> So, Sweezy wished to clarify the meanings of the terms "socialism" > and "communism" by saying that the law of value still continues to > operate under socialism to the extent that economy is capitalistic, > i.e., governed by market discipline, whereas it won't under communism > worth its name. As Jim Devine said four years ago, "Well, this is a > pretty mild and inconsequential thing to agree with Stalin [or the > Soviet economist(s) who wrote the work attributed to Stalin] about"
Jim raised the question in that post Yoshie mentions: "But then again, I'm not sure exactly what it means to have to have "the law of value" continuing "to operate under socialism." Does that mean that the economy isn't totally under a plan? The answer to Jim's question is really that in the USSR you basically had (at the risk of simplification) a capital goods sector where the distribution of inputs and outputs were mainly regulated by the plan according to administered prices and countertrade agreements etc., and a consumer goods sector, where at least many outputs were priced either by regulating prices (controlled by the planning authorities) or by market prices. In some areas that worked very well, but in some areas it did not work much at all, in which case the result was black and grey markets, informal trading and so on. A ""market" is not necessarily a capitalist market, since it is not necessarily dominated by the imperative of private capital accumulation. "Market" refers only to a regular pattern of trade involving a certain number of buyers and sellers applying to a specific supply and demand, but just exactly what the nature of that trade is, what the terms of exchange are, can vary and need not necessarily be dominated by private bourgeois accumulation. This is ABC for any economic historian or anthropologist. In a certain sense, what you had in the USSR was an "extended social democracy" without much popular democracy. It is amazing really how well it worked economically, relatively speaking, even in the absence of many civil liberties, popular democracy and many modern communication/information technologies - the material conditions of life could be improved very fast, for a very large number of people. To a certain extent this was of course due directly to forced labour. But forced labour by itself cannot explain the successes of Soviet economic growth, you can see this easily by looking at the quantitative proportions of labour what was truly "forced". In reality, economic modernisation in the USSR wasn't simply a question of workers being forced to produce a surplus for bureaucrats. There was also genuine enthusiasm for improving the conditions of life, and improving human culture, and people felt they had a personal stake in improving their society. There was both cynicism and enthusiasm. The reason why markets weren't abolished despite state controls, is of course because you still had wage-labour, and a large portion of claims to consumer goods and services were realised through a waged income in roubles; Soviet citizens had a constitutionally guaranteed right to work, an obligation (duty) to work, and a lot of job security as well, but, those jobs took the form of wage work, and the possibilities for job mobility often wasn't very great, given the way the larbour market was organised. So even if Soviet workers couldn't buy what they wanted with their roubles, economic exchange therefore wasn't abolished at all, formally or informally, all sorts of trading (including barter) continued to occur. But the terms of exchange were drastically changed, being to a large extent controlled, regulated and limited by the authorities. The law of value states, in its most general (transhistorical) expression, that globally speaking, the value of commodities in exchange is regulated or determined by the socially necessary work-time required to produce them. This law, expresses the social necessity of a relationship between production costs and social needs, and it applies to markets, and ONLY to ma rkets, and therefore, it concerns relative price levels of goods and services, and relative exchange-ratios in trading. The word "value" in the exp[ression "law of value" applies to the value of the object of trade. It sets limits to what relative price levels can be, it sets limits to relative exchange-ratios, and it means that relative productivity levels reached in producing output, influence the direction in which relative and absolute prices move, because cost considerations will change the terms of exchange, and balance them out over time, given a relatively constant basic consumption structure. To the extent that administered prices had nothing to do anymore with real production cost or real demand for products, and competition between enterprises for sales could not level out prices, or establish regulating prices in an open market, the law of value was no longer a regulative principle for trade in the USSR; the exchange-ratios of traded objects might in fact have nothing to do with their true production cost, nor with real demand, nor possibly with either of them (economic irrationality). Rather, the terms of exchange were set by politically decided social priorities, elaborated by the planning authorities. But, as Ticktin and others have noted, just because planning authorities decided to enforce specific terms of exchange, this often did not mean it happened in reality, because the ability to enforce specific terms of exchange was actually limited; if no true cost, price and consumption information was provided, the system was hindered or broke down, and then some or other informal trading process substituted for the official norms. But that did not mean that the planning authorities could ignore real production costs or real demand for products, obviously. And, even if you had an almost total state monopoly of foreign trade in the USSR, the economy of the USSR was still under pressure from the world market as well, not just in terms of imperialist aggression and economic blockades, but also because some essential goods had to be imported and others were exported. Therefore, output prices were still determined in some way by real labour costs, real production costs, and the price structure of trade in consumer goods and services, bought by wages, was still influenced by work-time. Therefore, it must be the case that the law of value continued to influence the trade in goods and services, both externally (through pressures from the world market and imperialist aggression requiring additional military expenditure) and internally (the imperative of maintaining some kind of "realistic" relationship between production costs and real demand in the allocation of labour-time and real demand, even if, in particular cases, that wasn't in reality "realistic" so that you got gluts, bottlenecks, featherbedding and shortages). Insofar as Stalin acknowledged this, he was perfectly correct, I think. It is just that his discussion consists mainly of generalities. For Marx, it was not a question of affirming general, transhistorical verities about the law of value or theorems such as that you cannot consume what you haven't