Home » The Alternative to Capitalism

The Alternative to Capitalism

The following is the final chapter from the 1986 book, State Capitalism: the Wages System Under New Management, which was co-authored by Adam Buick and the late John Crump.

If state capitalism is not socialism, what is? In other words, if state ownership and management of production does not amount to the abolition of capitalism but only to a change in the institutional framework within which it operates, what would be the essential features of a society in which capitalism had been abolished?

Although it is possible to imagine that capitalism could be replaced by some new form of class society in which some other method of exploitation would replace the wages system, we shall concern ourselves here only with the replacement of capitalism by a society from which, to remain deliberately vague for the moment, exploitation and privilege would be absent.

Since capitalism is a worldwide class society and exchange economy, it is clear that the exploitation-less alternative to capitalism would have to be a classless world society without exchange.

No Classes, No State, No Frontiers

The basis of any society is the way its members are organised for the production of wealth. Where a section of society controls the use of the means of production, we can speak of a class society. Control of the means of production by a class implies the exclusion of the rest of society from such control, an exclusion which ultimately depends on the threatened or actual use of physical force. An institutionalised organ of coercion, or state, is thus a feature of all class societies and historically first made its appearance with the division of society into classes.

In all class societies, one section of the population controls the use of the means of production. Another way of putting this is that the members of this section or class own the means of production, since to be in a position to control the use of something is to own it, whether or not this is accompanied by some legal title deed.

It follows that a classless society is one in which the use of the means of production is controlled by all members of society on an equal basis, and not just by a section of them to the exclusion of the rest. As James Burnham put it:

For a society to be ‘classless’ would mean that within society there would be no group (with the exception, perhaps, of temporary delegate bodies, freely elected by the community and subject always to recall) which would exercise, as a group, any special control over access to the instruments of production; and no group receiving, as a group, preferential treatment in distribution. (Burnham, 1945, p. 55)

In a classless society every member is in a position to take part, on equal terms with every other member, in deciding how the means of production should be used. Every member of society is socially equal, standing in exactly the same relationship to the means of production as every other member. Similarly, every member of society has access to the fruits of production on an equal basis.

Once the use of the means of production is under the democratic control of all members of society, class ownership has been abolished. The means of production can still be said to belong to those who control and benefit from their use, in this case to the whole population organised on a democratic basis, and so to be commonly owned by them. Common ownership can be defined as:

A state of affairs in which no person is excluded from the possibility of controlling, using and managing the means of production, distribution and consumption. Each member of society can acquire the capacity, that is to say, has the opportunity to realise a variety of goals, for example, to consume what they want, to use means of production for the purposes of socially necessary or unnecessary work, to administer production and distribution, to plan to allocate resources, and to make decisions about short term and long term collective goals. Common ownership, then, refers to every individuals potential ability to benefit from the wealth of society and to participate in its running. (Bragard, 1981, p. 255 emphasis in the original)

Even so, to use the word ownership can be misleading in that this does not fully bring out the fact that the transfer to all members of society of the power to control the production of wealth makes the very concept of property redundant. With common ownership no one is excluded from the possibility of controlling or benefiting from the use of the means of production, so that the concept of property in the sense of exclusive possession is meaningless: no one is excluded, there are no non-owners.

We could invent some new term such as no-ownership and talk about the classless alternative society to capitalism being a no-ownership society, but the same idea can be expressed without neologism if common ownership is understood as being a social relationship and not a form of property ownership. This social relationshipequality between human beings with regard to the control of the use of the means of productioncan equally accurately be described by the terms classless society and democratic control as by common ownership since these three terms are only different ways of describing it from different angles. The use of the term common ownership to refer to the basic social relationship of the alternative society to capitalism is not to be taken to imply therefore that common ownership of the means of production could exist without democratic control. Common ownership means democratic control means a classless society.

When we refer to the society based on common ownership, generally we shall use the term socialism, though we have no objection to others using the term communism since for us these terms mean exactly the same and are interchangeable. If we have opted for the term socialism this is as a means of showing that we decisively reject the Leninist insertion of some sort of transitional society, wrongly called socialism, between capitalism and its classless alternative, generally called communism. For us socialism is communism, since both terms describe the society which immediately follows the abolition of capitalism.

Common ownership is not to be confused with state ownership, since an organ of coercion, or state, has no place in socialism. A class society is a society with a state because sectional control over the means of production and the exclusion of the rest of the population cannot be asserted without coercion, and hence without a special organ to exercise this coercion. On the other hand, a classless society is a stateless society because such an organ of coercion becomes unnecessary as soon as all members of society stand in the same relationship with regard to the control of the use of the means of production. The existence of a state as an instrument of class political control and coercion is quite incompatible with the existence of the social relationship of common ownership. State ownership is a form of exclusive property ownership which implies a social relationship which is totally different from socialism.

