MARKET SOCIALISM

...nor is it mandatory that they be aimed at...

...But it would provide an arena—a single company—in which the fight for democratic and social control would not have been lost before it began, as in the case of an entire industry...

...7These tax proposals, however, are not an inherent part of Stauber's market socialist structure—as is, for instance, the establishment of publicly owned investment banks—and would require separate legislation...

...In fact, it can be reactionary and worse...

...He writes: Whether the resulting pattern of investment is optimum from some social point of view is irrelevant...

...The distribution of a social dividend based on the earnings of the investment banks would be a significant step toward income equality...

...Fora "positive" view of market socialism see Arthur DiQuattro, "Alienation and Justice In the Market," American Political Science Review, September 1978, and his "Market Socialism and Socialist Values," Review of Radical Political Economics, Winter 1975...

...2 National priorities are to be determined through input by nongovernmental groups, which are guaranteed free access to professional research facilities and to the mass media, as well as by public and worker representatives at all levels of corporate decision-making...

...9"Market socialists" differ among themselves on the ability of market socialism to resolve the "dilemma...

...The significant point is that the authorities Harrington relies on posit the existence of a central agency setting prices...

...So he brings in an antidote, democratic planning, and puts off public ownership until the antidote (which requires a good deal of workup and "on the job" preparation) is in place...

...The market emphasizes competition with all its ramifications...

...Among American socialists, "market socialism" (a publicly owned economy relying mainly on the market mechanism for its allocative decisions) has commonly been considered a misnomer—when it has been considered at all...

...He calls for the "disaggregation" of those corporations where the existing size or combination of operations adds little or nothing to economies of scale but reduces effective competition and adds to the ability to undermine public regulation...

...By calling for a transfer to a decentralized system of public ownership on the basis of an existing market economy, the dilemmas that have driven Harrington into an impasse are overcome...

...As part of the campaign to minimize inequality and to increase the amount of money available for the social dividend, he combines his call for public ownership with a program of personal taxation on property and nonproperty incomes designed to eliminate disproportionate individual and family wealth...

...This would serve to counteract the potential abuse of power involved in a fully nationalized economy, where important economic decisions can be more effectively disguised and hidden from public view...

...It is to this central question that Harrington's program is directed: the experience will be acquired right here in the political economy of 95 democratic capitalist America...

...It was the need to have a socialist cadre in place before public ownership could be attempted that forced Harrington to postpone the attempt...

...97 How does this relate to his views on public ownership...

...See also his article "The Implications of Market Socialism in the United States," Polity, vol...

...Aside from the important social and economic advantages of tapping personal initiative, the ability of individuals to start new (corporate) enterprises, assuming they can convince the banks to loan them money, will further decentralize economic and political power...

...More, it is the socialist dilemma...

...Who, for instance, could have foretold that the building trades unions would be talking about nationalization...

...Hence, Harrington is able to characterize this kind of planning as "a publicly subsidized system of market research...

...Not among the Bolsheviks, before or after the Revolution...

...8 In general, the entire ground is shifted under the democratic controls strategy...

...Moreover, the decentralized market process for financing these firms means that government intervention or assistance to such firms would be highly visible and so would be the continual subject of political debate and decision...

...In bare outline, Stauber proposes legislation that would terminate private ownership of equity stock in American corporations and vest public ownership in these stocks in a network of investment banks owned by local governments.6 The income earned would accrue to the respective local municipalities who could use this "social dividend" as they saw fit...

...These proposals have a direct bearing on the attitude to be taken toward the existing technostructure...

...This brings us full circle...

...Nevertheless, Harrington's position is seriously deficient...

...Would he apply this to the publicly owned economy...

...He proposes a program for American socialism that excludes public ownership as a current practical option...

...4 Because of all these inhibiting factors, Harrington is led to his insistence on the structuring of democratic safeguards prior to nationalization...

...4"It is obvious that if nationalization...

...III DOES STAUBER'S VERSION of a market-socialist system provide an argument for overcoming Harrington's reluctance to adopt public ownership as part of a socialist program for the coming period...

...Not in Marx...

...Harrington, however, hastened to add: "But precisely that summit is the controlling factor in today's economic world...

...But these goals and targets are not production quotas...

