Section I: Definitions of "Social Democracy" and "Socialism"

is a political ideology that supports economic and social interventions to promote social justice within the framework of a capitalist economy, and a policy regime involving welfare state provisions, collective bargaining arrangements, regulation of the economy in the general interest, redistribution of income and wealth, and a commitment to representative democracy. Social democracy aims to create the conditions for capitalism to lead to greater egalitarian, democratic and solidaristic outcomes.

rejects the social-democratic view of reform through state intervention within capitalism, seeing capitalism as incompatible with the democratic values of freedom, equality and solidarity. From this perspective, democratic socialists believe that the issues inherent to capitalism can only be solved by a transition from capitalism to socialism - by superseding private property with some form of social ownership.

is a form of socialism with a democratic government; the ownership and control of the means of production, capital, land, property, etc., by the community as a whole -- combined with a democratic government.

the social and economic system characterized by social ownership of the means of production and co-operative management of the economy.

'Social ownership' may refer to cooperative enterprises, common ownership, state ownership, citizen ownership of equity, or any combination of these. There are many varieties of socialism and there is no single definition encapsulating all of them. They differ in the type of social ownership they advocate, the degree to which they rely on markets or planning, how management is to be organized within productive institutions, and the role of the state in constructing socialism.

the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange.

secure for the workers by hand or by brain the full fruits of their industry.

the socialism he advocated was different from traditional conceptions of socialism.

ethical doctrine that views social-democratic governments as having achieved a viable ethical socialism by removing the unjust elements of capitalism by providing social welfare and other policies.

publicly declared support for a 'new capitalism,'

socialism as a rigid form of economic determinism has ended, and rightly.

contemporary socialism had outgrown the Marxian claim for the need of the abolition of capitalism.





Section II: Merits of Market Capitalism

an economy or economic system consists of the production, distribution or trade, and consumption of limited goods and services by different agents in a given geographical location. The economic agents can be individuals, businesses, organizations, or governments.





Section III: The Flaws of Marxism





Section IV: Merits of Market-Based Distribution

the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.



Socialists who are opposed to markets do not take into account the economic calculation problem in the face of scarcity. They also overlook how humans respond to incentives, and how the capitalist system provides people with incentives to allocate goods efficiently and to innovate. Capitalism also empowers individuals: consumer sovereignty, dollar votes, and voluntary exchange.









Interestingly, after the USSR collapsed, the U.S. sent Peace Corps volunteers to Russia who had MBAs and/or business experience to assist in building Russia's newly formed private sector.









Section V: Social-Democratic Policies

The Audacity of Hope





the available evidence provides little support for the view that U.S.-style labor-market flexibility dramatically improves labor-market outcomes. Despite popular prejudices to the contrary, the U.S. economy consistently affords a lower level of economic mobility than all the continental European countries for which data is available.





One of the most insidiously deceptive ideas is that the 'free market' is natural and inevitable, existing outside and beyond government -- so whatever inequality or insecurity it generates is beyond our control...In reality, the 'free market' is a bunch of rules about (1) what can be owned and traded (the genome? slaves? nuclear materials? babies? votes?); (2) on what terms (equal access to the internet? the right to organize unions? corporate monopolies? the length of patent protection? ); (3) under what conditions (poisonous drugs? unsafe foods? deceptive Ponzi schemes? uninsured derivatives?) (4) what's private and what's public (police? roads? clean air and clean water? healthcare? good schools? parks and playgrounds?); and (5) how to pay for what (taxes, user fees, individual pricing?).

In other words, markets don't exist in a state of nature; they're human creations. Governments don't intrude on free markets; governments organize and maintain markets. Markets aren't 'free' of rules; the rules define them. The rules can be designed to maximize efficiency (given the current distribution of resources), or growth (depending on what we're willing to sacrifice to obtain that growth), or fairness (depending on our ideas about a decent society). They can even be designed to entrench and enhance the wealth of a few at the top, and keep almost everyone else comparatively poor and economically insecure.

There can be no market without rules. Even the basic building blocks of the market — property, acceptable monopoly power, contract, liability, and bankruptcy — depend on rules and how they’re enforced. And those rules are the products of government. Legislators, administrative officials, and judges are continuously engaged in readjusting, resetting, or reinventing them. Without government there can be no free market.









Section VI: Critique of Market Socialism

is contrasted with social-democratic policies implemented within capitalist market economies: while social democracy aims to achieve greater economic stability and equality through policy measures such as taxes, subsidies and social welfare programs; market socialism aims to achieve similar goals through changing patterns of enterprise ownership and management.





Section VII: Defense of Welfare State Capitalism

Section VIII: Global Capitalism

the notion that resources flow from a 'periphery' of poor and underdeveloped states to a 'core' of wealthy states, enriching the latter at the expense of the former. It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the 'world system.' Poor nations provide natural resources, cheap labour, a destination for obsolete technology, and markets for developed nations, without which the latter could not have the standard of living they enjoy. Wealthy nations actively perpetuate a state of dependence by various means. This influence may be multifaceted, involving economics, media control, politics, banking and finance, education, culture, and sport.

He [Carlos Slim] spoke of the uplift of society in the developing world through broader access to information, education, health care, and entertainment — and the need to share and spread the prosperity that advancing technologies will create. He predicted the emergence of tens of millions of new service jobs in Mexico through meeting the Mexican people’s basic needs and enabling them to spend time on leisure and learning. He sees tremendous opportunities to build infrastructure where there is none, and to improve the lives of billions of people who presently spend their lives trying to earn enough on which to subsist

Section IX: Human Nature

Section X: Post-Scarcity

collective ownership and administration of the research, development, and use of nanotechnology.

