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Engels making the Socialist calculation claim before Hayek

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Soviet cogitations: 803
Defected to the U.S.S.R.: 28 Jan 2008, 19:10
Ideology: Marxism-Leninism
Komsomol
Post 22 Jun 2012, 05:56
The below quote by Engels is often used by conservatives to show that even the founder of Marxism recognized the impossibility of economic planning. I'd be interested to see if any SE would like to respond to it. I'm hoping someone knowledgeable could put it in context and explain why the economic planning advocated by Marxists is fundamentally different from the utopian program of Rodbertus.

It was actually posted here in 2006 viewtopic.php?f=108&t=40066&p=621561 but didn't get any responses

If you google "shall not go hungry in regard to corn and meat " you will see that this Engels quote is used not just by Thomas Sowell, Murray Rothbard and a host of right-wing bloggers but even by bourgeois high school economics textbooks as an illustration of Engels making the argument that economic pricing is impossible without competition before Hayek did. In context Engels is arguing against a utopian state-socialists who advocated wages being tied directly to labor time.

http://www.marxists.org/archive/marx/wo ... e-1885.htm

The cited passage is here:

Quote:
If Rodbertus has hitherto always had the misfortune to arrive too late with his new discoveries, this time at least he has the merit of one sort of originality: none of his rivals has dared to express the stupidity of the labour money utopia in this childishly naive, transparent, I might say truly Pomeranian, form. Since for every paper certificate a corresponding object of value has been delivered, and no object of value is supplied except in return for a corresponding paper certificate, the sum total of paper certificates must always be covered by the sum total of objects of value. The calculation works out without the smallest remainder, it is correct down to a second of labour time, and no governmental chief revenue office accountant, however many years of faithful service he may have behind him, could prove the slightest error in calculation. What more could one want?

In present-day capitalist society each industrial capitalist produces off his own bat what, how and as much as he likes. The social demand, however, remains an unknown magnitude to him, both in regard to quality, the kind of objects required, and in regard to quantity. That which today cannot be supplied quickly enough, may tomorrow be offered far in excess of the demand. Nevertheless, demand is finally satisfied in one way or another, good or bad, and, taken as a whole, production is ultimately geared towards the objects required. How is this evening-out of the contradiction effected? By competition. And how does competition bring about this solution? Simply by depreciating below their labour value those commodities which by their kind or amount are useless for immediate social requirements, and by making the producers feel, through this roundabout means, that they have produced either absolutely useless articles or ostensibly useful articles in unusable, superfluous quantity. Two things follow from this:

First, continual deviations of the prices of commodities from their values are the necessary condition in and through which the value of the commodities as such can come into existence. Only through the fluctuations of competition, and consequently of commodity prices, does the law of value of commodity production assert itself and the determination of the value of the commodity by the socially necessary labour time become a reality. That thereby the form of manifestation of value, the price, as a rule looks somewhat different from the value which it manifests, is a fate which value shares with most social relations. A king usually looks quite different from the monarchy which he represents. To desire, in a society of producers who exchange their commodities, to establish the determination of value by labour time, by forbidding competition to establish this determination of value through pressure on prices in the only way it can be established, is therefore merely to prove that, at least in this sphere, one has adopted the usual utopian disdain of economic laws.

Secondly, competition, by bringing into operation the law of value of commodity production in a society of producers who exchange their commodities, precisely thereby brings about the only organisation and arrangement of social production which is possible in the circumstances. Only through the undervaluation or overvaluation of products is it forcibly brought home to the individual commodity producers what society requires or does not require and in what amounts. But it is precisely this sole regulator that the utopia advocated by Rodbertus among others wishes to abolish. And if we then ask what guarantee we have that necessary quantity and not more of each product will be produced, that we shall not go hungry in regard to corn and meat while we are choked in beet sugar and drowned in potato spirit, that we shall not lack trousers to cover our nakedness while trouser buttons flood us by the million – Rodbertus triumphantly shows us his splendid calculation, according to which the correct certificate has been handed out for every superfluous pound of sugar, for every unsold barrel of spirit, for every unusable trouser button, a calculation which “works out” exactly, and according to which “all claims will be satisfied and the liquidation correctly brought about.” And anyone who does not believe this can apply to governmental chief revenue office accountant X in Pomerania who has checked the calculation and found it correct, and who, as one who has never yet been caught lacking with the accounts, is thoroughly trustworthy.

And now consider the naiveté with which Rodbertus would abolish industrial and commercial crises by means of his utopia. As soon as the production of commodities has assumed world market dimensions, the evening-out between the individual producers who produce for private account and the market for which they produce, which in respect of quantity and quality of demand is more or less unknown to them, is established by means of a storm on the world market, by a commercial crisis. [*1] If now competition is to be forbidden to make the individual producers aware, by a rise or fall in prices, how the world market stands, then they are completely blindfolded. To institute the production of commodities in such a fashion that the producers can no longer learn anything about the state of the market for which they are producing – that indeed is a cure for the crisis disease which could make Dr. Eisenbart envious of Rodbertus.

