Liberal socialism as a possible alternative to the exsisting socio-political system

Author: Luka Đekič

University of Ljubljana

luka.djekic@gmail.com

Submitted to the European Consorttium for Political Research: General Conference in Oslo,
September 6-9, 2017

Section: Political Theory: Forms of Injustice

Panel: Injustice in Democratic Societies

This is an working paper. References are not complete. Proof-reading not done. Please do not
cite without permission.
Liberal socialism as a possible alternative to the existing socio-political system

1 Introduction

The current situation regarding social1 and economic2 inequalities among individuals in
the countries of the European Union as well as in other countries around the world (Harvey
2009; Bauman 2011; Krugman 2012; Stiglitz 2013; Piketty 2014; Milanović 2016), stresses the
urgency of seeking new policies, institutional solutions and above all alternative socio-political
systems. According to Sigmund Bauman (2011), the explosive mixture of rising inequalities
and the increasing human suffering is the biggest problem the mankind will have to face and
solve in this century. I believe that this will not be possible only by making minimal changes
within the existing system (e.g. tax and fiscal policy), but mainly by changing the whole system.
The requirements for new alternatives are also being heard from the sphere of civil society. Let
me just quote one of the examples: "Justice is the right! We want our rights back! Millions of
us are demanding a new social contract!" said the leader of the Turkish opposition in a very
direct way at the protests in Istanbul on July 9, 2017.
As we can see, basic political theory and political economy issues are coming back to
the political and academic arena again, such as: What is the basic task of politics? Is the existing
system fair and if not, what basic principles of justice should be chosen? Which system would
be most appropriate on the basis of selected principles? How to arrange basic socio-political
and economic institutions to ensure justice? What should the powers of state authorities be like
in the field of social and economic affairs? These are just some of the topical issues that must
be answered by the political theory.3

1
When talking about social inequalities, I mean (in)equal access to amenities and services, which should be
accessible and equal to all individuals. In legal and political terms, I mean social rights that every individual should
have the opportunity to enjoy, not only at the level of formalities, but above all at the level of materiality and
reality (e.g. equal access to education at different levels, equal access to health services, the same starting position
in society (power), economic (in)equalities, equal access to cultural and sports services and activities, equal access
to social security (e.g. social assistance in case of loss of work, disability, which provides individuals with normal
level of survival etc.).
2
When talking about economic inequalities, I mean, in particular, the large differences in the distribution of wealth,
more precisely incomes, wealth (property) and equal access to economic resources among individuals. I do not
quote empirical data on social and economic inequalities among individuals within countries and among countries
because they can be observed almost at every step. What is essential for our article, is, above all, the fact that social
and economic inequalities among individuals both at home and abroad are extremely large and unjust.
3
The political theory must provide us with balanced, well-founded and well-designed alternative suggestions
and solutions.
 In the article entitled "Liberal Socialism as a Possible Alternative" I am trying to come
into the field of a critical thought that deals with alternative political concepts. I am following
the view of Offe (1984), who says that every political theory worthy of its name has to give a
draft model that includes both the organization and tasks of state authorities as well as the
organization of society. But before I try to develop this concept to a certain extent in the field
of social and economic life, I will briefly evaluate three social political orders: etatism, welfare
capitalism and »laissez faire« capitalism. The criterion by which I judge them are the
reformulated principles of John Rawls' (2001), which are divided into three of them in order to
facilitate the analysis. On the basis of the criticisms of the above systems and the principles of
justice, I will then try to formulate the foundations for an alternative socio-political system,
with an emphasis on the social and economic field.

2 Rawls reformulated »Justice as Fairness«

Let me explain why I have chosen the justice of John Rawls (2011). Firstly, because
Rawls' principles of justice provide the basis for the establishment of a fair socio-political
system with all relevant political, social and economic institutions. Secondly, because I believe
that he is one of the few authors who managed to integrate justice with the values of the French
Revolution into a coherent whole.4 With the first principle of justice that each person has to
have guaranteed basic rights and liberties, he took into account the validity of pre-existing
human rights. In addition, he protects them against possible compensation at the expense of
economic growth and efficiency (which is often happening in modern societies) and allows the
possibility of their completion or expansion. With the second principle of justice, the "problem"
of social and economic inequalities5 was at the systemic level.6 With the principle of fair
equality of opportunities (access to offices and positions), which is, to some extent, also
contained in the first principle (e.g. equal access to health, education and social services), he

