Confronting Capitalism: Socialists and Markets

0:00Welcome to Confronting Capitalism. I'm Melissa Nashek and I'm here as always with a Vec Chipper, a professor of sociology at NYU and the editor of Catalyst, a journal of theory and strategy. Quick reminder before we start the show, if you like what you hear, please like and subscribe wherever you get your podcasts. We also published transcripts of all of our episodes on Substack. We haven't been in person in a little while, it's nice to be here. I know, it seems like a long time, right? Because I was traveling so much in the summer, so I didn't get to see you at all. You were very in demand. Well, it was a grueling summer, three weeks in India where we had our marks at school, and then nine days in South Africa where I gave a series of five lectures over there on anti-colonial struggles and then four days in Indonesia right after that. So seven weeks were taken up,

1:03just going around from one continent to another. I'm somebody who doesn't like travel. Yeah. It was not my idea of a good time. Is that why you didn't attend socialism in 2026? Too tired for your travels? Oh my god. May I just say I'm really disappointed that you're not fully masked. I actually, when I saw the clips, I was like, are people still doing this? 2026 and they're fully masked. It just boggles them. I, the world has moved on in so many ways, but it's like nothing changes with these guys. I know. I know. I feel like all the clips that are circulating, they could have come from back in 2020 back in, you know, 2018 when I was joining the left. I was watching Breaking Points where Ryan Grim showed a clip of this and he made an interesting point. He said, you know, you might think that the left has grown and has matured so much that you should just kind of ignore these people because they're so kind of crazy. Then he said, no, I think actually precisely because the left is matured, you should

2:04actually focus on this phenomenon and the fact that it's still around. And I really agree with them. I think we should aggressively and actively kind of denigrate and colliminate this kind of just clownish performance that you see. It's not just that, you know, they're fully masked and weird. The things they're saying, the actual arguments, the things that they're focusing on. Well, that's something Monty Python drew up in a fever dream in 1995 or something. Right. And that's the problem. That's what we're saying so little has changed is that whatever kind of role these people still have in the left, they're still a presence. They're still significant presence. And it's a big issue that a lot of the left seems to be trying to be more serious, trying to have more successful interventions in gaining power within the American political system. And then you still have people who have a significant enough hold within the socialist movement to at a minimum make it look very bad. And, you know, at worst, like what I experienced

3:06when I was an organizer really actually detract from organizing efforts. I don't know how much sway they have in meaningful political organizations anymore. And how much versus this performative stuff that people just show up for. Right. If they didn't call themselves socialist, of course, we could just ignore it. But the fact that they are able to get away with putting that label on things like what fat genocide was one of the things they were talking about. Yeah. I mean, this is just clownish. It's bizarre. Are you pro or anti-paget? Well, I haven't worked out a full position on that yet. I'm working on it. That's a deep topic. And you can't demand. This is notable because Vivek never takes in big US positions on the podcast. This is the first one. It's the complexity of it is overwhelming. So I have to study and think about it really hard. All right. Well, today we're going to be talking about markets, which I don't know how much that was covered during the fat genocide panel. But it will be covered here today on the podcast. We did a previous episode on market socialism in which you talked about why markets are not inherently capitalist and

4:13how the socialist movement should think about markets and think seriously about, you know, for its future versions of society, how to incorporate markets. So today we're going to take a bit more theoretical and historical approach and look at what markets are, what role do they play in capitalism and, you know, talk again about why markets could be compatible with the socialist society. Yeah. Because one of the interesting things about political discourses, we know that the neoliberal right and a lot of versions of free market economics take markets to be synonymous with capitalism. So you see capitalism simply has a quantitative expansion of the market. Ironically, there's a mirror image of this within the left too. So that they see that whenever there's a market, it has to be a capitalist market. And this is why a lot of the objections come to market socialism. So I think it's good to see if we can detach markets from capitalism conceptually. And then try to show that the market itself is very limited in its properties.

