Che Guevara and Marx’s Law of Labor Value (Pt 3)

The Cuban Revolution

As the Cuban presidential and congressional elections of 1952 approached, it appeared that the democratic-nationalist Party of the Cuban People, more commonly known as the Orthodox Party, was about to capture the Cuban presidency. This set off alarm bells in Washington. The U.S. government feared the election of a democratic-nationalist government in Cuba would encourage democratic anti-imperialist forces throughout Latin America. In response, Washington supported a coup d’etat by another presidential candidate, one who had no chance of winning a democratic presidential election.

That was Colonial Fulgencio Batista (1901-1973). Batista had headed the Cuban military during the 1930s and 1940s, dominating the Cuban government from behind the scenes. Between 1940 and 1944, Batista served one term as elected legal president of Cuba. After completing his term, Batista left Cuba and moved to the United States. He later returned to Cuba to run what appeared to be a doomed presidential bid. In reality, Batista was preparing with Washington’s support to seize power illegally to block a victory by the Orthodox Party. Batista’s coup cut off any hope for democratic change in Cuba through electoral methods.

The young Fidel Castro (1926-), a former radical student leader, had run for Congress on the Orthodox ticket during the aborted 1952 election campaign. Castro, a lawyer by profession, then sued Batista for overthrowing the legal government of Cuba, but that failed to dislodge the dictator. Fidel then organized, along with other young Cubans, an uprising on July 26, 1953, at the Moncada Barracks, hoping it would develop into an island-wide insurrection that would bring down the Batista dictatorship. Many of Castro’s associates were killed in the abortive uprising, but Fidel survived.

The Batista government then tried Castro on the charge of attempting to overthrow the Cuban government by force and violence. Castro’s defense was brilliant. At the trial, he pointed out that the Batista government itself was guilty of precisely the charge that it made against him. Fidel’s defense was published under the title “History Will Absolve Me” and circulated within Cuba. (1)

While Batista’s judges found Castro guilty and sentenced him to 15 years in prison, Batista effectively lost the case before the Cuban people. As a result, in 1955 the Batista government was forced to release Castro. Unable to do much within the legality of the Batista dictatorship, Castro went into exile, where he was to meet a young left-wing Argentinian medical doctor named Ernesto Guevara (1928-1967). Guevara went by his Argentinian nickname “Che”.

The young Guevara had been in Guatemala when the democratically elected government of Colonel Jacobo Árbenz Guzmán (1913-1971) was overthrown in a Washington-organized coup in 1954. President Arbenz, who had won the 1951 Guatemalan elections, had attempted to carry out a land-reform program that was bitterly opposed by the infamous U.S.-based United Fruit Company. United Fruit had long dominated the Guatemalan economy and was bitterly opposed to President Árbenz’s reforms.

In response, Washington falsely claimed that the democratically elected Arbenz government was “communist.” The CIA-organized coup that overthrew him resembled the Cuban coup of 1952. The result was decades of brutal dictatorship that cost the lives of thousands of Guatemalans. The experience of witnessing a Washington-organized coup against a democratically elected government further radicalized the young Che Guevara.

In 1955, in Mexico, Guevara met Fidel Castro, who had just been released from prison in Cuba. In 1956, the two men and a few supporters including Fidel’s younger brother Raul rented a yacht called the Granma. They set sail to Cuba with the intention of launching a guerrilla war aimed at overthrowing the Batista dictatorship. To accomplish this, Fidel had organized a multi-class organization, the July 26 movement, that combined militant young workers and bourgeois democrats who were prepared to struggle arms in hand against the dictatorship.

At first, the landing proved to be a disaster, but Fidel, Raul, Che and few other survivors managed to escape into the Sierra Maestra mountain range and began to organize the peasants who lived there into a rebel army.

Though in terms of numbers and arms the guerrilla forces were no match for the far more numerous professionally trained forces of Batista’s army, the latter had one disadvantage that was to prove fatal to them. Most of the rank and file had no desire to die for the cause of the Cuban “pseudo-republic,” which had lost all pretext of legitimacy as a result of Batista’s 1952 coup. As a result, toward the end of 1958 Batista’s army began to disintegrate. As New Year’s Eve approached, the dictator prepared to flee the island with as much loot as he could take with him.

There were last-minute attempts to save the Cuban military and police apparatus by setting up a junta that would negotiate with the rebel army. However, Fidel insisted on the dismantling of the so-called Cuban army that failed to defend Cuba from its only real enemy—the United States—but instead served as a police force—and a very brutal and corrupt one at that—for U.S. imperialism. Therefore, when Batista fled on New Year’s Eve, not only did Batista’s personal dictatorship collapse but the entire, thoroughly rotten, military-police apparatus of the Cuban bourgeois state as well.

From bourgeois-democratic government to workers’ state

The bourgeois-democratic forces that initially formed the provisional government, and other bourgeois-democratic forces, including the right wing of the July 26th Movement, attempted to rebuild the Cuban state apparatus along bourgeois-democratic lines. The left-wing forces led by Fidel Castro, including the left wing of the July 26th Movement and the Popular Socialist Party, moved toward the organization of a workers’ state—the dictatorship of proletariat—though at first without using the traditional Marxist terminology or openly talking about socialism. (2)

The class struggle in Cuba against imperialism and against the opponents of socialism, which now included many Cuban bourgeois democrats who had supported the struggle against Batista, entered a whole new phase. Under the conditions of the newly established workers’ state, the supporters of what was now a socialist revolution, though historically coming out of different traditions, were obliged by the intensity of the new phase of the class struggle to organize themselves into a single party of the revolution, which evolved into today’s ruling Cuban Communist Party. (3)

Washington was unhappy with the victory of the Cuban revolution in 1959 but at first assumed that the revolution would stay well within the limits of bourgeois democracy. Since the increasingly armed and organized Cuban people were obviously determined to defend their new revolution, Washington reasoned that rather than invade Cuba, which might trigger uprisings throughout Latin America, it would gradually wear down and corrupt the revolution from within.

The complaints of Batista’s friend mobster Meyer Lanksy (1902-1983) (4), who owned a vast gambling empire in Havana, that the revolution was “communist” seemed wildly exaggerated. However, much to the horror of Washington, a workers’ state—the armed workers organized as the ruling class—emerged in 1959-1960.

With the Cuban people now armed and organized, Washington knew that a U.S. invasion would be very costly in terms of U.S. casualties and its political impact throughout Latin America and even in the U.S. itself. Washington moved to blockade the island economically in order to create discontent, a blockade that continues to this day.

Then, in April 1961, Washington organized a force of counterrevolutionary Cubans to invade Cuba with the aim of reestablishing capitalist rule on the island. By presenting the U.S.-organized invasion as a new “revolution” against the communist “dictatorship” by the Cuban people themselves, the CIA believed that the mercenary invasion would succeed with Washington’s assistance.

The CIA and the White House, however, were proved wrong. The armed Cuban people led by the Cuban working class defeated the counterrevolutionaries within 72 hours, though armed resistance from other U.S.-sponsored armed counterrevolutionaries continued until 1965. The rise to power of the working-class government and state in Cuba, combined with the existence of a socialist bloc of nations headed by the Soviet Union (5), now posed the question of building socialism on the island.

Building socialism in Cuba

The leaders of the Cuban revolution had a rich experience in political and military organization and struggle but no experience whatsoever in building a socialist society and economy. The rapid nationalization of private businesses in Cuba in 1960-1961, however, posed the concrete question of how the newly nationalized enterprises should be administered. There were two ways to approach this question and both had considerable influence.

