What does “Socialism” mean?

“Is there ever going to be socialism in America?”

Our misunderstanding of the term “socialism” is far too prevalent. This is an important discussion because countries with little understanding of Social Contract, and with weak Social Contracts as well, are suffering a very real economic impact globally today.

This question above (“Is there ever going to be socialism in America?”) is one of the dozens of similar questions asked on Quora.com every week. If you haven’t spent some time at Quora, it’s a frustrating place to visit once you’ve spent time conducting economic research. The incredibly low-level understanding of our monetary system – by the voters that support it – and also by many academics, is truly brutal.

New non-theory sciences in Economics have gone as far as to deprecate the word altogether – preferring to simply refer to Ownership by the State as “Public Ownership”.

Consider for a moment that “Socialism is ownership of production by the state” – and that it means nothing else. I’ll explain why this must be true below.

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FDR (Franklin Delano Roosevelt, President of the United States from 1933 to 1945) built the American Dream – and largest economy ever; and he did it in our last mature capitalism – in a time very like today during the Great Depression of the 1930s. President Roosevelt’s Second Bill of Rights (1944) asked America to create a strong Social Contract within the Constitution – as it absolutely needs to be in any large democracy.

Social Contract is a term first coined by Thomas Hobbes’ “Social Contract Theory” back in 1654 – but we don’t hear it as we should today.

For one reason and another, 200-years of theorists since Leroux, Marx, and Engels have preferred to present the word “Socialism” instead – and have preferred to imbue that term with as many tangled meanings as was convenient at the time. Dozens of authors were inspired to spurn the Socratic Method’s best-practice of separating terminology (disambiguation) until Socialism came to combine discussions of:

1. State ownership of business and production
2. State ownership of property and personal housing
3. Ethics and Empathy
4. Fiscal and budget management
5. Economic performance
6. Social programs and Human Rights (Social Contract) – see examples Second Bill of Rights & U.N. Universal Rights
7. Merit and equality
8. Non-monetary systems of commerce – like Communism, Bartering, etc.

Socialism means the first item on this list only “Public Ownership”, and none of the rest.

New sciences in Econometrics realize that “isms” like this are un-Proof-able in their ambiguated form so Transition Economics de-weaponizes the term Socialism further by deprecating it altogether.

State ownership of business and production is now simply called “Public Ownership” and has nothing to do with Social Programs, Economic Performance, etc.

Disambiguation is especially important for Slavic persons for whom the term “Socialism” also imbues clear memories of poverty, austerity, oppression, and even corruption, incompetence, bureaucracy, and starvation.

See a complete disambiguation of all of our Monetary System’s terms at The USE CASE for Monetary Systems.

Strong Social Contract nations have advancing economies almost 100% of the time – at all times in a monetary system cycle. The most successful-per-capita economies in the world, often rely on an 80%/20% mix of capitalism/socialism ownership to build their Social Contract infrastructures.

So, in this article, I am going to explain the wildly-important difference between Socialism, Socialist Policy, Social Contract, and Empathy.

First, you probably realize that there is public ownership (Socialist) policy in America – as there are in every country. The military, the Government, the Mail Services, administrative infrastructure, national parks, public transit, and similar, are all productions owned by the state. Michael Moore in his 2015 film “Where to Invade Next” explained that America is more socialist than most countries owing to the reality that 60% of all federal tax here is spent on its military.

“Social Contract” has nothing to do with ownership. Social contracts are our good lives, our human rights of food, shelter, education, healthcare – and it’s also the most important building block of a strong economy – as we see in the chart above. The mixture of publically owned or privately owned productions in a Social Contract (80%/20%), is actually an insignificant point.

Capitalism works well at every stage of a monetary cycle – but, there is a “but”. Capitalism needs very few constraints during the early years of a new monetary system cycle. This is because there is abundant opportunity and balance in the economy – and so a single income can afford all costs-of-living. However, “but” – monetary systems do need balancing as their cycle matures – as reliable incomes and cost-of-living get out of balance. “Starvation wages” is an example of an imbalance where reliable incomes do not match costs-of-living. Surely America’s economy would be the strongest in the world by 100-times every other economy – given its incredible lead and head-start, if Capitalism worked perfectly well without moderation. But today America’s growth is not as strong as others, and it is being outperformed by dozens of strong social contract economies.

To explain why America’s capitalist policies have not resulted in incomprehensible wealth today; near the end our monetary system cycle, I have to correct the common misunderstanding of “What is Socialism” – so that a smart answer to this Quora question above can be possible. Answering the question as it is asked, does not solve any important social problems in fact.

