Saturday, September 29, 2012

The Greatest Transformation - by Eric Aarons

above: A recent book by Eric Aarons - exploring the clash between Karl Marx and Friedrich Hayek.

In the following article former Communist Party of Australia leader Eric Aarons responds to our earlier article by Shayn McCallum. (Shayn's article can be found here: ) Aarons critiques 'social market' approaches to change, positing global warming and other environmental challenges as the most important issues facing humanity. While recognising the necessary role of some markets, Aarons proposes an egalitarian services-based economy, and an economy which goes beyond the treadmill of over-work and over-consumption. DEBATE WECOME!!!

nb also: In addition to our article here, a very detailed review of Aarons' larger, more academically-inclined book on the same theme of Hayek and Marx can be found via the link below  - where we welcome debate!!!:   SEE:

Eric Aarons, September 2012

This article is a response to Shayn McCallum’s article ‘State and Market – a Democratic Socialist Approach’ that appeared on a Tristan Ewins’ website. I do so because the concerns it deals with are close to my own – that is, seeking to formulate  a substantive definition of what currently  active people of the left should do or ‘stand for’.

My response is not intended as a polemic, though it is forthright and direct because I assume that neither Shayn nor I wants to smarm over difficulties or differences. I therefore begin with the title of his piece stated above. 

Shayn poses ‘a mixed economy’ as one reasonable answer to the question posed by his title ‘State and Market’. But that term, which I also use, can’t take us very far or generate enthusiasm unless the nature of the mix is further clarified. I also use the term, sometimes with the proviso that the ‘mix’ must be devoid of the extremes evident in the continuing practices of capitalism and the type of socialism that came to prevail in the Soviet Union or Maoist China and blackened the very term.

But I believe that ‘mixed economy’ is not made adequate by adding the word democratic, or the phrase ‘devoid of extremes’. Similar problems arise with ‘economic democracy’. I agree that ‘The Social Market’, as devised by its founders and analysed by Australia’s Hugh V. Emy,  Professor of Politics at Monash University, poses little danger to the existing system, or possesses any significant transformative power.

Thus we seem to agree that no expression has yet been found that contains the emotional and intellectual force possessed in the past by the ‘left’, and backed by the capacity to enthuse people into action by concretising general aims in specific strugggles.  Shayn points out that much of social democratic (in Australia, particularly Labor Party) discourse is ‘excessively tenuous, somewhat vacuous’ and limits its criticism of [neo] liberalism to the details rather than its over-arching vision.’ That comment, I believe, is justified, but loses much of its force when Shayn himself fails to outline what the content of an effective critique of that vision would be.

I don’t feel lacking in that area, having written three books on the subject, the last being Hayek versus Marx (2009). The publishers insisted on that title because it was part of a planned series (mine came out as the 180th  work in      that series). But I eventually persuaded them to add the subtitle: And today’s challenges, the significance of which for discussions like the present one I explore later.

But I think it is essential to appreciate the vast difference between the retail markets that we visit almost every day, and the financial markets that played a crucial role in generating the Great Financial Crisis of 2008, to the present time, when it threatens to break out with even greater force at any moment in Europe.                     

The necessity of some markets

As Shayn clearly recognises, markets existed to one degree or another in practically every society later than the stone age. (For instance, the Conquistadores found extensive markets in some of the countries of what is now called Latin America). But Shayn neither distinguishes between different kinds of market, nor explains the reasons for the universal existence of some of them.

The foremost of these concerns has to do with what most of us perforce do every day, in response to the natural evolution of the division of labour. This compels us to engage in exchanges, usually of money from our wages, to obtain the mix of different commodities we need to live. These range from foodstuffs to transport, liquor, haircuts, entertainment and other items. One doesn’t need a vivid imagination to envision the difficulties, not to speak of the public outrage, that would result from any attempt  to plan and institute an alternative, for example, one of state allocation of the same  items or meals for all irrespective of the work they may, or may not have contributed in Mao’s ill-fated Chinese rural communes, while in competitive marketts, it is equals that are generally exchanged.      

