Information Technology and Socialist Construction

The End of Capital and the Transition to Socialism

Daniel E. Saros

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9780415742924
• eBook ISBN: 9781317803188
• Topic: Business
• Subtopic: Business General
• Index: Business

The failure of command central planning in the twentieth century has led to a general disillusionment within the socialist movement worldwide. Some alternatives to capitalism have been proposed since the end of the Cold War, but none has offered an alternative form of economic calculation. This book explains how modern information technology may be used to implement a new method of economic calculation that could bring an end to capitalism and make socialism possible.

In this book, the author critically examines a number of socialist proposals that have been put forward since the end of the Cold War. It is shown that although these proposals have many merits, their inability effectively to incorporate the benefits of information technology into their models has limited their ability to solve the problem of socialist construction. The final section of the book proposes an entirely new model of socialist development, based on a "needs profile" that makes it possible to convert the needs of large numbers of people into data that can be used as a guide for resource allocation. This analysis makes it possible to rethink and carefully specify the conditions necessary for the abolition of capital and consequently the requirements for socialist revolution and, ultimately, communist society.

Information Technology and Socialist Construction will be of interest to students and scholars of political economy, the history of economic thought, labour economics and industrial economics.

Part I

The logic of capital

1 The seemingly unbreakable capitalist laws of motion

The origin of Marxian political economy is frequently misunderstood. Although it is often treated as an alien ideology in the West, Nicholas Lobkowicz (1967: ix–x) argues that Marxism is an “outgrowth” of Western culture rather than “a foreign body in the history of Western culture.” E.V. Il’enkov (1967: 392) concurs that Marxism is a “natural outgrowth” of the development of Western European civilization. The tendency in the West to regard Marxism as something unfamiliar has discouraged public discussion of its principles and insights. According to Robert Tucker (1978a: ix), to ignore the writings of Marx and Engels is to exclude oneself from the continuing debate taking place within most contemporary societies where free political discussion exists. Nevertheless, it seems that most professional economists in the United States seem to fall into exactly this category. It would seem that it should be unnecessary to have to make the case for better education and comprehension in the West of this important body of thought. Because of the powerful resistance to the spread of these ideas in Western nations, it is necessary to once again review the key insights that have become a part of the body of thought known collectively as Marxism.

Marx’s voluminous writings would indicate that this task is too great for a single chapter. Still, Tucker (1978b: xxviii) explains that Marx “spent the greater part of his life writing one important book under a number of different titles.” The purpose of this chapter is not to provide a comprehensive overview of Marx’s worldview but rather to highlight those aspects of his thought that are essential to understand what capital is and why it needs to be abolished. This chapter, therefore, concentrates on the following aspects of Marx’s worldview: the materialist view of history, the logical method of Marxism, the theory of capital and surplus value, criticism and consciousness, alienation, and the state.

According to the materialist conception of history, humanity has passed through a number of historical periods, each of which may be characterized in terms of a particular socioeconomic formation. A socioeconomic formation in Marxian theory consists of an economic base and a political and legal superstructure. The concept of a socioeconomic formation is what Wesolowski (1967: 61) calls the “broadest Marxian theoretical category” or “the totality of relations in a given society.” The economic base or the mode of production of a given socioeconomic formation consists of two primary components: the social forces of production and the social relations of production. The social forces of production consist of society’s accumulated stock of knowledge and technological skill. The social relations of production refer to the particular form that human relationships assume within the mode of production to make production possible. As Gasper (2005: 15) explains, what Marx and Engels initially called the “form of intercourse” between individuals in The German Ideology, they would later call the “social relations of production.” Examples include the lord/serf relationship in the feudal mode of production and the capitalist/wage laborer relationship in the capitalist mode of production. Upon this economic base arises a political and legal superstructure. That is, all of society’s laws, political institutions, customs, religious traditions, and cultural practices are only so many concrete expressions of the underlying mode of production.

The passage from one socioeconomic formation to another requires a revolution of the mode of production. Such transitions come about as a consequence of a contradiction within the economic base. That is, the social forces of production develop to the point where they become increasingly incompatible with the social relations of production. Eventually, a revolutionary upheaval occurs in which the social relations of production must be transformed to accommodate the advancement of the social productive forces. If this accommodation is not successful, the revolution may end in collective devastation until humanity, fumbling forward at a low level of consciousness, discovers the solution to its problem and creates social relations of production that are compatible with the social productive forces. When the social revolution occurs, the political and legal superstructure will be transformed to reinforce the new mode of production of which it is the ideal expression. As Marx explains (1978a: 4), legal relations and forms of state “have their roots in the material conditions of life” or what Hegel called “civil society.” That is, a change in the material conditions of life necessarily coincides with changes in the legal and political superstructure.

