Why law of value really applies in socialist economies

The term law of value has exoteric and esoteric meanings. The exoteric or superficial meaning is that in capitalist type economy, relative labour values will act as an attractor for relative prices. The more esoteric meaning is that the distribution relations in all societies are constrained by the distribution of labour. In a capitalist economy the great branches of production subsist by trade and their respective revenues have at least to be roughly proportional to the populations that they support.

New Harmony Utopian community designed by Owen

New Harmony Utopian community designed by Owen

Although in a socialist economy the great bulk of the economy is publicly run, the distribution of the population accross sectors of the economy continues to exert an influence as does the fact that the population still live in households. This may seem an unexceptional observation, but communist organisations that grew up within previous class societies dispensed with the household as an institution. Think of a monastic community or Owen’s New Harmony. In such householdless communities there would be no personal property as opposed to community property. Food preparation, was communal, and childcare was either abolished as in monastic orders, or carried out communally. But if you have households then private property of the household is distinct from community property. Since the composition and consumption needs of households differ, it is impractical to give all households a uniform ration of goods. An old couple would have little need for children’s shoes or toys, for example. So a socialist economy with households has to allow some flexibilty in consumption, which they have achieved by distributing a portion of people’s income in money. In principle they could have used something other than coins and notes. They could have kept social credit accounts or labour accounts for people, but in all cases, many goods for household consumption would have something very like a price.

In a socialist society then, with households, how does the esoteric aspect of the law of value, the underlying constraint posed by the social division of labour, express itself?

1.1  Intersectoral relations

I shall divide the socialist economy into three sectors

  1. The production of means of production.
  2. The production of articles of personal consumption that are distributed for sale or charge to individual workers’ families. At this point it makes no difference whether the articles are sold for actual money, or against the debit of a labour account.
  3. The provision of uncharged services such as education, healthcare, defence, and public infrasctucture. This is not to say that being conscripted into the army is not a charge on the conscript, but that they do not individually have to pay in cash or labour credits for their military service. Similarly education costs adult society time and resources, and costs the pupils their play time, but it is assumed that there are no school fees.

I will use the subscripts 1,2,3 to denote these sectors. Sectors 1 and 2 produce physical outputs, that is to say they are materially productive in the sense of Adam Smith’s use of the term productive. I will call the output of sector 1 machines, though it also includes all other means of production, and will use the symbol m, in lowercase to indicate a flow, for the gross output of machines and the stock of machinery and equipment used in the sectors as M1,M2,M3.

Machines wear out. I assume that a fraction δ of them wear out each year. So for the sectors the flow of new machines needed to simply stand still is given as δM1,δM2,δM3. If the economy is growing there will be some surplus flow of machinery over wear and tear, set asside for growth, which I will call mg.

mg = m −( δM1+δM2+δM3)
(1)

I will assume that the working population is P divided into P1,P2,P3 working in the three sectors, and that for each year of work the government credits a person with a wage of w either by paying them cash or by recording some units into their personal consumption account in a database. The state also, for budgetary purposes has to account for the usage of machinery and equipment in different sectors right down to the individual factories, hospitals etc. The accounting unit for such charging is assumed to be the same, either money, labour hours, concievably energy, as is used for personal consumption accounts. I will use c for the charging rate for a machine. This then gives the current accounting costs Ci of each sector, assuming that the government does not charge itself interest, of

C1=cδM1+wP1
(2)

 

C2=cδM2+wP2
(3)

 

C3=cδM3+wP3
(4)

The accounting costs of each sector are made up of the charge for the use of publicly owned machinery , and the payments to the people working there. The first is a charge internal to the public sector but the government has to carry out such sectoral charging if it is to make overall budgetary decisions about the scale of the sectors. The only point at which an actual sale, with change of ownership, happens is when the output of the consumer goods industry is sold to the working population. I will call this the bread or baking industry and label the total output of the industry b and the price of bread p. If we assume for the moment that there is no mechanism by which the working population can save, then we have

pb=w(P1+P2+P3)(1−t)
(5)

where t is the income tax rate. That is to say, the price of bread times the bread output equals the after tax income that the working population gets. This is their money wage but in addition they consume a social wage of education, healthcare etc provided by public sector 3. Equation 5 gives the price of bread as a function of the money wage.

