When I was a member of the IMT, we were never given a convincing or coherent picture of how socialism would work in practice. The answer to all the economic problems of the world could be summed up by the same vague proposal, uncritically proffered to the starving masses, to implement a ‘nationalised planned economy’, which would be centrally directed and democratic at the same time. We insisted that past failures of planned economies had nothing to do with the inherent deficiencies of the economic systems in question, but the existence of a bureaucracy that arose due to the ‘objective conditions’ of ‘backwardness’. This argument was put forward to explain why Lenin and Trotsky dismantled the experiment with workers’ control that was attempted in the aftermath of the Russian Revolution, and why Stalin had risen to power after Lenin’s death. It didn’t occur to us that the ‘backwardness’ argument wouldn’t apply to East Germany or Czechoslovakia or even Cuba, none of which were ‘backward’ compared to Russia in 1917. Yet there, the planned economy still failed. A reasonable person would suggest that this endless failure, in countries with different material conditions, suggests that the working-class is simply incapable of running the economy or society. Even Trotsky was willing to concede this as a possible outcome of WWII (though he was convinced that this would not happen):
An analogous result might occur in the event that the proletariat of advanced capitalist countries, having conquered power, should prove incapable of holding it and surrender it, as in the USSR, to a privileged bureaucracy. Then we would be compelled to acknowledge that the reason for the bureaucratic relapse is rooted not in the backwardness of the country and not in the imperialist environment but in the congenital incapacity of the proletariat to become a ruling class. Then it would be necessary in retrospect to establish that in its fundamental traits the present USSR was the precursor of a new exploiting régime on an international scale.
In our model, the workers would run the economy. There was nothing in the way of a sophisticated economic analysis of why these previous models of planned economy failed. Everything was reduced to the evils of ‘bureaucracy’, something that was apparently external to the economic system. Lop off the bureaucratic excrescence, as Trotsky had argued, and the socialist planned economy would run smoothly. After all, said Trotsky, even the bureaucratic version of planned economy under Stalin had outstripped capitalism in its ability to secure economic development, its problems notwithstanding. How much more successful would a planned economy under true workers’ control be? The organisation’s conception of economics was primitive, composed of age-old dogmas borrowed from Marx, Engels, Lenin and Trotsky and regurgitated unthinkingly. Even Marxist economists of the twentieth century, who had built upon Marx’s writings in Capital, were ignored. The USSR and Eastern Bloc had an entire army of economists who were trained in Marxist theory and who were tasked with trying to make the planned economy work, yet we never look into any of their work, or considered it worth learning from their experience. Trotsky’s analysis was the last and final word on the matter, and we had nothing more to learn from anyone.
Our ‘transitional demands’ for transforming British capitalism into socialism included the old Militant proposal of nationalising the top 200 monopolies, and implementing what we called the system of ‘thirds’. There would be a central planning board in which a third of the seats would be given to trade unions, a third to consumers and a third to the government, which presumably would mediate between the two. I found out recently that this idea was actually borrowed by Ted Grant from the evil bourgeois ‘centrist’ Austrian Social Democrat, Otto Bauer, who posited it as an alternative to Bolshevik-style wholesale nationalisation of the means of production by the state. (I was never told this when I was in the organisation, of course.) We never explained how this would work in practice. What if the interests of consumers and the government was at odds with those of the workers? What if agreement was not reached, and the trade unions went on strike, thus holding their fellow workers and consumers to ransom and jeopardising the plan? It did not occur to us that after the revolution, the interests of workers could conflict with that of their state. It can at least be said that Lenin was honest enough to realise this when he shot down Trotsky’s proposal in 1920 to make the trade unions completely subordinate to the state. (They became so anyway by default, but the reluctance to make this official betrays Lenin’s deep-seated guilt and unease at what he identified from early on as a ‘bureaucratic deformation’ in the new workers’ state.) The Rousseauan-Marxist myth that in a socialist society, individual and sectional interests would become dissolved into a ‘general interest’, coloured all our statements and proposals. We never even considered what we would do if a future revolution in Britain or elsewhere, led by our sect, degenerated along the lines that the Russian Revolution did. When I posed this issue to the full-timer for my region in a debate we had before I left, he blithely replied that this was just a risk we’d have to take. This seemed to me like an appallingly reckless gamble. Of course, if we failed, we could always write it off as ‘not real socialism’.
Kristian Niemitz, in his fantastic book Socialism: The Failed Idea That Never Dies, published in 2019 (when I was still in the cult) addresses this and many other problems with the illusory socialist utopia, which continues to animate people to this day, despite its manifold failures in the past century. Niemitz analyses why it is that socialism continues to endure to this day as an ideal among so many people despite its failures, whilst the capitalist status quo is so despised. Studying several British opinion polls on the subject, Niemitz notes that more people approve of socialism than capitalism. This, for Niemitz, shows how widespread socialist assumptions are on a moral level, even if few people would actually want to have lived under any actually-existing socialist regimes. Niemitz rejects out of hand the idea that socialist experiments have failed because of the lack of democracy, citing studies which show that democracy and economic development have little positive correlation, if any. Democracy does not make much of a difference to economic performance, but conversely, a wealthier country tends to be a stabler democracy.
