No one should hold a belief unquestioningly. I’m a Socialist, but there are lots of matters on which my mind has been changed by the evidence. For example, I used to be quite anti-market, in a Polanyian sense, now I’m less convinced that non-market institutions will work as well as they could. A market seems like the only rational way to distribute iPods, food or housing; so long as we ensure people can afford what is on offer through their wage or a direct transfer then a market in goods is a good thing.
I once believed the positives of Maoism; an educated, healthy, disciplined workforce with a diversified set of infant industries (for the per capita income) outweighed the negative; the Great Leap Forward and the Cultural Revolution. When you consider how badly China had been run up until 1949 and how badly it still would have been run in Mao’s absence I found it hard to condemn what Mao left behind (even if it was easy to condemn what Mao did to get China there). These days, I’m less sure that Taiwan’s rulers wouldn’t have been as successful on the mainland as they have been in Taiwan.
Something which is important for Socialists to consider is that some of the things they hold dear may be mutually exclusive.
I quite like the idea of humanity progressively getting richer. By that I mean continuing increases in productivity being used to make and do more stuff from fewer resources (with some of this increase in making and doing being taken as increased leisure). I also like the idea of a more equal society. What if the two of these are at odds with one another? What if a little bit more equality leads to a little bit less growth.
A price worth paying, perhaps? Jimmy Reid said that he was “prepared to sacrifice a margin of efficiency for the value of the people’s participation.” And many on the left echo this statement. However, many on the left have not heard of the most powerful force in the universe, compound interest. A small reduction in growth, become a big reduction in wealth in a surprisingly short amount of time. If an unequal economy growing at 3% a year can purchase equality by sacrificing just 0.5% annual growth, would I make that deal? In the short run, you bet, but in the long run, I’m not completely sure I would.
I used actually existing income distributions of the UK in 07/08 and Norway in 97/98 so I could emphasise that these are realistic income distributions, not wishful thinking. I used 3% and 2.5% GDP growth figures because a small difference allows me to make my point even more strongly and because they are roughly realistic historical figures. For ease of comparison I’m assuming social mobility is the same in each country and that there is no population growth or demographic decline etc.
Our countries start with an equal income, represented in the below graph. 70% of Redland’s people are better off than their compatriots in blue land and even the top 30% are still doing pretty well. The poorest 10th in Blueland take 1% of income, compared to around 4% in Redland. Whether you’re looking at minimising your chance of the worst outcome, or maximising you chance of a relatively higher income, Redland wins handsdown.
However, things change as we mover through the generations and tiny differences in growth compound over time. After 30 years, 60 years and 100 years our societies become radically different. After one generation (below) Redland is now about 5% poorer than Blueland, but still much more equal and what I would call a fairer society. Bottom half of Redland society are wealthier than the bottom half in Blueland.
After 100 years, a few generations (below), the material benefits of a more equal society more or less vanish as everyone bar the very poorest become worse off than they would have been in more unequal Blueland. (A similar trend is visible after two generations, but become particularly pronounced after a century.)
Is it beneficial for everyone to be slightly worst off if the non-material benefits are great enough? There are many arguments out there that an equal society provides many benefits that an unequal one cannot; lower crime, happier people, less mental illness, better quality of life. Does the benefit of knowing you’re a member of an equal society outweigh the cost of simply not being as wealthy? These are empirical claims, and if we are honest, we don’t know either way.
Is it fair that in 100 years time a generation will be about half as wealthy as they could have been? It is impossible for us to know what choices that generation would have made. Perhaps equality is worth the price, but without knowing what the unborn think we would be exploiting those not yet born to purchase ourselves some equality.
Is it desirable to be poorer? This is not just a case of quantitative differences, if we end up in Redland in 100 years not Blueland, there will not just be fewer iPods and smaller housing. In Blueland we are on a manned mission to Mars, in Redland we can’t afford it. There may be diminishing returns to greater prosperity, but are they such that it is worth everyone being a little bit poorer in the long run?
Would Jimmy Reid (and am I) still be happy to “sacrifice a margin of efficiency” if it led to nearly everyone becoming poorer? Well, I cropped Jimmy Reid early. He didn’t just say he was “prepared to sacrifice a margin of efficiency for the value of the people’s participation.” He actually added “in the longer term, I reject this argument.”
As do I. I contend that Socialism as I see it, not a capitalist market economy with tax credits thrown on top, would not reduce growth. A Socialism in which the information and knowledge of normal people working in democratic workplaces would operate more efficiently and more equitably that modern managerial capitalism. However, if a fairer society as I imagine could be shown to consistently reduce growth then my life as a Socialist would become far more problematic.