Marxism contends that the limits to the level of production relations, especially the character of ownership of the means of production, are dictated by the level of productive forces of the country. This is a cardinal principle of historical materialism and it applies in all cases.
Trotskyites and revisionists have always used this truth either to argue against the seizure of state power by the advanced detachment of the proletariat, or to cynically denounce socialism whenever socialist countries run into problems. Nevertheless, this Marxist principle is true and must be respected by communists in all countries.
Precisely on this question, Lenin pointed out a serious mistake in his earlier position on agrarian reform in the Bolshevik Programme:
... the vastness of our agricultural country with its poor transport system, boundless expanses, varying climate, diverse farming conditions, etc., makes a certain freedom of exchange between local agriculture and local industry, on a local scale, inevitable. In this respect, we are very much to blame for having gone too far; we overdid the nationalisation of industry and trade, clamping down on local exchange of commodities. Was that a mistake? It certainly was.
In this respect we have made many patent mistakes, and it would be a great crime not to see it, and not to realise that we have failed to keep within bounds, and have not known where to stop. There has, of course, also been the factor of necessity – until now we have been living in the conditions of a savage war that imposed an unprecedented burden on us and left us no choice but to take war-time measures in the economic sphere as well. It was a miracle that the ruined country withstood this war, yet the miracle did not come from heaven, but grew out of the economic interests of the working class and the peasantry, whose mass enthusiasm created the miracle that defeated the landowners and capitalists. But at the same time it is an unquestionable fact that we went further than was theoretically and politically necessary, and this should not be concealed in our agitation and propaganda. We can allow free local exchange to an appreciable extent, without destroying, but actually strengthening the political power of the proletariat. How this is to be done, practice will show. I only wish to prove to you that theoretically it is conceivable. The proletariat, wielding state power, can, if it has any reserves at all, put them into circulation and thereby satisfy the middle peasant to a certain extent – on the basis of local economic exchange.[1]
He also wrote:
Show by your practical efforts that you can work no less efficiently than the capitalists. The capitalists create an economic link with the peasants in order to amass wealth; you must create a link with peasant economy in order to strengthen the economic power of our proletarian state. You have the advantage over the capitalists in that political power is in your hands; you have a number of economic weapons at your command; the only trouble is that you cannot make proper use of them. Look at things more soberly. Cast off the tinsel, the festive communist garments, learn a simple thing simply, and we shall beat the private capitalist. We possess political power; we possess a host of economic weapons.[2]
Furthermore, Lenin said this mistake had to be summed up and programmatically repudiated, so the masses, not just Party members, could learn the lessons.
Small peasant farms, which engage in free, petty trading, and petty profiteering, are still to be found in a capitalist country where capitalism has reached its full development. Such facts must not be forgotten. Of the 300,000 members of the Party who are represented here, are there many who fully understand this question? It would be ridiculous conceit to imagine that because we, whose good fortune it was to draft this programme, understand all this, the entire mass of Communists also understands it. They do not, and they need this ABC. They need it a hundred times more than we do, because people who have not grasped, who have not understood what communism is and what commodity production is, are far removed from communism. We come across these cases of small commodity economy every day, in every question of practical economic policy, food policy, agricultural policy, on matters concerning the Supreme Economic Council. And yet we are told that we ought not to speak about it in the programme! If we heeded this advice we would only show that we are incapable of solving this problem, and that the success of the revolution in our country is due to exceptional circumstances.[3]
Our Party is the government party and the decision the Party Congress passes will be obligatory for the entire Republic: it is now up to us to decide the question in principle. We must do this and inform the peasantry of our decision, for the sowing season is almost at hand. Further we must muster our whole administrative apparatus, all our theoretical forces and all our practical experience, in order to see how it can be done. Can it be done at all, theoretically speaking: can freedom of trade, freedom of capitalist enterprise for the small farmer, be restored to a certain extent without undermining the political power of the proletariat? Can it be done? Yes, it can, for everything hinges on the extent. If we were able to obtain even a small quantity of goods and hold them in the hands of the state – the proletariat exercising political power – and if we could release these goods into circulation, we, as the state, would add economic power to our political power. Release of these goods into circulation would stimulate small farming, which is in a terrible state and cannot develop owing to the grievous war conditions and the economic chaos. The small farmer, so long as he remains small, needs a spur, an incentive that accords with his economic basis, i.e., the individual small farm. Here you cannot avoid local free exchange. If this turnover gives the state, in exchange for manufactured goods, a certain minimum amount of grain to cover urban and industrial requirements, economic circulation will be revived, with state power remaining in the hands of the proletariat and growing stronger. The peasants want to be shown in practice that the worker who controls the mills and factories – industry – is capable of organising exchange with the peasantry.[4]
We cannot mistake the sheer existence of private enterprises (e.g., free market, private plots) under socialism for revisionism. The CPC made this faulty argument in their pamphlets, “Is Yugoslavia a Socialist Country?”, and to some extent in “On Khrushchev’s Phoney Communism and Its Historical Lessons for the World.” Though there are plenty of revisionist lines and policies in the Soviet Union and Yugoslavia, simplistic theoretical rationalization can only lead to adventurist steps of pushing for public ownership in all spheres. It will lead to grave errors in violation of Marxist principle.
For example, the reality of Chinese conditions is that well over 80% of approximately one billion people are peasants. They conduct what is a relatively self-contained, subsistence economy. Among the peasant population, about 90% of the farmland, farm machinery and irrigation systems are under collective ownership. Collective ownership is not public or state ownership and is therefore relatively independent. To that extent, the law of value in commodity production operates. Within the industrial sector, the most advanced and most socialized sector (and thus a most “plannable” part of the economy), which is also the political power base of socialism, public ownership covers 97% of the fixed assets and employs 63% of the workers nationwide. That means that even within the industrial sector of the economy, 37% of the Chinese workers work in non-state-owned shops, engaging in individual handicrafts, etc.
The fact that over 80% of the able-bodied men and women in China have to engage in agricultural production to sustain themselves as well as the urban workers testifies to the harsh reality of an agrarian society with a very low level of productive forces. To appreciate this, compare it to the United States, where only about 6% of the work force is tied down in agriculture. Even with such little manpower commitment, the United States is the biggest exporter of agricultural products, while China has to import grain, especially in lean years.
On the other hand, though the Soviet Union has become the largest producer of petroleum, steel, and electricity in the world, it cannot be self-sufficient in agriculture, even with 30% of its workforce there. The problem is long-standing despite repeated campaigns to improve this sector of the economy.
The point to be emphasized is that the limits of the productive forces in each country are the limits to which it can change the production relations (particularly its ownership system), and then the relations among people, distribution, ideology and the superstructure.
Planning, one characteristic of the inherent superiority of the socialist system over capitalism, is therefore also limited by the extent to which the economy is publicly owned (i.e., owned by the whole people). It is only in the state-owned and planned sector of the economy that exchange value will be eliminated. Only in that sector of the economy can commodity production, and therefore the law of value, play less and less of a role in the national economy. Therefore the constant problems of planning and of the relationships among different sectors (the interrelations among heavy/medium/light industries and agriculture, the relationship between production and consumer sectors, between supply and demand) are inherent in an industrially underdeveloped country like China. Its characteristic is a diversified system of ownership, where most people do not live and work under the state-owned part of the economy, though the state-owned part is the dominant, leading factor.
Socialism’s inevitability lies in its ability to resolve the basic contradiction of capitalism, the contradiction between private ownership of the means of production and socialized production. Then how do we look at socialist countries such as China, or even the Soviet Union, where capitalism and therefore the productive forces, were not that developed? To that extent, the basic contradiction of capitalism was not sharp.
One of the vague political conclusions drawn by Kautsky, assorted Trotskyites and modern day revisionists is that communists should either not seize state power in the first place in those countries, but should just content themselves with being the opposition in a bourgeois democratic regime, or they should go back to New Democracy or even capitalism, as some revisionists in China today advocate.
Our Party’s view on this question is firm, undeviating and clear. The political power of the bourgeoisie should be broken and the working class, represented by its vanguard detachment, should seize power at the earliest possible opportunity. Then revolutionizing the economic system should proceed from the concrete conditions of each country. Finance and heavy industry should change hands to state ownership. In the context of overall raising the productive forces in the public sector and the consciousness of the small producers, the ownership of the petty bourgeoisie and small owners should be transformed step-by-step. Only with this political perspective should the struggle between men and ideology and the entire superstructure take place, a struggle which will in turn influence the speed of this transformation and the consolidation of the material basis of socialism.
The dictatorship of the proletariat, workers’ rule, is the precondition for transformation of the ownership of the means of production, no matter in which sector or at what speed. While the dictatorship of the proletariat, as an organized form of coercion, is necessary, it is far from sufficient to consolidate the workers’ power. The transformation of the system of ownership and the development of productive forces are essential to consolidate socialism. In the relatively long historical period of socialism, these two processes will reinforce workers’ rule, especially for countries like China. Workers’ rule is the only class rule that will eliminate capitalist remnants and create the material and spiritual conditions for communism.
There are different lines on how to proceed with the revolution.
One line, held by Liu Shaoqi, argues that since the development of productive forces is the main thing, the CPC should just let the national bourgeoisie run the economy. Politically this boils down to a question of whether to continue New Democracy or to make the transition to the socialist stage. Liu’s line was a revisionist “theory of productive forces” because it does not see the dynamic role of the subjective factor in the transition to a more advantageous, higher form of ownership – forging state ownership from national bourgeois ownership, and forging lower forms of tool sharing cooperative farms from individual proprietor/peasant ownership.
