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.
Up to this point we have considered social production only as simple reproduction. Distribution of the total social product takes place in such a way that all the means of production and raw materials used up are again replaced, whilst individual consumption accounts for the remainder. In this form of distribution, the total of social production remains the same, the same net quantity of goods are produced; that is to say, society does not become any wealthier. The intrinsic end-purpose towards which the principle of "consumption according to need" tends to gravitate, and which is also motivated through the spontaneous increase in the population, is however that which demands that that necessary degree of enlargement of the productive apparatus is aimed for which will be sufficient to achieve both these aims. This then has as its necessary outcome a reduction in the quantity of product hitherto assumed to have been assigned for individual consumption; a part of this must now be invested in the task of enlarging the productive apparatus. This inevitably means that the individual producer can no longer receive back from society the full yield of that individual's labour.
Under capitalism the extension of the productive apparatus, or accumulation, is a motive and responsibility of the individual capitalist group. Whether or not and to what degree the productive apparatus is to be renewed is decided by it alone. With the elimination of private property in means of production, however, accumulation assumes a social character. Society itself then decides how much product or how many labour-hours are to be deducted during the coming production period from the total labour yield and invested in the further extension of the productive apparatus. Thus the problem confronts us as to how this deduction is to be carried out. The solution generally adopted, such as has been applied in practice in the two examples of Soviet Russia and Soviet Hungary and such as has been afforded definite status in the theoretical literature, is implemented by means of an increment added to the prices of products to take account of the needs of accumulation. If we have already been at pains to demonstrate that a price policy infringes the principle of a direct relationship of the producer to the product of the producer's labour, in just the same way as this occurs under capitalism; and if this can then serve as a means for concealing the true state of affairs of economic life, in an exactly analogous way can it now be demonstrated that by this means both the production budget and the indices controlling accumulation come to be veiled in mystery. If it is necessary to determine how much labour, over and above the needs of simple reproduction, society needs to deploy for the purposes of investment in the extension of the productive apparatus, then it is necessary to know as a first requirement how much labour has been absorbed in simple reproduction.
Leichter has made an approach towards a solution of the problem, in that he places production on the basis of labour-time computation and advocates that the production time for each partial process should be exactly calculated. He has, however, spoiled his own broth, in that he prejudices the viability of the whole system of labour-hour computation through his advocacy of a price policy. The productive establishments may pursue the most exact system of book-keeping for all partial processes and have brought all factors such as depreciation, raw materials, etc., within the purview of their system of accounting - nevertheless the "science of prices" practiced by the supreme management must celebrate its orgies and so render all this necessary book-keeping useless, so that society has once again no way of knowing how many labour-hours are actually consumed in each partial process. In other words, it becomes impossible to ascertain how many labour-hours have been consumed in total reproduction. It thus of necessity also becomes impossible to determine how many labour-hours must be laid aside for investment in the extension of the productive apparatus. If the aim is to elevate the accumulation process to the level of a consciously implemented procedure, then it is above all necessary that the time required for simple reproduction be a known quantity, and the observations we have made on this matter show that this can be exactly revealed and made known only through the generally applicable formula (p + c) + L. In the case of the total production process, this becomes
(Pt + Ct) = Lt (Index t = total)
The question of the expansion of the productive apparatus will in the communist future become one of the most important in society, because it is a factor contributing to the determination of the length of the working day. Were, for instance, the Economic Congress of the Workers' Councils to reach a decision that the productive apparatus should be expanded by 10%, this would then require that a mass of products amounting to 0.1(Pt + Ct) should be withdrawn from the sphere of individual consumption. Once the construction tasks associated with these particular accumulation measures had been completed, production would then continue according to the formula 1.1(Pt + Ct) + Lt.
The next question to be asked is: how is the general decision to implement a rate of accumulation amounting to 10% to be reached in practice? In other words, how is the deduction from the sphere of individual consumption to take place? It will be recalled that, during our examination of the process of simple reproduction, it was demonstrated that the entire social product would be consumed by society if individual consumption was to take place according to the formula:
FIC = L - (Pu + Cu)
L + Lu
(To achieve a simplified representation, we have not included the mixed establishments in the formula; in principle this makes no difference).
