value in the economy during the epoch of transition; autonomy of enterprises and self-management; investments through the budget or by means of self-investment, etc, Involved in these issues is the problem of the ideal model for the economy in the epoch of transition from an underdeveloped country, a problem of absorbing interest to the Bolsheviks during the 1923-28 period and which arose again, even if on.a rather low theoretical level, in Yugoslavia, Poland and even the Soviet Union in recent years,
The Law of Value in the Economy During the Epoch of Transition
The -question of the “application” of the theory of value in the planned and socialized economy of the epoch of transition has been subjected to the worst confusion, mainly because Stalin, in his last work, posed_it in a both gross and simplistic way: "Does the law of value exist [sic] and does it apply in our country?. .. Yes, it exists there and it applies there." This is an evident truism, To the extent that exchange occurs, commodity production survives, and exchange is thereby objectively governed by the law of value. ‘The latter cannot. disappear until. commodity production withers away; that is, with the production of an abundance of goods and services. Oo
But this does not answer the concrete question around which turns the fundamental discussion begun in 1924-25 between Preobrazhensky and Bukharin and which has continued to develop, with ups and downs, among Marxist economists and theoreticians up to now: to what exact degree and in what Sphere does the law of value apply in’the economy during the epoch of transition? ‘ .
Stalin himself, while muddling the problem, had to admit a fact which the Khrushchevist economists are nevertheless beginning to bring into ques~ tion; namely, that in the "socialist" economy, the law of labor=value cannot be the regulator of production, that is,.cannot determine investments.
In developed capitalist economy, the law of value determines production through the play of the rate of profit. Capital flows toward the sectors where the rate of profit is above the average and production increases there, Capital recedes from the sectors where the rate of profit is below the average, and production decreases there (at least relatively). When the.means of production are nationalized, so that there is neither a
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market for capital nor its free entry and withdrawal, nor even the formation of an average rate of profit with which the rate of profit of each particular branch can be compared, clearly there is no longer a possibility for the "law of value" to be directly the "regulator of production,"
If in an underdeveloped country which has carried out its socialist revolution the "law of value” were to regulate investments, these would flow preferentially toward the sectors where profitability is the highest in relation to prices on the world market, ..But it is precisely because these prices determine a concentration of investments in the production of raw materials that these countries are underdeveloped, To escape from underdevelopment, to industrialize the country, means to deliberately orient investments toward the sectors that are least "profitable" for the time being according to the law of value, but more profitable according to the criterion of the long-term economic and social development of the country © as a whole. When it is said that the monopoly of foreign trade is indispensable for industrializing the underdeveloped countries, this means precisely that it cannot be accomplished until these countries are able to “pull the teeth" of the law of value,
- But perhaps this qualification applies only to the “law of value on the world market"? Cannot the law of value at least alter investments on the national scale, once world prices are left aside? This is wrong again. The industrialization of an underdeveloped country cannot be carried out rapidly and harmoniously except by deliberately violating the law of value, (1)
In an underdeveloped country, and precisely because of its under~ development, agriculture tends from the beginning to be more "profitable" than industry, handicrafts and small industry more "profitable" than big industry, light industry more "profitable" than heavy industry, the private sector more "profitable" than the nationalized sector, To channel invest~ ments according to the "law of value," that is, according to the law of supply and demand of commodities produced by different branches of the economy, would imply developing monoculture for the export trade by
(1)"Planned economy in the transitional period, while founded on the law of value, violates it nevertheless at every step and establishes relations among. the different economic branches, and between industry. and agriculture in the first place, on the basis of unequal exchange, The state budget plays the role of a lever for forced accumulation and planned distribution. This role must be increased in accordance with the latest economic progress. Credit financing dominates relations between the coercive accumulation of the budget and the fluctuations of the market, insofar as thé latter enter in. . .- If the domestic Soviet merket is ‘freed! and the monopoly of foreign trade suppressed -~ exchange between the city and the countryside will become much more equal, the accumulation of the village (I refer to the capitalist accumulation of the farmer, the 'kulak!) will follow its course, and it will soon be seem that Marx's formulas likewise apply to agriculture, Once on this road, Russia would rapidly become a colony that would serve as the base for the industrial development of other countries," (Leon Trotsky: "Stalin, Theoretician." Available in French in Ecrits. 1928-1940, Tome I, p. 106.)
priority; it would imply preferential construction of small shops for the local market rather than steel plants for the national market.. The construction of comfortable lodgings for the petty-bourgeois or bureaucratic. layers (an investment corresponding to "effective demand") would have priority over the construction of low-cost homes for the people which clearly-must be subsidized, In short all the economic and social evils of underdevelopment would be reproduced despite the victory of the revolution.
In reality, the decisive meaning of this. victory, of the nationalization of the means of industrial production, of credit, of the transportation system and foreign trade (together with the monopoly of the latter), is precisely to create the conditions for _a process of industrialization that escapes from the logic of the law of value. Economic, social and political priorities, consciously and democratically chosen, take the lead over the law of value in order to lay out the successive stages of industrialization, Priority is placed not on immediate maximum returns, but on the suppression of rural unemployment, the reduction of technological backwardness, the suppression of the foreign grip on the national