RELATION ene SELF~MANAGEMENT AND INVESTHENT
IN THE ECONOMY OF THE WORKERS STATES
Some Remarks on the Discussion in Cuba
By E. Germain [continued from last issue.] the Law of Value and. Autonomy of Decision.at the Enterprise Level.
In the debate which has raged in some of the workers states, the. problem of the area of application of the law of value is intimately linked with the problem of autonomy of decision at the enterprise level in the field of investment, The Yugoslav authors have even formulated with regard to this a veritable new dogma which requires critical analysis: “Without the right.of the self-management: collectives to dispose of a con= siderable part of the social ‘surplus product, no genuine self~management."(4) (4) Thus | wont st Popovic, in an article Titled Self-Management and Pian— ning": "On the other hand, in the sector of expanded social reproduction, © in perfecting the system. of investment on the basis of the new reletions, our results are less conclusive, although the first steps have been taken in this direction. The establishment of nonadministrative relations, of economic relations, in this sphere, reverts quite simply to the establishment of credit-interest Lr] relations, and to taking them as the basis. a
"One must first of all counteract: the contradiction which arises from the fact that the resources serving social reproduction are deducted exclusively through administrative measures (taxes, duties, contributions) thus leaving free the organization of labor without the latter on the other hand becoming the 'proprietor!; the organization of labor evolves, in fact, into a unique system of credit in which these resources are at one and the same time 'theirs? and tcommon! (article 11)...
"Tt is possible to avoid, on the other hand, having subjective and political considerations as the only ones to be taken into consideration at the time of the adoption of the decisions concerning: investments. It goes without saying that this method cannot and must not ever be pushed to its final conclusion, But a system can be constructed in which the political decisions will bear on the general orientation of the political economy, | while the distribution of the means destined for investment is carried out in_ accordance with the credit mechanism, according to financial and material ] criteria fixed with more or less precision, In operating in this way the process of expanded reproduction is likewise 'Ydepoliticatized,!. This 'depoliticalization! is not absolute, It is carried out to the degree that _bureaucratism must be deprived of its base in this sphere as in the others." .My emphasis.] (Current Questions of Socialism, No.70, July-Sept, 1963. pp. 67+8,
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This analysis must examine the problem from two aspects: economic effi-— ciency’ (criteria for choosing one investment. project rather than another), and social and political efficiency (success in the struggle against the bureaucracy and bureaucratization).
The more backward a country is, the more the conditions of almost universal scarcity rule not only in- the means of production but for much of the means of industrial consumption (at least for the great ma jority of. the population), and the more detrimental the practice of sélf-management . is the more detrimente is it to permit the self-management collectives _ to determine for themselves the projects for priority of productive invest-~ ment.
It is evident in fact that under conditions of almost general scarcity of industrial commodities, almost all the investment projects can be econ= omically profitable, no matter how gross the economic errors that are committed, Almost every profitable | industrial or agricultural enterprise (providing funds for investment) is like an island in a sea of unsatisfied needs, The natural tendency of self-investment is therefore to attend $0.0 what is } most pressing, both locally and in each sector. 7
In other words: if the self-mane gement enterprises hold Large funds for self-investment, they will have a tendency to orient their investments either toward the commodities which they lack the most (certain equipment - goods; raw materials; auxiliary. products; emergency sources of energy), or _ toward the commodities which their workers or the inhabitants of the area. laek the most. Thus criteria of local. or sector interest are placed above national interests, not because the law of value is "denied" but precisely because it is a iieat This means, once more, to orient industrialization toward the “traditional road" which it followed in the historic framework of capitalism, in place of reorienting it according to the requirements of a nationally planned economy.
An attempt can be made to reconcile national pla nning requirements and allocating self-managed enterprises considerable funds for self-investment. ~The means chosen for this aim can be a levy-tax in behalf of national development funds and equalization funds. for regional development. This is. evidently a step in the right direction, but it does not at all resolve the problem,
Since an underdeveloped economy. is characterized precisely by the fact that the enterprises of high productivity are still the exception and not the rule, it is sufficient to leave them a part of their net surplus ~— product and the inequality of development between the industrialized local- . ities and the nonindustrialized localities, the inequality of development and of revenue between the archaic enterprises which enjoy only en average level of productivity and the enterprises technologically "up to date" will increase instead of diminishing, It is necessary moreover to insist on this fundamental idea of Marxism: any economic freedom, any “autonomy of decision" and any "spontaneity" increases the inequality so long as there exist side by side strong and. feeble enterprises or individuals, rich and poor, favored and unfavored from the point of view of location, etc, This is the reason why, it should be noted in passing, that according to Marx — the mechanism of the law of value leads to its own negation, competition inevitably ends in monopoly.
