To what extent did the Commodity-form exist in the USSR?

As we have seen, Trotskyist theorists place great importance on property forms when it comes to the question of the nationalization of the means of production. State ownership of the means of production, and hence the abolition of private property, is seen as constituting the crucial advance over capitalism. However, although the state owned all the principal means of production in the USSR, the actual legal possession and operation of the means of production was left to the state enterprises and trusts, each of which was constituted as a distinct legal entity with its own set of accounts and responsibilities for production.

While Trotskyists have tended to gloss over this, seeing these legal forms of the state enterprises as being merely formal, Bettleheim has argued that the existence of these separate state enterprises, which traded with each other and sold products to the working class, meant that commodity-exchange did exist in the USSR. However, for Bettleheim, this separation of economic activity into a multitude of state enterprises was merely a result of the level of development of the forces and relations of production. The USSR had yet to develop to the point where the entire economy could be run as a giant trust as had been envisaged by Bukharin. It was therefore unable as yet to overcome the commodity-form. In contrast, we shall argue that this division of the economy into distinct state enterprises was an expression of the essentially capitalist relations of production.

What is a commodity? The simplest answer is that a commodity is something that is produced in order that it may be sold. But by itself this simple definition is inadequate for an understanding of the commodity as a distinct social form. It is necessary to probe a little deeper to grasp the implications of the commodity-form.

Any society requires that individuals act on and within the material world in order to appropriate and produce the material conditions necessary for the reproduction of themselves as social individuals. As such social reproduction necessarily entails the constitution and appropriation of material objects of social needs. However, in a society dominated by commodity production this process is carried out in a peculiar manner that gives rise to specific social forms.

Firstly, as commodity producers, individuals do not produce for their own immediate needs but for the needs of others that are both indifferent and separate from themselves. The results of their human activity — their labor — are thereby divorced from their own activity. The results of their labor stand apart from them as commodities that are to be sold. Secondly, as commodity consumers, objects of an individuals need do not emerge out of their own activity as social individuals but as the ready made property of some other — the producer — who is separated from them. As a consequence they find themselves immediately separated from their own social needs through the non-possession of material objects in the form of commodities.

As a consequence labor — the human activity of the producer — is separated from need — the needs of the consumer. Hence, for each particular commodity, producers are separated from consumers and are only subsequently united through the sale or exchange of the commodity. The relation between the consumer and the producer is therefore mediated through the exchange commodities — that is they are mediated through the exchange of things. To the extent that commodity exchange becomes generalized then the relations between people manifests themselves as a multitude of relations between things.

Because the relations of between human beings assume the form of the relations between things then these things assume the particular social form of the commodity. In producing a commodity the producer produces something for sale — that is the producer produces something that can be exchanged. What is important for the producer is that what is produced has the social quality that makes it exchangeable. In other words what is important for the producer is the value of the commodity. In contrast, for the consumer, what is important is that the commodity has a number natural properties that meet his own needs as a social individual but which he is excluded from by the non-possession of the commodity as an object — that is that it confronts him as a use-value. The separation of social needs from social labor is thereby reflected in the commodity-form as the opposition of use-value and value.

The commodity-form is therefore constituted through the opposition of its use-value and value, which manifests in material form the underlying opposition of labor from needs in a society, based on commodity production. However, although objects of need must exist in all societies — that is we must have access to distinct things, such as food, clothes and shelter, in order to live — use-values can only exist in opposition to value. Value and use-value mutually define each other as polar opposites of the commodity-form. A commodity can only have a value if it can be sold, but to sell it must have a use-value that some other needs to buy. But equally a commodity has a use-value only insofar as the qualities that meets the needs of the consumer confront that consumer as the ready made products of another’s labor, and hence as natural properties from which they are excluded except though the act of exchange of another commodity with an equivalent value.

