People's Republic of Walmart
* Book: Leigh Phillips and Michal Rozworski. The People's Republic of Walmart: How the World's Biggest Corporations are Laying the Foundation for Socialism. Verso (Jacobin), .
URL = ebook
Description
From the publisher:
Since the demise of the USSR, the mantle of the largest planned economies in the world has been taken up by the likes of Walmart, Amazon and other multinational corporations
For the left and the right, major multinational companies are held up as the ultimate expressions of free-market capitalism. Their remarkable success appears to vindicate the old idea that modern society is too complex to be subjected to a plan. And yet, as Leigh Phillips and Michal Rozworski argue, much of the economy of the West is centrally planned at present. Not only is planning on vast scales possible, we already have it and it works. The real question is whether planning can be democratic. Can it be transformed to work for us?
An engaging, polemical romp through economic theory, computational complexity, and the history of planning, The People’s Republic of Walmart revives the conversation about how society can extend democratic decision-making to all economic matters. With the advances in information technology in recent decades and the emergence of globe-straddling collective enterprises, democratic planning in the interest of all humanity is more important and closer to attainment than ever before."
Contents
Ridhiman Balaji:
"Chapter 2 does a good job of summarizing the “socialist calculation debate,” polemics between various Austrian and Marxist economists in the early 20th century.
Chapter 3 examines how con- temporary neoclassical economic theories conceal hierarchical social relationships and delegate decision-making authority to wealthy owners and bosses. Since their interests do not coincide with those of workers, bosses have a vested interest in implementing policies that increase firms’ operational efficiency without taking into con-sideration the physical and mental well-being of their workers. Te authors also discuss an odd conception of “freedom” promulgated by Hayek, arguing that he is not so much after freedom, but rather “freedom for information and money” – two central lubricants of market activity. For the authors, Hayek plays a central ideological role in debates about the feasibility of economic planning.
Chapter 4’s focus is on Amazon; the authors examine its use of complex math and computer science to carry out its operations all around the world. Due to its sheer scale, Amazon integrates its supply chains with those of other producers to ensure that sufficient quantities are produced and arrive to stores as needed. As a result, it is compelled to use complicated algorithms in its planning process in order to solve “optimization problems,” allowing Amazon to determine how much of a given product it should produce in order to supply its entire distribution network.
Chapter 5 looks at how capitalist enterprises rely heavily on a financial system that is thoroughly integrated with central banks.
The government uses monetary policy to “ration investment” in order to manage expectations and diminish uncertainty with respect to the business environment, and plays a major role as the entrepreneurial agent carrying out investments in risky circumstances. Nationalization alone is insufficient.
Using the case of the British National Health Services, Chapter 6 argues that public institutions can plan and prioritize public interests and overcome the desires of capitalists to derive profits from every economic opportunity. Despite numerous attacks the NHS has faced from conservative administrations, chronic underfunding, and the imposition of market reforms, the authors argue that a more systematic reform of capitalist society can occur by embedding institutions such as the NHS with democratic decision-making processes.
In Chapter 7, the authors challenge the conventional claim that
the Soviet Union was socialist. “While the replacement of the market
with planning is a necessary condition for an egalitarian society,
it is not a sufficient condition. Planning must be democratic.” A
deeply authoritarian state like the Soviet Union never aspired to
a more egalitarian society, and the Bolsheviks never implemented
workers’ control, on either a workplace or societal level.
Chapter 8 is perhaps the most problematic. The authors discuss how Soviet economists planned the economy using first material balance sheets, and then Input-Output analysis. Their attribution of the method of Input-Output analysis to Marx is problematic.
Chapter 9 builds on this, exploring the feld of “cybernetics,” the use of computer science to develop decentralized economic planning. The authors discuss Project Cybersyn, initially conceived by Chile’s Allende in the early ’70s. However, the project was never resumed after his overthrow in 1973.
In Chapter 10, the authors discuss how democratic decentralized economic planning can be applied to tackle problems pertaining to the environment. From decarbonizing agriculture to integrating renewables, they argue that democratic planning could be extremely useful for implementing system-wide reforms and addressing underlying biological problems. They end their book by writing that planning works, is already ubiquitous in our society, and that sophisticated algorithms are already used by large-scale firms like Walmart and Amazon to increase productivity. However, the authors stress that democracy is paramount for their proposal to implement decentralized economic planning."
(https://www.academia.edu/43327957/Economic_Planning_as_a_Reconfiguration_of_Capitalism)
Review
1. Cory Doctorow:
"Phillips and his co-author, Canadian labour organiser Michal Rozworski, have outdone themselves with this volume.
