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I read in a 2015 PIIE brief titled "Russia’s Economy under Putin: From Crony Capitalism to State Capitalism" that:

After nationalizing Yukos, the Russian government started taking control of privatized companies in “strategic” sectors such as oil, aviation, construction, power generation equipment, machinery, and finance. For example, in June 2006 the government took 60 percent control of VSMPO-AVISMA, a company that produces two-thirds of the world’s titanium. In 2007, United Aircraft Corporation, a company that is 51 percent government controlled, combined all Russian companies producing aircraft. In 2011, majority state-owned Sberbank bought Troika Dialog, the fastest-growing private investment bank operating in Russia.

By mid-2015, about 55 percent of the Russian economy was in state hands, with 20 million workers directly employed by the government, equal to 28 percent of the workforce (Aven 2015). This is the highest share in 20 years, after the two privatization waves in the early and mid-1990s. In comparison, 22 percent of the workforce was employed by the government in 1996. After last year’s EU and US sanctions on some sectors of the Russian economy, this share is increasing, as companies and sectors that previously depended on private financing from abroad now resort to financing from state-owned banks, and in case of continued difficulties, their ownership is shifted to the government’s hands. The longer the economic sanctions last, the more private businesses will be squeezed out and the higher the share of the Russian economy will be converted into state ownership.

So, why isn't Russia more often described as socialist these days? Is it because of a lack of an overt socialist ideology (of Putin) that "state capitalism" seems a more preferred term for what's happening in Russia?

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    I think there is some confusion in this question about what socialism actually is. Socialism isnt defined by "government doing things" or "government owning things". The Russian government has been controlled by one man since the late 90s with effectively dictatorial power. In a case where the government is not actually controlled by the people in any meaningful sense, it seems kind of silly to even call this "public ownership". – Tal May 2 at 16:54
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    @Tal Communist dictatorships aren't exactly rare though – JollyJoker May 3 at 8:39
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    @JollyJoker Who mentioned communism? – Phoshi May 3 at 14:26
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    @JollyJoker "Communist Dictatorship" is a contradiction in terms. At the same time, we must contend with the fact that there are several authoritarian states created from popular revolutions originally based in some variety of socialism. This is a problem of violent revolutions of any sort. They generate cults of personality (which are always dangerous) around the types of people who thrive in a violent environment. Napoleon called himself a defender of the revolution while making himself Emperor of France. But were the anti-monarchist principles of that revolution also totalitarian? – Tal May 3 at 17:25
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    @Tal - Hardcore free market capitalists will tell you that a capitalist dictatorship is also a contradiction in terms. How can there be a dictatorship that doesn't influence people's freedom to buy and sell? Many Christians or Muslims or what-have-you will also tell you there can't be a dictatorship based on their religion, because their religion says to be kind to others. The ideal form of most philosophies excludes dictatorship, yet dictatorships happen anyway. – Obie 2.0 May 3 at 21:07
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Because nationalization is not necessarily socialist

Nationalization is the government taking ownership of private property. Socialism is "social ownership" of the means of production. Depending on what definitions of "social ownership" you accept, that may not involve the government at all.

"Social ownership" usually also involves the distribution of the profits of the enterprises that become socially owned to go to everyone in society, or all of the workers of those enterprises, depending on what flavor of socialism is being discussed. The same is not true for nationalization; nationalization merely means the government owns it.

Common forms of socialism may use nationalization as a tool, but it does not make all nationalizations socialist.


In the comments, the question was asked as to what the differences are "in practice" as opposed to "in theory" between Putin's use of nationalization and Chavez's use of nationalization, that make Chavez's use of it labeled as "socialist" but not Putin's.

The answer is, the excuse used for engaging in nationalization is different. In Chavez's case, the stated reason for nationalizing various private companies was to redistribute the profits of those companies to the people of Venezuela, e.g. nationalization is merely a means for achieving a socialist goal. In Putin's case, the nationalizations all have different reasons; the re-nationalization of the space launch industry in 2013 was justified with the excuse that the private companies had several failed rocket launches and that direct government oversight was necessary in order to ensure launches were successful. There's nothing particularly socialist about successfully launching rockets into space, and it's not automatically socialist for the government to take over a function that the private sector has allegedly failed to address well (e.g. "market failure").

