Can socialism and capitalism coexist in the same country?

Question

I had a discussion with a friend because I would argue that Denmark is not a socialist country. We have a welfare state and therefore pay high taxes, however we have a free market and privately owned companies. Even things that are "free" like school and medical care that is owned and operated by the state has competition through private schools and private hospitals which you pay to attend.

Now the problem arose because the railroad system in Denmark is owned by the state and so it is only the state owned company that can use these railroads (called DSB). So there is a monopoly on train transportation, which favor the state. The government has decided that DSB (the transportation company) has a time period where they have the right to use the rail roads alone and when the time is up, others can appear on the market, however this period is always extended 30 years from time to time.

This sounds a lot to me like a socialistic trait. Does that mean that we have a mix of capitalism and socialism?

Answer 1

Yes.

You have set up a false dichotomy: that either a country is "socialist" or "capitalist". Nearly all countries have aspects of both.

In socialism, the ownership of property and the "means of production" are held in common (typically ownership is assigned to a government). In capitalism, ownership is held by private individuals and companies. Denmark has aspects of both systems. In this it is entirely unremarkable, and the same is true of nearly every other country.

Few "socialists" actually believe that all property should be held in common. Few capitalists think that the state should have no property and produce nothing. Instead a "socialist party" believes that the balance should be different to a capitalist party: for example a socialist party may think that the government should own rail, health, and utility industries (perhaps alongside privately owned companies). A capitalist party might believe that these industries should be entirely privately owned (but think that education should still be provided by the state). There is nothing surprising about that.

Answer 2

There are over 40 definitions of socialism. However a common-enough one (SEP) is that:

The bulk of the means of production is under social, democratic control.

And in contrast the corresponding definition of capitalism entails:

The bulk of the means of production is privately owned and controlled.

Under these definition the answer is no, you can't have both socialism and capitalism at the same time in a country. Either the bulk of means of production is in private hands or it's "socially owned". (Actually, that SEP page also allows for a "statism", in which the state owns most of the means of production but the state is not under democratic control. I'm glossing over this distinction between socialism and "statism" here.)

Wikipedia provides a fairly similar definition of socialism, but with a less clear threshold:

Socialism is a range of economic and social systems characterised by social ownership of the means of production and workers' self-management.

Under this definition it's more arguable when something is to be called socialism.

In general, economic publications don't try to put such socialism vs. capitalism labels on countries nowadays. Rather more objective figures like the percentage of state-ownership in the economy and/or the percentage of people employed by the state. For the latter (which is somewhat more objective to calculate as you don't have to try to estimate the value of schools or hospitals) Wikipedia has a list. For example Demark has about 32% of employees in the state sector, whereas it's around 16-19% in the US. For a proper contrast, the page also notes that

In the former Eastern Bloc countries, the public sector in 1989 accounted for between 70% to over 90% of total employment.

Even on such apparently simple employment figures data can be somewhat misleading due to subcontracting

Germany, for example, spends as much as France on health, but has far fewer public employees in the sector. This is explained by the fact that health workers in Germany are generally paid by the administration through private contracts. France, more generally, rarely relies on subcontractors for public services, in contrast to Germany, Denmark and Finland.

So one can be largely paid by the state, but be technically a private employee... See public–private partnership (PPPs) for more on this latter issue. Arguably, PPPs are "less socialist" than outright employment by the state, but some right-wing/libertarian writers nonetheless declare PPPs the "backdoor to socialism"... So I hope you get some idea why answers to your questions depend on definitions.

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If you want to move beyond mere ownership and employment by the state, to the state exercise of regulatory power or even dirigisme over the (rest of) the economy, things can get even more complicated. According to some research, the Nordic countries actually exercise less regulatory control than the US so there is more "business freedom" in the Nordic countries according to some indexes, including by OECD, World Bank or (even) the [US-based] Heritage Foundation standards. This despite the higher taxes and social spending in the Nordic countries. Consequently, some argue that a unidimensional scale [never mind a pure dichotomy] of socialism vs capitalism is rather misleading nowadays.

