Method of Theorectical Analysis

The Method of Theoretical Analysis of Soviet Economy

Why do we bring under discussion the method of analysing Soviet economy? Does it not go without saying that in studying our economy we should be guided by the Marxist method?
We do so for this reason. There cannot, of course, be the slightest doubt that in studying our economy we can, must, and will base ourselves on the general principles of Marxist method, in so far as this means the method of dialectical materialism in general, and in particular the general sociological method of Marx. However, in so far as it means the method used by Marx in his political economy, that is, the method of studying the production-relations of pure capitalism, we are obliged to face a methodological prob
lem, since the very material to be examined is substantially different. The material is different in that we have to investigate the laws not only of capitalist development but also of capitalist decay, the disappearance of capitalist production-relations, and to analyse the laws of a new economy which is taking the place of capitalism and which bears all the marks of an economy of a mixed, transitional type. Marx in Capital examined classical capitalism; what we have to examine is probably not quite classical, perhaps even definitely not classical, but all the same a living, real, and historical first experience of a concrete commodity-socialist system of economy. We could disregard the problem of method only if we were to pre-suppose that the method of study used by Marx in Capital is only an application of the general sociological method of historical materialism, and that this is possible because that method is wholly and completely, without the slightest changes or variation, applicable to the study of any system of economy, whether existing before a commodity economy or following a commodity economy. But this assumption in its turn presumes, as a tacit logical pre-supposition, that theoretical political economy is not only the science which studies merely something which is historically determined—more precisely, the commodity and commodity-capitalist system of production-relations—but also the science of human production-relations in
general. We know that among Marxists there is a small group who uphold that standpoint, as was shown in particular in I. I. Skvortsov's paper, at the Communist Academy, 'On the subject and method of political economy'. We must however, consider the quite incontrovertible fact which was pointed out more than once in the discussion on Comrade Skvortsov's paper, that this view of political economy is in complete contradiction with everything that Marx himself wrote on the subject and method of political economy, that it contradicts the entire theory of capitalist economy which he gave us in Capital and other works, and that it relies, so far as the founders of scientific communism are concerned, on two or three loose formulations by Friedrich Engels.
But if we regard it as established that Marxian political economy is the science of commodity and commodity-capitalist economic systems, then we can come to grips in real earnest with the next question, namely, whether or not there are in the method used by Marx in Capital certain specific elements which are connected with the specific nature of the material being studied. If there prove to be such elements, then the question arises, which of them are preserved and which of them fall away or need to be varied when we go over to analysing the system of economy which in history takes the place of capitalism—not to speak of the need to make variations even when analysing capitalism itself in its monopolist stage and in the period of its decay.
It is quite clear that we cannot answer the questions which we have just raised without saying a few words on the method of Marxian political economy in the aspect which concerns us. After this methodological excursion we shall more easily understand the problem of the method to be followed in theoretically analysing the Soviet economy.
The Method of Marxian Political Economy In order to understand the method used by Marx in Capital we have at our disposal, on the one hand, a series of direct statements by Marx about method, scattered through his works, and, on the other, some specific pieces of research where the use of this method is shown in practice.
When touching on the question of method, Marx more than once tried to show how the application of the method of materialist dialectics differs according to the specific material to be studied. He pointed out that, for example, the study of natural phenomena in those cases when it is not possible to observe the phenomena in a pure form can be carried out by mounting experiments which permit such observation. However, 'in the analysis of economic forms neither microscopes nor chemical reagents are of use. The force of abstraction must replace both' (Preface to Capital). Here Marx makes the first great distinction within the material to be studied by the dialectical method, that is, the distinction between nature and human society. In relation to social processes, which cannot be repeated or reproduced artificially, he considered it necessary to substitute, for the results which could in some spheres be obtained by experimentation, the force of abstraction. Essentially, the method of historical materialism is to a high degree an abstract method of investigation, because, in the indivisible complex of a social organism, in which direct relations in the process of production are very closely interwoven with what it is customary in Marxist terminology to call the 'superstructure', the Marxist begins his analysis with the centre from which all changes and all movement begin, namely, economics, separating this by the force of abstraction—at a certain stage of his investigation—from all the rest.
But the difference between the ways in which the method is used does not end there. When the basis is abstracted from the superstructure and we proceed to examine this basis (in the present case to examine commodity-capitalist economy) the material under examination itself, the specific peculiarity of the laws of the capitalist system, demands of us a further exercise of the power of abstraction. The point is that the pattern of regularity of the capitalist mode of production has its own peculiarities as it develops. In order to grasp the basic dialectical law of development of capitalist economy in its equilibrium generally, it is necessary, first, to rise above all those phenomena of concrete capitalism which prevent us from understanding this social order and its development in their purest form. Marx writes on this matter: 'In theory it is assumed that the laws of capitalist production operate in their pure form. In reality there exists only approximation; but this approximation is the greater, the more developed the capitalist mode of production and the less it is adulterated and amalgamated with survivals of former economic conditions'. (Capital, Vol. Ill, part i, p. 153, Stepanov's translation. [F.L.P.H. English edition, p. 172.]
Consequently, in order to understand the laws of capitalism it is necessary to build up a concept of pure capitahsm, as Marx does in Capital. But this is not enough. So far there is, in respect of the use of abstraction, no great difference between Marx's general sociological method and the method of his political economy. The difference begins when the analysis of this pure capitahsm has revealed peculiarities of this economic structure which call for an abstract-analytical method adequate to deal with them. Capitahsm is an economic system which on the one hand is an indivisible, integral organism with reciprocal connexion and mutual dependence between all its parts, but which on the other hand is an unorganized system in which equilibrium is achieved purely by spontaneity, and at the same time, and also because of all this, relations between people are treated as things [reified], materialized. The essence of things does not correspond to the form in which they appear. The immanent laws of development and equilibrium of the system assert themselves through a mass of accidents and contrary tendencies, and can be grasped only on the basis of profound critical, and at the same time abstract, analysis of the basic law of the system and the forms in which it manifests itself, that is, through the establishment of the law of value, the law of the self-regulation of the capitalist mechanism. The purer we imagine capitalism to be, the more distinctly do we see all the immanent laws of its development and equilibrium, and the more obvious to us, also, is the specific nature of the very type of regularity or conformity to law of the capitalist economy, the concrete meaning of the word 'law' itself as applied to this social form. 'Under capitalist production, the general law acts as the prevailing tendency only in a very complicated and approximate manner, as a never ascertainable average of ceaseless fluctuations.'
(Capital, Vol. Ill, part 1, p. 139, Stepanov's translation. [F.L.P.H. English edition, p. 159.]
It is very important to notice that Marx is not speaking here of the complication and approximation in the working of a law applying to a concrete capitahsm, where all this can be caused by the distorting influences of other economic forms, such as survivals of feudalism. No, Marx is speaking of pure capitalism, of capitalism in general, for analysing which a second degree of abstraction is needed. One can think of capitalism at the stage when it has embraced the whole of world economy and in the sphere of production there are only two classes, the capitalists and the workers, and at the same time understand its laws in the spirit of vulgar economics, that is, by offering in the guise of science mere superficial description, complete with the reified relations of commodity production. It is precisely the analysis of pure capitalism that reveals also in the purest form that specific feature of regularity in commodity economy which is inherent only in an unorganized yet at the same time indivisible and coherent economic complex. And from this follows the methodological approach appropriate to the study of an economy of this type. Only by the method of abstract analytical dialectics, and only by proceeding from the concept of the law of value, can one find one's way amid all these complications which present so extremely confused a picture to the investigator. In relation to economic forms where the law of value is not yet operating, and also in relation to the form where it will no longer operate, that second degree of abstraction and that complication of methodological procedures which are typical of Marxian political economy, typical of Capital, are not needed. To clarify this idea let us take an example. The law of deviation of price from value, which is only the form in which the law of value manifests itself, is inherent in the capitalist system as such; it results from the entire structure of capitalism and its particular method of achieving equilibrium in the whole system of production, exchange, and distribution. 'This [i.e., the quantitative incongruity between price and magnitude of value, E.P.] is no defect, but on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another.' (Capital, Vol. I, p. 72, Stepanov's translation. [English translation, Allen & Unwin, p. 75.]
