NOTES: On the Puzzling Classical Socialist Belief of Both the Necessity & the Ease of Building a Non-Market Economic System
What were the classical socialists thinking in their confidence that it would be very easy to replace the market economic system with some combination of workplace democracy and accounting...
What were the classical socialists thinking in their confidence that it would be very easy to replace the market economic system with some combination of workplace democracy and accounting bureaucracy? This is the feature of classical socialist thought that most puzzles and flummoxes me: I do not understand why the problem was thought of as so unproblematic. That the market system needed to be curbed and constrained seems to me to have been an obvious conclusion to reach. But abolished? Without even thinking that there were problems of information and incentivization that the market system solved?…
Perhaps the most puzzling thing about the socialist intellectual enterprise from, say, 1845 on was its assumption that the dynamiting of the old social order would unproblematical bring the new utopian one into being.
Earlier socialists—Henri de Saint-Simon, Charles Fourier, Étienne Cabet, Robert Owen—worked hard to found and build small actual socialist communities as proofs that a better world was, in fact, possible.
But with The Communist Manifesto there began the excoriation of such “utopian” socialists:
Historical action is to yield to their personal inventive action; historically created conditions of emancipation to fantastic ones; and the gradual, spontaneous class organisation of the proletariat to an organisation of society especially contrived by these inventors. Future history resolves itself, in their eyes, into the propaganda and the practical carrying out of their social plans…. In proportion as the modern class struggle develops and takes definite shape, this fantastic standing apart from the contest, these fantastic attacks on it, lose all practical value and all theoretical justification…. To realise all these castles in the air, they are compelled to appeal to the feelings and purses of the bourgeois. By degrees, they sink into the category of the reactionary [or] conservative…
It was clear to post-Manifesto socialists that what the small individual socialist communities did in miniature needed to become the ruling principles of society in the large. It was clear to them societal institution of the market system needed to be exterminated. But what was to replace it? They never said. This is the puzzling thing: destructive critique was thought to be sufficient. Why?
I still cannot understand it. But we can, at least, outline what the critique was, and what gestures to the direction that any kind of escape from and replacement of the market should take:
With humanity’s economic development, wrote Karl Marx, should and would come humanity’s freedom. The move into the age of the Steampower Economy would bring abundance. And then the market economy that had grown up in the interstices of the age of the Late Agrarian Economy and then spread its tentacles everywhere in the age of the Commercial Economy would need to be replaced. Why? Because free people were not bossed around. And the market economy—the requirement that you buy no more than what you could afford, and work only at what would pay—bossed people around. That was the opposite of freedom;
Freedom… consist[s] in socialised man, the associated producers, rationally regulating their interchange with Nature, bringing it under their common control, instead of being ruled by it as by the blind forces of Nature…
The “it” here which rules humanity—which makes humanity the unfree plaything of malign or rather cruelly indifferent superman forces—is the market economy’s patterning of humanity’s productive and distributional interchange with itself and with—Engels, Aveling, and Moore made the decision to capitalize it in their English translation of volume 3 of Capital—Nature. Underneath this is an implicit model of three types of unfreedom. They are:
Nature dominating us because of our poverty—making us unfree because we must work long and hard hours to get enough to barely survive.
The oligarchy dominating us because, well, they are on top in a society of domination—making us unfree because we must work long and hard hours to pay them their tithes, their rent, and their taxes due.
Irrational systems dominating us—social arrangements we do not understand and cannot control moving us around via their incentives and constraints because that is just how they operate.
For this third, the best thing I have ever seen is the old review of Francis Spufford’s Red Plenty by Cosma Shalizi:
There is a passage in Red Plenty… central to describing both the nightmare from which we are trying to awake, and vision we are trying to awake into….
