Revolution#118, February 3, 2008

Socialist Planning or “Market Socialism”?

Revolutionary Worker #1166–68, September 15–29, 2002, posted at

I have been following the debate on the website with great interest—and have been especially interested in what several people have posted on planning and markets. This has also been a topic in exchanges I’ve had with political economists and others about the Draft Programme.

As a Maoist political economist, I consider the question of “planning versus markets” to be a highly important one. It has everything to do with understanding and changing the world. So I thought I would make some comments, based on some of my discussions and also in response to points raised by participants on the site.

One person on the site, BrightRedLight (BRL), articulates a viewpoint opposed to comprehensive socialist planning (the phrase used is “strong command economies”). BRL says there’s nothing wrong with markets as such, and writes: “There is nothing straight forwardly contradictory or unjust about a market-socialist society that ended capitalist appropriation of surplus value by governmental regulations ensuring the full appropriation of the product by the workers in a given factory. I think that we as socialists, need to seriously criticize command economic models.”

He and others argue that a modified form of a market economy, one without exploitation, could be a useful counterweight to out-of-touch or arbitrary central planners. Like anarchists, BRL thinks that socialist state planning is undemocratic and results in bureaucrats ripping off workers. Like “market socialists” (people who feel that the market can be reshaped to serve worker interests), BRL argues that centralized planning might be useful for some big projects but that when it comes to other things, like consumer goods, it doesn’t work.

I understand that real concerns are bound up with these positions, but I strongly disagree with the argumentation and the conclusions. I believe that commodity production and the market have to be transcended—because they are obstacles to people consciously taking hold of and transforming society.

I also think history has shown that a revolutionary system of planning can work in a way that both meets social need and empowers people. Put differently, socialist planning is not fundamentally a question of what planners and planning agencies do, important as that is. Rather it is a question first and foremost of developing the means and mechanisms by which society can consciously regulate social production—in the service of overall political, social, and economic objectives and on the basis of the conscious activity of the masses. The proletarian state is indispensable to this process. But things are not so simple.

First of all, it’s not possible to abolish commodity-market relations overnight. The new socialist economy will have to utilize certain aspects of these relations. For instance, distribution of some consumer goods will involve forms of commerce and exchange through money. But, at the same time, the new society has to restrict the role and influence of commodity-market relations.

Second, there is real potential for socialist state structures to become divorced from the masses, for the socialist state to be turned into a capitalist state, and for state planning to become a tool of a new state capitalist class. But that’s not an argument to abandon socialist planning in favor of the market. It’s a warning to take the problem of bureaucratism and the danger of capitalist restoration seriously.

This article has five main sections.

1) The first discusses what markets are and why you can’t have the rule of the market in the distribution of goods without ultimately having a market in means of production and labor power, i.e. capitalist exploitation.

2) The second deals with what’s wrong with a market-based economy and why the market is an obstacle to the full emancipation of humanity.

3) The third answers some of the charges made by critics of the “command economy.” For example, in this website discussion, BrightRedLight writes, “Lotta seems to think that only options available to a modern world are capitalism or a socialist command economy... If you take Marx’s theory of exploitation seriously: then you have to ask yourself why a worker in a command economy isn’t being exploited in the same way as in a capitalist economy? After all, in a command economy, a worker is not receiving the full product of his labor. Just like under capitalism, the state is siphoning off surplus value in order to support the bureaucracy, the parasitic bureaucracy, the military, research, infrastructure, etc.... I think that history has shown that the strong command economies of the past were failures, at least in regards to providing the a diverse array of day to day consumer products and minor luxuries that ordinary people want.”

In reply to this, and similar views from other people, I argue that the whole idea of a “command economy” is a distortion of the experience of socialist economics and that the term itself is closely connected with the assumptions and analyses of pro-capitalist economics. I discuss the methods and successes of the years when revolutionary communists actually led the creation of the socialist planned economy of Maoist China.

4) The fourth section continues the examination of “socialist planned economy” by looking more closely at the economic approach advocated by the Revolutionary Communist Party’s Draft Programme.

5) The fifth deals with issues of consumer goods and markets, and the “politics of consumption.” BrightRedLight raised some important questions when he wrote: “If you get rid of markets, of supply and demand, then you need an alternative way of assessing what the people want. Do they want to put more resources into household goods or do you want to put more into AIDS research? Do you want more heavy or light industry?...What is the MECHANISM that Lotta purposes for making these big decisions? Are polls to be taken? a vote? What if the workers vote for luxury goods over social spending?... Or will the decisions be made by specialists and bureaucrats (as in the USSR and China)?” In this section, I argue that the socialist economy needs various mechanisms for feedback from the people who use the products but that this has to happen in the context of a sweeping revolutionary movement to break with consumerism.

I hope this stimulates further thinking and dialogue about some key themes in the Draft Programme.

1. What Is the Market?

Okay, to start with some basics.

When the greater portion of society’s output is produced for sale, when relations between the various sectors and “actors” of the economy take the form of buyer-seller relations—you have a capitalist market. The market is the site and mechanism of exchange: buying and selling between individuals and between individual units of capital (companies, corporations, etc.).

Markets existed before capitalism. But capitalism represents the full flowering of the market. Under capitalism all elements entering into production—land, raw materials, buildings, machines, computers, and people—are monetized or marketized. They are bought and sold as part of an integrated system of social production.

