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POLITICAL ECONOMY for SOCIALISM Also by Makoto Itoh

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POLITICAL ECONOMY for SOCIALISM Also by Makoto Itoh POLITICAL ECONOMY FOR SOCIALISM Also by Makoto Itoh TilE BASIC TIIEORY OF CAPITALISM TilE VALUE CONTROVERSY (co-author with I. Steedman and others) TilE WORLD ECONOMIC CRISIS AND JAPANESE CAPITALISM VALUE AND CRISIS Political Economy for Socialism Makoto ltoh Professor of Economics University of Tokyo M St. Martin's Press © Makoto ltoh 1995 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published in Great Britain 1995 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-0-333-55338-1 ISBN 978-1-349-24018-0 (eBook) DOI 10.1007/978-1-349-24018-0 10 9 8 7 6 5 4 3 2 I 04 03 02 01 00 99 98 97 96 95 First published in the United States of America 1995 by Scholarly and Reference Division, ST. MARTIN'S PRESS, INC., 175 Fifth A venue, New York, N.Y. 10010 ISBN 978-0-312-12564-6 Library of Congress Cataloging-in-Publication Data ltoh, Makoto, 1936-- Political economy for socialism I Makoto Itoh. p. em. Includes bibliographical references and index. ISBN 978-0-312-12564-6 I. Socialism. 2. Communism. I. Title. HX36.I85 1995 335-dc20 94--46182 CIP Contents Preface vii Introduction: Socialism at Stake xiii PART I IDEAS 1 Origins of Socialism 3 Formation of various concepts of socialism 3 Communist ideas as natural right 7 Utopian socialism 10 2 Modern Socialism 18 Owenism 18 Fabianism 20 Marxism 22 PART II THEORIES 3 Marx's Socialism 31 Historical materialism 33 Socialism in The Communist Manifesto 38 The labour theory of value and socialism 44 On the division of labour 57 The functions of surplus labour 62 How to secure dynamic flexibility 77 Conclusion 81 4 Market Economy and Socialism 83 Theoretical critiques of a socialist economy 83 Theoretical defences of the rationality of a socialist economy 93 Arguments for market socialism 105 The Recent debates on the market and socialism 117 Multiplicity of the models of a socialist economy 128 v vi Contents PART III REALITIES 5 The Nature of the Soviet Type of Society 143 Anomalies in the Soviet order 143 Marxist critiques: the real nature of the Soviet type of w~ti~ 1~ Arguments for reforms and the future of socialism 153 6 Achievements and Crisis 160 The Soviet type of planned economy 160 The basic conditions for growth 164 Stagnation and crisis 166 7 The Reforms and Systemic Change 176 Perestroika and the Russian tragedy 176 Eastern European revolutions and systemic change 189 Economic reforms in China 201 Concluding Remarks 213 Notes 217 Bibliography 228 Index 234 Preface This volume is an introduction to contemporary Marxist political economy for socialism, and discusses the various notions of socialism, several theories concerning the socialist economic order, as well as the actual reality of the socialist economies and their recent systemic changes. The book is profoundly concerned with conceptualising the perplexing processes of the recent dissolution of Soviet-type socialism, and with drawing conclusions about possible alternative economic orders for the future. These issues clearly require much co-operative re-examination by political economists across the world, and so this volume does not even pretend to be a comprehensive and standard guide. The author, however, is convinced that this sort of work should be undertaken from many different perspectives so as to promote international co-operation leading to the revival of the hope for a better future for human socie­ ties in the direction of socialism. A few words on how the author came to write this book might also be appropriate. During my stay in Oxford in the summer of 1987, and while writing The World Economic Crisis and Japanese Capitalism (1990), I considered two possibilities for future work: one was to write a book on the Political Economy of Money and Finance, the other was this volume. Andrew Glyn decisively recommended that I should do the latter. I hesitated at the time since my work hitherto has been mainly on the basic theory of the capitalist economy, for instance, Value and Crisis (1980) and The Basic Theory of Capitalism (1988). I felt more comfortable with, and better qualified to undertake, work on money and finance. Naturally, I had been intensely interested in the issues of socialism while studying Marxist political economy. For instance, I strongly encouraged the publication of Paul Sweezy's Post-Revolutionary So­ ciety (1980) in Japanese, translated it, and wrote an