Re: [OPE] market socialism

From: Alejandro Agafonow (
Date: Mon Jun 30 2008 - 09:47:18 EDT

Dickinson, Henry D. [1939] 1971. Economics of Socialism, New York: Books for Libraries Press.
«The most efficient statistical service in the world will not make it possible to predict, without a large margin un uncertainty, whether spots will be more popular than stripes next season, how a new film or musical play will go, what will be the reception of a novel, a gramophone record, or a mechanical “Mickey Mouse”. In the minds of many people who think that planning can eliminate uncertainty lurks the idea that uncertainty may be abolished by abolishing consumers’ freedom of choice. But this is like cutting off one’s feet in order to keep one’s socks from wearing out. The economic organization of a socialist society should exist to satisfy human needs: variety and choice are human needs no less than so many calories of food and so many square metres of floor-space.[…] On the other hand, variety and freedom of choice involves the risk that goods may be unsold or saleable only below cost; this is a waste, and waste must be paid for.»
 (pp. 98-97)
JERRY, I doubt that “business cycle” and “inflation” are valid categories for differentiating between capitalist and socialist economies.
Since there is a consensus among socialists about the importance of citizens’ freedom of choice -at least I think so after studying Cottrell and Cockshott’s Socialism-, “business cycle” and “inflation” are universal phenomena. But for obvious reasons it is difficult to think about them in a planned economy.
The difference is that Cottrell and Cockshott’s arguments try to show how their balancing algorithm will counterbalance “business cycles”, while Market Socialism –at least as I conceive it incorporating some Hayekians aspects- will try to take advantage of the disequilibria manifested in these cycles, with the purpose of exploring lower opportunity costs due to the entrepreneurship capabilities of the more efficient socialist managers.
In a labour value accounting economy “inflation” manifests in an increment of labour tokens, necessary to buy products that has experimented an increase in their demand until lines are formed. C&C expect to counteract it, diverting more resources (labour time) to their production. But the important thing is that the phenomenon is present due to an increase of the scarcity of these products.
One can even imagine a situation of a turning business cycle, so that most of the existing goods experiment a decrease in their demand and citizens willing to consume goods not produced yet. So we would have a declining cycle, a period of unproductive labour and the necessity of a massive readjustment of the productive apparatus (diverting labour time to the production of most wanted goods).
Concerning unemployment and large income inequalities, we have already discussed them. Even in capitalist Scandinavia they are shockingly low because we have the mechanisms to relatively isolate labour force from the accidents of market. 
And yes JERRY, there is “a [potential] contradiction between the principles of efficiency and ‘socialist ethics’”. But, is not there a contradiction between socialist ethics and a “bureaucratic oligarchy”?
Cuba, Soviet regime, China, North Korea, etc. proved that there is indeed.
The important thing is that, due to a reduction of private ownership over means of production and a social consensus progressively achieved, this contradiction would be lower in Market Socialism –and in a representative Marxist democracy like the C&C.
Concerning the figures you cited about payment differences in the former planned economies, they disguise the huge non-pecuniary advantages and resources that “bureaucratic oligarchy” enjoyed. The problem is that we don’t have figures about this because open channels for accountability upon Socialist dictatorships are missing for obvious reasons.
Concerning DOGAN’s worry, you can not refer to "social harmony" and "social regarding" only in philosophical terms. These philosophical bases have to justify concrete and feasible mechanisms. Where are your mechanisms? I always refer to my ones!
And not DOGAN. Germany has never achieved the level of progressiveness that has Scandinavia. Take a look at EUROSTAT and OCDE reposts. Scandinavia emerges as a specific model in all the key indexes and figures. Germany always falls behind.
In the scientific literature about Welfare State, Scandinavian model is characterized as “institutional”. But Germany has another model, a “conservative” Welfare State due to the prevailing influence of corporatist interests upon the shape of institutions.
Kind regards,A. Agafonow

----- Mensaje original ----
Para: Outline on Political Economy mailing list <>
Enviado: domingo, 29 de junio, 2008 22:16:54
Asunto: RE: [OPE] market socialism

> Is there any problem with “consumer sovereignty” –as JERRY think- having 
> all the provisos we foresee and these mild inequalities? Of course there 
> is not.
Even the leading  advocates of market socialism (such as Nove and Kornai) 
came to realize - though *experience* - that there were indeed problems.  
If you want to evaluate market socialism, you have to critically evaluate the
historical experiences where some variation of it was adopted. Kornai was
very clear about this: he argued that there was - especially in Hungary 
under the NEM - was a contradiction between the principles of efficiency 
and "socialist ethics".  For any system of material incentives to be
effective there must be income inequalities, he argued. Yet, this 
anti-egalitarian system conflicts with the principle of equal pay for
equal work and contradicts the socialist principles of solidarity, 
security, and full employment. In Hungary, there was also the problem
of "Departmentalism", e.g. where managers lobby the state for subsidies
and tax allowances. Kornai was very blunt in suggesting that there was 
no easy or general solution for these contradictions.
What you call "mild inequalities" was anything but "mild" in many
of the countries which adopted market socialist models. In the former
Yugoslavia, for instance, some firms paid skilled workers twenty times
the salary of unskilled workers! (By contrast, the ratio in the former
USSR was about 3.5 to 1). In 1981 the top 10% of income earners received
23% of all income. This compares to the top 10% earning 27% of all
income ... in the USA!  
The chickens of market socialism really came home to roost in Yugoslavia
in other ways.   
For example:
- increasing inflation rates (1.5% from 1956-1964; 10.4% from 1965-1970;
14-5% from 1976-1980). Note the trend!
- increasing unemployment rates (5.5%  in 1960-65; 7.5% in 65-76; 12% 
from 1977 to 1980). Note trend!
The question that was asked at the time by many socialists was "is this
socialism?". What kind of "socialism" has the business cycle, unemployment,
inflation, large income inequalities, etc.?  
In solidarity, Jerry

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