Why Marxists are against markets
Market socialism is an extremely fringe view among socialists. So, why do some people (even socialists) think we need markets?
Remember that this is a distributional problem : we have a bunch of goods and services that we need to distribute to people in need of them.
Markets are one way to do that, and the primary way under capitalism. Markets are based on two things:
- Individual profit: IE, buying low, selling high, and ignoring the effect of the transaction on others (externalities).
- Commodification of every resource (even people).
Labor is one such commodity, that is bought for cheap, and it’s results sold for high (IE profit).
History of markets Yes, markets are oppressive.
Markets only became the primary way to distribute goods within the last 500 years. For the vast majority of human history, rituals, harvest festivals, a group of elders deciding fair distribution, or communal decision-making accomplished what the market does today. Writers like Plato and Aristotle detested markets (small-scale trade within cities and between nation-states at that time), because they witnessed how the individualistic profit motive worked to destroy the community.
Markets, through the commodification of every resource (including human beings), destroy the community in the following ways: they promote generational wealth hoarding, increasing inequality, treating people as objects, monopolistic practices (price-fixing, dumping, colluding), rent-seeking, informational failure (over/under production), booms/busts/business cycles, negative externalities (affecting the environment and third parties), unpaid labor (such as housework, and childcare), human exploitation (slavery and wage-slavery, prostitution), large-scale imperialism (Such as in Africa, South America, and Asia post 1700s) demerit goods (encouraging for-profit drug use, see Opium wars), inefficient and incorrect valuation, artificially high barriers to entry for many sectors…. in short, they result in an antagonistic relationship between a working class, and an owning/wealth hoarding class.
Also, free markets inherently favor those with the most capital, giving elites leverage over poorer communities. For many of the poorer places in the world, free market interventionism is identical to imperialism: business interests, with the help of the military, conquer or buy up the land, labor, and resources of the poorer country, bribe local labor leaders, businessmen, and police forces, and enforce the domination of the richer imperialists. For example, in Cuba under the Batista dictatorship, 70% of the Arable land was owned by US businesses.
What do we replace markets with?
You’ll hardly see any Socialist advocating markets as a distribution system, because of that individualistic profit motive. Most of us advocate for democratically planned economies with labor vouchers, or gift economies in goods that are widely abundant. For a great academic breakdown of how planned economies would work, I suggest Cottrell - towards a new socialism.
What about market socialism?
The argument for market socialism states that we outlaw the commodification of labor, but retain markets. This completely ignores the incentive structures associated with market transactions, by which the profit motive demands the commodification of everything, including labor. Even if the market were socially controlled and commodification of labor were somehow outlawed, it would still allow hoarding of wealth, individual profit motive over collective good, and emphasize monetary incentives over human ones.
Market enterprises have one goal, increasing profit and market share, in isolated transactions. What would prevent a coop from polluting a river that people use, if they’re able to cut corners and extract a larger profit?
What would prevent a small group of people from accumulating wealth and using it for individualistic motives? Maybe they won’t be legally able to exploit a labor force, but they will still try to get away with it to satisfy the profit motive, which is unavoidable and systemically inherent to a market system.
Finally, there is the market socialist principle that somehow we stop treating labor as a commodity, but we continue to treat everything else like one. Natural resources, health care, living spaces, and food security are things we should not be treating as a commodity, which they would be under a market system.
Market socialism in a predominantly capitalist society has a historical name: utopian socialism, or the cooperative movement. Engels, in Socialism: Utopian and Scientific, explained how a few of the early socialist reformers such as Fourier and Owen nobly tried to set up idealistic isolated islands of socialism, known as worker cooperatives, in the early stages of the industrial revolution. These all failed in the long run, both because they relied on capitalist enterprises for materials and means, and because they were out-competed by capitalists who did a better job of extracting a higher profit from their workforce. Engels stated that as the class contradictions become more absurd, The mode of production rises in rebellion against the form of exchange, IE, the socialized force of production (the united working class) rises up against the individualism of the market.
How do we get to Fully Automated Luxury Queer Space Communism?
In the transition towards communism, most socialists prefer gift economies for abundant goods, and labor-time economies for scarce goods.
What about scarce goods, and getting paid in the socialist future? A: Labor vouchers
Labor vouchers would replace money as a way to govern demand for non-abundant goods.
Labor vouchers are different from money in that:
- They are valued in time (Specifically average socially necessary labor time), not an arbitrary substance or thing.
- They are attached to a person/family, and can’t be traded.
- They are destroyed after they’re exchanged for goods/services from the democratic workers council organization (I usually call it the pool)
- They optionally have expiration dates (to prevent wealth hoarding, and inter-generational conflict)
In books like I like linked above, goods/services are valued and labor vouchers are based on labor time, and that book provides good calculations for how to value labor time for various things. Instead of getting paid a certain amount per hour, you would receive something that proves your hours worked. Goods and services are then valued based on all the constituent labor time necessary (including all the sub-parts) to produce them. For example, a door might cost 2 Labor hours (LH), after adding in the time costs to harvest all the materials for the wood frame, metal handle, lock, hinges, etc, and assemble them. Large input-output tables (and some linear algebra) could be used to calculate the labor time values of every good and service in an economy.
As technological improvements decrease the labor time cost of goods and services to nearly zero, that good becomes an abundant good. Many food products and consumer items could already be considered abundant. When nearly all goods are abundant, then we could say that we’ve reached full communism.
With regards to moderating demand for goods, grocery stores can currently function in gift and labor voucher economies, since they already gauge consumer demand by keeping track of which items have been scanned when leaving the store, and can determine how much of what good needs to be restocked, or produced. This information, absent of a money price, represents a “signal”, to the associated producers, telling them where to allocate labor resources, and push for technological advances.
Unlike a capitalist economy, where the goal is individualistic profit, in a labor-time economy the goal is minimizing the labor-time-cost of all goods and services, to improve the well-being of the community.
Likely there would also be a kind of basic income of labor vouchers, to make sure everyone gets a fair share of the distribution of food and housing and such (this could be seen as accounting for unpaid labor done in the home). Since they are attached to a person/family, labor vouchers prevent wealth accumulation being handed down to further generations.