ABSTRACT
There is a widespread agreement on the left that one, though hardly a sufficient, condition for a revival of socialism’s political fortunes is a radical re-appraisal of socialist principles. One trend in that reappraisal has led to proposals for ‘market socialism’. In discussing such proposals and their relation to the issues of planning and the role of the state in the economy, it is politically vital to distinguish two quite separate (or at least separable) lines of argument that have led to such proposals. In ‘socialism with markets’ the key issue is what role can markets play within a framework of traditional socialist objectives. Market socialism on the other hand by placing ‘the market’ at the centre of concern effectively subverts socialist objectives. It becomes little more than a gloss on a Hayek-ian celebration of the market in a manner wholly incompatible with socialist objectives (e.g. Miller and Estrin, 1986).The concept of socialism with markets brings out the point that there is in socialist economics a long history of discussion of the role of markets, most of which has accepted some role for markets, but has argued about its scope. This history begins in the 1930s with the attack on the feasibility of socialism by writers of the right (Hayek (ed.), 1935). This alleged that either a rational socialism would be impossible because it would have no market prices to guide resource allocation (Mises in Hayek (ed.), 1935), or infeasible because of the scale of centralised calculation such allocation would require (Hayek (ed.), 1935). This was responded to in a number of ways from the left. Dickinson (1933) argued that with collective ownership, in combination with an egalitarian distribution of income and no monopolies, a desirable socialism could have free markets. Lange (1939) argued that a Central
Planning Board could use prices to guide allocation, adjusting them to market disequalibria like a centralised auctioneer.2Such arguments were widely discussed by economists on the left before and after the Second World War. They led to no simple conclusion, but rarely to a simple blanket hostility to markets. Thus, Dobb, for example, whilst sceptical of Lange’s emphasis on resource allocation as the central economic issue for socialism, thought Lange’s arguments ‘worthy of serious consideration’ (Dobb, 1955: 243). Later he became much more sympathetic, if not to Lange’s theoretical approach, then to the role of markets under socialism. His later work tended to view the legitimate scope of markets in Soviet-style economies expanding as they moved from a focus on ‘the requirements of economic growth to greater attention to consumption and to the needs of a rising standard of life’ (Dobb, 1969: 140; 1970, Chapter 1).A new dimension was added to the debate by the attempts to reform East-European economies in the 1950s and 1960s. This led to a reconsideration of the role of markets, drawing on the aforementioned arguments plus orthodox Marxism and Eastern European experience (e.g. Brus, 1972; Nuti, 1981).A highly significant recent representative of this general approach to socialism and markets is Nove’s Economics of Feasible Sodalism (1983). Whilst commonly read as a market socialist, Nove does not in fact use that expression in this book, and uses it elsewhere only in quotation marks. In line with my distinction, Nove can best be designated an advocate of socialism with markets.Nove’s concern is centrally with the lessons to be learnt from the Soviet and East European experience, and the theoretical work that informs his approach to that experience is largely socialist and/or East European in character. Nove aims to learn the lessons for Western Europe of the Soviet experience, and to assess the extent to which these lessons have been absorbed by those on the left in Western Europe. The power of his book is its convincing demolition of the case for general centralised planning as a desirable alternative in Western Europe. So Nove (like the later Dobb) is a market socialist only to the extent that he sees desirable and feasible socialism including markets. But his work is no paean of praise to the market; it involves both a strong state and a central plan, as well as the predominance of state, social, and co-operative property (Nove, 1983, Chapter 5; 1985).
