Socialist ownership of the means of production is ownership by all workers. Capitalists cease to exist and workers cease to be their employees.
Ownership by workers of necessity has to be collective ownership by society as a whole. Modern means of production cannot be divided up among workers like the hand tools of old. They have to be owned and used in common. They could of course be parcelled out to groups of workers (eg, workers' cooperatives). However, if they were, the level of ownership of each worker would be considerably constrained. (This is discussed in more detail below.)
Social ownership is central to removing the shackles that hold back the economy under capitalism. Society can now control the economy and be free of the anarchy of capitalism. And production is aimed at maximising the satisfaction of human needs rather than the profits of capitalists.
In another sense socialist ownership is highly individual. Collective ownership is not ownership by 'the collective', it is joint ownership by individual co-owners. This is reflected in the fundamental change in the position of the worker. If workers own the means of production they cannot be means to their exploitation. They have to be means to their fulfilment and development both as producers and consumers. As producers work becomes a free and self-affirming activity. Workers are now individuals whereas before they were part of a 'collective' mob of non-owning wage earners employed by a small minority of owners. With everybody an owner, socialism is genuine free enterprise. Co-ownership is also reflected in the distribution of the final product, with workers sharing a similar level of prosperity.
We will now look at these two aspects of socialist ownership in more detail, looking first at the collective and then the individual aspects. We will then end with a discussion of how social ownership rules out markets for means of production.
Collective aspect of ownership
As just mentioned, the joint or collective aspect of ownership has two features which I think are important - social control and production to maximise the satisfaction of human needs.
By social control I mean that under socialism the economy is no longer something with a life of its own that can spin out of control. As a result there will no longer be the cycle of booms followed by recessions.
The basic reason for this is that unified ownership ensures that there will always be effective demand for the output of a fully employed economy. My way of understanding this is in terms of the following two differences between the socialism and capitalism.
Firstly a socialist government would have no shortage of measures at its disposal to rectify any macroeconomic problems. By contrast, a capitalist government has very few at its disposal. In fact they are mainly confined to the very blunt instruments of fiscal and monetary policy; and with these it has to rely on economic information that is skimpy, inaccurate and out of date. The ineffectiveness of economic policy under capitalism is often described by economists as pushing on string.
Secondly under socialist ownership there are no separate owners acting at cross purposes to each other. This would appear to be a major problem in times of crisis or economic downturn when companies and individuals cut back on purchases and call in their debts as they try to shore up their position. [In 'game theoretic' terms, this is an example of the so-called prisoner's dilemma problem where the 'rules of the game' are such that each individual player is forced to adopt a non-cooperative strategy that delivers to them an outcome that is inferior to the one they would receive in a 'game' that enforced a cooperative strategy.]
Maximizing the satisfaction of human needs
Maximizing the satisfaction of human needs rather than individual profit basically means that production is more efficient. In other words we produce as much output as possible and we produce the goods and services that people want. Production for profit, on the other hand, leads to a far inferior outcome.
This view of course is very much at odds with the "invisible hand" theory of the market. According to this theory the outcome you get when capitalists maximise their profits comes fairly close to an efficient outcome. Elsewhere when I discuss the economic superiority of socialism, I look at why these two actually diverge considerably. The essential point is that cooperating is superior to competing.
Socialist ownership benefits the individual in two ways. These are control of one's owns labor and an entitlement to an equal share of the final product - shared prosperity.
Control of your own labor
Under socialism we no longer have to alienate our labor. We no longer hand it over to capitalists in return for the means of physical survival. This means that we are free to transform work into something that is satisfying and empowering rather than something that is irksome and soul destroying.
Work becomes something that is an end in itself rather than simply a means to earning a living. It becomes an activity that fully develops and exercises our abilities, and that especially includes our intellectual abilities.
Achieving such a transformation of work is essentially about ending the narrow division of labor, accelerating the elimination of routine labor and ending tyranny in the workplace.
Eliminating the present division of labor means ensuring that people have a fair share of the more challenging and cerebral tasks and also ensuring that people are not locked too narrowly into any particular field. So this is basically about eliminating the hierarchy of jobs where you have at one end jobs requiring the development and exercising of a lot of ability and at the other end jobs that require the development and exercising of virtually none. At the same time it is also about people not being stuck in a narrow field even if it is high up the task hierarchy. For example, there is no reason for people to be dentists, school teachers, computer programmers or airline pilots all their life.
The quality of work will also be enhanced by a decline in routine labor as a result of automation. Even without the capitalists, work can never be much if a high proportion of it is basically routine. In recent times labor has started to become less so. Half the workforce engage in jobs that require some kind of training and even the average routine job is probably not quite as routine as it used to be. And there are no technical reasons why most of this labor cannot be eliminated over a number of decades. It is basically about automating transport, distribution, retailing and hospitality, and completing the automation of manufacturing.
The tyranny one finds in capitalist organisations is due to the fact that owners at the top have to impose their will on non-owning workers. In an organisation of any size this means a hierarchical chain of command with bosses at the divisional, sub-divisional, plant levels and so on, being responsible to the boss above them. Most workers of course are to be found at the bottom level of this hierarchy.
Bosses at each level have a lot of power over their subordinates. They can hire and fire, promote and demote, tell people what to do and how to do it, bully them and generally make life difficult.
Having layers of bosses also serves to create a section of better treated workers who have a vested interest in the status quo. They have better pay and conditions and also a career ladder to climb.
However, under socialism with its very different system of ownership you have a totally different form of organisation and control.
Firstly, workers don't have to bossed. Because they control their own labor they want to do a good job. And as representatives of the collective ownership they are interested in ensuring that what is happening around them is in keeping with the public good (ie horizontal supervision).