You might say that this still doesn't describe a difference "in practice" as opposed to "in theory". That's because the practice part is the nationalizing, and the theory part is the reason why you do it (e.g. "socialism" or "national security" or "market failure" or whatever). Your mileage may vary on whether the reason actually matters in practice; I myself don't think it really does because it's seizing private property either way.

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    I would agree in theory. But in practice, what's the difference between Putin and Chavez when it comes to nationalizations? Or in slightly more abstract terms: didn't the pre-1990 "socialist" regimes (with or without scare quotes) in Eastern Europe and Soviet Union benefit a small clique as well? – Fizz May 2 at 18:54
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    @Fizz I believe that the difference is that Chavez' explicitly stated goal for the nationalizations was to redistribute wealth. Putin's nationalizations I do not believe have this as a goal, but are predicated on other excuses. – Joe May 2 at 19:33
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    @Fizz the windfall from ownership is not the only factor that matters. The Soviet-style system was often described as a "centrally planned" economy. The government was directly involved in managing all projects undertaken by all organizations. – grovkin May 2 at 20:34
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    @Fizz You seem to have the right intuition. Distribution of wealth doesn't work well in socialist countries and is therefore a bad indicator. Better indicators are the stated goal of redistribution (even though it doesn't work), the government coming to power in a revolution that never ends, branding the US as 'imperialistic' and, well, hunger. – knallfrosch May 3 at 6:42
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    @pytago - While the first part may be true, I can't imagine that the others are good indicators. Famines are a bad indicator because they happen in capitalist countries too, like the Irish Potato famine, the US dust bowl famine, etc. Plenty of non-socialist counties like to call the US imperialist, and in any case that's a criterion that's very limited by space and time. Dwelling on the revolution is also a bad measure, because lots of countries do that as part of nationalism. – Obie 2.0 May 3 at 8:57
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Because socialism is not "the government doing stuff".

The problem with the term "socialism" is that the US has the strange habit of calling everything involving the government "socialist", whether it is public railroads or socialized medicine, and this usage is beginning to be adopted outside the States. But what is socialism?

If we go back to Marx socialism is, at its core, worker control of the methods of production (factories, infrastructure, etc). This control can be centralized in the State, but it is not a necessary condition. The difference between socialism and communism in Marx's writings is tenuous because he used both terms somewhat interchangeably.

Then came Lenin. In Marxism-Leninism, Socialism is the system in place during the transition from Capitalism to Communism (a stateless, classless and moneyless society). Socialism, thus, still has classes and a State, but the power dynamics are inverted: instead of the State being used by the bourgeoisie to keep their power over the proletariat, it is the proletariat who form a new worker's State to make sure the old ruling class is not able to come back.

If Russia was still Marxist-Leninist, their nationalizing would be a socialist policy because the state would be a worker's state governed by representatives of the proletariat; the working class would be in control of the methods of production not directly but through the state. The thing is, Russia is capitalist, so the State is a tool of the bourgeoisie, not the working class. Nationalization does not really change anything in a class-based perspective: the bourgeoisie is still in control of the MoP.



Note:

I am aware of all the arguments against considering the USSR a socialist State. As this is not the focus of the question I opted to assume it was socialist.

  • Socialism: a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. It's not an US invention. It's the classical definition. It's been the definition in political economy since at least the 18th century. The "modern definition" you're using is the result of socialists (and communists) constantly redefining terminology to confuse people. Marx was absolutely brilliant in making any honest discussion of socialism impossible. – Luaan May 4 at 11:34
  • The majority of socialists considered socialism an economic theory, arguing that centrally owned means of production result in better satisfaction of people's wants (more efficient use of resources). Only when it became blindingly obvious how bad state capitalism is did they change over to the many alternate definitions of socialism, and started claiming that despite the inefficiencies, socialism is still desirable (usually in some limited form, e.g. "railroad socialism", energy, transportation, post services, tons and tons of regulations, mandatory "insurance" etc.). – Luaan May 4 at 11:37
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After some more readings and reflection, I think the answer is two-fold: state capitalism is both bigger and smaller than socialism.