Niemitz points out how many of these experiments were feted as vindications of the socialist project by prominent socialist intellectuals, academics and journalists in the West, only to be abandoned hastily when things went wrong and the great new society of the future turned out to be a figment of their fevered imaginations. Only then were they redefined as having never been truly socialist. Niemitz takes us on a whistle-stop tour of different failed experiments – the USSR, China, North Korea, Cambodia, Cuba, East Germany – most of which went through three stages. First, the new regimes receive adulation and praise from deluded foreign pilgrims as harbingers of the socialist future, which is followed by angry defensiveness, excuses, whataboutery and handwaving of any evidence of atrocities or mismanagement on the part of the adopted fatherland. Finally, when reality sinks in, this ends with a refusal to accept that these regimes were socialist at all, and even the notion that to use them against socialism is a strawman. The socialist ideal could not be refuted by any empirical examples. By contrast, capitalism must forever be subjected to judgement by those who hold up an imperfect status quo to an unattainable ideal, which ensures that capitalism will stand condemned in the court of public opinion.
Niemitz, borrowing from the writings of Hayek and Mises, explains why socialism cannot work. It is not mismanagement, wicked leaders or difficult objective conditions that have prevented planned economies from succeeding. Nor can all the failures of the planned economies be blamed on bureaucracy. Rather, planned economies have failed because the concept is fundamentally flawed. Bureaucracy is a symptom of a deeper problem. It is a feature, not a bug. Planned economies do not have price signals that capitalists use in a market economy to decide how to allocate resources. Markets make use of the knowledge of millions of people making micro-economic decisions on a daily basis, knowledge which does cannot be replicated by a small group of planners. Secondly, market competition helps to produce new knowledge that spreads throughout the economy and is used to make the productive forces more efficient. This new knowledge cannot be produced under a socialist planned economy. It is an irony that Marxists denounce defenders of capitalism, like Hayek, as ‘idealist’ (as we used to do when I was in the IMT), yet the classical liberal conception of economics as laid out by people like Hayek and Mises in the 20th century, which describes the spontaneous activity of market actors in response to material conditions, is far more materialist than the Marxist idea that a small group of people at the top can anticipate what this vast number of people needs or desires on a day-to-day basis, with the help of algorithms and computer models.
Furthermore, as Niemitz points out, a democratic socialist economy requires the existence of small, homogeneous communities like the Israeli kibbutz in order to be function. Given the small scale, it is much easier to coordinate joint activity. Moreover, such entities exist within a sea of capitalist market relations, and have a tendency to become more capitalist in their behaviour over time. It is simply not possible for millions of ordinary people to run the economy. It will require endless votes and discussions on every single aspect of economic life, and would lead to apathy and demoralisation before too long. Already in most Western economies, there are high rates of voter abstention. Imagine how much that will increase when voters have to choose not just between different parties, but whether to produce commodity X versus commodity Y, whether to allocate more workers to energy or to transport, etc. When Oscar Wilde, himself a libertarian socialist, said, ‘The problem with socialism is that it takes up too many evenings’, he clearly had a point.
A planned economy is incompatible with individual freedom and democracy for another reason – for the plan to work, factors of production must be strictly allocated by a central body. This includes labour, hence the phenomenon of labour passports in the USSR and other Eastern Bloc countries, which fixed workers in a particular place, preventing them from quitting their jobs and moving to a more profitable career elsewhere. This also explains the building of the Berlin Wall, which helped staunch the flow of scarce workers to the more prosperous West, something that was wreaking havoc with the plan. Marx may have said that a socialist society would see a transition from the administration of men to the administration of things, but since human labourers are a factor in production, and since we will never attain a society in which scarcity has been completely abolished for all time and work is no longer necessary, it is not clear how a socialist society could exist without the use of coercion to allocate workers to sectors where they are needed. In a 1997 article, Stephen Louw explains how the Bolsheviks justified ‘war communism’ and militarisation of labour with reference to Marxist theory and the need to build up the productive forces to the point where coercion would no longer be necessary. Since the market had been abolished, the only means of getting workers to work was the use of state power, or moral exhortation. The latter proved ineffective, so the former had to be adopted. This, according to Lenin, Trotsky, Bukharin and others, would produce a ‘new man’ who would see his interests and those of the community as synonymous, and would give his labour over to society voluntarily. This would also speed up the development of ‘backward’ Russia to the point where a full transition to socialism could be made. Of course, Russian backwardness was not the only, or even the main reason for this policy, which was applied in every country that implemented a planned economy. It turns out that a planned economy can only work if the state has full control over human bodies. As Trotsky explained in Terrorism and Communism, such a state, in order to reorganise the economy on socialist lines, must have the right to call upon the services of every able-bodied man or woman and send them to where they are needed.
