By Frank Little
Whenever I get angry about some particular strain of left-wing thought or discourse, I’ve found it’s helpful to remember that I live in a country where a decent chunk of the population have been bombarded with the idea that politicians like Nancy Pelosi and Chuck Schumer are socialists. I think it’s good for people to know what their political beliefs are and even argue about them a little bit, but the internet is perfect for arguing and bad for every other part of organizing so it’s important to keep a level head when it comes to discussing political ideologies.
That being said, if socialism really is as “on the rise,” as various opinion columnists would have us believe, it’s important to consider what socialism would mean in an American context. To that end, I’d like to offer a response to a policy paper published by Matt Bruenig at the People’s Policy Project outlining the case for establishing a social wealth fund. In the paper, Bruenig makes the case for a social wealth fund in America along the style of the Alaska Permanent Fund or those managed by the Norwegian state as a means of tackling wealth inequality. While Bruenig doesn’t explicitly call his proposal a socialist one, he traces the history of the idea back to market socialist ideas whereby a sovereign fund could serve as a way “to collectively own, control, and benefit from the wealth of the nation.” The idea of a social wealth fund was also outlined in a column by Ryan Cooper entitled “The Dawn of American Socialism.” Since Cooper also wrote the script for a video for Bruenig’s policy paper detailing the Alaska Permanent Fund,it seems safe to assume that establishing a sovereign wealth fund is to play a major part in creating in “an economic system for the many, not the few,” the goal of the People’s Policy Project .
The central problem with the sovereign wealth fund described in Bruenig’s paper is that it fails to contend with the fact that capitalism is a dynamic system of producing and distributing commodities. That is to say, it does more than dictate the distribution of wealth in society. Of course, capitalism does create an ever-widening gap between rich and poor and between owners and laborers. But making the distribution of wealth generated from the circulation of commodities more equitable doesn’t necessarily upend commodity production, distribution, and consumption.
Why does this matter? Well, for me it matters because understanding the ways that commodities are produced, exchanged, and consumed is central to understanding how capitalism operates and to creating something that could actually replace it. That’s why Marx begins his three volume critique of capitalism and bourgeois political economy with a long discussion of the nature of the various kinds of value which, under capitalism, are inevitably turned into commodities. Much to the chagrin of many people who begin reading the book, it’s something he spends much more time talking about than he ever does outlining what socialism is really meant to look like.
Identifying and carrying out the steps needed to get from a capitalist mode of production to a socialist mode of production is probably the defining disagreement between the various ideologies typically grouped together as “the left.” For proponents of sovereign wealth funds, the fact that they seem to offer a smoother transition from capitalism to socialism with less disruption of existing systems is a positive. Financial instruments like index funds and sovereign wealth funds are proof of concepts for market socialism and would address what seems to be the main problem with capitalism: private ownership of capital and the inequality and exploitation it brings. If the dividends of capital were socialized, as Bruenig has previously argued, it would spread the benefits of rallying financial markets to all people rather than the small group of very wealthy people who get the benefits now.
It’s certainly true that this kind of system would redistribute wealth in this country and go along way towards reducing inequality in the U.S. Making citizenship a requirement for collecting benefits means that the roughly 11 million undocumented immigrants in this country wouldn’t see much benefit, despite facing many additional obstacles to building wealth and particularly egregious working conditions. However, the problems with this proposal run deeper than just who is included within the US population.
The problem with this view is that it ignores the aspects of capitalism today that are fundamentally opposed to socialism. Because I want anybody reading to understand where I am coming from, I’ll lay out how I understand socialism, albeit in broad terms. Under socialism, the goods that any society — capitalist or otherwise — has to produce to sustain itself would be made and distributed in a way that provides a stable and fulfilling life to all, and one that doesn’t result in further irreversible destruction of our natural environment. A socialist system would distribute goods according to need rather than ability to exchange for them, and that production would be done in concert with nature rather than in opposition to it. It also would entail an end to the wage system, or at the very least the recognition that labor by people is what creates value, and that they should not have that value taken from them by the owners of businesses. Finally, there would be an end to the imperial power, exercised through corporate, military, and financial organizations, that the United States has tried to wield as the superpower left standing after the Cold War.
