Let me begin by saying how much I appreciate that the term socialism is being used in the US without a derogatory meaning attached to it by a mainstream politician. In that sense, I am grateful to Bernie Sanders for describing himself as a socialist and for actually running as one. If nothing else, it has brought the word back into common usage. However, this has led to some really strange memes that need to be discussed …
It is amazing what the response to one post on facebook can create intellectually and emotionally. When I saw this post, I was consumed first by laughter and then by anger and then driven to correct what is so obviously inane about the post. So today’s piece is an attempt to deconstruct the above post and then to try to explain what is erroneous about the post.
So what is the post saying?
- It defines capitalism as an economic system in the private sector;
- It clarifies that it is not a form of government but rather an economic system;
- It then argues that capitalism does not contain a moral system;
So far … okay, not perfect, but ok. We can clarify this further. It is the next series of assertions that are way out there …
- It then makes the assertion that government run by corporate bosses for their benefit is fascism.
- It then says that Democratic Socialism is government in the public interest that regulates the excesses and abuses of capitalism.
- It makes the obvious point that the right is lying about what democratic socialism is, (this hopefully does not need to be addressed);
- It concludes with the bizarre claim that FDR (Franklin Delano Roosevelt) was a Democratic Socialist
- It also claims that he created the middle class.
Let’s begin with the first three statements as while clumsy and poorly thought out can be clarified so that the post makes some more sense.
Point 1: Capitalism is an economic system which is based on the production of exchange values for the purposes of securing a profit. Ownership of the means of production and distribution are in the hands of the capitalist class which exploits workers who are forced to sell their ability to labour in order to survive. Exploitation exists because the workers create the total value of the product but only receive the value of their labour power. As such, the vast majority of property-less people are exploited by a few who appropriate both the product and the surplus value produced by the majority. While profit seeking production exists in the private sector rather than in the state sector, there is nothing that prevents profit making enterprises in the state sector.
Point 2: This brings us to the next point about capitalism not being a form of government. That is completely correct, it is an economic system. However, that does not mean that the state is neutral. The bourgeois democratic form of the state which exists in the advanced capitalist world arose in specific historical circumstances which the rising capitalist class found to be appropriate for their aims. The seizure of the apparatus of the formerly feudal state by the capitalists (either in a revolutionary manner like in France and the US, in the attempt to unite a series of smaller units like in Germany and Italy, or in a transformation of suffrage as in Britain) was revolutionary in that it overthrew the old feudal political order and then altered the juridical processes to support the new economic order. However, capitalism can happily co-exist with dictatorships, with autocracies, and with a fascist political system.
So Milton Friedman’s insistence (echoing Hayek) that capitalism and democracy go hand in hand is historically erroneous. Moreover, his linkage of economic freedom and political freedom can be disproven by one of his own pet projects, Chile under Pinochet.
Essentially we are asking what is the role of the state in a capitalist economy?
In understanding the role of the state under capitalism we need to clarify who does the state serve? Is it a state independent of classes, a neutral functionary, does it merely functionally carry out the will of the people or is it a class state, that is, a state that serves the interests of the ruling classes in society?
While it may sound ridiculous, I went back to a very old text to look at the discussion of the role of the state in capitalist societies and the argument that capitalism can be transformed into socialism through reforming the economic system.
In Reform or Revolution (1900), responding to Eduard Bernstein’s (1899) Evolutionary Socialism, Rosa Luxemburg discusses the role of the state under capitalism. Bernstein had argued that socialism could be gradually realised due to the evolution of the state in society, the fact that capitalism is an adaptive system and the rise of bourgeois democracy which he believed would enable socialism to be achieved through a more open arena for debate.
Luxemburg argued:
“The state became capitalist with the political victory of the bourgeoisie. Capitalist development modifies essentially the nature of the state, widening its sphere of action, constantly imposing on it new functions (especially those affecting economic life), making more and more necessary its intervention and control in society. In this sense, capitalist development prepares little by little the return future fusion of the state and society. It prepares, so to say, the return of the function of the state to society. […]
But on the other hand the same capitalist development realises another transformation in the nature of the state. The present state is, first of all, an organization of the ruling class. It assumes functions favouring social development specifically because, and in the measure that, these interests and social develop coincide, in a general fashion, with the interests of the dominant class. Labor legislation is enacted as much in the immediate interest of the capitalist class as in the interest of society in general.
