Market Socialism - A discusion primer

[sc4r]

On Market Socialism, Markets, and Wealth in general.

Market socialism takes the key Socialist principle of ‘common ownership of the means of production’ and marries it to the economic organising power of a market. The idea is that while no individual is allowed to accumulate wealth one of the most potent objections to both Socialism and Communism from an economic perspective is overcome. The problem in a nutshell is that in a large complex economy it will be very difficult (or even impossible) for any person, or even any group of people, to properly predict what others may want or how much they would prefer to have one thing rather than another if they have to choose.

Without knowing this it is impossible to plan production. or investment in production facilities, to satisfy the demand (self evidently). This has been the bane of many socialist inspired nations ‘central planning’. The problem is that the more complex an economy becomes (and all modern ones are complex), the harder this problem is to solve. And the difficulty rises exponentially with the number of commodities, technologies and people, not linearly.

Marriage between ‘socialism’ and the market concept has been tried to variously limited extents in most actual socialist inspired states, but crucially has never been simultaneously linked to an absolute ban on capitalist markets or to an extended democratic process (which is of course one of the defining features of true socialism).

It is absolutely, ABSOLUTELY, core to understanding this concept that one realises at the outset that the ‘Socialist market’ is not the same as the capitalist market. You cannot in any shape or form trade in ‘means of production’ or rights to other peoples future production in the socialist market. It is used only so that demand may be established and production planned. YOU CANNOT MAKE MONEY IN THIS MARKET.

Many Socialist and Communist hackles rise immediately on hearing the word market. It really is important to realise that it is just a word. A word which describes a much bigger class of things than the capitalist market and which is linked to all sorts of economic and distributional theory in both mathematics and applied mathematics. The Market is not to put too fine a point on it the key to running a complex system of sometimes competing demands efficiently.

Anarchists also get het up about it. Sorry, but its implicit in their descriptions that a market is present in their systems too. They rarely acknowledge this and in fact don’t seem to realise that without assuming one is present their production will be totally haphazard and their distribution systems almost non existent.

In market socialism society decides what new enterprises or extensions to existing ones are desirable and provides the funds (gained from the surplus production of existing enterprises) to allow them to be developed. Once developed enterprises are run as if for profit (but with social constraints on such things as advertising etc) but with the key difference that any profit realised does not accrue to owners, shareholders, bosses etc. but to society at large (which can use it to fund new production or on social facilities (hospitals, schools, leisure facilities, social security nets, whatever it wants).

It will be tempting at this point to declare ‘YEAH so its exactly the same as capitalism then’. It isn’t, not at all. Think about it, and by all means ask searching questions if you like, but please try and stay at least polite. I know this is not like Capitalism, I doubt that anyone else KNOWS that it is, they will just make assumptions based on subtle (but often very far reaching) misunderstandings.

To fully explain it would require a book. So I’m not going to try. Instead I’m going to see if understanding can be reached through the quicker route of answering genuine questions. As I say they can be tough, probing, even very suspicious; only if they are personally hostile to me and question my integrity or commitment to socialism will I tend to get pissed off. If by any very unlikely chance someone comes up with something which actually does reveal it to have a fatal flaw (especially a capitalist leaning fatal flaw) I’ll have egg on my face. I’ll live and the person will have done me a service.

Most advocates of market Socialism (myself included) would allow people to trade their labour in such a market (to socially owned enterprises not to individuals) and to be rewarded at ‘market rates’ (essentially whatever they can negotiate). This isn’t a necessary feature. But its one that causes a lot of heat, so I’m going to initiate this discussion on that topic:

Some people appear to equate differential personal wealth of any sort with capitalism; even fairly limited difference. That just is not so.

The features of Capitalism that makes it so grossly inequitable are: A) The process of acquiring wealth is cumulative, one uses existing wealth to acquire more. B) As a consequence an individual’s wealth is not necessarily earned by his efforts or usefulness to society. C) As a further consequence, it is entirely possible for the differences in wealth to be absolutely massive.

Market Socialism does not have these features. In fact it does not have potential wealth differences of any kind as an explicit ideological requirement.

My personal opinion is that some degree of difference should be permitted. This seems very much more commensurate with the idea of a man retaining the product of his own labour. To my mind it provides more individual dignity, and involves less wishful thinking than to imagine that free riders can be eliminated just because you say they should not exist. But this is an opinion, not part of the ideology. The ideology provides for society to decide what the maximum difference should be (even down to zero).

To put this in context my opinion about the absolute maximum ‘wage’, given the worlds wealth as it stands today, would be around about $50,000 p.a. purchasing power
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There is no question whatsoever of the goal being, as has been suggested, a ‘radical Sweden’. The goal is a state with NO (repeat NO) private ownership of the means of production; an advanced democracy; the absolute minimum of state /social intervention in the life of any individual; and only whatever central mechanisms are needed to maintain a healthy society and coordinate economic activity so that social goals may be advanced.

This implies an economic system which, staying within those parameters, is efficient at identifying the wishes of people and also at distributing types of wealth according to how different people value them - If we both have £1, and I want an apple plus an orange, and so do you; then the trick is to discover how our incompatible perfect wishes can nevertheless be satisfied as best possible. This means that if I’d bid 75p for the apple and only 25p for the orange and you would do the reverse then its better I get the apple and you get the orange. This should not need saying to anyone claiming to have any grasp at all of socio-economics, but some will understandably not have that background. PLEASE don’t reply that we should slice the fruits up. That works only because, for clarity, this is a simplified example.

A market does this.


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On Specific objections raised by RS in the past

To fully understand this section you may need to have followed several previous threads on this and other matters. If you have not I’d say you’ll find it almost impossibly tedious and confusing to try and do so now. The following are however responses to questions which were outstanding and I’ve shown them here to try and bring the whole mess together into one place.

RS :’Good point. I'll note that communications have changed rather dramatically over the last few decades and the pace seems to be accelerating. What things will be like in this field by the end of this century is certainly hard for me to imagine. {in reply to a question about communicating economic demands and production responses and an observation that RS leaves all such questions unanswered}

My "provisional" conclusion: it will be harder and harder to lie...and easier and easier to expose the liar. I think that steadily increases the vulnerability of capitalism as well as the practical possibilities of communism.

But, admittedly, I'm speculating.’

He is also failing to understand what communication means in this context. We are not merely discussing communications technology, but actually what it is that is communicated, he is focussed on the method of exchanging signals not the interpretation of them.

It does not matter what communications technology you assume (short of instantaneous awareness by all people of what all other people want, and how much, plus instantaneous calculation by everyone of how the resulting quite massive equation can be solved) you are still left with the question of how, in a situation where billions of people value different things differently, you propose to ensure that at least an approximation to an optimum solution is reached to the questions of what to produce, in what quantities, when, and who to give it too.
If RS actually tried to answer the mini example question posed about Combine Harvesters, or shoes (and now apples) etc. he’d reveal very much more conclusively what his alternative solution is. Waffling gets him off the hook (perhaps) as far as ‘winning’ the debate goes, but to anyone who is actually looking at substance indicates that he does not know.
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Sc4r :’It is because they(market socialist enterprises post implementation of a socialist society} do not retain any profit themselves. If you wish to explore by all means do so, but please don’t have the bloody cheek to keep repeating stuff that has already been denied.

Yes, denied in this post. But this is what you said yesterday...

My 'market socialists' all work at what they want to work at, they retain the product of their own labour...

Yes, both true. The part of the ‘income’ that is profit is by definition not derived from a persons own labour, but from the fact of having had an investment made by society to multiply the output value of that labour.

Learn first, critique later RS. Right now all you know is the phrases (mostly dogmatic) that may be used to criticise the capitalist system. What’s applicable there is not applicable if the nature of what is traded in the market alters.
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If they {workers within market socialsm} retain the product of their own labor, then some will prosper--get richer--and some will not. If the state appropriates all the profits, then those who run the state will prosper.

The socialist state is not the same as the people that administer it. The Marxist state is merely the administrative representation of society as a whole.
It is true that if people retain the product of their own labour some will be wealthier than others. It is misleading, given his other comments, to say they will become richer though, since this implies wealth feeding off wealth (which is not permitted).

If you want absolute equality of income then it is difficult to see how you are going to get it without a state apparatus to ensure it happens.

I don’t myself see any particular merit in absolute income equality (in fact I see positive harm); but as I’ve also said this is my opinion not any part of this ideology. Society could enforce absolute income equality, I just would not (because obviously as soon as you do then people are not necessarily retaining the product of their own labour).
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Either way you choose to go (from one day to the next), you still get the pre-conditions for the emergence of a new capitalist class.

And that is why it is not "dogma" but plain common sense to say that the market generates classes by its very functioning as a market.

A market provides information, it does not of itself determine either the source or the destination of reward or the possibility for accumulated wealth. Those depend upon the specific rules governing transactions within the market.

It is common sense only to those who are judging it purely on the basis of common experience (which is only of the capitalist market and its rules).

The pre-conditions for the emergence of a capitalist class are A) That people are allowed to purchase future rights to other peoples production (which to a very close approximation indeed is what ‘private ownership in the means of production’ means effectively) B) That for some reason or other one person is willing or able to forego something today in order to acquire such rights. Both are necessary conditions. My ideology does not provide condition A.

Hence whether common sense or not, it isn’t true.

All you are actually doing is saying ‘Ahaa but your system might be subverted somehow’. A poor argument that is, since I can say ‘Ahhaaaa so might yours be’. So might any system be given enough breakdowns of the checks and balances (the controls). But I’m not suggesting leaving it entirely to chance; I’m suggesting controls (direct democracy, instant possible dismissal of state administrators, etc. to prevent it). What is the CONTROL that prevents one or several of your communes ‘going rogue’? Answer - there isn’t one.
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True, I am not infatuated with "systems of controls"...I don't think there's any magic institutional formula "guaranteed" to prevent abuse. And phrases like "special responsibility" and "personal ends" are as "fuzzy" as any that I use. {in response to ‘Essentially all you are saying (very vaguely and indirectly) is that you believe that there is no possible system of controls that could prevent people who have any special responsibility for anything from exploiting that situation for personal ends}

I don’t think that ‘personal ends’ is very fuzzy at all. It means doing something to benefit yourself that you are not officially allowed to. That’s to my mind about as unfuzzy as anything ever is.

‘Special responsibility’ means anybody who has more actual control over a thing than someone else. Again not very fuzzy I’d say.

And both obvious from previous context I’d have thought.

There is nothing magical about my controls either. That’s the point of a control. To say if this… then that; if something else, then something else. etc.

If somebody is found to be squirreling away social funds they get removed, They cant grow especially powerful and prevent investigation because they are not allowed to squirrel away even a few funds, they cant change these rules because several billion people are watching them. In practise that’s not the end of it, you add independent auditors, public reporting, and all sorts of other things.

