This post gives a basic outline for constructing a socialist system in an industrialized country. The question at stake here is, assuming that we are pursuing socialism, what specific plan should we implement? What should socialism ‘look like?’ The lack of such specific plans is an acknowledged gap in current socialist groups (The New Republic).
Of course, there is still another important question of whether pursuing socialism is appropriate in the first place. The fact that I am strictly answering the further question about the specific type of socialism should not be construed as endorsement of a milquetoast pluralist sort of Effective Altruism where one’s prior convictions are to be uncritically accepted; such a view is not philosophically tenable (Berg 2018). But creating new plans to replace other people’s inferior or nonexistent ones is productive nonetheless. Some readers may have already identified good reasons to expect that socialist activism is a beneficial course of action. And judging socialism is itself difficult because of the lack of particular coherent plans; having a good-but-feasible plan to chew on is necessary to solve this chicken-egg dilemma.
This post doesn’t attempt to specify an optimal socialist system. This would almost certainly be politically unfeasible. Governments and economic systems have always been suboptimal in many ways, and the preferences of the electorate within a country frequently clash against the preferences of foreigners, animals and future generations. For instance, an optimal system in an industrialized country might involve total economic mobilization to solve global poverty, but such a plan would not be politically acceptable. Therefore, we must compromise by making a plan that is favorable to the domestic working class (and, preferably, favorable to other domestic groups as well).
Still, it should be remembered that other socialist plans are likely to be inferior to this one. Even if we consider the idea here to be superior to capitalism, that doesn’t necessarily mean that we should generically promote the idea of socialism, which may come in other forms. The realities of socialist movements’ plans and behavior are key indicators of whether they merit support in a broad political sense.
Anyway, here are the elements that a socialist system should have:
Democratic government is widely beneficial. Details of representation and voting may vary considerably. A populist move towards direct democracy or parpolity is one possibility; alternatively, the electorate might be constrained along the lines of epistocracy or sortition. Futarchy and quadratic voting are other features that might be included. None of these proposals is particularly popular, so standard representative democracy is a reasonable assumption. Regardless, the government must be structured with robust incentives to follow the interests of the people. This is a key criterion for mitigating the risks of oppression and economic failure. Democracy also reduces the risk of warfare with other democratic states (Reiter 2017).
The integrity of democracy should be protected with strong campaign finance laws.
The most desirable basis for socialism is for firms to be owned and managed by their workers. Pérotin (2012, 2015) summarizes research to show that worker cooperatives have broadly positive impacts. As for firms which are merely owned by workers, Kruse (2016) summarized existing research to show that worker ownership is positive for both firm performance and employee welfare, though a study by Monteiro and Straume (2018) found inconclusive and potentially negative impacts on firm efficiency in Portugal.
The government should use legal and taxative mechanisms to strongly encourage a transition towards worker cooperatives, so that the majority of workers are employed by cooperatives and all workers have access to such opportunities. Once this major transition is achieved, voters can make a further decision on whether or not they prefer to mandate worker cooperatives for all economic ventures, though hierarchical and private firms may simply die off on their own.
Worker cooperatives are traditionally organized with a simple “one person, one vote” rule. However, the government may decide to endorse alternative practices such as epistocracy and quadratic voting as viable augmentations of workplace democracy.
Well Corrected Markets
Markets have been included in a number of socialist plans, such as the one given by Schweickart (2011). Economists have consistently found that they are beneficial: Hall and Lawson (2014) looked at 198 empirical studies and found that economic freedom corresponds with good outcomes in 2/3 of studies and bad outcomes in less than 4% of studies. Theoretical economic work also finds that they are efficient. Therefore, the socialist system should include open markets for labor, capital, and goods and services.
Of course, the government should still regulate markets and apply Pigovian taxes and subsidies when necessary to correct their behavior. Another important kind of market correction (broadly construed) is progressive taxation to reduce wealth and income inequality and thereby create a more just and equitable market.
Avoid State Capitalism
In the context of this socialist plan, a private enterprise is a firm that is owned and managed by its own workers, whereas a state enterprise would be owned and theoretically managed by the electorate/government (though it would presumably make use of internal democratic decision making for many minor issues) for business purposes. Private enterprises should compose the bulk of the economy, due to research indicating that even capitalist private enterprises are superior to state enterprises (Megginson and Netter 2001, Shirley and Walsh 2001). Even public banking, though specifically advocated by some socialists (Schweickart 2011), has historically had bad results (Megginson 2003).
However, some services should be performed by the government and distributed for free, for economic or political reasons which don’t apply to most industries. This might include policing, firefighting, infrastructure, social security, and health insurance. These would be government agencies, not state enterprises. They should be balanced with the goals of high wages and low unemployment, because large governments generally slow down the economy (Berg and Henrekson 2011).
