The socialist economy: theory and practice

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The Socialist Economy

The Socialist Economy Theory and prtlctice 10m BoUomore

ΙΙΙΙ HARVESTER

-

WHEATSHEAF

First published 1990 by HIin'ester Wheatsheaf 6δ Wood Lane End, Hemel Hempstead Henfordshire Η Ρ2 4RG Α division of Simon & Schuster International Group ~ Τ om Β. Botιomore

1990

ΑΙΙ rights reserved. Νο part of this publication may be reproduced, stored ίη a retrieval system, ΟΓ transmitted, ίη any form ΟΓ by any means, electronic, mechanical, phoιocopying, recording ΟΓ otherwise, without ΡΓίΟΓ permission, ίη writing, from the publisher.

Typeset ίη 10/12pt Times by WitweII ltd, Southport Printed and bound ίη Great ΒΓίΙθίη by BiIIing and Sons Limited, Worcester

British Library Cata/oguing

ίπ

Publication Data

Bottomore, Tom, /920The socialist economy : theory and practice. Ι. Communist countries. Economic policies Ι. Tίtle

330.91717 ISBN 0-7450-0118-1 ISBN 0-7450-0119-X pbk Ι

2 3 4 5 94 93 92 91 90

Contents

Introduction: Socialist economy and socialist society Ι

2 3 4 5 6 7 8

The nineteenth-century vision Marxist conceptions of a socialist economy The experience of planning since the First World War Critiques of socialist planning The state, bureaucracy and self-management Plan and market Problems of socialism today Modes of transition to a socialist economy

9 22 33 52 70 82 121

Bibliography Index

138 147

ΙΟΙ

Introduction: Socialist economy and socialist society

Socialism, as a political doctrine and a social movement, has πeνer set itself purely economic aims. From the beginning its ideal v,'as the creation of a new type of society, ΟΓ, as Gramsci expressed ίl, 'a nev,' civilization'. Some critics indeed have argued that socialist thinkcrs, at any rate υηιίl the 1920s, largely ignored the question ()f hov,' a socialist economy would actually function; and Miscs (1920, 1922). ίη one of the most extrcme and vitriolic attacks, claimed to shov,' that ίι would ηοΙ function <ιΙ all. Ιη this book Ι shall consider whetller, and for what rcaSOl1S, earlier socialist thinkers did unduly ncglect thc cconomic problcnlS οΓ socialism; what has bccn learncd, ΟΓ can stiII bc Icarned, ΓΓΟΠΙ 111C debates οΓ tl1e [930s about socia[jst ca[culation and ccntra[ ρl,ιπ­ ning; and finally, what new conccptions and pr3cticcS 11avc ClllCI'gcd from thc cxperience οΓ socia[jst dcvelopnlcnt ίπ thc po~l-\,ar period. ΜΥ 3pproach Ιο t[lese qucstions is sociological, Sl'llillg cconomic rc[ations ίη thcir widcr socia[ and cultural fr,IIl1cv,'OI·k. and this corresponds broad[y witll 111C idca οΓ 111C C0l111Ccliol1s between economy and socicly Ihat 11as gcncr,lIl)/ bccl1 cxpl"Csscd ίΙ1 socia[jst thought. There arc, Ιο be surc, divcl'sc conccptiOI1S οΓ socialislll,l buι "11,11 is common Ιο a[most aII οΓ tl1Cnl is a COI1Viction οΓ thc ftJl1dalllCI1I,II importance οΓ thc CCOIlOIllY ίl1 Sllapil1g sociallifc ,IS ,ι "'11OIc: ,111 idca which found its most trcncllant cxprcssion ίl1 Marx\ soci,I[ 111COI")', [ shaIl intcrprct that tl1cory, which 11as bccl1 rcforιnul,IICd, tll0dificd

2

Τhe Socialist Econon1Y

,Ind 'n:constrιIcted' by many later tl1inkers,~ ηοΙ "s asserting Η uni\crs"l Hnd strict determination οΓ thc rolitical cιnd cultural 'superstructure' by the ecοnΟΠ1ίc 'bcιsc', bLIt ,ts arguing that the manncr ίη which humHn beings producc and reproduce the material conditions οΓ their cxistcnce is a Π1ajοr factor ίη the creation οΓ a \\'hole 'fornl οΓ life'; ΟΓ, ίη Marx's own words, that the 'Π10de οΓ production should ηοι be regarded simply as the reproduction οΓ the physiccιl existence οΓ individuals. lι is far more a definite form οΓ activity οΓ these individuals, a definite way οΓ expressing their life, cι definite Il10ι/e οι ΙΨ' (Marx and Engels, 1845-6, νοl. Ι, section ΙΑ). Marx goes οη ιο say, ίη the same passage, that what individuals cιΓι: 'coincides' with their production, 'with 1\'/10/ they produce and /10\!' they produce'; and ίι is this conception which has largely guided socialist periodizations οΓ history, υρ ιο the advent οΓ modern capitalism and the movement towards socialism. The crucial Ceature is 1101\' human beings produce, which encompasses both the technical means οΓ production (and notably since the nineteenth century the spectacular advance οΓ science and technology, which also profoundly affects whal is produced), and the way ίη which the social labour process is organized; that is Ιο say, the social relations οΓ production formed by the distinctive characteristics, ίη different historical periods, οΓ the 'owners οΓ the conditions οΓ production' and the 'direct producers" lη modern capitalist society, according Ιο Marx's anaIysis, the social relations οΓ production, which establish the framework οΓ a distinct mode οΓ life, are constituted by the capitalist ownership οΓ means οΓ production and by wage labour; and the essence οΓ the socialist alternativc - ηοΙ οηΙΥ ίη its ;ν1arΧίst versions - has always been the transformation οΓ private ownership ίηιο social ownership, which Marx expressed by referring Ιο a Cuture society οΓ 'associated producers" The 'associated mode οΓ production', as Marx called ίι ίη thc third volume οΓ CapiIa/ (1894, ch, 23), ΟΓ more generally 'cooperative production', was ηοΙ treated ίη the socialist literature οΓ the nineteenth century as having οηΙΥ an economic significance, but as a vital element ίη the constitution οΓ a new form οΓ society ίη which individuals would ηο longer be dependent upon dominant minorities, but would be able Ιο develop freely ίη a social environment which they took a full and equal part ίη crcating. Αι the same timc,

Socialist economy and socialist society 3 as natural beings, they would still be subject Ιο material constraint!>, and Marx was more realistic than some other socialist thinkcr~ ΟΓ prophets ίη recognizing that the realm of freedom ... [Iies] ... oυtside the spherc οΓ muteriill production proper. Just as the savage '"T1USt wrcstle with nilιure ill order Ιο satisfy his wants, ιο maintai ι Ind reproduce his ΙίΓι:, 50 also must civilized man, and he must do ίι ίη all forms of socieI) and under any possible mode of ΡΓΟΙ uction. With his dc\'elopmcnI the realm of natural necessity expant ;, because his wants incrcilsc: but at the same time the forces of production, by which thcsc wants are satisfίed, also increase. Freedom ίη tl1is field cannOΙ consist of anything elsc but the fact that socialiled humaniIy.. Illt: associated producers, regulate their exchange wiIh IlaΙUre rationally, bring ίι under their common control, instead οΙ' being rulcd by ίι as by some blind power, and accomplish their task ....'ith Ihc least expenditure of energy and under such condiIions as ,ΙΓΙ: proper and worthy for human beings. Nevertheless, Ihis alwa}'s remains a realm of necessity. (Marx, 1894. νοl. 111. ch. 4Κ) Hence Marx's further contention that a precondition of freedom is the reduction of working hours and that 'a nation is ΙΓυlΥ rich whcn. instead of working twelve hours, ίι works only six' (Marx, 1857 Χ, ρ.

706). Οη

the other hand. Marx certainIy anticipated a continued growth of material wealth. and above all a virtuaII)1 unlimitcd development of human powers of production. ίη socialist socict~': but rhis view raises diffίcult questions, which havc increasingl~ preoccupied socialist thinkers, about the human rclation ιο naIlIrl' and the possibility ΟΓ desirability of setting ουΙ delibcratcl)' ιο satisfy ίη the fullest measure all conceivablc material nccds. J'athcr than encouraging the emergencc of a new slrucΙUrc of nccds ίπ which non-material necds acquire greater importance.' Truc. tI1CI'C are ίη Marx's own writings occasional refercnces Ιο ι11ι? ccοlοgίc;ι1 conditions of human existence, as ίη Ihe passagc ίη ίαμίια/ ( Ι R94. νοl. ΙΙΙ, ch. 46) which he concltJdes b)' saying tl1al T\'cn :ι \\11ι)lc society, a nation, ΟΓ all contemporary societics tHkcn logctl1CΓ. ;11'(' ηοΙ the absolute owners of the earth. Thc)' arc οηl)' its OΙ'l'Iιp;lnι~. its benefίciaries, and lίke a good patcrfan1iliHs 11:Ι\'ι? 1ιl 1c;1\ C ίι ίΙ1 improved condition Ιο succccding gcncrations'; ;1I1d 11ίS SIll'i,11 philosophy as a wholc - particularl)' ίη thc (':ΙΓI)' "Titings. tlHHIgl1

4

Τhe

Socialist Economy

ηοΙ only there - emphasizes human freedom and creativity outside the spherc of work, along with a steady reduction of the time dcvoted to that sphere, rather than the expansion of material production as such. Nevertheless, ίη the actual development of socialist economies ίη Ihe Iwentielh century, as well as ίη socialisl thought more generally, there has undoubtediy been an intense preoccupation with sheer economic growth, and ίη the past decade ΟΓ so with the new prospects for growth opened up by the 'scientific-technological revolution" Many factors have contributed to this particular orientation of socialist thought and practice:

Ι.

The advent of socialism ίπ countries which were, for the most part, economically backward, agrarian and peasant societies, and the perceived need for extensive and rapid industrialization. 2. The extent of poverty ίπ the capitalist societies during the depression of the 1930s and the commitment Ιο eradicate ίι. 4 3. The rapid post-war expansion of 'organized capitaIism', characterized by large-scaIe state intervention, partiaI pIanning and very high rates of growth, and the need for socialist societies (as weII as socialist governments when they come ιο power ίπ capitalist countries) ιο compete effectiveIy with capitaIism ίπ the pro\ision of high material leνeΙs of Iiving. 4. The connict between power bIocs which has led ιο the invesIment of immense resources ίη the deveIopment of ever more sophisticated and expensive weapons. This addiction Ιο growth has, of course, been contested by many thinkers ίπ the socialist movement itself, and ίι has aIways been qualified by the commitment Ιο broader social ideaIs. Within, ΟΓ οπ Ihe fringes of, Marxist thought the 'critical theorists' of the Frankfurl School~ expressed with particular force their opposition 10 the main tendencies of development ίπ advanced industrial society ίπ aIl its forms, arguing that the drive to dominate nature Ihrough science and technoIogy necessarily involves the domination of human bcings and is the major obstacle 10 emancipation. b Ιπ thc past few decades important ecology movements havc emcrged ίη the industrial countries, most prominently ίη West Germany where the Green Party has had significant elcctoral succcss. Thesc movements have been supported by many socialists 7 and have themselves

Socialist economy and socialist society 5 had an important inf1uence οη the ideas and policie~ ο! ~ocialist parties, giving a new salience Ιο aims which had become obscured by the concentration ο! attention οη material prod uction. But ίη recognizing the development οΓ new attitudcs to ecunomic growth we should ηοΙ overlook the fact that socialist thought and practice always envisaged growth :1 the context οΙ a more (;ωη­ prehensive reorganintion οΓ soci; Ι life, and also largcl)' as>ulΠed that the prob!em οΓ scarcity - ίη t le sense οΓ αη inabilit), to satisf) the basic material needs οΓ all mt mbers οΓ society, αι the Icycl οΙ civilization already attained - would already have been o\'ercome by the development of capita!ism itself. Hence, ίη examining the achievements and problems ο! the present-day socialist societies wc have Ιο consider ηοΙ οηlΥ what is produced. ίη what conditions ίι ί> produced, and the efficiency of the process ο! prod uction as a who!e, but a!so how the product of the social labour process is allocated and distributed. There are, οΓ course, great differences between the socia!ist industria! countries and those socia!ist countries of the Third Wor!d which have οη!Υ recently embarked οη the process of economic deve!opment and industria!ization; but what ί> evident ίη all these societies is the sustained commitment. f rom thc outset, ιο the widest possib!e extension ο! public services education, hea!th care and other we!fare services, the provision ο! housing, pub!ic transport and recreationa! faci!ities within the !imits of their economic resources; and ίη this respect the)' have achieved some notab!e successes. George and Manning (1980) notc that 'socia! po!icy is more ambitious ίη its aims ίη thc Sovict II ηίοη than ίη we!fare capita!ist societies', even though Ώο! always ΠΙ0ΓΙ: comprehensive ίη ίι, achievemcnts' (which will bc affectcd b)' thc rate of economic growth), and that, 'the dominant idcology οΓ ι11Ι: Soviet υηίοη provides a more sccure cnvironmcnt for the growtll οΙ' socia! po!icy' (ρρ. 168-9).R !η the devcloping countries the I110s1 striking successes (for example, ίη Cuba and morc rccentl), ίl1 Nicaragua) have been ίη ovcrcoming illitcracy and providing basil' hea!th care for the mass οΓ tlle population; thc Π1;ψΗ (JrohICI11~ those οΓ meeting tl1e rapidly rising expcctations ο! tllcir l)ιψιllaιίοπs while at the same time invcsting 11cavily ίπ thc infl'
6

Τhe

Socialist Economy

United States).q The economy, therefore, has a crucial importance ίπ the creation of a socialist society ίπ two respects. First, the social ownership of the principal means of production is intended ιο eliminate the domination of society by a particular class, and ιο establish the conditions ίπ which all members of society can participate actiνely ίη the management and deνelopment of their productiνe resources, including the use of their own labour power. But this goal of ..... idespread participation has encountered many obstacles ίπ the actιιal deνelopment of socialist societies, and ίη the past few decades numerous projects and experiments designed Ιο increase participation by a thoroughgoing reform of the economic system haνe taken shape. These changes, the controνersies which surround them, the new directions of socialist thought with regard Ιο central pIanning, self-management and markets, are major subjects for analysis ίπ the following chapters. Second, an effίcient, well-managed, productiνe economy is an indispensable condition for attaining the broader aims of socialism - the elimination of poνerty, increase of leίsure time, extensiνe social serνices, a high leνeΙ of education and general culture. But ίπ this respect, too, the existing socialist societies haνe faced serious diffίculties, and eνer since the 1920s there has been much debate about the effίciency of centrally planned economies. This question, which will be examined ίπ Chapter 3 below, raises some larger issues, broadly of two kinds. 1π the fίrst place, the problem of eflϊciency may be directly lίπked with that of participation, and the alleged defίciencies of central pIanning, as we shall see, may be explained ίπ part by the stifling of initiatiνe, responsibility, choice and decision, among indiνiduals and groups ίη society at large. But second, we haνe Ιο consider the ποιίοη of efficiency itself ίη a wider context. Α socialist economy serνes a socialist society, and the rationalization of production ίη order Ιο achieνe an eνer increasing tlow of material goods should ηοΙ be giνen an absolute ΡΓίΟΓίΙΥ regardless of such considerations as working conditions and hours of work, the enνironment and the depletion of natural resources, ΟΓ whether what is produced adds appreciably Ιο the quality of life and the leνel of ciνilization. These are, howeνcr, νery complex issues and Ι shall examine them more closely ίπ latcr chapters. What will be eνident, Ι hope. throughout this book. but should be emphasized νery strongly at the outset. is that Ι do ποι claim ιο

Socialist economy and socialist society 7 possess any incontroνertible criterion of what socialism really /5, but simply a general conception of a socialist society (which certainly excludes some other types of society) within whici, a considerable νariety of economic and social arrangements iS ρ, ι,­ sible. Socialism, like eνery human actiνity ΟΓ form of lίfe, iS a historical phenomenon and πο ΟΠΙ .an reasonably pretend to foresee ίπ detail how ίι will eνol'e, ΟΓ precisely how f uture generations will resolνe, ΟΓ perhaps ometimes fail to rcsolve, the problems that its further deνelopmen generates. lπ this spirit Ι am inclined to take as a kind of motto for the present work the obserνation that Engels made iι propos of another matter. Repl~'ing ιο a letter [rom Kautsky about the problem of excessive population growth (an issue often raised by opponents of socialism ίπ the nineteenth century, οη Malthusian grounds), Engels (Ι Februaσ 1881) wrote: Of course the abstract possibilit)' exists that thc numbcr οΙ' human beings will become so great that liIl1itS will have ιο be se! ιο iIS increase. Βυι if at some ροίπι communist societ)' should find itsclf' obliged ιο regulate the production of human beings, as ίι has already regulated the production of things, ίι will be prcciscl~ and οπlΥ this society which carries ίι ουΙ wiIhoU\ difficuIIy· .... 111
Notes Ι.

Schumpctcr (1942, ρρ. 170 Ι) claiIl1cd Illa! sGcialiSll1 ί, ~o 'clllIιιr,lll1 indctcrminate' th'It ίι cannot bc ΡΓccίsclΥ dcfincd cxccp! ίη plJrcl1 cconomic tcrιns, but this ί, a considcrablc cxaggcl'
8

5. 6.

7.

Η.

9.

Τhe

Socialist Economy

developed ίηιο a polic)' and <ιη economic philosophy much wider ίη its Implicatiuns ... ίηιο a pulic)' 01' economic growth.' For a general account οΓ the school see Bottomore (1984b). See especiaII)' Marcuse (1964), and for a more general discussion leiss (1972). Ι consider many οΓ these i.lrgumcnts exaggerated and misguided and Ι ha\'e criticilcd them ίη Bottomore (1984b). See the discussion ίη Bahro (1982), especially the essay οη 'Ecology crisis and socia1ist ideas', which also considers the relation οΓ Marx's thought ιο ecology, observing that 'Marx already perceived the contradiction between capitalist production and nature, Ιι was just that this was ηοΙ )'et so acute for him to place ίι at the centre of his analysis' (ρ. 30). See also thc excelIent account of social policy ίη Hungary by Ferge ( 1979). For a more detailed account see Whitc (1983).

1 The nineteenth-century vision

The ideas of 'socialism' and 'communi!im" ι and sociali!iI mo\cments, spread rapidly ίη Europe from the 1830s. 80th the idcas and the movements had important antecedents ίη the social criticism and revolts of earlier times, but what was distinctiνe ίη thc nineteenth century was the extent of the moνcmcnt!i, Iheir organi7aιίοη οη a national and even international scalc, Ihcir grov.'ing identifίcation with the specifίc situation and intcrcst!i οΓ ι11ι' industrial working class, and at the same time the systcmatic claboration of a new 'world view'. The latter was first signallcd b)' ι11ι' appearance ofthe word 'socialism' itsclf, and ίι then deνclοΡcd ίπ a great νariety of forms: ίη socialist doctrincs fron1 thc SaintSimonians ιο thc Marxists; ίη social experimcnt!i, and tl1C lίιcraturc about them, inspired by Robert Owen, thc Fouricrists
10

Τhe

Socialist

ΕιΌnοmΥ

formation and developn1ent οΙ' new political parties ίη thc laιιer thc nillcteenth ccntuΓ)'. attcntion was concentratcd υροπ the economic development of capitalism and the organization οΓ the industri:ιl ....·orking class as an effective political force. Βυι the lItopian element did ηοΙ disappear from the socialist movement, and indeed ίι revived strongly towards the end of the century ίπ two ....·idcl), read and innuential novels, Edward BcIIamy's Looking ΒaΙ'kl\'Ο,,1 (Ι 887) and WiIIiam Morris's Newsfrom No"'here (1890). Both novels expounded a vision of a new society from which injusticc, povcrt)' and crimc would be eliminated, and ίπ which a complete equality would prevail. Ιη both cases the effective functioning οΓ the new social system depended ultimately υροπ a radical transformation of human nature, so that the sentiments favourable Ιο peaceful cooperation, social responsibility and non-acquisitiveness became predominant. Morris had lίttle Ιο say ίη his novel about the economic organization of his Utopia, but Bellamy, οη the other hand, devoted much attention to economic questions and conceived the economic structure of the new society as the outcome of the trust movement ίη American industry: 'the epoch of the trusts had ended ίπ the Great Trust' (1887, ρ. 41), Industry would be centraIIy directed by the government and production would be carried οη by an 'industrial army' ίπ which everyone between the ages of twenty-one and forty-five would serve, BeIIamy emphasized liberty as weII as equality, particularly ίη the sphere of consumption, where every citizen would be free Ιο spend the annual credit assigned Ιο him as his share of the national product ίη any way he pleased, and production would respond Ιο consumer preferences. But the 'industrial army' was Ιο be very autocraticaIIy constituted, as was the national governmenI, and BeIIamy largely ignored the dangers Ιο both freedom and equality inherent ίη this extreme centralization and the emergence of a powerful bureaucracy. The success of the new society that he portrayed depended essentiaIly, as Ι have suggested, οη a change ίπ the orientation of human purposes from sclf-seeking and competitiveness Ιο cooperation and a subordination of individual reward Ιο the general welfare; and this is still more apparent ίη Newsfrom No"'here where Morris, who was repcIIed by Bellamy's picture of a completely planncd social order. depicts thc future society as one that is based υροη voluntary, spontancous coopcration without any elaborate organization of the economy, governΡ:ΙΓΙ οΓ

Τhe

nineteenth-century vision 11

ment or administration. Ιη any case, as Morris explicitly said, his Utopia was 'ποι a prediction, but a description of the kind of society ίη which he would feel most at home', his 'personal vision οΙ the good society' (Cole 1954, ρ. 423). As such ίι evidently ,ippealed ιο many people at the end of the nineteenth century, and ίι stiII has its appeal ίη the vastly changed circ J nstances of today. Although Marx rejected υιορί; n socialism as having becn Iargely superseded by the developmI ηΙ of the working-class mo\'ement, there were undoubtedly υιοι: ίιιπ elements, as weII as man)' unresolved problems, ίη his own brief and scattered comments οπ the future 'society οΓ associated producers" As Heller (1976. ρρ. 118-30) has noted, ίη his conception ofthis form ofsociety 'Marx is working with an entirely new structure of needs' ίπ which human labour wiII (a) cease ιο be 'alienated' (i.e. performed under external compuIsion), and (b) become ιraνaί! aIIraL·t({ (i.c. 'a fίeld for the self-realization of the human personality' and hence a νίιιιl need). Βυι these two aspects are ηοΙ treated by Marx ίπ precisely tlle sanlC way ίη different writings. Ιη the Grul1l/risse both conditions <ΙΓΙ: met: labour ceases Ιο be alienated and ίι also becomes Ira\'aiΙ aIIrae·tif(as inteIIectuallabour). Ιη CapiIa!, νοl. 111, however. Marx declares that labour and material production always rcmain a 'realm οΓ necessity" and the realm οΓ freedom οπlΥ begins wherc labour ceases; all that can be achieved ίπ thc sphcre of matcrial production is a humane organization of the labour process as a cooperative activity and the direction of production Ιο the satisfacιίοη of 'true social needs" Βυι as HeIIer pertinently asks: how can 'true social needs' be measured; how can the diversity of individual needs and their rapid changes be provided for; who nlakes the decisions about how productive capacity should bc aIlocated? Οπ the last ροίηι, Marx would ηο doubt have replied: L'l'ef)'olle (i.c, <ιΙΙ the associated producers). Yet the diffίcultics <ΙΓΙ: cvident and.
12

The

WX"ίetίn.

Socialisι Economy

Thii ί\ ηοι ιο ~y thaI the υιoρίaη ekments ίη socialism now ιο ιχ diw:arde.d. ΟΓ have ίη effect lxen di§carde.d. ίη favour οΙ wmc kind of'new realiim", aJthough ιΜι may weII accord with thc: dίψίrίιe.d ρoJiI~aJ mood of thi, fin dε s;ec/e. Heller's δΙΟΟΥ concJudn oPIimir.ticaIIy ιΜι ιΜ υιoρίaη a.sρects of Marx's idea.s ση Ihe fuιure wciety οΙ a5wciaιed producers remainJertik, provίd­ ίηι a norm 'agajn!>t which we can mea.sure the realίty and value of συΓ ideaι' and embodying 'the most beautiful aspiration of mature humanity"; and ίη some ofthe wcial movements ofthe 19605, which were r.ureJy ηοΙ ίι!) ultimaιe manifestation, this aspiration found for a timc a fresh and invigorating expression.2 Ιη the nineteenth century, at all events, the νaήοus currents of υιoρίaη ~ociali!>t thought played an important part ίη the creation and de\-'elopment of new ιyρes of social organίzation: the early form!> οΙ trade unioni!>m; the cooperative factories - descήbed by Marx (CαpifαΙ, νοl. 111, ch. 27) as a new mode of production 'within the old form' - and the broader consumer cooperative movement; and Friendly Societies as a major form of mutual aid. Αι the same time wciaIΊSt ideaι began Ιο be more wίdely and δYιιemaιίcally diffu!oed through the development of πtaSI ροΙίιίαl parties. Some of the\e parties were Marxist; notably those ίη Germany and Austrίa, which were growing rapίdly by the end of the century and had create.d for miIIion!> of workers a distinctive way of Iife that has lxen described as taking οη the character of 'a staιe within a state' (Nettl 1965). Other\ were create.d either as the politicaI arm of the trade υηίοη moνement, concentrating οη piecemeal legίιlative changes ιο improve the conditions of workers - as was largely the caιe with the Βήtίιh Labour Party - or more generaIIy as parties whΊCh conceive.d the attainment of socialism as the outcome of a gradual procesι of economic and social reconstruction rather than a !>udden revolutionary transformation. The growιh of maιs partie,., with their leaders, officials, newspapers, and numerou. 5uι"ίdίary or relate.d organizations, and their continuou,. involvement ίη day-to-day politics, brought about changes ίη the formulation of 50cialist aims. While Utopian ideas continued Ιο provide a general stimulul ιο the socialist movement, the ρolitical parties had necessarily ιο engage ίη struggles for the achieνement of interim reforms which would improve the condition. of the working claι,. - univer!lal !luffrage, trade υηίοη rights, factory kgίslation, the expansion of education and of health and ουμι

The n;neteenth-century

νΊS;oπ

13

the end of ιΜ century ιΜ outcome of ι~ came ιο be r.een by some sociali!>t~ Δ~ "Γι important element ίη ιΜ changes ίη capitaIi!>t societ~' ~h;tj-I required a more 'gradualΊSt' conception of the tran!>ition ιο weIfare

ιerνίces. ΒΥ

reforιning activitίeι

ιociaIίsm.

One of the m05t influential formu' ί ':ons of thi!> \ie~ appeared ίπ of articles οη 'problems of 5<. ::IalΊSm' by 8ernstein (1896- 8,. subιequently expoundt:d more com )rehensively ίη a book (1899) whΊCh set off the 'revisionist debc te' among Marxist socialisH, Bernstein's arguments were directed primaril~' against an 'economic collapse' theory of the demise of capitalism and the ad\ent of socialΊSm, and against the conception of <ιη incre~ing polarization ο! classes, accompaoied by intensifying cIass conflict. ίπ capitaIi!it socίeιy. His ideas are convenientIy summarized ίπ a ποιι: found amoog hΊS papers: 'Peasaots do ηοΙ sink; middle cIass does ποι disappear; cήses do οοι grow ever Iarger; misef}' and serfdom do οοΙ ίηαeaιe. There ;$ increase ίη insecurity, dependence. !iocial dίstance, socίaJ character of production. functional superΠuit~, of property owoers' (Gay 1952, ρ. 244). Ιη the last chapter ο! his book 8emιteίo dίscussed 'the tasks and possibiIities of social democrac~" ίο the Iight of his revisioo of Marxist theory. and deaIt with three ιnaίo wues. First. he drew attention ιο the imporιance ο! cooperative organίzations as 'the easiest accessibIe form ο! association for the working cIass' (ρ. Ι 25) which 'bear ίη themselves enough of the eIemeot of sociaIΊSm ιο develop ίηιο worth)' and indispensable Ievers for the socίalist emancipation' (ρ. 187), though he was critical of those conceptions - Utopian ίη hi!'> view - which regarded producer cooperatives as the principal way of organizing socialist production (ρρ. 109-20), Second. Bern!Όteίn emphasized the role ο! democratic ίMιίtυιίoη!; and the activities ο! numerous independent seIf-goveming assocίations ίη the movement towards socίaΙί!Όm: 'the cooquest of the democracy. the formation ο! political and social organs ofthe democracy. ίs the indispensable preliminaf}' condition Ιο the realisation of socialism' (ρ. 163). Third. he ηoι~ the signifίcance of municipal socialism ίη the ad\'ance to\... ards a socialist socieιy and as a fίeld ο! fruitful activit~' alon~side the parliamentary struggle. Bernstein had been greatly influenced by the ideas ο! the Fabian socialΊSts (with whom he established clo§(: relations durin~ his exile ίη EngIand from 1888 Ιο 1901) which were another major factor ίη

a

ιeήeι

14

The 50cialist Economy

Ihc revision οΙ socinlist concepIions <ιΙ Ihe end 01' Ihe nineteentlI ceIlIury; indeed Bernard Sha\v, ίπ his preface to thc 1908 rcprint οΓ Ihe FahillIl ΕΙ',I'αη', claiIned that: 'Since 1889 the SociHlist n10VCI11cnI has becn conIpcIely translΌrΠ1cd throughout Europc; and Il1e resulI οΙ Ihis ιransΙοrΠ1atίοn may ΓαίΓIΥ be describcd as Fabian Socialism' (1931, ρ, ΧΧΧίίί). The main tenets οΓ the new conccption \vere seI ουΙ ίπ a historical essay by Sidney Webb. Ιπ the first place ίι \\ιas c\olutionist (expliciIly related to the theories οΓ Comte, Danvirι and Spencer), and ίπ consequence 'gradualist': 'Νο philosopller 110W looks ΙΌΓ anything but the gradual evolution οΓ the new order from the old, without break οΓ continuity ΟΓ abrupt change οΓ the entire socialtissue at any ροίπι during the process'(193l, ρ. 29). The Fabian thinkers, thereIore, were totally opposed ιο all Utopian ΟΓ 'catastrophic' views οΓ the transition ιο socialism: 'history shews us πο example οΓ the sudden substitution of Utopian and reνolu­ ιίΟΠΗΓΥ romance' (ibill.). Webb then continued by associating the socialist moνcment with democracy: 'The main stream which has borne European society towards Socialism during the past \00 years is Ihe irresistible progress of Democracy' (ρ. 31); and he summarized his view by saying that socialists now realize that 'important organic changes can ΟΠΙΥ be ... democratic, and thus acceptable to a majority οΓ the people, and prepared for ίπ the minds of all ... graduaI, and thus causing ηο dislocation, howeνer rapid may be Ihe rate of progress', and ίη Britain at any rate, 'constitutional and peaceful', (ρ. 32). Webb also laid stress υροη municipal socialism (and Bernstein followed him ίη this respect), obserνing that 'ίι is the municipalities which haνe done most to "socialize" ουΓ industrial life' (ρ. 47). Βυι the growth of socialist parties brought another change beyond the increasing inνolνement ίη reformist politics and the adoption οΓ a more gradualist outlook. The cνcntual socialist economy came ιο be conceiνed more explicitly ίπ terms οΓ the nationalization of major industries and the introduction οΓ centralized economic pIanning, while the ideas οΓ cooperatiνe producιίοη and self-management by the 'associated producers' were largely dismissed as Utopian fantasies. 1 Thus Annie Besant, ίη her contribution ιο the Fahian EHay.s οπ industry under socialism, though she allowed ΓΟΓ some urban and regional organization οΓ industry, argued that concurrently with this would proceed 'the taking oνer ο! the great centralised industries, ccntraliscd for us by capitalists,

Τhe

nineteenth-cenrury vision 1S

who thus unconsciously pave the way ΓσΓ their own ~uper~es~ion' (Shaw, 1931, ρ. 146). The argument is close to thi1t οΓ Mi1rx i111d later Marxists concerning the process σΓ 'socialization of tlll: economy' reaching fulfίlment ίη a socialist socicty where, <.ι~ Hilferding (1910, ρ. 27) later expressed ίι, production would be regulated by 'the 10cal, regional ΟΓ ι . ιίσπαl commissi1rs' ....,ho .... ould 'shape, with conscious foresight, 'he whole economic lίfc οΓ thc communities of which they are th, appointed rcprcscnti1ti\ c~ i1nd leaders, ίη accordance with the n :eds οΓ the members'. and ι 11(: labour process as well as the distribution οΓ products would bc 'subject Ιο central controI'. ΒΥ the beginning of the twentieth cenιury the socialist pi1rtics, whether they ',\'ere Marxist ΟΓ ηοΙ, had rcached "cr)' similar conclusions about how a socialist economy should be organiled through the nationalization of major industries and centraIil.ed economic planning, But there was Iittle expericnce of operi1ting publicly owned industries, outside the Iimited ficld of municipal enterprise, and the projects ΓσΓ socialist rcconstruction wcrc couched ίη very general and abstract terms, without much considcration ίη detail of the problems that might emergc, ιι .... α~ recognized, ιο be sure, that the fuιure society could ποΙ bc compIeteIy planned ίη advance (and for that reason ιΙιι: ΙΙιορίαη schemes were rejected); Annie Besant (Shaw 1931, ρρ, Ι 40- Ι) aimcd Ίο forecast, ηοΙ the far-off fuιure, but the next social stagc , , , to work ουΙ changes practicable among men and womcn as we kno .... them" while Karl Kautsky (1902, ρ, 105) ίπ his essay οη 'the da~' after the revolution" expresscd very cIearly thc vicw that after thc conquest of politicaI power 'problems will arise οΓ which wc kno .... nothing and many with WhiCll we are occupied today will b)' ΙI1:1Ι time be solved. New means Ιο thc soluιions οΓ thesc diffcrcnt problems will also arise of which we today havc ηο suspicion,' Kautsky went οη, however, Ιο examinc morc closcly than .... ·α~ usual among socialist thinkers some of the immcdiate problcnls that might be encountered ίη constructing a socialist economy Οηι: of these was the incentive ιο work, which he thought woIlld dcpcnd partIy οη working-class discipline, though this would bc :1 'democratic discipline' presupposing a 'democratic organiz.ation οΓ labour' and a 'democratic factory' (ρ, 126); and 11C also 110tcd that there would be various fornls οΓ sociHI prσpcrt)' π:lιίοn:II, municipal and cοοΡcratίνc Wllilc Ρrίν:ιιc propcrt)' ι'Οιlld still cxist

