File spoon-archives/marxism-international.archive/marxism-international_1997/97-01-08.181, message 71


Date: Wed, 8 Jan 1997 10:35:42 -0500 (EST)
From: Justin Schwartz <jschwart-AT-freenet.columbus.oh.us>
Subject: Re: M-I: Cooperatives?



I'm not going to talk with Louis about this stuff any more because he has
run out of arguments. He's fallen back on insults in a rather tedious way.
I'm a shyster who traffics in abstractions, a liberal, a petty bourgeois
utopian who refuses to bow down at the shrine of St. Fidel, etc.
(Incidentally, this shyster will be working for the UAW this summer, or
maybe that's just as bad, sucking up to the labor bureaucracy.)

Zeynep, though, raises some important questions. She points out that
capitalists plan, and of course they do, rather extensively, both within
firms and in less laissez faire economies than America's, for example
Japan's, nationally. This is quite necessary for the operation of an
econonmy and market socialists don't denigrate the planning function or
its possibilities. What we do denigrate is the idea that just because some
or a good deal of planning is possible that the whole economy can be run
like a firm, without market constraints. 

In terms of incentives, since Zeynep raises the question of market
discipline, markets do at least two things that pure planning doesn't. I
leave out labor markets because like Zeynep I don't advocate these. In
market socialism, I would have all workers be cooperators and not
wage laborers. But as to markets in goods and raw materials, these, first,
provide incentives to use resources efficiently and nonwastefully. Plans
sufffers from what Kornai calls the soft budget constraint. Inefficient
uses of resources are not discouraged. Planned enterprises operate on a
cost plus basis. Consistently wasteful uses are perpetuated, not ended.
Empire building and bureaucratic interests discourage shutting down losing
operations or seeking more productive approaches that may actually meet
real demands better. 

Second, market discipline encourages enterprises to try to meet actual
demands. Plans operate with production targets, so many tons of nails, so
many kilowatts of electricity, etc. Real world experience with planning
shows this runs into distortions that fail to provide high quality usab;e
products. Soviet enterprises with tonnage targets for nails would produce
large quantities of very big nails. No mix of targets seemed to get around
this problem: the planners always overlooked the ways in which the tragets
sent the wrong signals. But with markets, if you make stuff you can't
sell, you have eat the losses. There uis an incentive to get and act on
accurate information.

With regard to information, Seynep and Louis, computer programmers, assure
as there's no problem with getting and computing accurate information. But
in the first place, they are operating on a rather small scale, taht of
the enterprise, where effective planning is possible. Second, they are
operating in a market context with relatively hard budget constraints and
more or lerss accurate information about demand and costs provided by the
market framework. Where these are lacking and on a larger--national or
international scale-- there's no reason to suppose the intra-firm
experience will translate smoothly and a good deal of real practical and
theoretical experience to suppose otherwise.
Z
Zeynep is concerned about labor markets and I am too. Shge says, if
workers get fired, I'm outta here. Well, I don't want workers to be
employees. But surely even in a planned economy, Zeynep does not want
workers to be employed in inefficient and wastefukl enterprises that make
things no one can use. If a planned economy (or a market one) cannot shut
these down, then it is in trouple. Likewise, surely even in a planned
economy Zeynep does not want to discourage labor-saving innovation that
may enable worker's labor to be put to better use elsewhere or even to
give workers more free time. And even in a planned economy, to deal with a
touchier subject, Zeynep does not want to stick the other workers with
incompetents, free riders, exploitative goofoffs, and the like. They would
not thank her for that if there was no way of either getting rid of those
losers or making them get with the program. So a planned economy too needs
labor flexibility and labor discipline. 

Now I think taht a market socialist econonmy will provide betteer for
those things without a labor market and without compromising free
employment. The government would have to make a  commitment to full
employmenmt, creating coops where this was needed and acting as an
employer of last resort. Coops themselves are very reluctant to let
workers go--Mondragon has hardly ever done the cooperative version of a
layoff and bought workers out even in economic hard times. (It does so, in
the cooperative versdion of firing, with incompetents and goofoffs.) Since
a cooperative economy would be a market economy, the workers would have an
incentive to meet actual demands in a nonwasteful way. Since the workers
would be in charge, and since they don't want to worker harder than they
have too, theey'd have an incentive to invest in labor saving machiney.

I'm out of time. More later.

--Justin 

On Wed, 8 Jan 1997, Zeynep Tufekcioglu wrote:

> Doug, are you saying capitalists can't plan very efficiently because of the
> market? I agree wholeheartedly.
> 
> What I'm saying is that there are better alternatives to the market convey
> information from the consumers to the producers. That function of the market
> can be taken over. The other function of the market, "the disciplinary"
> function is there because firms have the right to fire their workers, not
> solely because GM and Ford compete with each other. The word competition has
> no special meaning unless one defines what the loser does lose. Under
> capitalism, you get fired. Under socialism?
> 
> Anyway, that's one of the main indicators I use to separate state-capitalist
> countries from socialist (or call-them-what-you-want countries), can a
> worker be fired? Is unemployment legal?
> 
> What I'm objecting to is the claim that the "hard-to-plan,
> not-withing-the-firm" stuff is, by itself, a positive aspect of the market.
> That has nothing to do with "conveying information" or "allocating resources
> efficiently". It's inefficient. 
> 
> Zeynep
> 
> 
> 
> At 16:33 7/1/1997 -0500, you wrote:
> >A reaction to Zeynep's remarks on capitalist planning.
> >
> >Yes, capitalist firms plan, often for the long term (Mitsubishi reportedly
> >plans for the next 250 years), and they use computers to do it. But don't
> >forget the role of competition in regulating the relations among
> >enterprises. Ford may plan, but it always has GM to worry about.
> >Competition is a very messy and destructive way of sorting out success and
> >failure, and forcing technological change. These are the hard things to
> >plan, not the within-firm stuff.
> >
> >Doug
> >
> >--
> >
> >Doug Henwood
> >Left Business Observer
> >250 W 85 St
> >New York NY 10024-3217
> >USA
> >+1-212-874-4020 voice
> >+1-212-874-3137 fax
> >email: <dhenwood-AT-panix.com>
> >web: <http://www.panix.com/~dhenwood/LBO_home.html>
> >
> >
> >
> >
> >     --- from list marxism-international-AT-lists.village.virginia.edu ---
> >
> 
> 
> 
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