Ever since the financial sector bailout process started seven months ago, there has been quite a lot of talk about socialism. Over the past 30 days, Google News records 8,251 matches for "socialism" or "socialist" within American media outlets along. Most of this talk has been extremely naïve and uninformed. The most frequent abusers of the term, conservatives, have lobbed the charge around as though there was a switch governments flip in order to change from "capitalist" to "socialist." The general presumption seems to be that an economic system is either socialist or capitalist, and that the two systems are mutually exclusive.
This is, of course, hogwash. Every economic system in the modern world has elements that are both capitalist (private ownership and / or administration) and socialist (public ownership and / or administration). The two co-exist alongside each other, as they have done in every economic system since the beginning of time. Unless you want to make the postal service, police and fire departments, military, and education 100% private, then you are proposing a certain level of socialism. The fundamental ideological debate over economics is not whether the economy should be socialist or capitalist, but what proportion of it should be capitalist and what proportion should be socialist.
(total projected 2009 public expenditures minus intra-governmental transfers / projected 2009 Gross Domestic Project)
Now, one area where the conservatives are not wrong is that we are witnessing an increase in socialism in America. Last year, America was only 37.0% socialist, and 63.0% capitalist. From 2002-2007, the standard range was 35.3%-35.7%. In 2000, the year before Bush took over, the USA was only 33.0% socialist. Since the mid-1970's, public expenditure a as a percentage of GDP has consistently hovered in this 33%-36% range, no matter which parties controlled Congress and the White House, and no matter if there was split or single-party government. However, with the various government bailouts, the jobs / stimulus package, and President Obama's expanded budget, the last year has seen a break with a longstanding 65%-35% capitalist / socialist split in America. Currently, we are roughly a 55%-45% capitalist-socialist country, with future numbers probably settling around 60%-40% capitalist-socialist, as our various bailouts and wars (hopefully) wind down, and (hopefully) economic growth picks up again. (Yes, socialism can also be right-wing, even if it means war spending funneled to private contractors.)
Given that we are only talking about a temporary, 10% increase in socialism in America, and a long-term 5% increase, one might wonder what all the brouhaha about socialism is these days. However, if you consider that the entire range of mainstream socialist vs. capitalist debate in all wealthy democracies on Earth is over where whether we should be 29% socialist (South Korea), 61% socialist (France), or somewhere in between, a 10% shift in one year is a pretty big deal. As I show in the extended entry, the recent shift noticeably alters the location of the United States in the socialist-capitalist continuum relative to other major nations.
With the exception of the United States and the United Kingdom, where better data is available (see here for the US and here for the UK), the following data comes from the CIA World Factbook. It measures the percentage of socialism in major world economies by dividing real government spending by nominal GDP for selected countries (numbers for all countries except the UK and USA are from 2008):
Levels of socialism in G-20 nations, plus selected other economies Cuba: 81.4%*
United States: 44.7% (2009) United Kingdom: 42.1% (2009)
Saudi Arabia: 40.4%
United States: 35.5% (2007) South Africa: 33.9%*
South Korea: 29.3%
* = officially, or at least famed for being, communist or socialist
Even though I don't entirely trust the CIA World Factbook's numbers (not to mention the blog to which I linked, which seems highly dubious, but unfortunately there wasn't much else available for international public spending information), there is still a lot of fascinating bits in these numbers:
The G-7 is practically socialist: The G-7 nations of large, wealthy democracies (Canada, France, Germany, Italy, Japan, United Kingdom, United States) is actually the most socialist force on the planet right now. Collectively, the combined economy of those seven countries is 45.2% socialist, and the median in 48.2%, for nearly an even mix between socialism and capitalism. Forget the Soviet Union and forget China--the new face of socialism is wealthy, largely post-industrial, liberal democracies.
Wealthier nations much more socialist than poorer nations: With the exception of a few countries that are either officially socialist or famed for their socialism (Cuba, Angola, Libya, Venezuela), public spending as a percentage of GDP is, on average, much higher in wealthy democracies and in emerging economies. The BRIC countries of rapidly expanding economies, Brazil, Russia, India and China, all lag far below in terms of overall socialism than the more developed economies. America is, for example, twice as socialist as China.
US closes in on Europe: In just two years, the United States has almost, but not quite, entered the normal range of Western European socialism. However, much of that is inflated through our enormous military spending, without which we would be down around 40% socialist. We are becoming more socialist, but we would still have a long way to go to catch western Europe.
A narrow ideological range: Within large, wealthy democracies, the socialism range is rather small: from 29.3% in South Korea to 61.1% in France. Given such a range, perhaps a capitalist in these countries advocates for between 25%-38% public spending as a percentage of GDP, a moderate advocates for 39%-51%, and a socialist advocates for 52%-65%. I think, at least in the abstract, that I am a moderate on this scale, but very close to the socialist range. In theory, I'd consider myself a 51% capitalist, but every program and industry sector needs to be reviewed on its own merits.
Hopefully, this article will help demystify the term "socialism" a little bit, and move us toward a more adult, informed understanding of the terms. Anything would be an improvement over the hysterical charges of "socialism," as though simply saying the word is enough to win an argument, being hurled from the right. All economies operate along a socialist-capitalist continuum and, within wealthy democracies, a pretty narrow continuum at that. Once we realize that everyone is part socialist and part capitalist, the sooner we can have a more sober, realistic discussion about the economy.
Update: To those in the comments who claim that public expenditures do not equate to socialism in and of themselves, and argue instead that public expenditures must be coupled with ownership and an equitable distribution of resources, I have the following rebuttals:
Self-described socialists do not have exclusive control over the definition of the term "socialism." Words have varying meanings. Abtractions have even more variation in their meanings. Political abstractions have the most variation of all. Socialism is no different.
Definitions of socialism from conservatives simply cannot be dismissed out of hand because you don't like those definitions. Language is always a communal, collective repository over which no one has ownership. Competing definitions of socialism exist, and must be taken into account in any broad classification attempt such as this post.
The definition I am using--public or state-based redistribution of economic resources--is the broadest and most widely accepted definition by all parties. Left and right-wingers alike would agree that is an essential element of socialism. After that point, there probably isn't any agreement on what the term actually means. As such, I am using the broadest, most widely accepted definition available.
Taxes and regulations are a form of ownership and administration. Individuals and businesses pay taxes because the public is legally given an ownership stake in income of almost every kind.
Similarly, regulations are a form of administration. Whether it is mandating a minimum wage, dictating what ingredients can and cannot be used in products sold over the counter, or declaring where garbage can and cannot be dumped, regulations play a role in the administration of virtually every business in this country.
If regulations and administration aren't a form of ownership and administration of the economy, then I don't know what is.