With commodity production social relations become reified. Society becomes broken up into atomized individuals. Indeed, as Marx argues, commodity relations begin where human community ends. Historically commodities were exchanged between communities and only occurred when different communities came in to contact. As commodity exchange develops traditional human societies break up, ultimately giving rise to the modern atomized capitalist societies.[112]

The society of the USSR would have seemed to be no less atomized and reified than those of western capitalism. To what extent was this a result of the prevalence of commodity relations? To answer this we shall first of examine whether there was commodity production in the USSR and then look at the question of the existence of commodity exchange.

To what extent did commodity-production exist in the USSR?

Under capitalism the worker, having sold his labor-power to the capitalist, works for the capitalist. As such the worker does not work for his own immediate needs but for a wage. The labor of the work is therefore external to him. It is alienated labor.

However, unlike the serf, the servant or the domestic slave, the wage-worker does not work for the immediate needs of the capitalist. The capitalist appropriates the labor of the wage-worker to produce something that can be sold at a profit. As such the prime concern of the capitalist is to make his workers produce a mass of commodities that are worth more than the labor-power and raw materials used up in their production. Hence, for both the capitalist and the worker, the product is a nonuse-value — it is something that is produced for the use of someone else.

A commodity can only be sold insofar as it is a use-value for some others. Therefore the capitalist is only concerned with the use-value of the commodity that he produces to the extent that is a necessary precondition for its sale. For the capitalist then, use-value is merely the material form within which the value the commodity is embodied.

This twofold nature of the commodity as both a use-value and a value is the result of the twofold nature of commodity production. Commodity production is both a labor process, which serves to produce use-values, and a valorization process that produces value of then commodity. Through the concrete labor appropriated from the worker the raw materials of production are worked up into the specific form of the product that gives it a socially recognized use-value. Through this concrete labor the value already embodied in the means of production is preserved in the new product. At the same time value is added to the product through the abstract labor of the worker.

In the USSR these relations of production were essentially the same. The workers alienated their labor. As such they did not produce for their own immediate needs but worked for the management of the state enterprise. Equally, the management of the state enterprise no more appropriated the labor from its workers for it own immediate needs any more than the management of a capitalist enterprise in the West. The labor appropriated from the workers was used to produce products that were objects of use for others external to the producers.

Like in any capitalist enterprise, the management of the state enterprises in the USSR, at least collectively, sought to make the workers produce a mass of products that were worth more than the labor-power and means of production used up in their production. As such the labor process was both a process of exploitation and alienation just as it was a two-old process of both abstract and concrete labor that produced products with both a use-value and a value i.e. as commodities.

Production in the USSR can therefore be seen as the capitalist production of commodities. However, while production in the USSR can be seen as a production for some alien other to what extent can it be really be seen as a the production of things for sale? This brings us to the crucial question of the existence of commodity exchange and circulation in the USSR.

To what extent did commodity exchange exist in the USSR?

As we have seen, within the circuit of productive-capital, (P...P’), exchange is primarily confined within the simple circulation of commodities (C — M — C) necessary to bring about the renewal of production on an expanded scale. Commodities are sold (C — M) by those who produce them and are purchased (M — C) by those who need them for the next cycle of production.

From the perspective of productive-capital commodity exchange is therefore a mere technical means that allows for the expansion of productive capital. A necessary means for overcoming the division of producers that arises out of the social division of labor of commodity production. However, the circulation of commodities is more than a mere technical matter. The buying and selling of commodities is the alienated social form through which human labor alienated from human needs is reunited with human needs alienated from human labor.