Looking to the future, the climate crisis is the most likely factor that will force the global population to transform the capitalist mode of production due to the conflict that is being created between the forces of production and the social relations of production. Capitalist relations of production lead to endless capital accumulation, which now threatens the world with environmental catastrophe. The forces of production, having reached their advanced stage in the modern period, are becoming increasingly incompatible with capitalist social relations. Minqi Li emphasizes this point:

Capitalism would remain viable (and therefore ‘reformable’) only to the extent the necessary historical conditions required for its normal operations are present. But the development of capitalism inevitably leads to fundamental changes in the underlying historical conditions. Sooner or later a point will be reached where the necessary historical conditions are no longer present, and capitalism as a historical system will cease to exist.

(Li 2011: 297)

In Li’s (2011: 299) opinion, “meaningful climate stabilization” will require an economic system that operates “with zero economic growth, and with levels of material consumption consistent with the normal operations of the ecological system.” In Chapter 7, the requirement of zero economic growth is challenged, but Li’s point stands regarding the role that climate change will likely play in disrupting capitalist social relations. Mark Fisher similarly argues that to deal with environmental catastrophe,

rationing of some sort is inevitable. The issue is whether it will be collectively managed, or whether it will be imposed by authoritarian means when it is already too late. Just what forms this collective management should take is, again, an open question, one that can only be resolved practically and experimentally.

(Fisher 2009: 80)

The important point to note at this stage is that for humanity to continue to develop the social forces of production, it must establish a socioeconomic formation that contains social relations of production consistent with its highly advanced forces of production. Exactly which form these social relations must take to achieve this objective is the question that must be answered.

The concept of a socioeconomic formation and its subsidiary concepts are essential, but Marx’s logical method requires emphasis as well. Many social scientists share with Marx a view of “society as a total system in which there is an infinite and multiple interrelationship between phenomena which must be studied in their complexity” (Meyer 1967: 100). The concept of overdetermination that Richard Wolff and Stephen Resnick (1987: 20) use to describe the logic of Marxian economics supports this interpretation of Marx’s view of society. As Wolff and Resnick state, “each event is always understood to be simultaneously a cause (it adds its own influence to the creation of all others) and an effect (its own existence results from the combined influence of all others on it).” This method was central to the development of Marx’s theory of capital, as can be observed from his comments in the Grundrisse, which served as Marx’s rough draft of Capital. In Marx’s (1994: 132–133) introduction to the Grundrisse, he argues that the “conclusion we reach is not that production, distribution, exchange and consumption are identical, but that they all form the members of a totality, distinctions within a unity.” Marx (1994: 133) also explains that “[m]utual interaction takes place between the different moments. This [is] the case with every organic whole.” This description of key social processes certainly appears to be consistent with Wolff and Resnick’s assertion that the logic of overdetermination is the most applicable logic to Marxian theory.

The materialist conception of history that Marx and Engels developed has the potential to be misinterpreted, however, particularly with respect to the treatment of causality. Economic determinism gives primary causal weight to economic factors as the driving force of history. In an 1890 letter to Joseph Bloch, Engels (1978e: 761) explains that “there are innumerable intersecting forces, an infinite series of parallelograms of forces which give rise to one resultant – the historical event.” Engels (1978e: 762) complains of young people who often emphasize the economic aspect too much and that he and Marx “had to emphasize the main principle vis-à-vis [their] adversaries, who denied it, and [they] had not always the time, the place or the opportunity to allow the other elements involved in the interaction to come into their rights.” This explanation, thus far, is remarkably consistent with Wolff and Resnick’s (1987: 21–22) claim that the class process was chosen as the central focus of Marx and Engels’s theory because class (as they understood it) has been so neglected in theories of political economy. Engels (1978e: 765) also accuses critics of lacking dialectics and only seeing cause and effect. This criticism also corresponds exactly to Wolff and Resnick’s (1987: 15) critical description of the unidirectional causal logic that characterizes neoclassical economic theory. On the other hand, Engels is very hesitant to lump the economic aspect in with all others, and it is here that he seems to depart considerably from Wolff and Resnick’s (1987: 19–22) interpretation of the logic of Marxian theory. Engels (1978e: 761) states that “[w]e make our history ourselves,” but the economic conditions under which we make them are “ultimately decisive.” Furthermore, referring to the historical process, Engels (1978e: 765) explains that “the whole vast process goes on in the form of interaction – though of very unequal forces, the economic movement being by far the strongest, most primeval, most decisive” (emphasis added). Engels clearly had a tendency to privilege the economic aspect above other aspects in the historical process for reasons that have to do with causal power and not simply for the purpose of overcoming the relative neglect of this aspect. For Engels, the economic element is the most important one but not the only one that influences historical results.

