WEBVTT NOTE V. The Most Recent Socialist Doctrines and the Problem of Economic Calculation 1 00:00:00.000 --> 00:00:08.480 Section 5. The most recent socialist doctrines and the problem of economic calculation. 2 00:00:09.360 --> 00:00:18.320 Since recent events helped socialist parties to obtain power in Russia, Hungary, Germany, Austria, 3 00:00:19.120 --> 00:00:26.160 and have thus made the execution of a socialist nationalization program a topical issue, 4 00:00:26.160 --> 00:00:32.640 To you, Marxist writers have themselves begun to deal more closely with the problems of 5 00:00:32.640 --> 00:00:36.720 the regulation of the socialist commonwealth. 6 00:00:36.720 --> 00:00:43.000 But even now, they still cautiously avoid the crucial question, leaving it to be tackled 7 00:00:43.000 --> 00:00:45.600 by the despised utopians. 8 00:00:45.600 --> 00:00:50.920 They themselves prefer to confine their attention to what is to be done in the immediate future. 9 00:00:50.920 --> 00:00:58.600 They are forever drawing up programs of the path to socialism and not of socialism itself. 10 00:00:58.600 --> 00:01:04.800 The only possible conclusion from all these writings is that they are not even conscious 11 00:01:04.800 --> 00:01:11.960 of the larger problem of economic calculation in a socialist society. 12 00:01:11.960 --> 00:01:17.640 To Otto Bauer, the nationalization of the banks appears the final and decisive step 13 00:01:17.640 --> 00:01:21.840 in the carrying through of the Socialist Nationalization Program. 14 00:01:21.840 --> 00:01:28.880 If all the banks are nationalized and amalgamated into a single central bank, then its administrative 15 00:01:28.880 --> 00:01:35.440 board becomes the supreme economic authority, the chief administrative organ of the whole 16 00:01:35.440 --> 00:01:36.820 economy. 17 00:01:36.820 --> 00:01:41.280 Only by nationalization of the banks does society obtain the power to regulate its labor 18 00:01:41.280 --> 00:01:46.920 according to a plan and to distribute its resources rationally among the various branches 19 00:01:46.920 --> 00:01:50.920 and the use of production so as to adapt them to the nation's needs. 20 00:01:50.920 --> 00:01:57.920 Bauer is not discussing the monetary arrangements which will prevail in the socialist commonwealth 21 00:01:57.920 --> 00:02:00.920 after the completion of the nationalization of the banks. 22 00:02:00.920 --> 00:02:09.920 Like other Marxists, he is trying to show how simply and obviously the future socialist order of society 23 00:02:09.920 --> 00:02:14.920 will evolve from the conditions prevailing in a developed capitalist economy. 24 00:02:14.920 --> 00:02:31.420 It suffices to transfer to the nation's representatives the power now exercised by bank shareholders through the administrative boards they elect, in order to socialize the banks, and thus to lay the last brick on the edifice of socialism. 25 00:02:31.420 --> 00:02:43.920 Bauer leaves his readers completely ignorant of the fact that the nature of the banks is entirely changed in the process of nationalization and amalgamation into one central bank. 26 00:02:43.920 --> 00:02:58.920 Once the banks merge into a single bank, their essence is wholly transformed. They are then in a position to issue credit without any limitation. In this fashion, the monetary system, as we know it today, disappears of itself. 27 00:02:58.920 --> 00:03:11.920 When in addition the single central bank is nationalized in a society, which is otherwise already completely socialized, market dealings disappear, and all exchange transactions are abolished. 28 00:03:11.920 --> 00:03:14.920 At the same time, the bank ceases to be a bank. 29 00:03:14.920 --> 00:03:20.920 Its specific functions are extinguished, for there is no longer any place for it in such a society. 30 00:03:20.920 --> 00:03:27.920 It may be that the name bank is retained, that the Supreme Economic Council of the socialist community is called the Board of Directors of the Bank, 31 00:03:27.920 --> 00:03:33.920 and that they hold their meetings in a building formerly occupied by a bank, but it is no longer a bank. 32 00:03:33.920 --> 00:03:39.400 Ludwig, it fulfills none of those functions which a bank fulfills in an economic system 33 00:03:39.400 --> 00:03:44.920 resting on the private ownership of the means of production and the use of a general medium 34 00:03:44.920 --> 00:03:47.360 of exchange, money. 