|Liberman, E. G. (1971). Economic methods and the effectiveness of production A. Schultz & L. J. Kirsch, Trans. White Plains (N. Y.): International Arts and Sciences Press, inc.
|Last edited by: Dominique Meeùs 2012-02-21 14:39:50
| What, then, is the difference between “market socialism” and capitalist private enterprise ? As far as can be judged from certain “models of market socialism,” the difference lies in the fact fact that enterprises belong not to private owners but to society through self-governing collectives of enterprises as independently operating subjects. Naturally, there are many variations of this “model,” but they are all basically the same : it is something in the nature of corporative or guild socialism, a reminiscence of anarchistic and syndicalistic ideas that were condemned in fierce debates when Lenin was still alive.
Essentially, it is the latent or manifest assumption of the theory of “market socialism” that intrabranch competition and orientation toward the market automatically lead society to progress in production without the aid of centralized decisions.
Western commentators tend to confuse such concepts as “attention to the consumer” and “orientation toward the market.” Outwardly they appear to be similar, but in actual fact there are enormous differences between them. Attention to the consumer is a task which entirely corresponds to the economic interests of people under socialism. It is not by chance that today, at a time when a powerful production apparatus has been created, more attention is focused on the production of consumer goods. In 1968, 1969, and 1970, the growth rates of consumer goods production began surpassing the rate of production of the means of production. At the same time, the share of output of Department I remains dominant in the structure of the gross social product.
But we have a completely different attitude toward the principle of “orientation toward the market,” which is written on the banner of champions of “market socialism.” This is not so much a question of the satisfaction of and the continuous increase in the population’s needs as of somehow “facilitating” the conscious management of social production. To this end, it is proposed that reliance be placed on spontaneous market relations and collisions and that success be judged according to the degree of profitability of production and the volume of sales of any goods and services, which means following habitual, frequently perverted tastes inculcated by the petty bourgeois way of life.
Such “orientation” requires nothing more than the study of current demand or, more accurately, obsequiousness to the more profitable directions of such demand. Centralized plans (except for discussion of “indicative” programs) are unnecessary and are therefore rejected. Nor is there any need for an apparatus to actively influence the volume and structure of consumption by means of scientific forecasting, industrial research, and introduction of the sale of totally new goods and services promoting the ever more complete and all-around development of man’s capacities.
Orientation toward the market is a manifestation of the fear of failing to cope with the truly serious problem of planning production on a bilateral basis : to take resources into account, to make optimal use of them, and to master the achievements of the revolution in science and technology on the one hand, and to consider consumer demand and satisfy it maximally on the other.
Socialism is a society of creators. In a twofold process, the forces of nature are mastered to an ever-increasing extent, and the human mind is more and more restructured, man’s alienation from society is eliminated, and his capacities are developed in every way.
Orientation toward the market is the “socialism” of skeptics, of those who lack a deep belief in the creative strength of the working people. […] And this is precisely the orientation that is persistently propagandized by people attempting to undermine socialism from within.
| As we know, the economic reform was elaborated in a rather extensive, specific form. First, there was a substantial reduction in the range of obligatory plan indices communicated to enterprises on a centralized basis, a number of indices were replaced, and the new profitability index was introduced.
Plan targets for the volume of output to be sold are being established for enterprises instead of the gross output index. This substitution is very substantial : it places production under the economic control of purchasers and creates prerequisites for the establishment of organic unity between planning and cost-accounting. The basic product-mix [nomenklatura] is also confirmed from above.
In addition to other indices, profit and profitability calculated as the ratio of profit to fixed productive capital and to normed working capital have been established as indices for evaluating the effectiveness of the work of enterprises. Thus, yardsticks of effectiveness which, although they have existed in our country for a long time, have not played a large part in planning, to say nothing of the evaluation of the work of enterprises, have been brought into economic circulation.
In our opinion, the plan should confront production with ultimate goals but should not directly regulate the means of their attainment within the enterprise, which would deprive the enterprise of the necessary maneuverability in finding optimal solutions for the fulfillment of plan targets.
Although they retain their importance as accounting indices within the branch, such indices as the number of personnel, the average wage, labor productivity, and enterprise cost of production are not included in the number of obligatory indices that are confirmed for each enterprise.
