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Market Socialism for Chavez Christian Socialist Solidarity

If we are to learn from the past, we need critical and ruthless analyses of the post-revolutionary societies, their achievements as well as failures. It should be evident by now that a transfer in class power can make a real difference. That shows up during the early days of a move to a new social system: elimination of hunger, creation of full employment, the spread of literacy, universal education and medical care for all the people, and an escape from imperialist domination. These steps toward social justice are not easy. Moreover, booby traps may slow and divert further progressive and radical changes.
Some of the varied accounts of market socialism given by political theorists and economists do attempt to meet this theoretical challenge (Miller, 1990). But I will argue that it is the work of the American Legal Realists and Critical Legal Studies writers with respect to the nature of the market and property rights that provides the strongest theoretical grounding for the viability of the market socialist project.

Once the market socialist project has been given the theoretical 'green light', I will move on to consider the range of concrete proposals which have been offered. I will argue that the theoretical work of the Realists and CLS writers also give us guidance as to which part of this spectrum to favour--namely the highly decentralised models involving productive enterprises which are democratically run and owned by those who work in them.
Private Property and the Market in Capitalist and Socialist Theory
As we are all aware, capitalism stresses the importance of a free market and private property. The market is seen as a decentralised mechanism for sending signals to economic actors that ensure that resources are used efficiently, and in a way that satisfies the demands of consumers. The market works by trading valued rights, and so it is no surprise that capitalism also stresses that market actors should have a strong bundle of private property rights that they can use and trade as they see fit. The capitalist stress on free markets and private property connects with the stress in classical liberal theory on individual liberty and neutrality regarding conceptions of the good. The market was seen as a neutral mechanism which allowed each individual to pursue his unique conception of the good or worthwhile life. It maximised freedom of choice.

Socialism can be seen historically as a reaction against what capitalism actually produced in the 18th and 19th centuries--for most people it produced great inequality, lack of freedom, harsh living condition, stunted lives, and exploitation. This reaction against capitalism took a number of forms, but Marxism was the dominant variety of socialism from the second half of the 19th century on. Marxism stressed the negation of the essential features of capitalism--private property in the means of production would be replaced by socialised ownership, and conscious planning of the economic aspects of our lives would replace the anarchy and cruelties of the market.

This is the source of the feeling of some theorists on both the right and the left that market socialism is an impossible contradiction. Socialism is understood by them to be co-extensive with the Marxist position that markets and private property rights must be eliminated. If socialism is understood in this way, 'market socialism' is indeed incoherent. But this is a misunderstanding both of the actual history of socialist thought, and of its potential resources. Although Marxism has been the dominant socialist theory for a long time, and although it strongly influenced the communist regimes, it is not the only response that socialism did develop or could develop in response to capitalism.

A much milder socialist response that came into being in some countries was social democracy. Here there is some regulation and shaping of market transactions, especially in the labour market, but the basic approach is to leave the capitalist property rights and market system alone, and allow this system to play itself out. Then a social democratic government changes the resulting end-state to one which better accords with socialist ideas of equality and security of material benefits. This is typically achieved by taxing and redistributing the wealth generated by the capitalist economic system. In social democracies we see that a weak form of socialism is compatible with the market and private property as they are conceived under capitalism.

Here is a different socialist response, although it has not been applied in any country so far. It does not seek to eliminate capitalist markets and private property in the means of production, as in Marxism, nor simply leave them in place but milk them, as in social democracy. The goal of this approach is to keep the institutions of private property and the market, but not as they are realised under capitalism. The goal is to reconceive and remodel them so that they naturally produce results which are more in line with socialist values, without the need for significant ex post facto rejigging by the state. The focus here is thus upon establishing an economic system with socialist-inspired property and market ground rules at the beginning, rather than on altering the end-state achieved when an economic system with capitalist ground rules is allowed to play itself out. If this project could be realised, it would be a more strongly socialist response to capitalism than social democracy because it would focus not just upon altering patterns of distribution, but also upon altering capitalist property rights and the ways production is carried on. This project describes the variety of market socialism which I want to explore in this paper (it is not the only possible variety as we will see). We will have to wait until later to see whether it can be carried out in any convincing concrete way, and even before that there are other conceptual challenges which will have to be surmounted. But at least at this stage we can see that it is a form of market socialism which would be free from the charge of 'impossible contradiction' which is made by those who see socialism as being identical with the Marxist position.

