Economic Calculation

The basic conception (as mentioned in footnote 1 of DMcM) is for social ownership of means of production with a market for labor power and final consumption.

I agree that this is a necessary historical step but would prefer to emphasize its continuity with state capitalism as Lenin did in The Impending Catastrophe and How to Combat It (quotes above). Labor power as a commodity instead of "from each according to their ability" is a recognition that workers are not yet "socialist angels" but are working for pay. To the extent that the public ownership is actually administered in the interests of workers it is a transition towards communism. To the extent that there is still a separate class managing things and that class has scope to act in its own interests, it is a continuation of capitalist wage labor with, as history adequately confirms, ample scope for transition back to more "privatized" forms of capitalism.

If workers, including managers, are still motivated by payment of wages, it is merely confusing to claim that the calculations resting on that are unrelated to a "profit motive". In fact intense struggle through a historical epoch would be required to eliminate the profit motive, and its actual elimination would correspond to eliminating wage labor.

Also, while national economies are owned by nation states engaged in exchange through a world market, one cannot possibly exclude means of production from market relations.

I found Michael Perelman's draft very interesting, although I am not familiar with the literature discussed. His intellectual biography also looks like it would be worth reading more of his stuff. I suspect a large part of the practical struggle in transition will be unleashing the productive forces by eliminating the various inefficiencies that inevitably result from private interests of owners and managers by mobilizing the enthusiasm of workers as master of their destiny. This won't result from institutions or methods of calculation but actual concrete class struggle.

I agree with the central point that DMcM makes that centralization is orthogonal to social ownership with the most important centralization resulting from transition being the collective decision on proportion of output invested as opposed to decentralized decisions by individual capitalists.

Even institutional arrangements need not all be determined by government through legislation and taxes (except in the same sense that laws define the nature of corporations, cooperatives, non-profits etc under capitalism). As mentioned "Some will be new entrants who are either existing enterprises moving into a new area with synergies or starts ups established by enthusiasts with ideas the incumbents are not open to or capable of developing. This diversity could be greatly assisted by having a number of independent agencies (investment 'banks') disbursing funds in any given industry on the basis of their own assessment of what are good investments.9

However footnote 9 does not actually solve the problem of how investments of socially owned investment funds are to be allocated by decentralized socially owned financial institutions to decentralized socially owned production institutions. It merely notes that this too can be more efficiently decentralized than by the whims of parasitic owners and the institutions that manage their private wealth:

"9 Investment funds would be raised from depreciation and net revenue of enterprises, and (if

need be) from taxes. They would be distributed to agencies on the basis of past or expected

future performance and perhaps even to some extent through random allocation (i.e., lottery)."

 

My view is we need a detailed understanding of the actual role of the "finance industry" in economic calculation under capitalism in order to develop a far more effective (and less crisis prone) model of how to do that in transition. The problem is non-trivial and this theoretical work has not been done.

 

Exchanging custody of means of production among socially owned enterprises at prices does not differ in form from market exchange of ownership. If economic calculations by enterprises seek to maximize their rate of return on funds invested that differs in content only to the extent that capitalism fails to actually achieve this. My picture is that in negotiating prices and contracts production units would be motivated to increasingly give priority to overall interests and eliminate the parasitic rent seeking behaviour that characterizes capitalist inefficiency. This again implies a historical epoch of class struggle. The same applies to allocating investments but seems harder to specify given that "expected future performance" remains the criteria for calculation.

Exactly the same numerical increases in rate of return on funds invested ("performance") can be gained by monopolistic price gouging and financial manipulation as can be gained by improved efficiency. Institutions for social auditing (and absence of commercial secrecy) would provide an immediate advantage but still ultimately rely on class struggle between adherents of the socialist and capitalist roads.

The short answer to claims that decentralized price mechanisms have to be run by entrepreneurs seeking personal profit is the simple observation that the overwhelming majority of prices are in fact set by employees working for wages in large corporations owned by purely parasitic "investors". As noted in footnote 6 efficient decentralized prices for both means of production and consumer goods would become even more possible when the workers doing the decentralized price setting have ceased to be employees working for wages. They would be far more likely to be "enterprising" in seeking the common good than employees seeking to maximize their own career benefits while employed to maximise the wealth of parasitic owners.

The discussion of forces that will make workers, including managers more inclined to "do the right thing" when not working for capitalist parasites should be balanced by an explanation that the mechanisms available to capitalists for enforcing their interests on recalcitrant employees and managers will be equally available to an economy in transition and used more effectively by it. Recalcitrant managers and workers would be subject to audit, dismissal and legal penalties for fraud. There would be no starry eyed illusions about human nature having already changed, but an intense practical struggle to change it - by force to the extent necessary, just as capitalism tries to hold it back by force to the extent necessary.

The reply on historical failure of socialism is clear. Should highlight that blaming the backwardness of backward countries on the communist revolutionaries who modernized them instead of on their feudal predecessors and imperialist hostility worked well as propaganda but is quite useless for theoretical analysis.

 

The six points on superiority of socialist price mechanism highlight 6 instances where the "socialist calculation" of "performance" according to return on invested capital WILL conflict with social needs. The transition to communism is a period of overcoming these contradictions, not a "socialist system" that claims to have magically overcome them already.

 

Conclusion should be strengthened. Actually existing capitalism is a serious obstacle to the implementation of the "utopian capitalist" price mechanism described in apologist literature. Transition will simultaneously enable and supercede it.

 

A theme worth emphasizing is that revisionists habitually go for maintaining the old content by pretending that minor differences in form are decisive and can be labelled "socialist". Revolutionaries are much more likely to cheerfully maintain old forms, eg Lenin's New Economic Policy acknowledged as capitalist while striving to ACTUALLY change the content through struggle and only later

change the labels and forms.

 

Mikonakis

provides a useful survey of revisionist "market socialism" that exemplifies this preoccupation with form instead of content. (Again I'm not actually that familiar with the recent literature). Although informative, it characteristically completely omits any concept of a period of transition and class struggle. All that remains are efforts to come up with "models" that could somehow implement the pre-Marxian concept of a more equitable distribution based on capitalist relations of production.

 

Some of the detailed proposals seem quite bizarre - eg citizens owning share coupons which can be traded to discipline corporate managers but cannot be exchanged for cash.

 

Underlying this stuff is the failure to envision how finance operates under capitalism and how it would be transformed.

 

This critique by Mikonakis seems insightful:

 

"...

protagonists of new market socialism engage in a process of randomly and

arbitrarily picking up capitalist institutions which can presumably be used to ‘design the

next step of socialist experiments’, while dispensing with the institutions they consider

counter to this aim. These institutions, however, rather than being seen as the result of

deeply rooted historical processes, are treated superficially as simple empirical facts which

can be replicated at will."

 

My prejudice is that we should focus on unleashing the "X-factor" by liberation of "free enterprise" from parasitic owners by transformation from people who "only work here" into dynamic masters of their own social wealth.