Calculation Problem Again

Andrew Hagen hagena at
Tue Nov 1 21:52:35 MST 1994

Hi, everybody. I'm new, so let me just say that I'm an undergraduate
economics and philosophy major at Moorhead State University, Minnesota.

It's funny, but we were just having this argument over on COC-L, the
Committees on Correspondence list, albeit in a slightly different form.

On Tue, 1 Nov 1994, Justin Schwartz wrote:

> But the state does solve, or mitigate, problems with the market. That's
> one reason we struggle for social democratic reforms. We do, don't we?
> Face it, if we woke up in America with what they have in Germany or Sweden
> we'd think the revolution was over and we won. (This is an exaggeration.)

We're all familiar with the inflation and deficit problems Germany is
undergoing at this time. When coupled with the rise of organized crime,
prostitution, and hate crimes, esp. in what was East Germany, we have to
recognize that the German mixed economy experiment must now undergo quite
a drastic change in order for its society to remain orderly. Whether
Germany shifts to the left or right is anyone's guess, of course, the
point being one cannot straddle a growing chasm.

As for Sweden, a critique of its reforms appeared in Monthly Review,
Jl/August 1994. A short quotation: "the [Swedish social democrats] not
only accepts capitalism but defends it against any attempt at change. The
party has always argued that what is good for Swedish corporations is good
for the Swedish working class. The SAP's political difficulties stem
largely from the fact that this argument is untenable."

It's pretty clear that instead of "negotiated class relationships" or
whatever, these two social democracies were always fully capitalist.

Some circumstances in Germany and Sweden are advantageous when compared to
those in the U.S. But they are not permanent solutions to the
contradictions and crises of capitalism.

> >   Markets create capitalist classes
> Actually this is not so clear. In Marx's own historical account it is
> markets plus state action in the form of enclosures, etc. There's nothing
> automatic about it, which is one reason we had markets for tens of
> thousands of years before we got capitalism.

Karl Polanyi, in his _The Great Transformation_, argues that these
pre-capitalist exchanges did not constitute markets as trade was
primarily carrying goods from site to site, and markets were so strictly
regulated as to wholly prevent competition.

I'm not saying that Polanyi had the facts from God (!), but I am
challenging your assertion of the existence of ancient markets.

So where did markets come from? In my opinion they are instruments of
power wielded by the capitalist class. They were created for reasons of
political power. (see my next post for more of my opinions on this.)

> Of course the social democratic welfare state in Western Europe is under a
> great deal of pressure. Still, you mentioned China, and whatever the
> difficulties of the European model, these are trivial compared to the
> Chinese case. Anyway I am not a social democrat. I do not think that
> regulation of the capitalist market is a stable solution. But regulation
> of a socialist market is another story.

(Is there agreement that the Chinese experiment in capitalist/market
reforms is having fairly negative consequences? I assume there is.)

Regulation of socialist markets sounds interesting. But how will this
regulation be different from what the Chinese and Russians are attempting?

Why can't we go from planned socialism to market socialism, if market
socialism is what we need to work for?

> 1a. Who says managerial talent is so scarce? Why do income differentials
> amount to class distinctions? In fact they're a lot flatter in most places
> than in the U.S. Anyway, class is about ownership, not income.

Class is also about authority. It can't be summed up as "ownership."

> If the
> workers own the means of production through the state and the capitalists
> don't, highly paid managers are just highly paid managers.

Let's take a current example. The unions and employees of United Airlines
(UAL) (a transnational with U.S. headquarters) now own 55% of the common
stock (that is, stock with voting rights) of their employer, UAL. They've
accepted major wage/salary cuts. For this, they receive a miniscule profit
sharing plan, one seat on the board of directors, and virtually no more
workplace sovereignty than they had before. Moreover, the wealthy pilots'
union has most of the say-so amongst the unions, with the flight
attendants and the machinists having much less power. Finally,
transnational financial institutions review the plans of the company, to
make sure they follow "good business sense." It is widely held true that
the employees initiated the plan to stave off UAL bankruptcy and their own

What happened? In short, the employees didn't have enough capital of their
own to take firm control of the organization. The new owners are not the
workers, but the banks. The managers were never the owners; the only
change for them is that they give fealty to the banks rather than the
stockholders. (Not like stockholders had much power before.....)

This seems to contradict your notion of managers just being managers with
no extra power under market socialism. Given, UAL operates under global
capitalism. But how would market socialism mitigate its circumstances? It
must obtain operating capital from some source. Will the worker-seized
state simply print money?

Andrew Hagen                              hagena at
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