Updated Post: 10/1/15

Original Post: 5/18/15

When asked about what descriptor best sums up my political views, I respond with "left-wing liberal." I would like to see America move more toward the Nordic model: stronger safety nets, less income and wealth inequality, higher social mobility, excellent public K-12 education, "free" higher education and daycare, paid maternity and paternity leave, paid sick leave, paid vacation, good pensions, good public transit, strong labor laws, poverty alleviation, and universal healthcare. The Nordic countries also have a razor sharp focus on gender equality, maximizing labor force participation, redistributing income, and liberally using expansionary Keynesian fiscal policy.Yet, I am also a strong supporter of market capitalism and its fundamental components, including private property, private ownership and control over the means of production, market distribution and exchange, profit-seeking private enterprises, division of labor, and capital accumulation as a driving force for economic activity. While I support the capitalist mode of production, I feel free-markets should be regulated effectively and melded with powerful safety nets. In general, I support "welfare state capitalism" as implemented by social-democratic governments in Western Europe and Scandinavia in the latter half of the 20th century.If you took a spectrum of market capitalism, and looked at the left-wing end of the spectrum, "social democracy" would fall under there. "Social democracy," while still being a form of capitalism, is essentially the last train stop before you get to genuine socialism. To me, capitalism with a social-democratic hue is superior to both more neoliberal manifestations of capitalism on the right and genuine forms of socialism on the left. If I lived in Sweden, I would be a conservative in the sense that the political-economic status quo would largely satisfy me.Somewhat confusingly, despite having nearly identical names, "social democracy" and "democratic socialism" are very distinct concepts. Modern "social democrats" support maintaining market capitalism, whereas "democratic socialists" seek to eradicate the capitalist system and replace it with socialism through democratic, non-revolutionary means. Often times in colloquial language, "democratic socialism" is erroneously used as a synonym for "social democracy," wherein "social democracy" refers to the regulation of capitalism and the maintenance of a welfare state.Social democracy "" ( Source In contrast, democratic socialism" ( Source In essence, democratic socialism "" ( Source Historically, there was no strong distinction between democratic socialists and social democrats. In fact, in the late 19th and early 20th centuries, social democrats were a specific subset of democratic socialists who sought to forge a socialist society through steadily reforming capitalism. These early social democrats were heavily influenced by the "reformist socialism" of Ferdinand Lassalle and Eduard Bernstein. Moreover, in 1872, Karl Marx modified his stance on revolution, arguing that in some countries, socialism could be achieved through peaceful reformist measures.Operating within the existing political system, elected social democrats tied economic reforms to a desire for long-term systemic change. Although some democratic socialists rejected gradualism in favor of more sweeping measures (while still working within democracy), many supported social-democratic reformism, arguing that it was the most practical approach. Most of these early social democrats were either Fabians or revisionist Marxists in the vein of Bernstein.However, in the 20th century, social-democratic movements began to dissociate themselves from Marxism and instead adopted "liberal socialism" as advocated by Carlo Rosseli. Over the course of the 20th century, social-democratic parties joined forces with agrarian parties to cobble together "universalist" welfare states. These "red-green" coalitions in Scandinavia crafted the comprehensive safety nets at the heart of Nordic model.However, following World War II, social democracy emerged as a sharply distinct ideology from democratic socialism. In the postwar era, most social democrats completely abandoned their previous ideological connection to Marxism, and instead emphasized social policy reform within the framework of market capitalism.After witnessing the successes of welfare state capitalism in balancing equity and efficiency in the postwar era, social-democratic parties accepted political realities and completely abandoned their long-term goal of evolving capitalism into socialism. Labor parties began to denounce "socialism" as a goal to be achieved, removed references to socialism from party constitutions, and instead sought to attain "capitalism with a human face." Many of these parties abandoned even rhetorical socialism, and some have become largely independent of their original trade union creators.In the 1980s and 90s, social-democratic parties became even more dazzled by the wonders of capitalism, further affirming market-based economic orders and private entrepreneurship. Academics praised Nordic welfare state capitalism as viable alternative to both laissez-faire capitalism and the command economic systems in the Soviet bloc. Today, social democracy believes in reforming the economy to be more aligned with social justice and economic democracy while maintaining the capitalist mode of production.Because the U.S. political spectrum is so skewed to the right relative to those of other advanced nations, social-democratic policies such as government-funded healthcare and free college are often perceived to be "fringe" or "left-wing" in America. However, in the political context of most advanced nations, it makes more sense to label social democracy a "center-left" ideology. Additionally, it is important to note that social democracy is a very mainstream ideology in Western Europe and Scandinavia: social-democratic parties are almost always "major" parties in European liberal democracies, and have often been the dominant, governing parties in these countries. Genuine anti-capitalist parties (democratic socialist parties, communist parties, etc.) tend to be on the political fringe, even in Europe and Scandinavia.In European countries with a multi-party system, social democrats position themselves to the left of social liberals and moderates who occupy the political center; conservatives, market liberals, and Christian Democrats who occupy the center-right; social conservatives who occupy the right-wing; and nationalists who occupy the far-right. Moreover, social democrats position themselves to the right of greens who range from center-left to left-wing in orientation; democratic socialists who occupy the left-wing; and communists who occupy the far-left.Increasingly, social-democratic parties have moved to the political center to court votes and compete with conservative parties; as a result, center-left parties have come to adopt neoliberal policies. These "Third Way" policies combine elements that are usually associated with conservative and libertarian philosophies (like privatization, deregulation, focus on personal responsibility, fiscal conservatism, etc.) with the maintenance of European-style welfare programs.Today, social democrats firmly embrace market capitalism, believing it to be a great system to promote wealth, creativity, and entrepreneurship. Modern social democrats have no desire to abolish capitalism, even in the long-term. Yet social democrats also seek to implement welfare and state intervention designed to improve the long-term outlook for underprivileged groups within the system, ultimately creating a more equitable distribution of income. Social democrats seek to curb the excesses of capitalism, such as inequality, poverty, and the oppression of various groups, without having to completely scrap capitalism. To achieve this, social-democratic governments have combined various market-based economic orders with robust redistributive policies and Keynesian macroeconomics. Despite labor parties moving to the right in the 1980s and 90s, the existing welfare states of European countries with major social-democratic governments are much more generous than the thinner welfare states enacted by social liberals (such as the modern Democratic Party) in the U.S.However, socialists fundamentally disagree with modern social democrats. As mentioned, the two groups split in the past several decades, and became distinct with wildly divergent goals. Socialists feel it isn't nearly enough to simply reform capitalism and/or provide safety nets. Unlike modern social democrats, socialists maintain the end goal of completely abolishing the capitalist mode of production and establishing alternate methods of social organization. Whereas social democracy is a policy regime intended to improve capitalism rather than a system to replace capitalism, democratic socialism seeks to fully replace capitalism.Socialists feel capitalism is exploitative on a fundamental level. To remedy this, socialists believe in instituting "worker ownership over the means of production, distribution, and exchange for the benefit of the community rather than for private profit." Many of them additionally oppose private property, the profit-incentive, capital accumulation, and other central components of capitalist production. Social ills, including poverty, disparate wealth, injustice, unemployment, unjust distribution, alienation, economic volatility, worker exploitation, and shortages of social services are viewed as direct byproducts of the private ownership of capital that lies at the heart of capitalism.Some socialists also believe economic contradictions are inherent to capitalism, and reforms are ineffective because they keep a fundamentally unstable system in place. To these socialists, attempting to address economic contradictions will only cause problems in other areas of the economy. Socialism at its very core is an anti-capitalist ideology and movement.Capitalism and socialism are often ill-defined and vague terms, so before we continue this discussion, I wanted to provide the technical, precise definitions for both. Capitalism and socialism describe fundamentally divergent forms of social ownership. Under capitalism, the commodities that workers produce are owned and sold by another party (the business manager) for a profit. These profits accrue to the capitalists and business owners rather than to the workers themselves. Capitalists are the ones who own and direct the means of production, including raw materials, natural resources, factories, machines, and entrepreneurship. In contrast, under socialism, workers themselves own the products and services they produce. The community democratically directs distribution and exchange, and collectively owns economic inputs. Socialists furthermore oppose capitalist business hierarchies and traditional employer-employee relationships.Keep in mind that capitalism and socialism only refer to systems of ownership, and don't specify a method of distribution. Some incorrectly believe that socialists are inherently hostile to markets, when in fact, there are "market socialists" who wish to see worker co-ops compete with each other in the marketplace.Socialism is technically defined as "" And there are many different types of socialism: “” ( Source Socialists believe that under capitalism, the proletariat works to survive, being harshly exploited by the capitalist class in the process. The capitalist class (bourgeoisie) is able to exploit the proletariat class because capitalists privately own the means of production, the physical and institutional means with which commodities are produced and distributed. Some socialists purport that political, economic, and social contradictions in capitalism will trigger an inevitable conflict between the two classes, fundamentally transforming society. According to these socialists, society will ultimately transition away from a highly unequal one into an egalitarian one.Cuba, the USSR, Maoist China, and North Korea are examples of command economies, in which the government owns, manages, and directs the means of production through widespread nationalization. Essentially, the government acts as a central planner for the economy. The "communist" parties that governed these nations professed to have achieved "socialism" through implementing various forms of “Marxism-Leninism.” These countries claimed socialism as their official ideology, purported to oppose capitalism, utilized socialist rhetoric and symbols, and professed a desire to expand socialism abroad.Some socialists view these nations as examples of an indirect form of socialism, called "state socialism." However, others feel that "state socialism" only exists when the government is democratic and represents the will of the people; therefore, out of the four examples, only Cuba would be somewhat genuinely "socialist." Most modern-day socialists believe