35 00:03:47.360 --> 00:03:52.880 It no longer distributes any credit, for a socialist society makes credit of necessity 36 00:03:52.880 --> 00:03:53.880 impossible. 37 00:03:53.880 --> 00:03:58.640 Bauer himself does not tell us what a bank is, but he begins his chapter on the nationalization 38 00:03:58.640 --> 00:04:05.000 of the Banks with the sentence, All disposable capital flows into a common pool in the banks. 39 00:04:05.000 --> 00:04:10.080 As a Marxist, must he not raise the question of what the banks' activities will be after 40 00:04:10.080 --> 00:04:12.600 the abolition of capitalism? 41 00:04:12.600 --> 00:04:16.440 All other writers who have grappled with the problems of the organization of the socialist 42 00:04:16.440 --> 00:04:19.400 commonwealth are guilty of similar confusions. 43 00:04:19.400 --> 00:04:24.200 They do not realize that the bases of economic calculation are removed by the exclusion of 44 00:04:24.200 --> 00:04:33.200 of Exchange and the Pricing Mechanism, and that something must be substituted in its place if all economy is not to be abolished and a hopeless chaos is not to result. 45 00:04:33.200 --> 00:04:38.200 People believe that socialist institutions might evolve without further ado from those of a capitalist economy. 46 00:04:38.200 --> 00:04:48.200 This is not at all the case, and it becomes all the more grotesque when we talk of banks, bank management, etc. in a socialist commonwealth. 47 00:04:48.200 --> 00:04:54.200 Reference to the conditions that have developed in Russia and Hungary under Soviet rule proves nothing. 48 00:04:54.200 --> 00:05:04.200 What we have there is nothing but a picture of the destruction of an existing order of social production, for which a closed peasant household economy has been substituted. 49 00:05:04.200 --> 00:05:10.200 All branches of production, depending on social division of labor, are in a state of entire dissolution. 50 00:05:10.200 --> 00:05:16.200 What is happening under the rule of Lenin and Trotsky is merely destruction and annihilation, 51 00:05:16.200 --> 00:05:21.040 Question. Whether, as the liberals hold, socialism must inevitably draw these consequences in 52 00:05:21.040 --> 00:05:26.880 its train, or whether, as the socialists retort, this is only a result of the fact that the 53 00:05:26.880 --> 00:05:32.240 Soviet republic is attacked from without, is a question of no interest to us in this 54 00:05:32.240 --> 00:05:38.240 context. All that has to be established is the fact that the Soviet socialist commonwealth 55 00:05:38.240 --> 00:05:43.840 has not even begun to discuss the problem of economic calculation, nor has it any cause 56 00:05:43.840 --> 00:05:49.080 to do so, for where things are still produced for the market in Soviet Russia in spite of 57 00:05:49.080 --> 00:05:54.200 governmental prohibitions, they are valued in terms of money, for there exists to that 58 00:05:54.200 --> 00:06:01.120 extent private ownership of the means of production, and goods are sold against money. 59 00:06:01.120 --> 00:06:05.240 Even the government cannot deny the necessity, which it confirms by increasing the amount 60 00:06:05.240 --> 00:06:10.920 of money in circulation, of retaining a monetary system for at least the transition period. 61 00:06:10.920 --> 00:06:37.920 In the dictator's deliberations, there ever recurs the thought that the immediate and most pressing task of Russian communism is the organization of bookkeeping and control of those concerns in which the capitalists have already been expropriated and of all other economic concerns. 62 00:06:37.920 --> 00:06:46.920 Even so, Lenin is far from realizing that an entirely new problem is here involved, which it is impossible to solve with the conceptual instruments of bourgeois culture. 63 00:06:46.920 --> 00:06:51.920 Like a real politician, he does not bother with issues beyond his nose. 64 00:06:51.920 --> 00:07:07.920 He still finds himself surrounded by monetary transactions, and does not notice that with progressive socialization, money also necessarily loses its function as the medium of exchange in general use, to the extent that private property and with it exchange disappear. 