Re: Beyond Communism and Capitalism?

[Justin Schwartz <jschwart@xxxxxxxxxxxxxxxxxxxxxx>]

On Tue, 16 Jan 1996 HANLY@xxxxxxxxxxx wrote:

> Recently Doug Henwood wrote:
>
>  Market socialism may not be one's idea of utopia, but it's the only
> politically conceivable option for the next, oh, two centuries.
>
> Comment: Why is this so? Whenever wars break out the role of command versus
> market is accentuated even within capitalism.

Do we want to model a socailist economy on a war economy? In general,
central planning (CP) does very well for limited, specific goals, like
winning a war or building a space program. It does poorly on on the
day-to-day tasks of running a large modern economy which must respond to
diffuse and competing interests.

>  As ways of dealing with crises markets are hardly
> suitable, and I would not be in the least surprised if the present trajectory
> of capitalist development should produce crises on a world wide scale.
>
Two things. (1) The issue is comparative. Market economies have crisis
tendencies, but CP economies do too, argfuably worse ones, since they
collapsed because of them while market economies have survived.

(2) The question is, what causdes crises in capitalist market economies?
Is it their being market economies? Or capitalist ones? If mainly the
latter, then perhaps the solution is to take new investment out of private
hands and vest the power to decide how to invest, at least on the large
scale, in the the state or a central bank or CP Board. This is what Dave
Schweickart suggests. I commend his discussion.

    Re: Market socialism and Walras' Crier(Response, partly, to Justin Swartz)
> . Of course the state could play a
> role analogous to the crier but the function of this would be simply to
> do exactly what markets would do under Walras' equilibrium model , maximize
> production, generate efficient,pareto optimal results etc.

Right, that was what Lange proved. I don't subscribe to this model because
I think the information demands on a CP economy would defeat the
auctioneer's attempts to attain equiulibrium, practically speaking. Lange
later came to think so too, and moved towards a market socialist
perspective.

>  But to think this way is already to
> accept as Gospel the basic concepts of the model and that model embodies
> concepts that are central to the ideology of capitalism not socialism. It
> is to maximise production based upon THIS MODEL a model of individuals
> competing to maximize their utility by exchanging  commodities.

Why so, if the market is only one awy to attin the equilibrium (in
theory)? On the early Lange model, you have no exvhange of commodities, in
fact, no commodities, and individuals are not the main agents, rather the
CP Board is. Of course you do take into account individual's preferences,
but what's wrong with that? And waht's wrong with making everyone as well
off as they can be (Pareto-optimality) if you can do it?

 Even if you
> as a socialist redistribute, so that initial endowmnents are in some sense 
> equal
> the whole model is an ideological sinkhole
>  and is a deductive analogue of the stories about
> making everyone equal in the great race (to exchange) or the pursuit of
> happiness according to ones own lights etc.etc

I don't undertstand the objection. What is wrong with the pursuit oif
happiness acording to one's own lights? I should pursur happiness
according to _your_ lights, maybe?

 It is a "socialist" reflection
> of many of the same basic ideological myths as are incorporated in the
> capitalist use of the model. It is not just that CAPITALIST FREE MARKETS
> are not acceptable, it is that Walras' model is ideologically warped
> when interpreted either as a model for capitalism or socialism.

So far, not proven. I don't think the model is very good for either, but
not for this reason.

 Any socialist
> who believes that free individuals exchanging in free markets to maximize
> their utility

Look, given the general equilibrium assumptions, it is a _theorem_ that
free markets make everyone as well of as they can be. The problem is taht
the assumptions are desperately far from reality, so far as to provide a
non-very-useful model of the economy.

And again, the Lange general equilibrium theorem _has no markets or
exchange._ Lange's acheivement was to show that youcan get Pareto
optiomalityy and equilibrium, in theory, and on the same kinds of
assumptions as Walras (no transactions costs, notably), without markets.

 is the ideal for socialism simply swallows the myths created
> by capitalism of the free individual in uncoerced contract seeking their own
> happinesss as the ideal of social organisation. Compared to feudal or slave
> ideologies this may be superior but it is hardly the best, even best feasible
> mode of production, distribution and exchange.

The Walrasian model isn't better than feudalism. It's impissible. So,
alas, is the Lange model. But if you have a better alternative than a
market economy, tell us what it is.

