The economic republicanism of early bourgeois socialism

January 31, 2014 in History, Theory by Thomas Chefsky

This article by JR is a commentary on “economic republicanism”, a political trend in the United States around the time of Lincoln. It intends to complement some writings from the Marxist Center about the democratic republic. Thomas’s recent article about the democratic republic for example lacks an explanation of the republican ideas of bourgeois socialism.

Bourgeois Socialism: neither welfare states nor corporate bailouts, but economic republicanism[1]

Marx and Engels wrote in the Communist Manifesto in 1848 that “the socialistic bourgeois want all the advantages of modern social conditions without the struggles and dangers necessarily resulting therefrom. They desire the existing state of society, minus its revolutionary and disintegrating elements. They wish for a bourgeoisie without a proletariat. The bourgeoisie naturally conceives the world in which it is supreme to be the best; and bourgeois Socialism develops this comfortable conception into various more or less complete systems.”

I would like to start[2] by putting emphasis on the last part of this quote – on “complete systems”. This is because the idea behind it is closely tied to an old slogan “For a democratic and social republic,” which originated from the 19th-century worker-class movements[3] that emerged shortly after the Communist Manifesto was published. In order to do so, let us first look at the etymology of the words “democratic” and “republic.” In his critique of Mike Macnair’s book Revolutionary Strategy, which took up the defense of the democratic republic, Paul Cockshott noted:

“[…] the phrase ‘democratic republic’ is wrong from the start. It couples two quite different ancient models – those of Athens and those of Rome […]The federalists knew their classical political theory and they understood that in establishing a state of this form in the USA they were not establishing a democracy, but a republic.  They had read their Aristotle and understood well enough that election was an anti-democratic principle […] [Aristotle] was listing the minimal conditions for a state to be called a democracy at all.  The key principle is that, instead of being elected, public officials are chosen from the general public like a jury.

There is an obvious downside with the term “democracy”. In 2005, for example, the British left-wing reformist Tony Benn noted that demokratia meant merely “people power” (implying the possibility of elites leaning upon it at times) and not “rule by the people” – demarchy.

Having made the clarification between “democracy” and “demarchy”, let us now turn to the word “republic”, which comes from the Latin res publica, or “public thing”. This was once associated with the Roman Republic. Nowadays, it is associated with bourgeois-constitutionalist states without hereditary kingships. Long forgotten, however, is the association of the “public thing” with the radical (albeit left-bourgeois) republicanism of Jean-Jacques Rousseau and of the American Radical Republicans who were to the left of Abraham Lincoln. What exactly were the details and history of this radical republicanism?

Michael Hudson’s outline of Bourgeois “Socialist” economic republicanism

In light of the recent economic crisis, Professor Michael Hudson, a former Wall Street economist, invoked classical political economy to elaborate upon the aforementioned historical development. Contrary to popular myth, even Adam Smith, best known for conceptualizing “free markets,” meant for it to mean something completely different from the definition used by the modern bourgeoisie. “Free markets”, according to classical political economy, were to be free primarily from economic rent derived from special privilege – the economic core of feudalism – thereby ensuring that income and wealth would be obtained only through personal labour (the role of workers) and through personal enterprise (the role of “industrial” capitalists and petty proprietors). Taxation, therefore, would be based primarily on the collection of this economic rent – most obviously ground rent, but more importantly monopoly rent and interest – and its application towards public purposes.

 The political debate at that time was between the position of reducing governments as a means to minimize the collection of economic rent for non-public purposes (as opposed to the vulgarized sloganeering of “small government” that is heard today) and the position of increasing the role of governments as a means to achieve the exact same purpose. Michael Hudson was once a Marxist economist and now a classical economist. To complement the elaboration above he gave an outline of what he thought “socialism” was. The first three features are:

  1. “Public ownership of basic economic infrastructure, natural monopolies […] and the land itself” – included in “natural monopolies” is the banking system and in “land” the broadcast spectrum, two elements not considered by the pre-Marx classical economists.  [First, I would personally include in “public ownership of economic infrastructure” the need for a public monopoly on foreign trade, given too many countries’ inabilities to diversify trade.  Second, I would also include nationalized military-industrial complexes, given the notorious arms trade and the profit margins skimmed by private companies engaged in military production contracts with their respective governments.  Third, I would argue that this point alone already goes beyond post-modern rumblings on “the commons,” including environmental commons and digital commons.]
  2. Economic rent should be taxed at optimal levels (land value taxation even if the land is publicly owned, for example).
  3. The country’s entire tax burden is on the shoulders of rentiers (landlords, financial speculators, etc.), “industrialists” (Hudson’s post-Marxist description of entrepreneurial capitalists), and perhaps unproductive labour (many self-employed who cheat on their tax returns), as well.  This means that productive labour has no tax burden, whether directly (payroll taxes, lotteries, etc.) or indirectly (consumer goods and services, including flat monthly premiums charged by Western governments for public health insurance).  Contemporarily speaking, calls for a Tobin tax on financial speculation are cheap compared to Keynes’s “substantial Government transfer tax on all transactions.”
  4. Next come anti-inheritance measures and measures against capital flight, which in my programmatic phrasing call respectively for “public, anti-inheritance appropriations of not some but all the relevant productive or other non-possessive properties (that would otherwise be immediately inherited through legal will or through gifting and other loopholes) towards exclusively public purposes” and “confiscatory, despotic measures against all capital flight of wealth, whether such wealth belongs to economic rebels on the domestic front or to foreign profiteers.”