This variety of market socialism has moved a long distance from Marxism by its refusal to seek the negation of the market. Notwithstanding this concession to capitalist orthodoxy, it can expect to meet with further objections from defenders of capitalist market society. First, they may feel that private property and the market are not subject to redesign in the way proposed by this market socialist model. 'Everything is what it is, and not another thing', and so private property and the market cannot be changed much from what they are now without losing their essential natures. The assertion here is that once you accept the basic concept of the market, most of the detailed structure of the market, i.e. its groundrules and dynamics, follow as a matter of course without significant choice on your part.. This assertion lies behind the other capitalist claim that the market is just a neutral procedural device, i.e. its rules involve no political choices or commitment to a particular social vision. Private property and the market have to be realised pretty much as they are now for them to exist at all, because technical efficiency considerations and the logical implications of the concepts 'private property' and 'market' demand this.

Second, they will see the projected redesigning of property rights and the market as just another example of the socialist impulse to get the state into areas it does not belong. As has often been noted, classical liberal political thinking divides social space into public and private zones. It is crucial on this picture to keep the state out of the private zone and confined to its legitimate role in the public zone. But private property rights and the free market belong firmly in the private zone. Any redesigning of them by the state is therefore deeply improper. It would involve the state moving into the private zone to affect relationships and decisions that individuals should be left alone to make. So again we seem to end up with a contradiction. The market is within a private area which the state should be kept out to the greatest extent--that is why it is called a 'free market'. But a 'market socialism' with the goal of reconceiving and reconstructing the market and private property involves the state penetrating deeply into that private zone.

However, I will now argue that Legal Realism and CLS have provided adequate responses to these objections, and have also provided the theoretical foundations for a version of market socialism which seeks to retain private property and the market, while simultaneously reconceiving them in a radically different way from capitalism.

Legal Realism and Critical Legal Studies
Critical legal studies writers such as Roberto Unger (1987:124,129,134,136,160.), Karl Klare (1991:72-81), and Duncan Kennedy (1991) reject the claim that it is not possible significantly to rework the content of 'private property' and 'the free market' from what they are now without moving outside the boundaries of those concepts altogether. They reject the views of conservative defenders of the free market in Anglo-American writings who seem to think that the free market requires, by definition, something quite definite and circumscribed, and something quite close to what already exists in those economies. The CLS argument is that very abstract concepts such as the free market, which is just an economic system where 'a large number of independent agents bargain on their own initiative and for their own account' (Unger, 1987:122), can be made concrete in many different ways, and in many more ways than we have hitherto experienced.

Some indirect support for this position is found in the fact that we can find actually existing private property and free market capitalist regimes that differ substantially from Anglo-American models in places like Germany, Japan, and the four Asian 'tigers' (Singapore, Hong Kong, Taiwan and South Korea). But the thrust of the CLS argument carries us further than these examples. Consider again that abstract description of the free market: an economic system where a large number of independent agents bargain on their own initiative and for their own account. One foundational question here is: what kinds of entities are these independent agents or market actors to be? Are they to be just individual human beings, or groups of human beings such as partnerships? Are artificial legal entities such as corporations and states to be allowed to participate as market actors too, and if so, are they to have exactly the same rights and powers as human market actors? The choices you make with respect to this one foundational question will produce very different types of free market systems--imagine what it would be like if only humans, not corporate actors were allowed--but they will all fit the definition and be free market systems.

There are many other foundational choices of this kind which have to be made in order to specify or describe any free market system:

(1) What types of things can be owned and traded in the market? For example: can people be owned? Can body tissues and body parts be owned? Can corporations own other corporations? Are some desired things to be outside the scope of the market mechanism entirely (Radin, 1987)?

(2) What bundle of rights does an owner get? Is it the cluster which Honoré (1961) described in his paradigm case, or should some of that bundle be permanently redistributed so that all of those rights can no longer be concentrated in one pair of hands? Should the right to alienate be stripped from the ownership bundle for a larger class of property than it is at present?[1]

(3) How can interests be transferred, and what counts as a 'voluntary' as opposed to a 'coerced' transaction? How much and what types of power over other people is seen as acceptable (Robertson, 1995)?

The point made by the CLS writers is that foundational questions such as these cannot be avoided, and can be answered in many different ways, producing a much greater variety of possible free market systems than the orthodox defenders of currently existing capitalism imagine. This means that the market socialist project I described earlier gets the theoretical 'green light', since it simply wants to give different answers to the foundational choices which have to be made in any private property and free market system.

