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co,
P. NIl< TIN
FUNDAMENTALS
OF POLITICAL
ECONOMY
MrUI AR co ~ I S E
P OGRE ) 1.1
MOsrow
Trallslated from the Russian
by VIOLET DUn and VIC SCIiNrIERSON
Edited by MURAD SAl Fur IN
The original of the present revised text was
awarded a prize in a contest for a popular telCtbook
of p:>liticai economy held in 1959 by the publishin9
Hcuse of Socio'Economic Literature Dnd the Institute
of Economics, Academy of Sciences of the U,S.S,R.


First printing 1963
Second reviS! deditio/! 1966
UNIVJ::RSrry 01 BRArF ... RD
IBRARV
- 2 SE "1111
.
'-lOll No.
..... No.
\:22. SeD
N
n. IIII KltTlIll
OCHOBbl nO.'lIIT1I I IECKOfl 3KOlIOMIII{
/Ill W "':OM R3bl
p
THE SUBJECT MATTER OF POJ.lTICAl ECONOMY
CllUplcr t. PRE-CAPITALIST MODES OF PRODUCTION
,
1. Primitive-Communal Mod!.' of Produl lion
2. The Slave Mode of Production
3. The Feudal Mode of Production .
4. The Disintegration and Colla, c.
Birth of Capitalist Rdatio :; Wi n the Feudal Sy
THL CAPITALIST MODI OF PRODUrnON
A. 'poly Capitaiisif

.
26
"
Chaptt' JJ COMMODITY prODm
AND MONEY
(OMM( DITl
leral DcS\:rip i(...1 .,f Cc )(lit)' P:o.JUtu_
1_'" COlT'm( di lC Labou W lich Crca! s C, . ti
":t Dcvc' JP 1C' f EXI lar 1e ":1 the rms f V u 4
I. Me ley. 48
0;,' W Jf Valle' .co ..... it- Law (;. CO _J ..... P-
dlction 54
It CAP' .11,.1 .-\ND 'URPI u:i VALV. WAC:>
AP TAllSM 60
1. prillitil' AI umul :i( 11 f Cal t 60
Co v 1 C I:' 0 CJ.p tal fJ
3. j P:iu i( 1 of Surp: us Jalue E:q-I . li i( 1 56
4_ ell It Compo ent. , -
_ Two 0 n( e 9 h DCJtee 0 tiln f .be
Worki! 9 Clal.s .
6. Wage Un :ler Capit lis., 81
cl pll tV, ACCUMU1,ATION 01 CAPITAL AND DJ TERreRA
ON N ..IE PO ITION OF TUr S!l
A, m '( )It 1 nd llc Al ::1y of Urem::,l,y';!
2. T G eral . w of Cay tJ.list A, u.=, 1

89
99
Clrapler Y. TH t
PROFIT AND ITS
OF EXPLOITERS
CONVERSION or SURPLUS VALUE INTO
DISTRIBUTION AMONG VARIOUS GROlTP)

1. Special Forms of Capital . .

2. Average Profit and the Price of Production
106
Ilkj
"'"
3. Commerci .r1 Profit 115
4. Loa.n Capital. Joint-Stock Companies. ..
5. Ground-Rent and Agrarian Relations Under Capit ... lism
CJUJpter Yr. REPRODUCTION OF SOCIAL CAPITAL AND ECO
NOMIC CRISES
1. Reproduction o[ Social Carital
2. The National Incomc . . . .
3. Economic Criscs . . . . .
B. Monopoly Capitalism Imperblism . . . ,
Clltlpt.:!r V/I. THE BASIC ECONOMIC FEATURES OF IMPERI-
117
122
1.11
131
138
142
1-13
ALISM . . . . . . . . . . . . . . . 151
1. Concenlration of Production llnd Monopolies . . . . 151
2, Finance Capital and the Financial Oligarchy .... 157
3. Export of capital. Economic and Territorial Division of
the World . . . . . . . . . . . . . 161
4. Monopoly Profits-the Motive Force of Monopoly Capitalism 168
Chapter VIII. THE PLACE OF IMPERIALISM IN HISTORY. THE
GENERAL CRISIS OF WORLD CAPITALISM 171
1. The Place of Imperialism in History 171
2. The General Crisis of World Capitalism 181
THE COMMUNIST MODE OF PRODUCTION
A. Socialism-the First Phase of Communist Socicty 201
ClIap/er IX. THE RISE AND ESTABLISHMENT OF SOCIALISM 201
1. Marxism-Leninism on the Transition Period from Capi-
talism to Socialism . . . . . . . . 201
2. The Economy of the Transition Period . . . . 209
3. Economic Policy in the Transition Period. The Leninist
Plan for Building Socialism . 214
4. Thc Victory of Socialism 224
CIUlpter x. PRODUCTIVE FORCES
nONS IN SOCIALIST SOCIETY
AND PRODUCTION RELA

1. The Productive Forces . .
2. Relations of Production . .
3. The Basic Economic Law of Socialism
4. The Economic Role of the Socialist State .
Cllapler XI. THE PLANNED DEVELOPMENT OF THE NATIONAL
ECONOMY UNDER SOCIALISM .
1. The Law of the Planned, Proportional
the National Economy . . . .
4
Development of
. . . . . . .
228
228
235
241
245
248
,.8
2. Socialist Planning 255
3. Advantages of Planned EcoTlon:, . . 260
C/loplcr Xlt. SOCIAL LABOUR AND PRODUCTIVITY UNDER
SOCIALISM . .

1. Social Labour Under Socialism . .
2. Steadily Rising Labour Produ,tivity Is 31 E n(mi Law
of Socialism .

Chopler Xff1. COMMODITY PRODUCTION. Me NEY AND TRADE
UNDER SOCIALISM .

1. Commodity Produ<.:tion Under Socialism
2. Money and Its Fun,tions in Socialist SCKie':Y
3. The Law of Value in Socialist Ec onomy
4. Trade Under Socialism . . . . .
C/rapter XIV. DISTRIBUTION ACCORDING TO WORK AND
FORMS OF PAYMENT FOR WORK UNDER SOCIALISM
1. The Economic Law of A, " Work
2. Wages Under Socialism . . . .
3. Payment for Work on Collective F;,rms .
C/rapler XV. COST ACCOUNTING AND PROFlTABIL'"!'Y_ PRO
DUCTION COSTS AND PRICE .
1. Cost Accounting and Profitability ,
2. Assets of Enterprises Under Cost Accounting
3. Production Costs and Prices of Manullctl\red 01"'- Jt
4. Cost Accounting on Collective Farms
Chapler XVI. SOOAUST REPRODUCTION. NATIONAL INCOME
AND THE FINANCE AND CREDIT SY';:-EM
1. Socialist Reproductio"
2. The National Income Its U_-r1_ $.;_, : ism
3. Finance and Credit Sr.:e::: U :k SociabJl'
Clwpter XVII. THE WORLD SOCIAIlST SYSTEM
1. The Rise and Developmcllt of the W-t':ld SodalL:
2. Co-operation and Mutual as the Basis of
Economic Relations Among tl:e Countries c: t1'e Wor,d So
cialist System . . . . .
3. Forms of Economic Co-operation
4. Peaceful Coexistence and Economic Betwee!1
the Two World Systems . . . . .
B. The Gradual Development of Soci.tlism into Communism
C/rapler XVlll. THE HIGHER PHASE OF COMMUNIST SOCIETY
AND THE LAWS OF THE DEVELOPMENT OF SOQALISM INTO
COMMUNISM . . .. . . . . .
l. Economic Features CommNl to and communism
and Their Points of Difference
2, Objective Laws the DC\'.ii:"pmcnt Jf s.xialism
into Communism . . . .
,
l63
263
269
2; ;
.: ' ,
282
;.::.H
301
301
"'"
311

.::lb
:-; 18
'>,
'-
309
336
34'
3"
341
353
353
354
351
Chapter XIX. THE CREATION OF Till! MATF.UIAI. AND TI.CII
NICAL BASIS Of' COMMUNISM 3fH
I. Ways of Creating the Material nnd .. 1 Bn i of
Communilim . . . . . . . . ... 3ln
2. Development of M:tin PrOf.hu UV4: Pone of So, !C'ly
Man . . . . . . . . . . . 372
CluJpler XX. SOCIALIST INTO COMMUNIST REl.ATlONS IN
PRODUCTION . . . . . . . . . . . . 374
1. From Socialist to Communist Ownl'uhip . . .. .. 374
2. The Elimination of Sodo-Economic iJllltinL tion, . . . . 378
3. Tran.formation of Labour into Man'. Prime Nc(:C'uity of
Li fe . . . . . . . . . . . . . . . .
4. The Transition to the Communist Principle of Distribution
5. The Political Organisation of Society. State Strudurc and
Adminislration in the Period of TranlHion from Socil2lism
to Communism .
Index . . . . . . . . . . . . . .
382
31<.
3R9
391
,
" 2
'filE SUBJECf MATfER
OF POLITICAL ECONOMY
Knowledge of the world is the object of many
Some sdent:c,> study the phenomena of nature, other
fltudy society. The sdcnces that apply themselves to
are known as the natural sciences. The leneet that
the various aspects of social dev lopment are known
social sciences. Political economy . one of
sciencel.
Marxist Lcnini t political economy II a co",
the integral science of Marxi m m.. :aL
Marxism-Leninism is the SClertee whiCh deal w_
laws of social development. the revolntiO" ad
dictatorship of the proletariat. the of
communist society It i a 9
consilting of three
economy. and the tM01Y 01
economy
bccaute t
ProducUoD
of material ", .. Ub-
Ole bull
ot .001" W.
illltance h
piece \' G
proved that there are no supernatural forces. There was
also the view. which bourgeois scholars share to this day,
that the development of society depends to a decisive extent
on geographical environment, that is, on definite natural
conditions (climate, soil. minerals. etc.). It stands to reason
that geographical environment is one of the essential
conditions of social development, but it is not decisive. In
the span of three thousand years there have been three
successive social systems in Western Europe and even four
in Central and Eastern Europe; yet during that period the
geographical conditions in Europe have either not changed
at all, or so little that geographers take no account of them.
Some people consider that the course of history depends
only on the will of outstanding personalitiei-statesmen,
generals and so on. In actual fact. however, these
ities do accelerate 01' retard the onset of events, but they arc
unable to alter the course of history.
What. then, determines the development of society? Marx
was the first to provide an answer to this question.
In order to live, people must have food and clothing,
housing and other material means of life, and to have these,
people must produce them, they must work. Any society
will collapse if it ceases to produce
fore, the production of material wealth IS the baSIS of the
life and development of any society.
What is meant by the production of material wealth? The
process of producing material wealth includes human labour,
the means of labour and the objects of labour. , .
Labour is a purposive activity of the human bemg directed
towards the production of material wealth. In the.
of labour, man acts upon nature in, order to adapt It to hiS
needs. Labour is the e,!clusive of man, an .eternal
natural necessitY, a plimary for human hfe. As
Engels put it. l<lQour created man , ' h h
The process ot"'Production is mconcelvable Wit out t e
means 01 labour. This is the term used to denote ?ll the
things with the aid of which people act upon thbe obJ,ect1s
f t
h The means of 1a our IOC u e
labour and trans arm em. drs buildings
machinery and tools canals,
uscd for purpotscs'Thc la:d is also a univcrsal
F( wer transmISSion IOCS, e c.
6
means of labour. The instruments of production play a
decisive role among the means of labour. Man's power to
mfluence nature depends upon the instruments he uses, The
man of primitive society used stones and sticks as his
of production, and was therefore largely
helpless 10 the face of nature. The modern man works with
the help of powerful machines. and his powers over nature
have increased immeasurably. Marx points out that economic
epochs are distinguished one from another not by what is
produced but by the instruments that are used tl] rr Ju e
material wealth.
With their instruments of production people act upon the
objects 01 labour. i,e., everything upon which man's labour
is used. And since this labour is used upon nature which
all round him, nature itself (the land and the bowe's of the
earth) is a universal object of labour. Ar the mmary
objects of labour are available in nature. Man has tl. adapt
them to his requirements,
The means of labour and the object:; of labour tC'gethef
form the means of production, But obviously the means
of production themselves cannot produce material wealth
The finest technical equipment is lifeless without peoplt
to use it. The decisive factol in all produc":ion th rcfore
is man himself. his labour powel
Regardless of its level of develc'"
Productive forces ment. production always bas two s
and the relations h d f I I
of production peets: t e pro uc lYe \)fCes an 1
relations of -..roduction. The pndu( lIVe
forces include the means oT-proauctlon created by society
first and foremost the instruments of labour, and llso 'Ie
people who produce material wealth. It IS be 'ause
of their knowledge. experience and labour skill. w"o set
in motion the instruments of production, who improve them,
invent machines. and add to their knowledge. In tJ . w v
development of the productive forces is ensured. and an evel
increasing volume of material wealth obtained. .
But people produce material wealth not by
separately, but by working together in groups, SOCially.
Take, for example, a modem shoe How
people do we find working there. makinG only
commodity-footwear? Lfundrcds. even thousands 01' stdl
morc people work [01 the factory to provide it w th
9
machines, leather. thread. needles. ctc. The smnll
farm, too, does not produce, say, grain in isolation from
the outside world. The farmer needs a plough. which is man
ufactured by an artisan or at a factory; he also needs snIt,
matches, soap, etc., which -arc also manufactured by other
people. Consequently. in the process of producing material
wealth people arc linked together, depend upon onc another /
and enter into definite relations with one another.
The relations between people in the process of the
production. distribution and exchange of material wealth
Marx called production, 01' economic, relations. Production
relations may take the form of either coopcration and
mutual assistance among people freed from exploitation, or
exploitation of man by man. This depends on who owns the
means of production-the land and its mineral wealth, the
forests the factories and workshops, the instruments of
, .
labour, and so on. When the means of productton are
privately owned, belonging not to the whole of society. but
to separate individuals, social groups or classes, the
established are the exploitation of man by man, dommal:lon
and subordination. It is because the workers under
capitalism are deprived of the means of production. t.hat
they are obliged to work for the Under soclahsm
the means of production are SOCIally owned.
there is no exploitation of man by man, and the
among people are those of comradely cooperatlon an
socialist assistance. f d "
The relation of people to the means o. pro uc Ion
determines the place .FeoEle occuPy in tthde
--methods by wnich the products of labour are .. lstn u
h
h
For instance, under capitalism the w lC

live in poverty. Under socialism, where the means p)o con-
tion belong to the the
sumer goods are dlstrtbute in the material and
people have expended,. a!1
d
". 5 for all the working
cultural standard of 1S
t
b the production (or econ'
people. This is what IS mean Y
omic) relations among people.
10
,
I
Five basic types of produdion relations are known to
human history: those of primitive society, slavery, feudalism.
capitalism, and socialism, which is the first pha<'"e of
communism, The underlYing feature of each of these s a
definite form of ownership of the instruments and means
of production. Thus, the basis of the produdion relal ons
under slavery, feud"li<;m and capitalism is private
;hip of the means of production. This ownership has caused
and continues to cause a division of society into hostile
classes-the exploiters and the exploited. Therefore violent
class struggle is the basic feature of slavery, feudalism and
capitalism. It is only under socialism, where c Jmmon,
socialist ownership of the means of production .I':llms the
basis of the production relations and wheT"" here s no c "55
that society consists of friendly classes the workers
and peasants, and the intelligentSia :11 :I; so. al tratum.
The productive forces and productic-:t relal ons tl.. ether
form the mode of production.
Mo e of p tio"
-

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Producli .. e fore(' R, n
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I I I
,
I
.
, F rn s
F""
w :h
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Although the mode of pr,::,duction do( s :onsitute the
unity of the productive forces and the 01 t:II
tion, the latler arc two asrects of It. The'" wo IdC"s
interad and influence clch other. Both the Nor UC ve force
and the rcl.:-Ition' of ,,)TO uc on kvclop in thl' roce S)! Ie
impl'ovcnll"'lt of produclion.
,
The productive forces are the most mobile element in the
mode of production; they are continually changing, since
people are constantly improving the instruments of labour
and accumulating production experience, As for the relations
of production, these change according to the level of
development of the productive forces and in their turn
influence this development.
When the relations of production correspond to the level
of development of the productive forces, the latter develop
uninterruptedly. The socialist countries provide an example
of the relations of production corresponding to the level of
the productive forces, There, production develops rapidly,
without crises and unemployment, because it is based on
social ownership of the means of production.
When the relations of production do not correspond to
the level of development of the productive forces, they act
as a brake on production. The capitalist countries provide
an example of production relations not corresponding to the
level of development of the productive forces. In capitalist
countries production develops comparatively slowly, and
during economic crises is even driven backwards, with
many millions of working people becoming redundant and
swelling the Ianks of the unemployed. This happens because,
in bourgeois society, private capitalist ownership of the
means of production predominates, and this hinders the
further growth of the productive forces.
A definite level of the productive forces requires the
corresponding relations of production. This is the economic
law, discovered by Marx, that the production relations
correspond to the character of the productive forces. This
law reveals the economic basis of social revolution. When
the relations of production lag behind the development of
the productive forces, become outdated and hamper their
development, they are inevitably replaced by new o.nes. In
a society divided into hostile classes the old relatIons .of
production are superseded by new ones through sOClal
revolution. .
The classes whose interests are served by the old relatIons
of production never yield their positions of their free
wilL Take the U.S. capitalists. Will they ever freely. give up
their factories, mines, railways, etc.? No, th:y WIll never
give them up of their own free wilL because private property
/2
them to exploit the working people and lo live in
lux.uty. In order to replace outworn relations of pror.iuctivn
w?lch become a on the development of
forces, a social force is needed that can abolish
by.man. The working class is such"
force m Together with its ally, the
It IS vitally mterested in putting an end to
explOItation,
It is. o,:,ly in a socialist society, where there arc no
antagolllsbc classes, that relations of production develop not
social revolution, but through their planned
alteration to accord with the development of the productive
forces.
mode of production should be distinguished from the
of society. The basis is the sum-total of the production
relattons prevailing in a given society, which relations
correspond to the existing level of the producti .. 'e forces.
The basis of society is either antagonistic or non-antagonistic.
The feudal and capitalist societies are fundamentally
by nature for they are based on private owner-
shlp of the means of production, relations of domination
and subordination, exploitation of man by man. Socialist
society is non-antagonistic for it is based on the social
ownership of the means of production in the absence of
exploitation.
The basis engenders a corresponding superstructure and
determines its development. The term superstructure means
the political, philosophical. jUridicaL artistic, religious and
other views of society and the institutions which correspond
to them. In a class society the superstructure bears a class
character. In conformity with its own ideas the ruling class
creates institutions to defend its class interests.
Both the basis and its superstructure exist only for a
definite period of time. When the basis changes, its super-
structure also changes. Thus, the change in the feudal basis,
and its replacement by the capitalist. led to the feudal
superstructure becoming superseded by the capitalist. The
rise of the socialist basis brought about the socialist
superstructure and the destruction of the capitalist one.
Although the superstructure as a whole is engendered by
the basis, separate elements of a new superstructure can
arise within the o1d society, since it is in the old society
13
that the ideas and vi('ws of the advnn('cd cla'> .. make their
appearance. For instance. U1H.ier (:i.lpitil]ism lhel'!.' nri$('s
proletarian ideology, which corresponds to the new revolu
bonary class-the proletariat.
The superstructure is generated by thc basis, but once it
is born it does not remain passive in relation to the basis
and influences it retroactively. helping it to take dccpcr
root and assume its final shape. Thc superstructure can
perform either a reactionary or a progressive role. The
superstructure of the capitalist basis, for example, is at
present playing a distinctly reactionary role. because in our
time capitalism has become a brake on the further develop-
ment of the productive forces. The superstructure of the
socialist basis, on the other hand, is playing a progressive
role. because under socialism political power promotes the
development of the productive forces of society and thereby
helps to resolve the problems facing a country as it builds
the new society.
The mode of production of material wealth, being a unity
of the productive forces and the relations of production,
together with the conesponding superstructure forms the
socio-economic lormation.
Five socio-economic fonnations are known to history:
primitive-communal, slave, feudal, capitalist and commu1list,
socialism being the first phase of communism. Each of these
fonnations has its own appropriate economy, views, ideas,
institutions. The development of the socio-economic fomla-
tions ascends from the lower to the higher one. Thus.
feudalism gave way to capitalism and the latter to socialism,
the lower phase of communism. The rise, development and
downfall of socio-economic formations are subject to the
laws of social development.
Economic laws
of social
development
Marxism-Leninism teaches that nature
and society should not be regarded as
an accidental agglomeration of iso-
lated, disconnected phenomena .. The
reverse is true. All natural and social phenomena are lIlter-
connected and determine one another. This deeply
connection finds expression in laws of natural and SOCIal de-
velopment. The task of a science is to discover these laws.
Economic laws form the basis of the .of
society. These laws detcnninc the great vancty of SOClO-
14
(. )MmIC I'clal ions among people, i.e. relations in the
of til"n. distr bution, exchange and lonsump-
L lll. J he cil!.coYc;'ry of the ec")nomic awl. social develop-
ment is o c.U'dinal mpor ance for roliti, al economy 1 a
sCience
The laws (1 n..:tUTC olnd society have one c..:'mmon fell:.lrC-
arc. objective, that is, they originate and opcntc
of whether 0:- not we are aware of them or Wish
them to operate. This means that people can neither change.
transform, nor abrogate these Jaws. Nether can they
new laws. People can only discover law 1''1e fal t
that these laws arc obJe 'live does not melO that opJe are
powerless in the face of pm Th-<>y cm get ) k lOW them.
and apply them in the 1I1tere;r5 01 society. Thu!>. the
proletariat of the socialist countrIes, haVing aware
of the law that the relations of production 'olrespond to
the character of the productive forces. in alliance with the
peasantry and led by the Communist and WOI "el" Parhei,
overthrew the powel of the exploiters and et lb:mt building
a new society.
Economic laws have features whi' are I" .... specific )
laws of nature. The first feature is that ley are of
comparatively short dU:"lt"on and )pera/e d {J definit.
bistorical period. Definite economic conclitic" that IS 0
say, the production relations on whi2: _ eyre t5, f .... n
the basis of the operation of economll. __ \\'s. In the transition
from one formation to another. the old re, tions of prodU(
tion are abolished and new ones take lh 'r place. Tlis I
what causes the of 0 e set l. .. lIlomu.; 1 W5
and the appearance of other laws.
The fact that private ownership ,,1 the mcans of produc
tion is the basis at production relahons lOd, c j'itali5m
enables capitalists to exploit the workin:- C
1
_55 :lnd to
subordinate t11e de, elol'JlIcnt of produ( tlon to tb Ir Qoal of
enrichment and to their itch for profil F r th.i rea. on
productioll of surplu!> value is an objel..-tiIJe ec. )lIonw law ot
cap i t (/li sm.
Furthermore. private ownership of the means of produc'
tion prompts each capitalist to develo] just those br;lnches
of production th3t ue more profitabli to hi m. Thb rules
out the possibility 01 planned economic development under
capital"sm, Capitalist economy develops on lC basis of
,
competition and anarchy
c;ompelilioll and anarchy 01
objective law of capitalism.
of Consequently.
prodlldlOtI ,,/.o;() constitute a"
After. pri.vate owncrshiy of the mean .. of
production IS abolished, the economl!.: laws of capitalism
to operate .. As a re5u1t of the abolition of capitalist
pflvate ownership of the means of production in the
socialist countries. new economic laws havc comc into being
there, while the old laws ceased to operate.
of production are based on public
socialist ownership of the means of production. Under
socialism, it is the working people themselves who are
the owners of the means of production. They work for
!heir own benefit. for the bencfit of their society. This
IS why the development of production in the socialist
is by the purpose of increasingly
the mateflal and cultural requirements of society.
Increasmgly full satisfaction 01 the material and cultural
requirements of society is Oll objective economic law of
socialism.
. Public socialist ownership of the means of production
mtegrates the entire socialist economy into one organism.
Such an economy can develop only according to plan.
Balanced planned development 01 the national economy is
an objective law of socialism.
Many economic laws operate in each socio-economic
formation. Laws which are typical of only one formation
are known as specific laws. Among these we may distinguish
the basic economic law that determines the chief aim which
society seeks to attain and the ways and means of
. it.
Besides these specific economic laws, there are others
which apply to all socio-economic formations. Among these
is the law that production relatiolls correspond to the
character of the productive forces. It expresses the necessary
connections and interdependence between the two aspects
of social production-the productive forces and production
relations.
The second leature of economic laws concerns the
character of their application in the interest of society. It
implies that. unlike the laws of natural science where a neW
law is discovered and applied more or less smoothly.
16
('COllom;c laws are discovered and applied ill the teeth of
the resistance 011 the part of the obsolescent forces.
The application of economic laws in class society has a class
character.
These arc specific features of economic laws which make
them diHerent from the laws of nature.
In all modes of production economic laws may operate
spontaneously or be applied consciously, as a "recognised
necessity" .
In the antagonistic socio-economic formation.. where
private ownership of the means of production is the rule,
economic laws operate blindly, regardless of whether they
arc recognised or not. for instance, under capitalism the
process of production is of a social character, all its branches
are connected and interdependent. But this social character
of production is based on private property, which means that
every capitalist in his enterprise pursues his own selfish
aim of enrichment and seeks to extract the greatest profit.
The necessary connections and proportions between various
branches of production are established in a spontaneous
manner-through endless and continual deviations. One
day muny goods are produced. and the next, only a few,
etc. And so, for every capitalist. economic laws operate as
a force standing above him, as a force which cannot be c?n-
trolled. True, some capitalists may reach an understanding
of the economic laws of capitalism, but they are unable to
alter the spontaneous character of their operation.
Under socialism economic laws are understood and
conSciously applied for the benefit of society, thanks. to
the existence of social ownership of the of
It takes conscious, organised and by .
working people to make the most of the econom.lc
laws that operate under socialism. A very. big
knOWing and utilising the objective economiC laws I!, t.e
interests of communist construction in socialist countnes IS
played by the Communist and Workers' Pa.rties.. h' h
political economy IS a sCIence w lC
The subject maUer deals with the ?a5.is of social develo!i
of political eeonomy menlo This baSIS IS the
material wealth, the mode 0 P tb
tion. But political economy studies
standpoint of the relations between peop e unng
t7
of production. It investigates the basis of society_ Political
economy, wrote Lcnin. is not at all concerncd with produc-
tion. but "with the social rclations between people in pro-
duction, the social system of production".l At the same time
political economy cannot fail to take into account the con-
nection between the productive forces and production rela-
tions. Nor can it completely ignore the superstructure, since
this rises out of the basis and strongly influences it.
The subject mattcr of political economy is thcrefore the
production (economic) relations 01 people. This includes the
fOllilS of ownership of the means of production, the place
different classes and social groups OCCtlpy in production and
the l'elations between them. the forms of distribution of
material wealth.
In other words, political economy is tIle science 01 the
development 01 the socio-productive, i.e., economic, relations
among people. It explains Llle laws Wltic11 regulate the
production and distribution 01 material wealtb ill human
society at the different stages 01 its deve1opmellt.
From this definition of political economy it is clear that
it is a historical science. It shows how society develops
from the lowest to the highest stages, and how the entire
course of historical development necessarily paves the way
for the victory of the communist mode of production.
Political economy is a class, partisan science; it deals
'W questions of relations among people and classes, and
it is concerned with their vital interests.
Is the downfall of capitalism and the triumph of
communism inevitable? Bourgeois political econom;t'
naturally gives a negative reply to this question, It
lepresents the interests of the system that has .long Slllce
become a brake on social development and IS doomed
to fall .
Bourgeois economists could more or. l.e!';s
analyse the world as long as the was USlllg
dass and the development of capitalism was 111 the lOterests
of IOCial progress. But that time is long. over. From the
moment the working class became an 1ndependent force
I Lenin. coUected Works, Vol. 3. pp. 62-63.
"
opposed to the bourgeoisie, and the development of the class
struggle I'eal:hed a stage wherc it started to forcshadow thc
downfall of capitalism, bourgeois political economy lost its
scientific character. Since then its task has been to defend
the outdated capitalist ,ystem by all available mcans. to
combat the ideology of the working class.
The leaders of the working class-Mane, Engels and
Lcnin--developed political economy on a truly scientific
basis.
Marx's life work, Capital, contains everything contributed
to political economy by Marxism before Lenin. This work
is based on a penetrating analysis of the capitalist system
rmd proves scientifically the inevitability of the downfall or
capitalism, the cstablishment of proletarian dictatorship and
the inevitability of the triumph of communism.
In new historical conditions Lenin continued the work of
Marx and Engels and raised political economy to a high('r
level. The great service Lenin rcnaered was ttlafnc gave a
scientific analysis of the highest and last stage of capitalism
-imperialism. His analysis of imperialism and. primarily,
his discovery of the law of the uneven economic and political
development of capitalism during the imperiali<;t epoch
formed the basiS for the new theory of proletarian revolu-
tion.
Lenin showed that revolution will first triumph in one
country, or in a few. The whole strategy and t..,ctics of the
Communist Party during the period of preparation tor, and
the carrying through of. the Great October Socialist Revolu-
tion, and during the subsequent period of struggle for the
victory of socialism in the U.S.S.R. were based on this great
discovery. The political economy of socialism is linked with
the name of Lenin.
Marxist-Leninist economic theory is constructively de-
veloped in the decisions of the Communist Party of the Soviet
Union and the Communist and Workers' Parties of other
countries, and in the works of Lenin's disdples. A model
of the creative development of Marxism-Leninism in general.
and o( Marxist-Leninist political economy in particular, is
to be found in the treatment by the Twenty-Second Congress
of the C.P.S.U_ of such cardinal questions as the two phases
of communist society and the laws governing the growTh of
I"
socialism into communism; thc crcation of the material and
technical basis of communism; the PQths of development
and the coming together of the two forms of socialist
property; the elimination of class distinctions and the
establishment of complete social equality; the formation of
communist social relations; the conditions for implementing
the fundamental principle of communism: "From each
according to his ability, to each according to his needs";
the completion of the cultural revolution and the moulding
of the new man. The problems of the political organisation
of society during the transition to communism are here also
comprehensively elucidated.
What, then, is the significance of political economy?
It arms the working class and all working people with
knowledge of the laws of society's economic development,
and enables them to cope successfully with their tasks. To
the working people of the capitalist countries it reveals the
causes of their enslavement. poverty and privations. It shows
that the oppression and impoverishment of the working
class and all working people are not accidental. are not due
to the arbitrary rule of individual capitalists, but to the
capitalist system as a whole. For this reason, it is only
uncompromising class struggle, abolition of capitalism and
establishment of proletarian dictatorship that liberate the
working people from exploitation.
For the peoples of the economically underdeveloped
countries Marxist-Leninist political economy points to the
real causes of their backwardness and poverty. It shows that
the oppression and plunder of the peoples in the colonies
and dependent countries have been brought ahout by
imperialism and its colonial system. For centuries a handful
of imperialist countries, through violence and deception,
have kept the vast majority of mankind in a state of subjec-
tion in the colonies and reduced them to the status of slaves.
Only a determined struggle against imperialism and all its
manifestations will put these peoples on to the path of
national independence and progress. .
Political economy shows the direction to be taken 10
building socialism and communism in countries which have
liberated themselves from the yoke of capital, reveals
advantages of the socialist over the capitalist economIC
20
and proves the ineVitability of the victory of
mumsrn. Knowledge of t.he laws of socialist economy offers
the opportumty to participate consciously in the
UI of communism. stimulates the initiative of the
working people, teaches them to work more productively
and all .working people to become active builders or
commumst society.
In .the of proletariat and all working people
political economy is a powerful instrument
In the struggle for peace, democracy and socialism.
Chapter I
PRE-CAPITALIST MODES OF PRODUCTION
In this chapter we shall deal briefly with the origin,
development and collapse of the primitive-communist, slavc-
owning and feudal modes of production.
1. Primitive-Communal Mode of Production
Life on earth began approximately 900 million years ago,
while the first men emerged less than a million years ago.
Here is how science explains the appearance of man on
earth. A highly developed strain of apes dwelled wherever
the climate was ..... arm in various parts of Europe, Asia and
Africa. In the course of a very long period of development
man originated from these apes. The basic distinction of
man from animal appeared when man began to manufacture
tools of labour, at first very primitive ones. Witl! the
manufacture of tools of labour there appeared human labour.
Due to his labour the fore limbs of the ape gradunUy
transfonned into the arms of the man. As the arms and
hands were freed for labour operations, man's distant
ancestors acquired an ever more upright gait. Once the
simple tools of labour were manufactured, the need
among primitive men to communicate with one another 10
labour, in the usc of the tools of labou\'. Articulate speech
appeared. Labour and articulate speel.:h exercised a deter
minative influence on the development of the brain. Conse'
quently, it was labour that created man himself. and human
society owes its origin and its development to labour,
The first socioeconomic formation was the primitive
communal system, which covered a period of many hundred
years, It marked the rise of human society. At first men
were in a semi-savage state, powerless against the forces of
nature. They gathered nuts, wild fruits and berric:"., rooth of
plants, etc., living primarily on a vegetable diet.
Man's first insh'uments were roughly chipped stoneo; and
sticks. Later, by slowly accumulating experience, people
learnt to make the simplest tools for striking, cutting and
digging.
The discovery of fire was of great importance for primi-
tive people in the struggle with nature. Fire enabled them
to bring variety into their diet. The invention of the bow
and arrow was a new landmark on the road to improving
the instruments of labour, to developing the productive
forces of primitive society. So people began to hunt after
wild beasts. the flesh of which formed an addition to their
former food. The development of hunting led to primitive
cattlebreeding. Hunters began to domesticate animah_
The rise of agriculture was a further great st:-:de in the
development of the productive forces. For a long time it
remained extremely primitive The use of cattle for draught
purposes made agricultural labour more and
tillage acquired a firn basis. Primitive people began to ad;)pt
a settled mode of life.
In primitive society the relations of production were
determined by the state of the productive forces_ The basis
of production relations was communal ownership of the
primitive instruments of lat-our and of the means at
production. Collective ownership to the level
of development of the produdivL' forces. The instruments
of labour were so crude that primitive man was unable
single-handed to struggle against the forces of nature and
wild beasts. The people had to live together in communes
and jointly conduct thC"ir economy (hunting, fishing and
preparing food).
Side by side with the "ommunaJ ownership of the mC.)ns
of production there \\IdS rn'-"'"1;J! l'rop!'l'ty_ This t00k the
form of the instruments of labour possessed by the
individual members of the commune, who used them for
defence against wild beasts. . .
In primitive society labour productivity was very low
and yielded no surplus beyond the bare necessities of life.
Labour was based on simple co-operation, many people
doing identical work. There was no exploitation of man by
man and the meagre supply of food was equally distributed
among the members of the commune.
While man was still emerging from the animal world,
people lived in herds. Subsequently, with the rise of joint
economy the clan organisation of society gradually came
into existence. where only kinsmen could unite for common
labour. At first the clan was a group consisting of not more
than a few dozen kinsmen, but with the passage of time it
reached several hundred. As the instruments of labour
developed, a nalural division of labour arose within the
clan: between men and women, between adults. children and
old people. The men began to occupy themselves mainly
with hunting, while the women collected vegetable
foods, and this led to a certain increase in labour pro-
ductivity.
In the first stage of clan society the dominant role
belonged to the woman. She collected vegetable food and
kept the home. The clan was maternal or matriarchal.
Subsequently. when cattle-breeding and tilling became the
work of the men, matriarchy was replaced by patriarchy
and the dominant role in the clan shifted to the male.
With the advance of cattle-breeding and agriculture there
arose a social division of labour, where one section of society
began to concentrate on agriculture and the other on live-
stock raising. The separation of animal husbandry from
agriculture was the first major social division of labour in
history.
This led to higher productivity. The primitive communes
then found that they had too much of some products and
Dot enough of others. The pastoral tribes and those engaged
in tilling the soil began to exchange products. As time went
on people learned to smelt metals-copper and tin (iron
extraction was mastered later), and to make bronze instru-
ments of labour, weapons and utensils; the invention of the
hand-loom meant the production of textiles and clothing.
:-1
Consequently, some members of the commune began
to concentrate entirely on their own particular craft. and
the articles they made were increasingly exchanged for
others.
With the growth of the productive forces, man's labour
productivity and his power over nature increased consider-
ably, and he was able to satisfy his requirements morc fully.
But the new productive forces of society could no longer
develop smoothly within the narrow framework of the
existing relations of production. The restricted nature of
communal ownership and equal distribution of the products
of labour began to retard the development of the productive
forces. Joint labour became no longer essential and the need
arose for individual labour. Whereas joint labour required
collective ownership of the means of production, individual
labour demanded private ownership. Private ownership of
the means of production emerged, and with it inequality of
property among the people-both between the clans and . l l ~ o
within the clan. There were now rich people and poor
people.
With the further expansion of the produCh\'e forces, man
began to produce more than was required for his own
subsistence. In these conditions it became possible to usc
more workmen. They were obtained through warfare:
captured prisoners became slans. At first slaverv was on
patriarchal (domestic) lines, but later it became' the basis
of a new social system. Slave labour led to further inequali-
ty; households that used slaves grew rich quickly. In
connection with the growing inequality in property. the rich
began to enslave not only prisoners, but aIs;:. any of their
own fellow-tribesmen who had become impoverished or
fallen into debt. There followed the first division of society
into classes, the division into slave-owners and sJaves. This
was the beginning of the exploitation of man by man. From
this period onwards, up to the building of socialism. the
whole history of mankind has been one of class struggle.
Growing ineql1ality among people led to the establish-
ment of the state as the organ for the suppression of the
exploited class by that of the exploiters. Thus slavery grew
lip on the ruins of the primitive-communal mode of
production.
2. The Slave Mode of Production
Slavery is the first. crudest and open form of exploita
tion in history. It has existed among almost all peoples.
The transition from primitive society to slavery was made
possible by the further growth of the productive forces, the
development of a social division of labour and exchange.
In primitive society stone implements of labour predomi-
nated. while in the epoch of slave society. after iron smelting
was discovered, implements made of iron bCC::llUC prevalent.
Iron tools broadened the framework of human labour. For
instance, it became possible, using the iron axe, to clear
the land of trees and undergl'owth ready for ploughing; the
wooden plough with an iron share could cultivate
comparatively large plots of land. Agriculture began to
supply people not only with bread and vegetables, but with
wine and vegetable oils. The making of metal tools led to
the appearance of a special group of workmen-handicrafts-
men, whose occupation became increasingly independent.
Handicrafts became separated from agriculture. This was
the second major social division ollaboLlr.
With the division of production into two basic branches.
exchange of the products of labour developed, As exchange
became a regular phenomenon. money made its appearance.
Money became the universal commodity by which the value
of all other commodities was measured and which served as
an intermediary during commodity exchange. The growing
division of labour and exchange gave rise to people who
made a business of buying and selling commodities-the
merchants. The emergence of the merchants was the third
major social division of labour. Taking advantage of the
remoteness of the small producers from the markets, the
merchants purchased their commodities at low prices and
sold them to the consumel'S at higher prices.
The development of handicrafts and exchange led to the
formation of towns, At first the town was hardly distinguish-
able from the village, but gradually the
trade became concentrated in towns. This was the begInntng
of the separation ol town from country. .
The expansion of the productive forces and further SOCial
division of labour and exchange intensified
inequality. Draught cattle, inc;trumcnts of productlon an
26
poor.
money accumuiated in the hands of the r:ch. The
however, bec'arne mor!! impoverished and were more
frequently to turn to the rh ..h for toans Thus
usury arose with ;ts relahons of debtcr and creditor. "The
class struggles of "he ancient world took the form chiefly of
a contest between dehtors and creditor;, which In
ended in the rulD of the plebeian debtor:.. Th>v wcre
replaced by slaves. I A large-scale slave own:rtg economy
made its appear-me". The rich slave-owner; aequil"cd
hundreds and even thousands of s.laves. They seized huge
plots of land, forming vast estates with tremendous numbers
of slaves working on them. In aneie .... t Rome they were
called lalihmdia.
The relations of production in slave society were haseJ

on the fact that the slave-owners possessed L'oth the me,:ms
of production (land, instruments of labour, ?tc,j and the
people engaged in production, the s13v(O'<;, The "bve was
regarded as a chattel, he was com:--letcly C!'ld sco
1
c
1
y at the
disposal of his owner The slave was knowl" ClS th.: 'sreakinq
tool". In the eyes of the slave-owners. :"'e ,lave Jjffered
from the axe or ox only in the of -'1. In ,:Ither
respects he was as much the of 1m "laster (1;<; the
domestic animals, house . and and instruments of labour.
The exploitation of slaves assu:ned extremely cruel fonTIs.
They were treated much worse L13n cattle. They \\erc
driven to work with whips and were harshly punished 01'
even killed for the slightest "I.egligcncc. The owner W.1S not
held responsible for the killing of 3. c:Ji:we, :Ic 3rpropriatcd
the entire product of hjs labour, W:lS given just
sufficient means 01 subsistence to s,J\'e him iNIl1 death by
starvation and keep him working for the slave
On the basis of slave labour the ancient '" orld achieved
considerable improvement in economy and ('ulture. Many
branches of knowledge-mathematics, astronomy, mechanics.
architecture-became considerably developed. The slave-
owning mode of production, however, was a brake on the
road of human progress, in spite of all it had accomplished
compared with the primitive-communal system.
The slave.owning mode of production .,:.)ntained deep and
imupcl 3ble which to it" destnlction,
Above all the slave-owning form of cxploitation constantly
destroyed society's basic productive force, namely, the
slaves. The slaves frequently revolted against the harsh
forms of exploitation. An uninterrupted influx of slaves was
a condition of existence for slavc-owning economy. Slaves
were obtained through successful warfare against other
states. The peasants and craftsmen were the backbone of
the war machine, it was they who served as soldiers and
yet bore the main burden of taxes essential for conducting
wars. But as a resull of the competition of large-scale
production based on cheap slave labour, the peasants and
craftsmen became ruined. This sapped the economic,
political and military strength of the slave-owning states.
Victories gave way to defeats. The source of the uninter-
rupted supply of cheap slaves dried up. All this brought
about a general decline in production.
"Universal impoverishment; decline of commerce, handi-
crafts, the arts, and of the population; decay of the towns;
retrogression of agriculture to a lower state-this was the
final result of Roman world supremacy."1
When it first began, the slave mode of production
contributed to the growth of the productive forces. But its
further development, as we have seen, caused the destruc-
tion of the productive forces. The relations of production
based on slave labour acted as a brake on the development
of society's productive forces. The labour of slaves, who
were in no way interested in the results of production, had
outlived itself. The historical necessity arose for the
replacement of slave-owning production relations by others,
which would change the position of society's main pro'
ductive force-the slaves.
With the decline of the big latifundia based on slave
labour, small households became more profitable. Thus, the
numbers of freed slaves increased, and at the same time
large estates became split up into small plots cultivated by
coloni. A colonus was no longer a slave; he was a tiller of
the soil who, having been granted the use of a plot of land
for life, was obliged to pay a sum of money or produce for
it. He was not a free tenant: he was bound to his plot and
t Engels. "The Origin of the Familv. Private Property and the
State'. Man;: and Engels, Selected Works: Vol. II, Moscow, p. 299.
could not leave it; he could be sold together with his plot.
The coloni were the predecessors of the medieval serfs.
Thus, within the old slave system, the new feudal mode
of productioll began to take shape. -
As slave"Owning economy developed, the class struggle
of the enslaved masses against their oppressors became
intensified. This struggle flared up as revolts of thc slaves
against the slavc-owners. The ranks of the slaves were
joined by free peasants and craftsmen who also were
exploited by large landowners and the slave-owning state.
Of the numerous uprisings of the slaves, that led by Spar-
tacus (14-71 B.C.) was particularly significant. The blows
from inside became more and more involved with the blows
from outside, and this finally brought about the collapse of
the slave system.
3. The Feudal Mode of Production
The feudal system has existed, with particular features
of one kind or another, in almost all countries. The epoch
of feudalism covers a long period. In China the feudal
system existed for more than two th.Qusand years, In the
West-European countries feudalism spread over a number
of centuries, from the fall of the Roman Empire (5th cen-
tury) to the bourgeois revolutions in England (11th century)
and in France (18th century). In Russia it lasted from the
9th century to the abolition of serfdom in 1861.
The production relations of feudal society were based
the private landed property of the feudal lords and their
incomplete property rights over the serfo He was not a slave;
he had his own holding. Besides the property of the feudal
lords there was also the property of the peasants and crafts-
mcn, namely, the instruments of production they owned and
their private holdings. Small peasant economy and produc-
tion by smal1 independent craftsmen were based on
labour. All production was primarily in I.e" the
products were mainly for conswnption by the households,
and not for exchange.
Large-scale feudal landed property was the basis for the
exploitation of the peasants by the landlords. The feudal
lord's own demesne occupied part of the Jand. He allotted
i?
the other part on extortionate conditions for usc the
t The P
easant holding was the mC.\Ils by ",1\1Ich the
peasan s. tn- hId'
.... landlord secured his labour force. wit ?crc It.:uy posses
, f his holding. the peasant was oblIged to work for
Slono 1'1' 'I
the landlord, either to till his soi . ttSlOg liS IInp cmcnts
and stock (IaboUl-rent, 01' cor\'cc), 01,' else to the feudal
lord part of his product in kind (qmt l:cnt patd In produce)
or to pay both_kinds of ground-rent. ThiS system
not only led to the unconcealed form of explOItatIon. but
also inevitably made the peasant personally dependent on
the landlord. The feudal lord could not kill a peasant, but
he could sell him.
The serf's working time was divided into necessary and
surplus time. During the necessary time, the peasant
the product necessary for his own existence and that of hiS
family. During the surplus time he created the
product which was appropriated by lord In the
form of ground-rent (labour-rent. rent m kmd and money-
rent). The exploitation of the peasants by the. feudal lords
in the form of ground-rent has been the mam feature of
feudalism among all peoples.
The towns, inhabited mainly by craftsmen and traders,
subject to the authority of the feudal lord. on whose
the town was built. Townsmen fought for their freedom
often won their independence. t1
growth of towns and the development of trade grea J
the feudal countryside. The economy. of feu I
was drawn increasingly into market clrculation
th
.
n
to buy luxuries the lords needed money. In IS
they began to transfer the peasants from
and rent in kind to money-rent. Feudal exploltati nd
further intensified with the transfer to money-rent. a t
between the feudal lords and the peasan s
more acute.
Pa;nteglation and of
IIidh of Capitalist Relabons W.tblD
the Feudal System
hi ber
the productive forces reached.a i!.ch
under the slave other
was improved; the 11'0n plough an
iron instruments of labour were used more extensively. New
branchcs of field cultivation arose; viticulture. wine-making
and marketgardening developed considerably. There were
improvements in livestock husbandry and its ancillary
branches-buttcr and cheese production. Meadows and
pastures were extended and improved.
Gradually the instruments of labour of the craftsmen and
the methods of processing raw materials were improved.
Crafts became specialised. In the course of time there
appeared new crafts-those of the armourer, nail-maker.
knifc-maker. locksmith. shoemaker. saddlemaker and others.
There were improvements in the smelting and processing
of iron. The first blast-furnaces appeared in the 15th century.
The great geographical discoveries date back to this period.
But the feudal system. in which new productive forces
had already developed, acted as a brake on their further
development; the productive forces dashed with the Darrow
framework of feudal production relations. The peasantry.
under the yoke of feudal exploitation. was in no position
to increase the output of agricultural produce. since the
productivity of serf labour was exceedingly low. In town
the increasing labour productivity of the craftsmen encoun-
tered obstacles set up by guild statutes and rules. All this
required the abolition of the old relations of production and
indicated the need to establish new relations free from the
fetters of feudalism. Capitalist relations of production began
to appear within the feudal system.
Further, simple commodity production. i.e .. the production
of articles for exchange, which was based on private owner-
ship of the means of production and personal labour, gradu-
ally expanded. Commodity producers found themselves
engaged in a fierce competitive struggle, which led to the
division into rich and poor in both town and country. With
the expansion of the market. the more or less big commodity
producer would ever more frequently hire poverty-stricken
peasants or craftsmen to work for him.
Capitalism developed also in another way. Merchant
capital. as represented by the merchants, began dizectJy to
control production by the peasants and craftsmen. MerchaDt
capital had first appeared as an intennediary in the evh'Dge
of the commodities of the small producers. Later met"'
began the systematic buying up of commodities from tile
31
small producers, supplying them with raw malt'l'uls and
advancing money to them. In this way the small produu'l's
became economically dependent on the merchant. The next
step taken by merchant capital was to bring together the
scattered craftsmen under one roof. in a workshop, where
they proceeded to work as wuge-workers. Thus merchant
capital became transformed into industl'iul capital and the
merchant into the industrial capitalist.
Capitalism was also growing up in the countryside. With
the development of commodity production the power of
money increased. The peasants began to pay the feudal lords
in money instead of in kind. The development of money
relations gave an impetus to the differentiation of the
peasantry into the rural bourgeoisie and the impoverished
peasants.
Thus, capitalist production came into existence within the
feudal system both in town and country. The abolition of
feudalism became a historic necessity.
The entire history of feudalism was one of bitter class
struggle between the peasants and the feudal lords; the
struggle became especially acute towards the end of this
epoch. Peasant revolts shook the foundations of the feudal
system and led to its final collapse. The bourgeoisie headed
the antHeudal struggle and used the revolts of the serfs
against the feudal lords in order to seize power and become
the ruling class.
TIlE CAI'JTALIST MODE OF PRODUCTION
The capitalist mode of production, as we know. originated
in the womb of feudalism. In its development ca.pitalism
passes through two stages: pre-mm -,poly and monopoly
(imperialism). These two stage') have co com'non e,oncrntc
foundation-private capitalist OJ the of
production and exploitation of lat' .'u: But pre-
monopoly capitalism and imperialisJI:1J 3a...-;"! pomts of
distinction. Pre-monopoly capitalism is per-cd in the
development of capitalism when there existed fre.' c'Jrnpeti
tion and the productive forces developed ascencb.ntly, more
or less smoothly. In the United Stltes. Britd7") cl'.d Fran:.:e
and other economically developed coun::ies Fi:mOnopoly
capitalism prevailed until the latter few of the
19th century. when processes generated in the e;:onO!llY of
the capitalist countries imparted a new quality to c.Jpit::Ilisrn:
free competition gave way to the dominaticn ..:If
which began to play a decisive part in the'conomic affairs
of the capitalist countries. At the turn of tl:c century pre-
monopoly capitalism turned into imperialism, the highest
and last stage of capitalist development.
-
A. P r e-M 0 n 0 pol y Cap ita Ii s m
Chapter II
COMMODITY PRODUCTION.
THE COMNlODITY AND MONEY
Marx began his analysis of capitalism with the
commodity. Under capitalism everything, from a pin to a
giant factory. and even man's labour power, is bought and
sold, taking the form of a commodity. The relations between
people in society appear in the guise of relations between
commodities. The commodity, as Marx said, is the economic
.se1Honn of bourgeois society. Just as a drop of water
reflects the world around it, so the commodity reflects all
the fundamental contradictions of capitalism.
Marx's investigation into the commodity and commodity
production enabled him to explain the essence of the
capitalist relations of production.
1. General Description of Commodity Production
Ova __ of eommod. Commodity production means the
..,. production production of goods not for personal
use. but for sale, fot' exchange on the
market. "By commodity production." says Lenin, "is meant
organisation of social economy in which goods are
84
produced by separate. isolated producers. each spectalising
in the making of some one product. so that to satisfy
the needs o( society it is necessary to buy and sell pro-
ducts (which. therefore. become commodities) in the mar-
ket."!
Commodity production originated during the period of
the disintegration of the primitive-communal system; it
existed under the slave and feudal modes of production,
though natural economy was dominant in both cases. Under
this economy society consisted of a mass of uniform economic
units. each of which performed all forms of work. beginning
with the obtaining of various raw materials and ending with
the processing of them for its own consumption. This type
of economy, in which the surplus product was chiefly
exchanged, prevailed until the rise of capitalism.
The development of capitalism dealt a crushing blow to
natural economy. Under capitalism everything, including
man labour power, took the fonn of a commodity. With
the transformation of labour power into a commodHy.
commodity production became dominant and universal.
Once commodity production under capitalism had become
the prevailing form of production. the relations between
people in the process of production. i.e., their production
relations, took the fonn of commodity relations. To illustrate
this, let us take the fundamental production relation in
capitalist society-the exploitation of the proletariat by the
bourgeoisie. In order to exploit the worker. the capitalist
has to hire him, while the worker has to sell his labour
power, which is now a commodity. The capltahst pays the
worker a wage, with which the latter buys his means of
subsistence-commodities. Thus, the production relations
between the worker and the capitalist are expressed Dot
directly. but through commodities. and assume the character
of commodity l"elaQons.
The capitalists sell products to one another and buy from
one another raw materials. equipment and other commodities.
The relations between the capitalists also assume the
character of commodity relations .
t Lewa, works, Vol. 1. Moscow. p. 93.
"
Consequently, in capitalist society commodity production
takes on a dominant, universal cJUlraclL'c, whereas relations
between people appear as relations
Condilions
for the rise
of commodity
production
between things, commodities.
Commodity production arises only
where there are definite conditions
for it.
The most important condition re-
quired for the rise and existence of commodity production
is social division of labour. This means the making of different
products is divided among separate people or groups of
people. One group of people, for instance, weaves cloth,
another makes footwear, a third-household articles, a fourth-
tools, and so on. Clearly, in order to satisfy their personal
requirements these people must exchange the results of their
labour. In this way all the producers taken together form
a large production unit whose members are dependent on
one another.
But social division of labour is only one of the conditions
required for the existence of commodity production. Another
essential condition is the presence in society of different
owners of the means of production. Take the following case.
A man has made an article and wants to sell it to someone
else. Can he do this? Yes, he can, but only if he is the owner
of the means of production used to make the article and
hence the owner of the article itself. For instance, despite
the fact that there was a division of labour in the primitive
communes, there was no commodity production and no
commodity exchange. The members of the commune
exchanged the results of their labour, but they did not sell
them to one another; they could not do so, since the
commune as a whole owned the means of production and
the products of labour. It was a different matter when the
product of one commune was exchanged for the produ.ct
of another commune. In this case a change of ownershIP
took place and the product of labour was a commodity.
Thus the basis of commodity production is social division
of labour and the presence in society of several different
owners of the means of production. Only when both these
conditions are present do commodity production and an
exchange of products emerge in the shape of purchase and
sale.
Simple
and capitalist
commodity produc-
tion
Capitalist commodity production arises
where there are definite social
ditions and on the basis of simple
commodity production.
The most typical representatives of simplc commodity
production arc the small peasants and handicraftsmen. They
base their production on personal labour, Le., they work
themselves, and do not exploit the labour of others. Each
simple commodity producer is the owner 01 his means of
production, and he produces not for his own consumption,
but for the market. for sale.
Simple commodity production is of a dual nature. On the
one hand, as it is based on private ownership, the small
peasant or handicraftsman is a roan of property, and this
brings him closer to the capitalist. On the other hand, as
simple commodity production is based on personal labour,
the commodity producer is a working man, and this brings
him closer to the proletarian, who, unlike him. possesses no
means of production. It is here that the working class and
the peasantry have a common intere!:t. and consequently arc
capable of forming an alliance.
Under certain social conditions, simple commodity pro-
duction can be the point of departure and the basis for the
riia .aL capitalist l?roduction.... Two such conditions occur.
First. the existence of private ownership of the means of
production. We know that this condition emerged in the
period of the collapse of primitive society. Second, the
transformation 01 labour power into a commodity. This
occurred during the epoch of the disintegration of feudal
society.
Simple commodity production is unstable. for among the
peasants <lnd handicraftsmen a process of stratification is
continually taking place: some (the minority) grow richer.
while others (the majority) grow poorer. In the above-
mentioned conditions these processes lead to the formation
of a bourgeoisie and a proletariat in both town and country.
Capitalist commodity production, like simple commodity
production, is based on social division of labour and private
ownership of the 1!Jeans of production, but it is also founded
on the exploitation of hired b'y the owner of the
means of production, not on his own personal labour. With
capitalist commodity production the capitalist does not work
.!7
himself, having at his disposal both the mcans o( production
and money. With his money he buys labour power to set his
mcans of production in motion. The transfonnation of labour
power into a commodity means that, under capitalism,
commodity production develops further and becomes
universal. Commodity exchange, wrote Lenin, appears as
"the simplest, most ordinary, fundamental, most common
and everyday relation of bourgeois (commodity) society, a
relation that is encountered thousands of millions of times".1
We must therefore explain what the commodity-this cell-
form of capitalist society-really is.
2. The Commodity and Labour Which Creates
Commodities
Usc-value
and value
of the commodity
The commodity is a thing which 6rst
of all satisfies some human
ment and, secondly, is produced not
for personal consumption, but for sale, for exchange.
The man who produces an article for hi,.-'Own consump'
tion is producing only a product, not a commodity. For the
product to become a commodity it must satisfy some
social requirement, i.e., must satisfy the demand for it on
the part of other members of society.
A consideration of the commodity reveals in it two
-closely linked.. aspects, two propcrties- value and value.
The property of the commodity to satisfy some human
requirement is called its use-value. The need which the
commodity satisfies may take many different forms. A
commodity may be a prime necessity such as bread, clothing,
footwear. It may be a luxury article-expensive wines,
jewelry, etc. It may also be a means of production, such as
machinery, coal. iron and so on.
Each article may have more than one use-value. Coal, for
instance, may be used as fuel or as raW material for the
manufacture of chemical products. .
The discovery of use-value, that is, the utility of a thID.9
to man. occurs in the course of society's historical progress
------
I Lenin, "On Dialectics". Marx-Eng,,b-Marxism, MosCOW, P TJ2
"
and slcms from the development of the productive forces.
Take coal. It was known to man since timei immemorial

