What is Socialism?

By Kevin McLoughlin, Socialist View No 11, Summer 2003

The war on Iraq had a profound effect on people's attitudes. There is a generalised understanding that the war was about oil and a growing awareness that it was also about increasing the dominance of US capitalism internationally. It was the military reflection of the neo-liberal policies that capitalism has been imposing on the world in recent years.

Neo-liberalism means getting rid of anything that restricts the capitalist market and the drive for profits. It involves cuts in taxation for big business, cuts in essential services, the cheap sell-off of state utilities through privatisation, attacks on wages and conditions at work. It's about decreasing the amount of wealth going to labour and thereby increasing the share to capital. In the wake of the war, renewed attacks on the economic position of ordinary people have been launched in many countries including those who "opposed" the US, particularly France and Germany.


The radicalisation that has resulted from the war will give a further boost to the anti-capitalist movement internationally. The emergence of this movement demonstrates a developing understanding that capitalism is destroying the lives of people and the planet. However in the light of the war, the anti-capitalist movement must review whether its ideas and strategies constitute a real challenge to capitalism on the rampage.

There is a peculiar mix of opinions within the anti-capitalist movement. The Socialist Party and our international organisation the CWI argue within the movement for a democratic socialist alternative. While we recognise that the activists are genuinely trying to search for the best way to fight the system, we have important disagreements with the ideas and approach that have tended to dominate the movement up to now.

Consumer boycotts of particular and the idea of supporting alternative ethical forms of production such as "fair trade" manufactures as well as the need to increase taxation on the rich have been raised.

The need to build mass movements is accepted by many but the dominant view of its role is that it should act as a force for regulating the excesses of capitalism. At a recent meeting of the Irish Social Forum in Dublin a proposal to oppose all forms of privatisation was not agreed even though this is now clearly a key aspect of capitalism's attack on working class people.

Amongst the main leaders of the anti-capitalist movement there is a lack of any real focus on the working class movement and a dismissing of socialism as an outmoded ideology that leads to new oppression and inequality. Others argue for an opposition to organised parties and politics, favouring instead networking from the "bottom up" and spontaneous individual actions.

The dominant trend within the anti-capitalist movement is based on the belief that capitalism can be divided between rogue and acceptable elements and that the system can be reformed. If capitalism can be reformed in such a way then there would be no need for a struggle for socialism. The view of some that the struggle for socialism is an indulgent, unnecessary waste of time, distorting the real struggle would be given validity by these ideas. Therefore the real nature of capitalism and whether it can be reformed or not is of crucial importance.

Inherent contradictions of capitalism

Capitalism is first and foremost an economic system based on the production of commodities for profit. Different corporations and countries fight each other for markets. For capitalism, profits are essential not just so a tiny minority can live a life of luxury but also in order for corporations to be able to re-invest and improve productivity and competitiveness. The development of the productive forces, of new techniques and therefore investment is an integral part of capitalism. If a capitalist doesn't do this, they simply will not be able to compete and their potential to make profits collapses.

Since the mid 1970s capitalism has entered a new phase. In the immediate period following the Second World War, capitalism developed in an extensive fashion. Economic growth was initially given a huge impetus by the unprecedented destruction of the war and massive financial investment by the US. Governments assisted by investing huge amounts of taxes in the economy and in the development of "welfare states". Capitalist corporations, usually because of the struggles of the trade union movement, gave wage increases, which in turn meant the extension of the market as workers could buy more.

However, the inherent economic contradictions of capitalism, first identified by Karl Marx, emerged with a vengeance in the mid 1970s. At that stage, corporations found that investment was not increasing or maintaining profit levels.

Such was the level of competition, that the amount corporations had to invest had reduced the actual rate of profits to an historic low. At the same time enough commodities had been produced to satisfy the markets that existed. That's what Marx referred to as a crisis of over production. The working class produce the wealth in society in the form of goods and services but because a large portion of this wealth is taken by capitalists for themselves and for investment purposes, the working class doesn't have enough to buy the goods they have produced.

For instance if ten car workers produce one new car a week which goes on sale for 10,000 euro, but collectively their wages amount to only 5,000 euro, they don't have enough to buy the car. Generalise that example to the whole of the world economy and you can see that for a period capitalism can develop until a certain stage is reached where inevitably there is a glut of goods in the market that cannot be bought. In such times, investment in new production is futile as profit will not be realised, instead economic activity declines until the glut of goods is gone and the potential for profits has returned.

Capitalism faced such an economic crisis in the mid 1970s and it represented an end to the post war expansion and a new phase of economic decline. To regain its profit levels which is essential to the system itself, capitalism was forced to reduce further the share of production and wealth going to the working class. Hence the intense class struggles of the late 1970s and 1980s and the rise of Reaganism and Thatcherism. In reality a neo-liberal offensive against working class people has continued since then. In general the world economy has stuttered along for the last couple of decades but never re-developing the extensive growth or real profit levels of the post war period. In fact the offensive has actually undermined the capitalist market further. It seems capitalism is facing its most serious economic crisis since the inter-war period. The same contradictions of over-production and a crisis in profits have re-emerged in an even more intense way. The economic tensions between the dominant capitalist countries were evident during the Iraqi war and in the conscious devaluation of the dollar by the Bush administration. They are trying to make their exports cheaper and the exports of other countries more expensive. In trying to develop a competitive edge they are in fact deepening the economic recession internationally. In the past it was only the devastation of the Second World War itself and the radical alteration of economic and social relations that it caused which created the conditions for the post war boom.

