Neither socialism nor market fundamentalism

51ub7qfxqgl-_sy344_bo1204203200_A brief extract from my current reading which really stood out for me. Economics and Utopia pits the theories and practices of socialism against those of market fundamentalism, and moves towards some sort of third way, encompassing a plurality of institutions, including the market.

“Neither the individual nor the state can be omniscient. What is remarkable about both socialism (in a traditional sense) and market individualism is that they both presume a high degree of capability and enlightenment on the part of one or the other. In socialism the planning committees are assumed to be capable of knowing what is best. In market individualism the individual alone is ascribed with this capability. It is necessary to escape from this false dichotomy.

All knowledge is partial and provisional. Society, and the individuals within it, are involved in an interactive and mutually interdependent process where all are learning on the basis of conjecture, error, experience and experiment. It is suggested here that this open-ended and experimental process cannot be encapsulated adequately in these two systems. Neither a universal system of planning (democratic or otherwise), nor a set of atomistic individuals acting solely through markets and contracts, can give full reign to experimentation and learning. They require a set of varied and pluralistic economic structures, frowned upon by centralist socialists and market individualists alike.”

Geoffrey M. Hodgson (1999), Economics and Utopia, Ch.2, p.79-80


5 thoughts on “Neither socialism nor market fundamentalism

  1. Again, socialism is not about planning vs market. Just read Proudhon. As an anarchist he believed in no state at all and still, he is one of the most influential socialists, presenting the alternative system more clearly than most.
    Socialism is about abolishing rent, interest and profit, so wealth is distributed not according to proprety (making money with money), but to one’s contribution to society (labor). This does not imply, in no sense whatsoever, ending markets for goods and services, only capital and labor markets.

  2. Hodgson’s general point applies no less to individual issues such as distribution ( – may I remark as a reply to Francisco). There are no panaceas, nor completely satisfactory solutions (concerning many of the topics of which we think there are such solutions or wish they could be brought about).

    Hodgson has written excellent books and articles; I got to know and appreciate him on acquainting myself with the (Old) Institutionalists (Commons, Veblen, Dewey) to whom he has dedicated large sections of his work.

    Copious material to be found here:

    Another author in this vain that I am very fond of is Warren Samuels. He has helped me to understand the intrinsically political nature of the economy/economic activity and economics.

    In practising economic activities we are engaging in competitive behaviour, pursuing action that affects different interests differently, hence we tend to evaluate economic activity and outcomes differently.

    Any theory that ignores this (proposing an ideal solution uniquely optimal for all) is mere ideology, no matter whether it happens to be of a libertarian, a Marxist or any other blend.

    • Thanks for your comment. I am finding Hodgson’s book interesting and useful so far, and want to read his more recent Conceptualizing Capitalism at some point. I can see that he is strongly influenced by the old institutionalists, and emphasises historical contingency, so that different theories are needed to account for different historical periods and kinds of institutions in society.

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