Reviews, Socialist Review, No. 172, February 1994.
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Against the market
The collapse of the old Eastern bloc in the 1980s produced a deep crisis within much of the socialist movement in the West and the Third World. People who for years had claimed that the USSR and Eastern Europe showed the superiority of ‘planning’ over the market turned turtle and declared that there was no alternative to the market. The chorus of voices proclaiming this message reached its high point in 1990-91 – just as the market capitalisms of the West were entering their deepest crisis since the 1930s.
The conversion from faith in the Stalinist economies to acceptance of the market was often not instantaneous. For a time in the 1970s and 1980s the fashion was not so much for full blown market capitalism as for an attempt to look to a halfway house between it and the Stalinist structures, usually called ‘market socialism’. This appealed both to those seeking to maintain the old Stalinist structures through limited reform and to those, genuinely horrified by them, looking for a better model than that of the West. Today a few market socialists remain – notably Branko Horvat, the courageous Croatian social democrat recently interviewed in this Review who used to be the ablest analyst of the Yugoslav economy. But the eminent proponents of ‘market socialism’ – for example, the exiled former Polish planner Wlodzimierz Brus – had come round to the view by the time of the fall of the Berlin Wall that the halfway house was untenable. The logic of the market, they insisted, was incompatible with any form of socialist control over the economy. Socialism, Brus argued, could only survive as an ethical ideal not connected to any particular form of economic organisation.
Dave McNally, a member of the Canadian International Socialists, sets out in this book to argue the same case – but from a very different standpoint to Brus. The logic of the market undermines any possibility of rational social control over production, McNally insists. This means not that we have to abandon the fight for such control, but that it can only come about by a revolutionary transformation of society and the establishment of new economic mechanisms, quite different from those of both market capitalism and state capitalism.
An economic historian by profession, McNally develops his case by showing how the arguments about market socialism are not new. In the century before Marx wrote Capital there was a tension within political economy. Adam Smith, McNally points out, had believed a civilised society depended not only on the free play of the market, but also upon ethical standards which held people back from the most greedy forms of behaviour and provided guarantees against the impoverishment of the weakest sections of society.
Bourgeois economics after Smith, however, rejected the second part of his message. The Reverend Thomas Malthus insisted the market could not work if restrained in any way. If the poor were poor, he said in language which is still to be found in the preaching of the Tory right today, that was their own fault. Any attempt to protect their conditions would only, in fact, make them worse and undermine the prosperity of everyone else. Economists like Ricardo, who differed with Malthus on other questions, agreed with him on this. Sentiment and the market were incompatible. The rich had to get richer without any consideration for the welfare of others.
This was not, of course, a palatable doctrine to those linked in one way or another to the emerging working class movements. Robert Owen, William Thompson, Thomas Hodgskin, John Gray, John Francis Bray and Pierre Joseph Proudhon all tried to use political economy itself to refute the doctrine and to point to a more rational organisation of society. They had little difficulty in exposing the hypocrisy of the increasingly apologetic bourgeois successors to Ricardo and of getting across the message that existing society rested on the exploitation and oppression of the mass of people. But, McNally points out, they were unable to resolve a contradiction within their own thought. They began by accepting the market, and that undermined their arguments for a new society. Like the market socialists a century and a half later, they began by insisting on a society much different from capitalism – and then ended up sliding back into acceptance of the status quo.
Such was the situation when Marx became a revolutionary in the 1840s. His economic writings were a ‘critique of political economy’ in the double sense of criticising both the writings of Smith and Ricardo and of criticising the society they described. He began in 1844 and 1845 by accepting many of the points made by the earlier socialists. But he soon found he had to go further and challenge many of their assumptions if he was to overcome their limitations. That is why his first book on economics was his criticism of Proudhon, The Poverty of Philosophy.
The earlier socialists had argued it was the capitalist misuse of the market that was to blame for poverty, oppression and crises. Marx argued, by contrast, that capitalism was simply the full expression of the market. It was the system that came into existence once the market, commodification, penetrated every aspect of production, so that human labour power itself became a commodity.
Labour power was a commodity like any other, with a value determined by the amount of labour required to sustain the worker and his or her family. But once bought by an employer it had the peculiar property of being able, through the performance of labour, to produce more value, including a surplus over and above its own cost. But if one employer could extract such a surplus, every other employer was compelled to do so for fear of being driven out of business. This was not merely the basis of capitalist exploitation and capitalist competition. It was also the secret behind the capitalist drive to make workers labour even harder and to use the extra wealth created not for the interests of the mass of people but for blind accumulation. And because of this it was the root cause of the repeated economic crises which characterise the system.
If this were so, simply replacing the private capitalist by some other employer – the state or a workers’ cooperative – could not do away with capitalism. The drive to make a surplus, to compete to accumulate, and to run into repeated crises, would remain. The only way out was to do away with the most fundamental feature of the system, to stop labour power being a commodity. Workers collectively had to take control of production and reorganise it, so that their livelihood did not depend on them selling their ability to work. They had to replace the market in labour power by the democratically planned use of labour power to satisfy their own needs.
The best chapter in McNally’s book deals with the arguments used by those who claim such democratic planning is impossible. He points out that all those arguments derive from a school of economics which admitted that the market did not produce stable economies in which human beings could rationally organise their own activities, but rather a crisis riven ‘order’, characterised by great convulsions as well as great dynamism. He points out, too, that for all the talk of price signals allowing ‘rational economic calculation’, such signals could actually tell you nothing about what demand would be in a few years time for the output of investments made in the here and now.
Most importantly, he shows that democratic socialist planning does not mean, as its opponents claim, the virtually impossible task of listing in advance every item which is going to be produced. It rather means democratically deciding on priorities for the production of the most important goods that go into providing people’s livelihoods, so that these are no longer dependent on competitive accumulation and the market. Then workers can look forward to using, for their own benefit, the free time left over after producing these goods as quickly and as efficiently as possible – they begin to move from the realm of necessity to the realm of freedom.
This book is not for complete newcomers to the subject. At times McNally gets bogged down in the economic history of the early capitalist period and the intricacies of the different political economists. And the excellent chapter demolishing the opponents of democratic socialist planning could deal with some of the counter-arguments in greater depth. But it is a very valuable contribution to a very important question – indeed, perhaps the most important question facing humanity at the end of the 20th century.
Last updated on 24 February 2017