Being Against Capitalism Isn’t Enough

We live in a time when everything is political — except politics. We routinely treat everyday choices about culture, consumption, and personal identity as expressions of moral allegiance, parsing them for hidden meanings and assigning them to partisan camps. We infer entire worldviews from what people watch, buy, joke about, or post online.

And yet, in this atmosphere of constant ideological conflict, the most fundamental political questions are almost never asked. How should an economy be organized? Are disparities in income and wealth intrinsically objectionable, or are they acceptable as long as no one is starving? Can political equality truly exist alongside economic inequality? If democracy is good for governments, why isn’t it good for workplaces?

Much of the twentieth century was defined by global rivalry between Western capitalism and Soviet communism. Capitalism’s victory was clear by the century’s end. The USSR and its Eastern European satellite states collapsed. Most of the countries still ruled by Communist parties adopted a marketized hybrid of the two systems. In an era of capitalist triumphalism, the basic contours of social and economic life were treated as nonnegotiable.

Decades later, even the most strident critics of capitalism’s abuses rarely suggest that we can transcend the system entirely.

We have spent much of our lives advocating for reforms that benefit working people in the here and now. We understand that while history sometimes takes giant strides forward, social progress more often involves daily push-and-pull struggles for short-term gains.

However, those of us who call ourselves socialists must be able to offer not only a thoroughgoing critique of capitalism — one rooted in the lives and struggles of ordinary people — but also a vision of what should replace it. Not what such a successor might look like centuries from now, once economic, environmental, and logistical hurdles are overcome by advancing technology, but how an alternative could function in the present. Without that, opposition to capitalism risks amounting to little more than an abstract moral protest.

If the best we can say about a fully socialist society is that it’s something that may one day become possible, like radical life extension or colonies in distant galaxies, then being “against” capitalism is a pointless affectation layered on top of our support for reforms within the system.

Nor does it do much good to point out, as Marxists often do, that capitalism hasn’t always existed. Consider some other things that didn’t exist for most of human history — like modern sanitation, multiparty democracy, or the internet. The question isn’t whether any of these things might cease to exist in the future; it’s whether we would want them to stop existing. Overcoming capitalism is only desirable if we can replace it with something better.

A key feature that distinguishes capitalism from feudalism or ancient slave systems is that in those earlier modes of production, the ruling class used direct force to compel what Karl Marx called the “immediate producers” (peasants, slaves, or serfs) to work for them. Under capitalism, wage laborers are made to serve the capitalist class not by whips and chains but by the fear of destitution. No one who works for Amazon is marched into a warehouse under armed guard. They can leave at any time, and the threat of job loss is one of the most effective disciplinary weapons in the employer’s arsenal.

The results speak for themselves. The tools of extraction might be gentler, but just as feudal peasants were legally obliged to spend part of their time growing crops for the nobility, modern capitalist labor contracts oblige workers to surrender part of the product of their labor to their society’s ruling class. The biggest capitalists become so rich in this process that we’re rapidly accelerating toward an economy in which the top spots in the distributive hierarchy are occupied not by billionaires but by trillionaires.

At work, the boss rules like a dictator. Labor unions and the regulatory state sanded off some of the roughest edges of workplace tyranny in the twentieth century, but the forces of capitalist innovation generate creative ways to restore those edges every day. There’s a reason why workers at Amazon warehouses race to fulfill their quotas in an atmosphere of electronic surveillance and skip bathroom breaks for fear of falling behind.

As bad as the soft coercion of economic necessity that underlies capitalism can be, it’s an improvement over the direct coercion that characterized many of the systems that preceded it. But this reduction in human unfreedom doesn’t go far enough. Socialists want to radically empower the immediate producers by creating institutional arrangements through which working people get to decide what’s produced, how it’s produced, and how to divide the results among themselves. And we want to create a system that does a far better job than capitalism of guaranteeing the social necessities people need to live a good life. This book explores a realistic model of what that might look like and argues that it would be a significant improvement over what we have now.

The Case for Blueprints

That vision begins with a simple question: Who has power, and who doesn’t? Short of disrupting the system through collective action, the only individual leverage workers have under capitalism is the power of exit. Securing this power is a profound historical accomplishment, but it has serious limitations.

For one thing, workers can’t exercise this leverage often — their future job prospects suffer if there are too many gaps in their employment history. For another, in most cases, it’s far easier for a company to replace one of its workers than for the worker to replace the source of their livelihood. Things are a bit different for workers whose skills are particularly sought after by employers, but supply and demand work much the same way in the labor market as they do in any other market — rare skills confer more bargaining power precisely because they are rare. For most workers, most of the time, wage labor in what we can think of as its “natural state” is a take-it-or-leave-it proposition. Workers whose only freedom is the freedom of exit can decide which particular capitalist dominates them, but they still can’t fully control their own lives.

