2. What is a feasible change?

In an influential article, Harold Demsetz contrasted what he called the “nirvana approach” to institutional analysis, which involves comparing the real to the ideal in order to declare the real deficient, to the “comparative institutional approach,” which involves comparing all available alternatives to the ideal, in order to select the one that “seems most likely to minimize the divergence.” (Demsetz, Reference Demsetz1969, p. 1). The former approach, he argued, is little more than an inducement to the commission of logical fallacies. Even when it does not lead directly to errors in reasoning, there is still widespread agreement that demonstrating the superiority of an idealized version of a particular institutional arrangement over a realistic version of some other is, as Jason Brennan put it, simply “not that interesting” (Brennan, Reference Brennan2014, p. 59). Most importantly, it does not tell us what we need to know to make decisions about the world. The relative superiority of one institutional arrangement over another can only be determined by comparisons made at a roughly similar level of idealization.Footnote ⁶

Those who violate this stricture are often described as having committed a “nirvana fallacy.” Demsetz, however, imposed what many would regard as an unreasonable restriction on the comparative institutional approach by insisting that the comparison only be carried out between “alternative real institutional arrangements” (Demsetz, Reference Demsetz1969, p. 1). This rules out a perfectly ordinary and legitimate form of institutional criticism, in which an existing alternative is compared to some proposed alternative, which despite not being actually realized, is nevertheless presented as being realizable. This of course harbors its own ambiguities, since proposals can be more or less difficult to implement, for various reasons (e.g. they may require extensive modification of behaviour, may require a high level of coordination, may elicit greater resistance from entrenched interests, may require a constitutional amendment, etc.), and so the claim that a particular arrangement constitutes a feasible alternative to the status quo has a strong indexical quality. Feasibility is always relative to some set of constraints (Guillery, Reference Guillery2020). The most common instances of the nirvana fallacy occur, not when the real is compared directly to the ideal, but when it is compared to a proposal that has been deemed feasible under such a relaxed set of constraints that the assessment amounts to comparison with an ideal.

To see how constraints operate, consider the limit case of a proposal that is disqualified on the grounds that it is impossible to realize.Footnote ⁷ This may seem straightforward, yet even a relatively clear modal term such as “impossible” cannot be given a precise definition without further specification. Using the standard Kripke semantics for modal operators, a proposition can be said to be impossible if it is false at all possible worlds that stand in a certain accessibility relation to the actual world (Wiens, Reference Wiens2015, p. 456). For example, if the accessibility relation picks out all possible worlds at which the same laws of logic prevail as in the actual world, then a proposition that is false at all such worlds is said to be logically impossible. By contrast, if one adopts a more restrictive accessibility relation, such as one that picks out only those possible worlds at which the same laws of physics prevail as in our own, then a proposition that is false at all such worlds is physically impossible (even though it may be logically possible). So in order to say that a particular institutional arrangement is impossible, one must specify the accessibility relation that is being employed.

Consider, for example, Rousseau’s self-imposed constraint, announced at the beginning of The Social Contract, that he intended to think about the organization of political society “men being taken as they are and laws as they might be” (Rousseau, Reference Rousseau1913, p. 5). This is generally interpreted as a commitment to taking the basic features of human nature, including human psychology, as fixed, but treating social institutions as variable. One might think of this as confining one’s attention to the set of institutional arrangements that are humanly possible, through an accessibility relation that picks out possible worlds at which human nature is the same as in our own. Many have felt, however, that this generates an overly narrow conception of possibility, because many features of adult human psychology are the product of (or at least are influenced by) the institutional and social environment in which children are raised.Footnote ⁸ If unjust social relations result in the cultivation of individual personality structures that reinforce these injustices, then Rousseau’s dictum arbitrarily forecloses the range of emancipatory alternatives. This is why, for example, a large portion of Mary Wollstonecraft’s Vindication of the Rights of Women is focused on defending her claim that the “headstrong passions and grovelling vices” exhibited by women are merely an effect of their upbringing, and so would disappear with the introduction of more egalitarian social relations (Wollstonecraft, Reference Wollstonecraft1891, p. 14).

It is, however, possible to take this argument too far. Karl Marx’s sixth thesis on Feuerbach has often been interpreted as a denial that there is any fixed human nature at all, above and beyond the ensemble of “social relations” (Geras, Reference Geras1983). Regardless of whether this was in fact his view, many Marxists have taken it as license to assume that “the revolution” is capable is bringing about arbitrarily extensive changes in human psychology, and so our sense of what is possible in a post-capitalist society should not be constrained by any aspect of present-day human psychology. This obviously led to some disappointment in post-revolutionary socialist societies, such as Cuba or China, where efforts to create a “new socialist man,” who would no longer require material incentives in order to contribute to production, resulted in considerable frustration and failure (Chen, Reference Chen1969). These experiences gave rise to a genuine puzzle about how we should specify the constraints that our thinking should be subject to when it comes to conceiving of alternatives to capitalism. One does not want to adopt an overly pessimistic view about the space of human possibilities, and yet at the same time it is important to avoid the sort of catastrophic miscalculation that was at work in the Chinese Cultural Revolution. Progress will be a great deal more difficult if we are unable to learn anything about where the constraints of human nature lie from failed utopian experiments.

