There has been much discussion in recent years of the role of moral ideas within Marxism. Marx's stringent criticisms of purely philosophical inquiry impose rather narrow limits on the form which a Marxian moral philosophy might take. For Marx often holds that moral ideas and moral theorizing are irremediably ideological. By this Marx appears to mean that moral ideas are part and parcel of a system of class domination, a way of preserving class domination through internalized norms. As many recent commentators have shown, however, these criticisms of moral reasoning, though present in Marx's system, cannot be the beginning and end of his stance on moral matters. For Marx himself is committed to making normative judgments about capitalism and socialism, and there is a richly textured set of normative ideas that run through his writings from early to late. Further, and perhaps more compellingly, there is a pressing need internal to Marxism for discussion of moral ideas in order to steer the course towards the attainment of socialism.

There are two principal philosophical conceptions of socialism, corresponding to two interpretations of the notion of a rational society. The first conception corresponds to an instrumental view of social rationality. Captured by the image of socialism as “one big workshop,” the instrumental view holds that social ownership of the means of production is rational because it promotes the optimal development of the productive forces. Social ownership is optimal because it eliminates the costs of coordination imposed by the conduct of economic activities in formally independent enterprises, and, more generally, overcomes fetters on development that result from the control of resources by individuals whose particular interests (in profit) imperfectly correspond to a general interest in productive advance.

This paper stands at the confluence of two streams in contemporary political thought. One stream is composed of those critics of liberal political philosophy who are often described collectively as ‘communitarians’. What unites these critics (we shall later want to investigate how deep their collegiality goes) is a belief that contemporary liberalism rests on an impoverished and inadequate view of the human subject. Liberal political thought – as manifested, for instance, in the writings of John Rawls, Robert Nozick, and Ronald Dworkin – claims centrally to do justice to individuality: to specify the conditions under which distinct individuals, each with his own view about how life should be lived, can pursue these visions to the best of their ability. But, the critics claim, liberalism is blind to the social origins of individuality itself. A person comes by his identity through participating in social practices and through his affiliation to collectivities like family and nation. An adequate political philosophy must attend to the conditions under which people can develop the capacity for autonomy that liberals value. This, however, means abandoning familiar preoccupations of liberal thought – especially the centrality it gives to individual rights – and looking instead at how social relationships of the desired kind can be created and preserved. It means, in short, looking at communities – their nature and preconditions.

Imagine a society of fisherfolk, who, in the state of nature, fish on a lake of finite size. Fishing on the lake is characterized by decreasing returns to scale in labor, because the lake's finite size (and finite fish stock) imply that each successive hour of fishing labor is less effective than the previous one, as the remaining fish become less dense in the lake. In the state of nature, the lake is commonly owned: each fishes as much as he pleases, and, we might suppose, calculates his fishing plan by taking the labor of the others as given, as he sees it. Each knows that the distribution of fish will be proportional to labor expended among the fisherfolk: if I fish twice as long as you, I will end up with twice as much fish as you. This is not due to some kind of concern with equity (or the labor theory of value) among the fisherfolk; it is a technological fact, implied by the assumption that fishing labor is homogeneous, and all are equally likely to catch a fish in a unit of time. An equilibrium under common ownership can be thought of as a Nash equilibrium of the game where each computes his optimal fishing plan, given the labor of the others and knowing what the consequent distribution of fish would be. (A Nash equilibrium is an allocation of labor and fish to each fisherman, with the property that no one can increase his utility by deviating in his choice of labor, given what the others are doing.)

In this paper I want to discuss a well-known but poorly understood problem: how can socialists reconcile the observed paucity of cooperatives in capitalist societies with their alleged superiority on normative grounds? If cooperatives are so desirable, why don't workers desire them? If one's ideal of socialism is central planning, it is clear enough that it cannot emerge gradually within the womb of the capitalist economy. If instead it is something like market socialism, it is not clear that a discontinuous transformation of society is required. If workers want (market) socialism, they can start up here and now. If they don't, doesn't it prove that they do not want it?

I shall proceed as follows. Section I argues that the usual explanation - that cooperatives are not economically viable or that workers prefer working in capitalist firms – is not necessarily correct. The explanation may lie elsewhere, in endogenous preference formation, adverse selection, discrimination, or externalities.

Section II is concerned with the variety of cooperative arrangements. Only rarely do we find cooperatives in their pure form, with all workers and only workers having equal ownership rights. Non-working owners, non-owning workers and unequal distribution of shares are frequent. When the deviations become sufficiently large, the firms cease to become cooperatives in any meaningful sense.

