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Nationalize the Economy,
or Socialize the Economy?

Should We Favor
or Socialization
of Industry?

By Punkerslut

By Punkerslut, Made with Graphics by Michael Daines
Image: By Punkerslut, Made with Graphics by Michael Daines,
Released Under the Creative Commons
"Attribution-ShareAlike 2.0 Generic" License

Start Date: April 11, 2011
Finish Date: April 11, 2011

The Use of Public Control of the Economy

"And when the industrial baron who has been levying blackmail upon the worker is once evicted, production will continue, throwing off the trammels which impede it, putting an end to the speculations which kill and the confusion which disorganizes it, transforming itself according to the necessities of the movement under the impulsion given to it by free labor. 'Men never worked in France as they did in 1793, after the soil was snatched from the hands of the nobles,' says the historian Michelet. Never have men worked as they will on the day when labor becomes free and everything accomplished by the worker will be a source of well-being to the whole commune."
          --Peter Kropotkin, 1880
          "The Commune of Paris," Part III

     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.

By Punkerslut
Image: By Punkerslut

A Decentralized Revolt Against Capitalist Exploitation

"A universal State, government, dictatorship! The dream of Popes Gregory VII and Boniface VIII, of the Emperor Charles V, and of Napoleon, reproducing itself under new forms, but always with the same pretensions in the camp of Socialist Democracy! Can one imagine anything more burlesque, but also anything more revolting?"
          --Mikhail Bakunin, 1870's
          "Marxism, Freedom, and the State," Chapter 4

     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.

"...our efforts must in the first instance be directed to making the revolution and in such a way that it is in the direction of anarchy. We have to provoke the revolution with all the means at our disposal and act in it as anarchists, by opposing the constitution of any authoritarian regime and putting into operation as much as we can of our program. Anarchists will have to take advantage of the increased freedom that we would have won. We will have to be morally and technically prepared to realize within the limits of our numbers, those forms of social life and cooperation which they consider best and most suitable for paving the way for the future."
          --Errico Malatesta,
          "The Anarchist Revolution"



*1. "Speech of Sedition," by Eugene V. Debs, June 16, 1918, WikiSource.org.
*2. "Eugene Debs: Biography," published by Spartacus Educational, Spartacus.SchoolNet.co.uk.
*3. "Canada: A Modern History," by J Bartlet Brebner, edited by Allan Nevins, and Howard M. Ehrmann, Published by the University of Michigan: Ann Arbor, pages 404 to 405, Chapter 25: The Tests of War (1914-18), Section: The War Economy, Sub-Section: International Accounts.
*4. "The Revolution Will Not Be Televised," Directed by Oliver Stone, 2003, Produced by David Power, Studio: Power Pictures, Distributed by Vitagraph Films.
*5. "More About...Senator George Norris State Historic Site," by Official Nebraska Government Website, Nebraska State Historical Society, 20 May 2003, NebraskaHistory.org.
*6. U.S. Code, Title 29: Labor, Chapter 6: Jurisdiction of Courts in Matters Affecting Employer and Employee, republished by the Cornell University Law School, Law.Cornell.edu.
*7. "Rural Electrification Act of 1936," passed by the U.S. legislature, May 20, 1936, [S. 3483, Public, No. 605.], republished by the Center for Columbia River History (CCRH), CCRH.org.
*8. "Rural Electrification," published by the Roosevelt Institute, no date or author attached, NewDeal.Feri.org.
*9. About Page for MJM Electric Cooperative, MJMEC.coop.
*10. "Socialism in Japan," by Sen Katayama, Source: Justice, November 21, 1908, No. 11, p. 6.
*11. "A Treatise of Taxes & Contributions," by William Petty, 1662.
*12. "The Modern History of Japan," by W.G. Beasley, 1963, Frederick A. Praeger: New York, Washington, Library of Congress Catalog Card Number: 63-20665, Chapter 1: Japan in the Early Nineteenth Century, page 10: "For all this it is possible to identify three broad divisions of the feudal class. First came those who were linked with the lord's own house by blood or long service: the upper samurai, few in number, much wealthier than the rest and often holding land of their own. Second were the middle samurai, full members of their class by rank and privilege, but usually excluded from the very highest posts. Last were those who are often called the lesser samurai, a group rather more numerous in most domains than the other two together. They were men whose military duty as foot-soldiers and the like gave them some claim to samurai status and access to the minor offices of government, but whose economic and social position was vastly inferior to that of the samurai proper. Indeed, it is not easy to recognize some of them as members of a ruling class at all.