Even now, certain economists cannot see how such a very important index as labor productivity can be left outside the realm of obligatory centralized planning. But the reform in no way denies the fact that labor productivity is a most important index to the effectiveness of production. The task consists in monitoring the correspondence between the growth of wages (including bonuses from profits) and increases in labor productivity.
| The system of economic incentives makes provision for the formation of a special source of incentive payments above and beyond centrally established wage rates. The profit created at an enterprise is this source. It has been recognized that the amount of deductions paid from profits into the incentive fund depends on the fulfillment of the plan for increased sales or profits and on the profitability level contemplated in the annual plan (provided that the prescribed mix of key products stipulated in the plan is observed). In those instances when an increase in sales volume is not advisable, the size of the material incentive fund is determined as a function of increased profit.
Three economic incentive funds are formed on this basis : the production development fund, the material incentive fund, and the fund for sociocultural measures and housing construction.
The production development fund serves as a supplement to centralized sources of capital investment. It is formed through deductions from profits as well as through the use of a certain amount of the amortization deductions earmarked for the total renovation of fixed capital.
The material incentive fund is created solely from profit. The size of the deductions from profits paid into the material incentive fund is determined according to norms depending on the increase in the sales volume (or the amount of profit) and the profitability level stipulated in the annual plan. Norms are established as percentages of the wage fund: for every percentage point of increase in sales volume in comparable prices (or amount of profit) stipulated in the plan for a given year as compared with the previous year ; for each percentage point of profitability stipulated in the annual plan.
Norms are envisaged as stable for a number of years and are differentiated by branch (and, where necessary, by groups of enterprises within a branch). Limits on deductions paid into the material incentive fund are not established.
Payments of an established amount are made to the material incentive fund when the enterprise fulfills the profit and sales plan for the product-mix stipulated in the plan. When an enterprise overfulfills the profit and sales plan, additional payments are made to the material incentive fund. When an enterprise fails to fulfill the profit and sales plan for the established product-mix, payments are made to the material incentive fund at a lower rate. The product-mix is assigned to enterprises by higher-echelon organs in the process of confirming the indices of the yearly plan, and, if it is not fulfilled, payments to the material incentive fund are reduced. Other restrictions on deductions to the material incentive fund are not established.
The formation of the incentive fund is connected with the quality of planning at the enterprise. In order to eliminate, or at least diminish, the striving to conceal reserves in the elaboration of plans at enterprises so as to make these plans easier to fulfill, resources are paid in full into the incentive fund only if the production growth plan is fulfilled. But in the event the plan is overfulfilled, the rates are reduced by approximately 30 % for that part of the increase in output which represents overfulfillment. The idea is to make the deliberate lowering of plans disadvantageous, since the enterprise will thereby lose one-third of the incentive it would otherwise receive for the increase in sales which is overfulfillment.
On the other hand, the plan should not be unduly high. Therefore, if the plan is not fulfilled, the incentive payment is also reduced by the same amount compared with the established normative rates. The procedure for reducing rates of payment for the overfulfilled and unfulfilled part of the plan concerns not only the increase in sales (or profits) but also incentives for the profitability level, and such incentive is established without discounts for the level of profitability actually attained on the basis of normative rates solely within the framework of the plan.
The same methods have also been adopted for the formation of the third incentive fund, which is earmarked for sociocultural measures and housing construction.
Of basic importance is the fact that enterprises are not regulated by strictly centralized instructions in the matter of distributing the incentive fund among production participants. Enterprises may elaborate one or another provision on the procedure for awarding incentives on the basis of standard recommended methods in accordance with the specifics of their production. The only point that has been established is that bonuses to workers under presently existing statutes will be awarded from the wage funds in the future as well. But in addition to this, workers may also be paid bonuses from the material incentive fund formed from profit. Furthermore, these bonuses may be paid under special provisions, for example, for improving the quality of production, for economizing on materials, for mastering new products or processes, as well as on a one-time basis for individual attainments on the job.
The awarding of bonuses to managerial, engineering, and technical personnel and employees is also regulated by special provisions. In addition, certain sums in the incentive fund are reserved for one-time assistance. An important feature is that part of the material incentive fund is earmarked for rewards to personnel based on their performance for the year, depending on their length of service at a given enterprise.