Geoff Hodgson: The Democratic Economy (1984)


Geoff Hodgson was and is an academic economist who developed a libertarian socialist approach to economic management. He lectured at Newcastle and Manchester Polytechnics and in the US. In 1981, he published Labour at the Crossroads, followed by Capitalism, value and exploitation in 1982.

Since publishing The Democratic Economy in 1984, he has published several further books on economic theory and management, including works on the Italian economist Piero Straffa and Economics and Utopia, published in 1999, as well as numerous articles in academic journals. He is currently at Loughborough University and also edits the Journal of Institutional Economics. His latest book, published in 2019, is entitled Is Socialism Feasible? Towards an Alternative Future.

Hodgson’s 1984 book followed from an increased interest within the Labour Party in democracy within the workplace, which had perhaps not been seen since the guild socialism and shop stewards movements of the 1920’s. There had been a reconsideration of the appropriateness of the centralised Morrisonian model of managing nationalised industries. In 1977, the Labour Party had published the Bullock Report on Industrial Democracy, which had proposed statutory worker representation on the management boards of firms. It was approved by the Labour Party annual conference in 1979. There were also more radical examples of worker management – notably the Lucas Aerospace shop stewards alternative plan of 1976, the subject of a book by Hilary Wainwright and David Elliott in 1982 (recently republished by Spokesman), and the Upper Clyde Shipbuilders ‘work in’ of 1971 led by Jimmy Reid and other communist shop stewards.

“A society based on the fullest extension of popular participation in power, where democracy predominates, and where there is no great inequality in income or wealth, must be a form of socialism. Such a society is incompatible with the concentration of ownership of the means of production in the hands of a small minority, as obtains at present in all Western societies. Thus, in the transition to a democratic economy a threat to some vested interests is unavoidable. But that does not mean that we should not attempt to seek the smoothest possible transition. The orthodox Marxist account sees it as conceivably peaceful but more likely to be violent. This is largely because of the flawed and over-simplified picture of one class removing another from the position of power: the proletariat replaces the bourgeoisie as ruling class in a single revolutionary action. In this rapid and cataclysmic process, the ‘ruling class’ is bound to resist.

“The question is which forces and advances are to be given priority? The traditional socialist answer is to put the main emphasis on reform from the centre: particularly an extension of public ownership and taxation policies to reduce inequality. These matters are important, and they have to be tackled at some time. But it can be argued that extensions of democracy, participation, decentralisation and autonomy should be pressed for first. To put the matter more strongly, the present terms of debate should be changed from nationalisation versus markets and private enterprise, to the issue of how is democracy to be combined with autonomy. This creates the important possibility of a socialist consensus, which can gain wide popular support, and pose issues in terms which clear the way for the democratic economy.

“Thus, the traditional socialist configuration of means and ends is reversed. Instead of democracy being the means to achieve a goal of greater public ownership, public ownership is a means when necessary to achieve greater democracy. It could take a variety of forms, and it should not be conceived as old-style nationalisation. In any case, the pre-existence of a strong and pluralistic movement for democracy, participation and autonomy will help to prevent the emergence of state collectivist forms.”

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