Economic systems December 28, 2012Posted by Tomboktu in Capitalism, Communism, Economics.
Around the time of the Soviet collapse, the economist Peter Murrell published an article in the Journal of Economic Perspectives reviewing empirical studies of efficiency in the socialist planned economies. These studies consistently failed to support the neoclassical analysis: virtually all of them found that by standard neoclassical measures of efficiency, the planned economies performed as well or better than market economies.
First he reviewed eighteen studies of technical efficiency: the degree to which a firm produces at its own maximum technological level. Matching studies of centrally planned firms with studies that examined capitalist firms using the same methodologies, he compared the results. One paper, for example, found a 90% level of technical efficiency in capitalist firms; another using the same method found a 93% level in Soviet firms. The results continued in the same way: 84% versus 86%, 87% versus 95%, and so on.
In 1989, the dissident Polish reform economists Włodzimierz Brus and Kazimierz Łaski — both convinced socialists and disciples of the distinguished Marxist-Keynesian Michał Kalecki — published a book examining the prospects for East European reform. Both had been influential proponents of democratic reforms and socialist market mechanisms since the 1950s.
Their conclusion now was that in order to have a rational market socialism, publicly-owned firms would have to be made autonomous — and this would require a socialized capital market. The authors made it clear that this would entail a fundamental reordering of the political economy of East European systems – and indeed of traditional notions of socialism. Writing on the eve of the upheavals that would bring down Communism, they set out their vision: “the role of the owner-state should be separated from the state as an authority in charge of administration….[E]nterprises…have to become separated not only from the state in its wider role but also from each other.”
Parties of the working class, acutely vulnerable to pressure from below, were in government more than 40% of the time in the postwar decades – compared to about 10% in the interwar years, and almost never before that – and “contagion from the Left” forced parties of the right into defensive acquiescence. Schooling, medical treatment, housing, retirement, leisure, child care, subsistence itself, but most importantly, wage-labor: these were to be gradually removed from the sphere of market pressure, transformed from goods requiring money, or articles bought and sold on the basis of supply and demand, into social rights and objects of democratic decision.
This, at least, was the maximal social-democratic program — and in certain times and places in the postwar era its achievements were dramatic.
But the social democratic solution is unstable — and this is where the Marxist conception comes in, with its stress on pursuit of profit as the motor of the capitalist system.