going to obfuscate and play the death toll game then the argument defeats itself. If we accept the prostituted definition of “Socialism” and “killing” that this argument uses then the death toll of say African Capitalism is far greater then Eurasian socialism/communism.
Also the population of the USSR was increased dramatically by Stalin despite the millions dead.. Perhaps the simplistic narrative you are pushing is more nuanced then you’re suggesting?
Bernie Sanders platform is a mere cookie-cutter Nordic style economy, nothing more, nothing less.
Okay, but did some ex-colonies do better than others?
Isn’t Africa heavily socialist/communist with a heavy dose of authoritarianism? By the way what is that number? If they have over 100m killed as a direct result of capitalist policies that would be very surprising.
Nordic style economies are free market capitalist economies- significantly more free market than the U.S. That is not what Bernie wants. Bernie wants far more regulation than Nordic states have.
> did some ex-colonies do better than others?
Between 1945 and 1960 the following countries got independence from the British empire:
Jordan, India, Pakistan, Israel, Burma, Sri Lanka, Libya, Sudan, Ghana, Malaysia, Cyprus, Nigeria, Somalia
I think Israel, and perhaps Jordan and Cyprus, are the only countries that have clearly done economically better than India during that time, and some have clearly done worse.
> Nordic style economies are free market capitalist economies- significantly more free market than the U.S. That is not what Bernie wants. Bernie wants far more regulation than Nordic states have.
This seems right. I think Warren is much clearer in wanting this sort of social democratic/neoliberal state that Scandinavia has.
Bernie Sanders is definitely unclear about what he wants.
You say you want a revolution… a socialist revolution… that consists of just winning an election rather than violence… and your government won’t institute a command economy…
That’s a bad case of undefined terms.
Libya and Israel were not really colonies of the UK, just administered by them for a relatively short period. Cyprus and Malaysia are well developed countries much richer than India. Interestingly the richest African country is Mauritius a former UK colony, which is described as highly developed, and supposedly is the third freest economy in the world according to the Heritage foundation.
Would you be able to provide any details on that? I’d like to know more!
Population of pretty much any large area of land has grown over that period. Giving Stalin (or socialism) credit for that happening in the USSR is about as justified as thanking him for the fact that the Sun was raising over each of the Soviet Republics, every single day of his reign without ever slacking.
Every good communist knows to thank Uncle Stalin for the sun rising each day over the Soviet Republics. Surely you’re not implying that we shouldn’t thank him? Seems like an… unfortunate misunderstanding on your part. Better apologize before somebody notices.
Nice to meet
a man of culturean ideologically savvy comrade here! Sure Stalin’s played invaluable role in providing sunshine to every Soviet worker and peasant. Moreover, it’s only through his infinite wisdom and thoughtful oversight did the crops know to ripen in the fall to keep people fed trough winter.Stalin’s policies directly led to a decrease in the death rate by giving free healthcare to all among other things. Its all doom and gloom when capitalists talk about Stalin but the man saved millions of lives.
It’s all really doom and gloom when you read memoires of those who lived during that time. Or look at the long long lists of innocent people shot down or send to death in gulags. Capitalists would mostly talk about statistics, which, whether correct or not, is not nearly as graphic.
Whatever healthcare was actually provided – as opposed to just declared – was nowhere nearly enough to offset deaths from repressions, massive forced relocations of entire ethnicities, and hunger caused by completely incompetent management. Nevermind completely incompetent command during first months of USSR participation in the WWII and foreign politics prior to it, which lead to much higher casualties than could’ve been.
Stalin was vastly popular in the USSR even after destalinisation. In Russia today Stalin is held in high regard by about 50% of the people there.
Many were not innocent and were legitimate coup plotters or just your average criminal scum. A user above me provided a very pertinent Mark Twain quote which I will reproduce here –
“THERE were two “Reigns of Terror,” if we would but remember it and consider it; the one wrought murder in hot passion, the other in heartless cold blood; the one lasted mere months, the other had lasted a thousand years; the one inflicted death upon ten thousand persons, the other upon a hundred millions; but our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break? What is swift death by lightning compared with death by slow fire at the stake? A city cemetery could contain the coffins filled by that brief Terror which we have all been so diligently taught to shiver at and mourn over; but all France could hardly contain the coffins filled by that older and real Terror—that unspeakably bitter and awful Terror which none of us has been taught to see in its vastness or pity as it deserves”
Why was this a bad thing? As Molotov put it “The fact is that during the war we received reports about mass treason. Battalions of Caucasians opposed us at the fronts and attacked us from the rear. It was a matter of life and death; there was no time to investigate the details. Of course innocents suffered. But I hold that given the circumstances, we acted correctly”
The Soviet Union was a beacon of workers rights, anti-imperialism and women’s rights, this is why we defend it. One of the reasons the USSR was viewed favourably by its citizen is that it was a huge improvement over Tsar rule.
Your first two answers don’t really address my arguments. In your third you seem to be implying that Caucasians (as well as Kurds, Koreans, Poles, Finns and others) were obliged to fight for Russians just because Russians conquered them. Which is an interesting thing to imply for someone who argued against colonialism few comments before.
That’s why leaving it was a crime punishable by death for the perpetrator and imprisonment for the family members, and people still did it, sometimes going through incredible hardships and danger.
They were poor when the brits got there, then poor when the brits left.
And you’re whitewashing socialist holocausts, to put it lightly.
No it isn’t. Not even close.
