What is Socialism?

Author: 
Kieran Allen

What is Socialism?

By Kieran Allen

In 1867, Karl Marx published his famous book, Capital. He began research a decade earlier after a banking crisis collapse in New York triggered a major economic depression. The book revealed the real workings of capitalism in a way that no conventional economist has ever done since. When read against the background of the current economic depression, it sounds almost prophetic.

But what was his alternative?

At first sight, it might appear that Marx only offered a critique. During his early years of political activism, he engaged in debates with the ‘utopian socialists.’ These were figures such as Robert Owen and Charles Fourier who devised great plans for a future socialist society, without asking: who would bring it about? 

To his credit, Owen set up large communes – including one in Ralahine in Limerick – to show how co-operation was superior to competition. But these communes were dependent on his large inheritance which he generously shared. Fourier, by contrast, had to advertise for a benefactor to meet him in a Paris café to fund his plans. Of course, none turned up.

Marx’s was disdainful of intellectuals who thought ‘they had the solution to all riddles lying in their writing desks’. He was against any dogmatism which claimed a knowledge of the one True Path. While fellow students in the Young Hegelian movement called themselves ‘The Free’ and launched searing attacks on religion, Marx took up the struggles of weavers in Silesia and peasants in Moselle who wanted to gather firewood from forests owned by landlords.

He summed up his approach as follows:

We do not confront the world in a doctrinaire way with a new principle: Here is the truth, kneel down before it! We develop new principles out of the world’s own principles.

‘We do not say to the world see your struggles: Cease your struggle, they are foolish – we will give you the true slogan of struggle.

‘We merely show the world what it is really fighting for, and consciousness it something it has to acquire, even if it does not want to’.

This method differed from two other approaches that were popular then – and now – on how to bring change.

The first assumed that the mass of people were too indoctrinated by the old regime to be capable of bringing about change. They had to be led by an enlightened minority who worked behind the scenes to foment revolution and install themselves as a ‘revolutionary dictatorship’. In Marx’s time, these ideas were represented by Bounarroti, a supporter of a secret society known as the ‘Conspiracy of Equals’. Elements of this conspiratorial method can be found in the Irish republican tradition.

The second approach advocated early French communists was ‘education of the masses’ through a continual stream of propaganda. But, for Marx this begged a further question: Who teaches the teachers? How did they come by the knowledge to be able to ‘educate the masses’?

Marx’s argued that the working class had to emancipate itself through struggle that came up against the limits of capitalism. Workers might join these struggles without knowing how the system worked or what traps it set if they wanted change. But it was only in the course of such struggles that the working class could become aware of itself as a distinct class whose interests were opposed to their rulers. In other words that ‘consciousness is something it has to acquire, even if it does not want to’.

Let’s apply this method to contemporary Ireland.

Vast numbers of people are raging with the government and are joining in struggle. But to win, they will need to develop an awareness that it is not just Brian Cowen or even the bankers who are causing their problems but the capitalist system itself. If they are not to be ‘sold out’, they will have to learn how union leaders or the Labour Party can talk radical – but only to head off the struggle. That consciousness arises more quickly when socialists promote revolutionary ideas and while they also learn from the movement.

Marx also believed that the seeds of a future socialist society are laid from the way in which working people must organise themselves to impose their will on society.

Think again about contemporary Ireland. According to every official spokesperson, we have to undergo four more years of ferocious cuts that will be twice as bad as those we are witnessing today. To stop these attacks, workers need a general stoppage – most probably built from below. But that can only occur, if there is a profound democratic spirit in the workers movement.

Those who want to turn the current wave of anger into a sad, passive cynicism will try to avoid mass meetings and will suggest leaving matters to union leaders. If mass meetings occur, they will try to mystify people with formalities. They will use people’s inexperience to preach trust in TDs’ who will set up very important meetings in Dail Eireann.

Socialists, by contrast, promote a real grassroots democracy so that an open contest can be conducted between workers’ fears and their enthusiasm for action. They want to elect leaders who are made accountable so that they cannot be co-opted behind closed doors. They want to send delegates to other workplaces to co-ordinate action from below.

Through such activities grassroots organs are built within the shell of the old capitalist society – but these same organs can lay the basis for a profound extension of democracy in a new society.

Significantly Marx’s writings on the political structures of a socialist society only appeared in The Civil War in France, a short pamphlet rushed out in support of Paris workers who took control of their city in 1871 after they were faced with an invasion of the Prussian army.