4
The value of freedom is a part of the first principle, the value of equality a part of the principle of equal
opportunities, and the value of fraternity (solidarity) makes a part of the difference principle.
5
The second principle of justice is: social and economic inequalities are acceptable under two conditions: first,
when offices and positions are accessible to everyone under the conditions of fair equality of opportunity ("fair
equality of opportunity principle"), and second, when they are to the benefit of the last-advantaged members of
society (" difference principle ").
6
Rawls talks about internal justice (of the basic structure) and does not focus on global justice (like for example
Piketty - world tax). Personally, I also follow this point of view. The theory of liberal socialism, which I will
attempt to formulate, relates primarily to the fairness of a state system.
has protected all individuals against unfair circumstances.7 With the difference principle8,
however, he protected those who, for these and other reasons, are in the worst position.9 At the
same time, he took into account the principle of reciprocity and effectiveness.10 Thirdly,
because, on the basis of the aforementioned principles of justice, he offered the fundament for
combining political liberalism (in terms of taking into account human rights, which in the
capitalist economic system is often only a formality or a "dead letter upon paper") and economic
socialism (in the sense of developing a just "self-governing" economic system that would be
fair and compatible with liberal human rights and liberties).

3 Brief critical analysis of three socio-political systems by the principles of justice (John
Rawls)

When I talk about »ethatism«, I mean the socio-political system in which a small elite
of individuals at the state-controlled level (i.e. the party) only seemingly represents the ideas of
classical socialism.11 Ethatism is a state-owned, centrally planned and one-party government.
All political, economic and ideological power is concentrated in the hands of a handful of
people. Social plurality is, according to Lefort (1999), denied in all its forms, whereas different
beliefs, opinions and habits are rejected. From the point of view of Rawls' (2001) principles of
justice, it can be said that in ethatism basic human rights and liberties as well as the fair value
of these liberties are violated (Polulantzas 1981; Rawls 2001). Individuals are also not given

7
With unfair circumstances, I mean a class, a gender, a material and social environment, differences in the
possession of economic and political power etc.
8
When I talk about the difference principle, it is necessary to be aware of the fact that Rawls (and this is a
disadvantage) did not set any lower or upper limits (e.g. minimum or maximum income) or the ratio of the income
range (for example, in Yugoslavia, this ratio in income was determined by 1: 3), despite the graph and the points
of the acceptable inequalities it shows. Therefore, if we overlook the above graph, there is a possibility of a
distorted interpretation of the difference principle. It can be used by those who justify large inequalities in incomes
and property (Saunders 1990), as well as those who strive for their almost complete equalization (Barry 1990).
9
I follow the definition of Rawls. Last-advantaged members of society are those individuals who, in a certain
system, are in the worst position in terms of income and wealth.
10
Reciprocity in the sense that more successful people who morally really do not take a credit for their welfare
still justifiably deserve more material assets for their efforts and the development of better natural predispositions
and, consequently, because they are improving the position of those being in the worst position. From the point of
view of effectiveness, we can say that he did not overlook this, which is pointed out by most economists, that for
good functioning of the economic system the diversity of income and, consequently, property, is an essential
component needed for successful operation (motivation, development). The problem that remains, however, is
linked to the range of income and property inequalities that needs to be determined sooner rather than later. So,
what should the range of income and property inequalities be like that will ensure justice and effectiveness? We
will come back to this issue in the part in which we will develop the idea of liberal socialism.
11
Seemingly because socialism is no longer understood as a classless society in which individuals can freely
develop their abilities, in which costraint will be replaced by social responsibility, and in which various forms of
exploitation and oppression will be banned.
equal opportunities in terms of developing their own talents and equal access to jobs, services
and goods.12
The difference principle, which depends on the structure and functioning of the
economy, has also not been fulfilled. The economy is managed centrally on the basis of a
unified plan, the ownership of production assets belongs to the state, there is no responsibility
towards the employees of the company (the concept of the self-management is not in sight), the
differences in social and economic inequalities (e.g. in income and wealth) are not of benefit to
the last-advantaged members of the company. According to Horvat (1983), it is a matter of
inverted capitalism regarded from an economic point of view.13 Thus, ethatism is not socialism,
so we must, once and for all, shake the prejudice that the systems that have been called
»socialist« are indeed socialist.14
When talking about »welfare capitalism«, I mean a socio-political system that includes:
democracy in a representative (parliamentary) way, capitalism in the way of a mixed economy,
which is to some extent corrected, assisted and enabled by state authorities, and social welfare
in terms of providing public goods and services for all those who are in the domain of state
authorities and their institutions. All of the above is also expressed in the legal form at the
international level, by forming civil and political rights (in 1948) as well as economic, social
and cultural rights (in 1966) by the UN. It is necessary to recognize that the welfare capitalism
after the Second World War (especially in Western Europe) with a wide range of public services
in the fields of health, education, sport, culture and social affairs (Offe 1984; Berend 2013;
Heinrich 2012; Piketty 2014)15 under the auspices of state authorities, managed to improve the
lives of most people (mainly workers).
We can say that it has been partially fulfilled with the principle of equal opportunities
(the state has striven for full employment) and the principle of equal rights and liberties (here I
am referring in particular to social and economic rights). On the other hand, the principle of the
fair value of political rights and liberties was not fully carried out because not all people were

