Things got busy for a bit there, so this took longer than I expected. I also want to apologize in advance, this is going to be long. First, lets define some terms:
Capitalism
Capitalism is the system where there is private ownership of the means of production. Private meaning individuals, groups, or shareholders owning things. A 21st century way of defining this is that individual(s), groups or shareholders own the businesses and the enterprises. This generally means that the state is not the predominant owner nor is there collective, public, employee or worker ownership of businesses and enterprises at a significant scale.
This system rewards those who already have means or were born into means much more than those who do not. It also means that those who own the means of production have a distinct advantage over those who do not and have to work for a wage, or do not have capital to start their own business or enterprise. This leads to increasing wealth stratification over time and emphasizes growth over everything else, including human rights, workers rights, the environment, democracy/representative forms of government and looks to capture them all for its own purposes.
I don't think that capitalism is all bad and has some distinct strengths. My interest is finding something that keeps the majority of those strengths while addressing the many weaknesses, especially the system breaking ones that it has. Historically, without guardrails, it tends to destroy itself and work in opposition to the free market in relatively short order. It happened in the early 20th century leading world war twice before guardrails were created and then it took about 40 years in the strongest economy in world history to destroy those guardrails and the foundations that made it successful in the first place. In some places and historical examples, it didn't even take that long.
That being said, I do think capitalism is a net negative at this point in human history due to the inequity, anti-democratic, human rights and surveillance state it has created for profit. It also has shown that it is unable to tackle the rising climate change risks. This is not to mention the flexible labor pool that AI is designed to be, permanently reducing all worker's bargaining power for a higher (in many cases livable) wage. This system is on deaths doorstep. What replaces it?
Liberalism
This is the ideology that most of us are familiar with, so this one is going to be more brief. It has been the predominant power structure in the west, starting with the American and French revolutions and methodically spreading across Europe over the ensuing 150 years. Based on enlightenment ideals about human rights and particularly on negative rights, it has been the predominant ideology in American politics, both for the Democrats and the Republican parties, at least until very recently.
Married to capitalism, its contradictions between lofty goals of human rights and equality are juxtaposed with capitalism, which operates in an authoritarian manner and works to undercut those rights over time. This is especially apparent with the neoliberal economic order, which reinforced both those founding ideals with its contradictions and got us into the mess we have today.
Socialism
Socialism comes down to ownership. Unlike the predominant narrative in the US, it is not when the government does stuff. The definition of socialism is simply "worker ownership of the means of production". In 21st century terms, it is who owns the businesses and who owns the enterprises.
Historically, the predominant understanding ended up being dictated by the USSR after the 1917 Russian revolution, which was state ownership of the means of production, with people voting via democratic centralism on what should be done. So in theory there was "worker ownership" but only via the state. In actuality, the reality is that only lasted a few months before a vanguard of party members (bolsheviks) became the only folks voting on it after the they lost an election to the social revolutionaries, a party that wanted to implement a type of social democracy and instead dissolved the duma (parliament). This didn't stop the USSR and many of the other communist countries to continue to define it that way however, despite the fact that it practically never worked that way and was more or less just controlled by the party.
Please note: state ownership of most industries is not what I am advocating for. I think history has shown this system is inferior and rife with human rights and civil rights abuses and stifled creativity and growth. For industries where the profit motive go against human wellbeing like in insurance, healthcare and prisons, those should be ran by the state or non-profits. Also, note that the "free market" did not go away in these historical examples, as by many prose accounts there was a very robust black market and a high degree of bribery and corruption to meet market need that the system could not. That culture continues today in the countries that composed the former USSR.
Democratic Socialism
What makes democratic socialism different than most historical examples of socialism is that it embraces democratic processes while setting up more decentralized & horizontal power structures. It is based on a continuation of enlightenment values, where rights are not just seen as negative rights (someone cannot prevent you from doing X), but also as positive rights (you are empowered to have Y). The idea would be to create a society that would most likely result in human flourishing for the most people due to the basic needs being universally met.
Instead of the economy being centrally planned and everything being controlled by a single party or complete control by the government, the goal of the system is to shift the balance of power in the marketplace to workers and away from capital owners. The goal of a new system is to take the things that capitalism is good at and combine it with an approach that allays its shortcomings and provides a more equitable approach to economics.
It also is the realization that some sectors should not have a profit motive, specifically, healthcare and insurance are two sectors where there is motivation to NOT cover paying people, so decommodifying would be a wise move.
A typical democratic socialist platform would look something like this:
- Medicare 4 all/universal healthcare
- Expansion of Labor rights
- More progressive taxation
- Social housing (check out the Vienna model for more info)
- "Free" college (covered by taxation)
- Universal childcare
- Green New Deal or a similar environmentally conscious energy policy
- Extensive safety nets
- Collective ownership of businesses (employee/worker owned for most sectors in medium to large companies)
- Creation of a public bank
This isn't exhaustive and you will likely see/hear other platform issues depending on the person and their own persuasion.
Economic Democracy/Market Socialism
An economic system that keeps market principles and commodification intact for the majority of the sectors of the economy, but reduces private ownership of the means of production in favor of worker owned enterprises. The idea behind this is that command economies cannot address the knowledge question (Hayek) adequately and they run into issues with supply & demand. Whereas capitalism is able to grow quickly, but is unstable, and tends to become more and more oppressive to the working class over time.
