A Response to Mike Konczal on the Social Wealth Fund


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Earlier today, I released a report arguing for the creation of a dividend-paying social wealth fund. The short of it is that the millionaire class in America owns nearly all the wealth in the country, and even more of the corporate equity. Being an egalitarian and a socialist, I find this repugnant and believe that we should gradually replace ownership by the millionaire class with ownership by society as a whole. The social wealth fund is the proposed instrument for achieving that collective ownership.

Mike Konczal, of the Roosevelt Institute, has three criticisms of the idea that I will address in order below.

Discursive Critique About Spending

Konczal’s first argument is what in my debate days we would have pejoratively called a “discursive critique.” A discursive critique does not say proposal A does bad thing B, but instead says that proposal A puts memes into the discourse that through some unspecified steps cause other people to do bad thing B.

In this case, the social wealth fund proposal puts into the discourse the idea of “prefunding” spending through capitalizing a fund and “if the Left comes to believe that spending needs to come from prefunded savings that weakens our overall position in securing programs (my emphasis).”

Konczal does not argue that the social wealth fund proposal ever says you need to prefund social spending. Konczal just baldly asserts that because I advocate one program that sort of has a prefunding element, then that will somehow be a slippery slope into everyone thinking everything has to be funded that way. As with all discursive critiques, the only thing you can really say is: no it won’t; people aren’t that stupid.

Also, as a technical point, Konczal’s use of the phrase “prefunding” is not actually a correct description of the social wealth fund. I do not argue we need to save up money so that we can later spend it down (as in the case of Post Office pension example Konczal uses). Rather, I argue we need to “save up money” that we will never spend down. The point of capitalizing the fund is not to have enough cash on hand for some future projected spending. Rather, the point is to socialize the ownership of capital, and building up assets held by the state (i.e. “saving”) is the way you do that.

Another question I have of Konczal here is: if Konczal thinks building up state assets is inherently problematic because he prefers to use the resources for current spending, then does he also believe holding on to state assets is problematic? Why not sell the Postal Service or the trillions of dollars of federal land so that we can spend the proceeds right now? It is the same dynamic and those who say otherwise are just stricken by the cancer of status quo bias.

A final consideration on this point is that the social wealth fund is going to be built through wealth taxation and plowing the revenues of wealth taxes into capitalized funds helps counteract the dissaving effect of those taxes. This is not discussed in the paper, but is a serious consideration in a lot of social wealth fund writing, including the writings of James Meade.

Sleight of Hand on the Word “Owners”

Konczal’s second argument involves an interesting sleight of hand on the words “owners” and “shareholders.”

As we all learned in Semiotics 101, words are signifiers that point to referents. Right now the signifier “owners” points to the referent “millionaire class,” as does the signifier “shareholders.” After the social wealth fund is implemented, those two signifiers point to the referent “society as a whole.” This is because, as noted in the introduction, the social wealth fund works by shifting the ownership of wealth away from millionaires and to society as a whole through this particular policy instrument.

Konczal’s sleight of hand is to write “By tying public goals to the profits of shareholders, it means that we have a vested public interest in ensuring that owners exercise even more control over the economy.” The way this argument works is by making you think the word “owners” and “shareholders” still refers to “millionaire class.” In that case, the sentence is truly repugnant. But if instead you swap out “society as a whole” for the word “owners” and “shareholders,” then the sentence just describes the definition of socialism.

So if you fill in the right referent for the word “owner,” the sentence sounds awesome and it’s hard to understand what the problem even is. If you fill in the wrong referent for the word “owner” (such as “millionaire class”), then the sentence sounds awful. Konczal is counting on you doing the latter even though that makes the statement false as a description of what the social wealth fund does.

An easy way to understand my point here if you are skeptical of social wealth funds is to consider a related idea called “codetermination,” which was most recently picked up by Elizabeth Warren. The way codetermination works is that a fraction of the seats on each company’s boards (in Warren’s proposal, it’s 40 percent) are controlled by the workers in the company. Using Konczal’s approach to language, you could say “codetermination keeps corporate boards in the driver seat.” This is a technically true statement, but seems to really miss the key point, which is that “corporate boards” are different things when the workers control big fractions of them, just as “owners” are different things when they are society as a whole.

Socialism Solves the Tension Between Capital and Labor

Konczal’s last argument is that social ownership of the means of production renders the conflict between capital and labor moot. This is because, when the means of production are owned by society rather than a tiny millionaire class, there really is no reason to fight for higher wages anymore. If the wages of workers go up, then their dividends go down and they are really in no better position than before.

I am not really sure what to say about this critique in particular because I don’t really understand it as a critique. The whole point of socialism is to eliminate the capital/labor tension at the heart of capitalism. This is true of every socialist strategy. For instance, in worker cooperatives, the workers receive dividends from their ownership of the cooperative and wages from their work for the cooperative. Due to this arrangement, it does not make sense for workers to strike or fight for wages generally because if wages go up, dividends go down. Since workers own both ends of the arrangement under socialism (the labor end and the capital end), it just does not really matter that much how the national income is divided between capital and labor.

Konczal’s view that the ultimate resolution of this tension is bad comes out of a weird school of leftist thought that basically says the goal of the left is not to achieve socialism and eliminate once and for all the capitalist class, but is instead to perpetually struggle against it. And in that weird school, it is true that, as Konczal advocates, the best economic system is one in which the millionaire class owns almost everything and workers just constantly fight against them for a bigger piece of pie.

For me though, I don’t want to constantly fight for a bigger piece of the pie. I just want to have the whole pie and that’s what a fully-implemented social wealth fund gets you over time.