With the resurgence of socialism back in the mainstream discourse in the United States, many Americans find themselves unsure exactly what socialism means in the context of the longstanding socialism-versus-capitalism debate.
Socialism is now a favorite buzzword for politicians on the right to use against their opponents, referencing dictatorships such as Nicolas Maduro’s government in Venezuela and the rise of communism following World War II. As the debate intensifies in this year's U.S. elections, public awareness of the real differences between socialism and capitalism will become increasingly important.
As a first step, we must understand socialism as it actually is: a system of social organization which prioritizes worker ownership and democratic decision-making.
Socialism is easily misconstrued, with a long history of countries and government programs claiming to be “socialist.” The last century of the socialism-versus-capitalism debate consisted primarily of politicians arguing over the wrong issue, and misconceptions became widespread following the so-called "Red Scare" of the 1950s and anti-socialist hearings of the late Sen. Joseph McCarthy, R-W.I. If we are ever going to talk seriously about socialism, then we need to reeducate the public and move past the misunderstandings left by McCarthyism.
So, then, how should socialism be defined? There are several common notions in the public of what socialism is, but here are a couple problematic ones:
Some may think of socialism as a system in which the government owns and controls enterprises, meaning all operations of economic production, such as companies and cooperatives. Alternatively, others may consider socialism to be a system with a planned economy, in which the government plans and directs the exchange of goods and services.
However, these ideas are highly misleading because they're characteristics which could be applicable to both socialism and capitalism.
Socialism, in fact, is not about any particular economic policy. Instead, it categorizes the social organization within an enterprise. Socialism refers to the type of relationship between workers and whomever benefits from their labor.
To put it briefly, socialism is a system in which workers are their own bosses. They are both the employer and the employee, collectively owning and running enterprises, rather than serving those in power as a subordinate majority. Under socialism, the majority has direct democratic control over the workplace. The goal is group ownership, collaborative labor and democratic decision-making.
Capitalism stands in contrast to socialism because under capitalism, decision-making power in an enterprise is concentrated at the top. Usually, an unelected group, such as the board of directors or shareholders, holds the power.
To get a better understanding of socialism, it’s important to correct a few other misconceptions.
One misconception is that socialism equates to state control over the market. On the contrary, some systems which have state control are more similar to capitalism than socialism. In a feudalist society, for example, feudal lords who command serfs can sometimes be part of the state. Yet, an enterprise controlled by feudal lords is not an example of socialism. Rather, it is more akin to capitalism.
Capitalism and feudalism share fundamental commonalities: Just as in a feudalist system, employees under capitalism are only compensated enough to merely continue being a subordinate laborer. In both systems, workers’ labor is undervalued as they give more than they get, and the surplus profits go to unelected, undemocratic individuals in power.
Socialism rejects these systems in favor of workers controlling their own enterprises and distributing profits through democratic means. Moreover, state control over an enterprise is not necessary for it to be an example of socialism. Socialism values workers having power over their enterprises and profits whether or not they are part of the state.
Another misconception is that socialism is equivalent to central planning of the economy. In reality, all forms of social organization, including both socialism and capitalism, can permit market economics.
Socialism’s fundamental critique of capitalism is against the oligarchic concentration of power within the workplace. The argument is that laborers deserve to reap all of the benefits from their work and to democratically decide what to do with the profits.
With these ideas in mind, it’s easier to dispel the myth of so-called “socialist” countries in modern history like the Soviet Union, China, Cuba and Vietnam. Although these countries changed private employees into state employees, their systems of social organization are not examples of socialism. Instead, these new economic systems merely preserved the oligarchic structure of capitalism, but under a different owner: the government.
State capitalism, as was prevalent in these “socialist” countries, is still capitalism. It is for this reason that the misinformed debate is often actually between private capitalism and state capitalism, rather than between socialism and capitalism.
Properly understood, capitalism is designed to consistently force the consolidation of wealth in the hands of the few, and Americans should not tolerate any economic system which promotes such inequitable class disparities.
Socialism, on the other hand, offers a wide spectrum of ideas for democratizing the workplace and the economy with the common goal of transcending worker oppression and exploitation. Everyone is entitled to basic necessities and equal opportunity in society.
Going forward, Americans ought to move to empower workers’ unions and democratic enterprises such as worker cooperatives, especially if we ever hope to achieve full worker emancipation and democratic control over the workplace.
Jonah Hyatt (he/him) is a junior studying political science and philosophy. In his work, he focuses on U.S. politics and political philosophy.