Models of State-led Economic Transformation

The political discourse of the last several years has increasingly revolved around the question of whether capitalism is really operating in the interests of all. Many on both the Left and the Right are seeking for ways to move beyond capitalism, or at least to fix it so that it truly serves the common interest. In all of this discourse, inevitably the role of the state becomes a question of central concern. There are currently several models for the state’s involvement in the transition from capitalism circulating in the discourse, and it would be useful to consider a couple of these models in comparison. I would characterize these models as productive and distributive models. Practically speaking, these models are not mutually exclusive, but it is interesting to notice the different emphases placed on them by different agents of the political discourse.

The common social democratic model for transitioning out of capitalism revolves around the creation of a fairly comprehensive welfare state. Bernie Sanders’ platform, whose biggest plank is “ Medicare for All,” is meant to imitate the social democratic — or “democratic socialist” — welfare states of the Nordic Countries. In Marxist terms (without claiming that social democracy = Marxism), these are structures in which surplus-value is captured by the state and redistributed through the welfare state, by a variety of…