But this harmony endures only up to a certain point of capitalist development. When capitalist development has reached a certain level, the interests of the bourgeoisie, as a class, and the needs of economic progress begin to clash even in the capitalist sense (Luxemburg, 1900, Reform or Revolution, Haymarket Press, 1973, pp. 25-6).”
She continues:
“in a clash between capitalist development and the interests of the dominant class, the state takes a position alongside that of the latter, its policy, like that of the bourgeoisie comes into conflict with social development. It thus losses more and more of its character as a representative of the whole of society and is transformed at the same rate into a pure class state. […] these two qualities distinguish themselves more from each other and find themselves in a contradictory relation in the very nature of the state. This contradiction becomes progressively sharper. For, on the one hand, we have the growth of the function of a general interest on the part of the state, its intervention in social life, its “control” over society. But on the other hand, its class character obliges the state to move the pivot of its activity and its means of coercion more and more into domains which are useful only to the class character of the bourgeoisie and have for society as a whole only a negative importance, as in the case of militarism and tariff and colonial policies. Moreover, the “social control” exercised by this state is at the same time penetrated with and dominated by its class character (see how labor legislation is applied in all countries (Luxemburg, op cit, pp 26-27).”
Even though written in 1900, this is useful. So, the extension of bourgeois democratic freedoms (e.g., universal suffrage) supports the idea of a state (or historically furthers the idea of a state) which represents the will of all in “society.” The guarantees of certain civil rights in constitutions provides evidence that the state serves the interests of society or does it?
But the contradiction is that these freedoms are extremely limited and that the state will ultimately serve the interests of the ruling class. Why do we need the creation of standing armies, who does that serve? While we nominally have freedom of speech, it is increasingly curtailed and we are spied upon by the state. Whose interests is that serving? Does the state have an independent interest from that of the society and the ruling class?
What happens when we run straight into a contradiction between bourgeois democracy and the perceived needs of capitalism? We can look at the conflict between the Troika (ECB, EU and IMF) and Greece. Who won that? Clearly democracy becomes superfluous when the capitalist system and its proxies feel threatened. In fact, this contradiction was completely missed by Alexis Tsipras and Syriza as they actually seemed to believe that democracy was more important and its legitimacy necessary for the capitalist system; as can be seen, if it represents a threat to the perceived needs of the capitalist system, the will of the people is of little or no importance (even if the referendum did not address leaving the Eurozone; it addressed the terms of the memoranda from the Troika). Historically, this was not the only time that democratically elected leaders were forced out and dictators and “technocrats” that served the interests of capitalism were appointed, we do not have to go back to Allende’s Chile, but can look at Italy where Mario Monti (who was unelected and appointed a Senator for Life a week before becoming Prime Minister) replaced Silvio Berlusconi as Prime Minister so that the demands of the Troika would be implemented to deal with the Italian debt crisis.
Moreover, and this is an important point, with the internationalisation of capital, the state itself runs into conflict with multinational corporations while still trying to serve their interests. Internationalisation of capital has made collection of corporate taxes more difficult, it also creates a conflict between the needs of the domestic state itself and its role of functionally and nominally covering the needs of its own working class and control of resources with the general needs of capitalist economic system.
Point 3: Capitalism does not contain a moral system? No, but it has justifications for its vast economic and political inequalities. Justifications do not constitute a moral system but they do attempt to hide the true nature of the system which is a class system based upon exploitation of the producers to benefit the small number of appropriators. Political apologism that inequality is permissible as the vast majority benefits attempts to put aside moral objections to the system itself. An additional point about justifications … think of the whole idea of trickle-down economics and if you think that was invented only by Ronnie Raygun, you need to go and look at Nassau Senior’s (1838) argument that high profits and low wages benefit the workers as those profits are reinvested and create jobs. So the capitalist system is neither moral or immoral, instead it is an economic system based upon exploitation and private ownership of the means of production. If you are feeling masochistic you can go and read the justifications for the right of capitalists to earn profits in the 1830s; they are sickening in their attempt to provide moral rights to private appropriation of surplus value. Are moral criticisms against the system a problem? Not really, but it is not capitalist greed which is the issue for me. It is what the system itself relies upon to function.