A critique of working-class unfreedom isn’t the only grievance socialists have with capitalism. We’re also concerned with issues like poverty, precarity, overwork, fairness in the distribution of resources, the corrosive effect of all the above on personal fulfillment and interpersonal relationships, ecological destruction, imperialism, and the inevitable link between concentrated wealth and concentrated political power. But at least some of those other problems can reasonably be traced to the fundamental power imbalances built into capitalist ownership relations. Those imbalances are deeply objectionable on their own terms — or at least they are if there’s a more desirable society to be found on the other side of capitalism.

After all, the abolition of wage labor only represents a reduction in the overall level of human unfreedom if whatever system replaces capitalism can sustain a sufficient level of material abundance. Attempts to enforce an egalitarian distribution of crumbs can get very ugly, and they don’t tend to last for long. The easiest way to end a system of soft coercion is to bring back hard coercion. Millions of working people are critical of capitalism but hesitant about the prospects for a viable and desirable socialist future. That’s exactly why we need a blueprint — a compelling and concrete vision — for how a better system could be constructed.

Many socialists have thought we don’t need to worry about what Marx once called “writing recipes” for “the cook-shops of the future” because, once the working class has vanquished the old order, they’ll confront and solve the problems of constructing a new world through mass, democratic problem solving. It would be foolish and inappropriate, the thinking goes, to attempt to anticipate the results of this process in advance.

We don’t deny that there’s something to this line of thought. It’s true enough that no model dreamed up today will fully reflect the complexities of the real world tomorrow. And as a matter of practical politics, new social institutions are often odd and messy hodgepodges — combining remnants of older institutions, new elements shaped by historical accidents, and compromises and improvisations that would be impossible to predict. Even in our most optimistic moments, we don’t expect the citizens of a future socialist society to feel bound by a speculative model devised in the mid-2020s.

Nevertheless, the old-line socialist idea that the details will sort themselves out “after the revolution” is badly misguided. The experience of the Soviet Union was a record of systemic economic failure, not just political repression. Authoritarianism doubtless exacerbated the failures of command economies in multiple ways. During the darkest days of Joseph Stalin or Mao Zedong, even state officials were often afraid to speak out against catastrophically misguided economic decisions. But the apparent assumption of many anti-Stalinist socialists in the twentieth century that democracy by itself would have cured what ailed those societies is hard to defend.

Start with a simple thought experiment. Take the basic structures of Soviet economic planning and graft on the sort of democratic political institutions found in most advanced capitalist societies. There’s a free press. There are competitive elections. Parties debate competing visions for the next Five-Year Plan, and whichever one wins a majority in the Supreme Soviet forms a government and appoints the new head of Gosplan, the central planning agency.

This alternate USSR would be superior to the one that existed in our timeline in any number of ways. The 1930s Ukrainian famine would have been much harder to sustain if Stalin had been worried about whether peasants would vote to reelect him. But would the day-to-day frustrations of consumers at grocery stores in 1978 Leningrad really have been much different?

The history of socialism in the twentieth century provides clear evidence against the idea that a viable model will dialectically emerge at the appropriate historical moment. We need to think carefully about these issues in advance. A blueprint need not perfectly match the outcome of a future collective process to be worth drawing up. It can show that there are desirable ways to build the society we’re asking people to commit their energy to creating.

What’s more, a blueprint can help galvanize us to fight for a better world. If working people don’t think there is an alternative to capitalism, they’ll limit their political expectations accordingly. Conversely, it’s easy to retreat into comforting vagueness in the face of reasonable worries about how socialism could work. Putting forward a specific model for socialism helps the socialist left avoid this evasion and grapple seriously with the best objections to our vision of a transformed society.

That’s why we’ve written The Blueprint, even as we fully acknowledge that, for all kinds of reasons, people in the cook-shops of the future might end up using other recipes.

Principles of Construction

Some socialists might object to the thought experiment offered above about a democratic USSR as follows: “Real socialists like me don’t think the kind of parliamentary democracy that exists in most capitalist societies is good enough. I want real bottom-up democracy, with workers’ committees, neighborhood assemblies, and so on. I want participatory planning that’s radically decentralized as an alternative to Soviet-style economics.”

Our imagined objector is giving us a peek at one possible blueprint for a future society. Now we can start to think about whether it’s a good blueprint.

It overlaps with the model we’ll offer here in important ways. Most obviously, we too emphasize the importance of democracy in the workplace. We too want to deepen political democracy in society as a whole. But transferring economic decision-making from a central planning agency to decentralized committees, or even to assemblies in which any citizen who cares about the outcome is expected to participate, raises at least two major concerns.

