This note is a critique of Benjamin Page’s “Ota Sik and Czechoslovak Socialism” (MONTHLY REVIEW, October 1969). We shall discuss three basic objections to it. First, Page reveals an ignorance of what Sik actually wrote. Second, he incorrectly describes the theory and practice of the reforms. Third, he gives a dubious evaluation of the democratization movement of 1968.
We must look at what Page says Sik said, and what Sik actually said, on two issues: (1) plan versus market, and (2) moral versus material incentives.
According to Page, Sik says that “production must be based not on estimates of social needs but on consumer demand. The market is to take the place of planning as allocator of resources.” In fact, Sik states: “Planned development of the national economy under socialism is indeed an objective necessity, a law.” (Plan and Market Under Socialism, p. 106) Specifically, Sik attacks pure use of the market in several respects. First, he says that planners must consider the future, not the historical accidents of past and present supplies and demands. Second, planners must not pay attention to temporary fluctuations. Third, the major spheres of social need, such as health, education, culture, and research must be governed by nationwide political decisions, not individual consumer preferences. Sik favors use of the market mechanism only within the context and the goals of the social plan.
According to Page, Sik makes three interconnected points:
“(1) Sik sees communism. . . as an extension of the basic form of the consumer-oriented system of production. . . . (2) This amounts to an acceptance of things and people as they are. (3) It is the substitution of a private, individual, selfish, incentive system. . . for the building of socialism and communism.”
On the first point, Sik speaks only of socialism, not communism, because the productive forces are not yet developed enough for communism; he would argue for moral incentives under communism.
On the second point, rather than accepting things as they are, Sik favors changing “human nature” by socialist education, which would help people to “recognize these long-term goals” or social needs, and to direct people toward “a more consistent overcoming of the direct personal behavior that pursues only momentary gain.” (Plan and Market, p. 197)
On the third point, under socialism Sik’s whole theory is an attempt to harmonize material and moral incentives by using the material incentives to channel people’s initiatives toward social goals, which he calls “the social utilization of material interest.” Sik argues that the material incentives under socialism are non-exploitative returns (unlike private profit under capitalism); and he does argue for the increasing use of moral incentives on the road to communism.
The old economic system in Czechoslovakia introduced by Stalinism was a system of extreme centralization where the center not only did long-term planning, but also issued commands on every trivial economic decision within the enterprise. “Planning” should mean long-run guidance of the economy in accordance with social needs. But 95 percent of the “planning” work of the Central Planning Commission was merely day-today coordination of local decision-making on technology, output mixtures, and so forth. The Planning Commission had no time for real planning. The whole idea of the Czech reforms was to substitute the market for day-to-day coordination, while the central plan should carefully and fully set guidelines for the best path of social development.
Many Marxists had previously not taken the problems of the socialist economy seriously enough. Even Lenin had implied that central direction is easy, that it merely takes a little bookkeeping and accounting with no special knowledge But the experience of the more industrially developed socialist countries in the 1950s and the early 1960s showed a quite different situation:
(1) The central planners had to make millions of exceedingly complicated decisions.
(2) There was an immense problem of information gathering and processing in order to make correct decisions concerning all of the million or more products produced.
(3) In order to make correct decisions, the planners must have prices reflecting the objective economic conditions. But that is not the case if the planners themselves merely set prices arbitrarily.
(4) The centralized system was too rigid, and the time lag in coordination was much too long to adapt to new conditions.
(5) Managers were under great pressure to show quantitative results, and they often did so by illegal means or at the expense of quality.
(6) Even when balance was maintained in the aggregate between supply and demand, it was impossible to maintain balance for each commodity.
(7) The biggest problem was lack of technical progress. Since current inputs were rigidly fixed by the plan, it was difficult for an enterprise to innovate for at least a year or more (since technological change involves change of inputs). Furthermore, if a manager did show incentive to improve the productive process, he ran a risk of lower immediate returns during the transition, but he knew that in later years his planned quota would simply be raised as fast as, or faster than, he raised production. Certainly, also, there was no interest in producing better machines for other firms, since that did not mean better marks for one’s own performance.
(8) One result of the poor technical progress was that Czechoslovakia could not sell its goods in the competitive international market, so the balance of payments steadily worsened. This was especially true because the emphasis was on production and export of machines, where quality and rapid improvement is most important.
(9) Income distribution appeared quite equal, but there was secret income to top Party functionaries, and there were many privileges to the whole elite group. Privileges of the elite included chauffeured cars, special housing, special shops where goods were plentifully supplied, and exclusive access to top administrative and managerial jobs. On the other hand, the masses had choice restricted in some ways—for example, those working in agriculture were prevented from ever leaving agriculture.
The economic reforms were meant to correct some of these abuses and inefficiencies. To end overcentralization, the market was to coordinate current, day-today choices. The market would also generate more realistic prices so that there would be better information for both enterprises and central planners —for example, information on consumer preferences. If the market is to work, each enterprise must be free to set prices, and make choices of technology and product mix. Accordingly, the plan was not to determine most prices, but they were to be set competitively. Moreover, the manager must have an incentive to maximize the value of output and to minimize costs, with bonuses being set accordingly.