but began to be used as a fuel in relatively recent times.
The development of science and technology revealed a new
quality in coal, and it is now being used as a raw material
in the chemical industry.
In commodity production. a constant exchange takes
place among the different use-values, and in a definite
quantitative proportion. For example, one axe is exchanged
for 20 kilogrammes of grain. The proportion in which one
usc-value is exchanged for another is the exchange-value of
the commodity. In considering exchange value two qucstions
immediately arise: 1) on what grounds arc commodities of
a totally different quality equated to each other? and 2) why
arc different commodities equated to each other in a definite
proportion, in a definite quantity? If different commodities,
which do not each other at all. are treated as
equivalent to each other during exchange, this means they
something in common. As far back as the fourth
century B.C .. the famous Greek Aristotle noted
j'hat exchange could not take place equality just as
equality could not exist among things which not
c,"'mmcnsurable.
All cnmmortities in gpncral have the foll('lwing properties
in varymg dCiJrees: utility. capability of being an object of
UOrly .:lnt! demand, rarlty. and labour.
Which then. determines the vabc of commod-
t
o ,
. ,
.- "
At flrsl it may appe.3l' that utility is rlsponsible
for the of a commodify. The more useful the <Hiide,
the value it must h.Jvc. Actually. however. we find at
every step that utility does not determine value. The most
useful thing-.; often cost nothing (for instanr.e. air) or cost
very little (fot' imtance, water), whereas things which are
of little pcr"on<ll use arc often much more costly (for
instant'c, diamC"nd:;;). Truc. if the value of products depended
''''"1 de9rel.! .:'If thf"ir then bn!.ld and watcr would
l a wOlth more than diamonds. TherefDre. utility, or use-
value. is ,,,,,lv a C,"l'H'titi('ln and not a ,';1U<;C l"lf value. Although
vaIn .. cannot exi;t without use-valuc. the latter is quite
without Vllluc (for instance, air has a great usc'
value. but no value at a11).
Can supply and demand determine v.ilue? At first glance
it appears that they can. It is kno.wlcdgc that the
greater the demand for commodities, the higher the prices
fixed for them. and. on the other hand. the greater the
supply of any commodity, the more these commodities arc
brought to the market. the lower their price.
But if we penetrate more deeply into the essence of the
question, it becomes clear that the value of commodities
does not depend on supply and demand. For instance. take
sugar and salt. These commodities arc governed by the law
of supply and demand. If the demand for them is equal to
the supply, 1 kiiogrammc of sugar will still be incom-
parably higher in value than 1 kilogrammc of salt, which
shows that supply and demand have nothing to do with
value. True, the amount of supply and demand makes some
difference to the prices of commodities, but it determines
not the amount of value, but the degree to which the market
prices fluctuate round the value of the commodity in ques
tion. When the demand for some commodity increases, while
the supply of it decreases, market prices soar above its
value; and, on the other hand, when the demand for it
decreases, while the supply of it rises. market prices drop
below its value. Only when the demand equals the supply,
do market prices coincide with its value. But this situation
hardly ever arises under capitalist commodity production.
This means that supply and demand do not determine the
value of a commodity.
Can the rarity of a commodity determine its value? That
it can seems to be borne out by thousands of practical
examples. Let us take gold, diamonds and bread. Gold
diamonds are rarities and they are very costly. There IS
much more bread and it is much cheaper, although people
want it very much more. This does not mean, however, that
rarity is the reason for greater value. For example, when
of drought there has been no rain for a long time,
long for it, the "demand" for it is tremendous, y,:t
all its rarity and utility, for all it is needed so much, It
no value that can be expressed in money. .
Consequently, neither ulility, nor the capability of bel
n
1
an object of supply and demand. nor rarity is the cause 0
value. Labour alone remains, and it really is the basis. or,
.. Marx put it, the substance, of value. The more the labour

required for the production of this or that commodity, the
greater i.'S the value it possesse'>, the more costly it is. Gold
is much dearer than ('oat for the prospecting of gold and
the removal from it of extraneous admixtures require the
expenditure of much mue labour than for mining the same
amount of cC.'l1.
All commodities are the result of human labour. They
become comparable to one another bec3use every com-
modity contains a definite amount of lab,:.ur. The fact
that commodities arc t.he product of labour gives them
value.
Value is the social labour of the cmmodity producers
embodied in the commodity. The term "embodied" under-
lines the fact that labour is included in the commodity. h.)s
taken the shape oi the article or commodity. The propor-
tions. in which commodities are exchanged serve as the lorm
of expression of value: they show that tht' same amount- of
labour has been upon the commcdi!ies excliangcd,
that they are identical in \:aJue.
The valu!" of a 'ommodity is c:: s'.x':ll it is not
seen but it is felt wherever am: co:nmodity 1'; ClCchanged
for another. and 01"e commodity : -; equated to ::lnother.
Therefol'C Lenin saii! th::t v.:!.:!!e IS .l re!:!tton Ctct ....ccn two
persons ... a relation disguised as a relation between ,,)
things" .t
Usc-value has always existed .and always exist. But
the commodity as the de.l'ository ,-f emerqeJ at a
definite stage of social t..e .. when commodity
production and exchange came i!lto existence. With the
disappearance of p:od'Jcticn commodity value
will also disappear. This means that value is both 8 social
and a cat ego:;.'. that it e')[ists et a definite stage
of social development.
Although a c.:-mmodity represents the unity of two sides
(usc-value and value). this lmity is a conflicting one.
As usc+vaiu("s. commodities are qualitatively heterogen-
eous (whc.:lt. cloth. iron, etc.). while as values they are
homogeneous (being the prouuct of man's labour).
As usc-values. commodities are intended for consump-
tion, and value;: they are intended fer sale.
t T.enin, M .. p. 33.
41
Thc producer of a commodity is interestcd in its valuc
(and not in its usc-valuc), but in ordcr that a commodity
could rcalise itsclf as valuc it must have usc-value, that is.
it must be in demand.
The usc-value of a commodity is a tangible thing. while
its value is intangible. Such are the disparities between the
usc-value and the value of a commodity,
We have thus made clcar that thc commodity has two
properties, it is a combination of usc-value and value.
What, then, is the explanation for this dual nature of the
commodity?
The twofold nature of the commodity is determined by the
twofold nature of the labour which
creates the commodity. The labour of
the producer which is embodied in the
commodity appears, on the one hand.
concrete
and
abstract labour
as concrete labour, and on the other, as abstract labour.
Concrete labour is labour expended in a expedient.
useful form. A man cannot work "in general". When he is
doing work, it is the work of a shoemaker. or a farmer, or
a miner. and so on.
Different types of labour differ in quality. craft methods.
tools. materials used. and lastly. the results, i.e .. the final
products. use-values. It is concrete labour that creates the
a colllttlOdity.
however. we look more closely at the different types
labour. we find one common feature-the expenditure of
labour in general. Le.. the expenditure of muscles.
brain, nerves, etc. Labour viewed independently of its
concrete form. labour as the expenditure of human labour
power, is abstract labour. It is abstract labour that forms
the value of a commodity.
Concrete labour. as that which creates use-value. has
always existed and will continue to do so. It exists under
commodity production and when the latter is absent. Abstract
labour is typical only of commodity production. The reduc-
tion of different types of concrete labour to the identical
abstract labour. labour in general. is explained by the
esistence of commodity production. the fact that the product
is for sale. Indeed. if the producer has made. for
a pair of boots. and taken them to the market.
to exchange them for. say. bread? As use-values
.2
thesc two products arc not comparable. So they can only be
compared according to the labour spent on them. If the
one pair of boots for 100 kilogrammes
of gram. thIS means that an idcntical amount of abstract
labour has been expended on the boots and the grain. If the
boots had been made not for exchange. but for use in the
shoema.ker's household. it would have been unncccssolry to
dctcrmmc the amount Q.L,,9stract labour emhQdicd in them.
With the disappearance of commodity production the cate-
gory of abstract labour will also disappear.
In commodity production there is an irrc('oncilable
?ontradiction between concrete and abstract labour, appear-
109 outwardly as a contradiction between private and social
labour.
In commodity
Prlvafe
nnd
80clal labour
production each producer makes a par-
ticular kind of commodity. In society
labour is divided. and the deeper this
division. the more branchet; of produc-
tion the mc;, extenc:ive are
the links binding the roducC"'s. the more are
they dependent. in genc'aI. :m one ano:hlr. The making
of almost everything involves scores or even hundreds of
people of different trades_ Thi5 II:.cans that the labour of
each commodity producer is a smaU particle of the labour
of society. and so takes on a character.
But in a society where there. is private ownership of the
means of pronuction. the commodity are
in production Independently of one another: they llre
disunited. And so their labour. whkb is essentially social
labour, takes the fOMfl -m labour. The social
character of labour is.. here onccaled: it is only apparent
during exchange on the mJ.rket. It is preciseJy during the
exchange of commodities bV means of purchase and sale
that it becomes apparent that the private labour of the
commodity producer is a small particle of social labour.
:;incc it is wanted by 1Ol,)dcty.
In view of the fact that the labour of the commodity
producer. while beinfJ directly private. is at the same time
soci:ll in chJ.l"acter, there <:Irises the major contradiction 01
"imp/I" commodity et onomy, that between private and social
labour. This contradiction is revealed during exchange. When
commodity producers go to the market. it transpires that
some of them sell their commodities and others fail to do
so. They may fail to sell them because there is no demand
for them, or because they are too expensive. But if the
commodity producer cannot sell his commodity on the
market. this means that his private labour has not found
social recognition; the producer suffers a loss, and, if
this experience is repeated often, he becomes ruined. It
follows that the contradiction between private and social
labour leads to the ruin of some commodity producers
and the enrichment of others.
Since the value of a commodity is
l\lagnitude created by labour, the magnitude of
of tbe value
of a commodi.tY its value is measured by tlle amount
of labour embodied in the commodity.
There are many commoditY producers, and they spend dif-
ferent amounts of labour on producing identical commodi-
ties. The magnitude of the value of a commodity cannot there-
fore be measured by the actual amount of labour spent on
it by each individual producer. If the magnitude of the value
of a commodity were determined by the actual expenditure
of labour by each producer, there would be no single mag-
nitude of value for identical commodities. In exchange. how-
ever. identical commodities are of equal value. The magnitude
of the value of a commodity is determined not by the
labour-time spent by each producer, but by the
which is socially necessary for the production
the given commodity.
Socially necessary labour-time means the time needed
the making of one single commodity under average
conditions of production in the given branch of
. (average technical equipment. average skill of
producers and intensity of labour). As a rule. the socially
oecessary labour-time is determined by those conditions of
production in which the largest amount of commodities of
the given kind is created.
Socially necessary labour-time is constantly changing;
CODsequently the magnitude of value also changes. Changes
In the socially necessary labourtime occur in consequence
of cbanges in the productivity of labour. Labour productivity
.. expressed by the amount of products created in a given
.,." of labour-time. An increase in productivity is under-
*"" to mean any change, in general. in the labour process
44
v:
hiCh
. the of labour per single article.
lhc the productivity, i.e .. the greater the quantity
o.f fintshed products' that can be made in a given unit of
time. the lower the value of a unit of the commodity. And.
conversely. the lower the productivity of social labour, the
more the socially necessary labour-time required to produce
the given commodity, the higher its value. It is therefore
said that labour productivity and the value of each single
commodity are inversely dependent on one another.
If the productivity of labour rises. the value of a unit of
the commodity concerned drops. Conversely. if the produc
ti.vity of labour drops, the value of a unit of the commodity
tlses.
Labour productivity should not be confused with intensity
of labour. Labour intensity is expressed in the expenditure
of labour per unit of lime, The higher the expenditure
of labour during the same space of time. the larger is
the number of products created, but the value of one
single article may not change. since a larger amount
of labour is then distributed over the larger number
of products,
The magnitude of the value of a commodity is affected by
the degree of complexity of labour. whether it is skilled or
unskilled. The labour of a worker who has had no special
training is simple. l!Dskilled labour. Labour which requires
special training iS1 complex or skilled labour. Complex
labour creates a greater value per unit of time than simple
labour does. For this reason Marx says that complex labour
is simple labour raised one degree. or multiplied.
In commodity production based on private property, the
reduction of different types of labour, labour involving
varying degrees of skill. and labour of varying productivity,
to one single measure-abstract labour, which forms the
value of the commodity-takes plaJ;e spontatleously on the
market, when the commodity is being sold, Value expresses
the relations of production between the commodity
producers. the mutual exchange of their activity. But super-
ficially. these relations appear to be relations between
things.
45
3. Development of Exchange and the of Value
Exchange-value,
the form in wbieb
value manifests
itself
The value of commodities is created
by the labour spent on producing
them. Their value. however. reveals
itself only when onc commodity is
compared to another in the process of exchange. i.e .. through
Thus. the value of onc axe cannot be
expressed directly in terms of labour-time. it is expressed in
terms of another commodity. For instance. one axe = 20
grammes of grain. The grain serves here as a means of
expressing the value of the axe. This equation implies that
an equal amount of labour was spent in the production of
both the grain and the axe. The commodity which expresses
its value in another commodity (in our example. the axe) has
a relative form of value. The commodity. the of
wllich serves as the means of expressing the value of
another commodity (in our example. the grain). has an
equivalent form of value.
has traversed a long road of historical
development-from the elementary or accidental form of
value to the money form of value.
Elementary form
of value
In natural economy people produced
their products not for exchange but for
personal consumption. Only acciden-
tally accumulated surplus products were exchanged. The
quantity of the exchanged products was limited. Any single
commodity was directly exchanged for another, expressing
its value in one commodity alone. For instance, one
axe = 20 kilogrammes of grain, or 20 metres of cloth
- one coat. Inasmuch as the exchange was of a fortuitous
character, the magnitude of the value of the commodities
not equally measured. In this case we have the
single. or accidental form of value.
In primitive society, with the rise of the
Total first major social division of
- form the separation of the pastoral
from those engaged in tilling the 5011-
evbange included livestock, grain, etc., and graduallY
regular. But in the course of exchange, it
.. Uti and more clear that many people wanted one special
'6
commodity. In the natural course of events, this proved to
be livestock. which was equated to, and exchanged for.
many commodities of a different naturc. For instance.
_ 40 kllograrr mes of grain
0'
_ 20 metre:. of cloth
I sheep
... 2 axes
or
o'
_ 3 grammes 0' go d, ek
This form, in which the value of a commodity can be
in a series of different commodities, is called the
total or expanded form of value.
With the development of commodity
Universal form production and exchange. one com
of value modity becami! singled out, the one in
the greatest demand. An commodities
began expressing their values in this particular commodity.
A commodity which serves to express the value of many
different commodities plays the role of U"1;rJersal equivalent,
Le., it becomes equal in value to all oflier commoffifid. Wlth
the appearance of the universal equivalent the transition
takes place from the expanded form of to the universal
form of value. This can be expressed 3S follows:
40 kllog;-ammes of t;TaIO = \
" 20 metres doth
or
2 axes
or
3 grammes 01 guh!. etc.
Ish. 't'p
This transition led to the circulation of commodities. Now
every act of exchange is divided into two stages: purchase
and sale. At this stage. however. the role of universal
equivalent had still not become attached to any single
commodity. In some places livestock played the role of
universal equivalent; i.n others, salt. in yet others. furs,
and so on.
The further growth of commodity production and
exchange necessitated the transition to one single equivalent,
since with different commodities playing the role of
universal equivalent, the development of exchange was
hampel.ed, and this came into contradiction with the needs
of the growing market. This contradiction was resolvcd by
giving the precious metals, silver and gold, the role of
universal equivalent.
When the role of universal equivalent
had become attached to one com-
modity, for instance gold, the mOlley
Money form
of value
form of value appeared. It can be expressed like this:
40 kilogrammes of grain:::a
0 '
3 grammes of gold
20 metres 01 cloth
-
0'
2 axes =
0'
1 sheep, etc. """
The . t ransition to the money form of value took place
followmg the second major social division of labour-the
separation of handicrafts from agriculture, Because of their
specific (homogeneity, divisibility, durability,
SIze, etc.) gold and silver became firmly estab
h shed as money. Money is a commodity which fulfils the
social function of expressing the value of all the other
commodities. With the appearance of money all commodities
began to measure their value in money.
Nature of money
and its functions
4. Money
Money originated spontaneously dur
ing the historical development of
commodity production and exchange,
It is precisely the development of the forms of value,
beginning with the simplest. that led to the appearance of
the money form of value and money itself.
Gold, and silver, minted metal coins, or paper notes as
a. substitute for them, are used as money. But this money
did nOl come inte existence all at once, it was a product
of long At first from among the commodities
the one whIch was the most frequent object of exchange
became singled out,
At different times peoples used as money animal hides,
cattle. leather, grain, salt, and the like. The role of money
ahifted (rom one commodity to another. As a result <If the
long development of commodity e.;onomy the role 01 money
finally became flnniy associated with gold. In the 19th
century, gold functioned as money in the absolute majority
of countries.
In a developed commodity economy, money fulfils the
following functions: al the measure of the values of '
commodities. a circulation medium, a means of accumula
tion or hoarding, a means of payment. and uni1fet-al money,
Let us consider each of these functions.
The basic function of money is as the measure of value.
The essence of this function is that the value of all
commodities is measured by means of money, In order to
perform its function as the measure of value. money must
itself have a value, Just as the weight of a body can be
measul'ed by using an iren weight onJy because the latter
has a weight of its own, so the value of a commodity can
only be measured with the help of anothe-:- commodity that
has a value,
The value of a commodity is measured through the
medium of gold. In fixing a definite price a cc-mmodity,
its owner mentally (or, as Ma,x puts it. idc;';Illv) expresses
the commodity's value in gold. It is possible t.l equate a
commodity to a certain quantity of g.:lld because in reality
a definite relationship always exists between the value of
the gold and the value of the givcn C.lmmodity. The basis
of this relationship is the soda11), neteisary l.::bc:1! on
making the gold and the other
The value of a commodity expressed in money is called
its price. Price is the monetary expression of the value of
a commodity.
Commodities express theit value in de:1nite amounts of
gold or silver, These amounts of the money commodity must
themselves be measured. A definite amount. in weight, of
the metal used for moncy is one unit of measurement of
money. In the U.S.A" for example. the money unit is called
the dollar, in Britain -the pound sterling, and in France-
the franc, For convcnience, these monetary units are divided
into aliquot parts: the dollar into 100 cents, the franc into
100 centimes. the pound sterling into 20 shillings. and the
shilling into 12 pence.
4
49
The unit of money and its parts serve as the struldacd 01
pnce.
The second function of money is that of circulation
medium. Before the appearance of money, simple exchange
of commodities took place. i.e., one commodity was
exchanged directly for another commodity. With the
appearance of money the exchange of one commodity for
another was accomplished with the aid of money. First the
commodity is exchanged for money. then the money is used
to buy a different commodity. Exchange of commodities
accomplished with the aid of money is called commodity
circulation (commodity-mOney-commodity). It should be
noted, however, that when a commodity passes into the
hands of the buyer, it leaves the sphere of circulation; but
money remains constantly in the sphere of circulation, i.e.,
it passes from fhe hands of the buyer into those of the seller
and vice versa. In this way money acts as a medium in the
circulation of commodities and fulfils the function of
circulation medium. To carry out this function the money
must be actually present.
Originally, when commodities were exchanged, money
took the form of bars of gold or silver. But this created a
number of difficulties. Each time bars had to be weighed,
broken up into small pieces, and tesled for purity. So
gradually bars of gold or silver gave place to coins, the
minting of which was undertaken by the state. The coin is
a piece of metal of definite shape and contains a definite
weight of metal.
During the process of circulation, coins become worn and
lose part of their value. But in practice worn coins are
as currency as new coins. This is explained by the
that in performing the function of circulation me-
dium, money does not stay long in the hands of either
the purchaser or the seller. It is a matter of indifference
to the producer of a commodity whether or not he gets money
of full value for his commodity, because he spends it at once
on other commodities that he may need. Consequently, the
function of circulation medium can be performed by metal
money of incomplete value or even by paper money.
With the development of commodity eCQflomy, money
began to fulfil the function of means of accumulation or
50
l
Jloarding. Money is the universal embodiment or wealth.
For money any commo4ity can be acquired. Commodity
producers accumulate money in order to buy the commodity
they need. This function can only be discharged by money of
full value-gold and silver coins, or articles of gold or silver.
Money fulfils the function of a means 01 payment.
Commodities are not always sold for ready money. They are
sometimes bought and sold on credit. on deferred payment
terms. When a purcha!>e is made on credit the commodity
is handed by the seller to the buyer without immediate
payment taking place. The money is paid over, by agree-
ment, at some future date. When the day for payment comes,
money passes from the hands of the buyer to those of the
seller. In this case money serves as a means of payment.
Suppose the blacksmith forges a plough that the peasant
needs in the spring, when the peasant does not have the
cash to pay for it. He will have the cash in autumn, after
he harvests his grain and sells it. In the circumstances. the
only way the peasant can acquire the plough from the
blacksmith is on credit, that is, with payment being deferred
until autumn. As a means of payme!lt money is also used to
settle taxes, the land rent. etc.
The functions of money as a circulation medium and as a
means of payment make possible the elucidation of the law
which determines the total amount of money needed for the
circulation of commodities.
The amount of money needed for circulation depends,
firstly. on the total of the prices of the commodities in
circulation and, secondly, on the \"elocUl: with which the
money is circulated. The more Tapidly money CIrculates, the
less the amount required to be in circulation, and vice versa.
If, for example. in the course of a year the total price of the
commodities sold is 100,000 million dollars. and each
dollar moves fifty times on the average. then for the
circulation of the whole mass of commodities 2,000 million
dollars are required. This is seen from the following;
Amount or
L

t<'tal prier 01 c o m m o d l l k ~
rt.,':ley- VdOCliy-of monty luruover =
$luO,O')() million
50
51
-$2,000 million
Thanks to the credit which producers extend to each
other the need for money is reduced by the total of the
price; of the commodities which are sold on credit, and by
the total of the payments which mutually cancel out. The
law of the circulation 01 money is this: the amount of money
needed for the circulation of commodities must equal the
total price of all commodities, divided by the average
over of money. Furthermore, from the total of the prices
of all commodities must be deducted the total of the prices
of all commodities sold on credit and the sum of mutually
cancelling payments, and to it must be added the total of
those payments which are due to be settled.
This law applies to all social formations where there
exist commodity production and circulation.
Money also fulfils the function of universal money. On
the world market money strips off its local garbs, as Marx
puts it, and appears not as coin, but in its original shape-
gold or silver bullion. In the trade turnover between
countries on the world market, gold is the universal means
of purchase and payment, and the universal embodiment of
social wealth.
All these are the functions of money, and they are
interrelated, expressing in different forms the
essence money as the universal equivalent.
I n social formations based on the exploitation of man by
man (slavery, feudalism and capitalism) money bears a
class character, serving as a means of exploitation.
Paper money consists of money
Gold tokens issued by the state to take the
and paper money. - 1 ! d ld' 'ts
Inflation p ace a an represent go m 1
functions as circulation medium and a
means of payment. In practice, paper money has no value
of its own and therefore cannot perform the function of
the measure of the value of commodities.
Paper money was first issued in America in 1690. In
Russia it appeared for the first time in 1769.
However many paper tokens are issued, they still only
represent the value of the quantity of gold required to
the commodity turnover. If paper money is issued in
accordance with the amount of gold required to cover t.he
turnover, the purchasing power of the paper money
odes with the purchasing power of gold money. But usually
52
I
the bourgeois state issues additional paper money, because
as a rule its revenue is smaller than its expenditure. This is
particularly typical during wars, crises and other emer-
gencies. The result is that the value of paper money falls.
Take the folloWing example. Let us say that to cover the
circulation of commodities 5,000 million gold coins, each
worth one dollar, are required. The state has put into
circulation 5,000 million paper dollars. This means that each
paper dollar represents one gold coin. Now let us suppose
that the circulation of commodities remajns the same, but
that the sfatehas issued anotheZ:-S;J-OO" -million paper dollars.
Now each gold coin is represented by two paper dollars,
but for these two dollars one can buy only the same quantity
of commodities as could previously be bought for one gold
dollar. The value .of the paper money has thus depreciated,
its pl,iZ'chasing power has fallen.
This process is called inflation. It causes a rise in the
prices of commodities. But if the wages and incomes of the
working people in capitalist countries rise at alL they do
not do so as rapidly as prices. For this reason it is the
working people who suffer most from inflation.
There comes a stage when inflation leads to profound
dislocation of the country's economy. Various methods exist
for restoring normal money circulation. One method of
monetary reform is the exchange of the devaluated money
for a smaller quantity of new money (devaluation).
The nature and the methods of putting through monetary
reforms are detennined by the bourgeois state in favour of
the ruling class. One consequence of the monetary reforms
out by the bourgeoisie is the lowering of the living ,
standards of the masses.
In addition to paper m.:>ney there is
Crcdlt money credit money in capitalist countries. It
owes its appearance to money's
function as a means of payment. The simplest fOl'm of credit
money is the bill 01 exchange. It is the established form of
document in which the debtor undertahes to pay a definite
sum 01 money within a specified period 01 time. The bill of
exchange pcrforms the function of money, since it is trans-
fcrred from one pcrson to another during the purchase and
sale of commodities.
Originally the private commercial bill of exchangc was
53
current as credit money; this was a bill drawn by the
purchaser of the commodity concerned. But the private bill
of exchange was circulated within a narrow circle of
people, for it was accepted only by those who knew the
person who had drawn it. Subsequently it became more and
more the practice for the banks to accept and discount
private bills. But the banks replaced them by their own bills
which came to be known as bank-notes. A banh-note is a
draft on a banker for which the bearer can at any time
receive cash from the ban/;:. concerned.
Bank-notes can at any time be exchanged fOf gold or
other metallic money. In these circumstances, bank-notes
circulate on an equal footing with gold coins and cannot
depreciate. As capitalism developed, there was a relative
reduction in the amount of gold in circulation. Gold began
increasingly to be accumulated in the form of reserve funds
in the central banks of issue. The gold in circulation began
to be replaced by bank-noles and later also by paper money.
Although at first bank-notes were, as a general rule,
exchangeable for gold, later inconvertible bank-notes were
issued. This, to a considerable extent, brought the bank-notes
into line with paper money.
5. The Law of Value-an Economic Law of
Commodity Production
Competition
and the anarchy
of production
Where private ownership prevails, the
production of commodities is carried
out spontaneously. No institution
exists or can exist for the purpose of indicating to the
producers what commodity should be produced, and in
what quantity. Private entrepreneurs and farmers do not
co-ordinate their production with other bu!>inessmen or with
the conswners_ Anarchy, i.e., absence of planning, disorder
in production, is what prevails.
Anarchy of production is intensified by competition, by
the bitter struggle among private commodity producers for
more conditions of and sale, fOi
the highest posslble profits. CompetItIon and anarchy 0
production are a law of commodity production based on
private ownership. Each commodity producer, peasant,
54
<
handicraftsman or capitalist (of course, the capitalist does
not himself produce commodities, but on the market he acts
as a commodity producer), tries to make as much profit as
possible out of the sale of his commodity. But he cannol
foresee exactly what demand there will be for it. He mculy
knows that the commodity was recently in great demand,
and he tries to produce as much as he can. But other
commodity producers act in the same way. Consequently,
each works at his own risk, trusting to luck. It often happens
that much more of a commodity is produced than soc:ety
demands.
What, then, regulates production in a society where
private ownership prevails? It is regulated by the law of
value.
The law of value is an economic law of commodity pr?'
duction, by which the exchange of com-
The Jaw 01 value modilies is effected in arc.,,.dan-- u,ith
the amount of socially nece 1'1-
bour expended on their production. In other words, the
of value means that one commodity is exchanged for another
according to their value, i.e . the commodities w'li=l e
exchanged contain an identical amount of sociaUy necessary
labour and are equivalents. Consequently, the price paid for a
commodity (let us recall that price is the monetary e:tpres'
sion of value) should correspond to its value_ But, in actual
fact, the prices of commodities are either higheJ or ower
than the value of the commodities, because of the inthence
of supply and demand. It is a well-known fact that the less
there is of a commodity on the market and the more the
demand is in excess of the supply, the higher will be the
price, and vice versa. Can it be said, on these grounds, that
the law of value does not operate? No. The operation of
every law can only be understood after examining a vast
number of facts, If the different prices p.aid ever a long
period for any commodity are analysed, we lod that the
devifltlons v.bove and below its value cancel out, 0 that on
)0' the average' prices coincide with value
Dei-pile- the disorder, the anarchy of production prevai'ing
in commodity society based on private ownership of the
means of production, state of equilibrium, or pro{'ef
proportion, 1 re'lchcd f 'om time to among the
different bram .. lCS of econr'lly ComflKldity economy owes
this to the law of value, which is the regulator of produc
tion, and operates through market competition. Engels
pointed out that "competition, by bringing into operation
the law of value of commodity production in a society of
pl'oducers who exchange their commodities, thereby brings
about the only organisation and arrangement of social
production which is possible in the circumstances. Only
through the undervaluation or overvaluation of products is
it forcibly brought home to the individual commodity
producers what things and what quantity of them society
requires or does not require".l
The operation of the law of value in commodity produc-
tion based on private ownership of the means of production
makes itself apparent as follows:
1) The law 01 value spontaneously regulates the distribu-
tion 01 the means 01 production and labour among the
different branches 01 productiotl.
Social division of labour requires that there should be a
definite proportional relation among the different branches
of production. Without such a relation, production cannot
take place. Price fluctuations and the consequent greater or
lesser profitability of production cause the means of produc-
tion and labour to flow at times into and at other times out
of the particular branch of production.
Let us quote a bright keen-witted passage from M. Ilyin's
book, Story 01 the Great Plan, to illustrate this point. The
writer produced an entertaining picture of how the law of
value regulates commodity production, particularly capitalist
commodity production.
"Let us assume," writes Ilyin, "that Mr. Fox has come
into a sum of money, say, a million dollars. Money, he
knows, must not lie idle. Mr. Fox studies the newspapers,
consults his friends, and hires agents. His alert experts run
around town from morning till night asking judicious ques'
tions. They want to know what Mr. Fox ought to do with
his money.
"At last, a good investment is found! Hats! Hats have a
good market. for people are prospering.
"Mr. Fox builds a hat factory.
f th F
t G rna Ed,Oon". so, Mllrx. The
I Engels. "Pre ace to e Irs er n
PoDerty 01 Philosoplry, MoscoW, p. 21.
56
"The same idea strikes Mr, Pox, Mr. Crox and Mr_ Knox.
All of them arc struck by it clt one snd the '>ame time. and
all of them start building hat factories.
"Within six months the country has a few new hat
factories, which glut the shops with hats. The warehouse ...
arc bursting with hats too. Billb:>ards, advertisement <.:nd
posters cry hats, hats, hats. factories work on in full
gear.
"This is when something, Mr. Fox, MT. Knox and
Crox did not anticipate, happens. The public stops buying
hats. Mr. Knox lowers his prices 20 cents. Mr. Crox goe1
him one better and lowers them 40 cents. Mr. Fox, for h;s
part, sells his hats at a loss, just to get ,id of them.
"Yet sales keep dropping.
"Comes the day when Mr. Fox shuts down his factory.
Two thousand workers aTe dismh:sed and left to their own
ends. The following day Mr. Knox follows -;uit. A week
later nearly all the hat factories come to 1 standstill.
Thousands of workers are out of The new
develops a coating of rust. The factories are sold for S:":,lp.
"A year or two pass. The hats bought M" Knc)('.
Fox and Crox grow old. People start buying hal again. r.:le
stocks in the hat .;hop$ shrink. Dust-covered come
off the top shelves. A sbOltage of hats a;pe:' Hat rrices
go up.
"This time, it is no longer Mr. Fox' jut, ,ay Mr, Doodle
who launches out into hat manufac+-l:ing bl"iine,s. The
same idea strikes oth'!':- busi::?so;men-Mr.
Boodle, Mr. Foodle and M r. N'oodle. T :0 i:'Iegins all
over again."1
2) The law of value impels private commodit':l producers
to develop the prodllctifJe iQTces. We know that magni'
tude of the value o[ a .:ommodity is detcr:ninect hy the
socially necessary labour put into it The pr,"Idl1ccrs who
apply a higher technology and lll'o;uiuttion is bettcr
organised, etc., turn out thf"tr commoditic:> ,il t1i.an lhc
socially necessary cost But the commodities ..;re sold at
pricC"s consistent with social v :inount of
labour. The rc! ult is . these producers :'cccive .!
I M. Il:yn, 'o'y QI II t Platt. II.- ,co Pi':- Y.
of money and grow rich. This spurs on the rest of the
producers to introduce technical improvements in their
enterprises, too. In this way technology advances and the
forces of society are developed.
__ 3) Tn de1Uille -circumstances, the operation of the law of
value leads to the rise and development of capitalist
relations. The spontaneous fluctuations of prices round
the actual value intensify economic inequality and the
struggle among the commodity producers. The
struggle leads to some being ruined, while others become
rich. The operation of the law of value leads to the stra-
tification of the commodity producers into bourgeoisie and
proletariat, . to the of an ever-increasing
part of SOCIal productlOn m the hands of some capitalists
and to the ruin of others.
We have already established that the
The fetishism lab?ul' of each commodity producer,
of commodities whlle being social in nature, appears
in form as private labour. The social
nature of the sor;ial _commodity
producers, theIr mtrtUa'i depen ence on one another are
revealed and made manifest only on the market where
commodities . It seems that here not people
but enter mto relations with one another. In
condItions commodities become vehicles of the social
relatlons of people. The thing made by a commodity
producer ceases to obey its owner once it has reached the
and .into relations with other commodities;
begms to ltve an mdependent life, and a very capricious
hfe at that. Today one may receive 20 dollars for a pair of
shoes, tomorrow only 15 dollars. The day after tomorrow it
turns out that at all can be got in exchange for the
sho,es. sttll It transpires that people are running off
thelr legs m search of footwear and are prepared to pay a
lot of money for shoes.
This . independent, completely fortuitous life of the
on the. market impels people to regard the
havmg special properties which are not
e;ent m It. Where actually there exist social relations of
prt people see only relations between things. The
ati0bns people become concealed behind {he rela-
hons etween thmgs,
58
a
means of production was
relat}.ons natural to
lriv:a: ownership of the
Marx the fetishism of
commodities.
1
With the development of commodity production, the
fetishism of commodities increases and becomes more wide-
spread. When money appeared, it assumed its most complete
form-that of the fetishism of money. All things can be bought
with gold. And this appears in the eyes of people as a
natural property of money, of gold, whereas in reality it is
a result of definite social relations, those of commodity
production.
Marx was the first to reveal the secret of the fetishism of
commodities. Only when private ownership of the means of
production is abolished does the fetishism of commodities
disappear.
1 The word "fetishism" implies the religious deification of objects-
fetishes-which people themselves have made. According to supersti-
tious people a fetish has supernatural. magic powers.
Chapter III
CAPITAL AND SURPLUS VALUE.
WAGES UNDER CAPITALISM
At a definite stage of social development. commodi ty
production gives rise to capitalism. What is meant by
capitalism? Lenin gave a very simple, c1earcut definition.
"Capitalism." he wrote, "is the name given to that social
system under which the land, factories, implements, etc ..
belong to a small number of landed proprietors and
capitalists, while the mass of the people possesses no
property, or very little property, and is compelled to hire
itself out as workers."1
Under capitalism the working people have personal
-freedom but are- deprived of the means of producton and
liei'ice of the of subsistence. For this reason they are
compelled to work for the capitalists.
How, indeed. did the conditions arise in which the means
of production became concentrated in the hands of a small
group of people?
1. Primitive Accumulation of Capital
CoDditiODS Bourgeois ideologists deliberately
for tbe rise distort the history of the rise of the
of capUalism capitalist class and the working class.
They do their utmost to justify the unfair distribution of
material wealth, concoct legends about the reasons why
lenin. Collecled Works. Vol. 4, Moscow, p. 311.
society is split into rich and poor. From time immemorial.
they assert. the world has been populated by people
different trnih of character: some mdustnous and thrifty.
others lazy. The fonner gradually accumulated all kinds of
riches, while the latter remained what they had always
been-beggars. This explanation of the origin of capitalism
has nothing to do with the facts. . ..
Two basic conditions Dre needed for the rIse of capItalism:
first. the existence of people who have personal freedom
but who have neither the means of produdlon nor i.ht' meam
of subsistence, and who must therel re, sell theIr labour
power; and, secondly, the concentration ,,/ the means ot
production and large amounts of money Jl1 the hands of
certain individuals. .' .
These two conditions came into eXIstence WIthin the
system, during t.he process of stratification was tak.lOg
place among the small commodity producers. fhe establish
ment of the capitalist mode of produc::on was
by means of the crudest methods of .. oeroon the
masses by the landowne-s, bouqt'Olsle and
the organs of state pOWtr. . ..
. The p:-o-::"e<::<> known as 1}r!:rlIlive
The Isolation accuwulat.i.or. involved the creatIon of
of the conditicns requi;'ed for the
of production. capitalism. "Primitive accumulahon,
Accumulation wrote Marx, 'is ncthing else tbn the
. of wealth 'historical of divorcing the
In the hands t th 'd
ot the tew producer _fom e DlC1jl-; C. pro UC"
tion. ;
This process constitutes the prehistc:'Y of capital. The
primitive accumulation of capital too}; shape in. its
typical form in England, where the landlords fOfCIbly selZed
the common lands of the and even evicted them
from their homes. The landlords turned the land appro-
priated from the peasants into p.3stures for sheep or leased
, it to farmers. At that time wool was in great demand for
the growing textile indmtry. .
The rising bourgeoisie en:n went so far to appropnate
state land and plunder church property. Large numbers of
, Mmx. C_ ....ital, Vol. r p.
61
people deprived of a livelihood became tramps, beggars and
highwaymen. The state authorities cl:ue} laws against
the expropriated who tried to retall1 theIr property. In
England, for example, they came to be known as the bloody
laws. These ruined, plundered people were driven into
capitalist enterprises by torture, flogging and branding with
hot irons.
Two results were achieved by this forcible expulsion of
the peasants from the land: firstly, the land became the
private property of a comparatively small group of persons;
secondly, an abundant influx of into industry
was guaranteed. Thus the first essential condition' was
- create a for tnense of capitalism-the presence of a mass
of propertyless people, enjoying personal liberty, but
deprived of the means of production and subsistence.
Marx indicates the following basic methods of accumulat-
ing the great wealth required to organise big capitalist
enterprises: 1) the colonial system-the plundering and
enslavement of the backward peoples of America, Asia and
Africa; 2) the system of taxation-creation of monopolies
and other methods of appropriating part of the taxes levied
on the population; 3) the system of protection-state support
for the development of capitalist industry; and 4) brutal
methods of exploitation.
Thus, primitive accumulation resulted in the creation of a
huge army of labour, deprived of the means of production,
and in the accumulation of immense weal th in the hands of
the few.
2. Conversion of Money into Capital
The general formula Money does not in itself constitute
of capital capital. It is known to have existed
. . long before capitalism arose. Money
IS converted mto capital only at a certain stage of the
development of commodity production. Before capitalism
there was commodity circulation 'which can be expressed in
the C-M-C (commodity-money-commodity), i.e.,
the sellmg of one commodity in order to buy another. The
movement of capital is expressed by another formula:
62
M-C-M (money-commodity-money), i.e., buying in order
to sell.
The formula C-M-C is typical of simple commodity
production. In this case one commodity is exchanged for
another through the agency of money. Money acts only as a
medium of exchange, it is not capitaL The purpose of
commodity exchange is clear. A bootmaker, for instance, sells
the boots he has made in order to buy bread. It means that
one usc-value is exchanged for another.
The formula M-C-M has a totally different character.
Here money is the starting-point and is used as a means of
making a purchase with a view to making a sale, i.e., It
functions as capitaL With his money, the capitalist buys
definite commodities in order to convert them into money
again. The starting and finishing points coincide: at the
beginning of the process the capitalist had money and at the
end of it he has money.
But the movement of capital would be pointless if, at the
end of the process, the capitalist had the same amount of
money as at the beginning. The whole meaning of the
existence of capital is that there should be more money after
this movement than there was at the beginning. The ultimate
aim of the capitalist's entire activity is the extraction 01
profit. Therefore, the movement of unaer capitalist
conditions was expressed by Marx in a formula which he
called the general formula of capital: M-C-M', with M'
standing for the money Originally advanced plus a certain
increment. This increment, or surplus over the original sum,
Marx called surplus value. He used the letter '5" to stand
for surplus value.
Capitalists use money not as a medium in commodity
circulation, but as a means of making profits and of self-
enrichment.
This movement of money under capitalism is an endless
process during which money acquires the property of being
able to increase. Self-increasing value, or value which brings
in surplus value, is called capital.
How, then, does this mcrease of capital take placef Maybe
it takes place in the sphere of circulation, in the transaction
of buying and sellingf It would be wrong to think S?,
because this transaction (in the sphere of circulation) .15
merely an exchange of equivalents, of values equal In
63
magnitude. If. however. all sellers succeed in selling their
commodities 10 per cent, ;hall we '.lay, above their value. then
when they become buyers. they have to pay back this
same 10 pcr cent to the sellers. Thus. what the com
modity owners gain as sellers they lose as buyers. Yet. in
actual fact. increments to capital arc secured by the whole
..- class of capitalists.
The question arises as to how the capitalist. who buys
and sells commodities at their values, can nevertheless extract
surplus value.
The general formula of capital contains two elements-
money and the commodity. Consequently, the gl'owth of value
can take place only due to changes occurring either in money
or in the commodities. It is common knowledge. however.
that money in itself cannot change its value and provide an
increment. This means that the source of the increase in
value must be sought in the commodities.
For money to be converted into capital, the capitalist must
find on the market a commodity which. when used, creates a
value greater than that wutch if aduaTIy possesses. This
commodity is labour power.
Labour power is the aggregate of the
Labour power physical and mental
possessed by man. which he makes
use-value use of whenever he produces material
. . wealth. In every society, labour power
IS an essentlal element of production. However, it becomes
a commodity only under capitalism. that is, when the working
are deprived of we means of production and
subs1stence. An they can bring to the market in these
circumstances is their labour power.
Like every other commodity'. labour power must have.
and actually does have, a vafue and a use-value. The value
of power is determined, as in the case of every other
by the labour-time socially necessary for its
Labour powel' is man's ability to work. It
long as its owner remains alive. And to
maintain a worker requires a definite quantity of
the means subsistence. Consequently. the value of
labour power 1S determined by the value of the means of
lUblistence requisite for the maintenance of the worker
The quantity and quality of the necessary means of
subsistence for the worker depend in each country on certain
factors: thc level of ceonml' development. the cir(umstances
in which the working class took shape. the length of time
this class has been fighting for own Interest, and how far
its struggle has been IUccessful .
The value of labour power the v.alue of those
social and cultural of the workmg class that
have developed in a given country over a definite dod of
history. Marx pointed out th : "in contradistinc".'on Ulerefore
to thc case of other commodities, there enters intu the dekr-
mination of the value of Jabour ryower a historical and moral
element",1
power is repJ-:!oj':"hcd by the worker'.; family. For
thIS reason the value of labour power should al:>..') jnclude
the value of the means of sabsistc!lce required by the
members of the worker's family.
Finally. a man 15 not bom a skiileJ workl-I". 1::1 =rder to
skilled. labour power there ll!5 .;J be expenditure on
trammg. ThIS expenditure is also inch.:deC :.1 the value of
labour power. In other words, the va.hte of labour power is
determined by the value of the vilpl neces$ities needed in
the given country to resi.::-e the physical strength of the
worker, to satisfy his own so.::a1 and cultural requirements
and those of his family and to cover the expense s of J.cqWrUlg
qualifications. The value oj labow: pO"...:er expTl'5sed in terms
of money is the price DE labour powec. Under Clpitilism.
wages are the pnce .:f labour power.
Being a commodity. abour p.::>we;" also has a me-value.
which consists in the wage-worker s capacity during the
labour process to Iuc gre3ter than the value of his
labour power. k is this property of rabour power to be the
source of 'sJ,.lrplus value that interests the capitalist.
Let us now..E.1O'e l:u>w surplus value is created through the
consumption of la1)our and how the capitalist eru:iches
himself,
I M"r. C ... n.: . .i. \.Jl I, p. lj:.
6'
3. The Production of Surplus Value.
Capitalist Exploitation
Specific features of Labour power is used during the
tbe labour process labour process, which is always aeeom-
under capitalism pUshed in a definite social form. This
social form is what is known as the relations of production,
and these arc based on the form of ownership of the means
of production. The particular features of the labour process
depend in every society on who owns the means of produc-
tion. In capitalist conditions the means of production belong
to the capitalist. while the worker is deprived of them. For
this reason, the following specific features of the labour
process are typical of capitalism:
Firstly, the worker works under the control of the
capitalist to whom his labour belongs. The capitalist decides
what is to be produced, on what scale and by what method.
Secondly, not only does the worker's labour belong to the
capitalist but also the product of his labour.
These specific features of the labour process under capitalism
convert the worker's labour into a heavy, compulsory burden.
Tb
Capitalist production is a combination
e process f th f 1
of &"rowth of value. 0 e process 0 creatIng use-va ue
Capitalist and the process of the growth of value.
exploitation In a commodity economy use-value
cannot be produced without producing
value. When the worker makes a commodity he expends his
labour. The nature of the labour is twofold. On the onc
hand, it is concrete labour and it creates use-value. On the
other hand, it is abstract labour and it creates the value of
the co"!modity. For the capitalist, the production of use-
values IS only a means of achieving his aim. This aim and
the chief motive of capitalist producUon is the creation 01
surplus value.
Let us consider how surplus value is created.
When he start:s up his business, the capitalist buys on the
market everythmg he needs for production machinery,
tools, raw materials, fuel and labour' power. Then
production starts: the machinery and tools operate, the
workers work, the fuel is consumed, the raw materials are
traufonned into the finished product. When the commodity
G6
is ready the capitalist sells it on the market and with the
money l'cccivcJ he buys morc raw materials, machines.
labour power, etc.; in other words, the cycle is repeated. This
cycle can be depicted like this:
Lp
c .... P
Mp
C' 'I'
, ,
money-commodity (labour power and means of produc-
tion) -production-commodi ty-money.
What is the value of the finished commodity?
Let us suppose that the capitalist owns a clothing factory.
In order to produce suits he buys sewing machines, woollen
cloth. trimmings (lining, buttons, thread. etc.) and labour
power. Suppose that to make 500 suits he buys 1.500 yards
of woollen cloth at $30 a yard, that is, goods to the value of
$45,000. On the trimmings he spends $30 per suit. that is.
a total of S15,000. The production of 500 suits entails
depreciation of the sewing machines, and other expenses
(lighting, heating, etc.) to the amount of $5,000. Expenditure
on hiring labour (500 workers. each recclvi:lg $5 PC1' day)
amounts to $2,500.
Thus the capitalist has acquired all the elements essential
for production. Hi!; expendi':'Jrc on 500 suits is as
follows
Value of woolltn cloth
Value of
Value of dCpll c:alion, etc
Value of laboUi powe:'
/'Jlal
.,5 . 00
fl5.0.)o
,:i,QuO
,:: ,fi'JO
'ti7,50
0
The value oj' ont: suit (67,500:500) is SUS. The capitalist
discovers on the> market that similar suit:> arc sold at $135 per
suit. So he, too, has to sell his suits at this price. It follows
that the l:apiwlist hRS advanced S67,500 for production and
that ,1fte1" the sale 01 the commodities produced (S135 X 500)
he l'eceiveJ t he :same $67,500. No surplus value has been
crc",tcJ. money has; nlJt been tl".lnsfonned into capital.
How then is surplus v::t1uc
,.
,
1

\
The point to note i5 the ,the
of his power not In the (,ourse of a \\ worRmn
day 'but during part the i.t:1Y. In. houn.
But the capitalist compels hun to ,fOlk fot, malt.: than five
hours a day. The capitalist hus paId the o.:'uly value of the
labour power and is the owner of the of
commodity during the whole of the worklllg. day. For this
reaSon he compels the worker t? work for eIght or ten or
even morc hours. This lcngthcmng of the labour process
results in the worker creating more value than that of the
commodity known as labour power.
Let us suppose that the capitalist makes the worker work
not for five but for ten hours. Over ten hours the workers
(in our example. there are 500) will use up twic: as much of
the means of production and will produce tWIce as much
output, that is, they will make 1,0,00 suits. ,
Let us noW consider the capitalIst's expendIture:
Value of woollen cloth,
Value of trimmings .
Value of depreciation
Value of labour power
,
,
,
,
'90,000
'30,000
'10,000

Tdal ,132,500
In a ten-hour working day the workers have produced
1.000 suits. Their sale on the market (at $135 each)
brought in 5135.000 to the capitalist. From an advance
S
132 SOO he has received $135.000. The originally advancl
. 'P US
amount has grown by $2,500, This sum of $2,500 1S SUI
value. Money has been transformed into capital. f t
The acquisition of surplus value is determined by the ac
that the workers put in more hours of work
IEquired for the reproduction of the value of thelr la
power. Consequently. surplus value is . result ot
fj,doitation 01 the working class by tlle capItalIstS. cd by
Exploitation of man by man is not engender f dal
capitalism. it existed long before it. In slave, and
rrieties. the labour of slaves and serfs was or
labour. and their exploitation was not concca
68
Thing< t""C different :Jndcr capitalism. The worker here
is no }(Inger per onally d('pcndent; he doc1 not belong to
11 [1ST' 'cui.l:'" dpitali ,t. The latter cannot r'orce
h'm to work But the worker has neither means of produc-
tion nor mc;!n, of subsistence and is compe.ned to sell his
labour row.er. HuftQc' free, the worker to work for the ;'
'1.'hal '. the system .. f wage labour is a
sy"tem ) wage sl.lvct1.
Under c .l'nitnlje,111 the forced tcr of labour is;
camouf1agcd,
After revealing the secret of c ,list cx"loiution. Marx
discovered the basic r.contmk \.lW of the CJpitd
1
ist mode
of production, He wrote: "Production of surpll1,!; value is
the absolute law of this of
The law of surplus v-'uc enable!> us t.:'l understand and
explain all the processes and phenomena taking place in
capitalist society. It expresses exrloiting nature of this
mode of production. This law determines Lhe intensific.l'
tion of competition and the anarchy of t...; :,;. produC"-
tion, the growing impovershment of the work;ng people,
increasing unemployment . he I'ld !;h">l"pening
of all the cClntradictkns c .
Necessary
and surplw
labour-time
In the capitalist co;t::orpnsc the work-
ing day lnto two parts: necessary
l.;lbour-time and surr1uc; labour-time.
the worker's labour
;.s divided into nE'-ccssary ::.U:l'!us lacou,_
Nuessary labour-time t:.'ld a:'c tbe parts
o( the labou" Lmc and .:-: C.e L,boul' cxrenJcd by the
worker which arc requirt>o for the 1'2r'rodu...-:lion 0f tLt' value
of his labour power, i.e,. of the vJJue of the me.].ns of
subsistence he requires, The c.lpitalist pays for the
labour-time in the fo;m of WJ9'-s.
Surplus labour-time and surplus labour .lre the parts of
the labour-time and of the labour which arc expended on
the productic 01 slIrrlus product. Under caritalism,
surplus product as"umcs the form of the surplus value
appropriated by the cUl,il.lllst, The mt10 of. labour <..
or surp}U!; labour time t," 11c .. ,'ssary bbour or' .necessary
labour-time the of exploi!.lti(lu of the
I Mar. CIlIlI' :1. p. 6;8.
,
k
Consequently, surplus labour time nnd
war cr. . 1 1 h h ,
labour express a definite SOCia rc a!lon W Ie IS C laracter'
. t af the exploitation of the wo
rk10
9 class by the owncl's
h . ,.
of the means of production-t c capIta lsls. .
Capitalist ownership of the of und the
exploitation of wage labour divide bourgeOIs SOCIety into
two antagonistic classes.
Marx and Engels proved that society
Class structure ot
bourgeois society
became divided into classes only with
the appearance of private ownership
of the means of production, i.e., of
the land, the bowels of the carth, the instruments of labour,
in a word. of everything people need for the production of
material wealth. One section of society, comprising a
minority, possesses the means of production. Because of
this, it is able to exploit the other section of society which
is deprived of the means of production.
Classes in an exploiting society, said Lenin, are groups
of people one of which can appropriate the labour of
another owing to their different relations to the means of
production.
The first class division of society was the division into
slave-owners and slaves. With the transition from slavery
to feudalism this was replaced by the division of society
into the class of feudal lords and the class of serfs.
Characteristic of bourgeois society is the existence of
two basic antagonistic classes-the bourgeoisie and the
proletariat. The bourgeoisie is the class which owns the
means of production and uses them to exploit the wage-
workers with a view to extracting surplus value. The
proletariat is the class of wage-workers, deprived of the
produ:-tion and therefore subjected to
explOItation. BeSIdes the bourgeoisie and the proletarlat
there also exist under capitalism the classes of landlords
j and peasants, as survivals of the previous, feudal systeI"?'
The bourgeoisie and the proletariat are antagonistic
classes. i.e., classes whose interests are opposed and
irreconcilably hostile. As capitalism expands, the proletari.at
>- grows in strength, becoming increasingly conscious of Its
own class interests, and develops and organises for
struggle against the bourgeoisie. The chief feature whIch
characterises bourgeois society is the class struggle of the
70
proletariat agaInst the bourgeoisie. The prdctariat is the
most revolutionary class in this sOCiety. the gr3 ....cdigger
of capitalism.
The bourgeois state safeguards the and
political inequality that exists under It protects
capitalist private ownership of the means of production.
is instrumental in the exploitation of the workiny people.
and suppresses thf"P- stT'lggle against th" cClj'italist system.
Bourgeois sociologists and lawyers the bourgeois
state as existing above "a:;se-. above SOCiety. ActuaJ1y.
however. the bourgeois state is the :'": litic..!' oiganisation
of the class which dom:natC'<, the economy It is a dictator-
" ship of the bourgeoisie.
The main function of the exploiter state is to hold the
exploited majority in check and to keep it to
the ruling classes. The bourgeois state has different forms
(monarchy or republic). It has also different regimes
(democratic or fascist and despotic). But the sllb:,tance of
all these forms is the same. They a:e r's of the
bourgeoisie. The purpose of the e-q>loiter statc is. to
maintain and strengthen the system o!' hired
labour by capital.
4. Capital and Its Components
Capital as a sodal Bot! _ ::::eois eccnc that
relation t!vr:rY 01 beginning
ot produC&lon w,:th the stones .llld :;ticks of primitive
man, is capital In actu.11 fact the means production arc
not in themselves 1.:J'7'ital; they are indispens3b!e for the
existence of any socicty, and in this sen:::e are .of no account
to classes. The means of production become c.lpltal only when
they are the private property of are used
the exploitation of the work!ng class. CaPItal!S not a defiOlte
sum of money and is not the mean!': o[ a
historicallv detennined svcio-producti\'e relation. 10 whIch
the means and inst'!"uments of production, as well a.s
bask means of subsistence. arc the property of the <..
class, whereas 1 he working cla,%. as the chief
of sc,iety is deprhco of the means of productIon
:/
and the means of subsistence; so the working class has to
sell its labour power to the capitalists and bear the brunt
of exploitation. In other words. capital is value which,
tlJrough the exploitation of wage labour, produces surplus
value.
Of great importance for the elucidation of the essence of
capital and the mechanism of capitalist exploitation is the
division of capital into constant and variable capital. It is
this division that enables us to answer the question: Where
does surplus value come from?
When he starts up production, the
Constani and capitalist spends part of his capital on
variable capital erecting a factory building, on
purchasing equipment and machinery,
fuel, raw materials and auxiliary supplies. This part of
capital. which is embodied in the means of production, does
not change its magnitude during the labour process. It is
only transferred to the newlyproduccd commodity to the
extent that the means of production become used up or
out. For instance, the value of the raw materials,
iar supplies and fuel is completely transferred to the
product during each operation of production. If we
a machine, it may serve in the production process for,
ten years and in this case it annually transfers ten per
of its value to the new product. The part of capital
which is spent on the means of pr"O<iuction (machines,
machine tools, raw materials, etc.) and which does not
in ma9nitude is called constant capital. Marx used
the letter "c" to denote constant capital.
The capitalist spends another part of his capital on the
purchase of labour power. At the end of the production
process he receives a new value which has been produced
by the workers in his enterprise. The new value is greater
than the value of the labour power, for which the capitalist
paid in the form of wages. The part of capital spent on the
purchase of 1ab9:Ur power, which grows in the production
Piocess as a resfllt of the creation by the workers of surplus
value, is called .pariable capital. Marx used the letter "v"
'" denote variable capital.
It was Marx who first divided capital into its constant
,. variable parts and thus disclosed the secret of capital.
that only variable capital produces surplus value.
71
<.
Bourgeois economists do not recognise the division
of capital into its constant and variable
As advocates of capitalism they to. .ltS
exploiting character. What they recogOlse 15 .the. dt.vlsto.n
of capital which is by the m hIS
commercial accounts-the diVISIon of capital fzxed
and circulating capital. This division of whIle help
ing to explain the mechanism of production., glosses over
capitalist exploitation.
The way in which productive capital
transfers its value to the finished
product-immediately or by stages-
underlies the division of capital into
Fixed and
circulating capital
fixed and circulating capital. ..
By fixed capital is meant that part of the capItal whlc.h
transfers its value to tile nnished product 1)y stages, as It
WNu'S out (premises, macninerY, I1lJ.chine tools). By
circulating capital is meant that part of the c:.lpital which
is spent on the purchr. sc of power, : .... w materials,
auxiliary supplies, fuel, etc.. and which Jurinq a single
period of production is completely returned to the capitalist
in the form of money when the commodity is sold.
I
The division into fixed and circulating capital c:Jmplctely
conceals the radical difference between the means of
i ,">-production and labour power. Here labour power comes
l under the same heading as the raw and auxiliary materials,
fuel, etc., and together with these is contrasted to the other
means of prod.l.lchOQz .Ibis Qiyision conceals the special role
played by labolLr power in cre.J.ting surplus value, and
thereforE: camouJiages t:apitalist exploitation.
These two ways of dividing capital nlay be shown as
follows:
Diuision accordiMR
to rait played in the
process 01 t'xploita
tiM
VClI'iable capt/a}
Didsion nccording
to manner 01
circulation
f
Faclor'l Prernis.'s. }
"t;lI.ipment, Fixed capItal
I Rll:-' and auxiliary
I materials, Ildl } Circul4lillg ropilal
I wages
73
l\Iass and rate of
surplus value
Surplus value h.:lS a definite l11;tnniludc,
either absolute or r,'tntivc, The
absolute magniludl' of surrlus value
is called the mass of surplus value. It depends on the
:... of exploitation and the number of exploited workl'rs. The
relative magnitude of smp1u5 value IS expressed in the
rate of surplus value or the degree of cxpJoil(Jlioll.
By explaining the division of capitDI into constant and
variable capital, Marx not only revealed the nature of
capitalist exploitation, but also showed the method of
". measuring the degree of exploitation.
Constant capital (c) docs not create surplus value. there-
fore when determining the rate of surplus value it should
be excluded. Variable capital (v) creates surplus value. For
this reason, to determine the relative magnitude of surplus
value. the latter should be taken in relation only to
variable capital. By doing so we get the rate of surplus
value, which is the exact expression of the degree of
exploitation of labour power. If we take s' as the rate of
surplus value, with s standing for surplus value, we get
>
the equation: s' =-; x 100%. Let us illustrate this. Suppose
a capitalist advances the following sum (in dollars) for the
production of commodities, 100,000 c + 20,000 v = 120,000.
He sells the commodities produced by his workers for
$140,000. This means that he receives 520,000 as surplus
value.
What will be the rate of surplus value?
: x
The example shows that here the labour of the worker
is divided equally into necessary and surplus labour, i.e.,
half the working day he works for himself and the other
half he- works for the capitalist for no wages. The greater
the r proportion of surplus labour to necessary labour, the
higher the rate of exploitation.
As capitalism develops the rate of surplus value grows.
In the U.S.A. the rate of surplus value in the mining and
processing industries, calculatcd from official statistics, ...
145 per cent in 1889, 165 per cent in 1919, 210 per cent In
74
1929,220 I cr cent in 1939, lbout 260 per c t 1941 and
306.3 per cent (in the pro ... sing Indus!r'e. alone) in 1 i.>5,
How IS 'he incr.!-lSC ir. the dc;:ee of cxploitat on of
labou. ad1ievcd unt:cr C"lPItc..: "Il ?
G. 'J'wo WaYI of Increasing tbe Degree
of Exploitation of the ""orkfng Class
Absolute It How 1'1'(1.1 what 'las -)np. bCOlC
'"IlIrplU5 value th .. t .lpitc:
11
SM 'e wc-rking day
15 d; iricd in'"l two P -ts' 1 th::
necessary lAbour .... ne .. -'lircd I r-rxluce ;lr 4-not nt ....
commoditfcs b e., Jal 1 ,,'alue to thr u power
used, and 2) the s .....-plu laY<our.t n dunnJ
worker is working for t'l .... c -italb .. _ i c. ltiJ1q u::vJ lS
value.
Lct us take for example a day f! ... t}C.UTS, f
which 5 are '1lell!' sary nJ and 5- S:.lr h:s labc .11"
time, Let us "xpress this 1;1 .. n.
, _.
-
h lis ese the 1' .. e o.