There is another incorrect line on socialist transformation. Chang Chun-chiao, for instance, in his pamphlet “On Exercising All-Round Dictatorship Over the Bourgeoisie” never mentions the material basis for the existence of collective ownership. In fact he never refers to the level of productive forces in relation to the level of production relations, particularly the level of ownership. Failing to give a comprehensive presentation of the question, he jumps right into his diatribe on production relations. He says:
It is perfectly correct for people to give full weight to the decisive role of the system of ownership in the relations of production. But is it incorrect to give no weight to whether the issue has been resolved merely in form or in actual fact, to the reaction upon the system of ownership exerted by the two other aspects of the relations of production–the relations among people and the form of distribution–and to the reaction upon the economic base exerted by the superstructure; these two aspects and the superstructure may play a decisive role under given conditions. Politics is the concentrated expression of economics. Whether the ideological and political line is correct or incorrect, and which class holds the leadership, decides which class owns those factories in actual fact.[5]
Within this quote lies the fallacy of the “left” idealist line on how to proceed with the revolution. Notice that he says “under given conditions” the aspects of relations among people, forms of distribution and the superstructure may play the decisive role. This is not by itself incorrect. But what are the “given conditions” in a country like China? They are precisely a low level of development of the productive forces, which necessitates a large proportion of collective and to some extent private ownership. It is incorrect to divorce the level of production relations in China from the question of the level of productive forces, and how to develop them. Chang does exactly this.
Ignoring the concrete conditions of China and without establishing why at that point the relations among people, forms of distribution and the superstructure may be decisive, Chang tries to develop his view of socialist transformation. By ignoring the material basis, the level of productive forces, he is forced into idealism. To him socialist transformation is solely creating the spiritual conditions for communism and the material basis is ignored. Even though he gives a list of material conditions and the diverse ownership levels in China, he does not put this material data to work at all. He does not draw out the dependency of higher forms of production relations on productive forces, and why the limit of production relations is collective and team ownership. He jumps to the conclusion that the bourgeoisie is being generated every day, every hour, and that they should be combatted. Thus his definition of tasks is pure “class struggle” in the realm of the superstructure, and he completely forgets about the development of the economic basis.
Following this line, the authors of the textbook Fundamentals of Political Economy are forced into eclecticism in the chapter on socialist ownership. Although they correctly struggle against Liu Shaoqi’s vulgar theory of “mechanization before cooperativization,” which is wrong under Chinese conditions, they muddle the basis of the transformation of ownership relations as a whole. There is only an off-handed mention of the interdependency of production relations and productive forces, with absolutely no elaboration of the dependency of the former upon the latter. Only in one place do they state, “The development of the collective ownership system from the small to the big, from the low to the high, and from collective ownership to state ownership is all based on a gradual improvement of the productive forces and the socialist consciousness of the people.”[6] But even in that formulation, socialist consciousness is incorrectly put on the same level as the development of the productive forces. The authors fail to see that the determining factor is the material reality of the level of the productive forces, and upon that basis, the superstructure (including socialist consciousness) either spurs or retards their development. The superstructural elements, the relations among people or distribution forms in the realm of the production relations within socialism, can help or hurt the development of socialist ownership. But they can never decisively determine the overall level in any fundamental or sustained way. That concrete level is mainly determined by material reality – the level of development of the productive forces.
It is wrong to look at productivity solely from the angle of work attitude or consciousness. The textbook makes that error in saying, “The existing disparities in income levels between cooperatives cannot be artificially eliminated. The only way to do it is to help the low-income cooperatives to grasp revolution and raise labor productivity in order to gradually narrow the gap.”[7] This again leaves out the material basis for productivity – the differing natural conditions such as soil and weather, and even more important, the main basis for increased productivity, the development of the productive forces, such as farm machines and tractors.
Charles Bettelheim in Cultural Revolution and Industrial Organization in China goes even further down the incorrect path. Overthrowing the Marxist law based on material reality, he blatantly states, “In the combination reproductive forces/productive relations, the latter play the dominant role by imposing the conditions under which the productive forces are reproduced.”[8] Talk about imposing! If what Bettelheim said were true, then China should be able to transform itself from collective ownership to state ownership practically overnight. After all, if there were very few material constraints, then every commune member could be made a salaried worker, the state could seize the commune’s land and convert it to state ownership, equal distribution of all consumer goods could be made a law – and all of it could be done today!
Bettelheim has turned Marx on his head, and replaces Marxist materialism with Nietszchean idealism. Either it is true as Marx stated that production relations arise upon the basis of the development of productive forces and must come into correspondence with it, or production relations are merely ideas and have little connection with material reality, as Bettelheim believes.
The ultra-“left” line sees socialist transformation only as a matter of brute force and class struggle. As Chang Chun-chiao’s title “On Exercising All-Round Dictatorship Over the Bourgeoisie” implies, instead of understanding all-round work in all aspects without exception, he sees the dictatorship over the bourgeoisie as the main thing. Because of the eminence accorded to this piece when it was published, this one-sidedness cannot be a mere polemical thrust. It is his comprehensive presentation.
This line fails to grasp the real dynamics of society. It is metaphysical in that it severs the relationship between raising the level of material and organizational conditions on the one hand, and raising the masses’ consciousness (including political consciousness) on the other. It is an idealist theory which asserts that consciousness is at all times the leading factor, rather than seeing that the higher the material and cultural level, the greater the possibility of raising the level of consciousness.
Those who followed the Four are very subtle on this point. They always say that “while primarily it is the being that determines consciousness, consciousness in turn also spurs forward the being, material conditions.”[9] They always emphasize the secondary aspect. We first thought it was a polemical thrust, but in the real world the deviations are too evident: for example, rejecting foreign technology and culture, and belittling legal codes to enforce organizational and technological momentum in production.
This pits ideological struggle to limit individual bourgeois right and the sphere of operation of the law of value against measures for higher modes of production. It is manifested in excessive uptightness over ideology (such as limiting bourgeois right), rather than dealing with the privileges and capacities under an overall, step-by-step plan, perfecting the socialist judicial system and invigorating inner Party life to prevent abuses.
There is no doubt that bourgeois right and the realm of operation of the law of value should be curtailed throughout the long historical progression from socialism to communism. For example, can the cooperative ownership affecting 80-90% of China’s rural population be upgraded to state ownership? Or will the three great differences, the difference between countryside and city, between mental and manual labor, and between workers and peasants, be eliminated only through step-by-step developing the productive forces and through raising the political consciousness mainly in the course of expanding the collective and public ownership sectors? Can the law of value, eight-grade wage system, mixed ownership economy, and exchange through money be eliminated in a straight linear fashion?
In some areas the problem, in fact, is that communists don’t even know how to use the law of value to serve planning. Aspects of production like quality, efficiency, dependability and service, to some extent cannot be planned. There has to be competition between two fraternal computer firms, for instance, to see which can come up with a better product through realization and not just numerical output. Planning stops at a certain point and the law of value takes over. Only over a period of time, through letting the market operate, can there be sum-up and further planning. Then measures can be taken, for example closing a plant which produces inferior computers or consolidating it with a superior plant. There the law of value definitely serves planning. In fact, it is indispensable in the dynamic process of planning.
A good example of the incorrect line is in RCP’s Red Papers 7, “How Capitalism is Restored in USSR.” It said, “Class struggle in socialism continues between those who want the law of value and blind market forces to regulate production and those who want to subject production to class-conscious control of the proletariat.” This line is metaphysics defined. It pits “those who want law of value and blind market forces to regulate production” and “those who want to subject production to class-conscious control of the proletariat” – as if “class-conscious control” does not entail skill in using the “law of value” and “blind market forces” to serve planning! It is as if people have to defy the natural forces of rain and sun, instead of harnessing them to serve us. This is a voluntarist Nietszchean line of trying to use sheer will to change reality. It has nothing to do with the dynamic role of the subjective factor which conforms to the laws governing particular spheres. The law of value is precisely such a law in the period of socialism. This line is RCP’s basic argument that capitalism has been restored in the Soviet Union. For example, they say that to build socialism and advance to communism, the “lever” that makes possible the production, accumulation and utilization of the social surplus product “cannot be commodity production and the law of value, but can only (our emphasis) be ideological and political line (their emphasis).”[10] This is an idealist line, for it ignores the material reality of socialism. It is metaphysical because it skips the process of development based on the concrete conditions. A line like this will only wreck class struggle here in the United States.
While socialist transformation certainly entails class struggle, it also must include struggle for higher forms of organization (which are crucial for these higher levels of ownership), as well as effective persuasion and propaganda. In other words, the role of the subjective factor in changing the objective conditions – productive forces and economic conditions – is not just direct class struggle, such as dragging out the landlords during the 1949-1957 land reforms. It has to be an all-round struggle for professional organization, creation of favorable public opinion, and a profound grasp of the Marxist economic law of development applied to a set of concrete conditions.
This last aspect is particularly difficult. Most Chinese communists (and most Russian communists) lack perspective in comparing their economic condition with that of the West. They have a weak grasp of the basic contradiction and the dynamics of capitalist countries. The only model for Chinese communists is the Soviet Union. Since the Soviet Union was also an agrarian society and made all the mistakes that can possibly be made, it is no wonder that this struggle to grasp the economic law of development and apply it to the concrete conditions is full of twists and turns with tremendous setbacks. There is a tendency to absolutize public ownership in some periods, and then as problems arise, there is the opposite tendency to glorify Western capitalism’s historical ability to develop the productive forces. Naturally, this has given rise to an apparent crisis of Marxism, particularly since the deaths of Lenin, Stalin and Mao.
Have there been advancements of Marxism, the only correct general science of social development and the theoretical weapons of the world proletariat? Yes, there have. Like all sciences and scientific developments, Marxism develops through trial and error. Marx only drew the outline of the science, particularly from the cell of commodities, workers’ exploitation and the reconstruction of the development of capitalism – from its inception, through its growth, and to its fall – to the ultimate goal of classless society, communism. He could not and did not dissect all the particular paths to communism in various countries based on unique sets of historically-inherited circumstances. For instance, no Marxist foresaw that the working class could seize state power first at the weak links of imperialism, and in the midst of two gigantic inter-imperialist world wars. It is in this era of imperialism when there is a tremendous trial of strength between socialism and the old world concentrated in the power of U.S. imperialism, as well as infighting among the various socialist countries which carry out incorrect policies toward each other, straining to their utmost but limited by weaknesses flowing from the unique circumstances under which they all seized power, that the socialist countries, the cause of the international proletariat, and the science of Marxism advance.
What are some of the advances since Lenin and Stalin? Unquestionably they are the contributions made by Comrade Mao Zedong.
