Markets in the Name of Socialism.
An Interview with Johanna Bockman

✑ JOHANNA BOCKMAN | 3,634 words
‟1989 was supposed to be the realization of a truly democratic form of socialism. Neoliberalism has left-wing origins.

Johanna K. Bockman is Associate Professor of Sociology and Global Affairs at George Mason University and works in economic sociology, urban sociology, sociology of globalization, and East European Studies. 

Originally published on Rebel News (2015) by Jack Marsh (interviewer), whose work has appeared in Philosophy Today, Philosophy and Social Criticism, and Continental Philosophy Review.

W hat is neoliberalism? Its meaning can be distilled in the infinitely utterable mantra touted daily by business media, Republican candidatesand the inimitably cheerful Paul Ryan: I believe the US will renew its dedication to economic freedom and reach a proper understanding of the role of government. In doing so, we will not just promote our prosperity, we will ignite an economic boom to spread opportunity around the world.

“Neoliberalism” generally refers to the alleged powers of an immaculately “free market,” proffering what Naomi Klein dubs the “holy trinity” of policies: economic privatization, deregulation, and cuts to social spending. Panned in nearly every other nook of our ideological multiverse — from David Graeber to Pope Francis — neoliberalism also illumines quite interesting rifts between its Marxist and Keynesian critics.

Enter sociologist Johanna Bockman, and her recent book Markets in the Name of Socialism: The Left-Wing Origins of Neoliberalism. Bockman argues that the neoliberal architects of the post-89 world-order appropriated and exploited the novel ideas of central European socialist economists. Against the classical Marxist critique of capitalism, and its reliance on the labor theory of value, these socialist economists contributed to developments in neoclassical economic theory.

Bockman goes on to show how these theoretical developments were put into practice through experiments with social ownership, worker self-management, competitive leasing, or even “contractual socialism.” (168) As such, Bockman holds that neoliberal appropriation of neoclassical ideas harbors “decades of radical democratic and socialist experiments.” (12)

Against both neoliberal ideology and its statist critics of whatever stripe, she suggests, as Barker distills: “there is no inherent affinity between neoclassical theory, market institutions, and capitalism.”

