The Brooklyn Rail

JUL-AUG 2018

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JUL-AUG 2018 Issue
Field Notes

Dreams of National Capital: Market Socialism, Past and Present

The apparition of a general trade war stalks the global economic order. In the United States, it recently manifested itself in the debate over the issue of sanctions leveled against Chinese companies. Bernie Sanders, the unofficial standard bearer of neo-social democracy in the U.S., excoriated the Trump administration for walking back on sanctions against the telecommunications firm ZTE. “Too many jobs in China lost,” Trump had tweeted. Sanders quickly pointed out how the move contradicts Trump’s “America First” message and (quelles horreurs!) would result in jobs being created in China.1 Chuck Schumer, fearless leader of the Democratic minority in the Senate, vigorously agreed with this sentiment, suggesting that Trump’s real, unforgivable motive is to “Make China great again.” On the closely related policy to impose limits on visas for Chinese students, the Republican, Marco Rubio, who has been reborn as a kind of anti-China evangelist, added his charming thoughts on Twitter: “China poses unprecedented threat. Student and academic visas are another weapon they use against us in their campaign to steal and cheat their way to world dominance,” thus effectively casting all Chinese immigrants as mindless robots serving at the behest of the sinister Chinese government. We live in strange times when Donald Trump, whatever his foppish antics, can seem a globally-minded cosmopolitan compared to the patriotic zeal of his would-be opponents. 

Yet here we are. There is no shortage of morbid symptoms expressing the slow, agonizing death of neoliberal capitalism, but the pan-ideological recrudescence of racist nationalism in recent years is surely among the most alarming. In the U.S. and worldwide, forms of political thought and discourse asserting the primacy of the nation-state as the vehicle of democracy against the invidious forces of globalization are growing in power. In the U.S., this posture is evolving into an antagonistic, zero-sum struggle against national enemies cast as villains who “cheat” at globalization, unfairly rigging it in their favor. Yet this should not come as any great surprise. Liberalism’s consoling homilies foretelling a smooth, peaceful voyage into a world of rising living standards for all, based on faith in the liberalization of trade and the democratizing spread of markets, have crashed on the hard shoals of deepening inequalities, ideological polarization, and the untimely return of geopolitics. Taken by many after the events of 1989 to be the inevitable telos of human political history, liberal democracy now finds its very existence thrown into question, a casualty of the deepening stagnation and slow-motion disintegration of the global economic system.

The darkening atmosphere of what Yanis Varoufakis has called a “postmodern 1930s” has thrown up a fair amount of ideological froth.  Liberals have mostly given up the old litany about the supposed benefits of unfettered free trade, issuing a clarion call for a return to national social democracy, or even to “strong nationalism,” in some cases.2 Various leftist tendencies, thinking a more radical break is necessary, have brought out a fresh batch of old but classic vintages. Bold proposals inherited from the old socialist left are once again being floated and seriously discussed as alternatives to the capitalist order.

One of the most widely-discussed recoveries from the remnants of the old ideas is “market socialism.” Various currents of economic thought flow into the idea, which has many variants. Its most commonly found nineteenth-century version, rooted in the classical school of political economy, emphasized the capability of worker-owned enterprises and cooperatives to manage themselves while trading in a broader free market. However, more recent debates take the distinctly financial form of contemporary wealth as their point of departure, and have tended to orbit a different model. At its core, this model entails the public ownership of financial assets and democratic planning of production while retaining independently-controlled, competitive businesses and the price system to regulate the exchange of commodities. Its advocates see such “simulated competition” as an eminently rational suggestion: there is no reason to dispose of freedom of choice in those domains where it is appropriate, such as in the selection of occupation and the exchange of consumer goods. This is taken as key to safeguarding the basic rights of civil society, and in any case the verdict supposedly is in, regarding the failure of centralized economic planning as a social experiment in the twentieth century. Combined with an ambitious scheme for redistributing wealth, market socialism is taken to offer a workable recipe for qualitatively transforming society.

