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 System of General Social Accounting as the Model Method of Integrating Economic Processes


1. The Labour-Hour as the Foundation of the Production Budget

We have already made reference on several occasions to the Hilferdingian vision of a mode of concentration of the social productive apparatus which arises as a consequence of the rule of capital itself, that is to say, the general cartel. If we repeat this yet again, it is because we find in it the purest possible representation of social production as taking place through an organised unit, as this will take form according to the doctrines elaborated by the social-democratic and State-communist economists after the abolition of private property in means of production has been carried through. The relevant passage is as follows:

"The whole of capitalist production would then be consciously regulated by a single body which would determine the volume of production in all branches of industry. Price determination would become a purely nominal matter, involving only the distribution of the total product between the cartel magnates on one side and all the other members of society on the other. Price would then cease to become the outcome of factual relationships into which people have entered, and would become a mere accounting device by which things would be allocated among people. Money would have no role. In fact, it could well disappear completely, since the task to be accomplished would be the allocation of things, not the distribution of values. The illusion of the objective value of the commodity would disappear along with the anarchy of production, and money itself would cease to exist. The cartel would distribute the product. The material elements of production would be reproduced and used in new production. A part of the output would be distributed to the working class and the intellectuals, while the rest would be retained by the cartel to use as it saw fit. This would be a consciously regulated society, but in an antagonistic form. This antagonism, however, would express itself in the sphere of distribution, which itself would be consciously regulated and hence able to dispense with money. In its perfected form finance-capital is thus uprooted from the soil which nourished its beginnings. The circulation of money has become unnecessary, the ceaseless turnover of money has attained its goal in the regulated society, and the perpetuum mobile of circulation finds its ultimate resting place".[1]

This passage offers in a few bold outlines a genial representation of an economy forged into a single unit; production and reproduction are fused together within a single organisation. Existing today under the direction of a consortium of capitalist magnates - what stands in the way of the State assuming command over such a structure tomorrow? But Hilferding also declares that the economic categories of capitalist economy - value, price, money, the market - will be eliminated and made purposeless through the organisation of the economy on the foundations of such a system. At the same time, however, he has not a word to say as to what will take the place of these categories. Nevertheless, he does declare that, in the case of the "general cartel", the magnates of capital will rule through their control over finance capital, whilst under socialism the State commissioners will determine and administer the economic process "with all means of statistical science at their disposal".[2] Concerning the system of statistics itself, through which it is intended to replace value, price, money and the market, he says nothing. Although Hilferding disdains to declare himself clearly on these matters, one must nevertheless enrol him into the school of 'natural'[3] economists within which Neurath, Varga and others must also be included, and which would seek to control the process of production and distribution by means of the notorious system of production and consumption statistics which dispenses with the application of any economic unit of social regulation and control. We have already seen what characteristics such a brand of 'socialism' would possess when we considered the Faurean system of "universal happiness".

It is unnecessary to investigate further the impossibility of such an economy; we will make only the additional point that even the "general cartel" described by Hilferding cannot manage without a computed unit of economic regulation and control. If Hilferding has clearly demonstrated how money becomes superfluous in a consciously operated economy, then it is also clear that only the labour-hour can function as its replacement. Communist economy must rest upon the foundation of labour-time computation, as any other unit measure of accounting control is out of the question. Thus it becomes necessary for society to compute "how much labour each useful article requires for its production" (F. Engels, Anti-Dühring). As our criticism of Kautsky has demonstrated, this is quite impossible to carry out from the offices of a central economic authority. The procedures associated with labour-time computation must therefore be effected through the agencies of the locally based organisations themselves at the place of work - at the factories, works, offices, etc. A system of social accounting based upon the computation of average social labour-time, uncompromisingly implemented, and applied to both tangible products and services, provides the firm foundation upon which the entire economic life of the producer-consumers must be structured, directed and administered.[4]

The strict application of the category of average social production time which, as here expounded, moves and develops wholly on the foundations of marxist economic theory, leads to an organic union of economic life in its entirety. The economic organism emerges as a system in which all the antagonistic motivations of capitalist commodity production have been eliminated, that is to say, as a system designed solely to promote the struggle of humanity as a whole against the forces of the Darwinian jungle. Within this system the stream of products move wholly in accordance with the laws of motion established by labour equivalents: " a quantity of labour in another form is exchanged for an equal quantity of labour in another form". At the end of the chain of production the finished product available for disposal in the hands of the consumers has required for its production the total production time applied, neither more nor less, from the very beginning to the very end.

The book-keeping procedures necessary for the regulation of the product-flow do not as yet extend further than the sphere of the individual industrial establishment or the production sector to which it belongs, and relate in the main only to input and output, that is to say, to the product-flow through the factory. Aside from this, however, we would observe that this has nothing whatever to do with the works or factory-based method of cost accounting, which in recent years has become a science in itself. For this a specialised knowledge of the different specific production processes in the separate industrial establishments is necessary; this is designed to supply the data needed for an entry recording system of the debit and credit type. In a system, however, in which production times have been ascertained by competent technical staff, there remain only the movements of debit and credit for the office workers to record.