There will still be some leadership or supervision roles assigned to individuals. However, in many cases they will be replaced by groups of workers making their own collective decisions.
To the extent that these roles remain they would be very different to present day bossing. I can think of five reasons off hand:
- There would be no power to dismiss, bully, demote nor unlimited power to decide how things are done.
- The rank and file would have a say over the appointment and removal of people in leadership and have extensive power to criticise.
- People with special expertise and experience can 'add value' to the labor of others, or have a mentor, role without having extensive power over them.
- Authority is not associated with monopolising information.
- Authority is not confined to a special management career cast.
I think control of one's labor should be characterised as a new freedom, a new right, as genuine free enterprise. This is an important point to score in arguments with neo-liberals.
Because they own the means of production, workers receive the full product of their labor. They do not have to 'share' it with capitalists. Part of this is received individually by the worker as private consumption while another part is assigned to collective spending on investment, pensions and public goods.
Everyone will share a similar level of prosperity. Firstly, there will no longer be rich capitalists. Secondly, income among workers will be far more equal for the following reasons:
- Overpaid management and supervisory positions are eliminated.
- As the old division of labor is eliminated differences in productivity diminish.
- There is a reduced reliance on financial incentives and more on intrinsic motivation. So the more productive people won't resent the less productive receiving a similar hourly wage rate or respond by reducing their own productivity.
- Pensions will be close to the incomes of workers.
There may be a need for pay differentials where there is excess supply or demand for certain kinds of labor. Excess demand would usually be a short term problem solved by training and by giving priority to automating less popular tasks. As for excess supply due to some particular activities being very popular, the problem would diminish as an increasing proportion of work takes on a rewarding character.
In a modern industrial economy production is socialised. The economy is made up of many thousands of workplaces specializing in the production of specific products. And the specific tasks performed by individuals within those organisations do not produce products on their own but contribute to a cooperative effort. Furthermore, the means of production are used collectively by the workers rather than workers having their own individual implements.
Dividing up means of production among individuals makes no sense, nor does dividing them up among groups of workers, eg by assigning the means of production of particular individual enterprises/workplaces to their workers.
The means of production used by our pre-capitalist forbears were mainly hand implements that could be owned and used by individuals in small scale production. This is not the case with modern means of production. For example, an electric power plant can only be operated in common by a group of workers. It cannot be divided up among them.
The power plant could of course be given to the workers employed in it. Or more generally workers could be given joint ownership of the company that currently employs them. In other words the economy would comprise numerous separate worker cooperatives.
Such a system would mean the continuation of market relations between separately owned enterprises. Workers income and the replenishing of their means of production would rely on the revenue obtained from the sale of their output. In other words it would be an economy producing commodities.
However, that would not be an effective form of working class ownership. Possession at the level of the enterprise constrains the kinds of possession that the individual can experience. It is totally at odds with eliminating the old division of labor because that requires workers to be able to move around and not be constrained by any particular organisation or activity.
This form of ownership would also be unsustainable in the long term. If worker's ownership is confined to the enterprise it would be lost if the enterprise went bankrupt. They would then become employees of other enterprises. Such bankruptcies would be just as common as they are now. They are high at the best of times and particularly high during recessions which would continue under such a system.
Like enterprises in any dynamic modern economy there is also going to be pressure to adjust to changing conditions and technologies. This will mean a change in labor requirements, both in number and in the range of abilities. So there will be a need for labor mobility that does not fit with ownership at the enterprise level. Ownership would become something you gain or lose depending on labor requirements.
Unless internally generated funds were sufficient for investment opportunities, the enterprise would have to issue shares or bonds for purchase by other enterprises or individuals. Shares would represent a partial relinquishing of ownership.
Market relations and the income flowing from them mean that those with the ability and inclination will be likely to undermine other people's full possession of the means of production (ie retain the hierarchical division of labor). Possession by the individual depends on a cooperative environment where people build each other up rather than pull each other down.
If workers' income depended mainly on the profitability of their enterprise, [and the hierarchical division of labor is still very much in place] you would expect that they would do what most non-controlling shareholders do and appoint on high salaries the kind of high flying executives they expect will increase the performance of the organisation. These will be the real owners and the workers will be like the mum and pop shareholders that already provide an increasing proportion of capital ownership. Workers would be better off with a portfolio of shares that spreads the risk. This will be much like present day capitalism - small share holders, insurance companies and banks with funds they got from workers, and entrepreneurs who use their executive control of companies to make billions from other people's money. All that is missing is old money - wealth possessed by the descendants of dead entrepreneurs; and time can fix that.
With this 'worker capitalism' there is no basis for equity of income however defined. Income will be dependent in part on luck in the market place. Output will have all the inefficiencies of capitalism plus some extra ones. [DN: explain. Excessive value is placed on the labor of incumbent workers relative to other inputs because workers cannot easily be moved. Will tend to purchase new capital rather than take in new workers who would share in the profits. Older workers very short sighted because they cannot capitalise their ownership when they retire. Experience of Yugoslavia.] It will be the same dog eat dog world.
Working class ownership can only work with a fundamental transformation of individuals where cooperation and mutuality reign supreme. There is no place for markets and competition in such a setting. For these reasons the means of production have to be owned jointly, and together with output cease to be commodities.
Just as physical assets cannot be separately owned, neither can financial assets. If you do not own a physical asset, you do not own the revenue if it is disposed of. Funds can be both given to a unit and taken away. There is no personal entitlement to these funds. This includes any arrangement where personal income is connected in any way to revenue levels of an economic unit. This does not completely rule out the possibility of personal appropriation. In the Soviet Union managers not only relied on their ability to siphon off revenue, but directly employed the labor and raw materials allocated to the enterprises under their control to build mansions for themselves and their patrons.
From The Socialism Web Site - http://home.vicnet.net.au/~dmcm