“In the final reckoning, Mao must be accepted as one of history’s great achievers: for devising a peasant-centered revolutionary strategy which enabled China’s Communist Party to seize power, against Marx’s prescriptions, from bases in the countryside; for directing the transformation of China from a feudal society, wracked by war and bled by corruption, into a unified, egalitarian state
Funny you mention Scandinavia--I've actually been doing some research into how their economy works and that, contrary to the libertarian assumption, they're doing okay despite their welfare state. Best arguments that I've seen is that their Econ system survives because they are uniquely homogenous, have very good informal institutions, etc., so if you had their system in the US (for example), you'd get Venezuela.
Any good arguments I'm missing? Personally, I've felt that many libertarians have been sidestepping this issue. Is this true?
I tried googling your name + Scandinavia a few times but couldn't find anything--would love to hear your thoughts.
You make some valid points. Most people don't realise that despite being somewhat politically to the Left, most Scandis are actually quite socially conservative. Having neighbours in Sweden is a bit like being in a particularly uptight homeowners association. My brother lives in Sweden with his new wife. We both lived in the UK for most of our lives, other than a year in the US as kids.
It's not really the welfare which is a problem in Sweden, it's the public sector employment. On most indices of economic freedom, they obtain high scores. The exception is size of government, for which they are ranked 158th. They have stronger worker protections which is in a many ways a good thing (it keeps older workers in employment and off disability)- but it does lead to a less dynamic employment market- they take it too far.
But the 'secret sauce' is that they are generally far friendlier to capital than even America. No inheritance tax, and they abolished their Tobin tax during the same period, back in the early nineties. The theory worked. It was hoped that a removal of inheritance tax would stop people taking their money offshore and encourage inward investment. It was a more rational approach. They now gain more in tax revenue from corporation tax and a modest cap gains tax than they ever did from inheritance tax, which is essentially a bad vanity tax.
The other side effect of this business friendly approach is Sweden has managed to remain a high growth economy compared to the rest of Europe. The situation is a little more complex than that- their desire to be a 'superpower of good' has backfired completely. Inward migration has had a cooling effect on GDP per capita. Intra-European migration is good, as is many types of Asian inward migration, but most non-European migration has proven incapable of keeping pace with Swedes high levels of value creation, even with successive generations born in Sweden. North African and Middle Eastern migration has been shown to be the worst from an economic perspective, cultural factors mean that even the children of migrants and their children can tend to have low rates of women staying in the workforce. In the UK, the figure is around 29%.
Sweden has a higher economic-freedom score according to https://www.heritage.org/index/pages/all-country-scores than the US does, despite the US welfare state being somewhat less extensive (while also enormous). Still, the US has around 50% higher per-capita productivity. I tend to want to blame Swedish labour-market inefficiencies for this.
My theory of why Stalin and Marx get praise and Hitler and National Socialism don't is because Hitler transformed a modern stable civilized open society into barbarism while the world looked on, while Lenin/Stalin transformed a backwards mysterious (with an unreadable language!) society of peasants and serfs into a modern industrialized society out of the public eye. One minute serfs and losing to Germany; 30 years later, modern and defeating Hitler. It's easy to forget that Stalin was a co-conspirator with Hitler in starting WW II, and gobbled up far more of Eastern Europe than Hitler did of Central Europe; after all, Stalin turned on his co-conspirator. Don't we applaud criminals who turn on the rest of their gang, especially when the convicted criminal did his work in the public eye and the snitch hid his worse activities?
FDR at one point praised Mussolini, Stalin, and Hitler. Statists have always applauded successful statists until the stench was too much.
About who turned on whom ... I wasn't referring to the German invasion of the USSR but Stalin's overreach in Eastern Europe. My understanding is that Hitler expected Stalin to leave some of those countries alone (Hungary? Romania? Bulgaria? I do not remember now) and was upset about Stalin occupying them or turning them communist. But it's been a long time and I don't remember the details.
As for the Bolsheviks getting favorable treatment, was that before 1917? I wasn't aware of that.
And as for the early USSR, it didn't matter what really happened, only what the outside world thought Lenin/Stalin had done or were promising to do, socialism was still the up and coming new thing and hadn't been tarnished yet, so it was easier to let themselves be deluded. Everything Hitler did to Germany was much more visible to the world press than what Lenin and Stalin did. Remember Duranty in the New York Times; I don't think there was anything close to that level of gaslighting about Hitler.
No, I mean Stalin taking so much of Eastern Europe as part of dividing up Poland, 1939 and 1940. My understanding is that Hitler thought Stalin was getting too greedy or something, the way bullies think about other bullies.
It's simpler than that. Stalin condemned all left wing people and parties to the right of him -- his competitors and potential competitors -- as right wing deviationists. That's where the convention of calling Nazis and Fascists right wingers comes from. It's a very honorable society: After all, Trotsky was a "right wing deviationist". That's how one winds up with an ice pick in one's head.
The transformation in the american elite between say, 1910 and 1930 is remarkable. I've read a lot of biographies of people from that period and in 1910, they are all rock-ribbed christians and capitalists. To a man they believe in goodness of jesus and making a buck. And yet, by 1930 or so, they all seem to be socialists or fascists of some sort. Some of it is generational change, but a lot is the same people changing attitudes of individuals. The causes of this shift are understudied.
