MARXIST INTERNET ARCHIVE | Martin Nicolaus

19  Means of Production (II)

    "The essence of the reform," writes prominent Soviet academician A. Rumyantsev, "consists in concentrating centralized planning on formulating the most general indicators of national economic development, extending the independence of enterprises, providing greater material stimuli to raising the efficiency of production and developing cost accounting." ("Management of the Soviet Economy Today: Basic Principles," in Soviet Economic Reform. . . , p. 16) Its essence, it might be said in other words, consists in giving the central planners the task of keeping the economy as a whole in balance while each particular unit of the economy runs riot in pursuit of its maximum profit.

    The new 1965 enterprise law, cited earlier, gives the Soviet enterprise directors (as well as directors of combinations of enterprises or"production associations") written protection against having their plan targets changed by superior authority. "Plan targets fixed for the enterprise," says the statute, "may be altered by the superior body only in exceptional cases. . . ."

    The result of this provision is that "planning" not only begins when the enterprise director draws up the enterprise plan, it virtually ends there as well. Even if the

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central planners were able to perceive the "general interest of society" they could impose that interest against the profit-maximizing plan of the enterprise only with difficulty, in exceptional cases. This is one basic reason why the 1966-70 plans drawn up by the enterprises and sent up to Gosplan (the central planning bureau) did not come back down again in the form of revised working programs for the enterprises, or even for the "ministries."

    In the Soviet literature this is termed "planning from below," though this does not mean, to be sure, planning by the workers themselves. In any system where labor power is a commodity and where the workers do not hold state power, they cannot very well participate in any real sense in planning. It means "planning" by the enterprise directors, who are, technically speaking, "below" the central plan, as are the heads of the "production associations" and the heads of the new "ministries" -- "ministries" which themselves operate on the profit-maximizing principle, as will be seen later on.

    Under this system, as the French socialist theoretician Charles Bettelheim rightly observes, the central "plan" ends up merely running alongside the path chosen by the enterprises and the combines in pursuit of their maximum profit. "In the extreme case," he writes, "the development of commodity relationships ends in the result that the 'planning' organs leave the enterprises 'free' (formally or actually, it matters little) to work out the main lines of their 'plans' by themselves. . . . In such a case, 'the commanding power of money' ('controle par la monnaie') achieves maximum development and the plan becomes no more than an 'accompaniment' ('accompagnateur') to the commodity relationships. It is this direction that has been taken in the Soviet Union since the reforms of 1965." (Calcul economique et formes de propriete, Paris 1970, p. 89) In other words, the plan follows where the profit-maximizing units lead.

    A graphic illustration of what this means in everyday practice is supplied by a radical U.S. economist who traveled to the USSR in June 1974 as member of a delegation organized by the revisionist U.S. Communist Party. "In our discussions with enterprise managers," the visitor recounts, "two important features of the planning

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process came out. First, all plans originate at the enterprise level, and are then submitted to higher authorities for review. In no case were we told of an example where higher authorities altered the submitted plan in any important respect. Secondly, enterprises are allowed to keep one-third of their after-tax profits for reinvestment outside the plan; i.e., managers are free to invest profits in expanding capacity or buying up other plants in the same branch of industry . . . in any way that seems most profitable. Any productive capacity built or acquired then comes under the plan for production, but these plans again originate with the enterprise." ("Report of a Recent Visit to the USSR," in Red Papers 7, How Capitalism Has Been Restored in the Soviet Union and What This Means for the World Struggle, by Revolutionary Union, Chicago 1974, p. 141; emphasis in original)

    This illustration shows the hollowness of the category of "centralized investments," which was mentioned earlier. For apart from the genuinely central investments undertaken by the state directly, out of its own funds, the bulk of "centralized" investments coming from enterprise funds are really nothing but their outside-of-plan investments of previous years. This year's out-of-plan, planless, profit-maximizing investment by the enterprise is merely renamed next year as "part of the plan" and hence "centralized." In this brilliant fashion even the most socialist public-spirited plan would become corrupted in a few years into a socially-worthless register of opportunism. As Stalin had occasion to say about similar "planning" proposals advanced by the right-opportunist wing of the party in 1929, it is "not a five-year-plan but five-year rubbish." (Works, Vol. 12, p. 84; emphasis added.)