As a set of ideas, market socialism occasionally pops up at times of great change to offer itself as a sensible alternative to free-market capitalism. Its last great heyday was the late 1980s through the early 1990s, when a vigorous debate was held on the left about the merits of the idea in the face of the apparent world-historical defeat of communism.3 Contemporary market socialists, writing in a similar period of upheaval, pick up the thread of this tradition. In a notable contribution, Seth Ackerman restages the calculation debates of the early twentieth century to arrive at an updated version of the old doctrine: commonly-owned banks with competition between businesses in a socialized capital market. Ackerman wants to socialize finance through a collectivization of credit that would allegedly “democratize” it while retaining markets to attune supply with demand across the economy.4 Likewise, Vivek Chibber, in a more recent, widely-circulated argument, remarks that, “we have to seriously consider the possibility that [economic] planning as envisioned by Marx might not be a real option,” and that “a post-capitalist economy might have to take the form of some sort of market socialism.”5 Matt Bruenig has floated the idea that contemporary index funds represent a “proof of concept” of market socialism.6 Popularizations like these are complemented by a more explicitly theoretical revival, with contributions from longtime proponent John Roemer and the Habermasian “critical theorist” Axel Honneth, among others.7

What’s not to like? Market socialism lets leftists have their cake and eat it too, it would seem, offering apparently compelling answers to important questions left over from the legacy of the twentieth century. Yet upon close examination, it becomes clear that these proposals rehearse tired formulas for national economic sovereignty that are either unworkable or an outright fantasy in the context of world capitalism today. It is, in other words, the same old nationalist wine poured into shiny new bottles.

The course of the following argument will outline the genealogy of market socialism, revisit the results of the “socialist calculation debate,” and show how those results are taken up in contemporary theory to conjure the illusion of national economic autonomy. More specifically, this is the old Stalinist canard of “socialism in one country,” whose full implications do not always seem appreciated by today’s theorists. However, this is emphatically not a critique from the right, in a reprise of the Hayekian deification of the market as an unfathomable information processor. Nor is it an instance of ultra-left criticism based on the rejection of markets, tout court. Rather, it is a critique of nationalist ideology from the space opened up by the ongoing, fundamental crisis of capitalism through which we are living and the possibilities for transformation opened up by it. From this standpoint, the unacknowledged nationalism in the internal logic of market socialist theory, and the incoherent—if not disastrous—results it would lead to if put into practice, are the object of critique.

Classical Precursors, Neoclassical Heirs

The roots of market socialism lie in the classical school of political economy. The idea of labor as the natural source of value had set the stage for an attack upon rents, profits, and concentrated ownership, which allegedly distorted the distribution of the social surplus and deprived workers of the full product of their labor. Thus radical proposals for worker self-management were put forth by the so-called “Ricardian socialists” of the early nineteenth century. These socialists, such as Thomas Hodgskin, and prominent anarchists like Pierre-Joseph Proudhon, among others, saw labor as the natural owner of its product while taking free markets as its equally natural complement.8 Decentralized, worker-owned cooperatives combined with competitive markets for exchange would simply subtract the capitalists and rentiers from the equation, granting labor the full possession of its product. In this they drew from Smith and Ricardo radically different political conclusions from the ones those authors themselves had reached, planting the philosophical seeds of what would eventually grow into the twentieth-century doctrine of market socialism.

That doctrine, in the form in which it attracts the most attention today, is a legacy of the emergence of the subjective, marginalist theory of value and the ensuing advent of “economics.” In the late nineteenth century, amidst the formation of massive industrial cartels, an increasingly confident labor movement, and the imperial domination of the colonial world, what had been known as “political economy,” the science of society, mutated into “economics,” the science of rational action, by way of the formative concept of marginal value. As a science with a supposedly rigorous, non-political foundation, economics re-centered the entire intellectual enterprise as a mathematicized investigation into how individual agents respond to prices to optimize their “utility.” At its core, this involved grafting Jeremy Bentham’s pleasure-and-pain calculus onto half-understood concepts of energy and motion borrowed from classical mechanics, resulting in a bizarre bricolage that many at the time dismissed as nonsense.9 But it turned out to be a portentous sort of nonsense. It augured a paradigm shift that transfigured economic theory from the study of the production and distribution of resources by and among social classes, or the reproduction of society, into a granular analysis of how prices necessarily converge on a state of equilibrium through exchanges between rational individuals.