L
-
"
v ) to., n.o::
,
, . ,t t
._-

,
t
If the npi 'CS! v 1,,1;.::;;. r JLC T _ ";11' '....... t t b I '--' . , .- 1, 1,r
engthcning "t; , nJ t 1t. I.- p' If la 11 tIm\.. will
grow 14 nger And thiS .:! DieiD .... 1 mLrc_ .. 1 the n: ct
surplus Vallf' n I'l.e dt:1'rc:: o. .m Of I Itt: "'('Ir'. "'r <.;u-
pose the wOIk nJ da" S lcngl"tned Iron 10 t.:> :.2 t"e
'abour' me w, then 1:; ," '1l1d lot hour hif1!J
the case, the ]tt:' f S.lr 1'15 V-'ll.1e w!l e' JO 140
pel' cent.
The illl pIll! value produced by lengthening th .... wOlk:ng
?ay Marx c:: llled a!Jsolute SUI .us rJal But ince there
no end to he c'pitd'ist's IN' sur Ius vaJue, he
w 'I . k h . >ee ::l m4 el! e t e engtJ-- of 1C work':Jg to tht:
extreme Ii n t
To what limits can the capitalists lengthen the working
day? If they could, they would compel the workers to work
24 hours a day. But this is not possible, for a man has to
spend a certain part of each day and night resting, sleeping
and eating. These needs determine the purely physical
limits of the working day. Apart from the physical limits,
there are also moral limits, for as a membcr of socicty, the
worker needs time to satisfy his cultural and social require-
ments (reading books and newspapers, going to the cinema,
t o meetings. etc.). But since both the physical and the moral
limits to the working day are elastic. the wOl'king day
under capitalism can last 8, 10, 12 hours, 01' even more.
In the early stages of capitalism, the state promulgated
special laws to lengthen the working day in the interests
of the bourgeoisie. Later, with the spread of machine
production and the growth of unemployment, the need for
legislation to lengthen the working day disappeared. The
capitalist was now able to use economic pressure to compel
the workers t o work the maximum possible number of hours.
The working class then began a stubborn struggle to
shorten the working day. The struggle developed earliest in
England. It became particularly stubborn after the Congress
of the First International in Geneva and the Labour Congress
in Baltimore in 1866 put out the slogan demanding an eight-
hour working day. The working-class struggle resulted in
most capitalist countries adopting legislation to restrict the
working day. How then does the capitalist decide the pro-
blem of getting a large amount of surplus value, if the work-
ing day cannot be lengthened indefinitely?
The second method of increasing
Relative surplus value is to shorten the
surplus value necessary labour-time, keeping the
length of the working day unchanged,
so that the amount of surplus labour-time is thus increased.
How is this done'? Let us recall that the value of labour
power is detennined by the amount of labour which must
be spent on the production of the worker's means of
If there is an increage in labour productivity in
lnd.ustnes producing consumer goods, the value of these
artIcles decreases. This will mean a reduction in the value
of labour power and, consequently, a reduction in the
7.
necessary labour' time And this will ae'ount for th .
. hI' "e Increase
In t c surp us labour-time.
Suppose we divide a 'II hour working wy ,nto ; hou ."
necessury an.d 5 hours surplus labour'"lime. Suppose that as
a IOcrcascd labour productivity the neccss.Jry Ja.
15 from 5 3 hours. Then the surplus
labourtlme WIll mcrease from 5 to 1 hours.
The of CXplO1tation (or the rate of surplus value) Wl_!
be. h1gher, although the working day has not c'anged. In
thIS case the working day nay be depicted like thIS;
I
I'; hours
I
') Jrs
I
necessary la1' r
.:: ;>iu 1 I r ti;n
The rate of surplus value ex ressed as " pc:: ..... ntage. WI]
5
be s SX IL.J .ICO .. r\.. .. lt.
I
3 h)urs
J
netc_ ry lal)\ rtil
urp s
"
-
The rate of surplus value w 11 be s 3 X I
cent.
In our example. the rde of surplus alue ,_;; n .... from
100 per cent to 233 per cent :10t as a reswt c. al abs"'J
increase in the length of the wo;king day bul a re)ult
of the chanl:.cd proportion betw:en nc_..!:- ry and !!!plu'S
labour-timC'.
Surplus value which arises fr.:.m a reduction in the
necessary labourtime and a con'esponding increase in t'1c
surplus labour-time, upon the increased lahour
productivity, is called 'telative surplus value. Under cc,tain
conditions alsO" obtain- extra surplus value.
Extr,,;. (or ddditil oa1) su: pius is
Extra a va:icty of relative surplus value.
surplus \'alue f'.very capitalist seeks to extract as
much profit as can. For th"S)urpose
he lew machinery and technology and thus
secureS a highc. rodurtivity of labour, tbf' nct result being
that the indiv'du31 value f goods produced nlis e"lterpris
e
is lower than the average vaJu,c of the commodities
I'rodm.:cu in the relevant bllO(h.ur Indusl 'Y. As L.1C
nee of n commodity is Ictennmcd by !9C condl"
tions prevailing in P10liw t on, the capltnlt,st ohtd ns a
higher rate of surplus v.l1m': W\t'1 the usual
rate.
Extra surplus value is the difference between the social
value of the commodity md Its lower individual v.alue It
has two specific features: firstly, it is by those
individual employers who were the fir;t to Install "lew,
more prod\.1l,:livc pbllt. Secondly, su:pJus i5
obtained only temporarily by the npltalist In question, for
sooner or later the new machinery will be introduced in
the enterprises of other capitalists, il:ld whoever was first
to make usc of the new equipment will 1< SC lis advantag:
dnd cease to obtain extra surplus valuC'. Disappelr ng from
one enlerprise. however, Lhis kind of surplus value 'I)pe'lrs
in another, where new and still more oCtv.:)r"I,. ...d naehinel'Y
been intmducl'd.
""tr.1 surplus value days )n rn'll r 11 t de i1l the
development of capltc:.:"Sm. The drive to 01 tam it rcsul,
in a tl ntancous devclopmc,t Gf tc 1-onokgy Si 1l:C c.;J.\...h
capItalist "]ims at his own c'1,r'chmcnt. lU: tr C1 tl' ke('p hi
new "laC:li,,"ry ond roduction "('hnolop:y 1 eClet, l. erreby
ret..:.'ng t'1c lnt"<ldul. 011 1 oth cnl('l'p. iSC5. 11 ;
cnhane com v: il !CJ dm("ng the itali ts and am r11 l,t s
the "ontnrlk Ie "'5 amono The ul nate result 15 l at
h
some em plovers OTC ruuled, wh11e oth. 15 grow l' e
f n 01 'ler WOI as though in'ltrllr1r ... tal n th ..I
ev
c1opment
of the producth:c torces. the pursu t f x -. u pics
value retards the' rogr .5.
It "lal v" surplus value hPl'S its !"Iure
1:1 t lC <:" ..lb, ttl' plodl.! IV ty
fhercforc, ,m anal:-;s.:s of i' value
r"V"11. ,hrlc h's. r c31 ... s in the
i e cl roductivity lnd (; .t" Ism
Threr .tares or

de\'dopmen&
In Industry
mplc c.:or "'pcr1IJC', mdnuf ... __ ; u n! ... ne p. ,I
The fir t nd mz t c1emL t"rv fc.p 01 labour
wa. clJpJtalist .l.:r.: Jt" cO "f- rat. :3.' C ene.: lay H
f
"! itl'
capitalist .. ' i l' 1 ' WI,). k 'r._ ....
large numlcr of w,,:'J':,,_ I (.;1 wb -:i. y r
'dad of w rk

When m.1ny workers jointly perform one nnd the .. arne
kind of work. the capitalist has the opportunity to compare
the labour productivity of individual workers and make
them increase the tempo of work, the net result being that
the productivity of labour increases. The total productivity
of five simultaneously employed workers is much higher
than their total productivity if they work apart from each
other. This new productivity costs the capitalist nothing,
since he pays just the s;tlne as he did before for the labom'
power of each worker separately; but once production is
greater he cxtl'ads more profit. In addition, where labour
is performed by many workers together, the C<lplt':llist
economises on prcmises. lighting, he<ltinq, etc. It also
discovered in Wily that some pcople Jrc "'ett!" at
Opcr,lI1.011. a.nd other excel at different one Al1rJ t lC
Fnd ... it more lliv':lI1tageous to put the WI rite on
the or hc .illes best. In thi5 way division of luI U I'
gr ... est .. Uished ill the workshop. Clpilll st cnterpr.
based on divI'11 n of laboUJ 1nd hand II aft tL '1ll1que ire
t..ll cd malluiaftorit's.
Div; ion of labour within 1e nanufactory led ... 1 qrelt
ir "Cl e In ,p rodu.,; i\r '! or lat- ur The. roduc 'on ,.f
.. dl Jr 11 hc'S a car e-x:ample , le cighl enll ccntu V
] rr nu! lctOIV. cmpkying ten lrned out 3.000
!l day I.r 4.800 pcr wOJ
1
'cr Yet WI: 10ut divi' ion
d JaboUl one w().ker auld rodue donI,! twcnty
I -.11(' 1 day. >rodu< ., ty mul: pI c ., o me,.
Labour ir: tJ!e n_ luf.! ry were vc v 1ard.
c..:or:. nu,ll rcpctitk ..... 01 ne und the lmf" :SlInpJe s: ,f
nents cr ;>lled 1f! w r. phy' I< .lJiy nd nOlllly 1 :;
W"". :lay ]( hed 1 B Jnu:; r ml""rc, and \\ w "
,-x" llely Ii w
.ire pi :" red the n I r lh("
l,,'t n t u;J( ,lIe TI31h ne IrodUI on, \I 7. 1. the
imlli:,. ,.: (.f we k nq pc 11 on. n.:.ldl. it po ibli! II
,..Ia,... lC! wo. ers I!.lr: bv m,:,hir: 2) the fulfilJl1<..1t
c. lr t (J l' on led to 1 sp _ .:.llj ation "f t ne working
I With 1(' rC..II th ,t codv mee rom 1andopC'l".1tt'd
. 0 ma< :1.'1 po lblc J) ill.Jnufa< lrc rcI41red
n' er s,II j v.k 'r the TI.:.lchme ldcs"v In
l I 1anl f 're pia\{_ 1 11 tl r 1(' ,
N' .' fa Jrc '" trans] on fo: m J lding to the
I
,
factory. First there appeared what is known the working
machine. It performed the same opcrat.lons as those
previously carried out by the worker. But It was
onc worker's muscular strength to set such mach me In
motion. A motor mechanism-the steam t.hen
invented. It served to set a multitude of machmes
in motion. Eventually all this resulted in the rise of
capitali st factory, the which used ,a, connected senes
of machines for the productlon of commodIties.
The use of machines and their revealed
ever new possibilities for raising the pl'Oduchvlty of labour
and for making commodities cheaper. In consequence of
the increasing use of vast masses of small
commodity producers became rumed and the workshops
using hand labour had to close down. ,
The capitalist factory marked a new stage In the
enslavement of labour by capital. Here the plays
>- the role of an appendage to the machine. Capltahst use of
machines leads to a longer working day, the employment
of women and children in production, the formation of an
army of unemployed and worsened conditions for the
proletariat. .
The capitalist docs not always make usc of
The limits to its use are set by the fact that the capItahst
introduces a machine only ".mere. its price is less than the
wages of the workers displaced by it. The, capitalist
it amy it it is to his advantage. Machme productJon
therefore does not eliminate labour performed by hand.
Manual labour is widely used to this day even in the most
industrially developed capitalist countries, like the U.S.A.
and Britain. . ' d
The transition from manufacture to the factory
the final establishment of the capito list mode of productt?n.
Large-scale machine productlon
The provided the basis for a spontaneous
process of socialisation of labour and
of capItalism d' Th 11 workshops
pro uetlon. e sma b'
using hand-operated machinery were superseded by
factories, employing many thousands of workers
different trades. Division of labour extended further. d
enterprises. all industries became interconnected an t
interdependent. Engineering plant s, for instance, could no

function without the products of the iron and ste::
1
worl\.s,
which, in turn, could not Cunction without 1,;.')01; th- coal
mines depended on the engineering and other plants. [n
this way production took on a
Meanwhile all the enterprises, the land and its ricQcs
remained private property. The products of 'abour
were appropriated by the capitalists. This brou'lht .J.bout
the development of a contradicticm between the,;vci.al
character of production and the plJuate capitali-
f
orm of
appropriatioTi of the results 01 prodw-t"on. ThlS is ":
fundamental contradiction of capitalism
The fundamental contradiction of capitalism exp scs
the co.ntradiction between the constantly devc!oping
producttve forces and the capitalist 'elal on .
As the socialisation of production grows. becomes
a brake on the further expansion of the praduL_ ve for
of society, '!"O remove this brake, prop..crt)' bas
to .be. abolIshed. By, developing the oroduL cree;
capItalIsm Its own gravedigger the p I niat,
force to do away with private 0 nersbp 1r
10 1tS place estal It! h sodal 'J.
6. \Vages Lnder !'sm
Essential nature
of wages
The value of labou"
price of labour pow.
We h.Jve a1 d( V 1. L t lD ..
unde1 c.ap:talism y
cve"v other .:c:n:nod] s v
pov:_ ... d "'1 money
that
'ike
uc.
1e
To fad of c.]pit.]jist exploitation bOUl gcob
clalm that wages arc the pnce lal l!.: T}o.
they say. works n a capital":;t l!tOlY rodu'es
vanou.s commoditic<; and 10 rctu, or 11: '01' r re
the of that labour. i.e., his W3gC'
ThiS apeearance of wages as .payment fo' "'1(" wOik
performed derive:; Tram the tb,t tCe "W -It .
h' .. '- " n ore!' receive
rts when he !:tas worked fal a definite period of f1l1
n addition, wages arc fixed cith.::r in acc0rdance with :
of . time (hours. days. weeks) 0 1 in
wa e nce the quantity of lrticlc5 produced. Actually.
I'd frx I, 1re ,the transmuted, .e concealed.
9 orn the v lie 01" "'ril'c, of .abou. po" cr.
. ."
R.
odit and for that rca!>on h<1,\
Labour itself is nO,t a sell labour. it must
neither value nor pr\cc. 0 n cannot sell anything that docs
exist prior to the sa c. nc b 'n 5 his boots to the market.
not exist. When ,a But when the capitalist
they actually CXlst
k
an exists as yet. There is only
has hired the cr, no l'k.. his labour power. It is this
the worker's abdlfJr to 1 'talist When the lattcr buys
that the worker sell,s ,to t is interested in is the
and pars O! It,'k to create surplus value) and not
worker s abilIty to WOI ,
the worker d capit',lism tal<;c the outward
ttl; so"" tal' as t;, C:r the <impl'cssion is inevitably
form of payment OJ a 0 '1' is fully paid for. Let us
created that the whole to producc thc means of
suppose that a
lf
wad family six hours of socially
subsistence for hlmse an IS 'red' If one hour of this
k' fme arc rcqUl .
nccessary war mg. 1 d 11 the value of the labour
time is cxpressef In one. The capitalist pays for
is cquiva ent to SlX dollars, but forces
full value of thc Thus the rate is actually
worker to work for 1 cal the fact that the
50 cents an hour. h day, but not for
pays for onc a 0 I all trace of the division of
other. wages concea d u'rplus labourtime, into
working day into nccessary an s ke it appear that the
and unpaid labour. Wagcs rna ker has been
of the labour expended by the This is what
paid for so. theYf societies
capItalIsm rom a
existed before it. d -t r sm wages take various
Un cr capl a I h f rm under
forms. Time-wages arc teo is
..... of "Wales which payment for labour power the
on the basis of the length of time worked-bY
week or month . t r sm they
allied of under df the
be considered in relahon. the e a 9 worker ten
day. For example, the capttahst h
Pays
The average
day and the worker works ten ours. se
a ODe hour is, therefore, onc
j".: I'eases the length the f bout
hours. In this case the pnce 0 e
82
will be reduced from one dollar to 83 l.;ents. It is clear
from this that foJ' the capitalist time-wages arc a means of
intensifying exploitation. Besides time-wages, there is
another form of wages-pIece-wages.
The form of wages under which the size of the worker's
earnings depcnd!t on the quantity of articles or parts which
he produces in a given unit of time (an hour or 8 day) is
known as piece-wage." (payment by results).
Marx called piece-wages a modified form of time-wages.
The fact is that in fixing the rate of pay for each part. the
capitalist takes into account, firstly. the time-wages of the
worker per day and, secondly, the number of parts the
strongest and most dexterous worker produces in the course
of a day.
If the daily time-wage amounB to ten dollars, and the
number of parts produced by the worker is 20 a day. the
capitalist pays 50 cents for each part. The capitalist thus
makes sure that piece-wage:;. shall not exceed tirnc--wages.
If that is the why de c.J.f'ltlcsts in!.:-J'd:Jce piece-wages?
They do this because there are certain h.:Jf:'.1r attached to
piece-wages which sometimes make them mere advantageous
to the capitalists than other for.ns of wages. For example,
with piece-wages the quality of the work is checked by the
finished product. The capitalist pay for products of
high or medium quality. i'ut not for those of poor quality.
This form of wagci puts an added strJin on the labour of
the worker. and each worker tries to increase his output in
order to get more money. But 3.5 ,,-oon as alJ the workers
have increased their output the capitalist lowers the rate
per part, and this increases his profit. That is why Marx
said that the more the w(ll-ker w(lrks. the less wages he
receives.
The capitalists make 1I"e of the different forms of wages
to suit the concrete circumst.:mccs.
Historically, time-wages appeared before piece-wages.
The fanner WC1-C widespread in the early stages of capitalist
development. when employer:> were in a position to increase
surplus \',lIue hy lengthening the \\orking day. This fonn
of payment dlfo1-dcd them advantages. Later. when
the length of the w ... ..,rking day became restricted by law.
the employers made wide use of piecerates. The present
period witnesses the growing usc of different forms of the
"
83
time-cate-bolllls system. Thus, towards the end of 1957.
70 per cent of the industl'i31 workers in the U.S.A. n,!c.:eived
modified time-wages.
What is the explanation for the lransition from piece-
wages to time-wages? fact is that many branc.:hes of
modern capitalist industry adopted the "flow" method, with
a conveYOl' belt moving at a fixed rate. This means that
the speed of production does not depend on the worker, it
is determined by the continually greater spcedingup of the
conveyor belt or by the specific nature of production
technology. The tremendous intensification of labour is not
accompanied by any increase in wages for the workers.
Time and piece forms of payment are often used
simultaneously in one and the same enterprise, Under
capitalism, both of these forms of wages are only different
ways of intensifying the exploitation of the working class,
In their pursuit of increased surplus value, the capitalists
also adopt various sweating systems of organising production
and paying wages. The essence of these systems is to
squeeze as much labour as possible out of the worker in
a given space of time. There are dozens of varieties of
sweating systems of wage payment,
One of the first systems of this kind is Taylorism, named
after its inventor, the American engineer F. Taylor. The
essence of Taylorism is as follows. The strongest and most
dexterous workers picked out by the capitalist in the
enter prise are obliged to work at their maximum intensity.
The execution of each separate operation is timed in seconds
and fractions of a second. The data obtained are then passed
on to a special technical board, which, aftel' studying them,
fixes a production regime and time-rates for all the workers
in the enterprise, Two rates of pay are laid down-the
higher rate for those who fulfil the job and a very low l'ate
for those who do not. This wagcs systcm leads to a sharp
rise in labour productivity, while the wages bill scarcely
increases at all, so that the rate of exploitation of labour
rises enormously.
Another form of the sweating system is Fordism. It has
the same aim, that of extracting the possible aIIlO?nt
of labour out of the worker, This is achieved by
_ up the conveyor belt. Whereas previously, for example, 1
moved at a speed of three metrc': a minute, it is now
8'
accelerated to foUl cr five metre [ h'
worker c mpelled willy-nIlly IS
and spend more energy but more IDtenslvely
Jevel and do not for remain the old
is that many workers lose their health b gy ,t. .. he r .. :lIt
40 or 45 and arc by the em lye hme they olre
I dd
" h P over.
n a ltlon, t c simplicity of the' ,
on conveyor belts enables the _ performed
unskilled workers, fix lowe ate f paIl IstS f to h employ
thus get bigger profits. yment '-r t em, and
The "profit-sharjng" scheme can also bId
the swc t' t f e c assc amrng
a mg sys ems 0 wages, Here the caritalist . f
the he hires that he wil1 pay them less
emp oyers 0, but that at the end of each year wl]cn th
of work is drawn up, those who have work l
well WIll receIve a share of the prcFts, e
Thdc use of this scheme steps UI tl-e intenSity c'" laL
retar s the development of the wo', kc . cIa s c ' ur,
d' . ....SCH usness
r them and hampers their strug4 1.. aq 'nst
"profit sharing" scheme creates the iIJ l'ion
th wI,or ers have an interest in _li ing t"e pI "IF
e capIta 1st enterprise
In the early s 19C of clpitalist
Nominal and level I
real w es opmen wlges were r" "'y paid
Jig L.J the workers III monev."1l'"
po 'r capitalist placed the workers lD ;
Ion where, '''ev were forced to take food and consumer
on credit f-om the lctOlV shop. At th ... "d of tlte
of h or of the se%on, the caritaL:;t made au; the a 'cou 11
he had' the wor:<:er had eatned and hown!,y
When the cah J1310n W1S "lade the wor-ter
littIc. at e W1S due '.:0 Q"ct no moncv It .11" or VC1V
.At thc time, pay:nent in kind is particularl
wlfesprCild In the :lly underdevel.,ped countr:ies Y
n the dcvcloped capitalist countries, howevel .
wages arc now the prevailing form of pavme"t, 'noncy
in t4 rms of 'l1oney are raIled n('millal
a ges. But W1I'JCS show the 34 :.la1'- level o f
p yment receIved by the worker T"le conc""t as
f> wages is used tro deti rn 111" this cvel. i<.'Jl w;;ges
g CXPI __ sed n terns of the wor:tcl s means of
subsistence. In a word, real wages show what and how many
of the means of subsistence a worker can buy for himself
and his family with the money he carns.
In determining real wages account must be taken of the
size of the nominal wages, the prices of consumer goods
and services, the burden of taxes, rents and overheads. As
capitalism develops, real wages tend to fall.
The decline in real wages under capitalism is due to a
number of causes, The first of these is risizlg prices, The
worker's nominal wages may slightly increase, but if the
prices of goods go up to a greater extent. then he cannot
buy as many goods as before, i.e., his real wages have
fallen, That is just what is happening in the capitalist
countries at the present time: prices are mounting more
rapidly than wages. In France, for instance, during the
period between 1938 and 1954, the prices of all kinds of
goods increased more than 32 times, while money wages
increased only 21 times, The result was that in 1954 the
French workers could not buy as much as they did in 1938.
Another cause of the decline in the real wages of the
workers is the growth of taxes and overheads (rent, heating,
lighting and other charges). These increased payments cause
a considerable reduction in the worker's real wages, In the
U.S.A., for instance, taxes from the population in 1959 were
almost 12 times as higb as in 1939, and in 1958 rents
accounted for 25-30 per cent of earnings. Fines also lower
real wages.
These are some of the causes of the decline in the real
wages of the working class under capitalism.
In capitalist countries there is tlO equal pay for equal
work as between men and women, Women doing the same
work as men are paid considerably lower wages.
The average wage paid to female workers in the United
States is 30 to 40 per cent lower than the average men's
in France 15 to 20 per cent lower, and 35 to 40 per
cent lower in Japan, This difference in the wages paid to
men and women annually yields the U.S. capitalists alone
several billions of dollars of additional profits.
Racial discrimination is a source of huge profits for the
capitalists. In the U.S.A., for instance, the Negro
arc placed in worse working conditions than the.
workers. They arc employed mainly on the most dlffic t.
86
harmful and dangerous work. Payment for Negro ldbour 1
much less than for white labour
The level of wages s not the me 10 the dlffcr ... nt
capitalist countries. There ac many reasons for this. It
would, of course, be wrong to SUptA.se that in some ..:oun 'le!;
the capitalists arc more favourably tnc'ined towards
workers than in other countries. Everywhere they strive to
lower to extreme minimum. But in compa mg
the 10 the different countries account must be taken
of the historical conditions in which the workin c1 ss was
formed, level of its traditional requirements, the
expenses lIlcurrcd in acquiring a sk lIeli tr'lde t'1r
I.abour, the dass struggle and otT er
hans charactenstlc of the country concerned.
, In the U.S.A., for capitalism developed at a
time when was in short supply and tbs ('] .. cd
to wages. bemg higher, The class 11'1 Br: tam was
the first. 1Il Europe to organi,,. to:a.. ist the I.._i,itali ts.
For thiS reaSon worKers "1
h
" h ) ,. rlln "re nAw
Ig cr than, say, in Ireland. .,. ...
Tbe working-class The capitalists rtr vc to reduce the
struggle workers' e;ornip..... and to wages
for blgber wages would o;ufficc only t r ").e sk m
,-u.:. t necessities .;:If lifl.. In s fight
the working class the bourgl,;oi<" c .. llists le ,e'p
. 0 testate. t.he .law, the church, the pres:,., :1 'iic n
capltahsts 1130 unite in emplovers:1 131,o"5
10 er to present a united front agains\' le workc-
t'le workers also unite 10 I lelr t cH.tc
. 0 t e attacks of capital c:,? Inp:W th
1960 total un on J:l'
which . . was 10 t le regIOn of 190 m: lion, 01
World were affiliated to the
The level of wages " bl" h d
bitter I IS esta IS e n consequence of 1
c ass struggle between th I
bourgeoisie. Where the w e ryro etatiat and the
determination in strike orkers. re.veal stubhomness and
meet their demand' d .the are often fOle d to
of the work in n Increase wages. ""he
assllmed J. ve'; b d to mprove their liVlflg ns h"'s
capita1i! t 11 the no t important
, .. ntalIl. F Italy, West
87
Germany and Japan. In 1964 alone some 60 million people
took part in the strike movement. History will always
remember the mass actions taken by the French workers
the strike of the Belgian miners, the long strike of
Italian steel and engineering workers that involved as
many as 1,250,000 men, the strike of the E.nglish engineering
workers, etc. The struggle of the workmg class in the
capitalist countries for their economic and social rights is
becoming more and more acute.
The economic struggle of the proletariat is of great
importance. Yet while recognising this fact, Marxism-
Leninism teaches us that alone it cannot free the workers
from exploitation. The abolition of the capitalist mode of
production through revolutionary, political struggle can
alone put an end to the conditions that give rise to the
economic and political oppression of the working class.
Chapter IV
ACCUMULATION OF CAPITAL
AND DETERIORATION IN THE POSITION
OF THE PROLETARIAT
We discovered earlier that surplus value is prodlO ed by
capital. But capital in its turn comes from surplU! vl!lue
How does this take place? To this we roll!
learn something about the mechamsII" of nplti:: 1st rei ro
ductian.
1. Accumulation of Capital and the Army of
Unemployed
Reproduction and Wlwo we spc::'-;: or PloJlo.U( bon. we
accumulation of n ..... ll the prace #0 uf ere: nat:!lal
capital wrdth. Under eapit<!lism. thIs me'UlS
tt-.'lt the buvs of produ4 0:1 lrd labour
power on the market and trcn mal\?dal weal
t
'1 is el ... ']ted
by the people. The production plOCe') is then complete:.
Fut docs this mean that there is n4 fur" 14 ne d '"l produ( e
Il'atelial wealth? No it de cs "ld. So, ety c ;,nnot st:J'" plO'
\' , Id dan 'er Its
during matcrJal wealth. since to dll so WO,", cn . b 'he
cxistcnc So production must go on coni nually. rho
amp s..arcs m 1St be repeatcd ovt> 8nf
l
("ver a
g
a
1
d
."
'00' tantly _OC\' d nd repeated e s of 11C -ro uc 1 '
of mate" ial w altb i ... 111 d roduC#1On. 1.. t'VC .. but tp mo I
Reproductiro ti.tkl plac'" 10 SOl Ie Y . 0 lno:hef.
C'S bch;nd r rodc!: 11 ... valY OJ1l onc oc ctv .
Under capitalism the motive force is the capitalists' pursuit
of surplus value. Material wealth is not produced and repro'
duced to satisfy the needs of the working people, but so
that the capitalist can make profits.
The surplus value appropriated by the capitalist is created
during a process of capitalist reproduction. But we should
be interested not only in the appropriation of surplus value,
but in how it is used, i.e., on what it is spent. If the capital-
ist spends the entire surplus value on his own personal
requirements, then we have what is called simple reproduc
tion. Suppose the capitalist has advanced a capital o
5200,000, the constant capital being 160,000 o this, and
the variable capital 40,000. With a 100 per cent rate of
surplus value, the commodities produced will have a value
of 5240,000, assuming that all the constant capital enters
into the value of the producl (160,000c plus 40,000v plus
40.0005 equals 240.000). These $240.000 consist of the
$200,000 originally advanced plus $40,000 surplus value
created by the labour of the workers during the producticn
process.
Since with simple reproduction all the surplus value is
spent on the personal requirements of the capitalist and his
family, the reproduction process will be renewed on the
same scale the following year. It will be the same during
the third year, the fourth, and so on. Although with simple
reproduction the production of material wealth is repeated
without any variation in the volume, an analysis of it helps
to reveal the source of the enrichment of the capitalists.
During the production process the capital originally
advanced is reproduced. and surplus value is created which
the capitalist spends on his personal requirements.
If the capitalist did not appropriate the surplus value,
then in time he would use up for his personal requirements
all the capital he originally advanced. In our example the
capitalist spends $40.000 every year, and since the capital
originally advanced amounted to $200,000, then in five years
none o it would be left. Yet this does not happen,
actually the sum of money the capitalist spends on h.IS
'" private needs is the surplus value created by the unpaid
labour of the workers.
Whatever the primary source o the capital it
follows that already in the course o simple reproductIon
this capital in time becomes value created by the labour of
the workers and appropriated for no return by the capitalist.
One very important point arises from this. It is that
when, in the course o the socialist revolution,
class expropriates the capitalists, takes away thel: actones,
it is only taking back what the labour o gener.ahons of. the
working class has created. The abolition o.f
ist ownership is a lawful act. an act of Justice. .
We have been assuming that the capitalist all. hIS
surplus value on personal requirements. But thiS situa-
tion last for ever1 In the early stage of develop'
ment this was frequently the case: the capltaltst was
exploiting only a small number of workers and some.ttm.es
worked himsel. The situation changed when
enterprises expanded; then the capitalist began to explo1t
hundreds or thousands of workers. Let us suppose the ca-
pitalist has hired 1,000 workers and pays them wages to
value o $2 million annually. These workers create for hIm
(with the ratc o surplus value at 100 per cent) surplus value
amounting to S2 million annually. Now. the employer to
longer spends the whole. but only part of thr. surplus v;
on h
is personal requirements. The other pal
t
1. use t
h' raw rna
expand production, acquire more Illac mery anU. d d
terials and hire more labour. In case we hav n'en P
reproduction. or accumulation of capztaL f . f
Let us examine the process of the trans. or .nation 0
su Ius value into capital. Suppose the capltab! t h?s. I
of $10 million. Of this sum he f
as constant capital and 2 million as vanablc capita. A
e
rate of surplus value will be 100 per
o production is completed, assummg a mod-
capital is incorporated in the value o the product, d
Hies to the value of $12 million will been PIO uce
(8 million c plus 2 million v plus 2. f!1
11h
?n S).. d b the
Suppose the surplus value of 2 mIllion IS Y mil-
capitalist as follows! for expansion of productlo
n
-S
1
.
lion; for personal consumP
l
tiO
n
-
1

the part o the surplus va ue use. 0 . . the same
divided between constant and capital Id 4 i.
proportion 8S was the capital ortgmally ldvance, ..
(SOO.OOOc plus 200.0000)
-
The consequence is that in the sc(."ond YCilr the enterprise
will have functioning capital to the amount of $11 million
(8,800,OOOc plus 2,200,0000), If the rale of surplus value is
100 per cent, then the second year commodities will have
been produced to the value of $13.2 million (8,800,OOOc
plus 2,200,OOOv plus 2,200,0005).
In the second year there was an expansion in the volume
of production and an increase in the mass of surplus value
since part of the surplus value obtained in the first year
transformed into capital. Surplus value, then, is the Source
of the accumulation of capital. By means of capitalisation,
i.e., the addition of surplus value to the capital, the capital-
ist increasingly adds to the amount of his capital.
The insatiable thirst for surplus value fOl' the sake of
self-enrichment leads to the capitalist continually extending
the scale of his production. On the other hand, competition
compels every capitalist under threat of becoming ruined,
to improve technique and expand production. To call a halt
to the advance of technique and the expansion of produc-
tion means being left behind, and those who are left behind
become the prey of their competitors.
If the capitalists are continually expanding production,
does this mean that they reduce that portion of surplus
value which is spent on personal consumption? No, it does
not. As the wealth of the capitalist class increases, there is
also an increase in the amount of surplus value the capita-
lists use to satisfy their personal requirements. In the U.S.A.
today, for instance, millionaires spend about 25 per cent of
their incomes on personal requirements. Some millionaire
families have several mansions, expensive yachts, their own
aeroplanes, and dozens of luxury cars. The extravagance
of American millionaires today is seen in the fact that at
a grand reception held every season by one of the 60 richest
families in the U.S.A., as much money is spent as would
keep an ordinary American family of five wanting for
nothing for the whole of their lives_ All this points t.o
fact that the parasitism and extravagance of the
class grows side by side with the accumulation of capItal.
Representatives of vulgar bourgeois political economy
eaplain capitalist accumulation as being due to thrift on
pnt of the capitalists, who, concerned for the good 0
Ic-'iety, supposedly restrict their own requirements.
92
The most blatant advocate of this view was the 19th
century Engk'h PoCOnt nr ,t Senior. '''1, for
tal" he solemnly announced, ("on5Idcrcd as an IDstru
cap' , db' ..
t of production. the wor a stmcncc.
thc subject of this humc-rously
ointcd out that the capitalist re",tnd5 hiS reqwreme.nts
P h "I d" the instruments of laL..;:.ur to the workers
whcn e en S 'I f rtil'
. t d of consuming steam-engines, r:u ways, e 15ers
mS/3 h"msclf Exposing these apologetics for what they
an so on iranic.ally that simple human kindnes:i
are, Marx d d that the capitalist riO! freed from
w
h
ould"secm
s
t
lJ1
.o
g
by depriving him of his right to
t ese agom .

m mo 1 e. ist Thom.:ls Cer'\cr, who mere Y
and the Amencan . b the words "prospective-
replaced the Y
ness" and 'waltm.g "" .' :; - ita!ism and capital"
All these theones aL JustL:):'L'1g 'tal " ..... "1 fhe
d th aLl" on 0, capl .
ist exploitation. Indee. . e on the
extent of its accumulation cp. dc--',....gists wccld have it:.
of the capitalist, a.s tJ:e class. Take. for
but on the 01 to 8oo0c plus 2.00Ov" A rate
example, capItal amounting t would give 2oo0s, and a
of surplus value of 100 per -4 the
200 per cent rate of ue tt.: S:l!r
1us
\'alue
higher the rate of explohltahO"t t of ... - -:Jlation. The
t e ex en b
created and the t- I t "Ower 1S increased Y
1 't t "'n Q' a 'our .' fIb
degree of exr 01 a h... - ". tbe intensity o. a our,
. th . king day, ra15109
lengthemng e ,",or... th value of bbour power. etc
lowering wages be}..;,,:, "e labour is an important factor
Increasing PTl
1
.lu
c
tivlly of 1 ti n of c3pital. It leads to
which uP. ait 0 for the
cheap!.!r commodIties. m 9 d'ty labour power. which
a) to cut the value of the comm;t
l
of variable capital a
that with the be set in J!lotion, so that
greater mass of !n'e . more surplus vallie be
more O1.tl "ut ",nd, te -oJnsumption WIthout
d
to i'lC'"' >'ie pllva <-
pro UCCC: l ..
9i'
decreasing that part of the surplus value required for ex
tended production; and c) rapidly to cxp':lI1d production
through the use of cheaper machines, without increasing the
surplus value to be used as capitaL
The amount of the accumulation of capital. finally, i:i
affected by the size of the capital advanced. The greater the
amount of the capital. the proportion of its division into c
and v remaining the same. the greater also is the size of the
variable capita1. Therefore. the size of the accumulation of
capital, other conditions being the same. is directly propor-
tional to the size of the originally advanced capital.
These are the basic factors which determine the size of
the accumulation of capital.
How does the accumulation of capital affect the position
of the working class'? To answer this question we must first
know something about Marx's theory of the organic
composition of capital.
In his theory of surplus value Marx
Organic composition revealed the division of capital into
of capital constant and variable. thus disclosing
the true source of surplus value. Sub-
sequently. Marx added to this proposition the theory of
the organic composition of capital.
The composition of capital can be regarded from two
aspects: from the natural substantive (material) and accord-
ing to value.
The composition of capital according to value is deter-
mined by the proportion in which capital is divided into
constant and variable.
According to its material form, the capital functioning
in the production process is divided into means of produc-
tion and labour power. The make-up of capital determined
by the relation between the mass of the means of produc-
tion used and the amount of labour required to
them is called the technical composition of capital. ThIS
relation depends on the technical equipment of the enter-
prise in question. .
The composition according to value and the technIcal
composition of capital are closely connected.
speaking. a change in the technical composition of
leads to a change according to value. Therefore. the
between constant and variable capital, i.e . the compO'iltiO
n
,[
of capil,,1 according to in so far as it is determined
by the tcchnil:.ll cOlllpvsl11on of c,lpitai dnd rcilects Its
ch<lngcs. Marx (ailed the organic composition of capital.
Thus, the otg.mic composition of ,.11'ita\ is the relati(l:t
of c to v, For ex'Ill!le, if capital is SOOc plus 200v,
then the orHanic composition will be 4 : 1. The
of capital according to valuc,;hould not be confused with
the organic composition. The form:'- can constantly change
with fluctuations in the market of the means of PI"(\"-
duction and labour power. The organic comtH.' ,iti('n
capital only change!> when it is influenced by In the
technical make-up. With the development of ,w.lpitalism and
the growing accumulation of capital there is a
rise in the organic composition of capital. In the processmg
industries in the United States. for example. the organl(.:
composition of capital was 4.5 1 in 1889, f): 1 in 1939.
and 8 ,lin 1955,
This growth in the organic composition reflects the fact
that as production devdops there is an increase. in the m:ls:;;
of raw materials, machines. tools and other eq.ulpment c?m-
pared with the amount 01 labour power used In pnductlon,
For example. whereas the organic composit!on :of capital
was originally -:. : 1, it later becomes 2; 1. then .3 : 1: 4; 1.
5 : 1 and so on, And this means that the proportIon of
variable capital w:th1'1 the whole capital fell from 1 2
1/3. 1/4. 1/5. 1/6. etc. But since the for ,lab.;'lw ,15
determined not hv the whole of capltat .on,y by. Its
variable part, relative curtal :ment of capItal
means that the rate at workers are drawn
duction becomes slower anu slower. and behmd th
rate of the accumu1ation of capita L
The result is thaL an ever-increasing section of work.ers
can find no employment for their labour. Part of t.he
class becomes redundant il1 relation to the
capitalist accuOlul.1tion. A Soocalled "surplus populab
on
01
relative population is n is
The cxist..:'ncc of constant relatlve surplus. aho d
, h " }' t law of populatIOn. dlScovcre
an cxprcs<;Ion of t e capl a IS th t the
, f l' 1 s that e grcacr
by Marx The csscnl.."e 0 t 115 aw 1 I It' of
, d h te is the accumu a on
surplus vdluc create. t e grca r. tion But the
capital and the higher i ... its orga':llcl hjgher its
greater the accumulation of capIta an
95
organic composition, the less is the amount of labour ,
drawn into the production process. POv.cr
Workers thrown out of the production
Tbe Industrial process form the army of worke .
reserve army th . I' , 1's In
and its forms c capIta 1St countnes.
The main cause for the formatio
of an industrial reserve army is the rise in the organic
position of capital. But apart from that, there arc other
factors which intensify the growth 0, Among
these are: a) longer hOlirs and hCIglztCHcd llltensity 01 la-
bour. The capitalists take advantage of the existence of the
army of unemployed and compel those who are employed
to do the work of two or three workers. and this tends to
increase the industrial reserve army; b) the widespread
introduction of female mId child labour. Technical innova-
tions and the simplifying of labour operations make it pos-
sible to draw lower-paid women and juveniles into pro-
duction, and this throws out adult male workers formerly
in employment; c) the ruin of the small produ.cers. As
capital accumulates, this process is accentuated, peasants
and craftsmen being forced to abandon production and so
swell the ranks of the unemployed.
A reserve anuy of labour in industry is essential to
capitalism as a means of systematic pressure on the
employed workers; it enables the capitalist to lower wages
under threat of dismissal and to increase the intensity of
labour, i.e., to intensify the exploitation of the
class. That is why the capitalists are interested in mamtam-
ing a certain degree of unemployment.
Relative surplus population, or unemployment. takes a
variety of fonus in the capitalist countries. There are
main forms-floating, latent and stagnant. Let us conSI er
each of these. f
The floating surplus population applies to the 0
workers who are at one time drawn into and at other tImes
thrown out of production so that in general there is always
, d wn
a certain number of unemployed. These workers are . ra
into prodUction, by expansion of production, the
of new enterpnses, and are thrown out when productIon d
curtailed, new machines are introduced, enterprises closed
down, etc. This fOlm of unemployment is most widesprea
in towns and industrial centres.
: (j
,
Latent surplus population or agrarian surplus population
applies to the constant surplus of working hands to be
found in agriculture. This surplus appears because the small
peasants. with their miserably small plots of land. ,ve from
hand to mouth and arc always ready to sell the labour
power if they can find a buyer. ,.. .
At the time. a process of differentiation wtthm the
peasantry takes place, a splitting into rich and poor. An
agricultural proletariat forms in vast numbers. people work
ing as farm hands for the rural bourgeoisie. But
capitalist farms which concentrate more. and more land
their hands make increasing use of machlOcry, so that
follows an absolute rcduction in the .numbf'l of,
working in agriculturc. To avoid starvatIon, the tu .ll
labourers go to the towns and industrial centres. addlOq ')
the army of unemployed there. ..
The stagnant form of relative surplus populahon llppJ, cs
to the existence of a mass of workers who ha,ve no . ar
work of any kind (people engaged in home mdustnc ,. 0:
sual labourers. etc.), The living standards of
Dre considerably lower than the average tan ar or
working class as a whole, . ... It"Jm
Besides these basic forms, there IS a ,-'\0 e
included in the term relative surplus population, .. <-
the tramps. criminals. beggars. so on. 1 population iT'
As capitalism develops. b fact WhlLl
creases. U nemployment capl ue efore
cannot be denied. Bourgeols eclo.. the 011g
1n
and
faced with the task of exp ammg
existence of unemployment. , 't of bourgeois economists
The maJon y 1 t
, ex lain that unemp oymeI'!
The misanthropIC try to p e due to eternal laws
"tbeory" of l\1althus and poverty ar th c economists
f t e Among es '
o na r' d with the most reaction-
the man who in 1798 h orw:rn English clergyman.
ary theory of all was a t d was that since the
The main thesis Malthus a_. vancte
he
population has be.ell
very beginning of human SO"I('ty, (1 2 4 8 etc.l. while
increasing by geometrical progreSSIOn f lim'ited natural
b
. t e because 0 , n
the means of su SIS enc . b progrcsSIO
resources, have been Y
97
(1, 2, 3, 4, etc.). This ratio, in Malthus's opinion, shoWed
that masses of the people in the world nrc "SUPCI"'"
fluous : they can find neither work nor food. This concIu.
sian was drawn from false statistical calcuhltions.
In spite of the absurdity of Malthus's "theory", the bour-
geoisie welcomed it with open arms, since it provided a
justification for all the evils of capitalism. Unemployment
could be ascribed to the too rapid absolute growth in num-
bers of the working class. poverty-to the absolute surplus
of mouths to feed and inadequate means of subsistence.
According to Malthus, the proletariat could free itself from
unemployment. poverty and starvation, not by abolishing
the capitalist order. but by refraining from marriage
and by artificially curtailing childbirth, In addition, Malthus
regarded disasters such as wars and epidemics as blessings
to humanity: they. after all. do away with the "surplus" popu
lation. bringing the numbers of the human race into line
with the available means of subsistence,
Progressive people in all countries took up the cudgels
against the "Malthus's doctrine", Among the active oppo-
nents of this misanthropic school of thought we should
mention the Russian revolutionary democrats Chernyshev-
sky and Pisarev,
Malthus's false assertions are fully exposed by Marx in
his theory of the accumulation of capital. Malthusianism.
however. is still advocated in the capitalist world. and is
particularly Widespread in the U.S.A. In Road to Survival.
a book published in the U .s,A. by William Vogt, it is as-
serted that the earth cannot support more than 500-900
million human beings. and that all the rest are redundant
and must be g:lt rid of. In another book. Human Fertility:
The Modern Dilemma, written by Robert Cook. the growth
of population is represented as a terrible threat to the con-
hnued existence of humanity. .
The actual cause of unemployment. poverty and starvatIOn
under capitalism has been scientifically revealed by thi
founders of MarxismLeninism. It is the capitalist 0
production, with the thirst for capitalist accumulatton,
which gives rise to unemployment and the starvation of the
working masses. To get rid of these evils. capitalism must
be destroyed through revolution. The development of the
socialist countries is visible proof of this.
98
2. The General Law of Capitalist Accumulation

of (he K('"('ral law
of capitalist
accumulation
The deter 0; 1tion of the pO!.ition of
the wor.lOg 1:'S and the gruW'l of
unemployment are not due to i.;lC
operation of natural lawli!. but dIe
explained by the laws of capitalist production. "The
the social wealth. the functioning capital, the extent and
energy of its growth and, therefore, also thc .ab! olutc ma.-:s
of the proletariat and the productiveness of Its the
greater is the industrial reserve army .... , But gre.lter
this rescrve army in proportion to the actJVC laL OU1 ar:ny,
the greater is the mass of a consolidate? sur?lus ;)opula-
tion, whose misery is in direct proportion tc the
put in. The more extensive. fio.ally, la.:....;:..;.s-.dye'j'
of the working. class. and the mdustnal zr:ny.
the more official pauperism will '" be. the aft.
solute universal law of capztalzst ac ....umulauoD. wrote
Marx. . , ,.." th t
The general law of capltahst Imp Ie- .
the accumulation of capital the JMwth of weaL.l
at one pole. i.e .. in the hands of the Ja>:-, at
the other. the growth of unemployment and I.me,
the working class. The general law cf /._lmula.
tion is the concrcte exprcssion of the operatIon t.he
economic law of capitalism-the law of surplus value It
the pursuit of surplus value which leads to 0:
riches luxury parasitism and extraVaq,lnce on the p ... ,
the The greater the accumulatiOn of y
. Of unem-
the bourgeoisie. the larger becomes. ,.le army I' d
played. the higher the degree of the emp O)C
workers and the worse their matenal PO:'.ltJOn: Therfefohre
. f . I d the detcnofltLon ate
the accumulatIOn a capllJ an, bI t of
position of the proletariat are two insepara e as-pee s
capitalist society.
.. .... PO\'CT:y.strickcn unempl,,},cd,
I The lowest strata .l.I labour or feeding on scraps
beggars. homeless peoplt' hVlng ty ... J5U
frem other peoplcs table:;. - Ed.
3 Marx.. Capital. Vol. I. p. 644.
99
A process of impoveriS]lment
Relative of the proletanat takes place with th
and absolute development of capitalism Th,s m e
deterioration h . . Cans
of the position t at as SOCIal wealth increases. th
of the proletariat share of the workers in the value th
is always being newly created
society (Le., in the national income) becomes less, while
share of the capitalists increases.
The advanced capitalist countries, the U.S.A., Britain
France, and so on, reveal a striking example of the progres:
sive relative impoverishment of the working class. In 1890
the share of the American working people in the national
income was 56 per cent, in 1923-54 per cent, and today less
than 50 per cent.
But while the share of the working class in the national
income is declining, that of the capitalists is steadily increas'
ing. "In the United States the capitalist classes appropriate
more than half of the national income, although they com-
prise no more than about one-tenth of the country's popu-
lation."!
The relative impoverishment of the working class is
reflected in the change in the ratio of wages to profits, which
is to the detriment of the working class and to the advan-
tage of the capitalists.
The general law of capitalist accumulation gives rise also
to the tendency towards an absolute deterioration of the
material position of the working class and absolute impoV-
erishment.
The worker's lot under capitalism is to live with n? co
n
f
fidence in what the future will bring. The accumulatlon 0
capital continually reproduces the worker as a wagev.:0rkeri
throws him on the labour market, makes him an obJect. 0
exploitation. On the one hand. it condemns a large sectlon
of the working class to excessively hard work and moni
straus eXf:loitation; on the other, it creates a larg;:! army 0
unemployed. . . the
Absolute impoverishment means the deterioratIon 0 5
living and working conditions of the workers: rea! wag;s
fall, the cost of living rises, the army of unemployed 91'0
t Materials 01 the
Moscow. 195:). p. 39.
Extraordinary 21st
fIJI)
Congress 01 C.P.S.U ..
larger in town and countryside, intensity of labour increases,
housing conditions worsen, etc. Let us examine a few of
these factors.
In the capitalist countries the cost 01 living is rising. For
example, if the cost of living index in the U.S.A. for the
years 1947-49 is taken as 100, then in 1950 it stood at 103,
in 1955 at 115. and in 1960 at 126.4. It follows that the cost
of living in the U.S.A. rose 26.4 per cent between 1941 and
1961.
If the 1938 cost of living index in Britain is taken
as 100, then in 1950 the index stood at 185, and in 1955
at 246. So the cost of living in Britain in 1955 was two
and a half times as much as in 1938. The cost of living
has continued to rise since 1955. If the 1956 cost of living
index is taken as 100, then in 1958 it was 109, and in
1960-110.7.
An important factor determining the tendency tow,,:'ds
the absolute impoverishment of the working cL"" une'er
capitalism is the growth 01 unemployment. Mass
ployment has become permanent and chronic in the
countries. Apart from the totally unemployed, there are mll-
lions of partially unemployed working a short week or a
short day. In the U.S.A, after the Se,:ond World War t,e
annual number of totally unemployed was 2 .)T J million,
but in 1962 the figure was in excess of 4 million. In Italy,
in 1964, the number of unemployed amounted to 1..2 mil-
means not only pr:vation and
for those out of work,' it worsens the posi don of the whole
working class, because the capitalists use it to bJ"lng d,')Wll
wages for those at work. d d f
An indication of the lowering of the living stil.n ar. s a
the working class is the continual, of. the
sity ot labour in capitalist enterprIses. ExcessIve mtensl
tion of labour, coupled with lack of proper
sions, leads to mass incidence of industrial aCCl cn.ts. n
U.S.A for example one worker is killed or
.. . d worker receIVes some
work every minutes, an one h d t of
kind of injury every 11 seconds, According to t e : :960
the U.S. Bureau of Lahour StatisticS. between of
about 22 million American workers became
accidents. i.e . an average of 2 million annually.
fat
When examining the question of the tendency toward
absolute should be. taken of th!
position of the m the colonies and depen-
dent countries. where Imperlahsm has left a heritage of
poverty and high mortality .. and also of the ruin and impov-
erishment among the basIc mass of the peasantry and
handicraft workers in all the capitalist countries.
These. in brief. are a few of the factors which make for
the absolute impoverishment of the working people in the
capitalist countries.
Absolute impoverishment should not be understood to
mean a steady, universal lowering of the workers' standard
01 living year by year and day by day. The living standard
of the working people may rise in one country or several
countries concurrently with a general lowering of living
standard in world capitalist economy as a whole. When
estimating the position of the workers in the capitalist
countries. it should be remembered that the level of mate-
rial well-being of the working class at anyone moment is
determined by the relation of class forces between the bour-
geoisie and the proletariat. Throughout the history of capi-
talism the workers have been putting up a stubborn struggle
to improve their living conditions. This struggle is a factor
working against the decline in the living standards of the
working class.
The strike movement in the capitalist world spreads year
by year. It has become particularly broad in scope in
U.S.A. A comparison of the ten pre-war years (1931-40) an
the ten post-war years (1946-55) shows that the number oJ
strikes in the U.S.A. increased from 22,021 to 43,159. an
the number of workers involved in them from 9.5
to 26.5 million, while the total working days lost increase
from 145 million to 434 million. In 1962 there were m?re
than 3,500 strikes in the U.S.A., involving about 1.5
workers. The strikes are becoming more and more protra
cte
and stubborn.
Throughout the capitalist world the number of
and other employees involved in the strike movemend
increased from 54 million to 60 million between 1960
1964. There is a steady rise in the political activity of
working class: whereas in 1958 approximately 43 per cen
102
of the total strikers throughout the capitalist world were
involved in political strikes, nearly three-quarters joined in
political strikes in 1962.
Bourgeois and Right-wing socialist economists do their
best to put a good face on capitalism and have advanced
many theories in an attempt to refute the MarxistLeninist
doctrine of the relative and absolute deterioration in the
.,.. position of the working class under capitalism.
The most specious theory propagated in recent years is
that of "people's capitalism". This is now the official theory
of imperialism to deceive the working masses. In the U.S.A.,
for example, a special government information agency is
charged with the propaganda of this theory :md one of its
officials has intimated that it is very important that the
term "people's capitalism" exists to show the
between American capitalism today and the cJ.;'ltahsm
that existed in Europe 100 years ago when Marx wrote
01 it. k
The advocates of this theory declare that wn ,,13 v.:
atjes
under capitalism increase so rapidly thc:t the c1as!'
ences between workers and capitalists are
ing obliterated. With their workers buy cars,
shares; they put money in savmgs banks at .ma."v
prises, get a share of the profits. 5 , de:
clare these defenders of capitalism. bnngs about a revolU
h
tion in incomes" which causes a narrowing of the brea,c 1
between the mod'es of life of rich and poor, while
wealth is distributed equally among the members of
. , ,. 9 way to equa 1 y,
Consequently class antagomsm IS glVln . a-
while the Marxist-Leninist theory of class stT?dggdJehls _
. rker proVl e e IS In
rently unnecessary, smce every wo .'.
dustrious and thrifty, can become a the falsity of
But there are irrefutable facts to test! y 0 f f't
the "people's capitalism" theory. and the best proo
is the growth of the strike of
The advocates of "class pe.ace 'd distrad
Y
The working
to prove the unprovable 10 or e.r basic class interest!. to
people from the struggle. forI their ment to disarm the
split the organised worktng-
c
ass. mhovJJe. . a'-ut the pos-
fi J
' 'nds Wit I uSlons uv
workers and II peop e s. ml h '1 f the capitalist system
sibility of doing away With t e eVl 0
without a revolutionary struggle.
J(jfJ
Historical tendency
01 capitalist
accumulation
After his thorough analysis of th
accumulation of capital. Marx show
the tendency of capitalfs
t
accumulatIon.
The starting-point of the of. capitalist property is the
private property of small commodity producers. Small-scale
commodity in the period of feudalism began to disintegrate
and engender capitalist clements. But this process of disin-
tegration was too slow; it was accelerated by the forcible
expropriation of small commodity producers during the
period of the primitive accumulation of capital. The result
of this expropriation was that capitalist property became the
prevailing form.
The bourgeois relations of production, which were thus
established and were based on large-scale private ownership
of the means of production, promoted rapid development
of the productive forces: there was technical advance, the
labour of hundreds and thousands of workers was brought
together and production assumed a social character.
This social character of production was accentuated still
further by the operation of the economic laws inherent in
capitalism. The fundamental economic law of capitalism-
the law of surplus value-gives rise to increased exploitation
of the working class, followed by intensified accumulation
of capital. In the process of capitalist accumulation the
organic composition of capital grows, and the outcome is
large-scale production.
This process of socialisation of production goes hand in
hand with the constant reduction in the number of capitalist
magnates: but they control increasingly larger quantit.ies
of social wealth, and appropriate the fruits of the collective
labour of millions of working people.
As capitalism develops the social character of the produc-
tion process comes increasingly into conflict with the ca-
pitalist private form of ownership. Private ownership be-
comes an obstacle to the further development of the pro-
ductive
The socialisation of labour by capital prepares the
objective preconditions for the ending of capitalism. B?t
the operation of the inner laws of capitalism creates, 'f
addition, the ..aubjective preconditions for the downfall
capitalism. With the growth of capital and the increase ,.
lIN
the scale of production, the working class continually
grows in numbers and. through the mechanism of capitalist
production, unites. organises and prepares itself for the
time when it will manage production in- the new-, 'iodalist
society. During the process of capitalist accumulation,
unemployment grows, the position of the working
deteriorates and its struggle increascs. The working c1as"i
is more and more coming to understand that the only way
to get rid of poverty, stClrvation and exploitation and to win
their rights is thc path which leads to the abolition of
capitalism by . . .
Thus, capitalism Itself prepares thc obJccttve and subJec-
tive preconditions for its own abolition. This i3 the
essential point about the historical tendency of capitalist
accumulation-the preparation at all the conditions
tor the expropriation of capitalist private far the
downfall of capitalism and the viclnry of socialif'm.
The inevitablc downfall of capitalism is c:onfirmed by
the whole course of historical development. Thus, in U17.
the working class, in close alliance with the pC"lor
. .antry. carried through October Revc:lutic:l under
the guidance of the Communist !'3.rty led by Lenin.
In the (('uJ"lie of the trilndormations bnJtJht by
the Rr.voluti"n, the working class of the
expropriilted the bourgeoisie, private
ttf the me:fl!; of pr"dudion, and in place
public ownership of the mC:1ns cf prod.uctL)n. WJ.h Its
establishment. new relali::ms of prcc!u:tlCn between
members of society were introduced. relations of c,,-oPderartlon
'b and women frce rom
and mutual asslstance etwcen men
exploitation. f th
After the Second World War the peoples 0 0 er
countries took the puth of radical transfor-
f II bu
' Id,'ng
m<.ltions, and are now success u y I
..
-
Chapter V
THE CONVERSION OF SURPLUS
VALUE INTO PROFIT AND ITS DISTRIBUTION
AMONG VARIOUS GROUPS OF EXPLOITERS
1. Special Forms of Capital
The chapters dealt with the relations between
the proletarIat and the industrial bourgeoisie. We set aside
the fact other groups of exploiters exist-the commercial
the bankers. the agricultural capitalists and
the b.rg landowners. They all join in the exploitation of the
workmg class and divide among themselves the surplus
produced by the workers. The reasons for the
dIvision. of the bourgeoi$ie into special groups should be
sought m the actual conditions of capitalist production.
Capital is in a state of constant
Circular movement movement. To stop or to slow down
of capItal the movement of capital means to lose
. completely. or to diminish. the surplus
value accrumg to the capitalist.
In the course of its movement capital passes through a
number of stages and takes on different forms. [n its first
stage capital functions in the sphere of circulation in the
form of money. With this money the capitalist buys means
of production and labour power in preparation for the
process of capitalist production. The movement of capital
at this stage may be shown by the following formula:
Lp
M-C<
Mp
(M=money; C=commodities; Lp=labour power: Mp;::;:
means of production.) Thus in its first stage capital
from the monetary form inLo the form of productive capItal
106
In its second stage capital functions in the sphere of
production. Here hired labour is brought into combination
with the means of production. The labour of the workers
creates new commodities. having new value. including
surplus value. The movement of capital at this stage is:
Lp
C<
Mp
. p .. C'
Thus at the second stage capital changes from its
productive form into the form of commodity capit(J1.
In its third stage capital again functions in the sphere of
circulation. Here the commodities which have been produced
are realised. Commodity capital turns into money capital.
The movement of capital at this stage may be shown as
follows,
C-M'
Capital, thus, began its movement in the fonn of money
and returns again to the monetary fonn. but the c-,Plla::st
has received more money than he put into circu'dtion.
Schematically, the movement of capital may be "hown as
follows,
',p
M C< .. P .C'-M'
'Ip
This movement of capital. i.e., its successive
metamorphoses from one form into another and its passage
through three stages, called the circuit of car-ital.
The circuit of capital falls into two stages of circula-
tion and one stage of production. It follows that ca-
pitalist reproduction is a unity formed of the circulation
process and the production process. But although these
two form a unity. production is decisive, for it is here that
surplus value is produced.
Three forms of capital correspond to
Formation of various the three stages in the circuit of
torm!l of capital industrial capital: money capital.
arnd "I',OU
II
"', pronucth'e capital. and commodity
o cap a 55 . I' d 1 each
capi As capita Ism eve opc;,
form of capitll becomes more clearly separated from the
'b 'd ndent
othels. CommCr,"L11 and Joan capital ecome '"
of the Qipital functioning in production and begin to
107
function only in the spheres of commerce and credo
These forms of c.oincidc
the vaTlous groups wlthm the bourgeoIsIe -mduslrialists
merchants, and banhers. '
The function of the industrial capitalists consists in th
direct appropriation of the surplus labour of the workin:
class, of surplus value, The function of the merchants
consists in transforming commodity capital into money
capital. The function of the loan capitalists is to concentrate
and allocate capital available in the monetary form. Each
group of capitalists receives its share of the surplus value
created by the working class.
1
Besides these groups of capitalists, there is yet another
within the exploiting class-the landowners. These occupy
a special place in capitalist society, since they Own one of
the most important means of production-land. They also
get their share of the sum-total of surplus value.
The separation of individual parts of society's capital into
independently functioning capital-industrial. commercial.
and loan capital-and the existence of big landowners cause
fierce competition among the different exploiters for the
appropriation of surplus value. The surplus value appro-
priated by each capitalist takes the form of profit. Industrial
capitalists get industrial profit, merchants-commercial profit,
and bankers-interest on loans. The big landowners get
ground-rent.
2. Average Profit and the Price of Production
cost-p Ice d t't The value of the commodity produced
Ra[e 1. in a capitalist enterprise breaks dOW'f
into three parts: 1) c-the value 0
constant capital (part of the value of the machinery and
the value of the raw materials, fuel, etc.); 2) u-
the value of variable capital; and 3) s-surplus value.
Of these three parts the capitalist has paid only for .the
first two, and they form his cost-price. Capitalist cost-prIce,
1 Besides the groups mentioned above, there are also capitalists
in agriculture. There is no need, however, to put these ,into a
for in principle they differ in DO way from the industrIal capt S
therefore, consists of the sums expended as constant and
variable capital (c + u).
When the capitalist sells a commodity which has been
produced in his factory, surplus value appears as the
surplus over and the. .In
determining the profitability of hls enterpnse, the capltaltst
sets this surplus against the capital spent. or advanced, i.e.,
against his cost price. Surplus value, in r.elation to
total capital. assumes the form of profit. IS
lue taken in relation to the total capital Invested m
and appears as something by that
capital. In actual fact profit. is surplus va.Iu:, and IS
by the variable part of capital alone. Thls IS why Marx call.,
profit the transmuted form of surplus val.ue.. ,.
The level of profitability of a capItalIst enterprIse
measured by the rate of profit. Rate of profit is the ratIO
expressed as a percentage of the surplus to the tot:!'
capital advanced. For instance, if the capItal aJvanced
(c+v) equals 200.000 dol'ars (160.000c+40.000v
1
,.nd
the surplus value (s) over the year amounts to 40,000 doLars.
the rate of profit will be,
S 40.t(JO 'OOA 1"''1
P
'.-- X 101).' --2"" ..'w'l. X I =.L
c,; + U voJ,lIJV
A distinction must be between
and the rate of surplus any te 'of surplus v.llue.
rate of profit is always le;s t.in e ra '11 b .
In the given case the rate of surplus value Wl e,
100' _40.000 x 100%=100';'
s ... , - X ,,)-- -tu WO
" .
. otive forre behind capitalist
The ratc of profit IS the m f fit under capitalism
production. The role of the 0 pro English trade union
was summed up by T. J, as follows:
leader and publkist of the m'
11
ensure its employment
"A certain 10 per cent will produce
anywhere; 20 per ccnt 100 per cent will make It
50 per cent. positive audaclt
Y
;laws' 300 per cent, and there
ready to trample on all human '
109
.. not a crime at which It will scruple, nor a risk It wI1ll1G1
run. even to the chance of its owner being hanged,'"
This description is fully borne out by the practice 01
capitalists today. The wealth and power of the AmeriCIII
multimillionaires-Morgan, RockefeUer. Dupont. etc.-Wll'l
created and maintained by trampllDg
@)l Capital-
a multitude
'w PP"tIoD.
., ... anrap i 1i11
ot ..... .. ....
of enterprises producillg aU
kioda of commodities. Enterpri ...
m,king similar products do DOt all work under the
',me conditions. They vary in size. level of technlewl
equipment. aad organisation of production. Consequenu,.
the individual value of commodities produced by different
enterprises is not the same. But competition within one braacb.
ot Urdw/ry leads to the prices of commodities being dew,
mined not by the particular expenditure of labour on their
ploduction aad Dot by their particular values, but by the
__ (.,..;01) value of these commoditie
of commodities is determined by tb; jr
ina.let ftlue. the .... tetprl... which bave a high level 01
IIo<hnolll\l) and labour productivity are found to be ID
faw .... able position. They receive additioDDl profit, '"
IJdOe ., ......... ..
..".."roIit. But free competition this situation coIF'll
laag. High lure everyone. The capitalist
the level of technique is Dot 80
technical
the labour
industry becoming equaIbed. or, which .. Iha _
capi.als of equal size get an .qUGl ........ 1II a( ...
Le. us see how the equaIi.ation of Iho
among capitalist. comel about.
branches of industry in
engmeering. They have each
capital. but with variationJ in the
capital. The amount of capital
branches equall 100 units (say, million
of the leatherworking indUitry contiltl
constant capital and 30 units of variable
textile industry-SO units of COIIItaDt IUId
capital, and that of the
constant and 10 units
plus value in all three
Then, in the leatherworkiDg
value will be produc.d, ill the
10. The value of the commodities ID the
equal to 130, in the second to 120. aad In Iha
and in all three together- 360 units. ' ;
If the commoditi .. are sold at
IeatherworkiDg iudusby the
cent. ill textil .. 20 per
cent This disbibulloD
the capitalists whO luhe
iudustry, but Dot to
will lead the
engineering to
additional
begill to
demand ,
I profit on capitals of the same magnitude irlVested in
branches of industry . . the formation of the
average rate of profit. sold not at value
(c + II + 5). but at the compnstn.9 the .cost-price and
the average profit (c + v p). The pncc which equals the
cost.price of the commodity plus the average profit is called
the price of production. . .
The equalisation of different rates of profit mto an average
rate and the formation of the price of production may be
illustrated by the following table,
,
,.

