A worker at Copreci, a Cooperative Company belonging to the Mondragon Group Photo: Mondragon Corporation / Flickr

Worker self-directed enterprises: the cure for capitalism

  • February 8, 2020

Book Review

In his new book “Understanding Socialism,” Richard Wolff paves the way for a 21st century socialism that starts with democratizing the workplace.

“Socialism Sucks!” This blatant invective was hurled at me while I stood on a DC metro train reading Richard Wolff’s new book Understanding Socialism. I chuckled a bit, having heard this refrain from InfoWars or Turning Point warriors for years. “I suppose it depends on how you define it…” I began, attempting to use the same argumentative techniques as Wolff does in the pamphlet dangling between my fingers.

As we discussed, it was clear that this person had totally swallowed the anti-communism pill and proceeded to blather the same tired arguments made by baby boomer parents and their generational ilk. “Ok boomer!” I think to myself, yet my conversational partner was a woman of no more than 30 years old.

At a time when a majority of young people have a negative view of capitalism and a more positive view of socialism, hearing this refrain coming from a millennial was startling. I thought of lending her my copy of Understanding Socialism, but for my concern that its ultimate destination may be the nearest trash receptacle. Had she read it, though, I think she would have been surprised by how socialism is defined. Indeed, answering the seemingly simple question “What is Socialism?” is far from easy. A great feat of this book is the concise and clear manner in which Wolff attempts to provide this often difficult definition.

Richard Wolff’s “Understanding Socialism” is out now

When it comes to defining socialism, one will find as many definitions as they do adherents. To wit, the dictionary provides an unhelpful non-explication. While an entire chapter of Understanding Socialism is devoted to defining the word, right at the outset Wolff provides one of the broadest definitions of the term socialism I’ve heard. Socialism is a yearning — a yearning for something better than the status quo, better than capitalism. Reminiscent of Marx and Engels’ specter haunting Europe, Wolff sometimes describes socialism as capitalism’s shadow, following it perniciously where ever it may roam. Unlike many leftist purists, Wolff has an expansive view of socialism and goes on to describe many “socialisms”.

For instance, there is early socialism, whose utopian visions attempted to maintain both the philosophical and everyday idealism found in the first stages of the industrial revolution. There is a statist socialism, where the state owns and operates enterprises which served as the driver of 20th century economic growth in the previously backwards economies of Russia, China, Cuba, and elsewhere — what Wolff, following Tony Cliff and others, describes as state-capitalism.

There is also parliamentarian socialism, or social democracy, which, using socialist ideas, seeks to manage markets and economies and provide a mechanism to transfer the wealth generated by productive forces still held in private hands. All of these, and more, stem from a single tradition of socialist critique of capitalism, but differ in the solution proposed.

The Red Menace

For most of those not imbued with red-colored glasses, socialism is defined by the Soviet Union — and to a lesser degree the People’s Republic of China — with its grand May Day parades, red flags, gulag archipelagos, statutes and busts of former and current leaders, and, eventually, failure. In the chapter on anti-communism, Wolff explains in detail how two generations of people were subject to wholesale propaganda and social engineering such that the politics of the Soviet Union, including repression of political rights, became synonymous with socialism — despite a whole section of socialists who maintained Marxist-based criticism of the Soviet project and its policies.

My fellow rider on the metro train embodied the success of this propaganda campaign. But it was not only the United States who propagandized the world in linking socialism with the Soviet Union, but the Soviet Union itself under Stalin. But that begs the question — was the Soviet Union really socialist?

For some socialists, the answer is obviously yes. The Soviets expropriated the owners of the means of production in Russia, both Tsarist and private. They nationalized industry, limited the operation of markets, and began to plan the economy under the Gosplan program. For them, this is evidence enough of the socialist credentials of the Soviet project. Wolff, however, disagrees.

If we understand socialism as a critique of capitalism, or as its shadow, then we must understand what capitalism is. For the average American, the definition of capitalism boils down to something like free markets, free enterprise and/or private business holding. In a recent Monk debate, Professor Wolff’s opponents argued simply that capitalism equals markets, but this is a fundamental misunderstanding of capitalism, and so it will invariably lead to a misunderstanding of socialism.

Capitalism is not markets. Markets existed before capitalism and will exist after capitalism. Markets can be an efficient means of distribution, but little more. Instead, capitalism is a mode of production. A mode of production can be defined by answering simple questions: who owns and controls — who makes the decisions on what to produce, how to produce and what is done with the proceeds — and who inputs the labor.

You can answer the questions for any historical period. In ancient times, slaves produced, citizens owned and decided what, where, how and what to do with the proceeds of production. In feudal societies, the serf did the work, while the lord made the decisions and took the proceeds. In capitalist societies, workers operate the means of production, but owners make the decisions and take the profits. In these class divided societies — with class being merely the relationship to the means of production — the rest of society, the norms, mores, rules, laws and interpersonal interactions are all predicated on the base level divisions in society.

A socialist society is intended to be different, one where class division is no longer the base of society, but instead is built upon a fundamental equality of persons — all are both workers and owners of their respective enterprises — and all the norms, mores, laws, and interpersonal relations would flow from this base.

