Beyond Social Democracy

 What would it take to go from reforms within the capitalist system to a democratic socialist society?

That's a much tougher question than it may seem at first glance.

The 'capitalist system' is based essentially on the idea that we can earn income through ownership, and not through labour alone.

With no effective limits on ownership, and physical limits on labour, it will always be the case that earning through ownership has a structural advantage, which leads inevitably to a concentration of capital and devaluation of labour.

So what does it mean to say 'reforms within the capitalist system'? These would acknowledge that capitalism exists, that is, that it is possible to earn income through ownership, and to place limits on this, either by strengthening the position of labour, or taxing or limiting concentrations of capital. That has long been the core of socialist policy, but it has the weakness of always being an approach defined by being 'opposed' to something (which is where we get all the 'fight for this' and 'fight for that' rhetoric).

The extreme Marxist position would be to effectively limit capital, eliminating ownership. This appears to be impossible; *somebody* (whether a person, a collective, or a government) must make decisions about the disposition of land and resources, and this in practice amounts to ownership. The effect has been in practice to disenfranchise all labour, leaving nobody but the government with ownership, which is undesirable.

An in-between position would enable ownership, but eliminate capital (ie., eliminate money). I'm not really sure what such a position would look like, but there have been pastoral attempts from time to time to return to a barter economy. This has numerous shortcomings and requires a lot more goodwill than is possible in a large society or where shortages exist. And concentration of (non-capital) wealth still occurs.

Another aspect of capitalism is that it is (in theory) a non-directed economy. This puts it at odds with approaches that 'interfere' with the economy, for example, taxation, or limits on ownership. The argument (currently being proven in the U.S.) is that the power to direct the economy too often leads to temptation to use this power for personal gain and to stay in power. This also leads to the disenfranchisement of the population.

The reasoning for supporting a non-directed economy is that the marketplace can naturally address issues such as resource allocation and productivity. Value is not inherent in anything, and based only on 'willingness to pay', while production is sensitive to that demand. In general, the theory is sound - network mechanisms are more stable and reliable than directive or rule-based mechanisms. The flaw, though, is that an economy based on an abstraction - and specifically, capital - is what they call 'scale-free', and this leads (through what is called a 'power law') to a concentration of wealth.

Monetary policy is an attempt to limit scale through limits on the money supply. The idea is to increase or decrease the supply of money to preserve a balance with the actual value of goods in circulation. However, it fails in many cases - for example, where demand is far in excess of supply, and where supply is far in excess of demand. This results in things that are not inherently valuable, like food and shelter, becoming 'priceless', and things that are inherently value, like freedom and air, having no value whatsoever.

Mark Carney's approach - for those who are interested - is to attempt to define 'value' as being based on more than supply and demand, and to redefine it in terms of 'values', hence (for example) putting a price on things that are valuable but unowned, so that social values weigh against the accumulation of capital. Hence, for example, a carbon tax, which puts a price on placing carbon into the atmosphere, based on our desire to avoid global warming. It's an interesting idea with flaws, since it still allows the concentration of capital to occur, and to overwhelm social values. (For more, read Carney's Value(s)).

Moreover, there remains the question of how we determine what we value. In general, the default is to democracy, but in a world dominated by capital, people are just as likely to vote to support their own self-interest (and personal wealth) as they are to vote in support of values, which means the value of values is under constant pressure, and becomes lower over time.

Indeed, the problem with capitalism is that it has expanded to encompass all aspects of society. There is nothing on which a value is not placed, the worth of individual lives along with basic freedoms is constantly under scrutiny, and we live in a world of human capital and social capital and all the rest. Everything becomes a commodity, all relationships become transactional, the the only value in any exchange is the maximization of wealth. (See Cory Doctorow on Enshittification).

So there are a few approaches.

I think, a society 'beyond capitalism' would be one that defines and defends some things as being 'not for sale', that is, that cannot be acquired, traded, owned, managed, or controlled. We can't define all things this way - after all, markets do exist, and are essential for the functioning of a society, but we could place limits on what could be subject to market forces.

It's no impossible to imagine. For example, slavery is banned outright in society. People cannot be bought and sold outright. Similarly, the high seas cannot be bought and sold. People attempted to ensure that Antarctica can't be bought and sold. We might have a discussion about what other things ought to be defined as being beyond capitalism.

A second approach might be to redefine the medium of exchange. I think something like this was attempted in the Cluetrain Manifesto, with the dictum 'markets are conversations'. This would allow that alternative 'currencies' could exist, such as reputation, trust, friendship and family or tribe. The practical effect here is that (corporate) responsibility would extend beyond fiduciary responsibility, and that Boards would be allowed to (for example) take a company's reputation into account without equating 'reputation' to 'return on investment'. Cue Ben and Jerry.

A third approach might be to create physical limits on capital, so that it is not possible to concentrate wealth. This is way networks are limited (and hence, retain their stability) in nature. The idea is that large concentrations of wealth (of capital, land, gold, or anything, really) become less and less stable, so that as they increase in size they become more likely to break apart.

Currently, we do the opposite. As wealth and ownership increases, it becomes more stable. The wealthy are able to protect what they've gained by employing security - everything from armed guards to tax havens to high-priced lawyers to well-connected lobbyists - to protect that wealth. Wealth becomes multi-generational, and can result in entire families or even societies enjoying an advantage over the rest. The difference in generational wealth, for example, is a major differentiator of opportunity between blacks and whites in the United States.

At the moment, we have small and generally ineffective limits on wealth - progressive taxation, inheritance tax, extra property tax on second homes, things like that (all, of course, depicted as 'interfering' in the marketplace). It's hard to know exactly how to place non-arbitrary 'physical' limits on wealth. But that would go a long way toward balancing capitalism with the other elements of society we wish to protect.

The only real limits are those envisioned by Locke - emigration or revolution. These are the current flashpoints of global society. These are undesirable, for many humanitarian reasons. But barring a response to the concentration of wealth, they remain the most likely futures.