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  Issue No 81 Official Organ of LaborNet 08 December 2000  




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A New Socialism

In an extract from his new book, political economist Frank Stilwell argues the need for a new radicalism to counter the Third Way


Frank Stilwell

What is at stake is a fundamental rethinking of the socialist project in modern economic, technological and ecological conditions. It takes us beyond the 'middle-of-the-road' character of 'third-way' positions to a more audacious assertion of socialist principles freed from the taint of excessive authoritarianism which characterised the command-administrative model adopted in the twentieth century.

Its exploration requires, first and foremost, the consideration of the basic 'in-principle' appeals of socialism. Five elements are central. There is the appeal to equity - a classless society in place of a system based on unequal ownership of the means of production; the appeal to rationality - the planned use of economic resources to serve social objectives; the appeal to liberty - the extension of democratic principles from the political sphere into our day-to-day lives as workers, students, consumers and citizens; the appeal to solidarity - the recognition of common interests and the development of processes of mutual support and co-operation; and the appeal to harmony - living in balance with the natural environment.

Here is a recognition of our essentially collective concerns, that our social well-being is something more than the sum of individual self-interests. Here is a recognition that our interdependence necessarily involves more than purely market relationships. Here is an explicit recognition of ethical issues as the 'glue' holding economy and society together. These are basic socialist tenets. They stand the test of time remarkably well. Indeed, the contrast with the characteristics of contemporary capitalist society makes them seem increasingly relevant. However, as presented, theya re merely abstract ideals. Working out how to translate them into a viable economy and society remains a colossal undertaking. This can be confronted initially by exploring a series of fundamental questions, as follows.

How Much Work And By Whom?

Modern technology opens up tantalising possibilities for the liberation from toil. Work may be part of the human condition, but it need not be alienated labour and it can be more equitably shared. Evidently, modern capitalism has great difficulty adapting to these technological possibilities, although the system has played a major role in precipitating them. Many potential workers are currently denied any waged work at all, while other workers are putting in stressfully long hours. Addressing this socially damaging situation is a major task for socialist practice. Can we have flexibility in working lives, involving continuous part-time work or periods of full-time work interspersed with periods of leisure, education or other creative pursuits? Of course, the damand for a shorter standard working week and job-sharing without loss of wage income is a radical demand on capitalism. It also needs to be considered carefully as a basis for organising the distribution of work under a socialist alternative. Therein can lie a key element of the appeal of socialism as a means for tackling problems of production and distribution that appear intractable under the capitalist system. It has obvious relevance in the Australian context where the imbalance in the distribution of work is one of the most important current political economic challenges.

How To Combine Markets and Planning?

Socialists have traditionally been critical of markets because of their association with capitalism and its inbuilt tendency to produce inequitable outcomes. But the alternative of economic planning, particularly of a centralised kind, is also problematic: being sensitive to the complex patterns of consumer preferences. Industrial production possibilities and new technologies is a major, some would say impossibly difficult, task. Some forms of planning are clearly necessary though, if the broad directions of economic developments are to serve social purposes. So the key question is whether that planning can be combined with some role for markets in 'fine-tuning' the system. There are some interesting possibilities. With the aid of modern computer technology, regional and sectoral planning can also be used to set the broad parameters for economic development without negating the freedom of consumer choice that markets permit. Importantly, that planning framework can - and must - embody goals of ecological substainability, for example, by the regulation of the use of environmental assets and by husbanding non-renewable resources. Herein lies a major challenge regarding the development of appropriate industry policies. Again, the issue has obvious relevance in the Australian context, where industry development to date has lacked any such co-ordination.

How To Control Investment?