5:16How it functions will depend on how it's embedded in the wider and more encompassing context of other social relations. And that'll help us think better about what aspects of the market are intrinsic to it and what aspects of the market actually are ones that are endowed through capitalism. And hence, if we were to take it outside of capitalism, we can see which aspects of markets will remain in which aspects of market will fall away. And it might turn out that the aspects that remain are actually not only unobjectionable but quite useful. When we start then with the markets that existed before capitalism, what did markets look like in a pre-capitalist society? Well, in one sense, they look like markets do anywhere else, which is they were places where people went to buy and sell stuff. But in a deeper sense, markets were very different prior to the rise of capitalism. So first of all, the buying and selling of things

6:17occupied a much more peripheral place in society. The actual existence of trade is thousands of years old. It's existed almost since the deepening of settled agriculture. But it's also known that the trade tended to be of goods that work what you might call surplus production. Prior to the rise of capitalism, the fundamental production unit was the family farm, the peasant farm. And the peasant farm overwhelmingly produced raised crops and made things for its own consumption. Now this sometimes was taken to be a sign of what's called the natural economy. A natural economy was meant to be. Every unit was totally self-sufficient. They produced just for themselves and nobody traded. We now know that that has never been the case. Even when people were primarily making and growing things for themselves, they always engaged in trade. But the trade they engaged in tended to be of stuff that was left over after their consumption needs were taken care of.

7:23They took those to the market. And most markets tend to be rural markets, village markets. You didn't go to the cities. When you say consumption needs, can you just clarify that? Yeah. So the peasant family primarily engaged in agriculture. And it would grow crops. So some of this would be grain, depending on the country you're living in, wheat or rice. And then there would also be other subsidiary crops that they grew on the side, many of which were used for fertilizer. So you would consume some of it and then the rest like turnips you would use for fertilizer. You also as a family unit, major on manufacturers. So prior to the rise of capitalism, manufacture and agriculture were not separated as economic activities. The same unit that did agriculture also did manufacture. And Marx speaks eloquently in capital about how with the rise of capitalism you get a division of labor in which for the first time, manufacturing activity and agricultural activity become functionally separated from each other. Manufacturing is done in urban areas or in different

8:24localities. And agriculture is done as a separate activity. So in theory, the family rural peasant unit is self-sustaining just by its own production. Let's say it strives toward self-sufficiency. Okay. Never achieving it. Let's just say that. Right. Because then you mentioned that there are subsidiary things that they're all going to market for. Exactly. So they would grow their own crops. But then they would also try to build some of their own tools. They would also try to make their own clothes. They would to the extent that they could make whatever furniture is possible. But obviously they couldn't do all these things. Some of it they would have to get from elsewhere. Either from, say, blacksmiths or carpenters within their village. And in India, you had something called a Judgemani system. The Judgemani system was one in which different groups of people specialized in particular things that they made and who usually organized around caste. And then they would exchange with each other through that specialization. But in a non-monetized way, it would be exchange in kind. Okay. This many shoes with this many shirts. That kind of thing. Right.

9:27Would you still consider that a market? It's not a market. It's exchange activity. Okay. We call a market something where there is a concentration of exchange in the specialized location. So suppose different families are trading with each other at the same village. It's not a market. But as suppose you put a place separately where everybody brings their wares when they want to put them up for sale or trade with somebody, well, now you've got a market. So before the rise of capitalism, there weren't a lot of markets in that sense. Most exchange took place informally and locally. Okay. So that's one thing, which is not much of the product was actually put up for exchange. The second thing is that what was put up for exchange was stuff that you made primarily for yourself. And then there's something left over you took it to the market. Right. Now that is a very important implication, which is that the production activities were not done with trade in mind. I'm making stuff for myself, but I'm not making it to exchange on the market. Right.

10:29What's the implication of that? The implication is I don't care so much about cost and quality. I made it for myself to my liking. And I made it at a cost that I don't really worry about being competitive since that's afterthought for me. But that means that the stuff that's coming to the market is neither very cheap nor very good. It's just stuff that is there. And if you want to buy it, you can buy it. Okay. Now what about the cities? Well, the cities, interestingly, right up until the 15th century or so, cities have two kinds, large urban cities and then the smaller townships. Most urban settlements were small townships before the rise of capitalism. And these townships are actually an extension of the rural areas. They're not as vapor thought islands of urban activity and mercantile activity separate from say the feudal economy. Cities were actually controlled by feudal lords. What's their role in the feudal society in that case? Both consumption and production. There were places where feudal lords took some of the stuff that they were having made. But they

