We Rise Up and Seize the Means of Production. Then What?

When the capitalist rulers of the United States let Donald Trump become president again, his wrecking crew promptly set off mass anger. But discontent has been boiling under for years. While a handful of mega-billionaires like Elon Musk, Jeff Bezos, and Mark Zuckerberg grab for more, young workers see no road to modest prosperity, can barely afford a place to live, and dread to think about their future. Retired workers worry whether they can get health care when they need it.

Thirty years ago no declared socialist could mount a serious run for president. That has changed. When Bernie Sanders ran for the Democratic presidential nomination in 2016, he called himself a democratic socialist. (Democratic socialists in power have always fought socialist revolution. At best they drop a few reforms into the toilet bowl of capitalism.)

Sanders read mass sentiment. Polls now register broad favorable opinion of socialism. The Pew Research Center in 2022 found:

Among 18- to 29-year olds, sentiment is 44% positive for socialism, 40% for capitalism.

Among lower-income families (income less than two-thirds of the median), sentiment is 45% positive for each.

Among Blacks, sentiment is 52% positive for socialism, 40% positive for capitalism.

To be sure, what people understand by socialism ranges from vague to sharp. At the reformist end, the goal is comprehensive social programs like the now-dead Swedish model. At the revolutionary end, we advocate the socialist-communist road to abolish exploitation and class differences. This is the only road to common prosperity and liberated work for all.

A reasonable question any worker might ask is: okay, we seize the means of production. Then what?

A Revolution in Ownership

Most means of production – factories, mills, laboratories, the electricity grid, data centers, Internet and phone networks, service centers, smelters, offices, crop fields, etc.  – are owned by corporations. They own the warehouses and stores that distribute goods, too. The banks, mutual funds, and other financial firms are also corporations.

The equity of corporate enterprises is divided into shares of stock. The new working-class government can simply decree its ownership of these enterprises and rip up the stock certificates. It may provide different amounts of compensation, or none, according to the class position and need of the shareholder.

Capitalist corporations are run to make the biggest profit they can. Then most profits are reinvested. For all capitalists’ obscene luxuries and displays of degradation, corporations reinvest the bulk of their profits, or they pay them out to financial capitalists who invest the funds somewhere for yet more profit. This is capital accumulation. It is the motor of a capitalist economy. Capital accumulation basically determines what is produced, how the economy grows, and which technologies are developed.

The working-class government can change the charter of enterprises from making a profit to breaking even. The mission is: book neither profit nor loss. Aim for revenue that just recovers outlays for labor, materials, etc. If an enterprise happens to make a profit, it is taxed 100 percent. If a loss, the state must cover the shortfall and may reorganize the industry.

Hand in hand with their breakeven charter, enterprises pay for labor in two parts: the workers’ wage and a tax on each hour of labor. The tax is set at a level which captures the surplus that appears in capitalism as profit, interest, executive compensation, etc. This tax also replaces the income and sales taxes we all pay. The cost of labor to an enterprise (wage per hour plus tax per hour) is a measure of the whole labor input, not a reduced cost of exploited labor.

The dedication of the staff to produce something and sell it at the no-profit price is a political matter. It helps when several companies compete for market share. Consider, though, that there is only one federal government, yet the workers at the one national weather service, the air traffic controllers at the one aviation administration, the crop experts at the one agricultural service, and the clerks at the social security offices do a fine job by and large. This is under capitalism. Workers in a socialist-communist economy can hold each other and managers to the same ethic of service to society.

An Initial Socialist Economy

Here is a typical burst of enthusiasm from the so-called Party of Socialism and Liberation (PSL):

The socialist government will provide free, high-quality health care to every person living in the United States, regardless of citizenship. For-profit health care and private insurance companies will be outlawed.

The socialist government will provide decent housing for every person in the United States. No person will pay more than 10 percent of their income on housing costs. …

The socialist government will provide free, high-quality education to every person in the United States from pre-school through college…

However, you will search the group’s program in vain for an example of how the economy might provide these wonderful things. Health care requires clinics and hospitals staffed by trained medical workers. Housing requires building materials, construction machinery, and construction workers who have the skill to use them. And educating people requires schools, textbooks and other learning materials, and teachers who inspire students and help them master thought and action step by step. 

How Can It Be Done? The Input-Output Table

A basic tool of central planning is the input-output table. The example here illustrates the idea. (The numbers in cells A1 to F4 do not represent a real economy. It is the relations between cells in the outer parts of the table that illustrate the planning concept.)

The various kinds of machinery, buildings for factories and other production sites, and raw materials are listed on rows 1 to 3 along with labor on row 4. They are operated to make things. The entries on the row for a certain kind of machinery show, at each column heading, what the machinery is used to make. The entries down each column show, at each row label, how much of that input is used to make the thing named in the column head.

Columns A to C are the same intermediate products. They go back into the economy to make other things or provide a service.

Columns D and E are consumed goods and services. These are consumed individually, like clothing, or collectively, like a new public building.

Column F is the investment column. It is for the machinery and materials that were used up and need to be replaced plus new machinery and facilities that will expand our productive power.

In a coherent plan for the coming year, the intermediate products are just used up making things: the total of each row 1, 2, or 3 should equal the total for each corresponding column A, B, or C. Here, G1 = A5, G2 = B5, and G3 = F5.

Similarly, the total uses of labor in row 4 should equal the total of columns D, E, and F which shows what we made with our labor. Here, G4 = D5 + E5 + F5.

The Central Plan in Action

An input-output table maps connections among industries. The federal government’s Bureau of Economic Analysis prepares such tables for the U.S. economy. In a capitalist economy, they can only be descriptions. The Bureau advertises, “Businesses can use input-output data to develop economic projections and forecasting models.” Capitalists might find the tables helpful for deciding where to invest, but only if profit beckons. A socialist regime, abolishing capital and its accumulation based on profit, uses an input-output table to operate a planned economy.