16

Τhe Socialίsr Economy

ίη many means of production (ρ. 127). Βυι the effects of this working-cl.tss discipline would also need to be complemented b)' making \vork itself n10re attractive, reducing the hours of labour and improving conditions ίη the workplace (ρ. 128). These were ideas that had already been briefly formulated by Marx, though as the discussion by HeIIer, cited earlier, indicates, the problems are more complex than was foreseen by socialists ίη the nineteenth century. Kauιsky also expounded very clearly the role of money ίη a socialist economy:

Mone}' is Ihe simplest means known υρ Ιο the present time which makes ίι possible ίπ as complicated a mechanism as that οΓ the modern ρrοdιιcιίνe process, with its tremendous far-reaching division of labour, ιο secure the circulation οΓ products and their distribution ιο the individual members of society. Ιι is the means which makes ίι possible for each one ιο satisfy his necessities according ιο his individual inclination (ιο be sure within the bounds of his economic power). As a means ιο such circulation money ννίll be found indispensable υηιίl something better is discovered. Το be sure many of its functions, especially that οΓ the measure οΓ value. ννίll disappear, at least ίπ internal commerce. (ρ. 129)

He then went οη ιο discuss how the incomes of workers might be increased under socialism, pointing ουΙ that because of the need for investment and public expenditure there would be 'none ιοο much remaining over from the present income of the capitalist ιο be applied ιο the raising of wages' (ρ. 136), and emphasizing as the main factor a rapid expansion of production. This, he argued, could be achieved mainly by a rationalization of production which woLIld concentrate ίι ίη larger, more efficient plants, and by the elimination of economic crises. Buι Kautsky, unlike Marx ίη the Grunt!r;He, did ηοΙ specificaIIy include the progress of science and technology among the important factors affecting the productivity of labour, and he did ηοΙ therefore discuss the question of how technological innovation would be organized ίη a socialist society, ΟΓ whether ίι might be impeded by the development of a bureaucratic system of state management. lη the last part of his essay, however, Kauιsky did suggest some variations and lίmίts ίη the socialization of production. He made clear, first, that there would

Τhe

nineteenth-century vision 17

be municipaI and cooperative enterprises alongside the large stateowned concerns; and second, that ηοΙ all production would be socialized, and many individual producers would remain active: ... the greatest diversity and possibility of change wilI rule ... The most manifold forms of proper v ίη the means of production - national, municipal, cooperative, uf consumption and producιίοη, and private - (an exist besidt each other ίη a socialist society, the most diverse forms of ndustrial organil.ation ... οΓ remuneration of labour ... of cίrι ulΒιίοη of products .... The same manifold character of econoInic mechanism that exists ιoda~' is possible ίη a socialist society. (ρ. 166)

Apart from agriculture, where Kautsky stressed the important rolc of small farmers, a major sphere for the deveIopment of small-scaIe and individual enterprises was, ίη his view. that of 'inteIIectual production" The educational system and scientific research wouId need ιο be nationaIIy organized, but ίη the arts and Iiteraturc f ree individual activity must prevail. and Kautsky summed υρ his idcas ίη the phrase 'Communism ίη material production. anarchism ίη the intellectual' (ρ. 183). Although socialist thinkers. as Ι have illustrated. became incrcasingIy preoccupied with the question of organizing and managing Βη economy based υροη the socialization of Iarge-scaIe enterpriscs, and reIying ιο a great extent υροη central pIanning. ΙΙιορίΒη ideas did ηοΙ vanish completely from the socialist movemcnt. Thc Utopian novels of Bellamy and Morris were thenlselves publishcd late ίη the nineteenth century and were very ....,idcI), rcad. Ι n particuIar, the idea of self-management by the 'associatcd produccrs' remaincd potent and assumcd new forms; for cχanψΙc, ίη the French syndicalist movement. whicll also strongIy influcnccd the workers' movement ίη Italy and Spain, ίη thc Amcric:ln lηdustrίaΙ Workers of the World. and ίη tlle guiId sociaIist n1O\'Cment ίη ΒΓίΙΒίη. The latter deveIoped ίη a clin1atc οΓ ορίηί0l1 111:11 owed much Ιο Morris. and 'NeI1',I' /rolll N()\I'/Il'rl' , . . nliglll hc taken as thc vision that tlle guild socialists stro\'c ιο illlCI'prcl ίn ;1 form appropriate Ιο the twenticth ccntury' (Glass 1966, ρ. ~),. Somewhat later. towards thc cnd of thc Fil'sl World \V:IΓ. 111C idea οΓ self-managcmcnt reccivcd :1 I1C\\' ίπψιllsίΙΗΙ frOI11 111C emergcnce of workers' and soldicrs' coul1cils :111(1 111C dc\'clopnlCllI

18

Τhe Socialίst

Economy

of what camc to be called the 'council movement'. Karl Rcnner ( Ι 92 Ι)
Τhe

nineteenth-century vision 19

debated, ίη response ιο the criticisms that were levelled ί1! the ίdeί1S expounded by the counciI movement, the syndicaIists and tht: (JuiId SociaIists,S and ίη the Iight of experience of the actual functioning of cooperative production and seIf-management. Two issues hί1ve been crucially important ίη this debate the extent to y,ihich effective participation ίη managem ~ 'ι can really be achie\ed ίη enterprises which differ greatIy ίη sί..e, compIexity and technoIogicaI sophistication; ano the ways ίι which individ uί1l entcrprises shouId be related ιο the national and international econom)'. through central ΟΓ regional planniIIg ΟΓ through market mechanisms (more ΟΓ less strictly regulated) - and thc)' will be considered ίη detail ίη later chapters. ΒΥ the early years of the twentieth century the socialist vision had assumed, as Ι have illustrated, a diversity of forms. and ίη the course of this century ίι has become ever more diverse. ίη thcor)' and ίη practice. But this growing diversity, marked especially b)' the Γίfι between the authoritarian ΟΓ lotalitarian socialism of Eastcrn Europe and the democratic socialism of Western Europe. \\'as accompanied afιer 1945 by a steady advance of the 'socialist idea' ίη many of the capitalist countries. and by a gradual extension of broadly socialist policies and institutions. Ιη most of the West European countries membership of socialist parties. and thc socialist vote, increased substantially (though Britain was a notabIc exception), and ίη many countries socialist governmcllts havc bccn ίη offίce for longer ΟΓ shorter periods (Botιomore 1984a. ch. 11). Since the mid-1970s, however, there has been a notable resurgcncc of capitalism, and the virtues of private entcrprisc and a markct economy have been widely and vigorously cxtolled (again with exceptional fervour and effect ίη Britain. reflecting the weakncss οΓ the socialist movcment). This changc has reawakcned discussion οΓ the content and prospects of the 'socialist idea' ίη tcrms oΓtcn reminiscent of the rcvisionist debate provokcd b)' Bcrnstcin at thc end of thc nineteenth century,~ and the debate has bccn givcn fr'csll impetus by the reforms that are now undcr way iIl tllC USSR :Ind other socialist countries. Αη important part of the debate concerns thc political institutions οΓ a socialist society, and above all thc 4ucstion οΓ dcmocr;Ic~·. pluralism and individual liberty; but thc cconomic strιrcΙUrc οΓ socialism. which is lίnkcd ίη many rcspccts Witll thc political problems, remains a crucial issuc. and is thc principal sιιbjcct οΓ this

20

Τhe

50cialist fconomy

book. Ιπ asscssing the current rethinking and restructuring of socialism \\'e do ποΙ need Ιο adopt either of two extreme positions: one which clings obdurately ιο past formulae and ιο the idea of a 5udden minlculous transformation of human nature and society οπ 'the day after the revolution '; ΟΓ one which rejects almost the entire past along with any Utopian vision, ίη favour of accommodation ιο what seems immediately, ΟΓ ίπ the short term, feasible. Nor do we need ιο fear, ΟΓ ιο regard as symptoms of a profound and perhaps terminal crisis, the critical reassessments and reforms which are now taking place. Socialism, like capitalism, is a historical phenomenon, subject ιο all kinds of change and processes of deνelop­ ment ΟΓ decay, and every generation has Ιο face new situations, problems and opportunities - ίη large part inherited, ιο be sure, from the past with which ίι must grapple as intelligently and resolutely as ίι can. Νο one can predict with any accuracy exactly what kind of world human beings will inhabit a hundred years from now, ίΓ they still haνe a world ιο inhabit; but we can at least be confidenI, Ι think, that the nineteenth-century νision of socialism has become an enduring part of the furniture of the human mind, and that the socialist idea and socialist practice, howeνer greatly modified by new experience, will remain powerfully effectiνe for a long time ιο come.

Notes Ι.

The terms 'socialism' and 'communism' were used more ΟΓ less interchangeably ίπ the early nineteenth cenιury, although the former was more widely employed, and this practice continued through much οΓ the cenιury. Marx and Engels folIowed this usage to some cxtent and did πο! take strong exception even ιο the term 'social democratic' which had been adopted by some socialist parties, although Engels later (ι 894) expressed reservations, saying that while 'the word wilI pass mustcr' ίι was realIy unsuitable 'for a party whose cconomic programme is πο! merely socialist ίπ general but specifίcalIy communist, and whose ultimate political aim is to overcome the entirc state and consequently democracy as welI.' Only ίπ the twentieth cenιury, particuIarly after the creation οΓ the Third (Communist) lnternational and οΓ separate Communist parties. did the term 'communism' acquirc a morc distinctivc meaning, embodying the idea of rcvoluιionary action ίπ con-

Τhe

2.

3. 4.

5. 6.

nineteenth-century vision 21

trast with socialism as a more peaceful, gradual and 'reformi~t' approach to social changc, while αΙ the same time communi~t "JLiety came to bc reprcsented (notably by Lenin) as a second, higher stage ίπ the development of post-capitalist societies. Οπ the diverse and changing usages see the article by Jaszi (Ι 934), Stanley Μ oore ( 1980), and the entries οη 'Communism' and 'Socialism' ίπ Bottomore (1983). lπ Ihi, book thc term 'socialism' ννίll bc υ~ t j Ιο refer to all those movement~ which aim ΟΓ have aimed to creatc a 'classless society' ΟΓ, ίπ οπι: form ΟΓ another, a 'society οΙ associated prι ducers', and Ιο the diverse types of society which claim to have achievt d, ίπ some degree, those aim,; and any necessary distinctions between differcnt movements and societie~ ννίll be made at the appropriate place ίπ the text. Another defence of Utopian thought was made by Οιιο Neurat h (1919) who argued that 'we find ίη utopias prophetic trains of thought which remain closed Ιο those who, proud of their sense οΓ realit~·, stuck f
2

Marxist conceptions of a socialist economy

Marx referred ΟΠ!Υ ίπ the most genera! terms, and οπ rare occasions, ιο the socia!ist mode of production, as that of the 'associated producers', ΟΓ as the 'se!f-goνernment of the producers', and ίπ the Grundrisse (ρρ. 704-6) as an economy, such as had a!ready begun ιο deνe!op under capita!ism, ίπ which the 'creation of rea! wea!th ... depends upon the genera! state of science and the progress of technology' and 'genera! socia! know!edge has become a direct productive force" For the most part, !ater Marxist thinkers, at the end 01" the nineteenth century and ίπ the first decade of the twentieth century, ~fitinued ιο describe the socia!ist economy main!y ίπ terms of a progression ίπΙο pub!ic ownership of the !argescale enterprises and financial institutions which had become increasingly dominant ίη the capitalist economy, without considering ίη any detail how these public corporations would be managed ΟΓ precisely how a centraJIy planned economy would function. As Landauer (1959, ρ. 161 Ι) obserνed: Ιη

the last years before the First World War the groundwork was for the great advance of socialist theory ίη the interwar years, but this preparatory work was done ίη the main by some of the critics of socialism and ηοΙ by the socialists themselves. The period from 1900 Ιο 1914 was unfavourable Ιο the emergence of a realistic theory of socialism because one wing of the socialist movement was committed 10 Marxism which offercd ηο basis for such a theory, and the other wing was Ιοο much under the

laίd

22

Marxist conceptions of a socialist economy 23 influence of the historical and instiιutionalist school~ ... to bt greatly interested ίπ any 50ΓΙ of theoretical analysis.

The work of Karl Kautsky, as Ι indicated ίη the previous chapter, was rather exceptional ίη discussing (whilc rejecting, ίη Μ αrχ \ terms, any intention of writing reci ο ~s for the kitchens οΓ the f uιure) some of the problems that would Iace a socialist regime aftcr thc social revolution, anJ ίη outlinin~ an economic strucΙUre ίη ",·llich large state-owned enterprises wOl ld be compIemented b)' cooperative production and by small-scalc: ΟΓ individual private enterprise. GradualIy, however, ίη the new conditions resulting from ΙΙΙΙ: growth of large working-class parties, which needed Ιο presenI more detailed economic and social policies ίη their programnles, and especialIy after the Russian Revolution, which made the construction of a socialist economy αη urgent practical question, Marxist thinkers were obliged ιο consider more carefully and thoroughly the nature of economic institutions and mechanisms ίη a socialist society. Ιη this reorientation of thought the experience οΓ the 'war economy' during the First World War played αη important part, and was analysed ίη various ways, Karl Renner (19 Ι 6), ίη a series οΓ articles οη 'problems of Marxism', argued that the war econom)' had accelerated a process of 'the penetration οΓ the private ecοnοmγ down ιο its elementary cells by the state' and the emergence οΓ 'control of the whole private sector of the econom)' by willcd and conscious regulation and direction " concluding that sοcίetγ had 'entered an era of state economy , , . though entireIy within ι he framework οΓ the capitalist economic order" The socialization οΓ the economy had taken an unforeseen course, ίη which, for thc Iimc being, the principal agents were 'all-powerful national states" and this posed new problems for the socialist movemcnI. Onc important aspect of his argument, which hc and other Austro-Marxists developed ίη later writings, was that a working-cIass gονcrnη1cnt couId build upon and extend the economic functions οΓ tl1C statc that had already emerged ίη capitalist society and would ΙΙ0Ι nccd ιο reconstruct the entire state machinery. Αι thc samc tin1c tl1crc is apparent ίη Renner's discussion a conccrn about ιΙκ 'aII-powcrfuI state'; this concern was later cxprcsscd mucI1 n10rc strongI)· b~' HiIfcrding (1941), aftcr thc cΧΡcΓίcncc oftl1C StaIil1ist J'cgil11C ίl1 tI1C Sovict υηίοl1 ,tBd thc NatiOI1HI Soci;tIist rcgiInc ίιι (lcrnHII1~', ίn IliS

24

Τhe

Socialist Economy

thoroughgoing revision 01' the Marxist theory of the state. Quite a different aspect of the war economy was given prominence by 0110 Neurath ίη articles published between 1916 and 1920, more particularly after his experience as the creator and president of a central planning offίce ίη Bavaria ίη 1919. He described this experience ίη a lecture given to the Sociological Society of Vienna (1920). and began by observing that: Αι Ihe beginning of Ihe revolution people were as unprepared for Ihe lask of a socialisl economy ίπ Germany as they had been for a war economy when war broke oUΙ ίπ 1914 .... The German Social Democralic Party had ποΙ worked ουΙ απ economic programme and was unable to ρυι forward clearcut demands for socialization .... The technique of a socialist economy had been badly neglected. Instead, only criticism of the capitalist society was offered .... That was why, when revoluιion broke out, a commission for socialization had ιο be called ιο discuss the basic ΡΓίπ­ ciples. Longwinded, sterile debates took place, showing disagreements of αll sorts, withouι producing a uniform programme.

Neurath went οη Ιο describe briefly his work during the period of the shorι-lived Bavarian Soviet, and Ιο make clear his own commitment Ιο 'full socialization' and central planning as against the parιial measures that were being introduced ίη Germany as a whole. His conception of a socialized economy was outlined ίη articles οη the war economy and οη the immediate post-war attempts at socialization which were collected ίη a volume entitled Through rhe War Econorn}' 10 rhe Natural Econorn)' (Ι 9 Ι 9). Ιη one of these articles (1917) he argued that the decline of the free trade economy was accompanied by the advance of an 'administrativc economy' orientated towards an economy ίη kind, which 'seems Ιο incline towards the furthering of a certain uniform shaping οΓ the economic organization, based οη centralized measures'. Ιη a later report (Ι 919) delivered to the Μ unich Workers' Council, he set ουι more fully his idea σΓ a socialist economy: The lolal organiza!ion whosc crea!ion we discussed can raise Ihe economic cfficicncy of thc order of lίfe only if ίι possesses απ adequale economic plan. 11 is no! enough 10 know Ihe possibilitics of produclion and consumplion as a whole, one musl bc ablc 10

Marxist conceptions of a socialist economy

25

follow the movement and fate of aΙΙ raw materials and energies. of men and machines throughout the economy [and for this purpu~e] we need universal statistics which, ίη coordinated surveys, comprise whole countries ΟΓ even the world ... Economic plans would have Ιο be designed by a special offίce which would luuk οη the total national economy as a ~ ί gle giant concern. Mone}' prices would ηοΙ be important for ίι.; surveys, since within the framework of a planned economy s\ ch prices, as long as they continue at all, are fίxed ίη an essen ially arbitrary manner b}' associations, by the state ΟΓ by othel' authorities, whereas previously they were automatic results of competition, The central office for measuremenI ίη kind, as we might call the ofIϊce mentioned above, would have as one of iIs tasks the presentation of the economic process at any given time, but above all would haνe ιο design the economic plans for the future .... We musI at long last free ourselves from outmoded prejudices and regard a largescale economy ίη kind as a fully valid form of econom}' which is the more important today ίη that any completely planned economy amounts to an economy ίπ kind. Το socialize therefore me
26

The Socialist Economy

socialist planning was the principal source οΓ the 'calculation debatc' οΓ the 1920s and 1930s, which will be considered ίη Chapter 4 below. Αι this ροίηι, however, ίι is worth noting that Neurath's concepιίοη οΓ 'calculation ίη kind' is significant also from another aspect, since ίη principle ίι enables economic planning ιο take ίπΙο account the use, as between generations, οΓ non-renewable natural resources (ra\v materials and energy). Ncurath himself, ίπ a later essay (1928), raised this question ίπ discussing the formulation οΓ production plans for providing housing: One ma)' choose between plans: those that with the same effort consume more raw matcrials than others are οΓ course eliminated. More difficult is the case where higher consumption of raw materials goes with less work. The question might arise, should one protect coal mines ΟΓ ρυι greater strain οη men? The answer depends for example οη whether one thinks that hydraulic power may be sufficiently deνeloped ΟΓ that solar heat might come ιο be better used, etc. If one believes the latter, one may 'spend' coal more freely and will hardly waste human effort where coal can be used. If however one is afraid that when one generation uses ιοο much coal thousands will freeze to death ίη the fuιure, one might well use more human power and save coal. Such and many other non-technical matters determine the choice of a technically calculable plan. (ρ. 263)

Neurath, however, did ποι pursue the ecological issues and ίπ general there was lίttle interest, and very lίttle debate, among Marxists concerning ecology (Martinez-Alier 1987, ch. 14). It is, however, an important subject for modern socialist thought and Ι shall return ιο ίι ίπ a later chapter. After the Russian Revolution the principal Marxist discussions of economic planning took place ίπ, ΟΓ with reference to, the Soviet U πίοπ. The Soviet planning experience, ίπ its particular historical context. will be examined ίπ the next chapter. Here, Ι shall confine myself ιο the discussions among Marxists ίπ the period from the First World War ιο the 1930s, which also related ιο the attempts at partial planning ίπ some West European countries and the consequences of the war economy. As Ι noted earlier, Renner (1916), ίπ his articles οπ 'problems of Marxism" had drawn attention Ιο the great expansion of state intervention ίπ the economy and raised

Marxist conceptions of a socialist economy 'Zl

questions about how the activities of the interventionist state could be transformed ίη a socialist direction; and later, Hilferding (1927) argued that post-war capitalism had moved towards an Όrganί7,ed economy' ίη which the 'capitalist principle of free competition' \I"as replaced by 'the socialist princir' ~ of planned production', and that the present generation faced 'Ue problem of transforming with the help of the s:ate, which onsciously regulates society - an economy organized and directet _by the ('apiIa/iSH ίηΙο one which is directed by the demοcrαΙίι' state" The Austro-Marxists clearl)' conceived the socialist economy as one ίη which production would be dominated by large state enterprises, with public ownership of the financial institutions as a major element, and directed b)- a central plan, and this was also, as we have seen, the view of Neurath, who was broadly ίη sympathy with thcm and contributed regularly ιο their journal Der Kamp[ Ιη the event, the Austro-Marxists and the Austrian socialist party (SPO) never had the opportunity Ιο implement their economic plans for the country as a whole, but ίη Vienna, where the socialists were ίη power υηιίl 1934, another aspect of socialist planning \I"as evident ίη their achievements ίη providing working-class housing, health and welfare services, and cultural facilities, and ίη bringing about major educational reforms (Bauer 1923, Gulick 1948. νοl. Ι, chs 10, 13-16, 18). This was important ίη giving prominence Ιο an essential element ίη socialist planning; namely, tllC organization ()f production Ιο satisfy basic human needs for the whole population. and a new, more equal division of social welfarc. Equally importanI was the Austro-Marxist criticism of the coursc taken b)' tllC Russian Revolution, best expressed by ΟΙΙο Bauer (1923) ίπ his book οη the Austrian revolution, wherc he also qualificd the idea of a centrally planned and managed econom)' through his advocac)' of works' councils: ΟηlΥ this self-education ίη and IIHough Ihc pracIicc οΓ wOI'ks' councils will creatc the prcrcquisitcs for a socialist modc οΓ 11Γ0ducIion. The cxample of Russia, wlterc IIIc dcnlOcr;lIic orgal1il:Iιίοη of industry whiclt was aιtcmpted immcdiatel)' aftcr tltc OcIobcr Revolution soon gave way to burcaucr;lIic statc capitalism, dcmonstratcs that οπlΥ hurcaucratil' Matc soci;tlisnt which merely rcplaccs Ihc dcspotism σΓ thc cl1ιplo)'cr h)' tltc despotism οΓ Ihe burcaucrat is rossihlc 50 lσl1!! as tltc "'orkcrs

The Socialist fconomy

28

lack Ihe capaciIy for self-government ίπ Ihe labour process .... As insnumenI οΓ proleIarian self-government ίπ Ihe producIion process Ihe \vorks' councils consIiιuIe a prelirninary slage οΓ the socialist mode οΓ production. Consequently, their creation and development is a more important preparation for a socialist system οΓ society Ihan any forcible act of expropriation, if the results οΙ' the laΙΙer αΓΙ: πο more than state ΟΓ municipal undertakings administered οπ bureaucratic lines. (ρ. 166) <ιπ

Much of the Marxist discussion of a socialist economy ίη the early 1920s was preoccupied with the question of the role of works' councils, and more broadly with workers' self-management, ίη relation to a centrally planned and managed economy - ηο! only ίη Austria, but ίη Russia (especiaIIy through the actiνities of the Workers' Opposition, ίη which Alexandra KoIIontai took a leading part)I, ίη Germany, ίη Czechoslovakia and ίη Italy (notably ίη Gramsci's articles οη the Τυτίη factory councils) - and the discussion has revived vigorously ίη recent years. But from the mid1920s Ιο the 19305 Marxist theory came Ιο be dominated partly by the controversies ίη the Soviet υηίοη and their repercussions elsewhere, partly by the 'calculation debate' provoked by antisocialist critics. The influence exerted by the controversies among Soνiet Marxists was theoreticaIly unfortunate ίη the sense that they had less Ιο do with the construction of a socialist economy than with the indu5trialization of a backward, overwhelmingly agrarian society. Α more extended analysis of the deνelopment of the Soνiet economy, and of the historical circumstances which affected ίι, wiII be given ίη the next chapter, and ίη the present context Ι shaIl consider only the principal theoretical ideas which emerged. The 'industriaIization debate' took place between 1924 and 1928,2 and the main protagonists were Bukharin and Preobrazhensky, though many other leading economists also took part (Erlich 1960, chs Ι and 2). Bukharin, who had fervently supported the economic policy of 'War Communism', invoIving the extension of nationalization and direct control of the whole economy, and presented a theoretical justification of ίι ίη his Economic.~ ΟΙ Ihe Translormation Perio(J (1920), changed his views radicaIly after the introduction of the New Economic Policy (ΝΕΡ) which Lenin persuaded the party Ιο adopt at the eHd of the civil war and foreign intervention, as a

MarXist conceptions of a socialist economy 29 means of restoring the sh attere d economy. Ι η a serιe~ 'οΓ. artIcles from the end of 1924 BUkharin now adνocated, for the agriculturdl sector of the economy, a liberalization of trade and a relaxation of the restrictions οη hiring labour, but at the same time <.ι strong ~ffort Ιο promote peasant cooperaliνes. lη the interim, he drgued, We have ιο tell the peasantry, al ,ts strata: gct rich, accumulcttc. develop your econoMY" since thi;, along with a liberalization οΓ foreign trade, would have a stimu iating effect οπ the deνelopment of industry and industrial investn ent, and would make possible a reduction ίη industrial prices. These policies as a whole. Bukharin argued, would promote general economic growth. Preobrazhensky (1926), οη the other hand, emphasized the importance of rapid industrialization ιο overcome the 'goods famine' and to absorb the surplus agrarian population; he noted that this must take place οη the 'new technological basis' which required an ever increasing amount of capital per worker. But this posed a massive problem of accumulation, and tlle crucial part οΓ Preobrazhensky's work was his formulation of a 'law of primitive socialist accumulation' (by analogy with Marx's description οΓ 'primitive capitalist accumulation' ίη the early stages of the deνclop­ ment of capitalism), which involved the suppression of the 'Iaw of value' governing competitive markets and the imposition of 'forced saving' οη the peasantry, mainly through monopoly pricing by the state. But Preobrazhensky introduced several qualifίcations ίηΙο his argument, recognizing that the policies hc adνocated faced major problems and contradictions, ηοΙ least the danger of a 'peasants' strike'; and ίη a later statement of his position hc concluded that 'the sum total of these contradictions shows how strongly ουΓ developmcnt toward socialism is confrontcd with thc ncccssit)· aΓ ending ουΓ socialist isolation, ηοΙ οηlΥ for political but also ΓaΓ economic reasons, and of Icaning for support ίη thc future aη thc material resourccs of othcr socialist countrics' (Erlich 1960. ρρ. 55· 9). What Preobrazhensky did ποι forcscc, as hc ackna\vlcdgcd ίη his speech Ιο the scvcntcenth party congrcss ίπ 1934. whcrc 11C ;Ils(1 renounced his law of primitive socialist accumulatiol1 ;IS 'a CΓtIdc analogy with the cpoch of primitivc capitalist accunHIlatiol1'. "";iS the forccd collectivization of thc pcasantry cnrricd out b~' Stalin. as a means of accumulating thc rcsourccs for rapid indtIstri;Ili7
30

Τhe

Socialist Economy

politic,tl issues such as Marxists ίη Western Europe, beginning with Marx himself, had never expected ιο confront: the industrialization of a backward eCOnOfilY and the construction of 'socialism ίη one country'; the maintenance of working-class dominance and 801shevik rule ίη a society which had three miIIion industrial workers and eighty million peasants; the constant threat, ΟΓ fear, of mίlitary intervention by the capitalist powers. Hence, a considerable gulf emerged between the preoccupations of Soviet Marxists and those ίη the West, and this was widened by the division ίη the international working-class movement between the old social democratic parties and the new communist parties. For the most part the social democratic Marxists remained critical of Soviet policies, and especiaIIy of the political dictatorship, and conceived the advent of socialism as the outcome of a 'slow revolution' ίη which, according ιο Hilferding, organized capitalism would graduaIIy be transformed ίηιο socialism as the democratic state took possession of the 'commanding heights' of the economy. Few of them undertook an analysis ίη any detail of the development of the Soviet economy, ΟΓ its fundamental problems; one such attempt, by F riedrich PoIIock (Ι 929), which was described by a Soviet reviewer as having 'an outstanding place ίη the ocean of lίterature οη the USSR and its economy',3 was ίη fact a largely descriptive account of the system of central pIanning, while the theoretical discussion which PoIIock promised for a later volume never appeared. Ιι was, however, the impIementation of a central plan, which had its first beginnings ίη the same year (ι 92 Ι) as the introduction of ΝΕΡ, with the creation of the State Planning Commission ('Gosplan'), that mainly interested socialists elsewhere, and from this aspect there was ηοΙ such a great difference between the concerns of Western Marxists and Soviet Marxists. 8υι the former found themselves increasingly involved ίη a theoretical defence of the possibility of central pIanning ίη an advanced industrial economy, against the criticisms of anti-socialist economists such as Mises and Hayek; this 'socialist calculation debate' of the 1920s and 1930s, and its prolongation ίη more recent controversies, wiII be discussed ίη Chaprer 4. Here, ίι should be noted that the external condirions of the debate changed dramaticaIIy between rhe end of rhe 1920s and the mid-1940s, ίη rhe first place as a result of the profound economic depression ίη the capitalist countries, which was interpreted by many Marxists as a 'final crisis' preceding the collapse of

Marxist conceptions of a socia/ist economy

31

capitalism, and ίη sharp contrast the ruthless collectivization οΓ agriculture and rapid industrialization ίη the USSR, which made possible its victory ίη the Second World War and its post-war emergence as an industrial and military superpower. Second, the outcome of the war was an expansion οΓ the Soviet form οΓ socialism ίηΙο Eastern Europe, :\ strong Soviet innuence οη the development of socialism ίπ ClIna and ίη some Third World countries, and ίπ \,ιestern ΕυΓ< pe a considerable extension οΓ public ownership, increased state intervention ίπ the economy, and an apparent movement towards ι!emοcratίc socialism, Ihough this was soon checked by a vigorous revival οΓ capitalism aided b)' the MarshaII Plan. ΒΥ the end of the 1940s Marxist conceptions οΓ ,\ socialist economy had settled fairly clearly ίπto a pattern ίη which central planning and state ownership and management οΓ a wide range οΓ industrial enterprises and financial institutions held pride οΓ place; but this began Ιο change ίη the 1950s. Ιπ γ ugoslavia the system οΓ workers' self-management was introduced, and a 'socialist market economy' emerged. Then, very gradually, the highly ccntralized economies ίπ other East European countries began Ιο change, and the process of decentralization and development οΓ a controlled market economy has accelerated rapidly ίη the past decade. Marxist conceptions of a socialist economy have now become quitc diverse and ίι is very evident at present that ηο single view holds a clearly dominant position. The more reccnt debates and schools οΓ thought wiJI be discussed ίη later chapters, following an cxamination ίη the next two chapters of the various fornls of socialist planning since the First World War, and thc argunlents against planning which have been PI-opoundcd by anti-socialist critics.

Notes Ι. See Porter (1980), ch. 16, and thc rcfcrcnccs givcn tl1crc. 2. Οη this debate scc Erlich (1960) and Splllbcr (1964). Sc\"cr;11 st tJ(jcnt~ "ι this period have noted that tl1C Sovict cconoιllic dchatcs "'crc pionceriJ1g attempIs ίπ the ficld οΓ dcvclopn1cnt CCOI1OIlliCS which "111~' l11tKh I;JIn. after 1945, with thc emcrgencc οΓ 'dc\"eloping ('ι)ΙΙl1trίcs' ;Ind tl1C lInivcrsal conccrn witl1 economic growtl1. cl1gaged ι11Ι' Γllll ;IttCllliOI1 01' Westcrn cconon1ists. As Spulhcr (1964. Ι'ρ, \" \'ί)
H)tc~:

32

Τhe Socialίst

Economy

Since the Ι 950~. which ~aw the emergence οΓ many newly independent countries bent οπ rapid economic growth, preoccupation with nlaSSi\'e state intenention ίπ the economy. forced industrialization. and planning has gi\'en rise ίπ thc West ιο a whole body οΓ literaιurc οπ economic dcvelopment. Man)' οΓ the problems under discussion ίπ this literaΙUre and ίπ the newly de"eloping countries were alread)' confronting Russia ίπ the 19205 .... The truIh is that the Soviet mid-1920s were teeming with interesting and valuable ideas.

And as other writers have observed, these ideas, and the Soviet experience of planned industrialization, became ίη varying degrees a model ΟΓ ροίηι of reference for Ihe policies of many developing countries afIer 1945. 3. Cited ίη Ihe ediιorial introduction ιο Ihe 1971 reprint of PoIlock's book.

