- Two Simple Concepts: "Entity" and "Environment"
- Four Approximate Outcomes
- Political Economic Limbo: The Case of the Sole Trader
- An Oxymoron Called "Anarcho-Capitalism"
- Ideological Banks Terraforming the Economic Landscape with "Credit"
- Epilogue: Application
In America, political economic history and thought has been intentionally warped and mangled to such a degree that it's largely impossible to hear a sensible conversation these days coming from the United States or the anglophone west for that matter; or perhaps anywhere (such has been the reach of neoliberalism and its suffocating effect on political thought).
In the US, as far as I can gather, socialism has come to mean "centrally planned, nationalised, anti-free market, anti-choice and anti-personal liberty" and capitalism refers to some kind of idealistic dream of (early stage) laissez-faire, free market capitalism conflated with individual liberty and political democracy. Though, in recent years (catalysed by the 2008 financial crisis) the realities of late-stage crony/state capitalism have initiated a marked re-assessment. One attempt to get ahead of this is the World Economic Forum's (never let a good crisis go to waste) "Great Reset" whereby the cause of the disease promotes its remedy (in this case a banal, technocratic eugenics-based tyranny with fluffy "sustainable" and "inclusive" language to round off some of the sharp fascistic edges).
There are different forms of socialism and different forms of capitalism and to understand why they are all so different from oneanother one needs to pull apart two fundamental concepts, define them and then put them back together.
Two Simple Concepts
Concept #1: The Entity
By "entity" I mean an economic organisation responsible for the production of goods and/or services.
If the entity is owned and controlled by the workers, then it is by definition a socialist enterprise (the workers own the means of production) and there is no employer-employee relation and thus no wage exploiting the surplus value of the employee, rather there is a profit dividend shared among the workers. These entities are democratic by nature and often bottom-up in terms of control.
If the entity is owned by private interests and it employs workers and distributes the surplus value of their labour among the owners (directors, private shareholders etc.), then it is capitalist. Capitalism is by definition the private ownership of the means of production. These entities (corporations in the main) are authoritarian by nature and the control is most definitely top-down.
Concept #2: The Environment
By "environment" I'm referring to the commercial / transactional context in which goods and services are bought and sold.
Controlled centrally by a state, whereby the state apparatus decides how much is produced and at what price it is sold ("central planning"). There is no organic "price discovery" via market competition.
Prices are determined transactionally by participants (via offer and acceptance), often referred to as "price discovery". This is called a "free market" and has been wrongly conflated with capitalism (primarily because capitalists want you to believe it's exclusive to and inextricably linked with private enterprise - it absolutely is not).
Entity + Environment: 4 Approximate Outcomes
Now let's combine the "environment" with the "entity" and see what we get ...
1. Socialist / Participant Determined
If you imagine many worker-owned and controlled enterprises, syndicates, co-operatives (as per anarcho-syndicalism, e.g. the Mondragon Corporation) competing with oneanother in a free market - this would, by definition be Libertarian Socialism. Some simple examples: an array of farming co-operatives offering their produce for sale in an open farmers' market; a tech startup where ownership is shared among its coding entrepreneurs; a law firm where everyone is a partner. The Mondragon syndicate illustrates quite clearly that whatever a traditional corporation can do, its worker-owned facsimile can do too; there are no theoretical limitations but there are practical ones that need to be addressed (which I'll discuss below).
2. Socialist / State Controlled
If you had a similar setup but instead the state determined how much each enterprise would make and at what price they would sell, this would be called State Socialism or State Communism (and these worker co-ops or nationalised industries wouldn't be independently working for themselves - they'd be working for the centralised state). In terms of state-owned / nationalised entities the workers don't really own the means of production, instead the general public do via a proxy called the state (how much control the public have over the state or vice-versa, then becomes a central issue).
3. Capitalist / State Controlled
If the state controls capitalist enterprises (think China), or if an agglomeration of capitalist enterprises control the state (think USA / UK) then you have "State Capitalism" (sometimes referred to as Crony Capitalism) or what Mussolini quite rightly called Fascism.
A brief side-note to illustrate:
If we look at two recent methods of social control, in China they have a "social credit system" which acts as a carrot and stick citizen management system governed via the state's surveillance apparatus.
In the US, UK and much of the west a similar system is being introduced via consortia of large corporations (from big tech/social media, banking/fin-tech, big pharma, bio-security, big data/surveillance etc) promoting digital only (cashless) payment systems, digital IDs, vaccine passports and the like, where ones ability to engage in society and function in the economy is in the hands of private actors (who may or may not have connections to the government). In this way behaviour can be controlled remotely via the ever-present threat of being "de-platformed" socially, silenced politically (even if you're the president) and "disconnected" financially; i.e. if we don't like your behaviour ... you're "de-platformed" from the transactional infrastructure (like Wikileaks were with PayPal, Mastercard et al)" The suffocating effect of these two systems of citizen control will feel similar, the difference however is that in the latter "western" form, it's often harder to pinpoint who exactly is orchestrating what.
