Critique of political economy

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Critique_of_political_economy 

 

Critique of political economy or simply the first critique of economy is a form of social critique that rejects the conventional ways of distributing resources. The critique also rejects what its advocates believe are unrealistic axioms, faulty historical assumptions, and taking conventional economic mechanisms as a given or as transhistorical (true for all human societies for all time). The critique asserts the conventional economy is merely one of many types of historically specific ways to distribute resources, which emerged along with modernity (post-Renaissance Western society).

Critics of political economy do not necessarily aim to create their own theories regarding how to administer economies. Critics of economy commonly view "the economy" as a bundle of concepts and societal and normative practices, rather than being the result of any self-evident economic laws. Hence, they also tend to consider the views which are commonplace within the field of economics as faulty, or simply as pseudoscience.

There are multiple critiques of political economy today, but what they have in common is critique of what critics of political economy tend to view as dogma, i.e. claims of the economy as a necessary and transhistorical societal category.

John Ruskin

John Ruskin portrayed in his thirties

In the 1860s, John Ruskin published his essay Unto This Last which he came to view as his central work. The essay was originally written as a series of publications in a magazine, which ended up having to suspend the publications, due to the severe controversy the articles caused. While Ruskin is generally known as an important art critic, his study of the history of art was a component that gave him some insight into the pre-modern societies of the Middle Ages, and their social organisation which he was able to contrast to his contemporary condition. Ruskin attempted to mobilize a methodological/scientific critique of new political economy, as it was envisaged by the classical economists.

Ruskin viewed the concept of "the economy" as a kind of "collective mental lapse or collective concussion", and he viewed the emphasis on precision in industry as a kind of slavery. Due to the fact that Ruskin regarded the political economy of his time as "mad", he said that it interested him as much as "a science of gymnastics which had as its axiom that human beings in fact didn't have skeletons." Ruskin declared that economics rests on positions that are exactly the same. According to Ruskin, these axioms resemble thinking, not that human beings do not have skeletons but rather that they consist entirely of skeletons. Ruskin wrote that he did not oppose the truth value of this theory, he merely wrote that he denied that it could be successfully implemented in the world in the state it was in. He took issue with the ideas of "natural laws", "economic man", and the prevailing notion of value and aimed to point out the inconsistencies in the thinking of the economists. He critiqued John Stuart Mill for thinking that "the opinions of the public" was reflected adequately by market prices.

Ruskin coined illth to refer to unproductive wealth. Ruskin is not well known as a political thinker today but when in 1906 a journalist asked the first generation of Labour Party members of Parliament in the United Kingdom which book had most inspired them, Unto This Last emerged as an undisputed chart-topper.

"... the art of becoming 'rich,' in the common sense, is not absolutely nor finally the art of accumulating much money for ourselves, but also of contriving that our neighbours shall have less. In accurate terms, it is 'the art of establishing the maximum inequality in our own favour.'"

— John Ruskin, Unto This Last

Criticism

Karl Marx and Friedrich Engels regarded much of Ruskin's critique as reactionary. His idealisation of the Middle Ages made them reject him as a "feudal utopian".

Karl Marx

Karl Marx is the author of Das Kapital (Das Kapital. Kritik der politischen Ökonomie) [Capital: A Critique of Political Economy].

In the 21st century, Marx is probably the most famous critic of political economy, with his three-volume magnum opus, The Capital: A Critique of Political Economy, as one of his most famous books. Marx's companion Engels also engaged in critique of political economy in his 1844 Outlines of a Critique of Political Economy, which helped lay down some of the foundation for what Marx was to take further.

Marx's critique of political economy encompasses the study and exposition of the mode of production and ideology of bourgeois society, and its critique of Realabstraktionen (real abstraction), that is, the fundamental economic, i.e. social categories present within what for Marx is the capitalist mode of production, for example abstract labour. In contrast to the classics of political economy, Marx was concerned with lifting the ideological veil of surface phenomena and exposing the norms, axioms, social relations, institutions, and so on, that reproduced capital.

