This seems to us to be a fairly accurate caricature of a substantial fraction of the socialist movement. Whilst the communist parties tended to have a fairly clear idea of what they wanted to achieve, based for the most part on an emulation of the USSR, other socialist parties have been loath to give a concrete view of how socialism should be organised. On all sides there has been a reluctance to examine the practical problems of organising a socialist economy.
Marx took the view that as a scientist he could not put forward detailed theories about socialism, a form of society that did not yet exist. Economic and social research had to base itself upon the data provided by real society. He was ready to identify features of contemporary capitalism that revealed the potential for a future socialised production system but not to construct a detailed theory of socialism in the absence of data. He was willing to say that capitalism had generated a class struggle that would lead ineluctably to the dictatorship of the proletariat and thence to a classless society. As to what this society would be like, he was only willing to give sketchy predictions: that it would be based on planned production rather than the market, that it would not use money, etc.
For other, non-communist, socialists the issue was more problematic. Although the great majority of socialists during the period from the '30s to the '50s took things at face value and accepted that Russia was socialist, there was always a minority who did not, and, in Western Europe during the last 30 years such views have probably come to represent a majority of socialist opinion.
Socialism they argued could only be established on the basis of a free press, free political parties and open parliamentary elections. A socialism that denied this was either not socialism or was not worth having. This is a clear and principled argument and the Social Democrats have stuck to it for seven decades. Its weakness was that the communists could simply retort: ``Who says you can't build socialism using a dictatorship. That's just parliamentary cretinism. We have tried dictatorship and it works. You tried parliament and where is your socialism?"
On economic grounds, the Social Democrats had less to say against communism. Social Democracy has a `liberal' definition of socialism both in the sense of looseness and in the Manchester sense. A mixed economy with social welfare legislation and some elements of industrial planning would certainly qualify, so their economic criticism of Soviet Communism is that it was not necessary to go so far. The economic direction was not in question, rather it was the council of moderation. Public ownership of the means of production, planning, welfare rights and an egalitarian income distribution were accepted as socialist objectives by both Communists and Social Democrats. The latter presented themselves as the democratic socialists without challenging the socialism of the latter, only their totalitarianism.
From our perspective questions 1 and 2 are partly empirical. Only partly, because the meaning of the question still relies upon the interpretation on makes of the word country. This is commonly used to refer to a nationstate, but nations and states are not coterminous. The USSR was an international organisation of proletarian state power not a nation state in the old sense. If by country we mean explicitly a nation then it must be said that we lack empirical evidence to decide if socialism is possible in a single country. If by a country then we mean a single state power, then we have historical experience of the existence of a single socialist state from the early '30s to the late '40s. The time period given is determined by the point at which the distinguishing characteristics of a socialist economy came into being. On either definition of a country: nation, or unitary state power, then since the late 1950s it has been clear that a plurality of socialist countries can co-exist. We give the late 50s as the crucial period here, since until then the Peoples Democracies of Eastern Europe were only nominally independent state powers, Communist Parties there were the effective agents of state power and the CPs remained so tightly co-ordinated that it was doubtful that the states could really be considered as independent. China, where the CP was independent of Moscow, had not established a socialist economy in the early 50's. On the question of whether socialism is more stable in one country or several, it appears that it is more stable in one provided that by `country' one means a unitary state power. A unitary state power is better placed to present a united front to the hostile capitalist world, and best placed to coordinate the economic development of nations at different levels of development. One only has to consider what the chances of socialism's survival would have been had the USSR not been formed, and had there existed instead a multiplicity of sovereign nation-states on its current territory. The imperialist powers would undoubtedly have picked them off one by one. In the post war period, splits between socialist states: USSR/Jugoslavia or USSR/China or China/Vietnam have been exploited to disasterous effect by the USA and hamstrung socialisms economic development. In a paradoxical sense, it can be said that the abandonment of the policy of socialism in one country in the sense of a monolithic state by the communist movement in the late '40s early '50s contributed to their collapse in 1990.
At a formal level he was certainly correct in this. But the difficulties involved in establishing a genuine market economy in Eastern Europe after the counter revolution of 1990 indicate that the social reality behind money and prices in these countries was somewhat different from that in the West. In the consumer goods markets, the prices bore little relation either to the amount of social labour required to produce them or to demand. In producer goods there was not really a market at all, since money alone did not suffice to ensure supply of a good if it had not been allocated in the plan. Bordiga was right in raising the existence of money and the commodity form as a potential problem, but like other left communists he was none to specific as to what alternative form of economic calculation should be used.
Given that the economic changes introduced by Khrushchev were fairly minimal this argument was hard to sustain. If, however, one views them as allegorical comments on an internal Chinese political debate about the appropriate way forward, then they make a lot more sense. Within China there was a fierce struggle between the Maoists and the followers of Liu Shaoqi and Deng. Liu was stigmatised as China's Khrushchev. Alternatively this can be seen as labeling Khrushchev as Russia's Liu.
