5 July 2012
What does it mean to be a socialist in the 21st century, in the wake of a century of failed socialist and communist social experiments? We have already seen the use of the phrase “21st century socialism,” particularly in the work of Heinz Dieterich Steffen, who has been influential in Latin America. Dieterich has been a professor at the Universidad Autónoma Metropolitana in Mexico, D.F. since 1977; I first heard about him when I was in Ecuador in 2009. Dieterich has been closely associated with the left-leaning governments of Venezuela and Bolivia.
Partly under Dieterich’s influence, and partly simply using his slogan of socialism of the 21st century, Venezuela, Bolivia, and to a lesser extent Ecuador engaged in a so-called Bolivarian Revolution. But the Bolivarian Revolution has fizzled. Recently there was a good critique of the movement in Foreign Policy magazine, The Bolivarian Legacy by Douglas Farah, subtitled, “Hugo Chávez and his leftist allies will leave little behind other than failed economic policies, massive corruption, and shrinking political freedoms,” which pretty much sums up the author’s conclusions. I would have framed it even more strongly. There is absolutely nothing whatsoever “new” or “revolutionary” or “twenty-first century” about caudillo-style politics masked by claims to represent “the people.”
So much for twenty-first century socialism in Latin America. Now it seems that we are to find out want twenty-first century socialism means in France under the new president François Hollande. This, I think, will be rather more effective and more of a movement to reckon with, than the tendentious ideological formulations of Heinz Dieterich. Hollande is a career politician, and he will act as a politician, which is to say he will rule by policy, in the context of his party, and employing the institutional structures of the French government, which has been a strongly centralized state since the Sun King turned France into an Enlightenment superpower united under absolute monarchy. This is more about institutions than it is about personalities. By all accounts, Sarkozy was much more of a “personality” than Hollande.
The Financial Times ran two stories in today’s paper, Wealthy hit hardest as France raises taxes by Hugh Carnegy in Paris, and France: Ready to jump ship by Hugh Carnegy and Scheherazade Daneshkhu, both detailing French plans to dramatically raise taxes and to place salary caps on executives.
These policies will have a strong selective effect. Some wealthy people will leave France and take their businesses with them — perhaps many will do so. David Cameron has already promised to welcome French “tax exiles” to the UK:
“If the French go ahead with a 75% top rate of tax we will roll out the red carpet and welcome more French businesses to Britain and they will pay taxes in Britain and that will pay for our health service, and our schools and everything else.”
Thus France will lose some of its wealthiest citizens, some of its businesses, probably some international investment, and it will likely decline in growth, productivity, and competitiveness. If you want to start a dynamic new business in Europe, and believe that it may come to be worth a lot of money, you certainly won’t try to start that business in France.
That being said, is this policy necessarily ruinous for France? The answer to this depends upon how you define “ruinous.” I have no doubt that there are many who will characterize the developments in France as ruinous, or something similar, but it is to be observed that Hollande is not trying to foment a social revolution, he isn’t proposing the European equivalent of a Bolivarian Revolution, and he isn’t laying plans for mass nationalizations and confiscations, although the tax levels are already being called “confiscatory.”
I would not be at all surprised to see France settle into a comfortable if stagnant and ever-so-genteel decline — a decline that may be as comfortable to the majority of French citizens as Japan’s “lost decade” was to a majority of Japanese. Japan was and is a very wealthy country. It no longer aspires to great power status, and so its people could be relatively comfortable even in the midst of extended stagnation. Similar observations hold for France: France was and is a wealthy country; it no longer aspires to great power status, and so its people could be relatively comfortable even in the midst of extended stagnation. Moreover, mass sentiment in France may well be on the side of an economic leveling that will eliminate France as a major global economic competitor, but will nevertheless confirm the people in their moral rectitude; and in feeling that they are in the right, the people may be more satisfied with this moral stance than they would be with higher economic growth rates, especially if part of the growth rate is eaten up by executive salaries and shareholder dividends.
What I am saying is that Hollande’s variety of socialism may well be sustainable, especially in France, and perhaps also elsewhere in Europe. France could become a place that is perhaps not very economically vibrant, but one where the needs of the people are met with a reasonable degree of comfort (rather better than the comfort provided by the socialist economies of Eastern Europe behind the Iron Curtain), where freedoms and human rights are respected (rather more respected, again, than behind the Iron Curtain), and where the gap between the poorest and the wealthiest is systematically narrowed by legislation.
A sufficient number of “true believers” in the cause of France will remain in France to keep the major enterprises functioning, even if they could earn many times more if they went elsewhere. As I noted above, Hollande’s policies will be strongly selective. Those for whom wealth is of paramount importance will choose to leave; those for whom France, and being French in France, is of paramount importance, will choose to stay. From this selective process, France may gain in French nationalism even as it declines in economic competitiveness. A socialist France cannot expect to be a global economic competitor, but if it can keep the lights on and the people fed, this may be more important to the French masses than improving standards of living.
It has become an almost irritatingly repetitive commonplace that mathematicized economics cannot account for all the forces and complexity of an economy. I do not deny that this is true. A mathematical model is always a simplification that derives its predictive power precisely from being simpler than reality. There is no point is constructing a model that is a duplicate of the phenomenon to be modeled; the map, as we all know, is not the territory. Usually when this “criticism” of economics is made it has a strong moral slant to it, but surprisingly the criticism often misses some of the most important moral truths of economic life: that sometimes people will prefer to be poor and proud rather than to be slightly wealthier but at a moral cost they are unwilling to pay.
This is one formulation of socialism — trading moral rewards for economic rewards — though not one the socialists are likely to endorse. The tradition of socialist and communist thought is so steeped in absurd fantasies of maximized abundance in which, “each man’s share of labour would be light, and his portion of leisure ample” (in the words of Malthus), that it is all but impossible to get them to see that they are trading wealth for moral rectitude. And if that is what people want, that is what they will get.
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