By Daniel B.

Today one hears all sorts of slogans placed under the banner of socialism: gender, sexuality, race, identity, ability. It is almost as though those contemporary voices who speak in the name of “socialism” would like to see anything but class or political economy be placed first in the arena of politics. It is often said that class or economics are “too reductive”, as though it were more important not to be “reductive” than to say what is true. When class or economics are mentioned, they are always cut with other considerations. They are made secondary. For example, capitalism plus race equals “racial capitalism”. It is as though it would be unacceptable to contemporary leftists to simply speak of class and the capitalist economy as such—as though the class inequality and economic exploitation on which capitalism (i.e., profit formation) is based would be OK, if only they were not “unfair” with respect to some criterion other than class (e.g., gender, race, ethnicity, ability, etc.).

What always set socialism apart from liberalism and conservatism was that its view of the world was based in a matter-of-fact understanding of the political economy and economic class system in which we actually live, instead of abstract ideals about “liberty” or “tradition”. That unique aspect is what gave socialism its realistic approach to politics, its strength, and inspired fear in the hearts of liberals, conservatives, capitalists, and the latter’s lackeys. Yet this realistic approach to politics is precisely what identitarian pseudo-socialism, which is actually just radical liberalism, sacrifices. It is as though a class of body-snatchers, in the language of Hollywood, have replaced socialism with liberalism.

In order for socialist politics to be effective, it must be rooted in political economy; it must adopt a matter-of-fact, class-first and economy-first approach, and discard the identitarian liberalism that is being marketed as socialism today. How could we do this?

Friedrich Engels’s formulation is particularly helpful here. In capitalism, production has been socialized in the sense that it is a global system of interconnected activities and processes that we are involved in in our work, but the appropriation of the proceeds (i.e., profits) of socialized production has not been socialized. On the contrary, the appropriation of profits remains privatized. The right to profits is the exclusive privilege of the owner of capital or the capitalist class. So, the task of socialism is therefore to further socialize appropriation of the proceeds of production (i.e., aggregate profits) as well, beyond capitalism. Engels writes: “The means of production, and production itself, had become in essence socialized. But they were subjected to a form of appropriation which presupposes the private production of individuals, under which, therefore, every one owns his own product and brings it to market”.

Socialist politics would focus on the instantiations of political power within the economic class system which is exercised in exploitation at work, is enforced outside of work, and appears in the form of capitalists’ profits. Genuine socialist politics would be oriented to transferring the wealth or profits which the class of workers produce for capitalists, from capitalists to the associations of workers who constitute businesses for which they work. Assuming that the economy is fixed, the gains of capitalists are the losses of workers, and the gains of workers are the losses of capitalists. Indeed, capitalists try to keep wages down, to keep profits up. So, capital, wealth, or profits, which, in capitalism, are the primary form of power of the class of capitalists and their agents, must be owned and democratically controlled by the class of working people who produce them, if we are to have a democratic economic system of republican government. And so, for example, “defunding the police” or “funding schools” is not a socialist political action, because it does not change the balance of wealth or power or capital between the working class and the capitalist class. Similarly, “taxing the rich” is not necessarily a socialist action either, if it does not place capital in the hands of workers.

What follows will sketch six points which could constitute a realistic and genuine socialist program which is based in political economy and puts considerations of class first.

1. Real, full employment in America. The working class can exercise real power vis-à-vis the class of wealthy and powerful capitalists only if it can withhold its labor in order to make demands or strike. And the working class can strike successfully only if there is no unemployment—no unemployed people who can take their place when they strike (i.e., strike-breakers, scabs). So, full employment is a necessary condition for workers to exercise power in capitalist society, and capitalists know this.

In previous times in the 20^th century, there were two priorities to the economic policy of nations and states: full employment and controlling inflation (i.e., rising prices). Full employment guaranteed the well-being of workers, kept them satisfied politically, and ensured effective demand for products so that capitalists could make profits. Inflation had to be controlled so that prices were stable, so that instability did not hurt industry’s profits or workers’ abilities to consume. Today, however, politicians are only concerned with inflation. Unemployment is accepted as a tool that is used to control the inflation of prices of goods and to foster the deflation of money, which increases its real value for ultra-wealthy oligarchs and rentiers (i.e., financial assets). 

