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Notes on the opposition between capitalist and socialist economics
Who takes the decisions?
The disappearance of classes

Notes on the opposition between capitalist and socialist economics
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We have often remarked on the nature of communism as a classless, moneyless, society, and we will take that as read for the moment. What we will examine here is how this form of society can be achieved (transitional stage) and be maintained (communism). To do this we need to look at what is produced, how things are produced, and what needs to be changed in order to transform society towards socialism / communism.

Marx spent a lot of time examining the properties of commodities. Produced primarily in order to be sold, commodities have to have «useful» properties in order to attract buyers. Not all of the product sold to the eventual buyer is however really use value: under capitalism there is also the glitzy packaging, the advertising, and sometimes the «free» gifts which get the product into circulation. With the sale of the article the profit can be realised. But socialism and communism is not merely defined as the existence, or not, of profit: bankrupt enterprises are just as irrational as those which are highly profitable: the suppression - or rather the redivision and socialisation - of profit alone will not bring about a new society. The issue needs to be looked at in a wider context, in particular keeping in mind «profit» as something extracted from the whole of the working class, that is surplus value, or added value.

The expression «surplus value» can be misleading. It may give the impression that profit is purely a matter of bookkeeping, consisting of what remains after all expenses have been paid. The expression «added value» is more precise, signifying that there has been an addition of value deriving from human labour.

The method of deducting from «total sales» the «legitimate expenses» sustained by the individual capitalist, or individual company, also hides the profits derived by other capitalists (and their state), the provision of «services», taxes and the profits taken by the owners of land - the infamous rent.

Communism is not just about ending the profit obtained by the bourgeoisie which represents, say, 10% of the value of the goods sold - it is also about bringing under control the anarchy of the other 90% of production. It is not a question of merely returning to the producer «the full fruits of his labour» but freeing him / her from the drudgery of wage labour. Products, and production itself, will be totally transformed.

Communism will not merely be characterised by the production of «useful» commodities, Commodities will cease to exist not only because they are no longer sold, but because the mode of production itself will be different; with the satisfaction of needs, rather than exchange in order to realise profit, determining a completely different approach to what and how things are produced.

At the moment there is an internal duality to commodities as they are produced and consumed. These can be counterposed as follows:

Production for use

Production for profit

Use Value

Exchange Value

Cost calculated in living labour

Cost calculated in dead labour (money)


Accounting systems

Grouped in the left-hand column are those aspects inherent to consumption and production understood in a material sense, while the right-hand column deals with the reproduction of capital, the circulation of commodities until converted into money.

In a very general sense the left hand side is «production for need», and is «what would remain» after the destruction and extinction of the mercantile-capitalist system. Under communism, production will still require the forces of industry to be concentrated - costs of production will still be computed, and measured in human labour time - audits and inventories of what has been produced and what is in stock will still need to be carried out in order to produce for the needs of the population. The aim of these indispensible calculations however is purely technical since under communism exchange value ceases to exist: since there is no long exchange of equivalent values between consumers and centres of production (as former «firms» and «businesses» would then be better known).

The mercantile, capitalist system is expressed by the right-hand column. Goods are produced for exchange value, for their capacity to be sold in order to recoup the value upon sale. All the calculations in this system are based upon money alone, wage labour having been already converted into money. The movements within the system are decided and represented in «double entry» accounting terms - which accurately reflect, in their two-fold movements between «economy» and «property», the internal conflict within capitalism. If something can't be sold at a suitable price then don't produce it at all is the capitalist's refrain.

Unlike the scare-mongering of the bourgeois economists, we state boldly that the financial side of the production «equation» can be disposed of.

Capitalism is a social relation brought about by the following factors:

a) Money available for investment (potential capital)

b) Money converted into capital by the purchase of machines and other means of production, whether raw materials, or all the other auxiliary expenses (offices, warehouses and the like). These acquisitions are not made in a random way, but in order to bring the entire factory up to maximum efficiency and produce goods at the most competitive prices and therefore realise profit. In this sense capital is the result of investment in technology for the most productive use of labour, in other words, the most effective form of exploitation of wage labour.

c) But all these machines would stand idle without the living force needed to put them into motion: the working class. Their labour power is purchased (in the form of wages/salaries) arid then they are put to work in order to produce goods and therefore profit.

There is united in the productive process two factors: capital and labour, the former being generated by the latter. Capital is not just abstract value but is made up of what Marx called dead labour, being the accrued value of previous workers labour. Money, for the most part, is the result of profits obtained by the exploitation of other workers, maybe in other countries, maybe in previous periods of time. That is what Marx meant by «the domination of dead over living labour». Goods are produced by applying living labour to dead labour, during which part of the usefulness of the machinery is used up (in economic terms - depreciated) in the making of the commodities. And so in the production of the commodities in the factory there are three factors: use of living labour, use of raw materials and the wear and tear of the machines, the product of the work of other workers.

The market system, so beloved of the economists, is usually referred to as a way of balancing the needs of the producer and the consumer. But the famous «free market» isn't really free at all, but is always influenced in one direction or the other. It is sheer sophistry to maintain that «consumers» can in any way exert their influence on the system by being «politically correct» in their choice of commodities. It is a delusion of capitalist morality that all social problems should be blamed on the «free consumer customer», as, for instance, when the workers in the bigger capitalist centres are held directly responsible for hyper-exploitation of child labour in the poorest countries; or for the «destruction of the ecosystem» because of their «insatiable» demand for consumer goods. In fact the opposite is true: the cause of such human and environmental crises lies in capitalism's need to sell any old rubbish to the famous «general public». It is the capitalists who control the market, however much the advocates of «rational consumption» go about trying to «change the world by changing themselves».