The two are addressing themselves to the socialist calculation debate, which raged through Austrian economic circles a century ago, with market-focused economists like Ludwig von Mises arguing that it was technically impossible to calculate an efficient allocation of goods in a large, industrial society, and that markets alone -- as a kind of distributed calculation engine -- could solve the problem of getting goods to the people who could make best use of them.
Von Mises won the argument in the 1920s, but a funny thing happened on the way to the 2020s: we are now surrounded by companies and organisations that within the same order of magnitude as the Soviet economy at its apex, which undertake breathtakingly efficient allocations of goods and resources, and all without markets, running as command economies.
You've heard of these comparable-to-the-Soviet-Union command economies: Amazon. Walmart. The Pentagon. There are many more. Each one is an existence-proof of the idea that markets are not needed for mass-scale allocation. What's more, the counterexamples, like Sears -- which implemented internal markets at the insistence of an ideology-blinded libertarian CEO -- show that markets are much worse at allocating resources than the computational command economies used in other enterprises.
The upshot of this is that to the extent that the Soviet Union was crippled by inefficient allocation, that is no longer the problem it once was. It's that we can imagine something as efficient and convenient as Walmart or Amazon without CEOs, shareholders or exploited workers, bringing all the bounties of late-stage capitalism without its pathologies.
The upshot is that fully automated luxury communism isn't just science fiction: it's a going concern with real evidence on the ground.
Market purists argue that we must tolerate all the evils of markets -- exploitation, inequality, the endangering of our biosphere -- because markets are the only conceivable force that can accomplish efficient allocation in our highly technical world. Deep greens take them at their word and say, fine, let's get rid of technology and return to a kind of agrarian feudalism.
Both of them are buying into Thatcher's maxim that "there is no alternative." But Phillips and Rozworksi are proposing an alternative: bright green, high-tech societies where markets are useful tools for solving the odd problem, but where allocation is primarily accomplished by the preferred means of Jeff Bezos and Sam Walton, but to the benefit of the many, not the few."
(https://boingboing.net/2019/03/05/walmart-without-capitalism.html?)
2. Ridhiman Balaji:
"The People’s Republic of Walmart asks whether Walmart is an institution which progressives can use to build a more egalitarian society. Major multinationals like Walmart and Amazon have become increasingly technically sophisticated, employing complex computer algorithms to solve “optimization problems.” Can this technology be appropriated by progressives to build a more emancipatory and liberatory society? For the authors, the answer is yes, however, their arguments suffer from numerous drawbacks.
The authors note that their goal is not to celebrate Walmart, but rather to capture its operational efficiency and use it to build an egalitarian and liberatory society. Tey argue that the defining characteristic of existing capitalist societies is the free market.
Something profitable using the free market, they note, is not necessarily socially useful. They cite the absence of a universal public healthcare system in the U.S. as an example: “Healthcare for all would be wonderfully useful. But because it is not profitable, it is not produced.”
Phillips and Rozworski point to democratic planning as an alternative, arguing that a more democratic version of central planning could help allocate resources more efficiently. Economic planning has a long history, dating back to the ancient Mesopotamians, whose complex economic record-keeping might be described as an early, rudimentary version of economic planning. The authors argue that despite the fact that “ancient planning was at the service of an economic system created for the benefit of a small coterie of elites who were motivated to maintain their wealth and power,” there are many lessons which we can learn from the failings of the ancients. Ultimately, for Phillips and Rozworski, centrally planned economies are not desirable because they are not democratic."
(https://www.academia.edu/43327957/Economic_Planning_as_a_Reconfiguration_of_Capitalism)
Discussion
The Left and Big Data
James Meadway:
"The case for democratic planning has recently been restated by Leigh Philips and Michal Rozworski in their very readable The People’s Republic of Walmart. Their argument hinges on the presence of ‘islands of planning’ in a sea of market competition in the form of the vast operations of corporations. The possibilities of using the technologies and organisation mobilised by the likes of Walmart for more obviously human ends than is the animating thread of their book – just as was observing the prodigious efforts of capitalist states planning production for total war for earlier generations of socialists.
In particular, fast computers and cheap digital sensors open up the prospect of continuous, real-time planning of the economy in ways that have never been feasible before. The ‘socialist calculation problem’ of old – that society was too complex to plan everything – appears solved. Yet this may not be an entirely desirable solution. In the World Review of Political Economy, Bibin Yang and Xiaoyan Li have recently proposed the implementation of a planned economy using real-time Big Data to allow immediate adjustments to plans, creating a hybrid ‘market-based, plan-driven’ system. Like Philips and Rozworksi, they suggest that major corporations – particularly the platform companies like Alibaba and Amazon – already operate on such a model. All that is needed, they suggest, is for the state to replicate such functions and expand its sphere of planning. Jack Ma, founder of Alibaba, has suggested that his company is a stepping stone to a planned economy: ‘with access to all kinds of data, we may be able to find the invisible hand of the market.’