It is not so obvious how the government should set the charge for machinery used by the public sector but one obvious way is to set the charge for machines at their imputed cost of production

c=C1/m
(6)

The tax revenue plus any profit on sales of consumer goods is then used to cover the cost of the free public services and the net accumulation of new machinery

cmg+C3=tw(P1+P2+P3)+pb−C2
(7)

We have 7 equations 1 to 7 with 8 unbound variables mg,c,w,t,p ,C1,C2,C3. I assume that m, b, M1,M2,M3, P1,P2,P3, δ are fixed by the actual structure of activity so in principle the government could fix either the tax rate or the wage rate, but having done that, all the other variables are constrained. Let us look at options.

I will present a simple example and compare the effect of different wage and tax policies.

Sector P M output
1 4000000 250000 100000
2 6000000 250000 1000000000
3 5000000 250000 no physical output
  1. The wage is fixed at 1, this ends up equivalent to valuing things at labour values, no profit is made on the sale of consumer goods and income taxes are adjusted to meet the cost of the public services and accumulation. We end up with
    p c t income tax rev turnover tax rev
    0.0073 53.3 51% 7666570 0
  2. In this scenario income tax is held low at 10% and the price of the consumer goods have to rise to cover the shortfall in government revenue. Given that the physical output of consumer goods stays the same, the only effect of reducing income tax is to increase prices. The net effect is that the goverment raises most of its income from what can either be viewed as a tax on consumer goods, or on the profits of nationalised industry. Wages turn out to be the same, as does the charge for means of production, but consumer goods cost almost twice as much.
    p c t income tax rev turnover tax rev
    0.0135 53.3 10% 1500000 6166666

    The relative prices of machinery and bread now diverge significantly from labour values, with bread being sold at a premium due to the tax being levied on it.

The conclusion is that the extent to which a socialist government can disregard labour values is constrained by the level of income tax that they levy. If they rely on income tax for public revenue, then sectoral prices will be proportional to labour values. If they attempt to curtail income tax to a level too low to support public services, then the price of consumer goods has to be raised in what amounts to a sales tax to prevent the accumulation of purchasing power in the hands of the public, and thus suppressed inflation.

1.2   Intra sectional constraints

Even if you assume that the number of people allocated to make consumption goods does not change, that still leaves considerable flexibility in what consumer goods are made. Asume the intention is to adjust output to consumer wants as expressed by the goods they chose to spend their social credits on. What does this imply for the relative prices of goods?

Should these relative prices correspond to relative labour values?

Yes they must, for it is only under this condition that the attempted adjustments people make in their consumption will be compatible with the pre-determined number of people working making consumer goods. Suppose that one group of goods – say furniture is systematically undervalued compared to another group of goods, let us say clothes. Suppose clothes are priced at par for labour values and furniture is sold at a 50% discount with respect to its labour value. Note that it does not matter if the social credits are measured in hours or in some arbitrary currency units, there will always be some quantity of the currency that, averaged accross all prices, represents an hour of embodied labour. Consumers then attempt to shift part of their clothes consumption to furniture. Suppose they cut clothes consumption by the equivalent of 100 million hours of credits, and switch these credits to furniture. Since the furniture is being marked at a 50% discount, these 100 million hours of credits switched from clothing appear to be enough to buy furniture that took 200 million hours to make. Even if the workers who in the past worked the 100 million hours in the clothing industry were shifted to make furniture, that would not provide enough additional labour to make 200 million hour’s worth of chairs, tables etc.

More generally, if prices are not proportional to labour values, then shifts in purchases from one good to another will lead either to patterns of demand that to big to be met with the existing workforce, or if the demand shift goes from undervalued to overvalued goods, to unemployment and short time working in the consumer goods industry.

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19 Comments

  1. So, in a socialist economy the value of a commodity is the average quantity of socially necessary labour required to produce it, just as Marks stated.
    I have no academic background whatsoever but have never experienced any difficulty understanding that the labour theory of value would apply to any human society with division of labour. Who would have any such difficulty?

