What Is Socialism? 

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6. A Planned Economy

Some socialists argue that there should be public ownership where appropriate at national, regional or local level, including co-operatives and employee share schemes. 

But this policy would mark a return to the old mixed economy of nationalised industries coexisting with private industry. In other words state intervention without any fundamental challenge to the power of the capitalists. This would still produce inequality and crisis.

Under capitalism some workers and middle management have been drawn to co-operatives such as Triumph Meriden motor bikes in the past or Tower pit today. Many have set up firms to tender for contracts in local authorities. Far from being the realisation of a dream of being entrepreneurs, in most cases these have been a last-ditch stand after the workers concerned have tried to stop the sell-off of services or the closure of their workplaces.

They sink their savings or redundancy pay into these enterprises. In effect they are buying back their own jobs or workplaces that they have built up in the first place. They then find themselves producing for a market controlled by capitalism and using raw material supplied by capitalism. They are not havens of socialism but are sandwiched between capitalist firms who can force them to compete by cutting wages and conditions and, if they wanted to, could force them out of business altogether.

Workers' participation schemes likewise give the impression of democracy. In fact they are nothing more than a glorified consultation and information exercise with no real power over important decisions.

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7. Which firms should be nationalised?

If we are to resolve the problem of homelessness we would have to control the building industry, such as Wimpey and Laing, (four or five companies control 80% of contracts), their supply industry, land and building societies. 

As part of the rebuilding of the NHS and solving some of today's health problems, we would take over the major pharmaceutical and chemical companies such as ICI and Wellcome. Chemical firms are also suppliers of seeds, fertilisers etc for agriculture. We would need to look not just at ensuring the wholesomeness of food but also safeguarding the environment and water supplies from chemical pollutants. We would also have to take back into public ownership the utilities such as gas, electricity, coal, water and others privatised by the Tories and Labour.

In order to develop most industries, the planning and administration of society and communication, we would need to nationalise the major companies producing technology. Similarly for transport to be effectively planned with the least possible pollution and spoiling of the environment, we would have to take over the major firms manufacturing vehicles and other forms of transport.

In modern society the vast majority of production is not an individual or a family matter. It's carried out in major firms bringing together thousands of workers, often internationally, in workplaces of a variety of sizes doing different processes. The wealth is actually produced by working-class people in co-operation with one another.

Even the managing and planning in detail is not done by the wealthy who reap the rewards but by white-collar workers and middle management, many of whom are now in trade unions and suffer similar insecurity to workers.

But when it comes to the ownership of wealth or the decisions about what is produced then it is an entirely different matter. Wealth is privately owned, used primarily for the benefit of an elite and the decisions are made according to what will produce more profits, not according to what the vast majority of people need.

Socialism means that just as production has become socialised so should the wealth that's produced, instead of going into the pockets of a few individuals. Instead of planning resources to allow for profit, resources should be planned to meet the needs of people. Taking into public ownership just the top 150 firms, under democratic workers’ control and management, with the establishment of a democratic plan of production, would mean that the levers of economic power would be taken from the grip of the Capitalist class.

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8. Would it be difficult to plan the economy?

When capitalists talk about the market they are not telling the truth about their own system. Capitalism is more and more dominated by a few big multinationals. 

Even the distribution of food, for example, is not done by small farms producing for corner shops or markets but is coordinated by multinationals and vast supermarket empires. Prices are fixed by the parent company. 50% of British trade is between affiliates of the same multinationals.

Mass production by these multinationals needs a lot of planning. General Motors decides what product is produced where, and sets targets, specifications etc. Market research is really about predicting trends in demand for certain goods and receptiveness to new goods.

Capitalists argue we couldn't plan the economy because it's too complicated. They say that the number of consumer decisions are so vast that they can't be planned for. Yet most needs hardly vary such as hospitals, education, housing, transport, food, clothing.

It's not because it's too complicated that capitalism hasn't planned to meet these needs. It's because its not profitable enough. Planning itself is not a problem. It's the degree of planning and what the purpose of it is that counts.

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9. Democratic workers’ control and management

Under socialism all the resources would be brought together with the working class to plan production.

