Market socialism

Market socialism also called commodity socialism is a Marxist term used to describe different corporatist economic models with workers' control of production that, to a greater or lesser extent, They rely on market mechanisms for the construction of scientific socialism.

Many of these models support the idea of socialism with autonomous socialized companies making decisions about what, how much and how to produce through the dispersed information provided by the price system which would allow a rational economic calculation. Some of these currents defend that the market should not be confused with capitalism. Likewise, within the different models of market socialism, some place greater or lesser emphasis on the compatibility of deliberate economic planning (centralized or decentralized) with the market. Likewise, some of the non-Marxist socialists are radical defenders of the free market, so they defend market socialism not as a means but as an end, on the other hand, Marxist socialists (that is, communists) who defend market socialism do the same. They defend it not as an end but as a transitional stage ultimately leading to communism.

On the other hand, the term is also used to refer to some types of State capitalism "necessary" for the full consolidation of socialism.

The expression "market socialism" is a broad term, which includes different models, such as the "socialist market economy" or the "socialism-oriented market economy", which specifically correspond to the economic systems of China and Vietnam respectively, the "New Economic Mechanism" of Laos, among other models that link socialism with the market.

Theoretical development

Prefaces

According to Dimitris Milonakis, although the origin of the term as such is found in the debates on economic calculation in socialism in the 20s and 30s of the 20th century between Austrians and Marxists, its The basic idea (the combination of the market with the aspirations of socialism) goes back to the origins of socialism itself. Early proponents of some form of market socialism include Thomas Hodgskin with his anti-capitalist free market proposal within Ricardian socialism, libertarian socialist Pierre-Joseph Proudhon's philosophy of mutualism and classical liberal philosopher John Stuart Mill's defense of a decentralized or "cooperative" socialism.

Modern Social Democracy

Although in its origins social democracy was an ideology closely linked to Marxism that sought to achieve evolutionary socialism through legislative reforms, over time it accepted market mechanisms to a greater extent but also limited itself to maintaining a reformed capitalism within the framework of a mixed economy with state social welfare programs. However, there are still social democrats who defend the objective of achieving socialism and who even trust to varying degrees in market mechanisms.

Democratic socialism

Democratic socialism is a very varied political philosophy but that maintains democracy as a common fundamental pillar for a non-authoritarian development of socialism. Democratic socialism can defend both revolutionary and reformist policies. Some schemes support proposals such as market socialism, participatory economy or planned economy.

Marxism

Although Marxism proposes the overcoming of the market (communism) as its final objective, different authors have described certain elements of the market within Marxist thought, from Karl Marx and Friederich Engels to later Marxist theorists.

The Marxist Teodoro Santana Hernández defends that the market should not be confused with capitalism and affirms that "the whole of the planned economy and the market economy liberates the productive forces and accelerates economic development, a condition sine qua non for the triumph of socialism.

For his part, the Argentine Marxist economist Rolando Astarita attacks price controls as a measure of class collaboration since, in his opinion, "they serve to deactivate union demands and induce the exploited to "cooperate"", in his opinion. time he warns that as "economies become more complex, in which interdependence increases, it becomes clearer that control has extremely short legs."

In this sense, the Venezuelan Marxist economist Manuel Sutherland also defends the thesis that Marxism does not defend either price control or exchange control and following Marx's Discourse on free trade emphasizes the defense of free trade as a factor that accelerates the social revolution and the rejection of protectionism as reactionary and a retarding element of the revolution.

In the words of Marx himself:

But in general, the protectionist system is in our conservative days, while the system of free change is destructive. It runs the old nationalities and leads to the extreme the antagonism between the bourgeoisie and the proletariat. In one word, the system of free trade accelerates the social revolution. And only in this revolutionary sense, I vote, gentlemen, for free change.