In the 50’s, after the CPC financially stabilized China and militarily consolidated its power by aiding the Korean people to drive U.S. imperialism beyond the 38th parallel, they confronted the question of whether or not to nationalize the property of the patriotic national bourgeoisie. We must remember that the working class and peasantry wrested power from the Kuomintang and comprador bourgeoisie through a political alliance between the CPC and the patriotic national bourgeoisie, many of whom owned factories and other means of production. Even though the CPC had maintained military power, the completion of New Democracy and the transition to socialism required that they confiscate the national bourgeoisie’s ownership of the means of production. They did this skillfully. They did not outright confiscate these means of production. The national bourgeoisie was allowed to maintain ownership and management of the means of production, as well as the privileges such as a higher standard of living, chauffeurs and servants. However, the CPC discontinued the national bourgeoisie’s right to invest their profits in other sectors of the economy. This essentially castrated the capitalists. In other words, they became capitalists without capital. In many instances, even the profits were limited by appropriating 10% interest on their assets. Thus China – where the national bourgeoisie was never that fully developed culturally, economically or politically due to the stifling effect of the imperialists, comprador bourgeoisie and the feudal lords – made the transition from New Democracy to socialism.
Another major contribution on the dynamic role of the subjective factor was the transformation of the individual peasant ownership after the difficult phase-by-phase land reform to cooperative farms, then to the complex and advantageous economic aggregate unit of people’s commune.
A people’s commune is an economic as well as political unit. Its distinct advantage for an agrarian country like China is that it has transformed a vast sea of private, individual proprietorships into a socialized unit whose production can be partially planned within a national plan. People’s communes rather than state farms are the dominant form of ownership in China. State farms are state-owned. Workers there, like all workers, receive salaries from the government regardless of their input into the job. Communes, on the other hand, are collectively owned. Their links to the state and the overall state plan are their fulfillment of a certain, pre-arranged part of the division of labor (e.g., a certain tonnage of grain). So, locally or even nationally, the peasant population, instead of being governed economically by the spontaneous law of value, by market forces, can actually take part in the national plan. Even though the communes are not state-owned, they play an essential role in the state economy, namely becoming a part of organized, “plannable” socialized production.
The historical development of a country’s productive forces determines the particular combination of people’s consciousness and organization. Precisely because of that, in China the work-point system based on “more work, more money” actually corresponds well to the level of the social consciousness of the peasantry and the level of organization of the productive forces, as well as the state’s infrastructure support for agriculture. This is in contrast to the state farm system. The state farm provides no individual incentive to produce more and work harder, and fundamentally it depends on the support of a large state infrastructure of which it is part. In the state farms, which also exist in China, particularly in the outlying “military regions,” the productivity per worker is considerably higher because of more favorable terrain, availability of fertilizer and farm machinery. There individual motivation, individual work habits and diligence have less effect on productivity than in the typical setting of communes in China.
For instance, let’s look at the model work brigade Dazhai. In terms of using what they had – rocky soil and practically no tools – there is no doubt that the Chinese got practically everything they could out of its “given conditions.” This was due to the unleashing of the dynamic role of human subjective factor, including correct political orientation. But is it possible today for Dazhai to become a state farm, where everyone would be paid a wage regardless of the work performed? No, it is not. Productivity would almost certainly drop, as the direct material incentive would be undermined. The material reinforcement for the socialist consciousness, to spur its development, would not exist. And given the back-breaking labor that it takes to produce in even advanced communes like Dazhai, without a certain amount of material incentives, only the best comrades there would be able to keep up their advanced labor attitude.
The point is that overall labor productivity is not mainly a question of work attitude or “line struggle.” The superiority of advanced industrial societies in labor productivity is precisely that mechanization makes individual differences in work attitude less and less important for increasing productivity overall. On a modern harvester combine, whether the person is highly motivated or lazy has relative little impact on how much gets done. The limits of the machine itself mostly determine the productivity. This is why, for instance, the problem of lower productivity in the U.S. auto industry vs. the Japanese is not that U.S. workers are “lazy” or that Japanese workers are paid less, as the capitalists contend. The basic difference is that Japan has invested far more capital into its auto industry, thoroughly computerizing and robotizing its production and reached production rates that the United States can only dream of without doing the same.
China’s underdeveloped productive forces make it impossible for its agriculture to have all the irrigation systems, tractors, harvestors, fertilizer and transportation means necessary for state ownership. Collective ownership such as brigades and work teams is the most appropriate form because it motivates the peasants to produce. Also it does not depend on the state as much as state-owned enterprises for support such as state-funded and state-constructed railroads, highways, fertilizer, farm machinery and other necessities.
Revisionists argue that individual farming actually motivates peasants most. They disregard the benefit of communes – i.e., how large-scale unpartitioned land conserves more arable land, and allows collective investment in large-scale irrigation, hydroelectric power stations, fertilizer plants, etc. Revisionists also do not see that with individual ownership, large-scale famines which have plagued China for centuries will recur. Under individual ownership, peasants would only plant cash crops like cotton and peanuts and whatever sells best. And this would raise the prices of basic foodstuff such as grain and rice for a billion people. Even if workers offered to buy the grain, it would disturb the worker-peasant alliance, the political pillar of workers’ rule in China.
China’s historic achievement in becoming the first third world country to be free from famine and self-sufficient in foodstuff is unparalleled. As the most populated country in the world and with such undeveloped productive forces, China can develop industry only by ensuring that it can feed itself. All attempts to develop industry first will necessarily fall into requiring tremendous imports of foodstuff. This would not only drain the surplus from industrial production but also cause the country to incur such a huge debt that it could not possibly continue to develop its industrial base. There is no question that only socialism can accomplish self-sufficiency for a third world country. And Mao’s contribution on this question is an established verdict in history which cannot be disputed or reversed.
We have no difference with revisionist assertions that productive forces set the material limit for the relations of production, particularly the system of ownership. That is a fundamental Marxist materialist principle. But we have fundamental difference with them on how to develop the productive forces. In short, they will embark upon a spontaneous, capitalist road, while ours is a socialist road. If the Mensheviks had their way, the October Revolution and its world impact probably would have been delayed. Without the salvo of the Russian Revolution, the Chinese Revolution would have been delayed, undoubtedly prolonging the life of neo-colonialism, and the suffering of billions of people. This renders whatever problems socialism has insignificant.
There are disputes on whether or not the Great Leap Forward and the Cultural Revolution were impetuous and voluntarist in that they outstripped the objective conditions of China. Mao did make errors. It is a historical fact that there were errors in the early part of the Great Leap Forward campaign, particularly the Backyard Steel Furnaces Drive and the “communalization wind” (setting up mess halls where commune members could eat and take all they wanted), which caused tremendous waste and dislocations in the economy and even led to some famine. But these mistakes were corrected. Mao was the first to recognize those errors and to propose a set of concrete solutions.
No doubt he made errors in socialist economic planning. But the errors in the economic sphere were the inevitable errors of a great Marxist-Leninist making revolution on an uncharted course. These errors were committed under unique circumstances – workers represented by their vanguard party seized power in a country where capitalism was not fully developed, the country was surrounded by imperialists, and experienced an unprecedented economic, political and military blockade by U.S. imperialism. The same is true for the Soviet Union.
China was also threatened by Khrushchev’s chauvinist and reactionary line. Khrushchev fundamentally had more trust in U.S. imperialism than in his communist comrades. The Soviet Union pulling out all its technicians and advisors from China and taking the blueprints with them as an act of revisionist betrayal reflected a nascent state of socialism in the world. Those were the conditions under which Mao had to operate. His errors were committed in making freedom out of real and pressing necessities. His errors have to be viewed as those of a great Marxist-Leninist struggling to resolve real questions of socialism in this real world of imperialism and nascent communism. They necessarily accompany his achievements just as failures accompany scientific breakthroughs made by all great scientists. All sciences advance through new questions, new confrontations and the crises in their fields. The crisis of Marxism today is the continued birth pangs of socialism and communism worldwide.
Conditions in agrarian societies – third world countries, for example – are such that Marxist-Leninists can seize state power mastering fewer spheres (for example, primarily the military sphere) in preparing for revolution than in capitalist countries. But it is hard to build up an underdeveloped socialist country into an industrialized state because of inherited historical conditions, particularly the low level of development of the productive forces.
Nevertheless, replacing the competition and anarchy of production by overall planned development of the national economy is an important aspect of the superiority of socialism over capitalism. It is a concrete manifestation of the negation of the basic contradiction of capitalism and a necessary precondition for the creation of the material and spiritual conditions for communism.
Because of the basic contradiction of capitalism, between the private ownership of the means of production and socialized production, capitalist production is carried out boldly, ruled by competition and the anarchy of production. Production under capitalism is regulated by the law of value as well as monopolies as forces operating outside of society’s control. Under socialism, for the first time humankind enters an era where we can begin consciously to make use of objective laws to create our own history. The law of value is no longer a totally alien force governing people, but a force that can be used to serve the socialist planned economy.
The scope of planning possible and the necessary use of the law of value to complement it are determined ultimately by the level of development of the productive forces. To the extent that the development of the productive forces has pushed forward the socialization of production (highly interdependent, with highly developed division of labor throughout the society), to that extent the state ownership of the means of production can dominate and with it more centralized planning. To the extent that production is carried out by isolated, independent producers with little dependence on other production units, as is the case with peasants, who make up the majority of the population in China, to that extent the law of value must play a more important role in the economy.
For instance, in those sectors where the productive forces are developed and the level of socialization is high – in modern industries like steel, auto, finance, and machine tools – state ownership of the means of production is relatively easily accomplished and, more important, is necessary to expand production rapidly. In almost every country where communists have won state power, these sectors are the first to be state-owned. Strictly speaking, these sectors and these sectors alone are “socialist” in the economic sphere. They are the cutting edge of the socialist economy and the sectors that conform to the dictatorship of the proletariat towards the consolidation of socialism.
Production in these state-owned sectors, including state farms, is not subject to fluctuations according to the level of prices and the size of profit. State farms, as state-owned factories, are regulated qualitatively less by the law of value and directed much more by the national economic plan formulated according to the requirements of the basic economic law of socialism. To the extent that they are socialized and become part of the public sector, to that degree the crops they produce cease to be commodities and thus cease to have exchange value. They only have use value in the economy.
Based on the needs of the government and the people, the government planners decide what and how much to produce and the state enterprise must carry this out. Of course, these complex plans are drawn up through consultation and take into consideration local conditions. Mao called this approach “overall planning and all-round consideration.”
