Workers’ Power League - Sweden:
THE STATEBUREAUCRATIC MODE OF PRODUCTION (1977)
Introduction
When we are investigating the specific characteristics of a certain
social formation, it is necessary to look at the actual production
relationship within the society, in order to be able to decide the
degree of development, the role within the global production order
and other aspects of the society. With the help of all the information
we can get on the function of the economy - shortly, the way products
are produced and consumed - we must learn which laws rule the economy
and thereby, the development of the whole society. With the help
of such investigations we can also more closely define the position
of different classes, the social strata within production, the class
situation in terms of a future revolution and the possibilities
of class alliances.
If we do not apply Marxist method, but proceed from a ready-made
theory and try to find its specific characteristics in a social
formation, we will - with great probability - not understand anything
of what happens or will happen in the society. The fact is, that
every social formation includes several modes of production, and
therefore it must be easy to find fragments or elements of the mode
of production one is specially looking for. An "analyst" who is
desperately searching for capitalist features in the social formation
of the Soviet Union, and an another "analyst" whose purpose it is
to draw the differences between capitalism and the Soviet system
into the light, will both find what they are looking for; but none
of them will have answered the question: What mode of production
is dominating? Let us leave behind us the Maoist, who discovers
the local grocery market in a Polish village, and the fact that
enterprises in the Soviet actually produce a surplus and
who, because of his desire to regard the Soviet Union as a capitalist
state, proclaims it to be so. Let us leave be hind us the Trotskyite,
who discovers The Plan and happy with this proclaims the
USSR to be a "Workers’ State". Let us instead try to investigate
the economy of the so-called "socialist countries".
Every society (since archaic communism) has needed production
in order to be able to consume: and every society since then has
been a class society. In none of all the class societies in history,
has production been arranged according to the needs of the people.
On the contrary, the economy has been ruled by other forces. Today
in capitalist societies, we can see how the economy is ruled by
the profit motive of private companies, and how they try to adjust
the consumption patterns of the people to Suit the profit motive.
The causes of this are to be found in the division of the class
society into a ruling and a ruled class and the ther irresistable
necessity of the ruling class to remain in power.
The function of the economy
In the statebureaucratic countries the economy is planned. This
means that the production goals are determined with the help of,
and through, an administrative apparathus. The main planning authority
is often called the "State planning commission" or something of
the sort, and its task is to collect economic data as a basis for
the planning, define the goals for production and coordinate these
goals because of changes in the economic/political situation. The
plan, or rather the several plans, valid during differing periods
of time, consist of orders and work directives for the departments,
branch organizations and companies. The directives can be directly
connected to production, such as decisions about quantity, weight
or volume etc., or as production incentives eg: a certain surplus
of sold production. Another important instrument for directing the
economy is the fixing of prices. The prices of important industrial
and consumption products are determined at a central level, while
the prices of many products of less importance are determined on
a lower level, in some cases even by the company itself. But all
prices can be regulated centrally with the help of negative or positive
sales taxes, which vary from product to product.
The fact that products exist does not mean that they are commodities.
A commodity is a product which is sold or exchanged on a market.
What determines a commodity’s price on the market is its
value, or equivalently, the socially necessary work which is
needed to create the product. Of course work is needed to create
products even in a statebureaucratic society, but for the great
majority of such products, a market does not exist where they can
be sold or exchanged. "The state owns all enterprises and does not
have to buy from itself."1 "If the transport of steel
from the steel works to the machine-shop or coal from the coal mines
to the steel works, is regristated as acquistion (buying) of means
of production, it is in reality a simple act of transferring the
product within the framework of the same form of ownership (in concrete
terms: the same owner = the state) and not a real act of buying
and selling at all. The proof is the arbitrary character of prices
in the ‘nationalized sphere’; these prices are merely an instrument
for bookkeeping, they do not correspond to the value relationship.
