State ownership is not sufficient to define the transitional economy

(Reply to Sal--Joseph Green, July 11, 1999)

--from Communist Voice #22,. October 9, 1999--


Sal's theses
(A) Redefining the word "socialism"
The transitional period
A multitude of socialisms
(B) The underlying economic structure of the state sector
(C) The character of the state sector isn't determined by whether it has some social programs
The state sector must be transformed
(D) Profit, value, and other capitalist categories
(E) Sal's capitalism without the consequences of capitalism
Exploitation becomes a good thing
Redefining profit
The two levels of profit
Surplus value and profit
Surplus value and the state sector
The two levels of value
Value and the office Christmas party
The revelry continues
(F) Socialism as "proletarian capitalism"
The transitional economy
"State capitalism under workers' rule"
Appendix: "From each according to his ability, to each according to his work"


. Various study group minutes from last year and Sal's longer document of March 1999 are part of an ongoing discussion about the transition to socialism, which flared up again over my two-part article of last year, entitled "Preobrazhensky--theorist of state-capitalism". (Part one, subtitled "Does the existence of nationalized industry prove that a country is socialist?", appeared in the April 15, 1998 issue of Communist Voice, and part two, "Does the existence of nationalized industry prove that the capitalist law of value has been abolished?", appeared in the August 1, 1998 issue.) It is useful to look further into this controversy, as the views of Preobrazhensky still are important today.

. First let's recall that Preobrazhensky was a Soviet economist whose main theories were developed in the 1920s. He held that the Soviet economy consisted of two sectors, a capitalist sector and a socialist sector (which was the state sector), and that the progress towards full socialism could be measured mainly by the growth of the state sector. The Soviet state sector clearly made use of financial accounting, buying and selling, profit-making and commodity exchange, and the extent of working class control was limited. But, in Preobrazhensky's view, these capitalist features were mere surface appearances; they masked the fact that, in essence, the state sector had supposedly gone beyond commodity production. He thus defined the Soviet economy as a "commodity-socialist" economy, where the private sector still had commodity production, but the state sector had supposedly achieved socialism in its internal relations. The transitional economy was supposedly a hybrid of the already-existing socialism in the state sector and the commodity production in the private sector of the economy.

. Marx and Engels held that, after the working class seizes power in a socialist revolution, it builds the state sector as part of the working masses establishing a unified direction of the economy as a whole. But they distinguished between different types of state sectors and state ownership; they opposed the "state socialism" of their time which lauded the state sector as inherently socialist in and of itself. They distinguished between state sectors built by capitalist governments and those to be built by the revolutionary proletariat. Nor did they believe that the proletariat seizing power automatically meant that the state institutions became its tool; they held that the proletariat had to smash the old state machine, and that even the revolutionary state would itself eventually fade away. Thus, in the Marxist view, although a growing state sector would be a characteristic of any transitional economy, the size of the state sector itself didn't prove whether an economy was capitalist or moving towards socialism. The crucial issue is whether a true social control of production, a control by the entire working population, was coming about. The state sector itself had to be evaluated according to this criterion.

. Preobrazhensky went only part-way with Marxism. He agreed with Marxism on the need, after a socialist revolution, for the state to take over the main means of production. However, he held that the state sector was already, in its internal relations, socialist, and not simply a transitional institution. Nor did he see the need to evaluate the real relationship of the state sector to the working class. He assumed that the increasing size of the state sector would automatically solve the problem of working class control of economics and politics. So long as the old bourgeoisie had been overthrown, he assumed that the state sector was irrevocably socialist, no matter whether the workers were becoming more and more passive and no matter how far the state sector was managed according to money and profit-making.

. History wasn't kind to Preobrazhensky's theorizing. Although the Soviet state sector grew, the role of the working class diminished in the Soviet Union. Although the old bourgeoisie became more and more irrelevant, a state capitalist order was built, based on a strong state sector. Such was the Stalinist system in the Soviet Union. Nevertheless, at the outset of the first Five Year Plan, as it became clear that the Soviet state sector would become utterly predominant, the Trotskyist Preobrazhensky abandoned his critique of Stalinism. Although he had misgivings about particular Stalinist economic policies, he had no fundamental critique of the Stalinist economic system that was being built up.

. Thus, despite the fact that, as one of his political murders of the 1930s, Stalin eventually had Preobrazhensky shot, Preobrazhensky's theorizing has survived as a justification of state capitalism. It provides a communist coloration for the idea that the degree of socialism in a regime can be judged mainly by the amount of state ownership, irrespective of how the state sector is run or the overall role of the working class in the economy and society. Indeed, in these days of neo-liberalism and privatization, when the bourgeoisie has pruned the state sectors of the Western capitalist economies, state regulation and ownership, in itself, may appear to many activists as more radical than it really is. Instead of analyzing why the old state-capitalist economies in Russia, Eastern Europe, and elsewhere collapsed, and why the socialist pretensions are growing thinner and thinner in similar economies like those in Cuba and China, there is a strong tendency to look back nostalgically on these economies as at least providing some social benefits. In this situation, theorizing like that of Preobrazhensky is used to give a scientific cover to such nostalgia.

. Sal disagrees with my critique of Preobrazhensky's theorizing. Like Preobrazhensky, Sal sees the state sector as the defining economic feature of socialism. From this "state socialist" point of view, he has been left, like Preobrazhensky, with no way to distinguish economically between state capitalism and either socialism, or a transitional economy moving towards socialism. Thus he has denigrated the anti-revisionist analysis of the Cuban and other state-capitalist economies, claiming that there has been no study of the "underlying economic structure" and hence of the "fundamental level of economics". For Sal, the only economic criterion is state ownership or private ownership; he rules out research into the class structure and methods of operation of the state sector as supposedly dealing with non-economic or superstructural issues. It may look like many articles in Communist Voice, like my article on Preobrazhensky, deal in detail with economic realities, and not mere political policies, but Sal waves this mass of material aside as not satisfying his definition of "economic". As a result, no matter how much economic research is done concerning the state sector in Cuba, the Soviet Union, and China, no matter how much it is shown that a new bourgeoisie rules over the working masses, no matter now much it is shown that these state sectors display the capitalist anarchy of production, Sal holds that there has been no criticism of Cuba, the Soviet Union, etc. on an economic level, but only political criticism of the lack of democracy.

. Sal does have disagreements with Preobrazhensky on, for example, whether there is commodity production under socialism. Preobrazhensky held the Marxist view that socialism means the abolition of commodity production, and therefore capitalist categories like "value" and "profit" couldn't apply to socialism. Thus, in order for Preobrazhensky to prove to his own satisfaction that the Soviet Union of the 20s was a hybrid "commodity-socialist" economy, he had to show that there was indeed a socialist sector, that is, he had to show that the state sector was free from commodity production.

. At one time Sal seems to have held a similar view concerning the lack of commodity production inside the state sector. Earlier in the discussion concerning Preobrazhensky, Sal held that the law of value didn't apply in vertical monopolies in capitalist countries and that it probably didn't apply in state capitalist economies either. But now Sal seems to hold that value, profit, and commodity production in general are all inevitable for a long period in any state sector; and he doesn't challenge the economic research that shows that they existed in the Cuban and Soviet economies. But simultaneously he now holds that value and profit and commodity production would also exist in socialist economies.

. This leaves him with a number of problems. He holds that the transitional economy is "proletarian capitalism", which he defines as a "capitalist and communist" hybrid. But what is the communist part of this hybrid? Preobrazhensky also held that the transitional economy was a hybrid economy, the "commodity-socialist" economy, but Preobrazhensky defined each part of this hybrid: Sal, on the contrary, simply says it's a hybrid and leaves it unexplained. For Preobrazhensky, the communist part was the state sector, while the commodity part was all the rest. Unlike Preobrazhensky, however, Sal believes that all of the "proletarian capitalist" economy is involved in commodity production, including the state sector. So where's the "communist" part of Sal's "capitalist-communist" hybrid? Where is the part that has dispensed with commodity production? In the latest reports of the Seattle study group, Sal still has no answer: he's still searching for his Holy Grail.

. But this means that Sal has no economic foundation for his views about what is or isn't an economy in transition towards communism. All he has is a collection of stock phrases--"proletarian capitalism", "hybrid of capitalism and communism", "initial phase of socialism"--without any content to these terms other than capitalist economy. Meanwhile he dismisses historical research into the experience of the state sector as irrelevant. He ignores the economic history of the 20th century, such as the formation, in the state-capitalist countries, of new bourgeois exploiting classes based on the state sector. As a result, his theorizing ends up as a defense of the standard apologies for the state-capitalist regimes.

Sal's theses

. The main ways Sal backs up his views about socialism are the following:

(a) he redefines the word "socialism";
(b) he holds that the class structure of the state sector is only a political question, and the fundamental economic question is only state ownership versus private ownership;
(c) he finds the existence of social programs sufficient to prove the socialist character of an economy with predominant state ownership;
(d) he holds that profit, value, and other capitalist categories apply to socialism as well as capitalism;
(e) he believes that the possibility of class exploitation can be eliminated while profit, value, and commodity production still exist: for example, he holds that there are two "levels" of profit, only one of which is "the obsession of the capitalist"; and
(f) he holds that the transitional period can be described, simultaneously, as "socialism", "proletarian capitalism", "state capitalism", and a "hybrid" of capitalism and communism.


. Sal's theorizing doesn't rest on a study of economic history, but on defining and redefining words. That is how Sal avoids dealing with the multitude of facts about new bourgeois classes having arisen in various countries, with their power based on their domination of the state sector.Sal holds that such matters are outside the sphere of proper discussion because they are supposedly mere "political" issues, although one would have thought that Marxism shows that one of the most important facts about a society's economics is its class structure. But Sal's method of definition and redefinition of the spheres of economics and politics frees him from even having to comment on the mass of economic material that has appeared in Communist Voice concerning the new, state-capitalist bourgeoisie.

. Moreover, Sal defines the new bourgeois class out of existence. He naturally holds, like most other socialists, that socialism means a society without an exploiting class, but he also redefines "socialism" to simply mean an economy where the old bourgeoisie is gone and there is a large state sector. He then deduces the nature of the economy of such societies from the term "socialist", rather than from what actually happens in them. Since he calls any such society, with its large state sector, "socialist", then such a society must, in his view, actually be socialist. It therefore can't, by the very definition of "socialism", have an exploiting class; it is therefore impossible, by definition, for a new exploiting class to develop based on its domination of the state sector. That was simple, wasn't it? A few magic words, and the economic history of the 20th century vanishes!

. Sal also says that what he is doing is proving that socialism really isn't the abolition of commodity production, but some sort of "intermediary" period between capitalism and the abolition of commodity production. But this is misleading as Sal hasn't shown that the economies he regards as intermediary really are "intermediary between . . . capitalism and communism".The problem with the state-capitalist economies wasn't and isn't whether they should be labeled "intermediary" or "socialist", but that they were and are new forms of capitalist exploitation. So, no matter how Sal relates the concept of socialism to the intermediary period, it says nothing about what, in the real world, the revisionist economies actually were and are.

. Putting that aside for a moment, there is yet a further problem with Sal's definition of "socialism" as the intermediary period. At first sight, it might seem as if Sal simply regarded "socialism" as the protracted period of economic transformation between a working class revolution and the abolition of commodity production. He would thus be replacing the Marxist definition of socialism as a new economic system based on a new mode of production, with the definition of "socialism" as meaning the "transitional" efforts aimed at achieving such a new economic system. But there is more to it than that. Sal also wants to argue that the intermediary economy he is describing--which still has profit-making and commodity production--already has all the good properties of a new economic system. He presents it as already having achieved the elimination of all the evils inherited from capitalism, rather than being an arena of intense struggle between the old capitalism and the rising forces of the working masses.

. For example, in discussing whether there should be special programs to ensure that minorities are able to study at colleges and universities, he holds that this issue only arises under capitalism.He says that under socialism, by way of contrast, "the needs of all those seeking higher education [would] be satisfied", and so there would be no need for special programs. But if he is really talking about the "intermediary" period, then one can't simply assume that the educational needs of all will be satisfied. It will take time after a revolution to fully transform the educational system, as well as to provide the working and living conditions that really allow all working class children to have a higher education. There will be a need for a series of special programs for minorities as well as for workers and their children. (Moreover, if we consider the issue of ensuring that there are positions in the economy for all the graduates of the new higher education, then the full dimensions of the problem become clear. So long as there is a sharp division between mental and manual labor, it is impossible for everyone to get a higher education and a job commensurate with that education, since the whole population can't consist of people in one type of job.) Such special measures will be an important part of the political and economic program of the intermediary or transitional period. But in discussing education, Sal attributes to socialism not "intermediary" features, but the features of a consolidated economic system which has done away with commodity production, done away with the antithesis between mental and manual labor, etc.

