The Economy

At the heart of the socialist approach to the economy is a preference for common or collective ownership over private ownership. Such a view sets socialism apart from liberalism and conservatism, which both regard private ownership as natural and proper. Socialists criticise private property for a number of reasons: 

• • Property is unjust: wealth is produced by the collective effort of human labour and should therefore be owned by the community, not by private individuals. 

  • It breeds acquisitiveness and so is morally corrupting. Private property encourages people to be materialistic, to believe that human happiness or fulfilment can be gained through the pursuit of wealth. Those who own property wish to accumulate more, while those who have little or no wealth long to acquire it.

  • It is divisive. It fosters conflict in society; for example, between owners and workers, employers and employees, or simply the rich and the poor.

Socialists propose either abolishing private property and instituting common ownership of productive wealth, or balancing property rights with community interests. Pioneering socialists like Marx and Engels envisioned eliminating private property to establish a classless, communist society as an alternative to capitalism. They advocated collective ownership of property for the benefit of humanity, although they provided few details on practical implementation. When Lenin and the Bolsheviks took control in Russia in 1917, they believed socialism could be achieved through nationalization. By the 1930s, Stalin's 'second revolution' led to the creation of a centrally planned economy and state collectivization in the Soviet Union. This resulted in 'common ownership' equating to 'state ownership' or 'socialist state property' as per the Soviet constitution, marking the rise of state socialism. Social democrats also see the state as a means for collective ownership and rational economic planning. Nationalization in the West, however, has focused on creating a mixed economy instead of full state collectivization. For instance, the post-World War II Attlee Labour government in the UK nationalized key industries like coal, steel, electricity, and gas to regulate the economy without complete collectivization. Since the 1950s, socialist parties in parliaments have moved away from emphasizing ownership politics, instead defining socialism in terms of equality and social justice. 

Socialists’ view of the economy 

● Socialists differ in their attitude to capitalism. Revolutionary socialists like Marx and Engels argue that capitalism distorts human consciousness and leaves the worker ‘deformed’, with the proletariat exploited by the bourgeoisie.

● Revolutionary and democratic socialists want capitalism abolished and replaced with an economy based on collective ownership of property and the workers controlling the means of production.

● Revolutionary socialists argue that equality can be achieved only with the abolition of private property and the common ownership of the means of production with workers’ control.

● Revolutionary socialists argue that any attempts to reform capitalism will completely undermine the core objectives of socialism. Luxemburg maintains that the exploitative elements within capitalism are too strong.

● Marx and Engels argued that capitalism’s innate contradictions and crises mean that its collapse is inevitable. This is a predominant theme within revolutionary socialism.

● Democratic socialist Beatrice Webb argued that equality of ownership would equate to extensive state nationalisation and not the workers taking direct control. She preferred a paternal socialist governing class.

● Social democrats disagree with revolutionary socialists and democratic socialists and argue that capitalism should not be abolished but reformed.

● Social democrats argue for a mixed economy of state and privately run industries. The state would regulate the economy using Keynesian economics to maintain growth and full employment.

● Social democrats wish to reform the inequalities of capitalism via the welfare state, which would redistribute wealth.

● Social democrats like Anthony Crosland focus on social justice rather than common ownership and emphasize that the state must manage the economy wisely so that its benefits can be shared on an egalitarian basis.

● Social democrats wish to redistribute wealth, resources, and opportunities via public ownership and extensive public services that would be financed by progressive taxation.

● The Third Way embraces aspects of the free market and abandons top- down state intervention. It envisages private enterprise being involved in the delivery of public services, as in the private finance initiatives instigated by New Labour.