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The Stalinist System
(The Internal "Evolition" Towards "Liberalization")

Written by Hiroyoshi Hayashi (1972)
Translated by Roy West

  1. The Laws of Commodity Exchange and Socialism
  2. The Relations of Production Under the Stalinist System
  3. The "Socialist" Planned Economy and the Category of Capital
  4. Economic Reforms and the Bourgeois gEvolutionh of the Stalinist System
  5. The gOverallh Development of Commodity Production and the gShift to Communismh
  6. Criticism of eSocialistf Economics

Economic reform ("liberalization") in the Soviet Union and Eastern Europe, which was debated in the first half of the sixties and implemented in the second half of the same decade, sharply raised the question of the essence of "socialism". Already in the twenties, some extreme-left communist factions in Germany and other countries, defined Soviet society as state capitalist and denounced the Stalinists, who had mercilessly oppressed the Trotskyists and revolutionary workers factions, as the political bearers of state capitalism. However, Trotsky and the Fourth International were satisfied to simply describe the Soviet Union as a "degenerated workers' state", and Stalinists as a "degenerated caste of workers". This ambiguous and compromised definition was in striking contrast to what could be called their bitterly emotional accusation of Stalin and the Stalinists. Trotsky's criticism of Stalin was emotional and moralistic, not historical. As a result, he was unable to correctly define the essence of Stalin's rule, and instead glorified the USSR as a "workers' state". Even after all trace of the Soviet Union as a workers' state had substantially disappeared, Trotsky obstinately stuck to this view on the grounds that the means of production were "nationalized". In reality, his dogma was not very different from the Stalinists' views of "socialism".

With economic reform, the debate has arisen again on a worldwide scale over the nature of the socio-economic system in the "socialist" bloc. The "leftwing faction" (Chinese Communist Party) within the international Communist movement, is denouncing the Soviet Union for "reviving" capitalism, while the "rightwing faction" (Togliattists or the Japanese Structural-Reformists) has evaluated the reforms as a process towards a Yugoslavian-style "market socialism". The Structural Reformists (read: liberal intellectuals) refuse to recognize the essential difference between capitalism and socialism. They define the Soviet Union and China as "bourgeois socio-economic systems without the bourgeoisie", but they still call these societies socialism, and say that socialism is also a bourgeois society. Consequently, they imply that actual bourgeois societies (state monopoly capitalism in the U.S., Western Europe and Japan) are also socialism. The bourgeoisie, on the other hand, has enthusiastically welcomed economic reform ("liberalization"), since it seems to demonstrate the superiority of bourgeois production and justify their long-held view that socialism is "unproductive and inefficient" because it oppresses individual autonomy and difference. They conclude that ultimately "socialism" must become capitalism, thereby leading to the appearance of a re-united capitalistic world.

The JCP, with their self-proclaimed "autonomous-line", have yet to publicize any official party view on the economic reforms. They seem to think that this problem is not that important. But intellectuals affiliated with the JCP, although there is no agreement among them, have closed their eyes to reality in order to salvage "socialism" in the Soviet Union, and are playing around with socialism as an "ideal". The "autonomous-line" JCP cannot fully embrace official Soviet economics which claims that "communism" can be built through the overall development of the commodity=value relationship. The JCP, on the contrary, claims that it is necessary for the commodity=value relationship to "gradually" disappear. Thus, the JCP at best can only shut their eyes and ignore the reforms, while talking about "socialism as an ideal", thereby diverting the attention of the masses from Soviet society.

Today a specter of capitalism is haunting the "socialist" bloc, and no one can ignore this reality. Of course, this "specter" is not the opposite of the Stalinist system, but its inevitable, developed or "evolved" form that clarifies the hidden reality of this system. We understand the bourgeois transformation and liberalization of the "socialist" system as this sort of inevitable "evolution" of the Stalinist system, not as the "restoration of capitalism", in the manner of the Chinese Communists. This alone is the dialectical viewpoint.

A. The Laws of Commodity Exchange and Socialism
The Law of Value and Socialism

Beginning in the early forties, the official view emerged in the Soviet Union that the law of commodity exchange is not the law of capital, and hence there is nothing strange about the existence of the law of commodity production (law of value) in socialist society. This was later systematized in 1952 with Stalin's 'Economic Problems of Socialism in the USSR'. Subsequently, some of Stalin's ideas advanced in this essay were "developed" further, and "evolved" to the point where "socialist" economics today claims that socialism and commodity production are necessarily linked. Therefore, we need to begin with the most abstract theoretical problem of the mutual relationship between commodity production and socialism. This provides a basis for the realistic analysis of Soviet society, as well as being the theoretical starting point that determines this reality. The official view of "socialist" economics on this matter is the following. For example, the third edition of the Soviet 'Textbook on Economics' states:

Commodity production under socialism is of a special kind. This is commodity production without private ownership of the means of production, and without capitalists.