But the necessity for foundational choices of these kinds to be made also counts against the second objection to the market socialist project noted above. That objection, you will recall, was that it was an improper intrusion into the private zone if the state acted to redefine private property or market rights. But now we have seen that it is impossible to have any free market and private property system without the state acting to provide answers to foundational questions like the ones above. So if it gives different answers to these questions at some later time, it is not doing something any different from what it did when it set up the original rules; it is not now entering into a private zone that it has hitherto kept out of. The state not only always has been, but always has to be, deeply involved over in the private realm liberals wanted to keep it out of. This holds true even if you don't have a soviet-style planned economy, or a social democracy that alters end-states, and instead have the most laissez-faire 'free market' system. The implication of this is that the division of social space into public and private realms so beloved of liberal thinkers has some serious problems.

And it gets worse still. The market is seen as a neutral facilitating structure in liberal theory. It imposes no values or goals on people, but simply allows them to pursue their own unique visions of the good life. But now we see that any market system requires foundational choices, and on what basis are these foundational choices made? The different choices are not simply aesthetic: they have power implications, and therefore have implications for the eventual distribution of power, wealth, and status that is generated by the system. This was a point stressed by Robert Hale (1923; 1943), a legal economist who had a great influence on both the Legal Realists and the later Critical Legal Studies writers.[2] The choices made in establishing any market system are not just technical and neutral ones, therefore, but political choices. In making them the state cannot be neutral, but is guided by a conscious or implicit commitment to a particular social vision, or vision of how society could and should be ordered. It then follows that any conception of free markets that stresses their neutrality, and denies the political choices that inevitably go into their formation, is ideological. It operates to disguise, behind a smokescreen of neutrality, the political choices benefiting some groups at the expense of others.

Further Implications of the Legal Realist and CLS Analysis for Market Socialism
The Realist and CLS analysis just described has significant implications for a widening of the scope of the market socialist project. When we turn to those offering descriptions and analyses of market socialism, we find that many of their models and critiques implicitly accept limitations on what the market socialist project involves (Bardhan and Roemer, 1993; Le Grand and Estrin, 1989). In particular, many seem to accept that the differences between capitalism and socialism, in an economic sense, depend upon different answers to the choices between public ownership versus private ownership, and market versus plan. If you choose public ownership and plan, you have communism. If you choose private ownership and market, you have capitalism. On this understanding, market socialism is what you get when you chose instead public ownership and market. The underlying limitation is that any form of socialism must involve public ownership, (although it needn't be what we know as nationalised state ownership).

Oscar Lange's market socialism of the 1930s would fall into this category (Lange and Taylor, 1994). An interesting modern example of this type of market socialism is provided by John Roemer (1993a:89; 1993b:347). He basically sees all enterprises as publicly owned, run by hired managers, and competing against each other for profits in a market system However, instead of the profits going to the state, they are distributed directly to citizens via dividends paid by mutual funds which supply capital to the enterprises, and in which all citizens are given shares. These shares can be traded for other mutual fund shares, but cannot be sold for cash, and thus the ability to concentrate holdings is limited. A much more egalitarian distribution of wealth results.

A great value of the Realist and CLS analysis is to provide the theoretical foundations for varieties of market socialism that are not confined to working out new forms of 'public ownership', as these models do, but seek instead to rework the content of 'private property'. The realist and CLS contributions give a theoretical foundation for varieties of market socialism in which private property and the market are retained, but reconceived by the giving of different answers to the foundational choices necessary to establish any private property and market system. The market socialist foundational choices would be guided by the desire to achieve, without massive government ex post facto tinkering, outcomes or end-states that were more egalitarian, democratic, and communitarian than those produced by the capitalist private property and market system.
A Market Socialist Model
Finally, after the theoretical objections have been overcome and the theoretical foundations have been provided, we come to the task of evaluating attempts to carry this new type of market socialist project forward. In practice this project has amounted to a shift to producers' co-operatives as the predominant economic form.[3] There are many differing models of such a 'self-managed market socialism', and we shall choose one to look at in more detail shortly. But first note how an economic system based on producers' co-operatives is still recognisable as a private property and market system.

