Title page book Von Marx zum Markt

Von Marx zum Markt --- Look at Sweden

Publication: Metropolis-Verlag (1990, Marburg)

First insertion on Heterodox Gazette Sam de Wolff: 20 november 2014

E.A. Bakkum is a blogger for the Sociaal Consultatiekantoor. He loves to reflect on the labour movement.

The debate about the centrally planned economy has been politicized to such an extent, that textbooks almost always discuss the theme in a subjective and biased manner. Those who want to form their own judgement about the merits of central planning are forced to consult a large diversity of sources. Your reviewer makes the strong recommendation to include in any case the book Von Marx zum Markt in the source material. This book of the quality publisher Metropolis Verlag is by far the best story, that your reviewer could find about this theme. The authors Wlodzimierz Brus and Kazimierz Laski are definitely experts. For a decade, they were professors at the university of planning and statistics in Warsaw.

After the Polish revolt of workers in 1970, which was suppressed in a bloody manner by the Gomulka regime, they both emigrated to abroad. There they were fortunately able to continue their research in the operation of centrally planned economies. So the duo has proved its expertise. Incidentally, the authors owe their excellence partly to the high level of the Polish economic science, immediately after the Second Worldwar. For, at the time the top-economists Oskar Lange and Michal Kalecki (the rival of Keynes) returned to their native country in order to help with the reconstruction.

In the end, Brus and Laski conclude, that the central system performs much worse than capitalism. But that conclusion is preceded by intense studies. Especially Brus sympathized with the plan philosophy, and for a long time has tried to improve her1. In Von Marx zum Markt the authors present a complete discussion of the aspects of central planning, which excels by its insight and clarity. The authors published the English edition of the book in 1989, among others as a manifesto for the policy makers of the Leninist East-block, which then elaborated huge economic reforms. Then Brus and Laski still reflect upon a socialist market economy. Perhaps it is still possible.

A year later, when this German edition is published, it is already clear that the Leninist system as a whole will collapse. It is a failure. Thus Von Marx zum Markt lost its practical usefulness as a manual for the reform policy. Instead it has mainly become a commentary. Those who look in perplexity at the Leninist ruins, can find some answers here.

Brus and Laski begin their book with a clear explanation of the motives, which have led to the formation of the Leninist planning system. The foundation of Leninism is an anthropological model, wherein people are dedicated to the collective. Incidentally, here the authors make the historical mistake to attribute the anthropology to Marx, although it really concerns the radical variant of Lenin (alias Ulianov). Lenin wants to reconcile the homo economicus and the homo socialis by means of coercion. Lenin expects that this will lead to a continuous innovation and progress. Besides, the planned economy promises to increase the efficiency, due to the control at the macro level. All productive factors are mobilized, so that the unemployment disappears. And the consumptive needs are satisfied better.

The plan is a political instrument, which is applied for defending the general interest. Man as a consciously acting being shapes his own future. It is an appealing idea, which can not be refuted rationally. The system has an inner logic. Although the authors do not want to present political analyses, they must nevertheless conclude, that the people do not like central planning. The system lacks a legitimacy, and could only be realized by the political raid, followed by the Leninist dictature2. This can not be a reproach to Marx. According to the authors, Marx demands, that the homo socialis will appear already in capitalism (p.57). This is indeed not impossible, although the process will certainly be more complex than Marx envisaged. But Lenin first imposes his system by means of violence, in the illusion that next man will adapt to it (p.43). That is a fatal mistake and a sign of unbounded pride.

Anyway, Brus and Laski conclude factually, that after the Second Worldwar capitalism simply remains. It prospers, creates social security and minimizes unemployment, and is innovative. The industrial proletariat decreases in size, and there is nowhere a tendency towards socialism in sight, in the sense of a comprehensive collective property. On the contrary, even in the East-block there is a clear call for more free markets. Incidentally, Brus and Laski acknowledge, that immediately after the First Worldwar the basis industries in the Soviet Union expand faster than in the west. But unfortunately the Leninist system does not succeed in controlling the production costs. That makes excessive savings unavoidable, at the cost of the level of consumption. After the Second Worldwar the performance of the Leninist system deteriorates, and finally it falls behind the performance of the developed capitalism. The inherent rigidity and waste lead to stagnation3.

Brus and Lasky analyze the poor functioning of the Leninist economy, with a prominent place for the faulty system of product prices. The Leninist elite believes that centralism is identical with socialism. But a rational control requires at least, that the prices reflect the production costs. Here the system fails, because the prices are mainly a political instrument. And it is almost impossible to efficiently control the enterprises with political means. In chapter 4 it is described how the directions of the enterprises (commonly dedicated party members) try in various ways to manipulate political commands to their own advantage. Enormous stocks are kept as reserves, and innovation is avoided, whenever possible. It is depressing to read.

The authors elaborate on the theory of Oskar Lange, their professional father. At the time Lange had proved, that a planned economy can be controlled simply by maintaining an appropriate set of product prices. Bruski and Laski reject the theory of Lange, since the Leninist system has failed. Your reviewer believes that this is not a convincing argument, because the practice of the political Leninism has little resemblance with the economic ideas of Lange.