In these circumstances it is only thanks to the discovery of the law of value as the central law of the commodity -capitalist system that one succeeds in grasping through 'apparently lawless irregularities' the regularity of the system as a whole and its working, and then in logically deducing from the operation of the law of value all the categories of political economy, as scientific descriptions of those real production-relations of capitalism which take shape spontaneously on the basis of the operation of this law in real life.
It becomes fully comprehensible also why the whole of this construction appears when expounded to be an a priori construction, though Marx himself arrived at it by way of critically working over an enormous amount of factual material. Only through combining the study of concrete facts with abstract analysis did he succeed in building his theory of abstract capitalism, in which real capitalism, freed from everything accidental and untypical of this economic form, lives and moves, illumined with all the colours of the rainbow, and in its turn the entire construction throws back a shaft of amazingly bright light upon capitalist relations in the real world.
Political Economy and Social Technology Political economy is the science which reveals the laws of development and equilibrium, and (in part) the laws of decay of the commodity and commodity-capitalist mode of production, as a planless, unorganized mode of production. The antithesis of commodity production, which succeeds it in history, is the planned socialist economy. And as, in the sphere of economic reality, the commodity of the capitalist mode of production is replaced in planned economy by the product, value by the measurement of labour time, the market (in its capacity as the sphere in which the law of value manifests itself) by the book-keeping of planned economy, surplus value by surplus product, so in the sphere of science political economy gives place to social technology, that is, the science of socially organized production. 'Political economy is not technology', said Marx in his introduction to the Critique of Political Economy, emphasising thereby that political economy has for its direct and immediate task the analysis not of man's relations with nature, but of men's relations with each other in the process of production (as they take shape in commodity and commodity-capitalist economy). It follows from this, however, that political economy is not social technology. It studies only the production-relations of an elemental, unorganized form of economy which possesses the types of regularity inherent only in this form, the types which reveal themselves on the basis of the operation of the law of value. Regularity appears in such a way that the result of the operation of the law does not coincide at all with the aims, plans, aspirations, and expectations of the agents of production, since they calculate merely within the limits of an extremely restricted economic field and by the very essence of the whole system can never foresee what will be the consequences, in the final, objective sense, of their uncoordinated actions, strivings, and plans. And knowledge of the laws of capitalist production and exchange, while very important for understanding what happens in production under certain conditions, cannot eliminate the domination of things over people where in the sphere of reality the production-relations of a commodity economy exist and operate. If all the capitalists and merchants of contemporary economy possessed a perfect knowledge of Marx's Capital, they would probably calculate better within the limits of their sphere of activity and would possibly commit fewer stupidities; but they would not be able to overcome these consequences in the economy which ensue from its unorganized, elemental character, from the absence of any preliminary estimation of its possible results and of any planned distribution of the productive forces. Reality proves stronger than consciousness. In Anti-Diihring, Engels, ridiculing Diihring's attempt to retain the law of value in the sphere of distribution 'in the future society', wrote:
The 'exchange of labour against labour on the principle of equal value', in so far as it has any meaning, that is to say, the exchangeability against each other of products of equal social labour, that is to say, the law of value, is precisely the fundamental law of commodity production, hence also of its highest form, capitalist production. It manifests itself in existing society in the only way in which economic laws can manifest themselves in a society of individual producers: as a law of nature, inherent in things and in external conditions, independent of the will or intentions of the producers, working blindly. (F. Engels, Herm Eugen Dilhrings Umwalzung der Wissenschaft, Stuttgart, 1920, p. 339. [Anti-Diihring, Lawrence & Wishart edition, p. 343.])

Now, one must ask, what is changed in this connexion after the transition of society to completely organized, planned, socialist production? Is the activity of human beings here subject to necessity, does regularity prevail here too in the sphere of social
relations? Of course. To suppose otherwise would signify repudiating the entire theory of dialectical materialism and substituting for it a conception of the world based on a relapse into the philosophy of free will—if not individual free will, then collective free will. If we regard freedom as the consciousness of necessity, then regularity in the sphere of man's economic and social activity continues to prevail here too, merely changing its form. Law 'asserts itself under planned economy in a different way from under unorganized commodity economy. But there is regularity, conformity to law, though in view of the difference of form it has been considered necessary to replace the term 'law' with something different. And in so far as regularity asserts itself in a different way, to that extent also the method by which this regularity is grasped also undergoes a change. The method is changed as a result of the change in the material being investigated, and one social science is replaced by another when one passes to studying this changed material.
Let us see more concretely how the material to be studied is changed and why political economy must give place to another science. On this subject we find in Engels's Anti-Diihring the following classical formulation, which both he and Marx frequently repeated elsewhere and which is often understood to a considerable extent in an over-simplified, not to say vulgarized fashion. I have in mind the celebrated phrase about the 'leap into the realm of freedom'.
The seizure of the means of production by society puts an end to commodity production, and therewith to the domination of the product over the producer. Anarchy in social production is replaced by conscious organization on a planned basis. The struggle for individual existence comes to an end. . . . The conditions of existence forming man's environment, which up to now have dominated man, at this point pass under the dominion and control of man, who now for the first time becomes the real conscious master of nature, because and in so far as he has become master of his own social organization. The laws of his own social activity, which have hitherto confronted him as external, dominating laws of nature, will then be applied {angewandt) by man with complete understanding, and hence will be dominated by man. Men's own social organization (Vergesellsckaftung), which has hitherto stood in opposition to them as if arbitrarily decreed by nature and history, will then become the voluntary act of men themselves. The objective, external forces which have hitherto dominated history will then pass under the control of men themselves. It is only from this point that men, with full consciousness, will fashion their own history; it is only from this point that the social causes set in motion by men will have, predominantly and in constantly increasing measure, the effects willed by men. It is humanity's leap from the realm of necessity into the realm of freedom.  (Anti-Diihring, same German edition, p. 306. [Lawrence & Wishart edition, pp. 311-13.]
In connexion with this question it is useful to recall as well what Marx said about freedom and necessity in the sphere of economics.