11:31were also mainly places where people, they moved out of the village, they would come and live there. And then they would engage in some kind of mercantile activity. But that mercantile activity was controlled by guilds. And guilds were essentially urban merchant associations or producer associations, carpenters, tradesmen, things like that. And those guilds tightly controlled the markets. So it's not the case that there was in urban areas, a flourishing market that would then spread into the rural areas like capitalism spreading from the city to the rural areas. The cities were actually completely controlled by feudal lords. Their economies were run and controlled by the guilds. And the guilds could only control the urban economy if landlords gave the monopoly powers. So the cities could not therefore be a source of opposition to feudal lords the way vapor thought. Cities were in fact primarily an overwhelmingly controlled and dependent upon feudal lords. So markets, therefore, were not a dissolving element to feudalism.

12:35Anywhere in the world, they were internal to feudalism. And what that tells us is markets are not a solvent. Wherever you put them, they don't just spread like a virus across the economic activity. They are as much under the influence and control of political relations as anything else is. So prior to the rise of capitalism, markets were fully contained. They were limited in what they could do. And they were limited in their impact upon society. But that also means if you see a market prior to say the modern era, you can't say capitalism was coming about capitalism was on its way. Because that relies on the assumption that a prior to capitalism, you just have this natural economy in which there were no markets. That's wrong. It also relies on the assumption that once you have a market, it has this internal engine that gets it to spread everywhere. That's not the case. They were limited and contained as long as the class structure and the production relations remained feudal once. Right. And the theorists who have argued that capitalism has basically just been

13:41steadily developing since the beginning of human civilization. They point to markets as part of their proof. Exactly. And so what you're saying here, and we'll get into also what Marx has said, also shows that capitalism is not just some natural outgrowth of economic relations in exchange, but in fact, in imposed and discrete political economic system. That's exactly right. Capitalism cannot be understood as simply the result of the natural growth of the market. Because this is the important thing, the market did not grow naturally. It existed, but it actually went up and down from about the year 1,000 to 13, 13, 15, it grows. But then it receipts for about 80 to 100 years. Then it starts growing again. From 30,000 feet on high, you can say, okay, if you just look at history long enough, you can see that there's been a growth of the market. But that misses the fact that for the market to have grown, it required prior political changes first. So there was nothing

14:42natural about the growth of the market. And therefore, nothing natural about the rise of capitalism. When capitalism does come about, it's because there is a discrete and episodic, a very specific change in class relations from Lord and peasant to capitalist and landlord and rural worker, then later capitalist and worker. And that took very specific actions. And it's conceivable that it might not have happened for hundreds of more years. So how did capitalism transform markets? Okay, so this is the really important thing. As I said, prior to the rise of capitalism, market exchange exists, markets as discrete places and society exist. But the things being traded are things that are surplus that's left over after you've made your stuff. And the things being traded were never made or created with the intent of selling them. And so they weren't disciplined in the producer's mind right from the start with the intention that, look, this has to be good

15:45enough to sell, cheap enough to sell, and it has to have a market. We just made them for himself. Now, the second thing is that because they were peripheral, because they were marginal, they never really controlled people's lives. People's lives were overwhelmingly determined by their own production units, their consumption habits, and their own consumption needs, by the growing and the creation of stuff for themselves, and by the authority relations around them, which was aristocrats, feudal lords, if it's Rome, maybe slaveholders, but markets did not have much of an impact on people's lives. They didn't depend on them for their livelihood, they didn't depend on them for their consumption goods. What changes with capitalism is not just that the market becomes bigger, more expansive, and grows, although, of course, that's true. What changes is that for the first time, market exchange, market activity comes to rule people's lives in a very fundamental way. The deepest way in which it rules their lives is this, before the rise of capitalism,

16:49what was the basic production unit? As I said, it's the family farm, the peasant unit, and within that unit, people grow stuff for themselves and rely on their own labor, which is unpaid. They're working for themselves, right? Right. When capitalism comes about what's the basic production unit, now it is that's just say stylistically is the factory, right? In that, what is the modal, the typical form of labor now? That's wage labor. Right. Now, again, wage labor can be found in all pre-capitalist societies. It existed, but it was small in the proportion of the labor force that actually engaged in it, and a lot of people who did wage labor, again, just did it as a side thing, as we call it a side hustle, but they didn't depend on it. Now, what happens with capitalism is what's the defining element of capitalism? Well, people no longer have their own plots of land. It's called expropriation. They're kicked off the land, peasants become workers, and now they have no choice but to sell their labor power in order to get the money to make the goods previously, they used to

