One of the most contentious issues that divided the left during the 20^th century was whether or not the Soviet Union was socialist or not, which of course brings into sharp focus the question, what is a socialist economy and how does one achieve it?

For us today, this has become a burning issue when confronted with terminal capitalism, ready to take the rest of the planet with it as it unravels and descends into barbarism, a process that is already well underway.

Let us not be deflected by the comforting words of the apologists of capitalism who talk of ‘economic recovery’ and so on, for it is clear that the political class of the capitalists are totally clueless and hang on by their fingertips from day to day, hoping for some miraculous ‘intervention’ to solve the contradictions of the capitalist economy that are now compounded by the twin assaults of the revolution in production brought about by the information technology revolution and what could well be the impending crash of the planet’s biosphere, brought about in no small part by the insatiable fetish of production/consumption to which they have addicted sections of the planet’s population.

Nor should we be defeatist in thinking that socialism too, is dead and gone. I maintain that socialism, now more than ever, is not only necessary, but vital to our survival, perhaps not as a species, but definitely as the ‘guardians’ of an emerging planetary ‘economic ecology’.

I’m not going to get into the old debate about whether Mao’s China was the real socialism either, as it too has taken the capitalist road as well, even if by a different route. What those debates do reveal however, is that most socialists are utterly ignorant of real economics and that there is a deep irony in the works of Marx being bandied about in the name of socialist politics, when he was first and foremost an economic theorist and moreover, a student of capitalism, not socialism (which is not surprising really, as socialism didn’t exist).

That Marx’s economic works got appropriated by the state bureaucracy of the Soviet Union and China et al and got distorted almost – but not quite – beyond recognition in order to justify a dictatorship of the Party (and its handmaiden, the state bureaucracy) has merely served to mask the essential issue – indeed problem that confronts us – by what process and in what form, does a transition from capitalism to socialism take?

These problems are essentially economic in nature, as our experience of the 20^th century has shown, that taking political power, under the right conditions, can be achieved but that the real obstacle has been, how do the producers take economic control without it being monopolised by the state’s political class (most often a ‘communist’ or ‘workers and peasants’ party)?

The problem lies in the nature of the state’s control of the means of production, namely nationalisation by the state, for in all cases, whether within a capitalist or nominally socialist society, it has led either, to the state utilising nationalisation to the ultimate benefit of the capitalist class or, as in the case of the Soviet Union, to maintain the power of the dominant political class, the Communist Party (or whatever it calls itself).

In other words, our ‘classical’ understanding of the ‘equivalence’ between political and economic classes, with one representing the interests of the other, has not been resolved by any society that claims to be socialist.

I’d like to get into this issue, by using a poor, dependent economy as an example of the problems that confronts the majority of the planet, for it is only in these countries that socialism ‘triumphed’. And the question has to be asked (as it has been many times before), why has no developed economy made the transition to socialism and what is the relationship (because there surely is one) between the two?

For poor countries this is not a simple problem by any means as it involves two related issues. One is the nature of the internal economy and the other, the relationship between poor economies that are attempting to get out from under imperialist economic domination of which Nicaragua was (and still is) a textbook example. This perhaps explains why the thinking that emerged from Nicaragua at that time (the 1980s) is so important, not only for poor, post-colonial countries but also for us in the developed world.

Perhaps the most cogent analysis I’ve read on the subject came out of a Nicaraguan Sandinista ‘think-tank’ in the 1980s. Nicaragua, in common with many so-called Third World countries found itself ‘trapped’ between imperialism and the Soviet bloc (through no fault of its own).

With most of its economy (80%) still in private hands and driven by the US economic blockade into a relationship with the Soviet Union, Nicaragua was caught between a rock and a hard place. Its economy was totally dependent on trade with the US, being exclusively ‘primary’ production, coffee, bananas etc. Nicaragua had no means to ‘add value’ to its production, for example exporting fruit juice instead of fruit, instant coffee instead of beans. Adding value requires a relatively sophisticated technical infrastructure and moreover, it requires the means to penetrate a developed market (distribution, marketing, transportation and so on), all of which were owned and controlled by US cartels like United Brands, Grace, Chiquita etc. As long as it was dependent on US-owned corporations for the export of its primary products, the local economy was totally dependent on the major trading centres for the price of them (eg London, Chicago or wherever), as that is all it has to sell.

The problem was compounded by the fact that aside from the big, US-owned producers, much of the production was small scale. How do hundreds or even thousands of small producers compete with the likes of Grace or United Brands? A partial solution lies in co-operatives whereby small producers utilise a single outlet for their production. Traditionally these co-operatives have been confined to such things as processing, packing and internal transportation or perhaps harvesting machinery. However, local co-operatives have not extended their activities to international transportation and marketing. This is where the real money is, in the metropolitan markets, getting Nicaraguan instant coffee onto the shelves of Safeway or Sainsbury.

In the 1980s Nicaragua made an important break with this relationship by creating a national association of producers. To be eligible to join you had to be an indigenous Nicaraguan company, whether private, coop or state-owned. The association with support from the state, created a national infrastructure of marketing, distribution, communications and transportation that enabled Nicaraguan business to compete head-to-head with the transnationals in the global market and it succeeded in this endeavour.

What makes this example important to my argument is the thinking that lay behind it. The Sandinista think-tank that originated the strategy was motivated by the fact that although the socialist revolutions of the past had succeeded in taking political power and creating a political class that could represent the interests of working people, there had been no commensurate development of a dominant economic class to replace the capitalists.

In other words, given a successful political revolution, the working class per se ceases to exist (this corresponds to ‘classical’ Marxist economic theory).

