Translated and Edited by Mike Baker: published by the
Movement for Workers' Councils, London 1990.
Marked up by Jonas Holmgren for the Marxists Internet Archive.
A survey of the literature of socialism or communism, otherwise so rich, shows that only an extremely meagre body of work has been written concerning the economic foundations of that form of society which it is intended should replace capitalism. With Marx we find the classical analysis of the capitalist mode of production, which concludes with the statement that, through the development of the productive forces, humanity has placed before it the choice either to abolish private ownership of the means of production, in order then to continue production on the basis of social ownership, or - to sink into barbarism. This great scientific achievement lifted socialism out of the realm of utopia and placed it on the firm ground of scientific thought. Concerning the economic foundations of communism, however, Marx gave us only a few signposts showing us by what means they could be laid. In this connection it is his Marginal Notes, known as the Critique of the Gotha Programme, which are especially significant. This wish not to treat of the question at any greater length, to give us only a few pointers, does not however represent any kind of fault in the body of Marxist theory, for to have unfolded these questions for full examination would in his time almost certainly have been premature. Such a beginning would almost certainly have ended in utopia, and it was for this reason that Marx himself warned against it. And so this problem has become to some extent a fruit from the tree of forbidden knowledge, and this it has remained to some extent even to this day, in spite of the fact that the Russian Revolution has proved that it is precisely at this historical juncture that it must be solved.
In addition to defining the general foundations of the new system of production, Marx also indicated the method of social regulation and accounting control which would find application in the new society, and which we describe as accounting according to average social labour-time. The precondition for the establishment of the general foundations of communism were that money and the market must completely disappear, and that the disciples of Marx, insofar as they concerned themselves at all with the foundations of communist production, did not proceed any further than this. In communism they saw fundamentally nothing other than a continuation of the concentration of economic resources as we have known this under capitalism, which would then bring communism into being quite spontaneously. This outlook is revealed most clearly in the case of Hilferding, who subjects to examination the consequences of a total concentration of capital in the hands of one single owner. He draws the imaginary picture of a mammoth trust and describes this in the following words:
"The whole of capitalist production would then be consciously regulated by a single body which would determine the volume of production in all branches of industry. Price determination would become a purely nominal matter, involving only the distribution of the total product between the cartel magnates on one side and all the other members of society on the other. Price would then cease to become the outcome of factual relationships into which people have entered, and would become a mere accounting device by which things would be allocated among people. Money would have no role. In fact, it could well disappear completely, since the task to be accomplished would be the allocation of things, not the distribution of values. The illusion of the objective value of the commodity would disappear along with the anarchy of production, and money itself would cease to exist. The cartel would distribute the product. The material elements of production would be reproduced and used in new production. A part of the output would be distributed to the working class and the intellectuals, while the rest would be retained by the cartel to use as it saw fit. This would be a consciously regulated society, but in an antagonistic form. This antagonism, however, would express itself in the sphere of distribution, which itself would be consciously regulated and hence able to dispense with money. In its perfected form finance-capital is thus uprooted from the soil which nourished its beginnings. The circulation of money has become unnecessary, the ceaseless turnover of money has attained its goal in the regulated society, and the perpetuum mobile of circulation finds its ultimate resting place."
According to this theory, the development towards communism is an unproblematical matter. It is an automatic and contradictionless process, which capitalism itself completes. Capitalist competition leads to the concentration of capital, and by these means large aggregations develop in industry. Within such an aggregation - for instance, a trust which combines transport, mining, rolling mills, etc., in one integrated economic community - a sphere of distribution without money develops. The higher management simply decides to which factory the new means of production (extended reproduction) are to be delivered, what and how much is to be produced, etc. According to this theory the problem of communist production is fundamentally nothing other than the further implementation of this kind of concentration, which then leads to communism quite spontaneously. Private ownership of the means of production will be superseded, for the simple reason it becomes a hindrance to the further combination of industrial establishments. With its elimination the process of concentration can develop to the full and nothing then stands in the way of combining the whole of economic life into one mammoth trust, which is then administered from above. The preconditions which Marx laid down for a communist society would thereby have been fulfilled. The market will have disappeared, because one single concern does not sell to or buy from itself. The prices attached to products also then vanish, whilst the higher administration directs the stream of products from one industrial unit to another, according to what they find to be expedient. That it should ever have been thought necessary to measure how much labour each product embodies was obviously a naive error committed by Marx and Engels.