17:55grow their own goods. Now, they have to buy them. So, some of what you're saying right now is that even though capitalism didn't invent the labor market, the role that the labor market comes to play under a capitalist society has qualitatively changed. Exactly. Qualitatively changed. You put a just right, not just quantitatively. You could have a quantitative expansion of what's called the labor market without a changing its quality. So, you could just have more peasants doing a little side hustle, and therefore the labor market is growing, or the wage labor market is growing, but it hasn't changed in its actual functions in society. Right. Just like in our day-to-day, when the labor market expands or contracts, it doesn't signal some kind of major shift within the structures of capitalism. Yeah. It's just a quantitative expansion or contraction of an institution, but the role of that institution hasn't changed. Right. What happens with the rise of capitalism is for the first time ever, people have to buy the stuff they need to survive, and in order to buy the stuff they need money. And since money doesn't grow on trees,

18:57the only way they can acquire it is by selling something. The thing they sell is their labor power. So capitalism is a system in which everybody sells in order to buy. Everybody selling something. Capitalists sell goods, services, workers sell their labor power. So, they become dependent on the labor market in a way that no peasant ever was. And the reason that matter for the peasant was say there's no jobs in the urban areas. Say there's no jobs in nearby villages. It's okay because you got your plot of land. You can still survive. Right. That's your insurance. It's like having social insurance, right? With the wage labor market now, you're completely dependent on it for your survival. And what that does is it puts you at the mercy of two things. First of all, it puts you at the mercy of the guy giving you the job. Because if he fires you, you're out on your butt, and you're not going to survive. Second thing the wage labor market does, it makes you dependent on having enough money to be able to survive. Money now becomes a central social institution in a

20:02way that it never ever was before. So capitalism universalizes and expands two markets, a market for labor, which never occupied a central place in society. The other thing is a market for products. In the past, people took a surplus to the market, stuff that was left over after their consumption needs. They never made things specifically with selling in mind. Now with capitalism, the people who owned the factories, capitalists, well, they can't consume the stuff they're making because all the stuff they're making is like things like metal goods, you can't consume it. Right. The only reason you're interested in making it is that it'll get you money. So can you talk about the relationship between production and exchange within a capitalist system? Right. So what happens now is that in prior to the rise of capitalism, exchange had no real connection to production. Production was carried out for use for your own consumption. Exchange occurred as a side activity and many times, person households would not

21:10do any exchange at all. And as I said, the result of that is that the products that are taking to the market are of uneven quality, oftentimes the brain not cost efficient, not that concerned with whether you find a market for them or not. What happens in capitalism is this, every capitalist knows that unless the products he makes sell and sufficient quantity and add a sufficient profit in the market, they're going to lose their assets. They're going to lose their factory. So right from the start, the capitalist has to make things that are cost efficient and that are of good quality. Now you might be like, well, okay, that's fine. Whatever. So what? That feels very common sense to us because we're living in the capital system, right? But there's a political and social consequence of that because every capitalist has to fundamentally be concerned with cost effectiveness, unit costs, quality. He's got to worry about how the work that people are doing for them is being carried out. The capitalist brings in labor. He could say to the labor, hey man, look, I've hired you

22:12for eight hours. I'm just going to go leave now. I'll be back at five o'clock. Whatever you've made, hand it over to me and I'll go sell it. Wow. Sounds like a great boss. Yeah. That's the kind of boss everyone wants. It's true. Nobody has that boss. Why? Because the capitalist knows, if I commit to paying this person, I need to have revenues from the sales that are high enough to pay for this person and to have my profits. And those revenues are not going to come easily because there's somebody else competing with me on the market to sell the same things that I'm selling. Yeah. So that means if he's going to survive, he has to be concerned with cost effectiveness and quality from top to bottom in all of his operations. But that means he cannot trust his workers. He cannot trust them to provide labor in the quantity and of the quality that he wants. And that means that he's got to exert power over them and he's got to make them work faster and harder and better. And that puts him at longer heads with the workers. So see what's happening. This is creating the basis for class struggle.