It is now comprehensible why Rodbertus determines the value of commodities simply by “labour” and at most allows for different degrees of intensity of labour. If he had investigated by what means and how labour creates value and therefore also determines and measures it, he would have arrived at socially necessary labour, necessary for the individual product, both in relation to other products of the same kind and also in relation to society’s total demand. He would thereby have been confronted with the question as to how the adjustment of the production of separate commodity producers to the total social demand takes place, and his whole utopia would thereby have been made impossible. This time he preferred in fact to “make an abstraction", namely of precisely that which mattered.

Now at last we come to the point where Rodbertus really offers us something new; something which distinguishes him from all his numerous fellow supporters of the labour money exchange economy. They all demand this exchange organisation for the purpose of abolishing the exploitation of wage labour by capital. Every producer is to receive the full labour value of his product. On this they all agree, from Gray to Proudhon. Not at all, says Rodbertus. Wage labour and its exploitation remain.

In the first place, in no conceivable condition of society can the worker receive the full value of his product for consumption. A series of economically unproductive but necessary functions have to be met from the fund produced, and consequently also the persons connected with them maintained. This is only correct so long as the present-day division of labour applies. In a society in which general productive labour is obligatory, which is also “conceivable” after all, this ceases to apply. But the need for a social reserve and accumulation fund would remain and consequently even in that case, the workers, i.e., all, would remain in possession and enjoyment of their total product, but each separate worker would not enjoy the “full returns of his labour". Nor has the maintenance of economically unproductive functions at the expense of the labour product been overlooked by the other labour money utopians. But they leave the workers to tax themselves for this purpose in the usual democratic way, while Rodbertus, whose whole social reform of 1842 is geared to the Prussian state of that time, refers the whole matter to the decision of the bureaucracy, which determines from above the share of the worker in his own product and graciously permits him to have it.
Kamran Heiss
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Soviet cogitations: 4764
Defected to the U.S.S.R.: 20 Jul 2007, 06:59
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Forum Commissar
Post 22 Jun 2012, 08:46
Wow. Amazing quote. I have Poverty of Philosophy and sadly, mine doesn't come with this preface.

I wish I had the time to explore this fully, especially in its positive and not just negative implications. But, from my limited perception, it seems to me that yet again, borgeois economics is unable to rise above its limited historical horizon and extend its conditions ahistorically.

I don't think that Engels is saying that competition is a necessary condition for economy, understood as the social distribution of labor and its products, because that would fly in the face of historic evidence, rather, he is saying that in any market economy, in a VALUE PRODUCING economy, competition and market factors, which result in the deviation between price and value, is indeed necessary.

The best explanation I have found on this topic was made by Isaak I. Rubin, on his Essays on Marx's Theory of Value (now on MIA, look it up). I wish I could quote you the relevant parts, but I don't have the time, sadly.

I believe that this part is key:

Quote:
It is now comprehensible why Rodbertus determines the value of commodities simply by “labour” and at most allows for different degrees of intensity of labour. If he had investigated by what means and how labour creates value and therefore also determines and measures it, he would have arrived at socially necessary labour, necessary for the individual product, both in relation to other products of the same kind and also in relation to society’s total demand. He would thereby have been confronted with the question as to how the adjustment of the production of separate commodity producers to the total social demand takes place, and his whole utopia would thereby have been made impossible. This time he preferred in fact to “make an abstraction", namely of precisely that which mattered.


It hits the nail in the head in stating that non-Marxist economists (including Ricardo) view the relation between labor and value, but do not see it in its full historic perspective, and don't see what conditions have to be met in order for labor to become value, or rather, that value implies a certain kind of labor, abstract labor. I. I. Rubin expains this in depth.

What I feel we shouldn't lose sight of, and this should be the avenue we should pursue, I would say, is that what we're talking about is society as a fact, about its social production and reproduction of itself through numerous operations; that every society must have these numerous productions and operations is undeniable. How tasks are distributed and how are products distributed is how we can classify these societies (their base, not their superstructure). A market economy, with nominally independent producers, acting "freely" but bound by the need for society to continue to function properly, implies competition and value. OTHER ECONOMIES must have OTHER ways of distributing labor. That is the challenge, to overcome value. NOT to "tie" commodities to their value as a way of achieving "fairness" in market conditions.

And as dumb and crazy as it seems; I remember a few years ago some people in Venezuela arguing in favor of something like this; so I would say that this is extremely relevant, especially given the implications in Engels' last paragraph you quoted.
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