Bernie sanders wants reduced labor market regulation, charter schools, and local control of the welfare state now? Damn, who knew!
Yes but the problem was exasperated by capitalist Britain. Surely you aren’t denying that?
Is this really all you got?
No, it wasn’t. india wasn’t poorer when the UK left, it was considerably richer. But, then, you claim stalin as a great humanitarian, so clearly you’ve left all need for fact far behind.
It hindered its development and made its position in the world relative to the rest of the world far worse. Increasing GDP means nothing when that wealth goes to rich British aristocrats.
No amount of whitewashing can alter the fact that Indians had poverty forced upon them by capitalist Britain, their present road to damascus economy speaks for itself.
FDI where the profits go to western investors is precisely how india is getting rich today. The idea of colonial powers sucking money out of their colonies is simply ignorant, the flow was usually the opposite direction. Indians didn’t have poverty forced on them by the UK, they were found in poverty and, at the absolute worst, left in relative (but not objective) poverty.
@cassander
You accuse me of deny socialist holocausts but then deny the economic subjugation of India. Hilarious.
Because you do.
No, I point out that colonialism didn’t work the way you claim it does. What you describe is reasonably accurate for the Belgian Congo, but not India.
India is tough to crack for big sociopolitical questions like this, because what it did after Independence is weird. They had a flourishing parliamentary democracy for decades… that didn’t crack one-Party rule by Congress until 1977. And that breakthrough only happened because, well…
Desai became the first non-Congress Prime Minister with the failure of Indira Gandhi’s attempt to become a dictator, but didn’t pass economic reforms and Indira returned to power in January 1980, the family business of ruling India passing to her son Rajiv upon her assassination. Rajiv was also assassinated, during the second Opposition coalition interregnum in Congress rule, at which point it ceased being the Nehru family business, allowing P.V. Narasimha Rao to come in and dismantle the Licence Raj.
This was basically a reductio of what pro-business Americans complain about as “socialism” or left-of-center hegemony. In the US, they don’t literally need permits from up to 80 government agencies to have a private business and the license laws in place aren’t explicitly linking to desiring a planned economy, but in India…
The timeline on your graph isn’t incompatible with the corrupt bureaucracy enforcing the Raj reforming in the 1980s under Indira and/or Rajiv, but I’m disinclined to give them credit for anything. All credit should go to the Opposition (more the Hindu nationalists than the old coalitions, which as we can see did nothing for the economy in the late ’70s and are hard to disentangle from the 1991 reforms or “invisible” reform by Rajiv their second time in power) and the more democratic Congress of Rao, not the non-Communist leftist hereditary rulers slapping their foreheads and being like “Oops!”
Logged in to say something similar. Something pretty obvious happened to India in 1975. It was called the Emergency. Socialist opposition of central government policies led to things like the suppression of strikes and arrest of opposition. And when Janata came to power, it had a much bigger voice for business (being formed by opposition parties, many of whom cut their teeth against socialists). One that elected a business sympathetic former finance minister in 1977. Meanwhile, the Fabian-influenced socialist party had blown its socialist credentials by doing things like arresting strike workers and also moved in a more pro-business direction. And this led to a notable pro-business shift leading into the liberalizations that have followed…
I can discuss this more but it’s not really that confusing a narrative. It would be confusing if the break was in 1970 but not in 1975, when there was a clear shift in economic policy and politics following a dramatic and wide reaching political event.
The Green Revolution comments are good ones. Aside from those, keep other factors in mind: India is, indeed, a state that moved away from its own branch of socialism a bunch. India is also a state that warred with its neighbors, tried to genocide some of its own people, and had millions of its brightest move the hell away. The possible confounders are very much there and should be considered before deciding that the label socialism is to blame for all.
???
That would be the literal millions of sterilisations issued and the pogroms against Sikhs after Indira Gandhi’s bodyguards got fed up and killed her, yes.
Those are only cofounders if you don’t consider them the likely outcome of socialist economic policies. And except for warring with your neighbors, they definitely are.
Non-socialist former colonies have had these things happen, too. It happened in European countries as well, but we’d mostly gotten past that by the point the rest of the world caught up.
This seems like it’d have lots of overlap in the research in How Asia Works. That book tends to be pretty pro-socialism, but in a limited fashion, and in the context of a slow transition into capitalism as the end goal.
What sectors grew during the 1980s and what sectors didn’t?
This is where my thinking was leaning – perhaps, sectors that were less regulated started growing and hit a wall in the late 80s corresponding to the crash and asking ‘why did they stop’ led to further reform?
That quote from the Charter Cities report seems pretty shoddy. Almost all of the claims about how much things have improved you data points from decades before the 1991 reforms, which clearly is an issue if (as seems to be the case from the poverty graph) improvements were made pre-1990.
Hi Scott, over the last few weeks/months I’ve noticed the quality of your posts have gone down. This is apparent in this post as well. I’ve nothing against the thesis of this post, I’m broadly in agreement with it. But your previous “much more than you wanted to knows” were much longer, much more well-researched, and had more references. I’m sure you could have written something much more comprehensive about Indian economic reforms if you wanted.
Previously I couldn’t wait to read your posts; in fact after I discovered your blog I read ~150 past posts in a short interval. But now I see ~15 posts in the last month or so that I haven’t bothered to read.
I understand that you have a busy schedule as a doctor. And we can’t demand anything from you, it’s a labor of love. But I just feel sad that something I used to love is going downhill.