. If Sal coupled his definition of "socialism" as the intermediary period with a stress on having people realize that such a "socialism" is not a period where all the ills of capitalism have been solved, but one where dramatic reforms and struggles will be required to step by step eliminate these ills, then he would at least be consistent. It might be questioned whether it was advisable to depart from the Marxist definition of socialism, but one could then take his definition of "socialism" seriously. But such a "socialism" would have to be presented as an economically and politically turbulent period, with advances and setbacks, and with the working class having to organize to overcome the old capitalism that is not yet fully abolished. But Sal doesn't do that.This is seen clearly where, in the same March document where he discusses his concept of socialism, he also advocates that the problem of special measures to help minorities won't exist under socialism, instead of proudly displaying such measures as a characteristic feature of socialism.

. Mind you, Sal is quite aware that the economy still has capitalist features in the intermediary period, which he calls "socialism"; indeed, he also defines "socialism" as "proletarian capitalism". But he doesn't do this to show the internal contradictions and class struggles inside a transitional economy. In his view, it really isn't that serious that profit-making, exploitation, and commodity production still exist. His idea is that they are simply natural features of "socialism", and so the type of commodity production, profit-making and so forth that takes place in the intermediary period is nothing to be worried about. Much of his argumentation is devoted to defining new meanings, or "levels" of understanding, for the words commodity production, profit, exploitation, and value--meanings and levels that are sanitized and safe.

. Turning from the theory of the intermediary period back to the analysis of the revisionist economies, because Sal can imagine a kinder, gentler form of commodity production, profit, exploitation, etc., he rules out any evidence of how commodity production actually works in the revisionist economies. He advocates that the various evils of commodity production that appear blatantly in the revisionist economies don't show their state-capitalist character (in his terminology, their "bourgeois capitalist" as opposed to "proletarian capitalist" character), because "socialism" allegedly also has all the features of commodity production. This is a very old argument in favor of these regimes. And naturally, so long as Sal has nothing to say about what the basic structure of an economy moving towards the abolition of commodity production looks like other than it resembles capitalism, he has no way to distinguish actual intermediary economies from either state-capitalist or "bourgeois capitalist" economies.

The transitional period

. To justify his procedure, Sal implies that his definition of socialism is the same as Marx's. He writes that "Implicit in the description of socialism is the concept: 'from each according to his ability, to each according to his work', and that of communism: 'from each according to his ability, to each according to his needs.'" Sal doesn't make much of an attempt to show why "from each according to his ability, to each according to his work" would apply in his own definition of "socialism". It is supposedly obvious. But his simply saying that this dictum is part of his concept of socialism is supposed to be enough to prove that it really does apply to the economies he regards as "socialist". Moreover, since it is well-known that Marx made use of these dictums about "from each and to each", Sal's adoption of these dictums is supposed to show that his concept of socialism is the same as Marx's.

. However, as I pointed out earlier in this ongoing discussion, Marx held that socialism referred to the abolition of commodity production, not the intermediary period. His two famous sayings about "from each and to each" refer to the evolution of an economic system which has already abolished commodity production. This is set forth by Marx in Critique of the Gotha Program, where he elaborates on these two dictums, and it is further commented on by Lenin in State and Revolution. Marx's view on this subject are reviewed in the appendix to this reply to Sal.

. Sal implies that Marx held that commodity production exists under socialism; Sal writes that "It must by now be seen that I am defining 'capitalism' in its strictest sense; that is, that economic system which produces commodities, and in which labor-power is itself a commodity (which is precisely the case when the principle: 'from each according to his ability, to each according to his work' is in effect)." Sal gives no further elaboration about why he thinks that "from each and to each" means that commodity production exists, so we can only guess at his meaning. Presumably he thinks that this principle mainly means that the workers are paid wages, and so the capitalists themselves can boast of following it. Actually, in Critique of the Gotha Program, Marx says that this principle cannot be put into practice under commodity production. This too is discussed in the appendix.

. However, it is true that in the intermediary period between capitalism and Marxist socialism, commodity production still exists. After the working class seizes power, it cannot establish socialist relations of production all at once. It must not only wrest the economy from the old capitalist class; it must learn now to administer the means of large-scale production; it must gradually transform small scale production; and so on. There is a transitional economy which still uses money and engages in commodity production, but in which the working class is learning how to exercise a unified social control of production. From the Marxist point of view, it is only when the working class is able to supplant commodity production with a unified social control that socialism has been achieved.

. What should this intermediary or transitional period be called? Naturally, after a socialist revolution, the economy and society will be called "socialist" or even "communist" in the popular language and in political discourse. But it will be important, if there is to be any possibility of a materialist analysis of what is happening and any understanding of the class struggles that have to be waged, to recognize that the economy and society are, in fact, in a transitional or intermediary situation, and have not realized Marxist socialism, which perhaps will be called "full socialism".(Thus Lenin wrote in 1918 about the economy's "transitional character" and doubted whether "any Communist [has] denied that the term Socialist Soviet Republic implies the determination of Soviet power to achieve the transition to socialism, and not that the new economic system is recognized as a socialist order." See his Collected Works, vol. 27, p. 335, "'Left-Wing' Childishness and the Petty-bourgeois Mentality".)

. What we shall see is that Sal's method of definition and redefinition wipes out any clear comprehension of what is going on in the transitional period, or of how the transitional period differs from a state-capitalist order where a new bourgeois ruling class exists. Indeed, with his definitions, one can't even talk about this problem, since "socialism" = "transitional" = "state-capitalism" = "large state sector". Thus it is almost impossible to ask the question of what type of state sector exists in a country and what it means for the class structure of the country, because Sal leaves one with no terms to express such distinctions. One has to resort to qualifiers like "capitalism in the traditional, bourgeois sense" versus "capitalism in the proletarian capitalist sense"; "capitalism in its customary, literal sense, the socio-economic commodity-producing system which is by and for the bourgeoisie" (Sal's words) versus, presumably, "capitalism in its proletarian, socialist sense, the socio-economic commodity-producing system which is by and for the proletariat"; capitalism "in its strictest sense" (which, Sal says, includes socialism) versus capitalism in its "customary, literal sense" (which must be a looser sense of the word than capitalism "in its strictest sense", but which is the capitalism which is the "obsession of the capitalist").

A multitude of socialisms

. Now, anyone can define "socialism" as they please. So long as they don't imply that their definition is the same as Marx's (as Sal does), there is no logical error involved, and most political trends don't care about logical consistency anyway--they are into political deception of the masses and use terms for their emotional appeal. Scandinavian and other West European economies have been called "socialist" as they have a larger state sector than the U.S. and far more generous social programs. The late Soviet Union and other state-capitalist countries called themselves "socialist". And Sal's arguments about the state sector as proof of the "socialist" character of an economy could be embraced by a multitude of "state socialists" and apologists of state-capitalist regimes.

. But what I was dealing with in my article on Preobrazhensky was the path towards that revolutionary, or Marxist, socialism which abolishes commodity production. I didn't quibble with Preobrazhensky over definitions, but sought, as far as possible, to use a common terminology with Preobrazhensky so that the differences on matters of economic fact and analysis would stand out. Having this basically common terminology with Preobrazhensky was possible as he identified socialism with the abolition of commodity production, as Marxism does. So instead of getting bogged down in verbal disputes, my article could analyze such matters as how Preobrazhensky's theorizing compared with reality: for example, whether commodity production existed in the Soviet state sector of the 1920s. Sal shrugs this off on the grounds that he can redefine socialism to include commodity production. No doubt, but then the question arises whether such a "socialism" will encompass even regimes which are new forms of exploitation and legitimate targets of proletarian class hatred.

. Indeed, if the state-capitalist regimes, with their economic failures and political tyranny, are really socialism, then not just the bourgeoisie, but the working class won't want "socialism", and shouldn't want it. If this is socialism, then socialism is dead. Sal has no answer to this. At the end of his March statement he writes about people "who continue to ascribe the present indifference and antipathy of the proletariat to the communist call to the successes of bourgeois propaganda" and calls this the "self-serving rationalization of the innocently arrogant who expect of the workers a frivolousness which they themselves too often exhibit." Passionate words, of which they are often all too few in theoretical discussions. But such words are precisely what can and should be said of those who think that the working class will rally to state socialism, despite the experience of the 20th century, if only we redefine it.



. Sal, as we have seen, dismisses the economic history of the state sector in countries like Russia, China, Cuba, and Albania by saying he won't deal with mere political issues. He dismisses the question of whether a new ruling class arose in these countries based on its domination of the state sector as a merely political phenomenon, and sneers at "drag(ging) in the question of bureaucracy vs. democracy". He writes that: "the question of the difference between bureaucracy and democracy was not on the table--I was not addressing the political aspects of socialism at all, but was endeavoring to point out the necessity of understanding its underlying economicstructure."

. Whatever Sal intends, the logical implication of what he is saying is that the revisionist countries are, in fact, economically socialist, although they may possibly have bad governments or, at least, some bad leaders. All that matters is that large state sectors have displaced the former big bourgeoisie.

. Sal appeals to the principle of looking at the economic base. Nevertheless, he immediately departs from this principle by separating the economic base from the question of what class relations exist in the state sector. He sees private ownership versus state ownership as an economic issue (and might, perhaps, also distinguish between what he regards as a socialist state sector and the state sector in a country ruled by a bourgeoisie predominantly based on private ownership). But once the old bourgeoisie is overthrown, class issues drop out of his view of the state sector. He sees nothing but technical or political or policy issues, rather than economic issues, in how such a state sector operates. It is on this basis that he denies that the issue of whether a new bourgeoisie can arise based on control of the state sector is an economic issue. It is as if there are no longer class relations or class struggles once there is extensive nationalization.

. By way of contrast, a number of articles published in Communist Voice have investigated the "underlying economic structure" of the state-capitalist countries such as the Soviet Union, Cuba and China. They have considered both the theoretical side of the transition towards socialism, and the economic experience of various revolutions and of their degeneration. The notable feature of these articles is that they don't reduce problems to merely this or that bad individual or policy, but seek to find out how the economies operate in the countries studied; they are studies of the economic base.

. One of the notable findings of this study is that the state sector does not act as a unified whole in these countries; this is seen in one revisionist economy after another. There is, instead, an extensive anarchy of production in state industry, and in the economy as a whole. The Soviet ministries themselves didn't expect the state enterprises to report proper economic figures to them; the enterprises employed special executives to obtain necessary goods outside the state plan; the construction plans became more surreal from decade to decade; waste of various sorts cascaded throughout the economy; and so forth. These phenomena in the state sector, which Sal ignores, are recognized by serious observers from a variety of different trends, including by pro-Soviet economists. The predominance of the state sector in these countries did not create that unified social control of the economy which Marxist socialism requires.

. But suppose the rule of the new bureaucratic bourgeoisies in Russia and Eastern Europe (yesterday) and China and Cuba (today) was really a mere political issue, and that the state sector was economically socialist despite this rule. Then the question would arise: what good is a supposed "socialist" economy that displays such negative features as these economies did, and that eventually collapses of its own weight? The state capitalist economies, despite periods of impressive growth, also manifest a strong internal tendency to decay. The answer to why the state sector behaves this way in the state-capitalist countries is key to both socialist agitation and socialist theory. This is, in essence, the question of whether the free-market can really be dispensed with.

. Naturally economists of different trends have a different answer to this. While just about all serious observers note the many failures of the state sector in the late Soviet Union, Cuba, and China, they differ in their analyses of why these failures occur. Free-market economists naturally regard them as an inherent feature of state ownership and/or regulation, thus concluding that capitalism can never be dispensed with; technocrats regard them as a result of mistaken methods of planning, thus advocating a renovated state-capitalism; and "market socialists" regard them as proof of the need to have a mixed economy, which they see as a hybrid of the capitalist market and state ownership and/or regulation. All these observers generally separate the question of the class structure of the state sector from its performance.

. In contrast, the articles in Communist Voice have sought to show the connection between the anarchy in the state-capitalist economies and their class structure. The working class does not direct production in these countries, but it is done by and for the new bureaucracy, which has formed a new ruling class. The experience of these countries doesn't show that socialism is impossible, but that a unified, social control of production cannot be achieved when the state sector is run by a new elite; this can only be achieved when the working masses as a whole direct production. The new elite is not only in struggle against the masses, but there is a struggle among its individuals and groupings over who will appropriate the benefits of the economy, and to what extent. For both these reasons, the continuance of private appropriation of the fruits of large-scale production, even though under new forms from those of the old market capitalism, provides an economic base for the anarchic phenomena that are observed. These articles thus point to key issues of the class structure that are neglected by the free-market analysts, technocrats, and "market socialists". This explanation provides a scientific foundation for continued socialist work. If the internal decay of the state-capitalist economy and state sector is due to its class structure, then the ongoing collapse of the state-capitalist regimes doesn't discredit socialism but calls for revolutionary, anti-revisionist conclusions. The socialist goal remains, but it can only be pursued by supporting the class struggle against the state-capitalist regimes as well as against the market-capitalist ones.