Can it ever in principle be subverted by a determined enough conspiracy prepared to risk the fact that there might be even a few whistleblowers present? Yes, anything can be (including of course most definitely your uncontrolled society) but there is even a control to make that unlikely in my scheme – What is it? The initial fact that they are not allowed to start acquiring wealth and privilege. All real examples of subverted democracy ultimately rest upon the fact that somebody started off with a disproportionate amount of power, privilege and/or wealth.

I can assure you that a ‘control’ such as yours which says ‘everyone would behave because errrr they’d be determined to’ is not usually thought of as a control; its described as ‘blind faith’ or ‘a fucking disaster waiting to happen’ depending on the mood of the auditor.
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But even a "vulgar" Marxist knows that where weath is involved, ways are found to make its influence felt...and what that leads to. The USSR had plenty of "controls" and so did "People's" China...they didn't help.

Like what? The real point is that they did not. Neither had any significant democratic controls in place at all.
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My conclusion is that communism is only practical with the conscious participation of the working class; without that, no amount of institutional engineering is going to make much difference and, in the long run, no difference at all.

I too believe that conscious participation of the working class is a necessary condition, It’s not however a sufficient condition.
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You appear to believe that a new social order is something like a well-designed machine...once it's completed, you turn it on and it runs itself after that and you can go do something else.

Then what I appear to you to believe, is not what I actually believe.




(Edited by sc4r at 11:25 pm on July 26, 2003)

[sc4r]

BTW I'm away for ten days from tomorrow. So no answer from me does not mean I have no anser.

Good luck all.

May the road rise with you.

[Morpheus]

Markets only exist in mutualist anarchism - other anarchists oppose them. Mutualism is basically the anarchist form of market socialism.

Yugoslavia practiced Market Socialism from the early 1950s until the '90s. Algeria also implemented a dual market socialist / standard capitalist system for a while after independance. Evaluations of those societies should play an important role in evaluating market socialism.

[redstar2000]

The End of Central Planning?

The "common wisdom" in bourgeois circles has it that the collapse of the Soviet Union and the eastern European "people's democracies" was due to the failure of their "command economies".

Modern "complex economies" involve "too many variables" to "plan" successfully. It is claimed that even the most sophisticated computer programs running on the most massive supercomputers would nevertheless fail to meet some demands while overproducing unwanted products.

Only a "free market" can "quickly adjust" to changing demands, moving resources rapidly from sectors where demand is inadequate to sectors where demand is growing.

So we have been told--in very authoritative tones--and so many have believed, including some socialists. They have not chosen to "give up" on socialism--the authoritative bourgeois recommendation--but instead have offered one or another version of "market socialism"...such as the one at the beginning of this thread.

The Semi-Free Market

Socialist "free markets" work somewhat differently from their capitalist counterparts, at least initially. Enterprises produce commodities for sale in the marketplace and consumers make choices depending on their needs and their ability to pay; but enterprises that successfully anticipate consumer demand remit their profits to the state, increase the direct rewards to the employees, or invest in expansion of the enterprise; unprofitable enterprises must shrink, convert to some other product more in demand, or be dissolved.

It's not altogether clear to me where the initiative for those changes will originate. In a capitalist market, the capitalist himself initiates those changes from the profit-motive. Perhaps a "socialist enterprise" would develop a "management structure" capable of these kinds of decisions or perhaps the enterprise employees would make such decisions democratically. It's also possible that the state apparatus itself might intervene, saying directly "you must make more of this and stop making that".

Class Structure in Market Socialism

With the abolition of the capitalist class as such and with no individual opportunity to invest in the means of production, "market socialism" has, initially, a very simple class structure. Those who are employed in some enterprise--the working class; those who are not employed at all--non-workers; and those who work in some capacity directly for the state apparatus.

For employed workers, the key is their paycheck. The more they make, the better off they are, the greater their access to consumer goodies in the marketplace. They have a direct incentive to mobilize in whatever ways they deem effective to increase their pay. This could take the form of votes in an assembly of employees, a special resolution in a regional or national parliament, or even a strike...the refusal to produce some product in high demand unless they receive a greater share of the proceeds.

For non-workers, their lack of money with which to purchase necessities in the marketplace puts them in the same position as they are under capitalism. It does not matter if the regional supermarket is full of food, they must go hungry without money. It does not matter if there are thousands of vacant apartments on the market, they must be homeless without money. Or they must convince some employed individual or some larger collective to support them.

How many people are non-workers is difficult to estimate now and will be even harder to estimate in the future. We know that it's very difficult for anyone under the age of 15 to earn enough money to live on. We know that the capacity for useful employment begins to decline at an accelerating rate after the age of 50. We know that some percentage of people are effectively "unemployable" due to physical or mental disabilities, extreme drug/alcohol abuse, etc. And we know that there is something of a long-term trend for fewer and fewer workers to be able to produce more and more...due to the growth of sophisticated technology.

There's no reason, in principle, of course, that "market socialism" cannot have a "social safety net" just as some capitalist countries have one now. How generous it will be is problematical; some workers express considerable resentment of non-workers and presuming that "market socialism" is democratic, the "safety net" might be closer to that of the United States (almost none) than to that of Scandinavia (fairly decent).

Finally, there are those employed directly by the state apparatus. Whether elected or appointed, they are likely to see themselves as responsible for "society as a whole" and deserving of generous rewards for assuming such a "burden". This is especially the case when one remembers that access to consumer goodies is a "measure of status" in any market economy.

There is no doubt that "market socialism" would initially be far more egalitarian than any class society that exists now...though perhaps slightly less egalitarian than the centrally-planned economies of the 20th century.

But there would be differences...and the real question is how those differences would work out as a result of the functioning of the market.

The Market At Work

Whenever income in the form of money determines your access to life's necessities and luxuries, you are drawn towards a "world-view" that emphasizes the increase of your income at the expense of all other considerations. People are certainly capable of resisting that temptation and many do; some cannot.

How that phenomenon will manifest itself is impossible to predict; but that it will manifest itself is certain. There will be a "pressure" to increase income differences over time and while it might be politically or even morally resisted for a time, it does not go away. The market, like the "devil" of the middle ages, never sleeps but is always looking to snare another "soul".

Non-workers, at least those who have some capacity for purposeful activity, will turn to crime--some form of "private enterprise"--for what they cannot obtain by employment. Employed workers will agitate in one form or another for increases in wages. State employees will seek "perks". All are acting in response to the demands of the market...you must have money, as much as possible, or you're fucked.

One can certainly imagine steps that might be taken to mitigate this phenomenon; but it can't be escaped altogether as long as a market exists.

Does this mean that "market socialism" "must" devolve back into capitalism? I would expect that to happen, but I'm not sure that it's possible to "prove" that. Perhaps the best that can be said at this point is that there would be a tendency to restore capitalism but that there would not be an "absolute inevitability" about it.

As long as that tendency is resisted, there won't be capitalism. But there will be a gradual growth in inequality of income and, eventually, accumulated wealth. Human ingenuity will be brought to bear on the problem of how to invest that wealth to make more wealth--if there are no legal ways to do it, perhaps some semi-legal or even illegal ways can be found.

And so it will go.

The Communist Alternative

Communism proposes, of course, the complete abolition of markets, wages, prices, etc. Since anyone has access to the necessities and luxuries of life regardless of what they do (even if they do nothing at all), the motives of accumulating wealth--security and status--are rendered meaningless. It is thought that people, being rational, will no longer bother with an activity (accumulation of wealth) that has become pointless.

To "de-couple" work from material reward also means that work is chosen only for its intrinsic satisfaction; status will be conferred on demonstrated competence in work that is considered socially useful.

Thus the "pressure" on "market socialism" to return to capitalism doesn't exist under communism. There might well be some "greedy" individuals in the early years of communist society...but there will be no material reinforcement of greed. In fact, I'd expect greed to be seen as a form of "obsessive-compulsive disorder"...an irrational obsession requiring professional help.

Which would be freely available, of course.

:cool:

(Edited by redstar2000 at 9:35 pm on July 27, 2003)

[redstar2000]

...in your version of communism how will production be coordinated? By central planning?

Tough question.

First of all, I think "central planning" got a "bad rap"...it actually did produce what was planned for (except in agriculture). If you want lots of consumer goodies, you have to plan for that...they won't fall out of the sky.

I think there are probably a large number of ways that production and distribution could be "coordinated" and different ways might be appropriate for different products.

The role of a "Central Economic Planning Board" might be purely advisory...their supercomputers and economic models will tell them (and they will tell us) that if you do A, the outcome will be B. And we will decide in small or large groups if B is worth A.

Likewise, such a central board could easily keep track of what was actually happening--the "card-swipe" technology that exists today and is spreading around the world will record the fact that a consumer in New York just picked up (not "bought"...) a pair of size 10 gloves and a consumer in Madrid just picked up two bathing suits, size 6, and so on. The information is also sent to the production units that made those gloves and bathing suits. It would not take long (a few months? a few years?) before you'd have an extremely accurate picture of how demand for different consumer goods ebbs and flows and producers would know with considerable accuracy when to make more and when to shut down for a vacation or convert to making something else.

But remember, I'm speculating here...there could very well be other, better, ways to do it.

And your claim that

"there are those employed directly by the state apparatus. Whether elected or appointed, they are likely to see themselves as responsible for "society as a whole" and deserving of generous rewards for assuming such a "burden"."

would seem to apply to your communist system as well. Unless you are arguing for anarcho-communism.

They might "think it", but there's no way to act on it. They can only go to the distribution point for some particular consumer goodie and take it home with them...just as anyone can.

If they want a nicer apartment, their name goes on the waiting list like everyone else's. Or they can try to find someone who'll swap apartments with them...that might be pretty common in early communist society. But the "rent" is still zero.

Of course, they (or anyone) can try to "work the system" in some fashion to gather an outrageously disproportionate share of the common wealth. Those card-swipe technologies might come in handy again...keeping track of who has picked up a third television set in less than a year. Questions will be asked.

But without money or markets, there's clearly a limit to what anyone can accumulate and there's no incentive for anyone to work for or assist the greedy.

Things will be ragged for a while...some people will attempt to have a personal computer in every room...and so on. But it's nothing that can't be controlled--public shame will be a powerful weapon in communist society.

I think the words communism and anarcho-communism really mean the same thing...it's just a historical accident that we have two words instead of one.

:cool:

[Morpheus]

RedStar2000, in your version of communism how will production be coordinated? By central planning? And your claim that

"there are those employed directly by the state apparatus. Whether elected or appointed, they are likely to see themselves as responsible for "society as a whole" and deserving of generous rewards for assuming such a "burden"."

would seem to apply to your communist system as well. Unless you are arguing for anarcho-communism.

[Severian]

The market cannot be "poof" abolished, of course. It will continue to exist after the nationalization of the means of production, whether it is "allowed" to or not. But I'd suggest that the advance towards socialism and communism implies a political and economic battle to restrict the operation of the market, the blind operation of the law of value, while seeking to gradually replace material with moral incentives. If this is not taking place, but instead the market is relied on more and more, that society is not advancing towards socialism, and will eventually backslide towards capitalism. As we've seen.

