Socialism for Today: Economic Democracy vs Neoliberalism

THERE IS AN ALTERNATIVE:
SOME NOTES ON READING
‘AFTER CAPITALISM’
BY DAVID SCHWEICKART

Published by:
Rowman & Littlefield, 2002
PB: $23.95; 193pp.


Reviewed By Carl Davidson

In this short book, building on his earlier work, ‘Against Capitalism,’ David Schweickart has given us an excellent breakthrough in finding the road to a new socialism for the 21st century. Using both practical and ethical arguments, his main objective is to take on the ‘TINA’ argument—‘There Is No Alternative’—of the neoliberals. He convincingly shows there is at least one alternative, a ‘successor system’ that he calls ‘Economic Democracy.’ His critics will find it hard to dismiss his ideas lightly.

First, Schweickart’s Economic Democracy alternative is a working hypothesis, and not a rigid or doctrinaire model. While rooted in historical materialism, Schweickart’s Marxian notions of science are more in tune with the ‘open systems’ and critical instrumentalism of modern pragmatism. He casts a wide net to draw lessons from practice—from the failed Soviet-led command economies, to the ongoing surge of China’s market socialism, to the new smaller and more tentative projects in Spain’s Mondragon Cooperatives and Brazil’s Worker’s Party projects. He uses all these as resources, but he returns to American soil to work out his basic ideas and proposals.

‘Successor-system theory’, Schweickart explains, ‘is meant to be theory with practical intent. If it cannot offer a plausible projection as to how we might get from here to there, successor-system theory remains an intellectual exercise in model building—interesting in its own right, perhaps, and capable of providing a rejoinder to the smug apologists for capital, but useless to people trying to change the world.’

So what is ‘Economic Democracy’? The core idea is that the workers themselves democratically elect the managers of their firms. They also share the wealth they create by sharing the profit among themselves. They make their money the old-fashioned way: by finding consumer needs, meeting those needs with decent products, and selling them to satisfied customers at reasonable prices.

But how are things like costs, prices, new products and production goals determined? Here Schweickart departs from traditional socialist conceptions; he affirms the primary role of the market rather than relying on nationally centralized planning. What to produce is shaped mainly by consumer demand; what to charge for products or services is determined by competition for market share with other worker-controlled or private enterprises; and what to pay the workforce is limited by what’s left over after total costs are deducted from total sales.

What about ownership? Each Economic Democracy plant or workplace is controlled by each respective group of workers, but the firm is not owned by each particular group. The firms are socially owned by the public at large. Because of this public ownership, the local workers are also required to meet the cost of paying into two funds: a depreciation fund, to be used locally by the firm for capital expenditures, and a government-controlled capital investment fund. This latter payment is in the form of a capital assets tax also added to the firm’s costs. In a sense, the workplace is leased by the workers from the government. But what’s left after all the costs are met, the profit, the workers divide among themselves as they see fit. The depreciation and capital assets taxes that the government takes in is used to finance new enterprises, to maintain and develop infrastructure projects, and other costs spread across the whole of society.

That’s the bare-bones model. Naturally, it has further implications and raises many more questions, not the least of which is how we get from today’s globalized capitalism to the ‘successor system’ of Economic Democracy . In the course of the book, Schweickart addresses a good deal of these problems; but for some issues, he has only hints or open possibilities.

Here are some of the critical implications of his theory:

1. Labor is not a cost, as it is under capitalism. Rather, labor gets its return from the local profits. This means there is no pressure to keep the workers’ compensation low. Just the opposite: the pressure is for the local workers to produce good quality, desired products efficiently, since that is the best way to gain better profits and a thus a better share for each of them.

