Capitalism has always had a chorus of sirens that have striven to allure Homo sapiens from thinking they had any chance to escape its clutches. Margaret Thatcher proclaimed ‘there is no alternative’ in 1980. In the wake of the Soviet Union’s collapse, Francis Fukuyama declared the ‘End of History’ in 1992. Given the fall of the Soviet Union, the decline and isolation of the Cuban economy, and the dominance of the ‘Washington Consensus’, the decade after the Cold War was one of capitalist triumphalism. It was during that time the Marxist literary critic Frederic Jameson famously wrote that ‘it is easier to imagine the end of the world than the end of capitalism.’
The late Mark Fisher described all this as ‘capitalist realism’ (the title of his 2008 book on the subject), ’the widespread sense that not only is capitalism is the only viable political and economic system, but also that it is now impossible to even imagine a coherent alternative to it.’ Central to capitalist realism is the idea that an economy based on planning and democracy is not viable, inevitably leading to endemic shortages, bureaucracy, and stagnant growth.
Such were the arguments put forward by Austrian School economist Ludwig von Mises in his seminal 1920 essay titled ‘Economic Calculation in the Socialist Commonwealth.’ Mises asked how could planning boards know which products to produce, how much should be produced at a given time, which raw materials had to be used, and how much of them? Where should production be located and which production process is the most efficient? And how would all this information be gathered and calculated and then be retransmitted back to all the relevant actors throughout the economy? Mises’ answer was that no human process could accomplish it. He argued it is simply beyond the capacity of any planning agency to accurately describe supply and demand across all economic sectors therefore planners working with flawed data would regularly produce vast mismatches between what is demanded and what is supplied, resulting in inevitable shortages and the requisite barbarism.
Instead Mises argued the simple mechanism of prices floating in a market contain all the needed information. This argument was later taken up by Friedrich von Hayek. Hayek also viewed prices as information-gathering machines reflecting reflects the discrete bits of knowledge scattered among executives, workers, and consumers. Prices, derived from the collective wisdom of the crowd, could coordinate information through a decentralized network Hayek called a ‘spontaneous order’, making planning unnecessary.
On the surface these arguments seem formidable and have been used against socialism for generations. Lenin himself acknowledged the difficulty of building a planned economy in revolutionary Russia in the aftermath of the destruction of World War I when he said to the Session of the all-Russia C.E.C. in 1918:
We know about socialism, but knowledge of organization on a scale of millions, knowledge of the organization and distribution of goods, etc.- this we do not have. The old Bolshevik leaders did not teach us this…And we say, let him be a thorough-paced rascal even, but if he has organized a trust, if he is a merchant who has dealt with the organization of production and distribution for millions and tens of millions, if he has acquired experience- we must learn from him.
But these arguments can certainly be dismantled. Consider first how much planning and public research is already happening in a modern economy. For instance, in what has now long been an annual routine of anticipation and leaks in the business press, Apple again recently launched its latest version of the iPhone, iPhone 14 (and the pricier iPhone 14 Pro). The release of iPhone 13 last September brought back the long lines of loyal devotees to Apple stores all over the world after the pandemic paused the ritual. It was the iPhone first released in 2007 (followed by the iPad), that ultimately made Apple the first company in the world to reach a trillion dollars in market cap value on August 18, 2018- not to mention the first to reach $2 trillion (August 19, 2020) and $3 trillion (Jan 3, 2022). In the five year period following the 2007 launch, Apple’s global net sales increased nearly 460 percent. It was the iPhone that more than anything made Steve Jobs a modern icon.
Beyond that, the iPhone (and smart phones generally) is often held up by defenders of the status quo as proof that the status quo is working just fine. After all, what better evidence of the power of capital than the fact that billions of humans now hold in the palm of their hands more than 100,000 the processing power and more than one million times the Random Access Memory than the computer that landed Apollo 11 on the moon in 1969? A few years ago the meme ‘Capitalism Made Your iPhone’ made the rounds on social media.