From what was produced we would have to decide:

• how much to spend on common needs such as health, education, housing. Many Items such as food, transport and housing would have very low charges or none at all
• how much to allocate for those who weren't directly involved in production at the time, for example, old people, the young, the sick.
• how much to allocate for replacing worn out material or replacing old technology with new inventions.
• how much for the administration of society.
• how much for individual consumption.

Increasingly as we developed production more goods and services would be directly allocated, cutting out the market and exchange through prices and money.

In a socialist society, even without an increase in production, the vast billions of profits and dividend payments, fat cat salaries and bonuses would become available for society as a whole to benefit from.

The capitalists argue there are limited resources so you can't fulfil everybody's needs. Socialism is not just about redistributing wealth that's unequally shared now. it's also about generating new wealth. But if resources were limited then we would have to decide democratically which needs should be satisfied first, the need of everyone for basics or of a few for luxuries.

Planning an economy would also allow us to resolve some of the major problems facing workers such as those in the defence industry and nuclear power. At the moment thousands of workers are involved in the production of armaments, especially as the British government has been willing to deal with every tyrant and dictator around the world.

So we have the spectacle of workers in this country manufacturing weapons and providing services to armies which then use them in the main against workers in their own countries. These workers are often fighting for democratic rights or for the basics of life. Similarly we have a nuclear industry whose safety record is appalling and whose long-term effect on the environment could be devastating.

Yet the workers in these industries feel they must defend them because the alternative is the dole and the destruction of their communities. But capitalism offers no way forward as defence workers have discovered with the recent round of cuts where thousands of jobs have been lost. 

In a planned economy we would be able to discuss the best way of producing society's energy needs.

Incentives 

Supporters of the market argue that we have to recognise merit, that if there were no incentives of wealth then there would be no incentive to invent new technology or make discoveries. Yet most of the pioneering work on innovation doesn't enrich the people who do it but the companies who buy the patent.

Many inventors lived in poverty. Many researchers today work on low pay and have uncertain futures as grants are cut. Many waste their skills on devising useless processes, like putting more air or water into food products, so the costlier ingredients go further or a new brand of washing powder or soap which is no more than duplication of existing products. 

That's not to mention the wasted talents and experience of workers who have no say or have a say through suggestion boxes for which they get little reward. According to the Industrial Society 16,000 suggestions from workers were adopted by 103 companies. Dunlop saved £54,000 as a result of one suggestion from a worker. Many inventions go undeveloped because they would undermine a company's current profits. Half of Research and Development goes into defence. In a socialist society this would be freed for research into socially useful production.

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10. How would decisions be taken?

In a socialist society we would be able to utilise new technology, computers and communications systems to work out what resources were available and what products or services were needed.

New technology would be vital in another way. No matter what structures we decided on to involve everyone in decisions, they would only work if people had the time to participate. Through using new technology, putting the unemployed back to work, we would be able to cut the working day and week enabling everyone to participate in making decisions and in the general running of society.

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11. Conclusion

Socialism grew out of the experience of the working class as they struggled for a better life. Working class people who live every day with the consequences of the unfairness and inequality of capitalism want to know how exactly their situation can be changed.

The Labour government attempts to manage the existing economic system, and in the coming recession will find itself being forced to carry out crisis austerity measures on behalf of the bosses against working-class people.

Despite concessions before the last General Election, Blair and the rest of the Labour leadership are making it clear in advance that this is the road they intend to go down. If they do they will face the opposition of workers. Working-class people will be forced to struggle to defend themselves and to implement even the smallest of reforms.

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Appendix

1. How was "Old Labour’s" Clause Four adopted? – "A party of struggling proletarians."

Clause 4 was adopted by the Labour Party in 1918. Jack Straw said it was written by a couple of middle class intellectuals. No matter who drafted it nor what their intentions might have been, it was introduced because of the events of the time.

In Britain the years leading up to the First World War had seen the working class struggling against the bosses and the government for the basics of life and for the right to organise. The general trade unions of manual workers and the lowest paid were born in these struggles through the strikes of dockers, transport workers, women workers in the food processing industries and many more.