Under the classical form of capitalism this social form is market constituted through the collision of self-interested competing individuals. As Marx argues:

Circulation as the realization of exchange-value is implies: (1) that my product is a product only in so far as it is for others; hence suspended singularity, generality; (2) that it is a product for me only in so far as it has been alienated, become for others; (3) that it is for the other only in so far he himself alienates his product; which already implies; (4) that production is not an end in itself for me, but a means. Circulation is the movement in which the general alienation appears as general appropriation and general appropriation appears as general alienation. As much, then, as the whole of this movement appears as a social process, and as much as individual moments of this movement arise from the conscious will and particular purposes of individuals, so much does the totality of the process appear as an objective interrelation, which arises spontaneously from nature; arising, it is true, from the mutual influence of conscious individuals on one another, but neither located in their consciousness, nor subsumed under them as a whole. Their collisions with one another produce an alien social power standing above them, produce their mutual interaction as a process and power independent of them.[113]

Through the alien power of the market alienated labor is brought into conformity with alienated human needs. Products that do not meet needs expressed through the market do not sell. Labor embodied in a commodity that is excess of that which is socially necessary is not recognized. At the same time, the imposition of the commodity form on human needs serves to incorporate such needs into the accumulation of capital. New needs that give rise to new forms of commodities expands the range of material forms through which value can be embodied and expanded. To this extent the market brings human needs into conformity with alienate labor within the commodity form.

Yet while the alien power of the market arises out the conflicting social and technical needs of the individuals that make up society the alien power of the state does not. The state plan is necessarily imposed from outside the social-economy. There was thus a fundamental problem with reconciling social needs with alienated labor. This was reflected in the relation of use-value and value and the form and functions of money.

To what extent did Money exist in the USSR?

For Proudhon and his followers, the problems of capitalism arose from the existence of money as an independent form of value. For them, it was through the intermediation of money that capitalists were able to make profits and extract interest. As a consequence, Proudhonists proposed the direct expression of the value of commodities in terms of the labor time required for their production. Money denominated in units of labor time would simply act as a means of circulation that would in effect allow for the direct exchange of commodities in accordance with the labor expended in their production. Money would not be able to develop into a social power independent of the direct producers. However, through his critique of such Proudhonist proposals Marx showed that in a society of independent commodity producers money must necessarily assume an independent form of value distinct from all other commodities.

The labor embodied in a commodity is immediately private labor — or more precisely it is asocial labor. It is only with the sale of the commodity that this labor is recognized as being part of the total abstract social labor of society as a whole. Hence the value of a commodity is only realized or validated as such through the process of exchange. In production the value remains potential value — a potential based on previous cycles of production and exchange. When the commodity reaches the market it has an ideal price based on its potential value but this is not realized until the commodity is actually sold.

If too much of a particular commodity is produced in relation to social demand or if the quality is defective than some commodities are not sold or have to be sold at a discount. In cases such as these the actual labor embodied in commodities is not realized as abstract social labor. Indeed it is through this social mechanism that a commodity economy is regulated. If production of private commodity producers is to be brought into conformity with social demand than money can not be simply the direct expression of the labor embodied in commodities. It must exist as the independent form of value through which the labor embodied in commodities is socially recognized and validated as abstract social labor and hence as value.

As a consequence, Marx concluded that money as an independent form of value could only be abolished if the economy of independent commodity producers gave way to the planned production of freely associated producers. In this way the regulation of production by the market would be replaced by a social plan that would make labor immediately social.

As we have argued, the forced development of productive-capital in the USSR required the suppression of the development of money-capital and this involved the restriction of the development of money itself as an independent form. To this end the regulation of production by the market was replaced by economic planning. But this was not the planning of a classes society of ‘freely associated producers’ but a plan developed out of a society of atomized individuals based on class exploitation. As such the alien power of the market that stands above society was replaced by the alien power of the state. The imperatives of the state plan confronted the producers as an external force just as the external imperatives of the competitive market. The plan replaced the market as the regulator of commodity production but as such it did not over come the separation of labor from social needs that remained alienated from each other.

Money in the USSR: In so far as simple commodity circulation existed as a part of the circuit of productive capital in the USSR money entered as merely a means of circulation facilitating the exchange of outputs of the previous cycle of production for the inputs necessary for the next cycle of production. But whereas under fully developed capitalism such circulation could break down — a sale without a purchase or a purchase without a sale — in the USSR this was precluded by the state plan.