Hyman Minsky explains it all 'Stability is destabilizing.' Stability leads to confidence, which leads to over-confidence and bubbles. In the collapse which inevitably follows people are willing to consider batshit crazy ideas, because they perceive the social and economic model in place to be fundamentally broken.
Of course, in the current context the fundamentally broken bit also happens to be true. We could have easily handled two of the following three: high inward migration, women entering the workforce in unprecedented numbers, and offshoring/deindustrialisation. The basic fallacy was the Western belief that anyone could be educated to do anything- only 8% of the population can perform highly cognitive work, and three-quarters of them can only manage it at a barely adequate level. At the higher levels of performance scepticism matters more than raw intelligence, in most fields other than pure science.
That's the rise of progressivism and WW I. All those capitalists became "dollar a year men" in WWI, and they loved it, funneling government money to their interests. By 1930 there was reinvigoration: We planned in war!
It's understudied because from the POV of the contemporary literati class, it's all so -- natural.
I've recently had some very lively and entertaining discussions with an older enthusiastic Marxist writer. Unfortunately, I think he's blocked me! It must have been my criticism of romanticists who yearn for a return to pre-industrialist society. I called them anti-humanists, and noted that China had nothing other than vague plans to expand much beyond 30% for total wind and solar renewables by 2030- exactly what I would expect from a country acting in its own rational economic self-interest, because beyond 30% the costs of pumped hydro energy storage and transmission lines becomes becomes progressively more prohibitive. They are also in the process of a significant expansion of nuclear power, and are now something of a big hydro energy superpower.
Anyway, as part of my foray into the Marxist worldview, I did a fair amount of research into the Chinese SOE model. Apparently, employees of SOEs receive about 10% more pay compared to equivalent work for a private sector company in China. Older workers tend to prefer the SOE model, whilst younger workers with ambition tend to prefer the faster promotions, greater creativity and more dynamic work environments which are typical of the private sector.
Besides, 10% for capital is a pittance compared to the money extracted from workers in the West to cover regulation, employer taxes, compliance costs and the internal corporate bureaucratic and overly-bloated management structures which are a feature and not a bug of elite overproduction in the West. Weighing capital against government and culture it becomes clear that the latter is by far the heavier burden. And that's before the workers themselves are taxed by government.
The unsung hero of China was Deng Xiaoping. His economic reforms were directly responsible for China's current success. "It doesn't matter whether a cat is black or white, as long as it catches mice."
Oh wow. I will definitely have to read it- it looks like the guy who co-wrote it is the same R. H. Coase who developed Coase Theorem. Eric Weinstein has recently been talking about how Coase Theorem might be used to assign workers soon to be displaced by AI with licensing rights for the labour they are going to lose- the idea being that as labour is lost, licensing fees will partially compensate for lost labour.
It's his view that other solutions, like UBI, strip dignity.
It's Ronald Coase's final book. He got a Nobel Prize for two articles, each groundbreaking in a different but related direction. My recent post on Brilliant Simplicity was on Coase as well as a bunch of other people.
What do you think of Steve Keen? Don’t get me wrong, some of his ideas are whacky or outdated- the stuff on the physiocrats for example (he should read Superabundance). But I’ve found some of his thoughts on system dynamics and marginal costs in particular, insightful.
And he’s right about the way manufacturers price. That’s exactly the way we, and everyone else, used to do it. At one company I worked at, which was always treated as a subsidy cash cow- before the management buy-in- we had a couple of divisions which were perennially arguing overhead reduction for pricing, in pursuit of volume.
About 10 years ago I had a student of Swedish descent (she grew up in the Middle of the Mitten on the Lake Huron coast in Michigan) who at age 20 decided to take a position as an au pair for a family in Sweden. Her Swedish was acceptable, although she said sometimes English worked better in some situations. She was leaving a broken relationship and wanted to learn more of Sweden.
She wrote a very nice memoir about her time there. It nearly broke my heart. She was probably the best, or perhaps 2nd best pure writer I ever had out of probably some 5000+students.
What stuck with me was her claim (which I take to be accurate) that the upper-middle or lower-upper class family she worked for basically had about the same wealth/income and lifestyle as a lower-middle class family in rural mid-Michigan.
The struggled a lot with paying for heat and groceries and the grocery choices were very limited, they had very few electronics of any kind. They had an older but servicable car and a similar truck. Their entertainment choices were quite limited.
I wouldn't say she was appalled but rather astonished. Her family was quite obviously, in their neighborhood, towards the top of the heap. She met a young man that she dated for a couple of months, and he lived in quite strained circumstances, in housing almost s]describable as a hovel.
Now she was not in a major city, but she said it was like living in the U.P. only even colder in the winter.
Anecdotal, to be sure, but I found it interesting. She said it gave her a much more appreciative view of her American life.
And, as a side note, she said she found the average Swede she met to be pretty "grasping" money-wise.
It's not merely a matter of anecdotes. Europe has become the sick man of Europe (although that was less the case a decade ago). If Sweden were a US state, its GDP per capita would rank #49 out of 50 states.
And that's not merely a matter of a few rich Americans in each state bringing the averages up. Median numbers point in the same direction (although not quite to the same degree).
I think for my student, who basically was from a rural small town, it was a shock to find the "living standard" of people wealthy enough to hire her when compared to what she was used to and what she had expected.
