Back in November, local economist Alan Harvey explained in a Person of Interest feature that he was, at the time, reading Hyman Minsky's 1975 book on the work of John Maynard Keynes, arguably the most influential economist of the 20th century. Whether you believe it or not, we all live in a Keynesian world. Even Trump and the GOP can't escape Keynes, which is why the US has a huge military budget and no real enemies to make sense of it. All of the massive government spending forms one of the key supports of this economy, producing jobs for the poor and providing demand for a number of privately-owned enterprises. This is Keynes. Harvey, who is a post-Keynesian (I explain that here), recommended reading the last chapter of Minsky's John Maynard Keynes first. In that brilliant section, Minksy questions the social usefulness of full employment, explains why capital is scarce, and, as concerns this post, offers a counter-intuitive reason for why socialism, if done right, should be better for entrepreneurialism.
Minsky writes:
[Socialism] is compatible with a large, growing, and prosperous private sector, this high-consumption synthesis might well be conducive to greater freedom for entrepreneurial ability and daring than is our present structure. The high-investment, highprofits policy synthesis is associated with giant firms and giant financial institutions, for such an organization of finance and industry seemingly makes large-scale external finance easier to achieve. However, enterprises on the scale of the American giant firms tend to become stagnant and inefficient. A policy strategy that emphasizes high consumption, constraints upon income inequality, and limitations upon permissible liability structures, if wedded to an industrial-organization strategy that limits the power of institutionalized giant firms, should be more conducive to individual initiative and individual enterprises than is the current synthesis. As it is now, without controls on how investment is to be financed and without a high-consumption, low-private-investment policy strategy, sustained full employment apparently leads to treadmill affluence, accelerating inflation, and recurring threats of financial crisis.
Please re-read that passage. It might be the most important piece of economic thinking you will ever be exposed to. It takes time to fully grasp its meaning, which is profound. It not only describes the world you live in, but also the world you should live in. And this other world is not in some future, nor does it require a revolution to obtain. It is concrete. It is already here.
Obamacare, for example, offers a real-world way to make Minsky's point about socialism obvious. Let's turn to something Mark Herbert, the California director for Small Business Majority, said in "What California's smallest businesses stand to lose with Obamacare repeal": "When you’re providing a benefit that allows folks to take that risk with a little more of a safety net … that allows more entrepreneurs to take the plunge..."
The fact of the matter is, one out of five people on Obamacare are self-employed, and many of these people own a business because they could "take the plunge." Universal health care is a form of socialism. It socializes the risks of injury and illness. This socialization is, in essence, liberating. A socialism that works is supposed to democratize freedom. By removing the wall of expensive health insurance, people can leave jobs in "institutionalized giant firms" that provide health care, and try to start something new. A functional socialism should encourage entrepreneurialism. A functional capitalism, on the other hand, does everything to lock people up in firms that fear competition, the new, a challenge to their share of the market. This is why markets can never be perfect under capitalism—a fact that was obvious to post-Keynesians like Joan Robertson.
To conclude: "Herbert said rolling back subsidized health care and the no-exclusion policy for preexisting conditions could lead entrepreneurs to abandon their endeavors for more secure jobs, or prevent them from setting up shop in the first place."
