Marx: "Right about capitalism, wrong about socialism"

I've been engaged in an exploration of the Marxian analysis of capitalism as a mode of production, how any successor society might emerge and what it might be like. I've read the first two volumes of Capital (bulky, circuitous and sprawling though they are) and also two excellent introductions from Michael Heinrich and Duncan Foley.

Amazon link .. and PDF

Amazon link .. and PDF

I feel quite sufficiently educated. I also concur with the Russian epigram quoted above: Marx was right about capitalism, but wrong about socialism.

But .. before we get too judgemental .. it's worth bearing in mind that Marx said very little about socialism. As Duncan Foley observes in his "Socialist alternatives to capitalism I: Marx to Hayek",

"In general Marx responded to questions about his views on the organization of socialist society by saying that these questions could be solved only by those who actually confronted them historically, that is, presumably, by the revolutionary movements that would establish socialist institutions. This is a prudent and in some ways sensible stance, but frustrating to a posterity that has made notably little progress on these problems."

Foley continues:

"Really existing socialism

"History, of course, was not waiting for political economy to sort out the issue of socialism. The early decades of the twentieth century also saw the emergence of a Soviet Union dedicated, rhetorically at least, to the building of a socialist economy, out of the wreckage of the Russian Empire.

The Bolsheviks confronted two practical political economic problems in the 1920s. Perhaps the lesser was the organization of day-to-day production and distribution. The greater was what later came to be called the problem of “development”: how to transform the backward, largely traditional agricultural economy of the sprawling Russian empire into a viable industrialized power.

The second task was all the more pressing because the denouement of the First World War on the Eastern Front had revealed the military and political vulnerability of a backward Russian economy in a world increasingly populated by industrialized capitalist powers.

The Soviets, whose leadership contained some remarkably talented and thoughtful figures, such as Nikolai Bukharin, arrived at a practical solution to the problem of organization of day-to-day production fairly soon after consolidating political power through prevailing in the Civil War with the Whites. This took the form of the “New Economic Policy” (NEP), which allowed, and indeed encouraged, capitalist commodity production in many sectors of the economy, including food production.

The NEP structurally created a “mixed” economy in which a large private sector co-existed with state-sponsored industrial enterprises. (The NEP is recognizably a precursor of Deng Xiaoping’s “socialist market economy” which was the framework for Chinese economic growth in recent years.)

The NEP worked well to stabilize the Soviet economy after the Civil War; under this regime output and incomes recovered significantly from the low levels of the Civil War period. Many Bolsheviks, including Lenin, were willing to accept the NEP framework as an indefinitely prolonged phase of building socialism, as long as the state held the “commanding heights” of the economy through control of energy, transportation, heavy industry, and finance.

Two connected and predictable developments undermined the NEP. First, as we would expect, the privatized commodity-producing sector of the economy exemplified some fundamental laws in generating large disparities in income and wealth. The appearance of a wealthy proto-bourgeoisie in the midst of a society governed by a one-party dictatorship committed to socialist goals threatened the narrow political base of Bolshevik power.

Second, the NEP was structurally favorable to the agricultural sector, particularly to the market-oriented strata of the peasants. The NEP thus resulted in a relatively “balanced” path of economic growth between industry and agriculture. Not surprisingly the prices of food and other agricultural products tended to rise relative to industrially produced goods, limiting the degree to which surplus production in agriculture could be mobilized for rapid industrial investment.

Despite Bukharin’s determination to “ride to socialism behind the peasant’s nag”, NEP policies proved explosively unstable politically, and collapsed under efforts to mobilize agricultural surpluses by military force which ultimately led to collectivization, central planning, and the bloody political purges of the nineteen-thirties.

Stalin rather than Bukharin balanced at the top of the “greasy pole” of Communist Party politics apparently more by ruthless and opportunistic manipulation of coalition politics than through consolidating a stable political base of power.

Just how the Soviet economy did operate in the 1930s, and in particular what was the practical mixture of bottom-up and top-down dynamics in this period remains obscure. A relatively small central planning bureaucracy had in theory enormous economic power to implement a policy of extremely rapid industrialization centered on the expansion of heavy industry. It seems unlikely that the fairly coarse-grained plans produced could be the whole story of Soviet economic life under this regime.

The management of new industrial armies recruited to new urban centers involved a great deal of decentralized local improvisation and experimentation. Since the centralized planning bureaucracy did not actually control many resources itself, local managers facing shortages of inputs and surpluses of outputs improvised informal market-like arrangements with each other. Despite the wishful thinking of market-fundamentalists, capitalist economies in periods of extremely rapid industrialization have often strayed significantly from the orthodoxies of profit-maximization given market prices, making it difficult to draw hard analytical lines by which to characterize the Soviet experiment.