First, what would a smarter Quora question have to be – rather than: Is there ever going to be Socialism in America?

Medicaid – is public Healthcare – but to say that this is a “socialist policy” is misleading. Why? Because healthcare is an essential of life – and as such, it is a needed part of our Social Contracts that improves longevity. Rights of healthcare, shelter, access to income, security, healthy food & water, breathable air & energy, and basic goods (clothes, furniture) – are also necessary – not only to sustain life but also to allow citizens to be productive contributors to the economy.

We measure Social Contract, not by the amount of food consumed nor the number of homes lived in, rather we measure social contract by the longevity statistics that it improves, by the years of education it supports, or by the absence of poverty, suicides, or inequity in a nation.

People who are too tired at the end of a day of barely getting by, don’t have the time, energy, nor means, to create export businesses and other important economic productions. The same is even more true of people who have no access to income at all.

Private healthcare, bottling plants, taxi services, etc. are privately-owned – in capitalistic policy economies – but ownership models (capitalism and socialism) are just Actors in a monetary system USE CASE. Social Contract is different; its an Output – and it’s an essential one.

Social Contract is essential because it is causal to strong economies, as we see in a Social Contract TEP (Transition Economics Proof) chart. I use TEP charts here because they are not theory-based; they don’t guess how economies might work, rather, they are actual surveys (of 158 countries here) that confirm that high-social-contract nations have advancing economies 70% to 100% of the time – in reality.

This survey also confirms something else; it confirms that nations with low social contract scores have a very low chance of an advancing economy.

Calling public healthcare “socialist policy” is like calling a shiny red hotrod – “a communist noise-box with wheels”. The description is distantly accurate, but the derisive “noisy, unAmerican, crate with wheels” fails to convey important context. Emperor Leopold of Belgium defended criticisms in Europe to his army’s killing of 10-million Congolese in the 1850s; his spin was to explain that he was “bringing Christianity to the heathens”. It was a true statement designed to deflect valid criticism away and onto an irrelevant point.

Healthcare, food plants, taxi services, private housing, etc. are necessities of a strong Social Contract. The ownership model that produces the best social contract is whatever mixture builds these needs within service levels required for quantity and timeliness. As I mentioned above, most successful high-Social Contract nations build these with an 80%/20% ownership mix.

A strong Social Contract is the American Dream – and the stuff that soldiers gave their lives for; as such its the “important thing” – if you see my meaning. When Robert Kennedy questioned the GDP Reports in 1968, he was noting its failure to report the important Social Contract Product of America.

“The GDP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything in short, except that which makes life worthwhile.”

Abridged

America’s Social Contract was the highest in the world – and so was their economy – until the 1980s. Once America lost its strong social contract, its incredible economy began to stall. Is it a coincidence that the economy and the social contract seem to be in sync? No. Clearly no really.

Early in a monetary system cycle (1950–1980), a capitalist ownership model was better at building strong social contracts (the American Dream). It worked better than socialism – and no-one would disagree with this point as we saw it play out. In this past 20-years; neither ownership model (capitalism nor socialism) supported a strong Social Contract without intervention and rebalancing. Here, late in the monetary system cycle – in a “mature capitalism” – as monetary systems reach their later stages, governments have to maintain balance in monetary systems carefully due to compound-interest mathematics.

Why is compound interest a concern suddenly? Try folding a piece of paper in half more than 7-times – it’s impossible and you’ll need a hydraulic press to make to 12 folds – until that “solution” is unfeasible. Monetary systems have lifespans just the same as the paper does. 60-years of 1% to 14% inflation rates mean that world GDP is now 60-times higher than in the first year. So now a 1% inflation lift is like a 60% annual inflation-rate in 1960.

“Freedom“ in a monetary system is what you can buy with the money left over after your stable incomes pay for your cost of living. In a perfectly-understood, and perfectly managed monetary system, we would ensure the cost of living and salaries remained in proportion – but instead, we didn’t teach our kids to vote for this – and we didn’t know any better so we voted for pretty faces and pretty (market-tested) messages – of “low-tax” trickle-down, small government, open-markets, low death tax – and other lies that unbalanced ratios between salaries and costs of living.

Economists like Ann Rice and Milton Freeman kept rich sponsors believing that “Greed is Good” in the 1980s by assuring them that no harm could befall the rights of the working class in an open market – despite Dicken’s and Lord Byron’s detailed explanations of the dystopia that open-markets actually look like and lead to.

