Economic Systems: Socialism

Dissatisfaction with the status quo has long driven philosophers and theorists to search for the ideal society. Socialism offered an alternative that promised to erase the class conflict and social problems that appeared to be a direct result of the prevailing capitalist system. As with any political philosophy, within the history and development of socialism there have been significant differences among socialist thinkers about what socialism means, how it can be implemented, and how it might provide a way to reach the ideal or utopian society. On a basic level, though, as well as in the most popularly known Marxist-Leninist interpretation, socialism is typified by collectivized ownership and distribution of resources by a central government.

Although Soviet communism collapsed in 1989 and China has significantly retreated from many aspects of Maoist communism in practice, the concept of socialism remains in various forms ranging from democratic socialist governments in Latin America and Europe to industrialized welfare states. Socialism has also been influential on other political ideologies such as radical environmentalism, various anarchist movements, and even as part of economically capitalist countries in the form of social welfare policies.

Keywords Authoritarian; Command Economy; Egalitarian; Eminent Domain; Laissez-Faire; Mixed Economy; Nationalization; Proletariat; Socialism; Statist; Totalitarianism; Welfare State

Work & the Economy > Economic Systems: Socialism

Economic Systems: Socialism

Overview

Generally, socialism refers to an economic system or political organization in which the means of production and distribution are owned or controlled collectively, often by a centralized government. Centralized government management of the economy is also known as a command economy and is a state-centric form of socialism. Socialism also has a specific meaning under the Marxist-Leninist theory as the intermediate stage between capitalism and communism marked by the "revolutionary dictatorship of the proletariat" (Marx, 1875 as cited in Tucker, 1978, p. 538), where strong government rule is seen as the method by which resources are collectivized. The Marxist-Leninist meaning of the word is only a part of the much broader concept of socialism. Socialism has influenced a variety of movements, governments, and programs from totalitarian Soviet imperialism to welfare. In this way, each could be considered a subset of socialism or, perhaps more appropriately, each specific movement that includes a component of socialism.

Socialism & the Ideal Society

Socialism, like many political and economic theories, can be considered a product of the human desire to create a utopian or ideal society motivated by dissatisfaction with perceived inequality or social injustice. Plato's Republic (380 BCE) was a vision of the ideal society in which philosopher-kings were raised and trained from birth to be logical and wise. Thomas More, the sixteenth-century philosopher wrote Utopia, a book about a fictitious island with a welfare state representative of democracy based on freedom of religion and equality of the sexes. In the nineteenth century, Karl Marx's vision of the ideal society was a communist society reached through a progression of phases culminating in collective efforts for the common good.

Historically, socialists have held differing opinions on the strategy of implementing socialism into society. For example, socialist thinkers such as Leon Trotsky argued for the necessity of an international socialist regime. This international movement was evident in Marx's First (1864) and Second (1889) International Working Men's Associations. In the twentieth century, some socialist goals focused on national politics and the "harnessing of modern science, technology, and industry." In addition, "alternative visions of a socialist future [emphasized] the potential of small-scale communities and agrarianism rather than full-scale industrialization" (Dictionary: Socialism, 2003).

Further Insights

Early Socialism: The Utopians

Early socialism came to be known as utopian socialism. These utopians predated Marx and Engel's Communist Manifesto (1848), which would later become the defining vision of socialist thought. Marx and Engel's themselves, though, actually coined the term "utopian socialists" in reference to those that they claimed had an underdeveloped understanding of class oppression. While many utopian socialists later adopted the Marxist interpretation, their initial ideas were quite different. Utopian socialists endeavored to transform capitalism into a more egalitarian system in order to realize a collective well-being for all people, even those Marx would call privileged. They held such values as association, community, and cooperation to be superior to the pursuit of individual self-interest. They emphasized solidarity and mutual interdependence as the means to replace conflict, instability, and upheaval with genuine social harmony (Dictionary: Socialism, 2003; Marx & Engels, 1848, as cited in Tucker, pp. 497–499).

The word socialism was first used in the early 1830s in Britain by the followers of the British socialist pioneer Robert Owen and in France by French philosopher and reformer Claude Henri de Rouvroy, Comte de Saint-Simon.

Saint-Simon

Claude Henri de Rouvroy, Comte de Saint-Simon (1760–1825), was a founding father of modern socialism. Saint-Simon was concerned with the fate of European society following the collapse of the monarchy and feudalism. He believed that the modern forces of science, industry, and technological innovation as well as religion would be drivers of social integration. He was the first to cite economically based conflict between classes as the ruin of the feudal system. After his death, Saint-Simon's followers

It exerted significant influence on later socialist thinkers, including Marx (Biography: Saint-Simon, Comte de, 2003).