Why did you write Markets in the Name of Socialism?
In 1988-1989, I was an exchange student in Budapest, Hungary and witnessed the protests, the dissidents, and life in a unique socialist country. I was interested in trying to understand what I witnessed and what had happened in Eastern Europe. In the 1990s, it was incredibly difficult to make sense of what had happened. During that time, I wrote my dissertation on the history of market socialist ideas among Hungarian economists.
Through my research, I had found that Hungarian economists had been interested in markets well before 1989, since at least the 1950s. My argument was that American economists had converted Hungarian economists to American mainstream neoclassical economics. However, I had a nagging feeling that this Americanization argument was incorrect, which it was.
I then began interviewing U.S. and European economists who had worked with economists from East Bloc countries, as well as visiting archives in different countries. I found that economists in the socialist East and the capitalist West practiced the same mainstream neoclassical economics, which allowed for a wide range of discussions. MNS is the result of what I discovered from this transnational research.
Can you clarify the meaning of the following terms: “neo-classical economics” and “neo-liberalism”?
William Stanley Jevons in England, Carl Menger in Austria, and Léon Walras in Switzerland are generally credited with simultaneously discovering neoclassical economics in the 1870s. Neoclassical economists moved beyond the classical view that the value of goods is based on the objective costs of their production (the labor theory of value) to the neoclassical view that value is subjective or perceived, that the individual agent — an individual or a firm — judges the utility or usefulness of certain goods or services. Neoclassical economists soon “discovered” that a central planner could use the equations describing a free market and create an equally efficient economic system.
Thus, the free market and the central planner sit at the center of neoclassical economics, which leads to economists’ interests in all sorts of abstract and real market and planning experiments. In the eyes of many neoclassical economists, Marxist political economy was not, in fact, an economics of socialist planning but rather a critical economics of capitalism. In their eyes, neoclassical economics provided a resource and a model for socialism. Neoclassical economics later became the mainstream in the United States and is now the mainstream worldwide.
Economists make a distinction between policy advocated by economists and economics practiced by economists. Economists may advocate neoliberal, Keynesian, or other policies, while sharing the same mainstream neoclassical economics profession and practice. In 1983, Keynesian economist Paul Samuelson wrote about neoliberal economist Milton Friedman, “Economists do agree on much in any situation…I could disagree 180º with his [Friedman’s] policy conclusion and yet concur in diagnosis of the empirical observations and inferred probabilities.”
Similarly, in 2007, Paul Krugman hailed the professional research of Milton Friedman, while criticizing him as an ideologue. Many people conflate neoclassical economics and neoliberalism. To understand neoliberalism, we must separate neoliberalism and neoclassical economics and leave behind the common assumption that neoclassical economics is a science of capitalism.
Neoliberalism has become a term of abuse on the left. Can you tell us in what sense it has “left-wing origins”?
David Harvey and Naomi Klein, among others, have understood neoliberalism as a new kind of capitalism that emerged in the late 1970s and 1980s. In contrast, Michel Foucault understood neoliberalism as a new kind of state and a new kind of governance, a governance or engineering of peoples’ souls, which emerged in the 1950s. Applying Foucault’s approach, scholars have understood Eastern European socialism as neoliberalizing since the 1960s. Yet, while Foucault’s approach has produced many insights into neoliberalism, it collapses alternatives to neoliberalism, including socialisms, into neoliberalism as simply other examples of engineering the soul.
In my work, I take Harvey and Klein’s approach, seeing neoliberalism as capitalist. What looks like neoliberalism during socialism – the interest in markets and prices – is just the continuation of the decades-long discussion about socialism. 1989 was supposed to be the realization of a truly democratic form of socialism that also included markets. Instead, for a variety of reasons, these calls for socialism were distorted into plans for capitalism, neoliberal capitalism. And the institutions created by socialists – such as non-state social property and socialist banks – were appropriated for capitalism. Therefore, neoliberalism has left-wing origins because it co-opts the language and the creations of radical socialist movements, which fought against both Soviet state-organized socialism and Western state-organized capitalism, in the service of a new kind of capitalism.
The distinction between capitalism and socialism permeates your analysis. In general, socialism was classically understood to involve public ownership of the means of production. If, indeed, markets can be utilized in and for socialism, doesn’t this entail some form of private ownership, popular entrepreneurial activity, or market actors distinct from the state?