“Under capitalism… was produced only in order to be exchanged… true qualities and uses dropped away, and the human power of making and doing itself became only an object to be traded. Then… the motion of society turned into a kind of zombie dance, a grim cavorting whirl in which objects and people blurred together till the objects were half alive and the people were half dead. Stock-market prices acted back upon the world as if they were independent powers, requiring factories to be opened or closed, real human beings to work or rest, hurry or dawdle; and they, having given the transfusion that made the stock prices come alive, felt their flesh go cold and impersonal on them, mere mechanisms for chunking out the man-hours. Living money and dying humans, metal as tender as skin and skin as hard as metal, taking hands, and dancing round, and round, and round, with no way ever of stopping; the quickened and the deadened, whirling on.… And what would be the alternative? The consciously arranged alternative? A dance of another nature, Emil presumed. A dance to the music of use, where every step fulfilled some real need, did some tangible good, and no matter how fast the dancers spun, they moved easily, because they moved to a human measure, intelligible to all, chosen by all”….
Marx’s nightmare vision is right: capitalism, the market system, whatever you want to call it, is a product of humanity, but each and every one of us confronts it as an autonomous and deeply alien force. Its ends, to the limited and debatable extent that it can even be understood as having them, are simply inhuman. The ideology of the market tell us… to embrace our inner zombie cyborg and loose ourselves in the dance. One doesn’t know whether to laugh or cry or running screaming.
But… human beings confront all the structures which emerge from our massed interactions in this way. A bureaucracy… even… democratic polity… can be… as much of a cold monster as the market…. It is beyond us, it is even beyond all of us, to find “a human measure, intelligible to all, chosen by all”, which says how everyone should go...
For Friedrich Engels back in 1845, it was not just that individuals would be bossed around whenever humanity were to be ruled by the cruelly indifferent superman forces that are the market economy’s patterning of humanity’s productive and distributional interchange with itself and with Nature. It was that humanity was bossed around badly. The market economy resulted in:
the progressing enrichment of a few individuals and the impoverishment of the great majority [with] the contradiction… develop[ing] more and more sharply…
plus:
A crying disproportion… must… quickly develop…. How is the manufacturer to discover how much of his products are needed in this or that market, and even if he could discover this, how could he get to know how much his competitors are sending to each of these markets?… Where you have such irregularity of production… at every moment there are interruptions to trade…. Markets are suddenly glutted. Trade comes to a standstill, factories work half-time or stop altogether; a series of bankruptcies begins, stocks must be sold off at ridiculously low prices and a great part of the capital, accumulated with great effort, is lost again as a result of this kind of trade crisis. We have had a whole series of such trade crises in England since the beginning of this century, and one every five or six years in the last twenty years. The last two, gentlemen, those of 1837 and 1842, will still be vividly remembered by most of you…
and there is the waste produced by all the duplicated effort of competition:
Consider through how many hands every product must go before it reaches the actual consumer…. Once… [the] statistics have been worked out… easily… done in a year or two… it is therefore easy at the appropriate time to determine in advance what amount of each particular article the people will need — the entire great amount will be ordered direct from the source of supply… procure[d]… directly, without middlemen, without more delay and unloading than is really required…
These three defects of the private-property commercial-contract market economy—(1) inequality, (2) business cycles, and (3) unnecessary competitive duplication of work—were clear to Engels back in 1845. And y ou can see them running through nearly all socialist thought since as tangible, impoverishing (for the masses) consequences of the unfreedom that happens when we are playthings of the market, and when our localities, our due reward for our industriousness, and our places in the societal division of labor are all dependent on and at hazard to satisfying some maximum-profitability test conducted by some rootless-cosmopolite financier thousands of miles away.
So escape is necessary.
But what is this escape, this “rationally regulating [humanity’s] interchange with Nature, bringing it under their common control”? Friedrich Engels again: replace the hegemony of the market by a coöperative, democratic management of the economy according to a conscious, chosen common plan:
Branches of production are operated by society as a whole — that is, for the common account, according to a common plan, and with the participation of all members of society… abolish[ing] competition and replac[ing] it with association…. Private property cannot be separated from competition and the individual management of industry. Private property must, therefore, be abolished… [with] production and… distribution… according to common agreement… the communal ownership of goods…
That is rather abstract.
