August 4, 2013
What about alternatives to the market? Are there better ways to organize the signaling and negotiation associated with the distribution of goods, and the production of goods for distribution? Off the top of my head (again, without spending really any time with the relevant literature, so this is all very preliminary) I can think of three broad alternative categories of economic organization:
1) Economies sufficiently local to not involve large-scale trade. These would have to be very local economies. Such a mode of economic organization is feasible in plenty of locations; but by its very nature it can’t ‘scale’ to mass production and the complex division of labour. Such a mode of economic organization is therefore, I think, simply not capable of producing sufficient resources to sustain a global population in the billions, at a decent standard of living. So this is ruled out.
2) Central planning. This was of course the classical socialist solution: the alternative to the anarchy of the market was the rational planning of a benign centralized bureaucratic organization, deputized to serve the interests of the people. This was, for generations, the main thing that people meant by ‘socialism’ and ‘communism’. The achievement of centrally planned economies, and the failure of those economies to realize the emancipatory hopes invested in them, is obviously the standard, tragic, and in my opinion basically accurate story of the failure of communist ideals in the twentieth century.
Could an alternative approach to centrally planned economies realize those ideals without replicating the failures of the twentieth century planned economies? It seems relatively clear to me (and to most) that the central failure of those communist states was their authoritarianism. In the absence of democratic institutions, those with power are always very likely to use that power for oppressive purposes, with little in the way of checks and balances to prevent this. So could central planning work if it were properly democratic?
I don’t want to rule this out; it’s worth spending time working on what this would be in more concrete practice. But I do have a reflex skepticism on this (characteristic of my time): the concentration of power required for the fully planned administration of an economy seems extremely vulnerable to abuse, even if much stronger democratic checks and balances are built into it than was the case for the twentieth century communist economies. So my impulse is that much more decentralized modes of organization are preferable – but I don’t want to take this for granted.
3) An alternative signaling system to money. It must, one would assume, be possible to devise an alternative way of fulfilling the information-transmission function of money, using modern computing: some kind of mechanism that enables the signalling of demand without the use of the ‘effective demand’ communicated by purchases and hypothetically projected future purchases, and (further) without the need to centrally manage the information thus communicated (though the problem of how to signal demand is also of course a problem for central planning). I know that there are proposals of this kind out there, but I haven’t actually read up on them; I ought to.
Given that (2) and (3) above both seem at the very least worthy of serious consideration, I don’t think it’s at all obvious that ‘market socialism’ is the best candidate when considering how to build more emancipatory economic institutions. I want to give more thought to the above. But for now I’m still going to take ‘market socialism’ as the leading contender for a credible realisable emancipatory economic system, when reading and thinking more about all this.