In certain instances, the enterprise must produce according to the plan regardless of profit. The losses of individual enterprises are made up by planned subsidies. The contradiction facing the U.S. capitalists today is eliminated: investment is desperately needed in basic productive industries like steel and auto, but no one will invest because there is no chance for immediate profit.
Given the fact that countries like China and Zimbabwe are industrially underdeveloped, the state-owned sector is necessarily only a small part of the entire economy. In China, for instance, even though individual peasant ownership has in the main been converted into collective ownership, there are only a handful of state-owned farms. And they are located in the border military regions as parts of the state enterprises. Under the various forms of collective ownership, the production of major products such as food grains is, in general, regulated by the state plan. But unlike the state enterprise, the collectively-owned enterprise is an economic unit responsible for its own profits and losses. The level of prices and the size of income directly affect the rate of accumulation of the collective and the income of its members. Other conditions being equal, the collective enterprise generally tends to be willing to produce more of those products which have low costs and command high income. In this respect, the law of value affects the production of the collectively-owned enterprise more than that of the state-owned enterprise and must be used accordingly. Under the conditions of developing socialist countries, therefore, the law of value plays a relatively larger role in aiding planned production.
One of the two arguments used by Yao Wen-yuan centers on the law of value. The Liberman Reform,[11] attacked by those who hold that capitalist restoration occurred in the Soviet Union, was a crystallization of experiences under Stalin on how to use the law of value to serve the planning. Individual managers can make decisions, take initiative, have material incentives, and even privileges. The direction was basically resolving how to integrate the planning tightly with the law of value. I see nothing wrong with that attempt. Stalin himself understood it. In the book, Economic Problems of Socialism in U.S.S.R. he criticized the leading comrades for not understanding the law of value and just wanting to use their will to push forward construction. Things would turn into their opposites if the leaders didn’t understand how to use the law of value to serve planning – and in many cases did turn. The Liberman Reform under Khrushchev was not sufficient basis for the restoration of capitalism, as the CPC under Mao’s leadership claimed, nor as CPML’s Martin Nicolaus claimed in his Restoration of Capitalism in U.S.S.R., nor as RCP’s Red Papers 7 contended.
Proceeding from the concrete material basis in socialist countries is our framework for looking at the dialectic between the socialist planned economy and the role of the law of value in it.
Undertaking this historical mission of really controlling our own social organization for the first time in the history of humanity is a monumental and an extremely complex task, especially given the need for developing the productive forces in countries like the Soviet Union and China. The question that always comes to the fore in planning is what is key in each economy. Mao said at one time that steel was the key link, and at another time that grain was the key link. So what is actually the key link? Or is class struggle the key link? This is a historical problem that faces all developing countries. The problem is how to develop one’s economy most speedily – whether to follow the Soviet model of putting emphasis on the industrialization of heavy industry or to emphasize the agriculture sector.
One of the CPC’s major breakthroughs under Mao’s leadership was that they were able to proceed from the concretes. Because they gave proper emphasis to the agricultural question, they were able to solve the food problem for close to a billion people. They solved the problem of how to use the local light industries, innovative industries, as well as ancient irrigation methods, and build up from there. They learned from the Soviet experience that if the agricultural question were not solved, the worker-peasant alliance would be broken; and that would mean the political base with the largest population would be lost, industry would be crippled and the working class declassed. But Mao’s approach, which is readopted even by the present rightist leaders in China, did not come easy. It took them years of inner party struggles against right doctrinairism of blindly following the Soviet model. And through their own hard won experiences such as the Great Leap Forward did they arrive at the correct conclusion.
Mao raised the question of steel being the key link in the late 1950’s either in anticipation of Khrushchev’s pulling out all the blueprints and stopping all the aid projects in China, or as a response. In 1960 China was stuck with many projects half-’ completed with Soviet aid and advisors. Added to that grave economic situation was the United States’ total embargo and containment policy to try to isolate China.
Mao and the CPC leaders then resolved to be self-reliant and emphasized steel as the key link. In the Great Leap Forward, the “backyard furnaces” helped to train a whole generation of technicians, but was economically wasteful because most of the steel produced was not up to par for industrial use. Moreover, the campaign disrupted agriculture, the medium and light industries and other sectors of heavy industry.
At the same time, there was an ultra-leftist “communalization wind.” Since people were working hard, going all out for 12-16 hours a day, seven days a week, they figured they should be able to eat anything they wanted. Compounding this was the problem of exaggeration in reports. The Center thought there was a bumper harvest with overachieved goals everywhere. As a result big mess halls were built and an erroneous “left” policy was adopted. People could eat anything and as much as they wanted. A great economic dislocation ensued.
There was tremendous waste. People began using the food to feed pigs. More seriously, after China’s leaders found out that production reports were exaggerated, they were caught in the crunch of a grain shortage. Mass famine in many parts of the country followed. Hundreds and thousands of people actually starved to death.
China’s subjective and impulsive response, which led to the Great Leap Forward was understandable considering Khrushchev’s scabbing on the Chinese Revolution and honeymooning with U.S. imperialism instead. Fortunately those lessons were summed up correctly and in a timely way by Mao, who played a leading role both in formulating the Great Leap Forward policy as well as the organizational measures to correct the mistakes and in summing up the lessons. The situation was turned around. The lesson, as Mao put it, was that communists must proceed from the concrete rather than from any formula, even if it is a correct formula. When steel was stressed as the key link and a mass campaign was unleashed to produce it, other sectors of the economy were liquidated and the entire economy disrupted. Furthermore, no specific plan for the usage of steel was presented, with the quality specified; the result was unusable steel and a widespread waste of resources.
To understand Mao’s saying that grain was the key link, one must look at the role of grain in relation to industry and other sectors. One must qualify concrete time, place and conditions for applying this slogan. It was correct only when grain was the key problem, the weak link in the whole chain of the economy.
The use of slogans is necessary to mobilize the masses. But as Lenin summed up, there are harmful effects in leading a revolution by slogans rather than by comprehensive propaganda.[12] This is a classical problem in the method of leadership, a constant struggle between the need to mobilize, organize and depend on the masses and the need for leadership to have and give a comprehensive plan to the advanced elements and leaders in order to orient them.
As Mao summed up, economic planning in China should proceed from “agriculture as the foundation.” From that basis light industries should be built up to accelerate the agricultural practice. And planners must understand the different kinds of medium industry needed to build up the light industry and agriculture. For example, hand-operated two-wheel tractors are more useful than heavy-duty tractors for China because of the hilly terrain of the farmland. Planning of heavy industry must serve medium and light industries, which in turn have to serve agriculture.
The second aspect of planning involves building up the existing industrial base, no matter how small it is rather than import complete plants from abroad as the Chinese did in the 1978-1980 period which indebted their economy to a devastating degree, rocketing their inflation rate to over 10%. For example, the plan for the Baoshan steel complex was so divorced from China’s conditions (in addition to the country’s lacking trained personnel to run such plants) that it wasted hundreds of millions of China’s dollars and eventually had to be cancelled. This severely damaged China’s international trading credentials.
The phenomenon of a shortage of consumer goods plagues all socialist countries. Besides being an historical limitation, there is an as yet unsolved planning problem in arriving at a correct balance and mutual relationship between the consumer goods sector and the producer goods sector. The fact that today the Soviet Union and China still have problems feeding their own populations show how difficult it is to make an overall plan, particularly for the national economies.
The Chinese leaders are now relearning Mao’s correct approach of building up large industrial enterprises based on the existing smaller enterprises, no matter how primitive. This is correct because the managers and planners already have a feel for the smaller-scale production, the goal of that production, and the quality of the goods. With additional machinery, new plants based on the old infrastructure, or possibly factories left over from colonial times, production will leap ahead. Workers can be trained from the existing core of workers and technicians. The second aspect is to build up the already-existing industries.
Only with a comprehensive national scope should the expansion be tackled–that is, the need for roads and railroads to expand into new areas calls for building up steel for the railroads and cement for the roads. Expansion should take place after maximizing the use of whatever is already available. The third aspect is to build the new economic base–heavy industrial plants, steel mills, petroleum, cement, heavy machinery, etc. to serve that expansion.
The process is to build from the existing base, from concrete conditions, and back down again to build the new infrastructure, the new base to serve basic items like agriculture and consumer items again. Back and forth, back and forth. We must proceed from the concrete conditions, concrete needs, concrete potential and concrete kernels that already exist. From those kernels, diversify and multiply.
For a whole nation’s economy, this line is not so simple to implement. A very complex, modern society has infinite varieties of divisions of labor involved just in making one airplane, for instance, or one car. So many industries are involved that planning is very complicated. In the past, I thought a symphony orchestra was probably the most complicated and advanced thing that humans had ever developed. But it’s clear that orchestrating socialist society is far, far more complicated and far, far more challenging.
This is a very crucial point to grasp because in past Workers Viewpoint articles, we wrote that the failure of Soviet agriculture and the dislocation in the Chinese economy (e.g., the building of the Baoshan Steel Mill and the other large-scale imported plants) were due to the anarchy of production. We saw them as signs of the restoration of capitalism, of the spontaneous market force of the economy acting on what to produce and how much to produce. But from the facts, it is now clear that these problems were due to incorrect planning rather than an absence of planning. There was planning based only on consideration of the needs of localities but not overall planning and all-rounded consideration based on Chinese conditions. It is based on a rightist political line that western technology will solve everything like a miracle, rather than a “leftist” deviation of impetuosity as the revisionists in China claim.
But as a whole these dislocations are noble attempts to master a planned economy, despite the fact that there are often opportunists involved who will try to take advantage of these attempts to get promotions or recognition.
Even with centralized planning, exchange value still exists under socialism. There is still commodity production. Money still plays a role to serve exchange. Profit is still used as an accounting criterion to measure efficiency and further serve planning. Differential wages still exist according to the principle “from each according to his ability, to each according to his work” – how much one is paid depends on how much one works.