A lot of beneficial changes in economic policy can happen without any explicit, written policy shift. A lot of government rules, restrictions, etc. are more or less discretionary, especially in countries like India. Individual regulatory actors can pretty much destroy companies if they decide to, or cause them large expenses. India has a lot of those people. Ghandi could have told them to stop, or at least tone it down. Strong signals from leadership that you should stop impeding business formation and development can have a pretty large effect under regimes like this. Ghandi could also make it clear that your advancement will be halted if companies complain about you causing problems for them. Doesn’t take telepathy so much as a strong signal from the leaders of a large bureaucracy that officials will not benefit from causing problems for business. The actual policy in this case might well have been a lagging signal of something that was mostly already done (formal recognition that the bureaucracy stopped interfering quite so much).
The problem with a lot of socialist policies in practice is as much arbitrary enforcement as anything else. The policies are often bad, but the fact that officials have a ton of discretionary power over economic activity is far worse. This is why it’s so hard to detect the impact of regulatory changes on economic activity. The rules matter, but the enforcement of the rules matters a lot more and this is very difficult to measure. From various things I’ve read / heard in talking to Indians, India has a huge number of officials with some power over economic activity. Too many individual pockets of officials that all have to be satisfied in order for a national enterprise to be consistently successful. Weakening as many of those pockets as possible helps a lot for economic growth.
Yeah I suspect this is the main thing. Pure guesswork though. Even if some Indian policy makers from the ’80’s confirmed that this happened then, it would be impossible to prove.
“But nobody thinks that Bernie Sanders plans to kill a six to seven digit number of people.”
First, 35 million people died in a famine because Mao’s economic ideas were terrible, not because he felt they were inferior and had to die. I mean, the CCP did and does commit plenty of murder, but that wasn’t the only problem. No amount of good intentions will cause farmers to learn how to make steel, or change the fact that birds eat pests. Planned economies will always suffer information and incentive problems.
Second, even if the true believers are honestly well-intentioned, their systems open the door for abuse by the sociopaths, the amoral but self-interested, the corrupt, etc. A system that turns to genocide if it puts one evil leader in power is not a robust system. Maybe Dictator-for-life Bernie wouldn’t order me executed, but it doesn’t take long on social media or certain subreddits to find people salivating over the idea of throwing conservatives into re-education camps.
So we’re in a much better position economically, and mistakes don’t cost us as much even when they’re the same kind of mistakes. I can get behind that. This reflects one of my deepest fears – there is an “acceptable level of progress”, and there are a number of wealth sinks that take everything extra. Richer countries have more social policies and more regulation. And regulation behaves like entropy – you mostly get rid of it when you (re)create a country, otherwise it just accumulates.
This isn’t all bad – it’s perfectly normal to take care of your population when you’re a richer country. But this doesn’t really feel like what’s going on. Poor people are still… poor somehow, even if the dollar value of welfare spent on them _should_ make them rich by 1950 standards. Because rents, NIMBY, minimum wages and so on.
It’s something I’m so afraid of because it’s invisible. We don’t see how we could have flying cars, cities on the moon and live to 120. We just see the present and imagine it’s pretty good.
The interesting thing to me is that the big actually existing socialist states existed in economies where there was a large class divide between rural farmers and urban proletariat, as well between both and the bourgeoisie, so there was a three way class thing going on that Marxism doesn’t neatly describe, other than by recourse to terms like petite bourgeois.
Enormous famines were generally created because of A: taking grain from peasants to make things better for proles and to sell abroad for industrial equipment (Stalin), and B: pure incompetence driven by insane looney tunes style ideas about freeing the peasants (Mao).
Now that almost no one is a subsistence peasant and farmers represent an extremely small percentage of the populace, it’s easier to take to take surplus without eating into the amount farmers need to live, so A would be less harmful, and B probably wouldn’t take place in the first place because agriculture doesn’t involve a peasantry to begin with today. Possibly, modern command economy technicians would come up with new ways to fuck things up, but I imagine it would be more similar to the slow grinding misery of the late era Eastern Bloc, then the famines of the early period.
Of course, in some ways a soviet socialism that couldn’t fuck things up much economically would be worse, because a lot of people find the revolution and re-education parts good, and those are harder to argue against from an empirical basis. It ends up as zero sum moral preference stuff. As greater levels of automation become possible and innovation slows down due to the laws of physics limits, state socialism will have fewer economic inputs to fuck with and less innovation to strangle, so it correspondingly becomes more viable and appealing.
There are plenty of countries that currently have to import calories. You can look at figure 3 here to see which countries are particularly teetering on famine if someone threw a wrench in the works.
No, there are plenty of countries *that import* calories. The article lists Italy and Spain as “food insufficient” countries, but all that shows is that it’s not currently economically competitive to farm there, not that those countries would starve if their food imports were restricted.
It looks like the USA has both high food self-sufficiency, and high net exports in food trade, at least.
The one thing I remember growing up in the 80’s in India was the change in my family’s life after Rajiv Gandhi came to power in 1984. That should be considered as a starting point. he brought in his friends from Doon School to begin the reform, especially Arun Nehru.