The central works in Marx's critique of political economy are Grundrisse, A Contribution to the Critique of Political Economy and Das Kapital. Marx's works are often explicitly named – for example: A Contribution to the Critique of Political Economy, or Capital: A Critique of Political Economy. Marx cited Engels' article Outlines of a Critique of Political Economy several times in Das Kapital. Trotskyists and other Leninists tend to implicitly or explicitly argue that these works constitute and or contain "economical theories", which can be studied independently. This was also the common understanding of Marx's work on economy that was put forward by Soviet orthodoxy. Since this is the case, it remains a matter of controversy whether Marx's critique of political economy is to be understood as a critique of the political economy or, according to the orthodox interpretation another theory of economics. The critique of political economy is considered the most important and central project within Marxism which has led to, and continues to lead to a large number of advanced approaches within and outside academic circles.

Foundational concepts

• Labour and capital are historically specific forms of social relations, and labour is not the source of all wealth.
• Labour is the other side of the same coin as capital, labour presupposes capital, and capital presupposes labour.
• Money is not in any way something transhistorical or natural, which goes for the whole economy as well as the other categories specific to the mode of production, and its gains in value are constituted due to social relations rather than any inherent qualities.
• The individual does not exist in some form of vacuum but is rather enmeshed in social relations.

Marx's critique of the quasi-religious and ahistorical methodology of economists

Marx described the view of contemporaneous economists and theologians on social phenomena as similarly unscientific.

"Economists have a singular method of procedure. There are only two kinds of institutions for them, artificial and natural. The institutions of feudalism are artificial institutions, those of the bourgeoisie are natural institutions. In this, they resemble the theologians, who likewise establish two kinds of religion. Every religion which is not theirs is an invention of men, while their own is an emanation from God. When the economists say that present-day relations – the relations of bourgeois production – are natural, they imply that these are the relations in which wealth is created and productive forces developed in conformity with the laws of nature. These relations, therefore, are themselves natural laws independent of the influence of time. They are eternal laws that must always govern society. Thus, there has been history, but there is no longer any. There has been history, since there were the institutions of feudalism, and in these institutions of feudalism we find quite different relations of production from those of bourgeois society, which the economists try to pass off as natural and as such, eternal."

— Karl Marx, The Poverty of Philosophy

Marx continued to emphasize the ahistorical thought of the modern economists in the Grundrisse, where he among other endeavors, critiqued the liberal economist Mill. Marx also viewed the viewpoints which implicitly regarded the institutions of modernity as transhistorical as fundamentally deprived of historical understanding.

Individuals producing in society, and hence the socially determined production of individuals, is, of course, the point of departure. The solitary and isolated hunter or fisherman, who serves Adam Smith and Ricardo as a starting point, is one of the unimaginative fantasies of eighteenth-century romances a la Robinson Crusoe; and despite the assertions of social historians, these by no means signify simply a reaction against over-refinement and reversion to a misconceived natural life. No more is Rousseau's contract social, which by means of a contract establishes a relationship and connection between subjects that are by nature independent, based on this kind of naturalism. ... The individual in this society of free competition seems to be rid of natural ties, etc., which made him an appurtenance of a particular, limited aggregation of human beings in previous historical epochs. The prophets of the eighteenth century, on whose shoulders Adam Smith and Ricardo were still wholly standing, envisaged this 18th-century individual – a product of the dissolution of feudal society on the one hand and of the new productive forces evolved since the sixteenth century on the other – as an ideal whose existence belonged to the past. They saw this individual not as a historical result, but as the starting point of history; not as something evolving in the course of history, but posited by nature, because for them this individual was in conformity with nature, in keeping with their idea of human nature. This delusion has been characteristic of every new epoch hitherto.

— Karl Marx, A Contribution to the Critique of Political Economy (Introduction)

German edition of Das Kapital. It is a famous critique of political economy written by Marx.

According to the French philosopher Jacques Rancière, what Marx understood, and what the economists failed to recognise was that the value-form is not something essential, but merely a part of the capitalist mode of production.

On scientifically adequate research

Marx offered a critique regarding the idea of people being able to conduct scientific research in this domain. He wrote:

"In the domain of Political Economy, free scientific inquiry meets not merely the same enemies as in all other domains. The peculiar nature of the materials it deals with, summons as foes into the field of battle the most violent, mean, and malignant passions of the human breast, the Furies of private interest. The English Established Church, e.g., will more readily pardon an attack on 38 of its 39 articles than on 1/39 of its income. Nowadays atheism is culpa levis [a relatively slight sin, c.f. mortal sin], as compared with criticism of existing property relations."

