On Socialism and the Market:
A Response to Bertell Ollman’s
Anti-Market Mysticfications

By Carl Davidson
Cy.Rev Managing Editor

Bertell Ollman's "Market Mystification" article provides us with a detailed analysis of how our economic life shapes our social outlook and our thinking about the future.  To a certain extent, the essay provides a useful summary of Karl Marx's views on the nature and importance of capitalist production, on the alienation of labor and on the source of surplus value. To this discussion, Ollman adds his own observations--some insightful, most arguable--on how socialists should view the market in their critique of the present order and their plans for a new society.

In fact, for Ollman, the market is the main enemy.  "A frontal, no-holds-barred attack on the market and all its ills," he argues, "which now include the horrific experiences of the newly marketized societies is an absolutely indispensable means of developing socialist consciousness.  People's turn to socialism will only emerge out of the rejection of all market relationships."  Ollman goes on to argue that the main obstacle within the left to launching this frontal assault are the "market socialists," i.e., all those socialists who conciliate with markets by recognizing their importance in the development of socialism and by refusing to use "the plan" to prematurely "abolish" markets.

"Our task," says Ollman, "is not to blur the edges of what the market is and does, as occurs with the proposals for market socialism, but to offer an analysis of the market that helps people make the connections that are necessary to engage in effective class struggle.  Leaving most market mystification in place, market socialism cannot be viewed as just another form of socialism or even a compromise with capitalism. It is a surrender to capitalism, which for historical reasons continues to fly the socialist flag."

Ollman has clearly thrown down the gantlet.  In his view, there will be no socialism without a widespread and heightened class consciousness among the workers, and there can be no class consciousness as long as the mystifications of the market clouds their thinking. Sooner or later, capitalism itself will produce revolutionary upheavals which will both erode the mystifications and, in the ensuing struggle, forge the new men and women with values of mutual aid and sharing. Our task is mainly to clarify matters by exposing the market; compromises with the market will only prolong or sabotage this process.

The problem with Ollman's thesis is that it rests, first of all, on a profound misunderstanding and distortion of what markets are, how they came into being, and how they might be limited, restricted and wither away.

Markets were not created by decrees, declarations or revolutionary directives.  Nor are they another name for capitalism; markets existed long before capitalism, qualitatively developed within capitalism, and will persist for some time after capitalism.  Markets evolved over thousands of years in the interactions between and within human societies; they evolved primarily out of earlier means of trade and exchange such as plunder, pillage, theft and barter.  Markets are sometimes thought to consist simply of a buyer and a seller. Actually, a market is a three-sided relationship--a buyer, a seller and a representative of law and order.  Markets require legal tender, fair measure and enforceable contracts; otherwise they break down, stagnant and degenerate back into plunder and pillage.

It's ironic that Ollman raises the issue of the "newly marketized societies" of Eastern Europe, when these societies are suffering not so much from markets as the lack of them.  Like Ollman, the right-wing "free-market" U.S. think tanks suffered from a similar illusion that markets could be proclaimed or dismissed by decree.  What they ignored is that markets are an evolved achievement of human civilization, a point made and elaborated on many times by Karl Marx and many others.  For someone as well-schooled in dialectics as Ollman, it's even more ironic that his approach to markets is so ahistorical and one-sided.

No where, for instance, does Ollman mention that markets arise out of conditions of scarcity. They will persist as long as scarcity persists; when economies of true abundance emerge, the conditions come into being for the withering away of markets. In the meantime, faced with the challenge of exchange under scarcity, markets display two qualities, static and dynamic. The static feature regulates exchange; it imposes the order of standard weights and measures, of money and exchange rates, of contracts and enforceable penalties for the breach of contracts. This order subdues and reduces the arbitrary, the capricious and the unpredictable; as such, it sets the conditions for the expansion of exchange and the growth of wealth. The dynamic feature of markets is their self-organizing, self-propelling, and self-expanding quest for wealth without regard for limits or obstacles; this dynamic is both profoundly creative and destructive.  Dynamic markets bring us wondrous inventions and discoveries; they also bring wars, famine and ecocide.