First, will the committees and assemblies be in the business of determining the price at which every product will be sold? If so, it’s not clear why the empowered citizens of this society would have an advantage over the state planners in either the historical USSR or an imaginary democratic version of it. They’ll still have to solve the information problems bound to arise in a complex economy in which a staggering number of items are bought, sold, and produced with a variety of capital goods that themselves must be purchased by enterprises and manufactured in turn. Are we imagining public meetings where citizens debate the prices of hundreds of thousands of goods — everything from insulin and diapers to forklift tires, copper-wire gauges, smartphone microchips, and every size of bolt used in a bicycle factory? Is there any reason to predict that the most popular proposals would help coordinate economic activity?

We might then be offered a second peek at the objector’s blueprint and told that money won’t exist in this version of the socialist future. If so, that just increases the scope of the problem. Are the committees and assemblies now responsible for deciding what gets produced in the first place and what sort of consumption requests will be honored when they come from individual citizens and how much of each capital good will go toward each socially owned enterprise to produce the consumer goods?

This is the sort of point that was wielded to great effect by antisocialist economists like Ludwig von Mises and F. A. Hayek. In his famous article on “Economic Calculation in the Socialist Commonwealth,” Mises argued that there could be no rational accounting for capital goods in a centrally planned system — that without the prices that emerge from market exchange, there would be no way to know how best to use society’s resources to produce what people want. Without markets determining prices for these “higher-order” goods, he thought, planners would be groping in the dark as they tried to coordinate between the needs of various state enterprises and the preferences of consumers. And without money as a common measure of tons of coal and iron, hours of labor, and so on, their task would be made that much more difficult.

We don’t have to agree with either Mises’s overall economic theory or his political proclivities to recognize this as a real problem. It’s true that even societies layering social democratic policies like nationalized health care onto fundamentally capitalist structures have shown that planning can be more effective, in some sectors, than the Austrian school of economics admitted. But these systems operate with monetary budgets in the context of a broader market economy. Experiments in economy-wide marketless planning have been far less encouraging. Those of us who want to try once again to go beyond social democracy to socialism need to reckon with the genuine problems our ideological enemies identified and calibrate our models accordingly.

This is an engineering worry. It’s about whether the version of the future we’re considering would “work” on its own terms. This is the kind of territory we explore in The Blueprint — laying out our own model of socialism and arguing that it can effectively achieve its goals.

However, this isn’t the only objection that can be raised to a particular postcapitalist vision. There’s also the question of the goals themselves. Take the sort of ultrademocratic proposal we’ve been considering, where every detail of economic activity must be democratically planned. Even if we make the dubious assumption that such a model would work in the sense of, for example, preventing shortages in the communal grocery stores, would it be desirable?

Maybe not. Do we really want direct participatory control over, say, the municipal water system or the electric grid? Or would we prefer not to think about them at all?

Workplace democracy matters for many reasons. People shouldn’t have to take orders all day from bosses who aren’t accountable to them. Earlier socialists were right to stress this point. But they were also right to emphasize that socialism would mean more leisure to pursue one’s own projects. Marx’s famous image of a person who spends part of the day hunting, part fishing, and part doing literary criticism without ever becoming a hunter, fisher, or critic is an extreme version of that hope: a vision of a society so abundant that consumption is decoupled from work. But even a more grounded, near-term vision of socialism should promise something similar: everyone’s needs met, and far more time to do whatever the hell they want with their lives.

Some people may spend more time reading Russian novels or cooking elaborate meals with people they love or hiking and camping in nature. Others might produce work of true genius they never would have had time for otherwise — and still others might just think they’re doing that. In fact, we confidently expect a better society to lead to a flood of bad poetry and unlistenable albums, as people finally have time to pursue their least self-aware dreams. If that happened, we’d welcome it as a sign of progress.

Twelve million products are directly sold by Amazon. If the prices for all twelve million have to be set through a participatory democratic process or, worse yet, if prices are dispensed with altogether in favor of some moneyless formula for determining the quantity and combination of products each worker-citizen is entitled to, a lot of time that people could otherwise spend pursuing their own interests would end up being devoured by meetings.

Of course, there are a variety of social goods that can’t be handled through markets and commodity production without degrading important human values. And even when it comes to the most trivial of consumer goods, the economists’ metaphor of dollars as “votes” is offensive in a capitalist economy where some people have many thousands of times more “votes” than others. But using regular money at a worker-controlled grocery store to send a quick demand signal by buying a tube or two of a preferred brand of toothpaste sounds a lot better to us than sitting around a committee room, arguing about how many millions of tubes of fluoridated, or tartar-control, or whitening toothpaste will meet the needs of the community in the next year.

This is one reason, alongside concerns about incentives and efficiency, why our model of socialism preserves a role for market coordination, while insisting on a large public noncommodity sector, social control of finance, and workplace democracy across the economy. Our model seeks to combine individual choice with collective democratic decision-making at multiple levels while recognizing the difficulties of coordinating a complex division of labor to meet everyone’s needs and wants. For us, efficiency is a socialist virtue alongside equality, security, and freedom, because it is the key to liberating the most important resource of all: our time.

The Veil of Ignorance

This brings us from engineering questions to more basic issues about our goals. What values should guide our social design?

