Ask Prof Wolff: Can Market Socialism and Marxism Coexist?

A Patron of Economic Update asks: "Can you be both a Marxist and a market socialist and, if so, how?"

This is Professor Richard Wolff's video response.

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“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”

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[michaeltansey]

i literally asked this question to a friend of mine 2 days ago. got a solid 2 sentence answer. it was a good answer, but this video got me exactly what i needed. thanks Prof Wolff and democracy at work team

[TheJayman]

Insights from classical econophysics suggest that markets do inherently tend towards pretty inequitable distributions of money which usually translates to unequal distribution of power which can result in capitalist restoration. That's not to say that it's necessarily impossible to implement control mechanisms which sustainably inhibit this inherent tendency of the market. Yanis Varoufakis for instance envisions panels of randomly selected citizens judging the social worthiness of each enterprise in his novel Another Now.

[Mark-zkgu]

For people who don't understand - capitalism is a mode of PRODUCTION. not a mode of distribution. Every economic system has used markets before. There's no reason socialism can't use market distribution with a socialist mode of production

[dazanta]

A very nuanced lecture as always. If anyone is looking for arguments as for why markets might be undesirable when the goal is a vastly more meritocratic and egalitarian society: Yakovenko and other econophysicists have shown how randomness of monetary transactions leads to wealth inequality, as well as providing undeniable scientific evidence of the two class society (workers vs owners) that Marx described more than a hundred years ago.

[AlexanderKoryagin]

Thank you very much for sharing your insights, Prof. Wolff!

[democracyatwrk]

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[emiebex]

These 2 systems obviously work better together, then Capitalism does by itself.

[anarchimedes]

<slightly long comment with quotes> Marx talked about how we come out of the labor market different from when we went in (namely, a wage slave), but the point is to resolve capitalism’s contradictions to move us toward the goal of developing socialism/communism, and thus expanding human freedom.

“In fact, the realm of freedom actually begins only where labour which is determined by necessity and mundane considerations ceases; thus in the very nature of things it lies beyond the sphere of actual material production. Just as the savage must wrestle with Nature to satisfy his wants, to maintain and reproduce life, so must civilised man, and he must do so in all social formations and under all possible modes of production. With his development this realm of physical necessity expands as a result of his wants; but, at the same time, the forces of production which satisfy these wants also increase. Freedom in this field can only consist in socialised man, the associated producers, rationally regulating their interchange with Nature, bringing it under their common control, instead of being ruled by it as by the blind forces of Nature; and achieving this with the least expenditure of energy and under conditions most favourable to, and worthy of, their human nature. But it nonetheless still remains a realm of necessity. Beyond it begins that development of human energy which is an end in itself, the true realm of freedom, which, however, can blossom forth only with this realm of necessity as its basis. The shortening of the working-day is its basic prerequisite.”

Previously in Grundrisse Marx foresaw how the tech industry would become a vital business to meeting the production needs of Capital because “the development of machinery […] occurs only when large industry has already reached a higher stage, and all the sciences have been pressed into the service of capital; and when, secondly, the available machinery itself already provides great capabilities” and “Invention then becomes a business, and the application of science to direct production itself becomes a prospect which determines and solicits it.”

And the significance of a highly developed machinery lies in a contradiction inherent to how “Capital employs machinery, rather, only to the extent that it enables the worker to work a larger part of his time for capital, to relate to a larger part of his time as time which does not belong to him, to work longer for another. Through this process, the amount of labour necessary for the production of a given object is indeed reduced to a minimum, but only in order to realize a maximum of labour in the maximum number of such objects. The first aspect is important, because capital here – quite unintentionally – reduces human labour, expenditure of energy, to a minimum. This will redound to the benefit of emancipated labour, and is the condition of its emancipation.”

This sounds like what became AI and automation and the contradiction is between expanding productivity to accumulate more capital and the basis of wage slavery. How do we resolve this contradiction and use the technology to shorten the working day and thus expand the “true realm of freedom”?

[iart]

Can you talk about the Nordic countries? Short documentary "why Nordic countries are so Rich" explains their system. But would love to hear it from you.

[luigidimartino]

Great prof. Wolff! Yes, this is the solution: to domocratize the production process. In any case, however, the strategic factors: energy, transport, health, water, state-owned area of ​​the city centre. All this should be in the hands of the state and controlled by citizens. It´s feasible and clearly for the good of all. This does not mean taking away merits, making everyone equal. Who deserves will earn more, but the shameful enrichment on the exploitation of others would be eliminated.

[zioMav]

See the video of Paul Cockshott about termodinamics of capital for reference

[KTheStruggler]

I think there are issues with markets but as long as they're regulated and kept mostly out of needs (as to prevent market issues interfering with people's access to food, water, housing etc.) It's mostly non harmful.

The problem is unregulated markets that dictate even people's needs to live which is mostly a symptom of capitalism.

[daneater]

Is the essential difference between market socialism and Marxist socialism the means of distribution? The difference being how goods and services are distributed? Either through markets or the state?