12
All production, educational, social, health, economic, cultural and religious institutions are subordinated to the
mentality of the party.
13
The party occupies the position of the capital owner: it owns the production assets, it possesses all possible
capital, it has power over employment, it owns all the surplus value.
14
According to Rorty (1998, 951), the regimes of Lenin, Stalin, Mao and Castro were all grotesque degenerations
of socialist theory. Socialism is not a centralized state authority that surveys and controls all areas of human
activity. Socialism has to be linked to liberalism and go in the direction of the limited extent of the functioning of
state authorities and in the direction of the extension of the sphere of an autonomous social life (Keane 1990; Held
2016), which is regulated by the law.
15
First of all, I am referring to various forms of providing social assistance, benefits, pensions, scholarships, sick
leaves, holidays, minimum incomes, labor standards etc.
given the same conditions regarding access to political space.16 The same happened to the
principle of equality of opportunity, since equally educated individuals with the same skills did
not have the same job opportunities - the policies for its achievement were not implemented.
When we discuss the difference principle, it is not being perceived. Higher income differences
of the more wealthy did not improve the situation of those in the worst position.
Where do I see the basic problem of welfare capitalism? From the point of view of
inequality in the »redistributive« function of state authorities. Only this, as it was often accused
of wrongdoing, did not restrict and drastically redistribute income and wealth. The state
authorities also did not interfere with the ownership rights over production assets, the very way
of functioning of the capitalist economy, or the salary scale respectively the ratio of income.
With various taxes, which in most cases were progressive, the state authorities just tried to
alleviate inequalities in the society.17 The main concern of state authorities in the welfare
capitalism was thus directed towards the secondary distribution (through various taxes with
which they financed their social programs and services) rather than the primary distribution of
property, power, incomes and wealth. Thus, they did not remove the very causes of injustice
but tried to remove only the consequences.18 In the sense of its functioning and structure, the
economic system practically remains intact. It is allowed that a large part of the economy is in
the hands of a few people who have a monopoly over the disposition of production assets,
knowledge, innovations and income.19
When speaking of »laissez faire capitalism« I am referring to a socio-political system
based on the classical principles of political and economic liberalism (Rizman 1992): individual
liberty and responsibility, the rule of law (regulations), self-regulating market economy, private
property (also over production means), minimum and limited state authorities (in terms of their

