Collectivist Debate

The Collectivist Debate

The Debate: Hayek v. Lange

Oskar Lange's Economic Theory of Socialism

Written in 1938, the Economic Theory of Socialism was written as both a counter to Ludwig von Mises, Freidrich Hayek, and Lionel Robbins' earlier critique of pro-collectivist works.

Von Mises' earlier critique is the backbone for most of the essay. Von Mises says that economic calculation is impossible in a socialist society, and, therefore, socialists cannot solve the rational allocation of resources problem. Lange counters this by saying that this is based on the wrong definition of price. Citing P. H. Wicksteed, Lange suggests looking at price as having two meanings - one being the typical exchange rate meaning, and the other being looked at as terms oupon which alternates are offered. The second meaning is broader and encompasses the first meaning.

Therefore, in order to perform economic calculation, one would only need three sets of data: the preference scale, the knowledge of terms on which alternatives are offered, and knowledge on the amount of resources available. The preference scale is assumed as given based upon demand schedules or the judgment of authorities. Three is given because a Central Planning Board would know the amount of resources available. Two therefore must be accessible because the terms on which alternatives are offered is simply the production function of the economy - socialist planners would have this knowledge as well. Von Mises' argument was therefore based upon an improper narrow definition of price.

Lange next moves on to Hayek & Robbins. Specifically, Hayek & Robbins state that they don't deny the theoretical possibility of the ability of socialist planners to be able to handle the problem of research allocation, only the possibility of a satisfactory practical solution. Hayek insists that it would take hundreds of thousands of equations, while Robbins goes farther to say that it would, "necessitate the drawing up of millions of equations on the basis of millions of statistical data based on many more millions of individual computations. By the time the equations were solved, the information on which they were based would have become obsolete and they would need to be calculated anew" Lange sums up the argument by saying that Hayek & Robbins say it could be solved, but it would take a lot of effort. In the next few pages, Lange convincingly argues, however, that the same mechanism used by capitalists to determine output and the allocation of resources could be used by socialist planners.

If, as stated by Hayek & Robbins, markets are an arena to provide a method of trial and error in a capitalist society, then it can also be an arena in a socialist society. In order to reach the proper equilibrium, Lange develops the following framework:

- Competitive market prices are given and there are low barriers to entry. There are three conditions of equilibrium:

1. All individuals must attain their maximum positions based upon equilibrium prices

Equilibrium occurs at the point of utility maximization, where consumers spend their income so that the marginal utility is equal for all commodities. Producers also maximize profits by determining the correct combination of factors and the optimum scale of each output. The correct combination of factors is determined by equating marginal productivity and the minimum cost curve. The maximum scale of output is determined where marginal cost equals the price of the product. Total output is based on free entry & exit, and owners of productive resources such as labor and capital maximize their profits by selling their services to the highest bidder.

2. Equilibrium price occurs where supply equals demand

Prices are constants independent of consumer's behavior, and each set of prices yields to different quantities demanded and supplied. Equilibrium serves to pick out the special set of prices as the one which assures the collective maximization of all in the system.

3. The social organization of the system must also be known

As a corollary, Lange defines the income of consumers as equal to the receipts from selling labor plus any entrepreneur's profits. In a socialist system, a similar trial and error process will be successful, based upon the parametric function of prices - each individual separately regards the actual market prices as data to which he must adjust, while trying to exploit market conditions he cannot control. Therefore, market prices are parameters determining behavior.

Lange lays out his trial & error process in a socialist system:

Given random prices, individuals fulfill their subjective equation condition to attain their maximum utility positions. Any discrepancies between supply and demand are removed due to competition between buyers and sellers. This leads to a new set of prices, and continues to run through the process repeatedly until the proper set of prices is reached.

In the socialist economy, freedom of choice in both consumption and occupation is assumed. Preferences are expressed by demand, and prices are the guiding criteria in production and allocation of resources. There is a genuine market for consumers' goods and labor, with no outside market for capital and productive resources outside of labor. Equilibrium is determined by:

A. Public officials make decisions according to certain principles

The officials are individuals participating as consumers and laborers, and managers of production of non-labor resources

B. Prices are determined where supply equals demand

C. As productive resources outside labor are public property, incomes of consumers are removed from ownership of resources, and the social organization is determined by principles of income formation adopted

Since socialists have different ways to determine C, this gives them considerable freedom in matters of income distribution