produced, it was rather a question of studying how the law of value operated with respect to the specific exchange and distribution processes of a specific mode of production or a specific society. He makes that very clear in his correspondence on the topic: whatever the form of society may be, people can no more cease to produce than they can cease to consume, this implies a social necessity, a survival necessity, which asserts itself with the force of a law of nature. And this necessity impacts on the actual trading patterns engaged in, influencing relative price levels, and relative exchange-ratios of the traded objects. Marx took all this to be perfectly obvious and trivial, and even said impatiently "any child knows this". But, he said, the scientifically important thing now is to understand how specifically the law of value asserts itself in a specific type of economy, given a specific mode of production or a specific type of society. Capitalism is the first form of economy in history which universalises the market, i.e. subordinates almost the whole production and distribution process of a society to market-trading principles. In that situation, Marx demonstrates, (1) production of output is conditional on private capital accumulation, which shapes and determines the development of production and consumption, and the division of labour, (2) the regulative principle is that sale at production prices (cost price plus average profits) are the condition of supply of goods and services, (3) the creative powers of human work, work capacity itself, are transformed into a production cost with a specific objective economic value, an abstract "labour force", and capital buys the function of the worker's capacity to work, and realises that function in real work effort done by employees, (4) these three factors together create a dynamic of increasing commercialisation and market expansion. But that is just to say that the "law of value" as generally defined in the above, expresses itself as far as Marx is concerned in a SPECIFIC WAY under capitalism, in virtue of the fact that, most of the production process of an economic community is now subordinated to market principles, and to the imperatives of private capital accumulation. Following Marx's methodology, therefore, it means very little to say just "that the law of value continued to influence economic life in the USSR", because we need to explain how exactly exchange and prices were regulated in the USSR, and why cost structures and price structures moved in a specific direction over time. And that is actually quite a complex story for which I haven't time (and I lack the data to evaluate it correctly). But it would be an interesting exercise, insofar as it would show how ideologically deformed and narrowly restricted the neo-classical idea about "prices" really is. Professor John Weeks, in his first book (Capital & Exploitation), engaged in a diatribe against Frederick Engels and Stalin as regards their interpretation of the law of value. But he gets only one part of the argument correct, namely, that Stalin fails to state what is specific about the way the law of value operated in the USSR, i.e. Stalin confuses transhistorical economic necessities with specific economic laws (regulative principles occasioned by physical/social necessity) applying to a specific form of society. But Weeks also gets in wrong, because he cannot define correctly what a "commodity" is, and he doesn't really understand that the law of value applies to market trade in general. Weeks wanted to emphasise that the "law of value" means the "value becomes a law" in capitalism, i.e. the value-form dominates everything under capitalism, such that "work becomes value", and therefore, that the law of value can apply only under capitalism and is specific to it. He ends up arguing that a product can only be a commodity if both inputs and outputs are objects traded in the market. This is directly contrary to Marx's explicit statements but also ignores the historical process of the generalisation of market economy and the problem of original accumulation. No serious economic historian or anthropologist would agree with Weeks's interpretation in his first book. Capitalism doesn't drop out of the air one fine day with the law of value attached to it, rather capitalism emerges gradually out of the growth and generalisation of trade, as Ernest Mandel summarises in his book Marxist Economic Theory, with illustrations from a variety of sources. That was really Engels's point; the necessary relationship between production cost in labour-time and real consumption demand, will influence trade regardless of what kind of trade it is, and regardless of scarcity factors. If trade had existed for thousands of years, the law of value has operated in some form for thousands of years. But it is obvious that exactly HOW the law of value will assert itself will depend on the exact type and scope of trade and the social framework in which it occurs, i.e. how developed is the market, how much labour mobility is there, and so on. It requires a specific analysis to understand that. This interpretation I have offered leads some people to think "that may be true perhaps, but if true, it's so abstract as to be absolutely useless for economic analysis now". But I don't think so, because the necessary relationship between the productivity of human work and ability to consume do continue to influence world trade, and cutting labour costs remains an obsession under competitive conditions. The "unquenchable thirst for extra surplus-values" under competitive conditions continues to spur economic development. The real productivity of human work continues to be the long-term regulator of trade in the world economy, however distorted it may be by relative bargaining positions of different countries and specific scarcity factors. It is merely the relative autonomisation of money and capital markets and credit facilities from the production and consumption process, that creates the illusion that this is not so. And therefore, a specific investigation of the real allocation of labour-time in the world economy, can tell us very much about the future development of economic life, and how the process whereby the elites appropriate wealth that they did not create actually works out, in practice. Unfortunately most economists do not do this; they neither care much about studying aggregate labour hours nor about studying the trade in already existing assets, rather they focus on GDP as if this constituted true national income or true value-added, and they look at some monetary aggregates and so on. But Marx provides a real analytical advantage here insofar as he argues that a universal capitalist market objectifies the basic conditions for the social reproduction process, and therefore permits us to specify the necessary proportions which must exist between production, distribution, circulation and consumption. Being schooled in these basic Marxian concepts, Chinese economists for example therefore have a definite advantage, because they aren't confused by neoclassical absurdities which do not apply in the real world. Jurriaan