Karl Marx

Similarly, Friedrich Engels attacks "utopianists" like Johann Rodbertus for wanting to violate economic laws such as the law of value of the price system:

In a company of producers who exchange their goods, want to establish the determination of the value for the working time, prohibiting the competition from making this determination of the value through pressure on prices, that is, the only way this can be achieved, only means to show that, at least in this field, the usual contempt of the utopians for economic laws is felt.

Friedrich Engels

However, Engels affirms that the law of value is inherent only to commodity production:

In a company of producers who exchange their goods, competition puts into action the law of value, inherent in the production of goods, thus establishing an organization and an order of social production that are the only possible in the circumstances given.

Friedrich Engels

In this sense Marx explained that depending on the development of the productive forces, human beings acquired particular relations of production "necessary and independent of their will"; and that upon reaching a certain point they entered into contraction with each other, altering the legal and political superstructure, which revolutionized property relations and stated that "new and higher relations of production never appear before the material conditions for their existence have matured within." of ancient society itself." On the other hand, Marx indicated that "law can never be superior to the economic structure nor to the cultural development of society conditioned by it"; Therefore, he recognized that while advancing towards communist society, various defects inherent to capitalist society, such as the persistence of bourgeois law and the economic laws of commodity production, are inevitable.

Likewise, Engels pointed out in Principles of Communism that it is not possible to immediately abolish private ownership of the means of production but that it is a gradual process in which it is not only necessary to improve the means of production. of production but also the correlative development of the skills of the people who manage these means and affirms that the "collective management of production cannot be carried out by men as they are today, men who each depend on a specific branch." of production.

However, according to Marx, when the "higher phase of communist society" is reached, the residue of bourgeois law and the law of value becomes unnecessary to base the economy on needs:

In a higher phase of communist society, when the enslaving subordination of individuals has disappeared to the division of labour, and with it, the contrast between intellectual work and manual labor; when work is not only a means of life, but the first vital necessity; when, with the development of individuals in all their aspects, the productive forces also grow and run to full collage the horizons of collective wealth, only then can the whole of society be reduced.

Karl Marx

Later Marxist theorists developed different visions that today are usually included as forms of market socialism. Of these there are three basic models: 1) the combination of self-managed socialism with market mechanisms in countries such as Yugoslavia and Czechoslovakia; 2) the development of state capitalism as a basis for a socialist economy applied under Lenin's New Economic Policy and the current economies of China and Vietnam; 3) the Lange model where central planners use market mechanisms and cybernetics.

Lange model

During the debate on economic calculation in socialism, Oskar Lange takes up the concept from a point of view that can be called neo-Marxist. In Economic theory of socialism (1937), Lange proposed the use of market mechanisms by central planners, specifically, a trial-and-error system for setting prices and allocating resources, achieving economic equilibrium and Pareto efficiency. According to Lange himself, planning aims to "submit the action of economic laws and the economic development of society to the direction of human will."

In Lange's model, cybernetics is used through the use of computers that quickly perform mathematical equations that allow optimal economic accounting. Prices are guided by the law of supply and demand, which determines the economic plan to be executed.

On the other hand, in this model the means of production are property of the State, therefore there is no market for capital goods; but there is a market for consumer goods and labor services. Consumer preferences for a certain consumer good indicate what needs to be produced. On the contrary, the needs of companies for a certain type of personal work indicate what training and productive specialization the population requires.

Libertarian market socialism

Libertarian market socialism is a current of libertarian thought that defends the realization of socialism through a radically free market. This philosophy has revolved mainly around mutualist and anarcho-individualist circles that support the idea of an anti-capitalist free market. Although it is closely linked to anarchism, there are also defenses from minarchism.

History

Some Ricardian socialists of the 19th century such as Thomas Hodgskin were radical defenders of the laissez faire philosophy, since they thought that in the environment of a strict free market absent of monopolies the predominance of the capital over labor, thus obtaining the workers the complete product of their labor. In the first volume of Capital, Karl Marx would consider Hodgskin "one of the most important modern English economists." For his part, G. D. H. Cole describes Hodgskin as a "philosophical anarchist in the tradition of William Godwin" who hopes for a "non-governmental, individualistic society" but who differs "from pure individualism by his strong defense of unionism."

