Wednesday, May 27, 2020

Socialism and markets

Much ink has been wasted on the supposed conflict between free markets versus central planning, with free markets supposedly being intrinsic to capitalism and central planning intrinsic to socialism. All nonsense. Sadly, too many socialists retain an irrational and unfounded fear of the word market.

In the broadest sense, a market is a system of voluntary transactional exchanges of goods and services using money tokens.

As a general principle, a society should ban voluntary action only in extreme cases where the voluntary action either imposes uncorrectable externalities, such as going without a mask in a pandemic, or is just completely stupid, such as driving without wearing a seat belt. (I tend to libertarianism in the latter case, but that's not a hill I'm willing to die on.)

Any society facing scarcity must have some numerical way of allocating scarce resources. If a society imposes a numerical limit on consumption, it has money: money is the numbers and the limits.

Different jobs have different average desirability, so it makes sense to somehow make undesirable jobs more desirable by allowing workers in undesirable jobs to consume more per hour of work.

"Market socialism" is, therefore, kind of a redundancy. A truly communist society would not have markets, but only because communism presupposes no material scarcity. Under communism, a transactional accounting method for allocating scarce resources, i.e. money, would be superfluous. Whether we might have unlimited material resources in the future, at present we do not yet have them.

A socialist society could ban voluntary transactions, and some societies have. I have no idea whether those bans were good or bad ideas in those societies under their specific historical circumstances. But such a ban is a tool, not an intrinsic characteristic of socialism.

A more critical investigation of capitalist markets, however, gives socialists a better idea of what is essential to socialism.

First, capitalist markets are not always voluntary. If I must pay rent or freeze to death, the "choice" to pay rent is not voluntary. If I must kiss my boss's ass to keep my job so I can pay my rent and not freeze to death, the "choice" to kiss my boss's ass is not voluntary. Nature does coerce us — we must eat to live — but we can eliminate nature's coercion only with science and engineering, not with law or social construction.

Second, capitalism really does require markets (however involuntary) in everything. We can carve out exceptions, and the exceptions work in practice, but capitalists always offer unrelenting indefatigable opposition to any exceptions to markets. Capitalists exercise power using involuntary capitalist markets; any exceptions diminish their power.

Third, and most important, the driving force behind capitalist markets is the profit motive: each household must do whatever it takes to increase its flow of money tokens, without limit. Capitalist markets are about accumulating power, not the efficient allocation of scarce resources. Just because Elon Musk has accumulated a metric assload of money tokens does not mean that firing a Tesla into space is an efficient use of scarce resources. (I mean, maybe it was, but we can't tell just because Musk had enough money tokens to do so.)

The essential nature of socialism is not to ban voluntary transactions. A socialist society might or might not ban some or perhaps all voluntary transactions, based on specific material circumstances, but such bans are not essential: we cannot say that a society that does not ban voluntary transactions is therefore not socialist.

What is essential to socialism is first being honest about distributing nature's coercion. Human beings must work to live, so a socialist society, unlike capitalist societies, must be honest and direct about saying that each person capable of working must actually work. And once we are honest about nature's coercion, we can tackle the scientific and technical task of freeing ourselves from nature's coercion.

It is also essential to a socialist society to reject the profit motive. The motive for each households should not to accumulate as much wealth as possible, but to offer its scarce resource, labor, and use its demand on the social product efficiently to maximize the happiness of its members.

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