Ch 5: Democratic socialism - pathways out of capitalism | The Gift Economy, Anarchism and Strategies for Change

5: Democratic socialism - pathways out of capitalism
link to pdf

Terry Leahy 2023

This is the second of three chapters on pathways out of capitalism. How can we replace capitalism with something more benevolent? I’m looking at ones that I think are the most popular. The gift economy, democratic socialism, and the steady state economy. If you boil it down, other options are usually variations on these three themes. In the last chapter I wrote about the gift economy as my preferred option. What I’m looking at in this chapter is democratic socialism. The term ‘democratic socialist’ is used here as follows. Taking over the means of production, nationalizing things, a planned economy, all that. Whereas the term ‘social democrat’ refers to the left wing of the labour parties. A welfare state regulation of capitalism. In contrast to that reformist program, the key idea of ‘democratic socialism’ is to end capitalism. The state owns the means of production on behalf of the people. The commanding heights of the economy are nationalized — energy, transport, education, and health. Even mining and agriculture.

Different democratic socialists plan to set the boundary between the private economy and government ownership differently, but they all believe that the central and most basic parts of the economy should be owned by the public. And when they talk about the people taking ownership of the means of production, they mean through a democratically controlled state. The state nationalizes and owns these central parts of the economy. So, what are the other parts of the economy? This is a shifting boundary, depending on who you’re talking to. The other parts of the economy could include small privately owned businesses, like the local shop or a local electrician. Or bigger enterprises such as market-based cooperatives of workers, which might be supported by the state. This monetary economy could be supplemented with voluntary community work. Unpaid community activities such as community gardens. Private parts of the economy would operate under the close supervision of the state, allowing overall control of the economy through representative democracy. Most access to goods and services would be through a wage or a state pension. You could be working for a state company or a private business and getting your wage. Or you might get a state pension, such as an old age pension or supporting parents’ benefit. Some government services would be free.

The term ‘democratic socialism’ is used to clearly distinguish this pathway for system change from Soviet style regimes which claimed to be socialist. What’s ‘democratic’ about this new version? Well, representative democracy implies an elected government — with different parties promoting alternatives within the broad framework of a socialist economy. Democratic socialists insist on freedom of speech and freedom of association. Beyond this, advocates of democratic socialism recommend workers’ participation. Through workers’ councils managing government owned departments and enterprises, as well as through worker owned cooperatives.

This expanded representative democracy oversees a planned economy and regulates environmental outcomes. Parliament decides how the economy is going to run and plans it. The government allocates money to government departments to implement these plans. In doing this ‘central planning’, the elected government also plans for environmental outcomes. Because government departments are not working to make a profit, they are not tempted to cause environmental damage. Instead, they will follow democratically decided environmental regulations. Those who see democratic socialism as a way of getting past the environmental disasters of capitalism refer to their position as ‘eco-socialist’. There are a variety of positions described by the term ‘eco-socialist.’ In this chapter I will only be looking at those eco-socialists who are also democratic socialists.

Adolfo Gilly was imprisoned by the Mexican government in 1966 and in his appeal hearing he explained the aims of the Trotskyist ‘Workers Revolutionary Party’.
Nationalization, without compensation, of imperialist enterprises and major national enterprises; transfer of all land to the peasantry, to be collectively cultivated; planning of the economy by, and at the service of, mass organizations; workers’ control of production; pay increases and a sliding pay-scale; full employment; democratic rights; education in service of the people and its needs; a government of workers and peasants; and socialism.
This is a succinct and clear statement of a democratic socialist program, couched with Mexico in mind, but relevant more generally.

Democratic Eco-Socialist Visions

Eco-socialist writers vary in the extent to which they articulate the detail of their post-capitalist vision. My sense of their position is based on the more detailed descriptions and an interpretation of the vaguer descriptions. Let us look at Joel Kovel’s The Enemy of Nature first. In a series of passages towards the end of the book, Kovel explains his model.

The first of these passages is an account of the structure of the eco-socialist party. The vanguard party of the revolution. It should be grounded in communities of resistance and production – in other words, activist pressure groups and workplace unions. These will ‘supply the cadre of party activists’ and ‘the assembly that is its strategic and deliberative body’. Delegates to this decision-making body and members of administrative task forces will be rotated and subject to recall. So this is a representative structure — local bodies elect delegates to a central decision-making body.