The attacks against the working class over the last years, which gave birth to the anti-capitalist movement, were not based on the fact that Bush and his ilk are mad or just greedy. They are rooted in the developing crisis within capitalism that forces the system to try to maintain its profits by increasing exploitation and the robbery of working class people.

Far from indicating that they are prepared to negotiate or have any social conscience, the governments and the 150 corporations that dominate the world economy are displaying a brutality not seen since the Great Depression. The idea that capitalism in crisis can be reformed is an illusion. There is a fundamental conflict between running society on the basis of profit and the needs of working class people and the oppressed.

Can capitalism be reformed?

That doesn't mean that the Socialist Party doesn't fight for concessions or reforms from the system. We do so continually but we understand that as long as the multi-national corporations own and control the economy, such gains will be limited as they will return again and again to try to take more and more of the wealth.

Some of the leaders of the anti-capitalist movement seem to be bending over backwards to try and find ways to reform capitalism instead of thinking positively that it can be overthrown.

Notwithstanding the excellent material that both Naomi Klein and George Monbiot have produced, the conclusions they have tended to draw, that a mass movement must be built in order to regulate and put a check on capitalism, is a mis-understanding of capitalism and a mis-direction of the movement.

In his book "Captive State" Monbiot calls on mass movements to prevent "any faction - the corporations, the aristocracy, the armed forces, even, for that matter, trade unions and environmental groups from wielding excessive power". In our opinion, if a genuine mass movement representing the working class can be built, it should not have limited horizons but must take ownership of the economy because it is impossible to control what you don't own. Ending capitalist ownership of wealth and the key means of producing wealth is the key task of the age.


If the problems society faces flow from the ownership of wealth by a tiny minority, then the alternative is to socialise the ownership of the productive forces. We are in favour of the democratic public ownership of the major multi-national corporations and financial institutions. Would this constitute robbery? No, it would be the reclaiming by the working class of what had been robbed from them over generations. A socialist government would also implement a state monopoly of foreign trade in order to stop a flight of capital and machinery out of the country.

Socialism could also end the huge waste of resources under capitalism and in fact would be economically much more productive. The huge expenditure on advertising would be unnecessary. $1 trillion a year is spent on such advertising. The duplication of research and development by different companies and countries could also be dispensed with if capitalist competition was ended. The socially destructive massive expenditure on arms could also be ended and re-directed to seriously tackle issues like poverty and healthcare.

Most importantly, socialism could release the productive forces from the inevitable crisis of a profit-based system. Capitalism has created the basis to end economic problems as it has developed techniques to such a level that human labour can produce far more wealth than any one individual needs in order to have a decent life. One of the biggest contradictions in capitalism is mass unemployment.

In Western Europe alone more than 30 million people are unemployed because the capitalist market is in crisis and the bosses can't make a profit out of them. Imagine what could be done with the wealth that these workers could produce! By putting the unemployed to work and through planned investment of the resources, socialism would be able to achieve levels of environmentally friendly economic development never seen under capitalism. In a real way socialism would represent the first time in human history where the majority would be in power and would be the prime beneficiaries of sustainable economic development. The transformation of the economy will facilitate the ability of society to establish real democracy at local and national level. Socialism and a revolutionary change of society is only possible when a mass movement, led by the working class as the most powerful force in society, becomes decisively active in politics. Such revolts have happened many times in the past and the potential for similar movements will re-develop in the years ahead.

Role of the working class

The active participation of the working class is the best guarantee against any potential bureaucratic degeneration of majority rule as happened in the USSR in the 1920s. One of the first initiatives will be the reduction of the working week, which could be implemented without loss of pay because of the technology that exists. That would facilitate full participation in the new democratic structures that a mass movement will develop. Coupled with the fact that any officials or representatives within a socialist society would be subject to immediate recall and replacement by those who elected them and would live on the same wages as the people they represent, genuine democracy could be maintained.

Superficial arguments that greed would inevitably lead to a usurping of democracy either ignores the fact that people having transformed society would themselves be the guardians of their own democratic rights or is an unjustified cynicism about the potential of working class people to run society.

Internationally, the working class is potentially the most powerful force in society. That's the case numerically but also economically because of the essential role they play in producing the world's wealth. Over the last couple of decades the power, cohesion and consciousness of the working class has been dented by the sell-out of the trade union bureaucracies and the capitulation of the former workers' parties like Labour to capitalist neo-liberalism. That coupled with the massive capitalist ideological offensive that followed the collapse of Stalinism, played a role in disorienting the working class. However the economic, social and political crisis of capitalism is creating the material basis for a new mass socialist movement.


Another key reason for the degeneration of the Russian Revolution was the defeat of the international revolution in the 1920/30s coupled with the propagation of the idea that socialism could be achieved in one country alone. A socialist break-through can be achieved in a particular country but needs to develop on an international basis otherwise over time it would be drowned out by the forces of capitalism still dominant internationally. A socialist change in one country would not necessarily result in simultaneous revolutionary movements internationally. However capitalism lost political but not economic power in Nicaragua in the late 1970s but even on the basis of that limited change, the "Nicaraguan Revolution" was able to survive for a decade in America's backyard. The world is more "globalised" than ever before which means the fates of countries are absolutely intertwined. Real socialist change in one country would be met with enthusiasm by workers internationally and would open up a period of potential for international socialism.

The Socialist Party advocates the genuine ideas of socialism and Marxism and is set on building a mass movement for socialist change based on the working class, the trade unions and the youth over the next years. We are part of the CWI which is an international movement made up of revolutionary parties in over 35 countries on all five continents, so the struggle can be conducted on a global basis. We are confident that if workers and young people in the respective countries and internationally get organised around a genuine socialist programme, we have the power to achieve international socialism and end the nightmare of capitalist exploitation.

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