Tornado Alley (PROG)

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Socialism and Capitalism in Venezuela and Norway

"Stop Calling Trump a Populist
[...]
But he’s been in office for a year and a half, time enough to be judged on what he does, not what he says. And his administration
has been relentlessly anti-worker on every front. Trump is about as populist as he is godly — that is, not at all."

Does AOC and Bernie Sanders Represent a Norwegian or Venezuelan Future for the US?

Erik Engheim
Feb 26

As a Scandinavian married to an American I’ve been looking with great interest at the surge in popularity of candidates advocating a more Scandinavian style approach to economics.

However there are two competing narratives emerging in the US. The American left speaks of turning the US into a sort of prosperous Scandinavian welfare state, with high wages for workers, free health care and education paid for by taxes.

The right prefer instead to speak of how AOC and Bernie Sanders are going to turn the US into a failed state like Venezuela. Who is right?

Let me just start by saying, that the whole Venezuela idea is ridiculous, but there is still a value into going through the details of why this idea is so wrong.

What is Socialism?

The first fundamental problem is agreeing on what socialism is. When the success of Scandinavian countries are pointed to the American right has four typical counter points:

1. Scandinavian countries are not socialist, but rather capitalist.

2. All their wealth was produced back when they were capitalist and they have been going downhill ever since they went socialist.

3. Scandinavians themselves, don’t call themselves socialist.

4.Scandinavia is social democratic, not socialist, which is totally different.

The claim is essentially that Scandinavian countries are not real socialism but Venezuela is. To which I would ask, by what metric?

Instead of arguing over which country “feels” more socialist, let us look at the data.

Public Sector Employment

While we can disagree on the specifics, it should not be controversial to claim that in a socialist society, more people work in the public sector than in the private sector.

Statistics on this .. https://en.wikipedia.org/wiki/List_of_countries_by_public_sector .. shows unsurprisingly that Cuba has the highest level of public sector employees. 77% of their employees work in the public sector.

And unsurprisingly the capitalist high castle of the US, only has 15.8% in the public sector.

Venezuela has 29% of its worker in the public sector. That is terrible right? Shows how extremely socialist they are! No in fact it doesn’t. Norway is considerably higher at 37.8%. Same goes for another Scandinavian, Denmark at 31.4%.

Perhaps more shocking is that Singapore, which has the image of super capitalism, has 32.0% of its workforce in the public sector. What?!

Government Run Companies

In fact Singapore .. https://en.wikipedia.org/wiki/Economy_of_Singapore .. has a rather large public sector. Many of its top companies are government owned.

-
Government-linked corporations play a substantial role in Singapore’s domestic economy. As of November 2011, the
top six Singapore-listed GLCs accounted for about 17 percent of total capitalization of the Singapore Exchange (SGX).
-

The Norwegian government .. https://www.aftenposten.no/okonomi/i/ml4q/Dette-er-statens-forretningsimperium [not in English] .. owns 33% of the Norwegian stock exchange. This includes full or partial ownership of oil companies, hydro-electric power plants, banks, aluminum production, transportation, defense industry, liquor stores etc.

Whether this is more or less than in Venezuela I could actually not obtain information about. The point is that it is quite broad.

Taxes

How about the tax burden. Conservatives like to talk about how socialist countries are high tax.

Norway has the third highest tax .. https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio .. rate as percentage of GDP at 54.8%. Venezuela in contrast is way down the list .. https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio .. at 25%. In fact this is below the American rate of 26%.

Political History

If we look at the political history of Norway and Venezuela, that is where we see the really big difference. Norway clearly has a more socialist political history. Since 1900s Venezuela has had 6 different occasions .. https://en.wikipedia.org/wiki/List_of_Presidents_of_Venezuela .. where the military has sized power and suspended democracy. If you go further back in history, there are even more cases.

Norway has history of military rule [[sic] should be a no there i believe], unless you count the German occupation of Norway during WWII.

