Marx vs. Hayek, conscious action vs. utopianism

Justin Schwartz jschwart at
Sat Nov 12 18:44:28 MST 1994

On Fri, 11 Nov 1994 tgs at wrote:

> <<Justin, let's try this.  This is Tom, everything I say will be in double
> brackets, which is a reverve on the traditional, but no matter>>
> You say mainly two things:
> 1. Market socialists cannot rely on a democratic state partly because the
> problems I have noted with democracy are universal and partly because
> markets create problems for democracy, mainly through generating inequality.
> I agree about the former worry, but of course planned socialism has no
> advantage there.
> <<You're evading one of the big problems I brought up.  Because of the private
> nature of all markets, any level of decentralized democracy is unworkable.
> Yet centralized democracy degenerates bureaucratically.  Democratic planning
> is no less unworkable under "centralized democracy" (an oxymoron).  But
> democratic planning does not have the same problemm of corruption with
> decentralization>>

No, while markets limit democracy they do not abolish it. Regulation is
possible, and when it is carried out in a participatory manner by hightly
accounatble local authoriries, fairly democratic. At higher levels things
get more problematic for everyone. Moreover the state is not the only
venue for control of markets: there are unions, consumer and community
groups, indeed producer associations,a nd lots of "civil society"
structures which are available.

Democratic planning will hacve problems with corruption of the sort I
mentioned. Planners will use and enjoy their power and privileges,
planning failures will result in both quasi-markets due to hoarding amd
attendent black markers due to selling off hoarded supplies; black
marketeers will have undue and unacknowledged influence; managers or
managing committees in key industries will throw their weight around.
Democracy will not fix this. Anyway, as I mentioned, corruption is
probably largely a cultural effect and not a basic system dynamic, or, if
it is, more of planning than markets. At least that's the empirical
evidence. If you dismiss the evidence of corruption in actual planning, I
will dismiss that in actual markets.

> As to the latter I have responded elsewhere about some mechanisms MS can
> use. Firms will be smaller for reasons explained, books can be opened,
> decentralization can work for MS as well as for PS.
> <<The fact that firms will be smaller does not clear the decentralized market
> of  state of the problem of corruption.  Big or small, firms are private>>
But small firms have less power to corrupt. And why is "public" better?
Can you spell B.O.S.S. T.W.E.E.D.? Privatization of the public trust is a
grand old tradition. Why won't it happened under DP? As ever the issue is
comparative. Don't tell me that the planning will be democratic as it
wasn't under Stalinism. Tell me how DP can avoid the problems I mentioned
better than a democratic government in a MS society.

I will mention here, apropos of your followup post that sometimes you need
big firms, that MS firms will grow up the limits of economies of scale. If
these are large, the firms will be large. What they will not do is grow
beyond those limits. Thus, since no one can get rich exploiting labor in
MS, firms like Wendy's and McDonald's won't metasatize: they grow only
because their owners profits from low pais labor. If the restaurant biz
were run on a coop bases, you might get local chains of a few restaurants,
but the economies of scale are rather small. (Purchasing is a different
matter, but restaurants might form purchasing coops to buy in bulk.) Steel
production is another matter. There economies of scale are larger. And
beyond the market and its economies of scale, where of course there will
me market failures, there is the state. You say, gaaak! I say, planning.

> For some functions, e.g., providing public goods, it doesn't actually
> matter if the state is all that democratic as long as the goods really are
> public and needed and wanted by all, e.g. roads. So a state which is not
> so democratic or even undemocratic--I don't advocate this--can help solve
> collective action and public goods problems. Mussolini, it is said, made
> the trains run on time.
> <<You've got to be kidding.  Seriously, you just proved, to my dissatisfactionn,
> the unworkabillity of  your own model.  Neither  fascism nor a corrupt, bloated
> parliamentary
> bureaucracy, no matter what it's official commitment to need-fulfillment as
> mere ideology, is acceptable>>

My point here was just that public goods problems do not require democracy
for their solution under certain conditions. This is a logical point.
Obviously I am no fan of Mussolini. Incidentally I gather it is not true
that he made the trains run on time.

> Finally, one thing to note is that with regard to efficiency (i.e.,
> solving the economic problem I state below, which you accept the
> formulation of), the only thing that PS has to rely on is in effect the
> state at all its levels, whether or not planning institutions are
> officially part of the state. So problems with democracy and efficiency in
> the state are really quite pressing for PS. MS of course has the market
> (or markets) in addition. As ever the question is comparative.
> <<I disagree.  Once again, you're playing the realist.  You assume that the
> only  thing we have to rely upon are the systems of alienated powers under
> capitalism: state, or market.  Under a commune style system, however, a
> third very important factor emerges: the masses themselves, as a PUBLIC.>>
I agree that popular organizations in civil society should play an active
role in any socialism, planned or market. But in the end in planned
socialism the plan must be enforced, and that means have legal backing,
which brings in the state. If "playing the realist" means calling your
attention to obvious truths, yes I am playing the realist. And will
continue to do so. The "masses" or the democratic public must make thieir
will effective, if thery can formulate it. To make it effective they must
be able to enforce it, to write a budget and pass it into law.

