Allocating Resources

 

Stock or inventory control systems employing calculation-in-kind are absolutely indispensable to any kind of modern production system. While it is true that today they operate within a price environment that is not the same thing as saying they need such an environment in order to operate. Most students of logistics will be able to explain how unnecessary dollars and cents are for its operation.

The key to good stock management is the stock turnover rate – how rapidly stock is removed from the shelves – and the point at which it may need to be re-ordered. This will also be affected by considerations such as lead times – how long it takes for fresh stock to arrive – and the need to anticipate possible changes in demand. The Just-In-Time systems are another tried and trusted tool of warehousing and supply chains that can be utilised. And even so the existence of buffer stocks provides for a period of re-adjustment. We even have the existence of store "loyalty cards" and consumer research that can be put to more creative and constructive non-commercial usage. Socialism does not necessarily involve the creation of new layers of administrations but simply the transformation of existing structures.

The “law of the minimum” was formulated by an agricultural chemist, Justus von Liebig in the 19th century. Liebig’s Law can be applied equally to the problem of resource allocation in any economy. For any given bundle of factors required to produce a given good, one of these will be the limiting factor. That is to say, the output of this good will be restricted by the availability of the factor in question constituting the limiting factor. All things being equal, it makes sense from an economic point of view to economise most on those things that are scarcest and to make the greatest use of those things that are abundant.

Factors lying in between these two poles can be treated accordingly in relative terms.

Actually to claim that all factors are scarce (because the use of any factor entails an opportunity cost) and, consequently, the need to economise is not a very sensible approach to adopt. The effective economisation of resources requires discrimination and selection; you cannot treat every factor equally – that is, as equally scarce – or, if you do, this will result in gross misallocation of resources and economic inefficiency.

In any economy, there needs to be some way of prioritising production goals. How might these priorities be determined? We can apply Maslow’s “hierarchy of needs” as a guide to action. It would seem reasonable to suppose that needs that were most pressing and upon which the satisfaction of other needs are dependant would take priority over those other needs. We are talking here about our basic physiological needs for food, water, adequate sanitation and housing and so on. This would be reflected in the allocation of resources: high priority end goals would take precedence over low priority end goals where resources common to both are revealed (via the self-regulating system of stock control) to be in short supply.

We can also speculate, that some kind of “points system” might be used with which to evaluate a range of different projects facing such a society. Again those more qualified can explain how cost-benefit analysis is not dependant upon dollar and cents calculations, as (even now) ecological concerns are required to be taken into consideration in planning. In fact, each day we all individually use various methods of adding up pros and cons to determine actions. Naturally, under capitalism, the balance sheet of the relevant benefits and costs advantages and disadvantages of a particular scheme or rival schemes is drawn up in money terms, but in socialism, a points system for attributing relative importance to the various relevant considerations could be used instead. The points attributed to these considerations would be subjective, in the sense that this would depend on a deliberate social decision rather than on some objective standard. In the sense that one of the aims of socialism is precisely to rescue humankind from the capitalist fixation with production time/money, cost-benefit type analyses, as a means of taking into account other factors, could therefore be said to be more appropriate for use in socialism than under capitalism. Using points systems to attribute relative importance in this way would not be to recreate some universal unit of evaluation and calculation, but simply to employ a technique to facilitate decision-making in particular concrete cases. The advantages/disadvantages and even the points attributed to them can, and normally would, differ from case to case. So what we are talking about is not a new abstract universal unit of measurement to replace money and economic value but one technique among others for reaching rational decisions in a society where the criterion of rationality is human welfare.

