‘Instead of prosperity, socialism has brought economic paralysis and/or partial collapse to every country that tried it. The degree of socialisation has been the degree of disaster.’
That was Ayn Rand, a fervent supporter of laissez-faire capitalism and present-day darling of the American alt right, writing in 1964.
Yet over the last 60 years it is capitalism itself that has experienced the paralysis she refers to. The capitalist system staggers from crisis to crisis. Ironically, in this era of ‘permacrisis’, it is to public ownership that capitalists are grasping for in desperation, to ‘rescue’ industries such as rail and water which were privatised in the 1980s under Margaret Thatcher’s conservative government. Thatcher herself was inspired by Rand and other gurus of the right. Yet far from being a ‘disaster’, some element of public ownership is increasingly the last hope for capital, and it is an indication that capitalism is a spent system.
Over 200 years, capitalism has massively expanded production and created enormous wealth. However this wealth is increasingly concentrated in the pockets of a handful of huge corporations, operating across the globe, some with turnover or budgets greater than nation states, bringing vast numbers of workers together in complex supply chains.
The system is characterised by a high degree of interdependence between countries and between companies, meaning that production is inherently social, with workers, technicians and managers all communicating and interacting with each other — but the means of production are not socialised. They — warehouses, factories, lorries, machine tools, computers — are largely in private ownership, so, as each corporation tries to drive the others out of business, or at least to gain a greater market share, anarchy reigns. No-one is in charge and there is no Plan B because there isn’t even a Plan A.
Engels, in his Socialism Utopian and Scientific, lays bare the fundamental contradiction in capitalism:
This solution can only consist in the practical recognition of the social nature of the modern forces of production, and therefore in the harmonising with the socialised character of the means of production. And this can only come about by society openly and directly taking possession of the productive forces which have outgrown all control, except that of society as a whole.
In other words, capitalist production is social but ownership is private. Abolishing this contradiction, through social ownership, makes possible the rational planning of production, precisely in order to meet needs and not for the sake of profit.
Social ownership, of course, means taking the wealth and power away from the capitalist class and transferring it to the working class — a revolutionary act. The key levers of economic power would need to be nationalised, including banks, supermarkets, construction companies, rail, mail, phone companies and other utilities, manufacturing industries etc. This would enable a socialist government to consolidate, co-ordinate and above all plan the development of the economy. This does not require all private enterprise to disappear, only those enterprises above a certain turnover or which employ large numbers of workers. Some smaller businesses on the high street or corner shops could remain in their owners’ hands, though capitalism already ensures that small enterprises are vulnerable, with bank credit hard to obtain, threats of takeover by bigger companies etc. Last year in the UK no less than 31,000 businesses failed — most of them small, family-based businesses — with the pensions, redundancy money and life savings that had been invested all disappearing.
However, with the bulk of the economy in public hands, enormous benefits could be realised. It will be possible to plan the development of the economy in line with real needs. The capitalist market distorts the economy in myriad ways. Young people need affordable accommodation but the construction industry builds ‘4-bedroom executive homes’ which are more profitable. Consumers need cheap reliable mobile telephony but they are offered more and more expensive devices which after a short period are ‘no longer supported’ and then consumers are harassed with offers of upgrades.
The real requirements and priorities of the economy will be decided democratically, involving consumer groups and trade unions, using demographic data and existing patterns of consumption but eliminating the distorting effects of the profit motive. There are elements of this even under capitalism. Huge multinational companies such as Walmart, with its 11,000 stores worldwide and a turnover higher than Norway’s GDP, have already developed sophisticated real-time planning tools to ensure products reach the right stores at the right time. Of course Walmart’s case is limited by competition from other distributors — and it is also not democratic. The need it is based on is not that of workers and the planet, but shareholders who want to sell ultra processed foods, sweatshop clothes etc. But those methods could easily be put to the service of society as a whole. Increasingly, Artificial Intelligence, which is very skilled at spotting patterns, will play a key role in predicting what needs to be produced.
The capitalist system is inherently inefficient. The principle of competition means that each company has spare capacity in the hope of snatching greater market share; a socialist system would determine democratically how much capacity is required. Competition requires huge expenditure on marketing and advertising; each year in the UK £35 billion is wastefully spent on advertising alone. In a socialist economy commercial advertising based on stimulating artificial needs and extravagant claims would disappear, freeing the creative talents in those sectors to be expressed independently of contractual relationships. But the greatest gains in a socialist system will come from the democratic participation of the working class who know best where and how processes could be improved. The capitalists understand this well and often try to conscript workers into ‘quality circles’ and ‘improvement teams’. In this system workers’ instinctive desire for quality improvement is stifled by arrogant managers or the fear that change will lead to job losses. A socialist society will benefit from the ingenuity and self-confidence of a working class which has achieved momentous revolutionary change.