There are two important points here. The first is that ‘finding the invisible hand’, whilst a striking metaphor, is very much in line with conventional economics thinking on the relationship between planning and the market. The ‘ideal’, welfare-maximising distribution of societies’ resources, as selected by a perfectly benevolent planner, is identical to the ‘ideal’, welfare-maximising distribution of societies’ resources as selected by an entirely free market, in the standard proof of the desirability of a market society. The presence of Big Data turns this hypothetical social planner into a real possibility, overcoming the standard free market criticism of planning, exemplified in the work of Von Hayek – that the information needed to perform the task, in any reasonably complex society, is too great to be performed. We have not stepped outside the boundaries that neoclassical economics usually establishes for the problems it seeks to address.
Second, if we do look beyond those boundaries, we are back in the world of a state-capital fusion. ‘All kinds of data’ has deep implications: it could include, for instance, social credit scoring, as applied in China (and of which the recently-departed Dominic Cummings was something of an enthusiast). It is not obvious that this should be acceptable. Francis Spufford’s semi-fictional account of the development of Soviet planning, Red Plenty, makes exactly this point: that even with faster computers and more data, the demands of a (presumed) benevolent planner might well be rejected by those expected to follow its edicts. (In the book, changes in the prices of food, intended to produce a fairer distribution according to the plan, provoke riots.) We would have to exhibit a very high degree of trust in the planner to simply allow for its diktat to set the course of our lives.
Arguably, via the mass data-collection empires of Big Tech, we do display that sort of trust, happily handing over to them unimaginable volumes of information about ourselves and our relationships. We might read this as a challenge to Graeber’s vision of reciprocity: that a version of free exchange – even a gift relationship – can be established with an entirely faceless bureaucracy subject to no obvious legal or democratic or even, if we are not careful, human restraints. The latter point is particularly important with AI that can teach itself and devise new rules for us, as is already occurring. We are implicitly offering our consent to a process that is running ahead of us – and one which, under Covid-19, has accelerated markedly.
There are two profound side-effects to the presence of mass data that the Left has not yet got its collective head around. The first is the gradual disappearance of consumer-facing markets from our lives. Facebook is, as it says on the homepage, ‘Free, and it always will be.’ No exchange of money takes place between the Facebook consumer and the Facebook company, as in a more conventional market operation. Instead, Facebook monetises the data it gathers and sells it elsewhere. But this is a challenge to how we conventionally think about capitalism, and certainly how we conventionally try to register its activities. Constructing GDP becomes harder when there is less being obviously traded, and the location of where ‘value’ is realised becomes harder to pin down. This is a process of capital-led decommodification, at least for its end-products; but the corollary recommodification of data is also still poorly understood. Katharine Pistor has recently explored some of the implications. In ‘Rule by Data: The End of Markets?’, she speculates persuasively that the data will likely displace markets and law as the dominant organising principle of human societies. We are already seeing the displacement of markets; law is further down the line. This process runs counter to the neoclassical expectation that the improvement of markets would lessen the dependence on law and reduce the role of firms in the economy. In fact, Pistor suggests, we have seen the reduction of transactions costs to bare minima via digitisation, but, alongside and as a direct consequence of this, the massive growth of ‘corporate behemoths’ in the form of the data giants. Law is being bent towards their will, directly in the sense that they are very powerful lobbyists for specific legal structures, and indirectly (and ultimately more consequential) in that their actions create new structures enjoying a form of legality in advance of any formal lawmaking.
There are three sets of responses to this. One is to attempt to reassert market rule, as with the various anti-trust efforts against Big Data. A second is to reassert law, as in the various attempts to regulate and control data. Both of these look doomed to fail, at least on their initial terms: the former looks set to, at best, reproduce multiple versions of problematic institutions; the second merely hands over more control to a central authority. Both ‘market sovereignty’ and ‘state sovereignty’ fail when set against the need to bring data under human control. This will not stop their political protagonists arguing for either: a reassertion of neoliberal politics lies in one direction, and potentially ugly nationalism in the other. An anti-egalitarian political right can exist on the basis of either (or, quite possibly, some combination of both at once).
Pistor favours a third option: a reassertion of the fundamental reciprocity – the ‘primitive communism’ – in allowing smaller collectivities of data users and producers to form, then seeking their protection through the use of ‘data trusts’. These would be a mixed form of institution – potentially (if the trustees wished it) operating in a market, enjoying a legal protection, but constituted on the basis of a collective interest. (I have recently discussed such trusts in Creating a Digital Commons.)