Contrary to common prejudices on both the left and the right, though, the politics of marginalist analysis are not predetermined. One of the founding figures of the neoclassical school, Léon Walras, was in fact one of the earliest to adapt the new methods to socialist ideas.10 For Walras, the new economics, with its concept of general equilibrium as the maximization of utility for all markets under given constraints, offered the chance of rigorously demonstrating—for the first time—the economic feasibility of a market economy in which the various factors of production are commonly owned. Several generations later, this idea was to inspire the economist Oskar Lange, whose neoclassical analysis of socialist economics was to play a central role in the famous “socialist calculation debate” with Ludwig von Mises and Friedrich Hayek in the 1920s and 1930s.11

Lange developed his theory of planning mainly in response to Ludwig von Mises. Mises had argued that it would be impossible for a socialist economy to solve the problem of the rational allocation of resources because it ruled out what, according to him, is the crucial function of money in competitively determining prices.12 Competitively set money prices based on private ownership, per Mises, are the only means to know the true cost of the available alternatives for any given set of choices, since they absorb and transmit all the innumerable subjective judgments of value that individuals can make within a market economy. Economic rationality therefore requires such a competitive monetary system to avoid misallocating resources that could have been used more efficiently. This, the natural form and function of “economic calculation,” is something that the socialist commonwealth allegedly rules out by definition.13

Yet for Lange, it is these natural laws of economic calculation themselves that make socialism possible. General equilibrium theory, production functions, and the price mechanism make it possible to envision state-owned firms maximizing output with fixed (“scarce”) inputs and meeting consumer demand through a mix of coordinated planning with limited markets—i.e., simulated competition. “The economic problem,” states Lange, “is the problem of choice between alternatives,” setting up his argument that a central planning board could easily solve the economic problem more rationally and efficiently than an anarchic struggle between private owners.14  If the citizenry could collectively own the means of production, and thus the bulk of society’s wealth, through the state, then the only relevant question becomes a technical one of how best to coordinate supply with demand for a given national economy. The political and economic horizon of socialism shifts from a moral plane, as the early socialists saw it, to an essentially technical one, as a solution offered by the very laws of economics that classical liberals took to invalidate socialist planning.15The mechanical problems thus resolved, the question of socialism could again be formulated simply as a matter of ownership—a question of who shall possess the wealth that society produces.

Friedrich Hayek, of course, dissented from this view. The thrust of Hayek’s critique of planned economies is well known. Lange’s savvy demonstration of socialist planning through the same economic laws that were thought to disprove it left only one course of action for market apologists: to posit the operations of the market as unfathomable, beyond human reason, and to advocate the discipline of its blind necessity as the only viable landscape for individual liberty. Whatever the mathematical prowess of the central planning office, it would simply not be possible for its staff to compute the millions of equations necessary to balance supply with demand—an illusory goal in any case, for Hayek, since for him the supposed tendency of markets toward stationary equilibrium does not exist.

Hayek understood better than anyone else that a price had to be paid to meet the challenge of the socialist economists. That price turned out to be the wholesale embrace of irrationalism in a theory that conspicuously placed irrationality at the very foundation of society. Rational action at the individual, subjective level culminates at the aggregate level in objective irrationality—the whole is less than the sum of its parts, as it were.16 This proposition, which he would eventually elaborate into an entire social philosophy, is the peculiar but bold inference at the heart of Hayek’s worldview.

And our own, as it has turned out, over forty years of neoliberal ascendancy. “Neoliberalism” may be a widely contested concept, but as an ideology it would be hard to deny that the negative theology of the market, the belief in its unknowable yet uncanny capacity to process information, lies at its center.17Today, when market socialists insist on a space for market competition they tacitly accept Hayek’s theology. That is, they take the market as an irrational whole, grounded in intersubjective exchange and opaque to reason, as the natural form of economic life, which we violate at our peril. It is but a short step from this concession to a confession like Vivek Chibber’s, that “it might even be the case that central planning is in tension with some dimensions of social justice.”18

This concession to Hayek is based on a misguided set of ideas uncritically carried over from the calculation debates, which implicitly take as their object a hypothetical, national planned economy. This is no accident. Lange’s purely technical analysis of economic rationality was a rigorous elaboration of the core of the economic model of the Soviet Union, of what became “socialism in one country,” which over the course of the twentieth century would oscillate between phases of full centralized planning and mixtures with limited markets. From this vantage, the eventual collapse of Soviet society, and the plainly disastrous results of its economic experiments, might logically seem to recommend the Hayekian view. Yet Hayek too, of course, impicitly relies on a strong state no less than Lange to compel the legal recognition of individual property rights, the rule of law, and other social prerequisites to the market order.19 Whether it sets production targets, irons out market failures, or forcibly promotes the institutions that make the market possible, a coercive authority must be presupposed by both the market socialist and the neoliberal to enforce the conditions for competitive exchange. This power, within the debate’s horizon of thought, is precisely the national state. 