 (I don’t think it necessary to pursue the many further variations that arise in areas such as whitegoods, TVs, computers, houses or cars, where the state may step in with requirements for performance standards, health requirements and the like.)

The Social Market

I agree with Shayn that the term ‘social market’ doesn’t take us very far. Its origin and meaning was well analysed by Australian academic Hugh Emy as the vision of some genuinely liberal-minded post-war German theorists, couched in moral as well as economic terms. It centred on the idea of ‘co-determination’ by owners and workers in businesses but ruled out any interference with ownership relations. It had some progressive content, but was by no means a transformative development.

Shayn rather airily dismisses cultural issues and contests, defining them as though they were lightweight compared with a physical presence or direct economic content. Without trying here to cover the full scope of culture, political activists need to realise that morals, values and attitudes, among other features of human behaviour and consciousness, are sources of action or passivity, which are surely of central importance in politics.

Without entering the field of values, for instance, I see little chance of constructing an effective critique of the neo-liberal vision which at present still holds (now less securely) a hegemonic position, or defining an effective social democratic one. Shayn instead speaks of confronting the ‘questions of class power’, that he then nominates in purely economic terms as ‘redistribution or the provision of social goods and services’.                                   

I am far from dismissing the importance of this for a segment of the population of our country, a similar proportion of other economically developed countries, and massive numbers in the undeveloped. But I am convinced it is the wrong direction, at this particular juncture, in which to look for a liberating, emancipatory, transformative orientation.

Today’s  main  challenges                                                                                                                 

The general social conditions and forms of economic restructuring that would be involved in meeting those challenges, the first of which is Global warming, requires sober calculation, including of the time frame. Solutions need to be, or clearly becoming, politically possible within two or three decades, or the problem could take a disastrous turn, for example by the melting of the tundra in Siberia, Greenland and elsewhere which would release huge quantities of now frozen methane – an even greater ‘greenhouse effective’ gas than carbon dioxide.

 ‘Politically possible’ means that to be democratically effected there has to be near enough to majority support for the measures involved type. There are already in existence more than needed of what I call ‘if only’ plans  – ones that pose preconditions having little chance of being realised, and which in any case are inadequately campaigned for.

Global Warming occurs today mainly because we are burning increasing quantities of fossil fuels (coal, oil and gas) to generate our ever-increasing energy requirements. The burning  process produces carbon dioxide gas which has the physical property of acting like a greenhouse – that is, a kind of‘house’ device, usually made of glass that lets in the sun’s rays, or is internally heated to cultivate plants that need heat to grow, but doesn’t let the heated air inside escape. Carbon dioxide and other gases, in the quantities now being generated by burning, mix uniformly in the global atmosphere from whatever country they come, warming the world, from frozen poles and glaciered areas to the tropics, causing the escalating number of weather extremes we all see on TV or ourselves experience, and raising ocean levels by melting ice.

Earth’s resources are not infinite

The related major challenge of our times is first of all the growing threat to the sustainability of the supply base for all this burning of fossil fuels.  It is clear that oil will soon run out, while coal and gas won’t last forever. Water is becoming scarce in many places, and large quantities of underground water are being polluted by the fracking of coal and shale beds to produce gas. ‘Rare-earth’ elements, essential for many sophisticated electronic apps are scarce. Phosphorus, one of our main fertilisers (and an essential component of DNA) is in short supply, as is potash.

Fish are becoming scarcer, and some of its best food species are on the verge of extinction, while ever-larger trawlers are built to pursue others still existing. New agricultural land is scarcely to be found and the productivity of large areas is being reduced by overuse and  more extreme weather events.
 Much more information is readily available, but is not acted upon. Nor are either the dangers, or the transformational possibilities flowing from victory in the struggle to overcome them sufficiently taken on board by the left including, regrettably, the trade unions.