16
Here I am referring to the problem of public financing of campaigns, access to the media space and other services
and resources that should be provided for a fair political competition.
17
To be true, this is also evident from Pikkety's (2014) analysis of the allocation of capital. He claims that, for
example, in France after the year 1950 the salaries of managers increased much faster than low and medium-high
salaries.
18
This is evident from a more or less »successful« compensation with health services, subsidies, various re-
qualifications, unemployment benefits, unemployment compensations, employment services etc. In addition to
greater or lesser unsuccessfulness, all of the consequential or delayed measures are also ineffective as they are
more expensive than they should be in the causal way of intervention. In order to avoid the high costs incurred in
the subsequent action, the state authorities would have to introduce several preventive strategies that, acording to
Rawls, could guarantee fairness, which would require inevitable intervention in the economic system itself
(capitalist way of production and property relation) (Offe 1984). For these interventions, however, the state
authorities in the welfare capitalism do not have leverages and formal legal powers. For this reason, the only thing
necessary to do is to change the socio-political system.
19
Here I am referring to those private equity holders and managers of state-owned companies that have been
appointed by the state authorities.
tasks and their intervention into the sphere of economy), and the constitutional system that
protects all of the above mentioned (Polyani 2001; Harvey 2009; Held 2016). The functioning
of state authorities is characterized by promoting lower taxes, the privatization of state-owned
enterprises, banks and most social services (health, higher education, culture, sports) - all these
should become payable and a part of market competition. It also does not provide welfare and
social security of citizens, the basis of which is the secondary distribution, which forms the
basis for state-run social programs and services in welfare capitalism. According to Rawls
(2001), it only provides a low social minimum.
Interference in the economy in terms of fiscal incentives and statutory corrections is not
longed-for. Progressive taxes are devastating for the functioning of economy, as well as state
ownership over companies. Due to corruption, nepotism and ineffectiveness, most of social
services and companies that are in the domain and owned by the state authorities need to be
privatized. The idea that the establishment of a set of political and social institutions and
interventionism in the economy can ensure a more fair life for people is thus rejected. According
to Hayek, it leads into socialism, its forced and arbitrary methods (Hayek 2006).
From the point of view of Rawls' principles of justice, we can say that in this system, to
a certain extent, only the first principle of justice is guaranteed, and only in the formal sense.
Why? Social and economic rights are constitutionally guaranteed to people, but they are
responsible for their material realization by themselves. If we make a comparison: in the welfare
capitalism, the state authorities were those ones who, to a great extent, provided their actual
realization; in the »laissez faire« capitalism, individuals need to do this for themselves. As
Suzana George (2013) would give a satirical remark, human rights will become only a
"Christmas letter".
Just like in the welfare capitalism, the »laissez faire« system does not guarantee a fair
value of equal political liberties. The principle of equal opportunities is also not fulfilled.
Individuals do not have baseline equal opportunities in terms of occupying important functions
and all other positions in the society. They are dependent on subjective criteria of capital
owners, state bureaucrats and political bonds. The principle of difference is also not in sight, as
the basic goal of the system is economic growth and effectivenesss, whereas the issue of the
distribution of the created wealth is not important. It relies on the logic of Kuznets' economic
theory (in the sense that when the common cake grows they all benefit from it in the long term)
(Harari 2014; Piketty 2014), which provides extreme social and economic inequalities. As
Piketty correctly states, private property and market economy allow the owners of capital a
dominion over those who only have their work (Piketty, 2014).
 When speaking of the theoretical model of the »laissez faire« capitalism and the existing
systems in the Western world, I mean, this is only an approximation. The state authorities
(depending, of course, from state to state) did not entirely abandon all social tasks and services,
and, moreover, there is no self-regulating market in sight that would be completely separated
from the state authotorities. This is evidenced by the crisis of 2008, when the state authorities
with their macroeconomic policy in terms of fiscal incentives and with the help of the central
bank prevented the collapse of finance and economy (Krugman 2012; Varoufakis 2013; Piketty
2014). The practice is still the most approaching the theoretical model in the field of income
and property inequality. The fact that different state authorities leave them aside, is proven by
the policy of lowering taxes on profits, low labor taxes for employers, no inetrference in the
structure of income (with the exception of securing a minimum wage, and even this is in some
cases violated), and no interference in the structure of property rights (mostly over production
means). The structure of the economy, as well as in the welfare capitalism, remains intact, on
the other hand, the tasks of the state authorities in the field of social services, taxes and state
property are reduced to a minimum. Numerous authors (Harvey 2009; Krugman 2012;
Varoufakis 2013; Piketty 2014) prove that this is really true and emphasize that the current
situation regarding social and economic inequalities is critical and this trend is continuing. 20 I
do not think it is necessary to lose words about the unfairness of these.
Because of all mentioned above, I believe that we must change the socio-political system
itself. For the reasons which I have already mentioned, it should follow the principles of justice
by John Rawls. As it is evident from a brief critical analysis, justice can not be enjoyed within
etatism, welfare capitalism and »laissez faire« capitalism. As Norberto Bobbio (1992) would
say, we need a different social contract than the neoliberals want to enforce - a social contract
that will be based on the distributive principles of justice and will be compatible with the
socialist tradition. Let me correct this great thinker a little bit. As it can be seen from the work
where I analyze the welfare capitalism, the distributive (secondary) justice is insufficient. The
world needs »primary justice«, which will take into account the existing human rights and will,
by means of restructuring the economic system, tasks and the extent of the functioning of state
authorities (in the field of social security and economy), make them real. The latter, I believe,