Whatever form the analysis of rational action takes, the state acts as the market’s supplement, its essential support apparatus. So too does money. As marginalists, both Lange and Hayek see the individual act of exchange as a rational, purely formal activity constituting the basis of economic life. Money, as in standard neoclassical theory, is taken to be simply a convention to lubricate exchange, removing the inconveniences of direct bargaining—it has no substantive reality of its own. This is why Lange can successfully refute Mises’s original argument against planning, which relied on the alleged necessity of money prices for an efficient economic system. Hayek, likewise, does not invoke any special role for money, relying on his distinct theory of the market to make his case. This rarefied notion of money is at the heart of the calculation debates.

In contemporary market socialist theory, this same, etiolated concept of money casts a spell of plausibility over the idea of nationally-organized, market-coordinated socialist societies. The notion of such an economic system, in which all financial assets are publicly owned but intra-national competition is preserved, necessarily presupposes the conception of money as a simple reflection of rational exchange. This follows from the prior premise asserting the need for market competition: if competition is to produce its supposed advantages, then the course of exchange must be allowed to flow naturally, without constraints. In this scheme money, by necessity, plays the role of a simple mediator—it greases the wheels of exchange by acting as the general equivalent for all commodities. Once this magical supposition is made, the abstract model of national market socialism can be made to appear in all its formal elegance. But it is the sheer unreality of this conception that condemns market socialist theory to self-defeating incoherence. Money is not a mere formal mediator of exchange, but is rather a mediation of deeper social interconnections that make general commodity exchange possible in the first place. These global, underlying interconnections are the social relationships of value, that is to say, of alienated labor. These relations tie the nations of the world into a transnational nexus of value production, appropriation, and distribution, and the expression of this unified process as the uneven accumulation of capital. Money, as mediation, is just as universal, contradictory, and global as is this unified process.20

Money Problems

Working with a well-known example will provide a useful vehicle for this critique. Matt Bruenig, a researcher at the People’s Policy Project, has floated the idea of stock index funds as a proof of market socialism.21 He even advances his version of the concept as being “compatible with the new antitrust movement,” and like Ackerman, Bruenig is exercised by the calculation problem. He looks to competitively-organized market socialism as the answer to it.  

Bruenig points to the division between ownership and control of business as the key to a feasible socialist economics. Index funds can be seen as a kind of ideal-type for this model: designed to mirror the overall performance of the broader market, they are based on a diversified portfolio of investments in stocks, bonds, and other securities spread across a range of companies whose managers, presumably, are indifferent to the source of investment. In theory the structure of index funds suggests how stock ownership could be evenly distributed across society, or socialized, opening up the wonderful world of capital gains to everyone, while leaving competitive markets and the price mechanism in place to regulate supply and demand. This would supposedly equalize the ownership of wealth. Like his forerunners, Bruenig boils down the question of socialism to “who owns what?”

Bruenig implicitly sees money in the same conventional light as the participants in the calculation debate, taking it to be a fungible, abstract, financial accounting device. As a superficial veil over exchange, changing patterns in the ownership of money will not affect the underlying rationality of competition. At first glance it certainly seems a plausible enough take today, when money really does appear to be merely an ethereal thing tapped into digital existence as numbers on screens, or else conjured up through the arcane sorcery of the derivative trader’s financial engineering. Hence, this view of money would seem to allow for financial assets to be redistributed to equalize property relationships within an otherwise competitive national economy. Such a reorganization would mean requisitioning the financial wealth of the firms within a particular national state for redistribution while internally maintaining a competitive economy. As a necessary step, any such program would have to involve sealing off such wealth from global financial markets in order to re-center it upon the welfare of the national community. In other words, it would entail walling off the assets of the national firms from the competition of the world financial market, whose discipline dictates their value in relation to all other financial assets, and allowing them to compete within a protected national market. In short, it would mean nationalizing them for financial autarchy.

Consider a hypothetical scenario in which all questions of technical and political possibility are suspended and such a program is realized in the United States. The U.S., like every country, does not exist in a historical vacuum, but rather is part of a whole that is greater than the sum of its parts, namely the world market, the competing states that compose it, and the underlying articulation of production that fuses them together. To equalize ownership in that country by returning all financial assets to the citizenry would require taking the equities and bonds of all U.S. firms off the world market and liquidating all of the derivatives, bonds, and other securities tied to their prices. This planetary evaporation of fictitious capital would mean the abolition of the dollar as world money, as I have argued extensively in a previous essay.22 This, in turn, would likely mean a global crisis beyond the capacity of any national government to mitigate. It would mean the demolition of the global division of labor, its transnational supply chains, and the whole financialized geography of production. It would roll back the integration of the entire world economy, which could only occur at a staggering human cost, and by extension the possibility of transnational class solidarity, in order to return to some misguided idyll of a serene, stationary state.