All these economic categories will exist until the country achieves material abundance. They will wither away only as the world achieves communism, when there is abundance. Then the productive forces will be so developed that people can get anything they want. Work hours will be short. All youth can afford to go to college. The gap between mental and manual labor, between countryside and city will be narrowed. People’s abilities will be unleashed and developed all-roundedly because we will have advanced technology and advanced consciousness. Until we achieve this, however, the law of value must still operate under socialism to serve the planning.
Earlier I talked about the role of money and the role of commodity production in society, from primitive society with a low material basis to a higher society with many divisions of labor, more advanced productive forces and a higher mode of productive forces. Money, once a tool to facilitate exchange, has become the purpose of production itself, and labor power itself became a commodity. Commodity production has a dual purpose: subsistence as well as exchange. Any product having these two functions is a commodity. Commodity production started long before capitalism. Even in the slavocracy and feudal periods, there was commodity production. People produced to exchange things. Artisans and peasants exchange their products in order to specialize in certain areas. Larger divisions of labor in society began, and that’s basically what commodity production is.
The emergence of capital differentiates capitalism from the previous lower mode of production. The ushering-in of large-scale assembly line production and the high degree of competition mean that in order to survive, one has to increase one’s constant capital to lower the cost of production as well as to intensify exploitation. In any given society with private ownership of the means of production (and thus an unplanned economy) those who can get more constant capital, bigger and more efficient machinery, have the edge in competition. The process of competition causes the value of the commodity to fluctuate around the socially necessary labor. The law of value is a simple, succinct expression of that spontaneous process of production as well as distribution. It says: the value of the commodity is determined by the socially necessary labor. The commodities must be exchanged according to their values.
I must quote the Fundamentals of Political Economy extensively to establish the functions of the law of value under capitalism.
The law of value performs three functions in commodity production based on private ownership. These functions are realized through the spontaneous force of market competition.
First, the law of value is a regulator of production. It spontaneously regulates the distribution of social labor and the means of production among various production sectors. Commodity production based on private ownership is conducted under the condition of competition and anarchy. Nobody has direct information on what or how much society needs. But some order, allocations, and arrangements are necessary for the continuation of social production. These allocations and arrangements are regulated by the law of value and realized through the spontaneous influence of market price fluctuations. If the supply of a certain commodity does not meet the demand for it, its price will rise above its value, and the production of this commodity becomes especially profitable. The production of this commodity will thereby be increased. If the reverse is true, its price will fall below its value, and its production will be decreased. It is in this way that the law of value directs the activities of commodity producers and regulates the distribution of labor and the means of production among various production sectors.
Although the regulation of social production by the law of value imposes certain order in the commodity economy based on private ownership, this order is achieved under the condition of anarchy. It is constantly destroyed by blind competition, and a new order is again spontaneously formed. The establishment of this kind of order is achieved through an immense waste of social labor. Just as Marx said, “This orderless motion is its order.”
Second, the law of value stimulates the improvement of production techniques and labor productivity. Labor productivity is measured by the amount of products produced in one unit of time. Expressed as a formula: labor productivity equals amount of products divided by labor time. The level of labor productivity is determined by many factors. The most important ones are the skill of labor, the state of technology and its application to production, and the extent of division of labor and cooperation. According to the objective requirement of the law of value, commodities are sold according to the values determined by the socially necessary labor. Therefore, whoever is more skilled, more efficient, and uses less than the socially necessary labor time will get more profit. This stimulates the commodity producer to pay attention to improving his production techniques and labor productivity. But under private ownership, the improvement of production techniques by the commodity producer is for the sake of higher profits. Those who possess new techniques will naturally keep them secret. Under these conditions, the development of social productive forces is hindered.
Third, the law of value promotes polarization among commodity producers. This is because the production conditions of various commodity producers are all different. The individual labor time used to produce a certain commodity varies widely. But the law of value requires that commodities are sold according to the value determined by the socially necessary labor. Thus, those commodity producers with better production facilities and with individual labor time less than the socially necessary labor time will make a higher profit and develop faster. On the other hand, those commodity producers with poorer production facilities and with individual labor time higher than the socially necessary labor time will not survive the competition. Thus, the polarization among commodity producers is inevitable.[13]
Socialist planning is complicated. Not only are there heavy, medium and light industries and agriculture, there is also the relation between the producer goods and consumer goods sectors. There are small items, like nuts and bolts, pens, and glasses, most items in the consumer goods sector, which cannot be planned in detail, period.
With different degrees of organization under socialism, one can theoretically organize and plan all the nuts and bolts. If the organization is “perfect,” one can start planning how many pencils are needed, how many watches, how many glasses, how much tape, and how many paper clips. These will all be under the plan. Then the spontaneous function of the law of value operating in the competitive free market will no longer be needed. Theoretically, workers can be so highly conscious that they can deal with all aspects of quality that cannot be planned. But no such “if’s” and “can’s” exist! As long as the material and spiritual conditions for communism have not been developed, commodity production and the law of value to serve planning and complement it are necessary.
Manufactured products from the planned economies of the Soviet Union and China are very crude compared to the capitalists’. Their variety is minimal, the quality is low, and they cannot be competitive in the world market. Historical and political factors and the limits of planning today all play their parts. For example, look at the overall level of economic development of the U.S.S.R. and China when looking at the quality of their products as compared with western goods. Both socialist countries had a much lower level of expertise and were subjected to a trade boycott by the west which prevented their rapidly acquiring advanced technology. Even today, the most advanced western technology is withheld from them. In this respect, comparing the capitalist Federal Republic of Germany to the socialist German Democratic Republic is more fair. In this comparison, East Germany does not do badly and in some respects excels. Overall, the socially necessary labor needed to achieve parity with the west is much higher per unit in most socialist countries. Productivity in the socialist countries, given their material basis, is overall lower. In other words, planning problems are only a part of the quality problem in production.
Secondly, there are political choices to be made if a country on a lower level of development wants to become competitive internationally. Japan, for instance, has developed its industry, especially in the areas of electronics and computer technology, at the cost of increasing dependence on agricultural imports. Thus, the socialist countries must make decisions on how self-reliant they will be. Socialist countries must decide how to invest the social surplus product in these areas, still meet the short- and long-term needs of the people and the state and achieve balance and growth in the economy overall.
Then how do we deal with the questions of quality, efficiency, reliability, variety and service under the overall planned economy? Under capitalism, this is dictated by the blind operation of the law of value, one of whose functions is to force the capitalists to drive down the cost of socially necessary labor, and increase technological innovation under pain of being driven out of the market. Under the conditions of socialism, when the society must strive to create the material and spiritual conditions for communism, this function must still exist and the law of value be used consciously to complement the plan.
There are two ways to do this under socialism. First, it can be consciously regulated through the operation of the planning system. Quality, efficiency, reliability, service and variety to a certain extent can be scientifically determined and of course must be based on the mass line – what the capitalists have called “market information.” Secondly, there must be incentives, both positive and negative, to spur the development of these aspects. These include organizational, financial/material, and ideological/political (including theoretical campaigns) measures built into the system.
The conscious exercise of the law of value by the socialist country to promote productivity and efficiency can be seen in socialist accounting. Based on the requirement of the law of value, the socialist country charges the same price for identical products according to the average social expenditure in production. But because of differing technologies, management and operation, the individual labor expended on the same product may differ from one enterprise to another. The unit costs in enterprises which know how to mobilize the masses through concentric attack and are continually updating technology and lower costs by careful and detailed calculation, may be lower than the average social expenditure. They can fulfill and overfulfil the plan targets assigned by the state and become advanced units. Conversely, enterprises which are careless, wasteful, lag technologically and are unable to mobilize the masses have higher than average labor expenditures and become relatively backward.
Therefore, the unified prices set by the socialist state, making use of the law of value, are conducive to exposing the contradictions of operation and management of various enterprises. As they help reveal the gap between the advanced and backward, they will press various enterprises continually to improve, thus spurring overall socialist production.
Presently both the Soviet Union and China have the problem of bureaucracy in planning. Planning targets are rigidly set by the bureaucrats at the central level and there is little input from the masses and the lower levels. Excessively concerned with sheer output and meeting targets, without a highly developed system to consciously use the law of value in spurring innovation and quality, these aspects are liquidated. This results in quantities of goods being produced which are never sold and used because of their poor quality and lack of consumer appeal.
To a certain extent, this is also caused by metaphysical emphasis on the production and expansion of heavy industry in the plan and insufficient attention to the development of light industry and agriculture–the production of consumer goods. Both quantity and quality suffer for lack of investment and attention by state planners.
But there are limits to the ability to plan, as mentioned before. And there are some areas of distribution that cannot be planned. There the law of value must be used even more, to allow enterprises, including private enterprises, and individual initiatives to serve and complement the state plan. The plan itself has to use key criteria such as “realization” of products (how many are actually sold) rather than sheer output. Profit is only one criterion in the realization of products and often, in heavy industry, the productive sector, it’s not the main criterion.
There is a danger of being idealistic about the importance of the individual independent enterprise’s role as a small decentralized economic unit. Their development may be a step forward for a developing country like China. But such units are virtually nonexistent in the United States today; monopolies have been the rule since the turn of the century. American capitalism is long past the stage of the “free” commodity market. Instead the rule is monopoly collusion and competition – large-scale planning within giant concerns, based not on the nonexistent “free play in the market,” but on advertising campaigns to create markets, on planned obsolescence of products, on marketing research techniques, and the like.
The kind of open competition promoted so idealistically in China and the Soviet Union now does not exist in the United States outside the fantasies of the libertarians. And it would be a step backward for the United States. For the most part, the closing of inefficient plants and consolidation into the more productive plants has already occurred under capitalism. At this point, quality improvement must be stimulated through other forms, such as sharing technological breakthroughs and improving management techniques.
In a socialist United States there will be much better basis and technology for the planning of large economic units than in either the Soviet Union or China. This is evident in the widespread use of computer technology, developed market research techniques, specialized polls, highly developed mass communications, a large body of highly trained economic planners, urban planners, managers and administrators of all kinds. Thus our planning can be more scientific and systematically responsive to public needs than any other country’s has been. This does not mean we can ignore the market forces governed by the law of value, but simply that this market force is only one of many tools available to us in controlling our economic development.