Market socialism has an economy composed of primarily worker owned business & enterprises (co-ops) and publicly owned business. Publicly owned entities are entities that are owned by the public of a region, but are independent from the state.
Partial ownership, however small, and shared profits from the operation of the business mean that as the business grows, the vast majority of wealth does not just go to one person or several people. It goes to the workers that made that growth possible also. This is important as it would prevent the primary cause of our wealth stratification which is vastly unequal rewards for success in the workplace.
One worker, one vote for major company decisions. Non-worker shareholders of the business are unable to vote, but can hold shares of the company. Leadership positions at companies would be elected instead of selected and this means that company leadership is chosen from and accountable to the workers themselves, not a board of directors or to private equity. This also has helped reduce the wage discrepancy between workers and leadership to a more reasonable level.
Co-ops have higher employee satisfaction,
higher wages than non-worker owned entities in the same industry, far more benefits, better work/life balance and much lower levels of wealth stratification. They also are just as competitive than typical capitalist businesses, if not more so. Their biggest hurdle is funding for creation. Most people who start a business want to keep the majority of wealth it generates for themselves and once a business is established, it is hard to make it worker owned, although programs like an
Employee Stock Ownership Plan can lead to a successful employee owned business.
We really only have two historical examples of any country getting close to this system, one is Sweden under the
Meidner Plan (specifically the wage-earner proposal of the plan) and the other is Yugoslavia in the 1980s. Both ended up being unsuccessful, but for different reasons. In Sweden, the wage-earner proposal essentially bought out a portion of each large company on behalf of the workers a year at a time, and while it made some headway, capitalists were able to block the full implementation of the program and eventually reversed it. In Yugoslavia, a similar system grew out of the old Soviet block they still had a lot of central planning and massive amounts of foreign debt, compounded by massive subsidies to companies operating at a loss (
good reddit post summarizing a paper in an academic journal). The latter was particularly egregious, as the point of markets is that some enterprises do well, make a profit and grow, while others don't do well and fail. With robust safety nets, this will make a harder transition time for an employee at a failed enterprise easier.
There are two additional policies to help facilitate and economic system transition, that would be creating a bank of the commons to have an additional outlet for co-op creation and also an altered corporate tax structure that would provide lower taxes to co-ops and a higher tax on standard corporations.
If you are interested in reading more about how such a system would function from someone a lot smarter than me and is far more comprehensive, I recommend the book
After Capitalism by David Schweikart. He goes into great detail on how banking, lending and entrepreneurship would work, business structures, etc.
This would be my preferred economic system based on the information we have at this time.
What democratic socialism isn't:
Social Democracy
Social democracy is simply capitalism with robust safety nets. It is not socialism as ownership structure does not change and private ownership dominates the economy. Ironically, this is what most Americans picture when they think of socialism. There are many examples of successful social democracies: the Nordic countries are the most famous, but most western European countries and even the US from the 1930s-1970s also fit the bill, although our safety nets were not as robust as the European countries. The main issue they have had is that none of them have been able to stave off the capitalists in the long run and the safety nets have ended up being weakened and democratic processes becoming monetized over time. This has even happened in the Nordic countries, they just had a better starting point than us. The issue is they don't address the problem of ownership, so capital finds ways to weaken these safety nets over time and the system collapses, leading to authoritarianism and/or fascism.
State Capitalism
China is not currently a socialist country. They were from a period of time after Mao rose to power, but after Deng's reforms in the 80s, they embraced capitalism with a government stake in many of their larger businesses, but allowed private ownership. Now, over 96% of their business entities are privately owned (Source:
http://english.scio.gov.cn/pressroom/2024-06/14/content_117253322.htm). They do have some have aspects of central planning mixed in with their market economy, but that percentage of private businesses tells the tale. What confuses a lot of people that mistakenly call them socialist is due to the marxist-leninist vanguard party (CCP) that runs the country, but that describes an authoritarian governmental structure, not alterations in the ownership of the means of production.
While the whole populace is part of the All-China Federation of Trade Unions, this is a symbolic entity. They are not adversarial in the least (they can only take action and strike if the party gives them the green light) and it is illegal to form your own union, or to participate in wildcat strikes. China is also starting to deal with the massive wealth stratification that a capitalist system causes over time and is catching up to the US in that regard.
Communism
A stateless, moneyless, classless society with communal ownership of the means of production. It sounds great, but I don't think humanity is anywhere close to evolved enough for such a system. Sorry Star Trek fans, fully automated, luxury space communism is probably at least a couple centuries away. Historically, most of the countries that claimed to be communist were nowhere close to this goal and have historically had some of the worst human rights abuses and highest body counts in history. Why? In my opinion it is due to the extreme concentration of power this approach takes.
Conclusion
In short, we are seeing similar material conditions and contradictions in our capitalist systems that gave rise to socialist movements in the late 1800s and early 1900s. Will we choose a different path that avoids the pitfalls that lie on both sides of the road? Only time (and us!) will tell. What are your thoughts about these ideas and any other political/economic theories you find that resonate with you?
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