If human tastes and needs remained constant over time, then it would be possible for socialist planners to divine what these were through some combination of surveys and trial and error, then build sufficient productive infrastructure to satisfy them, year in and year out. If nothing ever changed from one year to the next the problem of calculation (as a technique operating in real time) would disappear. The problem, Mises reasoned, is that consumer tastes and productive technology both tend to change, often with great potential benefits. Not only that but capital investment involves taking long-term bets, which may or may not pay off. There is risk involved. Profit-seeking entrepreneurs can develop a rational economic strategy, drawing on price data to calculate the likely pay-off of their investments. If they get it wrong, they go bust. But what would state-owned enterprises do as an alternative? As far as Mises was concerned, they’d be constantly ‘groping in the dark’.
At a historical juncture when socialism (together with Taylorism, behaviourism and social statistics) held a tightening grip on ideals of progress and rationality, Mises’ critique was audacious in its attempt to turn the tables. Socialists may dream up alternative future societies, and may, with sufficient power, get the chance to implement these dreams. But plans are static, while modern societies are dynamic. What socialism crucially lacked, according to Mises, was a technical system of computation capable of distinguishing workable from unworkable plans, in an evolving social environment. ‘Socialism is the abolition of rational economy,’ he concluded.
Challenging the Market
Mises’ argument develops a number of rhetorical and critical ploys that would later become associated with ‘neoliberalism’ as an intellectual and political movement.4 One of these is the introduction of a stark choice between the free market, on the one hand, and any form of planning, on the other, with scant interest in the various shades of grey that mediate between the two (what have been called ‘mixed economies’, such as Keynesian social democracy). The curious effect of Mises’ critique, which would later become echoed in the rhetoric of figures such as Margaret Thatcher, is to denounce all forms of economic utopia in a dogmatic, almost utopian language. The utopia of neoliberalism is the eradication of all utopias, or at least their submersion into the market, which is much the same thing.
Another key feature of Mises’ argument, which would recur in the work of his ally Friedrich von Hayek over the 1930s and 1940s, is to represent the market as a type of man-made technology for the performance of calculation. As Hayek saw it, the market was a more brilliant invention than was ever usually recognised, not least because ‘intellectuals’ tended to be snobbish towards business:
It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials.5
The challenge that Mises laid down for socialism was a resolutely technocratic one: to come up with a rival infrastructure of computation that could match that of the price system, as a means of real-time monitoring, aggregation and calculation of value. It was a challenge that few socialists have felt able to duck altogether, and fewer still have successfully risen to. Some hoped that the economics of ‘general equilibrium’ developed by Léon Walras in the late nineteenth century could be used to calculate proxy prices, which would allow government policy-makers to plan economic production on that basis.
As computers advanced over the second half of the twentieth century, hopes were periodically rekindled that a socialist response to Mises’ challenge would be found. The ambition of coordinating industrial production using cybernetic feedback systems was influential among Soviet economists of the 1950s, the subject matter of Francis Spufford’s novel Red Plenty. Between 1971 and 1973 Salvador Allende’s socialist government in Chile employed the British cybernetician Stafford Beer to develop a computer system capable of planning the Chilean economy.6 The resulting ‘Project Cybersyn’ remains one of the most ambitious computational attempts to achieve the socialist ‘economic rationality’ that Mises had declared impossible.
Our contemporary ‘big data’ era, in which billions of us provide digital feedback constantly via our smartphones, shopping, online searches, swipe cards, social media use, and so on, would appear in principle to offer the most promising technical basis yet for a non-market solution to the problem of calculation.7 It may be that today we are surrounded by vast but unrealised potential for socialism.8 The difficulty, of course, is that most data analytics capacity is now in the private corporate sector, rather than being put to collective social use. This is something that the ideal of ‘platform cooperativism’ seeks to challenge, and in doing so potentially puts this huge computational power in the service of the public, perhaps also to reduce the reach of markets as mechanisms of calculation.
Yet, if the market is a computational artifice, the question of its design or transformation is also an open one. The simple binary choice between a market economy (guaranteeing ‘economic rationality’) and any form of planning underplays the possibility of designing markets and the instruments of calculation differently, around different political agendas. It obscures the extent to which markets are themselves planned, one of the central insights offered by Karl Polanyi but also shared by many neoliberals, including Hayek. Money, for example, comes in various forms from various sources. Most money in twenty-first-century capitalism is manufactured out of thin air by the private banking system, through the provision of credit to customers.9 Most of this money never attains any tangible form beyond its digital record: a loan of £100 involves the customer’s bank balance being increased by 100, and the ‘assets’ on the bank’s balance sheet being increased by 100 (in the form of an IOU from the borrower) at the same time. Quantitative easing involves a similar trick being performed, adding hundreds of billions to the ‘liabilities’ column of central bank balance sheets, and the same amount to the bank accounts of pension funds and insurance companies. Money is a largely a leap of faith, backed up with machines of representation.
