Massachusetts Daily Collegian

People over profit: What Socialism is not

By Mike Tudoreanu

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In my previous column of this three-part series, I tried to sum up the problems and injustices at the heart of capitalism, and wrote about the socialist alternative and how it differs from capitalism. In this present column, I wish to explain how socialism differs from some of the things commonly labeled as “socialism” in the U.S. Before describing what socialism is, it may be useful to talk about what it isn’t.

Socialism is not the type of society that exists in Sweden, Norway and Denmark, or to a lesser extent in France and Germany. Those countries (particularly the ones in Scandinavia) follow a model called the “social market economy,” and this represents the liberal ideal, not the socialist ideal. When they get called “socialist,” it is due to confusion between liberalism and socialism.

The social market economy is a model where the rich are taxed very heavily and this money is used to provide things like universal health care, free higher education, generous pensions for the elderly and welfare for the unemployed. In other words, it is an economic model that contains a large degree of wealth redistribution. But in all other respects it is still identical to the standard form of capitalism. The economy is still based on markets and profit, and it is still dominated by corporations. The majority of people are still employed by profit-seeking companies, and still do not have control over their workplace or the products of their labor. Decisions about what to produce and where to invest are still made on the basis of profitability and not human need. You can still lose your job to downsizing or outsourcing, or get fired for no fault of your own. The economy still goes through periodic recessions. And the rich still get rich by exploiting the labor of others (higher taxes mitigate this problem to an extent, but they do not fix it).

That is not socialism. That is capitalism with a Band-Aid. It is better than what we currently have in the U.S., but it is also a very vulnerable system. The wealthy are still in control of politics and government, and they are always trying to destroy as many progressive policies as they can get away with. Sweden, for example, has been gradually shrinking its welfare state since the 1980s. Practically all countries in Europe and North America have deregulated their banking systems in recent decades, which yielded disastrous results in the crash of 2008. The rich are always demanding lower taxes, but it is unpopular to cut government services. Thus, politicians are pressured to cut taxes without cutting spending, leading to budget deficits. In short, the social market economy is a very difficult balancing act between the interests of the capitalists and the interests of working people. You can walk that tightrope for a while, but sooner or later you will fall. The progressive dream is only possible as a short-lived compromise.

What about the other thing that sometimes gets called socialism – the kind of economic system that existed in the Soviet Union and Eastern Europe before 1989, and continues in Cuba today? It’s certainly a very different system from what we are used to. There are no private firms or corporations, the economy is not driven by profit-seeking (in fact, profits are officially abolished), all industries and workplaces are owned by the state, there is no unemployment, and, at least officially, people are provided things like free health care, education and pensions. But there is no democracy. The people don’t control the state, they don’t control their workplaces and they don’t control what happens with the products of their labor. The state is supposed to serve them, but, in practice, it can do whatever it wants. With no democratic accountability, there are no consequences for the heads of state companies if they only make low-quality products, or if they don’t make enough. There are no consequences for the government if the services it provides are sub-par. In fact, the government can even decide to return to capitalism, as it has done in China, without asking anyone’s opinion.

That is not socialism, either. The whole purpose of socialism is to have a society where the workers control all the wealth and decide what to do with it. Obviously, this doesn’t happen when the economy and society is controlled by a government which doesn’t have to answer to anyone. The main reason why socialists oppose capitalism is because capitalism puts power and wealth in the hands of a small ruling class who did nothing to earn it. The last thing we want is to do the exact same thing, but with a different ruling class. It is true that countries like the Soviet Union had important things in common with socialism — for example the fact that their economy was planned, not market-based — but they missed the most important aspect of socialism: workers’ control. Just like a dolphin is not a fish, an undemocratic planned economy is not socialism.

Other things have been called “socialism” as well. In many parts of the world, “socialism” is a buzzword with very positive — similar to the word “freedom” in the U.S. — and therefore many political groups are tempted to jump on the bandwagon of calling themselves “socialists.” There is not enough space to address them all, except to say that they share one common theme. They all claim to want to help working people, or the poor, from above. But socialism is not about getting help from someone else. Socialism rejects the idea of a political hero coming along to save us. Socialism is about people helping themselves, saving themselves, and collectively taking control of their own destinies. Someone who says “support me and I will help you” is not a socialist. The socialist is the one who says “join me, and let me show you how to organize and help yourselves.”

In my third and final column of this series, I will attempt to describe in more detail what socialism actually is, rather than what it is not.