(1) The main economic actors are producers' co-operatives rather than corporations, but these co-operatives compete against each other to sell goods and services to the public. There is still a market structure but with different actors than the ones we are used to under capitalism.
(2) There are still private property owners who own these new economic actors, but again, these are different from the owners we are familiar with now. Whereas the owners of corporations, the shareholders, can be people who do not work in the enterprise, this is not possible with producers' co-operatives. Their owners can only be people working in the enterprise.
(3) On some models these new owners take over most of the ownership bundle that Honoré described. Thus the right to manage, the right to income, and the right to capital that Honoré described as part of private property ownership are not taken away and given to the state, as in nationalisation. Instead this bundle is taken from one set of people, the suppliers of capital, and given to another set, the suppliers of skills and labour.
(4) On other models the treatment of the ownership bundle is more complex. In them it is not the case that the familiar ownership bundle under capitalism is simply transferred to a different class. The rights might be permanently disaggregated, and distributed among different groups of people. Or the ability of the owners of the enterprise to alienate their interests might be more limited than they are under capitalism, without being removed altogether.

Let us finally look briefly at one detailed model of self-managed market socialism.[4] The model I will describe is that given by Thomas Weisskopf in 'A Democratic Enterprise-Based Market Socialism' (1993:120). Weisskopf recognises that capitalist forms of enterprise ownership combine control rights and income rights, (understood broadly as including both the income from assets and the proceeds from asset sales), and also allow private individuals to acquire such ownership rights in varying amounts. But this means that 'capitalist ownership generally confers control over enterprises on a group of private owners or shareholders with unequal membership rights, little social contact, few ties to the area in which the enterprise is located, and no enduring common identity.' (Weisskopf, 1993:126) Such private ownership is not 'individual', since many owners are involved, but nor is it collective or social in any strong sense.

Market socialists argue that ownership of productive assets should be more social; it should be ownership by people who do form a genuine community. Different models of market socialism result depending on the type of community chosen. 'In particular, whether the community is a political constituency (local, regional, or national) or an economic constituency (those who work in an enterprise) and which enterprise ownership rights--control and/or income--are to be held on an equal basis by members of the relevant community and which (if any) are till to be available for acquisition in varying amounts by private individuals.' (Weisskopf, 1993:122). He describe two pure models based on (1) ownership by political communities and (2) ownership by workers of an enterprise. In each of these the community keeps the full ownership bundle of control and income rights. After noting problems with each pure model, he tries to combine elements of both to produce a hybrid that combines greater economic efficiency with greater satisfaction of the socialist goals of greater equality, democracy, community, and social rationality.

(1) Democratic self-management is required for all enterprises with more than a minimum number of people involved. The members of the enterprise elect a governing council on a one person, one vote basis, and this council hires managers. (Weisskopf, 1993:126)

(2) The enterprise finances itself and/or acquires assets in the following ways:

(a) by leasing assets.

(b) by borrowing funds from independent and democratically self-managed banks and other financial intermediaries to purchase assets.

(c) by selling non-voting tradable equity shares to independent mutual funds, and using the proceeds to purchase assets. The mutual funds receive no formal control rights, but get the right to receive dividends and to realise capital gains or losses by selling shares. Thus his model 'unbundles the control and income rights associated with capitalist enterprise ownership.' (Weisskopf, 1993:125).

(d) by reinvesting some of their net operating surplus in the purchase of assets. 'In this case all members of the enterprise community receive--in proportion to the rate at which they earn income in the enterprise--individual nonvoting nontradable equity shares, which generate dividends and capital gains or losses in exactly the same way as any tradable shares held by outsiders, according to the performance of the firm; the capital gains or losses can be realised, however, only as and when the insiders leave the firm and cash in their equity--by selling positive equity claims back to the enterprise, or making good on negative equity claims resulting from poor enterprise performance.' (Weisskopf, 1993:127). This internal capital account model is based on that developed by the Mondragon co-operatives in Spain. (Ellerman and Pitegoff, 1982-3).

