Michael Harrington

What Socialists Would Do in America If They Could

L et's pose a far-reaching question, without socialist alternative. It is with this thought in pretending to answer it fully. What would mind that I undertake an attempt to define a happen in America if we were able to make it socialist policy for the (still unforeseeable) come to pass? How would we move beyond middle distance. First, I will try to outline the welfare state? What measures would be some of the general problems raised by such taken on the far side of liberal reform, yet well an imaginative definition of the future. Then, short of utopia? there will be a brief sketch of that possible These questions are not academic. In socialist future. And finally, I will try to relate Europe today there are democratic socialist these speculations to the immediate present, mass parties that are putting them on the since I am convinced that projecting what political agenda. In America there is, of should be must help us, here and now, in de- course, no major socialist movement, yet. But vising what can be. this society is more and more running up against the inherent limits of the welfare state. I: Some General Problems We can no longer live with the happy as- sumptions of '60s liberalism—that an endless, noninflationary growth would not only allow Capitalism is dying. It will not, however, us to finance social justice but to profit from it disappear on a given day, or in a given month as well. So, for instance, a Democratic presi- or even year. Its demise will take place as a his- dent is told by key economic advisers that toric process that could lead to democratic so- workers will have to bear the consequences of cialism—or to a new kind of collectivist and breathing cotton dust because industry authoritarian society. And one of the key "cannot afford" the cost of protecting their problems of locating socialism in this process lungs. is that it must emerge in a society that is not In the United States, at present, the capitalist or socialist but something in- dominant reaction to such structural between, with elements of both. problems is to sound retreat. This may well Let me now hastily sketch in a few details to strike cruelly at the poor, the minorities, support the sweeping statements I have just women, and all other vulnerable people. But made. ultimately the forced march to the rear will The way capitalism ends defines the terrain not work. For there are limits to the ability of on which socialism becomes possible.* Pres- the nation to impose the social costs of late- ent-day capitalism is more and more collec- capitalist production upon those least able to tivist, that is, it increasingly makes its eco- defend themselves. nomic decisions politically. This happens So I baldly assert that old-fashioned reaction is not, in the long run, a feasible way *In what follows, I have summarized the arguments of dealing with our problems. There will detailed and documented in The Twilight of Capitalism. either be a new-fashioned reaction—sophis- Readers who seek proof for my various assertions will, I ticated, modern, planned—or there will be a hope, find it there.

440 because the inherent tendencies of the system vestment, "trickle down" becomes the subvert the always imperfect "free markets" of ideology of late capitalism. Thus the political an earlier age and because, in any case, those representatives of the rich are now demand- markets could not organize a system of such ing—in the name of the common good—that interdependent complexity. Thus far, this further tax privileges should be conferred on process of collectivization within capitalism the wealthy, while government-spending for has been dominated by corporate priorities, everyone else is curtailed. even when the collectivizers have been lib- This corporate collectivism is not, however, erals, trade unionists, or socialists. a stable system—as anyone who has lived in This last trend is not the result of a conspir- the '70s can testify. The private, and anti- acy on the right or of betrayals on the left. It is social, priorities that inform public action are a consequence of the fact that, as Claus Offe becoming more and more destructive. The put it, the capitalist state is not itself a anticapitalist measures used to shore up capitalist. The economic and political health capitalism create a crisis of legitimacy. And of the government thus becomes dependent eventually, the contradictions of "private on investment decisions made in private socialization" will require basic structural boardrooms. Those decisions are critical de- changes. Those could move in the direction of terminants of the Gross National Product, the a new class society, a bureaucratic sort of col- level of employment, and indeed of the gov- lectivism, or toward a new communitarian- ernment's own revenues. The rulers of the ism, a democratic socialism. welfare state therefore must adapt them- This summary analysis points to a key selves to corporate priorities—"win business assumption of all that follows and helps to confidence." define a central problem for socialists seeking Those corporate priorities center on the to transcend the welfare state. Socialism will maximizing of profits. This, obviously, is no have to define itself in the course of a contra- longer done in an entrepreneurial or "robber- dictory transitional period in which elements baron" way. The nonowning manager has a of both traditional capitalism and corporate much more sophisticated calculus and, collectivism will coexist with, and threaten, corporate collectivist that he is, takes political socialist innovations. and even social factors into account. Yet, even in this new guise capitalism remains danger- t is foolish to imagine a day, a month, or a ously and fundamentally antisocial. Capacity year when society suddenly "leaps" from is expanded in good times as if there were no capitalism to socialism; the very complexity tomorrow—or more precisely, as if the ability of modern society precludes that. Where, in of the society to consume were not limited by some brief period of time, will one suddenly the very income structure that capitalist pro- find a socialist cadre capable of taking over duction enforces. In consequence, there are from the capitalist managers? How can new periodic crises. At the same time, the growing psychologies, and new ethics, be created social costs of the system are imposed upon quickly? Moreover, one must have a due those least able to pay—a fact cruelly visible respect for socialist ignorance. We know the in the devastated cities of the Northeast and evils of the old order in great detail, but we do industrial Middle West. Markets are rigged not have all the plans for the new order in our with increasing expertise, which is one source hip pocket. Even if we did, that would be of of inflation in the midst of recession. Inequal- small help since a socialist society must be ity persists because, under capitalism, private built democratically and cannot be pro- wealth, personal and corporate, is the main claimed from on high. source of new investment funds. After all, socialists do not simply propose a The welfare state reinforces these trends. new economy. We realize that there must be a Since the health of the entire economy is seen transformation of culture, of individual and to depend on the will of those who control in- collective values, if the new structures are to

