Part 2 of 8

Economic Calculation in the Socialist Commonwealth
1. The Distribution of Consumption Goods in the Socialist
Commonwealth
Under socialism all the means of production are the property of the
community. It  is the community alone which can dispose of them and which
determines their use in production. It goes without saying that the community
will only be in a position to employ its powers of disposal through the setting up
of a special body for the purpose. The structure of this body and the question of
how it will articulate and represent the communal will is for us of subsidiary
importance. One may assume that this last will depend upon the choice of
personnel, and in cases where the power is not vested in a dictatorship, upon the
majority vote of the members of the corporation.
The owner of production goods, who has manufactured consumption goods
and thus becomes their owner, now has the choice of either consuming them
himself or of having them consumed by others. But where the community
becomes the owner of consumption goods, which it has acquired in production,
such a choice will no longer obtain. It cannot itself consume; it has perforce to
allow others to do so. Who is to do the consuming and what is to be consumed by
each is the crux of the problem of socialist distribution.
It is characteristic of socialism that the distribution of consumption goods
must be independent of the question of production and of its economic
conditions. It is irreconcilable with the nature of the communal ownership of
production goods that it should rely even for a part of its distribution upon the
economic imputation of the yield to the particular factors of production. It is
logically absurd to speak of the worker’s enjoying the “full yield” of his work,
and then to subject to a separate distribution the shares of the material factors of
production. For, as we shall show, it lies in the very nature of socialist production
that the shares of the particular factors of production in the national dividend
cannot be ascertained, and that it is impossible in fact to gauge the relationship
between expenditure and income.
What basis will be chosen for the distribution of consumption goods among
the individual comrades is for us a consideration of more or less secondary
importance. Whether they will be apportioned according to individual needs, so
that he gets most who needs most, or whether the superior man is to receive more
than the inferior, or whether a strictly equal distribution is envisaged as the ideal,
or whether service to the State is to be the criterion, is immaterial to the fact that,
in any event, the portions will be meted out by the State.
Let us assume the simple proposition that distribution will be determined
upon the principle that the State treats all its members alike; it is not difficult to
conceive of a number of peculiarities such as age, sex, health, occupation, etc.,
according to which what each receives will be graded. Each comrade receives a
bundle of coupons, redeemable within a certain period against a definite quantity
of certain specified goods. And so he can eat several times a day, find permanent
lodgings, occasional amusements and a new suit every now and again. Whether
such provision for these needs is ample or not, will depend on the productivity of
social labor.
Moreover, it is not necessary that every man should consume the whole of his
portion. He may let some of it perish without consuming it; he may give it away
in presents; he many even in so far as the nature of the goods permit, hoard it for
future use. He can, however, also exchange some of them. The beer tippler will
gladly dispose of non-alcoholic drinks allotted to him, if he can get more beer in
exchange, whilst the teetotaler will be ready to give up his portion of drink if he
can get other goods for it. The art lover will be willing to dispose of his cinema
tickets in order the more often to hear good music; the Philistine will be quite
prepared to give up the tickets which admit him to art exhibitions in return for
opportunities for pleasure he more readily understands. They will all welcome
exchanges. But the material of these exchanges will always be consumption
goods. Production goods in a socialist commonwealth are exclusively communal;
they are an inalienable property of the community, and thus res extra
commercium.
The principle of exchange can thus operate freely in a socialist state within the
narrow limits permitted. It need not always develop in the form of direct
exchanges. The same grounds which have always existed for the building-up of
indirect exchange will continue in a socialist state, to place advantages in the way
of those who indulge in it. It follows that the socialist state will thus also afford
room for the use of  a universal medium of exchange--that is, of money. Its role
will be fundamentally the same in a socialist as in a competitive society; in both
it serves as the universal medium of exchange. Yet the significance of money in a
society where the means of production are State controlled will be different from
that which attaches to it in one where they are privately owned. It will be, in fact,
incomparably narrower, since the material available for exchange will be
narrower, inasmuch as it will be confined to consumption goods. Moreover, just
because no production good will ever become the object of exchange, it will be
impossible to determine its monetary value. Money could never fill in a socialist
state the role it fills in a competitive society in determining the value of
production goods. Calculation in terms of money will here be impossible.
