The Third Way. Ota Šik 1972
Our examination of Marxist theory – covering the leading ideas as enunciated by the founding fathers and the doctrine now officially accepted – has revealed a deep gulf between what is postulated and the present-day social reality’. Particularly vulnerable when confronted with the reality are the insistence on the ‘scientific justification for the necessity of socialism’ and the allied assumptions about the origins of the system and its basic features.
The conclusions drawn some hundred years back about the inevitable emergence of insuperable and ever-deepening economic and social contradictions which would, of necessity, lead to the revolutionary overthrow of capitalism have not been borne out precisely in the form envisaged. True, in revealing the economic basis of the conflict between the owners of capital and the wage-earners, the basic analysis of capitalism has proved substantially correct. The built-in confrontation of capital and labour persists, albeit in modified form, in the social structure. And to this day it is still a source of dislocation – the modern ills of capitalist society. But Marx’s forecasting of how his fundamental contradiction of capitalism would evolve has been invalidated by the actual course of events, and by the emergence of a capital surplus in the leading capitalist economics.
Capitalism was not, as it turned out, driven to the brink of revolution either by working-class ascendancy in society or by impoverishment, or even by crises sapping the forces of production. While it is true that the working class increased numerically, the share of manual workers in the total of productive wage-earners showed a marked decline. Moreover, the share of all productive wage-earners in the population of the leading industrial countries also shrank, in some cases to little more than 50 per cent. The capitalist social structure, far from being simplified, became considerably more complex.
Once the capital surplus appeared, with variable capital expanding faster than the workforce, and with the trend towards full employment firmly established, the economic soil of impoverishment was removed. And even though the wage-earners still have to fight the vested interests of capital for a bigger share in the national income, their living standards have undergone a radical change. True, the rise in consumption by the working population is governed, in the long term, by the necessary macro-balance between consumption and investment, which perpetuates strong class differentiation in the consumer pattern. But even with this macro-balance continuing to be a matter of ups and downs involving incalculable economic wastage, there are no scientific grounds for describing the consumer trend as one of impoverishment among the wage-earning population.
Undoubtedly, consumption in the leading capitalist economics is still marked by social contrasts far exceeding the type of differentiation attributable to variations in work performance. The grinding poverty of the socially deprived even in the super-wealthy countries stands in glaring contrast to the lavish spending in ‘high society’. And the big differences in income and consumption between regions (e.g. the south and the north of Italy) or races (blacks and whites in the United States) are symptomatic of the uncontrolled nature of the distribution process. Yet these differences are not growing; rather, as extreme survivals from the early days of capitalism, they are being reduced – true, the process is, for the most part, unnecessarily protracted and erratic.
The capital surplus has also imposed substantial changes on the process of macro-economic reproduction. The cyclical crises of over-production recurring at ever shorter intervals with growing severity, with all the social misery entailed, have yielded to a special type of inflationary movement taking place in a long-term climate of rapid economic expansion. This wave movement is symptomatic of a macro-production structure developing without co-ordination and at odds with the macro-income growth. Inflationary phases in consumption have their counterpart in recessions due to over-investment. The losses incurred, and the accompanying social insecurity and tensions, while certainly not comparable to the disastrous consequences of the old crisis days, still bear witness to the unresolved clash of interests in the capitalist system and the absence of social control over macro-development.
Contrary to Marx’s expectation, the social and economic contradictions of capital have not been aggravated, impoverishment has declined and radical movements have not taken hold everywhere. The dogmatic clinging to the old theories and their application in communist propaganda to the developed and underdeveloped countries alike has only served to discredit socialist ideas in the industrialized capitalist world. Nor is the propaganda even effective in exposing the true causes of impoverishment in the developing countries; it never gets to the root of things and gives no accurate and differentiated picture of how to cope with the process.
Undoubtedly, with some modifications of course, the situation in the developing countries bears out some of the Marxist findings. And not only in these countries, but also in many industrialized parts of the world where certain areas or sections of the population have not been fully involved in the modern production process, radical ideologies and political movements of the type envisaged find fertile soil. Nevertheless, it must surely be obvious to anyone – except those whose political ascendancy is dependent on denying the fact – that impoverishment is a product of a specific phase in capital development, connected more with the industrialization process than with the advanced stages of capitalist evolution.
