Ask scholars and laymen alike – about the relationship between socialism and capitalism - and one will discover the prevailing view of a perceived immutable opposition between these two key philosophical concepts, which have dominated international politics for over 100 years. This essay aims to explore and de-construct this supposed opposition and assess what basis it has in fact – i.e. are socialists inevitably opposed to capitalism or are there grey areas between the approaches where their conceptions overlap? We will attempt to find an answer to these questions by analysing political theory from the last 150 years, including the works of J S Mill and Karl Marx. Throughout the course of the paper we will encounter a great many 'flavours' of socialist thought, and will use this plurality to demonstrate that not all versions of socialism are opposed to capitalism.
There are probably fewer 'flavours' of capitalism than of socialism, but we ought to begin by defining our second referent object. It would be very time-consuming to examine every combination of the different models of socialist and capitalist systems, and see how they relate, so this paper will instead focus primarily on socialist opposition to laissez-faire, or free-market capitalism. This kind of capitalism has rarely been present in undiluted form, but dominated largely in the 19th century United States and Great Britain (Rand, 1982: 66), and in the British colony of Hong Kong before the return to Chinese rule - and can be seen to have been advocated by Adam Smith, Friedrich Hayek, Ayn Rand and Murray Rothbard, among others. The main tenets of laissez-faire capitalism are the protection of private property, and the limitation of government intervention to only situations where some conception of individual rights are deemed to be infringed (Rand, 1966: 19). A fair amount of ambiguity exists as to the formulation of these positions, but it should be enough to distinguish this kind of relatively unbridled capitalism from the market socialism and corporatism which is prevalent in most modern economies. Capitalism - argued Bradlaugh in a famous 19th century debate - is an economic approach which stresses the primacy of the individual (and his self-interest and profit motive). Socialism, by concentrating on the collective, can at some fundamental level be seen as in opposition to these principles (Hyndman and Mayers, 1884: 4).
We will consider both moralist and consequentialist oppositions, since capitalism, according to some, has changed in its meaning as well (Krisztics, 1935: 132). Ideologically, capitalism was initially justified in a more utilitarian way, and was portrayed as a pragmatist economic delivery vehicle; only later was capitalism defended on individualist moral grounds (Rand, 1966: 19-40). We will now explore the many divisions that exist within socialist political theory, and consider how each has different implications for any potential opposition to capitalism.
Measuring differences in socialist thought presents the scholar with a tricky set of choices in methodology. Structurally, one might think that the most significant separation one can make is to set aside those strands of socialist thought which propose the use of the state as a delivery vehicle for their ideological prescriptions (Bradlaugh, 1887: 3-9) from those that reject the use of the state (Hyndman and Mayers, 1884: 10). In reality, though, this dichotomy can be seen to have no definite prescriptions for opposition (or lack thereof) to capitalism, since both positions have capitalist and anti-capitalist elements (Rothbard, 2004: 1275-6). In reality, however, implementation of socialism is not either-or with regard to state control. Rothbard writes:-
“The distance between the poles of the purely free market, on the one hand, and total collectivism on the other, is a continuum involving different 'mixes' of the freedom principle and the coercive, hegemonic principle. Any increase of governmental ownership or control, therefore, is 'socialistic', or 'collectivistic', because it is a coercive intervention bringing the economy one step closer to complete socialism ” (Rothbard, 2004: 1274).
But the different 'schools' of socialism cannot be easily classified according to such a spectrum, and other divisions, more crucial and more nuanced, must be highlighted, and the implications for opposition to capitalism examined.
A model for a more advanced analysis is therefore required. One such approach is suggested by Mueller (Mueller, 1982: 160) with two lines of division: profit vs want 'orientation'; and private vs collective ownership. Mueller has postulated that crossovers can exist, and suggests four alternatives in place of the traditional socialist-capitalist dichotomy. According to Mueller, profit-oriented, private ownership equals the paradigm of laissez-faire capitalism; profit-oriented collective ownership creates the market-socialist, 'cooperative' model, closely related to 'anarcho-syndicalism'; want-oriented private ownership creates 'state capitalism' (a.k.a. corporatism or the 'mixed-market' model in contemporary dominance); finally, want-oriented collective ownership leads, at least in theory, to the totally monopolised, centrally-planned communist model of Marx and Engels. It would appear, on the face of this model, that only one of these four paradigms seems wholly in opposition to capitalism. Of the two which aren't laissez-faire capitalism or communism ('market socialism' and 'state capitalism'), the degree to which they are in opposition to capitalism would depend on which of 'private property' and 'state non-intervention' one considers to be most important according to our earlier definition.