2. Firms are under no pressure to ‘expand or die’, as they are under capitalism. If the workers produce and sell to a share of the market that gives them a comfortable living, all they need to do is maintain it over time. If the firm grew its market share simply by adding more and more workers to produce more and more products to sell, it would just mean that the resulting greater profit would be divided by a greater number on workers. Each worker would still receive about the same. Economic Democracy’s tendency, then, is to maintain small and medium-sized firms supplying more local and regional markets, rather than to expand into larger firms reaching a global scale.

3. Worker-controlled firms do have an incentive for technological innovation, but differently than under capitalism. They will want to increase productivity per worker, but not to eliminate workers, expect perhaps through attrition. They will, however, want to eliminate drudgery, but in a way that enhances and upgrades the skills of all workers, and/or in a way that shortens the working hours per worker. But they will not want to enhance profits via automation at the expense of themselves, as the current system works now.

4. Inequality will exist in worker-controlled firms, but not to the degree of the huge inequalities between CEOs and production workers under capitalism. To keep especially good or skilled workers and managers, or to account for the difference s between new and older workers, the factory council will likely give some categories a greater share in compensation or benefits. Otherwise a competing firm may lure them away. But the varying compensation packages will be set by a process of one vote per worker in the enterprise. This creates a different and more restricted dynamic than the current setup, where decisions are made by management arbitrarily or by stockholders with one vote per share of stock, with vast differences in the amounts of shares held per voter.

5. Entrepreneurship will encouraged under Economic Democracy, but in a different way. Groups of individuals with projects for new products or enterprises could apply to the government’s capital investment fund and its subsidiaries, rather than relying on venture capitalists. If approved as risk worthy, socially appropriate and capable or generating new wealth, the project would be funded with a grant, not a loan. The grant, however, would become part of the new enterprise’s capital assets and hence taxed over time, assuming the project is successful. The creators of a successful project could pay themselves a startup fee for launching a successful enterprise, but afterwards would only be compensated if they were a worker or working manager. Straight-up capitalist entrepreneurs can apply to the capital assets fund, or even raise money privately, and make money from their ventures (subject to being taxed, of course). Under Schweickart’s model, however, a capitalist firm, when sold, must be sold to the state.

6. All information about a firm and its finances is open to all workers in the firm, unlike the many restrictions on information needed for decision-making under capitalism. This way, workers can make informed decisions via direct democracy in periodic assemblies, or through the managers they choose to hire or fire as their representatives. Workers can also still have their unions to settle problems with management and to work on larger social issues.

Schweickart offers only a brief concluding chapter about the strategy and tactics of getting from the present order to economic democracy. Briefly it is quite flexible and open, but he mainly discusses two possibilities:

1. A political party of popular and economy democracy could win a majority of the electorate, and take a majority of seats and positions at all levels of government. The new administration would decree economic democracy by passing laws and executive orders that would nationalize stock and redefine corporate charters with varying degrees of compensation.

2. Economic democracy, including its firms and political groupings, could be grown over time as an expanding counter-hegemonic community within the existing order. Step-by-step, it would demonstrate its superiority to the old way of doing things, competing over a longer period within a mixed system, but as a growing force that ultimately would supplant capitalism.


There is also a third option. While Schweickart doesn’t directly mention it, there is nothing in his perspective that would prohibit it, and it’s worth pointing out:

3. A political party of popular and economy democracy could take power through revolutionary insurrection at a time of severe crisis brought on by war, fascism or ecological and economic disaster. Economic democracy would be organized as the way to resolve the crisis and put the country on its feet again.


Apart from these three projections, I have stressed only the economic aspects of Economic Democracy. What about the broader political and social reforms that would accompany Economic Democracy? First off, no particular set of political reforms are strictly required by Economic Democracy , even though winning a wide range of structural reforms under the existing order would be both helpful and desirable. But Economic Democracy can develop, to a certain extent, even under an authoritarian regime with little in the way of a social safety net.