One was to study how the enterprises had been administered under capitalist ownership and make this the starting point. The second was to turn to the experience and methods being applied at that time in the countries of the Soviet Union and its eastern European allies. The Soviet Union and eastern European countries sent advisors to Cuba to help them organize the new socialized economy. And here a major contradiction began to emerge, which led to what was called the “Great Debate,” in which Che Guevara was a major participant. (6)

Che Guevara became the advocate of what was called the budgetary finance system. This system emphasized central planning. The starting point was the centralized management methods used by U.S. corporations to manage their Cuban subsidiaries. Che believed that the nationalized enterprises should be managed as one big enterprise modeled on the way the giant U.S. corporations had managed their subsidiaries in Cuba. The difference was that now it was the Cuban people who were the owners of the enterprises, and not the super-wealthy American stockholders who had owned them before.

Under the budgetary finance system, the state enterprises did not own the accounts at the state bank. Nor did the state bank make loans and charge them interest. Instead, the state through the Ministry of Industry, headed by Che, allocated funds and supplies to the state enterprises as part of an overall central economic plan that aimed at transforming Cuba from the oppressed agrarian country it had been under the “pseudo-republic” into a modern industrialized society as rapidly as possible. Che didn’t see any role for the circulation of commodities within the state sector—especially within the larger enterprises that had been owned by U.S. corporations before the revolution—since all the state enterprises had a single owner: the new Cuban workers’ state.

The other approach, called the financial self-management system, was strongly recommended by Cuba’s new advisors from the Soviet Union and eastern European socialist countries. Under this system, the various state enterprises owned their own accounts at the state bank and used them to finance their production and expansion, even though the enterprises all had a common owner, the state. In addition, the state bank granted loans to the enterprises and charged interest on their loans. But how, Che asked, could the state as the ultimate owner of both the bank and the enterprises make loans and charge interest to itself?

Instead of the socialist government administrating the enterprises directly, the idea of the financial self-management system was as much as possible to guide the enterprises through “economic methods.” This meant that the enterprises would be encouraged to make profits within the framework of the national plan. The supporters of the financial self-management system with its “economic methods” contrasted it to “administrative” methods favored by Che.

The supporters of the financial self-management system—both Soviet and eastern European advisors and many Cuban economists as well—believed just like is the case under capitalism that in the socialist countries means of production produced by one state enterprise for use by another remained commodities. According to this view, virtually all the products produced within the socialist camp—whether by the state-owned enterprises, cooperatives, or private enterprises were commodities, just like is the case under capitalism. As a result, they held that just as is the case under capitalist production, in the socialist countries production was or should be regulated by the law of value.

These economists rejected the idea that attracted Che that the economy of a socialist country could be administrated as one large enterprise. The supporters of financial self-management argued that the experience of the socialist countries including the Soviet Union had shown that administrating the economy as one giant enterprise was utopian due to the great and increasing complexity of the modern economy. Not only would such economic categories as commodity, money, profit and interest survive under socialism, they should be further developed until the higher stage of communism was reached where people would be paid not according to their work but according to their need. (7)

“Commodity production, the law of value, and money will disappear only when the highest state [presumably should be stage—SW] of communism is achieved,” the Soviet “Manuel of Political Economy” states. “But in order to bring about conditions favourable to [the] disappearance of commodity production and circulation, it is necessary to develop and use the law of value as well as monetary and commodity relationships while the communist society is being built.” (quoted in “Che Guevara: The Economics of Revolution,” by Helen Yaffe, page 56)

I have slightly altered the translation of this quote. Yaffe seems to be quoting Che from the Spanish translation and not an English translation of the Russian original. The Spanish word for commodity is “mercancía,” which because it is similar to the English word “merchandise ” translators don’t seem to understand that when used in this context it must be translated into the English word “commodity.”

Che took strong exception to the word “develop.” How could a communist society be built while “developing commodity and money relationships,” which form the very essence of capitalism?

Until then, according to the supporters of the financial self-management system and official Soviet doctrines of the time as reflected in the Soviet “Manuel of Political Economy,” the increased use of the “lever” of commodity-money relations and individual material incentives would be necessary to stimulate the development of the productive forces so they would eventually reach the level that would make possible the achievement of the higher stage of communism. Only then would the economic categories of commodity, money and interest finally wither away. (8)

Che was open minded at first, since he apparently had no background in economics, let alone the practical building of a socialist economy. But as he gained practical experience in economic administration and began his own study of Marx’s “Capital,” he increasingly came to reject the financial self-management system.

For one, he disliked the reliance on individual material interests of managers and workers as the main “lever” to stimulate the growth of productivity. These methods were exactly the methods the capitalists use to “sweat labor.” Under these conditions, workers tend to see their fellow workers as competitors to be defeated rather than brothers and sisters in the struggle to build a communist society. By destroying the solidarity of the workers, Che increasingly came to believe, the road would be opened not to a communist society but to a return to capitalism.

Che wrote in 1965 shortly before he left Cuba: “There is the danger that the forest will not be seen for the trees. The pipe dream that socialism can be achieved with the help of the dull instruments left to us by capitalism (the commodity as the economic cell, profitability, individual material interest as a lever, etc.) can lead into a blind alley. When you wind up there after having traveled a long distance with many crossroads, it is hard to figure out just where you took the wrong turn. Meanwhile, the economic foundation that has been laid has done its work of undermining the development of consciousness. To build communism it is necessary, simultaneous with the new material foundations, to build the new man and woman.” (“Man and Socialism in Cuba”)

Che argued that the key to building the material aspects of the foundations of communism was the development of science and technology. If the productivity of labor was vastly higher in the 1960s—and still more so today—than in any earlier time, it wasn’t because workers were working harder than in the past. Rather it was because of the applications of the fruits of science and technology in the form of the ever-growing mechanization of production.

As we saw in our March post, Che had a particular interest in computers. Computers, in the 1960s still in their infancy, would make it increasingly possible to run the economy as “one big enterprise.”

In contrast, the champions of the financial self-management system played down the role of computers as not all that significant. The key to the growth of productivity was to further develop the economic “levers” of individual material incentive and especially the stimuli of “money-commodity relations.”

Che realized that the “new man and new women” and the material foundation in highly mechanized and computerized production couldn’t be created overnight and that there was a role for individual material incentive. But he wanted to use such incentives as little possible, while the supporters of budgetary self-finance saw them as the key factor in the struggle for a higher productivity of labor that would eventually make possible a communist society.

From the viewpoint of supporters of financial self-management, Che’s views were both idealistic and utopian. According to them, the policies he advocated would lead to an over-centralized, highly bureaucratic, inefficient economy where there would be little incentive to increase labor productivity and encourage innovation. Such an economy, the supporters of financial self-management held, would be unresponsive to ever-changing consumer needs and tastes. This, they claimed, would lead to a situation where the producer would dominate the consumer.

The supporters of financial self-management also argued that the policies Che advocated were exactly the methods the Soviets and eastern Europeans were trying to get away from in the wave of reforms that had swept through the socialist countries following the death of Stalin in 1953.