A broad picture would be that production-for-use would operate in direct response to need. These would arise in local communities expressed as required quantities such as grammes, kilos, tonnes, litres, and so forth, of various materials and quantities of goods. These would then be communicated as required elements of productive activity as a technical sequence, to different scales of social production, according to necessity. Each particular part of production would be responding to the material requirements communicated to it through the connected ideas of social production. It would be self-regulating because each element of production would be self-adjusting to the communication of these material requirements. Each part of production would know its position. If requirements are low in relation to a build-up of stock, then this would an automatic indication to a production unit that its production should be reduced. If the register of needs and the communication of every necessary element of those needs to the structure of production would be clear and readily known. The supply of some needs will take place within the local community and in these cases, production would not extend beyond this, as for example with local food production for local consumption. Other needs could be communicated as required things to the regional organisation of production. Local food production would require glass, but not every local community could have its own glassworks. The requirements for glass could be communicated to regional glassworks. These would be definite quantities of required glass. The glassworks has its own suppliers of materials, and the amounts they require for the production of one tonne of glass are known in definite quantities. The required quantities of these materials could be passed by the glassworks to the regional suppliers of the materials for glass manufacture. This would be a sequence of communication of local needs to the regional organisation of production, and thus contained within a region. Local food production would also require tractors, and here the communication of required quantities of things could extend further to the world organisation of production. Regional manufacture could produce and assemble the component parts of tractors for distribution to local communities. These would be required in a definite number and, on the basis of this definite number of final products, the definite number of component parts for tractors would also be known. The regional production unit producing tractors would communicate these definite quantities to their own suppliers, and eventually, this would extend to world production units extracting and processing the necessary materials.

 This would be the self-regulating system of production for need, operating on the basis of the communication of need as definite quantities of things throughout the structure of production. Each production unit would convert the requirements communicated to it into its own material requirements and pass these on to its suppliers. This would be the sequence by which every element of labour required for the production of a final product would be known. This system of self-regulating production for use is achieved through communications. Socialism would make full use of the means of communications that have developed. These include not only transport such as roads, railways, shipping etc. They also include the existing system of communications which provide instant worldwide contact as well as facilities for storing and processing millions of pieces of information. Modern information technology could be used by socialism to integrate any required combination of different parts of its world structure of production. Only a few functions would have to be dealt with at the world level. Most could be carried out (as in practice at present) at a level that can be called regional (in world terms). It is at this level that production of intermediate goods and machines and equipment can be envisaged as being produced, for distribution for use either in other factories or by local communities. Local communities can only be the basis for consumption and for democratic decision-making but not for production. Of course, the actual degree of centralisation and decentralisation will be up to the people around at the time to decide in the light of their traditions, experiences and preferences.

The first and most important point is that we are not starting from the beginning. It is not a blank sheet. We are taking over and inheriting an already existing economic system that has in place various means of determining allocations and trade-offs. There are countless professional and trade associations and marketing boards and government departments which have the research and diagnostic tools available, plus the trade union movements with their skills and knowledge. All those bodies may at present be based on commerce but they can be quite easily democratised, socialised and integrated organisationally. Planning in socialism is essentially a question of industrial organisation, of organising productive units into a productive system functioning smoothly to supply the useful things which people had indicated they needed, both for their individual and for their collective consumption. What socialism would establish would be a rationalised network of planned links between users and suppliers; between final users and their immediate suppliers, between these latter and their suppliers, and so on down the line to those who extract the raw materials from nature. There is no point in drawing up in advance the sort of detailed blueprint of industrial organisation that the Industrial Workers of the World, the various syndicalists or the GDH Cole’s guild socialists used to possess and what Michael Albert of Parecon now depicts, but it is still reasonable to assume that productive activity would be divided into branches and that production in these branches would be organised by a delegate body. The responsibility of these industries would be to ensure the supply of a particular kind of product either, in the case of consumer goods, to distribution centres or, in the case of goods used to produce other goods, to productive units or other industries.

Free Access Socialism

 Although we cannot specify in advance a utopian blueprint let's try and describe free access socialism. Suppose that the new social system was to start tomorrow, we are not proposing just the abolition of money. In fact, the abolition of money alone, would solve no problems and undoubtedly create many difficulties. But what we propose is, that the whole system of money and exchange, buying and selling, profit-making and wage-earning be entirely abolished and that instead, the community as a whole should organise and administer the productions of goods for use only, and the free distribution of these goods to all members of the community according to each person’s needs. Simply put, in socialism there would be no barter economy or monetary system. It would be an economy based on need. Therefore, a consumer would have a need, and there would be a communication system set in place that relays that need to the producer. The producer creates the product, and then send the product back to the consumer, and the need would be satisfied. For socialism to be established the productive potential of society must have been developed to the point where, generally speaking, we can produce enough for all. This is not now a problem as we have long since reached this point.