Schweickart is very clear on the implications of the structures of class privilege on democracy. He defines democracy as existing where ‘suffrage is universal among adults’ and ‘the electorate is sovereign.’ A sovereign electorate, he adds, requires open information and public education, but especially that ‘there exists no stable minority class that is privileged,’ i.e., ‘it possesses political power at least equal to that of elected officials and unmatched by any other stable grouping.’
Systems with these elite privileged groupings Schweickart calls ‘polyarchies.’ Since that accurately describes our existing order, Schweickart bluntly states ‘we do not live in a democracy.’

Economic Democracy, however, has a built-in political bias towards radical political democracy. By dampening great inequalities in wealth and diminishing the role of corporate lobbyists and PACs, Economic Democracy enhances the prospect for public financing of political campaigns and reduces the role of private wealth in politics. It thus opens the door to reforms like preferential ballots, instant runoff, and proportional representation. The practice of participatory democracy in the workplace—which is usually punished in today’s world—would likely stir political participation and a multiparty system in the political realm of the broader society.

Economic Democracy thrives where social well-being and social capital are widely generated. It is especially enhanced by access to life-long learning for all who want to learn, and by access to universal single payer health care. Having these social costs born by general revenues is a spur to the successful launching of new enterprises and sustaining those that may have temporary difficulties.

Schweickart stumbles a bit, however, on the ‘safety net’ issues of guaranteed full employment and the guaranteed annual income—’Jobs or Income Now’ as the old slogan declared. One problem is that these reforms often receive substantial opposition within the working class itself. ‘Guaranteed Jobs’ is often seen as ‘make work’ that creates nothing of value and drains public resources. ‘Guaranteed Income’ is only supported for the physically disabled, but opposed as a subsidy for slackers and freeloaders.

One alternative solution to these reforms, as well as the minimum wage, is the concept of the ‘social wage.’ Here anyone who creates social value would be able to obtain a subsistence level of financial support-say $18,000 per year. The idea is that value for society can and is created in realms that reach beyond the job market. Students learning in schools, for instance, create value in the form of their skills; caretakers of young children create value in raising the next generation of producers and creators; teaching sports in the parks creates value in the form of public wellness and health, and so on. Third sector nonprofits can set the base standards for what constitutes social value, but the social wage package would be low enough and on a sliding scale to always reward regular part-time or full time employment. Since full employment is not naturally built into Economic Democracy, this would be an important supplement to regular employment.

Finally, how does Schweickart relate Economic Democracy to the broader problems and conflicts of globalization? Our country, after all, exists in a world of savage inequalities between North and South, and a reverse flow of wealth from South to North.

Schweickart points out, first of all, that since Economic Democracy has no ‘expand or die’ dynamic, it has better conditions for a more progressive and democratic foreign policy. If anything, it has a bias toward promoting Economic Democracy elsewhere. One fascinating passage in the book is a long list of alternative foreign policy decisions that could have been made if the organizing principle for U.S. policy was democracy rather than anti-communism over the last six or seven decades.

Schweickart goes on, moreover, to promote a number of measures to help reduce the North-South divide that have been around for a few years—the Green Tax to price commodities at their true social and environmental impact costs, Carbon Taxes to deal with pollution, stock transfer taxes on the global financial transfers, etc. Even if petroleum alone were priced at its true cost, it would change the price differentials between North and South due to the higher or true cost of transport. ‘Free Trade’ is often riddled with hidden subsidies.

Schweickart, however, offers a new and controversial solution that he calls ‘socialist protectionism.’ Here, our government would put a tariff on U.S. importers to raise the price of imported goods to be competitive with goods produced here. Nothing new here, but what Schweickart wants to do is to remit the tariff, not to the US treasury, but to the country of origin to improve conditions there--hence ‘socialist’ protectionism.

It’s an interesting idea, as it transfers some wealth from North to South. But the devil is in the details. Who would get the remission? The Third World governments? The local unions or NGOs? The workers themselves?

