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The Origins of Modern Socialism

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The specter of socialism is again haunting the minds of the corporate elite, from the Americas to Europe and beyond. This, after decades of pro-capitalist campaigning from the corporate media, which has always confused "capitalism" with "freedom." But of course freedom and democracy cannot exist alongside tremendous inequalities of wealth -- or next to corporations wielding absolute power over elections and governments.

These facts helped form the social movements in Latin America that now advocate 21st Century Socialism, a name that implies the prior century's experiments needed either updating or improving, while also implying that the general socialist "project" was progressive.

What are the progressive aspects of last century's socialism? And from where did the original ideas come? These are extremely relevant questions in light of the international economic and political upheavals.

Modern socialism was born alongside capitalism and in opposition to it. When the basic features of industrial capitalism first came into existence -- in the early 1800's -- people instantly recognized that drastic changes needed to be made:the large industries that emerged created dehumanizing conditions for the majority of people -- forcing people to work twelve and fourteen hours a day for starvation wages -- while a tiny minority were becoming fabulously wealthy. This is not what most people had fought for in the English, American, and French revolutions.

The "utopian socialists" in the early 1800s tried to correct these social inequities by proposing grand schemes that, if adopted by governments, would help harmonize society. These reformers, however, soon learned that those in power wanted little to do with their ideas. They also learned that "alternative economic models" set up next to the large capitalist enterprises were soon crushed by these corporations, due to the superior wealth encapsulated in the giant machines the capitalists owned, as well as the state machinery that the corporate elite controlled.

The Utopian's failure was partially due to a lack of understanding. At the time, people were attempting to grasp what was happening to society; capitalist industrialization was happening at a lightning pace, with little preparedness or understanding from the majority of people. Blind economic forces seemed to be advancing uncontrollably.

Karl Marx was the first person to really study and dissect the capitalist system. His greatest work, Capital, is an extremely thorough analysis and critique of the capitalist economic system. He was the first to diagnose "what was happening," and through his assessment a "solution" logically emerged.

In fact, modern socialism can be theoretically reduced to correcting the economic contradictions that inherently exist in capitalism. Marx listed these contradictions in his Capital; the "socialist solution" is merely the correction of these fundamental problems of capitalism.
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For example, in capitalism's embryonic stage, the capitalist ran a small shop, where perhaps he sold wagon wheels. But as capitalism evolved, a thousand times more goods were produced after the whole town was organized to make wagon wheels, each person performing a different, very small task, but all working cooperatively to produce the final product. The profit, however, went to one person -- the owner, or owners. The result was that wagon wheels were immensely cheaper, and those who could not afford the high cost of the factory-approach of production -- machines, labor costs, and raw materials -- were pushed out of the market.

Eventually, those capitalists unable to compete evolved into workers, while more and more money was needed to purchase the giant machinery and infrastructure needed to stay a competitive capitalist; through this dynamic wealth increased at one pole and decreased at the other.

This shows a fundamental contradiction of capitalism: all of society is organized to produce goods and services; workers work "collectively" to build products, i.e., they work "socialistically," but the vast majority of the wealth produced goes to a small minority of non-working, very wealthy shareholders. Thus, to correct this problem, the wealth produced by society should be distributed to those who create it, not funneled into the pockets of the rich. This would require transferring the vast majority of the productive machinery from private ownership of a few to the control of vast majority.

But the capitalists may argue that, without these wealthy capitalists, there would be no wealth-producing enterprises, and everybody would be consequently poorer. This argument may have been true 250 years ago, but no longer.

To out-compete their rivals, capitalists -- organized in corporations -- invested hordes of money in labor-saving technology, which produced greater and greater amounts of goods, in turn creating more and more wealth. But despite the capacity to produce more and more goods, unintended consequences emerged.
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Capitalist competition naturally evolved into monopoly capitalism, as the winners of the free-market took over their competitors' businesses and machinery. The free market soon became the private property of the mega-corporations, which no longer left the production of their goods to blind market-forces.

After all their competitors were defeated, and the market was dominated, the capitalists were better able to plan out their production to the finest detail: how much raw material they would use, how many products they would produce, what prices to sell the goods at, never knowing how much could actually be consumed by the workers in the marketplace, especially since corporations were constantly driving down workers' wages to boost profits.

So another contradiction emerges: large corporations produce a massive amount of goods according to a plan, but leave the distribution of these goods to a very limited, un-planned market, which shrinks as workers get paid less and are laid off, due to the introduction of machinery.

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Shamus Cooke is a social service worker and activist living in Portland Oregon.

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