Sozialismoaz hitz bi (Robert Paul Wolff)

A reader of this blog sent me the following message:

“Obviously, you are highly committed to socialism.  What, however, seems to be the perennial problem is that despite 150 years of socialist thought and practice, it’s not at all clear how it would actually work.  We all know what communism is, having seen it in the Soviet Union, the Eastern European satellite states, China, etc.  We all know what social democracy as practiced in Western Europe is, i.e., capitalism with a political commitment to a fair degree of redistribution.

But what would a socialist economy and polity look like?  One hears vague phrases like “economic democracy” and “community control” but never any reasonably precise description of how it would function.

As I look across my room at the new swivel chair I recently purchased I see chrome, leather, plastic and thread brought together, as well as the shipping and financial transactions that were associated with my purchase and the underlying legal framework for such transactions.  I don’t want to fetishize the “miracle of the marketplace,” but well, the chair is there, and I don’t see what the process would be under socialism that would produce the same result.

Am I missing something?  It doesn’t feel like I am asking for too much from proponents of a political and economic system.”

It certainly does not seem like too much to ask, so instead of replying by email I promised I would try to say something useful on this blog. But I warned not to expect too much because I have nothing more than suggestions to offer, certainly not a blueprint or even a coherent plan of action.

Let me begin by reminding everyone of how little Marx himself had to say about the subject. As I have several times noted, he wrote more than 5000 pages of detailed analysis of capitalism as he observed it, principally in England, but scarcely as much as 100 pages about socialism. Besides describing socialism as collective ownership of the means of production, he said almost nothing about how a socialist economy and society would function. There is a reason for that, of course. Marx believed, correctly in my judgment, that fundamental changes in the organization of an economy come about as a consequence not of command decisions by a government or ruling clique but rather internally as a consequence of the decisions of large numbers of individuals engaged in various aspects of that economy. We all recall his striking metaphor – the new order developing in the womb of the old.

It is for this reason that every time I try to address this important question I start by describing the major changes I see taking place within contemporary capitalism rather than by following the practice of those thinkers whom Marx described dismissively as Utopian Socialists.

Capitalism has changed dramatically in the more than century and a half since Marx published volume one of Capital. Aside from the explosion in productivity which makes our world as different from that of Marx as his world was from that of Adam Smith, I can see at least four fundamental developments internal to capitalism whose significance we must try to understand before we can even begin to answer my reader’s pointed question.

First, the internationalization of capitalism that was already underway in Marx’s day has now been brought virtually to completion, as any of us here in the United States can tell simply by reading the tags on the things we buy and discovering how many of them were made in China. This is not simply a matter of imports and exports. The production process itself of individual goods has been internationalized so that, for example, it is impossible these days to purchase a car every part of which has been made in the same country.

Second, as I have frequently observed, the ownership of privately owned capital has been to an extraordinary extent divorced from day to day management of its use in production, through the introduction of the limited liability joint stock corporation, and the public sale and trading of shares of stock on markets widely accessible to investors who have no functional relationship to the private corporations of which they are in theory partial owners.

Third, modern governments around the world play important roles day – to – day in the private corporate economy, shaping it through fiscal and monetary policies, saving it from its moments of self-destruction, bending it to the service of politically determined ends, all without invading or violating the fundamental private ownership of the means of production that is the core fact about capitalism.

Fourth, the private ownership of capital results in a steady irresistible accumulation of privately held wealth that dwarfs even the enormous budgets of modern imperial states. Because this wealth is passed on from generation to generation – because it is, as the French say, patrimonial – certain individuals and families become incomprehensibly rich, rich as it used to be said beyond the dreams of avarice.  This wealth is the financial representation of the cumulative product of the labor of billions of men and women who, however, have no more control now than they did in Marx’s day over how that product will be used.