It's bigger in the sense that it's more widespread, e.g. from Saudi Arabia to China. It's hard to find much ideological similarities between these two countries besides a (higher) level of authoritarianism (compared to the West). And from that it's also clear that state capitalism is also smaller than socialism in scope, in the sense that these countries don't try to have as much control over the economy as the former Eastern Bloc countries had in Soviet times.

And state capitalism is also older as a realization. The Economist points to the East India Company as historical precursor of the modern resurgence.

State-directed capitalism is not a new idea: witness the East India Company. But as our special report this week points out, it has undergone a dramatic revival. In the 1990s most state-owned companies were little more than government departments in emerging markets; the assumption was that, as the economy matured, the government would close or privatise them. Yet they show no signs of relinquishing the commanding heights, whether in major industries (the world's ten biggest oil-and-gas firms, measured by reserves, are all state-owned) or major markets (state-backed companies account for 80% of the value of China's stock market and 62% of Russia's). And they are on the offensive. Look at almost any new industry and a giant is emerging: China Mobile, for example, has 600m customers. State-backed firms accounted for a third of the emerging world's foreign direct investment in 2003-10.

And this may be a little more controversial, but some theorists argue that socialism never really existed, only different levels of state capitalism.

We do not doubt the sincere Marxist consciousness and anti-capitalist commitment of the revolutionaries who inaugurated the USSR and PRC. However, notwithstanding their battles to establish and defend socialism and to move toward communism, they could not and did not install communist class structures as the prevailing social organization of production in either country. Instead, they established particular state forms of capitalism and state forms of feudalism as means to improve their nations’ economic and military strength and their citizens’ standards of living. Thus, by the second half of the 20th century, the dominant conflicts occurred among: 1) mostly private capitalisms (the US, Western Europe, Japan, etc.), 2) a state capitalism in the USSR and Eastern Europe, and 3) first a state feudalism and then a state capitalism in the PRC

They use the term "state capitalism" more narrowly than usual though (compared to the previous two sources) i.e. only when state officials appropriate most resources:

Lenin seemed to recognize the difference between class and power processes. For example, not long after the 1917 Soviet revolution, he admitted that the state’s control of production and distribution (and hence the surplus) was a ‘state capitalism’ but, he argued, it was a step toward communism because state power was in the hands of workers (organized in the Communist Party) committed to using their power to that end (Lenin, 1965: 349). Lenin thus deployed a complex analysis which related but also kept distinct power and class processes. Very few of Lenin’s critics or followers followed him in this kind of analysis. Instead, most collapsed power and class together, usually in analyses that focused mostly on power as if it subsumed class.

[...] The USSR after 1928 thus defined itself as socialism and socialism as the opposite of capitalism.

Two related patterns of Cold War debates warrant attention. First, anti-Soviet literature referred mostly to ‘communism’ as what existed in the USSR, Eastern Europe, China, Cuba and so forth. In contrast, pro-Soviet literature mostly saw ‘socialism’ as what existed and communism as a future goal. Cold War debates thus often resembled dialogues of the deaf talking past one another. Secondly, serious disagreements among the critics of capitalism entailed competing claims to the term ‘socialism’ and thus a proliferation of different meanings. For example, critics of both private capitalism and the USSR’s socialism developed terms like ‘democratic socialist’ and ‘social democrat’ to define the qualities and limits of state intervention (e.g. Sweden, Germany and France after World War Two) that they preferred in their definitions of ‘socialism’. In this article, we use ‘state capitalism’ to refer only to societies where the state form of capitalism prevails, where state officials appropriate most surpluses. We avoid use of the term socialism not only because of its multiple and clashing usages, but also because they all distract attention from the organization of the surplus which is our focus in (as well as our definition of) class analysis.

