Monday 8 December 2014

Market Socialism: Basic Ideas

Market socialism: oxymoronic or just plain moronic? These days the '99%' and 'Another World is Possible' are slogans fluttering atop many a radical social movement. Yet on those occasions activists' deliberations turn to what a post-capitalist future might look like, there will be a lot of talk about participatory democracy, community networks, the decentralisation of power and so on. The state might (might!) occasionally get a look in as something that can facilitate the building of the new society, but what definitely will not are markets and market-type mechanisms. And it's entirely reasonable why they should not. Ostensibly, the world economy has had 35 years worth of free market fundamentalism. The tearing down of tariffs and protectionism has been accompanied by an orgy of privatisation, speculation, and offshoring. Markets are the only political game in town. They have been introduced by hook and by crook into public services. In country after country, tax payers cash have been thrown at markets to lubricate them. Even more, with the banking crisis, they have saved markets from their tendency to eat themselves. Anywhere and everywhere, markets have proven themselves the handmaidens of the powerful. Obscene wealth concentrated in few hands and environmental destruction condemns them in socialist eyes.

Or does it? I'm no fan of markets for exactly these reasons. Philosophically speaking, socialism, if it is anything is the regulation of a complex, advanced industrial society by its participants. It's about recognising social life as a conscious, collective endeavour. For socialists heavily influenced by Marx, like me, there is plenty of extra ammunition too. Markets are one aspect of the elemental forces capitalism has unleashed, they are the very instantiation of the estrangement of human beings from human beings. Capital confronts us in a number of guises. It is an alien power we have to submit ourselves to in the workplace. It, to greater or lesser extents via the medium of employer/boss/supervisor subjects us to diktat and discipline. Capital also confronts us as many capitals. They sometimes compete with each other for our attention, as courtiers coveting our purses and wallets. They also compete with "our" (employing) capital, threatening to drive it out of business, take it over, make life turn hard; their competition systematically undermines our place in the world, the sense of our security. Yet this is entirely artificial. Markets are the outcomes of purposeful human activity, albeit one where the invisible hand wields an iron rod. Its anarchy is the direct corollary of workplace despotism, the less individual capital can make its own way against other capitals, the more it bears down on its workers to accumulate more. Capital is our monster, the market is its habitat. It is a creature born of our collective powers, which it has subverted and returned to blindly dominate, subjugate and compel.

As with most things Marx-related, there is another side. For all the exposure and critique of commodity fetishism, Marx conceded that in the lower phase of communism after the seizure of power by the immense majority in the interests of the immense majority, for a time those societies may still be grounded in 'bourgeois right'. In other words, after the glorious day has been and gone there will still be private property, codified law, the inequitable distribution of resource (pay differentials), and so on. The role of organised proletarians here is to manage society under the circumstances in which they find it and proceed to build socialism using what they have. After the revolution comes reform. Despite socialist hostility to markets, and given the impracticality of leaping from capitalism to the society of associated producers in short order, a red government, be it revolutionary or having come to power as per received constitutional niceties would have to treat with the market economy. Does a socialist society decide to live with it and change it over time, or rip it all out and begin afresh with a democratic plan - albeit at a price of further social dislocation and conflict?

Market socialism tries to go some way to assuage the understandable level of hostility socialists have towards markets. Market socialism got some impetus from Alec Nove's influential The Economics of Feasible Socialism, which appeared in 1983. Here, Nove approached issues of institutional design for a socialist society, how its economy might work, and so on. But market socialism as a distinct set of ideas broke cover toward the end of the 1980s. If one wanted to be uncharitable, it could be read as a left capitulation to the right's rampant market agenda. Old Labour shibboleths around nationalisation were out of touch and out of time. Bureaucracy was under attack here and in the command economies of so-called actually existing socialism; so groups of thinkers, academics and wonks drawn from the broad Labourist/Fabian tradition looked at markets afresh. And in policy paper after article after book chapter, market socialism was fashioned. Simply put, markets and capitalism are not one and the same. Markets can neutral allocative mechanisms that can aid socialist development, empowerment and efficiency; but only if they are disaggregated from private ownership of the means of production. Markets yes, capitalism no.

