Planning and the Market
Socialist Outlook1990sPhil HearseScanned print read by OCR, and not yet proofread: expect run-together words, dropped letters and, where a piece began partway down a page, a few lines of its neighbour. The printed page is the authority.
The bankruptcy of the Stalinised economies, and the experience of bureaucratic nationalisation in the West, has understandably created a ferment of discussion about what a feasible model of socialist economy might be.
But pro-capitalist ideologues carry out a sleight-of-hand when they conclude that the Stalinist command economy, and the experience of bureaucratic nationalisation in the West, have proved that any form of socialised economy must be bureaucratic, authoritarian and inefficient. The choice which they present - either a bureaucratic command economy or the capitalist market - is a false
one. To see what the alternative might be, we have to explain why the Stalinist economies crashed.
In our opinion, the answer to this is that the Stalinist command economy (and indeed nationalisation in the West) was, over time, inefficient precisely because it was authoritarian and bureaucratic. Inefficiency and growing chaos was the result of trying to administer everything from the top - the huge over-centralisation, with the national ministries trying to determine everything. Various types of economic system cannot be democratic or undemocratic at will: a Stalinist type economy had to be dictatorial and authoritarian to function at all; a socialist economy which works to meet peoples needs has to be democratic.
Our starting point is a rejection of the idea that only the capitalist market can provide democracy and 'consumer choice. In fact, despite the provision of a wide range of goods and services, the contemporary capitalist market is profoundly undemocratic in its allocation of the resources of society. There is no 'consumer choice' or 'democracy' about the way that the total social product is divided up between profits, armaments, welfare provision, investment, wages etc. All these things may be influenced by working class struggle, but in the end they are either the decisions of national and international capitalist corporations, or the decisions of capitalist governments- which are constrained by the decisions of those same corporations. Democracy through the choices of the individual consumer is a myth of monstrous proportions.
Neither is there real consumer choice about which products are produced. Exactly which consumers decided, democratically, that there should be 87 identical washing powders, each with their own costs of development, packaging and advertising? Or 500 near-identical computers with immense overheads of development and competitive marketing? No sensible person would 'choose' to have this situation: it is a product of capitalist competition, outside of any democratic decision.
The first rule of socialist economy must be the bringing of the basic decisions about the allocation of society's economic resources under democratic control. But this fundamental of 'economic democracy' has immense implications about the shape of a socialist economy. It means, at least, that the basic investment decisions have to be collectively made. And since they have to be made simultaneously (you cannot allocate 80 per cent of GNP to investment and 80 per cent to wages) they have to be part of an
overall plan.
It follows that the main production units in society have to be in social ownership. Why? If they remained in private ownership it would mean private companies which had their wages, profits, investments and products severely constrained by the national economic plan. But this removes the very motive for individual ownership, which is precisely to maximise profits - and which in tur requires private decisions on all fundamental issues of the allocation of resources. A private company that has its major parameters planned for it is really a socialised company. The reason for being a capitalist owner would be removed.
But these general considerations do not give us any detailed ideas about the way in which a socialised economy would work. For examples, what is the role of market mechanisms? Is there a role for strictly private enterprise?
The Market So long as we do not have infinite economic resources, the social product has to be divided between investment and consumption. Either consumption goods for individuals can be directly allocated (rationing) or they can be bought and sold. If we don't have rationing we have to have a market. In a socialised economy, however, some goods ard services presently 'marketed' to consumers - like public transport - could be of minimal price or free, in effect directly allocated.
But the majority of the needs of households and individuals would be bought and sold. A socially-owned economy, with a democratically-decided national plan, could allocate resources to consumption goods based on market indicators. For example, a drastic decline in the number of video recorders bought (highly likely in a society where leisure ceased to be privatised in the nuclear family) would lead to an adjustment in the plan. It is a myth that planning cannot respond to consumer preferences expressed in the market. Of course, opinion polls and consumer surveys could provide some data about the priorities of consumers. But the concrete fact of which goods consumers actually bought would be a decisive criterion for planning production.
Pro-market ideologists argue that national planning is too slow to respond to consumer preferences. But this need not be the case.
In the first place 'consumer preferences' in capitalist society are highly structured by what big corporations decide to make and aggressively market: we take it for granted that in a socialist society there would not be a spontaneous demand for yet another type of Jaguar car which the plan would have to respond to. We take it for granted that the obsessive and morbid consumerism of capitalism would gradually subside. But to respond to changing consumer preferences socialised 'firms' must have some freedom to swivel their production priorities. This is why a national plan cannot - as the Soviet Gosplan allegedly did (but in reality didn't) - plan the whole of the economy, from raw materials to every finished product. Not only does this prevent adaptability, but there are just too many decisions to be made.
