Democratic Planning and Market Socialism

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* Article: Democratic Planners and Market Socialists: Can we be friends now ? By Robin Hahnel. 1997

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From the reading notes of Michel Bauwens, 2006:

Markets, to a certain point, may efficiently allocate resources, but they generative inequities, such as:

- 1) differences in ownership of capital

- 2) different human capacities

- 3) differences in deviousness: the market wipes out the less devious

- 4) differences in luck

Market socialists therefore generally propose measures to:

- 'equitize' initial endowments

- intervene a priori to avoid inequitable outcomes

- correct inequities a posteriori through redistributive taxes, transfers, and insurance

I. What about market inefficiencies ?

Positive is that markets push producers to increase the value of goods and services, and diminish the unpleasantness of getting the goods.

Negatively, it pushes producers to 1) externalize costs and 2) appropriate benefits.

Adam Smith coined the concept of the 'invisible hand' to denote the positive aspects. E.K. Hunt and Ralph d'Arge coined the concept of 'invisible foot' for the negative maneuvering behaviors.

Usually , the benefits go to clearly identified producers and consumers (f.e. car producers and consumers), while the cost of externalization are distributed and widely unequal, making reaction difficult.

RH notes that this feature would apply even in a perfect market of equals.

However, in the real world of unequal economic power, the most effective profit maximizing strategy is usually of the second maneuvering kind, i.e. reslicing the economic pie at the expense of the weak, of nature, of future generations.

II. Why Markets Undermine the Ties that Bind

Hahnel posits:

- a. markets undermine social ties

- b. markets subvert economic democracy

- c. commercials values undermine equitable cooperation

He further states that:

- capitalism is not satisfying essential human needs for the majority of the people on the planet

- it is not satisfying the need for self-managed meaningful work that educated people want

- neither the need for community, dignity, justice

- it devours the environment

- and fosters conflict

III. Differences and similarities between market socialists and democratic planners

RH then examines the difference between market socialists and democratic planners.

The latter do not accept unequal rewards, and the former do.

- because it would be unfair tot to reward more ability

- equity has to be balanced with freedom and efficiency

- as all problem can't be tackled at once, let's start with property, not rewards

RH answers that

- the trade off is bogus, it is only effort that must be rewarded

- the stage theory is questionable, because it leaves the 'doubly exploited' out of the loop (i.e. those who have lesser human capital, why should they wait for justice)

Discussing the alternatives, RH argues that the South must disengage from globalization. Basic needs provision is primary and not compatible with neoliberal engagement. Next, we should built on precapitalist cultures of cooperation.

But these are 2 areas of agreements between the MS / DP camps as to the precondition of any international liberalization:

- 1) fair labor and environmental standards

- 2) retraining for workers

If no benefits accrue to workers, they should be refused.

A point of difference is that anti-market forces would insist that prices reflect external costs; they are not sure that trade integration would still give efficiency gains in such a context.

RH insists that one cannot both reward greater contribution and greater sacrifices, and only the latter is in the end morally just. He faults MS for choosing the former.

Where can the latter be obtained if the former belief is hegemonic: only in the cooperative movements. The current wave of cooperatives is driven by necessity, and hence, more mainstream than ever. Creating just relationships within and between cooperatives is one way forward.