Russia 'State Capitalist' — Another Voice (1973)

From the March 1973 issue of the Socialist Standard

In January we published a translation of a Russian leaflet distributed to Western correspondents in June 1972 which referred to Russian society as "state capitalism". A French translation of another Russian underground publication shows that this view is held by other oppositionists in Russia as well.

Cahiers du Samizdat, published in Brussels, carries in its December 1972 issue a translation of the first issue of a journal called Seyatel (“The Sower”) dated September 1971. This is mainly a call to establish a “social democratic party" in Russia and a criticism of those opportunists there who see the struggle merely as one to establish legal civil rights. According to Seyatel this overlooks the fact that the present ruling class in Russia bases its power precisely on the denial of democracy and dictatorial control of the State apparatus; so that the struggle for democracy in Russia must necessarily be a struggle against them. It must be, in other words, a struggle to overthrow Russia’s “bureaucratic class”.

Says Seyatel :

  “The facts have proved to us that the rise of private capitalism was not followed by a Socialism freeing the human personality, but by a bureaucratic state capitalism. Our country is the most pure and most developed example of state capitalism.
  "The ruling force in such a regime is the bureaucratic class, made up of the leaders of the State, the Party and industry, of the activists in the trade unions, youth movements and propaganda services, of the top ranks of the army, of the secret police, of all types of presidents, secretaries, directors, divisional chiefs, etc. The bureaucratic class is organised as an apparatus, i.e. in a strictly hierarchical structure". (From the French translation).

Russia is said to have been state- capitalist ever since the revolution.

This is a deeper analysis than that of the leaflet we published in January. On the other hand, unlike the leaflet which was addressed to Russian workers, Seyatel is still addressed to the intelligentsia. But again, though they claim to stand for a "scientific and democratic socialism”, the author(s) cannot be regarded as Socialists in the proper sense of the word. Nevertheless it is encouraging to see that more and more people inside as well as outside Russia are coming to recognise that the system there is state capitalism.

Copies of "Cahiers du Samizdat” can he obtained from 108 Drève du Duc, 1170 Brussels, Belgium and of the January Socialist Standard from Dept. R, 52 Clapham High Street, London, S.W.4.

Russia: An Underground Document (1973)

From the January 1973 issue of the Socialist Standard

Esteemed Citizens!

On June 1st, 1972, it will be ten years since the date of the raising of the prices of products of greatest necessity. Ten years ago, in the decree of the Central Committee of the CPSU and the Council of Ministers of the USSR, it was announced:

  "The raising of prices of meat and meat products, and also of butter, is a temporary measure. The implementation of the measures laid down by the March (1962) Plenum of the Central Committee will make it possible, in the not-distant future, to lower the prices of agricultural produce. It will undoubtedly be possible in the immediate future to lower retail prices."

It is now clear to the people that this was the usual “promise” — the usual barefaced lie of the Kremlin bosses.

According to the newspaper reports, during these ten years our people has already successfully accomplished the resolutions of ten Plenums and two Five-Year Plans. But prices not only do not come down: they continue to rise. The concealed price rises in food products and in manufactured goods goes on by means of new packs, lowered quality, sticking on new labels and so on.

Remember the fuss over the resolution of the 22nd Congress in 1961 on The Programme of the Construction of Communism! The authors of that fantastic pseudo-programme promised us: "In the first decade (i.e. toward 1970) all strata of Soviet people will be able to enjoy affluence and will be provided for materially . . . there will be an end to the housing shortage". There was a plethora of statistics, from which it followed that nowadays we should surely be standing on the threshold of paradise of material affluence.

But instead of that deceitfully promised prosperity, life in our country gets more costly all the time. During the last ten years prices have gone up on nearly all goods by 20-30 per cent, house construction has been cut back by nearly 20 per cent and the co-operatives are made to bear an ever-increasing load.

Esteemed citizens! Our country has the richest resources in the world, and is the second greatest industrial power. But as for their living standards, the workers of the USSR occupy only the 26th place in the world and among developed countries they are at the bottom of the scale. Our worker can buy with his pay packet 7-12 times less than can the American, English or West German worker. The average size of a flat for our worker is 2-5 times less than for the workers of those countries. Cars are owned by 80 per cent of American families, 60 per cent of British families and 50 per cent of German families — but in the USSR less than 0.1 per cent of families have a car. In the USSR the scales of pensions, sickness benefit, disablement benefit and maternity benefit are negligible in comparison with Western countries. And of all these countries the workers of the USSR get the shortest paid holidays.

The unemployed Western worker can buy with his unemployment benefit 2-4 times more goods than our industrial or white-collar worker can get with his pay-packet. Yes, and what’s more the number of unemployed in the West does not exceed 2-4 per cent of the workers. Not for nothing do the Kremlin bosses completely jam all foreign radio transmissions. Even Hitler didn’t do that in peacetime!

Esteemed citizens! It’s not too well known that in our country the overwhelming majority of goods sold are sold at a price 2-4 times dearer than it costs the State to produce and market them (including the profits of the enterprises). Our economists have calculated that the take-home pay of the Soviet industrial worker is about one-third of his real earnings. And besides these secret withholdings and deductions our worker still pays taxes.

Where then do they go — these enormous secret revenues from our and your labour?

These enormous secret revenues are appropriated for themselves, stealthily and openly, by the Kremlin bosses and their servants — the big and middle bosses of the Partocracy, the apparatchiki. etc. These revenues go on their life of luxury, their dachas, villas in the resorts, limousines, or their huge salaries and bonuses, on their share-outs — concealed from the people, on their special resorts, clinics and nursing homes . . . The Kremlin bosses and their hangers-on live better and richer than many Tsarist noblemen did before the Revolution — and yet they call themselves "the vanguard of the Soviet people”, its servants!