The now forgotten edited collection Market Socialism by Justin Le Grand and Saul Estrin (1989) proved something of a landmark text, bringing together contributions on virtually every aspect of the topic. What united all the papers were some shared basic propositions:

a) Markets act as self-organising information sharing/incentive indicating economic systems. Ideal typically, price as they appear on the market are the point in which they are sold. This relays information back to the manufacturers that this is the market rate and can reasonably expected to continue selling at that price. But as well as providing information, it acts as incentive too. If x quantity of commodities are sold at that price that allows the firm to recoup costs and yield a profit margin, our producer/supplier rushes more commodities to market to yield more profit, and so on. This is why markets over time can meet a bewildering diversity of need/demand.

b) There is a relationship between markets and freedom. Markets are economic systems that respond to individual preferences. Employers compete to attract the best staff, brands compete among themselves to sell their wares, in total capital-in-general offers and endless multiplicity of choices. Hence market capitalism inculcates a certain form of subjectivity that is capable of making decisions on the basis of the information available to them and choosing as autonomous, independent beings. The encouragement of critical faculties of a sort does not sit well with authoritarian/dictatorial regimes with liberal market economies. The two cut against one another - either a regime shuts down a market or the critically-minded subjectivities markets have engendered will shut down the regime.

c) Competition can be a great leveller. It drives efficiency and innovation and cuts out the sclerotic and shoddy. Provided, of course, markets are embedded in an institutional and regulatory context entirely different to those pertaining under capitalism. For example, depending on the rules of the game, markets can theoretically undermine accumulated economic advantage, as per this radical carbon credit trading scheme. Abstracted from capitalism, there is no reason not to believe that socialist market competition cannot deliver the goods, keep the lights on, and have everything running along without the recrudescence of inequalities and private economic power.

In the context of collapsing bureaucratic "socialism" in Eastern Europe, and the transition in China from Stalin-style commandism to an authoritarian market socialism (or is it state capitalism?); and of Labour's three straight election defeats on a "traditional" platform, it's understandable why this emerging set of ideas turned heads. Market capitalism appears to beat capitalism at its own game. Liberated from private ownership, schematically it promises market efficiency and the ability to meet the niche, individual needs of consumers. Compare and contrast with the USSR and its clients. The bureaucratically planned economy existed only in theory. Behind the imposing edifice of Gosplan, the much admired plan, the "proletarian property forms" were anarchic as any market - except perhaps even worse. Production targets did not meet demonstrable need. Large firms leaned on bureaucrats for extra resources under the plan irrespective. There was no impulse to quality control, let alone innovation. And at the margins, where the plan broke down not only citizens but entire enterprises traded goods and services on the black market. And, nominally at least, if there is one plan there can only be one agency with the authority, expertise and vision to drive it. That, of course, was the Party.

We should really talk of market socialisms rather than market socialism. There is market socialism of the middle range, like this:
The market socialist wishes, where possible, to reap both the efficiency and libertarian characteristics of markets whilst promoting much greater equality than we presently experience. The market socialist society will inevitable require a strong democratic state ... with powers to intervene and regulate where markets fail, with powers to promote competitive conditions and undermine monopolies, and, above all, with powers to promote equality of freedom. (Abell p.80, in Le Grand and Estrin 1989)
There are weak market socialisms that stress what is now wonkishly termed 'predistribution' (of which more another time). And there are very strong variants. How does a society in which capital has been expropriated from its owners, ownership and control have been hived from one another (and is strictly enforced), and the typical market actor is a worker cooperative, sound? The state, itself thoroughly democratised, consistently intervenes to ensure the market remains within certain parameters, that it will forever be society's servant, not its master.