According to the U.S. Bureau of Labor Statistics, which reports the official unemployment rate, workers who do not look for jobs or who have not found a job within four weeks do not count as “unemployed”. So, current unemployment figures are not real. Real unemployment is masked. And the pool of unemployed workers functions as a tool that employing capitalists can use to threaten and discipline employed workers if the latter do not accept their situation or try to improve it by unionizing or through political avenues.  

So, millions of American lives are sacrificed to unemployment and desolation in order to hold prices stable for the power, wealth, and privilege of oligarchs and their political agents.

This policy only protects the interests of the class of financial oligarchs (e.g., bankers, Wall Street), who hold real or financial assets or credits, which equal the liabilities or debts of working people. For example, speculators invest in unproductive real estate to make profits by inflating its price and reselling it (resulting in gentrification). Financial oligarchs want the prices of their assets (e.g., real estate, stocks) to constantly inflate, so that they can obtain tax-exempt profits when they sell those assets (“capital gains”), but they do not want the prices of real goods to inflate, because that would hurt their buying power. Meanwhile, workers’ monetary wages remain stagnant, if they are lucky enough to be employed to pay rents or mortgages. So, the value of workers’ incomes constantly deflates, or they receive relatively less money and fewer real goods for the same amount of work, and they must pay more of their income to cancel debt obligations to banks (e.g., credit card debt, mortgages, car loans, student loans, etc.), while the prices that they must pay for goods constantly inflate. In short, workers get less in real terms, and oligarchs get more. Moreover, workers’ payments on their debts do not flow into industrial corporations which employ people to produce more goods that people need, because they are paying financial, rather than industrial corporations. “Job creators” in America are a myth. Investments largely flow either abroad or into domestic unproductive assets.

The only way to ensure real employment of every citizen and the security of every employee is to create a federally instituted state program which unconditionally and directly employs any unemployed citizen in the construction of national infrastructure, without any requirements, or any private subcontracting or mediating employment-agency, or any means-testing bureaucracy. This will establish a de facto minimum wage for the entire nation irrespective of states’ regulations, stimulate the effective demand for products in each state, revitalize the economy and communities, and support the national infrastructure which the well-being of the American citizenry and national industry requires. Above all, politically, once workers have real full employment, labor strikes will be able to force capitalists into political agreement. Short of real full employment, however, strikes will always be broken by unemployed workers. 

2. Homeownership for every American citizen. The basis for independence and liberty in a free republic is the ownership of the property which one inhabits. In the 20^th century, membership in the so-called middle class meant home ownership. This freedom is increasingly threatened in the course of recent history, especially since 2008, when massive wealth-management firms bought up the 16 million homes that were foreclosed upon in the Global Financial Crisis. A small number of real-estate or asset-ownership firms control nearly all the property and wealth of the nation for a minority of absentee-owners or financial capitalists, usurping the lion’s share of the national income—whether through banks issuing mortgages, or firms or landlords demanding rent. The only way to be certain that one person does not end up owning everything is to make certain that every person owns something. It is also the only way to make sure that banks do not own everything and inflate prices through issuing mortgages. The only way to be sure that this does not continue, and that a landlord class does not become a new ruling class, is to establish an ordinance that every American shall own the domicile in which he or she lives upon proving occupancy of the premises for the past 90 days. The lease or title will be transferred at any public office of government. This will neuter the power of the financial oligarchs and unproductive monopolists who threaten to take over and destroy the national economy.

3. Federal banking for every American citizen. Currently, major financial institutions and banks borrow money (i.e., reserve currency) from the Federal Reserve (i.e., central bank) for nearly nothing (e.g., 0.01%) and they lend it to citizens at exorbitant rates (e.g., 5% to 20%). They charge interest and fees which amount to profits for free for them, while on the other hand amounting to increasing overhead costs for everyone else, which are strangling the national economy and industry. Industry is dying in America because the cost of living requires wages that are too high for productive corporations to compete internationally. Yet the profits of these financial institutions and banks are only due to a political monopoly. And their unproductive profits constrain the ability of the economy to grow as it would if there were no profits for the financial sector. They do not result in investments in real production or employment. They end up in art markets, debt obligations, bitcoin or real estate—not production and employment of working people. They harm, rather than foster, job creation. Therefore, every citizen and employer must be issued a checking and savings account, free of charge, at the federal reserve, upon birth, at the time of issuance of their social-security number or legal status as a citizen. That is, the private banking sector must be liquidated immediately for the well-being of every citizen and the nation.

