The collapse of…socialism?

More bad economic news arrived today. Nevermind that it refers to last year; it is still pretty bad and makes me wonder what has happened since then. The overall national median income dropped by nearly 4%. And worse, still, income gaps increased substantially between 2007 and 2008. That was 2008, the good old days, when there was still debate about whether we were even in a recession.

In light of all that, I have to wonder what’s up with yesterday’s New York Times article about “the specter of socialism’s slow collapse.” 

It says:

Even in the midst of one of the greatest challenges to capitalism in 75 years, involving a breakdown of the financial system due to “irrational exuberance,” greed and the weakness of regulatory systems, European Socialist parties and their left-wing cousins have not found a compelling response, let alone taken advantage of the right’s failures.


This is absurd. We are living through financial crisis that couldn’t have been better designed in the wildest dreams of bolshevik propagandists. There are six people chasing every open job, foreclosures and homelessness are spiraling out of control, and furloughs are becoming almost normal. It seems like socialists have their work cut out for them. Where are your pitchforks, comrades?

Of course, the article isn’t really about revolutionary socialism, so much as the electoral kind that just got trounced in Germany. Is this just an electoral quirk, brought on by conservative parties co-opting the socialist platform of government economic control?

Before I go on, I have to make a couple of side comments. First, it may be tempting to blame Obama for the wave of  “socialism” sweeping America, but the Bush administration really got the ball rolling in its current direction. Second, I’m also including the Democrats in my concept of conservative, as one of the deep flaws of that party is that it is approximately as tied to big capitalist business as are the Republicans.

Ultimately, socialism’s problem is that it has already been tried. I’ll grant that there are many variations on the theme (Russia, China and Yugoslavia all had major differences, notwithstanding our paranoid belief that “The Reds” were coming to get us) and some of them have not fully played out yet (Cuba actually has some good bits, and might be a lot better if it weren’t so severely isolated). But in general, there is a perception that socialism didn’t/doesn’t work. 

Personally, my big beef with state socialism is that it is compulsory. Aside from offending my generally libertarian values (and please don’t confuse that with the values of the Libertarian Party), it doesn’t seem like that is a viable arrangement. People – at least those raised under capitalism – apparently have some need for rewards tied to performance. We also seem to need some sense of buy-in – a choice of joining or not.

But the question of why socialism isn’t making a roaring comeback during capitalism’s most embarrassing failure leads to another question: now what?

If socialism has failed, capitalism is failing. The decline in income may turn around, but the income gap appears to be permanent and worsening and directly tied to capitalism’s practice of rewarding wealth and power with more wealth and power (this is the basic structure of corporate governance, which is based on one vote per share).

That scheme obviously can’t go on forever. There have previously been periodic socialist revolutions whenever wealth concentration gets too far out of hand. These serve to reset the system, but that fail-safe seems to be missing this time. So, again, now what?

If neither of the great economic ideologies work, then what the heck are we supposed to do?

It should come as no big surprise to my regular readers that I see a solution in cooperatives. These are businesses that give one vote per member, and which generally distribute profit based on use of the business (through profit sharing or patronage dividends). They are also a global movement involving perhaps a billion people worldwide.

Co-ops have been around for more than 160 years in their modern form, and at times they have been dominant players in national and regional economies. So far none have fully transformed a society, but they are still a work in progress. There are a growing number of models for how cooperatives can work on a gigantic scale, including two large federations in Italy (Confcooperative, and Legacoop), and The Co-operative Group in the UK – each with millions of members).

The most advanced and integrated, however, is perhaps Mondragon, which employs over 100,000 people in a system of worker ownership. In a half-century these cooperatives have effectively taken over many functions usually considered the work of government, including healthcare, social security, and education. They have one of Spain’s largest banks and its largest domestically-owned grocery store chain – jointly owned with consumers. They have created a new economic system within the free market, which controls no territory beyond the real estate that it has purchased. No territory has ever been conquered, no land or property has been forcibly collectivized, and no one has been killed or captured in its name. It is a great answer to the stalemate between capitalism and socialism.

I will be in Mondragon in under two weeks, and I am looking forward to that in a way that can’t really be described. 

I’m not sure when I first learned of Mondragon, but it has been at least a decade. During that time I’ve gushed repeatedly about it; at times I’m sure I’ve misstated or exaggerated certain things. This trip will probably reveal more of these little errors (hopefully none in print!), and I am ready to be humbled in that way. Something that big and complex is impossible to fully grasp, especially from afar. Even ten days up close is just scratching the surface.

I know that Mondragon is not perfect, and some of their recent directions are a bit troubling to me. But the Basques have created a model that the whole world should be considering, finding its pros and cons, looking for ways to apply its lessons in our own communities. Capitalism and socialism are not going away, so we need to get to work organizing in their shadows, finding ways to achieve the best ideals of both while avoiding their pitfalls.

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5 Responses to The collapse of…socialism?

  1. coopgeek says:

    In observance of China’s 60th anniversary of “socialism” I have to point out that it isn’t really. It’s more of a crony capitalist state ruled by a single party that is communist only in name. If they were really socialist, they wouldn’t be the main creditor preventing the full collapse of international capitalism in the US.

  2. coopgeek says:

    At risk of commenting too much on one blog entry, I also have to clarify that today the Socialist Party in Greece just trounced the Conservatives.

    Whoops, maybe the Times spoke too soon.

  3. sasham says:

    You are commenting your own posts? 🙂

  4. coopgeek says:

    Yes, I’m having a lively little conversation with myself, adding little corrections here and there. This has been a funny entry, with more than one relevant news story right after I posted it.

  5. sasham says:

    Yugoslavia did not have socialism in my opinion. Lot of people praise the former country (socialist yugoslavia) but i disagree with them.
    I think socialism as we have tasted it is just one big extree capitalism. Instead of many small business fuedal lords you have a big totalitarian state. its much worse than capitalism. I think real socialism is something like social democracy in Scandinavian countries.
    There is another way but not many people know about it. It is called anarchy. But the name is to worn out perhaps. Maybe we could call it open source?

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