In economic discourse, socialization has several different but related connotations. In socialist economics, the term usually refers to the process whereby production is reorganized away from producing for private profit to producing goods and services directly for use, along with the end of the laws of capitalism, and in its most developed form, the end of monetary valuation and monetary calculation in production.[1] The phrase "social production" has been used to classify the form of workplace relationships and ownership structure of the open-source software movement.
Socialization has also been used to refer to social ownership, a form of ownership distinct from employee-owned cooperatives, public-ownership and private-ownership. Economists such as John Roemer, Pat Devine and Alec Nove have advocated for socially owned enterprises as a major component for hypothetical socialist economies, defining social ownership as ownership of an enterprise by those affected by the use of the assets involved.[2][3]
In the theoretical work of Karl Marx and Frederich Engels, socialization refers to the process of transforming an economic activity from a solitary activity to a social relationship. Socialization is a process that begins to take place under capitalism and is a hallmark of the capitalist mode of production in the form of socialization of production in the factory and socialization of labor by transforming the process of producing goods and services into a highly collective and mechanized process. This occurs due to centralization of capital and in industries where there are increasing returns to scale. In Marxist theory, a contradiction develops between the socialized production and the private ownership and appropriation of the surplus value and profits, leading to a situation where socialization is expanded in scope to include socialization of the surplus value in the form of cooperative ownership over the means of production; a transition from capitalism to socialism.[4]
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Socialist economists have defined social ownership and social property differently. In some instances, it is used in reference to worker-managed and employee-owned enterprises. But it is separated and distinct from public ownership and the process of nationalization.
Pat Devine defines social ownership as "...ownership by those who are affected by - who have an interest in - the use of the assets involved", distinguishing it from other forms of ownership and more efficient than the other types of ownership because "...it enables the tacit knowledge of all those affected to be drawn upon in the process of negotiating what should be done to further the social interest in any particular context."[5]
John Roemer's model of market socialism features a form of social ownership where individuals would receive a non-transferable coupon entitling them to a share of the profits generated by autonomous non-governmental, publicly owned enterprises.
Socialization is a process that begins to takes place in capitalism as large-scale manufacturing based on a vertical division of labor displaces "cottage industry"; small-scale and family-owned production shops. This process transforms production into an increasingly social and collective process, but appropriation of the social product in the form of private profit continues to be an individual or private affair by investors and private owners of the enterprise. Furthermore, exchange of the commodities produced is the private act of a small group of capitalists or an individual owner. As the process of socialization expands, a contradiction between the socialized nature of production and the individual nature of appropriation of the surplus product arises, coinciding with the obsolescence of the functions performed by the capitalists (the private owners).
This socialization of production and centralization of capital that takes place under capitalism lays the foundations for a socialist economy. Socialism entails ownership of the socialized means of production by the workers engaged in the production (see: Worker cooperative) and social, or worker control in the appropriation of the socially produced surplus product (profit), either in the form of economic planning and planned investment, or by autonomous worker cooperatives. The establishment of social ownership over the means of production resolves the contradiction between social production and individual exchange/appropriation under capitalism.[6]
Socialization of the workplace is contrasted to rigid hierarchy and bureaucracy, as workers gain more autonomy, collective decision-making power and control over the output they produce in a socialized work environment. Socialization of industry is different from nationalization, which can, but usually does not imply the socialization of the workplace; socialization of industry can take place in private or cooperative-owned enterprises. In a capitalist economy, socialization entails "commodification" and is therefore limited.[7] Socialization therefore takes a different form in the capitalist mode of production than in the socialist mode of production.
Michel Bauwens identifies the emergence of the open software movement and peer-to-peer production as an emergent alternative mode of production to the capitalist economy that is based on collaborative self-management, common ownership of resources, and the (direct) production of use-values through the free cooperation of producers who have access to distributed capital.[8]
Commons-based peer production generally involves developers who produce goods and services with no aim to profit directly, but freely contribute to a project relying upon an open common pool of resources and software code. In both cases, production is carried out directly for use - software is produced solely for their use-value.
Particularly in the United States, the term "socialization" has been mistakenly used to refer to any state or government-owned industry or service (the proper term for such being either nationalization or Municipalization). It has also been applied to any tax-funded programs, whether privately run or government-run. The term "socialized" is usually used in a pejorative sense, most commonly in reference to publicly funded health care programs (See: socialized medicine)[9].
It is important to note that in economic and Marxist terminology, publicly funded or even state-run, universal healthcare services would not constitute a "socialist" industry because the employees and workers do not own their means of production and participate in the management of the enterprise. Furthermore, a majority of universal healthcare programs are simply publicly subsidized, privately owned capitalist health and pharmaceutical firms; private ownership of the means of production and private profit-generating firms being the antithesis of socialism.