Kovel affirms the ‘right of an individual to freely appropriate the means of self-expression’. For example, an individual or family has a right to good housing. But ‘the ownership as such of the housing and the land upon which it stands is collective and is granted by the collectivity.’ This collective is the democratically elected state body in charge of this process. In other words, what Kovel calls ‘collective ownership’ is ownership by an elected state body.

The role of the state in the revolution is emphasized in a passage that worries about the state becoming an ‘alienating agency’ — as in the Soviet Union. This must be considered ‘since the gain of state power by the revolution is essential for redirecting society.’ The revolution will seize the executive power of the state to ‘direct society’. Immediately after the revolution, an ‘interim assembly of delegates from the revolutionary communities of resistance constitutes itself as an agency to handle the redistribution of social roles and assets, to make sure that all are provided for out of common stocks, and to exert such force as is necessary to reorganize society.’ These communities of resistance are being represented through the eco-socialist party. Accordingly, the party, acting through the assembly, is using armed force, when required, to determine distribution and reorganize society.

Each local area will be run by a town government elected by all inhabitants. ‘The assembly will convene in widespread locations and send delegations to regional, state, national and international bodies.’ In other words, a system of nested territorial governance based on representative democracy, with voting units being ‘communities of resistance’. The central assembly will monitor communities according to their ecological contribution and ‘give a kind of weight to communities’ proportional to their contribution. Meaning that the central assembly will reward towns for ecological conduct and sanction the wrongdoers. These central bodies will provide society wide services such as ‘rail systems, the allocation of resources, the reinvestment of the social product, and the harmonization of relations between regions.’ In other words, what earlier democratic socialists have called ‘central planning’.

Cooperatives become the units of the new economy and existing cooperatives (communities of resistance) organize other workers into this network of productive communities. Many of these are envisaged as money making cooperatives putting goods for sale onto the market. Others must clearly be government departments. During the transition, ‘incomes will be guaranteed.’ The state centrally controls incomes. State shops or market cooperatives provide goods and services to buy with those incomes. Ultimately money will be based on ‘ecocentric value.’ A quantitative measure of value — working just like money in all essential respects. Childcare work and similar unpaid services will be transformed into ‘productive communities.’ Meaning that workers in these services will be paid a wage, since no one will go without ‘remuneration’.

Let us look now at another account of the eco-socialist vision that is essentially similar. In Global Capitalism and Climate Change, Hans Baer lays out the principles of ‘democratic eco-socialism’ as an economy oriented to meeting basic needs, a high degree of social equality, public ownership of the means of production, representative and participatory democracy and environmental sustainability. Socialization of private wealth would be a first step. Governments would own much of the economy. Another major part would fall to workers’ cooperatives. There would still be some private businesses. Within government departments and cooperatives, workers’ democracy would mean that enterprise managers were elected or chosen by lot. ‘Democratic planning needs to be part and parcel of the production process, such as in deciding what goods are needed and whether they are environmentally sustainable’. This planning must take place ‘at all levels’. For example, should owners of private cars pay special taxes to subsidize public transport? A decision at the national level. Planning decisions at the national level set the terms for the economy. The elimination of jobs that contribute to emissions. The creation of new jobs in renewables and public services. A shift to ‘green jobs’ funded by ‘public expenditures’ that will require action by ‘governments and government-directed programs.’ Beyond this, a world government. ‘Socialist governments in various countries ultimately need to be part and parcel of a world government, with reduction of armies, police and prisons.’

Democratic Socialism – What could go wrong?

I’m going to look at the economic and social problems that might arise in a democratic socialist post-capitalism. Conservative commentators usually refer to this economic model as a ‘command economy’. It’s not the market that decides which goods and services are going to be provided, but the government exercising command of the whole economy. Conservative commentators attack Soviet style economies that were in no way democratic. It may be unfair to apply these critiques to democratic socialists, willy nilly. Yet some aspects of classic state socialist economies are still central to the democratic socialist model. Comparisons are not always a mistake.

My view is that this kind of system would be likely to end up with some of the same problems as any more standard market economy. The problems of money also infect the democratic socialist economy. That is not the end of it. There are other problems uniquely connected to this economic model.

