Tuesday, May 8, 2012

Against Robert Reich on "Socialism"

This anxious, unsettled response to Hollande's electoral victory has been circulating on the internet in liberal circles. I feel compelled to respond because it is explicitly framed as a way of turning left-minded people away from "socialism" (something that is becoming more and more intriguing to growing numbers of young people) and back toward the system―capitalism―which has engendered a global slump so deep and protracted that even many bourgeois economists are looking to Marx for answers.

Reich's frantic "don't give up on capitalism" piece is a response to the victory of François Hollande in France, who is hardly a socialist by any stretch and very much an advocate of the capitalist system Reich desperately clings to. Reich's argument is that "socialism is not the answer" because what we really need is a "capitalism that better distributes the benefits of the productivity revolution." The rest of his rather unlettered article is nothing but an elaboration on this formula: better distribute the benefits of productivity and capitalism is a swell system that works for everyone.

I think it's telling that in the article Reich doesn't say a single thing about what "socialism" means. And why should he? He doesn't want to seriously engage with genuine alternatives to the present―he merely intends to leverage the Cold War connotations of the word to help buttress his argument for a slightly reformed status quo. Moreover, if the only problem with capitalism was that it just happened to distribute "benefits" in a unequal way―as Reich suggests―there wouldn't really any need for socialist politics.

It would be nice if that were the only problem with capitalism. Unfortunately, this is only a symptom of its deeper problems, a mere surface-level indication that there is something very wrong at the core of capitalism.

But before I say anything about those deeper problems, let me be clear: the distribution of material wealth in capitalist societies is both highly unequal and highly unjust. But―pace Reich―this problem is not the result of a lack of "political will" to change things. First of all, ordinary people want things to change, but the political system offers them no means of changing things. A vote for Obama, as we've seen, means tax breaks for the rich and austerity for the 99%. Now, I'll concede that changes in tax policy that benefit the ruling class--such as a drastic cut in the marginal rate of income taxation―certainly had an effect on the increase in income inequality during the period from 1981 to the present. But the tax code is not even the main cause of income disparities. The good ol' capitalist system is.

Reich doesn't bother to say what capitalism (or socialism, for that matter) is, or what socialists see as wrong with it, so let me do that really quickly. Think of it as a rushed version of Marxism 101.

Capitalism is a system in which the basic means of production―factories and industry, productive technologies and instruments, raw materials, workplaces, banks, and so on―are the private property of a small class of the population. Call it the capitalist class or, if you like, the 1%.

The capitalist class earns its living by owning, by employing other people to work. Because capitalists own the means of production, as a class they assume direct control over the direction of investment, whether ordinary people find work and under what conditions, the organization of the workplace, the distribution final product, and the profits reaped by selling it on the market. This, unsurprisingly, gives capitalists a great deal of economic power over the 99%. But their control of the means of production also translates into tremendous social and political power as well. It's worth emphasizing that theirs isn't an elected post. Though their decisions―about employment, investment and so on―have massive impacts on our lives, they are not democratically accountable to us whatsoever.

Capitalists also own the goods that workers produce in the workplace―which includes all of the basic goods that we need in order to survive. Thus, we―the 99%―are forced to depend on capitalists both to employ us and to sell us the basic necessities of life; as I've said, and as the Occupy movement has made clear, this gives capitalists enormous social, political and economic power.

Capitalists have a basic interest in keeping the wages of the 99% as low as possible while keeping workers' output as high as possible; low wages and high productivity mean big profits. Given that society is forced to depend on capitalists for employment and the basic necessities of life―not to mention the tax revenues that fund the State―the small capitalist class wields an enormous amount of undemocratic political power over the rest of us. For this reason, Marxists refer to the capitalist class as the ruling class in capitalist societies.

Finally, because of fierce market competition among capitalist firms, individual capitalists are forced to try to accumulate not just any level of profit, but maximum profit by any means necessary. Capitalists, then, don't screw over the 99% because they're evil. A capitalist who doesn't drive wages down, maximize profit, and reinvest in expanded production is not likely to remain a capitalist for long. They are likely to lose market share and go under to more ruthless competitors. Although I won't get into it here, this ruthless "anarchy of production" that competition among capitalists engenders, makes capitalism a remarkably crisis-prone system that is marred by internal contradictions. Mainstream economists―like Reich―seem to still think, however, that capitalism is a system that tends toward harmony and equilibrium.

So, by its very nature, capitalism empowers a small ruling class to appropriate the lion's share of the social surplus for themselves. This essential feature of capitalism is the source of distributive inequalities in the US. Whether or not ordinary people can get a larger share of that surplus under capitalism depends on their levels of organization and militancy. Working people have succeeded in securing the biggest gains following period of mass, extra-electoral struggle―strikes, sit-downs, factory occupations, mass demonstrations and the like. The bosses only give up fractions of their profits when we force them to―power concedes nothing with out a struggle. But as long as the basic structure of the economy is owned and controlled by the 1%, there will be pressure from above to undo all of these gains the minute that struggle subsides. 

Contrast this with the basic goal of socialists. Socialists begin from the idea that the productive wealth of society should be under the democratic control of the people. This means no more bosses over our heads, no more ruling classes lording over us from above, deciding for us, pushing down our living standards. Also, rather than using the massive productive power of modern societies to line the pockets of a small ruling class, socialists advocate using that productive power for the fullest development of human talents and potential. That is the meaning of the slogan "People Over Profit!". Finally, rather than allowing the planet to be destroyed by the scramble for global profits, socialists advocate structuring production in a way that is ecologically sustainable.

