Ernest Germain The Cuban magazine Nuestra Industria - Revista Econonica, organ of the Ministry of Industry, published two polemical articles in issue No. 3 (October, 1963) of great interest, one written by Ernesto Che Guevara and the other by Comandante Alberto Mora, Minister of Foreign Trade. This polemic testifies to the vitality of the Cuban Revolution in the field of Marxist (heory, too. It deals with a number of questions of the utmost importance in the construction of a socialist economy: role of the law of value in the economy during the epoch of transition; autonomy of enterprises and self-management; investments through the budget or by means of sel{f-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 in the Soviet Union in recent vears.
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 extenl thal 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. * First published in Fourth International No. 18.
Li
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 ?
Sialin himself, while muddling the problem, had to admit a fact which the Khrushcheyist economists are nevertheless beginning to bring into queslion; namely, thal in the "socialist" economy, the law of labour-value cannol 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 prafit is above the average and production increases there. Capital recedes from the sectors where tne rate of profit is below the average, and production decreases there lat least relatively). When the means of production are nationalized, so that there is neither a markel for capital nor its tree entry and withdrawal, nor even the formation of an average rate of profit with which the rate 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 invesiments, 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 2 concentration of investments in the production of raw materials that these countries are underdeveloped. To escape from underdevelopment, to industrialize the country, means to deliberalely orient investments toward the sectors that are least profitable" for the time-being according to the law of value, but more profilable according to the criterion of the long-term economic and social development of [he country as a whole, When it is said that the monopoly of foreign trade is indispensable for industrializing the under-developed
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 lcasl alter investments on the national sealc, once world prices are Jeft aside? This is wrong again, The iadustrialization of an
underdeveloped country cannot be carried oul rapidiy and harmoniously except by deliberately violating the law of value. In an underdeveloped country, and precisely because of its underdevelopment, agriculture tends from the beginning to be more “profitable than industry, handicrafts and small industry more “profitable” than big industry, light industry more "profilable” than heavy industry, the privale seclor more “profitable” than the nationalized sector. To channel investments according to the “law of value”, that is, according lo the law of supply and demand of commodities produced by different branches of the economy, would imply developing monoculture for the export trade by priority; it would imply preferential construction of small shops for the local markel rather lhan steel plants for the national market. The construction of comfortable lodgings for the petty-bourgeais or bureaucratic layers (an investment corresponding to “effective demand”! would have priorily over the construction of low-cost homes for the people which clearly must be subsidized. {n short all the economic and social evils of underdevelopnient 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 fiogether wilh the monopoly of the latter), is precisely {o creale the conditions for a process of industrialization that escapes from the logic ~~ ot 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 unemploymenl, the reduction of technological backwardness, the suppression of the foreign grip on the national economy, the guarantee of the rapid social and cultural rise of the masses of workers and pocr peasants, the rapid suppression of epidemics and endemic diseases, elc., el¢,
That is why the industrialization of the workers slates follows a different road from that of the capitalist countries where industries are buill beginning with the sectors that will most easily salisfy ‘effective deniand".
To violate the law of value is one thing; to disregard it is something else again. The economy ola workers state can disregard the law of value only at the price of losses to the economy which could be avoided, of useless sacrifices
imposed cn the masses, as we shall later demonstrate,
What does this mean? In the first place, that the whole economy must be carried on within the framework of a strict calculation of the real costs of production. These costs will not determine investments; these will not automatically go toward "the least costly’’ projects, But to know the costs means to know the exact amount of subsidies which the collectivity grants the seclors which it has decided to develop by priority. In the second place, that it is necessary to have a stable yardstick for these calculations; without stable money, no rigourous planning. In the third place, that all sectors where economic or social priorities do not dictate any preference are to he actually guided by the "law of value", (for example, different crops aiming at the domestic market). In the fourth place, so long as the means of consumption remain commodities, and aside from the commodities and services deliberately subsidized or distributed free by the state (pharmaceutical products, school and training materials, books, etc.), the preferences of the consumers will freely operate on the market the law of supply and demand will affect prices, and the plan will adapt its projected investments to these oscillations (within the limits of what is available in finances, equipment, raw materials, etc.). In the light of these initial remarks we can consider the importance of the two problems raised in the Guevara-Mora polemic: What is value? Are means of production commodities in the transitional epoch? Mora affirms that value is not
essentially abstract human labour; that it is "a relation existing between the limited disposable resources and the growing needs of man." (p.15). Still better: he holds that value is a "eategory created by man under certain conditions and for certain(!) ends." (p. £5).