Later, through the Frenchman Pierre-Joseph Proudhon, the philosophy was formalized, a philosophy known as mutualism, which was widely received in the United States through William B. Greene, considered the father of American mutualism. On the other hand, also in the United States, Josiah Warren independently develops a philosophy similar to Proudhonian mutualism but with a more individualistic vision. Warren's theses derived from an ideological break with Robert Owen's socialism, so he decided to apply his theses by founding colonies such as Utopia and Modern Times, as well as his Cincinnati Time Store project following the principle of cost as price limit.

This interpretation was continued by anarcho-individualist and mutualist theorists, followers of Pierre-Joseph Proudhon and Josiah Warren, especially around the anarchist newspaper Liberty founded by Benjamin Tucker. This current was also present in Libertas, the German edition of Liberty which was edited by the couple George Schumm and Emma Schumm, as well as the Australian anarchist newspaper Honesty.

Another defender of a pro-market socialist path was Franz Oppenheimer, who influenced his disciple Ludwig Erhard, the latter father of the German economic miracle. There would also be Silvio Gesell, developer of the idea of free economy. Gesell would become Minister of Economy of the short-lived Bavarian Soviet Republic, initially with a libertarian socialist orientation until he early received a coup d'état led by the Marxist Eugen Leviné.

On the other hand, in the Spanish-speaking world, the Spanish anarchist economist Abraham Guillén also defended the socialist free market. Guillén stated that "a society without competition is a society without incentives."

The American novelist Robert Anton Wilson adhered to the "mutualist-individualist anarchism of Proudhon, Josiah Warren, S.P. Andrews, Lysander Spooner and Benjamin Tucker", although he would later opt for a minarchist vision of market socialism.

Another representative of this current is Theodore Burczak whose objective «is to develop a 'libertarian Marxist' of socialism, a socialism committed to the forms of procedural and distributive justice that are central to the Marxist tradition and a socialism acutely aware of the problems of factual and ethical knowledge emphasized by [Friedrich] Hayek.

Currently some of these ideas were rescued and reviewed by the neomutualist Kevin Carson who writes for the Center for a Stateless Society, an anarchist think tank that brings together different sectors of the so-called libertarianism of left, a current where anti-capitalist pro-market anarcho-individualists, mutualists, agorists, left-wing Rothbardians, radical liberals, left-wing minarchists, Georgists, among others, converge.

Methods

Basically, market anarchism proposes the abolition of several structural monopolies protected by systematic intervention by the State that prevent the socialization of wealth: the monopoly of money, the monopoly of land, the monopoly of tariffs or tariffs, and the patent monopoly. In the 21st century Kevin Carson added a fifth monopoly to combat within the program of market anarchism: the transportation monopoly. This would be the description of each monopoly:

1. Monopoly of money: consists of the legal privilege of certain individuals to control the issue of money, which determines the interest rates, rental prices of houses and buildings and indirectly the prices of goods and goods in general. With its abolition, more people would enter the banking sector by competitively decreasing interest rates towards the cost of managing banks, allowing loans more easily to undertake what would be reflected in higher wages and lower dependence on workers on employers.
2. Monopoly of the earth: restricts access to unused land, which increases their incomes, preventing competition by willing people.
3. Monopoly of tariffs or tariffs: imported goods increase, thus reducing the income of workers by consuming, while encouraging the formation of national cartels. However, market anarchists first defend the release of money internally rather than the establishment of free trade with other nations because in that case the foreign capital would be more concentrated, there would be over-importation and further diminish the possibilities of workers to dictate the conditions of their work.
4. Patent monopoly and copyright: consists of protection against competition in innovations, thus increasing the price of goods and reducing wages.
5. Monopoly of transports: is the privilege granted by the State to the larger companies by socializing on the taxpayers the costs in the realization and maintenance of streets, avenues, highways, trains, railways, ports, among others. By internalizing the costs, large companies would face scale savings by promoting the proliferation of small businesses.