23:15If capitalist didn't care about the quality and the quantity of their good, they'd let workers do whatever they wanted. And if they did that, they would never be conflict between these two classes. Right. Why do they care so much? It's because production is right from the start shaped by exchange. That was not true before the advent of capitalism. So what happens in capitalism is exchange and the market takes over your life. It takes over your life directly if you're a wage laborer in that you've got to go sell your wage labor on the market, your laboring activity. Right. It takes over directly for the capitalist because he has to make sure that whatever goods are being made under his authority are sellable or good enough. And then indirectly is the institution, the factor that creates the conflict between labor and capital because if the capitalist is going to survive, he's got to make his profits. If he's going to make his profits, he's got to sweat his labor. If he's going to sweat his labor, there's going to be a conflict. And so the market fundamentally changes all the social relations because once you have people dependent on the market, everything

24:19else changes around them. Their culture is going to change. How they think about the world's going to change. The social institutions they make is going to change everything changes. And that's why Marx thought until you dramatically reduce the place of the market or roll it back all together, you're not going to be able to bring about the kind of social changes that we would associate with the more humane and the more just society. Yeah. Well, speaking of Marx, I wanted to ask you how did he understand markets and markets within capitalism? And how does Marx's understanding of the economy differ from, you know, especially conservative economists? I mean Marx understood it basically as I've explained it because I learned everything from him. So and Marx's theorization of the market is the most profound analysis of market activity that social science has ever come up with. And it's something of an achievement of modern social science that it manages to marginalize and ignore Marx on this issue. It takes real dedication

25:22to marginalize such a profoundly insightful theory. But, you know, universities have managed to do that. There is a deep difference between Marx's view of the market and the conservative one. The conservative view of the market sees it fundamentally as a arena of opportunity and freedom. How? Well, for the conservatives, there are no power relations involved in the market. You go to the market, you take your stuff and either somebody's in a bite or not. Nobody's forcing anyone to buy anything. Nobody's forcing anyone to sell anything. And if you find that your stuff is not selling, you'll go back home and you'll make something else. And you bring that. That's the beauty of the market is that through an iterative process, sellers find out what society wants. Because if the stuff doesn't sell, it means no one wants it. If the stuff does sell, it means it's meeting a need. And then because they all, all the sellers want to make a profit, they keep looking for things that'll sell. And through that process,

26:23they end up making things that are actually desired and actually needed. From the buyer standpoint, they go to the market knowing exactly what they want. And if what they want isn't there, they let it be known that, hey man, we'd really like to have some shoes. There's no shoes here. And somebody will make shoes for them because it's a market waiting to be tapped, as they say. So there's this iterative process from both sides. And everybody gains, everybody's happy. Nobody can force any one thing on the other. That's the conservative side, including the labor market. Right. So from the conservative standpoint, labor markets are as much a realm of freedom as product markets. Why? Because if I come to work for you and I don't like the way you're treating me, I can just quit and go work for somebody else. Nobody's forcing me. I'm not a surf. I'm not a slave. I can quit and go work for somebody else. And that'll be punishment to you as a bad employer. You left to change your ways. Vice versa, if you hire me and you don't like the work I'm doing, you can get rid of me. You can fire me and you hire somebody else. Fully free exchanges.

27:25Each person has an exit point. And it's exactly like when you go to a stall and a flea market, if you don't like what you're getting, you go to the next stall. Just like a capitalist, if you doesn't like the work that the worker is doing, he'll go to the next worker. The worker doesn't like the way his employer is behaving. He'll go to the next employer. So no coercion, all voluntary action and it's a realm of freedom. As Paul Samu's famously said, employees hire their employers as much as the employers hired them. Sounds nice. It does sound nice. The thing is it's based on a completely hallucinatory understanding of how labor markets actually work. Before I say that, let me say, it's not that the entire description is wrong. There is an aspect of the market, especially the product market, that market for goods and services. That is really free. That is really expansive. And Marx admired that. He understood that. Right. As much as we talk about exploitation, we're still not saying that wage labor and slavery are comparable institutions.

