Is Scandinavian-style social democracy an acceptable alternative to capitalism? Or does it not go far enough?

You've got it the wrong way around. When they own the means of production, workers have every incentive to automate themselves out of a job.

Suppose I'm working in a widget factory today, in a capitalist economy. If someone comes up with a machine that can halve the amount of labor required to produce a widget, this is disastrous news for my coworkers and I. Efficiency is doubled, great, but we're not going to see any of that benefit. We're not going to get paid twice as much, or allowed to work half as much for the same pay, or anywhere in between the two options. The boss is going to lay half of us off, and use the threat of further layoffs to drive those of us who still have jobs to work even harder, maybe for less money, because now for every one of us there's a freshly unemployed widget-maker who'd be happy to take our job. So as a worker, it's in my best interest to oppose increasing efficiency, even if it benefits the economy as a whole.

Now suppose we have some kind of a worker-owned economy, and I work in a widget-making cooperative. My coworkers and I own the machines that make the widgets, and we divvy up the workload, the leadership responsibilities and the compensation democratically. In this version of reality, if someone comes up with a machine that cuts widget-making time in half, we're all going to be over the moon. Now our productivity doubles, and it's completely up to us as workers how we're going to exploit that efficiency. Maybe we'll produce more widgets and make more money while working a little less. Or maybe we're completely happy with the amount we're producing and we decide to all just take more time off. Whatever we decide, we are the ones who reap the benefits of improved productivity, so we're all strongly incentivized to seek it out.

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