Rationality and Distribution in the Socialist Economy
* PhD Thesis: Rationality and distribution in the socialist economy. Dapprich, Jan Philipp. University of Glasgow (2020).
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Description
"The thesis provides a philosophically grounded account of a socialist planned economy. While I do not primarily consider a positive case for socialism, I address two major objections to it and thus argue that the possibility of socialism as an alternative form of economic organisation has been dismissed too quickly. Furthermore, I provide an account of the precise form a socialist economy should take, outlining general principles of planning and distribution.
Based on a welfarist interpretation of Marx, I show that distribution of consumer goods should be facilitated by an equal distribution of tokens. These tokens can be redeemed for consumer products or substituted for additional leisure time. The rates at which tokens can be redeemed for consumer products should correspond to market clearing prices. Welfare-oriented socialism is also defended against a deontological objection to socialism by Robert Nozick, who claims that socialism leads to injustice because it violates private property rights.
The thesis also considers Ludwig von Mises’s calculation argument against socialism, which claims that socialism leads to the abolition of economic rationality. I show how this objection can be overcome by using optimal planning techniques which are responsive to consumer demand as signaled by the market clearing rates of consumer products. The resulting model of socialism is tested using a computer simulation. The simulation also demonstrates that a novel system of valuation based on opportunity cost leads to a better adaptation of production in response to environmental constraints when compared to the labour values of classical political economy."
(https://theses.gla.ac.uk/81793/)
Excerpt
From the Introduction, by Jan Philipp Dapprich:
"The aim of this thesis is to provide a philosophically grounded account of a socialist planned economy. While I will not primarily consider a positive case for socialism, I will address two major objections to it and thus argue that the possibility of socialism as an alternative form of economic organisation has been dismissed too quickly. Furthermore, I will provide an account of the precise form a socialist economy should take, outlining general principles of planning and distribution.
The market as the predominant form of economic organisation has been a significant object of discussion and contention in western political philosophy (Herzog 2017). In the early Enlightenment, thinkers like Mandeville (1924) and Rousseau (1754) took up opposing views on the upcoming commercial society of their time. Marxists (Marx 2008, 192-330; Cohen 2014) criticise the exploitation they associate with capitalist market economies, while a variety of defences of the market have been offered (e.g. Nozick 1974, von Mises 1920, Hayek 1945, Friedman & Friedman 1962).
However, discussions of the market have not been limited to taking position for or against the market. Critical friends of the market (Herzog 2017, Section 2) acknowledge problems with market economies and discuss the extent to which other social institutions should interact with the market to counteract these problems. Discussion of market societies has thus not been limited to whether they are good or bad, but specific issues of justice within such market societies have received significant attention (e.g. Rawls 2001, Dworkin 2002). In comparison, the philosophical literature dealing with socialist economic planning as an alternative to the market is not as rich and has not received as much attention. Such literature often deals with socialist planning in comparison to the market rather than in its own right. Planning is criticised because it supposedly does not have the same desirable qualities that markets have. For example, Ludwig von Mises and Friedrich von Hayek outlined how markets enable rational economic decision making (von Mises 1920, 1922) and convey economic information (Hayek 2002, 1945, 1981). The focus of their analysis is thus the market and socialist planning is only discussed as an antithesis to the market that supposedly does not share the same virtues. This predominant focus on the market has in my opinion contributed to socialism and socialist planning being dismissed too quickly. There has been some literature on the question of distributive justice under socialism, most notably by Jerry Cohen (2009). Cohen advocates a kind of luck-egalitarianism, which disallows inequality based on people’s circumstances, rather than their choices (Gilabert & O’Neill 2019, Section 3.1). For other socialists, the starting point is Marx’s famous principle for what he calls the higher stage of communism: From Each According to his Abilities, to Each According to his Needs (Marx 1999a, Part 1; Carens 2003; Gilabert 2015). Less attention has been given to Marx’s description of the lower stage of communism (Marx 1999a, Part 1), which will be the starting point for my discussion of socialist distribution. Socialism has also been criticised as being in violation of principles of distributive justice by Robert Nozick (1974, 162-164).