There are nevertheless, some easy cases. Certain proposals to replace the market determination of prices with a form of democratic decision-making (e.g., among the “community of associated producers”) are clearly impossible under almost any specification, because democracy as a decision-making procedure lacks the capacity to decide the fine-grained, interdependent questions that arise in the context of economic planning. The sheer number of decisions that must be made, in order to guide production in even a moderately complex industrial economy, runs into the hundreds of millions, all of which must be answered simultaneously (i.e., changes in the answer to one question force reconsideration of the answers to many others). To pick just one small example, during its heyday, the Soviet economy required the production of more than 1,000 different sizes and grades of ball bearing, requiring (at some point) that decisions be made about precisely how many of each type should be produced and who should receive them (Nove, Reference Nove1980, p. 4). There is no conceivable way that such granular decisions can be made collectively by workers, much less democratically. Far from being able to plan an entire economy, the community of associated producers would face insurmountable problems even trying to figure out how many of each size and grade of ball bearing to produce, without even contemplating more difficult questions, such as what size and thickness of glass to manufacture for window panes, or how much lumber of different dimensions to produce, or what the ratio of synthetic to natural rubber in automobile tires should be, and so on. As a result, theorists who gesture in the direction of “democratic” planning are engaged in a clear-cut example of failure to articulate a feasible socialist alternative to existing arrangements, even under the most generous assumptions about human malleability.Footnote ⁹

By contrast, consider Marx’s conception of true communism, which relied upon the attainment of post-scarcity conditions for its realization (along with the closely conjoined expectation that the labor content of goods would drop to zero, leading to the abolition of the commodity form). The idea was that under conditions of sufficient material abundance, individuals might lose their possessive tendencies and so distributive conflict would become otiose. This claim was subject to particularly forceful repudiation by Thorstein Veblen (Reference Veblen1994), who observed that commodities consumed in order to achieve certain goods, such as social status or aesthetic gratification, are intrinsically scarce, and so no expansion of industrial output would ever produce satiation. Veblen took these observations to be grounds for concluding that a post-scarcity condition is impossible, and thus the corresponding model of socialism is infeasible. And yet one can always imagine circumstances in which human beings might lose all interest in social status, or aesthetic refinement, or whatever other aspect of goods generates competitive consumption, such that this pessimistic diagnosis would be overturned. This is, however, extremely utopian, in that it posits a change in human psychology that so far no one has figured out how to achieve. At what point, one must wonder, does this become an invitation to engage in wishful thinking?

It is a common conversational gambit among Marxists to point to the heightened social solidarity exhibited by individuals in states of emergency as evidence that people are capable of much higher levels of cooperativeness than they exhibit under capitalism, and so blueprints for a feasible socialism need not be so concerned about private incentives (Cohen, Reference Cohen2009, p. 54). The problem with this claim is that emergencies are, by their very nature, temporary, and so it is perilous to assume that the solidarity they evoke can be sustained indefinitely. (Several years ago, during a massive power failure that left most of downtown Toronto without electricity, several motorists jumped out of their cars and began spontaneously to direct traffic at major intersections. A local commentator concluded, on this basis, that there is no need for traffic lights, but that motorists and pedestrians should be left free to negotiate their own, more flexible and humane forms of mutual accommodation. “It’s about restoring responsibility to individuals for their acts, rather than forcing them to follow rules,” he argued (Salutin, Reference Salutin2005). It is not difficult to spot the error in reasoning here.) As a result, the reasonable core of contemporary discussions about the feasibility of socialism typically presuppose the two constraints that Hume took to define what he called the “circumstances of justice,” viz., limited altruism and moderate scarcity. The first implies that, while individuals possess some degree of moral motivation, it is generally not sufficient to override their self-interest entirely, or on a long-term basis. The second implies that, while material affluence may well continue to rise, it will never reach the point at which individuals become indifferent to questions of distribution.

To some extent, though, this discussion of what is impossible or not is a distraction, because one can always expand the sphere of possibility by curtailing the normative ambitions of the socialist project. The level of cooperativeness that one can expect from citizens, for example, is strongly influenced by the amount of coercion that one is prepared to employ in order to secure it. There are many available blueprints for a totalitarian socialist society, the feasibility issue only becomes pressing for those who would like the society to be both socialist and non-totalitarian. Similarly, the difficulty of planning a socialist economy can be significantly reduced if one is willing to accept a radical curtailment of the division of labor (e.g., Saitō, Reference Saitō2024, p. 194). The feasibility issue arises only for those who would like the society to be both socialist and reasonably affluent. As a result, discussions about feasibility are often a misleading way to formulate what amounts to a normative concern about the character of the socialist project—more specifically, about the possibility of reconciling the various values that socialists have typically sought to realize.

