The historical period we find ourselves in is not so different from the beginning of the 20th century, in which the Bolsheviks had to struggle against the revisionism of the Second International and for the unity of Marxists. Today, revisionism often manifests as a tendency of reconciliation between socialism and the perceived omnipotence of the market or between socialists and the bourgeois state. This is what makes People’s Republic of Walmart, by Jacobin magazine writers Leigh Phillips and Michael Rozworski, so profoundly frustrating: it succeeds at refuting the former, but falls prey to the latter.
The great merit of the book is its faithful defense of economic planning against the resilient mold of free-market ideology — a defense that is so greatly needed as neoliberalism has, for decades, corroded what little “opposition” “left” intellectuals ever managed to muster. Unfortunately, however, the authors are not Marxists, so the book is simultaneously undermined by their infantile politics — not to mention their occasionally cringeworthy prose. Especially in the first couple of chapters, I was left with the impression that the authors are insecure about their subject matter, remarking with belabored “self-awareness” in various places that it is “old,” “musty,” “not sexy,” and as interesting as “an airport business book.” Their self-deprecating tone, meant to ingratiate the authors with an audience they assume will be hostile to, or uninterested in, what they have to say, only insults the reader’s intelligence. Wherever they constrain themselves to discussing the operation of capitalist firms or advancements in information technology, it is my opinion that the authors achieve grace, wit, and humor. Wherever they attempt to interject their own sophomoric social and political commentary, however, the book becomes an unrewarding chore to read. Ultimately, the book’s central thesis — that economic planning not only could work, but, in many ways, is already at work, and working well — can be salvaged from this smoldering wreckage, but it must be coupled with a correct analysis of democracy and social revolution. For developing Marxists with an interest in economic planning, you are in luck. While I provide here a criticism of the text, a mysterious, sexy rogue has uploaded an abridged version of the book freed from its liberal tumors – though you should only download it if you’ve already purchased a copy of the book 😉
The political collapse and economic liberalization of the Eastern Bloc in the late 80s and early 90s, coupled with the rise of neoliberalism throughout the West and its colonies, effectively destroyed the public’s faith in the possibility of economic planning. Left and right opportunists alike continue to join hands with bourgeois economics professors and other ideologists in denouncing Soviet central planning as a failure on the grounds that economies are too complex to plan, and that market prices are indispensable for efficient resource allocation. “New Left” academics like Richard Wolff and Slavoj Žižek, armed with the anti-Soviet intellectual tradition they’ve inherited from their fascist professors, set out on ill-fated quests to discover new “mixed economy” and “market socialist” models, yearning after these impossible “syntheses,” like the alchemists’ misguided search for the philosopher’s stone. It is in this light that People’s Republic of Walmart is so refreshing. With highly accessible style, the authors gracefully defend their thesis that the market system is building the conditions for its own replacement by a system of social planning — by socialism.
One of the book’s more novel contributions is the idea that, contrary to that commonly held cliche, planning works in practice even if it doesn’t work in theory. Setting aside hypothetical and scholastic debates about the “economic calculation problem,” the authors plant their case firmly in reality by asserting that, actually, our advanced capitalist economy has been making use of planning for almost a century. It’s true that the capitalist economy at large isn’t planned, nor could it be — the only way for separate, competing firms to engage with each other is, of course, through market mechanisms. But, within the firm itself (that economic unit so often treated as a black box by bourgeois economists), planning dominates production. Furthermore, two critical developments have come about in the era of finance-capital. The first is that monopolization reigns supreme. Wherever monopolization reaches its highest pitch, whole industries effectively begin to be internally planned, even while externally subservient to the demands of the market. Secondly, finance-capital — capital controlled by banks but employed by industrialists — becomes a mechanism for rational planning of production on the part of the financial–industrial cartels. As Lenin correctly observed over a century ago, the methods of accounting and management developed by the big capitalist banks could be converted to manage production under socialism. Hence, the socialist planned economy is already in embryo within the shell of the modern world; the technology and methods of economic planning have already been developed within the market economy — and eventually this shell must crack, and give way to the more advanced social form growing within it.