. This analysis also shows that socialist activists have to seriously assess what is actually going on in the state sector, and not simply rely on its growth to automatically bring socialism.Sometimes a new elite may dominate a state-capitalist country from the beginning, but other state-capitalist regimes arose from major social revolutions in which the masses rose up on their own behalf. But if the working masses don't have the organization, the maturity or the power to increasingly direct the economy as a whole (and not just their own individual workplaces), if the state sector (and the economy as a whole) slips from their hands, or if it is wrested from their hands, then a new elite can develop out of the revolution and congeal into a new bourgeois class, and the economy can degenerate into state-capitalism.

. In fact, Marxism has insisted from the start that the nature of the state sector depends on its class structure, including both its internal organization and the overall class structure of society, and that nationalizing the means of production is only a step towards socialism when it really develops social control of the economy and puts the state sector into the hands of the working class. This is a dialectical view--it does not view the state sector in isolation from the class struggle and class relations; and this view is verified by the hard-won, and frequently tragic, experiences of the revolutionary attempts in the 20th century.

. Sal, however, doesn't even refer to the problems in the various state sectors of this century, to say nothing of giving any analysis about why such problems shouldn't be taken as discrediting socialism. The technocrats say one thing; the free-market advocates say something else; the anti-revisionists in Communist Voice have yet a third analysis; and Sal doesn't think the problem is important enough to even take notice of. Perhaps he will continue to explain his lack of a reply with the argument that such issues are supposedly "not on the table", and he is addressing something else. But that's the point. He refuses to address the key questions facing socialism today.




. While Sal passionately advocates that mere political questions are irrelevant to the fundamental economic structure of a country, his own analysis boils down to that a socialist economy is mainly characterized by carrying out certain different policies from those of the bourgeoisie. It's not the "underlying economic structure" of the state sector, but the policies of the government--especially its social welfare measures--that are key to his conception of what distinguishes "proletarian capitalism" (his view of socialism) from "bourgeois capitalism". In his summary of the Seattle study group discussion of December 6, 1998, he wrote that "socialist state capitalism will differ from bourgeois capitalism primarily in that, in contradistinction from the emphasis on profit for the sake of profit--profit for the bourgeoisie--it will focus on the needs of the proletariat, and thus will be willing to sacrifice profits, and indeed will strive to put an end to profits entirely."

. However, there is a major difficulty with this view. If a predominant state sector is taken as the underlying economic basis of "socialism", then one must show why the existence of this state sector will result in the desired policy of "focus(ing) on the needs of the proletariat". One must show what would lead the state sector to carry out this policy, or else saying that the state sector will have this policy may turn out to be an apology for state bureaucrats who really are doing something else. It does little good to just assert that such economies will do all the good things one would like them to do: one must show why they will act in this fashion. What economic force, what class relations, will result in their having this sort of policy? If one can't show this, then one is defining socialism simply by which party is in power and by its political policies.

. In fact, a predominant state sector alone isn't sufficient to orient an economy to the needs of the proletariat. This can be shown by the experience of the state-capitalist countries such as the (late) Soviet Union, where the economy was oriented to the needs of the new ruling class. Sal may assure us all he likes that the economic system he envisions will serve the workers and be the economic basis for that "democratic dictatorship of the proletariat" which he wishes to see, but he has not presented any proof of this. And how can proof be provided when in practice large state sectors (the main feature of Sal's "proletarian capitalism") have been combined with political tyranny and economic exploitation? The new ruling classes in the China and Cuba today (and the Soviet Union yesterday) live far better than the working masses, deprive the masses of their political rights, and exploit the state sector as a means of ensuring their own privileges and advancement. The struggle of various individuals and groupings of the new bourgeoisie to feather their own nest affects the basic structure and economic functioning of the state sector:this struggle serves as the basis for an extensive anarchy that prevails underneath the facade of state planning; and it provides a social basis for eventual moves towards privatization and free-markets.

. Sal's present ideas about the state sector are a development of past ideas of his with respect to the Castroist system. In opposition to the idea that the workers had to organize in their own interest against the Castroist bourgeoisie as well as U.S. imperialism, he argued that the Castroist system might be "the best possible salvation for the workers in Cuba". (See Sal's summary of the Seattle study group discussion of 10 July 1995.) Cuba has a predominant state sector and various social programs, and this sufficed for Sal. What he now calls "focus(ing) on the needs of the proletariat" was then no more than the Castroist social programs.

. Thus Sal's assertion that the system of "socialism" he outlines would orient itself to the needs of the workers is simply a pious wish. Having ruled out a discussion of the class relations in the state sector, Sal presents no reasons, economic or otherwise, to show why the state sector would operate in the way he would like it to. Yet he wants us to ignore the economic history of this century and, instead, take his bare assertions as fact.

. Only a state sector which is really in the hands of the working class would be oriented to its needs. Mark, in his reply of Jan. 17 to Sal, alluded to this point, saying "What's striking is that Sal doesn't really reply to the issue raised by Phil of what is the difference between a society really run by the workers or one in which a bunch of corrupt bureaucrats lord over the workers.The only hint of dealing with this is that Sal remarks that in the transitional society profit will be used to 'focus on the needs of the proletariat' rather than 'for the sake of profit.' But by leaving things at this level, Sal draws no distinction between revisionist state-capitalism where 'the needs of the proletariat' are decided by a new class of parasites, or one in which the workers really decide things."

. Sal replies to this with a good deal of irritation in his March statement, but with utter and total evasion. He implies that when he, Sal, says that the economy will be oriented to the needs of the workers, he is thereby saying that revisionist bureaucrats aren't in control, because "revisionist cliques do not meet the needs of the proletariat". Maybe he is saying that, maybe not, given Sal's past views about the revisionist rule in Cuba. But in any case, Sal evades the question at issue:what, in his picture of the "underlying economic structure" of his version of "socialism", would either ensure that the needs of the proletariat were being met or hinder or prevent "revisionist cliques" from being in control?

. Indeed, Sal's very presentation of the matter as one of "revisionist cliques" is an evasion.Although Sal writes as if the term "revisionist cliques" was my formulation, or that of Communist Voice, in fact the term "revisionist cliques" is rarely found in Communist Voice. By reducing the matter to some bad cliques or some bureaucratic practices, Sal evades the question of the class structure of the state sector and of whether a new bourgeois class exists, and by so doing, he confirms the accuracy of Mark's objection to his views. The issue, however, is not one of a few bad individuals, but of whether there can be a new class of exploiters (a class, not just a few bad eggs, not a mere clique, nor simply some people with some mistaken policies), based on control of the state sector. Indeed, if the only problem that could afflict an economy with a predominant state sector was a few mistaken individuals or misguided cliques, then this might be of little importance to the overall assessment of the economy. After all, cliques and mistaken individuals will exist under any system. But the real issue is: can a new exploiting class exist, based on its control of the state sector? As we shall see a bit later, Sal denies that class exploitation is possible in such an economy, thus presumably denying the very possibility of a new bourgeoisie arising and basing itself on its control of the state sector.

. What does economic history and the experience of twentieth century revolutions say about Sal's thesis? New bourgeoisies did arise in countries like Russia and China and Cuba. This happened even though these regimes implemented more social programs for the masses than the regimes they replaced. Moreover, even some Western capitalist countries have extensive social programs as well as large state sectors: Western Europe, for example, tends to have more extensive social programs than American capitalism.

The state sector must be transformed

. But how then does a state sector dominated by the bourgeoisie (new or old) differ from the state sector characteristic of a transitional economy? If there is no fundamental economic difference, then socialism, as an economic and political theory, falls to the ground. And, as we have seen, more social programs, however desirable and necessary, can't be the answer to this question; the extent of the social programs will follow from the basic economic structure of society, rather than being the main determinant of that structure. There is no substitute for judging whether the state sector is actually being controlled by the working class.

. The Marxist idea was never that the state sector could simply be taken over as it is. Lenin, for example, laid stress on the need for the working class to learn how to carry out actual accounting and control of an economy. It's not just a question of having a democratic vote on some matter of state policy. It's not even simply a question of having some leaders of a truly proletarian party take over key positions in the government and in the economic enterprises, but the revolutionary party must use its positions to encourage the working class to form the state and administrative apparatus out of itself. It is a matter of transforming the economy so that enterprises are run not according to what suits the private interests of some executives, but according to the working class. This involves not just workers running individual enterprises, but being able to coordinate the different enterprises in a common, planned effort. In any actual socialist revolution, there will be extensive consideration of the organizational means needed for this--factory committees, trade unions, political organizations, cooperatives, etc. What works, and under what conditions? What is the level of organizational ability of the working masses, and how can this be increased? The revolutionary attempts of the 20th century provide some lessons about this, and about the prerequisites needed for the workers as a class to remain interested in these forms. These lessons are limited, because the attempts at socialist transition were overwhelmed relatively rapidly by adverse conditions and by state-capitalist degeneration. But it is the ability of the working class to substitute its organization for the bourgeois direction of economic life that is the fundamental economic basis of the transition to socialism.



. Sal claims that he is dealing with fundamental economic questions about socialism, unlike those superficial anti-revisionists who are bogged down in the surface phenomena of politics. So what is the underlying economic issue Sal is putting forward, the one that is supposedly ignored by the frivolous anti-revisionists? It must be an important issue, as he says he "deal(s) with but one" issue. It is that in the period between capitalism and communism, various capitalist categories such as profit, value, and commodities, still apply. He sums this up as that, in its initial phase (he discusses no other) socialism is "proletarian capitalism". I leave aside for the time being a discussion of whether it makes sense to define socialism as "proletarian capitalism": the content of his claim is that commodity production and all the resulting categories, including profit and value, still exist.

. But what's new about this? In "Preobrazhensky--Ideologist of State Capitalism", which is the article he is replying to, I made the same point (although without using the suspect terminology "proletarian capitalism"). I analyzed in detail Preobrazhensky's error in believing that, as far as transactions within the state sector goes, the nationalization of industry results in abolishing profit, interest, rent, and commodity production in general. I pointed out that, not just in the Soviet Union of the 20s, but in any transitional economy, however revolutionary, commodity production still exists. I wrote that: "In a transitional society, there is still money and there is still commodity production." (CV, 15 April 1998, p. 40, col. 2)

. Unfortunately, however, Sal recognizes nothing but the persistence of commodity production in the transition period. My articles find the revolutionary aspect in the transitional economy to be the extent to which the working class develops its ability to direct the economy. So long as the whip of profit and loss is needed to ensure that workplaces produce efficiently, with attention to the needs that their products are fulfilling, and with suitable quality, the economy will remain mired in commodity production. When the workers throughout the country develop the organization needed to accomplish these tasks without the stimulus of financial methods or the whip of a separate managerial class, when their own organization begins to accomplish these tasks in ways better than financial methods would prompt, when financial methods thus increasingly become a blatant impediment to effective production, then the prerequisites have been created for doing away with commodity production, dispensing with money and financial methods, and replacing the transitional economy with a truly socialist mode of production.

. Sal, however, regards this issue of workers' organization as a merely political issue of democracy which doesn't bear on the underlying economic structure. But what then does he regard as the economic element in transitional society that points forward towards the abolition of commodity production? Sal doesn't yet have an answer. He hasn't yet put forward any alternative idea as to what constitutes the communist or revolutionary element in the transitional economy. As a result, Sal's recognition of the persistence of commodity production in the intermediary period functions mainly as an apology for the state-capitalist economies of revisionist countries. It amounts, in essence, to saying that they shouldn't be criticized for any of their capitalist features, as there will be commodity production in a transitional economy too. Sal also rules out criticism of the state-capitalist economies for not having the revolutionary aspects of intermediary economies, because he doesn't yet know what these revolutionary or communist sides would be. And Sal rules out criticizing the revisionist countries for their class stratification (the development of a new bourgeoisie), because he regards this as only a "political" criterion.

. Thus Sal's theory, as well as that of Preobrazhensky, ends up as a state-capitalist ideology. The existence of a predominant state sector becomes the sole and defining characteristic of the transitional period, and even of socialism itself. The fact that the proletariat has to make use of the state sector in the advance towards socialism is converted into the idea that every economy with a predominant state sector (at least if the old bourgeoisie has been overthrown) is moving towards socialism. The fact that commodity production remains in transitional economies is turned into the idea that an economy with a predominant state sector cannot be criticized for any blatant capitalist features that may appear in it, no matter what they are. For Preobrazhensky, the state sector was itself socialist; and he denied that the law of value or commodity production operated within it. Sal seems to accept that the state sector is involved in commodity production, but he argues that it doesn't matter as socialism itself--for a protracted period at least--is nothing but "proletarian capitalism".