Ii is clear that we are faced here with a subjective deformation of the Marxist concepi of labour-value, of which Marx specified the essence to be abstract human labour. It is not by chance that Mora refers to the “neo-Marxist" Soviet economists (2), whe haye been attacked, in the USSR itself, and rightly so, as wanting to introduce surreptitiously the marginal theory of value. His conception, according to which the "law of value is the economic criterion for regulating production" in the epoch of transition {p.17) - while he affirms that it is not the only regulator - necessarily involves the notion according to which ‘exchange of the means of production" occurs even when these are completely nationalized, that "sale of commodities" occurs even when these means of production pass from one nationalized enterprise to another, and that the "contradictions" between the state enterprises justify the assertion that a “change in ownership" occurs at the time of these exchanges (p,19}. All these affirmations are contrary to the reality and to Marxist theory.
On all these questions, Che Guevara is entirely righl against Mora.
Mora states that if in investments, one leaves aside the law of value, one must pay “the price"; in doing this, you automatically limit the social resources available to satisfy oiher needs. This is true, and we, likewise, underline the necessity for strict calculation of production costs in all fields. But in limiting oneself to this economic truth, the social content of the epoch of transition is done away with; that is, in abstracting from the class struggle, Mora leaves out 2 whole important side of the problem.
In fact, it is impossible to operate in the economy of the epoch of transition - any more than in any other economy containing different social classes - with aggregates like "social revenue", “social costs", "social price of investments", without at the same time posing the question, "Who is to pay this price to whom ?"
The society of the epoch of the transition from capitalism ta socialism is not homogeneous, In conducting an appropriate policy of investments, of prices, wages, foreign trade, etc., the workers state can act in such a way that the social bene- {its of priority investments (numerical reinforcement of the working class; elevation of its standard of living, skill, culture and consciousness; reinforcement of its leading role in the state and economy; accentuation of its participation in politicai life, etc., etc.) are paid economically by other social classes: the residue of the former owning classes; imperialism: the small commercial entrepreneurs and independent peasants, In an expanding economy, this economic price, paid particularly by the merchants, artisans and independent peasants can moreover be accompanied by a rise in their standard of living, on condition that this rise is less than it would have been in the framework of the "free play of the law of value” (thanks, for example, to a progressive income tax). (3)
THE LAW OF VALUE AND FOREIGN TRADE
All the preceding evidently constitutes only a general framework for replying to the specific problems which the question of economic calculation and the orientation of investments raises in each particular workers state. Here Mora is right when he stresses (p. 18} that ina small country like Cuba, which depends strictly on foreign trade for the current functioning of its industry (spare parts and raw materiais) and for the equipment of its new enterprises, the necessity for rigorous economic calculation is imposed with all the more reason
I
ise
‘nun ina big. largely awarchic country like the Saviet Union, Pxporls are made accordmng to prices on the world market. So that these will nol constitule a constant drain on the naltional cconomy (fhey must be mei in any case in order to keep industry an od industrialization going through imports}, it is necessary that the production costs of exporled goods should as 4 whole be below the prices obtained on the world market. It is necessary to ftx the objective on progressively suppressing all exports at a loss, so thal exports are not only a means of supplying the national economy but in addition an important source of aecctuiulation, a means of defraying part of the expense of industrialization - a part of the costs of not observing the law of value on the national market! - from abroad. The tendency fer current prices of sugar 1o rise on the world market creates, morenver, a favourable framework for the success of sucha policy. he progressive diversification of exports, to render the Cuban ecanoimt independent of future fluctuations of current sugar prices 4 must point to the selection of viher eapurl, prod. ere production costs remain below ihe prices sttained 2broad “inal is, average prices on the werld trearkell,
But Mora mixes sm che need to carry out all these calculations in the most strict way with the ex’ension of the field of application of the law of value in the Cuban economy, The two phenomena are not identical: thes can even be directly contradictory,
The law of value cetermines the exchange value of commodities according to (he quantity of labour socially necessary to produce them. The concept of "socially necessary” labour is determined in turn by the average tevel of the productivity af labour in a eountry, and by lhe concept of the effective demand of soviety - which must never be concounded with human needs or social needs from an objective point “ view. In an under-~ developed country like Cuba, ali production of many indusirial branches can correspond to 2n “effective der uand", thal is, all labour in these branches can appear as “socially necessary? despite a very low level of productivi:y., The reference to the Law of value. fur from thereby resolving the problem of rapid improvement in the productivity of Inbour, of the technological transformations which these industries mus! undereo, can only cbscure il. Because the law af value will have a tendency 10 keep alive archaic enterprises, as long as the state of seareily exists, from the monient there ceases to be free movement of capital and [ree imports of commodilies which could stimulate compelition with these enterprises,
2t Far from being a irelé :
dependence of Cuba in iu
of economic calculat.