She also learned to read contracts much more closely, as part of her remuneration was meals and such. She was very unhappy with what she was offered to eat.
In general, I think she rather expected to find something like America with funny accents. But she was a good person, intelligent, hard worker, etc. She made a career for herself, found the right guy, married, had 2 kids the last I heard.
The experience seemed, in the longer run, to be good for her.
Well done, David, on a much needed topic of what Paul Hollander, perhaps the best one writing on this theme of Western intellectuals in love with other countries’ Communist tyrannies, termed “Political Pilgrims” (the name of his book 4th edition 1997); Aka, Fellow Travellers or Useful Idiots (here I would include Noam Chomsky among younger others, see below).
Here are counter articles around that 1976 Economist article going against their Love of Tyranny grain, Hart and Leys sharing the footsteps of Hollander:
CHINA: THE ANNIHILATION OF HUMAN RIGHTS Libertarianism, David Hart, Jan 1, 1979
“The feudal rule which continued for more than 2,000 years has left its ideology deeply rooted.”
Ch'in Shih-huang was the first emperor of China, founding the unified empire in the third century B.C. In 213 B.C. he ordered all books presenting the views of his opponents burnt and more than 400 confucian scholars buried alive. That the “great helmsman,” Mao Tse-tung, could in his collected works not only compare himself openly with such a butcher, but boast at having surpassed him a hundredfold, is enough to leave one flabbergasted. But, then, Mao never shrank from admitting his crimes; he left that coverup to his apologists throughout the world.
Why has it taken so long to expose the gross violations of human rights—the massacres, torture and imprisonment—that have occured since the Chinese Communist Party came to power in 1949? Why have western journalists, intellectuals and academics remained silent until quite recently, when the evidence had become so overwhelming that they could no longer ignore it? A similar phenomenon occured during the 1930s in Soviet Russia. Fellow travelling, a sort of arm chair communism, blinded intellectuals to the horrors of mock trials, forced collectivization, shooting of dissidents and black marketeers, corruption, mass arrests, imprisonment, and deportation to Siberia. It seemed that if repression occured under a “right wing” government (Franco’s Spain, Hitler’s Germany, Mussolini’s Italy) fellow travellers would march to the barricades in defence of liberty—as many did in Spain. They were remarkably reluctant to fight the same evils when committed by their beloved “left wing” governments, testifying to their faith in the divinity of the “dictatorship of the proletariat”.
CHINESE SHADOWS China File, Simon Leys, May 26, 1977
“Not that I claim for myself any prophetic insight: it is simply that totalitarian regimes have very little capacity for change, and the validity of whatever truths one may gather about them is bound to endure as long as the regimes themselves.”
Now 2024 same Totalitarian Obsessive Compulsive Control Disorder by the CCP as 1979 as Leys knew the tyrants never change their democidal spots, pity the poor Uyghurs (and Falun Gong):
DETENTION CENTER 3: CHINA'S LARGEST DETENTION CENTER. Into the Shadows, Aug 18, 2024 17:29
Explore the hidden horrors of China's Xinjiang region, where mass detention, torture, and persecution of Uyghur Muslims are rampant. Uncover the truth about Urumqi Detention Center 3.
Unfortunately, I disagree with you that this “bias in favor of communism” is “weakened”—I only wish it were.
China is STILL rabidly Communistic at its black heart core even though it is clearly also a Technocracy. See the book “Who Are China’s Walking Dead”by Kay Rubacek
Western intellectuals like my TRIO OF TYRANNY LOVERS--Matthew Ehret, Cynthia Chung and Jeff Brown--cannot stop themselves fawning over Mao to Xi CCP’s amazing record of “Democratic Dictatorship” now “Multi-polarity” “Belt and Road Initiative” that will save the world from the U.S. and NATO, ugh.
Help me out Ehret, Chung and Brown to the Freedom community as the Useful Idiots they are---you can read their own self-incriminating words here:
MUSEUM OF CRIMES AGAINST HUMANITY BY THE CHINESE COMMUNIST PARTY (CCP) MAO TO XI--Holding Ideologues Aiding and Abetting the CCP Morally Accountable. Nov 16, 2024
This is brilliant. By the way, a similar bias relates to schools. We can never admit how they destroy inner city youth. For a huge expose of that, read "Goodbye Homeboy: How My Students Drove Me Crazy and Inspired a Movement" https://www.amazon.com/gp/product/B07L5NTQ5P/ref=kinw_myk_ro_title
His encounter with Ayn Rand (three dinners) when he was 26 and she was 75 is hugely entertaining, and every page of the book is riveting.
As for Scandinavia - a very flexible labour market, the ease of starting a new business, the rule of law, the absence of corruption, and a culture of mutual trust do a lot to offset the damaging effects of a huge welfare state and high taxation.
Seems to me that the intellectuals of the day were afraid of being lumped in with "reactionaries" like Hayek and your dad if they criticised a communist regime. Just like intellectuals of today are afraid of being lumped in with Trumpers and islamophobes if they defend Jews who have been randomly attacked over Gaza.
I was a young scholar of China just after Mao died. Nowhere in my experience, especially in the ivy League, did I hear anything but praise for Mao from the non-Chinese intellectuals in the academy, especially in the "social sciences," which was Marxist and very stupid people they were and are. Several scholars who had fled Communist persecution in China, of whom I knew several, were tiny voices overwhelmed by the positive discussion of Mao's "achievements."