In any case, Schweickart has provided us with a fine piece of theoretical and political analysis, as well as ethical and visionary thinking. It’s a relatively easy read, and an excellent starting point and organizing principle for both socialists and radical democrats. It’s already having an impact in the academy; it’s a good time to bring it the wider audience of global justice activists.

[David Schweickart is professor of philosophy at Loyola University in Chicago, and hold Ph.D’s in both Philosophy and Mathematics. He is also the author of ‘Against Capitalism’ (1993), and ‘Capitalism or Worker Control? An Ethical Economic Appraisal’ (1980). He is also the coauthor of ‘Market Socialism: The Debate among Socialists.’ (1998).]






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Another Round With Some 'No Voting' Anarchists

Debate On the Slogan, 'Don't Just Vote'
from Chicago Indymedia

By Makhno
07 Oct 2004
Let's change that slogan around a little bit, shall we? Instead of "Don't just vote", make it "Just Don't Vote!". Remember, no matter who you vote for, the government wins. Why are so many so-called American "anarchists" so reluctant to take a hard line against voting?

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by Carl Davidson
07 Oct 2004
Maybe, Makhno, its because they don't want to sound like aristocrats or Southern segregationists, who have always deplored the idea of the rabble going to the polls.

Must be the ongoing impact of the American revolution, the extention of the franchise after the Civil War, the Chartists in England, the Women's Suffrage movement, and the 1960s fight for the right to vote for Blacks in the South. Some ideas are just pesky and seem to stick around...

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by Pagan Anarchist
07 Oct 2004
Yeah, this statist thing has been a pesky idea that americans seem unable to shake off. That so called revolution could only get up the gumption to take a baby step towards freedom. Time to unload the baggage and demand the whole thing. It simply cannot be done by voting. Do what you will but expect the same old results and understand you perpetuated it.

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by Carl Davidson
07 Oct 2004

Re: Pagan 'It simply cannot be done by voting.'

Well, Pagan, I can't think of anyone the left who thinks it can be done ONLY by voting. There are some who think it can be done MAINLY by voting, but I'm not one of them.

Given the fact that we have 'polyarchic' or 'dollarocracy' elections, rather than far more democratic contests, I can understand your disdain, but why give up the tactic altogether?

In fact, how do you run a society, or even a large organization, without having folks registering their opinions and getting the lay of the political landscape? Consensus is fine for small groups and Quaker meetings. But on larger scales, we debate, propose, vote, elect delegates, hold them accountable, etc, don't we?

There are some examples of societies where folks don't vote, such as the feudal "organic communities" under absolute monarchs or pharonic slavocracies, but I assume that's not what you mean.

I always assumed anarchism meant 'No Rulers' (An Archos, from the Greek), but not 'No Voting', so tell me more about what you DO mean....

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by Makhno
08 Oct 2004

Carl, You have hit the nail on the head. The larger, more formally-structured and more complex an organization is, the more likely that some form of political decision-making such as voting will have to be employed. As an anarchist, I see several problems with voting:

(1) It is a form of domination. One individual or group is imposing their will on another individual or group through the process of majority rule.

(2) It is a binary, yes/no form of decision/making, with no allowance for uncertainties, ambiguities, or changes of opinion (unless one waits for the next formal election).

(3) It is impersonal and dehumanizing. Through voting, one is reduced to an interchangeable number or statistic.

If an organization is so large and complex that voting seems to be the only option for making decisions, then perhaps people should question the rationale for such a social structure in the first place.

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by Effortless Struggle
08 Oct 2004

carl wrote: 'But on larger scales, we debate, propose, vote, elect delegates, hold them accountable, etc, don't we?'

No. Actually we do not do any of those things.

The "debates" are exclusionary to candidates who might truly represent anyone.

We propose and are unheard.

Most of us do not vote. Those who do vote are not counted, and can be easily contradicted by the electoral college.

We do not elect delegates. We do not elect representatives. "Government is the shadow of big business cast onto society." Read Chomsky and consider it.

