17: "Socialist Profit"

As has been shown, in the Soviet economy since the "economic reform" profit is the motive and regulator of social production.

Seeking to present this society as "socialist", however, contemporary Soviet economists describe this profit as:

"....socialist profit"

(E.G. Liberman : "The Plan, Direct Ties and Profitability", in "Pravda" (Truth), November 21st., 1965, in: M.E. Sharpe (Ed.): "Planning, Profit and Incentives in the USSR", Volume 2; New York; 1966; p. 179).

and claim that it is qualitatively different from profit in an orthodox capitalist country:

"Our profit has nothing in comon with capitalist profit".

(E.G. Liberman: "Plan: Profits: Bonuses", in: "Pravda" (Truth), September 9th., 1962, in: M.E. Sharpe (Ed.): op. cit., Volume 1; p. 83).

"Under socialism profit differs fundamentally in socio-economic content and role from profit under capitalism".

(Editorial: "Economic Policy and Work for Communism", in; "Pravda" (Truth), January 14th., 1966, in: "The Soviet Economic Reform; Main Features and Aims", Moscow; 1967; p. 11).

It is necessary to examine this claim in some detail.

According to Marxism-Leninism, all value is created by human labour:

"A use-value, or useful article,.. has value only because human labour in the abstract has been embodied and materialised in it... Labour.. creates and forms the value of commodities... Human labour creates value".

(K. Marx: "Capital", Volume 1; London; 1974; p. 46, 53, 57).

Under any social system beyond that of primitive communism, a human being engaged in labour creates, in a particular period of labour, more value that is require for the subsistence of himself and his dependents in that period of time. This surplus produce -- in the sense of produce

"... beyond the indispensable needs of the direct producer",

(K. Marx: ibid., Volume 3; p. 795)

-- Marx calls

"... the surplus product"

(K. Marx: ibid., Volume 3; p. 795)

and the labour used to produce this surplus product

"...surplus labour";

(K. Marx: ibid., Volume 3; p. 790)

Contemporary Soviet economists endorse, up to this point, Marx's analysis:

"Primitive man ate or used up what he produced. As civilisation and technology progressed, labour began to create not only the equivalent of working people's means of subsistence but something more. This something more was the surplus product".

(E.G. Liberman: "Are We Flirting with Capitalism? Profits and 'Profits'", in: "Soviet Life", July 1965, in: M.E. Sharpe (Ed.): op. cit., Volume 1; p. 304).

But Marx goes on to hold that, once society has advanced beyond the state of primitive communism, once surplus labour and the surplus product come into existence, then -- until social development has led to the creation of a socialist or communist society -- this surplus product is appropriated by an exploiting class which own s the means of production; that is, surplus labour becomes unpaid labour:

"This surplus above the indispensable requirements of life.. is unpaid surplus labour for the 'owner' of the means of production".

(K. Marx: ibid., Volume 3; p. 790).

Social systems based on exploitation differ essentially in the way in which the surplus product, the product of surplus labour, is extracted from the worker:

"The essential difference between the various economic forms of society -- between, for instance, a society based on slave-labour and one based on wage-labour -- lies only in the mode in which this surplus labour is in each case extracted from the actual producer, the labourer....

Whenever a part of society possesses the monopoly of the means of production, the labourer, free of not free, must add to the working-time necessary for his own maintenance an extra working-time in order to produce the means of subsistence for the owners of the means of production, whether this proprietor be the Athenian khalos khagathos, Etruscan theocrat, civis Romanus, Norman baron, American slave-owner, Wallachian Boyard, modern landlord or capitalist".

(K. Marx: ibid., Volume 1; p. 209, 226).

In the case of capitalist commodity production, where "free" workers sell their labour power -- and only in this case -- Marx uses the term "surplus value" to denote the product of surplus labour:

"Surplus value presupposes capitalistic production".

(K.Marx: ibid., Volume 1; p. 667).

"The product of this surplus labour assumes the form of surplus value when the owner of the means of production finds the free labourer -- free from social fetters and free from possessions of his own – as an object of exploitation and exploits him for the purpose of the production of commodities".

(F. Engels: "Herr Eugen Duhrung's Revolution in Science"; Moscow; 1959; p. 287).

In a broad and loose sense, Marx equates surplus value with profit:

"Profit... is the same as surplus value.... Surplus value and profit are actually the same thing and numerically equal".

(K. Marx: ibid.; Volume 3; p. 36, 48).

But using the term "profit" in the narrower and more scientific sense of the surplus income retained by the capitalist entrepreneur involved in production: Marx points out that the total surplus value obtained may be classified into various parts according to their distribution, to form:

1) the rent received by the landlords;

2) the interest received by the financiers;

3) the profit and wages received respectively by capitalists and workers involved in non-productive activity such as distribution; and

4) the profit retained by the entrepreneur capitalist involved in production:

"Surplus value.. splits up into various parts. Its fragments fall to various categories of persons and take various forms, independent the one of the other, such as profit, interest, merchants' profit, rent, etc."

(K. Marx: ibid.; Volume 1; p. 529).

In a socialist society, such as that which formerly existed in the Soviet Union, the working people collectively own the means of production. They do not, therefore, produce surplus value which is appropriated by an exploiting class owning the means of production. In such a society, the working people assess, through the state planning organs which they control, the value of

"... the total social product".