3. A normative conception of feasibility

Commenting on recent trends in science fiction, Mark Fisher once complained that it had become “easier to imagine the end of the world than the end of capitalism” (Reference Fisher2009, p. 1).Footnote ¹⁰ This is something of an overstatement, in the sense that it requires little in the way of imagination to picture a world without capitalism. There are several countries in the world today where markets are effectively suppressed. The problem is that they are not particularly desirable places to live. The challenge is to imagine an “end of capitalism” that people living in capitalist societies would actually support. This problem arises from the difficulty of imagining a post-capitalist economic order that would constitute a clear improvement over the status quo. Otherwise put, the problem lies not with the impossibility of socialism, but rather with the undesirability of all the familiar blueprints (a problem, it should be noted, that Fisher did nothing to alleviate).

Shifting to the terminology being employed here, most proposed visions of a socialist society fail the feasibility test, not because they are impossible, but because they would be highly undesirable, or to put it more precisely, because they fail to surpass a minimum threshold with respect to certain normative desiderata. For example, the range of expected human behavior might be expanded through the adoption of more comprehensive, and perhaps punitive, socialization practices, in the style of Walden Two (Skinner, Reference Skinner1976). And yet most critics of capitalism are also supportive of relatively permissive parenting practices, not to mention keen to preserve a sphere of personal freedom, and so are not actually willing to accept the moral compromise, with respect to these values, that would be involved in achieving certain changes in personality structure or motivation. Similarly, many of the complexities involved in economic planning could be avoided simply by abolishing the advanced division of labor that exists in capitalist societies. The community of associated producers would be able to decide democratically what to produce if the economy contained only a few hundred commodities, rather than millions, but not many socialists are prepared to renounce the benefits that arise from specialization and economies of scale in production. The various fruits of modernity, ranging from solar panels and microprocessors to contact lenses and medical anesthesia, are available only through the institutionalization of an extremely advanced division of labor.

Indeed, the socialist ideal, under the most widely shared understanding, is one in which the complex division of labor underlying the modern economy is preserved, and yet achieved through a system of direct cooperation, rather than indirectly through competition and self-interested exchange (Corneo, Reference Corneo2017; Honneth, Reference Honneth2017). This is why socialists have not traditionally been proponents of degrowth. The most pressing feasibility constraint on socialist projects is therefore that they be able to maintain a complex division of labor, and through that the standard of living that has come to prevail in advanced economies. Nicholas Vrousalis, for example, when considering alternatives to capitalism, specifies that the task involves “finding an efficient form of free, undominated, cooperative activity under universal laws” (Vrousalis, Reference Vrousalis2023, p. 167). Preservation or expansion of the division of labor is what the commitment to “efficiency” entails, although the point is sometimes obscured by the lack of moral resonance this term has for many people. It might be better to say simply that the proposed socialist transformation should not make everyone worse off.

At the same time, efficiency is not an absolute value, and many would be happy to embrace a socialist system that combined a comfortable standard of living with a lower rate of growth than what could be achieved in a capitalist economy. Feasibility is therefore not an all-or-nothing affair. For any given socialist blueprint, one might say that the greater the compromises it entails with respect to efficiency, the less feasible it becomes. The same could be said for the other desiderata mentioned by Vrousalis. For completeness, it is perhaps useful to outline the normative aspirations that have traditionally been associated with the socialist project:

1. 1. Efficiency. The system should be able to maintain a level of productive output comparable to that of an affluent country today.

2. 2. Equality. The system should be able to achieve low levels of economic and status inequality.

3. 3. Progress. The system should encourage innovation and development in culture and the arts, expansion of scientific knowledge, as well as improvements in technology and health care.

4. 4. Personal freedom. The system should (within reasonable limits) permit individuals to select and pursue their own visions of the good life, affording them sufficient resources and leisure time to do so.

5. 5. Non-coerciveness. It should be possible to achieve these outcomes without widespread coercion or the imposition of unduly harsh punishments.

6. 6. Solidarity. The system should offer individuals protection against major life risks, as well as encouraging a social ethos that promotes inclusivity and mutual support.Footnote ¹¹

It is important to be clear that these goals are all aspirational. Many circumstances will arise that impose trade-offs among them. For example, efficiency in production and distribution is much easier to achieve if one is willing to be prescriptive about consumption, rather than responsive to consumer choice. The Soviet economy was relatively efficient during the period of industrialization, in which planners were free to specify what needed to be produced, but the system encountered serious difficulties in making the transition to a consumer society, in which planners needed to be guided by what individuals wanted. So it is possible to improve efficiency by limiting consumer choice (and thus personal freedom); the operations of any large army base provide an excellent illustration. Taking each value in isolation, there is almost always some institutional arrangement that makes the realization of that particular value feasible without markets. The important constraints arise only when one begins to consider the joint realizability of these values (Wiens, Reference Wiens2015, p. 455).

