What is Socialism?

Stanford defines capitalism by a short list of features, the first of which is that the means of production are privately owned; the others are that people own their own labor and sell it for wages and that markets decide what gets made and who gets it. Socialism changes the first feature only. It says nothing about markets, which may exist or not. The definition is one clause.

Socialism is not state ownership, but state ownership can be socialist if the people have democratic control and fair representation. Ownership by the state without democratic control is "some form of statism, not socialism." Does your government represent you? Can you trust the politicians who come after it?

Social democracy is capitalism with a strong government built around it. Stanford describes it as a market economy combined with a welfare state, in which "property in the means of production remains private" and the government limits the power of owners over workers. It attempts to insure people against illness, unemployment, disability and old age, pay for schools, transit and health care with taxes, regulate pollution and dangerous work, and back unions in bargaining. Stanford calls this strategy "taming capitalism." It was "developed with great success" in the three decades after World War II, especially in Northern Europe, and has been in retreat since the 1980s.

Social democracy is not inherently socialist, because it never changes who owns the means of production. Stanford counts it among the reforms that "stop short of" that change. Having the word "social" in its name does not make it socialist, in the same way that social media by itself is not socialist. The owners stay the same. The government softens what their ownership does to everyone else.

Democratic socialism uses elections, politics and government policy to change who owns the economy. Its goal is a socialist economy, reached through democracy. Stanford says most democratic socialists answer the conflict between democracy and capitalism "by extending democratic principles into the economy," so the people who work in a business or depend on it get a vote in how it is run, the way the members of an electric co-op elect its board. Stanford describes John Rawls's version as "public ownership of the preponderance of the means of production, with devolved control of particular firms."

The difference is ownership. Social democracy changes what happens to people under capitalism. Democratic socialism changes who owns and controls the economy. A country can do both at once: the same voters who pay for public schools can also own their electric company.

A co-op is socialism at the scale of one business. The people who use it or work in it own it together, and they run it by one member, one vote, however much each has put in. That is the definition applied to a single enterprise: social ownership and democratic control. In a worker co-op the owners are the people who work there. In an electric co-op, a grocery co-op or a credit union, they are the people it serves. Either way, no outside investor owns it, and nobody can buy control of it. One co-op does not make a country socialist. Stanford defines a socialist economy by the bulk of its means of production, and lists growing the cooperative sector among steps of which "none of these mechanisms on its own would make a society socialist rather than capitalist." A co-op is a socialist business. An economy is socialist when most of it is owned that way.

America is a mixed economy, and capitalism and socialism can and do coexist in it. Member-owned electric co-ops power more than 23 million homes, farms, schools and businesses in 48 states, for 42 million people. They reach the places that need them most: 92 percent of the counties in persistent poverty are on co-op lines. About 85 percent of America's farms are in counties that electric co-ops serve. Those farms feed the country, which makes these socialist co-ops the backbone of American capitalism: without food there are no workers, and without workers there is no economy, capitalist or not. Socialism is not coming to America. It has been keeping the lights on here since the 1930s.

Rural American electric co-ops exist because capitalism passed rural America by. In 1935, after fifty years of private electric companies, nine farms in ten had no power. The investor-owned utilities counted the customers per mile and decided rural Americans weren't profitable. Where capitalism failed, socialism grew from the farmer. The Rural Electrification Act of 1936 lent farmers the money, and they formed cooperatives, set the poles, strung the wire and elected their own boards. By 1953 nine farms in ten had power.

Stanford describes a gradual road it calls eroding capitalism. Economies are hybrids, and people "can introduce new, socialist forms of collective activity (such as worker cooperatives) and progressively expand them, eventually turning them from marginal to dominant." The sociologist Erik Olin Wright, whom the entry cites, compares it to a new kind of fish that thrives in one corner of a lake and spreads until it rules the water, the way capitalism grew out of pockets of trade in the cities of feudal Europe. America already has a head start. Where capitalism was the loser, on the farms it decided weren't profitable, socialism has been winning for ninety years. The farmers' co-ops still own the lines across more than half the country's land.

James Truslow Adams gave the American dream its name in The Epic of America in 1931, two years into the Depression. He called it "that dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement." And he was clear about what it was not: "It is not a dream of motor cars and high wages merely, but a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

Then he turned on the men who claimed to deliver it. "The great business leaders are likely to lead us astray rather than to guide us," he wrote. They pushed high wages, not to give the worker more leisure, but "for the sole and avowed purpose of increasing his powers as a 'consumer,'" until the worker was "getting into a treadmill in which he earns, not that he may enjoy, but that he may spend, in order that the owners of the factories may grow richer." He named Henry Ford, who had written in 1930 that "anything which is economically right is also morally right." Ford's fortune was "often referred to as one of the 'honestly' obtained ones," Adams wrote, "yet, either because his wages are still too low or the cars too high, he has accumulated $1,000,000,000 for himself from his plant."

