Capitalism, Socialism, and health care reform

( – promoted by buhdydharma )

This diary will attempt to bring the Cold War ideological conflict between “capitalism” and “socialism” into focus.  Here I conclude that capitalism is about profit, and socialism is a vague word which could mean a number of things.  As we define capitalism and socialism, we can see that the flaws and virtues of each can be understood for the sake of struggling to create our own system of political economy, one which actually serves us.  Finally, I will comment upon the relevance of this discussion to the matter of “health care reform” currently being contested in Congress.

(crossposted at Big Orange)

Back in 1992, we were told that the ideological struggle between “capitalism” and “socialism” had ended, with the collapse (actually, the abolition) of the Soviet Union, and that “capitalism” had won.

There were, of course, some rather drastic changes occurring in the former Soviet Union thereafter.  The idea that “capitalism” had won, of course, was a big oversimplification.

In economic discussions between ordinary people, much is made of the distinction between “socialism” and “capitalism.”  Let’s unmask the way these words are used, so that we can understand what the contest is about.  Hint: meaning will invariably come down to what people do, instead of what they say.


There are several definitions of “capitalism” typically used in ordinary conversation.  We will find, as we investigate these definitions, that much of the distinction between “capitalism” and “socialism” revolves around how things are owned.  Are things owned privately, by individuals or by corporations, or are they owned publicly, by communities or by states?  Let’s start by trying to define “capitalism”:


1) Capitalism as “trade”

Capitalism is often portrayed as “trade” by those who believe in its efficacy.  There is, of course, “trade” in capitalist systems — after all, “trade” (i.e. buying and selling for money) is the way capitalists realize their profits.

But no, “trade” has been in existence long before the capitalist system came to be, and it will be in existence after the capitalist system is gone.  For instance, there was trade in the feudal system of 12th-century France, but to call the feudal system a “capitalist system” would not tell us much about it.  So “trade” is not specific enough to define capitalism.

2) Capitalism as “private ownership of the means of production”

The people who use this definition of “capitalism” are typically concerned with what portion of an “economy” is privately owned.  Now, technically, this definition of capitalism is dictionary-correct: Merriam-Webster Online gives “capitalism” as:

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

However, merely because the means of production are privately owned does not mean that we are in a capitalist system.  Medicine was doubtless privately owned in the Roman Empire; this doesn’t mean that the Roman Empire was capitalist.  Moreover, if the means of production were to be publicly owned (or owned by the government, which is NOT the same thing) that would not necessarily mean we were in a socialist system, or at least not the socialist system we might like.  We could be in a system in which “public” ownership were a cover for some kind of dictatorship.

This definition, then, is accurate enough to belong in a dictionary.  And it does have the virtue of showing that the benefits of ownership of the means of production are PRIVATE.  What that means, of course, is that if you aren’t a private owner of the means of production, these benefits are NOT FOR YOU.

Yet in discussing capitalism here, we will want a definition of “capitalism” that is even more specific.  So, onward to definition #3:

3) Capitalism as the commodification of everything

This definition is reminiscent of the definition given in Ellen Meiksins Wood’s definition of capitalism, given in her book The Origin of Capitalism:

Capitalism is a system in which goods and services, down to the most basic necessities of life, are produced for profitable exchange, where even human labor power is a commodity for sale in the market, and where,  because all economic actors are dependent on the market, the requirements of competition and profit maximization are the fundamental rules of life.  (2)

So what’s “commodification”?  Commodification is the act of turning a physical object into a commodity, which is an item for sale.  Commodification is what happens to a physical object when it is dressed up (or manufactured) for sale.  According to this definition, we live in a world in which profit-making businesses attempt to commodify everything, and that’s capitalism.  For Wood, capitalism describes a situation in which “everyone (and everything) has their price.”

Thus, under capitalist health care, your services are a commodity you buy for a price, and the politicians who rule you (or at least their policy-making powers) can also be rented for a price by the health insurance corporations.

4) Capitalism as a system in which profits are made through the exploitation of wage labor

This is a definition I’ve used before, and it’s implicit in the analysis given in volume 1 of Karl Marx’s “Capital”.  This definition allows us to see capitalist business as a process.  Businesses hire workers, which then add value to the products produced by the businesses.  The businesses then sell the products for more money than they spend on the production process — and that’s how a profit is made.  

We can see this in the operation of for-profit hospitals, drug companies, and so on.  But there is indeed a further definition of capitalism which needs to be added to the mix, to account for financial capitalism.  Financial capitalism is, to wit, the institutions of “trade” which don’t produce anything of substance: the banks, the insurers, the lawyers, the stock traders, the currency traders, and so on.  It is:

5) Capitalism as money-making

David Korten encapsulated this well: “Capitalism is the use of money to make money for those who have money.”

An economy dominated by profit-making businesses, then, is a capitalist economy.  This dovetails well with Wood’s definition.