Robert Owen

Robert Owen was a humanitarian who experimented with utopian social organization. Owen's social experiments consisted of communes of between 2,000 and 3,000 people, which he established in New Lanark, Scotland, in 1800 and in New Harmony, Indiana, in 1824. The operation of these communes reflected Owen's belief that a person's environment is entirely responsible for shaping his or her character. He sought to replace money with the free distribution of goods according to need. This concept of receiving goods according to need latter became a central tenet in the anti-individualist socialist systems to follow (Pilbeam, 2001; Biography: Robert Owen, 2003).

Charles Fourier

Charles Fourier (1772–1837), another early socialist, advocated a socialist system in which societies would be arranged into autonomous profit-sharing phalanges composed of 1,600 psychologically compatible individuals. Each individual would choose his or her work, and everyone would rotate jobs every hour. Each phalange would make a profit, which would always be shared among its members. Fourier opposed communal property and thought equality was unnecessary; instead, he focused his plan on achieving happiness through individual fulfillment (Pilbeam, 2001).

Common Forms of Socialism

Communism

The basic values of socialism lent much to several other ideas for social organization. Perhaps the most well known is communism in its most commonly understood Marxist-Leninist form. Within communist theory, socialism is an intermediate stage between capitalism and communism wherein resources are collectivized under the authoritarian rule of the working class or proletariat. Communism itself developed into several related doctrines. In China, Mao Zedong interpreted communism differently from the Marxist-Leninist interpretation. For lack of a significant industrial working class, the Maoist focus was on the agrarian class instead of the working class.

In the Soviet Union, Josef Stalin, during his political reign, known as the period of Stalinism, practiced a socialism implemented by brutally repressing dissent and rigidly controlling the economy through government. Later, Soviet socialism took other forms, and the policies of glasnost (openness) and perestroika (economic restructuring), developed under Mikhail Gorbechev in the 1980s, represented a significant ideological change in Soviet socialist philosophy compared to the earlier Stalinist regime (McWilliams & Piotrowski, 2005 pp. 458–507).

In 1989, the Soviet Union collapsed, and the majority of former Soviet states have embraced more capitalist political and economic systems. However, the concept of socialism remains in other official governments including China, Cuba, and many others. The philosophy of socialism also remains in movements based on religion and particular interests, as well as in certain programs or policies of contemporary society throughout the world

Anarchist Socialism

The socialist incarnations reviewed above are all statist versions of the doctrine—that is, each involves central government control of resources. However, opposing interpretations coexist with the Marxist model. Libertarian socialism and social anarchism are socialist philosophies opposed to coercive authority, social hierarchy, capitalism, and the state. This form of socialism represented a distinct departure from the statist version advocated by Marx.

Mikhail Bakunin was a contemporary of Marx and the leader of the Libertarian wing of the First International Working Man's Association; a quarrel between him and Marx split the socialist party. Bakunin believed in the overthrow of the ruling class but denounced the Marxist idea that a dictatorship of the proletariat was required to reach the new order of socialism. Bakunin saw both government and religion as oppressive structures and advocated collectivism and cooperation. The anarchist movement has since fragmented into various interpretations of Bakunin, each with a different name, organization, and platform (Biography: Mikhail Aleksandrovich Bakunin, 2004; Yanov, 2007).

Religious Socialism

Religious organizations including Judaism, Islam, Buddhism, and Christianity have made movements to integrate the concepts of socialism into their beliefs. For example, the term Christian socialism, coined in 1848, sought to combine the teachings of Christ with the political practice of socialism. In Britain, the church used this approach to spread Christianity to the working class. Christian socialism favors alternatives to capitalism, such as cooperatives, and stresses the importance of reconciliation between workers and owners (Christian socialism, 2003).

Ecosocialism

Concerns about climate change and the destruction of the environment have prompted a combination of the socialism with environmentalism. This movement, called green socialism or ecosocialism, claims allegiance to socialism based on its aim to end capitalism and its dedication to living in harmony with the environment. Ecosocialists argue that capitalism is harmful because it necessitates the invasion and destabilization of the natural environment.

For ecosocialists, the fate of the working class is linked to the fate of the environment; thus, the alienation of the working class is the alienation of nature. Ecosocialists characterize capitalism as an inherently insatiable system that necessarily ascribes paramount importance to economic growth and is therefore incapable of operating in a way that sustains the health of the natural world. This doctrine advocates a shift of power to the working class to develop and deploy technologies and achieve integration with nature. This shift would redefine the concept of wealth, since it advocates production for the sake of consumption, rather than production for the sake of exchange and profit. The doctrine also promotes social solidarity and human integration with nature as opposed to conceptualizing people as distinct from the environment (Kovel, 2007).