The state imposed plan that allocated capital to each industry, determined the output and set prices. To this extent the value of the commodities produced by each capital were not validated or realized through the act of their transformation into money but were pre-validated by their recognition as values by the state. Hence commodities had to be bought and money had to buy. The regulation of the commodity producers by the law of value was replaced by the state plan.

Yet while the alien power of the market arises out the conflicting social and technical needs of the individuals that make up society the alien power of the state does not. The state plan is necessarily imposed from outside the social-economy. There was thus a fundamental problem with reconciling social needs with alienated labor. This was reflected in the relation of use-value and value. This had important implications for the form and functions of money as it existed within the circuit of productive capital.

To consider this in a little more detail let us consider the two transactions that make up the simple circulation of commodities — firstly the sale of commodities produced by productive capital (C — M), and then the purchase, (M — C), which ensures the continued reproduction of productive capital. The commodities that have been produced by productive capital enter the market with an expanded value and a given specific use-value. The opposition of value and use-value within the commodity finds it expression in the external relation of money and the commodity. The commodity has a price, which is it express its value in a certain sum of money, and is a certain kind of commodity defined by its use-value. Thus money appears as the independent and external form of the value of the commodity while the commodity itself stands as it own use-value.

For example, let us take an enterprise producing tractors. At the end of the production period the enterprise will have produced say 100 tractors that are priced £10,000 each. The hundred tractors express their value as a price that is in the ideal form of a sum of money — £1million. This ideal money -the price of the tractors — stand opposed to use-value represented by the material form of the tractors themselves.

However, this ideal money, the price of the tractors which serves as the external measure the value of the tractors must be realized. The tractors must be sold. Given that the tractors can be sold then the expanded value of the tractors will now be transformed into the form of real money. The tractors will have been transformed into £1million. As such the abstract labor will find its most adequate and universal form — money.

With money the enterprise can now buy commodities for the next period of production. As the independent and universal form of value, money can buy any other commodity, which is it is immediately exchangeable with any other commodity. Yet our tractor firm only needs those specific commodities necessary for the future production of tractors say 10 tons of steel. Money need therefore only act as a mere means of circulation that allows 100 tractors to be exchanged for 10 tons of steel.

In the USSR money was constrained to the functions necessary for the phase of the simple circulation of commodities within the circuit of productive capital — that is as an ideal measure of value and as a means of circulation — and precluded money emerging fully as an independent form of value. Firstly, as we have seen, the value of commodities was prevalidated. The ideal price of the tractors was immediately realized as the value of the tractors since the sale was already prescribed by the plan. Thus while money acted as an ideal measure of the value of the commodities for sale it had no independence.

Furthermore, the money received from the sale had to be spent on the particular commodities necessary for the reproduction of that particular circuit of productive capital. The £1million brought by the sale of the tractors had to be spent on the 10 tons of steel (or similar inputs). As such money did not function as an independent and universal form of value. It was tied to the specific circuit of productive capital (in our case tractor production). It could not be withdrawn and then thrown into another circuit. It merely served as a means of circulation that facilitated the exchange of one specific set of commodities with another set of commodities.

With the restriction of money to a mere fleeting means of circulation, and with the pre-validation of the value of commodities, money could not function as the independent form of value. The commodity did not express its own value in the external form of money independent of itself but rather its value was expressed in terms of the commodities use-value. As a consequence the expansion of value did not find its most adequate expression in the quantitative expansion of value in the purely quantitative and universal form money but in the quantitative expansion of value in the qualitative and particular forms use-values. Value and use-value were compounded leading to the deformation of both value and use-value.