Who takes the decisions?
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Under the existing property relations, the capitalists (owners of the means of production and the hirers of wage labour) claim for themselves the right to determine what should be produced, and how much; basing their decision on the anarchy of the market system and selling anything they can persuade people to buy.

But what will happen when the existing property relations are overthrown! Who will take the decisions then?

Notions about returning to the workers the «full fruits of their labour» still leave the workers imprisoned in the factory/enterprise, and the claim that workers should determine what is being produced under capitalism is still merely to speculate on the «right» to control. In business, the value of the commodities produced is calculated by reckoning up the value of the labour power and the value of the constant capital (machinery, etc.). The final price of the commodity represents all the value of the labour power used in the production of the raw and auxiliary materials, and the quota of fixed capital which has been consumed.

Therefore what goes to make the final product is not only the value added to the materials during the course of its manufacture, but also the raw materials, the power consumed (gas and electricity) and every other resource that has been brought in from outside the enterprise. The raw materials have value because workers have already worked upon them, i.e., dug minerals from the earth, grown plants and trees, and then transport them. Each part of the process of production and transport, uses up the living and dead labour (even if only in minute quantities) of other workers from around the world. It is the same with the value of the power consumed in the factory, which adds the labour power of the workers in the power industries to that of the dead labour crystallised in the potentiality of the plants concerned. The processes that make up the final product use the labour power of hundreds, thousands, perhaps tens of thousands of workers across the planet.

In this, and only this, sense, modern capitalism installs a universal social relationship.

However, the laws that govern the survival or bankruptcy of businesses are always at odds with human needs. One only need think of the enormous saving of labour time there would be if production wasn't carried out for its own sake. Instead of badly made products with built in obsolescence, objects of human need would be made to last: with a lower percentage of added costs, the lifespan of products could be multiplied tenfold or so) with a corresponding reduction in the necessity for repeated production!

The restricted nature of property relations and the productive structure of the enterprises typical under capitalism is immediately apparent. So then, deprived of the forces of supply and demand, who decides how the labour power of thousands of people will be used? Is it those who work in a particular plant, or those who supply the raw materials and services? Who determine what is produced? If it is the resources of society as a whole being utilised, then why shouldn't society itself take decisions on what, and how much, is produced?

The enterprise, as a self-functioning unit typical of capitalism, needs to be done away with. We therefore reject the notion of factories trading with each other (as expounded by Gramsci, etc), and the idea of factories establishing new property relations upon which independent workers committees could be based (Pannekoek). As regards the units of production as they exist at the moment, which are established by capitalists to make profits from their investments, it is enough to recall that they are slaves to the impersonal nature of their particular balance sheets shaped around the chaos of the market.

Communism is the liberation of humanity from the particular and the contingent, so that it can truly fulfil it's destiny as a species; living on an undivided planet and within a time frame permitting projects to stretch through generations, instead of their fate being determined during one session in the stock market. Another mode of production will arise that is more rational and responsive to the development of the means of production.

To begin with the watchword will be slow down! There may be cases of productivity being intensified locally in some sectors, but in most others there will be a slowing up of the pace of industry and indeed a halting of the production of wasteful and dangerous products.

The need will inevitably arise to produce the necessities of life in an entirely different way. Only then will much derided communism, far from menacing «individualism», allow a real, development of human potential. At least insofar as it is understood that we don't mean the bourgeois individual and his creature - the firm.

To be liberated from «the firm», along with the inevitable profit and loss account, entails the destruction not only of the buying and selling of products, but it also excludes the conversion of the means of production into capital. Having abolished the monetary accountability of the enterprise and the concept of investment capital. The notion of profit collapses as well.

We will free ourselves from economic calculations whilst maintaining an economy. There was a time when the means of existence were produced, stored and consumed without money changing hands. The word economy comes from the Greek, meaning household management. The situation in Mycenean Greece was related by Homer Penelope in Ithaca would go into the storehouse, where all the produce was kept, and recorded in detail, but no money existed. Money doesn't appear until 600 years later with the invention of coinage. Society, divided into closed circles, was used only to exchange the occasional surplus, mainly by means of barter. The circulation of slaves, and other especially valued goods, was achieved by means of piracy or sacking of cities. Economic calculations intervened only when money became involved in exchange, when the productivity of labour had developed sufficiently: and so commerce was born.

The disappearance of classes
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After the disappearance of classes, society will take all the means of production and distribution into its hands, and satisfy human needs with what

is available. That most precious of resources, human labour, instead of being squandered, will be managed and carefully conserved.

The period of transition, of evolution towards communism - possible once bourgeois power has been overthrown in the major countries - will allow the growth towards a society without classes and without money. Classes will not disappear overnight certainly, and during the transition period there will still be class struggle against the old proprietors of land and factories. But the proletariat will continue to gradually absorb into its ranks members of the other classes, until eventually it will become the only class, and thus cease to be a class.

During this transition the proletariat itself will be transformed and move beyond being communist just in a negative sense (i.e., in its seeking to resolve immediate demands, which is its destiny under capitalism).

These immediate demands of the working class under capitalism - drastic reduction of the working day and integration of those excluded from production; solution to the housing problem by utilising empty properties - already move in the direction of communism, however the changing of society to one without classes will also mean the supercession of the distinction between city and countryside, and the positive goal eloquently summed up by Marx, of «the naturalisation of man, and the humanisation of nature».

The present state, which holds together a society divided into classes, has to be overthrown and destroyed. The Dictatorship of the Proletariat also constitutes itself in a state form, but differs in that it will eventually «wither away», as Engels put it. This state form will resemble the preceding state insofar as it protects the power of a class. But as opposed to earlier class states it will differ in its aims, which is to enable the extinction of money, property, class privileges, and even itself.

Source: «Communist Left», no 12/13, 2000

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