The market does imply inequality. Whether enterprises are state-owned, collectively owned by those working there, or whatever - some will be more successful in the market than others. Those who are successful will be rewarded - bonuses for workers and managers, etc. - those who are unsuccessful will not, and probably will ultimately be allowed to "go out of business." Otherwise, managers and workers will have no motive to try for success in the market, and there's no point to having one.

This is not really a new idea, as Sc4r acknowledges. Most Stalinist states did this to some degree, and Yugoslavia to a pretty advanced degree. Cuba's economic planning system has largely imitated it, and they've been forced to make more concessions to it due to their post-Soviet economic difficulties. Additionally, there are "worker-owned companies" like United Airlines in capitalist economies. Experience shows that enterprises that have to compete in the market have to act a lot like capitalist companies in order to survive.

When they are not actually capitalist companies, however, it has only the drawbacks of the market without its virtues. As prices are not set by competition among capitals resulting in an average rate of profit, prices do not necessarily reflect true costs of production or amount-of-labor-contained-in-the-product exchange-values. So an enterprise can be "profitable" by doing things that make absolutely no sense in terms of social productivity.

There was some truck factory in Hungary, or somewhere, that used to get its transmissions by buying buses just for the transmission. That was the most "profitable" way, given the distorted "market socialist" pricing structure. The capitalist critique of this, of course, was that they needed more of a true market; I'd suggest the communist critique would be to question the use of "profitability" as the yardstick for the success of a state-owned enterprise, and the use of bonuses that made the plant's managers and workers seek this "profitability" at all costs.

Possible the most thorough critiques of this was written by Che Guevara, actually, when he was head of Cuba's national bank and advocating something called the "budgetary finance system" as opposed to the Soviet-recommended planning mechanisms that were ultimately adopted.

Che pointed out that one of the consequences of the reliance of the market is that it encourages capitalist moral values. The market rewards dog-eat-dog competition, rather than growing social solidarity. As Guevara pointed out, the construction of socialism is not merely the increase of economic productivity, but also creating the conditions for the "New Man" (and woman) to emerge. After a visit to Yugoslavia, he pointed specifically to its policy of encouraging market competition between state enterprises as undermining the values of what socialism is supposed to be all about.

I'd suggest as well that encouraging the development of communist human beings, the desire to work for the advancement of society as a whole, and of course workers' democracy and participation in economic management to allow this consciousness to affect economic decision-making - these things are essential to increasing economic productivity in a post-capitalist economy as well. Stalinism's economic failure is at bottom a product of its compulsion to suppress workers' creativity and involvement in management, not a lack of market orientation. Gorbachev's and Yeltsin's attempts to resolve its economic problems by increasing its market orientation only deepened the crisis.

One article by Che on this is called "Economics and Politics in the Transition to Socialism. " It's in a collection called Che Guevara and the Cuban Revolution, which may have some other stuff by him on this too. There's also a book on Che's economic ideas by a contemporary Cuban economist named Carlos Tablada. New International magazine issue 8 also deals with Che's ideas on this, including a couple articles by him.

Edit: I think Sc4r's correct that most traditional anarchist schemas for their projected society, the ones with "autonomous local producers communes" and so forth, do necessarily imply market relations between the "communes". Whether the anarchists realize this or not.

[Blackberry]

Originally posted by [email protected] 30 2003, 04:54 PM
most traditional anarchist schemas for their projected society, the ones with "autonomous local producers communes" and so forth, do necessarily imply market relations between the "communes". Whether the anarchists realize this or not.
We know that there is an anarchist market version. It's called mutualism.

[antieverything]

For a vision of market socialism somewhat different than that of sc4r's description, I highly recommend the book After Capitalism by David Schweickart. While it is available in print, the author also offers it free on his website in both PDF and HTML versions...while the PDF is more convenient for distribution, it is an earlier draft with some typos. http://orion.it.luc.edu/~dschwei/

The system envisioned by Schweickart resembles, in some ways, anarcho-syndicalism with a state--the economy is dominated by worker-owned and controlled cooperatives competing on a reasonably free market at almost every level. All capital, however, is owned socially and cooperatives pay "rent" to the state for the use of social capital. This "rent" is basically the tax of the new society which is reinvested through social banks...the profits of the production are kept by the workers. In this way, the wage system as we know it is abolished in most sectors of the economy.

Schweickart covers issues such as redistributive income taxation only briefly--either for purposes of brevity or because he believes them to be unnecessary. Still, the book is quite a good read and left me with an improved understanding of not only how socialism can work but also of how it is necessary to save our planet and ourselves.

The system I envision lies somewhere between those of Schweickart and sc4r...I feel that the market is not the problem--it is the fact that so many are disadvantaged in the market or left out of it entirely that is the problem. I also feel that the state has a larger role to play than the small role Schweickart seems to espouse--or rather it would be better to say that I believe that a larger role would be necessary...certainly Schweickart understands that the socialist state is a pragmatic one in the economy.

[redstar2000]

This is an excellent analysis of the Yugoslav experience.

http://www.che-lives.com/forum/index.php?a...=ST&f=6&t=16086 (http://www.che-lives.com/forum/index.php?act=ST&f=6&t=16086)

http://www.sawu.org/redgreenleft/YaBBImages/smoking.gif
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[sc4r]

RS : but enterprises that successfully anticipate consumer demand remit their profits to the state, increase the direct rewards to the employees, or invest in expansion of the enterprise

This I’m afraid is one of those subtle misconceptions. It is not the decision of the enterprise whether to increase rewards, but the decision of society. Likewise the amount available from profit for expansion are also determined by society.

As a good communist you must know that society and state have very different connutations. I’d appreciate it if you would stop injecting perjurative words into your arguments; this is not a debating contest.

RS: Modern "complex economies" involve "too many variables" to "plan" successfully. It is claimed that even the most sophisticated computer programs running on the most massive supercomputers would nevertheless fail to meet some demands while overproducing unwanted products……and RS then implies he does not agree

Yes it is, and there is a reason why. Rather like your objections to ‘Arrow Impossibility Theory’, its simply not good enough to say that in your opinion, not having examined the maths, the statement is untrue. Do you, for example, even know exactly what it is that the models say cannot be optimised without a market? – It is not simply ‘production’ in general (although there is a very strong suspicion that it is true even of this).

RS : For non-workers, their lack of money with which to purchase necessities in the marketplace puts them in the same position as they are under capitalism.

Not quite. In a capitalist society there is an incentive not to employ people if this is how any particular capitalist can optimise distribution of wealth. In a market socialist society there is perhaps some incentive for workers as a whole to wish the unemployed to stay unemployed if you assume that the unemployed have no vote. But of course they have exactly the same voting rights as anyone else.

If all you mean is that people who cannot, or will not, contribute to society have no natural entitlement to participate in the fruits of society then I’m afraid I agree. I can’t see why they should. I’m not a bleeding heart liberal.

But having said that do you seriously believe that any socialist society (by its very nature educated and inclined to act co-operatively) is going to cut the safety net for people who cannot contribute. Good god man even Liberal Democracies don’t do that.

RS : Does this mean that "market socialism" "must" devolve back into capitalism? I would expect that to happen, but I'm not sure that it's possible to "prove" that. Perhaps the best that can be said at this point is that there would be a tendency to restore capitalism but that there would not be an "absolute inevitability" about it.

As long as that tendency is resisted, there won't be capitalism. But there will be a gradual growth in inequality of income and, eventually, accumulated wealth

Sorry but the jump from ‘there is a tendency to want to increase your wealth’ to ‘therefore accumulated wealth will be allowed’ is hogwash. This is without even mentioning (again) that accumulated wealth is not the same as accumulated wealth which can be used to aquire more wealth (cumulative wealth) which is actually what is at the heart of Capitalism.

Above all any socialist society is democratic. Some people may indeed want to aquire more wealth than society wishes them to. But the point is that the mechanisms don’t allow them to do it.

Contrast this with your ideas – where presumably exactly the same desire is present (in fact given your implementation model the desire wont merely be present but will have been very recently acted upon) but with nothing at all to prevent it happening and I’m lost as to how you can continually bring up an objection which you justify only by saying ‘I feel it inevitably will happen’.

Severian : The market does imply inequality. Whether enterprises are state-owned, collectively owned by those working there, or whatever - some will be more successful in the market than others. Those who are successful will be rewarded - bonuses for workers and managers, etc

Simply not so. See reply to RS above.

[antieverything]

Any economy will have some degree of inequality...unless of course it is a utopian one in which case it will probably fail due to an ineffective reward system. There are, of course, problems that arise from inequality but these are problems which usually require massive inequality such as is present in the capitalist system. Price inflation doesn't drive people out of markets when there is only an inequality factor of ten or less! Economically, some level of inequality is good...the challenge is to find the equilibrium point at which inequality does the most good with the least ill effects.

On the issue of the Yugoslavian experience, it wasn't a step towards the restoration of capitalism, it was the restoration of capitalism. The Yugoslavian government didn't shift to an economy based on wide-scale worker control but to one based on control by a "Red Bourgeoisie". State-owned and controlled competitive firms could be considered socialist. State-owned, worker managed firms could be considered socialist. State-owned firms run by a new capitalist class can hardly be labled socialism...though some would disagree--James A. Yunker, the "Pragmatic Market Socialist", for instance.

[redstar2000]

I really enjoyed your vacation, sc4r, but I guess all good things must come to an end. :D

So...

It is not the decision of the enterprise whether to increase rewards, but the decision of society. Likewise the amount available from profit for expansion are also determined by society.

I don't think it matters all that much who makes the actual decision; the point I was making is that people at all levels will have a strong material incentive to increase their share of the social product at the expense of others.

That is inherent in a market economy; the more money you can acquire, the more consumer goodies you can buy. Your social status also rises, of course.

Do you, for example, even know exactly what it is that the models say cannot be optimised without a market? It is not simply ‘production’ in general (although there is a very strong suspicion that it is true even of this).

I shamelessly admit that I not only do not "know" but I don't even care!

Optimization is not my goal. I don't "worship" at that "church".

That's not to suggest that optimization is not a consideration; but it is one of many and certainly not the most important.

In a market socialist society there is perhaps some incentive for workers as a whole to wish the unemployed to stay unemployed if you assume that the unemployed have no vote. But of course they have exactly the same voting rights as anyone else.

Yes, they have the "right" to be outvoted by the employed majority over and over again...until they are too weak and sickly to be able to drag their sorry asses to the polls at all.

If all you mean is that people who cannot, or will not, contribute to society have no natural entitlement to participate in the fruits of society then I’m afraid I agree. I can’t see why they should. I’m not a bleeding heart liberal.

That's the spirit! When the lazy bastards get hungry enough they'll work...or they'll die and good riddance.

