Capitalism Isn’t Working. But What Would a Viable Socialist System Look Like?

Criticisms of capitalism’s failures have more power if we can actually imagine an alternative. Here’s what a viable socialist society could look like.

Workers divide bulk food into bags for donation by SOMOS on May 11, 2020 in the Elmhurst neighborhood of Queens in New York City. Stephanie Keith / Getty

“Socialism” is a somewhat open-ended term. Under capitalism, firms are in the hands of neither workers nor society as a whole, but rather a separate class of owners. These capitalists decide what gets produced, how it’s produced, and how to distribute profits. Socialists of all flavors want to change that. Michael Walzer’s slogan captures this impulse well — “What touches all should be decided by all.”

But what, in practice, does that mean?

It’s easy to paint a picture of socialism that’s both attractive and extremely vague. Under capitalism, key economic decisions are made by a handful of owners. And many economic outcomes don’t even reflect the preferences of any individual capitalist. Instead, they stem from the chaotic imperatives of market competition.

It’s natural, then, for socialists to look at both of these aspects of the status quo and say they’d reverse them. If the current system is undemocratic and unplanned, socialists say we support “democratic planning.” If the current system often fails to meet important needs, we’ll say we support “production organized around human needs.”

It’s easy to say that good long-term outcomes would flow from such a system. But there’s a tremendous gap between slogans about features we’d like an alternative system to have and a concrete explanation of how it would work — especially if we’re interested in convincing skeptical progressives that such a system could work at all.

Many capitalist democracies have succeeded in planning at least some sectors of the economy outside of the market. Britain’s National Health Service (NHS) is an obvious example. It’s not perfect, but even after decades of Tory governments undermining the service, the NHS continues to provide far better outcomes than America’s market health system. That said, the history of attempts by communist governments to plan entire economies has been far less inspiring.

Such systems have been successful at rapid industrialization but a lot worse at filling grocery-store shelves with the products that people want to buy, and the widespread discontent caused by these failures was a major factor in the collapse of state socialism.

It’s easy to say that what we advocate as democratic socialists is very different from the Soviet model, but it’s harder to explain why the distinction makes a difference for these specific problems. If free-speech, multiparty elections had been grafted onto the basic structure of the Soviet system so that the head of the central planning office, Gosplan, was appointed by whatever party had a parliamentary majority, this would have surely averted atrocities like the Ukraine famine. But would it have made the system any better at efficiently coordinating production with the consumption needs of workers?

We can say that we want radically democratic and decentralized planning rather than top-down planning, but consideration of what this would look like can make socialism sound even less attractive to ordinary people. Few of us want to spend hours of our free time in meetings. We can hold out hope that technological developments will allow us to outsource some of the heavy lifting to computers, but do we really want to delay the transition to socialism until the singularity is upon us? Or just reassure ourselves that calculation problems will sort themselves out by the time we’re ready to move beyond capitalism?

A much more grounded approach starts from the recognition that we need to at least start with what’s often called “market socialism.” This doesn’t mean a form of socialism where markets dominate every sector of the economy, but one in which at least a big chunk of economic transactions still involve market transactions between worker-controlled firms. The “commanding heights” of the economy — think, for example, about the finance sector or the power companies — can be moved out of the market entirely. So can vital services like health care and education. The remaining “private” sector can be made up of cooperative firms.

In this scenario, the growth of the state sector on the one hand, and the transition of remaining private-sector firms to workers’ control on the other, would entirely squeeze out the capitalist class. Perhaps even more radical changes can take place in the future. The point of laying out realistic visions of socialism isn’t to shut down anyone’s utopian imaginations, but to pry open the imaginations of those who currently can’t imagine anything beyond capitalism.

Meanwhile, in the “five minutes after capitalism” system just described, many of the objectionable features of the old system would have been eliminated. As with actually existing worker co-ops like the Mondragon Corporation in Spain, managers would still exist. They would simply be elected and democratically accountable to the workforce.

Best of all, this realistic vision of socialism doesn’t represent a flying leap into the unknown. The NHS exists. State-owned banks in various countries exist. Successful worker co-ops exist. All of these elements have been successfully beta tested under capitalism.

It’s just a matter of piecing them together into a framework that can deliver both greater economic prosperity and economic democracy to billions of people around the world.