...But no one knows how to make democratic control work...

...Harrington must sense this, because he acknowledges a role for the market in any transitional socialist society...

...8 Dissent, Fall 1978, p. 448...

...But the comparison is no longer valid if it is to be made between a privately owned corporate sector and a genuinely decentralized, publicly owned sector...

...They must emerge through trial and error, through testing...

...Consider the questions that must be answered: How is production to be carried out...

...But democratic planning by itself, in its "pure" form, can't work: it requires the assistance of the market...

...The companies financed by these banks would be organized along the lines of the presently existing American private corporation, rather than as a "public corporation" in which the government presence is more direct...

...It is important to understand that Stauber's concern with the decentralization of economic and political power is not a "cover" to allow the "market" full play, free of any interference...

...It can be categorically stated that this kind of planning is not being accomplished and at the present historical moment cannot be accomplished...

...I also rely on Harrington's "Economic Planning: Promises & Pitfalls," Dissent, Fall 1975, and his "Socialism and Economic Democracy," Socialist Affairs, the bulletin of the Socialist International, November-December 1979...

...Although he sometimes looks like a market socialist, he really isn't one...

...9 That Harrington is not yet ready to admit that planning by itself cannot do the job, and that this requires a major role for the market, is revealed in an aside where he discusses the famous debate over the question: In the absence of capitalist-factor markets that is, under socialism—can society rationally compute efficient prices...

...one is not ruling out indicative planning in an utterly different milieu," Dissent, Fall 1978, p. 445...

...IV TO A SIGNIFICANT DEGREE, Harrington's strategic proposals spring from his ambiguous attitude toward the market...

...In discussing the need for government to share in or assume the full risk for projects that serve certain national purposes, Stauber states categorically: "There is nothing about the market-socialist arrangements proposed here that would in the slightest reduce this recourse...

...For a discussion of various points of view see Neil Jumonville, "Market Socialism: The Theory and Its Critics," unpublished thesis, May 1977, Reed College library...

...It is true that he speaks of the market almost exclusively in relation to consumer goods...

...or: the federal government, after acquiring the securities of the firm to be broken up, could distribute to the local government investment funds, not the securities of the old firm, but the new securities of the new, successor, firms created out of the old firm...

...It is an imaginative and serious attempt to come to grips with a profound socialist problem...

...But there is a problem: What is the mechanism for running the economic machinery in an emerging socialist society...

...From May 1978 on, for over a year, In These Times held an extended discussion on market socialism, beginning with three articles by Leland Stauber and continuing with readers' responses.' And in a recent Dissent, Michael Harrington came close to investing the market with a primary role, in his "What Socialists Would Do in America—If They Could" (Dissent, Fall 1978...

...After explaining why he considered the nationalization of the entire industry to be wrong—for instance, the undoubted retention of the present managers who now would have gained "a public-interest license to carry out their private-interest policies"5 —Harrington went on to say: This reasoning has led me to favor Senator Stevenson's much more modest suggestion: the creation of one federal oil and gas corporation...

...Now those cadres are no longer absolutely required...

...nor is it required that the current managers and engineers undergo a transformation of "values," that they "go over to the people...

...If new people are expected to replace them, where do they come from...

...through legislation prohibiting conglomerate firms altogether...

...This expectation seems quite reasonable given the already existing tendency referred to by Harrington: the...

...But there is a consumer market even in Soviet-style economies...

...But in France a faction of the Socialist party, supported by close to 40 percent of the membership, advocates a form of socialism in which market forces would play a major role...

...He comes down on the side of those who hold that it could...

...Or is the old structure of authority simply replaced in its entirety by workers' control...

...There is no "plan," no "schema," no "blueprint," or any description spelling out its implementation...

...It's an old story that in the Communist countries of Eastern Europe it is considered "progressive and even radical to advocate greater reliance on markets...

...He can't live with it, he can't live without it...

...Even were the nationalization to be the work of a left-labor-liberal coalition, neither the knowledgeable socialist cadres nor the democratic structures of worker and popular control are available to make it work...

...In pursuit of the greatest gain the banks could buy and sell stock on a stock market restricted to trading solely by the investment banks...

...The decentralized publicly owned economy, at the very least, would make it unnecessary to counterpose the development of democratic controls to the establishment of a publicly owned economy...

