A Marxist Trap? The Danger of Economics Imperialism, or, How to Understand a Socialist Market Economy

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.


5 thoughts on “A Marxist Trap? The Danger of Economics Imperialism, or, How to Understand a Socialist Market Economy

  1. In the evaluation of a country as “socialist” or not, there’s a detail that folks who skipped over Lenin tend to miss: the primary importance of political power. “Is _____ a dictatorship of the proletariat” seems to me to be a more useful overall question for present state of the world than “is _____ a socialist country (despite the influence of the prevailing capitalist world-system).”

    There’s a section in Lenin’s “‘Left-Wing’ Childishness” (later reproduced in “The Tax in Kind”) where he enumerates the various relations of production that existed within the country at that point, and at that time it was clear that socialist relations were by no means the most prevalent (if anything, small-commodity production was probably the most common by a wide margin). So then what gave them the right to call themselves a union of “socialist” republics? The fact that the proletariat had political power — a fact that created the possibility of privileging socialist production and encouraging its further growth. Even at that early point, where he was arguing a greater prevalence of state-capitalist production would be a relative step forward, he clarified: “Our state capitalism differs essentially from the state capitalism in countries that have bourgeois governments.”

    As a twitter user put it rather pithily: “The issue is not whether the state owns the economy, but who owns the state.”

    On this note, I think a stronger case against the “capitalist counterrevolution” narrative in China would probably call for examining things like the relationship between state and party, the way the two are fundamentally organized, and how they interact with production. Even if policies and leading cliques change, is there a basic continuity of the structures and relations forged in the revolutionary years? Is the mass line still being demonstrably upheld? (After all, we say “the working class cannot simply lay hold of the ready-made state machinery, and wield it for its own purposes”; would not the reverse also hold to great extent for capitalist roaders and counterrevolutionaries?)

    These are topics I would dearly love to study in greater depth, though I’m not aware of many good English sources on these matters.

    1. Good points, since the work in progress of socialism involves far more than the economy. I have been developing the category of ‘enmeshment’ to understand the party-state-economy question (much more later). Useful here too is Stalin’s ‘Economic Problems’ from 1951-52.

      1. Thanks for the recommendations. Those are both on my to-read list, but I’ll make a point to move them up the queue.

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