In a commodity-producing society, products are the property of particular economic agents and are exchanged through bargaining between owners of property. Buying and selling involves transfer of ownership and control. Ownership not only confers power over things, but over effect treating people as things.

Basically, there are three interrelated types of markets under capitalism: a) product markets ; b) capital markets (money, stock, credit, and currency markets, as well as markets for means of production); and c) labor markets (that’s what want ads, the hiring and letting go of workers, and the whole cycle of employment and unemployment are all about).

I hope this is not getting too abstract. But the reason I’m getting into this is that we have to be clear as to what we’re talking about: If you say the market should continue in a revolutionary society, you have to specify whether you’re talking about all or some of these types of markets.

Will means of production, like factories and equipment, be privately owned, and be bought and sold on the market?

The Draft Programme makes clear that the means of production, now monopolized by the capitalist class, will become the property of society and used to benefit society.

Many anarchists say that factories and the means of production in general should be controlled by independent groups of workers. But as Nando pointed out in his post on the site: “If production is controlled at the factory level, you can’t have society-wide socialist planning—and in fact you have individual factories interacting with each other through the market, reproducing capitalism.”

If you have worker co-ops or autonomous factories, you begin to have something that resembles separate commodity-producing units. You won’t have society-wide mechanisms to foster cooperation between enterprises. If you fall back on market principles, you begin to have competing interests over resources and sales. You begin to have a situation in which stronger enterprises pull ahead of weaker enterprises. It is impossible for society to pull in a unified direction—towards meeting larger social goals and with the needs of world humanity in mind.

A) What Does the Market Do?

The market plays the decisive organizing role in the capitalist economy. It provides the signals (prices and earnings) by which resources are allocated and production is carried out and adjusted. As I explained in my essay posted on the site by Enigma (“Visionary Socialism: On the Anarchy of Capitalism and the Need for Socialism”), the market resolves a built-in and moving contradiction of capitalism.

On the one hand, capitalism is a highly developed and interdependent system of social production, with highly advanced technology and a complex division of labor. The different units of production, let’s say, steel mills and computer makers, depend on each other—both as suppliers of raw materials, machines, etc., and as customers.

On the other hand, the system of production is fragmented into privately owned and controlled units. So the connections between producers are not, and cannot, be consciously and directly worked out. Instead, the links among units are spontaneously arrived at through endless processes of exchange. If something sells, fine; if it doesn’t, something is wrong. If earnings rise, fine; if they plummet, the capitalist responds and adjusts. There is no “before-the-fact” planning.

So the market (and really I am talking about the law of value) coordinates the different components of the economy. But this happens indirectly and in a roundabout way behind the producers’ backs. Each owner goes his or her own way, and then sees what the market.

Money rules in the capitalist market. Not only is money the medium by which prices are paid and goods obtained. Money is the goal of production. The units of production are organized around profit. No capitalist is in the business of making soap or lighting fixtures or cars; they’re in the business of making money. The capitalist aims to come out of the process of production and exchange with more money (profit) than he started with.

And somebody, some class of laborers, has to produce that wealth. The producing class under capitalism is the proletariat.

Why are proletarians working for capitalists? That has everything to do with market and ownership relations. The capitalist class owns (monopolizes) the major means of production. Proletarians have no choice but to sell their labor power (their ability to work—their energy, skill, and creativity) in the labor market, or they starve. Wages enable workers to obtain the means of survival—to buy back in the market a portion of the wealth they have produced. The rest belongs to the capitalists.

Quiet as it is kept, the most fundamental market transaction under capitalism is the sale and purchase of labor power. The exploitation of wage labor is the source of capitalist wealth and power.

BRL made a correct point when he wrote: “According to Marx’s theory of exploitation ... markets are NOT the source of exploitation, rather, extraction of worker surplus value by the capitalist is the source of exploitation under capitalism.”

The market mechanism is not the same as the exploitation of wage labor. Exploitation takes place at the point of production. But what BRL fails to see is that the market is integral to this process.

On the one hand, a pool of laborers (a labor market) is available for exploitation, because these laborers have no means of production. The labor market represents a form of coercion unique to capitalism—the worker is not forced at gunpoint, or by feudal obligation, to work—but he or she is compelled to seek work (and laborers can work only insofar as the capitalist can make profit off their labor).

On the other hand, the market is the mechanism through which the capitalist carries out and completes the cycle of production and exchange: buying means of production and labor, and then realizing (converting into money form) the surplus value produced by social labor.

So let me continue with the question I posed earlier. If people say that the market should be allowed to do its job under socialism, does that include the market for labor power?

The RCP Draft Programme says that under socialism, labor power will no longer be a commodity that can be bought and sold. A minority class of owners will no longer have the “freedom” to hire and fire workers.

Socialism will put an end to the situation where people have to scuffle for employment and income. That requires that the working class, through its state, control the means of production. The Draft Programme explains how people will work in a different social environment, move between a variety of jobs, and be able to mobilize and cooperate in ways and on a scale that promotes the common good.

B) Regulating Production

The market regulates capitalist production in two fundamental ways.

