Socialism's Market Economy

Socialism's Market Economy
Published by the De Leonist Society of Canada
Jan.-Feb. 1999


Of all the dust raised by the defenders of Capitalism with which to confuse the working class, thus check the advent of Socialism, none appears thicker than the dust raised by the mass media around the term 'market. Here the phrase "market economy" is dished out as a synonym for the phrase capitalist economy and as an antonym to what is labeled "Soviet-style command economy."

Anyone who has given thought to the matter will know that whereas market economy is descriptive of a capitalist economy, it will also correctly describe any other economy wherein, directly or indirectly, an EXCHANGE OF PRODUCTS PREVAILS.

It has been well said that economic demand "drives" the economy-i i.e., serves to activate and regulate the production and distribution of goods and services. But in a world that has largely outgrown barter, what seeming talisman today promotes the exchange of products? MONEY!

There is more than one problem here, however.

An obvious difficulty concerns the use of money as a means of deferred payment -- a difficulty succinctly spelled out by Toronto Globe and Mail business commentator, Peter Cook, in his article of August 31 ('98) captioned A world put at risk by Russia. Quoting in part:

"The bankerly wisdom that carried us through the 1970s was that it was okay to lend huge sums to Third World governments because governments couldn't go bust. That was until they did. Or until oil-rich Mexico borrowed so much that it could not afford to make the interest payments -- oil prices, by then, having fallen.

"Mexico was not a major player in the global economy at the time. But its downfall became an epoch-making event that was forever associated with an IMF annual meeting in Toronto in 1982. Finance ministers and central bankers who crammed into the downtown Sheraton hotel turned a bland face toward the world while, behind the scenes, they held frantic meetings about how to avoid a financial collapse. The collapse that followed took an attenuated form: Latin America and much of the Third World entered a lost decade during which it was starved of capital.

"Something of the same order of magnitude happened last week as global financial markets reacted explosively to the troubles of another bit player on the economic stage, Russia.

"As Mexico was rich in devalued oil, so Russia is rich in commodities that have been devalued by bad times in Asia....

"Obviously, Russia is not the problem. Nor could it be. Its economy is smaller than Ontario s.... The problem is investor confidence, or rather the lack of it, and how far that might spread. If it is money that makes the world go round [our emphasis], then a situation in which a part of the world is deemed to be unfit to receive it because of the risk (however small) of it being another Russia is serious indeed.

"What Russia has done is to add to fears that were already there as a result of Asia. If investors were worried about Third World or emerging markets before, they are in a mood to shun them altogether now."

Less clear than the relation between investor confidence and Cook's working premise that "it is money that makes the world go round," is the question of HOW money does it. Cook is unhelpful here except for the lead that is to be found in his observation that following the collapse of Mexico's economy in the early '80s, "Latin America and much of the Third World ... was starved of capital." (Our emphasis.) In a word, it takes money invested as CAPITAL to "make the world go round." All of which simply begs the question: How does Capital do it?

How indeed? Marxism calls a spade a spade; anti-Marxism, when cornered, enlists the help of academe to call it something else! But let us get straight to the point. Capital is as Capital does. Daniel De Leon put it this way: Capital is "that part of wealth which, first, is the result of production; secondly, is devoted to further production; and thirdly, enables its holder to use it, and is used by him, in ways and manners that exploit the producers."

There we have it! Financial Capital is not money per se but money invested in the wages system -- an exploitive system foisted upon workers by "free enterprise" Capitalism (also, of yore, by "Soviet-style command economies") -- a system whose mission is to reward the investor with PROFIT "earned" by an artifice that simply shortchanges workers for their work prior to sale of their product. In a word, Capitalism is a system that enriches the capitalist class by impoverishing the working class, and a system wherein Capital "makes the world go round" only so long as investors of Capital remain confident of a profitable return on their investment.

There is a social order that would suit workers and their families infinitely better than that imposed upon society by the capitalist class. We speak of a bona fide socialist society. Socialism rejects Capitalism lock, stock and barrel. It repudiates a system that supports a parasite class, therefore in place of production and sale for profit it substitutes production and distribution according to need.

The contrast between the rapacious motive behind capitalist production and the social motive of socialist production is well marked by the contrast between Socialism's market economy and that of Capitalism.

Consider merely the consumers' market. In response to market demand, capitalist production will of course supply goods and services. However, that is very incompletely stating the case. For one thing, because workers are fleeced at the point of production their market demand cannot be a true measure of their needs and wants but only what their wages will buy. For another thing, the capitalist pursuit of profit is an intensely competitive "game" that constantly spurs competing capitalist concerns to implement ways and means to cheapen the goods and services being offered for sale -- all too often at the expense of the products' quality, even the consumers' health and safety. Again, the point should not be missed that when Peter Cook states, "The problem is investor confidence, or rather the lack of it, and how far that might spread," he brings up front and center for consideration the adverse effect on profit-making of a feared worldwide financial collapse -- but not the adverse effect on the countless numbers of workers who would thereby be handed their "walking papers" to join the already unemployed on the industrial scrapheap. Obviously the unemployed cannot generate an impressive market demand.

But what a difference will become manifest in a socialist regime! Having freed themselves from the baneful grasp of Capital, the producers of wealth will no longer have trouble keeping the wolf from their doors. For instead of wage or workfare, under Socialism they will receive directly and indirectly the full exchange value of their product. The ogre of unemployment, too, will be a thing of the past.


The problem confronting the working class is not "investor confidence or rather the lack of it, and how far that might spread." The problem is Capitalism itself! Away then with the elixer that supports it! Away with money! Quoting from The De Leonist Review of January-February, 1997:

"No more money? Are Socialists mad? Not so. The chief thing about money that Socialists find unacceptable lies outside its use as legal tender or as a medium of exchange. What Socialists decry is an abominable aspect of money which appears to be inseparable from it -- its use in the producers market as CAPITAL!....

"So what should Socialism use instead of money? Labor vouchers! Unlike money, the labor voucher will not circulate. Unlike money, the labor voucher will be non-transferable. Unlike money, whose stamp provides no clue as to how its possessor came by it, the labor voucher will record socially-necessary labor time expended by the worker, which voucher (after deductions for retirees and those unable to work, for maintenance and/or expansion of the industrial and service infra-structure, for medical research, for restoration of the environment, etc.) will be exchangeable for an equal amount of socially-necessary labor time that is crystallized in consumer goods -- value for value."

-- Alan Sanderson