That experience showed that the working class ‘ cannot simply lay hold of the ready made state machinery, and wield it for its own purpose’. Instead, it had to rule society through the new organs it had created during its struggles.

This form of workers’ democracy differed fundamentally from the limited form of parliamentary democracy which fitted with capitalism.  

Representatives were elected for short terms and could be re-called by their electorate. ‘Cheap government’ was made a reality because they were only paid average working wage. The ‘sham independence’ of judges or higher civil servants, which was used to protect privilege, was unmasked and they were made subject to popular control. Instead of a parliamentary talk shop which debated ideas and then transferred power to unelected state official to implement them, the legislative and executive functions were be integrated through mass popular democracy. 

Marx’s vision of socialism therefore implied a deeper form of democracy, whose very seeds grew in the struggles of working people today.

DIALECTICS

Karl Marx studied capitalism from a dialectical standpoint. This way of analysing the world stretched back to ancient Greek philosophers such as Heraclitus. It contained two essential ideas.

First, that every society was in a fluid state –like, as Heraclitus put it, a river into which you cannot step twice. To really understand it, you had to grasp it as a movement heading towards its destruction.

Pro-capitalist writers, such as Adam Smith, took an opposing stance. He thought that capitalism arose from a natural tendency to trade and had always existed, at least in embryonic form. 

By contrast, Marx argued that capitalism came into existence from the 1550s and industrial capitalism only developed after 1870s. In Capital he tried to understand its peculiar laws of operation, while recognising that it would eventually cease to exist.

Second, he thought that real change did not come primarily from great leaders or new ideas but grew out of the internal contradictions in society itself. The key contradiction in modern society was between the social organisation of production and the private seizure of profit.

Capitalism brings humans into a greater relationship of dependency on each other than any previous society. Our ancestors lived in small self-sufficient farms or small villages. But we cannot even acquire food or shelter without relying on the work of millions in different parts of the globe.

This social division of labour stands in direct contradiction to the control exercised by corporations who exist to benefit a tiny number of private individuals.

This contradiction is mystified by the pseudo-scientific language of modern economics which pretends that the economy has little to do with conflicts over the distribution of wealth. 

Instead of recognising that collective human labour is the basis of society, we are supposed to accept that that ‘market forces’ should dictate how long we work or whether we have wage cuts.

Yet these same ‘market forces’, which are code words for the manic greed of capitalists, produce a boom slump cycle, the summit of which is a general crisis of the sort we are currently witnessing.

Once that occurs, the mystical veil is torn aside and we are forced to confront the question: Can we organise our collective social labour differently?

WHAT IS  SOCIALISM?

Socialism involves a number of fundamental ideas.

1. Take corporations into public ownership.

A corporation is a legal entity to allow shareholders to take the fruits of the labour of others. Shareholders add nothing to the production process – they do not work, plan or even help to sell what is produced. They merely buy coupons which allow them a share in the exploitation of others.

Banks control the surplus money which arises from production and is waiting to re-enter into another cycle of production. In the interval, the financiers can choose to speculate, buy other shares or loan it out to other capitalists at an interest. But the money they control is nothing but ‘congealed human labour’.

For a period, they can delude themselves that through the mysteries of ‘financial engineering’, that money just makes money. But the pathetic nature of this illusion is revealed when the system hits a general crisis.

The modern corporation is organised around a dictatorship of money. The richest millionaires get several million votes to select a Board of Directors while the middle class shareholder gets a handful.

The sole purpose of the Board of Director is ‘shareholder value’ – or maximising the exploitation of workers.  Some money may have to be spent on PR to pretend that there is ‘corporate social responsibility’ but this is only spin. A corporation is a really collective psychopath that does not care about its workforce or about its impact on the environment. 

Socialism means taking such corporations into public ownership.

A simple example will illustrate this. There are ten corporations which control half of all legal drugs which are produced on the planet. Each has about 15 people on its board of directors, often representing other corporations in an interlocking chain. This means that about 150 people dictate the collective labour of millions of people and for what purpose they are a set to work.

Instead of producing drugs for the sickest people, they spend about 30% of sales on marketing to convince healthy people that they may be sick. Between 1975 and 1997, 1,393 new drugs were produced but only sixteen were for tropical illness.

Socialists propose giving redundancy notices to this golden 150 so that the pharmaceutical industry is owned in common and cheap generic drugs are produced to help the poorest and the sickest.

2. Establish  Workers’ Control

Modern work processes are based on a sharp division between thinking and doing.

