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Categorizing Democratic Socialism

Why the modern Democratic Socialism trend is more akin to Neo-syndicalism than traditional socialism

"I endorse Austro Libertarian Magazine 100%" —Tom Woods

Categorizing Democratic Socialism

Why the modern Democratic Socialism trend is more akin to Neo-syndicalism than traditional socialism
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I really want to understand, and properly categorize, the phenomenon of democratic socialism in light of what they are actually proposing. Much to the frustration of many readers of this site, this causes me to treat socialism in extra careful and nuanced ways sometimes; but I believe in facing what may be a long war with a New Socialism, we have to be prepared to argue against what they are actually saying. Why? Because they will win converts if they are able to point out that no one is actually responding to them.

To be clear, this is actually more difficult than it seems because I don’t think that most democratic socialists are self-aware enough to recognize their various differences with historical socialism. Having been miseducated, for the most part, they do not realize the extent of the devastation of command economies and central planning in the far east and South America; instead, and much more dangerously, they operate not with the means in mind, but with the utopian ends they wish to see. They state an objective (the elimination of poverty, for example) and make that a policy in itself, as if their opponents disagree with this objective and previous generations of politicians failed only in not dreaming big enough.

Thus, here is a short overview of they way I am defining my terms.

Capitalism: Private ownership and control of the means of production.

Interventionism: The system wherein private ownership of the means of production is retained, but the capitalists don’t have full control of the use of the means of production, because the state intervenes, regulates, subsidizes, and manages certain business activities. It is, as Mises called it, a hampered capitalism; an unfree market.

The Free Market: Where private property owners are able to produce, purchase, and sell consumer and capital goods without coercive action, which includes the actions of the state. The free market, therefore, presupposes capitalism.

Socialism: Public ownership of the means of production, via a state, which is alleged to act on behalf of the public; but whether it does or does not is irrelevant to our criticism of this form of central planning.

As I have written in depth previously, two strategies for accomplishing socialism developed in the Russian territories: first was revolutionary marxism; a violent overthrow of the capitalist order (the order where the means of production of privately owned) prior to creating a socialist one. The second was “reformism;” a strategy of working within the existing governance structures to bring about socialist ideals over time. In the Soviet Union, the Bolshevik revolutionaries, spearheaded by people like Lenin, prevailed and the reformists either died out or came west.

But regardless of strategy, their goal was the same: government control of the means of production under bureaucratic (agency) management.

Because of the eventual staggering failure of the command economy where the government is the decision maker over the allocation of all production resources (the means of production), traditional socialism fell into monumental disrepute, not only in the west, but also in the east.

But that does not mean that the goals of “equality” and a classless society and the end of profit and the domination of wage earners were forgotten. No, they were reformulated. The reformulation, in my opinion, gets us closer to Democratic Socialism today. Here is how the Democratic Socialists of American organization describes their ideas compared to the command socialism of the Soviet Union:

Democratic socialists do not want to create an all-powerful government bureaucracy. But we do not want big corporate bureaucracies to control our society either. Rather, we believe that social and economic decisions should be made by those whom they most affect.

Today, corporate executives who answer only to themselves and a few wealthy stockholders make basic economic decisions affecting millions of people. Resources are used to make money for capitalists rather than to meet human needs. We believe that the workers and consumers who are affected by economic institutions should own and control them.

Social ownership could take many forms, such as worker-owned cooperatives or publicly owned enterprises managed by workers and consumer representatives. Democratic socialists favor as much decentralization as possible. While the large concentrations of capital in industries such as energy and steel may necessitate some form of state ownership, many consumer-goods industries might be best run as cooperatives.

Democratic socialists have long rejected the belief that the whole economy should be centrally planned. While we believe that democratic planning can shape major social investments like mass transit, housing, and energy, market mechanisms are needed to determine the demand for many consumer goods.

To translate this, I am going to actually use Mises himself. Now check this out. This is where it gets fascinating:

Every measure which takes the ownership of all the means of production from the entrepreneurs, capitalists, and landlords without transferring it to the whole of the citizens of the economic area, is to be regarded as Syndicalism.

Here, Mises is making a distinction between Orthodox Socialism and what he calls Syndicalism. Here is the difference: Orthodox Socialism wants to transfer the ownership of the means of production from the private owners under the capitalist world today to the government, which acts on behalf of all people within the society. This means that all people collectively own all means of all production efforts.