Marx is careful to distinguish between the production of different goods by different people (“the division of labor”) and the production of those things as commodities (“commodity production”). The former is necessary for all society unless we are to revert to a chaotic “grab-what-you-can” existence, while the latter is essential for capitalism specifically. This distinction is important to keep in mind when we examine the potential of current modes of production as potentially useful under socialism.
In his paper, Bruenig discusses the two Norwegian social wealth funds: Government Pension Fund-Norway, which holds investments in Norwegian companies, and Government Pension Fund-Global, which exclusively invests outside of Norway. These two funds do hold a substantial portion of wealth in Norway. As Bruenig puts it, “gpf-Norway controlled assets equal to 7 percent of Norway’s gdp [and] gpf-Global owned assets equal to 241 percent of gdp.”1 Between these two and the enterprises owned by the Norwegian state outright, the Norwegian government owns 59% of the country’s wealth (76% if you exclude private home ownership). In 2017 gpf-Norway generated a return of 26 billion kroner in 2017 while gpf-Global garnered about 1.3 trillion kroner, which using current exchange rates comes to about $3,100,799,000 USD and $122,600,822,000 respectively. If that wealth had been paid out as a dividend to Norwegians, it would come to about $25,500 per person.
Bruenig is right to conclude that “the idea that a society could collectively own three-fourths of its non-home wealth through social wealth funds administered by a democratically-elected government without any negative economic consequences would be rejected as preposterous by most political and economic commentators in America today.” While this may be true, I’d like to hold a proposal for a sovereign wealth fund to a slightly higher standard than that if it is to be a means of transitioning from the destructive and outdated capitalist system to socialism.
Below are some of the companies that the Norwegian sovereign wealth fund invested in during 2017 along with their investment in U.S. dollars. 2 Ask yourself: does the continued financial success of these companies have any place in whatever your idea of socialism is?
|JP Morgan Chase||$3,157,074,018|
These represent about 18% of the U.S equities that gpf-Global has in its portfolio. I would guess that any American fund would be more heavily invested in these companies since they are large American firms which have consistently generated mostly positive returns over time. Even if they weren’t, I don’t think its controversial to say that the profits and dividends generated by the firms I’ve listed above are some of the most oft-cited examples of capitalist exploitation, of both workers and the environment, and rent-seeking behavior. As such, many of them have a vested interest in preventing moves towards more sustainable or equitable systems of production. That exploitation leads to their increased profitability, which is why for many of the companies shown here, the fund has maintained or increased its investment in them year after year.
Conditions set by both the executive branch and federal reserve following the recession in 2008 have led to particularly high returns for U.S. equities. Low borrowing costs set by the Federal Reserve have allowed these and many other corporations to borrow money cheaply. Cheap credit, combined with the bonanza from the recent tax cuts, have led many corporations to buy back large amounts of their own shares to reduce the number of shares available and, thus, drive share prices higher, further inflating a corporate debt bubble. This has been good news for the fund in terms of dividends, since their equity investments are concentrated in the U.S., but it is likely bad news for most working people, who have seen little of the benefit of this stock market rally, and the environment, which is heating up in ways that are quickly outpacing existing models.