20
Let me just give you one example that Krugman (2012) exposes. In 2006, twenty-five best-paid hedge fund
managers earned $ 14 billion, which is three times more than 80,000 teachers in New York. The analysis of Piketty
(2014) on property and income inequalities is also alarming. Namely, at the beginning of the second decade, 10%
of the richest people own 80-90% of all assets, while the top 1% own 50% of all assets.
is not possible with corrective adjustments of tax and fiscal policies and the maneuvers of the
central bank.
Therefore, when forming a new alternative, it will be necessary, to a certain extent, to
take into account the findings of social democracy (in the sense that social and economic rights
must be guaranteed for all), as well as the findings of neoliberalism (in the sense of relieving
the tasks and powers of state authorities due to ineffectiveness, too high expenses, corruption)
and those of socialism (in the sense of different functioning of the economic system on the basis
of self-management). In case of a change of the latter, I think that the suggestion by
neoliberalists for a reduced role of the state in the field of taxes, interventions in the economy
and, to some extent, social services, is a possible and realistic way to a better functioning. The
essence of the criticism of neoliberalists (in particular, here I am referring to Hayek) was thus
focused on the welfare capitalism and the communism of the Soviet type, which formed and
defended the illiberal type of a system. May I, on this basis, be allowed to continue to try to
give my own insight into a socio-political system that meets the criteria of justice by John
Rawls.

4 Liberal socialism

Let me start a little bit provocatively, with two claims by the father of neoliberalism
Friedrich Hayek. The first states that possession of property is not a precondition for protecting
an individual from constraint, but rather that material resources that allow an individual to carry
out his plans must not be under the sole control of another. In the second claim, he advocates
the distribution of property. He believes that an individual should not be dependent on specific
persons, who could be the only ones to provide him with what he needs or the only ones who
could employ him (Hayek 2006).21 I understand these claims in two ways. Firstly, that an
individual should not be dependent on state authorities, and secondly, that he must not depend
on the power of private capital. In the legal political language, he must have the right to dispose
of property, the right to acquire material assets, and the right to freely choose and get work. All
of this is also mentioned in the declaration of human rights and liberties. The question that is of
key importance to us is as follows: In what socio-political order would the claims of Hayek and
the justice of Rawls be fulfilled?

21
Rawls (2001) also writes about this, stating that the property has to be distributed so that different forms of
domination do not occur and that an individual has to have have the same job opportunities.
 In view of this, like we said before this is not possible in the »laissez faire« capitalism,
which Hayek himself defends, as well as not in the etatism and the welfare capitalism.22 Would
it be possible in liberal socialism?23 Stephan Hessel (2011) seems to call upon us in the direction
mentioned. As he says, the extraordinary economic power of companies, great inequality and
poverty should force us to find an alternative economic system based on compassion and the
principle of dignity, as stated in human rights. Political and economic liberalism must be united,
which can, on the one hand, be dealt with in a complementary way, and on the other, as a
relatively autonomous sphere. Relatively because the state authorities can never be completely
separated from the functioning of the economy.24
When I speak of political liberalism, I think, in addition to speaking up for division and
limitation of authority, parliamentarism, individualism in the sense of the individual's free
choice of »good« life, the rule of law and constitutional government, and above all the concern
for the real assurance of human rights. As we know, in most cases, socialism denies them
claiming that they are merely a cover for the dominance of the capitalist elite and, therefore, an
unnecessary formality. I agree with the point of view of Honnet (2017), who says that socialism
has to revise its views in three areas. Firstly, it must adopt a policy, recognize the importance
of political institutions and human rights, which are an integral part of every modern society
(Honneth 2017). In addition, it must question the defense of direct democracy based on the
majority, without constitutional restrictions (Held 2016). Secondly, taking care for and focus on
the proletariat must be changed by taking care for all individuals. The proletariat in the form
described by Marx simply does not exist in modern societies. And thirdly, it has to get rid of
»religion« in the legitimate course of history (Honneth 2017) in the sense that »its music can
not be composed in advance« (Held 2016, 257). Such mentality precludes the formulation of a
normative theory. I believe that socialism must be liberalized and liberalism must be socialized.
Economic liberalism, based on a free market economy, a gold standard, a minimum state
authority (Bobbio 1992; Polanyi 2001) and property rights over production assets, prevents the
vast majority of individuals from actually enjoying social, economic and political rights. In a

