Deconstructing the Enigma of American Plutocracy

My new book is now available on Amazon, at a bargain price of $12.95. Above is the link. As a bonus to followers of my blog, below is a free chapter. I chose Chapter Eight because its short (less than 5,000 words), and there remains a stubborn misconception in many people’s minds about what socialism is, and what social democracies are. Enjoy!

(N.B., This was uploaded from the MS Word file before it was edited and converted to pdf, so there are likely to be some typos.)


Case Study: The Horrors of Living in a Social Democracy

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.[1]

  • Winston Churchill

What being a socialist means is… that you hold out… a vision of society where poverty is absolutely unnecessary, where international relations are not based on greed… but on cooperation… where human beings can own the means of production and work together rather than having to work as semi-slaves to other people who can hire and fire.[2]

  • Bernie Sanders

The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand. And the fight we are in here, make no mistake about it, is a fight of individualism versus collectivism.[3]

  • Paul Ryan

Anything that Paul Ryan does not like must have some merit.[4]

  • Hypothetical musing from John Nichols

As I’ve previously noted, “socialism” is a word that has been poisoned. It has become, through decades of effective and invective messaging, a pejorative, and we automatically reject what it represents, without actually understanding what is represents. I have even been taken to task for calling some Nordic countries like Denmark, Sweden and the Netherlands “social democracies” by people living there. I think part of the problem is people don’t like their countries labelled (especially from foreigners) so faciley – their natural instinct is to push back with pedantry. But we communicate ideas mostly with words, and we can’t do anything about definitions being inherently malleable. Katja Kaila from Finland (one of those who admonished me) defines the Nordic Model as “a combination of free market capitalism with a comprehensive welfare state and collective bargaining at the national level.”[5] That’s just fine, but it’s also a mouthful, so when I use the term social democracy, think of Kaila’s description, along with the idea that within these democracies, citizens have decided (the “democracy” part) that they want a broad welfare state to meet everyone’s economic needs with correspondingly higher taxes (the “social” part), and of course free enterprise too. One might suppose this is because (although they may have been caught in between the machinations of dueling hegemonies) they have never been infected by the caustic viral infections in thinking that the current world’s (fading) hegemonic power, the United States, and the world’s rival hegemony, the Soviet Union, came to represent.

Another term that I use frequently which is also subject to some confusion is “political economy.” It is defined in various ways, but the Wikipedia definition is the most complete: “the study of production and trade, and their relations with law, custom, and government, as well as with the distribution of national income and wealth.”[6] The terms went out of fashion in the 19th Century with the development of the “science” of economics, which took its place. Economists, imagining themselves to be scientists, came to exclude the distribution of wealth from their thinking. They were concerned with growing the economy, and left it to politicians to decide how wealth is to be divided within society; in other words, how the pie was sliced was none of their concern. With the publication of Piketty’s Capital in the Twenty-First Century, however, which among other things clearly showed that economists should be very concerned with wealth distribution, the term is making a comeback. (The reason economists should be concerned should be self-evident – if political economies become so unbalanced that societies collapse, there will be no need for economists.) We are, according to a recent paper in Nature, very close to the inequality tipping point to civilizational downfall due to inequality.[7]

Blame it on the Russians

Last year, with the 100th anniversary of the Russian Revolution, I decided to re-read Louis Fischer’s 1964 magnum opus The Life of Lenin. That led to me to write an essay where I puzzled about the impact of the Revolution had on American capitalism. I wrote that

[t]he damage the Russian Revolution (and by extension the Cold War) inflicted on capitalism, was as subtle as it was insidious. Because we were battling a war of ideas, we could not dispassionately examine the warts of our beloved system of free markets and political liberalism[.] Doing so would be admitting the possibility of weakness for the enemy to exploit. Thus, the American propaganda machine rolled on for nine decades until the “truth” about of virtues of free market capitalism and the evils of autocratic socialism became a permanent part of almost everyone’s mental furniture. The stamping out of communism required, not surprisingly, our own purges and black lists for those with a tainted political ideology. Indeed, in many circles calling someone a socialist is still the ultimate political insult, and the central tenant of conservatism remains ideological purity, which must include banishment to the hinterlands of thought the slightest miasmic whiff of socialism (or abortion, but that’s another matter). It should not be lost on historians and political philosophers that the similarities of Lenin’s insistence on ideological puritanism with regard to state socialism is similar in kind to that of American conservatives in their fetishism of capitalism (the ideological ends always justifying the intellectually dishonest, and often violent, means).