But this is what happens when state-owned enterprises trade with
each other in a country where the market exists. It doesn’t matter
if the state owns the major part of the industry, as for example
in Austria. A system does not become a statebureaucracy because
of the dominance of a state owned sector, it is a statebureaucracy
because of the lack of a market, which means that prices are determined
by other criteria than the law of value, and therefore the system
doesn’t work according to the same principles as a statecapitalist
system as Austria. This, among other things, results in a different
kind of tendency with regard to crises, thus a different kind of
further development of the system, another inherent logic...".2
Even the transportations of consumption products from producer
to consumer are just seemingly via a "market"; the prices rarely
corresponding to the value relationships. The prices are fixed so
that the total consumption reaches a level desirable for the state
bureaucracy. There are no markets for agrarian products in the state
bureaucracies where private farming is permitted. There are many
sellers, but only one buyer - the state - which buys the agrarian
products under conditions of monopoly, for centrally fixed prices.
In addition, both compulsory purchase and obligatory delivery are
used.
The existing local market plays a minor role in the supply of
food products within the state. These markets could be called "elements
of simple commodity distribution within the statebureaucratic social
formation".
Since there exists no real market (and in no sense of the word
of a market for means of production), there is no place where a
surplus product can be sold, no place where surplus value can
be realized. Acordingly there cannot exist any capital,
since capital is defined as value which increases through surplus
value.3
The enterprise in the statebureaucracy
We have now shown that in statebureaucratic countries, there
are no commodities, no markets, no surplus value or capital and
no capitalists. We will now move on to the question of what is the
impelling force, the primus motor, of the economy, when it
can’t be the profit (the surplus value in relation to the total
capital). Let us look at an enterprise in the Soviet Union:
Higher authority decides:
INPUT
supplier,
quantities,
prices
PRODUCTION
main item of production,
main investments,
fund of wages
OUTPUT
prices,
recipient,
quantities,
distribution
The enterprise decides:
INPUT
minor conditions for delivery
PRODUCTION
design,
bi-products,
distribution of wages,
minor investments
OUTPUT
minor conditions for delivery
(4)
One wonders how many Swedish managers who would accept working
under those conditions. What Eastern European managements may decide
is apparently restricted to things such as: Whether a product should
be painted blue or red; distribution of the total wage sum the enterprise
has received among the employees (here it must be remembered that
all wages are fixed in a higher level), and decisions about minor
investments - if the company has saved means for this. In this case
the means must come from the companys own surplus.
The fact that a company produces a surplus doesn’t make it in
any sence a capitalist company. The unique quality of human labour
is that it produces more than what is needed to maintain it (more
than what is needed for the reproduction of the labour power). This
fact is what makes material development through history possible,
and which also makes the class society, with its exploitation of
the proletariat possible. The ruling class lays claim on the surplus
products produced by the proletariat. In a socialist society there
would also be a surplus product, but this would be distributed according
to the wishes of the working class, through collective decision-making.
In statebureaucratic societies there is also a surplus produced
by the enterprises (of course there are exceptions and in these
cases, the loss is compensated bysurplus, from other enterprises).
This surplus is sometimes called "profit". Even if this "profit"
shares its name with the profit of a capitalist company, it has
in reality very little in common with its capitalist cousin.
The "profit" in a statebureaucratic enterprise is based on the
surplus product produced by the workers. The amount of money the
enterprise can register on transportation of a product to another
company (or in some cases, directly to the consumer) is of course
dependent on the produced quantity, but is also dependant on sales
taxes. This "profit" may be called gross "profit". From this
gross "profit", the state lays claim to the major part, (Poland
80%, Soviet Union 70%, Hungary 60%, for example5) and
the rest, the net "profit", is distributed by the company
on several different funds: e g "fund for production development",
"social and cultural fund" (for the common needs of the employees
such as lodgings), "fund for unexpected expenditures", "fund for
material stimulus" etc. The surplus left over when the net "profit"
has been distributed - according to certain regulations - on the
different funds, is left over to the state. There is therefore no
need for the enterprises to make great "profits" - the state will
in any case appropriate them.
