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Welcome, friends, to another edition of Economic Update, a weekly program that many of you know and that those of you that are new are hereby. Welcome to. I'm your host, Richard Wolff, and today's program is about socialism. And the reason is not hard to pinpoint. Socialism is becoming an issue again here in the United States. It has always been an issue in most of the rest of the world. For the last 50 years, it has been kind of taboo here, but it's returning. And as often happens with tabooed topics, it's returning with a vengeance. So let's begin by talking about why it's a return. In other words, what happened. And then we'll go into the transition that socialism is going through around the world and here in the United States as well. First of all, socialism is a criticism of capitalism. And as such, it's a criticism that has been here as long as capitalism has. You might think of socialism as capitalism's shadow. You can pretend you can dance around, but you will not get rid of your shadow any more than capitalism will get rid of socialism. Every other economic system in the history of the human race has had people who like it and people who are critical of it. Having a critical part of your society feel that way about your economic system is a normal, healthy part of a society. It only becomes unhealthy if you have to repress or deny that. People experience an economic system differently depending on the position they occupy within it. Socialism as a set of ideas, socialism as a program of a political party, socialism as an alternative way of organizing an economic system. Those are all ways that socialism exists. In most of the countries of the world today. There are socialist organizations, socialist political parties in many parts of the world, socialist governments that run the society according to what they think is a better system than capitalism. That's been going on for a long time. Before the Second World War, socialism was an important part of American culture and society as well. And that's important to remember. At the beginning of the 20th century, there was a famous socialist leader, Eugene Victor Debs, who ran for president as a socialist long before Bernie Sanders, there was Eugene Victor Debs. Many socialists won positions as congressmen and women in the United States Congress, as state legislators, as mayors of towns, and so on. I like to ask a quiz of audiences when I speak to them. What state in the United States had the most socialists elected to the state legislature? And I won't bore you by having you guess. I'll tell you, and it will surprise you. The state of Oklahoma. That's right. That was the state where the most socialists were elected to the state legislature. So we've had lots of socialist parties, voting movements, newspapers, trade unions, you name it. But then the Cold War happened after World War II, and the United States decided that its great enemy was the Soviet Union. Kind of strange since it had been our ally in World War II. And this change of attitude here in the United States, making the Soviet Union not the great ally but the great enemy, led to what we call the Cold War. And everything having to do with the Soviet Union was demonized, was declared to be dangerous, evil, threatening, and all the rest. And since the name USSR stands for Union of Soviet Socialist Republics, the very word socialism became taboo in the United States. So that for most of the last 70 years of American history, discussing socialism was something most people avoided altogether. And for the few who discussed it, it was usually treated as evil, terrible, threatening, or worse. And that went so far as to make the criticism of capitalism also taboo, so that people didn't do it. For example, I went through an education in economics, Undergraduate Master's program, PhD program. I was never presented with a positive image of anything having to do with socialism. And none of my professors ever articulated a critique of capitalism. If they had a criticism, they kept it to themselves. Well, guess what? With the crash of 2008 showing that capitalism continued to be an unstable system, as it had always been, that an instability that had always provoked the criticism that informed socialism. As that came back with the crash of 2008, so did the rediscovery of socialism. And likewise, the growing inequality in the United States for the last 50 years has produced such a polarized 1% versus 99%, that once again, people are discovering that socialism has been a critique of the inequality that goes with capitalism for a very long time. So all the ingredients are here. And guess what? The cake is baked. That's right. Socialism is back in the political discussions of. Of our time, even in the United States, where the taboo lasted so long. And where do we see it around ourselves? Well, we see it first of all in all the discussions of capitalism. The recent conference in Davos, Switzerland, which gathers economists and business leaders and political leaders around the world. What was noteworthy were the number of conversations and panels devoted to critical questions about capitalism. Major figures raising the question, is capitalism digging its own grave? Is capitalism producing a backlash that threatens its survival? And so on. But there's another way to see it. Bernie Sanders, running for president in 2016, identified himself as a socialist, making it once again part of the national discussion. And where People imagined that because he was a socialist, somehow he wouldn't be a relevant