The authors provide several compelling and concrete examples of their thesis in action. First, they mention that planning is not new, and that, in fact, certain ancient economies utilized primitive forms of economic planning to great effect. Second, they refer to the public sector, primarily the military, which utilizes planned production for all sorts of things — penicillin, satellites, radios, the internet, cellphones, rockets — all these and more were products of “planned capitalist production.” Most compelling, however, is the book’s comparisons of three unequivocally private firms: Walmart, Amazon, and Sears.
On the question of what made Soviet central planning inefficient — that is, inefficient with regards to delivering consumer goods — the authors identify data throughput as the essential bottleneck. “Old school” central planning relied on manual reporting by managers and advanced calculations had to be done, and redone, by hand. Besides requiring a small team of highly skilled bureaucrats to form plans in batches based on months or even years old information, this system was also susceptible to inaccurate reporting by managers who were frequently unwilling to report failures to meet quotas. By the time distributed communications networks arrived on the scene, the bureaucratic rot of the post-Stalin Soviet system prevented adoption of these new technologies that could have streamlined planning. Cybernetic planning, by contrast, could have distributed the collection and production of data related to supply and demand while allowing real-time coordination of production and distribution. Unfortunately, the first experiment in cybernetic planning, Chile’s revolutionary Cybersyn system, was quickly dismantled by the fascist Pinochet regime. The great irony is that the closest any efforts have come to replicating Cybersyn since then have come from that infamous capitalist super-giant: Walmart.
I said earlier that separate competing firms can only interact with one another through market mechanisms — and until quite recently, this has (mostly) been true. Essential information about production, supply, and demand has been treated as invaluable proprietary data, locked up deep within each individual firm, creating a “fog of war.” But every firm is reliant on another for its supplies. Without the means to see through this fog, each firm must do its best to predict and prepare for deviations in supply and demand, requiring storage buffers. For each link in the supply chain between raw resource extraction and retailers, the storage needed to compensate for these deviations grows exponentially larger, such that small changes to demand at the end of the supply chain create huge shocks at the front. This phenomenon is known as the bull-whip effect. Walmart, the authors explain, has devised a novel way of compensating for it: complete data transparency with its partners and cross-supply chain coordination. As the authors state: “While there are indeed financial transactions within the supply chain, resource allocation among Walmart’s vast network of global suppliers, warehouses, and retail stores… [behaves] like a single firm.” Walmart was thus able to beat its competitors in the market with superior cooperation and superior planning. Amazon, another titan of modern retailing, followed suit with its “Vendor Flex” program, which allows Amazon to co-manage production of the items it stocks and to set its own quotas based on data it collects on consumers — data which would have otherwise been unavailable to Amazon’s suppliers. This horizontal integration between production and distribution cuts out the uncertainty that normally accumulates between suppliers in the market, minimizing inventory, transportation, and logistics costs. Not altogether unlike Cybersyn, the free distribution of information along sectors of production, combined with the monumental collection of consumer data, allows for efficient planning without relying on price signals to coordinate supply and demand. The authors go into much greater detail, but the bottom line is that economic planning is already here — and it works!
The unfortunate irony, and the source of many of my criticisms, is that these authors are heirs of the same “New Left” tendency that is guilty for perpetuating this free-market revival. Consequently, the book suffers whenever it veers off course from its central topic, crashing head first like Wile E. Coyote into a painted tunnel depicting an illusory “anti-Marxist socialism.” It would be difficult to completely enumerate every error the authors make without writing a book at least as long. As far as the historical sections are concerned, the problem primarily consists in a one sided screed against “Stalinism,” in which the authors desperately beg their imagined audience not to associate them — or the concept of economic planning in general — with any of the 20th century experiments in Communism. If I had to summarize the authors’ biggest theoretical failures, two particular areas come to mind: their horrendously distorted understanding of democracy and distribution.
