4 - "The promise and peril of the 'third wave' - socialism and democracy for the 21st century", by Carl Davidson, Ivan Handler and Jerry Harris>
The promise and peril of the ‘third wave' – socialism and 
democracy for the 21st century

by Carl Davidson, Ivan Handler and Jerry Harris

The collapse of Soviet socialism is being celebrated by 
the defenders of imperialism throughout the capitalist 
world as the definitive victory in a struggle that has 
been waged for some 150 years.

It doesn't matter in these circles that the Soviet system 
was a deformed, or distorted, or corrupted, or phony 
version of any socialism that Marx or Lenin would have 
recognized as their own. Nor does it matter that there 
are still a few pockets of resistance holding out, 
whether on a small scale in Cuba or on a large scale in 

What does matter to them is that the only socialism that 
claimed to be an existing alternative for advanced 
industrial society is no longer a competing force. 

The left now generally acknowledges the crisis. Some 
stalwarts were in deep denial until the very end. But 
despite this major defeat, the left, for the most part, 
still hopes to keep the red flag flying. For better or 
worse, most of the left groups and trends still want to 
defend their own brand of socialism, or at least defend a 
given set of socialist goals or ideals, if not socialism 

As for the collapse or stagnation of existing varieties of 
socialism that held state power, the left generally tries 
to explain these failures as stemming from an internal 
lack of democracy or a surplus of bureaucracy, or as a 
byproduct of external imperialist aggression or military 
competition, or some combination of all these factors.

We want to argue for a different approach. In our view, 
the crisis is deeper than a fundamental flaw in the 
theory or practice of socialism. We believe the causes of 
the failure of socialism lay in its historical roots in an 
industrial society, itself in crisis. We see the current 
chaotic situation around the world as the advent of an 
all-sided and deep structural crisis that is sweeping not 
only through the socialist countries, but the capitalist 
countries as well. Rather than witnessing simply the end 
of socialism, we believe we are witnessing the start of a 
new radical upheaval in industrial society generally, in 
both the capitalist West and the socialist East. 

This perspective is not original with us. Much of the 
analysis that follows is taken from the work of Alvin and 
Heidi Toffler, co-authors of three widely read books: 
Future Shock, The Third Wave and Powershift. We believe 
the socialist movement has a great deal to learn from 
both the questions they pose and the answers they 

In its limited analysis of the crisis so far, we believe 
the left has downplayed what the existing capitalist and 
socialist economies of the West have in common in real 
life. In industrialized society, labor and machinery are 
organized along similar lines in capitalist and socialist 
countries. The primary means of generating wealth is the 
mass production of the factory-based assembly line. 
While each economy has its own particularities, the main 
patterns of socialized mass production are reflected and 
reproduced in all arenas of human endeavor. Moreover, 
these systems of mass production are linked together in 
country after country, as a dynamic and expanding market 
develops national industrial societies into a global 
system. For industrial mass production, the main 
dominant patterns of social organization are the forms 
of presumed rationality: concentration, centralization, 
standardization, specialization, maximalization and 

But despite its claim of rationality, industrial society is 
not a sustainable form of civilization, especially as it 
expands on a world scale. Its energy sources, whether 
capitalist or socialist, are primarily nonrenewable 
hydrocarbons – oil, natural gas or coal – or toxic 
radioactive materials. Not only are these energy sources 
irrationally, unevenly and unfairly distributed; their full 
and complete use is also irrational. The steady, ongoing 
overuse of carbon-based systems would transform all of 
the solid and liquid forms of the element now 
underground and pump them into the atmosphere in the 
form of carbon dioxide.

The end result is the "greenhouse effect" – a complex 
web of environmental disasters wreaking ecological 
havoc and rendering the biosphere unfit for human 

This feature of industrial society is not a problem of the 
distant future. It is the "dirty little secret" of today's 
world, standing behind the rising conflict between North 
and South. The truth is that we cannot have economic 
equality among nations based on today's levels and 
standards. If every country in the world was organized on 
the same level and the same types of production and 
consumption that are "enjoyed" in the U.S., or Europe, or 
Japan or even the former Soviet Union, the resulting 
polluted biosphere would render the globe uninhabitable 
for humans.