Now however, in the new situation, individual consumption must be reduced by a factor of 0.1(Pt + Ct), whereby a mass of products equivalent to L- 0.1(Pt + Ct) - (Pu + Cu) would remain available for consumption. With a 10% expansion of the productive system, the Factor of Individual Consumption (FIC) would be modified as follows:
FIC = L- 0.1(Pt + Ct) - (Pu + Cu)
L + Lu
By this means, the process of accumulation is integrated into the Factor of Individual Consumption, and there thus comes into being a general social fund amounting to exactly 0.1(Pt + Ct) labour-hours, with the completion of which the general decision originally adopted by the Economic Congress of the Workers' Councils has been fully implemented.
The foregoing observations lay claim to possessing no more significance than that of theoretical generalisations, in the sense that they show how accumulation can and must be fully and consciously regulated and integrated with the Factor of Individual Consumption. Should it not be so integrated, the addition of a price increment becomes unavoidable - in other words, the actual production times will become concealed. Furthermore, in a year in which a higher rate of accumulation has been achieved, say 10%, a correspondingly longer production time will be required than in a following year in which, for instance, only 5% accumulation is attained, the general conditions of production remaining the same. Thus, in such a case, we have fluctuating production times, causing unforeseeable complications in the production budget and in the distribution of the product. The means and methods according to which the deduction on account of accumulation is to be implemented are thus decided and resolved within the economic process itself; they are prescribed by the very laws of motion which underlie the production of the product stream itself. For that reason their movements are circumscribed within firmly defined limits.
The determination of the rate of accumulation, on the other hand, is not implemented through the material process of production as such, but can be determined in a variety of ways. In our above example we have assumed a general expansion of the productive apparatus by 10%. There is thus made available out of the general accumulation fund a factor of 0.1(P + C) for the extension of means of production in each productive establishment. A special instruction from some authority or other is not required. The objective course of production itself reveals quite clearly the amount for any claim of a withdrawal from the accumulation fund put forward by any one productive establishment.
To conceive of an expansion of the productive apparatus at a unified rate amounts, however, to an unreal assumption. In reality there will be branches of production which require no extension whatever, others for which a rate of accumulation above the average rate per cent is necessary. For this reason it will be seen to be a useful principle that only those productive establishments which require expansion should be allocated an accumulation fund as a part of the general GSU budget.
Nevertheless, the political and economic conditions prevalent during the early inceptive period of communism will make it imperative that the proletariat keep tight hold of its right even to an irrational mode of determining and allocating accumulation, if in its immaturity it occasionally so decides. The decisive factor is that, in the absence of a central authority exercising the right of control over production, there can also be no central authority exercising control over accumulation - in this sphere also the right of control must lie in the hands of the producers themselves.
An example of an irrational mode of allocating accumulation would be, for instance, if each productive establishment were to receive an increase of 10% in (P + C) without any account being taken as to how much of this expansion was really necessary at any given stage of economic development. Should such an industrial establishment form part of a production group or "guild", the practical outcome of the application of such a measure would be that the associated industrial establishments would together take steps to form an accumulation fund for the entire guild. The relevant industrial organisations would then decide according to what method and to which industrial establishments that fund would be applied. In one case they could decide that underproductive establishments should be better equipped in order to enable them to reach the average level of productivity, whilst in another case a more rational decision might be to not add any new material resources whatever, and instead to take measures to eliminate the relevant establishments altogether. The power to enact these decisions must, however, lie in the hands of the producers themselves if a situation is to be avoided in which a screwing up of productivity is directed against their interests, as occurred in Hungary. In each and every such case an extension of production or any increase in productivity - factors which stand in organic association with a quantitative extension of the productive apparatus or a qualitative improvement in its technological level - must be the result of consciously determined measures taken by the producers themselves.