Fair-minded critics will likely concede that welfare-state capitalism scores highly with respect to efficiency, technological innovation and personal freedom; less well with respect to non-coerciveness; and poorly with respect to equality and solidarity.Footnote ¹² The socialist ambition therefore involves working toward a system that will be more egalitarian and depend less on adversarial interpersonal relations, without tanking the score in other dimensions (Honneth, Reference Honneth2017, pp. 21–29). Such a project might be considered desirable even if it was worse with respect to certain desiderata, so long as its advantages outweighed these disadvantages (e.g., the values with respect to which it excelled were weighted more heavily, etc.). A project might then be classified as undesirable if it involved too great a compromise in too many dimensions, without offering sufficient compensating benefits. The term infeasible could then be applied to any proposal that is either dominated by the status quo or deemed unacceptably low in one or more dimensions, to the point where no reasonable person (which is to say, no person who cares about all of these goals) would endorse it. These infeasible options are supported only by fanatics, which is to say, individuals who assign exclusive weight to just one (or a small subset) of these values (with the canonical example being those who assign no weight to non-coerciveness).

The primary challenge, for critics of capitalism, is to find some alternative to the status quo that promises better performance with respect to equality without disastrous results in the efficiency dimension. Thus, the major feasibility constraint on socialist alternatives to capitalism arises in response to what is commonly known as the “calculation problem.” In order to maintain a complex division of labor, it is necessary to ensure that what each worker intends to produce corresponds to what someone, somewhere, would like to consume. Arranging it so that these sums add up, across the entire economy, so that everyone gets (roughly) what they want, turns out to be fantastically difficult. The fact that markets perform such calculations in a decentralized fashion, and without any particular effort on anyone’s behalf, has led many socialists to radically underestimate the difficulty of the problem, not to mention the severity of the consequences that follow from failing to provide a reasonable solution to it (Boettke, Reference Boettke2000). This is why, among economists, the calculation problem has tended to eclipse all other feasibility concerns.Footnote ¹³

Complicating the situation is the emergence of fairly widespread agreement that central planning, such as was undertaken in the former Soviet Union, does not provide an acceptable alternative to the market determination of prices. Apart from the fact that it was not particularly efficient, the centralization of all economic decision-making in the hands of the state is generally thought to have dramatically exacerbated the authoritarian qualities of the Soviet system. As a result, socialist schemes that rely on central planning as their central mechanism of economic coordination are generally considered infeasible. But this puts critics of capitalism in an awkward position, because with the exception of a few proposals that attempt to use a system of Walrasian auctions to solve the calculation problem, most concede the need to preserve a system of markets to determine prices.Footnote ¹⁴ In other words, feasibility concerns lead them to endorse some form of market socialism, typically involving preservation of the market accompanied by modification of the ownership structure of firms. This puts an enormous number of constraints on what these critics can condemn in capitalism, because of their intention to keep large segments of the capitalist system intact, including private exchange, competition, and the profit orientation of firms. At the very least, it leaves them open to the charge of kvetching.Footnote ¹⁵

4. What’s wrong with kvetching?

Many theorists have accepted this basic analysis, yet insist that there remains something valuable about the exercise of pointing out moral flaws in the market, even if there are no feasible alternatives that lack these flaws (e.g. Wilkinson, Reference Wilkinson2022).Footnote ¹⁶ Consider Vrousalis, who rejects the idea that social criticism “is a necessarily comparative exercise”:

If one interprets “infeasible” to mean “impossible,” then Vrousalis’s argument appears question-begging—does the impossibility of not being in the cage not constitute a good reason for being there? And why would we describe the state of affairs as “unjust,” rather than “unfortunate”? In any case, since there is literally nothing that can be done about the state of affairs, one might think that nothing hangs on the question whether one chooses to call the act of drawing attention to it critique or not. Nevertheless, the way that the term critique has been used in recent years, particularly in the philosophical tradition stemming from Marx and the Frankfurt School, typically implies some connection to praxis.Footnote ¹⁷ James Bohman, for instance, set the following condition on the definition of critical theory: “a critical theory is adequate only if it meets three criteria: it must be explanatory, practical, and normative, all at the same time. That is, it must explain what is wrong with current social reality, identify the actors to change it, and provide both clear norms for criticism and achievable practical goals for social transformation” (Bohman, Reference Bohman2005). Although the practical interest of critical theory is often neglected, there is a sensible question to be asked whether a theory that is completely divorced from praxis deserves to be called “critical” (Harcourt, Reference Harcourt2020). At very least, it can be misleading to describe as critique the identification of states of affairs that no human agent has any ability to change.Footnote ¹⁸

