what about inequalities between firms (market socialism)

Andrew Hagen hagena at mhd1.moorhead.msus.edu
Fri Nov 4 01:03:53 MST 1994


Justin Schwartz writes:
> Let's call it cooperative
> production, or I'll get nasty and start calling democratic planning
> "Stalinism with a human face."

Market socialism is "cooperative production?" Isn't that ambiguous
terminology?

Could I suggest a very simple rule of thumb before this list sees the
farcical repeating of history and splits into different factions? We call
each other by friendly names. No one wants to be a fascist, or known as
one, and no one wants to be a Stalinist, or known as one.

"Come on guys! We're all on the same side."  ;-)

Justin Schwartz continues about market socialism:
> Yes. They aren't fired, since they're their own bosses, but if they're not
> making money, they will want to either reorganize or do something else.

What if these workers are doing something fairly important, like mainting
the national electrical power grid? What if they are the only ones
providing an essential service in a remote area--an area where the market
is unprofitable? What if this particular firm produces components vital to
an entire industry, like an Intel, yet due to the high cost of meeting the
payroll is awash in red ink? Do we allow an entire industry to be harmed?

> Do you
> mean that under [...] democratic
> planning, that inefficient and unsuccessful production units will just be
> carried by everyone else? Why isn't that waste and exploitation?

No. The response to highly inefficient sectors under planning would be
decided upon democratically, but I would argue that such a society should
either cut out the cancer, if the industry is not socially valuable, or
invest heavily in the sector if it were. The fresh capital would
eventually be able to solve the efficiency problems or circumvent them.

Justin Schwartz continues, remarking on market socialism again,
> This is a problem. Better off firms will lobby on their own behalf. Though
> I don't see how it is problem with regard to unemployment. Unlike in
> capitalism, where there's structural pressure to create high unemployment
> to keep down wages, in market socialism there is none. No one wants low
> profit shares (the analog to wages) and no one benefits by unemployment.
> So any undue influence of better off firms in the market will not tend to
> create structural unemployment.

This is certainly an advantage of market socialism.

One question, and I don't want to be mean. No structural unemployment and
a little frictional unemployment would occur under market socialism, but
what about cyclical unemployment?

Would market socialism have business cycles? Why not? What happens when
demand fails? If a program of Keynsian spending is called for, who buys
the bonds to service the governmental debt? You can't just print money!

> Labor is not commodified under the version of market socialism I advocate.
> In the strong version of the model, it is illegal to buy or sell labor
> power, capiche?

Thanks for saying this. I, for one, had no idea.

Again, however, your defense of market socialism rests on the effectivity
of regulation. Without it, what's to prevent a cooperative with extra
capital, pent-up demand in a market in which they dominate, and little
productive capacity to build an illegal sweatshop factory in a Third World
country and hire labor power there? Would not the fellows of the
cooperative realize more profit from their covert Third World operations
than by expanding production domestically? Won't they have an incentive
to circumvent or ignore such regulations?

The point is, you can't just assume regulation will work. We need a
convincing explanation of how regulation in market socialism will be
qualitatively different than that in capitalism.

__
Andrew Hagen                              hagena at mhd1.moorhead.msus.edu
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