More on the socialist market economy

We print another reply to Prof. Erwin Marquit’s People Before Profits columns on the “socialist market economy,” published in the PWW earlier this summer. The discussion will continue in subsequent issues.

Socialism and commodity exchange

Writings on the Soviet economy in the post-WWII period reveal an extensive discussion of the role of commodities in a socialist economy. The economic problems in the 1970s discussed in the Marquit article in part resulted from changes that occurred in the Soviet Union concerning the control of commodity sales. By the early 1950s, the only commodity production was by the collective farms. All other goods and services originated from state-owned enterprises and were therefore not commodities and not subject to the laws of commodity exchange. The other tight control on commodities was the Soviet import-export monopoly, which regulated all exchange of foreign commodities.

By the early 1970s both these controls had been loosened considerably. Collective farms had not been developed into state farms, so commodity production remained. Private plots were introduced, expanding the market. Soviet monopoly on imports and exports was loosened step by step, until in the 1980s every firm was allowed to trade on the international market. Foreign commodities increased substantially.

Technological development began to slow because investment in the 1960s and 70s had been redirected away from production of the means of production and into production of the means of consumption. In 1957, the USSR launched Sputnik and was known to be a decade ahead of the United States technologically. By the 1970s they fell behind. Further, the military, in the name of national security, hampered the dissemination of technology throughout the economy, further restricting its development.

However, we should not underestimate the level of technological development that existed in the Soviet Union in the 1970s. In fact, an interesting aspect of the economic problems in the 1970s was the effects of the early application of electronics to the production process. The Soviets were unable to deal with the drastic changes in the nature of work that utilized electronics, the reduction of workers needed where electronics began to be applied, and the beginning of the disruption of “economic laws” as electronics dramatically increased labor productivity. Under these new conditions of production, the need for the productive relations to evolve was blocked and resisted by the privileged bureaucracy.

Bruce Parry and Lenny Brody Chicago IL