On the whole bourgeois economists haven’t attempted to produce a theory of non capitalist economies, and have been content to insist that socialism can work only if it becomes capitalism. In Eastern Europe and the USSR, economists have produced a great deal of economic writing about Soviet-type societies, but for political reasons they have been reluctant to produce general, critical theories of the political economy of socialism.
The field has therefore been left open for Western, anti-Stalinist Marxists to gain a near monopoly of general economic theories of post-capitalist societies. Amongst such theorists there is a widespread consensus that many of the most serious problems of Soviettype economies derive from what can be called “bureaucratic planning” in the absence of political democracy, with the way forward lying not through marketisation but socialist democratic central planning.
These Western Marxist theories have become very influential in the Western Left, while being largely ignored in bourgeois academic circles, But this long-established tranquility has now been rudely disturbed by Alec Nove in his new book The Economics of Feasible Socialism (Allen & Unwin, 1983). Nove is claiming Social-Democratic property rights on the whole field of the theory ol socialist economies, arguing that both the classical Marxist traditions and contemporary Western Marxist economists have failed to produce a ‘feasible model’ of how a socialist economy can work.
Neither his general theoretical ideas nor his economic programme is particularly new and original (nor does he claim originality). He draws heavily on the work of East European economists and his programme of wide marketisation plus the introduction of a multiplicity of property forms – centralised state corporations, small-scale capitalist firms and petty, individual production is very similar to that put forward by Polish economists close to the Solidarity leadership.
The novelty and force of Nove’s book lie in the way he marshals these ideas for an assault on Western revolutionary Marxist writers, accusing them of utopianism and sloppy, vague thinking not only about existing Soviet-type economies, but also about programmes for the Left in the West. And in the course of this attack Nove time and time again argues that the failures of the existing planning mechanism in Eastern Europe and the USSR stem not from the deformations of the political regimes there, but from the nature of planning itself. Indeed, he suggests that the political authoritarianism of the Soviet system is, at least in some measure, a necessary effect of centralised planning.
As a great stimulus to theoretical debate among Marxists, Nove’s book is to be welcomed. This is all the more true because Nove is himself a very knowledgeable scholar in the history and problems of the Soviet economy. However. the consequences of Nove’s programme are not spelt out in the book, yet they are consequences which should cause grave concern to any socialist.
The most valuable theme running through the whole book is Nove’s hostility towards the strains of utopianism that can often occar in Western Marxist criticism of Soviet-tуpe economies: rejections of material incentives, promoting schemes that imply a regime of abundance, exaggerated ideas about the blessings of plant self-management, hostility to any forms of petty production or service work, rejection of marketisation of any scope in non-capitalist economies and so on.
Secondly, in the field of general theory ol a socialist international economy after the suppression of capitalism. Nove’s critique af an economic theory of universal, centralised planning does constitute a challenge to Marxists. Nove’s case has been stated many times before but he develops it with special vigour. As he points out, Marx’s basic premise for his outline of how a socialist economy would operate was that it would be an economy of abundance, where absolute and relative scсагcities would be abolished. Such a premise will not be achieved in the foreseeable future (for Nove it is a utopia) and consequently, the law of value must remain an important operational concept in socialised economies: some objectively established proportions must balance the various branches of the economy (Nove claims, wrongly, that Preobrazhensky failed to appreciate this).
Nove then argues that the market is the best, indeed the only way of objectively establishing such proportions in an adequate quantifiable form, and correctly points ou that the alternative method of making some aggregate accounting of use-values, through their costs of production rather than their price established by the market, cannot work in any satisfactory, exact way.
This leads Nove to argue that central planning of an entire economy is bound to be inefficient and wasteful and to contain a large measure of economic irrationality. Decentralisation of decision-making is essential for the efficient use of resources and for avoiding crippling bottlenecks. He continues that competition between enterprises is vital for effес tive innovation and for the satisfaction of consumer preferences.
Nove then applies these ideas to the international field: One would hope that the clumsy state monopoly of foreign trade of the Soviet-type would be unnecessary, but, yet again, the only known alternative is a market, ie exchange, and since multilateral trade has evident advantages over bilateral barter, this would seem to imply currency convertibility, and the right of economic units to buy and sell across borders. This in turn means realistic prices and exchange rates. It also means that a productive or wholesaling enterprise will be able to acquire foreign currency without necessarily seeking permission from some government office. Internal and foreign trade prices in tradeable goods would be mutually consistent (p. 244).
It is here that the crippling weaknesses of Nove’s method become obvious. His general theoretical case for wide marketisation is abstractly applied to a single national economic ‘model’, a model which is constructed outside any consideration of the existing world political and economic situation.
And if we try to situate this model economy in the real world it quickly becomes very unattractive from a socialist point of view.
The most important fact about the world is that it remains dominated by a capitalist world economy which is enormously more powerful than the non-capitalist economy. with a far more developed division of labour and much higher productivity than Comecon Sccondly, this capitalist economy is presided over by imperialist powers that are remorselessly hostile to any form of socialised economy. Yet in Nove’s entire book this most important economic fact for any consideration of a ‘Feasible Socialism’ plays no opera tional role whatever. If Nove was a cloistered academic with a distaste for politics this might be an understandable omission, but for a man who has frequented NATO seminars such ob vious truths should not be obscure.