Historically, some socialists have preferred to sidestep such questions on the grounds that, once we discover the laws of development of human societies, we’ll see that socialism follows capitalism as naturally as capitalism followed feudalism. It was possible, they’d grant, for something to go so catastrophically wrong that society would collapse to an earlier stage of development, but there was only one way forward. This quasi-deterministic line of thought is captured in what Marxist philosopher G. A. Cohen calls “the obstetric metaphor”: the old society is already pregnant with the new, and all that’s necessary is to make sure the baby is safely delivered.

If this had turned out to be correct, both engineering questions about how to design a new society and normative questions about the values that should guide the construction would be far less pressing. History, however, hasn’t been kind to this assumption.

In 1919, revolution in Germany created a short-lived socialist republic in Bavaria. Its director of economic planning was the brilliant philosopher and economic theorist Otto Neurath, who later lamented that “preparation for consciously shaping the economy was lacking” among even the most capable organizers. Briefly imprisoned after the republic’s defeat, he reflected on what his socialist training missed: “The technique of a socialist economy had been badly neglected. Instead, only pure criticism of the capitalist economy was offered and the Marxist pure theory of value and history was studied.”

Design problems are real problems. Conversely, if the only possible postcapitalist future isn’t already sitting there waiting for us to arrive, the values question can’t be ignored. We need to decide which goals we care about, because goals allow us to appraise our design. Like it or not, that takes us into the territory of normative political philosophy. A good starting point is John Rawls’s theory of justice.

Rawls believed that just social institutions are ones that we could endorse from what he called “the original position.” Agents in this position know the facts relevant to deciding between different political and economic arrangements. They would know, for example, how any model would work out in practice — whether they would be faced with shortages of key goods, how easy it would be in practice to switch jobs, and so on. They would also know that they would have to live in the society they were designing. Their vision would be obscured, however, by a “veil of ignorance” on one crucial question: who in this society they would be.

Some of the consequences of this are straightforward. Such agents wouldn’t endorse the racial laws that existed in apartheid South Africa or the kinds of gender laws that still exist in Saudi Arabia because they wouldn’t know the race or gender they would end up with. Similarly, they wouldn’t create the type of society where the poor die from easily treatable diseases because they wouldn’t know whether they would be born into rich families or poor ones. A less obvious implication of the thought experiment is that those deliberating in the original position would reject any proposal for a pure meritocracy in which some people got a bigger share of society’s resources for no reason other than their greater innate talents. Many liberals and conservatives seem to think such a pure meritocracy would be a utopia, but agents in the original position would reject it for exactly the same reason they would reject racist or sexist laws — they wouldn���t know whether they’d get the short end of the stick.

Leftists often end up spending their time arguing that actually existing capitalism isn’t particularly meritocratic. Tech CEOs hailed as rare geniuses in the business press often turn out to be the recipients of all kinds of dumb luck. They had seed money from their families, or they were the one entrepreneur of twenty with the same idea who happened to be in the right place at the right time, or they benefited from government favors. That’s all correct and worth highlighting, but Rawls’s point is that high levels of economic inequality wouldn’t be just even if they did reflect purely meritocratic principles. Just as you don’t get to choose your race, gender, or socioeconomic background, you also don’t get to choose whether you’ll be even a genuine tech genius.

Granted, nearly all talents need to be developed with hard work before they’re of much use to their holder. No one makes it to the NBA Finals or wins a Fields Medal in mathematics without many years of nurturing their skills. But the reality is that the overwhelming majority of human beings wouldn’t have the capacity to play basketball or do mathematics at that level even if they devoted their entire lives to the undertaking. No one deliberating behind the veil of ignorance would know their athletic or intellectual potential. And just as they wouldn’t know whether they were going to be born into rich families or poor ones, they wouldn’t know whether they’d have the combination of cognitive and social skills that — combined with other sorts of luck — help some kids who grow up in poor families do well in school and climb the career ladder.

Once you recognize that, it’s easy to see how Rawls’s theory cuts against a variety of important sources of inequality. Things get more complicated when we start thinking about which types of inequality would be acceptable to people in the original position.

Rawls argued that, even behind the veil of ignorance, we might grudgingly allow inequalities if they met two conditions. First, the better-off positions must be open to everyone under conditions of “fair equality of opportunity.” Second, the existence of any such inequalities would have to work to the benefit of the least well-off.

Inequalities, by definition, favor the best-off. Rawls’s point is that there could still be cases in which the worst-off in Society A are better off than their counterparts in a more egalitarian Society B. For instance, suppose that in A — but not in B — computer engineers earn higher salaries than workers in most other occupations. Because of the higher pay, more people are drawn into the field, which accelerates technological progress. That progress then improves the standard of living for everyone, including the poorest citizens of A. If we stipulate that A is, despite this patch of inequality, still more equal than any society today, then an agent in the original position could rationally tolerate the income gap. Even if they lacked the skills to become an engineer, they might see the inequality as a price worth paying for access to the technology available in A but not B.

