Socialism and Foreign Investment?

[EstrellaRojaEZLN]

Let's say there is a country that has a Democratic Socialist Government and the economy consists of cooperatives, collectives and parastatals, and a foregin investor or a transnational company wants to open a business in that country, how would a Democratic Socialist deal with this issue? Make the company do a joint venture with a local cooperative? place a special tax for operating here? or deny entry to open a franchise or business here?

Thank you for your answers.

[canto-faire]

If the country is a very strongly developed economy, and either still in or just coming out of a revolutionary situation, then to protect the new socialist economy, the Government should probably very strongly limit foreign capitalist involvement. It isn't necessary to development, and might threaten the recent advances. If an outright ban isn't practical, then very strong regulations and taxation to minimize exploitation would be a given. Making the company do a joint venture with a local cooperative could jeopardize the cooperative if that form of organization hasn't been sufficiently grounded.

If the country's developed, isn't going through the Revolutionary phase, and isn't likely to be threatened much by a little Capitalist involvement, then the decision should probably rest entirely with the community the company wants to station in. An outright government ban or strong limitation would probably be unnecessary.

If a country isn't developed, however, it may simply be an economic necessity. There simply aren't enough Socialist nations to trade with or receive funding from. In this case, it might even be advisable to go so far as offering a tax *break* for doing your 'joint venture with a local cooperative'. If a country simply doesn't have the material basis necessary for socialism, it'll have to accept that and find ways to build that material base without simply privatizing everything and building a stock market, and that will likely mean a lot of foreign investment.

All in all, it really depends on what the level of the country's economic development is, and what the international political situation is. We can hypothesize a few policy proposals here, but ultimately it'll vary too much to propose anything like a solid plan.

[EstrellaRojaEZLN]

Great Answer!

I am also all in for Direct Democracy and its up for the people that are going to be affected is to decide if they want a capitalist transnational corporation on their country, with strong regulations and taxes.

At least a Democratic Socialist nation won't look just as hypocrite as China.

[Vladimir Innit Lenin]

A country can't be 'Socialist'. Autarky/economic isolationism has shown to be a disastrous policy within the institutional framework of capitalism. As we have seen for many years now, any and all 'Socialist' countries end up accepting foreign investment sooner or later. Or they become North Korea.

[Leftsolidarity]

Well there's a few things to sort out first.

You're going to have ultra-lefts (above post) say that socialism is not possible in a country. They equate socialism=communism, so you need to get around that language barrier.

For those who aren't ultra-left, we need to say whether the make-believe country is actually socialist or if it's social democracy/some sort of co-op capitalism.

From your example, it would seem that the country would still be capitalist just with worker co-ops and "socialists" in the government.

In a socialist country, the workers would control the means of production and the state entirely without the capitalist market. That would mean that foreign capitalists would not be able to come in and open businesses or invest with the goal of generating more capital. We can see examples of socialist countries having to give into the capitalist market sometimes out of need to survive but it is not really in line with building socialism.

[Sperm-Doll Setsuna]

A country can't be 'Socialist'. Autarky/economic isolationism has shown to be a disastrous policy within the institutional framework of capitalism. As we have seen for many years now, any and all 'Socialist' countries end up accepting foreign investment sooner or later. Or they become North Korea.

Even Cuba and DPRK are quite open to foreign investment, if not quite desperate for it, though they likewise suffer tremendous poverty both from economic isolation.

[EstrellaRojaEZLN]

From your example, it would seem that the country would still be capitalist just with worker co-ops and "socialists" in the government.

That would be some kind of market socialism and enterprises running as socialist mode of production.

[tuwix]

Let's say there is a country that has a Democratic Socialist Government and the economy consists of cooperatives, collectives and parastatals, and a foregin investor or a transnational company wants to open a business in that country, how would a Democratic Socialist deal with this issue? Make the company do a joint venture with a local cooperative? place a special tax for operating here? or deny entry to open a franchise or business here?

Thank you for your answers.

Firstly, the potential investors would try to destroy economic system of such country instead investing there.
Secondly, even if they didn't try to destroy the country, they could only form a cooperative. But all workers of cooperative have the same amount of votes regardless capital they brought in. Then what make sense to capitalist such investment?

[Vladimir Innit Lenin]

You're going to have ultra-lefts (above post) say that socialism is not possible in a country. They equate socialism=communism, so you need to get around that language barrier.

This is childish. It's not a mere 'language' barrier, but an actual understanding what Socialism is, and what Socialism isn't, as we shall see below.


In a socialist country, the workers would control the means of production and the state entirely without the capitalist market. That would mean that foreign capitalists would not be able to come in and open businesses or invest with the goal of generating more capital. We can see examples of socialist countries having to give into the capitalist market sometimes out of need to survive but it is not really in line with building socialism.

So, the workers would simultaneously control the state, without the capitalist market, but would also somehow have to give in to the capitalist market? And you presume that what, the 'Socialist' state can just trade on favourable terms with foreign investors and in foreign markets as and when they wish? And you think this would actually happen in reality?

And how exactly would they trade with foreign countries? You'd need a currency. And if you need an external (trade) currency, then you need a domestic currency too. And what that means is that you have a price system. And if you have a price system, and you have an open economy (i.e. where trade occurs, as you admit is likely to be necessary), then your economy is vulnerable to price fluctuations, unless you can control the exchange rate AND the price at which you trade goods externally, which clearly wouldn't be possible if you are trading in capitalist foreign markets. So then, if you have an economy based on fluctuating prices, then you will inevitably have a divergence between the price of labour, the use-value of a good, and the exchange price.

This can go in two directions:

If prices go up, you will have a surplus (i.e., that which underpins capitalism) and some level of accumulation, via the exploitation of workers, as domestic prices will increase and diverge from the intrinsic value of a product, or the value of the labour necessary to 'finish' the product.

If prices go down, then you either have unemployment/under-employment and a recession, or wages go down and existing workers are being further exploited.

It's just ridiculous, in economic terms, to try and posit this whole 'we can have Socialism AND trade in capitalist foreign markets when we WANT to' scenario, not to mention the realpolitik difficulties of such a dream.

There are three pillars of Socialism which I think, broadly speaking, we can all agree on: the eradication of class structures and wage labour, the eradication of the state, the eradication of money as currency. Now, what sort of socialism is it if you are not aiming to eradicate the last two, and the first pillar is likely to be impossible to eradicate, given the need for relations with capitalist economies via foreign markets?