441 matter. As Antonio Gramsci rightly insisted, co-optation does not arise, primarily because socialism is the work of an epoch and it has to of the personal corruption of leaders or bu- do with an entire society, not just with reaucrats; it is a structural tendency of the property forms or tax laws. society. But that fact creates enormous problems. So in imagining socialism as it would How, for instance, does one avoid the co-op- emerge just the other side of the welfare state, tation of partial measures of socialization in the imagination must be realistic. How does an economy in which corporate collectivism one begin to create a new society in a world in retains considerable power? In a recent book, which there will be capitalist striving for gain, Serge Christophe Kolm analyzed what this socialist egalitarianism, and "communist" meant in the Chile of Unidad Popular. One of free goods in the libertarian sense of the word the first measures of the Allende government as used by Marx in his Critique of the Gotha was to increase enormously the wages of the Program. Under such difficult conditions, poor while holding down prices. This meant, how is it possible to transfer the control of however, a reduction in the profits of the basic investment decisions from private private sector—profits that had been the tra- boardrooms to the democratic process? ditional source of new investment funds. At In facing up to these issues within the first, the problem was not too serious since the framework of a brief essay, much that is wage policy set off a consumer boom. But enormously important will be placed in pa- eventually, there occurred a slowdown and rentheses. I will deal with a single developed the corporations had to borrow, thereby set- society and ignore the international implica- ting into motion the inflationary spiral. The tions of socialism that are, in other contexts, Nixon administration, the CIA, the copper decisive. I will posit the existence of a political companies, the world financial community movement capable of taking the lead in im- (including the World Bank), all did what they plementing the proposals I make, and I will could to make matters worse. focus on economic and social structures and Still, the relevant point here is that Chile present my illustrations as evocative symbols demonstrates the inherent difficulties in in- of a possible future, and not at all as a fully troducing socialist measures in an economy worked-out program. still manifesting strong capitalist tendencies. So, alas, does the Tennessee Valley Author- ity. From its inception under the New Deal until the early '50s, the TVA managed to II: Speculations and Possibilities control floods and generate power in a way that enormously stimulated the region's econ- omy. But from the early '50s on, this public F irst, socialism proposes a national plan- property behaved more and more in a classic ning process in which all the people would private way. It moved from hydropower to have an effective right to participate. coal and in the process was a major initiator of Through a political process, the society the destructive strip-mining of Appalachia. would consider its basic options. Put in Indeed, it is possible to make a sad generali- American terms, the Administration would zation: most existing nationalized enterprises outline the needs of the next period and the in the world behave about as badly as private resources available to meet them. Since the enterprises. When one adds that those na- latter would not be infinite, there would have tionalized companies constitute, more often to be proposed "trade-offs." A crash program than not, the collectivization of private losses for the improvement of health might limit the and inefficiencies one gets a sense of the growth of education; the decision to take the enormous difficulties of a transition toward benefits of increased productivity in the form socialism within the contradictory world of of more leisure time would mean that the late capitalism. In that setting, the danger of same productivity could not be spent on more