...The answer is democratic control, structured to prevent the threat of totalitarian takeover, and to provide the arena for free cooperation...

...This, too, would allow for a good deal of independence, and would make it feasible for private promoters to start new firms in the market-socialist sector...

...In this way a publicly owned, decentralized capital market would be brought into existence...

...Both Stauber and Harrington depend, perhaps crucially, on a policy tending toward income equalization through steeply graduated taxes...

...Therefore, a system of commodity exchange, call it by whatever name, is still necessary...

...Not in Kautsky...

...Are the old managers fired...

...It remains only a concept...

...2"However, in rejecting indicative planning within a late-capitalist society...

...This is Harrington's dilemma...

...This combination is taken to be a way of overcoming the tendencies of a market economy to respond primarily to profit considerations, and to get it to respond to social priorities...

...Harrington does not commit himself...

...In fact, the struggle for both ought to go on simultaneously...

...Disruption of the presently existing technostructure would be kept to a minimum since, operating in a market economy, corporate personnel would do pretty much what they had been doing all along...

...I had no illusions that...

...61n addition to Stauber's articles in In These Times, I am relying on his "A Proposal for a Democratic Market Economy," the Journal of Comparative Economics, September 1977...

...their achievement supersedes all questions of ownership...

...On the other hand, it is imposible and undesirable to nationalize the entire economy overnight in a way that democratic socialists could support...

...3 Dissent, Fall 1978, p. 447...

...If chaos is to be avoided, the answers to these questions had better be in place before any such nationalization occurs...

...The main leverage of the banks, aside from the power to hire and fire top management, would be exerted through their ability to buy and sell stock...

...Ibid...

...There is no way to tell in advance...

...or one may "take off" while the other hardly gets off the ground...

...While they can be considered as separate, it will take the same kind of groundswell to effectuate either...

...Does the market reach back into the pipeline and draw in materials, and the production of capital goods, on the basis of its demands...

...the purpose of this part of the economic system is solely to provide such a market process...

...Now at last there are signs of interest in the U.S...

...This insistently raises the specter of the centralized state— without a key role for the market...

...We will take the principles and practices of democracy, as they already exist, and deepen and extend them until they encompass democratic planning and democratic control...

...A number of advantages should result from the adoption of these proposals: The maintenance of a market economy, already in existence, would avoid drastic change and upheaval and promise at least the same degree of economic efficiency...

...But if the "planning" agency, either centrally or in concert with the owners, does not carry the main responsibility for making allocative decisions, what mechanism other than the market is there...

...this would remain the function of management...

...The use of a market process for allocating publicly owned investment funds would avoid reliance on some powerful central administration...

...We know now that nationalization per se is not "progressive...

...It is this idea that Harrington later expanded and elaborated to become a major strategy in his socialist program for America...

...Since there would be thousands of semiautonomous investment banks throughout the country, their decisions would reflect a radical decentralization of economic power...

...In the meantime, the only responsible action that socialists can advocate and support is the kind exemplified by Harrington's stance when the idea of nationalizing the oil industry, lock, stock, and barrel arose among trade unionists and liberals as an aftermath of the 1973 gasoline shortage...

...a move that is as necessary in the long run as it is premature in the short run...

...Harrington's discussion of this question is unclear...

...Democratic control and planning is decisive...

...I think so...

...Harrington writes that "a transitional socialist society would make full use of the virtues of the market mechanism...

...He posits a structure of democratic planning and control that would eventually make it possible for socialists to support fuller nationalization...

...While the investment banks, as shareholders, would hire and fire top management, they would not run the enterprises...

...What is the structure of the organization for planning...

...To appreciate this insistence, consider an overnight "total" nationalization that at its inception was expected to fit the concept of "social property...

...Experience teaches us that a piecemeal nationalization compels the minority sector to operate within a sea of capitalist enterprises where it constantly faces the danger of co-optation...

...Central control, while appearing to open the way for rational planning, involves the risk of totalitarianism...

...Then public ownership provides an infinitely more secure foundation for democratic controls...

...He advocates the market solely in relation to consumer wants...

...To insist on more at this time is to approach the matter of public ownership in a doctrinaire fashion...

