Group of International Communists

Fundamental Principles of Communist Production and Distribution


Translated and Edited by Mike Baker: published by the Movement for Workers' Councils, London 1990.
Marked up by Jonas Holmgren for the Marxists Internet Archive.

Table of Contents:


The Communist Mode of Distribution


1. The Relationship of the Producer to the Product

Following upon all that has been outlined hitherto, we can now move on to deal relatively swiftly with the question of distribution. The fundamental aspect here, of course, is and remains that of securing an exact relationship of the producer to the product. We have seen that all economists who have concerned themselves with the problem of the distribution of goods and services in a communist society have not conceived this relationship as being determined in the sphere of production itself, but have made it the nodal point of competitive or antagonistic political or economic relations amongst the consumers. This however means nothing other than that the struggle for power in the State, for a dominant position within the relationship of the producer to the product, is still burning at the heart of society and is continuing to make its corrosive influence felt. Wherever, on the other hand, the producer determines a relationship to the social product directly through labour, a price policy is rendered both completely impossible and unnecessary. The conditions for the "withering away" of the State are then for the first time given, and we can say:[1]

"The society which organises production anew on the basis of free and equal association of the producers will put the whole state machinery where it will then belong - into the museum of antiquities, next to the spinning wheel and the bronze axe."[2]

"The government of persons is replaced by the administration of things and the direction of the processes of production".[3]

As soon as the decisive relationship between producer and product has been firmly anchored, it only remains to carry through the integration of industrial establishments in both horizontal and vertical directions for the production process to be structured in the most rational way possible. This integration is a process which has its starting point in the producers themselves. Today, under capitalism, it is the profit motive which leads to amalgamations of economic concerns - trusts, price rings, cartels and similar organisations. Under communism, when the profit motive has been excluded, it is a question of linking the industrial establishments with one another in such a way that a smooth flow of products from establishment to establishment or, alternatively, from a productive establishment to a distributive cooperative, can fully unfold. The exact computation of all those values, expressed in labour-hours, which flow into and out of the factories and other economic establishments, ensures the smooth operation of the whole distributive process, responsibility for which can then rest with the producers without any intervention by a State authority. The distribution of the greater part of the total social product, that is to say that represented by means of production, which flows ever anew to each productive establishment or factory, also fall unreservedly within the sphere of responsibility of the producers themselves.

If we now focus our attention upon the question of the distribution of those products destined for individual consumption, emphasis must be placed upon the mutual interdependence of production and distribution. Just as that mode of administration of the economy which proceeds from a directing centre requires the method of allocation according to subjective norms reflecting administrative judgement, in just the same way the association of free and equal producers makes necessarily a corresponding association of free and equal consumers. Thus distribution also takes place collectively, through cooperation of every kind. We have already demonstrated how, in this respect at least, Russia provided a glowing example of how consumers organised themselves in a short space of time in order to be able to distribute the product independently, that is to say independently of the State. However we have also demonstrated that this Russian independence was only a farce, because the relationship of producer to product had already been determined previously in the higher spheres of the administration. Nevertheless, in itself the form of distribution thus achieved remains a positive achievement.

It is not the task to provide here a description of the process leading to the amalgamation of the distributive cooperatives. This will most certainly vary according to local conditions and the type of product to be distributed. Nevertheless, it is necessary that we make clear the general principles of distribution, as these are given, determined by and developed from the character of the social system of economic regulation and accounting control. This necessity arises out of the fact that it is our fundamental responsibility to demonstrate of what crucial significance it is that the system of distribution should not in any way infringe the principle of an exact relationship of the producer to the product.

In the course of our examination of the system of economic regulation and accounting control based upon average social labour-time, we have seen that this relationship develops, grows in strength and implants itself socially irrespective of and unhindered by the general charges imposed by society, and so ensures that "the full yield of their labour-power" accrues to the workers as a whole. Expressed in another way, this means that the costs entailed in distribution must be adopted as a part of the general GSU budget. The distribution of goods is a general social function.

Thus the costs of distribution cannot be borne by each separate distributive cooperative alone, if for no other reason than that, as its end result, this would infringe the principle of an exact relationship of the producer to the product. Were this to be introduced, the centralised administration of the distribution organisation would then be compelled to apply a "price policy" in order to cover these costs, and this would then lead to the principle of distribution according to arbitrary administrative decision being smuggled in by the back door. If we consider a distribution organisation from its aspect as a consumer of p and L, then it becomes clear that it has to be classified as an economic organisation of the GSU type. The product or service which is the result of its activities is precisely the distribution of products.

From this characterisation it can be seen clearly that these organisations are bound by the same rules as apply to all GSU establishments. Like all others, they also prepare a budget in which is shown how much (p + c) + L = service (i.e. is equivalent to x product-hours available for distribution). Within the framework of this schematic the distribution organisation has complete freedom of movement and is "master in its own house", whilst at the same time we have ensured that, in the sphere of distribution also, the principle of an exact relationship of producer to product has not been infringed.