A managerial layer – whose first loyalty is to the shareholders – does all the thinking, planning and conception. They decide what is produced, how products are designed, work is organised. As capitalism grows older, they expand in numbers to supervise the exploitation of others. They create ever more paper work to check how the Key Performance Indicators of one group of workers ‘benchmark’ against another. They even develop their own strange business speak that is used as a marker for entry into elite circles. Their aim, however, is to intensify exploitation so that shareholders get more profit.

By contrast, the mass of workers – whether blue collar or white collar – ‘are not paid to think’. They have no say what is produced or how work is organised. A handful of overpaid managers function like the priesthood of old – they are all wise and all seeing and, it is assumed, that only they could possible know how to organise.

Socialists propose to end this absurd fiction to enable workers control of production.

Workers should periodically discuss how to run their enterprise. They should be free to discuss better ways to raise productivity without feeling this will lead to job losses. Higher forms of productivity should benefit all through, for example, cutting the working time or enabling workers to build up credits to access higher forms of learning.

The breakdown of the division between thinking and doing will do away with vast amounts of unproductive, over paid managers.

In any large organisation, some people will still need to function as co-ordinators. But these can be elected democratically or else the function can even rotate.

Workers control rather than managerial dictats will, therefore, unleash the creative energies of millions who are now told ‘not to think’

3. Planning for need not Profit

Even if the large corporations were taken into public ownership and workers control of production prevailed, there still has to be a mechanism through which the resources of society are allocated for different human needs.

Under capitalism, this takes place according to the laws of supply and demand. If there is a huge demand for, let’s say, holiday packages to Malaga, the prices will increase. These high prices send out a signal to capitalists to charter more planes and hire hotel spaces in Malaga. Through such mechanism the ‘hidden hand’ of the market, is said to allocate scarce resources in an efficient manner.

But how just how efficient is a system which cannot allocate cheap water purification tablets to the five million people who die from water borne diseases each year?

And if the hidden hand works so well, why will 50 million people loose their jobs because of the current global depression?

Instead of pretending that there is a great machine known as "the Market" which we must adore but not interfere with, socialists propose democratic structures to decide how to allocate resources and to plan what will be produced.

Such a plan would seek to establish what people need though democratic mechanisms and would establish targets for different sectors of the economy based on such needs. The aim of such planning would be to eliminate the problems of over-production and imbalances which lead to economic crises. These problems inevitably arise in a for-profit economy.

CAN SOCIALIST PLANNING WORK?

The global economic depression has raised questions about the viability of capitalism. But does a socialist planned economy offer a practical alternative?

We need to disentangle some confusion about because some still associate a planned economy with the former ‘communist’ regimes in Eastern Europe. But they had as much resemblance to Marx’s vision as the Spanish Inquisition had with the teachings of Jesus Christ.

Typically, a handful of people in the Politburo of the Communist Party made decisions on where investment was to be allocated. Their overall aim was to reduce consumption - the share of an economy distributed to workers - and to transfer resources to heavy industry. During the Cold War, investment in the iron and steel was intimately connected to the arms industry. Planning was therefore driven by the logic of military competition – rather than the needs of the mass of people.

Output targets for each sector of the economy was, accordingly, decided through bureaucratic commands. But this led to its own internal form of chaos. When the Politburo in Moscow ordered  so many tons of raw pig iron to be produced, the local bureaucrats in Minsk or Odessa conformed by either producing inferior quality goods or by manipulating the figures. Without genuine transparency or accountability, the economy relied on ficticious data that made genuine planning impossible.

Planning also occurs in private capitalism today. Contrary to the impression created  by its ideologues, capitalism does not work according to pure market mechanisms.

In the late twentieth century, a massive centralisation occurred as merger and acquisition activity grew by five fold in the 1990s. As a result, every major industry is dominated by an oligopoly – a small number of competing firms who often reach ‘understandings’ on pricing structures  with each other. A growing proportion of the world’s economy, therefore, takes place inside gigantic multi-national firms rather than on a ‘free market’

Inside these firms another form of bureaucratic planning  occurs, led by a Board of Directors. The US car industry is a good example. GM, Chrysler and Ford compete on a market but they also co-operate to seek greater state subsidies and do not respond to signals from the market.  A tiny number of managers plan for the long term by designing, pre-marketing, pre-testing new models that only arrive in production years later. Conflicts develop within the bureaucracy of each firm and fictitious prices are sometimes established to gain benefits from transfer pricing – setting artificial prices to make it appear that more production takes place in tax shelters.  But as the present crisis show, all this planning by the car bosses can be undone when ‘ market forces’ cause chaos..

