Markets and Plans
Paul examines the analysis of Herbert Simon, who in his 1991 paper, “Organisation and Markets”, concluded that a Martian, in orbit around Earth, would see a capitalism comprised predominantly of organisations not markets. Simon's conclusion is similar to the point I made earlier that all of these organisations plan the allocation of capital internally, by means that have nothing to do with the market.
Paul utilises and amends the schematic used by Simon. It consists of green blobs representing organisations, blue lines showing the hierarchy within the organisation, and ending in blue dots, representing the workers. Red lines between the green blobs represent the transactions between them. The size of the blob signifies the size of the organisation, and the thickness of the lines signifies the volume of the transactions. Each of the blue dots must also have thin red lines from it, to the green blobs, as the workers buy goods from them.
Simon did not include the blue dots in his schematic. Doing so along with all of these trillions of red lines, now makes the overall image much redder, Paul concludes.
If we run this model forward in time, from 1991, to today, we would see a large rise in the number of blue dots, due to the doubling in the size of the global working-class. Along with it, the number of thin red lines would expand, and they would lengthen as the internet and globalisation means that those workers now buy goods directly from across the globe, and they now do so during their time at work, as well as outside work. The green blobs divide up as businesses outsource non-core activities. Some blue dots become green blobs, as workers become self-employed, and red lines sprout from them to other green blobs. Finally, Paul says, yellow lines develop, and these represent non-market transactions between organisations and individuals.
The point that Paul is trying to make here is two-fold, firstly that the role of the market, as opposed to organisations, is greater than Simon depicted, and secondly, that the nature of transactions is changing, so that non-market transactions are increasing, and have the potential of further expansion, relative to market transactions. This is consistent with Paul's analysis being based on the mode of distribution rather than the mode of production.
There are a number of obvious comments to make in relation to it. Firstly, if we take the green blobs, even as they divide, they can and do get bigger. That is Marx's basic analysis of the accumulation of capital, and the process of concentration and centralisation. When the big US monopolies were broken up, at the start of the twentieth century, each individual capital simply grew to the previous size of the whole, amd the basis was laid for further amalgamation, as Lenin describes in Imperialism, in his critique of the reformist proposals for opposing monopoly. The more each green blob expands, the more the allocation of capital and commodities that were previously determined by market relations become determined by planned relations.
Secondly, even where the green blobs divide, the relations between the core green blobs, and the periphery green blobs should really be seen as blue, or maybe purple lines, because the core organisation outsources non-core activities only on the basis of a planned and regulated relation. The smaller, subordinated green blobs only exist on the basis of the work outsourced to them. They are told what price they will be paid for the work they do; they will be told what specification the goods and services they provide must conform to; they will have to comply with even things such as the provision of Health and Safety documentation and so on, dictated to them by the core green blob; they will have to connect their computer systems to that of the core organisation; and, as part of Just In Time production and stock control systems, will have to make planned and regulated deliveries exactly as dictated to them by the core organisation, and so on.
Some of the smaller green blobs may merge together, and overall more small green blobs will turn into blue dots than blue dots turn into green blobs, and most of the green blobs will actually be green dots, which, on closer inspection are more blue than green, as with all of the Uber drivers, and so on. Even some of the larger green blobs will continue to merge together. For example, some years ago, Procter and Gamble found the need to merge with Gillette because they required the additional market power to confront the buying power of Wal-Mart.
If we take the yellow lines this is presented as if no such yellow lines previously existed. Of course, that is not the case. A look at the picture prior to WWII, would show a profusion of such yellow lines, if we were to look inside household relations, for example. Typically, a male wage worker would bring in a wage, required for the purchase of goods and services, from external suppliers, that would be bought and processed by the labour of a female domestic labourer, i.e. their wife. This labour would be undertaken on the basis of non-market relations. And, particularly in an age prior to modern domestic appliances, it would be extensive, covering cooking, cleaning, sewing, knitting, childcare, elderly care, healthcare, education and so on.
Moreover, many more activities, until quite recently, were undertaken on the basis of these kinds of non-market relations, some of which have now been replaced by market relations. That is perhaps most apparent in relation to voluntary leisure activities, for example, when people didn't require dating apps, or Twitter or Facebook, or E-gaming to be able to relate, in person, to talk in actual social venues, to go for a game of football on the rec, and so on.
And, that is the point about many of Paul's yellow lines. They are really not new non-market activities at all. If we take Paul's example of Wikipedia, those who contribute to it, act as editors and so on, do so as a voluntary act, but that is no different, in substance, to the coal miner, who, on a Saturday afternoon or Sunday morning, gave up a couple of hours of their time freely to referee a football or rugby match in their local rec or park, or who donned their St. John's Ambulance uniform or their Scout Leader's uniform.
And this, again, illustrates Paul's confusion in relation to The Labour Theory of Value, and the difference between labour, as the determinant of value, as opposed to labour-power, the use value possessed by the labourer. In each of these cases above, the individual provides their labour for free, but that does not at all mean that the labour they undertake creates no new value. In each case, the labourer is able to provide their labour for free because they are able to reproduce their labour-power by other means. Someone who has accumulated wealth to live off can reproduce their labour-power from it, and so they can volunteer for all sorts of activity, without seeking wages or other payment in return. The miner gets their wages from working in the pit for 40 hours, and thereby reproduces that labour-power, which means they can spend 2 hours as a referee without requiring payment.
