Abstract
This paper surveys the development of the concept of socialism from the French Revolution to the socialist calculation debate. Karl Marx’s politics of revolutionary socialism led by an empowered proletariat nurtured by capital accumulation envisions socialism as a “top-down” system resting on political institutions, despite Marx’s keen appreciation of the long-period analysis of the organization of social production in the classical political economists. Collectivist thinking in the work of Enrico Barone and Wilfredo Pareto paved the way for the discussion of socialism purely in terms of the allocation of resources. The Soviet experiment abandoned the mixed economy model of the New Economic Policy for a political-bureaucratic administration of production only loosely connected to theoretical concepts of socialism. The socialist calculation debate reductively recast the problem of socialism as a problem of allocation of resources, leading to general equilibrium theory. Friedrich Hayek responded to the socialist calculation debate by shifting the ground of discussion from class relations to information revelation.
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Notes
If x is the use-value productivity of labor, and w the use-value equivalent of the wage, then the rate of exploitation is e = (x − w)/w Foley et al. (see 2019); if w stagnates at subsistence while x rises, the rate of exploitation increases without limit.
These proposals hoped to make w equal to x, thus driving the rate of exploitation to zero.
(Added 2020): A referee remarks “The author seems to relate this peculiar methodological stance of Marx with the implicit wish to not only initiate a revolution against the capitalist mode of production, but also at the same time to overcome the much longer history of commodity-producing societies. If this is indeed what the author intends to say, it should be expressed more explicitly.” This is indeed what I intended to say.
(Added 2020): The thoughtful referees of this journal point out that “bottom-up” and “top-down” elements are present in all complex systems, and in all visions of the political-economic organization of social production and distribution. The dialectical contrast between these points of view nonetheless throws considerable light on the wide variety of visions of socialism we encounter historically.
(Added 2020): A referee links these issues to the broader issue of the potential role of technological change to transform social relations through increase in labor productivity. This suggests that the piece itself might more appropriately have the subtitle “From Marx to Schumpeter,” since Schumpeter’s work puts technological change closer to the center of his account of political economy. I find myself mildly skeptical of this line of thinking, mainly due to the decades separating us from Marx, during which there has been an enormous increase in the use-value productivity of labor, without a corresponding fundamental change in social relations of production.
The private exchange equilibrium set is the Pareto-optimal locus in the absence of externalities, because without externalities private reservation prices for commodities coincide with social marginal benefits and costs.
(Added 2020): Referees argue that my discussion gives excessive prominence to Hayek, who, after all, was a consistent critic of socialist ideas rather than a proponent of any form of socialism. This line of thinking suggests the piece would be more appropriately subtitled “From Marx to Lange.” My decision to include so much discussion of Hayek’s thinking had more to do with the connection of his information-based critique of the socialist calculation debate to later discussions of socialism I address in the companion paper to this one also published here. Hayek’s epiphany seems to me to have been a turning point both for the political-economic analysis of capitalist commodity production and for the ongoing discussion of socialist alternatives.
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Foley, D.K. Socialist alternatives to capitalism I: Marx to Hayek. Rev Evol Polit Econ 1, 297–311 (2020). https://doi.org/10.1007/s43253-020-00012-5
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DOI: https://doi.org/10.1007/s43253-020-00012-5