which could provide @ ch
ently of any rigid “liw’, Tne :
country's supply of spare paris anc ra‘
certain volume of exports, @ven li these
loss. The necessity io inaincain ang io de velop che existing level of industries dependent on foreign Supplies iniposes searching, as guickly as possibile, for projitable exports in relation to prices on the world is
: aaphcatinn ¢ at ss haw of value, the
ies the uecessily
ulce
iarkel - even TP Unis 1eans ‘switching investments 1 ranches that ire dtreidy piotilable in relation to the national market ‘Uranenes Und | sell their commodities ai their exchange value .
bility of exporting at a protit, of gaining Suppleineniacy re. sources {frum exports, of trausforming trade info a curstan souree cf socialist accumulation, will, moreover pers jusi the liberation of the ¢conoiny trum the tyranny al the “law of value", that is he development of new industries despite the fact that their production costs wi the begiuraing well be ngher than the prices of imported gruaucis, without lowering Lhe slandard of living or the rate of accumuiailus i the country. This is an aspect of the real dialectics ot the dependence on foreign trade and the phiy of the law of value thai is
hivaghe:
decidedly more couplex than Comrade Mura tt
THE LAW OF VALUE AND AUTONOATY OF GECISIGN AT THE ENTERPRISF, LEVEL
In the debate which as raced in SOme Of ihe WOrkKels Staten, the problem of the area of applicetion of fre law ol value is intimately linked wilh the problen. of autonun:y of devisnmn at the enterprise level in the field of investment, a a Waoelay authors nave even formulated with regard tu this 4 v
new dogma which requires erilical analysis, "Withe
right of the seil-management colicclives ic dizporte «
derable part of the social surplus prodacé, tic
management," ‘4! “Pris analysis must exainine the
fron. two aspects: economic efficicney ¢ /
one inves! mel project gather than i
politieal efficiency (sucvess in lhe ciruggle auiinst
bureaucracy and bureaucratizatisn; .
The more backward 2 country ts,
almost universil scarcity rule nat
duction sector bui also for touch 1 ott ry
and the nore d dei
more detrinents
collectives {o determine for themselves the projects for priority of productive investments.
it is evident in fact that under conditions of almost general searcily of industrial commodities, almost all the investment projects can be economically profitable, no matter how gross the economic errors that are committed. Almost every profitable industrial or agricultural enterprise (providing funds {or investment) is like an island in a sea of unsatisfied needs. The natural tendency of self-investment is therefore to attend to what is most pressing, both locally and in each sector. In other words: if the self-management 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 lack 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 applied! 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 planning 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 characterised 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 devefopment between the industrialized localities and the nonindusLrialized localities, the inequality of development and of revenue between the archaic enterprises which enjoy only an average level of productivity and the enterprises technologicaily “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, favoured and unfavoured from the point of view of iocation, 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.
The economic logic of a planned economy therefore speaks completely in favour of productive investment by budgetary means at least for all the big enterprises. What must be left to the enterprises is an amortization fund sufficiently large to permit modernization of equipment with each renewal of fixed equipmer (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 awhole, 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 the material incentives in enterprises. Numerous Soviel 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 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 involved in reality is heightening material incentives for the bureaucracy 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 self-management, particularly in Yugoslavia, maintain that decentralization of the decisions on investment would be a powerful guarantee against bureau- Cratization, This thesis is based ona fallacy. The Yugoslavs are right in stressing that the power of the bureaucracy grows in relation to its freedom in disposing of the social surplus 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 enterprise. (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 generalised scarcity and poverty: also the greater the temptation becomes for corruption, theft, abuse of confidence, false entries - temptations that do not exist at the level of the planning commission, if only because of multiple checks. The concrete experience of Yugosiav "decentralization" has shown, moreover, that it is an enormous source of inequality and bureaucratization at the level of the enterprises.
