Capitalism and planning

I remember a lot of talk in the air growing up about The Market and how it would take care of things if we just trust it. This vision is in part a political claim about the actions of the state and other actors, that the market will just take care of things if only people would stop messing around politically trying to control economic activity. This assumes that the market is a nonpolitical thing, and something fully distinct from the state.

In my experience this idea of The Market is often counterposed to some idea of a planned economy, which always means an economy planned by the government. “Let’s replace capitalism with a planned economy.” I remember thinking that at one point. I thought planning and capitalism contradicted each other. This perspective leaves out two important features of capitalist societies. One is the role played by capitalist governments, a form of planning, within markets and capitalist societies. The other is the importance of non-state forms of planning conducted by capitalists seeking to escape from or limit the power of markets.

The opposition between planning and capitalism has a long history within marxism. In their series of articles on what they call decadence theory, Aufheben write that marxists of the Second International generally held to “a notion of (…) socialism [as] the solution to ‘the capitalist anarchy of the market’ the freeing of the forces of production from the fettering relations of private capitalist appropriation.” From this point of view, capitalism is “an irrational economy and socialism is seen as equivalent to a fully planned economy. The theorists of the movement were convinced that the movement was on their side, focusing on Marx’s ideas that the joint stock system “is an abolition of capitalist private system on the basis of the capitalist system itself.” They thought the further socialisation of production evidenced in the extension of credit and joint-stock companies into trusts and monopolies was the basis for socialism. At some unspecified date a revolution would occur and the capitalists would lose their tenuous hold on the socialised productive forces which would fall into the hands of the workers who could continue their historic development. This is an optimistic reading of the lines of capitalist development which gives the agency for social transformation to capital’s drives towards centralisation and co-ordination.”

In 1950 Raya Dunayevskaya criticized the distinction between capitalism and planning. She wrote about what she called “the plan of the capitalist,” namely, “to bring the workers together for purposes of extracting unpaid labor.” Dunayevskaya concluded that the important “opposition is not between ‘anarchy’ and ‘plan,’ but between the plan of the capitalist, which is always despotic in form, and the plan of freely associated men, which is always cooperative.” She elsewhere reformulated this point by saying that capitalism involved a fundamental conflict, that “the plan of the capitalist against the plan of free, associated workers.” She added that “since all labor under capitalism is forced labor, plan[ning] can be nothing but the organization of production under the domination of the machine” and the capitalist. Dunayevskaya noted that the kind of planning in workplaces was quite authoritarian, writing that “[i]f the order of the factory were also in the market, you’d have complete totalitarianism.”

Ranierio Panzieri discussed the importance of planning under capitalism as well, writing in 1961 that “[t]he laws of capitalist development in the era of competition appear as capitalist planning in (…) the factory.” Panzieri built on Marx’s discussion of the importance of workers’ cooperation in the capitalist labor process in order to develop an argument about the importance of planning within capitalism. Capitalist production is cooperative; capitalists shape, control, and plan this cooperation. “In the capitalist mode of production cooperation is the fundamental form. Cooperation is the basis for the development of labour’s social productive forces. (…) Starting from cooperation, capital takes command over a planned labour process.” “Planning immediately appears at the level of direct production (…) as an essential aspect of capital’s development. Therefore there is no incompatibility between planning and capital.”

Panzieri argued that surplus values always involved planning, referring to “the law of surplus value, i.e. planning.” “[C]apital utilizes planning at increasingly higher levels of the productive process – from simple cooperation to manufacture and to large-scale industry – in order to strengthen and extend its command over labour power and obtain an even larger access to it.”

Panzieri criticized Lenin’s understanding of planning under capitalism. He argued Lenin identified planning with the creation of socialism, a mistake rooted in the failure to see that planning occurred within capitalist production. Panzieri added that while economic planning may occur under capitalism, it did “not fall within a socially neutral sphere, but appears within the framework of capitalist development right from the outset.” That is, planning by capitalists was not a step toward socialism.

In Panzieri’s words, the false equation between planning and anticapitalism “facilitate[d] the repetition of capitalist forms in the relations of production both at the factory level and at the level of the overall production – all this, behind the ideological screen of the identification of socialism with planning, and of the possibility of socialism in one country only.”

We can see forms of capitalist planning in another sense within the history of capitalism, in the final section of Marx’s Capital, Volume One. In this section Marx describes what he takes to be the origin of capitalism, in a process he called primitive accumulation. This process involved, among other things, legislative as well as extra-legal taking of land, and horrible brutality. Starting from Marx’s account of primitive accumulation, we can say that capitalism involved planning from the outset.