The national plan in a non-bureaucratic economy would have to concentrate of making the basic choices between investment and consumption; between resources allocated to social needs like health, transport, and the social infrastructure in general; and resources allocated to individual consumption.
There is no reason why there should not be a private sector of small firms, both in production and distribution. Huge retail conglomerates (like Marks and Spencer and Tesco) would logically become social property: they would not be more efficient by being private or broken up. But the thousands of small retail outlets could easily stay in private hands; a portion of the 'profit' on goods would stay with the private owners for their consumption needs. Equally, there could be definite advantages in having a private production sector of small firms and co-operatives, free to make their own decisions on what to produce, which could help to meet new and unexpected demands in the marketplace. Provided that they were limited in size, limited by taxation in the amount of profit they could make, and subject to strict guidelines on the pay and conditions of their workers, they could be a useful auxiliary to socially-owned firms. This is not to argue for a 'mixed economy', but merely to state that in the first phase of socialism a sector of small firms, rigorously controlled and subordinate to the much larger social sector, could be a useful adjunct aiding flexibility. Choice and democracy A socialised economy need not eliminate choice for the consumer; indeed it would make it more rational and extend it. The basic
choices of allocation of society's resources between sectors would come under public control for the first time.
Irrational choice - the 'freedom' to choose between 78 washing powders, 257 brands of identical lager or 137 different microwave cookers - would probably be eliminated. But there are much more important choices to be made by individuals and society as a whole. More socialised services - for example an extension of the number of cheap, socially owned restaurants and a huge increase in the allocation for socialised child care - would decrease the demand for consumer durables. Choice for individuals would gradually revolve around what they do rather than what they own. A radical reduction in what individuals pay for housing could quickly increase private real incomes.
But the radical restructuring of consumer demands through increased socialisation should not be allowed to limit the choice of those goods and services which people wanted a variety of. Clothes, food, restaurants, and books are obvious examples. The important thing at every stage is that the resources allocated to each sector - and by extension to the number of different products which could feasibly be produced in each sector - would be the subject of democratic decision.
Efficiency and innovation But what would make a socialised economy tick? What would generate innovation and growth? In capitalist society the drive for profit is the key to innovation and cheapening production. In the bureaucratic economies it is the logic of the bureaucratic plan that obstructs innovation and efficiency.
The basic answer is democracy. Workers in the Eastern bloc, by contrast, have no interest in making innovations and making production more efficient because they gain nothing from it. In a society in which the plan was under democratic control there would be two key factors for workers and work units to make their production more efficient and to innovate.
First, if - within the guidelines of the plan - individual work units were free to democratically organise their production (hours of work, organisation of work etc.), workers would have an inbuilt motive for making their work less time consuming and more
efficient. This could generate a collective desire to organise the work efficiently, and to dispense with oppressive labour discipline characteristic of capitalism.
But second, if (and only if the overall direction of the economy were under democratic control - and there was no capitalist or bureaucratic elite engaging in conspicuous consumption - a sense of collective effort and identification with the common goals of society.
Individual technological innovations could be rewarded not only by prestige for those who developed them, but in the early stages of a socialised economy, by material incentives as well. The whole point of a democratically socialised economy is to unleash the tremendous knowledge, skill and capacity for imaginative leaps and innovation which remain locked up' and repressed in workforces dominated by oppressive labour discipline. Two things are critical for doing this: democratic control over the national plan, and workers self-management in firms and production units. Choices over economic growth Capitalism has an in-built tendency (in boom periods at least) to technological innovation and economic growth. In a socialised economy more fundamental choices about growth could be made. In any case, there must be a limit to economic growth. There are only a limited number of material goods that any one individual can use.
Moreover, economic growth might be limited by ecological considerations. Workers might choose, in debating the national plan, to have less economic growth in return for shorter working nours. From this point of view, it is wrong to pose the question of how a socialised economy could do everything that a capitalist economy does. In a socialist economy we would not want to do everything that a capitalist economy does. It seems likely that any kind of socialism would prioritise improvements in the quality of life, which is not exactly identical to the pathological production of more and more things.
Free time is the most precious commodity which is denied to workers by capitalism and bureaucratic regimes. More free time, together with the basics of health care, more socialised domestic labour, education, affordable public transport, housing - together
with the availability of rational choices over individual consumption - are possible in a socialised economy. No proponent of the market even dreams of these things.
Democracy The worst aspect of the crisis in Eastern Europe, from an ideological point of view, is the apparent social choice which is presented: either a state economy with no democracy or capitalism with democratic freedoms. To win any mass following socialists have to appropriate democracy, not only in the kind of society they argue for; not only in the immediate goals they fight for; but in their practices in the labour movement in general and their own organisations in particular.