The scale of all this
Geology Professor Mike Sandiford of Melbourne University gives us a striking  measure of this scale:
Rivers and glaciers have moved about 10 billion tons of sediment from mountain to sea each year on average over geological time. Each year humans mine about 7 billion tons of coal and 2.3 billion tons of iron ore. We shift about the same amount again of overburden to access these resources, along with construction aggregate and other excavations. In short we are now one of the main agents shaping the earth’s surface. (Sydney Morning Herald, May 23, 2011)
The course of solving it will not only help to change the present unfavourable-to-the-left balance of political forces. It will provide us, and especially succeeding generations, with clues about the best course to further economic and cultural steps.
                                   *                       *                      * 
Inverting the meaning of Karl Polanyi’s striking title to his famous book The Great Transformation which he used with the subtitle The Political and Economic Origin of Our Time, I have called success in meeting fully the present challenges The Greatest Transformation.
This may seem exaggerated, but consider the fact that for the first time ever in history, all countries and cultures will eventually have to become involved, and that the vast majority of people will then have to be guided by the principle that excesses in resource consumption must be avoided.
Some may be alarmed at this and consider it to be going backwards. But I hold that it is true progress, liberating us from toils of consumerism which daily (and nightly) consume the time and energy of a growing proportion of the world’s population, while also keeping a large proportion of humanity in wretched poverty or on the brink of starvation.             
Transformation, emancipation
Those on the political right, centred on the ideology of neo-liberalism, and their rabble-rousing foot soldiers, simply deny what is there to be seen and experienced. Maybe they simply fear change as such, perhaps believing that what now exists is the pinnacle of possible human existence, as Frances Fukuyama once asserted, but now, to his credit, has changed his tune.
Even those on the left, the core of which are the social democrats, and the Greens (who are to the left of them on some issues), aspire to something better and more constructive for the future, but have yet to develop a sufficiently coherent social philosophy.
And I am concerned that Shayn gives so little attention to these issues. Could it be that he holds the view common among a small section of the left, that no substantial progress can be made in any social field until the economic base on which it has arisen is first transformed? Such views have dogged the socialist cause almost from its beginnings, with Eduard Bernstein, for one, struggling with it through most of his life.
Of course, no one political strategy could meet every different set of conditions; but my judgment is that the issues stated above are tailor-made for a strategy of resolving pressing major issues, not instead of (perhaps) more basic ones, but rather as an essential step on the way to actually doing so.
Consumption is essential up to the point of sufficiency (which of course cannot be too narrowly defined) but taken beyond that to the very aim of life is a view and practice that is far from liberating. It binds a majority of people in the economically developed countries to a daily (and often nightly) treadmill that is now restricting rather than helping to extend our development as human beings.

Friedrich Hayek, who developed neo-liberal philosophy to its present (though declining) predominance, helped elevate consumerism to its present peak above more worthy and humanly satisfying aims by denouncing those who rejected his view ‘that the great ideal of the unity of mankind should in the last resort depend on the relations between the parts being governed by the striving for the better satisfaction of their material needs.’ (LLL2, 111)

He followed that up by denigrating working people with the assertion that ‘their intuitive craving for a more humane and personal morals corresponding to their inherited instincts is quite likely to destroy the Open Society [capitalism].’ (LLL2, 146).

Let us wear this as a badge of honour.                                               
Human development       
One aspect of switching our view of progress from more material goods to greater human development is to expand and deepen our relationships with other human beings, family and otherwise. This activity is both pleasurable and emancipatory, cultivating our human sensibilities whose possibilities are inexhaustible, as are the possible accomplishments of our reason.  

Furthermore, caring occupations require increased human participation, as do educational, and health services, and individual and collective cultural and artistic pursuits, while engineering and related developments to create more material commodities often cut employment, though capturing sufficiently more of the sun’s heat and electronic rays to replace burning for energy will keep the need for engineering and related activities, including science, fully employed indefinitely into the future.