.'
0
E - - ,
,
-
0 , ,
-
- E
".

,
-

OrganJc
,
-'
,
- - ."
,
"
, u
,
,
"



>
" ' "
::,,::
lDduslry
"
-
-' -
0
.. '
-
c::-
01 capil<ll
-
0 0
._- ,

-
u
.,
If- ';::;:E
.,
-

,;.-

"
0

,
- ";
. > " -
,
,
;;
-
0 > - ,
,
-

, - 1:.-':
c-::: ..
-

--
, ,
,
I 120 -10
Le:l 70c
+
30"
100 30 30 130
'
20
..
El1I!inee-ing
. , : \ 80c + 2O'J IUU 20 20 1,2U 20 120 )
,
Total
, '124Oc + 60v 1'00 60 120 1360120 1
160
-
As the table shows the different rates of profit have been
levelled to an average rate. The prices of production
?ave deVIated from the value of the commodity. In one
mdustry they have risen above the value in another they
have fallen below it ,
(" In industries with a low organic composition of capital
. m our example these are represented by the le:atherworking
the price of production is found to be less than
t C dvalue, the profit less than the surplUS value
pro uced In Ind t' , h 't' n
of .' nes WIt a medium organic compOSl 10
a d:a\tal, the pnces of production coincide with the value.
h
n
e with the surplus value. In industries with a
19 or"':ntl compf f ... ur
eiC!mple) the . OSl Ion 0 capltal (engmeermg, m 0
and th pnl"es of production arc higher than the value.
gre.ater than the surplus value pro(luced. !liS
I...:...:tcd b i. pnce of production in excess of t le v,"uc IS
y .le workers In t le industries w.. t1:1 a low org
alllC
112
,
of but. it appropriated by the
capltal.Ists of the mdustnes With a high organic composition
of capital.
The workers. therefore. are exploited not only by the
capitalists who e.mploy but by the capitalist cla!s as
a whole. The class has an interest 1D al5m!;,.
the rate of explOItation of the workers, as this leads to an
increase in the average rate of profit. That is why the
capitalists present a UnIted front in the class struggle against
the workers. The working class. exploited by the capitalist
class as a whole, should also show class solidarity and
organise a united front. The struggle for the sectional
interests of workers. the struggle against individual
capitalists, cannot lead to any radical change .n the
of the working class. The working class WIL ucceed n
throwing off the yoke of capital only when it abol Shf'" the
system of capitalist exploitation. In this conclUSion iiI the
immense political significance for the class struggle 01 the
proletariat of Marx's theory of average profit.
As we have seen, commodities under capital sm ue sold
not at their value, but according to their prices of pi OCIC
tion. But this does not mean that the law of value ':tao
ceased to operate. The price of production is a
fonn of value. Some capitalists sell the' com-nodi C !l
prices higher than their value, others at pnces below I'll r
value. but all the capitalists as a whole receive the Jl . 3J J:
of theiL' commodities, and the profits of the w':trl c:tpItaJ
class coincide with the total mass of the value
produced in society. On the scale of the whole SOl ety.
the sum of the prices of production is to t'1e SUM of
the values of the commodities, and the nass o[ profit 1S
equal to the mass of surplus value. In way the of
value operates through the agenQl" of Rn
r
-" f
As c'lpitalisrr. develops. the or!;.
0
' capit2 Ii' e ,. fbI:'"
Tendency of the rate .'. th
of prom to fall means that there IS an In e
mass of raw machIne; lnd
eqUipment in the enterprises, At the same time. only tot
so npidly he nunber of workers increases. There 1
var ::.ule growS more slowly than cor.:-tant
But the higher '"I.e organ.c ,om:)osition of C3Pll:tJ. th
tltat
O
the
the rate of profit rbis. however. doe!> not mean
, ,

total mass of profit also falls. Let us take an example. The
capital of society amounting t? S100. thousand million, made
up of 70c + .doubles ltself, In 20 reaching
$200 thousand mt1lton. Its organiC composItIon has risen
and become 160c + 40v. With the rate of surplus value at
lOO!l/o, the mass of profit in the first instance would equal
$30 thousand million, in the second case-$40 thousand
million. At the same time, the rate of profit has decreased
from 30 to 20 per cent. A fall in the rate of profit is
inevitable, just as an increase in the organic composition
is inevitable. Yet there are a number of factors which operate
against this.
The principal factor counteracting the fall of the rate of
profit is the rise in the degree of exploitation 01 the workers.
Let us return to our example. Let us suppose that the degree
of exploitation in the second instance has increased, that
it is now 200 per cent. Now the profit will be $80 thousand
million, while the rate of profit will be IO:!40X 100%_40%.
Thus intensified exploitation of the working class leads to
an increased rate of profit.
There are other factors which counteract the fall in the
rate of profit: lowering 01 wages below the value 01 labour
power, economising on constant capital at the expense 01
the workers' health and lives, etc.
But all these factors do not eliminate. but only mitigate
the fall in the rate of profit, giving it the character of a
tendency.
The tendency of the rate of profit to faU extremely
aggravates the contradictions of capitalism. The contradiction
between the proletariat and the bourgeoisie becomes more
acute because the bourgeoisie, trying to slow down the fall
in the rate of profit, intensifies the exploitation of the
working class. Contradictions within the capitalist camp
also become more acute. The capitalists rush their capital
into industries which have a high rate of profit. This leads
to fierce competition among the capitalists, and, in the last
resort, brings ruin to some and enrichment to others. The
contradictions between the capitalist powers are
accentuated, In the pursuit of a higher ratc of profit. capItal
from the industrially developed countries is exported to
the economically underdeveloped countries, where labour
114
power is cheaper and the organic composition of capital
lower. . h d f . I
In aggravatmg t e contra Ichons 0 capIta Ism, the law
of the tendency ?f .the rate of to fall clearly
the historically limIted and tranSient nature of the capItalist
mode of production.
3. Commercial Profit
Industrial and
commercial capital
Surplus value is created in the process
of production by the labour of the
working class, It is appropriated in
the first place by the industrial
capitalist who owns the enterprise, It is him, that all
the other groups of the exploiting class, mcludmg the
commercial capitalists, receive surplus value, Why does the
industrial capitalist surrender part of his, td
the merchant? In capitalist society commodIties pro uC
b
for sale. So it is not sufficient for the commodity to e
produced it must also be sold. As ,a general rule, h th:
industrial capitalist sells his to
who then sees that the commodity IS move on "
of the commercial capitalist is to tnnsform
, p'tal If there were no
commodity capital mto ca .1
1
, t would require to
commercial capitalist. the 10 ustna IS 'I premises hire
h
"t 1 to equip commerCla '
ave extra capi a 'd '1' t leaves all this to the
salesmen, etc. But the 10 ustna t commercial capital
merchant. On the of lirom industrial capital.
represents additional capital e 't I of the commercial
and confronts it in form 0 ft The profit that
capitalists who receive part 0 '1 P fit
' . k as commerCia pro . f h
goes to them IS nown . J ant is that part 0 t e
ComlmercJO
l
pr which the manufacturer
I I surp us va ue 'turn
Source or commerc a d t the merchant 10 re
profit surren ers f r his commodities.
for th,e sa e to merchants at
Industrial capitalists sell The merc,ha.nts
prices lower than the f By appropnatmg
then sell them at the. pnce
h
0 i%dustrialists, receive. average
the difference they, lIke t e fit f the merchant IS below
profit on their capital. If the pro 0
"
J/S
the average profit, commerce. becomes an unprofitable
business, and the merchant will transfer his capital to
industry. industrialists and merchants receiVe aVerilge
profit. But thiS does t.hat they get ('qual amolitJts
of profit. Naturally the mdustrlallst. who spends considerably
more capital on productlon than the merchant docs On to
sale of commodities, receives a larger amount of profit.
for equal shares of expended capital. they get equal profits
When it takes the form of commercial profit,
value becomes even more camouflaged. The merchant's
capital does not take part in production, a!1d the impression
is created that the profit arises out of commerce itself, that
is, in the plocess of circulation.
The process of realising commodities
Costs of circulation requires a definite expendilure. This
is referred to as the costs of circulation.
There are two kinds of capitalist circulation costs. Net
costs of circulation are directly connected with the
of buying and selling commodities. They include outlay
connected with transforming commodities into money and
money into commodities. Also included is a large part of
the expenditure on paying for the labour of commercial
employees, on the maintenance of commercial offices, on
advertising. expenditure made necessary by competition
and speculation, The net costs of circulation add no value
to the commodity, and they are covered by the capitalists
out of the surplus value which they get from the industrial
capitalists. Net costs account for by far the greater part of
the circulation costs incurred in capitalist commerce.
Among the costs arising from the extension 01 the
production proce.,>s to the sphere of circulation is the
expenditure incurred on operations which are essential to
society and independent of the specific aspects of capitalist
economy, viz" the storage, finishing, transporting and
packaging of commodities. A product is only ready to be
used when it is delivered to the consumer. Labour spent on
finishing. transporting and packaging commodities a
new value to the already existing value of the commodltlcs,
and for this reason circulation costs arc in no way different
from production costs.
Undcr capitalism the costs of circulation increase
continually, first and foremost the net costs of circulation,
1/6
I
particularly tho!;c conn.ccted with advertising. Tn 1961, U.S.
expenditure on advertlsmg amounted to 112.000 million,
more than dou.hle the 1 ?50. level. The increase in the
of circulation IS an indication of the growth of paraSitism
'n bourgeois soC"icty. Circulation costs in the capitalist
amount to aboul o.ne,Lhird cl.. the total retail trade
t rnover, and arc a he:wy burden on the working people.
u tn capitalist economy today there are
Forms of capitali!Ot two main forms at internal tradc-
trade. I'oreign trade wholesale and retail. Wholesale trade
is trade between capitalists (industrial-
. t and merchants). Retail trade is the <I.le d r.ommodities
Id
sS
tly to the public. Of great importance in wholesale trade
Irec .. It [kt
. the commodity exchange. ThIS IS a specla ype 0 mar e I
trade is done on the basis of samples, where surply
and demand of commodities on the scale of country
and frequently on the st.:ale of the entire capltailst world are
concentrated. . Th
Fo eign trade consists of exports and e
elatron (in prices) them forms the 01 trade.
balance of trade mdY be i\ctive or passive. :: th.e
from a country exceed the the b:::.iance 01 t!"Jde IS
active' if imports exceed exports. It 1$ p::sswe'
l
't r t
By 'selling commodities on foreign capt
are ahle to expand production and thereby to 1 t (,lei
rofits Trade with the economically un er ope
is particularly for
the industrially . developed at
manufactured articles a.re so d . bOll ht from
relatively high prices, whllc. raw mdate:,a1a
s
mreeans ';V which
I
. Forelgn tra e 15 .
them at ower prices. . .. h Id underdeveloped
the advanced bourgeOIs count11co; a
countries in economic dependence.

4. Loan Capital. Joint-Stock Compames
D
the turnover of capital. it is
unng . I "t I that
Loan capital 1 commerCla CJ.pl a
and interest not on Y t d ff but al<;o money
becomes SCp31'3 c 0 "t I Where does
. k th form of loan capl a . hi
capital. when It es e f ? If an industrialist sells s
spare money cJ.pltal come rom
117
finished commodities monthly, shall we say, but buys raw
materials only once every half-year. then for five month
at a stretch he will have spare money on hand. If S
capitalist is money. in to replace
out parts of his fixed capItal he wIll agam, temporarily. have
spare sums of money. These sums will be spent on the
purchase of new machinery only after the lapse of several
years.
At other times the capitalist will be in of money:
for instance, when he has not succeeded in selling his
finished goods, but requires to buy raw materials
immediately.
Consequently, at one and the same time one capitalist
will have a temporary surplus of money capital, while
ano,ther has of it. The capitalist who has money
available. loans It out for temporary use by other capitalists.
Loan capital is money capital loaned lor a definite period
of time in return lor a definite consideration, known as
interest.
Interest is that part of the profit which the industrialist or
merchant yields to the lending capitalist in return for being
granted a Joan. The industrialist or merchant invests the
money borrowed either in production or in trade. The
feature of loan capital. therebre, is that it
by the capitalist to whom it belongs. The
mdustrtalIst. by using the capital loaned him, hires workers,
and surplus value. He pays part of this surplus
to the lendIng capitalist in the form of interest So interest
on loans is a form of surplus value. .
Take this example: an industrial capitalist has received
a loan of $100.000. With the average rate of profit at 20 per
cent, the total profit obtained on this capital will be $20,000.
l
Out. of this profit. the industrialist pays interest to the
end!ng capitalist. If the level of the interest on the loan,
Or tnter:st rate.' is 3, then on a capital of 5100.000,
53.000 wlll be paid over out of a profit of $20,000. The
,the profit, 517,000, is appropriated by the
ThIs part of the profit is known as profit of
enterpnse.
t Tm rate 01 intt:ust
to the capital loaned.
is the ratio of the amount of the interest
1/8
The proportion in which the average profit breaks down
into interest and profit of enterprise depends on the balance
of supply and demand in regard to loan capital. The higher
the demand for money capital. the higher the rate of
interest; conversely, the lower the demand for money
capital, the lower the interest rate. Since interest is only
part of the average profit. the interest rate cannot be
higher than the average rate of profit.
As capitalism develops. the interest rate shows a tendency
to fall. There arc two reasons for this: 1) the average ratc
of profit tends to fall. and 2) the total mass of loan capital
grows faster than the demand for it.
The movement of loan capital takes
Capitalist credit.. place in the form of credit. Capitalist
Banks and banker S d' h . 1 d
profit ere 1t as two forms: commerCIa an
banker's credit.
Commercial credit is credit given when industrialists and
merchants sell one another commodities on credit, the seller
receiving a bill of exchange obliging the buyer to pay a
certain sum of money by a certain date.
Banker's credit is credit made available by bankers to
functioning capitalists in either industry or commerce.
Banker's credit is provided out of the temporari!y spare
money capital deposited in banks.
A bank under capitalism is a capitalist concern, the
function of which is to act as intermediary between
borrowers and lenders. The function of the banks is to
collect spare, inactive capital and incomes and make them
available to functioning capitalists. and also to
bourgeois state. In addition. bankers invest
in industrial and commercial enterpnses, thus becommg
functioning capitalists at the same time. .
The operations of a bank. as of other capitalist enterpnses,
serve the object of making profits. The of the
made by the bank is the surplus value created In
Banker's profit is the difference between the r:cclve
on loans granted by the bank and the interest whIch It pays
out on deposits, Deposits are the temporarily res
ot
::
ces
of money which are put into banks by
landowners and other sections of the loans '-';'_
pays a smaller interest on deposit'> than
f
It on banke; ........
and appropriates the difference. Out 0 t IS e
119
covers the expenses involved in banking operations, and
the remainder is his profit. Capitalist competition of itself
reduces this profit to the level of the average rate of profit
on the bank's own capital. A large part of the bank's capital
is borrowed capital, obtained through deposits.
Besides acting as intermediary in credit operations, the
banks settle the accounts between capitalists and perform
all kinds of financial commissions for them. Consequently
for many capitalists the bank acts as their cashier. '
Under capitalism banks function as a specific apparatus
for spontaneously allocating monetary resources among the
different branches of the economy. But they are allocated
in the interests not of society, but of the capitalists.
Capitalist credit, by closely linking the various branches of
the economy, promotes the further advance of socialisation
of labour. But this socialisation of labour takes place on
the basis of private ownership of the means cf production.
By virtue of this, the development of credit still more
aggravates the contradictions of the capitalist mode of
production and increases the anarchy of capitalist production.
At the dawn of capitalism, factories
were started up by individual owners.
companies Later, however, huge enterprises such
as the railways, docks and so on
could not be financed by individual capital. Joint-stock
companies began to be formed in industry, railway
construction, and in banking. They became widespread in
the second half of the 19th century. A joint-stock company
is a form of en.terprise the capital of which consists of
contributions from the members of the company, who own
a certain number of shares corresponding to the amount of
capital they have invested.
A share is a security which certifies that the holder has
put a definite Sum of money into the enterprise. The share
gives its holder the right to receive part of the income
the enterprise. The amount received by the shareholder IS
called a dividend. Shares are bought and !;old at stock
exchanges at definite prices, known as quotations. A
exchange is a market for securities. primarily shares. l.t IS
here that shares are bought and sold and their quotatIons
registered.
The quotation or price of shares depends on two factors:
120
1) the level of the inter.est which the banks pay on deposits,
and 2) the annual tncome brought in by each share
(dividend). If a share of $100 brings in an annual income
of S10, then it will sell for the sum which. if deposited in a
bank. would also bring in S10 a year in the form of interest.
Let us suppose that the bank is paying 5 per cent annual
interest on deposits; in this case the share will sell for S200,
since by putting this sum in the bank the shareholder will
get an income in interest of $10 a year.
For the control and organisation of a joint-stock enterprise
a genernl meeting of shareholders votes to elect a board
of management, and appoints officials. The number of votes
at the general meeting is determined by the of
shares. And since, as a rule, the overwhelming majori"ty of
shares arc in the hands of a sman number d big capitalists,
it is they who. in effect. control the Joint-stock company. It
has been shown in practice that it is en01.:'-J'1. to hold less
than half the shares in order to have complete conlrol ::-f a
joint-stock enterprise. When one person holds enough sh,,:es
to enable him to do as. he pleases in a joint-stock enterpr1se
he is said to have the controlling interest. This can also
apply to groups of persons. . _
Capital existing in the form of secuntles (s!1.J!ec;,
. . . ft . [i.'NJDUS
and provldmg an mcome or 1 s owner, 15 -,. -
capital. because securities themselves have no
They merely indirectly reflect the movement of re
capital. . 1 t
The spread of joint-stock companies inCreaslflg.y _
forms the capitalists into receivers of interest
while the management of industrial productIon IS
on by employed staff-managers, directors. Thus. the parasltlc
. I h' becomes more and more
character of capIta 1St owners Ip
marked. . f the
Sh he
ld hy people from all sectIons 0
arcs are f h 'talists' the
population. This is to the advantage a t h'ands
more buyers of shares, the the
of the upper stratum of the s arc 0 ers e acquired by
joint-stock companies. The fact. that ideologists
groups of worki.ng people of capital".
grounds for theIr theory 0 e It f the development
This false theory asserts that as :ature of capitalism
of the jOint-stock form of enterprIse, e
/2/
is changing and any working person who buys a h
becomes a co-partner of the company and can take p s a:
e
its management. In actual fact. joint-stock enterprise
art
In
completely controlled by the big capitalists who also d
S
?re
... all benefit from the share of a company. en:
workmg people who hold only an Insignificant part of h
shares do not and cannot play any part in the manage t e
of a joint-stock company. ment
. Above we considered how surplus value is transfo d
mto profit, and how industrialists, merchants and ba fink e
. . B d . 1 h n ers
acqUIre It. .ut un er capIta Ism t ere is yet another exploitin
class-the bIg landowners. They also receive their shar 1
the surplus value. This takes the form of capitalist 9
f
O e cd.
rent. un
5. Ground-Rent and Agrarian Relations Under
Capitalism
Capitalist
groundrent
Where does ground-rent come from
who creates it, and how does it get
the landowner? In its answer to these
questions. MarxismLeninism takes as
its . starting-point the of capitalist agriculture,
carned on by the explOItation of hired labour. It is also
assun:ed that the landed proprietor and the capitalist are
two different persons.
The owner of land does not engage in agriculture himself.
leases the land to a capitalist who has decided to invest
hls . capital in agricultural production. The capitalist hires
agncultural labourers, who. during the production process.
create value. This surplus value goes primarily to
the capItalIst tenant-farmer, who divides it into two parts:
?ne part is .his profit equal to the average profit on the
Invested capItal; the other part is the surplus over and above
the profit. and is approoriated by the landed
propnetor. It is this second part of the surplus value which
forms groun?-rent. Why and on what grounds does the
landed propnetor take f<:r himself part of the surplus value
created by the workers hlred by the capitalist tenant-fanner?
Solely on the basis of the fact that he is the owner of the
land. and that without his pennission no one has the right
to farm the land. That is why it is said that ground-rent is
122
the economic form in which private ownership of the land
is realised. If the capitalist is himself the owner of the land
he appropriates all the surplus value created by the agri:
cultural labourers.
Capitalist ground-rent differs from feudal ground-rent.
Under feudali sm rent in all its forms (labour-rent, rent in
kind. money-rent) exprcc:;sed the feudal production relations
between two main clac;ses-the landlords and the serf
peasants. Under capitalism. ground-rent expresses the
relations linking three classes-the landowners, the capitalist
tenant-farmers. and the hired agricultural workers. Under
feudalism, ground-rent accounted for the whole of the
surplus product created by the peasants. Under capitalism,
surplus value is distributed between two exploiting c1asses-
capitalist tenant-farmer and landowner.
A distinction should be made between the two types of
rent: diHerential rent and absolute rent. The existence of
these two types of rent is connected. as Lenin shows, with
the dual nature of monopoly: monopoly of the land as an
object of economic activity, which gives rise to differentiz!
rent. and monopoly of private ownership of the 'and, which
gives rise to absolute rent. .
In industry the value of a om-nodlty
Difrerential rent and the price of are
determined by the average co"ditiom
of production. In agriculture, the price of produc"on of
agricultural is not determined .. by the
conditions of production. but by the condltlons. of
on the poorest lands. Since the area of land IS and
cannot be enlarged indefinitely. those tenants who ho.d the
best land or that of medium quality are in a more
position than the tenant-farmers on poor lands. !hIS
monopoly, tenants have of different plots of obJects
f
..... e to dlfferences m Incomes.
o economIc activity, gives TIS h
D
.ff. . h olil over and above t e
I erel1Wtl rent lS l e excess pr, 0-- d
average profit obtained bv those farms wh1ch un he,
. . a. .. I d ction But it IS not t e
more falJourable con /t1Or.S 0 pro U ood
land itself that is the source of rent. Labour applied to g
land more productive and yields to obtain
There are three facton which It pOSS.1 :1?e fertility
differcntic:' r."nt. arc, 1) in the
of the soil Ln diHe:ent pl(lts of lan, e 1
123
lo.cation of, plots of .1a:zd in "elation to tIte marhet: 3) the
dIfference In productzvlty derIVed from the additional Ca '/ I
. d h Z d pI a
ll1vesle In lean .
re?t connected with in fertility and
location of land IS referred to by Marx as differential relit 1
Let us examine this. .
Take. for example. three plots of land. equal in size but
varying in fertility. On each one, the tenant spends S100
on hiring workers. buying seed <lnd machinery, etc. But as
the plots of land vary in fertility, the grain yield will not
be the same: 10 bushels from farm 1. 15 bushels from farm II
and 20 bushels from farm III.
Let us suppose that the average rate of profit is 20 per
cent. In this case, the price of production of all the grain
(costs of production plus average profit) on each farm will
be $120. But what will be the individual price of production
of 1 bushel of grain? On farm I. the production of a bushel
of grain will cost 12 dollars (120: 10). on farm II it will
cost 8 dollars (120: 15), and on farm III-6 dollars
(120 : 20).
But on the market the price of grain will be fixed at the
price level on the poorest land. i.e .. 12 dollars per bushel.
If the price were fixed at the level of 8 dollars (the medium
plot). the capitalist tenant-farmer on the poorest land would
only get 80 dollars (10 X 8 dollars), i.e., he would get no
return on his expenditure. and absolutely no profit at all.
This would mean that the tenant-farmers on the poorest land
would abandon agriculture. They cannot transfer to the
medium or best farm lands. since these are occupied by
other capitalist tenant-farmers. To discontinue production on
the poorest lands would affect the total grain yield. which
would fall. The prices of grain would begin to rise, and
when they. reached the level of 12 dollars per bushel. it
would agaIn be worth while farming on the poorest
land.
So the tenant of farm I will sell his harvest for 120 dollars.
the tenant of farm II -for 180 dollars. and the tenant of
farm III -for 240 dollars. The over the price of
production-60 dollars for farm II. and 120 dollars for
farm III -comprises the differential rent.
For greater clarity let us present this example in the
following table:
124
--
-- - -
-
-'-
n 1,,1,0. I e Sotl.l prlu' 01

E
,

I
II
III

- if'
10{)
IOU
IOU
20
20
20
10
,5
20
01 tm, ,
120
,20
120
, .
-

'" -.; '" .c
tA 0:: i
I ,-
,2 \
12
12
I
.
-.
120
180
240
\
\
,
. -
- c
" ,
60
20
It follows tho.t differential rent is the exce'=f' OW"" and
above-_the _average profit. is r by tne lal ur or the
a-gricultural workers: The, wLners'abour. v7'. "m
productivity when it IS aprhed to la.od of vary.lg r_h y.
and for this reason it produces va amounts of s1.llpius
value d mili
The origin of differential rent 1 is also conne -+e WI e
location of the farms. The di.stancc town_ ;rqe
rivers the sea coast and the ratlways has Its effed - ..
which are nearer to marketing centre; ra' e .It'!:
considerable la'u ur and resources spent on
produce which tne Illore outlying have.o Si - -h["
sell their products at the same 'l!' thC"se obtalne_ Y
the more distant farms, and so get addltlor.:.: p- . 1 is
Differential rent also ;lnses addltlo_ .-; - "ld
invested in the land (usc of artiJl':lal fertl .. -
.. d h; et \ T':J.e!dtltlOnal
amehoratlon, Improve mac nery. .: kn d,Herential
. f . I'V 00 is own
resultmg romntenslve cu. '--
differential rents I and 1" the landow:lf:- also
takes absolute rent.
Under capitalism
Absolute r("nt.
Price or land
land is privately owned by.
proprietors. So before capIta ....10 f
put into ag:-iculture. the consE':lt d
he landowner has fir5t to be
-. ly of private I
The ,nonopo f ca ital from industrY
of the land cxc
1
udes t;le frcc- Jlo.\al.
h
Q; _ nic com ... of
to agricu'ture ... JLlSC of t e _Olg dust>"! This melns
Z cu'ture than 10 10 .". IS
capital is O!;ter \'1 1. d more surplus V3 ue 1
that for the same cl.pital :nveste. d tl"\1 If there were a
. . I than in 10 us .".
produced 10 ag{ICU lure
t25
free flow of capital from industry into agriculture th
surplus value created in agriculture because of th e t
xtra
organic composition of capital would be shared c
b
OWcr
industry and agriculture. But private ownership of
prevents it being redistributed among the capital' t e
landowners take this extra surplus value from the l' he
who invest in agriculture. pI a ISts
AbSolute
rent
Average
profit
Types
Ot soil:
a
poa,
Absolute and Differentia.l Rent
b
average
c
good
u
-
.The capit?lists cannot organise agricultural production
paymg the landowner for the use of his land. The
the receives on the basis of his right to
pnvate ownershIp of the land is what is called absolute rent.
. Let us examine the following example of how absolute rent
.. formed. If the organic composition of capital in industry
1S 4 : 1 and the total capital is SOc +20v, then, with a rate
of surplus value of 100 per cent. $20 of surplus value will
be The value of the total production is $120. The
of capital is lower in agriculture than
m Industry, bemg perhaps 60c+40v, i.e., 1.5: 1. With a
ra.te of surplus value of 100 per cent. $40 of surplus value
be. created and the value of the total agricultural produc
wl.11 .be The capitalist tenant farmer, like the
receives an average profit of 520. Therefore
t?e pnce of production of the agricultural product (prod
uc

tion costs plus average profit) will be 5120 (100 + 20),
whereas the value of the product. which is what it sells at.
is 5140. The difference between the value and the price of
production of the agricultural product (in our example
126
140 -120 c::: 20) fonns the absolute rent which is appropriated
by the Absolute rent, then, is the exees!! of the
value the product over the sooal price of
production.
It that the mo.nopoly of private owne:-,hip ,f the
land IS the cause responsible for the existence of the lbsolute
rent paid on each plot of land, irrespective of its fertility
or situation.
The land is a gift of nature and has no vz:
1
uc, but under
capitalism land is and i.e., becomes a commodity.
What, then, determmes the pnce of land when it i,. sold?
The price of a plot of land depends on two factors: 1) the
annual income (rent) it brings in, and 2) the rate of i.nterest
on loans. If the landowner annually receive!> a :':ont of
$10.000 from his land. then he will sell the land for 1 sum
of money which, if deposited in a bank. would bring 1n the
same income, i.e., 510.000 a year. I.et us suppose that the
bank is paying 4 per cent on deposits. The landowner will
sell his land for $250.000 because this is the amount of
money which, deposited in a bank at 4 per cent interest,
would give him an income of $10.000. the
price 01 land is capitalised rent. i.e, rent t'lnsfor:ned
into capital providing an income in tlle form .of.
As capitalism develops, the price 0: lana increases in
connection with the :D rents and the lowering
of the interest rate on loans.
In agriculture carit.llhtr. develcps
accon"; ng to the same ec",ncmlC laws
e.,; in indust:v.
At the sa.me time develop'i
in in ways,
depending on the cone-etc historical circumstances. Two
paths of development have been most typical.
The first was the retention of the feudal landed
its transformation, through gradual changes. into capitalist
farming. For instance. capitalism developed along these
lines in Germany, tS31ist Ru .. sia and Italy.
Specific features
of capitalist
development
in agriculture
The second was the abolition of the fcudal landed estate
through bourgeois the confiscation of
.' . which capitalist
Its sale to the pe.'l:sants. Farms groW up In . h
production develops rapidly. It on these bnes t at
capitalism developed in agriculture to the U.S.A.
But no matter how capitalism may have developed .
agriculture. there was always a process of concentraf In
landed property in the hands of the bIg bourgeoisie.
peasant ownership and feudal landlord ownership gave w 1
to bourgeois private ownership. In the U.S.A. in 1954 t'
example, 7304 per cent of the farms held 19.6 per
the total area of land, while 26.6 .per cent of the farms held
BOA per cent of the land. of which the largest agricultural
concerns (2.7 per cent of the total farms) owned 45.9 per
cent of the land.
As capitalism develops in agriculture, production become
more This leads to the small peasant
becommg crowded out by large-scale production, because
the latter has several decisive advantages OV.2r the forme
Large-scale production means that agricultural
can be .to t.he fullest extent. On large farms. labour
productIvity hIgher. An important advantage of large-
scale productIon .is in one or other particular
branch-land cultlvatlon or hve'itock raising-with its conse-
quent high commercial marketability. Small production
becomes ruined in the face of the competition from large-
scale production_
It is an in.contestable fact that in industry large-scale
always prevaIls over small production. Even the defenders
of capitalism have to admit this. But they depict agriculture
as a of rural bliss and advance the lying doctrine
of the stabilIty of small peasant farming", In actual fact. the
small far:n is by no means stable, but only keeps going
because. m the face of incredible privations the peasant and
his family are strenuously overworked. '
Capitalism deepens and aggravates the antithesis between
town and country. The economic basis of this antithesis is
the exploitation of the peasantry by the urban bourgeoisie,
the impoverishment of the majority of the peasantry in the
course of the development of industry, commerce and the
systems of credit and taxation. Economically, politically and
culturally, the countryside more and more behind the
to ..... n.
Tl-Jcir hard living conditions bring the peasantry to the
real.. ation of the need to abolish the capitalist system,
Because of this, the basIc interests of the majority of the
peasantry coincide with those of the proletariat. It is here
128
that we find the economic. ba"is of the alliance be!tVeeD the
proletariat (md the. wc:
rkmg
peasanUy in '1''tetr Common
struggle against c<=pltahsm,
Private ownership of the land is the
major reason for the fact that
agriculture lags behind industry. As
already stated. private ownership of
NationaUsat.lon
ot tbe land
and ground-rent
the land hampers the free flow of capital from industry to
agriculture, It t?eans that. t?e tenant-farmer is
unwilling to mvcst addItIonal capItal in agriculture
(fertilisers, irrigation projects, etc.), since all the advantag( s
from investment. once the leasehold expi;es. will go to the
landowner. Private ownership of the land s the origin of
absolute rent. which is parasitically approl rial by tnc
landed proprietors. This indicates that pliv-lte ownershIp
of the land is an obstacle to the ,en
t
of the
productive forces of capit<!lism. The:-="ore t'le abolifon 01
private ownership of the land becomes a m:c ilty. Ol"Je way
of bringing thi! about would be national1 _'Jon oj tne land,
Le., the conversion f the am. into stal ploper-y,
In the early day; of rep' """ltative" of
the bourgeoisie were in fdvour of nati( -,,1' -ing .... I> and.
They suggested aro! shing private .and own. hip (in
times the land was m.:! nly owned v feu._ 1 l( as) md
putting the land unde r the conl1'OJ .,1 th_ urq 015 tat,
What would hz-ve beell the conseqc .... s c !;' '1 1 me', ure
under capitalist . -? the ,tate h,:id ... ml 01 of
the land, absolute rCl')t w ulu lave CC:1sea 0 e:m t. s. lce t
derives from private 01 tn(
In spite of the fact that nal cnal. 3tion of the bnd b}'. thle
?ourgeois state would accelerate lC de\. 0, capild
le
Ism and ib productive orc\.:), the IS
of carrying it through. tir tly. the abolnon of ."JlV'lte
ownership 01 the land wou d shake the ,C'f
, , 1 d'lg c"'-itali' Sec flaly,
prIvate property 1 qr ler, .. , nc u I -, _ .
as capitalism devc"o: . t'he u. Ide Il If .bcqan ,to
3( qUire Iflti, 0 that It; In e ts of 1C bOUI I! I( afl ' .1e
landownc s CedlTle mcr .... inSlynte woven f d lo-cd
P'ivatc .... wne .. 111 d-,d n tl'1'" 1 'fOl
callt':lH'm 1 oniv be (: lc.:..:: ' 'w n'e ... - 5 W l( 19 i S
. '1<h ,t c as!' I
the lbol ton d y;l\; atl..; ronc
1
ty 1.1 gene)J 4.' aJisation
the onarv plolctar': B1.1t ploieta:lall ::1alon
129
of the land does not open the way to the development of
capitalism; on the contrary, it is the beginning of the aboli-
tion of capitalism.
Nationalisation of the land in the U.S.S.R. destroyed at
one stroke private ownership of the land and absolute rent.
This measure was one of the main conditions for the rapid
growth of socialist forms of agriculture.

We have now examined the particular forms assumed by
surplus value in the rotation of capital. \Ve have made it
clear that the sale source of the incomes of all groups of
the bourgeoisie and of all landowners is the labour of the
hired workers who create surplus value. The particular
fonns assumed by surplus value conceal or gloss over the
fundamental class contradiction of capitalist society-that
between the bourgeoisie and the proletariat.
In making his analysis of the processes involved in the
production of surplus value, the accumulation of capital and
the impoverishment of the proletariat, as well as in the
distribution of surplus value, Marx was considering the
fundamentjll class contradiction of capitalism, that between
the pro!elariat and the bOurgeoisie, from every possibJe
angle. He proved beyond a shadow of doubt that the historic
task of the working class is to resolve this irreconcilable
contradiction, i.e., to end the capitalist mode of production
and abolish exploitation for all time.
C ha.pteT VI
REPRODUCTION OF SOCIAL CAPITAL
AND CRISES
- ---
Capitalist economy consists of a )f separ"te
independent enterprises. Each capItalist prodUI.:C5 the
commodities which bring him the greatc t profit at the
given moment. Because of this, production develops chaoti'
C-"Hy, without any planning. The anatl..1Y of 1
capitalist society creates dil ficulties cODne ... wltb the sale
of commodities and leads tL ec nomll.. cnses . f .;
production. .'
Economic cnses cause untold suffenng to workJ'9
people and make the ;ontradictions of ..
acute. They are CO! vigorous reminder to capltahsm of It-
inevitabb coHarse.
Let us look into the mechanism of the capitali t rent Cluc
tion of sor:<lJ capital a!. a :vllOJe
1 Reproduction oi Social Capital
L lrler capl13lism soclal _ D
Individual, not aJ1 mtegrated whole I IS up
and Boclal capital th d"v;dual l..lpital
In<..-ng e In 1 . - th
P
r Each of the e -:3 -"r:v"tely owned by onc ",r 0, er
- ,. - - . - function!.
-<!")l ,I -t and .1 rclation 0 i..."lC C: ler enterr'nses, .
" h time repro'
dS an nc'epent r-roduchon urn:. At t e same .
duc.:t on in c<.\ch SCI- arat::' enteljlrisc depends t71e
duction ir. others. flUS. 1'CP1.JJul"tion at a :]lotor "ar wer s
"
131
on the production by other capitalists of all kinds
of machine tools, instruments, auxiliary materials, fuel,
COIIsumer goods for the workers, etc. The operations 01
aeparate capitalists, and consequently the movements 01
aeparate capitals, come into contact with one another.
The sum-total of the separate (individual) capitals. taken
in their inteJ:dependence and interconnection, is what is
bcrUD 88 social capital as a whole. It is in this interweaving
of the 01 separate independent capitals. which
are Jet parts 01 the total capital of society, that reproduction
takes place under capitalism. For reproduction to take place,
all the capitalists in society, not merely the individual capi-
talist. must be able to sellon the market the commodities
they produce, and to buy there the commodities they them-
..m. require.
To disoover how the reproduction of the total social
...... takes place, let us look at the composition of the
........ p.""IGCt.
'DIe entire mass of material wealth
(machinery, machine tools, fuel, bnv\,
clothing, etc.) in society ova
...... period. a ,au. lotI'" the gross sociol prcodr
........ rite, the groll social product is divided iDto
ftlue ..&irh zarlaces the _nt capital apen!. i.e.;,
eN! tear of equip" .. "'t the value of thcL
tilled. etc., 2) the value wIIlc:Ii
1he ftlue of labour power, an
value of the gross
capital + variable cap'-
,ocI.! product
When analysing the teproductioD l1li4
social capital. great impcnl"'CZ attadaeI to
of the gross social product.
As regards its mauriGI 101m the a-
consists of the means of ptoyt.- tioD ....
The whole of social production h'ls
two major parts, Department I II the
means of production and
consumer goods.
These parts of the 91OS1 IO'"IIt
material form. fulfil different roh ...
tion. The means of productioa
consumer goods serve to
...
turnover, i.e.. pas. DO'" Ibe
from the production to the
commodity fOim hi- k to tile
turnover can take ..a-
of them
process of
the annual lod"
Ie
the value of the constant capital be 2,000, that of the vari bl
capital 500. and the surplus value 500. The gross s:C
product will then fall into the following parts: la
OE'partment I: 4.000c+ I ,OOOV + I,OOOs_6,OOO
Department JL 2,000, + 5000 + 500, - 3,OeO
In Department I, the value of the entire product. which
equals 6,000, exists at the end of the year in the form of
machines, raw materials, etc. But the workers and the
capitalists in this Department need not only means of
production, but consumer goods as well, if the process of
production is to be continued further. The finished goods of
Department I must be realised. How is the process of realisa-
tion effected?
Part of the output in Department I, equalling 4,OOOc, will
be sold to enterprises in the same Department to replace the
constant capital that has been used up. The other part of the
output of Department I (I,OOOu + 1,000s) is sold in the form
of means of production to enterprises which produce can'
sumer goods. These means of production, equivalent to 2,000,
serve to replace the constant capital in Department H.
In Department II the value of the total product. which
exists in the form of consumer goods (clothing, footwear.
foodstuffs, etc.). amounts to 3,000. Consumer goods, to the
amount of 2,000 (produced in Department II), are exchanged
for means of production (produced in Department I). The
rest of the output of Department II. also consisting of
consumer goods and being the reproduced value of
variable capital (SOOu) plus the newly-produced surplus
value (5005), is sold to the workers and capitalists of this
Department.
In this way, the entire social product is realised. The con-
dition for realisation, with simple capitalist reproduction, is
as follows: the variable capital plus the surplus value 01
Department I must be equal to the constant capital of Depart-
ment II.
If triangles are drawn round those parts of the product
which are realised within their own Department and rec-
arc put round those parts of it which are exchanged
in the other Department and e line drawn connecting therl.
W'" the following diagr'lm:
/.'/4

- -
This diagram clearly sh?ws the condition of in
'mple capitalist reproductIon: I(u + s) =
51 Extended reproductIOn, or aCl':umula-
Conditions tion. is characteristic of capitalism. In
for realisation In order to increlc;e production. the
extended d existing enterprise has to e"< "'nded
repro ue on or a new one built h both cases SalT''':
new means of production must be set in m("llJon. And sin( e
the means of production are produced in Dcp: -tmen! 1. t" t
part of the product of Department I which r 1)1 t. cnts newlv-
created value I(u + 5) must be gl e3.t"l 'an th
P
.
capital in Department II (lIc). Only on 1. conditIon w I
there be the surplus means of nrodlY on hll'" 'an be set
in motion to extend production bOl.l Dep'
The lmple below ta\(" this cndl on In 0,- ount:
, . JO" +-1 l00v + I C
Dcp<..rrm nt tI: I SO ,.. t- fu)S
ad
.' th -.. ...,l"s v3.1ue 1 1 e3.('h
With extended "epr uc lon, e -,... consl'mrd
Departmen.t fa.lIs into two palts: wh_t IS
by the capItalists and Wit sac Jmu additional
part of the surplus value IS na: power.
means of production and on hI 'IIl'L }' '-' t f J Department I
Let us suppose that the capL ISIS. 500 This
h
If f th' surplus vaJ'le .
accumulate one- a 0 elr th ';lnstant and 100 to
means that they must add 400 thO e \ I ted pa,t of
1
. b1 't l' spend t e accumu..l " .
t le varia e capl a , I.e., . . the capital orij inal y
surplus ve
1
ue in the same proportlOn 0 artment: 1S it
111"VJlnL rio In consequence, the following year,
wil i'tpr-ear when it goes into pro t.::
W1J' l;" composed as follows' 4 400c 't I (6 000) 4400 is
Oul 01 the total product of Del 1.600
realised wllhin the sawe Deplr'"men
13,
must be exchanged for products from Department II. But if
the capitalists of Department II are to be able to purcha
means of production to the sum of 1.600 (instead of
1.500 spent by them in the preceding year). they mu
increase their constant capital by 100. out of the surpl:s
value of Department II. These 100 units of surplus valu
allocated to extend the constant capital of Department
will mean that the variable capital must be increased by 50
since the capital originally advanced in Department II
spent in the proportion of 2 : 1. In consequence. the value
in Department II which will go into the following year's
production will be: 1.600c+BOOv.
The process of distributing the means of production and
consumer goods withil1 Departments I and II is shown in
the following diagram:
1
100
I
\ -
t 101 I
-
- }()
R"at:z..ation of "'e pr riUl.t will take nlac::- d:- fo11ows. T'Je
:!l::ts of DcI' r ... '"'1e"t I uy It'Jr''S A production from one
am-the to the value d 4,4f O. T'lf' lemaining part of the
me...;.ns 01 orc..:luct:on (.6CiJ! s exchanged {or consumer
gO(; -" .:l Dcpa tIllent If As d result f lis eXt lange the
/3b
, "talists of Department I receive consumer goods to the
'''PI hOI h 0 r f D
value of 1.600. w ,I e t e capita IstS 0 cpartmcnt II re eVe
cans of productIon to the value ,of 1.600, The realisation
the remaining consumer goods m Department II (1.400)
place within that Department.
The process of exchange between the Department' may
be shown like this!
I 4,400c + 11,1000 + 500, 1- 6,000
t
II L1,6UOc +8000+600,3,000
The condition for realisation in extended reproduction IS
equality: the value of the variable capital (1.000) plus that
part of the accumulated surplus value which is addr.d. t('l
the variable capital (lOa) rlus part of the sUJplu) va11'- wl]tc!:t
is consumed by the capitalists (500) musl I-e 31 0 ie
value of the constant capital (1.500) plus t"at p;!rt of tl1('
i.lc":umulated surplus value (100) whIr; i!> adae t) the
.:onstant capital of Department II
The new cycle of production Wil t';,in in lC V""
vn 1 larger capital basi . and it the 3te, f u plus vall IS
lOO per ccnt. thf> gro! S Sl al p;----Iuct In the e "and ye!1
Wlil be JS follcw
['" 'pal (me'll 1 4 40)(;
[epartn cnt 11: l,ooe
, 10 l-
t: :Qu +
, JO, 66u
'lO
. 3,20)
, 0
This is row the proces! 01 extende_ "d'"Jltali! t r,!nl ,.0 on
takes place, and these are the conditb ns F r __ 1. al on
which predetermine the trend of extended repJ ""'Iclu_ on.
I t
th --c uc
In extended reproduction. the deve opmc'1 01 e. .
tive forces is expressed in the fact thaI the amount of sd lal
labour that goes into the production of means of )1 J
tion increases more rapidly than that w'1icl. goes nto le
production of nsumer goods, 'that flz
Thf'! e::'Jllomic Jazu rl exte'1de.1 f'cnroducllo
n
15" _;,11.
productioll vI tne mr.uns 1 prf'll:!'ld" grnw. mor .,.-
than pr .!'ll".!iC
n
f f c nSU711er goOdS. -f th" f the
"r h . " w 0
e W Ole m ,mmg .:.:II.- <:Igm - the one
mr rc npld wtb of me..:.ns of rodu, on ies to
fact that the replacement of hand b m .
the technical progress that :cco achm.e labour-in
Industry-calls for the intense devc}opme t mpaOles machine
of coal and iron, those real 'means of n d
of
t.he production
of production',"! pro uchon for means
The theory of realisation makes clear th ..
essential for the realisation of co e which
sImple and extended capitalist reprodu in both
means affirms that uncler capitalism But, by no
actually present. On the contra the CondItions are
bemg violated. ry, ey are constantly
Where competition and anarch f d'
hn? one knows the exact arc k
the

or t IS reason definite esse t' 1 1'-' e mar et.-
branches of industry and re atIons among the
c,?ntinual, innumerable establi.shed
relationshIp. 0 e proportIonal
bet.ween production
production is to deriver The fi
a1m
. 0. capitalist
through e t d' . Imum pro t; It IS achieved
the same and accumulating capital. At
lowerin th r . ese plocesses take place by means (If
their of the working people, so th?it
less. This leads t amount they consume become
d.ffi , f 0 a contraction of the market making t
1 T Cll t or commodities to be realised '
he bour .. . .
capturing tnes to resolve this contradiction bv
the' , Ign, The struggle for foreign
Ir seIzure diVISIon and d"
and create most acute
among tho c 't ,. are for Innumerable conflicts
... apt a 1st Countnes.
2. The National Income
What is tbe We have already discovered that fle
national income gross social product "leans the mass
. th of mater ai wealth produced in
souety tn e cou .e say of ' ,
product . l' one YC..t From the SOCIa
const3.nt capIte: IS ':lnce it i::. the value

I Woriu. Vel. 1 .. J, lOS.
1,18
tf"nsferr('d from of production to t'1e neWly
products. The rematnlng pa:t of the social produG (variable
.surplus value) 15 the value. during
the year. lhls part of the gross SOCIal produ IS the national
income of capitalist society.
If, for instance, commodities to the value of 190 thousand
million have been produced in a country during the course
of a year, of which 560 thousand million will go to replace
the means of production used up during the year. then the
national income created that year will be $30 thousand
million.
In its material form, the national income ists of
articles of personal consumption and of that part OJ tl-)e
means of production which is used to extend productic
n
The national income is created by those wh .... work in the
sphere of material production: industry, agriculture. building,
transport. etc. The national income is create:!' by the workers,
peasants, handicraftsmen and intellectuals who are di
employed in the sphere of material nrodl -:tir ....
In the non-productive sphere. WIO nation_ 1 Dcome is
create This includes: the state '"I p ..... att:s. __... ere-lit
commerce with the exce...,tion of ""OS tradin operations
which 9.re aft extension 01 the proc!'is f .,rode.... )0'0
sphere of ... culd' on. the aT"llY institut n . cnt ..
tainrnents. etc. Al the exoenditure involved in th .. e ranches

is covered out 01 the nationcl mc Ire c' eated 1D fo' e phc
1
e
of production.
In so far as the national incomp - created in the "he
l
"
of material production, the conditioI"' req1li ed for its
growth is that there should be an increase n the numb r
of people engaged in production and In iJ'lCrelSe in the
p' ,ductivitv of their labour.
. Under capitalb m 'If> i?comr.
Dlstributlon of is distlibuted on a a-s m the
tbe latlonal iOCQmc interest of the explolte 'S and not of
thl( WOl k' ng people " di tinction
Should be mdde etwe=-'1 primary e,d secondary diSL lrutIon
o . "e 1atil1na1 4 Kome
n ... , C"'dt ircome f. t d 31' faUs :'It(' the
c3pitalisl. }lr mary Jj<;tribution of the natlo.
n
3 .. lDcome
consists n its beinr dist lbuted between ":lpltahsts an, d
h
ts surp US
werkers. '"T'hr: workers receive wages, t e caplt .. .u.tS
139
value, which is distributed among th' ,
merchants, bilnkers and big landed propri t e
tion is seen in the following diagram (' trs'h This .distribu:
S1.000 million). cae Unlt being
i
Gross social
I
product 90
-
I . - .
t
National
3D
Rf'pl.:lct'mf'nt of
constant c.lpital
used up 60
-
\"1

ria b \ cl'o c::t p ita 1 ----"'/ IV

--, ages of product ion .
_____ _____ .
incon
S"
.-
-
1e I
. -
t
rplus V.1\UC
20
Profit of
industrialists 10

