Author: Axel Lieber
In the first part of this series, I made the general case for free markets. In this part, I will look at Democratic Socialism and compare it to free-market capitalism. I will focus on two systemic outcomes important to vegans, namely animal welfare standards in farming, and innovation aiming to replace animal agriculture outright.
Not everyone uses the term Democratic Socialism the same way. Some use it to describe a capitalist model which is modified by egalitarian policies intended to mitigate its downsides. This is not a rejection of capitalism but an attempt to “tame” it. It’s correctly referred to as “social democracy” and is the norm all over Europe.
I will use the term Democratic Socialism in its original sense, as a proper alternative to capitalism. In this sense, it implies a socially owned economy and a democratic polity. As there is no long-lived historical example of such a society (Socialist Yugoslavia may have come closest but lacked democratic characteristics), a good amount of speculation will be necessary. I shall do my best to give it a fair shake.
One key characteristic of any type of socialism is the rejection of interest- and profit-taking on the part of the capitalists. Their ability to become rich merely by extracting profits from investments without ever lifting a finger, and to accumulate more and more wealth that way, is — to socialists — the very cause of social injustice and inequality. Likewise, they object to the capitalists’ ability to make decisions that affect millions without any form of democratic accountability.
In a Democratic Socialist economy, capital is controlled socially. Different from the former Soviet bloc, this control is decentralized to a large extent. It lies with the workers in each company (“cooperative”), and in participatory boards of state agencies. Workers organize in democratic form through which company management is appointed, and decisions are made. Profits are shared among the workers and society at large. There are socially imposed limits on how much individuals can earn. Once the reasonable needs of the workers are met, future investments can be financed. Some profits are taken via taxes to finance state expenditure (welfare programs, policing, defence, etc.). Markets continue to exist, both between such companies, and between companies and individual consumers. Money is issued by a central people’s bank. (*1)
Let’s examine the question of animal welfare standards in such a society. Regulation of economic activity, including animal farming, is imposed by the democratically controlled state. Just as in a liberal democracy, elected delegates or referendums determine policy. Animal farmers will attempt to influence any decisions in their favour, just as they do in capitalism.
Factors that drive voting behaviour in liberal societies range from the weather, the charisma of candidates or the disgust they cause, to policy issues, to personal economic interests such as income and consumer choices. (*2) No reason is evident as to why these factors shouldn’t also apply to Democratic Socialism.
A common belief on the left is that the profit motive (greed) is responsible for the exploitation of animals. But a closer look at various historical examples of socialism shows that animals are treated no better in non-capitalist societies than in capitalist ones. On the contrary, they’ve been treated far worse in Soviet societies and Mao’s China than anywhere in the liberal West. Criticizing the situation of animals in socialist farms and slaughterhouses has tended to land folks in serious trouble, including prison time. Humans abuse animals because they can, because it’s convenient. This is no different in socialism than it is in capitalism. It isn’t socialist ideas that help the animals but rising living standards. (*3)
Another common claim is that some innovations that have occurred under capitalism, such as automated slaughter, have led to an increase in animal suffering. It is, of course, true that this has happened. But the implication that since some of these never happened under socialism is misleading. They didn’t happen in socialist societies because of their slower pace of innovation, not because socialists wouldn’t utilize these new technologies.
On the question of animal welfare standards, then, we will probably have to remain agnostic. For all we know, animal welfare standards in Democratic Socialism are unlikely to be any better than in liberal capitalism.
This leaves us with the question of innovation. Innovation necessarily requires an innovator and a risk-taker. The innovator provides the idea; the risk-taker provides the funds that will be lost if the innovation fails — or multiplied if it succeeds. How would products designed to supplant animal farming emerge in a democratic socialist economy? Innovators are easy to come by, but where would the funds needed for the risky innovation come from? In Democratic Socialism, there are no angel investors and no venture capitalists. Instead, an innovator would have to either persuade a company already in business to launch a new product or apply for a loan or grant from a socialized lending or investment institution.
Successfully persuading an existing company to expand into a risky new category will probably be a rare occurrence. Members of worker collectives do not stand to gain anything from successful expansion personally but stand to lose income or even their jobs in case of failure.
