This is a chapter from the book:
The Victory of Morality over Socialism

Chapter l. How to correct an unplannable brand of planned economy

The Communist Party of the Soviet Union is notoriously dissatisfied with the successes of the economic system it has created, and this is especially true at present. It considers its society’s material interests to be insufficiently served, and above all wants higher productivity to improve matters.

However, the economic “reconstruction” the Party has embarked on has nothing to do with a communist planned economy, in which the necessary deployment of labor is properly planned and the procurement and use of the means of production that make the work easiest are organized. Instead, it is reshuffling the contradictory duties it has imposed as economic goals on its state-owned firms and working population. It demands a livelier circulation of exchange-values (commodities considered as the proportions in which they exchange for other commodities) — as a means for improving, more or less automatically, the production and distribution of use-values (commodities considered in terms of their useful physical properties). It pays tribute to the fetish “profit” as if profitability were the same thing as more output with less expenditure of work — although it itself abolished private property, the basis for the rule of profit over society’s production. It believes with new determination in the “law of value” that Marx criticized capitalism for, as if he had actually wanted to recommend it to communists for them to emulate and improve.

The CPSU is thus using the mistakes of its anticommunist lever economy to “correct” it.

Proof for the necessity of economic reconstruction is being dished up in abundance. Again and again, firms and the population fail to be supplied with what they need because there are too few goods. Or the goods are barely fit for consumption or use due to bad quality. On the other hand, production materials are wasted in transport, in use, or even by not being used at all. Technological developments which could increase productivity and improve the quality of the products exist, but they are not applied … All this, according to the Party, really need not be.

But as soon as the CPSU sets about changing things, it regards all its outrageous findings as problems. Its casual manner of pointing to obvious absurdities, as if only a little good will and common sense were required to remedy them, proves to be deceitful. Amidst the reality of its planned economy, the Party seriously considers it a great difficulty to find out what the people and the firms need, and an even greater difficulty to control production in such a way as to ensure that there is enough of everything.

And it is actually right about that in so far as it does not even try to do either. The Party acts very differently in order to harmonize demand and supply “better and better.” Instead of simply counting things up and giving the commands, it tinkers around with an “economic mechanism” which, all by itself, is supposed to determine needs, control production, ensure supply, promote innovations, make the deployment of labor more effective and God knows what else. Of course, the business about a “mechanism” is only meant figuratively. In reality, the planners, managers, etc., must focus their minds and wills on prescribed results. But the Party would evidently feel helpless if it “just” made needs the rule and introduced the best possible production methods for satisfying them. Its commands are based on all kinds of other things —indicators, norms, cost-accountancy, etc. — which, if followed properly, are supposed to act as an ingenious mechanism and bring about the optimum production results according to their own “inherent logic,” without the participants having to make these results their business.

This way of giving orders is intended to be somehow indirect and for that reason, strangely enough, one hundred percent effective. It is based on the idea of a money circulation which, by purchase and sale at just the right prices, is supposed to direct goods to exactly where they are needed. At the same time this is supposed to bring about financial surpluses which in turn define what is possible for the planning agencies. This roundabout is really most peculiar. After all, with its victorious revolution the CPSU not only put an end to the rule of the czars but also abolished the rule of money — the minted power of private property. And it had pretty good reasons for doing this. The laws by which money circulates and accumulates reduce the workers to poverty and make their exploitation all the more forceful — this is the capitalist annoyance the CPSU was out to, and did, abolish. And it was quite aware that in capitalism the “distribution” of goods only comes about as a final effect of the circulation of money — a corresponding “distribution” which gives rise to rich and poor.

However, at the same time the CPSU made an anticommunist mistake, as the results of its efforts prove. It did not object to the rule of money over society’s production, but merely to the effects it considered unfair. It expropriated capitalist private property and thus actually abolished the capitalist laws of the circulation of money, intending to put these very laws back into force without private property and without unfair effects. This turns everything upside down. The desire for a fair distribution of goods is the first thing. Then the prices are fixed. They are to be used by the firms to make a profit, as if it were still a matter of making a profit, as if the firms functioned as private wealth bent on accumulating and not just as production sites owned by the state. And the duty to make money is somehow not to be directed against anyone, not against the workers or the buyers or the suppliers or other firms that produce the same thing. It is to benefit the state, which collects ever larger sums of money to be used for expanding production … All the instruments of capitalism are resurrected, no longer as expedient means of capitalist accumulation but as rather awkward means — putting it mildly — of taking care of the people, and as fairly suitable instruments for securing the state its rule over society’s wealth.

