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Theme: The Economic Solution for the Period of Transition from Capitalism to Communism

Period of Transition


Communist production and distribution / Paul Mattick

Source: Living Marxism, Vol. 4, 1938, N° 4. (1)

This version is based upon a photographic reproduction of reduced size without transcription, edition, annotation or source, by Greenwood Reprint Corporation, Westport, Connecticut, under the general title “New Essays”; with a short introduction in the first volume by Paul Mattick sr.

Source: Part 1, Part 2.

Communist production and distribution

Capitalist crises arise from the contradiction between the social forces and relations of production, a conflict in which the profitable employment of capital becomes increasingly difficult and which must lead to the collapse of capitalism. Marxism rejects all pseudo-socialist economic theories which consist merely of a new regulation of distribution while retaining the capitalistic system of production. Value production must be abolished before there can be the slightest semblance of a communist society. Under communism, labor has no “value” and no “price”. The abolition of value exchange is the abolition of the wage system, for the wage relation is but the exchange between buyers and sellers of labor power. If this relation exists – and it matters not whether the purchasers of labor power are individual entrepreneurs or the state – we have by that very circumstance, production of value and surplus-value based on the exploitation, of workers. And such capitalistic production admits of none but capitalistic distribution. “The manner in which the productive forces are exchanged,” says Marx in the Critic of the Gotha Programme (p. 32), “is decisive as regards the manner of exchange of the products.”

In communism, the process of production is no longer a process of capital expansion, but only a labor process in which society draws from nature the means of consumption which it needs. The only economic criterion is the labor time employed in the production of useful goods. And so, from the standpoint of Marxism the Russian experiments in “planned economy”, are not to be rated as socialistic. The Russian practice follows the laws of capitalist accumulation, on the basis of surplus-value production. The wage relation is identical with that of capitalist production, forming the basis for the existence of a growing bureaucracy with mounting privileges, which, beside the still present capitalist elements, must be appraised as a new class appropriating surplus labor and surplus-value.

The gist of the Bolshevist “theory of socialization” may be sketched as follows : With the revolutionary overthrow, i.e. the expropriation of capital, the power over the means of production and hence the control over production and the distribution of the products passes into the hands of the state apparatus. The latter then organizes the various branches of production in accordance with a plan and puts them, as a state monopoly, at the service of society. With the aid of statistics, the central authority computes and determines the magnitude and kind of production, as also the apportionment of the products to the producers.

To be sure, the means of production have here passed from the hands of the private entrepreneurs into those of the state; as regards the producers, however, nothing has changed. No more than under capitalism do the producers control the products of their labor, for they still lack the control over the means of production. Just as before, their only means of livelihood is the sale of their labor power. The only difference is that they are no longer required to deal with the individual capitalist, but with the total capitalist, the state, as the purchaser of labor power.

The decisive problems of a communist economy do not come up until after the market, wage labor, money, etc., have been completely abolished. The very fact of the existence of the wage relation signifies that the means of production are not controlled by the producers, but confront them as capital; and this circumstance further compels the reproduction process in the form of capital accumulation. The later process, is (2) at the same time the accumulation of misery, and hence also the Russian workers are actually growing poorer at the same rate as capital accumulates. The productivity of the Russian workers increases faster than their wages; they receive a relatively ever smaller share of the increasing social product. To Marx this relative pauperization of the working population in the course of accumulation is only a phase of the absolute pauperization.


Capitalist economy has perfected the computability developed by industry. Particularly in the last two decades the computing methods for determining costs have attained a high degree of precision. Though capitalist accounting methods are bound to money as the common denominator, the necessity for accounting does not die out with the disappearance of money and the market in the communist society. A general measure, a reckoning unit is indispensable to the social regulation of production and distribution. To Marx and Engels the basis and computing unit of communist economy was the socially necessary labor time contained in the products.

Labor time as the unit of reckoning would play a double role in the communist economy :

“Its apportionment in accordance with a definite social plan maintains the proper proportion between the different kinds of work to be done and the various wants of the community. On the other hand, it also serves as a measure of the portion of the common labor borne by each individual, and of his share in the part of the total product destined for individual consumption. The social relations of the individual producers, with regard both to their labour and to its products, are in this case perfectly simple and intelligible and that with regard not only to production but also to distribution.” (Capital, Kerr Ed. Vol. I. pp. 90-91) (3).

Communism is neither “federalistic” nor “centralistic”, and yet it is both together. It is a productive mechanism which assures the independent operation of the units and simultaneously enables social planning of production. In all forms of society the process of production must also be a process of reproduction. Under capitalism reproduction is regulated through the market mechanism, whereas under communism it is a planned process consciously determined by the producers themselves. If labor time is the measure of communist production, it is the measure also for expanded reproduction.