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



9 Responses to “People over profit: What Socialism is not”

  1. Kris on November 16th, 2012 8:08 am

    Mihnea, list some flaws with your socialist plan. If you can’t you’re full of it.

    Brian D. says “Ah, but you see! Actually! But wait, racism!”


  2. mike on November 16th, 2012 8:21 am

    Still going with your “did nothing to earn it” argument I see. Why are you so bitter?



  3. Kris on November 16th, 2012 4:14 pm

    Bitterness for days…


  4. Sam on November 17th, 2012 9:42 am

    “do not have control over their workplace or the products of their labor.” Wrong. In capitalism, you have free reign to deny a company with unfair labor practices your labor by working somewhere else. If they don’t find issue with that, either you’re complaining about nothing, or your labor is not valuable (you don’t work hard enough). In capitalism, the products of your labor are only limited by the utility of the products in question. As long as someone sees value in one of your products, and is willing to pay money to have it, you’re free to create it. If you want to create something useless that no one wants, whats the point? You’re not being a productive member of society in that case.

    “Decisions about what to produce and where to invest are still made on the basis of profitability and not human need.” The degree to which you fail to understand even the simplest tenants of Capitalism is startling. In Capitalism, people produce goods on the basis of their utility. Having food and shelter is pretty useful to most people, and so people are willing to pay literally any price to have them. Luckily, everyone knows that, so the guy who wants to charge $100 for a hamburger because he knows people need to eat is denied that opportunity by the other bloke named McDonalds who undercuts him at $1.

    A government which controls the means of production has no need to respond to the people. Democracy does not exist on its own, doesn’t pop out of the ground, and is not sustained by the process of Democracy. Democracy can only exist when there is some exigent force demanding equitable enforcement of the rule of law, some essence of political regularity, taxes that are reasonable, etc. That force is Capitalism, or more specifically, capital. The threat of capital flowing out of the country ultimately keeps governments in check, not the ballot box. I guess we’ll have to wait for your third column, but it seems like what you’re describing is anarchy, which would fail because…it’s anarchy.


  5. Jamie on November 17th, 2012 2:29 pm

    Sam, if you are offered a deal on the basis of take-it-or-leave-it, that’s the very DEFINITION of not having any control over the terms of the deal. So when you go to work on the basis of “you must do whatever the boss says, and if you don’t like it you can quit”, that’s the very DEFINITION of not having any control over your workplace or the products of your labor.

    Whether the company cares about you quitting (or being fired) has absolutely nothing to do with how valuable you are or how hard you work. Only one thing matters: Can they find someone else to do your job and work equally hard? If yes, then they won’t give a damn about you quitting, and they’ll fire you if you step one toe out of line, no matter how hard of a worker you are. There’s an entire business model built around hiring naive young people, overworking the hell out of them, and firing them or making them quit in frustration before they can move up to a higher pay grade. Lots of companies do it – especially in retail, the restaurant industry, and charter schools.

    In capitalism, most people don’t get to sell the products of their labor. That’s not how capitalism works. Most people don’t sell their products, they sell their ability to work (their labor-power). That’s what a job is, under capitalism. It’s a contract where you sell your ability to work, some company buys it, and anything you produce on the job is the property of the company. Not *your* property. Then the company takes that product of yours and sells it to people, and you get paid a wage, which has absolutely nothing to do with the value of the product you made. There are workers in India who get paid less than a dollar a day to make a few dozen t-shirts that get sold by the company for $20 each. Companies always pay their workers less than the value of the products made by those workers. This is where profits come from, and it’s the driving force of capitalism. Even within the US, where the difference between wages and product value is not as immense as in the Third World, there is still a big difference. McDonald’s sells hamburgers for $1, and the workers who make those burgers get paid, on average, a lot less than $1 per burger. And it’s the same thing regardless of your level of education. The people who design and make jet engines get paid less than the value of the engines, too.


  6. Jamie on November 17th, 2012 2:41 pm

    Oh, and the thing that keeps democratic governments in check is the people, and the threat of popular discontent. Democracy DOES exist on its own, and it DOES sustain itself. If the government does something that people hate, the current governing party will be voted out and a different party will be put in its place. Simple.

    Of course, some governments have invented all sorts of tricks to avoid getting voted out – such as the two-party system, designed to reduce your choices, or allowing massive political donations from corporations and rich people, which enables the pro-capitalist parties to pay for a flood of lies in the media and in the mail (which can change the minds of enough people to sway an election). Obviously, in order to have a proper functioning democracy, we need to get rid of these tricks.