But industrial mass production is expansionist. It strives 
for universality, transforming industrial society into a 
mass society. It features mass urban centers, mass 
markets, mass media, mass culture, mass education, 
mass consumption, and mass political parties. While 
advanced capitalism roots itself in the mass market and 
mass consumption, Marxism too has reduced complex and 
diverse populations to oversimplified conceptions of 
"the masses."

ONGOING REVOLUTION n Today's technological revolution 
has pushed industrial mass production to new heights in 
the capitalist world. New and upgraded factories 
continue to produce an ever-wider variety of 
commodities of improved quality at lower prices, with 
less labor. Telecommunications has integrated capital 
markets into a 24-hour, on-line global system of 
exchange. The full consequences of these developments 
are only beginning to take shape, although change takes 
place at an increasingly rapid pace.

The main reason for today's ongoing revolution in the 
productive forces was the invention of the microchip. 
This revolution began in the 1950s with the merging of 
transistors, themselves the first major practical 
application of quantum mechanics, with the mass 
replication of miniaturized integrated circuits. The 
result was a device that vastly expanded the ability of 
the machinery of mass production to process information 
rapidly. In fact, the speed of the microprocessor has 
enabled information to be used within a time-frame and 
on a scale of complexity hitherto unimaginable. 
Information itself has become an increasingly valuable 
commodity of a new type 

The microchip's impact is changing everything about our 
world and the way we live. Civilization is undergoing a 
quantum leap on the order of the agricultural revolution 
launched 6,000 years ago and the industrial revolution 
launched 200 years ago. We have now entered a third 
period of human history. We prefer to call it the 
information era. Others refer to the same phenomena as 
"post-industrial" or "postmodern" civilization, to 
differentiate the present from the agricultural or 
industrial past.

Neither of these two earlier revolutions or waves of 
change – the agricultural and the industrial – is fully 
completed. Both are having an impact today.

As for the first wave, in some remote corners of the 
globe, hunter-gatherer societies continue to be drawn 
into settled agricultural modes of production. The 
persistence of the second wave is much more apparent. It 
continues to surge in the new industrial revolution now 
spreading in the formerly agricultural regions of Asia, 
Africa and Latin America.

But the third wave of change, rooted in the impact of the 
microchip, is spreading even more rapidly. It has been 
underway for less than 40 years, mainly in the industrial 
societies of Europe, North America and Japan. It is the 
main feature of the shift from industrial to post-
industrial society; and its promise and peril will soon be 
projected into every corner of the globe.

A society becomes "third wave" when a majority of its 
labor force becomes mainly and irreversibly engaged in 
processing information and providing services, rather 
than directly producing "hard" commodities or farm 
products. In the U.S., this point was reached by 1960.

This does not mean that a third wave society stops 
producing the traditional goods of basic industry. It is an 
even greater industrial powerhouse than before; but now 
it manages to produce these goods with a relatively 
smaller and smaller proportion of the labor force.

A good analogy is U.S. agriculture. Less than 100 years 
ago, a majority of the American labor force worked on 
farms for a living. Today U.S. farms are the most 
productive in the world, supplying not only the domestic 
market but the world market as well. But now less than 3 
percent of the labor force works on farms. Mechanization 
and relatively large amounts of fertile land are only part 
of the reason for this. U.S. farmers are also many times 
more productive than earlier farmers because of 
information – whether in the design of equipment, 
fertilizers or hybrid seeds, or in advance knowledge of 
weather patterns transmitted by modern 

SURPLUS VALUE AS KNOWLEDGE n Information is not a 
new component of production, even though its relative 
importance has grown with the progress of society. In 
fact, the creation of value, whether use-value or 
exchange-value, is best understood as the result of 
expanding the information content of the productive 
process. An average laborer in industrial society can 
produce much more value than he or she needs to survive 
comfortably. A similar worker on a pre-industrial farm 
will produce far less wealth, using a far greater 
expenditure of labor-time. The difference here is not the 
worker but the tools and organization of work.