We should also remember that, at its best, the “market force,” so central to Reagan’s “supply-side economics,” is itself a very rough tool. Production based on “market predictions” really means making an educated guess about what will sell. In the pure idealistic model, the right guessers make a profit; the bad ones take a loss and may even go out of business. All of the guessing units are small enough to permit an overall balancing: what one loses the other gains. New guesses are based on what happened before, with everyone just one step behind all the way. To prevent huge imbalances, each guessing unit must be small enough that no major dislocation occurs if it goes out of business.
Giving broader scope to the law of value might be correct for an undeveloped economy which has not had a long period of capitalist competition and monopoly formation. It cannot be useful as a major model for the United States. Neither should it function unchecked in China or the Soviet Union, for as consolidation occurs, the problems of quality, safety and overall balance of production come to the fore and must be solved.
The law of value alone cannot solve these problems. For example, the effects exerted by the operation of the law of value and the state plan can conflict. With regard to the comparative price relations between food grain crops and cash crops and among various cash crops within agricultural production, the prices of some cash crops bring a relatively higher income to the collectively-owned enterprise than the prices of other cash crops. If the law of value is left unchecked, it will conflict with the requirements of the national plan that there be an overall increase in the production of all crops with varying degrees for different crops. When the effects of planning and the law of value are identical, the law of value can play a supportive role to the plan. But when the effects of the two are not identical, the law of value can disrupt the fulfillment of the state plan and plays a negative role.
Finally, the emphasis on leaving initiative to the enterprises raises the question: Initiative to do what? Make a profit alone? If that is the enterprise’s priority, it will have to act in certain ways, which may harm other more important priorities (lasting quality, pollution control, job safety, overall economic balance, full employment, correct relationships between automation and labor, meeting long-term social needs not reflected in the market). Investment in the enterprise, for example, is better than the non-productive speculation under capitalism. But each enterprise’s investment being based on its own profitability can lead to imbalance and hinder the long-term interest of developing more industry in a less developed region (where in the short-term, investment is less profitable). Yugoslavia is a good example. Croatia and Slovenia get richer while Macedonia and the Kosovo become poorer and poorer because they have less development funds. This happens even though the poorer regions have great potential: they are less profitable only because of historical differences like fewer roads, a poorer population with less buying power, and lower skill levels among the workers. Because of such factors, development requires a higher initial investment than that necessary to expand a plant in a more developed region. The law of value alone can never resolve such contradictions.
We see from this analysis that under socialism simple and direct reliance on market forces leads to dislocations. These can and do lead, in their turn, to social and political injustices which retard and weaken the development of whole countries. The lesson in this historical experience is that the knowledge of a law confers freedom to consciously employ it, along with an imperative to employ it correctly. However, other conclusions besides this one have been tried. As we shall see, the attempt to simply abolish the law of value succeeds no better than the decision to rely on it alone.
With the development of material abundance and a high degree of automation (including cybernetics) in a society, products will be of high quality because the emphasis can shift to use value rather than exchange value. Furthermore, under those material conditions, high cultural and spiritual conditions will be achieved. Work attitudes will change so radically that work will be considered a pleasure rather than a burden. Work hours will be short and all workers will have abilities comparable to our present highly trained scientists and technicians. Under these conditions the quality and variety of products will be no problem.
Then and only then can we dispense with the law of value with its three functions in planning. Planning itself will be sufficient because it will be so developed and refined. Of course, that’s communism–”from each according to his ability, to each according to his need.” But in the prolonged period of transition from socialism to communism, for hundreds of years to come, the law of value will be needed to serve planning. The principle of “to each according to his work” will apply. That’s why commodity production, money, different wage grades, and bourgeois right will exist.
To deter and defeat imperialist aggression, safeguard socialism and create the material conditions for communism most rapidly, efficiency and the quality of goods must be a very high priority. The use of the law of value, market forces, and wage differentials are attempts to complement planning and to achieve these necessary results. As long as experts create overall material conditions to unleash greater production most effectively (which a lot of proletarian elements and cadres, such as the Bolshevik cadres, the old Iskra core and the CPC core, historically have been unable to do), even though they are paid four to five times, even twenty times, higher wages and a prejudiced stratum-mentality develops, they will actually more speedily create material basis for the proletariat to realize communism. Improved production will benefit the proletariat because the public sector will benefit (e.g., free universal education, free cultural clubs for workers, accessibility of TV and radio) and the proletariat can use these tools to educate and consolidate themselves rapidly.
The technology already exists in the United States for every household in the country to have an interactive computer terminal and TV system. An interactive system allows the viewer to respond to questions put to him over the TV. (With the Qube system in one area of Ohio, viewers have response consoles hooked up to a central system. Polling on different issues is through the TV.) However, because of the impoverishment of the proletariat, it is unlikely to go far beyond the relatively privileged in this society. Moreover, capitalists use it mainly for their own purposes, such as polling on candidate and program preferences to serve the manipulation of public opinion.
Under socialism, distribution of an interactive system free or at very low cost will allow it to be used to expand democracy and direct democratic participation literally millions of times among the masses. People would have at their fingertips the information they need to make important decisions as well as the opportunity to become educated in many different fields. Mass debates on burning questions could take place nationwide over the system. This is only one example of how the development of the productive forces under socialism could directly serve to educate and consolidate the rule of the workers.
This potential is particularly significant for countries like China, where the peasants now have no means to educate themselves rapidly–to learn recent technology and industrialize. Therefore the ability of the vanguard to consolidate them on socialism is hampered and limited. Enlarging the public sector will help to raise the cultural level, the overall knowledge-level, of the workers. As long as there is planning, the expertise of the experts will help create conditions to move closer to communism in terms of material abundance, the material basis for communism.
Of course, enlarging the public sector and improving production will not, in and of themselves, achieve communism. Stress on production will not automatically raise the level of consciousness. Everyone may have a TV, but if all the programs are junk, it doesn’t educate the workers. If universal education is achieved and everyone can go to college, but the curriculum is irrelevant, it does not really educate the proletariat to run their own country. Enlargement of the public sector as a result of the development of higher productive forces does not then serve its purpose.
There is no absolute and relative impoverishment built into the socialist system as there is in the capitalist system. However, in the various spheres of the social system problems certainly exist which must be resolved. There are many, and if not addressed they can become antagonistic to the development of the socialist system.
Some have asked whether these are signs of the restoration of capitalism in the Soviet Union. We must answer with a categorical no. As I have demonstrated, there has not been a restoration of capitalism in the economic base nor a smashing of the socialist state machinery–and the latter is the necessary bottom line of restoring capitalism. In terms of method, it would also be fallacious to use the problems of socialism as proof that capitalism has been restored. This would be to believe in socialism solely as an ideal, rather than seeing it as a transition from capitalism to communism, a social system dealing with concrete problems in the real world. Looking at socialism in an idealist light, and not from the scientific viewpoint of what problems of capitalism it has already resolved and what problems in both theory and practice it has yet to resolve, leads to conveniently dismissing the problems of socialism as “capitalist” and scientifically dissecting them in order to find real solutions. Such solutions, by the way, are not possible under capitalism and necessitate the overthrow of the capitalist class.
What are some social problems in the Soviet Union today? And what are the causes and possible solutions? While we cannot give a totally comprehensive answer, we can give some preliminary answers.
In the Soviet Union, there are clearly problems with health of the population as measured by mortality rates, and rates of alcoholism and crime. First of all, we must restate that the Soviet Union’s standard of living has steadily been increasing, without the wasteful and tortuous booms and busts of the United States and other capitalist countries. Secondly, these are relatively recent problems, becoming acute only in the last two decades.
When the Bolsheviks took state power in 1917, the infant mortality rate was 25-30%: about one in three babies died within the first year of their life. The average life expectancy in Russia was 30 years. Showing the incredible advance of socialist medicine, by 1960 the infant mortality rate was almost as low as West Germany’s with the Soviet Union’s per capita output far smaller. Moreover, the average Soviet citizen was living longer than Americans in the most highly developed economy in the world.
One demographer wrote in the New York Review of Books that the Soviets’ own reports show conditions have deteriorated since then. Infant mortality rates went up by more than a third from 1970 to 1975 and death rates rose for almost all age groups. According to the Soviets, from 1960 to 1975 (the last year for which published data are available), death rates for men and women in their 40’s and 50’s rose by 20 to 30%. Soviet life expectancy is now six years lower than in western Europe and infant mortality three times as high.[14]
One of the causes, according to the article, is that the Soviet Union now is reducing the share of the national budget allocated to health care because of severe economic dislocations. The irony, says the writer, is that declining health is itself a burden on the economy and a barrier to growth of productivity. But recognizing this problem, the Soviet Union is putting more emphasis on health in its new five-year plan.
The context for this is the large amount of money the Soviet Union is constantly putting into defense, a steady 10% of their output per year. In recent years of poor economic performance it constituted an even higher figure, as this spending was not only steady but increasing. This necessity, in the face of the U.S. imperialists is definitely hurting the Soviet people and is a concrete sacrifice made in fighting the main enemy of the peoples of the world.
But there is another side to the picture which we must address–the growing alcoholism and disorientation among the Soviet people. For one thing, alcoholism seems to be growing for the Soviets, even by their own admission. Alcoholism has also been pointed to as a reason for the decline in health in the Soviet Union, as it affects both infant and adult mortality rates. Per capita consumption has grown to the point where it is double that in the United States. In this country, of course, the problem is fundamentally more serious, with at least 10 to 20 million confirmed alcoholics and about 50 million people who are on tranquilizers and other drugs.
This brings us to another question: What is the effect of the bureaucratic and revisionist line of the Communist Party of the Soviet Union? Today, people in the Soviet Union carry pictures of Stalin because they say at least Stalin cared about the people and tried to control the privileges of the bureaucrats. Today, they say, people in power don’t care about anyone but themselves and their privileges. Part of the discontent with the leadership is caused by the condition of the Soviet economy in the last decade. There have been shortages in meat and milk and prices have been going up in certain products, even though the overall standard of living is higher today.
But to say that the Soviet people are just thinking about their daily bread and butter makes them look like pure philistines. Their history of struggle and sacrifice shows the opposite, especially considering their experience during the antifascist war (World War II).