. So let's look further into the role of commodity production in the transitional period. Sal holds that commodity production, value, and profit continue in this period, but he prevents any revolutionary conclusions for the workers' struggle being drawn from this by holding that, somehow, the consequences of commodity production don't or can't appear. Take, for example, the question of a state sector which produces commodities and seeks profits, as Sal admits the state sector will in his version of "socialism". Does the persistence of commodity production create the possibility that such a state sector might exploit the workers? Do the workers have to remain vigilant against setbacks that might lead to such an unfortunate state of affairs?

. Preobrazhensky argued that the simple fact of the nationalization of industry and the displacement of the old bourgeoisie proved that there could be no class exploitation of the workers in the state sector. He argued that the workers owned the state sector, so who would be exploiting them? They couldn't exploit themselves, he said. In my article, I pointed out Preobrazhensky argued from "a merely formal approach to the problems the working class faced in controlling the Soviet government and state sector". He ignored the real difficulties facing the working class in transforming the state sector and the Soviet government, and simply identified the Soviet institutions with the working class. He simply assumed that a new ruling class could not arise in the Soviet state, and this assumption proved tragically wrong.

. Sal wants to maintain the essence of Preobrazhensky's state socialist argument--that the state sector is socialist no matter how it is organized--while conceding that capitalist methods still exist. Unlike Preobrazhensky, Sal argues that all the surplus product produced by the state sector constitutes "surplus value". But fully in line with Preobrazhensky, he writes that this surplus value "belongs to the proletariat--not individually, but collectively". Here Sal applies his usual method of definition and redefinition. He replaces an examination of the workers' struggle to transform the state and master the economy with a definition: he defines the surplus value in the state sector as belonging to the proletariat. Sal doesn't see that one has to examine how any particular state sector operates, and how far the working class actually controls it. Instead, for him, if the state sector controls the "surplus value", the "surplus value" automatically belongs to the workers collectively. He takes a purely formal approach to this issue, rather than looking at where the surplus value actually goes in any particular economy. How far, for example, does this "surplus value" go to provide higher pay for the managerial strata? Can such "surplus value" be said to be collectively owned by the workers even though it goes to another class, because it is the decision of the workers that it go to another class? And how far is the division of the surplus value--how much it goes to other classes to win their cooperation, how far it goes to an accelerated program of investment, etc.--really the decision of the proletariat?

Exploitation becomes a good thing

. But can the surplus product in the state sector take the form of "surplus value" without this meaning that there is at least the possibility of exploitation? To deal with this problem, Sal resorts again to defining and redefining the world. Sure, says Sal, exploitation can exist too, but what's so bad about that? You see, the problem with Preobrazhensky was that he didn't have access to a dictionary, and so he gave a bad definition of the word "exploitation". According to Sal: "Preobrazhensky was wrong when he protested that the proletariat cannot exploit itself. In fact, the proletariat can indeed exploit itself, if we understand that term in the strictly objective sense (as when we might say that one 'exploits' a resource, or an opportunity)."

. Preobrazhensky was of course talking about class exploitation, which is the relevant concept.Sal makes this class exploitation vanish by saying that we should look at exploitation "in the strictly objective sense", in which exploitation is simply a synonym for "use". Of course, the proletariat can--and should!--"use" a resource, or its own labor power, or whatever. Why, with this meaning of the word "exploitation", the more exploitation, the better.

. Well, that was a simple way of solving the problem of a revolution degenerating into an exploitative regime. It's not necessary to worry about the ups and downs of the workers' class struggle. All that is needed is to redefine "exploitation" into something inevitable, something necessary, indeed, into something good and valuable. Perhaps the words "oppressive", "imperialist", and "ethnic cleansing" could be redefined as well. One by one the problems afflicting the various state-capitalist regimes could be defined out of existence. Sal says that "To discuss a political system without addressing its fundamental economic basis is to engage in an exercise in sterile and empty rhetoric." Redefining "exploitation", now there's how to address the "fundamental economic basis" of socialism!

Redefining profit

. Sal continues this process of redefinition in dealing with the question of profit. On one hand, he recognizes that the persistence of commodity production in the intermediary or transitional economy means that categories like "profit" will still be meaningful. But on the other hand, instead of investigating what contradictions this causes in the transitional economy, he lulls the reader to sleep about the significance of this profit-making by distinguishing between two "levels" of profit, only one of which is supposedly "the obsession of the capitalist", while the other is an "abstract", pale, sanitized level of profit.

. Sal, having tamed profit-making by his usual method of redefinition, can then ignore the effects that profit-making has on the class structure of state industry, and of the transitional economy in general. For Sal, it is simply a question that the state industry should be efficient and create an economic surplus, and what can that be but profit? He writes that "It is generally admitted that the socialist state will expropriate all businesses. But to do what? To run them or close them down? If to run them, how? To produce and sell commodities? To sell these commodities at cost, or to realize a surplus? From whence this surplus, if not from labor? And what can the surplus be, but profit?" And that's as far as his economic analysis of the state sector goes.

. Thus Sal presents profit-making as simply a rational and desirable part of the transitional economy, rather than pointing out that its inevitable persistence exercises a constant pull backward on the economy. He says nothing about what profit-making means for the class structure of the transitional economy. Yet already, over three-quarters of a century ago, as the famous New Economic Policy was being implemented, Lenin pointed out that the Russian state sector going on the self-financing basis (in which each enterprise is supposed to make a profit) would cause certain contradictions between the economic executives and the mass of workers, and that attention had to paid to protecting the class interests of the workers. It wasn't sufficient to note that financial accounting, profit-making and other capitalist features would be part of the "New Economic Policy" and its self-financing (or "khozraschet") system; it was also necessary for the workers to protect themselves against the inevitable consequences of such measures. (See "The Role and Functions of the Trade Unions Under the New Economic Policy . . .", Jan. 22, 1922 in vol. 33 of Lenin's Collected Works, pp. 185-6.) But such questions of class interests and internal contradictions are foreign to Sal's idea of the "economic structure" of the transitional economy: it is questions like these which he has dismissed as supposedly only issues of the political superstructure and as supposedly only minor details concerning whether some "clique" or other is a bit too bureaucratic.

. Sal also ignores how profit concretely appears in the state economy. He just asks whether a state enterprise should be run at a profit or a loss; he doesn't consider whether this means that each state enterprise will be a separate economic entity. He ignores the protracted discussion in Communist Voice articles of how the profit-making system actually worked in the Soviet and Cuban economies. When the Soviet state sector went over to self-financing (or business accounting, as it was also called), this meant that the state enterprises did not work as one unified whole and did not maintain common financial books. Each enterprise was on its own.(To be more precise, there was a continual process of defining and redefining what level of enterprise would be the business unit. This unit might be an individual factory, but might also be a conglomerate unit.) This meant that the state sector, formally owned as a whole by the state, was broken up into independent units, which could rise or fall on their own, or financially compete against each other. It also had some affect on what was possible as far as workers' control over management decisions. But Sal ignores all this. Economics for him is reduced to:there has to be an economic surplus, so there has to be a profit. No doubt, so long as commodity production continues, profit-making will as well. But the point is to understand what this means for class relations and the tasks of the workers' movement in the transitional period.

. Instead of considering the effects of profit-making on class relations, or even such nagging questions of state-capitalist experience as why so many state enterprises run at a loss even though they are supposedly on the "khozraschet" system, Sal resorts to quibbling about the meaning of the word "profit". So let's look at bit more closely at his two "levels" of profit.

The two levels of profit

. These two "levels" of profit appear to be the profit itself, which the capitalists obsess over, and the rate of profit, which Sal says is more abstract. (To be more precise, his two "levels" of profit are somewhat mangled expressions of the amount of profit and the rate of profit.)

. Sal claims that "at its most basic, fundamental foundation, profit is equivalent to surplus value, and is expressed as the ratio of surplus value to constant capital . . . (the rate of profit equals surplus value divided by constant plus variable capital) . . ." That is, the basic profit is "the rate of profit". This is also, according to Sal, the profit which is an "abstraction"; it is only "profit in the abstract"; and it is the "level" of profit which will exist under socialism. He writes that:". . . on the highest level of abstraction, both capitalism and socialism--in its initial stages--necessarily require the production of profit--that is to say, surplus value in relation to the capital invested." (See Sal's report on the Seattle study group meeting of Dec. 6, 1998)

. However, Sal says, the supposedly "abstract" profit, the rate of profit, is not the real, concrete, material profit longed for and fought for by the capitalists. He writes that it "is not the profit (or is only coincidentally the profit) which is expressed in the ledger of the capitalist. The profit--the tangible profit which the capitalist seeks--is represented by the formula: profit = cost price minus the price of production; the latter two functions influenced by secondary forces. The former formula [the rate of profit--JG] represents profit in its most abstract . . ." It is the amount of profit, which "is the obsession of the capitalist, and which is the profit which is influenced by many outside factors: competition, interest, monopoly, etc. . . ." (Sal's document of March 1999)

. To make the point clearer, let's consider a numerical example. Say that a capitalist makes $30 million profit on an investment of $200 million. Then the profit is $30 million, but the rate of profit is 15% (or $30 million divided by $200 million). The $30 million and the 15% are Sal's "two levels" of profit. Sal says the 15% is merely an abstraction, the abstract profit, and that 15% "is not the profit (or is only coincidentally the profit) which is expressed in the ledger of the capitalist". Instead, the profit which is "the obsession of the capitalist" is the profit itself (the $30 million), before it is divided by the expended capital and turned into a percentage. I will call this $30 million the "amount of profit".

. Sal's claim that the capitalists hunger after and dream about only one of these two "levels", and not the other, is utter nonsense. For one thing, they are very closely linked. For another, American capitalists are often more obsessed over the rate of profit than the absolute amount. For example, the post office is making gigantic profits, but it insists that it really must do better in order to have a reasonable rate of profit. And the rate of return is generally the measure of how good an investment is. (However, one of the factors which can lead large monopolies to stagnate is being satisfied with the mass of profit despite a declining rate of profit.)

. Sal goes on to tell us that the rate of profit can be understood "as a function of the underlying, basic fundamental mechanism of commodity production", while the amount of profit is profit "as it is immediately perceived: as a result of a number of countervailing forces such as the prevailing rate of profit, competition or monopoly, interest, rent, etc." This is an incomprehensible distinction. It is absurd to say that only the rate of profit, but not the amount of profit, is a function of the "underlying" mechanism of commodity production.

Surplus value and profit

. However, Sal's exposition being rather obscure, it is possible that he didn't really mean that the difference was between the rate of profit and the amount of profit. Another comrade has pointed out to me an alternative reading of Sal's theory of profit, which goes somewhat as follows:

. What Sal may actually be trying to say is that "surplus value" is the abstract, dainty, sanitized level of profit, while the dirty, money-grubbing, concrete profit, which from transaction to transaction deviates from the surplus value, is the "obsession of the capitalist". "Socialism" or "proletarian capitalism" restores the true profit, profit calculated according to the surplus value, while "bourgeois capitalism" lusts after the concrete profit, which deviates from this true profit due to "competition, interest, monopoly," and so forth and due to the fact that modern capitalism prices goods at their "cost-price" rather than at their value.

. The idea that a just society would restore the true value of goods has a long history. Proudhon, for example, talked of the "constituted value" of a product, and believed that exchange according to "constituted value" would remove the disproportions and injustices of capitalism. Sal doesn't say that the restoration of true value would bring the just society, but he seems to be saying that such a society would only use the true value for its pricing. He sees pricing according to the "cost-price", "price of production" and other modifications of value as the province of "bourgeois capitalism", implying that "proletarian capitalism" would price commodities according to the true value.

. But it doesn't make sense to separate the cost-price from the value. The law of value isn't the model for a reformed, proletarian capitalism, but a description of the "basic, fundamental foundation" of commodity production which gives rise to cost-price, the price of production, and all the other capitalist obsessions. Meanwhile direct pricing according to value is not used in the state-capitalist economies; and it is unlikely to be used in transitional economies.

