The New York Stock Exchange is perhaps the premier institutional expression of the capitalist economy. It’s hard to conjure an image of American capitalism without including the Wall Street sign at the corner of Broad, or the stone streetscape of the exchange with its US flags, or the bronze “charging bull” statue at Bowling Green. 

Wall Street is for some a wondrous emblem of American exceptionalism. For most of us, it is a picture of moral desolation and criminality. Indeed, since it became the centre of US finance in the nineteenth century, Wall Street has repeatedly been the target of protests by workers who recognise it as a place where their enemies organise to rip them off and destroy their lives. 

So when you think “socialism”, you might, not unreasonably, conjure images of the storming and burning of stock exchanges everywhere. Yet a socialist economy would likely retain the machinery of Wall Street, albeit for refashioned ends. To understand why, and how a socialist economy might work, it’s important first to grasp just how remarkable the capitalist economy is. No human society before it has come close to developing the science, technologies and industrial capacities that we now take for granted.

Take the production of one of the most important things for human survival: food. Prior to capitalism, economies were primarily agrarian, the continued existence of any given population being almost entirely dependent on seasonal crop yields. Survival was a year-by-year proposition, famine just one flood, one drought, one failed harvest away. “A bad year such as 1817 could, even in tranquil Switzerland, produce an actual excess of deaths over births”, the late historian Eric Hobsbawm noted in his 1962 book The Age of Revolution. 

Today, thanks to capitalism, scarcity is a thing of the past. The amount of food available to an individual in France, for example, is estimated to be more than double what it was prior to the revolution of 1789, even though the population has more than doubled, from 28 million to 68 million. Across the world, the volume has increased by nearly 50 percent in the last 60 years, from fewer than 2,200 calories per person per day to more than 2,900, according to the UN Food and Agriculture Organization. The recommended daily caloric intake being between 2,000 and 2,500 per day suggests that there is more than enough food available for everyone on the planet.

There’s an obvious problem, though, isn’t there? All around the world, billions of people are going hungry. At the extreme end, the humanitarian organisation Action Against Hunger estimates that more than 800 million people are undernourished. Even in the richest of countries, there’s an issue. In Australia, for example, more than one in six adults and more than 1 million children routinely miss meals, according to Foodbank, a charity.

This minor detail—more than enough being produced but billions of people struggling—is replicated in almost all areas: housing, incomes, health care, education etc. The problem is that, while capitalism excels in producing masses of things, it fails dismally in distributing them in any equitable way. 

“The workman is the source of all wealth”, an article in the Lancashire Co-operator noted of nineteenth century England. “Who has raised all the food? The half fed and impoverished labourer. Who built all the houses and warehouses, and palaces, which are possessed by the rich, who never labour or produce anything? The workman. Who spins all the yarn and makes all the cloth? The spinner and weaver ... [Yet] the labourer remains poor and destitute, while those who do not work are rich.”

Things haven’t changed much from those early years of capitalism. According to the financial group Credit Suisse, the richest 1 percent of adults on the planet together own nearly A$300 trillion in personal wealth—which is about 46 percent of the world’s total personal wealth. But the poorest 55 percent, close to 3 billion people, have just 1.3 percent of the wealth—on average less than A$2,000 per person.

It’s not just that the distribution of personal wealth is unequal, it’s that the productive infrastructure—the factories, the mines, the office blocks, the arable land, the telecommunications systems, the transport networks and so on—is owned and controlled by the rich and used to enrich them further.

One of the first goals of a socialist economy would be to put all of these important economic resources under the collective ownership and control of workers. By doing so, the majority of the population would gain the ability to decide what the priorities of production and distribution should be.

This brings us back to those stock exchanges. Every day, the Australian Securities Exchange in Sydney executes nearly 2 million trades. The system is remarkably efficient in pairing buyers and sellers of a diverse array of financial instruments. By and large, this is just wealthy people making themselves wealthier by buying and selling claims to the ownership of companies and other things. They, or their brokers, simply get online, look at what’s available to purchase, and trade away. 

In a socialist economy, this sort of technology, instead of being used to link capitalist traders around the world, could be used to link every workplace and every suburb in a city, every city in a country, and every country in the world. Instead of endlessly trading claims to ownership of different companies, the trades would be simple declarations of needs and availabilities. That is, any given region would let the system know how much it had produced of certain goods and how much of certain other goods its population needed for the week (or the day, whatever the case may be). The system would then balance out all the claims and society would immediately know where there were excesses and where there were shortages and alter production accordingly.

It sounds so simple as to be utterly utopian. But this is basically the way the world works already. Take the extensive global supply chains linking farms with ports with food manufacturers with warehouses with supermarkets—everything is coordinated down to the last kilogram between buyers and sellers. When it comes to this sort of distribution, capitalism is in general incredibly efficient. 

