Hi Paul, Paul Cockshott wrote: > In 'Towards a New Socialism', we make it clear that in > a planned socialist economy there is no buying and selling between factories.
That's not exactly true. There is buying and selling between factories in your system, but because it takes place as accounting entries kept track of by a central authority, you think it isn't real buying and selling. But in fact, since the economic accounts kept with these accounting entries determine what happens to the factories, including whether they stay open, it has the same economic effect as real buying and selling. You rename the economic entities as "projects", and you merge the central bank with the planning authorities, but real buying and selling exists. Let's look at this a little closer. In your book, you and Cottrell also state that the Soviet Union, from 1928-1931 on, was a socialist society (which I disagree with), although not the type you prefer. (See pp. 2. 174) And your discussion of central planning in this book and the articles you refer to is a modification of the Soviet methods, such as the proposals by Kantorovich. Yet in this system, there was buying and selling between factories. You refer to this buying and selling. So it's not true that you and Cottrell believe that buying and selling between factories can't take place in socialism or in a system with central planning. You don't like buying and the selling, but you do recognize the historical Soviet system, a system with buying and selling, as socialist. Now, these sales were subject to the overall control of the planning agencies. And the enterprises were owned by the state. On this grounds, Preobrazhensky, in his book "The New Economics", advocated that it was only a matter of appearance that the state sector used prices, sales, made profits or losses, and was subject to such categories as interest, rent, and so forth. He sort to explain away these commodity categories and regard the state sector, even in the 20s, as socialist in and of itself. By the 30s, the entire industrial sector was a state sector, and from then on you regard the Soviet system as having a socialist economy. So in essence, you have a similar attitude to buying and selling in the state sector as Preobrazhensky. But in fact, the buying and selling in the state sector had real economic results; and factories were supposed to make money (according to the "khozraschet" or self-financing principle). The planning agencies could tell the factories what to produce, could assign production targets, could tell the factories where to sell their goods, etc. Or they could give the factories leeway. And the factories officially belonged to the state. But there was buying and selling. Moreover, and this is crucial, there *wasn't* workers' control in the Stalinist system that developed. So this was state- capitalism, not socialism. It differed from market capitalism, but it had real buying and selling and even -- despite the central plans -- the anarchy of production. In the latter part of your book, there is a "proposed communalist model" which you and Cottrell believe to be a preferable form of socialism. This model is supposed to overcome buying and selling and the possibility of factories going bankrupt, thus eliminating "khozraschet", the self-financing principle. But when one looks closely, it turns out that everything has simply been renamed. There is still buying and selling, but it takes place with different names. In the system in your book, enterprises supposedly no longer exist, but there are "projects". The "projects" don't engage in buying and selling, but instead notify the "planning authorities" of how much of their "budget" goes to labor, and how much "on power, equipment and maintenance". (The example given on p. 182 is of a "local leisure center", so it has no raw materials. Presumably, in general, one should add "raw materials" to this list.) The planning authority then deducts from the project's budget the appropriate sums for labor, power, equipment, etc. The worker does not get paid directly from the project. The payment comes from the planning authority. But the worker only receives this payment if the project has notified the planning authority that the worker is employed there. And similarly, the system will presumably provide that the projects do not get paid for their goods directly from other projects. But if the project produces something, whether it is a material product or a service, it will presumably be entered into the planning authority's books. (If it doesn't, the whole system collapses.) The planning authority then makes use of some "rational system of economic calculation" to decide whether to close the project or allow it to continue. So it turns out that buying and selling takes place, pretty much as it did in the Soviet system, only money doesn't directly go to or from the project. Instead the planning authorities keep the books for the project, just as a bank might. The project's account is continually deducted from and added to, the same way the financial balance of an enterprise is repeatedly deducted from or added to as it buys and sells. The project will get closed if it fails according to "a rational system of economic calculation" -- i.e. if it goes bankrupt according to calculation by the economic authorities according to labor values. So the whole system runs as if there were buying and selling. But enterprises are called projects. The financial balance is called the budget. Money is called an accounting entry in the books of the planning authority. And bankruptcy is called closing the project due to rational calculation. > We are quite clear that labour certificates are just a means of distributing > consumer goods. I'm sorry, but that's an evasion. The problem is that labor values, in your system, aren't used only for labor certificates, but for the "rational system of economic calculation" that determines whether factories stay open, and that is key to the proposed mechanism of central planning The labor certificates are measured in labor values. But they are not the only thing measured in labor values. So are the budgets of the projects, and the accounting entries which the planning authorities calculate with. So the labor values are actually used to determine how goods flow between enterprises, whether the enterprises go bankrupt, and so forth. It doesn't matter if you call some things labor certificates, and other things accounting entries. If they are both labor values, then the supposed labor certificate is, in effect, being used for transactions between factories. Sometimes the labor value is denominated in a labor certificate; sometimes it is just an entry in a budget. But labor value = labor certificate = accounting entry. > We also say that environmental constraints have to be imposed > from the outside by politics and can not be encoded in a system > of prices or valuations. Thank you, Paul. It is an important point that a system of prices cannot take account of environmental concerns, and I'm very glad that you have repeated this point here. I wish it were more widely realized. However, it is one of the fatal defects of the system you propose that it is unable to take account of environmental factors *economically*. This follows from the fact that the labor value of the environment is zero. It means that economically, without political correction, a system which relied on labor values as a "rational system of economic calculation" would devastate the environment, just as Western capitalism does, and just as the state- capitalist Soviet Union did. In my opinion, it is entirely wrong to say that economic calculation can't take account of the environment. It's economic calculation based on a single index that can't do so. That's not the only type of economic calculation. But economic calculation based on a