As we saw, common ownership is a social relationship of equality and democracy which makes the concept of property redundant because there are no longer any excluded non-owners. State ownership, on the other hand, presupposes the existence of a government machine, a legal system, armed forces and the other features of an institutionalised organ of coercion. State-owned means of production belong to an institution which confronts the members of society, coerces them and dominates them, both as individuals and as a collectivity. Under state ownership the answer to the question who owns the means of production? is not everybody or nobody as with common ownership; it is the state. In other words, when a state owns the means of production, the members of society remain non-owners, excluded from control. Both legally and socially, the means of production belong not to them, but to the state, which stands as an independent power between them and the means of production.

The state, however, is not an abstraction floating above society and its members; it is a social institution, and, as such, a group of human beings, a section of society, organised in a particular way. This is why, strictly speaking, we should have written above that the state confronts most members of society and excludes most of them from control of the means of production. For wherever there is a state, there is always a group of human beings who stand in a different relationship to it from most members of society: not as the dominated, nor as the excluded, but as the dominators and the excluders. Under state ownership, this group controls the use of the means of production to the exclusion of the other members of society. In this sense, it owns the means of production, whether or not this is formally and legally recognised.

Another reason why state ownership and socialism are incompatible is that the state is a national institution which exercises political control over a limited geographical area. Since capitalism is a world system, the complete state ownership of the means of production within a given political area cannot represent the abolition of capitalism, even within that area. What it does mean, and this has been one of the major themes of this book, is the establishment of some form of state capitalism whose internal mode of operation is conditioned by the fact that it has to compete in a world market context against other capitals.

Since today capitalism is worldwide, the society which replaces capitalism can only be worldwide. The only socialism possible today is world socialism. No more than capitalism can socialism exist in one country. So the common ownership of socialism is the common ownership of the world, of its natural and industrial resources, by the whole of humanity. Socialism can only be a universal society in which all that is in and on the earth has become the common heritage of all humankind, and in which the division of the world into states has given way to a world without frontiers but with a democratic world administration.

No Exchange, No Economy

Socialism, being based on the common ownership of the means of production by all members of society, is not an exchange economy. Production would no longer be carried on for sale with a view to profit as under capitalism. In fact, production would not be carried on for sale at all. Production for sale would be a nonsense since common ownership of the means of production means that what is produced is commonly owned by society as soon as it is produced. The question of selling just cannot arise because, as an act of exchange, this could only take place between separate owners. Yet separate owners of parts of the social product are precisely what would not, and could not exist in a society where the means of production were owned in common.

However, socialism is more than just not an exchange economy; it is not an economy at all, not even a planned economy. Economics, or political economy as it was originally called, grew up as the study of the forces which came into operation when capitalism, as a system of generalised commodity production, began to become the predominant mode of producing and distributing wealth. The production of wealth under capitalism, instead of being a direct interaction between human beings and nature, in which humans change nature to provide themselves with the useful things they need to live, becomes a process of production of wealth in the form of exchange value. Under this system, production is governed by forces which operate independently of human will and which impose themselves as external, coercive laws when men and women make decisions about the production and distribution of wealth. In other words, the social process of the production and the distribution of wealth becomes under capitalism an economy governed by economic laws and studied by a special discipline, economics.

Socialism is not an economy, because, in reestablishing conscious human control over production, it would restore to the social process of wealth production its original character of simply being a direct interaction between human beings and nature. Wealth in socialism would be produced directly as such, i. e. as useful articles needed for human survival and enjoyment; resources and labour would be allocated for this purpose by conscious decisions, not through the operation of economic laws acting with the same coercive force as laws of nature. Although their effect is similar, the economic laws which come into operation in an exchange economy such as capitalism are not natural laws, since they arise out of a specific set of social relationships existing between human beings. By changing these social relationships through bringing production under conscious human control, socialism would abolish these laws and so also the economy as the field of human activity governed by their operation. Hence socialism would make economics redundant.

What we are saying, in effect, is that the term exchange economy is a tautology in that an economy only comes into existence when wealth is produced for exchange. It is now clear why the term planned economy is unacceptable as a definition of socialism. Socialism is not the planned production of wealth as exchange value, nor the planned production of commodities, nor the planned accumulation of capital. That is what state capitalism aims to be. Planning is indeed central to the idea of socialism, but socialism is the planned (consciously coordinated) production of useful things to satisfy human needs precisely instead of the production, planned or otherwise, of wealth as exchange value, commodities and capital. In socialism wealth would have simply a specific use value (which would be different under different conditions and for different individuals and groups of individuals) but it would not have any exchange, or economic, value.

