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Current Affairs

A Magazine of Politics and Culture

How To Build Socialist Institutions

When people ask “what does socialism look like?” we can point at all the things socialism looks like.

There is an increasing recognition that we are now living in a “socialist moment,” a period where socialism has reemerged as a popular idea in American political life. There’s just one problem: Everyone seems to have a different definition of what it means. For liberals tired of being mislabelled socialists by the right, the term has come to mean any government policy aimed at providing public goods, from food stamps to the Air Force. For the progressives who have embraced the term, it means a social democratic program to aggressively confront inequality. For conservatives and libertarians, it represents anything from Soviet Marxism-Leninism to Venezuelan left-populism. And, as has always been the case, different factions of self-identified socialists argue vigorously among one another for the term’s one true meaning. As Nathan Robinson and Rob Larson noted in their recent article, “if you ask 10 socialists what [socialism] means you’ll get 12 or so different definitions.”

Even putting aside the numerous abuses of the term in mainstream American politics, socialism has always been a broad concept, adopted by hundreds of political movements all over the world to mean a wide variety of different things for almost two centuries. While this has allowed for a diverse body of thought to flourish, it has also had the effect of confusing millions of people as to what socialists actually believe.

The ascendant strain of socialism in America today is democratic socialism. Commonly confused with its more modest sibling of social democracy, democratic socialism is a strain of thought which traces its roots to late 19th-century movements in America and Europe which advocated for popular control over both government and business through democratic means. The U.S.’ largest socialist organization, the Democratic Socialists of America, define the idea as the belief “that both the economy and society should be run democratically—to meet public needs, not to make profits for a few.”

Even for many skeptics, this sounds nice conceptually. But if these socialists explicitly reject the models of the USSR or communist China, then what is their alternative? If not a bureaucratic command economy, does democratic socialism exist as anything other than an abstract daydream in the minds of the young and the pages of a few magazines? 

The recently-passed Erik Olin Wright, a staple of left-wing sociological thought, started what he called the “Real Utopias” project in the early 1990s in order “to focus on specific proposals for the fundamental redesign of different arenas of social institutions rather than on either general, abstract formulations of grand designs, or on small immediately attainable reforms of existing practices.” Such a clarifying project is precisely what the left needs now more than ever. The good news is that the foundational models for a democratic socialist vision already exist around the world—indeed, many are popularly and successfully in place in the United States right now. 

What separates socialism from left-liberalism and social democracy is the emphasis placed on ownership: Wealth and income are not simply redistributed by the government, but are predistributed among the broad community that makes such wealth possible, rather than an elite few. In an institutional setting, the socialist ethos is represented by the idea of common ownership, that powerful institutions should be owned and controlled by those with a stake in them. Michael Walzer expresses this principle in the form of a classic maxim: “what touches all should be decided by all.” But “the state is not our only common enterprise… The capitalist economy proliferates what are plausibly called private governments” (in the form of hierarchically organized firms) with “outcomes that seriously affect thousands and hundreds of people… that can only be opposed or ignored by the members only at risk of penalties.”

The principle of common ownership can take a number of forms. The most common way to split common ownership is between public and cooperative ownership. In the case of public ownership, an institution is put under the control of a democratic government on the local, regional, or federal level. In a sufficiently democratic government, this serves as an indirect conduit for common ownership, with popular input via elections and any other mechanisms designed specifically for stakeholder involvement. Cooperative ownership is the more direct form of common ownership, involving the members of a neighborhood, the employees of a company, or those in some other group jointly possessing and overseeing an enterprise. Each has their advantages and disadvantages.

Because of its Cold War connotations, most Americans think of socialism solely as inefficient and bureaucratic public ownership through a powerful central government. But actual public ownership need not be either centralized or wasteful. The state of North Dakota owns both a public bank and the nation’s largest flour mill, each providing reliable services to state residents while also being accountable to and returning their profits to the state government rather than to private shareholders. Indeed, in order to ensure that everyone had access to basic banking services, the U.S. ran a highly successful basic public banking program through the post office from 1911 to 1967 (139 countries still offer at least some financial services through their post office).

While private internet service providers ignore rural consumers and systematically overcharge the customers they do have, more than 500 cities across 40 states have established cable internet networks owned and operated by municipal governments, with great results: The municipal networks for Longmont, CO and Chattanooga, TN are both among the 10 fastest internet service providers in the nation.