The private appropriation of an economic surplus and its disposition to serve particular class interests lies the core of the capitalist system. Under socialism there must still be a surplus. Not all the value created by labour can be returned to the workers as wages, or there would be no funds available to replace worn-out plant and machinery or for investment in collectively needed infrastructure. The essence of a viable socialism is not the eradication of the economic surplus but the control of that surplus for social purposes. How much surplus and how it is used then become essentially political decisions. But that leaves open the question of who is to make these decisions and by what criteria. To draw a parallel with the existing superannuation funds in Australia, there is a huge difference between them being managed individually with a view to maximising private returns (as they now are) and them being managed collectively for broader social purposes. A co-ordinated National Investment Fund, prioritising socially productive and ecologically sustainable industries, would be a step in the latter direction. Such a fund, suitably subject to democratic control and accountability, could be a key feature for ensuring collective determination of the investment process. But how much of the economic surplus would be channelled through such a fund, and how the fund managers would be selected, remain open questions.

What Forms of Ownership?

So too do the appropriate forms of ownership in industry. It is conventional to associate capitalism with the private ownership of the means of production and socialism with collective ownership. But various forms of collective ownership are possible. Collective ownership by the state of all productive enterprises raises the spectre of an over-centralised economic system. It is unnecessary; modern socialism does not require the nationalisation of the local milk-bar or the corner store, nor would that be broadly acceptable in the Australian context. One can conceive, as a compromise, of a three-tier system in which the 'comanding heights' of industry are regulated by 'planning agreements' to ensure the commitment to community service obligations, while medium-sized firms are typically organised as worker co-operatives, and private enterprise operates in small businesses. The relative size of these three tiers and the economic relationships between them would need careful consideration: so too would the extent of public influence over the economic surplus generated in the three sectors. The first tier need not necessarily involve extensions of public ownership: it is hard to see reversing the privatisations of the last two decades as a realistic option in the foreseeable future. But the use of 'planning agreements' can be an alternative means of regulating private sector corporations' performance ina ccord with government industry policy objectives. Industry policy thereby becomes conditional on forms meeting specified criteria regarding employment, investment, environmental goals, and so forth. 'Reciprocal obligation' becomes a principle to be applied to industry rather than social security recipients!

How To Extend Economic Democracy?

Economic democracy has to operate within enterprises, not just through public policies to influence the use of the economic surplus generated. Herein lie some exciting possibilities at the frontier of what a capitalist system can tolerate. There is an inherent contradiction between capitalism and democracy, contrary to the claim of the conservative economist Milton Friedman. Under capitalism, democracy is restricted to the political sphere, focussing manly on periodic parliamentary elections. Modern socialism needs to take democracy more seriously. Of course, it is the failure of twentieth-century socialist experiements (e.g. in the former USSR) to extend democracy in practice that is a principal source of the popular association of socialism with authoritarianism. Breaking with this legacy is crucial Industrial democracy is a key policy for this purpose because it has the potential to extend democratic practices into the economic sphere. But its appropriate institutional form remains a matter for debate. Are workers' councils the appropriate model? What about representation of consumers, environmentalists and other social interests? How are potential conflicts between regionally and/or sectorally based institutions to be reconciled? These are practical questions for which solutions cannot be plucked from existing socialist theory.

A 'Classless Society'?

The question of distributional equity is also central to the modern socialist project but not easily resolved. Of course, it is easy enough to contrast the capitalist tendency to reproduce poverty amidst affluence with a socialist vision of classlessness. But how much inequality could a modern socialist society permit in practice? What, for example, would be the tolerable limits to the ratio of the highest incomes to the lowest? Would , say 3:1 be appropriate as a means of allowing for material inventives while still emphasising social cohesion? I have argued elsewhere that this is a reasonable goal: certainly it stands in stark contrast with the ratio of top management salaries to low-wage employees, currently of the order of a hundred times that ratio. But what about the social divisions associated with gender and race? The readication of class inequalities associated with differential ownership of the means of production does not necessarily eliminate sexism and racism. Some contend that a 'politics of recognition' (emphasising the distinctiveness of 'minorities') ranks in importance alongside a 'politics of redistribution'. Support for multiculturalism and Aboriginal rights are expressions of this former concern, sitting somewhere uneasily alongside egalitarian objectives of transcending differences of race, gender and sexual preference. Evidently, it is necessary to rethink how the socialist vision relates to contemporary concerns with these multiple sources of economic and social inequality. And, of course, the policy instruments by which egalitarian outcomes are achieved also warrant detailed consideration. Policies towards inheritance and other sources of cumulative wealth, policies to balance wages against other income sources, and more progressive forms of taxation become central issues in this scenario.

