The Socialist Blueprint

The tactical advantages to be reaped by placing oneself on this standpoint are indeed obvious enough to explain what at first sight looks like surprising broad-mindedness. A competent socialist who sees as clearly as any other economist all the weaknesses of Marxian and of popular arguments can thus admit whatever he feels should be admitted without compromising his convictions because the admissions refer to a historical stage that (so far as it ever did exist) is safely dead and buried; he is enabled, by judiciously confining his condemnatory verdict to the non-competitive case, to lend qualified support to some indictments, such as that in modern capitalism production is for profit and not for the consumption of the people, which otherwise would be merely silly; and he can baffle and puzzle good bourgeois by telling them that socialism will only do what they really wanted all along and what their own economic ulemas always taught them.

But the analytic advantages of stressing that family likeness are not equally great. 8 As we have already seen, the bloodless concept of perfect competition that economic theory has framed for its purposes turns on whether or not individual firms can, by their single-handed action, influence the prices of their products and of their cost factors. If they cannot—that is, if each firm is a mere drop in an ocean and therefore has to accept the prices that rule in the market—the theorist speaks of perfect competition. And it can be shown that in this case the mass effect of the passive reaction of all individual firms will result in market prices and volumes of output displaying certain formal properties that are similar to those of the indices of economic significance and volumes of output in our blueprint of a socialist economy. However, in all that really matters—in the principles governing the formation of incomes, the selection of industrial leaders, the allocation of initiative and responsibility, the definition of success and failure—in everything that constitutes the physiognomy of competitive capitalism, the blueprint is the very opposite of perfect competition and much further removed from it than from the big-business type of capitalism.

Though I do not think therefore that our blueprint can be objected to on the ground that it is borrowed from commercialism or that it wastes socialist oil in order to anoint that unholy thing, I am yet much in sympathy with those socialists who object to it on other grounds. I have, it is true, pointed out myself that the method of constructing a “market” of consumers’ goods and of orienting production according to the indications derived from it will come nearer than any other, for instance the method of decision by majority vote, to giving each individual comrade what he wants—there exists no more democratic institution than a market—and that in this sense it will result in a “maximum of satisfaction.” But this maximum is only a short-run one 9 and, moreover, is relative to the actual desires of the comrades as they are felt at the moment. Only outright beefsteak socialism can be content with a goal such as this. I cannot blame any socialist for despising it and dreaming of new cultural forms for the human clay, perhaps of a new clay withal; the real promise of socialism, if any, lies that way. Socialists who are of this mind may still allow their commonwealth to be guided by the comrades’ actual tastes in matters that present no other than the hedonist aspect. But they will adopt a Gosplan not only, as we conditionally did ourselves, for their investment policy but for all purposes that do present other aspects. They may still let the comrades choose as they like between peas and beans. They may well hesitate as to milk and whisky and as to drugs and improvement of housing. And they will not allow comrades to choose between loafing and temples—if the latter be allowed to stand for what Germans inelegantly but tellingly call objective (manifestations of) culture.

6. It is therefore necessary to ask whether, if we jettison our “markets,” rationality and determinateness do not go overboard also. The answer is obvious. There would have to be an authority to do the evaluating, i.e., to determine the indices of significance for all consumers’ goods. Given its system of values, that authority could do this in a perfectly determined manner exactly as a Robinson Crusoe can. 10 And the rest of the planning process could then run its course, much as it did in our original blueprint. The vouchers, prices, and the abstract units would still serve the purposes of control and cost calculation, although they would lose their affinity to disposable income and its units. All the concepts that derive from the general logic of economic action would turn up again.

Any kind of centralist socialism, therefore, can successfully clear the first hurdle—logical definiteness and consistency of socialist planning—and we may as well negotiate the next one at once. It consists of the “practical impossibility” on which, it seems, most anti-socialist economists are at present inclined to retire after having accepted defeat on the purely logical issue. They hold that our central board would be confronted with a task of unmanageable complication,11 and some of them add that in order to function the socialist arrangement would presuppose a wholesale reformation of souls or of behavior—whichever way we prefer to style it—which historical experience and common sense prove to be out of the question. Deferring consideration of the latter point we can easily dispose of the former. First, a glance at our solution of the theoretical problem will satisfy the reader that it is eminently operational; that is to say, it not only establishes a logical possibility but in doing so also shows the steps by which this possibility can be realized in practice. This holds even if, in order to face the issue squarely, we require that the plan of production be built up ab ovo, i.e., without any previous experience as to quantities and values and on no other basis to start from than a survey of the available resources and technologies and a general knowledge about what kind of people the comrades are. Moreover it must be borne in mind that under modern conditions a socialist economy requires the existence of a huge bureaucracy or at least social conditions favorable to its emergence and functioning. This requirement constitutes one of the reasons why the economic problems of socialism should never be discussed without reference to given states of the social environment or to historical situations. Such an administrative apparatus may or may not deserve all the derogatory comments which some of us are in the habit of passing upon bureaucracy—we shall presently comment upon it ourselves—but just now we are not concerned with the question how well or ill it may be expected to fulfill its task; all that matters is that, if it exists at all, there is no reason to believe that it will break down under the task.

In any normal situation it would command information sufficient to enable it to come at first throw fairly close to the correct quantities of output in the major lines of production, and the rest would be a matter of adjustments by informed trial and error. So far there is in this respect no very fundamental difference 12 between socialist and commercial economies either as to the problems which the theorist meets in showing how an economic system proceeds to a state that could be “rational” or “optimal” in the sense of fulfilling certain maximum conditions, or as to the problems which managers have to meet in actual practice. If we admit previous experience to start from as most socialists do and especially Karl Kautsky always did, the task is of course greatly simplified, particularly if that experience is of the big-business type.

But something else follows, secondly, from another inspection of our blueprint: solution of the problems confronting the socialist management would be not only just as possible as is the practical solution of the problems confronting commercial managements: it would be easier. Of this we can readily convince ourselves by observing that one of the most important difficulties of running a business—the difficulty which absorbs most of the energy of a successful business leader—consists in the uncertainties surrounding every decision. A very important class of these consists in turn in the uncertainties about the reaction of one’s actual and potential competitors and about how general business situations are going to shape.

Although other classes of uncertainties would no doubt persist in a socialist commonwealth, these two can reasonably be expected to vanish almost completely. The managements of socialized industries and plants would be in a position to know exactly what the other fellows propose to do and nothing would prevent them from getting together for concerted action.13 The central board could, and to a certain extent would unavoidably, act as a clearing house of information and as a coordinator of decisions—at least as much as an all-embracing cartel bureau would. This would immensely reduce the amount of work to be done in the workshops of managerial brains and much less intelligence would be necessary to run such a system than is required to steer a concern of any importance through the waves and breakers of the capitalist sea. This suffices to establish our proposition.