But what of my readers new swivel chair? Will it still be available in a socialist economy or will we just sit around on tree stumps eating peaches and cream? (…)

But what about that swivel chair? Socialism may be all very well and good, very high-minded and all of that, but can it produce the goods? Let us be clear: when I talk about socialism I am not referring to a romantic return to an earlier time when we all kept chickens and used outhouses and sang folksongs and wore sandals and lived in little cottages with candles while we read poetry to one another and searched our inner selves. I am asking whether there is some way to move beyond the current advanced stage in the development of private ownership of the means of production in order to achieve genuine economic equality and collective democratic decisions about how to invest the surplus generated by our productive efforts.  As I pointed out in the first post of this little series, there are already developments within capitalism that are preparing the way for movement beyond. The divorce of legal ownership from day-to-day management is already well advanced. We are all mesmerized by Elon Musk, Jeff Bezos, and Bill Gates – more of them in a moment. But for the most part, the functional operation of a modern capitalist economy has been separated from the legal ownership of capital.

It is quite obvious that democratically elected governments are capable of doing an efficient job of deploying capital for collectively agreed upon purposes. Private entrepreneurs may be selling seats in space capsules at fancy prices, but let us not forget that the first people to walk on the moon were government employees. Higher education in the United States is an odd mixture of private and public enterprise, but in many advanced capitalist countries the great universities are public institutions and it is really only the Catholic Church that clings to private higher education for otherworldly reasons. The cars we drive are made for profit by private corporations, but both in the United States and abroad the roads on which they drive are made and maintained by governments.

Private ownership of the means of production distorts what is made and consumed in ways that are personally profitable but socially undesirable. As I have observed before, because it is possible to get rich producing inexpensive well-made well-designed clothing, even the poor look good when they go from job to job trying to make enough to pay the rent. But for reasons that have absolutely nothing to do with social welfare, expensive housing is profitable to produce while well-designed, well-made inexpensive housing is not.  Hence the rich are comfortably housed and the poor are not, even though these days when the two mix and mingle on public streets it may be difficult to tell one from the other. Why is public housing so poorly designed? Would it not be possible for government to produce well-designed housing? This is really two questions masquerading as one. Is it possible and is it politically acceptable in a capitalist economy? I will simply offer my opinion, which is that it is possible but that for political reasons public housing must be a blight on the landscape.

What about innovation? Are we really going to leave it to bureaucrats to pick and choose which ideas for new products on the production lines are to be funded? Is the world of the socialist future to become one vast bleak landscape of motor vehicle registry offices? Even sandals and candles and outhouses would be better than that!

Well, let us be honest about this. These days, ambitious innovative types who want to start a new company do not often acquire the capital by cheese paring, as in the old self-congratulatory early capitalist fairytales. They go to banks or equity funds.  Some way would have to be designed to capitalize lenders with public funds.  And to encourage socially valuable greed, which is to say entrepreneurial innovation, the terms would have to be such that successful innovators could become reasonably rich.  The problem is not that successful innovators become rich – and of course with taxation we can limit just how rich they become. The problem is what Piketty calls patrimonial capitalism, which is to say the ever greater accumulation of inherited wealth.

Will innovators sit on their hands if we deny them the opportunity to leave what they make to their children? I think the answer is no but quite obviously I cannot be certain about that. That is one of the as yet unanswered questions that a transition to socialism would have to confront.

But what about that swivel chair? Well, if it is made by craftspeople in a small privately owned and managed company, all well and good. If it is made by a huge international Corporation like IKEA, then that may be government owned. I seriously doubt that the chair would swivel less well if that were the case.

I have just scratched the surface but before I close I want to emphasize once again the central organizing idea behind this speculative post. If we want to know what socialism will look like, we must first ask what changes are already taking place within capitalism. To that we must add that the direction of further development will be determined not by armchair speculators like myself but by the collective decision-making of democratically chosen representatives. Does that pose problems? You bet it does! Are those problems greater than the problems we now have and live with in a capitalist economy? I do not think so, but then, I only have one vote.

(Gogoratu Maria Mazzucato: Enpresari-estatua)