Democratic Socialism & the Welfare State

The concept of socialism, understood as the collectivization of resources, has also been applied within economically capitalist societies. While Marxist and related interpretations of the socialist thought advocate the collection and distribution of resources through a central authority, social democracy or democratic socialism advocates socialism as an economic theory with democracy as the governing principle. Thus, in this form of socialism, the means of production are collectively owned and political power is maintained by the people through a democratic process. The movement goes by two popular names: democratic socialism and social democracy. Like the other socialist movements, it has several subgroups. However, one important distinction is that it is based on a path of incremental reform, rather than radical or revolutionary reform (Democratic socialism, 2003).

Democratic Socialism in the United States

In the United States, the democratic socialist movement became prominent during the end of the nineteenth century. It is often identified with Eugene Debs, one of its most famous advocates and the leader of the Socialist Party of America. Debs was an active craft and industrial union leader who converted to socialism as he came to believe that competition leads to class strife. Debs was a Socialist Party presidential nominee five times, reaching a high point when he won 6% of the vote in 1912. In 1918, Debs was convicted of sedition and sentenced to prison, where he ran for president once again and received over a million votes. In 1921, President Woodrow Wilson pardoned Debs, but upon his release, Debs could do little to restore the American socialist movement (Eugene V. Debs, 2003).

The British Labour Party

The democratic socialist movement continues to this day in Europe and around the globe. The British Labour Party, the Socialist Democratic Party of Germany, and the Bolivarian Revolution in Venezuela are all contemporary examples.

The British Labour Party, formed in 1890 as the Labour Representation Committee with origins in working-class protest, exerted political influence throughout the early twentieth century. However, by the time Margaret Thatcher, a conservative opposed to socialism, became prime minister in 1979, the Labour Party had imploded and was committed to a fully planned socialist economy. Toward the end of twentieth century, under the leadership of Tony Blair, who became prime minister in 1994, the Labour Party moved away from the radical left and Blair rebranded the party as New Labour. The modern, center-left New Labour Party replaced its former commitment to common ownership with a more general social justice agenda that addressed policy problems with a mixture of state and private approaches. Under Blair's leadership, the party became more pro-business and pro–European Union than ever before (Labour Party, 2003).

The Socialist Democratic Party of Germany

The Socialist Democratic Party of Germany is one of the country's oldest parties, dating back to 1875. Its popularity grew until the years after World War I, when the extreme economic difficulties brought on by the war and the Treaty of Versailles caused a drop in support. The party was outlawed by the Nazi regime but was later revived and grew steadily, ultimately regaining power in 1998 under Chancellor Gerhard Schröder.

Socialism in Latin America

In Latin America, democratic socialism has experienced a surge in popularity as evidenced by the election of Evo Morales, the leader of the Movement towards Socialism Party (MAS), as president of Bolivia, and the presidency of Hugo Chávez, the leader of the Bolivarian Revolution, in Venezuela from 1999 to 2013. Following Chávez’s death in early 2013, his personally chosen successor, Nicolás Maduro, narrowly won the presidency, thus upholding Chávez’s brand of democratic socialism for another six years. In Nicaragua in 2006, the Sandinistas made a comeback when their leader, Daniel Ortega, was elected president for the second time. In Peru in 2011, Ollanta Humala, a left-wing Chavist candidate, won the nation's presidential election in a runoff against Keiko Fujimori. Another proponent of Chávez’s brand of socialism, Rafael Correa Delgado was elected president of Ecuador in 2006 and reelected in 2009 and 2013. In 2010, Dilma Rousseff, the candidate for the social democratic Workers’ Party, was elected to the presidency in Brazil.

The Welfare State

The welfare state is yet another form of socialism. A welfare state is a system in which the government takes partial responsibility for the social and economic well being of its citizens. Welfare state programs typically include pension plans, such as Social Security in the United States, or health care, such as the National Health Service in the United Kingdom. The inclusion of such programs in otherwise capitalist countries is generally referred to as a mixed economy.

To achieve a socialist end, governments often use the mechanism of nationalization. Nationalization occurs when a government assumes control of an enterprise formerly owned by private individuals or corporations. At times, property is nationalized through eminent domain to promote public projects such as roads or bridges; such nationalization normally includes compensation for the property's former owners. For example, the communist states of Eastern Europe nationalized all industry and agriculture following World War II. In Britain, between 1945 and 1951, the Labour movement nationalized many important industries including coal, steel, and transportation

Viewpoints

The Tragedy of the Commons

Various forms of socialism contain the concept of communal ownership, which, critics argue, is often subject to a problem referred to in economics as the “tragedy of the commons.” The tragedy argument is essentially that when property is open for the common use, each user has a personal interest in maximizing personal benefit and little interest in sustainability. In cases in which many users pursue the goal of maximum personal benefit, the resource ultimately becomes useless for all. Thus, when everyone owns something, people act as if no one owns the property, which in turn encourages irresponsibility and waste. Conversely, these critics argue, private ownership can promote conservation and good stewardship. This argument applies most directly to forms of socialism that lack a central governing authority, such as anarchism or libertarian socialism.