The first thing I remember was the pay Commission of 1985 or 86. Before that, India being a quasi-Socialist country; public servants were paid really badly. Public Service was considered to be doing public good without expecting remuneration, because … I don’t know why. My dad’s pay went up by a considerable amount and 1986 was when I remember having a life without having to worry about the next payday of my Father. So that was where it began. The after the fall of the Soviet Union when India was no longer getting oil on the cheap; IMF forced India to liberalize the economy. The reforms that were judged too ‘controversial’ by previous administrations were finally allowed to be put in. The credit for that should go to the PM PV Narasimha Rao along with Manmohan Singh and Chidambaram. But since PVN was already a part of the Congress leadership in the 80’s, he was privy to the reforms that were proposed in the mid 80’s, but could not be implemented for political reasons. The fall of the Soviet Union and the loss of cheap oil was the triggering point for full scale liberalization. But the seeds were already sown by the Rajiv Gandhi 1984 government.
+1 for the inside look, thanks.
Possibly rude, true, necessary: Basically the entire problem with arguing with capitalist apologia is that those kinds of takes are considered “historically-informed”. This somehow always ignores actual (extra-economic) historical context (like Stalin’s overall disregard for human life, Pol Pot being a genocidal nationalist, or Mao being…uh, Mao.) Meanwhile, even bigger numbers of people who starved to death under capitalist rule are always easily handwaved away. This, of course, is particularly grating while discussing India, which went from millions of people dying every few years to essentially nobody dying in a systemic manner with the simple trick of regaining independence from ur-capitalist British empire.
Bernie Sanders needs not concern himself with India, because he has a perfectly fine positive model for his plans, mainly the entire western world several decades ago. Studying India to counter this will yield an argument even less persuasive than studying Cambodia.
That was an aside, though. My real point here is – there’s essentially no evidence that a degree of economic “liberties” has a meaningful impact on economic well-being of countries in the first place. There is an argument to be made that private property and markets facilitate growth under specific conditions (just as they stifle it in others), but there’s no argument, and indeed no indication, that it in any way generalizes enough to be applicable to 1990’s India, 2020’s America or anywhere else. Concerning oneselves with them is ideologically motivated, and likely to prove merely a huge distraction away from actually meaningful factors.
My personal hunch, superficially consistent with broad-stroke patterns of history, is that economy of a country depends mainly on its bargaining power, which is in most cases a product of military power. The entire history of Asia’s economic down- and up-turns can be directly traced to liberation from western imperialism. First, of course, there’s a post-WW2 decolonization. Then, Japan, then Korea and Taiwan receiving US protection and market access lets them overcome their periphery status. Then, US gets a huge hit in Vietnam, and in Iran, with an oil crisis in the meantime. This shakes up the west’s economic foundations, enough to lead to liberalization of finances and trade, which kickstarts the transition of the world hegemony from North America to East Asia, of which India is one of beneficiaries. Whatever India’s government did during that time is largely insignificant in comparison. They merely had to avoid fucking up as badly as, say, Mao, but seeing that even Mao’s wacky hijinks didn’t stop China for long…
Ah, yes, the claim that socialism isn’t the problem, just socialist leaders. Frankly, even if I grant you the case, you aren’t any better off. Either socialism doesn’t work, or it does work, but the people who become socialists always seem to pick leaders like Mao. either way, the idea should be considered harmful.
You can’t handwave things that don’t exist. capitalist famines are vanishingly rare, even by the most generous definitions of the term, and don’t come anywhere close to the socialist deathtolls.
That’s a funny way of describing a global agricultural revolution that took place in almost all countries regardless of whether or not they remained under british rule. Deaths from small pox also fell dramatically in the same period, are you going to ascribe that to the end of british rule as well?
That’s not a model. those countries did massively different things with massively different results.
This is simply ignorant. The correlation is strong, and the causal link easily demonstrated by countries like Chile, China, and Ireland.
the richest countries europe of any considerable size are switzerland, ireland, norway, iceland, and denmark, none of which has any meaningful military power. Your hunch is nonsense.
Funny how that didn’t work in the Philippines or Thailand, both of which also got US protection and market access.
Yes they did. China was poorer than sub-saharan africa when Mao died. Things didn’t start to change until they liberalized, an idea you earlier said was beyond ridiculous.
Donald Trump hates the Washington Post and New York Times. And the worst thing he can do to them is . . . cancel the White House’s subscriptions.
The United States government began a giant program of surveillance that was illegal on its face, the New York Times knew about it, and the government threatened them, and they didn’t publish.
Caveat 1: In the main, I think “socialism” (if we call the Soviets and Mao that) did kill more.
Caveat 2: This game of piling up all the skulls can get a little gross.
Still…something like 20 million starved to death in the British controlled India 1860-1945. Thats like 2 million every decade. Just in India.
https://en.wikipedia.org/wiki/Timeline_of_major_famines_in_India_during_British_rule
Lots of caveats often get added-Don’t the Imperial Japanese deserve the lions share of the blame for the starvation in Bengal in 1943? Once the British imposed the famine codes in the late 19th century the number of famines subside and the British were largely successful in stopping a famine in Bihar in the 1873-don’t they get credit for that?
So yes, for example, 4 million die in the famine in Bengal in the 1940s and 7 million die in the holdomor in the 1930s. We could grant that 35 million die in the Great Leap Forward and 8 million die in the holdomor vs 21 million who die in the Indian/Irish famines from 1840-1950. Stalin is worse than Churchill and the Soviet Union is worse that the British Empire. Capitalist/Imperialism’s pile of skulls is smaller!
But isn’t it at least a little close? An average 1-2 million starving every decade from 1840-1950 isn’t “vanishingly rare.”