The Services Society

Largely unnoticed and unremarked till recently is the fact that provision of services rather than material consumption commodities is by far the largest part of the economies of the developed countries.    
Last year, two Reserve Bank economic analysts, Ellis Connolly and Christine Lewis, quantified the changes in Australia. Titled Structural Changes in the Australian Economy, it showed that 80 per cent of the total value produced in our country came from the service sector, and embraced 85 per cent of the total workforce. The remaining 20 per cent of value was produced by agriculture, manufacturing and mining which employed the remaining 15 per cent of the workforce.
I queried them about the inclusion of ‘construction’ (for instance, construction of massive office blocks) and they replied that they did so because it is listed in the Australia and New Zealand Standard Industrial Classification (ANZSIC).  However, they did agree that there is no clear distinctions between industries that are ‘services’ and those that are ‘non-services’.
As a lay-person in this area I would estimate that a more realistic figure might be about two thirds services. But that figure, and the fact that only 15 per cent of the workforce, in manufacturing, mining and agriculture, produces no more than 20 per cent of all value indicates a major restructuring of society is already under way, I believe with great significance for proceeding to ‘the greatest transformation’ that humanity must accomplish before the end of this century. And building on a spontaneous/evolutionary development is generally far easier to accomplish than trying to create something so radically different that people may be more reluctant to embrace it, while it can also be more subject to violent reversal.                                                             
Consumption goods cannot be distributed equally because people and families are different, have different responsibilities, different incomes and different tastes, Services, however, from electricity, water and sewerage supplies, health and education and transport and communication services … are equally essential to everybody, indeed possess an egalitarian aspect that is desirable, but     rare in present society. This fact is expressed in the so far unsuccessful attempt to globalize and privatise trade in services through GATS (General Agreement on Trade in Services), leaving most services still locally supplied, with a major portion still in state hands.

The Australia Institute conducted surveys that revealed a majority would prefer better services over tax cuts. When asked which election promise was more likely to win their vote, 56 per cent of those surveyed chose better services to increased living standards compared to 44 per cent who said that tax cuts would sway their vote. Of all those surveyed, 63 per cent wanted services to benefit Australians equally.

As well as treasuring this egalitarian factor, we should remind ourselves e forget conditions of work have an effect on ways of thinking, ‘big industry’ significantly generating trade unionism and to a certain extent socialist thinking. This is not to suggest that trade union and socialist sentiment cannot arise among workers in, for example, caring activitie, only that they may have to be approached in a rather different way, as do workers in country areas compared with the city. The conclusion should be that understanding the ways of thinking of differently placed, differently formed, differently parented and differently educated people, is not simply the product of class economic relations.

Taken generally, we need to realise that politics is an art rather than a science where ‘theory’ alone is adequate to decide on policy and practical activity. Or, put somewhat differently, the common view in left, right, and to some extent in neutral or various other circles, that property or other economic relations have to come first – that these, often called material relations, must change before any significant society-wide alternatives can occur.

My contention is that in the concrete conditions of global warming and threats to planetary resource provision, tackling these problems should be the priority, and that succeeding in the endeavour to overcome them will do more than any other available way in which to clarify what economic changes can politically then be made.                       

Friday, August 17, 2012

State and Market - a Democratic Socialist Approach

above: 'people power' - time to build a democratic economy

In this new essay  Shayn McCallum explores the possibilities for a genuine democratic mixed economy; one profoundly more radical that the social market approach.  Debate welcome!

nb:  Readers can join our Facebook group too!!  at:

Current debates within the European socialist movement on the way forward for the Centre-Left, often seem to be centred on the unnecessarily narrow field of “state versus market”.  Much of the debate revolves around questions of the “correct ratio” of state-to-market in the provision of public goods and services, with scant attention given to the political nature of either.  Where an economic vision is articulated we see labels such as “decent capitalism” or the highly traditional “social-market economy” employed.  Both of these terms however, borrow heavily from a terminology, and therefore a mind-set, which is not of the Left and which unnecessarily limits and restricts the thinking of social-democratic strategists and activists.

