Economics (2012)

Book Review from the October 2012 issue of the Socialist Standard

Remaking Scarcity – From Capitalist Inefficiency to Economic Democracy. By Costas Panayotakis, Pluto Press.

The subject of economics is commonly understood as being the problem of unlimited wants in the face of finite resources. Likewise socialism, communism and common ownership are seen as arising out of conditions which bring about the elimination of scarcity. Panayotakis, who describes himself as a “recovering economist”, frames the issue a little differently. For him scarcity itself is not necessarily the problem but rather it is the “the undemocratic determination of the configuration of scarcity that people live under” that leads to the social-ills of today.

This book is in effect in two halves, the first is a well written critique of many of the underlying assumptions that make up neo-classical economics and the second explores what Panayotakis calls “economic democracy” and compares two models for the operation of such a society. Panayotakis uses economic democracy “the principle that all citizens should have an equal voice over the goals and the operation of the economic system” as a yardstick to measure how successful an social system is. According to this measure and as would be expected, capitalism fares badly.

David Schweickart's conception of economic democracy is also put up against this measuring stick. Schweickart sees his system as achieving a balance between democracy, planning, and markets. Workers have democratic control of the companies they work for, firms trade between themselves and the general public and should the smooth functioning of this worker ran market economy be disrupted the State will step in to ensure that all is returned to a happy state of bliss. How close this proposal is to the current economic system is striking. Schweickart does not seem to realise that the problem with the market economy is not so much that the workers do not have democratic control of the means of production but that market forces ultimately control any decisions that have to be made, “accumulate or die” will remain the mantra until the competitive struggle for profits is removed. Panayotakis seems aware of these criticisms but does not really drive the point home.

To contrast with this “market-socialist” blueprint Panayotakis offers up the schemes of Michael Albert and Robin Hahnel. Commonly known as “Parecon” this system of participatory economics sees productive decisions co-ordinated by a network of workplace, neighbourhood, and facilitation councils which communicate amongst each other until pricing and production levels are agreed upon. However, in this system competition between enterprises is not eliminated, the law of value still operates, enterprises that fail to compete would go under and so the tension between profit and wages remains. Albert and Hahnel are trying to find political solutions to what is essentially an economic problem.

What is missing from this book is the argument for the type of classless, stateless and non-market system of free access which we would call world socialism. Economic democracy is as much a problem of economics as it is of democracy. A truly democratic economy cannot be realised until the economy is governed directly by human need.

DJP