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Socialist economics

Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems.[1] A socialist economic system is characterized by social ownership and operation of the means of production[2][3][4][5][6][7] that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit.[8][9][10][11] Socialist systems that utilize markets for allocating capital goods and factors of production among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.[12][13]

Socialist economics has been associated with different schools of economic thought. Marxian economics provided a foundation for socialism based on analysis of capitalism[14] while neoclassical economics and evolutionary economics provided comprehensive models of socialism.[15] During the 20th century, proposals and models for both socialist planned and market economies were based heavily on neoclassical economics or a synthesis of neoclassical economics with Marxian or institutional economics.[16][17][18][19][20][21]


As a term, socialist economics may also be applied to the analysis of former and existing economic systems that were implemented in socialist states such as in the works of Hungarian economist János Kornai.[22] 19th-century American individualist anarchist Benjamin Tucker, who connected the classical economics of Adam Smith and the Ricardian socialists as well as that of Pierre-Joseph Proudhon, Karl Marx and Josiah Warren to socialism, held that there were two schools of socialist thought, namely anarchist socialism and state socialism, maintaining that what they had in common was the labor theory of value.[23] Socialists disagree about the degree to which social control or regulation of the economy is necessary; how far society should intervene and whether government, particularly existing government, is the correct vehicle for change are issues of disagreement.[24] The goal of socialist economics is to neutralize capital, or in the case of market socialism to subject investment and capital to social planning.[25]

: capitalist production is the production of "an immense multitude of commodities" or generalised commodity production. A commodity has two essential qualities firstly, they are useful, they satisfy some human want, "the nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference"[35] and secondly they are sold on a market or exchanged. Critically the exchange value of a commodity "is independent of the amount of labour required to appropriate its useful qualities".[35] However, rather depends on the amount of socially necessary labour required to produce it. All commodities are sold at their value, so the origin of the capitalist profit is not in cheating or theft, but in the fact that the cost of reproduction of labour power, or the worker's wage, is less than the value created during their time at work, enabling the capitalists to yield a surplus value or profit on their investments.

Law of value

Historical property relations: historical capitalism represents a process of momentous social upheaval where rural masses were separated from the land and ownership of the by force, deprivation, and legal manipulation, creating an urban proletariat based on the institution of wage-labour. Moreover, capitalist property relations aggravated the artificial separation between city and country, which is a key factor in accounting for the metabolic rift between human beings in capitalism and their natural environment, which is at the root of our current ecological dilemmas.[36]

means of production

: Marx adapted previous value-theory to show that in capitalism phenomena involved with the price system (markets, competition, supply and demand) constitute a powerful ideology that obscures the underlying social relations of capitalist society. "Commodity fetishism" refers to this distortion of appearance. The underlying social reality is one of economic exploitation.

Commodity fetishism

: workers are the fundamental creative source of new value. Property relations affording the right of usufruct and despotic control of the workplace to capitalists are the devices by which the surplus value created by workers is appropriated by the capitalists.

Economic exploitation

: inherent to capitalism is the incessant drive to accumulate as a response to the competitive forces acting upon all capitalists. In such a context the accumulated wealth which is the source of the capitalist's social power derives itself from being able to repeat the circuit of money→commodity→money, where the capitalist receives an increment or "surplus value" higher than their initial investment, as rapidly and efficiently as possible. Moreover, this driving imperative leads capitalism to its expansion on a worldwide scale.

Capital accumulation

Crises: Marx identified natural and historically specific (i.e. structural) barriers to accumulation that were interrelated and interpenetrated one another in times of crises. Different types of crises, such as realization crises and overproduction crises, are expressions of capitalism's inability to constructively overcome such barriers. Moreover, the upshot of crises is increased centralization, the expropriation of the many capitalists by the few.

Centralization: the interacting forces of competition, endemic crises, intensive and extensive expansion of the scale of production, and a growing interdependency with the state apparatus, all promote a strong developmental tendency towards the centralization of capital.

Material development: as a result of its constant drive to optimize profitability by increasing the of labour, typically by revolutionizing technology and production techniques, capitalism develops so as to progressively reduce the objective need for work, suggesting the potential for a new era of creative forms of work and expanded scope for leisure.

productivity

Socialization and the pre-conditions for social revolution: by socializing the labour process, concentrating workers into urban settings in large-scale production processes and linking them in a worldwide market, the agents of a potential revolutionary change are created. Thus Marx felt that in the course of its development capitalism was at the same time developing the preconditions for its own negation. However, although the objective conditions for change are generated by the capitalist system itself, the subjective conditions for social revolution can only come about through the apprehension of the objective circumstances by the agents themselves and the transformation of such understanding into an effective revolutionary program.

[37]

Public enterprise centrally planned economy in which all property is owned by the state and all key economic decisions are made centrally by the state, e.g. the former Soviet Union.

Public enterprise state-managed market economy, one form of which attempts to use the price mechanism to increase economic efficiency while all decisive productive assets remain in the ownership of the state, e.g. the socialist market economy in China and the socialist-oriented market economy in Vietnam after reforms.

market socialism

A , where public and private ownership are mixed and industrial planning is ultimately subordinate to market allocation, e.g. the model generally adopted by social democrats in the 20th century such as in Sweden. Many different proposals for socialist economic systems call for a type of mixed economy, where multiple forms of ownership over the means of production co-exist with one another. Alternatively, a mixed economy may also be a socialist economy that allows a substantial role for private enterprise and contracting within a dominant economic framework of public ownership. This can extend to Soviet-type planned economies that have been reformed to incorporate a greater role for markets in the allocation of factors of production.

mixed economy

Public enterprise employee managed market economies, another form of in which publicly owned, employee-managed production units engage in free-market exchanges of goods and services with one another as well as with final consumers, e.g. mid-20th-century Yugoslavia. Two more theoretical models are Prabhat Ranjan Sarkar's progressive utilization theory and economic democracy.

market socialism

Public enterprise participatory planning, an economy featuring social ownership of the means of production with allocation based on an integration of decentralized democratic planning, e.g. and libertarian socialism. An incipient historical forebear is that of Catalonia during the Spanish Revolution. More developed theoretical models include those of Karl Polanyi, participatory economics, Inclusive Democracy and the negotiated coordination model of Pat Devine as well as in Cornelius Castoriadis's pamphlet "Workers' Councils and the Economics of a Self-Managed Society".[66]

stateless communism

production quotas for every productive unit. A farm, mine or factory was judged on the basis of whether its production met the quota. It would be provided with a quota of the inputs it needed to start production, and then its quota of output would be taken away and given to downstream production units or distributed to consumers.

allocation through political control. In contrast with systems where prices determined allocation of resources, the Soviet bureaucracy determined allocation, particularly of the means of production. The prices that were constructed were determined after the formulation of the economy plan, and such prices did not factor into choices about what was produced and how it was produced in the first place.

full employment. Every worker was ensured employment. However workers were generally not directed to jobs. The central-planning administration adjusted relative wages rates to influence job choice in accordance with the outlines of the current plan.

clearing goods by planning: if a surplus of a product accumulated, then would either reduce the quota for its production or increase the quota for its use.

the central planning authority

for the long-term development of key industries.

five-year plans