Market vs, planned socialism

Justin Schwartz jschwart at
Thu Nov 10 09:01:57 MST 1994

On Thu, 10 Nov 1994, Andrew Hagen wrote:
> On Mon, 7 Nov 1994, Justin Schwartz wrote:
> > [...]
> > a. It's not undemocratic to discuss how a hypothetical system would work.
> > [...] But to discuss in detail what might be on
> > the menu is not to limit the choices.
> Right. But it's rather hard for me to just produce a "model" of my
> proposed "system" as antithesis to capitalism when nothing like that
> exists, other than what you're advocating.

Depends on what you mean by "exists." Neither of us can point to a
society which realizes our preferred vision of society. But there is a
large literature on the alternatives to capitalism debate, which exists,
and there are lots of historical examples and instances which are relevant
and illuminating, e.g., the USSR, Mondragon, Yugoslavia, etc.

> Furthermore, one point which I'm trying to advance is that coming up with
> a model or a system is antithetical to the process of overcoming the
> hegemony. Not only are models useless in particular social/cultural
> contexts but also they have great difficulty adopting to new historical
> contexts.

Firstly I am not advocating modeling as a way of devising blueprints for
implementation as written regardless of context. I am arguing rather that
we need answers to reasonable doubts about the feasibility of socialism.
The only way I can think of to answer these doubts is to produce models
which do not manifest said problems! Second, when blueprint time comes,
alas too far away, we will need the models. Otherwise we will go into it
"unconsciously," making things up as we go along and making mistakes we
could have avoided if we had thought about it beforehand. Obviously any
model will have to adapted to circumstances and changed to fit particular
situations. Please credit me with not being a complete idiot. But we need
to have something to adapt and change.

 For example, capitalist economics. From Smith to Ricardo,
> Marshall to Keynes, Friedman to Galbraith, the models had to be revised
> constantly.
> Instead of setting up boundaries to what is possible, which is what
> models do when they make assumptions about the contexts of their
> applications, we should attempt to tear down the walls of impossibility
> that limit our choices.

No: modeling expands our horizons by letting us think things through
clearly: what would happen if, supposing X is true, we do Y? In the same
way linguististic expression, by enabling us to say very precisely what we
mean and make new distinctions, opens possibilities to us. In both cases
some possibilities are closed off too. We learn when we talk and think and
write that in some cases we cannot maintain cherished propositions because
they are contradictory with others we cherish more or not supported by
evidence we accept. In modeling we may learn that on assumptions we
accept an ideal we want cannot be reached. But the fact is we cannot learn
anything without thinking things through, and that means modeling.

 For example, instead of seeing scarcity as a
> given, create ways of eliminating it.

Yes of course! We have to interrogate our givens. Modeling enables us to
do this by helping us find out what they are. Give me a model that
plausible eliminates scarcity, please!

 Find ways to overcome problems of
> centralization vs. freedom. etcetera.
> > b. A main obstacle to radical organizing today is that ordinary workers
> > who are dissatisfied with the way things are do not see a feasible
> > alternative which would be better. [...]
> Right.
> > Answering these questions requires modeling, precise, specific, and, yes,
> > abstract characterization of your preferred alternative, and argument that
> > it would avoid the problems with Stalinism and capitalism.
> Why? If we desire rule by the proletariat, are we going to demand that the
> proletariat comes up with feasibility studies before implementing their
> "dictatorship?" (which of course, would not really be a dictatorship since
> it would be rule by the proletariat, which is by definition many people
> combined.)
There is not going to be any rule by the proletariat if workers are not
convinced that socialism would be better for them than capitalism. And how
are you and I going to contribute to convincing them if not by saying how,
i.e., developing models?
> > Of course, once
> > drawn into the process, ordinary workers will suggest or demand
> > modifications in the models. But no one will even consider alternatives
> > to capitalism unless these are placed on the table in enough detail to
> > have a sense of their dynamics, advantages, and disadvantages.
> Ok, ok, here's my "model": replacement of property rights with property
> charters; abolition of the division of labor; making holidays of voting
> days; reducing the terms of elected officials; increasing the number of
> issues decided upon by referenda; guaranteed allowance of a particular
> standard of living to every person; new cultural, historical, social,
> economic, and political contexts wherein culture assumes the roles
> previously played by the others; challenging of most intellectual
> traditions; and reparations to women and persons of color, and other
> groups.

This isn't a model and you know it. Some of the stuff is goals--guaranteed
incomes, achieved how? Some of it is political reform--term limits,
referendas, monthly voting. But you don't say on what or how the
alternatives are developed and stated or even what this is supposed to
accomplish. Some of it is interesting but vague: property charters? And
the rest is just handwaving

> > 2. Tom and Andrew both think that markets cannot be honestly regulated by
> > the government, that they "naturally" tend to take over the state and
> > prevent any restriction on profitability.
> Well, maybe I was wrong. There probably is a possibility, however slim,
> that one day capitalism can be reformed to such a great extent that it no
> longer needs changing.