The relationships which result from this system of exchange between
comrades cannot be disregarded by those responsible for the administration and
distribution of products. They must take these relationships as their basis, when
they seek to distribute goods per head in accordance with their exchange value.
If, for instance 1 cigar becomes equal to 5 cigarettes, it will be impossible for the
administration to fix the arbitrary value of 1 cigar = 3 cigarettes as a basis for the
equal distribution of cigars and cigarettes respectively. If the tobacco coupons are
not to be redeemed uniformly for each individual, partly against cigars, partly
against cigarettes, and if some  receive only cigars and others only cigarettes,
either because that is their wish or because the coupon office cannot do anything
else at the moment, the market conditions of exchange would then have to be
observed. Otherwise everybody getting cigarettes would suffer as against those
getting cigars. For the man who gets one cigar can exchange it for five cigarettes,
and he is only marked down with three cigarettes.
Variations in exchange relations in the dealings between comrades will
therefore entail corresponding variations in the administrations’ estimates of the
representative character of the different consumption-goods. Every such variation
shows that a gap has appeared between the particular needs of comrades and their
satisfactions because in fact, some one commodity is more strongly desired than
another.
The administration will indeed take pains to bear this point in mind also as
regards production. Articles in greater demand will have to be produced in
greater quantities while production of those which are less demanded will have to
suffer a curtailment. Such control may be possible, but one thing it will not be
free to do; it must not leave it to the individual comrade to ask the value of his
tobacco ticket either in cigars or cigarettes at will. If the comrade were to have
the right of choice, then it might well be that the demand for cigars and cigarettes
would exceed the supply, or vice versa, that cigars or cigarettes pile up in the
distributing offices because no one will take them.
If one adopts the standpoint of the labor theory of value, the problem freely
admits of a simple solution. The comrade is then marked up for every hour’s
work put in, and this entitles him to receive the product of one hour’s labor, less
the amount deducted for meeting such obligations of the community as a whole
as maintenance of the unfit, education, etc.Taking the amount deducted for
covering communal expenses as one half of the labor product, each worker who
had worked a full hour would be entitled only to obtain such amount of the
product as really answered to half an hour’s work. Accordingly, anybody who is
in a position to offer twice the labor time taken in manufacturing an article, could
take it from the market and transfer to his own use or consumption. For the
clarification of our problem it will be better to assume that the State does not in
fact deduct anything from the workers towards meeting its obligations, but
instead imposes an income tax on its working members. In that way every hour
of work put in would carry with it the right of taking for oneself such amount of
goods as entailed an hour’s work.
Yet such a manner of regulating distribution would be unworkable, since
labor is not a uniform and homogeneous quantity. Between various types of labor
there is necessarily a qualitative difference, which leads to a different valuation
according to the difference in the conditions of demand for and supply of their
products. For instance, the supply of pictures cannot be increased ceteris paribus,
without damage to the quality of the product. Yet one cannot allow the laborer
who had put in an hour of the most simple type of labor to be entitled to the
product of an hour’s higher type of labor. Hence, it becomes utterly impossible in
any socialist community to posit a connection between the significance to the
community of any type of labor and the apportionment of the yield of the
communal process of production. The remuneration of labor cannot but proceed
upon an arbitrary basis; it cannot be based upon the economic valuation of the
yield as in a competitive state of society, where the means of production are in
private hands, since--as we have seen--any such valuation is impossible in a
socialist community. Economic realities impose clear limits to the community’s
power of fixing the remuneration of labor on an arbitrary basis: in no
circumstances can the sum expended on wages exceed the income for any length
of time.
Within these limits it can do as it will. It can rule forthwith that all labor is to
be reckoned of equal worth, so that every hour of work, whatever its quality,
entails the same reward; it can equally well make a distinction in regard to the
quality of work done. Yet in both cases it must reserve the power to control the
particular distribution of the labor product. It will never be able to arrange that he
who has put in an hour’s labor shall also have the right to consume the product of
an hour’s labor, even leaving aside the question of differences in the quality of
the labor and the products, and assuming moreover that it would be possible to
gauge the amount of labor represented by any given article. For, over and above
the actual labor, the production of all economic goods entails also the cost of
materials. An article in which more raw material is used can never be reckoned
of equal value with one in which less is used. Economic Calculation i