The issue, therefore, is not planning versus the ‘free market’ but rather whether planning serves the interests of the majority or a  tiny corporate or party elite.

SOCIALIST PLANNING

There are three main pre-requisites for genuine socialist planning.

First, as we have seen ,the major corporations must be taken into  public ownership. Planning cannot work, if elected representatives draw up a plan but do not the means to implement it. The requirement for public ownership need not apply to every small business. 

A socialist society has no interest in nationalisation restaurants, bicycle shops or design agencies. It might establish a legal framework to gaurantee workers’ rights or limit their exploitation. But socialist planning only requires that the major levers of the economy are in the hand of the representatives of the people.

In Ireland, we would need to take control of the banks, the major construction companies, the major manufacturing plants currently run by multi-nationals, the food industry and the major supermarket chains. 

Second, planning requires that all economic information is available to the public. Despite hypocritical talk of transparency, capitalist society is shrouded in secrecy, as Irish banking demonstrates.  

We do not know how much bad debt the Irish banks have; we  do not know who controls their large blocks of shares; even though Anglo-Irish bank is nationalised,  we are not told about the assets of the developers who have took out huge loans from ‘our’ bank..

If people are to collectively decide how to allocate resources, commercial secrecy must be abolished. There will be no need for such secrecy in an economy built around co-operation rather than competition. The absurd notion that individuals can hold ‘intellectual property’ over knowledge will also have to be abolished. How can we develop the productive forces of society, if individual scientists  ‘own’ the fruits of scientific research and can charge a fee for giving others access to the data.?

Third, socialist planning requires a form of economic democracy that goes well beyond the limited political democracy of capitalism. It requires co-ordinating institutions where delegates discuss and deliberate on where the major funds for investment are to be allocated and what type and what quantity of goods are to be produced.

To accurately reflect the needs to society, delegates will have to be mandated from gatherings of their constituents and will have to report back regularly. To safeguard against bureaucracy and elitism, there should be a facility to re-call them if they do not carry out their mandate.

CENTRALISATION AND DE-CENTRALISATION

Once these requirements are in place, it becomes easier to see how socialist planning might work. It involves both centralised and de-centralised decision-making

At a central level, a socialist society needs to democratically decide the length of the working week and what areas of the economy should be de-commodified. 

Instead of pricing mechanisms, there should be decisions on what are essential free services which can be paid from general revenue. Obvious candidates include, education, health and public transport. Less obvious areas that require debate are sectors such as car insurance or the digital media.

Pricing mechanisms allocate scare resources but they do so in an unequal and inefficient manner because they require additional administrative structures to collect money. De-commodification allows for positive synergies. Universal free health care, for example, would be built around preventative healthcare. Instead of taking your car for annual service and neglecting your body, you might be encouraged to have regular health checks in order to minimise use of more costly hospital resources. 

Delegates to a central council will also have to decide on where the main areas of investment will be allocated, what proportions each sector of the economy will receive and what the expected targets are for output.

Right wing economists suggest that this type of planning is too complicated. But if a large supermarket chain such as Tesco can plan the supply of vast numbers of different commodities to appear on its shelves though a ‘Just in Time’ system, why cannot information technology be used to make the key investment decisions.

It is perfectly possible to draw up alternative allocation models and to outline the economic consequences of each. These modelled can then be voted on by delegates of the people.

In a market regime, resources are allocated chaotically after people have already signalled their wants though purchasing decisions. The current crisis shows, however, that this leads to over- accumulation in some areas such as housing  as profit becomes the sole motive for responding.

Socialist planning means democratically making judgements in advance for what people will require. Contrary to myth, consumption patterns are extremely stable – as Tesco understands- and as long as there is a built in flexibility for innovation, this is perfectly possible.

Such planning does away with the huge levels of waste through advertising and ‘branding’.

Once indicative targets are set at a central level, democratic planning needs a further level of de-centralised decision making.

If there is agreement on the allocation of investment for the clothing industry, for example, it is then up to industrial councils of consumers and workers to discuss design, fabric quality, quantities and the relevant trade offs with working time and working conditions.

Even if decisions are made  on products and output targets, genuine democracy must also include  scope for the workers – both white collar and blue collar- to decide how exactly they implement these decision in their work process.

Because the essence of socialist planning is workers – not bureaucratic -control.

 

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