— Karl Marx, Das Kapital (Preface to the First German Edition)

On vulgar economists

Marx criticized what he regarded as the false critique of political economy of his contemporaries, sometimes even more forcefully than when he critiqued the classical economists he described as vulgar economists. In Marx's view, the errors of some socialist authors led the workers' movement astray. He rejected Ferdinand Lassalle's iron law of wages, which he regarded as mere phraseology. He also rejected Pierre-Joseph Proudhon's attempts to do what Hegel did for religion, law, and so on for political economy, as well as regarding what is social as subjective, and what was societal as merely subjective abstractions.

Interpretations of Marx's critique of political economy

Some scholars view Marx's critique as being a critique of commodity fetishism and the manner in which this concept expresses a criticism of modernity and its modes of socialisation. Other scholars who engage with Marx's critique of political economy affirm the critique might assume a more Kantian sense, which transforms "Marx's work into a foray concerning the imminent antinomies that lie at the heart of capitalism, where politics and economy intertwine in impossible ways."

Contemporary Marxian

Regarding contemporary Marxian critiques of political economy, these are generally accompanied by a rejection of the more naturalistically influenced readings of Marx, as well as other readings later deemed weltanschaaungsmarxismus (worldview Marxism), that was popularised as late as toward the end of the 20th century.

According to some scholars in this field, contemporary critiques of political economy and contemporary German Ökonomiekritik have been at least partly neglected in the anglophone world.

Feminism

There has been a growing literature on feminist critiques of economics in the 21st century. But feminist critiques of economics can be found as early as the beginning of the 18th century. According to Julie A. Nelson, feminist critiques of economics should start from the premise that "economics, like any science, is socially constructed." These feminists therefore argue economics is a field socially constructed to privilege Western, and heterosexual persons that identify as male.

Katrine Marçal - author of Who cooked Adam Smith's dinner (2012)

They generally incorporate feminist theory and frameworks to show how economics communities signal expectations regarding appropriate participants to the exclusion of outsiders. Such criticisms extend to the theories, methodologies and research areas of economics, in order to show that accounts of economic life are deeply influenced by biased histories, social structures, norms, cultural practices, interpersonal interactions, and politics. Feminists often also make a critical distinction that masculine bias in economics is primarily a result of gender, not sex. But feminist critiques of economics, and the economy, can also include other views such as concern with an ever increasing rate of environmental degradation.

Differences between critics of economy and critics of economical issues

One may differentiate between those who engage in critique of political economy, which takes on a more ontological character, where authors criticise the fundamental concepts and social categories which reproduce the economy as an entity. While other authors, which the critics of political economy would consider only to deal with the surface phenomena of the economy, have a naturalized understanding of these social processes. Hence the epistemological differences between critics of economy and economists can also at times be very large.

In the eyes of the critics of political economy, the critics of economic issues merely critique certain practices in attempts to implicitly or explicitly rescue the political economy; these authors might for example propose universal basic income or to implement a planned economy.

Others

Contemporary

Economists

• Richard D. Wolff
• Steve Keen
• John Komlos

Sociologists

• Orlando Patterson, John Cowles professor of sociology at Harvard University, argues that economics is a pseudoscience.

Philosophers

• Slavoj Žižek

Historians

• Moishe Postone

Historical

Historians

• Thomas Carlyle
• Roman Rozdolsky

Poets

• Carl Jonas Love Almqvist
• August Strindberg

Miscellaneous

Paul Lafargue

Planned economy

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Planned_economy 

 

A planned economy is a type of economic system where the distribution of goods and services or the investment, production and the allocation of capital goods takes place according to economic plans that are either economy-wide or limited to a category of goods and services. A planned economy may use centralized, decentralized, participatory, or Soviet-type forms of economic planning. The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed.

Socialist states based on the Soviet model have used central planning, although a minority such as the former Socialist Federal Republic of Yugoslavia have adopted some degree of market socialism. Market abolitionist socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially owned economic enterprises that make up the economy. More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology.

Planned economies contrast with unplanned economies, specifically market economies, where autonomous firms operating in markets make decisions about production, distribution, pricing and investment. Market economies that use indicative planning are variously referred to as planned market economies, mixed economies and mixed market economies. A command economy follows an administrative-command system and uses Soviet-type economic planning which was characteristic of the former Soviet Union and Eastern Bloc before most of these countries converted to market economies. This highlights the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems.

