Market Socialism

Justin Schwartz jschwart at
Tue Nov 1 17:10:09 MST 1994

On Tue, 1 Nov 1994, Louis N Proyect wrote:

> Justin Schwartz:
> Thank your for the prompt and succinct answer to my questions about your
> vision of market socialism. But I do find it a little disturbing that you
> answered 'yes' to just about all of those questions, since I had raised
> what I thought would be the questions that would put market socialism
> in the most unflattering light. I guess one person's meat is another
> person's poison.

Once again the question is comparative. Is a market system with
self-managed firms, full employment for all who want to work, and no
capitalists better than capitalism? I should think that from the point of
view of anyone even remotely attracted to socialist ideas, the answer is
obviously yes.

Is is better than a planned system? Depends on what that system is like.
If the planned system approximates Marx's vision--a very short workweek,
freedom from subordination to the division of labor, so that each can do
what she likes, pretty much, abundance to the point where we don't have to
worry about costs, and labor which is so much like play that one can't
tell the difference, obviously not.

But what makes anyone think that this is an attainable ideal?

If the planned system is a cleaned up version of the Soviet system--no
secret police or Gulags, but catastrophic shortages and bottlenecks
through the whole system, waste in the form of billions of dollars of
useless products no one wants, hours of each day spent waiting in lines,
work that is alienating subordination to a plan on which one has equal but
infinitesmal input to that of 150 million of people, ecological disasters,
no innovation to speak of, full employment at meaningless makework,
rampant corruption, black and grey markets all over the place, etc., it's
not obviously superior. In fact, you won't convince anyone in America that
such a system is superior.

The task for planned socialists is to explain why their alternativbe will
be more like the first alternative than the second. Here they must answer
the Mises-Hayek critique of planning. It is no good to invoke "democracy"
as a magic wand. Democracy is very hard and rather ambiguous; what it
means must be precisely stated and how it helps must be explained. In my
view democracy would not help with the MHC on the balance. In fact, one
way to read the critique is that comprehensive planning blocks
democracy--not in that it creates a police state but in that planning
inefficiencies block the popular will.

A serious critique of market socialism will not spend its time dwelling on
the inadequacies of markets. Instead it will explain the virtues of
planning. Look, I want to be convinced. Why doesn't someone solve the MHC
and do it for me?

> A follow-up thought:
> It occurs to me that the success of Western Europe, Japan and United
> States vis a vis the former Soviet bloc has less to do with the
> efficiency of "markets" but more to do with their plunder of the third
> world which occurred over a period of centuries and which catapulted
> those countries into the modern, industrial era. The money that London
> and Wall Street banks can advance to a manufacturing plant was at some point
> in the distant past probably stolen from the Incas or the Aztecs.

That was only the start. We're not moving around the created by the Incas
any more. As Marx taught us, capitalism itself awakens hitherto unknown
productive forces slumbering in the lap of social labor.

> Certainly the free-market system has a built-in dynamism, but how would
> modern capitalism have advanced without the booty accumulated over
> centuries. Before we take Adam Smith too seriously, we should remember
> that capitalism has always been a global system.

No, not till recently.

 The wealth of some
> nations has always been at the expense of others.
The wealth of the advanced capitalist nations is sweated in no small part
from the brows of the workers living there, as well as from poorer nations.

> Which leads me to my next thought:
> Under capitalism, the countries which export manufactured goods have
> historically exploited those that export agricultural and mineral goods.
> Under market socialism, what will prevent the nations of Africa, Asia and
> Latin America from continuing their steep decline. For every 'success'
> like South Korea, there are dozens of faiures like the Philipines, Zaire,
> Bolivia, etc. It appears to me that "market socialism" would not only
> present employees of uncompetitive firms with pink slips. It would also
> reward uncompetitive nations with a similar fate.

There's a problem here. Market socialism has a partial solution: nations
will not compete with each other so fiercely, because MS firms are not
particularly expansionary. MS would not be imperialist. However, it would
also discourage market-driven capital investment overseas.

The problem, however, is faced by a democratic planned socialism. If, as
is likely, bringing the third world up to first world standards would
require a significant diminuation in the living standards of first world
workers, how is this to be brought about in a democratic society, planned
OR market? How do we create the kind of solidarity necessary for American
workers to see harm to Mexican workers as harm to them? If this cannot be
done, workers in planned socialism would resist such transfers to Mexico,
etc. and reject plans which proposed to do this. So when Mandel, for
example, imposes a requirement of international justice on his planned
model, he says nothing about how it is to be enforced. Doubtless he
supposes that the revolution will automatically create such solidarity,
but I think this is naive. The question is very hard.

--Justin Schwartz


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