If that narrative sounds compelling, it is also quite incomplete. While Jobs and the product designers at Apple undoubtedly had a talent for synergy and design, the Bauhaus inspired minimalist look to the iPhone was always a large part of it brilliance, the actual technology inside the iPhone has its roots not in Apple labs but in publically funded research. This includes touch-screen displays, GPS, the Internet, even Siri. The first workable prototype for the internet came in the late 1960 with ARPANET (Advanced Research Projects Agency Network) funded by the U.S. Department of Defense. GPS got its start the same way a few years later. Federal funding for computer science increased rapidly in the 1970s, reaching $250 million annually by 1975. The internet received another boost with the establishment of the National Center for Supercomputing Applications, funded by the National Science Foundation in the 1980s (out of which emerged Mosaic which later became Netscape). The U.S. government was an early, sole consumer for processing units based on Integrated Circuits. It heavily subsidized the domestic semiconductor industry in late 1980s to the early 1990s through the SEMATECH program. Apple was able to ride this wave of massive state investments in the technologies that underpinned the iPhone.
It is also has to be pointed out, as brilliantly described by Leigh Phillips and Michal Rozworski in their book The People’s Republic of Wal-Mart, that large, successful enterprises, even while operating within a general market economy, do a great deal of large scale planning internally. Some of these companies have larger market caps than most countries’ GDP. Apple and Amazon are worth more than 90 percent of the world’s countries. In 1970 the GDP of the Soviet Union, the second largest economy in the world at the time, came in at around $433.4 billion. In 2021 Wal-Mart’s revenue was $572.8 billion. These organizations eschew internal markets. The different departments, stores, and suppliers don’t compete with each other. Everything is coordinated. To that extant one can say much of the global economy is already planned.
In fact, there is a recent example of a corporation that actually took markets seriously enough to attempt to incorporate them internally. In February 2013, Edward Lampert, founder of the hedge fund ESL Investments, took over as the CEO of Sears Holdings (the parent company of Kmart and Sears formed after the former brought the latter), one of Wal-Mart’s main competitors. Sears goes back to 1892. Its catalog once revolutionized shopping for Americans, particularly the many back then who lived in rural areas. Lampert announced his intention to create markets within the company, breaking it up into 30, then later 40, autonomous units that would compete with each other. Each unit had their own president, board of directors, chief operating officer, and separately measured their own profit and losses. The idea being this would efficiently produce better data.
Instead it devolved to absurdity. Creating internal divisions blocked internal synergy. If a division needed help from the HR or IT departments, it had to write a formal request or use a contractor. In order to optimize profits at one division at the expense of others, infighting erupted over everything from floor shelving to advertising space on circulars. The results quickly spoke for themselves. A Bloomberg expose from 2013 described the gross spectacle of screw drivers being advertised next to lingerie. Little funding went to needed upgrades at stores, many of which became dilapidated. Sales dropped by $10 billion. By October 2018 Sears Holdings filed for bankruptcy and Lampert stepped down as CEO (though he remained chairman). While Sears was facing stagnation since the 1990s as online retail took off, it an epic Randian failure that truly crashed it.
Compare all that to the fluidity of Amazon. Amazon is certainly a soul-sucking corporation that grinds workers to dust. Yet it has achieved logistical and operational genius. Consider that at any given moment Amazon has 600 million items up for sale, basically all available to be home delivered within two days from strategically placed distribution centers that more and more run on algorithms and robotics. Amazon uses search and point-of-sales data and search history to stock the centers. The result: Amazon receives about 115 orders, basically a full delivery truck worth, every second. That’s 10 million fulfilled orders for a day. An estimated 60 percent of U.S. Adults are Amazon Prime members.