But syndicalism is different.

Mises again:

Syndicalism like Socialism aims at the abolition of the separation of worker from the means of production, only it proceeds by another method. Not all the workers will become the owners of all the means of production; those in a particular industry or undertaking or the workers engaged in a complete branch of production will obtain the means of production employed in it.

Thus syndicalism is slightly different: the workers within a given industry own the means of production only within that industry. Or, to quote Mises quoting the syndicalists: “The railways to the railway men, the mines to the miners, the factories to the factory hand—this is the slogan.”

Today, democratic socialists, as can be seen in the excerpt above, take this idea one step further. The workers within a given business owns the business itself: Or, to alter the slogan: WalMarts to the WalMart men, Levis to the Levi men… you get the picture.

To reiterate, DSA National Director Maria Svart explains exactly this:

“Let’s say you were negotiating at a bargaining table with workers in a bakery, and the workers said, ‘Look, we want more than a quarter of the bread; we want half of the bread, or we want two-thirds of the bread,’ ” she said. “The socialist would say, ‘Actually, we want the bakery. We want to control it all, for all of our benefit.’ “

Anyone who reads this website regularly, recognizes this as a helpful breakthrough for me. I’ve long struggled with the simple carry over from Soviet style socialism to what they Democratic Socialists of today were trying to articulate. And categorizing them as Neo-syndicalists is quite helpful in my mind. They are basically, without knowing it, describing something much more similar to syndicalism than Marxist socialism in the sense that workers of the business should own the business (no more capitalists!) But not, via a state, have shared ownership in every production factor in society.

The Various Problems with Democratic Socialism

Finally, we have something of substance to break down and tear apart! As Mises says in Human Action:

“If one were to take these plans seriously, one would not have to deal with them in a discussion of the problems of interventionism. One would have to realize that syndicalism is neither socialism, nor capitalism, nor interventionism, but a system of its own different from these three schemes.”

Here is the problem, economically, with their narrative. In the DSA paragraphs above, they wrote:

Today, corporate executives who answer only to themselves and a few wealthy stockholders make basic economic decisions affecting millions of people. Resources are used to make money for capitalists rather than to meet human needs. We believe that the workers and consumers who are affected by economic institutions should own and control them.

Here is how Mises responds to something like that:

The root of the syndicalist idea is to be seen in the belief that entrepreneurs and capitalists are irresponsible autocrats who are free to conduct their affairs arbitrarily. […] The fundamental error of this argument is obvious. The entrepreneurs and capitalists are not irresponsible autocrats. They are unconditionally subject to the sovereignty of the consumers. The market is a consumers’ democracy. The syndicalists want to transform it into a producers’ democracy. This idea is fallacious, for the sole end and purpose of production is consumption.

Wow! These DemSocialists really do fit the syndicalist profile much better than the historical marxist-socialist one.

Now, let us entertain the Democratic Socialist’s idea of an economy without capitalists to take profits and where all the workers “own” the business together. Either this is done voluntary, or it is done involuntary. That is, if the workers do not want the responsibilities required in an owner-manager role, will they be allowed to accept the relatively risk-less role of a wage earner at all?

Here is what a employer/capitalist does in a business, here is how he contributes (as I discuss in Podcast 6 on Marx’s Exploitation Theory) to the market:

The employer brings his savings to the table and pays out the wage earners before a good or service is even sold. He hopes (after calculating and judging future consumer behavior) that the costs will be less than the revenues from the consumer. But he does not know. If he is wrong, he will experience a loss. But the wage earner does not want to bear this burden. He wants to be able to pay his bills, provide a simple living, and feed his family regardless of whether the entrepreneur judges the future correctly. Thus, the wage earner and the employer strike a deal: the wage earner will accept X dollars per hour, guaranteed and the employer will capture the difference as his compensation for bearing the weight of the time between work done today, and revenue that comes tomorrow.

Thus, the capitalist-entrepreneur (we will think of them in one role for the sake of this article) does 3 things:

1: The capitalist comes to the situation with the savings (the capital) required to acquire the necessary components of the car, as well as pay for the other “factors” needed for the production process (tools, buildings, wages, etc).

