Marx vs. Hayek, conscious action vs. utopianism

Justin Schwartz jschwart at
Sun Nov 13 10:03:00 MST 1994


It looks to me as if we have run out of things to say about democracy and
corruption. I could repeat stuff which obviously hasn't persuaded you and
which you haven't answered to my satisfaction and vice versa, but I
suspect that would go on in fruitless and uninteresting way for a long

As to Mandel's model. The key to Mandel's solution to the
calculation problem is a drastic simplification of the input descriptions.
Instead of saying that we produce so many t-shirts and button down
shirts, etc., and specifying t-shirts in detail--a recent Pentagon request
for plain white t's had thirty small print pages of specs--we say "shirts."
Now this will work to reduce the information about consumer preferences to
manageable loads, but at a great cost, probably, in terms of consumer

Two further problems and one observation. Mandel's solution has the same
problem Paul's does with regard to production. There's nothing it which
enables or allows or encourages calculation of least-cost methods of
production, choice among different ways of satisfying demand. So
production is liable to be wasteful, and also, not innovative, insofar as
innovation disrupts the plan and requires adjustment all over. (Mandel
admits this, saying, what's so great about innovation? This is a big
concession for a Marxist!)

The other problem, on the consumer side, is that Mandel suggests that much
demand is inelastic, so we can just project from the past on how many
shirts, how much milk, electricity, etc. we use. This runs into problems
with change in demand, which are amplified by the simplification solution
to the information problem.

The observation is that Mandel himself says that we can use his method
only where demand is inelastic, which he calculates at 65-70% of the
economy--he doesn't say how he gets that figure. So for the rest, what he
calls "luxury goods" and services, the economy is marketized. He
accordingly says his model is less than what he would consider to be fully
socialized. He expresses a wish or hope that luxury production be
socialized eventually but leaves it at that. Any any rate Mandel is not
offering a model of a fully planned economy.


On Sun, 13 Nov 1994 tgs at wrote:

> Justin,
> Re: in reply to your last message on market socialism vs. democratic
> planning
> Too many brackets to use the line item veto.
> A) Yes, I'm close to Mandel
> B) Yes, both corruption and insensitivity of computer modeling can occur,
> in both the market and planning (corporations have been pretty damn
> insensitive, with whatever
> computers they have, and they have
> quite a lot.  I think Paul has  pointed out how
> insensitive these corporations have been, regardless, what with the automobile
> industry, etc.).  But in market socialism, the dangers of these problems
> are far greater.  I may be old-fashioned nor too well-read, but public
> scrutiny and decentralization
> of power are for me the only means of attacking both problems.  Once again,
> you merely assume the workability of democratic accountability in YOUR model,
> without benefiting us with an explanation as to how this will resolve the
> problems of the private market groups
>  corrupting the state, problems which are indeed fundamental and inescapable
> in your system, as they are not in mine.
> How can you seriously talk about public scrutiny in a private system?
> It simply won't work.  All you can do is impose an abstract state on top of it
> --which will automatically corrupt and serve the most powerful private interests
> in the society. Since there is a market competitive system in society, there
> will inevitably grow disparities of wealth and power which will give rise
> to a new class of potential exploiters, who will use their influence over the
> state, or merely their informal power within the economy, to overrule and
> elliminate all strictures on free competition and exploitation.
> All the "socialist" ideology in the world is not preventing the bureaucratic
> castes in Vietnam and China from celebrating the virtues of the capitalist
> market, exploitation, and inequality.  Political will and fine ideological
> intentions can never remain in the saddle for very long.
> If you say that there was something intrinsic about the planning process
> itself which led to Stalinism, I disagree profoundly.  The imperialist onslaught,
> combined with Bolshevik Fichteanism, determined that an otherwise healthy
> model bureaucratized and then disiintegrated.  You can't talk about any
> public scrutiny in a one-party state beaten almost to death by twenty
> invading armies.
> Tom


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