(K. Marx: "Critique of the Gotha Programme", in: "Selected Works", Volume 2; London; 1943; p. 561).

and, through these same organs, decide on the social deductions they wish to make from it. These social deductions comprise:

"... cover for replacement of the means of production used up;

..... additional portion for expansion of production;

..... reserve or insurance fund to provide against misadventures, disturbances through natural events, etc.;..

..... the general costs of administration not belonging to production;

...... that which is destined for the communal satisfaction of needs, such as schools, health services, etc.;

...... funds for those unable to work, etc.".

(K. Marx: ibid.; p. 562).

The balance of the total social product remaining after these social deductions constitutes the wage fund, representing that part of the total social product which the working people reeive directly and individually.

The social deductions, on the other hand, represent that part of the total social product which the working people receive socially:

"What the producer is deprived of in his capacity as a private individual benefits him directly or indirecly in his capacity as a member of society".

(K. Marx: ibid.; p. 562).

In a capitalist society, as has been shown in the section entitled "The Value of Labour Power", the wage fund is equal to the total monetary value of the subsistence of the working class at the level of civilisation pertaining in the society concerned.

In contemporary Soviet society, as has been shown in the section entitled "The Value of Labour Power", the wage fund is equal to the total monetary value of the subsistence of the working class at the level of civilisation pertaining in society. Furthermore, as has been shown in the section entitled "Ownership of the Means of Production", the principal means of production are no longer owned collectively by the working people, but are effectively owned by a new class of Soviet capitalists, to whom, as has been shown in the section entitled "The Sale of Labour Power", the workers are compelled to sell their labour power.

Clearly, therefore, the surplus product produced by the working people in contemporary Soviet society is, in Marxist-Leninist terminology, surplus value or, in the broad and loose sense, profit. The latter, in fact, is admitted by some contemporary Soviet economists:

"Profits are the monetary form of the surplus product, that is, the product which working people produce over and above their personal needs".

(E.G. Liberman: ibid.; p. 304).

"The value of the product of surplus labour.... is expressed in profit".

(E.G. Liberman: "Profitability of Socialist Enterprises", in: "Ekonomicheskaya gazeta" (Economic Gazette), No. 51, 1965, in: M.E. Sharpe (Ed.): op. cit., Volume 2; p. 237).

"Profit under socialism is a form of surplus product".

(Editorial: "Economic Policy and Work for Communism", in: "Pravda" (Truth), January 14th., 1966, in: "The Soviet Economic Reform: Main Features and Aims"; Moscow; 1967; p. 11).

However, wishing to present contemporary Soviet society as "socialist" and aware that Marx held that in capitalist society the surplus product took the form of surplus value, these economists are at pains to deny that the surplus product in the contemporary Soviet Union constitutes surplus value:

"Under capitalism the surplus product appears as surplus value".

(D.A. Allakhverdyan: "National Income and Income Distribution in the USSR", in: "The Soviet Planned Economy"; Moscow; 1974; p. 92).

"Under socialism the value of the surplus product in its socio-economic character does not constitute surplus value because it does not express relations of exploitation".

(B. Rakitsky: "Bourgeois Interpretation of the Soviet Economic Reform", in: "Voprosy ekonomiki" (Problems of Ecnomics). No. 10, 1965, in: "The Soviet Economic Reform: Main Features and Aims"; Moscow; 1967; p. 134).

But, in fact, the definition given by contemporary soviet economists of "profit" in the Soviet Union since the "economic reform" --

"Profit is formed directly from the difference between the price and cost of production",

(L. Gatovsky: "The Role of Profit in a Socialist Economy", in: "Kommunist" (Communist), No. 18, 1962, in: M.E. Sharpe (Ed.): op. cit., Volume 1; p. 98)

-- is virtually identical with that given by Marx for surplus value (i.e., for profit in the broad sense) in an orthodox capitalist society:

"Surplus value is the difference between the value of the product and the value of the elements consumed in the formation of that product".

(K. Marx: "Capital", Volume 1; London; 1974; p. 201).

"Surplus value is the excess value of a commodity over and above its cost price".

(K. Marx: ibid., Volume 3; p. 34).

Tacitly accepting that "socialist profit" does not differ from profit in orthodox capitalist countries in its economic content, contemporary Soviet economists fall back on the argument that there is nothing wrong with profit in orthodox capitalist countries in its economic content; what is wrong -- and what distinguishes it from "socialist profit" -- is, they say, its distribution:

"Under socialism profit.. is distributed in the interest of the people".

(L. Gatovsky: ibid.; p. 91).

"The evil of capitalism lies not in the drive for profit, but in its distribution".

(V. Belkin & I. Berman: "The Independence of the Enterprise and Economic Stimuli", in: "Izvestia" (News), December 4th, 1964, in: Me. Sharpe (Ed.): op. cit., Volume 1; p. 227).

"In our country... all the profit goes for the benefit of society".

(E.G. Liberman: ibid.; p. 237)

"Capitalist profit is... a form of capitalist exploitation....

In contrast to this, profit under socialism... accrues to the working people".

(Editorial: "Economic Policy and Work for Communism", in: "Pravda" (Truth), January 14th., 1966, in: "The Soviet Economic Reform: Main Features and Aims"; Moscow; 1967; p. 11).

"Under socialism, the surplus product belongs to those who create it -- to the working people, and it is utilised in their interest".

This argument will be examined in the next two sections.