(3) In order to achieve a broader distribution of the fruits of these enterprises without the familiar taxation and redistribution, Weisskopf proposes a two-tier stock market system. The two tiers are (a) shares in the worker-owned enterprises themselves, and (b) shares in the mutual funds which purchase shares in the worker-owned enterprises. The shares in the worker-owned enterprises can only be purchased by competing mutual funds, not individuals or enterprises. These mutual funds can sell shares in their portfolios to other mutual funds for cash. But the shares in these mutual funds themselves would, in a manner borrowed from Roemer (1993a;1993b), be spread among all of the adult citizens, thus ensuring a more egalitarian distribution of the income of the worker self-managed enterprises. To avoid some people being able to buy up and accumulate citizens' mutual fund shares, these shares can only be traded for other mutual fund shares. They cannot be purchased for cash or converted into cash. But this trading, based on the dividends paid by the mutual funds, which are in turn based on the performance of the enterprises which form the portfolios of the mutual funds, will send signals about the performance of the enterprises and their managers which can be used for disciplinary purposes.

I have chosen to focus on Weisskopf's model of market socialism because at one level it retains many of the familiar features of capitalism. There is private ownership of productive assets and capital, there is debt financing and equity financing, there are decentralised market mechanisms at work. But each of these elements has been reinflected, reconceived and altered to increase socialist outcomes. There will be greater equality in the distribution of material benefits because income differentials are typically smaller when they are chosen by the workers at producers' co-operatives, and because some of their profits will be distributed to all citizens via ownership of shares in the mutual funds. Democratic decision-making will be extended into the workplace and the economy because workers in an enterprise now retain control over it. The expectation is that this enhancement of democratic skills will flow over into the regular political process too. Ownership of productive assets will have a more social nature, as now ownership will be held by people in a genuine form of community, rather than isolated shareholders with no real connection to the enterprise they own.

Weisskopf acknowledges that his model is more achievable at the moment in the Eastern European post-communist countries, where most of the productive assets had already been socialised in the hands of the state. The state need only devolve most of its ownership rights to enterprises and mutual funds to establish a Weisskopf-type economy, whereas in the West the realisation of his model would involve massive and costly expropriation of the current owners of shares in enterprises and mutual funds.
Bardhan, Pranab and Roemer, John (1993) Market Socialism: The Current Debate. Oxford: Oxford University Press.

Ellerman, David and Pitegoff, Peter (1982-3) 'The Democratic Corporation: The New Worker Co-operative Statute in Massachusetts', [1992-3] New York University Review of Law and Social Change 441

Hale, Robert (1923) 'Coercion and Distribution in a Supposedly Non-Coercive State', 38 Political Science Quarterly 470

--(1943) 'Bargaining, Duress and Economic Liberty', 43 Columbia Law Review 603

Honoré, Tony (1961) 'Ownership', in A. G. Guest, (ed.) Oxford Essays in Jurisprudence

Kennedy, Duncan (1991) 'The Stakes of Law, or, Hale and Foucault!', 15 The Legal Studies Forum 327.

Klare, Karl (1991) 'Legal Theory and Democratic Reconstruction: Reflections on 1989', 25 U. of British Columbia Law Rev. 69.

Lange, Oscar and Taylor, Fred (1994) 'On the Economic Theory of Socialism' in A. Nove and I. Thatcher (eds.) Markets and Socialism Aldershot: Edward Elgar.

Le Grand, Julian and Estrin, Saul (1989) Market Socialism. Oxford: Clarendon.

Miller, David (1990) Market, State and Community. Oxford:Clarendon

Nove, Alec (1983) The Economics of Feasible Socialism. London: George Allen and Unwin.

Radin, Margaret (1987) 'Market-Inalienability', 100 Harvard Law Review 1849.

Robertson, Michael (1995) 'Property and Ideology', 8 The Canadian Journal of Law and Jurisprudence 275.

Roemer, John (1993a) 'Can There Be Socialism after Communism?' in P. Bardhan and J. Roemer (eds.) Market Socialism: The Current Debate. Oxford: Oxford University Press.

--(1993b) 'The Possibility of Market Socialism' in D. Copp et al. (eds.) The Idea of Democracy. Cambridge: Cambridge University Press.

Unger, Roberto (1987) Social Theory: Its Situation and its Task. A Critical Introduction to Politics, a Work in Constructive Social Theory. Cambridge: Cambridge University Press.

Weisskopf, Thomas (1993) 'A Democratic Enterprise-Based Market Socialism' in P. Bardhan and J. Roemer (eds.) Market Socialism: The Current Debate. Oxford: Oxford University Press.

1. Even under current capitalist arrangements, it is not the case that all those things which can be owned as private property can be freely alienated. E.g. prescription medicines, home brewed beer.

[2.] For reliance on Hale by Critical Legal Studies writers, see Klare (1991) at footnotes 18, 20, 25 and accompanying text, and Kennedy (1991).