But having said that do you seriously believe that any socialist society (by its very nature educated and inclined to act co-operatively) is going to cut the safety net for people who cannot contribute. Good god, man, even Liberal Democracies don’t do that.

Well, actually they do...and they're doing more of it with every passing year.

But, I was simply suggesting a possibility, not an inevitability. More than once, I have heard working-class people express solidarity with other workers, contempt for the bosses, but equally bitter contempt for "welfare bums". Granted that attitudes change, I suggest that in any market economy, there will be temptations in that direction. Whatever someone else gains by not working is something that you lose by working...that's how a market operates. A unit of currency taken from your pocket and placed into the pocket of a non-worker is, to you, a loss.

Sorry but the jump from ‘there is a tendency to want to increase your wealth’ to ‘therefore accumulated wealth will be allowed’ is hogwash. This is without even mentioning (again) that accumulated wealth is not the same as accumulated wealth which can be used to aquire more wealth (cumulative wealth) which is actually what is at the heart of Capitalism.

Sorry, but you must have skipped the rest of the paragraph...

Human ingenuity will be brought to bear on the problem of how to invest that wealth to make more wealth--if there are no legal ways to do it, perhaps some semi-legal or even illegal ways can be found.

I didn't mean to suggest, by the way, that this will be a wide-spread phenomenon...it doesn't need to be. One embryonic proto-capitalist does not a counter-revolution make. But the market is truly relentless (a point I note that you did not dispute)...anyone who can figure out a scheme to make money from money is going to prosper and others will learn.

Whatever institutional barriers you erect will delay this, perhaps for a considerable period of time. But even those "in charge" of such barriers have been known to be tempted...and to yield.

Some people may indeed want to aquire more wealth than society wishes them to. But the point is that the mechanisms don’t allow them to do it.

Sure it will. Individual A is a skilled worker who earns more than enough to live on comfortably. He can purchase luxury goods with his surplus or he can stuff it in his mattress. Should he choose the latter option, at some point he has accumulated considerable wealth. Your mechanisms prevent him from legally investing it to earn more money...but he has a strong incentive to find a way to do it illegally or semi-legally.

Human ingenuity, remember?

Contrast this with your ideas – where presumably exactly the same desire is present (in fact given your implementation model the desire wont merely be present but will have been very recently acted upon) but with nothing at all to prevent it happening and I’m lost as to how you can continually bring up an objection which you justify only by saying ‘I feel it inevitably will happen’.

I guess you skipped my response to that question, so I'll repeat it...

They might "think it", but there's no way to act on it. They can only go to the distribution point for some particular consumer goodie and take it home with them...just as anyone can.

If they want a nicer apartment, their name goes on the waiting list like everyone else's. Or they can try to find someone who'll swap apartments with them...that might be pretty common in early communist society. But the "rent" is still zero.

Of course, they (or anyone) can try to "work the system" in some fashion to gather an outrageously disproportionate share of the common wealth. Those card-swipe technologies might come in handy again...keeping track of who has picked up a third television set in less than a year. Questions will be asked.

But without money or markets, there's clearly a limit to what anyone can accumulate and there's no incentive for anyone to work for or assist the greedy.

Antieverything wrote this...

Economically, some level of inequality is good...the challenge is to find the equilibrium point at which inequality does the most good with the least ill effects.

A curious statement based, I presume, on the various market-oriented theologies that prevail among bourgeois academics these days.

For communists, economic inequality has no utility whatsoever; practical equality--where everyone gets what they need--is the goal.

When you stop and think about it, what other goal makes any kind of sense?

http://www.sawu.org/redgreenleft/YaBBImages/smoking.gif
___________________________

U.S. GET OUT OF IRAQ NOW!
___________________________

"...a disgusting and frightening website"
The RedStar2000 Papers (http://www.sawu.org/redstar2000)
A site about communist ideas

[sc4r]

Well I'm glad you enjoyed my vacation.

There is nothing of substance for me to reply to in your last missive. You believe everyone should be equal; can suggest no mechanism to ensure this, happily admit to not even caring to examine (let alone understand) what are essentially mathematical, not ideological, truths, but declare them wrong anyway; and base your whole ethos on the idea that if everyone would just be perfect then everything would be perfect. Its like listening to a kid pray to Santa Clause.

NO chummy, the unemployed are not getting a bum rap in most liberal democracies. They get on the whole a pretty decent shake all things considered. This especially includes the fact that they are not living in a socialist system, where the emphasis is to optimise social wealth and where there would therefore be a special drive to actually create as much value in total as is possible. IF you think otherwise go off to Africa and see how things are there.

And finally IF AS YOU SAY people will always find a way to turn any advantage into a capitalist style cumulative one (once again you give no reason at all for saying this) then your ideas are far more shagged than anything I have ever proposed because you dont suggest any mechanism to prevent it.

Your whole thesis is based around saying : if people were like this, then they would do that. Even you yourself acknowlege(in your last post for gods sake) that they are not. You are not (IMO) into socio-economic or political theory, you have religion. And it's just as nonsensical as any other religion.

TO put it another way you are obsessed with saying what should be (only in your opinion mind, I dont happen to share even that) and seemingly careless of whether this is something that feasibily could be. You are not a socialist, you are a hippy; and you harm our movement with your declared association to it.

[redstar2000]

You are not a socialist, you are a hippy; and you harm our movement with your declared association to it.

:lol:

http://www.sawu.org/redgreenleft/YaBBImages/smoking.gif
___________________________

U.S. GET OUT OF IRAQ NOW!
___________________________

"...a disgusting and frightening website"
The RedStar2000 Papers (http://www.sawu.org/redstar2000)
A site about communist ideas

[antieverything]

For communists, economic inequality has no utility whatsoever; practical equality--where everyone gets what they need--is the goal.The point of my post was to say that you can have everyone getting what they need and a level of inequality coexisting!

[sc4r]

Severian :

I think you still do not fully appreciate the concept of a market distinctly from the capitalist market. Nor do I think you fully appreciate that even given this it is how profits are distributed that determines who benefits. This last point sounds obvious but I think that rather too often people get hung up on criticising process because they know that within the context of the existing liberal/capitalist laws a process supportd one thing; change the context and it supports quite another.

What distinguishes the capitalist market is that rights to a part of the production of other people can be traded in it, by individuals. This allows those individuals to accumulate negotiating advantage and , of course, can gradually lead to acquisition by a few of disproportionate wealth. You cant trade those rights in a socialist market because there is nothing to trade. Such rights are not defended by socialist law and in a very real sense simply don’t exist.

Nor does the market by itself imply inequality. Why? All a market does is allow one to specify that you personally place a use value of x on Y and, say, 2x on z etc etc. it simply provides information to potential suppliers on what they should best produce to satisfy peoples desires and how much it is appropriate to spend on satisfying various demands. Within the capitalist framework this information is also used to tell suppliers what they can get away with charging, and since it is they who retain any surplus value produces inequity. But this does not have to be so; it is simply that capitalist laws support it.

If everyone’s desires were exactly the same you would of course not need a market; but I think it is only the most extreme communists that think this is ever likely to be true (or even desirable). A market provides a way to deliver maximum use value to people. Without it you get the situation where you simply have no real way of finding out the fine distinctions of how people would balance the same budget in slightly different ways given that nothing is in infinite supply.

Of course I am not a communist. I do not see equality itself as being an especially desirable goal anyway, so the rules I would put on what can be traded in a market and what part of any advantage gained can be retained by who is not the same as a communist would. But again this has nothing to do with the idea of a market, only about what rules it operates under.

BTW I do however definitely not support the capitalist market. I do not support private ownership in the means of production. It is this that gradually allows accumulation of wealth earned solely by virtue of having existing wealth. It is this that produces EXTREME inequality (to which I am opposed).

You see when you say things like ‘otherwise managers and workers will have no motive to try for success in the market, and there's no point to having one.’ You really have to make your mind up. If this were true and motivation could only be supplied by the promise of personal wealth then your ideas are more totally shagged than anything I’m suggesting anyway. Why can a worker not be motivated purely by the thought of seeing his company/commune more successful at producing goods which have a demand disproportionate to the cost of producing them; why should the result (best called company profit) not be redistributed to society for it to spend on other desirable goals?

All the experiences you are talking of show that companies that compete IN THE CAPITALIST MARKET have to become fairly capitalist to survive. Probably true. Not necessarily; but probably. But so what? I’m not suggesting retaining the capitalist market.

In conclusion : A market is an extremely efficient way to reveal marginal preferences (by individuals and producers). Without this information you cannot do a good job either of really satisfying consumer demand or (especially) of finding out which producers can make most use of scarce production goods. There is no reason why a market could not do this job even in a communist society of full equals with no variance in budgets.

And equally importantly – NO other mechanism I’m aware of does the job even remotely efficiently.

best wishes

[Severian]

Originally posted by [email protected] 16 2003, 08:15 PM
You see when you say things like ‘otherwise managers and workers will have no motive to try for success in the market, and there's no point to having one.’ You really have to make your mind up. If this were true and motivation could only be supplied by the promise of personal wealth then your ideas are more totally shagged than anything I’m suggesting anyway. Why can a worker not be motivated purely by the thought of seeing his company/commune more successful at producing goods which have a demand disproportionate to the cost of producing them; why should the result (best called company profit) not be redistributed to society for it to spend on other desirable goals?

If this were true and motivation could only be supplied by the promise of personal wealth then your ideas are more totally shagged than anything I’m suggesting anyway.

True. I took it as self-evident that the market is needed only as a way of apportioning material incentives (still needed for a long transition period, with the use of moral incentives gradually being increased.) It's becoming more and more unclear to me, what function you think the market should have.


Why can a worker not be motivated purely by the thought of seeing his company/commune more successful at producing goods which have a demand disproportionate to the cost of producing them; why should the result (best called company profit) not be redistributed to society for it to spend on other desirable goals?

So to clarify then: you're proposing that the market, the proceeds of selling goods at market prices, etc., would have no relation to workers' incentives? Is that right?

In that case, your proposals aren't specially market socialist. Less market-oriented than most actual postcapitalist economies...anything but war communism, really.

The market will, of course, continue to exist after the abolition of capitalism. Even if it was wholly banned it would still exist. The laws of the market will still effect prices. No way not.

I do think it's often necessary to set or alter prices away from their market prices for social purposes, though. Subsidizing necessities of life to make sure everyone can afford them, etc.

[sc4r]

Originally posted by Severian+Sep 16 2003, 09:27 PM--></span><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Severian @ Sep 16 2003, 09:27 PM)
[email protected] 16 2003, 08:15 PM
You see when you say things like ‘otherwise managers and workers will have no motive to try for success in the market, and there&#39;s no point to having one.’ You really have to make your mind up. If this were true and motivation could only be supplied by the promise of personal wealth then your ideas are more totally shagged than anything I’m suggesting anyway. Why can a worker not be motivated purely by the thought of seeing his company/commune more successful at producing goods which have a demand disproportionate to the cost of producing them; why should the result (best called company profit) not be redistributed to society for it to spend on other desirable goals?