And here's an interesting take on the terminology from a Chinese perspective:

two different stock phrases that have been widely used to describe the Chinese economy of the Reform era: “state capitalism” 国家资本主义and “socialist market economy” 社会 主义市场经济.

What the term “state capitalism” suggests is that the Chinese economy today evinces all the signs of a capitalist economy—dominated by capital, profit-driven, and with wide income gaps between capitalists and their hired workers—except that the state plays a very large role, most especially in the form of interventions in the economy and state-owned and managed corporations. The difference from the planned era is that market forces and a profit ethic have replaced planning and a revolutionary, redistributive ethic. What the term highlights is the large role of the state and the essentially capitalist nature of the system. The other widely used term is “socialist market economy,” the official Chinese formulation since about 1993. Here the idea is that the economy is market-oriented and market-driven for growth, just as in capitalist economies, but it is for a socialist purpose. Now, “socialism” can be understood in many different ways, including planning and state ownership, but in the context of this article, and in the Chongqing experiment, it is intended to mean above all a mixed state and private economy that comes with social equity, summed up by the expression “getting rich together” 共同致富. It means development (“getting rich”), but development with equity, not without.

What has been happening in China in the Reform era approximates in reality “state capitalism” more than “socialist market economy.” That is part of the reason there have been so much criticism and opposition from China’s socially conscious, progressive intellectuals, who do not reject the market but believe that the ideals of social justice from the revolution have largely been given up for the ideals of individual pursuit of self-enrichment.

Acemoglu and Robinson probably have the broadest view of state capitalism:

To understand the logic of state capitalism, it is useful to recall some early examples—not the socialist command economies or modern societies seeking to combat market failures, but ancient civilizations. Indeed, it seems that, like farming or democracy, state capitalism has been independently invented many times in world history.

Consider the Greek Bronze Age, during which many powerful states, organized around a city housing the political elite, formed throughout the Mediterranean basin. These states had no money and essentially no markets. The state taxed agricultural output and controlled nearly all goods production. It monopolized trade, and, in the absence of money, moved all of the goods around by fiat. It supplied food and inputs to weavers and then took their output. In essence, the Greek Bronze Age societies had something that looked remarkably like state capitalism.

So did the Incas as they built their huge Andean empire in the century before the Spanish arrived. They, too, had no money (or writing); but the state conducted decennial censuses, built roughly 25,000 miles (40,000km) of roads, operated a system of runners to send messages and collect information, and recorded it all using knotted strings called quipus, most of which cannot be read today. All of this was part of their control of land and labour, based on centrally planned allocation of resources and coercion.

How is it that societies as disparate as the Greek Bronze Age cities of Knossos, Mycenae, or Pylos, the Inca Empire, Soviet Russia, South Korea, and now China all ended up with state capitalism?

The answer lies in recognizing that state capitalism is not about efficient allocation of economic resources, but about maximizing political control over society and the economy. If state managers can grab all productive resources and control access to them, this maximizes control—even if it sacrifices economic efficiency. [...]

inclusive institutions require a private sector powerful enough to counterbalance and check the state. Thus, state ownership tends naturally to remove one of the key pillars of an inclusive society. It should be no surprise that state capitalism is almost always associated with authoritarian regimes and extractive political institutions.


There's almost no discussion in the literature of whether Russia is socialist nowadays, but there's occasional discussion about China; in one such discussion the following criteria are drawn

There is no generally accepted definition of “socialism,” and there seems little point in arguing over whether a complex reality coincides with a simple and arbitrarily defined label. Instead, the strategy of this piece is to advance four general characteristics that are plausibly related to a broad range of conceptions of socialism: that is, we will be talking about descriptive characteristics of socialism, rather than “models.” Whether or not the reader accepts that these features are related to a coherent ideal of “socialism,” raising the question of socialism in this way can help to gain a fresh perspective on the current reality of the Chinese economy.

