Socialists considering how to break with capitalism are confronted with a dilemma: support a gradual move to social ownership, so workers can build up the know-how to run those firms, or support a rapid transition so capitalists can’t sabotage the economy.
Otto Bauer, Austrian social democratic politician, circa 1920. (Hulton Archive / Getty Images)
There has been a lot of talk about democratic socialism in the last ten or so years. Mostly, socialism is used as a label for a political tendency (Bernie + the Squad + Democratic Socialists of America) or as a catchall term for a set of values and policy proposals (equality + community + Medicare for All + unions are good). It’s rare to hear many commentators or even socialists themselves talk about socialism as a new way of organizing society.
Yet there was a time when socialism was first and foremost a label for the social order to come. And debates about the nature of socialism, the possibility of alternatives to capitalism, and how to move from one social order to the next were a major focus. For socialists today interested in long-term questions about where our work is taking us, these discussions are still of great interest.
Otto Bauer was an important contributor to these debates. Bauer was a member of the Austrian Parliament in the first third of the twentieth century. He also served as deputy party leader for the Social Democratic Workers’ Party in Austria and was the country’s foreign minister in the months after its defeat in World War I. Some highlights from his life’s work were recently collected and published in a series of volumes on Austro-Marxism. (Austro-Marxism is the name sometimes given to the ideas of Austrian socialists who tried to find a third strategic path out of capitalism, one more democratic than Bolshevism but more ambitious than reformist social democracy.)
In “The Transition from the Capitalist to the Socialist Society,” a particularly interesting essay written in the late ’20s, Bauer speculated on the possible pace of system change. For Bauer, the transition to socialism is about changing who owns companies. “[T]he transition is essentially a process of expropriation.” The working class takes ownership over firms and the role of “capitalist” is eliminated.
Expropriation would begin with the financial industry and may also include heavy industrial firms, real estate, and companies producing raw materials. The financial industry is the focus because it makes decisions for many other companies. It’s this decision-making function that must be brought under democratic control as quickly as possible.
Bauer urged caution for the future architects of a socialist order. “To expropriate everything would mean that the working class would be burdened with things they could not handle quickly enough to solve the issues-at-hand. They would be compelled to organize everything anew, and they would lack the necessary personnel.” Imagine, Bauer asked, a new socialist society trying to reorganize production, exchange, and distribution in every sector and in every firm in only a few years. Experience and ideas needed to transform the economy are accumulated over time and through experimentation. A total revolution in ownership and organization, carried out overnight, would surely be disastrous and rapidly undermine popular support for the new socialist system.
There is therefore no possibility in Bauer’s thinking that the transition to socialism would happen overnight:
The passage from the capitalist to the socialist society is, indeed, a quite complicated process. A new societal organization arises only in the course of an entire period of history. We must count on a long transitional time; the emergence of a new society is an organic process, for one cannot realize it by decree. . . . The goal of socialist politics will consist in gradually enabling the socialist enterprises to spread and develop at the cost of the capitalist enterprises.
Bauer envisioned a socialist sector coexisting alongside a capitalist sector for many years. The long transition to socialism will be characterized by the competition between socialist enterprises and capitalist enterprises. And the culmination of this transition could be defined as the birth of a new society in which the socialist mode of production exists as the dominant way of organizing the economy.
There are certainly grounds for questioning Bauer’s vision of a gradual transition. Bauer insists on the need for a gradual process to allow room for experimenting and developing expertise and skills. These are legitimate concerns. We might call these the “personnel problem.” But others have raised concerns about a transition to socialism that push in the opposite direction. In a famous serious of essays “On the Economic Theory of Socialism,” the Polish economist Oskar Lange formulated what we might call the “sabotage problem”:
An economic system based on private enterprise and private property of the means of production can work only as long as the security of private property and of income derived from property and from enterprise is maintained. The very existence of a government bent on introducing socialism is a constant threat to this security. Therefore, the capitalist economy cannot function under a socialist government unless the government is socialist in name only. If the socialist government socializes the coal mines today and declares that the textile industry is going to be socialized after five years, we can be quite certain that the textile industry will be ruined before it will be socialized. For the owners threatened with expropriation have no inducement to make the necessary investments and improvements and to manage them efficiently. And no government supervision or administrative measures can cope effectively with the passive resistance and sabotage of the owners and managers.
Lange concluded definitively: “A socialist government really intent upon socialism has to decide to carry out its socialization program at one stroke, or to give it up altogether.”
While questions of socialization and a transition to a new economic order seem like distant problems today, democratic socialists who are interested in long-term strategy have a lot to think about. The “personnel problem” and the “sabotage problem” combined present a real challenge to hopes for a transition to a more just world.