Certainly no perfect substitute exists for reading Capital if one wishes to fully understand and appreciate Marx’s analysis of the capitalist mode of production. Nevertheless, a few major aspects of Marx’s analysis can be briefly summarized to emphasize Marx’s reasons for believing that capital needed to be abolished, as well as to lay the foundation for the manner in which capital may be brought to an end. This brief overview reviews the core concepts such as commodity, use-value, exchange value, value, concrete labor, abstract labor, socially necessary labor, commodity circuits, capital, variable capital, constant capital, and surplus value. The reader is encouraged to consult a text such as Paul Sweezy’s The Theory of Capitalist Development (1970) for a more thorough introduction to Marxian economics.

Marx began his analysis of the capitalist mode of production with the concept of the commodity, which Marx considered to be starting point of the analysis because the wealth within capitalist societies consists of a giant collection of commodities. He observes that a commodity possesses two different sorts of value. On the one hand, a commodity is a use-value in that it satisfies some definite social need. It is also an exchange value in that it can exchange for so much of another commodity in the process of exchange. Although two commodities must be useful for an exchange to occur, what renders them commensurable in exchange is the fact that each requires human labor for its production. Labor time is, therefore, the quality that the two commodities possess in common and the amount embodied in each commodity determines the proportion in which they exchange (e.g., ten books for one desk). Labor time is thus the basis of the exchange value of a commodity.

The problem, as Marx noted, is that the particular type of concrete, private labor that is required for the production of a book is considerably different from the particular type of concrete labor that is required for the production of a desk. How can these qualitatively different, private, concrete labors be equated in the process of exchange? Marx’s solution to this problem was to assert that the social character of the labor is revealed in the process of exchange when the different types of labor are recognized as the generalized expenditure of human effort. Private, concrete labor is thus transformed into abstract, social labor rendering the equality of the two commodities in exchange possible.

Another problem that Marx identified is that this explanation of exchange value seems to imply paradoxically that the lazier the producer is and thus the longer the period of production, the more valuable the commodity becomes in exchange. To solve this problem, Marx asserted that the only labor that contributes to the exchange value of a commodity is that which is socially necessary. Socially necessary labor time then refers to the average labor time required in that particular branch of production given the existing technical knowledge and skills of the producers and the average intensity of the labor process. Overall then, the value of a commodity depends on the quantity of socially necessary abstract labor time (SNALT) embodied in it. The greater the SNALT embodied in a commodity, the greater will be the value of the commodity. It will, therefore, exchange for a greater quantity of another commodity, reflecting its greater exchange value.

Many critics of Marxism have tried to identify errors in Marx’s foundational concepts. George Kline, for example, commits some errors in his discussion, the correction of which will help to clarify the meaning of some of Marx’s important terms. Kline (1967: 427) accuses Marx of neglecting economic services and only focusing on tangible commodities. Tangibility is not identified as an essential feature of a commodity in volume 1 of Capital. Kline thus commits an error when he argues that the service that a slave provides for his master is “a kind of work, but it is neither ‘productive’ nor ‘world-transforming.’ Marx and his followers have, understandably, shown little interest in it.” The service that a slave provides to his master is productive because the resulting product represents embodied labor. It, therefore, possesses a value that may be realized in and through the exchange process. In addition, the service that the slave provides is not a commodity because the slave does not own it and thus cannot sell it as an owner of labor-power (i.e., a wage laborer) would. In the case of a slave, the slave himself is the commodity and the service that the slave provides represents the master’s productive consumption of the commodity over time. In other words, the master realizes the use-value of the slave over time. Kline also states that if Marx “were to speak about those ‘goods’ which serve ‘spiritual-cultural’ needs – which he hardly ever does explicitly – Marx would refer to the making of violins rather than the repairing, tuning, or selling of violins.” Kline lumps the repairing, tuning, and selling of violins together as though Marx would treat them in the same manner, but actually the selling of violins creates no value. Rather, it only serves to realize value.

Austrian economists have also committed errors in their critiques of Marxian value theory. For example, Hayek (1988: 91) incorrectly attributes to Marx the view that labor is the real source of wealth. For Marx, SNALT is the sole source of value, as previously explained, whereas the source of wealth is both human labor and the natural environment. Mises (1990: 30) commits his own error when he condemns the labor theory of value for failing to recognize that when comparing two commodities, each with the same labor value but one using more raw materials, the one that uses more raw materials is the more valuable. While it is true that raw materials add no value to a final product, Mises overlooks here the fact that the commodity that contains more raw materials will also require more labor for the extraction and transport of those materials. Generally speaking, that commodity will possess a greater value, consistent with our intuition. Hence, the labor theory of value does reach the conclusion that Mises argues it should reach.

Once the source and measure of commodity value is understood, it is possible to use it to make sense of the sphere of commodity circulation. Marx explained that this sphere may be understood as a vast network of interlocking commodity circuits. That is, a commodity is sold by its owner for money, and the money is then used to purchase a qualitatively different commodity. Each commodity circuit may be represented sy...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Acknowledgments
• Note on the text
• Introduction
• Part I: The logic of capital
• Part II: The defense of capital
• Part III: The renewed challenge to capital
• Part IV: The end of capital
• Conclusion
• Index