In reality, money is not a neutral, empty vehicle for rational exchange. The apparent ease with which it is manipulated by central bankers and financial engineers today is a mirage of fictitious capital. Money is a mediation of a whole system of production and exchange, the international channels of the circulation of capital that themselves mediate the global articulation of the social relations of production. Its “nature” changes with the vicissitudes of the ensemble of relations that make up the whole of capital, undergoing cycles of abstraction and concretion that reflect transformations of that whole. To believe money can be neatly re-purposed for financial nationalism in any given country is a fantasy of secession from the world economy. In reality, each national economy, each part, is mediated by the whole, by capital, which is greater than the sum of its parts.23 As a result, most contemporary left political economy is formulated in an ahistorical, nationalist vacuum, remaining blind to the fatal mistake of wishing away the hard constraints on economic agency that are presented by the global scene in which we act.

How to Fairly Redistribute Domination

Current theorists of market socialism assume an extraordinarily thin notion of money that occludes the whole problem of world money. This thin understanding of money, in turn, prompts an equally misguided fixation on the purely formal question of ownership, in particular of “public ownership,” as the path to socialism. The belief is that removing private ownership in capital goods would be sufficient to constitute socialism. To believe this is to believe in the possibility, and desirability, of socialism in one country, while ignoring the immanent potentials for a more universal future created by capitalism as a world system.

Fixating upon private property leaves the basic social relations of capitalist production—wage labor, the production of surplus value, capital accumulation—completely untouched, even unanalyzed. Marx discovered this early on in the Paris Manuscripts of 1844, essentially an extended interrogation of Hegel’s Phenomenology of Spirit. While his contemporaries, like Engels and Proudhon, argued that modern private property was the source of alienation and exploitation, Marx grasped private property not as the cause of alienated labor, but as its effect. Alienated labor is a social relationship in which the subject’s creation of the object results in the object’s domination of the subject.24 This process of reversal, a form of objectification unique to capitalism, constitutes the basis of alienation in commodified labor. It is the source of the possibility for the object’s appearance as an independent, self-subsistent thing that stands apart from the subject as something that could be possessed by her or others. The act of mutual recognition presupposed in the exchange of commodities is merely a formal expression of this deeper process of self-estrangement. Private property, modern possession, is therefore merely a surface-level form that reflects how a deeper mediated, social relationship between people is transmuted into an immediate relation between things.

Naturalized by liberal social and economic thought, property is only the juridical crystallization of a deeper process of alienation, of self-imposed self-domination. Returning briefly to the concept of money: money too is a reflection of an essence underlying exchange. As the production of commodities takes place purely for profit and without any view to its usefulness for society, so money comes to be valued in its capacity to generate additional profits, instead of simply serving as oil in the gears of exchange, as in the marginalist account. Money is the materialization of a paradox: a tangible, material thing that is also the most abstract, general reflection of alienated labor.

The point is that the dialectic of alienation weaves together money, labor, production, and exchange into a contradictory whole, the open totality of capital, estranged from the very beings who constitute it – us. But this entire intricate process is repressed by the apparatus of economics, which adopts reified appearances—“money,” “property”—as the inert matter of its facts and theories. This is the standpoint silently assumed by contemporary market socialism. Blinding itself to the generative source of reification in the process of alienated labor, and beginning with the results of that process, money and property are taken as given, and by the same token so is the institution whose whole purpose is to give them juridical reality—the national state.

Let us return to Bruenig for a moment. In his arguments for market socialism he implicitly takes this whole scheme for granted. Taking the torch from Lange, but agreeing at a deeper level with Hayek, he presumes that the principal challenge for any socialist is to show how a national system in which the means of production and credit are socially-owned could be economically efficient. This is to unthinkingly accept the conventional notions of property and money at face value, without interrogating their historical limits. Most crucially, however, it is to rob the theory of socialism of its supranational scope, by lifting it out of the actual global circuits of value and the accumulation patterns of capital in order to cram it into a bourgeois morality tale of equal property ownership and fair exchange for one’s labor. And most importantly, because of the inherent nationalism of its concepts, the theory of market socialism not only goes nowhere near a postcapitalist vision; in the current historical moment, it also contains the seeds of a reversal into the corporatist economic nationalism of the proto-fascist hard right.