. Sal's idea that "proletarian capitalism" produces the true profit, or surplus value, while "bourgeois capitalism" produces the distorted profit is reflected in his view that some profit isn't surplus value at all. Thus he refers to "profit in the more extended, social sense" as "the money (not necessarily value) obtained from investment . . ." (see Sal's notes of Jan. 15). It is possible to make a profit without producing anything, hence without physically producing a value, although the capitalist ends up with a real profit. There are profits from trade, from usury, and from various sorts of cheating, as well as those from actual production. It appears that Sal regards that these profits aren't value, while only profits from real production are surplus value. Moreover, this leads him to the view that there is money which isn't value at all; only money made in producing something is supposedly value.

. Economically, however, all these distinctions are nonsense. $30 million buys the same amount of commodities, whether the $30 million were obtained as "productive" profits or as interest on a loan. Moreover, the surplus value created in production does not all go to the industrial profit of the enterprise. Marx noted repeatedly that not just the profit of the entrepreneur, but the interest the enterprise paid to the bank or usurer, and the rent paid to the landlord, came from the surplus value. Indeed, it might be added, so does the tax that is paid to the government. As Marx writes:

"The capitalist who produces surplus-value--i.e., who extracts unpaid labor directly from the laborers, and fixes it in commodities, is, indeed, the first appropriator, but by no means the ultimate owner, of this surplus value. He has to share it with capitalists, with landowners, &c., who fulfill other functions in the complex of social production.Surplus-value, therefore, splits up into various parts. Its fragments fall to various categories of persons, and take various forms, independent the one of the other, such as profit, interest, merchants' profit, rent, &c. It is only in Book III that we can take in hand these modified forms of surplus-value." (Capital, vol. I, at the beginning of Part VII. "The Accumulation of Capital", pp. 618-9, Kerr edition.)

. Thus the industrial profit is only one part or "fragment" of the surplus value. Only when one is studying one particular aspect of capitalism in itself, an aspect for which the existence of many different types of parasites sucking up the surplus value is irrelevant, can one temporarily equate surplus value and profit. But from the point of view of Sal's different "levels" of profit and surplus value, the good profit comes from production and is surplus value, while the other profits are distortions and are not even value, to say nothing of surplus value. "Proletarian capitalism" only has the supposedly true profit, which is supposed to constitute the entire surplus value, while other types of profit are the realm of "bourgeois capitalism". Sal thus presents "proletarian capitalism" as more productive and worthwhile than "bourgeois capitalism" on the basis that proletarian profit-making represents the true surplus value. This is certainly an ironic twist in socialist economic theorizing, in which surplus value had previously been regarded as the exploitation of the proletariat. But as we have seen, Sal holds that "exploitation" is a good thing, not a bad thing, under "proletarian capitalism".

. The fantastic nature of Sal's theory about the relationship between surplus value and profits is shown by the fact that it wouldn't even apply to a real intermediary economy. Even there, so long as there is commodity production, not just the industrial enterprises but the banks and trading establishments may also be on a profit-making basis, and the state will definitely engage in taxation. Moreover, the money that circulates in the economy will represent value whether it is obtained by an enterprise making a profit on its production or by tax or by other means.

Surplus value and the state sector

. What harm does Sal's confusion about the relationship between profit and surplus value cause to his theorizing? Besides presenting commodity production in a favorable light in general, it contributes to his fundamental error in arguing that the state sector is unified and under the control of the working class by definition, even though what is under discussion is a state sector in which the various enterprises seek to make profit and are on a commercial-accounting basis.

. Sal writes that "all surplus value--that is to say, all profits--would accrue to the state". This is simply not true. If one examines the history of NEP Russia, or the state sector in Cuba, etc., one sees that the surplus value is divided into various portions, some of which goes to the central state authority, some of which is retained by the enterprise, some of which goes as rent to other state agencies, etc., etc. So the industrial profit of the enterprise is only a part of the surplus value produced by the workers; it is the part which remains after the payment of rent, taxes, high salaries to the various privileged strata, etc. Some of this goes to other state agencies, but some of it goes to various other social strata. Moreover, a good deal of the surplus value may be hidden from the state and its ministries. Thus, even if one regards the part of the surplus value accruing to the state as including both what the local enterprise and the various other economic and central authorities get, it is still only part of the surplus value.

. Preobrazhensky maintained that all transactions engaged in by the state sector, except insofar as they involved buying from or selling to entities outside the state sector, were of no fundamental economic significance: they were just shifting furniture around within the state sector. Thus the division of the surplus product within the state sector might have some technical or practical importance, but it would not, in his eyes, have much theoretical significance. Sal apparently agrees with this, since he doesn't worry about whether the profit is retained by enterprise, or the ministry, or the central state treasury. He is just as wrong as Preobrazhensky. My article on Preobrazhensky goes into this in some detail. Here it suffices to note that the division of the surplus value between tax, rent, and profit (and the division of profit into retained profit and what has to be handed over to a different state agency) had major effects in NEP Russia and thereafter.It might determine whether an enterprise modernized or expanded, the size of the social benefits available to the workers, what funds were available to the ministries for general purposes, the fate of executives, and so forth. The competition among enterprises, as well as that between enterprises and their ministries, the scramble over who gets raw materials and machinery as well as the squabbling over bonuses and payments, became more and more, at base, a struggle over the division of this surplus value.

. Thus Sal is wrong to say that the state gets all the surplus value (unless he defines the state as a mass of conflicting and competing agencies, enterprises, social strata, individuals, and divergent groupings). Certainly the central state ministries can't dispose of this entire surplus value as they please. The very mechanism by which the enterprises seek to make profits requires that the profit be divided between the ministries and the general state budget on one hand, and the enterprises on the other. In fact, it requires an even more complex division. This is not just true because of some special conditions in Russia in the 20s--it is a part and parcel of the self-financing or profit-making system in state industry. Commodity production and profit-making have their consequences. Sal lectures others that these consequences are "neither a convention nor a habit, but the expression of a social law, a material law, and, as such, cannot be simply willed away." Powerful words, that should be taken to heart. Yet when it comes to his own theorizing, Sal believes that the arrangements in the state sector can be whatever he wants them to be. He dreams of a system where enterprises seek profit, and yet a unified state receives the entire surplus value. Apparently all he has to do is to decree that this is so. Sal doesn't study the laws of commodity production in the state sector, and so he transgresses against his own words that "value (and its offspring, profit) . . . continues to enforce its edicts supremely indifferent to the cognizance (or lack thereof) of any and all the members of the society of which it is the material foundation. It is a true abstraction created and maintained faithfully but blindly--in concert--by those who are at once both its masters and its servants; by those who, while they produce it, are in turn produced by it; and by those who, while they sustain it, are sustained by it." And it continues to do so, whether Sal closes his eyes to its edicts or not.

The two levels of value

. Sal not only theorizes that there are two different sorts of profit, but also that there are two different sorts of value. Just as with profit, he recognizes that value persists in the intermediary period. But just as with the existence of profit in the intermediary period, he recoils from drawing any revolutionary conclusions from the existence of value. The whole point of his theorizing is to deny the contradiction between this category of commodity production and the struggle of the working class. Instead he theorizes about the existence of two types or levels of value, with the one level ("proletarian value"?) sanitized for use in the future society, not just the intermediary period but even socialism and communism, and the other level ("bourgeois value"?) being the real, capitalist value.

. Sal first describes the usual value, and says that "When Marx employs the term 'value' he in general uses it in relation to commodity production, i.e., exchange value." And it's true that the labor-theory of value is concerned with the laws governing commodity production and exchange value. It is not a theory about the best or most efficient way to produce useful objects; it is an explanation of the capitalist reality. As Engels stresses in his polemic Anti-Duhring, "the only value known in economics is the value of commodities" (Part III. "Socialism". Ch.IV."Distribution", p. 334), and Engels goes on to ridicule the idea that socialist society will see "the producers control their products by the logical application of an economic category [value--JG] which is the most comprehensive expression of the subjection of the producers by their own product." (Ibid., p. 339) Or, as Marx puts it, value, "measured by labor time, is inevitably the formula of the present enslavement of the worker, instead of being, as M.Proudhon would have it, the 'revolutionary theory' of the emancipation of the proletariat." ("The Poverty of Philosophy", Ch. I., Sec. 2, p. 49, Norman Bethune Institute reprint of the Russian edition)

. Sal, however, believes that there is another sort of value, different from the one which Engels regarded as "the only value known in economics". Indeed, Sal attempts to prove that Marxism recognizes this other sort or level of value. In attempting "to clarify the concept of value in relation to the socialist and the communist system", he writes that

". . . Marx also refers occasionally to value in a looser and broader sense:
" '. . .after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour-time and the distribution of social labour among the various production groups, ultimately the book-keeping encompassing this, becomes more essential than ever.'--Marx, 'Das Kapital', International Publishers, Vol. III., p. 851."

. Note that Marx is not talking about the intermediary or transitional period, but about what happens after commodity production is eliminated. Nor is he talking about capitalist remnants under socialism or communism. True, he is describing a system where "social production" will remain, but this isn't a remnant of capitalism, but a basic feature of the mode of production that will replace capitalism. And obviously, the "distribution of labor among various production groups" is essential in any system of social production. Thus, Sal's interpretation of Marx's statement would make him into an advocate of value as an eternal category, needed in communist society as well as capitalist, needed indeed in any society in which social production exists.

. But all Marx is actually saying is that communist society has to keep track of the labor-time and resources necessary for production, and of how it distributes its products. This, ultimately, is a matter of "book-keeping", and it is more essential than ever in a society which does not use the market-place or money to distribute or keep track of goods or to marshal the resources needed for production. This "book-keeping" remains, but value itself does not.

. Marx holds that "In all states of society, the labour-time that it costs to produce the means of subsistence must necessarily be an object of interest to mankind, though not of equal interest in different stages of development." (Capital, vol. I., Chapter I. Section 4. "The Fetishism of Commodities and the Secret Thereof", p. 82, Kerr edition) But Marx distinguished this concern about the labor-time from the concept of value, which is the way this concern is expressed in commodity production, and only in commodity production. He writes that "the value relation between the products of labor which stamps them as commodities . . . is a definite social relation between men, that assumes, in their eyes, the fantastic form of a relation between things." (Ibid., p. 83) This is consistent with his statement about communist book-keeping: since the social relations corresponding to the "value relation" of commodity production no longer exist in communist society, all that is left of the "determination of value" is seeing how much labor and resources are needed for production, something of concern to all types of economies.

. A similar thing could be said of capital itself. Are socialists to advocate that communist production would be based on the use and accumulation of capital? In order to produce things under capitalism, there must be a certain amount of capital in the form of the machinery, raw materials, buildings, and so forth. In communist society too, there will have to be machinery, raw materials, buildings, and so forth in order to engage in modern, large-scale production: a group of people can't simply arrive at a desolate location and produce things without tools or raw materials. They can't replace a hammer and saw with a few hours of work without tools on the grounds that the value of a hammer is simply so many hours of labor time. Perhaps someone might say that, "in this looser and broader sense", the need to accumulate capital still exists in communist society. Or, if we spoke in accord with how Sal discusses economic categories, it could be said that there are two "levels" of capital, bourgeois capital, and the "abstract", proletarian capital used in social production in general. But in fact, machinery, raw materials, buildings, and so forth will no longer function as "capital" in communist society.

Value and the office Christmas party

. Sal illustrates his views on value by imagining "an informal office Christmas party" where there is a exchange of gifts as well as a pot-luck buffet dinner. Thus he studies value in an isolated situation, irrelevant to the main production or distribution of the economy, where the point of the event isn't production or distribution at all but socializing, and where he can specify any odd type of rules he wishes. What imagined stories about Robinson Crusoe are to some bourgeois economists, the office party is to Sal. This doesn't seem promising, but let's join Sal at the festivities.

. Exchange value is supposed to be illustrated by the way gifts are handled. Everyone "is asked to bring a small gift worth no more than, say, five dollars. . . . At the party, each person draws the name of a guest from a hat; the name then is that of the person from whom he will receive a present. . . . only coincidentally should any two guests mutually exchange their gifts." Sal claims this "represents commodity exchange in which products are exchanged on the basis of equal value; that is, the exchange experienced by the capitalist system and by the initial stage of socialism." Really?

* For one thing, under this plan you may provide a gift worth $5 but receive one worth only $1.This may not be important for the festivities at the party, where the cleverness of a gift is more important than the value, or where, perhaps, the nature of the gift is no more significant than the color or style of the noise-maker one toots. But how is this an exchange on the basis of equal value?
* Indeed, is it really exchange at all? Under this plan, employee A gives a gift to B but receives one from C. Sal specifies that only by way of coincidence is there a "mutual exchange" between two people. (But hey, "redefinition" to the rescue. Sal now has two levels of "exchange"--"mutual exchange", where two people actually exchange something, and general or indirect exchange, where they don't.) But isn't "mutual exchange", not a random redistribution among a big group, what happens in a typical capitalist commodity transaction? Yet in Sal's office party, not only isn't there "mutual exchange", but whatever employees A, B, C get as gifts has no further effect on their economic relationship. The gift-giving is neither a direct exchange nor an indirect one:when A gives a gift to B, it does not start a chain that eventually leads to C giving something to A; what C gives to A is completely independent of what A gives to B.
* In this "exchange" of gifts, no one has any say about what they get. But in commodity exchange, one seeks to obtain an object that one wants, presumably an object that one would find of some use-value. If one were dealing with the actual process of production, the problem would appear immediately. A factory buys raw materials and sells its product.If it could only select what it sells (analogous to deciding what gift to give), but had to accept materials at random from other factories (analogous to receiving a gift by the luck of the draw), production would soon cease.