We will take forward these early indications as we look at some of these models in more detail.
Marxism (or 'communistic socialism') differs from other incarnations of the ideology by vehemently calling for – and when implemented, enforcing - the abolition of private property (Krisztics, 1935: 133) for individuals. Vandervelder has made the argument that of the socialists, it is only the Marxists who are inherently opposed to capitalism (Vandervelder, 560), a charge which most Marxists seem happy to admit. But is this the case?
If one considers the strictly Marxist definition of socialism as the abolition of private property – then it quickly becomes inarguable that socialism is incompatible with capitalism. Communistic socialism (or 'communism') and capitalism are mutually exclusive ideological approaches. Communism is in opposition to capitalism, and vice versa. In fact, Marx's devotion to dialectic materialism informed his view of history as scientific and inevitable – an approach which one could argue is indicative of an outright denial of rational, self-motivated human action altogether.
Historically, Marxist thought sees capitalism as being a necessary precursor to socialism (Leftwich, 27), an antecedent condition against which the 'proletariat' must inevitably rebel, to be replaced by the equally inevitable state of 'socialism'. In a very important - if superficial - sense, then, Marxism as a model would seem, theoretically, to depend on capitalism for the very existence of its end goal, and therefore cannot be entirely opposed to it. Marxists, however, would view this capitalist 'stage' as a 'means to an end' and focus on the end-product view of socialism (Leftwich, 27). Leninism, in contrast “treats socialism as means and end” (Leftwich, 30), and does not view capitalism as a necessary 'stage' that must precede a socialist state (Leftwich, 31). Since Leninist ideas have been implemented under pre-industrial conditions, it would seem that this inevitability can be discounted (Leftwich, 30-31). In these 'end-product' conditions, it has been argued that Marxian modes of production are in direct opposition to those of capitalism (Chattopadhyay, 2319-2320).
There are those however who, having analysed Marxist theory, argue that it does not enter into opposition with capitalism on basic fundamental principles (Cohen and Graham, 25). This controversial claim cites a Marxist reliance on the same principle of self-ownership which is at the heart of capitalism – that “every person is morally entitled to full private property in his own person and powers. This means that each person has an extensive set of moral rights (which the law of his land may or may not recognize) over the use and fruits of his body and capacities, comparable in content to the rights enjoyed by one who has unrestricted private ownership of a piece of physical property ” (Cohen and Graham, 25). The self-ownership principle, far from being denied by Marxist theory, is actually a key tenet on which the theory depends, since without the concept of self-ownership, no case for 'exploitation' can be made (Narveson, 3). The Marxist inconsistency, and their departure from this principle in advocating forceful and collectivist solutions, argues Cohen, is the result of subsequently permitting false assumptions (Narveson, 5). From this standpoint, we can therefore see, that Marxism is not actually in direct theoretical opposition to capitalism in principle, but only due to additional maxims that do not logically follow from these first principles (Cohen and Graham, 26). The capitalist, provided he remains true to the principle of self-ownership, remains consistent in furthering his self-interest, driven by his profit motive. Only by exploiting coercive (e.g. statist) power does he sever the connection with his principle, and one could argue that this would anyway invalidate his claim to be a capitalist at all (Cohen and Graham, 26). Similarly, according to Cohen, the Marxists - by basing their counteraction of exploitation not on a negation of self-ownership, but on its affirmation - can be seen as more fundamentally different from those forms of non-communistic socialists who came before and after Marx, than they are from capitalists (Cohen and Graham, 28-29). Perhaps, then, some 'versions' of socialism are more opposed to each other than they are to capitalism? We will continue to look at this theme as we examine other major types of socialism.