Presented as a static model of equally distributed ownership for all citizens, market socialism invokes a national, self-contained community within its very concept. As citizenship and property ownership are plainly legal categories, it only extends as far as a given legal regime—in this case, the nominal rights of citizens to the wealth produced by the firms of their particular country. Within this model, it is only from a narrowly nationalized basis that a “fair” redistribution of wealth, of national capital, can be imagined.

Given that the vast bulk of the wealth of society is now concentrated in equities, bonds, and securities of various kinds, market socialism rests on the illusion that capitalist finance could be cleanly delimited from the “productive” economy, which is always taken to mean a mythical, self-enclosed national economy—national capital. The seductive myth of productivism is composed of images which make it seem plausible that financial assets could simply be evenly redistributed while leaving competitive markets in place to naturally regulate supply and demand. But, again, this is to unconsciously identify a fixed, unchanging image of “natural” economic life—the domain of rational action—with historically specific, capitalist social relations. Like the neoclassical paradigm, which takes the logic of exchange as the transhistorical basis of all economic life, productivism abstracts finance from the global production and circulation of capital to reify it into a pure form of national property. This makes it a purely abstract negation of the present, in Hegel’s terms, a hollow refusal unconnected to reality.

Market socialism thus boils everything down to the problem of ownership. Besides the fact that it leaves the whole system of commodity production and commodified labor completely unexamined, it should be obvious that equalizing property ownership within a country would not remotely affect the supranational, compulsive drive for capital accumulation, which envelops all the countries of the world and proceeds with or without the agreement of any individual one among them. In essence, market socialism wants a fairer, local distribution of wealth within a broader, distended, inhuman form of production. The ultimate incompatibility of these aims is a symptom of its conceptual incoherence as an attempt to graft a nationalistic theory upon an essentially transnational form of social life. Based as it is on a fantasy of sovereignty, on a desire to secede from the rest of the world’s people by reclaiming the capital of the nation, this kind of agenda might understandably seem appealing to an anarcho-primitivist, but it is rather puzzling why self-proclaimed socialists seem to find it so attractive. Yet the puzzle disappears in the critique of left economic nationalism, which exposes how the nation is essential to the theory. This is why it would be easily compatible with rightwing economic nationalism, which bases itself on a renewed competitive struggle for sovereignty and the assiduous prosecution of the national self-interest in the global economic order.

Finally, and most importantly, market socialism succeeds in effacing the global class-relationship between the multinational working class and the equally multinational circuits of capital. As a relation between the owners of capital, or more accurately what Marx called the personifications of capital, and their workers, the class relation is made to appear as a thing, a question of who owns what property or money, or who owes what to whom. But the class relation is no mere question of ownership. It is constituted by the globalized working class from which surplus value is extracted in order to be reinvested into the reproduction of capital. As a variant of economic nationalism, market socialism stops at the question of ownership and distribution without any real consideration of the class relation itself. Explicit consideration of that relation would immediately undercut the nationalist pretensions of the theory, insofar as the class relation is irreducibly transnational in scope, spread across a financialized terrain of production that unites workers from dozens of countries into the same global division of labor. Economic nationalism, right or left, is the consequence of a debased form of economic and political thought that, far from advancing class solidarity, amounts to the negation of class politics.

Toward a New International

As the history of the twentieth century amply demonstrates, the attempt to construct a socialist society within broader and deeper structures of alienation invites pathological distortions of its own idea. This is the legacy of “socialism in one country,” which the market socialists would resurrect. The crucial point is not that planning of whatever kind teleologically leads to coercion and state terror, as Hayek and his ideological children would believe, but that the only models we have for it presume a national framework. In our current moment, national schemes—whatever their details—will inevitably founder on the shoals of capitalism, whose deeper, substantive, global reality forms their historical limit. 

Of course, that limit cuts both ways. The world backlash against the obvious failures of the neoliberal project proves beyond doubt that the currents of history are shifting against the Hayekian vision of helpless, abject enslavement to the market. But the dream of national liberation from the oppression of globalization remains a mythological fantasy, whether peddled by the reactionary right, an increasingly unhinged center, or the contemporary left.

