I am slowly thinking through a framework for understanding a socialist market economy. Historical investigation reveals that market economies have appeared at earlier points in human history, such as ancient Southwest Asia and the ancient Mediterranean. In these contexts there were market economies, but not capitalist market economies (or a capitalist mode of production, as Marx puts it). Instead, the Persians had what may be called a military market economy, while the Greeks and Romans had a slave market economy.
The obvious point from this historical work is a profound mistake in current debates, which is to equate ‘market economy’ with ‘capitalism’. Let me change the terms to indicate how serious the mistake is: it as though one were equating ‘mode of production’ with ‘capitalism’. In fact, the danger – especially for Marxists economists – is that if you make this equation, you end up with a version of economics imperialism.
To explain: this imperialism first arose from the context of neo-classical economics, in which the specific history of the emergence of this particular branch of economic analysis, if not the history of its topic (capitalist mode of production), was conveniently erased. The result was a universalisation of the specific assumptions of capitalist market economics so that you could apply these assumptions to human economic activity throughout history. Thus, if you have markets in the ancient world, they must be capitalist. Or if you have markets in a socialist economy, they must be capitalist.
I have encountered a number of Marxists who make a similar mistake. They assume that ‘marketisation’ and ‘market economy’ mean capitalism. They use this assumption to hypothesise that China is a capitalist economy because it has markets. By now the trap is obvious: it might be described as a Marxist version of economics imperialism.
While thinking through some the implications of this move, I decided to reread a crucial section of the third volume of Capital. In chapter 36, entitled ‘Precapitalist relationships’ (pages 588-605), Marx examines markets in their earlier forms. He writes of a range of features found in ancient markets, whether Greek or Roman or European feudalism. Here we find commodities, money, capital, merchants, industry and usury, but Marx is very careful to point out that all of these individual components did not make up a capitalist mode of production, or – as I am putting it – a capitalist market economy. Why? The relationship between these various items and their social determination meant that they may have comprised components of a slave or feudal mode of production, but certainly not a capitalist one – which requires a very different organisation.
Extrapolating from this historical work, this means that you may find some or more of these items under socialism in power, but this does not mean you have a capitalist market economy. It is a very different reality, for which ‘socialist market economy’ is the best name.
The next step in thinking through a socialist market economy is to analyse the distinction between a ‘planned economy’ and a ‘socialist market economy’ (a crucial change made in the Chinese constitution in 1982). Currently, my sense is that a planned economy is one phase of the wider reality of a socialist market economy, but I have more work to do on this question. The mistake in this case is to equate a planned economy with a socialist economy.