The more interesting question arises, however, if one interprets infeasible in the normative sense, as involving a transformation that no reasonable person would support. In this case, one can see that Vrousalis’s use of the term “unjust” is ambiguous between a pro tanto and an all-things-considered sense. If no reasonable person would support the option of cagelessness, then it can only be pro tanto unjust for the person to be locked in, it cannot be all-things-considered unjust. As far as socialism is concerned, given the inevitability of trade-offs, there is no social system that can be expected to achieve a perfect score with respect to all six values outlined in the previous section. Indeed, every institutionalizable system will systematically trade off gains in one dimension for losses in another. This means that each system will necessarily exhibit moral flaws, in the sense that it will fail to maximize realization of some widely accepted value. But this is perfectly compatible with it being morally justifiable all-things-considered, if it constitutes the best compromise among the various pro tanto values at play. Thus, a system can be “unjust” in some dimension while nevertheless being “just” overall. (In this sense of feasibility, there is also a tension in Vrousalis’s suggestion that the person is in the cage “for no good reason,” since the suggestion that there is no feasible alternative implies that it is all-things-considered best for the person to be in the cage, which in turn implies a good reason for the person to be there.)

In this context, it is important to observe that many prominent defenders of the capitalist system rest their endorsement, not on its supposedly ideal character, but rather on the absence of better alternatives. They are willing to grant the various moral flaws in the system, they simply judge these flaws to be outweighed by other considerations, which is to say, they consider capitalism to be all-things-considered justifiable. Friedrich Hayek, for example, was willing to grant that “the manner in which the benefits and burdens are apportioned by the market mechanism would in many instances have to be regarded as very unjust if it were the result of a deliberate allocation to particular people” (Hayek, Reference Hayek1993, p. 64). His defence of the market lies in his insistence that a complex economy cannot be organized through a system of deliberate allocation, and so we are forced to forgo our concern about justice in distribution, in order to achieve the benefits that can be secured through an advanced division of labor. Along the same lines, Alfred Marshall began his vastly influential Principles of Economics by observing that an economy organized through marketplace competition is “relatively evil,” when compared to one based on “energetic co-operation in unselfish work for the public good.” The latter motive, unfortunately, could serve as the basis of economic organization only “in a world in which all men were perfectly virtuous,” which they are not. Marshall therefore ruled competition to be justifiable as the lesser evil, given our fallen condition (Marshall, Reference Marshall1920, pp. 8–9).

While it is still possible to find panglossian defenders of capitalism, I think it is fair to say that the sheer volume and intensity of complaint registered over the past two centuries has left its mark, to the point where the average defender of the market now has a relatively nuanced view. Especially given the paucity of alternatives, most recognize that it simply does not impair one’s commitment to capitalism to grant that the system has several morally undesirable features. Furthermore, after two hundred years of debate, it seems unlikely that some new, deal-breaking flaw is likely to be uncovered, which will upend the moral calculus that has led most people over time to make peace with the market. As a result, the only worthwhile discussion is the one that is occurring at the level of all-things-considered evaluation.

A final objection to the practice of criticizing states of affairs that one has any actual plan to change is that it eliminates the most important source of constraint on the normative principles that serve as the basis of critique. Particularly in political philosophy, there are often feasibility concerns built into the principles of justice that are deployed, in the sense that the principles impose a set of demands that one might reasonably expect institutions to satisfy. For example, the principle of non-domination, which has played an important role in recent neo-republican thinking, imposes a relatively modest demand—it does not require that individuals care for one another, or offer one another any kind of mutual support, it merely asks that they not interfere with one another in certain ways. But if we are not concerned about feasibility, why ask people merely to refrain from dominating one another? Why not expect more? Barry Maguire, for instance, has criticized market exchange for impairing the ability of individuals to care for one another (Maguire, Reference Maguire2022, p. 3). Why not follow the lord Jesus and ask them to love one another? There is, in fact, a rich tradition of Christian moral criticism directed against the market (e.g., the principles of Catholic social teaching), often formulated in terms of extremely demanding values (MacIntyre, Reference MacIntyre1984, 254). Most critics of capitalism, however, recognize that it is far too easy to find moral flaws in the market if one is committed to such exacting standards. So even when philosophers disavow the concern over feasibility, as Vrousalis does, the concern often remains implicit in their choice of relatively minimalist normative principles.

5. A whole lotta kvetching going on

Most critics of capitalism are aware that the specification of a feasible socialist alternative to the present economic system presents formidable, and perhaps insurmountable difficulties. And yet there has been a notable reluctance to temper their criticisms in recognition of these difficulties. The result has been a steady transformation over time of critique into kvetch. It should surprise no one to find examples of this in the work of G. A. Cohen, since Cohen was quite explicit in his acknowledgement that we do not know how to design a socialist system that would reconcile his central normative commitments (to personal choice, equality, and community). The only consolation he offered was the somewhat puzzling observation that “I do not think that we now know that we will never know how to do these things” (Cohen, Reference Cohen2009, p. 76). He was willing to tolerate market socialism in a transitional phase, but insisted that a true socialist society would require the abolition of the market. Only then would we be free of the “oppression” that the capitalist system “visits upon” humanity (Cohen, Reference Cohen2009, p. 180).