India had some bad near-droughts in the 1960s and 1970s. Was that really stopped by the green revolution? It is unclear to me that the famines in the 19th and first half of the 20th century were impossible to prevent and needed 20th century technology. The British did avoid famine in Bihar in the 1873 (wiki implies they overreacted and the government then got criticized for spending too much so they then underreacted to the Great famine of 76) and the famine codes of 1880 did help. Was the Irish or Indian famines really impossible to prevent? Obviously history isn’t a science experience where we can rerun to see how a democratic independent India or Ireland handles those challenges but I am unaware of few famines that ravage independent democratic states-there are a lot of votes to be gotten in making sure people get fed. On the other hand in an imperialist capitalist system where the Indians don’t really vote (and Ireland, despite having half the population of England in 1848, had way less than half the MPs) you can see how the system would be less responsive to the needs of the imperial possessions vs. the metropole.
mrdomino says:
Let’s not play that game. there is no honest sense of the word socialist that does not apply to mao and the USSR
Not nearly as gross as the game of sweeping them under the rug.
That number is absurdly high, but for most of that period India (A) wasn’t really governed by the British. It was bunch of princes that pledged fealty to whoever the current monarch was and then were left to run their own affairs. And (B) isn’t anything remotely capitalist. If capitalism means anything, it’s a society where most people make their living by buying and selling goods on a market. Colonial India was a peasant society where most people grew their own food, not a capitalist one, and peasant societies, by definition, have a lot of people living on the margins of sustainability.
Note the shift in goalposts. Socialist governments run around actively causing famines, and they are being compared to capitalist governments who failed to prevent them. If we’re looking at excess deaths, then capitalism looks even better, because, especially in the time period we’re talking about, LE and GDP per capita are very highly correlated, so an economy that grows faster saves an enormous number of lives. Socialists, always and everywhere, failed to deliver on their economic promises and lagged behind capitalist growth.
“Every bad example of your system is germane and dispositive, every bad example of my system isn’t really my system because reasons.”
Surely you can step outside of yourself to see that when you dismiss the Indian example as not capitalist you are doing EXACTLY what you accuse him of doing with socialism.
@Freddie deBoer says:
Less of this, please.
I gave reasons, very specific ones. If you don’t like them, try arguing against them instead of dismissing them. I rejected one example, not every example. If you want to talk about, say, Ireland, you have a much better claim to calling it capitalist. But India in 1780? no. And in 1943, there was no rice because the Japanese had stolen it all. SO also not capitalist. Stalin, on the other hand, he swore up and down what he was doing was socialist, was celebrated as a great socialist by socialists all around the world, and he refused food aid rather than admit that socialism wasn’t working.
Today, in capitalist India, children literally live surrounded by excrement. But that’s not an indictment of capitalism; that’s not relevant. In Russia, the death of communism and implementation of capitalism saw an immediate and massive decline in life expectancy. If this situation was reversed and Russians suddenly saw a big jump in life expectancy, you would never stop hearing about it from capitalism’s cheerleaders. Instead it declined to a degree that’s truly rare. Yet you certainly don’t hear about it from Scott, and you won’t hear about it from you. But let me guess: that doesn’t count. Because reasons.
@Freddie deBoer
Who said anything about India today? We were talking of india in the mid 20th century. But fine, if you want to talk about india today, is the amount of excrement on children increasing in capitalist india or decreasing? is it higher or lower than in socialist india? because by my measure, it’s going down, something socialist india failed to achieve.
No, the decline of LE started under communism, as the wheels finally started coming off. Under capitalism, even Russia’s very weak capitalism, it’s reached all time highs. Any more myths you’d like dispelled?
I suggest we go further, and include all kinds of death. Yes, even dying of old age. By that metric, both capitalism and socialism have death rates 100%. Therefore, no one should be pointing fingers.
From a sufficiently generous perspective, there is nothing wrong about sending millions of people to death camps. In other regimes, people ultimately die, too!
@Freddie deBoer, @cassander,
The decline trend of Russia’s life expectancy did start in the 1960s, but it’s also about alcohol use/abuse. The uptick in the late 80s before returning to the previous decline trend matches the implementation and then removal of Gorbachev’s strict anti-alcohol policies.
@sharper13
that is a very good point, although that article is about 20 years old and the LE has since surpassed the 60s high. I have no idea how much alcoholism levels have changed since 2000, a followup would be interesting.
The rate of famines increased significantly under British rule, which suggests that colonialism was indeed causing them, just in a less direct way where you can’t blame it on some specific central planning guy who gave a specific order.
(Also, this whole thing smells of Copenhagen ethics – so long as you do nothing, the crisis can’t be your fault, because neglect isn’t a thing. The crowd around here has no issue saying things like “Failing to do public health intervention X killed Y million people and cost Z million QALYs,” why don’t we ever say anything similar when it’s economics and not medicine?)
@beleester says:
Did it? Or did just the documentation of famines increase?
Well, (A) I think there is a huge moral difference between not fixing something bad and causing something bad, but even if you don’t, you need to compare apples to apples. If you want to count the deaths that capitalists allowed to die due to laissez faire policies, then you also need to count the people the socialists allowed to die because lower economic growth resulted in lower LE.
and (B) I don’t say that failing to do X killed Y people, at least not the way you describe. But if I did, you’d have a fair point.
Yeah, I don’t think that’s actually a thing we do here very much. Also, there is very much a difference between neglect and deliberate harm, and for that matter not all inaction is neglect.
There is a brand of consequentialism that suggests that everyone is always obligated to act so as to minimize global harm. But that’s a minority opinion even here, even more so among the vocal proponents of capitalism here. Those who hold that opinion, generally do not accuse those who fall short of their standards through inaction of being murderers – even as they do accuse those who actively kill people of murder.