If Marxism-Leninism can be summarised as 'the abolition of private property', then many would argue that market socialism can be seen as an admission that the economics of communistic socialism do not work (Lavoie, 1990: 73). This revisionist approach, coupled with a retention of the capitalist concept of markets, is an attempt to adapt the model of socialism to one which can truly succeed in delivering equality and social justice, by the use of markets and the pricing system, which - market socialists argue - can best determine the methods of implementing the ideal of 'the greater good' (Lavoie, 1990: 73). Market socialism is then further subdivided according to how the market system is 'used' within the framework of socialism. We then see the computational approach, the more praxeological 'incentives approach', and the discovery approach (Lavoie, 1990: 74), famously espoused by one Noam Chomsky (Chomsky, 1996). The computational approach would appear to favour the use of markets only in order to determine the optimal configuration of a socialist system. Oskar Lange, a pioneer in market socialism, talks of his belief that “the market process with its cumbersome tatonnements appears old-fashioned” and argued for computers to be used to perform the necessary calculations to determine the suitable settings (Lavoie, 1990: 75). These computations are not really market-driven, and without the ethical justification for the capitalist element, they amount to no more than a feedback instrument for a socialist system. There is no capitalism, since the control is performed by a central planner, and individual self-interest is nowhere to be seen. The incentives approach, by focusing on human action and providing for individual motivations, comes closest to a merger of socialism with capitalism, but would still be framed within a collectivist, utilitarian justification: that incentives as means lead to equality and collective satisfaction as an end. The discovery approach would indicate compatibility with - not opposition to - capitalism, since the discovery process “by its very nature cannot be centrally directed”. But because it does not abandon the 'greater good' tenet – an epistemological choice before it is political – even this most bold of market socialist initiatives cannot ultimately be seen as anything other than a subversion of capitalist principles.
Due to length constraints, and anticipating terminological confusion, this paper omits an analysis of mutualist and anarcho-syndicalist models, often seen to be closely related to market socialism. But of market socialism it can certainly be said that although there are veneer elements of capitalism that appear to be constituent, the pragmatism of the theory overrides the concept of individual self-interest just as much as Marxism. Nominal private ownership of property seems overridden by the collectivist utilitarian justification for the system, in opposition to capitalist principles.
This 'worst of both worlds' approach appears to characterise the other of the hybrid systems – that of Fabian socialism. Fabian socialism
“The intense practicality of Fabianism was based instinctively upon Burke's remark that the essence of statesmanship is in knowing how much of an evil to tolerate” (Lewis, 448)
Fabian socialists are those that 'accept' the 'evil' of a capitalist economy in the present, in order to slowly dilute and subvert it. This is not just the simple pragmatist compromise it might appear, since their hatred of capitalism is strong and genuine, and based on moral principles rather than consequentialist rationales (Lewis, 448). Rather, it is like a doctor trying to heal a sick person, and hoping that the recovery can precede the treatment. To complete the analogy, the Fabian socialist method amounts to treating the capitalist system as a malaise, and then rather than cutting out the infection, they allow it to live, in order to study it and then diminish it gradually over time.
Since they view the gap between the rich and the poor as the worst consequence of a capitalist economy, the Fabian socialists have created a paradigm whereby they allow capitalist wealth to accumulate, in order to progressively tax that wealth and redistribute it (Lewis, 448-451). It is this egalitarian streak which is perhaps the only tenet common to all forms of socialism (Watts, 1869: 5-6).
Fabian socialism can be seen to have its roots in the writings of John Stewart Mill and his “Principles of Political Economy” (Lewis, 444). “As long as the middle class does not align with the rich to use state power against the labouring class, Mill [believed] the advance of the greatest happiness for the greatest number can still proceed within a liberal-capitalist context” (Sarvasy, 1985: 316).
Unable to integrate his normative judgements with scientific formulations (Sarvasy, 1985: 312), Mill developed a model which has been called “proto-corporatist” (Bannister, 1987). Mill for example, argued that the state could own corporations in order to best manage collective priorities and administer a program of gradual nationalisation of land. In this way, we can see again that capitalism and socialism are often hybridised rather than polarised.