As an illustration of this oppression, Cohen ends his book If You’re an Egalitarian, How Come You’re so Rich?, with a story about his father, Morrie, who was fired from his job as a dress cutter in a garment factory at the age of 69. The reason, Cohen suggests, somewhat polemically, is that “it no longer paid the boss to pay him.” More prosaically, he notes that “the boss told them that there was not enough work to keep them on, and that he would therefore have to let them go” (Cohen, Reference Cohen2000, p. 180). According to Cohen, this is morally unacceptable. “Business is, among other things, people treating people according to a market norm—the norm that says they are to be dispensed with if they cannot produce at a rate which satisfies market demand. Of course that promotes ‘efficiency’, but it also corrupts humanity. Business turns human producers into commodities” (Cohen, Reference Cohen2000, p. 181).

When it comes to assessing this complaint, it is helpful to begin by asking which specific feature of capitalism is responsible for Morrie’s dismissal. Although the way that Cohen describes the case is not entirely free of ambiguity, it seems clear that Morrie’s employer was experiencing a decline in demand for its products (or at least the ones that Morrie was involved in producing), which led the firm to want to decrease output, which in turn led it to decrease its demand for labor. This chain of events, however, would appear to be a product, not so much of capitalism, but rather of the division of labor. Indeed, Cohen seems to have fallen victim to a form of commodity fetishism, by allowing the monetary character of the transaction to obscure the underlying social relationships. It is an elementary feature of the division of labor that individuals are engaged in production, not for themselves, but for others (a point that is in danger of being obscured by the use of expressions such as “market demand”). This means that others necessarily get a great deal of say over what gets produced, by virtue of their capacity to define their own needs. Morrie had no abstract entitlement to be able to continue to make dresses, especially not if women decided that they wanted fewer of them. Indeed, for him to have such an entitlement would violate the basic reciprocity principle that sustains the division of labor. It is misleading to describe this as a “market norm,” because any socialist system would also require the capacity to reassign labor from one task to another in response to changes in need. One may have quibbles with the specific way that Morrie’s case was handled (or the fact that he was dismissed without any guarantee of employment elsewhere), but if the objection is merely that he was dismissed in response to a decline in demand, then this amounts to a variation on l’enfer c’est les autres. So long as we are producing for others, we must accept that those others are going to have significant say over what we produce.

One might think that theorists who are willing to endorse some form of market socialism are in a better position than Cohen to develop a genuine critique of capitalism. And yet even here, there is sometimes a failure to appreciate just how large a concession it is to grant that a post-capitalist economic system will still need to depend on a decentralized network of private firms and individuals, contracting with one another, to determine prices. The typical blueprint for market socialism focuses on changing the ownership structure of firms, along with introducing new conduits for the transformation of savings into investment capital, while leaving the basic set of markets for the exchange of goods and services intact (Roemer, Reference Roemer1994, Reference Roemer1996). While this constitutes a laudable concession to reality, in the sense that it acknowledges both the difficulty of the calculation problem and the implausibility of non-market solutions, it also transforms most of the traditional critique of capitalism into kvetching. This is because the morally counterintuitive features of capitalism are primarily consequences of the market, not the ownership structure of firms, and so would persist under socialism according to this specification.

Consider some of the complaints that have traditionally been lodged against capitalism, but would persist under market socialism:

1. 1. Commodification. It has often been felt that there is something morally suspicious about the “commodity form” that goods assume under capitalism—the fact that everything has a price, anything can be exchanged for anything else, and individuals are free to adopt an entirely instrumental attitude toward all aspects of production and consumption. All of these features of capitalism would be preserved under market socialism, including the tendency of the system to induce commodity fetishism.

2. 2. Exploitation. Over the past half-century, philosophical Marxists have engaged in an extraordinarily thorough analysis of the charge that workers under capitalism are exploited.Footnote ¹⁹ The task of specifying a coherent concept of exploitation is non-trivial. Nevertheless, it seems clear that so long as wages are set by the market (which, in effect, they must be under market socialism, since the system requires some mechanism for reallocating labor from one task to another), then workers will also be exploited under socialism (Roemer, Reference Roemer1986, p. 77). Similarly, if savings are relied upon as the primary source of investment funds (which would presumably be necessary in the absence of central planning), then owners of capital will still be earning profits without working.

3. 3. Alienation. Capitalism has often been faulted for instrumentalizing workers, transforming their labor into an activity not undertaken for its own sake, but rather for the purpose of earning wages. Workers are similarly seen as alienated from the products of their labor, which stand opposed to them as an alien power (Øversveen, Reference Øversveen2022). And yet all of this, it would appear, would be preserved under a market socialist system, in which goods are produced for sale to others.

4. 4. Profits. A great deal of opposition to capitalism has been driven by abhorrence at the pursuit of profit by corporations. And yet the alternatives proposed by market socialists typically retain the profit orientation as the central organizational objective of firms. Worker cooperatives, for example, are profit-oriented organizations (in that the workers, in their capacity as owners of the firm, exercise a residual claim over the firm’s earnings) (Heath, Reference Heath2022, pp. 74-80).