Of course, policies allegedly designed on communist lines to overcome exploitation and poverty in the underdeveloped countries of the capitalist world, and implemented in a similar situation in Russia, can accomplish many things – they can accelerate industrialization, introduce land reforms and rationalize the use of the land, abolish feudal or semi-feudal hangovers in the social structure, establish a new national bureaucracy and a political elite, bolster the power of a particular nation and stimulate its national awareness. From the nationalist standpoint, all this may be regarded as progressive. By socialist standards, however, it can be classified merely as a specific type of accelerated industrialization on state monopoly lines which, thanks to its one-track nature and top-heavy bureaucracy, far from introducing any elements of socialism, involves its own peculiar brand of impoverishment and oppression.
Inevitably, in the circumstances, freedom of opinion and the assertion of sectional interests are stifled, rank-and-file workers are alienated economically and politically, while the power elite exercises its remote bureaucratic control. In short, after the Soviet revolution, communist revolutionary theory met the fate that befell the ideals of freedom proclaimed by the bourgeois class – it turned into a conservative state ideology, its ‘socialist’ veneer masking what the philosophers term ‘false consciousness’.
That the revolutionary ideology – blended with ideals of national, anti-imperialist liberation – can kindle the emotions of many in the industrially backward countries indicates the immediacy behind the goals of national independence and the more rapid advance of the national economics. It would be necessary to differentiate more precisely in studying the revolutionary movements, distinguishing particularly between the course of state monopoly controlled by bureaucratic power and the socially progressive, democratic trends. In any case, the type of economic, political and cultural set-up peculiar to the developing countries bears no relation to socialist measures appropriate to the needs of industrially and culturally advanced countries. It may well be that a developing country can follow its own specific road to socialism, but it cannot skip the industrialization phase, nor can it fail to evolve, as far as possible, a high degree of division of labour with an accompanying development of the market mechanism.
In the industrialized world of capitalism, the fact that advocacy of socialism is so often tied to the image of the state monopoly system in the U.S.S.R. almost inevitably brings discredit upon the profoundly humane quality of genuine socialist ideas. That the prospect of a revolutionary dictatorship of the proletariat and a state takeover of the means of production holds little attraction for the working people is hardly surprising. An ideology advocating these as measures designed to banish exploitation and impoverishment of the workers is miles removed from the actual economic and social situation in the industrial countries; nor are the undeniable facts about the economic and political situation in the communist countries likely to enlist any great support for communism. It is sad to observe how their revolt against the ills of modern capitalism continues to lead sections of the young generation to seek radical solutions by joining the communist ranks, thereby cutting themselves off from the most progressive human interests of their own people.
The more successful the state monopoly system has been in communist countries, primarily, of course, in the Soviet Union, in promoting a rapid build up to great-power status in national terms, the less convincing its claim to serve as a model in tackling the excesses of the industrialized consumer society. The monstrous bureaucracy, the one-sided insistence on growth, the overriding priority accorded the military build up, the imperialistic aspirations and interventions by the Soviet Union in foreign policy, all these bring socialism into disrepute in the West and repel the general public. To lay the blame on ‘bourgeois propaganda’ is to beg the question.
Even the non-communist advocates of radical socialist policies, the far left among social democrats, for instance, have nothing approaching a social model of their own to offer, hence they are almost inevitably liable to be suspected of having, as their ultimate purpose, the introduction of bureaucratic state ownership combined with totalitarian command planning. Any such suspicion is likely, nowadays, to give socialism a bad name among both wage- and salary-earners, especially those employed in the most progressive growth area, the tertiary sector.
Attempts by many youth groups to win support among workers for the praiseworthy purpose of removing the brakes on progress inherent in capitalism, against the consumer rat-race, over-industrialization, and the bureaucratic Establishment, are bound to founder so long as they are unable to offer any positive picture to arouse public interest. The current theoretic confusion arising from endeavours to accommodate the old dogmatic communist concepts to the needs of modern society is becoming more and more confounded.
The only remedy, if socialism is not to be utterly compromised, is to make a clean break between the goals set and the image of communist state monopoly dictatorship. If moves in the direction of socialism are to be promoted, the communist blueprint must be discarded and a set of theoretically substantiated models genuinely adapted to the requirements of the industrialized countries must be produced – without, in so doing, indulging in primitive anti-communist attacks from capitalist positions.