As socialists, we should reject the abstract dichotomy between the nation-form and neoliberal globalization. We must look toward a different horizon whose contours are only just beginning to come into view through the fog of the current chaos, but which points to a radically different, universal, and progressive future whose real potential lies immanent within the present. That potential lies not in abstractly negating globalization by tearing it apart through destructive nationalism, but rather in its determinate negation (to use Hegel’s phrase) through a progressive transformation into a more humane, egalitarian global society.25 Reviving internationalism to actualize this potential is not simply a good option—it may be the only option we have to avoid an unwelcome return of the nightmares of the twentieth century.  

Dedicated to the memory of Moishe Postone, 1942-2018.


  1. Bob Bryan, “Bernie Sanders, Democrats Blast Trump’s Decision to Back Down on Sanctions Against Chinese Tech Giant,” Business Insider, May 14, 2018.
  2. See Yascha Mounk, The People Versus Democracy (Cambridge: Harvard University Press, 2018). Other notable examples of liberal apostasy include Martin Wolf, “Capitalism and democracy: the strain is showing,” Financial Times, August 30, 2016;); Dani Rodrik, “Put Globalization to Work for Democracies,” New York Times, September 17, 2016; Paul Krugman, “Trade and Tribulation,” New York Times, March 11, 2016; and Lawrence Summers, “The case for secular stagnation is more convincing than ever,” Financial Times, February 18, 2016.
  3. Some notable contributions to this earlier debate included Alec Nove, “Markets and Socialism,” New Left Review, no. 161, January-February 1987; Diane Elson, “Market Socialism or Socialization of the Market?,” New Left Review, no. 172, November-December 1988; John E. Roemer and Pranab Bardhan, “Market Socialism: A Case for Rejuvenation,” Journal of Economic Perspectives 6, no. 3, Summer 1992; and Ernest Mandel, “The Myth of Market Socialism,” New Left Review, no. 169, May-June 1988. For a comprehensive critical statement against the market socialist case as it was presented at the time, one can consult David McNally’s still excellent Against the Market: Political Economy, Market Socialism and the Marxist Critique (London: Verso, 1993).
  4. Seth Ackerman, “The Red and the Black,” Jacobin, December 20, 2012.
  5. Vivek Chibber, “Our Road to Power,” Jacobin, December 5, 2017.
  6. Matt Bruenig, “Index Funds are a Proof of Concept for Market Socialism,” People’s.
  7. John Roemer, “A Design for Market Socialism,” Cowles Foundation Discussion Paper No. 2090, May 31, 2017; Axel Honneth, The Idea of Socialism: Towards a Renewal (Cambridge, UK: Polity, 2017).
  8. There is a of course a rich literature on the Ricardian socialists, which include, as some representative figures, Thomas Hodgskin, William Thompson, Piercy Ravenstone, and John Gray, among others. Two great overviews are in E.K. Hunt, “The Relation of the Ricardian Socialists to Ricardo and Marx,” Science and Society 44 (2), 1980; and J.E. King, “Utopian or scientific? A reconsideration of the Ricardian socialists,” History of Political Economy 15 (3), 1983. A very valuable discussion can be found in McNally, Against the Market.
  9. The key texts here are well known: William Stanley Jevons, Theory of Political Economy (New York: Sentry, 1962 [1871]); Léon Walras, Elements of Pure Economics: or the Theory of Social Wealth (London: Orion, 19841874), tr. William Jaffe; and Carl Menger, Principles of Economics (Auburn: Ludwig von Mises Institute, 1976 [1871]), trs. James Dingwall and Bert F. Hoselitz. See also the synoptic overview of the “marginal revolution” in Ben Fine and Dimitris Milonakis, From Political Economy to Economics: Method, the Social and the Historical in the Evolution of Economic Theory (New York: Routledge, 2008). For the relationship between neoclassical economics and classical physical theory, see Philip Mirowski, More Heat Than Light: Economics as Social Physics, Physics as Nature’s Economics (Cambridge, UK: Cambridge University Press, 1991).
  10. See Renato Cirillo, “The ‘Socialism’ of Léon Walras and his Economic Thinking,” The American Journal of Economics and Sociology 39, 1980.
  11. Oskar Lange and Fred M. Taylor, On the Economic Theory of Socialism (Minneapolis: University of Minnesota Press, 1938). Hayek’s response appears in three essays on “Socialist Calculation” in Individualism and Economic Order (Chicago: University of Chicago Press, 1948).
  12. Ludwig von Mises, Economic Calculation in the Socialist Commonwealth (Auburn: Mises Institute, 1990) tr. S. Adler. Mises’s argument was a itself a response to the Austrian polymath Otto Neurath’s proposal for a non-monetary, marketless socialist economy, which appeared in 1919.
