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M A R K E T S O C I A L I S M
EDITED BY
J U L IA N LE G R A N D A N D S A U L E S T R IN
C L A R E N D O N PRESS ■ O X F O R D
1989
Oxford University Press, Walton Street, Oxford OX2 6DP
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Oxford is a trade mark of Oxford University Press
Published in the United States
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© the several contributors 1989
All rights reserved. No part of this publication may be reproduced,
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The paperback edition of this book is sold subject to the condition that it shall not, by way of
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without a similar condition including this condition being imposed on the subsequent purchaser
British Library Cataloguing in Publication Data
Market socialism
1. Socialism. Economic aspects
I. Le Grand, Julian II. Hstrin, Saul
335
ISBN 0-19-827701-6
ISBN 0-19-827700-8 (pbk.)
Library of Congress Cataloging-in-Publication Data
Market socialism / edited by Julian Le Grand and Saul Estrin,
Bibliography Includes index.
1, Socialism. 2. Mixed economy.
I. Le Grand, Julian II. Estrin, Saul.
HX73.M345 1989 335-8— dci9 88-38793
ISBN 0-19-827701-6
ISBN 0-19-827700-8 (pbk.)
Printed and bound in
Great Britain by Biddles Ltd
Guildford and King’s Lynn
Preface
After Labour’s defeat in the 1983 General Election— the
second defeat in a row— the Fabian Society called together a
group of sympathetic academics and others to a meeting to
discuss what had gone wrong. At that meeting Julian Le Grand
and Raymond Plant argued that perhaps the major current
problem faced by the Left, including the Labour Party, was its
loss of an intellectual base. Many of the traditional socialist
forms of economic organization— such as central planning or
nationalization— were widely perceived as failures; even collec
tivist values were discredited. The Left was no longer in the
vanguard of intellectual radicalism; rather it was the so-called
New Right that was producing radical ideas for social reform
and change, ideas to which the Left could only respond with a
limp defence of the status quo. What was needed was nothing
less than a rethink of socialism: a re-evaluation of its basic
tenets and a reconstruction of its philosophical and economic
foundations.
After the meeting Julian Le Grand wrote to the then General
Secretary of the Fabian Society, Ian Martin, to suggest that a
group be set up to meet on a regular basis and to begin
rethinking and reconstructing socialist ideas. There was an
enthusiastic response to the idea, and the Socialist Philosophy
Group was set up by the Fabian Society under the joint
convenorship of Le Grand, Martin, and Plant.
At the first meeting of the Group, David Miller presented a
paper 011 market socialism. This aroused considerable interest,
and the topic formed the basis of many subsequent discussions
in the Group. During the course of those discussions it became
apparent that several of the Group’s members had a common
interest in the ideas grouped under the umbrella of market
socialism— ideas that seemed to be worthy of further develop
ment and of dissemination to a wider audiencc. This book is the
result.
VI Preface
Although each chapter in this book is individually authored,
it is in a real sense a collaborative— dare one say, socialist—
effort. Each contributor has read, and commented extensively
on, the others’ contributions. We have held several meetings to
discuss the material and to iron out differences. We have not
always been successful at the latter; but the differences that
remain are small and do not, we believe, detract from the book’s
intellectual coherence.
We have tried to make the book accessible to as many people
as possible. To this end we have tried so far as possible to avoid
technical jargon and specialist analyses. We have also tried not
to burden the reader with excessive footnotes and references.
Footnotes have been kept to a minimum; the references are
collected at the end of the book.
We have many debts. We owe a special one to the Executive
and staff of the Fabian Society, particularly the" two successive
General Secretaries, Ian Martin and John Willman, for their
encouragement and support of the Socialist Philosophy Group
over the years. We have benefited greatly from all the
contributions to the debates on the topic within the Group itself,
including (and perhaps especially) the contributions from those
who profoundly disagree with our arguments. Many other
friends and colleagues have helped us develop and refine our
views. Jane Dickson bore the brunt of the organization and
additional typing. Finally, our families have had to tolerate the
demands of the project, as well as those of our normal
occupations and preoccupations. To them all, our deepest
thanks.