We can now move onto the rest of what is mentioned in the facebook post.
Number 4 that a government run by corporate bosses for their benefit is Fascism has already been addressed earlier. What is the nature of a state in a capitalist economic system and who does it serve? No offense, but what is evident in this statement is that the authors do not understand the nature of a state in Capitalism. The state under capitalism ultimately serves the interest of the ruling class. Fascism is a political system; the corporatism of Mussolini’s fascist Italy is not the same thing as capitalist bosses controlling the state. Moreover, while fascism arose historically in a period where state participation in the economy was dominant; that does not mean that fascism requires this economic form. Some modern fascist parties actually argue a more neo-liberal free market economic style. What is constant is the political form of fascists; they are a mass movement created by the ruling class with a strong nationalist perspective and totalitarian form of government.
So what is corporatism?
“Corporatism, also known as corporativism, is the sociopolitical organization of a society by major interest groups, or corporate groups, such as agricultural, business, ethnic, labour, military, patronage, or scientific affiliations, on the basis of common interests. It is theoretically based on the interpretation of a community as an organic body. The term corporatism is based on the Latin root word "corpus" (plural – "corpora") meaning "body" (en.wikipedia.org/...).”
So, the theory of corporatism can be utilised by any number of different ideological positions. This does not refer to modern corporations controlling a government; that is an error. In Mussolini’s fascist Italy, corporatism meant state control over the economy not the capitalist corporations controlling the state.
“The corporate State considers that private enterprise in the sphere of production is the most effective and usefu [sic] instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.
State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. (Benito Mussolini, 1935, "Fascism: Doctrine and Institutions", Rome: 'Ardita' Publishers, pp. 135-136).”
So, in fascist Italy, corporatism meant that different groups representing different interests (agriculture, industry, workers, the state) were consulted and state policy would reflect those interests. As such, theoretically divergent interests would be taken into account in the running of the economy by the state.
“Italian fascism involved a corporatist political system in which the economy was collectively managed by employers, workers and state officials by formal mechanisms at the national level. This non-elected form of state officializing of every interest into the state was professed to reduce the marginalization of singular interests (as would allegedly happen by the unilateral end condition inherent in the democratic voting process). Corporatism would instead better recognize or "incorporate" every divergent interest into the state organically, according to its supporters, thus being the inspiration for their use of the term totalitarian, perceivable to them as not meaning a coercive system but described distinctly as without coercion (en.wikipedia.org/...).”
What is Fascism? Above all else, fascism is a political system with an extreme nationalist agenda and authoritarian state government. It is opposed to socialism, communism, liberalism and conservatism. It is a right-wing ideology which emphasises the importance of the nation state and its extension.
For Mussolini, the state actually becomes the whole of society and is the creator of society at the same time:
“The State, as conceived and realized by Fascism, is a spiritual and ethical entity for securing the political, juridical, and economic organization of the nation, an organization which in its origin and growth is a manifestation of the spirit. The State guarantees the internal and external safety of the country, but it also safeguards and transmits the spirit of the people, elaborated down the ages in its language, its customs, its faith. The State is not only the present; it is also the past and above all the future. Transcending the individual's brief spell of life, the State stands for the immanent conscience of the nation. The forms in which it finds expression change, but the need for it remains. The State educates the citizens to civism, makes them aware of their mission, urges them to unity; its justice harmonizes their divergent interests; it transmits to future generations the conquests of the mind in the fields of science, art, law, human solidarity; it leads men up from primitive tribal life to that highest manifestation of human power, imperial rule (www.worldfuturefund.org/...).”
There is no way that capitalism controls the state under fascism; on the contrary, the state controls capitalism (again evidence that capitalism and democracy are not wedded in perpetuity).
Point 5: Democratic Socialism is government in the public interest that regulates the excesses and abuses of capitalism.
