What Is Socialism? Economic Democracy at the End of Capitalism

Socialism is Economic DemocracyIt is the Age of Malfunction — an age in which the social structures, governing mechanisms, and economic systems inherited by humanity have produced a civilization at the brink of catastrophic, systemic failure. Despite the production of unprecedented wealth, economic inequality is more obscene than ever before. Resources wasted by human economic activity irreversibly damage the environment as the suicidal markets of global capitalism continue to reward corporate entities with paradoxical profits generated by pursuing the total extraction of the only resources on earth. In these times, the future of this species depends on its ability to invent, develop, and realize a new kind of society and so it is important to discuss and understand the different social, economic, and political ideas that are available. This begins by discussing and understanding what an alternative to the current system of capitalism really looks like and how it might work — in other words, it begins by understanding socialism.

What Socialism Is Not

How Communism Works Propaganda
Communism, by the way, is not really a type of government — communism describes a future classless society which results from socialism. There has never been a communist human society… yet…

Because the word “socialism” is often abused by the major media-outlets, it is hard to explain the idea behind socialism without clearing the table by emphasizing what socialism is not:

  • Socialism is not a type of government
  • Socialism is not sharing everything
  • Socialism is not making sure everybody has the same stuff
  • Socialism has nothing to do taxes
  • Socialism is not wealth-redistribution

Some call socialism an economic system and that is a bit closer to the truth — socialism is a mode of production. Modes of production describe how societies are structured by relationships of control between the people, industries, resources, and information — or, to put it simply, modes of production are like different social operating systems for the economy.

Understanding Socialism
As Social-Economic Technology

Technology — defined as inventions, methods, or processes to achieve a goal or address a problem — may be a better way to frame socialism than politics. Just as irrigation, sanitation, and other technologies were created to address problems like scarcity and disease, socialism was designed to address the systemic problem of poverty and inequality under the capitalist mode of production. Unlike scientific or industrial inventions, however, demonstrating the usefulness of social or economic technology can be really difficult, especially when the list of parts needed to build a prototype includes the economy.

Socialist Rose, American Socialist PartyTechnology can seem weird, pointless, or dangerous if the purpose is unclear or misunderstood. For example, if a person did not know that microscopic bacteria spread disease, it would be hard to see any use for disinfectant or pasteurization and these technologies might even seem threatening. For similar reasons, socialist ideas only make sense after understanding the problem they are designed to fix. Socialism is less of a philosophy than an attempt to “debug” human civilization. In this case, the issue is the malfunctioning relationship between capital, labor, and certain concepts of property.

Relationships of Capital & Labor

Everything in human civilization was produced by mixing capital with labor — but what are capital and labor? Capital is all of the materials used by society in its economic activity. That includes natural resources — land, water, minerals, and raw materials like oil — and the industrial machinery used to make new materials or commodities, such as factories or large-scale agricultural operations. Money is also capital since it is readily exchangeable for any of those things.

Socialism Fixes the Exploitation of the Surplus Value of LaborLabor can be understood in many ways — from a market’s perspective, for instance, labor is similar to other things that are bought, sold, or used to produce more valuable commodities. While gold and grain is measured in ounces or bushels, labor is likewise measured by hours and sold for a price — but that is not the whole picture. Labor is unique among resources because nothing is produced without it. With no labor, iron remains asleep in the stone and the amber waves of grain go to seed. Even with all of the capital in the world — every dollar, factory, patent, & farm — not even a single pin could be created until labor was added. Labor transforms raw material and natural resources — capital — into the wealth of civilizations.

Value is the result of mixing capital and labor.

The Value of Labor

Labor turns iron ore to steel, turns steel to useful parts, and useful parts into a train or a skyscraper. Handfuls of seed and a tract of land become the food sustaining a community. Epoxy, glass, and flecks of semi-precious metal become computers and smart phones. Each transformation of capital by labor results in commodities more valuable than the material used to produce them. Cars are more valuable than heaps of oily scrap-metal because the value of the materials was elevated by the organizational and creative power of labor. The hours used by workers during labor are gone but the value of labor still exists, either as value woven into a resulting product or as the preserved value of time saved by labor for others.

And that is where the problem begins.

E is for Exploitation!

Exploitation Sesame Street img
“You see, Cookie Monster, the capitalist is an economic vampire extracting workers’ wealth by exploiting the surplus value of labor.”