When Steven Mosher discovered forced abortion programs throughout China, proven with photographs, the CCP kicked him out, slandered him with all sorts of bogus claims and told Stanford, kick out Mosher or we will curtail your access into China. Stanford removed Mosher.
The Leftists in the academy were thrilled to learn that Mao told Khrushchev, so what, your atomic bomb will incinerate 100 million of my Chinese, I have another 300 million! The old guard who had seen pre-1949 China were old and tired and still thought of China by reference to the 19th century ideal of the Confucian gentlemen scholar, whom they knew while studying in China.
And then all of America wanted to go to China, send their factories and they technology to China, exporting all the best that America had to the worst that China offered: the CCP. Americans of the loathsome Generation of '68 are totally responsible for their kow-towing, money-grubbing, traitorous conduct with China. They sold out cheap.
If leftist intellectuals in search of a foreign model have moved their sights from Stalin’s Russia and Mao’s China to the welfare states of Northern Europe, I guess that even a libertarian should salute it as an unquestionable sign of progress. The Nordic countries have also very good statistics, which leave no excuse for not empirically testing one’s beliefs.
It is progress. The Scandinavian countries are called socialist but are in fact capitalist welfare states. They may eventually run into serious problems due to the long term effects of a welfare state but they are not likely to lead to any equivalent of the Holdomar or the Great Famine.
It's also progress, intellectually speaking, that critics of capitalism have mostly shifted from socialist arguments to environmentalist ones. They are better arguments although often used to support undesirable policies such as biofuels.
Oh, dear David Friedman! The progress of the left has made my intellectual life hell. Looking back, with the old commies, I knew what I was up against. What I had studied and believed made me resilient to their arguments. Then along come these neo-marxists, Gramsci, Frankfurt school, never mind the post WW II French speakers. Oh, my God! How do you argue against people who believe reality is socially constructed? [I'm not even against the social part, just the constructed part.]
To come back to earth, their lot is not about the Welfare State, least of all Sweden, but about conforming, expressing that conformity, and submitting. Anywhere in the world. Nothing different from "Mao, Mao, Mao Tse-Tung"!
By the way, because the Frankfurt School emigrated to the US post 1933, it has been called "Hitler's revenge on the United States". But some re-emigrated to Germany post WW II, so the revenge turned on its home, so to speak.
I mostly limit myself to economics, not philosophy, so am concerned with environmentalism not the Frankfurt School. The environmentalists can make their arguments in legitimate economic terms, although some would oppose putting it that way. The problem is that, if you know what answer you want to get, there is enough uncertainty in the relevant facts so you can usually get it. I discuss that at length in the context of the consequences of climate change, here and elsewhere.
Broadly speaking, I believe the left has moved beyond capitalism and the welfare state. I don't know whether it's because they have won or they have lost.
I have learned most from your climate posts, more than from anybody else's climate analyses.
It's just that I feel so much better after muttering about the Frankfurt School. :-)
“…Tim Lambert, a commenter on a forum I am active in and, long before that, on my blog, a valuable commenter because he often disagrees with me and is sometimes right.”
This is what I aspire to be!
Nice piece.
I used to enjoy reading The Economist because as of a few years ago it was one of the few MSM publications that - while it no doubt had some leanings to the left - was centrist enough and generally fair.
Sadly, it now is leftist biased on par with most of the MSM. At least we still have the WSJ.
I looked through a bunch of their articles before posting and I didn't find any evidence of left bias. There was a long article about a woman suing a prominent advocate of sex change operations for irresponsibly pushing her and her family into one that she now very much regrets, and the article was positive about the woman, critical of the woman she was suing.
The American left in the post WW I period was very receptive to that national socialist Adolf Hitler and positively gleeful about the ex socialist leader Benito Mussolini. Though Benito had some people killed, he was not a mass murderer. In that league of Mao, Stalin, Hitler, he was Mr. Nice Guy. There was plenty of glee about Stalin, of course. Lincoln Steffens: I have seen the future and it works
"... but there are still the welfare states of Scandinavia for an American intellectual to look up to." And the left doesn't understand them either! The left would be surprised how capitalist -- and dare I say how free -- they are and how the middle class has to pay its own way!
ETA: When I first glanced at the title, The Economist on Mao, I misread as An Economist on Mao, and I thought a substack on Joan Robinson was coming!
Funny you mention Scandinavia--I've actually been doing some research into how their economy works and that, contrary to the libertarian assumption, they're doing okay despite their welfare state. Best arguments that I've seen is that their Econ system survives because they are uniquely homogenous, have very good informal institutions, etc., so if you had their system in the US (for example), you'd get Venezuela.
Any good arguments I'm missing? Personally, I've felt that many libertarians have been sidestepping this issue. Is this true?
I tried googling your name + Scandinavia a few times but couldn't find anything--would love to hear your thoughts.
I was thinking of the argument I made here:
http://daviddfriedman.blogspot.com/2013/04/time-inconsistancy-and-welfare-state.html
You make some valid points. Most people don't realise that despite being somewhat politically to the Left, most Scandis are actually quite socially conservative. Having neighbours in Sweden is a bit like being in a particularly uptight homeowners association. My brother lives in Sweden with his new wife. We both lived in the UK for most of our lives, other than a year in the US as kids.