To quote Margaret Thatcher, “No, No, No!” If we are in favour of socialism, then capitalism should be eliminated. Even if we are elected, our purpose is to push for socialism by demonstrating the limits of the capitalist economic system to provide for all and the limits of bourgeois democracy. So, this makes no sense to a socialist.
Certainly we support reforms within the capitalist economic system and we want to push bourgeois democracy as far as it can go, but our ultimate aim is not reforming capitalism but eliminating it and the exploitation that comes with it. So we can ameliorate exploitation but not eliminate it; even with democratic (as opposed to bureaucratic) trade unions, we cannot determine the methods of production in use, we cannot overturn the ownership of means of production and distribution; trade unions can only impact on the distribution between wages and profits. So we do not touch capitalist production, only capitalist distribution. That is desperately needed, but in and of itself, it does not create socialism. Trade unions help raise the consciousness of workers and serve as a point of organising for everyday struggles. At the most, and at their best, they can help workers understand the limits of the system and serve as points of organising towards a socialist system. This would hold unless Democratic Socialists have abandoned socialism itself, in which case why use the word? It has meaning …
Regulating the excesses and abuses of capitalism is social liberalism. This is William Beveridge and John Maynard Keynes and for that matter Franklin Delano Roosevelt (so to answer point 6; No FDR was not a democratic socialist). Social liberalism arises in the context of the failures of classical liberalism (free-market liberalism) to stem the tide of grotesque inequality and social misery brought about by the capitalist economic system. It doesn’t oppose the existence of capitalism, what it wants to do instead is ameliorate its excesses and provide a carrot to the working classes. It arises with the rise of socialist movements in the late 19th century and its policy prescriptions are done to prevent the rise of a socialist and then communist mass movements. Many on the hard left argue that the policies were forced on the ruling class in response to rising mass socialist and communist movements; the revolution in Russia scared them, the almost revolution in Germany (1919), waves of general strikes and revolutionary consciousness forced their hand.
It is not surprising that people confuse the two as the economic policies of social liberals and social democrats appear to be very similar. Both advocated a full employment policy, both used demand management to address economic instability. There are differences between the two and these relate more to the issue of inequality and how to address it. Some of these differences are clearly ideological, social liberalism talks about increasing opportunities for individuals and their social advancement, it enshrines individual liberty at the centre of the discussion. For social democrats, the aim is more collective, to address economic inequality and social justice, to shift the social perspective of what is acceptable under capitalism, and to thereby within the economic framework of capitalism to promote a more just capitalist system.
Keynesian and social democratic economic policies, adopted following the Great Depression and World War II, had a variable impact from country to country, but they were able to ameliorate the effects of crises. But the booms and busts arising naturally out of the system could never eliminated by such policies. What would have been crises were reduced to shocks and recessions, but a recovery of economic growth and profitability occurred reasonably quickly. What became obvious over time is that while these recoveries were recoveries of profitability, employment was not increasing in successive recoveries; these were ‘jobless recoveries.’
Keynes was a social liberal (he was not a member of the Labour party, he was a Liberal) and wanted to save capitalism from itself and to stabilise an inherently unstable economic system. Keynesian policies addressing the downturns relied on direct government stimulation of the economy through government investment in the private sector to stimulate job creation indirectly and stimulating effective demand and direct government job creation through creation of short-term services (see e.g., Works Progress Administration -- later called the Works Projects Administration, Civilian Works Administration, and the Civilian Conservation Corps in the United States) and a social safety net for the poor. The Works Progress Administration, Civil Works Administration, Civilian Conservation Corps, provided work for the unemployed and enabled the use of federal government funds for the building of infrastructure, parks and recreation projects and energy production.
On the other hand, Social Democratic policies (like those of the Attlee Labour government, even though their social welfare policy came from Beveridge, see Beveridge Report) did differ from Keynesian policies. They focused on narrowing income and wealth distribution. They also relied on nationalisation of key industries (e.g., energy, coal, iron and steel production) which created long-term employment and direct investment and control over these industries in the state sector and created a social welfare state which was not limited to assistance for the poor. The purpose of this was to put under national control the key industries to shift the nature of what and how things were produced. A sad irony which comes across clearly in Ken Loach’s film 1945 was that in many cases, the same people that were managers before the nationalisations remained in place in the new nationalised industries the old “the new boss, same as the old boss” … So, nationalisation doesn’t make something socialist if the state is under capitalist control and that is important, it is how those industries are run and for what purpose.