The debate between the champions of the budgetary finance system, led by Che, and supporters of the financial self-management system as we saw above involved a theoretical question as well as practical questions of management techniques and economic policy. What exactly was the role of commodity production and the law of value in the construction of socialism? The debate as to what extent production is commodity production in a country building socialism was not a new one. It had been debated in the Soviet Union, especially during the period of Soviet history when the New Economic Policy—NEP for short—was in effect.

The NEP followed the period known as “War Communism” implemented by the Soviet government between 1918 and 1921 and is generally considered to have ended in 1928 with the beginning of the first five-year plan. Che, however, believed that elements of the NEP persisted after 1928 and were again being expanded in the post-Stalin years.

The debate as to what extent the products produced by the state were commodities and the role of the law of value was renewed in the 1940s and early 1950s by Stalin himself. If the memoirs of Soviet leader Dmitrii Shepilov (1905-1995) are to be believed, Stalin expressed alarm that the younger cadres of the CPSU knew little about political economy. According to Shepilov, Stalin expressed the view that if this situation were not corrected, it would lead to the downfall of socialist construction. (9)

Stalin entered the debate—and also effectively closed it—when he published his “Economic Problems of Socialism” in 1952 to coincide with the Nineteenth Party Congress of the Soviet Union, the last one to be held under his leadership. Stalin’s book effectively established a new “orthodoxy” that, however, was to last for only four years. (10)

In his “Economic Problems,” Stalin held that due to the existence of two types of “socialist property” in the Soviet Union, namely the “property of the entire people”—state property—and the group property of the collective farms, which had dominated Soviet agriculture since the early 1930s, consumer goods remained commodities. Since the standard of living was still low in the Soviet Union, food produced by the collective farms that made up the bulk of the real wages of Soviet workers were commodities, as were the state-produced goods that were sold to the collective farms. Stalin also noted that products the Soviet Union imported and exported were commodities as well. Up to that point, Stalin’s views were in accord with later Soviet doctrine.

Stalin rejects view that the law of value is main economic law under monopoly capitalism

As I have emphasized throughout this blog, the law of value of commodities is the basic law that rules the capitalist system, including its monopoly phase. Under capitalist relations of production, the law of value appears as a kind of law of nature. Despite the planning of monopoly corporations, crises of generalized overproduction of commodities periodically subject the capitalist economy to even greater devastation than they did in the days of pre-monopoly capitalism. Nobody wants them, but they arise inevitably at periodic intervals due to the workings of the law of value, just like hurricanes arise through the dynamics of Earth’s atmosphere.

The difference is that while hurricanes draw their energy from heat stored in the Earth’s oceans, crises of overproduction draw their energy from the basic contradictions of commodity production itself. The “ocean” over which crises of the generalized overproduction of commodities move are the social relationships among people engaged in the production of commodities.

Stalin, however, in his “Economic Problems” rejected the view of this blog that the law of value is the basic law that governs monopoly capitalism and made an argument that should be carefully considered. He noted that commodity production is not confined to capitalism but existed in pre-capitalist societies and continued to exist in the Soviet Union. Therefore, Stalin reasoned, another law must dominate monopoly capitalism. Stalin proposed that under monopoly capitalism—or imperialism—the main economic law is “the securing of the maximum capitalist profit.”

But what exactly determines the “maximum rate of profit”? Is it the rate of profit that the monopoly capitalists desire? If that is true, the maximum rate of profit would approach the limit of infinity—to use the language of mathematics. In reality, the law of value determines that profit, including monopoly profit, consists of the surplus value produced by workers that is realized in money form (11). Therefore, the law of value establishes the limits of the rate of profit that can be realized even by the most powerful monopolists.

Great as these rates of profit are, they neither approach the limits of infinity nor are they immune in the long run to the equalization of the rate of profit. For example, the General Motors Corporation managed to make profits even at the low point of the Great Depression of the 1930s but collapsed during the Great Recession of 2008-2009 after years of losses. The same thing happened earlier in the U.S. Steel industry.

The kernel of truth in Stalin’s law of “securing the maximum rate of profit” is that individual capitalists both before and during the era of monopoly capitalism are forced by the pressures of competition to aim for the highest possible profit both in terms of mass and rate. This fact is known to every businessperson, most of whom have never studied “The Economic Problems of Socialism.” We don’t need political economy or its Marxist critique to know that capitalists are always attempting to maximize their rate of profit.

But if the law of value is the basic law that governs capitalism, how could it have existed in pre-capitalist society and survive at least to some extent in the socialist countries of the 20th century that had left—at least temporarily—capitalism behind? The answer is that the law of value is the law that governs commodity production. In pre-capitalist society, many of the products produced by society were not commodities. To the extent that products are not commodities their production is not governed by the law of value. As regards these products, society must make use of other methods other than the law of value to ensure that the products that are not commodities are produced in the proper proportions.

Only under capitalist production does commodity production become generalized. As commodity production develops out of barter exchanges, a special commodity that in its own use value becomes the universal measure of value separates out of the mass of commodities. At a much later stage of commodity production, society splits between a class that monopolizes the means of production and another class that owns only its own labor power and is thus forced to sell its labor power to members of the class that monopolizes the means of production. Only then can it be said that the law of value fully rules economic life.

In the period of transition between capitalism and the lower stage of communism, the law of value is again restricted to regulating the production of products that continue to take the form of commodities. These include production within the private sector and products sold to the private sector by the state as well as products that are either sold to or bought from capitalist countries.

Society cannot be said to have fully reached the lower stage of communism until capitalism has been overthrown in all countries, eliminating trade with capitalist countries, and the private sector has withered away. The disappearance of commodity production means that society has entered the lower stage of communism not because the production of commodities is illegal and suppressed by the state but because the commodity-producing sector has no more business to do. If commodity production is simply repressed by the state power, it inevitably will reappear, whether legally or illegally.

As long as commodity production continues to exist, and especially where the intervention of the repressive power of the state is necessary to restrict it, we have a society that is transitional between capitalism and the (lower stage) of communism. Inevitably, such a society combines elements of the communist society to come with elements—commodity production—of the capitalist past.

In these types of transitional societies—and all the socialist countries of the 20th century were of this type—society continues to be divided into classes—for example, any remaining capitalists who employ, whether legally or illegally, wage labor and people. To the extent that some individuals employ other people to produce surplus value-whether legally or illegally-these people are capitalists, even if on a small scale. Other members of the transitional society are engage in individual production of commodities for their own account belong to the petty bourgeoisie. In addition there are people who are members of producer cooperatives engaged in commodity production that aim to earn as much money as possible. Members of these type of cooperatives also belong to the petty bourgeoisie. They can either move closer to the working class or they move towards and some them may evolve into capitalists.

Finally, there are the workers employed in the socialist [state] sector of the economy who are building socialism. These people constitute the working class As long as classes still exist, class struggle will exist, and if the transitional society is not to revert to capitalism, the state must remain a dictatorship of the proletariat—a workers’ state.

Only when commodity production finally withers away does the transitional society reach the lower stage of communism. Neither the capitalists, landowners, petty bourgeoisie, or proletariat exist as classes, and class struggle vanishes. In this society, there are neither commodities, money, value, profit and interest or the law of value.

However, if Marx was right, society even then will still not be rich enough to distribute products according to need. In addition what Marx called the enslaving division of labor, as he put in his “Critique of the Gotha Program,” will to somewhat extent at least still still exist. As long as this true, not everyone will be able to work according to their true abilities and society with modifications will pay people according to their work and not their needs.

