History of Market Socialism
published March 1971 by Irish Communist Organisation>
In "The Social System: A Treatise on the Principle of Exchanges (1831) Gray dealt with the problem of demand failing to keep pace with production, and the resulting crisis of overproduction.
" It would be by no means difficult to place the commercial affairs of society upon such a footing, that the production should become uniform and never failing cause of demand.. that to sell for money may be rendered, at all times, precisely as easy as it is now to buy with money.
produce ad infinitum and I will find you a market ad infinitum (p16-17)
" To be able to exchange is as important as it was for Robinson Crusoe to be able to produce"
"To this hour there has never existed a rational system of exchanges, or a proper instrument for effecting exchanges. But he has discovered a device which will bring about the "instant power of exchanging " (page 18 -19)
"I will show you how to produce, in quantities without any known or concievable limit, may be disposed of at all times, in a single hour, and without the chance of the time ever arriving when there can be any possibility, be a market overstocked, or demand be overtaken by production " (page 22)
Gray's scheme is that a system of "national" warehouses should be set up, and that commodities should be taken direct from the factory to these warehouses, the seller receieving a certificate stating the value of the goods they have deposited. The price of the commodities would be established by adding the cost of the materials and labour expended on them (their "direct cost" )and a rate of profit to cover rent interest of capital, management , salaries, depreciation of stock, incidents, and all national charges.
The certificates of value would be issued by the National Bank (which would also keep the national accounts). These certificates or reciepts would enable the holder of it to obtain the value that was given for it, whenever he pleases and in whatsoever shape he may require" Page 63.
"The national banker would recieve and take charge of every description of valuable, and give back any description of valuable in its stead " Page 68
" Upon this paln it will be evident, that, as the nominal or money price of all the property in stock would entirely be made up in money issued by the Bank to the respective members of the sociall community, the quantity of money in circulation would at all times be exactly equivalent to nominal value on money value of the property in store. Money .. would increase as produce was increased.. and demand would keep pace with production " (page 66)
Society would then be like one large manufacturing and mercantile establishment the banking being its counting house. (Page 68)
The scheme was to be put into operation by the capitalists and the landowners putting their property under the control of a National Commercia Association which would pay a dividend proportional to the property contributed. but accumulation would take the form of "national capital" and as this progressed the dividends of those who contributed the original capital of the Association woud diminish proportionately, in time thet may be bought out entirely. The dayy may come.. when the business of every nation will be conducted upon the basis of national capital.(page 171)
Each enterprise would the operate with a portion of the national capital, producing commodities with it and instantly realising their value by deposting these in the national warehouses. This instant realisation of the total value of production would ensure that demand kept palce with production, that production directly, instantly, and with no wastage, created its own demand.
Gray's new money would not itself be a commodity, it would be a means of realising directly and immediately the value of commodities. He held it to be a major flaw in the existing system that money itself was a commodity.
In his Critique of Political Economy in ( 1859) Marx wrote :
"Why does exchange value develop into price ? Why do all commodities have their values estimated in one exclusive commodity, which is transformed into the adequate existence of exchange value, into money ? This was the problem that Gray had to solve. Instead of solving it, he imagines that commodities have an immediate relation to one another as products of socialist labour.
They can only have a relation to one another as what they are. Commodities are immediately products of isolated independent private pieces of labour which must be sanctioned as general sociall labour by their alienation in the process of private exchange, or labour on the basis of commodity production only becomes social labour by the all round alienation of the individual pieces of work.
But if Gray subsitutes the labour time contained in the commodities as immediately social, then he substitutes it as social labour or hte labour time of directly associated individuals.
Thus in fact a specific commodity like gold or silver, would not be able to be contrasted with other commodities as incarnations of general labour, exchange value would not become price, neither would use value become exchange value, the product it would not become a commodity and so the basis of bourgeois production would be done away with.
But this is by no means Gray's opinion. Products are to be produced as commodities, but not to be exchanged as commodities"
Gray hands over to the National Bank the execution of this pius wish. On the one hand, society in the form of bank makes the individuals dependent on the conditions of the private exchange, and on the other hand, society continues to make them produce on the basis of private exchange.
Inner logic meanwhile drives Gray to remove one condition of bourgeois production after the other, although he only wants to reform money arising out of commodity exchange. Thus he converts capital into national capital, landed property into national property, and if the bank is examined closely it will be found that it does not merely receive commodities with the one hand and with the other give out certificates of labour, supplied but that it regulates production as well"
The dogmas that a commodity io immediately money, or that the particular labour of private individuals contained in it is immediaely social labour, naturally does not become true by the bank believing it and operating according to it " (page 104-6)
It would be useful to make a detailed comparison of Gray's scheme with modern market socialist schemes, but we cannot embark upon this here. Marx's criticisms are exceptionally relevant to current market socialist theory.
He shows that Gray is suspended between two systems of production and points out that actual value in commodities cannot be directly social ("immediately social") that value cannot be assessed bureaucratically; that the actual value of commodites can only be established by actual competition, by actual market exchange ("all round alienation) and that commodities can " only have a relation to one another as what they are immediately" ie products of private, isolated labour, whose actual social value must be established by the market".
Some modern revisionist schemes like Gray's require the bureaucratic calculation of value without actual market exchange. In these schemes ( put forward where the situation is not ripe for an actual functioning market) the market is merely represnted has having a merely formal existence, it functions merely to confirm the bureaucratic calculation of value.
Marx rejected this notion as fantasy, seeing the only real alternatives as actual market system (capitalism ) and a system of producing use values directly for social use (socialism developing into communism).