There is no “after socialism.” There will not be in our or in our children's lifetimes an “after socialism.” In the wake of the Holocaust and the ruins of Nazism, anti-Semitism lay low a bit, embarrassed by its worst manifestation, its actual exercise of state dominion. In the wake of the collapse of Communism, socialism's only real and full experience of power, socialism too lays low for just a moment. Socialism's causes in the West, however, remain ever with us, the product of the convergence of two extraordinary achievements: liberal free enterprise and political democracy. The former creates wealth that has transformed all human possibility, but it also gives rise to particularly deep envy. The latter allows ambition a route to power by an appeal to the democratic state to seize and redistribute wealth in the name of social equality. As Friedrich Hayek and Ludwig von Mises understood perfectly, the bounty of free enterprise leads the unproductive to believe that such wealth is a fact of nature, there for the taking.

While no one has yet announced the death of capitalism, reports of its imminent demise have been as numerous as they have been exaggerated. Such reports have usually been bolstered by thoughtful analyses of the fundamental contradictions of capitalism, which was expected to come sliding—if not crashing—down under the weight of its own inconsistencies. Leaving aside Karl Marx's own predictions, twentieth-century analysts as diverse as Joseph Schumpeter, Daniel Bell, and Jurgen Habermas have asserted that the contradictions of capitalism could only mean that its days were numbered. Alas, all that has been established by these analyses is that predictive failure is no impediment to market success: either the consumer's demand for such theories of capitalism's failures is naturally robust, or supply continues to generate its own demand.

“The idol of communism, which spread social strife, enmity and unparalleled brutality everywhere, which instilled fear in humanity, has collapsed.” These words, spoken by Russian president Boris Yeltsin before a joint session of the U.S. Congress in 1992, brought a tumultuous response from America's political leaders. The evocation of the theme of idolatry by a former member of the Communist Party was striking, all the more so because it must have called to his listeners' minds the dramatic scenes of the destruction of the statues of Lenin then taking place throughout the Communist world. Nothing of the kind had been seen since the end of the Pagan era, when temples of the old gods were toppled throughout the Roman Empire. The events that historian Edward Gibbon, in his classic The Decline and Fall of the Roman Empire, described as happening in Alexandria in A.D. 389 might just as well have applied to what was happening in Minsk or Tirana: “The huge idol [of Serapis] was overthrown and broken into pieces, [its] limbs ignominiously pulled through the streets.

Socialism, understood as the rejection of markets based on private property in favor of comprehensive centralized economic planning, is no longer a serious political option. If the core of capitalism is the organization of the economy primarily through market competition based on private property, then capitalism has certainly defeated socialism. Markets have been accepted—and central planning abandoned—throughout most of the Third World and in most of the formerly Communist states. In the advanced industrial states of the West, Labor and “democratic socialist” parties have rejected socialism, by deregulating markets and privatizing industries, utilities, and transport. The U.K. Labour Party's 1945 manifesto declared the party to be a “Socialist Party, and proud of it. Its ultimate aim is the establishment of the Socialist Commonwealth of Great Britain.” Today the Labour Party insists that markets are a given.

What, if anything, is left of the socialist project? One way of interpreting this question is to ask whether socialism has bequeathed any permanent legacy to the capitalist democracies—do they have any features that would not exist apart from the historical impact of socialism, and that positively reflect socialist values? If we assume, with the political consensus of the moment, that full-blown socialism no longer represents a possible programme for these democracies, perhaps we can still discover the remains of socialism embedded in their practices. Or maybe not—that is the question I want to address.

Two related themes have dominated discussions about the Left in advanced industrial democracies in recent years. The first is that an increasingly integrated world economy is creating a fundamentally new situation for leaders and publics, imposing burdens and constraining choices. You can either opt out of the system and languish, or put on what New York Times columnist Thomas Friedman has called neoliberalism's “Golden Straightjacket”—at which point “two things tend to happen: your economy grows and your politics shrinks.” The second is that traditional social democracy has played itself out as a political ideology, creating a vacuum that can and should be filled by some new progressive movement with greater contemporary relevance. For example, Ralf Dahrendorf has argued that “socialism is dead, and … none of its variants can be revived,” while Anthony Giddens has written that reformist socialism has become “defensive” and perhaps even “moribund.”

