Plan and Market   Marx and Mechanism



Why did Marx believe that market must be replaced by a rational planned control of the economy? Marx, as well as a number of his forerunners, saw the market mechanism as functioning purely on ex post basis. This should be obvious from his formulation of 'the contradiction between the private and social character of labor under commodity production'. In a market economy a commodity is being produced for public, but its producer never knows ahead of time whether he is actually producing something that the public would want. Only the market itself, will determine ex post whether the value-in-use of that commodity had a truly 'social character'. Most of the other contradictions inherent in the market economy are according to Marx explainable from this basic contradiction. The lack of ex ante coordination of production decisions leads necessarily to the spontaneous imbalances and cyclical fluctuations in market economies.

At other places, e.g. in the chapter of 'Das Kapital' dealing with the 'commodity fetishism', Marx predicted that in a socialist economy, no spontaneous market would obscure 'relations of production', and that people working with common means of production would be able to use their individual labor powers in a planned fashion as a single social labor power. Social relations among people in the process of production and distribution of goods would be unobscured and transparent. Under socialism the rational allocation of labor power would be guaranteed ex ante and it would not be necessary to test it ex post in the market place. Thus the labor would become a 'directly social labor'.

We have the following contrasting concepts: On the one hand the ex post functioning of the market obscures the true relations and leads to disturbances in the economy. On the other hand an ex ante guaranteed smooth coordination of all socio-economic processes. This crudely stated opposites became the basis for belief that market and plan are incompatible, and that under socialism central planning must replace the market. Let us now analyze the new factors that have emerged both in theory and in reality since Marx's days.











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