4. Capitalist / Participant Determined
If you have privately owned enterprises (corporations etc.) competing with oneanother in a free market - this would be called Laissez-faire (or Free Market) Capitalism. The enterprise operates freely but is by definition an authoritarian one which exploits the work-force. Early stage capitalism may start like this but will tend toward fascism as successful enterprises gain sufficient wealth to buy other companies, bribe the political establishment and become increasingly monopolistic and corrupting (what John Titus aptly refers to as "Mafiocracy", currently playing out in the US and most developed western economies).
Note: Most societies are a weighted mix of all 4 of the above. In the US for example, the military is a mix of #2 and #3, the markets are a largely a mix of #3 and #4. A major element of the Russian Revolution was Lenin's Bolcheviks crushing #1 to consolidate #2 (see "The Third Revolution"). However, the overall balance is really what determines how a society functions, the degree of corruption, the style of authoritarianism etc. (see Epilogue below).
Political Economic Limbo: The Case of the Sole Trader
An interesting way to get this across is to consider the sole trader who has their own business. They are in a kind of political-economic limbo. They are neither capitalist nor socialist or they are both at the same time. They own and control the means of production, but no one else is involved. What Marx understood is that it's all about the relationship between the owner and the worker, when you are both at once, there is no relationship and so Marx would likely have little to say. Where it gets interesting is when the business grows to the point where an additional worker is required. At this juncture the nature of the entity is defined.
If the entrepreneur decides to make the additional worker a partner (co-owner) and shares a degree of ownership and control with the co-worker then this will be a socialist entity. If however, the entrepreneur decides simply to employ the co-worker and pay them a wage, then the entity becomes a capitalist enterprise.
An Oxymoron Called "Anarcho-Capitalism"
A quick word on the oxymoron that is Anarcho-Capitalism (a favourite among elements of the so-called "libertarian right" in America).
Ron Paul makes clear that he's against coersive force impinging on individual rights. People like Proudhon, Bakunin, Kropotkin and likely Marx might have pointed out to Ron Paul that you cannot have Anarchism / Libertarianism combined with Capitalism, because once you have the private ownership of the means of production, you have an authoritarian and exploitative entity. Your acceptance of a wage means you've rented yourself out for a certain amount of hours and during this period you are literally owned by the enterprise, you are thus submitting to its coercive rule (this is called "having a job" or in more honest times, "wage slavery"). You may notice, Ron Paul will happily talk about the "environment" (the free market) but will not talk about the coercive nature of the private "entity" (the capitalist enterprise, see below); someone like Richard Wolff however, happily will (though may be less keen to discuss the coercive nature of the state). Libertarian proponents of laissez-faire capitalism often proffer the old canard that anyone is free to choose who they work for (just as a prostitute is free to choose their clientele); this implies a peculiar definition of liberty; the freedom to choose one's master. Of course, no one is free to choose non-capitalist enterprises if there aren't any.
Ideological Banks Terraforming The Economic Landscape With "Credit"
And this is where the banks come in. Notice that Mondragon has survived largely because it created its own bank. Banks create money out of thin air when they make a loan (private commercial banks create approx. 95% of the money supply) as empirically proven by Richard Werner in his 2013 experiment and follow-up paper called "Can banks individually create money out of nothing?".
The best way to understand banks is like a gardener with a watering hose, where the water is the flow of credit (new money). The banks are like gardeners who favour some flowers (big private corporations) over others (worker-owned and controlled enterprises). If gardeners only water the flowers they favour, the other flowers will not flourish and will instead die. This is why there are so few success stories when it comes to the libertarian socialist co-operative model, they are starved of credit by a profoundly ideological banking system that would be threatened by the existence of a highly efficient and effective co-operative sector. No capitalist wants to see the Mondragon genie properly escape its Spanish bottle (it's also why the co-operative banking sector in Germany is under heavy assault from the ECB).
So if you want a democratic workplace, owned and controlled by the workers, you need to set up well run co-operative banks that will work with, and provide liquidity (sustenance) to co-operative entities.
Hopefully by now, it's obvious just how meaningless the terms "left", "right", "socialist" and "capitalist" are when they are bandied about in their unqualified monolithic form. Ultimately the qualifiers are related to the distribution and direction of power.
Is the power concentrated and are decisions made from the top-down in a hierarchy? Or is power and control broadly distributed and decision making largely democratic? Are "managers" elected and unelected by the workforce they serve, or are managers simply the sheepdogs to their masters' labouring flock?