[Keizaigaku kyokasho [Textbook on Economics], p. 759.]In the fourth edition there is the following passage:As long as commodity production and commodity circulation exist under socialism, the law of value continues to operate. Money expresses socialist relations of production.

[Ibid., p. 788.]However, is the law of commodity=value truly compatible with socialist society? What does it mean for a product to take the form of a commodity and labor to take the form of value? We must first consider this question, which is the theme that Marx clarifies at the beginning of the first volume of Capital.

The commodity form of products itself expresses certain historical relations of production. That is, it expresses relations of production in which individuals cannot form mutual social relations without exchanging their own products as commodities. The starting point is private labor, which private individuals expend independently from each other. This private labor is congealed as value in commodities, and it is only through their mutual exchange that this private labor becomes one part of the total social labor. Thus, the relationship between people appears as a relationship between things, i.e. a relationship between commodities. Products can only take the form of commodities at a certain stage in the development of human history on the basis of the division of labor and private ownership. As Marx says:Objects of utility become commodities only because they are the products of the labour of private individuals(*) who work independently of each other. The sum total of the labour of all these private individuals forms the aggregate labour of society. Since the producers do not come into social contact until they exchange the products of their labour, the specific social characteristics of their private labours appear only within this exchange. In other words, the labour of the private individual manifests itself as an element of the total labour of society only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers. To the producers, therefore, the social relations between their private labours appear as what they are, i.e. they do not appear as direct social relations between persons in their work, but rather as material [dinglich] relations between things.[Marx, Capital vol. 1, pp. 165-6.]

(*) Hayashi's note: "In the English edition edited by Engels, this is rendered "private individuals or groups of individuals". See Capital, vol. 1 (Moscow: Progress, 1996), p. 83.Under a socialist system, where the labor of each individual is directly expended as social labor (as one part of social labor), and the social connection of each person's labor appears as "the direct social relationships of people in their work", products do not become commodities, nor is there any necessity for them to do so. Marx defines the historical production relations of commodity producers in the following way:[A] society of commodity producers, whose general social relation of production consists in the fact that they treat their products as commodities, hence as values, and in this material [sachlich] form bring their individual, private labours into relation with each other as homogeneous human labor.

[Ibid., p. 172.]For Marxists, only one answer is possible to the question of whether "value" exists in socialist society. Needless to say, the law of value is the law of commodity=capitalist society, and the opposite extreme of socialist relations of production. Products of labor only become value in a society where objects of utility are the product of "the labor of private individuals who work independently of each other". In a society based on the division of labor and private property, social relationships can only be established between people in the form of the exchange of products (i.e., in a material form). The social character of the producers first appears through this exchange of products, and the labor of each individual can be seen as one part of the total labor of society. Thus, value (i.e. the commodity form of labor products) itself expresses certain historical relations of production. In a society where the labor of each individual directly forms one part of the total labor of society, it does not appear as exchange-value and consequently products do not become commodities. Value is a concept specific to the historical society of commodity production, while socialist society is the sublation of the production relations represented by value (although the significance of socialism is not limited to this alone).

The question of whether value or the law of value exists under socialism led to a worldwide debate in the forties. This debate ultimately came down to the question of how to evaluate the Soviet socio-economic system. The Stalinists justified this system with the excuse that value=money relations in the Soviet Union were "essentially different" from that of bourgeois society and represented "something totally new". Unable to explain why commodities were produced in a society whose means of production had shifted to "socialistic ownership", they were forced to come up with the strange theory of "higher" and "lower" forms of ownership. Social democrats and intellectuals, on the other hand, made various objections to this official Soviet view, but they also considered the nationalization of the means of production, not the question of commodity production, to be the most essential factor in determining socialism, and therefore concluded that the Soviet Union was in fact socialist because the means of production were nationalized. (This is essentially close to the view of Trotsky.) Only Raya Dunayevskaya, the American New Leftist, opposed the view of the USSR as socialism, and argued that the acceptance of the law of value represented an acceptance of capitalist exploitation. She criticized the apologists of the USSR, but could not make a clear conceptual distinction between commodity production and capitalist production and was unable to explain their relationship.

Value and the "Content of the Determination of Value"

Stalinists have often made use of Marx and Engels expression that "the content of the determination of value" would remain under socialism in order to justify the existence of relations of commodity production in the Soviet Union. Of course, it is possible to quote many such expressions in the works of Marx and Engels:

All the relations between Robinson and these objects that formed his self-created wealth are here so simple and transparent...And yet those relations contain all the essential determinants of value.