Each mature capitalism/great depression inspires authors, professors, presidents, philosophers, and economists to write about lessons learned. 1640’s General Crisis inspired the book “Social Contract Theory” by Thomas Hobbes in 1655, the Seven Years (and First World War) which led up to the 1772 Panic/Depression inspired Rousseau. Lord Byron’s Maiden Speech in 1826, Dickens’ Oliver Twist in 1837 – 1839, and A Christmas Carol in 1843’s – were composed during a Great Depression.

President Woodrow created the model in World War I which corrected 1894’s ongoing Depression – which FDR followed and then added his own Second Bill of Rights to in 1944 during WWII. The strong Social Contract that FDR created went on to be called the American Dream and it built the strongest economy in history. Strong Social Contract nations still live the American Dream today and have most of the strongest per-capita economies in the world today despite mature capitalism elsewhere – confirm this with the SCP Report at http://csq1.org/SCP

Professors like Nicholas Taleb suggested that there is no way to predict future events based on past recurring events; suggesting that calamitous events, religions, and other significant social phenomenon are ever-unpredictable “Black Swans”. “Baloney Swans” or “Lazy Researcher Swans” – might have been more appropriate titles. Of course, we can learn from lessons-learned – but my point here is that a din of academic professors, Gordon Gecko characters, multi-billion-dollar advertising campaigns, and self-designated “Economic Watchdog” organizations, each invented problems, rather than tackle the much harder work of establishing solutions scientifically. This free-for-all of misinformation would be confusing to anyone.

A fun and fitting excerpt from Thomas Frank‘s “Listen, Liberal” is:

“Exhibit A of these interlocking pathologies is economics, a discipline that often acts like an ideological cartel set up to silence the heterodox. James K.Galbraith has written a classic description of how it works: Leading active members of today’s economics profession … have joined together into a kind of politburo for correct economic thinking. As a general rule—as one might expect from a gentleman’s club—this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster where none occurs. They deny the possibility of events that then happen.… No one loses face, in this club, for having been wrong. No one is disinvited from presenting papers at later annual meetings. And still, less is anyone from the outside invited in. Professional economists screw up again and again, and no one cares. The only real accountability they face is from their endlessly forgiving peers in economics departments across the country. Granted, economics is an extreme case, but its thoroughgoing application of the right to disregard criticism has made it a kind of fascinating anti-profession, a brotherhood of folly rather than of expertise.”

By the actual survey presented in the Social Contract TEP Chart above, Social Contracts must be guaranteed to ensure strong economies – and they absolutely need to be added to the Constitutions of large democracies because large populations have diverse economies. Diverse economies mean that the unsustainable policies experienced by minorities can always be ignored by the majority – for decades at a time in most cases; until economies stall and living conditions become dystopic.

Eleanor Roosevelt explained how to build the American Dream for every nation when she led the creation of the Universal Declaration of Human Rights of 1948 at the United Nations – based on her husband’s Second Bill of Rights (1944). “Evil” – is the systemic failure of empathy – explained the Nuremberg Diaries in 1946. Leviticus 25–26 (760 BCE) and the Code of Hammurabi (1763 BCE) 4,000 years ago, even explain ideas on how to reset economies preemptively, every 50-years – instead of waiting for 60-years for hardship to begin to set in. After every mature capitalism (great depression), great philosophers documented the same lessons-learned – so that dystopia would never happen again – and then 60-years later, we ignored these lessons. Can there be any wonder that no civilization has survived? Clearly, our civilizations really are too dumb to survive it seems.

The U.S. Constitution was created for a population of 2.5 million in 1776 – and even today that model of democracy works well in small population nations like Norway, Denmark, and Ireland. Larger democracies like Germany, Japan, and Italy, had their Constitutions corrected after World War II – to include FDR’s Second Bill of Rights (a strong social contract and guarantees of basic needs of life and productivity). These are the only three nations with advancing economies today – along with full healthcare, six to eight weeks paid vacations, nursing care, great schools, daycare, free college in many cases, and more. These nations lost the war but won the peace.

Strong social contract nations build strong economies 100% Social Contract Product (SCP) Report – 2019 – CSQ Research, Transition Economics, Social Contract SCP & ACT Parties. The SCP Report shows that weak social contract nations lose billions daily – the U.S. loses $37 billion a day; 13 trillion a year – to its crumbling social contract.

So, who cares if socialism were to grows? The last 20-years has seen an explosion of capitalistic ownership – to 50% of all wealth internationally, socialism (ownership by the state) really isn’t a pressing concern today – and Social Contract is clearly a different essential as well.

A far better Quora question, therefore, would be: Will Social Contract grow stronger in America?