    The actual planlessness in Soviet economy and, moreover, the use of "planning" by the biggest and most powerful enterprises and combines against the rest, shows up with particular clarity on the Soviet market in means of production. In any society, the manner in which the means of production are distributed both reflects and powerfully shapes the course of economic development. This is why in the Soviet socialist period, as Dobb rightly remarks, the

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planning of the distribution of means of production was given special attention, as it "forms the main artery on which all other branches of the plan depend." (Soviet Economic Development . . . , p. 368)

    In the view of Pavel Bunich, a corresponding member of the Soviet Academy of Sciences, the 1965 "reform" is distinguished by its "uniformity" or "sameness of approach," under which, for example, all enterprises without distinction are granted "equal rights . . . to buy means of production by concluding detailed contracts with suppliers, at wholesale centers and in shops." ("Methods of Planning and Stimulation," in Soviet Economic Reform . . . , p. 36) What he means is that the sphere of "bourgeois right," which under socialism still operates in the distribution of articles of personal consumption (see part 7 of this series), has been extended by the "reform" into the sphere of the distribution of means of production. He omits to mention that while enterprises may enter the market in means of production with equal rights, they do not do so with equal resources. Let us see.

    "There is every reason to affirm," writes the economist V. Budagarin, "that the present market and the system of material-technical supply in the USSR are more extensively using the commodity-money mechanism in the circulation of means of production." Budagarin estimates that "the market in means of production" -- his term -- accounted in 1970 for about two-thirds of the nation's entire wholesale trade turnover (volume of sales). ("The Price Mechanism and Circulation of the Means of Production," Ekonomicheskie nauki 1971, No. 11, in Problems of Economics, July 1972, p. 78)

    Huge as this market is, however, there is not room in it for "equal rights" in reality for all enterprises. Some are "more equal" than others. Budagarin continues: "At present the customer is not able to participate actively in the establishment of the upper price limit for new implements or objects of labor or to oppose the frequent striving to arbitrarily raise the prices for which the means of production are sold.

    "The producer dictates the price, especially in establishing one-time and temporary prices on newly developed types of products, and frequently uses the

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existing shortage for a given group or type of resources to bring pressure to bear on the customer." (p. 83, emphasis added)

    What Budagarin here describes is the elementary raw exercise of monopoly capitalist market power, such as can be observed as a characteristic feature of nearly any major wholesale industrial market in the West. (See e.g. John Blair's comprehensive study, Economic Concentration, New York 1972, Chs. 16-20) In view of this, Budagarin's remark that all these practices take place "on an indispensable planned basis" (p. 78) seems almost like an attempt at humor or else a mere formal bow to the ruling rhetoric. But, as will be seen, it is true in a perverse way: the "planners" step in and sanction these strong-arm market tactics with the "planned" label.

    "A special place in the development of wholesale trade and in the application of the price mechanism," Budagarin elaborates, choosing his phrases carefully, "belongs to economic associations -- modern integrated enterprises that conform to the present dimensions of the market for the means of production. On the one hand, as large producers and as customers, these associations have a broader economic base for developing permanent direct relations and for exerting greater influence on the entire price formation process. On the other hand, they possess the economic conditions for influencing production through the system of contractual and economically substantiated accounting prices." (p. 81)

    A closer look at these "economic associations" (they are the same as the "production associations," also called trusts and combines by more plainspoken Soviet writers) will be had further on. What distinguishes them here, gives them a special place, as Budagarin says, is their greater ability to set up direct relations with other enterprises or combines, their power to "influence the entire price formation process" and to "influence production" in society in general.

