People over profit: The Socialist alternative

By Mike Tudoreanu

Editor’s note: This is part one of a three-part series by Mike Tudoreanu.

My regular columns over the past month have, in a way, been part of a single long-running argument. Two weeks ago in my previous column, I argued that the workers are the real wealth creators. I explained that the working class (including both physical and intellectual laborers) is the true engine of the economy, and people who do not work are not producing wealth. Such people include all those who get their income from profits, interest or rent.


In another earlier column, I pointed out that the rich did not earn their money – they could not possibly work hard enough to justify their colossal wealth They are not responsible for most innovations and the only reason they take more financial risks than we do is because they have more money in the first place. The conclusion is that the money of a rich landowner comes from the work done by his or her tenants; the money of a rich capitalist comes from the work done by his employees, and so on.

So far, what I have presented is an argument against capitalism, which can be boiled down to the idea that capitalism takes wealth from people who worked for it and earned it (the workers), and gives it to people who did not work for it and do not deserve it (the capitalists).

But now I want to go further and write about the alternative I advocate. I am a socialist. Unfortunately, that word has suffered so much overuse as a label for so many different things – just like the words “freedom,” “democracy” or “republic” – that it has become confusing and requires an explanation.

In a nutshell, socialism is the view that since the workers create all wealth, we need a society in which they also control all the wealth and decide what to do with it. To be a socialist means first and foremost to be on the side of the working class. Socialists believe that all profits (as well as rents and interest payments on loans) are, in a sense, stolen money that rightfully belongs to the workers, and therefore, they strive to return as much of that money as possible to the workers. For this reason, socialists often support the kinds of policies that are called “wealth redistribution,” such as universal health care, free education, social security and welfare payments.

But socialists are not liberals. When liberals advocate wealth redistribution, they see it as a kind of government-run charity or a way to “save capitalism from itself.” Liberalism does not question capitalism. It accepts the idea that the rich deserve to be rich and the poor deserve to be poor and the only goal is to offer a basic safety net so that no one becomes excessively poor. In addition, liberals see this safety net as their end goal; not a step on the way to something else.

When socialists advocate wealth redistribution, we don’t see it as a safety net, but rather more like a Band-Aid. Capitalism constantly makes workers lose wealth that they should rightfully get to keep, in the same way that wounds make you lose blood. So-called wealth redistribution is not redistribution at all, but rather a way to slow the bleeding. By providing workers with health care, education and so on, we are returning some of that lost wealth back to them so their net loss is smaller.

Thus, wealth redistribution is not a matter of charity or compassion, but a matter of justice. It is not a hand-out, but a restitution of stolen goods. However, the restitution is incomplete. The workers only get back a small part of the wealth taken from them by their bosses. This is another way in which wealth redistribution is like a Band-Aid: It can be a temporary fix that makes the problem less bad, but it is not a solution. It is no more than a small step on the way to the cure for society’s ills, not the cure itself.

So what is the cure? If the money that goes into business profits rightfully belongs to the workers, does that mean we should just ban profits and make businesses pay their workers all the money they do not spend on material costs?

Of course not.

Capitalism is an economic system based on privately owned, profit-seeking firms. One does not simply tell private companies to stop making profits. If we simply told private companies to stop getting profits, interest or rent, they would all go out of business and the whole system would collapse. So how can we get an economic system without profits, interest or rent?

Clearly, the only way to do it is to have an economic system without private companies. We need to replace them with a different kind of company. For instance, we could replace them with state-owned enterprises.

If you have ever heard the word “socialism” being used as a synonym for “state ownership,” or the government doing things in general, that is a lie with a grain of truth. The grain of truth is that most socialists do indeed support an economy based on state-owned companies.

The lie, however, is the idea that state ownership is the main thing socialists care about, or that they support the government in general. We do not. We support the working class and we want an economy controlled by the workers with no profits and no income, except that earned through work.

One way for the workers to control the economy is for them to elect representatives to a government body – in free and fair elections, without money in politics – and to have this body own and manage companies. It is only in that kind of context that socialists support state ownership. It can be a useful tool, but it is not an end in itself.

To be continued…

Mike Tudoreanu is a Collegian contributor. He can be reached at [email protected]