Overview

In the Hellenistic and post-Hellenistic world, "compulsory state planning was the most characteristic trade condition for the Egyptian countryside, for Hellenistic India, and to a lesser degree the more barbaric regions of the Seleucid, the Pergamenian, the southern Arabian, and the Parthian empires". Scholars have argued that the Incan economy was a flexible type of command economy, centered around the movement and utilization of labor instead of goods. One view of mercantilism sees it as involving planned economies.

The Soviet-style planned economy in Soviet Russia evolved in the wake of a continuing existing World War I war-economy as well as other policies, known as war communism (1918–1921), shaped to the requirements of the Russian Civil War of 1917–1923. These policies began their formal consolidation under an official organ of government in 1921, when the Soviet government founded Gosplan. However, the period of the New Economic Policy (c. 1921 to c. 1928) intervened before the planned system of regular five-year plans started in 1928. Leon Trotsky was one of the earliest proponents of economic planning during the NEP period. Trotsky argued that specialization, the concentration of production and the use of planning could "raise in the near future the coefficient of industrial growth not only two, but even three times higher than the pre-war rate of 6% and, perhaps, even higher". According to historian Sheila Fitzpatrick, the scholarly consensus was that Stalin appropriated the position of the Left Opposition on such matters as industrialisation and collectivisation.

After World War II (1939–1945) France and Great Britain practiced dirigisme – government direction of the economy through non-coercive means. The Swedish government planned public-housing models in a similar fashion as urban planning in a project called Million Programme, implemented from 1965 to 1974. Some decentralized participation in economic planning occurred across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936.

Relationship with socialism

Albert Einstein advocated for a socialist planned economy with his 1949 article "Why Socialism?"

In the May 1949 issue of the Monthly Review titled "Why Socialism?", Albert Einstein wrote:

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow-men in place of the glorification of power and success in our present society.

While socialism is not equivalent to economic planning or to the concept of a planned economy, an influential conception of socialism involves the replacement of capital markets with some form of economic planning in order to achieve ex-ante coordination of the economy. The goal of such an economic system would be to achieve conscious control over the economy by the population, specifically so that the use of the surplus product is controlled by the producers. The specific forms of planning proposed for socialism and their feasibility are subjects of the socialist calculation debate.

Computational economic planning

Further information: Government by algorithm

In 1959 Anatoly Kitov proposed a distributed computing system (Project "Red Book", Russian: Красная книга) with a focus on the management of the Soviet economy. Opposition from the Defence Ministry killed Kitov's plan.

In 1971 the socialist Allende administration of Chile launched Project Cybersyn to install a telex machine in every corporation and organization in the economy for the communication of economic data between firms and the government. The data was also fed into a computer-simulated economy for forecasting. A control room was built for real-time observation and management of the overall economy. The prototype-stage of the project showed promise when it was used to redirect supplies around a trucker's strike, but after CIA-backed Augusto Pinochet led a coup in 1973 that established a military dictatorship under his rule the program was abolished and Pinochet moved Chile towards a more liberalized market economy.

In their book Towards a New Socialism (1993), the computer scientist Paul Cockshott from the University of Glasgow and the economist Allin Cottrell from Wake Forest University claim to demonstrate how a democratically planned economy built on modern computer technology is possible and drives the thesis that it would be both economically more stable than the free-market economies and also morally desirable.

Cybernetics

Project Cybersyn was an early form of computational economic planning.

The use of computers to coordinate production in an optimal fashion has been variously proposed for socialist economies. The Polish economist Oskar Lange (1904–1965) argued that the computer is more efficient than the market process at solving the multitude of simultaneous equations required for allocating economic inputs efficiently (either in terms of physical quantities or monetary prices).

In the Soviet Union, Anatoly Kitov had proposed to the Central Committee of the Communist Party of the Soviet Union a detailed plan for the re-organization of the control of the Soviet armed forces and of the Soviet economy on the basis of a network of computing centers in 1959. Kitov's proposal was rejected, as later was the 1962 OGAS economy management network project. Soviet cybernetician, Viktor Glushkov argued that his OGAS information network would have delivered a fivefold savings return for the Soviet economy over the first fifteen-year investment.

Salvador Allende's socialist government pioneered the 1970 Chilean distributed decision support system Project Cybersyn in an attempt to move towards a decentralized planned economy with the experimental viable system model of computed organisational structure of autonomous operative units through an algedonic feedback setting and bottom-up participative decision-making in the form of participative democracy by the Cyberfolk component.