There is no reason why both capitalist and socialist libertarian ("participant determined") models can't co-exist and compete with oneanother in open and free markets (as both demand a minimal and non-coercive role for the state). Yet, there are few examples (Mondragon is an anomalous worker-controlled big-fish swimming in a sea of privately owned corporations); the main reason for this is that private banks act as gatekeepers by restricting credit to economic entities that are owned and controlled by their workers.
Mainstream political discussion has been purposefully limited to what kind of top-down, highly concentrated power system should be imposed on the population (as in China) or offered to the electrorate (as per the US / UK): Will they accept powerful corporations as puppet masters of the state (the western capitalist model)? Or would they prefer the state apparatus (the party) to play conductor to its vast corporate orchestra (the Chinese capitalist or "capitalism during wartime" model).
You'll notice that missing from this analysis are the post-modern abberations of "post-truth", "critical race theory" and "intersectionality" (i.e. "identity politics") which are merely the theoretical underpinnings and ideological by-products of a power elite's divide and rule strategy (an attempt to promote discord, distraction and infighting among the broad base of the population).
Likewise, the terms "left" and "right" have always been a divide and conquer distraction to prevent the vast majority of working people from acknowledging their commonalities, their common interests and perceiving their common enemy; an enemy that is now waging a war against them on a global scale.
Epilogue: Application (The 4 Outcomes)
The UK 1970's to present (#2 + #4 becomes #3)
In the 1970s the UK was a mixture of #4 (Capitalist / Participant Determined) + #2 (Socialist / State Controlled). It ran a largely capitalist free-market economy in combination with a large sector of nationalised industries and utilities and featured a welfare state "safety net". Such systems are often called "mixed economies" and in political parlance "social democracies" (and for our American friends, is what the "revolutionary socialist" pied-piper Bernie Sanders was advocating just prior to dumping his supporters in the lap of neo-liberals who had opposing agendas prescribed by their corporate "donors").
The 1980s saw the rise of neo-liberalism ("global corporatism") and from the 1980's to the present day #4 (Capitalist / Participant Determined) gradually morphed into #3 (Capitalist / State Controlled - of the western corporate controlled flavour) where corporate interests began to manipulate and direct state power (e.g. crony capitalist "Public Private Partnerships", where public money is siphoned off to corporate insiders) to further enrich themselves and accrue ever more power. Having smashed the nationalised industries in the 1980's / 90's, the #3 (Capitalist / State Controlled) system has been dismantling the social welfare element of the old #2 (Socialist / State Controlled) model and is currently transforming these elements into agencies of state oppression (under the guise of "bio-security").
The Sabre Rattling Between China and the United States (two flavours of #3)
China and the US are simply two sides of the same #3 (Capitalist / State Controlled) coin; two super-powered flavours of fascism vying for dominance. The only real ideological difference between the two states is which element holds the reins: private corporate power or state power. The Chinese "Communist" Party is not very different to what people in the US refer to as the "Deep (or Permanent) State" with its adjunct army of legislation-generating think-tanks and revolving-door corporate lobbyists. That said, there is no oppression like state oppression; for its outright violence, its lack of recourse and restitution, and the bleak finality of its judgment.
What Trump's "deplorables" and most American working people appear to want: sovereignty / "agency" (craving #4 when #1 is missing)
From this side of the ocean, what most Trump supporters seem to be crying out for is personal sovereignty; the freedom of the individual to be left to their own devices, to get on with their working lives. This manifests itself in a loyalty to the constitution and a distrust and disdain for profound and often overt corporate and state corruption. They would appear to be crying out for model #4 (Capitalist / Participant Determined) and a reining in of coercive and meddlesome corporate and state power.
However, though the reduced role of the state may accrue some personal liberty and "sovereignty" (or "agency") in daily life, unless you're a business owner you have practically zero power as soon as you enter the workplace. If individual ownership and sovereignty are truly the goal, one can make a strong case for model #1 (Socialist / Participant Determined) and this is very likely why this option has been erased from all levels of political education and analysis; why success stories like Mondragon are never mentioned in the media and why this entire quadrant of political theory (libertarian socialism) seems to have calved off the political land-mass and disappeared into a taboo ocean of whisperless quiet.
* For this reason all Anarchists are Socialists but not all Socialists are Anarchists. However, an argument can be made that democracy is the tyranny of the masses (i.e. "democracy is two wolves and a sheep deciding what's for dinner") and thus could be regarded as a form of collective coercion - and I think that's a fair argument, but all I'd say in reply is, I'd rather have the flawed democracy of the workers over the outright tyranny of a Board of Directors.
Ask yourself this, why would workers at Mondragon choose to ship their manufacturing to China and make themselves redundant? They wouldn't and they never did. Did employees of large private corporations in the US and UK ever have such a say when all their jobs were shipped overseas? No, they didn't.