There is no question about it, this is one way of running an economy (as to how it works, see Chapter 4). But how absurd it is that the CPSU uses its revolutionary freedom to plan production to engineer, of all things, a system of “objective restraints” for the profitable management of exchangeable values. These utterly fictitious “objective restraints” do not stand for any real social “mechanism” of exploitation and accumulation of private wealth. Each price, each profit norm, etc., represents only the Party’s will to have things that way. The Party’s commands to its producing population thus take on the most irrational form imaginable, a form which has furthermore proved its effectiveness under capitalism in serving the interests of the enemy of the working class — under capitalism it really acts as an objectified law without any system of directives from the state.

This disguise is revealing. It shows what these communists apparently like about capitalism, in spite of all “social injustice.” It is the wealth that seems to grow all by itself, alienated from the workers from the very beginning and existing as a powerful sum. The CPSU does not want to abolish this “achievement of capitalism,” but to nationalize it. It wants to provide the state with wealth which from the start presents itself not as a quantity of goods for satisfying society’s needs, but as a monopolized surplus that is available, as if by an “objective law,” to no one but the state. It is as if the Party wanted to drag the state with might and main into the economic role of the universal exploiter. In any case this practice makes quite a farce of the party ideal of an economic democracy in which each working person participates in deciding on the product of society’s labor.

But none of this bothers the CPSU a fraction as much as the abundance of disturbances and inconveniences which its peculiar economic mechanisms necessarily involve for the commanders themselves. Throughout the system, experience shows that the planning directives will not take effect “behind the participants’ backs,” so to speak. For the directives to have any effect at all, they must all be linked with “incentives” — a ridiculous idea in the world of capitalism, from which the Party has copied so much for its set of economic instruments, and a remarkable admission of how well the CP has, above all, made sure that the producers are not the beneficiaries of their labor. A system of “stimulation” of managers and staff makes the firms, which are no longer tools of a capitalist interest in enrichment, into economic quasi-subjects with an artificial interest of their own in making a profit. However, they are supposed to pursue this interest for the benefit of the whole, not at the expense of others. For this purpose the Party imposes “cost-accounting” on them, in which it lays down its ideal of a successful accumulation process — quite heedless of the fact that the money values it deals with are interrelated in an objectively necessary way only when they are effects of capitalistic competitive efforts. As directives they thwart all the calculations the firms are supposed to make.

Surplus production pure and simple is one state order; at the same time cost guidelines demand that means and materials of production be used thriftily; but the firms are also expected to be permanently interested in improving or restructuring production, for there are target figures for the increase of labor productivity to be achieved; the products are to be improved and become cheaper while at the same time the profit plan must be fulfilled and costs reduced … The imperative of the plan is thus “Produce more and more, better and better, using less and less!” — quite as if a constant level of production could not involve an increase in the means of production. Because the orders conflict with each other, the firms are necessarily induced to calculate which norms they can fulfil to their advantage at the expense of others, or which norms they can ignore in order to show tremendous successes in other areas.

This is why the activities of the firms lead to all kinds of undesirable effects. In order to ensure that the targets are fulfilled and over-fulfilled, it is advisable to secure plenty of means of production and manpower, which may possibly go unused while shortages exist elsewhere; sparing use of material can in turn be achieved at the expense of the product quality; the introduction of new material saving production methods — involving a cost increase — is a risk that one would rather avoid; the demanded improvement in product quality, which is rewarded by price increases, can also be obtained by a slight change in the product without the risk of a reconstruction and reorganization of production which could possibly make the firm look bad (in terms of the relation of costs to surplus). The Party registers all this as “negative phenomena” — and devises “levers” which are supposed to manipulate the whole business once and for all into functioning ideally in accordance with the directives. For seventy years now the CPSU has launched one economic reform after another and consistently refused to consider the intentional irrationality of its planning and control system as the reason for all the tenacious deficiencies which plague its people on the one hand, and bother the Party itself on the other.