The realm of freedom actually begins only where labour which is determined by necessity and mundane considerations ceases; thus in the very nature of things it lies beyond the sphere of actual material production. Just as the savage must wrestle with nature to satisfy his wants and to maintain and reproduce life, so must civilized man, and he must do so in all social formations and under all possible modes of production. With his development this realm of physical necessity expands as a result of his wants; but, at the same time, the forces of production which satisfy these wants also increase. Freedom in this field can only consist in socialized man, the associated producers, rationally regulating their interchange with nature, bringing it under their common control, instead of being ruled by it as by the blind forces of nature; and achieving this with the least expenditure of energy and under conditions most favourable to, and worthy of, their human nature. But it none the less still remains a realm of necessity. Beyond it begins that development of human energy which is an end in itself, the true realm of freedom, which, however, can blossom forth only with this realm of necessity as its basis. The shortening of the working day is the basic prerequisite. {Capital, Vol. Ill, part 2, P- 357)
From these formulations by Engels and Marx the reader can see that neither speaks of abolishing the 'laws of human social activity', though the concretely historical law of value, that is, the law which determines the activity of the agents of production in an unorganized commodity society, ceases to exist along with this type of productive system, to which it belongs. And Marx in addition makes the extremely important observation that under socialism the growth in wants must bring an increased growth of necessity, that is, in this case, growth of the economic necessity of satisfying these wants. Under socialism, and later under communism, the laws are applied and utilized by man, and in this sense man acquires mastery over them. But one can acquire mastery only over something which exists; mastering the force of steam, mastering the elemental operation of the laws of nature generally, does not mean abolishing these laws. It only means directing their operation along a desired channel. Though it is obvious that to acquire mastery over 'the laws of one's own social activity' means at the same time very significantly to change the way in which these laws manifest themselves. In this also consists the difference between the laws of capitalist production and the socio-economic regularity of planned socialist economy. Determinism prevails here too, but the forms of conditionality, of causality, are different. Let us clarify this by means of a very simple and typical example, where the structural difference between capitalism and socialism stands out very sharply, together with the difference in the forms of regularity which results therefrom.
Let us suppose that in a certain capitalist country there is under-production of leather footwear in comparison with the existing effective demand for this commodity on the market. First, the disproportion is revealed post factum, after the increased demand has come into existence. It could not happen otherwise where there is no social organization of production, no estimation of the dimensions of production and of effective demand. True, capitalist society has worked out its palliative methods of estimating future demand, but they only mitigate the inevitable fluctuations without being able to eliminate them, in so far as the system of distribution of productive forces remains a system of commodity economy. (Under monopoly capitalism, which means an increase in the organized character of production and exchange on the same capitalist basis, estimation of production, and to some extent also of effective demand, is of course carried out better than under completely free competition.)
The increased demand causes an increase in the prices of footwear and consequently leads to an unforeseen re-distribution of the national income (involving surprises which are pleasant to some and unpleasant to others), different from what it would have been if there had been equilibrium between supply and demand. After this comes an increase of production in the existing enterprises of the leather industry, an influx of new capital, perhaps fresh construction. Just as the amount of additional demand was not exactly known, because previously, before the market gave warning, the fact of under-production was not known, so the additional production may overflow, and usually does overflow, the limits of the additional demand, the phase of under-production thus being succeeded by a phase of overproduction, with a consequent fall in prices, a new spontaneous redistribution of the national income and of capital between different branches of production, and so on into the next disproportion. Any correspondence between supply and demand happens by accident; disproportion one way or the other is the rule. This is the way in which, through the operation of the law of value, the necessity of attaining equilibrium between production and effective demand asserts itself. The laws of man's social activity in the sphere of production confront the agents of production as forces external to themselves, blind, uncontrolled forces of nature. Just as, in order that equilibrium may be achieved in any system, a regulator is needed in the sphere of reality, a regulator specific to the given system alone, so also, in order to understand all this mechanism and the regularities peculiar to it, we need specific methodological procedures.
Let us now see how regularity will assert itself in an analogous situation under planned economy. Let us assume that an increase in the demand for footwear takes place in socialist society. The statisticians of socialist production will have calculated it, substantially, beforehand, through the methods of calculating mass demand which will be worked out under this form of production. The growth in demand here, called forth by the growth of population and other causes which are subject to calculation, will be taken into account in the drawing up of a production programme for the footwear industry, with all the consequences which follow from it for other branches of production. But the very fact of the growth of demand for leather footwear (in so far as it is not subjected to change through the conscious influence of society itself for the replacement of one type of shoe by another, or in so far as production itself does not consciously give rise to a new demand) is an objective fact. The regulating centres of economic life can adjust themselves to this objective fact, but cannot do away with it, cannot abolish it. And the adjustment of production to demand in this sphere calls for a number of necessary measures in the redistribution of the labour force in contiguous branches of production, including that of the raw material of leather, which, to the extent that it deals with material of animal origin, is more dependent than other branches on natural conditions. The difficulty can be partly overcome by the release of emergency reserves, which will always play a very big part under planned economy. But in this and in any other case regularity, as an externally compelling fact, remains, though it asserts itself through means quite different from those which operate in commodity economy. It asserts itself not through the market, it gives notice of its arrival not post factum, but in advance, ante factum, in the consciousness of the regulating economic organs of society. It is not prices on the market after production but columns of figures of socialist book-keeping before production that sound the alarm and enter the consciousness of the planning centres: they inform the guiding economic centres of the growth of new demands, and thereby of an economic necessity to which they must adjust themselves. This anticipation of regularity constitutes precisely the first characteristic feature of the new, socialist production, distinguishing it from the old. This distinguishing feature appears also in the fact that the interdependence of the different parts of the productive mechanism also makes itself felt not spontaneously but in the adjustment of proportional relationships indicated in advance by the state planning centre of the socialist economy. The domination of society over the productive forces is achieved as a result of foreseeing the measures to be adopted, their consequences and their pre-requisites. With this adaptation to economic necessity the number of methods and possibilities of achieving a new aim are greatly increased. Even with the same labour force and material resources as under capitalism, an enormous increase is here achieved in the possibilities of economic manoeuvring, and one change alone in the quality of the economic structure makes possible an increase in the quantity of the results attainable.
But to the extent that there is a change in the form in which economic necessity reveals itself and the form in which organized society reacts to it in the sphere of everyday life, to that extent there is also change in the method of studying this necessity and adjusting oneself to it both in the sphere of cognition and in that of science. With the abolition of the law of value in the sphere of economic reality, the old political economy is abolished likewise. Its place is now taken by a new science, the science of foreseeing economic necessity in an organized economy and the more expedient fulfilment of needs by production and other means. This is a quite different science, this is social technology, the science of organized production, organized labour, the science of a system of production-relations where economic regularity manifests itself in new forms, where there is no more reification of human relations, where, with the abolition of the commodity, commodity fetishism also disappears, where foreseeing the results of economic measures and study of what will be occupies not a smaller but within a very short time a more important place than estimating objective consequences, than analysing what was and why it was. This science is in a certain sense as distinct from political economy as the market of commodity economy is distinct from the future offices of the socialist regulatory organs, with their extremely complex and ramified nervous system of social foresight and planned guidance.
The Method of Studying the Commodity-Socialist System of Economy It is a complex business to analyse an economic system in which both the planning principle—within the limits imposed by the degree of organization attained in the economy—and also the law of value, with its externally-compelling power, are operating simultaneously. The especial difficulty of studying an economy of this kind is that neither form of production is present in its pure form. While the law of value, to the extent that it manifests itself in this system, is an old acquaintance of ours, which has been sufficiently studied as it is exemplified in classical capitalism and in relation to the system of simple commodity production, the planning principle is something unfamiliar, which first emerges on to the arena of history in our economy, and has so far revealed itself to us only to a limited extent. Nor is that all. Both the law of value and the planning principle, the basic tendencies of which assume in the Soviet economy the form of the law of primitive socialist accumulation, are operating within a single economic organism, and are counterposed one to the other as a result of the victory of the October revolution. Consequently, neither law appears in its pure form. The proletarian state guides not only the state economy but also domestic and foreign policy, endeavouring to protect the system as it exists, to strengthen it, and to bring socialist principles to triumph in it. It encounters resistance from world capitalism without and from private economy within. As a consequence of its economic policy, the real results achieved in the economic sphere do not follow the optimum line of the law of primitive socialist accumulation but a line that results from a certain relation of forces between the socialist tendencies and the opposing influences which they encounter.
