Sehon Responds on Socialism

Here are Scott Sehon’s reflections on our TCU Capitalism versus Socialism Debate, as well as his reaction to my reflections. Printed with his permission. Enjoy!

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There is so much to say about these questions and Bryan’s points! I’ll be selective, not replying to everything he says, even when I still disagree, and I’ll also try (but mostly fail) to be brief.

The definitional question

Bryan notes that I define socialism in degrees along two axes, (a) degree of collective control/ownership of the economic means of production and (b) degree of egalitarian distribution of resources. He suggests that it makes more sense only to include (a), since it would be possible that one could have a system on which there was very little collective control but a great deal of equality in distribution of resources.

So why do I include the degree of egalitarian redistribution as part of the definition of “socialism”? Because if you had complete collective control or ownership of the means of production, but wildly unequal distribution of resources (which would be entirely possible), that would not be socialism according to any conception of it that I’m aware of. So as a matter of how the word “socialism” is typically used, the axis including degree of egalitarian distribution has to be there.

Yes, it might turn out that under a system with very little collective control, distribution of resources was largely equal. If there were actual examples of that, then that would be interesting, and it would show that there are governments that, because of the two-dimensional nature of my definition, do not fit neatly into a one-dimensional spectrum of capitalism/socialism. That’s fine. That’s the way two-dimensional characterizations of a term work: they are not one-dimensional.

Moreover, as I say in the chapter Bryan liked, we shouldn’t argue about words. If someone really wants to deny me the word “socialism” because they define it solely in terms of collective ownership, then that’s up to them. I’d say that they have an oddly idiosyncratic conception of the term, but I won’t argue about the word. Call what I am arguing for “Socialism*” or even “Sehon-socialism” if you want; it matters not, as long as we are clear about how I am using the term.

Scandinavian countries and the definition

Bryan says that I overstate the degree to which Scandinavian countries count as socialist, according to my definition. The Fraser ratings he cites include various factors that are orthogonal to the dimensions that I put as part of my definition—hence my decision not to list them simply as some sort of obvious measure of the degree to which there is collective control of the economy or egalitarian redistribution.

In terms of sheer size of government, as measured by government spending as percentage of GDP, here are OECD numbers:

General Government Spending as percentage of GDP:

Denmark                     54.5%

Finland                        56.5%

Norway                       49.3%

Sweden                       49.3%

United States               37.9%

On average, the Scandinavian countries thus have 38% higher government spending than the U.S. In terms of the OECD numbers of the percentage of the workforce in the public sector, it is even more dramatic: the Scandinavian countries have 83% more. In terms of regulation, the Fraser report gives the U.S. a ranking of 6^th in the world whereas the Nordic countries are much lower (meaning, in terms of the Fraser report, that they have more regulation). It is even more dramatic with respect to labor regulation.

I gave numbers concerning inequality levels indicating that, while there is still substantial inequality in the Scandinavian countries, it is far less than the United States. None of the data are perfect and one can quibble about sources and what should be weighed more heavily, but I think it is quite clear that the Scandinavian countries are significantly more in the socialist direction.

But, again, why quibble about words? Suppose Bryan were to grant me this much: “it would be good to go as far as the Scandinavian countries in terms of redistribution and greater collective control; I just wouldn’t count that as socialist.” Then I’d be pretty happy. Yes, I’d suggest going somewhat further, but I’d be happy with that huge concession. Of course, Bryan is not making any such concession, so I’m not sure what the point is of the definitional dispute about whether the Scandinavian countries count as moving in the socialist direction.

Inequality and data about overall well-being

My empirical claim here is that overall well-being is improved when we diminish inequality, and I presented a number of pieces of evidence concerning that, both the World Happiness Report and data about health and social problems, and child well-being. In each case there were clear correlations: people are better off in countries with lower inequality. I can repeat all that data if you like (some of it was presented on slides in the debate, with more of it in the book).

Bryan does not present contrary data showing greater well-being in countries that are more capitalist, but instead questions bits and pieces of my data, and notes in particular that the Scandinavians are not that much happier than people in more capitalist countries. And he questions that the explanation for their happiness has anything to do with the fact that they are further towards socialism. There are, of course, reasonable questions one can raise about any broad-scale data like this, and, of course, one can always question any move from correlation to causation. I have much more to say in the book about the data and the inference to an explanatory relation.

But note this: With all his efforts, Bryan is attempting to explain away data that, on their face, do not fit his thesis and do fit mine. That is hardly a positive case for his implicit claim that more capitalism will lead to greater well-being or that government “is terrible”.  If government is terrible for well-being, then given that the Scandinavians have (by the numbers given above) a lot more government than the United States, then why aren’t they a lot less happy than people in the United States? Bryan’s thesis about government and redistribution being terrible for well-being would predict the opposite of what we see. Again, he can then try to explain away the data that I presented in the debate, and then could go on to try to explain away the further data I present in the book. At some point in these efforts, it starts to look like Bryan’s belief that redistribution and collective control lead to less well-being is more akin to an article of faith rather than an empirically supported hypothesis.

The ”most frustrating part of the debate”

Bryan says that the most frustrating part of the debate was that I kept comparing Scandinavia to the United States instead of comparing his ideal to my ideal.  By way of explanation, let me say two things.

1. I’m not sure what my ideal is. I’m actually being driven by data in saying that more egalitarian distribution and more collective control lead to greater well-being. Various data indicate strongly that we can increase overall well-being by decreasing inequality, and this is hardly surprising given that money has diminishing marginal utility. How far can we go in this direction without, for example, destroying incentives that might be necessary to get people to be productive? That's an empirical question. I think that the data suggest that we can go a fair bit further than the Scandinavian countries, but I don’t know how far. It may be frustrating to Bryan that I don’t know how far we should go and thus don’t have a preconceived ideal, but it seems that my approach at least has the virtue of intellectual honesty and humility: I’m looking at data and adjusting my theory, rather than having a preconceived ideal and then explaining away contrary data.

2. Bryan’s professed ideal (at least the next day in the class session if not in the debate) involved either no government (just privately run police, courts, etc.) or extremely minimal government. We have no data points on any country matching that ideal, because there aren’t any such countries. We do have the data indicating that countries that have less redistribution have more problems and are unhappier, so that would seem to indicate that if we went even further to Bryan’s extreme, we could extrapolate and infer that we would then have less happiness and well-being. I also make some general arguments in the book to the effect that there are various areas of economic activity where the positive arguments given for the effectiveness of markets clearly fail, and that too would indicate that Bryan’s extreme ideal would lead to less well-being. But the fact remains that we have no direct data on countries that try Bryan’s model—certainly none that I am aware of or that Bryan presented.

Rights and socialism

Bryan suggests that there is some right to private property or freedom of contract that would be violated by socialism. He doesn’t specify the contours of this right. At one extreme, one might claim that people have the right to keep any property currently in their possession; it would follow from this that it would be a violation of rights for there to be any taxation whatsoever. Is that Bryan’s position? That even if well-being is significantly enhanced by having taxation and government services, that any taxation is a violation of rights and thus should not happen? Or is he proposing some more carefully circumscribed property right that would still allow states to impose some taxes? I don’t know. Different replies would be in order depending on the position he takes. So I won’t say more here, though I can point you to a detailed discussion of rights in chapters 3 and 4 of my book.

Like Bryan, I will reiterate thanks to the organizers of the debate, Sam Arnold and Rob Garnett. And I would thank Bryan, both for a productive and honest interchange of ideas and for posting this reply.