The only way that this sort of policy can offer liberation is if your version of socialism is predicated on the idea that current levels of consumption in America are fine, it’s just that not enough people can get in on the feeding frenzy. I believe providing adequate food, shelter, and security to most if not all people on Earth is feasible. That is a grandiose goal and probably the hardest thing in the world to accomplish, but I wouldn’t bother with politics at all if I didn’t think it was possible. But if it is to become reality, it will be at the expense of the consumer culture in which I was raised and that I currently participate in, along with many others. As the late Samir Amin wrote in his 2004 book The Liberal Virus, “the idea that capitalism could adapt itself to liberating transformations, that is, could produce them, without wanting to, as well as socialism could, is at the heart of the American liberal ideology. Its function is to deceive us and cause us to forget the extent of the true challenges and of the struggles required to respond to them.”3
Certainly wealth inequality is a key challenge, though it is one among many. A report from Oxfam entitled Reward Work, Not Wealth, published in January 2018, elucidates another one of those challenges: the immiseration of the global working class. As they state at the very beginning of the report:
All over the world, our economy of the 1% is built on the backs of low paid workers, often women, who are paid poverty wages and denied basic rights. It is being built on the backs of workers like Fatima in Bangladesh, who works sewing clothes for export. She is regularly abused if she fails to meet targets and gets sick because she is unable to go to the toilet. It is being built on the backs of workers like Dolores in chicken factories in the US, suffering permanent disability and unable to hold their children’s hands. It is being built on the backs of immigrant hotel cleaners like Myint in Thailand, sexually harassed by male guests and yet often being told to put up with it or lose their jobs. 4
Though the report doesn’t say for sure, Dolores could very well be working in a chicken factory for Tyson Foods. Fatima could very well be making clothing for Target or Gap. Crackdowns on immigrants both here in the U.S. and elsewhere in the imperial core make an already precarious workforce all the more likely to be exploited. While capitalism has continued to develop and expand since Marx published Volume 1 of Capital in 1867, stories like those laid out in the Oxfam report show that its expansion and development have been fueled by its oldest and most reliable source of energy: extracted labor power from immiserated workers.
Some might say I’m singling out the wealth fund when plenty of workers saving for retirement or who are receiving a pension are likely also invested in these companies. Of course that is true. But pensions are not socialism, nor do they claim to be. What I’m saying is that building a welfare state or distributing a straight dividend to citizens that is built on the continued success of these companies as capital investments is not really a model for socialism either.
Since Bruenig’s paper is primarily aimed at an American audience, it’s understandable that global inequality isn’t really addressed, but as a socialist in America I think it’s important to keep a global perspective. Pew Research found that about 56% of the world’s population is considered low income, meaning they live on between $2 and $10 a day. 15% of the world’s population is considered poor, living on less than $2 a day. Nearly all the countries with a majority of their population either poor or low income can be found in Africa, South America, and Asia. Sub-saharan Africa has more of these poor countries than any other continent, likely because of global capital’s consistent and rapacious interest in seizing the continent’s mineral wealth for itself.
By contrast, about 56% of people in America are considered high income, meaning they live on more than $50 a day. Norway’s percentage is even higher, coming in at 77%. Globally about 7% of the world’s population is considered high income, with most of the majority high income countries concentrated in Western Europe and the British Commonwealth, along with the U.S.
There are problems with these kind of income designations. Moving from poor to low income is often used as a measure of global improvement, but this seems specious at best. Similarly, grouping everyone above $50/day as high income seems to miss a key aspect of the world economy, which is characterized by astronomical wealth concentrated in the hands of an absurdly small group of individuals and corporations, something Bruenig has written on extensively. Nevertheless, this kind of disparity reinforces the need for addressing global inequality, not redistributing imperial plunder more broadly within the core.
I would suggest the Cuban system, at least in terms of its organizational structure, is at the very least much closer to the ideal I have laid out than Norwegian-style market socialism. According to the mathematician and ecologist Richard Levins, Cuba emerged from the 1992 UN Conference on the Environment and Development determined to take the resolutions of that conference and put them into practice without sacrificing developmental progress. These resolutions included a mandate to systematically examine patterns of production, encourage the development of alternatives to fossil fuels, and address the imminent shortages of water. Writing in ReVista in 2000, Levins asserts that integrating these resolutions into their development plans “represents the final recognition that despite society’s commitment to a rising standard of living, natural limitations will not allow a world-wide consumer society with consumption of energy and materials at Euro-North American levels.” Instead of expanding the scale and scope of that consumer society, development should instead be focused on “quality of life, cultural development, education, and people taking care of people.”
