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

Introduction / Paul Mattick

Source: Controversies , 26 July 2014. Original source: Grundprinzipien kommunistischer Produktion und Verteilung ; Kollektivarbeit der Gruppe Internationaler Kommunisten (Holland), 1930. Einleitung von Paul Mattick – Berlin-Wilmersdorf : Rüdiger Blankertz Verlag (Institut für Praxis und Theorie des Rätekommunismus), 1970.  – 176 S. Translation from German by Jac. Johanson.

Fundamental Principles of Communist Production and Distribution (G.I.C., 1930). Introduction / Paul Mattick (1970)

The present collective work, Fundamental Principles of Communist Production and Distribution, first appeared forty years ago. Its authors, members of the Group of International Communists (g.i.c.) in Holland , participated in the council movement. Workers’ councils first arose during the Russian Revolution of 1905. According to Lenin, they already had the potential for seizing political power, albeit in fact they still stood on the terrain of the bourgeois revolution. According to Trotsky the workers’ councils represented, in opposition to the political parties within the working class, the organization of the proletariat itself. The Dutchman Anton Pannekoek conceived the council movement as the self-organization of the proletariat, which would lead to its class rule and the takeover of production. With the extinguishing of the 1905 Russian Revolution and the end of the councils, interest in this new form of organization subsided and the traditional political parties and trade unions once more confiscated the terrain of the workers’ movement for themselves. Only the Russian Revolution of 1917 once again brought the councils to the attention of the international workers’ movement; this time not merely as an expression of the spontaneous organization of the revolutionary workers, but as a necessary measure to confront the counterrevolutionary policies of the old workers’ movement as well.

The First World War and the collapse of the Second International closed the first phase of the workers’ movement. What had long been apparent, the integration of the workers’ movement into bourgeois society, now became an indisputable fact. The workers’ movement was not a revolutionary movement, but just a movement of workers who were trying to settle within capitalism. The workers themselves as well as their leaders lacked any interest in abolishing capitalism and by consequence were satisfied with the trade union and political activities within capitalism. The limited possibilities of the parties and the trade unions within bourgeois society simultaneously expressed the real interests of the workers. Nothing else could have been expected, since a progressively expanding capitalism rules out any real revolutionary movement.

The idyl of a possible harmony between the classes in the course of capitalist development, upon which the reformist workers’ movement was based, was smashed to pieces by its collision with capitalism’s own contradictions, which are manifested in crises and wars. The revolutionary idea, formerly the ideological property of a radical minority within the workers’ movement, got hold of the broad masses, as the misery of war exposed the true nature of capitalism; and not just that of capitalism, but that of the workers’ organizations which had thrived within it as well. These organizations had escaped from the hands of the workers; they existed for the latter only to the extent that it was necessary to safeguard the existence of their bureaucracies. Because the functions of these organizations are tied to the preservation of capitalism, they cannot avoid to oppose any real struggle against the capitalist system. A revolutionary movement effectively needs organizational forms which point beyond capitalism, which restore the lost power of the workers over their organizations, and who not only include a part of the workers, but the workers as a class. The council movement was the first attempt to build an organizational form adequate to the proletarian revolution.

Both the Russian and the German revolutions found their organizational expressions in the council movement. But in neither case they proved capable of asserting their political power and to use it for the construction of a socialist economy. Whereas the failure of the Russian council movement can undoubtedly be attributed to the backwardness of the Russian social and economic conditions, that of the German council movement rested on the unwillingness of the mass of the workers to realize socialism in a revolutionary way. Socialization was seen as a task of the government, not as that of the workers themselves, and the council movement decreed its own end by the reestablishment of bourgeois democracy.

Albeit the Bolshevik Party seized power under the slogan “All power to the Soviets”, it held on to the social democratic idea that the construction of socialism was the task of the State, and not of the councils. While no kind of socialization was carried out in Germany, the Bolshevik State destroyed capitalist private property, however without granting the workers rights to dispose of their production. In so far as the workers were taken into account, the result was a form of State capitalism that left the social condition of the workers unchanged and continued their exploitation by a newly forming privileged class. Socialism could neither be realized by the reforming state of bourgeois democracy nor by the new revolutionary Bolshevik State.