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The economic logic of a planned economy therefore speaks completely in favor of productive investments by budgetary means, at least for all 7 the. big enterprises, at must be left to the en erprises is an amortization fund sufficiently large to permit modernization of equipment with each renewal of fixed equipment (gross investment). But all net investments should be made in accordance with the plan, in the branches and places chosen according to preferential criteria selected for the society and its. economy as a whole, In this respect, too, the thesis of Comrade Guevara is correct,
The problem has been obscured, above all in the USSR, through associating it with the problem of heightening thé material incentives in enter~ — prises, Numerous Soviet economists have criticized the stimulants still _ employed today in the economy of the USSR to incite the enterprises (?) to carry out the plans. This criticism is in general pertinent, It has but. to repeat what the anti-Stalinist Marxists have said critically. for many years, Yet it is only necessary to examine closely the arguments of these economists to see that what is invulved in reality is heightening material incentives for the bureaucrats, for whom the growth of revenues must in some way be the essential stimulus for the expansion of production in the enterprises,
This is where certain partisans of ‘solf<management, particularly in Yugoslavia, maintain that decentralization of the decisions on_investment would be a powerful guarantee against bureaucratization. This thesis is ased on a fallacy, The Yugoslavs are right in stressing that the power of the bureaucracy grows in relation to its freedom in disposing of the surplus social product, But the technicians.and economists of the. planning commission "dispose" of the surplus product only in the form of figures.on paper; the real power of disposal is situated at the level of the enter~ ‘prises. (5) The more that means other than consumption funds (distributed revenues and social investments) are left at the free disposal of the enterprises, the more is precisely bureaucratization stimulated, at least ina climate of generalized soarotty and poverty; also the- ereater the tempta~ tion becomes for corruption, theft, abuse of confidence, false entries -temptations that do not éXist at ‘the level of the ‘planning commission, if only because of multiple checks, The concrete experience of Yugoslav “decentralization” has shown, moreover, that it is an enormous source of inequality and bureaucratization at ‘the level of the enterprises,
But doesn't the possibility of complete centralization of the means of investment at the state level create the danger of the whole political economy favoring the bureaucracy, as was the case in Stalinist Russia? Obviously. But then the cause does not reside in the centralization itself, it lies. in the absence of workers democrac oliti-
on the national
(e)this obviously does not apply tv cases where raw materials, equipment goods and sometimes even means of consumption are centrally distributed, becoming veritable hotheds for germinating corrupted bureaucrats,
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cal level.(6) This means that a genuine guarantee against bureaucratization depends on workers management at the enterprise level and workers democracy at the state level. Without this combination, even the autonomy of the enterprises will eliminate none of the authoritarian, bureaucratic and (often) erroneous character of economic decisions: made at the govern- -; ment level of the plan. With this. combination, the. centralization of investments. -~- priorities being democratically established, for example through a national congress of workers councils -= would not encourage bureaucratization, but on the contrary suppress one of its principal sources,
‘The Law of Value and Self-Management
"He ightening material incentives" in the enterprises cannot be «a. "stimulant" in the question of investments, But "heightening material. incentives" in the self-management collectives can actually stimulate continual growth of production and productivity among the enterprises,
_ Certainly, under a regime of genuine socialist democracy, creative enthusiasm, the free development of all the capacities of. invention and: organization of the proletariat, constitute a powerful motor for the growth of production. But it would be a grave idealist and voluntarist error to suppose that in a climate of poverty -- inevitable in an underdeveloped country immediately following the victory of the socialist revo-= lution ~~ this enthusiasm could, last. Tong. without a suffictent material , substructure.
The example. of the Soviet Union, where the proletariat: gave proof of” an enthusiasm and spirit of self-sacrifice without parallel in-the first ' years-after the October Revolution, is instructive in this respect: “a yong period of deprivation ended inevitably in mounting passivity of the workers, daily material concerns. taking precedence over attentiveness to meetings.
It is therefore imperative to link self-management. to the. possibility for the workers to immediately judge the success. of each effort at increasing productive by the elevation of their standard of living. The simplest and most transparent technique is that of distributing a part of the net revenue of the enterprise among the workers in the form of one or more months of bonus wages, the amount increasing or diminishing automatically. with the level of revenue, The hereasing collective material interest of the workers in the management of the enterprises moreover is superior to piece wages, inasmuch as it does not introduce division and conflicts inthe workers collectivity, inasmuch as it corresponds better to contemporary technique, which places less and less importance on individual output. and.