The Debate and It's Effects on Literature

George Orwell's Animal Farm

Description

Cartoon of The Road to Serfdom [1]

The writing of George Orwell were very critical of a totalitarian government. In particular his novel, Animal Farm depicted the events that led to the creation of Stalinist Russia. His writing can be seen as demonstrating the effect the economic debate Lange and Taylor had against Hayek concerning the effects of socialism and the by-product of totalitarian regimes. Orwell himself was a democratic socialist, believing socialism as a basic for the economy with democracy governing society. Primarily, this meant that the means of production were collectively owned by the citizens of a given society and that the political aspect of this society would be handled democratically much like a commonwealth of republic. Also, it is important to understand that advocates of democratic socialism believed in peaceful measures to bring about change rather than a violent uprising which they believed was the primary factor that led to dictatorships and oppression.

Looking at the novel Animal Farm, we can see a direct relationship between Orwell's beliefs and Hayek's theory of the Road to Serfdom. In fact, if we were to look at several key elements presented in the argument within the cartoon depiction of the Road to Serfdom, we can see their presence within Animal Farm, both within the same logical pattern and using the same argument.

In Orwell’s book we see the introduction of central planning coming from war-time necessity. The reader is also introduced to the central planners, the pigs (Napoleon, Snowball, and Squeaker) who take it upon themselves to teach and organize the other animals on the Manor Farm for the upcoming rebellion. The pigs push forward the idea of rebellion with the promise that no mouths will go unfed and that every animal would be free. As we move to chapter 3 in Animal Farm we can see that directly view themselves as the supervisors and are becoming like the central planners in Hayek's Road to Serfdom. On page 30 we read that “the pigs did not actually work, but directed and supervised the others. With their superior knowledge it was natural that they should assume leadership.” Around this time we can see the pigs planning, instituting resolutions, and forming committees

Similarly, the cartoon portrays the idea of planning begin due to war-time situations in order to fully mobilize the nation's economy. In the same regard as Orwell's book, the cartoon demonstrates that once the war (or rebellion) is over, the planners want to stay in power and promise a Utopian society with hopes of remaining in power.

The cartoon then demonstrates a potential flaw of planning is that the planners cannot agree on a single plan. The argument is based on the fact that for each individual planner has an incentive to get their particular plan passed and will not cooperate with others. Not only that, but the cartoon shows that even if plan is introduced, citizens often disagree whether it was the correct plan (often these disagreements occur between two different groups of people (e.g. farmers and factory workers)).

On page 34 we see that Orwell captures the potential flaw that Hayek discusses when he contends "Snowball and Napoleon were by the most active in the debates. But it was noticed that they were never in agreement: whatever suggestion either one of them made, the other could be counted on to oppose it." As the book continues the reader is brought to the attention of the windmill debate. Here we see Snowball presenting the idea of the windmill, and Napoleon vehemently opposing it. At one point he (Napoleon) urinates on the construction plans. We also see at this time, that the plan of building the windmill has also divided the farm into two factions.

Two parties are formed (1) with Snowball and for the construction of the windmill and (2) with Napoleon and against the construction of windmill. During a great debate, Napoleon seizes power using 9 enormous dogs who he has under his control. These dogs chase out the only opponent,Snowball, leaving only Napoleon to become the leader of Manor Farm.

Description

Here we notice a slight discontinuity between the cartoon and the events within Animal Farm. Within the cartoon the people become tired of the fighting and constant disagreements among the planners want to get a man who can make the plan work. However, the end is the same in both the literature and the cartoon. The "strong man" (Napoleon) takes power and has complete control over the daily workings of society.

On page 62 we see how propaganda plays a important role in ensuring obedience and loyalty from all of the animals. After Napoleon has taken control of the farm, Squealer (another pig) is sent around to explain the situation to all the other animals. He begins by arguing about the sacrifice that Napoleon has made and that leadership brings heavy responsibility. He also proclaims that "bravery is not enough, loyalty and obedience are more important." He also threatens that disobedience will bring back their enemies (the farmer, Mr. Jones).

We also begin to see the manipulation of events to create a united coalition of farm animals by implicating the ousted pig, Snowball, as being a traitor and in cahoots with the humans. On 65 Orwell writes, "and the plan which Snowball had drawn on the floor...had actually been stolen from among Napoleon's papers." We see this portrayal of Snowball as the enemy or traitor again after the windmill they had been building was blown down: "Comrades, do you know who is responsible for this? Do you know the enemy who has come in the night and overthrown our windmill? SNOWBALL!" Observing the cartoon depiction of the Road to Serfdom, we also see how it is not uncommon for the newly appointed (whether by force or misfortune) dictator to use a negative aim at a particular person or group of people. As the cartoon asserts, in Germany the negative aim was Antisemitism.