But just like Putin’s Russia is unable to wean itself from authoritarianism, we are unable to wean ourselves from the idea that laisses faire capitalism is an unalterable, inerrant gift from the Heavens. The coterie of capitalists (or their cognate of corporatists) in their current unchecked state are not members of a religion, but rather a cult, which bastardizes and obfuscates the English language with is very own cultish Orwellian argot, turning the idle rich into “job creators” and the great unwashed working class poor into “takers.”[8]

This is a very real problem. The solutions are (1) the passage of time, (2) education, and (3) experience. First, as the Cold War fades from collective memory, so too will capitalist propaganda. Second, as I’ve noted before, many people simply don’t realize that even in hyper-capitalist America, we have a mixed economy, portions of which are overtly socialistic, for very good reasons previously discussed. If the neoliberals win and everything that can be privatized is privatized, then we educators will not have done our jobs. Third, personal experience is important as well, and lessens the impact of perceived evils of socialism have on older minds, for two reasons. In a 2016 Harvard University survey of people aged 18 to 29, over half had an unfavorable view of capitalism.[9] I speculate that one reason is millennials have no living memory of the Cold war and its ideological battles. Another is that they have felt the sharp and unforgiving edges of capitalism up close and personal. Be that as it may, oddly, in the same study only 32 percent of those surveyed had a favorable opinion about socialism, indicating some profound confusion in the minds of young people – again, educators have work to do. (Perhaps they have a well-thought-out alternative to a mix of these two systems, but I haven’t heard about it.)

My hope is that people at some point will realize that it is not a binary, zero-sum game, which is exactly how the battle between capitalism and socialism has been sold for a century. We need both systems working in a partnership of pragmatism. Some things private industry handles well, some things (notably healthcare) it does not. When I study public policy, I do it without making the mistake that most politicians make – trying to squeeze the policy in question to conform with their ideology. Knowing that all policies have unintended consequences, and also that given our incredibly diverse society we cannot be expected to promote everyone’s interests at all times, it is much better to analyze policy with a blank slate. The question I first ask to any policy issue is: What is the best policy which will promote the well-being of the most people while harming the well-being of the fewest people? From that perspective, it is quite easy to see that neoliberal economic policy turns that question on its head: hyper-capitalism promotes the interests of the few at the expense of the many. The two difficult questions that we must resolve are what the proper balance is between capitalism and socialism generally, and where free market public policies and socialist public policies should be applied specifically. Models for functioning, egalitarian, economically prosperous, safe, and happy nations, are before our eyes if we choose to examine them. I’m thinking of the social democracies of Europe. I surely will not argue that the policies operating within their political economies could or should be copy-pasted onto ours; that would be ham-fisted and foolish. But we can surely learn something by examining how they organize their priorities. Now, in a single book chapter I don’t think anyone should expect that could analyze in a meaningful way all of the varieties of social democracies out there, but I can do a reasonably good job of examining one, which shares many of the attributes of its continental neighbors. It also happens to be one of the happiest countries in the world.


As mentioned, economists have traditionally measured GDP growth as a positive indicator, which they often wrongly equated with wealth generation across the board, and which now seems horribly short-sighed. Thus academics in other disciplines – notably psychology – began asking uncomfortable questions, such as: Why, in the richest country in the world, are so many people unhappy? It’s an important question, and has led to, among other things, the OECD to “redefine the growth narrative to put people’s well-being at the center of governments’ efforts,”[10] and the head of UN Development Program to criticize the “tyranny of GDP.”[11] It also led to the creation of the World Happiness Index in 2012. The Index measures the following metrics ascertain a nation’s socioeconomic well-being or “happiness”: (1) GDP per capita, (2) life expectancy, (3) social support, (4) trust, as measured by perceived absence of corruption in government and business, (5) perceived freedom to make life decisions, and (6) generosity. The top five happiest countries on the Index for 2017[12] were Norway, Denmark, Iceland, Switzerland, and Finland. The top 10 also included the Netherlands, Canada, and Sweden. The US ranked 14th. Clearly, GDP is a factor in assessing life satisfaction, but it is only one factor in the milieu of other things leading to social well-being. I hardly need to point out that the happiest countries weigh heavily toward social democracies, or in the case of Canada, democracies with a very sturdy social safety net, including a single-payer (“socialized”) medical system. Now, this could be a coincidence, or it could be Flavin’s, et al. conclusion published in the academic journal Social Forces that “we find robust evidence that citizens find life more satisfying as the degree of government intervention in the economy increases” is correct.[13] It seems unlikely that Paul Ryan would ever read this book, let alone the study I just cited, but one can only imagine the dysphoria it would cause him if he did.