It is quite obvious that under such conditions a simple description of what is and what has been will not be scientific in the true sense of that word. Marx said that if the form in which things appear and their actual essence were to coincide no science would be necessary. This does not only apply to the vulgar economists who merely describe the surface phenomena of capitalist economics, it is also a warning against any future backsliding into vulgar economics, including a vulgar approach to the study of the Soviet economy. A description of what is the result of a struggle between two principles in our economy will not explain why one particular result emerges and not another, or give a prognosis for the future. Consequently we have here too to resort to the abstract-analytical method of study and to try to ascertain what the conflicting tendencies are, first of all in their pure form. The main difficulty does not lie in analysing the law of value, nor even in those distortions and restrictions of its working which we constantly observe in our economy. For, first, we know here what is undergoing distortion and restriction. We can compare a photograph of the distorted law of value with the original. Furthermore, we have already acquired and studied some experience of the distortion of the law of value under monopoly capitalism, so that not all possible distortions of the working of this law are novelties and surprises for us. It is with the law of primitive socialist accumulation that the main difficulty lies—in ascertaining the inherent tendencies of this law in their pure form and then explaining all the restrictions to which they are subjected as a result of the operation of the law of value.
In the very attempt to analyse the law in its pure form and trace deviations from it we encounter the following difficulties, some of which have been formulated as objections. First: is it possible in general to speak of a law applying to the process of primitive socialist accumulation; is it not more correct to speak merely of the planning principle and its operation? Secondly, is it possible and correct methodologically to analyse the working of the law in its pure form, allowing, at a particular stage of the investigation, abstraction to be made from the actual economic policy of the Soviet state, which is dictated by the entire aggregate of political circumstances? Thirdly and lastly: is it in general possible to proceed from the presupposition that two basic laws are in conflict in our economy? Which of them, then, is the single regulator of the economy?
We have partly prepared the way for the answer to the first question in what we have said already. We can speak of a law of primitive socialist accumulation in a sense that we shall explain. In the general sociological meaning of the word, we mean by 'law' a constancy of results when approximately the same causes are reproduced in approximately the same social situation (absolute repetitions do not occur in nature, and still less in society). A law in the economic meaning of the word is a constancy of results following from the reproduction of a certain type of production-relations. For example, the law of value begins to operate wherever the production-relations of commodity and commodity-capitalist economy appear. Let us now assume that the planning principle begins to operate in society. Does causality cease to operate here—is regularity abolished in the sphere of production-relations? We have already answered this question in the negative. The regularity is merely of a different kind, it makes its way into consciousness from the beginning: what is economically necessary is known beforehand, is taken into account in advance, and then leads to organized action in a certain direction. This is the only difference.  In his 'Political Economy Syllabus', Comrade A. Kon writes on the question of the method of studying the Soviet economy: 'We consider it necessary, however, to emphasize categorically that, while introducing into a course on the theory of capitalism the question of the refraction of capitalist laws in Soviet economy, we do not intend in passing to study the theory of the Soviet transitional economy or, still less, the economic policy of the Soviet Government. We are fully aware that in our economy causal principles and teleological principles are combined and that for this reason it is impossible to study the Soviet economy taking causality as one's axis. We understand very well that in theoretically studying our economy the basic problems of political economy (the problem of value, money, surplus value, profit and so on) are to a considerable extent modified and pushed into the background by the fresh fundamental problem of the coexistence of spontaneity and the planning principle in our economy. We do not forget for one moment that our economy is transitional in its very
beginning to force a way for itself, its first task is to fight to exist and consolidate itself, which in our economy, under conditions of the growth of capitalist relations within and capitalist encirclement without, entails a constantly expanded reproduction of socialist relations, with a definite scale of expansion, objectively dictated to the Soviet state. This is a question of life and death for the whole system. But struggling for the reproduction of socialist relations means struggling to increase the means of production belonging to the proletarian State, means uniting around these means of production ever greater numbers of workers, means raising the productivity of labour throughout the system. And this also means struggling for expanded reproduction of the given system, struggling for the maximum primitive socialist accumulation. The whole aggregate of tendencies, both conscious and semi-conscious, directed towards the maximum development of primitive socialist accumulation, is also the economic necessity, the compelling law of existence and development of the whole system, the constant pressure of which on the consciousness of the producers' collective of the State economy leads them again and again to repeat actions directed towards the attainment of the optimum accumulation in the given situation. The necessity for these actions is known, though not always distinctly; (Transition to consciously planned regulation is connected both historically and immanently with socialization of the instruments of production; such regulation is inevitable after the socialist revolution. It is, however, quite another question how far it is 'conscious'. Even if it were true that the concept 'law' disappears where conscious direction of production exists, we could still speak of a law if only because consciousness and foresight are still rather modestly developed among us.)
) this essence and that therefore even the methodological procedures of study are modified', (pp. 19-20).
The author is quite right in saying that theoretical analysis of our economy, as an economy of a special type as compared with capitalism, demands modification even in the methodological procedures of study; which is, indeed, what I show in this book. But he is not right, either in his formulation or in the essence of the matter, when he speaks of the impossibility of 'studying the Soviet economy taking causality as one's axis'. In so far as the law of causality remains in force for planned economy too, and merely changes the way in which it manifests itself and determines the will, as a collective conscious will, to that extent in studying the regularities of our economy, as in any scientific study generally, it is still possible to take causality as one's axis, merely the methodological procedures of study being changed. I observe in passing that the author ought to have changed in his 'syllabus* the formula about land rent under the Soviet system, substituting an interrogative sentence for an affirmative one.
changes the form in which the law manifests itself, but does not abrogate it. If we were to have a poor understanding of the need to act—and to act with increasing speed and energy—in the spirit of accumulation, we should be urged forward by objective facts like the growth of the goods famine, the growth of private accumulation, the danger to the existence of our entire system constituted by the weakness of our industrial and war-industrial base, and so on. Under these conditions, objections to the term 'law' grounded merely on the fact that it has changed the way in which it manifests itself and determines men's wills, amount to nothing more than philological doctrinairism.
So, then, we can speak of the law of primitive socialist accumulation. But we not only can, we must speak of it if we want to advance scientific study of our economy and its peculiarities.
The following counter-argument is often brought forward. Why talk about a law when it is merely a matter of the struggle between the socialist planning principle and the spontaneity of commodity economy? This is the objection of a man who obstinately refuses to take a bath, considering that he can quite well go without it. I agree that, for those do not want to undertake scientific analysis of our economy and the current phase of development of the socialist principle in this economy, it is possible not to advance any further. But everyone who wants to advance will agree that the phrase about the struggle of the socialist planning principle against the spontaneity of commodity production tells us nothing about the distinctive characteristics, the specific features of the current period of this struggle. This phrase, in however many forms it may be offered us, remains a jejune formula if we do not give it a concrete content connected with the present period and the present socio-economic situation of the state economy. We waged a struggle against commodity economy under War Communism, we are waging it now, and we shall go on waging it for ten, twenty and, we must expect, thirty years; and when our socialist industry has acquired a fresh technical base it will probably constitute a part of the system of socialist production of Europe, and so on. Is it possible that with regard to such different situations, such different technical and production relations, such different systems of ties between the organized economy and private economy, we should be satisfied with one and the same general phrase—which will, of course, remain true for twenty or forty years, but just for that very reason will always be empty of content?
