A Letter to the ATC Editors

George Fish

A BRIEF LETTER doesn’t allow much space to speak on markets and planning under socialism, but perhaps these few notes will help clarify the issues.

When we specifically address the economic concerns of socialism, we come right back to what the advocates of “market socialism” have so pointedly made about Soviet-style economic planning. While such a command economy may be quite useful in the early stages of economic development in mobilizing and utilizing previously unused or under-used economic resources, it is not capable of responding well to the economic needs of a more advanced, more complex economy where most economic resources are used to capacity. Hence the history of economic stagnation and then sharp decline in the economies of “already existing socialism,” which quite simply couldn’t deliver the goods needed and demanded.

What a planning mechanism has to do, through rational conscious decision, is to equilibrate supply and demand with the same effectiveness they are equilibrated spontaneously through the market. There certainly are problems with markets, even in the equilibration of supply and demand. But markets have proven themselves to be both useful and functional to a very high degree within human society for over 5,000 years. So it should give one pause before deciding to abandon them in favor of a planning mechanism that has not proven to even be efficient, yet alone advance workers’ control, equality, etc.

David Schweickart mentions in Against Capitalism that in the former Soviet Union there were 50,000 goods producers producing some 12,000,000 different commodities. What needed to be done through rational, conscious planning was simply equilibrate supply and demand (i.e., make the number and supply of goods exactly equal to the demand for the number and variety of goods desired by all consumers, industry and individuals alike), which is akin to determining equilibrium values in a system of equations with at least 12,050,000 variables! (I say “at least” because we’ve left out both supplies and varieties of raw materials and intermediate goods that would necessarily also need to be considered.)

A market system “solves” such a system spontaneously, through the direct choices of the economic actors — not always perfectly, of course, but better than any system of direct economic planning yet developed. And such a planning system would only be called upon to duplicate through directed, conscious effort what the market does through spontaneity.

Marx and Engels were not of much help on the economics of a socialist society. Aside from some generalities of what constituted socialism in Marx’s “Critique of the Gotha Program” and a few other writings, and Engels’s insistence that socialism required planning, with the ideal as he saw it being the planning mechanisms of the capitalist cartels of Germany, the economic problems of socialism were not significantly broached by Marxist writers until Preobrazhensky’s The New Economics in 1926.

Then the whole debate over appropriate planning and other mechanisms for socialism (which was not so much a debate over socialism as such, but how to use market and collectivist means to economically develop the fledgling U.S.S.R.) was scotched by Stalinism, and what work was done on the matter was overwhelmingly done by “bourgeois” economists, i.e. those specifically trained in “mainstream” economics, even if they were socialists.

(web only, August 2009)