In this spirit, a plausibly socialist system would be judged on the following four criteria: capacity, intention, redistribution, and responsiveness. First, a socialist government controls a sufficient share of the economy’s resources that it has the capacity to shape economic outcomes. One traditional definition of socialism includes “public ownership of the means of production,” but “capacity” is here broadened to include the ability to control assets and income streams, through taxation and regulatory authority. Second, a socialist government has the intention of shaping the economy to get outcomes that are different from what a noninterventionist market would produce. Third, because a socialist government typically justifies itself as benefitting those citizens who are less well off, it is natural to look for evidence of whether such policies are succeeding in the outcomes involving growth, social security, and pro-poor redistribution. Fourth, a socialist government should have some mechanism through which the broader population can influence the government’s economic and social policy, so that policy shows at least some partial responsiveness to the changing preferences of the population.

So, while state control (and ownership) is considered a criterion in this paper, but it's only of four "socialism" criteria. And as an aside, with respect to China on some of these criteria:

Summing all four components, the Chinese government had direct or indirect control of 38 percent of GDP in 2015. [...] The official position—written into China’s Constitution— is that while multiple ownership systems coexist, state ownership is the “leading force.”

[... However] China is certainly not a welfare state. China has virtually nothing in common with countries like Cuba or Brazil—otherwise so different—which have made substantial efforts to transfer money directly to the poor and to invest in social services. In China, transfer payments of all kinds are low and are also restricted in important ways. However, even in this respect, there are important differences with the situation 20 years ago. In the mid-1990s, China was doing almost nothing to redistribute income. [...] Today, there are four different medical insurance and pension systems, which between them cover virtually all Chinese citizens. However, the actual flow of resources through these combined systems is still modest. The government’s direct contribution to social welfare benefits is still strikingly small. In 2014, budgetary outlays for education by China’s government were 3.6 percent of GDP; for health, 1.6 percent of GDP; and for public housing, 0.8 percent of GDP. These are all strikingly low by comparative international standards.

While there's no such equivalent declaration (on the preeminence of state property) in the current Russian constitution (duh), a US Army War College study did find that Putin had expressed some doctrinal beliefs in the nationalization of their energy sector, or at least in the creation of some national champions. Interestingly, the same articles (of Putin) highlighted there also mentioned that this was expected to increase welfare for the average Russian (although whether by "trickle down" or outright redistribution is unclear form these snippets):

Putin professed his views on the subject of nationalizing strategic national resources in a 1999 article “Mineral Natural Resources in the Strategy for Development of the Russian Economy” by highlighting the need for the state to maintain high regulatory control of the resource extraction industries. In what amounts to a blueprint for his campaign to re-nationalize industry, Putin stated that a key role for the state to play, particularly within the natural resource industries, is the “creation of large financial industrial groups – corporations with an interbranch profile that will be able to compete with Western transnational corporations.” In this article, which was published before his assumption of the Presidency, he also makes it clear that he views the government’s support for industries involved in the extraction of strategic natural resources as the means to “make Russia a great economic power with a high standard of living for the majority of the population.” Additionally, he justifies a turn away from privatization by stating that, “the experience of countries with a developed market economy gives us many examples of effective state intervention in the long-term project to exploit natural resources.”

Putin gave a more sinister preview of his philosophy on the role of government in controlling strategic aspects of the economy in an article entitled “Russia at the Turn of the Millennium” which he published December 30th, 1999, the day before he assumed the role of acting President, replacing the ailing Boris Yeltsin. He stated, “Today’s situation necessitates deeper state involvement in the social and economic processes. The state must be where and as needed; freedom must be where and as required.” In almost unprecedented historical fashion, Putin published his manifestoes on the state control of strategic industry and resources, and then actually rose to power to implement them.

I guess these (ideological) articles of Putin were largely ignored by other writers on the topic of Russia nationalizations. Interestingly however, not even this War College study uses the word "socialism" anywhere.

As percentage of GDP Russia spends more on social programs than China... or at least it did 10 years ago, from when I could find (comprehensive enough) comparative data, but still was below OECD average. (From this point of view Russia is "more socialist" than China.)