On the other hand, some market anarchists like Dyer Lum propose combining the fight for the free market with anarcho-syndicalism and others like Abraham Guillén even favored guerrilla warfare and the evolution of free market socialism towards anarcho-communism.

In his book What Is Mutualism? Clarence Lee Swartz proposed different methods to achieve the mutualist ideal, including: ignoring laws promoting the replacement of authoritarian institutions with voluntary ones, passive resistance including land squatting, tax evasion, cooperative entrepreneurship, creation of mutual banks.

Economic democracy

The philosopher and mathematician David Schweickart proposes a model of market socialism called economic democracy. Schweickart's ideas are based on the following guidelines:

• The market of goods and services as a form of democracy through consumer elections
• Self-managed democratization of the workplace
• Democraticly planned investments
• State banking aimed at the formation of cooperatives
• Healthy competition

Other nearby philosophies

Various authors such as Fernand Braudel, Immanuel Wallerstein and Samuel Edward Konkin III have argued that the free market is actually opposed to capitalism, describing capitalism as a statist economic regime.

For example, Wallerstein, following Braduel, points to the totally free market like this:

One of the reasons why it is not a daily reality is that a totally free market, if ever existed, would make it impossible for the endless accumulation of capital. This may seem a paradox, because it is surely true that capitalism cannot function without markets, and it is also true that capitalists regularly say they favor free markets. But capitalists in fact do not need fully free markets, but markets that are partially free.

Immanuel Wallerstein

For his part, Konkin, father of agorism, considered capitalism as a system where capitalists controlled the State, and which was therefore contrary to market anarchy.

Application

Historically there have been various interpretations of market socialism applied to different economic realities.

Soviet Union

New Economic Policy

The term has also been used to refer to the Soviet economy's attempts to introduce market elements into the economic system. More specifically, it would be the first attempt during the 1920s to apply the New Economic Policy (NEP) in the USSR, later abandoned by Stalin with the five-year plans.

Faced with criticism from left-wing communists, Lenin defended "state capitalism" as a transitional stage that represents the "most complete material preparation for socialism" and assured that "socialism is inconceivable without the great capitalist technique based on in the last word of modern science." Consequently, Lenin stated that "we are not civilized enough to go directly to socialism."

Under this policy a certain degree of market freedom was allowed and both regulated private capitalism and for-profit state enterprises were implemented. Although the proletarian state would regulate the economy, Lenin indicated that unions should defend class interests against private and state capital.

In this sense Lenin differentiated two forms of state capitalism:

State capitalism in a society in which power belongs to capital and state capitalism in a proletarian state are two distinct concepts. In a capitalist state, state capitalism means that it is recognized and controlled by the state for the benefit of the bourgeoisie and against the proletariat. In the proletarian state the same is done for the benefit of the working class in order to maintain ourselves against the bourgeoisie, still strong, and to fight it.

Lenin

Likewise, Lenin promoted the creation of mixed companies "in which part of the capital belongs to private capitalists - foreigners, by the way - and the other part belongs to us." Defending this strategy, he said that "in this way we learn to trade, something we greatly need.

However, Lenin himself recognized that it was not precisely an anti-capitalist measure but rather the opposite, but he defended it in the following way:

We recognize frankly and do not hide that, in the system of state capitalism, the leasing of concessional enterprises implies a tribute to capitalism. But we will gain time, and gain time means winning everything, especially at a time of balance, when our comrades from abroad prepare their revolution thoroughly. And the more they prepare it, the safer the victory. But in the meantime, we'll have to pay a tribute.

