With the rise of China as an economic powerhouse, much attention is being paid to the country’s model of “market socialism”. For the Global South, it is being touted as a method to develop productive forces and reverse the imperialist erosion of social wealth. An important conceptual proposition of this economic discourse is the existence of an interventionist state that can dissociate markets from capitalism and utilize them as a means to serve the ends of socialism. Here, state planning and the market economy are harmoniously conjoined as distinct modes that can be made to work together for the construction of a solid national productive base. This theoretico-practical unification of state regulation and market dynamism is said to be based on the historical fact that markets existed in the slave economies of the ancient world, e.g., Rome and Greece, and in the feudal economies of the Middle Ages. Since market economies have preceded the capitalist mode of production, market socialists suggest that a socialist mode of production can utilize them for collective goals of liberation. However, the abstract positing of a general and trans-historical market – one that has endured throughout successive modes of production – is an erroneous analytical operation. As Utsa Patnaik writes: “If we make no distinction between commodity production and capitalist production; and as a corollary, if we fail to distinguish between those ancient forms of money-capital engaged exclusively in trade and usury, and money-capital engaged in capitalist production proper – then we give up, in effect, the very attempt to apply those analytical categories to the domain of economic history, which serve to distinguish between differing socio-economic formations.”
To distinguish between pre-capitalist and capitalist markets, we need to examine their historical texture and economic structure. In pre-capitalist societies, the market was governed by a logic of economic transaction which emphasized the recycling of wealth in the process of circulation. Elites felt no need to maximize profits through the systematic application of technological improvements. In the words of Ellen Meiksins Wood, “exploitation took the form of direct surplus extraction by coercive force. To increase their surpluses, exploiters needed to improve not the productivity of the producers’ labor so much as the effectiveness of their own coercive powers of appropriation.” This changed under capitalist markets, which are defined by competition among producers. Such market competition entails a degree of economic coercion on the producers, which means that each producer/capitalist becomes a personification of capital, an agent upon whom the capitalist totality imposes the imperative of accumulation. Wood notes: “Only capitalist appropriation depends on market competition and therefore on the systematic improvement of labor productivity. Only capitalism, then, depends on constantly improving the forces of production. And only in capitalism is it necessary to grow just to stay in the same place.” The subjection of producers to competition leads to the creation of “strategies that lead to success in market competition—specialization, accumulation, enhancing labor-productivity, adopting low-cost techniques, moving in and out of various lines in search of profit, and so on. The result, of course, is a uniquely dynamic system which has produced a historically unprecedented tendency to self-sustaining growth and constant revolutionizing of the forces of production”.
When market socialists talk about the deployment of market for the construction of Third World socialism, it is the capitalist market they are talking about as it is only under capitalist social relations that market mechanisms can lead to the continuous revolutionization and strengthening of productive forces. The use of pre-capitalist market mechanisms carries no economic relevance since it can’t provide the productive resources necessary for the provision of basic necessities, the reduction of working hours, and the enhancement of cultural and educational life. Now, in the context of an imperialist world-system characterized by the core capitalist countries’ efforts to under-develop the Global South, there is nothing wrong per se with the Third World Left’s use of market for the development of productive forces. But what is problematic is the establishment of market as a necessary complement to state planning. Instead, what we need is the conceptualization of market and planning as a contradictory combination specific to a transitional stage, one whose tensions have to be intensified in favor of the elimination of the former. As Che Guevara puts it: “We understand that the capitalist categories are retained for a time and that the length of this period cannot be predetermined, but the characteristics of the period of transition are those of a society that is throwing off its old bonds in order to move quickly into the new stage. The tendency should be, in our opinion, to eliminate as fast as possible the old categories, including the market, money, and, therefore, material interest — or, better, to eliminate the conditions for their existence.”
In order to hasten the demise of capitalist categories, socialists need to undermine the law of value, according to which commodity exchange must take place according to socially necessary labour times established competitively on the market. Guevara tried to erode the law of value by treating Cuba as one big factory and work as a social duty. Helen Yaffe elaborates what this means:
“The Plan sets worker production ‘norms’, based on socially necessary labour time, but workers are urged to surpass these in order to increase economic efficiency. The challenge is to transform the value added to production by the worker above his own subsistence from ‘surplus value’, as under capitalism, into ‘surplus product’ under socialism and to move from production for exchange, to production for use. Under capitalism, the workers’ surplus is the product of exploitation because it does not belong to them. Under socialism, it is a contribution to social production – they work for themselves as part of a collective society. The surplus is distributed according to criteria determined by the plan. Workers’ management is essential under socialism because it ensures workers’ ownership of the means of production. The masses must participate collectively in devising the plan, establishing the norms and in daily decisions concerning production and consumption.”
Here, what is evident is the fact that planning comes to be the political regulator of socialist society, using democratic management and socio-pedagogical laboratories to increase productivity. In this way, “capitalist mechanisms (profit motive, material incentives, market-exchanges, competition)” come to be replaced with “administrative controls (the plan, the budget, supervision and audits, workers’ democracy)”. The centrality of politics in the socialist mode of production can be better understood by drawing a distinction the dominant and determinant instances of a society. A socialist society – like any other society – is a totality structured in dominance. Among the various structural instances, one instance will have the dominant role: contradictions at other levels will find themselves displaced to this instance (thereby averting a revolutionary rupture) or many contradictions may become condensed in this instance (producing the possibility of a revolutionary rupture). The dominant instance will vary according to the social formation, but in all cases its role is determined – in the last instance – by the economy. In other words, the economy exercises its effects indirectly by determining the specific efficacy of other instances. Drawing on these theoretical tools, we can say that socialism is a transitional mode of production in which the economy is transformed in such a way that political and ideological struggles come to occupy the dominant place, becoming the principal weapon through which capital’s hegemony is destroyed and a new mode of production is created. The dominance of politics in socialist transitions is confirmed by historical experience. Unlike the bourgeoisie, who started to economically undermine the pre-capitalist relations of production long before gaining political control, the proletariat has had to seize political power from the capitalist state to launch the revolutionary process of communist transformation. In the current conjuncture, the Left, while recognizing the temporary historical necessity of a socialist market economy, needs to move beyond that transitional discourse and put emphasis on politics as a revolutionary method for the dissolution of the law of value.
Yanis Iqbal is an independent researcher and freelance writer based in Aligarh, India and can be contacted at email@example.com. His articles have been published in the USA, UK, Canada, Australia, New Zealand, India and several countries of Latin America.