If this were true and motivation could only be supplied by the promise of personal wealth then your ideas are more totally shagged than anything I’m suggesting anyway.

True. I took it as self-evident that the market is needed only as a way of apportioning material incentives (still needed for a long transition period, with the use of moral incentives gradually being increased.) It&#39;s becoming more and more unclear to me, what function you think the market should have.


Why can a worker not be motivated purely by the thought of seeing his company/commune more successful at producing goods which have a demand disproportionate to the cost of producing them; why should the result (best called company profit) not be redistributed to society for it to spend on other desirable goals?

So to clarify then: you&#39;re proposing that the market, the proceeds of selling goods at market prices, etc., would have no relation to workers&#39; incentives? Is that right?

In that case, your proposals aren&#39;t specially market socialist. Less market-oriented than most actual postcapitalist economies...anything but war communism, really.

The market will, of course, continue to exist after the abolition of capitalism. Even if it was wholly banned it would still exist. The laws of the market will still effect prices. No way not.

I do think it&#39;s often necessary to set or alter prices away from their market prices for social purposes, though. Subsidizing necessities of life to make sure everyone can afford them, etc. [/b]
Well I&#39;d say that yes I am a market socialist since I believe in socialist principles and also believe that a sucessful economy is going to use market exchanges to make its economy run properly. In other word sto provide maximum benefit to people. I cant see how you could describe me otherwise. But I&#39;m not that bothered; if you choose to think of me as something else as long as you fairly represent my views and dont use whatever label you do pick as a propaganda weapon against me I wont complain.

But the truth is I still dont think that you have truly grasped what it is that a market does that is so important. The problem is markets are part and parcel of entire economic systems; one tends to look at the direct results of market exchanges for individuals within the context of a particular set of rules and say &#39;see a market allows individuals to take a profit&#39;. Thats not quite true; its the rules of society that allow this. What the market has done is measure quite accurately how much people value one thing against another and as a side effect produces a profit for those who are offering what people want at a cost (not price) which is better than other can manage.

The difference between the selling price (how much people want a particular product) and the cost of producing it is of course profit. But where the rules of society kick in is in regard to where that profit goes.

In a capitalist economy, of course, it goes into the pocket of the owner of the production facility. In a Socialist economy it goes to society who decide what to do with it. If the society is smart it probably feeds back at least a sizeable proportion of that profit to those producers who make it SO AS TO INCREASE THEIR PRODUCTION CAPACITY. Because by definition these people are producing what people want in a more efficient way than others are doing. This, of course, means more of what people want in total.

You could pay everybody exactly the same and the market would still fulfil a useful function.

Why would you set prices away from their market value? what would this even really mean. You are here confusing what one needs to do in a basically capitalist economy in order to prevent the negotiating muscle provided by that system from being abused with what a price in a socialist country means. A market does not drive prices up; it simply reflects actual demand given actual supply.

To ensure sufficient basics in a socialist country you would not interfere with market operation itself (which does not in a market socialism determine what surplus funds get allocated to) but simply build more production for those &#39;basics&#39;. Even here the market produces useful information. It tells you exactly what is in short supply, because by definition those things that are in short supply(ie for which there is heavy demand) are going to be producing large profits.

All a subsidy would do in such a socialist framework is take away choice. Why would you want to subsidise something given that you cant increase the total amount of it that is available in this way or affect the extent to which it is wanted? If in a simple socialist society of 10 people there are 10 loaves available and 5 rolex watches and nothing else then the price of loaves is going to go through the roof (almost right up to the total wages) but everyone that needs one will still get one, because, of course everyone will bid that high. while rolex watches will cost 1p and make a large loss.

And in a real society with many competing desires and products you wont actually find out that you have this shortfall in one particular product any other way. It&#39;s the market that is actually providing you with this information. Otherwise you are just guessing in a hierarchic society and doing god knows what (nothing?) in an anarchic one. To run a society well you have to have a mechanism for telling you what people really want. Simply asking them wont cut it. This reveals only gross problems not fine detail.

You would only &#39;subsidise&#39; loaf making in that whatever profit was made that year would be ploughed back into increased loaf making facilities (exactly as I already said).

Again ths does not hapen within a capitalist framwork because it is demand from people who have money that is being measured. But of course in a socialist (especially a very egalitarian socialist) society this is not the case.

All of this fits together. You cannot evaluate systems outside of their context. Markets perform a useful function. They are themselves neither good not bad socially; they are simply very useful, and very discerning because they focus choice and quite accurate evaluation of percieved value. What determines good or bad is the laws and rules that determine what can be traded and what can be retained.

best wishes.

P.s. Thanks Severian both for resurrecting this topic and for making sensible comments with implictly sensibel questions. I confess I was at the time diapoointed to see that there was far more discusion on whether to call an egg a piece of bacon, or whatever, than there was about this.

I honestly belive that there are many many people on this boards discusiong whether they should be Anarcho-syndacilist or Anarcho-communists or whatever who dont have the slightest idea how anything at all works. Far too many are obsessed with discussing what to call things, not with what things are and what they do.

I mean discusiing &#39;is a revolution needed&#39; for gods sake. Whats needed is to gain some sort of acceptance that anything at all to do with socialism is even acceptable first. Revolutionaries dont talk about whether one is needed; they do it. You do it IF you have to, and IF you might stand a snowballs in hells chance of winning. You dont &#39;prepare&#39; for a revolution 50-100 years ahead of time.

Sorry lads. I get tired of reading all the preening that gets encouraged by certain people who should know better.

[Severian]

OK, if I understand you right, there are two roles you see the market filling:

1. Price-setting.

2. As a guide to decisions about how much of what to produce, and allocation of resources to producing different things. "Profitability" would be involved here.

Is that right? I want to see if I understand before I do a detailed response.

The other question I have...it&#39;s a question of degree.

I expect that all planned economies have done this to some extent; on the simplest levels, like "hey, this stuff&#39;s really flying off the shelves, let&#39;s see if we can make more of it", it&#39;s pretty noncontroversial.

But IMO there&#39;s also a need to subsidize some prices, or to produce some necessities have to be produced in greater quantity than the market "wants". (Market demand is not always the same thing as somebody wanting it.)

I get the impression from your last post that you disagree, on prices at least. So I guess what I&#39;m wondering, are you saying that all prices, production decisions, etc., should be made on a market basis.

If so, that would be more market-oriented than any postcapitalist economy that I know much about, and more so that I&#39;d consider desirable, or even possible after capitalism.

[sc4r]

Originally posted by [email protected] 18 2003, 05:37 AM
OK, if I understand you right, there are two roles you see the market filling:

1. Price-setting.

2. As a guide to decisions about how much of what to produce, and allocation of resources to producing different things. "Profitability" would be involved here.

Is that right? I want to see if I understand before I do a detailed response.

The other question I have...it&#39;s a question of degree.

I expect that all planned economies have done this to some extent; on the simplest levels, like "hey, this stuff&#39;s really flying off the shelves, let&#39;s see if we can make more of it", it&#39;s pretty noncontroversial.

But IMO there&#39;s also a need to subsidize some prices, or to produce some necessities have to be produced in greater quantity than the market "wants". (Market demand is not always the same thing as somebody wanting it.)

I get the impression from your last post that you disagree, on prices at least. So I guess what I&#39;m wondering, are you saying that all prices, production decisions, etc., should be made on a market basis.

If so, that would be more market-oriented than any postcapitalist economy that I know much about, and more so that I&#39;d consider desirable, or even possible after capitalism.
Yes a market is all about price setting. thats what it actually does, directly.

Yes &#39;market profitability&#39; is strongly and implicitly involved in providing a guide as what to produce, and how much of it.

......

But please be clear what these things mean. Dont get tempted to attach to them the implications which would snf do apply within a capitalist framework.

&#39;Market profitability&#39; is the difference between the actual cost of producing a thing and the value that people place upon having it relative to all the other things they could have. Its a measure of how important a thing is to people and how difficult it is to obtain When you are producing less of a thing than people need this will be high; when you are producing too much it will be negative.

You could simply ask people to express their percieved value without actually exchanging anything, and obtain the same number. The trouble with that it is does not force them into being truly discerning about what they want or give them any scale of value to relate their expressed preference to. The other thing that just asking leaves out is any indication of whether they are setting a high value because the thing is scarce or because it is highly desirable, and in what proportion. You could ask them that as well. I think you can start to see how complex and difficult these questions would be becoming .

And then what? Do you simply say &#39;well irrespecy=tive of what you want this is what you are getting&#39;? or do you allocate things on the basis of peoples weighted preference (in which case you actually have a market by another name anyway).

So you have to give them a budget (equal in total value in a socialist society to the total cost of all production*). Whether you call this &#39;budget figure&#39; money or not is irrelevant; it fulfils the same purpose.

The end result is a highly focused expresson by individuals of exactly what it is they do value and how much, because they are being given the stark choice that if they &#39;wwaste&#39; their bids on stuff they dont want, or value it too highly they will get less of what they do want. It really really discerns between what people really want.

And of course we would want to be producing what people value. In a perfectly balanced economy this would in every case exactly balance the production cost. This would say &#39;we are producing precisely what people want, in precisely the quantities they want&#39;. All that would be left would be to introduce new improved things.

Now think carefully about the doctrine of &#39;to each according to his needs&#39; - In the absence of a market mechanism how are you going to find out what those needs are ? What even do we really mean by &#39;needs&#39; ? Do we mean barest subsistence? I doubt it. So we are really talking about desires, and even in a society not filled with aquisitive greedy people those desires will vary from person to person.

What are you going to produce ?

1) A random collection of stuff that any number of communes judge to be desirable ? basically because its them that produce it. Unless it is completely undesirable (actually repellent) it is likely all to be taken if its free. And then you have no way of knowing what would be a better mix.

2) A mix of stuff dictated by a central authority? this leaves an awful lot of power in their hands, and is also very unlikely to be a correct or very accurate judgement.

Which leaves a market. Its actually the only way of even approximating desirable production without a totalitarian / authoritarian command.

Price is just the expression within a budget (a scale in other words) of the use value people place on something. Without a &#39;price&#39; you have no scale of reference for anything.

Now consider a &#39;subsidy&#39; What are you &#39;subsidising&#39; ? You cant magically create more stuff than is available. You cant alter the costs of producing what has already being created. So what are you going to do ?

1) put funds into developing production areas where the profitability is high, and hence there is a significant unfilled demand/ need at the moment ? Good, I agree and if this is all you mean by a subsidy we have no argument.

2) Decide that a particular commodity will be &#39;sold&#39; at £x below its market price. All you would do then is drive its market price up by £x, you&#39;d achieve nothing except to distort the desireability measure.

