Market Socialism: An Overview

Against the Current, No. 12-13, January-April 1988

David Finkel with Samuel Farber

THE DEBATE ON “market socialism” is not fundamentally over economic efficiency or technique in a narrow sense; nor is it triggered primarily by academic curiosity over the abstract model of a future society. It is at bottom a debate about what makes socialism popular and democratic and a response to real conditions confronted by real social movements, East and West, aspiring to freedom from exploitation and oppression.

In the capitalist world every great struggle for democracy and social justice, every labor upsurge and every revolutionary upheaval includes a demand for a greater degree of collective economic control. The operation of the capitalist market is inextricably connected with exploitation and inequality, with periodic crisis and mass unemployment, with the subordination and special oppression of national and racial minorities and women.

Yet in the bureaucratic states, something called “planned economy” seems to be associated with chronic stagnation, shortages, suppression of working-class rights and-increasingly-technological and financial dependence on the West.

While revolutionary socialists differ in their assessments of how much or little economic and social progress was produced by the Soviet industrialization process, it is empirically clear that both attempts at reform-from-above and periodic powerful social movements from below in Eastern Europe are responses to systemic failures. Both tend to turn to market mechanisms of one kind or another.

The term “market socialism” does not refer to one coherent program. Rather, it covers a fairly wide range of hypotheses, general or technical, for overcoming the sterile duality of destructive market versus dysfunctional bureaucratic economics.

The debate is complicated by the fact that proposals for “market socialism” have not only numerous technical variants but also, and more importantly, differing social content.

As a program for bureaucratic restructuring from above, “market socialism” keeps political power far away from workers, and may even entail a sharp attack on their customary workplace rights and wage scales. (In this connection, see Hillel Tiktin’s and Susan Weissman’s comments on Gorbachev’s perestroika in ATC #I0.)

On the other hand, movements for change from below may see “the market” as a way to break the bureaucracy’s stranglehold on the production process — a potentially fatal blow to its rule. The debate thus touches on fundamental problems of democracy and power.

Contradiction in Terms?

In any form, however, the very notion of “market socialism” encounters strong prejudices among revolutionary Marxists and for solid reasons. “Market socialism,” like “liberation theology,” appears to embody hopeless contradictions. If “socialism” means human beings taking control at last over the productive apparatus to establish conscious direction of the forces that determine the future of our society, then “market” means the very laws and institutions that make such conscious control and direction impossible. To embrace the market means to renounce the socialist goal, to concede that the vast majority of human beings will be permanently separated from the ability to control their destiny.

For revolutionary Marxists, for whom the term “revolutionary” denotes uncompromising opposition to both capitalist exploitation and bureaucratic dictatorship, the alternative vision has been democratic planning, or “self-managing socialism,” with power residing ultimately in workers’ councils and associated mass institutions of democratic popular power. On the level of vision, there may be no need to say anything further and certainly no need to embrace as problematic a notion as “market socialism.”

However, if we want to engage ourselves in the discussions of those who are waging the actual struggles to democratize the bureaucratic societies, we will have to look more closely, at least, at how they view, rightly or wrongly, the liberating potential of “the market.” In the process, we may encounter some challenging questions as to what our own vision of self-managing socialism might look like in practice.

First, we should keep in mind developments in Poland. One of the devastating consequences of Stalinism in that country is that very few people believe that there can be such a thing as democratic planning. The discredit of socialism (and the left) has reached such a degree that even the term “market socialism” is not used. Instead the market, pure and simple, is praised.

The Polish Solidarity mainstream would like to see a market economy somehow coexisting with worker self-management in what is presently the state sector. However, since the mainstream leadership of Solidarity also advocates the creation of a “capital market” one wonders for how long the public self-management sector could maintain its hegemony.

But let us quote directly part of a recent statement called “On Wages and Prices: A Joint Declaration,” which appeared in Tygodnik Mazowsze on 28 Jan. 1987, no. 196 (cited in Committee in Support of Solidarity Reports, no. 50, 31 March 1987). This statement was signed by the Temporary Coordinating Commission, the Temporary Council of Solidarity, and by Lech Walesa:

“We demand an immediate and radical transfer of material and investment funds from ‘production for production’s sake’ to production of consumer goods for the people. We do so knowing that such a policy, if imposed from above in our present centralized economic system, will only be a palliative measure to slow down the erosion of living standards. We therefore reiterate in the strongest terms our position that genuine economic reform is necessary to achieve lasting positive change in the Polish economy.