Government departments and cooperatives

Democratic socialists mark their distinction from earlier state socialisms through their support for participatory democracy. In nationalized industries and government departments, a ‘cooperative’ manages economic units. Workers elect their own management. I am sceptical. Ultimately, a democratic socialist government sets up a national plan and government-owned firms and departments implement it. If workers are ambivalent about the plan, the government can bring them into line quite readily. Workers in departments depend on government funding for their wages. Elected managements are au fait with this context. Workers would be crazy to elect a management that did not keep on the right side of government. A typical moral argument backs government authority. The government represents the ‘people’, taken as a whole, while the workers in any one unit are pushing their own barrow. In the context of a monetary economy, a workers’ committee, a cooperative, can go one of three ways.

1. It is a workers’ consultation committee within a government owned department. The government implements their plan by making all important decisions for their departments.

2. The cooperative receives government funding but acts as an independent NGO.

3. The cooperative is a piece of private capital owned by its workers – a market co-op.

In the first case it is clear that the committee of the ‘cooperative’ is an apparatus for democratic national control of the economy. The workers are government employees. In the second case, the NGO sacrifices its independence as it is forced to implement government policy. The government uses conditional funding to pull strings. In the third case, the cooperative is constrained by market imperatives. It is not really independent. Workers do not have full control over what they are going to produce and how to distribute it. The market decides a lot of that. But in addition, to enact a democratic national economic plan, the democratic socialist government imposes additional controls on the cooperative by regulating the market in detail. For example, setting a price on resources, setting prices for distribution. Compromising the market independence of the cooperative. In each of these cases, we can see that the democratic socialist model vitiates a large part of the independence and participatory management that is promised by recent writers in this tradition. The central plan and state ownership of much of the economy are inevitably pitched against any local economic actors.

The monetary assessment of efficiency

Let’s assume you’re a manager of a state-owned firm. You’re competing with other managers to access government favours. To get advantages measured in money. For example, you might get a bigger enterprise and more government funding, more power as a manager. You might get to increase your firm’s output. You could advance your political career. Or you might get private perks, such as a nice car, a holiday house.

So, how are you going to get that government favour? You’re going to get it by demonstrating your efficiency. Now, what does efficiency mean? This is the interesting point. Efficiency means efficiency measured in money. That does not mean efficiency measured in any other way — looking after the environment, looking after your workers, distributing useful products to those in need. It just means you are making more goods worth more money and using less money to do that. For example, producing more widgets at a lower cost in labour, equipment, and resources. And those costs are going to be measured in money. So, your motivation as manager of the firm is to expand production. Reduce costs. And reduce inputs of labour — all measured in money. The effect is just like in a capitalist firm. Other ‘real’ values get sidelined. Your motive as a manager is to get government support and you get this support by demonstrating efficiency calculated in money.

So, we can look at an example of how this worked out in the Soviet Union. Very early on, the Soviet Union adopted assembly line production and the theory of management called ‘Taylorism’. This method of management, invented in the US, cut workplace tasks into small, readily supervised fragments. Making work very boring. The point was to facilitate supervision. Why do this? Because the whole system depended on monetary incentives. Work was not a joy and creative pursuit, but a task set by the planners. Taylorism is an arrangement of workplace tasks invented to control an alienated workforce. Soviet managers embraced Taylorism — to increase production and cut costs. Getting state funding by demonstrating monetary efficiency. Turning workers into robots.

In 1932 and again in 1936, Trotsky wrote about the problems of the Soviet economy. He defends the view that money must be the measure of efficiency. The success of planned interventions cannot be assessed in any other way.
The raising of the productivity of labor and bettering of the quality of its products is quite unattainable without an accurate measure freely penetrating into all the cells of industry—that is, without a stable unit of currency.
And further.
The plan is checked and, to a considerable degree, realized through the market. The regulation of the market itself must depend upon the tendencies that are brought out through its mechanism. The blueprints produced by the departments must demonstrate their economic efficacy through commercial calculation.
The monetary calculation of efficiency is implicit in the democratic socialist vision — even if firms are workers’ cooperatives. A cooperative could be hired by government to implement a part of the central plan. To be sure of being contracted next time, the co-op would have to maximize its efficiency, measured in money. If the socialist economy included market cooperatives, they would have to compete with other cooperatives to make money — or go out of business.

