What is socialism?

by John Martin

This is written from an Irish perspective but opens up the discussion for Britain too. 

If socialism is defined by how its political representatives act, then its elements can be described quite clearly. 

In the Irish context socialists tend to distrust the State. All actions by the State are suspect. The State must be called to account with the presumption of guilt. State initiatives, such as NAMA, are automatically deemed to be suspect:  either corrupt (“the developers bank”) or incompetent (“will lose billions”).

The State’s past record is a nightmare from which we are recovering. Socialists vie with each other for superlatives (e.g. “Gulag”) to describe the horrors of the past.

But on the other hand, they tend to oppose cuts in public expenditure. They resist any attempt at privatisation of the services provided by the “corrupt” State.

However, they rarely advocate nationalisation or workers’ control. 

Socialists tend to oppose monopolies and support free market competition. 

Irish socialists tend to oppose property taxes. They favour increased expenditure on social housing but also favour affordable housing, which is in effect subsidised private home ownership.

Present day Socialists tend to extend the principle of equality beyond the economic and the political. This principle has been used to establish ‘rights’ for a whole array of groups such as feminists, gays and ethnic minorities. 

These positions of present-day socialists are relatively recent. While some of the above are not incompatible with an older version of socialism, others are antagonistic to it, while still others have nothing to do with socialism in the traditional sense. 

Up until about thirty years ago, socialism meant the social ownership of the means of production, distribution and exchange.  Disagreements within the broad socialist movement related to how and when this could be achieved.  Other struggles, such as women’s liberation and gay rights, were subordinate to the objective of social ownership.  They certainly were not considered a substitute for this main objective.

Social ownership was desirable because private ownership was considered the means by which the working class was exploited. 

If social ownership has been abandoned, it would be useful to know why.  Is it necessary for it to be abandoned and, if so, what elements of socialism can be salvaged?

For much of the twentieth century, socialism was considered to be the wave of the future.  Its proponents claimed that it was not only a fairer system but also a more efficient way of organising society’s resources.  Indeed, Marx argued that Capitalism acted as a “fetter” on productive resources.  The attraction of Marxism was not just that it was a moral denunciation of capitalism but purported to be a scientific analysis of the laws of motion of the capitalist system. 

     Marx rather convincingly suggested that the capitalist system contained within it the seeds of its own destruction.  Its most significant characteristic was that it socialised production.  In previous modes of production, a large proportion of production was consumed directly by those who produced it or, if that was not the case, the producers knew who the ultimate consumers would be (e.g. his landlord, other members of his family or community).  But Capitalism was “social” in the sense that the vast bulk of production was produced for society.  The individual worker had no idea or particular interest in who would be the final consumer.  He was part of a vast socio-economic mechanism that provided for the economic needs of the society and whose scope extended way beyond national boundaries. 

The system was revolutionary in its effect.  It uprooted and destroyed other forms of production.  It could do this because the socialisation of production had enabled a massive increase in productive resources, which was accentuated by the application of scientific methods.  Marx thought that Capitalism developed in the Netherlands before other countries because socialisation of production was forced on the Dutch by the challenges imposed by their natural environment.

Marx believed that any attempt to reverse the process was utopian.  Instead, the beast must be controlled.  The problem was that, even though production was “social” or oriented to society, the “society” had no control over that production.  Ownership and therefore control was in private hands.  Another way of putting it is that capitalism was “indirectly social”.  Social needs were provided for as an indirect consequence of the drive for surplus value or profits. 

What could be more logical than social needs being provided for directly by society?  But how could this be done?

The means by which this would be achieved was by the State.  The State would represent society’s interest.  Communists believed that their party, with its understanding of scientific socialism, was best placed to act in the social interest by taking control of the State.  Other strands of socialism believed the State should be representative of the society.

So where did it all go wrong?  In many ways it didn’t!  Practically all the developments that Marx identified in the nineteenth century have been accentuated in the twenty-first.  In particular, an increasing proportion of life has been “socialised”

A feature of many of the services offered on the Internet are that many are free at the point of use.  This doesn’t make them socialist, but neither are they capitalist in the traditional sense. 

Social media has enabled the sharing of personal data which can be easily manipulated.  Never before has the question of social ownership and control been more pertinent. 