Fictional portrayals

The 1888 novel Looking Backward by Edward Bellamy depicts a fictional planned economy in a United States around the year 2000 which has become a socialist utopia.

The World State in Aldous Huxley's Brave New World (1932) and Airstrip One in George Orwell's Nineteen Eighty-Four (1949) provide fictional depictions of command economies, albeit with diametrically opposed aims. The former is a consumer economy designed to engender productivity while the latter is a shortage economy designed as an agent of totalitarian social control. Airstrip One is organized by the euphemistically named Ministry of Plenty.

Other literary portrayals of planned economies include Yevgeny Zamyatin's We (1924), which influenced Orwell's work. Like Nineteen Eighty-Four, Ayn Rand's dystopian 1938 story Anthem offered an artistic portrayal of a command economy that was influenced by We. The difference is that it was a primitivist planned economy as opposed to the advanced technology of We or Brave New World.

Central planning

Advantages

The government can harness land, labor, and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. In international comparisons, state-socialist nations have compared favorably with capitalist nations in health indicators such as infant mortality and life expectancy. However, according to Michael Ellman, the reality of this, at least regarding infant mortality, varies depending on whether official Soviet or WHO definitions are used.

The state can begin building massive heavy industries at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry and without reliance on external financing. This is what happened in the Soviet Union during the 1930s when the government forced the share of gross national income dedicated to private consumption down from 80% to 50%. As a result of this development, the Soviet Union experienced massive growth in heavy industry, with a concurrent massive contraction of its agricultural sector due to the labor shortage.

Disadvantages

Economic instability

Studies of command economies of the Eastern Bloc in the 1950s and 1960s by both American and Eastern European economists found that contrary to the expectations of both groups they showed greater fluctuations in output than market economies during the same period.

Inefficient resource distribution

Critics of planned economies argue that planners cannot detect consumer preferences, shortages and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). This difficulty was notably written about by economists Ludwig von Mises and Friedrich Hayek, who referred to subtly distinct aspects of the problem as the economic calculation problem and local knowledge problem, respectively. These distinct aspects were also present in the economic thought of Michael Polanyi.

Whereas the former stressed the theoretical underpinnings of a market economy to subjective value theory while attacking the labor theory of value, the latter argued that the only way to satisfy individuals who have a constantly changing hierarchy of needs and are the only ones to possess their particular individual's circumstances is by allowing those with the most knowledge of their needs to have it in their power to use their resources in a competing marketplace to meet the needs of the most consumers most efficiently. This phenomenon is recognized as spontaneous order. Additionally, misallocation of resources would naturally ensue by redirecting capital away from individuals with direct knowledge and circumventing it into markets where a coercive monopoly influences behavior, ignoring market signals. According to Tibor Machan, "[w]ithout a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals".

Historian Robert Vincent Daniels regarded the Stalinist period to represent an abrupt break with Lenin's government in terms of economic planning in which an deliberated, scientific system of planning that featured former Menshevik economists at Gosplan had been replaced with a hasty version of planning with unrealistic targets, bureaucratic waste, bottlenecks and shortages. Stalin's formulations of national plans in terms of physical quantity of output was also attributed by Daniels as a source for the stagnant levels of efficiency and quality.

Suppression of economic democracy and self-management

Main article: Socialist democracy

Economist Robin Hahnel, who supports participatory economics, a form of socialist decentralized planned economy, notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom. Furthermore, Hahnel states:

Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power.

Command economy

Planned economies contrast with command economies in that a planned economy is "an economic system in which the government controls and regulates production, distribution, prices, etc." whereas a command economy necessarily has substantial public ownership of industry while also having this type of regulation. In command economies, important allocation decisions are made by government authorities and are imposed by law.

This is contested by some Marxists. Decentralized planning has been proposed as a basis for socialism and has been variously advocated by anarchists, council communists, libertarian Marxists and other democratic and libertarian socialists who advocate a non-market form of socialism, in total rejection of the type of planning adopted in the economy of the Soviet Union.

Most of a command economy is organized in a top-down administrative model by a central authority, where decisions regarding investment and production output requirements are decided upon at the top in the chain of command, with little input from lower levels. Advocates of economic planning have sometimes been staunch critics of these command economies. Leon Trotsky believed that those at the top of the chain of command, regardless of their intellectual capacity, operated without the input and participation of the millions of people who participate in the economy and who understand/respond to local conditions and changes in the economy. Therefore, they would be unable to effectively coordinate all economic activity.