65 00:07:07.920 --> 00:07:16.920 The implication of Lenin's reflections is that he would like to reintroduce into Soviet business bourgeois bookkeeping carried on on a monetary basis. 66 00:07:16.920 --> 00:07:22.760 Basis. Therefore, he also desires to restore bourgeois experts to a state of grace. For 67 00:07:22.760 --> 00:07:27.480 the rest, Lenin is as little aware as Bauer of the fact that in a socialist commonwealth, 68 00:07:27.480 --> 00:07:32.280 the functions of the bank are unthinkable in their existing sense. He wishes to go farther 69 00:07:32.280 --> 00:07:36.680 with the nationalization of the banks and to proceed to a transformation of the banks 70 00:07:36.680 --> 00:07:42.360 into the nodal point of social bookkeeping under socialism. Lenin's ideas on the socialist 71 00:07:42.360 --> 00:08:06.360 The socialist state, he says, can only arise as a net of producing and consuming communes, which conscientiously record their production and consumption, go about their labor economically, uninterruptedly raise their labor productivity, and thus attain the possibility of lowering the working day to seven or six hours or even lower. 72 00:08:06.360 --> 00:08:20.660 Every factor, every village, appears as a production and consumption commune having the right and obligation to apply the general Soviet legislation in its own way, not in the sense of its violation, but in the sense of the variety of its forms of realization, 73 00:08:20.660 --> 00:08:27.160 and to solve, in its own way, the problems of calculating the production and distribution of products. 74 00:08:27.160 --> 00:08:33.860 The chief communes must and will serve the most backward ones as educators, teachers, and stimulating leaders. 75 00:08:33.860 --> 00:08:40.860 The successes of the chief communes must be broadcast in all their details in order to provide a good example. 76 00:08:40.860 --> 00:08:47.860 The communes showing good business results should be immediately rewarded by a curtailment of the working day and with an increase in wages, 77 00:08:47.860 --> 00:08:52.860 and by allowing more attention to be paid to cultural and aesthetic goods and values. 78 00:08:52.860 --> 00:08:59.860 We can infer that Lenin's ideal is a state of society in which the means of production are not the property of a few districts, municipalities, 79 00:09:29.860 --> 00:09:38.860 According to Lenin the Theorist, every large agricultural and industrial concern is a member of the great commonwealth of labor. 80 00:09:38.860 --> 00:09:43.860 Those who are active in this commonwealth have the right of self-government. 81 00:09:43.860 --> 00:09:52.860 They exercise a profound influence on the direction of production and again on the distribution of the goods they are assigned for consumption. 82 00:09:52.860 --> 00:10:03.560 Still, labor is the property of the whole society, and as its product belongs to society also, it therefore disposes of its distribution. 83 00:10:03.560 --> 00:10:11.660 How, we must now ask, is calculation in the economy carried on in a socialist commonwealth which is so organized? 84 00:10:11.660 --> 00:10:16.960 Lenin gives us a most inadequate answer by referring us back to statistics. 85 00:10:16.960 --> 00:10:31.460 We must bring statistics to the masses, make it popular, so that the active population will gradually learn by themselves to understand and realize how much and what kind of work must be done, how much and what kind of recreation should be taken, 86 00:10:31.460 --> 00:10:40.960 so that the comparison of the economy's industrial results in the case of individual communes becomes the object of general interest and education. 87 00:10:40.960 --> 00:10:52.960 From these scanty allusions, it is impossible to infer what Lenin understands by statistics, and whether he is thinking of monetary or innatura computation. 88 00:10:52.960 --> 00:11:07.960 In any case, we must refer back to what we have said about the impossibility of learning the money prices of production goods in a socialist commonwealth, and about the difficulties standing in the way of innatura valuation. 89 00:11:07.960 --> 00:11:17.460 Statistics would only be applicable to economic calculation if it could go beyond the innatura calculation whose ill-suitedness for this purpose we have demonstrated. 90 00:11:17.460 --> 00:11:23.960 It is naturally impossible where no exchange relations are formed between goods in the process of trade.