In the first place, they make the same mistake as the 20th century socialist Karl Kautsky, who Lenin once described as a “renegade” for taking a one-sided view of democracy, never bothering to ask, “democracy, but for which class?” That is to say, they see representational institutions in capitalist society and take for granted that the working class therefore has real, representational power within the bourgeois state. Phillips and Rozworski never seem to notice that all substantive policy decisions are made behind closed doors by the personified avatars of Capital. They therefore repudiate the necessity of revolution in establishing the proletarian democracy that would be necessary for the working class to have real power over the planning of production: “In such volatile times, it cannot be ruled out that a socialist candidate or party might soon form a government in the capitalist heartlands.” It cannot be “ruled out” (despite any positive precedent to the contrary) that a socialist candidate “might” form “a government” — what grand strategic vision! Again, the problem the authors identify is that planning already exists, but it isn’t run democratically; yet they never approach the question of proletarian democracy, and therefore the necessity of dictatorship over, and liquidation of, the exploiting class. They take for granted that the existing bourgeois constitutional republic is a suitable form so long as “our guy” is at its head. The last century unequivocally proved what happens when any socialist gets close to being elected into power in a bourgeois democracy: they are assassinated, or their new government is violently couped, or they do nothing to abolish capitalism, or the bourgeoisie side with fascists to burn the precious republic to the ground, just to keep it out of the hands of the socialists. The vision of a gradual, reformist road to socialism is a facile, utopian fantasy which can only end in failure and greater bloodshed. The successful revolutions of the last century demonstrated that we cannot suffice to take hold of the ready made state machinery. We must smash it, and make our own that will serve as the basis of power for the proletariat in its mission to end class society.
Secondly, the authors follow in the footsteps of another great colossus of revisionism, Ferdinand Lassalle. Lassalle attempted to abstract the question of distribution from production, as though these two were separable, independent things. That is to say, Phillips and Rozworski seem to mistake socialism itself for merely a different kind of distribution: “Inequality is, in the end, a question of unfair allocation… When we ask whether another world is possible, we are also asking: Is there an alternative method to allocate things?” They begin with the question of distribution, from which every other piece of their analysis flows downstream, as if distribution were a software plugin that could be swapped in and out of the same kind of economic hardware. To be fair, the authors pay some lip service to the question of production, but they don’t really seem to understand it. For example, they further refer to nationalization as synonymous with decommodification (“Nationalization decommodifies, but does it democratize?”), as though wage laborers producing goods for the market are not producing commodities if the industry is owned by the national bourgeoisie collectively. If only they could understand the class character of the state! Most egregiously, the authors maintain that the source of inequality under capitalism is not the extraction of surplus value from the wage laborer, but rather “disparities in the distribution of income” caused by “the market,” which is only “a method of allocation.” The solution to inequality, therefore, is only a matter of a different method of distribution. They are correct that competition in the market causes concentration of wealth by ruining other capitalists, by proletarianising their competition, but this is not the source of disparity between the workers and the capitalists. Marx proved two urgent facts that these gentlemen miss: firstly, surplus value does not come from the circulation of commodities, nor from exchanges within the market (which are, after all, equal exchanges), it comes from production. That is to say, inequality is decidedly not a question of unfair distribution, but a question of exploitation by those with power over the means of production and subsistence. Once again, the authors pay some minor lip service to this very point, but they don’t actually understand it — it is not reflected within their thesis or analysis. Secondly, the domination of the market is contingent on the dominance of commodity production, which, in turn, is contingent on the social division of labor. The social division of labor, therefore, is the basis for generalized commodity (capitalist) production. For the authors, distribution is the whole problem, the primary issue with capitalism, and hence they are unable to really explain how socialism would be established or how income inequality would be overcome.The consequence of all these errors is a vision of socialism which is, in reality, little more than a utopian vision of a more completely, “democratically” planned capitalism. Like some kind of conservative’s parody of a socialist, these daring radicals and dissidents dare to ask, “what if the entire economy was like the NHS?” By correctly educating against these grave mistakes, we can successfully rescue economic planning from revision and reaction. This book at least demonstrates that capitalists have already prepared for us the technology to plan the economy. Once the workers have seized power and overthrown the exploiters, we need “only” to expand the domain of planning to the entire economy. Of course, we should be clear: proletarian democracy and planned production are not the only two factors necessary for socialist construction. Simultaneously, we must also abolish wage labor, the social division of labor, and commodity production, replacing production for exchange with production for use. We will not merely use computers to slightly improve distribution, calculate “shadow prices,” or replace the money-form of value with the “labor-time” form of value; we seek the abolition of value.