Planning a nationalized economy

But it will be apparent, a democratic socialist model economy would not operate entirely like a capitalist economy. A critique of a planned state-owned economies comes from authors whose formative experiences were in the Eastern bloc. Typical problems in these economies were waste, inefficiency and the failure to meet planned goals. In a capitalist system, firms that succeed in the market attract investor funding and use their profits to expand their production. In a Soviet style economy, government bureaucrats make decisions about how to fund production. Measures designed to influence their thinking make sense. Feher, Marcus and Heller make these points.

The managers of state-based firms compete to get state funding because their own careers are tied to the success of their firm. What they want is more state funding for their firm. A common tactic is to promise big because then they’ll get more money. They may know that their promise is over stretched. But if they can convince government, the economic importance of their firm will increase. The other thing they will do is to overstate the importance and significance of their project. What we are doing, they will say, is a vital necessity. We need desperately to put in these electricity towers, or whatever it might be. The point is to get initial commitment. Once this has been secured, it is hard for the state to back down, even when costs blow out. For example, you promise to produce Y tonnes of bolts for $X of government funding. The government commits to Y tonnes of bolts in the plan and later realizes that you are going to need $X + Q to produce that amount.

Let us see how this plays out when tactics like these are common. The people who are in the planning departments expect these tactics. Knowing this, they discount the bids across the board. They make a bureaucratic decision to assume that the firm will produce fewer bolts than they say and accordingly will need less inputs. How do managers respond to these typical counter moves by planners? They put aside resources for a rainy day. The day in which the government does not provide what they need. Leading to even further inefficiencies, waste, and environmental damage.

The emphasis is on projects that guarantee promised results. The way James Scott describes it is to say that central authorities favour enterprises which are ‘legible’ and easily monitored — over enterprises that are complex and hard to supervise. To make a career as a manager or in planning, it is not a good strategy to back projects that may not work out as promised. For example, a therapy strategy for addicts. You would be uncertain whether the project would work as well as promised. Whereas the company that comes in and says, we’re going to make, ten tonnes of steel rails, you go. That’s right. That’s the one we’re going to fund. Creating an overemphasis on basic industry — as in the Soviet economy. Even contemporary China is afflicted by this problem, despite considerable moves towards a capitalist economy. For example, faced by the huge downturn of 2008, the Chinese government responded by encouraging a boom in construction and infrastructure. State banks provided generous loans to construction companies to build apartment blocks and public infrastructure. An intervention with very quantifiable outcomes. But much of this building and infrastructure was not actually necessary. Vast swathes of urban apartments were left empty . Inefficiency and environmental problems because there’s a lot of waste.

James Scott considers farming in the Soviet Union. Peasants were permitted to have a private plot and sell some of that produce, as well as working on the government owned collective farm. It was typical for the collectives to specialize in a monoculture with a crop that was easily monitored and very predictable, such as a cereal crop. By contrast, the small peasant plots were more likely to produce fruit and vegetables, tricky crops depending on daily fine tuning.

So, a centrally planned economy is likely to prioritize the production of things that are easy for the central planners to monitor and supervise.

White elephants

As argued in chapter two, the capitalist economies of the rich countries have been adapted to working class pressure. The effect has been to prioritize consumer goods that people are prepared to buy. In a state socialist economy, this minimal control can be absent. White elephants designed to deal with political problems can take precedence. The Chinese example shows how this can work. After the 2008 crisis, consumer demand in the rich countries (China’s export destinations) dropped severely. Chinese workers who had been making goods for export were out of a job. The government funded a boom in apartment construction to solve this political problem. Environmentally, this was a worry. Using all that steel and concrete to soak up unemployment by building unnecessary housing. Economies with high levels of state ownership tend to end up with white elephant projects of every variety — dams, airports, housing, expressways. These projects are very showy and visible — and provide employment. The downside is environmental damage and meaningless use of people’s time.

Let us think how this might play out with an eco-socialist government in charge. A large plant for pumped hydro would be showy and politically visible, with clear benefits in employment. A program to retrofit housing to stop drafts would be hard to police, quantify and assess.

