Crisis of Socialist Economic Models

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"The classical Marxist model of a socialist economy may be characterized in terms of a dichotomy between capitalism and socialism in the two dimensions of ownership and coordinating mechanism. Under socialism, capitalist private ownership of the means of production is replaced by social ownership; the operation of market forces is replaced by socialist economic planning. Social ownership enables exploitation to be abolished; socialist economic planning enables the anarchy of production to be replaced by conscious social control of the economy. The two dimensions are connected in that market forces operate through the interaction of numerous separate decisions over the use of discrete parcels of society’s productive resources, which are therefore de facto privately owned whatever the de jure position, whereas economic planning involves a single set of coordinated decisions over the use of society’s productive resources as a whole, which necessarily precludes private ownership and fragmented decision making.footnote2

This classical Marxist model, interpreted as the centralized planning of all production decisions, has been discredited by the Soviet experience. At the same time, the revival in the 1980s of the socialist economic calculation debate that had first taken place in the 1920s and 1930s provided theoretical support for the proposition that central planning, indeed any society-wide economic planning, is necessarily inefficient and strictly speaking impossible. Any socialist economic model today must take account of the Soviet experience and, even more importantly, address the theoretical issues that have been identified in the revived calculation debate.footnote3 These theoretical issues in relation to the efficiency and/or possibility of socialism are part of the more general theoretical climate, associated with the rise of the neo-liberal Right, which challenges the desirability of any form of collective action and celebrates the superiority of ‘spontaneous order’ over conscious social action."