2. The Market

Although we have indicated the basis upon which distribution should be founded and the structure it should take, one important problem nevertheless remains for solution; this relates to the question as to whether or not the necessary total quantity required by consumers is available for distribution; in other words, production must correspond with and reflect the needs of the population. For this to apply, we must in the first place have knowledge of the scope and quality of those needs; then the output of the productive establishments - and, where appropriate, the GSU ones as well - can be regulated to correspond harmoniously with them. This is to some extent a crucial question, since our opponents choose this as the precise point at which to direct their criticism. They declare bluntly that communism, which seeks to replace a value-engendered economy with an economy of use, disposes of no means by which to ascertain what the needs of society are. Capitalism, of course, solves this problem spontaneously. Wherever and as soon as a greater demand for certain products arises, this makes itself felt in the market in the form of an increase in the prices of the relevant commodities. Since the resulting higher profits then attract investors, capital then tends to flow towards that sector of production in which those articles are produced, so that the increased demand is satisfied relatively rapidly. A reduction in demand has, of course, the opposite effect upon production. In this way the market mechanism fulfils the function of a regulator of demand.[4]

It is a well known fact that this market mechanism is not the innocent tool that it appears at first sight. For it is precisely this mechanism which forms one of the nodal points through which the colossal production crises of capitalism express themselves, crises which deliver over thousands to a life of hunger and want and which also form the source of imperialist rivalries which drive millions to their death on the battlefield.[5] Nevertheless, the market is, and has been in the past to even a greater degree, an indicator of demand under capitalism. Communism, on the other hand, knows nothing of markets, also price formation and supply and demand are unknown to it, so that it has to make do without these well-known mechanisms. It was in this sphere that the notorious "devourer of communists", L. Mises earned his laurels, to the accompaniment of thunderous applause on the part of his worthy peers. With the following words he proved the economic impossibility of communism:

"Where there are no free market relations, there is no formation of prices, and without formation of prices there can be no 'economic regulation'"[6]

For Block also this was a problem the solution of which remained veiled in deepest obscurity:

"Wherever individual exchange is eliminated, production becomes a matter of social necessity, and for that reason the products themselves become objects of social necessity. As for the methods by means of which that which is deemed socially necessary are to be arrived at and determined, Marx did not concern himself further. So long as it is not possible to demonstrate by what alternative the market mechanism is to be replaced, it is not possible to conceive in practice of a non-monetary system of regulation in a socialised economy, that is to say a rational form of socialism."[7]

Thus Block has no solution to offer. The solutions proposed by Neurath and others, he considers to be impracticable - a view in which we can share. All these solutions to the problem point in the same direction and are turned out according to the same Hilferdingian recipe "with all the means made available by organised application of statistics", and thus one which yet again makes necessary a centralised right of disposal over the social product.

Before we can look more closely into this question, we must first come to grips with the two distinct characteristics possessed by the capitalist and the communist modes of distribution respectively. In the above passage we have conceded that, under capitalism, the market functions as an indicator of demand. A closer examination of this matter, however, shows that this is true only to a limited degree. Under capitalism, labour-power is a commodity, with a more or less definite market price. This price revolves around the subsistence minimum needed by the worker. Out of the price yielded by the sale of a particular unit of labour-power, the wage, that labour-power is reproduced, and therewith the matter has an end. The social product may grow to an immense degree, but the worker still receives only a subsistence minimum. Of course, needs may become greater; they are, of course, stimulated by the greater mass of products available, a great many of which are in any case unattainable. Capitalism may refer in as generous terms as it likes to its precious market mechanism, which is supposed to function as an indicator of demand; in reality it does not take these needs into account, or at least knows them to a far lesser degree even than do those who would seek to replace the market by a statistical apparatus. For capitalism, it is not even necessary for the market to be known precisely, because in the final instance, and particularly as far as the proletariat is concerned, it produces not for need but for profit. In other words, as far as the proletariat is concerned, the famous market mechanism moves only within the narrow limits prescribed by the subsistence minimum, whilst any knowledge of demand in the communist sense of the word is quite unthinkable. The bourgeois economists know this well. Block says in this connection:

"The process of price formation sees to it that only the most urgent needs are satisfied, that is to say those needs for the satisfaction of which a maximum degree of purchasing power can be demanded".[8]

Communist society, on the other hand, knows only of an equal scale of distribution of the social product amongst all consumers. With this system, labour-power has ceased to be a commodity which bears a price. With the growth of the social product the share accruing to each individual automatically becomes greater if in each single product the principle of a direct relationship of a producer to a product is given full expression - a situation in which prices cease to have any meaning. Thus we now see that the establishment of the hour of average social labour as the unit of economic regulation and control has as its necessary twofold purpose i) to place the reproduction of the impersonal part of the productive apparatus on sure foundations; and ii) to order the distribution of consumption goods.