The need for socialism arises out of these dynamic and static contradictions in capitalist market society.  The existing order, dominated by private wealth, is unable to overcome the savage inequalities in access to the means of producing wealth. As long as concentrations of private wealth dominate the various centers of political power, neither markets nor the surpluses generated from them will be subordinated to the universal common good. The earth's biosphere will be squandered for competing national labor markets; the world's health and safety will be threatened by the insatiable demands of competing military establishments.

What Ollman ignores is that the need for socialism arises out of the successes of capitalism even more than its weaknesses. Dynamic competition in the market accelerates the division of labor.  This means more and better goods are produced with less toil and more knowledge.  Eventually the amount of labor time in a product approaches zero; production approaches full automation and cybernation. Human labor time becomes vastly reduced, indirect and supervisory.  These are the conditions developing within capitalism that create the potential for economies of abundance, the abolition of meaningless toil, and the abolition of classes.  The classless society is achieved not by outlawing markets and making everyone an egalitarian worker; rather it is achieved by taking markets to their ultimate conclusion, by shrinking the working day for all toward zero, thus abolishing the working class and all other classes along with it.

Capitalism's negative features, along with revolutionary and mass struggles, have brought socialists to power in widely varying circumstances not necessarily of their own choosing. There have been wide variations in the development of productive forces, available technology, education and democratic institutions.  The point is not that these socialists should have waited for some better, future conditions. The question is, what approach did they take for getting from where they were to where they wanted to be? Socialism, after all, is a system of transition from class society to classless society.  What paths did they choose and what are the lessons?

Socialism in its first seventy years made the fundamental mistake of trying to outlaw markets and to replace them with a national command economy.  Despite initial surges, this approach mainly produced black markets, stagnation in production and corrupt bureaucracies. By 1990, almost all of these socialisms reached an evolutionary dead end and collapsed. Only the communist parties in China and a few other countries were able to maintain their positions of power by changing the socialist path, however imperfectly, to combine market and plan.

Ollman takes a common ultraleftist stance towards the experiences of these countries. He ignores their economic experiments, either pro-market or anti-market, and simply declares that they were not socialist because it was not possible for them to be socialist from the beginning:

"These countries do not possess the material and social preconditions such as we do in the advanced capitalist world, that would make socialism possible. The intentions, however admirable, of some socialist political leaders cannot substitute for a practice that history has placed beyond their reach. The real choice for these societies, therefore, would seem to be between a dictatorial form of savage capitalism, with socialist trimmings (China), and a progressive, egalitarian, anti-imperialist dictatorship, with different socialist trimmings, that is neither capitalist nor socialist (Cuba). If the political dictatorship is not too severe, I favor the latter option, if only because social and material benefits are shared more equally under such regimes, other problems associated with the market are either missing or minimal, and the anti-imperialist foreign policy that these regimes generally follow creates difficulties for the world-wide rule of capital. Only socialist revolutions in the advanced capitalist lands, however, could create the conditions that would enable the underdeveloped countries whose regimes have declared in favor of socialism to make substantial progress in this direction."

Rather than scientifically summing up practical experiences, Ollman's approach here reduces the left to Talmudic debates over competing definitions of socialism or sets of Marxist principles.  To make an argument by analogy, look at the history of the automobile and the airplane.  There was a range of different designs in the beginning: weird dirigibles or devices that flapped their wings, three wheeled cars, steam powered devices. Some, like the Zeppelins or Stanley Steamers, even succeeded for a while.  But most of the initial range perished in evolutionary cul de sacs or dead ends.  Do we want to say these were not true automobiles or airships because they didn't match Henry Ford's or the Wright Brother's definitions or models?  Socialism has clearly produced some evolutionary dead ends; it's much better to dig deep into the lessons, rather than deny their relevance or existence.

Early socialism clearly entrapped itself with its treatment of markets and planning.  In general, wherever it tried to regulate and supplement the market with the plan, it made advances, as in the NEP period under Lenin and Bukharin or New Democracy under Mao Zedong and Liu Shao-chi. Wherever it tried to abolish or suppress the market with the plan, it created trouble, either immediately or a few years down the line, as in the Cultural Revolution under Mao and the “Gang of Four” or Stalin's centralized fiascoes.  

The crucial difference between market and plan has to do with information theory and how decisions are made. In the market, decisions are made in parallel, with many being made simultaneously. In the plan, decisions are made in series, one after another.  Parallel decision making is dynamic and efficient, but also chaotic and sometimes destructive.  Serial decision making is deliberate and purposeful, but also coercive and bureaucratic. 