3 Τhe experience of planning

since the First World War

The first socialist planned economy was created ίη Russia aftcr the revolution of October 1917. Ιι could hardly have appeared ίn Icss favourable circumstances, ίη a predominantly agrarian and backward society, debilitated by three years of war and then by ci\il war and foreign intervention. The Bolshevik leaders themselves, al least υρ ιο the mid-1920s, were doubtful about tlleir abilit)' ιο relain power, and stiII more about the possibility οΓ conslrιIcling ,ι socialist society without external support from a socialist rc\'oluιίοη ίη one or more of the advanced industrial countrics οΓ Wcslcrn Europe. Ιη the event, as thc revolutionary' wavc ίη Europc subsidcd ΟΓ was queIIed, thcy were forced ίηιο the policy οΓ 'bιιίldίng socialism ίη onc country', which rcquired abovc <ιΙΙ nlassivc <ιησ rapid industrialization. The carlier period οΓ Soviet economic dcvelopnlcnt 11as hccn \\cll documented ίη numcrous studies,l and 11erc Ι shaIl αηl)' hΓίι'IΙ~ summarize the principal stages. T11C first stagc. 111;11 ο( "\<';11 Communism" was largely determined by 111C civil \\',Ir. (αrcιι;n intervention and the resulting chaotic condition αΓ socict~', Λ~ ~ ιΗΙ' (1969, ρ. 47) remarks, 'aII thc cvcnts οΓ 1917 21 \\'CΓC. f1;ltιιΓ:III~. dominated by the \var and civil ,..,ar, by dcstrιIclion ;Hld lϊΙ;llΙίηι;. h~ depleted supplies and paralysed transporI, b)' Ihe nccds οΓ 111C I'ronl and priorities οΓ baιιIc, Hnd IHSt but ηαΙ Icasl b)' 111C los~ 01' \ ίl;11 industriHl and agricultural areas 10 v.lrioIIs cncrnics" I~·ollo\\·ίιψ 111C nationalization and rcdistribtItiof1 οΓ 1,lnd,
34

Τhe Socialist Economy

\vorkers' control, statc o\vncrship and control 01" indlIstry and fίηaηcω instiIlItions werc rapidly cxtended, along with a bHn οη privatc trade, and thc whole economy moved towards <ιη cconomy ίπ kind, Η n10neyless economy ίη large meHsιIre ηο dolIbt as <Ι conseqlIence οΓ the civil war and thc prevailing disorder, blIt also theoretic
Β)' Ι 92 Ι indlIstrial prodlIction had fallen Ιο
Planning since the First World Wdr 35 universally accepted, οη both political and economic ground~. The political considerations were twofold. Ιη the first pl
Ιη a speech delivered ίη February 1931 Ιο leadίηg personnel οΓ socialist industry, Stalin (1955, ρ. 41) observed: 'We are fi[t~' ΟΓ LI hundred years behind the advanced countries, We must make good this distance ίη ten years, Either we do ίι, ΟΓ we shall go under", Ι ι was an astonishingly accurate prediction, The [orced ind ustrializaιίοη undertaken ίη the 1930s was a major factor enabling the Sovict υηίοη ιο withstand, and eventuaIIy ωΓη back, the massivc assault by Nazi Germany ίη 1941, which involved [or the rest οΓ the \\,Llr four-fifths of the whole German armcd forccs, The second political element ίη the industrialization progranlIl1l' concerned the rclation betwcen classes, Tlle Bolsheviks had Icd a successful 'proletarian revolution' based υροη a vcr)' small ίπdω,­ trial working class ίη alliance Witl1 a vcry largc pcasantry, and ίι \\;ι~ apparent ιο all of them that the existcncc οΓ millions οΙ PC,Is,lIl! households engaged ίη independent production, along ν.,ίιI1 ιΙ1Ι' growth of private small-scale manufacturc and privatc tradc dllI'il1}; the ΝΕΡ period, continually rccreated thc conditions for a ΓΙ'\ ί\,,1 of capitalism and constituted a thrcat Ιο ιΙιι: dcvcloPIl1Cl1t ι1Ι' ;1 socialist socicty. even though, as Bukharin argucd. Ι11Ι: 801S11C\ ι,,~ continued to occUPY the 'commanding 11Cίghts' οΙ' ΙΙΚ CCOfiOnl). Industrialization, therefore, was also secn ,IS crHciHI ίl1 l'hanging ιlιι: balance οΓ social forces by cnlarging tllC ίl1dΙΙSΙΓί:ι1 \\ΟΓ"ίl1g clHss

36

Τhe

Socialist Economy

and increasing its political weight. The policy of forced ίη­ dustrialization which began with the First Five Year Plan ίη 1928 w:ιs then complemenled by the forced collectivization of agriculture 10 elimin.tte, or at least severely restrict, independent peasant production. Finally, the purely economic consequences of rapid industrializaιίοη were essential ιο achieving the social aims of a socialist society b}' raising lίνίng standards, ensuring full employment, and expanding the social services; all of which depended υροη sustained economic growth. Ιη these respects the development of the Soviet U ηίοη ίη the 1930s contrasted strongly with conditions ίη the c:ιρίtalίst world - ιο such an extent that the Webbs (1935) concluded their generall}' very favourable account of the Soviet υηίοη as 'a new civilization' by saying that this civilization had been successful and was likely 10 spread elsewhere. J There had, of course, been some extension of economic and social planning ίη the European capitalist countries after the First World War. The war economy accustomed people Ιο much more extensive state intervention and regulation of production, and there were many who considered that this experience would lead gradually towards a socialist system. 4 Initially, too, the Russian Revolution gave a further impetus ιο the socialist movement, and several revolutionar}' upheavals ίη central Europe instituted for brief periods agencies and measures of state planning, notably ίη Ηungaσ' and Bavaria (where Neurath, as Ι have noted, played a prominent part). With the defeat of the revolutionary movemenIs, however, ver}'liιιle ίη the way of socialist planning survivcd outside the Soviet υηίοη. Nevertheless, the ideas of extended state intervention, public owncrship and central planning rcmained potent, and οη a lίmίted scale effective. Ιη most European countries state intervention ίη the cconomy did gradually increase, mainly through the growth of expenditure οη welfare services (unemployment benefίts, old age pensions, 10w-cosΙ housing),5 and at a local leνel, ίη municipalities and districts, somc clements of socialist policics could be implementcd. h Βυι thcre was lίttlc or ηο extcnsion of public ownershi p 7 and ηο agcncies for comprehensivc national planning were crcated. Thc greatcst change came with the cconomic depression that began ίη 1929. Ι n the fίrst place this gavc a new vigour Ιο thc socialist criticisms of capitalism, and Ιο thc advocacy of :ι planncd

P/anning since the First Wor/d War 37 economy Ιο deal with mass unemployment and povcrt). Α ι:οπ­ siderable lίterature οπ planning dcveloped, wcll excnlplilicd ίπ Britain by the writings οΓ Wootton and Durbin. Woolιon (1934) first examined the Soviet planned economy, thcn madc a ΓαίΓI~ detailed comparison between I)Ianned and unplanncd cconomie,. and concluded with a discuss υΠ of 'thc condilions of ~ucce~~ful economic planniilg', ίπ whicl shc cmphasizcd as lhc ΓίΓ~Ι prcrequisite 'knowledge and the al ίΙίΙΥ to use that knowlcdge' (ρ. ~()3J which ίπ turn required thc cre<.ιtion οΓ a gcncral planning commi~­ sion able ιο 'draw υρ plans and Ιο supervisc thcir execuιion' (ρ. 307). She then went οπ to consider some 'difficul! questions' οΙ socialist planning, such as the degree οΓ dependence 011. ΟΓ indcpcndel1ce of, a price mechanism, and the role of economic 111OΙi"eS ίπ a socialist society. 8 Durbin, ίπ hi's essay οπ 'the importance οΓ planning' (1935. republished with later essays οπ planning ίπ Durbin 1949), observed that 'ίι would be almost true Ιο say that "we are all Ρlal1l1ι'Γ.Ι· no\\'''. The collapse of the popular faith ίπ laissez~raire has proceeded \\'ith spectacular rapidity ίπ this country and all over the world since ιΙιι? War' (ρ. 4 Ι). But he then distinguished two kinds οΓ planning: (a) as 'meaning simply the il11ervel1liol1 ο/ llle GονeΓlΙ111e11Ι ι"11 α μal'ιίΙ'υlal' industry at a time when the greater part οΓ the econom~' still remains ίπ private hands', and (b) that 'which results ίπ thc fξΙ'IIl'ΓαΙ supersession ο/ individua! el1lerprise as thc source οΓ ccononlic decisions' (ρ. 42). Ιη his latcr discussion hc rejectcd thc idea ο[ rίι;ίd long-term plans which could ποΙ be quickl)' amended to Ιακι: account of changes ίη 11uman tastes, technical invcntions and so 011. and defined planning generally as αη 'cxtcnsion of tllC sizc οΙ ι 11C υπίι of management and the conscqucnt cnlargcnlcnt ο[ ιΙ1Ι' ficllJ surveyed when ΗΠΥ economic dccision is taken' (ρ. 44). DtIrhin Ι 11 Ι' 11 considcred tlle Hims of sociHlist planning, replicd to sonιc Π1'Ι.ίοl criticisms of planning (which Ι SllHll cxamillc ίπ tllC I1CX\ clι;φΙCΓ). emphasized thc inιportance οΓ ccntrHlizcd Ill0ncl;H~' C0I1\1',)I. ,1Ι1ΙI skctched the institutions l1ecessHry for dClll0crHtic soci,Ilist 11ΙΙI1ning. Α Marxist study. Bι-iIaill ~Jliιll(}ω ("aμίιaΙί,lι,\ (19,l6). rrCSCl11l'lI ;ι sustaincd criticislll of thc capitalis\ ΟΓΙ;ΗI1ί7<Ηίοl1 οΙ ι11Ι: Ι'Ι'ΟI10111\ and oUΙlined <ιπ ccononlic SYS\Clll [οl·;Ι 'SO"ic\ ΑΓίΙ;lίI1·. ι,ικίιψ ;IS ils cxplicit model thc Sovict econol11Y. ΛftCΓ COI1SidCI'il1g ι ΙΗ' CCOI10111~' as a wholc thc authoΓs tIndcrtook ,ι dct;ιilcd Ι'Χ;1111ίI1αιίΟI1 οΙ ι11('

38

The Socialist Economy

major scctors 01' economic <1Ctivity and concludcd with <1 ch<1pter ση scicncc <1nd educ<1tion which is still illuminating for the W<1Y ίη which ίι <1rgues the need for reform <1nd expansion (still today, ίη 8Γίωίη, only parti<1lly <1chieved). The book attracted quite widespre<1d attention even from defenders οΓ the status quo,9 and was a notable addition to the lίιerature which began Ιο create a climate οΓ ορίηίοη more favourable Ιο planning. From this aspect ίι also iίlustrated a second consequence of the economic depression: namely, απ increasing awareness οΓ the sharp contrast between the economic conditions ίπ the capitalist countries <1fid ίπ the Soviet υπίοη. While the former seemed ιο be ίπ decline, the Soviet υπίοη appeared Ιο be making (and as we now know, was ίn fact making, ίπ many spheres) rapid progress, and came Ιο be regarded by many people, ηοΙ οπlΥ those who were its committed supporters, as a viable and hopeful alternative ιο capitalism. 80th Wootton and the Webbs undertook a close study οΓ the Soviet economy, and the laΙΙer, as we have seen, concluded that this 'new civilization' would spread elsewhere. lt was undoubtedly the economic conditions and contrasts οΓ the 1930s which provided the stimulus for the growth οΓ the socialist and communist parties ίη many ofthe European capitalist countries, ιο an extent that became \"cry evident ίη the years immediately foIIowing the Second World War. Ιη fact, the pressure exerted by the growing socialist movement was making itself felt already ίη the Ι 930s, and there was an increase ίη planning ίη several countries. One notable example is Sweden, where the Social Democratic labour Party (SAP) came Ιο power ίη 1932, and has been almost continuously ίη power cver sincc. Social democratic rule has ηοι brought extensivc public ownership, but ίι has greatly increased public sector spending and the degree of state intervention ίη thc economy, creating gradually a very advanced form of 'welfare state'; and more rccently thc spherc οΓ public ownership has begun Ιο be cnlarged ίη an original way, which will be discussed ίπ a later chapter, through the devclopmcnt οΓ employee investment runds. EIsewhere therc was also a gcneral growth of statc intervcntion and partial planning, ίη a varicty οΓ rorms. lη the United States the New Deal, as Roosevelt had indicatcd ίη his inatIgural addrcss ίη March 1933, involved an extension οΓ state intervention, first ίπ a reform of the banking system thcn ίπ a rationalization οΓ industry,

P/anning since the First World Wur 39 ίπίΙίπΙΙΥ through the National lπdustrίaΙ Rccovcry Act; α reorganization of agriculture (which included, aS the boldc~t mea~urc of the New Deal experiment, the creation οΓ α largc pub;ic corporation, the Tennessee Vallcy Auιhority); and απ ambitiou~ programme of relief for the unemployed carried oUΙ mainly by thc Works Progress Administration, which spcnt vast sums οΓ monc)' οπ public works of all kinds. lπ Lritain, οπ a much smallcr and les~ imaginative scale, state intervcl ιίοπ also incrcascd, mainI y' ίπ the form of measures Ιο rationalii ~ agriculture and some ind ustrics (notably ίΓΟΠ and steel) and the yrovision of subsidies (for cxample, Ιο shipping). This trend towards grcater state intervcntion and regulat ίοπ, and partial pIanning, at least ίη the sense of rationalization,11I gaincd momentum with thc approach of thc Second World War. lπdeed ίι was ΟΠΙΥ later ίπ the 1930s, as the war loomed and rcarmamcn! programmes were undertakcn, that unemploymcnt bcgan ιο decline significantly ίη many of the capitalist countrics. GcrΠ1aΠΥ" afιcr 1933, had what was virtually a war economy, and [ΓΟΠΙ the Π1ίd1930s other countries embarked υροπ more gradual and limitcd rearmament, which involved ππ cxtension οΓ state intervcntion and planning. The war itself brought massive statc rcgulation οΓ thc economy, from the outset, οπ an evcn larger scalc than during thc First World War, and raised similar expectations that man)' aspccts of econoιnic and social pIanning would bc continued ίπ the postwar period, creating conditions favourable Ιο thc gradual construcιίοπ of a socialist econonlY and form of socicty ίη thc Europcan countrics. lπ ΒΓίΙπίπ, the advcnt of a Labour government ίη 1945 J11,Idc possible πη extension of public owncrship by the nationalilation οΓ sonlC major indIIstries, and an cxpansion of social serviccs, J1otahl~ through the crcation of a national hcalth scrvicc. Elscwhcrc, ,IS a result of particular circumstanccs, thcrc was also ππ cxtensioJ1 οΙ public ownership; ίη Francc, whcrc cntcrpriscs OWJ1cd b)' collahorutors with thc German occupution forccs wcrc nationalilcd, and ίn Austria, wherc many cntcrpriscs Wl1ich werc Gcrιnan ΡωΡcrι \ during the period of Austria's incorporation ίπ thc Tl1ird Rclι'll were confiscatcd by thc Allicd OCCUP),ing forccs and tl1cn ('cnHIincd ίη public ownership when tl1CY wcrc ('ctur'11cd to Austr'i,I hct\\'ccll 1946 and 1955. Ιη Gcrmany itsclf tl1C policy of 'co-tIetcrιllination' crcated an element of workcrs' pHrticiPHtion ίll tl1C Ill,III,Igcn1cllt οΙ'

40

The Socialist Economy

pri"ateI)" owned enterprises, and generally increased the innucnce the tr<Jde LInions 'Ind the Social Den10cratic Party." The w'Ir also extended socialist pIanning ΠΙ0ΓΙ: directty by est'lblishing ΙΙΙΙ: dominance οΓ the Sovict υnίοη ίη Eastern Europe, \\'here new socialist economies were created οη the Soviet model. 12 Οηι: οΓ these coLIntries, YLIgoslavia, soon separated itself from the rest οΓ Eastern ELIrope, however, and pLIrsLIed an independent coLIrse οΓ dc"clopment by introdLIcing workers' self-management and <ιη early form οΓ 'socialist market economy'.I.1 Βιιι the Soviet modcl \vas also followed by many οΓ the newly independent coLIntries οΓ the Third World as they embarked υροη programmes dcsigned ιο establish a modern economic infrastructure and basic industries, and ιο achieve rapid economic growth. 14 The experience of pIanning from the First World War ιο the years immediately following the Second World War indicates that three different kinds of planning have innuenced the development of modern societies. First, there is the planning associated with the war economies of the First and Second World Wars, which, as Ι have argued, showed the feasibility of planning and also provided practicaI experience of the operation of planning mechanisms. After both wars planning and state intervention ίη the economies of the European countries continued at a higher level than during the pre-war period, and this was especially the case after the Second Wor1d War, partly because of the extension of p1anning which had a1ready taken place ίη the inter-war years ιο cope with the economic depression, and partly because of the increased strength of the socia1ist parties and trade unions ίη Europe at the end of the war. Second, there is the partiaI pIanning, inνoIving rationa1ization, government subsidies, some pub1ic ownership, and ίη genera1 a greater state involvement ίη the reguIation of the economy, which developcd ίη the capitalist countries (incIuding the United States) during the dcpression of thc 1930s and continucd, cspeciaIIy ίη the West European countries, ίη the period of reconstruction after the Second World War. This corresponded broadly with what Hi1ferding (Ι 927) called ΌrganίΖed capita1ism', and what orthodox Μ arxist-Leninists later referred Ιο as 'statc monopoly capitalism '.15 SlIbsequcntly, the notions cxpresscd ίη thcse two conceptions οΓ thc dcvelopment οΓ advanccd capitalism were merged Ιο some extent ίη the concept οΓ corporatism, which J shall considcr later ίη this chapter. οΙ'

Planning since rhe First World War 41 Third, there is the comprehensive planning, resting οη public ownership of the major means of production, exemplifϊed by the Soviet economy and extended after 1945 ιο Eastern Europe, as well as being adopted as a model, ίη greater ΟΓ lesser degree, by many Third World countries. This kind of comprehensive planning had an important intluence, ίη vari )US ways, οη the changes taking place ίη capitalist countries afteI 1945. Thus, ίη ΒΓίΙαίη the Ροsι-ν..'ar Labour governmeJ1t introduce./ what Devons (1970, ρρ. 67-10) referred ιο as 'planning by econ )mic survcy', publishing ίη 1947 the first annual Economic Survη, which had an introductor)' chapter οη economic planning f01l0wed by αη outline οΓ thrcc sets οΓ plans which the government intended ΟΓ hoped to implcmcnt. Similarl~', ίη some other European countries, morc cοmΡrehcηsίνc t)!pcs οΓ pIanning were envisaged and partly implemcntcd. ιι. Furthcrιnore, as Tinbergen (1968, ρ. 102) points out, 'some ηαιίοηαΙ planning ",'as imposed οη a1l member countrics of thc Organization οΓ Europcan Economic Cooperation (OEEC), crcatcd Ιο adBlinistcr thc European Recovery, ΟΓ Marsha1l, Plan, which startcd opcrations ίη

1948'. While the war cconomies do clcarly [ΟΓηι a vcry distinct categor~, spite of some variations between countries, the categorics οΙ' 'partial' (or 'capitalist') and 'comprchensivc' (or 'socialist') planning should ηοι, ίη my view, bc rcgardcd as absolutcl)' distirKt and exclusive. Therc are, ίη thc ρredΟΠ1ίηantΙ)' caΡίωΙίsι Cι1l1ntriCs, degrees of planning which may tend, ίη sonle countries ,ιηι! dllring some pcriods, towards a more socialist fornl οΓ cconorn~'; and 011 the othcr side ίι is increasingly cvidcnt tllat cornprcllCnSi\Cl~ planned socialist societies may undergo rnodification h)' Ι Ιιι? Ι I1Ι roduction of market mechanisnls and αη cnΙargCΠ1cnι οΓ ι11ι? spIlcrc οΓ privatc cnterprisc, whilc thc majo!" part οΓ cconorl1ic ΡΓΟι! ΙΚΙ ίοn rcmains firmly ίn thc public scctor. Thc rest of this chaptcr \Vill bc dcvotcd to <ιη cx;trninHtiol1 οΙ ι/κ cxpcriencc of, ,tnd cxperimcnts ίη, socialist planning sincc ιIΙΙ' Ι'l1ιΙ of the Sccond World War. Bcforc cn1barking οη ιI1:1Ι, Ι10ν..c\cι. ίι is neccssary Ιο makc a furtllcr Con1B1cnt οη tl1C gcncI';II 1l0tiOIl ,,( pIanning, whicl1 cannot and SllOUld ηοΙ hc IiIl1itcd SIIllj1I~ '" cconomic planning ίη thc strict scnsc. ΛΙΙ ιΙκ (Jί"CΓSC ΙΌπιιs ι,Ι planning and sωtc intcrvcntion, ίη c:ιpitHlist <ιηι! soci;tIist SI1L'iCtiCS. as thcy ha\fc dcvclopcd sincc tl1C First \\'orId \\';ΙΓ, ίΙΗοln' hotIl economic and social PIHnning; ,ιηι! SOci:tIist PI;Illlling \\IliL'll is ίη

42

Τhe

Socialist Economy

dίrccιι:d, .is Ι
Planning since the First World War 43 the share οΓ the European socialist countries (including thc Soviet υηίοη) ίη world industrial output: ... increased from less than 10 per cent ίη 1938 to abouι 3Ο per ccnt ίη 1970, and ίη 1978 ίι was about 31 per cent (buι, according to some Socialist estimates, ίι 'VlS 37 per cent). Ιη Ihe leading Wcstcrn nations basic industri: IIΖαιίοη took some Iwent)'-five tu fίfty ycars to acl ieve, but ίη th : European Socialist countries Ihis process was compIeted ίη twel' e to twenty years, ΙI1 view οΓ Ihe semi-feudal conditions that they inherited. the absence οΓ colonics. the widespread wartime devastation. wesIern boycotιs and Ihe strategic embargo and practically ηο aid from Ihc capitalist \\orld. their achievements can be described by objecti"e obser\'crs as spectacular. This uniform type οΓ planning did not, however, persist ΙΌΓ vcr) long. Yugoslavia withdrew from the Soviet orbit ίη 1948 and began Ιο develop its own systen1 of workers' self-management. and So\'ict influence ίη China diminished from the mid-1950s as that (ουηΙΓ)' Ιοο embarked οη a distinctive course of socialist dcvelopmcnt. Ι n the Soviet υηίοη and the East European countries changes ίη the economic system began Ιο be made after tl1e dcath of Stalin, and the need for change became more wide!y recognized as a conscquence οΓ the slowing down of cconomic growth ίη the !atc 1950~ and a succession οΓ revolts against the political rulers ίη scνcra! countries from 1953 ιο 1980. The main featurcs of this proccss 01' change are the reorientation οΓ production towards increasing the supply οΓ consumer goods, and more fundamentally, a reconslrucιίοη of the whole economic system involving dccentralization and the development οΓ elements of a market economy. Ιη the past decade, and especially sincc thc acccssion Ιο po,"'cr ι)Ι Mr Gorbachev ίη the Soviet υηίοη, the speed οΓ changc has gn:al!~ irιcreased, and ίη later chapters thc major f orms and pro.jccls οΙ' reconstruction will be examined morc closcly. Hcre ίι will sufΓicc 10 make some general observations οη thc expericncc οΓ s(Kialist planning thus far. The European socialist countrics 11avc bcconlC major industrial producers (China will undoubtcdly rcaCll tllC s;trllc position within a relatively short timc), and the pcr capita GDP οΓ most of them probably lίes within thc rangc οΓ 85 pcr ccnl to 125 per cent of that ίη the United Kingdom (Wilczynski 1982. )'J. 212). Hence those carly criticisms οΓ ccntral planning. Wllich dcclarcd

44

Τhe Socialist Econon1Y

that

ίι

would provc impossiblc to carry out and that thc Sovict wolI!d sinΊpl y' collapsc, wcrc, as wc shall scc ίη thc ncxt chaptcr, \'ery wiιJe of thc mark. Thc sIowing down of economic growth sincc the 1960s, and morc particuIarly since the mid- Ι 970s, may bc cxplaincd ίη part by thc maturation 01' the socialist countrics as industrial socictics. Thc high rates of gro\vth ίη the earlicr stages, οη this vicw, rcflccted the rapid industralization from a low initial level, and many ccοnΟΠ1ίsts havc suggested that thcir growth rates will eventualiy settle at the lc"cls characteristic of the advanced capitalist countries (though pcrhaps \vithout the samc degrce οΓ cyclical fluctuation); but socialist economists havc gencrally dispuιed this view, arguing that a socialist planned cconomy makcs ίι possible ιο sustain higher average growth rates over the longer term. Thcrc is. howcver, another factor to be considered ίη evaIuating the reccnt declinc ίη growth rates and the prospects for the fuΙUre. Economic growth ίη thc socialist countries υηιίΙ the last decade was mainIy e.\'tensive, that is to say, achieved by bringing ίηΙΟ producιίοη additional quantitics of Iand, labour and capitaI, whereas ίη adνanccd industrial societies ίι has become increasingly intensive, brought about by technoIogicaI progress. The need for development based upon the application of new technoIogy was, of course, strongly emphasized by Preobrazhensky ίη the industrialization debatc οΓ thc Ι 920s - as Ι noted ίη the previous chapter - and more recentty by Richta and his colleagues (Ι 969), who argued, starting ουι from Marx's conccption ίη the Grundrisse of an advanced modern society ίη which scientifίc knowledge and its application has become the major productive force, that intensive growth would be more effectiveIy promoted ίη the centrally planned socialist economies than ίη capitalist economies. 19 The preoccupaιίοη with intensive growth ίη thc European socialist countries is illustrated by the prominence given ιο the usc of the tcrm 'scicntific and technoIogicaI revolution' ίη much social science research and writing over the past decadc. 2n Yet, ίη practice, technological progress seems ιο have lagged behind that ίη most of the major capitalist countries (except probably ίη the Soviet spacc programme and ίη defence), notwithstanding the largc rcsources dcvotcd ιο scicncc and tcchnology; and thc current reforms ίη the Soviet υηίοη and othcr socialist countrics are largely designcd ιο give a fresh stimulus Ιο economic growth by encouraging ίηηοecοnΟΠ1Υ

P/anning since the First wor/d WaI

45

vation and enterprise (8erliner 19ΗΗ, chs. 9, 11 and 12). One other aspect οΓ socialist planning, which will bc d i,tu"td more fully later, should be mentioned brieny αΙ this ροίηι. Α, Ι havt emphasized from the ouIseI, socialist economic ρlαηnίn!! ί, ηω απ end ίη itself, but is intended Ιο establish the basis οΓ a ~oι:ίαlί,ι society, ίη which the benefits (m~ t ~rial and cultural) ΟΙ rising Ιι:\ ι:1~ οΓ production are distributed a widely and equall)' among t11(; population as the gtneral conditi )ns οΓ the timc permit. Abo\c all. this has meant ίη the socialist (ountries the maintenance οΓ Ιυll employment, the eradication of iIliteraty and a rapid dcvclopment of the whole educational system, the provision οΓ free, ΟΓ \τσ IU\\cost services ίη many spheres (housing, public transport, rtcrcational and culΙUral facilities) and the expansion οΓ healtl1 and \\clfarc services. Ιη their sΙUdy οΓ social welfare ίη the Soviet U ηίοη. "hίΙ-11 Ι cited ίη the introduction, George and Manning (19ΗΟ, ρρ. 167 ~) observe that the intentions of social policy there are more ωη1prehensive and ambitious than ίη αηΥ welfare capitalist sοcίCI)Ό'1 though the achievements may ηοΙ always match the ainls, ILlrgcl) because ofeconomic constraints. Ι also cited ίη Ihe introduclion Ihc sΙUdy of Third World socialist countries b)I Wl1ite, Μ UnLI)' Llnd White (Ι 983) which shows that these countries havc bcen much more successful than non-socialist deveIoping countrics ίη crLldicLlIing ilIiteracy and extending health services to the mass οΓ 111C population, while attaining broadly comparable rales οΓ CCOI10111il" growth. After the Second World War, planning, including son1C clcn1Cnl~ οΓ socialist planning, was also considerably extendcd ίη n1an) advanced capitalist countries. Ι n part this was αη OUll'Ol11C (lf wartime pIanning and the need for post-war reconstruction (LlS ;IIΊι'l the First World War); but ίι was duc mUCll Π10Γ!: ιο thc grO\\111 ιΙI the socialist nlovement ίπ Wcstern Europc, to Ihc slill 11\ ίιl memories οΓ the pre-war depression and the dcsirc to rcgLll;lll' 111<' economy ίπ such a way that thcsc conditions \vOllld ηο! ITOII. ;lπιl ίπ a Icsser degree Ιο the examplc οΓ Soviet pl,lnning, \\'11ίΙ'11 11;1,1 become more widely known and innucnti,11 ίπ ιΙlC 1930s ;ll1ι1 σιιιιιψ the wartime alliance (though ΙΙ1ί5 provcd to bc ;1 SI1I)I"I-IIIι'll innuencc, 500Π destroyed b)' t I1C (ΌId WHr ,Ifid Ι I1C ίσι-οlιψl,,;11 redefinition οΓ world politics ίπ tcrms οΓ ;1 ωl1llίι'1 hl'IIH','11 'totalitarianism' and ι hc 'f rce \\'orld '). As Ι rJOlcJ ;1 11(1\C. 111C 110~1war Labour Governmcnt ίl1 8Γίι;ιίl1 11;llίοn;ιlί7CΙI SOI11l' SΙ'ι'lι1Ι"S ιΙ!" 111C

46

Τhe

Ι:COΠΟΠΙ)'

Socialist Economy

and proposl:d to introdLll:e 1110re cOIl1prehensivl: planning, b)' the annual ΕωllΟlιιί(' Surve.ι· (though this ncvcr canlC <ιbοιιι),
P/anning since rhe First World War

47

... forecasting methods have improved. tht: ~copι: οΙ plίIππίπ~ II<J~ widened. and planning machinery has become murc: prominc:nt ίπ government departments but the plan iIself' has becumc le\~ i1nd less imperative, and also more difficult ιu formulate. , , , \','!Ι:ΙΙ started out as the 'Nation's Plan' became οι 'medium-tcrm ~O\"Γn­ ment programme'. ... Neνertheless,

the existence of his machinery and the experiencc οΙ planning facilitated some re ;umption 01' national ρlίΙηηίη/! h~ socialist goνernments ίη the Ι 980s, as well as innuencing planning ίη the European Community (EC). Another example of νery successful Post-\\'ar ΡΙίΙηηίη!! is ιο hc found ίη Japan, where national economic plans havc becn rrcrarcd by the Economic Planning Agency every' two ΟΓ three )car~ frOll1 1955 (Komiya 1975, ρ. 189). Komiya, however, argues that tl1e~c national plans are ηο! as important as may appear <ιΙ Ιϊrsι. and much planning takes place ίη other ways. 'The J apancse government interνenes widely ίη indiνidual sectors. industrics. ι)(' regions ... ' (ibicl.), especially through the goνernmcnt ol'fϊccs called genkyoku, each of which superνiscs a particu\ar industf)' and is responsible for policies concerning the industry (jhid .. ρρ. 209 10).23 Planning ίη the capitalist countries diffcrs considcrabl)'. οΙ' course, from that ίη socialist countries. wherc thc plans ίΙΓΙ: lηΟΓΙ: comprehensiνe, more imperatiνe than indicative. and ίπ\'οΙνι: dircel state management of a large part οι' thc economy. as well as ha\'ing somewhat different objectiνes insofar as a high ΡΓίΟΓίι), is givcn ω maintaining full employment and ιο the proνision οΙ' \\TΙΓOIrι' services. Neνertheless, therc is somc conνcrgencc. Ihrough ΙΙ1Ι' socialist innuence - particularly strong ίη son1C counlrics 011 capitalist planning and morc rcccntly through ch;lngc~ ίη 111Ι' economic systems of thc European socialist countrics, WI1at Ι~ unmistakable is that large-scale planning. ίη ΟΙ1Ι: (orm ΟΓ ,ll1οιlιι·I'. has become vastly more important ίη tl1e ad\'anccd inιJIlsni,II countries and that ίι has produced sonlC ill1prcssin: IΊ'~ΙΙII~, Tinbergen (1968. ρ. 109) concludes his discussion 01' Ι'ι'οηΟI11 iL' planning ίη Western Europe by sayin!;! ιΙι<1ι planning 11as succccdcd in ίI\'oiding 111C lη"ίιι ίΙ1ι'ι1Il~ί,ιι·ι1ι'~ 111 unplanned cconomies οΓ 111C prc-1914 I~'PC, Il:IIl1CI~', ΙΙΙΙ' III1
The Socia/ίst ΕCOΠΟΠΙΥ

48

υιίlίιωίοπ

of rrοducιίγe cur,ICit}' as a consequence of business und of structural diseqιIilibria. lι is highly probable ι11<11 the dis;ιprear
1I m
Notes Ι.

Besides the works by Pollock (1929), Erlich (1960) and Νονc (1969), mentioned ίπ the prcvioIIs chaptcr, sec Dobb (192R) und Curr (1952).

P/anning since the First Wor/d War 49 2. See Nove (1969, ch. 3). As was noted ίη Ihe previous chapter, Neurath was also advocaIing aI this Iime an economy ίη kind. 3. S, and Β, Webb (1935, ρ. 1143): 'WiII this new civilizatiun with ίι~ abandonment of profit-making, its extinction of unemploymenI. ίι~ planned production for communiIy consumpIion ... sprt:ad to other countries? Our own reply is: . Yes, ίι will". Βυι how, when, where. ",ith what modifications, and \\ lether through violent revoluιion ΟΓ b) peaceful penetration, ΟΓ eve ι by conscious imitation, are ljue~tion~ v.t cannot answer'. 4. This was the case with many of the Austro-Marxists (see above ρ. 23) and also, for example, Ihe British labour Part)' whosc po~t-v.'
50

Τhe Socialίst

described ίι
9. The

F;lιuιrι';ΙΙ! Νι'ιn

del'el1ιJcrs

10. 11.

Ι::!.

1.1. 14.

15. 16. 17.

Ι R.

fconomy

P/anning since the First World War 51 19. Ιη discussing Marx's Grundrine elsewhcre (Boιιumort I<jX~. 11Ρ. 1'1 21) Ι have suggested that his vision of Ihe fuιure ~OCiCI) IIllgl11 bt expressed by adding to his well-known aphorism, 'The hand mill gi\t:~ you a society with the feudal lord, the sIeam miII a socieI\ "ith Ihc industriaI capitalist" the phrase: 'The automated miII gi~'e~ ~'oυ a classless society'; his seems Ιο be Ihe sense ίπ which Richta and oIht:r~ understand the signifίcance of technological progress. Αι aII e\'enI~ ίι can be said that automated producIion and modcrn information technology make central planning a grcat deal easicr and ίπ ΡΓίπι:ίρlι: more effective. 20. See for example the contribulions b)' Fedosc)'c\ and RichIiJ ω Scientific- ΤeΙ'hnοlοgίcal Revoluιion: So<"ial ASfJe('(~' (1977). 21. ΒΥ 'welfare capitalist societies' is meanl primaril)' Ihe sociCIic~ of Western Europe and some Commonweallh countrics (Ausll'
4

Critiques

οΙ

socialist planning

The criticisms of socialist planning - and by extension, of the more limited types of planning ίη capitalist societies - fall ίηΙο two main categories: those concerning rational calculation ίη a planned economy, and those concerning bureaucracy, management, incentives and related questions. Ι shall discuss first the issues that were raised ίη the notorious 'socialist calculation debate' of the 1930s. The ground of this debate was established earlier, at the turn of the century, by the Austrian marginalist school, but the members of the School differed considerably ίη their attitudes ιο socialism; ι and Wieser ίη particular, iη developing a 'theory of imputation' ιο determine the value of means of production ίη any economic system, helped ιο prepare the way for models of calculation ίη a planned economy. As Landauer (1959, ρ. 1624) suggests: 'ΕΥ elaborating formulae for the determination of the shares of all productive agents ίη the va1ue of the product, the ''Austrian School" laίd the ground for the concept of a national accounting system ίη a socialist society. '2 Bohm-Bawerk, οη the other hand, was a more hostile critic of socialism, especially Marxist socialism. His criticism rests upon his rejection of the labour theory of value and exploitation ίη favour of a subjectiνe νalue theory, expounded ίη his work οη the theory of interest (1884 and later editions) and his essay (1896) οη the third νolume of Marx's Capita/ (ιο which Hilferding [1904] wrote a notable rep1y).J The core of his argument was that socialism would 52

Critiques of socia/ist p/anning 53 ηοι achieve all that socialists hoped for, because ίι wou\d face similar problems ιο those ίη a capitalist economy, arising from the scarcity of resources and time-consuming roundabout methods of production, one consequence of which is that a socialist economy wou\d also requirι a positive rate of interest. Bohm-Bawerk did ηοι assert, however, that a socialist economy would be unworkable, and ίι was οηlΥ later, after the Russian Revolution, that this kind of argument became central, its most fervent and intr
... as soon as one gives up the conception of a freely established monetary price for goods of a higher order, rational production becomes completely impossible. Every step that takes us away from private ownership of the means of production and from the use of money also takes us away from rational economics. (Mises 1920,

ρ.