that Joseph Stalin perverted Marxism, socialism, and communism; instead of practicing any of them, Stalin was merely a totalitarian dictator. Many modern-day socialists have a negative opinion of political communism in the 20th century. Modern socialists feel that Marxist-Leninist and Maoist "communist" parties and movements embraced an authoritarianism that contradicts the essentially democratic nature of Marxism.Some have derided the USSR as exemplifying "state capitalism," but I dispute that characterization given that the USSR had a non-capitalist command economy. If an economy doesn't have private ownership and doesn't have robust markets, then it's not a true market capitalist economy. In my view, Marx was incorrect and inconsistent when he claimed that state ownership of property is capitalist unless certain conditions are met. As a result, socialists mischaracterize the USSR when they claim it was run as a “capitalist enterprise.” "Command-economy” is the most accurate and noncontroversial term for the USSR, North Korea, and Maoist China in my view.Moreover, "state capitalism" is a more accurate descriptor of China's current political economic configuration (post Maoist China, after Deng Xiaoping's dual-track market reforms). While the USSR certainly wasn't “capitalist,” I will concede that it may not have been truly socialist either according to the technical definition of socialism. Whether Marxism-Leninism is a legitimate form of socialism, however, continues to be divisive topic for socialists. Although, to be fair, most modern socialists are critical of the doctrine, and feel Marxist-Leninist states aren't truly “dictatorships of the proletariat” that will eventually transform society into a classless and stateless communist utopia.Modern day socialists almost unanimously denounce indirect forms of socialism, and prefer direct socialism and workplace democracy rather than state socialism and central planning. This is especially true when the state is authoritarian rather than democratic.Modern day socialists tend to favor decentralized planning over central planning in allocating inputs and outputs. One method to achieve this through cybernetics: in the 1970s, Chile attempted a computer-controlled economy to coordinate economic inputs and outputs. An alternative method is to have participatory planning in which producers and consumers negotiate the quality and quantity of what is to be produced. Participatory planning is based around consumer and worker guilds. Other socialists, however, prefer government sponsored enterprises (GSEs). Yugoslavia had a system of market socialism for a while in which GSEs competed with each other. Other market socialists wish to see worker and consumer cooperatives compete in the marketplace. Some socialist economists, like Richard D. Wolff, feel that a socialist economy can have both planning and market distribution. Most modern day socialist subscribe to the heterodox Marxian paradigm of economics, but there are plenty of non-Marxian socialists as well.Some socialists feel that the state has a guardian role in a post-capitalist society, providing a welfare state through unemployment insurance or a basic income, whereas others are "libertarian socialists," eschewing the state and relegating it to a small role. Some socialists go even further than libertarian socialists and are "communists," supporting not only the social ownership over production, but also a stateless, money-less, and egalitarian society devoid of class altogether as their end goal.Remember that "socialism" is distinct from "social-democratic" policies. Many people incorrectly conflate welfare policies and state intervention in the market with “socialism.” Technically, Sweden isn't more "socialist" than America; rather, it just has a stronger welfare state to deal with inequality and other market failures. Scandinavian and Northern European societies are fundamentally private enterprise market economies. They are vigorously capitalist in their economic organization, featuring widespread private ownership, free-markets, and extensive trade.Sweden, Norway, Denmark, etc., have rather stringent rules on protecting private property and enforcing contracts. These countries use money as their medium of exchange, have private ownership over capital, have mostly privately held businesses, have robust stock exchanges, have financial sectors, promote private sector entrepreneurship, have competition, rely on voluntary exchange, and utilize the profit-incentive to coordinate distribution over the free-market. In Scandinavia, there aren't many state owned enterprises, some sectors of the economy are lightly regulated, free-trade is promoted, and companies that fail aren't bailed out. Income and wealth inequality, poverty, and unequal outcomes exist in these countries.Scandinavian countries often score high on economic freedom measures, sometimes higher than the U.S. in some areas, and are characterized by an overall ease of doing business. Sweden is the birthplace of large multinational corporations like Ikea, H&M, Spotify, and Volvo. Denmark has Lego, Carlsberg, and Novo Nordisk, one of the world's largest pharmaceutical companies. Nordic country Finland is the home of Nokia, and video games Clash of Clans, Angry Birds, and Minecraft were created by Finns. The core programming code of Linux was developed by a Finn. Skype was co-founded by a Swede and a Dane.What Sweden has is a large social welfare system bolted onto its highly capitalist economy, but that does not make Sweden any less "capitalist" or make it more "socialist." Nordic countries are market-based, meritocratic, competitive, innovative, open economies that care enough about fairness to justify relatively high marginal income tax rates to temper capitalism's harsher effects. Their models have very little to do with socialism as the term has traditionally been defined. Sweden, Norway, Denmark etc., retain the capitalist mode of production and don't seek to overturn it anytime soon, so they are social democracies, not socialist countries.If an economic system retains commercial private property, private businesses, private ownership over capital, capital accumulation, market-based distribution, and the profit-incentive, despite what interventions and regulations you put on that system, it is still fundamentally a capitalist economy. Nordic social democracy is ultimately underpinned by a free-market capitalist economic system.This confusion is understandable: the word "socialism" is constantly misused in colloquial language. The abuse of the term is perpetuated by the media, public, and some politicians. While the term is used incorrectly among the public in both America in Europe, Europeans are much more likely to know the difference between social democracy and socialism. However, people in the U.S. tend believe that a "socialist" is a big government, tax and spend leftist. This is in no small part due to conservative propaganda that slaps the "socialist" label onto any remotely center-left policy to delegitimize it.However, leftists are also complicit in perpetuating this misunderstanding and not making clear distinctions. Various leftists in the U.S., including Bernie Sanders, have attempted to claim the term "socialism" for their own preferred welfare-state policies. Yet, they are also confusing the terminology. Genuine socialists who support economic democracy are among the first people to object to social democrats calling themselves "socialist." Socialists are frustrated because there are leftists who identify as something that is literally not socialist by definition, and advocate positions that are actually against socialism, but call themselves socialists anyway. Some argue that through humanizing capitalism and making it palatable to the masses, social democrats are a bigger threat to the socialist cause than proponents of unfettered capitalism.Socialism, by definition, is the social ownership of productive property. That means that productive property (factories, farms, workshops, the like) is owned either by a democratic state or directly by the workers themselves. It is not the case that this merely a "strict" definition of socialism, in that broader definitions of socialism include social democracy. This is just what the word means. This is the definition to which academics, socialist activists, socialist philosophers, and prominent socialist thinkers throughout history have adhered, as economist Richard D. Wolff elaborates in this video Moreover, this is not merely the "Marxist" definition of socialism: the utopian and Ricardian socialists who predated Marx also sought social ownership over property. Non-Marxian socialists who existed before and after Marx's life also subscribed to that definition. Socialism is fundamentally at odds with capitalism, the private ownership of productive property. Orthodox socialists argue that socialism from its very first conception by Henri de Saint-Simon has been defined as worker control of the means of production, and that genuine socialism has never accepted capitalism. Therefore, "social democracy" is merely reformed capitalism, and not the socialism some leftists claim it to be.In addition, some Americans inaccurately conflate social democracy with socialism because the are a few prominent social-democratic parties that retain the word "socialist" in their party name. One example is the "Socialist Party" in France. Moreover, many social-democratic parties are members of "Socialist International" and the "Party of European Socialists." However, it is important to realize the word "socialist" in these cases is retained merely for legacy purposes. Members of the French Socialist Party didn't decide a few years back that they were social democrats who wanted to appropriate the term "socialist." Instead, the French Socialist Party originated as a legitimately left-wing anti-capitalist party that shifted sharply to the right over time, and became a center-left social-democratic party. The French Socialist Party has made it clear that despite its name, it does not claim socialism as its ideology, and instead, seeks to reform capitalism.Moreover, many other social-democratic parties don't have "socialist" in their party name, like the Social Democratic Party of Germany, the Swedish Social Democratic Party, the New Democratic Party (Canada), the New Zealand Labour Party, the Labour Party (Norway) and the Social Democrats (Denmark). These parties are officially social-democratic, reject socialism, and explicitly claim modern day social democracy as their ideology. For example, the Canadian New Democratic Party (NDP) dropped all references to "socialism" from the party constitution in 2013. Additionally, democratic socialist political parties that are actually socialist and anti-capitalist actually outnumber "socialist" parties that are actually social-democratic but retain the word "socialist" for legacy purposes.The UK Labour Party is a more tricky example. Founded in 1900, it originated as a democratic socialist party. In 1918, "Clause IV" was incorporated into the party's constitution, committing the party to securing "" ( Source ) While the Labour Party was officially committed to genuine reformist socialism, in practice, Clause IV was really only just words from the beginning. Labour governments used it to justify social-democratic policies and the nationalization of industries. Labour definitely did not achieve direct socialism or "" ( Source Eventually, due to efforts by Tony Blair, a Third Way centrist, Labour removed Clause IV from its party constitution in 1995, making it officially a social-democratic party. Confusingly, however, Blair continued to refer to Labour as a "democratic socialist" party. In addition, subsequent Labour leaders, including Ed Miliband, have called themselves socialist, and referred to Labour as a "democratic socialist" party. Even today, Labour officially describes itself to be a "democratic socialist" party. Of course, this is a misnomer, given that Labour dropped its nominal long-term commitment to abolishing the capitalist mode of production by erasing Clause IV. However, it is important to note that Tony Blair explicitly declared that "" ( Source The Labour Party's "socialism" does not refer to a rigid system of social ownership, but an "" "New Labour's" version of "ethical socialism" was largely conceived by British Labour Party politician, Anthony Crosland. Tony Blair "" claiming that "" According to Blair and other Labour Party leaders, "" ( Source Therefore, while Labour claims "democratic socialism" as its official ideology, it admits to using an unorthodox definition of socialism (one rejected by many socialist activists, economists, academics, thinkers, etc.), and is only endorsing socialism as a guiding ethical doctrine. Even Labour Party members and leaders will admit that from an economic and materialist perspective, Labour is a center-left party firmly committed to market capitalism, and governs in a moderately