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Socialism and economic democracy

For many, capitalism is synonymous with democracy. It’s said to provide people with the freedom to ‘choose’ and empowers consumers. It’s popularly believed that, since we in the west are able to vote once every four or five years, we live in healthy democratic societies in which the people are sovereign. This notion of democracy is a glaringly shallow one, however. Under this setup, one’s average democratic input amounts to around two votes every decade – not exactly power of the people. During the long periods in between the occasional election, we live under the almost total domination of our bosses.

Capitalism is a profoundly anti-democratic system. Workplaces, where we spend the majority of our lives, are run on an authoritarian basis, with workers given almost no say on how production is organised. Key investment decisions are taken by unaccountable, unelected wealthy individuals in pursuit of private profit, while employment of human labour is subject to the whims of “the markets”. Although we enjoy a certain amount of political democracy – and that is not to be taken for granted – we live under what is essentially an economic dictatorship. A key political task for socialists in the 21st century is to highlight the lack of democracy which exists when it comes to economics. A deeper and more participatory form of democracy should be strongly advocated. As journalist Peter Tatchell said: “We expect political democracy. Why not economic democracy too?”

Democracy under socialism necessarily means economic democracy. Those who work in a certain organisation should be entitled to have a say on how it is run on the basis of one person one vote. Managers should be elected and decisions made democratically. This may sound unrealistic to many, who have been conditioned to believe that only those with “special talents” have the ability to run economies. Paul Foot did an admirable job of tearing down this common assumption when he wrote about US industrialist Howard Hughes. Describing him as a “mediocrity”, he wrote:

“He started life as playboy and ended it as a lunatic. He had no ability at all. Yet through a mixture of luck and the ability to read a balance sheet, Hughes became the boss of a gigantic financial and industrial empire. He was able, almost alone, to nominate the President of the United States, Richard Nixon, who also had no ability, knowledge or skill of any kind. Howard Hughes designed an aeroplane which crashed and directed a film which was a monumental failure. He couldn’t do anything which mattered. Yet he made the decisions. The list is endless. Successful capitalists, almost to a man, are not people with any natural ability. Yet they decide what the experts do…They decide that engineers must build the Concordes. They decide that physicists must work on nuclear weapons.”

Given the current state of the world’s economy, it is clear that those who control it are unable to carry out their task in a humane, logical and sane manner. If the economy was organised democratically, would the results really be worse than what we are experiencing at present? Should we really expect to see the same level of economic chaos, environmental destruction and extreme inequality which occurs under the existing system? With the proper training, experience and education, there’s no reason why most people would not be able to acquire the skills necessary to help organise an economy. As David Schweikhart asked in his pioneering book, After Capitalism: “We deem ordinary people competent enough to select mayors, governors, even presidents. We regard them as capable of selecting legislators who will decide their taxes, who will make laws that, if violated, consign them to prison, and who can send them off, the young ones, to kill and die in war. Should we really ask if ordinary people are competent enough to elect their bosses?”

Actually existing economic democracy

And rather than abstractly theorise about what form democracy would take under socialism, we can look to real life examples – worker co-operatives. They are practical living alternatives to authoritarian capitalism and serve as vital tools in educating working people on how the economy operates on a daily basis. They have a proven track record of success, many of which would be the envy of capitalists the world over, and show that production can be carried out without bosses looking over the shoulders of workers.

One of the world’s largest and most successful worker-led co-operatives is the Mondragon Corporation. Based in the Basque Country, it is currently the sixth largest company in Spain and employs almost 100,000 people. And with an annual revenue of around €15 billion, it’s certainly not a small operation. Mondragon is entirely different from a modern corporation, however. All decisions are made by the workforce, who collectively own and control the firm, with job creation being seen as a key pillar of the organisation’s ethos. Writing for Yes magazine, Georgia Kelly and Shaula Massena, reported on what happened when the corporation was faced with difficult financial times:

“The worker/owners and the managers met to review their options. After three days of meetings, the worker/owners agreed that 20 percent of the workforce would leave their jobs for a year, during which they would continue to receive 80 percent of their pay and, if they wished, free training for other work. This group would be chosen by lottery, and if the company was still in trouble a year later, the first group would return to work and a second would take a year off. The result? The solution worked and the company thrives to this day.”

This stands in glaring contrast to the common spectacle of authoritarian companies who close down factories on a whim in order to exploit cheaper labour in the developing world. Had Mondragon’s principles of fairness and solidarity been existed across the economy, wages would not have stagnated, trade unions would not have been supressed and, most likely, we would not have experienced the crisis we are going through now. And since wages are set democratically by the workforce, Mondragon’s top executives receive a maximum income of six times more than the organisation’s lowest paid members. This is a remarkable figure, considering that Apple CEO, according to the Fortune 500 list, this year received 6,000 times more than the average worker at his company.

Although Mondragon and other co-operatives are not explicitly socialist, they do provide a model which progressives can emulate. It is part of a wider movement springing up around the world and is a living alternative to the workplace totalitarianism which most of us are subjected to. They give a small glimpse of what work life, as well as democracy, could be like under socialism. While acknowledging the important role they can play we must also, however, recognise their limitations. Ultimately, co-operatives are obligated to operate within a capitalist market. As such, they are unable to overcome some of the greater problems caused by capitalism, such as the destruction of the eco-system and the chaos which comes from the unplanned use of resources. They should be seen primarily as a living example of economic democracy and should be employed as a tool to challenge the legitimacy of capitalism.

A post capitalist society should ensure that workplaces are organised democratically. They should, however, be part of a national economic plan, which treats both human well-being and the survival of our ecosystem as top priorities. As has been argued previously, the most practical way to ensure the fairest allocation of resources is with a central economic plan worked out on a democratic basis.

