In his book The Economics of Feasible Socialism Alec Nove criticizes the methods of Marxist economics, as misleading or irrelevant for the task of building socialism, and rejects the goal of Marxist politics—socialism without commodity production—as impossible of realization. Any effective answer to his objections must follow the same procedure that Marx employed in his study of the emergence of capitalism. In other words, it should not start from an ultimate ideal or normative goal to be achieved, but rather from the elements of the new society which are already growing within the womb of the old—from the laws of motion and inner contradictions of the capitalist mode of production and of existent bourgeois society. What has been the basic historical trend of capitalist development, from the Industrial Revolution onwards? A growing objective socialization of labour. All the interconnected laws of motion of the capitalist mode of production—the constant search for increased intensity and productivity of labour in the work-place; the relentless pursuit of new markets; the pressure to labour-saving technological change (rise in the organic composition of capital); the growing concentration and centralization of capital; the tendency of the rate of profit to decline; the outbreak of periodic crises of over-production and over-accumulation; the remorseless trend towards the internationalization of capital—all these together issue into this one end-result.

What does the objective socialization of labour mean? In the first instance it signifies the growing interdependence of both work-processes themselves and of the choice and production of the goods we consume. Such interdependence involved at most a few hundred persons for the average inhabitant of a European or Asian country in the fourteenth century. Today it embraces literally millions of people. But objective socialization of labour also betokens something yet larger. For what it implies is a dramatic extension of the planned organization of work. Inside the factory, once industrialization gets under way, it is not the market but planning which reigns supreme. The larger the factory, the greater the scale and volume of such planning. With the emergence of monopoly capitalism, planning reaches out from the factory to the firm—that is, in the modal cases, to multi-factory institutions. With the development of transnational corporations in the contemporary world, planning has become international—often indeed, juridically speaking, multi-firm in scope.

The consequence of this secular process has been a radical reduction in market-allocated labour under late capitalism, as compared with directly-allocated labour. The principal reason for this decline in market allocation of labour is not to be found in growing public intervention in the economy, or the emergence of the welfare state, or the conquests of working-class struggle—although all of these have contributed to the end-result. It lies in the inner logic of capitalism itself, and its peculiar dynamic of accumulation and competition. Of course, directly allocated labour can be accompanied by monetary book-keeping—as it is in the bureaucratized planned economies of the ussr, China or Eastern Europe. But this does not make it identical to market allocation. When General Motors has the spare parts of its trucks manufactured in factory X, the vehicle bodies in factory Y, and the assembly performed in factory Z, the fact that computer print-outs containing monetary cost calculations of the most minute type accompany the transport of the spare parts does not mean in any way that plant X ‘sells’ spare parts to plant Z. Sales imply changes in ownership, and with it an effective fragmentation of decision-making reflecting a real autonomy of property and financial interests. It is not the market but the planned target of truck output which determines the number of bodies to be manufactured. The body-building plant cannot ‘go bankrupt’ because it has delivered ‘too many’ units to the assembly plant.

Naturally, a capitalist market economy still rules in the sense that all these processes are typically limited to the stage of intermediate goods—that is, goods before they reach the final client (we say client rather than consumer here, because that client can also be another factory buying machines or the state purchasing arms). But its operation now has resort more and more to non-market mechanisms, not only in the sphere of production but of circulation. The fact that this economic socialization of labour under capital is accompanied by and intertwined with the growth of political forms of non-market labour allocation only makes the contradictions of the whole process yet more explosive.

We have been using the term ‘planning’. But the concept itself needs to be more precisely defined. Planning is not equivalent to ‘perfect’ allocation of resources, nor ‘scientific’ allocation, nor even ‘more humane’ allocation. It simply means ‘direct’ allocation, ex ante. As such, it is the opposite of market allocation, which is ex post. These are the two basic ways of allocating resources, and they are fundamentally different from each other—even if they can on occasion be combined in precarious and hybrid transitional forms, which will not be automatically self-reproducing. Essentially they have a different internal logic. They generate distinct laws of motion. They diffuse divergent motivations among producers and organizers of production, and find expression in discrepant social values.

Both basic kinds of labour allocation have existed on the widest possible scale throughout history. Both are therefore quite ‘feasible’. Both have also been applied in the most variegated fashions, and with most diverse results. You can have ‘despotic’ planning and ‘democratic’ planning (those who deny the latter have never looked at a pre-colonial Bantu village). You can have ‘rational’ planning and ‘irrational’ planning. You can have planning based on routine, custom, tradition, magic, religion, ignorance—planning rules by rain-makers, shamans, fakirs and illiterates of all kinds. Worst of all, you can have planning directed by generals; for every army is based on an a priori allocation of resources. You can likewise have planning organized in a semi-rational way by technocrats or, at the highest level of scientific intelligence, by workers and disinterested specialists. But, whatever their forms, all of these involve direct a priori allocation of resources (including labour) through the deliberate choice of some social body. At the opposite pole is resource allocation through objective market laws that a posteriori counteract or correct previously fragmented decisions taken by private bodies, separately or autonomously from each other.

Similarly, market economies in the sense of ex post allocations of resources have historically existed in the most variegated forms. In principle, there could be market economies with ‘perfect’ free competition: though in practice this has hardly ever been realized. There can be market economies skewed by the dominance of powerful monopolies able to control large sectors of activity and so to fix prices over long periods. Markets can coexist with drastic forms of autocracy and despotism—as they did under eighteenth-century absolutism, nineteenth-century tsarism, not to speak of various sorts of military junta or fascist dictatorship in the twentieth century. But they can also be combined with advanced forms of parliamentary democracy, as they have been in the latter half of this century—if in less than twenty countries out of the one hundred and fifty or so that comprise the capitalist world.