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Socialism Isn’t Just About State Ownership — It’s About Redistributing Power

Pelle Dragsted

Throughout decades of neoliberal counterreforms, the most resilient parts of the Nordic welfare state have been the ones under direct popular control. Their experience shows that the best way to push back against capital is to democratize power in society.

The Nordic countries enjoy a significant amount of democratic ownership as well as an extensive de-commodification of their economies. (@febiyan / Unsplash)

Interview by
Rune Møller Stahl
Andreas Møller Mulvad

Norway’s election last month brought a landslide shift to the Left, including a parliamentary breakthrough for the socialist Red Party (Rødt). There are now social-democratic governments in all five Nordic countries, with growing formations to their left resisting the further dismantling of the region’s welfare states. After years of retreat and defeats for the Left in the United States and Europe, the Nordic experience again seems to show a way forward.

The first signs of this Nordic left wave came from the Red-Green Alliance (Enhedslisten) in Denmark, which has held at least a dozen seats in parliament since its breakthrough general election campaign ten years ago. One of its MPs in this period was Pelle Dragsted, who is also the party’s main strategist. His recent book Nordic Socialism was a surprise bestseller in his homeland, rekindling long-dormant debates on socialism. The book addresses the nature of capitalism and how to transform it by building on the legacy of the Nordic workers’ movements of the twentieth century.

In an interview, Rune Møller Stahl and Andreas Møller Mulvad spoke to Dragsted about the current state of Nordic social democracy and how new left-wing forces can build on its historic achievements.


RMS

The starting point for your book is a report the Trump administration published in 2018, on the purported socialism of the Nordic countries. In contrast to what we’d normally read in Jacobin and other left-wing publications, you argue that Trump is right that the Nordic countries are socialist, or at least more socialist than what they are normally given credit for by leftists like ourselves, who have defined them as capitalist countries with generous welfare states. Can you elaborate on why Trump is right?

PD

A key message of my book is that we on the Left haven’t been good enough at acknowledging our victories and the socialist elements that can be found within existing economic systems. When Trump and Fox News — but also Bernie Sanders — all call the Nordic countries socialist, they do get something right. Namely, that we in the Nordic countries enjoy a significant amount of democratic ownership as well as an extensive de-commodification of our economies. This is a product of the historical strength of the working class in conquering state power but also of the very strong cooperative sector that existed in the Nordic countries.

It’s difficult to acknowledge this noncapitalist sector, because we on the Left have been trained to think in terms of societal forms as totalities — as amounting to society or the economy in its entirety. This way of thinking assumes that capitalism is all-pervasive, and that there’s no room for any socialism whatsoever as long as capitalism exists.

So, inspired by people like Erik Olin Wright and Matt Bruenig of the People’s Policy Project, I reject this conception of socialism as an either-or. Instead, we should think of a continuum in which societies can be more or less socialist.

This perspective is particularly relevant for the Nordic countries, where we have a higher level of common ownership. Let’s define capitalism as a system in which the owners of capital control the means of production and exchange their commodities in a market in which they also buy labor power. From this process they draw a profit. But looking at the Nordic countries, we find that large parts of these economies simply don’t match with this definition: In Denmark, the public sector accounts for 20-25 percent of the total economy. One in three people in the labor market are public employees. And in this sector, there is no private ownership.

Schools, hospitals, nurseries, et cetera are not owned by capitalists, but by the citizens in common. No one is drawing a profit, and the goods and services that are produced are not exchanged in a market, but according to a solidaristic system of abilities and needs. This sector was created by taking parts of the economy out of the market realm. Commodities were transformed into goods accessible to all citizens. This can be called de-commodification.

But apart from the public sector, we also have a considerable democratized segment of the private sector. The cooperative sector still accounts for quite a bit of our economy and used to be even more extensive a few decades ago. In Denmark, the cooperative sector emerged from an upheaval in agricultural society in the late nineteenth century through a simultaneous struggle for democracy and against private ownership of dairies, butcheries, and the entire chain of agricultural production, including product markets for fertilizers and pesticides. At the same time, consumer coops developed and a bit later, the workers’ movement began establishing its own cooperatives.

Today, cooperative ownership remains vibrant. Denmark’s second-largest supermarket chain is owned and governed by its members. Utilities such as electricity, water, and heating are dominated by cooperatives, and 20 percent of housing is run cooperatively. Even the financial sector retains significant elements of common ownership.

This doesn’t mean that such companies represent “pure socialism.” They function within a market and have to compete on capitalist terms. In many cases, cooperative members have lost influence over time. And the public sector is not governed by its workers to anything near the extent we would desire. Even so, I still think there is something qualitatively different about these companies, because there is a democratic potential. Their managers are not accountable to capitalists, but to much wider constituencies of stakeholders — consumers in the private sector, citizens in the public sector. Completely different logics can potentially become pervasive in these companies, and we can exploit that if we treat them as a terrain of struggle.