[3.] They will not be the only economic units or actors. Market socialist models tend to be pluralist. See for example Nove (1983) ch. 5 where he lists centralised state corporations, socialised enterprises, co-operative enterprises, small-scale private enterprise, and individuals.

[4.] Remember though there are many differing models. Is the enterprise to be owned jointly, or are workers to have individual alienable shares reflecting their portion of the capital value? Although only workers can be owners, can the enterprise also hire employees who are not owners? How is the enterprise to be financed--internally through retained earnings, or externally from lenders of capital? What kinds of entities should these capital providing bodies be? The choices with respect to these issues turn out to be very relevant for efficiency considerations. It is not enough, after all, to think up a different form of private property and market system: it has to be one that works efficiently or it will compare poorly to the existing arrangements.

Socialism cannot be created overnight. A long transition is needed to build its political, human, and economic foundations. If we are to learn from the past, we need critical and ruthless analyses of the post-revolutionary societies, their achievements as well as failures. It should be evident by now that a transfer in class power can make a real difference. That shows up during the early days of a move to a new social system: elimination of hunger, creation of full employment, the spread of literacy, universal education and medical care for all the people, and an escape from imperialist domination. These steps toward social justice are not easy. Moreover, booby traps may slow and divert further progressive and radical changes.

The transition to full-fledged socialism entails a long and bumpy road full of pitfalls and contradictions. Time is needed to: (a) convert existing productive forces into worker-controlled and peasant-controlled enterprises, (b) create new productive forces for the basic needs of the entire population, and (c) construct a legal-political-cultural superstructure adapted to a cooperative commonwealth. Shortcuts are few and far between. Nor can general recipes be designed that will suit every country and anticipate every twist and turn of history. Room must be provided for a process of trial and error, which means informing and involving the masses, including the power of the masses to recall administrators and correct errors.

The socialist vision encompasses a nonhierarchical, egalitarian society—one which strives to improve the living standards and quality of life, with top priority given to the poorest, most discriminated against, and powerless. Thus, the dominant tendency in China during roughly the first 30 post-revolutionary years was to dedicate resources and effort to achieving equality and meeting the basic needs of the people, especially those of the downtrodden. By the end of the 1970s (covering roughly the first three decades after the revolutionists came to power), China had become a highly egalitarian society, arguably the most egalitarian on earth in terms of the distribution of income and in meeting basic needs. Since then, however, a striking turnaround has taken place—in fact as in theory. The heads of the party and the government encouraged a blossoming of private industry via domestic and foreign investment. A turn to so-called market socialism was proclaimed. The U-turn in the ruling ideology was dramatic. Market socialism, it was said, would lead to speedy growth of material production, a growth of riches that would inevitably trickle down to all social sectors.

China's new course has indeed resulted in an extremely rapid increase of production and total national income. However, the wealth created didn't trickle down very far. The result is a very rich upper stratum and a comfortable middle class, and as for the rest: poverty, insecurity, unemployment, and a decline in education and medical care. The effect of the turnaround is finally acknowledged in official circles. Last year the political department of China's Ministry of Finance issued a report on the subject. People's Daily Online (June 19, 2003) ran an article containing the substance of the document. The article began by acknowledging that the government report had revealed: (1) "A ceaseless widening of the gap in income distribution and the aggravated division of the rich and the poor is occurring"; and (2) "Amassed wealth is becoming more concentrated, with the difference of family fortunes becoming bigger and bigger."

What is clear from the Chinese experience is that the basis of the class struggle continues even after nationalization of business institutions. The mentality (ideology) of the old society does not evaporate into thin air after a revolutionary change. It remains and conflicts with the socialist road. Other strains arise from the potential and actual entrenchment of a bureaucratic elite, the persistence of hierarchy, and the complexity of building a people's democracy. The bureaucratic elite and other privileged groups sustain a competing ideology—one that justifies their privileges, which are at odds with the needs of the mass of the people. Members of the elite are commonly concerned with passing on their advantages to their children, typical of class society. The clash of class interests continues from generation to generation. In this way the class struggle persists, though in different forms from the past. At heart, as Mao pointed out, even some in high Communist Party positions wanted to take the "capitalist road."