442 consumer goods. This last point is particu- computers; or it could be given the right to larly important because one would hope that, have the official bureaucracy work out the as socialist consciousness would rise, so details of its counterplan(s). Within such a would the tendency toward the decommerci- framework, when the Administration and the alization of life—toward communal, non- Congress would go to the various regions and commodity forms of consumption, like neigh- ask for popular inputs, there would not be the borhood centers or public theaters. pro forma hearings that so often prevail Under such conditions there obviously today. The critics would be technically as well would be debates over priorities. These would prepared as the establishment. be resolved by a democratic process in which Second, the political process itself should parties would compete with one another over be democratized. Here, some of the West conflicting programs. That, however, would European countries now are far ahead of the not mean a mere extension of present-day United States. All television time available to "pluralist" theory, which ignores the way candidates for federal office should be formal democratic rights, precious as they allocated according to a democratic formula. are, can be subverted by economic and social And each significant group should either get inequalities. In the period of transition, there subsidies for its own press, or else—as is would not simply be a corporate sector striv- sometimes the case in this country with ing to impose its values upon the polity; the intraunion oppositions in campaign peri- government itself would obviously be (and ods—have legally guaranteed access to the already is) a center of power. For democracy print media. to work in such a context, it would have to be Let us assume, then, that truly democratic much more profound and real than it is today. procedures could be established within the Let us imagine two quite unutopian aspects of planning process, given a little imagination such a deepening of democracy. and a mass socialist political movement. First, if the Administration or even the Ad- What of the content of the plan(s)? How ministration and the major opposition have would it (or they) be rationally debated and an effective monopoly on the machinery and worked out? How would it (or they) be personnel of the planning process, then the implemented democratically without an formal right to challenge the plan becomes enormous proliferation of bureaucracy? almost empty of content. In French "indica- It would be of utmost importance that tive planning," for instance, the workers are everyone in the planning debates know the legally guaranteed representation at every real costs of all the proposals. It was thus not level of the system. But they, unlike business an accident that, on the few occasions when he and government, do not have the expert staff, explicitly referred to the socialist future, the computers, the "knowledge technology" Marx spoke of the need for careful bookkeep- so important in a modern society. Therefore, ing. Like Max Weber, he regarded bookkeep- they normally don't bother to participate in ing as one of the great accomplishments of the the exercise. capitalist era, and then added that it would be If, then, planning is to be a critical even more necessary under socialism precisely instrument of the assertion of popular control because production would be planned. And it over the investment process, there must be is, of course, one of the central themes in a effective provision for democratic participa- contemporary indictment of late capitalism tion. Any significant group of people—much that this system falsifies prices by imposing its larger than a coffee klatsch, much smaller social costs on helpless people and/or the than a majority—should be given the means government. to challenge the official plan(s). This could be This point raises a technical question that done in at least two ways. Such a group could should at least be noted before moving on to a be given the funds to hire its own experts and basic issue. In the absence of capitalist-factor

443 markets, can society rationally compute dividend will not be a "profit." It will be efficient prices? In a famous attack on appropriated by the society and allocated socialism Ludwig von Mises argued that it after democratic decision-making; it will not would not be possible to do so. He was go to individuals in the form of wealth or elite effectively answered by Oskar Lange, A. P. power, as is now the case. Second, although a Lerner, and Joseph Schumpeter (the latter socialist society will have to create a surplus summarizes the debate in Capitalism, and will want to measure the return on Socialism, and Democracy). To be sure, I do investments as precisely as possible, the not accept many of the overly centralist resulting "interest rate" will be an accounting assumptions of their imagined solutions, yet device and not a flow of income to private their central point about rational prices under owners. Third, socialist accounting will socialism is persuasive. Schumpeter, brilliant compute social cost and social benefit in a way Austrian conservative, held that socialist that capitalism, for systemic reasons, does not prices would be set by marginal costs; the late and cannot do. For instance, mainstream Anthony Crosland, a British Fabian, noted economists today defend the ruin of the that only under socialism would such Northeastern and Middle Western cities as an capitalist theories work; and some of the inevitable—tolerable if unfortunate—conse- economists grouped around Francois quence of making a more "efficient" use of Mitterand, like Philipe Brachet, have gone resources. But efficiency, it must be under- into detail as to how this might be done in stood, is not a mathematical absolute obeyed present-day France. So I will assume that by technocrats; it is always defined in relation serious debate can take place on the basis of to the interests of different groups and indi- accurate information about "trade-offs." viduals. Under capitalism this is done behind But does this mean, then, that socialism will a veil of mystifying rationalization and in the operate according to the criterion of profit? interests of a minority. Under socialism, the And if so, what of the claim that it entails term will be democratically defined in public production for use instead of profit? debate in relation to the needs of the majority. Profit, I would argue on the basis of historical evidence, is the specific form that the surplus from production takes in, and only in, capitalism. Such a surplus exists in all but the most primitive of subsistence societies; Let us assume, then, that the democratic it will certainly have to exist under socialism. planning process has determined the basic Under capitalism, the surplus is appropriated priorities of the society. How will they be by the owners and managers of the means of implemented? production, and it is both a title to wealth and There are two existing models, neither of to the right to make basic investment deci- them applicable to democratic socialism. In sions about the future of the economy. In pre- the Soviet Union and other Communist capitalist systems, the surplus was appropri- countries, there is centralized command ated by political and ideological, not planning with the bureaucracy setting economic, means, i.e., on the basis of "God's thousands of prices and production targets. will" as backed by the human sword. The system is politically totalitarian and Under socialism, there will be a social economically inefficient—two facts that are dividend to provide for those who do not closely related to one another. I therefore (usually because they cannot) work for reject this model because it does not satisfy depreciation and for expansion (on the last basic socialist goals. The other model, that of count, it should be remembered that I am indicative planning, is also not the way to speaking of the socialist transition when there democratic socialism, but it is worth examin- will be many urgent needs for new investment, ing more closely for a moment since it both at home and abroad). But that social highlights one of the critical differences