As private utilities have been busy starting wildfires and poisoning rivers to protect their profits, 16 percent of Americans already get their electricity from public utilities (and another 13 percent from cooperatives). Nebraska, the only state to exclusively use public and cooperative energy utilities, has some of the cheapest and greenest energy in the country, and sends most of its excess revenue into state coffers. Every citizen can elect the members of their utility’s board and attend public meetings to provide direct input. In one of the most conservative states in the country, socialism is already thriving in one sector.

Though it’s common to mistake any form of government program as socialism by itself, scholars like Thomas Hanna help clarify the issue by pointing out exactly how much of our collective wealth is already owned and operated for the public good through the government: the vast majority of water utilities, hundreds of airports and marine ports, 20 percent of community hospitals, and a number of city-owned hotels and convention centers. Insofar as programs like Medicare and Medicaid are public replacements for insurance companies, they can serve as an example as well.

Natural resources are another interesting example, as they are a textbook example of a resource belonging to the commons. Many nations simply have nationally-owned companies for their natural resources sectors, with state companies producing 55 percent of the world’s oil and gas. Though this isn’t the case in the U.S., a number of states do maintain some modified form of a public “sovereign wealth fund” that collects income from these resources to be used for the public’s benefit, whether through handing it out to citizens or spending it on public projects. Alaska collects part of the revenue earned from oil production every year and puts it directly into the hands of every citizen in the form of a universal check generally worth around $1,000, an arrangement which has helped manage income inequality and poverty in the state without reducing employment. Texas and Wyoming have similar funds, but instead put the revenue into their education budget and general state coffers, respectively.

While profit can be a powerful incentive to provide many goods and services, institutional arrangements which are solely reliant on it can also produce inequality, corruption, pollution, exploitation, criminality, or even just neglect when much-needed services aren’t profitable enough to provide. Well-managed municipalization and nationalization in select sectors can serve as one way to bring complex and large-scale enterprises under the control of the public, providing better services in a more accountable way.

Public ownership is not a silver bullet, though. While certain sectors may be ripe for greater public involvement, concerns regarding innovation, efficiency, and pluralism in many other areas of the economy should temper any excitement to have governments control it all. In addition, some more libertarian Marxists presciently pointed out that public ownership is still an indirect mechanism for public control over the economy, and one which is threatened by the potential emergence of a domineering bureaucracy insulated from the demands of the people. This is a concern which can be alleviated by expanding political democracy through stronger voting rights, public campaign finance, institutional reform, and experiments in direct democracy like participatory budgeting. But it remains that public ownership has problems of its own, and for this reason democratic socialists should also look to cooperative ownership.

Using the modified versions of the sovereign wealth funds discussed above to expand public control of the economy is a popular idea among democratic socialists. Matt Bruenig and Robin Blackburn have suggested independent government funds that buy financial assets and distribute dividends to all Americans in order to ensure profits are shared with the workers that make them possible. These draw inspiration from an idea known as the Meidner Plan proposed by Swedish democratic socialists in the 1970s, in which private businesses would slowly contribute voting shares to employee-owned funds managed by union boards, thus gradually transferring ownership to workers. Though this plan was never fully implemented, Bruenig points out that neighboring Norway does still have sovereign wealth funds that own 7 percent of the nation’s economy (and international assets more than double the size of their economy). The Meidner Plan isn’t dead either: Both Bernie Sanders and U.K. Labour leader Jeremy Corbyn have resurrected the idea as a way to shift power from management to workers.

Employees buying ownership of the firms they work at is already common practice in the U.S. in the form of Employee Stock Ownership Plans (ESOPs), with an estimated 14 million workers already participating. Thousands more are employed in worker co-ops, designed from the beginning to be owned and run by employees. The benefits of worker-owned businesses are well-documented: Along with the obvious matter of profits going straight into worker’s pockets, firms controlled by workers have higher productivity and greater employment stability. While other policies like employee representation on corporate boards and profit sharing make steps in this direction, full worker ownership and economic democracy are what socialism looks like on a firm-level. Scaling such institutions does pose problems, but large firms like Publix and Spain’s Mondragon Corporation prove that it’s possible. As dynamic and competitive firms, ESOPs and worker co-ops are the best democratic socialist solution to entrepreneurship and small-to-medium scale commerce.