First, the market imposes norms (standards) of efficiency . Each capitalist is in battle with others. Each seeks a larger market share (at the expense of others), and the chief weapon in the battle is to expand production, raise productivity, and reduce cost. That means getting workers to work harder, faster, and longer. If an individual capitalist doesn’t operate at a certain level of efficiency, he loses out—he can’t sell at the prevailing market price—and he either raises efficiency or goes under.

Second, the market guides investment. When the market and profits are growing in a particular sector or product line, capital moves in. For instance, big returns could be gotten in telecommunications a few years back, so huge amounts of investment capital flowed in (you can see the moral of the story). But when the economy gets out of whack, the market imposes discipline and dictates reorganization: companies go under or merge, assets get sold or liquidated, workers are laid off, wage levels are pushed down—and stronger capitals and speculators move in like sharks in a feeding frenzy. This is a highly wasteful, anarchic, and oppressive process of regulation.

C) Accountability and Control

The market is impersonal. It isn’t accountable to people. It doesn’t consult with you about your needs. It doesn’t care whether you lose your job, house, retirement pension, or your health coverage. Hey, if those things stand in the way of market efficiency, so be it.

I’ve heard lots of rants about the socialist “command economy.” But what could be more commandist than the market dictating that 500,000 workers (yes, half a million workers!) lose their jobs in the U.S. telecommunications industry over the last 18 months?

If you want the market—let’s call it a “Market with a Human Face”—to be the organizing mechanism of the economy, you have to explain how the market can function according to market rules and yet not do the horrible things that the market does.

Let’s say market mechanisms are allowed to operate fairly freely in the consumer goods sector. Different enterprises are producing goods and winning or losing in the marketplace, based on what people buy.

If you don’t want the market to do those things and you want it to act according to other rules, let’s say safeguarding people’s basic interests, then what is the market doing that keeps it a market?

Market mechanisms do not promote meaningful work that serves the social good, and they do not promote social equality. These values are totally contrary to competition.

2. What’s Wrong with the Market?

There are five major problems built in to the market. These are:

A) Anarchy vs. Conscious Planning

There is no plan for social production in the capitalist market economy. Society as a whole is not figuring what its requirements are: its social needs, the equipment and technology to carry out production, the housing requirements of the population, the resources called for to deal with an AIDS epidemic.

Instead, this is left to the market to work out (of course, the government plays a role, but the market reigns supreme). What happens is that capitalists enter different fields and product lines. Each capitalist producer decides what and how much to produce, whether to expand or cut back, whether to hire new workers and build new facilities. These decisions are guided by the capitalists’ ability to sell products at profitable prices, and by the expectation of finding profitable markets in the future.

The capitalist produces and then sees what happens. As I said in my article, it’s a hit-and-miss, shoot-and-overshoot, trial-and-error process. In boom times, investment is expanded too much. In periods of economic slowdown, there is too little investment. Great numbers of people can no longer work, resources lie idle, and urgent social needs go unmet. All this is tremendously wasteful and destructive.

BRL used a discussion of AIDS research as an example, writing:

“It seems that a socialist market would be more in touch with the diverse needs of people in a way that central planning isn’t. There may always need to be a bit of centralism, especially with regards to AIDS research, etc. But, these kinds of BIG projects are only a fraction of what working people want. Just because, as Lotta correctly says, central planning works good for BIG projects, doesn’t mean that it works for consumer goods, etc.”

In other words, he suggests that “a bit of centralism” could function like “state intervention” in a society where the market is allowed a wide scope of control for large parts of the economy.

But can you really solve the AIDS problem with a “little bit” of state intervention? Doesn’t solving the AIDS problem require unified direction and orientation of pharmaceuticals and medical equipment production? Doesn’t it require a revamped medical training and health care delivery system? And, most of all, doesn’t it require that you mobilize people to deal with this problem in a multidimensional way (workplace, community, schools, etc.)?

How can you accomplish this without planning and society-wide coordination (not that it’s all done from the top planning levels on down—I’ll have more to say about that).

B) The “Bottom Line” vs. the Social Good

The market rewards the minimization of cost in pursuit of the maximization of profit. This is the “bottom line,” what it all comes down to in the market.

The capitalists equate the “bottom line” with efficiency. But efficiency has definite class content under capitalism. It is the efficient exploitation of wage labor. It is the calculation of what is cost-efficient and profitable in a narrow and short-term sense.

A factory might belch out pollution, but that cost to society is not a worry for the factory owner—you see, air is not within his boundary of ownership, not part of the cost structure that the market rewards and penalizes.

Or take agriculture: Recently I went to visit some folks in Kansas who have this institute devoted to sustainable agriculture. They are researching, developing, and demonstrating feasible alternatives to the high-input and ecologically damaging system of agriculture that we now have. They’re proving that is possible to grow food-grains in an ecologically sound way.

But they pointed out to me that in narrow market terms, this approach would not win out over agribusiness. It’s actually cost-effective for agribusiness to grow annual grain crops that require huge amounts of herbicides and pesticides. You manage these crops in a certain way, you get huge, standardized output, and on the cost and profit side, it works—for agribusiness, not for the farmer who does the actual growing. But once you start considering the effects on ground water, soil erosion, and public health, than the social costs go way up.