Monthly and annual plans with detailed commands to each enterprise were abolished in 1968. Instead, the central planners were told to make long-term plans on the basis of serious thinking about overall social goals. The plan would still choose the best future path on the basis of social preferences, including, for example, not only more production but elimination of smog. The central planners were not to give detailed commands to the firm, but were to set the overall strategy of development and guide the course of the whole economy according to social needs. In the new planning system, the central planners were to guide the economy by taxation and fiscal controls, monetary policy through the state banking system, wages and price controls, and partial regulation of foreign trade. Furthermore, the government remains the most important consumer, and directly makes contracts in many social areas (with power to force contracts, if need be, in some few but vital instances). Finally, but perhaps most important, really major investments in new projects would still be centrally planned.
The new system was to decentralize economic decision-making down to the enterprise level, with managers or workers’ collectives making the decisions; but with continued public ownership (and no individual profit-making) in almost all industry. Thus, it still seems to fall within Sweezy’s definition of socialism: “The differentia specifica of socialism as compared to capitalism is public ownership of the means of production . . Those branches of the economy which are decisive for its functioning must be in . . . the ‘public sector’.” (MONTHLY REVIEW, October 1963, pp. 330-331) Even Page admits that “under Sik’s plan. . . the state rather than private capital owns the means of production.”
Page argues that it is not socialism because labor is still treated as a commodity in the market. That cannot be a serious objection, however, because not only the USSR but also China and Cuba still purchase labor on the market, despite the enlarged area of moral incentives in the latter two. Lastly, Page argues that “Sik’s plan can hardly be called socialism” because enterprises can “determine the use of profits for reinvestment or distribution (albeit to employees rather than shareholders).“ This is a more serious objection, but notice that the profits are not to be distributed to shareholders as a return to property holdings but only to the workers as bonuses for good work (within strictly regulated limits).
The idea was to have not only central government ownership but also to have collective workers’ ownership in some areas. It was felt that central government ownership gave all power to planners and managers, whereas the new system would give more power to workers’ collectives or workers’ councils.
It would seem that rather than calling names, we should recognize that there is a variety of different socialist systems, with sub-species in China or Cuba quite different from those of Czechoslovakia or Hungary. There may be more or less use of central planning, of the market, of material or moral incentives, and of control by central bureaucrats or state-appointed managers or workers’ councils. These differences relate partly to levels of economic development and partly to differing national cultures and other historical accidents.
Specifically, in Czechoslovakia even after the full reforms would be completed, the distribution of income would still have been much more equal than in the Soviet Union. There would still be no unearned income, only labor income. Even managers’ bonuses were to be limited to 20-30 percent of salaries. And the secret income and most of the privileges of the elite were abolished in 1968. Moreover, introduction of the market was not to be applied in areas where it might distort social needs, so it would not apply to health, education, cultural activities, or urban transport; and pollution would bring heavy
The entire world was excited by the Czechoslovak attempt to achieve a “socialism with a human face,” a society both socialist and profoundly democratic, devoted to humanist ideals in contrast with the dehumanization of the Stalinist-type bureaucracy. On what grounds do the Stalinists attack the Czech experiment?
The traditional Stalinist argument was that there are no conflicts of interest in socialism because there is only one class, the working class, hence no need for a democratic expression of dissent on any issue. Everybody will be happy to follow the orders of a working-class government, everybody will be a willing cogwheel in the well-oiled machine. Anybody attacking such a working-class government on any issue must be a wrecker, leftover bourgeois, an imperialist spy (though Stalin also claimed that the class struggle intensifies under socialism, so these leftovers and spies must have been continually increasing). Of course, in Stalin’s view, the interests and desires of the working class were represented by the interests and desires of the Communist Party, the Communist Party’s views were expressed by the Stalinist faction, and the faction’s views by Stalin. Since Stalin alone knew the interests and desires of the working class, it was quite clear that any criticism of comrade Stalin was unnecessary and actually treasonable to the working class.
The view that there are some conflicts of interest under socialism has been presented not only by the Czech reformers (for example, Ota Sik in The Economy: Interests and Politics, not available in English) but also with great force by Mao Tse-tung in his On Contradictions Among the People. Mao’s thought provides the theoretical basis for a Marxist theory of the necessity of the widest political democracy under socialism— though one would not always recognize this in some of the “leftist” (?) statements and practice in China. Mao shows the different group interests at work (including the individual versus socialist society in any given short-run period). In addition to Mao’s long list of conflicts of interest such as those between workers and farmers, intellectual workers and manual workers, citizens and bureaucrats, we can also easily enumerate many concrete issues over which controversy may occur in any socialist representative assembly.
Basically, not everyone will agree on what the “social preference” is in any specific decision. For example, what part of the national product should be given out in immediate consumption and what part reinvested for future increase of capacity to produce? What consumer goods should be produced? Within consumption, how much should be paid for by individuals, how much should be free to everyone? How much investment should be made in education? And in a divided world, how much should be spent on the military? Should agriculture be collective or state-owned? How much aid should be given to other countries, and to which ones? The questions are endless, and new ones continually arise.