Alice walks past a hungry person and does nothing. Bob walks past a successful farmer and takes all his crops, leaving him hungry while Bob pursues some noble cause with his wagon of grain. The attempt to cast them as morally equivalent is noted, ridiculed, and dismissed except as a black mark against whoever said such a damn fool thing.
THERE were two “Reigns of Terror,” if we would but remember it and consider it; the one wrought murder in hot passion, the other in heartless cold blood; the one lasted mere months, the other had lasted a thousand years; the one inflicted death upon ten thousand persons, the other upon a hundred millions; but our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break? What is swift death by lightning compared with death by slow fire at the stake? A city cemetery could contain the coffins filled by that brief Terror which we have all been so diligently taught to shiver at and mourn over; but all France could hardly contain the coffins filled by that older and real Terror—that unspeakably bitter and awful Terror which none of us has been taught to see in its vastness or pity as it deserves – Mark Twain
Like most capitalists, Scott never even tries to address the greater Terror. Like you say, it gets handwaved away.
Analysis of the trope: Compare yourself with the rest of the universe, and argue that the rest of the universe is responsible for more evil (in absolute numbers) than you.
Example:
“How can you praise Hitler? Millions of people died in his concentration camps!”
“Oh, maybe they did. Maybe. But isn’t hypocritical how the opponents of national socialism always fail to mention the billions of people who died outside of our concentration camps since the dawn of history? Now who is the actual bad guy here: the Nazis, or the non-Nazis?”
Does Twain talk about Capitalism or Monarchy?
Do current self-descriped socialist states look more like the Ancien Régime, or do states that do not describe that label to themself?
Le Grand Terreur isn’t staple example against revolutions because the Directorate was so different from what came before. It is an example how it was not different.
Well, according to Marx, French Revolution overthrew feudalism and installed capitalism.
@AlesZiegler,
Well, according to the French National assembly, where the terms were originally defined, the participants in the French Revolution were all literally left-wing. 🙂
@AlesZiegler
All the more reason to ask, why the …. this quote should be a defence for self described socialists states?
Or to be more clear: Is there any proof that socialism is a way out of this first Greate Terror? And I don’t mean the weak sauce “Soziale Marktwirtschafft”, we practise in in Scandinavia and Germany.
That’s a phenomenal quote.
It’s relatively well styled, but in terms of ideas it is muddled.
A Connecticut Tankie in King Arthur’s Court.
– Robert A Heinlein
Leftists who took power by revolution have been terrible. Mao, Stalin, you know the list. Don’t get one of those.
Leftists who took power by election have been… sometimes quite good.
In India, Kerala has been a standout state, with the highest Human Development Index in India, beating out all the others on metrics like infant mortality, education, life expectancy. Why? Because they’ve been ruled by Communist Party governments for much of the decades since independence. And it turns out that the Communist Party took the welfare of ordinary poor Indians a lot more seriously, and with a lot fewer excuses about caste or tradition, than other parties. And because they were in power by votes, not guns, they had to stick to policies that showed benefit in real time to real voters.
Likewise leftist parties in Sweden and Denmark have presided over vast expansions of the welfare state that… haven’t damaged economic growth at all, and seem to have given people a better, more secure life.
On the other hand, leftist policies in Britain after WW2 seem to have been worse than useless, extending the suffering of wartime rationing for decades even as the Continent was enjoying a huge recovery. And while you can have a true-Scotsman argument about leftism in France, whatever it is it doesn’t seem to have aged as well as the Nordic model.
So clearly there exist both “helpful elected leftists” and “harmful elected leftists”.
But leftist revolutions have been a disaster. Don’t have one.
What about right wing revolutions? Have these also been unmitigated disasters? If so, maybe the main problem lies with people trying to take power outside the democratic system.
Are we talking about death toll, or economic growth?
Death toll: right-wing takeover usually looks more like “coup d’etat” than “revolution”, and perhaps because of that usually kills far fewer people from the majority ethnicity. Since they reuse the existing military and police, a coup government needs to kill less to make itself confident in its authority. So right-wing coups are mostly slaughterhouses only for ethnic minorities (Armenians, Jews, Maya, etc., depending on country).
If you’re in a country that doesn’t have a suspect ethnic minority, you probably get a 10x-100x reduction in slaughter for having a right-wing coup instead of a left-wing revolution. (Congratulations?)
The trouble is, saying that sounds like saying these governments are nice, and that’s false. Coup governments are infamous for death squads, “disappearances,” torture, etc. It’s just we may get to measure these tolls in “thousands dead” instead of “millions dead”.
Economically… it’s kind of a mixed bag. When a democratic country has a coup takeover, on average economic growth declines; when an already-autocratic country has a coup takeover, the average economic effect is positive but small. Basically individual cases vary widely.
So if you already have a democracy, don’t have a right-wing coup. If you don’t have a democracy, you might gain from a coup… but be careful what you wish for.
Woah woah. In the early 1970s Swedes had equal GDP/Capita to the US, and then steadily fell behind the US till their market reforms in the 90s. And still haven’t caught up. The Finns have a similar trajectory, but started slightly poorer.
All while the US was taking in a large % of immigrants that mostly came from below the media of their GDP/Capita, making that statistic even more damning.
Sweden’s relative GDP per capita to the USA has been remarkably stable over the long term. Sweden GDP/capita today is 6% above USA; in 1960 it was 3% above USA – basically no difference.
