Monday, July 23, 2018

Matt Bruenig - Nordic State Ownership of Enterprise Is a Real Thing

It's not just China which has massive state ownership of key industries, the Scandinavian counties do too, which works very well for the common good. China is leaving the West behind with its massive investment in public infrastructure which our private sector can never match. KV

Neal Meyer has a piece at Jacobin where he seeks to define the phrase “democratic socialism.” I had a similar post in late June here at People’s Policy Project.
Overall, Meyer’s piece is fine as far as these things go. But there is a turning point in the essay in which he attempts to distinguish “social democracy” from “democratic socialism” where he makes clearly false factual claims that really need to be corrected if we want to have a serious discussion about this idea.
Here’s Meyer:
In rare instances — usually following massive wars and economic crises — progressive governments have been able to win victories. The Scandinavian countries are what we call “social democracies,” societies with robust social safety nets and labor movements that check the worst tendencies of capitalism and limit the power of the wealthy in key ways.
Over the course of the twentieth century, workers in these countries won full employment, a strong welfare state, and high levels of unionization. But they never successfully challenged the source of capitalist class power: their ownership rights over the major national corporations.
The idea that the Nordic countries have avoided challenging the capitalist class’ “ownership rights over the major national corporations” is one that you see thrown around by just about everyone in the discourse. So it’s understandable why Meyer repeats the conventional wisdom in the US discourse here. But this conventional wisdom is simply wrong.
As I noted in Current Affairs earlier this month:
In reality, the Nordic economies do not provide any support for the idea that relatively high levels of state ownership are incompatible with stable and successful economies. Sweden has 48 state-owned enterprises, Finland has 67, and Norway has 74.
The level of state ownership in Norway in particular is staggering, even after two successive conservative governments have chipped away at it. The Norwegian state owns the country’s largest oil company Equinor (previously called Statoil), the country’s largest telecommunications company Telenor, and the country’s largest financial services group DNB. This would be like if the U.S. government owned Exxon Mobil, Verizon, and JP Morgan Chase.
Finland’s state ownership portfolio is somewhat less impressive but includes in it the airliner Finnair, the infrastructure engineering company VR, and the energy company Gasum. Finland’s state also owns a few oddball enterprises like the public relations company Nordic Morning and, until earlier this year, the wine and spirits company Altia.
What’s particularly weird about Meyer’s claim here is that, not only is state ownership of major enterprises common in some Nordic countries, but also government documents about state ownership in Finland and Norway generally justify that ownership in precisely the terms that he lays out in his piece.
Meyer says:
If capitalists don’t like our democratic demands to, say, stop polluting the planet or pay workers a living wage, they can simply pull their investments and move their jobs to another state or country — and we have little recourse to stop them.
The Soria Moria Declaration of the Stoltenberg government had this to say:
The State is a major owner of Norwegian business. State ownership guarantees our control over our shared natural resources and provides revenues for the common good. State ownership can be decisive in ensuring national ownership and ensuring national head-office activities of key businesses in Norway in years to come. Public ownership is important to safeguard key political goals within district, transport, cultural and health policies.
“Ensuring national ownership” is the mind-numbing corporate-speak way of saying “preventing capital flight.” The possibility that private ownership will facilitate the exit of major corporations is a risk that the governments of Norway and Finland seem to take pretty seriously. And “socialism,” meaning state ownership of those major corporations, has been part of their answer to that problem.
Here’s a Norwegian government white paper:
Companies with State shareholdings manage substantial economic and socially beneficial assets. The State is an owner of some of the country’s largest companies in order to ensure that national ownership of key activities that contribute to the centres of excellence associated with head office functions and research and development activities remain and develop in Norway. This makes the State an owner of undertakings that are highly significant in Norwegian industry and society.
The same document laments that insufficiently aggressive state ownership policies have lately led to a state of affairs where:
We are seeing an increasing trend for Norwegian knowledge businesses to be sold as soon as they achieve international standing. Norway depends on good contacts with strong international capital and competency environments, but in many cases, selling out means that we do not build up long-term knowledge industries and expertise in Norway. We risk undermining the results of long-term research and development, which are simply not reflected in short-term stock-market values. A better strategy must therefore be developed for ensuring national ownership of key businesses in the knowledge society.
The high number of state-owned enterprises in these countries is not exclusively justified in terms of “ensuring national ownership.” The Norwegian justifications also seem to lean heavily on the idea that state ownership of certain kinds of enterprises is key to ensuring the value of natural resources flows to the common good. But nonetheless using public ownership intentionally to stop capital outflows is something that is very much alive and well in these countries, contrary to Meyer’s claims.
Reckoning with Norway
In addition to correcting the record, I think it is important for socialists to reckon with Norway for two reasons.
First, the most powerful argument for a particular system or program is that it has been tried and works. This is why Bernie Sanders sells Medicare for All by pointing to other countries with single-payer systems. If another country has it, and it works, then it is hard for someone to say it is ridiculous on its face, which is how both conservatives and moderate liberals want to treat basically any proposals that come out of the left. Along these same lines, pointing out that we have successful countries like Norway where the state owns the vast majority of the national wealth and a lot of major corporations provides an easy way to argue for those things here.

Second, starting with an appropriate understanding of Norway or Finland (or any country for that matter) is necessary for articulating where those countries fall short of the ideal and how we would do it differently. Meyer’s basic approach of saying “Nordic countries plus X” is a good one, but only if X is actually something that isn’t present in Nordic countries. “Nordic countries plus public ownership of major corporations” is just to say “Nordic countries, Norway and Finland in particular.”


Detroit Dan said...