22
In each of these systems it comes to the dependency of individuals, to certain relations of domination and
violation of the principles of justice.
23
Various authors have written about liberal socialism to a certain extent and in different ways (Keane 1990;
Bobbio 1992; Rawls 2001; Kymlicka 2002; Callinicos 2003; Mouffe 2005; Held 2016).
24
From the economic point of view, even in the "laissez faire« capitalism," the state authority is minimal
interventionist: it collects taxes that are the basis of its operation (financing the judiciary, the police, the military,
the bureaucracy). The thesis that a completely free and self-regulating market has never existed nor ca never exist
was proved by Karl Polanyi (2001). In addition, one should not overlook the fact that the state authority constitutes,
changes and allows the economy to be managed through laws and institutions.
positive way, every individual with, for example, the right to work is formally free, which
means that he has the opportunity to accept or reject a job and payment offered by the capitalist.
On the other hand, the individual, and those in a modern society are not rare, owns solely his
own work, which means that, because of the existential position, he is forced to accept the
conditions of the capitalist. According to Callinicos (2003), formal freedom coexists with actual
unfreedom. Similarly, as socialists, (neo) liberals must also question the relevance of the free
market and private property rights over production assets. Thus, attention can not only be
focused on protecting individuals from state authority but also on protecting them from social
and economic inequalities and oppressive roles and practices permitted by the capitalist
economy (Hampton in Kymlicka 2002).
Liberal socialism must thus strive for the fair value of political, social, economic rights
and liberties, provide real equal opportunities for all and maintain a fairly equitable distribution
of property, income and wealth over time (Rawls 2001). This means that it must reduce
inequalities in the initial distribution of property (»basic primary justice«), as well as reduce
inequalities in income and wealth (Kymlicka 2002). All of the above can be achieved through
decentralization and limited tasks of the state authority (e.g. lower taxes on work for employees)
and a change in the economic system that goes into the direction of co-management. An
individual must thus have the same starting position in production, consumption, access to
social services and access to the political sphere of activity (Horvath 1983).25 On this basis only,
all individuals will have the fair value of enjoying all rights and liberties, and the resources
available to enable them to have equal access to the opportunities and benefits that are necessary
for the fulfillment of their preferences (Callinicos 2003).
The same starting position in production raises the question of the right to productive
property (Held 2016). Currently, two forms of ownership over production assets prevail, which
do not guarantee the same starting position for individuals in production: state and private
property. I am following the ideas of Horvat (1983), Keane (1990), Rawls (2001), Callinicos
(2003) and Held (2016), who somehow refuse public and private owneship over production
assets and agree on social ownership or on individually distributed property, which is, if we
ignore the law, actually the same. According to Rawls, the first principle of justice indeed
protects private property (including human rights), but this is not the property over production
assets (Rawls 2001) (e.g. machines, companies, technology, land etc.), which is designed to

