July 19th, 2009

There’s a nice spat going on between Robert Waldmann and Brad deLong over Marx’s 1875 Critique of the Gotha Programme. Specifically over this celebrated slogan:

From each according to his ability, to each according to his needs!

They disagree whether this is meant ironically or as a real, if remote aspiration. Whatever, the slogan has been taken ever since as the definition of communism, realistic or not. I submit it’s no such thing.

Capitalism and socialism denote possible ways of organising an economy. Communism should be an alternative, third way, shouldn’t it? But the two parts of Marx’s slogan refer to different, and incompatible, things.

  • To each according to his needs is a welfare criterion for optimal allocation of consumption goods: to maximise the welfare of a group, equalise the marginal utility of consumption of each member. The distribution of consumption utility functions does vary a bit, but not much, so the optimum is likely to be pretty egalitarian. Bryn Terfel surely appreciates singing more than I do: he should get the better hi-fi, but I should still get the cheaper one.
  • From each according to his ability is a criterion of efficient production, or resource extraction: to reach the optimal production frontier of a group, equalise the net marginal disutility of each member’s input. Talents and other endowments vary greatly: since I can’t even sing in tune the ratio between Terfel’s musical productive abilities and mine (a large number to 0) is infinite, and I shouldn’t be asked to sing at all. Equality of marginal sacrifice will therefore be reached at very different marginal and average quantities of goods and services. The better endowed should put in much more overall, whether it’s plumbing, music, or cash.

The two distributions are not just different, they are very little correlated. The optimal distribution and production maps will bear practically no relation to each other.

You can design institutions that will approximate either goal: centralised rationing for efficient distribution; property and competitive markets for efficient production. But not both. You can’t have a competitive market system to reach your Pareto-optimal production frontier, then confiscate the proceeds and allocate them benevolently: it’s a fantasy. The two goals are incompatible. Any feasible system – capitalist, socialist, communal, customary – either abandons one goal, or compromises. The slogan describes the fundamental contradiction of welfare economics, not a solution to it.

The point is perfectly illustrated by the two texts that Marx cobbled together from the Acts of the Apostles, describing different phases in the very early Christian Church.

2:44-45 And all that believed were together, and had all things common; and sold their possessions and goods, and parted them to all, as every man had need. (KJV – italics supplied)

This, and the near-identical Acts 4:32-35, describes a simple pooling of goods, with no property rights inside the group, and centralised distribution on a welfare criterion. The pooling, note, was not differentiated “according to abilities”, but total. Since they expected the Second Coming to be imminent, they could forget about the production side and live off capital. The other text runs:

11:29-30 Then the disciples [in Antioch], every man according to his ability, determined to send relief unto the brethren which dwelt in Judaea: which also they did, and sent it to the elders by the hands of Barnabas and Saul. (KJV – italics supplied)

This only makes sense if we assume that the church had reverted to private property: if assets were still pooled, ability to contribute would have been irrelevant. What’s going on here is a sort of progressive tithing. The verses reflect a change in the economy of the new community. Not surprising, since a lot had happened between the two dates: a rapid expansion in membership, the first martyrdoms, the disaster of Ananias arising from the stresses of pooling, the entry into the leadership of the socially conservative Paul, and probably a stretching of the eschatological horizon. The church didn’t claim to be relying on memories of Jesus’ teaching in its economic arrangements; it was making it up as it went along, and sensibly learnt from experience.

Since communism is an important word, with very strong emotional associations both for and against, I propose to retire Marx’ appropriation of it for something that isn’t an economic scheme at all. This leaves us free to see communism as something we have already, and on a large scale.

More to come. Update: here.

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