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How would socialism work?

Anti Capitalism - The Social Economy Alternative

By Chris Hill

Spokesman Books, 2002, £15

Reviewed by Per Olsson

THERE HAVE been many books produced on globalisation but, to paraphrase Karl Marx, many authors have interpreted global capitalism in various ways, the point, however, is to change it.

Chris Hill’s book is a well-documented critique of global capitalism in general and British capitalism in particular. Unlike many other anti-capitalist books it also argues for a socialist alternative, "bringing the world’s major corporations into public ownership" as it states in the introduction. It is a welcome contribution to the discussion on how a socialist society would tackle the problems facing workers and young people today.

The discussion on how socialism will work is as old as the workers’ movement, although it seemed to have died away in the 1990s when the collapse of Stalinism (a totalitarian one-party system ruled by a bureaucratic clique) was supposed to have delivered the final death knell to socialism and the planned economy.

But times are changing. Neo-liberalism and the increased exploitation following in the wake of globalisation have produced an anti-capitalist mood and the re-emergence of working class struggle. This, in turn, once again poses the questions: what movement and programme is needed to change capitalism? How will a socialist society be organised? No one, of course, can give a blueprint of how socialism is going to work. "Anti Capitalism is, in a way, a utopia", argues Chris. "Not in the sense that it is unrealistic, but because reality is unlikely to turn out this way. That does not matter. The important thing is that a practical alternative is shown. We can alter it on the way". By examining the workings of contemporary capitalism and its contradictions, analysing why Stalinism collapsed, and taking into account lessons drawn by socialists over the years, a glimpse can be had of how a socialist economy would work.

The first part of the book looks at the present situation in the world and the global effects of production for profit, not need. Capitalism is based upon production for profit – the rate of return. The restless never-ending process of profit-making alone is what the capitalist aims at, wrote Marx in the first volume of Capital. Backed by a solid display of facts Chris concludes that "the global triumph of capitalism is more mirage than reality" (p27). The reasons for marginalisation, mass poverty and growing inequality are that "profit maximisation and the market dictate" (page 28).

The decline of British capitalism stands out as an example of modern capitalism’s failure to provide a decent life for all. The book gives the real picture of Britain today. A majority of the population may be better off, but why are people not happier than before? Twenty years of anti-working class and pro-market policies, in the context of economic stagnation and de-industrialisation, have meant that "the numbers facing relative poverty, by being forced to live on less than half the average wage, has increased enormously. Evidence suggests that it is precisely relative poverty that causes the most psychological damage... Even the majority who have experienced growing purchasing power as consumers face a shrinking welfare state, weakening social bonds and unachievable expectations. Added to this can be a marked decline in a range of quality of life measures" (p98). Job insecurity, stress related illness and alienation now affect huge sections of the population in Tony Blair’s ‘cool Britannia’.

It is easy then to agree with every word written in the first part of the book, which argues very effectively the general case for socialism. However, in dealing with why the economies in the former USSR and Eastern Europe stagnated in the 1970s and went into a black hole at the end of 1980s, Chris jumps to the conclusion that: "An economy can be socially owned and directed and no longer operate to the rules of the profit system, but still be a market system... By studying the experiences of the bureaucratically planned economies, I hope to show that the task of modern day socialists is to socialise the market, not create a democratic system of allocation" (p152-153).

"Were the problems of the Soviet type economies a result of central planning itself", he asks, "or the lack democracy within it? Workers’ control and the freedom to criticise would undoubtedly have removed the worst excesses, but the central failure would remain that central planning removes the whip of the market and takes decision-making powers away from those directly involved in production. It removes the incentive to serve the customer, to invest, to do a good job and so forth... To accept the truths within the philosophy of Thatcher and her ilk, is not to agree with their political conclusions" (pp156-157).

A couple of sentences later Chris claims that supporting "public ownership is not necessarily to support central planning; market mechanisms can be incorporated into an economy that is socially controlled".

Marx accepted that the ‘market mechanism’ could be forced on a socialist society at its early stage, "just as it emerges from capitalist society: which is thus in every respect, economically, morally and intellectually, still stamped with the birth marks of the old society from whose womb it emerges". (Critique of the Gotha Programme, 1875) But is it not the very essence of socialism that the system is based upon a conscious and democratic planning of production, made possible by the abolition of private property of the means of the production? That co-operation and planning would replace the anarchy of the market?

Waste, destruction and exploitation are the ultimate outcomes of the market economy and production for profit. The market develops and ‘regulates’ the economy through booms and slumps, with an inevitable tendency towards overproduction and overcapacity. As society moves towards socialism goods and services become directly produced to meet needs, not indirectly for a market based on an exchange to realise profit. At the early stage of socialism there will, of course, still be elements of capitalism left. Money will have to be used for a time but, unlike before, the material and human resources are there for a rapid advance towards a society – or more correctly, a world – based on the socialist principle: ‘From each according to his or her ability, to each according to their needs’.

It was not central planning as such that brought Stalinism to its knees. It was the absence of democracy, elected bodies and accountability, the prerequisites for a planned economy. The more the economies developed, the more acute became the crisis. In response, the bureaucracies themselves started to introduce ‘market-reforms’ which, in turn, accelerated the process of crisis and disintegration.