3) simply allocate a set amount of some stuff to every individual? Which inevtiably gives some people more than they want and some less. effectively all you are doing is setting the market price of this particular stuff at zero. its just an extreme version of 2) with all the attendant loss of information.

DO not get hung up on what subsidy means in a capitalist market economy. There a subsidy means that social money is going to be used to subsidise private enterprise.; usually for nationalistic reasons. It wont do the same thing in a socialist economy because the private sector wont exist.

Also dont get hung up on the idea that in no circumstances at all might a tweak be desirable (basically rationing). I&#39;m not an ideologue who says that any deviation from the pure form of a thing makes it totally unwanted. In a true communist society full of non-selfish people there would of course nevber be a need to do this, since they would not attempt to &#39;stockpile&#39; more than their needs, which makes the market actually better in communism than in transitionary socialism. When in transition you might occasionally want to do this (but it should be very occasionally) in unusual and unforeseen circumstances. Basically this says that self regulation would take care of it in any of the perfect societies that the likes of RS are suggesting anyway.

I&#39;m going to end by asking you to think about exactly what it is you are concerned with? process? or result ? or just terminology? If you refuse to consider a market simply because you dont like the term, or because you dislike the results of the capitalist market (as do I) then simply call it the &#39;socialist market&#39;; or even something else (although this will tend to hide the reality of what you are talking about, and may lead you to ignore things you should not). If you are concerned with ensuring that as many people as possible get what they need/want then I&#39;d reckon a market does this better than anything else.

I dont really expect you to simply accept this. It&#39;s a fairly complex idea with facets I have not really touched upon; and self evidently it is in contradiction to the orthodox teaching you&#39;ve seen so often. I would not expect anyone to simply assume that there are no nasty hidden gremlins with consequences which I&#39;m not telling you about, but there are not.

Be clear. The market is not an entity in itself. It is a process not an object. It operates within the rules of what can be traded in it. It&#39;s those things which determine whether a society is good or bad and those things that determine what the consequnces (other than information) of a market economy will be.

Think about it is all. Dont be too keen to reject such a wonderfullly powerful and useful socialist tool. One which , as a bonus, will tend to help you seem more credible when talking to the unconverted.

best wishes.

P.s. Market demand is indeed exactly the same thing as people wanting a thing. It doesnt mean anything else, and cannot. It does not always mean that if something else were available that something else would not be wanted even more true. But there is little you can do about that other than encourage new ventures based on consumer research and see how they actually fare. Satisfying billions of people perfectly is never likely to be an achieveable goal. You aim to approximate it by getting increasingly closer and accept that you have to have a certain amount of wasted production and investment as a cost of finding these things out.

If on the other hand you mean that demand can be manipulated (false advertising / promotion basically) that again is true. You can do something about this by legislating against it (and in a socialist framework by actually withdrawing investment funds from any concern doing this). I&#39;m afraid I see no practical way around that other than by allowing society to make a subjective judgement on the matter. Can you ?

Do not assume perfectoion as RS does. Say how you will best approximate to it, and dont dodge the questions which are hard, possibly almost intractable. Reaching a mutuially acceptable consensus of requirements from millions or billions of people is indeed going to be very hard. It is fooloish to pretend there are trite and woolly answers with no difficult or even highly imperfect bits.

For me the acid test whenever someone like Redstar says &#39;that would not be allowed&#39; or &#39;it would only be given to most needy&#39; is usually to ask who is going to judge; and how are they even going to know what the question is? All too often this simple direct enquiry remains totally unanswered, or more commonly massively fudged in a barrage of slogans or vagueness which still fail to actually answer it. because frankly he has not even thought about it (I suspect he thinks there will be a sort of spirit of Redstar floating around doing the job , and that this should be obviously acceptable to us all).

The core questions for all forms of Social choice are : How do we find out what people want; how do we best satisfy them when they all want slightly different things, How can we see to it that we dont force majority choices on a minority needlessly; How can we achieve an equitable balance. A market provides a mechanism for doing this with material goods. Direct democracy coupled with people trained in presnting coherent choices could do this with regard to social behaviour. , if you say a priori that one of the social laws is to forbid private ownership in the means of production, then the two together produce viable Socialism. If people dont want it, then you cannot have genuine socialism anyway.

Socialism is about giving dignity and fair reward to workers, no ? But it should be obvious that unless the definition of worker is extended to cover a majority of people it cannot be instituted. And unless any minorities that do exist are satisfied at least on the whole then you are going to have a very very unstable society. It should also be obvious that if people do not want it, then it wont come to pass. We are a small movement because outside of those countries which had large and very oppressed peasant workforces there is little desire for change. We dont help matters by presenting ideas which look either autocratic or academically complicated and obscure. People see right through that BS. Market socialism retains many of the features that people know sorta work, while making it very clear what would be changed and how this would affect people. It has the power to convince, basically because it is valid and straightforward. But it is very definitely Socialist, and Marxist.

Slogans spur on and motivate the already committed; they attract a minority of people who are simply contrary; but they do little except antagonise those who do not see themselves as all that badly off (which is most people in western societies). To gain their support you have to present a clear alternative which has obvious benefits and few, if any, vague areas. We are not talling of trivialities here after all, we are talking about people entire lives. They are not going to risk fucking them up because the likes of RS declares something to be such and such. If I cant make sense of what he says in a practical way you can absolutely bet a years wages that others (already antipathetic even to the term socialism) wont either.

People know markets work. Most dont really know how, but they know they do. Sell the idea that socialists will take what works and improve upon it and you might sell socialism.

*In a capitalist society it would also include some valuation of future production.

[Severian]

Market demand is a measure of people&#39;s willingness and ability to buy something. Given economic inequality - which will persist through the first phase of communism - this is not the same as what people want.

Examples: Millions in the world today want and desperately need more food; as they don&#39;t have the money to buy it, this does not translate into market demand. There&#39;s a great shortage of housing in many cities as it&#39;s more profitable to concentrate on building fewer units of luxury housing - there&#39;s more market demand for that, in other words.

So sometimes economic planners have to produce more of a basic necessity than the market would demand, and sell it at sub-pseudo-profitable prices. This can involve rationing, as in Cuba, or not; this is not really new or speculative and does reduce retail prices. Has its downside, yes, as with most things.

Another example: presumably there must be some demand for lobster in Cuba. But the decision has been to sell Cuba&#39;s lobster catch on the world market, instead, to get the foreign exchange to buy powdered milk which is rationed to children. Seems correct to me irrespective of what the market says.

Now on the other side of market pricing, supply. This relates to cost of production. Under capitalism, each business may do its own cost accounting, but that isn&#39;t decisive. Ultimately the market sets a socially necessary cost of production. (or socially necessary amount of labor to produce a commodity, as Marx defined exchange-value.) Basically, by trial and error it&#39;s determined how cheaply can a reasonably efficient business sell something and make an acceptable profit. The ones who can&#39;t, go out of business.

Which involves the competition of capitals setting an average rate of profit. You can&#39;t have true market pricing without it, gets back to my first post in this thread.

That&#39;s the market function that&#39;s truly difficult for a planned economy to substitute for. You need some very good cost accounting to figure out what society&#39;s costs really are for making something. But for the reasons I&#39;ve just given, that&#39;s unavoidable.

OK, that&#39;s on pricing. The other side is the use of the market as a guide to production decisions. To some extent, that&#39;s common sense, like I said. If lots of people are buying something, make more. If possible. Otherwise, consider raising the price, if it&#39;s not a basic necessity of life, etc. I suspect that all economic planner have actually done this to some extent.

It&#39;s also a quality-control indicator, I guess - if people are buying one factory&#39;s product over another, the second one probably has a quality problem. And it&#39;s quality, not quantity, that&#39;s been the main problem for postcapitalist economies so far. The USSR achieved amazing industrial growth rates during the 30s, but nobody wants to buy a Yugo, let alone a Lada. Their material incentives probably didn&#39;t do real well at motivating people for quality - it&#39;s hard to set up a bonus or piecerate system that measures quality. Probably the main reason that capitalism doesn&#39;t use piecerate more.

That&#39;s another function of the market - businesses that produce crap risk going out of business. Again, difficult for any postcapitalist society to make full use of this, esp if you don&#39;t want to link the market to material incentives. It could be an indicator to alert planners to particular quality problems, like I said.

But ultimately I think it&#39;ll be moral incentives that will be decisive here. People know if they&#39;re making crap. And workers generally don&#39;t want to IMO - you want to take pride in your work - it&#39;s production pressure or cost-cutting from above that usually leads to poor quality. Stalinism couldn&#39;t rely on worker initiative here or in other respects of course.

In any case, I think the market can only be a guide considered by planners. Social priorities will sometimes override what the market or pseudo-profitability tell you to do. That&#39;s a question of values - gets back to my
first post.

I don&#39;t expect perfection, which is why I&#39;ve always said the market will continue to function for an extended transition period. But I don&#39;t favor turning a necessity into a virtue, if it undermines socialist values and the direction of social evolution we&#39;re trying to favor. And I think those values have to be the center of the appeal of socialism to the...unconverted, so to speak...as well.

Another thing to consider, BTW, is that individual/family producers as well as state and cooperative entities will be trading on the market. Seeing as how the immediate nationalization or collectivization of working farmers has always turned out to be a fiasco. Kinda hard to keep individuals from accumulating capital through trading on the market, sometimes, even when they&#39;re not allowed to employ wage-labor. Cuba&#39;s experience and the advantages and disadvantages of the different ways they&#39;ve tried buying farmers&#39; produce, or letting &#39;em sell directly to the public, might be worth examining there.

[sc4r]

Throughout you seem to be making (valid) observations which are based on the situation under capitalism, or under a socialism which is obliged to interact with a capitalist economy, and then assuming that it’s the same under socialism. Often it is not. Since your observations are generally fairly astute I’m assuming that you are not doing this out of obtuseness. That being so I hope you don’t mind if I reply in a fashion which I don’t usually like doing because it reeks of argumentiveness – i.e. paragraph by paragraph. I think this is the best way to communicate where I think you may be mistaken.

Market demand is a measure of people&#39;s willingness and ability to buy something. Given economic inequality - which will persist through the first phase of communism - this is not the same as what people want.

We are talking of a socialist society and you are assuming unequal purchasing resources? How? Why? If you are talking of non-socialist situation then no theory of socialist economics is going to work. All of them will be flawed. It is true of course that if you (probably sensibly) assume that any new socialist society will still retain some economic holdover from the old order that neither a socialist market nor anything else will result in complete fairness. What you do is to bring as many commodities as possible within the Socialist market and only allow them to be traded for newly issued socialist money (which of course you can distribute fairly). If some people are able to obtain and use other currencies then of course a black market (and probably currency trading) will go on, you can outlaw this, but probably you cant stop it entirely. However the imperfection of this arrangement is exactly equivalent in any type of socialist distribution system; while the advantages of having a socialist market also remain proportionally important and useful.