social-democratic (and sometimes neoliberal) manner. In fact, UK Labour is to the right of the UK Green Party and Scottish National Party.The idea of socialism as an ideology founded upon a rigorous Kantian ethical foundation instead of a Marxist teleology is quite old. "Ethical socialism" has certainly been influential in informing the worldview of principled social democrats in the Labour Party, including British Prime Ministers Ramsay McDonald and Clement Attlee. The British Fabian Society has been at the forefront of promoting ethical socialism within British social democracy, seeking to reconcile capitalism with a focus on the public good and cooperation. "Ethical socialism" is a liberal socialist ideology that critiques capitalism on moral grounds instead of opposing capitalism on materialist grounds. As a result, one can non-hypocritically advocate for "ethical socialism" while supporting the capitalist mode of production. Social democrats argued that ethics could be restored to "socialism" within a capitalist system, with the state being a pivotal asset to the workers. Indeed, while "Old Labour" favored progressive taxation, socialized medicine, public education, public housing, and nationalizing strategic industries, it supported private businesses in areas in which the private sector was more effective than government.When Clement Attlee was Britain's Prime Minister, the left-wing of Labour wanted to hand over control of nationalized industries to the workers in those industries themselves. Attlee, as the head of a big tent party, never went that far. Instead, Attlee governed in a social-democratic manner. He did improve conditions for Britain's working class by creating Britain's "cradle to grave" welfare state, nationalizing industries, and creating NHS. Britain, under both Tory and Labour governments, stayed on the hard-left of social democracy until Margaret Thatcher completely obliterated it.However, throughout its history, "ethical socialism" has been derided by orthodox socialists as a bastardization of socialism. Eduard Bernstein, a German social-democratic theorist and politician who put forth ethical conceptions of socialism, was resoundingly denounced as a "vulgar Marxist" and "liberal apologist." Orthodox socialists, both Marxist and non-Marxian, argued that reforms can never sufficiently make capitalism "humanized" or "moral." They insist on defining socialism on primarily economic grounds, arguing that material forces within capitalist production are the root causes of various social ills. Consequently, they argue that "viable socialism" cannot truly be achieved through social interventions within a capitalist economy, as social democrats who subscribe to ethical socialism claim.Using orthodox definitions, socialism is not raising the minimum wage, raising the top marginal tax rates, providing public roads and infrastructure, redistributing wealth, or guaranteeing healthcare as a right. These are simply government interventions that can exist in both capitalist and socialist systems. Similarly, capitalism on a fundamental level is not about excessive greed, corporatism, cronyism, unregulated free-trade, the dominance of investment banks, environmental degradation, unsustainable growth, poor healthcare, exorbitant inequality, and corporate influence of money in politics.Socialism promises an alternative method of social organization in which there is workplace democracy. If one believes that the capitalist system is "fine if we just tinker with it" along the lines of Scandinavia, then they are a social democrat. However, if they believe that capitalism must be replaced, then they are a genuine socialist.In the U.S., the term "democratic socialism" conjures up the image of Senator Bernie Sanders. However, when we analyze his specific policies, it is clear that he's not a genuine socialist, but rather a social democrat. Bernie Sanders does not have plans for the government to nationalize all industry and turn over the ownership of the factories from executives and shareholders to the workers. Nor does he have plans to expropriate owned land and abolish private property. Nor does he have plans to abolish the profit motive and replace the regulated free-market.In fact, in a conversation with The Brookings Institution, Senator Sanders explicitly expressed his support for the capitalist mode of production . While Senator Sanders opposes casino capitalism and runaway capitalism, he supports market capitalism in general, and doesn't seek to abolish it. Sanders asserts that market capitalism serves as a good basic framework for an economy, feeling it generates wealth, creates vibrant small businesses, and empowers creative entrepreneurs. Marxists, and traditional socialists in general, find Senator Sanders extremely conservative compared to themselves.What Senator Sanders proposes is mild social democracy (left capitalism), not a revolution, despite using the word "revolution" his interviews and speeches. While Sanders is perceived to be "left-wing" or "far-left" in America, if Bernie Sanders were in France, he would be right where President Francois Hollande is on the political spectrum. In Canada, Sanders would be a run-of-the-mill NDP politician (and the NDP is expected to win the upcoming Canadian federal elections). In the UK, Sanders would probably sit in the left-wing of the Labour Party. All of these are the major, and often governing, center-left parties of their respective nations. Indeed, Bernie Sanders would fit in quite comfortably in the mainstream center-left political parties in Western Europe and Scandinavia, given that in those countries, many of his preferred policies are already the status quo.Most likely, political parties and politicians to the left of mainstream center-left parties in Europe would find Sanders way too conservative. For example, Sanders is significantly, significantly to the right of Greece's Syriza, which is a coalition of various radical leftist groups. Moreover, Sanders' agenda is much more mild compared to that of Jeremy Corbyn, an old-school hardcore socialist who wants the British government to control huge sectors of the economy. Corbyn is much further to the left than Sanders, with Corbyn wanting to renationalize Britain's railroad system and to nationalize the UK's energy companies.If millions of people in the U.S. truly went on a general strike and ground our economy to a halt to demand anything, Senator Sanders would be appalled. Senator Sanders merely seeks to regulate the market capitalist economy more effectively while strengthening the social safety net. He does not desire to abolish capitalism and replace it with the public ownership over the means of production, distribution, and exchange. When questioned on what exactly he means by the term "democratic socialism," Bernie Sanders points to the mainstream social-democratic and labor governments in Western Europe . Sanders' inaccurate conflation of socialism with social democracy resembles the rhetoric of former Swedish Prime Minister, Olof Palme, a fellow social democrat.Palme considered himself a socialist, defended labeling himself a "democratic socialist," and delivered a famous speech in the Swedish parliament on the issue. Olof Palme led the Swedish Social Democratic Party from 1969 to his assassination in 1986, and like Sanders, used the terms "democratic socialism" and "social democracy" interchangeably to describe his agenda and policies. Palme felt that because social democracy had its philosophical foundations in socialism, social-democratic parties had at least a credible claim to some form of socialism. To him, the word "socialism" was elastic because social democracy grew out of socialism historically. However, like Sanders, Palme did not fully understand or recognize the distinction between socialism and social democracy, and how the two promote fundamentally divergent forms of social ownership.Palme worked to construct a highly regulated, welfare state version of capitalism to more equitably distribute the resources and wealth produced by capitalist production in the Swedish economy. However, that didn't make him a "socialist." Whether someone is socialist or not has very little to do with how much they have "the interests of the proletariat at heart." It's about their views regarding the ownership structure of an economy. Because he did not believe in abolishing private property, the profit-incentive, and private ownership of capital, and establishing social control over production and profits, Palme was definitely not a socialist, despite claiming to be one. In spite of growing out of socialism, contemporary social democracy is not an alternative to capitalism, it is merely a flavor of capitalism with a strong working people's element. Moreover, while it may not have been too egregious of an error to refer to Palme's party as "socialist" in the 1970s, the modern Swedish Social Democratic Party's embrace of neoliberalism has made it far removed from any form of socialism. Therefore, no one should be surprised that party leaders in Sweden have rarely invoked the term "socialism" since Palme's death; instead, leaders almost always invoke "social democracy" to describe their party's agenda.It is understandable why some prominent social democrats considered themselves democratic socialists and used the terms interchangeably, even after social democracy outgrew the desire to abolish capitalism. Even if the final product became far removed from its roots, social democracy is still derived from a socialist tradition of political thought. In the postwar era, many prominent social democrats had socialist sympathies, and felt market capitalism was fundamentally flawed. Many analyzed the economy through a Marxist lens. But they settled for social democracy because they felt material and technological limits prevented society from moving further to the left. Given that abolishing capitalism was impracticable, these social democrats made the best out of a bad decision by attempting to humanize capitalism. These "right-wing Marxists" and "right-wing socialists" defined socialism broadly to mean a general concern for the social problems created by capitalism, regardless of specific solutions to those problems. As a result, to them, social democracy was a genuine strand of socialism.Under the construct of "social democracy," the ideals and aims of socialism (a more egalitarian distribution of wealth, strong worker rights and protections, etc.), are injected into an otherwise capitalist economy. Capitalism is viewed as reasonable as long as it's well regulated and never allowed to proceed to its inevitable conclusive form. Unregulated, unfettered capitalism inevitably leads to excessive capital accumulation, creating an exploitative system of "patrimonial capitalism" in which inherited wealth dominates the economy. The very rich use their accumulated wealth to generate political power, creating an oligarchy. Social democracy, also known as the welfare state, puts capitalism in chains and allows it to exist as a necessary evil, intervening with progressive taxation, strong regulation, and safety nets when prudent. Through these interventions, social-democratic governments can mimic the ideal end goals of socialism while avoiding the typical historical consequence of "pure socialism" turning into an authoritarian command economy.Some social democrats found economist Karl Polanyi's definition of socialism useful, which stated that "socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to the industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society." Naturally, orthodox socialists who defined socialism on materialist grounds objected to Polanyi's unorthodox definition and other definitions that did not specify social ownership over production.Over time, however, social democrats came to opine that there were clear differences between their agenda and those of democratic socialists, and preferred to describe their beliefs as "social democracy" only. As mentioned, center-left parties removed official references to socialism, distanced themselves from radical leftists, and gave up rhetorical socialism. Social democrats who supported socialism as an ideal type but settled for social democracy as a practical compromise became eclipsed by leftists who approached social democracy from the opposite political direction. Indeed, especially after center-left parties embraced the "Third Way," most prominent social democrats were left-wing liberals who believed market capitalism was fundamentally a beneficial system, but that it needed to be regulated effectively and combined with safety nets to work properly. To these pro-capitalist social democrats, social democracy was a political doctrine that addressed the negative aspects of capitalism by promoting greater egalitarianism within capitalist institutions. Given that modern social democrats by and large reject Marxian analysis (and orthodox socialist analysis in general), it makes sense to make a