The state under the first stage of communism a ‘bourgeois state without the bourgeoisie’

As Marx put it, in the sphere of distribution of products—not production—bourgeois right continues to exist. While the state in the proper sense of the word no longer exists because there are no classes or class struggle, certain residual state functions are necessary. These are needed to defend the unjust bourgeois mode of distribution that still exists.

Therefore, according to Marx, material incentives—but not commodity production—continue to be necessary to a certain extent, though there is no commodity production and no law of value. Lenin called these residual state functions a “bourgeois state without the bourgeoisie.”

When the higher stage of communism is reached, wealth will flow more abundantly, people will now be able to work according to their ability and nobody will need the goad of material incentives to work. The “bourgeois state without the bourgeoisie,” the last remnants of the state will finally disappear. The material foundation for Che’s “new man and new women” will finally be fully realized. (12)

How monopoly capitalism prepares the way for abolition of the law of value

In 1959, Che Guevara became head of the National Bank of Cuba—Cuba’s central bank—and then became head of the Ministry of Industry. In her extremely valuable “Che Guevara and the Economics of Revolution,” Helen Yaffe explains: “Following the nationalisations, Guevara observed from the accounts of U.S. corporations that they did not send bills and issue payments to their own subsidiaries. They developed techniques of accounting, administration and analysis that relegated money to the role of simply recording the value of what had been produced: ‘money of account.'” (page 57)

Even in pre-monopoly capitalism, commodity circulation does not occur within single enterprises. But what happens when a single corporation—a trust—comes to own many enterprises. Does that suppress commodity circulation within the entire trust? Guevara observed that in relations with their subsidiaries in Cuba—roughly equivalent to Soviet enterprises—the circulation of commodities between the individual “enterprises” or “subsidiaries” and their ultimate owners, the U.S. corporations, did not exist. The law of value, however, dictated that commodity-money circulation applied to relations between the trusts.

In the Soviet Union, the owner of the enterprises was the state. Since all enterprises had a single owner, the implication was that commodity circulation did not exist in relations between enterprises. After the Twentieth Party Congress of the CPSU, Stalin’s “Economic Problems” came under attack as part of a much broader campaign of “de-Stalinization.” Stalin was now criticized for not understanding the importance of the circulation of commodities and the law of value within the state sector of economy.

By the 1960s, the majority—not all—of Soviet economists insisted that the products produced by Soviet state enterprises for other Soviet state enterprises were commodities that were ruled or should be ruled by the law of value. This view had become the new “orthodoxy” that replaced the one that had been briefly established by Stalin’s “Economic Problems” in 1952.

However, for products of Soviet state-owned enterprises produced for the productive consumption of other Soviet state enterprises to be commodities, each individual enterprise would have to act as though it was a privately owned individual business working independently of each other for their private account. This led to the view that planning should be indirect and set financial targets—targets in terms of rubles as opposed to physical targets in terms of the use values of the various products, which had been the practice since the first five-year plan was initiated in 1928. The Soviet “reform economists” held that the chief target of the individual Soviet enterprises should be profit.

The use of financial targets, and such “stimuli” and “levers” as commodity-money relations, profits in terms of rubles, interest on capital, and last but most certainly not least the ever greater emphasis on “individual material incentives,” steadily gained ground in the Soviet economic profession over the remaining supporters of “administrative planning.” In some ways, this implied an economy more decentralized than is the case with a modern monopoly capitalist economy at the enterprise level.

However, before Perestroika, the Soviet enterprises remained far less independent relative to the state than the capitalist holding corporations or trusts are relative to the state in the capitalist countries. What was emerging was a kind of hybrid system that aimed at making increased use of market mechanisms but retained considerably more central planning than exists or can exist in any capitalist country.

Inevitably, these reforms created a growing contradiction between the individual enterprises that were attempting to maximize their profits and the central plan. For example, to retool an enterprise—replace obsolete equipment with modern equipment—often meant that an enterprise had to be shut down while the retooling took place.

But if the enterprises were shut down, it would mean that they would not be making profits during the shutdowns. With the salaries of the managers and to a lesser extent the wages of the workers increasingly tied to the profits of the enterprises, the managers and workers would suffer a loss of income for the duration of the shutdown. This gave the Soviet managers and workers an incentive to resist the introduction of new technology into existing enterprises.

Under capitalism, capitalists can take advantage of crises, whether partial in a certain industry or a general one hitting almost all industries—except gold mining and refining, which experience their crises during periods of generalized prosperity—to introduce new technology into existing enterprises that are shut down as a result of the crisis. The workers are laid off and have to find other jobs or hope that the enterprise reopens before their unemployment benefits—assuming they have them—are exhausted.

In a planned system, you would think that the central planning bodies would arrange to shut down a certain number of enterprises for a period of time for retooling while their workers are reassigned to other enterprises or paid for the duration of the shutdown. But under the “reformed” Soviet system, neither mechanism operated. As a result, the introduction of new technology was largely confined to new enterprises. Not surprisingly, the rate of growth of the productivity of labor slowed down, with all the negative consequences.

Another negative feature of the reforms was that they encouraged individual Soviet enterprises to hoard raw materials. Before the reforms, raw materials were allocated to the individual Soviet enterprises as part of the central plan. This did not prevent individual Soviet enterprises from trading with each other more or less illegally but tolerated in a search for additional raw materials beyond the amounts allocated for them. Since the managers and workers of each enterprise were rewarded with bonuses to the extent that production targets were exceeded, they had an incentive to engage in this type of activity, which had the effect of creating artificial scarcities and damaged the economy as a whole.

However, the reformers, far from combating this type of harmful black or gray market activity, encouraged it by championing the “circulation of commodities” between state enterprises. This increased the competition among the individual enterprises in search of raw materials, leading to artificial shortages, increasingly disrupting production. This contributed to the progressive slowing of growth in the Soviet economy in terms of the growth of both productivity of labor and total output.

The experience of capitalist countries also shows that the market is not the solution to the problem of competition among various enterprises for scarce raw materials.

Even more than the Soviet economy was, a capitalist economy is prone to the harmful effects of the hoarding of scarce raw material whenever the economy or an individual sector of the economy operates close to its full physical capacity. But as we know, a capitalist economy normally operates well below its full physical capacity. A capitalist economy if it isn’t in recession is recovering from the preceding recession. When a full utilization of capacity is approached, it is a sure sign that a crisis of overproduction will soon break out.

The most extreme cases of a capitalist economy operating near physical capacity has not occurred during industrial booms but during the full-scale war economies of World Wars I and II. During these world wars, capitalist governments were obliged to impose large-scale centralized allocation of raw materials and other government controls over production that went against the grain of capitalism. However, these elements of central planning were undermined by the continued private ownership. And as we have seen elsewhere in this blog, full-scale war economies cannot be long sustained, because they suppress expanded capitalist reproduction, the very essence of capitalism.

Pro-reform economists in the socialist countries often compared the Soviet economy and the economies of eastern Europe during the socialist period to capitalist war economies. Both types of economies were “taut,” since they were operating near to full physical capacity. Under these conditions, even slight disproportions in production led to shortages of raw materials and workers and other bottlenecks that disrupted production.

However, there was a crucial difference between the capitalist war economies of World Wars I and II and Soviet-type economies. The latter, especially before the reforms, were characterized by vigorous expanded reproduction, not the contracted reproduction of the capitalist war economies. The only truth in this comparison of economies is that both types were characterized by full employment of the potential workers and machines. In contrast, “peacetime” capitalist economies are always accompanied by considerable—though varying with the successive phases of the industrial cycle—unemployment of both workers and machines.