Socialism does presuppose that productive resources (materials, instruments of production, sources of energy) and technological knowledge are sufficient to allow the population of the world to produce enough food, clothing, shelter and other useful things, to satisfy all their material needs. The new social system must be worldwide. It must be a cooperative world commonwealth. The world must be regarded as one country and humanity as one people.

Capitalism is not just an exchange economy but an exchange economy where the aim of production is to make a profit. Profit is the monetary expression of the difference between the exchange value of a product and the exchange value of the materials, energy and labour-power used to produce it, or what Marx called “surplus-value”. 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. Socialism is a money-free society in which use-values would be produced from other use-values, there would need no have a universal unit of account but could calculate exclusively in kind. The only calculations that would be necessary for socialism would be calculations-in-kind. That is one reason why socialism holds a decisive productive advantage over capitalism by eliminating the need to tie up vast quantities of resources and labour implicated in a system of monetary/pricing accounting. The economic signals of the market are not signals to produce useful things. They signal the prospects of profit and capital accumulation. If there is a profit to be made then production will take place; if there is no prospect of profit, then production will not take place. Profit not need is the deciding factor. Under capitalism what appear to be production decisions are in fact decisions to go for profit in the market. The function of cost/pricing is to enable a business enterprise to calculate its costs, to fix its profit expectations within a structure of prices, to regulate income against expenditure and, ultimately, to regulate the exploitation of its workers.

Unfortunately, prices can only reflect the wants of those who can afford to actually buy what economists call “effective demand” – and not real demand for something from those without the wherewithal – the purchasing power – to buy the product (or even to express a preference for one product over another. I may want a sirloin steak but I can only afford a hamburger). Socialism will make economically-unencumbered production decisions as a direct response to needs. With production for use, the starting point will be allocating needs.

Being Human in Nature

 Marx was fond of quoting the 17th-century writer William Petty’s remark that labour is the father and nature the mother of wealth. Marx’s materialist conception of history makes the way humans are organised to meet their material needs the basis of any society.

Humans meet their material needs by transforming parts of the rest of nature into things that are useful to them; this in fact is what production is. So the basis of any society is its mode of production which, again, is the same thing as its relationship to the rest of nature.

Humans survive by interfering in the rest of nature to change it for their own benefit. That humans have to interfere in nature is a fact of human existence. How humans interfere in nature, on the other hand, depends on the kind of society they live in.

Humans are both a part and a product of nature and humans have a unique significance in nature since they are the only life-form capable of reflective thought and so of conscious intervention to change the environment. It is absurd to regard human intervention in nature as some outside disturbing force since humans are precisely that part of nature that has evolved that consciously intervenes in the rest of nature; it is our nature to do so. 

True, that at the present time, the form human intervention in the rest of nature takes is upsetting natural balances and cycles, but the point is that humans, unlike other life-forms, are capable of changing their behaviour.

 

In this sense the human species is the brain and voice of nature i.e. nature become self-conscious. But to fulfil this role humans must change the social system which mediates their intervention in nature. A change from capitalism to a community where each contributes to the whole to the best of his or her ability and takes from the common fund to produce what he or she needs.

 

Competitive pressures to minimise costs and maximise sales, profit-seeking and blind economic growth, with all their destructive effects on the rest of nature, are built-in to capitalism. These make capitalism inherently environmentally unfriendly. Attempts to “green” capitalism, to make it “ecological”, are doomed by the very nature of the system as a system of endless growth. The only framework within which humans can regulate their relationship with the rest of nature in an ecologically acceptable way has to be a society based on the common ownership and democratic control of productive resources, freed from the tyranny of the economic laws that operate wherever there is production for sale on a market.

 Humans are capable of integrating themselves into a stable ecosystem and there is nothing whatsoever that prevents this from being possible today on the basis of industrial technology and methods of production, all the more so, that renewable energies exist (wind, solar, tidal, geothermal and whatever) but, for the capitalists, these are a “cost” which penalises them.