"It was extremely difficult to move upward from one of these divisions to another."
*13. "Workers Power and the Spanish Revolution," by Tom Wetzel, Uncanny.net.
*14. "The Paris Commune," by Edward S. Mason, 1930, Howard Fertig publishers, page 245-6, chapter 5: "The Commune of Paris (Continued): The Socialism of the Commune": "Beginning with the 18th of March, [1871] the steady exodus of employers from Paris had led to the closing of large numbers of workshops and a consequent intensification of unemployment. The Commission attempted to meet this situation by a scheme providing for the utilization of abandoned plant and equipment by workers' associations. The Commune accepted the idea in principle and in a decree of April 16th authorized the associated labor unions of Paris (Chambres syndicales ouvrières) to appoint a committee to investigate the matter.

"'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.'"
*15. "Anarchist Portraits," by Paul Avrich, 1988, chapter 7: Nestor Makhno: The Man and the Myth: "In his efforts to reconstruct society along libertarian lines, Makhno also encouraged experiments in workers' self-management whenever the occasion offered. For example, when the railway workers of Aleksandrovsk complained that they had not been paid for many weeks, he advised them to take control of the railroad and charge the users what seemed a fair price for their services."
*16. "Workers' Control," Paul Mattick, 1967, included in The New Left: A collection of essays ed. Priscilla Long. Boston: Porter Sargent, 1969. In 1978 it was included in Anti-Bolshevik Communism Merlin Press, London, 1978, ISBN: 0 850 36 222 7/9.
*17. "Soviet Trade Unions: Their Place in Soviet Labour Policy," by Isaac Deutscher, 1953, published by Oxford University Press: London, England, page 23, Chapter 2: Trade Unions and the Revolution, Section: Debates at the First Trade Union Congress: "The trade unions pledged their support to the Government in all essential matters:

"'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."
*18. "Workers Power and the Spanish Revolution," by Tom Wetzel, section: "Trajectory of the Spanish Communist Party," http://www.uncanny.net/~wetzel/spain.html : "The law that was passed only legalized expropriation of firms with 100 or more workers, or firms with 50 to 100 workers if 75 percent of the workers voted to do so. In practice the CNT simply ignored the fact that this was inconsistent with the expropriations of large numbers of smaller businesses they had carried out."
*19. "Problems in European Civilization: The Eighteenth-Century Revolution, French or Western?" Edited by Peter Aman, published by D.C. Heath and Company: Boston, 1963, chapter: "The Myth of the French Revolution," by Alfred Cobban, page 75. "The countryside took matters into its own hands when it broke out in the last jacquerie, under the stimulus of economic distress, the excitement of the drawing up of the cahiers and the election of the tiers état, and the general breakdown of authority resulting from the revolte nobiliaire. The unrest in the spring and summer of 1789 was so widespread that a major military operation would have been necessary to suppress it. The night of the Fourth of August was an attempt by throwing overboard some of the dues to salvage the rest. In the age of Reason, feudal went with such terms of abuse as Gothic and medieval. If the property rights that were sacrificed were called feudal, this was at least in part to prevent the episode from becoming a precedent in respect of other property rights. But the peasantry did not draw such subtle legal distinctions. They simply ceased to pay their dues, whatever their nature, and no subsequent government had the strength to make them resume payment. In the words of Lefebvre, ''they liberated themselves, and the successive Assemblies only sanctioned what they had accomplished."
*20. "The French National Workshops of 1848," by Ferdinand Lassalle, Source: Social Democrat, Vol. 10, no. 4, 15 April 1906, pages 236-242.

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