104)

This argument was elaborated ίη two directions. First, Mises emphasized that ίη a free market economy tlle system of computation by value is employed by every individual mcmber, both as a consumer who establishes a scale of valuation for consumption goods and as a producer who puts goods of a higher order ιο such use as brings the highest return. But this system, hc claimed. 'is necessarily absent from a socialist state', ίη which the adnliniStration can determine what consumption goods are most urgcntl~' needed but cannot establish a precisc valuation of the Illeans of production. Taking the example of building a ncw railw:IY. he concluded that the decision, ίη a socialist society. 'would dcpcnd at best upon vague estimates; ίι v.'ould nevcr bc bascd υροπ tllC foundation of an exact calculation valuc' (ihid., ρρ. 107-9). Second, Mises drew a contrast bctwecn a static cOl1dition of society, ίη which cconomic calculation might bc dispcnscd with,

54

The Socialist Economy

.Ind ,Ι d}'n<ιn1ίc condition (the reaI Iifc situιltion of <Ι πωdern societ)'), ίπ which econon1ic circumstances are constantI)' changing
the inteIIel'ιuaI dοmίπ<ιπce of SociaIism remains unshaken, then short ιίιηι: the whole co-operative system of cuIΙUre which Europc has buiIt up over thousands of years ννίΙΙ be shattered. For ,ι SOCi
The reaIity, as we have seen, was very different from this fantasy, and ίι was an important factor ίη the gradual erosion of the caIcuIation debate itseIf. MeanwhiIe, however, a number of socialist economists responded ιο the critical studies by Mises and others, and propounded a theoretical defence of central pIanning. Lange, ίη the course of his lίfe, proposed severaI different models οΓ a sociaIist economy (KowaIik 1987a), but the one for which he is best known is that οΓ market sociaIism expoundcd ίη two articles (Ι 936, Ι 937) which werc thcn incorporated ίη a book, with addi-

Critiques of socia/ist p/anning 55 tions and modifications (arising mainly from critical comln(;nt~ b)' Α. Ρ. Lerner), together with an essay by Fred Μ. Taylor (Ιange and Taylor 1938). Lange rejected Mises' main 'contentiun that α socialist economy cannot solve the problem οΓ Γaιίοηa! a!!ocatiun of its resources' as being 'based οη a confusion concerning tht nature of prices': As Wicksteed has pointed out, the tcrm 'pri(;e' has Ι\\Ω meanings. Ιι may mean price ίπ the ordinar)' sensc, i.C. the cxc!lange Γαιίο οΓ the two commodities οπ a market, ΟΓ ίι may have the generalil.ed meaning of 'terms οπ which a!ternatives are offered" ... Ιι is οπlΥ prices ίπ the generalized sensc which arc indispen~­ able ιο so!ving the problem οΓ aIlocation οΓ resources .... Το solve the problem three data arc needed: (!) a prefercncc scale which guides the acts οΓ choice; (2) knowledge οΓ the 'terms οπ which alternatives are offered'; and (3) knowledge οΓ the amount οΓ resources availab!e .... Now ίι is obvious that a socialist economy may regard the data under Ι and 3 as given, at leasι ίπ as great a degree as they are given ίπ a capitalist econom)'. The data under Ι may either be given by the demand schcdules οΓ individuals ΟΓ be established by the judgment οΓ the authorities administering the economic system. The question remains whether the data under 2 are accessiblc ιο the administraιors οΓ a socialist economy. Professor Mises denies this. However, a c
56

Τhe Socialist Economy

and producIivc: resources ouIsidc: of Iabour ο ο ο [and Ihcir prices] ;ΙΓΙ: Ihus pricc:s ίη Ihc: genc:raIilc:d sense, i.eo nlere indices of ;ιΙιernaιίvc:s ;ιv;ιίΙabΙe, fixed for accounIing purposeso {ρο 73~~

L
Critiques of socialist planning

57

the prob1em of the effίciency of pub1ic offίci
mathematical calculations. , .. Buι ίπ pr:IcIicc tlliS sOIIIIiO!1 is

Τhe

58

Socialist Economy

ιjυίιι>

unworkabIe, LΙ \vouId nc:cessitate the drawing υρ οΓ millions the basis οΓ millions οΓ statistical data based οη man~' more millions οΙ' individua! computations, ΒΥ the time the C:ιjUηle obsoIete and thc:y wolIId need to be caIculated ;Inc:\\', οΙ' eιju
Lange replied to these arguments ίπ his exposition of the method of and error, based οπ the essay by Taylor; a number of other econOHlists, especially after the experience of wartime planning,
the I930s a gre

ίη

ίπ

Schumpeter (1954, ρρ, 988-9) also rejected the Hayek-Robbins argument that the solutions of the equations required for socialist planning could ηοΙ be achieved ίη practice, and took the position of Taylor and Lange that they could be realized by the method of trial and error, Ιη the third of his essays οη socialist calculation Hayek ([1940] 1948) examined critically the mechanism proposed for a socialist economy by Lange, and ίη a similar form by Dickinson (1939),6 which he called the 'competitive solution'. After suggesting that 'much of the original claim for the superiority of planning over competition is abandoned if the planncd society is now ιο rely for the direction of its industries Ιο a large extent οη competition' (ρ. 186), he expounded his objections Ιο the method of trial and error as a way of determining the accounting prices of producer goods, First, he argued that, while such a method might work ίη a world where economic data remained constant over loηg periods, ίι would be greatly inferior Ιο market mechanisms ίη the real world of continual change where reaching the desirable equilίbrium depends οη the speed with which adjustments can be made (ρ. 188); he also raised questions about the periods for which the central planning body would fίx prices. Second, he deplored the vagueness of both

Critiques of socialίst p/anning 59 Lange and Dickinson about the acΙUal organizatiun οΓ the νίIΓίoυ~ industries and production units, and went οη Ιο posc ΙI1(; 4 uestion of how the central planners would ensure that their rult~ conccrning the determination of prices were effective1y imp1emcntcd. \10rc general1y, he considered some of the prob1ems that might arise in the relations between the 'socialist managers of industry' and thc p1anning authoritie~ (ρ. 197). Final1y, Hayek raised thc issue, which became centra1 ίη his 1ater work, of the preservation of personal and po1itica1 freedom ίη a p1anned economy, expressing the doubt that consumers' choice wou1d be an adequate safeguard againsI what he cal1ed 'arbitrary decisions' taken by those who effecIi\"cl)' contro11ed the economy. The 'ca1cu1ation debate' then subsided. partly, as Ι havc suggested, because of the wartime experience of p1anning, part1) because of the reve1ation during and after the war of the emergencc of the Soviet υηίοη as a major industria1 power. More rccent1)', howeνer, ίη the new c1imate that has deνe10ped ίη some Western capita1ist countries, emphasizing indiνidua1 enterprise and the supremacy of the market, an attempt has been made ιο revivc t11C debate. laνoie (1985, ρ. 4) argues that the protagonists ίη t11e origina1 debate did ηο! seem Ίο comprehend the fundamenta1 paradigm of their adversaries', so that both sides cou1d c1aim victory, for ΟΓ against centra1 p1anning, and the 'standard accounts' of the debate have perpeιuated the confusion. His own aim is ιο set out more rigorous1y the theoretica1 paradigm of the Austrian schoo1, especial1y Mises and Hayek, and from this standpoint to show that their centra1 arguments against socialist p1anning h:I\"c ηο! been refuted. lavoie focuses οη the ποιίοη of econolllic ΓίνίΙ1Γ)', and interprets Mises' cha11enge ιο socia1isn1 'as <ιπ aΓgument for t11C necessity of a particu1ar kind of rivalry ίη order ιο ac11icve comp1cx social production' (ρ. 23). After a critical discussion of Marx \ socia1ism, a restatement of Miscs' cha11engc, and <ιη cxamination οΓ Lange 's response ίπ terms of the 'tria1 and error' Il1ctl10d, 11C goc~ 011 Ιο consider the later Austrian rejoinder, and ιο conc1udc t11at Μ ίsι'~ had the advantage of the argument ίl1 showing t11at 'thc ("Ul1ctiOI1 οΙ this riva1ry is ιο disperse deccntralizcd il1fOrn1atiol1' ;Ind t11Cl1 marshal ίι, throug11 market priccs, for thc PIIΓf10SC 01" o\"croI11 economic coordination (ρ. 180); whcrcas the ' ''ιΓίίΙl ;Il1d CITor" procedure reduced the choicc prob1cn1 ιο purc1)' Γουιίl1Ι: hCI1;I\'iOI', avoiding a11 the prob1ems of alertness ιο l1ew opportunitics, 01"

60

Τhe

ΓΙΙΙΙΙΓίι)',

Socialist Economy

οΙ' knowledge dispersal' (ρ. 182). r'jnally, hc qllOtes H,lyek 's ([ 1935] 1948, ρ. 179) contention that 'nobody has )'et demonstrated how planning and competition can be Γ,lιίοη'IIΙΥ l'Ombined' (ρ. 183). Ι sh,111 reIIIrn ίη dlIe colIrse to variolIs aspects οΓ Lavoie's thesis, 01' \I"hich Ι have givcn a preliminary critical accolInt ίη a review essa)' (Botιomore 1986· 7), after considering the second major type οΙ' l'Γiticism οΙ' socialist planning: namely, that ίι is likely ιο bring .lhOlll ,ι condition οΓ stagnation through the bureaucratization οΓ cconomic lίl'e, and more widely οΓ sociallife ίη general. Max Weber ( 1918), ίη his lecture οη socialisn1, was among the fίrst ιο argue that t hc ch.lnges ίη modcrn society indicated an advance towards the 'dict.llorship οΓ the official' rather than the 'dictatorship οΓ the prolctariat" and 'ίΓ private capitalism were eliminated the state hurcaucracy would rule alvrιe'. Mises (1920) also gave a prominent pl,lcc ιο the problems οΓ bureaucracy ίη his criticism οΓ socialism, and declared indeed that 'ίι is now universally agreed that the cxclusion οΓ frec initiative and individual responsibility, οη which the succcsses οΓ private enterprise depend, constitutes the most ~erious menace Ιο socialist economic organization' (ρ. 116); while Lange, as we havc seen, concluded that 'the real danger οΓ socialism is that οΓ a bureaucratization οΓ economic Iife'. Schumpeter (1942, ρ. 206), however, took a very different view

,ind

aΡρrονίηgl)'

. , . οΓ that BureauCΓOHi7ation of Economic Lifc which constituIcs thc rhemc ()f s() many 'Inti-socialist homilies, Ι for one cannoI \'isuaIite, ίη Ihc condirions of modern socieIy, a socialist organizaιί()η ίπ <ιπ)' ΓΟΓΠ1 oIher Ihan IhaI of a hugc and all-embracing hurcaucratic apparaιus. Evcry othcr possibility Ι can conccivc w()uId ψcll failurc and breakdown, Buι surcly Ihis should ηοΙ horrif)' any()nc who rcaIi7es how far Ihe bureaucratization of CC()H()mic Iife ()f Iifc ίπ gcneraI evcn has gonc aIready .. , . We shall scc ίπ rhc ncxI p
Critiques of socia/ist p/anning

61

οΙ' duty') for the efficient performance οΙ functions, which he thought might be provided part1y by monetar)' reward~, hut increasing1y by the conferment of socia1 prestige, Many other socia1 scientists, both socia1ists and their oppoηι:πι~, have contributed ιο the debate about socia1ism and bureaucrac) among them Μίchι:s (1911), Djilas (1957), Aron (1960, 19(5), Ηegedϋs (1976) - but ίι has ιο be said, Ι think, that much οΙ the discussion has been at 1east as confused as thc 'calculation dcb
62

The Socialist Economy

1(64). Buι the type of domination - aHtocratic \vhich deνelοΡed ίπ the Soviet U πίοπ, and after 1945 ίπ Ihe OIher socialist countries of Eastern Europe, was domin,ltion b)' a ρaΓ/.Ι· whose leaders concentrated <ιΙΙ political po\\'er ίπ thcir own hands, and ίπ due course ίπ the hands of a single ίnιJίνίdual. rather than b)' an administrative elite. As this kind of regin1c became established, however, and after the savagery of Stalin's rule had ended, there emerged a system characterized by the dominance of party and state officials who constituted, ίπ the view 01' some critics, a 'new class' (Djilas Ι957, Κοnnίd and Szelenyi 1(79). The eνοΙutίοn of the communist parties ίπ the socialist countries exemplifies indeed the process which Weber termed the 'routinization of charisma" as well as the oligarchical tendencies described by Michels, and ίι was this process, along with the vast expansion of bureaucratic administration ιο impIement central pIanning, ίπ societies where public criticism and any kind of opposition were rigorously suppressed, which produced the stagnaιίοπ. inefficiency and corruption that have become the principal targets of current policies of economic and politicaI reform. Ιπ the Ι 940s and throughout the post-war period, the critique of socialist pIanning came to concentrate much more upon the lack of f rcedom and the totalitarian reguIation of <ιΙΙ aspects of social Iife than upon the difficulties of economic caIculation, and many socialists, as well as their opponents, elaborated fundamental criticisms of thc Soviet model of a planned society. Thus Hilferding (1940, 1941) argued that the Soviet U πίοη was a 'totalitarian state economy' and pointed to the dangers resulting from the great increase ίπ the power of the modern state and the extension of its activitics ίπΙο all spheres of life, which led ιο 'the subjection of the economy by the holders of state powcr" This theme of the merging of economic and political power, and its concentration ίη the activities of the state, became pre-eminent ίη the later discussions, and most innuential ίπ the writings of conservativc critics. Hayek ([1940] 1948) ίπ the course of discussing Dickinson's (1939) book raised, as Ι noted, thc question of personal freedom ίπ a centrally planncd society. Ιπ addition to making frequent refercnccs Ιο what hc always dcscribes as the 'arbitrary' decisions of the economic planners though why these should be considered arbitrary, ΟΓ more arbitrary than thc decisions madc by many govcrnmcnts ίπ othcr types of society, is never madc clcar ΟΓ even conIcxIs

(BoIιornorc

σr ιoι;ιlίΙίIΓί~lπ

Critiques of socia/ist p/anning

63

examined - he wenl οη ιο criticize parlicularly Dickinsun\ ,tatcmenl lhal 'ίη a socialist society lhe distinction, alway~ artificial. between economics and polilics will break down; lhe economic and lhe polilical machinery of sociely will fuse ίηιο onc', concluding lhal 'this is, of course, 'recisely lhe authoritarian doctrine preached by Nazis and Fascists' (ρ. 207). Later, in what becamc a \cr) influentiLlI lracl, The Road 10 SerJdom (1944), Hayek expressed his opposition ιο socialism and central planning in slill stronger lerms. and he has continued, υρ ιο his mosl reccnt work (1982), Ιο advocate a 'spontaneous' ΟΓ 'self-generating' order of societ)' in which the powers of government would be strictl)' delimited and confined. Aron, ίη a similar though more restrained fashion, anal)'sed thc Soviet U ηίοη as a totalitarian regime ίη which a single part)' has a monopoly of political activity, an official slale idcology is imposed by coercion and persuasion, and most economic and professional activities are subject ιο the state, ΟΓ even, ίη a way, part of ίι ([ 1965] 1988, ch. 15); and ίη several essays (notably [1950] 1988, ch. 6) he contrasted the 'unified elite' ίη the Soviet U ηίοη with the plυΓαlίι~, of rival elites ίη the capitalist democracies. Ιη the post-war years, lherefore, a broad agrcement seemed Ιο emerge among social scientists about the nature of the political regime ίη the Soviet U ηίοη and ίη the countries of Eastern Europc (excluding Yugoslavia), although there were many diffcrcnt nuances ίη the critical assessments, and thcse became more pronounced as the Stalinist era receded. But therc was much disagrcement about the relation between central planning, ΟΓ thc socialist project as a whole, and political dictalorship. Sonle, likc Hayck, argucd that ccntral planning and the merging οΓ lhe CCOnOnliC ;Ind political spheres necessarily led Ιο an authoritarian political S)'stCnl and the loss οΓ personal freedom. Olhers, howevcr, saw thc S()\ ict dictatorship as the outcome, rather, οΓ the absence οΓ dClllocratic traditions and experience instead οΓ which tllcrc pcrsistcd ;1 tradition of authoritarian rule (and the idea οΓ thc 'good (s;lr'): οΙ' the forccd industrialization οΓ lhe 1930s inspircd ίη pHrt h)' lhc fC;Ir of capilalist encirclemcnt and the dangcr οΓ military intcr\'cntion: οΓ lhe Cold War ίη the post-war pcriod which revivcd carlicr fcars: and pcrhaps, morc gcncrally, of thc lcndency οΓ all rc"olutions (as well as countcr-revolutions) Ιο institutc, for longcr οΙ' shortcr pcriods, highly authoritarian rcginlcS. FrOll1 lhis pcrspccli"e ίι was

64

The Socialist Economy

possible ω envisage <ι gradu
Critiques of socialist p/anning 65 unsatisfactory, and this is connected partly with the absence from the central planning mechanism of adequate quality inspection (except, as is generalIy recognized, ίη the privileged spheres of the space programme and military production), partly 'A'ith failures of management, and partly, as free-market critics would insisI, 'A'ith the lack of alterηatίνe sources of supply and of some degree of competition between producers. These critical refiections raise a host of questions about management and incentives, about bureaucratic regulation, and about the place of market mechanisms ίη a socialist economy, which wilI be examined ίη some detail ίη the folIowing two chapters. There is a second issue, however, related to alI of these, and quite central ιο the reνived calculation debate. which should be considered at this ροίηι; namely, the capacit)' for innoνation ίη socialist economies. Lavoie (1985), as Ι noted earlier. has claiIned that the later socialist arguments against Μ ises and Hayek ignored 'alI the problems of alertness ιο new opporιunities, of [υιυΓίΙΥ, and of knowledge dispersal' which are 'crucial Ιο an)' analysis of choice ίη the real world' (ρ. 182), and a number of othcr writers haνe emphasized the importance of this problem ίη thc Soviet economy. Berliner (1988), for example, ίη essa)'s written ίη the 1970s, discusses the question of 'bureaucratic creativity', particularly of the 'planning bureaucracy', with respect Ιο technological innoνation, and while recognizing that 'the system has been effectiνe ίη generating an enormous νolume of new technology' (ρ. 20 1).7 observes that there are many factors inhibiting innoνation, above all the conserνatism of the planning bureaucracy and an avcrsion to excessiνe risk-taking, so that new technology is less rapidly and less comprehensiνely introduced than would be desirable. Ιη a latcr essay (ρρ. 246-66) he considers the prospects for technological progress ίη the context of the sharp decline ίη thc ratc οΓ cconon1i" growth which became apparent ίη the 1970s. and notes thc conclusion of most Western research that ίπ the ροsΙ-'λ'ar period technological progress ίη the Soνiet υηίοη was considerabl)' less rapid than ίη the adνanced capitalist countrics, where tcchnological adνances became a much more important sourcc οΓ grο'λ'ιh tl1an increases ίη labour and capital inputs (ρ. 249). The Soνiet economic systcm of ccntralizcd planning. 'A'llich Berliner describes as 'a reasonably successful strucΙUrc' tl1at attained ίπ the fίrst thirty-fίνe years of planning 'an impressivc rate of cconomic and industrial growth' (ρ. 246), seems ηο longcr cntirel)'

66

Τhe

Socialist Economy

<ΙΡΡΓΟΡΓίnιι: to thc ncw conditions iInd the recognition 01' this situation undcrlics the prcscnt drive for econon1ic 'rcstrιlcturing' ίη thc SO\'ict υηίοη and othcr socialist countries, which was foreshadowcd by the 'Praguc Spring' οΓ 1968 (scc especially the discLlssion οΓ a transition from extensive to intensive growth, and οΓ thc rolc οΓ knowlcdgc ίη production, ίη Richta 1969) and by thc Hungarian 'Ncw Economic Mechanism' introduced ίη that samc )'car. ' Ovcrall, ίι may bc concluded, central planning has been succcssful ίη most οΓ the European socialist countries ίη achieving "ast and stable economic growth (Buck and Cole 1987, ch. 8) and tr,lηsΙΌrmίηg them ίηΙο major industrial producers who now account for about one-third οΓ the world's industrial output, but ίι has ηο! yet raiscd per capita incomc and living standards, except ίη one ΟΓ two cases, Ιο the leνel οΓ the advanced capitalist countries, and sincc the 19705 the rate οΓ growth has declined (though this has also happened ίη most οΓ the capitalist countries, and ίι is a widely held view that economic growth is likely Ιο be slower ίη mature economies). Most important, perhaps, is the fact that the introducιίοη οΓ new technology seems to be more sluggish ίη the Soviet U ηίοη and other socialist countries than ίη many capitalist countries, but this may be explained ίη part at least by the more recent 'maturation' of the socialist economies and ίη consequence a later recognition οΓ the need ιο move towards intensive, technologybased, growth. Two other considerations should be borne ίη mind ίη assessing the results οΓ socialist planing thus far. First, as has occasionally been noted, the economic achievements of the Soviet υηίοη and somc other socialist countries would have appeared still more impressive ίΓ the development οΓ capitalist economies after the Second World War had reproduced the conditions of the inter-war years, instead οΓ entering υροη a period of unprecedentedly rapid growth. The post-war successes οΓ capitalism, ίη spite οΓ considcrable Iluctuations which have become more frequent ίη the 1980s, are therefore a major element ίη thc comparison between capitalist and socialist economies, and they deserve some morc systcmatic explanation than has yet, Ιο my knowledgc, becn attempted. Here, without pretending even Ιο sketch any kind of general cxplanation which would require a study οη the scale of Schumpeter's (1939) work οη business cycles Ι would simply observc that thcsc

Critiques of socia/ist p/anning

67

successes have occurred alongside massive incrt:ases ίπ ~tatc intcrvention and expcnditure and a consideritbIc extt:nsion of national economic planning ίπ a variety of forms; and that a broad view of post-war development suggests that the advanced capitaIist countries which have had more comprehcnsive national pIanning, and ίπ some cases more extensive public ownership οΓ ίndu~tΓ)', have been more successful than otl.:.:rs (two good exampIes being the contrast ίπ economic performance bctween Japan and tht: United States and between France and ΒΓίιαίη). [n the long term, as Ι shal1 argue ίη more detaillater, ποΙ only does a fairly high len;l οΓ economic planning seem likely ιο be advantageous eνerΥν.'here, but socialist economies, ίη a context of reformed political and cconomic institutions, offer greatcr hope for sustained and stable growth, ίη addition ιο their other advantagcs (such as Lange emphasized) ίη the kind of distribution οΓ wealth and income thal they estab[ish, and more general1y ίη what may be summaril)' described as their pursuit οΓ 'the greatest good οΓ the greatest number'. However, a second ροίηι that we have Ιο consider is the naturc and consequences οΓ innovation and growth. Many peoplc ίη the capita[ist countries (and, for that mattcr, increasingly ίη some socia[jst countries) have become uncomfortably aware Ihat technologica\ progress is ηοι an unmixed blcssing, and share tl1C doubts expressed by Gabor (1970) about 'conΊpulsive innovation' and 'growth addiction'.9 From this aspect, the slower ratc οΓ innovation ίη socia[jst societies, ίΓ such is thc casc, may ποι be altogether a disadvantage. But this is ηοΙ thc main issuc. Thc qucstion is rather: what kinds of new tcchnology and economic growth are likely ιο add most Ιο thc sum οΓ human happinc~s al1l1 ιο thc quality οΓ lίfe? This question can only find ,ι ραΓιί,11 resolution - and always, Ι would think, ίη a tentativc and corrigihlc way - within a clearly defined social policy. Thus, ίl1 prCSCnl-(j,I~· Britain, ίι would bc advantagcous, and Ιο judgc by (φίJ1ίοn polls is seen by a majority ofthe population 10 bc advantagcous, to transfcr resources from the increase οΓ purcly ρ .. ίνΗΙι' wcalth to thc ίJ1φlι)\'L'­ ment οΓ the natioπal health scrvicc and education, tl1C protectioι1 οΓ thc enviroπmeπt, and a geπcral cxpansion οΓ pIlblic a!l1cπitics; :\!1d thc recent emphasis by the EC οπ a 'social IΞIlropc' sIlggcsts tll
68

The Socialist fconomy

planning and ίη tcrms οΓ its basic doctrine, Ιο move along sIIch a path; and no\v that the phase οΓ rapid industrialization and growth has been completed ίη many οΓ the European socialist societies, ίι should bc cxpected that they will develop ίη a more discriminating fashion with regard ιο both innovation and gro\Vth, and with the advanιage οΓ h'Iving already a solid infrastructure οΓ publicly Ρrονίdcd services. ~e\'crthelcss, ίη spitc οΓ the undoubted achievements and potentialities οΙ' the de"eloped socialist economies, there is a fairly general recognition that they are now facing serious problems, \\'hich are increasingly seen ιο arise, ηοι so much from difficulties οΓ economic calculation, as from bureaucratic rigidities and conservatism. inadequate incenti"cs for cfficient production, the excessive centralization οΓ power and decision-making, and a corresponding frustration οΓ thc exercise οΓ initiative, choicc and critical judgemen! b)' individuals and associations whose actions and relationships constitute the tissue οΓ social life. Ιι is these problems and the reforming policies which are being implemented, ΟΓ are proposed, ίη order Ιο deal with them which have Ιο be examined more closely ίη thc following chaptcrs.

Notes Ι.

2. 3. 4.

5.

Wieser was a moderate critic of socia1ism and, indeed, quite sympathetic ιο socia1 democratic ideas (Η utchison 1981, ρ. 207); Bohm-Bawerk a much more comnlitted opponent; and Mises the most vehement critic of all. See a1so Schumpetcr (1954, ρρ. 986· 7). Bohm-Bawerk's and Hi1ferding's texts are published together ίπ a \'olume cdited with <ιπ introduction by Paul Sweezy (1949). Ιaπgc (ρ. 60) citcs Wicksteed (1933) ιο the effcct that price ίη thc narrower sense of the money for which a good ΟΓ servicc can be obtained is simply a special case of price ίπ the widcr sense, and he notes that Schumpetcr (1908) similarly used the term 'exchange ratio' ίπ this widcr sense. Το simplify thc problem Ιaπge assumed that all means of production are publicly owned, but noted that 'ίπ <ΙΠΥ actual socialist community there must bc a large number of means of production privately owned (e.g. by farmers, artisans, and small-scale entrepreneurs)' (ρ. 73).

Cririques of socialist planning

69

6. Dickinson's work, praised by Hayck as 'a book οι grιoaι di~ιincιiun'. provides a very clear accounΙ οΓ how a socialisι <οιω1ΟΙΠ Υ' mighΙ bc o~ganized: w!th a ~ombinaιio~ οΓ consumer choice and c~nΙral plannlng, revtewtng dtΓferent optιons and various objection,. Ιη mo,t respects ίι is close Ιο the model proposed by Taylor and '-angt:. ιhougtl ίι seems ιο restrict more stringentl~, the sphcre οΓ pri"ate entcrpri,c. 7. Ιn connection with Soviet technological achievcmcI1t. wilj,h ί, οΓιιοη denigrated by thl more extreme Western critics. ίι ί' important to dra\\ attention to areas οΓ conspicuous success. for cxaInple. ίη ιΙιι: ψ
5

The state, bureaucracy and self-management

The economic role of the state has been greatly extended ίη all fil0dern societies, and most of all ίη the socialist planned societies, where the process gave rise Ιο all the familiar, and quite justifίed, criticisms of totalitarianism and dictatorship. But there is ηοΙ a necessary connection between the expansion of the state's economic activities and the emergence of political dictatorship ΟΓ authoritarίαη rule. Everything depends υροη the nature of the political system. Ι π the Soviet U πίοπ and Eastern Europe ίι was the monopoly of political power by a single party, ίη the context of other factors which Ι discussed earlier, that produced totalitarian, and subsequently authoritarian, regimes of greater ΟΓ lesser harshncss. What may plausibly be argued is that centralized control of the economy, and ίη some degree a merging of the economic and political systems, creates conditions ίη which a 'unified elite', ΟΓ a new dominant class, can more casily emerge. But this is ηοΙ bound Ιο happcn; ΠΟΓ, οη the other hand, is ίι thc casc that societies ίη which private cntcrprise prcvails and there is littlc central planning invariably escapc such conditions. Thcrc are, and have been, plenty of cxamples of political dictatorship and authoritarian rule ίη such societics. Thc question of governmcnt ίη a socialist society has Ιο bc tacklcd directly by considering what political institutions this kind of society, ίπ which the major productive rcsources are public propcrty and thc class rclations of capitalist society ηο longer cxist, 70

Τhe state, bureaucracy and se/f-managemι:nι

71

might have. Debate οη this subject was for many decades hanlptrtd ΟΓ excluded by the prevalence of a particular interpretation υΙ Marxist thought, according Ιο which there could be ΙΙϋ fundamental disagreements οη matters of social and econonlic represented b)' ;1:' policy ίη a society where the working class party, ΟΓ ίη due course by the party leaders was ίπ power, and where the eventual 'withe'ing away' of αΙΙ political power could be envisaged, even though the repressive power οΓ the state was. ίπ fact, being continuaIIy increased. This doctrine, though hardl)' the practice, could find some support ίη Marx's own ideas, the υtoρίαπ element ίη which is ηοΙ far removed from WiIIiam Morris's \:ision of a society whose affairs are conducted entircly by νοlυηιαΓ)' and spontaneous cooperation. But the harsh experience of ροΙίιίι:αΙ despotism and terror, and more recently the sIowing down οΓ economic growth, have produced a gradual modification οΓ the doctrine (ίη conditions, both internal and external. which differ radicaIIy from those of the period from the 1920s to the 1950s). which now shows a greater affinity with the more pragmatic ",iews often expressed by Marx and Engels themselves, as weII as by some later Marxists, ιο the effect that the precise characteristics and institutions of a socialist society could ηοΙ be fuIly defined ίπ advance, and there would bc much learning Ιο bc done 'after tllc revolution Ό Ιι remains the case, however, that nlany Marxist and othcr socialist thinkers, belonging Ιο diversc schools, took for grantcd that an organized working-class party would rule thc nc\\' socict). more ΟΓ less unchaIIenged, at lcast during a period of transition which might be quite prolonged, and thcir idcas \vcrc rcInotc [Γσηι those now being expressed ίη the discussions about 'politil'al pluralism'. Such pluralism - that is Ιο say, clcctoral ωmΡctίtίοn bctween candidates reprcsenting differcnt groups ΟΓ partics. ;Il1d greatcr freedom for the activitics οΓ various social 111σ\'cιηCl1ts t 11C first stcps towards which are bcil1g takel1 ίη sonlC σΓ thc sικί;ιlίst countries, and most boldly ίη Poland al1d Hungary. is ίl1tcndcιJ ω extend public debate and choice ίη tlle sphcrc of CωησηιίC ;tnd social policy, and Ιο diminish further thc scopc of authorit;ιri;II1 rule; and ίι is evidently conccived ησΙ sil11ply as a proccss οΙ 'democratization' but as an esscntial clcIncl1t ίl1 tllC rcforι)) ;Ind reinvigoration οΓ thc economy. Before turning ιο that ccntral issuc σΓ this book. ίι is ίιηΡΟΓΙ3ΠΙ to

n

Τhe

Socialist Economy

consider SΟΠ1e of the wider ίΠ1ΡΙίcatίοns of politicaI ΡΙuraΙίsΠ1. Νο one can be sure ίπ advance how the current changes will evolve, ΟΓ what policies will eΠ1erge frοΠ1 the new structure of politics. Ιι is possible, though perhaps ποι very likely ίπ the foreseeable future ίπ Π10st of the socialist countries, that competition for politicaI leadership οπ an extensive scale will lead Ιο the emergence of inf1uential pro-capitalist forces tending towards a restoration, ΟΓ partial restoration of capitalism. The possibility of such an outcome clearly poses fundamental questions about socialist, and more specifically Marxist, conceptions of social development, ίη which the attainment of socialism is seen as being, ίη a stronger ΟΓ weaker sense. a determined and irreversible stage ίη a progressive movement of history. Certainly there was ηο place ίη Marx's theory for the idea of a reverse transition from socialism Ιο capitalism, ΟΓ ιο some third, unimagined form of society. Yet the future development of the advanced industrial societies does now appear more open, less determined and predictable, than many socialist thinkers have been inclined ιο recognize, and there is corresponding!y an urgent need ιο re-examine, ίη a fundamenta! way, our conceptions of the po!itica! forms of socialism. Such an exercise is beyond the scope of this book, but there are still some other aspects of the re!ation between state power and central planning that need ιο be considered. The idea of po!itica! pluralism should ηοΙ be confined, as ίι often seems Ιο be, Ιο the subject of free e!ections and competing parties. Just as important is the decentra!ization of po!itica! power by enhancing the ro!e of !oca! and regiona! government within nation states (and this is relevant a!so ίπ the case of some capita!ist countries, notab!y ίη Britain, where the powers of !ocal government have been steadi!y reduced by an increasing!y authoritarian central government), and the working out of electoral systems which al10w the widest possib!e representation of diverse interests and of preferences ίη social policy. It was never reasonable ιο suppose that ίπ a socialist society all conf1icts of interest ΟΓ diversity of aims would disappear, even after the abolition of major class differences (which, for that matter, may reappear ίη new forms), and ίι may well be the case ίη the future that politicaI power ίη socialist societies wiIl ηοΙ only be more decentraIized, but will frequently be exercised by coalition governments which change their compIexion and orientation from time ιο time as circumstances change.