The reaction against the Russian Revolution and the rise of marginalism in Soviet economic thought

In the October 1966 edition of Foreign Affairs—a house organ of U.S. imperialism— there appeared an article by historian Arthur P. Mendel (1927-1988) entitled “The Rise and Fall of Scientific Socialism.” The article celebrated the growth of anti-Marxist ideas that were rapidly gaining influence in the Soviet Union during the 1960s.

History shows that all the great revolutions in history, at least up to the present, have been followed by eras of reaction. Before the Russian Revolution, the classic example was the Great French Revolution of 1789-94. Indeed, what is known in history as the “Thermidorian Reaction”—named after the month of Thermidor in the revolutionary calender—began with the overthrow of Robespierre’s revolutionary terrorist regime by the French Convention on the ninth of that month.

The Russian Revolution has proven no exception to the rule that great revolutions are followed by periods of reaction and that the reaction to revolution itself goes through various stages until a “reaction develops against the reaction” and society once again goes forward.

During the 1950s and 1960s, the reaction against the October Revolution was deepening, as reflected in the Foreign Affairs article by Arthur Mendel. The growing reaction certainly did not exclude the field of political economy. There, it took the form of the rise to dominance of marginalism within the Soviet economics profession and its growing influence within leading party and government circles.

Mendel wrote: “Rational price, profit, interest calculations, marginal utility theory and advanced mathematical and ‘cybernetic’ models are, consequently, replacing primitive techniques associated with the sacred labor theory of value and the fetish of maximum ‘command’ planning [emphasis added—SW].”

Mendel did not inform his readers—and may have been quite unaware—that marginalism had been mathematically and logically disproved not by Marxist economists but by professional Western economists in the “Cambridge Capital Controversy” between non-Marxist British and U.S. economists that had occurred only a few years before.

But the anti-Marxist U.S. professor and the Argentinian-born revolutionary who went by the nickname “Che” agreed on one thing, that Soviet economists were “forgetting” or, perhaps more accurately, rejecting Marx. And this sheds light on why Soviet economists were so strangely attracted not only to “capitalist methods” but capitalist methods based not so much on the monopoly capitalism of the 1960s but rather on a far more primitive type of capitalism that Che Guevara may not have been aware of.

Che attributed this attraction to the fact that Russian capitalism before the revolution had been far more decentralized than the developed capitalist economies of western Europe and the United States at the time of the October Revolution. But this was only partially true. On the eve of the 1917 revolutions, much of the Russian economy was pre-capitalist and much of the capitalism that did exist—particularly in agriculture—was dominated by small primitive enterprises. But Russian capitalism also featured huge—for the time—centralized enterprises that employed thousands of the workers. Financed largely by foreign capital, these industrial enterprise, like the famous Putilov works in Petrograd, with their great concentrations of workers, helped make possible the October Revolution in the first place.

As I explained last month, marginalists in their “proof” that capitalism is the most efficient economic system possible, assume the existence of so-called “perfect competition.” Perfect competition is defined as a situation where the individual enterprise controls such a tiny part of the total output of a given industry that any change it makes in its own output will have virtually no effect on prices. Last month, I explained that marginalists were forced to make this wildly unrealistic assumption in order to “prove” that a capitalist economy will operate at full employment and maximum efficiency and produce the highest possible consumer satisfaction while achieving a perfectly “just” distribution of income, defined as a situation where every person gets back from the economy exactly what he or she puts into it.

Many Soviet economists were impressed by the apparent mathematical elegance of the marginalist demonstration on the “perfection” of an economy based on “perfect competition.” Such economists would naturally try to think up “reforms” that would move from the highly centralized planned Soviet economy to an extremely decentralized economy in order to realize the marginalist utopia. First, they would favor deemphasizing central planning as much possible. Instead, they would advocate the breaking up of large production units into the smallest conceivable independent “profit centers.”

They would also favor a shift from production targets measured in terms of use values to profit-seeking in terms of rubles. They would insist that the economy should be reformed in such a way that profit, measured in terms of rubles and not human need as reflected in the plan, would be the aim of the plant managers.

In addition, they would favor the expansion of private and semi-private cooperative production that already legally existed in the Soviet economy. These not only included the private plots that members of the collective farms were entitled to but the collective farms themselves insofar as they operated as independent producers’ cooperatives engaged in the production of commodities.

Not least of all, they would insist that a “little unemployment” would not be such a bad thing after all, since it would encourage the workers to work more efficiently while providing potential wage workers for the private and cooperative sectors.

Above all, they would champion the interests not of the producer-consumers but rather the interests of the consumers as opposed to the producers. When it is expressed this way, it clear that “reformers” represented the interests of those in Soviet society who were not engaged in production and were the main candidates for membership in the reemerging capitalist class. The Soviet reform economists—so lauded in Moshe Lewin’s “Political Undercurrents in Soviet Economic Debates”—who “forgot Marx” and were not so very different from the economists in 19th-century Britain who “forgot”—or rather rejected—Ricardo and his labor theory of value and replaced it with marginalist notions.

The people who were candidates for membership in the new capitalist class included members of organized crime who ran illicit private factories and often speculated in scarce products that were produced by state enterprises. It also included corrupt state officials, law enforcement personal, and party officials who were “on the take.”

The latter were particularly important because they provided the base within the party for such “reformers” as Mikhail Gorbachev and Boris Yeltsin. The championing of the interests of non-producers, who all the same were consumers, like the young N.I. Bukharin noted in a somewhat different context, was very much in the spirit of marginalism.

The reformers advocate a socialist market

Moshe Lewin wrote in his “Political Undercurrents”: “Briefly, such theorists said: the economy should reorganize as a socialist market [emphasis added—SW], in which most of the outputs and inputs, including capital goods should circulate freely.” (page 176) The slogan of a “socialist market” was to become central during the Gorbachev era. Indeed, Perestroika can be largely defined as an attempt to “reorganize” the Soviet economy as a socialist market.

However, a market, whether socialist or otherwise, is an institution through which producers who work independently from one another, exchange the products of their private labors. For a “socialist market” to work, the individual state enterprises have to be so autonomous and central planning reduced to such a point that the state enterprises appear to each other as private owners of their means of production and their products relative to one another.

In practice, this can only work if the enterprises themselves have private owners. This was the conclusion that most consistent “radical reformers” in the socialist countries were forced to make. In other words, a “socialist market” where the producers exchange their products in order to determine whether the labor that has been expended on them is a part of social labor or is simply wasted labor is not socialist at all. It is either an economy of simple commodity production, which excludes modern industrial production; an economy where the private owners of the means of production use slave labor like in the pre-Civil War U.S. South, where the workers themselves were private property and thus commodities; or a capitalist economy based on wage labor ruled by the law of value.

The proposals of the “reform”—marginalist-minded—economists, Lewin writes, implied “the dismantling of the administrative supply mechanism for producers goods and its replacement by a wholesale trade network.” (p. 174-75) “This demand was finally incorporated as an official objective in the decision of the Twenty-Third Congress in 1966.”

This Congress met 19 years before the CPSU Central Committee plenum was held that elected Mikhail Gorbachev as its general secretary. Lewin, however, reports that the decision of the Twenty-Third Congress was not implemented. In reality, the “wholesale trade network” was not implemented in 1967 because it was incompatible with the Soviet planned economy. To what extent the delegates to the Twenty-Third Congress realized the implications of what they were voting for is another question, which I am not qualified to answer.

