Feasible Socialism (5)

Present-day society does not concern itself with determining the needs of society. Planned economy and capitalism are irreconcilable contradictions; the one excludes the other. If an economy is planned, then it has also ceased to be a capitalist economy. Experience has proved that planning under capitalism is impossible. When we socialists speak of planned economy we do not mean a plan which leaves all the wastefulness, all the inefficiency and all the criminal parasitism of capitalism untouched. When we socialists speak of a society organized on the basis of planned production and distribution we mean something entirely different. What we have in mind is very simple. It is clear-cut. Do away with production for profit.

The application of new technologies to human society shows what immense possibilities for the satisfaction of human wants are contained in the achievements of science and in its future growth. It can reduce human labour to the easy task of monitoring computerised automated machinery a few hours a day. It leaves mankind free to engage in other pursuits. Everybody is responsible for the welfare of all, everybody works according to his or her ability and everybody receives from the common stock of goods according to need. No exploitation, no oppression, no insecurity, no poverty. Life is made humane. This isn’t a utopia. This isn’t a dream. What we propose is real, capable of fulfillment, by the forces that already exist and are in operation.

Capitalism is production for the market. The surplus-value created by the workers cannot be realized by the capitalist in the form of profit until the product has been sold on the market. It should be borne in mind that the market, under capitalism, has a far wider meaning than is usually understood by that term. The capitalist market is not confined to the consumers who buy the simple commodities required for life – food, clothing, home furnishings and the like. Every capitalist enterprise produces for the market. But each one is itself a market. Mines buy lumber, tools and machines. Steel mills buy coal, brick, concrete, iron, machinery. Machine-tool plants buy machines and metals. Automobile factories buy machine tools, metals, glass, rubber, woolens and even agricultural products. Textile mills buy machines, cotton, wool and synthetic materials.

How does a capitalist enterprise know how many of its products can be sold on the market, in other words, how many it can safely turn out for any given period? It does not know. It cannot know. All it can do is to depend on the market price and a judgment of its trend. Prices are regulated by supply and demand. Low supply and great demand usually mean high prices, and vice versa. If prices are relatively high and it looks from the trend that they will stay high or go higher, the enterprise is stimulated to produce and to capture from its rivals as large a share of the market as possible. The market is the only basic regulator of capitalist production. As we shall see, however, it is a blind regulator.

The capitalist enterprise begins to produce. It acquires machinery or replaces its old equipment with new, more modern, more efficient equipment. It purchases raw materials, and uses more fuel and electrical energy. It may set up an annex to its building, not only to produce a greater quantity of its commodity but to produce each unit cheaper. It hires a larger working force.

By these very acts, it stimulates production in other enterprises. Wages in the pocket of the worker means a greater demand for ordinary consumers’ goods; the industries producing them therefore increase their activities. The machine-tool industry expands production; so do those industries which supply it with raw materials, construction materials, tools, etc. The raw materials’ industries – chemicals, mining, cotton and leather, steel and iron – likewise speed up production. Multiply all this a thousand times and you get a clearer picture of how production gets under way and develops on an even-wider scale. As the market expands, each capitalist is impelled to produce more, in the hope of capturing a greater share of the market and out of fear of losing out to his competitors. They, meanwhile, are prompted by the same considerations and act in the same way. Even in boom times, therefore, or rather precisely in time of economic boom, capitalist production has an inherent tendency to over-production. This tendency to over-produce does not refer to the real needs of society. There is over-production in relation to the capitalist market, that is, there is a tendency to produce more than can be disposed of on the market at a profit.

Let us illustrate the process. The supply of automobiles is low, the demand high; the market price is therefore high. The capitalist is stimulated to produce. Each automobile factory begins. None of them has anything like an exact idea of how much the market can absorb. None of them has an exact idea of how many automobiles its rivals are planning to produce. The competitive race commences. This race stimulates the same kind of unplanned production among the manufacturers of tires and other articles that go into the making of automobiles. This, in turn, stimulates the production of raw rubber for the tyres and the machinery required to process it. The production in the steel mills and aluminum plants is stimulated in the same blind way, each plant producing more and more in the hope of capturing a larger and larger share of the growing market. The same holds true of leather factories; the machine-tool industry; the coal mining and iron ore industries; the plate glass industry; and a hundred others.

The more they expand production, the more complex the problem becomes. The expansion in an industry that supplies automobile manufacturers, in turn stimulates all the industries that supply that one. The echo of the initial stimulus to production reverberates to the most distant parts of economic life and back again.  The trouble is that this expansion of production in boom times is in its very nature unplanned. For example, a 100 per cent increase in wheat production does not require a 100 per cent increase in the production of threshing machines. A 100 per cent increase in the production of threshing machines may mean a 100 per cent increase in the iron that goes into the machines, but only a 10 per cent increase in the production of the tools by which the threshers are made. A 100 per cent increase in cotton textiles may require only a 25 per cent increase in the production of textile machinery. What is more, this small increase in textile machinery for one year may suffice to keep textile production at the higher rate for five years – the market for textiles themselves is more continuous than the market for textile machinery, the one used up far more rapidly than the other.