It's not really the welfare which is a problem in Sweden, it's the public sector employment. On most indices of economic freedom, they obtain high scores. The exception is size of government, for which they are ranked 158th. They have stronger worker protections which is in a many ways a good thing (it keeps older workers in employment and off disability)- but it does lead to a less dynamic employment market- they take it too far.
But the 'secret sauce' is that they are generally far friendlier to capital than even America. No inheritance tax, and they abolished their Tobin tax during the same period, back in the early nineties. The theory worked. It was hoped that a removal of inheritance tax would stop people taking their money offshore and encourage inward investment. It was a more rational approach. They now gain more in tax revenue from corporation tax and a modest cap gains tax than they ever did from inheritance tax, which is essentially a bad vanity tax.
The other side effect of this business friendly approach is Sweden has managed to remain a high growth economy compared to the rest of Europe. The situation is a little more complex than that- their desire to be a 'superpower of good' has backfired completely. Inward migration has had a cooling effect on GDP per capita. Intra-European migration is good, as is many types of Asian inward migration, but most non-European migration has proven incapable of keeping pace with Swedes high levels of value creation, even with successive generations born in Sweden. North African and Middle Eastern migration has been shown to be the worst from an economic perspective, cultural factors mean that even the children of migrants and their children can tend to have low rates of women staying in the workforce. In the UK, the figure is around 29%.
Sweden has a higher economic-freedom score according to https://www.heritage.org/index/pages/all-country-scores than the US does, despite the US welfare state being somewhat less extensive (while also enormous). Still, the US has around 50% higher per-capita productivity. I tend to want to blame Swedish labour-market inefficiencies for this.
My theory of why Stalin and Marx get praise and Hitler and National Socialism don't is because Hitler transformed a modern stable civilized open society into barbarism while the world looked on, while Lenin/Stalin transformed a backwards mysterious (with an unreadable language!) society of peasants and serfs into a modern industrialized society out of the public eye. One minute serfs and losing to Germany; 30 years later, modern and defeating Hitler. It's easy to forget that Stalin was a co-conspirator with Hitler in starting WW II, and gobbled up far more of Eastern Europe than Hitler did of Central Europe; after all, Stalin turned on his co-conspirator. Don't we applaud criminals who turn on the rest of their gang, especially when the convicted criminal did his work in the public eye and the snitch hid his worse activities?
FDR at one point praised Mussolini, Stalin, and Hitler. Statists have always applauded successful statists until the stench was too much.
Stalin didn't turn on his co-conspirator, his co-conspirator turned on him.
What you describe may be part of the reason, but the Bolsheviks were getting favorable treatment from western intellectuals earlier than that.
About who turned on whom ... I wasn't referring to the German invasion of the USSR but Stalin's overreach in Eastern Europe. My understanding is that Hitler expected Stalin to leave some of those countries alone (Hungary? Romania? Bulgaria? I do not remember now) and was upset about Stalin occupying them or turning them communist. But it's been a long time and I don't remember the details.
As for the Bolsheviks getting favorable treatment, was that before 1917? I wasn't aware of that.
Why would Hitler expect Stalin to leave countries in Eastern Europe alone, once it was all out war between Germany and the USSR?
I was referring to the Bolscheviks in the early years of the USSR, before they had any claim to have industrialized Russia.
And as for the early USSR, it didn't matter what really happened, only what the outside world thought Lenin/Stalin had done or were promising to do, socialism was still the up and coming new thing and hadn't been tarnished yet, so it was easier to let themselves be deluded. Everything Hitler did to Germany was much more visible to the world press than what Lenin and Stalin did. Remember Duranty in the New York Times; I don't think there was anything close to that level of gaslighting about Hitler.
No, I mean Stalin taking so much of Eastern Europe as part of dividing up Poland, 1939 and 1940. My understanding is that Hitler thought Stalin was getting too greedy or something, the way bullies think about other bullies.
It's simpler than that. Stalin condemned all left wing people and parties to the right of him -- his competitors and potential competitors -- as right wing deviationists. That's where the convention of calling Nazis and Fascists right wingers comes from. It's a very honorable society: After all, Trotsky was a "right wing deviationist". That's how one winds up with an ice pick in one's head.
The transformation in the american elite between say, 1910 and 1930 is remarkable. I've read a lot of biographies of people from that period and in 1910, they are all rock-ribbed christians and capitalists. To a man they believe in goodness of jesus and making a buck. And yet, by 1930 or so, they all seem to be socialists or fascists of some sort. Some of it is generational change, but a lot is the same people changing attitudes of individuals. The causes of this shift are understudied.
Hyman Minsky explains it all 'Stability is destabilizing.' Stability leads to confidence, which leads to over-confidence and bubbles. In the collapse which inevitably follows people are willing to consider batshit crazy ideas, because they perceive the social and economic model in place to be fundamentally broken.
Of course, in the current context the fundamentally broken bit also happens to be true. We could have easily handled two of the following three: high inward migration, women entering the workforce in unprecedented numbers, and offshoring/deindustrialisation. The basic fallacy was the Western belief that anyone could be educated to do anything- only 8% of the population can perform highly cognitive work, and three-quarters of them can only manage it at a barely adequate level. At the higher levels of performance scepticism matters more than raw intelligence, in most fields other than pure science.