The machines of the industrial era were created by the 
combined efforts of inventive workers, scientists and 
engineers of past and current generations.They designed 
machinery to amplify a worker's abilities. For example, a 
stamping machine amplifies a worker's strength; a 
conveyor belt amplifies a worker's ability to move and 
access materials. In addition to machinery, new methods 
of organizing production also amplified each worker's 
effectiveness. Industrial production thus has a much 
higher knowledge component than pre-industrial 
agriculture or even the craftsmanship of early 
manufacturing. There the individual worker had much 
knowledge, but the productive process had comparatively 
primitive tools.

In the information age, the knowledge-content of 
production has become even higher. In third wave 
production, only a few workers are needed to produce 
goods of greater quality and sophistication. This is due 
to the embedding of microcomputer technology into the 
tools of production. By organizing work so that most of 
the manual tasks can be done by technology, the number 
of workers needed to carry out the task gets reduced 
dramatically, while the productivity of the individual 
worker soars in inverse proportion.

This change is also causing another important reversal. 
On one hand, the workforce responsible for production is 
becoming more educated (in certain sectors) as its 
productivity increases. On the other hand, the workforce 
in many service areas (such as marketing) is increasingly 
comprised of large numbers of very low skilled workers. 
This is especially true for specific data-gathering tasks 
– data entry, feeding paper into optical character 
recognition readers, scanning bar codes, etc. This may be 
a temporary phenomena until new techniques are 
discovered to reduce the amount of labor needed to carry 
out many of these tasks. For example, the phone 
companies are continually adding new automated voice 
services which are increasing efficiency and reducing 
the number of telephone operators. In any case, the less 
educated sectors of the labor force are forced to 
compete for a dwindling number of better-paying jobs or 
forced out of employment altogether. 

The result is a deep structural crisis. The advent of the 
third wave is by no means a glittering, painless shift 
into a utopian wonderland. It is more like a hurricane, 
leaving disorder and destruction in its wake. The third 
wave guts entire workforces and industries to the point 
of collapse. It sabotages old markets and renders 
national borders meaningless. It makes possible a glut of 
high quality and relatively inexpensive goods, while also 
producing a radical and uneven restructuring of the 
working class itself.

Generally speaking, three main groupings of workers 
emerge in third wave society.

l The first group is a dynamic and growing force of 
skilled analysts, designers and technicians filling the 
new jobs created by the new technology in both the 
private and public sectors.

l The second group is a stagnant or shrinking force of 
both skilled and unskilled "blue collar" occupations. 
Their ranks are being depleted by automation or by the 
export of their jobs to the huge pools of far cheaper but 
now "globalized" labor in the newly industrializing 
regions of the third world. 

l The third group is a growing, deskilled pool of 
unemployed and even unemployable workers. From the 
capitalist perspective, these workers have a negative net 
value – even if they were employed, their skill level 
would result in the production of less value than the cost 
of sustaining them. This is the so-called "permanent 
underclass" – people with inadequate incomes for the 
necessities of survival, let alone for the higher quality 
goods of third wave production. 

The third wave thus contains both promise and peril. On 
one hand, it fuels the unemployment and social chaos 
that breeds the danger of war and genocide. On the other, 
it creates entire new industries in biotechnology, 
aquaculture and alternative energies. In this sense, the 
third wave contains the potential for sustainable 
advanced "green" technologies that can serve societies 
of abundance, decency and human rights for all.