Conventional academic economics in the West rejects the definition of economics as the study of the forces which comes into operation when wealth is produced to be exchanged. But even on the alternative definition it offersthat economics is the study of the allocation of scarce resources to meet some human needs (1)socialism would not be an economy. For socialism presupposes that productive resources (materials, instruments of production, sources of energy) and technological knowledge are sufficient to allow the population of the world to produce enough food, clothing, shelter and other useful things, to satisfy all their material needs.

Conventional economics, while denying that the potential for such a state of abundance exists, nevertheless admits that if it did this would mean the end, not only of the economy as a system of allocating scarce resources but also of goods having an economic value and price; goods would simply become useful things produced for human beings to take and use, while economics as the study of the most rational way to employ scarce resources would give way to the study of how best to use abundant resources to produce free goods in the amounts required to satisfy human needs (2). Significantly, the ideologists of state capitalism take up a basically similar position: if abundance existed, value, prices, money, markets and wages could be abolished but, since abundance does not yet exist and could not be brought into existence for some considerable time, all these categories of capitalism must continue (3).

As far as academic economics in the West is concerned, this question is not really one of fact but of definition. Scarcity is built into to its theoretical system in that it regards a factor of production as being scarce so long as it is not available in unlimited supply. Thus for it abundance can only be a theoretical limiting casea situation where land, capital and labour were all available, quite literally, for the takingwhich could never exist in practice, so that by definition scarcity would always exist. But this is a quite unreasonable definition both of scarcity and of abundance. Abundance is not a situation where an infinite amount of every good could be produced (Samuelson, 1980, p. 17). Similarly, scarcity is not the situation which exists in the absence of this impossible total or sheer abundance. Abundance is a situation where productive resources are sufficient to produce enough wealth to satisfy human needs, while scarcity is a situation where productive resources are insufficient for this purpose.

In any event, value and its categories do not arise from scarcity as a supposed natural condition; they arise, as we saw, from the social fact that goods are produced as commodities. Similarly, socialism is not a mere state of abundance; it is a social rather than a physical or technical condition. It is the set of social relationships corresponding to a classless society, i. e. to a society in which every member stands in the same position with regard to controlling and benefiting from the use of the means of wealth production. The establishment of a classless society means an end to the wage labour/capital relationship which is the basic social relationship of capitalist society. The wage (or employment) relationship expresses the fact that control over the use of the means of production is exercised by a section only of society. It is a relationship between two social classes, presupposing a division of society into those who control access to the means of production and those who are excluded from such control and are obliged to live by selling their ability to work. Since the very existence of wage labour (employment) implies a class of owners and a class of non-owners of the means of production, no society in which the predominant form of productive activity continues to be wage labour can be regarded as being socialist.

In socialist society productive activity would take the form of freely chosen activity undertaken by human beings with a view to producing the things they needed to live and enjoy life. The necessary productive work of society would not be done by a class of hired wage workers but by all members of society, each according to their particular skills and abilities, cooperating to produce the things required to satisfy their needs both as individuals and as communities. Work in socialist society could only be voluntary since there would be no group or organ in a position to force people to work against their will.

Socialist production would be production solely for use. The products would be freely available to people, who would take them and use them to satisfy their needs. In socialism people would obtain the food, clothes and other articles they needed for their personal consumption by going into a distribution centre and taking what they needed without having to hand over either money or consumption vouchers. Houses and flats would be rent-free, with heating, lighting and water supplied free of charge. Transport, communications, health care, education, restaurants and laundries would be organised as free public services. There would be no admission charge to theatres, cinemas, museums, parks, libraries and other places of entertainment and recreation. The best term to describe this key social relationship of socialist society is free access, as it emphasises the fact that in socialism it would be the individual who would decide what his or her individual needs were. As to collective needs (schools, hospitals, theatres, libraries and the like), these could be decided by the groups of individuals concerned, using the various democratic representative bodies which they would create at different levels in socialist society. Thus production in socialism would be the production of free goods to meet self-defined needs, both individual and collective.

Calculation in Kind

Under capitalism wealth is produced for sale, so that particular items of wealth (goods produced by human labour, useful things) become commodities which have an exchange value. Indeed, it is only as exchange value that wealth has significance for the operation of capitalism; all the millions of different kinds of useful things produced by human labour are reduced to a common denominatortheir economic valuebased ultimately on the average working time needed to produce them from start to finish, of which money is the measure. This enables them to be compared and exchanged with reference to a common objective standard and also allows the calculations necessary to an exchange economy to be made in a common unit.