Mill did not subscribe to the same evolutionary theory of capitalist society into socialism as Marx. Rather he supported the formation of workers' cooperatives and the development of socialist practices to occur concurrently with the development of the capitalist model (Sarvasy, 1985: 313). Quite how a dual evolution of socialism 'alongside' or 'within' capitalism was (or is) supposed to occur, Mill is not so clear on, but he did elaborate complex pragmatic models of how the two can be combined (Sarvasy, 1985: 319-323). Whether the dominant Fabian socialist regimes really intend 'socialism' as an 'end-product' - or have simply found a way to make profits for themselves and their cronies while touting the ideals of, and paying lip-service to, the ideals of the “greater good” - remains to be seen, and will have to be the subject of another research project.
Socialism has been shown in broad terms to be a collectivist approach to social organisation which stresses the primacy of the group over the individual. This definition excluded from our analysis anarcho-socialist and mutualist groups that justify models of human organisation in terms of their benefit to the individual (Proudhon, 1840: 281).
From an ethical standpoint we have seen socialist theorists who held that “capitalism focuses on production as a means to make profits, whereas socialism regards satisfaction of needs as the end production must serve” (Mueller, 1982: 156). It has been shown that not all socialists advocate the abolition of private property in order to do this. What appears to matter more to most socialists than ownership is the utilitarian conception of “the greater good”, and if, pragmatically, that is deemed by socialists to be best served by the temporary use of capitalism, then they will do it, as we have seen in the case of the Fabians, and to a lesser degree the 'market socialists':
“Society is fully entitled to abrogate or alter any particular right of property which on sufficient consideration it judges to stand in the way of the public good” (Sarvasy, 1985: 315). Many on the socialist side of the argument can be seen to oppose capitalism primarily because of the perceived evils of 'abuses by cartels' (Krisztics, 1935: 132). In the interest of fairness, it should, here in conclusion, be noted that if this charge is to be considered then one must first admit that such abuses are usually only enabled by a collusion of corporate and governmental powers, and so the term corporatism might be better suited as a descriptor of the cause of such abuse. Unless coercive force is being used, what constitutes 'abuse' is a subjective matter, and whether we're talking about corporatism, state-capitalism or market socialism, all involve the forceful intervention of government power into the economy, in opposition with capitalist principles.
We have touched upon how, ultimately, the consequence of socialist thought is that it removes the incentive for the energy and effort of the individual (Pearson, 1885: 14). This removal can be seen as in opposition to the central tenet of capitalism – that of self-interest. Empirically, the very existence of the most widespread current political paradigm – that of the 'mixed market', the 'progressive society' and the 'welfare state' - is incontrovertible evidence that socialism and capitalism can mix in some way. In fact, many commentators have indicated that the line between state socialism and state capitalism (corporatism) is very blurred (Mueller, 1982: 158).
However, the argument can also be made that even Mueller's crossover models are mythical contradictions, and attempts to realise them are really just 'houses of cards' which are unstable and cannot last. There does appear to be a large amount of contradiction (and opposition) inherent in the models, which Mueller himself acknowledges.
“The contradiction remains that in state-capitalism production is social, i.e., designed for society as a whole, while the profits flow to private owners without any moral justification such as risk, innovation, etc. In the long run, therefore, this type of monopoly tends to degenerate into a combination of predatory capitalism and inert bureaucracy“ (Mueller, 1982: 160). Ultimately, Mueller posits, “of two things only one is possible: either a market mechanism and competition, or regulation (planning) and monopoly. It is for this reason that any conflation of the two opposites [of socialism and capitalism] is inherently unstable” (Mueller, 1982: 159).
We have examined the traditional dichotomy of socialism and capitalism and found that many socialist models mix elements of both. It appears that some of these models may be unstable, however, which would point to the oppositional dichotomy being correct after all – that is to say, either one imposes socialism, or one 'allows' capitalism – the mixed-market system cannot last for long. However, at this historical juncture, it would perhaps be naïve to claim praxeological certainty as to which system – capitalist, socialist or a mixed-market system - may have the greatest longevity, since all three paradigms have appeared at different times and then collapsed. Dogmatic faith in the justice of egalitarianism and likewise in the ability of free markets to meet the needs of a polity (what might be termed market-absolutism) seem equal follies.
There is, however, a lot of evidence that socialists have been, are, and will be opposed to capitalism...when it suits them.
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