Sklar: Capitalism-Socialism Mix

Exerpt from “Thoughts on Capitalism and Socialism: Utopian and Realistic”
Journal of the Gilded Age and Progressive Era 2:4 (October 2003), pp. 361–76. Copyright © 2003 Society for Historians of the Gilded Age and Progressive Era. Reprinted with the permission of Cambridge University Press.

[C]apitalism is not to be equated with the thinking of the various persons who may have advocated or favored it. To do so would be an obvious fallacy. Capitalism is a mode of production or property-production system. Not all who favor capitalism are capitalists, and not all who are capitalists favor capitalism. Yet this fallacy is virtually taken for granted as a valid proposition when treating of socialism. Over and over again, historians and just about all others see socialism as the politics, movements, writings, and thinkers, known as, or professing to be, socialist, or favoring socialism.

The result is that historians and others have looked first for socialism in all the wrong places—that is, in parties, movements, personages, “radicals,” “the left,” leftists, books, pamphlets, newspapers, essays, and so on. No one would think of doing this with respect to capitalism. . . .

[A]ll [the aforementioned] versions of the old refrain [about no socialism in the United States] refer to the failure mostly of utopians and sectarians . . . to get power and control in U.S. government and society. But that is quite a different matter from whether or not socialism, as a mode of production, or as property-production-labor relations, has been present in real historical circumstances in the U.S. . . .

[If we examine social relations and institutions, rather than only ideas and their advocates] we are able to discern socialism (social relations, programs, goals, and outcomes) not only in government but also in the market—in investment input and allocated returns, in contractual relations, in pricing and taxpaying, and so on, and we can see market relations not only in the “private sector,” but also working in and upon the “public sector.” More than this, we can identify, and quantitatively calculate and measure, in both absolute and relative terms, what I call (a) a Capitalist Investment Component (CIC), and (b) a Socialist Investment Component (SIC), in market, associational, and government spheres alike, and we can begin to track their intersecting and interweaving, so that we are able to see the U.S. political-economy, ca. 1900 and since, as an evolving mix of capitalism and socialism—not in abstract or utopian terms, but in real history. . . .

Assuming the modern money-market, capital-wage-labor type of political-economy, the CIC refers to that part of investment, which itself or the returns of which go to investors’ private gain. The SIC refers to that part of investment, which itself or the returns of which go to social funding, or funding of social goals and programs. As the interplay of CIC and SIC has matured in history, returns on SIC and returns and gains from CIC increasingly go to individual (“private”) income of working-class and other non-capitalist people (think of pension funds, IRAs, social security, medicare, etc.). This, in turn, has involved the blurring or dissolving of older capital-labor class lines, as Marx anticipated, although not exactly in the way he anticipated. That is, workers share in economic growth, not only via nominal wage gains and SIC, but also via CIC returns and capital gains, which in the past accrued only, or overwhelmingly, to capitalists. . . .

In the period, 1890s to 1920s, the SIC in the U.S. was inchoate and far exceeded by the CIC, but the trend of its growth became established, and from this time forward, and especially from the 1930s on, the SIC continually grew, and more than this, increasingly became the condition of CIC markets themselves, that is, in the investment and price systems, as well as growing in government programs and activity, and those of nonprofit or civic or educational or philanthropic or social service organizations and associations of all sorts, religious and secular. Another way of putting this is that socialism became integral to the investment-price system—the market and business system (the “private sector”), just as capitalism has been integral to government programs and activities (the “public sector”).

Let me spell this out from a different angle. The prevalent—utopian (non-historical or ahistorical)—model for distinguishing capitalism and socialism is as follows:

This is essentially the Lassallean-DeLeon-Sombart-Lenin model rooted in late-19th century less developed (less modernized) societies with weaker civil societies and less modern class formation than in the U.S., England, and elsewhere—a model that subsequently came to prevail in the thinking of the intelligentsia, not only of less-developed countries but also of the more developed (western) countries, and not only among pro-socialists but among virtually all of the intelligentsia (from Sombart and Schumpeter to Galbraith and Sweezy, to Hayek and Friedman, to Heilbroner, Bell, and Lipset, to name a few well-known; and thinkers like Eduard Bernstein were dubbed “revisionists,”—”not really socialists”).

In contrast, a model more in keeping with historical experience, or historical reality, or the empirical record, would be something more like the following:

Capitalism/Socialism

This model corresponds with historical circumstances in advanced industrial/post-industrial societies like the U.S. (and others). In such societies, government has played a growing role in the economy and in the society at large, but along positive-government lines, rather than state-command, or at least substantially more the former than the latter, and government has remained, or been made, subject to the principle of the sovereignty of the people and rule of law, rather than the sovereignty of the party or party-state or clergy-state.

[Sklar follows this overview with several pages of examples from the government, market, and associational spheres.]

In conclusion, let me say that many historians have taken a utopian point of view in their understanding of U.S. history, especially late-19th and 20th century U.S. history, and particularly with respect to labor history, the more recent “social history,” political history, and capitalism and socialism. In so doing, they have adopted “pet” movements, i.e., “radical,” “dissenting,” or marginal movements, as the truly authentic—even if perennially failed—”agencies of change” (that is, change in the preferred form or direction), and they have erroneously assessed U.S. society as “capitalist,” “conservative,” and essentially static, whatever all the changes that have been actually going on. It is, I believe, this outlook that is static and “conservative,” not U.S. society in history. . . .