25
In the article I am talking about the equality in production, consumption and equality in access to social services.
I do not deal with the equality of access to the political sphere of activity.
create more wealth. The property that is and must be protected is the consumable property (e.g.
a car, clothes, a flat etc.) intended for the realization of individual's private preferences and
needs (Held 2016). So, the ownership over production assets must not be in the hands of the
state elite or the elite of private owners (shareholders).
Social property or distributed property among individuals allows them independence,
development of their talents and abilities as much as possible (Horvat 1983). In a liberal
language, we can say that this is a concept of a distributed ownership, which ensures the equal
power of all those involved in the production process. This, of course, is not nearly as close to
shareholding as we know today in the time of deregulated finances and capital. Firstly, shares
are not permanently owned by those who work in the company and, secondly, they can be
traded on financial markets within which, according to Krugman (2012) and Varoufakis (2013),
stock market speculations that occur can destroy a successful company in a moment. This can
simply not happen in a company with social or distributed ownership.
In liberal socialism all employees have the right to co-manage the company. This, of
course, does not mean that all can decide on all matters concerning the operation of the
company. It is more of a need to establish a concept of responsibility between the company's
management and employees - which is extremely rare in companies with private or state
ownership. The management of the company in the proposed system would thus continue to
carry out its work for which it is professionally qualified and also better paid, as well as all
other employees (e.g. secretaries, cleaners, receptors etc.) would perform the work tasks
belonging to their positions. The essence of distributed or social ownership is, above all, the
fact that economic processes are subordinate to collective supervision, that exploitation and
ownership over foreign work is prevented and the »master-servant« relationship is blocked. At
the same time, the possibility of corruption, nepotism and ineffectiveness is also reduced in
such an economy. So, in the event that the management leads the company in a bad way, the
employees have the option of »veto« in order to replace it. The same can also happen to other
employees in the company - with the help of commissions to control and take care of the smooth
working process.
So, companies in such a minimally regulated market socialism would be autonomous.
All that the state authorities should do in relation to the economy is to enable and protect their
autonomy (through legislation, inspection and specialized courts in case of violations) and help
them with fiscal incentives during the crisis. The legitimacy of such an intervention would
probably be much more legitimate than in case of the crisis in 2008, wouldn't it? Namely, the
state authorities would not save the bankrupt companies that are owned by shareholders, who
seek only for profit, or a small number of owners, who in most cases do not take over any
financial risks (even if the company went bankrupt), but all employees. These funds would be
acquired by the state authorities on the basis of taxes whose amount would be linked to the
branch in the economy and to the successfulness of the company. The latter would be evident
from the balance sheets that would not be »distorted« (for workers' supervision), as it is possible
in the private economy. We could say that this is a »business-to-business solidarity« for
companies or industries that are not as successful as the others, but they are still important for
the functioning of society.
In a co-operative economic system, wage inequalities would be far more fair than they
are today (they would provide the principle of difference). In addition to high property
inequalities, in the 21st century, we also face large salary inequalities (Piketty 2014).
Already before the crisis in 2008, Krugman (2012) lectured on income inequality and
emphasized that the highest-income shares were irreconcilably high - they had risen to the level
before 1929. At this point, it is necessary to emphasize that the statistics themselves are not
important, but the reasons that led to large salary inequalities. These derive from the private
ownership and arbitrary decisions by those who are at the top of the hierarchy. Wages are thus
dependent on the bargaining power of those involved and on the power ratio (Piketty 2014).
Regarding those at the top of the pay hierarchies, we can add that their wages have little or
nothing in common with their economic contribution (Krugman 2012).Thus, on the one hand,
we have a director who can earn up to 1000 times more than a cleaner.
In order to ensure the Rawls' principle of difference, the individuals in the company
must have the same starting position in consumption that is ensured by equality in production.
In the words of Horvat (1983), this means that an individual receives as much income as he
contributed to total production on the basis of his work. However, since the contribution of an
individual, as pointed out by many authors (Horvat 1983, Krugman 2012, Piketty 2014), is
extremely difficult to measure (for example, how to determine the contribution of an engineer
in the development department among let's say 1000 employees), it would probably be best if
the level of income could be determined on the basis of a fair agreement. Since this is practically
also difficult to implement, especially in companies with a large number of employees, and
because the potential of the result of all those involved is dependent on bargaining powers, as
pointed out by Piketty (2014), an alternative solution would be to determine fixed basic salary
scales or the ratio among salaries. Let's say the allowable difference between the lowest and the
highest salary was in the ratio 1: 4. With fixed basic income ratios high income inequalities, a
crisis period during the downturn in income in the company,26 a complete egalitarianism that
would discourage highly educated and leading staff27 as well as ineffectiveness would be
avoided.
At the same time, such a fixed basic income ratio, which allows the increase in wages,
provided that all the others also benefit from it at the same time, would not only satisfy the
principle of justice (the principle of difference) but also improve the relationships in the
company. A reciprocal relationship between hierarchical and income-different people would be
created in the sense that we all have to give maximum of our work as we all will benefit from
it. All this would make companies more effective, high-growing and solid.28 The concern of
business entities regarding fair wages, effectiveness and growth would also reduce the need for
intervention by the state authorities in the sense that it would not be necessary to have as many
taxes as possible (a possible redistribution of income would be unnecessary) as well as the
statutory minimum wage setting.
Of course, the principle of fair income from work that give legitimacy to economic
inequalities must not be generalized (Horvat 1983). With this I mean social, health, educational,
cultural and sports services and benefits that must be accessible and available to all individuals.
So, a cleaner with an income of 1000 eur or her director with 4000 eur per month must have
equal access to social, health, educational, cultural and sports services, as well as all other
individuals who are not involved in the production process (pensioners, the unemployed,
students, children, not to mention those with disabilities who need special care). I agree with
Horvat (1983), who says that educational, health, social and, to some extent, cultural and sports
services should not be linked to the income ability of individuals and left to the market. This
means that they can not be mostly privately owned because all services are payable there. Of
course, I do not think that all private sports, cultural, educational and health institutions should
be banned. I only argue that all individuals must have public institutions at their disposal that
provide free services and goods for all individuals free of charge. Given the degree of justifiable
criticism from the right, I doubt that these services could continue to be provided by the state