Lenin

In this sense, Lenin considered that the development and learning of the working class would help build socialism:

When the working class has learned to defend the state system against the anarchy of the small owner, when it has learned to organize the great production on a national scale, based on the principles of state capitalism, it will have in its hands – excuse the expression – all triumphs, and the consolidation of socialism will be assured

Lenin

But in one of his last writings, On Cooperation (1923), Lenin thought that not much attention had been paid to cooperativism. Furthermore, according to Lenin, thanks to the NEP, cooperativism had acquired "a truly extraordinary importance" since they had found "the degree of conjugation of private interests, of private commercial interests, with general interests." However, Lenin divided cooperativism into two types: a fanciful one that does not include the political struggle of the proletariat to end bourgeois rule and cooperativism under the consolidation of a proletarian State.

Stalin would later eliminate the NEP with the introduction of the five-year plans. However, during the first five-year plan (1928 and 1932) a secret private foreign investment project was carried out with prominent United States companies that advised the Soviet Government on industrial construction, which served as a learning experience for Soviet technicians. But by the second plan the economy would be completely nationalized.

Perestroika

Mikhail Gorbachev's economic policy, called Perestroika, included, among other objectives, giving more autonomy to state companies and also converting state companies into self-managed cooperatives.

China

Socialism with Chinese characteristics

The system introduced in the People's Republic of China by Deng Xiaoping in the late 1970s (1978) has evolved into what many economists call "socialist market economy." The theoretical basis of this system is called "socialism with Chinese characteristics. This term derives from adhering to Marxism and adapting it to Chinese realities, based on the Maoist principle of "seeking the truth from the facts."

In this way Deng points out that they observed that a ruined economy with practically no industry had been inherited from old China, still being a semi-colonial and semi-feudal society; Furthermore, they realized that at the beginning of the People's Republic of China, not much attention was paid to something very important within Marxism, which is the development of the productive forces.

In this sense, China is officially in the so-called "primary stage of socialism", which focuses on the development of productive forces directed first towards the principle of distribution according to the contribution of each person and finally thanks to an abundance of material wealth achieves the communist principle "from each according to his abilities, to each according to his needs."

On the other hand, for Deng, planning and market forces are not the essential difference between socialism and capitalism, because there is also planning in capitalism, but both are ways of controlling economic activity.

The current president of China, Xi Jinping, has declared himself against economic protectionism and in favor of balancing globalization to "make it more inclusive and equitable." He also called for studying the current capitalist system while saying that his party must further develop socialism with Chinese characteristics and must not abandon Marxism because if so the party would lose "its soul and direction", in addition to describing Marxism as "irreplaceable" for "understanding and transforming the world."

Vietnam and Laos today also describe themselves as systems of socialist market economies.

Vietnam

In Vietnam the model is called a market economy oriented to socialism. It is characterized by being a multi-sector market economy where the State plays a decisive role in directing economic development, and with the eventual long-term objective of developing socialism.

This model is a product of the Đổi mới economic reforms that began in 1986, which led to the replacement of the existing centrally planned economy with a mixed market-based economy with strong state-owned industry. Unlike the Chinese model, the private sector has played a comparatively minor role in the Vietnamese model.

The officially legal economic sectors are five: state, collective, individual, private capitalist and state capitalist.

The greatest objective of this model is to develop productive forces and the economy to build a solid technical and material base for socialism and improve people's well-being.

Yugoslavia

In Josip Broz Tito's Yugoslavia, a model of self-managed socialism was developed. This economic model had its ideological foundation in theorists such as Edvard Kardelj, Milovan Đilas and Boris Kidrič.

The construction of the model was partly favored by the gradual distancing from the Soviet Union, which began with the very origin of the victory of the Yugoslav communist movement thanks to the popular struggle and not so much to the support of the Red Army as in other Eastern European countries.