That's the rise of progressivism and WW I. All those capitalists became "dollar a year men" in WWI, and they loved it, funneling government money to their interests. By 1930 there was reinvigoration: We planned in war!
It's understudied because from the POV of the contemporary literati class, it's all so -- natural.
I suspect that the Great Depression was not great for the rock ribbed capitalist point of view.
I've recently had some very lively and entertaining discussions with an older enthusiastic Marxist writer. Unfortunately, I think he's blocked me! It must have been my criticism of romanticists who yearn for a return to pre-industrialist society. I called them anti-humanists, and noted that China had nothing other than vague plans to expand much beyond 30% for total wind and solar renewables by 2030- exactly what I would expect from a country acting in its own rational economic self-interest, because beyond 30% the costs of pumped hydro energy storage and transmission lines becomes becomes progressively more prohibitive. They are also in the process of a significant expansion of nuclear power, and are now something of a big hydro energy superpower.
Anyway, as part of my foray into the Marxist worldview, I did a fair amount of research into the Chinese SOE model. Apparently, employees of SOEs receive about 10% more pay compared to equivalent work for a private sector company in China. Older workers tend to prefer the SOE model, whilst younger workers with ambition tend to prefer the faster promotions, greater creativity and more dynamic work environments which are typical of the private sector.
Besides, 10% for capital is a pittance compared to the money extracted from workers in the West to cover regulation, employer taxes, compliance costs and the internal corporate bureaucratic and overly-bloated management structures which are a feature and not a bug of elite overproduction in the West. Weighing capital against government and culture it becomes clear that the latter is by far the heavier burden. And that's before the workers themselves are taxed by government.
The unsung hero of China was Deng Xiaoping. His economic reforms were directly responsible for China's current success. "It doesn't matter whether a cat is black or white, as long as it catches mice."
If you haven't read _How China Became Capitalist_ by Coase and Wang I expect you would find it interesting.
Oh wow. I will definitely have to read it- it looks like the guy who co-wrote it is the same R. H. Coase who developed Coase Theorem. Eric Weinstein has recently been talking about how Coase Theorem might be used to assign workers soon to be displaced by AI with licensing rights for the labour they are going to lose- the idea being that as labour is lost, licensing fees will partially compensate for lost labour.
It's his view that other solutions, like UBI, strip dignity.
It's Ronald Coase's final book. He got a Nobel Prize for two articles, each groundbreaking in a different but related direction. My recent post on Brilliant Simplicity was on Coase as well as a bunch of other people.
https://daviddfriedman.substack.com/p/brilliant-simplicity
What do you think of Steve Keen? Don’t get me wrong, some of his ideas are whacky or outdated- the stuff on the physiocrats for example (he should read Superabundance). But I’ve found some of his thoughts on system dynamics and marginal costs in particular, insightful.
And he’s right about the way manufacturers price. That’s exactly the way we, and everyone else, used to do it. At one company I worked at, which was always treated as a subsidy cash cow- before the management buy-in- we had a couple of divisions which were perennially arguing overhead reduction for pricing, in pursuit of volume.
Cheers. I will put it on my reading list.
About 10 years ago I had a student of Swedish descent (she grew up in the Middle of the Mitten on the Lake Huron coast in Michigan) who at age 20 decided to take a position as an au pair for a family in Sweden. Her Swedish was acceptable, although she said sometimes English worked better in some situations. She was leaving a broken relationship and wanted to learn more of Sweden.
She wrote a very nice memoir about her time there. It nearly broke my heart. She was probably the best, or perhaps 2nd best pure writer I ever had out of probably some 5000+students.
What stuck with me was her claim (which I take to be accurate) that the upper-middle or lower-upper class family she worked for basically had about the same wealth/income and lifestyle as a lower-middle class family in rural mid-Michigan.
The struggled a lot with paying for heat and groceries and the grocery choices were very limited, they had very few electronics of any kind. They had an older but servicable car and a similar truck. Their entertainment choices were quite limited.
I wouldn't say she was appalled but rather astonished. Her family was quite obviously, in their neighborhood, towards the top of the heap. She met a young man that she dated for a couple of months, and he lived in quite strained circumstances, in housing almost s]describable as a hovel.
Now she was not in a major city, but she said it was like living in the U.P. only even colder in the winter.
Anecdotal, to be sure, but I found it interesting. She said it gave her a much more appreciative view of her American life.
And, as a side note, she said she found the average Swede she met to be pretty "grasping" money-wise.
It's not merely a matter of anecdotes. Europe has become the sick man of Europe (although that was less the case a decade ago). If Sweden were a US state, its GDP per capita would rank #49 out of 50 states.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_GDP.
And that's not merely a matter of a few rich Americans in each state bringing the averages up. Median numbers point in the same direction (although not quite to the same degree).
Per the values listed here: https://ourworldindata.org/grapher/daily-median-income?tab=table, the median income in the US is the 4th highest in the world and Sweden's is 15th.
[Granted, not all countries show data for the same year, but the the basic picture remains clear].
I think for my student, who basically was from a rural small town, it was a shock to find the "living standard" of people wealthy enough to hire her when compared to what she was used to and what she had expected.
She also learned to read contracts much more closely, as part of her remuneration was meals and such. She was very unhappy with what she was offered to eat.
