Considering both economic theory and the historical record, it is reasonable to believe that if a society tries to abolish the market economy it will find that it abolishes the wealth-generation and long-run growth that only a market system can provide, and, on top of that, it will become more undesirably statist and lead to severe reductions in human freedom. If people cherish rights of speech, assembly, association, dissent, freedom of choice, freedom of religion, and so on, if they cherish that kind of liberty in general, it can only come about by having private property rights in the means of production – in the printing presses, the bookstores, the communications networks, and in most other scarce resources. They won’t get it when the state, the planning board, the party – whatever you want to call it – is in control of those resources.
When the state, in the name of “the people,” holds exclusive property rights — a monopoly! — over those scarce resources, people will be at the mercy of the state officials. The state officials will now hold ultimate responsibility for what is produced, how things are produced, and for whom things are produced. It doesn’t matter whether they’re Soviets, North Koreans, or Latin American military dictatorships. It doesn’t matter what language they speak, what culture they’ve emerged from, what race or gender the individuals themselves may be. In the name of “the people,” the state officials must decide, for example, which authors, which ideas, which books, which magazines and newspapers, are “socially worthy” of production and distribution, and which should not be produced.
In a market system these decisions are given to anybody who owns the means of production – and those private owners of the means of production will stay in control of the means of production only if they serve the demands of consumers. Only in a market system do we see millions of bibles being produced and purchased as well as hundreds of thousands of books that criticize religion and perhaps support atheism. Privately-owned publishers in the U.S. produce both books on the free market economy and Marx’s own radical books that attack the whole idea of our market and political institutions, as well as all views in between!
These decisions are not left up to some government bureau. They are not placed on some “democratic” political ballet for “society” to decide what should be produced. Instead, individuals cast their “dollar votes,” purchasing among an array of goods and services as each sees best fit. Joseph Schumpeter, an Austrian economist, once emphasized that, in a very practical sense, the market system is more “democratic” than a political system: cast your vote for a president, and you might or might not get what you voted for. You get only what the majority had voted for. But spend your dollar on a good or service, and you do get what you asked for. The majority of citizens out there probably detest, for example, old fashioned “jug band” music. But it is nevertheless produced on compact disk – and thereby enjoyed by what is obviously a minority of citizens – because some have found a way to serve that minority profitably. This would not occur if the decision to produce jug band music was left up to a democratic vote in a political process. There, the majority view wins. When the means of production are privately owned, producers will be encouraged to produce whatever they believe will be profitable to produce, seeking the “dollar votes” of consumers. Such freedoms allow not only for an enormous array of physical goods and services, reflecting all kinds of common and uncommon and even outright strange tastes and preferences, they also allow for the possibility of a civil sphere with different ideas, viewpoints, stances on religious and cultural matters, debates, websites, blogs, and so on to flourish.
Posted by Dave Prychitko on March 30, 2009 at 11:00 AM on “The Economic Way of Thinking” Blog.
For Freedom’s Sake was granted permission to re-post under the conditions stated in Creative Commons and by Dave Prychitko.
David L. Prychitko has been a Junior Fellow at Cornell University, Fulbright Researcher in Yugoslavia, and Cecil and Ida Green Chair in Economics at Texas Christian University. Also an author of several books and articles on Marx, comparative systems and methodology, Dave currently teaches at his undergraduate alma mater in the beautiful Upper Peninsula of Michigan.
One Comment
If say, in a society of 1,000 people, 900 want to buy a CD with pop music, and 100 with jug band music, 900 CDs with pop music are produced and 100 with jug music.
Production will be proportional to the diverse interests of a population and will be determined through a democratic process.
Thus, your argument does not hold. In a democratic socialist system, there will still be a plurality of goods produced and also, a civil sphere with pluralistic opinions will remain.