With that throat-clearing out of the way, what would it actually be like to live in a godless[14] social democracy below sea level with foul weather year-round? Well, a 2014 article in the Financial Post outlines in detail what it’s like to live in Denmark.[15] Wealth inequality is, among developed nations, the second lowest in the world. Healthcare is free. Not only is education free, but students over the age of 18 living on their own can receive a stipend of US $1,028 per month, and students living at home half of that. Unemployment benefits for up to 2 years pays out US $1,902 per month. Free job training. Subsidized child care. A generous public pension system. Fuel subsidies and rent allowances for the elderly. Strong unions have negotiated a universal minimum wage of US $20.30 per hour. Denmark is of course not without its problems, but many of them are problems other countries would love to have; for example, free education has resulted in a shortage of unskilled labor. And taxes are high, but the Danes like it that way: a Gallup poll found that 88 percent of Danes like paying their taxes, and 66 percent oppose any cuts to the welfare system. Sure, a lot of this has to do with the national culture. The Financial Post notes that “[a]mong Danes…distaste of ostentatious wealth tends to outweigh tends to outweigh dissatisfaction with taxes.” And yet Denmark’s GDP per capita for 2014, according to World Bank data, was $62,425 in US Dollars;[16] GDP per capita for the same year was $50,782 in the United States.[17]

In proportion to population, the middle class is significantly larger than in the United States. Forty-two percent of the working population in Denmark have after-tax incomes between US $36,700 and US $73,300 per year in 2014. In the same year, an income of $27,000 per year would put an American into the top 50 percent of income earners.[18] (Because we’re comparing developed economies, adjusting for purchasing power parity barely moves the numbers). With regard to income inequality, slightly less than 2.5 percent of Danes earn more than $100,000 per year. In the US, the number is 20 percent.[19]

Denmark is not business-shy about private sector market productivity either. It enjoys a trade surplus, and is a net exporter despite having few valuable natural resources. Among developed nations, it has one of the highest credit ratings. Also, despite a regulated business climate, Denmark consistently ranks among the top 10 countries for business according to yearly rankings done by Forbes. It topped the list again in 2014 as number one.[20] One reason is that it is governed by a many political parties with diverse, and often divergent, interests, and no single party has an absolute majority. That means that the parties must form coalitions and reach a consensus to pass legislation, “ramming legislation through,” as is so common in the US, is seldom an option in Denmark – pragmatism and compromise are the rules and not the exceptions. Now, this, I fear, is the point that I am going to completely lose American conservatives (if I haven’t already). Because Danes almost universally support their state welfare model, it allows for increased flexibility of Danish businesses. This I know is completely counter-intuitive to neoliberal ideologues, but if one were to be able to somehow inoculate oneself against ideology, even if for the minute it will take to read the next few sentences, the idea that a robust welfare state is good for business will make perfect sense.

Denmark has a regulated, but streamlined and efficient, business regulatory market, often referred to “Flexisecurity.” Employers are allowed to fire employers easily and without incurring direct costs in order to marshal resources efficiently elsewhere. This is permitted under Danish law precisely because unemployment benefits provide and actual livable income while the ex-employee can take advantage of free job retraining programs. Of course this comes at the cost of higher taxes, but the benefits are economic stability and a higher quality of life. Other European social democracies are organized around similar principles.

Living in Denmark doesn’t sound so bad, does it? As Linus Skov writes, “[O]ur enlarged welfare state provides us youths with a freedom of choice I suspect is not as dominant as elsewhere. [I have] the freedom to pursue a university education without a clear and lucrative career path, simply because I have a passion for it. My life in the workforce will not be a race against the accumulating debts, and the paths of my life will be decided by myself rather than my purse. That’s fortunate. To me, life is good. It’s better than it has ever been and likely better than in most other places on Earth. I’ve won the lottery, and I’m thankful for that.”[21] There are no utopias, there are no perfect societies. But there are ones built upon the idea that policies that work for the most, and harm the fewest, are good ones, and should be fought for if the concept of a society is to have any meaning at all.

