On Socialism Today - Planning a Way Forward

The following article - which the author plans to submit for publication by the Australian Fabians - is an in depth survey of the background and options for democratic socialism in Australia and the world. The idea is to spark debate in the lead up to a series of events in Victoria planned for 2020. Your contributions to the debate are also welcome!

Dr Tristan Ewins


Socialistic sentiment can be traced back to the slave revolt of Spartacus and Peasant uprisings in Europe ; for instance that led by Thomas Muntzer in Germany. But ‘modern socialism’ began with those labelled as ‘utopians’ by Karl Marx. Figures like Robert Owen – who personally wanted to convince the bourgeoisie (and nobility) of an egalitarian, communal society based around the means of production. (specifically communes of up to 3,000 people) And all those others who depended on a ‘socialist vision’ to convince people of the desirability of a socialist order ; as opposed to Marxists who based their approach on ‘the fact of class struggle’.

Generally, socialists preferred equality ; an end to exploitation ; extension of democracy to the economy. Marxists wanted to socialise the means of production to end both exploitation and the destructiveness and wastefulness of capitalism and its boom-bust cycle.

But Marx had another criticism of capitalism ; and that was the way in which the division of labour and demanding nature of much work traumatised workers. This was his theory of Alienation. Today in Australia for instance we are a world away from the working conditions of the 19th Century. But in call centres, offices and factories the division of labour can still exclude creative control and work fulfilment. Indeed, work conditions can still be traumatising.

In Germany where the class struggle was advanced the Social Democrats arose as a combination of the Marxists (Eisenachers) and the Lassalleans. Lassalleans (led originally by Ferdinand Lasssalle) believed in industry-wide co-operatives with state aid. Eventually Marxism became dominant. But by 1914 in Germany right-wing ‘socialists’ had come to predominate in unions and the parliament, and those people eschewed internationalism and supported the First World War.

Before World War One both the European and British socialists supported the class struggle and the fight for universal suffrage to advance workers’ rights. But Britain was relatively liberal ; and this resulted in less emphasis on revolution and more emphasis on incrementalism.

Fabianism arose in the 1880s ; and came to represent a movement to influence opinion in liberal and progressive circles. Especially in the Labour Party in Britain. Beatrice and Sidney Webb (prominent British Fabians) expressed sympathy with the achievements of Soviet Communism – but that view did not last. Some Fabians would focus on practical public policy ; others on the more radical aim of incrementally replacing capitalism. Again: Generally Fabians were gradualist rather than supporting a ‘sudden rupture’.

Modern Australian Fabianism shared the British Fabian principles and was formed organisationally in 1947. The height of Fabian influence was in the Whitlam Labor Government.

After World War One the broad Left was generally divided into Communist, Social
Democratic and Labourist Camps. Although pockets of Social Democracy remained highly radical – as in Austria in the 1917 to 1934 period. (Austro-Marxism) These sought a ‘middle path’ between Bolshevism and ‘mainstream’ international social democracy. And there were anarchists and anarcho-syndicalists – who were significant in the Spanish Republican forces and the fight against the Nazi-backed fascist insurgency of Franco in the Spanish Civil War.

From the 1940s through to the 1980s Swedish Social Democracy enjoyed remarkable success (replicated to various degrees in other Nordic countries) with full employment, active industry policy, strong unions, and a strong welfare state. For the overwhelming majority of this period Social Democrats held government. Basically workers received social security in return for a ‘corporatist settlement’ including wage restraint. The full employment achieved under the ‘Rehn-Meidner model’ also made a stronger welfare state possible. Though Walter Korpi conceived of the Swedish situation differently: as a ‘democratic class struggle’, involving mobilisation of ‘Power Resources’ and compromise depending on the balance of class power. But in the 70s and 80s Sweden also had to respond to the Oil Shocks and devalue the Krona. The ‘Meidner Wage Earner Funds’ plan sought to compensate workers for wage restraint by giving them collective capital share. But this implied a radical redistribution of wealth over time. Also - because it appealed only to workers and not to citizens, it could be argued that the funds could have included a wider base. (which is democratically preferable anyway) Capitalists went on the offensive : socialists on the defensive. And there has been a slow retreat since.

Up until and including the 1970s and 1980s there remained strong pockets of radicalism in many Labourist and Social Democratic Parties. But the Oil Shocks of the 70s and the drive to restore profits divided the Left and led to Socialist retreat. Also the Soviet Collapse during 1989-1991 had an enormously demoralising effect on the Western Left ; despite the fact the Western Left had long distanced itself from Stalinism. It’s not unreasonable to see the Gorbachev reform movement as a window of opportunity ; and a missed opportunity.

From Hawke and Keating onwards Australian Labor has broadly internalised neo-liberal Ideology. Small government, privatisation, free trade, limits on the liberties of organised labour, trade agreements which give capital an effective ‘veto’ on regulation and public sector expansion. Marxism used to have a strong base in the Socialist Left. But increasingly the factions have lost ideological cohesion ; and have been subsumed in the mainstream political discourse.

Indeed, the experience of Hawke and Keating inspired Tony Blair and Antony Giddens with their ‘Third Way’ or ‘Radical Social Democratic Centre’. In the 19th and early 20th Centuries ‘Centrism’ had been a largely Catholic phenomenon including limited support for trade unions, labour market regulation and welfare. Since Giddens and Blair the ‘Third Way’ has come to represent ‘neo-liberalism with a human face’. Punitive welfare on the one hand, but also the principle there should be an economic and social ‘floor’ below which no-one should be allowed to fall. Blair also marginally increased tax. (will Australian Labor still consider tax reform for the next election?) But he would not retreat an inch in opposing any re-socialisation – no matter how badly privatisation had failed. (eg: of railways) In Australia more recently ‘Centrism’ as epitomised by the ‘Centre Alliance’ struggles to maintain a credible liberalism – let alone any kind of social democracy. For instance there is conditional support for the ‘Ensuring Integrity’ union-busting legislation. Today ‘Centrism’ in Australia can mean a shallow populism cashing in on broad disillusionment with the two party system. Significant parts of the ALP Right consider themselves ‘Centrist’ after the Blairite model. Blairites also generally accept capitalism as a given.

Fast-forward to 2019 and ‘What is to be done?’.

Capitalism remains more vulnerable than people think. There is much focus on public debt, but private debt is a ‘ticking time bomb’ that could lead to loss of confidence, panic and collapse. In Australia, the US and much of the world private debt is many times the level of public debt. The Australian economy especially has come to rest on the housing bubble. Millions are locked out of home ownership ; but sudden and radical devaluation would cause panic and collapse. The boom-bust cycle remains a fact: but governments focused on public debt are less likely to engage in counter-cyclical measures. This could one day mean recession (or Depression) as the ‘solution’ to indebtedness. Modern Monetary Theory (MMT) has it that government can ‘create money’ at will ; but this is not without limits. It involves a degree of redistribution which capitalists hate – but also inflation. Progressive tax is still more effective at redistributing wealth in a targeted and progressive way. But certainly the MMT crowd are on to something.