Without studying Venezuelan history in detail, it becomes quickly apparent just skimming through .. https://en.wikipedia.org/wiki/List_of_Presidents_of_Venezuela , that it’s political history is nothing like that of say the US or Norway. There is a large number of different political leaders and dramatic and violent changes in government, political exiles, corruption charges, political splits and infighting through the whole post war period.

If one compares with Nordic countries such as Norwegian and Sweden, is that they have far more political stability and peaceful transition of power. Sweden has since the 1930s been almost exclusively run .. https://en.wikipedia.org/wiki/List_of_Prime_Ministers_of_Sweden .. by social democrats. There are been few changes of prime ministers. Typically Swedish prime minsters have been in power for a long time. The same experience is found in Norway. The social democratic Norwegian Labour party has been in power for most of the period since the 1930s .. https://en.wikipedia.org/wiki/List_of_heads_of_government_of_Norway .

On the American right it is popular to make the counter argument, that Venezuela the leaders of Venezuela calls themselves socialists and are committed to the abolishment of capitalism. The Nordic countries in contrast they say are social democrats, meaning they strongly support a capitalist economy with just a bunch of welfare services.

As I’ve pointed out through this article that is not the case. In particular in Norway, there is extensive state ownership of the means of production. The leaders of Venezuela calls themselves democratic socialists. Which is actually no different from what has been the case in Nordic countries. That label is seldom used by the Norwegian labour party today. However if you read the party programs .. https://www.arbeiderpartiet.no/om/historien-om-arbeiderpartiet/historiske-partiprogrammer/ [not in English] .. since roughly the 30s to the early 1980s, it typically states on the very first line either: “We are democratic socialists” or “we are committed to the principles of democratic socialism.”

Further reading of the party program will display scathing criticism of capitalism as a system as well as spelling out the long term goal being the abolishment of capitalism and replacing it with a socialist economy.

Now I am not saying this actually happened. But a political movement which has been in power for much longer than Hugo Chavez has explicitly stated that it works towards a socialist economy. Yet despite this goal, and the deliberate reforms enacted to get there, Norway has not ended up as an economic basket case like Venezuela.

Challenge: Name a Metric Where Venezuela is More Socialist Than Norway?

So I have gone through numerous easy to measure metrics which by people tend to judge a country as socialist or socialistic. In not a single one of them did Venezuela “excel”.

And that is my challenge to any reader: Come up with something that is easy to measure, where Venezuela is more socialist than Norway?

I’ve tried to study this and I cannot find it. However I found a lot of other things:

1. An unprofessional government, caring more about loyalists than having competent people in important positions.

2. Lack of transparency.

3. Short term thinking and populism.

None of these traits have anything to do with socialism. In fact the Trump administration seems to suffer from pretty much all of the same traits and they can hardly be called socialists. Like Hugo Chávez and Nicolás Maduro, Donald Trump is stacking his administration with yes-men and loyalists, disregarding competency.

Donald Trump also engages in short term populist policies such as debt fueled tax cuts for the rich. These policies may work in the short term. Just like Hugo Chávez’s splurge on social programs with oil money caused rapid reductions in poverty.

Eventually however the negative effects will show up. Hugo Chávez did not put aside any of the money from his windfall profits from high oil prices. Thus it was always just a matter of time before catastrophe would hit his populist regime.

Just as Americans will sooner or later have to repay the debt Donald Trump amass to pay for tax cuts.
Will Bernie Sanders be a new Hugo Chavez?

No, because Bernie Sander’s is a not a short term thinking populist. Bernie Sander has far more in common with Nordic social democrats who implemented socialist inspired reforms gradually and always tried to remain financially responsible.

Ironically Donald Trump is far more similar to Hugo Chávez: They are/were both boastful, short term thinking populists.

https://medium.com/@Jernfrost/socialism-and-capitalism-in-venezuela-and-norway-c864c7a59e8b

Exceptm, as Krugman pointed out,

"Stop Calling Trump a Populist
[...]
But he’s been in office for a year and a half, time enough to be judged on what he does, not what he says. And his administration
has been relentlessly anti-worker on every front. Trump is about as populist as he is godly — that is, not at all."