Bu: doesn't the possibility of complete centralization of the meunus of investment at the slate level create the danger of the a i policy as a whole favouring the bureaucracy, as was ‘he case in Stalinist Russia? Obviously. But then the cause dies not reside in the centralization itself, it lies in the absence ; rkers democracy on the national political level, (6) This reans that a genuine guarantee against bureaucratization depends
surkers management at the enterprise level and workers democrucy ul Lhe siute level, Without this combinalion, even lhe ausonomy of the enterprises will eliminate none of the authoritarianu, bureaucratic and (often} erroneous character of economic decisions made ai the government level of the plan. With this combination, the centralization of investments - priorities being democratically established, for example through a national conzress cf workers councils - would not encourage bureaucratization, but on the contrary suppress one of its principle sources. VIE LAW OF VALUE AND SELF-MANAGEMENT
“Heichvtening material incentives” in the enterprises cannot be a ‘'stirmulant’™ in the question of investments. But “heightening multerial incentives” in the self-management collectives can actueiiy stimulate continual growth of production and productivitv among the enterprises.
Cerwainly, under a regime of genuine socialist democracy, ereative enthusiasm, the free development of all the capacities at invention and organisation of the proletariat, constitle 4 powerfel motor for the growth of production. But it would be @ crave idealist and voluntarist error to suppose that in a climate of poverty - inevitable in an underdeveloped country immediately following the victory of the socialist revolution - this enthusiasm could tast long without a suiticient material sub- SLY uct ture, —~
The exsumple of the Soviet Union, where the proletariat gave prouf of an enthusiasm and spirit of self-sacrifice without parallel in the first years after the October Revolution,
is instructive in Lhis respect: a long period of deprivation ended inevitably in mounting passivity of the workers, daily miuterial concerns taking precedence over attentiveness to meetings.
lt is therefore imperative to link self-managenient to the possibility for lhe workers to immediately judge the success of each effort at increasing production 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 increasing 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 in the workers collectivity, inasmuch us it corresponds better to contemporary technique, which places less and less importance on individual output and more and more importance on the ratiional organisation of labour,
Self-management {and not mere workers control: seems to be the ideal model for organising socialist enterprises. But it by no means hinders more or less unlimited compctition among the 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; cfforts to defend Lhese 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 markel {including the shutting down of enterprises}; reappearance of unemployment, etc, etc. Useless and detrimental from the cconomic point of view, it by no means constitutes a sufficient guarantee against bureaucratization, as we have indicated above,
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 doctrine of anarcho - syndicalism, ‘The genuine euarantee of workers power lies on the political level; 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 powertul bureaucracy.
For all these reasons, self-management does net at all imply wider recourse to the "law of value" in relation to centralised 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 commodity whether its production has been subsidized or not, But nothing calls for the conclusion thal prices must be ‘determined by the law of value”, that is, by the law of supply and demand, If sucha conclusion still has some meaning with regard to the means of consumption, it is senseless for the means of production which, we repeat, are not commodities, at least inthe great majority of cases. And even means of production which are still commodities - those produced by the private or co-operative sector for delivery lo the state, and which the state furnishes
to private enterprises or co-operatives - cannot be "sold at their value" without encouraging under certain conditions priyate primitive accumulation at the expense of socialist accumulation. But, if the means of production are not sold "at their value", the value" of the means of consumption is itself profoundly modified.
Prices are, then, instruments of socialist planning and cannot be anything else in the epoch of the transition from capitalism to socialism. If you say instrument of planning you likewise say instrument for determing the distribution of the national revenue between consumption and investment, an instrument and investment, an instrument for determining the distribution of revenues among the diffe- 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 semi-colonial 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!) automatically signifies 4 distribution of other products above their value, Without strict calculation of production costs; without book-keeping 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 possibility for genuine scientific planning, there is above all no stimulus 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 productivily superior to that of the most advanced capitalist industry.
At the mament, the “law 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 firgt 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 leyel of productivity attained under capitalism in all its branches cannot be surpassed without approaching such a level of abundance that commodity production withers away. inthe workers state of ‘law of value" cannot channel investments except to the precise degree that 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.