Blue-prints aren't drawn up in indelible ink

 It is not particularly scientific to lay down an exact blueprint of how future socialist society will be organised but we are not concerned to design a blueprint for socialism - to say that this or that is how the future must be. No individual, or any minority of socialists, can abrogate to itself the decisions about how to live. These must be determined democratically by the people who make the socialist revolution. We can also imagine that the detailed structures of socialism in the different parts of the world won’t have to be exactly the same and will become clearer the nearer we approach it. Drawing up a detailed blueprint for socialism is also premature since the exact forms will depend upon the technical conditions and preferences of those who set up and live in socialism.

When a majority of people understand what socialism means, the suggestions for socialist administration will solidify into an appropriate plan. It will be based upon the conditions existing at that time, not today. Socialism is not a blueprint as to all aspects of the alternative society to capitalism, only a definition of what its basis has inevitably to be. What we can do, however, is to offer a glimpse into society as it could become once it is freed from the stranglehold of the money-men. We can describe certain basic principles and guidelines, and give an indication in a very broad and tentative outline of the way we think society might be conducted. But the exact administrative structure and precise mode of behaviour of people in a socialist society will be determined by the specific material conditions of that society. What these specific material conditions will be, and how people will react to them, cannot be known to us at the present time.

Marx and Engels had relatively little to say about the future, partly because they held the drawing up of blueprints for an ideal society to be the very essence of utopianism, utopian as in idealistic, in the sense of an ideal society projected into the future and unconnected with existing social trends. Before the coming of industrial capitalism, the yearning for an egalitarian society could only be a yearning, without any concrete analysis of social reality. By refusing to write recipes for future cook-shops, by failing to talk about the future society except in very general terms for fear of being dubbed “idealist”, they, in fact, signalled that the building of socialism, as distinct from the opposition to capitalism, was not high on their agenda. Yet for socialists the building of the new society, by spelling out what common ownership, democratic control, production solely for use, and free access mean as a practical alternative that people can support now, must now be part of our agenda.

It is not easy to convince someone of the necessity and feasibility of a fundamentally new society by simply elaborating the description of the future. No matter how appealing that future society might appear, compared to present-day reality, it will probably still seem to be a figment of the imagination. Nevertheless, what Marx and Engels did say was usually positive and in line with their generally optimistic view of human nature and the capacity of workers to build a better, more equal and more truly human society than that of capitalism. In particular, Marx wrote of the variety of useful and pleasurable work that would be available to people, in this well-known passage:

"In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, to fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic"

On another page, he summed up the same thought as follows:
"In a communist society there are no painters but only people who engage in painting among other activities" 

 

(Nor should we forget his son-in-law Paul Lafargue penned a pamphlet with the title "The Right to be Lazy")

Communism, as envisioned by Marx, was to be "a society in which the full and free development of every individual forms the ruling principle", a society "in which the free development of each is the condition for the free development of all".

What Marx and Engels envisaged for the future society, from its very beginning, was a kind of participatory democracy organised without any political leaders or administrators at all, which requires some effort of imagination and historical understanding for the present-day readers to grasp

"Communism puts an end to the division of life into public and private spheres, and to the difference between civil society and the state; it does away with the need for political institutions, political authority, and governments, private property and its source in the division of labour. It destroys the class system and exploitation; it heals the split in man's nature and the crippled, one-sided development of the individual...social harmony is to be sought not by a legislative reform that will reconcile the egoism of each individual with the collective interest, but by removing the causes of antagonism. The individual will absorb society into himself thanks to de-alienation, he will recognize humanity as his own internalised nature. Voluntary solidarity, not compulsion or the legal regulation of interests, will ensure the smooth harmony of human relations…the powers of the individual can only flourish when he regards them as social forces, valuable and effective within a human community and not in isolation. Communism alone makes possible the proper use of human abilities" so wrote Lezlek Kolakowski, a Marxist commentator, ‘Main Currents of Marxism’.