With the replacement of exchange by common ownership what basically would happen is that wealth would cease to take the form of exchange value, so that all the expressions of this social relationship peculiar to an exchange economy, such as money and prices, would automatically disappear. In other words, goods would cease to have an economic value and would become simply physical objects which human beings could use to satisfy some want or other. This does not mean that goods would come to have no value in any sense; on the contrary, they would continue to have the physical capacity to satisfy human wants. The so-called economic value which goods acquire in an exchange economy has nothing to do with their real use value as a means of satisfying wants, since the value of a good to human beings, i. e. its capacity to satisfy some want, has never borne any relation to the time taken to produce it. In socialism goods would cease to be commodities but they would remain use values; indeed, with the shedding of their useless economic value their importance as use values would be enhanced, as this would be the sole reason why they were produced.

The disappearance of economic value would mean the end of economic calculation in the sense of calculation in units of value whether measured by money or directly in some unit of labour-time. It would mean that there was no longer any common unit of calculation for making decisions regarding the production of goods. This has often been regarded as a powerful argument against socialism as a moneyless society, so powerful in fact that when it was first expressed in a systematic way by Ludwig von Mises in 1920 (Hayek et al., 1935, pp. 87-130) it led many self-proclaimed Marxists, including Karl Kautsky, to abandon finally the definition of socialism as a value-less society (and thus, in effect, to recognise that they had always stood for state capitalism rather than socialism)(4) and others to elaborate complicated schemes for using labour-time as a common unit of account in socialism (GIC, 1930; Pannekoek, 1970, pp.23-9). Only one participant in the discussion, Otto Neurath, an academic on the margin of the German Social Democratic movement, pointed out that socialism, as a moneyless society in which use values would be produced from other use values, would need no universal unit of account but could calculate exclusively in kind(5).

Calculation in kind is an essential aspect of the production of goods in any society, including capitalism. A commodity is, as we saw, a good which by virtue of being produced for sale has acquired in addition to its physical use value a socially-determined exchange value. Correspondingly, the process of production under capitalism is both a process of production of exchange values and a process of production of use values, involving two different kinds of calculation. For the former, the unit of calculation is money, but for the latter there is no single unit but a whole series of different units for measuring the quantity and quality of specific goods used in the process of producing other specific goods (tonnes of steel, kilowatt-hours of electricity, person-hours of work and so on). The disappearance of economic or value calculation in socialism would by no means involve the disappearance of all rational calculation, since the calculations in kind connected with producing specific quantities of goods as physical use values would continue.

What it would involve would be the end of the subordination of the choice of which use values to produce and which technical methods to employ to exchange value considerations. In particular, the aim of production would cease to be to maximise the difference between the exchange value of the goods used up in the process of production and the exchange value of the final product.

One critic of socialism as a moneyless society, the Dutch academic and former minister, N. G. Pierson, writing in 1902 in reply to Kautskys talk On the Day After the Social Revolution (Kautsky, 1902), argued that, without the common unit of account represented by value as measured by money, socialist society would be unable to calculate its net income:

We will now discuss the division of income and we will assume that this is effected according to the most advanced method, that of communism. We at once discover a value problem in the strict sense of the word. What is to be regarded as income, and what therefore comes into the question when considering the division? Naturally only net income; but the income of the socialist State will also be gross income. Raw materials will be required for the goods which it manufacturers, and in the course of manufacture fuel and other things will be consumed and machines and tools will be wholly or partly worn out. The live stock which has been reared will have consumed fodder. In order to calculate its net income the communist society would therefore have to subtract all this from the gross product. But we cannot subtract cotton, coal and the depreciation of machines from yarns and textiles, we cannot subtract fodder from beasts. We can only subtract the value of one from the value of the other. Thus without evaluation or estimation the communist State is unable to decide what net income is available for division. (Hayek et al, 1935, p. 70)

Pierson was right: without economic value and money it would be impossible to calculate net income but thisas the difference between the amount of exchange value in existence at the end as compared with at the beginning of a yearis a calculation that would be quite unnecessary, indeed perfectly meaningless, in socialism. The aim of production in socialism being to produce concrete use values to satisfy human needs, all that could interest socialist society at the end of a year would be whether specific quantities of specific goods had been produced over that period. To check this there would be no need to reduce (to continue with Piersons examples) cotton, coal, machines, yarns, textiles, fodder and beasts, to some common unit; on the contrary, it is precisely in their concrete physical forms of cotton, coal and so on that socialist society would be interested in these goods and would want to count them.

