Plan v Market
In terms of a transitional phase based upon the dominance of socialised capital, its fairly obvious that exchange will continue on the basis of prices of production, and not on a return to exchange values, precisely because there is no reason for a worker-owned cooperative to advance its capital, in the production of commodities that provide it with a lower than average rate of profit. To do so would be to restrict the ability of that capital to accumulate; it would shackle it compared to any remaining private capitals, or joint stock companies still under the control of shareholders.
The more these cooperatives are combined in a single cooperative federation, and their exchanges between each other organised by it, the less this is significant, in terms of these exchanges. A large company that comprises several integrated departments does not allocate capital between these departments on the basis of which is most profitable, and does not base its internal prices on prices of production. The company determines the level of its final output, and then allocates capital to its various departments, as required, to produce the various components, in the required proportions. Take a car producer that produces engines, gearboxes, etc. in one department, body shells in a second department, seats, lighting and fittings in a third department, and has a paint shop in a fourth department.
Each of these departments will have a different technical and so organic composition of capital. Consequently, each will produce a different rate of profit, but the car maker does not say, because Department 3 has a higher rate of profit, I will allocate more capital to it, which is what happens with the capitalist economy. If the carmaker did that they would end up with a surplus of lighting and fittings, and shortages of other components. The car producer rather determines how many cars they can produce with the capital they have in total, and then allocates this capital across their four departments in accordance with what is required to achieve the output of that department. They sell the cars at the price of production, but that does not influence the internal prices of components from the different departments, or the allocation of capital to them. The same applies with a large and expanding cooperative federation, whose members would sell their commodities, in the market, at prices of production, but whose internal pricing and capital allocation would be determined on the basis of material balances. The more other forms of socialised capital are brought under workers control, the more these internal relations are expanded, so that ultimately they become the external relations that dominate the economy.
Given that a large element of production is already planned, the market determined production becomes increasingly diminished. As Simon Clarke wrote, thirty years ago,
“Indeed it would be fair to say that the sphere of planning in capitalism is much more extensive than it is in the command economies of the soviet bloc. The scope and scale of planning in giant corporations like Ford, Toyota, GEC or ICI dwarfs that of most, if not all, of the Soviet Ministries. The extent of co-ordination through cartels, trade associations, national governments and international organisations makes Gosplan look like an amateur in the planning game. The scale of the information flows which underpin the stock control and ordering of a single Western retail chain are probably greater than those which support the entire Soviet planning system.”
(Capital and Class, Winter 1990)
The only difference, currently, is that all of the various socialised capitals, because they are mostly under the control of shareholders, is that they sell to each other also on the basis of prices of production. The more they were amalgamated into a single cooperative federation, the more they would simply integrate their production accordingly.
Paul's failure to locate his analysis in the property question is revealed again when he comes to examine social reproduction. He says,
“To understand a mode of production, another revealing question is: 'what reproduces itself spontaneously?' In feudalism, it is the concept of fealty and obligation; in capitalism, it is the market.” (p 236)
But, the actual answer is, under feudalism it is land ownership that is reproduced, on the basis of primogeniture, and under capitalism it is capital and wage labour. And, this weakness is continued, when he says,
“For Marx, the modes of production concept led to a strict historical sequence: there are various pre-capitalist forms of society, where the rich get rich through legally organised violence; then there is capitalism, where the rich get rich through technical innovation and the market;” (p 236)
The idea that Marx’s analysis is teleological again stems from Stalinist distortion, as Umberto Melotti has shown (Marx and The Third World). But, more significantly, Marx and Engels, in Anti-Duhring demolished the idea that in pre-capitalist societies, the rich get rich on the basis of violence. They show that feudal rent is not appropriated by the landlords as a consequence of violence, but on the basis of the reproduction of economic and social relations, which flow from the automatic reproduction of property relations. The existence of the concept of “obligation” is not based upon violence – it it were it almost certainly would not persist for long – but upon a whole set of ideological and cultural norms that develop over centuries, and which themselves arise upon the very material conditions in society out of which the property relations themselves develop. Being determines consciousness.
In a similar way, the ability of the ruling bureaucratic collectivist ruling caste, under the AMP, is not based upon violence – in fact, such societies were characterised by periodic violence, only as one dynasty overthrew another. The ruling caste arises initially on the basis of consent, usually because an administrative bureaucracy is required to undertake large scale public works for irrigation, and water management, and only slowly does this bureaucracy assume the form of a bureaucratic state apparatus. It develops on the basis of a codification of its status and role in society over centuries, and the establishment of a series of laws, taboos, customs and social mores that ossify social relations between the castes, and social strata of society. Indeed, its because of the centuries required for such relations to be established that the claims that a ruling bureaucratic collectivist caste determined the nature of the soviet state, having been formed in less than a decade, are so ridiculous.
The capitalist class does not get rich because of innovation and the market, but because of its ownership of capital. Even if there were no innovation, or accumulation of capital, as with simple reproduction, the capitalists would still get rich, because they would continue to extract profit, as a consequence of owning capital. Even if there were no market, for example, in an economy characterised by state capitalism, the capitalists would still get rich, because they would own, and lend out money-capital to the state, and obtain interest on it. It is not the mode of distribution - plan or market - that determines the wealth and power of the ruling class, but the mode of production, and the ownership and control of property that accompanies it.
The real question for the transition from capitalism to socialism also revolves around the property question. Socialised capital by definition belongs to no one; it belongs to itself. The question, therefore, resolves itself into a question of control, and the only rational solution to that question involves industrial democracy, and control over the socialised capital by the associated producers. And, contrary to Paul's argument that the defining characteristic of this transition is the existence of abundance and free stuff, the reality is clearly quite different.
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