Having made these observations concerning the distinction to be made between capitalist and communist modes of distribution of the social product, it should be clear that a market where prices are formed and where demand is made effective is, under communism, completely absent. Thus it will be necessary for a communist society to bring into being at the outset those organs through which the wishes and demands of consumers will be given expression. That which capitalism has no precise knowledge, namely, the needs of the workers, becomes under communism the entire determinative foundation of production.

Thus where Block, for instance, poses the question as to what is to replace the market mechanism, we reply that it will not be replaced at all! A communist society establishes, in the form of the distributive organisations, those organs which give collective expression to individual needs and wishes.

The links and forms of cooperation which it will be necessary to establish between the various distributive organisations form a complex of problems which can only be solved in the crucible of developing communist social life itself. The initiative undertaken by producers and consumers themselves here find their full expression. Just as the liberation of the workers can only result from the struggles of the workers themselves, in the same way does this, in the context of a communist society, acquire the meaning that the entire organisational nexus between production and the distributive organisations, through which actual demand is given expression, can likewise only be the work of the producer-consumers themselves.

Those economists who represent the view that the market mechanism is an indispensable feature of any society continually make reference to the alleged fact that, if the market is absent, demand is impossible to ascertain. By this kind of demand, however, is meant those subjective vagaries of fashion which can change so suddenly because the capriciousness of popular taste is so often revealed in the capriciousness of their real or imagined needs. In this way a new demand can quite suddenly push itself into the foreground or another equally suddenly disappear. The leaps and contortions so often apparent in the sphere of "fashion" provide instructive examples of this. It is, allegedly, the market which provides the productive apparatus with the means for adapting itself to all these twists and turns, and in this way is said to satisfy every kind of whim expressed through demand.

The above-mentioned critics have a strong argument against communism when they make the point that it would doom the spontaneously creative element in social life to a rigid immobility and ultimate death. And they have a degree of justice on their side when they polemicise against the official brand of "communism", i.e., that which would seek to measure demand "with all the means at the disposal of higher organised consumer statistics" and which is characterised by centralised administrative control over production and distribution. The fact is, of course, that the flow of creative energy in social life is not amenable to statistical control, and its richness resides precisely in its variety and many-sidedness. The aim of encompassing social needs in statistical form is completely meaningless. Statistics are capable of ascertaining only the most general social tendencies, and they are totally incapable of comprising the myriad detail which is embodied in the particular and the special. It is for this reason that we can say that a mode of production controlled by consumer statistics could not possibly be production for need, but only a production in accordance with certain norms which the central administration would lay down in accordance with the directives of those old acquaintances of ours, the subsistence or "minimum standard of living" sociologists. The objections of our critics are scattered like so much straw in the wind as soon as production and distribution lie in the hands of the producers themselves. The organisation of the consumers in their consumer cooperatives and in direct communication with the productive organisations is a relationship which permits complete mobility. This mobility would comprise and comprehend directly the changed and changing needs of individuals, who would transmit these needs directly to the productive apparatus. Such a direct connection would be made possible only because no State apparatus preoccupied with "price policy" would be present to interpose itself between producer and consumer. To each product would be given its own specific reproduction time, and this it then carries with it on its journey through the social economy. In whatever form a product is to be created, the appropriate demand is communicated by the distributive organisations to the productive establishments. This is the entire secret as to how production organised on the basis of the communist mode of production and distribution renders the market mechanism superfluous.

If now we seek to give expression to the whole mode of distribution as a totality, we see that the total social product (TSP) in fact distributes itself quite spontaneously amongst the various groups of consumers. The operation of the production process itself determines how and in what precise proportions it makes the transition from the sphere of production to that of distribution, and so makes itself available to society at large. Leaving the category "accumulation" temporarily out of account, each group of consumption goods takes from the consumer such quantities as (P + C) + L as represents its proportion of the total social product, and in the same measure as that according to which it contributed to the creation of that total social product in the first place. This can be implemented without any difficulty, because on each product the appropriate production time is clearly indicated.

In the production process each productive establishment calculates its consumption needs by means of the production formula (p + c) + L. The total production process is made up of the total of all productive establishments, which we express in the formula (P + C) + L = TSP. The same system which is valid for each separate productive establishment is also valid for the total system of production. If it is the case that for each productive establishment and for each separate productive set of conditions, the average social production time has been computed, then in the same way the sum total of all production times must be represented in the total product (TSP). The following principles then apply to the distribution of TSP: each individual economic establishment, whether it be of the productive type or of the GSU type, at first withdraws from TSP as much p as has been calculated for it in its production budget. As soon as this has been carried out for all economic establishments, they have replaced once again their consumption of p, and therewith p has been distributed in a fully correct proportion.