But there are real differences between the system introduced by Roosevelt and that introduced in Britain under Attlee’s Labour government. For example, in Britain, the National Health Service was not only meant to serve the poorest or the elderly (as compared to Medicaid or Medicare in the US), it was health care available to all. Keynesians do not support nationalisation of key industries for long-periods; while they certainly would argue that there are some things done as a government monopoly for efficiency reasons, nationalisation or socialisation is not an aim of the Keynesians. They recognise that full employment is impossible in a pure market economy, but they would not remove key industries from private control.
In both cases this led to the creation of the state sector providing goods and services that were deemed necessary for social needs (e.g., the National Health Service, the provision of social housing for the working class to replace the slums and tenements in Britain) and stimulating the economy and providing benefits and pensions for the working class.
Given the need for profit-maximization in the capitalist economics system, the provision of these services were to be too socially important to be tied to profit making criteria; they were either considered insufficiently profitable for the private sector due to long-term investments with low returns; essentially, if profit maximizing criteria is used, these services are not available to all. However, they were deemed to be of sufficient importance to society as a whole (e.g., education, healthcare) and also provided jobs and incomes following the Great Depression and WWII. Rather than relying on the private sector itself to provide services and production for social need, the state made changes and brought in new policies based upon a mixed-economy (public and private), a social welfare state (universal in Europe, geared towards the working class – employed and unemployed -- in the US).
The question that arises is how different are social democrats from social liberals? Does a state sector in and of itself mean there is socialism? Certainly not! There have been state enterprises and services in capitalism way before the introduction of Keynesian economic policies and social democratic policies in the post-war period. For example, the first fire insurance companies in Britain were created in the 17th century following the Great Fire and each insurance company had their own brigades. The national fire brigades in Britain were created due to the demands of fire insurance providers in the 19th century (en.wikipedia.org/...) as they could not afford the massive amount of pay outs that they had to pay. Clearly, this is not socialism.
The issue comes down to a basic point, what is the state sector doing and who does it benefit? Is it a question of creation for socially needed use values (e.g., health care, housing, guaranteed water consumption and access to energy for all, public libraries) or is it something needed to sustain the capitalist class (e.g., military, police)? Even something like education has a dual face: on the one hand having access to education helps working people and they have fought hard for it; on the other hand, the type of education and whose interests it serves is extremely relevant in this discussion. The education available to the working class is rather different than that available to the children of the ruling class both in terms of aims and results. But that does not mean we oppose universal education. However, when socialists use the term equality, it is not a limited type of equality that we are fighting for; it is not the “equality of opportunity” so beloved of social liberals which leaves in place economic inequality. That should be seen as a clear difference between social liberals and socialists.
This leads us to the issue which Luxemburg was criticising Bernstein in Reform or Revolution, that of a transformation to socialism through the aegis of parliamentary democracy. Can we create socialism by reforming capitalism? That is what the social democrats of her time argued and which is still argued social democrats today, that is, we can reform the capitalist system and produce a socialist system using the bourgeois state. Bernstein argued that this would be done gradually through fighting in trade unions, building cooperatives, and using the parliamentary system to address the inequality in capitalism. Since that is what revolutionary socialists were doing, the question is how these differ? Moreover, if the root of inequality in capitalism is private ownership of the means of production and distribution, then the question arises is how we can create socialism while leaving the means of production and distribution in private hands?
