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’.
Some spirited defences have recently been made of non-market forms of economic co-ordination, particularly by Ernest Mandel,
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and Nove is about the possibility of a society of freely associated producers in which commodity production has been superseded, rather
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
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.
This neglect is not specific to Nove: most of the discussion of the organization of a socialist economy has the same productionist bias. It is concerned with the transformation of the relations of production in the workplace, but fails to rethink the relations between production and
There is no sign of the politics of use values, or of popular participation in planning through direct cooperation between organizations of producers and the households which use their products. footnote7 Nove places little value on self-organization at the grass roots and is particularly suspicious of the role of trade unions, which are seen as obstacles to necessary economic reforms in both capitalist and socialist countries. Public action, for members of Nove’s socialist society, seems to be confined to buying, selling, and voting.