Markets and/or socialism?

John Rentoul highlights a curious claim by Neal Lawson:

The relationship between markets and socialism is not complimentary but contradictory.

Depending on your conception of democracy, this is both true and false.
It’s true if you regard democracy as Neal does - as a way in which we “express our preferences as society”, as distinct from the individual preferences expressed by markets.
There is, though, another conception of democracy. Democracy is a means of harnessing the dispersed wisdom of individuals, against the folly and arrogance of hierarchical rulers.
On this conception, markets are an expression of democracy. Markets can humiliate the powerful - as we saw in Dave Carroll’s campaign against United Airlines, the collapse of Fred Goodwin’s Stalinist managerialism, and in countless product failures.
I have two reasons to prefer the latter conception - which implies that markets and socialism are compatible:
1. It’s not obvious why collective preferences are in principle so admirable. What’s is the inherent virtue in having things decided by groups? Isn’t there instead much to be said for a large realm of private choice.
2. In practice, collective decision-making is often anti-egalitarian. It can give excessive weight to the rich and powerful or those with an over-inflated sense of entitlement. Collective provision of state education, for example, frequently favours wealthier families.
Of course, Neal is right to say that the democracy of the  market-place gives more votes to the rich than poor. But this isn’t a market failure. It is instead a state failure - the inability of the state to impose adequately redistributive taxes. And this itself is evidence that our "preferences as a society" - as filtered through existing pseudo-democratic institutions - militate against equality.
I suspect that any adequately socialist society would be one in which markets were used more intensively than they are now - not just because markets are a reasonably efficient way of allocating resources, but because they can embody egalitarian values.

Comments

[Fausty]

The state's only function should be to protect its citizens in as minimal a fashion as possible.

PAYE changed the status quo in that the state can decide to extract from you what it wants to, the only protest open to the citizen being at the end of the political cycle - election time.

Democracy is not all it's cracked up to be. Republicanism is a more accountable system.

How can it be fair, for example, that 50% of people can vote away your freedom and your money?

We should seriously consider having a minimalist written constitution much like the Yanks have, that limit the power of government and enshrine in constitutional law the inalienable right of the individual, regardless which despots are in power.

[The Rage]

Democracy/republicanism and markets are a collectivist ideology.

All materialistic ideologies are.

I would read Evola's Revolt against the modern world to gain insight in the failure.

Libertarians thus are the most crass of the collectivists.

[marksany]

You appear to have a different conception of socialism, where markets can allocate resources, which appears appealing and interesting. I'm just going to have to stump and buy your book, through a market, natch.

[rockinred]

I think you're spot on here. Markets can be a force for good - if properly managed. The post Reagan/Thatcher fashion for let-it-rip unfettered capitalism -nothing but greed lurking behind the pseudo-intellectual nonsense peddled by Hayek, Friedman et al -has produced a generation of idiot managers in thrall to the 'shareholder value' mantra with no notion of egalitarianism. At the same time we have a generation of carpetbagging careerist politicians with no clue about commerce and real world economics (except maybe Vince Cable). The question is, who's going to seize the controls of the capitalist engine to get it back on course...?

[Tristan]

You have it about right I think - its also a pity the market socialist tradition all but died and hierarchical authoritarian socialism dominated.
Markets are the only wide scale democratic institution we have.

Rockinred: You're wrong- markets are a force for good when they're not managed - the management is what really makes things go completely wrong.
The Thatcher/Reagan years were not markets run amok- they were markets forced into some areas but not allowed to operate fully, because if they did they would undermine the privilege of the wealthy.
You do Hayek a disservice - his insights are far more applicable to the anti-authoritarian left than any other group - the idiot managers owe nothing to him, except the prediction that they would be idiots. Its the attempts to manage the markets that produced these people - the fatal conceit manifesting itself in a different manner.

[Pedants Revolt]

'compl-E-mentary' surely?

[RobG]

A few potential problems with markets:

-Externalities, which are likely to be much more pervasive than we usually appreciate.
-Markets can crowd out other, 'nobler', incentives among the participants.
-There may be a utility one derives from receiving things through nonmarket provision which cannot be replicated in the market.
-Our preferences are not time consistent. Markets encourage and create desires which are short-termist, and may negatively affect our wellbeing in the long run.

How much any of these points is true will vary depending on the service/good, but it's essentially an empirical question, not one where one can a priori say that 'markets are better'.

Also, presumably the 'socialist' bit of market socialism is that property is socialised/equally distributed, but markets are used to allocate goods and services. If one proposes no public/collective ownership of property, and also believes in markets (Purnell), then you're a capitalist, pure and simple.

[littlehorn]

I'd like to take issue with the statement that the rich get 'education.' This is a farce. The less 'education' you get, the better off you are. 'Education' is not a good in itself, it's a brainwashing process, and a way to further stratify the population. But in a global, total sense, the less people are 'educated', the better. The poor are better off in this regard.

[Luis Enrique]

a few potential problems with non-markets:

- externalities, which are likely to be more pervasive in non-market decisions that we appreciate
- in non-markets, political in-fighting can crowd out other nobler incentives among participants
- there may be utility derived from earning something through the market which cannot be replicated by non-market allocations
- time consistency. non-markets encourage and create desires that are short-termist and may negatively effect our wellbeing in the long-run

[Richard Lawson]

Individualism, which is the philosophical basis of free market captialism, is the polar opposite of socialism. They are both philosophies based on the absolutisation of one aspect of the human being. They are antithetical, irreconcilable in their own terms.

I believe that they can be reconciled or achieve synthesis in the wider matrix of ecological philosophy, the philosophy that finds its starting point in our position as an element in the living system on a finite planet. Both individual and society depend on Nature to sustain them. By attending to the preservation and healing of our environment, we can overcome all sorts of conflicts. So in healing Nature, we can sort out the problems which arise from our view of "human nature".

[Charlie Marks]

Pat Devine has long made the distinction between market exchange (buying and selling) and market forces (the pressures generated by buyers and sellers operating in the marketplace).

The struggle of working people in this country over the last few generations has been to use the vote to buy the things we can't afford as individuals - healthcare, education, policing, unemployment insurance, etc.

The majority can act as such through the ballot box, but not in the marketplace where voting rights are one-pound, one-vote - and he who has the most pounds has the most votes!

Socialists have always sought to replace unrestrained market forces with democratic decision-making - but differed on to what forms of organisation this entails.