2: Therefore, in relation to the worker, he pays out a wage so that the worker can provide the means of his living today regardless of when the car is ready to be sold to a consumer. That is, the worker gets paid now even though the consumer may not even yet be aware of the existence of the car!

3: Not only does the worker get paid in the present so that he doesn’t have to wait until the consumer purchases the product, but he also gets a guaranteed return on his work independent of whether the consumer actually buys the product at all. The capitalist only profits if the consumer decides to spend his money on the product.

This is a mighty burden that is taken off the back of the wage earner. In fact, it is this very arrangement, as I discuss here, that is the actual creation of wages in the first places. Wages don’t exist without capitalists playing this risk-bearing role. As Rothbard says: “Most workers are unwilling or unable to assume these risks of entrepreneurship, and therefore they greet the employer’s willingness to do so, as well as to pay them in advance of sales, with sighs of relief. Or would if they understood the process.”

But of course, most people don’t even understand this process. And thus they line up for democratic socialism, hoping to take back their power from the capitalists. From ignorance, the democratic socialist movement spreads.

Now, the above reflects why the capitalists exist and the role that the workers should want them to play in society. But in any case, if the workers are not allowed to defer to capitalists to play this role, then democratic socialism doesn’t even allow the workers to participate in the economy in a mutually beneficial way; for they, by law would be prevented from doing so. This is why, in Gene Epstein’s debate with Bhaskar Sunkara, he made freedom of association the issue: if worker owned businesses are the goal, then go do it; if those you (Bhaskar) agitate with don’t follow suit, they have demonstrated their preference for participating in the economy without wanting to bear the burdens of the capitalists.

The traditional socialist, the Leninst-Marxist, since they focus on the state as the via media by which their ideas are implemented from the top, would respond that they are going to use force to recreate everything and no one would be able to “choose” to be a wage-earner because the state will make society so glorious. But the democratic-socialist (neo-syndicalist) cannot use the state in this way. It would not make sense and it would contradict their vision. Thus, they are at a loss to reform all of society in accordance with their own vision. For the workers in the west, who now largely live middle class lives, not impoverished ones (thanks to capitalism!) are thrilled to be relieved of the burdens of bearing time and uncertainty risks.

Finally, let me have another shot at understanding the categorization of Bernie Sanders. Because he is not a member of the DSA and they consider him as too interventionist, too capitalistic to be properly called a democratic socialist. Before discovering the connection between syndicalism and democratic socialism, here was my basic position on Sanders:

Socialism is the public/government ownership of the means of production. Sanders does not advocate the public ownership of the means of production, therefore, he is not a socialist.

Since I have added a new layer to my understanding of all this, here is how I would clarify things now:

Socialism is the public/government ownership of the means of production. Sanders does not advocate the public ownership of the means of production, therefore, he is not a socialist in the traditional sense. But if democratic socialist is defined as one who advocates the elimination of capitalistic employers and demand, by law, that all businesses operate as worker-owned cooperatives, Sanders is not yet on record endorsing this as a system and therefore he is not a democratic socialist either, despite his self-labelling.

And it’s not just me saying this. DSA members tend to agree and as the DSA co-chair Joe Cernelli told NPR:

“I think we just need to realize that the end goal is, ultimately, like social control of the means of production,” said Joe Cernelli, a founding member of that West Virginia DSA chapter. “You know we don’t just want to improve capitalism, we will ultimately want to get rid of it.

While Sanders considers himself a democratic socialist, he is not a DSA member, and his views don’t fully align with the DSA.

“There are some policies that I think he’s been a little too soft on, a little too Democrat for me.”

That is, his approach is more like Robert Reich’s (and they are good friends), who wrote an entire book on making capitalism work for the masses by using government to make capitalism a worker-friendly system. Thus, in my opinion, Bernies is perhaps the farthest left of the social democrat interventionists. But social democrats are not democratic socialists, who want capitalism (private ownership of the means of production) eliminated, not purified.

Links for Understanding Syndicalism

Mises’ overview from his Socialism book
Mises overview from Human Action (page 808)
Rothbard on Syndicalist Syndrome
You will often hear democratic socialists praising the social thought of Chomsky. Here is Rothbard’s reflections on Chomsky’s economics, with reference to syndicalist themes.

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CJay Engel

Creator and Editor of Austro Libertarian. Lives in Northern CA, runs several businesses, spends time with his family, and reads as much economics and political theory as possible.

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