After taking us through each and every one of these failed socialist experiments, and how they were by turns lauded, then defended, then renounced, Niemitz asks why it is that despite the manifold failures of socialism, it has such a good reputation. He looks at cognitive and evolutionary psychology for clues. One reason is that it is too painful for people to give up an idea to which they have become emotionally attached, even in the face of conflicting evidence. Moreover, if one is not likely to suffer as a result of having a mistaken view of something (as most Westerners who praise foreign socialist regimes from the comfort of a liberal-democratic country) then one is highly unlikely to change one’s mind. The people who sang the praises of Chavismo are not the ones starving as a result of the regime’s incompetence, and thus, there is little to no incentive for them to reconsider their commitment to the socialist project. The emotional attachment that people have to the socialist ideal outweighs the rational arguments against it, and the empirical evidence that shows up socialism for the failure it is. There is an additional reason – evolutionary psychology. We still have hardwired in us a hunter-gatherer mindset that biases us against the ideal of private profit and certain people acquiring more wealth than others. The essence of socialism, says Niemitz, is a desire to return us to this hunter-gatherer age, even if with the help of modern technology. Another central fallacy of socialist ideas is that they are defined by virtue of the outcome desired from it, rather than anything institutional. This allows for a ‘No True Scotsman’ position of denying that any socialist experiments were genuinely socialist, because they didn’t achieve the desired outcome. By contrast, capitalism is defined not by the outcomes it results in, but by virtue of certain institutional mechanisms which, it is acknowledged, can have a variety of effects, some good, some bad. Due to this mismatch in approaches to definitions, socialism can always maintain its halo of moral purity, uncontaminated by any empirical disasters, whilst capitalism is held responsible for all that flows from its existence.
Niemitz concludes the book by giving us a nice counterfactual about what would have happened if the people of East Germany in 1990, had chosen, in their first ever free and fair election, to vote for the dissident left opposition who were calling for ‘real socialism’ in place of the corrupt, Stalinist version that had existed previously. (I have written my own counterfactual about what would have happened had Militant seized power.) In a series of mock-Guardian articles, the story of this new, democratic East German socialism is traced from beginning to disastrous end. Despite the reformist and democratic socialists winning the elections and presiding over a short-lived revitalisation of the economy, the old ‘Stalinist’ evils reassert themselves. Despite the enterprises initially being delegated a degree of autonomy over the socialist plans, the state decides to take back control, since workers are voting themselves pay increases and time off despite poor productivity, and this is distorting the plan. Government spokesmen assure us that this is temporary, of course, and that the plan is still for workers’ management to be at the heart of the enterprise. Turnout at the meetings for worker consultation over the plan drops dramatically. Workers complain of being made to attend boring meetings about things they have no expertise or interest in. This leads logically to the next step, which is the abandonment of meetings for popular consultation over the economy altogether. A civil servant complains that the system of consumer consultation is unworkable because different groups want different commodities to be produced, and the plan cannot cater to both. In a market system, this would not matter – the more marketable product will win out. However, in a planned economy, there is no rationale for prioritising one over the other. Soon, hundreds of thousands of people are leaving East Germany, and border controls have to be reimposed. Before long there are protests over economic mismanagement, and, sooner or later, the whole experiment collapses altogether and the East takes the belated step of reunifying with the capitalist West. The Guardian says it isn’t ‘real socialism’.
Of course, in reality, the East Germans voted overwhelmingly to rejoin the West in the first place. There were parties like those Niemitz describes in the book, who argued, just like we did in the IMT, for democratic socialism. No one can argue that the workers were hoodwinked, or that they secretly wanted a democratic form of socialism but were denied this choice. A free and fair election took place, and the dissident left movement in East Germany, which included Trotskyists, was crushed. Trotskyists cannot plausibly argue that if only there had been the ‘correct leadership’, the workers would have made a different decision. The workers chose capitalism. Opinion polls that show that they ‘miss’ the GDR are, as Niemitz points out, rarely to do with socialism, and more to do with anti-immigrant sentiment, among other things. (The GDR was a very socially conservative state with little immigration.)
Niemitz’s book refutes the idea that socialism is good in theory and misapplied in practice. It is bad in theory as well. Any decent theory should be able to account for unfavourable conditions, and won’t be defined in a manner so ludicrously abstract that it cannot be falsified. No ideology is ever implemented in pure form. Socialism’s failure in every conceivable set of objective conditions should cause us to give pause before trying it for the umpteenth time. Trotskyists and other Marxists would do well to read Niemitz’s book, and be enlightened.