Economic Theory

Does ”socialism” HAVE TO mean public ownership of the means of production?

Several readers of my book Socialism: The Failed Idea That Never Dies got back to me, arguing that the way I use the term “socialism” is too narrow, and too formulaic. My definition, they say, may be technically correct; the dictionary may indeed say that “socialism” means a state-run economy, based on public ownership of the means of production. But in practice, there have been plenty of people who, over the years, described themselves as “socialists”, and who were not advocating anything of that sort.

Those readers have a point, and I suppose I could have been clearer about this in the book. For example, in 1994, Tony Blair wrote a Fabian Society paper entitled “Socialism”, in which he explained that for him, socialism was not so much an economic system, but rather a set of values. He said that unlike socialists of old, he was not wedded to nationalisation and state ownership. For him, those were just possible means to an end, sometimes useful, and sometimes not.

There are also a number of centre-left parties in Continental Europe which call themselves “socialist”, but whose members would roll their eyes if somebody started to drone on about nationalising the means of production. Those are usually parties which were originally set up on a Marxist platform, and which then evolved into something else, losing the Marxism somewhere along the way. They kept the old name, but there’s a tacit understanding that they no longer mean what they once used to mean.

So yes, maybe I should have made this clearer. If you call yourself a socialist for nostalgic reasons, or if you have your own idiosyncratic definition of it, or if you just use it to denote a set of broad values rather than a specific economic programme – fair enough. In that case, this book is not about you.

However, while I don’t dispute the validity of such alternative usages of the term “socialism”, I don’t think that this is especially relevant right now. When The Economist, the Financial Times and the New Statesman are running cover stories on the rise of “Millennial Socialism”, they are clearly not talking about a newfound enthusiasm for old Tony Blair papers, or for the Spanish Socialist Workers’ Party (PSOE). Tony Blair and the PSOE leaders may believe that you can be a socialist without being to fussed about who owns the means of production, but this view is, to put it mildly, not widely shared among proponents of Millennial Socialism.

Owen Jones, for example, calls for the nationalisation of some industry or other virtually every other week, and has been doing so years. (E.g. How to stop climate change? Nationalise the oil companies; British banks can’t be trusted – let’s nationalise them; Mobile phone companies have failed – it’s time to nationalise them; Time to renationalise Britain’s rip off railways) He could have saved himself a lot of time and effort by just writing one single article, outlining which industries he does not want to nationalise.

Meanwhile, the book People’s Republic of Walmart: How the World’s Biggest Corporations are Laying the Foundation for Socialism makes the case that since large corporations already resemble planned economies internally, there is no reason why it should not also be possible to run the entire economy along those lines. This book was not written by British authors, but until very recently, it used to be fairly high up on Amazon UK’s bestseller list, in the “Socialism” category.

The same is true of Bhaskar Sunkara’s The Socialist Manifesto, a book which explicitly defines socialism in opposition to Nordic-style social democracy (inter alia). Sunkara prefers Sweden to the United States, but he makes it perfectly clear that this is not the model he wants. In Sweden, he believes, power still ultimately rests with “the capitalist class”; it is not an economy run democratically by The People.

Then there’s Common Wealth, which is, according to their own description, “a think tank dedicated to democratising ownership.” Their mission statement says:

“Ownership matters, vitally […] How our economy is owned and by whom fundamentally shapes how it operates and in whose interest. Ownership and the distribution of property shapes flows of income, stocks of wealth, and concentrations of power and control in society.”

Over at open Democracy, Laurie Macfarlane writes:

“[P]roperty rights are not, and have never been, neutral or fixed. The rules that govern property rights have varied over time, reflecting power and class relations. […] [O]ur future will depend on creating new forms of ownership and governance that have the principles of democracy and environmental sustainability hardwired into their institutional design. This is no small task. But in recent years there has been a surge of new thinking on democratic ownership and economic democracy”

And at the New Statesman, Grace Blakeley writes:

“Today, the radical left in the UK, the US and France is calling not for social democracy but for democratic socialism. For me, the former means the taxation and regulation of private enterprise, while the latter means the democratic ownership of most large corporations and financial institutions.”

The recent policy paper “Land for the many”, edited by George Monbiot, argues for a policy which, over time, would lead to a nationalisation of large swathes of residential land.