The Finance, Insurance, and Real Estate (FIRE) sector of the economy is strangling the latter and must be abolished before it collapses into a new kind of feudalism of financial lords and debtor peasants.

4. Public healthcare, security, and retirement for every American citizen. Currently, every citizen over the age of 65 years is entitled to Social Security retirement, if no other plan is in place, and federal healthcare (Medicare or Medicaid). Private, rent-seeking companies continually try to privatize Social Security to use those funds for financial speculation and their profits. Yet the activity of insurance companies does not produce anything, and their profits are a cost that is a drain on the economy. They profit only if we do not really need them. If there were no such companies, which try to make their profits from the payments of private individuals, retirement and healthcare could be much cheaper and more efficient for everyone. Thus, all private insurance companies must be abolished, and public health, harm, and public retirement and medical insurance must be put in place. This will lower the costs of employment for commercial and industrial companies, increase employment, and foster the growth of the economy, as well as the well-being of all citizens.

5. Defaulted and unpayable debts of workers must be canceled. Currently, 8.5% of national debts are in default. Meanwhile, over 9% of people’s income is spent to pay debts for the profit of financial corporations that do not contribute to real production in the economy. This 9% of income could be spent on domestic products, the production of which could employ other citizens. It is wasted on the unproductive fees of the financial sector, which are not invested in real production or employment, but rather speculative profit-seeking, which simply raises prices of homes, for example, hurting working people even more. Moreover, the amount of credit-card loans, auto loans, mortgages, and student loans is an astronomically massive drag on the economy’s ability to keep people employed in the production of necessary goods. Therefore, all debts which cannot be paid, in relation to the debtor’s income, and therefore will not be paid in any case, must be canceled immediately, in order to save the national economy, the well-being of the population, and to roll back the financial sector’s capture of our political institutions.

6. Ninety-percent tax on capital gains and profits made on speculative financial assets. The investments of the ultra-rich today do not go into industrial production that employs working people and creates real goods and services which working people need. American capitalists are no longer “job creators”. They go into speculative assets (e.g., credit-card debt, real estate, etc.) which are a drain on the real economy, because they constitute an overhead cost. These unproductive “profits” are made by buying speculative assets cheaply and selling them more expensively, which inflates the price of assets (e.g., real estate), which in turn makes life harder for working people who wish to buy a home, for industry, and for the real economy. Currently, our legal system counts those profits as “capital gains”, and they are taxed at a disproportionately lower rate than ordinary income. The “profits” of monopolies (e.g., pharmaceutical companies) obtained from patents, intellectual property rights, royalties, and so on, are actually forms of rent. This is an unproductive drain on the real economy, growth, and the innovation of new goods, which could be produced at a lower price, closer to the cost of production, if those rents were abolished. Thus, the 90% tax rate on all forms of rent and capital gains which was in place from 1944 to 1951 must be reinstated. Far from destroying the real economy, this will only abolish the parasitic sectors of the economy (FIRE) which are strangling the real economy of industrial production and commerce. The revenue generated by this taxation will fund the employment guarantee and the construction of public infrastructure, stimulate private-sector employment in industry and growth, and present incentives for capitalist industry to produce goods that are really needed at a lower price through competition. That is, it will abolish monopolies.

Though this list could perhaps be made longer, anything less than political-economic gains for the working class which are simultaneously losses for the class of capitalists would not constitute a program for socialist politics, but rather ordinary liberalism: if the goal is to win, we should not focus on gains for us that do not present defeats for them. Socialists must leave the civil rights to their liberal guardians and focus on the subterranean class war that is waged in the “private sphere” of our political economy. For those liberals, it would be worth recalling that the 1963 march which was the occasion for Martin Luther King’s “I Have a Dream” speech was originally called the “March on Washington for Jobs and Freedom”. Its demands “included not just antidiscrimination measures, but a full-employment economy, jobs programs, and a minimum-wage increase”.

To conclude, the only realistic meaning which the word “socialism” can have, which could serve the actually existing population and humanity generally, is one that is grounded in political economy and real political-economic gains. Practically speaking, there is no other way to win than to improve the lives of the vast majority of humans who must work in order to live. Theoretically speaking, anything else would be “socialism” in name only, a mixed up brew of ideas which has earned a bad reputation for the cause of working people everywhere and has defeated its own substance for far too long already.