But what is worse than the dangers posed by the third 
wave is the attempt to ignore or stifle the information 
technologies fueling it. This was a deep flaw in the 
structure of the "command economies" of the Soviet 
bloc, which based their politics on the centralized 
control and restriction of information. The growth of the 
new technology requires open, accessible and 
decentralized sources and outlets for the flow of 
information. But this was hardly possible in societies 
that stationed soldiers to guard photocopiers and fax 
machines. Far from guaranteeing political security, these 
measures were only effective in insuring the economic 
backwardness of the societies practicing them. Relative 
to information-rich production methods and products in 
the West, the socialist factories were thus inefficient, 
wasteful and, with few exceptions, produced outmoded or 
shabby goods.

To be fair, the feudal and capitalist worlds initiated 
these practices of attempting to control politics by 
controlling information. It was Hitler's propaganda 
machine that gave birth to the term "totalitarian." The 
use of the state to control and restrict the market in 
information, moreover, was simply an extension of state 
intervention in the traditional economy. Capitalist 
industries in the West have always tried to use the state 
to "protect" favored industries from competition with 
more productive, better organized factories in other 
countries. Trade unions have also tried to "protect" 
obsolete jobs with featherbedding work rules. In the U.S. 
auto industry, for example, both management and labor 
believed that planned obsolescence was acceptable as a 
way to guarantee future demand, growth and job security. 
Instead they guaranteed stagnation and backwardness. 
The result was a huge opening for Japan to capture a 
larger market share with a better product.

A left that fails to base itself fundamentally on an 
accurate assessment of the nature and direction of these 
developments in the productive forces does not deserve 
to be called Marxist. At best, its critique of capitalism 
and industrial society generally will be limited to 
moralisms and will become irrelevant to practical 
politics. At worst, it will propose bankrupt solutions to 
the crises which will evoke a reactionary nostalgia for 
the fetters of the old order.

It does no good, for instance, to call for a 
reindustrialization of the economy along the lines of the 
blue-collar industries of the past. While some industries 
can be retained and some jobs can be restored – mainly 
those that were lost due to the business cycle, 
mismanagement or unrestricted runaways – most of 
those jobs or industries eliminated by advances in 
technology and industrial organization cannot be 

Marxists especially should not be calling for a retreat to 
less-advanced, more inefficient, more wasteful, and less 
skilled forms of production that turn out poorer goods at 
higher prices. In fact, it has always been part of our 
strategic critique of the bourgeoisie that its interests 
and methods placed fetters on the productive forces of 
society and produced a moribund, wasteful and decadent 

perspective, the failure of industrial "second wave" 
socialism is part and parcel of the worldwide collapse 
and transformation of second wave industrialism. In 
particular, the socialist crisis was hastened by its 
earlier uncritical and dogmatic embrace of industrial 
patterns as "scientific" or "progressive" regardless of 
limitations or conditions.

Second wave industrialism concentrated huge productive 
forces of machinery, labor and capital. Working-class 
communities surrounded giant factories, where 
communist "concentrations" were to be built as part of 
the newly massified neighborhoods. Socialist political 
structure was to reflect the skeleton of industrial 
organization and life. The whole working class, for 
instance, was to be concentrated in one mass party with 
a single strategy. Advocacy of diversified, multi-party 
systems or strategies was frequently denounced as 
"liberal" or "bourgeois."

This industrial principle of concentration was carried 
forward into Soviet economic and social planning. Whole 
new cities were built around giant factories. As Lenin 
put it, maximization was the "highest level of 
development." Bureaucracy was the inevitable and 
natural organizational form when all production and 
planning was to be concentrated under the state. A 
diversified market was not only politically incorrect, but 
supposedly went against the industrial principle of 
efficiency through concentration.

The Communist Party was to be built along the same 
centralized lines as factory management – rank-and-file 
"Jimmy Higgins" workers, mid-management full-time 
cadre, and the elite board of trustees or Central 
Committee. Just as industrial management reflected 
hierarchical relations of power, socialist political 
relations contained the same design. 

The "democratic centralism" that developed within this 
pattern was one where democracy was secondary to a 
centralized and hierarchical leadership responsible to 
make decisions and control information. This pattern of 
centralized power was as true for capitalist monopolies, 
as it was for socialist bureaucracies responsible for 
production. Within the ruling party, Stalinism took this 
principle to a zenith in its centralization of 
international political authority.