Proceeding further, each economic establishment withdraws from TSP as much c as has been computed for it in its production budget. As soon as this has been carried out for all industrial or other establishments, then c also has been distributed in a correct proportion and has been returned to the total system of production. Following immediately upon this, each separate industrial or other establishment has the responsibility to submit to the workers directives concerning the amount of social product available for consumption through the medium of labour certificates, in exactly the quantity as has been computed for it in the production budget under L. The total sum of these directives is L.(x), x representing the total sum of said establishments. The consumers can then withdraw from TSP such a mass of goods as corresponds with the total of labour-hours contributed.

In this way TSP has been fully taken up by society, whilst at the same time the relationship of the various consumer groups to one another and the measure of distribution adopted have been fully determined by the production process itself. In no way is control dependant upon subjective norms decreed by official and authoritative bodies, the precondition for whose power of diktat resides in a centralised right of disposal over production and distribution.


Table of Contents



[1] Paragraph ending: "The conditions for the "withering away" of the State are then for the first time given, and we can say:" (Quotation from F. Engels: Origin of the Family, Private Property and the State, p. 198 then follows). This also expresses with the utmost clarity the necessity for the first principle of communist production: "The establishment of a clear and open relationship of the producer to the product". So long as this principle is adhered to and remains the foundation of all social life, the imposition of an alienative relationship based on inequality and class privilege by an incipient class of would-be controllers of economic life remains impossible.

[2] F. Engels: Origin of the Family, Private Property and the State, Lawrence & Wishart, London, 1943; p. 198.

[3] F. Engels: Anti-Dühring; Foreign Languages Press, Peking, 1976; p. 363.

[4] Paragraph ending: "In this way the market mechanism fulfils the function of a regulator of demand". The most basic impediment to the smooth operation of this most fundamental plank in the theoretical heritage of classical bourgeois political economy is, of course, the unavoidable tendency under capitalism for simple "demand" to be restricted in practice to effective demand. The workers - or for that matter, any other section of the population - can "demand" the commodities they need, whether these are staple life necessities, as with the working class, or capital goods and raw materials, as with the capitalists, until they are hoarse from shouting - if the money commodity needed to purchase them is not forthcoming, or at least in sufficient quantity, then a non-effective demand is as good as a non-existent or a reduced demand. Whilst the above is a depiction of what are essentially contradictions at the surface or conjunctural level of economic movement, the level of the market - and none the less real for that! - it should not be assumed from this that the marxist theory of accumulation and crisis in any way reflects the acceptance of crude "underconsumptionist" theories as a fundamental cause of crisis. On the contrary, marxist economic theory sees that cause as residing in either one of the following two or - as is almost always the case - in a combination of the two: a) a fall in the per-circuit rate of surplus value below the level at which it can effectively maintain the rate of profit against a simultaneous tendency for the organic composition of capital to rise; or: b) under conditions in which, likewise, organic composition is rising, a fall in the rate of absolute capital turnover to a point at or below which it fails to compensate for an inadequate per-circuit rate of surplus value. In other words, marxism sees the cause of crisis residing, not is the sphere of distribution but in that of production, where surplus value and profit have their generative source. For, instance, a fall in the rate of employment of labour will usually be preceded by a fall in the rate of employment of capital, the latter arising on account of difficulties experienced by capital in finding profitable conditions of production, and hence resulting in the throwing of "its" workers out onto the streets. It is this which is the primal cause of a fall in "effective demand", and not, as the facile prescriptions of the bourgeois "economic experts" maintain, the opposite, a fall in effective demand which then brings about a fall in production and hence in the current rate of employment of labour. A fall in "effective demand" is thus an effect, not a cause, of crisis.

[5] "... and which also form the source of imperialist rivalries which drive millions to their death on the battlefield." Inter-capitalist rivalry, culminating in war, is of course also a "surface conjunctural tendency", and it is therefore perfectly valid to point out its relationship to the market. Wars are fought, however, not in order to raise "effective demand", and particularly not on the part of the working class. On the contrary, their "positive" aim is to win control of markets and "spheres of influence", i.e., to promote advantageous conditions for the investment and accumulation of capital. Their "negative" purpose, on the other hand, is to eliminate en masse those "units of human labour-power" - i.e., members of the working class - who have been rendered surplus to social capital's requirements through the inexorable advance of productive technology and the rising productivity of labour and who would otherwise go towards forming a large, expensive and possibly permanent "reserve army of labour"; as well as to destroy large masses of the associated technologically outdated means of production.

[6] L. Mises: Die Gemeinwirtschaft, Jena, 1922, p. 120.

[7] M. Block: La Theorie Marxiste de la Monnaie, pp. 121-122.

[8] M. Block: ibid, p. 122.