The problem has always been:  how can social ownership and control be made effective? 

It was thought, following the collapse of the Soviet Union, that the State was incapable of providing for the complex demands of a consumer society. But recent developments in capitalism make that point moot. 

The technical capacity to store vast amounts of information has enabled corporations to anticipate demand before the consumer is even aware of what his needs are. Indeed, it could be said the corporations determine what those needs are. Thirty years ago, except perhaps in France, it never occurred to anyone that telephone communication could be visual or that any individual could access a bewildering number of services through a centralised database, or that people could be constantly connected to such information through a hand-held device. No one demanded these facilities, but once experienced, it is almost inconceivable that life could continue without them. 

The idea that companies compete with each other to satisfy the arbitrary and pre-existing demands of consumers is an illusion. In the new economy production and consumption is centrally planned.

In France the impetus for such developments was the State (Minitel). In the US it was large corporations (or small companies that had unlimited access to capital at the development stage). The common factor in each case was a willingness to forego profits. US companies such as Amazon were prepared to lose billions for many years. 

Indeed, it could be said that one of the reasons inflation has not been prevalent in recent years in the world economy, despite an expansionary monetary policy is that a large proportion of funds have been sunk into creating the architecture for a new economy. There hasn’t been a consumer boom. 

The question arises:  why was the French attempt overtaken by the Americans? The answer is that the Americans had deeper pockets and had a global reach. The French system was really only for the French.  But, apart from that, the approaches were similar. The Americans had to abandon all hope of obtaining a short-term economic return. The stock market could cope with that by giving investors capital gains, rather than cash dividends. The capital gains only occurred because of the weight of money invested in the companies. To a rational investor schooled in the old economy such investments looked like gigantic Ponzi schemes. And indeed, many of them were, but enough of them had substance to justify the massive outlay.

The relative success of the Americans compared to the French illustrates a problem.  In order to be successful the operation had to extend beyond national boundaries. This applies to all industries. 

Marx, of course, was aware of the internationalisation of capital but the implications were not really explored. The State is the means by which capital can be controlled.  But the State is organised along national lines.  How can the State control international capital?  The answer is, on its own, it can’t. 

Multinationals decide where in the world they want to organise production. States compete with each other to attract such companies. If a multinational leaves, there is not a lot the State can do. 

 A few years ago a subsidiary of a multi-national closed down in Ireland. A left-wing TD called for the company to be nationalised. But, of course, such a proposal was impractical. The subsidiary most likely sold its products to other companies in the group. It was not a stand-alone company but merely a component in an integrated system of international production. 

The obvious solution is some form of cooperation between States. But that is easier said than done. 

In the meantime, it is very understandable that the Republic of Ireland should attempt to attract multinationals. The negative publicity about Ireland is as a result of the country being so successful. Recent moves by the OECD on tax harmonisation will have the effect of benefiting the larger countries since tax will be based on where the product is consumed rather than where it is produced. It is easy to be virtuous when it coincides with one’s self interest!

While the global reach of multinationals has made social control—never mind social ownership—impossible without international political cooperation, there are vast swaths of the economy in which social ownership/control does make sense. 

The obvious area is the financial sector. What benefits to society has free market competition had in the banking sector?  A strong case could be made for the opposite:  competition, particularly from foreign banks, precipitated the financial crisis.

The solution to the crisis was to nationalise the banks:  a longstanding socialist policy. And yet, now that the crisis has been surmounted, there is no serious resistance (socialist or otherwise) to their privatisation. There is no socialist vision for how the economy might run. 

Similar arguments can be made for social ownership of the insurance and pensions sector. 

In general, operations relating to infrastructure should be under social ownership or control.

What about the building sector?  It is widely believed that this sector has not served the social interest.  It is not necessary to nationalise every small firm in this sector, but there is a case for the State controlling what traditional socialists called the “commanding heights”.

Many of the large building companies are in effect employment agencies subcontracting work as the need arises.  Why can’t the State deploy such resources to achieve desirable social objectives?

If socialism is to advance politically, it must have an overarching vision of how society should be organised.  In the absence of such a vision, it will lapse into incoherence and be a prey to special interest groups. 

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