Wednesday, July 09, 2008

Alternatives to the Price System, or, how socialist economies could work.

On of the main criticisms of socialist economies in the 20th century was that there was no way to detect whether or not a product was good or not, whether or not people really wanted it or not, and that consequently people were sometimes stuck buying lower quality products because there wasn't any sort of alternative to them. The idea was that there was one type of soap, for instance, and that it was subsidized to be really cheap, and if you didn't like that brand of soap you didn't have much in the way of alternatives that you could buy in order to get better soap. Some socialist countries varied from this model somewhat, but it's a kind of valid criticism. But there are ways around the price system.

The price system is the general economic term used to define the way supply and demand reverberate through different levels of the economy telling businesses whether they're doing a good job or not with the products they make and in stores with the products they stock. Price comes in because the assumption is that if demand for a product falls enough the makers of the product will reduce the cost in an effort to attract customers. There's a parallel reasoning for raising costs, in that raised costs discourage customers, but I see that as a justification for price gouging more than anything else. Anyways, price system includes supply and demand as well as competition. But is it the only way that signals are given to stores and to manufacturers?

There's an interesting phenomenon that's evolved in the U.S: buyers cards in places like grocery stores and bookstores. If you sign up with the store for a card, and use it every time you're there, you'll get a discount on certain products. The purpose of these cards isn't just to be nice to customers but to get specific information on buying patterns that the companies can't detect through just what sells and what doesn't sell alone. What happens to this information is that it's collated to give a certain profile to different types of buyers that is then scrutinized to make sense of what buyers buy in a particular store, in a particular area, and why they might buy this stuff, in order that the stores can make changes to increase profit that wouldn't be obvious otherwise. The same thing could be implemented in a socialist economy with limited competition, a market-socialist economy, where the socialism comes before the market, though. If there were alternatives, like one or two, just for the sake of having alternatives because they could potentially satisfy citizen's wants more effectively, the trap of having no way to tell what people like could be partially avoided. The people working in these companies would be working against each other in order to come up with better products, but with traditional means of competing through deceptive and exploitative tactics forbidden by law. This gathering of information could provide an alternative, as would a limited recognition of supply and demand within a subsidized economy.

In reality, manufacturers and stores do this sort of reasoning all the time, far beyond the cards mentioned. The dreaded focus group is a manifestation of it, as are customer satisfaction surveys. Market research is partially oriented towards finding out what exactly people want and what people think of the products offered, as well as towards finding new ways to fuck people over. Brainstorming sessions are implemented in response to the info generated by the research, some of which makes its way down to actual changes in products on the ground floor. People spy on their competition, analyze what they're doing and why if they're in fact becoming more successful. All of this is over and above just the pure indications that the price system gives. There's no reason not to think that something like this couldn't go on in a socialist society. Some may say that it's a sort of fake market, but it would potentially be enough.

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