Class conflict and purges

One of the effects of a monetary economy based on state ownership is class conflict. Government control on the economy is premised on monetary incentives. We will plan this project and then fund it. People are signing up because they need the money. The government rewards those who are helping them most by paying them extra money. People supervising other workers, ensuring that the government plan is being implemented. Paid for their loyalty. People whose technical expertise is essential. None of this is accidental. It cannot be ended by a decree of equal pay. Any such equalizing measure would undermine the government’s capacity to implement the plan. So, there’s a hierarchy of pay, which is very similar to the hierarchy of pay within capitalist economies. Where owners of the means of production use monetary incentives to ensure that their wishes are implemented. Yet at the same time the ideology is all about we, the people, taking control of the means of production and running it for our own interests.

The likely effect is that most people resent the upper middle class. What, Barbara and John Ehrenreich called the professional managerial class — the engineers, the teachers, the lawyers, even the media stars. A violent purge of the professional managerial class can be the outcome. The party decides that the professional managerial class is getting too much influence. They allow popular resentment to find a scapegoat. They stoke the resentment of those excluded from privilege. The effect is waves of disorganization and upheaval as these class tensions play out — with no ultimate change in the way the system works. This is what happened in Mao’s China, with the red guards and the cultural revolution. Reading accounts from those who lived through these events, it’s obvious that hostility to the professional managerial class animated the purges.

Adolfo Gilly is a Trotskyist who arrived in Cuba five years after the revolution. At that time, ordinary people were enthusiastic supporters of their revolution. Proud they had taken the means of production from the capitalist class. At the grass roots, they celebrated equity and comradeship. At the same time, people were becoming increasingly hostile to party bureaucrats.
The term used is not always “bureaucrat.” The workers also call them, for example, “the ones with the briefcases,” because they always arrive in a great hurry with a briefcase under one arm, supposedly containing very important documents; they glance at the people working and leave again with the same haste. “The ones with the briefcases” is an allusion to an unproductive social group who, along with other special privileges, have that of deciding and leading in matters where the masses should be taking the initiative.
Alienated labour

The democratic socialist economy depends on alienated labour. Democratic socialists often write about the workers ‘taking control’ of the means of production. How can you be alienated if you’ve got control of the means of production? Well, in fact in your daily life, you don’t have control of the means of production in a state socialist economy — democratic or otherwise. If you’re in a nationalized firm, your firm is being instructed in what to do by the government. Told how to produce, what wages to set, how to distribute the product — to fit with the national plan. In fact, the supposedly democratic control of production by the national government depends on you having little control locally. The government sets goals, deadlines, and targets to fulfill the plan. Without this, the plan could never work. As an individual worker, you have little control. You are constantly being told what to do. The alienated labour that workers in capitalist societies experience is maintained. You’re not actually meeting with other people, deciding what to produce, how to produce it and how to distribute your productions.

As in capitalism, this alienated labour leads to political pressure for increased consumption. You are being ordered around in your daily life and you expect to be compensated with consumer goods and leisure. The joke is that the Soviet Union fell because people wanted the jeans that were only made in America. There’s a constant drive to increase resource use. We can see this operating in China now. The last thing the Chinese government can afford is for the growing provision of consumer goods to falter. The regime depends on the support of the mainstream middle and upper working class. Their experience has been increasing consumer well-being. It’s a political necessity to constantly ‘modernize’ and ‘develop’ the economy. For example, to continue to expand electrical supply with coal fired power stations

We can compare a capitalist company to a public department and see some structural similarities. Both are embedded in a market economy where labour is a commodity.

• In a capitalist firm, the means of production are owned by shareholders (the capitalists). In a department, the means of production (like a railway or hospital) are owned by the public at large, represented by its elected ministers.
• The public pays for government capital through taxes. Another way to look at it is that the government prints money, pays wages and creates capital. The company recruits private investors, pays workers and builds capital.
• The company buys labour on the market. The department also buys labour on the market. In both cases a hierarchical organisation implements the decisions of the owners and instructs the workers.
• The company then sells its products on the market. The owners receive surplus value because the monetary value produced by their workers is greater than the amount being paid to those workers. It is difficult to compare this to a government department. The combination of taxes, price setting, fees for service, and government control over money makes it meaningless to try to assess monetary surplus. Nevertheless, there is no doubt that these mechanisms make a surplus product available to governments. This surplus can augment the means of production in government hands or fund the consumption of a state elite. In either case, those who in fact produce this surplus do not control it. Just like a capitalist business.

At all events, a government department, as experienced by its workers, is remarkably like a private firm.