Historians have associated planned economies with Marxist–Leninist states and the Soviet economic model. Since the 1980s, it has been contested that the Soviet economic model did not actually constitute a planned economy in that a comprehensive and binding plan did not guide production and investment. The further distinction of an administrative-command system emerged as a new designation in some academic circles for the economic system that existed in the former Soviet Union and Eastern Bloc, highlighting the role of centralized hierarchical decision-making in the absence of popular control over the economy. The possibility of a digital planned economy was explored in Chile between 1971 and 1973 with the development of Project Cybersyn and by Aleksandr Aleksandrovich Kharkevich, head of the Department of Technical Physics in Kiev in 1962.

While both economic planning and a planned economy can be either authoritarian or democratic and participatory, democratic socialist critics argue that command economies under modern-day communism is highly undemocratic and totalitarian in practice. Indicative planning is a form of economic planning in market economies that directs the economy through incentive-based methods. Economic planning can be practiced in a decentralized manner through different government authorities. In some predominantly market-oriented and Western mixed economies, the state utilizes economic planning in strategic industries such as the aerospace industry. Mixed economies usually employ macroeconomic planning while micro-economic affairs are left to the market and price system.

Decentralized planning

Leon Trotsky was among the earliest Soviet figures that supported economic planning and decentralization but opposed the Stalinist model.

A decentralized-planned economy, occasionally called horizontally planned economy due to its horizontalism, is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet-type economic planning of the Soviet Union's command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system. This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy. Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists. Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society.

Decentralized planning has been a feature of anarchist and socialist economics. Variations of decentralized planning such as economic democracy, industrial democracy and participatory economics have been promoted by various political groups, most notably anarchists, democratic socialists, guild socialists, libertarian Marxists, libertarian socialists, revolutionary syndicalists and Trotskyists. During the Spanish Revolution, some areas where anarchist and libertarian socialist influence through the CNT and UGT was extensive, particularly rural regions, were run on the basis of decentralized planning resembling the principles laid out by anarcho-syndicalist Diego Abad de Santillan in the book After the Revolution. Trotsky had urged economic decentralisation between the state, oblast regions and factories during the NEP period to counter structural inefficiency and the problem of bureaucracy.

Models

Negotiated coordination

Economist Pat Devine has created a model of decentralized economic planning called "negotiated coordination" which is based upon social ownership of the means of production by those affected by the use of the assets involved, with the allocation of consumer and capital goods made through a participatory form of decision-making by those at the most localized level of production. Moreover, organizations that utilize modularity in their production processes may distribute problem solving and decision making.

Participatory planning

See also: Participatory economics

The planning structure of a decentralized planned economy is generally based on a consumers council and producer council (or jointly, a distributive cooperative) which is sometimes called a consumers' cooperative. Producers and consumers, or their representatives, negotiate the quality and quantity of what is to be produced. This structure is central to guild socialism, participatory economics and the economic theories related to anarchism.

Practice

Kerala

Main article: People's Planning in Kerala

See also: District planning in India

Some decentralized participation in economic planning has been implemented in various regions and states in India, most notably in Kerala. Local level planning agencies assess the needs of people who are able to give their direct input through the Gram Sabhas (village-based institutions) and the planners subsequently seek to plan accordingly.

Revolutionary Catalonia

Main article: Collectivist anarchism

See also: Revolutionary Catalonia

Some decentralized participation in economic planning has been implemented across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936.

Similar concepts in practice

Community participatory planning

Main article: Participatory planning

 

The United Nations has developed local projects that promote participatory planning on a community level. Members of communities make decisions regarding community development directly.

Socialism of the 21st century

From Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/Socialism_of_the_21st_century

Fernando Lugo (President of Paraguay), Evo Morales (President of Bolivia), Lula da Silva (President of Brazil), Rafael Correa (President of Ecuador) and Hugo Chávez (President of Venezuela) on 29 January 2009

Socialism of the 21st century (Spanish: Socialismo del siglo XXI; Portuguese: Socialismo do século XXI; German: Sozialismus des 21. Jahrhunderts) is an interpretation of socialist principles first advocated by German sociologist and political analyst Heinz Dieterich and taken up by a number of Latin American leaders. Dieterich argued in 1996 that both free-market industrial capitalism and 20th-century socialism have failed to solve urgent problems of humanity such as poverty, hunger, exploitation of labour, economic oppression, sexism, racism, the destruction of natural resources and the absence of true democracy. Socialism of the 21st century has democratic socialist elements, but it also resembles Marxist revisionism.