In both the cartoon and Orwell's book we also see the use of secret police to keep anyone from opposing the plan and to impose the dictator's will. Specifically, on page 85 in Animal Farm the hens on the farm are told that they must give up their eggs because Napoleon had signed a contract for four hundred eggs a week. The hens protested saying that taking the eggs should be considered murder. They proceeded to lay their eggs up in the rafters. Napoleon then ordered his dogs to stop their rations until they went back to their boxes and allowed their eggs to be taken. From this situation 9 hens died, but all the other animals were told that a disease had led to their death.

Description

As we move towards the end of the cartoon, we are left with the idea that the strong man controls every aspect of an individual's life determining what a person does for recreation, for a profession, and even so far as telling someone what to think. Orwell uses these ideas when he writes about every animal required to work on the windmill and the chickens required to turn over their eggs to be sold. Similarly, Orwell demonstrates that Napoleon attempts to change historical events and the way that the animals view things through the book by showing how the seven original commandments were changed to permit actions that he (Napoleon) felt were entitled to him.

Animal Farm concludes with the striking reality that the oppression and misery experienced when the farm was controlled by Mr. Jones is no different from the reign of Napoleon and the pig "planners" after the rebellion took place. The animals are still hungry, still labored, and still received no extra benefits from what they produced. In the end, Orwell seems to have been taken the words of Hayek very seriously when he argues that planning may very well put society down the path to the Road to Serfdom and to a totalitarian state. While Orwell disagrees with some who feel Hayek is arguing that an socialist state leads to a totalitarian system, he is willing to acknowledge that certain types of central planning (those such as Nazi Germany and Stalin Russia) as well as using revolution instead of peaceful means increases this tendency for this to occur.

George Orwell's 1984

Overview of the Story

The book 1984 demonstrates George Orwell's opinion on the potential outcome that would exist if a socialist system was transformed into an oppressive militarist totalitarian state. For Orwell, a socialist himself, this outcome would be more horrifying than the same happening in a capitalist state for the reason that that a capitalist state could turn to socialism as an alternative. As a reader, it is easy to see within the first few pages, the bleak and destitute outcome that Orwell paints awaits a society in this situation.

Orwell's story begins with the introduction of a large country, Oceania that is ruled by a single party led by the man named Big Brother. Early on we are introduced to Winston Smith, the protagonist and main character in this book. Winston works for the party controlling the Newspaper clippings to ensure only what Big Brother wants published, gets published. However, early on we see that he displays rebellious tendencies (e.g. purchasing a book as a diary and writing down "DOWN WITH BIG BROTHER") and understands the government is manipulating individuals for their (gov't) benefits. This manipulation is most widely see through the control that Big Brother has over the citizens of Oceania. Specifically, there were so-called televisions in each room, showing propaganda and political pamphlets, which had a built in camera and microphone to watch over the citizens. The thoroughness of the propaganda and mind altercation has led to the society excepting and cherishing the party slogan, which we read throughout the book as, "WAR IS PEACE, FREEDOM IS SLAVERY, IGNORANCE IS STRENGTH."

As the story moves forward, Winston displays his rebellious nature when he writes in his diary about the sex he had with a prostitute 3 years ago. For the people of Oceania, chastity was ingrained as party loyalty. All pleasure was to be removed from sexual acts, and their only purpose was in the creation of children to serve the party. In fact, illegal sexual relations were considered thoughtcrime and "thoughtcrime is death." The reader's is also brought to the attention of that he believes the only hope for Oceania, lie in the proles (the workers) because they make up a large part of the population and have to numbers to overthrow the party.

At this time, Winston returns to the shop where he bought his diary and purchases a glass orb with a piece of coral inside. He is also shown an upstairs room which is free of the televisions and the watchful eye of the government. Around this time, we meet another prominent character, Julia, who proclaims she loves Winston and together they arrange a private meeting. During this meeting, the two engage in illegal sexual relations and at one point Winston asks Julie if she has done this before, to which she replies yes, many times. This statement turns on Winston and gives him hope that the corruption (in the eyes of the party) in her gives him hope that the government is rotten and may simply crumble and fall apart one day.

