The virtues of the market and the deficiencies of central planning have become common sense for many socialist economists, both in the capitalist countries and in those of ‘actually existing socialism’. footnote1 Some spirited defences have recently been made of non-market forms of economic co-ordination, particularly by Ernest Mandel, footnote2 but in my view these do not provide fully satisfactory responses to the advocates of market socialism. In this essay I shall discuss the arguments put forward by Mandel in recent issues of New Left Review, and those of his principal target of criticism, Alec Nove. I share Mandel’s view that, despite Nove’s argument to the contrary, there is an alternative between the market and bureaucratic planning. But I begin to explore an alternative along quite different lines. I agree with Nove that the price mechanism is an indispensable instrument of co-ordination for a socialist economy, but argue that it must be socialized if it is to work for rather than against socialism. The debate between Mandel and Nove is about the possibility of a society of freely associated producers in which commodity production has been superseded, rather than about the ‘marketization’ of actually existing socialism. It is necessary to recognize that advocates of market socialism see the market as a form of free association: indeed, this is one of the major points of their case. The market cannot be dismissed a priori: the argument should rather be about whether the conditions necessary for the market to function adequately as a form of free association can actually be sustained. Nor should the discussion be foreclosed by defining socialism in terms of the absence of commodity production and by making a simple equation between commodity production and buying and selling. I do not intend to enter here into a detailed consideration of Marx’s concepts of the commodity and of commodity fetishism. I shall simply propose that the aspect of these concepts that makes them analytically useful is the idea of commodities as ‘autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race’. footnote3 The commodity, in Marx’s writings, is not fundamentally a good which is bought and sold for money. To be sure, sentences can be isolated in which the commodity appears to have no more than this sense, but the structure of Marx’s texts as a whole suggests something less banal. The problematic status of commodities derives not from the mere fact of sale and purchase, but from the fact of sale and purchase under conditions which enable them to take on an independent life of their own. It is this independence of commodities which enables a social relation between men to assume the fantastic form of a relation between things: ‘The persons exist for one another merely as representatives and hence owners, of commodities.’ footnote4

Such an interpretation leaves open the possibility of creating a society in which goods are exchanged for money but do not have an independent life of their own; and in which persons do not exist for one another merely as representatives of commodities. This possibility, which requires not the abolition but the socialization of buying and selling and the price formation process, will be discussed in Part II of this essay. Part I lays the foundations through a critique of the key proposals made by Nove and Mandel.

Though this essay is about forms of economic co-ordination, its starting point is neither the market nor the plan, but the production and reproduction of labour power. In a capitalist economy the guiding thread is the production and reproduction of capital; the creative power of human beings and the expression and development of needs become subordinate to the drive for profit. The guiding thread of a socialist economy must be the production and reproduction of labour power. To give this priority requires transformations in relations to the means of production and to the means of consumption; transformations within places of work, and within households; transformations in relations between producers and consumers. The touchstone for judging any particular form of economic co-ordination will be its implications for the process of production and reproduction of labour power. This is a wider view than the traditional socialist focus on workers, which tends to look chiefly at the implications for labour power in the paid labour process. This is certainly an important dimension, and the way in which labour power is used up clearly has powerful effects on the requirements for its reproduction. But, as feminists have always argued, unpaid labour processes in the household and the community are at the heart of the production and reproduction of labour power. ‘Producers’ has to be given a wider meaning than ‘workers in paid labour’—a meaning which takes account of the fact that every producer was once a child, and will someday find their power reduced through ill-health and age. Defenders of socialist planning have placed far more emphasis than have advocates of market socialism on the implications of forms of co-ordination for labour, but, with a few exceptions, they have tended to take a narrowly ‘workerist’ view of labour. footnote5 In contrast, I shall give the household a central role.

Nove’s advocacy of market socialism footnote6 is undertaken in the name of realism: actually existing socialism has foundered because of the deficiencies of central planning, and the Marxist tradition has only utopian or plain mistaken guidelines to offer. The only feasible solution is to reduce the role of central planning and increase the role of the market.

In Nove’s view, the only realizable socialist economy is a dual economy: a dominant sector which is organized through ‘a system of binding instructions from planning offices’ (p. 44), and a large, though subordinate, sector which is organized through markets. The main feature that differentiates such an economy from a capitalist ‘mixed economy’ is the absence of any large-scale private ownership of the means of production. The economy is made up of three types of enterprise: state-owned, co-operatives, and individually owned businesses. Choice and democracy largely depend on the operation of the market and a political system in which the planners are responsible to an elected assembly. There is some concern for the transformation of the social and material relations of production, but not of exchange, distribution and consumption. There is not much focus on the reorganization of the labour process beyond an advocacy of small firms, and none on the reorganization of the relations between the production of goods and services and the production and reproduction of labour power.