Market Socialism or Socialization of the Market

Article: Diane Elson: Market Socialism or Socialization of the Market? New Left Review, I/172, November-December 1988

URL = http://www.newleftreview.org/?view=424

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"The virtues of the market and the deficiencies of central planning have become common sense for many socialist economists, both in the capitalist countries and in those of ‘actually existing socialism’. [1] Some spirited defences have recently been made of non-market forms of economic co-ordination, particularly by Ernest Mandel, [2] but in my view these do not provide fully satisfactory responses to the advocates of market socialism. In this essay I shall discuss the arguments put forward by Mandel in recent issues of New Left Review, and those of his principal target of criticism, Alec Nove. I share Mandel’s view that, despite Nove’s argument to the contrary, there is an alternative between the market and bureaucratic planning. But I begin to explore an alternative along quite different lines. I agree with Nove that the price mechanism is an indispensable instrument of co-ordination for a socialist economy, but argue that it must be socialized if it is to work for rather than against socialism. The debate between Mandel and Nove is about the possibility of a society of freely associated producers in which commodity production has been superseded, rather than about the ‘marketization’ of actually existing socialism. It is necessary to recognize that advocates of market socialism see the market as a form of free association: indeed, this is one of the major points of their case. The market cannot be dismissed a priori: the argument should rather be about whether the conditions necessary for the market to function adequately as a form of free association can actually be sustained. Nor should the discussion be foreclosed by defining socialism in terms of the absence of commodity production and by making a simple equation between commodity production and buying and selling."