Several models of socialism have been put forward (Gilabert & O’Neill 2019, Section 4), many of which compromise on the idea of (centralised) economic planning. Michael Albert’s Parecon (Albert 2003) for example emphasises the direct participation of citizens in the planning process. Under market socialist models central planning is to a significant extent replaced with market processes or trial and error processes mimicking markets (Dickinson 1930, 1939, Lange 1936, Miller 1981). These models largely accept Mises’s claim (von Mises 2008, 23) that markets are necessary for a rational economy. Some later models even allow for a form of private ownership of stocks (e.g. Roemer 1994). In the Soviet Union, some economists also emphasised the need for enterprises to operate to make a profit (Gloushkov 1969). The difference between capitalist profit and this socialist profit is that socialist profit is intended for projects benefiting workers. A model more clearly in the central planning tradition was put forward by Paul Cockshott and Allin Cottrell (Cockshott & Cottrell 1993) in their book Towards a New Socialism (TNS). The TNS model emphasises the potential of computer algorithms and information technology to aid in the planning of a socialist economy.
My thesis attempts to add to the existing literature by discussing issues of economic rationality and distribution in a planned socialist economy. Drawing on existing philosophical literature on distributional justice, I will propose principles of distribution for a socialist economy.
Furthermore, I will argue that the critique of socialism by von Mises (1920, 1922) should be rejected. Based on this discussion I will derive a model of a socialist economy which represents a modified version of the TNS model (Cockshott & Cottrell 1993). I shall focus on addressing objections to socialism and giving a positive account of reasonable principles of distribution and planning. I will thus not critically engage with alternative models of socialism, other than the TNS model (Cockshott & Cottrell 1993) which has had a significant influence on my model. While political philosophers will find much that they are familiar with, at times I will step onto territory that might more properly be described as political economy or simply economics. Such a multi-disciplinary approach is necessary to do justice to the underlying issues.
By socialism, I shall refer to a form of social organisation in which the means of production are publicly owned, production in individual enterprises and transfer of goods between them is to a significant extent directed by a universal plan for the whole economy, and there are no significant class distinctions between members of the society. Public ownership of the means of production implies that enterprises and their machinery, tools, resources and so on are collectively owned and controlled by all members of society or by social institutions accountable to them and operating on their behalf. Worker-ownership under which workers have a distinct ownership stake in the enterprises they work for (c.f. Ranis 2019) should be seen as distinct from truly public ownership and thus does not meet my definition of socialism. When all enterprises, including their assets and products, must be publicly owned, the transfer of products from a supplier of a product to a consuming enterprise implies no change in ownership rights and thus does not involve exchange or monetary payment. A socialist society as I understand it instead plans the production and transfer of such goods and instructs individual enterprises to act accordingly. Products are thus not bought or sold on an open market, but simply passed on from one enterprise to another. While all economies involve some form of planning of individual economic processes or enterprises, socialism extends this principle to the economy as a whole. This universal planning thus replaces the market exchange interactions between enterprises, which are typical of a capitalist economy.
Last but by no means least, a socialist society is a classless society. While people might still differ in terms of their roles in the economy – some people might do manual labour, while others hold managerial positions – there are no significant differences between these people in terms of rights, political power and access to economic goods. Unproductive members of society that live by the labour of others might do so for reasons of age or disability but not because they belong to some form of aristocracy given special privileges or because of interest on accumulated wealth.
All three criteria are necessary for a society to be socialist. Non-socialist societies might completely fulfil one or two of the criteria or partially fulfil all of them. But I do not consider them socialist unless all three criteria are fully met. For example, during wartime and during post-war reconstruction countries like the United States and France relied to a significant extent on planning to direct resources towards the war effort and reconstruction (de Carvalho 2019). However, neither did so by completely abolishing private ownership in the means of productions and both maintained significant class differences. The thesis does not contain discussion of historical or contemporary ‘socialist’ countries, so I will not comment on the extent to which these might or might not have fulfilled the three criteria."