The Labor Party today is probably inclined to want to ‘save capitalism from itself’. The welfare state and higher minimum wages can assist by boosting expenditure and demand. A return to a meaningfully mixed economy can help by reducing cost structures via natural public monopolies. This could flow on to the private sector as well. As well, this could counter oligopolistic collusion – for instance in banking. (actually promoting competition) Higher government expenditure can also add money to the economy ; increase demand ; and ameliorate the explosion of private debt – which is a ticking time-bomb for the economy. (here and globally)

An expanded social wage, welfare state, collective consumption and social insurance – can also provide social justice and social security. Think reformed pensions – easing means testing and increasing payments. Public housing. Better-funded schools and hospitals. More money for the Pharmaceutical Benefits Scheme. More efficient public provision of infrastructure. (because of a better rate of borrowing and a ‘public interest test’ rather than share value and dividend maximisation) Also consider National Aged Care Insurance and a withdrawal of regressive user-pays mechanisms. As well as a retreat of user-pays in Education.

These are ameliorative reforms that can improve peoples’ lives. But Australia is still captive to the global economy and will suffer along the rest of the world in any ‘general downturn’ or ‘collapse’.

Over the long term we still need to think about an alternative to capitalism. Sub-Prime and the Global Financial Crisis did not only reveal instability – It also revealed the gap between Use Value and Exchange Value as Marx would put it. That is: there was an abundance of housing amidst widespread destitution and homelessness. This is a real capitalist failing and vulnerability.

Marx’s weakness was that he did not propose any concrete alternative vision to capitalism. He assumed ‘the class struggle would take care of things’. So maybe in part the ‘Utopian Socialists’ were on to something? The context of class struggle had to be engaged with ; but also concrete visions for the future. Today perhaps we need ‘provisional utopias’. We cannot afford to be ‘a force of pure negation’ with no vision for the future. Especially after the real historical experience of Stalinism.

But capitalism is a globally-reinforcing system. You can’t just ‘go it alone’ in revolutionising the entire economy. There are economic AND political constraints.

But what can be done is to begin a process of ‘revolutionary reforms’. Say in the spirit of the interwar Austrian Social Democrats. Even today in Austria there is a legacy in Vienna of 60% public housing – and overwhelmingly high quality public housing. A ‘democratic mixed economy’ would stabilise capitalism (through strategic socialisation and redistribution) while at the same time advancing towards an alternative. As in Austria this would also involve a counter culture: a rebuilding and reassertion of the labour movement ; but also a coalition with other social movements. What Gramsci would have called a ‘counter-hegemonic historic bloc’. That also involves establishing online presences ; other publications ; public meetings ; progressive radio and television ; social events of various kinds ; plays ; workers’ sport ; radical music etc. Establishing footholds where-ever possible.

Importantly the decline of industrial labour (with ‘deindustrialisation’) has widely meant a decline in class consciousness. Service sector workers can be just as exploited ; but are more likely to think themselves ‘middle class’ or lack class consciousness. We can and should fight this. But the industrial working class might not any longer be seen (in the Marxist sense) as a ‘finally redemptive’ ‘universal historic subject’. The labour movement is central: but the modern Left also needs alliances.

And should another Global Financial Crisis occur the big finance houses should not be ‘bailed out at the public’s expense’. Where the public sector steps in (if that occurs) it should retain a share in ownership.

Of course when it comes to advanced socialist transition bourgeois economic and political resistance has to be expected.

The ‘democratic mixed economy’ should be the short to medium term model. That includes a key place for natural public monopolies, strategic government business enterprises , consumers and workers co-operatives of various sorts (including multi-stakeholder co-ops which bring workers, governments and regions together) , mutualist associations . As well as ‘collective capital formation’. ( The Meidner Funds were such ; In Australia superannuation was a very pale imitation which may actually endanger welfare into the future by narrowing its base) ‘Multi-stakeholder co-ops’ are an important idea - as they could enable expansions of economies of scale to retain competitiveness under capitalism. All these are part of a concrete alternative.

There is also a need to restore and consolidate industrial liberties ; to increase organised labour’s power ; its ability to deliver ; and hence its coverage, strength, and ability to contribute to change.

Furthermore: how do we tackle ‘alienation’ today in Marx’s sense? Even with deindustrialisation, workers still find themselves alienated in modern professions – for instance call centre workers. The ‘post-industrial utopia’ has so far failed to emerge. At the least we can improve wages and conditions for the most exploited and alienated workers with low-end labour market regulation. (and maybe government subsidies where the market will not bear higher wages) Perhaps enabling a reduction of the working week for many. (though others would crave longer hours) ‘Free time’ is perhaps one alternative (for now) to Marx’s vision of a communism where workers regained creative control ; and labour becomes ‘life’s prime want’. (a quote from Marx) But ‘alienation’ is a feature of broader Modernity and not only capitalism. The rise of co-operatives could at least facilitate worker control – also ameliorating alienation.

In the final instance we need to think of where improvements in productivity could lead. Either to greater equality, plenty and free time for everyone. Or in the capitalist context only the intensification of growth, profit and exploitation. And possibly greater inequality if we do not socialise much of the gains of productivity. What Marx called the ‘coercive laws of competition’ means that competition forces a focus on productivity for capitalist profit and short term economic advantage. The problem is finding a way out of this ‘circuit’. (as well as the intensification of exploitation ; and a 'lagging behind in wages' in labour intensive areas where productivity improvements are hard to come by) We need to think where free trade and internationalism fit in to this problem. There are environmental implications as well. Capitalism by its very nature will trend towards the ‘endless growth’ option. Perhaps if the emphasis is on information and service industries it could be more environmentally sustainable.

But Sweden is also a warning. Again: there has been retreat since the Meidner Wage Earner Funds. The ‘corporatist consensus’ delivered for several decades in Sweden. But since the bourgeoisie ‘got cold feet’ and organised more overtly against Swedish social democracy – there has been a retreat. Swedish social democracy now has to work with Swedish Liberalism to keep the right-wing parties out ; and the price has been a retreat of the Swedish welfare state and progressive tax. In short: Socialists and social democrats have to be ready for capitalist backlash.

Class struggle creates change. That remains true. But so too do broader coalitions, cultural and electoral strategies. The Fabian Society in Australia is placed to mount cultural interventions ; and hence influence the electoral strategies of the Labor Party and the broader Left. We won’t get all that we want all at once. But we need a critique of capitalism. We have to be prepared for future crises. We have to think what a transition would look like: under what circumstances and what time frame? But all the time considering the reality of power – economic and political ; including the power of the State. And all in a global context: where global progress remains limited without global consciousness and organisation. Which is something the Fabians also need to be thinking about. Building ties with Democratic Socialists of America, for instance, could be a fruitful endeavour.

The Fabian Society re-embracing its place as an organisation of democratic socialism means engaging with these problems. For the short to medium term it is to be hoped we have an important strategic place in developing a ‘democratic mixed economy’ ; critiquing capitalism ; and imagining ‘revolutionary reforms’ which could decisively shift economic and political power over the long term.