clear distinction between social democracy and democratic socialism.Again, socialism is simply when the means of production are commonly owned, through worker cooperatives, or through nationalization. Worker co-ops exemplify "direct" socialism, whereas nationalization is "indirect" socialism provided that the government is highly democratic and genuinely represents the will of the people. The British NHS is an example of "socialized" medicine because the democratic UK government owns and operates the hospitals: doctors are public-sector employees. However, single-payer healthcare isn't technically "socialist" because while healthcare under single-payer systems is government funded, it is not necessarily government run. In Canada, healthcare delivery largely occurs in the private sector.While there are many forms of genuine socialism, all of them seek to eliminate private ownership of capital and replace it with collective ownership. Socialists of all stripes feel capitalism is exploitative because it perpetuates an organization of production in which the people who receive and distribute economic profits are different from the people whose labor generates those profits. Socialists, whether they support markets or economic planning, seek to establish a system in which the workers, whose labor generates a surplus, are identical to the people who receive and distribute that surplus. Marxists believe the capitalist mode of production exploits workers by enabling managers to extract surplus value from labor. Non-Marxian socialists feel private ownership of capital is exploitative on other grounds, arguing that traditional business hierarchies are inherently oppressive.While all socialists support common ownership, they strongly differ in their tactics. Some socialists are "reformists," and believe that we can tweak the economy in a social-democratic manner until we achieve public ownership of resources. Some socialists believe in the opposite, and are "accelerationists," professing that we can only overcome capitalism by expanding the free-market to its limit until it collapses upon itself. Some socialists believe that a society must develop a robust capitalist economy before transitioning to socialism, whereas other socialists believe you can go directly from an agrarian society to a socialist one.Some socialists support transitioning toward a post-capitalist society through revolutionary means, while others are "democratic socialists," and support parliamentary strategies for reform through fielding political parties. Some socialists are "Marxist Communists" who view the state as vehicle through which to attain communism, and support a transitional state between capitalism and communism to suppress the bourgeoisie. Other socialists, however, are "anarcho-communists," who assert that the state should be eliminated immediately to create a communist society, and dispute the "Marxist Communist" notion that the state will gradually and naturally "wither away." Furthermore, as mentioned before, there are many socialists who are not communists, with non-communist socialists believing that the state should have some guardian role in a post-capitalist society,Despite the many variants of genuine socialism, they all view "worker ownership over resources and the cooperative management of the economy" as the end game. If people don't support abolishing private ownership of capital, regardless of what other policies they support, they do not meet the technical criteria for being a "socialist."I am a social democrat instead of a socialist because I believe market capitalism serves as a decent basic framework for an economy. In "Theory of Moral Sentiments" and "The Wealth of Nations," Adam Smith does an excellent job linking private interest to public good. When economic actors pursue their private interests, they are bettering the public good, even when they are unaware of doing so. According to Adam Smith, on a societal level, self-interest is a more consistent motivation than kindness and altruism. As a result, utility maximization by all parties is the best organizing principle for a wealthy and stable society.It is a shame that as economics developed over time, neoliberal economists including F.A. Hayek and Milton Friedman presented a much more stripped down version of utilitarianism. The Hayeks and Friedmans of the world took Smith's market liberal view, stripped it of its nuance, and pushed methodological individualism much further. Neoclassical economists supported liberal capitalism because of its purported efficiency, unlike the classical political economists like Smith who supported market liberalism because they felt it maximized the public good and enriched nations.However, Smith's arguments about how capitalism benefits society are still very relevant today. Private property and markets distribution benefit the public. Markets are great at allocating resources among competing uses (via supply and demand). Private ownership over the factors of production provides incentives for innovation, specialization, growth, dynamism, and progress.Capitalism benefits society by improving people's quality of life through a higher standard of living: during the Industrial Revolution, capitalism got western societies out of the “Malthusian Trap." Higher growth is good, because while it may lead to higher relative inequality in the absence of social-democratic policies, it gets people out of absolute poverty. The productive activities unleashed by a free-enterprise market system have enabled the masses to escape grinding poverty.Remember, GDP refers to both output and national income (and expenditure), so as a country's GDP grows, the people of that country get richer. Economic growth helps mitigates the effects of scarcity as our capacity to produce more goods expands. Moreover, one of the most effective ways to reduce government deficits is to grow the economy. An increase in potential growth occurs when we see a rise in physical stock, growth in the size of the active labor force, growth in the quality of labor, and technological progress in which innovation drives productivity improvements. Capitalism has built-in incentives for to facilitate growth in these areas, whereas socialism does not.I don't see how socialist economies would foster the levels of long-term growth we've observed in capitalist economies. Furthermore, the evidence clearly shows that since World War II, countries with economic systems closer to the market capitalist model have grown much faster than countries with a centrally planned economy.In a capitalist society, the most rational course of action for a self-interest person is to work and produce goods and services that others value: consumer sovereignty exists. Capitalism doesn't cause us to be self-interested, it merely acknowledges that most of us are and constructs a system in which the most rational course of action for a self-interested person is to act in ways that benefit society.This doesn't mean that people should be self-interested on an individual level, and shouldn't be concerned for others. In fact, Adam Smith wrote extensively on how people shouldn't be self-interested as individuals. But it means that self-interest is a good organizing principle for an economy: consumers maximize their utility by demanding the products they want, and self-interested, profit-seeking firms will produce the products consumers want. That is the principle of the invisible hand. Voluntary exchange is an efficient organizing mechanism without a central coordinator. Markets collectively accumulate the private choices of individuals and allocate goods and services in a decentralized manner through a free-price mechanism. The market mechanism through a free-price system enables the efficient utilization of resources and greater productivity.Profit seeking isn't inherently harmful to society. With higher profits, a company can reinvest its earnings in organic expansion (through investing in technology that can result in dynamic efficiency and lower long-term costs), and ideally improving product quality and quantity provided that the market is competitive. Profit seeking also provides incentives for productive efficiency, meaning increasing output with fewer inputs. With proper regulation, we can ensure that the profit motive does not lead to abuse.Yes, there are some unfortunate byproducts of capitalism, such as inequality and creative destruction, causing structural unemployment resulting from workers being laid off of inefficient or unneeded industries. But the short-term costs are vastly outweighed by the long-term benefits, including higher standards of living, higher levels of growth, efficient allocation of goods, innovation, and entrepreneurship.What many people overlook is that the economy isn't fundamentally about the employment rate, but the level of economic output that society makes. Wikipedia defines the economy as follows: "" ( Source The employment rate of a society is merely an indicator of how well that society's economy is doing. As a result, we shouldn't conflate the unemployment rate with the "economy;" as noted in the Wikipedia definition, goods and services are what fundamentally drive an economy, not jobs.Typically, when the unemployment rate is high due to cyclical contractions, the economy is producing less goods and services than it would be at "potential output," the level of real GDP if the economy were more fully employing its resources. This is why governments utilize counter-cyclical fiscal and monetary policies to combat demand-deficient recessions and boost the employment rate to the Non-Accelerating Inflation Rate of Unemployment (NAIRU). The NAIRU corresponds to the long run aggregate supply curve, reflecting the current maximum level of growth possible in society given natural, technological, and institutional constraints.Mainstream economists define "full employment" as employment completely devoid of cyclical unemployment, although the overall employment rate is often higher than 0%. This is due to frictional and structural unemployment, and the need to avoid demand-pull inflation. Through technological advances and pro-growth policies, the economy can expand its production possibilities frontier, lower structural employment, and increase long-term potential growth rates.However, the key point is that jobs or labor is never the end goal of any investment, whether public or private. The end goal of an economy shouldn't be to guarantee people jobs at all costs, and then to vehemently protect those jobs from dynamic economic forces. The end goal of an economy should be to promote growth and maximize output. If a company or government wants to build a dam, the end goal isn't to hire people. The goal is to build the dam, and hiring laborers to construct the dam just happens to be part of that process.Moreover, it is important for society to build the dam as efficiently as possible. This is why instead of employing hundreds of workers to build a dam with shovels, we employ a few people to work with large machines to get the job done effectively. If we wanted to, we could just employ hundreds of people to work with shovels, or even employ thousands of people if we gave them spoons. But doing so instead of utilizing the machines would be a huge waste of time, talent, and scarce resources.When our economy gets more efficient, people are laid off in various industries as their jobs are mechanized. On the other hand, due to higher efficiency, our economy produces more goods, and due to abundance, the goods people purchase get much cheaper, benefiting society at large.Traditionally, when human laborers were displaced due to technological improvements, they sought out new skills and found employment in new sectors. While the displaced workers suffered in the short term, society as a whole benefited. These labor transitions are the price our society pays for economic progress. Technological improvements vastly improved productivity and efficiency, increasing output, and allowed us to economize on human labor to produce higher-level goods and services. Creative destruction has enabled humans to pursue tasks and jobs that our society couldn't even imagine doing 200 years ago in the agrarian economy, or even 60 years ago in the manufacturing economy. To prevent these labor transitions under market capitalism would be to halt growth, innovation, and the reduction of absolute poverty.I have yet to see a compelling argument of how a purely socialist system, in which the means of ownership are completely democratically owned and distributed by working class, would be better in the above regards.Under capitalism, self-interested, profit-seeking firms will always be looking to produce something new to get ahead of their competitors. Even though the government's role is limited in capitalism, one of its essential jobs is to protect private property rights. This includes intellectual property rights through patents. Hence, there are incentives in the