These four features coincide more or less with the first six allegedly “transitional” measures in the Communist Manifesto, for the informed reader. Two other features can be added: a more prominent role for co-ops in the capitalist economy, which can only come by means of public assistance (which stems from Ferdinand Lassalle); and, prioritized at the very bottom of this list, typical welfare state benefits and preferrably more (shorter workweeks, Minsky’s employer of last resort program, more typically “industrial” public works programs, etc.).

Compared to the cheap welfarism of even the most interventionist of post-WWII social democracy[4], this economic res publica, or economic republicanism, was the Bourgeois Socialism criticized by Marx from the Communist Manifesto down to his later critique of Henry George’s land value tax replacement for all other tax methods. Nevertheless, knowledge of it as a crucial rebuttal of rent-friendly social democracy is necessary. So is its programmatic inclusion in any Marxist minimum program for the dictatorship of the proletariat (nothing “transitional” here).

“Steps towards socialism” as a weakness: From Rousseau to Minsheng Zhuyi to Arab socialism[5]

Having reiterated Michael Hudson’s outline above of what Bourgeois Socialism really was, and having added a few more things myself, I must say that Karl Kautsky was once again, going back to his work from 1902 “The social revolution”, weak on economic questions. That holds true even if we compare his post-war ideas to the classic Kautskyan, social-democratic minimum program of the pre-war era, for it is the “bourgeois-democratic” revolution and not the full-blown anti-feudal revolution he described in 1902, let alone the dictatorship of the proletariat. Take, for example, this excerpt from an article he wrote in 1917:

“There can be no doubt that, as of yet, Russian capitalism offers very little in terms of starting points for socialist development. However, considerable steps could be taken in this spirit through the nationalisation of: large firms; railways – to the extent that they are not already (excluding Finland, the Russian empire’s railways total more than 74,000 kilometres, and of that 54,000 kilometres are state-owned); the mines, above all the mining of coal, gold and oil; as well as large individual firms in heavy industry. Further, through state confiscation of the goods of the dethroned dynasty and the monasteries, through state acquisition of large land holdings and finally through giving over property to the towns – both to build cheaper and healthier housing and to produce food for their inhabitants.”

“For the time being, the main thing will have to be maintaining workers’ interests in private production: extensive measures to protect the workers. Especially important amongst these is unemployment benefit and the provision of cheap food. Finally, the costs that fall to the state from these and other causes should be covered exclusively by progressive taxation on the property-owning classes.”

One might call that a bourgeois programme of reform and not a workers’ programme of revolution. Whether it is one or the other depends on quantity.[6] When Kautsky mentioned “railways,” he was referring to a specific example of natural monopoly. Why didn’t he step back and reconsider natural monopoly as a whole?[7] Also, which “large individual firms in heavy industry”? Without an appreciation of the classical economic take on rent, the monopolistic ones could not have been separated from the more competitive ones.[8]

The suggestion of progressive taxation is historically weak when considering proper state functions of class repression on the one hand and the “social” state on the other. All costs associated with the former should be covered exclusively by the upper classes (the third point in the outline above), and then the costs associated with the latter can be covered by progressive taxation once the upper classes have been “soaked” enough. Transparency regarding the allocation of tax revenues is key, of course.

Historically, other political figures have understood economic republicanism better than Kautsky, figures such as China’s Sun Yat-sen and Egypt’s Gamal Abdel Nasser. The left-wing elements of their respective movements may have even understood their respective ideologies to mean economically republican development without even the “nationalist” bourgeoisie cherished by Chairman Mao, conceding the role of “industrialist” and “entrepreneur” entirely to the small-business petit-bourgeoisie and to cooperative movements.

By JR


[1] This article is based on a working paper which addresses two things in three sections: Karl Kautsky’s Prospects of the Russian Revolution as published in the current issue of the Weekly Worker (http://www.cpgb.org.uk/article.php?article_id=1002036 with an introduction by Lars T. Lih: http://www.cpgb.org.uk/article.php?article_id=1002027), and on a related note a continuation of discussion regarding “state aid” as discussed in the Letters and as discussed on Arthur Bough’s blog.

[2] Most of the material in this section has been posted elsewhere on the Internet, including in the most recent version of Programming Class Struggle and Social Revolution, but this is a collection of those postings.

[3] I prefer worker-class over working class. See also Lars T. Lih’s “Lenin Rediscovered: What is to be done in context”.

[4] A social democracy which seemed a mere combination of “social” plus “people power” – that is, rent-friendly social democracy.

[5] The word “Minsheng” is a Chinese word that refers to Sun Yat-sen’s Third Principle of “People’s Livelihood,” which referred to things like welfare and even Taiwan’s legacy of land value taxation. The main figure in Arab Socialism was Gamal Abdel Nasser.

[6] http://www.cpgb.org.uk/home/weekly-worker/800/supplement-prospects-of-the-russian-revolution

[7] This renegade weakness in general theory and partial strength in specifics would exhibit itself only a year later, when Kautsky critiqued the specifically Bolshevik suspension of universal franchise but blundered on the general question of the proletarian dictatorship.

[8] Of course, in today’s world oligopolistic competition blurs the picture somewhat. However, monopoly rent and other forms of economic rent can still be identified.