or Socialize the Economy?
Should We Favor
The Use of Public Control of the Economy
The phrases "to nationalize" or "to socialize" industry are often used interchangeably. It means to make public, or in some other way, to give to the people. Power lines and roads, hospitals and the highways -- these are generally considered to be public possessions, because they are managed by individuals chosen to represent the people. Many would confess that they don't know if there is anything different between these two phrases. Yet, the difference is very strong, even if phrases like "nationalized medicine" and "socialized medicine" are used like synonyms.
To Nationalize industry means to give it to the nation and make is obedient to the wishes of those in charge of government. To Socialize industry means to give it to the society and make it subservient to the direct will of the people. The nation receives the right to regulate and control the powers of many business in a sector of the economy, or many different societies spotted across the nation reserve that right for those businesses.
A nationalized hospital, for example, will set its budget, its policies, and the way that it operates according to a plan set nationally, usually by a congress of representatives from many different regions. A socialized hospital, however, will organize itself according to the ideas and principles decided upon by those who work there. In one case, it is the nation that obtains the industry, controlled by governors, and in the other case, it is the people that obtain the industry, controlled by the workers.
The purpose of establishing any public control over industry, whether it is nationalizing or socializing, is to avoid a monopoly from falling into possession of those against either the nation or society. Some politicians and governors ask for nationalization of oil or nationalization of steel, and they do so with an eye to their military needs, and not to the issue of economy. Other rulers, however, ask for socialization of mining or socialization of manufacturing, and they do it with the stated intention of reducing inhumane conditions for workers.
To make part of the economy public, then, is neither Socialist nor Capitalist. The nationalization of steel, for example, has often been to serve the purposes of tank production and ship production. While the steel economy in the US was never nationalized, it was highly regulated during World War 1, imprisoning union activists for trying to resist the war. [*1] [*2]
The intention here was not to stop the steel or war industries from being inhumane to the workers. It was strictly a military consideration, to keep the war industries from being owned by those possibly against the interests of the United States government. The policy was strictly Nationalist and specifically served the interests of Capitalists alone. A guarantee of weapons for stealing foreign lands is beneficial only to those who intend to exploit those lands. The nationalization, or near nationalization, of economy can be done strictly for purposes of defending Capitalist profit.
A government may also choose to nationalize an industry for the purposes of effecting some humanitarian change. Efforts to nationalize the railroad or means of transportation are done because if anyone possessed a monopoly in any of these, they could easily abuse other members of society. In Canada, all of the railroads were subsidized by the Canadian government, with the aim of uniting the nation through commerce of goods and people. [*3] This was before the common use of the word "Socialism." A much more modern example would be the nationalization of oil in Venezuela under Socialist president Hugo Chavez. [*4] Here, the purpose was to provide a fair distribution of the wealth coming from the natural resources of the country.
On the other hand, industry can be socialized for the purposes of protecting the people. This was done most widely in terms of electrical power in the United States. The program of Rural Electricification, for example, encouraged industry to move to rural areas and provide electricity in areas that wouldn't be profitable normally.
Franklin Roosevelt signed the bill into law, but it was proposed by George William Norris. [*5] This senator is also responsible for the famous Norris-La Guardia Act -- the most powerful piece of legislation protecting the rights of organized labor in the United States, even to this day. [*6] With this type of influence, it's natural that he would write the Rural Electrification Act so that the power companies would be managed by local workers, and not managed by international, corporate executives. [*7] [*8] Many of these workers' cooperatives in the power industry still exist today. [*9]
Sometimes a government may not either have a humanitarian or military interest in securing some monopoly, but only desire it for increasing the public treasury. In Japan during the 1800's and the early 1900's, the government imposed a tax on salt, [*10] much like the King of France had done during the 1600's. [*11] It is certain that they must have appealed to both ideas of "foreign policy" and "social welfare" when defending their right to monopolize the salt industry.
The King of France must have established the tax on salt because of the evil if it were held by either the British or a few noblemen -- just as Japanese citizens may have looked to their government as protecting an essential commodity from foreign Imperialists or exploiting Samurai. [*12] In France, the tax on salt was 60,000%, and in Japan, it was 30,000%. Far from serving either a humanitarian need, or a military purpose, the salt tax was strictly for the purposes of empowering the central powers of the monarchist government. Nationalization had nothing to do with either nationalism or socialism; it was a matter of satisfying the greed of a king or emperor.
Industry can be nationalized for the purposes of military, or for effecting some humane reform. Or, there may be no use to it except to increase the power of the state, which will go under the title of defending the interests of the military and social welfare.
Socializing industry, however, has only been introduced for the purposes of creating a harmonious economy that provides just wages. Industry cannot be socialized for military purposes, because then control of business is in the hands of the people, and not the hands of blood-thirsty generals. And industry cannot be socialized to uplift and bolster the power of the state. Since it is the workers who manage the industry, who receive the profits of their labor, the state can have very little intervention, except by repealing Socialization.
The nationalized economy can serve a thousand purposes, because it binds the will of many to that of one ruler. Whatever the ruler feels is essential to the well-being of the people becomes policy in the industries. The socialized economy can serve only the purposes of the people who work in the industries. In the one case, it is the egotistic personality of a master who makes the rules -- in the other, it is the average of what the people in general desire.