444 between liberalism (in the American sense of In any case, we have come to a fundamental that term) and socialism. divide, one that marks off socialism from all Here is how Stephen S. Cohen described variants of capitalist reform. The latter French indicative planning in a 1977 paper for believed that liberal goals can be limited to a the Joint Economic Committee. There is, he late-capitalist economic and social structure, says, an economic "concert" achieved without while socialists define that structure as the the participation of the unions, consumers, or core of the problem. What, then, is the small businessmen. socialist alternative? How will socialists The economic concert is based on a simple actually implement the lovely choices made in political ideology and defines a simple political the democratic planning process? role for planning. The state needs a high Not by command of the Soviet, or any performance economy. This has come to mean a other, model. However, in rejecting indicative fundamental commitment by the state to the planning within a late-capitalist society that is expansion and modernization of the big economically and politically dominated by business sector. Big business needs the active cooperation of the state. It needs the state to corporate power, one is not ruling out maintain a high level of effective demand and to indicative planning in an utterly different socialize many of its costs. It also needs the aid milieu. For in imagining a socialist transition of the state in managing its own affairs. The from capitalism toward the good society, I overarching organization provided by the state hypothesize two different motivations for helps industry to regulate competitive forces. In working to fulfill the democratic plan and see brief, big business finds that it needs a them as operating within three different kinds cooperative economy and it needs the state to of enterprises. organize that cooperation. Most modern The first motive is individual gain. The goal capitalist nations are doing some variant of the of socialism, clearly, is to transcend greed as state-big business partnership model, but far as is possible, and to act upon the basis of nowhere with such clarity and enthusiasm as in France. "to each according to his/her need, from each according to his/her ability." This lies in the The French planners assume that private distance, although approximations of it corporate priorities are the pivot upon which should begin on the first day of socialist all decisions turn and that it is, therefore, the transition. But as socialism emerges from role of the plan to facilitate, and sometimes capitalism, there would be differentials in humanize, the work of big business in the wages within an enterprise and even differen- name of the common good. This, it will be tials between enterprises within the same noted, is the tacit assumption of much of industry. At the same time, there would be a American liberalism. However, it should be progressive, egalitarian tax program to emphasized that in technocratic, dirigiste reduce radically the outrageous spread France, what is implicit in America has between executive and worker pay in achieved the status of an ideology. I insist capitalism today. Managers receiving hun- upon this point for a political reason: the dreds of thousands a year—and setting their American liberals (including labor liberals) compensation for themselves—are not being who unconsciously accept the corporate paid wages, but if I may speak in an old yet premise are often also hostile to corporations useful language, they are appropriating and in the future could become socialist. This surplus value in the guise of wages. is not true of a principled French technocrat The wage structure, then, would be infinite- or, rather, the conversion required in the ly more progressive than it is within second case is much more profound. One of capitalism and would follow the Biblical the hopeful aspects of American liberalism is injunction by exalting the lowly and making its contradictory character. plain the high ones. Yet, there would be