In opposition to Bernstein, Luxemburg argued that:
“It is contrary to history to represent work for reforms as a long-drawn out revolution and revolution as a condensed set of reforms. A social transformation and a legislative reform do not differ according to their duration but according to their content. […] That is why people who pronounce themselves in favour of the method of legislative reform in place of and in contradistinction to the conquest of political power and social revolution, do not really choose a more tranquil, calmer and slower road to the same goal, but a different goal. Instead of taking a stand for the establishment of a new society they take a stand for surface modification of the old society. […] Our program becomes not the realization of socialism, but the reform of capitalism: not the suppression of the system of wage labor, but the diminution of exploitation, that is, the suppression of the abuses of capitalism instead of the suppression of capitalism itself (Luxemburg, op cit, pp. 49-50).”
This brings us back to point 6; that FDR was a democratic socialist and it is that with which we conclude. This is perhaps the most bizarre point in the fb post as it describes a politician who was not a democratic socialist as a democratic socialist. How does something like this come about?
Is it because people just do not know what socialism actually is in the US? Is it because there is some deep confusion about the differences between social liberalism and socialism? Is it because Bernie Sanders (who is a democratic socialist) is actually advocating policies to address inequalities and unemployment that are very similar (if not the same) to those instituted by FDR? There is clearly some updating, equal opportunity to access free higher education (but that was a common liberal demand later, see the creation of CUNY and SUNY during Rockefeller’s administration for example). So, the revival of old liberal ideas and an attempt to address the catastrophe that paying to go to University and College have become.
“While some inequality is expected in any economy — and is perhaps even healthy — the U.S. today has inequalities allowing those at the top to amass (and keep) huge estates, while 22 percent of children live below the poverty line. Adults can work 40 hours a week and still not make enough to feed their families, while corporate executives in many of those same companies make much, much more (feelthebern.org/...).”
Just because Bernie is advocating similar policies to FDR doesn’t make FDR a democratic socialist. It means that the policies being advocated in this day and age in a period of neoliberalism where there has been widening gaps in wealth and income between the rich and the poor would be a massive improvement. It does not mean that we are creating socialism by any means (and socialists of all stripes have been fighting for reform for quite a long time), but it means that given the current circumstance it is necessary to actually address the destruction wrought by neoliberalism and trying to shift politics to the left. However, most socialists would never accept that inequality is healthy; that is something we can agree upon.
Certainly anyone on the left of centre should advocate reform of capitalist distribution, recovering and extending the social welfare state, putting in a progressive tax system, clamping down on tax havens, etc. Certainly there is a need for jobs that pay decent living wages and access to education for all. These are essential reforms that are needed, but they are not creating socialism. They are shifting consciousness that an alternative to the current situation is possible.
Is Bernie himself confused or is he fostering confusion? And does this matter?
Reading his page on inequality he doesn’t sound like a social democrat; he talks about opening up opportunity to all, he accepts inequality. These are social liberal talking points, he even talks about the middle class and how it is disappearing. Is he proposing anything to move outside of the capitalist system. No. But he is advocating obvious reforms in opposition to a neoliberal economic agenda which can better the lives of the majority of people in the US if instituted. In a capitalist system running under the control of neoliberal economic ideas, he represents a return to social liberalism. But this not a socialist agenda, it is not a revolution by any means contrary to Bernie’s assertions. But it is a call for needed reform in a system where reform is desperately needed. But there are others that are running for President that are advocating more significant reforms than Bernie’s and they should not be ignored either.
So, this is not socialism, this is not even democratic socialism (unless they have opted for social liberalism), FDR was not a democratic socialist, but reform is needed. Is Bernie’s reform enough? Not really, there is a hell of a lot that needs doing and honestly Roosevelt’s policies are insufficient but we need to start somewhere (that is not the end by any means). I never could imagine that a mainstream politician would use the “s” word in a positive manner in the US, but we need to be clear on what is being argued and what it means and what the working class will win out of all this and for that we need to understand where we are and ground things in the material world and history itself. As such, the struggle for socialism is ongoing and it is independent of Bernie’s politics itself.
Btw: One quick point before moving on, there was a “middle class” before FDR; it was composed of professional classes like bankers, lawyers, doctors, etc. What changed was the creation of a labour aristocracy which were able to win higher wages due to the linkage between wages and productivity but this was fought for and won by unions. The ruling class gives nothing without struggle and we need to remember that …
References:
Rosa Luxemburg (1900) Reform or Revolution, Pathfinder Press, 1973.