Calculation Problem Again

Justin Schwartz jschwart at
Tue Nov 1 22:47:20 MST 1994

On Tue, 1 Nov 1994, Andrew Hagen wrote:

> 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.

Yes indeed.

> 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.
Didn't say otherwise. I am a _socialist_.

> > >   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.
It's a question of definition. If a market is a space where people
exchange goods and services to benefit themselves, they were markets. Of
course they were regulated. So are capitalist markets, as libertarians
like to complain.

> So where did markets come from? In my opinion they are instruments of
> power wielded by the capitalist class.

This is a theory about what they are, not where they came from.

 They were created for reasons of
> political power. (see my next post for more of my opinions on this.)
Please. This is opaque. One would have thought that they were created so
people could make money and get the things they wanted. Anyway, whatever
reasons they were created for, this is what they can be used for now.

> > 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?
Well, for one thing, it won't involve trying to keep the capitalists on a
leash--or, more likely as in Russia and China, letting them off the leash--
because there will be no capitalists.

> Why can't we go from planned socialism to market socialism, if market
> socialism is what we need to work for?
Huh? Why go through the detour, if market socialism is what we need.
> > 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."

Class is complex. But simply having authorities or, in this case,
managers, doesn't constitute class stratification.
> > 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
> unemployment.
> 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.

Hardly, if the real owners are the banks, which are not accountable to the
workers. But look at the Mondragon cooperatives in Spain, where the
workers own the productive assets and the banks.

 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?

Investment capital, on the Schweickart model, is raised from a "use
tax"--really rent or interest--charged on the value of the productive
assets controlled by the self-managed firms, and distributed as grants by
local banks to cooperatives who propose productive projects.

---Justin Schwartz


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