The ideological struggle that takes place is linked with differences over the rate and direction of growth. Unfortunately, growth in itself is the deity worshipped by "capitalist roaders," whereas the crucial questions are: What kind of growth? For what purpose? For whose benefit? Should the growth be geared to satisfying the desires of intellectuals, managers, business owners, and the bureaucratic political groups and classes? Or, should the direction of growth be oriented towards improving living standards and quality of life for the mass of the people?
Thanks . . . 24.Apr.2005 23:09

Progressive Democrat

. . . for excellent research and analysis. There is so much nonsense put forth as "economics" -- not the least of it being that economics is a science independent of ethical bias. Of course, there are scientific aspects to it, things can be measured and so forth.

Your work cuts right to the quick of the theoretical problems. I especially like the terms "Christian socialism" (scarcely discussed since R. H. Tawney) and "market socialism". Market socialism is a great concept as you use it to discuss the range of phenomena from social democracy to whatever we would call mainland China today -- I tend to call it "animal farm" socialism after George Orwell's book.

BTW: I have been trying without success to locate a copy, preferably on-line, of the famous booklet by Henry Simon, "A Positive Program for Laissez-Faire" (c. 1934). I read that work some years ago, and I believe it is a good statement of the original "Chicago school." Almost no one knows that the libertarian Chicago school started out very different from what it has come to represent today -- the Ludwig v. Mises theory that only capital formation matters, all "progress" stems from that, and whatever the results of such so-called "free market" economics, those results must be (by definition) good.

Nobelist Milton Friedman is usually given as the academic cover for the atrocities of neo-liberal economics (the official dogma of the W.T.O. beaurocracy). Friedman started out closely associated with the original "Chicago School" which, along with Friedman's lifetime work, has been greatly distorted over time to stand for unrestrained corporate power in a global economy.

Thus, at the AdamSmith.org website, the Friedman page lists 9 points, including this one --

# Minimum wage laws cost jobs. Employers cut out, or mechanise, jobs that are not worth the minimum rate to them. Worst affected are the inexperienced young people, those with poor skills, and minorities.


BUT there is no mention of the idea of a guaranteed minimum income -- one of Friedman's principle ideas when he was starting out!

Friedman's monetarist critique of Keysianism may be a useful theory, if properly applied; however, the theory that minimum wage laws should be rejected as counterproductive cannot be supported by data and analysis -- especially when it is stated without the concept of a levelling minimum income for everyone! For example, it is unclear that mechanization results in fewer jobs, although it hopefully should result in shorter hours and wage increases.

Friedman may have made some important theoretical contributions, but in practice his ideas have been selectively applied to support regressive legislation in a corporate globalized world. His theories are cited not to promote reality-based research, but to prevent such reseach and enquiry! For example, Friedman's ideas on vouchers as the best form of public support for education become meaningless when they are used to eliminate piece-meal all public support for education.

See, "Industry without Happiness: On the Guaranteed Minimum Income" by Thomas Schmid (translation by mbatko)


"Real Economist", you are probably already familiar with the works of David Korten. But others may not be --



Positive Futures Network (YES! magazine)

The People-Centered Development Forum



Social Venture Network

The Club of Rome

Excerpts from Korten's book, "When Corporations Rule the World" (2nd Ed.) available on-line --



FOR THE LOVE OF MONEY (based on "When Corporations Rule the World")




Here's something from "The Betrayal of Adam Smith" --

"Adam Smith was as acutely aware of issues of power and class as he was of the dynamics of competitive markets. However, the neoclassical economists and the neo-Marxist economists bifurcated his holistic perspective on the political economy, one taking those portions of the analysis that favored the owners of property, and the other taking those that favored the sellers of labor. Thus, the neoclassical economists left out Smith's considerations of the destructive role of power and class, and the neo-Marxists left out the beneficial functions of the market. Both advanced extremist social experiments on a massive scale that embodied a partial vision of society, with disastrous consequences.

"If corporate libertarians had a serious allegiance to market principles and human rights, they would be calling for policies aimed at achieving the conditions under which markets function in a democratic fashion in the public interest. They would be calling for an end to corporate welfare, the breakup of corporate monopolies, the equitable distribution of property ownership, the internalization of social and environmental costs, local ownership, a living wage for working people, rooted capital, and a progressive tax system. Corporate libertarianism is not about creating the conditions that market theory argues will optimize the public interest, because its real concern is with private, not public, interests."

Also available at --  http://reactor-core.org/betrayal-of-adam-smith.html