Socialist society has no need for value computations such as net income, national income, gross national product and other such abstractions obtained by ignoring the concrete use values of the specific goods produced during a given period. Indeed, socialism involves precisely the freeing of production from its subordination to these exchange value considerations. The aim of production in socialism is not to maximise national income or GNP or growth (of exchange values), which are meaningless concepts for it, but to produce the specific amounts and kinds of use values which people had indicated they wanted to satisfy their needs. The calculations involved in organising and checking this would be calculations in kind and would not require any universal unit of measurement.

Similarly, at the level of the individual productive unit or industry, the only calculations that would be necessary in socialism would be calculations in kind. On the one side would be recorded the resources (materials, energy, equipment, labour) used up in production and on the other side the amount of the good produced, together with any by-products. This, of course, is done under capitalism but it is doubled by an exchange value calculation: the exchange value of the resources used up is recorded as the cost of production while the exchange value of the output (after it has been realised on the market) is recorded as sales receipts. If the latter is greater than the former, then a profit has been made; if it is less, then a loss is recorded. Such profit-and-loss accounting has no place in socialism and would, once again, be quite meaningless. Socialist production is simply the production of use values from use values, and nothing more.

Even though the existence of socialism presupposes conditions of abundance (i. e. where resources exceed needs) socialist society still has to be concerned with using resources efficiently and rationally, but the criteria of efficiency and rationality are not the same as they are under capitalism.

Under capitalism there is, in the end, only one criterion: monetary cost, which, as a measure of economic value, is ultimately a reflection of the average time taken to produce a good from start to finish. The managers of capitalist enterprises are obliged by the working of the market to choose the technical methods of production which are the cheapest, i. e. which minimise production time and therefore monetary cost. All other considerations are subordinate, in particular the health and welfare of the producers and the effects on the natural environment. Many commentators have long pointed out the harmful effects which production methods geared to minimising production time have on the producers (speed-up, pain, stress, accidents, boredom, overwork, long hours, shiftwork, nightwork, etc., all of which harm their health and reduce their welfare), while more recently scientists have documented the damage such production methods cause to nature (pollution, destruction of the environment and wildlife, exhaustion of non-renewable resources).

Socialism, as a society geared to producing only uses values and not exchange value, would take these other considerations into account and subordinate the choice of production methods to the welfare of human beings and the protection of their natural environment. No doubt this would lead in many cases to the adoption of production methods which, by capitalist standards, would be inefficient and irrational in the sense that were they to be adopted under capitalism they would cost more and so be unprofitable. This is why such methods are not adopted under capitalism, where it is exchange value and not use value that counts, and why capitalism would have to be replaced by socialism if the original aim of production as a means to serve and enhance human welfare were to be restored.

In socialism, men and women in the various industries and individual productive units would have the responsibility for producing given amounts of a particular good to a particular standard, would seek to minimise (ideally eliminate) the harm done to the health and welfare of human beings and to the environment. As there would thus be a clear object and clearly defined constraints, industries and productive units could use mathematical aids to decision-making such as operational research and linear programming to find the most appropriate technical method of production to employ. As neutral techniques these can still be used where the object is something other than profit maximisation or the minimisation of monetary costs.

As to decisions involving choices of a general nature, such as what forms of energy to use, which of two or more materials to employ to produce a particular good, whether and where to build a new factory, there is another technique already in use under capitalism that could be adapted for use in socialism: so-called cost-benefit analysis and its variants. Naturally, under capitalism the balance sheet of the relevant benefits and costsadvantages and disadvantagesof a particular scheme or rival schemes is drawn up in money terms, but in socialism a points system for attributing relative importance to the various relevant considerations could be used instead. The points attributed to these considerations would be subjective, in the sense that this would depend on a deliberate social decision rather than on some objective standard, but this is the case even under capitalism when a monetary value has to be attributed to some such cost or benefit as noise or accidents. Furthermore, in so far as money is an objective measure, what it measures is production time to the exclusion of all other factors. In the sense that one of the aims of socialism is precisely to rescue humankind from the capitalist fixation with production time/money, cost-benefit type analyses, as a means of taking into account other factors, could therefore be said to be more appropriate for use in socialism than under capitalism. Using points systems to attribute relative importance in this way would not be to recreate some universal unit of evaluation and calculation, but simply to employ a technique to facilitate decision-making in particular concrete cases. The advantages /disadvantages and even the points attributed to them can, and normally would, differ from case to case. So what we are talking about is not a new abstract universal unit of measurement to replace money and economic value but one techniqueamong othersfor reaching rational decisions in a society where the criterion of rationality is human welfare.

Planning and Industrial Organization

Socialism would inherit from capitalism the existing material basis: a complex worldwide productive network linking all the millions of individual productive units in the world (farms, mines, factories, railways, ships, etc) into a single system. The links we are talking about are physical in the sense that one unit is linked to another either as the physical user of the others product or as the physical supplier of its materials, energy or equipment. Under capitalism such links are established in two ways: organisationally (as between different productive units forming part of the same private or state enterprise) and, above all, commercially (as when one enterprise contracts to buy something from, or to sell something to, another enterprise). In socialism the links would be exclusively organisational.

