McGowan: Socialism, Free Markets and Diversity
by Richard McGowan, Ph.D.
A useful way to help students understand economic arrangements is to place the phrases “completely free market” and “perfect command systems” at the end of a line and assign places to countries on the line. A completely free market, a polar end of the continuum, has no regulation governing private property and voluntary exchanges; a perfect command system has no private property and no voluntary exchange system. Neither endpoint would have a country on it. No pure free market or command systems exists — and with good reason.
Free markets should not tolerate Sherman tanks as private property or death-inducing drugs available in stores. Command systems cannot possibly outlaw all private property. Every culture in world history has had or does have property owned by individuals. Beads, shirts, houses, cars, loincloth, spear — every culture recognizes some items as individual and private. The question is, how much private property can an individual have and control?
For Marx, the very thought that individuals could control property individually was anathema. In The Communist Manifesto, from which sprang socialism, he wrote that “the theory of Communists may be summed up in a single sentence: Abolition of private property.” (section II) Marx occupies an endpoint on the continuum.
Countries near the Marxist endpoint tightly control property and govern exchanges among individuals. The old U.S.S.R. did that. One of my students visited there and reported that the Soviet customs agents counted the number of jeans, white socks and pens that a foreigner brought into the country. On a tour, she was prohibited from using a camera without guidance.
Venezuela and Cuba would be close to the Marxist endpoint. So would China; even though it allows some free market activity, the government controls that activity. Somewhere left of the center would be the Scandinavian countries as well as Canada, mostly due to ‘extensive welfare benefits,” as the CIA World Factbook put the matter. Switzerland and the United States would clearly be right of center, toward the completely free-market endpoint.
The Scandinavian countries, though often used to argue that socialism works, have market economies. How could they be classified as more toward the socialist endpoint? The two elements for capitalism to exist are a voluntary exchange system and respect for private property. While Sweden, Denmark, Norway, Iceland and Finland have free exchange, respect for private property may be a problem. Of the five countries, the lowest average personal income tax is Norway’s 38 percent (tradingeconomics.com and other sources). Three of the countries had an average personal income tax over 50 percent. For the United States, the average tax was 37 percent.
Other taxes are also higher in the Scandinavian countries. I have a Finnish grocery receipt from my visit in 2006. Gefilsmaito (milk), suklaapatukka (candy bar) and Kellogg’s Frosties were taxed at 17 percent; Sandels olut and Pilsner Urquell olut were taxed at 22 percent.
The highest state sales tax in the United States is Louisiana’s 10 percent sales tax. The sales tax in Sweden, Norway and Denmark is 25 percent; in Iceland and today’s Finland, the sales tax is 24 percent.
In three of the countries, members of the two largest churches pay a tax of 1 percent to 2 percent, depending upon where they live. Americans, of course, pay no church.
The “extensive welfare benefits” in the Scandinavian countries need considerable support from the population. For the Finnish population, roughly 5.5 million people, it is not that difficult to determine what people will support. Finland is over 90 percent native, according to the CIA World Factbook, and 70.9 percent Evangelical Lutheran Church. My students in Finland told me, “The number is too low because people claim no religion on tax forms so they don’t pay the church tax. If they want to get married in a church, they claim affiliation for that year and then drop out.”
In other words, Finland has a small population, with around 85 percent belonging to the same church and over 90 percent with the same ethnic heritage.
What about the other countries? In Denmark, ELC church members, 74.8 percent, pay a church tax. The country, of 5.8 million, is 86.3 percent Danish ethnic heritage. Norway is 71 percent ELC members and 83.2 percent ethnically Norwegian. Sweden, with 10 million people, is 61.8 percent ELC and 81.5 percent Swedish ethnicity. Iceland, with a relatively small population of 343 thousand, is 67.2 percent ELC and 81 percent Icelandic.
Those numbers compare with the United States, with 329 million people and a polyglot ethnicity of 72 percent white (includes Hispanic), 12.6 percent black, 4.8 percent Asian and some groups at around 1 percent. The Factbook even lists 2.9 percent of the population as “two or more” races. And of course, race is not an ethnicity or culture, unlike the data presented for Scandinavian countries.
As for religion, the United States is 45 percent Protestant, 20.8 percent Roman Catholic and 1.9 percent Jewish. Several other religions were listed as well.
If a person took a random poll of 100 citizens in any Scandinavian country, it would be clear what people wanted. The countries are homogeneous. Policy-makers could respond. The old U.S.S.R. held together for over 70 years but “policy by force” is about as unAmerican as domestic decisions can get. And when the Soviet Union broke apart, the U.S.S.R became 15 different countries.
So it is clear that heterogeneous countries like America present problems that Scandinavian countries do not have to face. Consensus is harder to reach when determining what welfare programs to support, let alone having “extensive welfare benefits,” in a country as diverse as America. But if socialism is adopted nonetheless, review the numbers above and get out your wallet.
Richard McGowan, Ph.D., an adjunct scholar of the Indiana Policy Review Foundation, has taught philosophy and ethics cores for more than 40 years, most recently at Butler University.