The thing that puzzles me is that Engels thought it was sufficient.
The historical record shows that those who found themselves forced to become less abstract turned out, in the end, to have no good ideas—indeed, no ideas at all save for a bureaucracy that became first brutal and murderous, then parasitic, and finally ossified. The person who found himself force to do things was Vladimir Lenin: he made a revolution, and then had to do something to organize an economy that had escaped from the soulless dominion of market forces. Lenin proposed to think of escape as being brought about in two stages: “really-existing socialism” and “full communism”.
The first stage, really-existing socialism, would be a short stage coming just after the Revolution In it, “after the overthrow of the capitalists and the bureaucrats”, society would:
overnight… replace them in… control… in… keeping account of labor and products, by the armed workers…. Control and accounting should not be confused with the… [work] of the scientifically trained staff of engineers, agronomists, and so on. These gentlemen are working today in obedience to the wishes of the capitalists and will work even better tomorrow in obedience to the… armed workers…. All… hired employees of the state… of the armed workers… of a single countrywide state “syndicate”. All… work equally, do their proper share… equal pay; the accounting and control necessary… have been… by capitalism… reduced to the extraordinarily simple operations—which any literate person can perform—of supervising and recording, knowledge of the four rules of arithmetic, and issuing appropriate receipts…
But:
this “factory” discipline… is by no means our ideal… [but] only a necessary step for thoroughly cleansing society of all the infamies and abominations of capitalist exploitation…
The second stage, “full communism”, would be possible when the unleashed creativity of humanity had created a society of true abundance and mass education, a society in which:
all have learned to… independently administer social production… keep accounts… exercise control over the parasites, the sons of the wealthy, the swindlers and other "guardians of capitalist traditions"…. Escape from… popular accounting and control will inevitably become… difficult… a rare exception… accompanied by such swift and severe punishment (for the armed workers are practical men and not sentimental intellectuals, and they scarcely allow anyone to trifle with them), that the necessity of observing the simple, fundamental rules of the community will very soon become a habit…
All participate. All independently calculate and decide. All—somehow—agree. All then independently administer—for accounting and control simply require “supervising and recording… [using] the four rules of arithmetic, and issuing appropriate receipts”.
This would, Lenin thought, come quickly: as quickly as St. Paul thought would be the coming of the Kingdom of the Heavens. In Lenin’s conception we still see the existence of those who are not part of the “all”—the “parasites, the sons of the wealthy, the swindlers and other ‘guardians of capitalist traditions’”. What would then happen to them would be: Swift and severe punishment at the hands of decentralized “armed workers… practical men… not sentimental intellectuals” would, first, place them under the necessity of submitting to the general will, and then, second, like Pavlov’s dogs make them “very soon” so well-trained that such submission will become “a habit”. That Lenin thought a world in which you had to fear that “practical men… not sentimental intellectuals” might suddenly decide that you were misbehaving and that what you needed was four walls to imprison you—or one wall up against which you would be shot—that does give one pause as a description of a realm of freedom,
But put that aside. What strikes me is Lenin’s absolute confidence that in the meantime, even before full communism, a really-existing socialist economy would be a fast-growing and prosperous one: the one-third of production consumed by the parasitic Tsarist élite would be available for redistribution along with what was lost in the waste of competition, and problems of managing and coördinating production were minor:
Take the most concrete example of state capitalism… Germany… modern large-scale capitalist engineering and planned organisation, subordinated to Junker-bourgeois imperialism. Cross out the words in italics, and in place… put… a Soviet state, that is, a proletarian state, and you will have the sum total of the conditions necessary for socialism. Socialism is inconceivable without large-scale capitalist engineering based on… science… without planned state organisation, which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution…. At the same time socialism is inconceivable unless the proletariat is the ruler of the state….