The problem—and this is built in to the market mechanism—is that the market doesn’t register the long-term and social effects of economic activity. Health and pollution don’t show up in the supply-demand and profit maximization framework of price and profit.

That’s what happens when profit is the starting and end-point.

Going back to pharmaceuticals: It is not profitable for the pharmaceutical industry to develop cheap drugs for diseases that affect the vast majority of humanity. The market returns are too low. So people go untreated and die of curable diseases. But it is profitable to develop “life-style” drugs and to slightly modify existing drugs to get new patents.

Housing as an example: In the U.S., there is an obvious and felt need for affordable and decent housing. But the market doesn’t respond to social need or social demand. It only recognizes monetary demand—“show me the money.” So you have the problem of homelessness; you have a public housing crisis; you have a situation, and I just found these incredible statistics, where the average worker in retail in the U.S. can afford the rent for a one-bedroom apartment in only 3 of the largest 20 housing markets in the country.

Globalization is all about the “bottom line.” In the anti-globalization movement, they call it the “race to the bottom.” The global investor scans the global market in search of low costs, high productivity, and big returns. Sweatshops, lax environmental regulations, few worker benefits—all this makes “good market sense.” It’s the Nike success story.

C) Competition vs. Cooperation

Each capitalist seeks to outmaneuver and out-position others. They keep technical and scientific knowledge from one another through trade secrets and patents and intellectual property rights. Ideas can become private property, and the “rights to these ideas” are bought and sold—just like everything else.

To win in the market is to maximize competitive advantage and gain. And this totally infiltrates our lives and psyches. We can’t eat, put a roof over our heads, or work without going through the market. But when you relate to the market for a house or for a job, you are relating to other people in very definite ways. You are competing for jobs, for housing, etc.

The market breeds a mind-set of “me-first,” of “look out for number one.” The market is cold and cruel. It’s about “winners and losers.” And in such a world, our world, it’s just not “cost-effective” to show concern for others.

Of course, we do try to care about others (today, even in this world dominated by the capitalist market), and we organize on the job and in the community. But the fact remains: capitalism and market exchange pit us against each other; the system of private ownership and the market fragment and atomize people.

D) Distorting and Mystifying Reality

What do most urban consumers know about how food is grown and processed? We know to find it on grocery shelves. But we don’t know about the actual social process of production—that’s not listed on the ingredients. We know price. That’s the essential market information.

I buy a chocolate bar. But do I know that the Ivory Coast is the world’s leading cocoa exporter and supplies most of the chocolate I crave? Do I know that Nestle and Hershey’s work through a web of cocoa exporters, purchasing agents, and labor contractors linked to plantations that rely on child labor? The market doesn’t convey this crucial information.

Not only do commodity production and market relations hide exploitation and oppressive class relations rooted in the system of production. They also distort and obscure the real social relations that bind individuals to one another. We are not free-floating consumers but are in fact part of an economic and social “matrix.”

E) Alienation and Powerlessness

The situation of exploitation and market relations alienates workers from the means of production, from the goals of production, and from work itself. Work is an alienating and oppressive activity. We work for an impersonal market and we work to obtain life’s rewards in the market. There’s nothing intrinsically rewarding about work, nor is work about serving meaningful social purposes.

We “market ourselves” for jobs, for education…even for relationships.

Happiness in the market society is measured by wealth and by the acquisition of things. Okay, there is the cornucopia of products. This however is not a market response to consumer want. Logos and brands are not about satisfying real material and social needs, and advertising is not a public service announcement. It’s all about manipulating wants, stimulating and steering demand, and fighting for market share.

Yes, “we get to choose things.” But three points have to be said about that. First, it’s a “sliding scale of choice” based on class position and income. Second, as I have emphasized, the market does not respond to social need. And, third, like the ritual of elections, the “illusion of choice” masks and reinforces the basic powerlessness of the great majority of society. The ideology of consumerism is part of the psychology of control exercised in the capitalist market economy.

3. Genuine Socialist Planning, Not “Command Economy”

There’s a lot of misunderstanding and flat-out distortion about the theory of socialist planning. And there’s a lot of ignorance and simple suppression of facts about how such economies have actually worked in practice.

Look, we’re not simply talking abstract models here. In China during the Maoist years (1949-76), one-quarter of humanity was creating a new society, free from exploitation and oppression. And it was a society in which a planned economy was quite functional.

Bourgeois experts matter-of-factly declare that socialist economies are lumbering, bureaucratic monstrosities. They declare that socialist economies, when and where they have existed, were hated by the people. They say that so-called “command economies” are doomed to fail and fall apart. A lot of progressive people repeat this without examining the facts.

A) Why “Command Economy” Is Not a Marxist Term

“Command economy.” It’s interesting, because the term was coined by bourgeois opponents of socialist economics. It’s not a Marxist or Maoist term.

If what people mean by “command economy” is that a bunch of bureaucrats just issue arbitrary orders and directives, without any regard for the objective requirements of social production, it’s an absurd proposition. If economies were run according to the whims or best intentions of bureaucrats, they would indeed fall apart. Economies are complex phenomena that obey certain laws.

In this era of world history, economic development will be guided by one of two economic mechanisms: either by the law of value, with the production of exchange value and surplus value dominating production and the labor process; or by conscious social planning carried out in accordance with the interests of the world revolution.

One system is capitalism; the other is socialism.