    Sent from Mail for Windows 10

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  2. Stuart remarks ”Who would have any such difficulty?” Well, I have been excommunicated from the “Marxist” church for arguing that a modified application of the law of value has to apply in a socialist society. Of course scriptural authority can be readily found for the opposite view in the writings of Marx and Engels, but Marx also remarks (Capital 1 P 169) that Robinson Crusoe’s “stock-book contains a catalogue of the useful objects he possesses, of the various operations necessary for their production, and finally of the labour time that specific quantities of these products have cost him…..these relations contain all the essential determinants of value.”

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  3. I came across an article the other day in a publication called the “Weekly Worker” in which Hillel Tiktin, a former professor of “Marxism” ( as if this were not a contradiction in terms), argued that von Mises was right when he argued that under socialism economic calculation was impossible. This evidently brought Hillel( ipse dixit!) the written approval of the Von Mises Institute.

    Now in “Capital” we read ” Book-keeping… becomes ever more necessary the more the the process takes place on a social scale…it is thus more necessary in capitalist production than in the fragmented production of handicraftsmen…and more necessary in communal production than in capitalist.” (Vol 2, p212 ) ”Even after the capitalist mode of production is abolished… the determination of value remains….more essential than ever…. the keeping of accounts.” (Vol 3, p991)

    ”People will be able to walk into a distribution point and pick up what they need” according to Hillel. So communism will let alcoholics run amock in supermarkets? “To each according to their needs” means not individually identified needs but socially determined needs, which demands greater economic calculation than under capitalism, in order to distribute the socially necessary labour among the various departments of production. Truly as Marx said, ” De omnibus dubitandum”- Be doubtful of EVERYBODY ( usually mistranslated!)

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  4. Ticktin is driven by an ideological anti- Stalinism into claiming that the Soviet economy was dysfunctional and produced mainly waste. Now those who did not inhabit Hillel’s trotskyist fantasy land, but had to face Stalinism on the harsh terrain of the battlefield, namely Hitler, Goering etc, were quite open about the Soviets having won the war because of their superior production. Hitler admitted that he would not have invaded had he imagined the Soviets could have fielded 30,000 battle tanks. But it gets worse. Another professor, this time of Japanese, John Crump, an anti-Leninist communist, agrees with Hillel. “People will be free to take whatever they choose from consumption outlets…without making payment”. And ”In the new society everyone will have the right to consume, irrespective of whether they are engaged in productive activity or not. Nevertheless, non-market socialists anticipate that people will volunteer to work, and will freely give their time and effort ..” ( Non-market Socialism 1987 p43-44)

    Where is the historical evidence for such assumptions? No wonder socialism is in the doldrums. Just try the validity of these claims out on your neighbours.

    Speaking of things Japanese, the greatest military defeat probably in history was the Soviet victory in 1945 over the Japanese Kwantung army

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  5. The Red Army swept away the Japanese army in 7 days. Why ? because it was so far better equipped. The Japanese just could not match Soviet fire power. It would have seemed incredible in 1950 that Japan would have so eclipsed the Soviet Union economically by 1980. Now the hirelings of the von Mises Institute will attribute this to the superior efficiencies of the ”Market”. But the Japanese economy was also planned. It makes no sense to argue with J.K. Galbraith that Soviet planning aimed to replace the market, while capitalist planning is to meet market demands. This is to posit in an a-historical, metaphysical manner ”the market” as antecedent to the economic exchanges that constitute the network of social relationships of which ”the market” is the conceptual expression. While there are other factors to take into account, I would suggest that a better line of investigation would be to determine to what extent Japanese planning was superior.Recall how Marx argues (Vol 3 p567-569) that with joint-stock companies capital receives the form of social capital, which ”is the abolition of capital as private property within the confines of the capitalist mode of production itself.” This clearly facilitates planning. It is no accident that the bourgeoisie talk of the market rather than of capitalism. But the leading Japanese companies until the 1980’s at any rate had lifetime employment ; there can hardly be any question of a labour market here. In any case, in the military-industrial complex many of the contracts seem to be awarded without any competitive tendering.

    I do really feel that Marxists economists need to complete Marx’s project and determine how the law of value is modified by the interactions of TNC’s operating at the level of the World Market, so as better to prepare the transition to a new form of society that is grounded in social reality and can address social needs rather than the fantastical ‘wants’ of an ecologically impossible communist cornucopia a la Ticktin/Crump.