Specialization was also part of the second wave 
industrial code. The efficiency of a labor task was seen 
in its specialization, which gave rise to the 
professionalization of work. For Lenin this meant the 
professionalization of the party cadres into full-time 
revolutionaries, and later for Stalin as the "red experts." 
Eventually this resulted in the separation and domination 
of political and technical work from democratic input 
and oversight.

Lastly, mass production also produced standardization – 
everything, from time, weights and products to culture 
and ideas. For socialism, the impact was a dogmatic 
standardization of Marxism, the political line set by the 
sole accepted center, the Communist Party of the Soviet 
Union. Differences were not only suppressed inside the 
USSR, but even worldwide. Bolshevik organizational 
structure became the standard for acceptance into the 
Third International. And perhaps even more destructive 
was the idea that there existed only one economic model 
on which socialism could be built.

A one-sided emphasis on all the above elements was the 
product of Soviet industrial society, and forms a fresh 
basis of criticism for a lack of socialist democracy. 
Socialism, understandably, could only function within the 
world into which it was born. When socialism embraced 
the proletariat as the primary agency of progressive 
change, it also tended to romanticize industrial society. 
Socialism thus consciously or unconsciously integrated 
second wave industrialism's internal designs and 
limitations into its own theory and practice.

Was there any alternative? Can socialism build a 
democratic, open and participatory society based on 
industrial principles?

Although both the Soviets and Chinese experimented at 
different times with worker-controlled factory 
committees, worker congresses and collective 
management, the authoritarian patterns of managerial 
hierarchy always reasserted themselves; they were 
imbedded in the organization of work on the factory 
floor. Thus, these relations could not be permanently 
transformed while trapped inside the second-wave 
industrial economic base. The very design of large scale 
production enforced its own organizational logic.

Second-wave industrialism not only engendered mass 
society but also had encoded in its structure, forms of 
mass domination. The centralization of information 
necessary to run huge firms was best done with a 
concentration of authority in the hands of a specialized 
hierarchy. In both East and West, this was touted as the 
most efficient and scientific form of production, 
although not necessarily the most democratic. 

Within this context, it became extremely difficult to 
permanently build a democratic socialism, although the 
tension between democracy and centralization existed 
for a long time. Under Lenin, the Bolsheviks certainly had 
relatively open and free wheeling political debates, 
rather than a standardization of thought. And Lenin 
became more acutely aware of the dangers of 
bureaucracy as they emerged towards the end of his life. 
After Lenin's death, the theoretical and programmatic 
effort to launch an alternative to the abuses of 
industrial socialism was best defined by Bukharin, who, 
along with Lenin, was the main theoretician of the Third 
International on a world scale, and of the New Economic 
Program (NEP) in the Soviet Union itself.

In fact, the most vital debate from the late 1920s 
through the 1930s was not between Stalin and Trotsky, 
but between Bukharin and Stalin.

For Bukharin the NEP was more than a temporary 
adjustment or retreat. Instead it was a strategic plan to 
build socialism through a balance between rural and 
urban economies. Bukharin defined this as "dynamic 
economic equilibrium" in which the growth of industry 
was geared to the growth of agriculture, instead of its 
one-sided exploitation. This view reserved an important 
role for the market, and saw class struggle mainly as 
managed, peaceful competition between larger state 
enterprises and the smaller private sector.

For the Stalinists, rapid concentration, centralization, 
and forced growth at gunpoint were the means by which 
the class struggle would be won for their variety of 
socialism. Class differences were to be forcibly 
eliminated, rather than peacefully managed. This path 
was certainly not inevitable, but the global and historic 
context of the industrial era was an important factor in 
developing, supporting, and rationalizing the Stalinist 
economic plan.