Lucky servants! They fleece their "master", the worker, three times over . . . while the "master and missus" of the country — the labourers and workers — can hardly make ends meet.

The second way the people’s wealth leaks away is overseas. The Kremlin bosses carry on trade not in the interests of the people but in their own political-adventurist interests, in the interests of attaining their own world domination. In return for their aid "without strings attached’’, given at the cost of a burden laid on the backs of their own people, they rush on to introduce into other countries exactly the same sort of cabal as in their own country.

The Kremlinites plunder their own people so as to export abroad huge quantities of top-quality goods: meat, fats, fish, caviar, grain, wool cloths, skins, expensive raw materials and other goods in short supply. At the same time we are obliged to spend from our already scanty gold reserves to buy grain from Canada. Huge resources are squandered by the Kremlinites on arms deliveries to so-called "freedom fighters”, on propping up dictators who provide military bases for the USSR (Egypt, Syria, Cuba, etc.), on maintaining an enormous overseas spy network and on bribing foreigners who might be "useful” to our rulers. Billions of roubles were spent on the Mao Tse-Tung régime: now this regime is our dreaded enemy. Helping to arm the DRV in its attempt to occupy South Vietnam costs 3 million roubles a day, Ouba gets 1 million a day and the Arabs get 1.5 million a day.

The Kremlinites spare nothing. The wealth in Russia is to keep them in clover till the year dot.

Esteemed citizens! There is no socialism in our country! It isn’t socialism when each and every parasite and boss in the country has got 20 times more than he would have in Tsarist Russia! It isn’t socialism when the average pay of a workers is 100 roubles, while the income of a big boss is several thousand roubles monthly! It isn’t socialism when the people are in fact deprived of the most elementary rights: freedom of speech, freedom of the press, the right to strike and so on! It is precisely the absence of these rights which in fact gives the Kremlin bosses the opportunity to rob and oppress our people pitilessly, both secretly and openly.

And it is not towards communism that we are heading: all that is idle talk. Our system is state capitalism — the very worst, the most wretched political system possible which enables the rulers to adjust all the prices and incomes of the country without control and to perpetrate unbridled acts of arbitrariness and force. In Germany with Hitler’s “socialism” there was a similar form of unbridled and ruthlessly rapacious administration.

Esteemed citizens! Our rulers are ruining the country. They are destroying its economy and agriculture. They are creating dangerous international tension.

Dear citizens! The workers of Western countries attained their high standards of living and wide political freedom by struggle. The proven weapons of the struggle are the strike and demonstration. In December 1970, when price rises were announced in Poland, the workers in the towns of Gdansk, Gdynia, Szczecin, etc. set up liaison committees, called a strike and came out in street demonstrations. As a result Gomulka was dismissed, and the Central Committee and the government were replaced almost in their entirety. The new secretary of the Central Committee, Gierek, revoked the price rises, raised wages and pensions, and relaxed the censorship.

Already the people of our country are rising to the struggle. During the last ten years there have been strikes, demonstrations and other uprisings in a number of cities: there have been strikes in factories in Novocherkassk, Temir-Tau, Chirchik, Leningrad and Moscow. And recently there have been numerous uprisings of the workers of Kaunas. Ever more frequently there are protest demonstrations by many of our writers, distinguished scientists, government employees and workers. They demand freedom of speech, freedom of the press, freedom of the unions, the improvement of people’s living conditions and they demand that an account be rendered to the people. They are persecuted, declared “apostates” and thrown into prison. They are locked up because they demonstrate almost singlehanded.

Esteemed citizens! Fight for your rights and for an improvement of your life. Defend one another: one for all and all for one. It is only by means of struggle that we can get a change for the better. If we are not going to struggle, then we will more and more be reduced to mere slaves of the bosses of the CPSU — mere working cattle. So long live freedom and democracy!

Citizens’ Committee. 

Spread the word with a leaflet to as many people as possible.

(Translated for the Socialist Standard by Charmian Skelton.)

“Wealth is in effect the property of an individual or group if that individual or that group has a right in fact against the other members of society to use it or to control its use. A class is made up of people who are in the same position with regard to the ownership and use of the means of wealth-production and distribution. One class has a monopoly over these means if the rest of society are allowed access to them only on terms imposed by the group in control. This monopoly does not have to be legally recognised though in fact, as in Britain, this is generally so. Here the privileged minority, the capitalist class, have titles backed by law to the wealth they own. In Russia the ownership of the privileged minority is generally not given formal legal backing, but, as in Britain, they maintain their monopoly through control over the machinery of government. They occupy the top posts in the party, government, industry and the armed forces. Their ownership of the means of production is not individual but collective: they own as a class. Historically this is not a new development as is shown by the position of the Catholic church in feudal times. The privileged class in Russia draw their 'property income’ in the form of bloated salaries, bonuses, large monetary prizes’ awarded by the government, and other perks attaching to the top posts.”

—from Russia 1917-1967 A Socialist Analysis, an exploration of how state capitalism came to Russia. Send 10p to Dept. R., The Socialist Party of Great Britain, 52 Clapham High Street, London, SW4.