The Prospects for Socialism Today

Dr Tristan Ewins


Writing in the Herald-Sun, Chris Collins (11/1/19 ) argues that the Nordic countries have never been “socialist” because they have not conformed to the original Marxist definition of the centralisation of the means of production in state hands. In reality, though, there were always a variety of definitions, and even Marxists themselves have revised their understandings.


Socialist aspirations include ending exploitation and the class system ; and reducing inequalities to a fair level. In Marx’s words, to advance the principle “from each according to ability, to each according to need’. That should include a strong welfare state and social wage ; involving not only natural public monopolies and strategic state ownership ; but also producers’ and consumers’ co-operatives, democratic funds, and a mix of competition, markets and planning.


Socialism also means building an economy focused on ‘use values’. (ie: not just maximising abstract exchange value ; eg: preserving the natural environment) But we’re in a global economy: which means we have to live with the transnational corporations. They are at best ‘a mixed blessing’: at times spurring innovations and job creation ; but also unacceptable inequalities in wealth and power ; as well as collusion, monopolism, planned obsolescence and so on. But also arguably the consequence of bourgeois dominance is that we live in a ‘One Dimensional Society’ where substantially different social alternatives are excluded from mainstream discussion. What’s needed is robust pluralism: where socialism is part of the debate ; and hence a genuine option in the broader context of democracy.


In response to writers who attempt to put Swedish Social Democracy and Democratic Socialism in opposition to one another: for key Swedish thinkers and politicians such as Wigforss, Palme, Rehn, Meidner etc the Nordic Model was definitely a kind of socialism. The 'high water mark' was with the Meidner Wage Earner Funds proposals of the 70s and 80s. That marked the end of a 'corporatist consensus' (institutionalised consultation and co-operation) which developed over several decades starting from the 1930s. The model has been in slow retreat since. But its past successes over many decades still give a sense of what is possible.


Importantly, the wage earner funds were to be structured in such a way as to compensate workers for prior wage restraint. But the extent of that wage restraint had been such that the funds would eventually deliver economic control to workers over many years. One of the biggest problems with the funds is that they focused on workers alone rather than the broader category of 'citizens'. (hence excluding pensioners for instance) In 1983 Australian Leftists like Laurie Carmichael wanted ‘Nordic Style’ policies in return for wage restraint under the the Government of Bob Hawke and 'The Accord'. Unfortunately nothing of the sort was actually delivered.


That said: what kind of state is in a position to deliver on socialism?


Leninists are inclined to oppose the ‘liberal bourgeois state’ to the kind of state which existed under the Bolsheviks. A ‘workers’ state’. Trotskyists would argue it had become a ‘degenerated workers’ state’ under the domination of Stalin.

On the other hand, by certain interpretations a genuine workers' state is a democratic state ; where we can interpret 'the dictatorship of the proletariat' as a 'manner of applying democracy' ; the 'democratic dictatorship' of the working class majority. (widely misinterpreted, the term always referred to the democratic rule of the working class as opposed to the rule of a single man such as Stalin) The ultimate aim is to create a ‘pure democracy’ where the state represents all people ; and the class system is permanently transcended. Finally, the State itself is presumed by Marxists to ‘wither away’ with the end of all class divisions and antagonisms. One flaw of this thinking, however, is the presumption that over the long run 'only class antagonisms matter' to such a degree that some kind of state power is necessary either as arbiter ; or to enforce interests.


Arguably Sweden enjoyed a decades-long 'equilibrium in the class struggle' or otherwise what Korpi called a 'democratic class struggle'. Where the class struggle was in some ways 'institutionalised' between social democrats, unions, employers. Concessions were made based on ‘the balance of class forces’ ; but open escalation of conflict was avoided as being in no-one’s interest. Then in the 1970s and 80s the Social Democrats and the LO (‘Landsorganisationen’ ; or Swedish Trade Union Confederation) attempted to assert their democratic leverage to achieve previously unheard of economic redistribution and democratisation. Again: even with over 80% unionisation coverage they still failed. And Social Democracy has been on the defensive there largely ever since. If anything, this gives an idea just how difficult the struggle can be.

What we need is a democratic state which is not a medium for direct OR indirect bourgeois rule. Nicos Poulanztas wrote about a 'logic of the class struggle' which 'imprinted itself upon the state field'. I'm not a structuralist (as Poulantzas was) ; but in a way that makes sense. The state tends to defend bourgeois interests ; but not totally. It is not a 'simple instrument'. It is much more complex than that. Rather, it has its own internal contradictions and internal struggles. What we need is a state which is fully committed to the implications of democracy: as opposed to the direct or indirect rule of the bourgeoisie.

The problem is that capitalism is supported by a clear majority of states ; as well as by the transnationals which are an expression of and foundation for global bourgeois dominance. Even assuming a state which breaks POLITICAL bourgeois dominance at a local level ; there are still the remainder of bourgeois states internationally; and global bourgeois economic power ; and economic co-dependence.


Think about revolutionary France. The Revolution was diverted into Bonapartism. (the rule of the French Emperor, Napoleon I) And eventually with the Congress of Vienna there was total Restoration of the "Ancien Regime" in France, and the consolidation of monarchies and their traditional bloodlines elsewhere in Europe. Liberal Democracy did not really take hold through much of the world until the Bolsheviks put much of the European bourgeoisie under such pressure as to implement the crucial concession of universal suffrage. This had long been a key Social Democratic and Marxist demand. We're talking about a period spanning over 100 years. (throughout which we had other revolutions and struggles ; eg: 1830, 1848, 1871) Thereafter the bourgeoisie and its representatives have spent another 100-odd years thinking of ways to divide the working class against itself to prevent it from realising the potential of the suffrage. The splintering of the working class culturally and economically has made it increasingly hard to realise the solidarity we need to bring about the change we want. Narratives on ‘political correctness’ and ‘left elites’ have just this effect ; and sometimes by neglecting class interests we play into the bourgeoisie’s hands.


Critics of socialism often declare that they don’t want ‘statism’ or state domination. And this they associate with socialism. Well, no - we don't want Stalinist-style 'statism'. (though I hate the term 'statism' as it is commonly used to stigmatise any place for the state ; even a democratic state) But 'wresting capital by degrees' from the bourgeoisie still sounds like a good idea - if done properly – and if only it were possible. The problems of exploitation and economic polarisation still demand our attention as practical and moral questions. And after all, radical redistribution of wealth is what the Swedes were attempting with the Meidner wage earner funds in the 1970s and 1980s .

Arguably the Mixed Economy represents progress towards that goal. Though the ‘mixed economy’, social wage and welfare state can be supported by far more ‘moderate’ forces who want nothing more over the long term than to ameliorate inequality and ‘save capitalism from itself’.