Thus the course of development taken by the science which concerns itself with the communist economy does not assume the form of a straight line, but takes, after Marx, a different direction, to return to its former classic position only at around 1920. In this connection, it is surely a bitter irony that it was precisely the bourgeois economists who unintentionally helped the science of communism to take a generous step forward in its own development. At a time when it seemed as if the downfall of capitalism was within foreseeable reach and that communism was on the point of taking the world by storm, Max Weber and Ludwig Mises began to develop their criticism of communism. They were of course able to relate that criticism only to the Hilferdingian brand of 'socialism' and - what is essentially the same thing - Russian 'communism', whilst Neurath, the thoroughgoing disciple of Hilferding, was compelled to suffer the consequences of this. Their criticism concluded by demonstrating that an economy without any means of regulation or accounting control, without a general denominator by means of which to measure the value of products, is an impossibility. And indeed their shot had found the right mark. The result was considerable despondency and confusion in the 'Marxist' camp. In the field of economic science the impossibility of communism had been proven, simply on the grounds that, in the case of such an economy, each and every form of planned production would have ceased. Communism, which sought to prove its very right to exist precisely on the basis of the anarchy of capitalist production, showed itself to be even less amenable to a planned mode of operation than capitalism! Block then added his voice by saying their could be no question of communism before it had been demonstrated what means of control was to replace the "market mechanism". Even Kautsky lost his composure and so arrived at the most non-sensical proposals, such as fixing of prices over long periods, etc. These wild somersaults of Kautsky's nevertheless has a positive content, in that, through them, the necessity for a system of social regulation and accounting control became recognised, even if Kautsky did then conceive of this coming into being on the basis of present-day money. He believed that money would be indispensable "as a measure of value for book keeping purposes and as a method of keeping account of exchange relations in a socialist society", as well as "a means of circulation". (K. Kautsky: The Proletarian Revolution and its programme, p. 318).
The destructive criticism of communism wrought by Weber and Mises had in reality the effect of helping the study of communist economy over its moment of inertia and to place it on real foundations. It was they who summoned to life those intellectual forces which from that moment on have allowed themselves no further rest, since it was from that moment that it became possible to pursue further the Marxist method of thought in relation to the concept of the average social hour of labour.
As an opposite pole to that of state communism, various syndicalist currents began to appear around the year 1910, which sought to continue capitalist production through "syndicates", "industrial unions" or "guilds". These would then distribute their profits amongst the workers, or profits would be allowed to accumulate in a central social fund. This form of 'communism' was never subjected to any theoretical elaboration, unless we can consider as such the work of Otto Leichter entitled Economic Regulation and Control in a Socialist Society which was published in Vienna in 1923. This study is based in general upon the method of social regulation and accounting control founded upon labour-time computation, and is without doubt the best effort hitherto produced in this field. The theory of autonomous economic administration at the hands of the producer-consumers themselves here takes a good stride forwards. In it, the problems are posed quite truthfully, although in our view Leichter fails to develop them to a satisfactory solution. He also declares that, before him, Maurice Bourguin had sought to place the communist economy on the foundation of accounting control on the basis of labour-time expended, and according to Leichter the latter's methods of thought corresponded almost exactly with his own. There were, in addition, various other Marxist economists who recognised the necessity for accounting control in a communist economy to be effected through labour-hours, although none of these adopted the means of production as a category in their method of accounting. For instance Varga, in Communism, Year 2, issue 9-10, published an article on this theme. Needless to say, because of the above-mentioned error the result is valueless.
It is however not only in the sphere of economic science that progress can be seen in the definition of the problem, but also in the sphere of the political factors. The economic experts consider communism only from the standpoint of production and distribution. The revolutionary proletariat, however, in reality pursues other motives. The extent to which state communism is economically viable or not is for it fairly irrelevant. For this reason it too rejects it, because practice has proved that the productive apparatus can be taken into social ownership whilst still continuing to function as an exploitative apparatus. The Russian revolution, for instance, has indeed revealed the problem in this political light.
