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Please begin with an informative title:

Market in Anarchist Spain
A market in anarchist Catalonia. From the 1983 BBC television series "The Spanish Civil War"

Ackerman proposes a market socialist system and claims it will eliminate profit to which I disagree and propose solutions. I hope you all enjoy some theoretical discourse!  

Intro

You must enter an Intro for your Diary Entry between 300 and 1150 characters long (that's approximately 50-175 words without any html or formatting markup).

Recently Seth Ackerman in Jacobin magazine wrote a compelling essay for a kind of market socialism which has even gotten the attention of people like Matt Yglesias.

If it had to be boiled down, he proposes that workers own the means of production but still be organized as businesses in a competitive and non-planned way. The selling points of the plan are that it is temporary (it allows for more changes to be made) but more importantly, that it has eliminated the need for profit-seeking behavior.

For a while I have been sympathetic to this kind of idea but looking closer it does not ultimately end profit. This is important not just because profit seeking behavior leads to bad consequences, but also because it is one of the important things keeping the current system in place.                

Ackerman's plan of action is two-fold: first socialize all the banks through a kind of buy-back program. This will dislodge the financial elite and allow for step two: have the workers take control of their workplaces and stay as competing firms.

So lets assume that somehow this will be politically accomplished, how will this end profit seeking behavior? The fact that a business is run as a co-op does not end profit. If we take the biggest example in the world, Mondragon, it is owned by the workers but still seeks profit because it is in a market system; as Noam Chomsky points out:

Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit [non-Mondragon] workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you're compelled to ignore negative externalities fixed on others.
And there is no reason to believe that an economy of competing Mondragons will solve the problem either. As Ackerman points out, even if worker-owned businesses can't exploit labor they can still exploit resources. That is in this competitive environment, co-ops can still pollute, use false advertising etc. to stay competitive or risk going out of business.

Even the people who proposed this system like Kornai, Murrell and Stiglitz etc; never envisioned that it would end profit, only that it would be a more humane capitalism.

A Real Solution to Profit?

Historically one of the only places that did eliminate profit in a democratic way was anarchist Spain during the Spanish Civil War. In urban Catalonia the people took up anarcho-syndicalism to solve it.

Essentially businesses would be managed by the workers but also organized into a federation (or syndicate) run by elected councils. The excess profits would go to the syndicates who would divide it among the businesses or trade with other syndicates. Although given the circumstances of the Civil War it was much more chaotic in practice

The result was that collectives sent all of their surplus goods to the cantonal capital where elected councils were responsible for bartering those goods with surplus goods from other collectives....Peirats' observations are germane: "Once the economic necessities of the collective itself were covered, the surplus was sold or bartered on the external market, directly or by way of confederal organizations" (Peirats, 141).
The take away from this is not that syndicalism is the solution but that some kind of democratic planning is needed. For instance In 1936 Spain a delegation of CNT leaders examined what a competitive system of co-ops might look like. As was summarized by German anarchist Augustin Souchy:
The workers must take into account that [market socialism] will in time degenerate into a kind of bourgeois cooperativism. Encased in their respective competing collectives, the enterprises will...degenerate inevitable into a bureaucracy: the first step leading to a new form of social inequality.

That is, competing businesses will slowly retrograde back into an ownership class and managers (the "social inequality" and "bureaucracy" Souchy points out).

What is perplexing is the proposed system is almost designed to this; it is suggested that a firm "could be “owned” by an entity in the socialized capital market, with a management selected by that entity..." The problem is in a competitive environment that managing firm will begin to act like typical business management because eventually the decisions will become too painful to be consented on by the workers (mass layoffs, wage cuts etc.) and will require managers unaccountable to workers.

This is justified by Marx's observation that public companies “have an increasing tendency to separate [the] work of management as a function from the ownership of capital…” The problem is it is largely a distinction without a difference. Managers are needed to maintain profits for the owners but are superfluous in a worker-controlled environment.

To give a bold analogy: it would be like saying the secret police (management) and Politburo (ownership) are separate in a Communist country and thus the secret police are "neutral" to whoever controls them. In a democracy there would be no need for a secret police.

The saving grace

I want to stress however that this proposal would still be a great still a great improvement over the system that exists now and that all the bad parts are about regressive back to the status quo.

The problem with the proposal (even if it were politically possible) is that it wants to eliminate profit but still remain consumerist when the solution has to be producerist. Ackerman's proposal is a good start but it wants a new system without really creating a new system.

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