On the contrary, as soon as we try to advance beyond this general phrase to more concrete analysis of the regularities of our economy at the present period, as soon as we concretely raise the question of what is the meaning, at the present stage of history, of the struggle between the planning principle and commodity economy, we at once come up against the problem of primitive socialist accumulation and the regularities of this process; in the light of this the cognitive significance of our analysis is enriched with a number of generalizations which make it possible both to grasp the fundamental outhnes of the law inherent in the present stage of struggle between the planning principle and the law of value, and to separate the accidental from the general, the secondary from the essential, the apparent form from the content of the matter.
The second objection of a methodological order, already voiced by some of my opponents after the appearance in the press of the second chapter of this book, is that it is incorrect to analyse the economics of the Soviet State in abstraction from its economic policy. This objection is quite groundless and goes against the general sociological method of Marx, against the theory of historical materialism. It is not at all accidental that Marx preceded his first basic economic work, A Contribution to the Critique of Political Economy, with a preface in which he set forth his general sociological method. His thesis about 'the basis and the superstructure' was there put forward as his justification for beginning the analysis of capitalist society with the 'basis', though a definite superstructure was always presumed as an objective social fact. In theoretical economics, abstraction begins with the very principle on which investigation proceeds, since this science begins with the basis. This is not to belittle the role of the superstructure and the importance of studying that side of men's relations in commodity economy; but investigation does not begin with the superstructure. In Marx's first draft of the plan for Capital there was a section on the State, but he proposed to approach this question from afar, after analysing capitalist economy in the strict sense of the word. Why is it not possible to begin with the basis in a theoretical analysis of Soviet economy? My opponents on this point cross over, without realizing it, from Marxist method to the camp of the well-known German sociologist Stammler and his school, and ally themselves with all the other critics of Marxism who have attacked the theory of historical materialism precisely for its principled methodological approach to the question of basis and superstructure. Stammler, in his work Economy and Law [Wirtschaft und Recht], held that in political economy a purely economic point of view, disregarding the quite definite social forms of regulation and not conditioned by them logically, is intrinsically impossible. Opposing the separation, in study, of politics and law from economics, with particular reference to Marx's preface to the Critique of Political Economy, Stammler wrote:
Thus it will be correct to counterpose not economic life, economic production or economic structure and so forth, on the one hand, to the legal order and the political superstructure, on the other, but the matter of social life to its form, as two elements of the single product of man's social life. (Rudolf Stammler, Wirtschaft und Recht, Leipzig, 1906, p. 324.)
And again:
Whoever wants to take as the direct object of his scientific study the social economy itself, as a coherent system of collaboration, cannot put forward and substantiate a single socio-scientific thesis which does not presuppose a previously-determined regulation of social life. Every investigation of land rent, wages, interest or profit also depends on the existence of a definite legal order, as also does every doctrine on money, credit, price-formation or any other chapter of political economy. (Ibid., and edition, p. 193.) I will refrain from giving other equally characteristic quotations. It is quite clear that my opponents have found themselves in the company, disagreeable for them, of a notable critic of Marxism and his school, with Birmann, Diehl, A. Hesse and R. Stolzmann, and also with the Russian subjective sociologists, whom they risk coming close to at another point of their argument as well.
My opponents bring up to confirm the correctness of their objections a formula which Lenin liked to repeat, about politics being concentrated economics. But they fail to show how this conception of concentration can absolve one from preliminary analysis of what it is that is concentrated in politics. (The statement that in our country the State guides the socialist sector of the economy and is inseparable from it shows merely that there are greater difficulties here in the way of abstraction than under capitalism, but in no way argues against the necessity of separating economics from politics at a certain stage of investigation.)
However, if it suits them to begin their analysis where Marxists usually finish it, let them try. We will listen to what they have to say. I take my stand on Marxism and consider that it is necessary to begin analysis with the basis, with the working of the regularities of economic life, and then go on to explain the necessity of a certain policy. This was how Marx acted when he analysed both capitalist production and the whole system of capitalist society. Answering objections which had actually been voiced to him together with other possible objections, in a letter to Kugelmann on II July 1868 Marx wrote: 'The science consists precisely in working out how the law of value operates. So that if one wanted at the very beginning to "explain" all the phenomena which apparently contradict that law one would have to give the science before the science'. My opponents evidently consider themselves stronger than Marx and find it possible to 'give the science before the science.' This task is certainly beyond my powers. I will wait for them to begin investigating by their method. History will be grateful to them if they give 'before the science' anything different from the ordinary vulgar economics on a new basis of which we have samples enough in our economic journals and newspapers. I devote myself to the modest task of first abstracting from the actual economic policy of the State, which is the resultant of the struggle between two systems of economy, and the corresponding classes, so as to investigate in its pure form the movement towards the optimum of primitive socialist accumulation, to discover the operation of the conflicting tendencies, as far as possible in their pure state, and then to try to understand why the resultant in real life proceeds along one particular line and not another.
This kind of analysis is, of course, difficult in so far as the consciously adopted economic policy of the State is quite often not a reaction to the difficulties encountered in practice in developing socialist reproduction but a product of previous calculation or anticipation of these difficulties. What is in fact a policy forced by external pressures (as a result of the resistance of private economy) appears as a freely adopted decision. Economic necessity makes its way in the guise of an externally free choice of a definite line of policy. The conscious decisions of the regulatory organs of the State are dictated equally by the optimum of primitive socialist accumulation and by the need to curtail this optimum as a result of the resistance of private economy and the classes which represent it. To separate the optimum in its pure form from the actual policy, which is forced to retreat from this optimum, is a very difficult task. To fulfil this task we need a concrete analysis of the entire economic and political situation at each moment of time, or at least in a definite period of economic development. This difficulty results, consequently, from the very type of our production-relations, from  the  intersection  in  them   of socialist principles with the principle of commodity production. Here we have that very point where the use of the general fundamentals of Marxist method has to be modified by the methodological procedures which Marx used when analysing the production-relations of pure capitalism. Just here (though not only here) we also encounter that change in the material under investigation which compels us to pass over, in a certain sense, from political economy to a different science which is itself transitional between political economy and social technology. This transitional science will have to be created by the collective efforts of our economists. This science will have to study the question of how the regularities of economic life manifest themselves under a mixed commodity-socialist system of economy, how the will of the participants in collective production is determined when this collective production is linked by a thousand threads with private economy, and how relations are formed in private economy, whether developing as such or adapted to state economy in a situation where the law of value becomes increasingly restricted by the planning principle. Something new arises here, not only in state economy itself, but also sometimes in private economy, existing as it does in a situation in which the so-called commanding heights are occupied by the collective economy of the proletariat. The methodological procedure which I adopt in this book—and which consists in trying to distinguish at the start, in their pure forms as tendencies, the two  contending  principles,   the  two  methods  of  distributing labour-power and means of production, in order to explain the economic resultant in actual life—is not a procedure which I am at all inclined to regard as the only possible one. If any researcher (a researcher, note, not a representative of vulgar economics) proposes another methodological procedure which proves more suitable and more appropriate to the content of our economics I shall merely have to welcome such an attempt.