free-market system for firms to be innovative and produce better quality products. Centralized planning does not provide these incentives for innovation. Decentralized planners may be more open to innovation, but because socialists oppose private property, with many socialists opposing intellectual property protections, levels of innovation will be lower under socialism than they are under capitalism.Capitalism is also inherently characterized by specialization and division of labor. Under capitalism, freedom of enterprise means that private sector entrepreneurs and firms have the freedom to be in business, meaning that they can obtain and use resources, produce products of their choice, and sell these products in the markets of their choice. Similarly, workers can choose the training, occupations, and job of their choice. And consumers are free to spend their income in such a way as to best satisfy their wants. This allows people to take advantage of differences in abilities and skills. Specialization saves time involved in shifting from one task to another, and is not inherently alienating to workers, despite what Adam Smith, Karl Marx, and other classical political economists claimed. Specialization facilitates economic growth because it allows us to enjoy a greater volume of output.Markets are also dynamic: what is efficient today may not be efficient tomorrow as tastes, technology, and resource supplies change. Prices help signal those changes and the market will respond. An increase in demand for one products (PlayStation 4) will lead to higher prices in those markets; a decrease in demand for another products (Xbox One) will lead to lower prices in those markets. Increased demand leads to higher prices that induce greater quantities of output from suppliers. The opposite is true for a decrease in demand. Yes, if the demand for Playstation 4s drastically decreases due to changing consumer tastes, workers involved in producing that product will lose their jobs in the short term. However, it is imperative that the economy facilitates dynamism and allows firms to become irrelevant and fail if demand falls; protecting jobs at all costs will create allocative inefficiency. In the long term, the laid off workers will be employed in firms whose products are being demanded by consumers, helping boost supply to match demand, creating allocative efficiency.The guiding function of prices is essential to a well-functioning market system. In the absence of price signals, government or some similar institution would have to decide where resources are allocated, but without knowing what people in society want. the result would either be in mass shortages or surpluses, as was the case in centrally-panned economies. A free-price system is essential: in the USSR, the government provided goods and services are artificially low prices that did not reflect the relative scarcity of goods; as a result, mass shortages ensued.The market capitalist system promotes progress in many ways. Market capitalism promotes technological improvements and capital accumulation, enabling economic growth (due to a building up physical capital and improving productivity). An entrepreneur or firm that introduces a popular new product will be rewarded with increased revenue and profits due to increased market share. New technologies that reduce production costs, and thus product price, will spread throughout the industry as a result of competition. Creative destruction occurs when new products and production methods destroy the market positions of firms that are not able or willing to adjust.Of course, many socialists assert that capitalism is a zero-sum game: capitalism relies on continuous growth, and growth cannot last indefinitely in a planet with ecological and social limits. They claim capitalism is fundamentally unstable given that natural resources are either finite or fixed. According to socialists, when market capitalism runs up against those limits, the system will stop functioning. To remedy this, some socialists assert we should reduce our desires and stop engaging in "heedless materialism," "consumerism," and "over-consumption."Some societies have forced their members to reduce material wants as an attempt to combat scarcity and halt "destructive," unsustainable growth. However, given that humans want to maximize their utility, and it is in their nature to have unlimited wants, artificially reducing wants has not been successful in the long-term. It is not a solution most people would accept, nor is it an ideal solution from an economic perspective.In reality, arguments against "over-consumption" and "materialism" are almost always based on bad economics. Economic growth not only takes into account the quantity of goods, but also their quality. Therefore, processing resources in a more efficient manner generates wealth and economic growth without using more resources than we would in a zero-growth economy. There would be no need to halt economic expansion and miss out on all the benefits growth bestows on our societies.Moreover, there are built-in incentives in market capitalism for efficiency: if a resource becomes scarcer, its price will rise and consumption will go down. The higher price will incentivize development in either alternative sources or encourage us to consume more efficiently. Through technology, we can improve the quality of resources, the efficiency of resources, and in some cases, grow the number of resources.We continue to develop newer, more efficient technologies. We're nowhere near close to depleting the resources on our planet. Eventually, we will have better refining techniques that allow us to utilize materials more efficiently, and we can dig farther down the Earth. In addition, future advances in space mining and resource extraction from asteroids would mitigate the threat of resource depletion. Moreover, regarding ecological damage, it is possible to have "sustainable development." Maximizing growth is highly desirable, provided that the negative externalities of pollution have been internalized through Pigovian taxes and other measures.Not all new products and services utilize fixed natural resources in their production. Economic inputs include land, labor, and physical capital. Human labor is also a factor of production, and through sustainable population growth, we can increase the goods and services we produce in a non-zero-sum manner.Moreover, over the last few years, economic growth has been driven by developing new software, which can be done on extant hardware. Facebook, for example, needs a server farm to function, but the actual product is code. So, we can have services that contribute to economic growth without necessarily using natural resources. And even then, we are making scientific breakthroughs in renewable energies, space mining, and resource recycling.Karl Marx definitely presented a powerful critique of capitalism in "Das Kapital" and "The Communist Manifesto." In particular, I like how he highlighted that in reality, market exchanges aren't entirely free and equal. In presenting the concepts of "base" and "superstructure," Marx highlighted how "free exchange" in the marketplace is mixed with power, ideology, and politics. Under capitalism, society itself becomes embedded in the economy. Marx was also correct in pointing out how capitalism generates inequality, and how there is a tendency toward forming monopolies. His assertion that the state is captured by the "bourgeoisie" and elite interests is very true if you look at the nature of American politics. I find it amusing how people conflate communism with big government, when in reality, Marx viewed the state as a vehicle that would transfer the means of production to the workers and would ultimately wither away. Marxism as an ideal-type is fundamentally anarchist. Furthermore, I agree that market capitalism can "alienate" workers from labor, preventing many workers from fulfilling their creative potentials.Marxism is a useful paradigm with which to analyse the power mechanics in our society. Who really controls a society? Who determines the direction it takes, who has a lot of power in their life and who are powerless? All of these are definitely important questions that Marxism helps answer. Marxism as a tradition is quite rich, encompassing economists, philosophers, and great thinkers who built on, modified, and updated many of the critiques Marx presented in his seminal works.However, while Marx was best in his criticism of capitalism, he was not good at predicting the future of the global political economy. Marx viewed history as having a series of stages that follow one another. This is called a teleological view of history, where history moves towards a more equal form of society. In my view, Marx is overly deterministic; in reality, this process of change is almost beyond human control. Moreover, it is not necessarily the case that "changing material conditions," is the basis for how societies transform. This fact undermines a central tenant of “dialectical-materialism,” the philosophy to which Marx and Engels subscribed. Changes in society do not necessary conform to the thesis-antithesis-synthesis paradigm as presented in Hegel’s dialectic approach, which Marx incorporated into his analysis of class struggle. Some Marxist thinkers have reinterpreted Marx's work to be less deterministic; even then, it is unclear that successive stages of Marx's history lay the foundations for the next stages of society.In Marxist theory, socialism is a technical term referring to an unrealized stage of human economic development. Socialism succeeds capitalism, and is trumpeted as the "dictatorship of the proletariat." After the working class takes hold of the state, the proletariat seizes the means of production, either by nationalizing industries, or preferably by establishing worker-owned cooperatives. "Socialism" in Marxism refers to an intermediate and transitional form of society between capitalism and communism wherein workers are compensated based on their contributions to society.In "Grundrisse," Marx held that socialism would dramatically advance productive technology, enabling scarcity to be eclipsed. Mass automation would result in such abundance that humans would become free from material constraints, making ownership and private property irrelevant. According to Marx, socialism would inevitably and ultimately give way to communism, effecting a society involving the free distribution of goods. Consequently, in the post-scarcity communist society, the state would gradually "wither away," classes would evaporate, and all human needs would be met.However, Marx's teleological view of history is premised on the notion that the tendency to crisis is inherent in the capitalist mode of production. For example, Marx wrote that capitalism will collapse as the boom-bust cycles will progressively get worse due to contradictions inherent in capitalist production. Marx and Engels associated crisis with the “tendency for the rate of profit to fall,” “tendencies to overproduction,” “under-consumption,” “disproportionately,” and “capital accumulation.” In reality, there is no strong empirical validation for the Marxist claim that capitalism will implode due to its own contradictions, laying the foundations for socialism, which will in turn lay the foundations for communism.In their explanation for the tendency to crisis, Marxists stress the limited consumption power of the population. A central reason for the volatile business cycle is due to the exploitation of workers that occurs under capitalism. A major pillar of traditional Marxian economics is the “labor theory of value,” which states that commodities gain value when human labor is added to them. This in itself is not a problem, but according to Marxists, when workers don’t own the means of production, and don’t own the fruits of their labor, workers will inevitably be exploited.According to Marxists, under capitalism, the bourgeoisie (owners of the means of production), will buy three types of commodities. First, raw materials, second, physical capital (factory, tools, machines), and third, human beings who offer their labor. Capitalism is viewed by Marxists as a dehumanizing system that alienates workers by commoditizing them, and trapping them with wage slavery. The profit-incentive encourages capitalists to pay workers the bare minimum whereas workers want to keep more of the value their labor creates. This contradiction lies at the heart of economic crises.Marxists posit that the fact that workers don't own the means of production enables the bourgeoisie to forcibly extract surplus value from labor, which is then used to accumulate capital. Workers are given merely subsistence wages, and are not fully compensated for the value of their work. The profit motive therefore seeks to lower wages and expand demand. Essentially, workers have less purchasing power, but are expected to buy more. This leads to a crisis of “over-production” and “under-consumption” in which more goods are supplied on the market than what workers can effectively purchase.This occurs because "capital accumulation" is the main driving force of the economy. "Capital," according to Marxists, is money used by the bourgeoisie to buy a commodity and then sell it at a higher price to make a profit. "Capital accumulation" occurs when extracted surplus value is invested into "dead labor" (raw materials, tools, machinery) to generate even more profit. Essentially, capitalists use financial "capital" to buy machine and labor, sell the commodities workers produce at a profit, extract surplus value from workers by paying them subsistence wages, and reinvest profits into purchasing more machines to generate more commodities with which to profit. The cycle continues, and as more financial capital is accumulated, economic growth becomes unsustainable. This is summarized in the equation C-M-C for workers, as Marxists believe laborers become essentially commoditized, and M-C-M for capitalists. Ultimately these contradictions get larger, causing crises of overproduction relative to the ability of the workers to effectively demand goods supplied on the market. These crises lead to recessions in which the proletariat grow in numbers, and the bourgeoisie continue to shrink, eventually causing capitalism to implode on itself.The problem, however, is that most economists across many economic schools have agreed that goods don't have intrinsic value: the value of goods are subjectively determined by supply and demand (and this is how it should be: allocative efficiency and consumer sovereignty allow for a democratic economy). Marxism's theory of worker exploitation is fundamentally based on the "labor theory of value," which most economists view as false. So in the real world, there is only subjective value reflected in market price, no intrinsic "labor-value," so the contradiction doesn't exist. That's why in the real world, recessions in advanced nations haven't lead to revolutions by the working class to overthrow the bourgeoisie and establish a "dictatorship of the proletariat." If goods only have subjective value, lacking both use-value and need-value, then capitalism isn't inherently exploitative or unstable. Therefore, there isn't a compelling justification for completely abolishing capitalism.There is no structural or inherent factor within the capitalist mode of production for the tendency of the rate of profit to fall. Marxists argue that under capitalism, higher levels technological innovation increased physical productivity. With higher productivity came unemployment as machines replaced laborers in the production process, increasing the organic composition of capital. However, remember, Marxists adhere to the labor theory of value, and argue that only human labor can produce additional value to goods and services. The true value of goods and services is based on the time and effort put into creating them, according to Marxists. Therefore, if there are fewer workers, the greater output will embody a smaller value and surplus value. Paradoxically, accumulating physical capital, advancing techniques and the scale of production, moving toward oligopoly for the victors of market competition, and higher productivity through technological gains actually diminish corporate profits in the long run. Marxists assert that in the long term, falling rate of profit must always and inevitably result from an increase in productivity. This is systemic to capitalism, and occurs regardless of market fluctuations or financial constructions. When profits fall, crises of overproduction occur, resulting in firms laying off workers and causing recessions that progressive get larger and larger, and ultimately pose an existential threat to the capitalist mode of production.Why do corporations still invest in technology if they will incur losses in the long term? Marxists state that capitalists operating in a competitive market environment are forced to invest in new technologies to avoid losing market share. Moreover, in the heyday of a technological breakthrough, profits actually increase; it is only when new technologies are widely applied by all enterprise in a market does the average rate of profit fall. In addition, capitalists can utilize what Karl Marx deemed "countervailing" factors to maintain profits in the short-term, including forcing retained employees to work longer hours, reducing employee wages below the value of labor power, increasing the rate of exploitation of workers to extract as much surplus value as possible, and more. However, these countervailing measures could not suffice in the long term, and the intrinsic capitalist trends toward falling profits would prevail, causing economic crises. Ultimately, capital accumulation can pull up the demand for labor power, raising wages, and cutting into profits. The reserve army of labor may not always last.However, we can dismantle the bulk of Marxism's critique of economic crises by simply declaring the "labor theory of value" to be false. Economists, like Carl Menger with his theory of marginalism, have shown that goods lack inherent "labor" value. Goods only have subjective value determined by supply and demand. As a result, "surplus value" extracted from human labor is not the only source of profits for capitalists. Profit is very simply total revenue minus total expenses. Economic profits go beyond accounting profits and also take opportunity costs into account.Therefore, it is possible for business profits to increase into the long term even with higher levels of structural unemployment due to technological advances. Higher productivity will result in higher profits all else constant: it reduces unit prices given current prices, raising the innovator's rate of profit. Increased supply will reduce the price of the good, but other firms would follow in a competitive market to retain market share, meaning the original innovator would not witness diminishing profits. Profits would only fall if real wages were squeezed upward. Moreover, with the expansion of "reflexive labor," labor is applied to itself to increase the productivity of labor, improving profit making opportunities for firms.When profits rise or fall, they do so naturally or incidentally: falling profits do not arise from systemic, inevitable tendencies within the capitalist system as a base social order. It is not the case that economic crises are inherently crises of over-production dude to a mismatch of aggregate and supply (excess producer supply and inadequate aggregate demand due to capitalists winning the class struggle to maximize surplus value by pushing wages down and labor effort up). Therefore, there is no guarantee that if workers were determiners of both demand and production in the first place instead of capitalists, these intrinsic tendencies toward economic crises would cease to exist.Of course capitalist economies experience crises. We can observe market fluctuations and mismatches of aggregate supply and demand. But these economic crises are complex and multifaceted phenomena. They are caused by an array of changing endogenous and exogenous variables going far beyond those specified by Marxists. Moreover, neither do these crises represent systemic problems within capitalist production nor do they inherently pose existential threats to capitalism. It is true that capitalism does not have an inherent tendency toward spontaneously achieving equilibrium, particularly in the short-term. Laissez-faire economists don't account for sticky wages and prices, imperfect competition, and other microeconomic market failures preventing the economy from clearing.But economist John Maynard Keynes was right in arguing that crises can be properly managed and mitigated by proper government regulation and intervention in the economy. It is neither necessary nor ideal to abolish capitalist production as a means to eliminate such crises. Crises are caused spontaneously and randomly, but if prudently addressed, they do not become terminal illnesses. Keynes, for example, viewed profits as cyclical; they fluctuated with the supply and demand for investment capital, which was determined by the "animal spirits" of businessmen. However, the severity of these fluctuations could be mitigated by aggregate demand management by the state, through counter-cyclical fiscal and monetary policies. Moreover, in cases where economic crises are caused by structural factors (such as if markets are dominated by corporate monopolies, oligopolies, and state barriers to entry), supply-side reforms via anti-trust laws are prudent to reduce the market power of entrenched interests.Marxists overlook how the market capitalist economy is a circular and internal system. While frictions prevent instantaneous adjustment of the level of economic activity, there is a trend toward long-term equilibrium. In the long run, markets adjust to remove imbalances between aggregate supply and demand, meaning there is no chronic, aggregate overproduction. In fact, more production is beneficial to society provided it is distributed in a rather equitable manner.It's certainly the case that widening inequality can perpetuate and exacerbate recessions through denying consumers the purchasing power they need to purchase the goods supplied by producers. There can be crises of overproduction and under-consumption within capitalism. However the causes of inequality are widespread, and are far more diverse than "firms exploiting workers." Excessive inequality can be corrected for through a robust safety net that stabilizes fluctuating aggregate demand. And since there's no contradiction inherent in the system, welfare policies don't simply postpone a proletariat revolution by preventing "class consciousness" as some modern Marxists claim. The strict dichotomy between capitalism and socialism faded with the introduction of the modern welfare state, which is largely here to stay. I find New Keynesians' explanation for economic fluctuations to be much more compelling than that of Marxists.Regarding capital accumulation, the crux of the issue is that capital begets capital, so you wind up with a positive feedback loop that eventually goes critical if unchecked. However, rather than throwing the baby out of the bathwater, the trick is to erect an effective dampening mechanism that would prevent the runaway feedback loop. A dynamically structured progressive tax on wealth (as proposed by economist Thomas Piketty) would be an effective dampening mechanism. Capital accumulation is not an insurmountable issue, and can be properly restrained in a regulated market capitalist economy.Evolutionary socialist Eduard Bernstein was a leader of the revisionist movement within socialism, arguing that many fundamental Marxist premises were outright wrong. Bernstein challenged Marx on the premise that capitalism will collapse due its own contradictions. Bernstein delineated how Marx's predictions were wrong, and how as capitalism grew, ownership of capital became more diffuse, allowing the middle class to grow. Moreover, due to economic forces, the proletariat does not possess a homogeneous, unified class consciousness. Bernstein correctly criticized Marx's labor theory of value, and also pointed out how some in the proletariat class were becoming economic entrepreneurs themselves. Therefore, class distinctions actually become less pronounced, and although the proletariat will continue to grow in proportion to increase in capital, the working class will be diverse.Moreover, Bernstein critiqued "scientific socialist" teleology, highlighted the flaws in materialist determinism, and argued that spheres of influence beyond the economy hold way over society. Society and politics don't inherently become completely subservient to economics under capitalism. He was steadfast in his belief that capitalist development does not move in the direction of its own ruin. More broadly, Bernstein's collective works can be seen as a critique of leftist dogmatism in which he argues leftists should adjust their theories when their predictions are not borne out in the real world.Overall, Bernstein, in his works, argued against revolutionary socialism, and felt socialism could be gradually achieved through peaceful legislative reform within democratic societies. According to Bernstein, capitalism was already moving toward socialism given that the state was regulating working hours and conditions, and providing old-age pensions. It is unclear what Bernstein envisioned as his end-goal or ideal society, whether he was content with reformed capitalism (like modern social democrats), or if he ultimately sought social ownership over productive property. While Bernstein claimed to be both a socialist and a Marxist (albeit a revisionist Marxist), he was criticized by orthodox Marxists (like Rosa Luxemburg) for focusing on the means of social reform instead of the final goal of fully replacing capitalism with a socialist society. Therefore, it is