Managerial elites

Another aspect of the state ownership model is the tendency to develop a wealthy management elite. Managers compete to get government support. Those who succeed become very powerful. They jockey for positions in the state bureaucracy. They end up displaying their wealth competitively, buying expensive cars, going on long trips, using holiday houses. All these displays have environmental consequences. Of course, none of this is unique to a state-owned economy. It also happens in capitalism.

Authoritarian politics and the democratic socialist economy

The authoritarian character of regimes premised on this economic model may be no accident. Democratic socialists vow to avoid such problems through a strong commitment to democracy. A commitment that they see as lacking in previous Soviet style socialisms. However, it clearly was not the original intention of these statist parties to stifle democracy. On the contrary, they aimed at an expanded democracy that would also run the economy. What went wrong? Democratic socialists today still argue for a vanguard party, leading the masses to victory and taking control of the state. The members of the party can come to believe in their superior understanding, undermining democracy. Within workplaces, the party members become an unelected fifth column, representing the government. From the perspective of the party, they are ideally suited to supervise the implementation of a central plan. But of course, that authority structure makes workplace democracy notional.

I hesitate to point to the authoritarianism of nationalized economies in practice. This is a key tactic in the most stupid anti-communist raves. At the end of the day, I would prefer to be a poor person living in Vietnam or Cuba than a poor person living in South Africa or India. The daily authoritarianism of capitalist society is never acknowledged in these ‘anti-communist’ diatribes. Nevertheless, this conservative argument does have a point.

The dictatorship in the Soviet Union did not immediately follow the revolution and was contested at the time. Lenin wrote as a supporter of democracy, following Marx. Most of those making the revolution expected that outcome. However, within a few years, the Bolshevik state, with Trotsky leading the army, suppressed workers’ control in the port of Kronstadt and defeated the Makhno anarchists in the Ukraine. The party subordinated and later eliminated popular councils and workplace assemblies.

The intensification of the party oligarchy is often blamed on the civil war and the encircling attacks of capitalist powers. At least, that is how these developments are explained by democratic socialists. Be that as it may. China was equally disastrous. The ‘great leap forward’, an attempt to speed up industrialisation, was responsible for a famine that killed at least 30 million people. More than 30 per cent of the population in some rural areas. The ‘cultural revolution’ was a vicious upheaval that achieved nothing.

Authoritarianism is not restricted to such extreme cases. Take Vietnam and Cuba as examples of more genuinely popular and successful regimes. In both cases, ordinary workers are cynical about the system. There’s a lack of efficiency in planning, production, and distribution. People are working hard at useless tasks and know it. There’s an elite which everybody resents. It is a joke to think that these countries are on the way to a classless society. In an open election the communist party would most likely lose. At the very least, ordinary people expect economic growth and consumer well-being as the payoff for obedience.

I will consider two examples to show how the economic problems of state socialism can push the party into authoritarian solutions.

The Bolsheviks and the Peasants

The early development of the Soviet Union is my first example. In the twenties, peasants owned much of the farming land in Russia. They ran their village affairs communally, even though they owned private plots and marketed their produce as households. They sold crops in Russia and also exported grain. Preobrazhensky, a ‘left’ Bolshevik, believed that to speed up industrialisation, the state needed an economic surplus. They could buy grain from the peasants at a lower price and sell it at a higher price on the market. Using the profit to finance industrialisation. Buying machinery from other countries and paying the industrial workforce. Stalin attempted to carry out this policy in the late twenties by organizing a system of state procurement. However, peasants preferred to market their grain to private contractors at a higher price. State procurement was insufficient to generate the surplus necessary for the planned industrialisation. More and more force was used to persuade farmers to sell to the state. Effectively a kind of taxation. Peasants responded by feeding surplus grain to their livestock — which they could still sell at market prices. Or by eating more grain. In the end by burning their supplies. Stalin responded with a forced collectivisation, between 1930 and 1934. The state seized peasant holdings and turned them into ‘collectives’. State owned and party-controlled enterprises. The state could buy grain from these collectives at low prices. Agricultural production did not expand as hoped. Yields per hectare were lower than before the revolution. But the state was certainly able to extract and secure a surplus. The police killed those who were resisting these changes and others died in the famine accompanying this upheaval. Estimates of deaths range from 3 million to 20 million. The agricultural sector lost about half the livestock that peasants had used to plough their fields — sold or killed. Meaning that the state had to supply the collective farms with tractors. Another cost of this exercize.

