Production and Consumption Under Capitalism — and Socialism

Democratic socialists see the point of socialism as extending democracy from politics to the economy. Defenders of capitalism sometimes push back against this by saying that the masses of ordinary people already control production — through the “price signals” they send through their consumer choices. Libertarian writers Milton and Rose Friedman famously argued in their book Free to Choose that every time you buy a product or refrain from doing so, you’re essentially casting a vote about what should be produced.

There’s some truth in this claim, but it also misses quite a bit. First and most obviously, given the massive income inequality produced by capitalist property relations, the “vote” on which consumer goods should be produced is one in which some “voters” get many times as many votes as others. The second, related point is that most working-age adults don’t just participate in the economy as consumers of the goods they buy in the supermarket. They also participate as sellers of their own working hours to employers.

“Markets put power in the hands of consumers” is just as true of labor markets as any other kind of market. When private ownership of businesses is combined with an advanced modern economy where most production takes place through the efforts of many different people working together in the same firm, the inevitable consequence is that there will be many times as many sellers as buyers of labor time. “Markets put power in the hands of consumers” is true with a vengeance here, and the inevitable consequence is that the vast majority of people are dominated, inside the workplace and in society at large, by the minority of labor-time consumers.

Socialists seek to free the working-class majority from domination by private business owners through some form of collective ownership of the “means of production” — like, say, banana farms. It’s important that people have democratic input in what happens in the workplaces where they have to spend so much of their waking lives, and that no one can grow wealthy by hoarding a vast share of the wealth created by the labor of workers.

But in itself, “there should be some form of collective ownership of the means of production” tells us very little about how decisions should be made about what to produce in the first place. And it’s that question we need to answer if we want to start to think about the fate of consumer goods like bananas.

Calculating Banana Prices in the Socialist Commonwealth

In countries like East Germany in the twentieth century, decisions about both what to produce — and which products to import from abroad — were made by a few state officials. Beyond being objectionably undemocratic, it was wildly inefficient. This wasn’t the only reason for the understocked shelves at Soviet-bloc grocery stores — geopolitical clashes with the West often played a role — but it was a major part of the problem. It’s a part we need to take seriously if we’re serious about achieving a form of socialism where we distribute the abundance created by a globally integrated modern economy in a more egalitarian way, instead of drastically shrinking it.

It’s far from clear that having planning decisions be made by a freely elected government rather than an authoritarian state would suffice to get around these problems. Elections are blunt instruments, and it’s unlikely that the voters periodically throwing out governments that did a bad overall job with the economy would make the system as a whole much better at coordinating production with the fine-grained preferences of individual consumers.

This consideration has led many socialist thinkers who’ve grappled with these issues — people like The Economics of Feasible Socialism author Alec Nove and After Capitalism author David Schweickart — to conclude that even after we abolish capitalist labor markets through social ownership of the means of production, we’ll still need a market for consumer goods. Concretely, this could mean that the “commanding heights” of the economy (like energy and banking) are taken under the umbrella of state planning, as well as sectors like health care and education in which market-less state planning has already been successfully beta-tested even in many capitalist countries — but goods like bananas are produced by private or semiprivate worker-owned firms. “Voting” with price signals about which such goods should be made might not be so bad given an at least relatively much more even distribution of “votes.”

Not everyone who’s thought hard about these issues has come to the same conclusion. The “parecon” (participatory democracy) model proposed by Michael Albert and Robin Hanhel, for example, involves an elaborate system for coordination between consumer councils and worker councils, with the consumer councils aggregating individual requests made by their members. That model sounds to me like it would involve an awful lot of time trying to figure out future needs and arguing about such requests with people who don’t need to be peering over my shoulder at my shopping list, but maybe advancing technology will allow enough of this process to be anonymized and automated to sound more efficient and attractive.

I’m agnostic about how far in the direction of totally market-less planning we could go — or want to go — in an advanced socialist future. But for right now, let’s assume markets for consumer goods as a starting point. Would we still have cheap and abundant bananas in countries too distant from the equator for many bananas to be locally produced?

Producing the Bananas

I’m deeply unconvinced by the argument that socialism would mean that Germans and Ohioans couldn’t have bananas. I don’t even think that prediction is particularly likely, and I certainly don’t see where confidence about it comes from. But I want to give people a sense of the strongest version of the argument.

Given a global transition to social ownership plus consumer markets, or even a truly optimistic scenario involving market-less parecon-style consumer councils in Germany and Ohio coordinating with workers councils as far away as Ecuador, there’s no reason to think that a transition to global socialism would mean reduced demand for bananas. In fact, I’m cautiously optimistic that healthier diets would be more widespread in a world with less financial stress and more time for people to plan out their meals, and thus that demand for bananas and other fresh fruit would considerably increase. The reason Socialist Banana Skeptics believe that Germans and Ohioans would have to learn how to live without bananas in a socialist future is that they predict that the supply would dramatically decrease.