Furthermore, it is also possible that an entire production group requires no extension whatever of its productive plant and equipment, because it is already fully capable of satisfying all demands likely to be placed upon it by society. In such a case in would be possible for the relevant industrial organisations to adopt a decision to place their entire accumulation fund at the disposal of those industrial establishments which stand in need of an exceptionally large degree of expansion.
In the early inceptive period of a communist economy, it is likely that decisions not to engage in accumulation would occur quite frequently. For communism will require a different disposal of industrial resources to those which we know today. Many types of factories will become superfluous, whilst in the case of others there will be too few. With the establishment of a communist economy, the subordination of production to real needs is brought to the forefront of attention; a colossal organisational and technical labour is then commenced upon, which almost certainly will not proceed without its disagreements and frictions. Thanks to the twice and thrice-blessed "market mechanism" so beloved of capitalism, which allegedly has matched production to needs for centuries, the proletariat is, at the very moment of its assumption of social power, burdened with a productive apparatus in which at least half of all labour-power required to be expended in its operation is wastefully and unproductively applied, and which is matched not to the real needs of millions of workers, but only to their intrinsically limited purchasing power:
"A larger part of the workers employed in the production of articles of consumption which enter into revenue in general, will produce articles of consumption that are consumed by - are exchanged against the revenue of - capitalists, landlords and their retainers; state, church, etc.) and a smaller section will produce articles destined for the revenue of the workers. ... The workmen, if they were dominant, if they were allowed to produce for themselves, would very soon, and without great exertion, bring the capital (to use a phrase of the vulgar economists) up to the standard of their needs." (K. Marx: Theories of Surplus Value, Part 2, Chap. 18; trans. by R. Simpson; Lawrence & Wishart, London, 1969; p. 580)
The conversion of production to the satisfaction of needs thus brings with it as its necessary consequence the transformation of the entire productive apparatus. Those industrial establishments working solely for the satisfaction of the ephemeral luxury requirements of the bourgeoisie are closed down, or are reorganised as quickly as possible, so as to enable them to satisfy the needs of the workers. Just how rapidly such a re-organisation can be carried out we have been given an opportunity to observe during the War and in the years immediately following it. In the first case the greater part of the productive apparatus was converted to the production of war material, only to undergo reorganisation once again after 1918 for the purposes of "production for peace". Further, let it be noted in passing that capitalism itself in not above switching off its famous market mechanism whenever the task becomes that of organising production for the satisfaction of its "special needs" - particularly those of war!
The organisational transformation to a communist economy can, in spite of the colossal attendant difficulties, be carried through relatively rapidly, whereupon the satisfaction of such staple needs as clothing, food and housing become the decisive factors. For one thing, it is likely, particularly in the early stages of a communist society, that an appreciable portion of total productive resources will be applied directly to the production of those materials which find application in the construction of housing and living accommodation - a perennially scarce resource in proletarian life under capitalism, and which, under communism, would need to be expanded as rapidly as possible. Expressed in brief: the entire productive apparatus undergoes a fundamental transformation according to need, as this is expressed through the instrumentality of the consumer cooperatives.
The first and inceptive stage of communist production will thus be characterised by the pronounced growth of certain branches of the economy and an equally pronounced shrinking of others. Under these circumstances, there will be no question of a homogenous and uniform rate of accumulation for all sectors of the young communist economy. Nevertheless, irrespective of any muddle which might quite likely attend the feverishly rapid conversion of the economic base, the proletariat should not allow itself to be seduced into renouncing its foremost birthright: its right of disposal over the productive apparatus and the accumulation fund. Even a possible uneconomic or irrational mode of allocating the latter would be justified if it was found to be an unavoidable outcome of serving and applying that higher principle.