Commercial orofit 3 .
---:
Interpsi 2
GI )Und,re1t '5
-
I
I
After the nationa1 inco h b ..
basic classes of ca' . me !1
s
een dlstnbuted among the
and landowners- soclet?'-t.he proletariat, capitalists
takes place. a secon ary dlstnbution or redistribution
How does the redistr'b t' f h
about? We have seen'th
1
u.lon 0 t e national income come
the economy (m d' at ,Ill ,non-productive branches of
amenities entertain e Instltuttons, public services and
But the' capital' s, etc.) no national income is created.
institutions pay slSl s. who control these enterprises and
, ) a arIes to the' I
cc. , cover the cost f ' emp oyees {doctors, actors,
make a profit Th 0 premises and, in addition,
expenditure of Cover all these items of
?f material bahhnal .1Ocome created in the sphere
I,e, paymr'lt for med' Y c argmg for the services provided,
and am'" ities e'"c Th
aJ
'" 'e"ltment education, public services
compen 3.te fo.' p.:: ynents fc snvices provided
at" l\..:rag m_ nee costs of thE:- -terprises and
'rod1 i ... sphc .... ,e p.vfil for the ca:>it'31isl. 1 the non-
140
Part of the inc...Jme of the ',vorking people is redistributc-.i
through the state budget and is used iJ1 the intere'Sts of the
ruling class.
The bourgeois state has its CI my, police, penal in,..tituti'Do;
and courts, administrative appal atu: and so em. All tll.e
maintained out of the state budget of which taxi'S evled
upon the population are the main of revenue. Tli:.
means that after the working people have wac ....
lhrough the primary distribution of th:- "ation./ income
have to pay taxes to the state out of them. In this way tr.c
part of the national income I'mt at tbc dis po: al of the work, 19
people is in fact reduced,!
The burden of taxation increases l! S;-1 devd ps .
For example, in Britain taxes in 113 lCC unted fl r 1 p_1"
cent of the national income; in 1Q24 23 per 'en.' n lQ.,)9'
35 per cent. In F ance, the figures are' l,," b per cent
1924-21 per :cnt, and 1959-21 er :ent of th: nJlonal
income, Am in ""c United States nore t3:.,." ,. 'C collectc
under the Trlman Administntion thU!1 undl - all thr:
Pre' ldents W 0 hau. come before" ... n iT' 1 Y?
k.. ,,"itb ... u tributi=1"' c: - national
How the national Deome, i.5 U __ elder clpitali. m. h:.s d
income Is used class C lar l( 1 :Ie n .. ..;.onal income I:.
spe:1t on :.: (.. ... umt.23tion.
f'le prvpor" ::m or the natiu:":._ mCQIl!e 111,., !e_ to th_
persC'naJ urphon 01 the w rkers does nu. en Jf a
subsistence ninurn for 1 v,- t m" 01 th_"11 M., It ns If
working peo!,"le live 1 )001 1( u. ir to
deny themselves real neces. itles, the! chil"';'ren of
1.:1ucation, anll so or
A large. sPc" 'C OJ the nabc" 1 :ncome is applpliatcd ...y
thc exploit 11! classes. "'"he ea."'itaJ .ts spend p.:t 01 it on
ht: Clp!tah! t! tuu pav t: But r'It S rc .. .rned to th4 m If!
the ,'"J?vm("nt an" t.:"b "v '"lh ':",u nt. 'or upo!'cs anu
sc . ' , "f
v.\.c, to : I.,c 3.J ... \1 " r Jt I. "'... 0:1 e up
state .1Dparatus army n- S{J o thl' C u.:f of h :(.
to j("f n-l1c lnh!l'eds of I,....:.nlli, '
I.. ..- "'\: ...n
f
... t I! \I,'hv onlv lhl :, bU .. _l, b'JI aJ 0 C '-, : ...
o thl,,; n JOt __ :Ii c.y ft . ItttJ-c .....
of thc !Xpoiting c aSSC$.
I '
personal consumption, including luxunes and f
of large numbers of servants The capitalist or lhe upkeep
part for expanding or for aCCurn 51 the other
part is relatively small when set against the u a I?bn'j But this
.. POSSI I itie
reqUlrements of SOcIety. The relatively sm 11 I sand
accumulation is because much of the national vo of
d
. ] '" . Income IS spe
unpro llctive y: on mlhtansmg the eCOllom . nt
of an inflated state apparatus, advertising, etc. y, mamtenance
. The class character of the distribution of th .
under capitalism causes the purchasing
p.eople lag behind the expanding scale of produc:
tIon. At hmes this lag reaches enormous dimensions d
leads to economic crises of over-production. . an
3. Economic Crises
The nature of crises Ab d b h
and tb ' un ance ecomes t e source of
elf dd" h
basic cause nee an prIvation, was ow Fourier,
. . the French utopian socialist, described
the contradIction revealed in economic crises.
The striking signs of a crisis of over-production are
a curtaIlment of trade, a surplus of unsaleable commoditie;
On the market. stoppages at factories. and a position where
many. workers are deprived of the means of subsistence.
1 Is .It true that in capitalist society "too much" food,
c fuel. etc., is produced? No, the over-production
,:",hlch leads to crises is not absolute, it is relative, There
d an excess of commodities only compared to the effective
en:
and
not compared to the actual requirements of
he. requirements of society do not become less
w en} IS crisis, but there is a sharp fall in the
purc lasIng powe f th f ] \
Durin .. r a mass 0 the working peop e.
bare g a the people have an acute need for
at
thelf requirements are satisfied less than
any 0 er hme.
tI?ost . deep-seated cause of economic crises of over
1S b the basic contradiction of capitalism-the
-- end th:/ itali
tween
. the sodal character of production
results 01 p d pnvale form of appropriation oj the
pro uction.
,.,. '
"t list production is based on social division of labour.
)ism develops, a further division of labour takes
As :oduction being carried by an
pIa b P of speCialised branches. BIg enterprIses bnng to
er hundreds and thousands of workers, and all these
get cr ,'ses arc interconnected and work for national and
cntcrpr . b .] b
ld markets. In this way, y concentratIng a our on a
:::t scale, capitalism gives production a social
and each commodity represents the result of the socml
labour of many thousands of . .
But capital gives productIon It. socI.al char.acte tn an
extremely antagonistic form. -r:he growmg 50(:la1 of
production is effected in the. mterests of the ca),ltahsts,
whose aim is to increase theIr profits. The means of pro'
duction with which millions of people do their work are the
private property of the capitalists, and so the products 01
the labour of the millions become the property of a ;andfll
of capitalists.
The fundamental contradiction of capitalisJl1 is shown
primarily in the contradiction between the orgaru .ahon of
production within the separate enterprise' and ar; ..... :-hy
which reigns in production throughout Every capi-
talist tries to obtain the nlgnest profits. In nu suit of a high
ate of profit, the capitalists expand producbon (or reduce
it, in order to transfer their capit-.
1
t) o( :e.:- mere profitable
mdustries), without regard to the of soclety .lS a
v.hole. The proportional rclatio:"l<:h-,"l amonr the l'r.J.nchcs
of industry is therefore violated, whJ(, make1. rC3lisation
01 the social product difficult or
The fundamental contradiction of is further
seen in the contradiction between the tendency. inherent in
capitalism, towards unlimited expansion of production, and
the limits which capitalism itself places on the purchasing
power of the main consumers-the working masses.
. The tendency towards unlimited growth of production is
dictated by the basic economic law of capitalism-the law
of surplus value. The pursuit of profit makes each capitalist
capilal, expand production, improve technology,
Introduce new mac hinery, hire more workers, and produce
mor;.:- com 'nodi tic'..:., But this urge towards unlimited
e"Xp .... 01 production is not reinforced by a corresponding
Ilf .,;onsumptit'n. Tn fact the desire for the highest
141
profits causes the capitalists to lower wages and iner
f 1 B' d case
the degree 0 exp oltation. ut Increase exploitation d
the impoverishment of the working people mean a
reduction in effective demand, less opportunity for selli Ve
All this leads to economic crises of ov;;
production.
The fundamental contradiction of capitalism is also seen
in the class antagonism between the proletariat and the
bourgeoisie. Capitalism has brought about the final break
between the means of production concentrated in the hands
of capitalists and the direct producers now bereft of all but
their labour power. This gulf is seen most vividly during
crises of over-production, when there is an over-abundance
of the means of production and commodities on one side,
and a surplus of labour power, a mass of unemployed with
no means of subsistence, on the other.
Crises of over-production Occur perio-
The capitalist cycle dically. The first industrial crisis
and Us pbases struck England in 1825. The 1847-48
crisis, which swept through the U.S.A.
and a number of European countries. was the first world
economic crisis. The most serious crisis in the 19th cen-
tury was that in 1873. which heralded the transition from
pre-monopoly to monopoly capitalism. i.e., imperialism. The
severest crisis of the 20th century was that in 1929-33.
The period from the beginning of one crisis to the begin-
ning of the next is called a cycle and consists of four
phases: crisis, depression. recovery and boom.
The crisis-the basic phase of the cycle-is chiefly charac-
terised by an over-production of commodities. a sharp fall
in prices. numerous cases of bankruptcy. a marked curtail-
ment of production. increased unemployment, a drop in
wages, deliberate destruction of commodities, machinery
and enterprises. and a reduction in home and foreign trade.
DUring this phase the contradiction between the growing
production possibilities and the relatively reduced effective
demand is expressed in violent and destructive forms. The
highly developed level of the productive forces comes into
conflict with the narrow framework of capitalist relations
of production which have become a brake on the further
development of the productive forces.
/44

B nkruptcy. the ruin of many enterprises and the delib-
t
a
destruction of part of the productive forces are the
e means by which the extent of production during a
oil: can be forcibly brought down to the level of the eHee-
c.tJslsdemand existing in SOciety. Then begins the transition
tive _
f m crisis to depresslOn. .
r;'he depression is the second pbase of the cycle and IS
'fi d by the fact that the further deepening of the crisis
arrested, industrial is still in .a
state of stagnation, prIces of commodities are low, trade IS
slow, the rate of profit small. and wages
d at the same level as dunng the cnSlS. The accumu-
stocks of a,:,e partly des.troyed.
Id ff at reduced pnces. CapitalIst productIon remams In
sh
o
1 of depression until competition and the struggle
t e p lase . 1 t' 1 t the
for markets and sources of raw materia,s s Imu a e ._
ca italists to re-equip industry and renew ItS cOllsta?t
tar The capitalists make use of all of tech meal
. . ments in order to cheapen production and make It
Plofic ble even at the low prices reached a n;mlt
pr.o. ta A demand for capital goods togcthel w1th
x and production. Gradually the precon-
ror the transition to the [,hase of the
cycle-recovery. . that those enterprises which have
Typical of recovery h 'r fixed capital and
survived the crisis continue to rene.w t ;e volume of pro-
gradually begin to extend on the eve of
duction approaches the level It that level. Tndc improves.
the crisis, and later surpasses a fit rise and there is a
prices of commodities increase. pro s .
gradual drop in beyond the maximum
When capitalist. productIon .. transition to the boom
volume reached prIOr to the CllSIS
phase occurs. . the c cle. During this
The boom is the last 10 of production IS
the tendency towards unlmuted g.. to overtake one
f d 0
again strIvmg .
ully manifeste: . nce ' reduction. launch IOto new
another the capitalIsts cxpand p. easing masses of com-
building schcmes and throw ever-mer owth of production
modi ties on The Over-produc'
f h ffectlvc e d
f'.' :;hc'; ahead of that 0 . tee. dd form to start with. an
t;on inire..::scs :;teadiiy, 1TI a hi en
145
_.
do.s DOt
rise.

IIIId relation,
iMJf puts obstaclea In
IIIId is moving illesistibly
b.sides industrial crises ",. W
_ of of
lone. is due to tbIo
with
obotNcts a
States: in Britain-72; and in Gell"8.-2I. fa
million acres of cotton in the U.sA .....
and so on.
During crises the most impcc-nt
society-labour power-is squandii1
lions of workers on to the sb:eeL 'l"be7 we
enforced idleness and an aimless existeDCe.
,. Crises lead to an aggravation of the cl.,.
between the proletariat and the
basic mass of the peanotry and the JIIDI\Jw.-.
lenders, etc" who exploit them. DurlDg
class loses a considerable psrt of the
the struggle against the capitalists.
Broad sections of the
suffer tremendous
revolutionary
that the only way to get rid
alter the economic and social I' ....
tiODS of the working people come to
sity of struggle against the dIl104te'5..
Economic crises thus c:1ead7
revolutionary change m..
will put an end to the
and open up boundleoa
society's productive fon:ea.
- -- .
B. Monopoly C "t I
a P I a is nt-I nt per i ali S m
During the last third of the 19th
passed into its highest and I ce?tury,.
feature that chiefly dis tin ui hast h The
ment of free competition g b s t IS I stage IS the replace-
During this period the y. e ru e of the monopolies.
great strides. New forces progressed with
into the iron and ste 1 . s d
of
smeltmg steel were introduced
Thomas. These called c
f
10 ustry . Bessemer, Martin and
During this period a or transItIon large steel works.
Were made (the dyna of .most Importcmt inventions
in 1877, steam 188
67
, Internal.combustion engine
ated the development of . d 3-1885) whIch greatly acceIer-
types of motive po . In ustry and transport. The new
of transport-the :fl' appearance of new modes
1885, diesel locom rIc. tram In 1879, automobile in
Advances in sCienceo 10 1891, and aeroplane in 1903.
the production and us
an
f also paved the way for
I . e 0 e ectnclty
n an earher period l' ht . d'
dominant position b t: 11 10 ustry had occupied the
heavy industry u Ib e last third of the 19th century
industry grew u pus e. to the fore. Branches of heavy
had 10 so that .by 1900 world steel
011-25 times and 1 tImes what It had been in 1870,
There was output had increased :lver threefold.
which particularly d large-scale production,
Parallel with OP! after the 1813 economic crisis.
and of production eve opm
d
.el1:
t
of the productive forces
e contra lctIons of capitalism increas-
148
ingly sharpened. Economic crises of over-production occurred
more and more frequently, they became more destruc
tivc, and unemployment continued to increase. There were
more frequent wars between the capitalist states, bringing
untold suffering to the working people. Yet while the posi-
tion of the working people deteriorated enonnously, the
wealth of the capitalists grew to unprecedented dimensions.
All this heightened the economic and political !:truggle of
the working class.
The supporters of the bourgeoisie within the labour
movement hastened to declare that the establishment of mo-
nopolies in the capitalist world meant that a new era had
opened in the development of capitalism, that now c.Jpitalism
no Ion gel' opposed the interests of the people. that it was
becoming "organised", "free of crises", "peaceful". Kautsky
and I-liHerding, for instance, advocated th:tt now it
be possible to eliminate the anarchy of productiC"':1 and wan
through the capitalists of the different counlric<; reaching
agreement among ThL: e' ;ential c;m d all these
theories was to gloss over the conl"ldiction' 01 (,Ilf'it<llism
and distract the wor\ing clcLs from the 1:0;;'; :-luticnary
struggle.
The ideologists of the working class were with thc
problem of providing a clear-cut scientiFc analysis of imperi
alism, making a proper study of t:'c :'lew phenomen.l which
had become typical of capitalism at the turn of the century.
This was essential primarily in order to give the working
class the correct theoretical weapon ::1 It; st.ruggle for lib-
eration from the yoke of capita1.
This task was accomplished by Lenin in hh immortal
work Imperialism, tbe Higllest Stage ot Capitltiism (1916),
Elnd a number of other writings. He showed that all the
basic features of capitalism remain
private ownership of the means of productIon by capltahsts
and relations of exrlcitation between wage-workers and
capitalists; the {onn of distribution under which the. wealth
of iome increase.:; while the position of others
antagonislic relations between the prolet..1riat and bourgcOl-
SIC. f "}"
In all the economic laws 0 capita Ism
continue to orenlte under imperialism: the law of surpluf
value. the qcneral law (If capitalist accumulation, the law 0
,.h1
and anarchy of production, etc U .
Ism, . however, the operation of these nder Imperial
specIfic features. reveals certain
Lenin's analysis of imperialism sho ed h
nopoly ,stage of capitalism is marked by w
the
f t I at ,the mo-
economIC features: "1) the concentration f 0 lowmg basic
capital has developed to such a hi h 0 and
created monopolies which play ad! . stage
j
that It has
life 2) th' eCJ51Ve ro e in e
; e mergmg of bank capital with . d . canomie
and the creation, on the basis of thi 'fi In ustnal capital,
a financial oligarchy; 3) the export of 5 . of
from the export of commodities a as distinguished
po:tance; 4) the formation of inte exceptional im- o!
tahst associations, which share thea monopoly capi-
and 5) the territorial division of the wh 1 among them-
the bIggest capitalist powers is complctcd."1 0 e world among
t Lenin, Collected Works. Vol. 22, p. 266.
Chapter VII
THE BASIC ECONOMIC FEATURES
OF Il\IPERIAIJSM
1. Concentration of Production and Monopolies
Concentration Prior to imperialism, free competition
or production was the rule. In the period ol .free:
competition, one and the same type of
commodity was produced by many different capitalists,
each of whom tried to sell it at the greatest profit to him-
self. Free competition led to the weak becoming ruined.
while the strong grew rich and expanded production. As
Engels put it. "competition is the completest expression of
the battle of all against all which rules in modern civil
society".1 Free competition, by enriching some and ruining
others, brought about cO{1centration of production in large
enterprises employing hundreds or of workers.
At a definite stage of its development concentration of
ducbon gives birth to monopoly. It reaches its highest stage
of development under imperialism.
In Germany, for example, enterprises with over 50
employees accounted for 22 per cent of the total number of
employed persons in 1882: in 1895-30 per cent of
total; in 1907-37 per cent: in 1925-47.2 per cent: and m
1939-49.9 per cent. In West Gennany in 1955, 87.1 per
l;ent of all employed persons worked in enterprises employ-
ing 50 or In the U.s.A. the largest enterprises with a
year:y outout worth a million dollars or more made up 0.9
1 M.U'X and Lngcls. 011 Britain. Mos.:ow. p. 109.
151
per cent of the total number in 1904. They then employed
25.6 per cent of the employ.ed and produced
38 per cent of America s gross Industrial output. In 1939
the largest U.S. enterprises which then accounted for 5.2 per
cent of the total. employed 55 PCI' cent of the total number
of workers and produced 67.5 per cent of the gross indus-
trial output. In 1955, 500 industrial corporations in the
U.S.A. produced about half the total industrial output and
acquired 68 per cent of the total profits. Of these, SO of the
largest, forming 0.05 per cent of the total number, account-
ed for almost one-quarter of the entire U.S. oUlput in the
processing industry.
Today, 100 of the largest U.S. companies and 100 compa-
nies in other imperialist countries control almost one-third
of the world's capitalist production.
Besides becoming concentrated, capital also becomes
centralised. Centralisation is the term used when capital is
increased through the amalgamation of several separate
capitals into one enlarged capital. This may take place by
agreement, as, for instance, when joint-stock companies are
formed, or by coercion, when in the course of keen compet-
itive struggle big capital ruins or takes over the smaller
capitalist enterprises.
Competition compels every capitalist to cheapen his com-
modities, and this the big capitalist can do. The smaller en-
terprises, which cannot stand up to competition, either go
into liquidation or fall into the hands of the big capitalist.
This process goes on all the time.
The concentration and centralisation of production and
capital lead to the massing of vast numbers of workers in
large and gigantic enterprises. This makes it easier for the
working class to unite and organise against capital and
transforms the proletariat into a revolutionary force capable
of effective struggle. The concentraticm and centralisation
of capital and production lead to socialisation of labour on
a gigantic scale and intenSify the c1ass struggle between
workers and capitalistg.
Concentration of production leads
Forms of monopoly directly to monopoly. It is difficult
'. for the largest enterprises with big
capital behmd them to defeat one another in the competitive
struggle. In the circumstances, it is possible and essential
152
for the big capitalists to reach agreement among themselves
for the purp?se of. snaring out markets and source,; of raw
materials, fixmg pnces, etc.
A mOllopoly is an agreement between, or association of,
apitalists who control the production or sale (and often
both production and sale) of the greater part of certain
commodities. Whatever the form these associations take.
they all aim at the same goal-to get the highest profit ...
Monopoly associations emerge first of all in branches of
heavy industry where production becomes concentrated
3rticulariy rapidly, But once they have gained control over
heavy industry, the monopolies spread to othe" branches of
industry. . . .
The forms of monopoly associatIons are extremely vaned.
In the beginning they are short-term agpcmnt' among
individual capitalists regarding selling mices. These prepJre
the ground for long-tel m agreement.
I
r Cartd
I
iJa':c Forn of \\on )0 y
I Sv ldlC e I
I
I , t 'ern
A cartel is an alliance of capitalists who rel(_!. dgreem
7
nt
on sharing out markets and fixing prices, me: WhO
the amount of commodities to be proC'luceu Th:
forming the cartel produce and sel' their corrm(' Ill-
dependently of one another. This fonn of mondOPOtllYI wac:
o d d ' war Gel nany an s I pr
particularly WI esprea In pre- .
vails in the Federal Republic of Germany. I 0 to on
. h' h t e of monopo y assoCla 1
A IS Ig er s a
g
d
, roduce commodities
Enterpnses belongmg to syn Ica,te. PI indeQcn..dclli:
e
, The
independently but lose thelar cOMmt..:rf
1
:h utput and buy
members of the syndicate 0 not se el: ? t commercial
raw materL11s themselves, a was
apparatus for the purpose. T IS . .- rm
widespread in pre-revolutionary III of all the
. 1 with iOlnt owners p .
A trust 15 a monopo y , f- owners bccommg
enterprises belonging it, the conner
151
shareholders who receive profits according to the number
of shares they hold,
A concern is an association of large trusts or enterpr'
" b h f'd f lSes
In dIfferent rane es 0 In ustry, 0 banks. commerc' I
fi d
' 'd la
rms, transport an Insurance compames, ependent fina .
dally on one particular group of big capitalists. n
Trusts and have developed on a wide scale in
the U.S,A., Bntam, France, Japan and other countries.
I!nder monopoly associa.
Monopoly hons predommate In the economies of
associations th . I' .
in the leading e caplta 1St countnes. By and large
capitalist countries they cover all of industry,
transport, commerce, Insurance and
banking. This is seen in the following examples from some
countries.
The U.S.A. Here the iron and steel industry is dominated
by 17 monopolies, which in 1959 controlled 94 per cent of
the steel productive capacity. Two of these monopolies-the
U.S. Steel Corporation and the Bethlehem Steel Corporation
-controlled half the steel productive capacity of the country.
The U.S. Steel Corporation has 140 steel works and 180
?last furnaces; it controls up to 70 per cent of the country's
resources, and has its own rail transport. In the oil
the largest monopoly is Standard Oil, which
Includes 20 companies with a dominating influence in the
oil industry of the U.S.A. and a few other countries.
Large U.S. companies with assets
in excess of 810 million each:
The automobile industry has three big monopolies: Gen.
eral Motors, Ford and Chrysler, which in 1958 put out 93
per cent of the cars in the U.S.A. These three monopolies
arc of importance as producers of armaments and munitions.
In the Second World War they produced all the U.S. mota
rised transport, 75 per cent of the aero-engines, 40 per cent
of the tanks and 30 per cent of the artillery, machine-guns.
automatic rifles, etc.
The bulk of the productive capacity in electrical
ing belongs to two monopolies-General Electric and
tinghouse. Dupont de Nemour. a trust. reigns supreme in
the chemical industry; it produces explosives. poisons,
tics, the basic chemicals, and atomic weapons.
Large monopolies in Britain, as 'n the U.S.A., rule the
country's economy. The British 'lnd Steel Federaticn,
for example, combines all the principal iron md steel com
panies in the country. The 1argest monopoly L 'le arma-
ments concern of Vickers Armstrong, which controls among
other enterprises the production of armaments muni-
tions, military and civil engineering and shipbuilding, and
aviation and output.
During the Second World War it sold the Br tish Goven
ment 28.000 airplanes, 164.000 heavy guns lnd nUlfIef'OUS ...
submarines. It IS one of the biggest ""'lctionary forces on <
Britain's political scene.
In the chemical industry the largest monopoly is the
Imperial Chemical Industries, which controls 95 per cent
of the production of basic chemicals, 95 per of
nitrogen output, 40 per cent of the dyestuffs, and IS mal.n
producer of chemicals for military purposes. The IS
closely connected with other important bl3Dc1:1es of Bntp;h
industry, especially with the armaments firms.
In France, Aluminium Francais, a cartel. controls
entire production of aluminium. One monopoly, CompagnIe
Franc;aise de Matiere Colorante, controls 80 per cent of
output of dyestufs. About 96 per ce'lt of the car
is concentrated 1 the entel prises of fOUl monopolies,
etc
In West Cermanv one ve"v targe monopoly is the
Steel Trusl Ve-ciniHte Stahlwelke A.G., which at the
ning 01 t World War controlled 370 compan;;s
and har' "20 branches in Gelmany lnd elsewhere. After e
J
.. it was restcm!d with the help of American capital
10 DOW one of the principal members of the European c::
ad Steel Community. Other large monopolies-Kru
'Ihyssen. etc.-were also restored after the war and are .:;
producing arms as well as steel. In the chemical induall
the ruling monopoly is I. G. Farbenindustrie. which at tt!
ODd of controUed .380 factories in lIIany and 500
.cilllpm ... JD other """"tries. I. G. Farbenmdustrie has ....,
fullr aegajned its MUler economic position.
Large monopolies also occupy a dominant position in
the ,,,,,,,,,",ies of Italy. Japan. Belgium and other countries.
The ideologists of the bourgeoisie
--..,u.. assert that monopoly eliminates com-
'.t _,olliloa petition. In actual fact monopolies do
not eliminate competition.
firstly. although monopolies dominate the capitalist econ.
omie.. one hundred per cent monopoly of an entire in.
cIuetzr Ii rare. So there is. in fact. a competitive struggle
........ dM mtmopoljes and those capitalists who do DOt
W ..... (wbat are known as outsiders). In !hie ","II
...... the mClllOpOlh. u.e every possible means of forcing
ilia C"d"c!en to join the monopoly. the alternative being
aampIIIa ruin.
s.h".AQr.
..... of
- ......
false. Although monopoly !lrew out .of free
d cs not climmate competition but eXIsts
rule of the monopolies, competition
apacious. To throttle a competitor,
blackmail and direct 118
Imperialism cannot do away WIth
cisely the "combination of
petition and monopoly. that 15 to
' t is this combination that is making for the
1 1'''1
the sociahst revo utton .
2. Finance
and the Financial
Concentrstion of
Concen&ratioD formation of
of capital
and mODopoUei lead
In banklnc capital in
of banking monopolies. Fierce
ends with the large taking over
conclude agreements and
They subordinate the smaU
societies. Each of these
or even hundreds of !maJler
grow larger and their turnovers
instance. there were 10.382 bam
$10.785 million, but in 1940 thm
assets of S80.213 mi11lon.
years the number of banks
but the as.els
banks in the
deposits In aU
Brit';nl the
1900 was
banks; in
Originally, b'lOks were .
The new role mcdial'ics. in the 'Ill akin fi ltPl c intc
of the banks As capitali sm develops, 1: d',m
Cnl t
. aliens of the banks ex an It 0pcr
takes capital from capitali sts who at tIl . p d , the bank
f
- d t C given mom t h
no usc or It. an lends it to those who . en ave
Conee t t
- d . . a rc 111 need f -
. n ra Ion an centralisation of bank in lea o. It.
tlon where the banks acquire enormous ceo 9 . d to a Sltua-
the whole economy. nomic power OVer
When the big banks handle the CUlT
capitalists they acquire knowledge f acc?unts of the
clients, exercise control over them 0 d 1\ affairs. of their
easily available or difficult to obta?n , y credit
capitalists in a subordinate po 'f m' d Pll:t t C Industrial
ties. 51 Ion an direct their activi-
Thus from being mode t . t d"
payments, the b k b s m erme in the sphere of
The financi al centres.
nopolists greatl 1 e banks mto aU-powerful mo
This is because
Y
of production.
the large enterprises c.redlt first foremost to
a matter of interest to k
n
monopolIes. It becomes
should prosper so the be. an s that these monopolies
buy enough shares t y egm to buy shares in them. They
voice inside the rna a lensure that they have a deci sive
nopo y.
Finance capital of finance capital,
The concentration of
therefrom. the m . production; the monopolies ari sing
is or coalescence of the banks with
such is the content :f of the rise of finance capital and
Banks b h at concept."1
. uysaresofindt'J
msurance and oth us ria, commercial transport,
Th . er monopol" d '
e mdustrial monopol" . les an so become coowners.
the banks with who h m their turn al so own shar es in
interweaving or co laC] t ey are connected. The result is an
du t - I escence -of m I b
s na capital On thi b' onopo yanking and in'
of capital.
vanous forms. Its most t and capital takes
sonal union, i,e" when th n 109 mamfestation is in a per'
e same people head the banking,
I 1.< -
mn, Collecled Works Vol . 22, p. 226,
158
industrial, and other monopolies. Heads of
banks, are brought Into the managements of industrial no
and representatives of industrial monopolies, tn
thClr turn, leats on governing bodies of banks.
In a!e ,Umted Stales, for lnstance. 0 small g{oup of 400
industnahsts and bankers hold aboUt 1,200 diret.i:onrups
in 250 of the, corporations. A typical e!ample of tha
sort of combmatlon IS Laurence Rockefeller, who is a direc-
tor of more than 10 different comparue,.
In Britain, 160 of the 200 directors of the eight l..igg
p
st
banks arc members of the oards of 33 indu.,t.-ial monopo-
lies, 31 insurance companies and building firm", 98 indus'
trial companies, 17 banks ana other financial ompanie-",
8.1 companies and banks outside the country, p"'-
tlcularly In the Commonwealth countries. Many British
industrial and transport monopoli for their part, have
directors on thc board! of th:o biggest banks. British Petro
leum, for example, has its :lire )rs on the of th ... c
such big banks as Midlanu Bank. Lloyd's Bank ant National
Provincial Bank.
In France. the di ertol's of t'1e largest baflk. t e Banque
de Paris et des Pays Bas, cuny 190 po ts on tJ'Ie boans of
companies which, in I 1C: turn, a w'" 1 ... nctwo: k (If
branches and subsidiaries.
In Germany, durin!;. the Second World W '"4 represen
atives of the very large Deuts! he Bank held di ector-
ships in a number of di :-ent CJmpanies, and in 1958, 48
representatives of the .. arne L ;lnk a total of 66:Z
posts in 126 big West Germat1 ':c-:nr3fl1e The nan of
the bank's board of dire:tors, He' mann Abs, holds lC' ts
on advisory committce b( ards of L1nks ;lnu commt'
cial and industrial enter riSeS (un de 1- t' er he oCC'lpied
42 posts)_
The domination of the oligarch), s . 1e concrete
expression of the powc" 01 Finance Ldnit,,!.
T1C q:owth of monopolics and fi nance
The t inanclal ..tnit.:: results in the biggcst bankers
oligarchy muus trialists forming a small ring
ofndividuals, which occupic'S a
dominant plae in e(;onomy and politics. The lizwncial oli
garclly, I.e., domin_!'on and power 01 a few finanClen. noW
its appcaraJ\ (.: ". All the vital branch! oC the economy.
TI
<
all the key pcsitions in the political a
capitalist countries are in the hands of th
oligarchy. 0 t c
In the U.S.A" for example, the decisive I .
'h fi . roelnth
my goes to eig t nanclal groups-Morg e ccone_
Dupont, Mellon, the Bank of America th anChRockefeUer
the Cleveland Bank, and the First Nation:1 Ci Icago Bank:
1955 the total. capital controlled by these fin ty Bank. In
was 218,500 mIllIon dollars The largest of th ,ance groups
those of Morgan and R;ckefeller. In 1955 groups are
sphere of mfluence embraced banks and e. Morgan
a total capital of $65,300 million. Amon with
the largest banks, 14 railroad companie; ese were 5 of
munications monopolies the U S 5t Ie' telecom-
E
l . ,.. ee orporation G
_ eettlc, etc. In the same year, the R k f 11 ,eneral
mfluence extended to banks and 0 oc ,e e er. sphere of
capital of $61.400 million in I d' c rPhralIons wIth a total
monopoly railroad s ' c u mg t e vast Standard Oil
United In,
only one per cent of the . ml lonalres compnsmg
the total wealth f h populatIOn control 60 per ccnt 01
o t e country.
Capital by the Big Financial
(m S 000 million)
Morgan
Rockefeller
Dupont
Mellon
rsz':o;a
tl.'j
fJ;i:i 16.0 1
tj.8110.51
own capitol
Groups
65.31
o controlled capitol
In Britain .
COUntry. cIght financi 1 h
retain S ,economy. Th a groups are decisive, in t e
P
thClr econom' e.y control the main industnes and
artofth B" Ie gnp on I
e nbsh Em . countnes which were fonn
er
y
plrc.
160

The rule .of . the finall:cial oligarchy is characteristic also
of other capitalist countne.
The financial oligarchy exercises its control in the eco-
nomic field through what is known as the system of holdings.
The system works as a large financier (or group of
financiers), through his controlling interest or by other
methods, gcts control of the main joint-stock company, which
acts as thc "parent company". This company acquires shares
in other companies and, when it holds the controlling inter'
est in these, assumes control over them as "daughter com-
panies", which in turn control "granddaughter companies",
and so on. Through this system of holdings, a financier with
a capital of, say, a thousand million dollars can control a
capital many times larger. Through this system the extent
of the conh'ol exercised by big capital is continually
increasing. The system can be viewed as a multistoreved
pyramid with the great "kings" of the financial w:-rld $ur
mounting it.
The financial oligarchy also rules the politiol life ;'.
the capitalist countries; the monopolies merge with the
state machinery. State monopoly capitalism emc.ges
md
develops.
3. Export of Capital. Economic and Territorial
Division of the 'Vorld
Before t'1e era. the man
form of economic between coun'
tries was foreign trade. the export of commodities. Un?cr
imperialism, world trade expands, but the export of I..:Jplt3.1
becomes of prime importance. The expcrt of capital
the basis for the exploitation of a large part of the capital-
ist world by a few big imperialist " ..'
Export or capital
The point is that where monopolies role,
piles up in the most highly developed
Of course, if the monopolies used their carllt;)l to raIse the
itandards of working people a?d to h.e1p
agrIculture lhc;'c be no such But In ! I
. '. " I' The aim ..:'If capita -
case nc't be LJphJ Ism.
11 711
16/
ists is to employ their capital where they can mak
highest profits. c the
is exported abroad in two forms: )o.ln capital
productive capital. Export of loan capital OCcurs wh 1 and
arc made available to the government or cans
country: The rcc,civing the loan of
pay mterest on It. In thiS case a blg portion of the 1 to
value created by the workers of that country . Us
. th f f . IS famed
away In e 01'01 0 mtcrcst to the country .
capital. exportmg
. Expo,rt of productive capital occurs when capitalists b .
mdustrlal railways, etc . in other countries
takes plae,e m the following way. For example, a . oint: 15
c?mpany J5 formed in the U.S,A. for the purpose d
oll.wclIs in a Latin American countr" The sl :1 mg
are bou ht b A .J. lares Issued
f 9 up Y men can capitalists. The capital acc .
rom the sale of shares is used to build installatio . rumg
country concerned: But the profits from the oil-we7ts m 0

fo:
o
part to economically
capital. their r.les. h These have vel'"'j little
abundance and raw .materials in
table to invest . ow. t IS makes It most profi-
is intensified ex At the present time there
East. Capital is p of capItal to Africa and the Middle
countries. The export to industrially developed
both for the country e has serious consequences
exported. xportmg It and those to which it is
In countries which im or .
development takes pI P .th
t
capItal, accelerated capitalist
tradictions-impove . h
acc
WI all capitalism's inherent con-
1'1S ment and . f
Claus squandering of I d rum 0 the masses, rapa-
Foreign capital and f and other forms of national
countries with orms the economy of the less
the mmmg industry and fa e. result that they develop chiefly
d the countries which for
so are twofold. On thra
rt
capItal the consequences of
. ell' wealth, i.e they 9 t ni hand, these countries add to
On thee ot
S
;:: us value .from abroad or as
p SSlblhty of invest" . hand, capital exports restrict
mg capItal in the home country.
162
Capital exports lead to broader ec.:>nomic relation; among
countries. But these broader reI lLJors .mply exploitation -of the
economically backward coun'ie- by the developed CJuntrics.
Bourgeois ideologiSts try to make out that the export of
capital in the pertod of impe:iali tr: ::. a (orm of "aid", ,1
"boon" to underdeveloped countries. A decoloni:;ation theory
has been put forward. the essence <Jf which is that imperialism.
has supposedly promoted the industrial devel<Jpment
colonies and made them Ins dependent on tlll"' -netropolitan
countries. The theory aims at .. amouflaging the Imperalist
nature of capital exports. In point <Jf fact, capital exports
not a form of decolonisation but a "y whll":1 ,ome
countries hold other countries
After the Second WorIdWar ce
t
1:ain new featurC' appe.ned
in the export of capital. The fact that 1. number d countries
in Europe and Asia had broken away from capitalism mt'ant
a sharp reduction in the area open to capitalist inv-cstmenb
The uneven export of capital became more strongly marked.
The export of Lom Britc!!n and F ance I' 1 c-"sld(';-
ably. From the U.S.A., on the other hand, it rosr signJi antly
In 1949, American investme!lts Lt:-road \If -:! gre __ ter
than those of all the othcr Lipitalist countr.es p.h
Between 1939 and 1955 ('S. te-.ll foreign in
creased almost fourfold,
The U.S.A. has been exporting mo:e and more in
the form of government loans and credJts both to i.:le under--
developed countries C'f Latin Americ3, Asil Afn!.:.3 3nd
to the highly countr:es at W 'Europe-'
Britain, France, West Gennany. etc_ The U.S.A. :5 (;.,-ntre
of the financial exploitation ot wo:-Id.
State loans and credits have cl politic.); .nod military 35 well
as an economic aspc.;t. . .
Through exports of ...:arital the tinancI.J] oligarc.hy of the
highly developed capitalist countril'S .f.eeks to bl'l.ng
its control the entire economic life the c':)untl1CS which
import capital. _. ..
Capital IS exported by many E1Ch lml?enabst
country tries to c-xrvrl capil,ll to C0untncs It IS more
profitable to inve!'.t it. And this to compditl0D: and
not only between ,:Jpitali5ts but between the Impenahst
countries, and shdrpen::. the conu-.1Jiction:; throughout the
capitalist world.
U'
16iJ
Economic division The in the .
or the world between countrles strive first and f . capItalist
capitalist alliances undivided domination of for
. market. They divide ute home
market keep pnces at an artificially high 1 PI he home
enormous profits. To maintain high prices and make
try to protect the home market against e monopolies
For this purpose governments fix high im 19
r
11
competition.
even ban the import of certain and
duty on Imports often greatly exceeds the 1 t
1tIes
. The
modities themselves. In this way the do . va 0 the COm-
nopolies on the home market is ensured. rnInatIOn of the mo-
But the home market is limited. It can .
vast mass of commodities pouring out f not wIth the
cems. So the monopolies m k' . rom t e giant con-
foreign markets, But how to sell on
markets, too, are by import thIS when these
In order to avoId hIgh im d'
capitalists build they, export capital.
their markets with commoditic 0 er c,ountnes and swamp
to overcome high import d f s. also does much
The dumping refers an capture foreign markets,
sometImes even below th sale at extremely low prices
'" exported to foreign count _ of production of
squeezed competitors th
S
soon as the low prices have
monopolies raise prices, 0 e market in question, the
The struggle lor I .
and for . for sources of raw
economIC division of th capItal Investment leads to an
nopoli . e world amo h .
.es mto spheres of in flu ng t c dIfferent mo-
nopolies beyond the bo d The advance of the mo-
marks the new still 0 their own particular states
and of concentration of
en In an industry I nm called supermonopo!y
aSSwne the d " a ew trusts ad' .
cond' ti eClSlVe role through h r syn lcates begin to
are created for the t e. capitalist world, the
l,nternational of international
division of biggest monopolies of agreements reachcj
hon quotas ma!kets and sources of r
1
ercnt on the
The
. pnce policies etc .JW matcnals OD
nseofth fi .' .
to the sixties International
a elghties of the 19 ;r:onopolies dates back
t! ccntw-y. By the end
164
of the 19th century there were about 40 of them, and by the
beginning of the Second World War (1939) more than 300.
At present there about 350. The largest monopolies of
the capitalist countrIes assume the character of international
monopolies.
Lenin showed how before the First World War the U.S.A.
and Germany had the monopoly of electrical engineering
throughout the world. In Gennany there was the General
Electric Company (A.E.G.) with its enterprises and branches
in several countries of Europe and America, In the U.S.A.
the monopoly of electrical engineering was held by the
General Electric Company with enterprises throughout
America and penetrating into Europe. In 1907, these mo'
nopolies l'eached agreement on the sharing out of spheres of
influence on a world scale. The Gennan company acquired
the European and part of the Asian markets, while the
American company dominated markets on the Amer:can
continent.
The world oil market was divided up before the First World
War between American Standard Oil and Dutr;-Shell.
the company.
International monopolies dominate all bnn,-,e If indmtry
including arms production. Vickers Armstrong in 'Britain,
Schneider-Creusot in France. Krupp in Ge -:nany have
connected for a long time. These firms shared out the
and supplied arms to 'myone who paid well, The
between these firms not discol"tinued du:-mg the
war.
After the Second World War many new interslltC asSO
ciations came into being. The most powerful of these are
European Coal and Steel Community, takes in the coal
and the iron and steel industries of France. West Germany.
Belgium, Holland, _lnd Italy, the.
Economic Community (the Common Market). which consists
of the same six countries, and the European Free Tra.de
Association (EFTA). which consist" of seven
(Aust,-ia, Bnt:l.in. Denmark, Norway, portugal, SW1Ler.and
Cl'ld ' .
Owing to the development c:
f
the
lriel the relation 01 for'-"5 between the mtematlonal, monopo
lies- !s comtantlv chanrrng. The creation of mO-
nOl doe, ml:.,m the cnd of struggLe to dlv1de up
1M;
the world, nor is it a transition to peaceful co .
among the imperialist countries; it is a sharpcninopcrfahon
struggle. 9 0 the
So, through the export of capital and the for t'
international monopolies the magnates of financ
ma
lon, of
divide the world among themselves economi
divide it into spheres of influence. But the tea y, I.e.,
the economic division of the world gives risc ruggle for
for the territorial division. a struggle
During the period of trans,t
Territorial division' . r Ion to
of the world Ism, the seizure of colonies
and the struggle mtensIiied. Between 1876 and 1914 th
lor its redivision Great Powers seized about 25 .11. e
k
.1 rol Ion
. square I ometrcs of colonial t .
Le., an a,rea one and a half times as great as that err?og'
m
7
tropohtan countries. Thc greatest amount of 1 dO e
sClzed by Britain In 1876 hI' I an was
225 'Il" . . ' er co oma possessions covered
, ml Ion square kIlometres with I '
251.9 million, but by 1914 the had i a popu atlOn . of
square kilometres with a f rth Y by 11 millIon
Germany, the United popu ahon of 141.6 million,
sessions in 1876 and F I Japan had no colonial pos-
powers had captured a none. By 1914 these four
square kilometres and ames IWl,t an area of 14,1 million
By the beginnin of th popu abon of 100 million,
sian of the world !as co e century the territorial divi-
territories available T e ,there were no more '"free"
taking it away fro' errl could only be acquired by
rediv!Sion of the wOdd p:evlOuffi owners. The question of a
The fi-st war for th\\ agenda.
fought by the USA e of the world was that
I th' . , . agamst Sp' .
o 1S war was that th a,m m, 1898. The result
the Philippines, Puerto AmCerlcan Imperialists seized
Samoa lCO, uam Cuba H .. d
I . ' ,awan an
t was for the pur f
launched redividing the world that the
\. With the trans:'tion of ,Second World wars.
be format; (. capita 1sm mto th' .,
...'om leted, .on .0, capitalist world e stage,
eco:om"":" llThtS W:J,S alh.ieved thro hethconomlc system was
lea Y weak", ug e subo d" f
The col . 1 .. ountnes to + he t . r mauon 0
fle of b:o
ng
:mperialist powers.
1St wO:'ld economic ryst came a const:tuent part
em.
166
\
The colonial system of imperialism
The colonial liiys!cm covered the colonies, semi-colonies and
of imperialism dependent countries oppressed and
exploited by the imperialist powers. The formation of the
colonial system of imperialism was the result of the economic
and territorial division of the world among the imperialist
powet's during the last third of the 19th and beginning of
the 20th centuries.
The ideologists of capitalism try to make out that imperial
ism instils civilisation in the colonies and dependent coun-
tries, raising the cultural level of their peoples. In actual
fact these asscrtions arC far from the truth. What i.s
typically found in colonies and dependent countrif's is not
cultural development, but almost complete illiteracy, absence
..". of medical services and economic backwardness. The impL 'i,ll
ists deliberately hold back the development of the colonies
and dependent countries in ol=de
r
10.maintain th.eir mw rule.
The imperialists did not seize colonies. in order to take
civilisation to them but to make high monopoly probt
there.
In the era of imperialism the importance tl..> ':te im""lc' iabsl
states of colonies and dependent countllf mar'<' had
increased enormously. In 1930, for ips. lnce, E-l. lin Sfn!
43.5 per cent of the total exports tO;f o10nies, anc ,1
1949-54 per cent. By off their co1omes :It'd
countries against competitors hrough a olicy of 1.:111S, the
imperialists have been able to sell off poor quality gcw u at
inflated prices, .
The colonies and dependent countries have alsc. gamed
in importance a.s spheres of capital investment. Here the
imperialists eliminate outside competition, find cheap labour
and raw materials and so are sure of a high return on the
capital invested. As a rule, capital is invested in the
industries, and colonial agriculture is into narrow
specialised channels, producing some one crop (rubber, coffee
cotton, etc.). The development of the colonies tt-us ;lkc<, on
a character. The colones me ag! u,gn raw
materjal of iali t power.
ThC' c'lpitalist monopolies sIi';ve to. get c n olaf the
greatest po:.sible :lmount .. f lwnatc,al. For eXlmp.le, ,,at
t'1.e end of 1962 the known oil re u:ce:l 0& the capltaIJst
. amoun(ea 0 million:.. '05, of whicb 2':;,689
I' 7
CIt ell per Clnt, were In the MiddJe II1II:
,.. - In West European oounbies. A "trueati
for MiM'. Ealt 8OUl'CeI of 011 betweea t\e
tile U.S.A., BrItain, France, Italy, Japan, etc. ..
of material, enables the lad ... , rItJ
pricee on the world mAiket and III
impwblnce of dependeat
in( i eased. The imperialist
u 1It0llg points and build naval and air
I
f
ree flow of capital hom onl
or ess . .
There were many enletpii.el m
The result of this W81 the
of profit. rial' __
Under impe Ism. .. e.
rule of In of
revails. economIC conditi01ll are
p ke it possible for the to
rna fit Over and above the avaage
the profit the
th dominate the gIVen sphere of
TInder imperialism, the
monopolies are not sold at the
but at monopoly The
duction costs plus high
How do the capitalilts
The
SOmen
01 monopolJ' pNIII
of all
UM:?
the
Through the wide use of
organisation of
intensified labour-an
mass of surpl ... value.
Another section
etc.-further explOIt tile
The monopolics derive enormous wealth from the
exploitation of peoples ill and other
coutllrics. There, wages are to prOVide workers
with even the necessities of life. The people ale
burdened by.a. complicated system of taxation. Forced labour
is openly employed in both industry. The
monopolies also profit by sellmg commodities at high mo-
nopoly prices and purchasing raw materials and foodstuffs at
low monopoly prices. Through this unequal exchangc, the
underdeveloped countries lose $20,000 million annually,
which is of the gross national product.
Wars and 1llilitarised economy also guarantee high mo-
nopoly profits. In wartime the degree of exploitation of the
workers considerably increases, because compulsory labour
discipline is imposed in industrial enterprises. In addition
taxes increase and_prices rise. An this brings in huge profits
for the caprtalists. During the Second Wor1d War, for instance,
the profits of U.S. monopolies rose more than sevenfold.
Militarisation of the economy in peacetime, i.e., swncbm9
industry over to war production, also helps profits to grow.
For example, the rate of profit of U.S. monopolies producing
war materials is today 50100 per cent higher than the rate
of profit in civilian industries. Production for war, which
yields vast profits for the monopolies, inevitably leads to a
deterioration in the :osition of the working people.
These are the chief methods by which monopoly capital
high. monopoly profits. In the imperialist era, the
baSIC economIC law of capitalism provides the basis on which
the broadest masses of the people-workers, peasants and
peo.ples of the colonies and dependent countries--can fight
against monopoly capital and so bring nearer the final collapse
of imperialism.