Leaders who have advocated for this form of socialism include Hugo Chávez of Venezuela, Rafael Correa of Ecuador, Evo Morales of Bolivia, Luiz Inácio Lula da Silva of Brazil and Michelle Bachelet of Chile. Because of the local unique historical conditions, socialism of the 21st century is often contrasted with previous applications of socialism in other countries, with a major difference being the effort towards a more effective economic planning process.

Historical foundations

After a series of structural adjustment loans and debt restructuring led by the International Monetary Fund in the late 20th century, Latin America experienced a significant increase in inequality. Between 1990 and 1999, the Gini coefficient, a measure of inequality in the income or wealth distribution, rose in almost every Latin American country. Volatile prices and inflation led to dissatisfaction. In 2000, only 37% of Latin Americans were satisfied with their democracies (20 points less than Europeans and 10 points less than sub-Saharan Africans). In this context, a wave of left-leaning socio-political movements, called the Pink tide, on behalf of indigenous rights, cocaleros, labor rights, women's rights, land rights and educational reform emerged to eventually provide momentum for the election of socialist leaders.

Socialism of the 21st century draws on indigenous traditions of communal governance and previous Latin America socialist and communist movements, including those of Salvador Allende, Fidel Castro, Che Guevara and the Sandinista National Liberation Front.

Theoretical tenets

According to Dieterich, this form of socialism is revolutionary in that the existing society is altered to be qualitatively different, but the process itself should be gradual and non-violent, instead utilising democracy to secure power, education, scientific knowledge about society and international cooperation. Dieterich suggests the construction of four basic institutions within the new reality of post-capitalist civilisation:

1. Equivalent economy based on the Marxian economic labor theory of value and democratically determined by those who directly create value instead of principles of market economies.
2. Majority democracy which makes use of referendums to decide upon important societal questions.
3. Basic state democracy with a suitable protection of minority rights.
4. Citizens who are responsible, rational and self-determined.

Post-neoliberalism

Post-neoliberalism, also known as anti-neoliberalism, is a set of ideals characterized by its rejection of neoliberalism and the economic policies embodied by the Washington Consensus. While there is scholarly debate about the defining features of post-neoliberalism, it is often associated with economic progressivism as a response to neoliberalism's perceived excesses or failures, ranging from nationalization and wealth redistribution to embracing protectionism and revival of trade unions; it can also refer to left-wing politics more generally.

The movement has had particular influence in Latin America, where the pink tide brought about a substantial shift towards left-wing governments in the 2000s. Examples of post-neoliberal governments include the former governments of Evo Morales in Bolivia and Rafael Correa in Ecuador. It has also been claimed that the Joe Biden administration in the United States exhibits post-neoliberal characteristics.

History

Evo Morales, the former president of Bolivia, is often associated with post-neoliberalism.

The idea of post-neoliberalism arose during the pink tide of the 1990s and 2000s, in which left-wing Latin American critics of neoliberalism like Hugo Chávez and Evo Morales were thrust into power. According to researchers, the election of Chávez as the president of Venezuela in 1999 marked a definite start to the pink tide and post-neoliberal movement. Following his election, Rafael Correa, Néstor Kirchner, Evo Morales, and numerous other leaders associated with the post-neoliberal movement were elected in Latin America during the 2000s and 2010s. Into the 2020s, the Chilean president-elect Gabriel Boric, who emerged victorious in the 2021 Chilean general election, pledged to end the country's neoliberal economic model, stating: "If Chile was the cradle of neoliberalism, it will also be its grave."

While the ideas of post-neoliberalism are not exclusive to Latin America, they are largely associated with the region. Post-neoliberalism has drawn criticism from the right of the political spectrum; right-wing and far-right critics have claimed that the term itself is vague and populistic, while also arguing that "post-neoliberal" policies harm international investment and economic development.