Besides the either objective or subjective immaturity of the situations, the passable roads towards socialization were obscured by the dark. By and large socialist theory was oriented towards the critique of capitalism and the strategy and tactics towards class struggle within bourgeois society. In so far as thoughts were devoted to socialism, the road to socialism and its structure appeared to be already prefigured in capitalism. Even Marx himself had only left few principle remarks on the character of socialist society, since it is indeed not very fruitful to concern oneself with the future beyond the point that is already included in the past and present.

Contrary to later conceptions, Marx had however made it clear that socialism is not the cause of the State but of society. Socialism, as the “association of the free and equal producers”, only needs the “state” - the dictatorship of the proletariat - for its establishment. With the consolidation of socialism the proletarian dictatorship, conceived as a “state”, would disappear. Both in reformist and in revolutionary social-democratic ideas an identification of state and social control was effected, and the conception of the “association of the free and equal producers” lost its original meaning. The marks of the socialist future already contained within capitalism were not identified with the possible self-organization of production and distribution by the producers, but with the tendencies towards concentration and centralization typical of capitalism, that were to find their conclusion in State domination over the economy as a whole. This conception of socialism was first assumed, and subsequently attacked as an illusion by the bourgeoisie.

The end of a great historical movement like that of the councils does not rule out the expectation of their reappearance in a new revolutionary situation. In addition, one can always learn from defeats. The task of the council communists after the defeat of the revolutions did not consist only of continuing propaganda for the council system, but of elaborating the shortcomings that the movement had suffered from as well. One of its weaknesses, and perhaps the greatest of them all, was that the councils had no clear conception of their tasks regarding the socialist organization of production and distribution. As the council movement finds its first base in the enterprises, this has to become the point of departure for the social coordination and joining together of economic life, by the producers disposing themselves of their product. ‘Fundamental Principles of Communist Production and Distribution’ was the first attempt on the part of the western European council movement to acquaint itself with the problem of the construction of socialism on the basis of the councils.

Taking into account the enormous difficulties that are in the way of the proletarian revolution, this document, which is for the most part concerned with the unit of calculation and accounting in the communist economy, may seem strange at first glance. As the details of the political difficulties that can be expected cannot be foreseen, this concern always remains speculative. A social system may be easy or hard to overcome; it depends on conditions which cannot be foreseen. However this document is not concerned with the organization of revolution, but with the problems that follow the latter. As it is not possible to guess the real state of the economy in the wake of the revolution, one cannot draft a program in advance for the ensuing tasks that really need to be accomplished. Here the uprising necessities will be the determining factor themselves. But it is possible to discuss in advance the measures and instruments necessary for the establishment of certain desired social relations, in this case relations that can be considered as communist.

The theoretical problem of communist production and distribution became a practical problem by the Russian Revolution. But the practice was already predetermined by the concept of centralist State control which dominated both wings of social democracy. The discussions about the realization of socialism or communism left aside the real problem: that of the control by the workers over their production. The question was how and with what means a centrally conducted planned economy could be realized. Since, according to Marx’s theory, socialism knows neither market, nor competition, nor prices, nor money, socialism could only be conceived of as a ‘natural’ economy in which a central body, by means of statistics, determines both production and distribution. It was upon this point that the bourgeois criticism set in, with the assertion that under such conditions a rational economy is impossible because production and distribution require a measure of value, such as provided by the market prices.

In order not to anticipate the discussion of this question in the ’Fundamental Principles of Communist Production and Distribution’, let us just say that its authors find the solution to the problem of the necessary unit of calculation in the average social labor time as the basis for both production and distribution. They meticulously demonstrate the practical applicability of this method of calculation and the public accounting associated with it. Because it is just about a question of means to obtain certain results, logically nothing can be objected against this. The application of these means presupposes of course the will to achieve a communist production and distribution. Once this condition is fulfilled, nothing stands in the way of their application, albeit they may not be the only ones suitable for communism.