Τhe state, bureaucracy and self-management

73

But there is stilI another element of vital importance ίη a pluralistic system; namely, the development of a great variety of active associations ίη civil society. Such associations - occupational, economic, community-based, environmental, ΟΓ cultural - while being independent of the state, may have a significant influence οη social policy as Jrimary sources of the individual's capacity Ιο choose, innovate and participate ίη making decisions οη matters directly affecting the quality of his ΟΓ her life. The ideas of 'participatory democracy' and 'self-management' both express the immense importance of this dense network of non-state associations as the substratum and condition of effective democratic pluralism. FinalIy, however, we should ηοΙ be led ίηΙο assuming that the nation state, even when ίι is deeply involved ίη centralized economic planning, is the only serious threat ιο individualliberty (or as ίι would be preferable ιο say, ιο the specific and parιicular liberties of individuals and social groups). Ιι is welI ιο bear ίη mind here, ίη considering the political institutions of socialist society ίη relation to its economic organization, the discussion of the state, democrac)' and citizenship by that exemplary lίberal socioIogist L. Τ. Hobhouse, who sagely remarked that 'there are other enemies of lίberty besides the State, and ίι is ίη fact by the State that we have fought them' (Hobhouse 1922, ρ.83). The aspect of the state ίη a planned socialist society that has attracted most attention and criticism ever since Max Weber wrote of the 'dictatorship of the official' is the growth of bureaucracy and its consequences. This has both a politicaI and an economic dimension, and ίη the folIowing discussion Ι shall concentrate οη the latter, since, as Ι have already argued, the question of political power and the emergence of a new dominant class ΟΓ clite ίη socialist societies requires an analysis of the nature of the statc. and of the monopolization of power by a single party, rather than of bureaucracy ίη its most general sense. Το be sure, therc has also grown υρ a party bureaucracy which has a significant rolc ίη the economy, and its influence will be considercd ίη the rcΙeνant contexts, but Ι shall begin by examining the bureaucratic phenomenon as ίι manifests itself ίη the planning and rcguIation οΓ economic life by state officials and managcrs. Α useful starting ροίηι is ιο be found ίη the discussion b)' Bcrliner (1988, ch. 8), who distinguishes two leνels οΓ burcaucracy ίη the

74

Τhe

Socialist Economy

Soviet s)'SIenl: a 'planning bureaucracy' which is 'inrerposed between rhe firms and the Party Ieadership' and comprises the econonlic ministries, organizations dealing with the planning process and tϊnance, and segments of the Party bureaucracy; and the nlanagement bureaucracy ίπ individual fίrms, which is comparab1e \\ίιΙι that ίπ capitalist corporations and hence referred Ιο as the 'corporare bureaucracy" 8er1iner then goes οη Ιο consider the ι:onsen;atism ΟΓ creativity of these two bureaucracies, ίη re1ation ιο rhe problem of Inotivation, and notcs rhat rhey tend Ιο make 'those decisions which contribute Ιο a higher score οη the standards by \\'hich their own work is eva1uated. Ιη some cases, rhis 1eads Ιο creatί\Ί~ behaviour; ίη others Ιο conservarive behaviour. The crux of the issue is rhe standard of eva1uation.' (ρ.193) 8υΙ there is a1so a genera1 obstac1e Ιο creariviry: name1y, rhe 1ack of satisfactory quantitative indicators of the re1ative va1ue of commodities as implied b}' rhe preferences of the party 1eadership, since the 'shadow prices' which express rhe re1ative va1ues are ηοΙ ίη fact known by rhe centra1 p1anners, the p1anning bureaucracy, ΟΓ the firms (ρ.195). The outcome is that the who1e bureaucratic system tends Ιο be conservative rather rhan crearive, and a1though the system 'has been effective ίη generating an enormous vo1ume of new rechno10gy' rhis is ποι rhe same as efficiency, which 'refers Ιο the re1arionship between rhe magniιude of the resu1ts and the magniιude of rhe effort and resources invested' (ρ. 201). lη genera1, rhere is liιιle doubt rhat rhe rate of techno10gica1 innovation and of productivity growrh (which ref1ects greater efficiency) has been unsarisfacrory,1 and since rhe 1960s a succession of major reforms and minor changes have been introduced, revised, and sometimes reversed again, ίπ an effort Ιο improve efficiency and increase thc rate of economic growrh (8er1iner 1988, ch. 12). What has changed most fundamenra11y is rhe conceprion of central planning. Whercas the Stalinist 1eadership, as 8erliner (ibid., ρ. 280) remarks, had great fairh ίη rhe abi1iry of rhe centra1 planners, who had afιer a11 achieved rhe transformation of rhe Soviet υηίοη ίηΙο a great industria1 power, Ιο direct rhe economy ίη every detai1, 'that naive oprimism has long since vanished' and rhe aim of a11 the subsequenr rcforms has bcen Ιο find a way of dccentra1izing loca1 dccisions ίη the framework of a centra1 plan. So far, howevcr, the internal strucΙUrc of firms has changed relative1y little ίπ rhe Sovict U ηίοη, aIthough rhe organizational

The state, bureaucracy and self-management

75

structure above the level of the fίrm has undergone considcrablc changes, so that, as Berliner (ihid., ρ. 275) observes, 'the bureaucracy that stands between enterprise director and his minister is much more complex than ίη the Ρre-waι' period" Elsewherc, notably ίη Yugoslavia from the 1950s and ίη Η ungary since 196!i, there have been more fundamental changes ίη enterprise structurc. as well as ίη the economic system generally, with thc development of diverse forms of 'market socialism'; and the current polic)' ο[ restructuring the economy ίη the Soviet υηίοη points ίη the same direction. The aim is ιο create new opportunities and incentives [or effίcient management, leading ιο more rapid technological ίηηο­ vation and higher prod uctivity, less wastef υΙ use οΓ resources, and the elimination of all kinds of bottlenecks ίη the supply οΓ materials ιο productive enterprises and ίη the distribution of consumer goods, both by liberating enterprises from detailed central regulaιίοη and by introducing an element οΓ competition. One consequence of deregu\ation and the greater autononlY οΓ enterprises is quite clearly a reduction ίη the size οΓ the bureaucracy, which itself represents a considerable saving of resources. Νυιί (1988) notes 'the drastic personnel reduction of the Central Planning Commission' (ρ. 377) ίη the Soviet υηίοη, and also thc substantial reduction ίη the number οΓ ministries responsible ΓσΓ industrial sectors, which ίη Hungary and Poland havc bccn replaced by a single Ministry for Industry and Trade (ρ. 378). The achievement οΓ smaller, more effίcient bureaucracies responsiblc for the general management οΓ the economy, by dismantling central planning ίη the form of detailed physical control of entcrpriscs and sectors, would be a considerable gain, both cconomically and politically, for many of the socialist countries; but the qucstion 0'the nature of central planning and its relation Ιο markets ίη thc IlC\\' economic system is far from being resolved, and, as Νυιί (ίhίιΙ., ρ, 382) suggests, the success of the restructuring proccss filay mcan that 'the traditional problems of centrally planned cconomics will have been alleviated ΟΓ perhaps solved, but at the cost of ίηΙΓΟ­ ducing at least some of the problems οΓ capitalist ccοηοηιίι's '. This diffίcult issue will be examined ίη thc ncxt chaptcr; nlcanwhilc ίι is nccessary ιο look at the divcrsc structιιres οΓ individual cnterprises and the changes thcy arc undcrgoing ίη the socialist countries, ίη relation 10 burcaucracy and ιο cconomic perfornlancc. The fίrst major break with thc Stalinist system took placc ίη

76

Τhe Socialist fcononJY

Yugosla\'ia. with the introduction of a new economic and social polic)' based υροη the self-management of enterprises and other social and culΙUral instiιutions, The Yugoslav economy can be chanIcterized briefl)' b}' saying that property is managed direcΙΙy by the \vorkers thenlselves, ίη a system of social ownership which is contrasted with state ownership ίη other socialist countries. 2 The latter separates the means of production from the producers ίη a ne\\' way and creates new dominant groups of party officiaIs, bureaucrats and managers; whereas social ownership approaches more closel)' the conception of a 'society of associated producers" formulated abstractly by Marx, but influenced by the experience of cooperative facιories ίη the nineteenth cenΙUry, Ιη a s)'stem οΓ state ownership, the coordination of the economy as a whole is assured by some central authority - the central planners and the party leadership - as has been the case ίη the So"iet U ηίοη and other socialist countries until quite recently; but where enterprises are ίη principle autonomous and self-managed, the relations between them have Ιο be established ίη a different way, namely through the market and exchange, though ίη an economy which is still planned and subject Ιο a general regulation by the state, The economic advantages of this system were seen as being that the producers are ηο longer direcΙΙy subordinated Ιο external political authorities, that incomes are determined by output and productivity instead of by administrative decisions, and that the independence of the producers provides greater incentives for economic development. But the restructuring of the Yugoslav economy also had the wider aim of encouraging the full participaιίοη of citizens ίη determining their social lίfe and achieνing responsible self-government ίη a genuine socialist democracy. The initial achievements of Yugoslaνia under the new regime were impressive, with very high growth rates and a high level of accumulation and investment, and they attracted widespread attenιίοη. But unemployment remained high, resulting ίη large-scaIe emigration of labour, mainly Ιο West Germany, and economic disparities between regions tended Ιο grow, as did income differences generally. More recently, economic performance has greatly deteriorated, the country is burdened with massive external debt, and the economic failures along with the continuing disparities between regions have exacerbated culΙUral and political tensions within this multinational state. As a result, criticisms of the existing

Τhe state, bureaucracy and self-managemenr

77

se1f-management system, which were a1ready voiccd ίπ thc 1αιι; 1960s, have mu1tip1ied both inside and outside Yugos1avia. J The major prob1ems of se1f-management seem Ιο be the fo1l0""ing. First, economic efficiency varies considerab1)', for divcr~c reasons, betweel' enterprises, and this resu1ts ίπ significant differences ίη income and socia1 benefits between the workers ίπ the~c enterprises. It a1so raises the question of whether the 1east efficient enterprises shou1d be allowed Ιο go bankrupt and, ίη that case. what becomes of their emp10yees and of socia1ist po1icies of full and stab1e emp10yment. Beyond this, according ιο some critics, there has deve10ped ίη the more successfu1 enterprises a 'group-egoism'. and the property re1ations that have been estab1ished could morc accurate1y be described as 'group ownership' rather than 'social ownership" Second, the full participation of emp10yees ίη se1f-management is rare1y achieved. Just as ίη se1f-managed associations of various types ίη other societies (for examp1e, vo1untary associations crcated for charitab1e and educationa1 purposes), most members are passive supporters, whereas there is a1ways an active minority of individuals who are ready, or eager, ιο take οη administrative tasks and exercise some authority. Ιη Yugos1avia the 1evel of participaιίοη ίη management varies considerab1y between enterprises and regions, and ίη the most favourab1e cases may attain some 40 per cent of the work force; but ίι is generally much 10wer than this. and ίη the view of some critics an 'o1igarchy' ΟΓ 'meritocracy' 11as developed both within enterprises and ίη the po1itica1j adn1inistrative system. Neverthe1ess, ίι may be argued that the Yugosl;J\, systcm has demonstrated its feasibility over a fair1y long pcriod. and as Szell (1988, ρ.113) observes, 'ίι has proved that simplc workers are ab1e. without being experts. Ιο run companics and socia1 institutions, and that this society therefore provides son1C hope that po1itica1 apathy will be overcomc'. Third, ίη an economy ίη which the basic productive υl1ίt~ ;Irc independent se1f-managed enterprises. the coordination οΙ' CCOllomic activity as a whole is effected partly by markct I·CI;1I iOl1s. partly by central and rcgional p1anning, giving risc to ;1 111;I.ίor prob1em concerning the relationship bctwecn tl1C aIItononlOtIS actiνity of production collectiνes and rational cconoιllic pl
78 ίl1

The Soc;a/;st Economy

the

bωauer

cOI1IexI of ,111 assessInent of the achie"enlents and the Yugosla" project. The intention οΓ the structural Ι'haηges ίη the Yugosla" economy and society, which ha"e been ste,ldil) de\'eloped over a period of almost forty years now, was, as Ι ha\'e said. to approach more closely the condition οΓ a mature socialist socieI)" concei"ed as a 'society οΓ associated producers" υ l1uoubIedl)', the changes have brought substantial achie"ements. TlHoughollt Ihis period, υηιίΙ the "ery recent wave οΓ liberalization ίη much of Eastern Europe, Yugoslavia has been a far more open socieI)' Ihan <ιηΥ of the other socialist countries, and ίη the 1960s especiall)', the future prospect looked exceptionaIIy bright, above <ιΙΙ ίl1 so far as economic development was concerned. The extent οΓ these achievements can be judged from one aspect by the [act that the Yugosl
Τhe state, bureaucracy and self-management

79

side, centraI pIanning impIemented by a single ραΓΙΥ which ι:ΙαίΠl~ a monopoIy of power as the maker οΓ the revoIution facίΙίιaιι:, thc growth of a new dominant and priviIeged group ίπ societ)', and thc pIanning itseIf may be Iess effective once the ίπίιίαΙ phasc οΙ rapid industriaIization has been compIeted, and the pIanncrs ιhcmscΙ\'ι:s become increasingly con 'erned with thc ΡΓΟΠ1Οιίοπ οΓ thcir o ..... n sectional interests. Οπ the other sidc, as Ilas been seen ίπ considcring the YugosIav system, seIf-management m
80

Τhe

Socialist Economy

considerable, ilnd hil"e become the subject of intense debate, and thc}' ilrc ι:on1potlnded by a further element which deserves pilrιiculilr ilttention. With the development of markets and the grciltcr indcpendence οΙ' enterprises, many socialist countries have becoΠle increasingly involved ίη the capitalist world market and hence exposcd Ιο the economic cycles characteristic of capita1ism. \Vith the recession ίη the capitalist countries ίη the 1980s, some of thc EilSt European socia1ist countries have faced major prob1ems of ild\'crse foreign trade ba1ances and 1arge externa1 debts, the 1atter rcsulting from ill-advised large-scale borrowing at a time when Western banks were on1y ιοο ready ιο 1end their massive cash rcsources all over the world. At the present time, Po1and, Hungary ilnd Yugoslavia are parιicu1ar1y affected by these conditions, and \\'e shall need ιο consider later how far the most recent po1icies of economic reform, and especially those ίη the Soviet υηίοη, will be able ιο avoid this kind of dependence. The under1ying factor is undoubtedly the continuing re1ative weakness of the socia1ist economies, despite their considerab1e achievements. Νο socia1ist country ΟΓ group of countries has yet become economically powerΓυl enough ιο have a determining influence οη the wor1d economy, and although there is not, ίn my view, a sing1e wor1d system, as some have argued, there is certain1y a still dominant capita1ist system, confronted by an alternative socia1ist system, which is economically weaker and as yet incapab1e of exerting so powerfu1 an influence. Ιη later chapters 1 shall consider how far the present economic reforms ίη socialist countries are like1y Ιο change this situation, which is similar, οη a world scale, ιο that which has been noted ίη respect of the attempts ιο move towards socia1ism ίη the capita1ist world itself, where a single country, ΟΓ even a small group of countries, seems generally doomed ιο failure ίη a confrontation with the power of international capita1ism sustained main1y, at leasΙ υηιίl recently, by the United States. 4 Clear1y, the conditions would be greatly changed by a revival of the socialist economies ίη Eastern Europe, and there are already signs that the new policies there are beginning ιο have an effect, with an increase ίη the rate of economic growth Ιο 4 per cent ίη 1988 and a significant rise ίη foreign trade. 5 But a rapid and sustained improvement ίη economic performance depends crucially υροη how successfully the restructuring of these economies is carried ουΙ, and the central issue, ιο which Ι shall now

Τhe state, bureaucracy and self-managemenr

81

turn, is unquestionably that of creating a system which successfully combines central (plus regional and local) planning with markets ίη a socialist economy.

Notes Ι.

2. 3. 4. 5.

See also the comments by Nuιί (1988, ρρ. 373-4): 'Researcll and deνeIopment haνe tended to be academically oriented and dcIachcd from the needs of both industry and teaching; lhe innovaIion dccision has remained by and large an administrative decision; long in"cstment geslation has led Ιο intolerable delays ίη the introduction σΓ nc\\ techniques. What is worse, severaI rcasons appear to provide a posiIivc disincentiνe for enterprise managers to innoνate.' Nuιί goes ση ιο lίsι some of the major disincentives and concludes: Ίι is ηοι sUΓJ1rising. therefore, that R & D and produclivity trends ha"e becn quilc disappointing outside a few sectors such as space and mililar)' industries. ' For more detailed accounts of the Yugoslav system sec Brockrnc)'cr (1970) and Szell (1988, ρρ. Ι 04-11). See, for example, Stojanovic (1973) and Szell (1988, ρρ. 112 23). See the discussion ίη Holland (1983) of lhc need Ιο rcslruCΙUrc lhc Wcs! European economies ίη a joint effort by lhe EC countries. United Nations Economic Commission for Europe, EC0l10111iC .')u,,'c.\' ΟΙ ΕIΙΓΟΡι' ίπ 1988-9.

6 Plan and market

Ever since the debates about central planning and socialist calculathe 1930s, and more particularly since the formulation by Lange and Dickinson οΓ what Hayek called the 'competitive solution', according to which prices and the allocation of productive resources were Ιο be determined by a combination of market mechanisms and central planning, there has been continued discussion οΓ the ways ίη which planning and markets can be successfully integrated ίη a socialist society. The discussion has becn cspecially intense ίη Yugoslavia, where critics have singled out as a major problem the relation between self-managed enterprises opcrating ίη a market situation and the rcquirements of rational economic pIanning (see above, ρ.77); and ίη recent years, with the new wave οΓ economic reforms, ίι has spread widely throughout Eίlstern Europe. But the general question is onc of great complcxity, which has many different aspects, and we should begin by distinguishing somc οΓ the separate issues involved. First, there is a great difference bctween those societies ίη which the greatcr part οΓ productive rcsources arc publicly owned and ccntral planning has a major role ίη the cconomy, and οη the other hand, the socicties ίη which there is οηΙΥ limited public ownership and pIanning and the construction of a socialist economy involves some cxtension of planning ίη diverse forms, along with restrictions οη market mechanisms. Ιη this chaptcr Ι shall be concerned with ιίοη ίη

82

Plan and market

83

the former group of countries, and primarily with the East European socialist societies, deferring until a later chc:tpttr a discussion of the second group, mainIy ίη Western Europe, where <ιΙ νarious times - and ίη some cases over fairly long periods, as for example ίη Sweden - the countries concerned have moved towards a more socia1ist form of society. But within the group of existing socialist countries itse1f there are important differences, arising from distinctive economic, socia1 and cultural conditions, which are revea1ed ίη the very different course of post-war development ίη, for examp1e, the Soviet υηίοη, YugosIavia, Hungary, the German Democratic Repub1ic and Poland. So ίι is ηοΙ Ιο be expected that precise1y the same solutions will be tried ίη every country, although there will certain1y be some common po1icies and a continuation of the exchange of ideas and experiences such as has already been taking p1ace; hence ίι will be necessary Ιο look a1so at the specilίc prob1ems and reforms ίη particu1ar countries. Second, the restructuring of the socia1ist economies raises questions ηοΙ οηΙΥ about the scope and nature of central planning, but a1so about the forms of ownership of productive resources, and ίη particu1ar the extent Ιο which private ownership will be permitted ΟΓ encouraged. This is ηοΙ a new issue ίη socia1ist debate, and ver)' diverse views have been expounded about the ownership of property ίη a socia1ist society. Α c1ear distinction was a1ways made between persona1 property - which wou1d on1y be affected by the transition Ιο socia1ism ιο the extent that a greater equality bctween individua1s became estab1ished - and ownership of productive resources; the divergences of view concerned essentiaIIy the laιter kind of property, above all ίη the basic spheres οΓ economic activity and where ownership was high1y concentrated ίη the hands of small groups of peop1e through the deveIopment of 1arge corporations ίη industry and Iίnance. Marx's legacy - the conccption of thc 'associated producers' - seemed Ιο imply a very wide extension of socia1 ownership, and a virtual extinction of individual ownership. but as we saw ίη the case of Kautsky, those early Marxists \\'ho gav~ any attention ιο the practical organization οΓ a ~ocialisI economy werc quite ready Ιο envisage very diverse forms οΓ ownership, including a sphere of individual owncrship and priνatc production. Furthermorc, there was from thc bcginning, am~ng Marxists and other socialists, a powerful current of thoughI whIch favoured relativeIy indepcndcnt sclf-managcd erιtcrprises, whilc

84

Τhe

Socialist Economy

opposing centralIy planned and managed state industries; and such ideas ηοΙ οηΙΥ persisted but enjoyed frequent revivals, as ίη the councils movement and ίη the Yugoslav system. I From this protracted debate and accumulated practicaI experience ίι is evident that the structure of a socialist econonlY stίll remains an 'unsettled ιJuestion', to which different answers may be given ίη different countries and ίη changing historical circumstances. Third, the debate about property ownership is intimateIy connected, as ! have indicated, with the question of central p!anning and state industries. Many socialists, and writers οη socia!ism, have recognized that a socialist economy cannot simply be equated with central pIanning. Hayek ([ Ι 935] Ι 948, ρ. Ι 30), for example, distinguished between 'socialism' as a description of ends and 'p!anning' as a method, and argued that 'ίι is possib!e Ιο have much planning with little socia!ism ΟΓ little p!anning and much socia!ism '. !η the writings of some of the Utopian socialists ίι was assumed ΟΓ hoped, as ίη the case of Morris, that a spontaneous order would emerge from the activities of responsible, cooperative individua!s, without any elaborate machinery of government, administration ΟΓ economic management, though other Utopians, !ike BelIamy, envisaged a powerfuI central authority which would regulate socia! life. The supporters of workers' councils and self-management, ίη a less extreme way, advocated the autonomy of productive enterprises οη the basis of social ownership, but they did ηοΙ consider ίη detail how the diverse economic activities would be coordinated, and, as we have seen, the self-management system implies the existence of markets and, ίη practice, creates diffίcult problems of the kind that ! discussed earlier, ίη particuIar the specific problem of a symbiosis between plan and market. Αι alI events, ίη the mainstream of socialist thought and practice the concept of pIanning came Ιο be closely identifίed with socialism, and as Dickinson (1939, ρ. 9) wrote: The definition of socialism that was generally accepted during the half-cenιury between 1875 and 1925 is 'social ownership of the means of production" Since that time the phrase 'planned producιίοη' has been tending to take its place. There is a close connexion between these two definitions .... One fundamental difference between socialism and capitalism will be the existence of an authΟΓίΙΥ able ιο view the economic system as a whole and with power

Plan and market 85 Ιο

make decisions involving the system as a whole.

Another half-century later the question of planning has become much more complicated and the subject of renewed controvers~'. Οη one side, the continued development of 'organized capitalism" has enlarged the sphere of planning and the role of the state ίη capitalist econom.es, parιicularly ίη the most dynamic societies, such as Japan. Οη the other side, comprehensive central planning ίη the socialist countries seems to have Γυη ίηΙο serious difficulties, and to be less effective ίη a more complex advanced industrial society than ίι was ίη the earlier stage of rapid industrialization. Hence the present more radical policies of reform and restrucΙUr­ ing. Before examining the content and implications of these reforms ίι is necessary to emphasize again that they are occurring ίη societies which are socialist ίη their strucΙUre and aims and are likely Ιο remain so for the foreseeable future. ΒΥ socialist Ι mean, ίη the first place, the kind of society defined by Dickinson (1939), ρρ. 10-11) as . .. an economic organization of society ίη which the material means of production are owned by the whole community and operated by organs representative of and responsible ιο thc community according ιο a general economic plan, aII members of the community being entitled Ιο bencfit from thc results of such socialized planned production οη the basis of equal righIs. The definition is incomplete ίη certain respects, sincc ίι does ηοΙ refer Ιο the culΙUral aims of socialism which Gramsci cal1ed thc creation of a 'new civilization'; and, as Dickinson himself notcd. ίι also leaνes vague two important points: namcly, how (ίη what instiΙUtional forms) society is Ιο work the Ρrοducιίνe equipn,cnt that it owns, and cxactly how (according Ιο wl,at criteria οΓ SCn·icc ΟΓ need, individual ΟΓ col1ectivc consumption) the social prodtlct is Ιο be distributed. Βυι ίι wil1 sufficc as a starting ροίηι Ι·(Η ι hc present analysis which concentratcs υροη thc cconomic asrccI~ οΓ socialism and the organization οΓ production. ΟηΙΥ ίn onc rcsrccI would Ι make an initial modification by saying tI,aI ίι is tl,c IIlo;or means of production (Iand Hnd naΙUrHI rcsources, largc-sc:tIc tradc and industry, transport and communication) \vhicl, necd to bc social1y owned, leaving Γοοη, for privatc individtJal οι· fan,iIy

86

The 50cialist ECOnOnlY

production ίη Π1ό.lΠ)' spl1t~rl:s, \VI: Ι',ιη no\\' tιιΓΩ to thl: rl:ΓοrΠ1S th,It ό.lΓI: t
P/an and market

87

between the idea οΓ self-management, which bel
88

The Socίa/ίst Economy

(Konnid and Sze1eny 1979), by a system of socia1 ownership ίπ which workers and emp10yees wou1d effective1y participate. However, Go1ubovic (1986, ρρ. 23-4) argues that, ίπ Yugos1avia, the state has retained its prerogatives Ιο dispose of the means of production and socia1 product, so that ' "socia1 property" oscillates between state usage, which has πο 1egal justification, and "group property" at the 1eve1 of the enterprise as a visible form of the fragmentation of socia1 property" As a consequence of this and other factors workers fee1 that they have 1ess and 1ess say ίπ their enterprise's po1icy making (ρ. 20). The recent reforms ίπ socia1ist countries have ποι generally moved towards se1f-management of the Yugoslav type, but have concentrated upon two issues: a possible extension of private ownership, and greater independence ίπ the management of enterprises by rc1axing centra1 planning controls and permitting the deve10pment of market relations. As ιο the first of these issues, ίι shou1d be noted that ίπ the Soviet υηίοη proposals are being considered [οτ an expansion of private agriculture through the 10ng-term 1easing of 1and from collective farms - whose importance wou1d thereby be diminished - ιο individuals and families; ίπ Po1and, the Solidarity Citizens Commitιee included ίπ its programme for the par1iamentary elections, held ίπ June 1989, a commitment Ιο estab1ish a 1ega1 basis [οτ the privatization of state property; and ίπ Hungary, since the introduction of the New Economic Mechanism ίπ 1968, there has been a considerable extension of private economic activity, and this 'second economy' is ποι οπ1Υ accepted but ίπ some sectors encouraged by the state (Richet 1981, ρρ. 34-5). The most recent reforms ίπ Hungary which allow the formation of new po1itical parties may well give a further impetus ιο the second economy.5 The expansion of private production, trade and services, has various consequences and imp1ications which Ι shall examine at a 1ater stage. Ι π the present context its main significance is that ίι represents one form ίπ which a greater autonomy of enterprises and individua1 economic agents can be achieved. lπ short, ίι is a way of decentra1izing economic decision-making, for producers and consumers. Clear1y, however, decentra1ization can a1so be brought about ίπ other ways, by giving greater independence ιο pub1ic1y owned enterprises and extending the sphere ίπ which market prices determine the 1eve1s and types of production and consumption;

Plan and market 89 from a socialist standpoint ίι is these alternative routes which are more interesting and important, all the more 50 becau~c ΡΓίναιc production and market mechanisms, when they are predominant, themselves create massive economic and socia1 prob1ems. What we have ιο examine, therefore, are the mode1s of a decentra1ized socia1ist economy which have been worked ουι, and ιο some extent, ίη Hungary and Yugos1avia particular1)', imp1emented ίη economic reforms. The starting ροίηι for the reforms ίη Eastern Europe has been described by Richet (1981, ρρ. 24-5) ίη the following terms: According Ιο the centralised conception of economic managemc:nt. the dynamic behaviour of the economy is governed b}' the accumulation process, and this ίη turn is directcd b}' the centraI authorities (the government and the central planners) acting through a verticaIIy structured organisational system (branch ministries, directorates ΟΓ associations, and enterprises). Ι n this system the 'central will' largely displaces horizontal regulation through the market mechanism. The resulting process of development relies οη extensive growth of the economy and requires for its operation only fairly rough and ready economic measures and indicators .... Richet goes οη ιο say that this hierarchically organized structurc 'may well be the most appropriate one when the main tasks of economic po1icy are concerned with the ear1y stages of accumu1aιίοη', but ίι seems 1ess suitab1e when the economy is more advanced. deve10pment becomes more intensive, and 'a more effίcient systcm of information and contro1 is needed" Two socia1ist countries have so far undertaken a Γundamcnta1 and comprehensive restructuring of the economy - Yugos1avi:t (where the phase of centra1ized managcment was very brief) and Hungary (since the changes initiated ίη 1968) - and their ne,,' economic systems have been influentia1 mode1s for many of thc more recent reforms. Ι have a1ready givcn some account 01' thc Yugos1av self-management system, and critica1 eva1uation~ 01' ίι. and now turn Ιο examine morc specifically thc rc1ation bct WCCI1 p1anning and markets which ίι embodies ΟΓ is supposcd to CIl1bod)'. The theoretica1 re1ationship has bcen clcar1y fornlu1atcd b~' Horvat (1982, ch. 12) who, after rcjccting thc cc1ccticiSI11 οΓ ;ι 'nlixcd economy', continues:

The Socialist

90

ΕCOΠΟΠ1Υ

\Ve ""ish ισ preser\'e essenIial COnSUnler sovereignIy because soci<JIism is based σπ Ihe pref'erences of Ihe individuals who con,ιίιuιι: Ihe socieI)', We also wish ιο preserve Ihe auιonom)' of proJucers. since Ihis is Ihe precondiIion for self-management. \Vhen Ihese are taken ιogether we need a market. Βυι ποΙ a laίsscι-Γ:ιίrc market. We need a market that ννίΙΙ perform the ιννο I'unction, jusI stated. neither less ΠΟΓ more. Ιη other words. we need the IIIarket as α p/anning ι/evίι'e ίπ a strictly defined sphere of priorities , . , [and] p/anning as α preC'OndiIion !or an efficient IIIurkt'I ... ίll order ιο increase the economic welfare of the communiIY. (ρ. 332)

According to this mode1, p1anning and markets are comp1ementary, contradictory, and Horνat goes οη Ιο consider the basic functions οΓ a socia1 p1an, beyond the formu1ation of actual plans \\'hich have expert and social (normative) components: as a forecasting instrument, as an instrument for coordinating economic decisions and for guiding economic development, and as an ob1igation for the body that has adopted ίι and a directive for its organs (ρρ. 333-4). Having out1ined the functions of p1anning ίη this way, Horvat then considers the regulatory mechanisms that \\lίΙΙ be needed, the behaviour of worker-managed fίrms, the optimum rate of investment, and the basic institutions required for macro-economic organization, comprising a planning bureau, a nationa1 bank, a deve10pment fund and an arbitration board for incomes and prices. Βυι the institutions and mechanisms Ιο create an effective connection between p1anning and markets, as envisaged by Horvat, have ηοΙ been estab1ished ίη Yugoslavia, and, ίη the view of Go1ubovic (1986, ρ. 25), 'Yugos1av society is constantly caught ίη a di1emma between the ρ/απ and the market, which ηοΙ on1y reflects the unc1ear1y defίned princip1es and aims of economic po1icy, but a1so is a manifestation of the actual ba1ance of forces ίη society'; that is Ιο say, of the c1ash between advocates of centralized bureaucratic p1anning and those who upho1d the abso1ute vaIίdity of market laws. Ιη the present economic crisis, with soaring inflation, very low growth rates, falling real incomes and an increasing polarization ίηΙο rich and poor, the clash between rival doctrines and policies has become more intense, and ίι is compounded by national rivalries within the Yugoslav federation. ηοΙ

P/an and market 91 The question ιο be explored, which is the subject οΓ very diverse interpretations, is whether the Yugoslav experience demonstratcs that there are formidable, even insuperable, diflicultics ίη achic\'ing the integration of planning and markets ίη any regime οΓ public ownership, ΟΓ more broadly, ίη a socialist society. Ιη considcring this question, we should remember first that for two decades the Yugoslav system funct:oned quite effectively, producing high rates of economic growth and an impressive development οΓ social and culturallife. The turning ροίηι came with the οίl price rises and thc Western recession of the early 1970s, which also affected othcr East European countries. It may be argued that the subsequent economic decline is due ίη large measure ιο the failure οΓ planning ιο deal effectively with the consequences of these events, and ίη particular with the massive growth of external indebtedness, which has also notably affected the Polish and Hungarian economies. lι is certain that the economic development of Yugoslavia and other socialist societies has been adversely affected ίη some respects whatever the initial advantages may have been, ΟΓ seemed ιο be - b)' their close lίnks, ίη foreign trade and investment, with the capitalist world, and by the failure of policy-makers ιο take due account οΓ the cycle of growth and recession ίη capitalist economies which is, after a11, at the heart of Marxist economic analysis. This failure may itself be attributed ίη part ιο the weakness οΓ political leadership, ίη conditions where, according ιο Golubovic, self-management has been largely subordinated ιο bureaucratic control and is more an ideology than a reality, and thcrc is a consequent loss of enthusiasm, a general stagnation ίη which ηο clear conception of long-term development has been formulated. What is evident so far is that the economic situation has dctcriorated more rapidly since thc extension οΓ markct relations, although. as Ι have said, there were also powerful external forccs αΙ work. Some critics of the present system, at the oppositc ροlc ΓΓΟΙΙΙ reformers such as Golubovic, nevertheless cOl1sidcr that a solιιIiol1 of the difficulties lίes ίη a further extension οΓ markcts: hιιI although this might perhaps stimulate some kinds οΓ ecoιl0nlit· growth, ίι would also almost certainly incrcase tllC dispariI)' between rich and poor and perpetuatc high lcvcls οΓ Ul1cnψΙΟΥ­ ment, as has happened ίη many capitalist countrics οΓ \VcsIcrn Europe. The alternativc, as Horvat proposcs, is Ιο crcaIc nl0rc sophisticated, clcarly defined, and efficicnt planning institutions.