Ideology

Post-neoliberalism seeks to fundamentally change the role of the state in countries where the Washington Consensus once prevailed. To achieve this, post-neoliberal leaders in Latin America have advocated for the nationalization of several industries, notably the gas, mining, and oil industries. Post-neoliberalism also advocates for the expansion of welfare benefits, greater governmental investment in poverty reduction, and increased state intervention in the economy.

Latin American application

See also: Pink tide

Regional integration

The model of socialism of the 21st century encourages economic and political integration among nations in Latin America and the Caribbean. This is often accompanied with opposition to North American influence. Regional organizations like ALBA and CELAC promote cooperation with Latin America and exclude North American countries. ALBA is most explicitly related to socialism of the 21st century while other organizations focus on economic integration, ALBA promotes social, political and economic integration among countries that subscribe to democratic socialism. Its creation was announced in direct opposition to George W. Bush's attempts to establish a Free Trade Area of the Americas that included the United States. In 2008, ALBA introduced a monetary union using the SUCRE as its regional currency.

Bolivarian process

Further information: Bolivarian Revolution

Former Venezuelan President Hugo Chávez initiated a process of social reforms in Venezuela known as the Bolivarian Revolution. This approach was more heavily influenced by the theories of István Mészáros, Michael Lebowitz and Marta Harnecker (who was Chávez's adviser between 2004 and 2011) than by those of Heinz Dieterich. The process draws its name from Latin American liberator Simón Bolívar and is a contemporary example of Bolivarianism.

Buen vivir

Further information: Sumak kawsay

Often translated to good living or living well, the concept of buen vivir is related to the movement for indigenous rights and rights of nature. It focuses on the living sustainably as the member of a community that includes both human beings and Nature. Buen vivir is enshrined in 2008 Constitution of Ecuador as an alternative to neoliberal development. The constitution outlines a set of rights, one of which is the rights of nature. In line with the assertion of these rights, buen vivir seeks to change the relationship between nature and humans to a more bio-pluralistic view, eliminating the separation between nature and society. This approach has been applied to the Yasuní-ITT Initiative. Buen vivir is sometimes conceptualised as collaborative consumption in a sharing economy and the term is used to look at the world in way sharply differentiated from natural, social or human capital.

Criticism

Authoritarianism

Critics claim that socialism of the 21st century in Latin America acts as a façade for authoritarianism. The charisma of figures like Hugo Chávez and mottoes like "Country, Socialism, or Death!" have drawn comparisons to the Latin American dictators and caudillos of the past. According to Steven Levitsky of Harvard University: "Only under the dictatorships of the past [...] were presidents reelected for life", with Levitsky further stating that while Latin America experienced democracy, citizens opposed "indefinite reelection, because of the dictatorships of the past". Levitsky then noted: "In Nicaragua, Venezuela and Ecuador, reelection is associated with the same problems of 100 years ago". The Washington Post also stated in 2014 that "Bolivia's Evo Morales, Daniel Ortega of Nicaragua and the late Venezuelan president Hugo Chávez [...] used the ballot box to weaken or eliminate term limits".

In 2015, The Economist stated that the Bolivarian Revolution in Venezuela—now under Nicolás Maduro after Chávez's death in 2013—was devolving from authoritarianism to dictatorship as opposition politicians were jailed for plotting to undermine the government, violence was widespread and opposition media shut down. Western media coverage of Chávez and other Latin American leaders from the 21st-century socialist movement has been criticised as unfair by their supporters and leftist media critics.

Economics

The sustainability and stability of economic reforms associated with governments adhering to socialism of the 21st century have been questioned. Latin American countries have primarily financed their social programs with extractive exports like petroleum, natural gas and minerals, creating a dependency that some economists claim has caused inflation and slowed growth. For the Bolivarian government of Venezuela, their economic policies led to shortages in Venezuela, a high inflation rate and a dysfunctional economy. However, the economic policy of the Hugo Chávez administration and Maduro governments have attributed Venezuela's economic problems to the decline in oil prices, sanctions imposed by the United States and economic sabotage by the opposition.

In 2015, Venezuela's economy was performing poorly—the currency had collapsed, it had the world's highest inflation rate and its gross domestic product shrank into an economic collapse in 2016.

Populism Although democratic socialist intellectuals have welcomed a socialism of the 21st century, they have been skeptical of Latin America's examples. While citing their progressive role, they argue that the appropriate label for these governments is populist rather than socialist. Similarly, some of the left-wing pink tide governments were criticised for turning from socialism to authoritarianism and populism.