Time and again throughout the history of the workers’ movement workers have shown their desire to take control of production. In the early 1970s workers at Upper Clyde Shipbuilders opposed the threatened closure of the yard by continuing production under the control of the trade union committee. In 1974 the trade union committee at Lucas Aerospace went even further in challenging capitalist rule. They developed an alternative strategy for the company, described by the Financial Times as ‘one of the most radical alternative plans ever drawn up by workers for their company’, and argued for switching production from jet fighters to ‘socially useful work’ such as dialysis machines. In Florence, former employees of GKN who lost their jobs when the plant closed are currently occupying their factory, no longer producing auto parts but prototype cargo bikes, challenging not just capitalism’s right to hire and fire but also the skewed priorities of a profit system which is destroying the planet. In this respect, as in others, the seeds of the new, socialist society are present in the old.
Socialist planning will mean that wider social goals can be fulfilled. A nationalised and fully integrated rail system will actively plan to take more freight off the roads and reduce carbon emissions. A socialist housing system would democratically plan the development of new estates and new towns to remove pressure from the overcrowded South-East of the UK. A socialist agricultural system would prioritise nutritional rather than cosmetic standards in food production, and would offer farmers guaranteed income for their products. Workforce planning, in conjunction with the trade unions, would ensure the necessary supply of midwives, bricklayers, radiographers, and train drivers — under this system private hospitals don’t train staff but rely on luring staff from the NHS, just as train operating companies currently poach drivers from each other rather than invest in training a new generation of workers. Every aspect of economic and social life could be accommodated in genuinely democratic socialist planning.
This was what was missing from the Soviet Union, often cynically used by our enemies to ‘prove’ that socialism means inefficiency and dictatorship. It certainly was the planned economy which enabled the USSR to rapidly industrialise and grow its economy from that of a colonial country like India to that of a super-power like the US in 50 years. But after the late 1920s working class democracy was extinguished. The 5-year plans were dreamed up in party committees with no input from workers, and the planning system imposed arbitrary and often unreachable targets on workers, with the threat of punishment if they were not achieved. The party and the trade unions were completely bureaucratised and there was no voice to defend workers from management attacks, nor was there any opportunity for workers to take day-to-day control of production. If there had been workplace democracy, and if the talents of the workforce had been engaged in finding shortcuts and more efficient processes, the Soviet Union could have grown even faster than it did. It grew despite the bureaucracy rather than because of it. The bureaucratic rulers opted for the capitalist road in the 1990s and Russian gangster capitalism was the result.
China and Cuba, unlike the USSR, both achieved their revolutions through peasant guerrilla warfare and so the working class itself was side-lined in both from the beginning. But that doesn’t mean the working class didn’t enjoy the benefits of state planning. In both countries, the nationalised economy gave a tremendous boost to production, on the back of which poverty was drastically reduced and a comprehensive welfare state was forged. In China, after Mao’s death, there was factional struggle among the party bureaucrats, and the wing which prevailed, terrified of the growing working class, sought salvation in large-scale privatisation, foreign inward investment and the dismantling of the welfare state. In Cuba, despite its extreme isolation in the maw of US capitalism, more of the gains of the revolution have been retained, but the creeping dollarisation of the economy fosters the development of private enterprise, especially in tourism. In neither country has the class struggle come to a stop and especially in China workers continue to organise, strike, fight with the police and seek to control their work and working conditions, often with the support of students who claim the mantle of Maoism.
The right wing claim ‘socialism has failed’ and that it ‘went too far’. For revolutionary socialists there are two key lessons that should be drawn. The lesson of all these bureaucratically planned economies — Russia, China, Cuba — is that democratic workers’ control is essential to plan an economy effectively. What’s more, socialism cannot be built in isolation, which leaves them vulnerable and prey to imperialist interventions and coup attempts, or even just the predations of corrupt officials. Capitalism is an international system and the full benefits of socialism — planning, democratic engagement, production for need and not profit, an end to war — can only be realised internationally. That’s why we in Socialist Alternative see it as indispensable to belong to and build a revolutionary international which can prepare for the transformation we need.
