New Democratic Socialism and Marxist Theory

In the coming months, the voters in our country are going to hear a discussion about “Democratic Socialism”. Defenders of this new “Democratic Socialism” argue that the Soviet Union was an aberration of socialism and was not the norm. The new groups that are now pushing this new generation of “Democratic Socialism” claim their vision and version is a kinder and gentler socialism, with democratic inclusiveness, social justice, and egalitarianism for all. 

These new advocates claim to reject the socialism of the Soviet Union and claim any attempt to link their version to the old Soviet Union socialism is an attempt to throw their ideas into disrepute through guilt by association. The problem with their argument is that any claim of socialism that is based on class conflict is still based on Marxist theory and forms. 

The claim about the “one percent wealthy” is merely a modification of Marxian terminology concerning the concentration of wealth in private owners who extract unearned output at the expense of workers they employ. Marxist theory claims the true value of goods must be a reflection of physical labor expended to produce an item, and capitalists’ profits represent an unjust taking of a portion of surplus value produced by workers hired by private business. 

What the “Democratic Socialism” proponents fail to understand is that profit is not exploiting extractions from the labor of workers, but a reward earned by entrepreneurs for successfully anticipating the future direction of consumer demand and being able to meet the demand in an open market. These entrepreneurs and businesses were willing to take risks with no guarantees.  

Some supporters of American style “Democratic Socialism” point to democratic socialism in the Nordic model found in Sweden, Finland, Netherlands, Norway, and Denmark.  The Prime Minister of Denmark remarked recently, “I would like to make one thing clear. Denmark is far from a socialist planned economy.” In fact, “Denmark is a market economy.” 

Here is a comparison of the consumption tax, social security tax, and payroll tax paid as a percentage of GDP for each country:

Sweden 27% Norway 22.3%

Finland 26.3% Denmark 14.9%

Netherlands 25.1% United States 10.6%

So what would “Democratic Socialism” look like in the United States?  So far, what I have been able to glean from the candidates who are pushing the agenda are the following key elements:

  1. Higher personal and corporate tax rates and higher government spending as a percentage of GDP.
  2. More worker protection restricting the ability of companies to hire and fire, and less flexibility for companies to set wages based on worker productivity and to employ foreign workers.
  3. More reliance on regulations, more constraints on real-estate development, more anti-trust enforcement, and more state intervention in product markets.
  4. Less value for shareholders.
  5. More protection for workers and domestic industries through tariffs and non-tariff barriers. 
  6. More constraints on capital inflows and outflows.  

Eventually, voters will realize the so-called “Democratic Socialism” does not exist and the ideas being proposed are simply the old Marxist rhetoric with better marketing. Remember, if it walks like a duck, swims like a duck, and quacks like a duck – it’s a duck.