Revisiting the Calculation Debate: A Call for a Multiscale Approach

Abstract

This essay provides a framework to develop policies that can both resist the capitalist system and formulate alternatives to it, by critically reviewing discussions of an ecosocialist society and its economic organization through revisiting the “calculation debate” that was started in the 1930s and is still ongoing. It underlines the importance of repoliticizing the economic sphere to reembed the economy in society rather than society being subordinated to the economy. To that aim, it emphasizes the gravity of (1) planning our future, (2) coordinating our decisions before we embark on any action, (3) relying on knowledge in different forms and formats as articulated at both the individual and societal level, and (4) generating real democracy via participatory and deliberative mechanisms. Finally, the essay critically assesses progressive responses to current economic, ecological, and health crises and, because local and macro initiatives are equally important and feed one another positively, advocates for adopting a multiscale approach.

Key Words:

• Calculation Debate
• Ecosocialism
• Embeddedness
• Incommensurability
• Participatory Planning

We appreciate the support of Yahya M. Madra, whose insight and expertise enabled us to extend and clarify many parts of this manuscript. We would also like to thank Ayşe Mumcu, David Purdy, Elena Lieven, Ian Gough, John O’Neill, and Ted Benton, as well as two anonymous referees, for their insightful comments and suggestions. The usual disclaimer applies.

Notes

1 Also from The Guardian, see Campbell (2020) and Campbell and Savage (2020).

2 E.g., Pollin (2018); “The European Green Deal,” European Commission, Brussels (2019), https://eur-lex.europa.eu/resource.html?uri=cellar:b828d165-1c22-11ea-8c1f-01aa75ed71a1.0002.02/DOC_1&format=PDF; “Recognizing the Duty of the Federal Government to Create a Green New Deal,” H.R. 109, 116th Cong. (2019), https://www.congress.gov/bill/116th-congress/house-resolution/109/text.

3 As exemplified in Gibson-Graham (2006); Gibson, Cameron, and Healy (2013); “Promissory Notes: From Crisis to Commons,” Midnight Notes Collective and Friends, accessed 15 February 2022, http://www.midnightnotes.org/Promissory%20Notes.pdf; Akbulut (2017); Hardt and Negri (2017).

4 To provide a historical context, we note that, in discussions on welfare in mainstream economics in Neurath’s day, nonmonetary forms of valuation were much more widespread, taking individuals’ needs rather than their tastes into consideration. See, e.g., Greenwood (2006), Davies (2015), Sandmo (2015), and Benanav (2020). We also remind our readers that the in natura calculation was already spelled out in Marx’s Capital (the Robinson Crusoe story) and that Engels’s well-known text on planning (based on labor expenditures) in Anti-Dühring somewhat resembles the in-kind approach. See Cockshot and Cottrell (1993) for an excellent historical review of planning in kind.

5 The Walrasian model, which is at the core of the neoclassical paradigm, can be described as the study of how rational individual agents, subjective values, and marginal calculation, together with a tâtonnement process (trial and error), will deliver market-equilibrium prices. An imaginary figure (crieur) is given the task of adjusting prices in the light of excess supplies and demands. The decentralized solution guarantees the (neoclassical) efficient allocation of resources (Bockman 2011).

6 It should be noted in passing that the initial model designed by Léon Walras ([1874] 2010) in his Éléments can be read as being inspired from a socialist perspective (Tribe 2015).

7 The concept of “tacit knowledge” was first explicitly developed by Michael Polanyi (Karl Polanyi’s brother) in his work on the history of science.

8 Though all three Viennese intellectuals—Neurath, Polanyi, and Hayek—were discontented with the Walrasian school’s epistemological position, Hayek did not want to associate himself with any version of the Left (O’Neill 2007; Mirowski 2018).

9 Given that nature cannot take purposeful action itself, the economy must first be reinstituted and socially controlled if it is to be reembedded in ways that create a sustainable organic realm.

10 As such, we distance ourselves from the “soft” interpretation of Polanyi (see, e.g., Block 2001), which suggests that the economy is more or less always embedded and that egalitarian capitalism is possible (Devine 2019b; cf. Holmes 2012, 2014; Dale 2016; Brie 2017; Hodgson 2017; Brie and Thomasberger 2018). Recall Polanyi’s argument ([1944] 2001, 234) that the self-regulating market should be transcended “by consciously subordinating it to a democratic society.”

11 This path then led to developments in general equilibrium modeling (including input-output analysis), with a wide range of algorithms that differ in informational requirements, computational procedures, and environments. Notable among the extensions of these models is the one that incorporates economic-environmental relationships (see, e.g., Miller and Blair 2009).

12 A detailed analysis of the calculation debate can be found in our earlier works (Adaman and Devine 1996, 1997; Devine 2018). For a recent contribution to the debate on the background of Marx’s heritage, see Chattopadhyay (2018).

13 Let us remind the reader in passing that the Austrian school does not deny that the ex post coordination of the market mechanism produces waste but has argued that this waste is naturally inherent in economic reality. Kirzner (1973, 232), a leading theorist of the Austrian school, has claimed: “To describe the competitive process as wasteful because it corrects mistakes only after they occur seems similar to ascribing the ailment to the medicine which heals it, or even blaming the diagnostic procedure for the disease it identifies.”