While the Soviets were engaged in their furious (if in the very long run curiously futile) attempt to change the world, western European philosophers continued to interpret it. ... "

In his follow-up paper, "Socialist alternatives to capitalism II: Vienna to Santa Fe", Foley contemplates the great complexity of the global capitalist economy and speculates how any subsequent mode of production could do better as regards the difficult issues of economic information retrieval, resource allocation and optimality of outcomes. He contrasts top-down and bottom-up approaches:

"The last half of the twentieth century saw an upsurge in interest in bottom-up self-organized systems, such as ant-hills and bees’ nests, bird flocks, computer networks, unsupervised learning algorithms such as neural nets, the capitalist economy, possibly the human brain and a host of other similar examples.

Several features of these bottom-up systems draw the attention of systems thinkers. For one thing, compared to top-down optimal control systems, bottom-up self-organized systems tend to be more “resilient” or “robust”. Self organized systems often (though not invariably) continue to function (possibly in a degraded mode) despite the disruption or even destruction of important subsystems, and in important cases can recover from such damage spontaneously.

Top-down systems can be built with considerably “redundancy”, but tend to be more vulnerable to disruption of key elements, particularly the feedbacks that implement their optimal control properties.

Another intriguing property of bottom-up self-organized systems is that although they are not designed to achieve optimal performance, they often do perform surprisingly well. Ant-hills, for example, are remarkably efficient in locating and exploiting food sources. Bottom-up self-organized systems also exhibit a high degree of adaptability to new situations. Optimal control systems tend to be optimized for some particular context in which they are designed to operate. Self-organized systems can adapt to a wide range of environmental changes (though there are typically limits to the magnitude of shocks any such system can survive).

Capitalism itself is a good example of all these features of spontaneously organized bottom-up systems: historically capitalist institutions tend to reproduce themselves even after the destruction wrought by wars, revolutions and financial meltdowns; capitalist allocation of resources approximates efficiency to some degree; and capitalism has proven to be highly adaptable in the face of massive environmental changes (many of which, such as world population growth and technical innovations, arise from the dynamics of capital accumulation itself).

The vision of the economy as a complex system gives rise to a “bottom-up” understanding of how commodity production is organized, a la Hayek. It also suggests a parallel bottom-up vision of socialism as arising from the spontaneous organization of production through some framework of institutions different from private appropriation and exchange of products.

This bottom-up vision of social organization resonates with important political currents of the late twentieth century. The “New Left” movements of the nineteen-sixties rebelled against the centralizing and regimenting tendencies of “Old Left” socialism and communism by calling for decentralization, participation, and the political primacy of individual freedom and expression.

The Left, such as it is in the contemporary world of globalized capitalism, is much more attracted to the vision of spontaneous political expression than to the unpleasant chore of organizing political institutions.

This enthusiasm for spontaneity without central coordination or direction has attached different parts of the Left to various economic experiments, plans, philosophies, and models. Some of these, such as micro-credit institutions, amount to very minor modifications of the capitalist commodity system (or could indeed be regarded as systematic extensions of the logic of the commodity system).

One idea which flowers perennially on the Left as an alternative to capitalism is workers’ control. ..."

Foley then looks in detail at the historical experience with workers' control, particularly in the former Yugoslavia, and comes to some very pessimistic conclusions.

"When worker-controlled enterprises become very successful, the resulting hierarchy of workers begins to resemble that of capitalist firms. When the contradictions between the juridical form of organization of the enterprise and the substantive claims of different strata of workers to the surplus revenues become acute, it is common for worker-controlled enterprises to privatize themselves spontaneously, converting into traditional capitalist firms.

A second point is that despite the demonstrated capability of worker-controlled firms to compete successfully with capitalist firms under particular circumstances, there has been no tendency for worker controlled enterprises to grow spontaneously to crowd out capitalist firms in any economy: workers’ control remains a relatively small sector even in societies where tradition and practice favor this form of productive organization."

So no easy answers then. However, Foley's essay would not be complete without at least an attempt to provide an existence proof that a mode of production transcending capitalism is at least possible (- all emphasis in the extract below has been added).

"To bring this talk to an end, I will indulge in the luxury of fantasizing about some alternatives to capitalist-commodity production.

There are some ground rules for this exercise. This is speculation about changing what Marx calls social relations of production. In thinking about alternatives in this (very broad) range of issues I am not required to consider every social problem (foreign policy, religion, education, political institutions, mental illness, drug abuse, culture).

In general, the basic supposition is that life goes on as usual. People get up, go to work or school, form families, reproduce, age, consume, and so forth. There are natural disasters and domestic and foreign conflicts, regional divisions, and the like. But it is not fair for me to wish away critical aspects of the problem of organizing a complex division of labor to sustain the type of technologically sophisticated society post-industrial capitalism has created, with relatively high levels of consumption and economic security.