445 differentials related to skill and output and libertarian sense) in that an increasing part of these would be tolerated, precisely as an people's incomes would take the form of incentive for individuals and enterprises to "free" goods, i.e., collectively paid goods and produce more efficiently. Moreover, the services, such as health, education, transpor- differentials between enterprises, even though tation. So a part of the wage would be carefully limited, would be the basis of a received collectively, as a social dividend from certain competition between them. It would heightened productivity. obviously be preferable if moral incentives Far-fetched? Not at all. Right now, the alone would guarantee efficient cooperation socialist parties of Sweden and Holland are with the planned priorities. But in this moving in the direction of such collective transitional stage, there is simply no realistic payment, proposing that corporations pay a reason to suppose that this would be the case. portion of their tax in stock placed in a The second major motivation would be worker-controlled mutual fund. And one of moral. It would not suffice, in and of itself; the reasons for this development is, precisely, but it is absolutely essential as the growing to give workers a communal stake in edge of socialist possibility. The point, productivity. This is not, it should be noted, a however, is not self-evident. In the United traditional stock-sharing device where the States moral incentives have played a role individual workers get shares in lieu of certain during wartime, but only then. Moreover, the wage increases. In Sweden, this is the American labor movement has been par- conservative alternative. It is a proposal for ticularly hostile to "work enrichment" the social sharing of productivity gains. schemes, regarding them as artfully designed One last point on wage structure. The programs to get more work out of fewer capitalist component would be settled by people. More often than not, this judgment collective bargaining negotiations. That issue, has been accurate. Why, then, assume that and the more general question of working American workers as they are will be moved conditions, would provide one of the bases for to change their attitudes in a socialist transi- the continuing existence of a trade-union tion? movement. The socialist and "communist" Surely, it must be obvious—not simply the components would be determined by a fact, but a fact plain for one and all to see— political process in which unions, parties, and that the savings of productivity will primarily other voluntary institutions would be in- go to the workers who make them or to the volved. Here again, I am positing the necessity society as a whole. If they go to the workers, of conflict among organizations that would then old-fashioned capitalist psychology interpret the common good in terms of the would explain why this incentive would work. particular good of different strata of the But what does it mean to say that the gains citizenry. would go to the "society"? Why would that So individuals would be motivated to motivate the average worker? The answer to cooperate in the work of the plan on the basis this question is best given in the form of a of capitalist, socialist, and "communist" generalization about the socialist wage in a incentives. What about enterprises? Given the transition period. previous analysis, I assume that there will be Wage, then, will be composed of three three main types of economic organization: different elements (I borrow some insights socially owned; privately owned large enter- from Serge Christophe Kolm). It would be prises; and cooperatives. There will also be a capitalist in the sense that there would be stratum of privately owned small businesses, differentials based on performance; it would but these will function primarily in the area of be socialist in that an egalitarian tax policy consumer markets and are not likely to play a would severely limit the differentials and' decisive role in fulfilling the society's work toward a redistribution of income and democratic priorities for production. wealth; it would be "communist" (in the In all three of the major sectors there will be

446 elected worker representation at every level. slav experience shows (and the authoritarian This is not merely desirable as a way of character of that country's political structure dealing with alienation. It is a practical neces- is not relevant to this point), for worker- sity if the sense of communal solidarity—the controlled enterprises to develop a collective socialist motive—is to grow. And that, in egotism. The Yugoslays, for instance, have turn, increases productivity. It is also essential found it difficult to convince the more affluent to the antibureaucratic aspect of the socialist collectives to invest their surplus in high-risk program, institutionalizing as many local, underdeveloped areas. So workers' control is face-to-face controls on authority as is possi- not a panacea, and it will require democratic ble. political checks on the part of the society as a So far, this may sound like the socialist whole. It even demands the redesign of version of apple pie. It is much more technology and economic organization, in the problematic—and important—than that. postindustrial as well as in the industrial Contemporary capitalist technology, Harry sectors. Braverman persuasively argues in Labor and Monopoly Capital, did not evolve in a value- free, technical way. It had, and has, social and even ideological functions. Specifically, it is Workers' control will function in all the not an accident that this technology worked at enterprises of the society—but those enter- every point to expropriate the skills of the prises will have different structures. workers, to dispossess them of all decision- • First, there is the social property sector. I making, and to try to turn out automatons. say social, not nationalized, property for a Therefore, as a technology incarnating reason. Any fool or charlatan or dictator can capitalist values is extremely difficult to run nationalize a plant. In and of itself, on a socialist basis, one of the goals of the nationalization is neither good nor bad. Or, transition will be to build different kinds of rather, to the degree that nationalization factories—and offices. suggests centralized state ownership, it is bad. I make the last point about offices for an It is not necessary to argue the almost self- important purpose. Most socialist language evident point that such ownership is political- and imagining is focused in terms of plants. ly hostile to democracy and economically But what about the "post-industrial society"? inefficient. "Social property" stresses both the Without going into all the complexities of that direct participation of the actual producers question, it should be noted that a major part and democratic control by society rather than of the "tertiary sector" is made up of service administrative control by bureaucrats. workers in large, anonymous, factorylike It is painfully obvious that it is simpler to settings, e.g., typing pools, supermarkets, the stitch together such harmonious formulas middling and lower levels of the information than to realize them in practice. As John industry. Moreover, the skilled and educated Kenneth Galbraith emphasized in The New reaches of this sector—engineering, Industrial State, elected bodies either lack the universities—often in themselves require competence to oversee the managers of public collegiality. So I am not projecting workers' property or, if they acquire that competence, control as an exclusively blue-collar proposal. they create a second bureaucracy to regulate But then neither can workers' control the first. Galbraith was thinking of existing operate as an absolute. In the socialist nationalizations, which do not involve transition, as many functions as possible will workers' control, but still his point is a be located on the most immediate level, where substantial one As I mentioned earlier, in the the majority of the people work. But in- very first stages of the transition it will be dividual enterprises or industries cannot be difficult to impose participatory socialist given the right to veto the democratic plans of values upon an antiparticipatory capitalist the entire nation. It is possible, as the Yugo- technology. Therefore, I do not see socializa-