28:26The fact that I can quit my job, go to somebody else, is a massive advance over being enslaved, or we're being somebody's surf. So that's real. That said, there is a genuinely fictional component of the conservative description. And that is this. It is true to say that I can quit my job working for you and go work for somebody else. But it does not follow from that, that there are no power relations between us. Actually, Adam Smith had the best explanation for this. And Smith, you know, is known as the founding father of modern economics and kind of a trailblazer for defending capitalism. But in fact, Smith hated capitalism because he saw what it's worth. He just said that it's better than the alternative at the time, which is feudalism. And he admired his efficiency gains. He said, anytime there is a standoff between an employer and an employee, he said it's pretty clear it's going to win. The employer wins every time. And the reason the employer wins is that he has so much more wealth that is disposal. That if his workers refused

29:30to work for him, he can just rely on his stocks of wealth. Back then, it was his inventories, his corn, whatever he had in his greenery. But today, we would say it's his assets. It's a stock portfolio. It's a savings, right? Whereas workers have no savings. And if they do, it's usually enough to tide them over for a week, two weeks or a month. Okay. Now in that situation, who's going to win? It's always going to be the employer precisely because of his greater wealth, precisely because of his greater assets. He can hold off longer. So the mere fact that I can change my employment venue from you to somebody else doesn't mean that the power that the two of you have over me disappears. All it means is I'm going from one situation in which I'm the inferior party to another situation in which I'm again, the inferior party. What might change is the degree to which I am mistreated by one or the other, the degree to which I'm vulnerable to you or the other. But the vulnerability itself never goes away. And that means the labor market is intrinsically

30:34and inaltrably a site of domination. It's a site where power is wielded by one party over the other regardless of what the rate of unemployment is. In mainstream economics, if every worker has a job, it equalizes the bargaining relationship. But it never does. Precisely because even if everyone has a job, they might be able to raise their wages, but they never equalize the power relation between them and their employers. And that's why Marx thought the only way to actually democratize economic relations is by eliminating the dependence of workers on finding an employer for themselves. So would it be fair to say that Marx's critique is sort of centralized on the labor market? What about non-labor commodities? The pillar on which the moral critique of capitalism rests for Marx is exploitation. And exploitation occurs between labor and the employer.

31:36So you could say that the labor market is the foundation, it's the central institution that Marx is aiming at when he criticizes capitalism. But of course, it's not the only one. Marx also thinks that there is something about the human beings relating to each other through things, to the commodity, through buying and selling, to only meeting each other in a very instrumental way as sellers and buyers of commodities. That's also he thinks kind of dehumanizing. We abstract away from our personhood, from our individuality. And that means that the richness of potential sociability between us is now set aside in favor of this very class instrumental need. And for Marx, that's a kind of dimension of what he calls alienation. So certainly that. Then there's also the problem of the immorality of my having to rely on the market for my basic necessities. Imagine if there's no wage labor at all. I'm given some kind of basic minimum

32:42support. But I still need to find all the stuff I need on the market. And there's no guarantee that it's going to be made. Give you a great example. Suppose it's decided by the people who control markets that certain pharmaceuticals are just not profitable enough for them. And they're not going to make them. Even though wage labor has been abolished, the production of goods is still completely dependent on profitability and whether or not they bring adequate profits to the person. Instead of being ruled by people's needs and what people really need in order to have decent lives with each other. Okay, Marx also objected to that. So I think it's true that most of Marx's moral and political theory revolves around the extraction of work, the consequences of that, both at the micro level and the macro level. But there he thinks there's aspects of markets and market dependence writ large that also have evils of their own. And that's why in his mind, it really was an imperative to reduce or abolish the market altogether. Hey listeners, we'll be right back with the

33:48conversation. But I wanted to let you know that you can subscribe to Catalyst Journal for half off and get a full year of issues for only $20 by using the code, confronting capitalism, all one word and checkout. Catalyst Journal provides essential insights and analysis on contemporary politics by leading scholars and thinkers. The new issue looks at how we got social democracy and why it is now suffering. Once again, use the code, confronting capitalism, all one word in the checkout and enjoy reading. Link is also in the description. Now back to the show. So let's keep talking about exploitation. What role does the market play in capitalist exploiting their workers? Normally people think of exploitation in a very common sense, a cool way. I think that's fine. The way they think of it is when you're treating somebody badly. In Marxism, Marxist economics, there is a dimension of that in exploitation. That's why he calls it exploitation. In Marxist view, workers when they are being exploited are being treated badly in