The purpose of this piece is to provide the basic ideas of market socialism in order to explore them further. Socialism might be as far off the political agenda as it has ever been, but there is no reason why the possibility of what an alternative society might look like should not be discussed. After all, if we are serious about socialist politics - if we want it to paint this century in the vibrant tones of freedom from tyranny, inequality, and want socialism has to have answers about what can be done and how things should be done. It's more than a random shopping list of demands to organise working people behind; it has to link interest and vision together in something credible and so realisable you can almost touch it. This is the spirit in which I'll be returning to market socialism in the future.


Ken said...

You really need to read me old mucker John Ross!

See also the three articles on 'The Choices for Russia ' here:

And for radical market socialist thinking from the US:

DFTM said...

I think there is a fundamental flaw in the belief that markets represent an automated, unconscious process and planning is manual and conscious.

I think both processes are to an extent automated and unconscious but have controls and mechanisms in place to ensure corrections, errors are spotted etc. Basically Hayek was wrong to believe Markets had this advantage over planning.

Planning, which is everywhere in capitalism incidentally, as anyone who has visited Argos will tell you, is itself an automated, unconscious process, in that it doesn't involve anymore boots on the ground than a market system would. Basically a planning structure will be in place and it will be left to run itself, as Marx says the state will be replaced by the administration of things.

What is missing from the market is some control mechanisms that don't just provide wants but question if those wants are attainable given other factors. For example, capitalists are basically left to produce what they want, however useless, and those commodities stand and fall in the market place. Consumers are a passive element in that they don't get to decide if the want is desirable based on other factors, they only get to decide what the want is in and of itself. We treat the consumer base like spoilt children.

More precisely, imagine a world where some people don't have the basic necessities and the environment is under severe stress from man made things. And then imagine a production system that will produce anything people desire as long as it has effective demand. So if you want a house full of outside Christmas decorations you get it, no questions asked. No one is being asked, do we need this stuff, could the resources be put to better use, given the environmental consequences is it appropriate to produce this. None of those questions are even on the table.

So the question isn't markets or planning but socialism or capitalism.

Boursin said...

I don't think it's quite "planning" versus "markets". In the golden age of indicative planning, in countries such as Britain or France during the Cold War, planning was not really located on a left-right axis at all. The people at France's famous Commissariat Général du Plan, for instance, were not planners because they were leftists, but simply because they were technocrats. Instead of the absence of planning, what separated these Western countries from Soviet-type economies of the time was the use of the price mechanism to allocate scarce goods.

One way of defining a market versus non-market economy is simply to see whether the price mechanism is so used or not. Correspondingly, one way of defining a capitalist versus non-capitalist economy is simply to see whether financial capital is raised through the stock market (or something similar) or through some different mechanism. So defined, there can be planning in both a market and a non-market economy, and in both a capitalist and a non-capitalist economy.

Here in my country (Finland), I was recently included in a Who's Who-type biographical dictionary – as the author of three books with themes similar to this blog, among other things). I was asked for my political allegiance, which proved a huge challenge. After giving it much thought and even looking up the responses of some friends and acquaintances for guidance, I finally put "market socialist". By this I maybe don't mean any more than what was described above as a society where "the typical market actor is a worker cooperative". Putting "market socialisms" in the plural is an excellent idea.

DFTM said...

A price mechanism does not deal with questions, such as:

Given the latest scientific data on climate change, do we now mass produce this (insert whatever useless pile of shit you can think of)?

A price mechanism takes for granted the things that get produced. As soon as you start to challenge what gets produced, i.e. take away the speculative aspects of capitalist production, you invalidate the price mechanism. You move away from price to the actual things themselves.

Therefore I don't think a price mechanism and socialism can co-exist for long, at least not without massive contradictions.

Eradicating the price mechanism seems to me to be one of the most important tasks for humanity, and one of it's biggest challenges.

DFTM said...

Just to add:

I am aware that this can be perceived as a pretty dogmatic view of socialism, i,e, that it must call into question what gets produced.

I am aware that for some socialists what gets produced should be left to a market type mechanism and all we have to do is change forms of ownership, and we operate in this environment. Basically we have capitalism without the capitalists.

I just, sort of, beg to differ on this.