447 tion as an act, a law, or a charter, but as a Social property would also be a key element process in which democratic forces will have in a full-employment policy that would to struggle during an entire historic period to emphasize the growth of all regions rather give real content to their legal rights. than a competitive struggle between regions In this same spirit, social property will as in the current "beggar thy neighbor" situa- obviously not be operated as departments of tion in the United States. Instead of provid- the state run by civil servants. They should be ing private corporations with multimillion- constituted on the model of the TVA, as (and billion-) dollar bribes to go into the authorities with relative independence but South Bronx or Appalachia—which are ultimate responsibility to the elected represen- always collected and often dishonored— tatives of the people. Another check upon locating new and vital social industries in such their power will be economic. There will be a areas would do that job much more directly multiplicity of such authorities within each and efficiently. industry. The size of American enterprises, as • The second tier of economic activity Robert Lekachman has pointed out, is not would be a profoundly modified private determined by the technical requirements of sector. "economies of scale" but is the result of the You cannot, I have stressed, socialize an drive of major corporations to control economy overnight. It is possible to markets, politics, and consumer taste. Within nationalize the "commanding heights" at a a framework of democratic planning there stroke, but that would have the negative would not be an antitrust utopia of Adam consequences I have already described. So we Smithian competition among tiny economic must anticipate a corporate sector in the units in a perfect market, but there could be a socialist transition. But if that is a necessary rational policy on corporate size and a fact of life it is also a problematic one. A consequent decentralization of economic major private company, Oskar Lange argued power. in one of his classic discussions, is not likely to With certain carefully defined exceptions, behave responsibly if it operates within a social enterprises would be required to pay socialist political environment and feels that it their own way and return a surplus for is working, so to speak, on death row. Part of depreciation, new investment, and the social that problem might be met because of dividend. Obviously, there would be cases developments that postdate Lange's fears: the when, in full consciousness of the cost, society emergence of a Galbraithian "technostruc- would want to continue subsidizing produc- ture" that, except at the very summit, will hire tion for "noneconomic" reasons (in the out to anybody as long as the pay is relatively callous, capitalist sense). That, it should be good. But precisely that summit is the noted, is the case in most nationalized controlling factor in today's economic world. industries today, and although it might also This is why workers' control and public be true under socialism, it would hardly be the participation in the corporate structure are so dominant model. The point would be to important. The private title to corporate locate social property in surplus-yielding wealth and a limited profit have to be activities. For example, the present private recognized; but many of the existing functions energy industry is completely unwilling to of corporate power can be socialized. For develop alternative sources of energy without example, the worker and public represen- huge government subsidies. If it gets that tatives on the board of directors should money from Washington it will surely develop routinely reveal all company secrets to the a socially inappropriate technology. This, public. Secret debate and decision-making therefore, would be a prime area for society to with regard to plant location, pricing, new invest in socially oriented research and products, hiring and firing policy, etc. are development, which it would implement today considered to be "managerial through socially owned enterprises. prerogatives." In the private sector during a

448 socialist transition such matters would be made as transparent as possible and would be The goods and services of these three tiers of subjected to social controls within the production would be distributed in two ways. planning process. There would be free goods and services Still, a transitional socialism would have to collectively paid for by various levels of tolerate private profits from this sector. One government. How would one control waste of the reasons why people would invest in and overuse in this area? A New York Daily such undertaking would be in order to make News dispatch on the 13th anniversary of money. (I speak here of investment in new National Health in Great Britain suggests that physical assets—real investment—not of the the problem itself might be somewhat shuffling and dealing of stock certificates in exaggerated. Not only is British medicine the great gambling house on Wall Street, a superior in some important indices to its parasitic, near functionless waste of resources American counterpart, it is also less costly as a that could simply be abolished.) The percentage of GNP and has a lower rate of deleterious social consequences of the con- patient utilization. Even so, there obviously tinuing existence of profit would, however, be should be some checks on the provision of free moderated by a highly progressive tax policy goods and services. An idea that is already and, above all, an inheritance law that would partly at work in the United States might be effectively end the possibility of transferring generalized well beyond its present use. large concentrations of wealth from genera- Health maintenance organizations now tion unto generation. By now, the Ford family provide lump-sum payments for the care of an has been more than compensated for can- entire group. If the providers can maintain set tankerous old Henry's genius. standards but reduce costs, they are able to get • Finally, there would be a major some of the savings from their own produc- cooperative sector, an idea much stressed in tivity. This principle might be tried out in 19th-century socialism. other areas, e.g., in transportation. In the United States, cooperatives account Second, a transitional socialist society for less than 1 percent of GNP; in Finland, would make full use of the virtues of the their share is 10 percent; in Israel, 30 percent. market mechanism in the areas where There is, then, enormous room in this country consumers would choose, and pay for, their for expansion of the cooperative principle. goods and services. To be sure, there is no During the socialist transition we might make point in investing markets with the mystical great use of one of the Rooseveltian reforms: powers claimed for them by their capitalist the Rural Electrification Administration. advocates—advocates who love to ignore the Under that system, the government has essential. Thus, after Charles Schultze supplied cheap (subsidized) credit to devotes a lyrical hymn to the power of the cooperators and thereby accomplished a "Unanimous consent arrangement" within decentralized, locally controlled electrifica- markets, he adds, "if the income distribution tion of the countryside. (The private sector is grossly unfair, the concept of voluntary opposed the program in part on the grounds decision and unanimous consent is a that farmers did not need electricity!) That charade. . . ." Since this is the prelude to a strategy could be a major level of socialist book that praises markets in the extreme, policy in the future. It would allow for a Schultze never so much as bothers to ask proliferation of locally controlled, face-to- whether the data show that his argument is a face undertakings, including community charade. corporations. In this sector, the capitalist Socialists, however, can do more than motivation would be most attenuated, the probe the question that Schultze side-steps; socialist most emphasized as the "associated they can create a new answer to it. That is, if producers" would actually run most of their an egalitarian tax policy has enormously own working lives. reduced the discrepancies in income and if