If all the enterprises could be joined under one roof, and production planned with meticulous care, it would be possible to work out a schedule of expansion for each industry so that each would develop in harmonious proportion to the other. Planning could regulate the proportions in which each industry should be expanded so that the whole of economic life advances harmoniously. But we do not and cannot have that under capitalism. In place of planned production, there is anarchy of production, competitive production for the market.

Does the development of monopoly put an end to competition and anarchy of production? No, under capitalism, monopoly exists side by side with competition, even though it dominates it. As a matter of fact, monopoly makes competition fiercer and more brutal.

Under the conditions of “free enterprise,” a big multitude of capitalist enterprises compete with each other for the market. The weaker fall by the wayside or are absorbed by the stronger. The many are centralized into a few. The few tend to unite with each other into a cartel or a single trust, which has a complete monopoly in the industry. All the branches of industry undergo the same process, in one degree or another. But inasmuch as each combination or merger of enterprises is much stronger than all these enterprises when they existed independently, the competition between monopolies for the rule of the market becomes more violent.

If competition between one steel mill and another is replaced by a cartel in which they agree to share the market, or by a single trust which they establish, a new competition for the market develops between the steel trust and the aluminum trust, or between both of them and the newly-developed plastics industry. If coal and oil and electrical companies cease to compete with other coal and oil and electrical companies by establishing “horizontal trusts” (trusts covering a whole branch of economic life, like all of coal mining, all of steel making, etc.), a violent competition develops for the “fuel” or “energy” market between the coal monopoly and the oil monopoly. The competition is now between mighty and extremely ruthless giants. Competition between monopolies extend on a world-wide scale, in the form of struggles between the monopolies of one nation and those of the others.

 Production is carried on in every capitalist country in an anarchic, unplanned manner, and that it cannot be otherwise. What is the result?

As production gathers speed, free rein is given to what we have called the inherent tendency to over-production. Remember, the capitalist enterprise does not have an exact knowledge of the state of its particular industry, to say nothing of the market as a whole. Rising prices give the capitalist both the urge to produce in greater quantity and the confidence he will find a profitable market for his products. Each one produces without a knowledge of the proportions in which his enterprise or industry should expand with relation to the expansion of the other enterprises in the industry, or in relation to the expansion of other industries. Capitalism has no way of establishing what the total demand is, and therefore cannot organize the production of the total supply to meet this demand.

The automobile manufacturers (assuming that all of them work it out together) decide that the market will absorb sufficient automobiles to warrant an increase of production of fifty per cent. Steel, however, may very well increase sixty per cent in the rising market; rubber, seventy per cent; plate glass, eighty per cent; aluminum, ninety per cent. Each of these increases is based not only on a judgment of what automobile production will require, but on a judgment of what will be required in the form of steel, rubber, glass, aluminum and the like, in a hundred other industries, in tens of thousands of other enterprises, each of which operates independently, with its own production schedule, separate from all others.

There is no way of telling immediately that the demand has been exceeded by the supply. The rising market stimulates production in expectation of sales. Machinery and raw materials are not bought only for the orders received and guaranteed, but also for orders that are expected. Finished products, as well as raw materials, begin to accumulate, in the stores, in the warehouses and in the factories themselves. Industry begins to overproduce without knowing it and without being in a position to know it in advance.

At a certain point a collapse takes place, and very suddenly. Not enough buyers are to be found for the accumulated commodities of one enterprise or industry. Because of over-production, supply exceeds demand. Therefore, prices fall. If the enterprise is not ruined entirely by the fall in prices, it is at least compelled to suspend production or to cut down drastically. Workers are discharged or their wages reduced. Orders which the enterprise previously placed with other concerns are reduced or canceled altogether. Laid-off workers mean a reduction in the market of consumer goods. Canceled orders means a reduction in the market of industrial consumption.

Each enterprise is connected with all the others by thousands of ties. The collapse of one directly or indirectly, immediately or soon, affects others, and they in turn affect still others, until virtually all are involved. If, for example, automobile production declines, the production of steel, coal, aluminum, brass, rubber, glass and all the others which were dependent upon automobile production, also declines. There is in turn a decline in production in the enterprises and industries which depended for their market upon them.

Banking, which is inseparably connected with industry, is stricken by the collapse. In the boom period there were large borrowings by industries which were expanding to meet the rising market. With the fall of prices, the collapse or retrenchment of enterprises, the latter are unable to meet their obligations to the banks. What is more, individual depositors begin to withdraw their funds, fearing a coming crisis or needing money because they are now without work. The difficulties in the sphere of production, on one side, and the difficulties in the sphere of finance, on the other, combine meanwhile to upset or knock out entirely the small retailers and businessmen, dragged down by large stock accumulations, loans they made to finance these accumulations and falling prices.

