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A Market Socialist Alternative to Neo-Liberal Austerity?

‘We cannot rebuild this economy on the same pile of sand.' So said President Obama in surveying the effects of the global crisis in the USA on 29 April 2009. The extent of economic dislocation was overwhelming. The capital equity loss of US banks was $3.6trillion. Unemployment has been estimated to have risen by 50 million people. But Obama’s electioneering slogan: ‘Yes we can’ has yet to be realized.  Incumbent Leftist politicians (such as Gordon Brown, Barack Obama, and Ed Miliband) have sought to correct the economic mechanism rather than to challenge the economic and political basis of neo-liberalism.  Electoral democracy generates the same kinds of economic and political leaders.

The reason that neo-liberalism has proven so resistant to change is because it infuses not only the financial sector, but also electoral politics, academia (especially economics) and media. The Left has been particularly reticent to articulate an alternative. Socialism as an alternative is absent from the public consciousness.

In the context of the current austerity policies and growing unemployment, now may be the time for a revival of market socialist ideas. By accepting markets but advocating public ownership as well as forms of employees’ control, market socialism may provide a first step in reviving socialist ideas and providing an alternative way of thinking to neo-liberalism.

The Market Socialist Idea
The key idea is that market socialism retains the market mechanism while socializing the ownership of capital. ‘Social ownership’ can take many forms. Cooperative ownership is highly favoured. Each enterprise has a democratic form, and employees’ control is one of them. Hence the widely held value of democracy is extended. A consequence of a market socialist policy is that companies which fail the public and are clearly lacking in public responsibility would be socialized. Currently, the banking, energy industries and rail transport would be prime candidates. Economic policies could be carried out within the capitalist framework to restore growth and employment. It would allow forms of indicative planning to be introduced which would further enhance public control.

Preserving the Market
While socializing property, policy would preserve much of the appeal of market capitalism and diminish the perceived flaws of socialism. As the socialist ethic is thinly spread, the proposal has an advantage in maintaining the current market linkages of productive enterprises. It has the benefit of applicability in societies in which most of the media, academia and the public are hostile to socialism but positive to democracy. Such policy, when shown to be successful, could be extended to include other large corporate firms.  As ownership of such corporations is a consequence of inheritance, as well as illegitimate rewards for speculation in financial capital markets, socialization could be legitimated on moral grounds. Whereas small and medium enterprises would remain unchanged under private ownership. These include retail trade, family farms, professional partnership and entrepreneurial firms.

The retention of many aspects of capitalism, concurrent with the introduction of socialized property and planning, is held to have more appeal to the public. Market socialism’s feasibility outweighs the loss of the scope of the socialist agenda. Socialization of the economy as well as public control could be introduced in a piecemeal fashion forming a hybrid system.

If seen as an end point, market socialism is open to significant criticism. Capitalist values of competition and the profit incentive are still in place and might defeat the socialist elements introduced by social ownership. Such policies, it might be conceded, are forms of democratic capitalism with socialist characteristics. Levels of inequality, derived from profits, even reflecting a positive contribution to the economy, would not be accepted by many on the Left.  However, the power of corporate capital would be broken. There are also real political obstacles to be overcome. Transnational corporations, if confronted with nationalisation, would not meekly ‘surrender’ the ownership of their assets, even with compensation. For countries in the European Union, regulations concerning competition and limitations on state ownership would have to be overcome.

Market socialism has the advantage not only of strengthening democracy but also of moving in the direction of socialism within capitalist market societies. There would be positive achievements in terms of the distribution of income and wealth. It has some appeal even to those skeptical of planning and state management. As a minimum programme, it would reverse financialisation and install public ownership over failing companies. Finally, it would extend the much valued social good of democracy in the form of cooperative and employees’ control.  It has the benefit of providing an alternative socialist framework to neo-liberalism.