However the proposal to set up a wholesale trade network was being partially implemented in the form of the growing role of the “second economy.”

When the reforms failed to improve or even check the worsening of the performance of the Soviet economy as measured either by the rate of growth of total output or labor productivity, the marginalist reformers had an answer. Our reforms are only being partially and half-heartedly implemented, creating a hybrid system that has neither the advantages of the market economy that we are advocating or the planned system that we want to see dismantled. To realize the benefits of our reforms—the marginalist utopia of perfect competition—the reforms have to be implemented fully and consistently.

This is what Gorbachev’s “radical” economic reforms and Yeltsin’s even more “radical” post-Perestroika reforms proceeded to do. The result as we have seen was not only the restoration of capitalism but the greatest economic disaster in all human history.

The historical limits of the law of the value of commodities and the real role of the law of value of commodities in the construction of socialism

I give the full title of the law of value in the heading because the full name indicates exactly the historical limits of the law of value. The limits historically of the law of value are the historical limits of commodity production. The law of value is a subset of a broader law that all labor of any human society must be divided among the various branches of production in correct proportions. If it is not, production will soon become impossible.

The law of value is a special case of this more general law. The abolition of the law of value removes restrictions that arise from the commodity form—which at a certain stage in the development of production leads to generalized crises of overproduction, long periods of stagnation, and output well below potential levels—but they do not remove the law that dictates that production must be proportionate.

In a communist society—even under the first stage of communism—society owns all the means of production of any significance. The only change in the ownership of products produced in such a society is the change from the socially produced and owned products to the privately owned products of the ultimate consumer. Such a change of ownership does not represent an exchange of commodities among producers working for their own private account but merely the distribution of products produced by the associated producers with socially owned means of production to the associated producers in their role as individual consumers.

Since no commodity production and exchange is involved here, the law of value does not apply. And where there is no commodity production, money in the scientific sense that I have defended against numerous critiques throughout this blog does not exist. There is also no profit and no interest (merely a portion of profit), because profit, including interest, is measured in terms of the use value of the money commodity. Where there is no law of value, there is no commodity production, no money, and therefore, as I have defined profit in this blog, no profit.

However, under the lower stage of communism, it will still be necessary to issue slips of paper, perhaps with pretty pictures of dead revolutionary heroes—or more likely electronic equivalents—that will entitle their owners to make withdrawals from the total stock of the socially produced and owned items of personal consumption in proportion to the amount of such slips of paper or their electronic equivalents they possess.

Such certificates will be issued to individuals in proportion, with certain modifications, to the quantity of labor they perform. Perhaps out of old habit, such certificates will be called “money,” but they will not be money in the sense used either by Marx or in this blog.

The real role of the law of value in the construction of socialism

We know that as capitalism develops, the number of independent capitals is reduced. Carried to its logical conclusion, this leads to the centralization of all means of production in the hands of a single universal corporation encompassing all of production. This is indeed the historical tendency. And Marx based his communist perspective on it.

If the process of the centralization of capital were fully realized, all means of production would have a single owner—the single surviving independent corporation—or trust—and its stockholders. Would commodity production and the law of value still rule under these conditions?

The answer is no. Would money still exist? The answer is again no, because you can’t have money without commodities, though the trust might pay its workers in certificates with pictures of dead U.S. presidents—or some electronic equivalent—that would entitle its workers to draw from the items of personal consumption it produced proportional to the quantity of labor they performed for the corporation.

Would the corporation and its stockholders still be owners of capital? No. Capital consists of commodities and no money and no commodities would exist. The corporation would own and indeed monopolize the means of production, but it would own them as material use values not as capital.

Born of highly decentralized simple commodity production and evolving towards the ever greater centralization of capital, the phase in the history of production that we call capitalist production evolves toward its own abolition. Che noticed this evolution when he observed the abolition of commodity production in relations between the U.S. corporations and their subsidiaries. He correctly saw that the highly centralized U.S. corporations were laying the foundations of a future communism even as the champions of the financial self-management system in the Soviet Union and eastern Europe were moving backwards toward the restoration of capitalism.

Commodity production in the transition between capitalism and communism

If the centralization of capital ever reaches its logical conclusion—and no Marxist expected or expects that it ever will before a social crisis triggered by the centralization of the great bulk of the wealth of society obliges the working class to seize political power—the transition to a communist society would be easy and quick. All that would be necessary to accomplish the transition to communism—or rather complete it—would be to transfer the ownership of the universal corporation from its stockholders to all of society. This would be equivalent to distributing ownership shares equally among all members of society.

There would be no need to make a transition from a market economy to a planned economy, because a planned economy would already exist. The plan would simply have to be revised to meet the interests of the producer-consumers rather than a few wealthy stockholders. There would be no need to abolish commodity production, because commodity production would already have been abolished. There would be no need to abolish money because money would, in the absence of commodity production, have been abolished in the sense defined by Marx.

With the abolishing of commodity production and money, the law of value would also have fallen before the revolution. Instead, the universal corporation would already be distributing the labor of society among the various branches of production according to a central plan. Of course, it would have to be careful to keep the various sectors of production it owned proportionate.

If contrary to the expectation of all Marxists, a single corporation some day does indeed eliminate all competitors and end up master of all production, the transition to the lower stage of communism will be accomplished within 24 hours. There would be no need for a transitional society between the reign of the universal corporation and the first stage of communism.

The point is that the more the situation of the rule of a single universal corporation is approximated before the socialist revolution, the easier the transition to (the lower phase of) communism will be and the less painful will be the birth pangs of the new society.

Conversely, the more small-scale production there is at the time the proletariat conquers political power, the longer and more painful the transition from capitalism to communism is and the greater the danger will be of its being aborted by a counterrevolution such as occurred in the Soviet Union.

Lenin saw the main obstacle to the construction of socialism in the former Czarist Empire was the huge role small-scale production, especially but not only in agriculture, was still playing both in the new Soviet republic and in the world. Small-scale production breeds commodity production and commodity production breeds capitalism.

The Soviet republic also existed in a sea of capitalism and had to engage in foreign trade with the surrounding capitalist world. Under these conditions, exports and imports were commodities and ruled by the law of value. On a world scale, the Soviet state, due in part to the monopoly of foreign trade, acted as one gigantic simple commodity producer. In addition, the huge commodity-producing private and cooperative sector was ruled by the law of value—except in those cases where pre-commodity subsistence agriculture prevailed.

The decision to launch the New Economic Policy acknowledged this reality and the utopian nature of the hopes that briefly flourished under “War Communism” that commodity production could be abolished in Soviet agriculture through the “direct exchange of products” while the mode of production remained highly individualized and decentralized. The great success of the New Economic Policy was that it restored the connection between industry and agriculture by reestablishing the circulation of commodities between town and country that had broken down under “War Communism.” However, this was accomplished not through socialist methods but through the market.

Che Guevara apparently believed that NEP was not only a retreat but even a mistake setting the Soviet Union on a path back to capitalism, and criticized Lenin accordingly. These views are apparently expressed in the notes he made that criticized the Soviet “Manuel of Political Economy,” published in 2006 about 40 years after he expressed them. When I conceived this series of posts, I had expected to obtain a copy of Che’s notes criticizing the 1960s-era Soviet “Manuel of Political Economy.”