Randomizing across starting years 1960-1969, the curve is even flatter (about 6% over USA income at the start of the sample, and about 6% over now).
You can check out the statistics yourself with the lovely FRED database.
Denmark does a bit worse than the USA, dropping by 8% per capita over 55 years, which is again a pretty small effect relative to noise – especially as most of that decline can be accounted for by the worse EU response to the Great Recession (Denmark’s krone is pegged to the euro, so it was forced to austerity, unlike Sweden).
In fact, if you choose a 2008 end date to avoid “EU handles the Great Recession worse” effects, even France-to-USA doesn’t look that bad, although then we get into arguments about WW2-recovery effects.
I suppose you could argue that European leftism led to being cavalier about central banking, and that in turn led to the mistake of the euro and the uber-mistake of Great Recession EU austerity. If that was true, it would be a nice argument against leftism. But I’m not sure the left is more naive about banking than the right – just differently naive. Comparatively right-wing America has lots of Stupid Banking Mistakes in its history.
That graph is like Viagra for the free marketers (although Sweden is higher at all times than other graphs I’ve seen such as in this
). The welfare state expansion was in the late 60s/early 70s and the market reforms were in the early 90s.
Now, I don’t think these graphs are the be all-end-all. Because I don’t think policies always have effects, and things like GDP/Capita in an interconnected world are more likely to be driven by things like intelligence, education, etc so long as the regime in place is not really bad.
This article seems to contradict the notion that there weren’t any pro-business policies until the late 80s.
Emigration might be an interesting factor to look at. At a cursory glance, migrationpolicy.com tells me that
Remittances could help explain some of the pre-1987 growth. This also helps explain the pro-market and pro-trade reforms as more and more connections between India and the United States are formed and capitalist ideas start to flow back to India.
This is a thing, I wanted to ask aas well. Indian and Pakistani first generation immigrants, are a staple trope from american media from the last 30 years. Expats often send big amounts of money, to the families they left home.
Could this inserted enough capital into India to alow them to finance economic growth?
You need to read Ha-Joon Chang
I read some of his books. If I remember correctly he says he is in favor of “capitalism, just not free market capitalism”. Protection of important industries, active government role in fostering other industries, welfare, regulation – that kind of stuff. This is somewhat left of economics mainstream but it’s hardly socialism.
Is that what you’re advocating or do you think this doesn’t go far enough?
looks like poverty rates start their dramatic decline in 1969-1970, a date no one is citing as ‘something having changed’.
The prior years were very bad, if you look at the trends from 1950-70 it looks just like a return to prior trends. It isn’t really until after that point that the trends reverse.
Of course it is possible that it was something that happened in the late 60s – trends that are extremely sensitive to arbitrary starting points can be used to explain about anything if you aren’t careful.
Question for Scott unrelated to this post:
Would you be ok with me creating a podcast feed of the entire archive of SSC put through a text-to-speech? Here‘s an example of what it would look like.
India is somewhat decentralized, so states can be quite different. Kerala in the southwest is usually run by the far left. They are said to do a good job with education and services, but are bad for business. So lots of people from Kerala go to work in the Persian Gulf and send money home. The state next door where Bangalore is is said to be more pro-business.
So this could complicate your search for a trend line.
Yeah, seems probable that it would.
Decentralization is key to how India had flourishing parliamentary democracy at the same time as one-Party hereditary rule by the Nehru family, IM(Outsider)O.
India was a British colony into the 1940s. Profits were exported to England, not necessarily spent or reinvested in India. (This is a big development problem. In colonies and many non-colonies, profits are often exported and turned into villas in the Riviera and the like.) Whichever metric one uses, it looks like growth and poverty reduction started in earnest about 20 to 40 years after the end of the colonial era. Unlike the US, which developed its own government and institutions as a colony, the government of India was firmly subordinate to its colonial masters, so it’s not surprising it took a while to get things sorted out and develop institutional expertise.
As for socialism, Bernie Sanders is as socialist as Dwight David Eisenhower. If anything, Sanders wants lower peak marginal tax rates than Eisenhower had. Socialism isn’t all or nothing. In every developed nation, the government has to drive technological advances and create comparative advantages for trade. That means industrial policy, resource policy, agricultural policy, educational policy, health and public safety policy, transportation policy and so on. At some point or another, the government has to pass the torch to the private sector, whether it is at the financial, corporate or individual level. Most arguments about socialism are about where to replace that dividing line, but the important arguments are about the driving direction.
India has a lot more problems than socialism. If nothing else, there is the caste system which encourages social and economic stagnation. Even now, a dalit who wants to get ahead has to tread carefully and encounters all sorts of biases and disadvantages. Contrast this with China where the Han are one people, and there is a long tradition of economic competition. I’m always amazed India does as well as it does.
@kaleberg says:
the profits from FDI are also exported. that doesn’t matter.
Taxes under Eisenhower were 17% of GDP, exactly the same place they’ve been ever since. Bernie wants to raise them considerably from that level. And the high rates under Eisenhower are misleading, because the tax code at the time had many more deductions and exemptions than the modern code.
No it doesn’t. Private capital can do that.
gee, if only there was some sort of social system that allocated capital on the basis of return on investment instead of caste. maybe we could call it capitalism? Is that taken yet?
The fact that the comments of this blog are dominated by reactionary Republicans such as yourself is one of the internet’s biggest mysteries.