Planning in socialism is essentially a question of industrial organisation, of organising productive units into a productive system functioning smoothly to supply the useful things which people had indicated they needed, both for their individual and for their collective consumption. What socialism would establish would be a rationalised network of planned links between users and suppliers; between final users and their immediate suppliers, between these latter and their suppliers, and so on down the line to those who extract the raw materials from nature.

By industrial organisation we mean the structure for organising the actual production and distribution of wealth. Some activities, such as intercontinental transport and communications, the extraction of oil and of certain other key raw materials, developing the resources of the oceans, and space research, are clearly best treated at world level, and we can imagine them being organised by a World Transport Organisation, a World Raw Materials Board, a World Oceanic Regime and so on. To begin with, and assuming (as seems likely) that socialism would inherit a problem of world hunger from capitalism, the production of certain key foodstuffs and animal feedstuffs might also need to be organised on a world level; there already exists in the Food and Agriculture Organisation (FAO) a world body that could easily be adapted for this purpose.

There would be a need for an administrative and decision-making centre at world level, democratically controlled by delegates from the various regions of the socialist world (we say nothing of the size and limits of these regions since such details must be left to the members of socialist society to settle), whose basic task would be to coordinate relations between the world industrial organisations, between these and the world-regions, and between the various world-regions. This centre would not be a world government since, as we have already explained, there would be no state and no government, not even at world level, in socialism. It would be an administrative and coordinating body and would not be equipped with means of coercion.

Other industries, and in particular manufacturing and processing, could be organised at world-regional level. There is no point in drawing up in advance the sort of detailed blueprint of industrial organisation that the old IWW and the Syndicalists used to (despite the promising name of Industrial Workers of the World, these were in fact blueprints for industrial organisations within a national framework), but it is still reasonable to assume that productive activity would be divided into branches and that production in these branches would be organised by a delegate body. The responsibility of these industries would be to ensure the supply of a particular kind of product either, in the case of consumer goods, to distribution centres or, in the case of goods used to produce other goods, to productive units or other industries.

Since the needs of consumers are always needs for a specific product at a specific time in a specific locality, we will assume that socialist society would leave the initial assessment of likely needs to a delegate body under the control of the local community (although, once again, other arrangements are possible if that were what the members of socialist society wanted). In a stable society such as socialism, needs would change relatively slowly. Hence it is reasonable to surmise that an efficient system of stock control, recording what individuals actually chose to take under conditions of free access from local distribution centres over a given period, would enable the local distribution committee (for want of a name) to estimate what the need for food, drink, clothes and household goods would be over a similar future period. Some needs would be able to be met locally: local transport, restaurants, builders, repairs and some food are examples as well as services such as street-lighting, libraries and refuse collection. The local distribution committee would then communicate needs that could not be met locally to the body (or bodies) charged with coordinating supplies to local communities.

Once such an integrated structure of circuits of production and distribution had been established at local, regional and world levels, the flow of wealth to the final consumer could take place on the basis of each unit in the structure having free access to what is needed to fulfil its role. The individual would have free access to the goods on the shelves of the local distribution centres; the local distribution centres free access to the goods they required to be always adequately stocked with what people needed; their suppliers free access to the goods they required from the factories which supplied them; industries and factories free access to the materials, equipment and energy they needed to produce their products; and so on.

Production and distribution in socialism would thus be a question of organising a coordinated and more or less self-regulating system of linkages between users and suppliers, enabling resources and materials to flow smoothly from one productive unit to another, and ultimately to the final user, in response to information flowing in the opposite direction originating from final users. The productive system would thus be set in motion from the consumer end, as individuals and communities took steps to satisfy their self-defined needs. Socialist production is self-regulating production for use.

To ensure the smooth functioning of the system, a central statistical office would be needed to provide estimates of what would have to be produced to meet peoples likely individual and collective needs. These could be calculated in the light of consumer wants as indicated by returns from local distribution committees and of technical data (productive capacity, production methods, productivity, etc) incorporated in input-output tables. For, at any given level of technology (reflected in the input-output tables), a given mix of final goods (consumer wants) requires for its production a given mix of intermediate goods and raw materials; it is this latter mix that the central statistical office would be calculating in broad terms. Such calculations would also indicate whether or not productive capacity would need to be expanded and in what branches. The centre (or rather centres for each world-region) would thus be essentially an information clearing house, processing information communicated to it about production and distribution and passing on the results to industries for them to draw up their production plans so as to be in a position to meet the requests for their products coming from other industries and from local communities.

