Encyclopedia of Anti-Revisionism On-Line

Communist Workers Party

Letter to the CWP: Material Incentives Needed Under Socialism


First Published: Workers Viewpoint, Vol. 6, No. 23, June 15-21, 1981.
Transcription, Editing and Markup: Paul Saba
Copyright: This work is in the Public Domain under the Creative Commons Common Deed. You can freely copy, distribute and display this work; as well as make derivative and commercial works. Please credit the Encyclopedia of Anti-Revisionism On-Line as your source, include the url to this work, and note any of the transcribers, editors & proofreaders above.

Dear Workers Viewpoint,

First of all, let me complement you on how much the paper has improved over the past few months. The majority of the articles have been well written, topical and have broad appeal.

But after reading “Capital is the Root of All Evil” in one of the recent issues, I felt compelled to write and ask you to elaborate on a few points.

Political economy is something that the bourgeoisie always tries to mystify. They tell us in school or on the news that economic crises, inflation, soaring interest rates are so complicated that no one can explain them. And because economics is so confusing, we have to live with the system the way it is.

So I was really pleased to see another article on political economy to really break it down. But I read the section with all the formulas three or four times and I was still lost. What the article really needed was a couple of concrete examples to explain these concepts. A good example of an article that did this was “Capitalism is the root cause of World War,” several months back. Brief reference to “material incentive” as being a necessary part of a socialist economy. Now the CWP has historically held the leading role in the struggle against revisionism, particularly the exposure of the coup in China and upholding the line of Chairman Mao. But with no further explanation, how does this statement demarcate the CWP’s line from the line of Deng Xiao-Peng and Co.?

Particularly at such a critical juncture in the developments in China, it is essential that WV paper be crystal clear in its presentation of the CWP’s position on “material incentives,” bourgeois right and upholding the Cultural Revolution.

Yet, with the exception of one brief article, there has been virtual silence on the issues raised by the sham trials in China. The American people are watching the trials and the media is doing its best to slander Chairman Mao and confuse us on the basic issues.

Please clarify the Party’s line on material incentives so we can better understand what’s going on in China and its implications for revolution in the U.S.

Los Angeles, CA

Your letter raises good questions. Although we received the letter months ago, we weren’t able to print it and answer your questions until now that our new understanding is public. Before we believed that the Soviet Union had turned away from socialism and gone back to capitalism. We also believed that China has been in the process of restoring capitalism ever since the coup against the four after Mao’s death. But through our study of political economy, and most important, critically looking at the problems raised by our practice in trying to make revolution in this country, our understanding has changed. The Soviet Union, China and many others are socialist countries. We now have a deeper understanding of the fundamental strength of socialism as well as a more mature perspective on the weaknesses socialism inherits from the old society.

What is our position on material incentives, bourgeois right, the Cultural Revolution and the trial of the four in China? These are important questions, but we don’t have the space here to do them justice. All of these topics and more are addressed comprehensively in a book written by Jerry Tung, our General Secretary, and will be published soon. There is an ad for the book in this issue of WV, and we urge you and all our readers to order a copy. Also, our Central Committee is preparing a separate publication on the Cultural Revolution and Mao’s contributions.

However, we would like to talk a little about material incentives. Material incentives are connected with the way society distributes its wealth under socialism. In any society, whoever owns the factories, mines and mills (the means of production) determines how the wealth produced by society will be distributed.

Under capitalism, the capitalists own the means of production. Workers are forced to sell their labor power and the capitalist exploits and oppresses them. Under socialism, the main means of production are owned by the working class. Thus, the distribution of products and the social surplus created by the workers is in their hands and favors the working class.

From the total wealth produced by society in one year for example, a certain part has to be set aside to further develop the country. Such things as what’s needed to replace worn-out plants and used up sources of raw materials and for new technology to produce more goods cheaper has to be set aside. Other deductions for schools, hospitals, national defense, the cost of running the workers’ government and so on are also necessary.

After these things have been taken care of, the rest of society’s wealth can be divided up among the people for personal consumption. Under socialism, the principle for distributing the wealth is “from each according to his ability, to each according to his work” – those who can work and don’t, don’t eat. The difference between this socialist principle and how wealth was distributed in previous societies should not be underestimated. It is an historic change from the past where a minority lives off the sweat of the majority.

At the same time, this socialist principle is not the same as communism where “from each according to ability, to each according to need” applies. For this communist principle where people see working for society as a pleasure. Socialism is a transition period between capitalism and communism where the material and spiritual conditions are built up.

But in putting this socialism principle to work, there are two dangers, One is the problem of an increasing gap between those who have a higher standard of living and those who have a lower standard. Socialist distribution leads to greater equality than capitalism because no one can get rich at the expense of others, but there is still inequality. From each according to ability, to each according to work “is still bourgeois legal right,” Marx said. An equal amount of labor brings an equal amount of compensation, but people face different conditions and have differing abilities. For an example, some only have to support themselves while others have families to support.

This inequality can be totally erased only when the material and spiritual conditions for communism exists. Meanwhile, with the development of the productive forces of society, there must be a rational policy that gradually narrows the differences in income and restricts the operation of bourgeois right in distribution. Otherwise, people’s initiative will be undermined and the development of socialist production held back.

On the other hand, the second danger is to try to impose absolute equality as the rule. This contradicts the socialist principle of “to each according to work,” and also hurts initiative and hinders production. It blocks the use of material rewards as a very important part of the necessary incentives used under socialism.

One of the idealist mistakes made by the Communist Party of China after the Cultural Revolution was one the use of material incentives. This was a reaction to the Soviet Union’s onesided view. The U.S.S.R. saw spurring production through material rewards but ignored all-rounded political and ideological work among the people. But the CPC went too far. They pit the need for spiritual incentives like political education against the need for material incentives and ended up blaming the people for not having advanced communist consciousness.

This idealist view contradicts the socialist principle of from each according to ability, to each according to need – the more you contribute, the more you get. There must be both material and spiritual rewards to spur productivity.

As long as the socialist principle of distribution applies, those who have high consciousness and who work harder should be given both material and spiritual incentives. Above and beyond the basic guarantee to have job tenure, monetary incentives are correct and necessary. But this should be done in combination with social and spiritual incentives. Monetary rewards alone can allow the capitalist spirit to win out. People will become selfish and this will hold back the development of the productive forces. And in the final analysis, highly developed productive forces is the foundation upon which the spiritual conditions for communism are built.

There are two forms of material incentives in operation in the Soviet Union and China today. One is payments in individual paychecks. The other form is what’s called the “material incentive fund” in the Soviet Union and the collective social welfare fund in China. How does this work?

The profits made by an individual plant, for example, are divided into three parts. The first part goes to the workers’ and peasants’ government to be used for the needs of society as a whole. The rest is kept by the plant. Part of this goes to production, particularly on buying new equipment. The other part goes into the incentives fund. This money is spent on improving workers’ housing and building cultural and service establishments, as well as for bonuses for the workers at the end of the year.

We hope this begins to answer your question. Again, we urge our readers to order Jerry Tung’s book. We look forward to debate and more questions from our readers on our new position.