It is easy to condemn Stalin and the party for their ruthless hubris. Yet this episode also shows us how difficult it can be to reconcile state planning and a monetary economy. The options for resistance to central planning, the vested interests that flow from any monetary economy, the resentment and sabotage that comes with alienated labour. How attempts to implement a central plan can tip over into coercion.

Chavez and Venezuela

In very many cases, the people who made these socialist revolutions were quite democratic in their intentions. They wanted a democracy. Chavez in Venezuela wanted to decentralize control and set up a planned economy based in workers’ cooperatives. Ferne Edwards explains the problems with one of these initiatives. The government attempted to set up market garden cooperatives, giving community work and local food provision to the urban unemployed. The government funded these cooperatives and paid government employees to supervise. The idea was that community volunteers would supplement the work of these government staff. Ultimately the gardens would make a profit. The volunteers would get an income from their cooperative — supplying food to the urban community. This strategy did not work. Ordinary members of the community were not participating. The paid functionaries were the only people maintaining these gardens. Most probably, this apathy reflected market conditions. These cooperatives were unable to compete in the food market that already existed. Consisting of state-run ration stores, and private supermarkets. Importing food cheaper than it could be produced in Venezuela.

Asa Cusack explains how problems like this affected the whole economy. The state funded cooperatives to compete against private companies. In most cases, the state owned fifty per cent. An attempt to reign in market competition. But in fact, incompetent political cronies often ended up in charge of these cooperatives. Tapping the government’s oil revenue. Almost all these cooperatives failed. To begin with, high oil prices allowed the government to fund social welfare through these cooperatives and to nationalize much of the economy. When oil revenue declined, it became difficult to maintain this spending. The government fixed exchange rates to prevent capital flight. This measure was only partially successful. A black market in US dollars developed. Locally produced goods, priced in local currency, could not compete with imports smuggled in from neighbouring countries. Attempting to maintain government spending by printing more money kicked off an inflation spiral. The final blows were dealt by US sanctions, preventing the government from accessing foreign holdings and restricting oil revenue.

After the death of Chavez in 2013, the new president Nicolas Maduro presided over an increasingly desperate situation. A million Venezuelans left the country. The huge inflation made it impossible for the poor to buy food. Maduro responded by clinging on to power.
… blocking a recall-referendum mechanism that was itself established under Chávez in 1999; installing a constitutional assembly without popular legitimisation; arbitrarily preventing prominent opponents from participating; and unconstitutionally scheduling elections to the ruling party’s advantage .
What this illustrates is the difficulty of running a market, monetary economy while also trying to implement state ownership, cooperatives, and government planning. It’s very hard to put them together successfully. A likely outcome is that the party becomes increasingly authoritarian as it struggles to hang on to the gains of the revolution.

Democratic socialism as a monetary economy

In what I’ve said so far, I’ve given quite a few examples from Soviet Russia and China. This may seem very unfair. These regimes are not what democratic socialists are promoting. Yet some of the problems of the Chinese and Soviet societies are problems with their economic foundations. New systems of political representation cannot jump over these economic structures. In my view, representative democracy is a very inadequate form of ‘ownership’ of the means of production. The monetary economy is premised on alienated labour. Your ability to buy something depends on someone else doing what the market, or the government, requires. Money implies markets because at the end of the day, people make market decisions with their money, buying cheap and selling dear. Putting market pressure on decision making even when the means of production have been nationalized. For example, there would be no point in a cake making department if no one would buy cake. These are not just ethical problems. They end up being environmental problems — consumerism as compensation.

Socialism, money, and the market are not a good mix. The democratic socialist model uses money to implement political control. The government allocates money to fund enterprises to carry out their central plan. In turn, these enterprises recruit people to work for a wage. These people sign up, knowing that without money, they won’t get access to goods and services. So, the whole system runs upon monetary controls. And this implies alienated labour. I’m ready to buy something. To buy what someone else’s alienated labour has produced. They had to do a job that would earn them money. So, there’s a connection between your use of money and their alienated labour. In terms of ‘socialism’, the people taking control of the means of production, it doesn’t make any sense. There’s a mismatch.

