A Note on "Market Socialism."

Article excerpt

I would like to use this occasion to try to explain why we feel estranged from the topic. Let us agree that a vision of socialism is needed, a vision that has a universal inner essence but is also subject to considerable variety in the concrete, depending on place and time (the obvious differences between a social revolution in Ghana, Mexico, or the United States). From my perspective, choice of market vs. plan is a secondary matter, not, as so many of the authors in the book believe, at the heart of the vision. A broader set of goals needs to take precedence. What kind of market, how much market, what kind of plan, how much plan are questions which have to do with how best to advance the main goals. In the final analysis, we surely agree, socialism will not be socialism unless the people are involved in the selection of both aims and methods, with adequate arrangements for change in a process of trial and error. I will try to explain why I think the broader vision needs to take precedence. For this purpose, I propose that a socialist vision of the United States would encompass the following: (1) A society which gives first and predominant attention to the poorest, the discriminated, and the disadvantaged. (2) A moral society which behaves as a good citizen of the world. (3) An economy that operates in harmony with nature. (4) A country with open borders.

What have the market and the price system to do with this vision? With respect to (1), let us first consider housing: (a) homes for the homeless, and (b) changing the slums of this country into a habitat for humans. Apart from the temporary makeshift arrangements for the homeless that even a decent capitalist society can make, I doubt that adequate, humane housing for all can be provided as long as essential aspects of the marketplace are in force. I can't see how the housing problem can be properly solved without a zero price for land, the cancellation of accumulated mortgage obligations, and the elimination of other economic relations that facilitate speculation in the buying and selling of residential facilities. For one thing, the advantages of high risers in private, public, and semi-public housing would be reduced. Market relations would then not stand in the way of constructing decent-sized structures appropriate for community life, as well as providing plenty of public space for parks, sports, child-care centers, medical clinics, schools, cultural facilities, etc. What has been said so far comes under the rubric of giving first priority to the most oppressed. But that won't be all that is needed to meet that objective. Enough jobs at good wages would have to be generated for the "excess population"--excess, that is, in a labor market that does not need them. From what I understand of the U.S. economy, the experience of the WPA, and the nature of the global unemployment crisis (so defined by the ILO), the bulk of the jobs with decent wages would have to come from the public sphere. The market, socialist or otherwise, cannot be relied on to create enough good jobs which would be financed by the scale of the goods and services they produce (especially if all four of the above "vision" items were followed). Hence, the public sphere's share of the job market would have to keep on growing. An overwhelming proportion of the economic surplus would then have to be garnered and used in ways unsuited to and unguided by the market. If so, central planning would be essential. This does not necessarily mean exclusive central control over the disbursement of the surplus; political and pragmatic elements would influence the extent to which the center, regions, and local communities participate in the planning process and in administering the use of the surplus.

Item (2) of the vision would call for even greater and more radical changes in this country's economy. The United States, with 5 percent of the world's population, consumes 20 percent (or some such disproportionate share) of the world's nonrenewable natural resources. As a responsible and moral society, the consumption of these materials would have to be drastically reduced to leave a fair share for the "third" and "fourth" world countries. Much would then need to be changed in our country. For example, we could not continue to operate with the use of about 700 autos per 1,000 people. I don't think it is necessary to elaborate on the drastic changes the diminished use of autos would bring about: enlargement of alternative transportation facilities, altered designs of cities, revised location of industry, public and private services, etc. Of course, much more than auto production and consumption would need to be reduced if we stopped hogging the world's resources. But there is enough to think about if we focus on autos. It should go without saying that the market will be of no use for this new direction. There are no price or tax gimmicks for such drastic changes. This was clear enough during war production years, when business leaders agreed with us eggheads that a direct, enforceable government ukase to stop the production of autos for civilian use was the only way to go.

Item (3) imposes additional requirements which are outside the competence of the market. For this goal, as for item (2), growth would need to be curtailed or controlled--the very opposite of the necessary logic of the market, whether capitalist or socialist. Proper environmental protection for present and future generations would call for changes in agricultural, forest, and industrial practices that would at best reduce profits while in many situations leading to bankruptcy in the absence of government subsidies. For the sake of the environment, some factories would need to be shut down, others relocated and downsized, in defiance of sound financial accounting. Above all, a much simpler life style would be needed in the rich countries for the sake of preserving the earth as a place for human existence.

