Plan and Market Under Socialism

Ota Sik

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138037915
• eBook ISBN: 9781351710824
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This title was first published in 1967. The main ideas in this book originated some time in 1957-1958 — the period when the first reorganization of planning and management in Czechoslovakia was being prepared. Even at that time, the deeper analyses of the growing economic contradictions and the disclosure of their causes were leading the author to recognize the fact that the maturing socialist economy and the advanced social division of labour, following on the industrially developed capitalist economy in this country, would inevitably require a thorough-going use of socialist market relationships.

II A Planned Economy and Market Relationships

1 The General and Direct Social Orientation of Labour under Socialism

In Marxist economics, socialist planning is usually treated as an expression of the direct social character of labour under socialism. This is the negation of the indirect social character of labour under private commodity production. With private ownership the work of individual members of society could not be directly expended in a planned way as social labour, although it was always necessarily designed to satisfy the needs of the other members of society. Under socialism, labour is expended directly as social labour.

Hitherto the substantial change actually occurring under socialism when labour has become socialized has always been explained too abstractly and with too great over-simplification. The so-called direct social character of labour was considered an absolute antithesis of indirect social labour, as an expression of the idea that national planning of the economy would in itself assure that labour expended in any socialist enterprise or factory would always be socially necessary labour. The fact that this has not been true in every case was considered to be merely one of the temporary, transitional shortcomings of our economic understanding and planning, which would be overcome in time, when planning bodies would have greater proficiency and experience.

It was, however, never conceded that it was more than just insufficient knowledge (and this problem was also immensely simplified), or that definite, objectively necessary conflicts of interest could prevent labour from being fully expended as socially necessary labour. On the contrary, the existence of such contradictions was strictly denied and the unity of interests of members of socialist society was again declared to be absolute. The logical result of such thinking was then, naturally, the rejection of real commodity-money relations and, of a market mechanism within a "thoroughly socialist (state) production". Commodity-money relations were reduced to a formality in deriving certain commodity forms only from the external relations of state enterprises (with cooperatives or with foreign states).

First, it is a matter of analysing in more detail the Marxist category "direct social labour", to show what is really changed when labour is expended as a consequence of socialist nationalization of the means of production, and why planned development under socialism must be conceived of in a different way than hitherto. This will show, at the same time, that the identification of the category "socially necessary labour" with the category "direct or planned expenditure of labour" is incorrect. We consider it, moreover, more correct to use, right from the start, the expression "general and direct social orientation of labour" rather than "direct social character of labour". I shall attempt to explain why.

In the second part of this study we will explain the necessary contradiction arising within socialist labour, which cannot be eliminated by socialist planning and must be solved by specific commoditymoney relations.

a Planned Management of Economic Activity under Socialism

The socialist nationalization of labour means, first of all, to do away with the class distribution of the means of production that had in the past divided society into antagonistic classes, non-owners and owners, workers and those who exploit workers. The socialist mode of distributing means of production prevents them from becoming private property, makes it impossible for people to decide their use according to private interests and will, against the interests and will of other people, using the means of production to exploit the labour of others. Means of production are appropriated in a socialist way, i.e., they are produced, distributed, exchanged and used throughout society in accordance with the needs and interests of society as a whole and according to society's plans.

When private appropriation of means of production is done away with, all members of society are put on a mutually equal basis as regards the fundamental mode of appropriation of necessities of life. All members of society, except those who are disabled, are required to earn their living by labour. With the immensely developed and widely ramified division of labour, where no one can obtain all the necessary means of subsistence by his own work, there arises the necessity of cooperation among all members of society following a common goal, i.e., a goal that corresponds to the general interest of all members of society.

It is in this sense that direct cooperation among all members of the whole of society arises. Within the limits of society as a whole people must proceed in their work in a mutually purposeful way, in order that their different types of work might supplement and complement each other.

A purposeful determination of the development of social production under socialism is assured primarily by the planned economic activity of production, exchange and distribution.

Of course, there is a certain planning of economic activity under capitalism, too. Here, also, the individual capitalists or corporations set up a goal and procedure for future economic activity. Some capitalist states also attempt, mainly by fiscal and monetary policies and other measures, to direct the economy's development in a planned way within a given state or in economic regions. If we want, then, to express the special feature of planning under socialism, we must resort to more concrete definition. How does the purposeful direction of economic activity under socialism differ from that under capitalism?