None of this means that someone born with the skills to be an excellent computer engineer would innately deserve a higher salary. To see why not, imagine a Society C and a Society D, where the occupation incentivized with higher salaries in C but not D was defeating giant tigers in hand-to-hand combat. Neither C nor D has the level of technology for shooting the giant tigers, never mind computer engineering, and the starting conditions are such that giant tiger attacks are a significant social problem. Just as with the appeal of A over B, it’s easy to imagine agents picking C over D. Even if you didn’t have the potential to be one of the star tiger hunters, you would be safer from tigers if more of those who did were drawn into tiger hunting with higher salaries, and on balance, you might well be willing to live with some inequality.

Still, accepting some inequality as a trade-off is very different from endorsing inequality without limits. You might hesitate about allowing such inequalities to grow beyond a certain point. Severely unequal distributions of resources can have devastating consequences for human dignity, social cohesion, and political democracy. You don’t want to be eaten by a tiger, but you also don’t want to be ruled by a tiger-killing warrior caste.

Rawls was attuned to this point, but one of his most perceptive critics, G. A. Cohen, took the worry a step further. Cohen understood justice in terms of what he called “socialist equality of opportunity”: the principle that distributive inequalities are unjust to the extent that they can be traced back to factors outside of the control of the people at the bottom end of the distribution.

This doesn’t mean, though, that Cohen necessarily denies that computer engineers in A or tiger hunters in C might have to be compensated at somewhat higher rates for the sake of the greater good. He leaves the door open to such possibilities. He just conceptualizes this as a trade-off between different values — sacrificing a bit of justice for a gain in efficiency — unlike Rawls, who thinks that whatever rational agents would sign off on from behind the veil of ignorance would be just. In Cohen’s view, Rawls is making a mistake by obscuring the trade-off.

Cohen’s way of dividing up the concepts usefully directs our attention to the fact that something important is lost whenever we permit distributive inequalities that lie outside the control of whoever gets the short end of the stick, even if sometimes the trade-off is worth it. But the gap between their practical positions may be narrower than it looks.

While Rawls leaves open the empirical question of what system would best satisfy his requirements in A Theory of Justice, his combination of views — keeping the door open for some degree of inequality for the sake of economic incentives while emphasizing concern for the least well-off — sounded to many like an endorsement of welfare-state capitalism. But Rawls flatly rejected this interpretation. In Justice as Fairness: A Restatement, published a year before his death in 2002, he concluded that his theory was incompatible with capitalism in any form. To see one of the reasons why, think about the difference between worker cooperatives and regular capitalist firms.

Typically, pay scales at co-ops aren’t completely flat. Some worker-members may earn more than others. But the range of compensation is barely a bump on a graph compared to the massive levels of distributive inequality produced within standard capitalist firms.

Take the Mondragon Corporation, essentially a federation of worker co-ops in the Basque region of Spain. The virtues of Mondragon are sometimes exaggerated by leftists eager to latch onto positive models. It floats in the sea of Spain’s otherwise thoroughly capitalist economy and often responds to the incentives created by that economy in ways that don’t reflect socialist values — for example, by employing nonmember contractors even within Spain and subcontracting to capitalist companies abroad. But the fact that Mondragon’s worker-members aren’t rigid socialist ideologues but regular people trying to make sensible business decisions makes their relative egalitarianism that much more striking. Within Mondragon’s cooperatives, the ratio between the highest-paid executive and the lowest-paid worker is capped at six to one. By comparison, in Spain’s IBEX-35 companies, the average ratio of CEO pay to average employee pay was about seventy-four to one in 2023; among S&P 500 companies in the United States, the average CEO-to-median-worker pay ratio was 268 to one that year.

The obvious difference between Mondragon and its noncooperative competitors is that in Mondragon the workers themselves get to vote on their pay scales. It’s possible to convince most worker-members, who have a rational incentive not to let the company go under, to allow some of their fellow workers to be paid more than themselves for any number of reasons. Workers may agree because those colleagues possess particularly desirable technical skills or because they’re willing to take on stressful and demanding responsibilities or because they’re willing to take on dirty or dangerous jobs. But good luck convincing your fellow workers that you should be given more of the product of everyone’s collective labor so that you can afford to purchase your own spaceship. It’s not going to happen.

And even that six-to-one gap must be understood in the context of a Spanish economy where Mondragon must compete for managerial and technical talent with regular capitalist firms. The gap would be even smaller in an economy where workplace democracy and hence far more egalitarian pay scales were the norm.

Rawls’s theory allows for distributive inequality when whoever ends up holding the short end of the stick is still holding a longer stick than they would in any otherwise equally desirable arrangement where all the sticks were the same size. What counts as “otherwise equally desirable” is less straightforward. Agents choosing between possible societies from behind the veil of ignorance may, for example, accept a slightly lower standard of consumption in exchange for the increase in their overall quality of life gained by avoiding the petty social indignities often associated with inequality or by experiencing a more robust sense of community.