The social average working hour as the computing unit of communist society is capable of embracing all categories of production and distribution. Each enterprise will determine the number of working hours it consumes so that they can be replaced by the same magnitude. The labor time method is unquestionably adapted to compute the total cost of an enterprise, of a branch of industrial production and also of the individual product or partial product. Even those enterprises which give rise to no tangible product are quite capable of determining the amount of labor time they consume in the form of products.

The production formula of an enterprise as well as that of society as a whole, may be stated very simple : means of production, plus labor, creates the product. If one distinguishes between two different kinds of means of production : fixed and circulating, we might assume for example the following production formula for a shoe factory :

Machines, etc | Raw materials, etc | Labor power
10,000 working hours | 70,000 working hours | 70,000 working hours

If we further assume that this factory produces 50,000 pairs of shoes, then 150,000 working hours were expended for their production, or three working hours for each pair. This formula is at the same time the formula for simple reproduction. We know how many labor hours were consumed in this factory for the production of 50,000 pairs of shoes. The same number of labor hours must accordingly be restored to it. And what holds for the single enterprise holds also for the whole of society, which of course is only the sum total of all enterprises. The total social product is the product of tools of production, plus raw materials, plus labor power of all enterprises. Assuming the sum total of all the fixed means of production to amount to 100 million labor hours, the corresponding raw materials to 600 million, and the labor time consumed to be equal to 600 million, we have the total product of 1,300 million labor hours. Under conditions of simple reproduction, 600 million labor hours can be turned over to the consumers in the form of consumption goods.

As in capitalism the accumulation of capital is to a large extend left to individual capitalists, so also the reproduction of labor power is left to the class-determined individuals. The worker continually produces, with insignificant exceptions, only new workers. The middle class fills, over and over again, the higher occupations. Under communism, however, both the reproduction of labor power and that of the material apparatus of production are social functions. No longer is the class position of the individual determining, but the “reproduction” of labor functions is consciously regulated by society. And as corollary, the antagonistic nature of distribution is discarded; it is foreign to a communist society.

The application of the social average labor hour as the computing unit presupposes the existence of workers’ councils organizations. Each enterprise comes forward as an independent unit and is at the same time connected with all the other enterprises. As a result of the division of labor, each factory has certain end products. With the aid of the mentioned formula, each enterprise can compute the labor time contained in its end products. The end product of an enterprise, in so far as it is not destined for individual consumption, goes to another enterprise either in the form of means of production or raw materials, and this one in turn computes its end product in labor hours. The same thing holds for all places of production, without regard to the magnitude or kind of their products.

When the individual enterprises have determined the average labor time contained in their products, it still remains to find the social average. All enterprises turning out the same products, must compare production figures. From the individual enterprises of an industry in a given territory, the total average of all the individual plant averages for these enterprises must be secured. If 100 shoe factories, for example, average three hours and 100 others average two, then the general average for a pair of shoes is 2½ hours. The varying averages result from the varying productivities of the individual plants. Though this is a condition inherited from capitalism, and the differences in productivity will slowly disappear, the deficit of one enterprise must meanwhile be made up through the surplus of the other. For society, however, there is only the social average productivity. The determination of the social average labor time calls for the cartellization of the enterprises. The contradiction between the factory average and the social average labor time ends in the production cartel.

The social average labor time decreases with the development of the productivity of labor. If the product thus "cheapened " is for individual consumption, it goes into consumption with this reduced average. If it is an end product used by other enterprises as means of production, then the consumption of means of production and raw materials for these enterprises falls, the production "costs" decline and hence the average labor time for these products is reduced. Compensating for the variations caused in this way is a purely technical problem which presents no special difficulties.

If the working hour serves as a measure of production, it must likewise be applicable to distribution. A very clear statement of this unit is given by Marx in his Critique (p. 29) :

“What the producer has given to society is his individual amount of labor. For example, the social working day consists of the sum of the individuals’ hours of work. The individual working time of the individual producer is that part of the social working-day contributed by him, his part thereof. He receives from society a voucher (labor time money (4) that he has contributed such and such a quantity of work (after deductions from his work for the common fund) and draws through this voucher on the social storehouse as much of the means of consumption as the same quantity of work costs. The same amount of work which he has given to society in one form, he receives back in another.”

The workers cannot, however, receive the full output of their labor. The labor time is not the direct measure for the part of the social product destined for individual consumption. As Marx goes on to explain in his Critique (p. 27) “The co-operative proceeds of labor is the total social product. But from this must be deducted; firstly, reimbursement for the replacement of the means of production used up; secondly, an additional portion for the extension of production; and thirdly, reserve or insurance funds to provide against misadventures, disturbances through natural events and so on.” There must again be taken from the remainder : “Firstly, the general costs of administration not appertaining to production. Secondly, what is destined for the satisfaction of communual needs. Thirdly, funds for those unable to work."