Were we to enquire as to what positive ideas and conceptions are today in circulation within the revolutionary proletariat concerning the new communist economy, then we would find that the idea of autonomous administration and management is fairly well developed, but that any closer indication as to how this is to be realised is lacking. Nevertheless everyone now believes that it is absolutely necessary to achieve clarity on these matters.
The plea for clarity appears very strongly in Müller-Lehning's pamphlet, Anarcho-syndicalism. He opposes the view that the immediate task is to wreak universal destruction whilst at the same time the task of discovering how society may once again be organised can be left safely to the indefinite future (ibid.; p. 4). A programme is necessary to determine "how anarcho-syndicalism may be realised after the revolution has taken place" (ibid.; p. 5). It is not enough merely to propagate the economic revolution, "but one must also subject to examination how it is to be carried through" (ibid.; p. 6). The Russian anarchists placed the self-initiative of the masses in the foreground, "but the question as to how this initiative was actually to express itself, what the masses were actually to undertake, today and tomorrow - all that remained vague and only slightly positive" (ibid.; p. 7). "Many manifestos made their appearance, but to the question of daily practice it was only very few which could give a clear and simple answer" (ibid.; p. 8). The following is a quotation from Müller-Lehning's pamphlet:
"It is necessary to say the Russian Revolution has posed the question once and for all time: what are the practical and economic foundations of a society without a wages system? What is to be done on the day after the revolution? Anarchism will have to answer this question, it will have to take the lesson of the last few years to heart, if total failure is not to find its conclusion in irredeemable bankruptcy. The old anarchist solutions, however much truth they may have contained and however much they may have been chanted in repetition, have solved not a single problem posed by real life. In particular, they do not solve a single one of the problems which the social revolution has placed before the working class." (Müller-Lehning: Anarcho-Syndicalism, p. 10).
"Without these practical realities all propaganda remains negative and all ideals remain utopia. This is the lesson which anarchism has to learn from history, and which - and this cannot be repeated too often - has been proved ever and again through the tragic experience of the Russian Revolution." (p. 11).
"The economic organisations have as their aim the disappropriation of capital and the disarming of the state. It is the productive associations of the workers which must take the place of the organs of capitalism and the state, which must function as the pillars supporting the whole of economic life. The foundation must be the factory, the factory organisations must form the germinal cells for the new economy and social organisation. The entire system of production must be constructed on the basis of the federal organisation of industry and agriculture." (Müller-Lehning: ibid.; p. 18).
"Whoever wishes to see an end to capitalism and state capitalism must replace these realities of social life with other realities and other economic organisations. That can be done only by the producers themselves. And they can do this only collectively, in and through their own organisations. Collectively in the factory, collectively in industry, etc. They must organise themselves in order to administer the means of production through their federalised industrial organisations, and so organise the whole of economic life on an industrial and federal basis." (Müller-Lehning: ibid.; p. 19).
This pamphlet, published in 1927, makes a fundamental advance compared with all others which up till now have appeared as attempting to make a contribution to the clarification of this question. It is not so much that it makes its point in compelling conceptual flourishes, but its great virtue is the fact that it does make the attempt to absorb certain experiences of the Russian revolution and to transform them into weapons for the future class struggle. The vision of a federal structure for economic life has been derived from the first period of the Russian revolution. However, the author demonstrates ad nauseam that this in reality only represented a first attempt to pose a problem, and not a single one of them can he offer a solution.
A French anarchist, Sebastian Faure, attempted to find a solution. His book Universal Happiness, published in 1921, depicts his conception of free communism. The importance of this book lies in the fact that it shows that anarchist conceptions of communist society do not necessarily exclude a system of centralised disposal and control over social production. For a close examination of the Faurian system of 'free communism' shows that it is in reality nothing other than vulgar state-communism. Indeed, the book does not bear the character of a scientific examination, but is couched more in the form of a utopian novel in which a "free communist society" is made to grow out of pure fantasy. Nevertheless, the fact that, in opposition to such phrases as "equality for all", "freely concluded agreements" and "the elevating spiritual principle of opposition to the state and state power", a system of production is depicted in which the right of control over production does not lie with the producers themselves clearly demonstrates that, in this particular camp at least, there is absolutely no fear of this particular author giving any evidence whatever of any understanding of the laws of motion applicable to a communist system!