The method according to which the settlement of charges between the various productive establishments takes place has to a large extent already been pre-developed under capitalism, in the form of simple transfer-accounting effected through the banks or clearing houses. In respect of methods of settlement applicable to a communist economy, Leichter declares:

"All material requirements of production, all half-finished materials, all raw materials, all auxiliary materials supplied by other productive establishments for the use of the one which works them up, are accounted a charge to the latter. The question as to whether this is discharged through spot-settlement in the form of labour-hours expressed in terms of Labour Certificates, or if ledger-controlled charges are resorted to i.e., a method of ledger-control charging which dispenses with 'spot-payment', will best be resolved through practice itself".[5]

Practice will indeed have a decisive word to say in this matter. In principle, however, it must be said that a mode of payment by "spot-settlement" effected through labour certificates would represent a fundamentally wrong solution. Firstly, because it fulfils no essential purpose, and secondly because an on-the-spot or 'cash' method of settlement would introduce serious hindrances onto the system of social regulation and control over production.

The intervention of labour certificates into relations between the productive establishments is wholly superfluous. In every case in which a factory delivers its end product, it has handed on (p + c) + L labour-hours to the chain of partially completed use-values. These must then be taken up immediately in like amount by the receiving establishment in the form of new p, c and L, in order that the next labour or production process may commence. Thus the regulation of production in accordance with this system requires no more than a registration of the stream of products, as this flows through the total social production system. The sole role of labour certificates is to function as the means to enable individual consumption in all its variety to be regulated according to the measure of labour-time. A part of the total 'yield' of any individual unit of labour is, in the course of daily economic life, already consumed through the processes of socialised distribution, i.e., reproduction, whilst only a certain proportion of that total can make its way in the form of labour certificates into the hands of individual consumers and be expended in accordance with the production times stamped upon the separate consumption articles. We have already observed that the mass of labour certificates issued becomes continually smaller as the process of socialisation of distribution proceeds, finally to reach a figure of nil.

The determination of the Factor of Individual Consumption is social book-keeping in the truest sense of the word. On the one hand there appears on the credit side of society the amount representing those labour-hours directly expended by the productive establishments: L. This figure can be found immediately in the system of general social book-keeping under the heading of the settlement account. On the other hand there appears here as a debit the quantities of Pu, Cu and Lu. Thus society establishes a system of general social book-keeping out of the totality of social production and consumption.

It is by these means that the following passage from Marx becomes reality:

"Book-keeping, however, as the supervisor and the ideal recapitulation of the process, becomes ever more necessary the more the process takes place on a social scale and loses its purely individual character; it is thus more necessary in capitalist production than in the fragmented production of handicraftsmen and peasants, more necessary in communal production than in capitalist".[6]

This is book-keeping pure and simple, and nothing more than book-keeping. Although it is the central point at which all the various strands of the economic processes come together, it nevertheless wields no power over the economic system. The system of general social book-keeping is itself an economic organisation of the GSU or "public" type, which has as one of its functions the responsibility for regulating individual consumption through the calculation of the remuneration factor, or the factor of individual consumption (FIC). It imparts neither any right of management or administration of, nor any power of disposal over, the economic system as such. These functions lie solely in the hands of the producer-consumers. The indigenous Workers' Council situated at the establishment responsible for general social book-keeping has authority in one such establishment only, and that is its own. This is so, however, not because of this or that decree, nor even because it is in any way a reflection of any kind of good will on the part of the workers who work in the Exchange and Settlement Office, but is determined objectively by the economic process itself. It is so because, amongst other things, each economic establishment or production sector is responsible for its own reproduction, and because each individual worker has, through that individual's contribution of labour, simultaneously determined his or her relationship to the social product.


Table of Contents



[1] R. Hilferding: Finance Capital, trans. T Bottomore, p. 234.

[2] R. Hilferding: Finance Capital, trans. T Bottomore, p. 28.

[3] "... the school of 'natural' economists ...". By this meant those theorists of socialism or anarcho-syndicalism who advocate the establishment of the new economic relations on the basis of barter, or exchange in kind.

[4] Paragraph ending: "A system of social accounting based upon the computation of average social labour-time ... provides the firm foundation upon which the entire economic life of the producer-consumers must be structured, directed and administered". The predilection of Kautsky - as, indeed, of virtually all other members of the professional intelligentsia in the leadership of the Social Democratic Party of Germany - for indirect empirical methods of economic control embodied in a vast bureaucratic State machine and characterised fundamentally by externally imposed forms through which the domination of the apparatus of production and distribution over the producers is realised, was itself a symptom of the petit-bourgeois, deterministic world outlook characteristic of that class - and one, furthermore, which declared its close kinship to the bourgeoisie proper. The longing for the perfect machine of social and economic administration which filled the dreams of these mechanical-determinist founding fathers of State socialism was, of course, later realised in Russia by Lenin and the Bolsheviks.

[5] O. Leichter: Die Wirtschaftsrechnung in der sozialistischen Gesellschaft p. 68.

[6] K. Marx: Capital Vol. II, Pt. I, Chap. VI; Penguin Books; p. 212.