Apart from the standard forms of expansion of the productive apparatus, which are implemented through claims placed by the industrial organisations upon the accumulation fund, there are other special industrial tasks, such as the construction of bridges and railways, enlargement of major road arteries, the construction of major defence barriers against the sea, etc. These tasks generally require several years for their completion. During this time the most varied products, materials and means of consumption are supplied by society to satisfy the needs of the workers engaged therein, whilst in the meantime no product is produced which might compensate society for the resources it has supplied. This particular form of the extension of the productive apparatus consumes not a small part of the total social product. As a consequence, a significant number of debates at economic congresses will of necessity need to concern themselves with reaching decisions as to the scale upon which these construction tasks are to be undertaken. In this way society as a whole makes giant strides along the path towards its higher development, since the more the productivity of the apparatus of production can be raised and the more readily social needs are fulfilled, the more does the capacity of society to carry through the most complex and developed functions increase:
"On the basis of social production, it would be necessary to determine to what extent it was possible to pursue those operations, which withdraw labour-power and means of production for a relatively long period without any useful product or useful effect during this time, without damaging those branches of production that not only withdraw labour-power and means of production continuously or several times in a course of a year, but also supply means of subsistence and means of production. With social production just as with capitalist production, workers in branches of industry with short working periods will withdraw products only for a short time without giving other products back in return, while branches of industry with long working periods will continue to withdraw products for a long time before they give anything back. This circumstance arises from the material conditions of the labour-process in question, and not from its social form." (K. Marx: Capital, Vol 2, Pt. 3, Chap. 18; Penguin Books; p. 434).
"If we were to consider a communist society in place of a capitalist one, then money-capital would be immediately done away with, and so too the disguises that transactions acquire through it. The matter would be simply reduced to the fact that society must reckon in advance how much labour, means of production and means of subsistence it can spend, without dislocation, on branches of industry which, like the building of railways, for instance, supply neither means of production nor means of subsistence, nor any kind of useful effect, for a long period, a year or more, though they certainly do withdraw labour, means of production and means of subsistence from the total annual product. In capitalist society, on the other hand, where any kind of social rationality asserts itself only post festum, major disturbances can and must occur constantly"(K. Marx: Capital, Vol 2, Pt. 2, Chap. 16; Penguin Books; p. 390).
In the above paragraphs the problem is set forth with the greatest clarity and the solution in general terms is simultaneously given. Nevertheless, it is no more than a loose and generalised solution, which still requires to be given more concrete form. And here once again there is a parting of the ways between the contending views. On the one side we have the Social Democratic and Bolshevik defenders of nationalisation or central economic administration, and on the other side the representatives of the Association of Free and Equal producers. In just the same way as contemporary vulgar "marxism" considers a central economic administration to be an essential instrument in making provision for the necessary social costs, so also does it consider this to be necessary for the solution of the problem posed above.
According to the Social Democratic or Bolshevik view, the obvious solution is that the central administration of the entire economy determines quite arbitrarily the course to be taken by the whole system of production and distribution, and so also takes into account those special cases mentioned above. Indeed, this question forms one of the main arguments through which the advocates of pragmatic social-democratic perspectives believe that the necessity for the administration of the entire economy through a centralised control authority i.e., through the State, is proved. They make the point that crises and other social disturbances such as occur under capitalism as a result of carrying out such tasks can only be avoided when the entire system of production is supervised and controlled from above by an arbitrary subjective authority. Furthermore, this is indisputably the case - under both capitalism and State socialism! For "marxists" of this calibre proof is thereby given that the State must of necessity manage and administer the entire economy in all technical, organisational and economic respects. The methods which the State then applies in order to control production and distribution, in order subsequently to solve the aforementioned problem confronting it by the device of substituting for it purely technical-organisational, i.e., subsidiary ones - these methods we are able to find in the oft-quoted Hilferdingian recipe:
"Exactly how, where, in what quantity and by what means new products will be produced out of the existing and man-made means of production ... is decided by the social 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." (R. Hilferding: Finance Capital, trans. T. Bottomore, p. 28.)