Russia: An Underground Protest (1973)

From the January 1973 issue of the Socialist Standard

We publish on our centre pages a translation of one of three leaflets distributed to Western correspondents in Moscow in June last year. That it was distributed to Western correspondents is indeed all we know for a fact about the leaflet. We do not know who wrote it or who distributed it: whether a real opposition called “The Citizens’ Committee” or just an individual oppositionist or even the Russian secret police, the KGB, in order to frame some oppositionist or even, for that matter, some Western intelligence agency in order to discredit the Russian government. We don’t even know if it was distributed to Russian workers as well as to Western correspondents. Such are the problems of assessing anti-government documents from a police state.

Nevertheless, we feel that the text is worth publishing since, assuming it to be genuine, it would reflect an advance in the general thinking of members of the small underground oppositionist groups in Russia, specifically an appeal for “working class” action. Particularly interesting is the emphatic rejection of the claim that Russia is socialist and the accurate description of Russia as “state capitalism”.

It is not entirely clear, however, whether the authors would regard themselves (or are supposed to be regarded) as “socialists”. Their comparatively favourable, and somewhat idealized, comments on Western society could mean that they are critics of state capitalism because they favour private capitalism. On the other hand, their appeal to workers to struggle and strike would suggest a pro- working class ideology.

But whatever they would call themselves they are certainly not Socialists as we understand the term. Part of the leaflet — the criticism of so-called foreign aid — betrays a nationalist approach; the Russian ruling class, for instance, is accused of “ruining the country”.

Apart from its description of Russia as state capitalist, the leaflet is interesting also for identifying the political dictatorship exercised by the CPSU in a State-owned economy as the source of the power of the “Partocracy’’ to constitute a privileged and exploiting class. And equally for its appeal to workers to struggle to win improvements in their living standards and some basic political rights.

The leaflet mentions various towns where there have been strikes and demonstrations. Apart from Moscow and Leningrad (and to some extent Novocherkassk) the others are in non-Russian speaking parts of the Soviet Union: Temir-Tau is in Kazakhstan, Chirchuk in Uzbekistan and Kaunas in Lithuania. Which suggests that the protests there might have a nationalist rather than a trade-unionist or democratic content.

As far as we know this is the first full English translation of this document. The Russian text we used was published in “Posev”, a Russian emigré journal, in its August 1972 issue.

Editorial Committeee

Facing the Facts in Russia (1975)

From the December 1975 issue of the Socialist Standard

Facing the Facts in Russia 
There's an old saying that “the daughter of Time is Truth”. In Russia at last we have indications that people are beginning to discover the truth that capitalism exists in that country as much as in the rest of the world.

Granted it’s a rather different form of capitalism, without Stock Exchanges. State capitalism is the term often used for the type of capitalism existing in Russia and in most other “developing nations”. In the Socialist Standard and the Western Socialist we have recorded in recent years several instances of Russian dissenters whose conclusion is that Russia is a state-capitalist country.

"Our system is state capitalism . . ."
Two underground leaflets from Moscow were reproduced in the Socialist Standard in January and March 1973.

Both said that not Socialism but state capitalism was the system in Russia (though the solution was said to be the establishment of a “social democratic” party). The present ruling class in Russia maintains dictatorial control of the State apparatus and thus the struggle for democratic “rights” is bound to be the form which protests take. What should be understood is that the appearance of a reform or opposition party, failing to have Socialism as its objective, would only further the interests of some new or rising capitalist group.

We are hardly surprised to find that Solzhenitsyn, the darling of the Liberal establishment, takes the Kremlin line (Western Socialist, No. 5, 1974). That is to say, he takes the line that Russia is a socialist country. An awful abuse of what Socialism really means. By labelling Russia’s tyrants “socialists”, he joins the Tories and their like who see the whole world as a Wild-West all-action movie, goodies versus baddies, with “socialism” cast in the role of villain.

After Solzhenitsyn’s superficial prejudice, it is refreshing to read Sakharov’s view (Time, Aug. 4, ’75). Sakharov is active as a champion of the civil rights movement and a liberal, not a revolutionary. He describes himself as “a confirmed evolutionist and a reformist”, from which we may infer that he sees the struggle for Socialism as not important at the present time. In the meantime there are lots of things to put right, like putting Sellotape on the ceiling when the problem is caused by slates falling off the roof and letting the weather in.

But he does start out with something which is worth noting:

 Contemporary Soviet society is based on state capitalism, a total party-government monopoly over economy, culture, ideology and the other basic spheres of life. In periods of crisis, such a system engenders rule by terror; in quieter periods, it engenders the dominance of bungling bureaucracy, mediocrity, apathy and dissipation among the people, and the permanent militarization of our economy . . . Much of our financial resources provide a high standard of living for the privileged strata of society that Djilas called the “new class”. Every day radio loudspeakers tell the ordinary Soviet citizen that he is the master of his country, but he knows perfectly well that the real masters are “the bosses” who, morning and evening, are whisked along quiet, closed-off streets in their armoured limousines.

The Dog-Meat Society
For decades now Socialists have been declaring that Russia is a capitalist (or “state”-capitalist) country, with wage-workers exploited just as much as those in this country. Indeed, if the evidence of my own eyes is anything to go by, the Russian workers are worse off than those here. A view which Sakharov appears to share:

  You (in the West) do not have your backs to the wall; even if you reduced your standard of living to one-fifth of what it is, you would still be better off than people in the world’s wealthiest socialist country. Workers in the Soviet Union have the right neither to strike nor to appeal to higher authorities.
  The average apartment building in this country resembles a low-income housing project in America, though ours has fewer conveniences and is more crowded. In most parts of the country one has to stand in line for hours to get meat, and even then it is sometimes not fit for a dog.

