From xxxxxx <[email protected]>
Subject Reimagining Socialism: An Interview With David Kotz
Date December 25, 2024 2:45 AM
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REIMAGINING SOCIALISM: AN INTERVIEW WITH DAVID KOTZ  
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C.J. Polychroniou
December 24, 2024
Common Dreams
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_ "The biggest problem with regulated capitalism is that it is simply
not sustainable in the long run," said the economist. _

Economist and professor David Kotz visited China's Peking University
in 2019., Peking University

 

In the 1990s, all the talk was about the end of socialism and the
unchallenged military and economic superiority of the United States.
Nonetheless, two decades later, socialism was revived as a possible
political alternative as the Great Recession of 2008 and the
intensification of neoliberalism’s cruelties tore a huge hole in
people’s faith in capitalism, especially among young people in the
United States whose hearts had been captured by Sen. Bernie Sanders’
fiery calls for universal healthcare, free public college, and
economic and climate justice. Socialism remains a political
alternative taken seriously by many across the United States although
its vision is still far away from becoming a hegemonic political
project.

However, there are different kinds of socialism, and some of them,
such as social democracy and market socialism, seek reform rather than
the actual replacement of capitalism. On the other hand, the Soviet
model, which is the only version of socialism that gave birth to an
alternative socioeconomic system to that of capitalism, had many
undesirable features and proved unsustainable.

So what would be the ideal system of socialism in the 21st century? In
the interview that follows, radical economist David Kotz
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drawn from the experience of the Soviet model, explains why reforming
capitalism does not solve the problems built into the system of
capitalism, and makes a case in defense of democratic socialism as the
only sustainable alternative to capitalism. David Kotz is the author
of _The Rise and Fall of Neoliberal Capitalism_
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soon-to-be-published book _Socialism for Today: Escaping the Cruelties
of Capitalism_
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He is professor emeritus of economics and senior research fellow at
the Political Economy Research Institute (PERI) at the University of
Massachusetts Amherst. From 2010-19, Kotz also served as distinguished
professor of economics and co-director of the department of political
economy at the Shanghai University of Finance and Economics.

C.J. POLYCHRONIOU: David, in a soon-to-be-published book titled
_Socialism for Today_
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you make the case that democratic socialism is the only alternative to
the long list of severe problems (massive social inequalities and
economic disparities, environmental degradation, racism, poverty,
homelessness, and so on) that plague the United States under
capitalism. Now, you acknowledge that a shift to a radically different
economic system would be a difficult and costly process but also
maintain that the problems mentioned above cannot be solved by
reforming capitalism. What do you understand by the term “reform of
capitalism,” and do you think all struggles to reform capitalism
have ultimately failed?

DAVID KOTZ: By reform of capitalism, we generally mean the
introduction of institutions and policies that modify the way the
system works but without replacing its core features—private
ownership of the means of production, the wage-labor relation, and the
pursuit of profit by the capitalist class as the basic logic of the
system. Since the end of World War II, we have seen two types of
reform of capitalism. First, the type of reform that emerged in the
industrialized countries after the Second World War and came to be
called regulated capitalism or social democratic capitalism and,
second, the unrestrained version of capitalism that emerged in the
1980s and has been nothing short of a disaster.

Social democratic capitalism included a more active role for
government in the economy, a major role for unions in the
capital-labor relation, and changes in the way corporations conduct
their businesses. Reforming capitalism along a social democratic line
was a process that had started before World War II, thanks to the rise
of working-class politics and the fact that socialist parties, in some
cases, rose to power. But big business and its political
representatives also went along out of fear that capitalism might not
survive the political pressures from below without reforms. Sweden led
the way to social democratic capitalism in the 1930s, but reform
capitalism also spread to other parts of Western Europe after the end
of the Second World War. In the United States, reform capitalism took
place with Roosevelt’s New Deal policies on account of the Great
Depression and had many common features with European social
democracy.