> 2. My second point is this. You complain my standards of modeling are too
> absurdly exacting to be met. This is not so. A lot of folks do meet them:
> Schweickart, Albert & Hahnel, Mandel, Roemer. Modeling doesn't require
> that you write the laws for societies that don't exist, but that you
> specify their institutions in enough detail to be able to say how they
> might work under resaonable assumptions about behavior. You can do
> this--all the writers I mentioned do--in less than a page. I have myself,
> or we wouldn't have had anything to talk about.
> Does your commune model do this? No. Look at my statement of the economic
> problem. How does the model solve that problem? All the model says is that
> people in workplaces and local communities elect lowly-paid recallable
> delegates with mandates to represent them in legislative+executive
> councils for local self-government, which then elect delegates to higher
> bodies, etc. (Incidentally indirect representation past the local level is
> not so obviously such a democratic idea.) The question remains how the
> councils at any level find and process the information they need to plan
> and how they present these plans for democratic approval, etc.
> <<You neglect to mention the other very important features which I a have
> already presented.  First
> of all, it is a system of FACTORY councils and UNIVERSALLY
> ELECTED ASSEMBLIES, all of which could and must be elected
> via universal popular  suffrage (see my piece and
> Edelstein's in ATC.

This doesn't help with my question.

  Second,  the use of computers and
> surveys and inventories,
>  which is pretty much all that corporations NOW employ so as to
> know when and how much to innovate and restock.

OK< so you're more like Mandel that A&H. We simply get rid of market
checks and competition and rely on surveys and past projection to satisfy
demand. Before I launch into a major critique of this, is that right?
Please state your model explicitly enough so that I can assess it. That is
all I am really asking.

  So are you really listening
> to me when I present my model?>>

Yes, I'm just not hearing anything to grip on.
> << In any case, it strikes me just now that you've been, and I have no other
> way of saying this, "engaging in  a double standard"
>  Unintentionally, I am sure.  But
> first you say that Mises and Hayek's critique does not necessarily have any
> thing to do with motivation, but only to do with information.  Fine.  But
> then you say, when I point out that corporations have the same information
> systems at their disposal as would DS (you use the term MS, which in my view
> is just as ovymoronic), you say that only the market can motivate investors
> sufficiently>>

Did I say that? No. In the Schweickart model, which is a good
approximation to what I advocate, _investment is planned_. So while state
bankers hand out investment grants on the basis of profitability of
investments (for firms), job creation, and environmental protection, and
are themselves motivated by how well their grants succeed, which
determines their pay, they are not investors in the firms and do not
profit from the investments that are made. The broad decisions about what
sortts of things to invest in are made by democratic planning.

> <<In any case, Paul Cockshott, as I said before, proved to my satisfaction
> the workabillity of computers to augment the commune system.  It does no good
> to bluster about how I don't address your arguments (as you did not recently,
> but a while ago) when you don't address him (Or did you?  If you did, please
> repeat it because I missed it)>>

No, I didn't, but someone--I think it was Steve Keen--did. Steve or
whoever pointed out that even if we grant that Paul's method would work
for consumer demand it ignores the crucial questions of choice of
productive methods. Anyway the problem with Paul's method is that it
either depends on rigid projections from past data, which won't allow us
to take into account changes in demand, or goes loopy in assuming the
reliability of computer modeling. Tom, have you ever _done_ computer
modeling? Would you really trust that system to ensure that you got shoes
that fit and lasted?

> <<Hey, this is a lot better--the inverted brackets, I mean>>
> Actually my guess is that your idea is essentially the same as Albert and
> Hahnel's, although you say it is not. What's the difference? Just that
> your basic units are workplace-based instead of neighborhood based? Is
> that what you meant by calling them too middle class? (A view you
> attributed to me and which I repudiate.) I don't see how that makes a
> difference in answering the objections to A&H which I posted here on the list.
> <<Not only is my model both neighborhood and workplace based (remember I
> mentioned popular associations, which you also seemed to have missed), but
> also more centralized councils and assemblies--which could act a bit
> more discretely than local neighborhood councils>>
They've got those too. Why not state your model as explicitly as
Schweickart has stated his and they theirs?

> --Justin Schwartz


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