History… has… has given birth in 1918 to two unconnected halves of socialism… side by side… Germany and Russia… [as] the material realisation of the economic, the productive and the socio-economic conditions for socialism, on the one hand, and the political conditions, on the other…. Our task is to study the state capitalism of the Germans, to spare no effort in copying it and not shrink from adopting dictatorial methods to hasten the copying of it… even more than Peter hastened the copying of Western culture by barbarian Russia…. At present, petty-bourgeois capitalism prevails in Russia, and it is one and the same road that leads from it to both large-scale state capitalism and to socialism, through one and the same intermediary station called “national accounting and control of production and distribution”…
Needless to say, all this was wrong. Lenin’s Soviet Union turned into a prison and an abattoir, and never got out of really-existing socialism. Or did it even get to really-existing socialism? It certainly never got to anything anyone could ever claim was coöperative, democratic management of the economy according to a conscious, chosen common plan.
What it got to was stick-and-carrot, emphasis on the stick, bureaucratic despotism. Even a fanatical believer like Belgian neo-Trotskyite Ernest Mandel would find himself writing in 1979:
The Soviet economy… the impossibility of reconciling… planning, of optimizing economic growth… within the logic of the system… with the material self-interest of the bureaucracy. All the successive economic reforms… from the re-introduction of enterprise-based cost accountancy (khozrazhot) under Stalin, to Khrushchev’s sovnarkhoz experiment, to Liberman’s projected use of profit as an indicator… to Kosygin’s introduction of “mixed indicators”… have been designed to overcome that contradiction, but without lasting success…. The parasitic nature of the bureaucracy…. Social planning can function smoothly only under management by associated producers…. Bureaucracy… is… a cancer on a society in transition between capitalism and socialism….
But as late as 1979 true believers like Mandel still had hope. He say that, in the future—in the near future—there would:
be a radical change in the modus operandi of the system. The mass of producers will get a decisive say about what is produced and how it should be produced. Social inequality will be radically reduced. The enormous waste caused by bureaucratic mismanagement will cease. The organization of work and its hierarchical structure will he radically overhauled…
But by 1979 the denunciations of the bureaucracy of really-existing socialism’s “single countrywide state ‘syndicate’” were 63 years old. Witness one of the very last things that post-stroke Lenin wrote:
Our state apparatus is so deplorable, not to say wretched, that we must first think very carefully how to combat its defects, bearing in mind that these defects are rooted in the past, which, although it has been overthrown, has not yet been overcome…. Of course, it could not be otherwise… when… in… five years we passed from tsarism to the Soviet system. It is time we did something about it…. The most harmful thing here would be haste. The most harmful thing would be to rely on the assumption that we know at least something, or that we have any considerable number of elements necessary for the building of a really new state apparatus, one really worthy to be called socialist, Soviet, etc.
No, we are ridiculously deficient of such an apparatus, and even of the elements of it, and we must remember that we should not stint time on building it, and that it will take many, many years. What elements have we for building this apparatus? Only two. First, the workers… absorbed in the struggle of socialism… [but they] are not sufficient educated. They would like to build a better apparatus for us, but they do not know how…. They have not yet developed the culture required for this; and it is culture that is required…. Secondly, we have elements of knowledge, education and training, but they are ridiculously inadequate compared with all other countries….
To renovate our state apparatus we must at all costs set out, first, to learn, secondly, to learn, and thirdly, to learn, and then see to it that learning shall not remain a dead letter, or a fashionable catch-phrase (and we should admit in all frankness that this happens very often with us), that learning shall really become part of our very being…. The conclusion to be drawn from the above are the following: we must make the Workers’ and Peasants’ Inspection a really exemplary institution, an instrument to improve our state apparatus…. We must follow the rule: Better fewer, but better. We must follow the rule: Better get good human material in two or even three years than work in haste without hope of getting any at all…
All this was indeed very very far indeed from a free society of associated producers.
References:
DeLong, J. Bradford. 2022. Slouching Towards Utopia: An Economic History of the Twentieth Century. New York: Basic Books. <http://library.lol/main/44052234676EE73630F4CDE061F6764B>.