"Wresting capital by degrees" from the bourgeoisie can imaginably involve a mix of public, co-operative and other democratic ownership - as opposed to 'Stalinist Statism'. But the process cannot be finished because bourgeois interests reinforce each other globally. Currently, there is no (acceptable) ‘way out’ of capitalism. But if we mobilise we can at least force compromises which are in workers' and citizens' interests. And we can convince the bourgeoisie that compromise is sometimes in its own interests. (again ; 'saving capitalism from itself') For example: natural public monopolies can reduce cost structures not just for citizens/consumers/workers – but also for business. And a state-owned savings and loans bank (with a charter promoting competition and ethical banking) could inject competition into the sector of benefit both to business, and to most ordinary people.


Importantly - forcing compromise through struggle is in some ways more involved than just 'gaming the system'. Over the long term who knows what's possible? Again: think about Revolutionary France - and the hegemony of liberal democracies which only finally arose more than 100 years later. We can only hope it will not take a catastrophe such as the First World War was to provide enough impetus to drive qualitative change ; to challenge the class system and the ‘defacto rule’ of Capital.

If anything the Global Financial Crisis gave a sense of capitalism’s enduring instability ; and that (should another crisis occur) radical interventions may be necessary ‘to save the system from itself’. But public dissatisfaction with “bailouts at the peoples’ expense” may drive strategic socialisations sooner than we think.


Socialism is not ‘inevitable’ as the old Marxist Centrists used to insist. We cannot anticipate all the policy innovations which may help ‘save the system from itself’. But over the long term a more generalised breakdown cannot be ruled out either. Socialists need to stand prepared for all manner of contingencies. Global organisation and dialogue are necessary to best prepare for those contingencies. That means not responding to discourse on ‘globalisation’ as an excuse for defeatism. It means working out the possibilities of domestic social democracy/democratic socialism ; but also building the organisation and dialogue necessary to give rise to internationalist responses. The current Socialist International is not an effective vehicle for this. Can it be reformed? Or do we need new forms of international organisation and dialogue?

Instrument of Change, ‘Barometer’ of Class Struggle, or ‘Parliamentary Talking Shop’?

 

In this new 'Left Focus' article, Tristan Ewins explores the conflict between social democratic parliamentarianism and far-Left critiques of parliamentary democracy.  He argues for the strategic worth of parliamentary interventions, but that social change involves more than electoralism.

 

Leninist Marxism  had a traditionally hostile attitude towards parliamentarianism – with parliaments dismissed as ‘talking shops’.  Though for earlier Marxists at least parliament was seen in the vital role as a ‘barometer of the class struggle’.  

There is a certain irony here, as 19^th Century Marxism had long championed universal and equal suffrage as a vital reform for ‘gaining a foothold’ in the executive wing of government, and as part of a broader process of revolutionising the state apparatus.   The structuralist Marxist, Nicos Poulantzas specifically was to refer to ‘the logic of class struggle’ imprinting upon ‘the state field’.  (which involves an importantly diverging connotation when compared to the alternate concept of the state purely in the sense of an ‘instrument’)  Problems arose, however, when socialist reformists began to apprehend the state power as a ‘neutral instrument’ which they could simply “lay ahold of” (Lenin) by virtue of a majority - in implementing their reform agendas. 

 

Certainly, Kautsky’s idea of an  “energetic shifting of power relations in the state” (find ref)  – while vague – tends to suggest something more than instrumentalism.  (Kautsky, The Road to Power, p 16, pp 71-72) .  And while Kautsky  comes in for criticism from modern-day would-be Bolsheviks, “Class neutrality” is the commonly accepted theory today – and is even more of a simplification…

 

To do them justice, ‘orthodox’ Marxists such as Kautsky and Martov were well aware that the state in bourgeois societies was far from a ‘neutral channel’, and still less a ‘neutral instrument’. They posed a political revolution as the means of democratising the state.  In Kautsky’s words, this would involve a “great decisive struggle” where the proletariat “grow[s] immensely” and acquires “a dominant position in the state” through democracy.  Though as we have noted – that in itself was a far more ambitious goal than a mere parliamentary majority.  (Kautsky; The Road to Power p16, pp 71-72)  

 

For orthodox Marxism, the need for political revolution was such that only the social democratic consciousness of the organised working class would enable it.  Hence the usual opposition of ‘social democratic’ consciousness and methods with those of ‘pure trade unionism’.  This distinction was carried forth into the 20^th Century by radical social democrats and Bolsheviks alike, and still retains a certain usefulness.  It is an important legacy.

 

As Mouffe and Laclau explain, the resulting presumption of “a privileged role for intellectuals” influenced Lenin.  Yet by contrast they hold that “according to the Spinozist formula (ie: structuralism, materialism), its sole freedom consists in being the consciousness of necessity.”  (Mouffe and Laclau, pp 15-20)   And Kautsky’s philosophical materialism is undoubtedly in the philosophical materialist tradition.  Hence a crucial variance between Kautsky and Lenin.

 

In reality parliamentarism has involved a mixture of roles .  Over decades, for instance, Swedish social democrats were to deliver a solidaristic society – a kind of ‘good society’ in a ‘hybrid system’ based on deep and extensive social solidarity .  This involved ground-breaking reforms – especially around welfare provision, full employment; and trade unions with saturation-levels of coverage; as well as corporatist structures of consultation.  Rather than a mere ‘talking shop’ Swedish social democratic parliaments – backed necessarily by a strong and mobilised social democratic and labour movement – delivered real gains to workers, and to the vulnerable.  And yet when the Swedish Social Democrats finally embarked on a program of effective industry socialisation via wage earner funds in the 1970s, limitations of the model began to seem apparent.  The power of big Swedish capital – long co-opted within corporatist structures – was unleashed with a ‘turning of the tide’ and a slow retreat for Social Democracy – which is still going on to this day.  So while parliament need not comprise a mere ‘talking shop’,  nonetheless on its own it does not allow reformers absolute freedom. (regardless of who holds the majority)  Parliamentary systems and ‘parliamentary/party-political democratic actors’ are constrained and conditioned by capitalist economic systems – national, and increasingly global; as well as by the interventions of capitalist economic ‘actors’ . 

 Parliaments – and the state powers on which they rest – are marked by the broader social and economic contradictions within which they are embedded.  Yet again – ‘structure and agency condition each other’, and collective will formation can challenge the interpenetrating logics of these social systems and structures.  But capitalist systemic imperatives – exploitation, accumulation, expansion – are dominant – and even assuming an interplay of voluntarism/agency and system/structure – attempts at socialist collective will formation are an ‘uphill battle’.

But reforms won through struggle – and retained through struggle - eg: socialised medicine, industrial liberties and rights, welfare – are all of real-world value to the exploited, the oppressed and the vulnerable.

Parliaments – while valuable – are not ‘the be all and end all’.  There is always a need for extra-parliamentary organisation.  And there will be times when the class struggle (and other struggles) run ahead of their representation in parliaments.   Questions of whether to ‘press ahead’ with struggle regardless are necessarily strategic in nature; though the question of minority liberation versus majority rule is also a values-based dilemma. Again: the Austro-Marxist example shows how dual power can be the condition of effective parliamentary democracy.  So despite their potential value, parliaments need to be considered in the broader context – of the balance of class (and other) forces – and of meaningful inroads of democracy into ‘the state field’.