PETER ABELL
SAUL ESTRIN
JULIAN LE GRAND
DAVID MILLER
RAYMOND PLANT
DAVID WINTER
Summer ig88
Contents
viii
About the Authors
1
1. Market Socialism
Saul Estrin and Julian Le Grand
2. Why Markets? 25
David Miller
3. Socialism, Markets, and End States 50
Raymond Plant
4. An Equitarian Market Socialism 78
Peter Abell
5. Planning in a Market Socialist Economy 100
Saul Estrin and David Winter
6. Market Socialism and the Reform of the Capitalist
Economy 139
David Winter
7. Workers’ Co-operatives: Their Merits and their
165
Limitations
Saul Estrin
8. Markets, Welfare, and Equality 193
Julian Le Grand
References 213
217
Index
About the Authors
peter Abell is currently Head of Department of Sociology at
the University of Surrey. He was formerly Director of Research
at the Social and Economic Studies Unit at Imperial College,
University of London, and Professor of Sociology at the
University of Birmingham. His interests are in co-operatives,
particularly in developing countries. He is the author of two
books, Small Scale Industrial Cooperatives in Developing Countries,
with N. Mahoney (Oxford University Press, 1988), and
Establishing Support Systems for Industrial Co-operatives: Case
Studies from the Third World (Gower, 1988).
Saul estrin was educated at the Universities of Cambridge
and Sussex, and has worked at Southampton and Cornell
Universities. Since 1984 he has been in the Department of
Economics at the London School of Economics. His research
has focused on comparative economic systems, with books on
indicative planning and self-management in Yugoslavia, as well
as numerous papers on producer co-operatives in Western
Europe. He is currently working on privatization in Britain and
France.
julian le grand is Professor of Public Policy at the School
for Advanced Urban Studies at the University of Bristol and a
Research Director at the Suntory Toyota International Centre
for Economics and Related Disciplines at the London School of
Economics, where he co-directs the Centre’s Welfare State
Programme. His books include The Strategy of Equality (Allen
and Unwin, 1982), The Economics of Social Problems, with Ray
Robinson (Macmillan, 1984), and Not Only the Poor: The Middle
Classes and the Welfare State, with R. Goodin (Allen and Unwin,
1987). He was co-founder with Ian Martin and Raymond Plant
of the Socialist Philosophy Group.
david miller is Official Fellow in Social and Political Theory
at Nuffield College, Oxford. Among his publications are Social
fustice (Oxford University Press, 1976) and Anarchism (Dent,
1984). He has been working for some years on the ethical
About the Authors IX
underpinnings of market socialism, and the results of this work
will shortly be published in book form under the title Market,
State, and Community (Oxford University Press).
Raymond plant is Professor of Politics at the University of
Southampton. He is the author of books on Hegel, Political
Philosophy and Welfare, Citizenship, Conservative Capitalism,
etc., and the Fabian pamphlet Equality, Markets and the State. He
was co-founder with Julian Le Grand and Ian Martin of the
Socialist Philosophy Group.
david w inter is a Lecturer in the Economics Department of
the University of Bristol. He has recently published papers on
the consumption goods markets of centrally planned economies
and in particular of Poland, and the determinants of British
government expenditure. He is currently a Senior Research
Fellow at the the Suntory Toyota International Centre for
Economics and Related Disciplines at the London School of
Economics, where he is a member of the Centre’s Welfare State
Programme.
I
Market Socialism
Saul Estrin and Julian Le Grand
T his book has two aims. The first is to ‘couple’ markets and
socialism. We hope to show that markets can be used to achieve
socialist ends. The use of markets in this way is what we mean
by market socialism, and the chapters in this book show how
this may be done in a variety of contexts. An important
corollary is the ‘decoupling’ of capitalism and markets. While it
may be impossible to have capitalism without markets (at least
in part because, as we argue later, all industrial systems,
whether capitalist, socialist, or mixed, inevitably use markets of
one kind or another), it is perfectly possible to have markets
without capitalism.
The second aim is to start the radical reorientation of socialist
thinking that is required by a proper understanding of market
socialism. The market mechanism is the most efficient way of
co-ordinating decentralized economic decision-making. This
means eschewing the tendency to centralized intervention in the
economy characteristic of socialist parties. Perhaps more funda
mentally, it means a change in our understanding of the
appropriate role of the state. Mistrust of the intentions of
bureaucrats and the effectiveness of public interventions leads
market socialists to seek to err on the side of laissez-faire. If one
wishes to ensure socialist outcomes from a market mechanism,
one must alter the environment in which markets operate to
ensure that such outcomes are in the private interest of
individuals, rather than use the state to impose the public
interest from above. This leads some of the chapters that follow
to focus on institutional changes and legal reforms conducive to
the socialist vision.