Turning back to the Soviet Union, after the October Revolution, the new base of the socialist society they intended to create would be the soviet, or worker’s council, which were bodies elected by the rank-and-file to represent them in operating enterprises and participating in local politics. However, the immediate engagement in hostilities with an anti-communist army — supported by the United States, Britain, Germany, Japan and others — meant that a war economy was necessary, and strict military-style discipline was needed to fight the war. It was this system, as Wolff reminds us, that Lenin called state capitalism — where the state had taken over enterprises but had yet to transfer ownership and control to the working class. For Lenin, the Soviet Union was on the way to achieving socialism but had not gotten there yet.

Stalin was not satisfied with this situation. The people had endured privations and war for nearly a decade when it was declared that, rather than merely state capitalism, the Soviet Union was now a socialist state. Within years of this declaration the Stalinist sections of the Communist Party were engaged in a series of ex-communications of critics and dissenters from the Party, the only political organization with political power in the Soviet system. A prison-camp system was set up to house political criminals while other freedoms, like press and assembly, were curtailed. This, based on Soviet and US propaganda, was socialism. But to decide if that was actually the case, one need look no further than the class basis of Soviet production.

Near the end of Understanding Socialism, Wolff mentions Yugoslav Socialist leader-turned-exile Milovan Djilas’ Marxist critique of 20th century socialism. In his book The New Class, Djilas argues that the Soviet Union, China and every other “communist” state had really only established state-capitalism. Whereas in the west businesses remained in the hands of private individuals who employee workers and extract the surplus value they create over their wages, in “communist” countries, the state simply played the role of the capitalist.

Nowhere in the Soviet Union, People’s Republic of China, Vietnam, Cuba, etc, do you see an entire economy made up of independent worker-owners who own and control their own enterprises. Rather you see state control of enterprises using anti-democratic methods to deny human beings their fundamental rights, just as private owners do in the rest of the world.

The Worker Self-Directed Enterprise

Throughout the 19th and 20th centuries, debates among socialists — who are far from a single mass — about the role of the state, whether it needed to own and control businesses or just provide a progressive tax system, continued unabated. However, the real question is not so much the role of the state, important as it is, but the role of democracy and democratic institutions. The bourgeois revolutions in the late 18th and mid-19th centuries promised freedom, equality and brotherhood, but they utterly failed to fulfill any of these. It is this failure that has energized socialists who want to make the promises of the bourgeoisie into realities for the whole of the world.

It does not take a barricade-building socialist to recognize that our daily lives are not imbued with democratic notions and activities. We all know at the end of the day that our workplaces are dictatorships where a certain person, or group of persons, usually disconnected from the actual operation of the enterprise, run them with iron fists. If you step out of line, your punishment is the loss of your job, which pays the wage that provides for the means to live. There is a democracy deficit at work, and that deficit spreads to legislatures locally, nationally, and even internationally.

For 21st century socialists, the role and locus of democracy is the prescient question to answer. What good is a state takeover if the base of society is fundamentally un-democratic? Is it even possible to take over the state and attempt to build socialism without first making enterprises democratic? These are the kinds of questions confronting socialists today. For many, including Wolff, the answer lies in the democratic, worker-owned and -operated enterprise. These worker self-directed enterprises are, for Wolff, the cure for capitalism.

Harkening back to a long-standing tradition, Wolff argues in the close of Understanding Socialism that the real preparatory work for widespread international socialism is local — even hyper-local — socialism. Worker self-directed enterprises are, each in their own way, examples of socialist production at the smallest scale. The lessons and experiences of workers in these self-directed enterprises are the very pieces necessary to fit into a larger revolutionary program.

In this view, socialism will come as every new economic system has come, by the leading edge of the toiling class self-organizing into units which provide the example for the future and compete directly with the traditional enterprises of their historical epoch. In this sense, worker self-directed enterprises are able to be constructed and sustained, and when they do compete with standard capitalist enterprises, they win.

A New Century of socialism

In the course of Understanding Socialism, Professor Wolff makes it clear that socialism is not a monolith, it is not one thing. Instead it is a tradition, a way of thinking, a longing for something better than capitalism. There have been as many versions of socialism as there have been socialists, but they share a general critique of a system that came into the world wrapped in the ideas of liberty, equality and fraternity, but that quickly shed its utopian ideals and settled into the dictatorial rule of the owning class under the cover of managed “democracy.”

The promises of 20th century socialism were too soon drowned in political blood, and anti-communist expressions in fascism and McCarthyism distorted and kept socialist ideas at the fringes of American society. A new century has dawned, yet the same challenges of capitalism, remain — exploitation, instability, inequality and environmental devastation — and have put the future of the world at risk.

But after the economic depression of 2008, the rise of Occupy Wall Street, and the success of Bernie Sanders’ “democratic socialist” campaign in the United States, a new version of socialism is possible and taking root in the movement for democratic worker self-directed enterprises and an cooperative economic ecosystem.

This 21st century of socialism allows us socialists to put our money where our mouths are, to organize workers such that they can show the world that they are capable, ready, and desirous of owning and controlling the means of production themselves. This new socialism will be drenched in democratic ideas and traditions and will not suffer the same deficits as did the 20th century experiments in socialism.

When this new socialism grows, it will come up against the propaganda of the 20th century but be able to provide to the entire world the fulfilled promise of true liberty, true equality and true fraternity. Wolff’s book is part of that glorious project.

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