Cuba has injected this ecological thinking into their model for development in spite of near-constant attempts to undermine the communist government there. As someone living in the center of the empire behind that aggression, it is important not to whitewash the tremendous pressure this has put on Cuba to forgo an ecological focus in development. Adding ecological factors into decision-making was and is the subject of fierce debate, especially given the many challenges to survival which face a favorite imperial target. However, Levins describes one local Communist Party nucleo as presenting the case in one such formal debate that “far from ecology being ‘idealist,’ it was the height of idealism to suppose that we could pass resolutions and have nature obey.”
The sovereign wealth fund described in the PPP paper suggests a kind of “one weird trick” path to socialism, as if simply redirecting the flow of capitalism’s spoils will change where they came from. It’s a seductive idea, but calling it socialism does a disservice both to the history of radical left action, such as the struggle for independence by formerly colonized people, and to the ongoing realities of imperialism and settler colonialism that built this country and maintain its hegemony today. I am willing to admit that I can’t conclusively lay out the path to socialism, but I think that socializing the benefits of investment in the global economy as it exists today is more likely to further entrench the most egregious abuses of capitalism rather than eliminate them.
It may well be that establishing a public stake in the private wealth currently being directed almost straight upwards could play a part in the transition from capitalism to socialism, perhaps as a means of ensuring liberation for those who have difficulty working. But it is important not to forget that the returns to an American sovereign wealth fund, without significant and concurrent changes to global supply chains,management structures, and reliance on fossil fuels, would continue to come at the expense of the people whose extracted labor power creates value in the first place.
In 2017, the wealth of world billionaires increased by $762 billion, which Oxfam estimated would be enough to end extreme poverty seven times over. This suggests that wealth redistribution, in addition to greater labor protections and higher wages globally, might not be mutually exclusive. However, steps taken to mitigate even just the most extreme abuses, like slave and child labor, in global supply chains of companies like Nestle or Kellogg would have a direct and negative impact on the returns that any sovereign wealth fund would get on investing in those companies. What about if we wanted to focus on not just ending slave and child labor and extreme poverty but also help those considered “low-income”?
Even if a sovereign wealth fund was committed to using its voting power as a shareholder to influence corporate policy, enacting changes that go against the fundamental incentives of capitalism would require enough voting power to overrule every other large investor who isn’t burdened by any such scruples about where their returns come from. Where would that number of shares come from? If they would have to be purchased rather than created by the firm, where would the money come from?
I want socialism because I want a different and better world, not just for me but for people in Haiti, El Salvador, India, Congo, and Palestine too. Building that different world means reckoning with how the one we have was created. It means recognizing that America’s consumer-driven capitalism, supported as it is by dollar hegemony and a massive, seemingly constant military mobilization, robs oppressed working people both here and abroad of the things they create and, more importantly, their lives. But in addition to these more pressing concerns, it robs even the wealthy capitalist of their connections to the natural world and to each other, replacing them with competitive consumption, social entropy, and ecological collapse.
To return to the mandate of the People’s Policy Project, if we want to build an economic system for the many not the few, who constitutes the few? Who constitutes the many? The scale of wealth inequality globally does not mean that inequality in the U.S. can’t or shouldn’t be addressed. What it does require, however, is a more nuanced understanding of not only wealth inequality, but how the wealth was created in the first place.
Bruenig would have US citizens turn into socialists by becoming shareholders in Uncle Sam’s index fund. If that’s what “American socialism” is, I guess I’m gonna have to find something else to call myself.
Frank is a member of the IWW in the Midwest active in the Incarcerated Workers Organizing Committee. Unlike his namesake, he is not a tough guy, just a humble librarian.
1. Side note: I’m not sure why it’s supposed to be staggering that the much larger fund that exclusively invests outside the country would hold assets greater than the GDP of just that country.↩
2. Find the portfolio of gpf-Global here: https://www.nbim.no/en/the-fund/holdings/holdings-as-at-31.12.2017/↩
3. P. 27.↩