Leon Trotsky was the first to explain how the ulcer of bureaucratism and totalitarianism worsens "the more the economy runs into the problem of quality, which slips out of the hands of a bureaucracy like a shadow. The Soviet products are as though branded with the grey label of indifference. Under a nationalised economy, quality demands a democracy of producers and consumers, freedom of criticism and initiative – conditions incompatible with a totalitarian regime of fear, lies and flattery".

"Behind the question of quality stands a more complicated and grandiose problem which may be comprised in the concept of independent, technical and cultural creation. No new values can be created where a free conflict of ideas is impossible... Soviet democracy is not the demand of an abstract policy, still less an abstract moral. It has become a life-and-death need". (Revolution Betrayed, p247)

At the centre of the struggle conducted by Trotsky and the Left Opposition was the restoration of workers’ democracy based on elected representatives subject to the right of recall and with officials’ wages brought down to the level of an average worker. The aim was "the gradual involvement of the entire working population without exception in the work of state administration and the systematic struggle for equality". Workers’ or socialist democracy was a condition for the development towards socialism.

A planned economy requires the active participation of the mass of the working class to implement, check, regulate and make changes to the plan. In the absence of this democratic involvement the bureaucracy inevitably becomes an absolute fetter on further progress. The process of stagnation and decline that started to set in during the 1970s reflected the unsolvable contradictions between the nationalised economy and bureaucratic dictatorship.

In one chapter, Chris Hill singles out Yugoslavia under the Stalinist dictator Tito as a country whose ‘self-managed economy’ was far "from ideal but gives us some clues as to how a socialist economy might be fashioned" (p175). Yet it is difficult to see how this can be the case. Yugoslavia’s combination of a one-party regime at the top, so-called ‘self-management’ in the workplaces (which was in fact very much one-man management) and ‘market principles’, was actually a disastrous cocktail, leading to growing inequality within the population and between the regions, fragmentation of the Yugoslavian economy and national division. On top of that, there existed high unemployment, inflation and a debt overhang. What is seldom mentioned is that the youth revolt in Yugoslavia in 1968, inspired by movements elsewhere, was a protest against growing inequality and what were regarded as ‘capitalist reforms’ by Tito’s regime.

The result of ‘the Yugoslav road’, according to a report by the Scandinavian based Transnational Foundation for Peace and Future Research, was that "Yugoslavia in the 1970s, due to de-centralisation and fragmentation, became the Eastern European country with least possibilities of cushioning the effects of market forces". (September 1992) Neither the distorted form of central planning in the USSR nor Yugoslavian ‘market socialism’ is an example to follow.

In the some parts of the book Chris seems to modify his position regarding the market, stressing the need for democratic planning. He admits that "to grasp the nature of competition [between companies] in a socialised economy is not easy" (p223). Yet it does not become easier when he repeatedly uses the term ‘profit’, because a socialist economy would not be profit driven. The economy would produce a surplus which would become a common fund under the control of democratically elected bodies. They would decide how the money should be spent. This is not profit out of unpaid labour distributed and used by individuals or groups who own the means of production. As soon as private ownership of the means of production is abolished and the economy becomes production to satisfy needs determined by conscious decisions, capitalism has ceased to exist.

What is left over from capitalism will wither away, including the use of money. This will not happen overnight, but as the planned economy starts to take off and society becomes truly democratic it could be achieved over a generation. The expansion of productive forces today has not only made the world ripe for socialism but over-ripe, which was certainly not the case in Russia in the 1920s. The world economy is now nearly 18 times as large as it was a century ago. Income per person, meanwhile, increased just over fourfold in the 20th century. The resources are already there to guarantee everyone a decent life.

Anti Capitalism argues that the market is a better way to distribute and reallocate resources, as long as market forces are checked and subordinated to a plan. Socialism or a socialised economy "will change the nature of the market" (p267). But a development towards socialism and a classless society will negate the capitalist market and its distribution of goods and services according to people’s income.

A socialist economy would for the first time give people, as producers and users, the chance to control every step of production, take initiatives and experiment without being strangled by profit-driven competition. This, together with research and testing, would make possible an economy based on equality and in harmony with nature. Why would people produce poor quality goods when they are producing to meet their own (and others) needs? Chris, however, insists that the market is the only instrument that can ensure quality and efficiently allocate resources. But with the technological level already existing, including the ability to widely spread information, it has become much easier to plan the economy.

Chris Hill’s view on what he calls an ‘orthodox Marxist’ approach to the nature of a socialist society is one-sided. It is not entirely correct to say that "Marx gave little consideration to the subject", although Marx was hesitant to describe the shape of a socialist society. Why write ‘recipes for the cook-shops of the future?’ he once commented. Nonetheless, The Civil War in France, Critique of the Gotha Programme, and Anti-Dühring (written by Friedrich Engels in collaboration with Marx), deal with many of the questions and problems that will face society as it moves towards socialism, while Trotsky’s Revolution Betrayed directly addresses the transitional economy and the need for democratic planning. According to Chris, however, "the orthodox position is as follows: the economy can be likened to a giant corporation. The corporation will decide how much it is going to produce in a year and organise its internal systems to achieve that production". Reality is, of course, more complex than that. But the point is, if multinational companies can draw up a plan in their own interests, why should a society based on socialist democracy not be able to work out a plan that serves the needs of working people?


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