Economic Democracy

Book: Economic Democracy: A Worthy Socialism that Would Really Work. by David Schweickart

Description

David Schweickart:

“A Worthy Socialism” was intended to demonstrate rigorously that there is an alternative, at least in theory: an economically viable form of socialism that would be more democratic than capitalism and at least as efficient. Against Capitalism made the same point, but extended the argument further. Economic Democracy would be not only as efficient as capitalism and more democratic, but also more rational in its growth, more stable, more egalitarian, less prone to high unemployment, more ecologically friendly. I was sick of hearing even progressives say that “we are going to have to stop using the term ‘capitalist economy’ as if we knew what a functioning non-capitalist economy would look like.” (http://www.solidarityeconomy.net/2006/10/25/economic-democracy-a-worthy-socialism-that-would-work/)

Discussion

Economic Democracy, Socialism with a Market, explained further:

"Economic Democracy: the Model

From these considerations a theoretical model comes into view, a socialist alternative to capitalism quite different from the Soviet model. I call it “Economic Democracy.” It consists of three defining institutions:

1. A market for goods and services, which is essentially the same as under capitalism.

2. Workplace democracy, which replaces the capitalist institution of wage labor.

3. Democratic control of investment, which replaces the capital markets of capitalism.

Let me elaborate briefly on each of these key institutions.

1. I’ve long been convinced that markets are a necessary component of a viable socialism. Central planning does not work for a sophisticated economy. The knowledge and information problems are too great. This is the great negative lesson to be drawn from the socialist experiments of the past century. But these markets should be largely confined to goods and services. They should not embrace labor or capital. And they should be regulated. Not all goods and services should be commodified, certainly not health, education—or water. There are valuable lessons to learned from the best examples of European social democracy as to what goods and services can be effectively provided by the state, and how markets might be effectively regulated.

2. It is now well established that productive enterprises can be run democratically with little or no loss of efficiency, often with a gain in efficiency, and almost always with considerable gain in employment security. This is the positive lesson of a great many recent experiments in alternative forms of workplace organization. Of course structure and culture are important here. Not all forms of workplace democracy work equally well. Good management is important. Managers need a certain degree of autonomy to manage effectively. But this management should be answerable, ultimately, to its workforce, one-worker, one-vote.

3. Some sort of democratic control of investment is essential if an economy is to develop rationally. This is the great negative lesson to be drawn from the failure of neoliberalism. But control of investment is exceedingly difficult if the investment funds themselves are privately generated. The solution to this problem is conceptually simple. Don’t rely on private investment. Generate your investment funds publicly—via taxation. In my article and in my subsequent work, I advocate a capital assets tax for this purpose. These funds should be allocated to public banks, which channel them back into the economy, utilizing both economic and social criteria—including, importantly, employment creation.

Regarding these three basic institutions, it is important to keep in mind that the last century was thick with economic experimentation, not only the large-scale experiments with various forms of capitalism and socialism, but also small-scale experiments in individual enterprises. I am convinced that the empirical data now available to us strongly support the claim that an economy structured along the lines suggested by the model presented above would work better than capitalism. We know a lot now about regulating a market economy. (We know that laissez-faire doesn’t work.) There is a vast literature now extant on worker-owned or worker-managed enterprises. We know what problems are likely to arise, and how these can be addressed. There have been many attempts at macro-economic planning, often involving the allocation of investment resources. We know that intelligent investment planning is possible.

In my view we can now assert with a high degree of scientific confidence that an economy structured as an Economic Democracy (the theoretical structures suitably modified to take into account certain practical contingencies) will be at least as efficient as capitalism, more rational in its development, and more democratic. It will also be less susceptible to the glaring defects of capitalism: excessive inequality, unemployment, poverty in the midst of plenty, overwork, and environmental degradation." (http://www.solidarityeconomy.net/2006/10/25/economic-democracy-a-worthy-socialism-that-would-work/)