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The Move to Socialism
In the early twentieth century, the centre of resistance to capitalism shifted to the countries of the east, those undergoing early industrialisation. It is here that capitalism broke down when weakened by wars and revolutionary uprisings. Socialism was a vehicle for emancipation – a much wider objective than opposition to exploitation. Movements, such as those which led to the formation of the USSR and the People’s Republic of China, did break the structure of world capitalism. In doing so they created an alternative to competitive market capitalism. But the conditions and consequences were not those anticipated by Marx.
Socialism brought modernisation without capitalist exploitation. But it is questionable whether the social formation which arose was qualitatively at a higher economic level than capitalism. One has to examine once more what socialist structures and processes are needed to supersede capitalism. What kind of economic coordination can replace market competition predicated on private property?
The Planned Society
Engels is best known for his emphasis on the role of planning which was adopted in different forms and to different degrees by socialist governments. For Engels, under socialism, ‘Anarchy in social production is replaced by plan-conforming, conscious organisation.’ Thus ‘the whole sphere of the conditions of life… which have hitherto ruled man, now comes under the domination and control of man who, for the first time, becomes …the master of his own social organisation. [1]’ The objective of national planning is to bring about a coherent pattern of investment, consumption, income distribution and employment. It enables social and environmental costs to be calculated and minimised.
The system of planning created in the Soviet Union was successful in many respects: it achieved rapid industrialisation and significant advances in some fields, even surpassing capitalism in such fields as space exploration; and in the post-war period significantly reduced differentials in income and wealth compared to capitalism. High rates of utilisation of capital and labour were achieved. Data collected by the United Nations Development Programme show that for given levels of GDP, human development (education, life expectancy) was often superior in the socialist states to capitalist ones. Planning had resolved the endemic crises invoked by the cyclical movements of capitalism.
However, in the latter part of the twentieth century, confronted with the tasks of intensive development in a more advanced and differentiated industrial economy, Soviet-type planning was found to be inadequate. Rather than transcending capitalism, the socialist states were successful developmental models to catch up to the level of production of capitalism. Their leaders turned to introduce the market to solve the ‘zastoi’ or slowing down of the Soviet economy.
In retrospect, the introduction of market relations, advocated by a long line of socialist economists, and finally put into effect by radical reformers under Gorbachev, was not successful – at least in the European post-socialist states. Not only did reforms effectively dismantle the system of planning but in doing so they destroyed what has been the only operational alternative economic system to capitalism. In consequence, yet another assumption of Marx was negated – socialist societies ‘turned back’ to capitalism.
The economic crises of capitalism continue; the world’s physical and human resources are not humanely and efficiently utilised. Economic exploitation, in Marx’s sense, rejoined enlightenment.
The Economic Challenge
The challenge of an alternative to capitalism or of different ways to coordinate capitalism remains. One way to approach this might be to consider revisiting ideas of planning which were articulated in the Soviet Union from the 1960s onwards. Socialist planning can consider comprehensively the costs and benefits of different developmental proposals. The development of computerisation has transformed the planning process as modern computers can effectively calculate prices which will equilibriate demand and supply – effectively replacing the need for a market. This conclusion had been reached by Oskar Lange in 1967 [2]. The great advantage of computerisation is that shadow prices can be estimated for a longer time scale. In the USSR, the work of L. V. Kantorovich and the system of mathematical planning pioneered by V.S. Nemchinov had been prematurely discarded.
Currently, major western organisations, such as General Motors and the US military, perform economic coordination on a scale comparable to many national economies. Since the dismantling of the European planned economies significant advances have been made in computer science which can solve the economic problems of coordination faced by Soviet planners in the 1980s. Developments in bar coding of commodities and universal bar codes, for example, facilitate the kind of computer planning required in a complex economy. Utilisation of such techniques would not only enable the full use of resources but would ensure consumer demand to be effectively incorporated into national plans. One lesson to be learned from recent history is the need for more planning and less marketisation.
And other lessons from the dismantling of the USSR include the need for methods of participation in the organisation and management of the economy to include the population in meaningful ways to assure its legitimacy as well as its efficiency: more democracy and less bureaucracy.
What next?
Marxism’s major contribution has been to focus attention on the economic processes of capitalism as a critique of its social order. While Marx was one of the first theorists to emphasise that its dynamics would lead to the spread of capitalism on a world wide basis, its contradictions have not led to a final collapse. The polarisation of class struggle has been replaced by a much more differentiated class system and a more pluralistic political process. There has been a movement to a more organised form of capitalism in the form of transnational financial and non-financial companies and the rise of global institutions. The cyclical development of capitalism continues. The appraisal of Marx should consider his contribution to social and political thought, rather than the use of his writing as a legitimation of any particular policy. There is no more need to follow ‘Marxism’ than there is to follow ‘Darwinism’. His materialist approach has been widely accepted and his political predictions dismissed. In this respect his work has been absorbed in various degrees by different subjects in the humanities and social sciences, it has influenced political parties and remains a debatable approach to an understanding of world history.
[1] F. Engels, Anti-Duhring, Moscow: FLPH 1954. p.392.
[2] O. Lange, The Computer and the Market, in C. Feinstein (ed), Socialism, Capitalism and Economic Growth. Cambridge University Press 1967. pp.158-161