From what I have said it will be to some extent clear that a successful scientific theoretical examination of our economy requires, on the one hand, a more circumstantial analysis of the actual concept of law, regularity, necessity, in the conditions of developing collective economy, and on the other hand a continuation of the sociological analysis of the whole system of Soviet society, as a new and distinct social formation, which was begun in Lenin's works of genius. This requires an enormous collective effort on the part of our theoreticians, constantly renewed and constantly checked against experience.
I come, finally, to the third difficulty and the third objection, which arises on the basis of this difficulty. Does it not follow from the foregoing that in our economy, with its struggle between two principles, there is also the basis for two different regulators of the system as a whole? Can this be so, in general, and if so, what becomes of the definite unity of the entire system of economy, as a coherent economic organism?
That two principles are contending in our system is a fact which nobody disputes except, of course, those who see our whole economy as merely one of the varieties of bourgeois-capitalist economy. But if in the single economic organism we have a struggle between two principles, and it is through this struggle that the whole system moves forward, as is characteristic of the dialectical process of development generally, the question has to be posed in a different way—not 'can there be two regulators in such a situation?', but 'can there not be two regulators?' The only thing that can be regarded as a unity is each definite resultant of the two contending forces; this is what really decides at each moment the distribution of labour and means of production between the systems and the market form of the connexion between them, above all changing its content in accordance with changes in the antagonistic poles of the economic whole. If each principle is fighting for supremacy in the whole system, it is thereby fighting for the type of regulation which is organically characteristic of the particular system of production-relations, taken in its pure form. Let us make this clear by means of an example. Suppose that commodity-capitalist relations were to prevail in our economy, which in politics would inevitably mean a liquidation of the dictatorship of the proletariat, and in the economic sphere free development for the capitalist-commodity regulator of the economy, that is, the law of value. The distribution of social labour and means of production would then take shape as it always does when the law of value operates, that is, in the rearrangement that would best of all spontaneously reproduce capitalist-commodity relations. With the abolition of the monopoly of foreign trade some enterprises would be abolished and others expanded, the industrialization of the country as a whole would be reduced, and this entire process would spontaneously be subordinated to the task of reproducing capitalist relations within the country and in those capitalist countries which would be involved in all this bourgeois reconstruction of our economy. The present industry of the U.S.S.R. and the pattern of its economy, in particular the distribution of productive forces between heavy and light industry, between town and country, would be substantially changed. It may be asked, is there inherent in our private economy and in the capitalist countries (earnestly striving, as their minimum programme, for the abolition of the monopoly of foreign trade and socialist protectionism), a tendency, a pressure in that direction? Yes, of course there is. And if so, then there is inherent in them a striving towards their own type of regulation, which will force its way wherever it does not meet with resistance from the other sector of the economy.
Now, about this other sector, the state economy. If it were to secure maximum opportunities for reconstructing the whole system as it would, above all if the proletarian revolution triumphed in Europe, then, of course, with the formation of socialist relations as the complete and unconditionally dominant type of relations in the whole economy, not only would the planning principle triumph as the method of organizing and guiding the economy, but the proportions and distribution of labour and means of production would be substantially different, both from what they are now and still more from what would result if the capitalist form triumphed and the law of value became the only regulator of the economy.
But if this is so, then one may ask: now, when the socialist sector is waging a battle for its existence and development, does there appear from this end the operation of another regulator, which tries to subject the whole system to itself, in other words to reconstruct it, and for this purpose to assemble more and more resources in order to organize labour in a new way, around means of production continually growing in quantity and improving in quality? Yes, there certainly does. And now it is only necessary to ascertain more definitely how this law operates, what the whole of this process is concentrated in, and in what it finds its expression. Let us assume for a moment that at this point of time we have in our economic system, taken as a whole, not a process of expanded reproduction but a process of simple reproduction. In this situation, undoubtedly, the distribution of productive forces and much else in the country's economy, as 'snapped' in 1926, say, would look very different from how they look in fact, when the system is in motion and we have expanded reproduction both in state and in private economy. But what would this difference consist in? We can partly answer this question by analogy with the distribution of productive forces under simple and expanded reproduction in capitalist economy. Those who have read the second volume of Capital know that Marx gives there, at the beginning, a diagram of the distribution of productive forces under simple reproduction and, later, a diagram showing their distribution under expanded reproduction. With the same total amount of capital in the whole economy the proportions of distribution of c + v + s,1 ( Including the division of s between the consumption fund and the accumulation fund.) within each department, and between the two departments, are then quite different. They are, so to say, drawn up as for battle; in them we perceive the proportions of the dynamic of expanded reproduction. In our economy, with expanded reproduction in both state and private economy, the arrangement of productive forces, the proportions between the socialist sector and the private sector, and also the proportions between branches in the socialist sector, must differ not only from what they would be under simple reproduction, but also from the proportions of expanded capitalist reproduction at the given level of industrialization; and they are inevitably different each year as compared with the previous one. Each new year for state economy, if it is in a condition of development, means: (1) an absolute increase in production as compared with the previous year; (2) a relative increase as compared with the increase of private production; and (3) a different arrangement of forces within itself, evoked precisely by the proportionality of expanded socialist reproduction in the given year. But the law which regulates the whole of this process—the regrouping,  the growth of socialist relations of production, and the transference of values from private economy —is also the law of primative socialist accumulation. In each year it dictates to us such a distribution of productive forces within the entire state economy as will anticipate their distribution also in the following year and to some degree for several years ahead. In the first place the level of organization already attained by the state economy, however modest it may be in general and however much lower it may be than the already existing objective possibilities for such organization, and, in the second place, the very nature of our capital investments, especially new construction, demand in each year a regrouping of productive forces such as will partially anticipate the proportions in the economy of the succeeding years. Otherwise we in 1926 shall inevitably create a goods famine for 1930, as well as a breach in the equilibrium between our economy and world economy, and a debacle, to the advantage of private economy, in our import plans, which should be subordinated to the task of industrializing the country, and so on. What the State Planning Commission has already experienced in working out the five-year plan is not an accident.  Such a deepening of the work of planning is not only an achievement to our credit but also an urgent necessity which is dictated to the collective economy directly, as an externally compelling law. The October revolution has a logic of its own on this battle-front. But if transition to such planning is inevitable, and zee cannot refrain from it or evade it once we have socialized industry and transport (otherwise there would have been no need to take up arms in October), then there inevitably follows in 1926 such a grouping of productive forces within state economy as must not only answer to the needs of the economy as a whole for the particular year but also foresee as far as possible the proportions of reproduction over a number of years—something which capitalist economy, because of its very structure, cannot do on such a scale and in such a form. If we partly exclude the operation of the law of value, which preserves unorganized economy, with the  disadvantages  and  the advantages  of this  law,  we  must accordingly replace its regulatory action by another law, inherent in planned economy at its present stage of development—the law of primitive socialist accumulation.