I seem to have heard that bit about dog-meat somewhere else. A Roman Catholic Community Services worker in Los Angeles was quoted in the Western Socialist (No. 3, 1975) as saying: “Our people have so little, they don’t have the money to buy dog-food. Dog-food would be a luxury.”

So the dictators of the Kremlin cause workers to queue for offal, and the world’s wealthiest and best- fed state, a so-called democracy, reduces some of its workers to the degraded and half-starved state where even dog-food would be a luxury. And they actually expect these same workers to rise up patriotically to defend their way of life. To fight a war to defend dog-meat — ye gods!

At last we have evidence lasting over a period of years that some people in Russia have begun to realize that they are not in a socialist society, only in a state capitalist one, and at the same time they are realizing increasingly the very real drawbacks to state capitalism. Some of these are mentioned by Sakharov, such as corruption and inefficiency among managers, indifference, apathy and appalling conditions for workers, and wasteful military expenditure. He did not mention, although others have done so, the lack of flexibility in responding to market demands.

The Need for Change
Increasingly the Russian government has had to allow foreign trade to take a key rôle in the economy. Russia exports and imports on a very large scale now, and not only wheat. The result is that the Russian economy must become adapted to the ups and downs of world trade cycles. The Iron Curtain is in tatters: détente has taken over.

With economic change there will have to be political change. Mostly the dissenters see this in terms of progressing forward to private enterprise capitalism: after all, if Western free enterprise is so good at turning out cars, freezers and the tellypop, it can’t be as bad as Lenin thought, can it? There have been indications and rumours of demands for a multi-party system, for more press freedom, the right to strike, shorter hours, the right to demonstrate, and many other civil rights, all of which indicate the development of resentment against the regime.

At present most of the demands seem to be for reform as an end in itself. In time we are confident that Socialist understanding will develop, as it has done elsewhere. Why are we so confident, you ask? After all, the Socialist movement even in Britain and America is still very small and many workers reject our message.

Our answer is that socialist understanding derives from the experienced, known facts of capitalist life; from the fact that you are living in that certain sort of society where everything you make belongs to “them”, where all the housing is controlled by “them”, where food and all other necessities can only be bought from “them”, where you struggle to hold down your jobs — tedious, mindless, monotonous, maddening, boring chores, but at least still receive your meal-tickets — where you see the youngsters drift to the cities — who wants to hoe turnips on Cold Comfort Kolkhoz anyway?, where you queue wearily while you know that “they” live comfortably and what’s more are regarded with awe and respect, or perhaps fear, by all their subordinates.

“They” are the surplus-value eaters. Although they have no legal title to ownership of factories, farms or mines, nevertheless they control everything produced by you and your like.

Worm's Eye View

For the worker the state-capitalist system works very like private-enterprise capitalism. The working class are “free”: we own no land and no tools, so we are free to sell our labour-power or put it another way, we absolutely have to sell our labour-power if we want to go on living. Those who control the factories also control what we produce while working at the boss-class’s machinery with the boss-class’s raw materials. In modern conditions, with the high productivity achieved by having large numbers of people working together and by the use of power-driven machinery, we are capable of producing the value of our pay-packets many times over in the course of the week. The difference between what we produce and what we get paid (surplus-value) is used by the boss-class for their own purposes — more capital, profits including puffed-up directors’ salaries, distribution costs including advertizing and market research, limousines, law ’n' order and defence estimates, to name but a few

This system operates all over the world. It is nothing but exploitation. The quest for profits has turned the world into such a dreadful place that the very word civilization stinks. “Where there’s muck there’s brass” can be turned on its head to make better sense: "where there’s brass there’s muck”. In other words, profits pollute. We say this system only lasts because most people are contented with it and continue to go on voting for the likes of “them” to run our lives.

We say democracy can be used in our interests, to get rid of the whole profits and prices system, West or East. We say, the dog-meat system stinks and the only way out is the Socialist way.

Charmian Skelton

The Last Word: Moving statues (1997)

Cartoon by Peter Rigg.

The Last Word column from the July 1997 issue of the Socialist Standard

The proposal of the boorish old drunk, Boris "the booze" Yeltsin, to remove the embalmed body of Lenin from its tomb in Red Square and give him a "decent Christian funeral" (as opposed to what would presumably be an indecent one) has set me thinking. Old Lenin has been lying in state for over seventy years: a mummified memorial to his years of unblushing lying as head of state: a veritable dictator in a fraudulently described “workers’ government".

The plan is to hold a referendum in St. Petersburg to decide what shall be done with Lenin. Has it occurred to the commerce-hungry Russian leaders that there is a market out there for Lenin relics? To be sure, they would not fetch much in St. Petersburg if forced to compete with fresh sausages, but think of the profits which could be accrued if Lenin cuttings were flogged off to sections of the dwindling world Trotskyist movement? The British SWP, which these days resembles a walk-in mausoleum for the praise of long-dead Bolsheviks, would surely pay a handsome price for a bit of prime Lenin anatomy. (Think of the jealousy it would inspire amongst the others Leninist cults: one can see now the RCP forging its very own fake Lenin testicles.) Lenin's left big toenail would be worth at least the price of Paul Foot’s salary for one month. Why not call in Camelot to ensure that the spoils are divided fairly?

Of course,Yeltsin did not invent the idea of kicking men when they’re dead. As ever, the English state was the pioneer in the field of brutality to the disinterred bodies of its enemies. For the sake of children and the nervously-inclined, we shall not describe what they did to Oliver Cromwell for having the audacity to temp as a monarch.