Those young people in the West who regard frank, hard-hitting criticism of communism as playing into the hands of conservative capitalist forces, thereby weakening the socialist movement, and who, consequently, reject this criticism, have still to realize that this is the surest way to damage their cause. Their attitude implies that communism is, after all, a form of socialism that requires, perhaps, merely to outgrow its infantile disorders. The truth is, however, that the state monopoly system has been converted by its very nature into a repressive, inhuman regime which no piecemeal reforms can now ‘cure’. Radical measures could not fail to produce a different system which, in view of the way things have gone hitherto, it would not be appropriate to describe as communist.
It has not been possible within the limits of this book to give any comprehensive account of how I visualize a democratic, socialist society, although I have had to touch on the subject now and then to dispel any suspicions that my arguments against certain simplistic, often demagogic communist criticism of capitalism might be taken to imply tacit approval of this last system. While publication of suggestions for socialist models will have to wait, the reader should see my critique of official Marxism as an attempt to contribute to a genuine socialist transformation of capitalism. The point is that the case cannot now be argued by pointing to the initial contradictions of the capitalist system, because the system itself has undergone substantial change.
An elementary principle in the method of scientific socialism is, in my view, to approach the social scene first with the basic interests of the working people in mind, then to pinpoint those vital conflicts which, in pursuit of these interests, appear ripe for revolution by means of changes in the system. I consider that the interests of all working people – not industrial workers alone, but all who do a job in society, that is, all ‘usefully employed’ people – should, in human terms, be the point of departure and focus of all work in the social sciences. In that case, where socialist goals are envisaged, research should be directed to detecting the areas of social conflict which hinder the advancement of these interests, to explaining why this is so and to seeking viable solutions. Pursuit of this basic purpose will, of course, be aimed against the interests of minorities which – in defiance of the now apparent contradictions – cling to the existing order merely because it enables them to assert their particular interests at the expense of the working people.
The continuing division of capitalist society into the vast majority – whose prime concern is with earning a livelihood, and who have an outright disinterest in capital – and the tiny minority whose entire interest centres on capital, represents, in my view, the most outdated, one might say fossilized, feature of modern capitalism. The contention that the few possess the special abilities and knowledge needed to run the system no longer holds water, because concentration has reached a point where ownership is so divorced from the function of capital that the capitalists as such have very little say in the disposal of their holdings. Interest is centred on the appropriation of a large slice of surplus value by owners of capital as a body, with a select few pocketing the lion’s share.
From this anomaly society stands to lose more and more as time goes on, with advance increasingly disrupted and subjected to one-sided pressures.
The disinterest of the wage-earners in capital development is the evident symptom of the persisting alienation in their attitude to the productive base of their working lives. In the old days, the threat of unemployment acted as an effective antidote to the irresponsibility and apathy prevailing in the workforce, in an economic climate where the bulk of surplus value was appropriated by others. This alienated pressure alone could ensure the effective employment of capital and the socially necessary efficiency of labour. Full employment, essentially an advance in the human sense, has, none the less, removed the social pressure making for the most effective utilization of society’s production resources.
The uncertainty and growing tendency to compromise now evident among managers – the men assigned, by virtue of their special training and skills, to make the all-important on-the-spot decisions about capital employment – illustrate in a most striking manner the untenability of a continued state of lack of interest. The old threats are losing their power, while wage increases and bonus schemes cannot banish the alienation. True, in many industrial countries nowadays the pressure is to some extent maintained by importing foreign labour. Yet the temporary and exceptional nature of this expedient itself indicates the need for a permanent, progressive solution, namely, overcoming the lack of interest in capital among the working people.
The alienated appropriation of surplus value, accompanied by alienation in the decision-making about its distribution, generates distrust and persistent strife over the allocation of income to wages and surplus value. Since the outcome is, naturally, far from objective, we get a combination of inadequate wage trends, and exaggerated saving, exaggerated wage demands, inadequate flow of investment funds and inflationary movements. And there will be no escape from disturbances in the macro-equilibrium plus inflationary processes, involving loss to the national income, primarily at the price of neglect of pressing social needs, so long as income allocation remains the battlefield of contending interests.
Transfer of capital to collective ownership – converting interest in capital development from a minority concern to that of society at large – could be the first big step in overcoming capital alienation. With surplus value appropriation now a collective matter, the workers’ narrow wage interest would gradually become tied to interest in the effective employment of capital. Although conflict between immediate consumer interests and long-term accumulation would not be eliminated, it would no longer be rooted in social antagonism; being simply a matter of different motivations among people, it could be resolved in a democratic way.
