Socialism and the Welfare State

Over at Twitter, Matt Yglesias shared my last post alongside the observation that it is weird that one of the biggest proponents of the welfare state in the policy game is “officially a socialist for Twitter feud purposes.” In the spirit of bringing the old blogging back, I figured I’d use it as a peg to discuss some of the underlying ideas Yglesias is tapping into in his tweet.

Of course, the claim that I am “officially a socialist for Twitter feud purposes” is clearly not true. I became a socialist in high school shortly before Twitter came into existence and was an active socialist – in the sense of being involved in socialist organizations – throughout college before I ever started my website or had a Twitter account. In fact, the only reason I even created a Twitter account was to promote this socialist blog, which I started in 2011. This was well before any kind of feuding was conceivable.

But the interesting part of Yglesias’s tweet is not his theories about my intent. It is his apparent view that welfare state advocacy is at odds in some way with socialism. Because it’s just a tweet, Yglesias does not elaborate on this idea, but it is not exclusive to him. Over the years, various socialists and non-socialists have expressed views that suggest that the welfare state and socialism are in tension with one another, primarily because they are supposedly competing approaches to solving the economic problems of laissez-faire capitalism.

In many ways, this debate mirrors the debate that operates inside non-socialist policy circles about the relative merits of “predistribution” versus “redistribution.” The former refers to policies that change the way that factor payments (i.e. payments to labor and capital) are distributed while the latter refers to policies that change the level and composition of taxes and transfer income.

Understood this way, socialism is the ultimate predistributive policy because it radically alters the distribution of factor payments by, among other things, zeroing out capital payments in order to hugely increase labor payments. This can be seen as being at odds with the welfare state approach, which merely taxes away some labor and capital payments in order to provide some transfer income to the poor.

But this is simply not the correct way to understand these two things. Socialism and the welfare state are not competing ways to address the same problems. They are complementary ways of addressing very different problems.

One of the problems with the laissez-faire capitalist system is that, in it, the ownership and control of production is concentrated in the hands of a relatively small group of people. This is inegalitarian in and of itself, but also has additional inegalitarian side effects, especially when it comes to the distribution of the national income. This feature of capitalism is the primary driver of inequality at the very top of society. Socialism, understood as the collective ownership and control of non-produced assets and capital goods, aims to address this specific problem.

Another of the problems with the laissez-faire capitalist system is that it provides no direct income to the large share of the population that is not working at any given time. This feature of capitalism generates enormous inequalities and is an especially large driver of the inequality and poverty found at the bottom of society. The welfare state aims to address this specific problem.

From this analysis, we can see that there are four possible combinations of views when it comes to socialism and the welfare state, which I’ve summed up in the table below.

Pro WelfareAnti Welfare
Pro SocialismEgalitarian SocialismDesertist Socialism
Anti SocialismWelfare-State CapitalismLibertarian Capitalism

I consider myself an egalitarian socialist, meaning that I think we should be trying to achieve a society that is as economically equal as possible and further think that both socialism and the welfare state are necessary to do that.

Occasionally, you can find a socialist who is very emphatic that they are concerned only with ending the exploitation of workers not with achieving income equality per se. What this means in practice is that they want to do socialism, typically through worker cooperatives, but are not particularly interested in the welfare state. You could call these individuals desertist socialists as they are clearly motivated by notions of labor desert, but this is not a term anyone uses, just one I’ve made up.

More typically, the socialists you’ll find talking about how they don’t like the welfare state are not desertists in this sense. They just don’t realize that, even in a socialist society where capital income was entirely predistributed to workers, you would still need a welfare state in order to avoid inequality and mass poverty.

Of course, as a historical matter, it seems like most socialist thinkers and leaders have been interested and supportive of the welfare state. This was true in the USSR just as it was true in mid-century Sweden. I think this is because most socialists are ultimately motivated, in large part, by egalitarian impulses and the idea that economic inequalities are unfair or unjust.

To see an example of this pro-welfare tendency in socialism, watch the former Swedish Prime Minister Olof Palme answer to the question of why he is a democratic socialist in the video below.