Through many discussions with Czech economist Ota Sik, Alec Nove came to the opinion that a new 'third way' of economic coordinating system must be developed. He viewed capitalism critically and pessimistically, and he believed that Laissez-faire is neither practical nor effective in an age of giant corporations and increasing instability. Nove also believed that "...inflation, unemployment, the breakdown of social consensus, indefensible extremes in the distribution of wealth within and between countries, promised trouble ahead" (Nove, p.49).
At the same time the economic ramifications of central planning were well known, and Nove thought its political-social implications to be deplorable. Anyone with an interest in socialism must actively seek alternatives. Nove states that this task, however, is impeded by certain aspects of the Marxian tradition. It became obvious that neither Marx nor Engels had the remotest conception of the complexities of the functioning of the modern industrial economy. It was believed that Marx failed to examine the mechanism of the functioning of the future society because he believed that "...the planned, purposeful development of communist society would make everything clear and understandable, in contrast with the spontaneously developing market mechanism of the capitalist society..." (Nove, pp.51-52).
In the opinion of Marx and Engels, future society would be based on the planning principle, and as such the need for spontaneous market exchange would be prevented. In the utopia developed by Marx and Engels, everything from people's individual goals to the availability of resources and the methods by which they would be transformed into consumer goods to meet the needs of the people would be completely obvious. It is hard to conceive of these aspects of Marxism, in which a virtual 'heaven on earth' is constructed. It becomes quite obvious why Alec Nove believes that these Marxist concepts could impede the search for a 'third way' of economic coordinating system that perpetuates socialism, because the aforementioned Marxian ideas do not allow for the existence of any type of political, social or economic problems. Marx's ideas on planning and organization of production and distribution are most assuredly linked to these 'utopian' aspects.
It may seem quite paradoxical, but Nove states:
Strict economy and conservation measures (according to Nove the very opposite of Marxian 'abundance') would result from the exhaustion of natural resources or from their effective control by producers (i.e.-OPEC). This would eventually result in the calling for imposed social discipline and planning, for society's survival, with real sharing of sacrifice. Nove reasons that because of this, the condition of scarcity "...makes it plainly impossible to envisage the end of selfish acquisitiveness, and so this would have to be harnessed in the form of incentives" (Nove, p.53). I believe, however, that efficiency must still remain if for no other reason than it is necessary to the condition of 'abundance'.
Nove believes the main problem of the 'third way' to be the manner in which principles of the command and market economies are intergrated. He realized that the market can cause "...serious social and economic distortions, requires to be limited, and must coexist with important centrally exercised state planning functions" (Nove, p.60). He allows for the fact that tensions can arise between local or sectoral and the general interest, between plan and market and within the plan and market. Nove also believed that life without conflicts and tensions is not merely a utopian concept, it is also a very dull one. Equilibrium, as the admirable Hungarian economist Janos Kornai once reminded us, is not necessarily good; there is equilibrium between an impotent man and a frigid woman. Yet the search for the 'third way' must continue. It is not an easy matter to find a balance between centralization and decentralization, plan and market, freedom and discipline, short-term economic efficiency and other legitimate social objectives (i.e.- greater equality, conservation of exhaustible resources).
The logic of a modern industrial society and repeated technological revolutions are no doubt a basic cause of our troubles, along with a rising population, world poverty, limited natural resources, nations and classes. Is it conceivable to believe a 'third way' can be developed that would either reconcile or at the very least help alleviate some of the burden these problems create? As Alec Nove points out, we are far away from Marx's 'abundance' and its implications. But he also states that the role of planning is enhanced, both by the increase in the scale and complexity in production (with the vast corporations of capitalist countries being internally administered) and by the "...unfortunate effects of uncontrolled stimulation of greed" (Nove, p.61). Nove believes it is imperative that we be aware of the negative aspects of a wholly market-oriented society, and of the strength of the case that can be made for planning and for social-political control democratically exercised, that is, for a species of socialism.
However, it is obvious that every thing Nove states about the reconcilitiation of the previously mentioned problems that exist in intergrating the two economic systems into a 'third way' is presupposed on the open rejection of the utopian elements of Marxism. Nove makes us all aware of the fact that neither Marx, Engels, nor Lenin appreciated or understood the inherent complexities of the problem, in its economic efficiency, social, or political dimensions. For them, everything would be 'simple'. Yet Nove makes us realize that we have "...no excuse for being unaware that it is all immensely complicated" (Nove, p.61).
Nove, Alec. "Socialism, economics and Development: Marx, the market and feasible socialism". London : Allen & Unwin publishing, 1986.