One of the problems that will have to be addressed is how the activities of a multitude of autonomous enterprises producing for a market can be reconciled with rational economic planning.
The abolition of capitalist ownership and control and its replacement by social ownership is itself a great step forward. But it will not resolve the anarchy and planlessness associated with market forces. For example, if we have several autonomous enterprises producing the same commodities, that is, competing with each other in the market, just as under capitalism, some will be more successful, others will go to the wall, and we will end up with new monopolies (although these will be cooperatively owned), while the workforces of the failed ones will become unemployed. Some sort of overall regulation of the different sectors of industry would need to be enforced to prevent this, and to regulate the optimum number and sizes of the different enterprises.
What happens if due to technological progress leading to increased productivity, there is overproduction of a particular product? Do the members of the cooperatives decide to halve the workforce, that is, sack half of themselves? Or amalgamate with similar enterprises, and dispense with half of their combined workforce? Or what? Obviously, the rational solution is for all workers to benefit from increased productivity by a general reduction in working time, thus giving all increased leisure time without a drop in material consumption.
Obviously, some sort of co-ordination and regulation within each branch of industry or economic sector to set the overall size of the sector and the optimum number and sizes of enterprises will be necessary. Pat Devine suggests in his book Democracy and Economic Planning 1 that ?negotiated co-ordination bodies? for each industry or sector, made up of representatives of each enterprise (plus other interested groups) could carry out these functions. Within the set parameters, enterprises would still be autonomous, relating to each other and the public via market mechanisms. This would be very different from the detailed central control of all such activities that operated in the old USSR-like command economies, and which spawned a huge and corrupt as well as inefficient bureaucracy.
Similarly, at the level of the economy as a whole, the relations between the different industries and sectors, between capital goods and consumer goods, and between these and social services, health, education, etc, would be determined by the allocation of major investment and finance through an integrated state budget at national, regional and local levels.
A Publicly Controlled Banking and Investment Network
This co-ordination can be achieved through the overall control of major investment at regional, national and international levels. It would be the duty of the elected state institutions to work out the social priorities according to which society?s resources would be deployed: how much in gross terms of society?s production should be earmarked for personal consumption, new investment, health services, pensions, public transport, education and so on. The overall costs having been estimated, the state budget then allocates the required finance. For example, if it is decided that new hospitals or schools are needed, the necessary finances are allocated for this. The contracts for building the hospitals and schools, providing the equipment, etc, are tendered for by autonomous enterprises. These would then liaise with their suppliers via market mechanisms.
Thus the state, rather than profit-driven private finance, would determine the overall allocation of resources and new investment on the basis of social needs ? and this includes determining the overall level of economic activity to ensure full employment.
Control over the allocation of investment capital between economic sectors and regions must be taken out of the hands of private capital, and vested in democratic society. This is essential if unplanned and chaotic economic activity with its booms and slumps, social inequalities and destruction of the environment is to be replaced by activity driven by social priorities.
The obvious way to do this is by taking the banks and major financial institutions into public ownership, establishing an investment bank or network of banks at national and regional levels to provide the necessary finance for the public services referred to above, and credit and finance for the autonomous enterprises.
Again, here we need to be realistic and not utopian. The transformation of the existing financial institutions, with their myriad connections with the global market into a publicly-owned and accountable system will be a complex task. It will not be accomplished simply by socialist commissars marching into boardrooms and ?taking over?, and installing a committee of bank employees. A serious socialist movement will need to enlist the assistance of academics, economists and other experts in working out a feasible programme of transformation.2 That is why, even now, a serious socialist movement must try and establish a dialogue between workers and sympathetic academics.
Under capitalism productivity increases lead to unemployment as competing firms ?downsize? in order to increase dividends and undercut competitors. In the proposed set-up, increased productivity should result either in increased leisure for all, or increased production of other needed goods and services, or assistance to poorer developing countries ? or a combination of these. This would be possible because the overall level of production and how it would be distributed among various sectors would be determined by overall planning at the macro level through the allocation of finance by the publicly-owned or controlled banking system.
In contrast to the discredited rigid command economies of the now defunct Stalinist regimes, the detailed interrelations between autonomous enterprises would be regulated by market mechanisms ? but within the general framework set by the overall plan.
- Read Mick Brooks’ review of Pat Devine’s book Democracy and Economic Planning published on our website. ↩