More interesting than this theoretical intermezzo is the chapter about the economic reforms, which have been realized by the Hungarian Leninists. Namely, in 1968 they have indeed introduced free markets. The authors make a profound analysis of the developments, notably because the reforms did not lead to more economic growth. They conclude that the elite has maintained an iron grip on the financial sector, so that the granting of credits was yet determined by politics. Thus the command economy has returned via the back door, as it were. The directions of the enterprises are still dependent.

Next Brus and Lasku analyze the economic situation in the former Yugoslavia, which also allowed some free markets. However, this system is so unusual due to the workers' self-management and due to the ethnical tensions, that its performance can hardly be translated to general situations. Nonetheless this chapter offers a fascinating lesson for social reform. The workers' self-management is not a success. The authors conclude from the Hungarian and Jugoslav experiences, that market socialism is only possible with an independently functioning capital market. The enterprises must be free to invest. The theory of Kalecki is used to show, that in this situation the state can still steer, albeit merely at the macro-economic level. Then the money becomes a true measure of value, and the enterprises become profit-driven.

So far so good. It seems that the market socialism can be rescued. But on reflection Brus and Laski no longer trust it. Namely, in this system the directions of the enterprises are wage-earners, paid by the state. In fact, they are officials. The principal-agent problem tells, that officials will defend their own interests, and not those of the enterprise4. A true entrepreneurial production prospers mainly thanks to the whipping by the shareholders. But in market socialism the shares are owned by the state, which itself is controlled by officials. Thus nobody feels responsible for the enterprises, and they get stuck in the bureaucratic morass. One could naturally accuse the authors of being atribilious, but yet the rigidity of bureaucrats can not be denied. Even this attempt to imitate capitalism does not look promising.

Thus the book risks to have a bad end. Fortunately Brus and Laski can yet offer some hope: socialism is actually just a matter of equal chances for all. It is determined by the culture, and not by the economy. Look at Sweden.

  1. The East-German barricade singer Wolf Biermann writes in Berliner Liedchen about the left-wing sentiment: Der Ostn ist schlechter / Der Ostn ist grauer / Und klein sind die Chancen / Und groß ist die Not / Und trotzalledem / der Traum der Commune / der schlief nur und ist doch / noch lange nicht tot. The Commune refers to the popular revolt of 1870 in Paris, which lead to a brief civil war. Beware of phantasts, which ignore reality, and want to realize their own chimeras by means of force. (back)
  2. The poem Ich hatte es auch schon halb vergessen by Wolf Biermann gives an impression of the dictature: Ich hatte es auch schon halb vergessen / daß sich unsre kleine Erde dreht. / Ich hatte die Lüge schon halb gefressen / daß nie mehr im Osten die Sonne aufgeht. / Wir hatten uns halb schon abgefunden / und ganz vergessen, was Zukunft war. / Und haben uns mit unsern Bonzen geschunden / wie 'n altes verbiestertes Ehepaar. / Das Schlimmste war nicht an unsern Tyrannen / die rotgetünchte Tyrannei. / Das Schlimmste waren dabei wir selber / all unsre Feigheit und Kriecherei. / Und daß wir auch selber das Übel waren / grad das ist die Chance und unser Glück. / Ihr seht: es geht! Wir holn uns auch selber / die ewigen Menschenrechte zurück. (back)
  3. Frustration is a fertile source of humor. In the GDR the party elite made jokes about the people in the satirical magazine Eulenspiegel. Here the humor is not in the unexpected (the fool who keeps a bale of straw in his bed for the nightmare), but in the system, which invites to behave irrationally. For instance, there is the joke of the complaining customer: "Equipment often gets a cover merely to hide the construction faults". Or a fashion show is held with costumes from the nineteenth century. The compere cheers: "At last our garments have completed the long way from design to production". Or a shop-assistant welcomes the customer with: "Good day". His colleague sneers: "Lickspittle!" Or the waiter says to the visitor of his restaurant: "You stare at me. Do we know each other?" Or, the company engineer has his leg in plaster. The company nurse tells her colleague: "He developed a mini-radio and dropped it on his foot". Another engineer says with delight: "Our latest innovation is the name change of 'lamp' into 'light'". (back)
  4. Wolf Biermann sings about officials in Michail Gorbatschow: Es gibt so viele Parasiten / uniformierte Banditen / Putsch-Generäle und Offiziere / Ordenbehängte hohe Tiere / so viele Menschen-Verwalter. / Die sehen Glasnost mit kalter / mit kalter Wut und mit heißem Schrecken. / Die mußte wieder in die Arbeit stecken. / Aber nein, Gorbi nein / steck sie nicht ins Gulag rein! / Auch so Schweine sind ja Menschen / und die brauchen Sonnenschein. At the time Biermann could not yet foresee, that Gorbachev and Yeltsin would lead Russia into a terrible economic crisis. Poor tormented people ... (back)