Democratic scarcity? (2013)

Book Review from the April 2013 issue of the Socialist Standard

Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy, by Costas Panayotakis. Pluto Press, 2011

Economics, as taught in schools and colleges, defines itself as the study of the allocation of limited resources amongst competing wants where these are greater than resources and teaches that markets and prices arose as the best way to do this. In fact, since it assumes that human wants are infinite, it teaches that scarcity – and markets and prices – will always exist.

Panayotakis rejects the traditional socialist argument that ‘scarcity has been conquered’ because ‘the problem of production has been solved.’ He sees scarcity as a fact but argues that free market capitalism is not the most efficient way to deal with it. Naturally, he has no difficulty in showing that capitalism does not allocate resources efficiently to meet human needs.

This, he points out, is due to the fact that ‘the true goal of capitalist economies is not to satisfy the wants of consumers, but to pursue profit and a never-ending accumulation of capital.’ This ‘logic of capital accumulation escapes people’s control and subordinates them to its imperatives,’ including even the owners and top executives of capitalist firms:

‘... the pressure of capitalist competition means that, even to preserve their capital and continue enjoying the privileges, prestige and power associated with their class position, capitalists must tirelessly pursue profit and capital accumulation.’

This makes them essentially ‘functionaries of capital,’ who don’t have a free hand to do what they might want, but only a greater power than the rest of society ‘to influence the terms under which they and all other socio-economic groups are subordinated to the logic of capital.’ So far, so good.

Panayotakis’s thesis is that capitalism fails to deal with the problem of scarcity efficiently because it is an economic oligarchy. The alternative to capitalism is, then, an ‘economic democracy’ where everybody would have an equal say in how scarce resources are used. He recognises that this implies that the means of production should no longer be owned and controlled by a minority but seems to favour particular productive units being run by workers’ co-operatives or councils.

The two models of ‘economic democracy’ he discusses in detail are so-called ‘market socialism’ (as in David Schweickart’s proposal) and Michael Albert’s ‘Parecon.’ He can see the drawbacks of retaining production for the market, but doesn’t make the point that, with market competition, workers’ co-operatives too would be forced to behave as ‘functionaries of capital’ if they wanted to survive.

He is more favourable to ‘Parecon’ but mentions one critic’s description of it as an ‘off the shelf utopia.’ As indeed it is, though ‘off the wall’ might be a better description given its endless form-filling and voting to try to fix prices and pay that conform to some ideal allocation of scarce resources.

Panayotakis and the others have got themselves into this position of discussing how to calculate prices and pay because they reject the traditional socialist view that, given the abolition of capitalism, enough to satisfy people’s needs could be produced and that therefore a socialist society would not have to price or ration goods but could implement the principle of ‘from each according to their ability, to each according to their needs’.

Adam Buick

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