Progressive Capitalism
Socialism vs. Socialism, or
Progressive Capitalism
by
Jon Erii, (Danish/American)
The author of this article has a uniquely broad perspective. Born in Denmark, he has lived and worked for over five years in Denmark, Germany, Spain, the United States & Venezuela. For three to twelve months in Canada, England, Iraq, Netherlands, Sweden, and Trinidad & Tobago, and has work-visited many other countries. John is multi-cultural/lingual, having emerged himself in local culture and customs.
Words do matter, and more so during our politically charged election season. A dogmatic leader will distort words and facts describing socio-economic characteristics and policies, bending definitions to their political agenda. Two words wiggling like snakes, hungry for clarity, are Socialism and Democracy. Both words are understood or perceived differently depending on heritage, upbringing, and national identity. The same word, for example, Socialism, evokes opposite perceptions and feelings depending on the audience.
When Bernie Sanders entered the race toward the Democratic Party's nomination for President, he actively promoted Socialism, which entered the American political narrative, either as something good and decent or as something terrifying fearmongered by the opposing faction. The mere word Socialism creates confusion and fear in some corners. For Donald Trump and the Republican Party, Socialism is the failed political system of Venezuela, Cuba, and the former Soviet Union. On the other hand, for the Democrats, Democratic Socialism or Social Democracy is the admired level of social justice delivered by the political system of the Scandinavian countries with the benefits it brings to its people. Unfortunately, in the United States, the steadfast core of the political base adopts their candidates' views without much thought.
Older voters will associate Socialism with the Soviet Union, Cuba, Nicaragua, and other failed socialist/communist economic systems. If they, or other soon-to-be voters in the Presidential election of the United States of America, go a step further and Google the meaning of Socialism - a standard practice of all generations nowadays, their prejudgment (Trump's version) is confirmed.
Google search:
quote
socialism
noun
A political and economic theory of social organization that advocates for the means of production, distribution, and exchange should be owned or regulated by the community.
Similar: leftism, Fabianism, syndicalism, consumer socialism.
policy or practice based on the political and economic theory of Socialism
(in Marxist theory) a transitional social state between the overthrow of Capitalism and the realization of Communism.
unquote
If the above definition describes Democratic Socialism, then Trump is right. Socialism and state-run companies are not what we want, and not what the Democrats want either. Capitalism is not perfect, but it is proven to be the most effective economic system for manufacturing and distributing goods and services in general. In contrast, Socialism, in its purest sense, has failed miserably over the past hundred-plus years.
The perception of what Democratic Socialism means politically depends on residency and country of origin. People of Latin American heritage will mostly have a negative understanding of Democratic Socialism. Latin American leaders, past and present, have experimented with Socialism and have failed. Why? Because they socialized the producing sector of their economies (e.g., oil, gas, industry, manufacturing, providing access to corrupt money and economic power) while neglecting the social needs of its people. On the contrary, in northern Europe, the countries have privatized the producing sector and socialized the people's core needs, such as health, education, and welfare. Even "democracy" in Latin American countries has often been, and still is, superficial, as in other countries worldwide running sham elections to lay claim to be democratic.
Europeans understand what Social Democracy or Democratic Socialism means in practical terms, but again, the perception and reality vary greatly from Spain to Norway and from the UK to Hungary. Keeping a particular voter's political compass steady, the voter can still be a Conservative in Denmark, Germany, and Spain, be Labor in the UK, and a Democrat in the USA. Is the Danish socio-economic system Socialism, as Bernie Sanders proclaimed? If we Google the response to the question, we get various answers, most notably from people in Denmark telling Sanders that Denmark is not a socialist country. So, what is it?
Denmark has a capitalistic market economy regulated by the people through a functional progressive democracy. The elected officials are not motivated or guided by outside money; therefore, they can speak their hearts and minds freely, providing a more equitable and just society with an ethical decision-making process. That does not mean the Danish political system does not have power struggles and fierce competition.
As to the definition of the Danish or Scandinavian socio-economic reality, instead of Democratic Socialism, I suggest Progressive Capitalism, which is a much better term and easily understood. Going into the details about how Progressive Capitalism works in Northern Europe will be far-reaching for this blog, but explaining the distinctions in general terms is essential.
With its elected officials, the public sector serves the people, guaranteeing education, healthcare, road infrastructure, public transportation, security & defense, and social security. There is little money in politics, and the Scandinavian countries rank among the least corrupt nations on earth. Denmark is number one (1), the United States of America is number twenty-two (22), and just for reference, Russia is number one-hundred-thirty-eight (138) on the list of least corrupt countries.