What, then, is the practical objection to social democracy? Any ideological objection would be incoherent. The Danes and others seem to be having their cake and eating it too. Taxes are high, but so what? The quality of life is good, as is the business environment. Denmark is a country with a population of less than 6 million, fewer inhabitants than New York City, but it still boasts 70,000 millionaires[22] and 5 billionaires,[23] according to Forbes.[24] Perhaps an objection would be that it works for Denmark because that is part of their deeply ingrained culture, and our culture is different. Okay, but that’s merely stating the obvious. Culture is an invention of man, and it obviously changes over time. The last time our political economy was significantly overhauled was during the New Deal, with the ready, sometimes even enthusiastic, support of the business community. We’ve been walking back the progress ever since. I wonder it will have to get as bad as it was during the Great Depression for fundamental change will come, and even if then. As of this writing conservative ideologues are sticking to their guns, and there can only be three possible reasons which are credible: (1) they are true believers, which mean there are irredeemably ignorant and unlikely (but possibly – see below) to consider the mountain of evidence against their ideology; or (2) they are maniacal in their feckless, irrational, short-term self-interest and are willing to whore themselves out to the highest bidder in or to stay in power, the country – and eventually themselves – be damned. I’m agnostic about which of these two possibilities are more likely. There is a third possibility, though, and that is that they are right, and the neoliberal economic model is the best one to pursue to ensure the rising tide raises most of the ships. If that is their true position, then all I can say is that the great body of evidence is against it, if history can serve as any guide. America is a young nation, but it is no longer a grade-schooler. It is high time that it stops believing in fairly-tales, myths, and comforting tautologies if it expects to make it into adulthood with its peers.

A Note on Chomsky

I don’t think it would be possible to write about American plutocracy in any depth without talking about Noam Chomsky. He is, after all, arguably, America’s leading public intellectual, and has developed an enormous body of work, much of it directly dealing with issues I raise. Despite his prolific intellectual output and corresponding accolades from the academic community, though, he is almost never seen being interviewed by corporate media outlets. I wonder why that is. Nevertheless, in arguing that under the American mixed economic system socialism is for the rich and capitalism is for the poor, he notes that

[e]very time there is a crisis, the taxpayer is called on to bail out the banks and the major financial institutions. If you had a real capitalist economy in place, that would not be happening. Capitalists who made risky investments and failed would be wiped out. But the rich and powerful do not want a capitalist system. They want to be able to run the nanny state so when they are in trouble the taxpayer will bail them out.[25]

The point seems to be unrebuttable, except to the extent that a capitalist might argue that the bailout was a necessary solution to prevent total financial collapse and an all-out depression. But that would not be an argument in defense of capitalism at all, it would rather be an argument for socialism, for a particular “free market” industry relying on the everyman, who is nonetheless then, unfairly held to the harshest strictures of neoliberalism. The financial bailout of 2008 was a pragmatic solution to a very big problem, and there is no way you can put the square peg of pragmatism through the round hole of neoliberalism no matter how hard you try. Denmark has never been foolish enough to ever attempt it.

But I nonetheless have quibble with Chomsky. He, like many intelligent people, and because of his intelligence, tend to impute motives to people that they may not have, and are impossible to know in any regard. For example:

Well, the Washington consensus — which is basically designed for the Third World to make it that way, and keep it that way — it’s now being applied not just to the Third World countries, but to the rich industrial societies, with the United States and Britain in the lead. However, it’s with a twist.

Since it’s being applied at home, this is really existing free market theory that’s being applied at home, meaning nuanced. So, powerful government to protect the rich, and market discipline and tough love for everyone else. And you see that very clearly. Go through the various elements of the Washington consensus.[26]

First, as an aside, the above excerpt was from a speech at Harvard in 1996, and what Chomsky called the “Washington consensus” is now more commonly referred to as neoliberalism. (“Consensus refers to the fact that liberals either acquiesced or were coopted into accepting the conservative capitalist argument in the 1970s.) The point Chomsky is making, though, and repeatedly makes to this very day throughout his lectures and writings, is that the wealthy and powerful know that capitalism and neoliberalism are just long con jobs. He does this too with education policy. He argues that our system of education not only indoctrinates, co-opts, and disciplines students into supporting the very neoliberal system that harms them (for example burdening them with student loans, among other things), he argues that it is meant to.[27] In imputing motives to decision makers that he cannot know – and that they repeatedly deny – he is making a mistake that many smart people make, most notably advocacy journalists.[28] When Chomsky does this, he marshals impressive evidence which supports his elaborate theories he develops, with their own particular jargon, in order to reach the (rather convincing) conclusion that neoliberalism is not an honest mistake, but rather an intentional and iniquitous scam to rob from the poor and give to the rich. In reviewing Chomsky’s work that deals directly with the political economy, it reads like a highly intellectual freshman manifesto. Of course it could be that puppeteers know that it is all a scam. After all, Chomsky’s arguments make perfect sense. But then again, one could design a perfectly rational and plausible theory to explain many things outside of the realm of science, but because it is rational and plausible does not make it truth. If one accepts that proposition, one must also accept that it could also simply be that the progenitors and advocates of neoliberalism have been convinced that it is the best policy for the most people, and have so fallen in love with their beautiful theory that they have elevated it – as Stalin did with communism or Hitler did with National Socialism – to a state religion. The fact that neoliberals might actually believe they are “doing God’s work” need not include any nefarious intent. To the extent that it is quite obviously not the best policy for the most people, and they cannot see that to be the case, one must account for the possibility of the enormous power dogma, combined with the enormous effect of cognitive biases. Neoliberalism is, as I continue to argue, a religion. Arguing facts against someone’s religion will seldom convince them – they will simply either refer their faith and their holy book(s) or engage in clever casuistry to support their faith, or both. For neoliberals, their holy book is Adam Smith’s The Wealth of Nations, and their casuistry are the combined writings of von Mises, Hayek and Milton Friedman, who became the theologians and apologists for a god (Smith) that did not even have much faith in his own creation.