In general, I think she rather expected to find something like America with funny accents. But she was a good person, intelligent, hard worker, etc. She made a career for herself, found the right guy, married, had 2 kids the last I heard.
The experience seemed, in the longer run, to be good for her.
Well done, David, on a much needed topic of what Paul Hollander, perhaps the best one writing on this theme of Western intellectuals in love with other countries’ Communist tyrannies, termed “Political Pilgrims” (the name of his book 4th edition 1997); Aka, Fellow Travellers or Useful Idiots (here I would include Noam Chomsky among younger others, see below).
Here are counter articles around that 1976 Economist article going against their Love of Tyranny grain, Hart and Leys sharing the footsteps of Hollander:
CHINA: THE ANNIHILATION OF HUMAN RIGHTS Libertarianism, David Hart, Jan 1, 1979
“The feudal rule which continued for more than 2,000 years has left its ideology deeply rooted.”
Ch'in Shih-huang was the first emperor of China, founding the unified empire in the third century B.C. In 213 B.C. he ordered all books presenting the views of his opponents burnt and more than 400 confucian scholars buried alive. That the “great helmsman,” Mao Tse-tung, could in his collected works not only compare himself openly with such a butcher, but boast at having surpassed him a hundredfold, is enough to leave one flabbergasted. But, then, Mao never shrank from admitting his crimes; he left that coverup to his apologists throughout the world.
Why has it taken so long to expose the gross violations of human rights—the massacres, torture and imprisonment—that have occured since the Chinese Communist Party came to power in 1949? Why have western journalists, intellectuals and academics remained silent until quite recently, when the evidence had become so overwhelming that they could no longer ignore it? A similar phenomenon occured during the 1930s in Soviet Russia. Fellow travelling, a sort of arm chair communism, blinded intellectuals to the horrors of mock trials, forced collectivization, shooting of dissidents and black marketeers, corruption, mass arrests, imprisonment, and deportation to Siberia. It seemed that if repression occured under a “right wing” government (Franco’s Spain, Hitler’s Germany, Mussolini’s Italy) fellow travellers would march to the barricades in defence of liberty—as many did in Spain. They were remarkably reluctant to fight the same evils when committed by their beloved “left wing” governments, testifying to their faith in the divinity of the “dictatorship of the proletariat”.
https://www.libertarianism.org/publications/essays/china-annihilation-human-rights
CHINESE SHADOWS China File, Simon Leys, May 26, 1977
“Not that I claim for myself any prophetic insight: it is simply that totalitarian regimes have very little capacity for change, and the validity of whatever truths one may gather about them is bound to endure as long as the regimes themselves.”
https://www.chinafile.com/library/nyrb-china-archive/chinese-shadows
AMNESTY INTERNATIONAL’S REPORT ON POLITICAL IMPRISONMENT IN THE PEOPLE’S REPUBLIC OF CHINA (1978)
https://www.amnesty.org/en/documents/ASA17/015/1978/en/
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Now 2024 same Totalitarian Obsessive Compulsive Control Disorder by the CCP as 1979 as Leys knew the tyrants never change their democidal spots, pity the poor Uyghurs (and Falun Gong):
DETENTION CENTER 3: CHINA'S LARGEST DETENTION CENTER. Into the Shadows, Aug 18, 2024 17:29
Explore the hidden horrors of China's Xinjiang region, where mass detention, torture, and persecution of Uyghur Muslims are rampant. Uncover the truth about Urumqi Detention Center 3.
https://www.youtube.com/watch?v=AR1tBTJKsfA
---
Unfortunately, I disagree with you that this “bias in favor of communism” is “weakened”—I only wish it were.
China is STILL rabidly Communistic at its black heart core even though it is clearly also a Technocracy. See the book “Who Are China’s Walking Dead”by Kay Rubacek
https://www.amazon.com/Who-Are-Chinas-Walking-Dead/dp/B097SHKT76
Western intellectuals like my TRIO OF TYRANNY LOVERS--Matthew Ehret, Cynthia Chung and Jeff Brown--cannot stop themselves fawning over Mao to Xi CCP’s amazing record of “Democratic Dictatorship” now “Multi-polarity” “Belt and Road Initiative” that will save the world from the U.S. and NATO, ugh.
Help me out Ehret, Chung and Brown to the Freedom community as the Useful Idiots they are---you can read their own self-incriminating words here:
MUSEUM OF CRIMES AGAINST HUMANITY BY THE CHINESE COMMUNIST PARTY (CCP) MAO TO XI--Holding Ideologues Aiding and Abetting the CCP Morally Accountable. Nov 16, 2024
https://responsiblyfree.substack.com/p/museum-of-crimes-against-humanity
Get free, stay free.
This is brilliant. By the way, a similar bias relates to schools. We can never admit how they destroy inner city youth. For a huge expose of that, read "Goodbye Homeboy: How My Students Drove Me Crazy and Inspired a Movement" https://www.amazon.com/gp/product/B07L5NTQ5P/ref=kinw_myk_ro_title
His encounter with Ayn Rand (three dinners) when he was 26 and she was 75 is hugely entertaining, and every page of the book is riveting.
As for Scandinavia - a very flexible labour market, the ease of starting a new business, the rule of law, the absence of corruption, and a culture of mutual trust do a lot to offset the damaging effects of a huge welfare state and high taxation.
