From International Socialist Review, Vol.27 No.2, Spring 1966, pp.34, 86.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
The operations of “market laws” allow “supply and demand” to balance – after the fact. This is obviously preferable to crude rule-of-the-thumb “balancing,” or to extreme scarcity and extreme sacrifices imposed upon consumers by universal rationing dictated by the authorities.
However, socialists have long known that this after-the-fact balancing of “supply and demand” has many deficiencies, and quite a few liberals agree with them.
First of all, the “market laws” do not balance “supply” and human, physical and psychological demand; they only balance “supply” and effective demand, that is, disposable purchasing power. In a society still characterized by great inequality of income and by very low basic incomes for the millions of citizens, “market laws” simply substitute one type of rationing (”rationing through the purse”) for another.
In the second place, after-the-fact balancing through “supply and demand” involves great waste, periodic destruction of goods and equipment (not to speak of periodic and permanent unemployment).
In the third place, with the tremendous international inequalities of income between nations, laws of “supply and demand” are unable to induce any rapid process of industrialization in the underdeveloped world countries, without which these countries can overcome neither poverty nor huge under-employment, nor backwardness. It is precisely through an application of the “law of supply and demand” on the scale of the world market that the underdeveloped countries have been “specialized” in the production and export of primary products, and have thus been trapped in monoproduction and dismal poverty.
In the fourth place, the richer a country becomes, the more basic physical needs can be satisfied by existing resources, and the more “market laws” become absurd, because by their very nature they are rational under conditions of scarcity.
For all these reasons socialists prefer to have “supply and demand” balanced beforehand and not afterwards, through conscious prior allocation of resources and not through blind operation of “market laws.”
Here are three examples:
All these examples are only given to show that a socialized economy cannot consider that regulation of the economy through these laws is an ideal objective to be reached. It must, on the contrary, assume that it should try to substitute as much planned balancing for after-the-fact balancing as is economically rational, given a certain level of development of the productive forces. This is what is meant by “the principle of planning.” This principle finds itself in a dialectical combination of struggle against, and coexistence with, the “market principle” during the whole period of transition from capitalism to socialism.
Why can’t the principle of planned balancing of supply and demand become generalized? Obviously because of the still existing scarcity of resources. Withering away of commodity production and “market laws” cannot be “commanded” by authority; it depends upon relative abundance of resources, or physical saturation of needs which is only another way of stating the same idea.
This is why consumer goods will generally remain commodities during the transition period (which does not imply at all, however, that their prices should necessarily be established by “market laws” and by “rationing of the purse”). But, the more productive forces grow, the more goods and services are characterized by inelastic demand, or even decline of demand, given a growing income, the more the principle of distribution according to needs can be extended to new categories of needs. However, as long as relative scarcity reigns in many fields, a certain amount of “market economy” must still be integrated with the “planning principle.”
Mr. McCormack is afraid that some “party,” or “central committee,” or “political executive” will dictate the “needs,” which the “principle of planning” balances beforehand with existing resources. This fear is a logical reaction to the experience of Stalinism – and even to the political regime presently existing in the Soviet Union.
But Mr. McCormack certainly cannot have missed the point of what he calls our “motherhood slogans”: workers self-management, true proletarian democracy, etc. What else do these mean but a determination by the majority of the people, freely expressing itself, of the priority of goals of economic development, of the needs which must have priority for being covered from the start by existing resources, of the goods and services which must be distributed according to needs?
Even in bourgeois democracy, Britain and Saskatchewan have voted for a free health service without causing a collapse of the economy.
Why couldn’t one visualize the mass of the toiling people in any socialized country based upon proletarian democracy, determining through free discussion, a free press, a free vote and free choice between various alternative plans, the exact amount of sacrifices it is ready to undergo as consumers, and the forms of sacrifices it refuses to accept here and now?
And isn’t it obvious that this conscious selection of planning goals by the mass of the people, under conditions of socialist democracy, is much more democratic, much more rational, much less wasteful and much less oppressive than both the systems of resource allocations through the tyranny of market laws under monopoly capitalism (which implies “rationing through the purse,” huge waste and huge injustice), and resource allocation through an allegedly omniscient bureaucratic Planning Board, freed both from control by the workers and control by the market?
This is why the present reforms of the Soviet economy, while they substitute some operations of the market for some operations of the Planning Boards, without going in the direction of workers self-management or proletarian democracy, do not solve the difficulties and contradictions of that economy, but only substitute one type of contradiction for another.
Last updated on 6 June 2009