Socialism As It Was Always Meant To Be


[This essay is part of the ZNet Classics series. Three times a week we will re-post an article that we think is of timeless importance. This one was first published September, 1999.]



As the twentieth century draws to a close, what have we learned about how we should manage our economic affairs? What should we do if we had the opportunity to start again?


 We could hold a lottery, or perhaps have a brawl to decide who owns what productive resources. The unfortunate losers would have to hire themselves out to work for the more fortunate winners, and the goods the losers produced could then be "freely" exchanged by their owners — the people who didn’t produce them. Of course this is the capitalist "solution" to the "economic problem" which has been spreading its sway for roughly three centuries. Based on that experience we can predict, with great confidence, that private enterprise market economies in a "second coming" would generate inequality and alienation just as they have the first time around. The only difference would be that "born again" capitalism would surely kill us all since it would begin with "initial conditions" — 5 billion people, modern industrial technology, and an already damaged ecosystem — that would do in mother earth in fairly short order. God has given capitalism the rainbow sign. No more water, the fire next time!


 Alternatively, we could make the best educated, or perhaps most ruthless among us responsible for planning how to use society’s scarce productive resources and for telling the rest of us what to do. But that was tried with questionable results. To make a long story short, after a troubled half century "command economies" are on their death bed. So whether public enterprise, centrally planned economies yield more or less alienation, apathy, inefficiency, and environmental destruction than their capitalist rivals is, practically speaking, a moot point. In any case, we know authoritarian planning does not yield equity, efficiency, and economic democracy.


A third alternative is to declare all physical means of production and natural resources part of the public patrimony and have everyone work for public enterprises which would then "freely" exchange the goods produced. A little thought reveals there could be different variants of public enterprise market economies. The fact that enterprises are publicly owned and goods and labor are allocated by markets, does not settle how enterprises would be managed or financed. One possibility is for the state to select, train, and appoint experts to manage production. The other possibility is for employees to hire their own managers. In either case enterprises could be self-financing out of their own revenues, financed out of the state budget, or some combination of the two.


Many anti-capitalist economists now support one or another of these variants of public enterprise market economies. The variants have important differences, and some are worse than others. (For example, we do not assume public enterprise market models are unattractive simply because eastern europeans have rejected them for capitalism and the Yugoslavian economy has fallen on hard times. The equation of public ownership with totalitarian communism by most East Europeans is understandable but unwarranted. And the disastrous economic policies of recent Yugoslav governments combined with impossible ethnic conflicts bear a great deal of responsibility for the collapse of the Yugoslav model. Instead, we reject public enterprise market systems on other grounds.) But they all share three major deficiencies:


(1) All variants of public enterprise market economies distribute the burdens and benefits of social labor unfairly. The distributive maxim implicit in public enterprise market economies is "to each according to the social value of his or her labor." Contrary to popular opinion in many "progressive" circles, this outcome is neither fair nor efficient.


(2) Received wisdom not withstanding, markets allocate resources very inefficiently, and create a great deal of environmental destruction and antipathy among buyers and sellers in the process.


(3) Markets create a social environment in which a class of managers, professionals, intellectuals and technicians — who we call coordinators — increasingly dominate and ultimately exploit ordinary workers.


Are there other alternatives? Some who reject capitalism, authoritarian planning, and public enterprise market models propose a vision of local self-reliance combined with direct democracy a la New England town meetings. They argue that reducing the scale of economic institutions and increasing the self-sufficiency of local geographic units can reduce alienation, cut transportation costs, and promote ecological balance. Small is beautiful. Communication and democracy works if done face-to-face. Avoid the negative repercussions of markets and central planning by decentralizing large, national economies into small, economically self-sufficient communities.


While the participatory and ecological goals of those who endorse small scale autarky are praiseworthy, the outcome would not be. Even if it were possible for every community to democratically decide how to produce and distribute everything it needs, there would be a terribly costly duplication of efforts as well as unjustifiable inequalities. But in the likely event that communities rediscovered the advantages of the division of labor, the model doesn’t provide a clue to how they should arrange to specialize and trade with one another. Should goods and services not produced by every community be traded in free markets? If so, why wouldn’t this lead to the usual inequities, hostilities, and inefficiencies? Should communities attempt to plan mutually beneficial economic relations? If so, how should they go about it? In the end, the problem of devising desirable allocative mechanisms won’t go away.


Finally, what is wrong with the original socialist vision? Why can’t workers in different enterprises and industries, and consumers in different neighborhoods and regions, coordinate their joint endeavors themselves — consciously, democratically, equitably, and efficiently? Why can’t councils of consum

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