Indeed, in the USSR accumulation of productive-capital, that is the self-expansion of value, became immediately expressed in terms of the quantities of use-values that were produced (100s of tractors, tons of steel etc.). However, without the full development of money as money — money as the independent form of value — the content of such use-values did not necessarily conform to the needs of social reproduction. Money had to buy; it had to allow the exchange of commodities. It could not therefore refuse to buy sub-standard commodities. The quality of the use-values of commodities was ensured, not by money and hence the purchaser, but by the state plan. But the state plan, as we have argued, stood in an external if not an antagonistic position with regard to the various economic agents whether they were workers or state enterprises.

As a consequence, the use-values prescribed and ratified by the plan did not necessarily conform to social needs.

The consequences of constrained money: As we have seen, the existence of money as the independent and universal form of value ensures that use-values conform to social needs. But furthermore, money as the independent form of value is also a diffused form of social power.

However, as we have argued, in the USSR money was constrained to the functions strictly necessary for the circuit of productive-capital and social needs were prescribed by the state plan. This had two important implications. The persistence of non-capitalist social forms such as blat and endemic defective production.

Insofar as technical and social needs developed outside the framework prescribed by the state plan they had to be articulated by something other than by money. Money could only buy within the limit established by the plan. The purchasing power of money was limited. While everyone needed money, it was insufficient to meet all needs. As a consequence, non-monetary social relations had to be persevered. Influence and favors with those in authority, client relations’ etc. — that is the system known as blat — became salient features of the Soviet bureaucracy as means of gaining access to privileged goods or as a means of getting things done.

As such blat emerged because of the restrictions placed on the functions of money due to its subordination to productive capital. As such blat was a distinctly non-capitalist — if not pre-capitalist — social form that involved direct personal and unquantifiable relations between people.[114]

However, as we noted the inadequacy of money in the USSR — it failure to function as the universal and independent form of value — also led to the endemic production of defective use-values which were to finally bring the demise of the USSR. This, as we shall see, was directly related to the class relations of production that arose from capitalist form of commodity production in the USSR. But before we consider this fatal contradiction of the USSR we must briefly consider the question of wages and the sale of labor-power.

The sale of labor-power

The reproduction of labor-power is of course an essential condition for the reproduction of capital. The reproduction of labor-power can be described as a simple epi-cycle in the circuits of capital as follows:

Lp — W — Cs

The worker sells his labor-power (Lp) for a wage (W), which he then uses to buy the commodities (Cs) necessary to reproduce himself as a worker.[115] In essence this epi-cycle is the same as the simple circulation of commodities.

However, as we have seen, one of the most telling criticisms advanced by the Trotskyist critics of state capitalist theories of the USSR has been the argument that workers in the USSR did not sell their labor-power. Firstly, because if labor-power was to be considered a commodity then it must be able to exchange with other commodities but, as we have seen, Trotskyists denied that there were any other commodities in the USSR. Secondly worker was not free to sell his labor-power.

However, as we have argued, there was commodity production in the USSR and there was a restricted form of commodity circulation thus labor-power could be exchanged with other commodities via the wage. Nevertheless it is true that the freedom of workers to sell their labor was restricted. Through various restrictions, such as the internal passport system the movement of workers was restricted. To the extent that these restrictions on the movement of labor tied workers to a particular means of production then they can perhaps be considered more industrial serfs than wage-slaves.

But on closer inspection these legal restrictions on the movement of labor appear more as a response to exiting situation which were honored more in the breach than in their implementation. With the drive to maximize production in accordance with the logic of the circuit of productive-capital labor-power had to be fully used. Indeed, full employment became an important element in the maintenance the political and social cohesion of the USSR from Stalin onwards. However, the maintenance of full employment led a chronic shortage of labor-power.

The fact that in reality workers were to a limited but crucial extent free to sell their labor-power is shown in the strategy of the managers of state enterprises to hoard labor. Indeed, the managers of state enterprises actively colluded with workers to overcome the restrictions to their mobility in their attempts secure sufficient labor-power to meet their production targets. Hence the legal restrictions to the free movement of labor-power were just that: attempts to restrict workers who were essentially free to sell their labor-power.