Hold them accountable. Oh yeah, we have the means to do that. When will you realized that this system is rigged against its subjects.

Finally, no one can represent my interests better than me. Fuck the vote.

On the other hand, Carl. It was a good try to use some historical explanations for why to use the slogan "Don't Just Vote." I would say they are mostly verosimilar but not accurate reasons for why this language has been chosen.

Primarily, anarchists believe in "Just Don't Vote", but using "Don't Just Vote" gets us beyond the fruitless, endless debate as to whether or not voting matters and onto more productive ACTION. Action being something Makhno may be unfamiliar with.

So we're saying: go take 10 minutes or whatever to vote, and then what are you doing in the rest of your life? Of course, the weakness of "Don't Just Vote" is that it doesn't encourage people to move beyond campaigning for candidates, which I think pagan anarchist and makhno would both agree with me that this needs to be encouraged.

Of course, I would encourage anarchists to stop wasting their time on campaigners and go out to the masses that do not vote, do not campaign and start making connections there.

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by Carl Davidson

09 Oct 2004
RE: Effortless

I think you mixing up two things here, 'Effortless.' My description of a democratic process was not of our current electoral setup, which I described as a 'dolloracy' worthy of some disdain, but of how we try to run our own large-scale organizations beyond the consensus method appropriate to smaller groups. We should work toward a society where its actual elections are far more democratic, but we're not there yet by any means.

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by My Two Cents
10 Oct 2004

I would agree with Carl along these lines; the act of voting itself takes little effort or time, and from that little effort/time there could be some beneficial change for some people.

I don't think the presidential election has enough legitamacy to even cast a ballot for a major candidate, but it may be worth the few minutes it takes to pick various local representatives and judges that aren't racist or homophobic if there are any running.

What I have a real problem with is people calling themselves progressives or activists, and spending months or even years doing little but electoral organizing, ala Carl D.

What a waste of time and energy, and I do wonder how some people feel being sold out by candidates they've been asked to support. I suspect pinning hopes for change on political candidates leaves many feeling disenfranchised and disempowered. That's the point if you ask me.

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by Carl Davidson
10 Oct 2004

'Two Cents' Says: 'What I have a real problem with is people calling themselves progressives or activists, and spending months or even years doing little but electoral organizing, ala Carl D.'

Sorry, 'Two Cents', but I'm not a very good example for your argument. My main orgainizing over the past five or more years has been in the community technology movement. We've build CTCNet-Chicago, a federation of about 75 CTCs in low-income neighborhoods, plus I worked of the national board of CTCNET, where we have 1500 CTCs across the country. Aside from that, I've worked with ex-offenders fighting for job training, helped build antiwar mass actions, and engaged in ongoing theoretical work around globalization through the Global Studies Association.

In the past, it's true I worked in the Harold Washington Campaign, I've helped a bit in Helen Shiller's campaigns, with my local alderman, Rey Colon, and helped the New Party/ACORN in a few races.

It's also true that I've been speaking up on Indymedia defending our Peace & Justice Voters 2004 registration and GOTV drive against it's anarchist and left critics, but I'm never been an "elections are the main thing" guy.

[If you're interested, look it up on www.cyrev.net, www.soldarityeconomy.net, www.net4dem.org/mayglobal, www.ctcnet.org, and www.net4dem.org/techtrain ]

But even so, what's wrong with folks who are? Progressive electoral work is a lot more than 10 minutes in a voting booth. It's really getting to know all your neighbors, building independent block, precinct and ward clubs, doing ongoing political education, protests at city hall and congressional offices, building alliances with other progressive groups to work together, etc.

Most on the left would agree, I think, that at least at some phase of the effort to radically transform this country, the people are going to have to create, among other things, dynamic popular organizations that can win seats and even majorities in legislative bodies, even if only to prove decisively - not just to a handful, but to millions - that extra-parlimentary means are required to carry the struggle through to the end.