Socialist planning is required mainly on the macro level where the market has already failed or is likely to fail in creating a humane and sustainable social order.  Markets, for instance, ignore the fact that economies are subsystems of a biosphere. Making the transition from an irrational world energy system based on taking carbon from the ground, burning it and putting carbon dioxide in the air, therefore, must be made by a planned intervention to restrict the market in carbon-based fuels and enhance the market in renewable energy sources.

Ollman takes great pains to claim that, while Karl Marx allowed for markets during the socialist transition period and spoke critically but favorably of worker-owned coops under capitalism, Marx was still not a "Market Socialist." Actually, Ollman is refreshingly forthright in his review of Marx on this subject; he doesn't try to hide or gloss over any number of points made by Marx that run counter to Ollman's own views.

   "It is quite dear," Ollman explains, "that Marx foresaw substantial sections of the market socialist revolution. In the Communist Manifesto, for example. his suggestions of what the new socialist government should socialize immediately are surprisingly modestbanks, means of transport and communication, and unused land.1 This leaves most of the economy in private hands, at least initially, but the owners decisions on all matters would be strongly affected by the economic plan (which is established at the same time), the newly nationalized banks, new laws on such things as wages, conditions of work, pollution, etc., an administration and adjudication of these laws that is now biased on behalf of the workers, and by their own workers.2 The only forceful expropriation Marx advocates-indeed, his only explicit reference to the use of force in this periodis of rebels (people who take up arms against the government) and emigrants (those who leave the country).3 It is clear that at this point in time, markets for commodities, labor power, and even capital, though already regulated and modified, continue to operate.
   
"This major exception to the economic principle that governs socialist society," Ollman suggests, "will probably last as long as it takes for a transfer of their private property to public ownership in a manner that will not disrupt the production process. To achieve this end, the socialist government will set up public enterprises to compete with the remaining private ones (not to help subsidize them as usually happens in capitalism), as well as put pressure on the latter through targeted bank loans, high taxes, and strict laws.4 The combination is likely to drive most capitalists to bankruptcy or to sell their companies to a public authority in a relatively short time. One of the major reforms Marx believes will occur immediately after the revolution is the abolition of inheritance in wealth-producing property.5 When the current generation of private owners dies out, therefore, their companies would all revert to the public. As a result of this and the other strategies mentioned, within forty to fifty years, at most, the entire economy will be socially owned.  Pressure brought by workers in the private sector to socialize their enterprises would, if anything, speed up this process." 

Karl Marx never meant for these comments to be anything like a detailed blueprint for how a post-revolutionary society was to be organized and managed.  What they do show is that Marx was not a utopian; that revolutionary strategy and tactics have to be profoundly pragmatic; and that social transformations take place in a step-by-step fashion over time.

Our argument with Ollman, in one sense, is all about how much time?  Ollman grants us that socialism is a transitional society between capitalism and communism.  He grants us that markets of a sort existed before capitalism and will exist for a while after capitalism.  He grants us that some capitalist enterprises can and should exist for a while under socialism.  He grants us that incomes and resources will be distributed unequally for a while.

But the reason he grants all this is because he wants to trivialize the transition.  Ollman thinks it can be down in a generation--or forty or fifty years at most.  It shows that he has not thought systematically about socialism as a world system, about what is required to break the back of Great Nation privilege and the vast inequities in the distribution of resources, knowledge, information and the material means of creating wealth. It shows that he doesn't have a clue about what is needed to restructure even the most "advanced" and "productive" industrial sectors to operate on renewable energy sources in a sustainable economy.

In our view, it would be best not even to talk about the transition in terms of years.  Instead, it would be better to describe it in terms of tasks to be accomplished--the creation of a world energy grid powered increasingly by solar sources, a world system of green taxes and standards that would reverse the destruction of the rain forests and the ozone layer, a world education system that enables everyone to learn to the limits of their ability and desire, a world health system capable of dealing with an AIDS crisis about to wipe out a third of Africa. Not only are vast new systems required for the sustainable creation of wealth, new and effective methods for the equitable distribution of resources must be developed simultaneously.