  13. Mises, Ibid. 17.
  14. In fact, it was Walras’ well-known hypothetical model of the “auctioneer” who, through the process of tâtonnement, would clear markets by efficiently matching the demand of a given commodity with its supply at every price. This seemed to establish the possibility of planned economies for socialist theorists. Lange saw it as but a short step from Walras’ auctioneer to his own central planning board, which in a market socialist economy would perform the exact same role. There is some ambiguity regarding the precise role of planning in market socialist theory, but the general drift of current theory is toward publicly-owned firms that engage in competition with each other, cutting costs and expanding production until the optimum point at which prices equal marginal costs.
  15. Lange’s critique turned the accusations of supposedly unscientific “historicism” and “institutionalism” – usually hurled against Marxists and historical economists by the marginalists – against Mises himself. This consisted in simply pointing out the blatant contradiction in Mises’s argument between its reliance on the supposedly timeless logic of human rational action, on the one hand, and its insistence on the need for the particular historical institutions of private property and money.
  16. This basic insight also motivates Foucault’s penetrating analysis of neoliberalism as a practice of governmentality. See The Birth of Biopolitics: Lectures at the Collège de France, 1978-1979 (New York: Picador, 2010).
  17. The classic statement here is “The Use of Knowledge in Society,” in Individualism and Economic Order.
  18. Chibber, “Our Road to Power.”
  19. Mirowski, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (New York: Verso, 2013).
  20. Some work supporting this view of money as global in its substance includes Duncan Foley, “Rethinking Financial Capitalism and the ‘Information’ Economy,” Review of Radical Political Economics 45(3), 2013; and Tony Norfield, The City: London and the Global Power of Finance (New York: Verso, 2015). The evidence for this definition of money does not only come from Marxian theorists, however. For example: Maurice Obstfeld and Alan M. Taylor, “International Monetary Relations: Taking Finance Seriously,” Journal of Economic Perspectives 31(3), 2017; Sheheryar Malik and TengTeng Xu, “Interconnectedness of Global Systemically Important Banks and Insurers,” IMF Working Paper, September 2017; and Adam Tooze, “The secret history of the banking crisis,” Prospect Magazine, July 14, 2017.
  21. Bruenig, “Index Funds.” Bruenig explicitly invokes Lange’s work as a precursor to this own, but, in its embrace of competition over planning, his position is really closer to Hayek.
  22. Jamie Merchant, “Fantasies of Secession: A Critique of Left Economic Nationalism,” Brooklyn Rail, February 2018.
  23. Ibid.
  24. This is the origin of the dialectic of alienation. Marx understood the act of self-domination by the subject through a Hegelian lens as ultimately an act of self-creation, in which the formation of the object simultaneously shapes the subject; unlike Hegel, though, he grasped this process as a form of mediation unfolding within the social relations of capitalist production, whereas Hegel saw it as the transhistorical movement of Reason itself. For a somewhat dated but still powerful interpretation of the dialectic of alienation, see Alexandre Kojève, Introduction to the Reading of Hegel: Lectures on the Phenomenology of Spirit (Ithaca: Cornell University Press, 1980), tr. James Nichols.
  25. Research and organizational work on the possibility of transforming globalization into a more progressive form is underway in an array of venues. No comprehensive review is possible here, but some notable representatives of a diverse theoretical and political movement include: Erik Loomis, “A Left Vision for Trade,” Dissent, Winter 2017; Thomas Piketty, “We must rethink globalization, or Trumpism will prevail,” The Guardian, November 16, 2016; Robert Pollin, Greening the Global Economy (Cambridge, MA: MIT Press, 2015); Rana Dasgupta, “The demise of the nation state,” The Guardian, April 5, 2018; and social organizations such as Asia Floor Wage, Alliance, Global Justice Now, The Global Living Wage Coalition, and Justice is Global.


Jamie Merchant

Jamie Merchant lives in Chicago. His book, Endgame: Economic Nationalism and Global Decline will be published in 2024 by Reaktion, in the Field Notes series.


The Brooklyn Rail

JUL-AUG 2018

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