Joseph Stalin

Economic Problems of the USSR


7. The Basic Economic Laws of Modern Capitalism and of Socialism

As you know, the question of the basic economic laws of capitalism and of socialism arose several times in the course of the discussion. Various views were expressed on this score, even the most fantastic. True, the majority of the participants in the discussion reacted feebly to the matter, and no decision on the point was indicated. However, none of the participants denied that such laws exist.

Is there a basic economic law of capitalism? Yes, there is. What is this law, and what are its characteristic features? The basic economic law of capitalism is such a law as determines not some particular aspect or particular processes of the development of capitalist production, but all the principal aspects and all the principal processes of its development - one, consequently, which determines the essence of capitalist production, its essential nature.

Is the law of value the basic economic law of capitalism? No. The law of value is primarily a law of commodity production. It existed before capitalism, and, like commodity production, will continue to exist after the overthrow of capitalism, as it does, for instance, in our country, although, it is true, with a restricted sphere of operation. Having a wide sphere of operation in capitalist conditions, the law of value, of course, plays a big part in the development of capitalist production. But not only does it not determine the essence of capitalist production and the principles of capitalist profit; it does not even pose these problems. Therefore, it cannot be the basic economic law of modern capitalism.

For the same reasons, the law of competition and anarchy of production, or the law of uneven development of capital-ism in the various countries cannot be the basic economic law of capitalism either.

It is said that the law of the average rate of profit is the basic economic law of modern capitalism. That is not true. Modern capitalism, monopoly capitalism, cannot content it-self with the average profit, which moreover has a tendency to decline, in view of the increasing organic composition of capital. It is not the average profit, but the maximum profit that modern monopoly capitalism demands, which it needs for more or less regular extended reproduction.

Most appropriate to the concept of a basic economic law of capitalism is the law of surplus value, the law of the origin and growth of capitalist profit. It really does determine the basic features of capitalist production. But the law of surplus value is too general a law; it does not cover the problem of the highest rate of profit, the securing of which is a condition for the development of monopoly capitalism. In order to fill this hiatus, the law of surplus value must be made more concrete and developed further in adaptation to the conditions of monopoly capitalism, at the same time bearing in mind that monopoly capitalism demands not any sort of profit, but precisely the maximum profit. That will be the basic economic law of modern capitalism.

The main features and requirements of the basic economic law of modern capitalism might be formulated roughly, in this way: the securing of the maximum capitalist profit through the exploitation, ruin and impoverishment of the majority of the population of the given country, through the enslavement and systematic robbery of the peoples of other countries, especially backward countries, and, lastly, through wars and militarization of the national economy, which are utilized for the obtaining of the highest profits.

It is said that the average profit might nevertheless be regarded as quite sufficient for capitalist development under modern conditions. That is not true. The average profit is the lowest point of profitableness, below which capitalist production becomes impossible. But it would be absurd to think that, in seizing colonies, subjugating peoples and engineering wars, the magnates of modern monopoly capital-ism are striving to secure only the average profit. No, it is not the average profit, nor yet super-profit - which, as a rule, represents only a slight addition to the average profit - but precisely the maximum profit that is the motor of monopoly capitalism. It is precisely the necessity of securing the maximum profits that drives monopoly capital-ism to such risky undertakings as the enslavement and systematic plunder of colonies and other backward countries, the conversion of a number of independent countries into dependent countries, the organization of new wars - which to the magnates of modern capitalism is the "business" best adapted to the extraction of the maximum profit - and, lastly, attempts to win world economic supremacy.

The importance of the basic economic law of capitalism consists, among other things, in the circumstance that, since it determines all the major phenomena in the development of the capitalist mode of production, its booms and crises, its victories and defeats, its merits and demerits - the whole process of its contradictory development - it enables us to understand and explain them.

Here is one of many "striking" examples.

We are all acquainted with facts from the history and practice of capitalism illustrative of the rapid development of technology under capitalism, when the capitalists appear as the standard-bearers of the most advanced techniques, as revolutionaries in the development of the technique of production. But we are also familiar with facts of a different kind, illustrative of a halt in technical development under capitalism, when the capitalists appear as reactionaries in the development of new techniques and not infrequently resort to hand labour.

How is this howling contradiction to be explained? It can only be explained by the basic economic law of modern capitalism, that is, by the necessity of obtaining the maximum profit. Capitalism is in favour of new techniques when they promise it the highest profit. Capitalism is against new techniques, and for resort to hand labour, when the new techniques do not promise the highest profit.

That is how matters stand with the basic economic law of modern capitalism.

Is there a basic economic law of socialism? Yes, there is. What are the essential features and requirements of this law? The essential features and requirements of the basic law of socialism might be formulated roughly in this way: the securing of the maximum satisfaction of the constantly rising material and cultural requirements of the whole of society through the continuous expansion and perfection of socialist production on the basis of higher techniques.

Consequently: instead of maximum profits - maximum satisfaction of the material and cultural requirements of society; instead of development of production with breaks in continuity from boom to crisis and from crisis to boom - unbroken expansion of production; instead of periodic breaks in technical development, accompanied by destruction of the productive forces of society - an unbroken process of perfecting production on the basis of higher techniques.

It is said that the law of the balanced, proportionate development of the national economy is the basic economic law of socialism. That is not true. Balanced development of the national economy, and, hence, economic planning, which is a more or less faithful reflection of this law, can yield nothing by themselves, if it is not known for what purpose economic development is planned, or if that purpose is not clear. The law of balanced development of the national economy can yield the desired result only if there is a purpose for the sake of which economic development is planned. This purpose the law of balanced development of the national economy cannot itself provide. Still less can economic planning provide it. This purpose is inherent in the basic economic law of socialism, in the shape of its requirements, as expounded above. Consequently, the law of balanced development of the national economy can operate to its full scope only if its operation rests on the basic economic law of socialism.

As to economic planning, it can achieve positive results only if two conditions are observed : a) it correct y reflects e requirements of the law of balanced development of the national economy, and b) if it conforms in every way to the requirements of the basic economic law of socialism.

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