Ollman's superficial treatment of the needs of a transition period is also a mirror image of his disdainful approach to the pragmatic strategy and tactics required for getting to a revolutionary turning point in the first place. He is especially critical of two approaches to strategy and tactics; first, what he calls the "social movements strategy"; and, second, any policies including employee ownership.

On the first, Ollman advocates the centrality of class and class struggle.  He opposes the notion of a "coalition of all oppressed groups" where no group is "privileged" in relation to the others. First, he is against the implicit reformism of such coalitions because they don't challenge the market as such, but only call for a fairer redistribution within the market. Second, he is against their treatment of class. Class is special, he argues, because the working class is special:

"This approach," Ollman explains, "gives priority to the working class not because it suffers more than other victim groups, but because the particular form of its oppression (exploitation and alienation) gives workers both an interest and, through their position in production, the power to uproot all the oppressions currently associated with capitalism."

"To abolish the conditions underlying their own exploitation and alienation requires that the workers do away with all forms of oppression. Treating everyone as equals is the only way the workers themselves can be treated as equals, without which no thoroughgoing reform is possible. Here, the workers simply cannot help themselves without helping others. This, then, is the politics of class struggle."

Ollman takes a curious approach here.  He starts off with Marx's notion that the working class is a social force bound with radical chains, i.e., by becoming a class-for-itself it sets in motion the expansion of the division of labor, the acceleration of automation, the eradication of private ownership in the main means of production, the shrinkage of the working day towards zero. This works toward abolishing the working class and hence all classes and class-based oppressions. Ollman gives it an interesting twist, however, when he brings up "treating everyone as equals is the only way the workers themselves can be treated as equals, without which no thorough-going reform is possible."  But is the aim of the working class to be treated as an "equal" class? Marxists have long opposed this as the ultimate reformist illusion, calling for the abolition of classes instead.  If we are talking about the equality of workers as citizens before the law or society, with no category of citizen having special privileges, then Ollman's claim is democratic, progressive and just, but it is entirely within the realm of bourgeois right and the promises, if not the achievements, of the current order.

Ollman worries that by building movements for partial gains, the movement for ultimate goals becomes corrupted and compromised. By agreeing to a higher wage, the worker implicitly accepts the wage system; he or she thus compromises with the market and furthers "market mystification." But the anarchist movement has long used this approach to oppose immediate or intermediate demands on any front. Demanding the right to vote, for instance, implicitly accepts the electoral system.  Or the demand for jobs implicitly accepts working for a capitalist.

In one sense, Ollman is correct.  Lenin often argued against his ultraleft opposition that every demand or program, however well crafted or militant, contained a "police snare," i.e., a potential for corruption.  Workers could be corrupted by high wages just as easily as by becoming part or full owners of their own factories.  But it also is true that the workers and unemployed can also be corrupted by the lack of these gains. Permanent employment and dire poverty breed their own market compromises and mystifications.

The potential for corruption can best be dealt with by the discipline, standards and organization of a dedicated and conscious minority within the broader movement to which they are held accountable. As for the reforms themselves, any or all of them can be taken away.  The true test for the success of a reform struggle is not even whether or not the reform in question was won or not.  Rather, the question is whether or not the political independence, organizational unity and fighting capacity of the forces involved is greater after the battle than before the battle was engaged.

This is a profoundly practical measurement rather than an ideological litmus test.  It is also the best way to evaluate structural reforms such as worker buyouts, union representatives in management or employee stock ownership plans.  What was the alternative at the time?  Are the progressive forces stronger or weaker?  Does the working class and its allies have a stronger, clear vision of themselves as active players rather than passive victims on the stage of making history and ruling society?  Are we training people just to redivide the pie? Or are we also training them, in our partial, compromising and corrupting battles, to take command and run the whole show?

These are the critical questions for the left to be asking today.  Unfortunately, Ollman's "Market Mystifications" diverts us in a different direction.

******************************
1.	Marx, Karl, and Engels, Frederick, The Communist Manifesto, trans. by S. Moore (Charles H. Kerr, Chicago, 1945), pp. 42-3.
2. OIlman, Marxs Vision of Communism, Social and Sexual Revolution, pp. 55ff.
3.	Marx/Engels, The Communist Manifesto, p. 42.
4.	Marx/Engels, The Communist Manifesto, pp. 42-3.
5.	Ibid.

This article was first published in Socialism and Democracy, Vol.13, No.1, Spring-Summer 1999.