In the minds of economists, markets do not necessarily require private property. For example, in 1922, Karl Polanyi understood socialism as the radical extension of democracy to the economic sphere. [A translation of this text is forthcoming in Theory and Society.] Polanyi stated, “the opposition of socialism versus capitalism is no longer reduced to the stereotype of the market-less economy versus the market economy.” Markets have existed across human history. Polanyi argued that socialism does not require the eradication of markets because it still requires markets. However, socialism should eradicate markets in “fictitious” commodities – land, labor, and capital – because such markets would create a market society, a society run by markets. Thus, Polanyi opposed market society – a society run by markets, he did not oppose markets or exchange per se.
According to Polanyi’s socialist vision, socialism would have fixed prices and negotiated prices, or, in other words, “exchange” prices negotiated by organizations of producers and consumers. For Polanyi, socialist market calculation would not take place so much at the individual level of the consumer, but rather democratically, at the social level.
In Peter Rosner’s words, “according to Polanyi, these organizations do not represent distinct social groups, but the same people in different economic functions. In a socialist economy, the basic principle of economic organization will not be the same interests of different people – the organizing principle of the capitalist system – but different interests of the same people” (p. 62). Therefore, producers and consumers as institutions, not as individuals, negotiate prices. Polanyi demonstrated how markets could be embedded in, or even constituted of, democratic institutions controlled by producers and consumers.
I personally sense that there are likely other problems with markets and commodities not acknowledged by Polanyi , but many economists I studied understood competitive markets working better in socialism than in capitalism, which tended toward monopoly.
You write, “I argue that we should not conflate neoliberalism and neoclassical economics, we should not assume that neoclassical economics is a capitalist science or ideology, and, most importantly, we should go beyond the state–market axis.” (4) At the core of your analysis seems to be a rejection of the Marxist view of market relations as inherently exploitative, and rather that markets can in fact function as mode of social self-determination under certain institutional conditions. How do you and the socialist economists you’ve studied answer the classical Marxist critique of neoclassical value-theory? What is the big lesson the left should take away from your book?
The big lesson from my book is that the dichotomies of American public debate – most importantly, the state versus the market, which is seen as synonymous with socialism versus capitalism – obscure the fundamental issues. Socialist neoclassical economists thought that ownership of the means of production was the essential concern. Many of them wished to move beyond state ownership towards communist forms of ownership. Many of these economists also rejected hierarchical forms of authority in the name of true workers’ power. The dichotomy of state versus market does not capture either the nature of ownership or the nature of workers’ power.
You write “Neoliberalism thus, despite the intentions of its proponents and the worst fears of its opponents, still contains, at least in potential, decades of radical democratic and socialist experiments” (12). Can you explain in more detail the democratic potentials that inhabit the origins of neoliberalism, with reference to the Hungarian and Yugoslav models?
In my study of professional economic discussions in Hungary and Yugoslavia during socialism, I found that economists and economic policy makers had planned and implemented a wide array of institutions and experiments that were later co-opted or appropriated by capitalist groups. For example, Yugoslavia had implemented worker self-management socialism, which they envisioned as moving beyond Soviet state socialism toward communism. Workers would hold (non-state) social ownership and practice collective management of the means of production in their work groups. This process was extremely contentious, difficult, and never fully realized. When Yugoslavia fell apart, advocates of neoliberal capitalism could distort the ideas of worker self-management into support for capitalism and could privatize and appropriate the companies owned and managed by workers during socialism. During socialism, as a member of the Soviet East Bloc, the Hungarian government could not or would not realize the Yugoslav model and instead experimented with markets and alternative forms of ownership without worker self-management. While some have argued that Hungarian market socialism was really just capitalism without capitalists, economists had more radical discussions behind the scenes. These radical or potentially radical democratic and socialist ideas and experiments still remain within neoliberal institutions and ideas, now in distorted form.
Your attempt to contest the state/market dichotomy is laudable, and suggests that the two necessarily function in productive tension. For example, on the one hand, you seem to underwrite Yugoslav and Hungarian experiments with “decentralization,” (104) and “competitive market[s],” (163) as a means “to expand…individual freedom” (162) and “loosen” centralized state power (162). On the other hand, you hold that the “disembedding the market from the state obscures the very clear argument these economists made for particular state and corporate institutions necessary for markets to thrive.” (192) You summon markets, as a potential mode of social self-determination, against state-power, and summon the state against unfettered markets as a condition for their effective function. What is the proper relation between market and state, or their precise mode of reciprocal limitation?