That which makes some people describe Eastern European enterprises
as capitalistic is the fund for material stimulus. It is, in the
USSR 6%, in Hungary 15% of the gross "profit ", in the GDR
20% of the net "profit".6 This fund for material
stimulus is used to make wages "go further" (which indicates that
wages are not generally high enough for a decent income). In the
USSR this makes a wage increment of, on an average, 10%. For the
managers however, the part of the salary that comes from this fund
is important, in Hungary for example 80%.7 But this does
not bear any similarity to capitalist conditions. The management
can useneither this fund, nor the revenue of any other, for new
investments. Moreover the manager cannot, to take an example raise
the prices or decrease the production (as under capitalistic-monopoly
conditions) to increase the "profit" and thereby his own income.
This is, as we pointed out before, decided by the central administrative
bureaucracy (we notice that Bo Gustavsson - a leading Swedish Maoist
- is wrong when he states the opposite in the book "Social Capitalism",
p 15).
The striving force of statebureaucracy
If not the striving for profit, what is the impelling force in
the statebureaucratic mode of production? We can point out that
it is not to satisfy the needs of the people, as it would
be in a socialist society, if we do not think that nuclear bombs,
space "science", luxury production for a privileged class etc.,
are basic needs for the working class. The proletariat in the so
called socialist countries apparently does not regard wage reductions,
rise in prices and lack of fundamental consumption products to be
to their benefit, according to the revolts among workers in Eastern
Germany 1953, Hungary 1956, Poland 1970-71 etc.
We regard the general goal for production in statebureaucratic
societies as the same as in all class societies: "Every ruling class
decides the goal for social production. Of course it does this in
its own class interest which is, aiming at a strengthening and extention
of its control over the production and the whole society".8
Under capitalism this means a striving by the capitalist for
maximal profit. Under statebureaucracy the ruling statebureaucratic
class secures its power through maximizing the economic surplus
for the whole national economy.
The material basis for the state bureaucracy’s self establishment
as a ruling class, is the necessity of an industrialisation in a
backward, agrarian society.
The task for the statebureaucracy ("instead of" the capitalist
class, which has been wiped out by the revolution or military conquest)
will be to develop the productive forces of the country through
central directives, In order to do this as fast as possible (fast
because of threat orcompetition from the surrounding, highly developed
capitalism), the state bureaucracy is forced to allocate the existing
resources in the production industry, (the industry that produces
new means of production, i e machine-shops and raw materials industries)
generally known as heavy industry. This necessitates giving a low
priority to the consumption industry and of course to consumption
itself. This is possible as long as there is labour force available
eg. from the countryside, and as long as the statebureaucracy can,
with the help of political stimulus, get the working class to make
sacrifices for the construction of the "new society". During the
time it took to develop the production industry (in Eastern Europe
up to -53, -56, in China up to "the Great Leap" 1958) it was a common
interest for the state bureaucracy and the working class to develop
the industry potential (this does not mean there was a common interest
in the methods which were used). However when almost everybody
had work, and there was a common feeling that industry, and indeed
the whole country, had been "reconstructed", the ideological ties
between the working class and the statebureaucracy began to loosen.
The workers now begin to demand more consumption products to buy
with the wages they have earned in the industry. They can hardly
consume steel, coal or electricity to any greater extent. The peasant
demands to get back the surplus from agrarian production in the
form of other consumption products. But from the statebureaucracy’s
point of view, it is too great a task to administrate both the society
and the consumption, and therefore, investments in the consumption
industry is not an advantage but rather a necessary evil. This is
because, if every Rubel, Zloty or Yuan invested in the consumption
industry, had instead been invested into the production industry,
it would have meant still more surplus to invest, still more power
to the state bureaucracy. This is why the specific class interest
ofthe state bureaucracy is "production for production", here
in the most material sense of the word: tons, m2, etc.