Capitalism is guided by the “invisible hand” of profit, working spontaneously and anarchically behind people’s backs through the market.

Socialism is guided by the “visible hand” of revolutionary politics. On the basis of social ownership and social planning, the masses will be consciously taking hold of the economy. The objective requirements of social production, such as the needed proportionalities between different economic sectors, will be consciously grappled with.

BrightRedLight writes: “If you take Marx’s theory of exploitation seriously: then you have to ask yourself why a worker in a command economy isn’t being exploited in the same way as in a capitalist economy? After all, in a command economy, a worker is not receiving the full product of his labor. Just like under capitalism, the state is siphoning off surplus value in order to support the bureaucracy, the parasitic bureaucracy, the military, research, infrastructure, etc.”

There is some confusion here. Workers under socialism will, as they do under capitalism, produce a surplus—more than they need for their own survival, more than is necessary to reproduce society at a given level of development. But the object of socialism is not to return the full product of labor to each individual worker or group of workers. Not only could society not advance or function if workers directly received the “undiminished proceeds of their labor,” but the point is to put this surplus at the disposal of society.

Under socialism, only part of the national income created by the laboring people will be distributed directly as wages and earnings.

The bulk of the surplus will be deployed by the proletarian state for:

1. accumulation funds to expand production capabilities, transport, infrastructure, etc.

2. cultural, educational, defense, and state administration sectors

3. material reserves to prepare for wars, shortages, etc.

4. social wage for medical and various accident and retirement needs of the working people

5. support for the world revolution

The social surplus is both directly and indirectly serving the interests of the proletariat and masses of people.

In looking at things this way, we begin to establish a yardstick for understanding what this surplus is all about, whether there is exploitation or not. Bob Avakian speaks to this very concisely:

“The decisive question is not whether a surplus will be produced, nor its size, nor the most ‘efficient’ means for producing the greatest surplus but whether the surplus will be produced through means, guided by principles, and utilized in such a way to make the greatest possible strides at every point toward the revolutionary transformation of society and the world, above all.” (from an unpublished correspondence).

If you have a society where there is formal state ownership and state planning, but where the masses are not being relied on and where people in leading positions have grown divorced from and are lording it over the masses—if society is not moving in the direction of overcoming the inequalities of class society—then you don’t have socialism and socialist planning, no matter what the rulers call it.

The mechanism guiding development will be the law of value serving bureaucrat capitalism. This was in fact the situation in the Soviet Union from 1956 until 1990-91. And part of the cause of the Soviet system’s collapse in 1991 was the fact that the state-capitalist economy had entered into serious crisis.

But the situation was totally different in China when Mao died in 1976. China was socialist, and there was no crisis or breakdown in China’s socialist economy. The restoration of capitalism did not happen because socialism somehow “failed”—and particularly not because the socialist economy had somehow failed to meet people’s needs.

What did happen in October 1976 was that Deng Xiaoping led a reactionary coup and a new exploiting class put China on the capitalist road. It’s not that there weren’t problems in China’s economy during the Mao years. But the fundamental problem in the eyes of Deng and Co. was socialism: The masses were running things and the openings for capitalism were being blocked.

B) Maoist China’s Economic Successes

I do have to set the record straight: Maoist China had great economic successes.

The masses constructed a comprehensive, integrated, and independent agricultural-industrial base. During the years of the Cultural Revolution industrial growth averaged 10 percent a year.

Living standards greatly improved. The food problem was solved; a growing assortment of consumer goods was being produced; housing needs were met; and the revolution created the most egalitarian health care system in the world (that’s according to the World Bank!). Life expectancy in China increased from about 35 years in 1949 to 65 years in the mid-1970s. Shanghai had a lower infant mortality rate in 1975 than did New York City! None of this would have been possible without socialist planning and economic coordination.

And we’re not talking here about some giant welfare state. These advances were made on the basis of social mobilization and mass political awareness. People were taking up and debating major issues of politics and culture in factories and communes. It was in the period of the Cultural Revolution that Mao summarized the approach with the slogan “Grasp Revolution, Promote Production.”

New forms of worker control and revolutionary management were being developed and struggled out within factories and workplaces. Barriers between workplaces and between people working in agriculture and people working in industry were being broken down.

Okay, but isn’t it true that more consumer goods are available in China today than under Mao? Yes. Once the Maoists were overthrown, and China was integrated into the world capitalist market, the variety and quantity of consumer goods expanded. The problem is that the people who mainly can afford these things are from new privileged strata—whilemillions of ordinary Chinese are working in sweatshops, producing consumer goods that they cannot afford for markets in the imperialist countries. And talk about a thriving market: a major cause of the AIDS epidemic in China’s countryside is the sad fact that today, with poverty and inequality spreading, poor and landless peasants are selling their blood in order to survive.

C) How Socialist Planning Works [and It Really Has Worked!]

When people talk about “command economy,” they usually mean two things.

First, there is the idea of people on top attempting to “micro-manage” everything—from the leading ministries all the way down to the smallest of enterprises.

Second, there is the idea that people are simply being barked orders at and moved around like pieces on a chessboard.

