Seth Ackerman’s Jacobin essay (via Yglesias) is well worth your time, although I have to say that I don’t buy it at all as a wholesale alternative to our current system; it seems to me though that this could well be a model for certain parts of our system. Ackerman starts off by suggesting that the problems of Communist or centrally planned economies was not that they were inefficient (by standard economics measures of efficiency/equilibrium) but their firms lacked autonomy. He suggests instead a system where the management of firms is autonomous but the financial system is socialized, and therefore the “public” owns the firms collectively but does not really manage them. He suggests that (a) this system is superior to the traditional social democratic apparatus where the role of Government is seen to be regulatory i.e. erecting checks and balances to the system of capitalist profit-seeking while still seeing profit-seeking as the engine of development and innovation. He suggests that this system is never really sustainable because it ignores politics and the relative power of capital. And (b) that this is the system we’ve been moving to all along. Capitalism started off from a place where the management of the firm and the owners of capital were the same, to one where the two were different (a.k.a. the managerial corporation). The logical outcome, he suggests, is one where the shareholders themselves are the “public” and are publicly accountable. His “market socialism” is thus a logical culmination of capitalism itself (a la Marx).
What is needed is a structure that allows autonomous firms to produce and trade goods for the market, aiming to generate a surplus of output over input — while keeping those firms public and preventing their surplus from being appropriated by a narrow class of capitalists. Under this type of system, workers can assume any degree of control they like over the management of their firms, and any “profits” can be socialized– that is, they can truly function as a signal, rather than as a motive force. But the precondition of such a system is the socialization of the means of production — structured in a way that preserves the existence of a capital market. How can all this be done?You should all just read the whole thing. But let me just point out what I think is the main flaw in this model (although admittedly the devil is always in the details). His proposal is essentially one where the economy consists of a huge, dominant public sector, but where the management of the public sector is radically separated from ownership (which is “public”). I think this is not as easy as he thinks it is. In particular, the relationship between the management (and workers) and the shareholders (the public) will now be mediated through the political process. Ackerman thinks that by eliminating the profit-mechanism, his system will make the prices more rational or efficient, but I suspect that the political process will step in and provide its own irrationality. In other words, Ackerman’s system, which he thinks is the golden middle between profit-seeking capitalism and centrally planned socialism may actually end up looking like one or the other eventually.
Start with the basics. Private control over society’s productive infrastructure is ultimately a financial phenomenon. It is by financing the means of production that capitalists exercise control, as a class or as individuals. What’s needed, then, is a socialization of finance — that is, a system of common, collective financing of the means of production and credit. But what does that mean in practice?