Even in agriculture, where collectivization plans were a notorious failure in Soviet nations, other cooperative solutions are at work every day. 2 million American farmers belong to agricultural co-ops, running their own individual farms while sharing ownership and profits in order to make costs manageable. Already, these co-ops are responsible for 80 percent of U.S. milk production. On a smaller scale, many communities help combat food insecurity through thousands of community gardens, leveraging public green spaces to provide food for anyone in need. There are also less-explored opportunities for agriculture on common property. The supposed infeasibility of this option is what spawned the idea of the “tragedy of the commons” in the first place, but while many are familiar with that theory, far fewer are aware that research from 1990 “demonstrating how local property can be successfully managed by local commons without any regulation by central authorities or privatization” won the 2009 Nobel Prize in Economics.

While the public ownership option to the housing crisis is building more public housing—something absolutely worth doing—cooperative solutions proliferate as well. Housing co-ops run hundreds of thousands of housing units in the U.S., including one of the largest such institutions on Earth: the Bronx’s Co-op City, a quiet neighborhood which houses over 15,000 residents. There are also community land trusts, in which land is cooperatively owned by the community as a whole while individuals can lease it for residential or commercial uses. Not only do these arrangements allow for more community control over development, combating gentrification and the arbitrary power of landlords, but they are also far more financially stable: At the peak of the 2009 housing crisis, regular mortgage loans were eight times more likely to be in foreclosure than community land trust mortgages.

When understood as direct ownership by stakeholders, cooperative socialist solutions exist today even in finance. While the public ownership strategy is public banking, the cooperative solution is credit unions. Instead of worker ownership, credit unions are a form of consumer co-op in which the organization is collectively owned by those saving their money there, with most credit unions holding elections for leadership among their savers. Over a third of America participates in these institutions, which are socialist almost by definition. Credit unions return profits to their customers rather than executives and shareholders, tend to offer lower rates and fees, and in many cases specifically aim to serve communities in need. The latter is particularly important, because while the corruption and wrongdoing of Wall Street is well-known, even small private banks engage in discrimination against people of color.

To the critics of socialism, it represents a comprehensive domination of public life by an authoritarian central planner who inefficiently compel individuals to live or die according to some cryptic logic decided by one’s appointed superiors. However, it’s hard to see how this is different in principle from the exact system we have now, just with the business plans of unaccountable oligarchs in the place of the five-year plans of authoritarian bureaucrats. Robinson and Larson put it as succinctly as possible: “If the principle of socialism is mass popular control of economic matters, then authoritarianism isn’t socialism. If there’s no popular participation, where’s the socialism? What does it even have to do with socialism?”

Just under half of all young people in the United States prefer socialism to capitalism. For older generations raised during a time where socialism had concrete referents in 20th-century dictatorships, this trend is terrifying. But generation Z and millennials lack this background—they hold their views not because they’ve all been brushing up on their Mao, but because they have been raised in a political environment where any alternative to cutthroat corporate rule is socialist. The political energy and debate that this dynamic has provoked should prompt us all to consider exactly what kind of society we want to live in. To disprove the notion that “there is no alternative,” we must focus on the fact that a better world is entirely possible, and that we can see start to see the seeds of potential real utopias simply by looking around us. 

The democratic socialist vision of the good life is one of equality, solidarity, and liberty. Critically, as much as its detractors insist otherwise, it is a realistic vision with countless proofs-of-concept operating every day, enjoyed and supported by groups with drastically different backgrounds and beliefs. When people say “socialism has never been tried” or ask what socialism would “look like,” we can point at all of the successful ways in which socialism has been tried, that show the beginnings of what it might look like.

Democratic socialism means waking up in the morning without worrying about rent, making breakfast with ingredients you grew alongside your neighbors, and taking clean and free public transit for your short commute to the job where you and your co-workers elected your own management. It means having your share of the profits you help produce direct deposited into your local credit union, going on a long walk through your vibrant and diverse neighborhood in the late afternoon, watching a movie over high-speed public broadband, and then going to sleep in your warm bed without worrying about energy bills. You don’t have to call your insurance agency to argue over a deductible, you don’t have to have your allergies exacerbated by dirty air, and you won’t be stopped and arbitrarily questioned by an aggressively militarized police force. We know that this world is possible; the only matter now is to fight for it.

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