Chris Harman


Market farces

(March 1988)

From Socialist Worker Review, No.107, March 1988, pp.8-9.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

“WE’RE ALL marketeers now.” That, it seems, is the slogan of the soft left Labour and Eurocommunist left. And it does not refer to just the EEC which they now extol, but also to the “free market” so beloved of the Thatcherites.

So most of the critics of Neil Kinnock and Roy Hattersley’s Statement of Democratic Socialist Values accepted the market, but then went on to call for the state to intervene where it “failed”. Tribune, for instance, argued that “worse” than the “free market” is “centralised planning”.

Those who reject the “social market economy” are all into the “socialist market economy”. It seems that only a dinosaur would dare disagree. After all, if the bureaucrats who run Russia now admit central planning can lead to stagnation and inefficiency, how are those who used to admire their methods to dissent?

All of this presents some of us with a dilemma. We never liked the Russian system. Forty years ago Tony Cliff published a book which argued that it was a state capitalist society not a socialist one. Twenty five years ago he added to it, showing how Russian economic growth was slowing down and bureaucratic waste abounded.

But dissent we must from any claim that somehow the “market” is better.

The market is a way of describing what happens when goods which are produced completely independently of each other are brought together and exchanged on a regular basis. To say the market is intrinsically superior to a planned economy is to insist that the blind interaction of the products of human labour must be superior to conscious control over them.

The argument rests on three dubious assumptions.

First, that left to themselves human beings will produce goods that other human beings do not need.

Second, that human beings have and always will resist producing things efficiently and well in the absence of outside pressures.

Finally, that because they are innately lazy, human beings will not work unless compelled to.

The market, it is said, overcomes all three problems. People who do not work hard enough, who produce unwanted goods or who do not adopt the most advanced techniques will get less money for their goods and will soon, alter their ways.

Work is automatically related to demand for its products, through what the classical bourgeois economist Adam Smith called “the hidden hand”. This replaces the immense effort that conscious human regulation would involve.

Adam Smith wrote at a time in history when his model was closest to reality. In Britain agriculture and industry were both organised in smallish units, and those which did not work flat out on the basis of the most up to date techniques were eventually driven out of business.

But even then the market did not operate as smoothly as the theory claimed. Its “efficiency” depended on the devastation of the lives of millions of people.

Hundreds of thousands of handloom weavers were driven into destitution by the sudden rise of machine production which reduced the value of their output.

A million Irish peasants died of starvation because the failure of the potato crop meant they could no longer feed themselves after they had paid their rents.

From the 1820s onwards the blind competition of capitalists with each other led to periodic recessions in which hundreds of thousands of people were suddenly thrown out of work. The rapid growth of production sucked large numbers of people into new industrial centres without providing the basic facilities needed to keep them fit and healthy for work and to produce the next generation of labour power.

Since Smith’s time the waste involved in the blind running of the system has grown ever greater.

The logic of competition is that efficient units of production drive inefficient ones out of production and grow at their expense. What Marx called the “concentration” and “centralisation” of capital occurs – an increasing proportion of production in the hands of a few giant units.

But the more this happens, the greater the damage done if one of these units goes bust. And the greater the incentive for those who run it to use trickery, fraud, persuasion or naked force to stop that happening.

They try to corner markets, they use advertising to lie about the quality of their products, they lean on governments to protect them from competitive forces, they resort to wars to extend their “national” bit of the world at the expense of rivals. Private capitalism becomes monopoly capitalism and monopoly capitalism state capitalism.

By the time this stage is reached it is certainly not the “market” that actually organises production. Within each giant company there is extensive planning of production, with the deployment of enormous and very costly managerial structures to enforce coordinated labour on hundreds of thousands of people. As Marx put it, “The anarchy of the market produces the tyranny of the factory.”

Such “planning” inside a giant firm adds to the waste of the blind competition outside it. Managers often resist costly innovations, maximising profits by relying on the sheer size of the firm to protect it from competition – such was the case with the British Steel Industry, British Leyland and in the world’s biggest company, General Motors, in the years before 1973. Where possible clever marketing techniques and political influence are used to get away with the shoddiest sorts of production – witness house and tower block building in Britain, the construction of plants like Seveso, Bhopal and Three Mile Island, the succession of drug scandals from Thalidomide to Opren.

On the shop floor workers soon learn that their interests are best served by resisting pressure for higher productivity, better quality control and new technology.

In short, the pressure of competition between giant firms leads to all the things the market is meant to cure – the production of goods that cannot be disposed of, the sabotage of much technical progress, a complete lack of commitment to their work by the immediate producers, and an outpouring of shoddy goods.

These are precisely the things which those who have carried out critical studies of the centrally run Russian economy focus on – where they go wrong is to insist they are unique to Russia.

Russia is like a single giant firm, engaged in military and economic competition with the Western states and multi-nationals. And so it suffers from all the forms of waste which arise inside its rivals.

The market is not the answer. Economic behaviour which is a product of blind competition cannot be cured by more blind competition. Even if some of the more sickly giant units of production allow themselves to be driven out of business by their more efficient rivals (and in the last 15 years very few have), it will not be long before those rivals in turn are suffering from the same ailments.

There is only one way to escape from such waste. It is for the economy to be run by the immediate producers themselves. Once in control of the process of production they would have no interest in wasting effort on producing goods that no one wants, on turning out goods of low quality, or resisting innovations that would make their work easier.

After all, even in existing capitalist society when people produce for their own immediate consumption none of these sources of systematic waste exist: you rarely find people cooking themselves meals when they are not hungry, deliberately burning the food or shunning the use of a mixing machine to lighten the effort involved.

Those things the market is supposed to protect us against are a product of what Marx called “alienation” – the separation of people from control over the products of their own labour. You cannot end them by raising alienation to a higher degree, but only by tackling it at the root, through a conscious reappropriation of the production process by the associated producers.

The “social marketeers” and the “market socialists” raise one last objection to this. They say that in an economy without a market there would be no price system and therefore no way to compare the production costs of different things. Waste would run riot, they claim.

But if workers were not alienated they would have no reason at all to disguise the amount of direct and indirect labour which had gone into goods, and so would provide an accurate measure of “production costs”. It would then be easy for people to get together so as to work out how to replace inefficient forms using less labour – and to do so without the devastation of lives that occurs when this happens at present.

This of course is all too much for Tribune and the soft left. For it could only come about as a result of revolutionary change. And so their alternative to the age of the dinosaurs is what came before – the age of the market swamp.

Last updated on 15 April 2010