But if this law dictates to us certain proportions within state economy, differing from the proportions which are dictated by the market situation in the given year, in exactly the same way certain quantitative dimensions of the entire process of expanded reproduction and consequently an objectively necessary minimum of accumulation of material resources (at the expense both of the resources of state economy itself and of the transfer of part of the surplus product from private economy to the socialist sector) is also compulsorily dictated to us in order to achieve these proportions. We may have a certain freedom to manoeuvre beyond the limits of this minimum, but failure to attain it will affect our system in the form of the crisis of under-production which has confronted us in 1925 and 1926. And this crisis, leading to a growth in private accumulation as a result of the increase in retail prices, weakens our position in the struggle against the bourgeois elements in our economy and is dangerous not only for our foreign exchange and for the real level of wages, but also politically. All this taken as a whole, from the standpoint of the problem we are here considering, confirms that the law of primitive socialist accumulation is the regulator from this end as well. Not to understand that this law exists, that it has a compulsory character for state economy and has an influence on private economy, is not only a theoretical mistake, not only mental obstinacy and conservatism, but also dangerous practically, dangerous from the standpoint of the struggle for existence of our whole system of collective economy.
I must particularly emphasize the danger of theoretical backwardness on this point because, with the centralization of the whole state economy and its leadership, forecasting plays a quite exceptionally important role in the development of our system and its preservation, not to be compared with the role of forecasting under the spontaneous type of regulation. From this there follows the enormous importance, not only scientific but directly productive, of a correct theory of the Soviet economy. When in a capitalist country ceaseless chattering and squabbling goes on in parliament, when in the sphere of science every self-respecting bourgeois economist and financial expert, skating on the surface of economic life, considers it his duty to cut a dash with paradoxes of his own invention, so as to distinguish himself from the rest, bourgeois society can permit itself such luxury in government and in science because the function of regulating the economy, more intelligently and reliably than all the politicians and professors put together, is carried out by the law of value. Not only the selfish class interest of the bourgeoisie (as Marx showed so clearly), but also the very structure of capitalist production reduce economics to, at best, the role of an apparatus for photographing the current situation, or something tolerated as a smart luxury. The mistakes of bourgeois economists can have very little effect on the successes of capitalist accumulation. In our economy, where the role of forecasting is so great and is growing so rapidly, where the mistakes of economic policy are overcome so painfully by the whole economic organism, and so badly distort the forward movement, our study of economics, our theoretical foresight, our correct analysis of the economic system must acquire a quite exceptional importance. And, contrariwise, mistakes in the sphere of economic theory are dangerous to us in practice, economically and politically. In particular, it is harmful and even dangerous for us to ignore in the theoretical sphere the existence in our system not 'simply' of socialist accumulation (to be aware of that fact even vulgar economics is unnecessary), but of the law of primitive socialist accumulation, as an objective factor, with all the consequences resulting from it.
Some of our economists are unable to admit, as a matter of principle, that not one but two regulators are at work in our economy. This is not the outcome of profound mastery of the science of theoretical economics, but an obvious product of academic prejudice, inability to apply the method of Marxist dialectics in new conditions. It is dogmatism and pedantry, nothing more. These economists are used to analysing developed capitalism and to the conception of a single regulator—in so far as there really is only one regulator under capitalism. And they not only reveal conservatism and mental timidity, but also come into contradiction with the spirit of Marxism, with the general sociological and philosophical method of Marx, when they fear to advance from theoretical economics the distance, though it amounts to little compared with the break from capitalism, which our economy has advanced in the sphere of everyday life. They fear to show in practice that political economy studies only an historically transient type of production-relations, so that its transformation into a different science after the socialist revolution is quite inevitable, if any forward movement can be said to be inevitable in the sphere of theory. This mental timidity—the social roots of which I am not concerned to seek; I speak only of the logical ones—is all the more incomprehensible in that the law of value itself did not, after all, fall ready-made from heaven, but came into operation with the development of commodity economy; it is not only not the only regulator in our economy now; it was not always that in the past, either. Did not the law of value, in that period when commodity economy was corroding and dissolving the craft system, clash with the still unliquidated craft system of regulating labour? This dualism in the past, at the dawn of capitalist development, was a fact. Why should dualism be impossible when capitalist relations are beginning to die out?
The person who has no reply to this argument is compelled, of course, to shift from methodological discussion to fresh ground and declare the following: 'It is all a question of how one estimates the relative weight of the planning principle; you exaggerate it, while we remain on the plane of reality. Let us admit this. But it is hardly possible to outrun in logic the social and economic consequences of the October revolution. As it is put in a certain funny story, there are 'two possibilities' here, and we will consider both of them. One possibility is that there is fundamentally a single law operating as regulator in our economy, the law of value. If that is so, however, how, on the basis of this law—which, if we understand it as Marx did, must spontaneously reproduce capitalist relations—can there be expanded reproduction of socialist relations, or, what is more, an advance in the socialist quality of these relations?
If this position is correct, were not the Mensheviks right in their analysis of our system? Was not the late Parvus right, who considered that our economy was completely bourgeois, with enormous possibilities of development on American lines, but that the workers' government, since it interfered with the production process, was the main obstacle to the development of the productive forces of an economy of the type he supposed we had, that is, a bourgeois economy, regulated by the law of value? If our planning amounts merely to this, that we observe the inevitable operation of the law of value and under its dictation write whatever it may prescribe to us by way of a spontaneous kick in the backside (when we have made an unsuccessful 'observation'), then have we not the right to ask: if this is so, is not all our planning, all our 'socialist' regulation merely a function of the law of value? How then can we not reproduce on an expanded scale capitalist relations and that distribution of productive forces which answers to the task of capitalist reproduction, both in the proportions of the economy and in the relations of production? One thing or the other. Either these relations cannot remain for long in inner contradiction with their 'regulator', or the regulator in our economy is not this, or, more correctly, not only this. I think that our economists with whom I am arguing on this point will decisively deny that they hold the point of view I have outlined, and will shrink from drawing such conclusions.
But then there remains another possible way of putting the question, namely, that a struggle is going on in our economy between two principles, though the socialist principle is very weak, weaker than in this book I estimate it to be. Formally, everybody recognizes this fact of the struggle between two principles. But for a struggle, as we know, a minimum of two contestants is necessary. Dualism is already present. The struggle, if it is really going on, cannot but be a struggle between two different types of organization of labour, distributions of productive forces, methods of regulation. How can there not be present another regulator, antagonistic to the law of value? This is not impossible, either logically or in fact. And in this case I should strongly advise those economists of ours with whom I am concerned to introduce a little of the 'planning principle' into their thinking, and show how they strike a balance in their theorizing between the proposition that our state industry is of the 'consistently socialist type', at the stage of expanded socialist reproduction (and not at the stage of expanded corrosion by commodity economy), and their obstinate assertions about there being only one regulator. It is time, high time, to strike the balance in this matter. One cannot get out of it with the phrase about the struggle of the socialist planning principle against the market. As we have shown above, in the period of War Communism also there was a struggle between the planning principle and the spontaneity of commodity economy, and it will continue in some degree for twenty to thirty years. One asks, how is the current type of this struggle to be distinguished from what prevailed seven years ago or from what will prevail in twenty-five years' time? In what does the regularity of this struggle consist, how does it find expression, when considered from the point of view of the socialist sector of our economy? If you reject the law of primitive socialist accumulation, what conception do you propose?