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From more recent data, Russian spending on welfare (as percentage of GDP) has somewhat increased since then, mainly due to a (relative) pension expenditure increase:

enter image description here

In 2015, total social spending in this country [Russia] accounted for 17.4% of GDP according to the cost structure, proposed by the OECD, or 20.3% of GDP when accounting for funding of all levels of education.

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    I think you should provide a definition for socialism. If you believe it to be something, but a dictionary tells you something else, that should be food for though. I've lived in countries where education and healthcare (among other) are public with no intention of having profit (much the opposite). These systems, albeit expensive, do bring equality and quality of life. Given that they cost money, but produce none, calling it state capitalism is a bit of a stretch. Nomenclature is important. Otherwise we will keep thrashing some philosophies by default, without ever giving it enough thought. – armatita May 3 at 12:33
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    @armatita - Oh, but they do produce money. Investment in education and healthcare increases worker productivity. If the state can capture that money through taxes or directly taking the profits from state-controlled companies, they've earned more than they have spent. Surely you've heard a phrase like "for every dollar spent on healthcare...." It's perfectly rational for a state capitalist government, concerned with maximizing profit, to fund public education and healthcare. – Obie 2.0 May 3 at 21:18
  • @armatita: see expansion – Fizz May 4 at 8:15
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There are two problems in the framing of the question:

  1. Socialism is not when "the state does things". Joe is right in his answer, refuting the simple equation that 'nationalising anything' = socialism as foolish. It just isn't. Look at British health care or German cars or US military?

  2. But despite the fact that 'nationalised industries ≠ socialism', that doesn't stop certain stupid parts of the political spectrum, that hold this overly simple and 'just wrong' equation to be constitutive to their ideology, to do just that: describing Russian economic structures with 'state-controlled' or '-owned industries' as socialist.

    Russia’s economic recovery has been generated by private enterprise, but since 2005 renationalization has prevailed, reducing economic efficiency and thus future growth. The renationalization of major companies such as Yukos, Sibneft, Vankor, United Heavy Machineries, VSMPO-Avisma, Sakhalin Energy, and Rusia (Kovykta) has aggravated corporate governance and political risk. The state now accounts for 83 percent of gas production and 45 percent of oil production, and the Kremlin is utilizing the financial crisis to promote renationalization that is economically unfounded and harmful. Strangely, in the midst of the financial crisis, the Russian government is preoccupied with further nationalization. A couple of companies, the mining and steel company Mechel and the potash producer Uralkali, seem to have been singled out for expropriation through major penalties, while the state corporations are buying up one distressed company after another with money from the state budget.
    Yet Russia has not espoused a socialist ideology, and its big state corporations are moving toward 51 percent state ownership — Rosneft and VTB made limited initial public offerings in 2006 and 2007, respectively — exposing themselves to assessment by the stock market. Investors have reacted negatively, slashing Gazprom’s market capitalization from $350 billion in May 2008 to $70 billion in October.
    Anders Aslund & Andrew Kuchins: "The Russia Balance Sheet", Peterson Institute for International Economics, 2009. (gBooks)

    Or even on Wikipedia – Russia under Vladimir Putin:

    Columnist George Will emphasized in 2003 the nationalistic nature of Putinism: "Putinism is becoming a toxic brew of nationalism directed against neighboring nations, and populist envy, backed by assaults of state power, directed against private wealth. Putinism is a form of national socialism without the demonic element of its pioneer".

  • @BurnsBA It says Q: "why isn't?", A: "but it is" Is that clear enough now? – LаngLаngС May 3 at 13:11
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    hey thanks, much clearer now. – BurnsBA May 3 at 13:19
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    I'd really like to know what Will means when he says "without the demonic element of its pioneer". Nobody found any concentration camps yet? – Luaan May 4 at 11:41
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    I'm seeing your point now in the perspective that "national" trumps "socialism" (by a large margin) in "national socialism". – Fizz May 6 at 1:17
  • But I'm not too sure this (Nazi) angle is relevant to a discussion of nationalizations; see politics.stackexchange.com/questions/41275/… – Fizz May 6 at 1:36

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