Examples: Millions in the world today want and desperately need more food; as they don&#39;t have the money to buy it, this does not translate into market demand. There&#39;s a great shortage of housing in many cities as it&#39;s more profitable to concentrate on building fewer units of luxury housing - there&#39;s more market demand for that, in other words.

Yes, but they are competing in the capitalist market and living in a system which permits very unequal distribution of purchasing power. That’s exactly what Socialism eliminates. The point about a socialist market in consumer goods is that all potential buyers have equal purchasing power in total. So the market price really does reflect need. basically the higher the price the greater the unsatisfied need must be, because otherwise people would not &#39;bid&#39; high.

When you talk of production goods the situation is a little different (but BTW even more difficult to get right without a market). Here, since it is production concerns &#39;bidding&#39; against one another the purchasing power is not necessarily equal*. Here a large and successful concern (for which read one which is satisfying many consumers) will have more to spend than a small unwanted one. But in both cases the extent of their bid for a product will reflect the extent to which they feel this product will help them to actually become more efficient producers. There really is no other efficient way of determining which concerns should get which production goods.

So sometimes economic planners have to produce more of a basic necessity than the market would demand, and sell it at sub-pseudo-profitable prices. This can involve rationing, as in Cuba, or not; this is not really new or speculative and does reduce retail prices. Has its downside, yes, as with most things.

Same comments as before. Cuba’s economy is strongly interconnected with the word wide capitalist economy in many different ways. Cuba is not a prosperous socialist state or one isolated from other non socialist currencies.

What happens is that the demand for necessities in Cuba would indeed be properly reflected by market prices (expressed in socialist currency don’t forget) And no economic planner would ever wish to produce more (because by definition the amount demanded by the market is the optimum assessment of how important various ‘necessities’ are). Cuba rations such necessities for several reasons :

1) it does not operate a full market socialism anyway. It is still partly a command economy and as far as small producers are concerned still partly capitalist.
2) The demand price in Cuba would be inflated by the fact that some people have access to non socialist money and are able to trade this for &#39;socialist&#39; money. These people would of course be able to ontain a disproportinate share of necessities by virtue of this.

Hence rationing is an accomodation to the fact that the rest of the socialist set up is poor. But again any non market system faces the identical problems. I&#39;m not saying &#39;ignore practical realities where they conflict with theories&#39;. Full Socialism with a full market is better than full socialism without; and part socialism with a market and with tweaks is better than part socialism without and with tweaks, is what I&#39;m saying.


Another example: presumably there must be some demand for lobster in Cuba. But the decision has been to sell Cuba&#39;s lobster catch on the world market, instead, to get the foreign exchange to buy powdered milk which is rationed to children. Seems correct to me irrespective of what the market says.

Society ultimately decides what actually comes onto the market, because it is after all society that is providing the investment funds. In the case of Lobsters it’s an odd situation, and in effect society would have said ‘we can face the reality that we need outside funds and that we have a product which can fetch a very high price outside, if we make it available on the internal market we wont be able to get those funds, so we will not make this particular product available. Another way of looking at it would be to say that the outside market price was allowed to determine the internal market price in this situation (which would therefore make it very high). Again this situation is caused because Cuba is not a prosperous self sufficient socialist economy.

Now on the other side of market pricing, supply. This relates to cost of production. Under capitalism, each business may do its own cost accounting, but that isn&#39;t decisive. Ultimately the market sets a socially necessary cost of production. (or socially necessary amount of labor to produce a commodity, as Marx defined exchange-value.) Basically, by trial and error it&#39;s determined how cheaply can a reasonably efficient business sell something and make an acceptable profit. The ones who can&#39;t, go out of business.

Which involves the competition of capitals setting an average rate of profit. You can&#39;t have true market pricing without it, gets back to my first post in this thread.

Of course you can. Market pricing has nothing directly to do with cost of production whatsoever. Its true of course that if you cannot produce a thing cheaply enough to sell it at a price which people find acceptable relative to all the other things they might otherwise have then by definition its not worth producing (and hence you go out of business). So? If you are suggesting that some things should be produced anyway then all you are doing is saying that people are incompetent to judge for themselves what they want/ need and balance their own requirements against their budget. You cant make stuff affordable which is not without making something else which should be affordable non-affordable. All you would be doing is conning people about what they actually can have rather than letting them decide honestly for themselves. They may have to face unpleasant truths square on (like that a decent healthcare system cant be afforded at the same time as champagne), but that’s part and parcel of giving people responsibility and genuine information.

Capitalism also does not function by setting ‘an average rate of profit’. Individual businesses may demand this for separate product lines, but I can assure you that this simply means they wont produce things which cannot achieve this rate (because this is the return the business owners say they could get elsewhere). What all capitalist look for is opportunities wherea price can be charged which is above the ‘average rate’; and when they find such opportunities they do charge the higher rate.

The market does not set the cost of production. All the market does is reflect the price people will pay and by doing so allows one to screen out (discontinue) those products where this price falls below the cost of production plus acceptable profit.

You can calculate an average profit margin. Capitalist wont want to be in businesses below this rate. But it is not ‘set’ by the market for individual commodities except in the sense that over time a commodity which generates demand prices above this average rate will attract in new capital so that the demand price falls.

That&#39;s the market function that&#39;s truly difficult for a planned economy to substitute for. You need some very good cost accounting to figure out what society&#39;s costs really are for making something. But for the reasons I&#39;ve just given, that&#39;s unavoidable.

Yes to figure out the cost of production you need decent cost accounting, the better it is the better your planning will be; but that’s true of absolutely any model.


It&#39;s also a quality-control indicator, I guess - if people are buying one factory&#39;s product over another, the second one probably has a quality problem. And it&#39;s quality, not quantity, that&#39;s been the main problem for postcapitalist economies so far. The USSR achieved amazing industrial growth rates during the 30s, but nobody wants to buy a Yugo, let alone a Lada. Their material incentives probably didn&#39;t do real well at motivating people for quality - it&#39;s hard to set up a bonus or piecerate system that measures quality. Probably the main reason that capitalism doesn&#39;t use piecerate more.

You cannot discuss quality separate from costs. You can always increase the quality if you are prepared to increase the costs. The question (which a market answers) is to find out where the best balance lies as far as people are concerned..

That&#39;s another function of the market - businesses that produce crap risk going out of business. Again, difficult for any postcapitalist society to make full use of this, esp if you don&#39;t want to link the market to material incentives. It could be an indicator to alert planners to particular quality problems, like I said.

Why? If you produce crap (ie stuff few want at a price which balances costs) in socialist market then you eliminate that producer. Why would you not want to? By definition such a producer is not making good use of social resources. They are, by definition, squandering resources.

But ultimately I think it&#39;ll be moral incentives that will be decisive here. People know if they&#39;re making crap. And workers generally don&#39;t want to IMO - you want to take pride in your work - it&#39;s production pressure or cost-cutting from above that usually leads to poor quality. Stalinism couldn&#39;t rely on worker initiative here or in other respects of course.

Sorry but this is simplistic. It assumes that there actually is a predetermined required quality level independent of price. There is not. I’m quite sure that everybody would want to be working on Rolls Royces and producing this quality. But the reality is that the guy who assembles Lada’s does just as important a job. He isn’t necessarily cutting down on the quality, he is simply producing a different product to a different spec, because this spec reflects the balance of features and price which many feel is appropriate to their total spending power. If you encourage people to feel bad because they are not working to ‘the highest spec imaginable’ you are going to end up with a society which feels like shit because it cant ever seem to get enough of anything, or in which shortages are endemic but a few fortunates eat caviar. It ignores balance you see; and you never can.

A rolls royce is not per se a different quality to a Lada. Its a different product. The Lada could well be of higher quality even though it has lesser features.

It is a common fallacy to discuss &#39;quality&#39; as if it meant anything more than &#39;conformance to spec&#39; and &#39; as stated on the packet&#39;. Any quality manager will tell you that this is the only quality measure that means anything. Anyone producing to this objective quality can and should feel proud of the job they are doing.

Its true, of course, that some capitalist entities do depress their workers by cutting corners where the worker knows they should not be cut. This is rather different. You can bet your life the marketing people advertise the non-cost cut quality, not the actual one. What any sensible producer (socialist or capitalist) does is tell his workers what quality means TO THEM. This means letting them know what quality level they are supposed to be achieving and making it clear that this is the quality which is advertised., and prasing them if THIS level of quality (the advertised one) is achieved. I felt just as fulfilled making cheap furniture as I did expensive sorts. Both fulfilled a need. SO LONG AS I COULD BE CLEAR TO PEOPLE THAT I WAS NOT TRYING TO TELL THEM THAT THE CHEAP SORT WAS AS GOOD AS THE EXPENSIVE SORT.



In any case, I think the market can only be a guide considered by planners. Social priorities will sometimes override what the market or pseudo-profitability tell you to do. That&#39;s a question of values - gets back to my
first post.

I’m not completely sure what you mean I’m afraid. I think I agree. The market can only tell you the relative desire for existing products/ services. It can’t tell you anything about potential ones. If this is what you mean by social priorities then you are right. But if you mean that when people say ‘a medical service is worth £5 to us’ that ‘planners’ should say ‘nope we intend to spend £10’ then I’d ask why the planners feel they should ignore the relative preferences of people as they actually have just said they are.


I don&#39;t expect perfection, which is why I&#39;ve always said the market will continue to function for an extended transition period. But I don&#39;t favor turning a necessity into a virtue, if it undermines socialist values and the direction of social evolution we&#39;re trying to favor. And I think those values have to be the center of the appeal of socialism to the...unconverted, so to speak...as well.

Why? A market is a virtue not a necessity. It provides information about what people actually want which you simply cannot get any other way. In what way does it undermine social values? All it does is allow people to decide for themselves what they actually want. It doesn’t do anything else.

Another thing to consider, BTW, is that individual/family producers as well as state and cooperative entities will be trading on the market. Seeing as how the immediate nationalization or collectivization of working farmers has always turned out to be a fiasco. Kinda hard to keep individuals from accumulating capital through trading on the market, sometimes, even when they&#39;re not allowed to employ wage-labor. Cuba&#39;s experience and the advantages and disadvantages of the different ways they&#39;ve tried buying farmers&#39; produce, or letting &#39;em sell directly to the public, might be worth examining there.

You are again talking of a mixed economy. Yep if you allow such a mixed economy you may have problems with incipient capital accumulation. But that’s feature of allowing such an economy not anything to do with the market.

best wishes.

P.S. Thanks for allowing me to state the case without rancour between us. I may not have convinced you of the extreme merits of a socialist market but you have allowed me to try and have made genuine observations. The failure if you still cannot see it is mine in that I have not explained well enough.

Yhanks again. all the best.

* I can concieve of a way that even this would not need to be a problem. If all &#39;business to business transactions&#39; were allowed without any requirement for a cash payment and simply used in determining the end &#39;value&#39; component (total purchases - total costs in a socialist framework) then no fledgling business would be at a disadvantage. I confess I&#39;ve never thought of it this way until re-reading your comment prompted me to do so; so there may well be a flaw in this idea. Feel free to comment.

