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Synthesis/Regeneration 6   (Spring 1993)

A Worker-Owned Economy

by Donald F. Busky, Delaware Valley Greens

I watched the Democratic and Republican conventions and didn't see a whole lot of difference between the two platforms. Beyond all the stentorian speeches and hoopla of the conventions, the plain, unvarnished fact remains that neither of the parties really has a clue on how to fix the economy. Indeed some of the measures being considered such as NAFTA will only make the economic situation worse to say nothing about its environmental devastation.

If you study the causes of recessions and depressions, you'll learn about the business cycle. Now, let's ask the question, why does business go through economic downturns periodically in the first place? There is more than one theory, but one of the most popular is overproduction. This is also called the inventory cycle. At some point companies produce more goods than can be sold. With market saturation, inventories begin to build up and workers are laid off to keep profits up. These unemployed workers don't buy as much, so sales drop in many other industries also. These in turn lay off even more workers. Thus is created a vicious cycle with more and more layoffs as sales cycle downward. After a few years, the inventories are depleted, companies begin rehiring to build up depleted stocks. These newly-employed workers can buy more again. This stimulates the economy, and there is an economic recovery. And so it goes until the next downward cycle. That's capitalism!

There is also a long-term economic downturn in the United States from deindustrialization due to capital flight. Companies flee overseas or down south, say, to Mexico, attracted by the cheap labor and capital available, and also the lack of safety and environmental regulation on business. Both the presidential candidates supported NAFTA, which will encourage even more US companies to flee to Mexico.

Neither the Republicans nor Democrats addressed overproduction or capital flight. They talk about taxation policies as being solutions. Lower taxes do temporarily stimulate business activity by injecting money into the economy. This also causes budget deficits. When deficits get to be too big, they are a drag on the economy. Too much of investors' money is attracted into government bonds that might have gone into businesses. The US deficit is now running over $300 billion a year—historically high. The national debt is approaching $4 trillion—the greatest debt in the history of the world. Interest on the national debt takes up 29% of the annual federal budget.

So what's the solution to these economic woes? Government ownership of the means of production? There are several objections to this by those who recognize the need for basic social and economic change.

First, governments do not necessarily behave any better than private owners. They too are quite capable of laying workers off when economic times are bad—witness the French Socialist government under Mitterrand laying off thousands of workers in the name of "modernization" of state-owned industries in the 1980's.

Second, if the state owns the industries, and the conservatives come back to power, they surely would privatize state-owned industries, as we have seen in Britain under Conservative rule following the nationalization of various industries under Labour governments. One might argue that democratic socialists would never lose an election, but this is wholly utopian. Marxist-Leninist states didn't lose elections, but they didn't have free elections. But now most of these communist governments have collapsed largely due to the terrific inefficiency of bureaucratic, state-owned industries. These were noted for their shortages and shoddy goods, with no chance for consumer choice.

This brings up the third objection to government ownership—it destroys competition and thus encourages inefficiency and corruption. Political democracy depends on free competition between ideas, parties and candidates. So too does economic democracy. Without a market system there is no hope for an efficient economy. We must come to recognize that command economies have been tested and have proven themselves to be failures—and there is no going back.

An objection to common ownership was made over two thousand years ago in Athens by Aristotle in The Politics as a reply to Plato's advocacy of communism. Aristotle believed in the superiority of the male as well as upholding slavery. But he did make a good point in saying that we neglect what is held in common and care less about it than what we privately own.

A fourth criticism of government ownership is that it often comes with political tyranny. Not a single one of the modern communist states has been democratic. On the contrary, they have all been murderous, totalitarian oligarchies or dictatorships. Total government control of the economy has never existed with a democratic government, and perhaps cannot do so.

A fifth criticism is that it makes workplace democracy difficult if not impossible. The workers are always likely to be fighting the politicians for control over management in government-owned industries. Politicians can always pass laws and command the police and military forces to win this argument. In service industries wholly dependent on taxes to operate, the public has an interest in getting the most work for its money, and so would demand government control over management. On the other hand, the workers in public service have an interest in doing the least work for the money they are paid. This is especially true in a situation in which they have no competition to perform those services, such as sanitation, police and fire protection.

Worker ownership ends exploitation of workers and layoffs due to overproduction & capital flight, as workers would not harm themselves if they controlled the companies.

For these reasons, state socialism will never be an acceptable alternative to capitalism to Americans or most other peoples. Democratic socialist as well as communist parties that continue to argue for government ownership of the means of production, distribution and exchange will go nowhere in politically—democratic societies and are likely to remain small sects.

Happily, there is an alternative form of democratic socialism that meets these objections—worker ownership. Social ownership need not mean government ownership. Worker ownership ends the exploitation of workers and layoffs due to overproduction and capital flight, as workers would not harm themselves if they controlled the companies.

None of the above should be taken as a rejection of government and all forms of government ownership. I consider anarchism to be wholly utopian. There will always be a need for the rule of law to protect the public from criminal behavior, be it from individuals or groups. Even a workers cooperative good to its own members could exploit the public and harm the environment. Government regulation of all business—capitalist, state-owned or worker-owned—to protect worker, consumer and environment safety and to prevent discrimination is a necessary function. And some forms of government ownership are proper particularly in the public service sector such as the health field. But in manufacturing, worker-ownership in a regulated market economy is superior to capitalist and government ownership. It can fundamentally fix what's wrong with the American economy, provide full employment, end exploitation, and allow for workplace democracy.

Fixing the American economy is the key to abolishing poverty, and all the social ills that stem from it. The government can lead a transition to a worker-owned economy by helping workers buy up companies and start new ones. A third party can build a mass base upon this economic policy. It is by no means the only thing a third party should stand for—it must address many important issues that deal with discrimination, the environment, peace, etc. But no third party can succeed today without presenting the American people something that really addresses their fundamental concerns with the economy. It is a program that can win.

Advocating a worker-owned economy is a revolutionary idea whose time has come. Public works projects should be part of the solution to helping end the current recession. But for all the good that they did during the New Deal, the Great Depression was only ameliorated, not ended by such policies. It was production for World War II and its increase in deficit spending that finally ended the Great Depression. But that policy cannot work again for the simple reason that we already have a war economy and a national debt like none other in the history of the world.

Mike Muench raised some interesting questions in his Green Synthesis essay, "Some Politics for a Green Party," (August, 1992, pp. 10-11) concerning electronic direct democracy. I have little doubt that someday in the future this will be a reality, but for now let me suggest a practical way to proceed. First, let's work to popularize the ideas of ecology, worker-ownership, civil rights and non-violence, and second, let's work to have every state and local community, and for the national government as well, pass legislation allowing for initiatives, referenda, and recall elections. That's a technology we already know how to do and is being done in several states. Once that exists everywhere, the transition to the kind of electronic direct democracy Mike Muench speaks of will be much easier. Let's get 20th century referendum democracy established everywhere before we make the jump to 21st century electronic democracy.

Donald Busky is Chairperson of the Socialist Party of Pennsylvania and is Convenor of the Energy & Environment Working Group of the SPUSA. He has covered environmental issues for The Socialist.

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