No, there is a fundamental difference. The revisionist line and leadership of the CPSU has demoralized the Soviet people and turned them inward. Lack of concentric attack, lack of revolutionary politics and mass line, and lack of criticism and self-criticism by the Soviet Party, have made the Soviet society stagnant and increasingly ossified. As I said before, this definitely affects the morale and thus productivity of the workers and especially the youth. A bad taste in their mouths from the stale official Marxism gutted of its revolutionary essence, the workers and youth are left without revolutionary enthusiasm and are increasingly trying to drink their problems away.
Mao, and more recently the Polish Party, faced the same kinds of problems, although not necessarily the same manifestations. For precisely this reason Mao unleashed the Cultural Revolution, and to a certain extent this led to the revolt of the Polish workers. Whatever the problems with both, they rejuvenated the political scene in both countries and unleashed the masses’ enthusiasm.
Part of planning rationally and using the law of value to serve socialism is understanding motivation. A common question is, “If everybody draws the same salary and there’s no individual incentive, why would anyone work hard? Why work at all?” This is incomprehensible to the majority of people in this country today. In this society we’re brought up to think that either you step on others to get ahead, or others will step on you. Capitalism breeds a lot of selfishness.
Our perspective under socialism will be that of rulers of the country, and masters of our own society. We will know that we’re helping other people around the world in their own just struggles. The ideal situation is that the consciousness of socialist emulation will be the principal motivating factor. It exists now among the advanced elements. But if we falter in implementing the concentric attack, particularly the aspect of socialist education and struggle against bureaucracy and revisionism, the middle workers will lose sight of the goal and even the advanced may become cynical and slow down. For example, in China today, there is a problem of cynicism, disillusionment, and disorientation because of rapid changes in the political system and the revisionist sum-up of the last 30 years.
In China jobs are guaranteed and it is very difficult to fire a worker. How hard one works is secondary. Bureaucrats especially don’t care because there are no criteria for high productivity and efficiency. They don’t apply mass line; they don’t orient the workers on their roles in production in relation to overall society and to world revolution.
The Soviet leadership for over a decade has decried the failings of ideological work and orientation within the Party and among the masses, especially the youth. In fact, in the 26th Congress of the CPSU held in 1981, Chairman Brezhnev again criticized the failings of the propaganda work of the Party, asking, “Have not our forms of mass political work become fossilized?”
But Brezhnev saw the solution as the “restructuring of many sectors and areas of ideological work.” In other words, the problem would be dealt with in a business-as-usual bureaucratic manner, without the participation and mobilization of the masses. Therein lies the weakness of the Soviet line on this important sphere. The root is theoretical justification of line, which came out years ago in the Soviet Union’s sum-up of Mao Zedong Thought, particularly criticizing two of his basic theoretical formulations, the “mass line” and “wave-like development of things.” The Soviet criticism comes down to denying a basic law of dialectics, the law of the transformation of quantity into quality, that is, the law of leaps in development.
The criticism of Mao was mainly on the economic front, and the linear, metaphysical line of the CPSU came out fullblown. They said, “A most important special feature of socialist reproduction is its continuous nature and the high and steady economic growth rate resulting from balanced development of the national economy in the conditions of socialist property ... . Under socialism, the interconnection between the various aspects of production is established in a special balanced manner, a major element of the latter being the constant and consciously maintained proportional development of social production.” Later they write, “With their vulgar view of Marxist dialectics, the Chinese economists have perverted the essence of the law of proportional and balanced development, saying that the impossibility of ensuring a steady growth rate is an inevitable tendency in the development of socialist production’.”[15]
This line of “steady development” reflects the basic political conservatism and essential stagnation of political thought among the Soviet leadership. While it is all well and good to criticize specific attempts to leap, specific campaigns, or specific attempts to lead, it is altogether another thing to criticize dialectics and fall into a kind of numbing “business-as-usual all the time” bureaucratic approach towards the masses.
There can be no doubt that the Soviet leaders have done this. They vilify all attempts at political campaigns, pedagogic campaigns initiated and led by Mao. For instance, they say that “In the last few years, one of the main methods used by the Maoists has been to stage deafening’, ’thunderous’ mass campaigns which shake heaven and earth,’ which generate unhealthy passions and instincts and violate elementary social rules, and the legitimate interests and rights of citizens.”[16]
With this kind of metaphysical, “socialism as an intellectual exercise in a pure environment” kind of line, it’s no wonder that the ideological vigor and political liveliness of the Soviet Union have deteriorated. The lessons of Poland show that this is not stability, but instability waiting to erupt. We can only hope that the Soviet leadership heed the warning signs before they are doomed to repeat the lessons of the past.
Socialist education and theoretical campaigns are necessary. At the same time, day-to-day ideological education by itself is not sufficient. If people don’t see a visible improvement in their standard of living after a few years, the Party’s rallying banner will cease to have its effect. If people still have to wait in long lines to buy meat, if grain is still rationed, if they can’t get consumer items such as TV’s and radios to broaden their scope and find out what’s happening around the world (and this materialistic desire doesn’t have to stem from the psychology of “keeping up with the Jones,” although inevitably there is some of that under socialism too), then they will think all the ideological discussion is just nonsense. To unleash productivity, more than ideological incentives are needed. It has to be clothed by organizational measures to yield results and reinforce the authority of the Party’s ideological line. Then people will be encouraged and their belief in communism and proletarian internationalism deepened.
This is related to how we see the slogan ”grasp revolution, promote production.” It is a correct slogan. But how do we grasp revolution to promote production? What is the link between the two? How we implement the slogan is where the art of leadership comes in. There is correct and incorrect understanding of the slogan. The incorrect way of understanding and implementing it is to overthrow all existing authority, and have political campaigns all the time. But this understanding cannot codify the lessons and victories of campaigns into the socialist legal system, into organizational gains, into real gains in production. It cannot generate concrete improvement in the political and spiritual life of the workers. It’s “combat, prevent, restrict and overthrow” all the time. Just being “anti-right wing,” or having campaigns “against Water Margin” or “against the right deviationist wind,” is a caricature of “grasp revolution.” When the correct relation is not grasped, it is one-sided and will turn into its opposite; then economic and cultural life are neglected. Of course, in a revolution, such as the Cultural Revolution, normal balance needs to be and is disrupted. This is only to create a new order, a new relationship on a more vigorous level. But this did not happen after the Ninth Congress in China.
The correct view of “grasp revolution” is to see it as manifold. It has to be reinforced with organizational measures, so production yields results, and scientific experiments and culture become richer, more varied and inspiring. Proletarian culture must be developed to the point where it beats religion any time and people don’t need to fall back on the “old world,” i.e., they don’t need to go to church anymore. Then morale will be high, people will work hard and look forward to the future with enthusiasm. The working class needs an internationalist perspective on their duties in the course of fighting revisionists and bureaucrats, so they know who the real bosses are, and see their own strength. They need to be able to constantly sum up and enforce those policies into laws, into a socialist legal system and customs which guarantee workers the right to strike, to speak up, to hold a different line and opinion without being prosecuted and thrown in jail. Socialist customs and ethics will aid in resolving non-antagonistic contradictions among the people and forge genuine socialist humanity with a lofty world outlook, labor attitude and force of habit. Higher productivity of society, given the spiritual reinforcement, will heighten the productivity and socialist culture. If a society like China lacks certain material basis (such as TV’s, radios, and universal education beyond the high school level), socialist consciousness can only be raised so high. It cannot sustain itself because there are no means of communication to reinforce it.
The theoretical basis for material incentives is connected to distribution relations under socialism. In any society, ownership relations determine distribution relations. Who controls the means of production is of decisive importance. In capitalist society, because the capitalists own the means of production, workers are forced to sell their labor power and the capitalist exploits and oppresses them. Under socialism, because the main means of production are owned and controlled by the proletariat, distribution of products and the social surplus are in the hands of the proletariat and the distribution principle favors the workers.
After certain necessary social deductions are made from the gross social product of the society – for such things as replacement and investment funds for expanded reproduction, for social needs such as schools, hospitals, social insurance, national defense, and the cost of the state apparatus – the rest can be distributed as personal consumption goods to the workers. Under socialism, the principle of distribution is “from each according to his ability, to each according to his work.” This is a historic revolution in the distribution relations compared to past societies. In the slave, feudal and capitalist societies, inequality in the ownership of the means of production meant that distribution relations were based on the relation between the exploiter and the exploited. The principle of “from each according to his ability, to each according to his work,” meaning that those who do not work do not eat, is a fundamental negation of the centuries-old distribution system in which people exploited people.
Under socialism, why must the principle be “from each according to ability, to each according to work” rather than “from each according to ability, to each according to need”? Because the material abundance and spiritual conditions necessary for this communist principle do not yet exist. Most people do not see work for society as a whole as a pleasure, nor do the material conditions exist such that it could be so. The real conditions are such that it is not possible nor practical to distribute according to need. Only the principle of “from each according to ability, to each according to work” meets the development needs of the productive forces and can be understood and accepted by the broad majority of the workers. Until the material and spiritual conditions are created to achieve the principle of “to each according to need,” the socialist principle of “to each according to his work” will be the principle of distribution of consumer goods under socialism.
There are two dangers, however, in implementing this socialist principle. One is the possibility of increasing polarization in the society, because equal rights in distribution according to labor still bear traces of the old society. As Marx pointed out, “The principle followed is still bourgeois legal rights.”[17] It is true that for labor to determine the distribution of consumer goods leads to more equality than under capitalism. But conditions and abilities vary among people. Some people are stronger or more able. Some only have to support themselves while others have to support a whole family. Under the conditions that an equal amount of labor brings an equal amount of compensation, the standard of living for those who are strong, skilled and have fewer mouths to feed is higher. Thus inequality in reality results, due to bourgeois right in distribution. This can only be totally overcome when the material and spiritual conditions for communism exist. In the meantime, with the development of the productive forces, there has to be a rational policy towards creating the conditions for the gradual narrowing of the disparities in income and restricting the sphere and scope of operation of bourgeois right in distribution.
On the other hand, the second danger is to try to force absolute egalitarianism as the rule. Absolute egalitarianism is in total contradiction to the socialist principle of “from each according to ability, to each according to work.” As with polarization in distribution, absolute egalitarianism hurts initiative in labor, hinders the development of production and is unfavorable to socialist enterprise. It undermines a very important part of necessary incentives under socialist society – material incentive.
