The Blueprint

There is no socialism without social ownership. Under capitalism, the owners of the means of production get to make investment decisions, take the surplus their workers produce, and either directly administer their firms or appoint the directors who do. In the proposed system, the entrepreneurial work of capitalists is taken up by public banks and the workers themselves.

In our system, worker-members elect their own directors and are custodians of the equipment they use to produce goods and services. They make production decisions as a collective, but they can’t sell their firm, convert its assets into private wealth, or employ wage labor.

You can think of it as members of democratic firms renting the means of production from society as a whole, through the public banks that finance them, but still controlling the fruits of their labor.

There were markets before capitalism, and we think there are ways to harness the power of markets while limiting their pathologies in any system that will succeed it. In our model, markets, prices, and money continue to exist, but capital no longer exists as a privately owned source of control over other people’s work.

Markets perform useful functions that shouldn’t be conflated with capitalist ownership of the means of production. Prices make economic calculation possible: firms can compare the costs of different inputs and techniques. But calculation is only part of the coordination problem. An economy must also discover what people want, give producers reasons to respond, and create space for new products and production methods to emerge.

Consumer choice matters because people care about quality, design, convenience, reliability, and many other things no plan can specify in advance. Demand for a firm’s particular product supplies information and gives other firms a reason to do better.

But The Blueprint rejects the false choice between markets and planning. A functioning market socialist system—with social ownership, worker control, and competitive allocation—creates the material surplus, the embedded information, and the dispersed initiative that make large-scale coordination and democratic decision-making in key sectors possible.

Under socialism, in contrast to the dictatorship of the capitalist workplace, workers will self-govern their own firms.

In a small firm, members may decide many questions in a form that resembles direct democracy. In most other firms, representative democracy is the expected form of governance. Workers would periodically elect directors and ratify or amend operating agreements, and directors would appoint managers. Though managers would still exercise administrative authority on the shopfloor, we’d imagine a workplace far more egalitarian, with ordinary worker-members empowered to vote on pay scales and to replace the directors above them. Authority ultimately runs upward from the workforce rather than downward from private owners.

Worker control does not give any one firm license to ignore people outside it. Democratic firms still have to win customers, meet wage benchmarks, follow environmental and safety rules, and justify their use of social wealth to public banks.

Competition between democratic firms is a good thing, but it needs to be regulated. Left to their own devices, firms could keep their costs low by suppressing wages and intensifying work—self-exploiting to capture more market share.

Wage benchmarks set by the labor board close off that low road and push firms toward finding better routes to success. A firm that cannot pay the benchmark is not viable simply because its members are willing to sweat their own labor. Competitive pressure is redirected toward the pursuit of productivity through innovations and better ways of organizing work.

The board does not set every wage for every possible occupation. Instead, it establishes a schedule of benchmarks by job category, with room on the scale to reflect skill, experience, and regional differences. We imagine a system no more complex than Australia’s roughly one hundred industry awards. Firms remain free to pay premiums for scarce skills, unpleasant work, extra effort, or other reasons their members approve.

Markets work best when a product is a discrete package whose benefits go to the buyer and whose costs are reflected in its price. Many essential activities do not fit that description. Energy and communications networks are natural monopolies. Knowledge and culture can be shared without being used up. In health and education, people often cannot assess what they need or judge quality as ordinary consumers.

State agencies can directly provide health care, education, care work, infrastructure, energy, transport, and other activities whose provision should not depend on profitability or an individual’s ability to pay. Publicly funded institutions can still retain substantial local and professional autonomy.

Democratic politics determines which activities should be removed from commodity production, which should remain in regulated markets, and which should use hybrids such as public purchasing, subsidies, or socialized markets.

Socialism doesn’t require everyone to get the same wages. Pay disparities may attract people to difficult work, reward effort, or encourage more people to train in scarce skills. But they arise inside a radically more equal structure: nobody receives income merely by owning a firm, wage floors are set by the state, and incomes remain subject to progressive taxation.

Public services and income guarantees protect people unable to work, temporarily unemployed, retired, studying, or caring for others. A modest unconditional floor prevents destitution, with more generous benefits responding to particular needs.

Land and housing are public property. Residents pay rent reflecting location and type, enjoy secure tenure, and can renovate their homes, but do not bear speculative risks or capture arbitrary windfalls.

Together, social ownership, compressed wages, income redistribution, and social housing prevent differences in earnings from hardening into inherited wealth and class power.

Markets don’t necessarily generate the right level of spending and investment. Demand can fall short and leave workers unemployed, or run ahead of productive capacity and generate inflation. Our decentralized model retains these problems. But it also gives socialist policymakers stronger instruments for addressing them than exist today.

The central bank runs the payments system as a public utility, and households, firms, state agencies, and the banks themselves hold their deposits directly with it. Public banks borrow from it. Under capitalism a central bank nudges private banks and waits to see what happens. Here it can open or close the credit tap directly, while the state speeds up public construction and hiring at the same time.

Trade is necessary for an economy, but capital flight isn’t. Our central bank would hold a monopoly on currency conversion, and would use it to prevent people from investing or transferring personal savings abroad. People and firms could buy and sell foreign currency to import, export, and travel; firms could borrow or invest overseas only through a bank partnership with the central bank’s permission. A flexible exchange rate can then absorb some of the pressure of international shocks instead of transmitting it as domestic austerity.

As discussed earlier, firm failure is an important part of the socialist model. But the aim is to protect people through economic change: public banks can finance new firms and sectors, while income guarantees and active labor market policy ensure that mass unemployment becomes a relic of the past.