Economic Issues

In addition to the tragedy of the commons, socialism has been criticized on more specific economic grounds. Ludwig von Mises, a champion of laissez-faire economics, argued that socialism cannot function because it lacks a true price system and competitive markets for goods and services. He also argued that mixed economies would fare no better and extended his arguments to include other market restrictions such as minimum wage laws (Biography: Ludwig von Mises, 2006).

Friedrich von Hayek (1899–1992), an Austrian-born philosopher and free-market economist, also attacked socialism and the welfare state on grounds similar to von Mises'. Hayek's economic analysis rested on the idea that all individuals choose and act in accordance with their own perceptions of their options and available methods for achieving them. Hayek's final work, a collection of essays called Economic Freedom (1991), argued that political and economic coercion was the greatest threat to individual freedom; he also argued that freedom is best achieved through the natural evolution of market forces.

Conclusion

Dissatisfaction with the status quo has long driven philosophers and theorists to search for an ideal society. Socialism offered an alternative that promised to erase the class conflict and social problems that appeared to be a direct result of the then prevailing capitalist system. The history and development of socialism reflects significant disagreement among socialist thinkers about how to reach the ideal or utopian society.

The failure of the Soviet experiment with socialism is well documented. Other countries, like China, have significantly retreated from a centrally planned economy and embraced capitalism while retaining authoritarian control. Still, the concept of socialism remains with us in various forms, ranging from the democratic socialist governments of nations in Europe, Asia, Latin America, and Africa to the radical environmental and various anarchist movements. It is also influential in economically capitalist countries in the form of welfare policies.

Terms & Concepts

Authoritarian: Relating to a leadership system with a concentration of power in a single leader or an elite group not constitutionally responsible to the people.

Command Economy: An economic system in which a centralized government is responsible for the production, collection, and distribution of national resources.

Egalitarian: Asserting, resulting from, or characterized by belief in the equality of all people, especially in political, economic, or social life (www.dictionary.com).

Eminent Domain: The compulsory taking of land or property for the public good by the government, usually with compensation.

Laissez-faire: An economic philosophy that supports a free enterprise system and its operation within its own economic laws. Laissez-faire opposes government regulation or interference in commerce beyond the minimum necessary for this to occur.

Mixed Economy: An economic system that allows for publicly and privately owned enterprises to operate equally.

Nationalization: Government acquisition and operation of business enterprises formerly owned and operated by private individuals or corporations.

Proletariat: The class of industrial workers who earn their living by selling their labor for wages.

Socialism: An economic system or political organization in which the means of production and distribution are owned collectively or by a centralized government. Under Marxist-Leninist theory, socialism is the intermediate stage between capitalism and communism.

Statist: A social or political system in which state intervention plays a major role.

Totalitarianism: A political structure requiring subordination of the individual to the state and strict control by the regime of all aspects of the life and productive capacity of the nation often using coercive measures such as censorship or terrorism.

Welfare State: A system in which the government takes partial responsibility for the social and economic well-being of its citizens.

Bibliography

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Suggested Reading

Ambrose, D. (2008). Utopian visions: promise and pitfalls in the global awareness of the gifted. Roeper Review, 30, 52-60. Retrieved May 28, 2008 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=31488892&site=ehost-live

Angus, I. (2007). Five challenges for ecosocialists in 2008. Canadian Dimension, 41, 27-29. Retrieved June 4, 2008 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=27947349&site=ehost-live

Carbaugh, R. J. (2014). Contemporary economics: An applications approach (7th ed.). Armonk, NY: M. E. Sharpe.

Cockshott, P., Cottrell, A., Devine, P., Ding, X., Mao, P., Yin, X., & ... Laibman, D. (2012). Question 1: Why socialism?. Science & Society, 76, 151–171. Retrieved October 28, 2013, from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=73981886

Muller, T. C., Isacoff, J. F., & Lansford, T. (Eds.). (2012). Political handbook of the world, 2012. Thousand Oaks, CA: Sage Publications.

Oizerman, T. (2005). Introduction to Marxism and utopianism. Russian Studies in Philosophy, 44, 5-23. Retrieved June 4, 2008 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=18895890&site=ehost-live

Smaldone, W. (2014). European socialism: A concise history with documents. Lanham, MD: Rowman & Littlefield Publishers.

Yanov, A. (2007). Three utopias: M. Bakunin, F. Dostoevsky, and K. Leont'ev. Russian Studies in Philosophy, 46, 52-70. Retrieved June 4, 2008 from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=27337676&site=ehost-live