Beyond Capitalism: Notes on the political economy of the transition to socialism

Beyond Capitalism

Notes on the political economy of the transition to socialism

R.E.Greenblatt

Copyright ©2015 by R.E. Greenblatt

All rights reserved

ISBN 978-1-31015881-0

Cover art:

Pavel Filopov

Formula for the Petrograd Proletariat (1920-1921)

Capital also is a social relation of production. It is a bourgeois relation of production, a relation of production of bourgeois society. Karl Marx, Wage, Labor and Capital (1847)

The proletariat seizes the public power, and by means of this transforms the socialized means of production, slipping from the hands of the bourgeoisie, into public property. By this act, the proletariat frees the means of production from the character of capital they have thus far borne, and gives their socialized character complete freedom to work itself out. Socialized production upon a predetermined plan becomes henceforth possible. Friedrich Engels, Socialism: Utopian and Scientific (1880)

As things stand today capitalist civilization cannot continue; we must either move forward into socialism or fall back into barbarism. Karl Kautsky, The Erfurt Program: A Discussion of Fundamentals (1892)

[S]tate ownership and control is not necessarily Socialism – if it were, then the Army, the Navy, the Police, the Judges, the Gaolers, the Informers, and the Hangmen, all would all be Socialist functionaries, as they are State officials – but the ownership by the State of all the land and materials for labour, combined with the co-operative control by the workers of such land and materials, would be Socialism. James Connelly, The New Evangel: State Monopoly vs. Socialism (1899)

Table of Contents

Preface

1 Introduction

2 Capitalism and socialism

2.1 Capitalism

2.2 Socialism

3 Planning

3.1 Goals, principles, and indicative planning

3.2 Information, economic engineering, and economic science

3.3 Investment and planning

3.4 Planning and innovation

3.5 Environmental planning and economic growth

3.6 Criticisms of planning

4 Socialism and markets

4.1 Are markets really needed?

4.2 Markets for which goods?

4.3 Money under capitalism and socialism

4.4 Markets and planning

4.5 Inflation

5 Enterprises

5.1 Enterprise scaling

5.2 Value, wage and price

5.3 A toy economy

5.4 Banking

5.5 Intellectual property vs. social investment

5.6 Agriculture

5.7 Cultural production

5.8 Capitalist property and socialist property

6 Labor and workers self-management

6.1 Workers self-management

6.2 Wages

6.3 Employment (and unemployment)

6.4 Household labor and social reproduction

6.5 Trade Unions and the transition to socialism

7 Foreign trade

7.1 Foreign trade and planning

7.2 Currency exchange

7.3 Foreign trade enterprises

7.4 Joint ventures and enterprise zones

7.5 Trade between socialist countries

8 Democracy and the state

8.1 Socialism and the state

8.2 Workers councils

8.3 Community councils

8.4 Scaling and decision making

8.5 Planning review panels

8.6 State income and taxation

8.7 Bureaucracy and socialism

8.8 Socialism and the law

9 Between capitalism and socialism

9.1 The Soviet experience

9.2 France - the Popular Front

9.3 Chile - Unidad Popular

9.4 Venezuela - Bolivarian socialism

10 Alternative anti-capitalisms

10.1 Social democracy - the reform road to socialism?

10.2 Parecon

10.3 Resource-based economy

11 Conclusions

11.1 A note on the state and revolution

11.2 There is an alternative

References

Preface

This essay began with a request from a friend to recommend some readings to them on the nuts and bolts of socialism. Then several weeks later, another friend, apparently independently, asked almost the same questions, again referring to the nuts and bolts of socialism. As I looked around for some suitable examples, I rather quickly discovered two things. First was that none of the brief writings that I encountered really fit the bill. They tended to be rather superficial and/or sloganeering. I foolishly thought that I could write a brief, accessible article that would close the gap. Second, as I began to work, I soon encountered a considerable body of thought and writing on this question, or rather, questions. Moreover, these involved issues with which I was not sufficiently familiar, even though some of the relevant writings were found (unread) on my very own bookshelf. As I continued to read and think and talk with others, I found that I was asking myself one question after another that I was not yet prepared to answer. In the last instance, I think that what I am writing about is what motivates me to continue in the fight for socialism. Now the brief article that I had intended to write has expanded into book length. The notes that you have now in front of you reflects the process of trying to answer both my friends’ questions and those of my own.

I would like to express my gratitude especially to Ann Menasche and Paul Pechter, both of whom made insightful criticisms of an earlier version of this essay. The remaining deficiencies, are, of course, my responsibility.