Under capitalism, the dominant political class represents the capitalist class's interests, the owners (eg the Democrats or the Republicans) – they compliment each other. But in the Soviet Union for example, the dominant political class, the Party did not represent the working class because the working class had no economic power, because its base, the means of production, the economy, had been captured by the state that in reality was the Party and its bureaucracy.

It can’t be called state capitalism as some left communists assert because private ownership of the major means of production was technically and legally impossible. The dominant political class, the Party (the only one permitted) could at best, appropriate only a small percentage of the surplus accumulated (perks etc). Its major asset was power itself, the power to reproduce itself, as it was unable to reproduce capital. This explains the fact that the difference between the highest and the lowest paid in the Soviet Union was extremely narrow, narrower probably than any other country in the world. As opposed to capitalist states, ultimate power lay in political, not economic control. So I suppose you could say, that at best, it was 'half a socialist revolution', as the party as opposed to representing the dominant economic class, the producers (or the workers), represented itself and the bureaucracy with the two (party and bureaucracy) being one and the same thing.

Why is this important? There’s another component to the Sandinista thesis that is embedded in the example I gave above, namely the development of a new class or more accurately, a combination of classes of producers of various kinds, not differentiated by whether or not they are privately, publicly or co-operatively owned, but whether or not they are indigenously owned.

Moreover, by combining in voluntary associations of various kinds, they are able to take advantage of economies of scale and access to technology, especially information technology-based processes that enable them to compete with transnationals on an almost equal footing.

But perhaps more important is the idea that out of these associations, new kinds of economic and social relationships are developed that form the basis of a new class (or classes) of producers. This new class of producers must be in place before a transition to socialism takes place. If not, then as with previous attempts at building socialist economies, the state will monopolise the economy (and hence the people) through its control of the political class.

To some this will sound like a stupidly simple idea, so simple in fact, that there must be something wrong with it and indeed, I do not mean to present a reductionist argument, as the exact nature of this new class of producers firstly, will vary from country to country depending on the level of development, the social wealth available and a host of other factors.

But I contend that there are a number of factors that support my thesis beyond that of simple justice.

First of all, aside from the fact that transnationals are privately owned, there is no fundamental difference between them and state-owned monopolies. The key difference however between the traditional state monopoly and the transnational is firstly, they are global in scope and most importantly, they employ information technology to create seamless integration through supply chains, distributed production and assembly, real time feedback of information on sales and demand, all of course driven by the need to maximise profits.

There is another difference brought about by the revolution in production through the application of information technology that also needs to be appreciated, one that relates directly to the idea of a new class of producers: whilst ownership is aggregated through the joint stock company, increasingly, transnationals have realised that the information technology revolution means that associations of individual producers are often more efficient than combinations. This is best expressed through the supply chain process.

So for example, a major manufacturer, no longer limited by national boundaries, distance or even time through the emergence of the Internet, is able to link discrete producers, assemblers and distributors into a single process. This corresponds directly to the Nicaraguan national association of producers. The supply chain enables competitive bidding, ‘just-in-time’ production and delivery, to the point whereby the manufacturer no longer actually ‘manufactures’ anything at all. The manufacturer has transformed itself into an association of producers, distributors and marketers.

This then, becomes the precursor for my new class of producers. The combination, the route whereby the traditional capitalist enterprise has maximised profits through mergers and acquisitions becomes redundant. The IT revolution in and of itself produces efficiencies that are historically unprecedented, obviating the need for giant corporations except of course to generate profits for shareholders.

For socialists then, the next step is to turn this recognition of a revolution in the process of production into a programme of economic and political transformation, just as Marx realised that the factory (industrial capitalism) created a new class of producers, the industrial working class, that in turn, produced a political expression, a party of the working class. The critical difference being that the state is no longer needed as a tool of direct intervention in the production process itself.

This approach solves the problem of a revolutionary political class having no corresponding economic class that it represents. It also solves the problem of a revolutionary political class directly controlling economic processes, as governance becomes in Marx’s prescient words, a government of things. The economy is effectively self-regulating, it has to be as its functioning is totally dependent on two directly connected processes that are the core of the process of distributed yet integrated production, the network.

Stafford Beer, unsung hero
The earliest investigation of this idea that I know of is in the works of Stafford Beer, an English cybernetician, who in the 1970s produced two seminal books on the subject that should be required reading for any socialist worth his or her salt, "The Brain of the Factory" and "Designing Freedom" both published by Routledge and I believe, still available.

Beer was hired by the short-lived government of Salvador Allende to develop a plan for a real-time ‘picture’ of the Chilean economy, and although Beer’s ideas still suffered from a ‘top down’ approach to economic management and modelling, it is to him that the idea of the supply chain should be attributed as well as the role of the network in integrating discrete production and distribution as a reflection of the real needs of the economy.

Beer’s works contain so many revolutionary concepts that relate to a 21^st century socialist revolution, that this is not the place to go into them. Better that you get hold of his works and read the damn things!

Conclusion
This is of necessity, a simplified overview. I offer it as a basis for further discussion and as a challenge to socialists to get off their arses and take up residence in the 21^st century instead of retreating back into the 20^th. I think it meets all the ‘traditional’ criteria that Marxists hold dear whilst at the same time, extending Marxist economic theory to take into account what I believe to be the culmination of a process initiated with the Industrial Revolution. Were Marx alive today, I’m pretty sure that instead of spending all his time in the British Library, he’d be Google’s number one user! I am also sure that he would not be at all surprised or fazed by the Internet but would view it as a logical outcome of the incessant need for capitalism to continually revolutionise production in the pursuit of profit and to understand that serendipity plays a central role in the process (DB, you know what I mean).