Faure is opposed to power as a "thing in itself", and for that reason he speaks of the hundreds and thousands of threads and links which forcibly bind together against their will all who cooperate in the modern productive apparatus. He writes: "This whole organisation (i.e. his system - Ed.) is founded on the inspiring spiritual principle of free cooperation" (p. 213). We however are of the opinion that this cannot be the foundation of any system of production and reproduction. Should the producers wish to make their rights secure, whether with or without the aid of an "inspiring spiritual principle", then the whole organisation must be founded to a far greater degree upon a firm, material basis. The producers must themselves determine in their workplaces the relationship of the producer to the social product. They must calculate how much labour-time is absorbed in each product, for their labour-time is the measure of their share in the social product. Only then can the entire organisation depend, not on some "spiritual" ideal wafting upon the breeze of some abstract principle, but be founded in economic reality.
In the case of the mutual relationship to be established between the producers themselves, we find once again the same vague, vacillating basis expressed through the concept of "free agreements". Here also there is no clear foundation, no system of time-based regulation and accounting control over the stream of products from factory to factory. But without this material foundation these "free agreements" also remain nothing but empty phrases. "One tries out this, tests the other, combines them and tests the results of the various methods. The resultant unanimity takes form, makes its appeal and pushes through on the strength of its results, and finally triumphs" (p. 334). For Faure, this foundation, grounded in freedom for each and achieved through the unanimity of all, is no more than natural. "Is it not so in nature also? The example of nature is there, clear and distinct. Everything there is joined through free and spontaneous mutual accommodations... The myriad tiny elements, like grains of dust, seek each other out, attract one another, gather together and form an atom" (p. 334).
We would point out in this connection that analogies drawn from nature are always extremely dangerous, and particularly in this special case the Faurian method reveals "clearly and understandably" how wholly inadequate it is. In Faure's world everything is joined through "free and spontaneous mutual accommodations". However, what is in fact so wonderful is the way in which, without further thought, the human concept of freedom is transferred to the field of nature. In the realm of "pure metaphor", of course one can escape from any responsibility. In this case Faure overlooks completely the decisive moment at which these "free and spontaneous mutual accommodations" actually arise in nature; that moment is, of course, determined by the mutual relations of forces between the participating members. If the sun and earth conclude a "free and spontaneous agreement" with one another that the earth should revolve around the sun in 365 days, this is amongst other things determined by the mass of the sun and the earth respectively in relation to one another. This is the real material foundation on which their "free mutual accommodation" is concluded.
It is always thus that matters are ordered in nature. Its atoms, or any other form of matter in motion, enter into relations based upon a balance of opposed forces. The exact form of this relationship is determined by the specific nature of the forces at work between the two opposed yet united partners. It is for this reason that we also are pleased to adopt this example from nature, but we do so only in order to demonstrate by these means how an exact relationship of the producer to the product must be present if such a "free and spontaneous mutual accommodation" is to be concluded successfully in the conditions of human society. It is by these means that this agreement is transformed from a mere phrase into reality. Although it is obvious that Faure has never actually concerned himself with economic problems, it soon becomes apparent that he is a representative of the Neurath school, that is to say, a "natural" economist. As we have already seen, this school considers a unit of regulation and accounting control to be absolutely superfluous, and proposes to achieve the same result by means of a production plan drawn up with the help of statistics:
"It is also necessary above all to determine the total demand for, and the quantity of, each separate need. ... The communes should then make these needs known to the Central Administration Office responsible for the whole national economy, according to the number of inhabitants, whereby the officials there obtain a survey of the total needs of the 'nation'. Each commune then produces a second list indicating how much they are able to produce, from which the 'central administration' is now able to assess the productive forces of the 'nation'. The outcome of the process is very clear. The higher officials should now determine which proportion of production is to be allotted to each commune and which proportion of production they may retain for themselves". (S. Faure: Universal Happiness, pp. 215-6)
This procedure is exactly the same as that conceived by the state communists: down below - the masses; above - the officials, who retain the management and administration of production and distribution in their hands. With such a system, society is not founded on economic reality but is dependent upon the good or bad will of individuals, or upon their administrative ability - something that Faure readily admits. In order that there should be no doubt concerning the need for a central right of control, he adds: "The central administration knows the extent of total production and total demand and must therefore inform each local committee as to how much product it has at its disposal and how much means of production it must produce" (p. 218). In order to be quite clear that all this has nothing to do with any specific kind of free communism, we will compare it with the social-democratic communism described by Hilferding . We will see that the two agree with one another almost word for word:
"Exactly how, where, in what quantity and by what means new products will be produced out of the existing natural and man-made means of production ... is decided by the commissariats of the socialist society at national or local level. It is they who mould with conscious intent the whole of economic life, utilising for this purpose all the instruments at the disposal of organised production and consumption statistics, in accordance with the needs of the communities as they, the social commissariats, have consciously represented and formulated them." (Authors' emphases - Ed.)