But some statements by Marx and Engels about the socialist future seem to show that they were not entirely immune from a conception of that future still rooted in the capitalist past. A particular worry about scarcity of goods in the early stages led Marx to consider labour-time vouchers or certificates:

"What we have to deal with here is a communist society, not as it has developed on its own foundations but, on the contrary, just as it emerges from capitalist society; and which is thus in every respect, economically, morally, and intellectually, still stamped with the birth-marks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society—after the deductions have been made, exactly what he contributes to it. What he has contributed to it is his individual quantum of labour"

Two points here. One is that modern production is social, not individual. It is doubtful whether the value of the "individual quantum of labour" could have been measured in Marx's time except in the crudest terms of time. It is even more doubtful whether such a measure could be made today. The second point is where Marx made it quite clear that, if labour-time vouchers were used in socialism, this would be a temporary measure resulting from the comparatively low level of technology. Today potential abundance resulting from improved technology has made the idea of labour-time vouchers quite outdated. It will no doubt become even more outdated in future. In a particular situation of actual physical shortage perhaps resulting from crop failure we can assume that the shortage can be tackled by some system of direct rationing such as prioritising individuals needs by vulnerability (according to needs), and if there is no call for that criteria, by lottery, or simply by first come - first served.

The socialist goal will be achieved by force of argument, by democratic methods, not by force of arms or authoritarian methods.

"Communism rises above the enmity of classes, for it is a movement that embraces all humanity and not merely the working classes. Of course no communist proposes to avenge himself against any particular individuals who are members of the bourgeoisie…Should the proletariat become more Socialist in character its opposition to the middle classes will be less unbridled and less savage… It may be expected that by the time the rising comes the English working classes will understand basic social problems sufficiently clearly for the more brutal elements of the revolution to be eventually overcome—with the help of the appearance of the Communist Party" (Engels).

This shows a progression of Marxist thought from a capitalist present that is in many ways divisive and brutal, to a socialist movement that is in a transitional stage from divisiveness to a future society that will embrace all of humanity. Engels quite reasonably expected workers to become less brutal as they adopted socialist ideas. The working class puts an end to human exploitation not as a conscious goal on behalf of all humanity, but as the inevitable by-product of ending its own exploitation. It accomplishes the general interest of humanity by acting in its own self-interest. This “movement” of the working class could be said to be implicitly socialist since the struggle was ultimately over who should control the means of production: the minority capitalist class or the working class (i.e. society as a whole).

 At first, the movement of the working class would be, Marx believed, unconscious and unorganised but in time, as the workers gained more experience of the class struggle and the workings of capitalism, it would become more consciously socialist and democratically organised by the workers themselves. The emergence of socialist understanding out of the experience of the workers could thus be said to be “spontaneous” in the sense that it would require no intervention by people outside the working class to bring it about. Socialist propaganda and agitation would indeed be necessary but would come to be carried out by workers themselves whose socialist ideas would have been derived from an interpretation of their class experience of capitalism. The end result would be an independent movement of the socialist-minded and democratically organized working class aimed at winning control of political power in order to abolish capitalism. As Marx and Engels put it in The Communist Manifesto:

 “the proletarian movement is the self-conscious, independent movement of the immense majority, in the interest of the immense majority”.

This, in fact, was Marx’s conception of “the workers’ party”. He did not see the party of the working class as a self-appointed elite of professional revolutionaries but as the mass democratic movement of the working class with a view to establishing socialism, the common ownership and democratic control of the means of production.

Marx and Engels' own vision of the communist revolution pre-supposed the masses' prior self-education. Perhaps the key distinguishing feature of Marx and Engels' thinking was precisely their conviction that the masses could and would educate themselves, organise themselves, liberate themselves, and rule themselves. The nature of a revolutionary movement was seen by Marx and Engels as crucial for the kind of post-revolutionary society that could be expected to emerge. A mass movement of workers meant that a democratic regime was feasible after the overthrow of bourgeois rule. A small conspiracy of professional revolutionaries implied a dictatorial post-revolutionary regime.