[Ibid., p. 170.]Marx also wrote the following in his 'Critique of the Gotha Programme':Here we are dealing with a communist society, not as it has developed from first principles, but on the contrary, just as it emerges from capitalist society, hence in every respect-economically, morally, intellectually-as it comes forth from the womb, it is stamped with the birthmarks of the old society. The individual producer retains proportionately, after deductions, exactly what he put into it. What he has put into it is a quantity of his individual labour. E.g. the working day for society comprises the sum of individual hours of work. The individual labour time of the individual producer is the part of the working day in society contributed by him, his share of it. He gets from society a receipt that he has contributed such and such an amount of labour (after a deduction of labour for common reserves) and withdraws from societies stores the means of consumption of an equal amount costed in labour terms. The same quantity of labour he puts into society in one form comes back to him in another. Obviously the principle here is the same as the one that applies in the exchange of commodities, so far as the exchange is one of equal values. The content and form have changed, because under the altered conditions no one can contribute anything except his own labour, and nothing can become a person's property except the individual means of consumption. But as far as the distribution of the means of consumption amongst individual producers is concerned, the operative principle is the same as under the exchange of equivalent values; a given amount of labour in one form is exchanged for an equal amount in another form.

[Marx, Critique of the Gotha Programme in Marx: Later Political Writings, (Cambridge: Cambridge University Press, 1996), p. 213.]Marx expressed the same idea in a letter to Kugelmann in 1868:It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves.

[Marx, Marx/Engels Collected Works vol. 43, p. 68.]Engels also says that even in a a socialist society:[I]t will still be necessary for society to know how much labour each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular, its labour-powers. The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan.

[Marx, Marx/Engels Collected Works vol. 25, pp. 294-5.]As we can see from these passages, Marx and Engels recognized that "the content of the determination of value" would remain even after capitalist society had been overcome. However, can one conclude from this that value, that is commodity production, will remain in socialist society? The answer, of course, is no. What remains is the content of the determination of value, not value itself. If the labor of individuals directly becomes social labor, it does not assume form of value. If labor time becomes the regulating factor of production, the concept of value would no longer be necessary. Needless to say, value is a category that expresses certain historical relations of production. Its substance is abstract human labor, but value itself is not human labor. Expended labor only takes the form of value under particular historical condition. Therefore, value is human labor in a historical form, and when human labor ceases to exist in this historical form, value also disappears.

Let us suppose, for instance, that there are some goods whose value is 10,000 yen. This means they contain abstract human labor corresponding to a price expression of 10,000 yen. However, value is neither the human labor objectified in the goods, nor labor itself, but human labor in a particular historical form expressed in the form of price (in the use-value of other commodities).

To repeat: the fact that the content of the determination of value remains under socialism is not equivalent to saying that value itself remains. The former means that labor time exists as the regulator of production and distribution. In socialist society, the relationship between the products of labor and the content of the value determination (labor time) is directly expressed, therefore no "value" is contained, and there is no need for it. One can hardly take seriously the views of those who deduce the existence of value (commodity production) from Marx's idea that the "value determination" would remain under socialist society. This boils down to the glorification of bourgeois production relations or the idiocies of the utilitarian school of economics.

We will next examine the views of Stalin, the shining founder of "socialist" economics. Even though many of his propositions are criticized today, he still holds the honor of having founded "socialist" economics. The most essential tenets of his theory have been preserved and are being "developed". In the following chapter, we look at his view as the starting point of "socialist" economics.

Stalin's View

Stalin held the following view:

It is said that commodity production must lead, is bound to lead, to capitalism all the same, under all conditions. That is not true. Not always and not under all conditions! Commodity production must not be identified with capitalist production. They are two different things.

[Stalin, Economic Problems in the USSR, (Peking: Foreign Languages Press, 1972) p. 13.]According to his view, commodity production does not necessarily lead to capitalist production in societies: "if the means of production are no longer private but socialist property, if the system of wage labour no longer exists and labour power is no longer a commodity, and if the system of exploitation has long been abolished."(*) Stalin reasons that commodity production is older than capitalist production, and existed in slave-owning society and served it, but did not lead to capitalism; existed in feudal society and served it and, although it prepared some of the conditions for capitalist production, it did not lead to capitalism. He argues that commodity production similarly can serve socialist society for a certain period of time without leading to capitalism. Stalin refers commodity production in the Soviet Union as "a special kind of commodity production" or "commodity production without capitalists".[(*) Ibid., p. 14.]