Those institutions which produce no tangible goods (cultural and social establishments) and yet participate in the social consumption may be reckoned as enterprises. Their services go over into society without delay ; production and distribution here are one. We call these institutions for sake of illustration “public enterprises”. Everything which the public enterprises consume must be drawn from the stores of the productive enterprises. It is necessary to know the total consumption of these public enterprises. With the growth of communism, this type of enterprise receives an ever increasing extension, means of consumption, dwelling, passenger transport, etc. The more society grows in this direction and the more enterprises are transformed in public enterprises, the less will individual labor be the measure for individual consumption. This tendency serves to illustrate the general development of communist society. Of the social product a part is to be employed for the further expansion of the productive apparatus. If this expanded reproduction is to be a conscious action, it is necessary to know the social labor time required for simple reproduction. The formula for simple reproduction is : tools of production, plus raw materials, plus labor power. If the material apparatus of production is to be expanded by ten per cent, a mass of products of this amount must be withdrawn from individual consumption. Going back to our formula for society as whole : 100 million tools of production plus 600 million raw materials, plus 600 million labor power, means that 700 million working hours have to be reproduced. There remain 600 million working hours. The public enterprises take from these 600 million their means of production and raw materials. Ten per cent is deducted for the expansion of production, the remainder can be equally distributed among the workers engaged in production and in the public enterprises. If we assume that 50 million working hours are necessary for the public enterprises and 70 million for expansion we have to deduct from the total consumption fund 120 million working hours. There remain 480 million working hours for the fund for individual consumption.

Distribution, like production itself, is a social question. The “expenses” of distribution are included in the general budget for the public enterprises. The bringing together of the consumers into associations with a direct connection to the organism of production allows full mobility to the satisfaction of needs and to their changes therein. In the relations between the individual enterprises, labor time “money” is superfluous. When an enterprise delivers its end products, it has linked tools of production, plus raw materials, plus labor power, working hours to the great chain of partial social labors. These must be restored to the various enterprises in the same magnitude in the form of other end products. The labor money is valid only for individual consumption. As more and more enterprises are brought into public enterprises, distribution by means of labor money grows less and less important and hastens its own abolition. Fixing the factor of individual consumption is the task of social bookkeeping.

This bookkeeping is merely bookkeeping and nothing else. It is the central point of the economics process, but has no power over the producers or the individual enterprises. The social bookkeeping is itself only an enterprise. Its functions are: the registration of the stream of products, the fixing of the individual consumption fund, the outlay of labor time “money”, the control over production and distribution. The control of the labor process is a purely technical one, which is handled by each enterprise itself. The control exercised by the social bookkeeping extends only to accounting for all receipts and deliveries of the individual enterprises and watching over their productivity.

The different industrial enterprises turn their production budgets over to the enterprise which conducts the social bookkeeping. From all the production budgets results the social inventory. Products in one form flow to the enterprise, new ones in another form are given out by them. To state the process in simple terms: Each conveyance of good is recorded in the general social bookkeeping by an endorsement, so that the debit and credit of any particular enterprise at any time can be seen. Everything which an enterprise consumes in the way of tools of production, raw material or labor “money” appear on the debit side of the enterprise; what it has turned over to society in the form of products appears as a credit. These two items must cover each other continuously, revealing in this way whether and to what extent the productive process is flowing smoothly. Shortage and excess on the part of the enterprises become visible and can be corrected. The reproductive process becomes the regulator of production. (*)

Edited by F.K..

Author’s note

* For a more extensive study of this problem see: "Grundprinzipien kommunistischer Produktion und Verteilung.” Gruppe Internationaler Kommunisten (Holland). Herausgegeben von der Allgemeinen Arbeiter Union Deutschland. Berlin 1930.

Editor’s notes

1. Bigger parts of this article are nearly identical to “What is Communism?” Paul Mattick, published first in International Council Correspondence – English Edition&nsbp;– published by United Workers Party, Chicago, N° 1, Oct. 1934. Seemingly important changes are indicated in footnotes.

2. Left out from the 1934-version: This latter is, “by the Marxist theory, beside and because of its validity as a law of crisis and collapse, at the same time …”.

3. All citations of Marx are left as they were in the original text by Mattick.

4. Text between parenthesis has been added by Mattick and cannot be found in Marx’ Critic …. “Labor money”: an unhappy expression, should be: consumption vouchers. In the 1934-edition Mattick cites Marx after following fragment: These certificates may be called labor money, though they are not money at all in the capitalistic sense. “The producers”, writes Marx, “may eventually receive paper checks, by means of which they withdraw from the social supply of means of consumption a share corresponding to their labor-time. These checks are not money. They do not circulate.” (Capital, Vol.&nsp;II, p.&nsp;412).

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Compiled by Vico, 4 February 2016