Reich, however, finds these ideas intolerable. They are, for him, emphatically not the solution. Rather, we should place our faith in capitalism and the Democratic Party and hope that they will heed Reich's advice and increase the marginal rate of taxation. I must say, like the millions of other Americans who are beginning to look favorably on socialist ideas, I simply don't find this very persuasive.

To whom is Reich's article addressed? On the surface, it is addressed to left-leaning people to exhort them to stop thinking critically about all of the things we've just examined so that they can to make their way back to the tired old platitudes about the virtues of the "free enterprise system" modulo a few reforms here or there. On a deeper level, however, Reich's argument is addressed to state officials, not the 99%. He doesn't call on ordinary people to take the situation into their own hands and struggle--from below--for their own rights. He calls on the existing layer of politicians and technocrats to make a slight change in course―from above―by tweaking the tax code.

But I look elsewhere for change to happen. I look to ordinary working people. I look to developments like the Occupy movement―and its predecessors such as the 1930s labor movement, the civil rights movement and others―which tend to see political and economic problems as linked, rather than separate. My view is that we need to organize ourselves and be prepared to struggle independently of the two major corporate parties―just as the Occupy movement has done―if we are going to win even modest reforms such as taxing the rich and increasing spending on education and healthcare. In fact, we will need organized resistance if we are going to even hold the line against the waves of austerity be administered from above by Democrat and Republican alike.

But what about the Soviet Union? Didn't socialism fail in 1991? These are important questions to ask. We certainly don't want a redux of the bureaucratic, top-down, hierarchical societies that characterized the Stalinist east bloc. But given how we just defined socialism above, my answer to these questions should be obvious: Stalinist Russia had nothing to do with socialism because ordinary people had no say over their own life conditions (whether that was in the workplace, in the home, or in society writ-large). State ownership is just as bad as capitalist ownership if ordinary people have no control over the State. Stalinism merely replaces the capitalist 1% with a bureaucratic 1%. The goal of socialists is to abolish all ruling classes no matter what form they take.


Richard said...

After reading David Bacon's book, "The Children of NAFTA", I stopped paying attention to anything Reich had to say. Bacon exposes how he, as Secretary of Labor, helped to ensure that many of the parade of horribles that he mentioned in this piece were allowed to happen in the US and Mexico after the implementation of NAFTA. He played an essential role in the evisceration of the purported labor protections in the agreement. His recent critiques of the US economy, like his book, "Supercapitalism", look like ripoffs of Michael Hudson to me, all the way down to one of the titles, "Supercapitalism" versus
"Superimperialism". Basically, his message is, real existing capitalism is terrible, spend the rest of your life fighting for a few crumbs.

t said...

I agree with what you say about Reich. I think what the guy has to say is generally pretty awful--and that's to say nothing of his record as Labor Secretary. But he seems to have influence among some left-leaning people that are against austerity, who favor taxing the rich, etc. And given that he was moved to explicitly condemn "socialism" I thought it was a good opportunity to set the record straight.

Sheldon said...

Maybe because Bill O'Reilly called him a communist for his gentle critique of present day capitalism, he has to prove that he really is still down for the system.

But seriously, I think he represents the rational factions of the ruling class who realize that if they don't restore some balance to the present system then they are sowing the seeds of its destruction.

Jon said...

Interesting that Reich looks to a top down approach. In this recent interview at Democracy Now he tells Amy Goodman that he knows the change really comes from below.

For those that say the Soviet Union was Socialist I sometimes point to this article written by Noam Chomsky in 1986. I'm also reading Chomsky's "The Washington Connection and Third World Fascism" written in 1979 and it's interesting to see him attack the Soviet Union. I understand his books were banned in the Soviet states. Why would the Soviet Union ban one of the world's leading Socialists?

Thanks for another interesting article.

Anonymous said...

Bourgeois politicians (and pundits) frequently pay lip service to the idea that change comes "from below". But it remains nothing but lip service.

Capitalism is a system in which workplaces are undemocratic--run in command-style fashion by the owners or their surrogates. Capitalism is a system in which investment, employment, production, etc. are all decided upon by the owners of industry--not democratically.

To defend capitalism is to defend the idea that ordinary people cannot and should not run their own lives. It is to say that we need "experts", "entrepreneurs", "talented executives", etc. and all the rest to lead us from above. It is to say that ordinary working people are just too dumb to be allowed to have democratic control over the economy and society.

That is the position Reich defends by defending capitalism. That is why he is nothing but a technocrat proposing tweaks to a hierarchical system from above.

Anonymous said...

I just saw this and had to read it because I just wrote this a couple a days also in response to Reich's piece: http://my.firedoglake.com/gaspoken/2012/05/08/reichs-case-for-reform-only-emboldens-the-1/. I like your's better but it's funny that there are a good number a similarities between both of our responses.

Misaki said...

>First of all, ordinary people want things to change, but the political system offers them no means of changing things.

That's because many "ordinary people" are still deluded into thinking that "a bad economy" means the rich are doing poorly as well. The majority of people do NOT want the government to create jobs with government spending.

But that's fine because jobs can be created without more spending. If you want to vote, this is what you should vote for. http://jobcreationplan.blogspot.com/

Misaki said...

And as a practical question for those who support "worker ownership of factors of production" (http://en.wikipedia.org/wiki/Workers%27_councils).

Suppose you have a workplace where 1/3 of the workers want the factory to retain profits and reinvest them in long-term gains (like better equipment), while 2/3 think that profits should be immediately redistributed.

Does the majority faction win?

Once again, we can create jobs without more spending and without even significantly increasing worker wages — people just have to accept that they won't be able to buy iPhones priced for twice their production cost and will have to make do for generic, non-luxury items. http://jobcreationplan.blogspot.com/