In Chapter 7 of 'Economic Problems', Stalin writes:Is the law of value the basic economic law of capitalism? No. The law of value is primarily a law of commodity production. It existed before capitalism, and, like commodity production, will continue to exist after the overthrow of capitalism, as it does, for instance, in our country, although, it is true, with a restricted sphere of operation. Having a wide sphere of operation in capitalist conditions, the law of value, of course, plays a big part in the development of capitalist production. But not only does it not determine the essence of capitalist production and the principles of capitalist profit; it does not even pose these problems. Therefore, it cannot be the basic economic law of modern capitalism.

[Ibid., pp. 37-8.]First of all, we cannot accept Stalin's view that the basic law of capitalism is the law of profit, not the law of value. Capitalism is certainly motivated by the production of surplus-value, but this does not negate the fact that capitalist production is commodity production governed by the law of value. Under capitalism, even human labor becomes commodified, and through the production of every product as a commodity, this develops into an entire historical society governed by the law of value. This is why Lenin defined capitalism as "the highest development of commodity production".

Capitalism is distinguished from other modes of production by the fact that surplus labor is appropriated (exploited) in the form of surplus-value. However, surplus labor takes the form of surplus-value because products in general take the form of commodity=value. This shows us that the historical and real foundation of capitalist production is commodity production, and we cannot understand the essence of capitalism without correctly understanding the law of value. Compared to commodity production, capitalist production is a category that contains more complex and numerous determinations, and is more concrete. On the other hand, commodity production is a more fundamental and therefore, in a sense, a more essential category. For capitalist production, the law of value is an essential question, not something secondary. It was for this reason that Marx wrote the following:The value-form of the product of labour is the most abstract, but also the most universal form of the bourgeois mode of production; by that fact it stamps the bourgeois mode of production as a particular kind of social production of a historical and transitory character. If then we make the mistake of treating it as the eternal natural form of social production, we necessarily overlook the specificity of the value-form, and consequently of the commodity-form together with its further developments, the money form, the capital form, etc.

[Capital Vol. 1, p. 174n.]Here Marx goes so far as to say that capitalist production is "stamped" as a "particular kind of social production" by the fact of being commodity production. This is exactly the opposite of Stalin's claim! Whereas Marx reveals that commodity production is inseparable from capitalist production, Stalin mechanically separates the two. Needless to say, the categories of commodity production and capitalist production are distinct from one another (on this point we are different from the Uno(*) school who confuse the two).(*) Uno Kozo (1897-1977) Postwar "Marxist" economist who had a strong influence on the New Left in Japan. Famous for his "three-staged methodology of economics". See his Principles of Political Economy (Sussex: Harvester Press, 1980).Nevertheless, commodity production has an intrinsic tendency to naturally develop towards capitalism, and only in this way can commodity production develop into the relations of production that envelop the totality of society. As Engels says:The value form of products therefore already contains in embryo the whole capitalist form of production, the antagonism between capitalists and wage-workers, the industrial reserve army, and crises.

[Engels, Anti-Duhring, p. 295.]Clearly, Stalin's theory, which mechanically separates commodity production from capitalist production while ignoring their unity, and denies that commodity production has an internal necessity to develop towards capitalist production, has nothing in common with the Marxist standpoint. Stalin argues that since commodity production is "different" from capitalist production, there is nothing strange about commodity production existing in a "socialist society", and indeed it is natural for the "proletarian state" to "make use" of this for its own purposes.

Socialism, however, is the sublation of capitalist production, and its opposite, and thus necessarily the opposite of commodity=value production. This should be an absolutely clear proposition for anyone based on Marxism, but this is rejected as "dogma" by modern-day "socialist" economists, who argue that socialism is the negation of capitalist production, but not necessarily the negation of commodity production.

The division of labor and private property make commodity production inevitable, and are thus the foundation, or starting point, of capitalist relations. Capitalist relations of production do not abolish commodity production. On the contrary, they thoroughly develop its internal nature. Therefore, capitalist relations of production are the logical outcome of commodity production (we will touch on this point later in connection to the reality of the Soviet Union).

Many people are content with the idea that since the USSR and China are "socialist", their commodities are different from those in the bourgeois states that we have just described. They have forgotten the simple truth that socialist society has no need for the production of commodities. At best, they argue that these commodities are the remnants of bourgeois society (but if this were the case, the Soviet Union and China would still be in a transitional period, not societies that had "completed" the construction of socialism and were on the path to communism). More open apologists, who needless to say they form the mainstream of today's "socialist" economics, don't hesitate to say that socialist society is a society of commodity production! The confusion and degeneration of "socialist" economics today knows no bounds. Already this has become indistinguishable from bourgeois economics, and corresponds exactly with the "evolution" of the Soviet Union into a bourgeois society.

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