Answer 3

In "A Theory of Socialism and Capitalism", H.H. Hoppe outlines four flavors of blended capitalism and socialism, which are common throughout the world:

Socialism Russian Style: Total state rule of the means of production

Socialism Social-Democratic Style: Voters ask the state to own the means of production

The Socialism of Conservatism: Voters ask the state to own a little less than those to the left of them, but with some added behavioral/lifestyle restrictions in place. "Conservatism is progressivism driving the speed limit."

The Socialism of Social Engineering Economists or social theorists propose positivist arguments in favor of socialism on moral grounds, Keynesian-style calculations, etc.

Hoppe asserts that there are no "capitalist countries" since there is a fundamental contradiction between private ownership and state ownership. Meaning, if the state taxes your property or wages, you don't fully own your property or wages. If the state can't tax, the state cannot exist because it is broke and it produces nothing.

So, in summary: Yes, they can and do coexist.

Somewhat related: One reason capitalism and socialism exist together is because of the distribution of various moral foundation traits found throughout the population. Some people are born with a deep concern for harm and fairness, while others value heriarchy and purity. In countries where state socialism takes over, the state often kills, exiles, or jails capitalists in order to weed the population of opposition. The inverse also happened in Augsto Pinochet's Chile where communists and socialists were thrown to their death from helicopters.

Answer 4

Yes, it is possible for both to exist in the same country. Some examples would be the USSR allowing private farm plots whose products could be sold by the individual, the Norwegian nationalized oil industry in an otherwise capitalist state or China today ( the socialism vs capitalism bit in China today is just pure chaos ).

Every socialist country has always had elements of capitalism, and probably all capitalist countries have had some elements of socialism.

Answer 5

You mention private schools as competition for public schools in Denmark but I don't think that is the case as it appears that 80%+ attend public schools versus 15.6% in private schools. Also should note that those private schools are still largely funded by the government through the voucher system. I am not sure of the breakdown of private schools but I would wonder how many of them are a religious based school versus a secular one. Overall I am not sure that a 15.6% market share for private schools is much of a competition for government ones.

https://en.wikipedia.org/wiki/Education_in_Denmark

Government-funded education is usually free of charge and open to all. Denmark has a tradition of private schools and about 15.6% of all children at basic school level attend private schools, which are supported by a voucher system.

Answer 6

All countries are a combination of both systems. Even USSR was although a communist but their leaders in projects were paid for performance. If you are overseeing development of say a mine or a bridge, your speed to completion and budget merited you for monetary gains. This looks on the surface like a capitalist way of motivating individuals to preform their best but the same standard was not used for people down the hierarchy, they would have to just preform or risk being transferred to undesirable places, where stand of living would drop as well as income. You could get transferred to places where salaries are not being paid in time.

Another example of USSR is although they called each other comrades but everyone had rank and going up the rank would bring financial benefits. A complete capitalist or a communist-socialist system would not work.

We call US a capitalist country but it gives people unemployment benefits, retirement benefits, and so forth which is socialist concept. We call north korea communist but their population is starving because no market is able to survive in order to cater to their population. All resources are concentrated with one family. This is not what Marxs talked about when he spoke of redistribution of wealth.

My point is there was never a true communist country or a capitalist country. Countries which had succeeded were able to realize how to bring maximum benefit to largest risk takers but at the same time give them the security they need to take risks if they fail. This is capitalist and socialist system working together.

Answer 7

In my opinion it is similar to the concept of temperature. You have two ends to it - Hot and cold. Temperature of any object will be between these two extremes.

Similarly, socialism and capitalism are two extreme ends of governance model. It is a scale - it's both ends are utopia. Every society belongs to a point in between these extreme ends. Calling a state capitalist or socialist is a approximation. The amount of areas that a state controls in total decide whether it is a socialist state or a capitalist one.

Answer 8

Marxists view capitalism and socialism as opposed modes of production where specific relations of production predominate.