From this it is quite clear that in this form of 'free communism' the right of disposal over the productive apparatus is given to those who are well acquainted with the tricks of the statistical art. One would have thought that the anarchists would have learned enough about political economy to have known that whoever holds control over the productive apparatus also disposes over the power in society. The "central administration" described above is compelled to provide for itself the means for making its will effective, that is to say, it must set itself up as a state. This indeed is one of the laws of motion of the Faurian system, whether this is Faure's intention or not; it is also quite immaterial whether the dish is served up with a sauce composed of "free agreements", or with the gravy of a "spiritual principle. Such condiments disguising the true flavour of the dish would not disturb the actual political and economic realities in the slightest!
The substance of the matter is not that one would hold it against the Faurian system that it seeks to forge the entire economy into one single unit; such an act of combination is indeed the end purpose of the process of development which is brought to fruition by the combined producers and consumers. Having done this, however, the basis must then be provided to ensure that they themselves - the producers and consumers - keep control of it. To achieve they must keep an exact account of the labour-hours used up, in every form of economic activity, in order that they may know exactly how much labour-time is embodied in each product. Then it is quite unnecessary for the right of decision as to how the social product is to be distributed to be handed over to any "central administration"; on the contrary, the producers themselves in each factory or other establishment can then determine this through their computation of labour-time expended.
Faure's Universal Happiness makes not the slightest contribution to our knowledge of communist production and distribution. If we have looked into this work a little more closely, it has been solely for the reason that, through making a sharp criticism of such fantasies concerning the "free communist society" it is possible to demonstrate clearly just how much progress in this sphere has been achieved over the last decade. Before 1917 it was impossible to uncover the state-communist kernel lying concealed within this mountain of misleading phraseology. Above all else it has been the school of practice embodied in the Russian revolution which we must thank for this knowledge, because it is this which has shown us in unmistakable terms exactly what the consequences are of permitting a central authority to establish itself as a social power which then proceeds to concentrate in its exclusive hands all power over the productive apparatus.
 Paragraph ending: "And so this problem has become ... a fruit from the tree of forbidden knowledge, and this it has remained ... in spite of the fact that the Russian revolution has proved that it is precisely at this historical juncture that it must be solved".
We find here yet a further example of the view, universally current amongst socialists and communists at the time of the First World War and the wave of revolutions which followed in its wake, that the proletarian revolution would be fought to a relatively rapid conclusion primarily within the European arena and within the same historical era - in short, that the First World War and the wave of European revolutions which followed it would mark the end of capitalism and the dawn of communism as a result of the proletarian revolution.
Apart from the rather obvious fact that a significant element in this belief reflected the primarily emotively based euphoria then quite understandably prevalent amongst the participating revolutionary groups, it has since come to be understood by Marxists that the resilience of the capitalist system and its capacity to absorb intense contradictory upheavals and social antagonisms is and was immense, and that consequently a great deal of further capitalist 'development' would have to take place throughout the world, but particularly in its underdeveloped periphery, before conditions would be ripe for successful proletarian revolutions in any part of the world.
 R. Hilferding: Finance Capital, trans. T. Bottomore, p. 234.
 "natural economist".
By "natural economist" is meant one who believes that a classless, non-antagonistic society must of necessity be one the economic basis of which rests upon relations founded on the exchange of goods "in kind", i.e., upon direct barter.
 "social-democratic communism".
The term "state communism" would be more applicable here.
 R. Hilferding: Finance Capital, trans. T. Bottomore, p. 28.