Even if you agree with Rawls that some distributive inequality can be justified via his “maximin” (maximizing the minimum) principle, it’s hard to believe that we need as much of it as is generated by capitalism. The drivers of the limited inequality within worker cooperatives are precisely the kind of factors that are actually relevant to keeping the engine of productivity humming. But you only get some individuals acquiring hundreds of times more of the collective product than others when the direct beneficiaries of that inequality or their benefactors have the power to simply take that share without having to justify themselves to the short-stick holders.

Calculation and Incentives

Capitalist thinkers argue that while different ways of distributing income after production might be plausible, society benefits from inequality in economic power. They think attempts to bring the means of production under collective economic control will only stifle innovation, discourage investment, and ultimately reduce the wealth available to distribute. Instead of more evenly spreading the benefits of a modern economy around, attempts at socialization will only kill the goose that lays the golden eggs. The citizens of the socialist future would be engaged in egalitarian crumb rationing. If this is right, even agents in the original position might be willing to give capitalism a second look.

The twentieth-century “socialist calculation debate” centered on exactly this question. On the socialist side, Oskar Lange accepted Mises’s argument that managing a complex division of labor required a price system but denied that it required markets. Socialist planners at the center and within workplaces could develop prices and coordinate production by following a set of procedures that would reproduce the optimal outcomes of textbook “perfect competition” models of markets without actually needing the markets. (His system did still involve money, shops, and a labor market, though, to draw out and properly price people’s preferences about consumption and work.) He believed this would beat capitalism at its own game, because actual capitalist markets are far from the perfectly competitive ideal and because planners could factor in things like environmental degradation that markets systematically ignore. Socialist pricing would be more efficient, not less. We call Lange’s vision and others like it “algorithmic” or “price socialism” to distinguish them from “market socialism.”

The Hayekian response was to argue that such a system ran into problems involving information and incentives. It’s true that, contrary to the way this debate is often remembered, Lange’s algorithms did not require planners at the center to receive and process a vast amount of information from across the economy. It was, in fact, a model of decentralized information processing and decision-making. The problem was that Lange’s model depended on workplace managers honestly assessing and acting on information about the technical possibilities of production in their own fields. Realistically, though, they would have tremendous incentives to fudge those numbers to maintain their own positions and little reason to go searching for new and better ways of doing things.

On the other side of the debate, Hayek recognized that real-world markets bore little resemblance to the perfectly competitive, static models of general equilibrium theory. But he argued that this objection missed the point about why markets, in their messy, imperfect reality, get the job of economic coordination done in a way for which there’s no obvious alternative. The real world is one of uncertainty and continual change; nobody has more than a fraction of the relevant information about technical possibilities and what people want. The pursuit of profit in competition with others gives people the incentives to act on the information they have, and the prices that emerge amalgamate that information, feeding it back to the participants and coordinating their activity. It is chaotic; it is not perfect; but it works.

We grant that there is a point here and that some models of socialism really do founder on those rocks. We accept an important place for markets and commodity production in our model. But we flatly reject the suggestion that any of this shows that we need capitalism.

In The Blueprint, we sketch out a model of a fully socialist economy — one in which, instead of being owned by a class of capitalists separate from the class of workers, the means of production have been socialized. The proposed economic system, like capitalism, is mixed. “Private” and “public” are perhaps the wrong words here, given that these spheres are even more entangled under the socialism we envision than they already are in highly developed capitalist economies, but the distinction is clear enough. There’s a “private” commodity-producing sector in which costs are covered by market sales and a noncommodified “public” sector operating with publicly allocated funds. The noncommodified sector includes the government bureaucracy and agencies under central control, but it may also include a variety of community agencies with considerable autonomy, which are nevertheless financed by the public purse.

The firms in our commodity-producing sector are democratic in two ways. First, management and administrative structures are chosen by the firm’s labor force using a democratic process. Second, each worker receives a share of the firm’s residual income. These are firms, though, in that they are autonomous commodity-producing entities that must cover costs with revenues and meet their contractual payment obligations.

A variety of enterprise constitutions are possible, but the standard for a midsize to large company would involve representative democracy, with elected directors appointing and monitoring administrators who do day-to-day management. This structure could be supplemented by committees and referenda as needed, but routine administration is often best handled by specialist professional workers with expertise in accounting, logistics, and so on. Democracy does its job by making sure the administrators are ultimately answerable to their colleagues and that working conditions and key questions of strategy have broad approval.

Financial viability constrains the democratic firm, as it does the capitalist firm. The need to cover costs and meet cash flow obligations, while competing with other enterprises, is what ties the firm into the broader division of labor across the economy — a chain of coordination linking everything from the sale of lattes in coffee shops to the federal health service buying cutting-edge medical equipment for use in the nationalized hospitals to car-manufacturing cooperatives replacing failing parts in their drop forges.