. True, Sal's scheme has at least some vague similarity to certain transactions in state-capitalist countries. Various enterprises may, to this or that extent, have little choice about where they sell their goods or where they buy their raw materials. The appropriate ministries may direct enterprise A to send its finished goods to enterprise B while directing enterprise C to send the necessary raw materials to enterprise A. Enterprise A may not necessarily fulfill its obligation to enterprise B, and it may also seek to obtain some raw materials and machinery under the table if what it receives from enterprise C is inadequate. Nevertheless, the ministries do succeed in directing a certain amount of economic activity.

. But even with respect to what the ministries order, it doesn't work the way Sal describes. If the enterprises are on the self-financing system, they will actually engage in exchange. Enterprise A may be told that it must send its products to enterprise B, but it is supposed to receive some form of compensation in return, such as payment being recorded on the appropriate financial books.Similarly, enterprise C will receive some form of payment in return for supplying enterprise A with raw materials.

. Sal's scheme seems more likely to obscure both commodity exchange and office politics than to clarify them. Of course, it might be said that there are many "levels" of exchange. If moochers and gate-crashers are kept out, and it is obligatory to bring a gift and a dish of goodies to the party, then it could be said that, "in one sense", one "purchases" the right to be at the party. So one could say that there is an exchange of some sort between each individual and whoever organizes the party, but Sal has arranged it so that there is no exchange between the individuals at the party.

The revelry continues

. Sal goes on to illustrate communist exchange by the office party. This, he says, is illustrated not by the gift-giving but by the dining arrangements: "Everyone is expected to contribute, but there is no expectation that anyone will restrict themselves to some preconceived moiety from the table. However, to stretch the analogy to conform to Marx's latter quote we will ask the guests beforehand about their preferences, how much they expect to eat, what they intend to bring, and suggest that they limit their donation to the table to harmonize with the tastes of the participants."

. According to Sal, this "represents the 'exchange' of products manifested in the communist society. Here there is exchange to be sure, but not directly on the basis of equal value, or of equal labor." Actually, once again there is no exchange between the individual party-goers at all: there is at most an exchange between each individual and the organizers of the office party. Moreover, according to Sal's arrangements, this "exchange" is not on the basis of equal value. Sal, however, only grants that this arrangement is "not directly on the basis of equal value, or of equal labor" (Sal's emphasis); he apparently believes that it is an indirect exchange of equal values. But it hardly represents exchange at all.

. Moreover, Sal apparently thinks that the arrangements for the food represent both communist production and distribution, as they involve bring bringing food and consuming it. That's a bit of a stretch, because the office party is only an example of recreation and consumption, not production. The food that is brought is either bought previously from some store, or the ingredients to be used in cooking it are bought from the store. Thus the party is a deduction from the consumption funds of the employees, as the particular company involved in Sal's office party is too cheap to provide the food itself.

. This character of the party as only recreation prevents it from saying much about production.Because bringing a dish seems to be voluntary, although "expected", and the organizers only make "suggestions", the party is supposed to represent communist production. But at the same time, everyone really should bring the correct dish in order "to harmonize the tastes of the participants" with what's in the buffet. What if someone doesn't bring the specified dish and brings something else instead? It hardly matters in an office party, just so long as there are a few good dishes. And so Sal doesn't concern himself with this problem. But if we were really dealing with production, it would be a different story. Then a failure to produce the proper raw materials and deliver them on time to the factory would have serious consequences. And would everything, including observing environmental regulations and producing products that are safe, be a matter of individual choice? A serious picture of communism would have to address how the discipline of large-scale production can go hand and hand with a vast extension of human freedom; this cannot be done by simply saying that everything is voluntary. It is only by ignoring the sphere of production altogether and concentrating on recreation that Sal can gloss over all these issues.

. Still, let us set aside all these problems and follow Sal in regarding the bringing of food to the office party as a metaphor for communist production. Then what follows is that communist production has nothing to do with exchange, as the dining arrangements have nothing to do with exchange among the party-goers. That's all that follows from his example.

. Sal, however, draws a different conclusion. He thinks that the dining arrangements are an example of "indirect exchange (employing the term 'exchange' in its broadest sense)". The "broadest sense" of exchange is, apparently, not having exchange at all. How can there be exchange of any type when Sal has specified that everything is voluntary, and that whether one eats has nothing to do with what one brings to the dinner?

. Sal's answer is his usual one: he redefines the issue. He replaces the issue of whether exchange takes place with the issue of what economic calculations are needed. That's not the same thing.But according to Sal, if the future society calculates the amount of labor needed to produce a single dish of food, it proves that the future society is engaging in "direct exchange"; but if the future society only calculates the number of hours needed to produce the whole buffet dinner, that shows that the future society is engaging in "indirect exchange". He writes that:

"In this example [the office party--JG] it is obvious that the totality of the products consumed cannot exceed that of those produced . . . In order that there be no unacceptable surplus--or dearth--of any given product, the production and the consumption of these products must be regulated. . . . but value--exchange value--will not enter into the calculations. The amount of labor in any product relative to any other single product will be of no consequence. Only the totallabor relative to the total consumption . . . will be of consequence to communist society."

. But Sal is mistaken about the economic calculations of the future, as well as about their significance. Not just the total labor must be considered, but so too must the amount of labor needed to produce any particular dish of food at the party or any particular product in communist society. Each dish of food has to be bought or cooked by someone. Therefore the organizers of the party had better not ask an individual to spend more time and money on a dish than he/she has available or than he/she is willing to spend, or many dishes won't be prepared, and there will be a lot of resentment from people asked to do unrealistic things. Thus there must be careful comparisons of the amount of time and resources needed to prepare any one dish against, not just the total labor and resources available, but against the labor and resources which any singleindividual has available.

. Moreover, the total amount of labor and resources needed to produce the dinner is the aggregate of the labor and resources needed to buy or cook each single dish. Indeed, in Sal's office party example the only way to increase or decrease the total figures is via changing the individualfigures. Thus as soon as one has to exercise some initiative in planning the party and in adjusting some tentative total figures, one is forced to compare the figures for this or that single dish against some other single dish, to see which one can be sacrificed or which one should be added.

. And what happens when one passes on from the office party to the economics of communism in general? Surely, communist society will want to produce efficiently and to avoid wasting labor and resources. This requires paying close attention to how much labor and resources are used in any particular production process. There certainly will be comparisons of one method of producing something versus another method, and of the amount of labor and resources needed to produce one product versus the amounts needed to produce another single product. Sal to the contrary, "the amount of labor in any product relative to any other single product" will be of tremendous significance.

. But the fact that the economic effort needed to produce something has been calculated and has a "consequence", doesn't tell us what that consequence is. It doesn't tell us whether things are produced for the sake of exchange, or for the sake of use. Well, it might be asked, does this mean that value will survive, not as a regulator of commodity exchange, which will no longer exist, but as a rational measure of how much economic effort is needed to produce something? In the second part of the article "Preobrazhensky, Ideologist of State Capitalism", I argue at length that the value, or "labor-content", of an item is not a scientific economic measure, but a one-sided simplification of reality. I suggest that "w labor-hours of expended effort = x tons of steel = y tons of wheat = z hours of educational instruction" cannot be considered "a rational equation expressing a material fact". Under capitalism, exchange value equates everything, with a power far greater than the long-sought philosopher's stone of medieval alchemy, and equations of this sort, generally expressed in monetary terms, make sense. They describe the reality of the market-place. (But even under capitalism, when an exchange of one commodity for another is not possible for one reason or another, such as in war-time conditions of scarcity, these equations break down to some extent. Under those circumstances, even governments of free-market fanatics have to resort to rationing and a direct allocation of critical materials; the law of value then takes on some particularly painful forms.) Under socialism, such equations can have only a partial and approximate use in economic calculation. Without constant infusions of the blood of commodity exchange, the "labor-content" (i.e., the value) fades and loses its predominant role as a regulator of the economy; if this weren't so, socialism would repeat, in a planned way, many economic evils produced spontaneously by capitalism.

. It would take far too long to repeat here this analysis of the "labor-content". Since these arguments are different from what appears in other literature, they really have to be examined in detail. They have to be either refuted, if wrong, or taken account of, if correct. But Sal simply ignores the development of socialist theorizing concerning the "labor-content". He pays as little attention to the theoretical issues that have been raised as he does to the study of economic fact.He replaces theorizing with his method of defining and redefining socialism, value, profit and exploitation, and he replaces the study of economic history with imagining the arrangements for an office party.



. Sal places a lot of emphasis on defining the intermediary period as "socialism". He defines socialism as what "lies intermediary--and is transitional between--capitalism and communism".But with equal vehemence he insists that this "socialism" is also "proletarian capitalism" or "state capitalism". It is at the same time capitalism and a "hybrid" of capitalism and communism. And it is a "hybrid" of capitalism and communism, although Sal insists that can be no "third" economic system intermediate between capitalism and communism. He thus succeeds in labeling the transitional economy as capitalist, socialist, intermediary, and something that can't be intermediate between capitalism and communism. No doubt that covers just about all bases.

. In fact, the transitional economy is neither fully the old capitalist system, nor is it the new socialist one. This is what generally happens when something old dies away, and something new is born: there is a period of transformation which resists description in static concepts. This is a period characterized not just by gradual quantitative changes, but by a series of qualitative changes and jumps. Such a period of change often inspires wildly contradictory descriptions. Sal wants to avoid the concept of a "transitional economy" as far as possible, but the very multiplicity of conflicting definitions which he uses for the intermediary system suggests that it is best to simply recognize that there is a transitional or intermediary economy.

. In the end, Sal ends up with obscurity. Indeed, what is the fundamental economic structure of Sal's conception of "proletarian capitalism"? The more one looks at it, the more slippery it becomes. What does it mean to call an economic system "proletarian capitalism" if one insists that this is not capitalism "in its customary, literal sense"; if it is involved in profit-making and commodity production, but not in their customary, literal senses; if it has exploitation, but not in its customary, bad sense but only in a good sense; etc.? It is capitalism, but it isn't the "capitalist system", because Sal says that the term "capitalist system" should be reserved for "bourgeois capitalism". Has Sal really said anything at all? Wouldn't it be more productive to just admit that there is a transitional economy in the period between capitalism and socialism, and to study its particular features? Wouldn't it say more about this economy to describe these features, than to label it, successively, capitalist, socialist, intermediary, and yet not intermediary? Can the use of all these different terms replace saying something concrete about this intermediary period?

. Instead of concretely describing this intermediary period, Sal sets forward a number of abstract and contradictory propositions on third systems, hybrids, and intermediate systems. He argues that "There are only two possible economic methods available to a technologically advanced society--capitalist and communist; an intermediate system can only be a hybrid of the two. One can no more envision a third economic system than one can imagine a circle with square corners." So the first clause of the first sentence argues that there are only two possible economic methods. The second clause declares that there is a hybrid or intermediate method. And the next sentence denounces the idea of a "circle with square corners", that is, of a hybrid geometric figure between a circle and a square.

. The grain of truth in these declarations is that there is nothing intermediate between commodity production and its abolition. Thus the transitional economy is subject to commodity production, although the conditions for abolishing commodity production are built up within this economy.But just for this reason, Sal's speculations on two senses or "levels" of profit, value, and commodity production are wrong. He is searching for something far stranger than the "circle with square corners" that he declaims against: he is looking for a "proletarian" or progressive commodity production as something intermediate between "customary, literal, bourgeois" commodity production and the abolition of commodity production. In reality, it's not that the laws of commodity production become tamed or proletarianized as the transition period develops, but that the proletariat increasingly develops the organization that will allow it to dispense with commodity production altogether.

