Those Alternative Socialist “Stimulus” Plans

There are, of course, other ways to “support and stimulate” the declining US economy: those that congressional debaters, presidential advisors, and the dutiful media never discuss.  All the Federal Reserve and the US Treasury ever do is justify their functions as lenders and spenders “of last resort” (when the private sector will not).  Neither ever mentions that the state could stimulate the economy if it became the employer and producer of last resort (when the private sector lays off and cuts back).  The carefully stage-managed passage of Obama’s economic policy package avoided any troubling consideration of all the stimulus roads not taken.

The various sorts of more-or-less socialist alternatives are reviving from thirty years of hibernation.  They swirl just below the surface of public life: direct products of global capitalism’s deepening crisis and the continuing failure of official US policy responses.  Soon those alternatives will enter the public consciousness and debate here as they already did in Latin America, Europe, and elsewhere.  The anti-capitalist demonstrations, general strikes, and new political movements abroad that raise socialist demands there have their impacts here too.

One kind of socialism — that focused on nationalizing formerly private enterprises — has already broken through in the US.  The government nationalized some large financial enterprises and public debates weigh more nationalization in finance, in the auto industry, and beyond.  The knee-jerk accusation — that such talk is socialistic — no longer stops the debates.  Where, we may wonder, will nationalization stop?

Another kind of socialism remains taboo — state hiring of workers for whom no private sector jobs exist.  That idea is still unspeakable.  The fact that FDR did it in the depths of the Great Depression makes no difference yet.  Hiring the unemployed for state jobs would put the money paid for their wages directly into circulation (which is what loans to banks failed to do).  It would immediately mean many resumed mortgage payments and many fewer foreclosures.

Growing state employment may confront private capitalist corporations with new competition.  Fear of that competition trumps those corporations’ desires for the new customers that a state jobs program would provide.  So most media keep mum about a mass government jobs program and officials follow suit.  However, just as what was unspeakable six months ago — bank nationalization — is being discussed now, the ban on discussing public employment for the privately unemployed may be broken soon.

Then there are socialists for whom nationalization and public employment programs are not enough.  Their preferred stimulus program would go beyond lending and spending more and taxing less (policies so far unsuccessful).  They want to reorganizeproduction  — to change how goods and services get produced — as well as employ more people.  The change they favor would establish state enterprises where workers function as their own collective board of directors — rather than having directors be other people accountable to shareholders and/or government officials.  They would likewise provide financial incentives for parallel reorganizations in private enterprises.  For them, replacing a capitalist organization of production by a socialist one is the best solution for today and for a future freed from capitalism’s crisis-prone instability.

For example, they say, had workers been their own directors in the 1970s, they would not have stopped raising workers’ real wages while their productivity kept rising.  If wages had not stagnated since the 1970s, neither household debt nor corporate profits would have soared to dangerous, unsustainable levels.  They link those profits to the stock market bubble that burst in 2000, and they link out-of-control debt plus wild financial industry profits to the real estate bubble that burst in 2007/8.  These socialists also argue that enterprises run by their employees would be less likely than capitalist firms to fire workers, foreclose on homes, and move production overseas: actions that today spread and deepen the economic crisis.  Lastly, the production reorganization these socialists propose would require workers to become skilled at boards of directors’ tasks (deciding what to produce, where, and how; and distributing the profits).  They cap their argument by saying that economic democracy on the job is a condition for real (as opposed to merely formal) democracy in politics.

Remarkably, one part of Obama’s just-passed stimulus program does combine an immediate crisis response (establishing a new health program that will inject more money into the economy) with reorganizing part of the economy.  A new federal research council will get $1.1 billion to “compare drugs, medical devices, surgery, and other ways of treating specific conditions.”  Beyond stimulating the economy by hiring researchers, buying equipment, etc., the new council also begins to reorganize health care by evaluating and publicly reporting which among competing treatments for a disease is actually the most effective.  If allowed to function, this new council will challenge many corporate advertising claims for the medicines, medical devices, etc. that they sell.  Independently determining and publicizing the best treatments could lower huge US medical costs for individuals and businesses (which far exceed those in all other advanced industrial economies).  Of course, corporations that fear losing sales will likely undermine the new council.

Corporations will also fight efforts by socialists to reorganize production.  Capitalist enterprises would be threatened because inside reorganized enterprises — let’s call them socialist — worker/directors would create very different working conditions for worker/employees.  Because workers in socialist enterprises would be treated differently, they would produce different qualities of output and use the profits of their enterprises in different ways.  Suppose capitalist enterprises had to compete on a level playing field with such socialist enterprises.  US consumers would then have real choices — for the first time — between goods and services depending on what kind of production organization they emerge from (much as they can now choose depending on where commodities are produced, how organically they are produced, whether they are fair-traded, etc.).  US workers would then have real choices — for the first time — between alternative work lives.

In response to today’s capitalist crisis, government policy could move in socialist directions toward more nationalization, more public employment, and a socialist reorganization of production.  This policy would combine an immediate crisis response with solutions for its longer-run causes and deeper foundations.  By avoiding and delaying the public debate over such socialist policy alternatives, the powers that be subject the vast majority to the ever larger social costs of their system’s crisis.

Rick Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Be sure to check out Rick Wolff’s new documentary film on the current economic crisis, Capitalism Hits the Fan, at