This financial discipline enforces the socialist virtue of efficiency, ensuring that the firm is using social resources reasonably well to meet people’s needs and wants. Like capitalist firms, democratic firms receive revenue from selling their output and use it to pay for new inputs for the next round of production. Like capitalist firms, they require investment: some inputs must be paid for long before receipt of the revenue that covers those costs. This investment must be financed somehow or other. As with capitalist firms, their future revenues and costs are uncertain to some degree. Market demand and prices change over time. They must make investment and production decisions in the face of uncertainty and so face financial risks.

So far, so Mondragon. The key differences between the worker-controlled firms in our model and actually existing worker co-ops under capitalism have to do with their legal status and the larger network of institutions within which they operate. Empirical research on cooperatives under capitalism suggests that they have similar levels of productivity and survive at about the same rate as any other business once they get going. The main problem is that their birth rate is vastly lower.

Some of this is doubtless attributable to cultural factors. In at least some societies with the legal doctrine of “coverture,” under which many of the rights of married women reverted to their husbands, it may have been technically possible for men and women to make more egalitarian marriage-like contracts, but even committed feminists rarely did. Most people in any society will default to normal preexisting institutions as they go through the business of living — getting married, starting families, starting businesses, or looking for work — and even workers who could pool resources with a bunch of friends to start a small co-op won’t normally do so.

Other factors, though, loom much larger. The most fundamental problems involve finance. To produce, collectives need not only their own labor but also tools, equipment, buildings, and so on. They need to finance these things in some way. The problem is not just that capitalist banks and other financial institutions are leery about lending to collectives because of their unusual legal structure. It’s not even that traditional capitalist firms are often a more surefire bet for lending institutions, since they have a competitive advantage over co-ops. Capitalist firms can move around in search of higher profits and don’t need to secure the democratic approval of the workers whose lives they upend by doing so.

Even beyond these factors, there are basic things about the economics of worker cooperatives that make them square pegs for the round holes of capitalist financial relations. If worker-members self-finance the organization, each must bring some personal wealth with them or take on a second mortgage to finance their share. Not only do they depend on their workplace for a wage, they also have a substantial portion of their wealth tied up in it, leaving them especially vulnerable to a firm failure. If the co-op grows by reinvesting some of its profits, its members accumulate collective wealth together, but what happens when someone wants to retire or leave to work elsewhere? What happens when the cooperative wants to expand by bringing in new worker-members? Either new members must come in with their own wealth or incumbent members will find themselves sharing their accumulated wealth with the newcomers.

In the first case, bringing new labor on board becomes a combination of job interviewing and investor courting. In the second case, incumbents may be more reluctant to expand at all, since it means sharing returns with more people. The alternative to member self-financing is borrowing, but this raises its own problems. By borrowing, a co-op promises fixed payments to the creditor on fixed dates, while its own revenues are always uncertain to some degree. Without the cushion of funding from external investors who can be compensated with equity, co-ops end up highly leveraged, their worker-members’ own incomes left exposed to the ups and downs of the business.

Given all this, it is not hard to see why worker cooperatives are rare under capitalism (and why, ironically, they are most common in the form of partnerships of high-income professionals in low-capital-intensity fields like law). There are also collective action problems involved in co-op formation within a capitalist context. Since our economic lives are governed by capitalist rules that allow for concentrated individual power, anyone whose motive for starting a co-op is simply to have a better life would have every incentive to shoot the moon and try to become an employer instead. The firm failure rate for businesses of all kinds is extremely high, and getting a new enterprise off the ground takes an enormous amount of work. Why do all that on the slim hope of marginally improving your position by becoming an equal citizen of a miniature economic republic? Why not spend that effort attempting to win a much better life by building a miniature economic kingdom where you get to be the king? If, after all that sweat and blood, the most likely outcome is that you’ll end up back in the subordinate working class anyway, why not at least try for the throne?

These problems alone mean that workers primarily motivated by their own individual interests are much less likely than committed socialists to be involved in attempts to start co-ops. And those committed socialists are likely to make the rational calculation that their time and effort would have more impact on the society around them if they spent it organizing unions at large capitalist companies, rather than working fourteen hours a day to get some local cooperative coffee shop up and running.

It gets worse. To see the full scope of the problem, imagine that you could ask a magical genie to instantly restructure every existing firm and put it under the democratic, collective ownership of its workforce, without changing anything else about the structure of the economy. The result wouldn’t be a stable form of market socialism but an arrangement that market forces would eventually push back into something recognizable as capitalism. Firms, whether capitalist or worker controlled, sooner or later go out of business, and the people who once worked there need new jobs. Cooperatives looking to expand operations and increase the income of existing members have an incentive to hire new workers as regular employees rather than co-owners, and people who have been out of work for a while have an incentive to accept this reduced status. And whole co-ops would often have an incentive to transition to regular capitalist firms by selling ownership stakes to other enterprises or wealthy individuals.