The work of George Lakoff and Drew Westen[1] into the neuro-linguistic dimension of politics reveals a great deal that is useful in considering the current weakness of the Centre-Left and its apparent loss of creativity and direction.  In accepting the essence of the liberal world-view and limiting its criticisms of the liberal project to the details rather than the over-arching vision, social-democrats have been reduced to becoming the “annoying flea” of politics, creating little more than an irritation for the continuing (neo-) liberal agenda.  It has proven relatively easy for conservatives and liberals in Europe and elsewhere to dismiss social-democratic complaints about the ruthlessness of capitalism as mere faint-heartedness or an unrealistic inability to face up to “what must be done”.  What is worse, the social-democratic discourse reveals that they may suspect that their neo-liberal opponents might be right after all; thus, the unsure, excessively tentative, somewhat vacuous nature of much social-democratic discourse.

By adopting terms such as “good capitalism” to combat the “bad capitalism” of the neo-liberals, social-democrats are exposing themselves to the obvious response, common to both far Left and Centre-Right, that really “there is just capitalism” and adjectives such as “good” and “bad” are irrelevant or misplaced.  For the hard-core economists of the Right, as much as the more economistic voices on the hard Left, speaking of “good” and “bad” capitalism makes as much sense as speaking of “good” or “bad” gravity or “good” or “bad” oxygen.  The term is weak, ineffective and unambitious and fails to offer more than a limp moral critique of the system as it is.  In fact, the charming vision of a virtuous, industrious society re-enshrined in the virtuous “real economy” of manufacturing and productive industry is not only a fantasy, it is, in many ways, a reactionary one at that.  When ecological collapse is looming right behind the collapse of the unbalanced and excessive, increasingly-consumption driven, global economic system, producing yet more “stuff” is probably not the optimum way forward from where we are now.  Short-sighted, populist attempts to revive the industrial revolution in the wealthy nations makes as much sense as trying to stop the Titanic from sinking by making the orchestra play more slowly.  The era of unsustainable industrial growth, at least in the first-wave of industrialised nations, belongs to the past not to the future and this is, perhaps, one thing the “neo-social democrats” have got right.

The state we are in demands a much bolder response than a nostalgic appeal to the good old days of industrial growth.   Terms such as “decent capitalism” or even the “social-market economy” are flawed, in that they create a conceptual framework that is inseparable from, and therefore unable to move beyond the basic framework of the existing system. In contrast, by adopting terms such as “economic democracy” or even “a democratic mixed economy” socialists would have the means to open up this currently truncated and inhibited conceptual framework and, potentially, take back control of the dominant discourse.  Where capitalism, whether “good” or “bad”, is defined by certain structures and institutions that cannot, even must not be transcended or interfered with for fear of undermining the system itself (once the central goal of socialists not so very long ago) terms such as a “democratic mixed economy” at least open the door to the possibility of transcending  the flawed logic of capitalism and “the market economy” altogether.

Not only “capitalism”, which, it should be pointed out, is a term originally coined by critics of the system and which has only recently been embraced by its aficionados[2], but also the term “market economy” (whether social or not) is a conceptual prison.  The Delors-era social-democratic slogan of “we want a market economy, not a market society” is reminiscent of a caricature of a man being devoured by a tiger and, whilst half-engulfed in the tiger’s maw, pleads with the creature to eat only his lower half and no more.  A market economy, in the sense implied by liberal theory, cannot but lead to a market society[3].  A “mixed” economy however, at least conceptually, has the potential of being a society “with markets” without necessarily being dominated by them.