For example, it would not be very interesting for me to posit a system of universal abundance of use-values created by some imaginary robot workforce, and then to spin a vision of the resulting glittering possibilities for human social life.

It would also not be of much interest for me to ignore the problem of a “transition” by assuming a complete self-contained and self-reproducing alternative system. A socialist fantasy alternative has to include the notion of a “mixed” economy, in which commodity-capitalist social relations continue to prevail in some sectors, or regions. The socialist sector of the economy has to include methods for dealing with a capitalist-commodity other.

Furthermore, I am most interested in ideas that would allow a socialist alternative to co-exist with (and in a larger sense compete with) capitalist-commodity social relations indefinitely. Thus it is not fair for me to assume some “revolutionary” transformation of the whole society (even with the dystopian backdrop of a looming or ongoing ecological crisis) to resolve basic problems of social relations.

It is equally uninteresting for me, however, to ignore the deep hostility of bourgeois ideology to radical alternatives to capitalist-commodity production. I am interested primarily in how ordinary, regular suburban/urban people who by and large have jobs, incomes, and more or less stable lives through the capitalist-commodity system might transform their social relations of production.

It is not going to be hard to criticize the particular fantasy I put forward. The main function of such exercises is to induce dialectic thinking by making concrete assumptions that can be knocked down.

On the other hand, it is not in the spirit of this kind of exercise to invoke “human nature” in one or another of its many incarnations as an objection; or to wish away through assertion the fact that capitalist-commodity production has many parallel unresolved contradictions.

It is not reasonable to insist, for example, that opportunistic behavior would be any less mixed with social and other-regarding behavior in a socialist fantasy than it is in capitalist commodity reality. In fact, it seems reasonable to suppose that a change in social relations could re-balance human behavior towards others at least at the margin.

It also seems reasonable to suppose that people are grown-up enough and aware enough of the facts of economic life to understand that at an aggregate level consumption depends on production, and that they are willing to accept social responsibility to work productively as a condition of consuming."

Don't hold your breath: gaming the system is rather pervasive in human affairs.

"Lifenet 

"So let us imagine an alternative set of social relations, which I will call “Lifenet” which can organize social production to meet at least some part of the spectrum of human needs outside capitalist-commodity institutions.

Lifenet production is organized through peer-production enterprises. People start or join existing peer-production initiatives without any direct material compensation. The output of these enterprises is made available freely to participants in the system through a Lifenet distribution system, just as open-source software is published freely through open source licenses.

One key point here is that users or consumers of Lifenet outputs agree not to re-sell them as commodities for money. The aim is to create an alternative system of production and distribution that can be effectively separated from capitalist-commodity production.

Participants in Lifenet enterprises have a Lifenet account maintained in a central Lifenet database. The Lifenet account records individual contributions to Lifenet enterprises, and also individual withdrawals of Lifenet products. Thus an individual who participated in a food production enterprise would have that participation recorded in her Lifenet account; if she received food or clothing or software from Lifenet distribution centers (perhaps something like food coops or farmers’ markets today) these withdrawals would also be recorded in the Lifenet account. (One can imagine something like a credit card system to maintain these accounts automatically.)

The purpose of the Lifenet account would not be to enforce an exact balance between individual contributions to the production system on the one hand and withdrawals through the distribution system on the other. It would, however, allow the system to monitor the balance of production and distribution as a whole, and to identify and discourage or prevent possible abusive over-drawing on distribution. (If some level of the individual accounts were publicly accessible, peer pressure could play a major role in this respect.)

The premise of the accounts is that Lifenet as a whole is solvent, and has products available for distribution. A Lifenet system is going to work only if the individuals participating and the system itself develop an ethos of thrift, prudence, and waste-aversion. Lifenet must prudently keep large reserves of products to secure its ability to respond to contingencies (natural disasters, local breakdowns of the system) flexibly and reliably. The participants in the system must use its resources sparingly and thriftily, both as producers and consumers. The idea of “enough” has to pervade the system from top to bottom.

He goes on but you can see (as in David Schweickart's account of a possible model for socialism which I wrote about), this is already sinking under its own implausibilities.

It is worth emphasising what derails all these models of socialism: the conflict between the interests of the larger economy vs. the interests of groups comprised of families and friends.

'Communist man' does not exist and  - short of substantial genomic engineering - never will: we are not ants. When this factory has to close and the workers relocate, or that sacrifice has to be made 'for the common good', then under capitalism - in the final analysis - coercion is applied.

Conflicts are intrinsic and unavoidable. Contemporary Marxist intellectuals always leave the room at this point, wringing their hands; the Bolsheviks were never so mealy-mouthed.

So if Professor Foley, a very smart economist, can do no better than this after a lifetime of study, I am more than ever convinced that capitalism will be superseded only when it has created sufficient cognitive-robotic automation to essentially displace the proletariat from production .. and thus end any further possibilities of capital accumulation.