single index, whether the labor value or money or whatever, will tend to reproduce the festishism of commodities and various other ills of capitalism. You think that you can around this by supplementing the system of labor values with political decisions. But this implies that the environmental decisions only affect a small section of the economy. In reality, these concerns cut through the entire economy, affecting energy production, agricultural production, the building of the infrastructure, etc. In fact, environmental concerns affect every factory and every enterprise -- in the choice of methods of production, as well as in designing their product. The Australian naturalist Prof. Timothy Flannery was right in noting that environmental regulation, once begun, would have to take in a wider and wider field (but he was wrong in regarding that this would inevitably be an oppressive "carbon dictatorship"). > But this does not mean that you can get away without some index of > social cost to guide choices of technologies. > We advocate that labour time be the basic mechanism for this, Thus here the labor value does become the "basic mechanism", not just for distribution of consumer goods, but for the direction of individual factores and the for the direction of the entire economy. Your system does not restrict labor values to helping with the distribution of consumer goods. They are the "index of social cost" which every factory and enterprise must orient themselves towarfs. > but say that any proposal by a particular plant or industry to > use a particular technology be subject to the over-riding imperative of the > plan, > since the planning system has additional > information that can not be effectively encoded into prices or values. Actually, if I understand it properly, in the planning system you describe, every proposal by a particular plant or industry to do anything is "subject to the over-riding imperative of the plan". It must go to the central planning agency which will evaluate it according to a massive computer program that tracks every single item produced in society. It is a really rigid and top-heavy plan. It is not my idea of socialist central planning. Present-day capitalism restricts environmental concerns to some political decisions that try to go against the basic economic logic of the system. This doesn't work very well, does it? We will have to fight, even under capitalism, to have environmental planning and regulation, but this will involve a constant fight against the basic tendencies of capitalism. Isn't it a bit disconcerting that, in a model of a planned socialist economy, there is the same contradiction between the basic economic logic of the system, and environmental regulation? > The planning algorithms can run a constraint satisfaction > system when selecting a feasible combination of technologies. >These constraints can include environmental ones. >I give an example of how to do this for different forms of power production > ( hydro and wind) using Kantorovich's technique in (Cockshott, W.P.C. >(2010) Von Mises, Kantorovich and in-natura calculation. Intervention : >European Journal of Economics and Economic Policies, 7 (1). pp. 167-200. >ISSN 1613-0960). > A shortened account is given in http://mltoday.com/images/pdf/cockshott.pdf. The Kantorovich system described there depends essentially on a system of prices. It is not a system of "planning in kind", but depends crucially on having a system of valuating things according to price or labor-value or some financial index. For example, on p. 14 of your paper "Mises, Kantorovich and Socialist Calculation", you point out that "If a refrigerator designer was deciding on what components to use in a planned new model, she would need some way of telling which components would, from a social standpoint, have been the most economical, which implies a system of valuations." So here you refer to a system of valuations -- i.e. of pricing. You eve refer to a controversy over which system of pricing should be used: should it be "marginal cost" or "average cost pricing". The system of equations used by Kantorovich required the use of such a system of valuation. He himself referred to this, as you point out, as maximizing profit, which, as you point out in your article, is the maximizing of value. You try to brush this point aside by saying that a more capable planning agency might tell factories exactly how much of each item to produce, rather than telling them to produce exactly so much value. You write that this concern with maximizing value "reflected the limited ability of GOSPLAN to specify detailed targets in kind as described by [Nove (1983)]." But this is an evasion, because even if this planning agency decided these detailed targets, if it decided them via Kantorovich's equations, it would need to use a system of pricing. It would reproduce in its planning what the factory would have decided in its quest to earn a profit. > > But unless local units of production have some sort of indicator, > then their search for techniques will be unguided. Yes, I think there is a role for simplified indicators, which don't give an absolute result for what should be produced but are useful most of the time. I agree that this is useful for local initiative, and I discuss this at the end of one of my articles debunking the idea that labor values are the natural unit for socialist planning. But such simplified or approximate indicators need not be the labor content (and can't be, if they are to take account of environmental concerns), and are even likely to differ from industry to industry. By way of contrast, you put foward labor values as the basic indicator. (See the section "Approximate assessments" in "The end of the reign of the law of value -- the fading away of the labor-hour as the universal economic measure", Pt 3 of "Labor-money and socialist planning" at http://www.communistvoice.org/17cPreo1.html) > Concievably one might argue that Kantorovich's ODV's might be a better > indicator, > but I suspect that for most purposes, > when attempting to rank the efficiency of production, > ODV's are not going to deviate far from labour values. Then why did you bother with Kantorovich's method at all? You take the reader through pages of mathematical calculations, and then, in essence, say they don't matter. The result is simply the labor value. > > Labour values have also a good intuitive and character >L - people can understand them, ODV's are only intelligible to experts > in linear algebra. > And hence they might not realize that the entire method used by Kantorovich depends on a system of pricing, and designed to create a system of pricing. A key point behind much of what you write is the belief that there is no real economic calculation aside from calculating with a single index, preferably labor values. Since you claim that empirically labor values are close to prices, this amounts to a belief that financial calculation is eternal. And it seems so reasonable, because we are accustomed to calculating things via a single index in this society. Commodity fetishishm, evaluating everything as an exchange value, is beaten into us by daily experience, by the necessity of buying things in the marketplace, by the necessity to fight the capitalists for a proper wage, by the necessity of basic financial planning for our families. It becomes difficult to see what the alternative is. And we have become used to overlooking the irrational results of financial calculation. But if we are going to get beyond bourgeois economic calculation, we are going to have to go beyond the idea that economic planning takes place according to the labor-hour or any other single unit. Calculation via labor hours isn't that different from calculation via the dollar. -- Joseph [email protected] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