THE PLACE OE IMPERIALISM I'" IIISTORY.
TIlE GE);"ERAI. CRISIS OF WORl D
1. The Place of Imperialism in Hislory
th hi b t and las'" s f '- 11 'I;n In
Impctialism g _ e
i
, in r m'1
defining the pla .... e Impena 15m IOC
t
e of -., It 1: .
th
.. srco" sag '-r'
pointed out at It 15 c:L 1" II mC"1(""poly .... 'I ::I,
three featu.es: 15_ 1)n..:. 1bl.!"1d "..IDltali.-:.
2) parasItIc or de dyl go -e _",_. "1 m 1
In. Its t.:.oDOIIU_ .. _
t -::)itc. ism. 3.lreaI...Y
Imperialism tr. olOpv_Y l. '. _ n",r m_m( pohes
Is monopoly ti ned. The ,jO"ll 0 '. '
capitalism . "-' t chief Id Its . .lat
IS . . l- _L_.-u
. occupIes In _"'.0;'_ t _
JIe place- the Spft !n S, :.a,lisDl
In hiS work ...... 'I:'::"Stn ..... ::efly
revealed the fo\';- ways m Wlll .
manifests its\.:;,. U when c",ncentration of pr.)-
Firstly, monopolll; h Included
duction had :', ,.:c.y., c.1l'tels, sylldH .... h.:::
the monopoly ilSS0C:d.lons (I. -d:';' .,. 1 "0 in economh.
. h 1 the e .... ... . th
trusts, concerns. T cy p ay , t gr .. w up t rom C
life of capit.:lliSI T:la tv rule in t:1C ceo-
concentration of f'Nductio.nalan
t
" ountries is
d l 't' s of caplt IS C ely 1m'
nomics an po 1 Ie . . , ,. I; st develor
ment
, ndm ,
iscs the new Sl,)g(' In ,-1 Ita . . h
pCl'Iali I cd through the banks.
Scc,--'ndJy. 1Dcnopolies up d became aU-power
had been modest intermedlJllCS an
hI
of finance In each of the highly developed capitalist
m.lllllhit .... five to ten of the largest banks have achieVed
:;ouu 0::' um on' between industrial and banking capital and
pen IU:U F..tal
thue control vast sums of money. mance. caPl and the
Menaal oligarchy subjugate the economIC and political
lifle of the nation. A small group .of and
mmion,l ... dispose of the country s entire wealth and are
reBfODoil)\e IiO no one but themselves.
TIdnIIT. monopolies bave led to seizure 01 the
"-ut imjKJt,ant sources of raw matenals, markdets and spheres
of .,.pital inveshoent. Their rule may exten over separate
countries or even whole continents. This kind of monopoly
oauttol has in particular increased the rule of a small group
of financial magnates, thus greatly aggravating contradictions
.. .!de the capitalist camp.
Pourtb1y. monopolies developed from the colonial policy
of the imperialist The era of "flee seizure" of teui .
.... is nplaced control of colonies through
Export of capital and com
peoples economically and
end
a lihation where one single monopoly
ea1p'pzi'es into a 1Init. brings together the
of thousands of people. keeps a close
.,.Im' B of raw and has at
scientists.
to the u'''_
iI! UUI gigantic sociaUsati
M
oWaenhip of the means of
of a bandf .. l of capitaJiatB.
DO advantage from the
forces; on the
forces and primarily the chief productive force of SOciet
human beings. In First World for example, 10
lion people. were 20 millIon Millions
of people dIed from epIdemIcs and starvation. In the Second
World War almost 50 million people were killed. This is the
price mankind has paid for the efforts of the imperialist
to solve their contradictions by means of war. 5
The decay of capitalism at the imperialist stage is deter-
mined by the fact that monopolies themselves (inasmuch as
they ensure high profits by artificially maintaining high
prices) reduce the incentive to improve production technology
i.c .. create a tendency towards stagnation. There are
and more frequent cases of monopoly organisations buying
up new inventions not in order to usc them, but to prevent
their being used.
At present, mankind has entered a period of scientific and
technical revolution, set off by the development of nuclear
engin.eering, the of ?uter space, the leap in
.. o production and other major scien-
tific and achIevements. But the capitalist relations
of are much too narrow for the scientific and
revo.l';ltion. Imperialism is using technical progress
chfiefl
y
for milItary purposes. It turns the accomplishments
o human genius against humanity.
.But the pursuit of high monopoly profits nevertheless
stimulates the capitalists to introduce new technology that is
madre productive than the old. To introduce new techniques
un er th d' , f
ha e can It,Ions 0 state-monopoly capitalism, however,
b
rIndS f
the
workmg class, Capitalist automation takes the
rea rom the wo k 1 .
standard f 1" frh
ers
, un,emp oyment Increases and the
Th
0 IVIng O. t e workIng people falls.
us, two Opposmg tend' , , "
A th
h
enCIes are tYPIcal of Impel'lahsm;
n eone and tosti ul t I
other, to hold it back. mac tec lnIcal progress, and on the
The decay 01: . t r '
imperialist ,a Ism IS also seen in the fact that the
to the upper SOme profits to give hand-outs
racy of labour, so-called aristoc-
racy contrive$ to get e the labour aristoc-
and other working-class in the trade unions
petty-bourgeois elements th gamSShons, Together with the
the labour movement. ey rcpresent a serious danger to
-
Through the aristocracy of labour thc bourgeoisie poisons
the minds of workers by <Jdvocating the reformist road to
"improving" capitalism and maintaining "class peacc", By
splitting ranks of the working class, thc aristocracy
makes it difficult for the workers to urute their forces to over--
throw capitalism.
Characteristic of imperialism is the turn from bourgeois
democracy towards political reaction in both hnme and
foreign policy.
Anti-communist and anti-labour laws, the banning of
Communist Parties, mass dismissals of Communists and
other progressive workers, blacklisting. in factories,
tests for office employees, polIce repressIon of the democratic
prcss the usc of the armed forces to put down strikes are
now part of the normal methods, by which the i,?perialist
bourgeoisie maintains its rule, These a;'e fadors
of the parasitism and decay of monopoly capltd. . '
The parasitism and decay are more m c,untnes
where capitalism is more developed. Bntam W;J.S "uch a
country at one time. But then the United States beC3me on,e
of the most developed countries, The dC\'elopment ,01 A :n.en
can capitalism shows. al: the present L1C
States has grown into the main seat of decay 3.nd p3l'asitism
in the capitalist world. . ,. '
L(>nin pointed out that ImperialIsm IS
Imperia1i9m moribund capitalism, This means that
is imperialism is transitory by It
capltahsm sharpens the contradictic::m of
ism to their extreme limits, after proletanan revolution
begins. . a1 d labour
The chief contradiction is that between capzt 1
In the pcriod of monopoly capitalism, the working peop e
I
sC.lle not known prior
undergo unrelenting exp Oltatlon on a
to this period. I th Id The
New methods of exploitation supp co.
monopoly position of the big capitalists prOVIdes an hOPPof
d d
t 'fication of labour purc ase 0
tunity for unprcce ente 10 enSt b ' f the exist-
labour power at a low mODopory
0
lundering
ence of a vast permanent army of unemp oy 'h
P
1
by means of hig monopo y
the working people as consumers , Sh I increased
prices for consumer g?OOS, tJ.xahon, 'k
etc
., position
exploitation, deterioration of the WOI ers
175
and mounting political oppression the class under
imperialism lead to an even greater mtcnslficallon of the cl
struggle between the proletariat and .the bourgeoisie.
old methods of struggle finally become and While
continuing its struggle on the economIC ilnd theoretical
fronts, the turns more and morc resolutely to
revolutionary pohtical struggle.
Thus imperialism brings the working class to the threshold
of socialist revolution.
At the imperialist stage there is a sharpening of the COli"
tradiction between the imperialist powers ill their scramble
tor spberes of influence. Each separate group of capitalists
endeavours to seize and retain their grip on markets, sources
of raw materials, spheres of capital investment. The economic
struggle between the capitalists for spheres of influence has
the whole-hearted support of the state. Consequently the
fierce struggle between imperialist countries for spheres of
influence causes military conflicts which weaken imperialism
and shake its foundations.
Under imperialism, particularly at its present stage, there
is a serious sharpening of the contradiction between the
colonies and dependent countries on the one hand, and tlte
imperialist powers on the other. The imperialist powers
plunder and mercilessly exploit the peoples in underdeveloped
countries. Increasing imperialist oppression together with the
development of capitalism in these countries drives their
peoples .to fight harder for their emancipation.
The rise and consolidation of socialism marked the advent
the of eman.cipation for the oppressed peoples. National
lberahon. have struck a devastating blow against
the colomahsts. In the last 20 years, more than 60 new in-
have risen upon the ruins of colonial empires
wlth a populahon of approximately one-third of mankind.
the chief contradictions which transform jm-
mto moribund capitalism. But to depict imperialism
as monbund 't l' d
d' . capl a 1sm oes not mean that capitalism can
automatically collapse. Imperialism is
t
f because. by bringing all the contradic-
lons 0 capltahsm t h d . h
on the agend d '. It as put socialist revolution
The tri a an It. m practice, inevitable.
later in sOClahst re;olut.ion first in Russia and
ropean an ASIan countries is brilliant
176
I
confirmation ?f .the Leninist de' cription of as
moribund t:3pitalism.
state-monopoly
capitalism
TYPIC":' of statemonopoly c:lpitalism
are: a high degrcl; of sociai:sJ.ticn of
production, the interlocking "f private
and state monopolies and the merging
f the state apparatus with the financial oligarchy, ThIS
is intended for statc's intervention in the countI!"s
conomy in order to bnng greater wealth to the monopohes.
e "State-monopoly capitalism," declares the Programme ,"'If
the c.P.S.U., "combines the strength the mcnopolies aI1:d
that of the state into a single mechamsm, whose purpose 1S
to enrich the monopolies, suppress the working-class
ment and the national liberation struggle, save the .....!':)1tah.,t
., I
system, and launch aggreSSive wars.
In the period of imperialism the governments ::1 the
capitalist countries consist either of representatl ..... s of
ruling monopolies or of the monopolists themselvcs. On
the other hand. the ministers, generals and
usually given important and profitable posts m eadin!-l
monopolies. - . . .
In the middle of 1955. for instance. of the 2.12 :!' ..}" .m
portant posts in the state apparatus of t..'e ,,'\.1 ,were
occupied by big capitalists and 30 by cur.po':'atlun lawyers.
The Rockefeller group was represented 10 11;
Secretary of State John Foster Dulles, wh.a was \.,;"!!:'1 ea 1
of a legal firm and director of 15 and ... a
firms For a long time the representatl\'e ot thl.: DupuntJ':oup
in government was Secretary of Defence Charles
f G
al M tor- Tn the Johnsun ml'
president 0 e?cr 0 ..,':>.. 01 Defem:e
ntstration Ford Motors 15 represenh;d b1 S .:I\' thY . "Iitalist
McNamm:a etc. The situation is similar ::1 u er .I.J.I f the
, . . 11 . d -. f the -ompleh-' 0
countries. ThIS IS a CVl encl.:. 0 .... r. The statL! has
state apparatus :,\'ith the . dffJl!"'; of the
become a commIttee !or admlDlskr .. g
monopoly bourgeoisie.. . h' 'h t te-monopolv capital-
What arc the chief tonns In. W Ie s J . various
? They arc seen 10
ism appears at the prescnt tIme . JOT regulating the
types of state control and mC.1s
ures
. (Do 'un;cnls
I R, \111 to Contnl!.!r.! sm .' ,,"'1
Congress ", tire C P.S.U.), MOSNW. 1961. p. - .
u , . g
1;,
economic life of countries, in the use of state prope t .
interests of the monopolies, in the aid the state r 1
1n
the
latter in the shape of gouerwllenl orders, in the the
capital out of state resourceS, etc. All these forms . P rt. 01
state-monopoly capitalism reveals itself have the sIn Wh,lCh
the enrichment of the financial oligarchy, arne aim:
An important source of enrichment is the use f b
resources to build state enterprises and the natioO r
of private enterprises and their conversion into Isatlan
erty. Private monopolies are given contracts on sf a e prop-
terms to carry out building projects for the govern avourable
completion of the work, these enterprises are ments; on
handed over to the biggest monopolies for
a very low rent or are sold off at low prices If n at
f l' ' ' a government
na lona Ises private enterprises. it does so in th '
of the capitalists, The former owners are
more than the value of the enterprises which y
run on behalf of the big monopolies: Th t en
I,state enterprise is conducted in the ofbolh
th
capt ISts, e
Statemonopol '1' b
the working C:PdIta Is
I
m rings increased exploitation of
n a ower standard of r' f all
working people Backed b th Ivmg or
?lies the r'ate of the monop-
IncreasIngly rob all wo k' e workmg class. and
and high prices, All people high taxation
hons and intensification f th ses a sharpemng of contradic
capital. 0 e struggle between labour and
,At the same time. since st t . ' ,
hlghest stage of the SOC1' I' I,a e monopoly capltahsm is the
, , a Isa Ion of produ ti' d 'I
Ism. It constitutes th f 11 ,c on un er capita
ism; ,it,t fact it is th: for social-
tranSItion to socialism th t to socialIsm, But for the
class is essential. e ransfer of power to the working
capitalism d 1
penods and in differe t eve,ops unevenly in different
Thus. world n countrIes and branches of the
tariam and political h wars and economic crises mili-
of up eavals accel ed '
capitalis' erat the development
Right-wing Socialists
m
capitalism,
monopoly capitalism modifi th VISIODlSts claim that state-
assert that the state has b es e nature of imperialism. They
ecome the decisive force in the
178
economy of the ,capitalist countries: that it can guarantee
plall
ned
leadershIP. of the economy In the interests of society
as a whole. etc, Life has shown that this is wholly untruc
State-monopoly capitalism does not alter the nature of
imperia!ism, It does not the position of the basic
classes In the system of socIal production but. on the contrary.
deepens the between labour and capital. between the
majorit,y of the monopolies, Attempts at state
regulation of capItalIst cannot eliminatc compcti-
tion. anarchy of productIon and distribution of the products
created. cannot guarantee planned development of economy
on the scale of society. for the basis of production still remains
capitalist ownership and the exploitation of wage labour.
Bourgeois theories about "planned. crisis-free capitalism"
have been rejected by the entire trend of devclopment of
present.day capitalist economy. The dialectics of statc-
monopoly capitalism are such that instead 'dt strengthening
the capitalist system. which is what the bourgeoisie counts
on. it further aggravates the contradictions of capitalism and
rocks its foundations.
In a number of less developed countries which have noW
taken the path of economic independence (India. Indonesia.
and so on) the state is also responsible for certain economic
measures and is expanding heavy industl)', But it is not
state-monopoly capitalism that is developing there, but
state capitalism. In economically underdeveloped countries
this is a progressive step because it helps to the
economy of these countries and to make them econoInlcally
independent of the imperialists,
The uneven development of individual
The law of uneven enterprises. industries and countries is
economiC and typical of the whole capitalist era.
political Uneven development follows from
development ' h f 'I \-
competibo
n
and the y 0 a
ist production. In the pre-monopoly perlod, ca,PItahs
m
was able to develop relatively smoothly. cO,untrles were
outstripped by others during a long penod of tIme, But
nature of the uneven dcvelopment of capitalism altered
the transition to imperialism. The separate countries
began to develop in leaps and bounds .. The unprcccdentjed
advance in technology gave some opportun ty
to outstrip their rivals. The countries whIch gamed the lead
Ji9
endeavoured to capture the greatest possible q .
materials, new markets and spheres of cap,'tal . uanhty of faw
h
Investme t
t ere were no longer any free territories to se' b n . But
division of the world had been completed. Ize ecause the
The changed alignment of economic and T
among the imperialist powers led to confrmt
l
forces
broke out for the redivision of the already 'd struggle
The change in the relation of forces divided ed
world into hostile groups. The aggravated t
the imperialist camp lead to the mutual wconkra. lcttons in
, , I' ea enmg of th
ImperIa lstS. Because of this, a break-through of the i '. e
front becomes possible where the link' th h
that is, in the country where e c am IS the
condItIons exist for the victory of the I mO,st favourable
Th pro etarlat
e uneven economic development of th ' . r
tries in the imperialist period led ' e capIta 1St Coun-
development, Class contradictions uneuen political
same level in all countrie Th . '! a not. reached the
revolutionary determinatio s. f pohtIfal and
to carry with it the b lk n h e pro etarlat and Its ability
unevenly developed. 0 t e peasantry similarly
for proletarian revoluti mefnt that the polItIcal conditions
different countries, on a so matured unevenly in the
Taking the law of the '
development of capitalist eConomIC and political
starting-point, Lenin d u?der imperialism as his
possibility of co:zc1usion about the
or even in one capital' t p mg first m a few countries
f th
' IS country alone d th' . ,.
a e ltlumph of so 'al' ' an e ImpossIbIlzty
M
CI 15m in all '.
oreever, it was not at all counttles sImultaneously.
to be the most highly develo for this one country
The triumph of so 'I' pe capItalIst country,
b
' . CIa 1st revoluf .
egInnmg of the world so . I' Ion In one country was the
Marx and E I . CIa 1st revolution
" nge s hved' th .
capltahsm. They believed e pre-,monopoly period of
4:. be VictOrious unies 't at proletarIan revolution could
b capitalist in most of the highly
valid conclusion e same time. This was an
Ii
' pltabsm. But in the impen' I' t reference to pre-monopoly
on can w' . a IS epoch th I '
. ,In 10 one country H . e pro etarIan revolu-
!Fe tf the First Lenin wrote about
eve opment is an absolute J - neven economic and
aw of capitalism, Hence,
180
the victory of socialism is possible first in several or even in
one capitalist country alone,"1
The supreme importance of Lenin's conclusion is that he
put a revolutionary prospect before the proletarians of dif
ferent countries, .release? th.eir initiative and strengthened
their confidence ID the lDevltable triumph of the socialist
system, The need for the formation of a socialist system of
world economy and the possibility of prolonged peaceful
coexistence between the socialist and capitalist systems follow
from the fact that the victory of socialism will come at dif
fel'ent times in different countries.
The Leninist theory of socialist revolution was fully con-
firmed by the victory in Russia of the Great October Socialist
Revolution, the organiser of which was the Communist Party
led by Lenin.
The fact that after the Second World War several Asian
and European countries dropped out of the system of im-
perialism as a result of victorious revolutions and are now
building socialism is additional brilliant cf the
Leninist theory of socialist revolution,
2. The General Crisis of \Vorld Capitalism
The essence "Our time, whose main content is the
and stages transition from capitalism to socialism
or the gencral initiated by the Great October Socialist
crisis or capitalism R I tOo ,'s a time of struggle be'
eVOU)n,-
tween the two opposing social systems, time socialist
revolutions and national liberation revolubons, a hme of
break-down of imperialism, of the abolition of the
system, a time of transition of more peoples ,to the SOCialIst
path, of the triumph of socialism and on a world-
wide scale.":;!, This proposition formulated ID the St,atem:nt
of the Moscow Conference of Communist and PartIes
expresses the essence of the general crisis of
The Great October Socialist Revolution Russla l.n 1.911
meant the beginning of the general CflS15 of capitalism.
---
I Lenin, Collected Works, Vol. 21, p. 342. . .
J. The Struggle lor Peace, DettWccacy and Socialml1, p, 38.
181
Capitalism to be a single system takin in
world. On one-sIxth of the world a state had 9 the entire
h
" h b . come int b"
w Ie ased not on prIvate ownership of the 0 Ctng
but on socialised. socialist owner of
vIctOry of the proletarian revolution in Russ' ship. The
era, h?d begun of the end of capitalism that the
socIalism. Here was full confirmation of the thea e vICb:ry of
forward, during the First World War that t th ry. Lenm put
stage socialism would be victorious the a e lmperialist
not simul,taneously, but at intervals over
a succeSSIOn of countries going thrall h 1 by
droppi?9 out, one after another, from and
capItalIsm. I system of
In an earlier chapter we referred to the n t
crisis. Economic crisis under capital" . a ure tf economic
over-production. It develo s onl .Ism IS one 0
though it obviously has a 10 the sphere,
of society. The gelleral crisi f y!l the polItical life
spheres of life in capitalist . caplta Ism. embraces all
alike; it is an all-round crisis f nes, economIC and political
"as a whole, its characteristic b capitalist system
moribund capitalism and emg . struggle between
from capitalism to The transition
general crisis of capital' sm IS the mam content of the
Th Ism.
e general crisis of ca itali h
and has entered T as developed through two
time of the First World W . he first stage began at the
consequence of the Octobe:
r
and most marked in
developed during the S d Revolution. The second stage
revolutions in several World War and the socialist
second half of the fift' untrIes of Europe and Asia In the
h
. les world . I" "
t lrd stage of the gener I " capIta Ism entered the new
Of. this new stage is The most important feature
WIth world war but m' not develop in connection
betw ' a SItuation of ..
een two systems wh .competitIon and struggle
become altered in :" alIgnment of forces had
The basic features of soaahsm.
tte falling away from crisis of capitalism are:
.of the positions r;;f !ll0re countries;
I p. titlon WIth socialism' th . p.erIahsm m the economic
omal system of imperial' e thcrlsIs and break-up of the
1St contrad'en' 15m; e a99 " Ions In circumstan ravatlon of imperial-
ces of state-monopoly capital-
162
ism and growing the increasing internal insta-
bility and decay of caPltaltst economy as seen m the con-
tinued inability of capitalism to make full use of the productive
forces (low rate economic .growth. periodic crises. perma-
nent under-capacIty productlon. chronic mass unemploy-
ment); increased struggle between labour and capital; serious
aggravation of the contradictions of world capitalist economy:
the unprecedented increase in political reaction all along
the line, abandonment of bourgeois liberties and the
establishment of fascist regimes in a number of countr:':
and a profound crisis in the politics and of the
bourgeoisie.
Let us see how these features are revealed in the perod
of the general crisis of capitalism.
The First World War in 1914-18 was
Division
the result of aggrayated contradictions
between the imperialist powers in the
cl their struggle to redividl"
world. The war had weakened ana t. 'eatd a
favourable situation for a break-througb on its front The
break-through was made in Russia. which 'lappened tt.:. b:::
the weakest link in the chain of world imperiatsm. the focal
point of all its contradictions, The result the victory of
the proletarian revolution in Russ.i,.a .WlS that world
became split into two systems. and
In a short period of time the soc::lltst
demonstrated its great advantages O\'er capl.lllsm. By 19 ..
the Soviet Union had already occupied first place 10
and second in the world for volume of produ(t:o
n
.
ot the world
into two system5
The Second World War prepared by the forcei of tnterna-
tional reaction was unlc:1Shcd by the bloc of fascist states-
Germany, Italy and Japan. The wal' .ended .in complete
for the fascist aggressors. The Vru
on
the
cisive role in bringing aNut that ThIS led
unprecedented development of the re\'Olutlonary Clnd naU
liberation movement throughout the world. . d ed t
A number of countries in Europe and ASIa ropp ou
of the capitalist system and. in consequence, there ar: d'f
more than one thousand mimon people (over one-thtr 0
the world's tobl population) who have freed:
the c3pitalist yoke and arc successfully.
This has brought about a further alterabo
n
ID the a 9
183
of forces between socialism and capitali h"
able to socialism and detrimental to lch IS favour-
The net result of the war therefore .
f rth th I" "' , was to dee
II er e genera CrISIS of capitalism. Its sec pen still
now begun. It was reflected in the fact that ond, st,age had
gone beyond the framework of one count Joclahs
m
had
a world system. Today, the countries of 7h an had become
system occupy more than one-fourth of th e wo!'ld sOcialist
globe. - e terrItory of the
In a short period of time the world so . l'
its superiority over system has
the soclahst countries develo' . e economy of
capitalist economy. The than
the volume of industrial producf 0 5 thn 1962 Increased
pared with 1937 while th n .more t an 7 times com-
increase of about '2.5 times. e capItalIst countries showed an
The new, third stage of th l' .
begun. The chief capitalism has
world socialist system . Z of thiS stage is that
III the development of h IS ecommg the decisive factor
first and foremost of th uman society. Consequently, typical
tio b e new stage of the " . .
etween two world st. . cnS1S IS competi-
becoming m which positions of
of lmpertaltsm are gro\"" ykstronger, whIle the positions
vmg wea er.
Influenced b th 0
Tbe crisis in . y e ctober Revolution
break. up f Rhussl
a
, the struggle of the peoples
o tbe colonial t e colonies for their natio I l'b -
system hon gain d' na I era
or imperialism the " e considerably in strength:
. . of the colonial system of
a serious aggravatio 15m bad begun. This crisis
he powers d
n
h
f
the contradictions between
countrles Th an t e colo " d
re '. e growth of th . an dependent
th:ulter In the colonies and e d nattodnal lIberation struggle
f
mse ves from the imper" I' epen ent countries freeing
orces had c' la 1St yoke N t" II" "
numbe orne mto being and h d . it lona Iberahon
mode: Of. the proletariat-the a begun to develop. The
the peassoelety-began to grow. revolu.tionary class in
tion, constituting the p;oletanat bringing
bourgeoisie ;h against imp f colomal popula-
foreign Interests conflicted Ihsm. The national
po les, 'Was also growing. Wit the rule of the
1M
During the First World War the imperialist metrop 1"ta
countries were unable to the colonies with
factured goods, theIr mdustries were preoccupied
v.'ith orders. Impelled a :apid growth of industry,
especially of the textile mdustry, m the colonies. Factories
expandcd, new factOl;es On the strength of
the economiC of colomes and under the impact
of the Octobcr Revolution, the national liberation movement
assumed dimensions and forms that did not exist before the
First World War. Lcnin wrote: "Precisely as a result of the
first imperialist war, the East has been definitely drawn into
the rcvolutionary movement. has been definitely drawn into
the general maelstrom of the world revolutionary movement." I
At the end of the First World War there was scarcely a
colony or dependent country where more or less serious out-
breaks against imperialism had not occurred. The movement
for national liberation assumed particularly broad dimensions
in China. There, in 1924, a people's anti-imperialist. anti-
feudal revolution broke out. which took the form of a series
of revolutionary wars. This revolution brought into being the
People's Liberation Army under the leadership of the Commu-
nist Party, and in some parts of the count.:-y Soviet government
was established. There was a mighty movement for national
liberation in India, Indonesia and other The leading
force in this national liberation movement of o9press
e
d
peoples against imperialism was the working which
allied round it many millions of peasants, democ:-3.UC repre-
sentatives of the bourgeoisie, and so on.
After the Second World War the peoples of many colonies
and dependent countries achieved liberation from the colonial
regime and embarked on independent development. The
of the colonial system of imperialism had begun.
The heroic struggle of the Chinese, Korean
peoples overthrew the domination of the foreign
and exploiting classes, and resulted the of
people's democratic states-the People s Repubbc of
the Korean People's Democ!'3tic Republic. and the Democratlc
Republic of Vietnam. .
In 1947, under the impact of the
ment. British imperialism was compelled to recognIse IndIa
1 tenin, Sele, h'd Work-_ Vd. 3. p. :340.
as an independent state. Along with India, other countrics_
Indonesia, Burma, Ceylon-set out on the road of independent
development. Many countries of the Arab East and Africa
won political independence after the war, Over the years
since the end of the war more than 1,500 mIllIon people hav
thrown off the yoke of colonial or semi-colonial dcpcndcncc
c
Cuba. a small country ninety miles from the United States'
owned lock. stock and barrel by U.S. monopolies. took
path of socialist revolution. By 1964 the colonial population
which in 1919 represented 69.2 per ccnt of the world
tion. had been reduced to 1.3 pcr cent. This clearly indicates
that the shameful colonial system has already collapsed.
One of the basic problems confronting the newly-liberated
peoples is which path they should now take: the path of
capitalist or non-capitalist development.
What can capitalism give these peoples?
Capitalism is the path of suffering for the people. It
neither guarantees rapid economic progress, nor abolishes
poverty. Capitalist development of the countryside will further
ruin the peasantry. The workers' lot will be either hard labour
to enrich the capitalists or unemployment. The petty bour-
geoisie will be crushed in the competitive struggle against
big capital. Culture and education will remain out of the
reach of the masses. The intelligentsia will have to sell their
knowledge.
What can socialism give these people?
Socialism is the people's road to freedom and happiness.
It ensures a rapid rise in economy and culture. It transfonns
a backward country into an industrial one in the life-time of
one generation. The abolition of the exploitation of man by
man an end to social inequality. Unemployment com-
pletely disappears. Socialism provides land for all peasants,
hel?s to develop their farms, unites them on a voluntary
In co-operatives, offers them up-to-date agricultural
tec
d
and agronomy. Socialism ensures a high material
an kC'u tural standard of living for the working class and all
wor Ing people.
will choose the path they wish to
arena and the of forces in the world
ld
possIbilIty of strong support from the
wor system of socialis th 1
arc free to dec"d tho m, peop es of the former colonies
1 e IS questIon to suit their own interests,
186
. hoice will depend on their own relation of class foItes.
"fhCI\C ggle of the working clasr, of all working people, and
The s ru ral democratic movement ensure the progress along
the path which best corresponds to the interests
the non ,
f the nation. uIf h bl f '>
o Although has s e!"oo h CIVY_. ow rom' e
. ht national-liberatIon movement of tht> sed peoples,
mIg Y
. . not yet dead. cd
It IS olonialism today not only makes use 0] oocn. an:n
C 1 b t resorts to concezled foms of pen!""!" 11 on mta
strugg C't countries, its llIf' to keep UtC'5e
the ntCWsYeconomical'Y llnd drt)rndcnt on le
coun r1C
colonialism today thr
. Headed by the U.S.A., the lmpenahs, .r-.:_
AmerIca", d new forms and methods of (:
pcrately colonies. The monopolies are Sf IV
the peop es cit' 'p on the levers of C\._Domic control ano
ing to keep clr tin Amenca.. Asia ana Afne" :hey
political lDb r:a ld ositions ir t,_ et nomy of the
aim at !"amtam
mg
t 0 l ca t" r..ng new po". ons undrr
newly-liberated cfawing ''lest'' into
the guise of \. ps them and
military blocs. Imposmg 'L.'. t to-les
establishing military Of asel
The break-down 0 . e co s o' the capitalist coun
the economic and ole -.Ifperial: sm :is a whole.
tries and shakes the foun r 1 'a1 lneviublc. The
The complete collapse C f co t
nJ
as reu't of
break-down of the 0 .,.l
CO
mov.ne"\t i ;h=
the advance of the hb ..:.,_, atter the , rmat'o
ll
d
hi torI\.. 'mpopu.<' .
plzellOmenon secon In S .
01 tile lVorld soci(w.'c:t systew. f th haracteristic fc.:Itu:C's .of the
One 0 e 7 ' f pitalism IS the
Aggr:n"atlon of the general cnSlS 0 ca
bl
1 markef."
problem of markels. aggravation 01 the pro an 0 t T1:le
Chronic h t capital investmen. "
unemployment and sp erc.s 0 ravation is the steadily
an4 under-capadiy caUse of thIS between the
produetioD increasing 11'n9 commod-
d the pvssiblltty 0 se 1 f the
growth of producticn an .. ;,ke Russia dropped out .0,
i; The fact that a count, e of the general enslS .of
.:apit:Jb3t system at the firs 1 the capitalist countries
.:apitali!>m increased the ,..trugg e a
187
for markets and spheres of capital investmen
second stage of the general crisis of cap"t r t. At the
fonnation of the world socialist system 1 ,With the
further huge markets and spheres of p tallS
m
lost
The establishment of the wor1d socialist lOvestrnent.
the formation of a ,""orId socialist market led to
have now appeared: the market of
countrIes and that of the capitalist countric C sOcIalist
The narrowing down of the sphere of s, 't .
tion, the present break-down of the cclaPl,allIst exploita-
. . rho oma sy t
ImperIa Ism, t e deterioration of the position f th 5 em. of
masses and the militarisation of economy 11 0 b' c workmg
the contradictions on the world capitali t a me make
profound today. s mar et partIcularly
from the capitalism now develo i .
countrIes IS another reason for th . . fi P ng In the
markets. These countries are e lI1tensl ed struggle for
against industrially developed competing
This is particularly t/
ICS
forh
t
e sale of their
lIght mdustries. ue 0 t e output of the
The struggle for markets and h
leads to conflicts amo .. sp eres of capital investment
among the imperialist monopoly associations and
Closely bound up with
and spheres of capital in e t aggravated problem of markets
pacity worldng of ind t ment are the chronic under-ca-
unemployment. us Cla enterprises and permanent mass
In the pre-monopoly . cd
under-capacity working d of capitalist development
scale only occurred d .0 10 ustrial enterprises on a
period of the generaf
nn
.
9
. an economic crisis. Now in the
working of plants h CbrISIS of capitalism,
of a h' as ecome a per f
. crOnIC nature. Durin th manent eature, i.e., is
Instance, 80 per cent 9
0f
: 1925-29 p.eriod of boom, for
u.s. processmg industr' he productive capacity of the
cent. Th US les was used i 1930
.e " steel indust w .? -34-only 60 per
Prod
C
uctive capacity in 1964 ry as USIng 80 per cent of its
onforming to th' .
industri 1 IS chronic und .
chan e: . enterprises, the nature otr-capaclty utilisation of
Formgerly period of the has also
crises but' of unemployed CrISIS of capitalism.
, 10 penods of recovery or . during economic
m It was drawn back
Jilt
into employment; in the it is becoming a
perrnanent mass army. Accordmg to offiCIal statistics. in 1963
the ratiO of unemployed to the total working population was:
for Canada 5.5 per cent; Denmark-4.3 per cent, Britain-
2.6 per cent. and the U.S.A.-53 per cent. By 1963 the unem-
ployed in the U.S.A.. were about five million.
In many countnes mass unemployment has become a
real national calamity.
Let us recall that the cycle is the
Changes in the
capitalist cycle
period from the beginning of one
economic crisis to the beginning of the
next. The cycle consists of four phases:
crisis, depression. recovery and boom.
In the period of the general crisis of capitalism, changes
also occur in the capitalist cycle: the duration of the cycle
becomes shorter. so that the crises become more frequent.
Before the First World War, economic crises OCCUlTed every
8-12 years. In the period between the world wars (1919-38)
there were three economic crises, i.e., a crisis occurred every
6-1 years. At the same time the phases of crisis and depres-
sion were longer, and the boom phase less stable. Crises
formerly lasted eighteen months to two years. but the 1929-33
crisis continued for over four years. in the period of
the general crisis of capitalism economic cr:se; occur with
increasing frequency.
Take, for instance. the U.S.A., which is responsible for
44.1 per cent of the industrial of the capitalist
world. After the Second World War U.S. ::ldus[l'Y had already
by 1949 been struck by an economic crisis. w?ich
increasingly acute throughout the year. Begmmng With the
second half of 1953 a new economic crisis developed and led
to a reduction in the volume of industrial production and
curtailment of orders, increased unernployment and the
up of stocks in the warehouses. The crisis continued durmg
1954. In the middle of 1951 another crisis of over-produc-
tion began in the United States and became
grave in 1958. In the first six months of 1958, pro-
duction dropped by 38.3 per cent. steel productlo
n
-
36
.
5
per
cent and motor-car production-33.6 per cent t.o
the same period in 1951. This particular eConomIC cns
1s
spread to other c.Jpitalist countries.
The 1951-58 crisis did not dear the ground for a long
period of boom in. American two years had
passed the U.S.A.. In 1960, agam slIpped Into economic cri .
In the post-war period, therefore. U.S. economy has ISIs.
o 0 0 M Our
times experienced economiC cnSlS, arcover, the usual se-
quence in the phases of the cycle has become disturbed. Some
phases have disappeared altogether. For example. the transi-
tion from crisis to recovery not infrequently leaves out the
phase of depression, and the recovery phase frequently does
not lead to the boom phase, but directly to a new crisis.
What is more, in a number of cases the transition to crisis
now occurs not suddenly, but gradually, over a long period
of pre-crisis stagnation. The crisis itself takes a longer time
to develop than before. There are no more stock exchange
and bank crashes. In the post-war period the crises have not
lasted as long as they did before the Second World War.
What is the explanation of all these changes in the capitalist
cycle since the war? The chief reason is that the capitalist
system has entered a period of chronic stagnation and decline
in some branches and whole countries, and also that there
has been a slowing down of the general rates of growth.
There are a number of other factors which have led to
the post-war change in the capitalist cycle.
1. The effect of the militarisation of the economy on the
trend of the capitalist cycle is twofold and contradictory.
It on the one hand, a temporary boom in branches
of mdustry connected with arms production, and, on the other
hand, causes further aggravation of the contradictions of
capitalist reproduction. and creates factors which make for
a still more profound crisis.
2, State-monopoly capitalism to some extent influences
the trend of the capitalist cycle, This means that the state inter-
venes economically on behalf of the monopolies (through
the system of purchases of industrial and agricultural
SUb,sldles and credits to monopolies, etc.), and
s IS defimtely Important for a certain growth of production
and renewal of fixed capital. Through state regulating
the monopoly bourgeoisie endeavours to mitigate
me estructive. of economic crises. But although state-
affects the capitalist cycle, it cannot
a 3 15
M
economIC cnses of over-production
, adem scientific a d t h 1 ' .
the trend of th 't r n ec no ogJcal progress influences
e capt a 1St cycle. This presupposes a rapid obso-
190
nce of fixed capital. Consequently, capital investments
les
ce
be curtailed during periods of crises and yet remain
may relatively high level. This imparts a somewhat different
r
t
to the development which the cycle had previously.
or4 The class struggle in the capitalist countries has a much
effect on the cycle. The more successful the workers
g:c I'n the class struggle, the more the bourgeoisie is forced
ale 0 ThO I h 0
t make economic conceSSIons, 1S avours t c expansIOn
the internal market and can in some measure act as a fac'
which hampers the deepening of the crisis of over-pro
duction. .' h
S. The break-down of the colomal empJres also affects t. e
italist cycle. This is seen in the fact that the count1'1es
have won political independence waging a
gle for their economic independen.ce,. path to economIC
independence lies through llldustnabsation. T,oday half
the equipment exported from capitalist countl'les, chIefly
West European countries, goes to underdeveloped
This has brought about an increase in output from the en
9
d
ncering industries of Western. Europe and thus .has belpe
to change the capitalist cycle In the pos.t-wa.r penod. f h
These are some of the factors affecting the trend 0 t e
capitalist cycle at the prese,nt time, It is these factors that
have brought about a situahon where the, post-war
of the capitalist countries has been subJected to
though less grave. economic crises than, the
Chronic under-capacity working of
permanent mass unemployment, too'S unable to
economic crises are proof that f ,a
y
1 hi h have
make full use of the ol;e:
grown up within it. Capltaltsm ecom. in to use
brake on the developmen.t it!;
the arms race and militansation of the -
economic and political cO,n.tra4icti,ons. f the economy implies
Mllitansabo
n
0 'd bIe art of
Militarisatlon the switching of er:
put
the
of economy industry from CIVI Ian ou T u
and deteriorating production of arms, and the Pf mg
position of the f material values in the orm 0
working people 0 , yes In the U.S.A., for
strategic reser f the Federal Adminis
instance, direct military expenddltuwre fd War was 14 per cent
tration on the eve of the Secon or
191
of the total budget but froll: 1953 until the pres-
ent time direct annual 1l1lhtary expendIture comprised two-
thirds of the annual federal budget. In 1964-65, this expend'
ture amounts to 51,200 million. Britain and France
expenditure in the post-war pCl'lod has accounted for one-
third of the total budget.
Militarisation of the economy and the arms race create
the danger of war. For this reason the Soviet Union, the
other socialist countries and all peace-loving mankind are
waging a persistent stl'Uggle for general and complete
disarmament.
And yet the imperialist powers are unwilling to undertake
general and complete disarmament. Why? Because the arms
race leads to an unprecedented growth of profits for the mo-
nopolies. For instance, the profits of the American monopolies
increased between 1938 and 1962 from $3,300 million to
551,000 million, i.e., more than 15 times over. The total profits
of 250 corporations increased from $7,500 million in 1961
to S8,800 million in 1962, i.e., 16.4 per cent.
Moreover, the ideologists of capitalism assert that militari-
sation of the national economy and the arms race free cap-
italist economy from economic crises and unemployment.
In point of fact militarisation of the economy, by deepening
the disparity between productive potentialities and the shrink-
ing effective demand of the population, inevitably leads to
a new, economic crisis.
The arms race fs a heavy burden on the working class and
all working people. In the U.S,A., for instance, military ex-
penditure per head of population was $3.5 in the 1913 .. '14
fiscal year; 57 in 1929.:'30, and $250 in 1954/55, i.e., it in-
creased more than 70 times during the period. In Britain,
military expenditure per head of population rose from 1.14s.
i.n 1913; 14 to 29.6s. in 1954.55. This vast expenditure
IS met by continually raising direct and indirect taxes.
In the U.S.A. direct taxation increased 15 times over in the
1959/60 fiscal year, compared to 1937/38, even allowing for
Jhe in value of currency. In Italy direct taxes
doubled, .and In Bl'ltaIn and France they trebled during this
same perIod.
T.he .post-war .arms race led to increased inflation in the
capItalist countrIes, resulting in a sharp drop in the purchas-
/92
,f paper money. The amount of paper money tir-
ing the U.S.A. rose to S27,400 million at the begin.
compared to 5,600 million in 1937. I::
OIng of in circulation amounted to 1,850 mllhon at
paper of 195A, compared to 460 million in 1931. In
the begtnnt 9 oney circul.!ting in 1958 reached the
Italy, paper rot 1 852000 million lire a9ainst 18,000 mlllIon
ical figure 0 ' ,
jn 1937.. f the increased burden of taxation growing
In .spIte 0 mono oUes contrive to "freeze" nommal
inflation, the h fixed level. This means a reduchon.1I1
i.e., to keep t in the position of the work.mg
real wages,.<1 h king class to struggle harder a.gamst
masses: cauStng t. e evidence of this is seen III t?e
capitalIst strike movement. Taking the offiCial
increased sc.ope 0 . -miscd for 11 coun!":":e3-the U.S.A.,
figures, obVIously Japan, Canada, Au<:.tr;3, Swe
Britain, F:ance, d eo:nd Argentine-ana
den, BelgIUm, Ho an ('1930-39) with the ten post>war C 94.:>-
the ten pre-war years b f ikes increaied from
54) it is found that the nbum efr 0 'T', e- _ in,-olvcd in the:n.
' OOlhnumero
wv
.---- 'd
61,000 to 101.0 , _ e -n' d the of war . ..,; ays
from 21 million to 1.3 un_Ion 'I:-!l
'II' to "5 -" mt _IC"D . 1_ .
lost. from 240 ml Ion .- ro!etariat far L,-=
The class struggle thae g3 r:l!:lio:: :.)OK
is flaring up_ ... Some ,?O i963 their :lumbt;[ res? :.J JB mIl
strikes in 196 .. _ but m
lion. . -orking c! the ..;apitalist
In the post-war penod to economic-trugg1e but
countries has not before the war has
with greater determmatlOn th ti hvDle and foreIgn
into action on "of the peoples' strug
olicy, and is marchmg 10 \ an$! .
for peace demo_c_ratle led by the. C:ommunlst
The proletanan strugg. f Marxist-LenInIst theory,
and Workers' Parties on the h.Jve been confirmed by
the strength and viability 0 epoch. 'cd
the whole expcri.cnce ha\'(' been
k
.
In our time Its C c e onc.third ol man 111
by the practical e,"penence of th od and all. Ihis means that
has abandoned capitalism for. go place to the new systcm-
d . -"1 bly give k' class an
capitaltsm WIll meVI a .' b' gs the wor 109
. b 1 0 -lahsm no
sociali!'m. Nothmg u s (,;
/9J
all working people final emancipation. It is under socialis
only that working people enjoy a11 the benefits of their
In the conditions prevailing today,
interests of the monopoly bourgeoisi
in the imperialist countries corn:
into conflict with those
of the proletarIat and the interests

go against
the interests
of the nation
of the nation as a whole.
Monopoly capital intensifies exploitation of the working
class and other sections of working people-peasants and
handicraftsmen. At the present stage of the general crisis of
capitalism the position of workers and farmers has seriously
deteriorated. In the U.S.A., the monopolies have inflated
prices to such an extent that in 1959 American farmers had to
pay 12 per cent more for the goods they bought than they
did in 1950, while in the same period there was a drop of
1 per cent in the prices at which the farmers sold their prod-
ucts. The gap between the prices of industrial and agricul-
tural commodities, the burden of debt and the pressure of
taxation imposed by the monopolistic state are leading to
mass ruin among the farmers. In the United States some
150,000 farms close down each year, and their owners join
the army of unemployed or farm hands. In France, 242,000
peasant farms "vanished' from 1954 to 1962. But the hardest
hit are the peasants in the Latin American countries and in
most of the countries in Asia and Africa.
Monopoly interests conflict not only with the interests of
the working people but also with those of the small and
middle bourgeoisie. Together with the state, the monopoly
capitalists pursue a policy of taxation, credit, tariffs and
?rices that ensures the redistribution of surplus value in their
mterests; small and middle capitalists are deprived of any
share in the profits, and become ruined.
. The of the small bourgeoisie and middle-class sec-
ltke. those of the working class, are increasingly coming
:nto with those of the monopoly bourgeoisie, with
Its pohtlcal parties and with the state the guardian of
That is why the workin'g class, peasantry,
and urban small and middle bourgeoisie are
v1tally Interested in abolishing the rule of the monopolies.
Favourable conditions are developing for rallying these
forces.
In conditions today all.the forces of the nation can be ral-
lied against the monopoitcs through the struggle for peace,
national independence, of democracy, nationalisation
f the most Important mdustnes and their democratic man-
and the u.se of the entire economy to satisfy the
needs of the population.
The Communist and Workers' Parties are the vanguard in
the struggle against the of monopolies and strive to
rally and direct the masses mto thIS struggle.
The Second World War intensified the
Growth uneven development of the capitalist
of countries. Germany, Japan and Italy
among the capitahst suffered military defeat their econo'
countries. .'.
mles became senously undermmed.
France suffered great losses during the occupation. Britain
was seriously weakened. Only the U.S. monopolies battened
on the war. In 1948, the U.S.A. was responsible for 56.6 per
cent of the total industrial production of the capitalist world,
Britain-ll.5 per cent, West Germany-4 per cent, France-4
per cent, Canada-3.5 per cent, Italy-2 per cent, and JaPil:0-l.5
per cent. Since then, serious ch-:mg.es have m the
alignment of forces in the capitalIst world.
Firstly, the U.S.A. lost its wor ..d
capitalist production and trade. Smce 1948, 1.S share 10 world
industrial production has fallen by more than 10 per cent
and in 1964 was 44.5 per cent; her exports have dropped from
23.4 per cent to 11 per cent and gold 14.5
cent to 35 per cent. Among the other capitalIst powers, th d
U.S.A. is now approximately where it was before the Secon
World War. k' f the
Secondly, there has been a noticeable wea 0 eir
positions of Britain and France. These states are losmg thh .
. . h h b unable to restore t elr
colomes lrrevocably. T ey od f In 1931
pre-war positions in world mdustnal pr uc Ion. f h ._
d
f 18 5 per cent 0 t C In
Britain and France accounte . . ld but in 1964 the
dustrial production of the capitalIst wor ,
figure had dropped to 13.4 per cent. . G rman
Thirdly the defeated countries, particularlyGWest e
ed dl ahead West ermany,
and Japan, have forg rapl f 114 er cent of the in-
and Italy are together respons
l
. e l.or . which is more
dustrial production of the capita 1st wor ,
than on the eve of the war.
to 195
The change in the relation of economic forces has 1 d
a struggle for the to
The U.S.A. is usmg lts advantages in an ef-
fort to subordinate other countries either fully or in part I
the early post-war years it succeeded in establishing';
domination over a considerable part of the capitalist wo
market. But when West Germany, Britain, France and It:l
had restored their economies, the U.S.A encountered the cor:/-
petition of these countries on the world market. This led to
an intensified struggle for markets among the monopoly as-
sociations of the U.S.A., Britain, West Germany and other
countries. The struggle of the U.S.A. for markets, sources of
raw materials and spheres of influence is encountering the.
growing resistance of the European imperialists, The West
European monopolies do not want to have their high profits
threatened,
The struggle among the monopolies leads to a further
growth of contradictions among the capitalist countries. The
contradiction tbe. and Britain is an example
of the deep-gomg contradictIons that prevail between the im-
countries. U.S. monopoly capital is staging an of-
... e against Britain's traditional markets and spheres of
The U.S.A. is with some success destroying Britain's
multilateral economic relations with her dominions and colo-
nies. The struggle is growing more intense between Britain
and the U.S.A. in the sphere of foreign trade and as regards
sources of raw materials.
There are increasing contradictions between Frazlce and the
.Many American firms have opened industrial enter-
111 France. The competitive struggle is also increasing
the of foreign trade. The U.S.A, is staging an offen-
sIve against France's traditional markets in North Africa.
There are signs of America's intention to oust France
AfrIcan. markets. Influential U.S. circles, frequently
e.'-_ng In the gUIse of "sponsors" of the national liberation
are to replace French domination in North
gY. monopoly domination, as they succeeded
out ':'letnam. T'1is U.S. tendency is causing can-
" rth concern 111 ruimg cud"',
LU er a . f ....
per_!ist 0 contradictions among the im-
economIC power; to t extent caused by the growing
. es and Japan. In the post-
1%
war period thc U.S.A. has been trying to get the West Ge
I
' d 't 1 rman
monopo Ies un er I s contra, to win firm positions in th
most branches of West German economy.
has been to do the same. But neither the U.S.A., nor,
still less, has in establishing a dominating
influ.cnc
c
m. West s economy. Backed by their grow-
ing Industrtal potenttal, West Gelman monopolies have em-
barked on a broad expansionist programme. In the early
years after the Second World War, West Germany occupied
one of the last places among the capitalist countries for ex-
pOrts, but today it holds second place in the world, after the
U,S,A,
The inter-imperialist contradictions are irreconcilable and
antagonistic, Lenin pointed out that the contradictions in thc
capitalist camp arc not accidental internal conflicts, but
reflect "a very deep ineradicable clash of the imperialists'
economic interests" and that "the alliance of thf' 'apitalist
powers ... is an alliance of robber
c
each trying tn snatch
something from the others."!
The inter-imperialist contradictions frotJ1 +;e In-
damental contradiction of capitalism, th'lt ,",ptyl:en le 01.. al
character of production and the prival "mm ('It apm pri'll on
of the results of labour by capitalists. T,Pl ue no
ments, deals, alliances or compromises that ClJ1 'lboli h t1-e
contradictions amonq the imperialist!:..
The chief contradiction of the present epoch fn" truaqle
between growing socialism 'inn dvino capitll]ism-" c)
remove the internal ("ontradictiom in t"e -:ll,itaHrt np. 'h's
chief contradiction of our epoch has ,: t: ... eftl t on
imperialist relations. On the one hand, it stimulate"; the mon
of the capitalist countr cs. forms the basi$ fM knocking )-
gether military blocs NATO, SEATO, CENTO,
difficult the outbreak of armed conflicts among the ImperIal-
ists. On the other hand. it creates new sources of contradiC-
tions and c 3mong the' apit{llist countric-:. f1:te
t:. :lsic problems l'lf present-d.1Y world dJ
'ontradicnons hould "ot lead
to W W"'t;r't C pit 'LIT' was '1('" ( rc'" that
the WJ rd intc 11 "lIaJ o::onl 31 dlsNlh3.ncc
of the b, ' 1r.e of v. W 'oUJ'ltr' fi laPy 'ed f W r\i
I e-:1in, ()llc I \V - .
10'
wars. Today, capitalism has lost its monopoly as the 1
world system. There is now the world socialist system
is becoming the, of hU,man development.
is now a new hIstorical SItuation whIch makes it possibl f e
the combined forces of the world, headed by the world soc, l
r
, bhf f' CIa
1St system, to cur t e orees 0 aggression and exclude w Id
war for ever from the life of society. or

We have now examined the capitalist mode of produ r
based on the exploitation of wage labour. Under capital,lOn
particularly at its highest stage of development the co 't
sm
,
d
" b 1 ' n
I,cbons etween 3?,>ur and capital, the metropolitan coun-
tl'lCS and the colomes, and between the imperialist powers
are to the extreme limits. The deepen-
mg of these contradIctions leads the capitalist world to
, d 'I h 1 new
economic an SOCla up s and, in the final analysis. to
the replacement of capitalIsm by socialism through revolutio
The facts, at the, present time are the best confirmation
the conclUSIon which Marx arrived at over 100 years ago
that the capitalist mode of production is doomed b'
hIStOry. Y
TilE CO:\IMUNIST 'lODE OF PRODUCTION
From one generatIon tL the next ..... ork.J.lg peuple
dreamed of a sec11re and Ii But for a ong ... me .. lese
dreams were not to come t.ue. for people wre unaware of
their path to freedom. Me.. 1: Engels lnd L:rull, the grelt
leaders of the working class, showed the working people the
path to communism, the radiO! It tutu -e d mankna.
"Communism," declares the program1T'e o! the C.p,s.l'
"accomplishes the h..-storic mission of deliveling all men
social inequality, from every form of onprcsSl( n 1nd exploi'
tation. from thc ;( rrors war. and prO,-'3.11
1S
Pc - lnbour
Freedom. Equality F-'lterl1lty and for all
of the earth."1
In its development communisl SO! ety ha! .0 pas: III "'ugh
two phases: the first IS Clllcd ;ocialtsn 100 the wnt( h
is the higher phase. communism.
Thc final aim of the liberation struggle of the workng peo'
pIe of all countries is the building of communism. As
we bcgin socialist reforms." wrote Lenin. "we must havE' a
clear conception of the l- 0",' towards which reforms
are in the final analysis dirc. ed. that is, '1.e creation of com-
munist society :'2
I Tile R( _ II) CQmzr:unism. P t!).
Le,m colJcc'e:l W -ks. Vu' "0. ,.127
Marxism-Leninism proved that the communist SOCio-
nomic formation, which will follow capitalism, will not
ready to hand and at oncc. .
Communist society c.a-?not be bUIlt thc dB:Y the work-
ing class has won pow:r. The bUIldIng of commu_
nism requires a long .penod of tIme and strenu.ous effort on
the part of the workmg class, and Intelligentsia.
Society cannot pass to from capital_
ism. It has to pass from capItalism to socIalIsm as the result
?f stubborn .struggle and only then will socialism develop
mto commUnIsm.
Describing the two phases of the communist socia-economic
formation, Karl Marx, the founder of scientific communism
wrote in his Critique of the Gotha Programme that
and communism are different stages of the economic maturity
of one and the same mode of production. Karl Marx regarded
socialism as the first phase of communism and indicated that
at this stage we deal not with a communist society as it has
developed on its own foundations, but with such a society
that emerges from capitalism and which, for this reason, in
every respect-economically, morally and intellectually-is still
stamped with the birth-marks of the old society. Lenin stressed
that "the only scientific distinction between socialism and
is that the first term implies the first stage of the
ncw SOCICty arising out of capitalism, while the second implies
the next and higher stage". t
The development of socialism leads to the second, higher
phase-communism.
Thus, socialism and communism are two stages, two
phases of one and the same communist SOCiety.
-,--
I Lenin, S('lecied Works. Vol. 3, r 247.
A. Soc i a lis m-t he Fir s t P has e
of Communist Society
Chapter IX
THE RISE AND ESTABLISHMENT Of' SOCIALISM
1. on the Transition Period
from Capitalism to Socialism
Revolutionary In their examinatic," cf the ,Jurse of
transition thc cconomic development of '3ocicty,
from capitalism the founders of
to socialism covered the laws of the develop
ment and downfall of npitalism. In place of the old sxiety
with its eronomic poverty and political insanity. w.rotc M.J.:",
a new will inevitably come, the
cipIc of will be peace. for each the na.tIOns wl:1
one and the :nastl::-- labour. This society Id'
'\ f h fi l t' 'I',C worl known as socialism. It was bUI I ,:IT t e rs Ime In. .
in the Union of Soviet Socialist Republics. . .
Consequent upon the defea.t of fascist Germ.J.ny mllit.ar-
ist ]apnn in the Second World War, in which the Soviet U.OI
l
on
t ' , 1 d th t 'umph of the socia IS
played the dCClSIVC ro e, an en. r-
revolutions, the peoples of a number of other countnes unde
took the building of socialism. . h' h
The victory of the Great Odobe!' Socialist Revolution W IC.(
'f . the development 0
was the '3tarting-pomt 0 a ncw era 111 I' d 'ts d'y
, h ,,'t r sm has cut Ive I ... ,
human soclcty showed t at \..JPI a I . .
. ' . {rodu tion have become a trc
that capitalist relation.; 0, P C f the roductive forces.
mendous brake on the development <? p A' nd
.<;O( ialist revolutions in
AmencCl have stl-uck another ml
h
9 ty t t event in world
of world capitalism. They arc t e grea es
201
history since the October Capitalism must
'nevitabIy relinquish its place to socialism. the new society
1 But the replacement of capitalism by cannot
about of itself, The bourgeoIs system can only
be ended through a deternllncd struggle by al1 the people
through a proletarian revolution which will deprive the cap:
italists and their underlings of power and the possibility of
oppressing and exploiting the people. Marx wrote that
"., . socialism cannot be achieved without revolution, It re-
quires this political act inasmuch as it requires the annihila-
tion and destruction of the old",1
Revolution is required in order to abolish private OWner-
ship, i.e .. to wrench all the basic means of production from
the hands of capitalists and transfer them to the people as a
whole. to establish socialist ownership,
The revolutionary transition from capitalism to socialism
is brought about by two methods-peaceful and non-peaceful.
The working class and its communist vanguard try to achieve
socialist revolution by peaceful means, This accords with
the interests of the working class and the people as a whole.
The peaceful method of socialist revolution presupposes the
.... winning of state power by the working class without civil war.
By uniting the overwhelming majority of the people under
its leadership, the working class can win a stable majority
in parliament. transform it from a weapon serving the class
interests of the bourgeoisie into one which serves the work-
ing people, A parliament of this kind can successfully solve
the tasks of socialist revolution, All this is possible through
the broad, uninterrupted development of the class struggle of
workers and all working people against the big monopol-
IStiC bourgeoisie, against reaction, and for profound social
refonns, for peace and socialism.
this is the existence of the steadily growing world
socIalist system. which is becoming a decisive factor in the
of human society; the weakening of the world
,system, with its now unprecedentedly aggravated
the break-up of the colonial system of impe-
the mcreased organisational strength and class-con-
of working class in the capitalist countries; the
Increased prestIge of the Communist and Workers' Parties,
. 1 Marx, "Der Konig von Preussen und die Sozial-refonn. Von
emem Preussen", M.EGA. I Abl. Bd. 3, S. 22.
202
It is not that in . of, th.e Increasing
owth of the forces oJf soclaltsm. the conso! dation the
and the of the positione.
f impcr"alism. a situation may anse In a numb' of oun'
ies whl!: e 1S and Lenin forecast, it will be to the
dvantagc (f the bourgeoisie to 19re to have their basic
a cans of pr v'urtion bought up, and for the 1Jrolctariat to
m .
"buy them out' ,.
Where thc exploiting classes resort to vIolence agaIn,5t the
people. it is necessary, bear I?ind '.he othe pc
of the transition to soClabsm. LenmIsm t".at thp r
classes do not power vo
f
luntanlY'jan,c! the ex
of history confirms thlS, There evo
b comes necessary. The non-peaceful lrans.
t
l0n sOClahsm
armed uprising. war L t - 11'
geoisie should be forcibly depn\'cd of pobtica.l .r:nw
In each individual country L"e actual pos.lbihty of, the
e or the other method of socialist revolu\:l("n s determmca
the concrete historical condi. ons. The of the rCViJ
lution will depend on how far Ule wor1,;.ing class 1nd s \.'llty
have mastered an the fcorms of struggle, peac .. luI ana ton
peaceful. and are prepared for a apid. hange ":'Om
one form of struggle to the ol'''er th li t
In conditions tOday. larks toO the ... ON t o. e sOClba k'
. . l' . J" caD take p n a ac
countrIes, socta lst rc'\iO u .... en . i 1 ed
ward country_ Relying on t!J:e suppa-:1 of. tPe llghly op 1
. th b k ard -C'unmes can P to SOC1_
socialist countries, e ae w. '. . - 1 "cvelo _
ism without going through lm: ,,) P
ment. This was done, for example. ed eOlccfully
Socialist revolution. whether It s 3( eV
j
b k ng up
f I I 'ly' mean" the rad l:3 r
or non-peace UI yaw. :>. ' th tal-lish1Tlent 01
of obsolete capi:aJ sl relab('tns aJ"u e _ - curied
.. j - 'T'h" <lIe '
new, soclalist rc abons. cst..: k' ' 1 the lterests
out by the go\'cnmcnt (11 tht wo: my l: ass '
of the whole of .... e epoch of the revolutionary, trans:
for'nation of capitalsl nto SOCial Sl so
Clcty lS .. transition_ pcnoc_ . Ii
The transition penod from caplta sm
'l'h(' nd for
a transition pl"rlod
b -... soclal sm cannot grow
to SOCialism :; nec"ssalY dtions of socialism
"'p wthm Oalv 'l-te precon 1
..mdel capilli sm,
20:.
Capitalism creates the, large<seal,c industry which
is the material preconditIOn of On the other hand
the growth of industrial productJ,on and fact that it be:
comes large-scale lead to an Increase m the numerical
strength of the working class, which becomes concentrated in
big enterprises, in centre?, The working class be-
comes organised. aware of Its class lIltcrcsts and transformed
into the social force capable of destroying capitalism.
Working-class interests coincide with those of all working
people, and it is the working class that heads the struggle of
the exploited masses for the overthrow of capitalism. This is
a subjective prerequisite of socialism which arises within
capitalism. The working class takes power by revolutionary
means in order, together with the peasantry, to build the new

socialist society.
The period during which private ownership and the exploit
ing classes are abolished and the whole economy, culture
and state are reorganised on socialist lines is called the tran
sition period from capitalism to socialism. In this period so
cialism has not yet been built, it is in the process of being
built; capitalism is not yet abolished, but is in the process of
being abolished.
After the proletariat has won power and captured. key
positions in the national economy, capitalism has suffered
defeat but is not yet fully destroyed. For a time capitalist
private enterprises will remain in indush-y, agriculture and
commerce. The task is not only to overcome the resistance
of. elements in town and countryside, but also to
ehml?ate them and get rid of the factors which cause them
to arrse.
An important task in the transition period is the reshaping
... of the .small peasant farms on socialist lines.
Durmg the transition period the material and technical
basis of socialism is created.
k
The
transition period is essential for every country that
ta es the road t . I'
. 0 SOCla Ism. Whether the country is indus'
or ?ackward, great or small, a definite
t
'1' me 15 reqUIred for th(;: transition from capitalism
o Socia Ism.
The transition period co h
which begim with the v' vel'S an entlrco historical
IctOry of the proletarian revolution
204
and eSlli)IL!-ime-,t f the dictatorship of the 1)lo:Jlctariat lnd
culminatl-" wi .. 1 th: compkte building s('Ic.:ialsm ]rt
phase of c_mmunist sc
The theory of the perIV<1 of transition from 1pltal:sm to
sOl.'ldlism was evOlved by Marx, Engels !lnd Lenin. They
equipped the working ...'aSs md Wit" sru n'
tilic knowledge of the ways of bUIldmg SOCial smr"u \..:om
munist and Workers' Parties 'Ire matuny a ij. c:"ln'lhu'
to Marxist-Leninist theory on the ... aJ'lsitiol] period.
Between capitalist and commun:sl society said Marx, lie,
the period of the rcYolutionaryamfonnation of lc .. tI.
the other. There corresponds to thiS also a pob, ell t 51
tion period n which the state can be "lothing but 1e"o'
lulionary dii.!at r.hip of the proletariat
The dictatorshI;' f the 1:llolctariat
1. be",lUse only the w",.km
L..5 . -} c:= 1'-'Sit! n 0 lead t}-le mass
of the W(,,:" k ng"::_ Ir+ '1f: SI"Jggle
tv the c! _pita] t: 'ld
build SQL,,'i.t SOL 1 The :tiet!!! ... p
Prolctarian
di.ctatorshlp-
the instrument
tor building
socialism
01 the ph'letan...:1 15 sllte lcaders.1i" ct' SOI_:, .... plt:. n: '!It_d
by the working class. The di _ tatvr l-ip of t _ pta! .. : 1:1at :
a dictatorship of the o\e.""hc1ml.lg m v.ty t._ rome:-
ity. it s directed against fle the
. b' ' J -1 labon
sion of nations, and is alme ... at a 0 <: . exp 01
of mal" by man. The dictatorship?l ... _,_t ..
not only t'le interests of W0 '1tlJ'lg s. t"t also \-lose c-f
all wOlking people."! Th(; wor!, '1;} class make- esc; d
power tle interests of a!l the
struggle of the working cl.J.ss .Jnd ... "e ex
ploiters and for the bLlllding of bmcs
indestructible aiiance. T'lC highest prmclrk of
ship of the I)roleu.:iat is that the:'l' should be d rm a lance
, ' d h ". sant"',
between the wOrkllll:j CJ,ss an t e ,Clung pea7 .
The dictatolship vf the ;Jrolctariat Means. the
l"!articipat'on 01 the brcJd working ma!-ses In man
f
<lgemclt. in the w0rk of thc organs, in t:1C gUI ance 0
all sphere> of and cultura.l:fc. . f so.
A ,t f" supers!!'ucturc rom
s p.:.l. 0 .:lC t-. h' l th prolctanat has as
cialist :'C\'oiution. :'1C dlcLltors Ip 0 . e
tile old ltate michie III
.. wo .. klng p.ople, if.
III aboIllh the
of ap\oitati<oD. of
tain main Un... In the p,cIi .. al
differences may be seen ill the faa:_
proletariat, in the fotms in Which
the different methods of
letanan dictatorship. aboUtion of
means of production. agricultnral
represent the COmmoD factor WIthout
tern cannot develop successfully.
Departures from. the main objective law.
dalist revolution and socia1iat
estimation of national features do d"",ge
socialism.
. th course of socialist revolution, the working class con
In e d . f th . 1
fiscates the means ?f ,rom c capita Ists, by this
legitimate action historIC Justice IS restored. That which the
labour of people has created should belong to the people.
Socialist nationalisation of the mcans of production abol
ishes the fundamental contradiction of capitalism-that be-
tween the social character of production and the private form
of appropriation by capitalists. Nationalisation brings the re
lations of production into accord with the productive forces
and removes the obstacles to their further development.
Nationalisation of the means of production destroys the
rule of the bourgeoisie in the economy. With the transfer of
the means of production to working people, they become mas-
ters in their own country, the dominant economic force of
society.
First and foremost nationalisation is achieved in the heavy
industry. banks. rail transport, merchant marine. communica-
tions, large-scale trading establishments, etc., and in agricul-
ture (full or partial nationalisation of the land).
Nationalisation in each country has its specific features,
depending on the forms and intensity of the class struggle
during the period of transition. In the U.S.S.R., for example,
where the bourgeoisie waged an armed struggle, organised
plots against the power of the Soviets and employed every
means of sabotage, nationalisation was carried out without
compensation to the former owners. In several European Peo-
ple's Democracies nationalisation of the basic means of pro-
duction in industry, transport and communications, as well as
nationalisation of the banks, took the form of the state buying
up the .enterprises of small and medium proprietors and those
belongmg to capitalists from countries that had been allies in
the .war against Hitler. Enterprises belonging to German and
Itahan owners or to capitalists inside the country who had
collaborated with the nazis were nationalised without com-
pensation.
In the People's Republic of China confiscation and the
of property to the state was restricted to enterprises
to the. monopolistic bourgeoisie, which had been
the of Imperialism in the country. The bulk of the
en.terprlses bel.onging to the national bourgeoisie became
mlxded with a view to securing their
gra ual converSlOn mto state socialist ent .
, erpnses.
210
After the most important means of production have been
nationalised, other measures are taken; the socialist state
organises a new .sedor In the national
economy-the soczallst sector. ThiS takes 10 factolies, banks,
transport. state farms, trading enterprises :lOd co-operative
societies-the supply and marketing, credit, consume and
producer co-operatives. Once the socialist sector of the
national economy is established, the cornerstone is laid f r
the immense work of construction which the people carry
out in the process of building the foundation of the wl,.ole
socialist economy.
The socialist sector plays the leading role in thc econr-my
of the transition period. This is because it combines the key
branches of the national economy and because t has the most
modern and efficient technical equipment at al5posal. ThiS
sector represents the more progressive type of production
relations. .., t
At socialist enterprises there IS no explOitation o. man "Jy
man, labour power is no longer a commodity arA .1.11.. bOUl
of the worker becomcs labour for the benefit of bIn t. f and
society. Everything that is produced _n t; " social,s. SCI.. or
goes to the working people as a whole. .
The socialist sector, where SO::i3list owner 'hlP of the mans
of production predominates, gives rise to lew ec
ditions. On their basis the new econOrLw laws 0 - - I. m
come into being and develop. graduallY exkldin then- s!'he.
of operation. Capitalist economiC ,,,,v;, gradual Y 10. '" the
1

force and in the final count cease to ope, .
The smalJcomrr.od!:y s ell r tak.e In
Small-commodity the small farm5 the pea. tnts, the
and capitalist II tisilns and handi.::raftsmfn WhO"b
lectors omies are based on private O\.,nc
r
hlP
of the means of production and their own pcrscmal labour
They arc all morc or less connected with the .market. Beca:s
e
small-commodity production is based on pllvate ownehs IX'
it approximates to capitalist production. On the an f
because the small peasants are interested in t'1e abohl 00, 0
all forms of exploitation, in the sense they cue wOlklDg
peasantry, they are closer to the prolctanal: I--
In the early stages of the transition penod, the. sm31 com
modity sector takes in the majority of the ,Po?ulatlon .1. Ill
J
,anY
. D th bwldmg of 50C13 Ism,
of the socialist countrIes. ur og _e
'"
,"
small-commodity production becomes. socIalist pr_duclion
through the establishment of co-operative!;, .
The capitalist sector (overs L'(OllomIC bnscd on
. te OWl1"l'ship of the means of production Inti W:)"C
pnva ... . "\ \ ' "
labour. It is represented 10 thl! countl'ysH C ly the nch [le'l"
ant section (kulaks) and in the mo:tly by OW'I rs 0:
small or medium capitalist cntcrpnsc
s
which hnvc !lot been
nationalised. Here exploitation exists and labour power Hi ,till
a commodity. Surplus value is appropriated by the owners
of the means of production.
The socialist state first puts restriclions on the capitalist
sector, in particular on the exploitation of labour; its policy
then aims at abolishing it altogether.
The socialist. small-commodity ilnd capitalist sectors arc
basic sectors during the transition period. There may be, in
addition, patriarchal peasant economy (natural economy) and
state capitalism. These sectors may, but need not. exist.
During the transition period in the U.S.S.R., for instance,
the patriarchal peasant economy existed ilnd [lIsa state
capitalism in the form of the concessions which the Soviet
Government granted to foreign capitalists. State capitalism,
however, did not develop to any large extent in the economy
of the U.S.S.R.
State capitalism has been extensively developed in the Peo-
pIc's Republic of China and in a number of othc
Democracies.
The task of the transition period is to develop the
sector to the fuil, to abolish the capitalist sector completely
and to transform the small-commodity sector into a socialist
form of economy, which must become completely domin:mt.
and thus to build the foundation of socialism,
Cla!;scs In the
transition period
The economic sectors of the transition
period are represented by
classes:
Sodalist sector {The working c1a!,$ and the peasantry
united 1n co-opr>J'ativc
{
The rural small and middle
Sma]: commodity sector peasantry and urr.'1n Mtisans
'clOd handicraft ;men.
Capitalist sc' tor {The urban Murgeoi' ie and the
: l( '1 flea ants.
1/'
Such I ,e clas tr 11- He n the f;: <xl of L lfl It on t m
'l 1.11 sm oClail m.
The F -t on 01 th r:las e , thIS It j C -:tI
und ritah m IS toqethr" jl. ,t
. j t) that
The working las!, wh -h "m r pltali m Wd3 o"'pre I d
and 'x loite s, lays I to lC'1ding r Jlc In '"i 11 r
the est.]1 lishmr,t ",f t"e dil t tc. hIp ::'If L1 prol ... 1 1 . It
becom 5 iog cia ,1 tat w r d t th
with u 1 wor 1119 pc pIc .... ontr"ls th_ Ii d '11 111
of prodw tion
The pea anlry is freed from depcndcn
ref elves 1 from tJ.. ..... ,al: t stat
being c plrited by the ril., pelS n 4 j
malion of co ope. ltive ,
n lar e , nd
",t t ;l f
111 r: f r-
In it!) pol cy I J\II ..... t}1 p
period, the ciali t I U
santry du.n t
L
tr
1 j by the U-illl t
n
lul :
alliance with the rrtr' jl" P_
ilnt and 5t uqgle t r
o( thiS Ull V 1 14. t th bu
alhcl. "to th "'10. k"1 .... ;
oClali n .
T}t.e WOI k. 1!.. ..
in I/,c "'1" 1 til.,.;) r
the "l.l!. .. ltry 111 ",th
ing mLelli .!n' l;t, Jr