Therefore, applying for a loan or grant from a socialized bank or investment agency will likely be the most common route. Different from capitalism, such institutions will base their decisions not on an expectation of profit but on a mix of other criteria, including anticipated demand and public guidelines determining what type of investments are desirable, and which are not. Plant-based meats would presumably be OK.
What would motivate the lender to extend credit to the innovator? At first sight, a profit motive is absent. Let’s assume though that decision-makers at such institutions would receive reasonable bonuses for making decisions that work out. The result of such a setup would probably be similar to what is common with commercial banks in capitalism. Commercial banks, compared to venture capitalists, tend to be conservative lenders that favour businesses they understand well, or where solid collateral is available.
It’s no coincidence that the most successful plant-based start-ups in our capitalist reality haven’t been financed with bank loans — let alone public grants — but were instead brought to success by VCs. That is because especially at the outset, when there is no track record with a new idea, banks are rarely willing to deploy the sort of capital that is required to make it work. Only private investors — like venture capitalists — seem capable of striking a balance between risk and reward that results in drastic spurts of innovation.
Could the venture capital model somehow be replicated in Democratic Socialism? It’s conceivable that something like a “Social Wealth Fund” might be established to take its place. In the US, about 5% of all private, non-residential investment is conducted through venture capital funds. This amounts to $85 billion. Suppose a similar number were raised through taxes and placed in the Social Wealth Fund. All adults in the US would receive equal allocation rights in this fund. This gives us roughly $330 to play with per person annually. Each adult could either allocate their $330 directly to ventures they want to fund, or they could delegate their shares to someone they trust. (*4)
Let us assume that 5% of all adults are committed vegetarians and that half of them are in it for the animals (rather than for health reasons primarily). Let’s further assume that all of those 2.5% see the wisdom in advancing plant-based meat, dairy and egg alternatives and will invest 100% of their shares in that category. In other words, they wouldn’t invest in biodegradable plastics, organic farming, a local vegan restaurant, solar energy, more ecologically friendly batteries, a cure for liver cancer, or that camping gadget that they want so badly. Instead, they would single-mindedly prioritize the end of animal agriculture. In combination, vegans would then command about $2 billion annually to be invested in the plant-based meat, egg and dairy industry. That would be almost three times what was invested in that industry in the US in 2019! (*5)
Of course, this favourable result rests on the assumption that there would be such a Social Wealth Fund. We have no historical example of one, and no democratic socialist platform I’m aware of calls for one. Even the two Norwegian sovereign wealth funds, the institutions closest to our ideal, are entirely managed by professionals, although nominally under democratic supervision. An unlikely chain of fortunate developments would have to occur for this best possible outcome to materialize.
If, on the other hand, there were no such fund, then Democratic Socialism might very well be worse for the animals since funding for innovation would be much harder to come by than in capitalism. Its main source would be socialized lending institutions with a risk-averse bias. In a worst-case scenario, these institutions would be quite centralized, too, and their decisions would reflect the will of the majority. That would be bad news for the animals indeed.
Finally, it is at least doubtful that a socialist economy, even in its best possible incarnation, could match a capitalist one in overall productivity, growth and creation of wealth. That is a charge most socialists would be willing to accept. They are prepared to sacrifice economic dynamism and wealth creation in exchange for an equal society. This may be good for humans. But given the importance of growth for innovation, it wouldn't be good for animals.
To sum up, in terms of animal welfare standards, it’s hard to see why democratic socialist societies would do any better by the animals than liberal capitalist ones. In terms of innovation, an unlikely best-case scenario would have to occur for food-related innovation under Democratic Socialism to outperform innovation under capitalism. On the other hand, things could also be considerably worse, and my personal bet is that they would be.
If Democratic Socialism isn’t a convincing answer to the animal question, what’s a good leftie to do? I will write about this in the next and final part of this series.
(*3) Research covering this topic is sparse but below doctoral dissertation from the Free University of Berlin details the animal welfare situation in former East Germany. In sum, animal welfare regulations were none-existent, and the formation of animal welfare related organizations was prevented by the state. The situation of farm animals was deplorable.