David Schweickart says he knows one big thing, rather than many small things. The Loyola University professor of philosophy proposes a theory of market socialism in which he seeks to overcome the flaws of the Soviet command economy as well as those of what he calls Chinese “bureaucratic market socialism”.
In his 2002 book After Capitalism, Schweickart outlines a plan for a transition to socialism in a modern democratic society which remains true to Marx’s vision of working class political rule and control of the economy. Worker self-management, the market, and social control of investment, are the three main elements of Schweickart’s model, which he calls Economic Democracy.
With worker self-management, enterprises are owned and controlled by their workers, who elect management and receive the profits of the enterprise’s activity. Schweickart argues that worker controlled enterprises will be more efficient than capitalist companies because of better decision making and motivation. The Mondragon network of cooperatively owned enterprises in Spain is a key exemplar.
Companies will still produce commodities for sale on the market and will strive to maximize their profits in Schweickart’s model. Since the fruits of innovation and efficiency will go to those firms that achieve them, the economy will be dynamic like that of capitalism. However, Schweickart believes that firms under Economic Democracy won’t be driven to expand ceaselessly as they are under capitalism. That is because ED firms will strive to optimize profits per worker, while capitalist forms optimize profits per firm. Once the economic benefits of division of labor have been exhausted, the firm will no longer grow merely for the sake of growth. Schweickart also envisions a way for entrepreneurs to start privately owned firms and provide for more innovation, while placing a cap on their impact by preventing them from bequeathing their profits to heirs.
Investment and banking will be controlled by the state. In place of interest and dividends that are paid by capitalist firms, ED companies pay taxes on their capital which they hold in trust, generating a social investment fund. The investment fund is allocated by elected bodies at the national, regional, and local levels, eliminating regional inequality and providing funeds to start new businesses or expand old ones. Control of investment by the state rather than by the private financial system is the most significant difference between ED and capitalism, and it is surely an appealing one, as the financial turmoil of late 2008 reminds us.
Schweickart also makes the case that ED will address inequality, unemployment, overwork, poverty, racism, ecology, and sham democracy.
Is ED too market-oriented to provide a stable socialist system? Some cooperatives will do better than others; can bankruptcies lead to centralization of ownership? Will worker control become a sham, with managers in effect controlling their enterprises’ production, acting like a new version of the Soviet nomenklatura? Will private savings and entrepreneurship provide an alternative path to accumulation, outside of and ultimately more dynamic than the socialist state? While these questions deserve more examination, I believe they are not fatal and can be solved through additional measures.
How about the transition? Schweickart envisions that the transition to ED could happen peacefully by a few specific reforms of the system. The reform agenda starts with support for cooperatives, green taxes, regulation of international capital flows, a financial assets tax, and a fair trade tariff to assist poor countries. When the financial market crashes, nationalization of the financial system is the result; the assets tax is increased, and the banks are put to work allocating the investment funds. Publicly traded corporations become worker-controlled, and payment of interest and dividends are forbidden. “Production and distribution of goods and services need not be disrupted. Workers still work, managers still manage, businesses still compete….[T]he productive infrastructure of the nation will remain wholly intact…. Life goes on – after capitalism.” A state-provided annuity compensates the capitalist class for the wealth which has been nationalized; while unfair, this allows them to continue to enjoy their consumption, their yachts and mansions, and employ the many workers who provide these things, without interfering in the productive side of the economy.
At one level After Capitalism is a return to the socialist vision of Marx, as Schweickart illustrates using quotes from the Communist Manifesto. The problem with capitalism is – capital. Expropriate capital, manage investment socially, change wage labor to cooperative labor, and we have a qualitatively different system, but one that can be set in place without the wrenching violence, the economic dislocations, of the Soviet experience.
Is it real? The political strength to enact the initial non-revolutionary reforms is not presently at hand for U.S. progressives, but there have been many times and places when they were within reach in advanced capitalist countries. Uniting a section of the population behind them is not in any way an unreasonable political goal. It is the implementation of the second stage, the core economic tenets of ED (elimination of interest and dividends, worker ownership of enterprises) that are unlikely to proceed smoothly and peacefully. The 1973 overthrow of the Unidad Popular in Chile is but one of many examples that shows the capitalist class will respond with violence to any attempt to challenge its rule. It is the political process of winning the transformation that I believe is most in need of expansion in Schweickart’s analysis.
This is a good overview.
ReplyDeleteThere have been two opportunities for the left to employment Schweickart's position recently: from above in the Big Three auto crisis, and from below during the Republic Windows factory occupation.
In the case of auto, we could advocate letting it approach penny stock status (it's already close), have the feds buy it all, lease the firms to the UAW and an allied team of Green engineers, let the workers in each plant fire and hire their managers, one worker, one vote. Then start meeting the country's transport needs with high speed rail, light rail, electric cars and hydrids.
At Republic Windows, have the city take over the abandoned factory with eminent domain, lease it to the workers, get some Obama bailout bucks, purchase sizable quantities of green winterized windows, and launch a Green Jobs program, together with the construction trades, with new apprentices, to 'green' the city's housing stock, starting in low-income neighborhoods.
Fighting for structural reforms like these is what a left is for in non-revolutionary conditions. Too bad a poorly thought out anti-market fundamentalist blocks the way. We have to clear the path.
I am interested and excited by the whole vision but still am curious about this statement, which I realize is pretty fundamental to any non-capitalist vision of the future.
ReplyDelete"Schweickart argues that worker controlled enterprises will be more efficient than capitalist companies because of better decision making and motivation."
They are more efficient because of the larger degree of self-supervision and self-organization by the workers themselves, which is more organic and less hierarchical. They will still have plant managers, hired by them, but a good bit of the supervisor levels are removed.
ReplyDeleteThere is greater motivation because of the share of profit received is more directly connected to how well they perform and the quality of the product. Arbitrary profit-taking by the boss to pay off his yacht is not present.
In a recent article (http://www.project-syndicate.org/commentary/james22), Princeton history professor Harold James acknowledges that the crash of 2008 has generated widespread interest in Marx' analysis of capitalist crises and in state control of investment. But James argues that centralized allocation of investment will not make for good economic decisions. Schweickart addresses that problem by a decentralized network of state-owned banks, each democratically controlled through regional and local elections.
ReplyDeleteI do not believe in government's ability to make wise business decisions. Whether the decision involves producing more hybrids and fewer minivans, or deciding loan standards for mortgage applicants, substituting the government's judgement for that of the business owner seems ill-advised.
ReplyDeleteThe astounding fact about the Obama administration is that it seems to be aspiring to make these types of decisions without staffing its own bureaucracy. Because of the impossibly high ethical standards they have set, the identification of nominees for key positions has been delayed to an unprecedented extent. Meanwhile, the lack of specificity in the administration's proposals is eroding investor confidence and worsening the recession.
This may well turn out to be the gang that can't shoot straight!
I doubt if the lack of specificity has anything to do with 'worsening the recession.' If he was more specific, they'd attack him for micro-managing.
ReplyDeleteBesides, government has made good decisions, from Lincoln's land grant colleges, to FDR's WPA, to Truman's GI Bill, to Eisenhowers Interstates, to LBJ's Head Start. None of these where all that specific, either.
In any case, Schweickart's model calls for all these to be made close to the ground.