The excitement surrounding Bernie Sanders’ presidential bid has many on the left hoping that Americans are ready to embrace socialism. That would be something. After the Republicans renominated Richard Nixon in 1968, James Reston of the New York Times called Nixon’s victory at the convention “the greatest comeback since Lazarus.” If Sanders raises socialism from the dead, that resurrection will surely top Nixon’s.
So, just what is
Sanders’ socialism? As analogs to his own program, Sanders points to the policies of Franklin D. Roosevelt’s New Deal and the social democracies of northern Europe. As a liberal, I find a lot to like about both of those. But Sanders’ portrayal of democratic socialism as nothing but the New Deal is a disingenuous sleight of hand that plays on foggy historical memories. And his comparison to Nordic social democracy is equally misleading: Much of Sanders’s platform ignores the economic realities that European socialists long ago accepted.
Many people may be inclined to interpret Sanders’ calls for a revolution as just a rhetorical flourish. I think we should take it seriously. His policies are rooted in a socialist framework rather than a liberal one. And despite what Republicans may say, there’s a big difference between socialism and liberalism. Democrats and independents attracted to Sanders ought to think twice before shrugging off his self-description as a socialist.
Politicians can try to give words their own spin—see the debate between Sanders and Hillary Clinton over the meaning of “progressive”—but they cannot insist on public amnesia about what those terms have signified before their campaigns. Socialism has a history, and Sanders himself has a history as a socialist. Both of those are relevant to understanding Sanders’ proposals and where he wants America to go.
The term
“socialism” first came into use in the 1830s in France and Britain, just around the time the word “individualism” was being popularized. Socialism primarily referred to socializing private property, putting it either in communal ownership (as in the experimental communities of that era) or in the hands of the state. After the experimental communities faded or failed, socialists focused on state ownership of the means of production and state planning of the economy.
Social insurance programs—worker’s compensation, unemployment insurance, health insurance, old-age pensions—had other origins, chiefly as a response of anti-socialist governments to the rise of socialism and labor unions, first in Germany under Bismarck in the 1880s and later in other European countries, including Britain a quarter-century later under the Liberal Party’s David Lloyd George. Lloyd George also introduced a more progressive income tax shortly before the United States ratified the 16th Amendment in 1913, enabling Congress to pass an income tax under Woodrow Wilson.
The policies distinctively associated with socialism—nationalization of industry and economic planning—had disappointing results where they were adopted. They were notably unsuccessful in adjusting to economic change and generating high rates of innovation. The political pressures that governments face restrict their ability to make tough but necessary economic decisions—to shrink industries in decline and reallocate capital to areas of growth.
During the mid-20th century, the United States was fortunate to avoid the program that socialists were calling for at that time. While Roosevelt experimented with different strategies in the New Deal, he did not undertake any large-scale nationalization, and the primary legacies he left behind were Social Security and regulatory agencies that not only maintained capitalism but also saved it from self-destructive excesses. Far from embracing socialism, Roosevelt rejected it and ran against socialist opponents, who had no doubt that socialism and the New Deal were very different.
As the old socialist program of state ownership and planning became harder to defend in the era after World War II, “social democrats” and “democratic socialists”—terms intended to emphasize they weren’t Bolsheviks—championed expanded social-insurance programs and progressive taxation. These redistributive policies have been at the heart of the northern European model Sanders invokes, except that he misses one key aspect of it. Based on a “class compromise,” that model includes trade and tax policies sought by business. The northern European countries tax labor and consumption heavily, but they have open-trade policies and lower taxes on capital to foster growth.
The Vermont senator calls for increasing the top marginal tax rate on capital gains to 64.2 percent, which would not only be nearly triple the current rate and a peacetime record in the United States but also far higher than in any of the countries Sanders admires. In contrast, Denmark’s tax rate on capital gains—the highest rate in Europe—is 42 percent; France’s, 34.4 percent; Sweden’s, 30 percent; and Germany’s, 25 percent. Under Barack Obama, the U.S. rate has risen from 15 percent to 23.8 percent, a significant increase but well within both recent U.S. experience and current patterns abroad.
Sanders’ 64.2 percent capital gains rate actually understates the full brunt of his program. He also advocates a significant financial transaction tax (FTT), which would tax losses as well as gains. (We currently have a tiny FTT, which pays for the Security and Exchange Commission, but Sanders is talking about one that will be big enough to finance free college tuition for all.) Add in state taxes on capital gains averaging about 4 percent nationally—and reaching 13 percent in California—and there is little doubt that Sanders’s capital gains tax is at counterproductive levels. With total marginal rates approaching 70 percent, people would hold on to appreciated assets rather than sell them. As a result, government revenue from the tax would fall. So would new investment, with serious repercussions for economic growth.