possible that Bernstein's "socialism" was a form of ethical socialism that could be achieved through social-democratic reforms within a capitalist society. While I am not particularly sympathetic to either Marxism or orthodox socialism, and I approach social democracy from the perspective of a left-wing liberal (much like Paul Krugman), I do find Bernstein's works to be substantive reads.I believe much of what Bernstein wrote has been vindicated. In the real world, we can observe that capitalists don't inherently exploit workers and invariably beat them in the class struggle. It may seem that way in the U.S., but that's not the case in the capitalist economies of Germany, Sweden, Denmark, and Norway. Moreover, profits don't always go up, and wages don't always go down in the long-term: when we have competition, businesses are forced to pay workers very close to what they contribute to the firm's bottom line. In a monopsonistic or oligopsonistic labor market, however, strong government regulations like minimum wages and collective bargaining protections are necessary. But through competition, worker exploitation by capitalists is pretty much eliminated.Those are the reasons why I'm not inherently against the private ownership of the means of production. I don't see private ownership of capital and the profit-incentive being inherently exploitative, which pretty much all socialists do. True, you have market socialists, who don't view market capitalism as completely irredeemable. They prefer retaining market distribution. But they still subscribe to the incorrect belief that capitalism is intrinsically an exploitative and unstable system, and to remedy this, workers need to own economic inputs themselves.I believe it's fine for a business owner or manager to make a profit, even if the owner is not a worker himself. In fact, it's fine for not every business entity to be a worker co-op: after all, managers should be compensated for coordinating the other factors of production (land, labor, physical capital) and for risking their own financial capital in the business venture. This is particularly true if the business is a sole proprietorship or general partnership.Moreover, we need to consider paying business owners (in non-corporate business entities like in sole proprietorship, general partnership, limited liability partnership, etc.) the opportunity cost of managing the firm rather than being employees elsewhere. The profit motive is also a great incentive for innovation, creativity, and leadership, as entrepreneurs will be motivated to develop products and services that they feel consumers will want. The profit-incentive encourages entrepreneurs to solve problems faced by consumers, other firms, or the government; to exploit an original idea or invention; to fill a gap in an emerging market; to exploit specialized knowledge not readily available to others; or to produce an existing product more effectively or cheaply. Capitalist entrepreneurship generates vibrant small and medium-sized enterprises, growth, and wealth. That's why I support maintaining the capitalist mode of production and its essential components.Consumers are ideally sovereign in a market capitalist system: they ultimately decide what is produced and what is not, and by whom, with their demonstrated preferences. A market-based system would incentivize firms to produce goods and services for which others are willing to exchange with money.Businesses are entities that provide goods and services to consumers in exchange for money. Meaning, under market capitalism, you make money by providing goods and services that others find valuable. Unless you becoming rich by stealing people's money, your personal gain and the gain for others are supposed to become united. Usually, firms gain revenue by appealing to either a few consumers with significant trade ability, or to a giant mass of consumers with lesser trade ability.The successful entrepreneur has to play mind-reader, making informed, calculated guesses as to whether his or her project will be profitable. If it turns out that consumers think the entrepreneur's application of capital to be a waste, they do not patronize the business, and it will fail in order for capital to be reallocated to something consumers actually want. This is the invisible hand of the market at work. In the real world, this is a bit more nuanced due to circularity and "controlled volition," since non-price competition (via advertising, branding, marketing, etc) can influence consumers' preferences. Economist Charles E. Lindblom elaborated on this in his works. But even then, consumers cast dollar votes in favor of the products they wish to purchase, and do have a voice, even in monopolistic markets: while the demand curve is relatively inelastic for monopolies, if monopolies charge too high of a price, consumers will stop purchasing the monopoly's product.Critics of market capitalism may often assert that it's better to have a planned economy, either through central planning or decentralized planning, because the products and services produced under capitalism don't go a long way in improving our quality of life.Now, we can deride markets as institutions that facilitate consumerism and materialism. But keep in mind allocative efficiency (producing the goods consumers want at the right quantity, regardless of what they are) is a central goal of economics, “” ( Source In a market capitalist society, goods don’t have intrinsic value. They have subjective value. The point of market capitalism is to have a democratic economy in which demonstrated consumer preferences via dollar votes translate into price signals for producers to supply the goods consumers seem to want. Allocative efficiency is achieved when the economy supplies the goods consumers want. The consumers can want whatever goods they want for whatever reason. If we tell them that “apple watches” are pointless, and people should demand cancer treatment instead, then we are being authoritarian, and not allowing people to trust themselves and make their own decisions.Now, a legitimate concern socialists bring up is that goods and services in areas that aren't the most profitable, and aren't the most demanded by consumers, but very much benefit society, are under produced in the market system. For example, we could wish that more skilled scientists would work on drugs for lifesaving conditions that have a low financial turnover, rather than focusing on “money making” drugs like long eyelash enhancers.However, the products and services that are under-produced in pure free-market systems are often goods that the private sector is inherently inefficient inefficient at producing anyway, such as healthcare, education, infrastructure, libraries, etc. These are goods that the government needs to provide. So you can have the government provide these goods while retaining the capitalist system: the fact that the private sector can't adequately supply everything isn't proof that capitalism needs to be overthrown completely. We can have a mixed economy, which is superior to both laissez-faire capitalism and pure socialism.Furthermore, if we institute a system of basic income under a market capitalist system, even if people are laid off due to technological unemployment (and automation occurs at such a rapid pace that even high-skilled jobs are automated, and people can't find work even after going through vocational and educational programs), people can still subsist. Some will form businesses and cooperatives in industries that won't be automated, like the arts, or they won't want to work at all, and will opt for leisure. The fact that automation is occurring and people will lose jobs due to it doesn't mean that capitalism is a failed system. Additionally, unlike many technologists, the overwhelming majority of professional economists do not believe that automation will lead to a future mass unemployment dystopia, although automation could increase economic inequality. However, inequality can be addressed through prudent public policy.Moreover, the historical collapse of command economies in the USSR, Eastern Europe, and Maoist China was largely due to inefficiencies caused by information problems of centrally planned complex economies, motivational problems of self-interested people in societies purporting to transcend individualism, innovation problems of change-resistant bureaucracies, and social problems of individual liberty subordinated to corrupt central planning. True, command economies often boasted lower levels of income and wealth inequality than their capitalist counterparts, but that did mean much when almost everyone under command economies was very poor.Many of these countries engaged in "structural adjustment programs" to liberalize their economies in order to achieve economic growth, productive efficiency, and allocative efficiency. These countries moved away from a command economy, and toward a capitalist economy. This involved more private ownership and greater reliance on decentralized market decision-making than government ownership over resources and central planning. These adjustments included privatization, promoting competition, reducing the role of government, removing price controls, promoting freer trade, and promoting foreign investment.While short-term problems would arise including potentially higher pollution, higher inequality, higher unemployment due to layoffs from government jobs, an unstable price level/higher inflation, and the formation of monopolies, economic reformers hoped shifting away from central planning toward capitalism would improve people's standard of living in the long-term. They believed that these short-term problems could be ultimately managed, and in many cases, they were. While most of the nations that transitioned toward market-based systems fared better than they did under command economies, there is considerable debate as how to properly liberalize. Some economists favor "shock therapy," but others who are "gradualists" point how shock therapy had disastrous results in Russia.I'm also not convinced that decentralized planning would be superior to market-based forms of distribution. I just feel that there are too many information failures that occur with planning, especially in large-scale economies. Economic planning can't replicate the price mechanism that sends signals to producers to produce the goods consumers want, and signals to consumers to ration goods based on supply and demand.Moreover, it makes sense to have some income and wealth inequality, and pay more for jobs that require highly developed skills, rare abilities, and pose a lot of risk. This is to offset the costs of training and to incentivize people to take on jobs that are dangerous or require training. With diversified levels of educational attainment, different years of training, and other factors, one's marginal product of labor may demand a higher wage than someone else. Market signals, including a high relative wage for a particular occupation, can indicate to people which jobs are currently highly valued by the economy and need to be filled. After all, wage is determined in large part due to labor demand, which is derived from the overall demand of the finished good or service the worker is producing. Market signals, including wages for certain jobs, indicate to people what skills they should invest in and what the new jobs of the future are. Of course, the jobs that are valued by the economy will constantly change due to fluctuating supply and demand in both product and labor markets.Also, under capitalism, some businesses succeed, and others fails. So inequality resulting from that is natural. Inequality between successful and unsuccessful businesses has also been an incentive for entrepreneurs to take on the risk of being creative and coming out with new products consumers may desire. However, excessive income and wealth inequality should be curbed by the state, and the state should ensure an equality of opportunity, but not equality of outcomes.Some socialists are not Marxists, and acknowledge that Marxian theory of exploitation is flawed. They do not buy into the labor theory of value, and how that enables capitalists to extract surplus value from labor. However, these socialists base their critiques of capitalism on other arguments, such as how they feel capitalist business hierarchies are oppressive in nature.Non-Marxian socialists argue that capitalists are hypocrites. One one hand, capitalists claim to support "freedom" and "liberty." However, if that were true, capitalists should also be against hierarchical business entities, and should prefer that all exchanges are mediated over the market. Entrepreneurs would have to contract out all the work they did, and would not have direct control over employees in an authoritarian fashion to minimize cost and assert the dominance of property rights. The traditional capitalist firm is essentially and authoritarian regime, and while workers and free to join