We have already indicated above as to what extent and to what purpose such statistics suffice, how in the realm of theory they amount to no more than a blueprint for a communism of a prison-camp, and how in the realm of practice they must for that reason inevitably collapse. Over and above this, however, it is clear that such statistics only serve any purpose when they are based upon a system of economic regulation and control through social book-keeping. A system of statistics which indicate how many tonnes of coal, grain, iron, etc., have been consumed, whether measured in quantity, by weight or by whatever other unit of measures and in respect of whatever goods, is for the purposes of social regulation of production and distribution completely valueless One may conjure up as many sophisticated indices and formulae as one wishes, if the fundamental unit of measurement is not one based upon social relations, is not one which expresses the relationship of the producer to the product, then each and every method of statistics dreamed up for the purpose of regulating social production and reproduction can only be quite worthless. The whole meaning and purpose of the social revolution is precisely that it is concerned with transforming, indeed turning upside down and placing upon its feet, the existing capitalist relation of the producer to the product. It was the great achievement of Karl Marx that he perceived this relationship in all its historical significance, and proceeded to develop it into an exact science in application to the capitalist mode of production. With the transformation of the social order the relationship of producer to the product is also transformed, and the new mode of production requires precisely that a new definition of this social relationship be elaborated.
The social revolution secures this new relationship and places it on a firm foundation, by offering to each worker a claim to just so much social product as corresponds with the labour-time that worker has placed at society's disposal. The revolution establishes the system of labour-time computation and accounting throughout society as the instrument for achieving that new relationship.
The lords of statistical apparatus do not consider even for a moment the possibility of establishing the new relationship, and for that reason it does not even occur to them to introduce the system of labour-time computation. Instead, they make use of the old established categories and methods of the capitalist society, such as the market, prices, commodities, money - tools with which it is impossible to ensure control even over simple reproduction. The State-capitalist system has not the faintest conception of just how much labour-time has been consumed in a particular sector of production, and even less idea how much labour-time has been consumed in order to achieve simple reproduction!
That a State-communist - or, even more to the point, a State-capitalist - social system might find the means to compute in advance "just how much labour, means of production and means of consumption it can employ without causing any disruption to any other branch of the economy - such as would occur, for instance, with the construction of railways over a longer period of time without any compensating supply of means of production or consumption or any other useful social service being rendered" - this, of course, would be for such a social system completely out of the question! These problems it must and would solve in the same manner as that by means of which they are solved under capitalism - by chaotic and arbitrary rule of thumb. The damage thereby inflicted in other branches of production would then have to be made good by whatever means lie to hand; clearly this offers no solution to the problem; in fact, it amounts to leaving affairs as they were under the old system.
Communism cannot employ such a method, and furthermore it has no need to. By means of exact methods of computation it is possible to calculate the exact time required for the reproduction of each and every commodity or service, be it a kilogram of sugar or a theatre performance, an entire branch of production or the whole of economic life itself; whilst simultaneously a publicly declared rate of accumulation proceeds along firm and clearly defined lines. By the same means it then becomes possible for society to determine accurately how much labour-time it is able to invest in large-scale projects, the influence of any subjective element being simultaneously excluded from any access to social control. And so it happens that this problem also finds its concrete solution in a system based upon the exact definition of the relationship of the producer to the product, achieved by a system of labour-time computation and implemented through the agency of the factory and other industrial organisations, the Workers' Councils.
Should, for instance, the construction of a new railway prove to be necessary, the first step would be the drawing up of a budget in which is indicated how many labour-hours this operation would consume and the number of years over which it would spread. Should the decision be taken by the Economic Congress of Workers' Councils to set this operation into motion, society would then have the responsibility for making the necessary resources available. The operation would, of course, be classified under the category GSU, it would require, say, from 3-4 years for its completion and thus, during this period, would require to consume a variety of products without any compensating ability to supply any service in return. As soon as, however, the quantity of labour-hours to be expended each year becomes known, this can be deducted from the Factor of Individual Consumption (FIC) in the GSU account, and therewith society has made available out of general production the total product equivalent of labour-hours required for pre-producing this special unit of accumulation. All possible causes of disruption or disturbance to other spheres of production are thereby avoided, whilst simultaneously the principle of an exact relationship of the producer to the product is not infringed.