Nora Castañeda, president of the Women’s Development Bank of Venezuela, summed up the economic goal of socialism well when she said: “We are creating an economy at the service of human beings instead of human beings at the service of an economy.”

Part One can be viewed here.

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It’s almost inevitable that in any discussion about socialism someone will claim that “humans are simply too selfish”. “We have always been like that and we always will be,” they would say. “That’s just the way things are, and you can’t change it”.

This argument is as hallow as it is predictable. It’s based on the false notion that humans are born inherently evil, selfish and violent. It’s a shallow argument which serves the ruling class well. After all, their system requires selfishness and extreme violence on a mass scale in order to operate effectively, for which the ‘human nature’ argument is intended to provide some sort of justification. Indeed, there were times in the past when slavery, racism and discrimination against women were all justified by the same ‘human nature’ argument.

The proponents of this argument associate ‘human nature’ exclusively with negative things, such as selfishness and greed. But they are far from the only characteristics that define our species. The more positive, and equally as important, ones such as co-operation, solidarity and friendship are generally ignored. If people’s actions were solely motivated by greed and selfishness there would be no such thing as charity; there would have been no money raised for the victims of the 2004 Asian Tsunami or other disasters; there would be no such thing unconditional parental love; there would be no friendship; people would not give up their lives for something they believe in; people would not protest against injustices on the other side of the planet. The list goes on.

The reason many people falsely associate ‘human nature’ with greed and selfishness is because the current mode of production encourages these features. Those who are wicked, ruthless and selfish do well under capitalism. Those who aren’t are usually disadvantaged. Because capitalism is the only system most people have ever experienced, they are lead to believe, wrongly, that greed and selfishness are the only human characteristics we can harness in order to run an economy. Attempts to organise society in a different way are simply “utopian” (Ironically, the people who attack us for being “utopian” also accuse us, at the same time, of wanting to subjugate humanity under some form of Stalinist dictatorship).

The ‘selfish’ argument also presumes that ‘human nature’ is something which is set in stone; that we are genetically programmed to be a certain way and nothing can change the way we are. Of course, this view is not one based on any form of evidence. ‘Human nature’ is not something static; our behaviour is almost entirely influenced by our social surroundings, and is in a state of constant change. That’s why a person alive today would be nothing like someone who lived 5,000 years ago. It’s also why someone brought up in a western society is nothing like a member of an Amazonian tribe. As Harry Magdoff and Fred Magdoff, of Monthly Review, said: “If human nature, values, and relations have changed before, it hardly needs pointing out that they may change again”.

What many people fail to recognise is the fact that capitalism is a relatively new historical phenomenon. Of the 150,000 years humans have populated this planet, industrial capitalism has been around for only 200 of those years. Indeed, capitalism in its modern, neo-liberal, form is only 30 years old. Many people find it difficult to understand that past societies were organised in countless different ways, many of them co-operatively, before the rise of capitalism. Likewise, we can organise ourselves differently after it goes. Throughout most of our history, humans have lived in hunter-gatherer societies, where there were no ruling classes. People who lived during these times would have viewed as totally alien the idea of a small number of individuals controlling a surplus produced by a larger group. Perhaps the most well-known case of a common ownership society (or primitive communism, as Marx described it) is that of the Native Americans. Here’s what Christopher Columbus had to say about them before their culture was destroyed by European settlers:

“Nor have I been able to learn whether they held personal property, for it seemed to me that whatever one had, they all took shares of….They are so ingenuous and free with all they have that no one would believe it who has not seen it; of anything they possess, if it be asked of them, they never say no; on the contrary, they invite you to share it and show as much love as if their hearts went with it.”

Many Native American tribes celebrated a festival known Potlatch. The ceremony involved the wealthiest in a certain area giving possessions away to the less well-off. The more you gave away, the higher your social status. Today’s culture of defining someone’s social standing by the number of flashy cars they own or how big their house is would be unfathomable to most Native Americans. In 1884, Potlatch was banned by the Canadian government after it was deemed to go against the Christian values of ‘civilized’ capitalism.

With the current economic system facing its biggest crisis since the 1930s, the ‘human nature’ argument is being raised now as much as ever. And it’s even more ridiculous at a time when working people are being asked to “tighten their belts” and sacrifice their living standards to pay back the debts of private banks. The fact is, only a relatively tiny number of people actually benefit from capitalism. How does it benefit anyone to work 60 hours a week for minimum wage just to pay their bills? How does it benefit anyone to have a boss? How do you benefit from capitalism when you are constantly threatened with unemployment? How would paying a high rent to a landlord for a run-down, inner city hovel benefit you? In my last article I showed how wages for the vast majority of people have stagnated over the past three decades, with many workers being left more than £10,000 a year worse off. How does capitalism serve the interests of these people?

Even more serious and disturbing is that more than 30,000 children have died over the past 24 hours because of preventable diseases. Another 30,000 died yesterday, and the day before that. They died because the capitalist market could not provide for even their most basic needs. Is dying from starvation or preventable disease in childhood just part of “human nature”?

Contrary to what is popularly believed, most people have a lot to gain from the replacement of capitalism with an economy based on common ownership. They will not have to labour half of their working lives to bankroll a class of idle rich. They will be able to run their own workplaces according to how they see fit and they will not be threatened with the destitution of unemployment.

Socialism is not about charity. It’s about the majority of humans taking control of their own lives. It would provide a massive increase in living standards for the majority of humanity and aims to promote the more positive human traits, rather than selfishness and greed.

Certainly, it would be true to say that socialism is the political self-interest of all working people.