1âThe Shortage Economy
Let us begin by identifying the object of study. Real Socialism as a concept emerged in the 1970s in the Soviet Union and Eastern Europe for the principal purpose of distinguishing the existing system there from theoretical or abstract concepts of socialism. Critiques of capitalism, it was argued, could no longer be âconfined to the purely conceptual realm. They are impelled by the rich experience of countries that have successfully built (or are building) socialism.â In short, there was a developed socialism, âa really existing socialist society,â a new society that had been built as the result of real practice.1
The development of this concept of Real Socialism played several roles. Firstly, it served as a means to defend against criticism of the Soviet model by those who harkened back to Marx and Engels, those who argued the need for reforms (for example, those who looked for âsocialism with a human faceâ) as well as those who thought they could build socialism by a different way (as in China at the time).2 There was another function as well: this concept of Real Socialism allowed the Brezhnev leadership to distinguish their focus from the stress in the preceding Khrushchev period upon building communism. Real Socialism was still to be understood as a stage of history preceding communism; however, it needed to be understood as a consolidated, stable system and celebrated as such.
For our purpose, then, Real Socialism refers to the nature of the system in the Soviet Union and in the countries in Eastern and Central Europe that adopted the Soviet model in the period roughly from the 1950s through the 1980s. Thus our principal focus is upon the system which was more or less consolidated and stable rather than the original emergence of that system.3
THE SYSTEM PARADIGM
To consider Real Socialism as a system, the appropriate starting point is with Marxââthe pioneer of the system paradigmâ according to Janos Kornai, the Hungarian analyst of Real Socialism. âResearchers who think in terms of the system paradigm,â Kornai proposes, âare concerned with the system as a whole, and with the relations between the whole and its parts.â4 That certainly was what Marx did. Considering the concept of an organic system, a âstructure of society, in which all relations coexist simultaneously and support one another,â Marx stressed that its elements could not be treated as âindependent, autonomous neighboursâ extrinsically or accidentally related; rather, they âall form the members of a totality, distinctions within a unity.â5
This focus upon the whole constitutes a methodological revolution.6 It breaks with the âCartesianâ heritage that views the parts as âontologically prior to the whole; that is, the parts exist in isolation and come together to make wholes.â In that Cartesian paradigm, described brilliantly by Levins and Lewontin, âthe parts have intrinsic properties, which they possess in isolation and which they lend to the whole.â In Marxâs dialectical perspective, by contrast, the parts have no prior independent existence as parts. They âacquire properties by virtue of being parts of a particular whole, properties they do not have in isolation or as parts of another whole.â7
In addition to situating parts within particular wholes, the system paradigm leads us to think about how systems change. âWhat distinguishes the thinking of those working within the system paradigm from that of their colleagues outside it,â Kornai argues, âis that they are interested in the big changes, in the big transformations. For instance, they enquire into what processes of decay are going on within a system, so that it will come to an end and give way to another system. They ask how there occurs a transition from one system to another system, or from one typical version of a great system to another.â8
But we also must ask, why do systems not change? Why did slavery last for centuries? Why did feudalism? And what keeps capitalism going? How is it that tomorrow there are capitalists and wage laborers? What makes these relations stable? In short, when you focus upon systems, you ask both what permits the reproduction of a system and also what leads to its non-reproduction.
THE REPRODUCTION OF ECONOMIC SYSTEMS
âWhatever the social form of production process,â Marx declared at the opening of chapter 23 of volume 1 of Capital, âit has to be continuous; it must periodically repeat the same phases. A society can no more cease to produce than it can cease to consume. When viewed, therefore, as a connected whole, and in the constant flux of its incessant renewal, every social process of production is at the same time a process of reproduction.â9
Following that opening general statement, Marx demonstrated that his specific discussion in Capital had provided the basis for viewing capitalism as a system of reproduction. He underlined this point by concluding the chapter as follows:
The capitalist process of production, therefore, seen as a total, connected process, i.e. a process of reproduction, produces not only commodities, not only surplus value, but also produces and reproduces the capital-relation itself; on one hand the capitalist, on the other the wage-labourer.10
The subject, thus, was a âconnected wholeâ constantly in the process of renewalâone that produces and reproduces material products and social relationsâwhich are themselves presuppositions and premises of production. âThose conditions, like these relations, are on the one hand the presuppositions of the capitalist production process, on the other its results and creations; they are both produced and reproduced by it.â11 Capital in this way spontaneously produces its premises: âIn the completed bourgeois system, every economic relation presupposes every other in its bourgeois economic form, and everything posited is thus also a presupposition; this is the case with every organic system.â12
But a âcompletedâ economic system doesnât drop from the sky. A new system emerges initially based upon historic premises, those it inherits from the previous society rather than those it produces itself, and âits development to its totality consists precisely in subordinating all elements of society to itself, or in creating out of it the organs which it still lacks.â13 For capitalism to become an organic system, capital needed to alter the mode of production and to create a âspecifically capitalist mode of production.â As indicated in the Introduction to this book, once that capitalist process of production is âfully developed,â capital produces the workers it needs, the presupposition of workers who look upon capitalâs requirements as common sense.14
