Commodity production and socialism: why the NCPN rejects the theory that socialism is a form of commodity production

The article below was written by the Ideological Commission of the CC of the NCPN for the party’s newspaper Manifest in December 2022.

Ideological Commission

In the Political Decision adopted by the NCPN at its 7^th Party Congress, we read the following in the section on the ‘Study of socialist construction’: “The NCPN rejects the theory that socialism is a form of commodity production (production for the market)...” In this article, we will briefly discuss the meaning of this sentence. What is commodity production? What about commodity production under socialism? What did Marx, Engels and Lenin write about it?

This is a complex subject that certainly cannot be fully highlighted in the context of one article. The focus in this article is on theory and how Marx, Engels and Lenin approached the issue. We do not deal so much with the historical experience on this issue in socialist countries. Thus, we are only trying here to give an outline of this issue and some theoretical tools to understand it. For the sake of the article’s scope, we also have to leave out many aspects. The article is intended as a starting point for further elaboration of the issue in other articles that highlight other aspects. For the sake of giving a comprehensive overview, we start with a very brief explanation of the concepts of commodity and commodity production.

Commodities and their value

Commodities are products that satisfy a human need, i.e. have a certain use value, and are produced for the purpose of trading this product, i.e. have value. That value only becomes visible in the process of exchange as exchange value, when we see that, for example, a loaf of bread is worth as much as a piece of clothing or a certain amount of money. Products produced for one’s own use are therefore not commodities.

How is it that two products that have completely different use values, such as food and clothing, can still be compared in quantities, i.e. relate to each other quantitatively? What do they have in common? They have in common that they are both products of human labour. Value is therefore determined by the labour realised in the commodity. This is the law of value. The socially necessary labour time determines how much value a commodity has.

It follows that the labour that produces commodities also has a two-sided character. On the one hand, the commodity is the result of concrete labour, with specific actions and skills required to produce a loaf of bread or, alternatively, to make clothes. The concrete labour creates use-value. But on the other hand, the commodity is also the result of the consumption of human labour in general, of abstract labour, independent of the concrete acts it consists of. This is the source of value.

Commodity production

In our time, almost everything is produced as a commodity. Almost everything we use – food, clothes, devices, etc. –we have bought and not produced ourselves. It is not without reason, after all, that Marx begins in Capital, the study of the capitalist mode of production, with this observation: “The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities’...”[1]

However, this has not always been the case. Engels wrote: “Commodity production, however, is by no means the only form of social production. In the ancient Indian communities and in the family communities of the southern Slavs, products are not transformed into commodities. The members of the community are directly associated for production; the work is distributed according to tradition and requirements, and likewise the products to the extent that they are destined for consumption. Direct social production and direct distribution preclude all exchange of commodities, therefore also the transformation of the products into commodities (at any rate within the community) and consequently also their transformation into values.”^[2]

Hence commodities are a historical phenomenon. They first appeared with the more or less accidental exchange of products of which there was a surplus. Later, they were produced for exchange and therefore simple commodity production appeared. In that process, commodity exchange and exchange value, or the value form, developed from the direct exchange of commodities to the appearance of money. Indeed, direct exchange soon becomes impractical. This is because it requires the coincidence that the two producers are looking for each other’s product. If the baker wants clothes, but the tailor does not want bread, there can be no direct exchange. Money ensures that the sale of one product and the purchase of the other need not take place at the same time. This, of course, makes the exchange of commodities considerably easier.

Commodity production arose in the pre-capitalist socioeconomic formations, but it did not predominate in those formations. Only a relatively small portion of production was for trade. Most products were instead produced with the purpose of direct consumption of the product, either by the direct producer and his household (slave, serf, peasant, etc.), or by the owner’s household (slaveholder or feudal lord). Thus, these products were not produced with the purpose of trading them and thus these were not commodities.