But, the fact that they do not demand wages for their labour does not mean it has produced no new value. If an amateur team charged an admission price for spectators to watch the game, it would be clear that additional value had been created by the players, and match officials by their labour, at least in part reflected in the money handed over by the spectators. That is true whether the players or officials took any wages or none for the labour they undertake. The new value created by labour is the consequence of the labour they undertake, not the value of their labour-power, or wages paid to them, and unless that is the case, then as Marx describes, surplus value itself would never be possible.
The housewife is not paid wages for their labour-power, for all the cooking and cleaning labour they undertake, but the fact that it produces new value is easily seen as soon as these same services have to be bought. A single male might employ a cook and a cleaner, and as Marx says, although they produce no surplus value, they do produce value, and require payment of an equal amount of value in return. It is the distinction between productive labour, i.e. that which produces surplus value, as opposed to labour that produces just value. Indeed, if we were to take any wage worker, in a ten hour day, they produce ten hours of new value, but their wages may only equal two hours of labour. The fact that they were not paid for 8 hours of labour they provided for free does not change the fact that it was 8 hours of new value they created. Unless that was the case, the 8 hours of surplus value could not be produced.
Of course, all the things that Paul lists here, such as Wikipedia, Open Source software and so on are very significant. I highlighted them myself many years ago. I referred to the example of the world's first Open Source produced car. But, the whole basis upon which I detailed those examples, along with the other examples of cooperative production, in activities as diverse as lumber production to sex work, was not on the basis of a replacement of market relations with non-market relations, but to demonstrate the rise of, and potential for cooperative production. My analysis has always been based on the changes in production, not distribution. In other words, as with Marx and Engels, I start with the revolution in productive relations, not the relations or mode of distribution.
To be honest, I have little concern as to whether the relations of distribution operate through a market or via planned relations, provided the production relations are based on cooperative production, and socialised capital/means of production, because as Marx says in The Critique of the Gotha Programme,
“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”
In other words, if private capitalists no longer draw vast revenues in profits, interest or rent, the distribution of revenues becomes immediately more equitable, and hence the distribution of society's consumption fund becomes immediately more equitable. If revenues are no longer grotesquely skewed in favour of a tiny minority, then the demand for the luxury products consumed by that tiny minority also disappears, whilst the demand for wage goods, and other more modest comforts of life increases, so that capital and production moves away from the former, and into the latter. Moreover, as Marx also sets out in the Critique of the Gotha Programme, he expected even in the first phase of communism, that society's product would continue to be distributed essentially on the same basis as occurs with commodity production, via the market, i.e. on the basis of an exchange of equal values.
“Here, obviously, the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labour, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labour in one form is exchanged for an equal amount of labour in another form.”
The main focus has to ne not areas of the economy that operate on the basis of non-market relations of distribution – which would be a very bad way of undermining capitalist production left free to appropriate profit in the rest of the economy – but is to undermine the control of socialised capital by private money lending capitalists, who utilise that control to amass huge money wealth, and wealth in the form of fictitious capital, which is the basis of their social and political power. To do that we have to a) expand cooperative production, particularly in high profit areas, b) organise those cooperatives in a single federation, preferably on an international scale, c) integrate that cooperative movement into the rest of the class struggle, alongside the trades unions, and Workers Party, d) undertake a large-scale political struggle for industrial democracy, and democratic control by workers of all socialised capital.
As Lenin put it in the motion to the Copenhagen Congress of the Second International.
“It is quite clear that there are two main lines of policy here: one—the line of proletarian class struggle, recognition of the value of the co-operative societies as a weapon in this struggle, as one of its subsidiary means, and a definition of the conditions under which the co-operative societies would really play such a part and not remain simple commercial enterprises. The other line is a petty-bourgeois one, obscuring the question of the role of the co-operative societies in the class struggle of the proletariat, attaching to the co-operative societies an importance transcending this struggle (i. e., confusing the proletarian and the proprietors’ view of co-operative societies), defining the aims of the co-operative societies with general phrases that are acceptable even to the bourgeois reformers, those ideologues of the progressive employers, large and small.”
And continues,
“The Congress is of the opinion:
“1) That proletarian consumers’ societies improve the situation of the working class in that they reduce the amount of exploitation by all kinds of commercial middlemen, influence the labour conditions of the workers employed by the supplying firms and improve the situation of their own employees.
“2) That these societies can assume great importance for the economic and political mass struggle of the proletariat by supporting the workers during strikes, lock-outs, political persecution, etc.
“On the other hand the Congress points out:
“1) that the improvements that can be achieved with the help of the consumers’ societies can only be very inconsiderable as long as the means of production remain in the hands of the class without whose expropriation socialism cannot be attained;
“2) that consumers’ societies are not organisations for direct struggle against capital and exist alongside similar bodies organised by other classes, which could give rise to the illusion that these organisations are a means by which the social question may be solved without class struggle and the expropriation of the bourgeoisie.
“The Congress calls on the workers of all countries:
“a) to join the proletarian consumers’ societies and to promote their development in every way, at the same time upholding the democratic character of these organisations;
“b) by untiring socialist propaganda in the consumers’ societies, to spread the ideas of class struggle and socialism among the workers;
“c) to strive at the same time to bring about the fullest possible co-operation between all forms of the labour movement.
“The Congress also points out that producers’ co-operatives can be of importance for the struggle of the working class only if they are a component part of consumers’ societies.”
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