Money implies a discourse of buying cheap and selling dear. It implies winners and losers. And that’s what we see in state owned economies. Corruption is a constant problem. Ultimately this competition drives the party feuds that end up with authoritarian purges. This competition is an inevitable part of a monetary economy. By owning money, you have privatized a parcel of the community’s wealth. The parts of the economy that the state owns can’t be owned by the market. The parts of the economy that the market owns can’t be owned by the state. So, there’s a seesaw. The state loses if the market gets more of a share of the economy and vice versa. They’re always in competition. Competition for wealth because money implies ownership of private parcels of economic wealth, of the community’s resources.

Democratic socialists of the present time generally recognize some of the problems with nationalizing a whole economy. They support a move towards a mixed economy model — state owned departments, market cooperatives, small businesses, and voluntary community work. But all these added extras can vitiate attempts to ‘plan’ the economy, creating economic chaos.

The unpopularity of the nationalized economy model

If we’re looking at the rich countries today, democratic socialism is a very unlikely choice for an angry population. Hostility to the nanny state is pervasive. To give an example. I was interviewing steelworkers in Newcastle, Australia, when there still was a steelworks. One of my interviewees told me two narratives, which I found very telling. I was asking him about his views on ‘burning off’. A common practice in Australian suburbs has been for the householder to take some of their rubbish into the backyard and burn it. My interviewee did this one day. He described the way men from the fire brigade had walked on to his property and told him to put the fire out. He was outraged at this invasion of his private space. The nanny state taking over. In many of my interviews at that time I heard the following narrative arc. The recent bushfires had happened because landowners had been prevented from burning off the understory of plants. This ban was because ‘the Greenies’ had stopped the burning off. In other words, an unrepresentative minority of environmentalists had got the ear of government and stopped people from exercising their age-old rights. A similar perspective informed this interviewee’s thoughts on the regulation of fishing. New rules were about to be introduced for Lake Macquarie to ban commercial fishing. He said, ‘I like to fish. I go out in the tinny (aluminium dinghy) with my son. Yes, it’s true that the fish stocks are down in lake Macquarie because of the commercial fishing. But, you know, I don’t think they should be banned. Those guys are making a living, we shouldn’t be coming in telling them what to do.’

This rejection of regulation is spread throughout the community. The Trump campaigns traded on that feeling. Likewise, Brexit. There’s a widespread feeling in the community that we’ve had enough control — don’t tell us what to do. Accordingly, democratic socialism is not a particularly likely choice if people are looking for pathways out of capitalism. I trace this widespread sentiment back to the authoritarian control of the workplace, authoritarian pedagogy in the education system, the puritan control of sexuality. These aspects of daily life in capitalism engender resentment. You go to work every day and stupid bosses are telling you what to do. You go to school, and the stupid teachers are telling you what to do. The far right has a field day using this resentment to attack state regulation. State regulation becomes a scapegoat. I cannot see any of this going away. As the environmental crisis ramps up, there will be increasing regulation and increasing resistance to regulation. Egged on by factions of the capitalist class that are losing out. It is hard to see a popular revolution demanding central planning and state ownership, however democratic.

Final words on this

While I have been talking quite a lot about the Soviet and Chinese cases, there are clearly many other examples. Cuba, Laos and Vietnam have been relatively successful. But what of the many cases where a combination of economic problems, civil war and outside interference have brought down socialist governments? For example, Nicaragua, Tanzania, Zambia, Angola, Mozambique, Chile. The revolution in Venezuela has not been a beacon of hope. Then there is North Korea. Not to mention Cambodia. In AA, they define insanity as doing the same thing over and over again — getting the same disastrous results and always expecting something different. How many times do we need to try a nationalized, centrally planned economy — using money and attempting to implement democratic control?

What I have argued in this chapter should not be interpreted as a condemnation of public ownership in current society. Public ownership can be a bulwark against the worst excesses of capitalism. For example, a public health service. Public ownership is also essential when the capitalist class cannot make a profit providing public goods. These days, the capitalist class is shooting itself in the foot. Cutting taxes on the rich, they starve the economy of necessary infrastructure. Public hospitals, bridges, energy supply. So, in this capitalist economy, I am a supporter of public ownership. But if you’re talking about a post-capitalist economy, I do not think that extending public ownership to most of the economy is a viable or attractive option.