Maybe things would be less mysterious if you took more account of the facts we’ve so graciously provided you and less account of the incorrect assertions you’ve made.
This has to be the most disappointing post I’ve read on SSC. 1. Bernie Sanders isn’t likely to kill millions with his ‘radical socialism’ as many have pointed out – he just wants the USA to be a bit more like Sweden. I don’t personally believe there is a viable path from here to Sweden, but nevertheless, Pol Pot he is not. 2. India is a high entropy mess with a strong and persistent caste system ,a patrimonial political economy and no history as nation state. If Nehru had been Ayn Rand’s lover, I doubt India would be richer today than it is. If he’d been an Ordo-Liberal circa Germany in 1952 I doubt India would be richer than it is. If he’d been General Park of Korea …… etc , etc.
The kind of policies that would have given India, China like growth were just not going to happen in India (the excellent Joe Studwell book on East Asia doesn’t talk about India but it’s clear the social and political conditions that gave East Asia its growth, such as land reform and a strong penetrating state bureacracy capable of designing things well did not obtain in India and that India would rank much lower than his worst cases – the Philippines and Indonesia). Since the 1980’s what’s happened is that India has converged on a quasi liberal, service oriented economy that sort of works for the mess that is India. A lot of it is also demographics. When India starts aging it will be bleak, because India has skipped the industrialization phase that creates a modern economy and modern polity.
It seems kind of short sighted to try and pin all of India’s success on internal policy. By the 1980s globalization in the developed world is in full swing, so almost any developing country with a large population and cheap labor is bound to do better. I don’t know that much more explanation is required
Wouldn’t one possible factor in per capita GDP rates be just, ya know, capita? Looking at India’s fertility rates, they were just under 6 kids per family until late 60s and then started steadily dropping. Maybe this shows in the GDP with a bit of a delay – more parents available for work, more possibilities for families to move from substance agriculture and take chances, the effects of poverty are less dire with less mouths to feed etc. https://assets.lifesitenews.com/images/made/images/remote/https_www.lifesitenews.com/images/local/popgraph1_604_468_75.jpg
Now it occurs to me that there are two conceptually different kinds of policies that get cornflated under the label of “socialism”.
First, there are policies that seek to shift the balance of power from owners of capital toward workers, renters and sometimes other groups whose interests are sometimes in tension with the interests of capital owners.
Second, there are policies that seek to increase level of control which the government exercises over what gets produced in the country.
I think that India of Licence Raj, like Soviet Union, is an example of the latter, while Sanders is much more an example of the former.
In order to do the first on command, you need to do the second. Changing the rules of society requires political power. A lot of political power. All those decisions people made based on the current balance between capital and labor? “I should invest my money for retirement instead of spending it on a new car.” “I’ll go to college for my accounting degree instead of spending my life following the Rolling Stones.” “I’ll go and take out a mortgage for a new house instead of rent.” Any of those could have had a different outcome if the balance was different.
If you want to completely transform the balance of society, such redefining the concept of property or getting rid of private ownership of the means of production, it requires pretty close to absolute power in the hands of the political leadership. Absolute power corrupts absolutely. This is why even a well-intentioned communist revolution ends up with what is euphemistically written off as “state capitalism”; to make the change, and make it stick, it requires a period of absolute government power while everyone that was disadvantaged by the change adjusts to the new reality, and that’s if nothing goes wrong.
Um, no, I respectfully disagree.
“State capitalism”, which is synonymous with centrally planned economy, is an illustration that when one is taken to the extreme, those two conceptions of socialism are incompatible. Soviet system was an extreme example of socialism as government’s total control of production, and it required disempowerment of workers, so independent unions and strikes were illegal in the USSR.
Changing the balance of power between workers and capital owners doesn ́t require increase of government power beyond what it already has in modern society, i.e. what is somewhat misleadingly called “State monopoly on violence”. As long as disputes between citizens are mostly resolved by courts and not by private violence, changing the balance of power between groups requires merely changes in what claims are accepted as valid by the justice system.
You can gradually over time shift the balance somewhat; that’s why I specified ‘on command’.
The total value of the US Stock Market is around $30 trillion dollars. If you’re going to require all companies to give a percentage of their stock to workers (I’ve seen numbers for Sanders proposed Democratic Employee Ownership Fund between 40-60%), that’s moving roughly $15 trillion dollars. Yes, the government probably has the legal authority to move $15 trillion, just as it has the legal authority to put people to death for jaywalking, however such a change in the relationship between the government and the people is a massive change in power.
Where are you hearing 40-60%? The campaign site specifies 20%, which is quite absurd enough as is, and I don’t recall hearing any other number.
You may not be aware that you’re propagating a myth with this comment.
In one particular year in the 70s, there were half as many divorces as marriages, which is where the myth began (even though you can’t count the divorce rate that way). The divorce rate has been declining for a couple of decades now.
If you’re poor, a member of certain minority groups, were very recently married, or have been divorced before, than your group has a higher “risk” of divorce. If you’re black and poor, you might hit 50%. For first-time marriages, the divorce rate is less than 30%. For college-educated, it’s less than 20%. The longer you stay married (with the biggest jump after the first few years, by far), the less likely you are to get divorced.
Another possible response to Bernie is that Nordic countries aren’t actually socialist.
https://fee.org/articles/the-myth-of-scandinavian-socialism/
Yeah, I’m going to have to second other peoples comments and say this is much less than I wanted to know about Indian economic reform. Indian is very underreported in general though, so I get that it’s hard.