What is uneconomic under capitalism does not become economic under socialism.

Mark Jones markjones011 at tiscali.co.uk
Fri Dec 13 17:16:59 MST 2002

Jurriaan  wrote:

>apitalist accounting takes
> places at the level of the enterprise, socialist accounting is coordinated
> at the level of society as a whole. It is quite easy to show that what is
> uneconomic at the level of the enterprise may be very economic at
> the level
> of society as a whole, and vice versa.

Again you seem to be conflating socialist planning with a quite different
question, namely the formation of an euqlaised profit-rate in a capitalist
economy in equilibrium. The point about subsidies, "uneconomic projects
carried out under capitalism is that they serve the overall process of
social reproduction, that is, they help to valorise the mass of produced
capital in each cycle of production. Individual capitalists agree to pay
taxes because they individually cannot profitably make Widget Y but they
understand the general need for Widget Y and are therefore prepared to
cross-subsidise its production by taxes or some other means. They do this in
order to secure *their own* profits. Capitalist countries compete with each
other. This competition between different national capitals ensures that
subdieis, state-expenditures, tax levels etc, are kept to the minimum
necessray to permit the valorisation of capital. These subsidies you mention
do not subtract from the overall mass of profit, thy are a condition of its
existence. This is quite different from the counterexample of intrinsically
non-profitable production for socia priorities in Xanadu. In socialist
Xanadu Widget Y is made not to help realise the overall mass of profit, but
because of some agreed social priority. It is obvious that the mor socialist
Xanadu is, the less likely it is to be competitive with Slumville, ie,
socialism tends to be intrinsically less productive. Similarly, in Xanadu
unemployment may be seen as intrinsically inefficient, but this is a
subjective value-judgment. It means that Xanadu's economy is going to be
burdened with artifical make-work schemes producing little or nothing of any
value and probably subtratcing from the net national wealth in all manner of
ways, purely to keep headline unemployment down because this is another
'social priority'.

> In a capitalist economy,
> profitability may increase, while real net output decreases, etc.

This may happen in a specific branch of industry for well-understood reasons
but if it happened generally it would idicate the ondet of a serious crisis
of over-production. In equilibrium conditions (ie, for much of the time)
production in capitalist states grows, not declines. That is a historical,
empirical truth.
> In an imperialist world, if you compare a country featuring
> state-coordinated economic development with a country featuring
> development
> by private enterprise only, assuming a similar level of labour
> productivity
> at the start in both countries, then economic growth in the former country
> is faster than in the latter. I cannot think of any exception to this rule
> (any takers ?). That is a very basic, primitive argument in favour of
> socialist economy.

Development strategies like this represent an attempt by a national capital
to oppose international finance capital, and/or the attempt by a national
bourgeosie to oppose predatory external imperialism. It doesn't mean that
capitalism works better under dirigiste or authoritarian states. Actually,
states which have gone this path (Japan, Korea) have not succeeded
particularly well in the longer term and their national capitals are not
particularly profitable, which seems to suggest that other than as a
defensive stragey, dirigisme is not cost-effective.

> The relative inefficiency incurred by a socialist economy has little to do
> with "economic" or "uneconomic", it has to do with making
> economic decisions
> through political processes

I would argue that what is actually happening is that "economic" decisions
are being over-ridden for political purposes. That happens all the time,
sometimes because it is necessary (as argued above) to realise the total
mass of profit, sometimes for reasons of state policy or bureaucratic
advantage which from the point of view of the workings of the Law of Value
are arbitrary and irrational and which generally reuslt in a loss of
competitivenes and a lower than average profit rate.


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