I need to make clear that I am reporting on the ideas of economists. I am a sociologist interpreting the intellectual world of economists, which I find very interesting and surprising, but I remain a sociologist. Neoclassical economists have some unusual ideas. For example, neoclassical economists prefer “pure” systems because either “pure” competitive markets or “pure” central planning are efficient systems. “Pure” systems can have a variety of ownership and operational institutions. Neoclassical economists do not prefer hybrid systems like Keynesianism, which mix these pure systems, because they are seen as inefficient systems. Thus, it is problematic to ask neoclassical economists about the proper relation between market and state because their concerns are elsewhere.
The democratic potentials you intuit at the root of neoliberalism seem premised in the idea of “social ownership.” How does “social ownership” differ from both private and state ownership? If socially owned ventures are distinct from the state, are they not a de facto form of shared private ownership, such that market actors and the state constitute distinct legal entities subject to specific obligations in, for example, lease agreements, service contracts, etc. enforceable by an independent judiciary?
In general, during socialism, Yugoslav leaders encouraged the withering away of the state by transforming state ownership of the means of production into “general people’s ownership.” They defined capitalism as the private ownership of the means of production and socialism as the social ownership of the means of production. The lowest form of social ownership was state ownership, as in the Soviet Union, which, in the words of top economic policymaker Boris Kidrič, would eventually take on “the character of state capitalism of a pure type (without ownership by middle classes, but with an all-powerful parasitic bureaucracy of a capitalist character).” According to Kidrič, the implementation of worker self-management and its control over individual enterprises had transformed state ownership into general people’s ownership. Over time, Yugoslavs referred to this kind of ownership as “social ownership,” neither individual private ownership nor state ownership.
In Yugoslavia, there were extensive debates about the nature of “social ownership.” Some argued that it meant that everyone and thus no one owned firms. For others, this ownership was in essence privatized by the specific workers and managers in specific firms. Many others continued to explore what this ownership might mean.
One can pose questions from both sides of the state/market divide. Let me ask two distinct questions:
  1. Can “competitive…leasing,” (163) “decentralized property rights from state to firm,” (163) “contractual socialism,” (168) and other experimental proposals really avoid the problems that typically attend market relations, such as the formation of classes? Following Ward, what prohibits worker-owned ventures from, “in response to increases in demand and price, workers would rather maximize their own individual incomes than hire new employees and increase production” (96)? To avoid such possibilities, is a strong centralized state is necessary?
I cannot say whether socialism based on worker self-management or other visions of radical democratic socialism fully realized would require a certain kind of state or would work. That is the job of others. My book brings to light past discussions that had been obscured and distorted. This is an ongoing project for me. Thus, I see my work as a potential resource for current discussions.
  1. If markets are and ought to be “embedded” (192) within specific social formations, then capital accumulation and allocation would presumably be mediated by trans-local institutions, for example: banks, planning bodies, etc. If these institutions accumulate capital (through taxation, etc.), and if they ultimately decides which social ventures gets access to existing capital, then in what meaningful sense can markets be said to enhance the “individual freedom” of citizen-social entrepreneurs? If democratic citizens are forbidden from pooling and utilizing saved earnings in new productive ventures, in what sense can such an economy be called “free”? Without protecting private property, markets become merely another instrument for state-planning. Why shouldn’t an association of citizens be able to freely pool their resources to, for example, form collective art galleries, sustainable organic farms, or the like free from state-control?
A problem with this question is that it assumes a universal idea of “the state” and a universal idea of “the market.” However, if we look at the work of Karl Polanyi, we see a wider array of potential states, non-state institutions, and markets. Scholars have used Polanyi’s work, primarily The Great Transformation, as proof that “the market” must be embedded within “the state” and thus as proof of the need for the Keynesian welfare state. For example, Fred Block has argued, “Real market societies need the state to play an active role in managing markets, and that role requires political decision making.” One can use Polanyi’s work to disprove laissez-faire claims that markets should be free of state regulation. However, something other than the state is key to his work.