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  6. The Soviets were aware of the irrationalities and inefficiencies in their system. Suslov, one of the main Soviet leaders, acknowledged in 1956, ”our architects, carried away by extravagances, gave little thought to what it would cost the people….and the collective farm personnel still very often do not figure out the cost of a ton of grain or meat…due to the fact that our economists have not elaborated the problem of exactly how the law of value operates in our economy.” (1979 Meek Studies in the Labour Theory of Value” p284). Stalin had already argued that the law of value ”extends to commodity circulation, to the exchange of commodities through purchase and sale, the exchange chiefly of articles of consumption. Here in this sphere the law of value preserves within certain limits of course the function of a regulator.” This was because the prices of commodities produced by state industry depended largely upon wage costs, which in turn depended largely upon the prices of wage-goods i.e. upon the the prices of commodities that came under the the operation of the law of value e.g. collective farm products. Stalin agrees under communism the law of value will cease to function. ( Ibid. p279-281)

    There is no doubt that this was the prevailing view: Engels in a letter of 1884 to Kautsky writes, ”you say that …..with the abolition of commodity production value too will be changed, that value as such will remain, and only its form will be changed. In actual fact however economic value is a category peculiar to commodity production and will disappear together with it.”

    In his Critique of The Gotha Programme Marx writes:

    “”Within the co-operative society based on common ownership of the means of production the producers do not exchange their products; just as little does the labour employed on the products appear as the value of these products, as a material quality possessed by them, since now in contrast to capitalist society, individual labour no longer exists in indirect fashion but directly as a component part of the total labour.”

    Well and good, but what exactly does this mean? And how does it square with ””even after the capitalist mode of production is abolished…. the determination of value still prevails in the sense that the regulation of labour-time and the distribution of social labour among various production groups becomes MORE ESSENTIAL than EVER (Vol 3 p991)

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  7. Ticktin says we cannot have socialism without relative abundance. Relative to what? The needs of society? Which society? the U.S.? I suspect he is here influenced by Trotsky’s argument in “The Revolution Betrayed” that “Marxism…. constructs the communist program upon the dynamic of the productive forces. If you conceive that some cosmic catastrophes going to destroy our planet in the fairly near future, then you must of course reject the communist perspective…

    The material premise of communism should be so high a development of the economic powers of man that …the distribution of life’s goods, existing in continual abundance …will not demand any control except that of education, habit and social opinion.” and ”By the lowest stage of communism Marx meant a society which from the very beginning stands higher than the most advanced capitalism.” and ”The strength and stability of regimes are determined in the long run by the relative productivity of their labour.” Even if this thesis were ever true, which personally I think not, the cosmic catastrophe is upon us and we need to think immediately of ways to limit the production of goods, which capitalism has developed to an extent and variety far beyond what is humanly necessary or Marx and Engels could even have imagined. Does this make socialism impossible? Quite the contrary, it makes it even more necessary than ever, and I will argue we do not need ( and in fact it is ecologically and even geologically impossible) to attain Western standard of life to attain socialism.

    Let us take the example of the Chinese village of Upper Felicity as described by Jack Chen who went to live and WORK with the peasants for a year.

    He explains “Each person in the commune receives a basic allocation of food… arrived at in the following way.

    Out of the gross output of the work team the grain tax (tax in kind) is paid to the state.. which varies from year to year..As output increases the percentage paid as tax decreases.
    The net output after tax is divided after democratic into four unequal parts. One part, 20%, is set aside as the reserve fund. This includes the collective grain reserve.. the fund for investment and welfare, which was 1% of output in 1969 and gave members care when sick or too old to work…

    The distribution fund into two fairly equal parts… the first half is divided by the total number.. and this gives the amount of cereal grain allocation for each person in the team (village).

    The other part of the distribution fund is used for the payment of work-points earned…every able -bodied adult member is rated at 10 work points a day, but more strenuous work was rated at 12 points and lighter work at 7. From each etc(1973 Chen, A Year in Upper Felicity p157-159).