What Basis for Economic Motivation?

The distributional issue is inexorably linked with the motivational issue. Here capitalism appears to be on firmer ground - fundamentally, it is a system for harnessing material self-interest to drive the economy. Replacing the capitalist dynamic of profit-seeking with the collective pursuit of social needs to easy to posit in the realm of rhetoric. It highlights the need to redress the perpetual imbalance between 'private wealth and public squalor'. But it seems a tall order to redress that imbalance by the appeal to collective rationality alone. Altruism and collective responsibility warrant greater encouragement, of course, but seem unlikely to provide a sufficiently robust basis for a productive economy. If the emphasis on the relentless pursuit of economic growth should be tempered by greater concerns with sustainability, the issue mellows significantly. Inculcating the motivation to maximise profits, outputs and market shares become less important than motivation to identify and attain more socially balanced outcomes. Of course, it has always been the hope and expectation of socialists that transcending capitalist structures would also transform social practices, even human nature itself. However, for an indefinitely long transition period, a more pragmatic compromise may be appropriate, whereby substantial material incentives are retained as a motivational element alongside the greater public control over the disposition of the economic surplus, as already discussed.

The Decentralisation of the State?

Underpinning all these concerns are difficult issues about the role of government and, more generally, the state as a whole. The eventual 'withering away of the state' has long been a cherished ideal of libertarian socialists. This aspect of the socialist tradition needs rescuing in order to dislodge the more general perception of socialism as requiring an all-powerful central state. Yet some co-ordinating and regulating role for government is indispensable if socialist goals are to be achieved. Liberty is not inversely proportional to the size of the state, since states may ensure freedom from (oppression, exploitation) as well as limiting freedom to (engage in individual pursuits deemed to be against the public interest). Herein lie fundamentally complex issues for which it would be unreasonable to expect a formulaic solution. The fundamental challenge is to see how the planning/co-ordination/regulation roles of the state can be reconciled with liberal socialist ideals. Can partial devolution within the state apparatus help in this regard? In the Australian case, one significant step in that direction could be the replacement of the six state governments: therein lies a potentially significant element in the process of constitutional reform, far beyond the minor question of the nationality of the head of state.

Coping With International Capitalism?

In a global economy orchestrated by the institutions of multinational capital it is not easy for an individual country like Australia to chart a more independent development path - whether it be socialist or not. Capital strike is evidently an ever present threat. However, the nation's vulnerability to this problem could be reduced by the development of better mechanisms to channel local savings into funding the required investments. Threats of withdrawal by multinational capital would not then be such a damaging prospect. But such threats of withdrawal depend more generally on whether sufficient rates of return on capital can be maintained. A greater role for planning in promoting local and national economic development may indeed reduce the risk element. It is certainly quite compatible with maintaining and extending international linkages of various kinds. The globalisation of human rights, labour organisations and environmental consciousness can be progressive antidotes to the globalisation of capital. They have the potential to give strength and support to new forms of socialism, operating alongside and in tension with globalising capitalist institutions.

How To Get from Here To There?

In the end, it all comes down to the issue of whether there is a real possibility for any such alternative path of development. The characteristics of Australia and global capitalism are not particularly encouraging in this respect. However, flux, contradiction and dialectical processes of change are in-built features of the political economic landscape. Change is inevitable:L the key questions are "In which direction? and 'Driven by whom?' This issue of a possible transitioin from capitalism to socialism has, quite understandably, preoccupied socialist activists. It is an important antidote to an abstract Utopianism. Moreover, the nature of any such transition has a major bearing on the shape of the outcome: that much, at least, we know from political economic experience. So the questions about the nature of the socialist vision are ultimately not separable from questions about strategy and organisation for change. But, given that the preconditions for any such transition are demonstrably lacking in Australia at present, there is evidently 'breathing space' for broader reflections. Indeed, such reflections - made public as far as possible - are a necessary part of the process of establishing the ideological preconditions for radical reform. Otherwise there is no viable socialist alternative worth struggling for.