Impossibility of Gradualism

The governments of some of the state capitalist countries, in particular those which had Leninism as their official ideology, used to proclaim as their long-term gaol the establishment of a society which they call communism and which at first sight bears a resemblance to the society we have outlined as the alternative to capitalism. For instance, at its 22nd Congress in 1961, the Communist Party of the Soviet Union (CPSU) adopted a programme for the construction of communism. One of the many books and pamphlets produced to popularise this programme tells us:

Communist distribution is a system of supplying members of society with all they need free of charge. In this society money will be superfluous. Under communism, consumer goods to say nothing of capital goods cease to be commodities. Trade and money will outlive themselves. Flats, cultural, communication and transport facilities, meals, laundries, clothes, etc., will all be free. Stores and shops will be turned into public warehouses where members of communist society will be supplied with commodities for personal use. The need for wages and other forms of remuneration will disappear. (Mans Dreams, 1966, pp. 172 and 224)

The society here described as communism is thus to be a moneyless society, but there is an implication that there might still be a body separate from the members of society which would be handing out goods to them at its initiative. In other words, it is implied that the means of production might still be controlled by a minority group which would distribute products free to the excluded, non-controlling majority. That this is to be the case is confirmed by other passages in which we are told that communism can be established in one country or group of countries and that the party will continue to exist for a long time even after the establishment of communism on a world scale (6). Above all, there is the incongruity that this system of free distribution is seen as gradually evolving from the present state capitalist system in Russia. What is envisaged is a gradual evolution, under the direction of the party, from a form of state capitalism in which workers are paid money wages with which they buy the things they need to a form of state capitalism in which they would be supplied free of charge with the necessities of life, i. e. would in effect be paid entirely in kind.

This perspective of a gradual withering away of commodity production and the money economy was not held by the CPSU alone but is the general Leninist view of how the so-called transition from socialism to communism will take place. Mandel, for instance, has gone into great detail to show how decommoditization would be economically possible as a series of administrative measures introduced on the basis of state ownership, in response to increases in productivity and inelasticities of market demand (Mandel, 1968, pp. 654-86). Such a gradual transition to full payment in kind is perhaps theoretically conceivable (although in our view highly unlikely), but in any event the end result would not be socialism, since socialism is not payment in kind on the basis of state ownership; nor could socialism be introduced administratively by a state capitalist government.

The definition of communism as state ownership plus payment in kind is shared by nearly all those who have participated in academic debates on so-called pure communism and its feasibility (Wiles, 1962; Sherman, 1970). As a result, most of the discussion which has ensued is irrelevant to socialism/communism considered as a social relationship in which all members of society stand in an equal position with regard to the control of the use of the means of wealth production. We have already seen that a system in which the means of production are owned by a state is not a classless society where all members stand in the same relationship to the means of production, but a class society in which those who control the state stand in a privileged position with regard to the means of production, since they control their use to the exclusion of the rest of society. This is the case even if, as in Leninist theory, this controlling group is to be a vanguard party conceived as being dedicated to serving the interests of the excluded majority. As long as a section of society is excluded from controlling the means of production, a class society exists, no matter how generous or well-meaning the ruling class is considered as being. This is one reason why a gradual evolution from state ownership (state capitalism) to common ownership (socialism) is impossible. Such a gradual evolution from a class society to a classless society is impossible because at some stage there would have to be a rupture which would deprive the state capitalist ruling classbe they well-meaning or, more likely, otherwiseof their exclusive control over the means of production. There would have to be, in other words, a political and social revolution in which the power to control the use of the means of production would be consciously transferred by the excluded majority from the minority state capitalist class to all members of society.

An equally fundamental reason why a gradual evolution from state capitalism to socialism is impossible is the difference in the form which wealth takes in the two societies. In socialism wealth appears simply in its natural form (as various use values capable of satisfying human wants), while under state capitalism wealth takes the form of value (goods having acquired an exchange value in addition to their natural use value).

As the totality of wealth produced today is a single product produced by the whole workforce acting as a collective labourer (Marx, 1919 (vol. I) pp. 383-4), some goods cannot be produced in the one form and some in the other. The social product that is wealth today can only be produced either wholly as value or wholly as simple use value. Certainly some goods can be directly distributed in kind while others remain obtainable only against payment in money, but this is not the same thing. In this case the goods produced for distribution in kind would still be value in that their production costs, i. e. the exchange value used up in producing them, would have to be paid for out of the surplus value realised in the priced goods sector. Profit-and-loss accounting in units of value would still be necessary. This is why all schemes such as Mandels for a gradual withering away of commodity production insist on the need to retain some universal unit of account (whether this be monetary units as in the various schemes for shadow prices or units of labour-time as an attempt to measure economic value directly) in both the price and the free goods sector.