...The urgent question remains: What is the society's allocative mechanism...

...is not to be merely a bureaucratic act that might inadvertently lay the basis for corporate collectivism, there must be structural safeguards built into the public enterprise itself' (Dissent, Fall 1975, p. 317...

...Based on the market, Stauber's proposals obviate the need for the kind of major reorganization of the economy that could spell dislocation and chaos, or that involve recourse to authoritarian planning and control...

...This makes the matter of "democratic control" less urgent, and changes the "rules" for defining "social property...

...But still, Harrington cannot let go—otherwise he would end up a "market socialist...

...This sets real limits on how far the policy can be carried out...

...If the means exist within a democratic context to render the owners of corporate America functionless —isn't that enough for one day...

...How much authority will reside in individual plants...

...In the U.S., private ownership of the economy is the basis for the private control of the economy...

...So long as they remain on the job and work efficiently enough to avoid major dislocation this would be sufficient...

...But where will the answers come from...

...Stauber also sees market socialism as allowing a more effective antitrust policy...

...II AT THIS POINT, the contribution t f the market socialist, particularly Leland Stauber's, seems relevant...

...The threat to democracy posed by a concentration of political and economic power in the public ownership of the basic means of production would be lessened through the decentralization of ownership and control of the capital market...

...Harrington's insistence that the structure of democratic controls be in place prior to any wholesale nationalization means, in practical terms, that the development of democratic controls and direct worker participation can proceed more securely on the basis of a privately owned corporate sector than a state-owned and statecontrolled sector...

...Instead of viewing public ownership solely in its typical nationalized form, where government bureaucrats, or the old managements now employed by the government, manage the nationalized industry, Stauber's proposals demonstrate that a decentralized form of social ownership is possible...

...Responses in the March 1978 issue, and Stauber's reply in the December 1978 issue...

...it would change much of the energy power structure...

...On the other hand, nowhere does he indicate any substitute mechanism for allocating the factors that go into the making of consumer goods...

...1, 1975...

...This could be accomplished through special legislation applying to particular 96 industries...

...8, no...

...Is production planned, and if so, how...

...It could provide a training school for those forces that could eventually participate in a democratic socialization of the entire industry...

...A rough analogy is the democratic socialist preference for capitalist democracy over bureaucratic collectivism—and for the same reasons...

...How much in an all-industry committee...

...It makes no sense not to attack that foundation if public ownership can be instituted in such a way that (1) it does not get submerged in a surrounding capitalist sea, and (2) wholesale nationalization does not mean centralized control...

...But his heart belongs to planning...

...The key question involves the factors that go into the production of items for the consumer...

...They resolve the "double-bind" of the "impossible" wholesale nationalization versus the co-opted piecemeal variety...

...Harrington would combine the techniques of French-style "indicative planning" with a wide extension of democracy...

...The productive system is not large enough to provide completely free goods and services...

...If the results of this process diverge from what is deemed socially desirable, then separate government measures can be used to promote the results desired...

...And given the immense power that nationalization would confer on state bureaucrats, to attempt it without such cadres and controls would be an irresponsible risk...

...In order to understand his position, we need to begin with his ambivalent feelings (fully justified) toward publicly owned enterprises and the decision that follows from these feelings to focus above all on structures of democratic control...

...But it is the experience of social democracies and welfare states that this policy will meet greater political resistance the deeper it cuts...

...Socialists want neither the market nor central control...

...He expressly rules out a system of "centralized command planning with the bureaucracy setting thousands of prices and production targets...

...Some see the market as a necessary transitional device, others as a neutral mechanism that can be utilized to achieve socialist justice and equality...

...Notes In these Times will provide Stauber's articles and the responses for a reasonable price...

...In and of itself," Harrington writes, "nationalization is neither good nor bad "3 The purposes it is put to, and the social interests that are served, will determine our judgment...

...emergence of a Galbraithian `technostructure' that, except at the very summit, will hire out to anybody as long as the pay is relatively good...

...Given the current social and political context, the odds favor the "bad...

...The techniques of indicative planning include: collection and analysis of data, wide publicity, discussion among the various sectors with representatives of owners, managers, technicians, labor and government and, finally, projection of the goals and targets, of a "Plan...

...And so forth...