What wrong with some folks starting that process now? If it's not your cup of tea, don't bother, but why trash folks who do?


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Exchange: Building Alternatives While Voting for Kerry?

Voting for Kerry & Changing the System?

by John Reimann
Email: wildcat99@earthlink.net

02 Oct 2004

Is it possible to vote for Kerry while also organizing against the system?

I recently had a conversation with a friend about voting for Kerry. My friend completely agreed that Kerry was nothing to get excited about. She agreed that he was nothing but the lesser evil. She even agreed that we need to build a movement to change the system. But she said that this was not "mutually exclusive" with voting for Kerry.

My friend hits exactly on the main point - whether voting for the Democrats and building an independent movement of the working class are "mutually exclusive" or not. This is exactly the issue, and I believe that all of history shows that they are mutually exclusive. Look what happened to the civil rights movement. At one point, it was forced to conclude that it needed to have a presence in politics. One of the things that developed out of this conclusion was the Mississippi Freedom Democratic Party (MFDP). This was sort of a hybrid - partly oriented towards the Democrats and partly towards political independence. When it could not find a way to build an independent party, and when the movement as a whole could not find this, then this movement got swept up into Democratic politics. Thus the career of such former civil rights workers as Julian Bond in Atlanta. What happened was that the movement was demobilized, taken out of the streets and into the backrooms of politicians, where it was sold out and died.

Look at the labor movement today. It is clear that a major motivation of the union leaders is to stay in line with the liberal Democrats.

In other words, it is not possible to build an independent movement of workers over the longer haul without also having as one of the goals workers' candidates and a workers mass party. Some people say, "yes, yes, I agree. But since we don't have such a party or candidates now, I'm going to vote for the Democrat until the alternative comes along."

This is exactly the problem - the alternative will not just "come along"; we have to fight for and build the alternative. "Yes," they say, "but in the meantime I'm going to vote for Kerry (or whoever)."

But if we are serious about organizing and about what we are doing, then if you vote for Kerry and the Democrats, then at election time you must campaign for others to vote for them. The history of the last 50 years has proven nothing if it hasn't proven that it's impossible to build an independent movement while also campaigning for and voting for the Democrats.

So if a person has no plans to be active in building a fighting, independent movement in the streets, the working class communities, the work places and in the unions - if they have no plans to do this - then there is not much reason not to vote for the lesser evil and postpone the date when we will all be pushed over the cliff. But if one wants to reverse directions, and organize a fight for a better world, then voting for (and campaigning for) one of the candidates of big business is not possible.

Re: Voting for Kerry?

by Carl Davidson

carld717@aol.com
02 Oct 2004

Eugene Debs started off by doing both, running as a Dem and supporting a few Dems at first and building his Socialist Party along the way. Same with the Populists in earlier years.

But the ruling class of the time struck back by, among other things, passing laws against fusion candidates and for winner-take-all primaries, not to mention the "white" primaries in the South.

If you want a serious progressive party, you have to achieve a number of precursors to it:

1. Get rid of the "winner take all" primary system,
2. Win the right to fusion candidates,
3. Get preferential balloting and instant runoff.

These are not weird ideas. They exist, in one form or another, in every industrial bourgeois democracy in the world. It's the U.S. system that's weird, out of step, and thus without multiple parties.

Some people even think the "two-party" system is embedded in the US Constitution, which it's not; but it is embedded in existing state statutes, which have to be overturned to expand democracy.

The problem is that so many of the folks who want a third party (really a first or second party) are not to be found in the non-election season when these reforms have to be fought for, state by state.

You're right to point out all the progressive groupings working in the orbit of the Dems, but you can't break up the tacit alliance between them and the DLC 'corporate caucus' without winning the above-mentioned structural reforms.

It's a simple, but hard-to-achieve truth. But it doesn't do any good the flagellate other progressives for exercising their only realistic options, while remaining passive on electoral law reform campaigns.

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