This differs from capitalism, where the goal for production is profit
in terms of money. For this very reason, the state bureaucracy is
not able to liquidate the production industry since it doesn’t "pay",
it can’t as the bourgeoisie in a capitalist country can, speculate
in currencies when the coal isn’t worth digging out any more.
What impedes a state bureaucracy from maintaining accumulation
and investing more in the production industry? Nothing else than
consumption. Further investment in the production industry beyond
a certain limit would mean that consumption decreases to below the
socially necessary level. The laborpower would not be able to reproduce
itself.
The crisis
The state bureaucracy is forced to spare a certain part of the
surplus for the consumption industry, which limits accumulation.
The basic contradiction within the statebureaucratic society is
therefore between "the already developed industrial potential and
the low consumption level".9 The striving of the bureaucracy
to develop the industrial potential and, at the same time, keep
consumption at the lowest possible level, is the root of the crisis
in the statebureaucratic society. These crisis expresses themselves
in the following way:
INFLATION:
Since there is a tendency towards investment in the production
industry, the number of people employed there tends to increase,
as well as the total wage sum paid out to the employees. Since the
consumption industry is not given priority, the state bureaucracy
is forced to raise the prices on consumption products, in order
to get back the money paid out in the form of wages. The result
will be a tendency towards inflation, which can lead to social crisis
as for example in Poland 1970-71.
LACK OF
RAW MATERIALS:
As a result of the exaggerated concentration of the production
industry, more raw materials are needed than if the consumption
industry had a role of higher priority within the economy (since
the consumption industry needs less raw materials). As the resources
of raw materials are often limited, the bureaucracy is forced to
import them. Since there is a lack of consumption products, which
under other circumstances could have been used as a payment for
the imported raw materials, the result is a lack of balance in the
foreign trade. This must be solved by reserving a part of the economic
surplus for the payment of loans, to take one example. This in turn
results in a further limitation of the import of consumption goods
into the country.
SQUANDERING
OF THE ECONOMIC SURPLUS:
The bad cooperation between production and consumption, that
is to say a bad adaptation of production to the existing needs,
leads to a production of things there is no need for, and to a production
of "commodities" of bad quality - which among other effects, results
in difficulties for the export.
"Bourgeois" observers tend to state that the crisis in these
societies are caused by bad planning, or even that it is impossible
to plan an economy under any circumstances. They state that enterprises
can’t adapt their production to consumption. But the fact is that
both managers and workers show a great inventiveness in adapting
production after the needs - their own needs. From the managerial
side, production resources are kept secret, stocks are over- or
underestimated. The workers act in the same way as in capitalist
companies - they do as little as possible and try to make it look
like as much as possible. Once again it’s the basic contradiction
in the society that is expressed - between consumption and production.
"Reforms" extending the influence of the "market" on the production
cannot solve any crisis. If a state bureaucracy advances further
towards a market economy (e.g. Yugoslavia), it will be the victim
of the capitalist system’s overproduction and liquidation crisis.
The Soviet Union is a good example. In the beginning of the 70’s
the USSR has retreated from the "decentralizing" reforms of 1965-67.
"The political structure,based on the bureaucracy’s possession of
the means of production, has seriously hindered the development
of the production forces; as long as this lasts, the crisis will
worsen from day to day. The only and inevitable solution of the
crisis will be the removal of these modes of production and consequently
the overthrowing of the class power of the bureaucracy".10
Notes:
1. Jacek Kuron & Karol Modzelewski: Letter to the Polish
Workers’ Party.
page 43 (Swedish version)
2. Ibid, p 43
3. See for example Ernest Mandel
4. Bergström, Ådahl: Företaget i samhället p 63 (The Enterprise
in the Society)
5. J. Wilczynski: The Economics of Socialism p 53
6. Ibid., p 53
7. Ibid., p 54
8. Kuron & Modzelewski, a.a. p 42
9. Ibid., p 61
10. Ibid p 73
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