Just to frame this concept so it can emerge from the level of rhetoric to the level of a concrete example, economic  history reveals a  myriad of examples of economic systems which employed markets without being dominated by them and without exchange and commerce occupying the central place in economic life.  Indeed, for much of human history, commerce has existed as one among many forms of economic activity and it is only in the modern age that it has acquired such a uniquely pervasive influence.  Feudal economies, for example, were essentially war-driven economies based on the control of land and commerce remained a highly secondary pursuit.  Merchants were tolerated and or encouraged as a means to an end and it wasn’t until the vast influx of wealth from the new world, from the 1500’s on, began to undermine the feudal power structure and grant the rising merchant class a significant degree of political influence that the road to modern capitalism was opened[4].  Likewise, in the Islamic Middle-East, trade was an important pursuit and markets held an important place in the life of the cities yet, even here, the dominant economic engine was the demands of a militarised state.  There was no market economy to be found in the Middle-East, although very sophisticated markets played an important role in the urban economic order.  No matter how important markets may have been to pre-modern economies, these were always merely one part, mostly a subordinate part, of the broader economic and political context.

As Polanyi points out[5], economic relations are always embedded in (and have been historically subject to) broader social and political contexts.  Capitalism therefore, may be perceived as an attempt to dis-embed the economy and grant it a central, autonomous and superior role in the construction and maintenance of society.  This is, however (according to Polanyi at least, and history is yet to prove him wrong) an unworkable fantasy.  The idea of the self-regulating market is just as mythical and untenable as the idea of a fully-planned, efficient communist paradise.   In reality, all economies embody a variety of co-existing production and distribution systems and most have varied property forms.  Even the most “capitalistic” economies, such as the U.S., clearly demonstrate these variances.  The state and large corporations are intertwined in ways that make a mockery of Smith’s “invisible hand”.  Capitalism, in short, means “the rule of capital” and markets are merely a vehicle to be used when profitable and to be ignored whenever a liability[6].

This definition of capitalism permits the, otherwise absurd, position of advocating free markets against capitalism.  This highly optimistic approach can be found in the works of David Korten[7] and the theory of mutualism associated with Pierre-Joseph Proudhon, together with various theories of “market socialism”.   Indeed, there are a number of political approaches which separate the market as a mechanism from the rule of capital.  Although this “socialist reading of Adam Smith” is perhaps naïve and overly rooted in a near extinct class of smallholder artisans, farmers and entrepreneurs, the idea of a separation of the market from the rule of capital, although problematic, is not totally unreasonable as the existence of socially-embedded market mechanisms long precede the emergence of the capitalist political economy.  As has been mentioned above, the self-regulating market is an ideological fantasy and does not approach the reality of capitalism which is increasingly exercised through highly-organised, bureaucratic trans-national corporations that employ markets as a tool.  The problem of “markets against capitalism” however, is that the competition inherent to a market system inevitably creates winners and losers and leads to an evolutionary dynamic that, in a very short period of time, undermines the basis of the market itself (which is the essence of Polanyi’s critique of free-market ideology).  A market-centred economy, regardless of its ideological foundations, appears inevitably to tend to support the emergence of capitalism at some point (a process somewhat demonstrated by real-world attempts to implement “market socialism”[8]).

Capitalism therefore, defined as the “rule of capital”, is, in every sense, at odds with popular sovereignty.  If social-democrats accept “decent capitalism” as a goal, they are essentially pleading for capital to be decent as they are not capable of advancing any meaningful counter-power, such as powerful, well-organised trade-unions or citizens’ alliances to ensure this.  In fact, the “decent capitalism” of the post-war Keynesian era, that forms the basis for this vision, was “decent” precisely because capitalism was compromised and partly balanced by a rising wave of democratisation.  This democratic revolution was, unfortunately, undermined by circumstances and partially abandoned in the late 1970’s, at which point the neo-liberal counter-revolution seized the initiative.   After WWII, capitalism was forced into an open-ended compromise with democracy, from the 1980’s onwards it has been busy undoing the bonds imposed by that era.

