In the lead-up to the 2020 U.S. election, socialism appears to be on trial, especially as Democratic Party candidates such as Bernie Sanders and Elizabeth Warren have called for policies that some would describe as being associated with a socialist paradigm. What is socialism? It requires, first, that the most productive assets are collectively owned, and second, that the major decisions regarding the use of those assets are determined by some collective choice procedure.
The standard attack on socialism implies that only one variant exists: state ownership of productive assets with centralised control over resource allocation. Yet modern socialist models are open to a mixture of collective ownerships depending on the context, and, for example, propose democratic voting to determine how much citizenries collectively wish to save or invest. These decisions may be implemented indirectly with interest and tax rate adjustments.
Most of these models also retain markets as a cheap way of getting information about consumer demand and business performance. More modest proposals to extend public capital ownership through independently managed sovereign wealth funds are likewise ignored by the standard attack. The standard line on historical experience draws attention to the flagrant human rights abuses that occurred, and still occur, under socialist regimes.
Many people have opposed state socialism for this reason. But it must be acknowledged that others have come to different conclusions. I was recently at the movies with a colleague who grew up and lived in the Soviet Union until its collapse. She told me that, back then, people being in cinemas during the day was unheard of because everybody had a job. She then reminisced about the first-rate education system and welfare provisions to which everybody had access.
Similarly, the common claim that socialism cannot match the sustained economic growth generated by capitalism is false. The Soviet economies grew rapidly for some 25 years in the post-war period. Yugoslavia performed remarkably well by many economic indicators for 30 years after 1949. An opponent of socialism might interject that even if better socialist alternatives to historical cases exist in theory, they have never been tried anywhere in the real world. That may be true, but neither were any new ways of doing things before they were adopted.
The reply that the difference between technological innovation and socialist experimentation is that the latter has cost millions of lives wrongly implies that socialists have learned nothing over the last 100 years. Fundamentally, this reaction seems to come from the contestable belief that people should not take big political gambles to improve the quality of their lives and those of future generations.
The writer is an Australia-based political economist specialising in the design of alternative economic institutions