candidate. He quickly proved that that's not the case, that the interest in and the openness to socialism is much larger than had been understood. Once again, it turned out that socialism is capitalism's shadow. And when the bright light of instability, as in the crash of 2008, and the bright light of inequality, as has been deepening in America for decades, when those bright lights shine, the shadow becomes real, clear. And so Bernie could run as a socialist. And the young people who produced the Occupy Wall street movement, they also were able to pinpoint one of the oldest socialist criticisms, that capitalism polarizes a society between a 1% rich and a 99% that aren't. @ the Davos conference in Switzerland recently, the leading organization that studies inequality in the world, Oxfam in England, produced its latest report, and here it the richest 26 individuals in the world together have more wealth than the bottom half of the population of this planet, roughly 3.8 million billion people. That's right. The achievement of modern capitalism is to make 26 people richer than 3.8 billion people. That's a level of inequality that's beyond my capacity to properly describe other than to give you the raw numbers. And we also see, indeed we've seen them on this program, new young politicians like Lee Carter in Virginia, like Alexandria Ocasio Cortez here in New York City, who are willing and able to step forward with a socialist criticism and to prove to the American people that a majority of the voters in their districts will in fact, put them into office because they want that perspective to be part of what creates the laws governing our states and our nation. So socialism is coming back with a vengeance. But here's an equally important point that I want to spend the rest of today's program working out for. The socialism that is emerging is not the socialism of. Of our parents and grandparents. A fundamental shift has happened, and we shouldn't be surprised that socialism is changing, because after all, it's the shadow, as I've said, of a capitalism which is also changing. A hundred years ago, most capitalists were people who ran a relatively small business, who knew the people. They hired their employees, and they were both the owner and the manager and the leader. Nowadays, we have a very different capitalism. The old idea of a capitalist who's the owner and the manager is basically gone, except for what we call small business. Most of the business of most capitalist countries is done by huge corporations. The owners are shareholders, but have virtually nothing to do with running the business. The business is run by a board of directors and by the managements who are different people. In most cases, the from the owners. My point is, only capitalism has changed a lot. Why would we expect that the socialism that is its shadow, that is its criticism, wouldn't have changed as well? It has changed, but socialism also changed for another reason, and that's just as important. In the 20th century, socialism went from a set of critical ideas to expressed by intellectuals, expressed by militant trade unionists, expressed by political parties seeking to get power. In the 20th century, it turns out a number of those socialist groups together got power. They made a social change. Some of them made it in western European countries like Norway and Sweden and Finland. Others did it in places like France and Germany. Socialist governments emerged in many other parts of the world. Most famous were the socialist governments that came out of the revolution in Russia in 1917 and the civil war in China after World War II. And so socialism had a new set of tasks in the 20th century. In places where capitalism still dominated, they continued to be mostly critical. But in the countries where socialists became the government, they had a whole new jobto administer a new and different kind of economic system. So we have these early experiments in socialist management, you might call it, in Russia, China, places like Cuba and Vietnam as well, where socialists tried to organize another economy. So we have these early experiments in what socialism as an alternative, alternative to capitalism might look like. And we as people looking at all of this, therefore have lots of raw material with which to say what have we learned about socialism? What is it that we want to keep and build on and what is it that we want to change? Where do we have to go further than we went before? Where do we have to go in different directions. So there's a change in socialism that that comes out of a self criticism based on its long century and a half of being a major part of the world. And in the second half of today's program, I'm going to go through precisely how the old socialism is changing into the new one. But before we do, I want to remind you that we maintain websites and a presence on YouTube that we invite you to engage with to subscribe to. Our YouTube channel is a big service to us and lets you know of everything. And we post a lot there that you can access. We also invite you to make use of our democracyatwork.info. that's all one word. Democracyatwork.info and rdwolf with two Fs. These websites allow you to follow us on Facebook, Twitter and Instagram. And we want particularly to thank our Patreon community for the support that they have continuously provided us. Stay with us. We'll take a short break and we'll be right back. Welcome back to the second half of today's economic update. And once again, I'm your host, Richard Wolff. We were talking about socialism, and this second