In the first place, under socialism there is planning of all economic activity for the entire national economy. Under capitalist private-property relations, only the activity of separate units is planned within the framework of one or another private capitalist enterprise or capital corporation. But even when the capitalist state attempts to direct the development of the entire national economy, private decisions remain decisive in the orientation of economic activity, which leads to insurmountable contradictions between the state plans and the over-all development of the national economy. Under capitalism, therefore, the entire activity of the national economy cannot be planned as it can under socialism, because there necessarily are not only contradictory class interests, but also the contradictions among the different private owners of capital (or the large corporations). It is true that they can and do at various times come to an agreement on some specific joint planned operation, but their private or group interests, their will and decisions are always in the final analysis decisive for their actual economic activity. This is one of the main phenomena of private ownership.

The contrary is true under socialism, where there is socialist distribution of the means of production and socialist division of labour, and where, therefore, there is no contradiction between labour and ownership, and where consumer goods are distributed on a socialist basis, according to work performed and partly also according to the needs of the members of society. Here exists a unified basic interest of all workers, an interest in the socially necessary optimum development of labour cooperation throughout all of society, and in a socialist distribution of the results of this labour.

The repeated perception of economic phenomena, the experiences of different members of society, and then, of course, the expanding theoretical understanding of economic relationships lead people to recognize that all production is directly and mutually linked and that the results of social production are distributed substantially according to labour. Therefore, there is a fundamental common interest of all members of society to subordinate their work to the goal which is set by society and which determines the trends in general social production. That means at the same time that the goals and the procedure, that is, the plans of smaller social groups, regional or on the level of enterprise, factory or shop, or of individuals, are subordinated to the more general plans, the plans for society as a whole, and also that, within the limits of the society, there is a uniform approach.

The system of planning for society as a whole is, therefore, an expression of the fundamental unity of interests of society, and that, again, is an expression of socialist production relations. As we shall show later, the unity of interests is not absolute. Even under socialism there are conflicts of people's interests, and hence in their activities as well. Of course, if we compare this with capitalism, we see a substantial difference. The antagonistic conflicts of interest between classes have disappeared and the antagonisms between private owners, too. Conflicts among workers under socialism are insignificant compared with those under capitalism, and the interests of the people appear as coordinated, united interests. Naturally, when we compare socialism with communism at some future date, the internal conflicts under socialism will seem substantial as compared with those under communism.¹ It is in this relative sense that we must understand the unity of interests under socialism.

The first particular characteristic of socialist economics, therefore, lies in the fact that there is planned management of the main economic activities within society as a whole, as the expression of the unity of fundamental interests of all members of society.

The second special feature is that under socialism there is a possibility to foresee the essential inter-relationships between the main economic activities, and, precisely because of this, there exist conditions for basic agreement between the plans and the subsequent actual economic activity.

The development of the main economic activities can be so planned that they will evolve basically in intrinsic harmony with these economic activities, with which they are connected. Precisely this is what it means to respect economic laws. The formula, "utilize or apply socialist economic laws," is very often used in our everyday life, but, for the most part, very abstractly and with little idea of its content. As we know, laws are the essential, necessary relationships between phenomena or things and when we speak of economic laws, these are the essential, necessary relationships of various economic activities. If we want to apply purposefully these logical relationships, we must respect these laws. This does not mean that we must create them, they exist objectively, independent of our will. This means directing economic activity in such a way that essentially interrelated economic activity will develop, as much as possible, in mutual harmony.

Under capitalism this is rarely possible. For example, it is not feasible to determine wages in all enterprises in a way that will harmonize with the development of production programs of all enterprises. And yet there is an essential relationship between wage policy and the production programs of the individual enterprises. Wage trends are the basic determining factor in the development of market demand. And market demand, in turn, must be met by a certain supply of consumer goods. And this supply of goods on the market is, again, dependent on the previous development of production programs in all the enterprises. In the final analysis, the attaining of harmony between demand and supply in the future period means to plan general wage trends to conform with production programs for all enterprises.

There are too many "unknowns" under capitalism and, unlike socialism, it is not possible, either, to coordinate sufficiently in advance the trends in production capacities among the various private entrepreneurs or to harmonize the distribution of the national income between capitalists and workers. No one can prevent the struggle of the working class for higher wages and better working and living conditions. The distribution of income into savings, investments and personal consumption, according to the will of the capitalists, cannot be sufficiently foreseen, and the indirect measures that influence the development of these processes are only partly effective, although it does have decisive influence on the future relationship between over-all supply and demand.

Of course, this is not to say that central planning under capitalism could not affect the development of these processes, with the aim of assuring a dynamic equilibrium of the economy. It is certainly true that the present level of capitalist development and the state-monopolist measures create conditions which had no counterpart under the older type of capitalism. Moreover, it is necessary to support all progressive political forces that attempt, and are able, to act on capitalist states and influence the economic-political measures taken for the welfare of the people and to raise their standard of living.