As should be obvious to the reader, my thinking has been influenced heavily by the writings of classical Marxism. However, the notes are not simply a string of quotations intended to justify a proposition by appeal to authority. Instead, I have tried to use the Marxist tradition, history, and methodology as a foundation to gain critical insight into the problems of imagining a socialist political economy. If I have been at all successful in this, these notes may serve to outline of some of the more important issues that need to be considered in the economic transition from capitalism to socialism. I would hope that this outline, at least, would be of some value for structuring discussion, even if the answers that are offered turn out to be wrong or incomplete. If you want to continue the discussion directly, you can contact me at SocialistEconomics (at) gmail.com.

1 Introduction

The Great Recession and financial crisis of 2007-2008 continue as the Global Slump¹. Capital responds internationally with cutbacks and austerity to boost profits at the expense of the working class.This has led to the ebb and flow of waves of resistance, worldwide movements for social justice and against austerity. These have included, for example, the Arab Spring of 2011, the 2015 Syriza electoral victory (and subsequent surrender to austerity) in Greece, and the remarkable popularity of Jeremy Corbyn in the U.K. and Bernie Sanders in the U.S in 2015. The political forms and political views of this resistance have varied around the world. There have been victories and there have been defeats, of course, but the movements continue. Although these movements differ in many ways, they are united in a growing rejection of capitalism and an openness to alternatives, including socialism.

1.1 What is socialism and why does it matter?

The failings of capitalism are becoming increasingly apparent. To cite only one example, if global warming is not reversed, our children and their children will live in a world vastly different and considerably less habitable than the one we now inhabit². Capitalism, the system that brought the climate change crisis into existence through its insatiable need for economic growth, seems unable to do anything on the scale necessary to control it. If there is no feasible alternative to capitalism, we are in deep trouble.

Socialism is the alternative. But what do socialists like myself mean when we talk about socialism? As with many things in life, there is not universal agreement on how to answer this question. The principal theme of this essay, Beyond Capitalism lies in elaborating a coherent set of answers to this question. As the essay progresses, it will introduce various ideas that have been suggested, focusing especially on how a socialist economy might be organized to satisfy human needs democratically and equitably. It is both a discussion of the problems that need to be addressed in moving beyond capitalism, as well as a glimpse of what a possible post-capitalist economic and social system might look like. Imagining a future can be an important step towards making the imaginary real.

Prior to the Russian Revolution of 1917, there had been a reluctance on the part of socialists to speculate on the nature of the future socialist society, precisely because it has been seen as a future society, whose contours will be determined by its participants³. However, since 1917 there have been examples of several societies that have attempted to create what they (or at least their leaders) considered to be socialist systems. From my perspective, these experiments have proven to be failures, though not everyone might agree. Failures or not, there are valuable lessons that can and must be learned from these real experiences. There is an extensive and growing literature, on aspects of the political economy of socialism by authors sympathetic to the goals of post-capitalist human emancipation. Much of it is in response to what we might call the socialist experiment, some of it by critical participants. For people to take the socialist project seriously, there must be a convincing reason to believe that unlike the failures of the Soviet and other experiences, another kind of socialism is possible. Then there is a practical problem faced by socialist organizers. As I meet people who are are both new to socialism, and also sympathetic to its ideals, questions naturally arise about the kind of society that we wish to bring into being. Vague appeals to a faith in the inhabitants of a future society are typically insufficient.

Socialism is (and maybe always was and will be) a contested term. For present-day social democracy (say Hollande’s Socialist Party in France) socialism stands for the gradual reform of capitalism. This sense has also been appropriated by the pro-capitalist right, for whom socialism is equated with state intervention into the capitalist economy. For these laissez faire types, even mild Keynesian reform is tarred with the brush of socialism. Perhaps the most destructive mischaracterization of socialism comes from those either on the left or the right who believe that the Stalin-led Soviet Union, along with its clones in Eastern Europe and elsewhere, constitute some form of socialism, real, actually existing or otherwise. One of the tasks of socialists is to regain an understanding of what socialism is (in theory) and what it can become (in practice).