For the Marxist, capitalism is a social relationship where the value form and its expanded reproduction (commodities causing further commodities to be produced by wage labour) dominates. This is a society of wage labour and goods for sale. The dominant relation of production is ownership of capital purchasing labour power through wages in the form of commodities (usually money).

Socialism is hypothesised as a mode of production where each produces from ability and consumes from need. Solidarity, free giving, or doing for pleasure are the hypothesised relations of production.

As modes of production are viewed as exclusive, based on revolutions being required to unlock the juridical recognition of the dominant property relations, socialism and capitalism cannot coexist as modes of production outside of a revolutionary contest. Not even the most hopeful ultra from below or Marxist Leninist claims this about China.

However relations of production can coexist. Regardless of the ideologies of participants, socialist relations of production predominate in free software.

This matters little for your case study: western governments run wage labour organisations with private commodity monopolies. State ownership doesn’t mean social ownership. An elected boss is still a boss.

Answer 9

"Coexist" is not the right word to describe the relationship.

Definitions:

• Socialism stands for government driven agendas that shift control over the economy to the government. Be it by direct ownership, regulations, (more) taxation, subsidies, criminalization or otherwise.
• Capitalism is the manifestation of individual liberties culminating in free market. As such it fundamentally opposes government intervention of any kind.

Socialism is inherently authoritarian and asserts control over people while capitalism does the opposite and allows them to make decisions on their own behalf. The more socialism you have within a society, the less capitalism you have - and vice versa. They are inherently in opposition to each other. Of course you can mix both systems, and that is the case for all countries in the world. But a simplified formula is this:

Capitalism = 100% - Socialism
 Socialism = 100% - Capitalism
      where each is a % between 0 and 100

The overarching philosophical positions are Individualism vs Collectivism. Individualism means you accept that people have a free will, make their own choices and live with the consequences of their own actions. Collectivism intends to override that by exerting top-down decision making by the force of the government. It fundamentally distrusts the individual to make sound decisions, but trusts its own "elite" to make them for the population.

As such, "coexist" is not the correct word to describe the relation. Would you call the relation between wolves and sheep a mere "coexistence"? Both always exist to some magnitude of course. Most political parties inherently inhabit some ratio of both concepts, and that ratio usually defines their position on the political spectrum. Some people believe some government intervention is preferable, some believe a lot is preferable. Most political discourse is revolving between these two sides. The more extreme stances are rather sparsely represented - even though the one side (collectivist/socialist one) was quite predominant in the 20th century and still in some countries today, and even on social media and academia in form of neo-Marxism.

Info: Logically Socialism is not the only way to exert authoritarian rule, but most, if not all of its agendas are authoritarian and collectivist in nature.

Answer 10

While nobody in Europe would claim to be living in a socialist country, it is a recent American political trope to define European countries, Nordic countries especially, as socialist. For some reason, probably related to the abuse of the word "socialism" across the pond, the Prime Minister of Denmark felt the need to make our transatlantic friends aware of this fact: https://www.youtube.com/watch?v=RO7wgS5tdz4

In my opinion the problem is that if by "socialism" we mean the property of a human organization that provides welfare or infrastructure to those living within its jurisdiction, then all empires and kingdoms and countries in the history of mankind would be "socialist", from the Persian empire and the Greek poleis to the Russian empire. If any country providing welfare or infrastructure has "some elements of socialism", then every human organization has "elements of socialism". In either case, we end up with an empty and irrelevant definition of socialism.

The US, France, Germany, Denmark, etc... are market economies, where public ownership or control are often exerted with market outcomes in mind, such as addressing or preventing market failures. Public ownership or regulation of natural monopolies (such as the public water supply or the railroad network) are examples of such interventions. Similarly the carbon tax is an example of a regulation aimed at another market failure, the negative externality caused by CO2 emissions. More controversially, we may say that the American healthcare system is another example of a market failure (see the much larger health expenditure pro capita in the US compared to Denmark, for little or no gain), but there may be other factors at play I'm not aware of (such as geographic peculiarities, life style, etc...).

A market economy is not compatible with any usable definition of socialism, so my answer is no.