Sanders gives no indication of even considering these difficulties. Whenever he talks about taxing “Wall Street,” he frames it as a repayment and a punishment for past financial misconduct. The business model of Wall Street, he says, is “fraud.” And so he calls for taxes at confiscatory levels—economic consequences for the country be damned.
Sanders’ single-payer health plan shows the same indifference to real-world consequences. The plan calls for eliminating all patient cost sharing and promises to cover the full range of services, including long-term care. With health care running at 17.5 percent of gross domestic product, Sanders’ plan would sweep a huge share of economic activity into the federal government and invite that share to grow. Another way of looking at single payer is that it would make Washington the sole checkpoint, removing the incentive for anyone else—patients, providers, employers or state governments—even to monitor, much less hold back, excessive costs. It would leave no alternative except federal management of the health sector.
Although Sanders often justifies his plan by referring to Canada and European countries, they generally achieve universal coverage without the degree of centralization he is calling for. The Canadian system is financed and run at the provincial level. Many European countries have multiple insurance funds and institutionalized bargaining among stakeholder groups, with power devolved on regional bodies. As in the case of tax policy, Sanders’ policies are more traditionally socialist than those of most of the countries he invokes as models.
Sanders’ program reflects his life commitments. In some respects, his biography recapitulates the journey of socialism itself. When he was in his 20s, Sanders worked on a radical kibbutz in Israel—the communal socialist phase. In 1979, he produced a video about the longtime Socialist Party leader Eugene Debs; on the soundtrack, released by Folkways Records, you can hear Sanders performing Debs’ speeches calling for an end to capitalism. In 1980, Sanders served as a presidential elector for the Socialist Workers Party, which supported the nationalization of industry and expressed solidarity with revolutionary dictatorships, including Iran (this at the time Iran was holding American hostages).
As he has pursued a political career in Vermont and as a member of Congress, Sanders has repositioned himself close to liberals, while denying he was a Democrat until the current campaign. But even now his worldview and the policies he is advocating are consistent with his old faith. He is still calling for a “revolution” to achieve socialism, blasting the “ruling class,” endorsing taxes at confiscatory levels and proposing a health plan that would effectively nationalize a sixth of the economy. Summing up his proposals, left-of-center economists estimate that it would increase the size of the federal government by 40 percent to 50 percent.
Sanders is also doing what populists on both sides of the political spectrum do so well: the mobilization of resentment. The attacks on billionaires and Wall Street are a way of eliciting a roar of approval from angry audiences without necessarily having good solutions for the problems that caused that anger in the first place.
In the wake of the 2008 financial crisis and the government’s failure to prosecute those responsible for it, many Democrats are legitimately angry and therefore receptive to this kind of appeal. Whether socialism is what they want is another question. Some writers on the left point to the Des Moines Register poll before the Iowa caucuses, in which 43 percent of likely Democratic caucus-goers said they would use the word “socialist” to describe themselves, compared with 38 percent who would use the word “capitalist.” But among the general population, the socialist label is still largely a political taboo. In a June 2015 Gallup poll asking voters whether they would support candidates with certain characteristics, “socialist” was a disqualifier for more voters (50 percent) than any other attribute, including “Muslim” and “atheist.”
Receptivity to the socialist label is higher among the young. But as Nate Silver of FiveThirtyEight has pointed out, public opinion data on preferences about the size of government among young people do not show a shift toward a socialist worldview. A higher rate of self-identified “socialists” is more about anger at capitalist excess than it is genuine socialist fervor.
Since Republicans have been calling Obama a socialist for the past eight years, the label socialist may seem to many to be a synonym for progressive or liberal. But the differences between socialism and liberalism are fundamental. At its core, liberalism has a concern for liberty. While liberals have expanded public programs, they also have sought to strengthen rights that limit arbitrary power, both governmental and private. Liberals do not sanctify the free market, but they care about preserving the incentives that stimulate innovation and investment and make possible a flourishing economy.
Socialism and Sanders have their heart in a different place—economic equality before all else. Socialism is still the dream of those who don’t worry about concentrating power in the state or about the perverse effects of making goods and services available at a zero price. To bring socialism back from the dead wearing New Deal liberalism as a mask is no service to either. Socialists should know the difference, and liberals should too. After feverish right-wing accusations that every liberal proposal is tantamount to socialism, the last thing liberals need is a Democratic presidential candidate blurring that line.