We cannot, on the basis of present-day experiences, estimate how far such states, under the pressure of these progressive forces, can really succeed in subordinating private interests and decisions to the broader interests of the workers in society and assure certain generally beneficial aims by planning. But it would not be right to give up these immediate goals in the political endeavours of progressive forces.

Socialism makes it possible to purposefully coordinate the development of the economy, determine by plan the main economic activities in such a way that the development of some need not hinder the development of others. And it is precisely because we take account, in advance of the essential relations of the main economic activities that these can develop fundamentally according to plan.

But it would be a mistake to mechanically identify with reality the above-described possibilities for a planned development under socialism. Although there are indubitably more favourable social conditions for a social, planned orientation of all main economic processes than there are under capitalism, this does not mean that the economic development in socialist countries is always in harmony with the plans. Here also there are necessary contradictions between the plans and reality. If we leave aside some conflicts of interest which we shall discuss later, in particular those caused by the fact that we still are far from being able to foresee all essential relationships, and even less so the minor relations, and therefore many economic processes still develop otherwise than we planned or anticipated. For example, general purchasing power has often developed in a way quite different from our expectations; we are not yet able to predict the structure of demand and thereby the retail turnover, etc. If we are not able to predict correctly future economic needs in our planning, it can happen that certain processes will arise spontaneously, deviating from our ideas expressed in the plan.

Even now, although we can speak historically only of the initial experience of our economic planning, we may say that the existence of socialist production relations makes it possible to plan the whole social production process and do away, as Marx and Engels said, with the contradiction between planning in an individual enterprise and anarchy throughout society. This means to plan not only on the enterprise level, but also to subordinate these individual plans to the plans for society as a whole.

At the same time, we must overcome the over-simplified views on socialist planning that have been widespread in our theory and, to some extent, in our practice as well.

What are these over-simplified ideas?

Planning all economic activity in a purposeful way means determining its development, taking into account the main internal economic relationships. As much as possible we must respect all fundamental economic relationships to be able to direct as precisely as possible the necessary development of the different economic programs. The over-simplification occurred when we considered planning to be something to be assured merely by proportional development. At the same time we had an over-simplified understanding of proportional development itself. This was considerably furthered by the Stalinist formulation of the "law of planned, proportional development of the national economy".

Why did this formulation bring with it an over-simplified conception?

Planned development of the national economy under socialism is indeed an objective necessity, a law. Socialism cannot develop without planning on a society-wide scale. A definite concrete form of planning in a specific period in a definite country is, it is true, always subjective activity and is influenced by the subjective characteristics of the people who are doing the planning, but without these plans in one form or another, a socialist economy cannot develop at all.

Of course this can be genuine planning only when there is an essential agreement between what is planned and the real needs and possibilities or the real economic development. If there were no fundamental agreement, between the plans and the actual development, it would be impossible to speak of a system of planning. Instead, it would be a question of goals that actually cannot be realized or, in other words, pious wishes. Moreover, it is not enough to narrow down one's attention to proportional development if there is to be agreement between the desired and the real development. We must take account of all fundamental economic relationships by which the proportions are achieved, as well as all other concrete economic relationships.

We must purposefully assure, in planning, that, especially, general economic laws are respected, laws that operate more or less on all levels of development of social economy, under all social and economic conditions. These are the most general laws, that appear under various economic conditions in various forms, operating through a large number of different specific economic processes, with varying force and consistency. Often these cannot even be traced in a short period, but over a longer historical period they must, in the final analysis, prevail, even though, perhaps, merely as long-term trends.

The most general economic laws cannot be disregarded by any economic system, if it is to persist historically, although they may be ignored or suppressed for a short period. They must be respected all the more in planned management of socialist economic activity. We shall attempt to formulate some of these more general economic laws, without making any claim in this study to a detailed analysis or historical demonstration. We are, however, convinced that a socialist economy must also primarily assure the operation of these laws.

These fundamental, general economic laws of development of production and all other economic activity are:

1. Social production must assure constant expansion and development of use values (material products of certain specific usefulness) in such a way that the existing needs of society are qualitatively satisfied, but also so that new needs are stimulated by new products and a continually rising level of consumption is assured (the law of development of use values).

2. Social production must develop in a way that will assure that the different types of use values are always produced in economic proportions. This means in amounts corresponding, in the final analysis, to the amounts of the social, economically realistic (given by the distribution proc...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Preface
• I. DEVELOPMENT OF A SOCIALIST MARKET THEORY AND ITS PRACTICAL APPLICATION IN CZECHOSLOVAKIA
• II. A PLANNED ECONOMY AND MARKET RELATIONSHIPS
• III. SPECIAL FEATURES OF SOCIALIST PRICE FORMATION
• IV. MONEY UNDER SOCIALISM
• V. CONCLUSION
• Bibliography
• Glossary
• Index