Seen solely from the aspect of the economic factors involved, the problem has therewith found its solution. There remains to be solved only the organisational and technical problems and the appropriate distribution of the human resources. Here, it is possible to make only the most general observations, for the simple reason that, in this case, the solution no longer belongs in the sphere of the theory of communist economy, but is one of human social practice in its myriad forms and with its continually changing relationships. Thus it is not possible to determine in advance precisely what shape the special will take within the bosom of the general.
For this reason we content ourselves only with the general observation that, so soon as society has taken a decision to embark upon construction works of an extraordinary kind, such as the construction of railways, etc., and has made available the necessary labour-hours of social product through adoption into the GSU account, it has thereby simultaneously decided upon a corresponding regrouping of the necessary resources in human labour.
In order to render this category in comprehensible form, we must first of all conceive in our minds the simplified model of a communist economy developing on the basis of simple reproduction. From out of the regularly occurring demands submitted by the distribution organisation, which of course exercises the responsibility for combining the myriad individual needs reaching it from the economy at large into a single combined total, there arises over a period of time a productive apparatus adapted to the satisfaction of those needs. If it is likewise assumed in our simplified model that variations in the productive apparatus arising out of changes in the objective conditions of production do not occur, such a mutual integration and adjustment to each others needs on the part of the many industrial establishments concerned would make it possible to conceive of such a productive apparatus as being in a condition of virtual immobility. In such a case, the distribution of labour resources would also be stationary, whereby, as a natural course, changes by individuals from one workplace to another would appear to be quite possible and routine.
That such a situation should arise in a system of social production is of course purely imaginary; the reality would mean that it would move continually further away from such a condition. This, of course, is what occurs in the case of standard accumulation, which we generally assume to take place at a regular and even rate. It is inevitable that changes in the productive apparatus will occur and make necessary corresponding changes in the distribution of the labour resources. In the case of irregular and uneven accumulation, these changes will assume a fluctuating character; nevertheless it is hardly likely that social difficulties will arise in the distribution of labour resources. That which capitalism acquires out of conditions of coercion from out of the reservoir of the industrial reserve army, communism will obtain by means of the natural urge for activity and the creative initiative exercised by the free producers.
It is also this which justifies the assumption that extraordinary construction operations such as those described above will not cause difficulties for a communist society on anything like the scale that they entail for capitalism. This is related, of course, to the willingness of the producers to carry out such exceptional works. After all, it is they themselves who will adopt the necessary decisions through their relevant organisations.
A further question to be considered is whether, expressed in capitalist terms, sufficient labour resources would be available for the carrying through of such special construction operations. We emphasise on purpose the words "expressed in capitalist terms", because a capitalist economy is able to make use of the reservoir of surplus labour which is always available to it through the industrial reserve army, whilst such a thing would be a monstrosity under communism. Thus, whenever communism seeks to organise such special construction operations, it must also encourage the redeployment of labour resources from one or another sphere of employment to that of the new one; in other words a regrouping of labour resources must occur.
The extent of this regrouping and the spheres of production from which such labour resources are released are, however, aspects of the matter which would already be indicated within and through the relevant decision of the Economic Congress of Workers' Councils that the construction works in question should be put in hand and the corresponding reduction in the Factor of Individual Consumption (FIC) effected. As a consequence, the sphere of individual consumption reduces its demand upon production by the total of labour-hours which have been computed as necessary annually for the pre-production of the particular extraordinary construction operations in hand. It will therefore be from the spheres thus affected that the labour resources can be made available which are required for the intended railway construction works, etc.
In conclusion, we would observe additionally that, as far as such extraordinary construction works are concerned, the scope and size of the industrial resources required by them and the production spheres under which these would fall would in the longer term become subject to standardised economic procedures. As long as such a situation might arise, there would no linger occur any appreciable displacement in the disposition of productive resources, whereby the labour resources required for such extraordinary construction works would become more or less permanently available.
 O. Leichter: Die Wirtschaftsrechnung in der sozialistischen Gesellschaft, p. 31.