afterword (1980). In this afterword, addressed to Japanese readers, I argued that the de­ velopment of Sweezy's thought since he wrote his book on Socialism (1949), should be seen as a serious attempt to understand the growth and deterioration of the Soviet type of society on the basis of Marxist political economy. However, I did not make clear my own position with respect to Sweezy's novel conception of the Soviet type of so­ ciety as a post-revolutionary (non-socialist) class society. Part of the Vll viii Preface reasons for this was my own lack of preparation to deal with this issue. Consequently, I began a more concentrated study of these questions and started to write essays on them. I then became increasingly aware of the fact that contemporary issues regarding socialism were indeed closely related to Marx's fundamental theories of political economy, as well as to his historical materialism. One result of this realisation was the addendum 'Part IV: Socialism' to The Basic Theory of Capitalism. However, since I am not qualified to do historical and empirical research into the actually existing socialist countries by using any of their original languages, I have been reluctant to treat my work on socialism as fully professional. Knowing my doubts, Andrew Glyn insisted that I should be bold enough to venture into a new field and work on the issues regarding socialism, rather than money and finance which is an old and established field of research. Although I was still attracted by the latter, I was eventually persuaded to do the former as Perestroika unfolded and the Eastern European revolutions occurred. Andrew Glyn's comments and encouragement were extremely helpful in producing this volume. Further to this, Nobuo Okishio, while collaborating with me on a book on Economic Theories and Contemporary Capitalism (1987, in Japanese), suggested that if I undertook this project I should also re­ examine the socialist economic calculation debate, including Hayek's critique of socialism. In the chapter on socialism in the above-mentioned book, Okishio asserted that socialism has to incorporate commodity production as an important channel for the participation of members of society in decision-making regarding production. I maintained that socialism should exclude commodity production in the long run, and in so far as a socialist society must employ market processes for a period of time it should strive to limit the scope and functions of the market. The extensive discussions I have had with Okishio on my book on Contemporary> Socialism (1992, in Japanese) served as preparation for this volume and were very useful. In re-examining the socialist economic calculation debate, I found Don Lavoie's Rivalry and Central Planning (1985) an interesting and stimulating contribution, though it clearly supports the Austrian cri­ tique of the rationality of a centrally planned socialist economy. It was also gratifying to read Lavoie's acknowledgement of myself as a person whose 'approach to Marxian scholarship had a significant im­ pact on this book'. A further unexpected development in the gestation of this project was a long letter from Bob Rowthom in October 1991, commenting Preface IX mainly on the final chapter of my Basic Theory of Capitalism. Rowthorn and Okishio tend to agree broadly in their theoretical views, as is also the case on the theory of skilled labour. In the letter, among several other comments, Rowthorn opposed my view that a socialist economy should aim at the abandonment of the law of value. According to Rowthorn, complex economies, which generate independent informa­ tion for enterprises and the state, necessarily require markets, regard­ less of who owns or controls the means of production. In a reply in November 1991, I wondered if Rowthorn was not too influenced by Hayek, and argued that I could accept the idea of market socialism provided that it was presented as one of many possible patterns of socialism suitable for advanced countries at the present time. How­ ever, I could not accept it as an abstract general principle. As a matter of historical record, is it not the case that the Soviet planned economy worked and achieved high economic growth for decades? My further question was: what kind of information is particularly difficult to deal with in a centrally planned economy with public prices? In his reply in April 1992, Rowthorn confirmed that he was in favour of state intervention and public planning and against the so-called 'free
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