If the economic policies followed by Deng after he came to power are indicative of what was being proposed in secret party debates during the '60s then the charges of `capitalist roadism' seem to have been accurate in the Chinese context. But until Gorbachov, those advocating similar measures ÿ in Russia were far from the centers of political power.
Many currents of thought in the socialist movement have dissented from this consensus, on the grounds that the conditions in countries of `actually existing' socialism violated numerous socialist ideals.
This may well be true, but as materialists we can not judge the material world by the standards of the ideal. It is not the job of reality to materialise our ideals. Reality just is in all its glories horrors and contraditions. In judging the reality of socialism by comparing it with ideals advanced by its early advocates one is adopting an unusual criterion. We do not judge feudalism or capitalism by the standards of an ideal, were we to do that we would soon find that no real capitalist society corresponded in whole to this ideal. One may note here that it was a common argument by opponents of Marxism to say that since welfare state Britain differed in many respects from the ideal type of 19th century capitalism, it was no longer really capitalist.
If one advances a theory about a class of society before it ever comes into existence the scientific status of that theory is not strong. If the predictions of the theory come to conflict with later observation one can either decide that the theory needs modification or that reality has been misbehaving. If one adopts the later policy and says that socialism has never existed anywhere in the world, one may hope ( we think vainly ) to escape the current political unpopularity of existing socialism, but one has hardly advanced ones ability to practically intervene in the contradictions that led to this unpopularity. An ideal can be kept pristine but its very distance from reality vitiates its practical political force and one is left in precisely the predicament that Marx criticised in Utopianism.
We therefore take an empirical approach to determining what have been the distinguishing characteristics of socialist society.
These seem to be the significant structural features that marked off the socialist world from the capitalist. These are also the features that the advocates of capitalism in these countries wish to abolish.
Those socialists to the left of Social Democracy who deny that socialism has ever existed do not generally specify which of them are incompatible with socialism. One has to assume that the socialist systems they advocate would share most of these features. Exceptions to this are perhaps the Bordigist International Communist Party, who argue that the continued existence of money was a decisive factor in preventing the USSR etc from ever having been socialist.
Our view is that although it is fruitless to question whether the USSR was socialist, it does not follow that one has to accept the political and economic policies followed by its government. If one abandons the utopian viewpoint and sees socialism as concrete form of society with its own contradictory forms of development, then one can start to ask just what economic and social policies should be followed in a socialist state. Any real society is fraught with contradictions, and is either destroyed by them or develops by resolving them.
By the 1930s it was widely recognised that liberal capitalism had reached a dead end and offered the world no prospect other than an appalling alternation of world war and economic recession. Not supprisingly many people concluded that only Nazism or Communism offered any hope for the future. By the 1950s that had all changed. The subordination of all other capitalist powers to the USA, keynesian economics, GATT and the IMF had transformed its prospects.
The economic contradictions of the socialist world have been evident and growing for a couple of decades. It is now as self evident that socialism is finished as it was that capitalism was finished in the '30s. As self evident and as false. Our opinion is that the crisis of socialism stems primarily from bad economic policies and can be resolved by a radical transformation of these policies. We do not put our views forward as an unvarying blueprint and anathemise every deviation from them. We do claim that they are more soundly based, and more likely to be sucessful than the economic policies followed by socialist governments in the recent past.
Mises is concerned above all with the issue of the choice of techniques to be used in the production process. The claim is that only a market, by reducing all costs and benefits to the common denominator money allows rational comparison of alternative possibilities.
The director 5 wants to build a house. Now, there are many methods that can be resorted to. Each of them offers, from the point of view of the director certain advantages and disadvantages with regard to the utilization of the future building, and results in a different duration of the building's serviceableness; each of them requires other expenditures of building materials and labor and absorbs other periods of production. Which method should the director chose? He cannot reduce to a common denominator the items of various materials and various kinds of labor to be expended. Therefore he cannot compare them. He cannot attach either to the waiting time (period of production) or to the duration of serviceableness a definite numerical expression. In short, he cannot in comparing costs to be expended or gains to be earned, resort to any arithmetical operations. 6
He reviews various possible ways in which this could be done and rejects them all.
This suggestion does not take into account the original material factors of production and ignores the different qualities of work accomplished in the various labor-hours worked by the same and by different people. 7
This is a somewhat brief treatment of the issue so our reply can also be concise. We have shown in other chapters that the labour theory of value does allow one to assign definite measures to the different value creating powers of labours of different degrees of skill. The essence of the method is to cost the training of workers in terms of labour also and impute this to the work they do once they have been trained. As for the failure to take into account the original material factors of production, the classical theory of rent shows how the level of differential ground rent is governed by the marginal labour costs of production. There is no reason why this calculation can not be applied directly in a socialist economy. If this basis were followed, then the resulting environmental destruction should be no worse than that routinely produced by the application of the same principle in market economies.