Capitalist economy thus reaches the stage of crisis, which it experiences periodically. It is the kind of crisis that occurs only under capitalism, a crisis generated by over-production. Thousands of enterprises go bankrupt. Industries slow down production or stop producing altogether. Millions of workers are thrown on the street, without employment and without a source of income, except, possibly, inadequate relief or unemployment insurance. Plants do not operate because too many machines and too much raw material have been produced! People cannot buy the food and clothing and home furnishings they need because too much of them have been produced! Small businessmen are ruined. Millions of workers go hungry. Their homes are lost. Their family life becomes a nightmare of insecurity. Suffering and privation spread like wildfire.

The inevitable result of capitalist production is capitalist collapse. Production expands under capitalism only to come to a periodic standstill. Crises of general over-production can be delayed in appearing, but so long as capitalism exists they cannot be abolished.

The periodic crisis and collapse of production affects all the classes of society, but in different ways and in different degrees. The ruin of the middle classes is speeded up and strikes more and more of them. The weak ones who are driven to the wall by the crisis end up in the ranks of the working class. Their enterprises are absorbed by the more powerful capitalists, who are able to weather the storm with greater ease. The higher standard of living which the worker enjoyed during the “prosperity days” is “evened out,” so to speak, in the days of crisis, depression and stagnation. The modest savings with which he may have hoped to enjoy a comfortable old age, or which he may have planned to use presently in order to “go into business for himself,” are wiped out. The comforts and little luxuries he may have accumulated during the boom – a partly-paid-for home, a good radio, an automobile, time-and-back-saving electrical appliances for the home – must be disposed of for a song during the crisis.

Just as the boom brings big capital the overwhelming bulk of the benefits, in the form of stupendous profits, so the crisis brings the working class the great bulk of the burdens. The capitalists have large reserves, the workers have next to none. The capitalist class suffers some losses, but on the whole it survives the crisis with comparative ease. The big ones emerge from the crisis even stronger than before. While it rages, they swallow up their smaller and weaker competitors. They enter the new boom period with increased monopolistic strength. The crisis period shows most glaringly how reactionary anti-outworn a social system is capitalism. It allows the spectacle – what else can it do, being what it is? – of millions without work who want to work, of millions without adequate food because there is too much food, of industries shut down tight when there is just as urgent a need as ever for industrial products. The consequences of production for profit, of unplanned, unorganized, anarchic production, are shown in all their ugliness.

Capitalism refuses to resume production – because it cannot – until it has been stimulated once more by the prospect of a profitable market. It awaits the rise cold-bloodedly. Just as cold-bloodedly, it undertakes the wholesale destruction of useful commodities. Crops are burned in vast funeral pyres. Vegetables, coffee and other foodstuffs are dumped into the sea and destroyed as though they were poisonous. Hundreds of thousands are paid subsidies out of the public funds to “plow under,” to annihilate the precious yield of agriculture – cotton, wool, corn, wheat, rice, fruit, tobacco, hogs, sheep and cattle. Hunger stalks a land of plenty!

It is then we see the system in all its hideous absurdity, as the great destroyer of social wealth, and of human happiness, security and life itself. The wondrous productive machine which it developed and which, if rationally organized, could easily supply the needs and comforts of all, proves to be a mechanism that degrades the people to poverty, wretchedness, suffering and every social iniquity.

In a rational, planned society, people released from tasks in one sector of the economy could easily be found work turning out a new range of goods elsewhere. But we do not live in a rational, planned society. People only get new jobs in this society if the goods they make can be sold at a profit. There are three ways in which they can be sold: as consumer goods (to other workers), as capital goods (to the owners of other factories), or as exports (to workers or factory owners abroad). If none of these three markets is expanding, then you can make the most wonderful and useful things in the world, and still end up on the dole queue.

 Production can be worked by plan, the people as a whole deciding what they need and producing a sufficient supply to meet it. . Leisure could be used for creative development. All could live a comfortable life. Service replacing profit, planning replacing person whim, production could become both scientific and moral having for its motive the provision of the means of well-being for all.

This age, marred by the private ownership of the means of life, with all its crippling effects on science and industry with its immoral emphasis on acquisition, and with it: inevitable consequence of wealth and poverty, of class; distinctions and class discords, must go.  The regulation of production must not be left to the whim of individual producers, nor to groups of producers. That was why the instruments of production must be vested in public, not private hands. The interest of consumers and their need are the pivot around which productive industry should and must revolve. Consumers must be consulted, and consumers' needs must be ascertained. In proportion to the relative importance and urgency of those needs, goods must be supplied. Data to gauge those needs must be collected and then weighed need against need.

When it has been determined in which order and to what extent the various needs are to be supplied, then orders can be issued to producers specifying what commodities and in what quantities goods shall be produced. In that way factory workers and groups of factory workers, peasants and groups of peasants, will know what, where, and when to produce. There will be no glut, because need has been gauged; no slump, no boom, no unemployment. The Plan demanded, not only the ownership and control of all the resources of production, but also that the pace of production should be speeded up, in order that commodities of every kind might be available for distribution without delay.