According to Marx, all economy is an “economy of time”. The division and arrangement of social labor to the satisfaction of the needs of production and consumption turns labor time into the measuring stick of production in capitalism as well, albeit there it does not apply to distribution. The prices that occur within capitalism are based on values bound to labor time. They are not related to individual commodities but to the totality of social production. All prices added up can be nothing else than the total value of production bound to labor time. The relations of production (or exploitation) in capitalism, which simultaneously are market relations, and the accumulation of capital as the motive and the driving force of capitalist production, exclude an exchange of value equivalents bound to labor time. Nonetheless the law of value rules capitalist economy and its development.

On the basis of this fact, one could easily assume that the law of value must be valid in socialism as well, because in socialism labor time must be taken into account as well in order to make a rational housekeeping possible. But only under capitalist conditions, in which the necessary social coordination of production is delegated to the market and the relations of private property, labor time is transformed into labor time value. Without capitalist market relations there is no law of value, albeit it remains necessary to take labor time into account in order to adapt social production to the needs of society. In this latter sense the ’Fundamental Principles of Communist Production and Distribution’ speak of the average social labor time.

The authors indicate that others had already proposed labor time as a unit of economic calculation before them. They consider these proposals insufficient because they apply solely to production and not to distribution, and therefor remain familiar to capitalism. From their point of view, average social labor time must simultaneously apply to production and distribution. At this point, however, a difficulty and a weakness of labor time calculation occurs, one that Marx had already pointed out and to which he found no answer but the abolition of labor time calculation for distribution through the realization of the communist principle “From each according to his abilities, to each according to his needs.”

In his Critique of the Gotha Program of the German Social Democratic Party, Marx argues that an equal distribution in proportion to labor time would entail new inequalities, since the producers differ from one another with regards to their working capacities and their private relations. Some do more work than others within the same time; some would have families to support whereas others would not, to the effect that the equality of distribution bound to labor time would result in inequality in the conditions of consumption. Marx writes “With an equal work performance, and thereby with an equal share of the social consumption fund, one obtains in fact more than another, one is wealthier than another, etc. In order to avoid all these wrongs, the Law should be unequal rather than equal.” Albeit he considered these wrongs to be “inevitable in the first phase of communist society”, he did not take them as a communist principle. When the authors of the ’Fundamental Principles’ claim that their explanations “are merely the consistent application of Marx’s line of thought”, this is correct only as far as these thoughts are applied to a phase of socialist development in which the principle of the exchange of equivalents still prevails, which should however come to an end in socialism.

For Marx it was self-evident that “all distribution of the means of consumption (is) only the consequence of the distribution of the conditions of production.” “When the practical conditions of production are the collective property of the workers themselves”, he explained, “a distribution of the means of consumption results that differs from the present one.” The possible wrongs of a distribution bound to labor time could therefor not be overcome by a separation of production from distribution, since the control over production by the producers includes their control over distribution as well, just as the determination of distribution by the State — its allocation from above — likewise includes State control over production. The authors of the ’Fundamental Principles’ rightfully emphasize that the producers must be granted full rights to dispose over their production, but whether this would require a distribution bound to equal labor time is a different question.

In the advanced capitalist countries, that is, in the countries where socialist revolutions are possible, the social forces of production are sufficiently developed to produce means of consumption in abundance. When one considers that more than half of all capitalist production and the unproductive activities associated with it (apart from the existing production possibilities that remain unused) have nothing to do with human consumption, but can only make “sense” in the irrational economy of capitalist society, it becomes clear that under the conditions of a communist economy an abundance of means of consumption can be produced that renders a calculation of individual shares superfluous.

