The Socialist Economy

Question 1

How do Socialists agree over the economy?

Answer 1

Socialists (Marxist/SD’s) agree on problems with capitalism:
- creates division/conflict through class system
- creates inequalities of wealth/poverty
- leads to selfishness, greed, materialism, individualism
- Too much competition/lack of cooperation, collectivism, fraternity/solidarity
- all needs to be fundamentally changed

Socialists (Marxists/SD’s) need a more socialist economy:
- reduce/end importance of class system
- end inequalities of wealth/poverty; wealth for all
- end selfishness, greed, materialism/individualism
- characterised by cooperation, collectivism, fraternity and solidarity
- involves workers control.

Question 2

What are Marxist opinions on the economy?

Answer 2

• Dialectical process consists of a thesis, antithesis and synthesis. Original harmonious thesis replaced by two mutually antagonistic and competing antitheses. Eventually destroyed - new unifying synthesis achieved harmony is restored. This happens over and over
• Competing forces lead global economy to ever higher and more productive/efficient stages of development. This historical process is known as Dialectical Materialism.
• Mode of production forms economic base, whilst political, social, cultural, legal/religious features are known as the superstructure.
• Socialisms a transition stage between capitalism and communism
• Marx: history = meaning, direction or purpose - ultimately arriving at communism, restoring a harmonious non-class-based society.

Question 3

Marxist ideas: Alienation

Answer 3

work = depersonalised/unfulfilling. Labour is a commodity, people only work for capitalist profit. Workers are alienated from the goods they make/psychologically separated from the nature of their own lives.

Question 4

Marist ideas: Class Conflict

Answer 4

• Exploitation is inherent within the capitalist economy. Marx devised the labour theory of value. Capitalist profits are only realised by extracting ‘surplus value’ from the work of labour. This surplus (profit) represents a form of ‘organised theft’ from the workers, which leads to resentment.

Question 5

Marxist ideas: Economic Crisis

Answer 5

• Surplus profit diminishes over time, as technology is used more to replace workers.
• Capitalism suffers economic crises on a cyclical basis. Falling profit – due to dependency on technology - means each economic crisis gets worse.
• The working class face an economic crisis where choice is ‘starvation or revolution’. Will rise up in revolution/seize the means of production.

Question 6

Marxist ideas: Social revolution

Answer 6

• Marx: socialist revolution only successful in developed capitalist economies, working class acquire ‘class consciousness’. This will lead to full workers control of the economy.
• Luxemburg partly disagreed with Marx, believing they would have to organise through Socialist parties/trade unions and then seize control of the economy through an uprising that would involve revolutionary violence.

Question 7

What did Marxist Leninism accomplish in terms of Communism?

Answer 7

Communist parties came to power in underdeveloped capitalist economies:
- Priority was industrial development/modernising economy, before socialism.
- Lenin did this through mixed economy; nationalising heavy industry/leaving agriculture and small businesses private.
- Organisations (called collectives) were run by the state, not working class. Luxemburg opposed this, Communist organisations should be federal. Avoids concentrations of power.
- Stalin, pursued industrialisation through nationalising the entire economy run by the Communist state. These industries were controlled by the state, not workers
- Successful in achieving early industrialisation, found to be unsuitable once economies became more complex/advanced. – — Ultimately failed

Question 8

What are the opinions of Social Democrats on the economy?

Answer 8

• State was a neutral body, representative democracy was spreading, capitalism appeared capable of creating sufficient wealth for all, made SD’s think socialism could be achieved through evolutionary means.
• Needed to be elected and implement socialist reforms. With a form of workers control of economy, would only be partial.
  Originally, believed this strategy could deliver full socialism. Many socialists downgraded expectations. Not possible to replace capitalism; rather reform it. Unsuccessful.
• Sought to get welfare states, managed economies, corporatism/legal protection through reform. Sought equality of outcome, not socialist control and ownership of the economy. SD’s came to partially accept the presence of a capitalist economy.
• Accepted capitalism produced increased wealth, state needed to redistribute this wealth equally.

Question 9

What were the means of Reform for Social Democrats?

Answer 9

Means of reform were:
- Regulated economy, deliver low unemployment/high levels of consumer demand – Keynesian demand management
- Strong welfare state/ progressive taxation to redistribute wealth- Crosland.
- Mixed economy. Essential parts would be nationalised so were available at affordable prices/used to create higher employment and less unemployment and damaging economic recessions - Webb
- Corporatism: cooperation between labour, business and state to ensure an efficient economy. Prevent inflation, workers gained better conditions – pensions etc.
- This was partial workers control.

Question 10

What were the issues Social Democrats faced?

Answer 10

Problems:
- The welfare state was too expensive at a time of economic stagnation.
- Nationalised industries were inefficient and expensive.
- Where corporatist structures weren’t introduced managed economies delivered high levels of inflation, falling economic growth and unemployment. led to declining levels of support for social democracy.
- heavy industry was typically replaced with service sector activities.

Question 11

What are Third Way opinions on the economy?

Answer 11

• Continue with free market economics created large amounts of wealth. little interest in workers control of the economy.
• State diminish the worst excesses of the free market economy, whilst using education and training to make the national economy more competitive. Enabling state – helping poor to access the economy.
• Poverty eliminated through a capitalist economy, combined with measures introduced to promote social inclusion e.g. the minimum wage.
• Marginalised groups incorporated into the workforce through the enabling welfare state.