1.2 Socialism: past, present, and future.

Several factors have converged to make this investigation timely. As the limitations of capitalism have become increasing apparent following the international economic crisis that began in 2008, there is an increasing audience for socialism throughout the world.. These notes are an attempt to address some of the questions that may be asked by those critically considering a commitment to socialist political activity. To do this, I intend to explore some the essential problems of a socialist system by comparison with capitalism. I then consider what a socialist political economy might look like, taking into account the work of those who have preceded me on this path, (at least those of whom I am aware, and whose published work is available to me). This also entails excursions into the economic history of several socialist experiments. Finally, I would like to compare the socialist perspective (or perspectives) to social democratic and anarchist alternatives. My goal is to make this accessible to a non-technical audience. I imagine two kinds of readers of this essay: First, someone who is looking for ways out of the trap in which capitalism has placed humanity, someone considering the possibility of a socialist future; someone who is willing to think through some of the economic and political implications of the road forward, but also someone without a background or formal training in economics. Second, a student or academic with some background in political economy, someone open to considering alternatives to existing the market-based and profit-driven system in which we now find ourselves; someone open to alternatives to neoclassical economics and free-market fundamentalism, the dominant academic paradigms.

My principal concern in this essay is to better understand the contours of the political economy of a society that is transitional from capitalism to socialism⁴. As Marx observed, [w]hat we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.⁵ Referring to Marx, Lenin noted in 1918 that the teachers of socialism spoke of a whole period of transition from capitalism to socialism and emphasized the prolonged birth pangs of the new society. And this new society is again an abstraction which can come into being only by passing through a series of varied, imperfect concrete attempts to create this or that socialist state.⁶ The approach that I follow in this essay is to attempt to clarify what socialist economist Alec Nove called feasible socialism⁷ during the transitional period, although the conclusions that emerge are often significantly different from those that Nove embraced. Rather than try to predict what a future socialism will look like, it seems more useful to consider alternatives that are likely to succeed and that are likely to be implemented. To look ahead somewhat, my principal argument will be that a transitional socialist economy will involve a synthesis of both plan and market, coordinated and directed democratically, and with the market subordinated to the plan. As with any such synthesis, there will always be tensions between these aspects. I believe that both an acceptance as well as a clear understanding of these tensions, along with possible reconciliation mechanisms, is essential to grasp the nature of a socialist political economy. Political economy for the transition from capitalism to socialism, I would maintain, is precisely the science of the dynamic and democratic balance between plan and market in the interest of satisfying human need, both individually and socially.

1.3 Political economy and socialism

My principal concern in this essay is to better understand the framework of possible political economies that are transitional from capitalism to socialism. The problems that this investigation raises may be addressed in two complementary ways. One the one hand, there are the issues more or less directly recognizable as the subject matter of political economy, for example, how planning and investment might work under socialism. Then there are what appear to be somewhat more abstract questions, like what is meant by socialism, or the criteria through which a socialist economy might be judged. This intellectual division of labor seems to be a necessary consequence of the problem of thinking about a socialist political economy, a problem which has not only an historical and a technical aspects, but also a speculative aspect as well.

In my view, the central problem when considering the political economy of the transition to socialism is the question of the relation between planning and markets, related to what has been called the socialist market problem. This is taken up at several points throughout this essay, especially in Chapters 2-4. and Chapter 9. In anticipation of more detailed development, I view the existence of both planning and markets as both necessary for a functioning socialist transitional economy. Equally or more important, if the idea of socialism is to have any practical meaning, I and many others believe that the economy must be regulated in its essentials by democratic planning, and not by market forces⁸. A theoretical position on this economic question is closely tied to a theoretical understanding of the political transition from capitalism to socialism, or even whether any distinct boundary exists between these systems. .

These notes are not intended to be a blueprint for constructing a new socialist society. In my view that would be an historically impossible task. This does not mean that any discussion of socialist alternatives are without value. Socialist political economy is is a work in progress, both in terms of intellectual development, and especially (I would hope) in terms of real economic and political progress. Rather than economics as a science specific to capitalism (as Rosa Luxemburg, for example, apparently believed⁹), it seems likely to me that the importance of economic science will only grow under socialism, when the anarchy of the market is brought under conscious (i.e., scientific) social control. This control will require not only a sound theoretical foundation, but, most likely, the development of a new technical cadre in the form of economic engineers and scientists. Furthermore, just as the purely economic and purely political functions will necessarily merge in a socialist society, so too will economics become political economics. I hope that this essay might encourage others with differing skills and experiences to contribute, both in theory and in practice, to the developments in a critical but constructive spirit. The work in this essay has been influenced by the contributions of previous thinkers, both in the classical Marxist tradition (that is, Marx, Engels, and Lenin, in particular) and beyond. For a macroeconomic perspective, I found Mandel (1962), Nove (1991), and Cockshott and Cottrell (1993) to provide many useful insights. On the microeconomic side, Albert and Hahnel (1991b), Wolff (2012), and Harnecker (2014) have contributed valuable perspectives. McNally