“Reform should be based on principles of a market economy. The State’s monopolies must be given equal standing and the state sector must be made subject to control by worker self-management councils. Such reform should be accompanied by clear and simple regulations for the formation, division, and closing of economic enterprises; breaking the monopoly over banks; and creating institutions that can build a capital market.”

Second, and if anything even more important, the Stalinist and nee-Stalinist model of state socialism seems to have exhausted itself at least at the level of ideas; first in Yugoslavia, then Hungary, China and now, Gorbachev’s Russia.

Most of these countries have not abandoned in practice the old state socialist model. But if they still practice it, they no longer defend it in ideological terms.

The one major exception seems to be Fidel Castro who has, during the last two years, abolished the relatively minor market-type concessions (for example, the farmers’ markets in the cities, construction of private housing} that he allowed in the early 1980s after the shock of the Mariel exodus. Castro has also gone on an ideological offensive on these issues including implied criticisms of the Gorbachev reforms.

A Many-Sided Debate

The direction of the Soviet Union and China today is not the specific topic of the following essays on the market socialism debate. Later this year, Against the Current will publish several articles on the Gorbachev and Teng reforms, human rights, the status of Soviet Jews and related questions. Here, we are concerned more broadly with market socialism as a theoretical construct and with what it might have to contribute to our understanding of the kind of society the working class might begin to build when it has taken power.

These articles by no means exhaust the many sides, pro and con, of the debate on market socialism. We present them as the beginning of a discussion. They should be read in that light, not as representing the views of the editors.

Les Evans’ essay presents a sharp challenge to the anti-market orthodoxy of the revolutionary Marxist tradition. Drawing upon and extending the work of the economist Alec Nove, Evans argues the case that some of the failings of existing planned economies must be located in overambitious planning itself and not simply in the bureaucratic regimes created by Stalin’s counterrevolution. That is to say, total planning is likely to produce nearly total disaster, no matter who attempts it.

At the same time, Evans faces up to what many dreamy proponents of mixed economies try to wish away-the fact that market relations promote private accumulation, growth of inequality, and the rise of social interests that will inevitably seek to dismantle altogether the foundations of socialized property. For Evans, democratic working-class socialism will require a long-term balancing act to hold in check both bureaucratism that grows organically from economic planning and capitalist­restorationist forces that will be associated with market sectors.

That this is a highly controversial perspective on the construction of socialism goes without saying. Evans proposes in essence that the working class, after a successful conquest of power, must consciously restrain its impulse to extend its collective power over the whole economy, even if it has the power to do so; if it fails to limit itself in this way, it will run the extreme risk of losing all its power to planning mechanisms beyond its control.

Mel Leiman offers a perspective that defends the historical experience of central planning. Stalinism deprived the working class of control over the nationalized property established by the Russian Revolution. Nevertheless, for Leiman, the progressive nature of economic planning is borne out by the substantial development of Soviet productive forces.

The establishment of workers’ control in the Soviet Union would amount to a “political revolution” as distinct from the social revolution needed in the West against capitalism. In this model, the Soviet experience is viewed as fairly successful in economic terms and any positive role for the market would be at most transitory.

Milton Fisk discusses socialism and the market in relation to various and potentially conflicting priorities. The market offers the potential for the least restricted fulfillment of liberal priorities, such as consumer choice. Social (collective) property, on the other hand, can embody two different kinds of relations.

Producer property corresponds to the relations of democratic planning under workers’ control, which is likely to maximize the values of social justice and equality with some possible sacrifices of economic efficiency and satisfaction of liberal priorities. State property corresponds to relations of bureaucratic domination-roughly speaking, what the workers of Hungary in1956 and Poland in 1980-81 were rebelling against.

Thus Fisk, like Evans, sees certain desirable priorities in potential conflict with each other. Fisk, however, suggests that under a system of producer property, democratic working-class planning is a possibility without massive concessions to the market. While posed in somewhat abstract terms, Fisk’s discussion appears to fit into a fairly “orthodox” democratic-Marxist framework.

[Readers interested in pursuing the issue further may wish to read Ernest Mandel’s critique of market socialism in New Left Review 159 (Sept.-Oct. 1986).]

January-April 1988, ATC 12-13

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