Just as it is impossible to serve two masters, it is also impossible to simultaneously uphold the power of capital and the sovereignty of the people.  The unsatisfactory compromise offered by liberalism is to separate the political from the economic, leaving the economy to the abstraction known as the market (in truth, organised corporate interests) whilst parliaments elected by the people handle what remains of the political.  In short, according to the theory, the “market” will see to employment, prices, wages and the distribution of essential and non-essential goods and services, whilst “democracy” need content itself with rulings on issues such as the permissibility of gay marriage, the criminalisation of flag-burning, gun ownership, abortion or other details of the social, cultural and political milieu.  In such an environment, politics becomes a matter of flavour and preference with cultural issues substituting for questions of class power, redistribution or the provision of social goods and services[9].  That social-democrats have allowed themselves to be led down this path is a sad indictment of the robustness of socialist thought and strategy in the current era.

As Thomas Meyer points out[10], economic issues, issues of public welfare and economic justice give democracy its substance.  If the liberal celebration of “negative freedom” (i.e. “freedom from” as opposed to “positive freedom” being the “freedom to” act or access something[11]) leads to little more than the “freedom” to be unemployed, homeless, ignorant or uninsured, there is good reason for adopting a more balanced and sober attitude.  There is no point speaking of “freedom” unless people have the basis on which to enjoy that freedom and this can only be assured politically, by means of an active, participatory democracy that embraces all areas of public life.

Thomas Meyer roots his approach to social-democracy in the U.N. Universal Declaration of Human Rights and there is some merit in referring to this document.  The Declaration attempts not to align itself overtly with any particular political or economic theory or ideology although it is quite explicit in its advocacy of a political and social democracy entailing a raft of full social and political rights.  Indeed, the resulting document proves, in its fundamentals, incompatible with either capitalism or communism (as practised in the Soviet Bloc or China) but highly compatible with either democratic socialism or social-liberalism and, indeed, it was on this terrain that the post-war Western European political order was established.  The emergent order was a compromise between socialism and capitalism which, although capitalism was always the dominant force, arguably also contained the (historically unrealised) potential also to evolve in a more socialist direction.

It is worthwhile remembering that liberals such as Keynes, although by no means socialists, were also very much disenchanted with capitalism, although they grudgingly tolerated its continuation as the least-bad of the available alternatives.  The aim of Keynesian demand-management was the general welfare and it saw capitalism as a tool, a means rather than an end.  Keynes’ economics were, therefore open-ended and evolutionary and, arguably, contained the seeds equally of what could become either a democratic socialist or a social-liberal approach.  

Although the benign capitalism of the “social market economy” may have resembled, in practice, the social-democratic ideal of a “democratic mixed economy” in truth the intentions were, and are, different.  The social market may be “social” but the market is the indispensable, central mechanism of the economy, albeit modified where necessary by the need for a degree of social justice (again, to the degree that it does not “distort” the market mechanism).  The “democratic mixed economy” however is an open-ended evolutionary project which stresses democracy as its primary feature.  Its goal is not mere benevolent capitalism but a terrain on which new, emancipatory forms of property and production are able to evolve and emerge.  It does not seek to overthrow capitalism in a frontal assault, nor necessarily to entirely eliminate market mechanisms from the economy, but rather to tame them, then subordinate them to the general good where possible.  The difference, in brief, is that the “social market” is conceptually rooted in the market and therefore limited by the demands of the market whereas a “democratic mixed economy” is conceptually rooted in, and limited by, the demands of democracy and social justice.   In the former, the limits of the social are determined by the market whereas, in the latter, the limits of the market are determined by the social.

Of course, in the real world, assuming the basis for a new compromise could be created, there would be a competition in politics between the visions of the “democratic economy” and the “social-market” which was, indeed, the ideological cleavage separating the Centre-Right and Centre-Left in the post-war Western European political economy.   The democratic Left begins from the assumption that its own vision must be fought for amidst a plurality of competing visions and approaches.  Any democratic political project must be open-ended and subject to both advances and reversals.  It is a pity that the large sections of the Centre-Left abandoned its own vision before it had even achieved the bulk of its goals, although there is still a chance it will find its way back home. 