So, here, we at last have some definitions of capitalism which is specific enough to tell us what we want to know about it.  With capitalist medicine, then, we have systems for health insurance and health care which are basically there to make a profit — and if they get more out of your bank account than they put into the process of healing you, then they will have succeeded in that aim.


Okay, so now it is time to examine definitions of “socialism,” to consider what “socialist” health care might look like:

1)  Socialism as “sharing”:

This, like the first definition of capitalism as “trade,” is too unspecific.  We might, however, argue that the essence of socialism is in sharing — rather than being a system in which properties are hoarded, socialism might be regarded as a system in which material objects are shared.  Like health care.

2)  Socialism as government intervention into the economy:

This is the favorite of those who like to speak of “pure capitalism,” a mythical state of economic reality in which people “trade” without any government interference whatsoever.  Of course, the myth of “pure capitalism” can be easily debunked by showing that government intervenes in the economy all of the time, for the most part doing so to keep capitalism going.  Markets, moreover, are not a natural phenomenon, arising like weeds in one’s garden — markets require an extraordinary degree of governance (whether private or public) to create.  To have a market there have to be a number of things in place: routines for reaching price agreements, publicity and transportation networks, forms for recording transaction data, storage facilities, and (most importantly for the argument here) a “legal framework defining ownership and appropriate forms of transfer of ownership of property, backed by the ultimate sanction of force’ (Hutchinson et al., p. 91).

So government intervention into the economy is an essential part of a working capitalist system.  If the capitalist system is to be faithful to its intention of increased profit for business, there must be government intervention.  In fact, as I have pointed out previously, government intervention into the economy has become more and more necessary, as the actual growth rate declines from decade to decade while the corporate demand for profits skyrockets.

The point is this: our current, “privatized” system of health insurance and health services delivery has as much to do with government economic intervention as anything the Republicans would demonize as “government-run health care.”  The proposed system of Federal “Romneycare” will be a major (and predatory) intrusion of government policy into your lives, for the sake of keeping medical capitalism going.

What does this have to do with socialism?  Not a whole lot.  The idea behind the word “socialism” is that “socialism” is supposed to benefit the people; it’s not supposed to be a

3)  Socialism as state control of the “means of production”:

once again, from Merriam Webster:

2 a : a system of society or group living in which there is no private property b : a system or condition of society in which the means of production are owned and controlled by the state

This was doubtless the definition of “socialism” used in the states of “actually existing socialism,” i.e. the Soviet Union, the Eastern Bloc, the People’s Republic of China, Vietnam, and Cuba during the 20th century.  Thus the Republican fear of socialism is connected to the Republican fear of government: if we let the government control the production of medicine, then we will have “socialist” medicine.  This, of course, provokes a knee-jerk reaction from them.  

However, it needs to be pointed out that this form of “socialism,” for all its promises, was inegalitarian: Milovan Djilas, the Yugoslav socialist, pointed this out in a neat volume titled “The New Class,” which argued that the managerial class was in fact a ruling class in the so-called “Communist” regimes.

I would add to this analysis that it is not inevitable that all versions of “socialism” will inevitably degenerate into rule by the “New Class.”  Generally speaking, the centralization of power in the Soviet Union and its satellites was one of the main fortifications of “New Class” rule, and decentralized power-sharing arrangements can go a long way to avoid dominance by bureaucratic elites.  Besides power-sharing, moreover, there needs to be knowledge-sharing; an egalitarian education system can go a long way to avert rule by the knowledgeable over the untutored.  (And beyond that, there is also the possibility of rotating leadership — when everyone who can be a leader is given a chance to be a leader, the system is made more egalitarian.)

The application of this strand of political thinking to our medical system is clear.  Medical knowledge needs to be spread more generally among the population, to ameliorate rule by an elite of doctors and specialists.  Bureaucracy needs to be minimized in order to remove barriers between patients and care — this, of course, is the point of a “single payer” system, in which there is really only one bureaucratic edifice (rather than several competing ones) sorting claims to health care.

4)  Socialism as public control of the “means of production”

A more sympathetic definition from gives some credence to this notion:

a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

So, if we replace the word “state” with the word “community,” collective ownership of the means of production looks a lot nicer.  Wouldn’t you like to have community control of the means of production?  We’d produce fewer bombs, fewer health insurance agents, and more healthcare.  That is, if we could operate within a framework for community power that would give us the time of day.  Creating that framework is, as the Zapatistas have discovered, no easy task.


Conclusion: Capitalism and Socialism in Health Care Reform

The word “capitalism” generally defines a system for making profits.  Its main beneficiaries are those who have already profited, or who are the sons and daughters of those who have previously profited, from the normal operation of the system.  It has brought us a world of 794 billionaires living amidst a bottom half of humanity who lives on less than $2.50/day.  Thus there are indeed manifold benefits to the capitalist system — the catch is that you have to have a “piece of the pie” in order to actually receive these benefits.