Thanks for post, Kaivey. Good to know more about socialism.

Andrew Anderson said...

One thing the State owns and should own without a doubt is its fiat.

Then why are banks not only allowed to use fiat for free but are PAID to do so via interest on reserves (IOR)? Why do we pretend the banks own fiat?

Otoh, individual citizens have an inherent right to use their Nation's fiat and should not be charged, up to reasonable limits on account size and number of transactions, for doing so.

Tom Hickey said...

One thing the State owns and should own without a doubt is its fiat.

Make that "One thing the public owns and should own without a doubt is its fiat."

Big difference between the state and the public when the public doesn't control the state apparatus through the commons and public purpose directed at the common good and general welfare of the people as a whole (system), while respecting the dignity of each through institutional recognition of rights based on custom and law, where the rule of law applies equally to each and all.

Otherwise, the state is rule by special interests and that is tantamount to rule by force, ownership of property, etc.

Failure to make these distinctions results in a lot of deviant political thinking aimed at privileging some cohorts over others.

Andrew Anderson said...

The public does not own fiat since only the State and the State-privileged usury cartel (i.e."the banks") may even use fiat except in unsafe, inconvenient physical form, aka "cash."

Moreover, to say the public does own fiat is dangerously close to gold-standard thinking. And "Render to Caesar what is Caesar's", Matthew 22:21, certainly means the Roman State, not the Roman public.

peterc said...

From a purely economic standpoint, I think that anything of importance should be carried out in the public sector and that long-term economic development needs to be driven by the state. To the extent there is an economically valid role for a private sector, it is only for dealing in the optional extras, and even then, it is more an indulgence than efficiency promoting (capitalist mythology notwithstanding). That's why right wingers don't usually privatize the military (they consider it to be too important) but do seek to privatize education and health care (which they regard as an optional extra, only needing to be available to those who can afford it).

To perceive the economic effectiveness of the state, it is only necessary to consider the economic performance of eastern Europe under the Soviet Union compared with the periods before and after, or the recent economic performance and future prospects of China relative to the west, or the relatively strong postwar economic performance of the west in contrast to its arm-flailing incompetence in the neoliberal era.

Tom Hickey said...

peterc is correct. I would add that under bourgeois liberalism (the system in place), private interests based on ownership of property seek to control the commanding heights of the economy, and for them these heights include education and health care, as well as the security forces, of course (see the Cato institute The New Commanding Heights. That's just the way that bourgeois liberalism works. It is set up that way — as Marx, Engels and Lenin sought to show in their writing. Since they sociologists have documented this, for example, C. Wright Mills, The Power Elite.

Democracy is supposed to control that tendency of bourgeois liberalism. However, democracy under bourgeoise liberalism is about being the public being allowed to vote but never actually to control power. The public merely elects representatives that are controlled in aggregate by moneyed interests since the candidate selection process is controlled by the ability to obtain campaign funding, and guess who has the money when campaigns are privately funded and "free speech" is interpreted as unrestricted funding of political propaganda. In addition, moneyed interests control the news media, and through that channel, "informed" deliberation and decision-making.

This accords with the sentiment of first US Supreme Court Chief Justice John Jay's view that the people who own the country should govern it. This stands in opposition to Lincoln's (mis)statement about government "of the people, for the people and by the people" as the expression of popular sovereignty.

Government "of the people, for the people and by the people" is the basis for participatory democracy. What we have now is a democratic republic controlled by elites, as are all republics. This is the difference between republicans and democrats, and this bears little resemblance to current political labels in use in US politics.

Andrew Anderson said...

From a purely economic standpoint, I think that anything of importance should be carried out in the public sector peterc

Not to needlessly contend, but I recall that small, privately owned gardens provided 25% of the Soviet Union's food supply.

It seems people preferred to work their own property rather than on collective farms.

Not that private land ownership should be concentrated either but that every family should own some land they may raise food on (cf Leviticus 25).

And things would largely still be that way in the US if the government-privileged usury cartel had not driven families off their farms, etc.

Andrew Anderson said...

Would the "Commanding Heights" include finance, Tom? And that's why you're not interested in ethical finance since ethics might hinder with the commanding?

Tom Hickey said...

Search on "commanding heights." There a ton of stuff on it.

"Commanding heights" is a term derived from military strategy. The idea is that elevation is a strategic advantage in controlling a territory.

Evolution is a lot about controlling territory both as an entity and a a group.

Wars are fought over controlling territory, and political control is about who controls the domestic space and what happens in it.

Thus, "the commanding heights" signifies everything that is key in establishing and maintaining control of a territory.

Politically, this means control over the principle sectors of an economy.

In a participatory democracy as governance of, by and for the people, the public should control the commanding heights of the economy in order to establish and maintain the common good and general welfare.

This doesn't necessarily imply that everything should be in the commons under direct public control, only that the levers are.

Finance? Of course, finance is a control lever. It is one of the principal control levers. Control over finance is tantamount to control over the territory.

This is not a recommendation for bank nationalization under the present system, since the public doesn't hold the reins, contemporary republics by oligarchies rather than genuine democracies.

On the way to genuine democracy and socialism as prioritizing people and the environment over ownership, the opposite of this is now in place. This calls for a balancing of power between the state and the private sector, so that neither can dominate.

The goal should be moving iteratively and incrementally from bourgeois liberalism toward popular liberalism. Populism on the right and progressivism on the left are forces acting dialectically to accomplish this, with the right seeking to reduce state power and the lift to reduce oligarchic power.

The challenge is to navigate between the Scylla of fascism and the Charybdis of collectivism.