Page says, specifically referring to Czechoslovakia, that most of the usual political freedoms are not “relevant” to the mass of people under socialism. Lest we misinterpret, a full quotation of the key passage is in order. He writes
To be sure, various freedoms were being called for or enacted, e.g., the freedom to travel, . . . ideological freedom, the freedom to organize clubs of “critical thinkers,” an opposition press, and even (according to some reports) an opposition party. As in the West, these freedoms would in principle be available to all. The point is that, again as in the West, they are not equally relevant to the needs of all, nor do they include ways and means to create the social and economic conditions that might make them so. (p.46)
This sounds very “radical” and “Marxist,” but we may perhaps be forgiven if we take a few words to examine its premises and conclusions. The notion seems to be that all of these horrible (or at least irrelevant) freedoms are only a sham cover for exploitation (“as in the West”). Most ordinary workers will continue to have low incomes, no time for politics, and no political power. It sounds more as though he is talking about India or Nigeria rather than Czechoslovakia. Certainly it is true that in the underdeveloped countries today most political freedoms are not very relevant except as tools in the fight for a better life. But Czechoslovakia is a highly industrialized country. This tells us that the income and leisure time of the ordinary worker are high enough to provide time for politics. Furthermore, the means of production are publicly owned, there is no private profit, rent, or interest on capital.
Naturally, the higher-income groups under socialism may exert somewhat more political power. That is unfortunate, but it is a fact. Furthermore, in the Soviet Union and Eastern Europe (and to a lesser but still significant degree in China) there is evidence that there is less than perfect social mobility, that income differences tend to be inherited. If nothing else, those who grow up in intellectual homes are more likely to obtain the background and motivation for college, so these children again have the highest educational qualifications. But these income differences are surely not a reason for declaring democratic freedoms irrelevant to the ordinary worker under socialism. On the contrary, democracy becomes a necessary form for the ordinary worker to assert himself.
The workers need free elections to be able to choose their own representatives rather than being ruled by a self-perpetuating elite. Everyone admitted that the previous elections in Czechoslovakia were farcical, not real. The 1968 reforms were intended to allow free elections. This could not be interpreted as anti-socialist, except in the sense that the old ruling clique would not be elected.
Page claims also that freedom of speech and press is irrelevant to the workers, and important only to intellectuals. But after censorship was abolished in Czechoslovakia, people stood in line to get papers, and they were all sold out by eight o’clock in the morning. Moreover, the new knowledge about the leaders was quickly put to use. Some of the old leaders could not even get elected as rank-and-file delegates to the Party Congress. Finally, the access to news and freedom of discussion led to the population’s discussing, and even influencing, government policy for the first time. For example, foreign policy in support of Nigeria over Biafra and Egypt over Israel was furiously debated, and the sale of arms to Nigeria was ended.
In fact, in 1968 all reports (including those from most foreign Communist correspondents) indicated a vast increase in political participation by the working class. Not only were students active in exercising the new democratic freedomsbut the hitherto sterile and bureaucratic trade unions suddenly came to life, and began to worry about the rights and interests of the workers. There were even spontaneous committees formed by the workers to protect the right of free speech. Moreover, there is next to no evidence (except in the Soviet press) that any large group was against socialism in Czechoslovakia. In fact, for the first time opinion polls were taken in Czechoslovakia, and they showed that, in spite of much dissatisfaction with the earlier political controls and repression, the vast majority were still in favor of “socialism.”
Why does Page seem to think these democratic freedoms (“even an opposition party”) are so anti-socialist or anti-Marxist? Marx (in The Civil War in France) held up the Paris commune as the best example of socialist democracy, of the dictatorship of the proletariat (and Lenin agreed in State and Revolution). But Marx specifically noted in the Commune the existence of many socialist parties, the fact that the Marxists were even a small minority, the fact that there were periodic elections and the right of immediate recall. Would it be so bad if there were several socialist parties representing different interests and different points of view in the present socialist countries? Only our indoctrination by years of Stalinist propaganda seems to have caused this to be accepted as “orthodox Marxism” among the Left.
Finally, we must speak of the interactions between the economic and political reforms. The Czechs introduced decentralization down to the enterprise level, and discussed the proposal for Workers’ Councils as the basic decision-makers (and actually introduced some) not merely to eliminate centralized inefficiency but as a political reform. The basic point for most Czechs and most of the reformers was that such decentralization and workers’ control would substitute the market for bureaucratic control, and would end the iron hand of the Party apparatus in all local decision-making (and would end the leaders’ power to appoint anyone to important and well-paid local posts). By reducing centralized bureaucratic control, the local enterprises, the towns, and the average worker through the Workers Councils would have more economic (and political) power. It was viewed, if you wish to use that terminology, as a way of effectively reducing the power of the "ruling class" and thus creating the economic and social conditions for more effective political democracy.