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Tuesday, August 10, 2010


Once again, I have decided to respond to the general drift of the comments with a post, rather than with short individual replies. I hope this works for everyone. Let me begin with Mike's comment, which allows me to raise what I think is an absolutely fundamental point. I am going to refer everyone to my paper "The Future of Socialism." Now, I realize that this habit I have of referring to things I have written or published can be irritating -- a bit too much like Mr Toad in THE WIND AND THE WILLOWS. But I have been thinking about these issues for half a century or more, and have over that time written a good deal about them, so I hope you will forgive me.

Mike, I wish to begin by quibbling with your metaphors, because a very deep truth lies concealed in that quibble. You question the desirability of "bringing down," "scrapping," or "toppling" capitalism. Capitalism is not a tree that can be "toppled" by cutting through its trunk near the ground. Nor is it a building that can be "brought down" by a series of well placed explosive charges. It is an enormously complex system of social and economic relationships, of laws, practices, and institutions involving most of the people on the face of the earth. History records that such systems change slowly, as the result of the choices and actions and habits of countless people, but change they do. The first question we must try to answer is whether we can see changes taking place within the capitalist socio-economic system, and if so, in what direction those changes seem to be moving the system.

Now clearly capitalism has been changing rapidly since it emerged as the dominant form of society and economy more than two hundred years ago. The changes have been technical -- in the processes of production -- and organizational -- in the appearance and explosive growth of limited liability joint stock corporations along side older proprietorships and partnerships -- and structural -- in the emergence of financial capitalism alongside capitalist productive activities. Virtually all of these changes have been driven by the perceived self-interest of those in control of the means of production, save for the changes forced on them by the organized activity of their employees.

From the outset, there have been thinkers who tried to imagine better ways of organizing economic activity -- those whom Marx and Engels rather dismissively called "Utopian Socialists." Marx's disdain for these efforts stemmed not from their motivation, which by and large he shared, but from the fact that they were mere speculations, unconnected to an analysis of the actual operations of the capitalist system -- what Marx called "the laws of motion of" capitalism. On the basis of his historical study, Marx concluded that far-reaching socio-economic change is driven by internal evolutionary developments in a society and economy, not by utopian planning or by the deliberate decisions of dictators. He believed that socialism -- the collective management of capital for collective social purposes -- could come about only after the way had been prepared for it within capitalism by the capitalists themselves. To be sure, he anticipated a violent final upheaval, although later in his life he acknowledged the possibility of more peaceful transitions, but this could not happen until the structural requirements for collective management of the economy had already developed within capitalism.

Let me give you several simple examples of what Marx meant by this rather strange claim. Early in the evolution of capitalism, firms were small relative to the size of the market into which they were selling. They were run, typically, by the entrepreneurs who founded them, and they were what economists call "price takers," not "price makers." That is to say, competition forced them to pay the market price for their inputs and charge the market price for their output. This fact, which made them subordinate to forces they could not control, drove them relentlessly to enlarge the scope of their enterprises, to engage in what economists call vertical and horizontal integration, leading finally to the enormous multi-national conglomerates we see today. The internal decision making in such firms has become more and more like the central economic planning of a small state, thus preparing the way for the possibility of planned economic activity oriented to social need rather than to private profit.

A second example. Planning even a small economy clearly requires the real-time acquisition and deployment of vast amounts of information of a very particular sort, about products, quantities, potential bottlenecks, input requirements into production, personnel, and so forth. Nothing remotely like this level of information management was possible in Marx's day, nor even when I was a young man. But it is now a routine part of the operations of modern corporations. Every time you buy something at a supermarket or department store checkout, its bar code is scanned, and the transaction automatically recorded and analyzed, so that those in charge of restocking the store can keep track of which items need to be purchased from suppliers. Factories that used to stock huge piles of parts and raw materials now rely on "just in time" supplying and resupplying. Even book publishers no longer keep warehouses full of print runs, instead printing copies as they are ordered. All of these developments, spurred by hardheaded profit driven capitalists, not by utopian socialist dreamers, are creating the objective possibility of a planned economy.

If we want to know what a centrally managed and planned economy might be like, we should look not to small utopian rural enclaves engaged in sustainable agriculture, but to the most efficient large multi-national corporations. They are the innovators in information management, long-term planning, and the like.
The question for people like me, who despair at the inequities and destructiveness of capitalism, is what direction capitalism itself is evolving in, and what role, if any, I and others like me could play in applying pressure to transform it into a humane collective undertaking managed for the good of all rather than for the profit of the few. Marx believed he could see the outlines of that process of transformation in the centralization and ever greater instability of capital, and the correlative greater and greater organization of workers. For reasons I outline in the paper referenced above, I am now pessimistic about that analysis. It is for that reason that I am pessimistic in general about the prospects for a transition to socialism. But I remain convinced that Marx was fundamentally right in believing that such a transition must grow within capitalism.


Scott said...

What are your thoughts on the Mondragón Cooperative Corporation? Isn't this a textbook example of building a new society in the shell of the old one?

NotHobbes said...

As you rightly say in your Future of Socialism, Marx failed to anticipate the Capitalist ability to stabilise but surely he was right when he spoke of "furnishing the proletariat with tools" a process which is still in it`s infancy when compared to capitalism.
Philosophy, Sociology and so forth are only now slowly but surely finding their way into mainstream curriculum; perhaps our great grandchildren will witness the changes we so fervently desire?

Unknown said...


Thanks for clarifying your view. I very much enjoy reading your thoughts on these matters. Let me try to raise a few questions.

First, if you are concerned with the exploitation of the poor, shouldn't you favor a return to the old capitalism in which firms were price takers rather than price makers? I'm a bit rusty on my Marx, but didn't he define exploitation as the appropriation of surplus value, which is possible only if a capitalist is not a slave to the market, so to speak?

While I agree with your point that modern capitalism contains the seeds of a planned economy, I am less convinced that, on the whole, a planned economy would be an improvement over the current system. First, it clearly matters who is doing the planning. Do we have any reason to think that he or she will be especially magnanimous? Second, and I may be way off here, my impression is that large multinational corporations, for all their IT wizardry, are considerably more bureaucratic and less efficient than their smaller counterparts. I admit, though, that on that point I am way out of my element!

GTChristie said...

But I have been thinking about these issues for half a century or more, and have over that time written a good deal about them, so I hope you will forgive me.

Quite forgiveable, sir, and endearing. I think it was Saroyan who said he quoted himself often because it's the best material. You deserve no less and I enjoy it.