A Decentralized Revolt Against Capitalist Exploitation
Even though there is little distinction made between them, Nationalization is the policy of the established powers -- Socialization is the ideal of the oppressed toilers of the world. Nationalization of railways and salt mines has occurred in some of the most traditional governments and nations on the planet. But Socialization is a curious spectacle that has been very rarely sanctioned by any government. One will find it in the worker-managed industries of Anarchist Catalonia in 1936, [*13] those of the abandoned factories of the Paris Commune of 1871, [*14] and even in the Anarchist Army of Nestor Makhno in 1920's Ukraine. [*15]
Here, the ideal has been direct worker management of industry and direct citizen management of society. Naturally, to prevent this type of decentralized democracy from springing up, governments have preferred to use Nationalization. With industries under control by the orders of a centralized state, the people themselves have no say in the functioning of society at all. History affords us many examples of the revolutionary power of Socialization, and the use of Nationalization to repress the revolution.
In Yugoslavia, after Tito established a Communist dictatorship, he allowed several years where workers could directly manage their industries, but once all opposition was destroyed, they were destroyed, too. [*16] In Russia, a similar policy occurred: Lenin and Trotsky allowed the unions to have some power in the direct management of their industries, but this did not last long. Once all opponents of the one big party were destroyed, then the unions were ripped to pieces, too. Eventually, Lenin said that the only purpose of a union was to make workers more productive and efficient, echoing the voice of conservativism and the Right-Wing. [*17]
In Spain, workers were seizing factories and farms once the Fascists had declared war on the people and their elected republic. But with all of these workers demanding direct, socialized control, the Socialists in parliament passed bills trying to nationalize industries. As long as either Capitalists or the Statists are in control of the industry, argued the Spanish Socialists, then we are moving toward progress. It wasn't long until the government of the Socialists began raiding socialized industries with military units to reclaim them as nationalized, and not socialized. [*18]
Historians might dispute the situation of Spain as "an unusual and peculiar incident in history," namely pointing to the influence of Anarchism in the factory seizures. They do not go so far as to draw conclusions or trends from the evidence at hand. Yet, there are two very distinct incidents in France where the same policy of Nationalization fighting Socialization can be seen. In the above situation of Spain, it was a battle of Socialists fighting Socialists -- those who wanted the worker liberated by the state, and those who wanted the worker to be self-liberating.
In the Great French Revolution of 1789, peasants throughout the rural provinces seized wide strips of land and claimed them as their own. The "forward-thinking" wage-workers of the cities didn't have that much interest in being their own masters, however. In response, the congressional authority of the Estates General moved to nationalize industries, vesting their powers and rights within the hands of the government, and not in the hands of the people. [*19] Here, the word Socialist did not exist at all, but the workers were smart enough to realize that they needed their means of production to be independent.
The French Revolution of 1848 produced an almost identical scene. Workers and the common people were demanding the establishment of public workshops, where laborers could manage industry for themselves and benefit from the products of their own labor. The disaster that followed has generally been called by historians, The National Workshops of France of 1848. Like in the first revolution, like in Spain a century earlier, the government passed laws to nationalize industries, solely with the purpose of keeping them unsocialized. The management of such industries was so awful that they provided less employment or opportunity than the previous private holding of capital. [*20]
The response of the state to the demands of the masses has been, "The common people are demanding that they should have the right to industry? Well, we shall just take the industry from the private realm and mismanage it until they give up their plans. Only the isolated authority of the state or the capitalist may direct industrial production. Never shall any citizen have a right to directly manage their workplace." This seems like a point worth considering. Even Socialists may not be aware of the significance between Socialization and Nationalization -- thinking that the only difference is whether to call the managers "representatives" or "delegates."
What is it that defines the Capitalist? It is their isolated control over some productive property in society. When the state "nationalizes" the railroads or the shipping ports, it becomes the Capitalist. It fulfills the role of someone with mastery over others, in an effort to seek out profits in contrast to the needs of the people. Nationalization of industry, then, simply choose a new Capitalist in place of the old. It is easy, then, to see why there are so many abuses with this system of Nationalization.
Nationalization and Socialization mean the appropriation of industry. In one case, it is the nation that takes it, and in the other, it is society that takes it. When the nation takes it, it means that the governors of state take it; but when society takes it, it means that the people themselves have taken it.
*1. "Speech of Sedition," by Eugene V. Debs, June 16, 1918, WikiSource.org.
"It was extremely difficult to move upward from one of these divisions to another."
"'Whereas a number of workshops have been abandoned by those who directed them, in order to escape their civic obligations, and without consideration of the interests of the laborers;
"'Whereas this cowardly abandonment has interrupted a number of works essential to the communal life, injuring thereby the working class;
"It is decreed.'"
"'The centre of gravity of Trade Union work must now shift to the organization-economic sphere... The Trade Union ought to shoulder the main burden of organizing production and of rehabilitating the country's shattered production forces. Their must urgent tasks consist in their energetic participation in workers' control, registration and redistribution of labour force, organization of exchange between town and countryside, in the most active participation in the demobilization of industry, in the struggle against sabotage and in enforcing the general obligation to work, and so on.'
"The mere enumeration of these functions showed the trade unions as most important props of the new regime."