At this point, it is perhaps appropriate to remember the approach of Eduard Bernstein for whom the “movement (was) everything, the end nothing”.  The end, for modern socialists, is perhaps not “nothing”, in that it helps to have a landmark in the distance by which we can measure our progress, although, the nature of social-evolution is such that there usually is no identifiable end that can be discerned as one victory endlessly opens the path to new struggles.  The goal of the Centre-Left therefore ought to be to ensure that the direction of evolution be towards greater freedom, equality and solidarity.  Getting trapped in the historical cul-de-sacs of specific systems or institutional frameworks, whether it be “state-socialism” or “decent capitalism”, is the passport to extinction.  Socialists need to imitate life itself and embrace constant evolution, but they must never forget the direction they wish to evolve in if they are to avoid the fate of the dinosaurs and dodos of the past.  In time, terms such as “democratic mixed economy” are bound to pass their use-by date and develop into hidebound clichés as reality continues to extend its limits and social-democrats, if they are even continuing to call themselves by that name by then, will once again need to adapt or die, but always, hopefully, on the path to ever more democracy, ever more equality, liberty and fraternity.

[1] Lakoff and Westen’s work strongly parallel and even largely duplicate each other.  The most comprehensive exposition of their approach can be found in:
Lakoff, George (2008): The Political Mind: why you can’t understand 21st-century politics with an 18th-century brain, Penguin, NY
Westen, Drew (2007): The Political Brain: the role of emotion in understanding the fate of the nation Public Affairs, NY
[2] Professor Fred Block points this out frequently in his work on capitalism and social-democracy and particularly compellingly in a Miwon lecture he delivered to Kyung-Hee University, Korea on September 26 2011, entitled; The Origins of the Current Crisis of Global Modernity
[3] Articulated most clearly by Karl Polanyi, especially in his magnum opus The Great Transformation.  See
Polanyi Karl (2001 (1944) The Great Transformation, The Political and Economic Origins of Our Time, Boston,
                                                 Beacon Press
[4] These ideas are explored widely in Polanyi’s writings on economic history and can also be found in Eric Hobsbawm’s writing on the era as well as in a number of other sources.  There is a wide range of literature dealing with the Islamic Middle-East however, among the best is probably the 3-volume investigation on the political-economy of the Ottoman Empire by Halil İnalcık and Donald Quataert., see
İnalcık H & Quataert D (1994) An Economic and Social History of the Ottoman Empire, CUP, Cambridge
[5] Polanyi Karl (1944) op.cit.
[6] This is also mentioned by Polanyi but also widely commented on by a very wide range of other sources positioned on all points of the political spectrum.  It was even acknowledged by former U.S. president Dwight D. Eisenhower in his musings on the “military-industrial complex”.
[7] David Korten is a leading proponent of a non-capitalist market economy.  Most of his work embraces the central contention that capitalism is actually not a market system and that a “true” market economy is the solution.  In many respects, his work is reminiscent of classical Proudhonian mutualism.
[8] Examples of this may be cited as the collapse of Yugoslav market socialism as well as the rather makeshift “goulash socialism” of communist Hungary but also the feeble market reforms of perestroika or state-capitalism of China and Vietnam.  It remains to be seen how the emerging reforms in Cuba are likely to take shape.
[9] For an enthusiastic embrace of this process, see Thomas Friedman’s The World is Flat
Friedman Thomas (2005) The World Is Flat: a brief history of the twenty-first century FSG NY
[10] Meyer, Thomas & Hinchman, Lewis (2005 (2007)  The Theory Of Social Democracy Cambridge, Polity Press
[11] The distinction between “positive” and “negative” freedoms here are based on the categories introduced by Sir Isaiah Berlin in his famous essay Two Concepts of Liberty.