One avenue for reimagining the economy, then, is to reimagine how money is produced. Local currencies, alternative units of exchange, time banking, nationalisation of the credit system, peer-to-peer systems of accreditation (now made efficient by digital technology), blockchain technologies such as Bitcoin – all of these offer alternatives to the capitalist status quo, while taking seriously the challenge of calculation. Financial instruments of debt and equity are also amenable to being reimagined and redesigned. Contemporary money is so abstract, so divorced from physical matter, that its ability to constrain us can seem bizarre. This is ripe territory for the inventive imagination to play around with.
Another avenue is to reconceive property rights, without necessarily making the leap to nationalisation. Mises assumed that only privately owned productive capital could be employed in a ‘rational’ (i.e. calculated) fashion. But private ownership comes in many varieties, especially where firms are concerned. To own something involves a combination of various rights and responsibilities, but there is no definitive or essential combination.10 Worker-owned or customer-owned companies may operate via the distribution of share capital, but might equally place ownership in a trust that employees cannot legally liquidate.11 The question of property (especially ownership of companies) is also a political question of governance: who has the right to influence how an asset is employed and to benefit from it?
The escape from capitalist privatisation looks most promising when certain goods have become so abundant as to resist property rights altogether. The ideal of the ‘commons’ was revived in the late twentieth century, especially in the arena of digital content and software production, wherein goods have intrinsic qualities that lend themselves to common ownership.12 Could a combination of common intellectual resources and the dawn of 3D printing provide the basis of a new post-capitalist model, of decentralised
and peer-to-peer production? The ‘end of scarcity’ – of cultural and scientific resources in particular – potentially throws the question of calculation back upon the proponents of private ownership. What role is left for the market, once goods are public in their very material (or immaterial) nature? Maybe it is technological innovation that is responsible for rendering things incalculable, and not socialism at all, paving the way to a new form of ‘communism’.13 Of course, intellectual property rights and digital rights management exist to avoid this very challenge. But these too are amenable to a range of designs, as the examples of Creative Commons copyright licences or open source software licences demonstrate.
Figures such as Mises and Hayek are associated with libertarian and conservative movements on the right. Nevertheless, more socially progressive, even anti-capitalist, versions of neoliberalism are conceivable, which deliberately employ the free market to break up monopoly power and reduce profit levels in the private sector. Anti-trust is arguably the central political weapon in the neoliberal armoury, and many German neoliberals envisaged it being used in combination with a generous welfare state, to reduce the power of capital to constrain economic freedom.14 If the market is a type of competitive game, then the rules of this game are amenable to endless reinterpretation. A number of Marxists have sought to use Hayek’s argument against economic planning to make the case for a decentralised, democratically managed, market-based socialist economy, in which firms are controlled by workers and trade with one another.15 These build on liberal socialist contributions to the ‘socialist calculation debate’, most prominently those of Oskar Lange, while accepting the critique of centralised planning.
Equally, the underlying philosophical premise of Mises’ argument, that value is a wholly private subjective matter that cannot be gauged in itself, can be challenged on various grounds, some more emancipatory than others. The development of ‘social indicators’ and ‘social accounting’ have developed since the 1960s to offer non-monetary measures of value, in the hope of reorienting macroeconomic policies and business strategies respectively towards non-market goals. Inevitably, these involve normative choices regarding the nature of social value, of the sort that Mises and conservative economists such as Milton Friedman always insisted are baseless. Yet the opportunity for technical redesign of the economy is nevertheless there, if a degree of consensus arises around particular moral concerns such as environmental and social degradation. If we can start from consensus on the preservation of, say, childhood and nature, as categories to be defended from market mechanisms, then it is possible to develop alternative metrics that challenge the primacy of monetary calculation. If accounting holds a privileged position in the development of capitalist rationality, as Weber and others have argued, then the possibilities for non-capitalist or post-capitalist economies might lie partly within the arena of critical and alternative accounting practices.
More philosophically pertinent, though perhaps also more troubling, are the various innovations in the monitoring of emotion and affect that have taken off since the 1990s. These include neuroscientific representations of emotion and techniques of ‘affective computing’, which aim to allow computers to detect emotion via combinations of machine learning, monitoring of bodily movement and data capture from online communication.16 Although such techniques imply a great expansion of quite intimate surveillance, as we consider routes out of the socialist calculation debate, we need to consider the possibility that – from some perspectives and with certain technical infrastructures – the calculation of value ‘in kind’ is now possible, in ways that endorse Neurath’s position in 1919 and undermine Mises’ critique.17
Capitalist economies are constituted by a patchwork of institutions and mechanisms, which are amenable to reimagining and recombining. These include instruments of real-time calculation of value, but they also include property rights, governance systems, bookkeeping methods, business plans, regulatory architecture, and so on, not to mention things such as fiscal policy, which are more obviously political in nature. These are all conventions that facilitate trust, not only in individual moments of market exchange but in terms of future expectations and guarantees. Institutions such as money or contract cannot work if they’re not accompanied by a normative sense that commitments and promises are binding into the future. Yet the nature of those commitments and promises is malleable.