Kautksy, Karl - ‘The Road to Power’ (Edited by John Kautsky), Humanities Press, New Jersey, 1996 

Laclau, Ernesto and Mouffe, Chantal; “Hegemony and Socialist Strategy – Towards a Radical Democratic Politics, Second Edition’,  Verso, London, republished 2001

 

What is the 'Democratic Mixed Economy'?

above: newly published by Connor Court - 'Turning Left or Right'


The essay that follows was an original draft of an essay on 'The Democratic Mixed Economy' - written for “Turning Left or Right – Values in Modern Politics”: a book edited by Carlo Carli, Tim Wilson and Paul Collits, and published by Connor Court. That essay was very significantly cut back to be much more concise; so I am hoping readers may get some idea of the intentions of the original draft.

But firstly – the abstract below is an account of that book, and I urge readers to consider purchasing it; The “Democratic Mixed Economy” essay follows:

Democracy is about choice. But today it can appear to be a choice between personalities as major political parties squabble over different shades of the same policy. Is the great political contest of ideas over? Or are the divisions less obvious than they once were?

How does the left balance competing ideas like free speech and avoiding offence? Why do classical liberals want to abolish the ABC and Australian Institute of Sport? And where do the left, liberals and conservatives agree, and why?

Turning left or right asks these questions, breaks through the wall of sound bites and explores how century-old political philosophies connect to practical policy for the 21st Century.

Each chapter includes three essays from some of Australia’s most engaged political thinkers who explore contemporary policy issues, find the dividing lines and reinject values and ideas. Importantly, every author’s essay provides insight into the solutions they think are needed to make Australia a better country for future generations.  

To order and for more info see:  http://www.connorcourt.com/catalog1/index.php?main_page=product_info&products_id=262#.UnCWhUG4aUk


By Tristan Ewins

Historical Background on the Mixed Economy


The Left has had an often ambiguous relationship with the State when it came to matters of political economy. Marxists sought centralisation of industry in the hands of the State under socialism en route to ‘stateless communism’. Yet there were those among them who believed that under capitalism the ruling classes would never allow socialisation of any form to progress beyond what was necessary to protect their own economic interests. In the Marxist view the state was not seen as an impartial arbiter between civic interests nor as a ‘neutral’ vehicle for the common good. Marxist views of the state as a vehicle for specific class interests contrasted with the socialism of Ferdinand Lassalle – the German socialist who – after the German philosopher Hegel – saw the State as a vehicle for reconciliation and ‘the universal interest’. And both Lassalle and Marx were at odds with libertarian anarchists such as Proudhon who saw in the co-operative movement the potential to transcend capitalism without the trappings of the State. 

In the 20th Century, however, Greek Marxist Nicos Poulantzas was to suggest that states themselves could be marked by internal contradiction due to the logic of class conflict. This went both beyond liberal notions of a ‘neutral’ state and beyond orthodox Marxist notions that state apparatuses under capitalism by their nature served only narrow bourgeois interests. From this it follows that contested states could advance working class and civic interests even under capitalism depending on the balance of class forces. It is on this basis that this author intends to argue that a ‘historic compromise’ is possible in the form of a ‘democratic mixed economy’. Universal suffrage is one potential basis for working class power – and affects the ‘balance of class forces’ - but is best utilised under circumstances of high social democratic and class consciousness and organisation.

Regardless of all this, however, in the course of the twentieth century progressive liberals and socialists alike became associated with ideas of (relatively) ‘big government’ – of a progressive public sector and social wage. Successive World Wars had demonstrated the potential of central economic planning; indeed of ‘state capitalism’. And classical economic liberalism stood discredited by the experience of Depression. This lent a degree of prestige to social democracy and its ambitions of strong welfare states, and an advancing public sector. Much of the world adopted a Keynesian approach involving a key role for the state sector in bringing forward public works: stimulating aggregate demand to counter cyclical downturns. This also required higher (often progressive) taxes – in order to source public investments and service debt. As opposed to the classical economic liberals and Austrian School economists, for the Keynesians there was no natural ‘equilibrium’ – achieved through the winding back of so-called ‘distortions’ such as tax, the public sector, labour market regulation and so on. The classical Keynesian economy was ‘mixed’ – but as yet not democratic – in the sense of delivering true popular control.

In Sweden especially Rudolf Meidner and Gosta Rehn developed an approach to economic management involving full employment, growth, high incomes and the containment of inflation. In Sweden security and growth went hand in hand as a steadily expanding welfare state developed alongside one of Europe’s most robust economies. Strong industry policies aimed to create high wage jobs in the place of unviable industries which could not survive without cheap labour. Full employment was accepted by both employers and employees as part of the Swedish ‘historic compromise’. This was opposed to the previous reality: of capitalism founded on insecurity – with a ‘reserve army of labour’ resulting in ‘labour market discipline’ – but at great economic and social cost.

Swedish social democracy was to advance steadily for decades – achieving ‘political citizenship’ (through universal suffrage) and ‘social citizenship’ (through the welfare state): and finally attempting to achieve a regime of “economic citizenship” through innovative measures of economic democratisation and socialisation. But Sweden’s march forward was brought to a halt over the issue of Meidner wage earner funds. Through these funds, Rudolf Meidner and the powerful unions who promoted the cause sought to compensate Swedish workers for past wage restraint – which had resulted in ‘super profits’ and concentration of ownership – by according to them collective capital share. This held the potential of gradually socialising investment in Sweden – leading to what in retrospect could legitimately have been called a “democratic mixed economy”. The defeat of the Meidner initiative by militant employers, here, was ‘the high water mark’ for Swedish social democracy.

Around about the same time (the 1970s and 1980s) social democracy underwent a succession of defeats through much of the advanced capitalist world. The First and Second Oil Shocks hit western capitalism hard, underscored by an ongoing tendency of profits to fall as anticipated by Marx as far back as the 19th Century.. (This ‘falling rate of profit’ remains the consequence of the cost of constant revolutionising of the means of production; although capitalists can get away with intensifying the rate of exploitation as a response - in a context where new technology improves productivity and living standards in absolute and qualitative terms at the same time; Favourable terms of trade can also serve as a protection at a national level – as historically with Sweden - but not a comprehensively global level) Wage restraint and a falling wage share of the economy, as well as attacks on industrial liberties were promoted as a means of restoring profitability. So too was ‘corporate welfare’ – funded through attacks on the welfare state, implementation of ‘user pays’, reduction of corporate taxation and like measures. Profits were restored and inflation contained – but through much of the world this was at tremendous social cost. (Sweden was not unaffected, being forced to drastically reduce the value of the Krona to remain competitive; but its welfare state remained resilient, and cushioned vulnerable Swedes against the ‘economic storm’)

The rise of neo-liberal ideology meant the progressive stigmatisation of the public sector; of the welfare state and social wage; of industrial rights and of progressive taxation. User pays and more regressive tax mixes hit the vulnerable hard. Even in Australia the Accords entered into by the unions and the Hawke Labor Government did not deliver the ‘Nordic’ outcomes some had hoped for. Wage restraint was rewarded with tax cuts – but those very tax cuts also reduced the revenue base from which the social wage and welfare state might otherwise have been expanded. Stigmatisation of labour militancy – on the grounds of ‘reconciliation’ – also led to a growing intolerance for industrial action. Furthermore – the most rudimentary ideas of social democratic redistributive justice became virtually ‘unspeakable’ – let alone a more robust critique of capitalist instability, exploitation, waste and centralisation of power.

