At a time of rising income and wealth inequality, the egalitarian goals of socialism seem quite compelling. But if the production system is allowed to remain capitalist, socialism will face formidable challenges. How then can we square the circle?
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It may sound somewhat bizarre and downright utopian to discuss the prospects of socialism at a time when right-wing populism is raging all over the world, and there is a marked decline in the popular following of traditional left parties in most parts of the world (with some exceptions in England, Greece, Spain, Romania, Ecuador and Bolivia).
About 10 years back, when economies were being ravaged by the financial crisis, there was a lot of public criticism of not just the excessive financialisation of recent capitalism but also its systemic failures in terms of inequality and instability, apart from the forces of worker alienation and environmental degradation it unleashes. There was some hope that this will, in reaction, strengthen socialist propensities among workers. Instead, in the past few years, workers in many countries seem to have turned in the opposite direction, toward right-wing demagogues often outside the traditional political establishment.
With the fall of the Berlin Wall it was evident that the so-called Communist countries failed primarily on two counts: one was the authoritarianism and gross abuse of human rights which alienated most decent people and eroded the legitimacy of the government; the other was an economic failure of the command and control system which seriously impaired efficient allocation of resources and innovations.
The spectacular success of China in the last three decades, however, suggests that it is possible to salvage the second failure and carry out vast improvements in the economy with a substantial relaxation of state control over economic decisions and allowing a freer play of the market forces, without giving up on authoritarian political control by the Communist Party. This is, of course, a tentative judgment, as (a) it is not yet clear if the Chinese success in ‘catch-up’ growth for a backward economy will be matched in future by big steps in major innovations, particularly if the too-big-to-fail state enterprises continue to drag the economy; (b) while the monopoly of political power remains intact for the party, one cannot really call it a Communist party in the traditional sense when the workers and peasants now form less than 30% of membership, while the majority of party members are professionals, students, and businessmen (some of them billionaire plutocrats). The Chinese economy today is characterised by the capitalist diseases of high inequality, instability and environmental degradation.
In western Europe, India and pockets of Latin America, socialism has more democratic antecedents. In some of these cases, socialism has primarily taken the form of progressive redistribution of the social surplus in favor of workers’ welfare, while the surplus itself is generated by primarily a capitalist system of production. In other cases (like France, Brazil or India) the state has played a more important economic role in production, though diminishing in recent years. There are not too many cases of economic success with a predominantly state-controlled system of production. Even in China, while the state is still dominant in some of the heavy and strategic industries, most of the thriving sectors are increasingly private or semi-private.
At a time of rising income and wealth inequality, egalitarian goals of socialism seem quite compelling. But if the production system is allowed to remain capitalist, with the increasing skill- and capital-intensity of technological innovations, the forces of concentration of capital and the clout the owners of capital have over the political process, socialism will face formidable challenges. In order to strengthen the countervailing power of workers and their organisations, at least three steps need to be seriously considered by democratic socialists.
First, more than wage bargaining, workers’ role in the governance of the firm is crucial (here the German works council system and Nordic confederate mode of collective bargaining are models for other countries to adopt and extend).
Second, workers today are particularly concerned with the precariousness of their jobs in the face of new technology and global competition. In both rich and poor countries, workers increasingly are in the informal sector, of the self-employed, free-lancers and ‘independent contractors’. For such workers, a universal basic income supplement can provide some minimum security, allowing them to look for better jobs and entrepreneurial opportunities. If labour organisations lobby for such income supplements, they can thereby build a bridge across the chasms that divide the labor movement today – between the formal and informal workers, between ‘insiders’ and ‘outsiders’.
Finally, if socialist parties are to win blue-collar workers back from the pied pipers of populism, they have to be aware that workers today are angry about their cultural distance from the footloose cosmopolitan professional liberal elite who seem to dominate the opinion-making circles of social-democratic parties. Unions may try to take an active role in the local cultural life, involving the neighbourhood community and religious organisations, as they used to in some European and Latin American countries – this is one way trade unions enabled workers to tame and transcend their nativist passions and prejudices against minorities and immigrants. Labour and religious organisations often can find common cause on the issues of local delivery of social services, and on environment and immigration. On policies like affirmative action for under-privileged groups, a more open attitude to include poor workers from the majority ethnic groups may assuage the feeling (among some sections of whites in the US and UK or the Hindus in India) that the liberal-left only care for the minorities, but not for “us”. Trade unions can try to accommodate such policies of economic justice and relieve some identity-based tension.
It’s an uphill task but with some organisational restructuring socialist goals may still be achievable.
Pranab Bardhan teaches economics at the University of California, Berkeley. This was piece was originally published in German by Die Zeit, which invited him to write a short op-ed on the prospects for socialism on the occasion of the centenary of the Russian Revolution.