That’s not how things worked in Maoist China. Mao and the Chinese revolutionaries had learned from the negative features of the Soviet experience. Under Stalin, there was too much top-down, vertical control over the economy. Mao said this stifled popular initiative. He also said this approach was unworkable—because there is no way that a complex and diverse economy could be managed on the basis of detailed commands from the top.

1) Mao saw planning as involving centralized leadership and coordination, and decentralized responsibility and initiative. And leadership is not just a matter of who is leading—but what line and policies are leading, what lines leading people are carrying out and fighting for.

In Maoist China, the socialist plan incorporated clear political, economic, and social priorities. These had to do with developing agriculture and feeding people; developing a regionally and technologically balanced industrial system, overcoming the city-countryside divide, revolutionizing management, organization, and the labor process.

A revolution has to identify key needs and priorities. Are you going to work to support revolution in other countries? Do you build baseball stadiums or hospitals first? Where do you focus efforts to improve transport—on private autos or mass transit?

You need centralized direction over the output levels of major products. You need to be able to mobilize resources for priority needs and sectors. You need society-wide coordination of some forms of technology (power and communication systems, for instance). Centralized coordination is also needed because economic activities at any given level have economic, social, and environmental effects at other levels of society. And people at the “ground level” cannot anticipate all such consequences, even as they act with the interests of the whole society and world in mind.

The national plan in revolutionary China projected the principal requirements of the provinces, but substantial powers of planning and administration were delegated to the provinces and localities. The number of materials placed under central allocation was relatively low compared to the situation in the Soviet Union during the Stalin years. Provinces and local areas assumed responsibility for supplying key goods to enterprises within their areas of responsibility.

A plan can’t be rigid. Targets should be attainable and flexible. If economic or political conditions change, if new understanding is gained, then adjustments may have to be made—and that should be built in to the planning system. Another point is that planning needs to unfold within “multiple time horizons”: longer-term, like five years; and shorter-term, like one year.

One of the big breakthroughs in planning methods in Maoist China was the practice of “two track” planning. You had industrial ministries drawing up plans to meet the needs and requirements of particular branches of production. This was one track. But the main track was “area planning.” Local areas took principal responsibility for basic production decisions and allocation of resources. Local plans were drawn up with a keen sense of local capabilities and resources, and with a con­cern for issues of pollution, population density, ways in which residential areas could be developed into new kinds of units of collective economic and social life.

2) How were plans worked out?

I wrote about this in an essay included in the book Maoist Economics and the Revolutionary Road to Communism. The overall process was described as the “two ups and the two downs.”

An initial plan, based on mass experience flowing upward and the overall needs of advancing the revolution, would be formulated and sent down through all administrative and pro­duction channels. It was then put to mass review, with suggestions getting transmitted upward. Then a final modified plan would be sent back down.

The goals of the plan were the object of mass discussion and evaluation, according to the overall and guiding political objectives. Where should society be heading and how should we be getting there? There was the principle of overcoming the “three great differences”—overcoming the gaps and inequalities between industry and agriculture, town and country, and mental and manual labor.

A plan is not just some “input-output” cookbook, or some grandiose set of marching orders. A socialist plan, first and foremost, serves and concentrates the political and social objectives of the revolution.

One of the primary purposes of a socialist plan is to give people a deep and accurate understanding of the conditions of society and of people’s real interrelations with one another—precisely what the market with its mystification can never do. The masses need to have wide knowledge of the whole system: its economic laws, its contradictions, and its goals.

A socialist plan is worthless and unworkable if the masses are not politically won to it—because it is the masses that have to grasp and act on it; it is the masses who have to define and carry out responsibilities…to do that with the interests of the whole society, the whole revolution, and the whole world in mind. This is why planning has to be linked with mass social movements and with political campaigns focusing attention on the key issues confronting society.

In sum, the planning system has to rely on collective responsibility. Socialist planning is the practice of the “mass line”: carried out in accordance with the interests of the masses and on the basis of mobilizing the masses.

4. The Relevance of the RCP’s New Draft Programme

A) The RCP Draft Programme and Commodity Relations

The Revolutionary Communist Party’s Draft Programme explains that commodity-money relations cannot be immediately overcome under socialism. They will persist for some time. [See the section “The New Socialist Economy,Part 1: Grasp Revolution, Promote Production.”]

The law of value—according to which the value of things produced is equivalent to the socially necessary labor time required to produce them—will play a role, a secondary role, but a role nonetheless, in the socialist economy. Socialist production will still have features of commodity production. A commodity has two aspects. It has use-value—it satisfies a human want; and it has exchange value—it can be exchanged for other commodities according to the value it contains.

It will be necessary for the socialist economy to undertake cost accounting, as expressed in value/money/price terms, in order for the planning system to estimate production costs and to measure, compare, and promote efficiency. But what gets produced will be determined by social need, and workplaces will be organized on the basis of politics in command, not around profit or efficiency first. A price system will be used to serve socialist exchange. A substantial portion of consumer goods will still be purchased by individuals in consumer markets. But these markets will be strictly regulated and controlled, so that social need is met.

Here’s how Maoists come down on these issues: Commodity production will exist in various forms and exchange through money will exist in various degrees under socialism; and they will be utilized within the planned socialist economy. But these phenomena are not neutral.           

Where market-money-price relations exist in any form, there are elements and seeds of the negative things I’ve been talking about:

From the standpoint of where humanity has to go, these relations are defects of the new society.