A “debate” between Lenin and Che Guevara, now that would be interesting! However, getting a copy of Che’s notes has proven much more difficult than I thought. If any reader of this blog knows how to obtain a copy, preferably in English translation, I would like to know.

I would also like to obtain a copy of the edition of the Soviet “Manuel of Political Economy” that Che criticized. I managed to find on-line in pdf format a copy of an earlier edition. But the section in this one dealing with the Soviet economy is based on Stalin’s “Economic Problems of Socialism,” where he defended the position that the products of the state enterprises that produce means of production destined to be used by other state enterprises are not commodities. Apparently, the opposite viewpoint was widespread within the Soviet economic profession and party circles even at that time; otherwise Stalin would not have felt obliged to polemicize against it.

After Nikita Khrushchev’s denunciation of Stalin for his repressions, reign of terror, and cult of personality at the Twentieth Party Congress, Stalin’s “Economic Problems of Socialism” came under attack by Soviet economists for defending the the point of view that means of production in the Soviet Union do not circulate as commodities. It would be quite interesting to compare the two editions of the Soviet Manuel as well as examine Che’s criticisms.

This would shed light on the struggles occurring within the leading circles of the ruling CPSU and the Soviet government leading up to and following Stalin’s death, provide background to the still unanswered question of exactly how and why Stalin met his end, and more fundamentally shed important light on the intense class struggles both within the Soviet Union and internationally—which ultimately cannot be separated from one another—that these events reflected. Perhaps I will return to this subject if and when I obtain the necessary documents.

In the meantime, there are far more pressing matters to attend to. A debate has broken out between former Federal Reserve Chairman Ben Bernanke—who is now a fellow blogger—and Larry Summers on the subject of “secular stagnation.” This will be—barring some completely unexpected development—the subject of next month’s blog post.


1 Very often capitalist governments charge political activists for crimes they are guilty of committing themselves. Though not easy, Fidel gave an example in “History will Absolve Me” how it is sometimes possible for activists and revolutionaries charged with a crime to put the government in the dock. (back)

2 Fidel announced the socialist character of the revolution only after the defeat of Washington’s counterrevolutionary mercenaries at Playa Giron—Bay of Pigs—in April 1961. Only then did Fidel publicly declare himself a Marxist-Leninist for the first time. (back)

3 The Popular Socialist Party was traditionally the leading force in the Cuban trade-union movement. As was the case in the U.S., immediately after World War II an anti-Communist red-baiting campaign was launched against the PSP, and the party lost its position within the unions. As also was the case with the left-wing trade unions in the United States, the place of the PSP was taken by a corrupt pro-imperialist, anti-Communist bureaucracy. At least since the time of the Seventh (and last) Congress of the Communist International in 1935, the PSP believed that the prospects for a socialist revolution in Cuba were far off and that the best that could be achieved in the foreseeable future was greater independence from the United States and bourgeois democracy.

During World War II, the PSP even served in Batista’s elected government, seeing World War II like all the other Communist Parties of the Third International as a war for democracy led by the the United States, Great Britain and the Soviet Union against fascism. The PSP had also opposed Castro’s raid against the Monocada Barracks as an adventure.

However, when the anti-Batista movement led by Fidel’s July 26th guerrillas developed into a mass movement, the PSP supported it. As a cadre organization rooted in the working class, the PSP was to prove invaluable when the revolution made its unexpected turn toward the organization of a workers’ state and a socialist revolution in 1960-1961.

However, some of the PSP cadre looked down at the newly minted Marxist-Leninists—some of whom only a year or so earlier had considered themselves to be anti-communists—who had emerged from the left wing of the July 26th Movement and the Revolutionary Directorate of 13 March and then merged with the PSP to form the new party that evolved into the present-day ruling Cuban Communist Party.

These frictions were reflected in the Escalante affair, during which the veteran PSP leader Aníbal Escalante was accused of organizing a “micro-fraction” in 1962. Despite these frictions, without the merger of both the old and new communists into a united Communist Party, the turn by the Cuban revolution toward socialism in 1960-1961 and the socialist construction that followed would have been impossible. (back)

4 Meyer Lanksy and his boyhood friend Charles “Lucky” Luciano (1897-1962) became the chief organizers in the U.S. of the “syndicate”—also known as “organized crime,” “the mob,” or “the underworld”—in the early and middle years of the 20th century. In the 1950s, under Batista’s dictatorship, Cuba was a favorite destination for well-heeled U.S. tourists who stayed in luxurious hotels, gambled in Lanksy’s casinos, enjoyed the delights of Cuba beautiful tropical climate, and not least enjoyed to the full Cuba’s night life while desperately poor Cubans looked on.

In my opinion, Lansky must be considered one of the “fathers” of the Cuban Revolution. By bringing wealthy “fun-loving” North Americans to the island, Lansky helped bring the contradiction between the desperately oppressed, super-exploited Cuban people and U.S. imperialism to the breaking point. As a result, Lansky’s personal nightmare of a radical Cuban revolution that would abolish his gambling empire became a reality. (back)

5 Of these two conditions that made socialist construction possible in Cuba, one no longer exists, the existence of the socialist camp headed by the Soviet Union. This should be born in mind in attempting to answer the ultimately unanswerable question of what would Che’s attitude be toward the current economic reforms in Cuba. (back)

6 The Great Debate also involved two West European Marxist economists. One was Charles Bettelheim (1913-2006), a non-party Marxist who was a supporter of the Soviet reforms and the financial self-management system. The other was Ernest Mandel (1923-1995), the central leader of the Trotskyist Fourth International, who supported Che. Ironically, both Stalin in his “Economic Problems” and Mandel, then considered the world’s leading Trotskyist theorist, agreed that the means of production in the Soviet Union were not commodities.

Che Guevara was not a Trotskyist, though he thought that Trotsky had some valuable ideas, considered Trotskyists like Hugo Blanco fellow revolutionists, and deplored the suppression of Trotsky’s ideas in the socialist camp.

Che, however, also deplored Trotsky’s conduct in his struggle against Stalin, especially in the final period of Trotsky’s life, and believed that the movement founded by the Trotskyist Fourth International had not accomplished anything positive. Instead, Che admired—though not uncritically—Stalin and had a generally negative view of Khrushchev’s de-Stalinization campaign.

Che’s generally positive attitude toward Stalin will be disturbing to many readers, but it is a historical fact and it would be a falsification of history to deny it. Che’s attitude toward Trotsky and Stalin are actually not that uncommon among radicals and revolutionaries from oppressed countries and minorities within the imperialist countries.

For example, in the U.S. Communist Party, African American members and sympathizers were less impressed by Khrushchev’s revelations about Stalin’s reign of terror and repressions than were the white members and sympathizers. The same was true of the party’s Latino membership.

Stalin retains more widespread respect among many people in China, Vietnam and India than generally is the case on the Western left, where he is with few exceptions reviled. The reason for the far more favorable attitude toward Stalin among the people of the oppressed countries is that it was under Stalin that the first great experiment in planned economy was carried out that enabled the Soviet Union to emerge as second only to the United States in terms of industrialization and as a result of that industrialization to defeat the Nazi Germany with minimal assistance from its Western “allies.”

