Value and Distribution in Socialist Society

The Weekly People
October 30, 1976
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Value and Distribution in Socialist Society

In his letter published in the October 2 issue of the Weekly People, D. George of Bessemer, Ala. criticizes one of your writers for talking about how "the workers will receive the full social value of their labor" in a socialist society. He suggests that what was really meant was that "the working class as a whole would receive full control over the total value of their social labor to dispense as they collectively wished." You respond that your writer's phrasing is a commonly accepted abbreviation for what D. George says was meant.

It seems to me (although I don't like picking nits either) that both of you have missed the point. "Social value" is a vague phrase. It could mean what Marx called use-value, or it could mean what D. George thinks it means, which sounds like labor-value. If it is the former, use-value, that is being talked about, then to speak of a "total value" is nonsense. A set of use-values represents a set of specific human needs for qualitatively different things, some of which are products of human labor and some not (see Critique of the Gotha Program): they can't have a total value any more than you can add apples and oranges, pounds of silk and pounds of steel.

If on the other hand you mean labor-value, then you fall into one of the very same errors that Marx criticized so relentlessly in his day -- namely the idea that goods and services in a socialist society would be valued according to the labor-time socially necessary to produce them. In the Grundrisse and elsewhere Marx makes clear that this measure of value is fundamentally capitalist, predicated on the existence of a market economy. It is the result of the competition of capitals, which over time and through a highly complex series of mediations causes the prices of commodities to tend towards their labor- or exchange-value. The "total value of social labor" is nothing more than the total value of world capital. Moreover, the amount of time taken to produce a good or service has nothing necessarily in common with its usefulness to society. This is easily shown by the fact that under capitalism, billions of labor-hours go into producing such valuable commodities as B-l bombers and World Trade Centers.

In a socialist society, labor-time would still be important, but not as a measure of value. We would still work to increase the productivity of our labor, but not so as to increase the profits of an enterprise. Instead, we would increase productivity so as to eliminate boring and repetitive jobs, to give ourselves more disposable time for learning, scientific research, or just playing around -- and to raise the standard of material life of the entire world population. The only value a good or service would have would be its usefulness to society, which means, ultimately, to individuals. Neither goods nor labor power would be sold at all, but distributed and set in motion according to the collective decisions of the producers.

In short, the point of the socialist revolution is not to give back to the workers the full value of their labor, nor to give them disposal over this value, which is impossible, since exchange-value is precisely the result of the blind anarchy of the market, of the separation of the producers from one another and from their collective product. Rather, the point is that the workers will determine what they produce according to its use-value to them, i.e. to the whole society. Marx long ago showed the foolishness of wanting to maintain exchange value where the market and competition have been abolished. I am surprised to see the SLP, even through vagueness, giving credence to such capitalist Utopias.

L. Michaelson

Berkeley, Calif.


The following response to the above letter, and the earlier one to which it refers, aims to do two things. First, acknowledge validity in the criticisms while showing that no fundamental disagreement seems to exist as to how a socialist society puts full control over the social product in the hands of the producers. Second, take advantage of the exchange to discuss a few points of Marxist economic analysis and their relation to the nature of a socialist system.

The original Weekly People article had included a reference to the wages system in which workers receive only a small portion of the values they create. This exploitation was contrasted with a socialist economy wherein "workers will receive the full social value of their labor."


Reader D. George was prompted to point out that a collectively operated socialist economy would need to set aside a portion of labor's product for common needs. This portion of labor's product would not be received directly by individual producers, but collectively through common consumption in such areas as health care, education, recreation, etc.

In addition, some of labor's product would be used to renew and improve the means of production. Other deductions might go to a common fund to provide for natural disasters, care for those unable to work, etc. All this is part of labor's product which under a socialist system "escapes the producer as a private individual," to borrow Marx's words from The Critique of the Gotha Program, but "directly or indirectly benefits him as a member of society."

These points are necessary additions to, and in a sense qualifications of the idea "workers will receive the full social value of their product" in socialist society. They correctly state things from the collective social view as opposed to the narrow perspective of the individual producer -- a perspective constantly reinforced by the nature of capitalist production.