92

Τhe Socia/isr fconomy

. . ome new stimulus Ιο self-manag~and <ιΙ Ihe san1e ΙIΠ1Ι: ιο glve s Ι and democratizaIion ΙΩ 11 ιο self-governmen menI. ΟΓ Π1ΟΓΙ: genera Υ . k- bl ιο involve the development aIl SΡhen:s, \vhich seen1S unmls ta a Υ σΙ' a plunIlisIi( political system. h t two decades has been The e:φerίenι:e οΙ' Hungary over t e P1as. The New Economic .' . ι ιο that of Yugos avla. slmllar ιπ somc respec s . . J_ ry 1968 after three Mechanism which came lηΙο force ιη a~uta ded to'decentralize . . arch was ιπ en . ve
an;:

But, ίη J 971, <ιη element of labour direction was introduced, and ίπ J 974 central control over investment plans was strengthened, because the release of market forces led Ιο problems ίπ the markets for labour and investment; and ίπ later years there were further measures of re-centralization, mainly, as Hare et αl. (ρ. 15) note, 'ίη response ιο the economic effects of the dramatic rise ίπ the price of οίl and other raw materials ίη 1974-5, coupled with the Western recession [which] led ιο a serious deterioration ίπ the terms of trade and the balance of payments'. The reform policy, however, was only temporarily interrupted; ίπ January 1980 much of the original mechanism was reinstated, and since then further radical changes have been undertaken, including monetary and fίscal reforms which introduced personal income tax and value added tax, and most recently the first steps ίη the development of a multi-party political system. The Hungarian reforms, however. have ηοΙ foIlowed the Yugoslav model of workers' self-management; οη the contrary, they are much more

P/an and market 93 individua1istic and market-orientated ίη their approach. As 1 noted ear1ier, the 'second economy' is a1ready a major clement ίπ economic 1ife, and the economic reform p1an adopted ίπ 19!\!\ cnvisages the deve10pment of a 'genuinc market economy' ίπ which the sharc of the private sector might rise Ιο some 30 per cent; there would be more extensive shareho1ding (ίη state enterprises too, though ίπ a collective form) anc a more wide1y functioning stock exc:hange, c10ser Ιο the Western capita1ist mode1, would develop. The ίΠΙΓΟ­ duction of persona1 income tax was itse1f an 'indi\oidua1izing' measure, part1y ίη response Ιο the growth of income inequalit), resu1ting from priνate enterprise ίη the second economy, and ίι was strong1y opposed by critics (ποι necessari1y advocates οΓ more centralized p1anning) who saw ίι as a substantia1 departure from the νa1ues of a socialist society. It is Ιοο ear1y yet Ιο judge the economic resu1ts οΓ the Η ungarian reforms. Hare, Radice and Swain (1981, ρ. 20) refer to their 'apparently 1imited impact' οη economic performance, but go οη Ιο say that 'without the reforms performance might haνe deterioratcd substantially'. But ίι is eνident, ίη any case, that so far Η ungary has ηοΙ done notab1y better than some other socia1ist countries (and especially the German Democratic Repub1ic)6 which re1y Ιο a much greater extent υροη centra1 p1anning, and the modest improνement ίη the socia1ist economies ίη 1988 was ηοΙ more marked ίη Η ungar)' than e1sewhere. Ιη China, the economic changes since 1976 have been much more sweeping than ίη the East European countries, and, ίη the view οΓ some commentators and socia1ist critics, can be rcgardcd as thc ΓIrst stages ίη a process οΓ 'restoring capita1ism '. 7 The main c1cmcnts ίη this process have been the rapid deνe10pmcnt of markct mechaηίsΠ1S which profound1y modify the socia1 objectivcs οΓ thc planning system and resu1t ίη growing inequa1ity, a 'dccol1ectivizatiol1' of agriculture which increasing1y favours rich privatc farmers, and the 'open door' po1icy with regard Ιο foreign capital, ίl1 thc ΓOΓlll 01" joint νentures and extra-territoria1 'specia1 CCOnOn1iC zoncs" \\Ilich promotes deνe10pment above all ίη thc forcign tradc sectors ο( ιl1ι' cconomy, The outcome so far οΓ thesc cconomic changcs is unclcar. China is still going through a period οΓ economic ιυΓllloίl, ίl1 whicll economic growth dcc1ined sllarply (rOI11 1979 to 1981, but has recovercd since thcn, though ίι is still ποι as high 3S ίπ thc pcriod 1965-78.8 C/c3rly, thc economic situation οΓ C11il1a (al1d ο,. otl1cr

94

Τhe Socialίst

Economy

Third World socialist countries) differs greatly from that ίη the countries 01' Eastern Europe which are, ίπ varying degrees, industrially developed societies; and the present Chinese reforn1s can be \'iewed ΙΟ son1e extent as a teπφοrarΥ expedienI similar Ιο the ΝΕΡ ίπ Ihe Soviet ΙΙπίοη ίπ the period 1921-7. Αι Ihe same Iime there are some general similarities ίη the ecσnomic reforms now being implemented ίη most of the socialist coLIntries; and ίι seems unlikely, for example, that the Chinese \'ersion 01' ΝΕΡ will be followed by a period of Stalinist-type planning. Το put the matter ίη another way, 'socialism with markets' seems Ιο be here Ιο stay, and ίι is welcomed by most socialist thinkers as well as by the overwhelming majority of the populaIion ίη socialist countries. But ίι is ηοΙ without its own problems and dLIbious aspects, as the preceding discussion has indicated, and ίι will be useful now Ιο attempt a provisional summary of the main issues. First, the question of markets has ιο be distinguished clearly from that of the ownership of means of production. The markets we are talking about, ίη a socialist society, are markets ίη which socially owned enterprises are major participants. Without social ownership οη an extensive scale there can be, ίη my view, ηο socialism. But this still leaves a large sphere ίη which small-scale private production can flourish - ίη the arts and cultural activities generally (including book publishing), ίη services of all kinds Ιο consumers, ίη local trade, and ίη some areas of agriculture. The case of agriculιure is particularly interesting because there seems Ιο be a fairly widespread agreement that the economic reforms should begin with agriculΙUre,Q and that this involves Ιο a greater or lesser extent a privatization of agricultural production. But this question needs careful examination. lη the fίrst place, small-scale private production is ηοι necessarily more effίcient; for example, ίπ Poland, where most agriculιural production is ίη private hands, ίι is ηοι notably effίcient and indeed seems Ιο be afΠicted by the same confusion and malaise as the rest of the Polish economy. Second, while state collective farms may be ineffίcient ίη the Soviet υηίοη they are ηοι so ίη Czechoslovakia, as some internal critics of aspects of the reform process have pointed out; and more generally ίι should be pointed out that the supply of basic, and ηοΙ so basic, foodsιuffs ίη advanced socicties ίη fact depends upon large-scale production, as is shown by thc development of agri-business ίη thc

Plan and markΙJt

95

capitalist world, which ίπ turn depends very much υροπ the supply of industrial products. The reform of agriculture ίπ socialist countries therefore requires, above all, more efficicnt managemenl of collective farms, the decentralization of decision-making and lhc introduction of elements of self-management, together with a beιter supply of modern machinery (which of course depends υροπ lhc success of the reforms ίπ industrial production); but this still leaves an important area ίη which production by individuaIs, families and small- ΟΓ medium-size cooperatives is appropriate and desirable. Α second major ροίηΙ is that markeis ίπ a socialist society should be conceived, ίη Horvat's sense, as a 'planning device' within a general economic plan, and hence regulated ίπ accordance with social objectives. The problem is how ιο accomplish this rcgulation effcctiveIy. There is, according to Ellman (Ι 989, ρ. 8 Ι), who cites studies relating Ιο the Hungarian reforms, a 'reguIation illusion' which consists ίπ 'the idea that enterprise behaviour can easil)' bc controlled by the planners by manipulation of certain regulators (e.g. prices, taxes, laws, etc.)', which turns ουι ιο be morc difficult than was imagined, for several reasons: 'enterprises rcact ιο a whole complex of economic, social and politicaI factors', 'ίι is impossiblc ιο develop a completely watertight system of rules and rcguIations'. and 'the goals of the enterprises [may be] other than those hoped for by the planners', leading ιο unexpected reactions. Ellman (ihid.) tl1en suggests that the critique of the regulation illusion is 'analogous ιο the rational expectations critique of the Kcyncsian belief ίη the easy controIIability of the economy'. What can bc concluded from tl1iS is that regulation ίη modern, complex, rapidl)' changing economies, either capitalist ΟΓ sociaIist, is difficult and imperfect; and ίι remains Ιο be sccn whethcr the current rcforms ίπ thc socialist countries will achieve somc less in1perfect rcgulator)' system. Ιη principle, this should be possiblc givcn the existcncc οΓ a morc comprchcnsivc pIanning systcm, and ίι is ccrtainly desirablc ίη ordcr ιο attain the overall social objectivcs and Ιο countcr thc wcll-known adverse conscquenccs of a markct cconom)'. Two particular issues are closely connccted with thc dc\oclopIllCl1t of grcatcr cnterprise autonomy, markct con1pctition and a nωrc indircct system of planning and regulation. Onc is that οΓ ίl1ψΓΟ\'­ ing management efficiency, and more widcly of cncouraging a kind of socialist entreprcncurship whicl1 would bril1g about I110rc rapid technological innovation. 10 Ιη this respcct, as with othcr fcaturcs of

96

The Socidlist Economy

the econom)', there are considerable dilTerences between socinlist cotIntries, <ιηό ίη the GDR the quality οΓ industrial managen1ent is alre,Id)' high b)' intern,ιtional standards,ll Νο doubt, ctIltιιral and histσricill I'ilctors play <ιη importnnt part ίη these differcnccs, but ίη gencrill the qUillit), 01' management depends οη incentives (ηοι οηlΥ 01' il pcCUniilr)' kind) and οη careful planning (οΓ trnining, career structures, etc.). However, management efficiency is ηοΙ the οηlΥ {ilctor ίη raising productivity, increasing the rate 01' innovation and promoting more rapid economic growth, and a second issue concerns the response, and the attitιιdes, οΓ workers. Here, too, incenti,'es οΓ various kinds are required, among them opportιιnities ιΌΓ greater participation ίη decision-making through reforms which may tend towards an effective system of self-managed enterprises. Ν οι all the socialist societies are moving towards a self-management system (which has, as we have seen, its own problems), but there is an unmistakable desire [or, and growth of, participation at all leνeΙs of society. Thus, there is a third issue involved ίη the present reforms: namely, the development of a greater 'openness' ίη society accompanying the restructuring of the economy and now widely regarded as being crucially important for the success of the whole reforming process. The economic changes, ίι is recognized, require a new political climate ίη which the population can have greater conlϊdence ίη their leaders, express their wishes and criticisms more freely and effectively, and take a larger part ίη the determination of social policy; for ίι is οηΙΥ ίη such a climate that a new enthusiasm, animation and readiness ιο innovate can flourish. The speed of political change varies from one country ιο another, but ίη most of them there is now greater freedom of expression, and ίη some, freer elections have been held ΟΓ are ιο be held. The emergence of various social movements and politicaI groupings has been tolerated ΟΓ fully recognized ίη several countries, and there is widespread discussion of the creation of a multi-party system, which is already far advanced ίη Η ungary. ΑΙΙ these changes diminish the absolute power of the Communist party, which has existed ίη the Soviet U ηίοη since Ι 917 and ίη most other socialist countries since the end of the Second World War; and thcy ροίηι perhaps towards an eventual socialist politicaI system ίη which coalitions of various independent parties are a normal feature of government, while other parties function effectively as a critical opposition. Some characteristics of such a system are indeed

P/an and marker

rπ

already appearing. Βυι the greater 'openness' οΓ the socialist societies involves much more than just the formation οΓ new political parties. It represents, as some observtΓs have noted, a recreation of 'civil society'; that is Ιο say, a revival οΓ the net work οΓ autonomous associations of all kinds ίπ which citizens can pursue their interests, express their ideas and construct a style οΓ life, f rce from government intervention and regulation (within the limits set by law). And this development of civil societ)' is also οΓ ,ίιαΙ importance for renewing the active involvement οΓ citizens ίη the whole process of reform. Needless ιο say, the present radical changcs ίπ the econom)' and society are ποι proceeding entirely smoothly, ΟΓ without producing some unwelcome side-effects. The greater freedom for new political movements, which has been welcomed as a means οΓ increasing public participation ίπ and democratic control over policy-making, has stimulated the growth of nationalist movements ίπ some federal states (notably ίπ Yugoslavia and, Ιο a lesser extent, ίπ the So"iet U πίοπ), and these may become extremely disruptiνe, without making any signifίcant contribution ιο economic renewal. The risc of nationalism is πο doubt connected with economic dissatisfactions (as has been the case ίπ Western capitalist countries; for example, the Quebec independence moνement ίπ Canada ίπ the 1960s), but ίι also has a νery strong cultural component which is only distantly related ιο the main intentions of the current reforms and is often backward-Iooking. From another aspect, howeνer, tllC nationalist moνements illustrate a more gencral phenomcnon, which is the unaνoidable proliferation of special intercst groups ίη a more open society. These interests, depending οπ thc context, may' be proνincial, national, regional, occupational ΟΓ cultural, ΟΓ sonlC combination of them; and ίι is already eνident that among thc interests at work are those of the old-stylc bureaucracy. Oνerall. therefore, the process of change ίπ the socialist countries is likcl)' to be a turbulent one, and those who are committed to rcform - ω tllC creation of prosperous, democratic socialist societics can anl)' hope (with a certain degree of confidencc indecd) that Wll,ιt is 110'" taking place will turn ουΙ ιο be, ίπ Schumpcter's phrasc, 'a galc ()f creatiνe destruction '. It is ιοο early as yet ιο pronouncc any kind of dcfinitiνc νCΓdίct οπ the merits of a more market-orientated socialist economy. Thc preceding discussion shows that thcre arc still nlal1Y difficultics 10

98

The Socialist Economy

be resol"ed, and thcre are
Plan and market 99 projccts ΙΌΓ investment and growth, and also Ιο countcr such ίΙΙ effects οΓ market forces as growing ine4uality or the spread οΓ an unbridled acquisitiveness. The major problem, then, is Ιο devise a new and more sophisticatcd planning machinery, a task which should be much easicr ίπ the intelIectual climate of debate and criticism which is now emerging. The fundamental issues that necd ιο be considered form the subject of the next two chapters.

Notes Ι.

See the discussion ίη Chapter 2 above, and also Szcll ( 1988, sccIion 2), Ι have discussed the theory of 'organized capitalism' and Ihe related theory of 'state monopoly capitalism' ίη Bottomore (1985, ch, 5), 3. Α general economic history of Eastern Europc is ίη coursc σΓ publication by the CΙarendon Press, and νοl. 111, edited by Μ. C, Kaser {1986}, provides a good account of institutional changes ίη thesc planned economies υρ Ιο 1975. There is also much valuable information ίη the monographs published by thc Research Project 'Criscs ίη Soviet-type systems', and Ι shaIl refer Ιο individual monographs at relevant points. Ιη addition, there is, of course, a large and growing literature οπ individual countries υροη which Ι shaIl draw ίη Ihe appropriate contexts. 4. Ιπ the following discussion Ι shall use the term 'socialism wiIh markcts' suggested by Tomlίnson (see above, ρ.78) which seems to me a more accurate description of a socialist view of thc role of markets tllan tllC more commonly used 'market socialisnl '. 5. According to the 'approximate and incomplete data' assembled b)' Giιbor and Galasi (1981, ρρ. 48-9), this second econoln)' \\'as alrcad)' very large by Ihe end of the 1970s, absorbing thc labour of about σηι: millίon people ουΙ of an economically activc populaIion of 5.2 πιίlΙίοη, 6. According Ιο Ellman (1989, ρ, 67): Ίη the mid 19805 Ihc GDR \\'as " stable welfare state with the highcst Iίving standards ίιι thc ('Μ FA, IIs macro-cconomic performance was markcd by sIcady growIh and stablc prices, at any rate as measured by official statislicS, Thcsc st;ItisliCS overstated its actual performance. Nevcrthclcss, comparcd to Ihc OΙllCI' CMEA countrics, its achievements wcrc real :tnd in1prcssi,'c.' SrccίΙϊι: historical and cultural factors havc affected ιlιι: dcvclornlcl1I οΓ 111C GDR, but the expericncc stiII shows that rational ccntral pl:Inning can be very cffective ίη an advanced industrial SOCiCI)" 7. Sec cspecially C110ssudovsky (1986), 2.

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Τhe

Soc;al;st Economy

8. Chossudovsky (1986, ρρ. 127-8). 9. See Ellman (1989, ρρ. 76·7). 10. The n:laIively low raIe of IechnoIogical innovation ίη Ihe Soviet economy has been <ιη important factor ίη Ihe economic stagnation of the past decade. See Ihe discussion ίη Chapter 5, and Ihe sιudies by BerIiner ( 1988) cited Ihere. 11. See Granick (1975, ρ. 215) and Ihe discussion by Ellman (1989, ρ. 67). 11. See 3150 Ihe discussion ίη Ellman (1989, ch. 10).

7

Problems of socialism today

The idea of 'burying socialism' is a fantasy of some conservative politicians, mainIy ίη Britain and the United States. Ιη the wider world there are many socialist ΟΓ socialistic l societies, οΓ diverse kinds, which for the most part function adequately and ίη some cases very well.2 Like all forms οΓ society, however, they have evolved historicaIIy and continue ιο evolve, encountering fresh problems at every stage. Ιη the preceding chapters Ι have discussed the socialist project from its formulation ίη the ideas particularly οΓ the Utopian thinkers and the Marxist socialists, through the debates about central planning ίη the Ι 930s and the expericnce οΓ pIanning ίη the Soviet υηίοη, ιο the renewed discussions and experiments of the post-war period, invoIving above all the rcstructuring οΓ socialist economies ιο cncompass both pIanning and markets. Against this background Ι propose no,,"' ιο consider some οΓ the fundamental problems which need 10 bc resolved, ίΓ tllC socialist renaissance of the past decade is actually 10 lead toward~ the crcation of a new civilizalion. Some preliminary comments are ίη ordcr. First, ίι is ncce~~af)' tσ distinguish between the kinds of society which Ι 11ave called 'socialist' and 'socialistic', the former group comprising thc Stnict υηίοη and the countries of Eastern Europe, China and somc Tllird World countries, the latter including thosc coul1trics. l11ail1l)· ίl1 Western Europe but also ίη the Third World, which havc 11ad for longer ΟΓ shorter periods socialist ΟΓ social denlocratic govcrnnlcnts 101

102

Τhe

Socialist fωnοmΥ

COllllllitted ιο <ιπ extension οΙ' ptlblic ownership, a high level of publit' ι:χρeπdίιtιre .•Illd some degret: of central planning. The ΡΓι1bΙeπιs confronting these two grotlps of cotlntries are different ίπ n"ltIre and will be treated separately. It will also be necessary, as we prL1Ceed. to ιιι:ιϊnι: more closely the basic characteristics of the two gΓιJUps ••15 \\ell as any major variations within them.

The socialist countries The)' are socialist, first, ίπ the ft1ndamental sense which has been ιΙιι: distinctive fealtlre of the whole socialist movement since its beginnings: namely, that the major means of prodtlction (other th'In htlman labotlr) are socially owned. Btlt they are also socialist, ίπ a second and later sense, ίη being 'planned' societies. 3 Third, they began \vith the aspiration to create a broad economic and social eqtlality among their citizens and ιο lίberate the individual human being, ΟΓ as Marx and some later Marxists expressed ίι, Ιο 'end alienation'; but ίπ these respects they failed signally (though Yugoslavia was <ιπ exception) during the Stalinist period and less blatantly ίη the foIIowing decades until the recent reforms were initiated. The imporιance of social ownership is that ίι embodies one of the central values οΓ socialism; the attainment of a practical form of collective self-determination ίπ which a community of free and equal citizens decides consciously and deliberately upon the general frame'λ'οrk οΓ its economic and social life, and is ηο longer dominated by a particular class - the owners of capital. Βυι the acltlal realization of this value - which has been expressed ίη diverse forms, from Marx's 'associated producers' Ιο 'self-management' and 'participatory democracy' - encounters, as the historical experience οΓ socialism ίπ the twentieth century should teach us, immense and fundamental difficulties. Ιη the first place, individual citizens ΟΓ grotlps οΓ citizens may want very different things which are, ιο say the least, difficult ιο reconcile. Second, ίι is impossible that a community οΓ several million people, such as even the smaller modern nations are, should decide and act collectively ίπ a direct and immediate way; hence some kind οΓ representative system must necessarily be created (though ίι may take many forms, with

Problems of socialism today

103

varying degrees of participation). Α representativc systcm ηο! οηίΥ gives expression ιο existing particular interests, but also produces new interests and divisions out of which there may emcrge eithcr a compromise negotiated between different groups ΟΓ αη authoritarian solution imposed by a particular group. These are the problems, long familiar ίη political philosophy, of the 'general will', οη which Hobhouse (19 Ι 8, ρ. 126), with a clear awareness of sociological realities, commented that 'the real objecιίοη to the term is that ίη so far as ίι is will ίι is ηο! general, and ίη so far as ίι is general ίι is ηο! Will"4 The same problems have been restated ίη a different way by Hayek ίη the course οΓ his 10ngsustained critique of socialism, and most fully ίη his recent '>"ork (Hayek 1982), where he expounds his ideal οΓ a 'spontaneous ordcr' as the only form of society that can provide the condition οΓ freedom, 'ίη which each can use his knowledge for his purposes' (νοl. 11, ρ. 56), ίη opposition ιο the vision of a rationally planned society which has as its goal the achievement of social justice. The latter, he argues, is doomed Ιο failure since 'society, ίη the strict sense ίη which ίι must be distinguished from the apparatus οΓ government, is incapable of acting for a specifίc purpose' (νοl. 11, ρ. 64), precisely because ίι does ηοΙ have a 'general will' ΟΓ a general consciousness ίη which the dispersed knowledge and purposes οΓ individuals can be brought together. Ιι is οη these grounds that Hayek, ίη his more strictly economic writings, alwa)'s refers 10 thc decisions of central planning agencies as 'arbitrary"5 Ι shall argue later that a socialist society ίη which there is social ownership of the major means of production does ηο! need ιο rcst υροη the ηοιίοη of a general will ΟΓ some kind οΓ universal consensus; but before embarking οη that subject ίι is necessar)' ιο consider the role of central planning, which l1as bccome the sccond principal feature of socialist economies, and cqually a principal target of anti-socialist criticism. The idea οΓ planning ,>,'as inlplicit ίη almost all socialist thought from the end of the ninetecnth century,6 and necessarily so, because ίι was (or appearcd to hc) thc only alternative ιο capitalist markets as a mechanisnl for coordinating the economic system as a whole. Buι ίι was only
104

Τhe Socialist fconomy

onwards socialisl!1 becaΠ1e virtuaIly identilϊed with central planning, anιl planning itsell' aCl.juired a new significance as the Π1aίn cΙeΠ1cnι ίη thc project οΙ' creating a 'rational society' ίη which the instabilit}, waste, frustration and inel.juality of a capita1ist ecοnΟΠ1Υ \\oLlld bc ο\'ercoΠ1C, Hayek (1982) is right, therefore, ίη tracing one important strand ίη twentieth-century socia1ist thought ιο the spre,ld 01' ,ι rationa1ist view of the wor1d, aided by the rapid growth 01" thc naιura1 scicnces; Ιο which he opposes his own conception of the c\'olution 01' human society as a 1arge1y unconscious process. 7 Wc <ΙΓΙ: ηοΙ concerned here with the wider questions of socia1 theor)" raised b}' Hayek's critique of a rationa1 and p1anned society, bLlt οηl}' with what we can 1earn [ΓΟΠ1 this and sίΠ1ί1ar critiques, as \\CII as I'ΓΟΠ1 historica1 experience and the more recent socia1ist debates, aboLIt the prob1ems and 1imitations of p1anning. 8 Some of thcsc issues have been examined ίη the previous chapter, among them the growth of bureaucracy, which may resu1t, οη one side, ίη the diffusion of a cautious and conservative out100k and the stifling of enterprise and innovation, and οη the other, ίη the emergence of a new privi1eged stratum which dominates society; and also the difficu1ties experienced by the kind of centra1 planning which attempts Ιο contro1 direct1y, and ίη detai1, the activities of individua1 enterprises ίη an advanced, comp1ex and rapidly changing economy. But there is sIiII a more general question ιο be examined which concerns both socia1 ownership and planning, and takes us back ιο the ideas of the nineteenth-century socia1ists, ίη a period when the actua1 instiιutions and mechanisms that wou1d need ιο be created ίη a socia1ist economy had scarce1y begun ιο be considered. lη discussing Utopian thought ίη the nove1s of BeIIamy and Morris (see Chapter 1 above), Ι observed that their vision of the functioning of a new society presupposed a radica1 transformation of human naΙUre, as a resu1t of which the sentiments favourab1e Ιο peacefu1 cooperation, socia1 responsibi1ity and non-acquisitiveness wou1d comc ιο predominate ίη shaping human behaviour; and for aII the disc1aimers that were made, Utopian ideas a1so profound1y affected the views of Marx and 1ater Marxists, as weII as other socia1ists. Νοι the least of the consequences was that the estab1ishment of a socia1ist economy was regarded, at 1east tacit1y, as a re1ative1y simp1e and uncomp1icated process, and with rare exceptions was ηο! serious1y discussed unti1 the 1920s.

Problems of socialism today

105

Thc idca of a transformed human naturc slill plays <ιη important part ίη socialist thought today, although ίι is vcry rarcly subjccled ιο any profound analysis. 9 From onc aspect ίι ma)' be conceivcd as the statcmcnt of 'an idcal end which gives a sensc ΟΙ direction lo human self-creation ίη history' (Markovic 1983, ρ. 217), and ίn lhi~ form ίι remains an essential and inexpugnablc clement ίη thc movemcnt towards socialίsm. 1o But ίι is shccr foll)' f ΟΓ sociali~ts ιο embark upon th' construction οΓ a socialist cconomy and societ)' as if that idcal cnd had already becn attained. Η ulnalI nature as ίι actually exists is complex, its bounds and possibilities still obscure and very divcrscly interpretcd, and at the same timc 50 obviousl)' and yet so frcquently disregarded - cxtremcly variable bct .... een individuals, although ίι is also historically mutablc and there is ηο absurdity ίη supposing that ίη a socialist socict)' wllat may bc called 'average' human nature would cventually manifcst itsclf ίη more cooperative, less aggressive forms of behaviour. Α rcalistic form οΓ socialism, ΟΓ what Nove (1983) has termed 'feasiblc socialism', cannot begin, however, from the unrcal presumption that ίη a socialist society - as ίι might exist ίη <ιηΥ forcsceablc future - 311 individuals, ΟΓ even a substantial majority οΓ them, v.'ill be dcvotcd Ιο the public good, that therc will be ηο individuals v.'ho singlemindedly and ruthlessly seek power, wealth and privilcge, ΟΓ tllat ηο clashes οΓ individual ΟΓ group interest will occur 3fid rcquirc mediation. These rather general and abstract considcrations 1,3VC 3 "cry direct and practical bearing οη tlle problems οΓ the existing socialist societies, for ίι has been a constant tlleme ίη ιΙιι: criticisms (both internal and external) οΓ their econonlics ίη the past few decades that they arc relatively inefficient ίη !heir use οΓ resourccs. insufficiently enterprising and innovative, and have ποΙ filoved rapidly enough from 'extensive' Ιο 'ίntensίνe' de"clopnlcnt. Thc current reforms are intended ιο overcomc these deficiencics, :Ibove all by a decentralization οΓ economic dccision-nlaking, so that managers and workers ίη individual enterprises havc grcatcr independence and responsibility, and also morc incentives (wlιίι-ll !1ccd ηοι be exclusively monetary) ιο produce cfficicntly. Sιιch a dcι-cn­ tralized economy implies the existence οΓ a markeL, and :ιn ClenlC!1t οΓ competition among producers, whicll itsclf v.Iould be a s!inlulus to greater efficiency. Such wide-ranging and fundamcntal changes 31'C bound Ιο

106

Τhe

Socialist Economy

producc: difliculties of their own: ιlηcertaίηΙΥ, a degree of confusion. and resistance [Γοη1 son1e individuals and groups whosc partieular interests <ΙΓ!: tl1reatened, as well as specific problcms of uηenφlο)'lηcηι and thc dcvelopment of new kinds of inequality. The difliculties can οηlΥ be countered by the rctention of an etTcctin~ planning systen1, which will, however, assume a different chanIctcr, 50 that 'greater use is ιο be made of indirect financial "Ie\'crs" such as prices, taxes, and credit, ίη place of detailed output assignn1ents and ίηρυι authorizations enforced by central aIlocaιίοη οι" supplies' (Bornstein 1973, ρ. 8).11 There is a particu!ar need for central planning ίη respect of invesrment, and as Marschak (1973, ρ. 58) comments, 'whatever the defects of a centra!ized scheme for determining the volume and composirion of the econom)"s investment, at least only one agency has control oνer the schcme and can modify ίι ίΓ ίι appears ιο perform bad!y'. The optimum mix οΓ planning and markets is ηοΙ something that can be determined by reference Ιο a developed theoretica! mode! ΟΓ blueprint, because that does ηοΙ exist and is perhaps unattainab!e ίη conditions οΓ imperfect knowledge οΓ aII rhe releνant data, and ίι can thereforc only be approached through a pragmatic strategy and continuous learning process. This is the course that seems ιο haνe been generally adopted ίη the socia!ist countries, producing diνerse types οΓ reform measures; and some time must e!apse before its results can be properly assessed. There is ηο reason ιο suppose, however, that rhe problems encountered by the new-sty!e socialist economies will be any greater than those (which are weII known) of capitalist economies. Ιη my estimation they are like!y ιο be !ess scrious and more easily resolved, rhough rhere wiII be considerab!e differences between countrics ίη thcir degree οΓ success, just as there are amω:ιg capitalist countries. The issue of decentralization, expanded market relations and a new type οΓ planning (which wiII also, of course, embrace local and regional planning) is quirc separate from that of public ΟΓ privatc ownership of economic rcsources, a!rhough rhe two rhings have frequently been associated, or strictly connected, ίη rhe argumcnts οΓ anti-socialist critics (for example, Mises). Publicly ΟΓ sociaIIy owned enterpriscs I2 can operate perfectly weII ίη a system οΓ market relations wirh central planning, and rhc quesrions which may bc raised about rhem are basically of two kinds. First, what can ΟΓ should be rhe extent οΓ private producrion of goods and services ίη

Problems of socialism today

107

a socialist economy? Ι have already made clear my view, which is that of many socialists, including Marxists such ίl~ Kautsky, thίll private production will have ίΙΩ important place ίπ ίIΩ~' reίllistiCίlllY conceivable socialist economy (as ίι has done ίπ practice ίπ thc existing socialist societies). Its advantages seem evident as ίlΠ adjunct ιο large-scale industrial and agricultural production, thc administration of public utilities, and the provision οΓ ίηΓΓίl­ structural serνices such as health and educίltion. Ιη many ~phere~ (smaIl-scale trade, restaurants, market gardening, bookshops, some publishing, small-scale building and repair work, and so οπ) ΡΓίνίΙιe producers can probably respond more quickly Ιο consumer needs and proνide more conνenient services, and they may also have ίΙΠ important role as innoνators. There is not, Ι think, any wa)' οΓ deciding ίη adνance for any lengthy period οΓ time exactly ....,hat the extent of priνate production should be, and ίη this case, too. a pragmatic approach seems adνisable, though there should be restrictions (as there haνe been ίη the socialist countries) οη the number of en1ployees that a priνate produccr can have. Furthermore, ίι should ηοΙ be oνerlooked that much small-scalc producιίοη and proνision of serνices can be undertakcn by coopcrativcs (as ίι has been) with the same adνantage. The second major question that has frequcntly been raiscd with reference Ιο publicly owned enterprises concerns their cffϊcienc)' and ability ιο innoνate, which is related ίη most of the discussions ιο the question of incentiνes for both management and workers. This is a matter which is stiII diffϊcult Ιο decidc ίη an cxact ΟΓ conνincing way, and Ι shaIl confine myself ιο some general considerations and a νery tentatiνe judgement. First, ίι should bc clear that we are dealing, ίη the case of the socialist countries. onl)' with a relative ineffϊciency, and eνen then ηοΙ ίη all cases: the GDR, for example, has a relatiνely efficient socialized agriculturc (whateνer may be the case ίη the Soνiet υηίοη) and industry. and its ΟΝΡ per capita is probably higher than that of Britain, which is admittedly one of the least successful capitalist countrics. Morc generally, ίι is widely recognized that the socialist countrics as a whole (with few exceptions) were νery successful ίη carlier pcriods ίη achieνing rapid industrialization, and major technological ίηηο­ νation ίη some spheres. Only ίη thc past two decades havc thcir economies (or most of them) experienced a rclatiνc stagnation, at a time when most of the capitalist economies werc maintaining, υηιίl

108

Τhe Socialist Economy

recentl~',

their previous rates of growth. principle. there seems ιο be πο reason that ριιbΙίcΙΥ owned Ι'l1ιeφrίses
unemΡ1οΥmenιl J