But the business to business cash transaction via a market definitely does work, and whats more is almost essential to produce efficient &#39;business to business&#39; transfers in an economy of any significant complexity at all. Without it you need people at the centre with superhuman powers of understanding into a complete maze of multiple businesses. The problem with no centre and no market (as some anarchists suggest) is almost beyond calculation so improbable is it that a halfway efficient distribution of production goods would occur.

[Severian]

OK, I&#39;m going to respond to some (not all) of the particular points, but without quotes (too much cutting and pasting, and hopefully you&#39;ll know what I&#39;m responding to. *** to mark where I&#39;m responding to different points.

I&#39;m looking at the problems of the transition to socialism because that&#39;s what we know the most about. There&#39;s some actual experience with it, so it&#39;s not a wholly abstract, a priori discussion.

And really, this whole issue comes up because of problems observed during the transition period. That is, the economic problems and inefficiencies of postcapitalist economies, mostly Stalinist-led. That&#39;s what gives von Mises&#39; criticism of socialism, his claim that economic planning&#39;s impossible without the market, so much credibility - that it seems confirmed by results. (And it seems to me that&#39;s part of what you&#39;re influenced by, and you&#39;re attempting to come up with a response to it.)

That&#39;s why I&#39;m interested in the question of the market, because it&#39;s an aspect of the problems of the transition period. I guess part of your interest has to do with anarchism? It&#39;s achilles heel IMO is the lack of any provision for a transition period. Poof&#33; The state is smashed&#33; End of story&#33; IMO reflects a lack of seriousness about actually getting there, as opposed to dreaming about a beautiful ideal.

And IMO the market can have the biggest role during the transition period, and second in socialism. Communism&#39;s characterized and defined by "to each according to his needs", which implies the end of wages, money, and buying - take what you need - so I don&#39;t see how the market could continue to exist then.

***

Yes, there will be economic inequality under socialism. It&#39;s characterized by "to each according to his contribution" - that is different wages according to productivity, skill, training and education, etc. This can only be ended at a level of consciousness that enables society to do away with material incentives altogether - and at that level of consciousness, you can go to "to each according to his needs", so it becomes a moot point.

At no time can there be precise economic equality, as people differ in both their contributions and their needs. Equality can mean the abolition of classes, but not cookie-cutter levelling.

***

Yes, prices are not set "directly" by production costs, but the connection is not all that indirect. The relationship is, IIRC, accepted by bourgeois economists, and on the Marxist side there&#39;s the labor theory of value. (Actually, that was created by a bourgeois economist too, David Ricardo.)

On the average rate of profit, it&#39;s set by competition, like I said. Capital is invested in businesses where it earns a higher rate of profit, and taken out of those where it earns a lower one. This is an important point, and I don&#39;t think you really understand what I&#39;m saying...to some extent, I don&#39;t know enough third-volume-of-Capital stuff to explain it better than I have.

I think the von-Mises people actually have a fairly similar explanation of why a true market, and above all true profitability is only possible with capitalism, it might be of some use to you to look at that.

My point there was not about producing things that cannot be economically produced. It is about how, without capitalism, the market cannot give one piece of information that postcapitalist economies have often lacked, more than information about demand: costs of production.

***

OK, first on the quality problem generally: a lot of postcapitalist economies made a lot of stuff that did not meet any kind of specifications. At least, I have a hard time imagining a set of specifications that would allow something that crappy. Those cars broke down CONSTANTLY.

Meeting specifications is not a trivial problem in production. The whole specialty of quality control is, supposedly, about ensuring they&#39;re met. And I can tell you from experience that they ain&#39;t always. Even in aircraft maintenance, it&#39;s not unheard of for supervisors to tell people to break rules and cut corners. Actually, there were routine technical rule violations.

I do not think it is simply a problem of resources. Cost-cutting is the major source of quality problems under capitalism, but I doubt this is the case in postcapitalist economies. For one thing, the major form of cost-cutting is reducing the workforce and speedup. In contrast, padded workforces and relaxed paces of work are common in postcapitalist economies.

And again, IMO quality rather than quantity is THE major problem to be solved.


Why? If you produce crap (ie stuff few want at a price which balances costs) in socialist market then you eliminate that producer. Why would you not want to? By definition such a producer is not making good use of social resources. They are, by definition, squandering resources.

Well, one, it&#39;s politically difficult. You&#39;re throwing people out of work. They are not happy about it. Postcapitalist economies have always had trouble with firing people, even individually, let alone en masse. That&#39;s their major individual incentive problem compared to capitalism, BTW, no fear of unemployment.

Two, it leads back toward market-determined material incentives, which you said you didn&#39;t want, and which I pointed out some problems about in my first post in this thread.

If you&#39;re not successful in the market, you lose your job. This is a powerful negative incentive, even if it&#39;s easy to get another one, and even if the new one pays the same. You might have to move, definitely have to adjust to a new situation and learn new skills (stress) and as new one on the job, will probably have a lower status, at least informally. Especially strong for managers (and the worker-manager distinction will unfortunately persist to some extent for a while.)

If you&#39;re successful in the market, you keep your job. The place expands, giving you more job security. For the managers, even if they don&#39;t get a higher wage for managing a bigger place, this means an increase in power and prestige. Which, for any bureaucrat, depends on the size of the empire they run. (A major cause of padded workforces BTW.)

***

In general, I think it&#39;s best to look at stuff as concretely as possible, with examples from actual experience. No theory can completely model real life ... and a lot of theory about the greatness of markets often seems especially disconnected from life to me.

Markets are not neutral or without class content. They reward competitive behavior and amplify inequalities - both of which undermine the development of socialist consciousness.

Many of the things we see in the world today are the product of the workings of the laws of the market, not of the malice of any individual or even government.

[sc4r]

I agree that we do indeed have to be very concerned about the transition period. But the socialist market is actually more effective and useful after that time than it is during it; because afterwards its information will not be distorted by residual capitalism.

I think you are correct to observe that during the transition period economic planning would have to include an element of ‘command’ simply in order to overcome those distortions. Thanks I’d never thought of that, and it’s a valid point.

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I have read Von Mises, and yes, I’m somewhat influenced by what he says. Some of it is actually valid. An awful lot is not, mind. His methodology is bloody awful and he makes unwarranted leaps pretty frequently.

He did not, as he claims, ‘prove that socialism cannot work’; he did not even prove that a market (which, BTW, he implies must be the capitalist market - by omitting to highlight that what he says applies to any market) is needed to govern production of consumer commodities. But he did show fairly convincingly that managing production goods is absolutely fraught with problems in the absence of a market.

Happily however, there is, as I’ve been trying to show, another sort of market (the socialist market) to which Von Mises’ criticisms don’t apply.

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I’m not really interested in Anarchism. I regard it as a rather lovely looking idea with no substance. Years of asking Anarchists to explain it, and getting in return nothing but ultimately meaningless and self referential dogma, have persuaded me that they have not actually got a bloody clue.

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Sorry production costs genuinely don’t have any influence on price whatsoever. You could make it so of course (as is suggested by many communists) but this then means that you get no indicator of what needs/wants actually are, or the strength of them.

If a competitive market (socialist or capitalist) is operating then it is, of course, true that you wont see products available which are priced below cost for any length of time. But this is because it indicates that people would rather have something else for the same cost (not price).

So yes there is a connection, but not the sort of causal connection you are talking of.

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An ‘average rate of profit’ is not set by anything. It’s simply the result of dividing all prices achieved by all costs

A ‘minimum desired rate of profit’ may be demanded (set) by an individual capitalist from any business he chooses to invest in. In effect he is saying ‘don’t even bother to try and sell below this figure’. But all that happens if this rate cant be achieved is that the business folds.

Don’t confuse ‘offer price’ with ‘market price’; which is what you are in effect doing.

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No the market tells you absolutely nothing about costs of production. So what? I’m not saying that a market solves every problem, only that it solves some which are not really solvable any other way.

You cant knock an idea because there are things it does not do, unless you have a different idea which not only does these things but also does everything the original one does.

A market does not in any way interfere with calculating production costs of course.

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I don’t think I said meeting objective quality standards was trivial. I said it was different from meeting a higher spec. Nor did I say that capitalists don’t cheat and make it hard, or impossible, for the supposedly demanded (and advertised) spec to be achieved.

The difference matters because to create a Rolls Royce to spec costs a lot more time and materials than to create a Lada to spec. Its all very well and good our post-capitalist worker deciding that he is going to make ‘the best car imaginable’ but I cant see him getting thanked for this when 9/10 people end up having no car at all as a consequence. Can you ?

The spec is in effect set by the market.

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AS to throwing people out of work. So what? They go off and find other work, that’s the idea. If you are going to allow people to continue working at things which people don’t really want you actually do create not only inequality but also send your society on a downwards spiral.

You can’t have perfect loveliness for all, all the time I’m afraid. Certainly not in anything but a totally stagnant society.

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Why do you say that a market will lead to material disincentives. There is absolutely no reason why it should.

If everyone in a Socialist society is given exactly the same disposable income then the market operates just as perfectly.

You COULD allow some, or all, of a person income to be market determined. But you don’t have to. You COULD make it dependent upon what they are producing, but you don’t have to.

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Why do you say a market ‘amplifies’ advantages? AS explained above it does not have to even reflect them , much less amplify them. I think (in fact I know) that you are still caught up in thinking of a market as meaning something which must have features of the capitalist market in it, and worse you are also assuming that for some unexplained reason certain capitalist ‘rights’ are retained. There is of course no reason why they should be.

The problems and inequalities we see today actually result from the fact of what rights our current society will defend, and allow to be traded in a market. The ‘market’ itself only provides a way of measuring demand for those rights. Because it’s a capitalist society, with very unequal distribution of disposable funds, this of course means demand from money not demand from people.

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Best wishes.

P.S. Try explaining what &#39;to each according to his needs&#39; means in objective terms and you will see why a market is wanted. Its one of those phrases that only seems reasonable if you do a sort of double think on it so that you interpret &#39;needs&#39; as meaning two completely different things at exavtly the same time.

To make it sound plausible it means something like &#39;basic needs&#39;.

But to make it sound attractive it has to mean something like &#39; whatever he/she wants&#39;. Which in a situation of non infinite resources is clearly impossible.

But put in the context of a market and it can actually mean something sensible and non-contradictory. Then it can mean &#39;a fair share of societies total output with precise details of what products are included for any individual decided according to how much an indiividual judges he needs it - If you decide your needs are those which are in abundant supply you can probably have all of them; but if your &#39;needs&#39; include a rare and desirable product you will, in the interest of fairness have to forego other things to get it&#39;.

In fact &#39;to each according to his needs&#39; actually cries out for a market mechanism in order for it to actually make operational sense.