As I explained in "The Future of Socialism," the elements of economic planning grow "within the womb of capitalism" because as firms expand and diversify, the market ceases to give unambiguous signals by which capitalist managers may guide their decisions concerning capital allocation, their estimations of profitability, and their choices of such central factors as the proper rate of savings. It is also true, of course, that such signals as the market does give do not serve to guide the decisions of capitalist firms toward the fulfillment of pressing human needs, but that is no concern of the managers, and it therefore has no effect on their corporate policy. If money can be made building McMansions while hard-working men and women are unable to find affordable housing, nothing in the logic of capitalism will incline builders toward the production of well-designed low-cost housing. But of course managers are not averse to satisfying human needs along the way, as it were. Well-designed mass produced clothing is profitable, at least as long as cheap labor is available in Asia or Africa, so even the poor in America can be stylishly dressed.
Capitalists learned how to manage the periodic crises of overproduction and underconsumption, thanks in part to Lord Keynes, but the explosion of the world-wide financial sector has created new kinds of crises that capitalism has not yet subdued. It would be a mistake, I think, to expect that failure to lead us toward the replacement of capitalist by socialist relations of production and distribution. Rather, we can anticipate that capitalism will develop more effective institutions for managing the financial components of capitalism, which is simply another way of saying that the new will continue to grow in the womb of the old.
How, then, if at all, can a transition to a humane socialist economic order come about? Only through mass mobilization, bottom-up organization, and the use of the collected political power of the great majority to take control of the thoroughly socialized means of production. This effort, if it is to succeed, must be grounded in the simple ideas set forth in my Credo -- that the vast wealth of modern society is the product of the collective efforts of the all men and women, built on the efforts of past generations, and -- in the evocative words of Edmund Burke -- passed on to generations yet unborn.
After this great transformation, Scott, if ever it should come about, there will still be a role for markets and room for individual entrepreneurs. Not to worry.