So as you read this, somewhere a supermarket line manager is scanning a series of barcodes and entering a corresponding quantity of units for each item; tomorrow a truck will turn up with several pallets of whatever it was that they ordered. It’s as simple as that. If you went back in time 200 years and tried to explain this to someone, they would likely consider you utterly mad. Yet here we all are, living in a world in which a stranger in a truck turns up with a mountain of goods after someone points a laser gun at a series of black lines on a small piece of paper. Marvellous. 

The process today is overseen by the small number of owners of the production and distribution chains who allow their workers to make orders and process deliveries only if they believe their company will make money. That’s the limit to the capitalist economy and its efficiency. But there’s no technical reason that this operation couldn’t be run instead to meet human need. The whole process is already carried out by workers—from producing the food to driving the trucks to stacking the shelves in the shops. All that would need to happen is for production and distribution to be put under the democratic control of the people who do all the work. 

Under capitalism, bosses like Jeff Bezos reap the rewards of their impoverished, exploited workers, then turn around and say, “I want to go to space”—and it happens. Under socialism, working people would reap the rewards of their own labour and communities would turn around and say, “We need a hospital”—and it would happen. It’s not materially or technically different; it’s just a different set of priorities and beneficiaries.

Along with its inability to distribute things equitably, capitalism generates a huge amount of waste. First is the mountain of things that are thrown out because they aren’t sold. Again take food. According to the United Nations Environment Programme, nearly half of all fruit and vegetables produced globally are wasted. In the United States, it’s about 30 percent of all food. Of that, up to a third of wastage happens at the farm and one-quarter at the retail level. It’s actually extra work to keep people starving—food producers and sellers have to put extra time into organising to dump or remove unsold produce, rather than simply allow it to be distributed, in the usual way, to those who need it. Plus they wasted all the labour producing it in the first place only to see it rot. It was also a massive waste of soil nutrients and precious water resources. 

Second is the huge amount of planned obsolescence in capitalist production: many things are designed to fall apart or with short lifespans so that people come back and buy them over and over again. Industrial-scale planned obsolescence reportedly originated in the early twentieth century with the Phoebus Cartel in light globe manufacturing, which decided to limit the lifespan of bulbs to around 1,000 hours. The idea is now embedded in pretty much every industry. It’s such a waste of labour and resources, but it’s the production model that makes companies the most money. In many cases, it is cheaper to drive wages lower and just produce more and more new things than it is to create durable or serviceable products. (Did you know that some 24 billion pairs of shoes are sold every year?) 

Third is the monumental waste of entire industries and the labour associated with them: things like the legal profession or sales and marketing. One estimate of the cost to end global hunger (using existing capitalist economic means) is about US$33 billion per year over ten years. Compare that to the investment in marketing: US consulting and research firm Forrester predicts that it will reach US$4.7 trillion in 2025. That’s trillions of dollars and millions of labour hours, every year, outlaid by companies trying to convince us to buy their products, which will soon fall apart, rather than their competitors’ products, which are generally the same and also fall apart.

It’s madness.

A socialist economy would get rid of most of this waste almost overnight by starting with simple questions that the whole population can respond to: “First, what do we all need? Second, what do we want? Third, how many resources do we have? Fourth, what are our priorities?” A huge amount of office space, factory space, fertile land, machinery and, above all, labour time, would be freed up by starting with those questions, rather than the capitalists’ questions (“How do I make people want to buy this product, how can I generate a profit?”). 

Think of all the millions of hours of wasted labour that could otherwise be used to increase the production of things in short supply, or to reduce the working week by either producing things to last (therefore reducing the need to produce so much) or by bringing in a greater number of workers into productive industries and reducing everyone’s working hours, while still providing for everyone’s needs. 

Finally, a socialist economy would be more rational. Defenders of capitalism always talk about how innovative their system is. As noted above, it is. But again, this has serious limitations. Take the ongoing economic addiction to oil, coal and gas. How innovative is it, really, to be wedded to energy sources from the nineteenth century? The problem again is profits: the huge companies already invested in and determined to squeeze every cent out of the fossil fuel economy just won’t let go. A socialist economy, being run by the majority in the interests of all, simply would not allow our planet to be trashed so that a few of us could live better than the rest.

Getting to a socialist economy will not be simple—we need a workers’ revolution to get past capitalism. But once we are there, it will be quite easy using existing technologies and processes to run the world according to the maxim, “From each according to their ability, to each according to their need”. The poet Bertolt Brecht put it best in his poem “In praise of communism”:

It is reasonable. You can grasp it. It’s simple.

You’re no exploiter, so you’ll understand.

It is good for you. Look into it.

Stupid men call it stupid, and the dirty call it dirty.

It is against dirt and against stupidity.

The exploiters call it a crime.

But we know:

It is the end of all crime.

It is not madness but

The end of madness.

It is not chaos,

But order.

It is the simple thing

That’s hard to do.

Ben Hillier is the author of Losing Santhia: life and loss in Tamil Eelam and The art of rebellion: dispatches from Hong Kong.