Seems to me that the intellectuals of the day were afraid of being lumped in with "reactionaries" like Hayek and your dad if they criticised a communist regime. Just like intellectuals of today are afraid of being lumped in with Trumpers and islamophobes if they defend Jews who have been randomly attacked over Gaza.
I was a young scholar of China just after Mao died. Nowhere in my experience, especially in the ivy League, did I hear anything but praise for Mao from the non-Chinese intellectuals in the academy, especially in the "social sciences," which was Marxist and very stupid people they were and are. Several scholars who had fled Communist persecution in China, of whom I knew several, were tiny voices overwhelmed by the positive discussion of Mao's "achievements."
When Steven Mosher discovered forced abortion programs throughout China, proven with photographs, the CCP kicked him out, slandered him with all sorts of bogus claims and told Stanford, kick out Mosher or we will curtail your access into China. Stanford removed Mosher.
The Leftists in the academy were thrilled to learn that Mao told Khrushchev, so what, your atomic bomb will incinerate 100 million of my Chinese, I have another 300 million! The old guard who had seen pre-1949 China were old and tired and still thought of China by reference to the 19th century ideal of the Confucian gentlemen scholar, whom they knew while studying in China.
And then all of America wanted to go to China, send their factories and they technology to China, exporting all the best that America had to the worst that China offered: the CCP. Americans of the loathsome Generation of '68 are totally responsible for their kow-towing, money-grubbing, traitorous conduct with China. They sold out cheap.
To solve this problem, Thomas More had invented the country Utopia, that is nowhere.
Interesting read, thanks!
If leftist intellectuals in search of a foreign model have moved their sights from Stalin’s Russia and Mao’s China to the welfare states of Northern Europe, I guess that even a libertarian should salute it as an unquestionable sign of progress. The Nordic countries have also very good statistics, which leave no excuse for not empirically testing one’s beliefs.
It is progress. The Scandinavian countries are called socialist but are in fact capitalist welfare states. They may eventually run into serious problems due to the long term effects of a welfare state but they are not likely to lead to any equivalent of the Holdomar or the Great Famine.
It's also progress, intellectually speaking, that critics of capitalism have mostly shifted from socialist arguments to environmentalist ones. They are better arguments although often used to support undesirable policies such as biofuels.
Oh, dear David Friedman! The progress of the left has made my intellectual life hell. Looking back, with the old commies, I knew what I was up against. What I had studied and believed made me resilient to their arguments. Then along come these neo-marxists, Gramsci, Frankfurt school, never mind the post WW II French speakers. Oh, my God! How do you argue against people who believe reality is socially constructed? [I'm not even against the social part, just the constructed part.]
To come back to earth, their lot is not about the Welfare State, least of all Sweden, but about conforming, expressing that conformity, and submitting. Anywhere in the world. Nothing different from "Mao, Mao, Mao Tse-Tung"!
By the way, because the Frankfurt School emigrated to the US post 1933, it has been called "Hitler's revenge on the United States". But some re-emigrated to Germany post WW II, so the revenge turned on its home, so to speak.
I mostly limit myself to economics, not philosophy, so am concerned with environmentalism not the Frankfurt School. The environmentalists can make their arguments in legitimate economic terms, although some would oppose putting it that way. The problem is that, if you know what answer you want to get, there is enough uncertainty in the relevant facts so you can usually get it. I discuss that at length in the context of the consequences of climate change, here and elsewhere.
For my climate posts see:
http://www.daviddfriedman.com/Sorted_Posts.html#Climate
I understand.
Broadly speaking, I believe the left has moved beyond capitalism and the welfare state. I don't know whether it's because they have won or they have lost.
I have learned most from your climate posts, more than from anybody else's climate analyses.
It's just that I feel so much better after muttering about the Frankfurt School. :-)
Apologies, and Cheers!
“…Tim Lambert, a commenter on a forum I am active in and, long before that, on my blog, a valuable commenter because he often disagrees with me and is sometimes right.”
This is what I aspire to be!
Nice piece.
I used to enjoy reading The Economist because as of a few years ago it was one of the few MSM publications that - while it no doubt had some leanings to the left - was centrist enough and generally fair.
Sadly, it now is leftist biased on par with most of the MSM. At least we still have the WSJ.
https://www.allsides.com/news-source/economist
I looked through a bunch of their articles before posting and I didn't find any evidence of left bias. There was a long article about a woman suing a prominent advocate of sex change operations for irresponsibly pushing her and her family into one that she now very much regrets, and the article was positive about the woman, critical of the woman she was suing.
The American left in the post WW I period was very receptive to that national socialist Adolf Hitler and positively gleeful about the ex socialist leader Benito Mussolini. Though Benito had some people killed, he was not a mass murderer. In that league of Mao, Stalin, Hitler, he was Mr. Nice Guy. There was plenty of glee about Stalin, of course. Lincoln Steffens: I have seen the future and it works
"... but there are still the welfare states of Scandinavia for an American intellectual to look up to." And the left doesn't understand them either! The left would be surprised how capitalist -- and dare I say how free -- they are and how the middle class has to pay its own way!
ETA: When I first glanced at the title, The Economist on Mao, I misread as An Economist on Mao, and I thought a substack on Joan Robinson was coming!
unsurprising yet still unthinkable gaslighting by the Economist