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davidtrump

The market

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Hungarian historian Karl Polanyi suggested that market economies should subordinate themselves to larger societal needs. He states that human-beings, the source of labor, do not reproduce for the sole purpose of providing the market with workers. In The Great Transformation, Polanyi says that while modern states and market economies tend to grow under capitalism, both are mutually interdependent for functional development. In order for market economies to be truly prosperous, he claims social constructs must play an essential role. Polanyi claimed that land, labor, and money are all commodified under capitalism, though the inherent purpose of these items was never intended "for sale"—what he labels "fictitious commodities." He says natural resources are "God-given", money is a bookkeeping entry validated by law, and labor is a human prerogative, not a personal obligation to market economies.

Schweickart's economic democracy is a form of market economy, at least insofar as the allocation of consumer and capital goods is concerned. Firms buy raw materials and machinery from other firms and sell their products to other enterprises or consumers. "Prices are largely unregulated except by supply and demand, although in some cases price controls or price supports might be in order – as they are deemed in order in most real-world forms of capitalism."

Without a price mechanism sensitive to supply and demand, it is extremely difficult for a producer or planner to know what and how much to produce, and which production and marketing methods are the most efficient. Otherwise, it is difficult to motivate producers to be both efficient and innovativeMarket competition resolves these problems, to a significant if incomplete degree, in a non-authoritariannon-bureaucratic fashion.

Enterprises still strive to make a profit. However, "profit" in a worker-run firm is calculated differently than under capitalism. For a capitalist firm, labor is counted as a cost. For a worker-run enterprise it is not. Labor is not another "factor of production" on par with land and capital. Labor is the residual claimant. Workers get all that remains, once other costs, including depreciation set asides and the capital assets tax, have been paid.

Because of the way workplaces and the investment mechanism are structured, Schweickart's model aims to facilitate fair trade, not free trade, between nations. Under Economic Democracy, there would be virtually no cross-border capital flows. Enterprises themselves would not relocate abroad, since they are democratically controlled by their own workers. Finance capital stays mostly at home, since funds for investment are publicly generated and are mandated by law to be reinvested domestically. "Capital doesn't flow into the country, either, since there are no stocks nor corporate bonds nor businesses to buy. The capital assets of the country are collectively owned – and hence not for sale."

According to Michael Howard, "in preserving commodity exchange, a market socialism has greater continuity with the society it displaces than does nonmarket socialism, and thus it is more likely to emerge from capitalism as a result of tendencies generated within it." But Howard also suggested, "one argument against the market in socialist society has been that it blocks progress toward full communism or even leads back to capitalism". From this perspective, nonmarket models of economic democracy have also been proposed.

wikipedia.org

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