half of the program is going to be devoted to socialism's old and the socialism of the 19th and 20th century and the socialism emerging here in the 21st century. So let's start with what socialism was. It was a criticism of capitalism focused on two key features of capitalism. First, the argument was that in traditional capitalism, the organization of production, how we produce the goods and services we all depend on, was in the hands of a very small minority of the people who owned the means of production, the people who literally owned the factory building, the machines, the space, the raw materials, the tools, all of that. And the argument of the socialists was that in capitalism, the owners of businesses, the owners of the means of production, were in a position to control the process of production and to make sure that the benefits, the output, the product, would enrich them first and everybody else second or third or fourth. So that the relative poverty of the mass of working people relative to the owners was explained by the ability of the owners to use their ownership to divide things that way, so that the socialists answer. The socialist criticism was that inequality was unjust and that it could be corrected if you took the ownership of the means of production away from a tiny minority and made it the collective property of everyone. In other words, it was called the socialization of the means of production. They would become the common property of everyone so that everyone could get a reasonable return for the efforts that that they put in and not the imbalanced concentration of wealth in the hands of the owners. That could become, of course, very extreme, as we mention in the first half of today's program. The second criticism of capitalism was not about production. The socialists focused on the other aspect, which we call in economics, distribution. How did the goods and services that everybody produced get distributed in the society? And once again, the socialists pointed out, distribution is very unfair. A tiny number of people have enormous portions of the wealth of society distributed to them, whereas the vast mass of people have much less of the output they help to produce distributed to them. And what is the reason for that? Said the socialists? The institution of markets. Markets are how we distribute goods and services. So, for example, if there isn't enough for everybody of Something being produced, we allow the producer to raise the price until more and more people can't afford it anymore. So the restricted supply will. Will now face only the demand of those who can pay the high price. In other words, the market is a rationing system. It delivers scarce goods to the people with the most money. And that, the socialists said, is not a good idea. It isn't democratic, it isn't fair, it isn't good for the wealth being and health of a society to allow a distribution not based on the human community's needs, not based on the desires of a democratically organized society, but determined instead by who has the most money to spend, which turns out to be, you guessed it, the group who also owns the means of production. So that socialism in the 19th and 20th century was about socializing the means of production and replacing the distribution of goods and services by means of a market, by instead doing it by democratic planning to distribute according to what a democratically organized society wants in the way of a distribution, rather than distributing simply to those who have the most money, whenever there's a scarcity. And that was the basis of socialism for most of the last century, century and a half. And that's why the Russian Revolution and the Chinese Revolution and the Cuban Revolution, the Vietnamese Revolution and so on changed everything. And they went after the means of production, and they went after the market. They socialized the means of production. They said, the government will henceforth on behalf of everybody, manage how the means of production are used, and the government will also help the to plan the distribution of output. That was the logic of what socialism had criticized capitalism for. And so it became the logic of what socialism did when socialists took over in societies, either by revolution or by political winning of elections. But with the Russian Revolution, a great change happened. The Russians threw a revolution in 1917, took over, closed the stock market, made industries the property of the government to be run on behalf of all the people, and instituted a planning system to distribute things and subordinated the market. They never got rid of the markets, but the markets were less important than the government planning apparatus. And in a way, this was a key moment, a kind of epiphany for socialists. For the first time they had power in a country. They had the power of the government in a country called Russia. And the whole socialist movement then was forced into a kind of a Is socialism what is going on in Russia? After 1917, every socialist had to ask. And basically the socialist movement split. One part of it said, yes, the future of socialism is in Russia, because that's where the socialists won. They must have been doing something right. They won. They took power. That's the future. But there were other socialists who weren't happy with what was happening in Russia, who didn't like Lenin and the leaders of the Russian Revolution, who were skeptical, who didn't want to do the takeover of industries the way the Russians were doing it, who didn't want to suppress markets in favor of planning