The actualization of the already potentially existing abundance presupposes, however, a complete conversion of social production into fulfilling the real needs of the producers. The transformation of the production of capital into a production oriented towards human needs will doubtlessly – not solely as a result of the abolition of capitalist relations – be accompanied by a transformation of industrial-technical development and will also secure the endangered future of human existence.

Albeit the ’Fundamental Principles’ rightfully emphasize that production is controlled by reproduction, and albeit the point of departure of communist production can only be the end-point of capitalist production, the new society needs a change of the goals and methods of production that is adapted to it. The measures that are adequate to these changes, and their results, will determine whether the distribution will be undertaken according to production shares, or according to the changing real needs. Further, it is well possible that a partial destruction of the production base, as a consequence of the class struggles linked to the social transformation, could rule out the organization of distribution based on labor time, without thereby impeding an equal distribution, for example by rationing. And this equal distribution could directly be secured by the workers themselves without the detour of labor time calculation. The ’Fundamental Principles’ however assume so to say a “normal” communist economic system, one that has already fully established itself and that is reproducing itself in its new shape. In such circumstances a distribution bound to labor time appears as superfluous.

Indeed the “exact relation between producer and product” which the ‘Fundamental Principles’ demand only concerns the individual share of production — after subtraction of the production parts that fall to public consumption and the reproduction of social production itself. The process of socialization is expressed in the reduction of individual consumption and the increase in public consumption. Thereby the communist development tends toward the abolition of the labor time calculation in distribution after all. The economy without market requires the organization of consumers into cooperatives, in direct association with the enterprise organizations, in which the individual needs regarding consumption, and thereby regarding production, can find their collective expression. Unfortunately this is the least developed part of the ’Fundamental Principles’, albeit it is precisely the market economy’s alleged freedom of consumption that is exploited as apology for capitalism. But it is very well possible to establish the needs for consumption without taking recourse to the market, and this even far better than the market is able to do, because in communist society the distortions in market demand given by the class bound distribution fade away.

The demand for “exact calculation” can only lead to an approximation in production as well, since the process of labor and reproduction is subject to constant change itself. The determination of average social labor time for the totality of production requires a certain time, and the obtained results are always outdated with respect to the actual reproduction. Its “precision” refers to a moment in the past, something that cannot be altered, however much it may be possible to curtail the time required for reporting by modern methods and instruments. In this way the average social labor time is subject to constant change. This lack of precision is however not a serious obstacle for the calculation of production and reproduction, be it at the same or at a higher stage of production. The actual situation will deviate from the calculated one, and only the deviations lay bare the real state of production. The calculation of labor time is not about obtaining a complete agreement of the production time, as obtained by the unit of calculation, with the average labor time actually employed and the production that results from this, but about the necessity of the allocation and distribution of social labor which, by its very nature, can only be approximately achieved. Nothing more however is required for a planned communist economy.

The authors of the ’Fundamental Principles’ want to construct production in such a way “that the exact relation between the producer and the product becomes the foundation of the social production process.” They see this as the “cardinal question of the proletarian revolution”, because it is only in this way that the construction of an apparatus that raises itself over the producers can be avoided. Only by means of establishing the relation between the product and the producer “the task of leaders and administrators related to the allocation of the product is abolished”. This is about the self-determination of the distribution by the producers as the indispensable condition of classless society. In reality, the definition of the exact relation between the producer and the product can only be the result of a successful proletarian revolution, which realizes the council system as the form of social organization. If this is the case, the necessity to master the productive process from the angle of distribution may fall away. One can imagine an uncontrolled distribution of consumption goods as well as a controlled one, without promoting the emergence of new privileged strata. On the other hand, the sole adoption of a norm for distribution is not a sufficient guarantee for the construction of a communist economy, which has not only to orient itself at the producers’ shares of the social product but, beyond that, to the material conditions of social production.

