Feasible Socialism (1)

Orthodox economics declare that the true state of the world is scarcity denies the potential for a state of abundance can exist. Our wants are essentially “infinite” and the resources to meet them, limited, claim the economists. However in the real world, abundance is not a situation where an infinite amount of every good could be produced. Similarly, scarcity is not the situation which exists in the absence of this impossible total or sheer abundance. Abundance is a situation where productive resources are sufficient to produce enough wealth to satisfy human needs, while scarcity is a situation where productive resources are insufficient for this purpose. Admitting this would mean the end, not only of the economy as a system of allocating scarce resources but also of goods having an economic value and price; goods would simply become useful things produced for human beings to take and use, while economics as the study of the most rational way to employ scarce resources would give way to the study of how best to use abundant resources to produce free goods in the amounts required to satisfy human needs. This is the purpose of the Socialist Party, to speed the day towards free access and the end of economics.

Conventional economists employ what is called the Economic Calculation Argument (developed by Ludwig Von Mises that a pricing mechanism for the well-being of society is necessary and it is presented as a fact, an economic law. Only prices and money can be used to rationally organise society because the professors’ text-books say that is so. Socialists offer an alternative model on how the practical allocation of resources does not require the intervention of a prices and how resources can be rationally allocated in a moneyless society.

A monetary economy gives rise to the illusion that the “cost” of producing something is merely financial. Money is the universal unit of measurement, the “general equivalent” that allows everything to be compared with everything else under all circumstances—but only in terms of their labour-time cost or the total time needed on average to produce them from start to finish. Such non-monetary calculation of course already happens, on the technical level, under capitalism. Once the choice of productive method has been made (according to expected profitability as revealed by monetary calculation) then the real calculations in kind of what is needed to produce a specific good commence so much raw materials, so much energy, so much labour. In socialism it is not the case that the choice of productive method will become a technical choice that can be left to engineers, as is sometimes misunderstood by critics, but that this choice too will be made in real terms, in terms of the real advantages and disadvantages of alternative methods and in terms of, on the one hand, the utility of some good or some project in a particular circumstance at a particular time and, on the other hand, of the real “costs” in the same circumstances and at the same time of the required materials, energy and productive effort.

By the replacement of exchange economy by common ownership basically what would happen is that wealth would cease to take the form of exchange value, so that all the expressions of this social relationship peculiar to an exchange economy, such as money and prices, would automatically disappear. In other words, goods would cease to have an economic value and would become simply physical objects which human beings could use to satisfy some want or other. The disappearance of economic value would mean the end of economic calculation in the sense of calculation in units of value whether measured by money or directly in some unit of labour-time. It would mean that there was no longer any common unit of calculation for making decisions regarding the production of goods. The contention is that without prices we cannot allocate resources. The Socialist Party, however, proposes that socialism, as a moneyless society in which use-values would be produced from other use-values, there would be no need to have a universal unit of account but could calculate exclusively in kind. The only calculations that would be necessary in socialism would be calculations in kind. On the one side would be recorded the resources (materials, energy, equipment, labour) used up in production and on the other side the amount of the good produced, together with any by-products. This, of course, is done under capitalism but it is doubled by an exchange value calculation: the exchange value of the resources used up is recorded as the cost of production while the exchange value of the output (after it has been realised on the market) is recorded as sales receipts. If the latter is greater than the former, then a profit has been made; if it is less, then a loss is recorded. Such profit-and-loss accounting has no place in socialism and would, once again, be quite meaningless.

Calculation in kind entails the counting or measurement of physical quantities of different kinds of factors of production. There is no general unit of accounting involved in this process such as money or labour hours or energy units. In fact, every conceivable kind of economic system has to rely on calculation in kind, including capitalism. Without it, the physical organisation of production (e.g. maintaining inventories) would be literally impossible. But where capitalism relies on monetary accounting as well as calculation in kind, socialism relies solely on the latter. One reason why socialism holds a decisive productive advantage over capitalism is by this elimination of the need to tie up vast quantities of resources and labour implicated in a system of monetary/pricing accounting.

Capitalist economists tell us that without the guidance of prices socialism would sink into inefficiency. “Socialism” or “communism” has for the Socialist Party always meant a society without markets, money, wage labour or a state. All wealth would be produced on a strictly voluntary basis. Goods and services would be provided directly for self-determined need and not for sale on a market; they would be made freely available for individuals to take without requiring these individuals to offer something in direct exchange. The sense of mutual obligations and the realisation of universal interdependency arising from this would profoundly colour people’s perceptions and influence their behaviour in such a society. We may thus characterise such a society as being built around a moral economy and a system of generalised reciprocity.