5. 5. Competition. Closely tied to the profit orientation of firms under market socialism is the fact that economic actors must also be in competition with one another, otherwise there will be no tendency for markets to discharge their essential price-setting function. And yet the way that competitive interaction pits people against one another is often taken to be a moral flaw in the capitalist system (Hussain, Reference Hussain2020).Footnote ²⁰

6. 6. Externalities. In the early 20th century it became clear that one of the major problems of capitalism was the tendency of corporations to produce negative externalities such as pollution. Social ills such as unemployment and inflation can also be seen as essentially externality problems (with firms trying to improve their financial position in a way that worsens that of others). And yet a market socialist system, by retaining the basic structure of privately managed firms standing in competitive relations with one another, retains the same incentives for production of negative externalities. (Thus, a market socialist society would still require a regulatory state, as well as a social safety net, much as capitalist societies do today.)

7. 7. Recessions and unemployment. One of the few genuinely positive things that can be said about the Soviet economy is that it was immune to cyclical fluctuations and was able to maintain full employment. But because economic decision-making is decentralized under market socialism and money remains the primary medium of exchange, the system will exhibit the same dynamics as a capitalist market, which will include both the business cycle and a certain degree of structural unemployment.

Surveying this list, it is difficult to avoid the impression that the major objections to capitalism arise from the operations of the price mechanism, and so the willingness on the part of market socialists to preserve this aspect of the system robs the critique of capitalism of a great deal of its force. Although neo-republican critics, like Vrousalis and William Clare Roberts, have labored mightily to show that Marx’s real objection to capitalism arose from the structures of domination that arose within firms, which can in turn be alleviated through changes in ownership structure, it is difficult to avoid the impression that they are grasping at straws (Roberts, Reference Roberts2017; Vrousalis, Reference Vrousalis2023). The more plausible interpretation of Marx’s work is that he genuinely did object to all of these genuinely objectionable features of the capitalist system, he simply failed to appreciate how difficult it would be to come up with an alternative that eliminated them while preserving the more desirable features (in particular, the ability to sustain a complex division of labor).

In the more standard run of cases, however, critics of capitalism are simply evasive when it comes to stating what they imagine the alternatives to be.Footnote ²¹ This is understandable, since the calculation problem presents a genuine dilemma for these critics (many of whom seem to have become quite invested in their conviction that the capitalist system is all-things-considered evil, and so are not open to rethinking that assessment). Accepting the need for markets as a solution to the calculation problem severely constrains the extent to which one can hope to remedy most of the traditional complaints about capitalism. Anyone willing to think rigorously and systematically about the implications of preserving markets for price determination (e.g., for issues like savings and investment, firm governance, taxation policy, etc.), winds up recommending a form of “market socialism” that is so similar to capitalism that it winds up blurring the distinction between the two. As a result, most of the traditional critique of capitalism gets left by the wayside. By contrast, those who take this as proof that market socialism is unacceptable wind up without much to say about their proposed alternatives to capitalism, which leaves them in an unsatisfactory limbo somewhere between kvetching and committing the nirvana fallacy.

6. Hussain on the invisible hand

The first thing to note about Waheed Hussain’s book, Living with the Invisible Hand, is that it is intended as a critique of real-existing market economies, and not merely as a kvetch. This is why, throughout the early chapters, a variety of promissory notes are issued about the changes that could resolve the problems identified. At the same time, Hussain sets a formidable challenge for himself by focusing his criticisms on fairly central features of the market system, raising serious doubts about whether those promissory notes could ever have been discharged. The work is, unfortunately, incomplete, and so there is a sense in which we will never know how things might have turned out. The last chapter that he completed, dealing with the business corporation, essentially just defers the problem, because making changes to corporate governance (e.g., by introducing co-determination to firms), does nothing to address the objections raised to the way that markets coordinate production.Footnote ²² Thus, it falls to the final chapter, which was assembled from two incomplete manuscripts by the editors, to address the challenges raised in the earlier parts of the book. This discussion, however, is unsatisfactory, and not just for contingent reasons related to its composition. There is a kvetchy character to many of the objections that Hussain raises to the market, which creates real doubt as to whether he could ever have redeemed those promissory notes.

Consider the principle of transparency that Hussain faults the market for failing to satisfy (Hussain, Reference Hussain2023, pp. 117–19). It seems like a foregone conclusion that any complex division of labor, involving literally billions of participants, is going to involve drawing individuals into patterns of interaction that are not fully transparent to them all. Indeed, while some ethical consumers may like to know the name of the farmer who grew the carrots they are eating, no airline passenger wants to know the name of every person who contributed, in even the slightest way, to the on-time arrival of their flight, or the impact that each had on the price of the ticket. Indeed, as Hussain himself acknowledges, the reason that markets are able to achieve cooperation on such a large scale is precisely that they do not require this sort of transparency: “The lack of transparency that I am calling attention to here is a widely recognized feature of an advanced market economy. In ‘The Use of Knowledge in Society’, Friedrich Hayek famously notes that price coordination does not communicate to market actors all of the information that might justify a certain pattern of production and consumption activity in society” (Hussain, Reference Hussain2023, p. 119). He concludes, on this basis, that “Hayek is essentially defending a form of authoritarianism” (Hussain, Reference Hussain2023, p. 119). And yet it seems clear that anything short of central planning will necessarily fail to exhibit the relevant sort of transparency, and since Hussain was not an advocate of central planning, he would appear to be accepting the inevitability of authoritarianism.