  7. mason on November 18th, 2012 7:45 pm

    I always think it’s ironic the people who defend capitalism are usually the one who have the least to show for it; they’re typically low wage or middle wage earner, defending capitalism as an employee not as one who has reaped it’s advantages.

    I think socialism should be further studied however it would require an examination by an individual that is free from bias which is unusual sadly in economics, an academic who is neither in favor of capitalism or socialism. I think socialism or a highly controlled state can provide insight in how to tackle problems like homelessness,crime and drug abuse; social problems in the soviet union with an very low prevalence compared to the united states.

    Also there should be study into China’s economy or what some refer to as “state capitalism”. I think china has developed a highly effective economic system and one that effectively combines the principals of communism and capitalism albeit in a modern and unique form; China will in the next 10-20 years become the richest and therefore the most successful economy the world has ever known. We could learn alot.

    We attend an university, a place where freedom of thought and opinion is embraced and encouraged; we should be able to discuss something simple like a type of economy or government without automatically dismissing or supporting one based on bias or preconception nor insult each other.

    I may not agree with everything Tudoreanu but I admire the fact he wrote this column despite knowing it would be controversial.


  8. hm on November 19th, 2012 3:03 pm

    sam, i agree that mihnea has not defined capitalism adequately, but i really don’t think you know what you are talking about either. how is profitabililty supposed to differ from ‘utility’ – who decides what is useful? the market – which i’m guessing you would assume is made up of atomic individuals making rational choices (as if!). vast amounts of our economy are based on things that have absolutely no practical utility at all – credit, debt, speculative bubbles, enabling the consumption of useless luxury items; perfectly good stock being thrown out or destroyed because it can’t for some reason be sold at a profit, etc. capitalism is money (abstract exchange value) in circulation through commodities and production via waged labor in order to return as a quantitatively greater value. but this says nothing of what we ACTUALLY value in a society or why. ‘the rule of law’ – do you really dispute that china or cuba have rule of law? isn’t a big part of your complaint that they have way too MUCH rule of law? and as jamie points out you are missing a whole other side of life in the capitalist system – which is life for the average person as a producer/consumer instrumentalized by the profit cycle, rather than the supposed rationality of the market as seen from a business owner’s point of view. cute little examples about hamburgers are totally abstracted from the context that makes any left critique of capitalism meaningful. the context that makes life in capitalism difficult.


  9. Sam on November 20th, 2012 8:43 am

    Jamie: I may have put the “suck if up or leave” dynamic a little bit bluntly. It doesn’t often play out that dramatically in real life. Apple and Motorola sell phones on a “take it or leave it” basis, but in reality the phones differ in their features, price, etc. Is it unfair for me to switch over from apple to motorola just because I decide I like the droid better? Hardly. Should I be forced to stick with the iPhone because I decide the terms of what I want in a phone? No.

    Whether a company cares about how you quitting has everything to do with how valuable you are or how hard you work. You just have to make sure what you’re offering is better than what they could get by hiring someone else. This could be done by a) acquiring a unique set of skills, b) working harder than the typical employee, c) marketing yourself well, or through number of other methods. If a company figures that other people in the labor market are worthy of getting paid what you think is unreasonable, what gives you the right to deny the next person down the line the opportunity to work your job? In that business model you described, you forgot to mention the part where those companies hold on to the people who are exceptionally hard working, ambitious, etc. (those people who are worth holding onto).

    You are welcome to make whatever product you want in Capitalism. It’s called starting a business, and it only takes a few hours to do in America. Corporations are just devices that allow people to combine their work to produce something greater than they could have produced individually. You’re right about the labor being sold part. Assuming an individual decides to not start their own company, they can get paid by another company for their services. However you’re wrong about the part where you claim that what you get paid has nothing to do with the value of the product you made. In your example of someone getting paid $1 to make a $20 T-shirt, you forgot to mention the costs of shipping the product to the U.S., the costs of marketing the shirt, and every other cost down the line. Gap’s profit margin is usually 5-7%. If the worker in India thinks he/she can do better than that, they are free to try.

    We have real evidence of what happens when democratic governments and economics merge into one entity. Take the resource curse for example. There is a quantitative and unequivocal inverse relationship between national resource wealth and good governance rankings. The proven solution to the resource curse? Liberalization of the domestic energy (or mineral, etc.) market.


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