Problems of 50cialism today

109

The second major issuc is the role of competition ίη ίt socialist society. Οη one side, increased competition between indcpendently managed enterprises ίπ a market situation is sccn as ίt mcίtns οΙ increasing efficiency, encouraging innovation, 3nd cnsuring, ίπ particular, a better, more varied supply of consumer goods. Οπ thc other side, ίι is evident that the competitive spirit, certίtinl)' ίπ its more extreme forms, is incompatible with the distinctive emphasis that is placeL, ίη all forms of socialist thought, οπ the value of cooperation and the good of the community. Ιι is ποΙ a matler, however, of choosing one οριίοη and excluding the other entircl)'. but of exploring the terms οη which they can coexist ίπ a socialist society. Ιη the fίrst place, some degree οΓ rivalry and competition seems inescapable ίη human societies, arising from a universal desire for personal or group achievement, which may manifest itsclf ίη many different spheres. But individual achievement does ηοι exclude cooperation, and is indeed often facilitated by ίι; and οπ the other hand, where ίι does take the form οΓ rivalry, ίι has always ιο be circumscribed and regulated ίη some way, ίη order ιο maintain the unity οΓ a larger whole, or more deliberately ιο attain ""hat is conceived as a 'good society'. Ιη particular, economic competition and the rivalry between nation states need ιο be restrained, because of the undesirable consequences which may come fron1 their being allowed a free rein, though the possibility οΓ effective restr3int depends to a great extent upon the strength of the interests οΙ' class ΟΓ national ambition - that are involved. Αι all events, the celebration of the unalloyed virtues οΓ cOIllpeιίιίοη indulged ίη by latter-day advocates οΓ laissez-JaiI'e capitalisn1. which Ι have criticized elsewhere (Bottomore 1986- 7), is totall~' alien ιο socialist thought, and the practice οΓ competition ίπ thi, manner is incompatible with a socialist fOΓIll οΓ society. Thc("(~ arc two issues here which deserve particular attention. Οηι; conccrns the kind of society which is created wl1en individual achicvcn1cn! comes ιο be judged primarily ίη terms οΓ thc acquisition οΓ ",·calth. and money dominates social life. Ιη such a societ)' man~ σΙIΗ?Γ human values are sacrificed to what is sccn as Il1C ιιισ(ι1Γ οΓ economic progress, and the result for some is dcrrivaIion οΓ Il1C basic requirements of a civilized lίfe, for man)' n10rc tl1C SCI1SC ()f lίνίng ίη a dull, oppressive, tawdry and uncrcativc world. AIllong the values most conspictιously sacrificcd is that οΓ:ιη agrcc;Iblc and safe environment, and this constitιιtcs thc sccond οΓ tl1C issucs ιο bc

110

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So6alist

ΕCOΠΟΠΙΥ

Ιω:d ίιι sOc'i<ιlist socictics. und by soci.tlist purtics cvcrywhcI·c. Fc\y rcorl" ιωνν doubt thut thc n.ιωπιl en\'ironmcnt 01' huInan socictics ί, s"riousl)' cndangcr"d. but ίι cannot bc said that thc cxisting soci,tlist countrics ha\'c ,ο far bcen notably cnlightencd ίη thcir cn\'ironmental ideas und practices. Like other industrial societies, und I"or sρccίΙϊc rcasons which Ι discussed ίη <ιη earlier chapter, they hu\e I'ocused their attention almost exc1usivc1y upon o\'era11 econσιηίc grlH\th. ίn ίι c1ίηι.ιΙι: of ορίηίοη wherc comparisons betwcen collIltries tcnd to bc madc 1argc1y ίη terms of rates of growth and stundίlrds 01" mateI'ia1 1ίΓe. ΟΙ' course, the lattcr are important. One 01" the ΓUndamenta1 aims 01' socia1ism has been Ιο provide a deccnt and comfortab1e 1ife [or all citizens, and steadi1y Ιο improve the materiul conditions of 1ife through economic growth (which some socia1ist countrics have, ίη recent times, conspicuous1y fai1ed Ιο do). Βυι this is ηοΙ, and cou1d ηοΙ be, the οη1Υ aim; and what can reasonab1y be expected at a stage when basic materia1 needs - by the standards of the present time - can be adequate1y met, is that the socia1ist countries shou1d demonstrate a superior abi1ity, ηοΙ ιο increase without 1imit the flow of materia1 goods, but ιο create a society which is satisfying ίη a11 its aspects: without extremes of wea1th and poverty, cu1turally creative, enjoying extensive 1eisure, caring for its natura1 environment, and encouraging ίη its citizens an active participation ίη pub1ic 1ife and commitment ιο the pub1ic good. The prob1ems invo1ved ίη restructuring the socia1ist economies are mu1tiform and comp1ex, and the process of solving them is 1ike1y ιο be 10ng and diffίcult. Ιη this process, as Ι have argued, what is important is ηοΙ the question of ownership (a1though ίη some spheres ίι may be desirab1e ιο expand sma11-sca1e private production) ΟΓ the cxcessive promotion of competition, but the decentra1ization of economic decision-making by giving enterprises grcater independence ίη a contro11ed system of market re1ations (which οΓ course imp1ies an e1ement of competition) and deve10ping new, indirect methods of p1anning the economy as a who1e. Βυι the economic changes, as Ι have made c1ear, are bound up with po1itica1 reforms; and throughout the socia1ist wor1d these two aspects are c10se1y associated ίη the ideas οΓ the reformers. The new cconomic po1icies necessari1y provoke widespread po1itica1 debate, and thcy a1so have po1itica1 consequences, for examp1e ίη diminishing thc power οΓ bureaucratic organizations (inc1uding sections of thc party

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burcaucracy), ΟΓ what Konrad and Sz.clenyi (1979) rcfcr Ιο α~ thc ncw intellectual class ο! 'rational redistributurs'. Morc gcncrall), the success ο! the economic rcforms depcnds to a vcry great cxtcnt υροη awakening public entl1Usiasm and commitnJcl1t. and tl1is caIl οηΙΥ happen ίΓ there is ΟΡΡΟΓωηίΙΥ to express frecly aIld cffecti\Tl y ideas and criticisms. Ιη an important sense the wholc rcform movemcnt caIl propcrly be described as a process ο! democratization, coming vcry latc. οl1Ι: may think, ίη the development ο! socialist socict)'. Ιη Ihc political sphere this requires free elections, a multi-part)· s)'stem to thc cxtcnt that major differences ο! interest ΟΓ aim become maniIest, απ electoral system (including some form ο! ΡΓΟΡΟΓιίοηαl reprcsentation) which allows all significant interests and aspirations to bc represented ίη government, freedom ο! political activity for social movements, groups and individuals within the limits set by ΙΙΙΙ: rulc oflaw, and all those ancillary, essential freedoms embodied ίη a frce press, a bill of rights, and a pervasive democratic spirit ίη public lίfc which, among other things, protects the rights ο! minorities. Ιπ such conditions a socialist democracy would show itself superior ίn many respects ιο even the most democratic capitalist countries, where the pervasive influence α! wealth (παι least ίη the nlass media), the tendency towards a trivialization α! politics (political meetings as circuses), and ίη some cases electoral systems which produce very unrepresentative governments, all tend to limit thc extent of democratic participation. 14 This is ηοΙ all, however. From the beginning, socialists conceived democracy as a form αΓ social life which should be developed as widely as possible beyond thc narrowly defined political sphere; hence the use of the term 'social democracy' by socialist parties. The economic reforms ίη Ihc socialist countries have therefore also, ίη tlliS sensc, a directl)' politicaI significance. Decentralization itself will bring sonlewhaI greater control over their immediate conditions ο! lίfc to thc personnel ο! individual enterprises, because they will ηο longcr bc directly subordinate ιο rcgionaI ΟΓ ccntral burcaucratic organi7:ttions; but the process may ncvertheless havc very diffcrcnt ουΙ­ comes depending υροη how the intcrnal structurc ο! thc cntcrρriscs evolves. lt is possible, for example, that thc systenl ο! InanagcnlcnI will be reconstructcd ίη such a way that a ne\\' elitc α! technαCΓ:ΗS and managers will emerge ίη the cconOIny as :1 \\'llOIC and hCgill to acquire political powcr (or evcn that a new class ο! capitalists \\'ίll

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appc:;.ιr).

AlIanaIivel)'. the process 01" democratization Π1ίΙΥ lead ίη a SlKi"liSI dircction ιow,Irds some kind οΓ sell"-managell1cnt \\'hich. Ι'or all its currcnt dilTiclllties ίη Yugoslavia, has shown itself, o\'cr " l",ιίΓΙ)' long pcriod, ιο bc " viablc, and ίη earlier periods very successful, ι)'ρι: οΓ economic organization. The restrιIcturing of the socialist cconon1ics is, therefore, ηοΙ οηΙΥ profoundly affected by poliIical reforms, but is itself a politicaI as well as ιιη economic phenomcnon. οπ which the socialist future of these countries depends. Π1ΟΓΙ:

The 'socialistic' countries The countries, Π1ίΙίπΙΥ ίπ Western Europe, which Ι haνe called 'socialistic', face problems which are νery different from those ίη the socialist countries, although some issues are of common concern, ίη particular the forms which public ownership (or control) οΓ productive resources, and economic p1anning, should take ίη the future. Ιη these countries the movement towards socia1ism has been graduaI, ofιen checked (or ίπ the case of ΒΓίΙιιίη during the past ten years 'liolently reversed) by the advent of conservatiνe governments, although Sweden and Austria constitute an exception ίη this respect. 15 These two countries can indeed be regarded as particularly socialistic, ίη several senses, and Ι shall begin with a brief account οΓ the main features of their economies and socia1 policies. Ιπ Sweden, the socia1ist party (SAP) has been ίη power a1most continuousIy since 1932, and ίπ that time has brought about substantial changes ίη Swedish society, especially since 1945. The 1950s and 1960s were decades of rapid economic growth, as they were generally ίπ Western Europe, and ίη Sweden they were a1so marked by a sustained movement towards socia1ism, ίη the sensc of greater economic equality, more industrial democracy, and a substantial expansion οΓ the public sector. The 1970s, following the οίl crisis, brought harsher economic conditions throughout the Western world, with weaker economic growth and rising unemployment, but Sweden has weathered this critical period better than most countrics (and notably better than Britain), while maintaining its socialistic policies. As Ryden and Bergstrom (1982, ρ. Ι) note. the democratization οΓ working life, increasing thc power οΓ the unions and diminishing that οΓ corporate owners, the expansion οΓ

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the public sector, more public regulation and participation ίη industry, have aII continued; and they conclude that this 'has meant increased importance for everything we refer to when talking οΓ th<: quality of lίfe - a better environment, more leisure, incrcas<:d possibilities for making the decisions that affect onc's life. But ίι has also meant continued centralization, bureaucratization, intensiΓIcd efficiency and a sense of alienation ίη the individual facing large private and pUJlic bureaucracies" They go οη ιο discuss the major problem of the disproportion between the demands οη societ)· and its productive capacity (especiaIly if there were a serious encrg) crisis), and its relation ιο the traditional system of wage formation through free negotiation. 16 Nevertheless, while recognizing the seriousness of the economic problems, the)' also ροίηι out that "the international economic crisis of the 1970s touched the aνeragc Swedish consumer relatively mildly [and] open unemployment never rose above 2.5 per cent', and conclude that, overaII, 'Swedisl1 society and the Swedish economy - the welfare state - havc proved enormously strong against the instability and crises of the 1970s' (ibid., ρ. 8). Ιι is noteworthy also that, during this period οΓ economic difficulties, the government pressed ahead with a projcct that would graduaIIy extend the coIlective ownership of Ρrοducιίνc resources through the employee investment funds (which will be discussed ίη the next chapter), and thus maintained, ιο somc cxtcnt, the impetus of the movement towards socialism. Ιη Austria the implementation of sociaIist policies οη a ηαιίοηαΙ scale is a post-war phenomenon, although the socialist ραΓΙ)' (SpO) cou\d draw υροη the earlier experiencc of thc socialist administration of Vienna ίη the years Ι 918-34, and ίι has occurrcd ίη a different context. For historical reasons, therc has bccn ;1 considerable expansion of public ownersl1ip of indusIr)' αηό financial institutions, beginning with thc nation3IiZ3tiOB οΓ Λ llStria's largest bank, the Credit-Anstalt, foIIowing iIs collapsc ίn 193 Ι, and continuing after the war witl1 thc naIion31iZ
114 (1985,

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Socialist Economy 75) 11OIe:

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The nation
Problems of socialism today

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include, besides Francc, Britain, Norway, the Federal Rcpublic οΓ Germany, Spain and Greece) the periods of socialist government have generally been ιοο short and intermittent, and ίη some case~ their policies have been too lίmίted ΟΓ ill-prepared, ιο makc possiblc any substantia1 advance towards socialism. Britain provides a striking example. The Labour government 01" 1945 carried ουι several nati )na1izations, established a national health service, and expanded the educational system, and ιο that cxtent ίι creatcd conditions favourable ιο a further advance towards socialism. But ίι failed lamentab1y ίη two major respects: fϊrst, ίι did ηο! bring thc leading fϊnancia1 institutions ίηΙο public ownership, and second, un1ike France, ίι did ηοΙ create an effective system of central p1anning. Hence, the socialist project came ιο a standstill, ηοι even at a 'half-way house' (more like a quarter-way house), and subsequent Labour governments were largely confϊned ιο managing the existing system, a weak form of mixed economy ίη which private capita1 remained absoIuteIy dominant (aided b)' Britain's special subordinate relationship with the United States), and Ιο coping as far as possibIe with its recurrent economic crises. But there is another great problem confronting the socialistic countries, which arises from the international character of presentday capita1ism. Sweden and Austria have been able to pursue their distinctive policies ίη specifϊc conditions which Ι have briefl~' described, and a1so because, as small economies, they do ηοΙ present a major threat ιο international capital. The circumstances are very different when a major European economy begins Ιο move ίη a socia1ist direction, as was dramatically iIlustrated by thc diffϊcuJtίes encountered by the French government ίη 198 Ι, when ίι tried ιο overcome the recession by reflating the economy unilateraIly. This poIicy, ίη the absence of supporting action by other n1ajor European economies, produced a balance of payments crisis for France whiIe bringing some benefϊts ίη incrcased trade and producιίοη ιο other countries. As the authors of a study outlining a sociaIist poIicy for economic development ίη Westcrn Europe (Holland 1983) argue, what is necded is ajoint reflation οΓ tl1C nlain European economies, with complementary policies οΓ public spcnding, planning and cconomic democracy, and public and cooperativc enterprise; and since 'the strongest and cIearest prcssurc group against reflation comprises the fϊnancial insIiιutions, boIh offϊcial and private ... methods must be found by which govcrnmcnIs can

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resist the pressure of financial markets' (ρρ. 63-5). Establishing effective control at an international level over the financial institutions, through public ownership and other means,19 c\'idently presents enormous dίftϊcuΙtίes, but an advance ίη this direction could well come ίη Western Europe as the EC plan for European monetary union is implemented over the next few years; and more particularly because the political influence of socialist and green parties has been steadily gro".. ing. The political pressure ΙΌΓ ;1 reorientation 01' European economic and social policies was clearl)' shown by the results of the European elections ίη June 1989, and ίι is ref1ected ίη rhe proposals for a 'social charter' as well as ίη rhe movement towards monetary union. This resurgence of what may no\\' perhaps be called 'green socialism' ίη Western Europe, ιogerher with the reforms ίη Eastern Europe, opens the prospect, ίη spire of the cvident difficulties, of a sustained movement towards a European socialism which would transform the world economy. But rhere is still a long way Ιο go, ίη the first place to catch up ""ith what already exists ίη Sweden and Austria. Ιη those countries themselves the socialist parties clearly regard their achievements ιο date as stages ίη a continuous, gradual process of reform which will lead eventually ιο a new society. For some socialists, ηο doubt, the process is all ιοο gradual, and they would prefer more dramatic changes, but Ι think they are profoundly mistaken ίη their judgement οΓ the pace at which human attitudes and behaviour are likely ιο change ιowards a more cooperative and less competitive mode of life, and also οΓ the real social situation ίη the advanced capitalist countries ίη the late twentieth century. ΟηΙΥ with the cumulative experience οΓ successful cooperative production and industrial democracy will attitudes slowly change ίη what Οιιο Bauer called a 'slow revolution Ό As ιο the social situation, ίι has ιο be recognized that for a majority οΓ people ίη the prosperous capitalist countries ίι is quite οω οΓ the question that they should support ΟΓ embark upon any sudden and radical transformation of society, especially when they have before their eyes the evidence of its costs ίη the historical cxperience of authoritarian socialism. These issues form the subject matter of the next chaptcr, the main themes οΓ which can be introduced by bringing together the discussion so far of the problcms of socialism ίη socialist and socialistic countries. Ιη thc formcr, thc major reforms that are required - and ίη many, if ηοΙ quite all of them, alrcady being

Problems ο( socialism roday 117 implemented - include the extension of democracy, which does ποΙ simply mean the introduction of a pluralistic political system, but the creation of something that can best be caIled a pervasive 'democratic culture'; the decentralization of the economy and changes ίπ the structure of enterprises, ποι only for the sake οΙ economic efficiency but Ιο promote industrial democracy; and the constructic η of a new, more sophisticated and indirect s)'stem for planning the economy as a whole. Ιπ the latter countries, exemplified by Sweden and Austria, the process of continuous reform points ιο a gradual extension of public ownership, ίπ diverse forms; a growth of public services; and the maintenance and improvement of indirect economic pIanning. Ιι is ποΙ fanciful ιο suggest, therefore, that the socialist and the socialistic countries are now slowly converging υροπ a type of society which would embody the major aspirations οΙ the historical socialist movement ίη the profoundly changed circumstances of the late twentieth century. Of course, ίι is customary ίη the predominantly conservative Western media ιο interpret the changes now going οπ ίπ Eastern Europe as some kind of 'return ιο capitalism'. but that is very wide of the mark, at least ίπ most of the countries concerned. For the most part public ownership and central planning are likely ιο remain, along with the emphasis ίπ their policies οπ full employment, social welfare and a substantial dcgrec of economic equality; Ιο which may now be added greater democratic participation ίπ all spheres of life. Ιπ all thesc respects they wil1 differ little from the socialistic countries of Western Europe, as the latter continue ιο pursue their own reforms. Wllat ncw issucs tlliS 'socialism of the future' will have ιο face has still ιο be considered after a closer study of the transitional period ίη which wc arc presently living.

Notes Ι.

Thc tcrm 'socialίstic' is intcndcd to rcfcI' Ιο ΙllO~c ~οcίcιίι'~, cφι'cί:ιll~ ίl1 Wcstcrn Europc, ίη which socialist ΟΓ social dcnlocI'atic p:lrtics havc introduccd, at various tinlcs sincc ιlιι: Sccond World W:Ir. sigIlifical1I clcmcnts of a socialist ccononlY. including a subst;IIllial θΙΙ10υιlΙ of public owncrship, sornc dcgrcc of ccntral planning. and :ι gCl1cral

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illι'rc~sc ίιι PlIbli.: Ι::I.pι:πιlίΙΙΙΓΙ:. Thc Ι:ΧΡΙ:I'ίι:lιcι:s of tllCSC cOllIltrics \νίΙΙ bt' ιlist'lISSl'll l;ιιι:r ίιι thc Ιι:ΧΙ. , 111 \Vcslcrn ΕΙΙΓΙΨΙ:. p~rtiCUI'HI)·. the sociillist moverηcnt is Stl"()ng ilIId ίllI1ιιι:πιί~l. Thlls sικί<ιlίsιs ~ΓΙ: b)' filr the Iilrgest singlc grOlIp ίπ tlle Furope'III P~rlialηcnt. and foIiowing thc EuropeilII electiolls ίπ JllllC Ι 9~9 thc) <ΙΓΙ: Iikcl)' to ΙΌrm <ι majorit)' ίll aIIi,Ince \vith other IcfHving gr"ups. \\'hi,h \\'ίΙΙ h,l\'e ίπψσΓωπι consequcllccs for the social policies ,,1'ιIΙΙ: Ι:Τ.

J. Dίι:kίnsσn (Ι 939. ρ. 9), whom Ι quoted ίη <ιη carIier chapter, observed 111~Ι ,ίηι'ι: thc 1920s ιΙιι: Ιι:rm 'pIilnned production' had tended to take the placc: of 'sociaI owllt:Γship' ίll the deIϊnitioll of sociaIism and argued thilt 'there is <ι cIose conllcksion between thcse two definitions" Sinlilarly". Pigou (1937, ρρ. 6-7) wrotc:

.. undcr Ihc innuencc of the Russian experinlent, the definition of generaI ,0ciJIism hJs bcen modiIϊed. Twenty years ago there was Iittle IaIk of central planning. SociaIism entaiIs, ίι was then heId, (Ι) the extrusion of privale profit-making ... and (2) the pubIic ΟΓ collective ownership of the means of production (other than human beings). Neither of these requirements singly make necessary any form of centraI pIanning; nΟΓ do the Ιννο ιogether .... None the Iess. at the present day the nοιίοn of centraI planning is commonIy introduced ίnΙο definitions of sociaIism.

4.

5.

6.

7.

There were, however, indications of the importance of central pIanning ίη some earlier Marxist discussions of the future socialist society, notably by Kauιsky (Ι 902, ρρ. 150- Ι), and more briefly by Hίlferding (1910, ρ. 27) ίη his reference ιο a 'consciously regulated' productive community. Hobhouse's sIιιdy, along with parts of his later work οη social justice (Η obhouse 1922), provides one of the most valuable and lucid discussions of the problems of democracy, still highly relevant to the issues facing democratic socialism today. For a critical examination of Hayek's general conception of capitalist society as a spontaneous order, ΟΓ a 'Great Society', see Bottomore (1985, ch. 4). Even ίη such a work of Utopian socialίsm as that of Bellamy, which envisages a large and powerful central administration. William Morris is <ιη exception, but his Utopian novel leaνes the economic organizaιίοπ of his ideal society completely vague. Hayek (1982, νοl. ι, ρ. 11) writes: Ιι ί, Ιο this philosophical conccption [rationaIism] that ννc οννc thc preferencc which prevaiIs Ιο thc prcscnt day fnr evcrything that ί, donc 'consciously' and 'dclibcratcly" ... Becausc of rhis the earIicr prcsumption ίπ favour nf traditionaI ΟΓ cstablished images becamc a presumption against thcm, and Όρίnίοπ' camc Ιο bc rIl0ught οΓ as 'mcrc' ορίπίοπ - somcthing

Problems of socialism today ηοι demonstrabIe ΟΓ decidabIe by rcason and as a vaIid ground for decision.

ιhcreΙΌrc ηοΙ

to

119

hc i1cct:pIed

Against this 'constructivist rationalism' 11C formulaIe~ hi~ own conservative philosophy (indistinguishable f"l"Um IhaI οΙ Edmund Burke) which emphasizes the importance ο!" tradition: 'Man)' οΙ tht: institutions ο!" society which are indispcnsable conditions for 111t: successf,,1 pursuit ο!" ουΓ conscious aims are ίπ facl the resulI of customs, habits ΟΓ practiccs which havc becn ncilher invenlcd ΠΟΓ <ΙΓΙ: observed with any such purpose ίη view.' And Ihe huntan bcing ί, successful 'because his thinking and acting arc gονerned b)' rulcs which have by a process of selection been cvolved ίη thc sOCiel)' ίπ which 11C lives, and which are thus the product of the experience ο!" gencraIions.' 8. Ιη the actual world, econornic planning has so far retained its cenlral place, ίη modifίed forms, ίη the socialist countries, and ίl has ac"uired θη important place ίη the more successful capilalisl economies as y.ell as ίη such supranational bodies as the EC. So the movemenI toy.ards a 'Γθιίοηθl society' has continued, and the idea ο!" such a society has been vigorously defended against such criticisms as those ο!" Hayek (y.hich indeed have a limited influence), notably by Jίίrgen Habermas (1971, 1981) who, ίη his recent work, examines critically Ihe concepl ο!" ΓθιίοηθliΙΥ and develops his own conception of the rationalization of the modern world .- ίη a broader sense than that of purely lechnoIogical ΓθιίοηθlίΖθιίοη. 9. Βυι Erich Fromm, ίη some of his later writings, underlook a more thorough analysis of human nature, and parIicularly of its aggressivc and destructive elements (Fromm 1973); and he concluded this lasι study by saying that he believed ίι had 'contributed valid argumcnts ίπ [θνουΓ of the thesis that aggression and destructiveness can oncc again assume a minimal role ίη the fabric of human molivations'. 10. This is the aspect which HeIIer also emphasizcs ίη hcr sιudy ο!" Marx\ theory of needs (see above, ρ. 12). 11. Yugoslavia began the process ο!" decentralization much carlier and has moved furthcr along this patll, and iIs central planning s)·slem. according ιο Bornstein (1973, ρ. 10) can 'best be comparcd \\'ilh French-style "indicative" planning" 12. Ι use the terms 'public ownership' and 'social owncrship' I110rc ΟΓ Icss interchangeably. The former is more widcly used ίη II1C Wcst; Ihc lattcr perhaps corresponds morc closely with thc idca οΓ socialisnl, eSΡCΙ'ίall)' ίη its 'self-management' form. 13. Ιη this connection the comparison madc by EIII11an (1989, ρ. 305) between the Gcrman Democratic Rcpublic and Il1C Fcdcral Rcpuhlic οΓ Germany is instructive:

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. ίι appears that labour productivity pcr ;nhah;ta,,, grew faster ίη the GDR than ίη the FRG ίη 1967- 76, but pcr l,Ι-Vflom;t·GI/.v αι'Ι;I'<' P""'Ofl ίι grew slu"'er ίη the GDR than ίη the FRG. (Output growth remained n10rc st~ble ίη 1967 76 ίη the GDR than ίη the FRG.) This can be interprcted Ιο mean th~t the infcriur pcrformancc ίη dynamic efIίciency by thc GDR was olTset by "η increase ίη the activity rate, i.e. "η increase ίη the burden ο .. "'ork e.~tracted frum the population. Alternatively, ίι can be interpreted Ιο n1ean that the ~'RG has αη inefIίcient economic system which wastes much of its putential labour force and deprives many people of the ΟΡΡΟΓωηίΙΥ to participate ίη paid work.

14. See the discussion of these issues, from diverse points of view, ίη Ου ncan (1989). 15. Ι have discussed the position of the Austrian and Swedish socialist parties ίπ αη essay οπ political trends ίη Western Europe (Bottomore Ι 984a. ch. Ι Ι). 16. This is discussed more fully ίη a later essay ίη the same volume (γ sander 1982). 17. For a more detailed account see Sully (1982, ch. 8). 18. See, [ΟΓ example, the references ίη Holland (1983, Part 3). 19. See the comment ίη Holland (1983, ρ. 66). However, the means of establishing financial control are ηοι very thoroughly examined ίη the laιer discussion of new policy priorities.

8

Modes of transition socialist economy

Ιο

a

The problems of socialism discussed ίη the previous chapters should ηοΙ be regarded as unique troubles ίη an otherwise pcrfect world, for the problems of capitalism are at least as great, and more fundamentaI, and so far as they have been contained at all during the post-war period ίι has been by thc adoption οΓ socialistic policies: greatly increased public spending, some extension οΓ public ownership, and more central pIanning, ΟΓ ίη short, thc development of various forms οΓ 'mixed econonlY" Ιι is the instabiIity of capitalism, characterized by the cyclc οΓ boom and slump, its inability Ιο ensure consistent full employment, the gross inequality.of wealth and income that ίι produces, and thc impoverished and tawdry culture dominated by money that ίι creates ίη its more extreme lai~'sez-faire forms, which account for thc contintlcd growth of the socialist movement ίη Western Europe sincc Ihe war: a growth which has accelerated ίη recent ycars as thc trouhlcs (1f capitalism have multiplied. Αη indication οΓ capitalism's continuing instability was given first by the recession οΓ the latc 1970s. thcll h~' the stock market crash οΓ October 1987; and SOnlC οbSCΓVCI'S expcct another, perhaps worse, collapse ίη thc near futurc, unlcss ίι is avcrted by a profound reform of financial instituti(1nS Illa! \\'oIIld involve more public rcgulation. ι Meanwhilc. tlncnlplo~'nlClll remains high ίη most οΓ the capitalist countrics, Hnd CCt1I10111iC growth rates arc stiII low. lη these conditions, the qucstion of a transition to sociHlism 121

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becomcs n10re urgent uguin. above <ιΙΙ ίπ the European socicties. ,Ind \ve must begin ,In cxuminution οΓ this question by οιιtlίnίng the kind σΙ" ΙΊιιure soci,llist society to which ίι is reasonable ιο aspire. Such u socict)· \\'l)uld be characterized by a substantial degree of ριιbΙίc o\\'nership. economic and social planning at a national, rcgional und localle"el. and eventually οη a trunsnational scale (as is alreudj' the cuse to a limited but increusing extent); and at the sume time u decentralized economy ίη which the transactions among producers. and between producers and final consumers, \\ould take place ίπ a regulated market system, while the internal structure of enterprises would comprise a large element of selfmanagement. The practice of self-management would indeed be an cssential component of socialist democracy, and the latter would be further reinforced by the greater equalίty of economic and social condition among citizens which ίι is a primary aim of socialism ιο establish, The transition ιο such a society will necessarily take a different cοιιrse ίπ Eastern and Western Europe, but there will also be great variations between individual countries, resulting from the diversity οΓ economic and cultural conditions: ίη the East, the size and strength of different economies, politica! and cultural traditions, the particular problems of mu!ti-national states; ίη the West, the existing extent of public ownership, the presence ΟΓ absence of a planning system, the strength ΟΓ weakness of individual national economies. Ιπ Eastern Europe the two major changes that are needed, and a!ready beginning ιο be implemented, are the decentralization of the economy and the extension of democracy. The first of these Ι have discussed ίη earlier chapters οη the experience of socia!ist planning and οη the relation between planning and markets, and Ι shall return ιο the subject !ater ίπ another context with reference ιο the objectives that should now be formulated by the socialist movement ίπ Western Europe. The second subject, which Ι have on!y briefly referred Ιο earlier ίπ this book, deserves closer attention, particularly ίπ the context of the present debates about political pluralism, the deve!opment of new socia! movements and parties, and the widespread discussion of the scope of democratic participation ίπ economic and social affairs throughout Europe. The socia!ist movement, from the beginning, stood for an extension of democracy. One of the first major activities of the newly formed socialist parties ίη the late

Modes of transition Ιο a socialist economy 123 nineteenth century and early twentieth century was Ιο campaign for universal adult suffrage, which they were largely instrumental ίη achieving, while at the same time they advocated greater democrac)' over a wider area - a concern expressed ίη the name 'social democracy' by which some of them chose Ιο be known. The growth of socialism ίη Western Europe after the Second World War wa~ checked Ιο a large extent by the unappealing spectacle of the societies οι' 'real socialism' ίη Eastern Europe, which remained authoritarian and oppressive even after the death of Stalin, though the active opposition of international capitalism, led by the United States, was also a major factor. Only Yugoslavia offered a more hopeful picture, providing a substantial degree of democratic participation through the self-management system and a reIativeI)I lίberal political regime, ίη spite of the absence of opposition parties. The process of democratization which has begun ίη Eastern Europe is now rapidly changing this situation, and ίι raises questions, ηοι only about socialist democracy, but also about the future development of democracy ίη a wider context. Ιι is misleading Ιο conceive the democratic movement ίη the socialist countries as simply a belated transformation of thesc societies ίηΙο Western-style democracies, with a multi-party system and free elections. Such a conception omits the whole issue of social democracy, and at the same time assumes that democracy ίη the advanced capitalist countries has attained a state of near perfection beyond which ηο further advance is possible ΟΓ desirable. As Ιο the first ροίηι, ίι needs Ιο be strongly asserted that socialist democrac)'. ίη its most distinctive form, would be comn1itted Ιο the widest possible participation by citizens ίη decision-making ίη all sphercs of life. Thus, alongside an electoral system ίη which various groups andj ΟΓ parties compete (at nationaI, regional and local levels) οπ the basis of alternative economic and social policies, there would bc institutions ensuring participation ίη the management of productivc enterprises and of educational and cultural organizations. Ιη short. a democratic socialist society would movc steadily towards thc practicaI achievement of those ideals formulated ίη thc idca of 'participatory democracy" however long and gradual tI1at prol'ess might be. 2 Ιι is a corollary of this view that political powcr would bc less monolithic than ίι has bccn υηιίΙ now ίη thc socialist socictics. and, as Ι argued briefly ίη an carlicr chaptcr. ίι is quitc conccivable that government (at all Icvels) ίη the socialist societies of the futurc

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would be carricd on, dLIring sonlC pcriods, by coalitions of various parties. Moreo"er, there should be, and as Ι cOl1ceive ίι there \vοιιΙd be, <Ι considerable devolution of powers from the centrαl gO\'crnnlent to regionaI and local governments, while the existence 01' denlOcratic participation ίη a multitude of other independent organizations, from enterprises ιο cu1tural bodies, would be a ΓUrther limit οπ the role of government. This is the manner ίπ \\'hich the famous 'withering away of the state' is most likel}' to be achieved; though today ίι may be more illuminating ιο describe ίι as the socialist version of 'minimum government'. Οπ the second ροίηι, which concerns more particuIarIy the socialist parties ίπ advanced capitalist countries, ίι should be remembered that democracy, ίη the sense of universal and equal suffrage. is quite a recent growth ίπ these countries, achieved for the most part ΟΠΙΥ since the First World War, and ίη some cases after 1945..1 There is πο reason ιο suppose that the process of democratization will, ΟΓ should, come Ιο a halt at this ροίηΙ. Ιη the first place there is a need ιο provide for better representation of the diverse interests and cultural values that exist ίη a modern society, and this can be met ίπ several ways: by reforming electoral systems ιο allow for proportionaI representation (as has been done already ίπ many European countries), and by giving greater powers ιο regionaI and local elected assemblies, which are closer Ιο the immediate everyday concerns of citizens. Regrettably, Britain is at present one of the least democratic countries ίη Western Europe; with a non-elective, totaIIy unrepresentative second chamber, an electoral system which excludes proportionaI representation and allows a government supported by just over 40 per cent of voters and about one-third of the total electorate Ιο carry ουΙ sweeping changes (many of which are opposed by a majority of the popuIaιίοπ), and a steady erosion of the powers of local government over the past ten years with a corresponding increase ίη the powers of central government. Ιπ the United States the structure of government and the electoral system have similarly, and for a long time, frustrated the development of new parties and consolidated the two-party system, while the electoral process as a whole is dominated, even more than elsewhere, by the power of wealth. The development of proportional representation ίη Western Europe is likely Ιο lead, just as ίη the socialist countries, Ιο political regimes ίπ which coalition governments, representing more faithgrOLιps σΓ

Modes of transition

Ιο

a socialist economy 125

fully the diversity of values and aims ίη society but also, Ι think, increasingIy socialistic ίη their orientation, become more usual, cιΙ least for the medium-term future. 8·lt this is still ηοι the lίmίι οΓ cι democratic transformation of sociallife, which requires cι continucd growth of 'social democracy' - the extension of democrcιtic participation ιο all spheres of life - which is foreshadowed, ηοΙ only ίη the ~urrent reforms ίη the socialist countries, but also ίη the proposals for a 'social charter' that are being discussed ίη the EC. There are many other aspects of the historical process οΓ democratization, given a new impetus by the reforms ίη Eastern Europe, that would need ιο be examined ίη a comprehensive restatement of the meaning of democracy ίη the advanced industrial societies of the late twentieth century (among them the institution of more 'open' government and a diminution of the elitism which is partly a survival from earlier forms of society); but Ι must confine myself here ιο the brief indications Ι have already given, and turn now ιο the mainIy economic aspects of a transition Ιο socialism, primariIy ίη the European countries. Ιη the socialist countries, as Ι have emphasized, political reform is an essential part of the transition, and ίι is inextricably interwoven with the economic changes, which require for their success a new spirit of individual enterprise, commitment, and responsibility ίη production and administration that can only be achieved by enlarging the sphere of free debate, critical judgement and participation ίη policy-making. The restructuring of management at all leveIs, from the central ministries ιο individual enterprises and services, is therefore a crucial feature of the economic reforms. Another fundamental aspect is the development of a coherent and systematic relationship between planning and markets, which is Iikely ιο be a gradual and tentative process. As Ι said earlier, there is ηο existing theoretical modcl which can bc mechanically appIied Ιο solve the problcms (although useful indications of possible courses of action are Ιο be found ίπ rcccnt WC\Γk οη the subject);4 and the balance between markct mechanisms and planned development, as wcll as an effective regul:ιtΟΓ)' s)'stcnl. "'ill have ιο be discovered largely by expel'inlent and IIHOUgll democratic debate and choice, while drawing upon thc cxpcricncc. both positive and negative, already accumιllated il1 Yugoslavia <ιηι] Hungary, as well as ίη some capitalist countrics (for cxanlple, wartime planning, and the post-war planning ίη Francc and Japan).