Contrary to how Mises posed things, it may not be all that easy to say precisely where ‘capitalism’ ends and an alternative begins. Perhaps there is hope in this uncertainty. To designate an economy as ‘capitalist’ is simply to say that its institutions and mechanisms are arranged in such a way that financial returns to private capital are typically prioritised, both by firms and by the state. But ‘non-capitalist’ elements do and must exist within such economies, not least so as to preserve the very social relations and public goods that capitalism itself relies on to some extent.18 Hybrid forms of enterprise – often designated as ‘social entrepreneurship’ or ‘social innovation’ – are now mainstream propositions. It is possible to discover viable ingredients of post-capitalism already scattered across the capitalist landscape, in the form of worker co-operatives, open-source projects or other experiments in economic democracy. These ‘real utopias’, as Erik Olin Wright has termed them, are enclaves of anti-capitalism within capitalism.19 Even so, the inventive ethos underlying them may not be entirely unlike that which drives profit-seeking entrepreneurs.
Wither Utopias?
It bears repeating that the problem to which Mises deemed markets and money a solution was that the economy (including its technologies and tastes) is a site of constant and spontaneous change. This analysis would fundamentally alter the question of modernism and how to design for modernity. From the perspective of utopian and avant-garde modernists of Mises’ time, Bauhaus artists and designers, for example, the future is to be imagined, invented, designed and planned. Modernism as a creative project involved the construction of future worlds, cities, economic models and lifestyles, which would remove the technological and economic constraints of the present. The dynamic element of modernity consisted in the fact that the human imagination was constantly seeing unrealised possibilities, then setting out to realise them through technological and artistic innovation.
By contrast, the modernism that figures such as Mises and Hayek were defending was an unplanned one, in which the single most important technology was the one that mediated between evolving visions, ideas and tastes – namely the price system. Change would inevitably occur, but not through a vision of social transformation. Rather – somewhat paradoxically – if the rules of the market could be set in stone, changes could arise organically within and around it. In place of the artistic, architectural or technological visionary, there would be entrepreneurs seeking to sell their visions of the future to investors and consumers. Thus, only by conserving the basic institutional framework of monetary exchange and private ownership of capital could change occur in a manageable, rational way. And yet this also involves giving up on the utopian ideal of a more wholesale transformation of society.
Here we get to the nub of neoliberalism and its uneasy relationship with modernism. The vision advanced by Mises and Hayek allows for individuals to be future-oriented, innovative and self-authored – indeed, it almost compels them to be those things. The futuristic spirit of modernism is in play, but it cannot be a basis for the reorganisation of society in any collective sense. Instead, the political challenge is reduced to that of coordinating between multiple, heterogeneous, potentially incompatible and private visions of the future. By channelling the ethos of modernism into the realm of the market, it becomes contained within the competitive psychology of entrepreneurship and consumerism plus the mathematical rationality of risk. By imposing a permanent framework of competition and calculation, neoliberalism establishes a system in which political choices are radically constrained, while entrepreneurial, financial and consumer choices are vastly ex
panded.20
The full cultural and political implications of the neoliberal critique would not be felt until the demise of the Keynesian system of macroeconomic management, which emerged around 1968, and gathered pace with the end of the Bretton Woods system of fixed exchange rates in 1973. That model had included an ample role for public investment and planning, which combined comfortably with post-war modernist visions of social housing, expanded higher education, public service broadcasting, publicly funded arts, and so on. This may not have been driven by the heady rush of modernism in an avant-garde sense, but it represented what Mark Fisher has called ‘popular modernism’, as represented by mass literary culture and rising social mobility. Keynesianism cultivated a sense of progress as a collective temporal experience, most explicitly and crudely represented by that icon of macroeconomics, GDP growth.
A number of cultural theorists have observed that, as the Keynesian model went into decline, that very sense of ‘the future’ also began to evaporate. Franco Berardi has argued that ‘the future’ as a ‘choice or a collective conscious action’, as articulated in the Futurist Manifesto of 1909, peaked in 1968 and was finished by 1977, the year that the Sex Pistols released No Future.21 Significantly, 1977 was also the year when inequality reached its lowest level in centuries, since when it has risen sharply back to pre-war levels. Neoliberalism, for Berardi, involves the retreat of individuals into virtual and imaginary spheres of political transformation, combined with a terrible sense that dominant political institutions are now permanent. As a psychic symptom of powerlessness, depression is the consummate neoliberal disease. Prozac becomes a necessary techno-political fix in a society that has lost its capacity for collective reinvention but has rendered individual ‘creativity’ an economic obligation.
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