Yugoslav Marxist theorists denounced the Soviet model as state capitalism in which a bureaucratic caste exploited the working class, which is why they defended a model that emphasized the Marxist goal of the "extinction of the State" and the creation of a society as a "free association of producers", which also included political decentralization within the single-party system.

Likewise, more autonomy was granted to companies through self-management by workers, also participating in a more competitive market where efficiency and productivity were rewarded, while integration into global markets also facilitated exchanges. cultural as evidenced in the philosophy of the School of Praxis, the black wave of Yugoslav cinema, as well as in different types of artists.

For his part, the liberal Murray Rothbard stated that Josip Broz Tito's model of self-managed socialism in Yugoslavia virtually showed how an economy should be destatized from the Lockean principle of original appropriation since the workers basically exercised control of the company with which they mixed their work; Thus, property for its workers is part of the Rothbardian basis for legitimate destatization.

Later, elements of market socialism were also introduced in Hungary, Czechoslovakia.

Czechoslovakia

During the 1960s, Czechoslovakia experienced a process of de-Stalinization, quite late compared to other Eastern Bloc countries. In this period, the country gradually but progressively faced a series of changes that finally led to the program of socialism with a human face announced by Alexander Dubček in January 1968 and the social, political, economic and cultural phenomenon of the Prague Spring.

In the economic aspect, since 1965, a series of economic reforms led by the economist Ota Šik were being carried out under the name "New Economic Model". These reforms were aimed at limiting centralized planning and increasing the role of the market mechanisms in the development of Czechoslavian socialism. On the other hand, in 1966 a state management and organization commission was created in order to give greater importance to the participation of workers.

With the approval of the program of socialism with a human face, the self-management of workers in company councils began to materialize, breaking out in strikes against the incompetence of the old business leadership. Initially under co-management formulas, but the unions with the support of the students demand greater autonomy that tends to go beyond party lines.

Later, the movement for workers' self-management was accelerated and politicized in August 1968 with the invasion of Czechoslovakia by the Warsaw Pact that sought to end the Prague Spring, progressively increasing the number of workers' councils arriving to involve more than a million workers in the summer of 1969. Later, little by little, the Government dissolved union autonomy and a variety of reforms that were being carried out.

Cuba

In recent years Cuba has experienced the policy of "updating the Cuban socialist model." Among the changes are greater autonomy in the management of state companies, greater openness to foreign investment, recognition of the role of the market and new types of property including private property.

However, Cuba "maintains as essential principles the socialist ownership of all the people over the fundamental means of production and planning as the main component of direction."

For his part, José Luis Rodríguez García, Minister of Economy of Cuba between 1995 and 2009, has rejected that attempts are being made to implement market socialism in Cuba. However, although he considers that market relations will continue to exist According to the degree of development of the economy, he affirms that these must be monitored and controlled. Likewise, he warns that the market acts in a contradictory manner with socialism, so its harmful effects must be compensated.

Israel

Within socialist Zionism, the kibbutzim, which are Israeli agricultural communes, have been key to this ideology and during the initial formation of the State of Israel. Although not intentionally, these communes have been framed within a market economy that has influenced changes over time in their internal structures with respect to more traditional kibbutzim.

Bavaria

The economist Silvio Gesell, developer of the idea of free economy - an anti-capitalist free market philosophy - would become Minister of Economy of the short-lived Bavarian Soviet Republic. Initially Bavaria was libertarian socialist in orientation until receiving early a coup d'état led by the Marxist Eugen Leviné.

Reviews

In his book Against the market ("Against the market") Canadian David McNally, a socialist in favor of the abolition of the market, blamed the crisis and collapse of the market socialism model not to workers' control but to the persistence of the market.

However, liberalism argues that the deepest economic problems of the former Yugoslavia came from the regulations and intervention inherent to the dirigisme of a socialist State.

For his part, James Robertson points out that due to the pressure of the competitive market, self-management in the Yugoslav model tended to concentrate in the hands of the most specialized workers, generating a certain inequality with respect to other workers.