449 public control of the private corporation has debt capital. I put "own" in quotation marks severely limited, or even abolished, monopoly for a reason. Most of those funds are pricing—and if the engineering of consumer employer-controlled and are invested, as taste is replaced by straightforward informa- required by law, in an utterly capitalist tion—then markets could really function as fashion. The workers cannot sell their pension they are supposed to. They would operate interest during their working life, borrow on within the broad limit of the democratic plan, it, etc. It is only available upon retirement and and alongside the free sector, in order to since some of those claims are not fully communicate the desires of the people and to funded, there are even questions about pay- maximize their choice. The existence of such a offs. market would not determine the basic However, the point here is not the inade- priorities of the economy—but it would quacies of the existing pension system; it is to provide more real consumer freedom than take Drucker's rhetorical fantasy—that capitalist society has ever offered. "pension-fund socialism" now exists in the Fine, someone might reply. Sitting in a United States—and try to turn it into fact. study, socialist writers can conjure up all Roughly two-thirds of domestic welfare kinds of glowing dreams. But who will pay for expenditures today are for people over 65, all of these utopian proposals? and there are in addition the private pension The largest single source of corporate claims Drucker cites. Socialists, I suspect, investment funds in the United States today is would want to create a single and uniform found in retained profits. Within the limits system, since current practices give govern- already discussed—relative autonomy of the ment support enormous inequities. But the enterprise, but under the ultimate control of a point here is that societies committed to the democratic society—that could well be true decent care of the aging—as all the welfare under socialism. For, as Marx foresaw before states, to one degree or another, are—will anyone else, capitalism has more and more indeed have to set aside or provide for huge "socialized" itself within its private sums of money. framework. Horatio Alger and the individual In Sweden some of those funds are already stockholder long ago ceased to be that used for investment in housing. Here the important to the investment process. AFL-CIO has a program to attract union Moreover, as the Meidner Plan of the funds, where possible, into similar under- Swedish trade unionists and similar proposals takings. Why not generalize again? An by the Dutch socialists indicate, a democratic intelligent and socially motivated investment sharing in an essentially social surplus could of pension funds would provide an enormous provide the basis for higher rates of capital pool of capital for all three sectors of the formation than are now possible under economy in a socialist transition. capitalism. Third, some individuals might want to save Second, a useful if somewhat capricious more of their income than others. Within the book by a corporate apologist, Peter constraints of a socialist commitment to Drucker's Unseen Revolution, helps to focus wealth and income redistribution, that could on a socialist solution to the question of Who be accomplished by the revival of an old Pays? Private-sector pension funds, Drucker American institution: the Post Office savings said in 1976, own 25 percent of the equity system. And there is still another source of capital today, and the pension funds of the savings: the people would pay for the non-free self-employed, public employees, and goods in the society and the cost would teachers account for another 10 percent of the include, as it now does, funds for depreciation total. By 1985, Drucker calculates, the and new investment—but not, as now, under pensioners will "own" between 50 percent and the control and to the benefit of wealthy 60 percent of equity capital, and 40 percent of individuals and their hired managers.