Only in the capitalist mode of production commodity production predominates. By far most of social production is then produced for the market. After all, Lenin defined capitalism as “commodity production at its highest stage of development, when labour-power itself becomes a commodity.”[3] The commodity labour-power has the specific property that its consumption (i.e., the performance of labour by the workers) produces value. Part of the value of commodities in capitalism is therefore also surplus value, the difference between the value of the labour power (the worker’s wage) and the value of the commodity produced. Surplus value is the portion that the capitalist appropriates.

The contradiction between private and social labour

Production always has a social character. People, as individuals, never produce everything they need. The labour of the individual is part of the labour of society as a whole. Collectively, as a society, people produce what society needs. In doing so, there is a social division of labour: different groups of people have different roles in production. One produces food, the another produces clothes, etc.

Commodity production is characterised by the contradiction between private and social labour. On the one hand, the commodity producer is an autonomous producer, who owns his means of production and the products he produces. His private labour is focused on production for his own gain. The needs of society are not directly relevant. Yet the labour of the commodity producer is also social labour. He is highly dependent on other commodity producers (for means of production, but also for the products he himself consumes). Moreover, even if it is not his direct goal, the goods he produces will ultimately also satisfy the needs of others, of society.

How is the social character of labour expressed in the context of commodity production? Marx wrote: “…the interconnection of social labour expresses itself as the private exchange of the individual products of labour…”^[4] In other words, the social character of labour manifests itself only when the individual producers exchange their commodities. The relationship between the labour of different producers, is not expressed directly, but indirectly, through ‘things’ (commodities) being traded. In other words, the value of a commodity cannot be expressed directly in socially necessary labour time, but can only be expressed indirectly, through the exchange relationship to another commodity or money.

“The fact, that in the particular form of production with which we are dealing, viz., the production of commodities, the specific social character of private labour carried on independently, consists in the equality of every kind of that labour, by virtue of its being human labour, which character, therefore, assumes in the product the form of value…”^[5]

In direct social production, where labour and products are allocated according to social needs, the social character of each person’s individual contribution to social labour is clear from the outset. In commodity production, on the other hand, the social character of the labour and the social utility of the products become clear only afterwards, and by a roundabout route, through the market.

The communist mode of production

The communist mode of production is based on social ownership of the means of production, central planning of the economy and workers’ control over production. Within that framework, there is direct social production and distribution. Social needs are considered in advance in a planned manner, and on that basis labour and other productive forces are allocated to different sectors and enterprises in the economy. In this context, there is no longer commodity production. Products are not commodities. They are not produced for the purpose of sale, but for the purpose of satisfying social needs.

Marx wrote: “Within the collective society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labour employed on the products appear here as the value of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labour no longer exists in an indirect fashion but directly as a component part of the total labour.”^[6]

Central planning is a feature of the communist mode of production. It concerns a social relationship that expresses the allocation of labour and means of production based on the aim of satisfying social needs at an increasingly higher level.

Central planning naturally takes into account the labour time required for production. After all, it goes without saying that in socialism labour still entails the consumption of human labour power, in the physical sense of the word. However, this is not the same as the 'abstract labour' and the 'socially necessary labour time' that determine the value of goods in the context of commodity production and are expressed in the exchange of goods through exchange value. Only on the surface are these similar, because in the communist mode of production the allocation of labour power is planned in advance on the basis of social needs. There is thus direct social labour, which is expressed in the concrete work each person in socialist society performs within the framework of centrally planned production. Thus, no abstraction of labour takes place in social production. Products produced within the framework of communist relations of production are not commodities, nor do they have value (they only have use value).

Engels wrote: “From the moment when society enters into possession of the means of production and uses them in direct association for production, the labour of each individual, however varied its specifically useful character may be, becomes at the start and directly social labour. The quantity of social labour contained in a product need not then be established in a roundabout way; daily experience shows in a direct way how much of it is required on the average. Society can simply calculate how many hours of labour are contained in a steam-engine, a bushel of wheat of the last harvest, or a hundred square yards of cloth of a certain quality. It could therefore never occur to it still to express the quantities of labour put into the products, quantities which it will then know directly and in their absolute amounts, in a third product, in a measure which, besides, is only relative, fluctuating, inadequate, though formerly unavoidable for lack of a better one, rather than express them in their natural, adequate and absolute measure, time. (…) Hence, on the assumptions we made above, society will not assign values to products. It will not express the simple fact that the hundred square yards of cloth have required for their production, say, a thousand hours of labour in the oblique and meaningless way, stating that they have the value of a thousand hours of labour. It is true that even then it will still be necessary for society to know how much labour each article of consumption requires for its production. It will have to arrange its plan of production in accordance with its means of production, which include, in particular, its labour-powers. The useful effects of the various articles of consumption, compared with one another and with the quantities of labour required for their production, will in the end determine the plan. People will be able to manage everything very simply, without the intervention of much-vaunted ‘value’.”^[7]