The transitional economy

. Nevertheless, Sal's argument that the transitional period is simply "proletarian capitalism" is based on the fact that there is still commodity production in the intermediary period. He writes:"And what can an economic system be--technically speaking--which produces commodities and realizes a surplus but capitalist (once again, speaking in the purely technical sense)?" His mistake is not that he recognizes the existence of this commodity production, but that he doesn't see anything in the transitional economy but commodity production. Indeed, it is quite important that commodity production persists in the transitional economy. If anything, I believe that Sal vastly underestimates the role of this commodity production, as can be seen in his theorizing on different "levels" of such commodity categories as profit and value and exploitation. Commodity production gives the transitional economy a formal economic framework close to that of capitalism; nor is the influence of commodity production simply formal--it exercises an unrelenting pull on the transitional society back towards full capitalism;and it stands in opposition to the struggle to introduce full workers' direction and control of the economy.

. If the transitional economy were nothing but modern, large-scale, commodity production, then it would be correct to describe it economically as capitalism--not proletarian capitalism, not "sort-of" capitalism, and not simply "technically speaking", but full, literal capitalism. But alongside the commodity production there is the increasing direction of the economy by the working class; its growing ability to operate factories and enterprises as well as plan the overall features of the economy; its growing ability to coordinate its work without the whip of a separate managerial strata or of the whip of financial pain; its growing ability to consolidate small enterprises into large social enterprises without loss of efficiency; its growing ability to transform the way the state sector is operated; etc. This process is incompatible with a stable, capitalist order, which depends on the existence of a subjugated and dispossessed working class, and it is this process which creates the conditions to eventually eliminate commodity production.

. Thus commodity production and the revolutionary transformation of how the economy is directed are in contradiction, from the first day of the transitional period to the last. This is why, in my opinion, the transitional economy is, in a certain sense, economically unstable. Everything else being equal, the working masses must continually chip away at the old bourgeois methods, or commodity production will drag the transitional economy backwards. This is one of the reasons why the transitional period is also the period of the dictatorship of the proletariat and of various forms of militant mass organization and of class struggle. The workers use their class and political organizations, the revolutionary state apparatus, the trade unions, and so forth to develop a level of mass organization and initiative unknown under capitalism. It is a complicated struggle, as the workers have to transform the state and their own mass organizations as well as fight hostile classes or strata. Once commodity production itself is eliminated (if this is not just a formal decree, but reflects the actual achievement of a socialist economy), then the mode of production is in harmony with the elimination of privileged classes. At this point, the economy will most likely have a spontaneous tendency, everything else being equal (which it hardly ever is), to gradually gravitate further towards higher forms of communism. The characteristic institutions of class struggle and class organization that are so notable a feature of the transitional period will then gradually fade away into the general institutions of the whole population in a classless society.

. Thus the transitional economy has both capitalist and socialist aspects, commodity production being the capitalist aspect and the increasing class organization of, and economic management by, the workers being its socialist aspect. But it isn't simply that it is so many per cent capitalist and so many per cent socialist. Its institutions, its method of operation, and its characteristic contradictions, aren't simply a blend of capitalism and communism, any more than the cocoon, the outstanding feature of the "transitional" pupa, is just a blend of the features of the old caterpillar, that no longer exists, and the future butterfly, that is coming into existence. In my article on Preobrazhensky I pointed out that "the characteristic institutions of a transitional economy that pave the way for socialism won't themselves exist, or will have started to wither away, in what Marxism considers a socialist society" (CV, 15 April 1998, p. 40, col. 1) Several examples are listed of such economic institutions of the transitional society. A serious approach to the transitional economy has to go beyond generalities about "hybrids" and deal with the specific characteristics of this period, and the specific contradictions that mark this period and give rise to the motion forward (and the danger of degeneration backward) in this period. It is notable that, with all Sal's different definitions and redefinitions of the transitional period, he stays away from any formulations that focus on the key practical and theoretical issue that the transitional economy is qualitatively different from either capitalism or communism.

. Thus the economic transition between capitalism and communism is not simply a gradual, quantitative change. Among other things, I don't think that the transitional economy will eliminate commodity production by slowly ousting it from one sphere after another, so that the percentage of commodity production gradually falls to zero. The number of public and free services will no doubt increase, and this will have a major impact on the psychology and consciousness of the working masses. But the main branches of production have to act as a unified whole: for example, how can factories sell finished goods and buy raw materials, unless the whole chain of economic transactions is run on a financial basis? It is only at a certain stage, when the conditions have been prepared, that the economy as a whole will go through a rapid metamorphosis, and throw off the old transitional cocoon and its commodity relations, which have become an unnecessary and harmful impediment.

. Thus it seems to me that it is misleading to identify the economic system during the transitional period as simply "capitalism" (whether "proletarian capitalism" or not). Furthermore, when it is identified as capitalism, Sal has to add "in this sense" or "technically speaking" or "in the purely technical sense" or that there are various "levels" of the capitalist categories. This is not only awkward, but it weakens the whole point of recognizing what capitalist features remain in the transitional period. The point is to recognize their danger, not to rationalize them away as merely technical or as a kinder, gentler "level" of commodity production than the capitalism which is the obsession of the bourgeoisie.

. Sal writes that: "It is true that when I employ the term 'proletarian capitalism' I beg the question with the term 'capitalism.' If Communists find the term unsettling--fine, let them give it another name. . . . My own personal inclination is to label it 'state capitalism': it would appear the more honest appellation . . ." The problem is not that Sal's terminology would unsettle people, but that it would lull them to sleep. He downplays the danger of capitalist forms by arguing that transitional period, after all, is just "proletarian capitalism". It is no accident that Sal is upset with the agitation of the CVO which rallies the workers against capitalist regimes pretending to be workers' states and "socialist" regimes; under his theory, "proletarian capitalism" is the immediate (if not the final) goal.

"State capitalism under workers' rule"

. As we have seen, Sal not only says that the transitional period is "proletarian capitalism", but that it is "state capitalism". He argues that "what can a capitalist system which expropriates and runs all (or nearly all) businesses be but . . . state capitalism? And should that state be proletarian, what then can that economic system be but proletarian state capitalism?"

. With this, Sal has openly come full circle. He begins his statement of March 1999 by claiming to oppose a purely political approach to socialism. He said that his "point is that before we can deal with socialism at another level--at the political level--at the secondary level--we must first understand it at this one: the economic level--at the primary level". He ridiculed those who worried about whether the working class really controlled the regimes involved, saying that this wasn't an economic criterion, but only a question of "revisionist cliques". But now he distinguishes between state-capitalist regimes and "socialist" ones by asking whether the "state be proletarian", i.e., by the political level. Since I don't know which states Sal considers as proletarian, or what criteria he uses for this, it is hard to say more than that Sal embraces the very political criteria which he denounces others for supposedly adhering to.

. In an earlier article, "The question of 'state capitalism under workers' rule' " (CV, 10 August 1997), I discussed Lenin's formulations and the controversy over "proletarian state capitalism". I presented a number of reasons why I believe that "state capitalism under workers' rule" was not a correct definition of the transitional economy. (However, I thought that "state capitalism under a democratic dictatorship of the workers and peasants" might well describe the economic system under a radical democratic revolution. But in this case, one is actually talking of capitalism, of a system that has not yet embarked on the socialist revolution.) As far as I can see, Sal has not yet weighed the analysis given in that article, but inadvertently, his document actually verifies some of its analysis. For example, I pointed out that those who define the transitional economy as "state capitalism under workers' rule" would be forced to constantly resort to qualifying phrases like that it really isn't capitalism "in the literal sense". And indeed Sal's document is full of qualifying phrases about different "levels" of terms, about definitions to be taken only in the most "technical" sense, etc. I also suggested that the term "state capitalism under workers' rule" hadn't seemed to have much power in practice in encouraging vigilance against capitalist carry-overs, but had often been perverted into an apology for capitalism. Sal's document shows the same tendency, with its attempt to show that various capitalist categories have different "levels", one being the obsession of the capitalist and the other the rather benevolent, eternal, abstract level.

. Moreover, most of Sal's qualifying phrases have the unfortunate side-effect of indicating that only the "customary" types of capitalism are the enemy. In fact, as long as capitalism survives, it will continue to evolve. Indeed, the 20th century has seen forms of capitalism that are not the customary, traditional forms. Even the market economies involve forms of organization that would appear novel and surprising, to say the least, to someone transported instantly from mid-19th century England, that model of the old industrial capitalism, to modern London. And the oppressive state-capitalist regimes of the 20th century are certainly new forms of capitalism.But this state capitalism, although it is not the customary capitalism, is not socialism, and is not an intermediate step towards socialism; it is simply another form of capitalist exploitation. Sal's definitions and qualifiers, however, tend to suggest that any form of capitalism other than the traditional capitalism, any new development or new evolution of capitalism, is automatically intermediary or transitional between capitalism and socialism. This is a major drawback.

. There is probably wide disagreement among anti-revisionists on the term "state capitalism under workers' rule". I think, however, that Sal's approach to the issue, if accepted, would move the discussion backward. He ignores both the experience of the state sector in the 20th century and most of the theoretical discussion analyzing that experience.

APPENDIX: "From each according to his

ability, to each according to his work"

. Sal presents his definition of "socialism" as the intermediary period between capitalism and the abolition of commodity production as the same as Marx's. Sal refers to Marx's dictum for socialism of "From each according to his ability, to each according to his work", and holds that this implies the existence of commodity production under socialism and hence that socialism is, as Sal calls it, "proletarian capitalism". Since this claim is one of the main pillars of Sal's reasoning, it is necessary to examine it more closely by looking into Marx's Critique of the Gotha Program, which discusses "From each according to his ability, to each according to his work".

. But a careful examination of Marx's views on this issue may have additional value. At one time, socialism meant, among revolutionary activists, the abolition of commodity production. The terms "socialism" and "communism" were used at different times with different meaning, and were sometimes used almost interchangeably, but at least in the works of Marx and Engels, they referred to an economic system that had overcome commodity production. The Erfurt Program (1891) of the German Social-democratic Party, adopted while this party was still revolutionary and one of the model programs for the Second International in the days when it still reflected working class rebellion against capitalism, also reflects this emphasis. It calls for the "the conversion of private ownership of the means of production . . . into social ownership and the conversion of commodity production into socialist production", although the idea that this party had of what this meant was very confused, and its famous theoretician Karl Kautsky dressed up measures that are really those of a transitional economy as the abolition of commodity production. The use of "socialism" to mean the abolition of commodity production is also reflected in various Bolshevik writings of the 1920s, and it is why Preobrazhensky, to back his claim that the Soviet state sector had already achieved socialism, tried to prove that it had overcome commodity production in its internal dealings. But from the 1930s on, socialism was generally used with a different meaning, not just among social-democrats and reformists, but among revolutionaries. If the old bourgeoisie was overthrown, a large state sector set up, and land reform (not even necessarily collectivization) carried out in agriculture, this sufficed to be considered socialism. Thus it was thought that the abolition of commodity production, and of all class differences in the relation of people to the means of production, was a matter only of a later stage of development, that of communism. The widespread belief that the Soviet Union had achieved socialism in the 30s with the five-year plans; the development of a supposed "socialist camp" after World War II; and the "socialist" phraseology of a section of the Third World bourgeoisie were among the factors contributing to this altered view of socialism. It is not just current among apologists of state-capitalist regimes, who model the concept of socialism after their favorite regime, but also among anti-revisionist activists who distinguish between these regimes and either socialism or revolutionary regimes in transition towards socialism.

. It therefore is of general interest that Marx and Engels regarded the abolition of commodity production as central to their idea of socialism. It seems to me, from my study of their writings, that they believed that there was a period of revolutionary transformation between capitalism and the abolition of commodity production, and then the new, co-operative mode of production was established, and began to evolve through its various phases of development. I think these distinctions, foreshadowed in their work, are important for current theorizing.

. So, turning towards the Critique of the Gotha Program, one of the first things that is notable is that Marx doesn't refer to "socialism" at all, but to "the first phase of communist society". The socialist dictum "From each according to his ability, to each according to his work" is taken as characteristic of this first communist phase. As Lenin says, discussing Critique of the Gotha Program, "What is usually called Socialism was termed by Marx the 'first' or lower phase of communist society." (The State and Revolution, Ch. V, sec. IV, p. 117, Chinese pamphlet edition)

. What did Marx mean by communism? He describes a "co-operative society based on common ownership of the means of production". He says that "the producers do not exchange their products; just as little does the labour employed on the products appear here as the value of these products, as a material quality possessed by them . . . ." (Critique, Section I) Thus a new mode of production, based on large-scale production and the abolition of commodity production, was the basis for all phases of communism or, in the more usual current terminology, for both socialism and communism, or both socialism and "fully communist" society. The definition of its economic base given here, in Critique of the Gotha Program, is repeated in a number of other places scattered throughout Marx's writings.

. Immediately after briefly characterizing the new mode of production, Marx goes on to say that "we have to deal with here . . . a communist society . . . just as it emerges from capitalist society". He then proceeds to discuss the lower phase of communism. Thus his description of the "co-operative society based on common ownership of the means of production" was to apply to all phases of communism; in his conception, commodity production has already been eliminated at the first phase of communism.

