According to a growing number of observers, the Obama administration practices "socialism" when it bails out banks, insurance companies and auto manufacturers, urges the adoption of a national health care program, and assists a minority of homeowners in default.
Ironically, endorsing their proposition requires tossing out the dictionary definition of socialism; the meaning that was used by Karl Marx and his contemporaries -- enemies as well as allies -- and, until the current global crisis, was being employed by virtually everyone else.
Webster's defines socialism as:
"ownership and operation of the means of production and distribution by society or the community rather than by private individuals, with all members of society or the community sharing in the work and the produce".
To date, the material truth is the Obama administration hasn't taken steps in the direction of ownership and operation of the means of production and distribution "by society or the community," but rather, by the government in the name of the community. Moreover, as tens-of-millions of overworked, underpaid and unemployed workers (thirty million of them on food stamps), and, the multi-million dollar bonuses paid to Wall Street executives testify, Americans are light years away from "sharing in the produce".
Arguing that the kind of government financing and control in question is state-capitalist, not socialist, Marx reasoned as follows:
During the early period of capitalist production factories were small and manufacturers were therefore able to obtain sufficient money (which Marx called "surplus value"), from workers to build and repair their plants and machines. But, as the number of capitalist producers increased, so, too, did the aggressiveness of their competition.
In time, Marx proposed, it became impossible for capitalists to extract enough surplus value from workers to construct the large factories, and install the costly equipment which competing required. It became necessary to obtain the requisite funds by selling stocks and bonds, which Marx described as "seeds of socialism," since it meant the capitalists were relinquishing a modicum of control over their corporations. Eventually, he continued, with more and more nations becoming capitalist to survive, factories becoming ever-larger, machines more sophisticated and expensive, even the sale of stocks and bonds would no longer provide adequate funding, making it imperative to glean surplus value from everyone, which could only be accomplished via the state.
However, since the benefits of production still accrued mainly to a financial-industrial elite, (the billions of dollars in salaries and bonuses currently provided bankers, major bond/stock holders and Wall St. execs?) Marx insisted state-capitalism was no less capitalistic; a point his (ideologically socialist, in practice, capitalist) colleague Fredrich Engels emphasized in "Socialism: Utopian and Scientific," writing:
"[T]he transformation, either into joint-stock companies and trusts, or into state ownership, does not do away with the capitalistic nature of the productive forces. In the joint-stock companies and trusts this is obvious. And the modern state, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists. The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers-proletarians. The capitalist relation is not done away with. . . . State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution."
Vladimir Lenin, a pragmatist, rather than an ideologue, when it came to applying Marx's logic, embraced its thrust on this particular issue following Russia's anti-feudal revolution. Lenin argued that in order to industrialize the Soviet Union would need the expertise of its businessmen, engineers, metallurgists, chemists, biologists and other professionals, all of whom enjoyed a socio-economic status well above that of the average Soviet citizen. Many of those professionals had already gone into exile in Western Europe or the United States, he observed. If the elite existence of the ones who remained was not protected they, too, would leave, making industrialization impossible, and socio-economic-political chaos a certainty. Therefore, Lenin insisted, the U.S.S.R. must concentrate on building a capitalist structure, as both Mensheviks and Bolsheviks had originally agreed.
Furthermore, Lenin reasoned, because England, France and the U.S. had no serious competitors when they established capitalist systems, they were able to start with small firms and gradually proceed to ones which were large. The U.S.S.R., on the other hand, was going to industrialize in a world already dominated by huge corporations which operated internationally. To compete in that world would require starting with firms of grand scale, and that would necessitate tapping the energies of everyone via the state; just as Japan and Germany had done before it for the same reason. Ergo, Lenin concluded, for the present the U.S.S.R. must focus on becoming "state capitalist." Responding to Russian anarchists who were demanding the Soviet Union begin to practice socialist equality immediately, in a speech given in June 1921, Lenin exhorted:
"The alternative (and this is the last ‘possible' and the only sensible policy) is not to try to prohibit or put the lock on the development of capitalism, but to try to direct it into the channels of 'state capitalism.' This is economically possible, for state capitalism---in one form or another, to some degree or other---exists wherever the elements of free trade and capitalism in general exist. Can the Soviet state, the dictatorship of the proletariat, be combined, united with state capitalism? Are they compatible? Of course they are. This is exactly what I argued in May 1918. I hope I proved it in May 1918. Nor is that all. I then proved that state capitalism is a step forward compared with the small proprietor (both small-patriarchal and petty-bourgeois) element. Those who juxtapose or compare state capitalism only with socialism commit a host of mistakes, for in the present political and economic circumstances it is essential to compare state capitalism with petty-bourgeois production."
Marx, of course, was very clear about what he meant by socialism and communism. Under socialism everyone would receive the same wage, enabling each working person to obtain an equal share of the nation's production of goods and services, his infamous: "From each according to his ability, to each according to his work." Following the failure of the Paris Commune in 1871 Marx modified this prediction slightly. For a brief period he suggested, the highest paid in a socialist society might receive twice the income of the lowest.
In his "Critique of the Gotha Program" Marx conceded that even if everyone was paid the same wage under socialism, a modest degree of inequality would still exist. To quote him here,
"...one man is superior to another physically or mentally; one worker is married, another not; one has more children and so on. Thus with an equal output and an equal share in wages, one /person/ will, in fact, receive more than another."
Although he considered the inequality described inevitable, Marx believed it was a problem that would resolve itself. As the socialist order of production and distribution matured it would become communist, wherein the operative principle would be: "From each according to his ability, to each according to his need."
When viewed through Marx's paradigm, then, those who argue for government financing or nationalizing of big banks and corporations are, in effect, recommending the U.S. should become more thoroughly state capitalist.
For Marx, when a capitalist state which is suffering economic crisis begins to take that step it prompts the question: "Is capitalism approaching its final stage?"; the stage at which he predicted capitalists would no longer be performing creative, job producing, community serving functions, but, through their control of banks and major industries financed by the people, would be bleeding off the nation's wealth.
Are there precedents for the governments of capitalist countries in deep crisis acting to maintain that productive-distributive system by financing banks and corporations and offering employment and income assurances to a majority of workers, while, via a redefinition of socialism, considering those practices socialistic?
Two immediately come to mind: The National Socialism of Nazi Germany and the Soviet Socialism established in the U.S.S.R. under Stalin. Both of these "socialist" structures were products of the Great Depression then throttling the global economy, and, both ad hoc redefinitions of socialism were originated by members of the German and Soviet upper-middle classes who, finding their personal social statuses increasingly threatened, formulated capitalism-sustaining programs/logics/definitions which would enable not only them, but everyone else to hang on; except, of course, for the millions of people their countries then found they would have to slaughter or enslave in order to keep their (state-capitalist?, socialist?) systems going.
Marrying the state to management of the fundamentals of the economy in times of global economic turmoil has been demonstrated to be hazardous in the extreme. Why would anyone think otherwise, given twentieth century history?
Ted Keller is Emeritus Professor of International Relations, San Francisco State University