"Full equality is antithetical to the logic and functioning of
capitalism. A capitalist economy cannot work without exploiting
workers."

Regulated capitalism in the United States produced many benefits for
working people. Starting in the early 1950s, labor productivity went
up, wages increased, and income inequality remained relatively stable.
By the late 1960s, regulated capitalism also led to major improvements
in air and water quality and in occupational safety and health. Those
regulations were passed under pressure from a broad coalition of
environmental activists, consumer product safety activists, and labor
unions. People of color also advanced in economic opportunities.
Nonetheless, while regulated capitalism created favorable conditions
for making progress toward social, economic, and racial equality, full
equality remained a chimera. The empirical evidence suggests that
racial/ethnic equality and gender equality can be reduced through
political and economic struggle but cannot be eliminated. Full
equality is antithetical to the logic and functioning of capitalism. A
capitalist economy cannot work without exploiting workers. The
improvements made by regulated capitalism were indeed limited and did
not resolve all the problems generated by capitalism. Unions had to
make major concessions to secure agreements for the reforms from the
powerful business interests. The official poverty rate declined over
the period of the duration of regulated capitalism, but deep pockets
of poverty remained in many parts of the country. The imperialist
drive of capitalism also was not tamed in postwar regulated
capitalism, and capitalist democracies remained only partially
democratic as wealthy individuals and large corporations remained
politically powerful.

The biggest problem with regulated capitalism is that it is simply not
sustainable in the long run. Why? Because it generates a powerful
drive on the part of capitalists to resist restriction in the pursuit
of the maximization of profit, which is what capitalism is all about.
Capitalism has always faced periodic economic crises. When such crises
occur, capitalists will grab the opportunity to overthrow regulated
capitalism. This is what happened in the 1970s, and regulated
capitalism gave way to a decade of accelerating inflation and a severe
business cycle. The neoliberal reforms of capitalism in the early
1980s were born out of the inability of regulated capitalism to
persist and bring long-term stability.

C.J. POLYCHRONIOU: OK, but since the aim seems to be full equality and
the absence of exploitation from human affairs, the argument can also
be rather easily made that 20th-century efforts to build a
full-fledged socialist alternative to capitalism also failed. Isn’t
that so?

DAVID KOTZ: There were two types of post-capitalist systems that
emerged from efforts to move beyond capitalism. One was the Soviet
model that emerged after the Bolshevik revolution in 1917. The second
was market socialism that surfaced following the collapse of the
Soviet model. Neither type succeeded in building a sustainable
alternative system. But let me focus on the first type since it did
abolish capitalism and build an alternative system. The Soviet model,
which spread to many other countries around the world, though with
some variations, relied initially on an institution called
“soviets,” elected by workers, peasants, soldiers, and sailors. It
was supposed to be the supreme authority in the new social and
political order. But soon after the revolution, the Bolshevik party
established a repressive regime that did not tolerate dissent. After
Lenin’s death in 1924, Joseph Stalin became the top leader of the
Soviet Union. He established a brutal dictatorship that went on to
eliminate much of the leadership that had made the revolution.

Under the Soviet model, all enterprises were owned by the state and
allocation decisions were made by a highly centralized and
hierarchical form of economic planning. Five-year and one-year plans
were formulated for the entire country. Enterprises were given target
outputs and provided with the inputs and labor time needed to produce
them. Enterprise decision-makers did not aim for maximum profit. There
were markets in the Soviet model in the sense that people bought
consumer goods in stores and workers decided on jobs in the labor
market. However, buying and selling in the Soviet economy did not
generate “market forces.” Market forces refers to a system in
which relative profitability determines which products will get
additional inputs and which will be cut back. Thus, market exchange
took place, but the system was not guided by market forces.