Socialism: the first phase of communism

Communist relations of production are not established in a day. The assumption of political power is only the beginning of socialist construction. Commodity production and all sorts of other features of capitalism, will initially persist in socialism, as a remnant or ‘birthmark’ of the capitalist mode of production. Socialism is not a separate mode of production. It is merely the first, incomplete and immature phase of communist society. To the extent that the new, socialist (communist) relations of production dominate, at the expense of the capitalist relations, the laws of the communist mode of production apply in socialism.

Lenin wrote: “Theoretically, there can be no doubt that between capitalism and communism there lies a definite transition period which must combine the features and properties of both these forms of social economy. This transition period has to be a period of struggle between dying capitalism and nascent communism – or, in other words, between capitalism which has been defeated but not destroyed and communism which has been born but is still very feeble.”^[8]

The main distinction between socialism and more developed communism, is the distribution of the social product. In socialism, the social product is distributed ‘from each according to his ability, to each according to his labour’. How does the distribution according to labour take place under socialism?

Marx wrote: “What we are dealing with here is a communist society, not as it has developed on its own foundations, but on the contrary, just as it emerges from capitalist society, which is thus in every respect, economically, morally and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society – after the deductions have been made – exactly what he gives to it. What he has given to it is his individual quantum of labour.”[9]

Here, the ‘wage’ no longer represents the value of labour power, since labour power is no longer a commodity. It is merely a form in which society gives back to each individual what they have contributed to social labour by giving them access to products and services. Thus, in socialism, the ‘wage’ serves only as a receipt for the individual’s contribution to social labour.

Working time performs a double role in the context of communist production relations. For central planning, working time is important for the allocation of labour power over the various sectors of the economy for its planned development. At the same time, it serves as a measure of the individual’s contribution to social production, on the basis of which the individual can use part of the social product.

“Labour time would, in that case, play a double part. Its apportionment in accordance with a definite social plan maintains the proper proportion between the different kinds of work to be done and the various wants of the community. On the other hand, it also serves as a measure of the portion of the common labour borne by each individual, and of his share in the part of the total product destined for in dividual consumption. The social relations of the individual producers, with regard both to their labour and to its products, are in this case perfectly simple and intelligible, and that with regard not only to production but also to distribution.”^[10]

In communism, distribution takes place according to a different principle, namely: “from each according to his capabilities, to each according to his needs.”^[11] Products and services are then available to those who need them. However, this is not a turnaround that happens overnight, when socialist construction is ‘completed’. On the contrary, it is a process. As the productive forces develop and communist relations of production expand, this principle will apply to an increasing part of the social product. Even in the immature phase of the communist mode of production, certain social needs will be satisfied according to need (e.g. free and public education, health care, etc.).

The opportunistic view of the role of commodity production in socialism

Several theories have emerged in the history of the labour movement that argue that socialism is a form of commodity production. For example, theories of ‘socialist commodity production’, ‘market socialism’ or ‘socialism with market’. These are not positions that point to the need to allow commodity production temporarily, restricted in certain sectors until the material conditions for its abolition are ripe, as Lenin, for example, argued with the New Economic Policy (NEP) in the specific circumstances that arose in 1921. These are opportunist theories that argue through one means or another that socialist economy is and must be based on commodity production. Such positions result, under socialism, in the weakening of the struggle for socialist construction and even the unlimited re-entry of capitalist relations of production.

