Bernie Sanders: Keynesian on Steroids
By Gary North
If Forrest Gump’s mother were around, she would remind us of this fundamental truth: “Socialism is as socialism does.” With all the hoopla surrounding Bernie Sanders’ campaign, let us apply this principle to his message.
As far as I have read, he has not recommended that the federal government nationalize America’s industries. He has not called for government ownership of much of anything.
If socialism does not mean state ownership of the means of production, then what does it mean? If the distinguishing feature of the socialist ideology is not government ownership, then how can we distinguish socialism from run-of-the-mill welfare state/Keynesian policies? If socialism is simply an extension of the principal of Keynesian government deficits and central bank monetary inflation, then how is it distinguishable from what we have today?
In other words, from what we can see from Bernie Sanders’ campaign rhetoric, he is simply another version of what we have had in the United States ever since the end of World War II. I call it Keynesianism on steroids.
I realize that he calls himself a socialist. I also realize that virtually every Keynesian calls himself a capitalist. The question is this: what is the economic content, analytically speaking, of what a self-proclaimed socialist or a self-proclaimed capitalist actually teaches?
THE COMMUNIST MANIFESTO
Let us go back to Karl Marx’s famous 10 points that define the transitional socialist order after the proletarian revolution but before the arrival of the Communist paradise, which Marx prudently never defined or even described for more than a paragraph in an unpublished manuscript.
For as long as I can remember, which goes back to about 1956, I have heard conservatives supposedly quoting this portion of The Communist Manifesto. “We have most of these 10 points today,” they have argued.
No, we have not. And it is unlikely that we ever will.
Here are the 10 points, verbatim
1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all rights of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.
6. Centralization of the means of communication and transport in the hands of the state.
7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal obligation of all to work. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country.
10. Free education for all children in public schools. Abolition of children’s factory labor in its present form. Combination of education with industrial production, etc.
The second point has been applied in the West: progressive income tax. The tenth point, tax-funded education, began in Massachusetts a decade before The Communist Manifesto appeared anonymously in German.
Other than these two, we have none of the other eight points in the West. And in each of these two areas, things have gotten better.
1. Abolition of property in land. Enough said.
2. A heavy progressive or graduated income tax. The federal government did impose a horrendously graduated income tax, but that came under Woodrow Wilson as a wartime measure. It certainly did not come as a result of any socialist political party. We had a 91% top bracket rate under Dwight Eisenhower and John F. Kennedy. Rates at the very top were dropped under Lyndon Johnson to 70%, and again under Ronald Reagan to 29%. There are horrendously high rates of marginal tax rates in Scandinavian countries, and Britain had high rates for a long time. But high marginal tax rates on the rich have always been popular with voters. This is not because they were socialists; they are just run-of-the-mill thieves who believed in a reworked commandment: “Thou shalt not steal, except by majority vote.” This outlook has been basic to Western political theory for well over a century. But the people who favor this do not call themselves socialists, and they are correct in this regard. They are just people who believe that it is legitimate to impose high marginal tax rates on the rich. So, the super-rich hire lawyers and donate to PAC’s, so the effective tax rate imposed on them in the United States is well under 20%. Nothing the Democrats have done under Obama or Clinton has changed this. It is business as usual in Washington.