the way the Russians did it. So this split happened. It was really over the Russian Revolution and what it meant. And those who supported the Russian Revolution said, we want to take a different name. So they were socialists, but they wanted to call what they did something else. So they took the name Communists. That's where it happened. It all happened in the early 1920s. Those who were skeptical went in a different direction, held on to the name socialists. Later on, they changed it and called what they were social democrats. They called what they were pushing for social democracy. And here's what it meant. You see it in countries like Scandinavia. You see it in countries today, for example, in the Netherlands, or you see it in Portugal. It's when socialists take over in a society, usually by elections. And what they do is they regulate the economy. They let private capitalists still own and run the businesses. They let private capitalists hire workers. They let the market basically distribute things, but with a heavy dose of government regulation to make it all work out less unequally, to make it work out less unfairly. Social democracy, meanwhile, the other kind of socialism, which took the name communism was, went further. The government didn't allow private capitalists to continue. It pushed them out. The government took over the ownership and operation of businesses and had planned distributions and didn't leave very much to the market. Okay, that's what socialism was in the 20th century. But here was the problem. If you give socialist governments the kind of power that you gave in Russia and China, and if you give them the kind of power in Scandinavia and elsewhere to regulate, you create tensions in the communist world. The tension was the government had so much power, the danger was it would use it for political ends that were not socialist. And that indeed often happened in Scandinavian type social democracies. The government's attempt to regulate was undone by the pushback of the private capitalists who didn't want their profits limited. And so over time, there was a reaction in the communist countries against the political problems of a powerful state. And there was the undoing of social democracy by the resistance of capitalists. So that by the end of the 20th century, social democracies were in retreat. The Soviet Union had collapsed and China had changed. Everyone saw all of this, including the socialists. And so they asked themselves the following key what went wrong? What is it that made the communist countries collapse? What is it that made social democracies begin to go into retreat? What was missing from the old socialism that a new socialism has to learn from and fix? And here it is. The problem that socialists discovered was that the changes made at the level of who owns the means of production and at the level of market versus planning in distribution left unchanged. Something that should never have been left unchanged. What was it? It was the organization of the enterprise, the place where most people spend their working lives. In the office, in the store, in the factory. In those places, the socialists had not transformed what had been left to them by capitalism. You still had an employer, a very small number of people, and the employees, a very large one. The employer still told the employees what to do. That's not socialism. That's not what Marx, the great theorist of socialism, had to say. It didn't revolutionize the basis of society, every workplace. And what would that mean? And the answer that socialists are emerging with now and why socialism is changing is, is that the problem was and is that if you want the socialism that has always been the idea of an equalized society, an egalitarian society, a society of liberty, equality, fraternity and democracy, the great goals alike of capitalism and socialism, you have to begin by democratizing the base of society, and that's the workplace. And what does democratizing the workplace mean? Well, the words we use these days are worker co ops. You make the workplace a place where everybody has one vote. And democratically you decide what this workplace is going to produce, how it's going to do that, what technology it's going to use, where the production is going to to take place, and what is done with the fruits of everyone's labor. In other words, how do you distribute the goods and services, the income and the profits and so on? To democratize the workplace is what the communist countries didn't do and what the social democracies couldn't do. It's the missing link. It kept capitalism alive in the workplace. If you understand that capitalism is the division between employer and employee, if socialism is to go beyond capitalism, which was always its goal, then it has to do that in the base of society. Otherwise the changes it makes at the top in who owns and how you distribute can't survive. The first experiments in the 19th and 20th century in socialism proved unsustainable. And the lesson to be learned is that they were unsustainable because they didn't have the basis at the ground level of a socialized workplace. And to do that, to democratize, socialize the workplace, is the major focus that makes 21st century socialism different from the socialism of the past. We are living at a time, therefore, not only of the rediscovery of socialism, but it's the rediscovery of a changing socialism. And that's as important as anything else. Shaping contemporary history. Thank you very much for participating in today's program, and I look forward to speaking with you again next.