Going beyond the twentieth-century experiences of capitalisma nd socialism is an enormous challenge. Advocates of a 'third way' have made a valuable contribution to opening up debates about alternatives, but remain primarily focussed on the fine-tuning of capitalism. Reorienting the policies of the Labor Party around a hybrid of economic rationalism and community development goals seems to be the main concern. A 'fourth way' can be built on more explicitly socialist principles, rethought for the twenty-first century. As this chapter has shown, that alternative requires fundamental questions to be considered. These questions cannot be resolved by reference to the pages of any classical socialist text. Previous experience of other countries seeking alternatives to the capitalist system also leaves them open-ended. They are questions to be explored by progressive Australians concerned with reformulating a vision appropriate for this nation in the years ahead.

Posing such questions is not a sign of weakness. Socialists need to do so vigorously, as an antidote to the common perception of socialism ideology as dogma, offering only preformed and dated answers to complex and changing problems. This is what Mackenzie Wark calls the view of 'Marxism as the philosophy of the alternative state in wating'. As argues in Chapter 2, there has to be a vision of an alternative but its form cannot be independent of the process by which it is created. Questioning is an integral element in that openended process. The act of posing the questions is concurrently an important contribution to the critique of contemporary capitalism.

After all, socialism begins with the recognition that our well-being, economically, socially, environmentally, even spiritually, has essentially collective aspects. Society is not simply the aggregation of atomistic individuals: there are inherent elements of interdependence. So our well-being depends on policies that shape that interdependence in the most fruitful manner.

Modern socialism has to be centrally concerned with the exploration of progressive political economic alternatives which can contribute to that. Exploration is the key word. Socialism in not a blueprint, but it can be a more convivial context for explorations in social progress. For this purpose a socialist alternative must embody inspirational ideals while also offering down-to-earth proposals for dealing with the problems of contemporary Australian capitalism. Popular support for the alternative cannot be built unless these proposals point towards tangible benefits - lower unemployment, a sounder basis for industrial development, fairer taxes, better social policies, more balanced urban and regional development and a sustainable environment. These are the necessary features of a program of radical reform.

Changing Track by Frank Stilwell is published by Pluto press


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*   Issue 81 contents

In this issue
*  Interview: Back to Work
After a stretch of unemployment following the 1996 election, former Keating Minister Robert Tickner is now helping others find work.
*  Media: Reality Check
Aiden White, head of the international journalists' union, argues that online journalism presents a new set of challenges for organising.
*  Economics: In the Same Boat
In an unprecedented move, a coalition of industry, community and trade union groups have joined forces to address long-trerm unemployment.
*  International: Nepalese Hotel Workers Ask for Support
Hotel workers in the small Himalayan nation of Nepal have finally decided to vent their anger and call a general strike for Monday - over a 21 year old dispute.
*  Unions: Speaking in Tongues
Labor Council's Mark Morey outlines the successful campaign by local government workers for a community language allowance.
*  History: Fighting Words
The anti-conscription campaign of 1914-18 tore the ALP apart; but this was not the first time the labour movement took a militantly anti-war stance.
*  Politics: A New Socialism
In an extract from his new book, political economist Frank Stilwell argues the need for a new radicalism to counter the Third Way
*  Satire: Roy Slaven on the Rampage
John Doyle's history of the ABC stretches back to a 1958 evening in Lithgow on which he was "scared shitless" by Blackboard on Mr Squiggle.
*  Review: Mauled in the Bear Pit
Vengeance may be sweet but it is always made better when you are able to write a book about yourself that also provides the opportunity to dump a bucket load on those who undertook your removal.

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