Posts tagged: socialism

Black Hole Theories of Social Power

A black hole theory of social power holds that when an institution gets too much power, that power will snowball, making institution ever harder to stop. Left unchecked, the institution will control most or all of society and use various forms of coercion and violence to cement its power for good.

There are two big black hole theories in the recent history of political theory. Roughly, the simple socialist theory is that large capitalist firms (boss-dominated) are the black holes. And also roughly, the simple libertarian theory is that large states are the black holes.

I tend to think the libertarian theory is better than the socialist theory for familiar reasons. States have more coercive power to begin with, they have far more monopoly power, and so aren’t subject to the checks of competition. And I don’t think the history of markets illustrates the ability of capitalists to achieve hegemony through the market order. Real capitalism is just so chaotic, and generates so much creative destruction, that it’s hard for any firm to stay on top for long without help. So they tend to co-opt specific parts of the state to engage in the most severe forms of domination. (An oldie, but a goodie on this last point.)

I’ve become more worried about the simple libertarian theory with time for a few reasons. First, states can’t really be modeled as one big bad actor any more than markets can. States are huge conglomerations of agents with different interests and goals, as are firms in a market. And, while states tend to grow more than they shrink, they do seem to abide by more limits than you’d expect if the liberal theory were true. Social norms, social trust, religion, and ideology have big roles to play in determining social outcomes, so much, in fact, that they may often overwhelm economic and political centers of gravity.

I now think that there are probably no social black holes. Or better, there are centers of social gravity, but there are a number of them, and they interact and conflict in complex ways such that predictions based on black hole theories often turn out to be false. Many human institutions are rather fragile, and are subject to contestation and decay, and so don’t really have event horizons.

The good thing about having no black holes is that it is harder for a society to become permanently dominated than many fear. The “bad” thing about having no black holes is that we have fewer big, powerful enemies to fight against in order to give our lives meaning. Socialists often make big business their meaning-bestowing political foe, while libertarians often make big states their meaning-bestowing political foes. Sometimes these mindsets lead to improvements in well-being, sometimes not. Neither theory is probably a very good thing to bet your life on.

I prefer a Wittgensteinian* theory. Hell isn’t other people. Hell is yourself. And the best way (though not the only way) to fight evil is to try and make moral progress, in small steps, each day, struggling to be kinder, more forgiving, and more loving than the day before. It may sound lame, but seriously, who do you have more control over in the end, yourself or other people? And how are you going to make the world a better place if you’re a bad person?

*Wittgenstein may not have said this, but it is often attributed to him.




Sweden, Venezuela, and Socialism

Now that socialism* is no longer a dirty word in American politics, we’re starting to argue about what socialism in the United States would look like. Conservatives and libertarians argue that American socialism will make us more like Venezuela, whereas progressives argue that American socialism will make us more like Sweden. I think both arguments have strengths and weaknesses.

I. Welfare vs Regulation

To see why, let’s distinguish between the welfare state and the regulatory state. The welfare state provides various kinds of transfers, tax-funded social programs that typically take the form of social insurance. The regulatory state intervenes in markets to fix various purported flaws, say through imposing price controls, providing subsidies, restricting the activities of business, creating unstable property rights regimes, and the like.

Substantially expanding the American welfare state is probably not going to lead us to become more like Venezuela.** The freest countries tend to have extensive welfare states. But substantially expanding the regulatory state runs that risk. If we look at the most influential economic freedom index, which is comprised mostly of measures relating to the regulatory state, Venezuela ranks 179th out of 180. Sweden, by contrast, is in the top 20. And if you remove government spending from the economic freedom index, Sweden should climb even higher, and further away from Venezuela. Sweden has one of the freest and most stable market economies in the history of the world, whereas Venezuela is riddled with constant, desperate market manipulation. The Venezuelan nation-state messes with the economy far too much, and that has led to massive dislocations and to tyranny. The Swedish economy, by contrast, redistributes a lot of wealth, but Swedes deliberately moved away from a heavy regulatory state a few decades ago, and it’s done them a world of good.

Here’s how this point can improve our political discourse. Bernie Sanders stands above all the other Democratic presidential contenders in his enthusiasm for the regulatory state, and has proposed dramatic expansions of the welfare state. When Bernie talks about expanding the regulatory state, such as supporting nationwide rent control, pointing to Venezuela is fair game. But when Bernie talks about expanding the welfare state, pointing to Sweden (today) is perhaps more appropriate.

That’s not to say that an extensive welfare state is justified. The point is that expanding the welfare state doesn’t set us on the road to Venezuela, while expanding the regulatory state very well might.

II. Trust Matters Too

Both sides should also bear in mind that social trust plays a huge role in explaining how well a society’s political and economic institutions work. Venezuela is a low trust society, whereas Sweden is a ridiculously high trust society, with the United States in between (trust data).

For instance, in the mid 90s, nearly 60% of Swedes said most people can be trusted, 35% of Americans said most people can be trusted, and 14% of Venezuelans said most people can be trusted. Sweden continues to hover around 60-65%, the US around 35-40%, and Venezuela around 13-15%. If you don’t trust most people, transactions are harder, including transactions with the civil service. The programs that work in Sweden may work worse in the US, and will tend to work worse still in Venezuela. So it’s important to recognize social trust as a variable in policy efficacy.

This limits the claims of both sides. Progressives shouldn’t expect that Swedish policies will work as well in the US, and conservatives and libertarians shouldn’t expect that Venezuelan policies will work as badly in the US.

* Here “socialism” refers to an extensive social democratic state, not government ownership of the means of production.

** Unless the social programs are funded with unstable resources subject to great government control, like revenue from government-run oil companies, as this mixes the welfare state and the regulatory state.