Jerry Fresia recently made the following comment: “I'm hung up on how socialists will "banish" the exploitation of workers. Will it be made illegal for the entrepreneurial minded to control the work lives of others?” This brief remark raises the vexing question of how the socialism we all talk about would actually work. This is indeed the question if, like me, you think capitalism should be superseded by socialism. I trust it will surprise no one when I confess that I do not have a snappy answer suitable for being put on a bumper sticker – or even in a fat scholarly tome. But I think I can say a few things that may help us along the way.
As I see it, there are really four distinct questions for which we need answers, and a fifth that is a no-brainer but has exercised some people mightily [notably Bob Nozick.] The four real questions are these:
First: How will socialism do away with the grotesque inequality of wealth?, a question highlighted by someone’s calculation that currently 23 billionaires have as much wealth as 3.8 billion people.
Second: How will socialism do away with the very great and seemingly permanent inequality of income that characterizes advanced capitalist economies such as America’s?
Third: [Jerry’s question] How will manifestly useful and socially productive entrepreneurial activity be encouraged in a socialist economy without simply setting in motion a reproduction of the inequality of wealth and income done away with by our fantasied socialist revolution?
Fourth: How will a socialist society keep those charged with managing the economy from looting it to gratify their own greed, thereby realizing Orwell’s dystopian fear that under socialism, some of the animals will be more equal than others?
And finally, the non-question made famous by Nozick’s Anarchy, State, and Utopia: Should we stop fans from voluntarily heaping great wealth on Wilt Chamberlain? [or LeBron James, or Lady Gaga, or whoever is the latest hot star]? Only people who are not serious about socialism [or capitalism, for that matter] ask dumb questions like this. The answer is, Of course not! Heap away. Each of us has his or her favorites. I would rather heap riches on Paul O’Dette than Vin Diesel [although I kind of like Vin Diesel], but that is neither here nor there. The adoration of fans has nothing to do with socialism, or capitalism, or feudalism, or slavery. A sensible and attractive socialist society has plenty of room for its sports stars, music stars, movie stars, and television stars, all living the high life, to the delight of their fans. Socialism need not be puritanical, though it sometimes sounds that way. Live a little!
Now let me say something very preliminary about each of the four serious questions.
First, the grotesque inequality of wealth. This inequality arises from three causes: First, the unstoppable tendency for capital to accumulate over time, making those who own it richer and richer; Second, the conversion of a portion of the profits of capitalist enterprises into huge salaries going to people who are ostensibly employees, a process made possible by the divorce of legal ownership of corporations from de facto day to day control of the corporations; and Third, the inheritance of large accumulations of wealth, which passes into the hands of those who themselves have neither overseen its accumulation as capitalists nor appropriated it in the form of inflated compensation.
If the capital is collectively or socially owned, its natural expansion will accrue to the benefit of all, not to the benefit of a select few who have legal ownership of it. That, after all, is the central point of socialism. As for the covert conversion of accumulating capital into excessive salaries for managers, there would have to be strict laws regulating the determination of those salaries and a vigorous, independent press and communications medium to ride herd on the inevitable attempts by those with a public trust to turn it into a private piggy bank. It is easy to say this, but extremely hard to carry it out in practice.
Second, the steep and seemingly unassailable income pyramid. This, I believe, is the greatest threat to a successful socialism, and I am nowhere near being able to say how it can be changed and then kept from recreating itself. A few observations to get a discussion started. One: In my younger days the pyramid was much less steep. The compensation of senior managers of ordinary big corporations [as opposed to the flashy name brand corporations still run by their founders, like FaceBook and Amazon] has soared since the ‘50s, when those corporations were quite profitable and as well run as they are now. Simply going back to those days would be a vast improvement. Two: the best really big corporate organization in the United States is the U. S. Military, whatever you think about what it does in the world. The pay structure for senior officers is pitiful by comparison with the corporate pay structure. Three: As I have observed here recently, the marginal product justification for the salaries of upper middle class workers, like professors, doctors, et al., is nonsense. So is the claim that those salaries are necessary compensation for the costs of a college education. The pay differentials required to draw folks into what we used to call white collar jobs, if indeed any differentials at all are required to get the right people in the right jobs, are nowhere near as large as those that now exist. Well, there is much more to be said here.
Third, the need to encourage and elicit entrepreneurial energy, talent, imagination, and effort [Jerry’s concern.] I do not know the answer to this, but I think it may well be necessary to make socialism compatible with major rewards to entrepreneurship. This will inevitably create a moneyed class [as well as some losers, of course.] There will thus be some significant inequality in a healthy socialist economy. But if ownership of the means of production is not inheritable, then private capital accumulation will be limited. So maybe Jeff Bezos will become incredibly rich, but neither his children [does he have any?] nor anyone else will come into ownership of Amazon.com when he dies. I think we socialists can live with that.
And finally Four: How do we keep the whole system from turning into a kleptocracy? Lord knows, capitalism is, as was feudalism before it. I no more believe in the incorruptible nobility of Socialist Man than I believe in the incorruptibility of those washed in the blood of the Savior. Eternal vigilance will be called for, I imagine. It certainly is now.
Well, my back trouble has returned, so I shall bring this to a close and lie down.