26
If the company's income and the quantity of the resources decrease, everyone takes over the burden according
to their wage ratios.
27
The leading staff in such a system would, firstly, already from the start have higher wages, and secondly, in case
of good business, they could have been raised while the wages of all the others would also grow due to a fixed
ratio.
28
So, In case of a general economic crisis, organized companies would probably be able to overcome the problems
easier, as all employees would have a good motive to try to solve the company jointly. In case of crisis or success,
burdens and benefits would be distributed among employees.
authorities (Kymlicka 2002). So, if, on the one hand, the state is not capable of providing this
and if a private marketer is not allowed to do that in the market, who would be the one most
appropriate? As I have already mentioned, one of the tasks of justice by Rawls, which is in the
domain of politics, is to establish legal frameworks for the functioning of political, social and
economic institutions. The fact that the state authorities generate legislation and sanction those
who do not follow it, of course, does not mean that the services must be directly implemented
by the authorities themselves. Exactly for the sake of fear of centralization, corruption,
ineffectiveness and nepotism, the state authorities should leave carrying out of services in the
hands of local self-governing or communitary communities, of course, under strict supervision
of competent institutions. The task of state authorities is thus to ensure fair legislation that will
set the framework and competence of local self-government communities to transparently
collect taxes, implement adopted legislation with the help of institutions, and distribute funds
fairly.
Of course, this does not mean that local rulers have a new and bigger cake of resources
in their hands, which they have to spend and distribute. By doing so, practically nothing would
change. They would only shift a part of their responsibility to lower levels of bureaucracy. What
I wish is exactly the opposite: a system that will, on the one hand, in a better way, take into
account the needs of people within their communities, and by that ensure the real enjoyment of
different rights, and on the other, a system that will be open to be controlled by the civil society.
In addition, I think that it would also be necessary to think about the establishment of social
safeguards in terms of the recall of managers (at various levels) who do not carry out their work
ethically, in accordance with the law and all other rules. By reorganizing the powers and tasks
of the state authorities in terms of transferring them to lower levels of local communities,
controlled by probably much more interested civil society and by enforcing a co-operating
economic system, it would definitely be easier to satisfy the actual realization of Rawls'
principles of justice.
I do realize that in such a short article and with so little time available, I failed to clearly,
accurately and well-foundedly present everything that would be expected, given the complexity
of the chosen topic. My intention is, in particular, to examine the potential interest of the
international academic sphere in linking political liberalism and economic socialism into a
unified system based on Rawls' principles of justice.
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