NOTES
(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 econo-
mic 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 accumu-
lation and planned distribution. This role must be in-
creased 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 the latter enter in..... Tf the domes-
tie Soviet market is 'freed' and the monopoly of foreign
trade suppressed - exchange between the city and the
countryside will become much more equal, the accumu-~
lation of the village (1 refer to the capitalist accumulation
of the farmer, the 'kulak’) will follow its course, and it
will scon be seen 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 1928-40, Tome I, p. 106)
(2) Among others Novochilov, Kantorovitch and Menchinov.
This question likewise underlies the famous debate on the
possible use of profit as the sole criterion in carrying
out the plan. In reality these economists are the spokes-
men of the economic bureaucracy, who demand increased
rights for the directors of enterprises - particularly the
right to freely dispose of a part of the “indivisible
funds" (fixed equipment),
(3) From 1924 ta 1927, the Stalinist faction violently accused
the Left Opposition - Preobrazhensky in particular -
with wanting “to increase the prices of industrial pro-
ducts’, Preobrazhensky had simply proposed that indust-
rial products could be sold "above their velue" to the
(4)
village, which could have been tied in perfectly with a progressive lowering of the sales price in view ou? tie rapid growth of the productivily of labour. But when the Stalinist faction made the turn to accelerated industrialisation, it increased the prices of industrial consumers goods through extremely high indirect taxcs, While in 1928, the tax on turnover was not above 17. %7. of the real turnover of retail trade, it rose to 78.1% in 1932, and in 1936, the nominal turnover of this trade was LOT billion rubles, of which taxes accounted for 66 billion rubles aiid the real turnover only 41 billion! (L.H. Hubbard; Trade and Distribution in the Soviet Union).
Thus Milentiji Popovic, ina «rticle titled “Self-
management and Planning", "On the other hand, in the sector of expanded social reproduction, in perfecting the system of investment on the basis of the new relatiuns, our resulls are less conclusive, although the first steps have been taken in this direction, The establishment of non-administralive relations, of economic relations, in this sphere, reverts quite simpiy to lhe establishment of credit-interest (!) relations, and to taking them as the basis,.....
“One must first of all counteract the contradiction which arises from the fuct that the resources serving soc reproduction are deducted exclusively through administrative measures (taxes, duties, conitribulions’ ‘hus leaving free the organization of labour without the Litter on the other hand becoming the 'proprietor': the organization of labour evolves, in fact, into a unicue system of credit in which these resources are at one und the same time ‘theirs’ and 'common' farticle ll',..,..
It is possible to avoid, on the other hand, having subjective and politica! cunsiderazans as Une only ones to be taken into consideration at the time of the adoption of the decisions concerning investmenis, It goes without saying that this method cannot and must noi ever be pushed to its final conclusion. Buta system can be constructed in which the political decisions will bear on the peneral orientation of the political economy while the distribution of the means destined for iInvesiment is carried out in accordance with the credit mechanism, according to financial and material (:) criteria fixed with more or less precision. In operating im this way the process of expanded reproduction is lixewise depoliticalised", This ‘depoliticalization’ is not absolute, It is carried out to the degree
sTz
sphere as in the others." (My emphasis) - Current Questions of Socialism, No. 70, July-Sept. 1963, pp. 67-8. This obviously does not apply to tases where raw materials, equipment goods and sometimes even means of consumption are centrally distributed, becoming veritable hotbeds for germinaling corrupted bureaucrats,
"Only the co-ordination of these three elements, state planning, the market and Soviet democracy, can assure correct guidance of the economy of the epoch of transition and ussure, not ihe removal of tne imbalances ina few vears ‘this is utopian’, but their diminution and by that the simplification of the bases of the dictatorship of the proletariat until the ime when new victories of the revolution will widen the arena of socialist planning and reconstruct its system."’ {Leon Trotsky: ‘The Soviet Feonomy in Danger’. Available in French in Tome l of Ecrits 1928-1940, p.127},
Certain Yugoslav authors take quite correct positions in this respect. See for example Dr. Radivoj Uvalic "While the open market can be widely utilized, ii cannot be the sole or even the principle regulator of the socio-economic relations of a socialist country," Andagain: "The iniportaunce of the planned guidance of economic development under the condilions 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 (?}, such as the production of the means of production and raw materials, which could be never developed sulficiently on the basis of the accidental play of the market, with the rate of profit as the sole stimulate, “