Irish Political Review. Vol. 3. No. 11 : November 1988
Socialism And Private Property
The Irish Political Review has characterised Gorbachev’s economic reforms as a retreat from social ownership. If this is so, what are the implications for democratic socialism in the West? I don’t think it has any implications for the collectivist values of socialism, but it does mean that those values will not be realised through Soviet type institutions.
If Western socialists are going to learn from the Soviet experience, they will have to take a cold look at why the Soviet Union’s economy has not caught up with the advanced economies in the West.
The main reason is that there are a number of things which Marx and Lenin failed to consider in relation to the economy. As was pointed out in the November 1987 issue of the Irish Political Review, Marx hardly wrote more than a few pages about what a socialist society would look like. His magnum opus, Capital, is an analysis of the capitalist system.
Under communism the society would make production decisions for itself without a market mechanism. Under socialism, the intervening stage between capitalism and communism, the state would make production decisions on society’s behalf. Marx never explained how the preferences of the individual would be satisfied without the market mechanism.
The market has a very imperfect way of satisfying consumers’ needs. Millions of pounds are wasted on advertising. It is also undemocratic. The basic principle is one dollar, one vote. But, at the end of the day, a business has to satisfy some one’s needs otherwise it goes bust. It not only has to provide socially useful goods and services, but it must do this at least as efficiently as its competitors. There is inherent instability in a market-based economy. Some businesses grow, other businesses decline. The lust for profit, by forcing the maximum Labour productivity, ensures that the economy grows despite hiccups caused by the business cycle.
In a socialist economic system there is no inherent instability and therefore no impetus for growth. Marx never thought this was a problem since socialism and later communism was to be established in conditions of material abundance. He shared Hegel’s desire for an end to history. Societies, according to Marx, developed through class conflict and reached an end point of development under communism. In any given society there would be a ruling class and an oppressed class. A new class would replace a ruling class, ushering in a higher stage of social development. But the new ruling class would not be drawn exclusively from the old oppressed class and would not end class conflict.
This pattern of social development would no longer apply under socialism. Under this system class conflict would end.
It is a moot point whether the Soviet Union is a classless society. The Yugoslav communist, Milovan Djilas, argues that Soviet society has not departed from the historic norm. Just as in all other stages of development a new class has arisen: the Communist Party intelligentsia.
But, even if Djilas is right, I would still say that the economic system has a tendency towards stagnation since the power of the new ruling class is based on an ideology rather than ownership.
Stalin saw instinctively the tendency of the system to stagnate and he responded by continually disrupting it. Even today, the only thing which ensures that there is growth in the economy is th desire of Soviet leaders to keep pace with developments in the West. It is only in areas that are independent of the economy, such as space technology, that the Soviet Union has a lead over the West.
At first sight, it would appear that by abolishing individual conflicting interests an economic system can develop more smoothly. But nothing can develop in a void. Immanuel Kant explains this by the analogy of a dove flying through the air. It thinks it would fly faster without the wind resistance. But it is the friction of the air that keeps it in flight. (See Socialism And Law, by Brendan Clifford.)
In a market-based economy the free play of conflicting economic interests ensures that the overall economy grows.
The task of socialists is not to abolish individual economic interests, but to regulate those interests to ensure the maximum benefit for society.
In areas of the economy where the individual’s pursuit of his interests will not benefit society, the state, on behalf of society, should step in. This would apply to investment in infrastructure, health, education and welfare. Investment in developing resources which only give a return in the long-term should also be done by the state.
The problem with a market-based economy is that it is undemocratic. There is a strong case for redistributing property from capitalists to “workers’ trusts” so as to give a greater say for workers in the running of industry.
But the traditional socialist demand of abolishing private property and replacing it with the social ownership of the means of production is pure fantasy.
This article appeared in September 2010, in Issue 3 of the new series Problems magazine. It contained articles from 1988 from Irish Political Review. You can find more at the Problems page on the Labour Affairs website.