The government should implement Capital-constrained Liberal Radical mechanisms for funding public goods. Citizens will make contributions through government agencies for projects such as parks and journalism pursued by free worker cooperatives, which will then be subsidized with a calculably optimal amount of tax money. The government will use its powers to suppress fraud and collusion. See Buterin et al (2018) for details and defense.
Due to the practical difficulties and uncertainties with liberal radicalism, it should start with a small budget and then be refined, expanded, or disbanded based on the results. Ideally it will supplant most market spending, thus causing economic decisions to be made on the basis of the public good.
International Distributive Justice
Socialism should not be combined with nationalism. The polity must demonstrate meaningful solidarity with the global working class regardless of their nationality, race or other divisions. Some of the benefits of the socialist system should therefore be shared with needier workers across the world. This is especially true if worker cooperatives would lock jobs within a developed country and eliminate outsourcing. The loss of employment for the developing world would be harmful, especially now as youth unemployment is one of the major upcoming challenges for Africa (Brookings 2019). It is more important than ever for socialism to pay a global dividend.
However, strong policies against global poverty are politically unfeasible. Instead, the socialist polity should take more modest actions, spending more but not vastly more than is typical. In doing so, the socialist government will gain additional moral credibility while still retaining sufficient benefits to motivate the domestic working class. But the details of these actions should be left to the discretion of the electorate. They should pick an agreeable combination of the following actions (or possibly others) to constitute their contribution to international distributive justice.
The government can distribute a substantial amount of economic and healthcare assistance to troubled regions. These efforts should be guided by the best available information on robustly beneficial aid programs, with care taken to ensure positive long-run impacts on foreign institutions. Aid can follow in the footsteps of effective initiatives like GiveWell and PEPFAR.
The government can remove tariffs and subsidies that unfairly privilege domestic companies in international trade. It can further promote the purchase of goods and services from the developing world. It can also support advanced training and education for domestic workers to move on to new industries where they are no longer competing with poorer laborers overseas.
Inviting foreigners to enter the country will extend the benefits of socialism to more people. The government can significantly increase acceptance of immigrants coming from situations of extreme poverty or other crises. For an extended summary of evidence on the issue, see the immigration policy position in the Candidate Scoring System (most recent version here).
Research and development
The government can sponsor globally beneficial R&D. For instance, it may offer subsidies to pharmaceutical cooperatives in exchange for drug manufacturing rights or preferential pricing being granted to needier foreign countries. Or it may develop technologies like renewable energy that reduce global pollution, and share the results broadly. Most economists already believe that R&D should be favored by the tax code (IGM survey), but it is doubly important when looking at research that is particularly useful for creating public goods or helping people in poverty.
The military can assist fragile states that face threats of insurgency from radical groups, and can take an active role in UN peacekeeping missions. See this post by Roland Paris for a compilation of research on the value of peacekeeping.
Global Liberal Radicalism
The government can create an institution that uses the Liberal Radical funding mechanism to fund projects that are supported by the residents of poorer countries.
One of the best, though little noticed, arguments in favor of a socialist program is the value of information. The nation will be judged by its economic, social and political outcomes and these will improve the ability of foreigners to decide whether they want to follow in its footsteps. If socialism works in one country, then billions of other people will have better information about how to structure their own economies. If socialism fails, then the country can eventually dismantle it and comparatively little harm will be done. Of course, socialism has already been attempted in a number of countries including the USSR, with generally bad results. However, some socialist plans (e.g. this one) are sufficiently different from 20th century models that those experiments now lack external validity.
To maximize experimental value, the socialist movement should not attempt a slow monolithic push for global socialist revolution. Instead, it should emphasize one or a few specific places for quickly establishing a socialist program. These should be large enough to have economic and social complexity comparable to that of many countries, but should not be too large because that would increase the amount of activism required for change. They should have a populace that is relatively supportive of socialist plans. They should also have capitalist peers that can be used as a basis for comparison. Specific states within the US and the EU should be considered.
Another implication of the emphasis on long-run experimental value is that the reform package should be narrowly tailored to efficiently accomplish its main economic and political goals of improving the economic and civic lives of the working class. If the socialist project is closely tied to a host of unilateral assumptions on unrelated political topics, such as technological privacy, environmental policy, race politics, gender politics, or animal rights, and those assumptions are not appealing to the workers and other people in the target country, then the success of the project will be jeopardized. Also, changing too many policies at once will make it more difficult for observers to disentangle the impacts of the core economic policies. Therefore, such unrelated policy questions should usually be left to the discretion of the electorate of the socialist nation.