But that very judgment will be contested. There’s going. to be class struggle in socialist society over whether to perpetuate and expand these relations and restore exploitation; or to monitor, restrict, and transform them, and to continue the revolution to move society forward and beyond commodities, money, the market, and the mindset of “me first.”

B) Socialist Principles and Policies

People ask how plans would decide such issues as light and heavy industry, where to focus research, what consumer goods would get produced, etc.

Would these things be voted on? The answer is no.

For one thing, certain common needs (housing, healthcare, etc.) are not such a mystery. For another, it’s an impractical way of running an economy and society. And one has to ask, according to what standards and preferences would people be voting?

But planners must not become divorced from the masses, and the planning system has to involve deep investigation among the masses and feedback from the masses. On the one hand, you need society-wide priorities and direction. On the other hand, you also need society-wide debate, education, and struggle, both over the immediate and the long-term goals of the revolution. This is essential in order for the masses to be relied on to solve problems and to transform society through their own efforts.

The party has tried to learn from this. The Draft Programme lays out an approach to economic development and indicates specific policies. I want to highlight a few of the most important of these principles and policies.

1) “Raising the bottom up.” The new proletarian state must take special measures, for “raising the bottom up.” This applies to rebuilding and improving the ghettos and barrios, the distribution of social goods and services (like health care centers), and giving preference in development: to less developed and more backward areas. The whole society, people from every stratum, will be mobilized to overcome the inequalities left over from the old society.

2) “Socialist sustainable development.” Step-by-step efforts will be undertaken to develop technology, industrial-agricultural systems, and infrastructure that are economically productive, ecologically rational, and socially just. The new society must promote the outlook that humanity is the caretaker of the planet for present and future generations.

3) “Creating new urban-rural relations.” The size of cities will be consciously reduced; new construction and economic-social planning will integrate work, residence, and community; the characteristic mode of suburban development will be halted and reversed; people will live in closer proximity to agricultural land and agricultural production.

4) “Reconfiguring a formerly imperialist economy.” The new socialist economy will shatter the old society’s former international economic relations. It will immediately cut links and ties with institutions like the World Bank and WTO and expose their crimes and wage struggle against such institutions. The proletariat in power will utilize the productive forces it inherits first and above all to advance the world revolution toward the aim of overcoming all exploitative and unequal relations in the world.

Where are these principles coming from?

The RCP is promoting and popularizing these principles today. It is rallying people to a revolutionary cause and to a revolutionary struggle capable of ultimately putting them into practice.

Under socialism, you need core principles as guideposts for economic development and as yardsticks against which to evaluate progress and backsliding. These kinds of principles set out in the Draft Programme will become the object of mass study, discussion, and debate. They will be taken up by the masses and used to transform society. New knowledge and understanding will be gained.

But this will not be taking place in a vacuum. Such principles will come under attack by new privileged forces within socialist society and the state who stand for very different economic priorities and social direction. This is another reason that you need revolutionary leadership: to focus up key questions confronting society and to politically arm and organize the masses so they can wage complicated class struggles to defend and advance the revolution.

Overthrowing Consumer Society

5. The Question of Consumer Goods

The question of consumer goods in socialist society has come up in several exchanges I’ve had with people about the Draft Programme . But before I talk about consumption under socialism, I want to make a point about the consumer market under capitalism.

We are often told that the capitalist consumer market is a kind of “referendum” in which consumers “vote with their dollars”—that in the market the “best product” wins.

This is an extraordinary distortion, because it is the market that shapes the consumer. What wins in the marketplace is a function of marketing. What wins is a function of the manipulation and creation of wants (and the party’s economic investigation has revealed that 20 to 25 percent of the U.S. labor force is engaged in selling and marketing and advertising). What wins out in the dog-eat-dog world of capital is profitability and least-cost production.

We’re supposed to worship at the altar of the great consumer market of the U.S. But doesn’t this market have something to do with empire? When was the last time any of us got a piece of clothing that wasn’t manufactured by super-exploited labor in the Third World?

A) Revolutionizing the Realm of Consumption

We get this message from capitalist ideologues that socialism will only produce a standardized and dull selection of goods that people don’t like; or that people won’t be able to get what they need, because there isn’t enough attention paid to distribution of products. From people who are more radical, I often hear the argument that socialist planning is inappropriate to consumer want, because these wants are so varied and changing.

On the website, BrightRedLight suggested (and I know that BRL’s heart is in the right place): “A socialist market would be more in touch with the diverse needs of people in a way that central planning isn’t.”

My immediate response to such arguments is: NOT RADICAL ENOUGH! I’m always surprised by the unspoken assumptions about consumption wrapped up in theories of “market socialism.” It’s as though, when you’re talking about consumer goods, things should pretty much stay the same, or at least not veer too far from the ways of the market.

You see, Maoism believes that revolution also has to revolutionize the realm of consumption . Not to enforce some “shared poverty” but to radically restructure relations between people and to ultimately achieve, with the achievement of communism, what the Draft Programme calls a “common material abundance”—on a world level.

So when I say “not radical enough,” I mean that we have to get under the whole “skin of social life” under contemporary monopoly capitalism.