Engels, Friedrich. 1845. “Speech in Elberfeld”. February 8s MECW. Volume 4. <https://www.marxists.org/archive/marx/works/cw/volume4/index.htm>.
Engels, Friedrich. 1847. “Principles of Communism”. Vorwarts!<https://archive.org/details/Engels_Fredrick_-_The_Principles_of_Communism>.
Hook, Sidney. 1934. "Karl Marx & Moses Hess." New International. 1(5): pp. 140-144. https://www.marxists.org/history/etol/writers/hook/1934/12/hess-marx.htm
Lenin, Vladimir. 1918. State and Revolution. Petrograd: Priboy Publishers. <https://archive.org/details/state-and-revolution_202312>.
Lenin, Vladimir. 1918. “‘Left-Wing’ Childishness”. Pravda. Nos. 88, 89, 90; May 9, 10, 11. <https://www.marxists.org/archive/lenin/works/1918/may/09.htm>.
Lenin, Vladimir. 1923. "Better Fewer, But Better." Pravda, March 4. <https://www.marxists.org/archive/lenin/works/1923/mar/02.htm>.
Mandel, Ernest. 1979. "Why The Soviet Bureaucracy is not a New Ruling Class." Monthly Review. 31 (3): pp. 63-86. <https://monthlyreviewarchives.org/2010/09/01/why-the-soviet-bureaucracy-is-not-a-new-ruling-class/>.
Marx, Karl. 1894. Capital: A Critique of Political Economy. Volume III. Edited by Friedrich Engels. Trans. Edward Aveling 7 Samuel Moore. Hamburg: Otto Meissner. <https://archive.org/details/capitalvol3>.
Marx, Karl, & Friedrich Engels. 1848. Manifesto of the Communist Party. London: Communist League. <https://archive.org/details/ComManifesto>.
Shalizi, Cosma. 2012. "In Soviet Union, Optimization Problem Solves You." Crooked Timber. May 30. <https://web.archive.org/web/20120602155007/http://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/>.
Spufford, Francis. 2010. Red Plenty. London: Faber and Faber. <https://archive.org/details/redplenty0000spuf>.
Wikipedia. 2024. “Utopian Socialism”. Accessed May 18. <https://en.wikipedia.org/wiki/Utopian_socialism>.
But who would have thought that a market economy could be built that would work without a myriad of rules and constraints that make epicycles seem simple by comparison? Would an actual socialist system really be more difficult to design given an infrastructure of laws, and regulations that we have for a market economy? Most economies are mixed - markets plus some socialist elements to mitigate some egregious market failures. So why shouldn't the balance change to be socialist with some market elements to ensure flexibility and choice? It seems to me that we use extremes as strawmen, when the goal should be a high standard of living, choice of occupation, incentives to improve, an unpolluted environment to reduce externalities, and limits to inequality.
I think I've commented here before that market based systems and socialist systems are judged by different standards. Socialist systems are deemed a failure if 20% of the population can't get shoes in their preferred color. Market systems are deemed a success even if 20% of the population can't get shoes.
The modern market based system which developed in the 18th & 19th century was amazingly productive, but by the early 19th century it was obvious that its productive capacity would exceed its distributive capacity. 200+ years later, we are still wrestling with the problem. Our market system is pretty good at getting everyone shod, but not near as good at getting everyone a place to live, food security, medical care and other basics. It's hard to call it a roaring success if one recognizes how many businesses rely on government subsidies to supplement their employees wages.
I've been reading Revolutionary Spring, an account of the European convulsions of the early 19th century. I think there was a sons of Martha, sons of Mary split. The sons of Martha could actually do things, run the factories, operate more efficient farms and so on. They were perfectly happy with the system despite its human cost, and, as far as they were concerned, this was the best of all possible worlds. The sons of Mary didn't have a clue of how to do things, but they knew that something was wrong and that things could be better. There's no surprise that they were ineffective, even harmful when granted power. On the other hand, the optimist in me agrees with them that it should be possible to do better.