J, r
(" .: ..
T 31
lap n p P 1
,
fee
,"tr
t r
pc -
c tt
T '

. J r

I
t'r.lP"
b n
In'
, 'f b
- w r
,
Once it las J t S..JI P wer i 1 b n C. I)
dUChl n, th" J. _ur C.)l 1'" oJ r '_ 3 lh .I. 1 a t ,
the transit on pcr -'y, U J f.. 1 u ber 0 y r c -
tinu to .am tnl Th t; plaT'atl .. ...
smaJl.I.",mmodi. v pi du on
capit, lism n 1a s. I ..
'l" tall
dd on,
ul
,
'Y
rter
t 11
1 t
L
t
cnQcnders
)SI 19 il
h' the power 01 corrin OIl, tl-e
Suppor 01 1\ nuL :lOal i' .
.. he 11 JI uct l' e mv "f thl'"
ConCradldlol1!1 of n I: C, p,- ad T" _ If' presl.... "f
the transition pCI od ho 1 (," 91 C i t, numb
r onto u m
In til s pcr'od, t 1 S. tv, S 1(" al' n . ac ng, .t
dar no" t I lr phI or tiL :tal e onomy old,
in p tir'Jlal It .f"es no t t 111 dql ic Illhl! C hd i m st..!
cxist I .. llry "r. 5. uqgle lI-_nst L Ism. IS why
,
Lenin pointed out that the period transition from capital-
ism to socialism "has to be a period of .between
moribund capitalism and nas
7
ent communism-or. In other
words. between capitali.sm whl.ch has been defeated but not
destroyed and communIsm whIch has been born but is still
very feeble".t . .
The contradiction between SOCialism and capitalism is
the fundamental contradiction of the transition period. The
question of who will beat whom is settled in the COurse
of bitter class struggle. The outcome of the struggle
depends on who succeeds in taking the peasantry along
with them.
The correct policy of the Communist and Workers' Par-
ties. that of a stable economic and political alliance between
working class and peasantry. enables the working class to
get the working peasantry behind its leadership. This decides
the outcome of the struggle in favour of socialism.
There are also other contradictions in the transition period.
In a number of countries. for example. there is that between
the advanced political system and the technical and economic
backwardness. This contradiction existed in the U.S.S.R. in
that period. In one degree or another it is characteristic of
the majority of the People's Democracies. There is. in addi-
tion. the contradiction between large-scale. unified socialist
industry and small. scattered. privately-owned peasant econ-
omy.
All these contradictions of the transition period are re-
solved by the economic policy of the socialist state.
3. Economic Policy in the Transition Pe-riod.
The Leninist Plan for Building Socialism
To build socialism the appropriate economic policy. i.e.,
the system of mcasures to be taken by the socialist state in
order to eliminate capitalist elements and ensure the victory
of has to be drawn up and put into effect.
. The alm 10 the transition period is to strengthcn the aI-
between. the working class and the peasantry; to con-
sohdate the dlctator'ihip of the proletariat; to develop the
I Lenin. Selected Works, Vol. 3, p. 309.
21.
country's productive forces; to abolish exploiting 1 d
build socialism. c asses an
economi.c policy of every country taking the socialist
road IS determined by the state of the economy ,n th t .
. d d b h' e ransl-
tion perla an y t e relation of class forces Butt .
. Id f .Isnam
prinCiples .ho good or all countries building socialism
The Sovlct began to pursue this economic 1-
icy in the sP.nng of 1.918. but later. because of the effect!'of
the war intervention. the civil war and the dl vastation
wrought. It was compelled to pass to the policy of
Communism.
In the period of War Communism the Soviet Government
enlisted the services of the rear to help the front. All in-
dustry became nationalised. including small .lnd mp.dium in-
dustry; private trade was prohibited; food surplus requiSI-
tioning was introduced, which meant the peasants' surplus
agricultural produce was taken from them in orde: upply
the army and workers. Because of the diffiCllt c nc.itions
created by civil war and foreign armed intervention, the So-
viet Government introduced food rationing and universal
labour conscription. This set of measures taken bv 1e Govern
ment was known as War Communi"m and w s an leVI-
table. temporary policy calculated to ser"Ur the of
the Soviet state in the difficult conditions of I. vii war ana
foreign military intervention.
As soon as civil war and foreign ended. 1"1e
Soviet Government. in 1921. returned to the economic policy
proclaimed in the spring of 1918. To disbny""lish it from
War Communism it was called the N .. w Economic Policy
(NEP). The change to the New Economic Policy began w'th
food surplus requisitioning being replaced by the 1000 tax
This tax was smaller than the amount demanded lnder requi
sitioning. The peasant could do as he wishcd with eve1yt':ling
that remained after paying the food ax to the 'Stall" He
could freely market his surplus produce.
The introduction of the food tax and permission to engage
in private trading were necessary in order to provide an
economic incentive to the peasantry to improve agricultUle"
in order to rebuild light and heavy industries. and then.
having accumulated the necessary strength and resources, to
pass on to a determilled offensive against the survivals of
capitalism in the country.
216
Soviet economic of. the rcri.od worked
out and implemented a.sltu.atlon o.f enCirclement
and the building of soclahsm m one ,mdlvl.dual country. This
left a definite mark on the manner In willch the policy Was
pursued, " '.
The main principles of Soviet economiC polIcy In the tran
sition period are of international importance. However. the
concrete forms and methods of the economic policy of the
transition period differ from country lo country by virtue
of the historical conditions in which they develop. Other so.
cialist countries are carrying out this policy in more favour-
able conditions. Each can use the weallh of experience of
the Soviet Union. its scientific. technical and economic aid,
and the experience and aid of the countries of the socialist
community.
The economic policy of the transition period was the con-
crete expression of the Leninist plan for the building of so-
cialism,
Lenin worked out a scientific plan for building socialism
in the U.S.S.R., which envisaged the elimination of the coun-
try's technical and economic backwardness; socialist indus-
trialisation; socialist transformation of agriculture and
the cultural revolution.
One of the most important components
Socialist of the Leninist plan for building social
industrialisation ism is socialist industrialisation.
Socialism can only be built on the
basis of large-scale machine production in all branches of
economy. "A large-scale machine industry that is capable
of .reorganising agriculture," wrote Lenin, "is the only ma-
terIal basis that is possible for socialism."1
. But the majority of the countries taking the road to social
could not hope to inherit such a highly developed rna-
technical basis from capitalism. During its existence
has been able to bring about the industrialisa'
bon of only a few countries inhabited by no more than about
15 per. cent of the .world's population. So for the majority of
cou.ntn:s the bUilding of socialism, industriali-
sabon IS a Vital necessity.
I Lonin. Selec'ed Works. Vol. ,3, p. 675.
Soc alist indu tr 'Is_t on involves thf' dcve:!opme,t of
1<..rJC lIe indli. y, rimartlV.1 avy !ndt.: try, c:J.pble !
enl.ur 19 the r dlc.:'.l re .In tru(.;hon f I 1a: nal to un my,
nclud:,1g It re, cn th .. b SIS ?f ad an ._ t h
n

1'1(' k .. i hr.k 11': = ... Ial 51 lalisatiC", is p. o. ty ae
0: thl. 1cavy In u:..tril p:'ld n the tr. n of
produl.. on ;-'If 11, .' m _1im and eq 1 y;nnl buildi.J
mater als. 01 peclal ImpOftdn." "Ir indt.sl Ii at.:ln is the
cleatlon f;1 n -tern 1:g indu try
In the proce s or ocial'st in 1 trial' . th r. _ 1
baSIS is built for th .. development f t?te ... -d c' r tivc
entcrpJiscs in indu t y md aq'll ItItu .. In .I na +1('''11 1lve
these the technical c wpmcm lCy IU'" o. i ") v. n
thcir final 0'" clpital" md nat ... ..:..nm ii!y .).
duction.
SOciil] t
U.S.S.R.
ldustr,_'1 _ }n w : of v hoi Im){' tl.. t}!e
Sod;:dist 14 1. t salon 1 v t.., tt._ f,lfl -t c 'I
the nai 1 t<' "', 0 b L ding sodali the ,r;' _0.
tion of the Cd& "'J 51 tor, t. s( a. t ". "n f
agricu'tul the eIL.",.lal on c. ,o'mtry 5 lrl 1 an_
economic 3.4:1;\ llrdm.
Tlte 1)( lie y 0 s I) .. L..-'t:,,, ia1 sa , \OJ 5 ! In L
the U.S.S.R. iJ1 ! oJ"" , :it t 'e" grt: t _ (
munisl P,-,ty. Th 5 Congle: affi d L .. tJ t.
1
was to ,(lu ;tr _ 51" _.... try 1 t! e Su t t S' I,; d ti. .. _
The 'H>::d foT' 11 was d:dal"d, -rSo y t f ;a: the
Soviel Union W A. tt: 1rically :iru . '1 I-.al ..... :il
com1 ned tl l' h qh1v c.. tali t cJl..-tr_ It \\.' S
a country oj mall pea ml . where;!.n . n(..o IC b ) m'" .!
suitable hr 11 italic n lar fo. social" m" S $:. 'I p St
Se('onl 'y t'le, 01 n v y as 1:t 'ed by capi _!. t .. e tnv'
k t L C' ,ate
ing to destroy, or L.. lea h. \\ e en,. . . VI ;...
All th s called 1igr. d soclahst Iru .... lali ,:-tl('ln.
Thai would e ie' w s d. termined,v . Ie acvant
agf' oj the ada!: t economic ."11 md by .1e pefk fe;!.
tures 01 1f" oc t n l. od of ID_J. tr ali 11' on. .
BeClusc SL __ .ll towner r. p of the mp'lns of. __
rre om nal :1, it w_ l.J... 11...
1
" to bqin - ... e
country by df"v ..
1
pmg 11..1VV notl.grt
as \YeS .lsuallv e l Sf' In the
soc; _. st econom.l. t W ... 3 to mo I'se
"
internal resources and direct them first and foremost .
. . d Into
large-scale machine In ust
7
y ..
The funds required to mdustnahsc the U.S.S.R. consisted
chiefly of the from nationalised industry. agricul_
ture, home and foreign trade and the banks. All these sour
of internal thousands of millions
rubles. so that It was possIble to Invest large capital in in
dustry and. particularly. heavy industry, -
The years of the pre-war plans (1929-41) saw the
building of new branches of Industry-tractor, automobile
chemical. machine tools, aviation, etc. Thousands of
were built and put into commission. The new enterprises
began to play the principal role and accounted for the greater
part of industrial production.
The successful fulfilment of the industrialisation programme
meant that in the first two five-year periods (1929-37) the
U.s.S.R .. from being a backward. primarily agricultural Coun-
try. a mighty industrial power, achieved complete
economIC mdependence from the capitalist countries and
developed its defence potential. The ratio of large-scale
lOdustry to the country's gross industrial output increased
from 42.1 per cent in 1913 to 77.4 per cent in 1937. By the
end of the Five-Year Plan (1937) the U.S.S.R. occupied
first place III Europe and second in the world for volume of
industrial production.
The successful industrialisation of the U.S.S.R. eliminated
contradiction between the most advanced political system
world and the outdated technical and economic basis
lOheflted from tsarist Russia.
"The industrialisation of the U.S.S.R.," states the Pro-
gramme the c.P.S.U., "was a great exploit performed by
the workmg class and the people as a whole, for they spared
no effort or means, and conSCiously made sacrifices to lift the
country out of its backward state."!

!ndustrialisation is of no less importance for the

at er soclaltst countries.
Socialist countries a b' . d " .
bl . . re emg m ustrlahsed In more favour-
a e conditions than those which prevailed in the U.S.S.R.
The developed countries among them rely on the all-
fOun of the Soviet Union and the more industrial-
t Th6 Road to Comnumi1.rn. p. 4.58.
ly developed ones, and this facilitates and accelerates th .
industrial development. elr
of the first measures of the prole-
government in the countries tak-
Ing the roa.d to socialism is agrarian
. reform earned out by confiscating the
land of the explOiters and transferring it to the working
peasants.
When Lenin drew up the Party's agrarian programme he
foresaw that land reforms could be carried out in different
countries either through nationalisation of all the land or
by making the land the private property of the peasants.
Lenin's forecast has been fully borne out.
Soclaw;t
tran!lformatlon
of agriculture
In the U.S.S.R., immediately following the victory of the
socialist revolution all the land was nationalised. The peasants
were given land for free use in perpetuity, but the state
remained the owner of the land. In the People's Democracies,
the land of the big landowners was confiscated. The greater
part of this was made the private property of the anU.
Only part of the land was nationalised: on this land state
enterprises were organised. . . . .
But neither nationalisation of the land norts dntflbuhon
among the peasants will of itself lead to a rise of 50CI Jist
production relations in the countryside.
After land reform, the predominant form of con
tinues to be small, privately-owned peasant falmmg. But
socialism presupposes socialisation of the means of produ(
tion in agriculture as well as in industry. . .
The need for the transition to large-scale sOClalist pr :lue-
tion in agriculture follows from the fact that socialism
be built on two opposing bases: that of large-scale sociahst
industry and that of scattered, backward, small peasant al:-
ing. These farms yield very little commodity output, for e
productivity of labour on them is extremely low. Small, sp
up. scattered peasant farms are a hindrance the u.se 0
. . d d d gronomlc tcchmques.
agncultural machInery an a vance a . I
In this situation it is impossible to secure a supp Y
of food for the ponulations of growing industnal tNowns:
'1 f 'dstry 01'151
sufficient quanti tie', of raw s or In.: the 'well-being
possible to achieve lOy substantlallOcrcase I
of the pe'lsant;.
Lenin worked out ways and methods for the socialist tr
f
'I b d t' an"
formation 0 agl'lCU turc ase on co-ope!'.:! lVCS.
Lenin showed the difference in principle between co.opc' .
tives under the. ,of the proict.:lriat and
tives under pOllltll1g out .thut .the growth of agri-
cultural co-operatives under proletarIan dIctatorship and with
state ownership of the most important means of production
is equivalent to a growth of socialism. The transition of the
peasants to large-scale co-operative production makes it
possible to equip agriculture with new machinery. At the
same time agricultural cO-<Jpel'ativcs are the easiest, simplest
and most acceptable road to socialism for the peasants. Lenin
said they were a form of building socialism in the countryside
in which "any small peasant" could take part.
Starting out from this, Lenin indicated that the develop-
ment of co-operatives among the peasantry was one of the
most important tasks in building socialism.
Lenin showed the methods to be used to carry out the
socialist transformation of agriculture through the organisa-
tion of co-operatives. He substantiated the principle of
voluntary association, i.e., that socialist forms of economy
must not be forcibly imposed on the peasants, and laid down
that the co-operative movement cannot be decreed into
existence.
. The most important principle of Lenin's co-operative plan
IS that co-operation in agriculture should be introduced
beginning with its simplest forms. The high road
to for the peasant is from consumer, supply-and-
marketmg, and. credit co-operatives to the simplest of pro-
ducer co-operatives, and then on to co-operative enterprises
of the socialist type.
The development of the simplest forms of co-operation in
the of supply, marketing and credit. and the positive
expenence of work in the first collective and state farms give
the peasants a practical demonstration of the advantages of
farming and impart to them the practical
sktll of managlOg collective farms.
h
For CO-?peration il! agriculture to be successfully achieved,
t e class should lead socialist construction in the
countrysIde and the proletarian state give it every possible
support. State assistance can be expressed in many forms:
2M
provision of agricullural machinery, loans of money or seed
to the pcasant5, ct.-.
Lenin's co-operative plan was first put into practice in the
U.s.S.R. The outcome of the immense and
, ' 9 work carried out by the Commulllst Party and the SOVIet
151ll
G crnmcnt was that 111 the second half of 1929 there was
turn among the peasants towards collective farm-
l' The bulk of the peasantry joined collective
mg, hi' , I
Ih 9h collcctivisation, t c most numerous exp oltlng c ass
in country-the kulaks-was. The
"who will beat whom'?" was deCided In favour of SOCialism
in the countryside as well as the to, ...:ns. . . .
Collectivisation gave the Soviet a 50c.la1l5t m
h t branch of the national economy which, beSides bemg the
extensive and vitally was also the most back-
ward, namely, agriculture. Agnculture :0 develo?
h k
'nd of basis as industry-soLlah<;ed, SOCialIst
t e same I .
ownership of the means of productlOn. .
Led by the Communist Party and with t'Pe utmost
and support of the \',.'orking class, the peasantry embarke
, l'
on the road to SOCIa. Ism. .' th USSR was
The basic form of collecti\'e farm!o9 In. e .... _
1
. hr or col1ecllve-fa:-m manage
the agricultural arte, l.e., a .... _.m . basic means of
ment which is based on, .. a easants, but
production and the nal farm .
with each peasant retamm.9, h_s corre::t combina-
The agricultural co-operatn e 1 nd social interests
ticn of the collective farmers persona a. fve forces
and promotes the development of within a
Collectivisation in the U.S.S.R. e 1 ialist agriculture in
few years, to create the most mass
ive
l
soc and supplying the
the world based on advanced techno ogy d't' It made
. . t ut of commo I leS ..
country WIth a much larger ou f b . f the collecttve-farm
way for a sharp rise in the wel - emg 0
peasantry. . ntryside of large-scale
"The introduction in the SOVIet c.P.S.U. points
socialist farming," the Programme o. reelall'ons in the entlle
. . cOtlOl1l1C ' d
"meant a great revoilltIOll we. . t' n for ever delivere
C llechvlsa 10 .
way ollile of the peasantry. 0 d f om class differenba-
the countryside from kulak bon lage'l ::00 of the eternal
" t The rea so Uw
bon, rUIn and paver y.
2'11
peasant question was provided by Lenin's cooperative
plan.'" h 1 .
The peasants of the at er socia 1St countries are now step-
ping firmly along the p:ath laid. d?wn by the peas-
antry of the Soviet Umon. of agri-
culture is already completed In the maJonty of the socialist
countries.
The experience of the and socialist
countries shows that the basIc prInciples of Lemn s co-opera-
tive plan retain their force today for every country taking
the road to socialism.
At the same time agricultural co-operation may have its
own specific features in the various socialist countries.
Thus, in the course of the socialist transformation of
agriculture in the countries of the socialist community where
the land was distributed as private property among the
peasants. there arose transitional forms of cooperative farms
which the U.S.S.R. has not known. In these farms the land
remained the property of the peasant cooperators and income
was distributed not only on the basis of work performed but
according to the amount and quality of the land put at the
disposal of the cooperative.
By creatively applying the basic propositions of Lenin's
co-operative plan to suit the concrete conditions in their own
countries. the Communist and Workers' Parties are them-
selves contributing to Marxist-Leninist theory and enriching
it by their experience of building socialism.
Improvements in the education of
Cultural revolution working people in socialist countries
follow from the very nature of social-
ism. The working people take over the reins of power for
the express purpose of being able to share in both material
and spiritual values.
At the same time the actual requirements of socialist pro-
duction raise the need for the utmost improvement in the
and edu:ational standard of working people. For
to develop. highly skilled. educated.
workers arc needed in every branch of the
naltona! economy. And so, however we approach this que
s
-
I Tb Road to Communism, p. 458.
tion. the conclusion is the same: once the working people
have assumed power,. they must concern themselves with
education and orgamse the training of the builders of
socialism.
The socialist state inherited ignorance and illiteracy from
the capitalist system, and even more so from the feudal
system. Because of this. the proletariat from the outset had
to put through strong, revolutionary measures to counteract
the illiteracy and lack of culture of the broad masses of
working people throughout the country. That is why Lenin
used the phrase "cultural revolution" to describe the abolition
of illiteracy, introduction of universal education and imple-
mentation of othel' measures to spread culture and enlighten-
ment.
A cultural revolution should give the broad working
masses all the blessings of culture which in the 1-'1st were
the monopoly of the exploiting classe.:..
In a short period of history the illiteracy of the adult
population was eliminated in the U.S.S.R. and d ne,,:, sv't"m
of popular education introduced. General education was
made available in the form of primary, !even*ye11 and
secondary schools. Schools gave free education m the n: live
tongue. . ..
Far-reaching measures were also in thp l1e a
of higher education and secondary speclahsed educat n,
which within a short space of time have produced
contingents of the new, Soviet intelligentsia .. An extensIve
system of scientific institutions has been estabhshcd, md the
professional and technological standard of knowledge among
the working class has risen considerably. Muc'1 progre;s nas
made in the deve.lopmcnt of the :J.dio and
VISIon, film industry. hterature and the aus, and cult
work in general among the population. 1 t f
The cultural revolution led the working PC()P C ou tit
spiritual slavery and ignorance and put them lD contact WI
the wealth of culture accumulated by mankind. . h b n
"The country, the bulk of W'lose a.. ce'l
illiterate. made breath-taking progress n SCIence and r...ll_ure,
stdtes the Prognmme 01 the C p.s.U,
4. The Victory of Socialism
The result of the revolutionary tra .
Abolition f . . 1 ns
the multiplicity ormatlOns In t lC econo.my, the political
orr . cclors system and culture achieved durin9 th
o economiC S . . . d . e
tranSItIon pc rIO IS that the new
socialist society is created and socialism is victorious. '
The victory of socialism means that private ownership has
been replaced by social ownership of the means of production.
The place of multiform economy has been taken by the social
ist sector, which has acquired undivided rule and has assumed
the form of mechanised socialist enterprises in town and
countryside. In this process the exploiting classes are elimi-
nated, exploitation of man by man is ended.
The victory of socialism means that the country's entire
economic life is determined and directed by state planning.
Competition. anarchy of production and crises arc abolished
for all time. Social production is organised for the purpose of
more fully satisfying the growing material and cultural needs
of the people.
Under sodalism revenue is distributed among: the people
according to the quantity and quality of their work: the
principle established is: "From each according to his ability,
to each according to his work." This guarantees that the
members of socialist society will be interesteJ in the re ults
of their labour, ensures that personal and social arc
combined in the best possible way and creates a powerful
stimulus for increasing labour productivity and improving
the economic position and well-being of th(; people
The working people have that they arc ':lot
working or exploiters but for themselves gives rise to
cnt lusiasm for labour. invention, initiative and socialist
emulation .
. With the completion in 193337 of the socia
1
ist trmsform
a
'
the U.S.S.R .. the building of sor.ialist socicty was in
mam completed.
viet-orv of -.ocialism led to radical changes in the
dU'U 01 soo :"J. '"!:'1e wor];:. 19 class ceased to be the cla!:i
f cprlveu d mf>'lns f p:-.:.duction. It became the _l
Z

d . i XL !t. owning, jointly with the whole
f ...... '" .. -b _t... mCins of pl ductioJ"'l. It becan e the
c. __ t _S&. th_ 1t_dmg {orce..n odal -:l elopm '!It.
.,
e easantry, from being a class of small, scattered pro-
Th P became a completely new class, freed from exploita-
close alliance with the working class, the collective-
tlOn. "easantry takes an active part in the management of
farm state. The fact that the two forms of ownership
the so dalist has brought the working class and peasantry
their alliance and made their friend-
ship indestructible.
A neW intelligentsia has grown up, born of people
loyal to socialism. It has the of makmg
eative use of its knowledge 10 the 10terests of the people.
intelligentsia together with the working class and peas-
antry has actively joined in the management of the country's
affairs.
The victory of socialism abolished political and economic
inequality between nations, the former antithesis between
town and country and between physical and mental work.
Because workers, peasants and intelligentsia basically share
the same interests, there now exists a socio-political and
ideological unity of the Soviet people, friendship among
peoples, Soviet patriotism.
The profound changes that took place in the economIc.;,
political and social spheres following the victory of socIal'srn
in the Soviet Union were legislatively embodied in elC Cons1
tulion of the U.S.S.R. adopted in 1936.
The entire life of socialist society is built on the broadest
democracy. Through Soviets, trade unions and other mass
organisations the working people actively join in the m?nage
c
ment of state affairs. in solving problems of economIC and
cultural construction. Socialist society guarantees true freedom
of the individual.
the Soviet people. the first in the wo:ld to ?laze
traIl to socialism, fell the historic role of pIoneer In laymg
down the new path of social development. .
The victory of socialism in the U.S.S.R. had an Immense
international impact. It struck a devastating a.t the
world capitalist system. In a short period of. history It de-
monstrated its superiority over capitalism. ThIS
the faith of working people in the powers of .workln
g
class and the ultimate world-wide victory of soclahsm.
Today socialism is winning onc brilliant vi:tor
y
after
another in the countries of the socialist COIIlmuOlty

2 '
The of sOcialist
industrIalIsation and socIalIst co operation 10 agn culture h
resulted in the majority of the countries that embarked as
socialist development eliminating the multi plicity of sect on
of economy and making socialist production relations
dominant.
This means that these . countries completed or are
about to complete the perIod of transltion from capitali sm to
socialism.
The victory of the socialist revolutions in the People's
Democracies means that socialism has gone beyond the fron-
tiers of one country-the Soviet Union- and become a world
system.
The victory of socialism in the U.S.S.R. was complete.
Elimination
of tbe possibility
of capitalist
restoration in the
socialist countries
This means that socialist production
relations in the country were
established throughout the national
economy and that capitali st relations
and the exploiting classes were abol- ....
ished. The result of the complete
victory of socialism was the establishment of the undivided
rule of the new society in the country.
But the victory of socialism in the U.S.S.R. was not final.
The Soviet Union was the only country building sociali sm;
it was in capitalist encirclement. The imperialists were strong.
The danger remained, therefore, that the forces of interna-
tional reaction might restore the bourgeoi s-landlord system.
After the Second World War the world situation changed.
A large number of other countries took the road to socialism.
The Soviet Union, by completing the building of socialism,
has entered the period of full-scale communist construction.
Capitalist encirclement no longer exists.
The increased economic and political might of the U.5.s.R ..
the formation and consolidation of the world socialist system
have made any elimination of the socialist gains out of the
question. The victory of socialism in the U.S.s.R. is noW
final. !':lot only in the Soviet Union, but in the other socialist
c.ountnes, the socio-economic possibilities of capitalist restora-
bon are now abolished.
"The combined forces of the socialist camp are a sure
for each socialist country against encroachments by
Impenahst reaction:' states the Programme of the C.P.S.U.
226
"The of the .Gocialist countries in a single camp,
its increaSing uDlty and steadily growing strength ensurelJ;
thc complete victory of socialism and communism within the
framework of the system as a whole."
Thc victorics of socialism arc of great international im-
portance. Working pcople arc becoming convinced that the
ncw society is irrevocably coming to take the place of capital-
ism and that it has enormous advantages over the ola world.
Only in socialist society do people find true freedom and
happiness. Only socialism frees man from oppreSSion, gives
him the broadest rights and confidence in the f!! .....nc
That is why the magnificent VIctories of oc lhsm inspire
the working people of the capitalist countries to stI"Iggle f, r
their rights and liberties and for emancipation from Clpllilist

oppression.
The complete building of SUl,;ld'ism in the U.S.S.R. ana the
successful building of socialism in the People's Dt.Docracirs
are clear evidence of the triumpb of the IIf x. tL 'linist
doctrine which lights the way for the work ng 'eople t .....
emancipation from capitalist slavery and the transition to
communism, the new social formatioI"
t Tile Road (0 Commuzrism. p.
Chapter X
PRODUCTIVE FORCES AND PRODUCTION
RELATIONS IN SOCIALIST SOCIETY
The preceding chapter dealt with the victory of socialism
and its conversion into a world system. In examining the
economic laws and categories of socialism it is first necessary
to give a general description of the productive forces and
production relations of socialist society.
1. The Productive Forces
The productive forces in socialist society are represented
by large-scale machine production in all branches of the
national economy. based on the highest technology and the
labour of workers freed from exploitation.
Large-scale machine production under socialism develops
on. planned lines and serves to improve the material well-
belDg and cultural level of all working people. That is what
fundamentally distinguishes socialist from capitalist pro-
duction.
. A feature of large-scale machine produc-
tion. In SOCIalIst society is its high technical level and the
rapId rate and uninterrupted nature of technological progress.
Technical progress in the national
Technical prol1'ess means steady development
. of SClenCe and technique and improve-
ments lD the cultural technical standards of working
people, the best orgarusahon of production and, on their
228
basis, every possible increase in the productivity of social
labour.
Under socialism technical progress in the different branches
of production is continuous and on planned lines, use
being made of the latest achievements of science and the
creative efforts of all working people. Technical progress
is a powerful mcans of increasing the social wealth with the
object of steadily raising the people's living standard. It
presents fresh opportunities for improving the quality and
extending the assortment of products, thus paving the way
for a higher productivity of social labour and satisfying the
mounting consumer demand.
The main trends of technical progress under socialism are:
improvement of the instruments of production and
logical processes; mechanisation and automation of labour
processes; electrification of the national economy; wide use
of chemistry in production; use of atomic energy for peaceful
purposes. These trends are closely linked and interdepcndent.
Mechanisation is the precondition for automation.
tion and automation develop on the basis of the electrification
of industry and farming. But electrification, too. is inconc iv'
able without all-round mechanisation and au')m tlon In t
the same way, chemicalisation of indust v lOd fz: -ntng I!
inconceivable without mechanisation, automation clectri
fication. But. on the other hand, the development of me:hant-
sation. automation and electrification hinges to 1 1 gr
on chemicalisation.
The basis of technical progress is improvement in the
instruments of production, which consists in the invention
and practical use in production of more economical, more
productive machines. It is inseparably linked with improve-
ment in technology-extraction methods. processing.:1nd
utilisation of raw and other materials; introduction of new
types of raw and other materials; use of high and ultra-high
velocities. power, and temperatures, as well :1S other means
of intenSifying production processes. . .
Modernisation of equipment is of great economIC sIg-
nificance in technical progress. Modernisation is process
of renewing and improving equipment already .ID us: by
replacing outdatp.d unil '. parts, etc. The economic effiCIency
of modernisation is that it increases the volume of ]1rod':1
c

tion and npidly improves the work of enterprlJes With
129
tant source of _ IJI ...........
the most up to d ...
production pNCel.11.
Industry bave
and new
In 1965 the output of pow ..
520.000 million kwh, u against 1.900
accelerate the developmOllt of
now Is to give priority to the of
stations using cheap coals. gas aDd
taneoualy work will continue on the buildinG
power stations.
A powerful factor IJI the
national economy i. cb'DdC9U.,.".,
ment of chemical methoda of
branches of the national eCClao
and chemical
branches of ,.
For its effect ...
Comblmtlon of prociactiOIl _ the
single enormoul enterprise of yarious
which are linked together
Magnitogonk Metallurgical
the whole cycle of iron and
and steeilhops and iDdIl'bial eaflp;ps'"
production of coke-oven products, ,eD.dud ..
bine is one organic technological prod"" 'bm u .... ,
Another example of combination are !be 011
combines for the comprehensive chemjcaJ
which produce petrol and lubricants.
spirit. acetic acid, acetone. pl.utics ....
products. Production cowbina ae alto
timber and paper. food. aad
A distinguishing feature of !be
basis of socialism is broad, pb= N
operation. SpeciaIisntion is the procell
which have a characteristicaJIJ-
process, and specially qualified
out one partiC'IIlar kind of
finished products.
Specialisation is bued OIl
enterprises. In the
greater opportuniti ..
ment. staodardisation. I11III
basis of colDptehensJve
Specialisation ..,SUI ... "'""'" riae
Specialised
another.
planned
prises that
A
wh.., the
secondary or higher education (DOt
\-"-- reached 9.956.000 in 1962 .. against
The development of large-vale
augmented the numerical composition of
In 1928 the total number of workers """
the U.S.S.R. was 10.8 million. but by 1N5
risen to 73 million.
The socialist system is responsible for the
creative activity of the people. Under sodaUIID
works has an . in raising labour
steady and of the
he works for .
2. Relations of
In socialist working peopl e are not opposed to th
means of productIon, but own them. !herefore. under sOcial:
ism the working people have an Interest in the full t
strengthening and of sociali sed ownership. es
How is socialised owner shIp of the means of production to
be described? It implies first and foremost that the means
of production belong to the people who work and are conse-
quently no longer capital, a means of exploitation.
Socialised, socialist ownership of the means of production
determines the character of the r espective relations among
people in production, exchange and distributi on. Typical of
these relations are comradely co-opera tion and socialist mutual
assistance among people freed from exploitation, and the
distribution of products to the advantage of the working
people on the principle: "To each according to his work."
Indeed, when the means of production belong to the
working people, when every individual member of society
and society as a whole are alike interested in increasing
production, people's relations are friendly. In the effort to
produce more goods for consumption, people do all they
can to help one another achieve greater success. The com-
munity of interests of the working class, peasantry and
intelligentsia, in fact of all members of sociali st society, who
are free from exploitation, is the basis of comradely co-
operation and socialist mutual assistance. These relations
develop inside the enterprises, between the different enter-
prises, between state enterprises and collective farms, between
the working class and peasantry, and so on. Relations of
comradely co-operation and mutual assistance and creative
activity offer boundless opportunities for developing the
productive forces.
Socialism removes the antagonistic contradiction between
the social character of production and the private capitalist
form of appropriating the results of production. Here the
social appropriation of the products of labour accords with
the social character of production. Because of this, socialist
of production offer the great scope for rapid,
unmterrupted development of the productive forces.
As these socialist relations of production gradu-
ally change lmprove, without remaining passive in respect
of the productive forces, for as they improve they open up
boundless Scope for the development of the productive forces,
236
Two forms or
sociali st property
Socialist property, as shown above
arises during the period of
from capitalism to socialism. After
winning political power, the working
class encounters, on the one hand, large-scale capitalist
property which it nationalises and turns over to the socialist
state (this is the origin of state socialist property). and, on
the other hand, the small private property of the peasants,
handicraftsmen and artisans based on personal labour. These
small and middle commodity producers associate voluntarily
in producer co-operatives and their property becomes social-
ised on co-operative principles. This is the origin of collective-
farm and co-operative property.
It follows that there are two forms of social property under
socialism: 1) state (public) property, i.e., the property of the
whole people, and 2) collective-farm and co-operative prop-
erty, i.e., that of the collective farms and co-operative asso-
ciations. The presence of these two forms of socialist property
determines the existence of two forms of socialist enterprises-
state and collective-farm and co-operative enterprises, the
social nature of which is identical. The predominant and
leading form of property in all socialist countries is state
(public) property.
State (public) property in the U.S.s.R. consists of the land,
mineral wealth. waters, forests, factories, mines, water and
air transport, banks, communications, state farms, repair and
service stations, state-owned trade and purchasing enterprises,
communal amenities, aggregate living accommodation in town
and workers' housing estates, and the output from state
enterprises.
Belonging to the whole people in the U. S.S.R: are .more
than 200,000 state indush'ial enterprises, the entire rall",:,ay
system (the total length of the permanent way in 1962 bemg
121,100 km), air tJ:ansport and shipping, about 8,600 state
farms, etc. . ' S R
Collective-farm and co-operatwe property tn the U.S ... '
includes the possessions of the 40,500 collecti ve ?9
n
-
cultural machinery (tractors, combi nes, etc.)' farm
commonly-owned d raught. meat and dairy cattle,
. 1 llectlve-farm
enterpri ses for processing r aw maten a s, co ..
. . f ltural amerubes
power stations, an extenSIVe system 0 eu
237
and communal serv.ices, and t?e output from collective fanns
and other co-operatIve enterprIses,
The commonly-owned collective-farm property stead'i
grows, In 1962. for ,instance, the assets
the collective farms lDcreased marc than 60 tImes OVer COm-
pared with 1932.
The co-operative form of property exists not only in
agriculture but also in trade in the .shape of consumer co-
operatives. whose members are chIefly from the rural
population.
These are the main types of co-operative association in
the U.S.S.R. The same types have also developed in the other
socialist countries,
Economically and socially, statc (public) property and
collective-farm and co-operative property are of a similar
type. First, both are based on socialised. socialist means of
production and collective work; secondly, both exclude
exploitation of man by man; thirdly, both their
economy on planned lines, for the purpose of ralSIng the
well-being of the working people; and fourthly, both apply
the socialist principle of "to each according to his work"
But because these two forms of property are of the same
type, it does not mean that there is no difference between
them. The principal difference between state property and
co-operative and collective-farm property is the degree, of
socialisation of the means of production. In state enterprIses
all the means of production are socialised on the scale of the
whole of society (they are the possession of the whole people),
but in co-operative and collective-farm enterprises the means
of production are the property of separate groups of people
(the farm or co-operative association). The products from
state enterprises belong to the whole people. The
from collective farming are the property of the particular
farm.
The different degree of socialisation of production
rise to forms of payment1 to the people working In
produt::t,lOn, and to different forms of management. In state
enterpnses socialist state administers through its repre'
sentahves-dlrectors, who are appointed and dismissed by the
organs of state. All the affairs of the co-operatives and
See Chapter XlV.
238
collective farms are administered by the general meeting of
members and the board of management elected by the
members, with its own chairman,
As the productive forces develop, collectivefarm production
becomes increasingly socialised and collective-farm and co-
operative property gradually reaches the level of national
property. As the building of communism proceeds. these
processes will Ie,ad to collective-farm and
erty merging WIth state property and becomIng a SIngle
form of communist property I owned by the whole of the
people, , ,
Social property under SOCialIsm extends to the means of
prodUction and their output. Part of
Personal property this output, consisting of consumer
goods. is set aside for distribution
among wOl'king people according to the amount and quality
of the work contributed, and becomes the personal proper y
of individuals,
Personal properly under socialism means ownerShl? by
individuals of those products of labour which are made r
personal consumption. In the U.S.S,R. property also
includes earned income and personal savmgs, a share of the
aggregate living accommodation. domest _c and household
goods, items for personal use and convemence. etc .
A special form of personal property under SOCial m IS the
collective farmer's household. This consists of rus e fi! m
buildings, domestic animals and poultry llnd al
implements for cultivating the holding. The pe ;onal,holdIng
is worked by the collective farmer and his famlly inf
is of a subsidiary nature, As collectivc-fann e<:on,om,Y 1eve1op'3.
this kind of property will gradually lose its slgmficance
Work in social production is the source of personal,prop-
erty in socialist society. Under socialism the, pre,dommance
of socialist ownership of the means of produc.tion IS the fiz:"
basis on which the requirements of the workIng people Will
be increasingly satisfied. and their grow
larger. This is guaranteed by the conSistent apphcatlon of the
principle of personal mater;al through
work according to quantity ':Ind qualIty But there IS a hmlt
to the growth 01 personal propc ty.
---
I See Cru.ptcr xx, rar. 1
. )
Under -pe.rsonal cannot be utilised
the detriment of rnrllvldual CItIzens or the state as a h Ito
Sociali st ownership of the me: 0 c.
d
. .. nsof
Economic Jaws pro uchon gives fiSC to the folio .
. Wing
eCOllOI1Z1C laws: the basic economic 1a
of socialism, the law of the planned. proportional dcvclo
ment of the national ,the law of .distribution
iog to work done. etc. SocialIst economIC laws express the
essence of socialist relations of production and arc objective
in character. They arise and operate independently of the will
or desire of people. But this does not mean that economic
laws operate by themselves, apart. from the ac:tions of people,
like the laws of nature. EconomIC laws. bemg laws of the
relations of production. cannot operate where there are
neither people nor social production. The objective character
of socialist economic laws means simply that in their actions
people take these laws into account and cannot disregard the
way they operate.
Failure to understand the objective nature of the economic
laws of socialism and to reckon with these laws in economic
affairs brings negative results. Economic laws make them-
selves felt whenever people violate them.
The way socialist economic laws operate differs radically
from the way economic laws operate under capitalism. The
difference is that socialist economic laws do not operate
spontaneously. as with capitalism. but are used by society
consciously and in an organised way. Between capitalist and
socialist economic laws the same difference exists as that
between lightning bursting from a cloud and electricity
handled by man. as Engels put it.
Socialist ownership unites the actions of people in a unified
economy with unified leadership. Spontaneous development
of society is out of the question under socialism. It becomes
possible and necessary to make conscious use of socialist
ec.onomic laws on the scale of society as a whole. For
without centralisation in the handling of the chief economiC
development of the economy would be
Without unified state leadership the plans of
mdlVldual enterprises would lose all meaning. as each of
them w?uld be accommodating itself to spontaneous market
fluctuatlons. Spontaneity and socialism are incompatible
and mutually exclusive.
140

Socialist economic 1aws arise and operate in definite con-
ditions; the.rcfore .. when these conditions change. the economic
laws are either given further scope in which to operate or
their of operation shrinks and they fade away.
For mstance, the rol.e of the law of planned. proportional
deve10pment of. t.he economy becomes more important
with the to smgle communist ownership. The
sphere of of the 1aw of distribution according to
work done wl1l become more and more curtailed as the transi
tion to communism proceeds. and in fully developed com
munist society this law will die out altogether. since distribu
tion of material wealth will then be according to need.
Scientific knowledge of the economic 1aws of socialism IS
essential in order to use them to work out and put into dfect
the policy of the Communist Party and the social st statl.;.
the aim being the building of c )mmunism.
3. The Basic Economic Law of Socialism
Under socialism. the age-old I:lopes of worlUng 10.
an improvement in their position are at last realised. Soc, tj,t
production is organised to satisfy the and itu:
needs of all members of society. This is Its c: Ie.... aim. its
whole purpose. Only for the purpose of raising the tandatu
of living of the population. of more fully saL !Y1l1q I'le
growing requirements of ;!.lJ people. can t production
develop successfully.
As the Programme of the C.p.s.U. p.)ints C'ut. the aim .of
socialism is the ever fuller satisfaction of the growing I]l .. tenal
and cultural requirements of the peoprc r;ls was 81
c
o
indicated by the founders of scientific communism. .
Describing socialist society, Marx and Engels ::lat
if in capitalist society "money-making" is the every
type of business and the acquisition by the capltahstg. of
surplus value is the motive and ultimate result?( prociuct10n.
under socialism production is dcvelvped to the :lceds
of society itsell of all its members. "With thIS recogml:
on
.
al last. of the rcal nature of the productive fo:rces ?f today:
wrote Engels "the soci<1J ana.rchy of productIOn gives p1ale
, . dfi'eplan
to a social rcgu ahon of productl.:ln upon a c OJ, '
, ..
according to the needs of the community d
vidual." 1 an of each indi_
Lenin pointed out that capitalist society w Id
by socialist in order to ensure the pro ou . be replaced
round development of all its members and all.
stressed that. only socialism
of subordInatmg socIal production and the d" t
products, out of scientific considerations to n
t
uhon of
df
' , merestsd
nee 5 0 people, m order to make life for all wh an
easy, prosperous and happy as possible. 0 work as
Lenin said that whereas formerly the genius of h
b d
. d man ad
een use to create In or er to gIve some people all the
benefits of technology and culture, while depriving th
of what was most essential-enlightenment and deVe1opom ert
now, under. socialism, all the marvels of technology
all the achIevements of culture will be possessed by the
people as . a whole, and from now on human genius will
never agam be turned to means of coercion and means of
exploitation.
of the needs of all members of society is the
obJechvely determined aim of production under socialism.
No other purpose for production is possible under socialism,
[or whe.re there is socialist society there is no private
of. the means of production and consequently no
economIC baSIS for the exploitation of man by man. All the
mean.s of production and products of labour belong to
workmg people united on the basis of socialist ownership
of the means of production. The economic intcrests of working
people, who own the means of production and the products
of are the chief motive force of production under
The motto of social production is to produce every-
for the sake of man, for the benefit of man. This
card.mal of socialist production is scientifically
m economic law of socialism. Its essence
I 11
at t .e (dIrect object of socialist production is the ever
u er satisact" f h . d
cultural . Ion 0 t e constantly growing matenal an
developmreqUlrements of all people through continued
ent and im '., b d
on the highest t ch provement of SOCIal productIOn ase
enology,
I Lngcis. Anti.Duhrin
g, pp. 38788.
2'2
The basic economic law of socialism expresses the objeci.
of socialist production and ways to its achievement; it
determines the driving force of socialist society and the
radical difference between it and capitalism.
The Marxist-Leninist Party and the socialist state subor-
dinate their work of developing the economy and socialist
culturc to the basic humanitarian aim of achieving ever more
complete satisfaction of the material and cultural of
the people and their all-round development.
On what docs the fulfilment of this task depend? The key
to it lies in continuous development and improvement of
production relying on the highest technology. And this means
that every worker in socialist society should put all he can
into his work, thereby making possible a steady improvement
in the well-being of the people. The workers understand that
continuous development of social production will alone
guarantee improvements in their living standard"
During the development and improvement of social pro'
duction, the material and spiritual preconditIons are 'ated
for communist society.
Conscquently, the basic economic law Of f )\ .. ali m 3 1(
law of the movement and devc1opme,t of 0(, _li<t s(lcipty
towards communism.
All the measures car lrougn by the Malxl. t .... ,j l:Sl
Panles in the socialist countries aim at SeCU
r
"1g a SI <:1'1
improvement in the people's living stand ..l.lds.
Every Soviet citizen is conscious of the of Com
munist Party policy; day by day, Ii'e in thl' 50vi:t Umon
becomes bcttcr and more prosperou,;, Durlg the years
Soviet power the living standard oj the Sovirt :"'Jeople :las
become immeasur.:tbly higher than of 1(> wc"'k ng people
in pre-rcvolutionary Russia.
Compared to 1913, the national income d the U.S.S.R.
increased almost 25 times in 1961, III : w U.s.A. the
increase for the same per od ws 3.6 times. ; 9: 3md
1961 the national ncome: p:. head of population III the
U.S.S.R. increased more 'lan 18 times, :n the U.S.A. and
France (1960) ?' 'nes, in Britan' 1., times. Compared te
pre A.v.Jutionary time 10 the .real of
WOl kers rose 11 no. t j . mt:"'" over an. those of i 1("
m rc th .. l ] t mt: Iolver
".
I
Higher living .1I"e rcncclcd in high,.
power. . I pm'chasing
Public consumption is rising YC':lr after VC'lr 1 1 .
1
bo h 80 ' ' . n 9fil th
popu ahon U9 t 1 per cent more mCilt ilnd 1l1l'-lt " e
90 per cent more butter, 370 per cent mOI'l' milk
products 120 per cent more sug.u' than in 1953. dairy
There wJll be. much greater naUonJ.l prosperity in
future. The reallOcome per head of popul.llion will' . the
th 3 5 t
' 'h 20 mCICa.sc
more an . lmes In t C years (1961-80). In th fi
decade the real incomes of industri al, professional and C
workers will be almost doubled. and those of the 10
t
' 'II' Wpal
ea egorles WI Increase approximately threefold.
As the incomes of, the J?Opula,tion grow the general level
0, consumption rapIdly ri se. The entire popula-
tion will. be able to satisfy its need for high-quality
and vaned and consumer goods-clothing,
footwear, furmture, household articles, goods for cultural
purposes, etc.
In the course of twenty years the housing problem will be
completely solved. The first decade will see the end of the
housing shortage. The net result of the second decade will
be that .every family will have a comfortable apartment
to. the of hygiene and cultural
hvmg. Th1s w1ll requ1re a threefold increase in the total
available housing accommodation in the U.S.S.R.
. will be a further reduction in working hours, pro-
scope for rapidly improving the people's cultural and
techmcal standards and giving more time for leisure. Factory
and office workers already now have a seven-hour working
day, and workers engaged in some branches have a six-hour
day. Bef?re 19?0 a six-hour working day, or 35-hour working
WIll be mtroduced for the bulk of the workers and a
ve-hour or 30-hour week, for people working under-
or 10 enterprises with harmful working conditions.
h wrteen 197? and 1980 the transition will begin to an even
so. er workmg week.
Simultaneously th l' k'
people will b e annua paId holidays of all wor lng
later of on e extended to the minimum of three weeks and
the Ibrthc of 20 years the needS. of
care, etc., will be fuh
u
IC. cfitenng, holiday facilities, medical
With the fulfilm y sabs cd.
ent of the tasks mapped out by the Com-
UJ
,
munist Party to improve the well-being of the people, the
U.S.S.R, will reach a highe ;tandard of living than any of
the c1pitalist countries,
Ij, 'l'he Economic Role of the Socialist State
Development of productive forces and improvement in
relation5 of production do not come about of themselves,
spontaneously, The state, guided by the Marxist-Leninist
Parly, bas the decisive role in organising production, distribu-
tion and exchange at all stages of socialist construction.
This role of the state in the economic life of the country is
due to the fact that it controls all the commanding heights
in the national economy. The greater part of the means of
production in the socialist countries (90 per cent in the
U.S.S.R.) is the property of the people as a whole and is
controlled by the state and its representattves, centrally md
locally, The remaining part belongs to co-operative entcrnTise
and in one form or another is also centrally controlle<i ane!
planned.
The socialist state is the first worke state in the history
of mankind. It reflects the interests of 1:le ..... I)1Jle, of
who create material values. who by their cons :uctive work
safeguard the existence and development of iociety, The
socialist state performs all its function! with th_ support
and active participation of the broad mac:'_ of th_ workinJ
people.
In its daily practice the socialist state is quided tv the
./' Marxist-Leninist theory of the laws of soclai
The economic policy of the socialist state rcsts on
analysis of the. objective slevelopment of S::lClety,
which not only ensures the correct estimation of P3.!'-t result..;
but determines future trends of development.
Economic growth and organisation, cultural work. ,a,nd
public education make up the main content of the actiVIties
carried on by the socialist state. . .
Starting out from the economic laws of socIahsm, the
socialist state maps out the plans for the development of
economy and culture, and puts them into practice by mobl-
lising all working people for their fulfilm.ent. The govemmen:
determines the scale. speed 3nd proportIons of the develop
ec ,
---
The rise 01 the world
Communist an
the task 01
those of a community socialist countries.
the scope 01 the loreign policies 01 the
broadened. From the international character of
of the proletariat there has grown up an entirelJ
unknown function of the socialist state-that of
countries in socialist construction.
In the period of full-scale communist
economic role of the state increases.
the instrument lor the consolidation and
of socialism, the instrument for
Chap t e T Xl
THE PLANNED DEVELOPMENT
OF THE NATIONAL ECONOMY UNDER SOCIALISM
1. The Law of the Planned, Proportional
Development of the National Economy