We should not, however, think that material incentives in the Soviet Union and China are purely a matter of individual paychecks. There are actually two forms of material incentives in operation, both payments to individuals and the collective social welfare fund (as it is called in China) or the “material incentives fund” (in the Soviet Union).
The Soviet Union puts it this way: “Every enterprise that works normally makes a profit. Under the terms of the reform part of the profits go into the state fund, the rest remaining at the disposal of the enterprise concerned. This is done to stimulate production. The better an enterprise works, the more goods it produces and realizes, the more profit it makes. Part of this profit is spent on its production needs, particularly on purchasing new equipment, and the rest goes into the material incentives fund. From this fund the staff of the enterprise who have made a good showing at work receive bonuses in the forms of additions to their basic wage and lump sums at the end of the year. Considerable sums from this fund are spent on improving the staff’s housing conditions and building cultural and service establishments.”[18]
China is experimenting with a similar system. In a recent article, the Chinese talk about the experiences with bonuses based on productivity and the welfare fund. The enterprises used their welfare funds drawn from a portion of the plant’s profit to put up apartment buildings for the workers and the staff. According to the article, “Neglect of the workers’ welfare over the years had resulted in a serious housing problem. In the Sichuan Chemical Plant, 300 couples lived separately in dormitories for single workers. In many enterprises, the average housing space per person was two square meters. In the past, an enterprise had no authority to build housing exceeding 20 square meters. Now the enterprises under experiment have all made plans to solve the housing problem and have set about the construction of apartment buildings. The Sichuan No. 1 Cotton Textile Printing and Dyeing Mill, which has 8,130 workers, is getting an annual welfare fund of 900,000 yuan, with which it has started to build apartments.... Comrades in enterprises under experiment predict that the housing problem will be solved for workers in most of these enterprises by 1985 if construction proceeds at the present pace.”[19]
One of the idealist deviations of the CPC in the years after the Cultural Revolution concerned material incentives under socialism. In a section from the Fundamentals of Political Economy called “In Nurturing the Communist Labor Attitude, We Must Criticize and Repudiate Material Incentives,” they say:
It is the nature of the bourgeoisie to be attracted by money and profit. But the bourgeoisie generalizes it as univeral human nature. They say that ’to work for money’ is ’human nature’ in order to poison the proletariat.
Modern revisionists try to replace the socialist principle of ’from each according to his ability, to each according to his labor’ with ’material incentives.’ . . .Why did they make such noise? Their ultimate intention was to lead the laboring people to the stray path of bourgeois individualism and to restore capitalism. The worker comrades put it nicely: material incentives are the opiate to paralyze the revolutionary combat spirit, sugar-coated arsenic and a soft dagger that can kill without shedding a drop of blood.
In socialist society, the bourgeois preference for leisure over labor is inevitably reflected among the laboring people so that some of them do not work hard and their socialist labor activism is not high. What can we do about such cases? Should we insist on having politics in command and strengthening ideological education or should we rely on putting money incentives and cash in command? This is an issue that involves which direction the proletariat and the laboring people should follow. It is an issue of which road to follow.[20]
The CPC’s line is no doubt a reaction to the Soviet Union’s one-sided line of spurring production through material incentives while liquidating all-rounded political and ideological work among the people. But the CPC line went too far and degenerated into voluntarism. In arguing for their idealist line, the CPC contradicts its explanation of the principle of “from each according to his ability, to each according to his work.” One reason they put forward the principle, and correctly so, is that “it can be understood and accepted by the broad masses of the laboring people.”[21] At the socialist stage, in other words, the spiritual (as well as material) conditions for communist society are still being built. The broad masses still lack the “communist labor attitude” of working solely for the good of society. The communist attitude toward labor has to be built step-by-step as socialist society develops.
Therefore, in the meantime there must be both material and spiritual incentives to spur productivity. This is thoroughly consistent with the principle of “from each according to his ability, to each according to his work.” The more you contribute, the more you get. The problem with the CPC line is that it pits the spiritual incentive (such as political education) against the material incentives, and ends up blaming the masses for not having advanced communist consciousness. Instead of promoting an all-rounded concentric attack based on the totality of objective and subjective factors, therefore, they are at the opposite end of the vulgar materialist line of the CPSU and fall into the pit of idealism.
As long as the principle “from each according to his ability, to each according to his work” applies, then those who have high consciousness and who work harder should be given incentives, both material and spiritual. The advanced should be promoted. Over and above the basic guarantee to have tenure on the job, monetary incentives are correct and necessary. But they should only be implemented in combination with social and spiritual incentives. Monetary incentives alone can allow capitalist spirit to prevail. People will become selfish and this will retard the development of productive forces.
Socialist emulation campaigns are where peer pressure and public spirit come in. Like sports conducted in a healthy atmosphere with the spirit of “no matter who wins, production for socialism will be pushed forward,” it will mean creating the material basis for aiding national liberation struggles and higher standard of living for all. That’s the situation among workers in factories and on state farms, where there is public ownership of the means of production.
For communes or small handicraft industries where the ownership is collective or individual, (the U.S. equivalent of mom-and-pop stores, street peddlers, and artists) material incentives are clearly present. How much they produce is how much they earn. There can be a tax system so that the more money they make, the more the state will benefit. In these situations, competition benefits mainly the individual. But as long as there is state ownership (of finance, heavy industry, and transportation) these remnants of small individual ownership and collective ownership can exist. They will not undermine the state ownership but can complement it. For example, the production of various consumer items, like toys, which cannot be planned, can invigorate the overall social and economic life of the country rather than go against it. The main thing is not to be uptight about them. As long as the overall economic, political, cultural and ideological life is strong and healthy, such elements cannot overwhelm the tremendous material advantage of the state sectors and socialism. And this strength is still the mainstream of life in China and the Soviet Union today.
The positive aspect of competition and incentive is definitely required. The only way to combat the negative aspect of material incentive is not to suppress and eliminate the law of value, or arbitrarily upgrade the ownership system, but rather to strengthen the mainstream of economic life all-roundedly, so they will be absorbed and become insignificant. As the material basis is enriched the planning will improve, and ownership can develop toward its higher forms. Some artists could begin to work for the state and the cultural ministries, and at the same time retain their individual creativity and individual style. The negative aspect of the law of value will be eliminated by the material growth under socialism.
Right now there are ideological/political problems in the Soviet Union and China even though they are fundamentally socialist. The same is true of Poland, where imperialist interests have penetrated deeply. There are rightist, revisionist, tailist lines in China, the Soviet Union, and Poland. The leaders do not unleash the masses’ sentiment for grasping revolution to promote production. In other words, they do not have what Engels called a “concentric attack” to fight to create both material and spiritual conditions for communism.
Raising the standard of living, the material conditions and basis is not sufficient. We must also wage ideological/political campaigns over the content of culture such as TV programs and school curricula. If we do not struggle over that, production will slow down. The whole structure and system will be bureaucratized. This phenomenon of bureaucratization, lack of professionalism and lack of vigor is a problem faced by us, by the Soviet Union, and by every revolutionary party; and this problem intensifies after the seizure of state power.
There has to be concentric attack in socialist countries after the transformation of the ownership of the means of production to the proletarian state. It is necessary to step up production and develop the productive forces, while at the same time struggling to raise the ideological/political level of the masses through various forms of class struggle–mass campaigns to criticize imperialism, study Marxism and criticize revisionism. Otherwise, the tendency to stagnate and slow down will become dominant. In such a situation, the bourgeois elements will be able to come into full play, imperialists will be able to penetrate more effectively and both will try to instigate the overthrow of the proletarian state. The concentric attack, concurrent promotion of ideological tasks and production, is crucial.
[1] V.I. Lenin, “Tenth Congress of the R.C.P. (B.), March 8-16, 1921,” Speeches At Party Congresses (1918-1922) (Moscow: Progress Publishers, 1971), pp.245-246.
[2] Lenin, “Eleventh Congress of the R.C.P. (B.), March 27-April 2, 1922,” op. cit., p.313.
[3] Lenin, “Eighth Congress of the R.C.P. (B.), March 18-23, 1919,” op. cit., pp.109-110.
[4] Lenin, “Tenth Congress,” op. cit., pp.244-245.
[5] Chang Chun-chiao, op. cit., p.10.
[6] Fundamentals, op. cit., p.10.
[7] Ibid., v.271.
[8] Charles Bettelheim, Cultural Revolution and Industrial Organization in China (New York: Monthly Review Press, 1974), p.91.
[9] C.f. the argument in Fundamentals, op. cit., pp.326-327.
[10] Red Papers 7, How Capitalism Has Been Restored in the Soviet Union (Chicago: Revolutionary Union, October 1974), p.55.
[11] E.G. Liberman, “The Plan, Profit and Bonuses,” Pravda, September 9, 1962, reprinted in Alec Nove and D.M. Nuti, (eds.), Socialist Economics (Baltimore: Penguin, 1972), p.313.
[12] V.I. Lenin, The Tasks of the Youth Leagues (Peking: Foreign Languages Press, 1975), pp.3-4.
[13] Fundamentals, op. cit., pp.53-55.
[14] New York Review of Books, December 1980.
[15] E. Korbush, The Economic ̶o;Theories” of Maoism (Moscow: Progress Publishers, 1974), pp.61, 78.
[16] “The Attitude of Marxism and Maoism to the State and Proletarian Legality,” A Critique of Mao Tse Tung’s Theoretical Conceptions, P.148.
[17] Karl Marx, Critique of the Gotha Programme (Peking: Foreign Languages Press, 1972), p.16.
[18] A Short History of the Communist Party of the Soviet Union (MOSCOW: PROGRESS PUBLISHERS, 1974), P.339.
[19] REN TAO, SUN HUAIYANG AND LIU JINGLIN, “INVESTIGATION REPORT: ENTERPRISES IN SICHUAN PROVINCE ACQUIRE GREATER INDEPENDENCE,” Social Sciences in China, VOL. 1, NO. 1, MARCH 1980 (PEOPLE’S REPUBLIC OF CHINA: SOCIAL SCIENCE PUBLISHING HOUSE OF CHINA, 1980), P.208.
[20] Fundamentals, op. cit., PP.469-470.
[21] Ibid., P.458.