The driving force of capitalist production is the striving for profit, its regulator the law of value. Capitalism satisfies the consumer needs of society by way of this mechanism. In particular, the worker receives his share from the fund of means of consumption through selling his labour-power. In what way is state economy different from capitalism on this point? On the one hand, it has already ceased to be production for profit, for surplus value. On the other, it is not yet production for the sake of consumption by the workers of the state economy, and still less by all the people in private economy. In our state economy an internal contradiction is here embodied, a contradiction which is connected with its nature and with the conditions of struggle for its existence and development. On the one hand it can be overturned if it does not fulfil the function of every system of production in history, that is, if it does not satisfy the social demands of the given epoch; the stimulus here, urging it on, as it were, with blows, is the consumer demand of the workers and peasants, which operates both directly (that is, not through the mechanism of striving for maximum profit, as under capitalism), and in many indirect ways (inability to carry out exchange of goods with private economy in the necessary proportions, and so on). The state economy is here still only groping to find the factors of stimulation peculiar to our system and their organized form. On the other hand, it can be overthrown in its mobile equilibrium if the necessary proportion of expanded reproduction dictated by the whole economic situation is not guaranteed by an adequately and steadily growing rate of accumulation of surplus product in material form, and this always means restriction of individual demand. The contradiction between these two tendencies within state economy does not take the form of an antagonism between classes, but it exists nevertheless. This contradiction also fully characterizes the law of primitive socialist accumulation itself, where distribution is concerned. On the one hand, expanded reproduction in the socialist sector means automatic, quantitatively-increasing reproduction of socialist production-relations, together with the corresponding proportions every year in the distribution of productive forces. But, on the other hand, this quantitative expansion of socialist relations, since it requires alienation of a certain amount of surplus product from the state economy, and subordinates the growth of wages to the function of accumulation, limits the growth in the quality of socialist relations and maintains a gap between the wage level and the value of labour-power. We see here not only the contradiction within the law itself but also its historically-transient character. It is very important to keep this in mind when making a methodological analysis of the whole economy, and in particular of the ways in which its characteristic regularities show themselves.
When the economists already mentioned say that our planning regulation simply observes the working of the law of value, they make the mistakes analysed above not only because they consider the proportions in an economy established on the basis of the working of the law of value to be natural also for an economy developing otherwise than in a capitalist direction. They not only do not take into account the importance of the changes which have been made in the whole economy by the change in the structure of the peasants' budget as a result of the revolution, they not only do not want to understand that the value regulator is necessarily being edged out and objectively cannot but suffer this fate and be replaced by the regulator of the developing collective sector of the economy; but apparently they also confuse the objectively-necessary proportionality in the economy with the methods of achieving this proportionality, and therefore they confuse the industrialization of the country under the dictatorship of the proletariat with the growth of large-scale production generally. Meanwhile, not only the form of value, but also what we call value-relations in connexion with labour-expenditure are changed both as a result of an improvement in technique and in the productivity of labour and because of the conversion of the whole of state economy into a single trust, which with the growth in the scientific organization of labour creates a fresh factor, engendered by the co-operation of huge interlinked economic corporations. This special feature of our state economy, resulting from its socialist nature, cannot have very much effect while the level of technique is low, but it is a factor of enormous importance for bringing up the technical level of our industry to that of the advanced capitalist countries. Can we say that the changes thus brought about are connected with the working of the law of value? Do they not depend rather on its liquidation or restriction and on the struggle for existence and development of our state economy as a type of collective economy? Neither these changes nor our most stubborn effort to oust private capital from trade and replace it with state and co-operative trade can be understood if we are to regard the law of value as the basic regulator of our whole economy. If one considers only administrative costs, private capital is 'more profitable' for the whole economy, and the productivity of labour in private trade is higher. But this is not our line of advance, despite the influence of the law of value; we are advancing along the line of another law, we are subordinating ourselves to the working of another regulator.
The second thing to be rejected is, of course, the confusion made between proportionality in the economy, which is objectively necessary for every system of social production with division of labour, and the historically-transient method of achieving this proportionality on the basis of the law of value. A correctly proportioned distribution of labour is necessary both for capitalism and for socialism, and also for our present commodity-socialist system of economy. But even if it were to be shown—and I have explained the impossibility of this—that the distribution of productive forces which actually obtains here at present on the basis of struggle coincides by some miracle with the distribution which would obtain under the rule of capitalist relations on the basis of the working of the law of value (that is, that the proportions within collective production at the present stage of industrialization of the country coincide with capitalist proportions), even then the proposition that there is a single regulator would not have been proved. Are we to suppose, then, that the proportions we need are dictated by the law of value as regulator, and can only be found through it, since the law of value is historically and, if you like, materially and physically linked with and inseparable from commodity production, as production in which private property in the instruments of production is predominant? Perhaps the replacement of private ownership by social ownership on all the commanding heights is merely a formal juridical act which involves no change in the essence of the system? Why can we not say that we find the necessary proportions in the main by our methods, which, despite the extreme paucity of our experience in planned regulation, are higher, more perfect than the methods of achieving equilibrium in the spontaneous way? Why is such a proposition objectively impossible now, when we find the general lines of proportionality by our own methods of statistical calculation of requirements and effective demand, methods which include calculation both of our potential influence on private economy and of our dependence upon it, while the law of value only makes corrections by spontaneous means? And if this is possible, if it is even fifty per cent, possible, then to say that we have basically only one regulator means crudely confusing the form of regulation on the basis of lab our-expenditure under capitalism with the objective economic need for proportional distribution of labour which exists not only for commodity and commodity-capitalist economy and which can be established not only by capitalist methods. Under the commodity-socialist system just this very proportionality can be established only on the basis of struggle against the law of value; it will always be the resultant of a struggle—though the direction in which the law of value and the law of socialist accumulation act may sometimes coincide in particular cases in real life.
It may be said: but, after all, since the commodity-money form of relationship is predominant, does this not mean inevitably that there is only one regulator, one law of value? This objection is important, but it is in fact formal and to a large extent it skates over the surface of phenomena.
If we take a brief glance at the general history of mankind, at the history of class struggle and the history of economic forms, whether a forward movement is made through antagonisms or by peacefully evolutionary means or by an alternation between the two—as a rule, always and everywhere a change in content precedes a change in the form of relations between men. It is just the same with the system of economy created by the October revolution. Our state economy is linked up with private economy, and automatically the latter penetrates into the very midst of the relations of state economy itself. Private economy, being individual economy, cannot develop without exchange forms of relationship (it is sufficient to recall our experience with the confiscation of agricultural surpluses under War Communism); state economy operating under the old form of exchange can advance remarkably far, changing the content of the social relations of production. To mix up form and content here, and the relative weight of one and the other, is at the present moment still to some extent
pardonable in the case of a jurist. But for Marxist economists such confusion is not pardonable; just as they cannot be forgiven when in observing how the whole system of regulation of the economy cannot but be affected by the socializing of industry and transport they see the formal aspect rather than the content.
Now we must also eliminate one misundertanding which can arise in the reader's mind when reading the following pages of the book. Attempts are often made to demonstrate how limited. are the possibilities of planned regulation by references to the many mistakes and miscalculations of the State Planning Commission and other organs which guide the economy. We make the reservation that in theoretical analysis of our economy we consider it necessary to establish and evaluate only those possibilities of regulation which exist objectively and depend on the real relation of forces between state and private economy, on the optimum possible degree of organization of the state economy at the given stage, on the influence on our state economy of market relations within and of the pressure of the world market without. We cannot reduce the objective possibilities of planning to the total of our mistakes and failures in planning. This would mean blaming historical necessity for every miscalculation, including the present unsuitable distribution of people among the various jobs. In exactly the same way also, it is wrong to attribute our insufficient understanding of the system of economy we are guiding and its laws, and the mistakes which result from this, whatever serious objective consequences they may have, to economic necessity, thus reducing by a corresponding percentage in theoretical analysis the possibilities of conscious regulation which are objectively embodied in our system.