Historical revenge is not sweet.The sight of the crowds booing Ceaușescu, the hideous Rumanian dictator (Sir Nikolai, to you, for he was knighted by the Queen for services to British trade) was a joy to watch, but why did they have to spoil it all my executing him? It is so much pleasanter to rout ones enemies and then leave them to rot in bitterness. (Lenin’s successor, Stalin, never quite grasped this point — as Trotsky was to discover.) Only the weak need to murder and torture to assert their strength.

The problem of what to do with offensive monuments is a real one. When they pulled down the statues of Lenin all over central and eastern Europe in 1989/90 they were actively destroying the symbol of a lie which had imprisoned them. There are some statues in Britain which cry out for such justice. The vast metal-wasting edifice of the parasite, Victoria, which stands close to Buckingham Palace: the offensive statue of the gratuitous aerial murderer, Bomber Harris: the statue at the end of Camden High Street, London to the callous free-marketeer, Cobden; these and numerous others across the land will surely be candidates for the sledgehammer of the people once the streets are truly reclaimed.

The case for vandalism, though seductive, is weak. The disfigurements and destructions encouraged by the Cultural Revolution in China were a futile attempt to dislodge the minds of the millions from the past by knocking down its superstructural architecture. For this socialist (though not necessarily for all) there will be a safe place for buildings of genuine beauty in a society of equality. Why on earth deny to future socialist generations the splendours of Westminster Abbey or Christ’s College chapel in Oxford or the Hindu Temple in historical Neasden simply because they emerged out of unearthly folly? William Morris’s dream of turning parliament into a storage place for manure was a teasing fantasy, but missed the point: surely, the objective must be to get the shits out and use the place productively. Why pour more manure on to centuries of past deposits?

There may well be a role for Buckingham Palace in a sane society. The sight of the ex-Queen and her old man serving tea and sandwiches to visitors to London would cheer us all on many a rainy day.

As it is, the profit system has its own way of disposing of exclusive assets. In France there is a huge row over the sale, for £30 million, of Voltaire’s old estate at Ferney. The fear that some philistine Yank might drift in and insert a pinball machine at the place of the desk where the great man once wrote his brilliantly funny novel, Candide, has caused locals to protest in the vain sort of way that people without £30 million tend to protest. Even Buck House has been opened to the vulgar hordes. Surely it can only be time before Camelot will sell tickets for a night out with Andy—or Edward, if one is so inclined. An alternative might be to offer the Lenin mausoleum as a new home for the dwindling Windsor family and open their palace to the kids who are sleeping on the streets within a mile of it. Now, that really is a foolish idea—isn’t it?

Steve Coleman

Socialism and Planning: What Can Work (2019)

From the July 2019 issue of the Socialist Standard

The impossibility of ‘One Big Plan’

In any kind of society, people need to plan. Even in the most gung-ho, ruggedly individualist laissez faire society imaginable, there would be plenty of planning. Entrepreneurs would have to plan what and how much to produce, along with the requisite quantities of material and labour inputs needed, in the face of market uncertainty. No large-scale system of organised production can function without planning.

Obviously, this would be true also of a future socialist society though, according to some commentators, what distinguishes socialism from capitalism is not the need to plan but, rather, the number of plans needed. In short, the sheer scale of planning.

In capitalism, literally millions of plans are implemented every day. Most obviously, this is because there are literally millions of separate competing enterprises operating in a capitalist economy – from some giant corporation like Walmart to your local self-employed plumber. Thus, capitalism is a ‘polycentric’ system – meaning it has multiple planning centres or bodies. Those millions of plans are said to mutually adjust to, and mesh with, each other in a quite spontaneous, or unplanned, fashion via the market mechanism and in a way that purportedly benefits everyone in accordance with Adam Smith’s quasi-theological concept of the Market’s ‘Invisible Hand’.

‘Socialism’, argue these commentators, would be very different. Instead of millions of bodies each striving to implement their own plans, there would be just one single planning body and one single vast plan encompassing the totality of production. Meaning there would be conscious, society-wide, ‘central planning’ in the classical sense of this term.

This, it is argued, is because the entire apparatus of wealth production would be socially owned. There would be just one ‘owner’– society itself. However, society-wide planning is not a necessary corollary of social ownership. Even within a large capitalist corporation today, though it is owned by those who hold equity in it (and who thus exert ‘ultimate’ control over it), there are numerous gradations of control below this level of ‘ultimate control’. Different departments or branches of the same corporation often exercise a considerable degree of initiative in planning their activities. Even within each department or branch we see gradations of control in the form of a managerial hierarchy.

Of course, the workers filling the various positions in this hierarchy don’t own the corporation they work for. They don’t exert ‘ultimate control’ over the corporation which is what real de facto ‘ownership’ boils down to – having the final say over the disposal of the corporation’s assets. But they do exercise some control, albeit within certain limits.

The point is that the numerous operational decisions affecting the corporation’s performance don’t all emanate from a single source. Of necessity, a great deal of decision-making is devolved down the managerial hierarchy. Only the most important decisions get to be made at the top.

If a single entity like a corporation today is obliged to implement a ‘polycentric’ model of decision-making, then how much more true would this be of a future socialist society embracing all humanity? Of course, this is not to suggest the organisational structure of a future socialist society would be modelled on that of a hierarchical capitalist corporation.

Lenin once famously depicted a post-capitalist world in The State and Revolution (1917) as one in which, ‘The whole of society will have become a single office and a single factory, with equality of labour and pay’ (he soon enough abandoned the idea of ‘equal pay’ on taking office). No doubt the dictatorial principle of ‘one-man management’ ruthlessly imposed by the Bolsheviks on Russian workplaces would similarly apply in Lenin’s imaginary post-capitalist world. Socialists see nothing appealing about this top-down version of what a socialist society is supposed to look like.