(6)" only: ‘tie “gosordination ‘of these three elements, state planning, the market and Soviet democracy, can assure correct guidance of the. economy. of. thé epoch of transition and assure, not the removal of the imbalances in a few years (this is utopian), but their diminution and by that the simplification of the bases of the dictatorship of the proletariat until the time when new victories of the revolution will widen the arena of socialist planning and reconstruct its system," (Leon Trotsky: "The Soviet Economy in Danger." Available in French in Tome I of Ecrits 1928-1940, p. 127.)
more and more importance on the rational organization of labor,
Self-management (and not mere workers control) seems to be the ideal model for organizing socialist enterprises, But it by no means hinders more or less unlimited competition among enterprises, which flows from their autonomy in-the domain of prices and investments. This autonomy cannot but. reproduce a series of evils inherent to the capitalist regime: monopoly positions exploited in the formation of prices and revenues; . efforts to defend these monopolies by "hiding" discoveries and technical improvements; waste and duplication in the field of investments; high cost of errors in decision, revealed a posteriori on the market (including the shutting down of enterprises); reappearance of unemployment, etc., etc. Useless and detrimental from the economic point of view, it by no means constitutes a sufficient guarantee against bureaucratization, as we have indicated above, . ae
In this connection, the polemic of Lenin and Trotsky against the theses of the "Workers Opposition" is still completely valid, Marxism is not to be confused with the anarchical doctrine of trade-unionism, The genuine guarantee of workers power lies on the political levels it is on the state level that it must be established; any other solution is utopian; that is, unworkable in the long run and a source for the reappearance of a powerful. bureaucracy. oe -
For all these reasons, self-management by no means bars wider recourse to the "law of value" in relation to centralized planning.(7) The fundamental data of the problem.remain the same. It is necessary to carry out strict calculations of production costs to show in the case of each conmmo~ dity- whether its production has béen subsidized or not. But nothing calls for the conclusion that prices must be "determined by the law of valus," that is, by the law of supply and demand, If such a conclusion still has some meaning with regard to the means of.consumption, it is senseless for the means of production which, we repeat, aré not commodities, at least in the great majority of cases, And even means of production which are still commodities -- those produced by the private or co-operative sector for delivery to the state, and those which the state furnishes to private enterprises or co-operatives -~ cannot be "sold at their value" without encourag= ing under. certain conditions private primitive accumulation at the expense of socialist accumulation, But, if the means of production are not sold
_(7)Certain Yugoslav authors take quite correct positions in this respect. ‘See for example Dr, Radivoj Uvalic: "While the open market can be widely utilized, it cannot be the sole or even the principal regulator of the sociomeconomic relations of a socialist country." And. again: "The importance of -the planned guidance of economic development under the conditions of socialism lies first of all in the possibility that is offered of considering profitability from the point of view of the economy as a whole and not from the point of view of each particular unit of the economy. ., This is the case in all branches of high concentration of capital Le], such as the production of the means of production and raw materials, which could never be developed sufficiently on the basis of the accidental play of the. market, with the rate of profit as the sole stimulate." (In: Socialist — Thought and Practice, No. 6, 1962, pp. 47 and 55,)
Nat their value," the "value" of the means of consumption is itself pro=-- | foundly modified.
Prices are, then, - instruments of socialist planning and cannot be anything else in the @poch. of the transition from capitalism to socialisn. if you say instrument of planning you likewise say instrument for determining the. distribution of the national revenue between consumption andinves omens an instrument. for determining the distribution of revenues among the. different classes and layers of the nation. To leave the determination of this distribution to the “law of value," is to leave it in the final analysis to the "laws of the market," to the "law of supply and . demand," that is to economic automatism, And economic automatism would rapidly take us" back to. an economy. of the semicolonial type.
But to say that prices cannot be determined by the law, of value, does. not at all signify that they can be independent — of the latter, Society can never distribute more values than it has created without progressively destroying its, accumulated wealth and impoverishing itself increasingly in the absolute sense’ of the term, The total sum of prices must therefore be equal to the total sum of value of the commodities produced (granting that there has been no monetary: depreciation). The distribution of certain products =~ in goods or vouchers -=- below their value (subsidies!) auto- ~ matically signifies a distribution of other products above their value, Without strict calculation of production costs3; without bookkeeping aided : by an objective criterion; without a kind of double entry system. that. faithfully registers, for each product, alongside the price. fixed by the — state the real cost and the subsidy (or. the: tax),there is: not only-no apa possibility for genuinély scientific planning, - -there is above all no stimalus for the fundamental economic dynamic of the epoch of transition -- the dynamic that progressively elevates one new branch of industry. after another to the point of rendering it "competitive" in relation to prices on. the world market, up to the time socialism announces its. next triumph when socialist industry as a whole operates with a productivity superior bo that of the most advanced capitalist industry. .
At that moment, the ‘Wlaw of value" could theoretically govern the dynamic of the workers state (or more exactly: the workers states as an international whole; because it appears excluded that this situation could be first obtained "in a single country"). But at.the precise moment when. it is on the point of triumphing, its reason for being disappears, The highest level of productivity attained under capitalism in all its branches commodity production withers away. . In the workers state, "the law of value" cannot channel investments except to the precise degree fnat it withers away and to the degree that along with it all the economic categories, products of a relative scarcity of material resources, likewise wither away.’ December 1, 1963 . CO [The end, |
Directeur-Gérant Pierre FRANK,