14 See our exchanges with Geoffrey Hodgson on the social mobilization of tacit knowledge: Hodgson (1998, 2005), Adaman and Devine (2001, 2006), and Devine (2018).

15 Hayek’s core claim has always been the liberal principle of private autonomy—see, e.g., Vanberg (2008)—and not the principle of democratic governance. Let us also note the Austrian claim that a planned economy would override not only consumer freedom but also the will of potential entrepreneurs to act. The socialist side remained largely silent regarding this challenge, other than Lange’s acknowledgement of consumer sovereignty and Neurath’s counterattack that capitalism is indeed what suppresses nonmarket forms of life (Whyte 2020). Hodgson (2016) rightly argues that the debate has lacked discussion on the institutional dimension.

16 Let us note that the debate showed no major concern over keeping market exchange for the coordination of the consumption side, which involves the sale/purchase of the output of existing productive capacity. Polanyi, for example, suggested that embeddedness does not require the dismantling of market exchange (as one of the three forms of integration, in addition to reciprocity and centricity; see, e.g., Jessop and Sum 2019).

17 Apart from this impossibility, the market environment is known to bring about inequalities, which also applies to market socialism. Ruccio (2011a) discusses likely implications in the case of cooperatives in a market environment.

18 For a general discussion on the contribution of Kantorovich, see Cockshott (2010). Let us recall that optimal planning is nothing but the study of economic optimization under some endowment constraints, leaving aside any likely contradictions—say, arising among the workforce—that one may encounter in real-time economic life. For a thorough discussion of this point, see Ruccio (2011b).

19 Note that we have opted for these two models based on their wide impacts on current discussions, but other valuable contributions include, e.g., a late addition to direct-allocation modelling of Samothrakis (2020).

20 We should like to note that this planning may be possible through direct democracy at the most decentralized level and at the smallest scale, but indirect democracy would inevitably come into play as the scale increased (Devine 2018).

21 On innovation, see Adaman and Devine (2001) and Devine (2002); on the environment, see Adaman, Devine, and Özkaynak (2007), Özkaynak, Adaman, and Devine (2012), and Adaman and Devine (2017). We believe that the expansion of the market mechanism to deal with ecological problems (e.g., carbon markets) will result in the further commodification of nature. For a similar position, see Lohmann (2010), O’Neill (2017), and Stuart, Gunderson, and Petersen (2019).

22 For literature on “postnormal” science stressing elements of uncertainty in scientific research, see Funtowicz and Ravetz (1990) and Peters and Besley (2019). For an engagement of how uncertainity impacts the political economy of crises (the pandemic being the most recent) and the discipline of economics, see the interview given by David Ruccio (Madra 2020).

23 Let us remind ourselves that the main reason some people still deny the climate crisis or resort to conspiracy theories on the COVID-19 pandemic must be that they feel the current regime’s use of science to be suspect (see, e.g., Healy 2014).

24 See Corneo (2017); Pollin (2018); Gilabert and O’Neill (2019); Cox (2020); Duty of the Federal Government to Create a Green New Deal; “The European Green Deal”; “The Green New Deal for Europe,” DiEM25, accessed 15 February 2022, https://diem25.org/campaign/green-new-deal.

25 No doubt, economic growth should be seen as an “ideology and structural interest” of the capitalist state (Barry 2020). However, initiating the same trajectory under a socialist regime would not only be ecologically infeasible, as already mentioned, it would also bring the danger of transforming economic subjects into mere consumers. For a discussion on the relationship between happiness and socialism, see Liagouras (2019).

26 It is worth remembering that in September 2018 a group of concerned scientists representing Europe called on the European Union to (1) constitute a special commission on postgrowth futures in the EU parliament, (2) incorporate alternative indicators into the macroeconomic framework of the EU and its member states, (3) turn the Stability and Growth Pact (SGP) into a stability and well-being pact, and (4) establish a ministry for economic transition in each member state. See “The EU Needs a Stability and Wellbeing Pact, Not More Growth,” The Guardian, 16 September 2018, https://www.theguardian.com/politics/2018/sep/16/the-eu-needs-a-stability-and-wellbeing-pact-not-more-growth.

27 Basic Income Earth Network website, accessed 17 January 2022, https://basicincome.org.

28 Gough’s notion of “basic services” can be seen as an attempt to extend the domain of social (public) goods that are provided by local/central governments to allow citizens to enjoy their social rights. Let us remember in passing Screpanti’s (2004) suggestion from a while ago that a process of growth in social goods can be seen as a process of constructing communism (if allocated on the basis of “to each according to their needs” and if financed on the basis of “from each according to their abilities”).

29 Cooperatives play crucial roles not only for their members but also for the larger communities that they engage with. And we should not forget the “demonstration effect, for the society as a whole” (Ruccio 2011a, 338; see also Wolff 2012). It is vital that cooperatives form networks among themselves and community groups to avoid being isolated in the market environment (Kristjanson-Gural 2011).

30 See Kawano (2018); “About Commons Transition,” accessed 15 February 2022, https://commonstransition.org/about-commons-transition-2.

31 Also see related activists’ sites such as lowimpact.org, accessed 15 February 2022, https://www.lowimpact.org; On the Commons (website), accessed 15 February 2022, https://www.onthecommons.org.

32 Transformative Cities (website), accessed 15 February 2022, https://transformativecities.org.