However, what ensures the reproduction of the worker as wage laborer before capital has âposited the mode of production corresponding to itâ?15 Faced with workers who do not look upon the requirements of capitalist production as self-evident natural laws, workers who by education, tradition, and habit still consider the sale of their labor-power as unnatural, âthe rising bourgeoisie needs the power of the state.â Thus capital proceeded to subordinate all elements of society to itself through the coercive power of the state (for example, âgrotesquely terroristic lawsâ), using this power to compel workers âinto accepting the discipline necessary for the system of wage-labour.â16
Accordingly, until the development of the specifically capitalist mode of production, the reproduction of capitalist relations of production required a specifically capitalist mode of regulation.17 This mode of regulation was needed to prevent workers from extracting themselves from their dependence upon capital and entering a âdiametrically opposedâ relationâone where the producer âas owner of his own conditions of labour, employs that labour to enrich himself instead of the capitalist.â18
In short, capitalism was not fully successful in âsubordinating all elements of society to itself, or in creating out of it the organs which it still lacksâ until it developed the specifically capitalist mode of production. Until the bourgeois system is âcompletedâ as an organic system, elements are present in society that are alien to capitalist relations. Thus when we consider society at such a point, it is neither purely one system nor another. Rather, necessarily characteristic of the existing society is a contested reproductionâa struggle between differing productive relations, between âtwo diametrically opposed economic systems.â
In The Socialist Alternative, I proposed that the same would be true for socialism. Until the associated producers develop their own specifically socialist mode of production, one that produces a working class that âby education, habit and tradition looks upon the requirements of that mode of production as self-evident natural laws,â a socialist mode of regulation is required. Until socialism has developed upon its own foundations, the elements it inherits from the old society infect it, and the situation here too is one of âcontested reproduction,â a struggle between two opposed economic systems. In short, to ensure the reproduction of socialist relations of production under these conditions, a specific mode of regulation that subordinates the elements of the old society is essential.19
We need to pose the same questions with respect to Real Socialism. How was the system reproduced? Did it succeed in developing a specific mode of production which spontaneously produced its premise? Or did it require a specific mode of regulation to ensure its reproduction?
THE METHOD OF POLITICAL ECONOMY
How do we get to the point of being able to explore such questions? For Marx, it was clear that the starting point must be a careful study of a real society. The concrete is âthe point of departure for observation and conception.â But empirical study in itself does not permit you to grasp the system as a totality; rather, you need the theoristâs instrument, âthe power of abstraction.â20 The method of inquiry, as Marx noted, âhas to appropriate the material in detail, to analyse its different forms of development and to track down their inner connection.â And that appropriation of the material in detail is a precondition for bringing âa science to the point at which it admits of a dialectical presentation.â21
This dialectical presentation, then, is precisely what Marx called the âscientifically correct method.â By starting from the study of the concrete, it is possible to distill simple principles that allow you to deduce elements in a sequence determined by the nature of their relations within the society in question.22 Deduction allows you to understand the interconnections within the concrete whole and thus not to treat the elements as âindependent, autonomous neighbours.â To proceed from those simple conceptions to a conception of the whole âas a rich totality of many determinations and relationsâ was how Marx constructed the concept of the organic system. Through this method, he was able to demonstrate how the later logical developments in capitalism are latent in the simple concepts.
But the starting point must be that appropriation of the concrete in detail. That is what makes Janos Kornaiâs examination of Real Socialism such a useful scaffold. Beginning with his initial analysis of managerial behavior and the planning system in his native Hungary during the 1950s to his subsequent in-depth study of the âshortage economyâ in general, to his later synthesis of the âimmanent regularities of a socialist economy,â Kornaiâs starting point was unquestionably the concrete characteristics of Soviet-type economies.
Making his analysis more than an empirical report, however, was Kornaiâs conscious attempt to imitate Marxâs method. Thus, just as Marx pointed to âthe completed bourgeois system [where] every economic relation presupposes every other in its bourgeois economic form,â Kornai concluded that the characteristics of Real Socialism âexist not merely side by side and independently but in the closest of relationships with each other.â23 The phenomena, he noted, âall belong together and strengthen each other. This is no loose set of separate parts; the sum of the parts make up an integral whole.â24 In short, Real Socialism was definitely âa structure in which all the elements coexist simultaneously and support one another.â25
For Kornai, Real Socialism was thus an organic systemâa system whose âcombination of main features forms an organic whole.â It was a âcoherent system,â âa coherent wholeâ whose elements are âorganically connected and reinforce each other.â And, characteristic of that coherent totality is that âan affinity applies between the elements of it, so that they mutually complement and attract each other.â Further, corresponding to Marxâs description of the âbecomingâ of an organic system as consisting âprecisely in subordinating all elements of society to itself, or in creating out of it the organs which it still lacks,â Kornai argued that the process of becoming Real Socialism was one in which âspecific forms and institutions grow organically within the system.â26
That process is one in which âa natural selection of institutions and behavior patterns takes place, and ultimately enormously strengthens and greatly consolidates the inner coherence of the system.â Indeed, once the key elements are present, the completion of the system tends to occur spontaneously: âThe new structure proliferates with an elemental force, propagating itself and penetrating into every social relationship. Once the start of the process is imposed upon the society, it goes on in a spontaneous manner.â27 In this way, he argued, Real Socialism proceeded to produce its own premisesâwith the result that every economic relation presupposes every other in its âreal socialistâ economic form.
In short, Kornai attempted to âappropriate the material in detail, to analyse it...