Adams's quarrel was with efficiency as a goal. Of the factory owners a century before him he wrote, "Like our modern 'efficiency,' it forgot the man." Schools had the same problem: "Unless we can agree on what the values in life are, we clearly can have no goal in education." If a person is only a producer and consumer, "then the more ruthlessly efficient big business is, the better." But if we think of him "as a human being primarily, and only incidentally as a consumer," then "our point of view will shift from efficiency and statistics to human nature." A willingness-to-pay study is efficiency and statistics in exactly his sense. It measures a person only as a consumer: how much can be taken at the counter before he walks away.

Nobody can stop eating, and the stores know it. During the price spikes after the pandemic, the Federal Trade Commission found that grocery retailers' revenues rose faster than their costs, and their margins stayed high after costs came down. When the government sued to block Kroger from buying Albertsons, a Kroger pricing director was confronted with his own email: "on milk and eggs, retail inflation has been significantly higher than cost inflation."

A grocery co-op belongs to the people who shop there. Any surplus goes back to them, as a bonus on what they spent or as lower prices, so there is no one in the building who gains from charging more for milk. It is the electric co-op's answer applied to the dinner table, and it runs at scale in Switzerland, Finland, Britain and Japan, where about 31 million people belong to consumer co-ops.

Food co-ops are among the sturdiest small businesses there are. In a Quebec government study, consumer co-ops were still open after five years 75.6 percent of the time; other businesses, 35 percent. In the United States, 181 new food co-ops have opened since 2006, and by 2022 those new stores employed more than 12,000 people and sold more than $640 million a year. In 2025 the food co-ops of National Co+op Grocers grew their sales 6.2 percent, more than twice the 2.9 percent of conventional grocers. In Dayton, Gem City Market has served a food desert for five years and has about 5,000 member-owners.

City-owned stores have a shorter, rockier record. Baldwin, Florida, bought its town's store in 2019 and closed it in March 2024. Erie, Kansas, bought its only grocery in 2020 and, citing the cost, leased it to a private company in 2024. St. Paul, Kansas, has run its store since 2013 and turns a small profit. And when a city store struggles, a council can lease it or close it, as Erie and Baldwin did. In a co-op, the shoppers decide.

And government does not need to own the store to help. Whatever a city would spend building its own grocery, it can lend or grant to a co-op instead. The federal Healthy Food Financing Initiative already does: in 2024 it awarded $2.6 million to 20 food co-op projects.

Artificial intelligence runs on data centers, and data centers run on land and power. Both are cheapest in rural America, where the co-ops own the lines. The co-ops are now being asked to serve single buildings drawing 500 to 1,000 megawatts, and the head of their national association has said one 800 megawatt data center can use three times as much power as all of a co-op's other members combined. The members who elect the board hold the one thing the industry cannot download.

A co-op should be owned by the people it serves, and so should what it powers. The companies building AI are not building it only to answer questions. They are building it to know you: what you buy, what you believe, what you will pay. Your information should belong to you. A data center owned by its members has to answer to them about what it collects, what it trains on and what it sells, because there is nobody else to answer to.

Can billionaires be trusted with AI? One company sells 85 percent of the chips that run it. Three companies rent out 63 percent of the world's computing power. Four companies are spending about $700 billion on data centers this year. The people building it say they cannot yet fully control what they are building, and they alone decide whether to build it, and they profit from the answer. Adams knew how that goes: "No ruling class has ever willingly abdicated." A fairer future will not be handed down by the people winning this one. The only way to get it is to own the thing that decides it.

No one shops around in an ambulance, or for one. Health care is the clearest case of a need you cannot walk away from, and in the United States it is run mostly for shareholders: insurers, hospital chains and private equity. Co-ops offer two other ways to own it. Patients and members can own the plan and the clinics, and elect the board that sets the prices. Or the people who give the care can own the agency that employs them, and decide their own pay and hours.

Both exist and both work. When the members own the plan, there is no shareholder in the room arguing to deny a claim. When the aides own the agency, the profit that would have gone to an investor goes to the people doing the lifting.

Co-ops are not only for necessities. Any ordinary business can be owned by the people who work in it. In a worker co-op the employees own the company together and elect its leaders, one worker, one vote. The profit that would have gone to outside investors goes to the people who earned it, and the decision to move the jobs overseas or sell the company is made by the people whose jobs they are.

Working at a business you own is better, and the research says so. The economist Virginie Pérotin reviewed the evidence for Co-operatives UK in 2016. Worker co-ops survive at least as long as other businesses and keep jobs more stable: in a downturn they cut pay before they cut people, and make it back through profit-sharing when business returns. They are more productive, with staff working "better and smarter." And the gap between the top and the bottom is far narrower. At Mondragon the best-paid worker may earn no more than six times the lowest-paid, a cap in place since 1988. At Britain's 350 largest listed companies, the median chief executive earns about 165 times the lowest-paid worker.

That covers tech companies as much as factories and corner shops. A software firm is mostly people and laptops, which makes it one of the easiest businesses for its workers to own. So is an app. The drivers who do the driving can own the app that dispatches them. The ownership question this page keeps asking applies everywhere: who owns it, and who decides.