I could go on, but you get the point. Millennial Socialism very much is about the ownership of the means of production. This isn’t about some awkward attempt to redefine and reclaim the word “socialism” while emptying it of its original meaning. This is the original meaning.

Do the above-mentioned commentators speak for everybody on the British Left? No. Does everyone in Britain use the term “socialism” in the way they do? No. But do they represent a set of views which are currently extremely in vogue, especially among young and young-ish people? Yes, absolutely. No question.

And that is what my book is about.

Socialists’ emphasis on collective ownership is not just some irrational obsession. It won’t do to tell them to be a bit more “relaxed” or “pragmatic” about this issue. Socialists cannot be “relaxed” or “pragmatic” about ownership, because they equate ownership with power. They believe that those who own the means of production are the ones who truly run Britain.

In a Marxist view of the world, capital owners are not just disparate individuals, who all do their own thing, and who have little in common with one another. They are a social class, and in a Marxist perspective, a social class has agency of its own. Its members act collectively, to further their own class interests.

So for them, the issue of nationalisation and privatisation is not about the relative efficiency of the public and the private sector. It’s about class power. Nationalisation is not about reducing train fares or energy bills by a few pounds. It’s about reducing the power of “the capitalist class”, and transferring that power to “the working class”.

Of course, so far, state ownership has not been particularly “empowering” for ordinary people, neither in mixed economies like 1970s Britain, nor in fully socialised ones like the Soviet Union. This is a point which most Millennial Socialists would readily concede. But they would insist that public ownership could also take completely different forms, that it could mean genuine democratic control, with mass public participation. It has just never been properly tried.

They are wrong. But it’s a point that the remaining defenders of the market economy need to address. Which is what I’m doing in this book.


Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

2 thoughts on “Does ”socialism” HAVE TO mean public ownership of the means of production?”

  1. Posted 11/06/2019 at 06:28 | Permalink

    I am concerened about the move towards ‘smart’ systems as a result of ‘the internet of things’. The idea is that they will be more efficient. But efficient systems aren’t resilient,there is no ‘slack’, no redundancy. A simple example is the ‘smart’ motorway. No need to build an extra lane as we can safely use the emergency lane because of close supervision and signalling. But what happens when traffic expands to ‘four lanes worth’ and there is an emergency?
    One advocate of ‘smart’ systems said at a public event that passengers could be ‘told’ to speed up or slow down to avoid congestion on railway platforms. ‘Smart’ is the new Soviet-style planned economy, but this time with lots of data and computing power they think they can get it right. Communism Mk II.
    What do ‘smart’ meters do for the customer? Nothing. But they allow those in control to selectively turn down demand, i.e. cut you off. We can bet there will be priority lists of those who won’t be turned off.
    What about the ‘cashless society’. Displease Google or Facebook and your ‘cash’ could be turned off, (think of those that use their mobile phones as a cash card).

  2. Posted 10/09/2020 at 08:00 | Permalink

    It is true that those examples of “never worked” socialism did not turn out well for the fooled- the citizens. Look what we have been laboring under just because of pimping to the needs, in words not reality so much, of the people. Besides our well documented interference and undermining of attempts elsewhere to share with the lowest rungs, there is the well known tendency to like power, use it for personal enrichment and – the citizen be damned. Of course agency capture and insider trading replicate these sins of socialism. They replicate right in the capitalism. No system reboot, by itself will change human nature, or the outcomes we see now- .

    “Centre for Global Development has estimated 2014 median incomes of countries around the world. Here’s what it reported for India and Pakistan:

    “Pakistan: Median Income per capita: $,1204.50, Median Household Income: $6,022.50 Mean (Average) per capita $4,811.31

    “India Rural: Median per capita $930.75 Median Household $4,653.75 Mean (Average) per capita $5,700.72

    “India Urban: Median per capita $1295.75 Median Household $6,478.75 Mean(Average) per capita: $5,700.72

    “It shows that India’s urban median income is slightly higher than Pakistan’s median income. However, India’s rural median income is significantly lower than Pakistan’s. It should be noted that 70% of India’s population lives in rural areas, much higher than Pakistan’s 61%, according to the World Bank.”

    Certainly , in socialism and capitalism, transparency and attentive
    eyes and strong sanctions are required.

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