Section III extends the argument of Section I by surveying the causes of cooperative failure. Some fail by success: profitable cooperatives often attract or turn into private ownership. Others fail outright, partly because they tend to be established under unfavorable circumstances and partly because of intrinsic difficulties of management.

A small puzzle: the terms ‘capitalism’ and ‘socialism’ initially present themselves as contraries, the one affirming what the other rejects. However, once removed from the dictionary, they function otherwise. The theory of capitalism is very much contained within the science of economics. The positive theory of capitalistic institutions, but also its normative superstructure, rest most easily within the language and methodology of the economist. What distinguishes the free market? It is efficient; allocation of factors of production are optimized; individuals maximize their utility; and so on. These are the terms with which justifications of capitalistic production typically begin – begin, and often end.

The socialist calculation debate is a debate about whether rational economic decisions can be made without markets, or without markets in production goods. Though this debate has been simmering in economics for over 65 years, most philosophers have ignored it. This may be because they are unaware of the debate, or perhaps it is because they have absorbed the conventional view that one side decisively won. This is the side represented by economists such as Oskar Lange and Fred Taylor who, in opposition to free-market economists like Fredrich Hayek, allegedly showed that their version of market socialism is, in principle, as efficient as capitalism.

Marx believed that what most clearly distinguished him and Engels from the nineteenth-century French socialists was that their version (or vision) of socialism was “scientific” while the latters' was Utopian. What he intended by this contrast is roughly the following: French socialists such as Proudhon and Fourier constructed elaborate visions of a future socialist society without an adequate understanding of existing capitalist society. For Marx, on the other hand, socialism was not an idea or an ideal to be realized, but a natural outgrowth of the existing capitalist order. Marx's historical materialism is a systematic attempt to discover the laws governing the inner dynamics of capitalism and class societies generally. Although this theory issues in a prediction of the ultimate triumph of socialism, it is a commonplace that Marx had little to say about the details of post-capitalist society. Nevertheless, some of its features can be discerned from his critical analysis of capitalism and what its replacement entails.

One of the paradoxes of recent political and economic theory is that, in spite of a period of extended economic difficulty, there has been a growing consensus concerning the virtues of the market economy. In particular, there has been a trend in socialist theory to argue that not only are socialism and the market not incompatible, but that some version of market socialism is the only feasible, practicable, and ethically and politically desirable form of socialism. Notable proponents of this view with whom this paper will be particularly concerned are Selucky, Nove and Hodgson. I will not, in this paper, address the question of whether the market and socialism are necessarily incompatible. Neither will I examine the whole gamut of political and ethical issues surrounding the relation of the market to democracy, freedom, individual rights, and so on – not because they are unimportant, but because they require more extended attention than I could give here. My concern will rather be with some of the economic arguments to which defenders of market socialism have appealed.

Writing in 1912, before the Bolshevik Revolution, American socialist John Spargo said that it was “inconceivable” that a democratic socialist society would ever abolish the “sacred right” of freedom of publication which had been won at so great a sacrifice. According to Spargo, “every Socialist writer of note” agreed with Karl Kautsky that the freedom of the press, and of literary production in general, is an “essential condition” of democratic socialism.

What does the Soviet record tell us about the viability, effectiveness, and efficiency of socialism?

There are several questions that arise if one examines the Soviet experience, in addition to the comparative systems aspect (i.e., the comparison between capitalism and socialism). One question relates to the impact of the experience of the Soviet Union on theories of socialism, and also vice versa: the impact and relevance of socialist theory in assessing the Soviet system. Then there is the important issue of the role of specifically Soviet-Russian circumstances: traditions, political culture, and work ethic. A poet, Voloshin, wrote, “Velikii Pyotr byl pervyi bolshevik” (Peter the Great was the first bolshevik). The eminent philosopher Nikolai Berdyaev also remarked that “Peter's methods were purely bolshevik.” Leftists of a Trotskyist persuasion argue that the Soviet Union under Stalin took the wrong turn, that the Soviet Union is not socialist at all, that it is “state capitalist” – run by a “new bourgeoisie,” a bureaucratic ruling class—and continue to manufacture other variants on this theme.While official Soviet ideology claims that the U.S.S.R. is socialist and is following the principles laid down by Marx and Lenin, this can be questioned. One can indeed show that many aspects of the Soviet economic and political scene are at variance with the anticipations of Marx and of Lenin. But from this, one need not draw the conclusion that there was a “revolution betrayed,” but rather that some of these anticipations were unreal or unrealizable.