Given the widespread environmental damage produced to the world's natural ecosystems from the bourgeois principle of valuing natural resources on the basis of marginal costs of production, we hope that a socialist planning agency would adopt somewhat stricter rules.
This is all true enough, but it does not prove that it is impossible to plan how best to use current resources to achieve a given future output. Our algorithm for plan balancing taking into account current stocks is one of probably many mathematical procedures that could be followed to achieve this end.
This mechanism is similar to that which we advocate for the distribution of personal consumer goods. Mises again concentrates on the alleged impossibility of applying arithmetical methods to comparing inputs with outputs in the absence of markets for means of production. Our answer is simple, the planning agency knows:
We may assume that in the socialist commonwealth there is a market for consumers goods and that money prices for consumers goods are determined on this market. We may assume that the director assigns periodically to every member a certain amount of money and sells the consumer goods to those bidding the highest prices. ... But the characteristic mark of the socialist system is that the producers' goods are controlled by one agency only in whose name the director acts, that they are neither bought nor sold, and that there are no prices for them. Thus there can not be any question of comparing input and output by the methods of arithmetic. 8
Throughout, Mises identifies calculation with arithmetic. This is understandable since commercial calculation and arithmetic have been strongly associated. Calculation 9 and arithmetical operations are practically synonymous. But calculation can be seen as a particular instance of the more general phenomenon of computation or simulation. What a control system requires is the ability to compute. This is true whether the control system in question is a set of firms operating in a market, a planning agency, an autopilot on an aircraft or a butterfly's nervous system. But it is by no means necessary for this computation to proceed by arithmetical means.
The important thing is that the control system is able to model significant aspects of the system being controlled. Firms do this by means of the procedures of stock control and accountancy in which marks on paper model the location and movement of commodities. In preparing these marks the rules of arithmetic are followed. The applicability of arithmetic to the problem relies upon number theory being a model for the properties of commodities. A butterfly in flight has to control its thoracic muscles to direct its movement towards objects, flowers or fruit, that are likely to provide it with energy sources. In doing this it has to compute which of many possible wing movements are likely to bring it nearer to nectar. As far as can be determined it performs these computations without the benefit of a training in arithmetic.
To use economic terminology the butterfly has many choices open to it. Different sequences of muscle movement have different costs in terms of energy consumption and bring different benefits in terms of nectar. Its nervous system has to try to minimise the costs and maximise the benefits using non-arithmetical methods of computation. The continued survival of butterflies is evidence of their computational proficiency. A planning agency is likely to make widespread use of arithmetic and indeed, if one wants to make localised decisions on the optimal use of resources by arithmetic means, then Mises arguments about the need to convert different products into some common denominator for purposes of calculation are correct. This is exactly the role played by labour values in our proposal: they allow engineers to have a good estimate of what is likely to be a cheap method of production.
If, however, one is wanting to perform global optimizations on the whole economy, other computational techniques having much in common with the way nervous systems are thought to work are appropriate. These can in principle be performed without resort to arithmetic. Indeed Oskar Lange pioneered such approaches in the 1950's when he constructed a hydraulic model of the Polish economy for planning purposes. Mises, like many bourgeois theorists confuses the particular historical form in which a function is carried out with its essence. He reasons that :
The problems with this argument lie in the steps 2 and 5. While propositions 2 and 5 are true, they do not support conclusion 6. To reach that conclusion we sould need stronger claims:
2¢. Arithmetical orderings are the only way of achieving optimization.
5¢. Money is the only practical metric.
As we have shown, these stronger claims are false: there are non arithmetical methods of optimsation and money is not the only method of converting into a common unit of measure.
1 Human Action, L von Mises, 1949, Hodge and Company, London
2 Economics of Feasible Socialism , pp 15-20
3 It would still be abundance to most of the worlds population. It is easy to forget, living in Western Europe, that the norm for the world capitalist economy is Mexico city rather than Berlin, Lagos rather than Stockholm.
4 Whilst for significant sections of the population even a rich free market economy like the USA fails to provide abundance of such necessities.
5 The 'director' is von Mises term for the dictator of a socialist state: a peculiar adoption of capitalist corporate terminology that is perhaps understandable for a book published in 1940. His argument however is not dependent on the planning process being subordinated to the will of a single individual, but is more general so that for 'director' one could read: planning agency.
6 Human Action, p694
7 Human Action,p 699.
8 Human Action, p 701
9 From calculus a pebble or stone used in counting.