[jeromyrutter]

From a Mutualist point of view (Josiah Warren, Pierre Proudhon, etc) capitalist markets are based on profit, while cooperative competition would lower prices to cost on market socialism. Warren is known for the cost principle: cost is the limit of price. Marx wasn't even the first to talk about exploitation...it was just known as Usury, and was condemned by even the church. The point of market socialism, according to Individualist Benjamin Tucker, is that "labor is possession of its own", that profit is an abstract taken from the workers by the employers in the forms of rent, interest, and profit... known as the Trinity of Usury (see State Socialism and Anarchism essay by Tucker). Capitalism's ability to extract value from workers was born from what they called state privilege, and if the state was to be removed, so would the privilege. Privilege was also called state backed monopoly. To Tucker, that was land, patents, money, and tariffs. That means that income would not concentrate in the hands of the few owners of capital, and income distribution would naturally be more decentralized, but still require individual initiative but with free association, rather than communal planning, ensuring the liberty part of liberty, equality, and fraternity. We don't speak of societies having liberty. We speak of individuals having liberty. Mutualism being about reciprocity means equal exchange...something that capitalists are against, because profit comes from unequal exchange. In this sense, profit, rent, and interest are unearned income.
With the LTV, equality of outcome is born from equality of responsibility and ability to make decisions.
Concentration of power is inequality in itself, and only perpetuates inequality.

[Dinofaustivoro]

There is also the matter of the State and the Party officials becoming a new ruling class.
If you take Proudhon as a theorist of "market socialism" (correct me if Im wrong) he would (and did) not agree with Marx on this matter. Proudhon and many other communists/ anarchists were in favor of replacing the State with a Federation of communes, syndicates and free asosiations. While Marx ended up in favor of a Vanguard Party overtaking the State.
We all know how that ended and should be cautious about making the first option a reality.

[IDareDoAllThatMayBecomeACat]

Professor Wolff, I have a question about banks and loans. Can banks "create" money by giving loans, or are they just creating fake money, that leads to bubbles, inflation and the boom-bust cycle?

For instance, if I deposit $10 in the bank, I assume I there is $10 there for me to withdraw when I need it. The idea goes that banks can take that $10 and give it to someone else as a loan, and effectively give us $10 more dollars in the economy, so now we supposedly have $20.

So right after that loan transaction, say I pull my money out. The bank doesn't have my $10, it has someone else's $10, so they give me that. But then what happens if that person withdraws their $10, and everybody else in the bank does too? The bank doesn't have that $10 dollars they need for the last people and the bank goes under.

So my question is, isn't the bank going under because is didn't actually create any money with that loan? Didn't they just give someone else my money and pretend that they pulled a rabbit out of a hat? And in doing so, just inflated a bubble over the value of the real economy?

A real economy created by the value added by actual economic activity of applying labor to capital, which is eventually, cyclically overtaken by this bubble, and once the bubble gets too big for the amount of actual money and value within the economy. Too many people need to pull their money out at once and it pops and you have a recession.

Am I missing something here? Obviously, this turned into a rant, but I would love to hear your thoughts or to point me in the right direction. Thank you.

[Dsonsee]

There are Marxists who have criticised that kind of socialism, amongst which is one Karl Marx

[stevecu]

Markets presuppose exchange, which presupposes demand, which presupposes speculative production, which presupposes capital formation, which presupposes class rule and actors who control this capital. Incidentally, characteristics which are all a disaster for the living environment.

Markets are compatible with socialism if you believe socialism can be defined as capitalism with some government intervention to ameliorate its injustices, and if you ignore the climate and extinction crises we are living through. For me though, that definition makes socialism something hardly worth fighting for, and something which is likely to disrupt the optimal running of the exchange system. In other words, market socialism could simply end up being an inferior exchange system to capitalism, which in my view is exchange taken to its highest form.

Therefore, communism is something I support, which is totally incompatible with markets and exchange.
It represents the end of exchange.

I truly believe that market socialism sits alongside libertarianism as the last refuge of the capitalist apologist.

[ruiborges]

There are lots of misconcepts on this subject. The market is not the cause but the consequence of some sort of economic relations: as long as a producer does not produce for himself and his family but for anyone who buys he needs a matket. On the other hand, Marx's focus is not specialy the market, but the capitalistic system of accumulation, and this system is able - as we all know- to destroy markets by allowing the surge of private monopolies and their capacity to impose prices (prices not only in goods and services, but also in the price of the labour force, by using their power "de facto" to enforce the value of wages). That system has created giant imbalances throughout history, and his now creating problems in the solvency of our planet's resources (energy, food, potable water, climate change, etc.).

[thecatsbackyard]

This confuses me. As far as I know markets always involve money. As far as I know there is no form of socialism that doesn't involve money. Communism is supposed to be a no government, no class and no money situation. It was my understanding that markets exist so long as money is being exchanged for goods and services. Whether the money is being exchanged by individuals or entities, isn't it still a market system?