Authoritarian forms of social organisation always have their root in the defence of material or social privilege, rather than just in authoritarian ideology. That can be the privileges of classes, of bureaucratic elites or political leaders. The maintenance of any form of social privilege always requires the exclusion of the non-privileged majority from active participation in decision making. Active democracy at any level - in society as a whole or in political organisations - requires free time, the wide dissemination of information, and open structures of participation, together with the sovereignty of the majority expressed through votes. This is why active democracy is utterly incompatible with an economy dominated by the market; in a market-dominated economy the central economic decisions, the basic allocation of society's time and resources, are decided informally by powerful groups and cliques. Weshall not here make an extensive critique of democracy under capitalism ("bourgeois democracy). We take it as read that although these societies have wide formal and actual freedoms - of speech, publication, political organisation - the meaning of these freedoms is circumscribed by unequal access to resources, information and the material means of power and decision making. Is an alternative possible without descending into one party rule or bureaucratic tyranny?
Unless one presumes some evil and eternal human nature, a democratic socialist system must be feasible. What would be its central characteristics? Practical socialist democracy would have to integrate two central factors. First, that real democracy is active democracy, with the right of citizens to be semi-permanently
involved in decision-making, especially over their own lives, and the decisions of the collective enterprises - from factories to housing estates - in which they participate.
Second, any national structure of democracy is always representative democracy. There can never be permanent participation of the whole of society in every single decision; at some level delegation, and the election of delegates, has to be accepted. How, then, could active participatory democracy at the base' of society be articulated with a 'representative' national structure? Working out an exact blueprint in advance is not possible. But some basic principles are clear.
Every citizen should have an equal voice and vote in decisions of institutions to which they belong. The proposals about how to organise a particular office, factory, club, local citizens committee etc. - should be debated openly and voted on. Decisions should be taken always at the lowest viable level. The principles of 'workers self-management' should be extended to every institution in society.
Socialist democracy is the democracy of multipartyism. Only parties that organise armed struggle against the state should be repressed. But for multipartyism to be democratic it means democratising access to the means of propaganda and the media. All political parties should have access to finance; all organised political and citizens groups should have access to the printed media and television. The democratisation of the media is a fundamental of democratic socialism. All workers and citizens groups, all political parties, should have access to meeting halls and offices. Even in a regime of workers self-management, some form of national assembly would be required. The precise form of election of such an assembly cannot be predicted in advance. Perhaps it would be directly elected in a general election; perhaps partly directly elected, partly elected as delegates from local and regional working class assemblies. In any case, delegates to a national assembly should be instantly recallable by their electorate and paid no more than the average wage. Politics would thus be 'de-professionalised'.
It goes without saying that a socialist democracy would represent, in all elections, political viewpoints and parties in strict proportion to the votes cast for them. The basic premise of socialist democracy is social control over the economy. The extension of democracy inherent in socialism is not simply the democratisation
of the formal mechanisms and institutions of power; neither is it simply the vast opening of the continent of politics to the masses of the people; it also vitally consists in a dramatic widening of thescope of political decisions, away from secret industrial, banking, military or intelligence cabals, to the open and public decisions of the people. Such democracy is literally impossible without a socialised economy.
Socialist democracy then is the notion of a society in which active, participatory democracy is structured in a system of workers self-management and political pluralism, freedom of information, democratic control at every level, and the 'de-professionalisation' of politics. It means involving people in active 'politics' through ensuring their decisions actually affect their lives. Of course, this is not what people experience in 'democratic capitalist countries today; but neither is it what they experience in the organisations of the labour movement. Socialist democracy is not just simply about abstract democratic goals for a future society: it is about the demands we fight for in society now; and it is about the way we conduct our own affairs in the labour and socialist movement. The two things are linked. The acceptance by the right wing of the labour movement, and the bureaucracy, of the present undemocratic order of society, is linked to the way they run their own organisations.
If the goal of socialist democracy has to be fought for by socialist and democratic methods, two things are needed. First, a fight against the bureaucratic domination of the labour movement. The fundamental factor here is the existence of the trade union bureaucracy as a definite social layer with its own privileges, and its own material and political interests. The democratisation of the labour movement means the open election of all officials, democratic decision making at every level, and full time officials being paid no more than a skilled worker.
Second, socialists have to be the foremost fighters for democratic rights under capitalism. This doesn't mean that we can permanently establish and maintain democratic gains: so long as capitalism exists democratic rights can be taken away - the reintroduction of the death penalty in the USA and Clause 28 in Britain show this. But by championing an extension of democratic rights under capitalism, through such things as a Freedom of Information Act and proportional representation, we can both fight for reforms that make the struggle for socialism easier by giving the working class more
space to organise and assert itself; expose the inadequacies of existing 'democracy; and show that socialists are not indifferent to, but are the best champions of, democratic rights.