Democratic socialism can build an economy that works for everyone

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No economist had a higher reputation among his peers than Kenneth Arrow,  who passed away recently at the age of 95. His works were cited, re-cited, discussed and lionized for decades.

Arrow was also a self-described democratic socialist, which, if it had been advertised widely, would have come as a great surprise to his many American admirers. In its obituary, The New York Times quoted Robert Solow of MIT who said Arrow had "liberal" politics (which makes sense if "liberal" characterizes anyone from Milton Friedman to Karl Marx).

Arrow linked his socialism to the Great Depression, where an "apparent sheer irrationality of the workings of capitalism was a basic condemnation."

Arrow identified the economic concept of "economies of scale" at work in politics. The few, very large, super wealthy corporations were able to band together to dominate the public agenda and influence decision-making. The individual citizen or small scale democratic organization had little chance to make itself heard or have its ideas prevail in such a contest with giants.

Democratic socialism would have won

In the most powerful capitalist economy, corporate control of both major parties confines citizen participation to ritual elections without much meaning, where less than 50 per cent of eligible voters turn up and an increasing percentage of the American population is denied the right to vote through voter suppression legislation adopted at the state level.

Bernie Sanders campaigned on the theme of how the American economy was rigged by corporations that used campaign finance to control elected officials: mayors, city councils, Congress, the Senate, and, indeed, the presidency itself.

And, yes, Sanders called himself a democratic socialist. If nothing else his ill-fated attempt to lead the Democratic party did lead to an increased American interest in socialism.

Democratic socialist economics begins with a simple contradiction. Basic human needs for warmth, shelter, food, water, education, cultural products, sport or recreation may be universal, but the means for procuring those needs are distributed unequally -- and many basic requirements are simply not met even in the richest countries.

The problems that beset capitalism are not just unjust distribution. At heart, the capitalist system is wasteful and inefficient.

For democratic socialists, the material deficiencies that prevent the satisfaction of human needs can be overcome through superior economic organization.

In a world where people have no means of support other than their ability to work, labour becomes a commodity to be bought and sold, for a price. Conventional economics sees a labour market where flexible wages will match workers with jobs.

Democratic socialist economics inspired by Karl Polyani suggest a need to de-commodify labour. The idea finds an echo in efforts to democratize the work process and build a social economy.

Worker co-ops, self-managed enterprises, publicly owned corporations, non-governmental and governmental agencies alike all represent potential alternatives to the worker-as-commodity.

Capitalism's PR game

The main obstacle facing democratic socialists is the legitimacy that surrounds the capitalist organization of society.

Civil society in general and media in particular associate wealth with knowledge. The richest capitalists are believed to have insights into everything from the environment to international development.

Independent social science research is generally ignored if it questions the foundations of conventional wisdom about the workings of the economy.

De-legitimizing capital goes hand in hand with building a democratic socialist economy.

A renewal of democratic socialist economics can draw on a 20th-century tradition exemplified by thinkers such as Rosa Luxembourg and Karl Polanyi.

The need to argue the merits of common ownership of productive capacity, planning, and regulation in the context of Stalinism in the Soviet Union and Eastern Europe, is being replaced by debates by over the roots of “Stalinist capitalism” as former Le Devoir journalist Serge Truffaut called it.  

The immiseration of sections of the middle class has created conditions for a broad alliance of salaried and working-class citizens. Precarious work grows in Canada and around the world.

One reaction to economic exclusion is the kind of populist authoritarian politics that led to the election of Donald Trump.

As scholars of the Frankfurt School concluded watching the rise of European fascism in Italy, Germany, Spain, and Portugal in the 1930s, the sequel to capitalist failures can be worse than the original.

The better idea is the one that Kenneth Arrow took as his own: democratic socialism.

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Image: Wikimedia Commons

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