Why not? Well, it’s certainly true that under global capitalism countries where labor is cheap often achieve this cheapness through horrifying mechanisms. Banana-producing countries like Ecuador, Colombia, Costa Rica, and Guatemala have labor laws that leave a lot to be desired — and enforcement that leaves even more. Efforts to organize unions on banana-producing plantations are often suppressed with physical violence, workers are rarely paid overtime, and big producers like Dole and Del Monte use shenanigans like keeping workers on through a long string of short-term contracts, “which allows [employers] to avoid paying for otherwise legally-mandated benefits and prevents these employees from organizing and collectively bargaining for better working conditions and benefits.”

The extent to which these practices underlie current production varies quite a bit from place to place — Hawaii, for example, produces hundreds of millions of bananas for the world market every year even though US labor law applies there and, as many complaints as I might have about US labor law, I’ll acknowledge that people are a lot less likely to get murdered for trying to organize a union in the United States than in Colombia. But it’s generally true that production is pumped up by mistreating workers. Of course, that’s true of every industry under capitalism, and socialists don’t generally think other industries will cease to exist once workers take over the machinery of production.

Would this one? It semes unlikely. As New York Magazine’s Eric Levitz points out:

It isn’t so hard to imagine socialists taking power in Ecuador and nationalizing its banana industry. But there is no reason to believe that Ecuador would stop exporting bananas in that hypothetical. Workers in the Global South’s export industries generally agitate for a higher share of the income generated by such sectors, not for their abolition. And banana exports are integral to the Ecuadoran economy, accounting for more than 4 percent of its GDP, employing 250,000 people, and generating the foreign currency that it needs to pay its debts.

Of course, in a scenario where socialism was achieved across the world, Ecuador’s debt could just be canceled — but the rest of Levitz’s points would apply. What about a scenario involving not only a nationalized banana industry in Ecuador but an advanced global socialist society where the distribution of wealth had been globally equalized so, for example, a socialist Ecuador didn’t have to worry about foreign debts, and everyone around the world was equally hesitant to do undesirable jobs? If equal hesitancy meant “no one anywhere felt like farming,” then in short order everyone would starve to death and all this would be a nonissue, but maybe we’re imagining a scenario where lots of farming is still happening but it’s hard to convince people to do particularly undesirable kinds of farming.

The best argument for thinking that the banana industry would either be abolished altogether or be shrunk to a size where bananas wouldn’t be loaded onto planes in this scenario is that current production involves keeping the production numbers up by using dangerous pesticides. As Levitz points out, one solution consistent would be to have more workers working fewer hours to minimize everyone’s exposure. That’s consistent with the traditional socialist idea that whatever dirty or unpleasant work had to be done in an advanced socialist society could at least be spread much more thinly throughout the population. But I actually think that there’s a more fundamental implausibility to the “no bananas for you after the revolution” predictions.

As Levitz points out, the achievement of socialism in Ecuador and the empowerment of the Ecuadorian working class wouldn’t be enough to stop or even much slow down banana production in the short term, given the current interests of Ecuador and the current demands of Ecuadorian banana workers. In the long run, given a sufficiently advanced enough form of a truly global socialist society to equalize conditions around the world and change those calculations, that might start to change — but given the current pace of advances in agricultural automation, I’m more than a little confused about why anyone would predict things would happen in that order. Do they really think that we’re so close to global socialism that the achievement of the most advanced and globally equalized kind of socialist future is likely to come before we have the technology to greatly reduce human involvement in mass-producing bananas?

It seems unlikely. But to be fair, history is full of surprises, and there’s no way to rule out things happening in the order they’d have to for this prediction to make any sense. Even if it did, though, we’d be talking about a phase of socialist history where bananas were rare in Germany and Ohio, not a permanent state of affairs where bananas were something people read about in history books recounting the bad old days of capitalist hyperexploitation on banana plantations. And one way or the other, the instinct by at least some participants in Banana Discourse to trivialize concerns about access to consumer goods as a matter of spoiled Americans not being able to imagine giving up their “treats” is deeply misguided.

The whole point of Marx’s materialist theory of history is that capitalism, for all its horrors, wasn’t an avoidable moral mistake but a necessary phase of historical development that built up the most advanced economic machine for producing material abundance in human history. Whatever happens with this or any other particular product, the general point is that distributing that abundance more equitably is a vision that can gain mass traction. Rolling it back is not.

No society has ever voluntarily retreated to a lower level of productivity, and it’s unrealistic to expect that to happen in the future. If “socialism” in the sense of the extension of democracy to the economy is as bad at delivering consumption as “socialism” in the sense of what existed in places like East Germany, it will never become the globally dominant mode of production in the first place. Instead, our vision has to be abundance made truly universal.