Just as bureaucratic state ownership offers no remedy for alienation from the means of production, so responding to capitalist, or communist, alienation of human labour by crusading against economic efficiency – essentially a petty-bourgeois reaction – affords no solution for our problems. No resistance to technological progress, no renunciation of material consumption, no back-to-nature ideas can banish the conflicts now bedevilling social production. Radical groups wedded to these ideas are fated to remain sects, as incapable as religious sects of persuading the majority to change their ways. The present perversion of consumption, imposed by the weight of one-track interests, can be cured solely by democratic means, finding new channels through which the public can share, in growing measure, in economic and political decision-making.
As things are, however, with the producer interests calling the tune in economic affairs, and with an overriding voice in the political sphere as well, production efficiency, though necessary, cannot contribute to humanizing our lives. Human progress is confronted not only by the proliferation of absurd and unnecessary material consumption diverting resources from social, non-economic needs of a non-market character, but also by the widespread subordination of politics to these narrow producer interests. In the event of the structure of consumption and production being perpetuated in this one-sided form, we are likely to find the interests of industrialists and workers alike merging to erect an almost insuperable political barrier to any radical change whatever.
Whereas, under the existing company system, the mass of small shareholders represent no obstacle to the socially necessary economic course, the big, concentrated holdings stand in the way of any genuine democracy in political and economic decision-making. From the standpoint of property-owning, shareholding spread on a wide scale is no more of a problem than the growth of savings from earned income, but it certainly plays a significant part in the allocation of accumulation funds. The big holdings, on the other hand, endow the owners with a privileged status in political life and in moulding public opinion. Consequently, setting a ceiling on shareholdings and inherited wealth would be a notable step in the direction of a socialist transformation of society.
The power of big capitalists to bend political and economic policies to their will is more than equalled by the supreme authority enjoyed by the handful of top men ruling a communist state after the revolution has been accomplished. Placing the interests of power above all else, they are bound, sooner or later, to conflict with the interests of the population generally. But with none to challenge their authority, they can parade their arbitrary policies as being for the good of the people, while stifling any dissenting voices. As in the political world, so, naturally, in economic policy and command planning. Although central direction of income distribution and consumer trends in tune with the planned growth of the industrial structure is, in formal terms, a matter of balancing economic development, the consumer is a slave of the system, with no opportunity whatsoever for choice.
The economy can be harnessed to serve human ends only by democratically decided, long-term and indirect measures to steer the course of income, investment and consumption, using one or another variant of scientifically based macro-economic planning. By making institutional provision for elected representatives of non-producer interests to share both in drafting alternative plans and in the final choice, the democratic element could be substantially reinforced. The common good would then stand a better chance of prevailing over the weight of the particular vested interests. With massive private appropriation of surplus value abolished, and distribution of the national income a matter for public decision and control, little would remain of the economic basis for narrow or self-seeking interests to dominate the political scene.
Democratic planning on these lines could not ensure effective economic growth without a viable market mechanism. The market remains the indispensable yardstick of economic performance, a mechanism enabling society to enforce efficient production, and an instrument for correcting possible errors in planning. All hopes of advancing non-economic activities and interests, of tackling the problems of poverty and deprivation, of pushing ahead with conservation measures and cultural progress are unthinkable without an economy geared to the highest possible performance. And, with the existing character of work, that performance can be ensured only with the aid of the market mechanism.
Hence the market should not be weakened in its function, on the contrary, its shortcomings need to be remedied by more resolute anti-monopoly policies. At the present level of development, it is impossible to dispense with the principle of equivalence and overcoming scarcity through market relations and market prices. Whereas the market alone is incapable of steering the economy to serve the human interests of society and in this respect it demands macro-economic control, it should not be prevented from fulfilling its basic functions.
Nor, in the course of a transition to socialism, can the socially essential interests in founding and operating businesses be suppressed. Whereas private enterprise continues to flourish in small-scale industry and the service sector, the founding of big concerns is now, even in the capitalist West, seldom undertaken by individuals. New ventures are almost exclusively the preserve of existing firms, of banks and so on. Similarly, alongside the state under socialism, enterprise development would be the concern of co-operatives, collective-capital firms and banks.
The collective capital flow should operate on a market no less flexible than that of private capital. Measures would be taken to curb the excesses of speculation and parasitic dealings.