Now, one might argue that the motives of those wishing to perpetuate this system are irrelevant – the harm caused is the same either way. But the possibility that these people are indeed true believers is more than a minor point. If we take the Paul Ryan’s of the world at their word – that capitalism when freed from the surly bonds of government will allow for the true flourishing of the human potential – then there at least exists the possibility, however slight, that they can be convinced of their error. It will take the marshalling of growing evidence and effective argumentation. It is not, I believe, a Sisyphean task, because history demonstrates that it has happened before. Remember that neoliberalism became the accepted fashion in the 1970s, and it can go out of fashion too, just as runaway capitalism did in the 1930s. The pendulum swings in both directions. Therefore, our goal should be twofold: defeat neoliberalism through the political system we have in place and build a true social democracy, and in doing so, convince as many as we can toward apostasy. It would take only one high priest conservative neoliberal order to renounce his error and embrace social democracy, for the dominoes to fall.

Chapter 8 Endnotes

[1] The Churchill Project, Hillsdale College, available at

[2] Kruse, Michael, “14 things Bernie Sanders has said about socialism,” Politico, July 17, 2015, available at

[3] Atlas Society audiotape, audio transcript available on at

[4] Nichols, John, “Is Paul Ryan Making Americans More Favorably Inclined Toward Socialism?” The Nation, December 2, 2012, available at

[5] See answer on Quora at


[7] Kohler, Timothy A., et al., “Greater post-Neolithic wealth disparities in Eurasia than in North America and Mesoamerica,” Nature, November 30, 2017, 551, pp. 619-622 available at (paywall)

[8] Olives, Glen, “You say you want a revolution? Well, you know…,” DAILY KOS, September 27, 2017, available at

[9] Ehrenfreund, Max, “A majority of millennials now reject capitalism, poll shows,” Washington Post, April 26, 2016, available at

[10] Strategic Orientations of the Secretary-General: For 2016 and Beyond, Meeting of the OECD Council at Ministerial Level, Paris, 1-2 June 2016, available in pdf format at

[11] Altschuler, Glenn C., “The Tyranny of GDP,” Huffpost, June 16, 2016, available at

[12] The World Happiness Report 2017 can be downloaded in full or in part at

[13] Flavin, Patrick, et al., “Assessing the Impact of the Site and Scope of Government on Human Well-Being,” Social Forces, June 2014, 92:4, pp. 1241-1258.

[14] A full quarter of Denmark’s population are non-religious, and the rest are fleeing fast. See, e.g., Payton, Matt, “Record numbers leave Church of Denmark after atheist adverts,” Independent, September 7, 2016, available at

[15] “How Denmark’s welfare program has narrowed its wealth gap to one of the smallest in the world,” Financial Times, June 24, 2014, available at



[18] Van Dam, Andrew, “What Percent Are You?” The Wall Street Journal, March 2, 2016, available at

[19] Guillot, Craig, “$100,000 income: No big deal anymore,” Bankrate, January 8, 2015, available at

[20] Badenhausen, Kurt, “U.S. Slides Again as Denmark Tops Forbes’ Best Countries For Business,” Forbes, December 17, 2014, available at


[22] Marsh, Pia, “Almost 70,000 Danes are millionaires in U.S. dollars,” CPH PostOnline, June 17, 2016, available at

[23] Ibid.

[24] Forbes, “The World’s Billionaires,” available at

[25] Polychroniou, C.J., “Socialism for the Rich, Capitalism for the Poor: An Interview With Noam Chomsky,” Truthout, December 11, 2016, available at

[26] Chomsky, Noam, “Free Market Fantasies: Capitalism in the Real World,” Delivered at Harvard University, April 13, 1996, available at

[27] See, e.g., Jones, Josh, “Noam Chomsky Spells Out the Purpose of Education,” Open Culture, November 8, 2012, available at

[28] See, e.g., Olives, Glen, “No, Donald Trump is Not an Evil Genius,”, April 7, 2017, available at