The argument is actually a bit more complex than this, because Hussain introduces another principle, trustworthiness, which essentially states that violations of transparency are permissible when it is necessary for the satisfaction of his first principle, reason sensitivity. Reason sensitivity requires that a coordination mechanism be responsive to the full range of considerations that might be thought relevant to that domain of interaction, which in the case of economic activity involves not just efficiency but also “distributive fairness, environmental considerations, and the protection of human rights” (Hussain, Reference Hussain2023, p. 120). Again, it is a foregone conclusion that markets will fail to satisfy this constraint, as would any other mechanism short of completely open-ended public deliberation among all affected. But since Hussain gives every indication of wanting to keep the price system in place as the central mechanism of economic coordination, the concern that it is less than fully responsive to the entire range of considerations we might like to bring to bear upon decision-making amounts to little more than a kvetch.

With respect to reason sensitivity, the three examples that Hussain gives of the failure of the price system to respect the principle are: the production and consumption of fossil fuels, safety testing for pharmaceuticals, and the impact of purchasing decisions on the racial demographics of neighborhoods.Footnote ²³ Both the first and third cases involve the production of externalities, while the second involves an information asymmetry. These are all well-known sources of market failure. Parenthetically, one might note that pointing to instances of market failure as a criticism of the market runs the risk of committing the nirvana fallacy. The more general point, however, is that these tendencies are a product of decentralized decision-making, not the market per se. The production of externalities, for example, although often blamed on the profit orientation of firms, can easily be observed in any institutional arrangement in which responsibility for outcomes is divided among multiple decision centres (Nove, Reference Nove1991, p. 68). Consider a task that can be broken down into three components, x, y and z, each of which is assigned to a subunit of a large organization. In this case, the subunit that is responsible for the production of x may pursue that objective in a way that makes it difficult for the neighboring subunit to produce y (and vice versa). This should be familiar to anyone who has worked in a university, where individual departments routinely act in ways that make it difficult for other departments to discharge their responsibilities. These effects are all externalities, from the standpoint of the unit making the decision, and they generate precisely the same collective action problems that arise in markets.

A similar situation often prevails with respect to transparency. One of the most common complaints that one hears from individuals who work in large organizations is that information is contained within “silos” that impede its horizontal flow. Again, the problem arises from the fact that a complex task is being broken down and assigned to different units, each of which collects information and develops expertise with respect to its particular contribution. Individuals working in one unit may experience frustration trying to get information that is housed in another, but the benefits of task specialization would often be lost if all information had to be shared across all units. Thus, decentralization necessarily generates a certain amount of non-transparency. It is a natural consequence of breaking up a task and allowing different people to make their own decisions about how to carry out their assigned portions that not everyone is going to know exactly why everyone else chose to do things the way that they did. Hussain, however, only allows deviations from transparency when it is required to enhance reason-sensitivity, and not for other reasons (such as efficiency).

As a result, Hussain’s complaints about the market impose standards of evaluation that would be difficult for any complex organization to satisfy, but a fully decentralized network of producers and consumers engaged in market exchange relations necessarily fails. It is therefore highly doubtful that an “intermediated market arrangement”—the details of which are left almost entirely unspecified—would be able to remedy these supposed defects.Footnote ²⁴ Furthermore, the Kantian character of Hussain’s reasoning does not encourage an ameliorative approach to these questions. His principles are presented as demands that are imposed by the requirement of mutual respect, not as ideals that we should be striving, however imperfectly, to approximate. This makes it difficult to see how Hussain’s normative framework could be satisfied by anything other than fully centralized economic decision-making. Consider the following claim:

What is to stop the “encompassing association” governing one industry from acting in a way that has negative consequences for some other industry? Will there not be information silos that develop, as these associations deliberate? How realistic is it to think that members of one association will be in a position to fully understand the factors that entered into the deliberations of another one? And yet if they do not, is this not a violation of transparency? Hussain’s proposal is intended to counteract, to some degree, the decentralization that occurs in markets, by creating deliberative bodies charged with overseeing, and presumably regulating, each different sector of the economy. But because the moral concerns he has about the market are due to its decentralization, the proposal does not really solve the problem, it just pushes the concern up one level. Nothing short of full centralization of economic decision-making would truly resolve the problem, but as everyone knows, full centralization is highly undesirable. This is why, in my view, Hussain does not succeed in presenting a genuine critique of the market, but merely identifies some of the tradeoffs involved in institutionalizing a complex division of labor.