    Thus the rule of "equal rights" on the marketplace for means of production leads directly to the conquest and occupation of a " special place" by the most giant profit-maximizing institutions, those whose size and diversity conforms, as Budagarin says, "to the present

    "The producer dictates the price, especially in establishing one-time and temporary prices on newly developed types of products, and frequently uses the

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existing shortage for a given group or type of resources to bring pressure to bear on the customer." (p. 83, emphasis added)

    What Budagarin here describes is the elementary raw exercise of monopoly capitalist market power, such as can be observed as a characteristic feature of nearly any major wholesale industrial market in the West. (See e.g. John Blair's comprehensive study, Economic Concentration, New York 1972, Chs. 16-20) In view of this, Budagarin's remark that all these practices take place "on an indispensable planned basis" (p. 78) seems almost like an attempt at humor or else a mere formal bow to the ruling rhetoric. But, as will be seen, it is true in a perverse way: the "planners" step in and sanction these strong-arm market tactics with the "planned" label.

    "A special place in the development of wholesale trade and in the application of the price mechanism," Budagarin elaborates, choosing his phrases carefully, "belongs to economic associations -- modern integrated enterprises that conform to the present dimensions of the market for the means of production. On the one hand, as large producers and as customers, these associations have a broader economic base for developing permanent direct relations and for exerting greater influence on the entire price formation process. On the other hand, they possess the economic conditions for influencing production through the system of contractual and economically substantiated accounting prices." (p. 81)

    A closer look at these "economic associations" (they are the same as the "production associations," also called trusts and combines by more plainspoken Soviet writers) will be had further on. What distinguishes them here, gives them a special place, as Budagarin says, is their greater ability to set up direct relations with other enterprises or combines, their power to "influence the entire price formation process" and to "influence production" in society in general.

    Thus the rule of "equal rights" on the marketplace for means of production leads directly to the conquest and occupation of a " special place" by the most giant profit-maximizing institutions, those whose size and diversity conforms, as Budagarin says, "to the present

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dimensions of the market for the means of production."

    Further symptoms of the anarchic distribution of means of production -- distribution according to the dictates of increased profit for one or another enterprise or combine -- are touched on by the prominent revisionist ideologue N. Fedorenko. He invites Soviet economists to "elaborate concrete proposals on the further improvement of the entire system of the circulation of means of production in the national economy. Certain forms of the existing distribution of the means of production frequently lead to an artificial shortage and to the formation of excessive inventories in some sectors of the economy and shortages in others and do not serve to improve the quality of production." ("Current Tasks of Economic Science," Voprosy ekonomiki, 1974, No. 2, in Problems of Economics, Dec. 1974, p. 24)

    The system of distributing means of production as commodities, in other words, brings with it also the fact that means of production are "allowed to rot" in the form of "excess inventories" that no one wants or can afford to purchase. At the same time, artificial scarcities are created, which producer enterprises, as was pointed out, exploit to dictate higher prices and bring pressure on customer enterprises. Both Budagarin and Fedorenko qualify these phenomena not as exceptional, but as "frequent."

    "Our experience points to the existence of a dangerous trend toward arbitrary price rises," reports the economist L. Maizenberg. ("Improvements in the Wholesale Price System," Voprosy ekonomiki, 1970, No. 6, in Problems of Economics, Feb. 1971, p. 64 emphasis added.)

    A stern lecture against enterprises that increase their profits "by arbitrarily jacking up prices on new equipment" is delivered also by economist M. Rubinshtein. He shows on the basis of comparative statistics that this tendency is a main cause of the "low rate of production of new items" in Soviet machine-building industry, a phenomenon much viewed-with-alarm in the Soviet literature. ("Scientific and Technical Progress and Planned Price Formation," Dengi i kredit 1972 No. 9, Problems of Economics, July 1973, p.