RMS

But what good is cooperative ownership if you’re still competing in a capitalist market? The Nordic countries have always had highly export-dependent economies, so they’ve been vulnerable in that regard. How has this project succeeded anyway?

PD

As long as the capitalist sector is dominant, there will be pressure on the democratic sector. But our history shows that capital doesn’t always win. The Nordic experience shows that the democratic sector can expand for decades at the expense of the capitalist one. Recently, in the neoliberal period, we have seen the opposite movement, where capitalist ownership has expanded, and our society has become less socialist. But my point is that this development can be reversed, and we can expand the democratic sector, through democratization of corporate ownership, or by expanding the public sector to new areas or rolling back privatization.

Even in a society with full cooperative ownership, competition in the market will limit democracy within companies, especially if you are in a global market dominated by capitalist firms.

We can see this in Denmark’s cooperative agricultural sector. Here, farmer-owned cooperatives still dominate — especially within the dairy and slaughterhouse industry. But these companies’ operations don’t show very impressive societal considerations. They don’t treat employees very well, they have high CO2 emissions and other environmental problems, too. When these companies behave this way, it is because of international competitive pressure. If these companies want to succeed in the international markets, they are forced to make all these socially harmful decisions.

So, the form of ownership isn’t enough. We also need to look at the relationship between market and planning. And here we need far more planning in the economy. This means setting up a political framework that ensures that competition between companies doesn’t lead to socially harmful actions.

AMM

Can you give a concrete example of what such a planned economic intervention might look like?

PD

The Danish Climate Law of 2019 is a pretty clear example of a plan-based economic approach. It has been decided that emissions must be reduced 70 percent by 2030, and an independent council has been set up to monitor whether the government — regardless of its political coloration — complies with the targets. So, a target is set, and afterward all sectors will need to adjust through concrete policies.

This model could be copied to make an inequality law, a biodiversity law, or a law of gender equality. The idea would be to set some democratic targets based on broad, inclusive deliberative processes, and then find the best tools, whether planned or market-based, to achieve them.

My idea of socialism walks on two legs: ownership and overall planning. So long as we have capitalist ownership, we will find oligarchic power resting with capitalists — a power that they can use to resist democratic planning. But with ownership broadening out and becoming gradually democratized, this oligarchic power is curtailed. So, it becomes gradually easier to make democratic decisions about how to structure the economy.

RMS

So, why not a model based purely on planning? Why retain elements of markets at all when constructing socialism?

PD

The problem with a centrally planned economy, as shown by historical experience, is that when economies became more complex, they got into trouble in terms of innovation and efficiency.

But a centrally planned economy also amounts to a centralization of power, which undermines autonomy for the working class.

Socialism is precisely about allowing people to make decisions about the issues that are pertinent to their lives. So, I am skeptical about a model like the Soviet Gosplan, that plans everything centrally down to the tiniest detail.

I believe that we have to deploy market mechanisms to ensure local ownership. But it must be circumscribed by strict democratic planning.

RMS

In the debate about your book in Denmark, you have been accused of being a kind of social democrat. What do you say to the people who say that what you are describing is not really socialism?

I am fascinated by the concept of “functional socialism” developed by the Swedish Social Democrats, and especially Gunnar Adler Karlsson. The idea is that while preserving formal capitalist ownership, you empty out its functions by limiting what the capitalists can use this property for.

For example, if you owned rental property in the 1970s, you would have formally owned the building, but it was politically decided how much rent you could charge and how the apartments should be fitted out. Whether you had to tear down your property was determined by a planning law, and if you sold it you were heavily taxed.

So, maybe you had ownership, but the practical power this brought was highly restricted. Karlsson compared this to the monarchy in the Nordic countries. Formally, the monarchs are still heads of state, but in practice they have no real power. The idea was to do the same with the capitalists.

This was the idea behind the social-democratic project. And it was quite successful for many decades. But when the crisis hit in the 1970s and the Keynesian system ran into crisis, the fact that the capitalists had been allowed to retain ownership of the central means of production proved to be an existential problem for social democracy. This meant that they could quickly launch an offensive to roll back all these improvements. And this is the situation we’ve been in for the last thirty years.

That is why I am skeptical of the social-democratic strategy. It is the Swedish economist Rudolf Meidner who said that as long as capital retains ownership, it has a gun to the head of the working class.

That is my conclusion in the book, so I’d strongly reject the idea that what I am presenting is a reformist plan. But it is a gradualist, rather than a classic revolutionary strategy. This does not mean that there will be no breaks and confrontations during that process. It is not a slow evolution into a new society as Eduard Bernstein imagined — for there are enormous privileges at stake, and capital will strike back.

But it is delusional to think that the transition to socialism will take place through one rapid rupture. I do not think that experience we have from history indicates that this is a good model. The places where it has been implemented have not succeeded in realizing the egalitarian societies that the revolutionaries dreamed of creating.

In well-developed societies such as the Nordic countries, there is simply no appreciable support for leaping into the unknown terrain of a revolutionary upheaval.