The meetings between Winston and Julie become more and more frequent. Winston went back to the store and rented the room without the televisions and cameras so that they can be together without the fear of being caught. During this time, Winston and Julie are introduced to Mr. O'Brien, who gives them hope of a resistance movement against Big Brother. When at O'Brien's house, Winston and Julie and asked questions on their willingness to commit various atrocities on behalf of the resistance movement. Winston and Julie both state that they want to work against the Party and believe in the resistance movement. After they leave, Winston receives a copy of The Book, written by the leader of the resistance movement and proposed traitor, Emanuel Goldstein.

Later in the book, it turns out that O'Brien had actually written the book given to Winston in a ruse to weed out potential revolutionaries. Winston and Julie are caught and accused of thoughtcrime. The reader follows Winston as he is taken to the Ministry of Love and tortured. Here the reader sees O'Brien use what Winston had written in his diary: "Freedom is the freedom to say that two plus two makes four." O'Brien holds up four fingers of his left hand, and he asks Winston how many there are. Winston answers four a couple of times, and each time the pain increases. The torture goes on until Winston breaks and answers what Mr. O'Brien wants to hear, that he sees five fingers instead of four being held up. Winston is then taken to Room 101, where his worst fear is realized, rats. This final sequence forces Winston to betray everything in his life and and comes to love Big Brother.

The View of Socialism in 1984

Within this book we see Orwell's message arguing that people must fight against the state which controls the individual. This message further argues that no one person is free from the power of oppression wielded by a totalitarian government and that any form of dictatorship threatens the uniqueness of the individual.

While this message rings true, we (the reader) knows that Orwell was not against socialism (he was a socialist himself and in his writing previous writings (e.g. Why I Write) he argues that his writing were written, directly or indirectly, against totalitarianism and for democratic socialism.), but simply the forms depicted by Hitler and Stalin or the events in Great Britain during WWII. In particular, 1984 has been seen as documented the events that were occurring in the United Kingdom around 1948 when Great Britain was suffering from economic woes, a dissolving empire, and wartime allies were becoming peacetime foes.

When looking at Orwell's message, for socialism (to the extent democratic socialism) per say and against a totalitarian state, we can see several instances where this message is present in 1984. For example, Orwell contends:

"The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power. Not wealth or luxury or long life or happiness: only power, pure power. What pure power means you will understand presently. We are different from all the oligarchies of the past, in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps they even believed, that they had seized power unwillingly and for a limited time, and that just round the corner there lay a paradise where human beings would be free and equal. We are not like that. We know that no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power."

Primarily, in the statement we are different from the oligarchies in the past...the German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives it seems that Orwell is demonstrating that this totalitarian state is so terrible in its oppressive and controlling ways that even two of the most looked-down upon dictatorships of his time don't even compare. However, at the same time we can see some of Orwell's democratic socialist roots when he argues that One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. This statement, I feel shows that he is arguing that those looking for power instigate revolutionary ideals and then seize the power and establishes the dictatorship.

HG Wells' Time Machine

Overview

First published in 1895, HG Wells' Time Machine was one of the works that argued for collectivism. It was published six years after the Fabian Essays in Socialism, and incorporated many of the ideas of that work.

The story takes place in London in the late nineteenth century. Wells paints a picture of a Time Traveler discussing his invention, a time machine. After briefly introducing the concept and background of the time machine, the narrator switches from an ambiguous "I" to the Time Traveler himself. The Traveler begins to tell his story of time travel.

After traveling through time for a while, the Time Traveler finds himself in London in the year 802701. The landscape has completely changed, and the buildings that once occupied London have been replaced by a few buildings, a large Sphinx-like statue, and other buildings in ruin. The rest of the landscape is covered in trees, flowers, and other vegetation.

The Time Traveler notices in the distance several strange people. When he finally encounters these people, known as the Eloi, he describes them as almost child-like, very weak and delicate looking. They speak a different language, and as such it is difficult for the Time Traveler to communicate with them. They take the Time Traveler and show him around their buildings, offering him a feast of hybrid fruits. The Time Traveler continues to explore, and when he returns to the field he landed on he notices his time machine is gone. He begins a frantic mission to try to find his time machine to no avail.

Sleeping outside one night, the Time Traveler notices another creature in the distance. He tries to catch up to it to no avail. Puzzled, the Time Traveler continues his exploration of the land. Eventually he finds a huge, well-like structure going deep into the ground. He decides to climb down the well, and finds out that this is where the Morlocks, the other inhabitants of the Earth, live.