34:48some way. But it's not just like that they are pushed around or they're dominated. For him, it's something quite specific. In addition to the fact that they're dominated, because they are dominated. In addition to the fact that they're pushed around, because they are pushed around. Which is that workers end up providing capitalist their labor in such a quantity that capitalist don't have to work anymore. They get all of their income and their livelihood from workers work. So what does that mean? It means that you come and work for me and you make stuff. And when I sell the stuff, the revenues from it are enough to both feed you and to give me an income. Regardless of whether or not I've worked. So in mainstream economics, they'll often say, well, the capitalist's profit are just his wages. They're wages from the fact that he also contributes to production. He manages, he supervises. He thinks hard. It's kind of stuff. Okay, you can say that. But here's the difference. If a worker isn't working, he doesn't get a wage. That's simple enough.

35:48If a capitalist decides not to work, he can still claim his profit. Because his profits were never based on the fact that he's working. They were based on the fact that he owns the factory. If he does work alongside the worker, whether it's management or anything else, that's just something he decided to do. He could just as well hire somebody else to do it and pay them. Capitalist income is always a claim on property. Workers income flows from their actual laboring activity. And the test is if workers stop working, they starve. If the capitalist stops working, well, he just sits around all day and the income still keeps coming in. So that's the exploitation. The exploitation is extraction of labor. You work for me and you work long and hard enough that your labor actually provides an income for both of us. That's exploitation. The question is why do capitalists do it? Answer is simple. If they don't do it, their operations go under. If I own a factory and I'm hiring people to work for me, if I do not extract

36:51labor from them, extract what's called a surplus from them, then I don't have the profits, the revenues to both plow them back into the factory as a reinvestment. Nor do I have enough for me to survive on, to live on. I can pinch pennies on my end, but at the end of the day, if you are not making enough stuff for me, add a profit within efficiency and of the quality that I need, my factory will go under. That means if I want to succeed, I've got to get you to make stuff for me that is cheap, that is competitive, and that customers will buy. That requires that I supervise you, that I make sure you work re-hard as fast as possible, not just fast enough, not just well enough, but at the highest possible level, because that's how I beat out my competitors. Because I'm obsessing over my competitors, that I treat you the way I do. Otherwise,

37:53like I said earlier, I could just leave, come back at five and say, hey, Melissa, I'll see you in eight hours, work if you want, work if you don't want, but at the end of the day, as long as there's enough for us to live on, we'll be happy. Why do I never do that? Why does no capitalists do that? It's because they're competing with each other. They have to get not just some labor out of their employees, but the maximum labor out of their employees. Markets force them to do it, which again brings Marx back to saying, don't tell capitalists to be better people. Don't tell them to behave better because they're not behaving the way they are because they're personalities. They're behaving the way they are because the pressure is on them to make a profit. If you want better employers, if you want a society in which the work relation is self-as-more humane, you've got to eliminate that pressure of profit maximization, that pressure of constantly extracting more labor, and that comes from the market. If markets are playing this huge role in exploitation and essentially forcing the owners of industry to exploit their workforce, how can we think

38:58that markets would be a good or even neutral thing under socialism? Yeah, that's a very good question. Indeed, the onus is on market socialists like myself to justify having markets. Just as I said, I laid the gauntlet down to people who support planning to say they need to make an argument why they think planning could work when it never actually has anywhere else. I think the justification for markets is twofold. One is that if it is indeed correct, as I've said, that central planning is a non-starter, then it's just a matter of necessity. You're going to have have markets to a greater or lesser extent, whether you like it or not, because the alternative, which is a fully planned economy, is not a workable alternative. That's just a recognition of reality. A lot of socialists treat the issue of markets and planning as if they're items in a menu. How can you say you don't want central planning? It assumes a choice where there might not be a choice. It would be really, really great if people on the left could just be pragmatic about this and

40:03realize that you cannot treat this as if it's just all up to you, whether you can opt for the door number one, which is markets or door number two, which is planning. I think it's perfectly fine to say we would prefer to have planning and then ask, could we actually have it? That's a great way to then say, okay, let's plan those things that can be planned. If we find that there's things that are not amenable to it, then we accept the market in those domains. Most importantly, we have to then neutralize those components, those aspects of the market that are obnoxious, that generate all these bad outcomes, morally, politically, economically, inside capitalism. I took from what you talked about with market socialism as that. It's also not quite neither or that markets in fact are a tool that can be used to, if not fully plan an economy, like facilitate a more planned economy compared to what we have now. Yeah, compared to what we have now.