Democratic control is not an optional extra of socialism. It is its very essence. Democracy does not mean that all decisions have to be made at general assemblies of all concerned or by referendum; it is compatible with certain decisions being delegated to committees and councils as long as the members of these bodies are responsible to those who (s)elected them. Certainly, workers' councils or something akin to them, as workplace organisations of the workers, are bound to arise in the course of the socialist revolution. But to claim that they are the only possible form of working-class self-organisation is to go too far, is in fact to make a fetish of a mere organisational form.

 What is important in working-class self-organisation, however, is not the form but the principle. As stated, what is important is not the form of organisation but the democratic - and socialist - consciousness of the working class. This can express itself in a great variety of organisational forms.

The Imagination of the “Impossiblists”

 

When one talks to people about socialism or communism, one very frequently finds that they entirely agree with one regarding the substance of the matter and declare communism to be a very fine thing; “but”, they then say, “it is impossible ever to put such things into practice in real life” - Engels

 Fantasy is the first act of rebellion said Freud. Let us indulge ourselves here in that most human of all pursuits – let us imagine the future.

 

Human society is a particular case in universal evolution. Nothing is eternal and unchangeable. Everything is variable. Every given social form is entirely relative, entirely conditional. Classes and systems succeed each other and differ from each other. For centuries, people have imagined Utopias where advances in technology and attitudes create freedom for all. Capitalism distorts the vision of a future society. We can only see a different system in terms of our present one. The first victim of education is imagination. From a very early age, every worker is taught to be “practical”, “realistic” and stop “dreaming dreams”. And yet imagination is the very act of being human. Whatever other aspects make human beings different from other animals, the human capacity to imagine is one of the most striking. The stifling of imagination is essential if the owners are to retain their class monopoly of the planet. That’s because the great revolutionary act for the working class is to imagine an alternative to present-day society.

A very natural question arises: “If one can visualise a possible future society then one should be expected to tell something of what that society will be like”. And so one should and so one can, but only within certain limits and with many reservations. In making projections into the future one should realise that one is dealing with the realm of speculation. Where a definiteness of opinion can be allowed is in the realm of the actual: what is and what has been. In the future, the best we can hope for is to observe trends in the present and the creation and development of potentials, etc. These can be projected as trends into the future scene which may grow to greater potentials and into actualities that may become definite powers, agencies and institutions. Science does not deal in certainties but in high probabilities. It does not depend on clairvoyance or astrological forecasts for its findings. Nor does it admit the determinists, who tell us that this shall be and that shall not be. Yet, notwithstanding what has been stated, one must allow that science, in its ever-restless search for greater knowledge, must permit itself flights of imagination, so to speak, for lacking these it would hardly venture on those essential journeys into the future. In much the same way a socialist speaks of “visualising a future social system”. Science does create for itself what are termed “working hypotheses”; that is to say, it presumes certain things to be so, and for the purpose of establishing a point of departure for definite scientific inquiry it takes its hypothesis as established fact. Of course, it recognizes that this at best is speculation but proceeds to then gather data that may prove, or disprove such a hypothesis. In the same way, we permit ourselves certain speculations and in so doing “we visualise a future society which will be organised for the public good”. But we must never lose sight of the fact that these are speculations, but as the “working hypotheses” of the scientist can be considered valid to the extent that such speculations arise naturally out of our knowledge of the past and the present – and in the absence of any contrary body of facts.

 

The question is thus put “How will production and distribution be carried on in this visualised possible future society?” Socialism is often described in negative terms: a society with no money, no classes, no government, no exploitation. But it is also possible to speak of socialism from a positive viewpoint, emphasising the features it will have, as opposed to those it will not. The future always looks strange when people's minds are imprisoned within the past, but the nearer we get to the next stage in social development the less strange the idea of production for need becomes. There are thousands of workers walking around with ideas in their minds which are close or identical to those advocated by socialists; as that number grows, and as they gather into the conscious political movement for socialism, the doubts of the critics grow fainter and more absurd and what once seemed unthinkable rises to the top of the agenda of history. 

 

“Have you not heard how it has gone with many a Cause before now: First, few men heed it; Next, most men condemn it; Lastly, all men ACCEPT it - and the Cause is Won", so said, William Morris. We must not suppose that socialism is therefore destined to remain a Utopia.