The pandemic has shown us how a collective interest can run far ahead of the state: judging by transport usage statistics, the ‘lockdown from below’ was beginning well ahead of the laggardly government response. The range of new governmental powers have not in general been directly used, because the wider social determination of a shared interest in maintaining social distancing, wearing a mask, and so on, has been very solid. The moves towards authoritarian control under Covid-19 – despite the hysterics from the pro-virus right – have occurred out of sight, in the collection, management and analysis of data."
Democratic Planning is Not Enough
Ridhiman Balaji:
"The main drawback of The People’s Republic of Walmart is the authors’ claim that their democratic planning proposal is fundamentally “not capitalist.” In their conclusion, they write, “Without a thorough democratization of any postcapitalist planning apparatus, we risk creating new unfreedoms.” While this is certainly true, democratic planning simply appears to be a different configuration of capitalism, one that leaves capitalist property relations and the separation between manual labor and planning intact. Tis would not do anything to restrict the ruling class from using the state to crush working-class opposition.
While the term “capitalism” has not always been explicitly defined, it is loose enough that countries like the former Soviet Union and China can be described, rightly so, as “capitalist.” In Chapter 51 of Capital (vol. 3), Marx provides a useful criteria for distinguishing capitalist modes of production from non-capitalist modes. For Marx, there are two defining features of the capitalist mode of production: production of commodities to satisfy human wants, and the production of surplus value. Te frst is that it produces commodities, products “outside us,” which are sold to satisfy human wants. The second is that “production of surplus-value [is] the direct aim and determining motive of production.” Certainly economic planning, especially if it is carried out democratically, might have its own benefits. However, transforming our society into one that is democratically planned would not alter these defining features of the capitalist mode of production or eliminate the exploitative arrangement between capitalists and workers with respect to private property. Classhood, who gets to be in what class, is a function of one’s relationship to labor-power.
Capitalists have the exclusive right to derive use-value from labor power, workers cannot do the same by virtue of their class position. Democratic planning does not eliminate the Capitalist-Worker class distinction, a defining feature of capitalism.
The proposal to transform market economies into democratically planned economies does not address the various ways in which capitalists rely heavily on the coercive instruments of the state. Under capitalism, exploitation occurs in part because capitalists are able to use police protection and the threat of violence to prevent workers from seizing control of the workplace.
Te authors want something “between state and markets,” something to replace capitalism, but also something that runs its operations as efficiently as Amazon and Walmart. However, it’s not clear why Walmart’s operational efficiency is intrinsically desirable; operational efficiency (as the primary determinant of social value) is a characteristic of psychopaths.
Tis analysis ignores the hardships of work life under maximally efficient, highly monitored, automated surveillance systems. It seems quite unlikely that workers would voluntarily choose to subject themselves to such a regimented workplace, absent coercive mechanisms. But since the authors would retain the state to carry out administrative work, enforce laws, and make sure the plan is abided by, the instruments of coercion would be close at hand should workers refuse to follow the plan.
Economic planning in combination with markets could be very useful in ameliorating the worst aspects of capitalism. But this is not the same thing as eliminating capitalism. The authors would maintain commodity production, alienated labor and exploitation. For them, socialism is more about fnding an alternative to distribution of goods through markets, rather than alienation of workers under capitalism or self-management.
Workers simply cannot seize the means of production and operate the frm themselves as long as there exists a coercive security apparatus which capitalists can use to subjugate their workers.
Economic planning, even in a more “democratic” form, shifts the decision-making process to state officials, thereby disempowering workers. State officials cannot support the workers and capitalists simultaneously, as the interests of capitalists are antithetical to those of the workers. Thus, despite the authors’ intentions, their democratic planning scheme is likely to bolster state centralism and preserve authoritarian social relationships.
Building an alternative to capitalism requires workers to develop autonomous, non-state institutions, based on mutual cooperation.
Developing such institutions, which operate outside of the purview of the state, will reduce the capacity of the ruling class to use its violent security apparatus to crush working-class mobilization.
People’s Republic of Walmart is a serious book that asks important questions about alternative ways to organize and allocate resources. However, a close inspection reveals numerous problems. What the authors present as a “postcapitalist” alternative to existing market economies is merely a rearrangement which preserves capitalist institutions. Under this system, individuals would still satisfy their human wants and needs by consuming and producing commodities.
Te project of converting market economies into democratically planned, decentralized economies does not in itself abolish the exploitative arrangement between capitalists and workers. As long as capitalists retain their ability to control and profit from labor power, exploitation and the theft of surplus value will continue, and work will continue to be a sphere of alienation."
(https://www.academia.edu/43327957/Economic_Planning_as_a_Reconfiguration_of_Capitalism)