In The Great Transformation, Polanyi used the term “the state,” in the main, pejoratively, as in the “liberal state,” revealing the hypocrisy of economic liberals who simultaneously criticized and demanded state intervention. In his 1922 work on socialism, Polanyi called for the end of private property and for the realization of radically expansive economic democracy made up of self-organizing producer and consumer institutions, not the state in a conventional sense. To Polanyi, capitalism remained in systemic crisis and any intervention in that system would further encourage this crisis.  Furthermore, he believed that capitalism and democracy were mutually incompatible and that only socialism and democracy were mutually compatible: “Either Democracy or Capitalism must go. Fascism is that solution of the deadlock which leave Capitalism untouched. The other solution is Socialism. Capitalism goes, Democracy remains.” As a life-long socialist, Polanyi argued that the way out of market society, fascism, and systemic crisis was socialism with these self-organizing institutions, in essence a society that itself creates markets and democracy simultaneously.
You hold up the Hungarian and Yugoslav models as examples of “radical democratic and socialist experiments” (12). In fact, both experiments were conducted within one-party states, and in Hungary, on the condition that economists not meddle in politics. While it’s true that Tito’s regime allocated local control to the republics, party functionaries still occupied key places in management counsels. Insofar as these experiments in fact depended on a one-party state, and insofar as your “social ownership” model theoretically depends on “embedded markets” within social formations that must involve collective decision-making procedures, what specific role do these legal procedures play in your vision of “radical democratic” socialism?
In my book, I explain the ideas and transnational debates of neoclassical economists. As I mentioned earlier, I cannot say whether socialism based on worker self­-management or other visions of radical democratic socialism fully realized would require a certain kind of state or would work. That is the job of others. My work is a potential resource for current discussions.
Finally, you write “the mixed Keynesian economy differed fundamentally from the neoclassical market socialism that the Yugoslavs had failed to create in 1954.” (95) Given the tensive relation between state and market your model supposes, I’m not sure this statement is justified. It seems to me that neoclassical market socialism suffers from the similar problems we’ve witnessed in both Marxism and neoliberalism: the gap between actual experiments and theoretical, in this case “Illyrian,” abstraction. Abstractions aid in economic calculation, but both your real examples and Polanyian premises suppose the state. As such, what fundamentally distinguishes a “mixed Keynesian economy” from an Illyrian economy? Perhaps this is the same question I posed above: is “social ownership” really distinct from private ownership from the perspective of the theory of state?
For Ward and other neoclassical economists, the Illyrian economy was a pure system, a fully competitive market economy with socialist institutions. Keynesianism, for them, was an inefficient hybrid system based on state intervention in the economy. The Illyrian economy as an abstract, utopian model would have no state intervention; rather it would have competitive markets, social ownership of the means of production, and workers’ control over the economy, politics, and society. Thus, the Illyrian model moved beyond the Soviet state socialist model to a form of communism.
The reason I am pressing the question of the state is this: as the current crisis in Greece shows, the problem of capital is inherently international. From where I sit, to deal with the problem of capital flight, and to render global trade less exploitative, requires international law and accords between states, multilaterally enforced by supra-national bodies. Short of this, international economic and political interactions would seem to be indefinitely stuck in a ‘realism’ of the strong preying on and exploiting the weak. Economic and political relations between different localities throughout the globe will abide, and this would be the case even if private ownership was replaced by “social” ownership in each of these localities. How does you work speak to this situation?
In the case of Greece today, we are still talking about capitalism and thus Keynesianism and the state are relevant for this discussion. Following the work of J. K. Gibson-Graham, one might develop socialist and other non-capitalist institutions already existing within our society today. Similarly, Polanyi wished to build socialism on “[t]he presently existing capacity of the trade unions, industrial associations, co-operatives and municipalities,” which he witnessed in 1920s Red Vienna.
In contrast, many of the economists I studied practiced their profession while living in actually existing socialist societies. Within this context, they were thinking about how to move beyond state socialism to a more social socialism. They recognized the deep problems of actually existing socialism, such as the continuation of class and exploitation, and simultaneously sought a more true socialism. Our situation today is rather different. My book brings to light past discussions that had been obscured and distorted. I hope that others will find these past discussions helpful for today’s situation.

Thank you.


An interview with Johanna Bockman (by Peter Slen / Book TV) on her book Markets in the Name of Socialism: The Left-Wing Origins of Neoliberalism.

Find Johanna Bockman's YouTube account, including lectures, here.