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22) He omits however to extend his comparison to Western countries, which would have shown him that resistance to technological modernization and low rate of introduction of new machine tools are standard features in branches of Western industry where monopoly is entrenched.

    Progress-minded Western engineers, industrial consultants and economists have often remarked on the excessive age and backwardness of the existing stock of means of production in the United States. (See e.g. Blair's Economic Concentration, Chs. 9-10; Seymour Melman's Pentagon Capitalism, New York 1970 pp. 184-191; Baran and Sweezy, Monopoly Capital, New York 1966, pp. 93-97 and others. The phenomenon and its roots are already mentioned by Lenin in his Imperialism, Ch. 8.)

    As in the West so in the present-day USSR, the official ideology stands, of course, for rapid technological progress; but the actual economic relations, based on the production of means of production as commodities for monopoly-dominated markets, defy the ideology and dictate restriction of the development of the productive forces.

    A most pathetic effort at proving the alleged plannedness of the Soviet market in means of production has been made recently by the head of the Department of New Planning Methods of Gosplan, Y. N. Drogichinsky. He is at great pains to prove that the bulk of Soviet trade in means of production is not "unrestricted free trade" because there is not (and, he emphasizes, will not be) "free choice of suppliers and customers."

    He seems unaware that in the Western countries also, the actual "free choice of suppliers and customers" and "free trade" has long been restricted and is daily being more thoroughly stamped out by monopolistic corporations, precisely on the basis of the commodity-money relationship. The "independent" gas station owner, for example, hardly has a free choice of gasoline suppliers; and the so-called "free trade" has long ago ceased to prevail on the majority of industrial markets.

    The Western antimonopoly literature is filled with accounts of exclusive dealing arrangements and the so-called "reciprocity ties" between major corporations in

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different branches, by which any "free choice" of suppliers and customers is excluded. In a 1965 survey by Fortune magazine, for example, it was found that all major U.S. heavy-industrial corporations, and 78% of all larger U.S. industrial corporations generally, had this sort of exclusive relationship with at least part of their suppliers or customers, usually with those of major importance to them. (Quoted in Fitch and Oppenheimer, "Who Rules the Corporations -- III" in Socialist Revolution, Nov.-Dec. 1970, p. 84; see also Blair's study, Ch. 14) The mere restriction or absence of "free trade" and "free choice of partners" is anything but a proof of socialist plannedness.

    Drogichinsky's sole illustration of "planning" on the market in means of production, significantly, is drawn from the Soviet automobile industry, which -- being a brand-new industry with its starting capital supplied directly and wholly from the state budget -- occupies an exceptional position, like the artificially implanted new industrial centers in the Far East and Siberia. The whole "plannedness" of supplier-customer relations in Drogichinsky's illustration reduces itself to the profundity that the automobile combine is not "free" to buy rolled steel from, for example, the fishing industry or the vodka distillers, but must buy it from the steel combine. Even on this level, Drogichinsky's illustration shows, however, that the auto-steel supply "plan" is not confirmed until after the "plans" of the enterprises concerned have been taken into account -- meaning in this context, after the profit-maximizing aims of all sides have been built into the "plan."

    Truly comical is Drogichinsky's attempt to assert general validity for this case. Some 70% of the market in means of production, he says, consists of "large lot wholesale trade conducted directly between supplier and customer." This trade, he straight-facedly asserts, "is based on the five-year plan for the production and delivery of products with an annual distribution of targets of the five-year plan." He then draws an elaborate flow chart with extensive supplementary explanations to show how the "new planning system" works. At the end, however, comes a bit of a letdown. The experience of the 1966-70

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plan period, it seems, unfortunately showed there were some "problems," such as -- "the fact that there were no five year plans of ministries, associations and enterprises with targets broken down by year." This is really picking up a rock to drop it on one's feet. ("On Wholesale Trade in the Means of Production," Voprosy ekonomiki, 1974, No. 4, in Problems of Economics, Oct. 1974, pp. 89-107, emphasis added.)