From our standpoint, it is entirely possible to envisage the world’s productive resources being owned in common by the global community yet subject to a complex system of polycentric democratic planning – with multiple plans being implemented at different spatial levels of organisation: global, regional and local – (depending on the nature of the ‘resource’ in question). While under capitalism, ‘planning’ likewise takes a polycentric form, minority class ownership of the means of wealth production invests it with a thoroughly authoritarian character. This is where any comparison with socialism ends.

Common ownership of the means of wealth production eliminates the very possibility of one individual or group exercising economic leverage over another, compelling the latter to comply against its will. In fact, socialism is the only conceivable basis upon which a truly free society can flourish.

Society-wide planning

Nevertheless, the idea still persists in certain circles that socialism would be a system based on society-wide central planning. Let’s examine this claim more closely to see why this cannot be so.

There are literally millions of different kinds of goods produced in a modern economy. Some of these (‘consumption goods’), in order to be produced in sufficient quantities to meet the demand for them, depend on the availability of other goods (‘production goods’) that likewise need to be produced in sufficient quantities to ensure enough of the former are produced. To produce production goods requires yet other production goods to be produced. Sometimes, the number of inputs needed can be truly mind-boggling. For instance, a single Boeing 747 plane is reckoned to have approximately 6 million component parts, supplied by hundreds of suppliers scattered right across the globe.

In an idealised system of society-wide planning, the requisite quantities of all these millions of consumption and production goods that society needs will have to be calculated in advance by the single planning centre and expressed as ‘production targets’ for each and every good within some vast Leontief-style ‘input–output’ matrix or table. Calculating these production targets does not simply involve finding out the aggregate demand for each good; one would also have to take into account the ‘technical ratios’ involved in producing them – something that, in theory, can be done through a method called ‘linear programming’ which we will look at later.

So, if a particular good – A – consists of two components, X and Y, and if it takes 2 units of X and 5 units of Y to produce 1 unit of A, then you will obviously need 20 units of X and 50 units of Y if you want to produce 10 units of A. This could change if your method of producing A changes. Let us say due to some technological innovation it now takes 3 units of X and 4 units of Y to produce 1 unit of A. If you stuck with your original production targets for X and Y – namely 20 and 50 units respectively – you won’t have enough units of X to produce 10 units of A while, at the same time, you would end up with a wasteful surplus of units of Y.

Incompatible with socialism

Looking at this simple example, we can begin to see why this concept of ‘society-wide’ planning is completely incompatible with socialism.

Firstly, it is pretty obviously impractical for any kind of large scale system of production, let alone socialism. To successfully implement this society-wide plan would require the production targets for each of the millions of consumption and production goods to be precisely calibrated and then exactly fulfilled right across the board. Any deviation from any one target would have knock-on repercussions that would jeopardise society’s ability to meet all those countless other targets because of the interdependent nature of modern day production.

Even something as simple as a typhoon in Indonesia or a crop blight in the American Mid-West could seriously disrupt supply chains, resulting in shortages of some goods and surpluses of others. The plan would then have to be completely redrawn and, in the real world, since changes happen all the time, what this means is that the plan would never get off the drawing board. It would need to be constantly revised by the planners.

Moreover, for the plan to be successfully implemented, this would require a moratorium on any kind of technical innovation. This is because technological innovation, as we saw, tends to alter the aforementioned ‘technical ratios’ involved in the production of goods, thereby altering the production targets of the inputs needed.

Some enthusiasts for central planning argue that the exponential increase in computing power in recent years now makes the concept quite feasible. However, this is to misunderstand what the problem is about. It is not the lack of sufficient computing power that makes the concept impractical but, rather, the attempt to apply it to the real world when the latter is constantly changing. Saying that ‘the plan’ can be rapidly adjusted to accommodate any change in the real world means simply that it loses its quality of being a ‘plan’ – something that is supposed to guide production in an a priori sense. The application of such computing power then becomes simply the means of tracking, rather than initiating, changes in the real world. This is a very useful faculty to have but it does not technically amount to ‘planning’.

Secondly, and more importantly, the very nature of socialism itself rules out the concept of society-wide planning. The two outstanding features of a socialist society that are relevant here and spring directly from the very fact of common ownership of the productive resources of society are, firstly, that individuals will have free and unfettered access to society’s stock of goods and services and, secondly, that they will freely and voluntarily cooperate to produce these things.

Society-wide planning flies in the face of both these core social practices. To take the demand side of the equation first, how can one possibly ascertain in advance what people want if their appropriation of goods is self-determined? It is not logistically feasible to carry out a global survey of over 7 billion people and then compile a list of production targets for the considerable array of consumer goods they might want. It would also be completely pointless given that what individuals want can change from day to day. This is to say nothing of the fact that the global population can expand or contract.

Instead of free access, what a centrally planned economy would have to institute is some form of universal rationing. People will need to be told what they can consume even if they had earlier been able to vote on the matter. Very likely, this would lead to an asymmetrical distribution of power in favour of a bureaucratic elite tasked with devising and implementing this system of top-down rationing and ensuring compliance. Creeping corruption and re-emergence of some kind of class-based society would be the probable outcome.