Fast forward to 2013, however, and there were growing ‘cracks in the neo-liberal ideological edifice’ despite decades of its Ideological hegemony. In Australia robust intervention by the Rudd Labor government managed to steer Australia through the 2007-08 ‘Global Financial Crisis’ relatively unscathed. But stigma against major tax reform remained; and an ill-timed attempt to introduce a ‘super profits’ tax on mining saw the end of Rudd Labor with Prime Minister Kevin Rudd’s replacement by Julia Gillard. Following this, Prime Minister Gillard’s carbon tax was successful in reducing emissions – and yet its introduction was politically damaging in light of previous promises not to introduce such a tax; and with Conservative disinformation about the proportionate effect of the tax on cost of living pressures)


What kind of Democratic Mixed Economy for Today?

All this said, what kind of ‘democratic mixed economy’ should Leftists be aiming for today? Certainly the Left would be well advised to exploit any weak points in the ‘neo-liberal edifice’ as the basis for and ideological counter-offensive. Importantly: many arguments for the old kind of mixed economy remain relevant – and Labor needs to reassess its previous commitment to the neo-liberal Ideology; including its own past rejection of the mixed economy.

Firstly we will observe the centrality of the welfare state and social wage for ‘social citizenship’. 

Public sector intervention can provide ‘social insurance’ – for example in aged care, disability support and services, comprehensive socialised medicine, legal aid, social housing and various forms of welfare. Arguably these services must be provided to all on the basis of need – as a matter of human decency, and of distributive justice. At the moment the quality of aged care in Australia is a hidden shame; and one which would spur much greater social outrage if working class voters realised what quite possibly awaited them and their loved ones in their final years.

The strongest welfare states are found in the Nordic nations (Sweden, Finland, Norway, Denmark) as well as in the Netherlands. Australian social democracy as embodied in the Labor Party has a long way to go to deliver Nordic levels of social security; and falls short in its scope of social expenditure compared to many other OECD countries as well. And yet the class base necessary as a foundation for a strong welfare state remains viable in Australia. Tax reform aimed at the wealthy and the upper middle class (in the vicinity of the top 15% income demographic) – would have a broad enough base to deliver tens of billions in funds for comprehensive social wage and welfare reform to the benefit of the remainder of the population.

Modern abundance also provides the economic foundation for greater cultural development and popular cultural participation than ever before.

As early as 1892 the Marxist scholar Karl Kautsky proclaimed:

“We must not think of the socialist society as something rigid and uniform, but rather as an organism, constantly developing, rich in possibilities of change, an organism that is to develop naturally from increasing the division of labour, commercial exchange, and the dominance of society by science and art.” (my emphasis) (Kautsky, P 141)

 In the information age Kautsky’s words appear prophetic. And yet modernity in its capitalist guise also warps culture, including science and art themselves. Even science and art are increasingly commodified to fulfil the ends of profit maximisation. In the field of academia, Arts and Social Sciences not ‘functional’ to capitalism are increasingly marginalised. But free education, including liberal education and education for ideological literacy and active and critical citizenship - could accommodate a plurality of wide ranging criticism – including of capitalism itself - as part of the project for a ‘democratic mixed economy’.

This brings us to the matter of public infrastructure and enterprise.

There are ‘natural public monopolies’ – especially in the area of infrastructure – where competition just doesn’t make sense - and private monopoly even less so. To elaborate – competition can duplicate cost structures – the physical cost of infrastructure; the cost of duplicated administration; the cost of profit margins. And private infrastructure (also Public Private Partnerships) tend to pass on an increased cost of borrowing on to consumers. On the other hand private monopoly can be just as damaging – lacking the corrective functions of competition, and also potentially leading to profit gouging and abuse of market power. To be specific, current areas of potential natural public monopoly include communications infrastructure; as well as water and energy; roads and public transport; ports and airports. In Melbourne it is notable that emerging working class suburbs are lacking crucial infrastructure including public transport, health services and schools because the state has abrogated its responsibilities – in order to hold down tax. Private infrastructure is the more-costly option; and if funded through user pays mechanisms can be highly regressive.

Large public sector corporations can also potentially compete in the global marketplace – delivering social dividends to the public – and made viable by the economies of scale provided in the context of government investment - without removing the corrective and refining influences of competition. Social investment in mining via a Sovereign Wealth Fund could potentially capture tens of billions for social purposes which otherwise are largely diverted overseas. It could even be financed in part via a reformed mining tax.

There are other areas where public sector intervention makes sense – not always to form a ‘natural public monopoly’ – but to enhance competition and outcomes in otherwise monopolistic or oligopolistic sectors. Sometimes there is also the need to counter possible collusion. Examples include public sector banking; state owned general insurance; state-owned private health insurance. State enterprises have also historically involved cross-subsidisation for the disadvantaged. Municipal as well as co-operative and not-for-profit child care and aged care can also ‘deliver a better deal’ to consumers. (where necessary with state subsidy)

State funding can also be essential in areas of pure scientific research where the immediate commercial gains are not clear. And public sector media and broadcasting can provide a corrective influence – pursuing goals beyond mere profitability, or the ‘cultural power-plays’ of a handful of billionaires. This can include the goals of an authentic and inclusive pluralism, as well as ensuring quotas for local content, and the genuine promotion of participatory media.

Finally, today most Australian families would prefer to own their own home. But the Howard-era housing bubble has put housing out of reach for many. Substantial investment in social housing could provide for disadvantaged families, pressing urban consolidation, while also increasing housing supply, and helping to correct the market failure of unaffordable housing.

Manifestations of Economic Democracy: Consumer and producer co-operatives

But the public sector alone is not ‘the last word’ on the democratic mixed economy. To be truly ‘democratic’ an economy must rest on real popular control. There is no ‘play of class forces’ favourable enough currently to result in the socialisation of the big transnational corporations – the ‘economic commanding heights’. (for instance as envisaged in the 1970s by British Labour thinker Stuart Holland) And engagement with the transnationals is necessary in order to make available their innovations for the general public. But there are a number of possible strategies which could gradually extend the ‘democratic sector’ of the economy. We will mention co-operative enterprise, mutualism and collective capital formation, co-determination and economic regulation. 