These new unions were in addition to the more established unions such as the miners, textile workers and engineers.

Unions were built to fight on day-to-day issues such as pay and conditions. But as workers fought they came to realise that much more was needed. They didn't have the vote yet they were affected by laws passed by Parliament. Although they might win a wage increase they could be thrown out of work or the following year they would have to do battle again to maintain their wages level. They also needed a good, secure home, education for themselves and their children, health care, security in old age.

To achieve these they fought for the vote and to form their own political party. They saw around them not only their own poverty and insecurity but the wealth and power of the bosses and landlords. Many workers looked beyond the constant defensive battle to keep what little they'd got and for small improvements in this or that area of their lives, to the possibility of building a totally new society where they would run and own the industries and services they worked in for the benefit of everyone.

Many unions adopted common ownership of their industries as their aim. For example, USDAW, the shop workers’ union, has as one of its aims,

"To work consistently towards securing the control of the industries in which its members are employed".

During the debate about the formation of the Labour Party, an event took place which clinched the argument about Clause 4. At the end of the First World War, the Russian Revolution exploded into history. Workers and peasants rose up against their tyrannical and bloody ruler, the Tsar, and against the capitalists and landlords who controlled Russia. With Marxists in the Bolshevik Party at their head they took power for themselves and set about building a new society based on a planned economy. This confirmed to workers across the world that it was possible to defeat the ruling class and that they could run society better themselves.

In was in these tumultuous years of working class struggle in Britain and across the world that the Labour Party came into being and Clause 4 was adopted. This also marked the beginning of the end of the Liberal Party as a serious force in politics. The Tory Party became the main party of the capitalists and the ruling class, deserving and undeserving.

2. The Intellectual debt to Marx

During the ideological battle to get Labour to rid itself of it’s socialist clothes, Peter Keliner, a political commentator, wrote in the Sunday Times:

'Socialism was conceived as an alternative to feudalism. Socialists have always wanted power for the people; but in the first instance, they meant bankers, industrialists, shopkeepers and craftsmen rather than bishops, kings and landowners. The original …aim of socialism was democratic capitalism. It was not until the 1840s, when Marx and Engels hijacked the term that 'socialism' became a project … to destroy capitalism.'

We study history not because we live in the past but because, as one woman from the mining community put it, fighting for a better future is like driving. To decide what to do, you have to be able to see ahead, but also you need to consult your driver's mirror frequently to see behind you.

Kellner wants us to unlearn our history and the bitter lessons of the past. Some early trade unions, such as the textile workers and miners, had supported the Liberals or Tories. But they soon learned that both these parties represented the wealthy and that their potential power as workers was being used in what was basically a fight between manufacturing bosses and the landed gentry. Not very different from the "deserving" and "undeserving" rich of Tony Blair. Neither of these groups cared much about the problems of workers. In fact when they fought against starvation wages, they found the bosses locked them out, victimised their leaders and tried to starve them into submission.

Some social reformers, horrified by the poverty and exploitation of workers in the new industrial towns, tried to put forward schemes to persuade employers to be more humane. There were the model communities set up by Robert Owen and the schemes worked out by Fourier. They let it be known that they were available to discuss their ideas with any bosses who were feeling humane on that day. Needless to say they didn't get many takers.

Even in the times Kellner is talking about workers were organising in the Chartist movement for their own political voice. They joined, for example, the London Working Men's Association, which was affiliated to the First International influenced by the ideas of Karl Marx and Friedrich Engels.

Marxism or scientific socialism, the ideas which the Socialist Party stands for today, was adopted by many working class people not because of any "hijack" but because they had learned the lessons of being used by one capitalist party or another and because they believed capitalism would never fulfil their needs. Marxism gave to those fighting for a better life the understanding to organise that fight more effectively.

The text of "What is Socialism" is based on a revision of a pamphlet of the same name produced by the Socialist Party in 1994 (then under the name Militant Labour.)  "After Genoa" is taken from The Socialist editorial, 27 July 2001.

Socialist Party members are always available to discuss any questions you may have about these pamphlets. Why not contact us, or email us for an informal discussion, or ring the Socialist Party on 020 8988 8777