Then there is the supply side of the equation – specifically, the labour inputs needed to produce what society wanted. To ensure that, the planners would have to impose some form of compulsion requiring workers each to perform a certain quantum of labour (in order to meet the Plan’s multiple targets) as a condition for gaining access to the goods and services they needed. Not only that, these workers would also have to be subjected to a compulsory division of labour to ensure the proportionate application of labour inputs required to meet all those production targets specified in the Plan: you couldn’t just choose what work you wanted to do, or when.

As the Bolshevik, Leon Trotsky, revealingly noted in 1920:

  If we seriously speak of a planned economy, which is to acquire its unity of purpose from the center, when labor forces are assigned in accordance with the economic plan at the given stage of development, the working masses cannot be left wandering all over Russia. They must be thrown here and there, appointed, commanded, just like soldiers … Deserters from labour ought to be formed into punitive battalions or put into concentration camps.

Exactly. What socialist could possibly endorse this capitalist apology for a workhouse system? As one commentator has noted, Trotsky’s recommendations are reminiscent of the Poor Laws enacted in Elizabethan England to combat the problem of vagabonds and beggars, as the rising bourgeoisie saw it, driven off the land by the Enclosure Acts and deprived of a means of living (‘Capitalism and Planning’, Libcom)

The voluntary nature of work carried out by the freely associated citizens of a socialist society would thus have been utterly obliterated. In short, we would have regressed back to something very much like a system of waged slavery that is the hallmark of capitalism.

(Next month the need for feedback).

Robin Cox

Link to Part 2.

Socialism and Planning Part 2: ‘Feedback’ (2019)

From the August 2019 issue of the Socialist Standard

Link to Part 1

Socialism and Planning: The Need for Feedback

Last month we explained why socialism could not possibly be organised on the basis of ‘society-wide’ planning – that is, a single vast plan encompassing everything. Though the numerous production (and distribution) units would obviously all be engaged in planning, the overall pattern of production would be unplanned. Meaning it would be the emergent outcome of many different plans. What would ensure these plans co-ordinated to produce a coherent outcome is something called ‘feedback’.

Any large scale, technically advanced society requires information in the form of feedback to function. ‘Feedback’ is an attribute of dynamic systems, when the ‘outputs of a system are routed back as inputs as part of a chain of cause-and-effect that forms a circuit or loop’ (Wikipedia). In this way the system is able to adjust its behaviour to accommodate changing circumstances.

The market is a good example. A contraction in the market for frozen fish fingers, perhaps because of some scandal concerning contaminated fish stock, causes a drop in prices and a decline in profits, resulting in some factory closures and reduced output. Here the relevant information takes the form of market prices. However, there is another kind of feedback system that operates alongside market prices and is, in fact, of far greater significance inasmuch as any kind of large scale society (including capitalism) utterly depends upon it. This is the feedback intrinsic to a ‘self-regulating system of stock control’.

Here, the basic information takes the form, not of prices, but of physical quantities – for example, counting the number of cans of baked beans stocked in your local supermarket. This is called ‘calculation-in-kind’. The supermarket simply tracks how many cans have been removed from the shelf – these days this is often computerised – and calculates the quantities needed to sufficiently replenish the stock to meet future demand, (taking into account the rate at which it is being depleted). That automatically triggers an order for fresh stock from the suppliers.

The beauty of the system is that any shifts in the pattern of demand can be picked up and almost instantaneously responded to, given the power of modern computer technology. This is precisely the kind of feedback system a socialist society can make full use of, enabling it to monitor and respond to the fluctuations in the demand for any conceivable kind of good produced in that society. We don’t need to reinvent the wheel. This system already exists and functions today under our very noses.

Misunderstanding socialism

In a chapter entitled ‘Understanding the Market’, Norman Barry lists three possible ways of ‘organising a society for the production of wanted goods and services’ – altruism, central command and the market:

  Altruism presupposes that individuals, without either the incentives of personal gain or fear of punishment, will satisfy the wants of others in a system of generalised reciprocity. It is now generally agreed that this places impossible burdens on a fragile human nature and on human knowledge. In a large society, even if people were uncommonly well-disposed towards each other, how could they know what others’ wants were? In fact altruism is only conceivable in very small communities where there is broad agreement about ends and purposes (The State or the Market, 1991)

Since socialists reject both ‘central command’ and the ‘market’, it would seem we are left with only ‘altruism’ with all the limitations Barry imputes to it. However, his argument is plainly wrong on two counts.

Firstly, to take his point about not being able to know what other people want, this is simply not true. It seems to naively assume that to do that you have to directly ask them what they want. Now it is certainly true that customer surveys and the like can provide useful pointers when it comes to product innovation and design but it would be impractical to canvas the entire population; only a small sample is required. It is also unnecessary since, as we have seen, the great bulk of information concerning individual wants in a socialist society can be acquired indirectly in an aggregated form via the aforementioned procedure of stock control. Since this is an open-ended procedure, the question of the size of the society is completely irrelevant.

Secondly, regarding his point about motivation, it is misleading to suggest that socialism would be a society based purely on altruism. For sure, people can and do behave altruistically and a socialist society will draw abundantly upon this very human quality of feeling concern for the wellbeing of others. Barry equates this altruistic concern with a ‘system of generalised reciprocity’ but fails to properly comprehend what that means. Yes, it denotes helping others out of concern for their wellbeing without expecting any direct or immediate return (what is called a quid pro quo transaction). However, it emphatically does not mean there is no expectation whatsoever of these others reciprocating in due course. It is not purely altruistic in that sense – as the very word ‘reciprocity’ itself suggests.