In capitalism, distribution is only apparently regulated by the market. Albeit production must be realized on the market, the market itself is determined by the production of capital. The production of exchange value and the accumulation of capital are the bases of the production process. The use value aspect of production is only a means to the end of increasing exchange value. The real needs of the producers can only be taken into account in so far as they coincide with the imperatives of accumulation. Production, as the production of surplus value, is automatically regulated in the market economy by the relations of exchange value, which only accidentally coincide with the relations of use value. Communist society produces for use and must for that reason adapt production and distribution to the real needs of society. In order to follow any sort of distribution norm, production must first be subjected to conscious control. Distribution is preceded by production, even if it is determined by the needs of the consumers. But the organization of production requires much more than the exact determination of the relation between the producer and the product; it requires control over the needs and the productive capacities of the whole of society, in their physical forms, and a distribution of social labor adequate to them.

In this way, in the council system as well, one cannot circumvent the construction of institutions permitting an overview of the necessities and possibilities of society as a whole. The impressions that are acquired in this way have to lead to decisions that cannot be taken by the individual enterprise organizations. The construction of the council system must be such that production can be centrally regulated, without infringing upon the self-determination of the producers. But even in the individual enterprise the carrying out of the workers’ decisions will be left to the councils, without thereby necessarily engendering a domination of the councils over the workers. In a larger framework as well, up to and including national production, organizational measures can be taken which bind the autonomy of the supra-enterprise institutions together with their control by the producers. But this solution of the opposition of centralism and federalism, that the ’Fundamental Principles’ strife for as well, will not likely be effected by the mere “registration of the economic process in general social bookkeeping”, but most probably requires special enterprises, integrated into the council system, which are specifically concerned with the problem of designing the economy.

In the ’Fundamental Principles’, the rejection of a central administration of production and the accompanying distribution regulated by the state is based on the experiences made in Russia, which do not relate to the council system, but to State capitalism. But even here production and distribution are not the work of planning organs but of the State, using the planning organs as an instrument. It is the political dictatorship of the State apparatus over the workers, not the planning of the economy, which has led to a new exploitation, in which subsequently the planning authorities can participate. In the absence of the political dictatorship of the State apparatus, the workers would not need to submit to the central administration of production and distribution.

The first precondition for communist production and distribution is then that no State apparatus arises alongside or above the councils, that the “State” function – meaning the repression of counterrevolutionary tendencies –is executed by the workers organized in the council system. A party which, as a part of the working class, aspires to State power and establishes itself as State apparatus after the seizure of power, will undoubtedly attempt to assume control over production and distribution, and to reproduce this control in order to preserve the position it conquered. Once the control of the majority by the minority has been established, exploitation can be perpetuated. The council system cannot allow any State to subsist alongside it, without taking away power from itself. But without this separate State power, any planning of production and distribution can only be carried through by the Council system. The planning organs themselves become enterprises, alongside other enterprises, that fuse into a unity in the council system.

In this context it has to be noted that the composition of the working class, too, is subject to perpetuating change. The ’Fundamental Principles’ take as their point of departure the industrial proletariat gathered in the enterprises as the socially decisive class. The Council system based on the enterprises determines the social formation and compels other classes, for instance the independent farmers, to integrate into the economic system. Over the past 40 years the working class, that is the layer of those who work for a wage or salary, has considerably grown but, relative to the mass of the population, the number of industrial workers has decreased. A part of the employees collaborates with the manual workers in the factories, another part works in the field of distribution and administration. Due to the scientific rationalization of production, in part, the universities can be regarded as “enterprises” as well, because the productive forces of science tendentially surpass those of direct labor. And albeit in capitalism surplus value can only be surplus labor, whatever may be the state of science, social wealth in communism is not manifested by an increase in labor, but by the persistent reduction of necessary labor, by the scientific development that has escaped from capitalist barriers. Production is progressively socialized by the participation of ever broader masses in the production processes, that henceforth can only exist in the closest connection and by the reciprocal interpenetration of all kinds of work. In a word, the concept ‘working class’ is expanding; already today it includes more than 40 years ago. The changing division of labor already contains in itself the tendency towards a dissolution of the professional divisions, of the separation between mental and physical labor, between factory and office, between workers and superiors; a process which, through the implication of all producers in the henceforth socially oriented production, can lead to a council system that effectively includes all of society and thereby puts an end to class rule.