    Here we see communism in operation, albeit at a low economic level. No value relations to be sure, but not quite communism, be cause where you find the Leninist party there cannot be real democracy.

    But it seems to me at any rate that in a more complex economy the distribution of labour-time and the system of remuneration to attain the appropriate distribution is not so apparent.

    Berki in a most absorbing book (1983: Insight and Vision: the problem of communism in Marx’s thought) concludes ”Marx’s thought is obstinately confronted by communism as its chief problem.” We should not ”identify Marx’s communism with an ideal picture of communist society.”

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  8. If one is a materialist , one has to examine real societies that took the socialist road, examine the problems they faced, what they got right and what wrong, and draw conclusions; not posit a communist society in some future, fantastic worldwide utopia which will never arrive and the earth’s ecology will never support.

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  9. Marx writes to Kugelmann:

    “Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves.

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  10. ”The Roman proletarians became, not wage labourers but a mob of do-nothings more abject than the former “poor whites” in the southern country of the United States, and alongside of them there developed a mode of production which was not capitalist but dependent upon slavery. Thus events strikingly analogous but taking place in different historic surroundings led to totally different results. By studying each of these forms of evolution separately and then comparing them one can easily find the clue to this phenomenon, but one will never arrive there by the universal passport of a general historico-philosophical theory, the supreme virtue of which consists in being super-historical.” So Marx in one of his letters; but Marx, the greatest champion of oppressed humanity, has allowed himself to be deceived by aristocratic Roman propaganda of the ‘bread and circuses’ type. In fact far from being a mob of do-nothings most Romans who lived in Rome and other towns worked for a living as is easily attested from Roman comedy as well as other sources. They would be mostly self-employed, though wage labour is now believed to be have been more widespread than hitherto imagined. However, most of these wage earners would be day labourers, their wage being additional to other means of income. In short although there was no permanent body of labour outwith slaves, commodity production was considerably more widespread than Marx envisaged (Temin, 2013 ”The Roman Market Economy”).

    Some Marxists argue that the law of value operates only in the capitalist mode of production where wage labour is dominant, but I will argue that this is not Marx’s view.

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  11. Marx observes, “If we go back to the great investigator (i.e. to the 4th century BC) who was the first to analyse the value form …Aristotle” ( Capital I p 151) and ” the production and circulation of commodities do not at all imply the existence of the capitalist mode of production….as capital production i.e. capital develops, the general laws governing the commodity evolve in proportion…..We see here how even economic categories appropriate to to earlier modes of production acquire a new and specific historical character under the impact of capitalist production.”‘( Ibid. Pp 949-950). ”Capitalist production is the first to make the commodity into the general form of all produce” (P951). But there is this difference: under capitalist production the commodity ”can be said to contain both paid and unpaid labour”(P954). This is the source of surplus value, a category that applies in the Ancient World only by way of exception, but is fundamental once wage-labour becomes dominant. Thus in the ancient world there is no drive as it were to increase relative surplus value i.e. to increase the productivity of labour by substituting for labour new techniques of production. The distinguished ancient historian Moses Finlay remarks that Vitruvius’ ”De Architectura” only deals with machines as an aid to enable labour to execute difficult tasks and never as a substitute for it. The ancients for example understood the basis of steam power but only used it for toys and gimmicks.Thus the category value has a different form in pre-bourgeois societies.

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  12. Marx explains, “Thus, although it is true that the categories of bourgeois economy are valid for all social formations, this has to be taken with a grain of salt, for they may contain them in an advanced, stunted, caricatured etc. form.” ( A Contribution to the critique of Political Economy” P211).

    The problem Marx is wrestling with is how to develop terminology to articulate the concepts necessary to explicate economic relationships. Thus in analysing ancient slavery he asserts, “In the slave system, the money capital laid out on the purchase of labour-power plays the role of fixed capital in the money form, and is only replaced as the active life of the slave comes to an end. That is why in Athens the profit that a slave-owner drew…was simply considered as interest (Capital2 P554-555). Here Marx is illustrating by way of analogy. Had he not condemned others like Mommsen for seeing capitalism at work in the ancient world? Similarly one finds economists talking of capital under socialism, when they should really say past labour.

