Help me to refute this!

[Allan]

I'm not very knowledgable about much of what he talks about. This is from a debate between a friend and me through E-mail.

"When you eliminate the bourgeoisie, you're going to be left with two classes: the bureaucrats (with the guns--the ones they used to kill or brutalize all the bourgeois) and the workers.

"Now that the bureaucracy controls the means of production, it faces the same challenges the former bourgeois businessmen face: how to allocate resources to meet demand. The market does this thru the calculation of profit and loss. The bureaucracy can't do that because it commands the support of the workers by promising to distribute according to need.

"Without profit-loss calculations, the new owners of the means of production find themselves without a rational mechanism to allocate resources to meet demand. They clumsily attempt to balance supply and demand but human activity is a complex phenomenon. In the absence of profit to signal to the producer the best way to allocate resources, the central planners resort to complicated mathematical calculation and, more often, political patronage, to allocate resources. The end result is always scarcity of goods in high demand (food, medicine, housing) and a superfluity of goods in low demand (atomic bombs, ugly, poorly made clothes, drab, unhealthy apartments, etc.)

"In conclusion, needs are infinite, resources are scarce. The market rations scarce resources according to price. The bureaucracy rations scarce resources according to guesswork and political patronage. The members of the Party live off the fat of the land. The workers develop a black market (i.e., a free market) in a desperate attempt to raise their living standards. In the end, the system collapses because the scarce means of production have been wasted by the central planners."

[redstar2000]

Capitalist dummy wrote: In conclusion, needs are infinite, resources are scarce. The market rations scarce resources according to price. The bureaucracy rations scarce resources according to guesswork and political patronage. The members of the Party live off the fat of the land. The workers develop a black market (i.e., a free market) in a desperate attempt to raise their living standards. In the end, the system collapses because the scarce means of production have been wasted by the central planners.

Well, not exactly.

The capitalist free market rations scarce resources according to disposable wealth.

In other words, if you have enough money, you can buy anything...no matter how "scarce". If you are really poor, then even the most minimal necessities are too expensive...and you die from malnutrition, exposure, or some disease connected with those conditions.

Centrally planned economies (at least those of the Soviet era) also had markets in which goods were rationed by disposable income; but they modified the effects by making many basic necessities either free or available at some purely nominal charge.

The modification was only partially successful because many basic necessities were deliberately underproduced...and that's what led to the "black markets".

It's quite accurate to say that the party hierarchy lived better, and at the top a great deal better, than the working class. On the other hand, in fairness, it must be added that the grotesque income disparities that exist in the U.S. were impossible in the USSR...only now, when capitalism has been openly restored, do you see a comparable income differential between the elite and the ordinary person.

The Soviet economy, by the way, did not "collapse"...what happened was that Soviet leaders diverted more and more production to the black markets, appropriating more and more wealth in offshore banks, until it "made sense" to openly restore capitalism.

Something along those lines is, I think, inevitable as long as your conception of post-capitalist society is limited to a "revamped" form of class society...with a market, money, wage-labor, state, police, army, political elite, etc.

You have to get rid of all that crap pretty quickly...or sooner or later, it will come back to bite you in the ass.

[Allan]

Thank you! I used some of your arguments, and as a result he has resorted to a bit of name-calling. He did also respond with:

"The supply of rare items is conserved by virtue of the fact that few people can afford them; demand is low because the price is so high.

"Demand is high for basic necessities, signalling the opportunity for profit to producers. Everyone rushes to supply this demand and compete in terms of price for consumer dollars. Lo and behold, there is a place to buy affordable food in the US on just about every street corner."

Concerning centrally planned economies:
"[...] what will happen is that consumption increases to the point where the basic necessities become scarce. A consumer who does not have to bear the cost of production has no incentive to conserve. Producers who don't make a profit have no incentive to innovate, or even to produce, really. Consequently, basic necessities in socialist countries are always in extremely short supply. Of course, the bureaucrats never go hungry."

Excuse my ignorance of such things that probably appear as obvious to you.

[redstar2000]

Capitalist dummy wrote: Demand is high for basic necessities, signaling the opportunity for profit to producers. Everyone rushes to supply this demand and compete in terms of price for consumer dollars. Lo and behold, there is a place to buy affordable food in the US on just about every street corner.

That's also the case in Cuba as well. If your planned economy plans to produce a lot of food, then it will be available...and at an even lower price than under capitalism.

But consider this: where is the supply of affordable quality housing in capitalist economies? Or the supply of affordable energy?

How is it that capitalist "competition" can't produce a decent apartment for $250/month? Or a monthly utility bill of $50?

Capitalist dummy wrote: ...what will happen is that consumption increases to the point where the basic necessities become scarce. A consumer who does not have to bear the cost of production has no incentive to conserve. Producers who don't make a profit have no incentive to innovate, or even to produce, really. Consequently, basic necessities in socialist countries are always in extremely short supply.

No, that's not really true. Energy, for example, was both cheap and abundant in the old USSR. It's only since the open restoration of capitalism there that people "freeze in the dark".

In California, thanks to the calculated manipulation of the market by the energy companies, energy is scarce and expensive...almost a luxury good.

I also think it's debatable about whether or not there is more "waste" in a centrally planned economy or in a capitalist economy.

Extravagance is a "status-enhancer" in capitalism...an "incentive" that doesn't exist in a planned economy. This is not to suggest that there was no wastage in the USSR (we know there certainly was)...but I think much of it was due to the primitive state of information technology there.

That would not be a factor in a modern planned economy of course.

Here are some posts I wrote once on the subject...

The Manifest Idiocy of Capitalism