Use-Value and Exchange-Value

The second letter, however, cuts nuch deeper and moves the argument to a different plane. Reader Michaelsoncalls into question the whole validity of speaking of "total value" in a socialist society.

He points out that value means either use-value or "labor-value," i.e. exchange value. Since use-value refers to the usefulness or utility of an object, it is impossible to speak of workers receiving the "total use-value of their product." Use-values can be neither quantitatively measured nor added up. For example, for shoe workers to "receive the total use-value of their product," they would have to take home and wear out all the shoes they produced. Even then the use-value of each pair could never be "totaled."

But the value of products generally refers to their exchange value and this is what is implied in the phrase "workers will receive the full social value of their labor." What then is exchange value and is this in fact the "total value" workers receive in a socialist system?

Exchange value is determined by the amount of socially necessary labor-time required to produce a commodity under a system of wage labor. The last part of the definition is as important as the first. Exchange value is not merely an abstract economic category nor simply a quantity of labor time. It is a social relation, which means that the production of exchange values implies the existence of certain social conditions, including wage-labor, production for sale in a market, private (or state) ownership of the means of production, the existence of classes, etc. Where these conditions do not exist, and they do not exist under socialism, exchange value does not exist.

One further example might help clarify this point. It would be absolutely wrong to say that the portion of labor's product used to improve the means of production in a socialist system was "capital." Capital, like exchange value, is a social relation. Its economic character stems not from its form, e.g. machinery, raw materials, etc., but from its social function. In bourgeois society, capital is a portion of labor's product used to exploit wage labor, produce commodities and recreate the conditions of capitalist production. In socialist society, which has neither wage-labor nor commodity production, the resources allocated in line with a democratic plan to improve social production do not in any way function as capital.


We see then that in examining categories of political economy, such as value, it is necessary to view them in their full dialectical, materialist and historical sense. The concepts of one system cannot simply be carried over into another. The concept of value in a capitalist society (where exchange value rules) does not remain the same in a socialist one (founded on the production of use-values).

Does this mean it is wrong to say that under socialism "workers will receive the full social value of their labor"? In a strict scientific sense it is wrong. The products of labor will have no exchange value in a socialist economy. They will not be produced for sale or exchange on a market. They will not be commodities. Hence they cannot be defined by capitalist categories like exchange value. The only value a socialist society is concerned with is use-value and as we saw before this cannot be spoken of as a "total" to be "received."

Nevertheless, both writers acknowledged that they weren't interested in "nit-picking," and in the interests of avoiding just that, we can point to a certain validity, or at least a certain usefulness, in the idea that socialism gives workers the "full social value" of their product.

The slogan that "labor produces all value, all value must go to labor" has been part of the socialist propaganda arsenal for over a century. It is expressly designed to contrast the class exploitation of the wages system under capitalism, with the collective disposal of the social product by the cooperative producers under socialism. It is what Engels called a "popular demand" and therefore suffers from the flaws which generally plague all ideas on the road from scientific precision to popularization. As long as this is not lost sight of, the "mischief cannot get out of hand.


But what about the broader question? If exchange value does not govern socialist society, how is labor's product distributed? And what is the role of labor-time if it is no longer a measure of value?

Reader Michaelson suggests a socialist system would keep track of labor-time in order to gauge how best to utilize it in pursuit of the socially determined economic plan, and how to maximize the amount of time each individual would have for other activity. "Neither goods nor labor power would be sold at all," he adds, "but distributed and set in motion according to the collective decisions of the producers."

This picture rightly places emphasis on the conscious management of the economy by the collective producers. Instead of the distribution of goods and labor power being mediated by exchange value in a market, it will be directed by the democratic decisons of the cooperatively organized workers. It will be, as Marx said, a society in which exchange is mediated "by the social conditions of production within which the individual is active." (Grundrisse.) And as Michaelson adds, "Labor-time would still be important, but not as a measure of value."