Karl Marx had argued at one point that co-operative productive enterprise attacked capitalist exploitation “at its very roots”. Though socialist revisionist Eduard Bernstein observed that co-operative enterprise under capitalism faced the same contradictions as private enterprise. To elaborate, Bernstein – who had refuted important parts of the Marxist orthodoxy – nonetheless observed of Marxian economic analysis:

“The fall of the profit rate is a fact, the advent of over-production and crises is a fact, periodic diminution of capital is a fact, the concentration and centralisation of industrial capital is a fact, the increase of the rate of surplus value is a fact.” (Bernstein, Pp 41-42)   

So as opposed to comprehensive socialisation under socialism, co-operatives under capitalism would face competitive pressure due to the economies of scale of their private sector rivals – who tended increasingly towards monopolism. They would be affected – and potentially ruined – by cyclical crises. And they would have to reserve greater proportions of their profits for investment (ie: internally financed investment) in the means of production – to retain co-operative status and still remain competitive.

Bernstein also feared co-operatives – for instance as anticipated by Lassalle - could become ‘corporate interests’ which actually gouged and exploited consumers. Specifically he considered the scenario of union-run co-operatives coming to dominate “whole branches of production”. 

In reality, though, co-operatives have achieved nowhere near monopoly status. Even the largest co-operatives can be held to account through competition in local and global markets. Corporate monopolisation on a global scale is the real threat. And mutual societies have no incentive to ‘maximise profits’ – as all revenue is reinvested for the benefit of members. Canadian economist and labour movement activist, Jim Stanford has observed several examples of successful co-operative enterprise. As of 2007 this included ‘Rabobank’ in the Netherlands, with 55,000 staff and 600 billion Euros under management. Also notable was the ‘Mondragon Co-operative’ in Spain – a worker-owned co-operative network employing over 80,000 people. (Stanford, p 329) 

While subject to capitalist pressures, existing co-operatives do away with the expropriation of surplus value by capitalists. Generally under the co-operative model any profits are duly socialised; and workers maintain democratic control. And while small co-operatives may be subject to greater risk, participation in that context can be rewarding insofar as direct control overcomes the kind of alienation resulting from the division of labour under capitalism.

Meanwhile consumer co-operatives can provide ordinary people with greater market power; and mutual societies can provide voluntary social solidarity while cutting out the profit motive and indeed the profit mechanic entirely. Mutualised automotive societies, mutual credit and mutual insurance all have long histories.

Arguably, though, robust state-aid is necessary to support these endeavours, and ensure such democratic enterprise retains strong market share, and a higher market profile. Ideally this should involve concessional loans, financial advice, tax concessions, and assistance with marketing. This is suggestive of potentially visionary policies favouring economic democracy by a future Australian Labor government, and other potentially progressive future governments worldwide.


Collective Capital formation

Another area of potential economic democratisation is collective capital formation. This involves workers and citizens coalescing to invest in the economy; and in the process potentially delivering economic power to those people collectively. Collective capital formation can take many forms: some radically redistributive; others barely challenging the logic of capitalism.

In Australia it is true to argue that industry superannuation funds (private pensions) hold the potential of delivering economic power to organised labour – which administers many funds on a not-for-profit basis. This is a common argument. And yet there is a downside as well. Public pension funds hold the advantage of socialising (rather than privatising) risk faced by workers; and also of not replicating labour market inequalities in retirement. Policy makers also have to deal with the future prospect of an Aged Pension marginalised along class lines. And there is the potential for rent-seeking behaviour when it comes to fund involvement in Public Private Partnerships which simply cannot provide the best value infrastructure for citizens.

However: returning to ‘Meidner’; wage eager funds in Sweden were based on far more radically redistributive premises, with 20 per cent of annual company profits set aside for workers. In decades, this would have led those democratic funds to a dominant position in the Swedish economy. But Meidner was arguably flawed in its apparent ‘productivism’ – its focus on Swedes in their capacity as employees - as opposed to their capacity as citizens. Arguably ‘citizens funds’ – marked from the start by a cap on the projected level of fund ownership – may have won over more voters, and averted the unflinching opposition of employers. At the time they were ‘wound up’ the funds only controlled 7 per cent of the Swedish stock market. (see: http://newleftreview.org/II/34/robin-blackburn-capital-and-social-europe )  

But learning the lessons of Meidner, the time could be right for a reconsideration of democratic and redistributive forms of collective capital formation.


‘Peeling the Onion’ of bourgeois property rights: Nils Karleby

Swedish social democrat Nils Karleby was well-known for his characterisation of economic ownership of the means of production not as an ‘indivisible’ phenomenon – but rather as a ‘bundle of rights’. The consequence of this is that socialisation ought be approached piecemeal – and that infringements upon the ‘prerogatives’ of private ownership can proceed gradually – with labour market regulation, health and safety standards, accident insurance, an eight hour day and so on. (Tilton, pp 79-81)

Hence there was Karleby’s powerful metaphor that: Social Democrats should:

“[strip] away the prerogatives of capitalists, like layers of an onion, until nothing remains.” (Karleby in Tilton, pp 80-81) 

However in Australia far-reaching economic deregulation – including labour market deregulation – and tax cuts contributing to a regime of ‘corporate welfare’ – have restored these prerogatives. Meanwhile Financial deregulation and uncontained finance market speculation led to the Global Financial Crisis disaster in 2007-2008. (the legacy of which we are still living with)

A democratic mixed economy does not simply leave these matters to ‘the market’ when the consequence is an intensification of exploitation. Restrictions on union rights of organisation, withdrawal of labour, and access are intended to facilitate this intensification and overcome resistance.

Growth is always considered ‘good’ as it facilitates the endless expansion of consumption and of the world market on which capitalist self-reproduction depends. But proponents of a democratic mixed economy question the assumed “rights of property” and the social consequences of this. Increasing levels of over-time for some and promoting casualization and job insecurity for others; with a steadily-rising retirement age - all contribute to the logic and imperatives of capitalist accumulation - to the detriment of the ‘life-world’ of real people. Work/Life balance across peoples’ entire lifetime conflicts directly with these ‘prerogatives of capital’.

Further – neo-liberal capitalism is self-destructive in the sense that the inequality it produces dampens aggregate demand – and hence the very growth upon which its systemic logic depends. (as those on lower incomes tend to spend a greater portion of their income)

In response to these phenomena strong unions could be well advised to pursue an optional shortened working week for those unionised workers who so choose; and a more robust minimum wage; with recognition of the hardship faced by some workers enduring unpleasant and or inconvenient hours and conditions. (for example cleaners) Further government subsidy of wages in areas such as child care and aged care - largely feminised industries currently involving high levels of exploitation for skilled workers - could also comprise a welcome reform. (as of writing the Gillard Labor government had made some progress on this front; but the new Conservative Abbott government is rescinding subsidies for Aged Care workers)

Also co-determination as has been attempted in some countries – very notably Germany – could involve mandatory employee representation on the boards of major companies and employee input into safe work practices amongst other areas - ameliorating the ‘absolutism of capital’. Though it is no permanent or comprehensive solution for antagonisms of class interest.