41:05Because in a market socialist economy, there will be more planning that there is in a capitalist economy. I don't know if I put it as they facilitate planning. What they do is they complement planning. So one part of the economy is planned. I said this would be things like transportation, utilities, media, medical care. These are easy to plan because they're substantially planned, even inside capitalism. But when it comes to a lot of consumption goods, like services, like restaurants and hotels, and small operations, like sporting good stores and things like that, I just don't see how you will ever be able to plan those. The goal then is this that you have those things be put up in the market. But the employment relation and the ownership relations within them have to be different than they are in capitalism. So perhaps you can have enterprises producing goods for the market, but they're all going to be co-ops. There won't be an owner inside them. They'll be paying their workers wages, but the wage will have a fixed component to it where every enterprise has to give

42:07their workers something like a living wage no matter what. And then on top of the living wage, the co-op can decide does it want to take some of its revenues and distribute it as wages, or does it want to take its revenues and perhaps put them in investment or something like that. But the key thing is there's no owning class. If there's no owning class, then all the key decisions about how fast to work, when to work, what to make, they're all made democratically by the workers themselves. The enterprises will compete with each other. Now, won't competition force them to do the same things that competition forces owners to do in capitalism? No, because your entire fate is not bound up with the success of your enterprise. So in market socialism, people who are working in the market sector would get a nominal wage, but they would also get a huge what's called social wage. That is guaranteed access to goods like housing, healthcare, child care, all these sorts of things will be citizenship rights. So that means then that when you're making your

43:10decisions in your cooperative about how to distribute your revenues and how to use them, you won't be burdened with this idea that unless I put all of that stuff back into investments so that we can drive down the cost of our goods, I'm going to be out on my butt and I'm going to be without any kind of survival chances. Because even if your enterprise goes under, you will still have access to certain basic goods as a citizenship, right? That means competition won't have the same force on you that it does in capitalism. So these are just ideas. And I think we have to think about them all. The reason I'm very serious about it is that, and I'll just say this again, you can't just wave your hand and say we're going to have central planning. It's either it works or it doesn't. And to not have discussions of a fallback option like market socialism, it's just irresponsible. Because if you take this leap in the dark again at a fully planned economy and it fails again, the result of it is not neutral. People return against not just planning, but the whole socialist

44:15idea itself. And they'll say, screw it, let's go back to capitalism and you'll have a movement backward, a new constitution, new rules, new laws, and you bring back capitalism because at least it works. So I tend to be quite conservative. I say let's at least start with market socialism. If we can push back the market to the point of being zero, fine, great. But you cannot pretend that it's an act of will and volition to opt for central planning because it is fundamentally a practical question, not an ideological one. So listening to you talk about markets in pre-capital societies, capitalist societies, and then talking about what they could be in a socialist society, it seems to me like what you're saying is that markets function very differently depending on the type of society that they're implanted in. Yeah. And I would just tell socialists, don't make the same mistake that mainstream economists do, which is whenever they see a market, they think it's capitalism in germinal form, in a small form, markets depending on the wider context,

45:21just do different things. It's still called a market because it has a thin veneer that is common across different systems. But if you just look vertically in how it's embedded in those systems, it's those vertical ties to the deeper system that really give it whatever functions it has. And so what that means then is don't think that if we have markets in socialism, we're bringing in capitalism. That's just not true. What we have is a socialist market as opposed to a capitalist market, the same way you had feudalist markets prior to the rise of capitalism. And once we emancipate ourselves from this fixation, now we also free ourselves, we allow ourselves to think of ways in which markets might help the socialist project instead of seeing the as a necessary enemy to the socialist project. Converting capitalism is produced by catalyst, a journal of theory and strategy,

46:24and published by Jacobin Maggi. Connor Gilles is our audio editor. Our music is provided by Zonky. Thanks for listening.