One can very well share the distrust of the ’Fundamental Principles’ against the “leaders, specialists and scientists” who arrogate to themselves to control production and distribution, without overlooking the fact that, apart from the leaders, the specialists and scientists are producers themselves. The council system puts them on an equal footing with all other producers and deprives them of the special position they occupy in capitalism. Since backward steps in the social domain are always possible, it is clear that even a council system can decay – for example as a result of the lack of interest of the producers in their own self-determination and, by consequence, the transfer of functions of the councils to instances within the council system, that become autonomous with regards to the producers. The authors believe that this danger can be thwarted by means of a “new calculation of production as the general basis of production”. But since this calculation of production must first of all be introduced, the hoped-for effect could be lost due to a series of modifications. In the exposition of the authors however the once achieved introduction appears as sufficient. They defend themselves against the prescriptions by persons that is common within state capitalism, which will have to be ruled out by the “objective operation of production” and the control of these persons by reproduction.

The new system of production and distribution itself here guarantees the communist society, although in reality the “objective operation of production” is always secured by persons. In capitalism, too, there is an “objective operation of production”, the one which is given by the law of the market, to which all persons are subject. Here the system dominates men. This fetishistically perceived system only conceals the real social relations of man’s exploitation of man. Behind the economic categories stand classes and persons, and wherever the fetishism of the system is breached, the open struggle between classes and persons appears in broad daylight. Albeit communism is also a social system, it is not placed above men, but is set by themselves. It has no life of its own to which the persons forcibly have to adapt; the “objective operation of production” is indeed prescribed by persons, but by persons united in the council system.

These few objections have to suffice here to indicate that the ‘Fundamental Principles’ do not constitute a finished program, but a first attempt to approach the problem of communist production and distribution. And, although the ’Fundamental Principles’ are concerned with a state of society that still lies in the future, they are at the same time a historical document that sheds light upon a stage of discussion in the past. Their authors were bound to the questions of socialization which were raised more than half a century ago, and some of their arguments have lost a part of their former actuality. In the meantime, the former dispute between the ‘natural economists’ and the representatives of the market economy, in which the ’Fundamental Principles’ intervened by rejecting both groups, has achieved its end. In general, socialism is no longer understood as a new society, but as a modification of capitalism. The market economists speak of a planned market economy, and the defenders of a planned economy utilize market economy. The arrangement of production starting from use value does not exclude the unequal distribution of consumption goods through price manipulations. The “economic laws” are conceived as independent from the social formations and, at most, the dispute revolves around what mixture of capitalism and socialism would be more “economical”.

The “economic principle”, that is, the principle of economic rationality which presumably lies at the basis of every social order and which presents itself as maximal realization of economical goals at the minimal costs, is in reality nothing else than the vulgar capitalist principle of production of profit, which always strives for the maximum of exploitation. The “economic principle” of the working class is, by consequence, nothing else than the abolition of exploitation. This “economic principle”, upon which the ’Fundamental Principles’ rely, has until now been reserved for the latter. Besides the obvious exploitation in the so-called “socialist” countries, the academic squabble about socialism in the capitalist countries only revolves about state capitalist systems. “Socialist ownership” of the means of production is always thought of as State ownership, the administrative distribution of goods, with or without a market, always remains the cause of centralized decisions. As in capitalism, exploitation is secured in two ways: by the persisting separation of the producers from the means of production, and by the monopolization of political power. And wherever a kind of “right of participation” has been conceded to or imposed upon the workers, the market mechanism of State exploitation adds self-exploitation to it. Whatever may be the weak points in the ’Fundamental Principles’, in view of this situation, they remain the point of departure, today as well as tomorrow, of all serious discussions and efforts for the realization of communist society.

February 1970, Paul Mattick

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Compiled by Vico, 18 January 2016