2 - Market socialism: the model that might have been but never was

Summary

History punishes those who are too late.

(M.S. Gorbachev, 1989)

‘It's a poor sort of memory that only works backwards,’ the Queen remarked

(Lewis Carroll, Through the Looking Glass)

The moving target of economic reform

The ultimate model for the wave of economic reforms attempted in Central Eastern Europe over the last thirty-five years has been a moving target. At first, reform aimed at improving Soviet-type central planning, replacing central commands with contractual relations, using net value instead of gross physical indicators of enterprise performance, credit instead of budgetary grants, material incentives instead of campaigns, and gearing the system to some market signals, especially to world markets (e.g. Poland, 1956; USSR, 1965; Hungary, 1968; Czechoslovakia 1981).

In a second stage the target was a fuzzy notion of a radically new model, ‘market socialism’. Initially, there were talks of a ‘socialist market’, an expression coined by Gorbachev which was rightly criticized: ‘We want sausage’, said Gavril Popov, ‘not socialist sausage’ ‘A market is a market is a market’, added Czechoslovak Vice-Premier Valtr Komarek soon after coming to power. Clearly only the institutional environment in which markets operate, and the policies followed by governments, can be socialist or non-socialist, while markets cannot be so labelled; thus, there can be market socialism but not socialist markets. A ‘socialist’ market may be understood as an egalitarian market where participants have equal income and wealth and ‘vote by the ruble’ in a genuine economic democracy; however, money, unlike votes, can always be lent and borrowed, and the position of households and enterprises is in any case asymmetric; a market cannot be equalitarian; only policies can be equalitarian.