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Ιπ the capitaIist weIfare states 01' Western Europe, a transition ιο socialisnl involves more pureIy econonιic changes, and above all an extension 01' social ownership and planning; but the conditions ίη \\'hich these changes may come about vary greatly from one country ιο
Modes of transition Ιο a socialist economy 127 atiνes, and perhaps ίη some spheres mixed priνate and public

undertakings. State corporations are ηο doubt the most appropriate form ίη some basic industries and serνices - airlines, railway~, telecommunicatrons, postal serνices, οίl, gas and electricity, engineering, chemicals, car manufacture, and others - but there can well be some rcgional deνolution, and the management of such corporations should always include a large element of self-management by employ( c:s, as weII as representation of consumer interests. Ιι is ηοΙ necessary, moreoνer, that there should be only one state corporation ίη each sector, and ίι is indeed desirable that several corporations, competing with each other, should exist ίη some spheres; for example, ίη engineering, the car industry, and largescale retail trade. This ροίηι is especiaIIy germane ιο the question of ownership of financial institutions, which is crucial for the development of a socialist economy. The alternative ιο private ownership is ηοΙ a single state bank, with anciIIary financial serνices. but a number of sociaIIy owned banks and insurance companies, which would, lίke manufacturers and serνice industries, compete with each other Ιο some extent; and we must eνen consider, however shocking this may appear ιο fundamentalists of one sort ΟΓ other. the forms which a socialist stock exchange (ί.e. a capital market) might take. There is a further issue concerning ownership of productiνe resources which is of νery great importance for the future of socialism, though ίι has been strangely neglected by socialist parties ίη recent times: namely, land ownership, which is νery unequal ίη capitalist societies (and particularly so ίη Britain).~ The ownership of land is an important element ίη the wealth and power of the capitalist class, and ίι is clear that radical changes would be necessary ίη a socialist society Ιο bring about social ownership. Ιη principle, the land should be regarded as being owncd by the community as a whole, but this does ηοΙ cxclude a νariety of forms of ownership ΟΓ possession ίη practicc: mcdiunl ΟΓ long-term leases for agricultural, industrial and commcrcial ΡΙΙΓ­ poses; national, municipal and local communiIy owncrship of 'common land' for recreational use; individtIal ο"ηershίρ for dweIIings. The second general form of social ownership, auIonomou~ sclfmanaged enterprises, seems appropriate over a wide range of economic actiνities, mainly ίη the field of mediunl-sile producers of goods and serνices, including much agriculιural producIion. as well

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as ίη cultunII and leίsure activities 01' all kinds. As Ι have said, there is Ιl1ιιch to be learηed I"rom the Yugoslav experience, but also from various forms 01" 'co-determination', which may gradually be extended ίη Western Europe if the EC 'social charter' is eventually irnplenlented. lη other spheres, and especially ίη small-scale production and ΡΓι)\'ίsίοn of services. cooperative enterprises have an important role to play. and there are indications that the number of cooperati\'es has been increasing, at a modest rate, ίη some European countries. sometimes with the help of socialist parties at the national ΟΓ local leνeΙ If ίη the future, for reasons Ιο be discussed later. there is a growth of small-scale production, then cooperatives will be likely ιο have a still more important place ίη the economy. Their particular value is that they are voluntary creations which can be established rapidly (within an appropriate legal framework) Ιο meet new ΟΓ neglected needs, and of course easily dissolved again if they are ηοΙ successful. Αι the same time, individual cooperatives can well form connections with each other, ΟΓ extend their activities ίηΙΟ new fields, thus creating larger cooperative federations which will facilitate and stimulate the overall growth of cooperative production and trade. 6 But there will also be, ίη any conceivable socialist society, a relatively large sphere of private production. Exactly how large ίι will be. and what forms ίι will take, are questions that cannot be decided ίη advance, ίη precise numerical terms, ΟΓ for the indefinite future. Two considerations are important ίη this context. The first is that ίη the advanced industrial countries the number of selfemployed persons has tended Ιο increase, along with the expansion of the service sector of the economy, and this trend seems likely ιο continue. 7 Second, there are benefits ιο be gained, as Ι argued earlier. from encouraging small-scale private economic activity ίη many different fields - ίη agriculture, artisan production, retaiI trade. and services - and this may be carried οη by self-employed individuals. families. ΟΓ enterprises employing a smaII number of workers (though some of the latter could equally weII be cooperatives). The persistence, and even expansion, of private economic activity may be seen by some socialists as nurturing an excessive individualism and hence the danger of a rebirth of capitalism; but Ι think such concerns are exaggerated. Socialism should ηοΙ be regarded as the antithesis of individualism, but as a specific

Modes of transition to a socialίst economy

129

conception ~ one which, moreover, has ιο be continually n:vised and restated ~ όf. the balance to be sought between individual achievement and self-fuIfilment, and the attainment οΓ a 'good society', that is to say, a society whose institutions enable α/l individuals, and ποι simpIy a privileged minority, ιο develop a~ fully as possible their powers of creation and enjoyment. The idea of such a relation between the individual and society is present ίπ all socialist thought, and notably ίπ Marxist thought, although ίι has sometinIes been obscured by an emphasis οπ the shaping of human nature by impersonaI social forces; and some versions of Marxism, as Sartre (1960, ρ. 58) observed, had 'completely lost the sense οΓ what a human being is" Ιι is true that private production does ηοΙ socialize individuals ίη the production process, does ποι incorporate them ίπto the body οΓ 'associated producers' ίη any direct manner, but they would still participate ίη the cooperative life of a socialist communit)' ίπ man)' other ways, through their relations with the sphere οΓ socialized production and public services, and their involvement ίπ numerous processes of democratic decision-making ίη public affairs. Ιπ any event, the sphere of socialized production, ίπ the form οΓ state corporations, self-managed enterprises, and cooperatives, would have a predominant place ίη the economy, accounting perhaps for at least half οΓ all manufacture, a substantial part οΓ agriculture and trade, and a very large part of the provision of basic services such as health, education; transport and general public utilities; and there would be social ownership ΟΓ effective control οΓ land and financial institutions. Βυι the movement towards the kind of society Ι have skctched here is bound ιο be gradιιal, and very uneven between countrics, ίη the economic conditions of thc late twentieth century. Sidnc)' Webb's argιιmeηt that 'important organic changes can only bc democratic ... acceptable ιο a majority οΓ thc peoplc ... preparcd for ίη the minds of al1 ... gradual, and thus caιιsίηg πο dislocation' (see above, ρ. 14) is now much more appositc than whcn ίι was first propounded. lη Britain, after the wholesale privatizations, thc extension of public ownership and central planning will bc exceptional1y difficult; but ίη Western Europe gcnerally,~ C"CJ1 ίη more favourable circumstances, ίι seems ιιηΙίkcΙΥ that the old-sty'lc method of buying οιιι the shareholders ίη privatc industry ~'ίΙΙ pla)' a major part ίη thc process of socialization, althougll ίι can still bc

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used elΤecιίγel)' ίη son1C cases, particularly where capitalist cnteI'prises Γυη ίηιο economic diffίculties during a recession, ΟΓ whcre public ορίηίοη turns strongly against private n10nopolies. Ιη any case, there are alternative methods, an10ng them the S ..... edish project I"or collective capital formation through employee ΟΓ wage-earner ίnγesιment funds, which emerged from discussions ut the 1971 Congress of the Swedish Confederation of Trade LJ nions (ΙΟ) and the resulting detailed study by Meidner (1978). Briet1)·, Meidner's original scheme proposed a method of accumulating 'collective capital' by a levy οη the pre-tax profίts of companies employing more than fifty workers, the proceeds of which would be paid ίηΙΟ a central fund ίη the form of newly issued shares. The capital accumulated ίη this way, and by the purchase of additional shares ουΙ of the income οη shareholdings, would eventually give employees a substantial holding ίη the companies, leading ιο the nomination of board members ίη individual companies and a more general control through the administration of this collective capital by regional ΟΓ sectoral funds (Meidner 1978, ch. 7). Over a period of twenty-five ιο sixty years, depending οη the profitability of companies, a large part of the Swedish economy would ίη this way be socialized (Olsen 1989, ch. 2). As a result of subsequent discussions and studies, however, Meidner's plan was considerably modified, and the legislation introduced ίη 1983 established a much less radical scheme, which applied only ιο large companies (with 500 ΟΓ more employees), involved a tax only οη 'excess profits' plus a payroll tax, accumulated funds ίη cash instead of shares, created regional rather than sectoral funds (though with a majority of employees οη their boards), and changed the main emphasis of the plan from socialization and workers' control ιο the accumulation of investment capital (Olsen 1989, ch. 2). The scheme was also introduced explicitly as an experiment for a limited period, ιο be reviewed ίη 1990, and ίι seems now ιο be the intention ηοΙ Ιο continue ίι beyond that date, by which time the funds will have only about 8 per cent of the 1983 value of shares quoted οη the Stockholm stock exchange (Olsen 1989, ch. 2). Nevertheless, the review of the 'experiment' may itself generate new interest ίη the scheme and revive the debate about alternativc methods of socializing the economy; and ίι will provide valuable lessons for other socialist parties and governments throughout Europc.

Modes of transition to a socialist economy 131 Among other methods of extending socia1 ownership we ~hou1d consider, particu1ar1y, increased support for small-sca1e cooperative production, which can be provided very cffective1y at the municipal ΟΓ loca1 1eve1, and the creation' of new cntcrρrises wherc this ί~ necessary, especially ίη the financia1 spherc. For examplc, ίη Britain, where' none of the commercia1 banks, ΟΓ other mί1jοr financia1 institutions, were ever taken ίηιο public ownership, ί1 significant beginning might be made ίη extending socia1 ownership by:the ~stab1ish~ent of new banks, particu1arl}' ίΙΩ invcstment bank and perhaps a1so some community banks, and a1 the same time app1ying Ιο the existing private1y owned banks some aΡΡrΟΡrίί1ΙC version of the eιpp10yee investment funds scheme. 9 1η other countries of Western, Europe, where there is morc cxtensive social ownership of financia1 institutions, of major infrastructural services, and ιο some extent of manufacturing industry, the development of a socia1ist economy will be re1ative1y easier. The influence of these countries, together with that of the reformed socia1ist societies of Eastern Europe, is 1ike1y 10 be a major factor ίη the evo1ution of Europe as a who1e over the next few decades. What is evident, indeed, is that the transition ιο socia1ism has become, more than ίι ever was ίη the past, a supranationa1 process, and there is a corresponding need for socia1ist thinkers and po1iticians ιο work ουΙ programmes, po1icies and mechanisms, οη a European basis, for advancing from we1fare capita1ism and 'socia1istic' regimes towards a more distinctive1y socia1ist economy. There is αη exampIe of such collaboration ίη the report by Holland (1983), aIthough this was a project for European recovery rather than specifically for European socia1ism. Many such projects, with a socia1is1 orientation, shouId now bc initiated ίη order Ιο prepare for thc new opportunitics that will emerge ίη the next decade. If socia1ist (or socia1ist/ green) partit's come 10 power ίη severa1 more European countries, and if thc restructuring of the socia1ist economies ίη Eastern Europe begiIls 10 produce successfu1 resu1ts, then a decisivc movemcnt to,,'ard~ socia1ism will be possib1e, and for this Ιο continue and endurc Ihcn: must be carefully prepared and coordinated action b~' socialisl governments, drawing υροη the experience of all of Ihcnl ίη deve10ping forms of socia1 ownership, with a stlΌng emphasis uron se1f-management, and ίη creating cfficacious types of cenlral plal1ning. Νοι on1y the achievcment, but thc satisfactory operation of a

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socialist ecοnΟΠ1Υ is, and will renlain, a CΟΠ1Ρleχ and difficult task, and we nlust hope that the present and future generations will ίη fact display that degree of intelligence ίη coping with ίι which Engels conlidently anticipated. The task is aII the Π10re CΟΠ1Ρleχ and daunting because socialist gon:rnments n1Ust ΙΓ)' ΙΟ achieve, over a period of tίΠ1e, a nUΠ1ber of different aίΠ1S which are ηοΙ easily reconciled and coordinated. First. they have ιο Π1aίntaίn the CΟΠ1fοrtabΙe standards of Iίving ....·hich can now be regarded as custΟΠ1arΥ for a Π1ajοrίtΥ of the population ίη the developed industrial countries, while at the saΠ1e time extending such conditions of life Ιο the still considerable numbers 01" those ίη poverty, and reducing the wealth of a SΠ1aΙΙ privileged Π1ίηΟΓίΙΥ. Maintaining these standards will, however, depend increasingly υροη public rather than private provision for Π1an)' basic needs, and a socialist government will ηοΙ necessarily be committed Ιο unlimited aggregate economic growth regardless of ....'hat is growing and what social and environmental costs ίι entails. The emphasis ίη all socialist policies should be οη improving the quality of lίfe for the whole popuIation, ηοΙ οη sheer economic. gro\vth, and ίι is Ιο be hoped that a time will come when the achievements of different countries will be judged ίη terms of the former criterion, rather than by their relative position ίη some international league of growth rates. This question is especially relevant ίη considering a second concern of socialist governments: namely, how they can best contribute ιο overcoming poverty ίη the poorer countries of the Third World, where economic development is undoubtedly needed. Ιι is evident ιο all that the present division of the world between wealthy and poor countries cannot, and should not, continue indefίniteIy. Βυι there are two aspects of this situation ιο be considered. Ιη the fίrst place, what are the policies and mechanisms that can most effectively help the poor countries? Τhere is a great deal of accumulated experience of successful, and unsuccessful, aid ιο these countries, ίη which both the objectives of donor nation!i and the character of the indigenous regimes are important factors, but Ι do ηοΙ think that there has yet emerged a distinctive and coordinated socialist policy ιο overcome international economic inequalities; ΟΓ second, a serious and thorough consideration of the consequences of economic development οη a global scale and their implications [or the industrial countries themselves. Let us suppose

Modes of transition to a socia/ist economy 133 that over the next half-century many οΓ thc poor countries, with thl: help οΓ socialist industrial nations, succeed ίη raising the standard οΓ living οΓ their populations substantially, and that thc Π1ίddle­ income countries οΓ the Third World continue effectively ιhι:ίr policies οΓ industrialization and general ecοnΟΠ1ίc deveIΟΡΠ1ent, so that they begin Ιο catch up with the advanced industrial socicties. lι is evident - and we can picture thc situation Π10st vividl) b:ίΠ1agΏίng that every country ί.Ω thc world eventually attained Ιί\ίΠ1:! standards equal ιο those ίη the prosperous West Europcan societics - that economic deνelΟΡΠ1ent οη this scale, couplcd with populaιίοη growth, would place an enοrΠ10US burden οη the earth 's resources, ίη land, energy, food and Π1ίnerals, and would add Π1assίνeΙΥ Ιο the problems οΓ pollution and daΠ1age to the earth 's atmosphere. 1o So there is an obvious need, ίη considering the longcr term, for a great deal more planning, with an international scope, based οη policies which would tackle sίΠ1uΙtaηeοuslΥ the ονercοΠ1ing οΓ poverty ίη the Third World, lίΠ1ίtίηg the growth οΓ populaιίοη, and restricting ΟΓ eliminating non-sustainable and damaging types οΓ economic growth. l' Many socialist parties, Ι think, have ηοΙ yet seriously confronted such issues, and for that reason there has been a rapid increase ίη the support for green parties which propose morc defίnite and radical policies; though the eventual outcome may be, as Ι suggested earlier and as Ι hope, the emergence οΓ a new, 'green socialism'. Ιη fact, most οΓ the questions that Ι have raiscd concerning the present-day problems οΓ socialism and possible modes οΓ transition ιο a socialist economy ροίηι ίη that direction. The decentralization οΓ cconomic decίsίοn-Π1akίng through the development οΓ self-managed enterpriscs, cooperatives and individual self-employmenI, would encourage ίη various ways the growth οΓ smaller, more local productive entcrprises; and evcn though some cnterprises must necessarily be organizcd οπ a largc scale - railways, car manufacture, some engincering and Chcnlical plants - there is πο reason why large enterpriscs thcnlselves should be brought together ίη giant corporations, \I.'hethcr ΡΓί\'αιc ΟΓ public. The rccent wave οΓ mcrgers and takeovers ίπ thc C'apitalist world has becn dictatcd more by financial speculation. hoHIldlcss profit-seeking, and the dcsire to eliminate compctition, ιlι;lπ h)' aJl~' very obvious economic need, ΟΓ bencfίt to the population at largc. 11 The development οΓ small-scale pΓoduction and pro"isioll οΙ'

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Τhe

Socialist Economy

ser"ices, where"er this is feasib1e, would, οη the contrary, bring considerab1e sociH1 and environmenta1 benefits. SociaHy, ίι wou1d cn1arge the sphere ίη ....'hich individua1s can have some rea1 contro1 o\'er their working 1ives and participate effective1y ίη decisionnlaking. En"ironmentally, ίη conjunction with the greater powers 01" loca1 government, ίι wou1d be 1ike1y Ιο increase concern for the natura1 surroundings ίη which peop1e 1ive and work, and ιο reduce the congestion resu1ting from 10ng journeys Ιο work. The shape of <ιη a1ternative economy for the twenty-fίrst century is now unmistakab1}' beginning ιο appear, at 1east ίη very broad outline, and socia1ist projects for the near future as well as for the 10nger term of the next ha1f-century shou1d take account of the new possibi1ities and the new pub1ic attitudes that are emerging. Any transition Ιο socia1ism will require extensive and flexib1e p1anning, of an indirect, indicative kind, if the diverse aims Ι have sketched here - greater equa1ity of wea1th and income ίη each courιtry and ίη the wor1d as a who1e, more extensive pub1ic ownership and democratic participation ίη all the affairs of socia1 1ife, and a reorientation of economic deve10pment ιο accord with these aims and a1so with the protection and renewa1 of the human habitat - are Ιο be achieved, however gradually. There is one aspect of p1anning which shou1d be particu1ar1y stressed; name1y, the need ιο take account, ίη constructing socia1 and economic p1ans, ηοι on1y of the market prices ΟΓ 'accounting prices' derived from them. of a11 the e1ements - materia1 resources and 1abour - which constitute the 'productive forces" but a1so of the ways of va1uing the exhaustib1e resources which can be allocated between generations. The subject is discussed ίη some detai1 ίη a study of the history of 'eco10gica1 economics' by Martinez-A1ier (1987), who considers some of its imp1ications for deve10pment po1icies ίη the Third Wor1d and a1so ίη the wea1thy industria1 countries. where zero growth. ΟΓ 10w and se1ective growth. may be desirab1e ίη the future. These questions are of great importance for socia1ists, but they have received 1ittle attention υηιίl very recently. One of these who considered them at an earlier time was Otto Neurath. who specifί­ ca11y raised ίη his discussion of a 'natural economy' the issue of va1uing, and making a choice between, the present and future use of non-renewable resources (see ρ. 21 above). Neurath also advocated, as an integral part of socia1ist planning which would take account of physical resources (materials and energy), the construction of

Modes of transition to a socialist economy

135

a!ternative 'scientific Utopias' which would be an essentia! e!ement ίη a continuous process of socia! transformation, and this idea Ιοο is va!uab!e for the present generation οΓ socia!ists. The strength ίind success of the socia!ist movement came historically from its νision of a comp!ete!y new society, but today that νision seems to haνc: faded, and socia!ism ίπ many countries, !acking an intellectual con ent (as distinct from νarious kinds of technical expertise), is orientated, for the most part, Ιο the achieνement of modesl reforms. Α cautious and uninspired pragmatism has almost vanquished Utopianism. Yet without the !atter Ι do ποι think there can be any movement deserving Ιο be called socialist or capable of engendering the enthusiasm and politicaI will necessar)' Ιο bring about substantia! social change. Not Utopianism ίη the sense of a belief that human society and human nature can be miraculousl)' transformed oνernight ίη order Ιο remedy all the multiple problems and injustices of the existing world, but as the forceful statement οΓ an ideal Ιο be attained over a long period, by the νariety οΓ means that Ι have discussed, and through the successive elaboration of, and widespread debate about, what we may call 'interim Utopias" The transition Ι have sketched here is ηοΙ located ίη some distant future. Οη the contrary, ίι began early ίη this century ίη a diνersit)' of forms, and since the end of the Second World War has passed through major phases of success and failure which are brieny charted ίη this book. From that experience there have emerged Ihc new movements and new ideas of recenl years which have still 10 be clearly recognized ίη a statement of socialist aims and policies - a new socialist manifesto - that would bring together the idcal οΓ a socialist society and the sequence of practical mcasures through which ίι can be approached, ίη the manner and at the tenlpo considered desirable by a majority of tllC population. Ιι is abovc all ίπ Europe, East and West, that the circumstances are now nlosl favourable for such a venture.

Notes Ι.

The French cconomist Mauricc Allais, for cxanlplc. ίπ an articlc ίη /Λ' Monde (26 June Ι 989) anticipatcs a ncw pcriod of turbIIlcncc, and

136

,

.1. -Ι.

5.

6.

7. 8.

9.

10. 11.

12.

Τhe

Socialist Economy

obsrr\'rs that rconomic instability. social injustice. and poverty Hre the bHnr οΙ' I11Hrk~t Ι:Ι:ΟI10111ίι:S. Ι h"vr discussed th~ di\'rrse conceptions οΓ democnlcy more fully ίπ BottonlOre (1979. ch. Ι). See also the discussion of the relation between dι:nΙιJCratίc ίdι:as and elite thι:οrίι:s ίη Albertoni (1987. Part 11) . S~t: BιJIlOη1OΓι' (1979. ch. Ι). FιJr ι:χamΡΙe. ίπ Horvat (1982. ch. 12) and Seluck)' (1979). See the data ίη SCOIl (Ι 982). ίπ particular his estimate that 'about 200 peerage Γamilies holding estates οΙ' 5,000 acres ΟΓ more owned about one-third 01' the British land area" and his summary of research by McEwan (1977) οπ 'the phenomenally high percentage of 1andowners among Britain's wealthy elite' (ρ. 103), even ίη recent times. :\ good example οΓ this process is the Mondragon cooperative ίπ Spain which has grown from smaII beginnings ίπto a fairly large and successt'ul association οΓ cooperatives (Thomas and Logan 1982). This is νerΥ evident ίπ Britain and also ίπ some socialist countries, for example ίπ Hungary's 'second economy'. lη the following discussion Ι exclude from consideration the United States, where the possibility of socialism seems to belong to a very remote future. Hencc there will be for a long time, οη any reasonable reckoning, two economic systems - capitalist and socialist - coexisting ίπ the world and influencing ίη different ways the deve10pment of the poorer countries of the Third World. See the discussion ίη Coakley and Harris (Ι 983, ch. 10) of the need Ιο 'nationalize' the major fίnancial institutions and, just as important, Ιο change the character of their operations (which does ηοΙ always necessarily follow the change of ownership, as the experience of the naticnalizations by the socialist government ίη France ίη 1982 indicates). The authors do ηοι, however, suggest any definite procedures by which social ownership and a change ίη the orientation of fίnancial policies could actually be achieved ίη the existing social and political conditions, and conclude only ίπ very general terms that preparation has to be made Ιο overcome the difficulties that socialization presents. See the discussion, with particular reference Ιο population growth, ίη Faaland (Ι 982). Much has been wrillen οπ this subject since the publication of the pessimistic projections of the C1ub of Rome (Meadows e/ ο/., 1972), including discussions of the 'sociallimits Ιο growth' (Hirsch 1977); and the rapid development of environmentalist movements and green parties ίπ the 1980s is an indication that economic policy-making has entered a period of profound change. Ιπ onc sphere, particular1y, the effects of 'gigantism' are very clear. There is πο value at all (except fίnancial gain for a small number of

Modes

οΙ

transition

Ιο

a socia/ist economy 137

people) ίη the emergence of giant publishing corporations, controlling a wide range of newspapers, magazines, book publishing, television and radio stations; and we should all be a great deal better off, ίη term~ of lίteracy and the generallevel of culture, if such activities were carried οη by a large number of independent medium-size enterprises.

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Index

accumulation, 29 agriculture, 17, 42, 64, 94-5 Aron, Raymond, 61, 63 Austria,39, 113-14, 126 Austro-Marxism, 27 base and superstructure, 2 Bauer, Οιιο, 27, 116 ΒΒνΒΓίΒη Soviet, 24, 36 Bellamy, Edward, 10, 17, 19,84, 104 Bender, Donald, 113 Βergsιrδm, νίllΥ, 112 Ber1iner, Joseph S., 65, 73, 74, 75 Bernstein, Eduard, 13, 14 Besant, Annie, 14, 15 Βδhm-Βawerk, Eugen, 52-3 ΒΓίΙΒίη, 19,39,41,45-6,48,72,79, 112, 114, 115, 124, 126, 129, 131 Βukhaήn, Niko1ai, 28-9, 34, 35 bureaucracy, 57, 60-2, 73-5, 104 capitalism, 19, 36, 45-8, 66-7, 80, 121 China, 43, 93-4 civil society, 73, 97 class, 13, 35 Cole, G. D. Η., 11 collectivization, 29 communism, 9 competition, 59-60, 79, 109 Comte, Auguste, 14 cooperatives, 12, 13, 128, 131 corporatism, 46

councils, 17-18,27-8 Cuba, 5 Czechoslovakia, 42, 94 Darwin, Charles, 14 decentralization, 88, 105, 106. 110. 111, 117, 133 democracy, 13, 14, 18, 111, 117, 122-5 Devons, ΕΙΥ, 41,58 Dickinson, Η. D., 53, 58, 59, 82. 84, 85 DjiIas, ΜίΙονβη, 6 Ι Durbin, Ε. F. Μ., 37. 103 Eastern Europe, 42-4, 89 eco1ogy, 3, 26, 110, 133, 134 economic ca1cu1ation, 52-60 depression, 36, 38 growth, 4,5,42,44,48,67-8, 132 efficiency, 6, 107-8 ~lite, 62, 63, 111 ElIman, Michae1, 95 emp10yee investment funds. 130 Engels, Friedrich, 7, 9, 71 Erlich, A1exander, 42 European Community (EC), 47. 67 financial institutions, 116, 121. 127 Fοuήerίsts, 9 France, 39,46-7. 114. ΙΙ5. 126 Frankfurt School, 4 147

148

Index

fr~~dom.

3. 11. 59. 73

Giιbor. Dcnnis, 67 Gay, Petcr. 13 g~neral will. 103 G~orge, Vic, 5, 45 German Democratic Republic, 42, 83, 96, 107 Germany,39 Golubovii:, Zagorka, 88, 90, 9 Ι Gorbachcv, Mikhail, 43 Gramsci. Αηιοηίο, Ι, 28, 85 green movement, Ι 16, 133

Hare. Paul, 92, 93 Hayek. F. Α., 30, 53, 55, 57, 58-9, 60, 62-3, 82, 84, 103, 104 Hegediίs, Andras, 61 Heller, Agnes, Ι Ι, 12, 16 Hilferding, Rudolf, 23, 27, 30, 40, 52, 62 Hobhouse, L. Τ., 73, 103 Holland, Stuart, 131 Horνat, Branko, 79, 89-90, 92-3 human nature, 10, 104-5 Hungary, 36, 66, 71, 75, 79, 80, 83, 88, 92-3 individualism, 128-9 industrialization, 35-6, 42-3 debate, 28-30 innovation, 65, 67-8 investment, 106 Japan, 47, 85 Kautslιy, Karl, 7, 15-17,23,83, 107

Kollontai, Alexandra, 28 Komiya, Ryutaro, 47 Konrad, G., 110 labour, II Labour Party, 12 labour process, 2, 11 Landauer, Carl, 22, 25, 52 Lange, Oskar, 53, 54-7, 58, 59, 60, 82 Lavoie, Οοη, 59-60, 65 Lenin, ν. 1., 28, 34 Lemer, Α. Ρ., 53, 55 management, 95-6, 125

Manning, Nick, 5, 45 Marschak, Thomas Α., 106 Marshall Plan, 31, 41, 46 Martinez-Alier, J uan, 134 Marx, Karl, 1-3,9, 11, 12, 15, 16,22, 59,71,76,83, 104 Meidner, Rudolf, 130 Michels, Robert, 61, 62 Mises, Ludwig, 1,25,30,53-4,55,57, 59, 60, 106 mode 01' production, 2 money, 16,25 Morris, William, 10, 17,71,84, 104 Murray, Robin, 45 nationalism, 87, 97 nationalization, 14, 126 natural economy, 24 needs, 3, II Nettl, J. Ρ., 12 Neurath, Otto, 24-5, 26, 27, 36, 134 New Deal, 38-9 New Economic Policy (ΝΕΡ), 28, 34, 94 Nicaragua, 5 Nove, Alec, 33, 35, 105 Νυιί, Domenico Mario, 75 Olsen, Gregg, 130 organized capitalism, 4, 40, 85 Owen, Robert, 9 ownership of land, 127 private, 83, 87, 88, 93, 107, 128-9 social, 6, 87-8, 106, 126-8 Paris Commune, 9 parties, 12, 62, 71 peasantry, 29 planning,6, 14, 26-7, 30, 36-7, 40-2, 45-8,62-3,64-7,79,82,84-5, 98-9, 103-4, 106, 117, 125, 134 and markets, 90-1 pluralism, 71, 72-3, 87, 96-7 Poland, 71, 75, 79, 80, 83, 88, 94 Pollock, Friedrich, 30 population, 7, 133 Poverty, 4, 132 Preobrazhensky, Evgeny, 28-9, 34, 44 prices, 55-6 property, 17

Index

149

Radice, Hugo, 92, 93 Reissner, Gerhard, 113 relations of production, 2 Renner, Karl, 18, 23, 26 revisionism, 13 Richet, Χ., 89 R ichta, Radovan, 44, 66 kobbins, Lionel, 53, 55, 57, 58 Roosevelt, Franklin Ο., 38 Russian Revolution, 27, 36 Ryden, Bengι, 112

30,34 Swain, Nigel, 92, 93 Sweden, 38, 83, 112-13, 130 Szelenyi, Ι., 110 Szell, Gyorgy, 77

Saint-Simonians, 9 Sartre, Jean-Paul, 129 Schumpeter, J. Α., 46, 58, 60, 61, 66, 97 science and technology, 16, 22, 44, 57 Second World War, 39, 40 Seibel, CΙaude, 46 self-management, 17, 18-19,76-9,84, 96,112 Shaw, George Bernard, 14 socialism, 1,4,6-7,9, 19-20,22-3,72, 84-5, 101-2, 122 Fabian, 13-14 Guild, 17, 18, 19 ίη Western Europe, 112-17 municipal, 13 Utopian, 9-11, 12, 17, 84, 135 socialist market economy, 40, 54-6, 78, 87, 93, 94-5, 97-8 socialization, 15, 24-5, 126 social policy, 5, 42, 45 Spencer, Herbert, 14 Stalin, J. ν., 29,42,43 State, the, 70, 71, 73 state monopoly capitalism, 40 State Planning Commission (Gosplan),

unemployment, 108, 113, 114, 121 USA, 38-9, 46, 48, 80 USSR, 5, 26, 30, 31, 33-6, 38,40,424,61,62,75,80,83,88

Taylor, Fred Μ., 55, 56, 58 Third World, 5, 40, 45, 132-3 Tinbergen, J., 41, 47 Tomlinson, Jim, 78 totalitarianism, 19, 62, 63, 70

Vienna,27 War Communism, 28, 33 war economy, 23, 24, 36, 41 Webb, Sidney and Beatrice, 14, 18,36, 38, 129 Weber, Max, 25, 60, 61, 62, 73 Welfare State, 38, 48 Western Europe, 19,45-8, 115-16, 129, 131 White, Christine, 45 White, Gordon, 45 Wicksteed, Ρ. Η., 55 Wieser, Frίedrίch, 52 Wilczynski, J., 42 WooIIon, Barbara, 37, 38 Yugoslavia, 18, 31, 40, 43, 75, 76-Q, 80, 82, 83, 86-8, 89-92 Zicgler, Rolf, 113