This is reinforced by the fact that the “anti-Stalinist reform movement” led to the return of capitalism in the Soviet Union and eastern Europe. This has made Stalin increasingly popular among people in the oppressed countries but has also made him increasingly popular—not universally, of course—among people in Russia, Ukraine and other ex-Soviet states, These attitudes have grown as as the disastrous effects of the counterrevolution made in the name of “anti-Stalinism” became clear.

Che also greatly admired the Chinese Revolution and its leader Mao-Zedong. (back)

7 It is a great myth that Marx believed that commodity production and money would continue under the lower stage of communism and would disappear only under the second higher stage of communism. This radically false view is based on a
misunderstanding of the following quotes from the “The Critique of the Gotha Program”:

“Here obviously, the same principle prevails as that which regulates the exchange of commodities [emphasis added—SW], as far as this is exchange of equal values.[Note, not the production of the commodities but the same principle that prevails under the production of commodities—SW]. Content and form are changed, because under the altered circumstances no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals, except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labor in another form.”

Note that Marx says the “same principle prevails as under in the exchange of equivalents” does not mean that commodities themselves are being exchanged, quite the contrary.

For anybody who has really mastered “Capital,” it is self-evident that Marx is not saying that commodity production prevails in the lower stage of communism. But the experience of the last 150 years since the publication of “Capital” has shown that it is not an easy book to master, especially when one is constantly exposed to mind-numbing bourgeois propaganda. But Marx makes things clear in the following quotes that precedes the quote that has generated so much confusion.

“Within the co-operative society based on common ownership of the means of production, the producers do not exchange their products [my emphasis—SW]; just as little does the labor employed on the products appear here as the value [Marx’s emphasis] of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labor no longer exists in an indirect fashion but directly as a component part of total labor.” (back)

8 The attempt to make greater use of the “levers of commodity-money relations” might have had some historical justification if they actually had increased the development of the productive forces, since a communist society, whether the lower or the upper phase, depends on development of the productive forces beyond anything we have even today. But the way the Soviet “reformers” attempted to use these “levers” did not stimulate the development of the productive forces created by the hard labor and sacrifices of the Soviet people, it destroyed them. (back)

9 This fact is documented in the memoirs of former Soviet leader Dmitrii Shepilov, published in English under the title “The Kremlin’s Scholar, A Memoir of Soviet Politics under Stalin and Khrushchev.” (2007, Yale University Press) (back)

10 The memoirs of various former Soviet leaders and military officers reveal that Stalin realized the value of clashing opinions and sometimes encouraged debates in which he carefully listened to the different sides before he made a decision. However, once Stalin made his decision, the debate was considered over and Stalin’s decision was binding on all concerned. (back)

11 This is why, like price, profit is ultimately defined in terms of the use value of the money commodity measured in terms of the use value of that commodity in an appropriate unit of weight. In practice, profit, whether of an individual capitalist enterprise, an individual capitalist, or a monopoly corporation is defined in terms of a given weight of gold bullion. (back)

12 It is becoming increasingly fashionable to question or deny the very possibility of achieving a communist society of abundance due to “planetary limits,” as the editors of Monthly Review put it. Instead, these editors envision an “ecological civilization” in which we must learn to live within these “limits.” This doesn’t sound like the society of abundance that Marx and subsequent generations of Marxists dreamed about. Is perhaps a society of abundance a utopia in view of growing environmental crisis?

These views cannot be lightly dismissed. But I think the following should be kept in mind. The U.S. space agency NASA is planning to launch next year (2016) the (OSIRIS-Rex)space probe to the 1999 RQ36 asteroid that if all goes according to plan will be reached in 2020. The space probe will attempt to gather material from the asteroid’s surface and return it to earth in 2023. The main aim of the mission is to lay the foundation for the eventual mining by private for-profit corporations of asteroids that contain huge amounts of raw materials. It seems as though NASA and the wealthy capitalists it as an arm of the U.S. government serves have not heard about the “planetary limits” that supposedly limit human activities.

Nor are certain Silicon Valley capitalists, who now have huge amounts of idle money capital burning holes in their pockets and are already taking the first steps to create companies they hope will one day realize a profit bonanza mining asteroids and make them or their descendants vastly richer than they already are. Though not knowing any planetary limits, even the most visionary of Silicon Valley capitalists are bound by the limits of a different kind, the limits of the law of value. However, our descendants having overcome capitalism will be bound neither by planetary limits nor the law of value but only the laws of physics.

In the meantime, powerful computers running powerful UNIX-type operating systems can now be worn on wrists while supercomputers that though we cannot yet wear them on our wrists create ever more powerful climate models. It is now often possible to accurately predict the path of a hurricane even before it has formed.

Past generations of Marxists—beginning with Marx himself and including Che Guevara—believed in the powers of science and technology as well as the working class. But the reaction against the Russian Revolution has created not only widespread disbelief in the ability of the working class to rule society but also a widespread disbelief in the powers of science and technology. I believe we must
reject both attitudes no matter how fashionable they may be at the moment.

However, Monthly Review is right about one thing. Any future communist society will not only be based on planning the economy. It will have to plan the interaction of its economy both on Earth and within the rest of the solar system with the environment. The days of ignoring the environment are definitely over.

But this task cannot be left to Silicon Valley capitalists limited by the law of value as they are but can only be properly tackled by the associated producers. Who knows, these producers may even create a society where each will be able to work according to their ability and receive according to their need. (back)

2 thoughts on “Che Guevara and Marx’s Law of Labor Value (Pt 3)

  1. Sam, just a little correction.
    You write:The Spanish word for commodity is “merchandise,” which because it appears to be identical to the English word “merchandise”…
    The spanish word is “mercancía”, which is very similar to “merchandise”. So you argument keeps valid and, as you said, the right translation for “mercancía” is “commodity”.

  2. Sam,

    Could you please clarify one of your points on generalized commodity production?

    You say: “Stalin, however, in his “Economic Problems” rejected the view of this blog that the law of value is the basic law that governs monopoly capitalism and made an argument that should be carefully considered. He noted that commodity production is not confined to capitalism but existed in pre-capitalist societies and continued to exist in the Soviet Union. Therefore, Stalin reasoned, another law must dominate monopoly capitalism. Stalin proposed that under monopoly capitalism—or imperialism—the main economic law is “the securing of the maximum capitalist profit.”

    Yet, in Economic Problems in section 3, it states very clearly “It is sometimes asked whether the law of value exists and operates in our country, under the socialist system.Yes, it does exist and does operate. Wherever commodities and commodity production exist, there the law of value must also exist.”.

    It seems to me that he makes the exact same argument of this blog, that the law of value exists wherever commodity production exists. Throughout the piece he seems to make the argument that it was not politically possible to repress commodity production in every sector. Therefore, commodity production persisted, albeit to a much lesser extent than in pure capitalist countries.

    Earlier in the piece he states that of course there would not be commodity production under socialism. With respect to the agricultural sector he states:

    “Nor can we regard as an answer the opinion of other half-baked Marxists, who think that the thing to do would be to assume power and to expropriate the small and medium rural producers and to socialize their means of production. Marxists cannot adopt this senseless and criminal course either, because it would destroy all chances of victory for the proletarian revolution, and would throw the peasantry into the camp of the enemies of the proletariat for a long time.” He knew that there would not be commodity production under socialism, but this was impossible in Russia at the time.

    It seems that he did not reject your view but it was not possible, at least according to the author, to abolish commodity production in every single sector at the time. I think he was in general agreement with you, his argument was just misstated.

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