Supporters of capitalism, especially the Von Mises school, may not be able to conceive of production without money and prices, but we socialists can. The definitive answer to the "economic calculation problem" is a (largely) self-regulating system of stock control in which calculations are made in kind rather than in terms of a common unit like money.
A self-regulating system of stock control will permit producers in a
socialist society (workplace councils, industry councils etc) to
ascertain more or less immediately the availability of stocks of any
particular item throughout the system; the communications technology to
enable this to happen is already in place.
Given this, their assertions that the "only practicable way to tell how
'abundant' B is, by comparison with A, is to look at the relative
prices" is absurd.
'Abundance' is a relationship between supply and demand, where the
former exceeds the latter. In socialism a buffer of surplus stock for
any particular item, whether a consumer or a producer good, can be
produced, to allow for future fluctuations in the demand for that item,
and to provide an adequate response time for any necessary adjustments.
Achieving 'abundance' can be understood as the maintenance of an
adequate buffer of stock in the light of extrapolated trends in demand.
The relative abundance or scarcity of a good would be indicated by how
easy or difficult it was to maintain such an adequate buffer stock in
the face of a demand trend (upward, static, downward).
It will thus be possible to choose how to combine different factors for
production, and whether to use one rather than another, on the basis of
their relative abundance/scarcity. By following the rule of using the
minimum necessary amounts of the least abundant factors it will be
possible to ensure their efficient allocation.
Money as a "general unit of cost" just would not come into it.
In further asserting that "if the output of X is increased, output of Y
must be reduced" they are begging the question at issue, which is
precisely, whether or not, resources are and always will be, scarce.
It is to assume that society's resources are fully stretched and that
there are no reserves to draw upon. But given the productivity of modem
technology and the elimination of capitalist waste, there are likely to
be substantial untapped reserves. In addition, socialist society can, as
just explained, deliberately plan to produce surpluses of various items
just to meet the eventuality you have in mind.
With regard to human resources in particular, even today under
capitalism tens of millions of people are unemployed. Though of course
in socialism no one will be "employed" as such, the average workload for
individuals is likely to be much less (thus resulting in a sizeable
reservoir of labour) and the opportunities for individuals to move
flexibly from one kind of work to another much greater.
This will make much less likely the occurrence of the bottlenecks they
foresee in the production of any particular good following an unexpected
increase in demand for it.
But scarcity is not simply a function of supply; it is also a function
of demand. It is in this area that the anarcho-capitalist critique of
socialism, based on its premise of infinite demand, is particularly weak
and unrealistic. For it takes little, if any, account of the effect of
the social environment on the likely structure and size of demand in
In a system of capitalist competition, there is a built-in tendency to
stimulate demand to a maximum extent. Firms, for example, need to
persuade customers to buy their products or they go out of business.
They would not otherwise spend the vast amounts they do spend on
advertising those products. At the same time, there is in capitalist
society a tendency for individuals to seek to validate their sense of
worth through the accumulation of possessions.
This is not surprising for if, as Marx contended, the prevailing ideas
of society are those of its ruling class then we can understand why,
when the wealth of that class so preoccupies the minds of its members,
such a notion of status should be so deep-rooted. It is this which helps
to underpin the myth of infinite demand.
In socialism, status based upon the material wealth at one's command,
would be a meaningless concept. Why take more than you need when you can
freely take what you need?
In socialism the only way in which individuals can command the esteem
of others is through their contribution to society, and the more the
movement for socialism grows the more will it subvert the prevailing
capitalist ethos, in general, and its anachronistic notion of status, in
Nor do we accept their premise that prices arise out of conditions of
scarcity. They arise out of conditions of private property.
So even if genuine shortages occur in the conditions of common
ownership that will exist in socialism - it is likely that some
shortages (e.g. decent housing) will persist (if only as a receding
problem) into the early stages of socialism - this will not undermine
the new society by leading to the re-emergence of money and prices.
For socialism to be established, there are two fundamental
preconditions that must be met. Firstly, the productive potential of
society must have been developed to the point where, generally speaking,
we can produce enough for all. This is not now a problem as we have
long since reached this point. However, this does require that we
appreciate what is meant by "enough" and that we do not project on to
socialism the insatiable consumerism of capitalism.
Secondly, the establishment of socialism presupposes the existence of a
mass socialist movement and a profound change in social outlook. It is
simply not reasonable to suppose that the desire for socialism on such a
large scale, and the conscious understanding of what it entails on the
part of all concerned, would not influence the way people behaved in
socialism and towards each other. Would they want to jeopardise the new
society they had helped create? Of course not.
One must therefore assume that whatever shortages may persist can be
tackled by some system of direct rationing and will be borne with
forbearance - even, one might say, with a sense of altruistic restraint.
For whatever the problems that socialism may have to contend with, and
there will still be many, if the alternative has to be the
re-instatement of capitalism then there would not be a real alternative.
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