As new technology bloomed from the 18th century industrial revolution, economic activity shifted from rural agriculture to cities and the political and social structures of feudalism were reorganized into what we now call capitalism. Market-based systems emerged in this mode of production and new concepts of private property were introduced that included more than the feudal land-based concepts of property. These changes to property rights revealed an underlying issue with the relation between capital and labor called exploitation.

A Tale of Exploitation:
The Mysterious Case of the Missing Surplus Value of Labor

Jack wants to open a factory. Jack possesses capital in the form of money and so he buys some land and has a factory built. Since nobody can run an entire factory, Jack agrees to pay Mary to run the factory machine while he fills out the paperwork and arranges the sale of the products. In this scenario, Jack pays himself and Mary for their labor as a manager and a machinist with what is left after factory upkeep — nothing problematic yet. But now business is going well and Jack realizes the factory makes enough money to pay the bills, Mary, himself, and a third person. Jack begins to pay Omar to do the paperwork and arrange the sales. Even though Jack spends most days playing Pokémon GO and relaxing, he continues to pay himself each month. Eventually, Jack replenishes his capital enough to buy a second factory. Now, Jack is paid enough to live comfortably and invest in more factories without needing to work himself. In this scenario, Jack is “earning” wealth by exploiting the value of labor provided by Mary and Omar — Jack has become a capitalist dog.

Exploitation occurs when value created by the labor of one person or group is taken by another. Capitalists did not invent exploitation — the ruling aristocrats of feudal societies also exploited labor by claiming to own farmland and then collecting their “share” of what people produced on it. Feudal exploitation, however, was hardly more than organized robbery. Capitalism integrated exploitation into the economy itself by establishing new rights of private property that gave direct control over products of labor to property-owners.

What is exploitation under capitalism? Info-graphic illustrationIn feudal modes of production, communities depended directly on fruits of their labor to live, which limited exploitation in some ways. Capitalism, however, allows products of labor to be intercepted by a wealthy minority who owns the land, resources, and machines used by labor to produce them. Workers do not have access to the products they make under capitalism — instead, they receive a wage from employers who possess both the products and the means of producing them.

The Socialist Answer to Exploitation:
Democratize the Means of Production!

Capitalist exploitation of labor, explained by a socialist cartoon

The problems of exploitation can be eliminated by changing the concept of property to place the means of production under the control of a working-class democracy. Means of production are the land, resources, and machinery used to produce a society’s wealth. The means are stuffs nobody personally needs to use — steel mills, freight trains, and vast tracts of farmland, for example, are means of production, while the tools in someone’s garage, a Honda Civic, and a garden are not means of production.

Rights of private property under capitalism ensure the wealth produced by a society is controlled by a ruling minority that perpetuates its advantage over an exploited class of workers denied access to the means of producing their own wealth. With no access to the means, the working classes are subject to the terms and conditions dictated by the ruling class which owns them. Putting the means under democratic control would end this cycle of exploitation and the systemic inequality and poverty it produces.

And this is socialism — control over the means of production by the people, for the people.

Re-Thinking Property (Again)

Numbers Show Capitalism Does Not WorkFree-market enthusiasts and critics of socialism often make the deeply flawed argument that collective ownership of production could never work because it would lack the apparently mystical power of the market to determine the right price for different goods or services. Today’s concept of private property today, however, is pretty new — for thousands of years before industrial technology made capitalism possible, many resources were collectively owned. Outside of economic hubs controlled by feudal states, unused land was considered common property — free for anyone to work. This meant the poorest folks often still had some access to resources and could subsist on communal farms.

These public lands were privatized by the Enclosure Acts in 18th century Great Britain and other industrial nations adopted that model soon after. Peasants were forced off communal farmlands that, in many cases, were considered public for thousands of years. Many parcels of land were given to wealthy business people by the British Parliament, many of whom developed it to produce wool for the new and incredibly profitable textile industry ( you can guess who owned the factories ). Considering that private property is only a few centuries old and that much of today’s privatized land and natural capital was originally stolen by enclosure or colonization, why should it be hard to envision alternative concepts of property today?

What Does Collective Ownership Look Like?