    So when we employ value as a category under socialism we use it in a restricted form by way of analogy.

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  13. Where does the bizarre idea come from that under socialism the wheels of production will run so efficiently compared with capitalism that eventually abundance will prevail? One source of error has been the interpretation that ”from each according to his ability, to each according to his need” means individual want and not socially determined need. If we have no idea in what proportions means of subsistence will be consumed it is immediately clear that social planning would be impossible. I remember attending a debate at Glasgow University between Professor Nove, a bourgeois socialist, and Professor Hillel Tiktin, a Trotskyist. “Under your society, Hillel, who will get to eat the fillet stake?” Hillel had no reply. Remember that Marx uses determine to mean ‘set limits to’ and ‘ determinatio est negatio’, in other words the plan will limit the consumption of certain goods and ban others altogether. For example how about facial surgery to make one supposedly more beautiful ? How might this ‘need’ be met? on the criterion of perceived ugliness or what?

    Another source of confusion has been in the development of ‘the forces of production theory of history’. Marx had pointed out that capital posits barriers to the development of wealth (Capital 3 Pp 350 ff) Some Marxists have interpreted this to mean that once socialism has removed such barriers the resulting untrammelled development of the productive forces is the precondition for socialism. The quotes above from Trotsky demonstrate this and such an understanding informed his arguments that Russia was too backward for socialism, which anyway could not be built(!) in one country. Socialism has to outperform capitalism.

    But Marx had already in 1870 argued, “The English have all the material necessary for the social revolution. What they lack is the spirit of generalisation and revolutionary fervour.” Marx is an economic determinist, not an economic reductionist.

    In this day and age how could a socialist China for example even contemplate outperforming current Chinese capitalism? The working day is already 12 or even 14 hours per day, sometimes 7 days a week, while the environment is so polluted in all areas that it is difficult to envisage how long it might be able to sustain its population. Marx again had argued, ”production in contradiction and indifference to the producer. The real producer as a mere means of production, material wealth as a means in itself. And so growth of this material wealth is brought about in contradiction and at the expense of the individual human being…..instead of production controlled by existing needs, the quantity of products made is determined by the constantly increasing scale of production….. achieved only by producing for the sake of production.” (Capital I pp 1037-38). Under socialism we must limit our needs. To this end we might for example curtail the working week, but the expansion of capital posits a barrier to this too.

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  14. Respect for the environment also posits a barrier to capitalist production. The Chinese Marxist Minqi Li (China and the 21st Century Crisis 2016 ) argues that ecological and other social contradictions will overwhelm Chinese capitalism within the next decade. But he has also argued that so degraded is the Chinese environment that in future China under socialism will be able to sustain a population of only 500 million, and will necessitate a return to the countryside and the commune system. In other parts of the world ecological pressures will also necessitate the discovery of more benign modes of economic organisation( Angus, ”Facing the Anthropocene” 2016) It is rightly pointed out by Angus that the Soviet Union also faced some environmental nightmares. Here however he commits a monstrous falsehood with a diabolus ex machina in the form of Stalin. Angus says, “Tragically the political caste headed by Stalin abandoned the Marxist view of socialism as sustainable human development, arguing that the Soviet Union could outcompete capitalism through a forced march to full industrialisation”(Ibid. p209 ). In fact Stalin at the beginning was the more moderate, probably influenced by Bogdanov and Lunarcharsky. Later of course Stalin did adopt a plan for the industrialisation of Russia; Trotsky accused him of adopting his plan! As we have seen Trotsky is the most eloquent espouser of the productive forces theory of history, and his acolytes like Tiktin still seem to adhere to it.

    ( Anyway, all the Leninists had similar ideas on socialist economics cf Ch 19 in ”The new Value Controversy” 2004)

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  15. Trotsky, as we have seen above, argued, ”…the distribution of life’s goods, existing in continual abundance …will not demand any control except that of education, habit and social opinion.” He of course is not the only distinguished Marxist to argue so, but I can find no evidence for such a view in either Marx or Engels. Marx’s own view is the use of certificates of labour, as he explains in “The Critique of the Gotha Programme”:

    ”Society gives him a certificate stating he has done such and such an amount of work….and with this certificate he can withdraw from the social supply of means of consumption as much as costs an equivalent amount of labour.” Note that there is no talk here of freely ”picking up” what one assumes to be one’s needs. There has to be a cost to the consumer. Now some ”scriptural marxologists” denounce this as a kind of labour money, but it is no more so than a theatre ticket, as Marx himself affirms. I shall here repeat in general the arguments of Cockshott and Cottrell (” Towards a New Socialism”1993) .