We believe that revolutionaries, who are genuinely 
progressive and democratic, must reconstruct society 
with the people, tools and materials bequeathed to them 
by history. We oppose the forced march of armed utopias 
and their attendant gulags. But we also believe the old 
state and industrial patterns and methods of command 
cannot simply be taken over and effectively used by new 

The capitalists launched the industrial revolution and 
became the new global masters because they dominated 
and developed the new industrial economic base of 
manufacturing. They did not base their revolutions 
primarily on a seizure of the feudal manors and landed 
estates of the old agricultural societies. The socialists 
of the second wave, however, have been ambivalent. On 
one hand, they based themselves on the advanced, rising 
class, the proletariat. The working class was the most 
advanced not because of what it thought at any given 
time, but because it was part of the most advanced 
productive forces and thus had the ability to remake 
society. On the other hand, they attempted to build a new 
world mainly by expanding the old unsustainable, second 
wave industrial base, rather than by nurturing a new 
historic economic order out of the most advanced 
achievements of the second wave.

In this way, Marxism spawned two visions of the future 
classless society: 

l In one, all classes were to be abolished except the 
proletariat; all society was to be industrialized and 
proletarianized under the hegemony of the working class. 
The proletarian ideological line is dominant over all 
forms of science, art and politics.

l In the other, all classes, including the working class, 
were to wither away through the gradual but steady 
abolition of toil brought about by the revolutionary 
advance of the productive forces. All ideology and 
politics is subordinate to freedom of scientific inquiry, 
tolerance of diversity and the expansion of universal 
human rights.

We affirm the latter view. We also believe it is more in 
keeping with Marx's early conception of the proletariat 
as the class, bound with radical chains, so that by 
freeing and abolishing itself, it also liberated all 
humanity from all forms of oppression. What is needed to 
accomplish this is political power in the hands of the 
masses plus the technology of the third wave. Third wave 
production is automated and cybernated, making it 
possible to revolutionize hierarchy and democratize 
access to information. It rests on a sustainable 
technology which diversifies production and accelerates 
the generation of knowledge. In effect, it is a new 
economic base which develops its own principles of 
society and culture making a sustainable and democratic 
socialism workable. In fact, post-industrial, third wave 
socialism may be the only socialism truly possible. 

making this transition is first of all centered on a vision 
of the renewal of democracy. We see democracy not only 
as a political and ethical value. It is deeply connected to 
the development of a progressive and scientific 
economics as well.

Any economic program worthy of being called popular and 
democratic, let alone socialist, must meet the standards 
of ecological sustainability. Any economic program that 
attempts to serve the present through the unrestricted 
looting of the resources of future generations can only be 
called reactionary and dooms us to strategic failure. It 
also opposes the basic principles espoused by Marx and 
Engels in The Manifesto of the Communist Party, where 
they insisted that communists distinguish themselves by 
taking care of the future within the movement of the 
present and by affirming the unity of the workers and 
democratic forces of all countries above any particular 
national or sectoral interest. In this sense, the founders 
of scientific socialism were the forerunners of the 
"Think globally, act locally" slogan embraced by today's 

But sustainable economics in today's world requires 
ongoing advances in science and technology. Science in 
turn both embodies and requires free and open inquiry, a 
democratic civil society affirming tolerance and respect 
for diversity. Under theocratic domination – whether of 
the medieval, fascist or secular Stalinist-Maoist 
varieties – scientific progress is stifled.

This article is the first half of a monograph by the 
Chicago Third Wave Study Group, initiated by Carl 
Davidson, Ivan Handler and Jerry Harris. It was formed 
expressly to produce this document for the discussion on 
goals and principles taking place in the Committees of 
Correspondence, leading up to the founding convention of 
a new organization of the American left in the summer of 

The complete document is posted on PeaceNet at the 
nfd.gen conference.org. E-Mail can be sent to 
cdavidson@igc.org or ihandler@igc.org. Comments and 
criticisms are invited. People in agreement with the 
perspective in the paper may join the study group. 
Communicators can also write to Carl Davidson, 
Networking for Democracy, 3411 W Diversey, Suite 1, 
Chicago IL 60647. Fax: 312-384- 3904.