As someone who spends a great deal of time in leftist spaces, I often run into misconceptions and mistaken ideas about market socialism and its basic organization. So I wanted to address some pretty common arguments I hear and why they are flawed in their understanding of what market socialism is and the problems associated with it.
So, let’s begin.
#1 “Guess I’ll just democratically starve to death”
The idea behind this is basically that inevitable market conditions will lead to worker layoffs, as the process of competition intensifies, working conditions will erode and there will be fewer workers needed, so they’ll be fired.
So, there’s a couple major flaws with this line of thinking. The most obvious I can see is the argument that competition necessarily leads to layoffs. What you’ll often find is that as old jobs are eroded, new are created. Sure, these new jobs require education, but in a democratically controlled workplace, why wouldn’t workers advocate for funding their own education with an on-the-job training scheme? Any income above operating cost and wages will be reinvested in either the cooperative’s capital, or its labor force in the form of welfare programs or higher wages. Now, in all fairness, competition does tend to reduce profits over time, and if a firm doesn’t innovate or is stagnant, then yes there’s the chance of workers losing jobs.
But this isn’t necessarily a bad thing within a market socialist society. We market socialists don’t want to only have cooperatives and nothing else. There’s no reason to doubt that consumer owned insurance cooperatives and mutual aid societies wouldn’t exist. If you lose a job, these cooperatives can help you get back on your feet. Plus, market socialist society would tend to pay workers more, and obviously this gives workers a cushion for any period of unemployment, or perhaps eliminates the need for employment all together. Many market socialists like myself are skeptical of state power, but others are perfectly fine with keeping a welfare state to protect all workers. There’s no inherent contradiction between the existence of welfare programs and market socialism. The difference is that within market socialist society, these welfare programs are run directly by workers/consumers.
But, for the sake of argument, let’s say that the market does in fact lead to layoffs. Well, if that’s the case, then obviously the workers that run and control cooperatives will obviously want protections. These protections can be paid re-training (funded by the cooperative’s profits or via debt on the part of the cooperative), payment while job searching, unemployment insurance paid throughout the period of employment, etc. There’s a million ways to deal with this, and the workers themselves would decide how and what they wanted. And the real beauty of market socialism is its decentralized nature, if you didn’t like your cooperative’s programs you could find another! Cooperatives must compete for workers as well, and better programs will attract them. But if programs add too much inefficiency, they will lose out in the market. The same cannot be said of state planning.
There’s more to say on the point of unemployment when dealing with the commons later in this article.
So in summary, the market doesn’t necessarily lead to job loss, market socialism doesn’t preclude mutual aid and welfare programs, and workers themselves will institute democratic protections within a cooperative for themselves, and the commons undermines the very concept of unemployment anyways.
#2 “Competition implies winners and losers. When there are loser’s the market centralizes and monopolies are naturally established”
This one seems to make sense at first brush, but with some more thought breaks down. So, market competition is almost Darwinist in a sense. What firms are competing over is price, specifically who can have the lowest. Usually this price can be lowered by changing up production methods. So, yes, cooperatives would compete in a market, but what’s actually winning and losing is PRODUCTION METHODS not the cooperatives themselves. So, yes, older less efficient methods are cast aside, but newer and better production methods win. Any cooperative that doesn’t adopt this new method, will, by extension, lose out. But if everyone in a market is competing using the same PRODUCTION METHODS (and therefore the same price) then there wouldn’t be any firms going out of business (assuming these methods bring in sufficient revenue to cover costs and that there’s no other factors affecting price). Not all competition is over production methods, and there are exceptions, but this is for the most part how it works.