>
>   Just for starters:
>      Any market system rations on the basis of income. In fact as Marx
> has pointed out the one need becomes money under capitalism. No money no
> need. But doesn't this apply
> to any market system?

Yes. In a world of scarce respurces you need to ration on some basis.N

 Under market socialism do you have money, and if you have
>  money won't needs be measured by effective demand -that is needs backed by
> purchasing power rather than some other means?

Sure, so you need to make sure that everyone has enough money for their
basic needs. That's what taxation is for.

> How do you ensure that those who have pressing needs but no money have those
> needs met in the market? Do you then subsidize these people and create
> a sub-optimal situation in efficiency terms.

OK, but we have already set aside the goal of attaining impossible
equilibria. If the alternative is inefficiency or injustice, who choose
justice as long as the inefficiency is not catastrophic.

 For example let us suppose
> we are socialists and must decide whether to cure grandma.
> We have a socialist market health care system:
>   We have a grandma who has no friends and no income.

Under a socailist system, market or no. health care is nationalized.
Moreover Grandma has a pension or other state support. As Marx remarked,
we need to provide for those unable to work. That's what justice requires
(though Marx wouldn't say so).

No one is willing to pay
> for her continued medical treatment but she needs it. Her treatment in market
> terms is not justified, assuming there is no possibility of her paying for her
> treatment out of future income. Her treatment is not even a potential pareto
> improvement and thus by the neo-classical model is not
> warranted.

As I say, the NCE model is not my favored rationale for markets. I go with
Hayek, rather, and defend their superioritya s information processing systems.

 Note that I need not suppose that any player in the medical market
> is a capitalist. I suppose your answer will be an analogue to the capitalist
> libertarian story: Surely people are charitable and would be willing to fund
> this through taxation. Insofar as the state does subsidize then it departs
> from the ideal, whereas surely it seems evident that it is NOT departing from
> the supposed ideal that is screwy.

Sure.

 Of course I am not saying that medical
> care need not be rationed but it should be rationed on the basis of medical
> need not ability to purchase medical care in a market.

But it doesn't follow that all goods should be distributed on the basis of
need. I like jazz. Do I need it? Who's to say? Is it wise, or just, or
good, that I should be allotted the average number of coupns for CDs or
concert tickets, while someone who doesn't care for music at all also gets
these? Isn't that a waste of resouirces? Should we be made criminals if we
exchange his coupons for mine? Why not avoid all the qiestions and me buy
CDs and tickets for money and let him buy what he needs for money?

The point isn't restricted to "nonnecessities" like music. Some
necessities like food and clothing and housing are very taste-dependent,
unlike medical care,w hich is pretty standardized. Best to distribute
these on a regulated market, guarnteeing everone an adequate income to get
what they like.

>   I really don't know what if any the role of markets would be in socialist
> society. Markets do give choice and freedom to choose TO THOSE WITH ADEQUATE
> funds. However, technology developed within advanced capitalism may make
> choice possible without markets per se. For example, now we have all sorts of
> bookstores with tremendous choices for people. There is a huge book market.
> However, if everyone had a computer and all books were in a central state
> depository on line, then anyone could retrieve and read any book they chose
> with no market. Surely, in some sense this would be a much more efficient
> system than what we have now and quite feasible in technological terms and
> it may be that the resources required to make this depository available free
> to everyone are not all that large, certainly not as large as the multitude of
> bookstores etc.

But books are more than text: they are objects that some people like. And
bookstores are more than depositories. They are meeting places, public
spaces, nice environments, these days, even coffee shops.

And I don't know how you would manage your suggestion with food or
clothing or other things which cannot be sent over the net, or which have
to be tried on, etc.

Albert and Hahnel have an elaborate, compter-based nonmarket proposal, the
best around. I can critique this if people want.

 that constitute the present market system. Maybe we can even
> tolerate the inefficient market socialists who like the aesthetic appeal
> of dust jackets and the ambience of walking among rows of books, but we will
> coerce them into tax-supported non-market distribution of books as well ;-).
> They could even write nostalgic novels about the old days when books were
> always treasured material objects personally owned, and we could place these 
> on
> line too.

I'd support nonmarket distribution of books on line. But I think paper
will be hard to replace. Computers in fact generate more rather than less
of it.

--Justin Schwartz








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