. But what about the difference between "to each according to his work" and "to each according to his needs". This is a difference in the distribution of consumer goods. It will no doubt represent a tremendous difference as far as the psychology of the people concerned. The higher form of communist distribution will no doubt further solidify communist society; it will appear as obvious to the society of its time as it appears utopian today; and any other type of distribution will appear tremendously wasteful and inefficient due the extra apparatus of supervision that it requires. But the basic mode of production during the different phases of communism is the same. The growing elimination of the divide between mental and manual labor and other aspects of fully communist society will consolidate the lack of class division and thus perfect the communist mode of production, and create the economic relations needs for a higher and better form of distribution, but this isn't a change of the basic character of the mode of production. This is why Marx talks of different "phases" of the same system.

. Marx pointed out, after discussing how distribution would evolve as communism matured, that

"Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of non-workers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism . . . has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution."

. Here again Marx gives a common description, "the material conditions of production are the co-operative property of the workers themselves", of the mode of production of the different phases of communism. He criticizes the authors of the Gotha program for not focusing the attention of the party's supporters on the contrast between the capitalist mode of production and this future mode.

. But, it may be asked, why would different methods of distribution appear under communism, when Marx emphasizes that the mode of production determines the method of distribution and repeatedly gives a common description of the basic mode of production for all phases of communism? First of all, compared to capitalism, distribution in all phases of communism will be radically oriented to the masses. There no longer will be a privileged class which monopolizes the wealth of society; general programs (education, health, child care, parks, etc.) for the good of all will be dramatically expanded compared to capitalism; the insecurity of life for the masses will have ended; etc. But there are certain differences in economic relations between the different phases of communism, and these affect distribution.

. Marx refers to these differences as follows:

"What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally and intellectually, still stamped with the birth marks of the old society from whose womb it emerges."

. Marx's image of a society just emerging from capitalism, and his term "the birth marks of the old society", are so strong that some people may assume from this that Marx was talking about the transitional or intermediary period between capitalism and the abolition of commodity production. Yet Marx actually says that this is what faces communist society, and this sentence comes immediately after the paragraph in which he describes "the co-operative society based on common ownership of the means of production", the society in which commodity exchange no longer exists and the very concept of the "value" of a commodity has vanished.

. Marx does, however, refer to an intermediary period prior to the communist society. He writes about this, in a later section of the article discussing not the methods of production and exchange but the political state, that "Between capitalist and communist society lies the period of the revolutionary transformation of the one into the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat." (Critique, Sec. IV) This refers to a revolutionary transition period after the revolution but, apparently, before the lower phase of communism. Thus his analysis of capitalist "birth marks" is much more profound than simply that capitalist remnants exist in the transition period. He holds that even after commodity production is abolished, it takes a whole period to overcome the remaining economic, moral and intellectual baggage from the old society.

. But back to the issue of the lower stage of communism. Sal claims that Marx's is talking about a situation where "labor-power is itself a commodity" in socialism, because this "is precisely the case when the principle: 'from each according to his ability, to each according to his work' is in effect."

. This would have been news to Marx. One might argue about what the slogan "from each according to his ability, to each according to his work" should really mean. If Sal puts forward something beyond the bare assertion that this principle means commodity production, his reasoning would have to be examined. But here the issue is whether Marx's use of the slogan meant that he envisioned commodity production under socialism, and that depends on Marx's view of the slogan. Well, first of all, Marx indicates that money no longer exists during the reign of "from each according to his ability, to each according to his work".

. For example, aside from Marx's general description of the "co-operative society" in which this principle operates, Marx also describes this principle being implemented by the worker receiving, say, "a certificate from society that he has furnished such and such an amount of labour". This is the famed "labor-certificate" of socialist theorizing. The labor-certificate does not function as a glorified money; it does not circulate between factories or between factories and the central planning agencies (as we have seen, Marx points out that "the producers do not exchange their products"); but it serves only to ensure that each individual receives his or her proper share of consumer goods.

. So Marx by no means intended that these labor-certificates were, say, simply a more accurate form of money, achieving this accuracy by replacing measurement in dollars (or francs or rubles or yen) with measurement in labor-hours. In talking about labor-certificates or, as they were something called, "labor-money", he and Engels repeatedly emphasized that they were not actually money. Thus Marx, in vol. I of "Capital", wrote that

". . . Owen's 'labor-money,' for instance, is no more 'money' than a ticket for the theater.Owen presupposes directly associated labor, a form of production that is entirely inconsistent with the production of commodities. The certificate of labor is merely evidence of the part taken by the individual in the common labor, and of his right to a certain portion of the common produce destined for consumption. But it never enters into Owen's head to presuppose the production of commodities, and at the same time, by juggling with money, to try to evade the necessary conditions of that production." (Capital, vol. I, Ch. III. Section 1. Footnote 1, p. 106, Kerr edition.)

. Engels also spoke against the idea that the labor-certificate was money. In Anti-Duhring, he refers to "a mere labor-certificate", such as "Owen's 'labor money' ", as something that "does not in any way function as money". (See the middle of Part III. Socialism. Ch. IV Distribution of Anti-Duhring, International Publishers edition, pp. 300, 333-4.)

. But why did Marx believe that the worker had to paid in labor-certificates? Could "to each according to his work" be implemented while paying the worker in money? Indeed, Marx's principle might still be said to describe wages, in the sense that consumer goods are still distributed in return for labor. Moreover, Marx says that in this distribution, "the same principle prevails as in the exchange of commodity-equivalents: a given amount of labor in one form is exchanged for an equal amount of labour in another form". But according to Marx, this is not possible as a uniform law under commodity production, because "the exchange of equivalents in commodity exchange only exists on the average and not in the individual case". That is, in societies based on commodity production, only on the average do workers receive an equivalent for their labor. In practice, the same length and intensity of work will be paid differently under capitalism, depending on which establishment the worker is laboring at, which field of work, how far the worker is able to resist harassment and wage-cutting by the employer, etc. Marx held that only after the abolition of commodity production would "principle and practice" no longer "be at loggerheads".

. So Marx's version of "to each according to his work" involves a certain leveling in wage-rates, although not an absolute leveling in the total wage packet. Indeed, Marx points out that equal payment for work of the same length and intensity is a principle of "bourgeois right"; he explains how a uniform wage-rate results in inequalities. He writes that

". . . it tacitly recognizes unequal individual endowment and thus productive capacity as natural privileges. It is, therefore, a right of inequality, in its content, like every right.Right by its very nature can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard in so far as they are brought under an equal point of view . . ." He also points out that "Further, one worker is married, another not; one has more children than another, and so on and so forth. Thus, with equal performance of labor, and hence an equal share in the social consumption, one will in fact receive more than another, one will be richer than another, and so on."

. Marx concludes that "from each according to his ability, to each according to his work" results in a system of "bourgeois right". However, he also says that, although this principle is based on an exchange of equivalents, the "content and form" are changed from that prevailing under commodity production. For one thing, the distribution of consumer goods is the only place in the economy where the principle of exchange still functions. For another, Marx says, as we have seen, that this type of "bourgeois right" is only obtained "on the average" under commodity production.

. Suppose we examine the transitional period prior to the abolition of commodity production.Even after the state sector achieves predominance, there are other sectors in the economy, and commodity exchange and money holds together the various sectors as well as permeating them.There is probably a cooperative or collective sector, involving much of the peasantry. Small-scale artisan production may exist for quite a while; etc. Even in the state machine, many enterprises may be separate commercial units (the "khozraschet" or self-financing or business-accounting system discussed in the body of this article). And the managerial and higher technical strata generally have their own higher rates of pay. In such a situation, while various dramatic reforms in pay-rates are undoubtedly going to be implemented, there will not be the payment according to work envisioned by Marx.

. It might also be noted that the experience of Russia, China, Cuba, etc. confirms that "from each according to his ability, to each according to his work" can't be accomplished under commodity production. Of course, the state-capitalist regimes may claim to uphold this principle, but they are masters at justifying any system of wages whatsoever as allegedly just a proper return for labor of this or that quality. Meanwhile the class differences and class privileges in these societies are dramatic illustrations of how far they are from paying everyone according to his or her work. As in ordinary capitalism, in state-capitalism there are exploiting strata who appropriate a vastly disproportionate part of the consumer goods.

. So one side of the question is that Marx's conception of "from each according to his ability, to each according to his work" requires the abolition of commodity production. But the other side of the question is, what grounds are there for believing that the first phase of communist society will implement this principle? It is not sufficient to define communist society as meaning one that has a whole series of nice things. It must instead be shown how the basic economic structure of communism gives rise to these things.

. Indeed, Marx was not using the method of definition and redefinition. Marx held that one cannot arbitrarily decide what type of distribution one would like to see, and then demand that the future implement it. He criticized the socialists of his time for this sort of approach. It is instead a question of seeing what mode of production is coming into existence, and what type of distribution would flow from it.

. Thus he showed, not by moral considerations but from painstaking economic analysis of the evolution of capitalism, that the very necessities of large-scale production were leading to the revolution that would substitute common ownership of the means of production for capitalist ownership. He then considered what type of distribution would follow from this mode of production.

. If the means of production are owned and directed by the entire society, there is no longer a mixed economy with capitalist owners, individual artisans, peasants and workers. There are no longer class differences in the relation to work; everyone now works; and there is no other source of "income" other than work. At the same time, there are the powerful traditions from the past which lead people to expect to be compensated for work in the manner of equal exchange. From such considerations, it seems that "to each according to his work" would not be some abstract principle imposed on society by some reformer, but something that would arise of its own accord.

. Well, it might be asked, didn't Marx and Engels impose their own moral judgments on this principle by assuming that skilled work would not get extra pay? In Anti-Duhring, Engels specifically makes the point that skilled work would not be paid extra in socialism. (See the end of the chapter on "Simple and Compound Labor".) But his reasons for arguing that there would be no differentials for extra skill were entirely economic: the society itself would be bearing the expense for the training of skilled workers; and the division between mental and manual labor, skilled and unskilled labor, would be breaking down. There was reason to believe that, for example, the increasing technical level required on a mass level by modern large-scale production would itself mitigate, in a situation where private ownership of the means of production had been overthrown, against the division between mental and manual labor.

. However, while there are solid reasons for believing that the principle of "to each according to his work" would stem from the very nature of the first phase of communist society, it clearly would be something which any particular communist society would modify according to its particular culture, consciousness, experience, and ideological views, as well as its material necessities. What, for example, is more "intense" work? This is something which the workers in different societies might well judge differently. Would it be necessary to pay more in order to entice people into occupations which were regarded by a particular society as peculiarly unpleasant? Would there be any special types of skilled work that required special incentives? Would "family allowances" be given to help workers with many children, and if so, as part of the wage-rate or as a social program independent of the workplace? There are a variety of modifications on the framework of the equal wage-rate which the mass of workers of any particular communist society might make.

. Perhaps some of these exceptions could be said, in some sense, to provide a more exact rendering of "to each according to his (or her) work". Surely that will be how the matter appears in popular consciousness. But economically, the exchange of equivalents isn't a mathematical and material fact, but an abstraction from bourgeois commodity relations. It reflects not eternal justice, but the historical conditions of a particular economic system. In talking about "from each according to his ability, to each according to his work", Marx wasn't attempting to establish the precise mathematical formulae to calculate future distribution precisely, but to show the general framework of distribution that would come about in the intermediate aftermath of eliminating commodity production. His analysis that such a framework would, however, still be a manifestation of "bourgeois right" points to the historical, rather than moral or ethical, character of this system of distribution. He then shows how communist society would gravitate, as it develops, towards yet another system of distribution.

. Thus Marx's view was that the slogans about "from each and to each" concerning the principles of distribution under socialism and complete communism (or the lower and higher phases of communism, in the terminology of Critique of the Gotha Program) were based on the necessities of a new mode of production. This mode of production presupposed the elimination of commodity production. <>

The October 1999 issue of CV contained the following other contributions to this debate:
* Debating the significance of the state sector in the transition to socialism -- Iintroduction by Joseph Green
* On affirmative action and on the economics of socialism (an extract from Sal's report of Jan. 15, 1999 on the discussion of the Seattle Marxist-Leninist Study Group of Dec. 6).
* Two issues: affirmative action and the transition between capitalism and communism (A reply to Sal's report by Mark, Detroit, Jan. 17, 1999)
* The transitional society and profit by Pete Brown (Jan. 19, 1999)
* State capitalism in the preliminary phase of socialism, by Sal, Seattle, March 1999

Back to main page, write us!

Last changed on October 16, 2001.