And at the same time, a revolutionary break will also mean an economic downturn, so if we want to maintain democracy, and that is nonnegotiable for me, then the question is whether we would be able to maintain power at all during the ten to twenty years that a social transformation would take.

RMS

You are critical toward the Left’s traditional focus on the nationalization of the economy. What is your critique here?

PD

The problem is that state ownership is a distant and indirect way of organizing ownership.

We saw the results of this in the former Eastern Bloc. When capitalism was reintroduced, there were relatively few protests in the Eastern European countries. Had the workers felt they really owned their companies, it would not have been so easy to privatize them all.

At the same time, state ownership in democratic countries is vulnerable in different ways. We have seen under neoliberalism that all it takes is an election defeat and then an incoming right-wing government can sell out everything built up over decades. We saw this with Margaret Thatcher in Britain, where you had a fairly extensive publicly owned business sector, which was sold out to the capitalists in a few years.

If we compare this with Denmark, it is not that we haven’t had right-wing governments that would have liked to expand capitalist ownership. They just had a harder time with it, because of a more decentralized model of ownership. There have been attempts to privatize infrastructure, but they’re owned by cooperatives, so the politicians can’t just sell them.

Thatcher also sold off public housing via the “right to buy” program; they tried it in Denmark, too, but couldn’t do it because our cooperative housing is owned by tenants through nonprofits. So paradoxically, it was private property that prevented housing and infrastructure from being sold to the forces of capital

This doesn’t mean that I am against public ownership. I basically believe that public ownership should be greater. A sector like finance or energy should have far more public ownership.

AMM

Right now, Denmark might be most famous internationally for its very strict immigration policies, which have been embraced by the ruling Social Democrats. How do you feel about being part of the parliamentary majority that keeps them in power?

PD

It is difficult and depressing. While Denmark does have a strong legacy of solidarity, a substantial proportion of the population find it very hard to extend this solidarity to refugees and immigrants. And racist opinions are pretty common in parts of the population.

In this situation, we have a social-democratic party which has decided firmly on a tough and relentless line on refugees and a strongly polarizing discourse on immigrants living in Denmark.

We do not provide votes for this policy, and we try to fight it and mobilize against it as well as we can. But there is a pretty big majority behind it in parliament, consisting of the Social Democrats along with the Right, and unfortunately also a pretty big majority of the population.

My hope for a solution is to dig in for a long-term effort to organize politically. It is all about showing that class antagonisms and not nationality is what matters. The best way to fight racism is to organize across ethnic divides. The moment you are on the picket line with your colleagues from Pakistan or Somalia, you are creating solidarity. It is only by organizing and fighting around class divisions that we can overcome division based on ethnicity and race.

RMS

Looking at other countries, recent years have brought defeat for Sanders, [Jeremy] Corbyn, Podemos, and now Die Linke. But if the Left is losing elsewhere, why is it different in the Nordic countries?

PD

The Nordic left is not in a position to challenge the social democracies for the hegemonic position within the center-left. We are not in a situation similar to the one that Podemos, for example, appeared to be heading toward a few years ago.

But we do have the opportunity to challenge neoliberalism. If we look at how the COVID crisis was handled, we see a classic social-democratic approach. Wage losses were fully covered, partially paid for by the state, as long as firms agreed not to lay off workers. This represents a break with neoliberal logic, and it means that there is now a greater support for socialist ideas — that the state should play a direct role in the economy; that we need social security.

It has been made clear during the COVID pandemic how interdependent we are. This has led to an increased sense of solidarity. But the roots of this shift go back further, at least to the financial crisis of 2008, which spelled the end of the fantasy of capitalism as a crisis-free system.

AMM

How, then, can the Nordic left avoid the traps that ensnared Sanders or Podemos?

PD

The left-populist strategy that Podemos represented has some intrinsic problems. You may reach new parts of the electorate by presenting yourself as a break with “old politics.” But it is not a sustainable strategy in the long term. Once you’ve been going for ten years and have entered local government, you have de facto turned into an “ordinary” party. And then you have to introduce something else.

But I see no reason to be depressed. The attempts by Sanders, [Jeremy] Corbyn, and others to take power didn’t succeed. But I think that the Left in such countries should be proud of what they achieved. In both the United States and the UK, a Left that was completely marginalized — much more so than anything we have ever experienced in the Nordic countries — made their way to the center of the political stage. When this happens once, it can happen again. And so, we should prepare ourselves.

The experiences of Corbyn, Sanders, and Podemos have served as an immense inspiration for me. When you are that close to power, you have to think practically. Since the end of the Cold War, socialists have tended to engage in abstract discussions around esoteric concepts such as Empire by Michael Hardt and Toni Negri. But now we have been forced to think about how we would take the first steps toward socialism.

This has sparked an incredibly creative process with new think tanks, books, and discussions. We have produced more reform programs in recent years than we did for several decades prior. So, we are much better prepared for the next time that opportunity knocks. Socialism has shifted from being a distant prospect to a realistic possibility.