Ticktin was well aware of the importance of the chronic shortage of labor-power and consequence practice of labor hoarding by the state enterprises. However, Ticktin persisted in denying that labor-power was sold as a commodity in the USSR on the grounds that the wage was not related to the labor performed. For Ticktin, although workers often worked for piece rates which nominally tied their wages to amount they worked, in reality workers were paid what amounted to a pension that bore little relation to the amount of labor they performed.

As we argued in Part II, this argument overlooks the contradictory aspects of labor-power and its expression in the form of a wage. Labor-power is both a commodity and not a commodity. Although labor-power is sold as if it was a commodity it is neither produced or consumed as a commodity since it is not a thing separable from the person who sells it — but the workers own living activity.

The worker does not produce labor-power as something to sell. On the contrary he reproduces himself as a living subject of whom his living activity is an essential an inseparable aspect. Equally, having bought labor-power, capital can not use it in absence of the worker. The worker remains in the labor process as an alien subject alongside his alienated labor.

It is as a result of this contradictory nature of labor-power that the wage-form emerges. In buying labor-power capital buys the worker’s capacity to work. But capital has still to make the worker work both through the sanction of unemployment and through the incentive of wages linked to amount the worker works. However, while the wage may be linked to the amount the labor the worker performs it is essentially the money necessary for the average worker to buy those commodities necessary for the reproduction of their labor-power. The extent to which the capitalist can make individual workers work harder by linking the payment of wages to the labor performed, rather than as a simple payment for the reproduction of labor-power, depends on the relative strengths of labor and capital.

Hence the fact that wages may have appeared like ‘pensions’ paid regardless of the work performed, rather than as true wages that appear as a payment tied to the work performed, does not mean that labor-power was not sold in the USSR. All that it indicates is the particular power of the working class in the USSR that, as we shall now see, was to have important implications.

Contradictions in the USSR: the production of defective use-values

As we saw in Part II, Ticktin has ably described the distortions in the political economy of the USSR. But rather than seeing such distortions as arising from the degeneration of a society stuck in the transition from capitalism to socialism they can be more adequately seen as distortions arising from an attempt to make a forced transition to capitalism from a position of relative underdevelopment. The drive to towards the development of the productive-capital that led to the fusion of the state and the replacement of the law of value by the law of planning can be seen to have led to the gross distortions and contradictions of the USSR.

Let us consider more explicitly the class basis of such distortions and contradictions.

Firstly, with the suppression of money as an independent form of value that could command any commodity the subjectively determined needs of the workers could not be expressed through the money form. The needs of the workers were instead to a large extent prescribed by the state. Thus as the wage did not act as an adequate form that could provide an incentive. After all why work harder if the extra money you may can not be spent?

Secondly, as we have seen, the forced development of productive-capital that precluded crisis led to the chronic shortage of labor. In conditions of full employment where state enterprises were desperate for labor-power to meet their production targets the sack was an ineffective sanction.

As a consequence, as Ticktin points out, the management of the state enterprises lacked both the carrot and sticks with which control their workforce. Indeed the workers were able to exercise a considerable degree of negative control over the labor process. Confronted by the imperative to appropriate surplus-value in the form of increased production imposed through the central plan on the one hand, and the power of the workers over the labor-process on the other hand, the management of the state enterprises resolved the dilemma by sacrificing quality for quantity. This was possible because the technical and social needs of embodied in the use-values of the commodities they produced were not derived from those who were to use these commodities but were prescribed independently by the central plan.

As a result, the quantitative accumulation of capital in the form of use-values led to the defective production of use-values. As defective use-values of one industry entered into the production of commodities of another, defective production became endemic leading to the chronic production of useless products.

Hence, whereas in a fully developed capitalism the class conflicts at the point of production are resolved through the waste of recurrent economic crises which restore the industrial reserve army and the power of capital over labor, in the USSR these conflict were resolved through the chronic and systematic waste of defective production.