Socialism: Meaning and Basic Principles

4. Common ownership

The distinguishing principle. Private ownership of the means of production is criticised on four grounds: it is unjust, since wealth is created collectively and appropriated privately; it breeds acquisitiveness; it is divisive, generating classes; and it is inefficient, since production is directed by what is profitable rather than by what is needed.

What varies is how far this goes. Full common ownership of all productive property is the strong version; the social ownership of major industries with a large private sector is a moderate version; and social democracy in practice has settled on regulation and redistribution with private ownership left largely intact.

5. Distribution according to need

The most quoted socialist formula is Marx's from the Critique of the Gotha Programme: from each according to his ability, to each according to his needs. Its structure should be noticed: contribution is measured by ability and entitlement by need, and the two are deliberately separated.

6. Class

Society is analysed in terms of classes defined by their economic position, and political conflict is understood as reflecting the conflict between them. Socialism is thus a doctrine that takes sides: it speaks for the working class.

7. Work as fulfilment

Work is not merely a means of earning but is where human capacities are exercised, so an arrangement that makes work degrading, meaningless or dangerous has damaged the person and not merely underpaid them. The concept of alienation belongs here.

The two great internal divisions

An answer that treats socialism as one thing will be marked down, because its internal quarrels are sharper than its quarrel with liberalism.

On means: revolution or reform. Whether the existing order must be overthrown or can be transformed by legislation and election. This is the division chapter 740 examines.

On ends: abolition or amelioration. Whether the object is a wholly different society without classes or private ownership of production, or a market society whose inequalities are limited and whose worst consequences are relieved.

A worked example

A large textile mill closes and eight hundred workers lose their jobs. The mill is sold and the land is redeveloped as housing, and the proceeds go to the owner.

A liberal analysis asks whether contracts were honoured, whether notice was given, whether statutory dues were paid, and whether the workers' freedom to seek other employment is unimpaired.

A socialist analysis asks four different questions, and each one is one of the principles above.

Who created the value in the land? The mill's value was built by generations of workers, and on its sale the whole of the accumulated value goes to the person who held the title. This is the objection about collective creation and private appropriation.

Why does one party bear the whole risk? The owner's downside is the loss of an investment; the workers' downside is subsistence. The risks are not comparable and the returns are distributed the other way round.

Was there any alternative form of ownership? A cooperative, a workers' trust, or public ownership would have distributed both the decision and the proceeds differently. A socialist's point is that the question was never asked, because the form of ownership is treated as given.

What happens to the community? Eight hundred households, the shops that served them, and the neighbourhood built around the mill. On an individualist analysis these are unrelated private losses; on a socialist analysis they are a single social fact.

Notice that a socialist is not saying the closure was unlawful. The entire transaction may have been perfectly lawful, and that is the point: the objection is to the institutions that made it lawful.

Distinctions that carry marks

What socialism is NOT

It is not the same as communism. Communism is one variety, distinguished by its analysis, its methods and how far it takes common ownership, and chapter 740 sets out the differences precisely.

It is not the abolition of all private property. The target is productive property, the means by which goods are produced. Personal possessions are not what any serious socialist proposes to socialise.

It is not necessarily undemocratic. Democratic socialism and social democracy have contested elections for more than a century, and Fabian socialism is defined by its commitment to gradual constitutional change.

It is not merely welfare. A welfare state relieves the consequences of an unequal distribution; socialism proposes to change the distribution. That distinction separates modern liberalism at chapter 580 from socialism, and it is the sentence that saves an answer from confusing them.

It is not a doctrine only of poverty. Its objection is to inequality and to the relations that produce it, which persist in a rich society.

Quick revision

1. Socialism is the doctrine that people are cooperative by nature, that inequality is produced by institutions rather than by nature, and that production should be commonly owned or socially controlled.
2. Seven principles: community, cooperation, equality, common ownership, distribution according to need, class, and work as fulfilment.
3. The formula: from each according to his ability, to each according to his needs. Contribution is measured by ability, entitlement by need.
4. Four objections to private ownership of production: it is unjust, since wealth is created collectively and appropriated privately; it breeds acquisitiveness; it is divisive; and it directs production to what is profitable rather than what is needed.
5. Two internal divisions: revolution or reform on means, and abolition or amelioration on ends.
6. Not communism, not the abolition of personal property, not undemocratic by definition, and not merely welfare, which relieves consequences while socialism changes the distribution.

Test yourself

1. Define socialism and state its basic principles. Socialism holds that human beings are social by nature and cooperative rather than essentially competitive, that the inequalities of a market society arise from its institutions and especially from private ownership of the means of production rather than from unequal natural endowments, and that the remedy is common ownership or social control of productive resources with distribution according to need. Its principles are community, cooperation, equality, common ownership, distribution by need, the analysis of society in terms of class, and the conception of work as the exercise of human capacities rather than merely a means of income.

2. What was socialism formed against, and why does that matter? Against the industrial order rather than against feudalism: large scale production, a propertyless working population, extreme inequality, insecurity of employment, and the doctrine that market outcomes were natural and beyond criticism. It matters because liberalism had already fought and largely won the battle against aristocratic privilege, so socialism is directed at the society liberalism helped create. That is why the two are successive answers to different enemies, and why socialism takes so much of liberalism, such as legal equality and constitutional government, for granted.

3. On what grounds do socialists object to private ownership of the means of production? That it is unjust, since wealth is produced collectively and appropriated privately by whoever holds the title. That it breeds acquisitiveness and makes the pursuit of possessions the organising motive of social life. That it is divisive, generating classes with opposed interests and destroying community. And that it is inefficient, because production is directed by what is profitable rather than by what people need, so that goods are made for those who can pay while needs go unmet.

4. Distinguish socialism from a welfare state. A welfare state accepts the existing distribution of ownership and relieves its consequences through transfers, insurance and public services; socialism proposes to change the distribution itself by altering who owns and controls productive resources. The distinction is what separates modern liberalism from socialism: a modern liberal justifies welfare provision by reference to liberty, arguing that a person without means cannot use their freedom, while a socialist argues from equality and from the injustice of the ownership arrangements that produce the need for welfare.

5. Apply a socialist analysis to a mill closure in which every legal requirement was met. The socialist does not say the closure was unlawful, which is the point: the objection is to the institutions that made it lawful. Four questions are asked. Who created the value realised on the sale, which was built by generations of workers and accrues wholly to the title holder. Why the risks are so unequal, the owner's downside being an investment and the workers' subsistence, with returns distributed the other way. Whether another form of ownership, a cooperative, a workers' trust or public ownership, would have distributed the decision and the proceeds differently, a question never asked because the form of ownership is treated as given. And what happens to the community, which an individualist analysis sees as unrelated private losses and a socialist sees as one social fact.