Fear of Communism and Socialism
Typical leftist shenanigans

Others insist the collapse of the Soviet Union or the difficulties being faced in countries like Venezuela are proof that socialism cannot work. Similar claims were made that it would be impossible to build a working airplane. “If airplanes could work, why did that one crash?” they asked. Like those who worked to build the first airplanes, socialists must overcome logistical challenges before their ideas are fully realized. In the meantime, there are already some working examples of collective resource-management, such as airspace.

In contrast to privatized models of land-management for profit, airspace is managed collectively by air traffic control to meet economic and social needs and it works pretty well. No plots of air are sold, planes do not land in the order of richest to poorest, and no one has discovered how to build air-fences yet. Airlines, mail-carriers, scenic tour services, and other businesses rely on airspace as a means of production and individuals can access it for recreational purposes. Rather than exploiting pilots or sky-writers for private profit, air traffic control organizes the use of airspace so that no one uses the same bit of airspace at the same time.

Instead of letting markets determine who uses airspace, access is given for practical reasons. Everyone accesses the resource and no one is exploited — would the situation be improved by air-lords charging sky-rent or private fast-lanes for wealthy pilots?

The Challenge of Building Socialism

Socialism Leads to Fully Automated Luxury Gay Space CommunismThere are different ideas about how to install socialism. The Bolsheviks thought socialism could be achieved in Russia by seizing control of the state and using that power to reorganize the relations of production. While Bolshevism did succeed at turning a backward, feudal, pre-industrial monarchy into a modern, industrialized world-power, clearly their model did not last and, in the end, it regressed to a corrupt bureaucracy. In 1936 – 37, the Spanish CNT seemed to build a working model of libertarian-socialism ( anarchism ) but it was crushed by the fascists and we can only guess what the long-term result might have been. Many attempts to build socialism electorally in Latin American nations were sabotaged by the CIA and other crazies — but that is another story.

The truth is that no one has built a fully-functioning model for socialism in the long-term — yet. And that is exactly why understanding socialism is important — technology is an ongoing creative, cooperative project and it works best with as many minds involved as possible.

Imagining an Economic Democracy

Socialist / Labor Rose SymbolTry to imagine economic democracy — a world without landlords. Corporate bureaucracies do not appoint the bosses anymore because workplace democracies elect the best people for the job. With the full value of their labor, workers are never too poor to eat a meal they prepare for others and everyone is paid more for work because no one earns millions just for owning the workplace. There is no fear of jobs being automated anymore and labor-saving technology only means more free time to spend with family, at free universities, or caring for health. Oil and gas corporations do not frack or force pipelines onto the lands of poor communities anymore and better environmental choices are made because resources are owned by the people for the people.

That world is possible — but first, everyone needs to know that. Then, all we have to do is work together to fine-tune the design and overcome whatever stops us from building it — easy, right? Let’s get to work!

In solidarity,
John Laurits

P.S. Leave a comment to tell me about how you think a real socialism might be built or what you think the greatest obstacles are today — or, if you think this is all a heap of nonsense, then leave a comment about why socialism could not work 🙂 I’ll do my best to respond…

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Pony Boy
Pony Boy

We just read your article (my spouse and I), and we realize that bringing into existence a Socialist economic democracy requires freeing the minds hearts and bodies of the working class, which is the 99.9%. The common victim conversation among most people is that the wealthy own all the means of production and political persuasion. But your article helped us realize that those rich people are nothing without our agreement and labor and the current president proves that in their isolated wealth pockets, they’re not even able to function–likely due to being terrified of losing it all which wasn’t theirs to begin with. It’s our collective energy who already owns the means of production. We are it. They aren’t even part of the club. How disorienting that must be. Which shows in the current miasma called the US executive branch how the ruling family… Read more »

White Rose
White Rose

My concern is that I don’t know where we would start. After the election, I feel like there was a surge of interest in social welfare, which could have opened the door for socialism. However, politicians continue to reiterate that the best way to change the system is to run for office, call your congresspeople, and/or vote. Hypothetically, if your congressperson agrees with you politically, calling them isn’t going to make one bit of difference if they are the minority party. We have a system of government that has lost whatever checks and balances it may have initially had, and if one party manages to win the legislature and the presidency, then subsequently install partisan judges in the judiciary, the opposition can’t do anything about it, no matter how much their constituents don’t like what’s going on. Running for office won’t work because, as… Read more »


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