As Marx details, capitalism requires a market that trades in people’s ability to work, which Marx calls labor power. The labor market was greatly expanded by two kinds of moves. One was the cutting off people’s access to things they needed except by purchasing them – thus requiring people to get money, a requirement which meant, for people who owned no productive property, the need to work for wages. The second aspect of labor market creation was the criminalization of poor people who were able to but did not work for wages. Marx describes as one example an English law from the late 16th and early 17th century which criminalized vagabonds. The law called for “[a]ny one wandering about and begging [to be] declared a rogue and a vagabond. Justices of the peace in petty sessions are authorised to have them publicly whipped and for the first offence to imprison them for 6 months, for the second for 2 years. Whilst in prison they are to be whipped as much and as often as the justices of the peace think fit... Incorrigible and dangerous rogues are to be branded with an R on the left shoulder and set to hard labour, and if they are caught begging again, to be executed without mercy.” Reading about the horrors of primitive accumulation help undercut the idea of capitalism as natural and markets – particularly the labor market – as apolitical.

Much of Marx’s Capital is focused on classical political economists. Marx takes the writings of capitalist ideologists and compares them with some of the structural dynamics of capitalism and some of the realities of life under capitalism in order to attack those ideologists. One of the roles of the primitive accumulation section in Capital is to cast a different light on any idea that capitalism is natural and to put the last nail in the coffin of any idea that capitalism is just.

In his book The Invention of Capitalism, Michael Perelman builds on Marx’s treatment of primitive accumulation by addressing classical political economists and primitive accumulation. Perelman shows how people like Adam Smith who talked about the power of markets and wrote positively about capitalism were not just voicing questionable ideas. Rather, these figures knew that in reality capitalism required state intervention, and violent state intervention, in order to impose markets on people.

Perelman looks at the public statements and published writings of people like Smith, and compares them with private writing like journal entries and correspondence, material not often considered to be theoretical works of classical economy.. He also looks at these figures’ efforts to shape policy. Even though classical political economists talked publicly about markets as regulating themselves, Perelman shows that they actually understood that capitalism required state intervention of a violent kind. Classical political economists understood perfectly well that markets required force to be set up.

As Perelman writes,“classical political economists” despite their image as being pro-laissez faire, “strongly advocated policies that furthered the process of primitive accumulation. (…) [T]ime and time again, they advocated policies that flew in the face of their laissez faire principles, especially in their analysis of the role of small-scale, rural producers.”

A later generation of economists in the United States did the same thing. In another book, Railroading Economics, Perelman details how late 19th century economists confronted problems regarding railroads and other growing industries with similar characteristics. Railroad involved large investments in track and machinery which was very expensive. These kinds of expenses, called fixed capital, made up a huge portion of the costs for these companies. Their cost per individual unit produced – each thing they sold – were relatively low. A large portion of their costs did not vary based on how much the company produced. These conditions meant that companies could cut costs very low as part of competing with each other, and could end up selling products at a loss, resulting in unpaid debts despite relatively high volumes of sales. Highly competitive economies would bankrupt many railroads and similar fixed-capital intensive companies in the late 19th century.

Some late 19th century economists, including some who worked in the railroad industry, tried to understand these dynamics. What they concluded, like the owners and managers of many fixed-capital intensive companies, was that competition was relatively bad for these kinds of companies. They would do better in relatively stable, controlled markets. This stability could be produced by government regulation, or by nongovernmental regulation of the economy by companies – in the form of trusts, associations, and mergers. However it happened, this was a case of capitalists trying to escape some of the pressures that capitalism imposed on their companies.

Perelman argues that the economists who tried to understand and to make suggestions for responding to the problems of railroads and other fixed-capital intensive companies realized that competitive markets were actually quite bad for those kinds of companies. To the degree that those kinds of companies were relatively important in capitalist society, competitive markets also undermined American capitalism. And yet, as Perelman notes, these ‘railroad economists’, like the classical political economists in his earlier book, wrote publicly and taught about the virtues of competitive and supposedly self-regulating markets. There were ideologists of The Market as an independent entity that just needs to be left alone so that people could compete their way to a better world, and there were theorists of state intervention and private anti-competitive practices. Often, these two groups were the very same individuals, varying their comments depending on who they were speaking with.