450 Finally, there is another important source III: A Vision of of savings in the elimination of some of the That Socialist Future outrageous waste inherent in American capitalism. Business today spends about $38 billion (in 1977) on advertising. A little of that money provides the public with useful I am writing this essay during the summer of information about products people truly want discontent of 1978. Proposition 13 has just and need; a major portion of it is employed in passed in California and polls in that state a corporate disinformation program to gull show that the voters want welfare to be cut, the supposedly sovereign consumer. Strict first and foremost. There are many other signs standards for private advertising and public of a growing social meanness. The hope and support for a variety of (competing) consumer good feelings of the first half of the '60s seem services could free much of those outlays, and to lie a century or so behind us. Is, then, this a fully employed economy could find useful description of measures that go far beyond the work for the people now living off them. welfare state a simple exercise in social I mentioned earlier the parasitic character fantasy? I think not. of a great deal of the activity on Wall Street First, there is the reason I have already and in the financial industry as a whole. A given. The problems of American society portion of the American legal profession today are structural and they require deep- thrives on the pervasive venality of the going changes. Those, I noted, could be society. A radically progressive income and undertaken by sophisticated and modern inheritance tax law, to take but one example, reactionaries—or by democratic socialists could free the graduates of many of the elite incorporating the best of liberalism in a schools from essentially wasteful and an- movement that goes beyond the welfare state. tisocial lives. There are other activities— If it is thus necessary to project the middle- antiunion consultants, managerial psy- distant future in an open-ended way, with chologists, etc.—which are a cost of capitalist both rightist and leftist possibilities, it is production but not of production itself. Here certain that incantation, conservatism-as- again, socialism, even in the confused period usual, or political temper tantrums against of transition, could offer a more efficient our complexities will not work. The ideas I system (always on the premise of a social, not have described here are, I believe, more a corporate, definition of efficiency). realistic than most of the popular panaceas of It would thus be possible in a socialist the late '70s. transition to plan democratically, to effec- Second, all utopian anticipations of the tuate that plan realistically, and to finance the future are also descriptions of, and prescrip- entire process. In making this point, I have tions for, the present. This effort at imagining not tried to be complete and detailed in my socialism is rooted in—and, more important, analysis, only to evoke the direction—and the relevant too—the America of the late '70s. In problems—of socialist solutions. Moreover, I the briefest and sketchiest fashion, let me have been "economistic" on purpose and not simply list some urgent and possible contem- indulged in the poetry of socialism. This is not porary approximations of the more distant to suggest that the culture and personal hopes whose realization and beginnings I dimensions of socialism are unimportant. On have just imagined. the contrary, the economic programs are only means to the noneconomic end of human liberation. But the cynics impugn those ends HERE AND NOW the democratic left should: by saying that we socialists cannot realistical- • Challenge corporate control of the invest- ly present a program of means. And that is ment process by insisting that public policy what I have tried to do here, in briefest concern itself with what is produced, and how outline. it is decided, instead of confining itself to

451 Keynesian "aggregates" and leaving all the sion of producer and consumer cooperatives, details to the private sector. This would including funds for community corporations. include public controls over private invest- ment decisions, such as specifying the con- SOME OF THESE PROPOSALS are more difficult to ditions under which corporations can leave a imagine in the near future than others, yet locality or oligopolies can raise prices, as well none of them requires a commitment to as such public undertakings as a democrati- socialism and most have been approved in cally owned and controlled gas and oil principle by major institutions of the mass company; of the democratic left. But why burden such • Demand national economic planning for empirically justifiable ideas by relating them full employment, with the implementation of to an ideology called "socialism"? There are the Humphrey-Hawkins bill as a first, but two reasons why I do that. First, time is only a first, step; running out on the very American creed of utopian pragmatism, i.e., the religious convic- • Suggest public cost-conscious and ac- tion that all problems can be solved in the curate definitions of economic alternatives in middle of the road by a process of bumbling which corporations are charged for their use along. The ills that afflict our society—which, and destruction of social resources; to repeat the most obvious and appalling of • Propose sweeping tax reform aimed at a current examples, are laying waste entire redistribution of income and wealth and, in cities as effectively as a rocket attack—are particular, at the unearned income of rentiers systemic. They are the product of a late and the untaxed wealth of successive capitalism that collectivizes on the basis of generations of the rich; antisocial, corporate priorities. Either the • Suggest a rethinking of the entire democratic left will find a systemic response American pension system, public and private, to that challenge, which is fairly called with emphasis on using such funds, socialism, or the undemocratic right will. theoretically "owned" by the people, for social Second, America—Western capitalism, the purposes as determined democratically by the world—desperately needs, not simply a people; legislative shopping list, but a vision. Not a • Urge employee and public representation religion, not a secular salvation; but a new on the boards of directors of all major sense of purpose. And so, in the details corporations and a radical increase in sketched out hopefully here there is not only a democratic decision-making by primary rational response to immediate issues but also workers in factories and offices; the intimation of some tentative steps in the • Propose federal support for a vast expan- direction of a new civilization. 0

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