If we are considering the problems of the Soviet economy, this relentless pressure from a much stronger capitalist world economy must surely rank as a far greater obstacle to rapid economic growth in the Soviet Union than the problems of central planning. And it is a problem which is not open to any economic solution. The enormous economic advantage of socialism over capitalism for Marxists has lain not in the supposed superiority of central planning over a socialis ed market, but in the suppression of private property leading to the socialisation of production on a world scale, overcoming the stralghtjacket of the nation-state defending national private capitalist interests. Yet when capitalism remains entrenched in the most advanced sectors of the world economy and onls relatively backward parts of the world economy have been removed from the capitalist sphere, this advantage of socialism cannot be realised, whatever the form of regime in the USSR.
Thus, if the USSR dismantled the monopoly of foreign trade, made the rouble convertible, allowed economic units automatic access to foreign exchange at the going rate, and let them borrow on the Euro dollar market, who can doubt that in the second half of the 1970s the Soviet Union would have acquired a Brazilian-style debt with the economy swinging out of any control by any government. And what then? Any noncapitalist economy faces a Hobson’s choice in its relations with the world economy: either it participates, in which case it benefits from the more advanced division of labour but loses control over its own economy in important ways, particularly as it is likely to participate precisely in key, bottleneck sectors of its own economy; alternatively, it apts for autarky and suffers the consequences in terms of sluggish growth.
In this connection, it is striking that Nove nowhere discusses the case of the East German economy. Here is an economy with centralised planning and presumably all the dire consequences that Nove assures us must flow from this. Yet the East German economy, which is much more sophisticated and advanced than the Soviet economy, has enjoyed very high growth rates, has a developed consumer sector, provides a higher per capita income than Britain, with full employment, little inflation and a welfare state that in many fields is comparable with that of Britain. Ah, people say, this is because East Germany benefits greatly from its close trading relationship with the Federal Republic. No doubt this is true, but it precisely illustrates the point: relations with the capitalist world economy can be a far more important factor than internal economic management mechanisms in determining economic performance. By being the one country in the Eastern Bloc that can expect a large measure of political stability in its capacity to do business with the capitalist world, the GDR is the exception that proves the rule.
There is a second factor that ought to be stressed in the East German case: the administrative culture within a non-capitalist state. It is only really in the 1960s that the Soviet Union acquired a settled stratum of reasonably well-educated administrative personnel in the lower levels of the state and economic management, and even today there would be no comparison between the bureaucratic efficiency and ethical standards of lower functionaries in, say a Soviet and an East German provincial town. These factors are in turn a result of the cultural level of the working class itself and they play an enоrmous role in the functioning of any planned economy.
This leads to Nove’s dismissal of the role of political democracy within a planned economy. He treats the issue of democracy above all as a question of who takes administrative-managerial decisions, and consequently has no difficulty in arguing that in a centrally-planned economy these decisions must inevitably be taken at the centre He rightly points out that plant selfmanagement in a centrally planned economy leaves the workers council with precious little of importance to decide. But for socialists, the issue of democracy is not fundamentally a matter of administrative decisions, not in the epoch of transition to socialism, our present epoch. It is above all a matter of political sovereignty of the working people within the state and of permanent freedom of information, ideas and criticism. Without this it is surely obvious that there will be gigantic planning disasters and waste, without the development of a civic and political culture that exerts a powerful pressure for administrative efficiency and initiative. None of these figures in Nove’s book The fundamental value that Nove attempts to assert is consumer sovereignty. As he puts it: ‘It is an essential part of socialist beliefs that there be a real form of economic democracy, that people can influence affairs in their capacities as producers and consumers … To influence the pattern of production by their behaviour as buyers is surely the most ge nuinely democratic way to give power to consumers. There is no direct “political” way. This theme runs right through the book as one of Nove’s basic values. Such ideas are also 10 be found amongst many other anti-Marxist writers: the idea that central planning in the form of state dictatorship over the people as consumers: a dictatorship over needs.
The trouble with this notion is that it assumes one set of needs over and against others. If the set of needs is envisaged to be a wide range of clothes, fashions, car designs. furniture styles, restaurants, and so on, there is a great deal of force in what Nove has to day. But what about other producer and consumer needs: such as a job, very cheap electricity and gas, very cheap necessities at heavily subsidised prices, free holidays, very cheap standardised cars, virtually free and plentiful public transport, a huge state housing programme with nominal rents, nominal charges for theatres, cinemas, sports facilities? Are these not also economic needs and are they not more important needs than the others mentioned by Nove?
Yet, on the whole, Nove has little enthusiasm for meeting such needs. He devotes no attention to them, though he does deplore the huge subsidies on food. This seems an odd scale of values for a socialist and a peculiar blind-spot when looking at Soviet-tуре economies. Of course, it is easy to say that all these needs are not fully met in the USSR and that great shortages remain in these fields. Fair enough. Shall we cut the military budget in half? Nove doesn’t discuss such matters. But the point that must be stressed is not the quantitative aspect of this problem, but the qualitative principle of the plan that enables such needs to be met and the principle of the market which tends to ignore these working class needs.
In conclusion, our quarrel with Nove is not that he raises the need for some elements of marketisations and indeed for some elements of a New Economic Policy (NEP) in the USSR. He might be right, up to a point. Our quarrel is that he treats these issues as matters of principle; he wants the market principle to replace the planning principle in non-capitalist economies. And he justifies this by abstracting himself from the socio-political aspects of functioning of a socialised economy in a predominantly capitalist world. He does not seem to realise that no socialised economy in this world can be organised on criteria of economic efficiency divorced from social and political criteria. For the economу to function in its hostile environment at all it must offer substantial, even if technically ‘inefficient”, social benefits to the working class which only the planning principle can provide and only the monopoly of foreign trade can underwrite. And it is the existence of those defences of the working class character of the state that makes both possible and nесcessary popular sovereignty over the state in the political sphere.