I’m not trying to get into these points in and of themselves, but rather posing them as illustrations of why a simple endorsement of a consumer market that supposedly answers to changing consumer needs is...“not radical enough.” My point is that socialist society has to meet social need but it also has to shape the structure, standards, and ideology of consumption .

One of the more provocative sections of the Draft Programme talks about issues of standards of consumption and attitudes towards consumption in a socialist society, and puts this in the context of developing a self-reliant economy that no longer exploits the people of the world:

“People’s most basic needs will be met, and the new economy will strive to produce a rational variety of consumer goods. But the ‘convenience’ of having Indonesian workers cater to athletic clothing needs, or peasants in other parts of the world cater to upscale coffee sensibilities, will be no more.... At the same time, people’s social needs will change with the transformation of social life. There will not be the obsession with consumption, the need to define oneself on the basis of what and how much one consumes.”

The Draft Programme also talks about socializing consumption:

“More of life’s needs must be met outside the ‘cash nexus,’ that is, by means other than exchange through money. Things like health care, childcare, cultural activities, and some consumer goods will increasingly be provided at low or no expense. They will be provided through more collective means: in workplaces, neighborhoods, and farms.”

The Draft Programme is saying that a new industrial-agricultural system that is not wasteful and environmentally destructive, and an economy that no longer feasts on the world, will call forth big changes. It will require a radical overhauling of production practices. It will also require the development of new patterns of consumption.

The Draft Programme is saying that socialist society has to bring forward elements of communist distribution: an increasing share of goods and services will be distributed socially without payment, on the basis of need. It is saying that a goal of socialist society is to create a common (shared) material abundance.

Part of achieving that involves expanding productive capabilities. But it also involves forging new social networks. As work and residence and community are increasingly integrated, production and consumption will become linked in new ways (the notion of being a “consumer” won’t have the same meaning). There will be more of a social basis for a common material abundance.

B) Once Again on Consumer Wants

A genuine system of socialist planning cannot be ignorant or indifferent to people’s needs and wants. It must safeguard people’s basic interests and it does have to be responsive to changing wants. This is not gone into in detail in the Draft Programme,but I wanted to offer some thoughts on how this might be approached. Here I am drawing on socialist experience and the political economy of socialism.

The proletarian state has to make decisions about the output levels and product mix of the consumer goods sectors. These decisions will be based on overall political, economic, and social priorities; on assessment of social wants; and on production capacities. Some of this can be determined and solved at the regional and local political and administrative levels.

In the realm of the production and distribution of consumer goods, the socialist economy has to make use both of a price system and of feedback mechanisms.

Let me start with the socialist price system: For some time under socialism, individuals will still purchase many consumer goods. So the socialist state has to “regulate” this sphere. Commerce (“retailing” and the wholesale supply channels) has to be under the control of the proletarian state. And the state has to utilize a pricing system that is “rational” from a socialist standpoint. That means that total prices must relate to total income in society. It also means—and this is absolutely “irrational” from the standpoint of bourgeois economics—that prices of individual goods and services must be consciously and deliberately set to meet people’s basic needs.

Let me break this down. Essential goods, like food and medicines, will have very low prices—selling at or below cost—or will be provided free of charge. Also, rationing may be utilized, if and when there are scarcities or disruptions of supplies. Other goods that are needed but less essential will be priced differently. And goods even less essential (BrightRedLight used the term “minor luxuries”) will have a different structure of prices. These categories of consumer goods will change over time—in relation to production capabilities and the transformation of social life.

Let me move on to what we might call “the preference question”—the question of the volume, assortment, and variety of consumer goods. The standard bourgeois charge is that a socialist economy can’t respond to, or doesn’t care about, changing wants. Now there are two responses to this.

The first I have already touched on. In the realm of consumption, socialism is not “more of the same”—or “less of the same”—with the private individual as the starting and end point. Socialism has to forge new relations of social life and community. It has to develop more collective forms of consumption; and it has to aim to create a common (shared) material wealth of society. It also has to criticize and struggle against the ideology of consumerism, which equates the meaning and value of life with the acquisition of things. It has to promote new values.

Still, people have raised a legitimate question as to how a socialist economy would be dealing with and responding to consumer wants and “changing tastes.” The answer is that responsiveness requires “feedback mechanisms” and information flows into the planning process. It requires social interchange and social investigation at all levels.

In other words, it’s not a question of bureaucrats deciding from afar, or of letting the market and price dictate what gets produced and who gets to buy it.

Rather than approaching this on an abstract, formal level, I thought it might be interesting to discuss some of the practices in Maoist China:

I’m referencing this not because it all worked perfectly (it didn’t), or as some blueprint (we Maoists don’t go for that: life and the class struggle are too messy). But I believe this approach to consumer and user wants (and it did work!) helps people take off the blinders and think about real alternatives to market- price mechanisms of decision-making.

In concluding these comments, I wanted to make one additional point.

BrightRedLight writes, “Marxism is a creative evolving analytical tool.” And I agree—with the affirmation, of course, that this is a tool to achieve classless society.

I think the RCP’s Draft Programme and the broader understanding that has been gained by the party and by the Revolutionary Internationalist Movement speak to the power of Marxism, including its ability to assimilate new experience and new understanding—exactly so we can carry out this most radical and liberating of revolutions: the world proletarian revolution.

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