Nevertheless, this description does tend to overlook one other function of labor-time in a socialist society to which Marx called attention. That is its role, not as a measure of value nor as a yardstick for efficiency, but as a mediator of exchange in a limited sphere within the bounds of the social plan. This refers to the idea of labor checks or labor vouchers and has a close connection to the notion that workers will receive the "full social value" of their product.

Marx described this aspect of socialist distribution in The Gotha Program. He ties it directly to the requirements of a socialist system "just issuing out of capitalist society" when it "retains in every respect, economic, moral and intellectual, the birthmarks of the old society."

Under these conditions, Marx suggests, it may not be possible for a socialist economy to spring up immediately with a fully developed social character in all aspects of exchange. In other words, it may not be possible to move directly from capitalist production to the advanced communist or socialist society guided by the famous dictum "from everyone according to his faculties, to everyone according to his needs."


Instead Marx projects a period in which a system of labor checks or vouchers would mediate exchange (again always keeping in mind that this takes place within the confines of a social plan, and that it never applies to the exchange of labor power or means of production). Marx describes this system as follows:

"Accordingly, the individual producer gets back -- after the deductions -- exactly as much as he gives to it. What he has given to it is his individual share of labor. For instance, the social labor day consists of the sum of the individual labor hours; the individual labor-time of the single producer is the fraction of the social labor day supplied by him, his share of it. He receives from the community a check showing that he has done so much labor (after deducting his labor due to the common fund), and with this check he draws from the common store as much of the means of consumption as costs an equal amount of labor. The same quantity of labor that he has given to society in one form, he receives back in another form."

As long as such a system prevails, labor-time would be functioning as a limited mediator of exchange in the sphere of the means of consumption. In this it has at least a distant similarity with "exchange value" under capitalism, a similarity Marx acknowledges. "Evidently," he writes, "there prevails here the same principle that today regulates the exchange of commodities in so far as it is an exchange of equivalents." Again a few lines later, " far as the distribution of [means of consumption] is concerned, the same principle prevails as in the exchange of commodity-equivalents; an equal quantity of labor in one form is exchanged for an equal quantity of labor in another form."

Marx immediately points out that both the "substance and form" of this "principle" have changed under socialist society and in any case it no longer dominates social relations. It is clearly a remnant of bourgeois society with its exchange value and corresponding consciousness. But it is just this kind of remnant one has in mind when speaking of workers "receiving the full social value of their labor."

To be sure, even this remnant disappears as socialist society develops. As Marx observed, "The less social power the medium of exchange possesses ... the greater must be the power of the community which binds the individuals together." (Grundrisse.) In socialist society the power of the community over all economic relations grows enormously and from the very outset. The "social power" of any medium of exchange, including labor vouchers, is quite effectively subordinated to the conscious determination of society's collective needs. From the very start of socialist society, the power of the "medium of exchange" is an entire historical era removed from the kind of power money has in a bourgeois society. When the power of the community is fully developed in all its social aspects, perhaps all need for a medium of exchange fades away. But this, like all social changes, must be viewed as a process, whose course cannot be fully predicted in advance.


As for the charge of "giving credence to Utopias," this seems a bit misplaced. The basis for Marx's sharp attacks on the "labor-money" theorists in the Grundrisse a century ago was their contention that such a system could be introduced without a social revolution to overthrow capitalist production. They proposed a "trick of circulation" without "touching the existing relations of production and the social relations which rest on them." Such a scheme was indeed Utopian.

The SLP might be giving credence to capitalist Utopias if it suggested that exchange on the basis of labor vouchers, in itself, constituted socialism or was in any way the essence of a socialist economy. Instead the SLP has always held:

1. That socialist production means production for use based on the common ownership of the means of production.

2. That such an economy presupposes democratic planning by the producers as the basis for society's allocation and distribution of resources.

3. That the use of labor vouchers, or any other method of mediating the part of distribution still taking place on an individual as opposed to a social scale, corresponds to the initial stages of socialist society. It will be surpassed in direct proportion to the development of the social character of productive forces and the social consciousness of the producers themselves.

4. That all these revolutionary changes can only come about through a successful socialist revolution by the organized working class.

- S. K.