Variants of such theories can be seen, among others, in the positions of the so-called ‘right opposition’ that opposed the end of the NEP (Bukharin among others) in the 1920s and 1930s in the Communist Party of the Soviet Union (CPSU), in the positions that gained the upper hand after the 20^th Congress of the CPSU in 1956 (elaborated by economists such as Liberman and others) and in the positions that gained the upper hand in the Communist Party of China from 1978 onwards (including in the theory developed by Deng Xiaoping and his successors). Through Eurocommunism and other opportunist theories, these elaborations also found echoes in the international communist movement and in the party programmes of communist parties in capitalist countries. We will not go into specific theories in this article, but only name some general characteristics.

Typical of such theories is that socialism and communism are pulled apart. Socialism is approached as a separate mode of production with its own laws. Communism is advanced as an elusive ideal in a distant future. Commodity production is approached not as a remnant of capitalism, something that must be fought and abolished to the extent that the material conditions for its abolition exist, but as a property of socialism itself. From such a point of view, it should not be fought, but rather promoted.

Such theories are also characterised by a superficial approach to all kinds of concepts that are distorted. For instance, state ownership is equated with social (socialist) ownership. Economic planning, state intervention and macroeconomic policy is equated with central planning. Co-determination is equated with workers’ control. If an enterprise procures the means of production through the market, sells the products through the market and operates on the basis of wage labour (thus using labour power as a commodity), it is a capitalist enterprise where capitalist exploitation takes place. This does not change if the company is state-owned, if the company has to deal with the government's economic policy or if there are certain co-determination structures. After all, we can find that in capitalism too.

One way or another, capitalist relations are presented as socialist relations. How damaging this is, the history of the USSR has made clear. Under socialism, opportunism will, if not fought in time, develop into a counter-revolutionary force. If opportunism prevails in the communist party, it gradually loses its revolutionary character and steers towards the re-emergence of capitalism.

Of fundamental importance, then, is to treat commodity production, the law of value and all sorts of other properties of capitalism, as remnants of capitalism, and not as properties of socialism itself. This is what we emphasise in our congress documents with the sentence: “The NCPN rejects the theory that socialism is a form of commodity production (production for the market)…”

As indicated earlier, there is much more to say on this topic. We will address other aspects of this issue in the future as well. This is done in the context of the aim we set with the 7^th Congress in the Decision on Party Building to “improve our understanding of socialism and communism”. Let us conclude for now with the words of Lenin: “The emancipation of the workers must be the act of the working class itself. (…) The real emancipation of the working class requires a social revolution (…) i.e., the abolition of private ownership of the means of production, their conversion into public property, and the replacement of capitalist production of commodities by the socialist organisation of the production of articles by society as a whole, with the object of ensuring full well-being and free, all-round development for all its members.”^[12]

[1]Capital, volume 1, in: Marx and Engels, Collected Works, volume 35, p. 45.

[2]Anti-Dühring, in: Marx and Engels, Collected Works, volume 25, p. 294.

[3]Imperialism, the highest stage of capitalism, in: Lenin, Collected Works, volume 22, p. 240.

[4] ‘Marx to Kugelmann, 11 July 1868’, in: Marx, Collected works, volume 43, p. 68.

[5]Capital, volume 1, in: Marx and Engels, Collected Works, volume 35, p. 85.

[6]Critique of the Gotha Programme, in: Marx and Engels, Collected Works, volume 24, p. 85.

[7]Anti-Dühring, in: Marx and Engels, Collected Works, volume 25, p. 294-295.

[8]‘Economics and politics in the era of the dictatorship of the proletariat’, in: Lenin, Collected Works, volume 30, p. 107.

[9]Critique of the Gotha Programme, in: Marx and Engels, Collected Works, volume 24, p. 85-86.

[10]Capital, volume 1, in: Marx and Engels, Collected Works, volume 35, p. 89-90.

[11]Critique of the Gotha Programme, in: Marx and Engels, Collected Works, volume 24, p. 87.

[12]‘Draft programme of the Russian Social-Democratic Labour Party’, in: Lenin, Collected Works, volume 6, p. 26.