For this collection entitled “After Socialism,” we were asked to reflect upon such questions as what rectifications (if any) to present market capitalist systems might be desirable and whether there is any viable remnant in the socialist ideal that ought to be preserved. My basic answer to the latter is that the socialist principle of distribution “From each according to abilities, to each according to needs” remains a compelling moral ideal, superior to the resigned, complacent, or enthusiastic acceptance of economic inequality that is offered by defenders of conventional capitalism and by many versions of liberalism. And so, my answer to the former is that the rectifications to present market capitalist systems that would be desirable would be to reduce the deep injustices and social malformations of these systems as much as possible by moving their distributive outcomes in the direction of the socialist ideal.

The collapse of Communism and the retreat from, in theory as well as practice, even moderate forms of collectivism have left even the non-Marxist forms of socialism in disarray. While it is true that forms of collectivism have remarketed themselves under meretricious, insubstantial doctrinal headings such as the “Third Way,” an unstable amalgam of capitalism, communitarianism, and welfarism, there has been little original work on how an economy and society might organize itself so as to have neither the superficially objectionable features of modern capitalism nor the economically untenable and morally odious properties of full-blooded socialism. The former might include vast inequality in resource ownership, the unequal political power such inequality might generate, the increasing alienation produced by the soulless possessive individualism that is allegedly engulfing the world, and a myriad of other complaints that are regularly leveled at capitalism.

I undertake three tasks in this exploratory essay. First, I examine some of the lessons of recent history concerning the relation between socialism, markets, and liberal democracy. Second, I lay out the basic theoretical building-blocks of an alternative to both socialism and laissez-faire that I call “mutualism.” Finally, I draw some conclusions for public policy and practice, in the form of what I call a “progressive market strategy.” A brief conclusion ponders the question, What's left of socialism?

If socialism and liberalism are rivals, one ambition these rivals have shared is that of being a transnational, even universal doctrine. Socialists and liberals have each thought of their own view as being well designed to expand, to reach out and be taken up in an ever-growing number and variety of societies. I do not know whether now is the time to write the final obituary for the socialist version of this dream. But the universalizing dream most vivid before the minds of the inhabitants of the world today clearly is not the socialist one, but the liberal one. “Globalization,” in our day, has come to mean something very close to “liberalization.” For some this is a cause of celebration; for others, it is a cause of protest and despair.

Let us assume, for the sake of argument, that socialism is over. (It looks to me as if this is very much open for debate. In some respects, the collapse of the Soviet Union has given Marxist socialism a new lease on life. It is no longer stuck with the heritage of “actually existing socialism,” and can, instead, develop its more plausible, critical side and tell stories of the revolution betrayed.) Be that as it may, it is now widely accepted that socialism, understood as involving the social ownership of the means of production and the abolition of markets, faces real and perhaps insuperable difficulties. For without both markets and individual ownership, it is difficult to see how problems of individual motivation and information transmission are to be tackled—to say nothing of Ludwig von Mises's underlying concern with how to make economic (as opposed to purely technical) decisions about the utilization of resources within an economy.

For most of the century and a half that began roughly with the later works of John Stuart Mill, the most important divide within liberal political thought was that between classical (or market, or libertarian) liberalism and welfare (or new, or redistributionist) liberalism. The questions that were important to the socialist/liberal debate also became important for debates within liberalism: What is the relationship between property and freedom? Between free trade and freedom? Is freedom of commercial activity on a moral par with other sorts of freedom? Is the alleviation of poverty or material need a more important political goal than freedom? How do freedom and equality fit together in a liberal understanding of justice? What degree of state economic planning, or state taxation and expenditure, is compatible with liberal freedom?