Not what I think. In my view market socialism would require a revolution
and probably armed conflict, since I think capitalists will not accept a
democratic verdict that expropriates them. I say this with great sorry as
killing people and being killed is something which horrifies me.

> > c. Tom and Andrew both hold up an idealized and unspecified democratic
> > planning in opposition to the problems they see with MS. It is presumed
> > without argument that no groups in DP will have an anti-social interest
> > and that democracy in DP is unproblematic and will fix all problems. Of
> > course this is all false.
> Of course I disagree.

You mean you think what I think is false is true? Please explain why. I
have after all explained why not. Or you disagree with the way I
characterize your views?
> > The planners, to start with, have an interest in
> > their own power and prestige;
> Automatically? In every possible context?
Shall we say in any plausible context. A while back someone mentioned
Michels Iron Law of Oligarchy. We don't have to buy Michels in toto to
think he had a point about how officials develop a special corporate
interest apart from those of the people they represent and sometimes
opposed to these. This is so in part because the exercise of power is
pleasant and in part because it gives you other advantages. Moreover those
who exercise it come to operate in a distinct milieu, etc. See Michels foe
details. If you think you have a context where this won't happen, share
it, don't just tantalize us with a logical possibility.

> > they may favor regions or ethnicities they
> > like, never mind family, and will be further corruptible by both the
> > managers in important industries who misappropriate parts of their product
> > for their own ends and by wealthy participants in the black markets which
> > will burgeon in response to planning failures.
> You assume that there will continue to be "industries,"

Well, if you want, say, public transit, we gotta make trains. How do you
propose to do this without industries?

 and that there
> will be a need for black markets because of planning failures. Why won't a
> planning failure engender a new method of planning, instead of reversion
> to the dead, old system of markets?

Because people want the stuff they want. If they can't get it through
official and legal channels, they will get it through unofficial and
illegal ones. And providers will expect to get something for their pains.
Thus markets. And yes, there will be continual reform of the planning
system, just as there was in the USSR and Eastern Europe. You really do
have to familiarize yourself with at least some of the literature on this
experience. And if your system follows precedent, the planning reforms
won't work and the planners will be forced to adopt market reforms.

> > Andrew claims that democracy guarantees that there will be no black
> > markets, but fails to see that even if the popular will is clearly
> > expressed, the calculation problem raises questions about whether it can
> > be implemented. The Mises-Hayek critique is thus a difficulty for
> > democracy under DP.
> Again, I'm unfamiliar with the MHC. But how significant is the critique?

Unanswered it is fatal for planned socialism.

> Does it not assume that societies to survive must have X and must have Y,
> and thus because of their reductionist proofs this is impossible under
> their pre-conceived notions of planning, which undoubtedly covers all
> possibilities of planning regardless of the fact of the futility of wisdom
> especially in an age so filled with lies about human history, because
> there is no way to have both X and Y? Maybe it does better than this, but
> I'm quite skeptical.

You have no right to be. To justify skepticism, produce an answer, namely
a model which avoids the problem.

> The problem with assuming *anything* other than its opposite relation to
> capitalism about "planning" is that you then must assume that the
> revolution is just not going to go too far. But it _is_ going to go very
> far if it is to be successful.

Let it go as far as you want. Just tell me what it is going to do and how
it is going to do it. The nice thing about modeling is that you have it
your own way within the limits of logic.

> > And finally, expressing the popular will is not so
> > easy.
> Democracy does not require the concept of "popular will." Better
> concepts will emerge.

Well, another time.
> > 3. Andrew worries about Keynesian measures in MS. Will there be business
> > cycles? Can they be offset by countercylical financing? Where does the
> > government get the money? Won't printing money be inflationary? How bad is
> > that anyway? These are good questions, pitched at the right level of
> > detail for discussing models of socialism. I wish pro-planners would
> > specify their models in enough detail to allow such questions to be asked.
> Me too. It is difficult to come up with such "models," though, when you
> demand that our models meet particular criteria unrelated to their
> possibility of success.

Explain. You mean you do not want to satisfy consumer demand and have
people work as much an on things they want to and to avoid externalties?
Those are the criteria for the solution to the economic problem.

> In sum, I'm all in favor of market socialism. I feel, though, that it is
> at best social democracy on steroids and thus it is not my top choice.
Not mine either, but show me we can do better. As tow whether it's social
democracy on steroids, ask the capitalists!

--Justin Schwartz


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