The lesson here is neither that it’s a fool’s errand to even try to go beyond capitalism entirely nor that the only way to do so is to learn to live with the calculation and incentive problems caused by totally marketless planning. Rather, it’s that just as capitalism required a set of social institutions different from the ancien régime, a stable and thriving socialist economy can only emerge on the basis of new socialist institutions.

Ending Capitalist Realism

Make no mistake: in our model, much of the economy would be under direct state ownership as part of the public sector. A worker-controlled health insurance company, for example, would have the same bad incentives as a regular capitalist health insurance company, and we know from the experience of social democracies that this is exactly the kind of activity for which the social benefits of decommodification vastly outweigh any calculation concerns. Similar arguments apply to sectors like education, energy, transportation, and telecommunications. We also agree with the traditional socialist position that the “commanding heights” of the economy should be taken into the domain of state planning and the noncommodified sector will be larger than is typical under capitalism. The Blueprint discusses state ownership in chapter six, income distribution in chapter seven, and macroeconomic policy in chapter eight. Crucially, this form of management includes the banking system, which, in our model, is the whole of the financial system and is entirely under public control.

However, for the reasons given above and developed in the book’s fourth chapter, there will also be a large market sector of commodity production by democratic firms. These will be “private” in the sense that they would be self-governing institutions autonomous from the state. But workers wouldn’t own shares of the firms that could be bought or sold any more than citizens can sell their votes in the next city council election to a fellow citizen. Workers can join or leave a firm the way citizens can move in and out of jurisdictions, but pieces of neither are for sale. And the productive assets — the actual physical “means of production” — would essentially be rented out to the firm by the larger community.

Starting new firms and expanding existing ones both involve partnerships between public banks and worker-controlled firms. Worker-members do not invest their own wealth in their firms. Investment in capital equipment and other assets comes from the associated banks. The financing arrangements are different from capitalist forms of debt and equity, designed especially to combine workplace-level democracy with national-level democratic control of the use of social resources. The public banking system allocates finance where it is most needed, managing and spreading risk. Individual collective firms become custodians rather than owners of the part of social wealth they are entrusted with. They are free to manage things in their own way, but they are responsible for maintaining the value of social wealth and have incentives to use it efficiently to meet their fellow citizens’ wants and needs. The Blueprint describes the system at the level of the firm in chapter five and at the macroeconomic level in chapter eight.

The possibility of firm failure is a necessary component of a dynamic economy. Short of outright failure, firms and whole industries sometimes need to shrink rather than grow. Our model balances security with mechanisms that give people incentives to move to workplaces where they are needed. A welfare state supports people who are temporarily out of work, with access to education and training for developing new skills. Meanwhile, the public banking system takes an active role in setting up new democratic firms, taking advantage of the detailed information it collects to find the most likely areas for development. Macroeconomic policy is committed to full employment, so that nobody who wants paid work is left looking for long.

This kind of socialism wouldn’t be a utopia or some kind of conflict-free end point to human history. It wouldn’t even fully realize Cohen’s “socialist equality of opportunity” principle, since, even with democratically determined pay scales, workers with particularly desirable skills would often be in a position to demand higher-than-average compensation, and some of this would reflect the brute luck of natural talent. (The Blueprint discusses income distribution and redistribution in chapter seven.) But anyone who sees Cohen’s principle as their North Star should acknowledge this model as a massive step in the right direction. Perhaps a path toward an even more deeply egalitarian reorganization of the basic structure of society, without unacceptable costs to other values such as economic efficiency, would become visible once we get that far. Just as the degree of social progress that’s been achieved in many advanced capitalist democracies would have been unimaginable to a Chartist fighting for universal male suffrage in early nineteenth-century Britain, it could be that the vision of socialism laid out in this book won’t begin to approach the virtues of the kind of socialism everyone will be living under in the twenty-fourth century. We can’t know.

However, our purpose in proposing a model isn’t to pronounce the last word on future progress and close off other possibilities. It’s to demonstrate that it’s possible and desirable to go much further than even most of the people alive today who have broadly socialist inclinations can imagine going.

We live at a time when unpredictable geopolitical developments and dizzying technological progress can make the future feel uncertain, but when what Mark Fisher called “capitalist realism” prevails on fundamental economic questions. American leftists dream of Medicare for All, British leftists of renationalizing their country’s railways, and so on, but it’s hard to stretch our minds to picture any alteration to the basic property relations that shape our societies. In providing a blueprint for one possible future, we aim to pry open our imaginations and put the biggest questions of politics back on the table.

This article originally appeared in Jacobin, a democratic socialist magazine publishing long-form essays and analysis on politics, economics, and culture. Subscribe to the print edition for $20 a year.