I’m going to bring this to a close in a moment. I want to come back to a remark by Aufheben. They write that “[t]he socialist economy as envisaged by Second International marxists was a solution to capitalism’s problems, and as such was state capitalism.” I’ve still not finished their article series on the nature of the USSR. For several years I’ve been meaning (and been told by my friend Phinneas Gage) to read it. I’m part way through and so far it’s very good. Anyway, I happened to read Perelman’s Invention of Capitalism around the same time that I read Daniel Cohn-Bendit’s Obsolete Communism. Like I said, Perelman’s book is about classical political economy and the history of Britain around the 17th and 18th centuries. Cohn-Bendit’s book is about revolution and the events of May, 1968 in Paris. I was struck that there was a great deal of overlap between them, specifically in that Perelman’s discussion of primitive accumulation and Cohn-Bendit’s discussion of Trotsky and Lenin sounded eerily similar. I mentioned this to a comrade, Harald Beyer-Andersen (sadly, he has since passed away).
Harald wrote in correspondence that the fledgling USSR issued a decree in 1919 that said "Particular obstructive workers who refuse to submit to disciplinary measures will be subject, as non-workers, to discharge and confinement in concentration camps."

"Earlier that year, on April 15, Izvestiya had printed the decree for the establishing of self-financing, forced labour camps in all Soviet provinces, intended for workers who did not follow labour regulations. First try at escaping increased the sentence tenfold, and second try could be punished by death. The camps were initially run by the Cheka, who also had the "adminstrative right" to confine workers to both kinds of camps. The concentration camps, which had been established during the period of Red Terror the year before, were unlike the forced labour camps, first put in use for employees. A decree of 19 November 1919 had also imposed forced labour and old feudal transport duties in the country-side."

Along similar lines, Trotsky said in 1920 that "If we seriously speak of planned economy, which is to acquire its unity of purpose from the center, when labor forces are assigned in accordance with the economic plan at the given stage of development, the working masses cannot be left wandering all over Russia. They must be thrown here and there, appointed, commanded, just like soldiers.” He also said that "Deserters from labour ought to be formed into punitive battalions or put into concentration camps." In my view, this recalls very closely the English laws against the vagabond poor that Marx quoted.

To turn back to Harald again, he quoted a report presented by a high ranking soviet bureaucrat at the 8th Soviet Congress in December 1920: "We started with free employment and, through a number of stages, made the transition to mass labor mobilization, based on the principle of universal compulsory labor. This enabled us to enlist and distribute the labor force on all-national scale and in the interest of the national economy as a whole, which was being organized on a new foundation... Step by step the entire labor force of the country became encompassed by a single leadership and principle. The labor force of the Republic was nationalized and, having become the property (sobstvennost) of the state, was carrying out the orders and the objectives of the state. As this process of socialization of the labor force was taking place, a single organ was established to consolidate this colossal work... which paves the way to the communist organization of labor."

This decree that Harald quoted recalls Dunayevskaya’s earlier remark that the extension of the logic of a factory to a whole society would be totalitarian. This is precisely what Lenin imagined in State and Revolution, writing that “The whole of society will have become a single office and a single factory, with equality of labor and pay.” Of course, Lenin saw this as a stage for Russian society to pass through, not an end goal. He wrote that “this “factory” discipline, which the proletariat, after defeating the capitalists, after overthrowing the exploiters, will extend to the whole of society, is by no means our ideal, or our ultimate goal. It is only a necessary step for thoroughly cleansing society of all the infamies and abominations of capitalist exploitation, and for further progress. From the moment all members of society, or at least the vast majority, have learned to administer the state themselves, have taken this work into their own hands, have organized control over the insignificant capitalist minority, over the gentry who wish to preserve their capitalist habits and over the workers who have been thoroughly corrupted by capitalism--from this moment the need for government of any kind begins to disappear altogether. (…)Then the door will be thrown wide open for the transition from the first phase of communist society to its higher phase, and with it to the complete withering away of the state.” We all know that no such withering occurred in the USSR.

To quote Dunayeskaya once again, in both the US and the USSR we can see “the plan of the capitalist against the plan of free, associated workers.” In the continuing economic, social, and political crisis of our times we will probably see eventual calls for new forms of economic planning and regulation – either in reformist garb like calls for new legislation or in pseudo-revolutionary garb as with those who hold up renewed forms of Bolshevism. In an era of deregulation and instability, this call for planning will seem progressive and may well be more humane than neoliberal capitalism. That will make it all the more important to remember, and to remind others, that planning and stability are not opposed to capitalism but are often features built in to capitalism.