Gorbachev’s perestroika is absolutely in keeping with this general policy. The Party is tinkering with its old ideal of firms that fulfil all the state’s desires of their own accord. And it claims to have discovered the recipe for this: to let the firms do things themselves more than before. With new determination it is pursuing the neither communist nor capitalistic plan of increasing the productivity of labor by making higher demands on the profitability of the firms’ efforts. This plan is not communist because the planning obeys the fetish of profitability; it is not capitalistic because profitability here is nothing but an ideal planning criterion, the basis for “stimulating the material interests” of the managers and their working staff. Thus, the CPSU is pushing its people into a new round in its absurd endeavor to wrest a more or less functioning production and distribution of goods from the prescribed automatic economic control mechanisms.

The ideologies the Party puts into circulation for this purpose are a disgrace to every communist. The most stupid ideals of bourgeois managerial economics, which would have everyone believe that without profiteering no straight nail or wearable shoe could ever come into the world, are given official certification in the current reform debate. The incessant emphasis on the firms “themselves” revives the legend of “private initiative,” as if mere ingenuity and energy were the sources of profit. Of course, an entrepreneurially-minded individual’s real “achievement” in causing profit to materialize, the extortion of services from all people without property to increase other people’s property, cannot be reminted into a socialist guideline.

“Cost consciousness” is praised for being the guarantor of all effectiveness — as if saving gave rise to abundance, and as if the capitalistic calculation of cost aimed at producing profits were afraid of costs, for instance the lavish deployment of low-cost labor. The “market” is celebrated by Soviet economists as a most ingenious institution for optimally providing for every need as soon as it appears — as if the point of competition for the buyers’ solvent demand were not that the solvency of a whole class is somewhat limited by their wages, so that a great deal of needs can wait indefinitely to be satisfied. “Market economy elements” are now invoked by Soviet planners as a method of harmonizing production and consumers’ needs — as if it were an incredibly complicated problem to find out what is needed where, a problem that is unsolvable for a planning authority but child’s play for firms with prescribed profit interests.

Finally, the reform debate has also discovered “competition” as a kind of beneficial constraint on the firms, to prompt them once and for all to attain the productive achievements that were lacking up to now. This is a new economic recipe which, like the other borrowings from capitalist ideologies, expresses nothing but a moral requirement: managers and collectives should simply make much greater efforts and manage their affairs better. In line with this, the Party experts are considering using the closure of firms, a consequence of capitalist competition, as an ingenious lever — not as the economic fact that competition for limited solvency inevitably produces losers, but as an educational measure. In an economy which continually demands means of production and labor, these things simply cannot be the tremendous moral means of applying pressure the Party would like them to be. Just as ineffective is the much-touted unemployment which the Soviet system does not produce at all, and whose theoretical popularity is based on the peculiar belief that it has an enormously motivating effect on the employees’ will to work. The fact that even the greatest will to work still needs production facilities before it can translate into productivity is never worthy of mention in these flights of fancy. Conversely, these flights of fancy stand as a political superstructure over the economic basis, when it comes to economic reform as well.

For it is one thing to ideologically “deduce” from exemplary productive achievements the existence of a master figure called “entrepreneur” or a kind of materialistically acting providence called “market and competition.” And it is another thing to bring these morally desired entities into being in the form of directives to the state-owned firms. In reality, the Party is once again merely tinkering with the guidelines for cost-accountancy and the division of profits. The guidelines should be pared down to allow the firms to make more decisions and perform more “themselves,” while at the same time the Party does not completely trust its own recipe for success.

“The problem of a system of indicators as a link between central economic management and autonomy of the enterprises is not yet solved,” announced General Secretary Gorbachev at the “trend-setting” plenary meeting of the Central Committee in June, 1987. This too is a declaration that the CPSU intends to remain true to its mistake of trying to benefit its people by providing them material goods without wanting to introduce a planned economy for this purpose. After all, a “link” between economic management and firms is only a “problem” when the economic directives are not simply the result of planning for the benefit of the producers, when one cannot rely on the producers’ interest in the directives being carried out properly. The “link” is necessarily a “problem” when a socialist party is of the opinion that it can only do some good for its people if it uses means of pressure to induce them to perform useful work; and when it uses as these means of pressure a kind of calculation borrowed from capitalism, bringing into being an imaginary self-interest on the part of the firms, and then being forever dissatisfied with the results. This of course also makes the search for an optimum link a permanent moral-economic task.