Since the plan states what we intend to produce, it is a political document, a supreme outcome of working-class democracy. The plan expresses a complicated set of goals. The government can gather opinions, write a draft, and submit it for public discussion. There will probably need to be discussion of national, regional, and city goals. Rewrite and repeat until the active working class is united.

Enterprises are integrated into the process. Looking at goals in the table, they propose budgets: we will make this amount of these things, for which we will hire this number of workers and buy these amounts of materials and machinery. The planning bureau revises the table in light of inconsistencies: not enough of this, an unsalable amount of that. The plan goes through rounds of adjustment.

A state investment agency puts the plan into action by loaning enterprises their operating and investment funds. This is the only way enterprises are allowed to get funds. Revenue out of sales pays back the loans.

Socialist planning is about guiding the investment that puts resources to work. A central plan does not require detailed orders from a state office that tell each factory what to make and how much of it.

If an economy does not run on unified allocation of investment, it is not socialist. China today is an example. It talks “plan” but, like Japan, France and other capitalist countries did, it uses state incentives and regulations to influence capital that is deployed for profit. Was it in China’s so-called plan that the country today has more than 750 billionaires (and that is before counting the hidden billions of state officials like former premier Wen Jiabao)?

In the U.S., ninety-nine out of a hundred economists today serve the capitalist class. They tell us over and over that socialist planning cannot work. Of course it can. It will need continual adjustment, and this is waste compared with perfect execution of a perfect plan. The economists somehow overlook the enormous waste in capitalism. Every year some corporations write off big losses or report negative earnings because their profit-seeking ambitions collided with the moves of other corporations.

An Ever More Communist Economy

The history of the Soviet Union and China both thrills and upsets us. Socialist revolution brought joy to the working people of two huge countries. They showed the workers of the world that we need not live exploited, unhappy, disastrous lives while capitalists wrap money around their cigars and smoke them.

Then the two countries taught us something we must never forget: socialism is the unstable beginning of communism. (Centuries ago, early capitalism in Italy and Holland was unstable, too.) The new mode of production must advance step by step toward complete liberation, toward communism – or it will fall back to capitalism.

The same PSL that has no specific vision of socialism declares, “Socialism is the necessary stage between capitalism and communism.” Eventually, it says, there is a “fading away of

classes and class antagonisms.” No, socialism is not a stage that starts out as a newborn baby, grows to a rounded maturity, and finally declares, okay, now we can go to communism. From the very first day, we need to drive socialism toward the complete abolition of classes, to work at erasing the class corruption of every sphere of society. We need to foster communist service and solidarity and draw everyone to high communist culture.

Socialism inherits a wide spread of wages in the working class. We can narrow the spread in steps, raising the minimum wage to a living wage and reducing a maximum amount. Every worker should truly earn her earnings. To do that, we educate, apprentice, and qualify all workers to a common level of all-round culture and skill. We will not all be engineers and physicians, but we should each be highly capable in one or another kind of work, while we also share the labor of driving a street-sweeper and making pizzas. 

It takes resources to move toward an equal wage. We can plan to produce them – an example of how socialism does what the capitalist motor of profit cannot. Capitalist managers are horrified at the extra cost of qualifying all workers to a high level. Profits are bigger when capitalists dumb down as much work as possible and hire people at low wages to do it, while an elite handful designs the production line. While the working class certainly aims to produce what we need and want, we also aspire to make ourselves and our children into new persons.

Moving toward an equal wage revolutionizes individual consumption, but it leaves consumption tied to individual earnings. At the same time we can also remove more and more output from purchase. Health care as each person needs it, not as she can pay for it, is already something most people want and know is possible.

Items of individual consumption are also candidates for communist distribution. Everyone could be given a smartphone and a network subscription at a defined level of capability. Communist distribution obviously requires socialist planning.

Revolutionizing the Secondary Relations of Production

Communist theory has given much attention to the question of how to distribute output. A famous pair of aphorisms contrasts socialism and communism: “from each according to ability, to each according to work” versus “from each according to ability, to each according to need.” Yet historical materialism finds that distribution is largely shaped by the prevailing relations of production.

The class relation of production is fundamental wherever it exists: peasants against lord, workers against capitalist. But there are other relations in production, dominated by the class relation. In turn, the secondary relations support the class relation.

An example is the relation between mental and manual work. In capitalism, people who do mental work tend to be better paid, and they have a greater opportunity to become capitalists. (As the forces of production developed, a further split between routine mental labor and more highly developed mental work has complicated the picture.)

Another secondary relation is that between managers and the managed, between giving orders and following orders. Managers and supervisors are paid more than their subordinates, and they know their assignment is to manage and supervise for the benefit of capital.

The mental worker and the manager often develop an individualistic attitude that their work is more important than routine labor following orders. They think they deserve privileges and need them in order to do their job. Such motivation played a big role in undermining Soviet and Chinese socialism.

Socialism that moves toward communism transforms secondary relations of production. We do mental work, we do manual labor. We draw up a schedule of jobs and tasks; we take our part in actually doing them. These arrangements take resources, which need to be included in socialist planning.

Socialism cannot be a stage between capitalism and communism. That approach fails to wipe out all the forces, relations, and ideas that pull back to capitalism. Socialism is a series of communist projects.

Revolution with Confidence

The technique of the input-output planning table and the tasks that move socialism forward are distilled from the history of the first socialist countries. When people cannot take capitalism any longer, when they decide there is no alternative to revolution, we can have confidence in the outcome. One reason for confidence is that, upon seizing the means of production, we can answer the question, “What now?”

Charles Andrews is the author of The Hollow Colossus and other books.