The changeover from commodity production to production solely for use can only take place as a rupture, not as a gradual transition. Since classless society and common ownership are synonyms, and since commodity production is a nonsense on the basis of common ownership, this rupture (revolution) is in fact the same as the one needed to move from class society to classless society. Neither classes nor the state nor commodity production nor money can gradually wither away. It is no more reasonable to assume that state capitalism could change by degrees into socialism than was the assumption of the classical reformists that private capitalism could be so transformed.


The alternative to capitalism as a society already existing on a world scale is, to define it somewhat negatively, a frontierless, classless, stateless, wageless, moneyless world. Or, more positively:

The new system must be world-wide. It must be a world commonwealth. The world must be regarded as one country and humanity as one people.
• All the people will co-operate to produce and distribute all the goods and services which are needed by mankind, each person, willingly and freely, taking part in the way he feels he can do best.
• All goods and services will be produced for use only, and having been produced, will be distributed, free, directly to the people so that each persons needs are fully satisfied.
• The land, factories, machines, mines, roads, railways, ships, and all those things which mankind needs to carry on producing the means of life, will belong to the whole of the people. (Philoren, 1943 emphases in original)

Opinions may legitimately differ as to whether or not such a society is feasible. That is a separate question. However, in the interests of clarity, we suggest that those who pose as critics of capitalism, but who consider that the society outlined above is not feasible in the immediate future, should refrain from using the term socialism to refer to any society in which money, wages and the state exist. There already exists a perfectly adequate term to refer to such a societycapitalism or, as the case may be, state capitalism. It merely confuses the issue to talk of socialism being anything other than a moneyless, wageless, stateless world commonwealth.


(1) This leads to the basic assumption which economic analysis makes about the physical world. It is assumed that the fundamental feature of the economic world, the feature which gives rise to economic problems at all, is that goods are scarce. Very few things in the world, with the exception of air, water and (in some countries) sunshine, are available in unlimited amounts. It is because of scarcity that goods have to be shared out among individuals. If scarcity did not exist, then there would be no economic system and no economics (Stonier and Hague, 1980, p. 3emphasis in original).

(2) Abundance removes conflict over resource allocation since by definition there is enough for everyone, and so there are no mutually exclusive choices, no opportunity is forgone and there is no opportunity-cost. The golden age, a communist steady-state equilibrium, will have been reached. Gradual change, growth, will be simple and painless. The task of planning becomes one of simple routine; the role of economics is virtually eliminated. There is then no reason for various individuals and groups to compete, to take possession for their own use of what is freely available to all (Nove, 1983, p. 15). There would then be no economic goods, i. e., no goods that are relatively scarce; and there would hardly be any need for a study of economics or economizing. All goods would be free goods, like pure air used to be (Samuelson, 1980, p. 17 emphases in original).

(3) Present productive forces are quite inadequate to provide the whole of mankind with up-to-date comfort (Mandel, 1968, p. 610). The necessity of a transition period follows precisely from the fact that on the morrow of the abolition of capitalism, society is still living in a situation of relative shortage of consumer goods. The allocation of consumer goods during the epoch of transition from capitalism to socialism must therefore be effected essentially through exchange, that is, through buying and selling. Consumer goods continue to be commodities. Leaving aside the social wage, the labour force is essentially paid in money. A huge monetary sector therefore continues to exist in the economy (ibid., p. 632 emphasis in original).

(4) In the same way, even if people were to limit themselves strictly to the exchange of natural produce, the existence of money would continue to be indispensable in a socialist society as a measure of value for accounting purposes and for calculating exchange ratios (Kautsky, 1922, p. 318).

(5) . . . the economic analysis, which starts off with quantities, which are measured differently, and which ends up with quantities, which are measured differently, can never be reduced to a single common denominator, especially not to the common denominator labour (Neurath, 1925, p. 74).

(6) It is not impossible that communism will have been established in the socialist countries before the capitalist countries take the socialist path (Mans Dreams, 1966, p. 227). The Party will hold the leading position in communist society for a long time, although its working methods and forms and its structure will naturally alter substantially. The Party, the very embodiment of all that is progressive and organised, will still exist even in the first stages of communism, after its victory on a world scale. It will take communist society many years and even decades before the new mechanisms are fully developed and become maximally effective, before conditions are created for the withering away of the Party. This will be a long and gradual process (ibid., p. 233).

Notify of
This site uses User Verification plugin to reduce spam. See how your comment data is processed.
Newest Most Voted
Inline Feedbacks
View all comments