A Forgotten History: East European Market Socialism

This article – ‘Socialism and the Market: The East European Experiment’ – is now in the final stages before publication in New Proposals, so I have removed the initial post and provide here the abstract:

This study reassesses a body of research that has largely been forgotten: Eastern European market socialism of the 1960s-1980s. It does with the objective of recovering important insights and also identifying problems that need to be addressed. Thus, the study begins with an overview of the practices of market socialism, which was pursued to varying degrees in the 1960s. While some (USSR, East Germany and Czechoslovakia) turned back to centrally planned economies in the 1970s, others (especially Yugoslavia and Hungary) pursued further reforms. This material provides the back for analysis of three theoretical breakthroughs and their attendant problems: the market as a neutral “economic mechanism,” as a crucial effort to detach a market economy from its assumed integral connection with a capitalist socio-economic system; the tensions between planning and market, where I seek a more dialectical formulation; and the ownership of the means of production, which risked ignoring the liberation of productive forces. Although there occasional references to Chinese practices and theory, a full study of a socialist market economy with Chinese characteristics is the subject of a follow-up article.

Keywords: market socialism; Eastern Europe; economic mechanism; planning and market; ownership of the means of production; liberation of productive forces.

10 thoughts on “A Forgotten History: East European Market Socialism

  1. Very topical, Roland, given the anniversary of the ‘Fall of The Wall’.
    I am also writing a fiction serial set in the DDR. Up to episode five. 🙂
    Best wishes, Pete.

  2. I’ve said this elsewhere but if you read carefully the Program of the Communist International from the Sixth World Congress held in 1928, the potential of “consciously organized and planned production for the purpose of satisfying rapidly growing social needs” replacing the “elemental forces” of the world market is fully actualized only under the higher stage of communism, where there is no state and the free association of labor prevails.

    1. That would, of course, be global communism, according the principle of ‘from each according to ability, to each according to need’. But the phase of socialism, as Stalin first defined it, is ‘from each according to ability, to each according to work’. And for that you need market socialism, as the East Europeans defined it.

      1. If I recall correctly, Stalin said in “Economic Problems” that the law of value continues to operate in the co-operative sector but is otherwise constrained by new economic laws that emerge as socialism develops, applying initially in the industrial sector but gradually over the whole economy. Apparently there was a huge argument between him and Vosnesensky over how extensively the law of value should have functioned (the latter wound up paying for his viewpoint with his life) but they both seemed to agree that, in my own words, markets continue to exist under socialism for as long as they’re materially necessary.

        Later Soviet theorists seemed to disregard this as they formulated their theories of “developed socialism”, thinking that the economy was both horizontally and vertically integrated enough to render the laws of market competition “well-nigh invalid”, as they said. Never mind that a massive underground black market was flourishing, with even Brezhnev himself participating. While I personally think that the idea of “developed socialism” is valid, it clearly didn’t accord with reality. As the KPRF states in its Party Program, the USSR “got ahead of itself”.

      2. Stalin’s 1953 text caused a few headaches in Eastern Europe and was actually one of the stimuli for developing market socialism. His argument for the necessity of ‘laws’ in the political economy of socialism, such as the law of value, the reality of commodities, and the tensions between forces and relations of production, forced economists to reconsider these issues. I do not think they solved them, since they were beholden to the primacy of relations of production (ownership and the control of the party), but at least it was a start. That said, we are talking about the distinct phase of socialism rather than communism. A good source on these debates in East Germany, where they did much work, is by Gunter Kraus, in a collection edited by Hans-Jurgen Wagener, called ‘Economic Thought in Communist and Post-Communist Europe’. Kraus is an economist who was trained and taught in East Germany, so he knows his stuff. I have also found the Polish Marxist economist, Włodzimierz Brus, very helpful, and occasionally the Yugoslav economist, Branko Horvat.

  3. Dear Roland,

    Thank you for your last post.

    The reason I ask is because I am working on a novel that involves a great worldwide communist revolution, and I’m looking into writers of such prophecies and trying to adapt them accurately as they theorised – as in, a communist revolution exactly how they imagined.

    Is Karl Kautsky’s ‘The Social Revolution’ (1902) one of them or am I reading his work wrong?


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