In a November 2019 profile for The Atlantic of Amazon founder and then CEO Jeff Bezos, Franklin Foer had this astute observation:
Amazon, however, has acquired the God’s-eye view of the economy that Hayek never imagined any single entity could hope to achieve. At any moment, its website has more than 600 million items for sale and more than 3 million vendors selling them. With its history of past purchases, it has collected the world’s most comprehensive catalog of consumer desire, which allows it to anticipate both individual and collective needs. With its logistics business—and its growing network of trucks and planes— it has an understanding of the flow of goods around the world. In other words, if Marxist revolutionaries ever seized power in the United States, they could nationalize Amazon and call it a day.
This would definitely be quite a first step, but only a first step. Socialism focuses on social relations and workers democracy. Simply nationalizing Amazon wouldn’t achieve it and in fact risks replacing the dictatorship of capital with another dictatorship. But the greater point holds. Such efficiency, flexible planning, and logistical power could be captured and used to create a just, egalitarian society. In a world full of crisscrossing cables, instant global communication, along with ever expanding AI, the arguments of Mises and Hayek truly lose their power. There are now many trillions of pieces worth of data that could be used to make nonmarket decisions about how to allocate the use of resources. ‘Big Data’ understandably has a bad name among many leftists, however data is the lifeblood of any planned economy. Rather than being used for surveillance and targeted advertising, it can be used to determine and fulfill peoples’ needs.
We have a rudimentary example of how this could work from Chile’s socialist experiment in the early 1970s. By the end of 1971 the Allende government had nationalized more than 150 enterprises, including twelve of the twenty largest companies in the country. Recognizing the difficulty of reordering the economy in the face of fierce opposition and American sanctions, the government instituted Project Cybersyn. The aim, using the limited computing power that was available to Chile at the time (there was only one mainframe IBM 360/50 available for the project, it relied instead on a network of telex machines), to connect data from the factory floor and the State Development Corporation in order to enable quick decision making in response to changing conditions. The system would provide daily access to production data and modeling tools the state could use to predict future economic behavior. A futuristic control room would facilitate communication and data analysis.
As described by Eden Medina in her book Cybernetic Revolutionaries, though primitive and ultimately not completed, the system did enable the government to overcome a general strike called by the opposition in October 1972. Shortages were quickly reported through the network allowing different enterprises shifted resources. Government data showed raw materials continued to flow to 95 percent of economically crucial enterprises and food supplies were maintained at 50 to 70 percent. Project Cybersyn didn’t survive the Pinochet coup in 1973 so its full potential wasn’t tapped, yet the promise remains. It is easy to imagine what can be planned with today’s computing power and mountains of data.
Of course it takes more than advanced computer modeling and AI to build socialism. It first takes the working class democratically controlling the means of production. This can ultimately only be won at the barricades. However, as examples from the technologies of the iPhone to Amazon to the COVID vaccines show, planning works. More and more we are moving toward Trotsky’s vision of the future of human innovation spelled out in Literature and Revolution:
He will point out places for mountains and for passes. He will change the course of rivers and he will lay down rules for oceans. The idealist simpletons may say this is a bore, but that is why they are simpletons….
Most likely, thickets and forests and grouse and tigers will remain, but only where man commands them to remain. And man will do it so well the tiger won’t even notice the machine, or feel the change, but will live as he lived in primeval times.
While there is a wide range of opinions as to when its beginning should be marked, there is now an emerging consensus that the planet is indeed in a new period of geological history, the Anthropocene, one in which human civilization essentially creates its own environment. This concept no doubt causes many to tremble in fear but denial of our collective responsibility will not change it. The specter of global warming, possible future pandemics, and other environmental challenges are awesome, but so are the possibilities of maximizing human freedom, ending war and poverty, and probing deep space. We cannot trust the irrational, unplanned capitalist system with its destructive incentives to fulfill our potential. As the world is witnessing with the COVID pandemic and global food crisis, far from the picturesque visions of Mises and Hayek, a reliance of markets leads to inefficiency, hoarding, and reactionary nationalism. The only good Anthropocene is socialist, its vehicle is an empowered global working class. It still has a world to win.
Joseph Grosso is a Writer and librarian in New York City, of Emerald City: How Capital Transformed New York Joseph Grosso | Zer0 Books (johnhuntpublishing.com)