All in all, we must conclude that a viable socialist system cannot be built on dreams of transcending men’s real needs and interests. Sects dedicated to lofty ideas divorced from the social reality may be driven to violence in attempting to impose their will; but although now more technically sophisticated, their political impact cannot be much greater than that of the traditional anarchistic movements. Change can be effected in the social system only when the conditions are ripe, that is to say, when mounting conflicts and socio-economic difficulties have convinced the majority in the society that the measures will be in their interest.
Gradually emerging now in the leading industrial countries are majority interests favouring either the maintenance of certain features of the system or, on the other hand, advocating change. And here we may detect the contours of a future socialist order in four areas.
First, the growing concern of the majority with ridding business of the armchair capitalists and curing inflation generates a mounting interest in collective ownership. This tends to lessen the wage-earners’ lack of interest in capital development, to reduce their alienation from the production base and their indifference to the state of the economy. It is imperative, however, that dogmatic concepts of state ownership be rejected because that can result only in the rule of bureaucracy, with the working people alienated once more, and in extreme measure, from the source of their life and labour.
Second, we have the idea of democratically controlled macro-economic overall planning, with institutional provision for non-producer and producer interests to have an equal say. The course of economic growth could then be directed towards human ends. With majority opinion increasingly concerned with systematic measures to humanize society, centralized command planning of the Soviet type can offer no solution, since, far from extending democracy, its bureaucratic machine effectively suppresses the majority interest. Moreover, the economic wastage incurred by command planning retards, in equal measure, personal and social consumption.
Third, it is in the interest of the majority that the basic functions of the market should be preserved, with the introduction of planned macro-economic regulation and an intensified drive against monopoly practices. Measures to regulate the basic structure and expansion of the market would include a state incomes policy based on collective capital ownership, effective anti-monopoly policies, foreign trade policies, and so on, enabling a balance to be struck between needs served by the market and those outside its scope. There would also be better opportunities for the democratic consumer voice to be heard. Utopian ideas about abolishing the market should be rejected, since the outcome can be nothing less than subordination of the consumer to the producers and the stifling of any interest by the latter in the quality, efficiency and flexibility of their performance.
Fourth, democratic elements in political life should be reinforced, thereby tipping the balance against the weight of political parties and power elites, while also allowing equal representation of non-producer and producer interests in all political and economic institutions. Greater mobility of opinion around proposals for reform and planning, institutional safeguards against the accumulation and exercise of power, democratic representation based on scientific analysis of the pattern of interests, controls to ensure objectivity on the part of the media and extension of public control and debate – all these measures would signify greater democracy. They stand in glaring contrast to the monopolistic, authoritarian Soviet system where, far from being able to find satisfaction, the public interest cannot even be voiced.
The decision to embark on socialist policies of this nature can be made only by a popular movement. Assuming that they truly correspond with the future interests of the working people, the agreement and support of the majority are bound to be forthcoming. But any attempt by a minority to force genuinely socialist ideas on the majority (in itself an anachronism) is doomed to failure.
When an organized minority proceeds to take power in a situation where the majority is opposed to socialist change, there is no alternative to installing an authoritarian regime. Political repression is then inevitable, since – as history has proved abundantly – those who have once tasted power are, never willing to resign voluntarily and they live in constant dread of opposition. An undemocratic political regime is capable, at the most, of instituting state monopoly, but not a genuine, socialist system.
Minority groups dedicated to the violent overthrow of capitalism betray a misunderstanding or underestimation of the actual concerns and the climate of opinion among the people generally. There is no truth in the contention that bourgeois ideology and propaganda alone are responsible for instilling an aversion to socialism in the working classes of the West; far more effective in this respect have been the doctrines as propagated hitherto and the image of ‘socialism’ in practice.
Social change is not a matter for arbitrary decision. A movement of opinion in favour of change will grow only when conflicts emerging from the social structure generate a clash of interests and acceptance of the need to resolve them. Any theoretical investigation of these conflicts, of the progressive interests and the groups representing them, and of the means for tackling and resolving the conflicts, must take full account of the actual situation if it is to contribute to furthering the progressive elements and winning them for political action.
An ideology not attuned to people’s interests and experience will win no response from those to whom it is addressed. Communism, too, once destined to be the ideology of the working class, has fallen more and more under the sway of narrow power interests. In its ultimate rigidity, it has become alienated from the working people. Sooner or later, the truth of this matter will be appreciated by all genuine socialists.
Last updated on 10 April 2021