Actually, ‘generalised reciprocity’ denotes a system of moral, (rather than economic) transactions, governed by the ethos that we should all contribute to the common good rather than free ride on the contributions of others. It implies a generalised expectation that we help each other rather than just one-sidedly sacrifice our own interests for the sake of others. As such, this is a fair description of the kind of social dynamics that would operate in a future socialist society. It is not something completely unfamiliar to us today or necessarily confined to only small scale face-to-face societies. Even under capitalism, there are plenty of examples around. Indeed, the internet itself has been compared to a gigantic ‘gift economy’. (http://wiki.p2pfoundation.net/Gift_Economy)

Ironically, the accusation that socialism ‘places impossible burdens on a fragile human nature’ in assuming humans should expunge any concern for their own interests – can be thrown back at critics like Barry himself. If according to the market ideology they embrace, individuals are purely driven by self-interest, then why do the great majority today put up with a social arrangement that so demonstrably works against their interests? Why permit a tiny owning class to accumulate vast fortunes at their expense? Clearly, it is not out of self-interest that workers allow this to continue.

Economic calculation

Apart from enabling us to respond to the ever-changing pattern of consumer wants, feedback in the form of a self-regulating system of stock control will also facilitate the efficient allocation of resources by ensuring these are allocated in a way that economises most on those that are least abundant. Here, we are alluding to the ‘Law of the Minimum’ formulated by the 19th century agricultural scientist, Justus von Liebig, who demonstrated that the total output of a crop is determined, not by the total amount of resources available for plant growth but, rather, by the scarcest resource or ‘limiting factor’ – for example, nitrate fertiliser. Increasing the supply of this input would then mean some other input becoming the limiting factor – perhaps, irrigation water. The point is that it is entirely possible to grade all the relevant inputs required to produce a given output in terms of their relative availability and determine the degree to which this constrains output.

In 1920, the Austrian economist and prominent opponent of socialism, Ludwig von Mises, published a tract called ‘Economic Calculation in the Socialist Commonwealth’. In it he set out to prove that socialism was impractical since, without market prices, it would be unable to make the economic calculations needed to efficiently allocate resources. As he put it:

  It would be evident, even in a socialist society, that 1,000 hectolitres of wine are better than 800, and it is not difficult to decide whether it desires 1,000 hectolitres of wine rather than 500 litres of oil. There is no need for any system of calculation to establish this fact: the deciding element is the will of the economic subjects involved. But once this decision has been taken, the real task of rational economic direction only commences, i.e., economically, to place the means at the service of the end. That can only be done with some kind of economic calculation. The human mind cannot orientate itself properly among the bewildering mass of intermediate products and potentialities of production without such aid. It would simply stand perplexed before the problems of management and location. It is an illusion to imagine that in a socialist state calculation in natura can take the place of monetary calculation. Calculation in natura, in an economy without exchange, can embrace consumption-goods only: it completely fails when it comes to deal with goods of a higher-order. And as soon as one gives up the concept of a freely established monetary price for goods of a higher-order, rational ownership of the means of production, rational production becomes impossible. Every step that takes us away from private ownership of the means of production and from the use of money also takes us away from rational economics.

Mises could not have been more mistaken. His unwarranted belief that calculation-in-kind could apply only to consumption goods and not ‘higher order’ production goods stems from a peculiar blind spot at the very heart of his ‘economic calculation’ argument. This is the taken-for-granted assumption that the allocation of these higher order goods would be undertaken by a single planning authority acting on behalf of society – what he meant by his ‘Fuhrer principle’. As we saw last month, that means establishing, in advance, production targets for each and every one of the millions of different production and consumption goods in the economy within a single giant plan.

However, what that does is to eliminate the very possibility of a feedback system and, therefore, a means of efficiently allocating resources. If, instead, you had a polycentric system of planning in place this would permit such a feedback system to come into play and thus enable you to rationally allocate resources in the light of known stock levels.

Contrary to Mises’ claim, calculation-in-kind is applicable not just to consumer goods but ‘higher order’ production goods too. Thus, if a particular consumer good, M, consists of three components, X, Y and Z, it is entirely possible to calculate how much of M we can produce, given the available supplies of X, Y and Z. If there were sufficient supplies of X and Y, but not enough of Z, to meet the demand for M (thus making Z the ‘limiting factor’ in this example) you then have two options if you want to fully satisfy the demand for M. Either you modify the ‘technical ratio’ (discussed in Part One) involved in producing M so as to reduce the quantity of Z needed or you divert supplies of Z from other end uses. This latter option would entail ‘opportunity costs’ that can be readily quantified in terms of the reduction of output for those other end uses.

In either case, the Misesian claim that socialism cannot resort to economic calculation to efficiently allocate resources is refuted. What remains to be done is to establish the social priorities to guide resource allocation (which Mises conceded was possible) and, also, when to switch resources from one end use to another depending on supply and demand – neither of which strictly relate to the question of ‘economic calculation, as such.

The first boils down to a question of society’s values. Establishing a hierarchy of production priorities (perhaps informed by concepts like Maslow’s famous ‘hierarchy of needs’ model) might, for instance, entail classifying different consumer goods according to a rough-and-ready ‘points system’ to guide resource allocation. The second, concerning when to switch resources, could make use of such indices as the rate of take up of particular lines of stock or planning tools like consumer surveys. In neither case is pinpoint accuracy required; what matters is that the general thrust of decision-making broadly moves in the direction society deems desirable and that we have the means of ascertaining what society desires by fully utilising all the available means of communication.

Mises never really grasped this way of looking at socialism because he was too fixated on the idea that it would be a system of society-wide central planning. However, as we have seen, that precludes the very possibility of feedback so crucial to the refutation of his entire theory.

Robin Cox