But this tendency towards centralization is also undermined by another factor: the diseconomies of scale. You often hear about economies of scale, but not often diseconomies of scale. Thanks to large scale state subsidies in the form of friendly contracts, subsidies, various protections like patents, copyrights, and tariffs, these diseconomies aren’t fully internalized. But as a firm grows larger, it is much harder to actually manage because there’s a lot more to manage. Plus, at every level of management, every manager is looking out for their own job and necessarily tweaks data to make it look good for them. As the information ascends through management levels, it becomes more and more distorted until those at the top are making decisions based on fantasy. Not only that, but the more stuff you have the more costs you have associated with storage and distribution. These costs add up. It’s a wonder big business still runs properly, thanks to workers on the floor actually knowing what they’re doing rather than the “skillful” lead of our capitalist management. Without state protections, competition would lead to small to medium sized cooperatives, up until management and internal costs became greater than economies of scale. Beyond that point, smaller more agile firms would out-compete the larger lumbering giants, as leftist author Gabriel Kolko argues in his Magnum Opus, The Triumph of Conservatism.
Finally, a market socialist society would be prone to more, not less competition, because not only do large firms have to worry about internal diseconomies of scale, they must also worry about internal defection. In a worker owned firm, any part could secede should it choose. It would be in the best interest of all workers involved to have multiple groups secede at once, thus preventing the larger firm from waging a price war as it lost valuable assets and access to the relevant markets. There’s an incentive to do this if workers feel they could make more money on their own by undermining the larger firm’s price. Thus, market socialism would lead to smaller cooperatives simply because there’s a lower chance of defection and because of diseconomies of scale being fully internalized.
#3 “Marx didn’t mean workers themselves owning the MOP, rather the laboring class as a whole”
This is true, but many market socialists don’t reject the idea of the laboring class as a whole owning the Means of Production. There’s a variety of models of market socialism, from more state oriented versions to a libertarian socialist bent, one which I align with more and will examine here.
Libertarian market socialists tend to advocate the usage of community commons. Anyone could come into community owned workshops and use the tools there in order to produce goods. A small fee could be exacted from members in order to pay for maintenance of tools and supplies. In these common workshops you could use tools to create products to sell. Imagine a community owned maker-space where local workers come together to produce. Teams of workers could emerge in these commonly owned work-spaces and COOPERATE with each other to produce goods. Essentially everyone becomes self-employed and may freely associate with others.
This fundamentally undermines the very concept of unemployment, because at any point you can just go use tools and produce a good for market or directly for yourself. As long as you follow the community work-space, you can’t be kicked out and thus can’t really be unemployed. Self-employment and free association for all is my dream for a future market socialist society.
New tools could be financed by community owned banks (think credit unions) that only charge for administration and management, no profit, and would be owned by their users. Or you could have a system of Mutual Credit as described by Thomas Greco in his book The End Of Money and the Future of Civilization, or the many proposals by mutualist thinkers on this front.
#4 “The hell of capitalism is the market, not that the firm has a boss” — Antonio Gramsci
So, I really do think this quote misses the heart of market socialism. It isn’t simply replacing companies with cooperatives and calling it a day. It is a holistic view of society, with ideas about socializing finance (everything from a state owned bank to mutual credit has been proposed), mutual aid and solidarity. These ideas don’t undermine the market at all, instead they free it from capitalist privilege and interference. Gramsci is right that interference and protections in the market lead to the hell of capitalism, but he mistakes those interference and protections for the market instead of abhorrent to it. Liberating the market from capitalist control and socializing finance will allow for workers to flourish simply because of the great variety of options and the decentralization tendency of the market.
I feel compelled to point out that the advocates of centrally planned, cybernetic socialism correctly point to large companies to show that they operate internally like planned economies (though they are still dealing with semi-rational prices). But this is simply pointing out that organizing the state in a similar way is organizing it much like a capitalist corporation, i.e. state capitalism, where the laboring classes themselves don’t actually own the Means of Production, rather a select bunch of hard-nosed bureaucrats do. Bureaucrats replacing capitalists doesn’t sound all that revolutionary to me. I’d rather embrace the freed market.
Fundamentally, the market itself doesn’t fundamentally undermine socialist values, instead it allows for decentralization, direct worker democracy, and rational and efficient production. These arguments simply don’t hold water to a market socialist. It allows for workers to directly manage their own affairs and their own lives without the dictates of the capitalist boss or the totalitarian state breathing down their necks. Workers of the world, reject your masters and embrace market socialism!