Conclusion

Looking back to the 1950s it is interesting to note that the conservatives and ‘centrists’ of that time were often more ‘radical’ on the economy than today’s avowed social democrats: and even of some avowed members of the Socialist Left.

In his important work, ‘Hayek Versus Marx’ former Australian Communist leader Eric Aarons considers the “social market” model – as embraced by the German Christian Democrats in 1950s, and the German Social Democrats “after 1959”. As Aarons explains, this approach suggested “a social vision couched in moral as well as economic terms…”, and “recognition of the fundamentally social nature of organised production”. Further, it implied a “moral community” “required to legitimate the social order…” , and the“[prevention] of the emergence of a ‘two-tier’ society” including a layer of permanently poor. A consequence of this was that “resources are allocated through both the political and economic system.” And yet it also involved “recognition that desirable public ownership should not be seen as a bridgehead to full public ownership and a traditional socialist society”. (Aarons pp 33-34)

Talk of a “traditional socialist society”, here, is presumed to infer comprehensive state ownership and central planning. This author does not seek to replicate the errors of the old Communism – for instance the virtual usurpation of peoples’ right to determine their own needs structures to a reasonable extent via market-mediated channels of consumption. Even though increasingly there are many areas – for example the energy market – where the promise of ‘choice’ has rung hollow – simply providing a cover for needless duplication, profiteering and waste. And while comprehensive central planning stifled individual consumer choice, it did make more sense in economies marked by greater scarcity.

A moderate form of the ‘democratic mixed economy’ could well conceive of itself in the tradition of the ‘social market’. Although what this author does aspire to – at least in principle – is significantly more radical. As Leftists we should probably seek to shift the whole relative centre of political discourse – ultimately striving for a new hegemony. So when we speak of a ‘democratic mixed economy’ there is a potential plurality of interpretations. But a common denominator should be a robust public sector, and a commitment to substantial democratisation in a wide array of forms as outlined in this chapter.

Again: in addition to an strategically extended public sector this could involve a mix of co-operatives, mutualism, collective capital formation, co-determination, economic regulation, a progressive tax system, welfare state and social wage; extension of liberal rights to the industrial sphere; and appropriate economic regulation – including labour market regulation – to ensure fairness.

Importantly: the language of a "democratic mixed economy" brings together a notion which is still relatively mainstream - (the mixed economy) - in combination with "economic democracy" - which has radical connotations. In so doing, that combination is creating a space for radical and progressive ideas - possibly introducing radical ideas to a broader audience. The ‘democratic mixed economy’ has strategic value both as a political discourse and as a strategy for economic management, democracy and liberation.

Concluding, though: Arguably there is a place for co-operation and competition: planning and markets. And yet large scale co-operation (at the level of the largest multinationals, say) looms as ‘the economic undiscovered country’. Who is to say that the refining logic of competition and self-interest is the only guarantor of quality, and will remain so forever? What future potential is there for economic activity based on altruism and co-operation? Only the future will tell.

Bibliography:

Aarons, Eric; Hayek versus Marx And Today’s Challenges; Routledge. New York, 2009

Bernstein, Eduard “Evolutionary Socialism”, Shocken Books, NewYork, 1961

Kautsky, Karl, “The Class Struggle” (Erfurt Program), the Norton Library, Toronto, 1971

Stanford, Jim; Economics for Everyone – a Short Guide to the Economics of Capitalism, Pluto Press, London, 2008

Tilton, Timothy; “The Political Theory of Swedish Social Democracy – Through the Welfare State to Socialism”; Clarendon Press, Oxford, 1990

Labor‘s Socialist Objective in the 21st century - principles for economic democracy and equity ?

From the author, Geoff Drechsler:  The following is an open letter to Australian Fabian News. I posted it here in the hope it will generate some discussion on some of the issues raised in the book 'Looking for the Light on the Hill: Modern Labor‘s Challenges.' ---------------------------------------------------------------------------------

by Geoff Drechsler

 One of the 'more' curious aspects of the current debate around modernising Australian Labor is the recurring proposal to abandon the party’s socialist objective, and commit Labor wholeheartedly to a neo liberal economic model. Troy Bramston‘s Looking for the Light on the Hill: Modern Labor‘s Challenges takes up this theme also. This is 'curious' because we are presently witnessing the greatest failing of free market neo liberal economics since The Great Depression, largely stemming from a lack of regulation and governance. So, it is a strange time to be advancing a position supporting free market economics, particularly in a debate about the future of a social democratic party, when one looks at the concrete realities of the current situation.

In this debate, the reality is that the choices being presented are between the principles of economic democracy and of equity of the socialist objective or a neo liberal agenda of privatisation and deregulation that has progressive social policy grafted to it, with the aim that the latter will mitigate the effects of the former. Since the late ‘80s, there has been a shift to the right in terms of economic policy by social democratic governments internationally, and all these experiences have shown the reality that such programs have meant less equitable outcomes for Labor’s people, and led to declining electoral support.

Locally, this approach is exemplified by the recent activities of the current Queensland state government and the former NSW government. Both have driven supporters away electorally, and are unlikely to deliver equitable outcomes in the long term.

Many of the opponents of the socialist objective use warnings of some grim imagined Sovietesque economic basket case, that they claim would be the practical manifestation of any implementation of the socialist objective too. This is disingenuous.

As a social democratic party, participating in politics in an advanced industrial country like Australia, it would be much more instructive to look to the labour and social democratic parties of Europe and their experiences, in regards to economic policy and programs.

In this debate, one country’s experience is informative, Sweden, because the Swedish social democrats developed an alternative economic model that achieved economic growth and equity in the post-war period. And the Swedish social democrats understood that free market economics were incompatible with the interests of working people and social justice, so attempted to develop their own economic model, rather than rely on existing mainstream economics. Just like the first Labor activists in Australia who drafted the original socialist objective here. The Swedish social democrats goal of economic democracy centred around 2 themes-industrial democracy and collective capital formation, which it was envisaged would lead gradually to the transformation of private ownership of the means of production to social ownership.

The Swedish economic model is also interesting because nationalisation as a strategy was rejected early on, and Sweden has also never had a large public sector either.

Practically, this alternative economic model lifted Sweden out of the Great Depression earlier than other advanced economies and, in the post-war period, led to high rates of economic growth and lower rates of unemployment than comparable economies. The Swedish social democrats themselves experienced an unprecedented period of electoral success over the same period.

The end result is a country with a high standard of living, more equitable distribution of wealth and a modern dynamic developed economy. All in all, an economic program worth further examination in any debate around the socialist objective.

We need to see this debate in terms of the need for an economic model that meets both the party’s economic and social goals, and clearly free market economics has already discredited itself, as recent history shows. Sadly, one only needs to look to the US to see the shrinking middle class, the product of a sustained neo liberal economic agenda over the last few decades.

A quote from Keynes’s is probably an apt conclusion at this point-“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually slaves of some defunct economist.”