    The labour hours performed are credited to a citizen’s social labour account and debited at a direct debit terminal as such hours are realised in means of subsistence.

    Such certificates do not circulate as they can only be directly exchanged against consumer goods. Of course a citizen might exchange her theatre ticket for a cinema ticket, but such is no more commodity exchange than if I give my neighbour flowers from my garden and she gives me vegetables from hers.

    Such certificates would not be transferable, any more than a modern direct debit card, and of course citizens would have only one.

    Such certificates could include vouchers and rationing limits. Vouchers would be cancelled after a single use, while the ration element would limit the number of acquisitions one might make of certain items, thus circumscribing consumption and fine-tuning the planners identification of needs.

    Such certificates would not serve as a store of value as they would encode a use- by date on them. In the case of perishable goods this might be a monthly date, thus again facilitating planning and avoiding waste.

    It should be noted that what we have here is the exchange of equivalents, quite analogous with commodity exchange, and some have argued that the system outlined here is only valid for a lower, transitional stage and quote Marx to the effect that in ahigher state of communism we would have a distribution of ”to each according to his needs.” But already in more enlightened capitalist societies it is recognised that some have greater needs than others and such needs are provided for, but it should be stressed that here too such needs are socially determined and met only within certain circumscribed limits.

    What is really interesting is the example of Upper Felicity, where the consumption fund was divided into two parts, one part to provide all members of the village with the same basic amount of food, and the other to distribute more to those whose work was more energy demanding i.e. according to their needs. Certainly the concept of variable work points demands greater consideration, as we decide how labour time is to be distributed appropriately among the various departments of the economy.

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  16. Marx asserts, ”On the basis of communal production, the determination of time remains essential…..economy of time, to this all economy ultimately reduces itself…..economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production. It becomes law there to an even higher degree. However, this is essentially different from a measurement of exchange values (labour or products) by labour time”(Grundrisse pp172-173). And further, under socialism ”necessary labour time will be measured by the needs of the social individual, and…disposable time will grow for all… The measure of wealth then is not any longer in any way labour time but disposable time” (Ibid. P 708).

    ”Time” says Augustine somewhere, ”I know what it is, provided that no one should ask me.” The value of a commodity is the social labour time necessary for its reproduction. Such time is abstract time, the concept of time as an independent variable, divisible into constant, equal units. Such a concept develops in Western Europe in tandem with the development of capitalist social relations. It is for example introduced in Japan during the Meiji Restoration as a component of the development of capitalism. ( Postone ”Time, Labour and Social Domination” 2003).

    So to return finally to our original question: does a modified form of value assert itself under socialism in the sense that Marx affirms that ”even after the capitalist mode of production is abolished…. the determination of value still prevails in the sense that the regulation of labour-time and the distribution of social labour among various production groups becomes MORE ESSENTIAL than EVER (Vol 3 p991). One might argue that we should employ a different category from ‘value’ but it is indicative that Marx himself uses the category of constant capital to explicate the role of slave labour in the slave mode of production, again clearly by way of analogy.

    So under socialism even more accountants, or today computer programmers, will be necessary to plan in advance the regulation of labour time, which as I understand it must also be abstract time, and its distribution, and to keep accounts of this. The real difficulty is, if the errors of Soviet central command planning are to be avoided, how goods are produced of the requisite quality and the socially necessary time for such production observed. That is really another question but we remember that for a use value like electricity there are intermediate and end users. So after the utility company has agreed its planned output targets with the central planning board it concludes contracts with the intermediate users. The board of administration of the utility consists of 1/3 workers in the utility, 1/3 workers from enterprises of intermediate users and 1/3 ordinary members of the public chosen by lot. It is clear that the latter two groups have an interest in ensuring the electricity utility meets its targets both qualitatively and timorously.

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