Centralized economic planning transformed the Soviet economy from a
backward agricultural economy to an industrialized economy in record
time. In just a couple of decades, an industrial base was built that
allowed the Soviet Union to produce military hardware that was key to
the defeat of Nazi Germany. Between the 1950-70s, the Soviet economy
was growing so fast that Western analysts were afraid that it would
soon surpass the leading capitalist economies. The Soviet model
transformed the lives of the Soviet people for the better in many
measurable ways. Between 1950 and 1975, consumption per person in the
Soviet Union grew faster than in the U.S. By the 1980s, Soviet
production surpassed that of the U.S. in steel, cement, metal-cutting
and metal-forming machines, wheat, milk, and cotton. It had more
doctors and hospital beds per capita than the United States. There was
continuous full employment, stable prices, and no ups and downs of the
business cycle, while income was relatively equally distributed.

However, the system had serious economic problems. Many sectors of the
economy were inefficient, many consumer goods were of low quality, and
many consumer services were simply unavailable. Households often faced
shortages of consumer goods.

C.J. POLYCHRONIOU: In thinking then about a sustainable alternative
system to capitalism, what do we keep from the experience of the
Soviet model?

DAVID KOTZ: As I sought to indicate earlier, the Soviet model brought
significant economic and social progress for some 60 years. In my
view, the problems of the Soviet model stemmed from its authoritarian
and repressive political institutions and the highly centralized form
of economic planning that was adopted. But while the Soviet model
lacked popular democracy, it did include the key institutions that
socialists have long supported: production for use rather than profit,
public ownership of enterprises, and a planned economy. The entire
experience of the Soviet model holds useful and important lessons for
a future socialism.

C.J. POLYCHRONIOU: What about market socialism? What lessons should we
draw from that experience?

DAVID KOTZ: The idea of combining market allocation with socialist
planning has a long history. New models of market socialism were
proposed following the collapse of the Soviet model in 1991. The hope
was that markets would guarantee economic efficiency while a socialist
state assured economic justice and material security. Market socialism
did not emerge in Russia after the collapse of state socialism, but it
did emerge in China after 1978 under the post-Mao leadership of Deng
Xiaoping. In China, market forces were introduced gradually and with a
high degree of state oversight to avoid economic chaos. The record
shows that market socialism not only reproduced many of the problems
of capitalism but has a tendency to promote a return to capitalism.
That’s because market forces can do their job of allocating
resources only by activating the profit motive as the primary force of
productive activity.

C.J. POLYCHRONIOU: In your book, you argue that economic planning is
the institution that can achieve the aim of creating just and
sustainable societies—not market forces. But you also argue that an
“effective and sustainable socialism” requires direct
participatory planning and new forms of public ownership of the means
of production. Can you briefly lay out the basic features of
democratic socialism?

DAVID KOTZ: Here I can respond only briefly to this question, which I
consider in detail in my forthcoming book. My view follows closely the
model of socialism in Pat Devine’s book _Democracy and Economic
Planning_
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The following are some of the key features of a future democratic
socialism in my view:

* Economic allocation decisions are made by all parties affected by
the decision. That includes workers, consumers, and the local
community.
* Differences are settled whenever possible by negotiation and
compromise among the relevant parties. If necessary, majority voting
can be used.
* The mass media are free to criticize the state and its officials.
* Individuals are free to criticize the state and its officials.

Democratic socialism will inevitably face a contradiction between wide
participation in decision-making and the need to make allocation
decisions in a timely manner, allocation decisions that are
inter-dependent in an actual economy. It will not be perfect, but it
promises the best possible future for the human species.

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David M. Kotz is Professor Emeritus of Economics at the University of
Massachusetts Amherst.

C.J. Polychroniou is a political economist/political scientist who has
taught and worked in numerous universities and research centers in
Europe and the United States. His latest books are The Precipice:
Neoliberalism, the Pandemic and the Urgent Need for Social Change (A
collection of interviews with Noam Chomsky; Haymarket Books, 2021),
and Economics and the Left: Interviews with Progressive Economists
(Verso, 2021).

* Democratic Socialism; Soviet Economic Model; Market Socialism;
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