The private sector in Denmark manufactures and delivers goods and services like any other capitalistic system with a competitive market economy. Essentials, e.g., pharmaceuticals, utilities, and the environment, are regulated through negotiations just as the utilities are in the USA. Without money in politics, favorable long-term policies and incentives become the norm, and the consequent regulations spur innovation, as does market competition. A good example is the energy sector in Denmark, with an ever-increasing output of renewable energy.
Private businesses and industries in Denmark pay a relatively low tax rate, adapted to the neighboring countries to keep as many jobs as possible. Any company's cost structure is easy to define. A company does not need to pay health insurance or retirement benefits for its employees and cannot risk employee benefits by holding their money. Money and benefits earned are money and benefits paid, whether working ten, fifteen, or forty hours a week. The value-added tax system provides an additional competitive advantage compared to the added sales tax in the USA. The environment for private enterprise in Denmark is exceptionally healthy, and for entrepreneurs, it is easy to start a new business. Businesses have the enormous advantage of drawing on an educated pool of potential employees, Denmark's main raw product. Copenhagen, the capital of Denmark, has recently been identified as the best city in the world for starting a new business. It is a far cry from Caracas, Venezuela, which is probably near the bottom of that list.
A citizen in Denmark will pay a progressively higher tax rate, from thirty to seventy percent, for top earners, as was once the case in the USA. Besides, workers and many in management will pay a union fee covering unemployment benefits.
On the other hand, economic disasters never linger around the corner. The citizens do not pay for health insurance; however, they pay for pharmaceuticals up to a maximum, and they do pay for all nonessential dental care. Tuition is free through university, but not only is the education free, but a student also receives a stipend subject to the parent's income to cover living expenses. If students want more money to spend, they can work, for example, at McDonald's, making twenty-plus dollars an hour, or take out a student loan. They will pay taxes on their earnings, but their net income is almost double that of the minimum wage in the USA without having to worry about healthcare and tuition. Finally, employees can change jobs without losing healthcare, earned vacation, or retirement pay.
The social safety net covers those who, due to their conditions, do not work, cannot work, or have retired. One will receive a minimum monthly payment and maybe a partial housing subsidy. This safety net enables retirees, or those in dire circumstances, to live with dignity at a baseline level. A thesis from nineteen-hundred-and-sixty states that in any country, approximately ten percent of the population cannot or will not cope with civil society, whatever the reason might be - from mere laziness to medical incapacitation. If the thesis is correct, there are two solutions. (A) To accept that a fellow citizen must live in poverty, with the inevitable result of increased criminal activity, prison, homelessness, and other consequences undoubtedly detrimental to all of the citizens, or (B) Provide a social safety net for those in need, to live decent and dignified lives, ultimately to the benefit of all the citizens. Denmark chose the latter and has continuously adjusted its social experiment over the past sixty years. To avoid complacency and permanency of unemployed or underemployed citizens, those with a temporary condition will have voluntarily/obligatory job placements or free re-education/training programs.
Capitalism is alive and well in Denmark. Does Denmark have millionaires and billionaires? Yes. In any prosperous society, there must be a path to extreme success. Analyzing the private sector in Denmark, we will find (comparatively per capita) more successful people and international corporations than anywhere else in the world. Is there a private health insurance market? Yes. One can choose luxury medicine and health insurance that covers it. Are there elitist private schools? Again, the answer is yes. Are there poor people in Denmark? Technically yes. The Danish poverty rate is 0.5% versus 11.8% in the USA, but in Denmark, no one lives in misery without healthcare and housing. Is everything then worse in the USA? Of course not. There are other advantages to our system here in the USA. Denmark and the USA are two of the most prosperous countries globally, and they have much to learn from each other's social experiments.
Progressive Capitalism is self-explanatory for a population with information overload, while the term Social Democracy needs explaining. The latter is misleading at best and does not express the true nature of the thriving economies with a high level of social justice, e.g., Denmark, Sweden, Germany, and others, which are genuinely capitalistic. The term Progressive Capitalism could gain an increased level of acceptance and, hence, a path to reducing the burgeoning inequality prevalent in too many parts of the world, including the United States. Further, it will prepare us for difficult times, meeting the challenges of the 21st Century. To use the term Progressive Capitalism will not curtail the essence of what makes America the most admirable country on earth. We are already on our way towards Progressive Capitalism.