The Time Traveler describes the Morlocks as both subhuman and subterranean, with pale skin, large eyes, and confusion in the sunshine. Here, the commentary on Capitalism begins.

The Time Traveler hypothesizes about how it came to be that there were a group of people above the ground, and a group below:

...the gradual widening of the present merely temporary and social difference between the Capitalist and the Labourer was the key to the whole position ... There is a tendency to utilise [sic] underground space for the less ornamental purposes of civilisation [sic].

The Capitalists kept expanding above ground, and eventually industry was forced underground. The richer people, interpreted as the Capitalists, began to monopolize the ground, and there was a split into the Haves (the Capitalists or Upper-Worlders), and the Have-Nots (the Laborers or Under-Worlders). The Haves lived above ground, where they could pursue pleasure and comfort, and the Have-Nots were forced underground.

Eventually, the Upper-worlders had exploited the Under-worlders to such a point that they no longer had to work, while the Under-worlders were constrained only to working - the rich was assured of his wealth, and the laborer assured of his life of toil. As such, the Upper-world eventually reached a stasis where there was no unemployment, no social problems, and, on the surface, a Utopia. The Under-worlders, forced to labor and completely separated from their fruits of labor, eventually began coming to the surface at night to feed.

The Time Traveler eventually recovers his machine, and completes his travels by going 30 million years in the future. Through his travels, he notices the Earth begin to fall apart, and eventually humanity ceases to exist. The world has devolved, and the only living creatures are crabs and other large animals. Safely returning to the present, the Time Traveler reflects on his trip.

Through the extreme use of Upper-worlders and Under-worlders Wells paints a picture of the effects of Capitalism. As argued in Collectivist literature, class structure enables the continued exploitation of the laborers by those who own the capital. Wells takes this notion, and uses it as the basis for the creation of two worlds. Ultimately, the Capitalists get richer, and the Laborers are eventually exploited to a point of being forced below ground. Incorporating many Collectivist themes in his work, Wells creates a startling image warning of the evils of Capitalism.

C.S. Lewis' That Hideous Strength

Overview

“That Hideous Strength” is the third in C.S. Lewis’ Space Trilogy. The other books in the trilogy include “Out of the Silent Planet” and “Perelandra”. Lewis, a Christian, portrays his Christian beliefs throughout the work, providing a religious and philosophical contrast to George Orwell’s work, who was an atheist.

As mentioned in the introduction, “That Hideous Strength” is a ‘modern fairly tale for grown-ups,’ meaning there is a lot of sci-fi and fantasy throughout the book. The genre is of note because it provides a stark contrast to other anti-collectivist books, signaling the expansion of the debate into all walks of literature.

“That Hideous Strength” takes place in England in a small university town. The university sells some of its land to the National Institute of Coordinated Experiments, or N.I.C.E. The N.I.C.E. is essentially a government-funded central planning board.

Throughout the book, a conflict arises as characters try to prevent the N.I.C.E. from taking over England, Earth, and the rest of the universe. The N.I.C.E. is portrayed as a group of scientists trying to make science the guidelines for human life and to use science to improve the lives of humans. By taking over the government and economy, the group would be able to control everything and further their quest. The people will simply become material for experiments, with the useless and obsolete individuals being removed from the earth.

The N.I.C.E. paints another picture of the potential horrors of a central planning board. Descriptions throughout are filled with images of the torture, horror, and pain for individuals when they no longer have control of their own life. People become mere pieces to the scientists and ultimately are just fuel for the machine.

Comparable to “the Road to Serfdom” and “1984”, Lewis shows how central planning results in the loss of human rights, and the sheer and utter misery of all those within the system. George Orwell’s review of the book shows synergy between Lewis and himself, as he describes the N.I.C.E. as being a “modern machine civilization [sic]”, consisting of a “company of mad scientists” that plan to “use the common people are to be used as slaves and vivisection subjects by the ruling caste of scientists, who even see their way to conferring immortal life upon themselves.”

The two authors provide differing viewpoints regarding the use of religion. Orwell, an atheist, mentions that the miracles, supernatural, and divine intervention throughout take away from the story. Regardless, the point is still evident that the debate, especially the anti-collectivist side, has spread throughout all types of works, and all moral, philosophical, and religious backgrounds.