Once we get away from the idea that the whole of humanity ought to devote its lives to the continued (and indefinite) running of the capitalist system, a large number of other possibilities open up.  The word “socialism” is sometimes used as a stand-in word for these possibilities.  The realistic possibilities of “socialism,” of course, were never exhausted in the least in the day-to-day operation of the Soviet Union, or for that matter of “Communist” Cuba or China.

If we are to look at it in terms of its full potential for the human race, we’d have to say that “socialism” is a rather vague term, which could mean any number of different social arrangements.  Some of these social arrangements, some of these socialisms, would be meaningfully good for everyone if we had the power to put them in place.  Some of them would be bad for everyone.  Some of them would be good for some and bad for others.  Some socialisms might work; others are mere fantasies that ought not to be put into practice.

The socialism which the Soviet Union tried for seventy-plus years “worked” over that span of time because the idea of a “war” (and, later, a “cold war”) against the capitalist world could be promoted in order to get people to work for a social arrangement which fed and clothed them in a more-or-less adequate way but which did not promise them democratic rights.  Once the war pretext disappeared, the socialism pretext went out of style.  Its abolition by Boris Yeltsin finished it off.

There are probably only two or three forms of socialism which would actually work.  If any possible socialism is to work, however, certain aspects of political life need to be in place:

1) A general dispersal of economic and political power — as necessary to bring “the people” (and not merely the Party which claims to represent them) to power.

2) A democratization of human relations — an end to general states of racism, sexism, and to the class divides which grant power to some while denying it to others, and a general spreading-around of the rights and obligations of citizenship to most everybody.

3) A focus upon the practical tasks at hand — any “socialism” one creates must be empowered to do what is necessary, and cannot be a mere parlor game.

Thus the powers necessary to make socialism work are powers of resistance, powers which (in our current circumstances) help people “fight the system.”  These are things for which we should struggle anyway, regardless of the possibility of implementing “socialism” at any particular time.  

The implications of this thinking for health care reform should be clear.  A cursory reading of Chris Hedges’ report on the state of the American health care system (and its impending “reform”) show what has obviously happened.

   Percentage change since 2002 in average premiums paid to large US health-insurance companies: +87%

   Percentage change in the profits of the top ten insurance companies: +428%

   Chances that an American bankrupted by medical bills has health insurance: 7 in 10 – Harper’s Index, September 2009

One needs to remember that in a system of capitalist profit, “competition” is only a temporary state, forced onto firms by the contingent struggle for market share.  Once there is nothing to be gained for a business by muscling other businesses out of their market shares, “competition” will disappear and each business will try to soak consumers for what they’re worth.  In this context, it’s important to remember that if you are a patient dying on an operating table, you can’t just walk out of the hospital and shop around until you’ve found the best deal for your illness.

We could, then, try to “reintroduce competition” in the health insurance market.  But the resultant utopia of market competition will not last long.  We are better put to create a public option health-care system which is 1) publicly controlled, and 2) available to everyone on day one.  The public option is the main way we have at present to do this.  

No, it will not be socialism.  And, yes, we will have to work hard AFTER it passes to MAKE SURE it does what it was intended to do.  And eventually we will discover that we have to take on the entire system so that we can save lives and get what we want.  But the creation of a public option would be ONE instance of a government program which did NOT exist merely for the sake of increasing the lifespan of the capitalist system or of the business interests which profit from it.

So look.  I can tell you want I want you to do.  I want you to read my diaries and get ideas for a better world from them.  And I want you to read slinkerwink’s diaries and put out the full-court press to tell Congress that if we don’t get a ROBUST public option, available to EVERYONE on DAY ONE, we want Congress to SHOOT DOWN mandates.  

So what do you want to do?


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    • banger on August 31, 2009 at 22:28

    it’s a matter of being pragmatic. The whole so-called health-care debate is an utter fantasy–an elaboration of a professional wrestling bout.

    We could have an entirely capitalistic-based health-care system but it has to be regulated by either the gov’t or a non-profit corporation of some kind. Systems are doing fine all over the world in either socialist of capitalist mode. Our system is merely corrupt. The gov’t intervenes on behalf of the powers-that-be in that system and regulate it (socialism) for the benefit of the parasites who would not exist in a free-spirited capitalist system.

  1. …which you state need to be in place for socialism to have a chance of successful implementation —

    1) ..dispersion of power,

    2) ..democratization of human relations,   and

    3) ..focus on tasks —

    –are important.  I agree they are necessary; they are essential.  But they, especially the first 2, seem far from becoming reality.  Nonetheless, I, and those of good faith, will continue to hope, believe, and work for their actualization because this is the forward motion of progress, of the evolution of life.

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