Item (4) would also create obstacles for the success of market socialism. Could a socialist society tolerate police patrolling the border with Mexico with guns and dogs, or naval patrol boats returning Haitian refugees? Unrestricted movement into and out of the country would undoubtedly end up in waves of immigrants into the United States, for whom jobs, homes, education, and medical care would need to be provided.

The transition to a society with the goals here specified would involve a reduction in the living standards of sectors of the population and for all a quite different view of the good life. A revolutionary transformation of this magnitude could hardly be contemplated unless a dominant proportion of the population understood what was at stake, wanted the conversion, and was willing to participate in its creation. Enormous cultural, political, and economic obstacles would stand in the way. As for the reallocation of resources entailed, there is no smooth, painless procedure. For sure, the market could not be reasonably expected to do it, even if one takes a long, long view. How could it possibly be achieved without central planning? (The kind of central planning, controlling the distribution of resources to regions and local communities, is another matter.)

The underlying assumption of the essays in Why Market Socialism? is that central planning inevitably requires bureaucratic control over every detail of production and distribution. This, I believe, is an unwarranted assumption abstracted from the history of past socialist countries. Moshe Lewin speaks about the disappearance of planning within the plan from its earliest days in the Soviet Union. Detailed centralized control is not a necessary feature of central planning, but the result of politics, class interests, arbitrary command decision-making--all of which wreaked havoc with attempts at consistent planning. Furthermore, there is no necessary contradiction between central planning and the use of the market for the distribution of consumer goods and a variety of intermediate production goods. Nor does central planning necessarily exclude "businesses" run by cooperatives, communities, family farms, or private small firms. What matters is whether the market is relied on as the guide for the allocation of resources, and/or is permitted to sabotage the socialist transition.

My impression of the essays in the book is that by and large, despite protestations to the contrary, the vision the authors have in mind is a nice, humane, regulated capitalism. Heilbroner sums it up nicely in his foreword: "Socialisms therefore constitute a kind of ongoing experiment to discover what sorts of arrangements might repair the damage wrought by the existing social order." The essays by and large are concerned with issues which are germane to a capitalist society: how to get improved growth, start new enterprises, improve efficiency, encourage innovation and competition. Do the people of the United States need faster growth, except for the fact that it is the only way to create jobs in a capitalist society? Are more profit-making enterprises needed? To do what--produce more cars, ferrous metals, plastics, paper; provide services of lawyers, bill collectors, real estate operators, and brokers? Why do we need improved efficiency? Efficiency for what, and by what standards? Why not less efficiency--shorter workdays, shorter work weeks, longer vacations, relaxation time during dull work routines? We are a rich country with enormous potential for improving the quality of life for all the people, as long as the ideal standard of life is not taken as that of the upper middle class. The innovations needed are not more gadgets or information highways, but the enrichment of education, medical care, room for the creative urges to flourish--alas, not grist for viable ventures in the marketplace.

The frame of reference of the essays is clearly far removed from the affairs of the underdeveloped countries. And I wonder how relevant the framework is for the industrialized world; surely not for the United States, where a gigantic financial superstructure, speculation, bigger and better office buildings, sumptuous shopping malls, advertising, sales promotion, and a slew of wasterful antisocial enterprises rule the roost. Is this the allocation of resources that market prices signal? I was somewhat surprised at the notion, repeated in various essays, that market prices might become useful guides to a "good" allocation of resources, and even provide information by which the population can judge policies. In my book, prices are the resultant of history and social forces (for example, the determination of raw materials prices, slavery, colonialism, and other imposed imbalances in power by force and market relations); the price of land and other commodities as affected by the way cities were built, industries located, and government subsidies. Prices have much to do with the distribution of income, the infrastructure, the structure of the economy, the power relations between different sectors of society--and what happened in the past. Is there an objective basis to the fact that the wages of textile workers are half those of automakers? Market prices serve to reproduce what exists: the arrived-at allocation of resources, the distribution of income, including the differences in workers' incomes and the exploitation of the underdeveloped countries. They set limits to what the market can do. Prices or some other accounting measures are of course needed in any complex society, whether planned or "free." But if market prices are to serve as guides to an allocation of resources that serves the aims of social justice and morality, then it would be necessary first to reorder the social relations within the society, achieve equitable terms between the nations that buy and sell raw materials, start on the road to equality and the abolition of classes, and provide plenty of latitude for the creation and use of a healthy surplus for nonmarket activities. Then, perhaps, the resultant price schedules might assist in guiding the economy.


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