Market socialism
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Market socialism is a term used to define a number of economic system(s) in which the means of production are owned either by the state or by the workers collectively (and therefore no market in land and capital goods, as there would be in capitalism) and the production is not centrally planned but mediated through the market. Its central idea is that the market is not a mechanism exclusive to capitalism and that it is fully compatible with collective worker ownership over the means of production — which is one of the fundamental principles of socialism (socialism being the precursor to the utopian ideals of communism).
Proponents of market socialism argue that it combines the advantages of a market economy with those of socialist economics. Others argue that the theory is fundamentally contradictory to orthodox Marxism and oppose the theory on the grounds that it "yearns for the impossible: commodities without capital, capital without exploitation, money without speculation. In short, Utopia." [1]
However Marx stated the exact opposite. Marx stated that money and commodities exist outside capital, writing that, "In themselves money and commodities are no more capital than are the means of production and of subsistence. They want transforming into capital." [Marx, K., The Secret of Primitive Accumulation, being Ch. XXVI, Capital Vol. 1, p668 in Progress Publishers' 1977 reprint].
Marx differentiated money, commodities, labour, wealth and value from capital and capitalist production. He stated in Chapter XVI, Absolute and relative Surplus Value, that;
"Capitalist production is not merely the production of commodities, it is essentially the production of surplus value" [Pg 477 in Progress Publishers' 1977 reprint].
He also maintained this view in his analysis of the export of capitalism to Australia under the Wakefield Plan.
Based on his theory of circulation, it would appear that Marx was a market socialist [see Marx, K., "Money, Or The Circulation of Commodities", being Ch. III, Capital Vol. 1, pg 113-115 and fn. pg 115]. In particular, Marx identified the market as 'the scene of action' for commodity exchange [pg 107].
Proponents of market socialism include economist John Roemer (who developed the interesting if overly complicated 'Coupon Socialism') and the philosopher David Schweickart, whose version of market socialism is called "Economic Democracy".
[edit] Theoretical basis
The key theoretical basis for market socialism is the negation of the underlying expropriation of surplus value present in other, exploitative, modes of production.
An important base for market socialism in economic theory is the Lange-Lerner-Taylor theorem, which states that an economy in which all production is performed by the state, but in which there is a functioning price mechanism, has similar properties to a market economy under perfect competition, in that it achieves Pareto efficiency.
[edit] Other uses of the term
Market socialism has also been used as a name for any attempt by a Soviet-style economy to introduce market elements into its economic system. In this sense, "market socialism" was first attempted during the 1920s in the Soviet Union as the New Economic Policy (NEP), but soon abandoned. Later, elements of "market socialism" were introduced in Hungary (where it was nicknamed "goulash socialism"), Czechoslovakia and Yugoslavia (see Titoism) in the 1970s and 1980s. Modern Vietnam and Laos also describe themselves as market socialist systems. The Soviet Union attempted to introduce a market socialist system with its perestroika reforms under Mikhail Gorbachev, but this led to the collapse of the USSR in 1991.
Historically, these kinds of "market socialist" systems attempt to retain government ownership of the commanding heights of the economy, such as heavy industry, energy, and infrastructure, while introducing decentralised decision making and giving local managers more freedom to make decisions and respond to market demands. Market socialist systems also allow private ownership and entrepreneurship in the service and other secondary economic sectors. The market is allowed to determine prices for consumer goods and agricultural products, and farmers are allowed to sell all or some of their products on the open market and keep some or all of the profit as an incentive to increase and improve production.
However, the Chinese experience with "market socialism" is another situation. The system introduced in the People's Republic of China by Deng Xiaoping in the late 1970s has evolved into what many economists, outside of China, describe as modern Chinese capitalism. See Socialism with Chinese characteristics. His theoretical justification for allowing market forces was given as such:
- "Planning and market forces are not the essential difference between socialism and capitalism. A planned economy is not the definition of socialism, because there is planning under capitalism; the market economy happens under socialism, too. Planning and market forces are both ways of controlling economic activity."[1]
[edit] References
- ^ Cited by John Gittings in The Changing Face of China, Oxford University Press, Oxford, 2005. ISBN 0-19-280612-2
- Whither Socialism, Joseph Stiglitz, MIT Press, ISBN 0-262-19340-X.
- Market Socialism: the Debate Among Socialists, edited by Bertell Ollman, also with contributions by James Lawler, Hillel Ticktin and David Schewikart.
- Equal Shares: Making Market Socialism Work, John E. Roemer et al. (E. O. Wright, ed.), Verso, 1996.