Need for planned Sociali st economy is made up of dl'f.
development of f
socialist production erent branches of production taking in
. a large number of industrial, agri-
:ultural, .commercIaL transport and other enterprises, which
In a varIety of ways are connected with production. The
whole aggregate. of closely connected enterprises, branches
and als? areas forms one unified, comprehensive
orgamsm-the socialist system of economy, which
together. both state and co-operative enterprises.
. .s vast sO':lal economy develops on planned lines. Plan-
mng In the national economy, according to Lenin's definition
means proportional'ty , , d '
( b I 1 maIn tame constantly and consciously
Tah a foce between the various links in the national economy).
, e h
P
esta?lishment of proportions in social production
IS m In SOCialism alone.
CapItalist econo k
through f . my, as we now, develops spontaneously,
or Itl.on anarchy; there we find no planning
C ' l'
uS
y mamtamed proportionality
aplta Ists run their b . . d
solely by th . . . usmesses at their own risk, guide
They expand e:
h
and the market situation.
pens to be On et:ro uetion of .commodities whose price hap-
maximum profits. e upgrade with the object of gaining the
But none of them eVer k .
how much (If a gi nows with any degree of accuracy
ven commodity 'II th'
1$ rea y required. For IS
148
reason, commodities are produced in such amounts that in
the end market can no longer absorb them. The !iurplus
commodIties arc not bought by anybody, prices of them fall
and production shrinks. Capital is then directed to
another commodity, and 80 forth.
The absence of a unified plan means that proportion'" in
capitalist economy arc arrived at spontaneously and are con-
tinually being upset. This does not mean. of course, that
there is no co-ordination at all between the diff:erent branches
and enterprises. The necessary proportions in production
break through countless of propo ," onality and
criscs of over-production.
It follows. therefore, that private ownership of the -nean.
of production. by isolating the producers of cc-:nmoditie- )re
eludes any possibility of planning the economy es a whole
That is why, under capitalism, there can neve" be any coo.
sciously maintained proportionality in the eI,;'1omy.
The situation is quite different under socialism. 'I''1e csult
of socialisation of production and the institution of " .. 1. t
ownership is that society becomes, as Lenin said. 'on;:: ringle
office, one single factory". Social o ... .-nership drl" '1Wly,-'th
anarchy of production and spontane:ty, and ..'In IS
developed in the intel ests "f the people' :1 whole. Thi beinq
so. the national economy eln only n planned lines.
Through their own state. war "15 unde sC' ial:sm TTl '::> 1
prior calculation of all the cor so etv :md of its p_"l.
ductive resources and direct proouchon '1 ttl'" inte sts of
the people. In conformity with set aIm. society al stal'>-
lishes the necessary proportiona'ity whICn then con 1n1 y
and consciously maintain:
But people cannot arbitrar'Y decide on my 11' _ of
portions: they have to reckon with detinite
tions and to build their econ.1mic policy WIth 1C e condl
tions in mind. For instance, the industry producmg
goods must not be developed onesidedly, ensUl
ing the more rapid development of the whl.ch
the of production. The result WIll be f.:nlcre 1f th ,S
not taken into account. It is for to
a large amount of agricullural raw matenals for the llgh
. .' . I 'II b :) much
and food 1l1dustnes. "1u. thl.:' raw Wl c 1
idle capital f there IS ::tot a correspondmgly supp Y
of machine V and "owe" to conver+- Iltis materIal mto con-

sumcr goods. Thus, to satisfy society' d
g
ood od t' f h ',' S nee for
5, pr UC Ion 0 t c means of pl'odu t' consume
oped at a still higher rate. It follows th \ must be
opmcnt of the light and food indusb:ic ate rate of devc!.
ated arbitrarily without fi,'st "ch'. . s must not be acccln ....
d I
' " ICVlIlq a h' h '
eve opment of engineering and power' 19 ('1' rate of
There must be definite proportions i
wIthin Departments I and II' of n rates of
bon. For Instance, large numbers of tr t socIal produc-
and other machines having internal c LIe bI's. aeroplanes
?e produced; but if a corrcspondin can
IS not produced as well all thi 9 h' nt of hquld fuel
useless metal, and the I labour 5 mac mcry will be so much
valueless. It may be suggested :0 produce it will be
?f production could be bou ht in a .he means
It not always possible bu countrIes. But, firstly,
deSIrable to buy abroad so Often, too, it is not
at home. Furthermore in t at could be produced
foreign market is also' 'd
e
udlttmate count, even if the
set . conSl ere the sam .
proportions among the b h' . e questton about
same. ranc es arIses inevitably all the
It is this objective connecti b
economic development that . etween the processes of
demands the planned est b1' ependently of man's will,
and is expressed in the 1 a 1 IS ment of definite proportions
opment 01 the national aw 0 the planned, proportional deuel
Th I economy
e aw of planned '.
expresses the need for do economic development
to a pi h cle to guid th
. an, so t at its variou r e e economy according
co-ordmated and should and branches should be
that proportions should be . a s.mgl
e
economic whole, so
atnd1material and labour remalfltamed in their development
Ive y sources u d '
. se senSIbly and effec'
By applying the law of th I
mthent of the national econoemP proportional develop'
e means of pr d' Y It IS po 'bl "
the b h 0 llchon and I b SSI e to dIstrIbute
of es of the national reserves correctly among
country to a h' nomy and h'
the work of I CleVe their ratio I among t e arcas
d' a I branches and na usc, to ensure that
mated, to. establish the is mutuall co'
g production, dIstribUtion andesscnhhal relations for de;elop'
Cxc ange.
250
The. law of development . :m
objcctlve necessity for continuous proportionality in thr. de
vclopmenl of all branches of social production and is mter-
related with othf'r economic la .... r. above :IIi the barh economh
law.
The character of the proportions in the national economy
is shaped by the necessity to s.ecure a continuou!) and apid
growth of socialist production in order to satisfy more ful'y
the people's growing material and cultural
This objective is carried through at each given stage de
pending on the level of development of the pi JC1lctive forces.
availability of material resources, ana 'lentenal and
situation of the socialist country It s In acc rdan( e with
these factors that concrete propol"ions arc fix=-1 n the eCvn'
omy on the basis of the law of nlanned, l)]opOltional de
velopment.
The law of the planned. proportional development of the
national economy has been in operation in the SCi aUst coun
tries ever since socialist ownership "nd th;: soc t sector
of the economy were established t!1ere But '1 t'le e nly pel ied.,
the operation of the !aw \\'as limited, inee at t ....... time
socialist economic sectors existed side b, ,idr with theot I
ist sector in the socialist COUTltr es. "D It:l le 'Socialist sec 'l"
develops and grows stronger, the ,loere' operabc"l of this
law is gradually t1Ctended. The law of th_ planned, pnpor
tional o! ""Ie nation .. l cono-ny will to
its fullest extent when the ;IX ..,' pr":s ..... om..:
dominant in cconomlC Ii.\;;
With the spread of sodali m bCY0nd the fr rnewor\t of
one coun!"":)' aDd the rise of the SO\..... t"'e :aw
of the plC'nnF...:t, proportional .:1J<.o to
the r.elations "'c.weef1 the socratistcountnes
Applying the Jaw of the planned. pro'
Proportion .. in portionai development "f the national
soC'ialist cfonOmy ;conomy, the socialist state consciously
..: 'ld on pb:med maintains a pc'
manent bali. "lee bctwt:cn the different economic links of so'
ci<'il production wh chrc b('''' int.:rconnccted and interde-
.. '1dcn,
The whi(:l mos. important :n developing the
nal!onai I' t:lat whKh detcmines .1l' the others.
Lnd, ndeed. the whole trc ld of social production 'he ratio
2;,
01 the productioJl 01 the means of production to tl
liolI of consumer goods, i.e., Department I to Dcp Ie troduc.
of social production. The building of socialism and II
requires priority development of the production of
of production. e means
Means of production are required to develop the d
tive forces, to raise the technical level of production rro .uc-
ulate the growth of labour productivity and ease a Stirn-
strengthen the country's defence potential and to l'noc
uc
, to
h f
.' Tease
t e. output 0 consumer goods and Improve the life of th
nahon. e
. Of no importance for planned economic development
IS the eS,tabhshment of correct proportions between industry
and agrIculture. Correct proportions in the development of
these branches have to guarantee, on the one hand, that in-
dustry plays t.he leading role and, on the other, that the
growt.h of agncultu:al production is adequate to guarantee
of the reqUlred amount of food for the urban popu-
lation raw materials for light industry. Further, correct
pr?P?rt.lOns have to be established between the branches
wlthm I11dz:.stry and within agriculture.
baSIC proportion in .the national economy are: the pro-
portions. between productlon and consumption, between ac
and consumption, between the growing cash
Incomes of the population and the growth of retail trade.
between the economic areas of tIle country etc.
Thusth ' I '
..' ere eXIsts a arge number of economic proportions.
"ta
n
.
d
It hIS the important task of socialist society to main-
m t em contmuously.
The Pbroportions between the various branches of economy
cannot e fixed b' 'I
governed b defi a.r y', at someone's whim. and are
tnevitabl / d' mte laws. whose violation leads
C
y 0 Isproportlons In the economy
orrect proporti .
production de d on among the different parts of social
the existing s a number of factors. These include
t'md of 0 eve1opment. of the productive forces
volume of matenJlogreSS, the productivity of labour. the
of the Parfiwl!:s:::r:t the internal and foreign situu.
b.ons '."i.thin the etonom sl eL Correct propol'
factor ... For this rea establIshed t .... conform to these
t: me. ':ley change ey are not fixed once and for all
mprove
2.52
Thus, in the period of full-scale communist construction
in the Soviet Union. parallel with accelerated development
of heavy industry, the possibility has arisen of considerably
extending the production of consumer goods. When heavy
industry was just being built in the U.S.S.R., the state had
to allocate resources primarily for the development of enter-
prises producing the means of production for heavy industry;
it had to restrict investments in enterprises putting out means
of production for the light and food industries. agriculture,
housing, and the welfare services of the people. It is now
possible to obtain a considerable increase in the investments
for enterpl'ises of the second type. which will mean that the
amount the population consumes will rise more rapidly. Thus,
compared with 1960. production in the first type of enter'
prises will increase approximately sixfold by 1980. while
that in the second type will increase 13 times.
To conform to this. it is planned to bring speed of
development of production of the means of prodUi "ion much
closer to the speed of that of consumer goods. In 1929-40,
the average rate of increase in the output of the means f
production was almost 10 per cent higher than that of con-
sumer goods, but in 196180. the excess will he only about
20 per cent.
In two decades (196180) there will be a c
.:hange in the proportions. because the m(\st progressive
branches of Soviet economy are developing f .. ster than
others. With an average 520 to 541 per cen increase
in industrial output in these twenty ye' ), th: ..:ltemu al
industry is to raise its production 7 time) over
extraction is to in' f!"lse 14 times over, 1e produ( ton
of electric power nine to ten times over, ,1e output of
engineering md the metal WOl king indu;, ries ten to eleven
timL i over, etc. t. 6 f the
Thel e proportions are to ensure the Jl
0
.
main task of the CommunIst Party lnt lC S<Wl("t ; CO?Jc
the c :>atkn 01 he mat rial and techfllC31 b- 51 ' o! C,)mmunll m.
PlanneG pnpol tion ' development of the nat onal
, , I d' t 'b t 'on 01 the prodw 'llve
omy pl t.: P pol tH na IS rl U 1 ..
for...:es as weI' This aC'lieved on . mes.O
, "h . t -f ,o'"allabour a rse In e
an mcre In t f' pi (hAil' Y ':I'" .
d . : d on ot '1(' cc 1nr':lUC
wei' of the peOl Ie inc .
anG drl .. ,ce pc. tent al of e !: C Sl ,teo
"
Under socialism, the main principles in siting pd.
arc: that industry should. be sited as closely as
the sources of raw materIals and power, to the areas h to
the finished product will be consumed, and that, in th,Ow ere
1 d
d s COn-
nection, on9- lstance an cross traffic will b
eliminated; that there wIll be planned territorial divisio e
f
b
. b' d n 0
labour etween economIC areas, com InC with compreh _
sive development of the economy within each area and en
steady rise in the economy of all the national republics;
this is the economic basis for strengthening friendship and
co-operation among peoples.
Over the years of Soviet power, radical changes have taken
place in the distribution of the productive forces. In 1921
,
Lenin wrote, "Look at the map of the R.S,F.S.R. To the north
of Vologda, to the south-east of Rostov-on-Don and Saratov,
to the south of Orenburg and Omsk, to the north of Tomsk,
are boundless areas big enough to contain scores of large
civilised states. And over all these spaces patriarchalism, semi-
savagery and real savagery reign."i
Since then over 40 years have passed. What are these areas
like today, Near Vologda, the Cherepovets Iron and Steel
Works has been built; the Kola Peninsula now has mining
enterprises, a shipbuilding yard, and paper and cellulose
combines. In the east of the country there are big iron and
steel and engineering works, large-scale chemical and food
industries, and gigantic grain enterprises; millions of hec-
tares of virgin land have been brought under cultivation.
To. the north of Tomsk a large port, Dudinka, has been
bUllt on. the Ye.nisei River, and the town of Igarka, a centre
of the timber mdustry, and NOl'ilsk, a copper and nickel
town.
In 1.960, the eastern regions of the country produced about
one-thud of the country's total industrial output. about
PCT cent of the total oil output, almost half the total output
steel. metal and coal, and over 40 per cent of the
total clec:tnc: power
also taken place in the distribution of
S'be . ad K
Pr
uc:tion. Areas that were formerly backward,
1 na an azakhstan f .
pliers of marketab1 '. or Instance, have become major sup-
e gram.
'L .
cntn, Selecter] Worhs, Vol .
..., p. 653.
2J4
The Twenty-Second Congress of the C.P.S.U. mapped out
a broad programme for further improving the distribution of
the productive forces. The next 20 years will see;
In Siberia alld Kazahhstan-the creation of new power bases
using deposits of cheap coal 01' the hydropower resources of
the Angara and Yenisei rivers; the organisation of big centres
of power-consuming industries; the development of new ric')
are, oil and coal deposits; and the construction of a number
of large machine-building centres;
In areas along the Volga, in the Urals, North Caucasus and
Central Asia-the rapid expansion of the oil, gas, and chemi-
cal industries and the development of ore deposits.
Alongside the development of the old metallurgical cen
tres in the Urals and the Ukraine and the completion of the
country's third metallurgical base in Siberia, the build;ng 1S
envisaged 01 two new ones in the Central Eu!oppan Pa:
f
of
the U.S.S.R. and ill
In addition, a long-term plan envisages woril;.
to divert the courses of some northern ivers in the European
part of the U.S.S.R. to the Volga basi"!"! to pr.:vide to
Central Kazakhstan, the Tselinny Terr'torv Y)onets Basm and
the Urals, the building of regulatirr. rc.crvOI: 5: in Central
Asia, on the Volga, Dnieper, Dnie:;[e. end Bug, development
of irrigation and amelioration on a large :,cale. .
The siting of production undel saclaJ.sn ensure n:,'st
effective exploitation of natural resources, c. ::.... 1111 'nv, Si:nents
and manpower resources. .'
This means that the productivity of WIll
increase, the rate of growth of production wil.l be J( __ .
and the needs of hl pearle w,'l be more .ully atdie.;
2. Socialist Planning
fhe ter:n planniny mcans the JrawJng
up 01 plan.:. for the development. of .so
Principles of . : :' :si ccan:lmy (.:.:ld the
socialist planning vf A a smgle
si )tt..: ... lan d
. I II t the ec,'ncmic an
Ecnomic plJ.:ln:ng plimari y. cc s
rq,:tnisdllCn<.ll functi('n of >oClah ,t
'5 - ,
When planning the national economy as a whole, the t
h
. t f . I Sate
proceeds from t e entire sys em 0 SOCia 1St economic I
and relies first and foremost on the deliberate
the law of the planned, proportional development of the
national economy.
The chief task in socialist is to fix the propor-
tions in which the branches of the natIonal economy should be
developed in to guarantee. the contin,uous and rapid
progress and Improvement of social production and, on this
basis, a rise in the well-being of the people. "It is essential,"
the Programme of the C.P.S.U. indicates, "that the national
economy develop on a strictly proportionate basis, that eco-
nomic disproportions be prevented in good time, ensuring suf-
ficient economic reserves as a condition for stable high rates
of economic development, uninterrupted operation of enter
prises and continuous improvement of the people's well-
being."! Taking account of the requirements of social devel-
opment, the socialist state draws up economic plans, i.e.,
organises production, distribution and exchange on a
planned basis and on the scale of society as a whole. The state
distributes material, labour and financial resources, deter-
mines the volume and structure of production and capital
construction, the rate of growth of labour productivity based
on the introduction of new technology, the amount and pat-
tern of the domestic and foreign commodity turnover of the
country, fixes the prices of goods for state or co-operative
trading, determines the level of wages for workers and other
employees.
The organisation of planning proceeds from the decisions
C;0mmunist Party Congresses, which determine how so'
clahst society will develop over a long period of time.
of the plans of Soviet national economy is the em'
of Party policy directed towards building commu'
msm. This reflects the Party and state approach to the sollltion
01 economic tasks.
Plans of national economy arc not prognostications or
but concrete plans for definite periods. Since the
lmm late tasks of e . . e
fl d
. conomlC and cultural constructIon ar
re ecte In the state pi h . .
ans, t elr fulfilment is objectively eS
-----
, The Road to Communism, p. 534.
256

sential. Aftel' the national economic plan has been widely dis'
cussed by the working people and ratified by the higher state
organs, it acquires the force of law and its fulfilment is
binding.
That plans are regarded as directives and their fulfilment
binding is an important principle of socialist planning. Other-
wise planning would have no meaning. For if one branch
of the national economy, say the timber industry, fails to
fulfil the plan, then plan fulfilment is jeopardised in other
branches which should get a definite supply of sawn timber
under the plan. That is why the strictest requirements for
plan fulfilment arc to be observed in the socialist countries.
To ensure planned, proportional development in all
branches of material production, the plans of enterprises
and industries have to be brought together. Planned guidance
by the state is extended to the collective falms lnd
as well as the state enterprises. This does not mean, of course,
that the state planning bodies draw up plans for each col-
lective farm. But each enterprise compiles :ts .'wn plan on
the basis of the general state assignment. plans of in'
dividual enterprises of state industry, collective anu state
farms, after being discussed locally, are pre",- :lted to the cen'
tral planning organs and are there shaped into the unified
national economic plan.
Centralised guidance combined with init!, . .l.tive forms
the principle of democratic centralism in planning. .
Planning becomes better organised each year
methods of economic leadership develop. ExcessIve centrahsa-
tion has been eliminated, so that a greater role went to the
Union Republics, regions, and also to enterpl'ises and
struction projects in the drawing up of p.lans. The.
farms now have more independence TO orgamsmg and
planning agricultural production.. and have a new system of
agricultural management. The Party fully re.veals and
criticises shorL.:omings in planning, rejects all that IS_ old. out-
of-date and hampers progress. The September 196"")
Meet
f th C C CPS U devoted much attention to
. 1I1g 0 e .. ..... N the
Improving the plannmg of the nabonal economy. ow a1
f
. 1 d ded between the centr
unchons are bemg clear y tVI .
.' IS thus betng com-
planmng organs, and theIr rcV!Slon
plcted.
11 g 257
for the
< .. "
Plans in lociellst 10+ J ety' 6' NIII
stantited. This mean. tb .. whea
drawn up, the planning
economiC conditiOllS 8IId
talae<! level of development the
and technology, and mIke wide u'e
of production. The of the
the organising work
the creative initiative
Drawing up plans is
most important aspect
ment, so that eUWI in
new reserves are found.
in the plan. If, beca!!.
reasons, dilplOpOit'km1
are quickly revesJed
important menns, ill die
any dlOiS m., 0CCIIt
any partiC'IIl.r
PriDclpIes of
the plano for
A .y.te
m
of
economic plans are
The state planning bodies draw up material bal
balances, and manpower balances. anees,
Material balances arc drawn up for all the most
products of labour, e.g., metals. machine tools, coal
butter, etc. In drawing up the balance, all the
of the given product are taken into account. The data
Y

d
'h " cd ameil
are compare WIt socIety s ne 5 ill regard to the i'
product. 9 \en
Value balances include the balance of the cash incorn d
expenditure of the population, the balance of the an 1
income, the state budget, and others. ona
The mW1power balance determines the manpower requir
ments of the national economy, branch by branch, both i:
and according to trades and qualifications. Here, too,
ace mdlcated the sources which will guarantee to the national
economy the amount of labour required.
Most comprehensive of all is the balance of the national
whic? unites all the indices characterising the pro-
portIonal relationships in socialist economy.
The system of balances in planning makes it possible, w:th
the exactitude, to detennine the con'ect
reqUlred for developing all the branches of the nation.::
economy.
3. Advantages of Planned Economy
Planned management of the economy is one of the decisive
addvantages of socialism over capitalism. It has already
emonstrat d . . . .
. e In practice by the magnificent results achlCVeJ
'D
n
the economy in the U.S.S.R. and the People's
emocraCles.
the advantages of planned economy?
r OCla 1St economy develops continually in an ascending
me,
the between the soc.ial.
the results of rod the pnvate form of approprJatlO?
under SOCialist!' h uction society to economic CI1scs,
IOtialist conditio owev:-r, thIS contradiction is abolished. In
cial character ownership corresponds to the SO'
duction knows :ction .. of this. socialist
Planned SOCialist conomlc <:nses of
economy guarantees high-capaetty
260
utili' ation of equipment and full usc of the fixed assets of
,
enterprIses.
Socialist planned economy rids society of the colossal
waste of material and manpower re ources, which is typical
of capitalism and goes hand in hand with economic crises,
anarchy and competition, unemployment, chronic under-ca-
pacity working of enterprises, et<.:.
Socialist national economy develops along planned lines,
on the basi s of proportions fixed by society in order to pro-
vide ever fuller satisfaction of the material md cultural needs
of the people.
Planned economy is a powerful factor in scientific and
technical progress. Under capitalism the efforts made by the
monopolies to conceal technical secrets from others and the
chronic under-capacity working of enterprises retard the ap-
plication of the new discoveries of science and technology.
There is boundless scope in socialist society "or the develop
ment of science and technology_ Planned economy make. it
possible to concentrate material and 'inancl.:!l
resources for the solution of scientific and technological prob
lems of the first magnitude.
An important advantage of ;odali! mover :apitalism is
planned use of manpower resources w'lich guarantees th :It
the entire working population h a!Wi.YS fu:
1
y emrloyed.
Under socialism ti1erc no unemployment but. on the con-
trary. a steady increase in the of I) ople employed
in the national economy the training of personnel pro-
ceeds along planned ; :,,( S. as also does their distribution
throughout the differ'", - rml"he< of ec:momy : the material
and c1.t1tural standards 01 . 'te worltinp people
1mprove.
The ndvantagc; of planned economy art.! most clearly .
in the high rate of socialist development. In the soclaitst
countries the volume of indushial production increases from
year to year at rates u"attainn.ble by capitalism, The advan-
tages in the rate of economk development guarantee that
in a hort per:od ot history socialism will in tlw eco'
'"lOTtie c..:mpel i\;.on with .
The Ch::;:--.l(tCT of sOl.:iJTi!'t CC.JnomiC development
lCld!; to .:l con!'tant rapid of of the.
tu':11 pud :natedal sl-;mdards d the reClple 111 the soclaitst
C u'ltnes.
It is no that the ideologists of the .
and the reVISIOnists try to prove that planned cc
sible under capitalism. With their arguments IS POs-
the revisionists try to whitewash the capitar t 15 effect,
give working people the idea that its social IS ystc
m
, to
removed without overthrowing capitalism S can be
dictions of capitalist economy, the anarchy 'of P de. Contra_
. I ro uctIon d
cnses, u?cmp oyment and the deterioration in the .
of workm9 people in the capitalist countries POSItion
refute these fallacies. completely
Chapter XII
SOCIAL LABOUR AND PRODUCTIVITY
UNDER SOCIALISM
1. Social Labour Under Socialism
Character of labour the work:ng activity of people
under socialism duected towards the produLLon of ma-
terial wealth. is essential for the Clf
every society But the character of labour is not the same in
different socio-economic formations; it entirely depends on
the relations of production prevailing in society. Labour dn
be voluntary and free -and performed for oneseL and one's
society, or it can be compulsory. performed for the x;"loiters.
depending on who owns the means of production.
In all exploiting social formations, the character of lahaw'
has always been compulsory. and various methods have been
used to compel working people to create riches for the ex
ploiters, All this was because the direct producers were de
prived of the means of production. Thus, private ownership
of the means of production is the root cause of the compul-
sory character of labour which turns it into a heavy burden,
In order to abolish the compulsory character of labour. it
is essential to get rid of private ownership of the means of
production.
The situation is different in socialist society, where people
work for themselves and their own society. Every achieve-
ment in production, every success at , ...'ork helps, directly or
indirectly, to improve the material and cultural standards of
the working people. The greater the amount of goodS. pro-
the cheape,' : 1.CV .ue, the more of them there "",111 be
2.1
for the working people in socialist society and the lower th
" .
prtces.
Characterising lahoUl' under socialism, Lenin pointed
that "for the first time after centuries of working for alh Out
of working in subjection for the exploiter, it has become ers,
sible to work lor oJleself and moreover to employ
achievements of modern technique and culture in on ,c
k
"i Cs
wor .
Socialism brings about a fundamental change in people'
ideas about labour and engenders a new attitude towards it
transforming labour into a matter of honour, glory, valou;
and heroism. The creative nature of labour in socialist COun-
tries is seen in the fact that the workers themselves invent
and improve machinery and perfect production processes and
the organisation of production. The army of rationalisers and
inventors is constantly growing. In 1963, for example. Over
4.3 million suggestions for technical improvement were put
forward in the U.S.S.R., of which more than 2.7 million were
introduced into the national economy. The saving effected,
calculated over one year, was about 1,700 million rubles.
The socialist state gives every encouragement, material and
:0. moral. to creative work and the creative attitude to labour.
most honoured citizen in the socialist country is the work-
er-mnovator who develops production and increases the
wealth of the country.
society, where labour is a cruel, painfully hu-
mllIatmg burden. workers' innovations are reduced to a
What creative attitude can there be. if what
1S gamed by inventing goes into the pockets of the
capitalists!
. Socialism o.ffers extensive possibilities for rapidly increas
mg dthe . techmcal equipment of labour in all fields of social
of machinery is seen in the
. d' . : particularly m the Increased power consumption per
uSinal. wo,:ker. This lightens the labour of the worker.
b
t
into highly skilled labour and tends to wipe
Th 1 b
lOe
etween mental and physical labour.
e a OUt of the worke' " .' hI
mechanised high1 k'l1 d 1 r m SOCialIst society IS hlg Y
. y S 1 e abour. Socialist production, based
t t J
cmn. Se ected Works. Vol 3. p. 560.
?64
on the :llOl;t up tec1.nil,;ue. te .... mically ef
ficient. trntned people. EvelY worker las a great opportun'
ity of improving his skill and leve! of education. All :ypes
of training under socialism arc free.
For the first time in human history. socialism creates w rk
ing conditions which to the maximum .oxtcnt precludp '1"'m!'ll
consequences to the workers' health.
Lenin repeatedly pointed out that under socialism eve y
achievement n s,,-'encc and technology should be 1"00 to
lighten labour. shorten the wOlking day and 'mprove work
ing conditions.
Under socialism eve-:yonc is guaranteed the right to "/Jrrk.
The application of the right 0 wl"'rk. 1.e. the light c every
person to obtain work in his own country <!.:- hl!i wr. ,u.lt..
and to receive payment for his work. i' t"nc of ... :alism s
great achievements. This is truly b"l;... lnteea by the
planned develorment of the nation::' econoILV and by the
continuous grow"l of p. dUCtiOD. Under soc. lhsm. .0 woo :0;.
ers have no fear of bZ'ng deprived of the :neans C 5U"""iIS.
cnce. The llbolition f un nrloyment 10 ali ts [-nrs give
the working people complete confidt'lte "l tl:: f 1 and
genuine I"reeaom.
While guarantee'1)g + c. ... ""Y C.=!:"1 .. Jht) work.
socialism at the same time d 'D,d +1: pe ole
worh and play t'1e' palt in OL'"l' t . \XII ti("''I'l. fo '.lkp.
part in social s .'"If> honot.:-lb.e ... ') .of ev ttIz "'l
in socialist socie:v. ir:- pcctive 0 SOt a.l orgm, "la .onal
ity. etc, . tl
A specific featlll e f lahou- IJr)ler sodall :"'1 s 1 . :11:-e. v
social character C:;ociali t 'aoo'.lr is lae:u' tb : .. c" ...ed
on planned lines .1J1(' is 11 ,"'<1 .he scale ot t'1e (.IS a
whole. Socialism leads .. . '1! W soral 'f
which is fundamentally . rom diVI<IC:"!
under capitalism The most important ot
division of labour IS that it is planned. S("lallsm away
with the er t:-l..: is01alOO natu.e c,onC"1lV and umtes all
enterprises in onf'" c<,;,"nom ... organism. and ... '1 t'lc people
. k" 11 . '" f thA labour ot workers.
In one wor mg CO 1;;_ oT:' .i 1( . eore. _. . I
pelsants ane' btclk tuais .; '1art the .1ggregati' SOCIa
labour ann IS d:''': ty SOl.. ,!' in . ; ''"Jeter
Thcr the rrlCsi ':n ...ort lnt of lak'ur under
k
1 freed from
sCIi..Ilism c:.... th... the wor ing pcop e
exploitation and so can work for themselves instead
being compelled to labour for. exploiters; that
attitude to labour becomes conSCIentIous and creative. th
all working people enjoy the right to work, while it
u?iversal of everyone to work; and that labour is
dIrectly socIal In character.
. The radical change in the character of
social labour under socialism brings
co-operation b II d" I h "
r labour a out cqua y 1'a lea c anges In the
o forms and methods in which labour is
organised. Socialist labour is collective labour, the combined
activity of workers, peasants and intellectuals.
In every society the production process takes place on the
basis of co-operation of labour-the labour of people combined
in one form or another, Socialist co-operation of labour is
labour that is combined, organised and planned and is based
on the comradely collaboration of working people freed from
exploitation. Socialist co-operation of labour differs in prin-
ciple from labour co-operation under capitalism,
The basis of labour co-operation under capitalism is the
capitalist's private ownership of the means of production.
Capitalist labour co-operation has its roots, therefore, in the
exploitation of man by man, and production is guided by one
person, the capitalist. It is the capitalist who derives all the
benefits from this labour co-operation.
Under socialism the basis of labour co-operation is social-
ist ownership of the rneans of production. Here there is no
exploitation of man by man.
Socialist labour co-operation covers not only the labour
of people working together in one enterprise, but the labour
of all the members of society. Under socialism, their labour
appears as unified, collective labour organised according to
a plan on the scale of the whole of society, and calculated
to secure the most rational utilisation of the means of pro-
duction and labour power.
Under capitalism, labour co"'Operation (simple co-operation,
':Ilanufa.cture, large-scale machine production) is a method of
the production of surplus value, a method of
mcreasmg the degree of exploitation of the workers. Con-
there are permanent and irreconcilable contradic-
tions between the workers cngaged ," thO ti" and
th h '. n 1S co-opera on
ose w 0 orgall1se 1t-the capitalists. Capitalist labour co-
266
fon is maintained by the discipline of hunger, by the
op.era of selling labour power in exchange for a
grIm
crust of bread. . ed
So
",list co-operation (If labour appears as the
c, d' "thod
rking activity o( people, aime at lOcreasmg e pr. uc-
f material wealth and ensuring the ever fuller sallsfac
of the needs of working people. Therefore socialist
tlon 0 t"on knows none of the irreconcilable contradu:"'ons
co-opera 1 .' .
. herent in cap1tahst co--operahon. .
10 Labour co-operation, i.e., the combmed labour of
k requires to be organised. There are sevenl pomts
wor ers, d" I"
I bour organisation un er SOC1a Ism.
to;- ical of socialist is the new
Y
b
discipline which IS unbke that of all the precedmg
of Socialist labour discipline is conscic.n-
comradely discipline of working people. ThIS dIS-
. n inted out. does not arise from good IlltC'1-
CIPhnci, during the building of socialism, 10
tions, U IS f a continuous struggle against the survivals of
the ;mong the workers in socialist peop}!;;
capita Ism. f d h cling to the old attituc" to
are still t.o be d w and snatch mol.. h:
labour, trymg to 0 ess wor . ta ks of the state is to
For this reason onc of tb? t labour aDd -teadily
instil in people the commUIllS . .
to combat violations ?f planned guidance
Socialist co-operatIon of ur Imp th :land firm
1
hieb means on e one. .
of the lIationa economy. w _' onsibility in the pro
and steady adherence to broadest. m(")stlctive
duction process and .. on the I
t
:r, the management of social'
participation of werkIng as 3. With the
ist enterprises and SOC131 Pk
r
""pIe wiJ..: !'3ke part more
advance to commumsm. wor mg p
extensively in managemenht. I dy been mentioned that the
It as a rea fIb under
'n the character 0 a our
Socialist emulation cha_ngl.e 1 1 ads inevitably to a ncw at-
and its role sOCla Ism e the part of the
t Ot de to labour on d "
'u trt"k"ngly expresse m
" "t d' is most. s 1
workers, ThIS nf'W stu u c
socialist emulation., . ession of socialist ,prOOuc-
Socialist cD1UlatKm IS. an c(pr mr.1delv co-operatIon
tion relations. the relation') 0, cO'
n
soc","al:sl society. thclr
. r;c;C"S 1
mutual 3.sdstancc .1mong VI 0, .
,7
efforts to fulfil and overfulfil the economic development 1
and to advance production as a whole. Pans
Socialist emulation is used as the most important m
b d
' 't d" eans
of raising la our pro UCtIVI y an Improvmg product'
through the activities and creative initiative of
people, Socialist emulation, said Lenin, is a method of
ing communism,
Lenin formulated the most important principles of the
organisation of socialist emulation. For instance, emulation
should be widely publicised, and its results should be in
comparable terms, the experience of leading workers should
be widely disseminated and the contestants should assist one
another.
Every worker engaged in emulation to improve production
and adopting the best methods of work is justifiably entitled
to expect that " ... a better example of the organisation of
production will be inevitably accompanied by a lightening
of labour and an increase in the amount of consumption for
those who have carried out this better organisation".1
Socialist emulation in the U.S.S.R. has a glorious history
of its own. It first took the form of communist subbotniks
2
held during the Civil War. Since then it has gone through a
number of stages-shock work, the Stakhanovite movement.
and others. From the very beginning, the socialist emulation
movement has been guided by the Communist Party.
The fact that the Soviet Union has entered the period of
communist construction has evoked a new wave
of socialist emulation. The movement of communist shock
workers and communist work teams is spreading throughout
the country.
. of this movement have set out to achieve the
s hIghest productivity of labour, They take an active
developing and introducing new machinery and pro
9 .ess
1
lVe
and tirelessly combat all signs of
mca conservattsm.
---
Lenin, C?llecled Works, Vol. 27 206
Subbotruks-volunta ' p. .
benefit of the Sovief R,:ork .performed after working hours for
In tJ.1e. mass movement of :r
he
first that ushered
dUCtiVlty, for a new labour disc l' king class for greater labour pro-
of Communist workers on th was organised on the initiative
1919, a Saturday (subbota is thee R Railway on April 12,
USSlan for Saturday),_Ed.
268
Communist work is based on the highest achievements of
cience and technology, which can be mastered only through
:. cless learning, a continuous and systematic extension of
This is why the movement for the victory of
munist work presupposes that all its members learn
tinuous1y,
Every year sees a wider development of socialist emulation
, the socialist countries. Wherever the power belongs to the
10 king people and people work for themselves and not for
wortal,'sts and landlords, the new, creative attitude to labour
cap' " 'd d
emerges, and socialIst emulation ,
Socialist emulation is a force SOCIal
a ment in the socialist countries. It IS due to .the soclahst
movement that economy rapidly t?e
roductivity of social labour mounts .. Soclalist
proves that in a society free from there
exist new stimuli, inconceivable capItalism, for the
d velopment of production. In competItIve struggle under
c:pitalism there can be no question of any broad eXi
change of experience, of comradely and
assistance, that is, of features in human relatlOns that are
trinsically socialist.
2. Steadily Rising Is an
Economic Law 0 OCI 15m
Productiv.dy of labour is expressed in
Concept of.. the amount of made
labour productIvIty b ' the worker in a umt of hme. .
) d tivity means an econvmy m
An increase in labeur pro uc M 'd' "The increase
'I'd) labour an:: sal .
living and past (matcna Ise . '. 1 ,'n that the share
, d "t consists precIse y . '
m labour pro UCtl\'l Y . at of ast labour IS
of living labour is reduced total Juantity of labour
creased but in such a way that e d't" declines in such a
. ' . . t f the commo I oJ '
mcorporatcd In a um. I bour decreases more than past
way, therefore, that h\'tng a
1 b
"
a our mcrcascs. . .
The expression "increa.smg
cutting down the expendIture
labour productivity".
of labom-time reqmred f
I Marx, Capital, Vol. III, p. 255.
269
making the social prod,uct, or increasing the amount of
ucts made in a unit of tIme. prod
Socialist of is the highest fa
of labour orgamsatIon In socIety; It ensures higher prod
tivity of social labour. Ue
A steady rise in labour productivity is the most impo t
d
. f h . t f . 1 rant
con ltion or t e VIC ory 0 SOCIa Ism over capitalism d
for the successful of
role of labour under Lenin wrote: "In
the las,t productIVIty, of labour IS the most important,
the princIpal thmg for the vIctory of the new social syste
Capitalism created a productivity of labour unknown und
m
.
serfdom. Capitalism can be utterly vanquished, and will
utterly vanquished, because socialism creates a new and much
higher productivity of labour."!
The la.w of steady
rise of labour
productivity
Rising labour productivity is a univer-
sal economic law, which means that it
operates in all socia-economic forma-
tions.
But this law operates in different ways in different forma-
How directly depends on the kind of pro-
ductIon relations whIch predominate in society, on the nature,
state and the purpose of social production. The opera-
hon of the .is under capitalism, the growth of
productIvity IS uneven and in some periods produc-
tiVity even declines.
,the abolition, of, private ownership of the means of
prod under socIalIsm, the barriers to increased labour
productivIty are thrown down,
, In soc,iali?t society, a steady growth of labour productivity
IS an objective .ty.. f
' , ,necessl ansmg rom the very essence of so-
ciahst production relations
"Economy of ti " '
distribution me; w:ote Marx, with planned
prod
t
' of time for the dIfferent branches of
uc Ion remams the fi t . f
collecti d rs economic law on the basIs 0
pro uction, It becomes a law even to a much higher
From what has been 'd' f 11
SOciety, where the law 0 Ows that, unlike capitalist
nsmg labour productivity has no
t lenin, Selected Works Vol 3 253
2 Marx'Engels Archioe. 'RU$$' .. p'v l
, .... 0 IV P 119,
decisive importance: socialist society gives full play to the
Jail! of the steady nse of labour productivity, The essence of
this law is that there should be the maximum economy of
living and past labour and the creation, with the
expenditure of of an ever-increasing quantity of the
material wealth required for the ever fuller satisfaction of
socialist society's needs,
Factors in the
rise of labour
productivity
Marx indicated the main factors on
which labour productivity depends.
"This productiveness," he said, "is de'
termined by various circumstances,
amongst others, by the average amount of skill of the work
men, the state of science, and the degree of its practical ap'
plication, the social organisation of the extent
capabilities of the means of productIon, and by physical
conditions." !
The level of productivity is determined first and foremost
by the standards of technical equipment in tl1e enterprisf's,
The better the factory workers are equipped with new, im'
proved machinery, the more fruitf,ul will be their T':le
best results in the struggle to raIse labour productivity are
obtained by the personnel of the enterprises where
hensive use is made of modern technical equipment 1 111
sectors and at all stages of the production ,'roc ses.
If, for example, new machinery is installed n mam
sectors of production and the productivity of, labour nses as
a consequence, it is also necessary to mechamse other, labour
processes connected with the main sectors, applies fir:t
and foremost to transport operations, handlmg, con,tro!' '1,
sembly and other j' obs, At many enterprises these Jobs are
h
. h' l' offers ex'
still being done manually, and t elr mee. amsa Ion , '
. bl f .. 9 productIVity MechamsatlO
n
tenSlVe POSSI 1 ItICS or ralsm , .' 'II bI
of these j' obs both in industry and agrIculture, WI ena de
.' 1 1 th anual labour an
the natIon to do away camp etc y Wl m
will raise average productivity many times over., t .
h
" d comprehenSIve au oma
Comprehensive mec amsatJon an k to;'r:
tion, the Programme of the C P,S,U, stresses, are a
technical reconstruction of d 1 branches of .the pro.
h
h' automatIOn 0 so ...
Com pre cnSlve mee amsation lfiu f d I mf'Jt pro-
duction enters a qualitati\'e1y lew stage 0 eve op "
Mnrx. CapJtal. Vol. I, p. 40.
271
ductivity of labour. too, will attai,n the world's highest lcve
But no matter how great the Importance of tcchniq 1.
. ." h f ue In
modern productIOn, man IS SOcIety 5 C Ie productive f
Therefore, it is on the degz-ee of sli!ilI and level of
qualifications of the bulk of the personnel, and primarily the
workers, that the level of labour and the possi.
bility of further growth largely depend. It IS not merely that
the labour of the skilled worker productive. But it
becomes possible for a worker with higher technical quali-
fications to make better use of technical equipment and to
find ways of improving it.
Labour productivity at industrial enterprises depends large-
lyon the organisation of production and labour.
Every production process is an aggregate of all the stages
through which the object of labour passes as it is worked
upon in the various production sectors. These sectors should
be strictly specialised and their work organised and well
balanced. In other words, there must be strict organisational
coordination between them, steps must be taken to ensure
that every worker's bench, every sector of production is given
efficient service. This kind of organisational bond should
exist both inside each enterprise and between the various
enterprises. Correct and efficient organisation of the whole
production process and wellplanned organisation of labour
at each worker's bench reduce loss of working time and its
irrational expenditure.
Labour productivity has always been greatly promoted by
various forms of emulation developing both inside and among
enterprises.
Natural conditions also affect labour productivity. To .3
extent they determine the level of productivity m
agl'lculture, and in extractive industries (coal, oil, iron are,
etc.)
Increased productivity of labour further depends on
the of labour is organised and on how material lW
centtves ior workers attaining the best results are imple'
mented.
The moral stimulus to work is also important in socialist
sooety Th . . 1 .
. e SOCla .1St state glVCS encouragement to the best
and leadmg collectives in the various enterprises.
r ders. medals and cer':ificates of melit are awarded fo!
goo work and t.""e be t k . I
s war ers are given honorary tit es,
272
etc. All this encourages the desire to distinguish oneself at
work, to produce better work and more of it, and to ensure
high quallty work.
The the level science and the more rapidly and
extensively latest are applied to production
the higher Will b: the productivity. It is possible fo;
science and matenal to be linked in every possible
way only under the soclahst system of economy, where there
cannot be open or concealed competition.
Finally, the rational location of production is a most im.
portant factor for raising labour productivity. The location
of production must, on the one hand, provide for clearly
defined specialisation of the enterprises and coopcration
among them, and, on the other hand, account should be taken
of the need to put natural resources more fully into eco
nomic use.
Correct location of production cuts the expenditure of so
dal labour in production, transport, storage and the .!ali!:l
tion of material values. Reduced expenditure of labour means
a rise in labour productivity.
The decisive factor in raising the productivity of soc131
labour is technical progress in all branches of the national
economy. That is why, during the period of full-scale building
of communist society, tremendous importance attaches to
work on comprehensive mechanisation. automation, electJi
fication and chemicalisation of production processes, improv-
ing the organisation of production and of labou! :lnd _ iishg
the workers' efficiency and technical qualifications.
Socialism offers great possibilities for raising pro'
ductivity. The socialist countries lead the tn. tn-
creasing rates of productivity. In the U.S.S.R. It 1.S nstng fOUl
to five times faster than in the capitalist countnes. In 1913,
prerevolutionary Russia's labour productivity in industry
was only oneninth of that in the U.S.A., but. by the
was much less, the figure for the Soviet Umon
sixtyfive per cent that of the U.S.A. Labour 1D
U.S.S.R. is already higher than in such caplt1hst countrIes
as Britain and France. d t"t of
In the course of 20 years (1961-80) p:o uc Y
and
labour will rise 300350 per cent in SovIet mdush
od
Y
. t.
4
R . ng labour pr uc IV
00500 per cent in agriculture. alSl f the
ity," the Resolution of the TwentySecond Congress 0
C,P,S,U, points out, "is the key question of the I'
practice of communist construction, the cssentiato ICY. and
for the improvement of the well-being of the pea 1 condition
creation of an abundance of material and cUlturalb c afid the
the working people."i cne ts for
The rapid and steady growth of labour productivit '
reqUIred for accelerating the rate of Y IS the
bon. for solvmg the tasks of communist construct'
h
't" k Ion at
W y 1 IS so Important to rna e full use of the 0 .. IS
for raising labour productivity that exist in
at every enterprise, at every worker's bench. SOciety
1 The Road to Communism, p. 421.
Chapte1' XIII
COMMODITY PRODUCTION,
MONEY AND TRADE UNDER SOCIALISM
1. Commodity Production Under Socialism
Commodity
production
under socialism
The necessity of commodity pi ,duction
in socialist society is predicated lirst
and foremost by the existen.ce of social
socialist property in its two forms: state (of the whole peo
pIe) property, and co-operative and collective farm pr ,perty.
Commodity-money relations under socialism also
from the social division of labour, as il develops on ",e basis
of the two forms of socialist property-
Furthermore, a certain socia-economic differentiat;on of
labour continues to exist under soralism with its definite'
degree of development of the produ( ive forces. There il
essential differences between mental and physical labour,
between skilled and unskilled labour. and betwe':1 the labour
of the worker and the collective farmer, due to which it is
impossible to reduce all varieties of labour directly and im-
mediately to just onc variety. This is poss:ble, but only in-
directly, through the mechanism of value. This and other
reasons condition commexhfy-money rclatil'ns under social-
,
15m.
"It is necesSJ,ry in communist construction. ' says the Pro-
gr41mme of the C.P.S.U., "to make use of commCldity-
money relations in keeping with theIr new content in the so
c.iJlisi period." I
-
t The Road to c.,mmunism, P 5J6.
, ..
,
Under Siocialism, commodity-money relations h
content due to the fact that commodity producr
ave
,a new
carried out on planned lines by united SOcialist
lon
IS here
(the state and co-operatives). on the basis of social.Producers
ship of the means of production. Owing to the 1St oWn,er-
features, commodity production under socialism se specific
into commodity be
Commodity production uncleI' socialism is not u .
as it is under capitalism. The sphere in which c nlVeadl'S,al.
ad t
" d d"" I" amm Ity
pr ue Ion an commo lty cucu ahon operate und "
" "I"" d F . er social-
Ism 15 umte. or Instance, labour power is not
"t "" b h a cammod
I Y; It IS not aug t or sold" The land with what I"t t " .
""hd f canalm
15 WIt rom the i.e., it cannot be bought
or sold. Neither can soclahst enterprises with th" fi
asset (h" b "Id" elr xed
Id
s mac mery, Ul mgs, equipment, etc,) be bought and
so "
The change in the nature of commodity production
under has led to a change in its categories, Man
categones, such as labour power as a commodity 1 y
and which reflected the capitalist
productIO?, have disappeared. Other economic catego
r 0 p:oduction-commodity, money, value,
pnce, . profit, credit-stI11 remain, though their nature has
essenttally changed.
fj relations arise in socialist society
Y: t' etween the state enterprises and the
socla lOns and the collect' f 5 .
the commoditie h' h lv.e arms. tate mdustry produces
the co-operativ! W lC provlde the means of production for
of co-operative s :nd . consumer goods for the members
commodities co-operatives produce the
and the popur /c p,rohvlde mdustry with raw materials
goods. a Ion WIt food and certain other consumer
Commodity exchan" .
relations betw ge IS an essential form of economIC
I
een state indust d " "
cu ture, ry an co-operatIve agn-
Secondly, commodit .
whole of the consume/ and exchange cover the
and co-operative sect 9 0 sd whIch are produced by the state
on their personal also. by the collective fanners
the system of purchase and ry I holdmgs, and which, through
ty of the urban and rural sale .. become the personal proper'
papu ahon.
276
Thirdly, commodity relations arise within state enterprises.
in the sphere of production of the means of production. The
means of production put out by state enterprises (machine
tools, machinery. metals, coal. oil, cement, etc.) are exchanged
through purchase and sale among the enterprises and are
therefore commodities.
Finally, commodity relations arise between the socialist
state and other countries through the foreign trade turnover.
In socialist society commodity production serves to pro-
mote the development of the productive forces and thereby
the transition from socialism to communism. "With the tran-
sition to the single communist form of people's property and
the communist system of distribution," the Programme of
the c.P.S.U. points out, "commodity-money relations will be-
come economically outdated and will wither away." 1
The commodity, as we already know,
and value has two aspects, two properties-use-
of the commodity value and value. Under socialism these
two properties have a totally different
meaning compared with the properties of the conmo(lity in
capitalist conditions.
What interests the capitalist is the value of 'le commodity
as something from which surplus value c ,m be extracted.
Use-value is produced only inasmuch as ,1 the vehicle of
surplus value.
Under socialism the state. in the process ofts planned
guidance of production, takes into account both aspects of
the commodity-use-value and value.
In the socialist economy the use-value of a commodity has
special importance. Socialist society is vitally interested in
increasing the quantity of use-values and in improving the
quality of commodities. Socialist society not. only the
quantity and types of usc-values. buL campaIgns for hIgher
quality commodities. .
The value aspect of the commodity is important. for soc.lal-
ist society as well. Production is planned not only In P?ys.Ical
indices, but also in money (value) indices. The latter mdIces
are used to bring about a systematic reduction in the. value
of commodities and. on this basis. to pursue a polley of
l lie Roo,l '0 C .,umwi I.; ).
177
reducing the prices of commodities t
growth of socialist accumulation ; dO ensure the conti
fully the requirements of the m' b
n
to satisfy eVer nUaI
I
' I' em ers of so ' I' mOre
. n socta 1St production there is no anta . Cl? 1St SOc:ie
between use-value and value, since the
tion between private and social I b re IS no Contrad'
Th' d a our le-
. IS oes not mean, however, that there .
all between the use-value and th no contradic_
lty under socialism. There is, but it eisva ue of the Com
It IS not of a destructive nature A not antagonistic
tradiction is revealed is the fact of how this can:
quality of commodities is not high that when the
tered In selling them. Shops have l 1 culhes are enCOlln-
factured goods are sold at departments where manu
these departments show re uce.d price. The existence of
has arisen between the that a contradiction
There is no sale for the g d an t e value of the goods
necessary, but because:' not ?ecause they
With their quality There' r hIgh value IS not consistent
They are not no demand for them
cannot be realised and so th elf, because the
. The contradiction b t e prIce IS reduced.
In socialist economy be wfen and value is removed
range and quality of by improving the
The dual character of th y reducmg Its value.
nature of the labour whi h e is due to the dual
The dual nature of I c
b
pr. uces the commodity.
the ant '. a Our In capital- t '
agOnIstic contradict" f IS SOCIety expresses
contradiction between . Ion 0 commodity production-the
The situation is ptrlvda,te and social labour.
the ec . qUI e Ifferent' "
d
anomlc basis of the . I' In socIalIst society. Since
an the syst Socia 1St syste' . I h'
t di' em of wage labo h m IS SOCIa owners IP,
{b ctIon between the SOC' 1 ur as been abolished, the
has .disappeared. J:dear
nd
.individual character of
sOd' u.t dIrectly social Th 1 bsoclahsm, labour is not
ety IS hum .' e a Our of I' ' I'
scale of th an activity pIa d peop e In SOCIa 1st
in the e Whole country I:
ne
and organised on the
of of this change
on the state unng the production a our, .individual labour
SI ctal lab or collective farm process In the factory and
Our. ' etc .
But at th .. " appears dIrectly as
e SOcIalIst stage, the h
c aracter of this directly
278
social labour still requires indirect expression through the
medium of value and its forms.
The magnitude of the value of the
Magnitude modity is determined, under socialism.
of commodUy value by the amount of socially necessary
spent on its production.
cially necessary labour-time means the average
spent by those enterprises which turn out the bulk of the
commodities in the given branch of production. These enter-
prises work under average production conditions.
The time actually spent on the production of one unit of
the commodity at the different enterprises is individual

Under capitalism, the socially necessary labour-time is
formed blindly on the market. In socialist economy it is the
state. working on the basis of the objective economic condi-
tions, that plans the growth of labour productivity. fixes the
rate of labour expenditure and thereby tends to reduce the
amount of socially necessary labour-time.
In order to reduce the value of the commodity, the labour
spent on its production has to be reduced. How can this ?e
done?
The magnitude of the value of the commodity is affected
by labour productivity. The higher the productivity. the lower
the value of one unit of the commodity. Thus, the campaign
to raise labour productivity is also a campaign to reduce
the value of the commodity.
The expenditure of raw and other materials also affects
the value of the commodity, which is made up of living
labour and past, materialised labour. Past labour is the labour
spent on the production of materials, machine tools, buildings,
etc. In order, therefore, to reduce the value of the commod-
ity. it is necessary to economise in both past and living
labour.
Such measures as the rapid spread and application of
vanced methods of labour and production and of technical
achievements substantially reduce the socially necessary
labour-time required for the production of one unit of the
commodity. Exchanges of cxpc-ience and technical
tion, as well as mutual assistance, enable enterpri! es wh.ich
are lagging behind to reach rapidly the level of the leadmg
es.
:179
2. Money and Its Functions in Social' .
1St SOciety
The nature of money Money i s needed under s . I
. cause of the exi stenc . aCla Ism be.
productIOn and circulation. The value of c of commodity
created by social labour during the pd' the cammodit
cd
th f r o Uchon pro . Y
press. III e Ofm of money. It follows th cess IS ex
funchon of money uncleI' soci al,s", , s as . at the eSSential
. .t . tlllwcrsal .
I.e., I expresses the value of all oth equwalenl
B d
cr cammod' t .
ut un er socialism money as th ' lies.
, e universal .
a content that is qualitatively new M equivalent has
is an instrument for the u'b
der
capitalism
for the domination of so 0 man y man, an in-
III socialist society money " people Over others but
d . . . 5 an Instrument f . '
an Improvmg socialist production ' th , or stImulating
eve,r more fully the requirement 'f a VI eW' to satisfying
society, Under socialist c dt' so c members of socialist
f
" on I Ions money .
a SOCialIst production relatio : IS an expression
is used as the universal mens; It cannot capital,
hng the production and d' t 'ban,s of accountIng and control
is the economic the social product; it
amy. or p annmg the national econ'
. The radical change in the na .
clety and in its socio e ' ture of money In socialist so'
the changed functions fconomlc content is made apparent in
o money.
Functions or money The basic function of mon . t
. as the ey I S a serve
ThIS means that the I measure of value of commodities.
m d . va ue of all th h
easure 10 money B t . e ot er commodities is
value is fulfilled ani b money s function as the measure of
haT' hvalue, and this aslda commodity which itself
e value of the c y IS go .
as we already e.xpressed in money is called,
eXists in the form of of the commodity. Soviet
Se S t e. place of gold. Th an. treasury notes. which
Th . SR .. IS the Soviet ruble a e money unit in the
contains are measured in rubles.
. e unction of money grarnmcs of gold
Ism makes it . as a rneasur fl
the amou t losslble to control th e 0 va ue under social
value. 0 . consumption. In its of labour and
of commodit IS used by the state hnchon as a measure of
les. w en planning the prices
28Q
In socialist economy money fulfils the function of a meazz5
of circulation. In this way it serves in trading. and is thp
medium in commodity circulation. which is planned and
regulated by the socialist date.
Under socialism. money is also a means of payment. This
function is seen primarily in the wages paid to industrial.
office and other workers. in the money incomes of col1ective
farmers, in repayment of loans, in tax payments, etc.
Money as a means of payment is used by the state for
organising finance and credit relations in the national ec')n
amy, for the financial control over the work of socialist enter'

pl'lses.
Money under socialism fulfils the function of 1 "1leans of
socialist accumulation and saving. This function is fulfilkd
when the resources and incomes of the working .,eople that
arc temporarily not in usc, and also the ac .ullulal d money
of socialist enterprises and various organisatjons.
and used for the needs of accumulation is 1150 cssed
in the savings which working pe.ople put I1to savings b"k
Under socialist conditions, accumulated money does n t
give rise to exploitation of man bv man. 2'5 is t'le "5 .. under
capitalism.
In socialist society. gold performs the fu!)c tiOD .of world
currency, in its role as international means of p.:ymC"lt. uni-
versal purchasing medium and reserve fund.
Such are the functions of money under social sm. These
functions are not isolated from each other. On the contrt- Y
they are closely interrelated. In this of fune
Hons we see the substance of money as 1 urhers,' eQu'ualenl
and its role in the soc.llist economy.
!." the normal way money ..:an fulfil the
Money circulation role of universal equivalent only if the
under socialism dlDount of money aV:iilable corresponds
to the national ec(momy's real need of
it as a medium .of cU'culalion and means of payment
The amount of money required for circulation is chiefly
defined by the total of priCt's of tbe comnloditi es cil
eulalion divideci bv the pe10city of the circulation f money-
To keep the cOl'reu balance between the
of commodities and .'le lmount of money 10 ctrculatlon I S
one of the most impol lot cOllnitions ensuring :10rmal
course of ('conom I,. ife in theountl'Y On the basts -:'\f the
law of money circulation, the state regulates th .
of money and makes planned use of it to furth C h clrcu1 atio
n
ment of the national economy. The money . er C develop.
regulated the planning of state finanlc: Circulation is
cash and credIt plans. 5, through the
A vital factor affecting the ci rcul ation of
PO
t" bt h ' money is th
r Ion e ween t e Incomes of the popul f e pro-
hand. and the volume of the commodlOty at lon, on the one
0d f b urnOYcr a d
services pal or y the population, on the oth n the
cash plan of the State Bank is drawn u f cr. The current
on the basis of the by the
Income and expenditure of the population. n the money
. !he current cash plan of the State Bank show
ticIP.ated cash payments into the State B k s all the an-
receIved from trading organi sations ( an , as: money
of all deposits), receipts from public t an
communications, tax payments enterprises,
Its, etc. The plan also reflect s the a ' t f gs bank depos-
by the State Bank in wa es to moun 0 money paid out
tive farmers against to collec-
their members against state s, t o lectlve farms and
to pensioners, allowances 0 payments
diture in the current .} e ra 10 0 mcome to expen-
regulate the amount of m p .an the State Bank to
PI d oney m CIrculation
anne organisation of th . I' .
ist conditions helps to t e of. money in social-
money. s rengt en cIrculatIon and stabilise
The stability of mone d ..
by the gold reserve bur er is ensured not onl y
contr.ols vast of by th: fact that the state
culation at fixed stabl .mo Ittes put mto commodity cir-
rency is the st bf pnces. of thi s, Soviet cUI'"
develops a th: 1U the wor ld. As socialist
Important in thi vIet ruble grows stronger Very
f
. s respect was the t f Id 0
o pnces and the . en 0 lDcrease in the scale
introduced on the gold content of the ruble,
30 The Law of V I
The f a ue In Socialist Economy
. act that commodi
Ism means that th 1 ty production exist s under social-
omv. e aw of value 0/ operates in sociali st
Under socialism the substance of the law of value is as
follows: the l?roduetion and exchange of goods proceeds in
WIth the quantity of socially necessary labour
embodIed 10 them.
The law of value began to operate at the same time as
commodity production appeared. As commodity produdion
developed, the sphere of operation of the law of value ex'
panded. Under capitalism the law of value has become
v.ersal. !n it is the regulator of production,
and dlsttlbutlon of capital and of power
lD the varlOUS branches of production.
Under socialism the law of value does not have the
scope. under capitalism. Its sphere of operation i!':
hmlted. ThlS IS because of the existence under socialism of
socialist ownership of the means of product"on and planned
economy.
In socialist society the law of value is not the regulator
of and of the distribution of the means of pro
duetton and of labour among the branches of the national
economy. This is all done by the state planning organs accord-
ing to the law of the planned. proportional development of
the national economy. In -;ociaLst condition. not onlY is the
sphere of operation of the law of value tiffcrer.t 'ut the W<iy
it operates is also changed. It DO longer (unctie' -s - - an
force that dominates people.
In planning socialist economy, aCCC'UIlt 11=s to be taken of
the way the law of value works. AboVE:: aJ
l
it is impo-tant to
use the law of value in price formation the law of vllue
operates through the mechaniSm of plices. l'nder socialism.
prices are not determined sPOIltancom!y l"lel' lIe. planned.
The socialist state prices on bas:s of the
amount of socially necessary labour spent to produce the
commodities. i.e . on the basis of value. It is here that the
state makes practical use of the law of value.
Out of national-economic considerations, t'le ':'ClciaEst state
fixes the prices of commodities either above or below their
value. Through its prices policy, the caD use part of
the revenue from onc branch of the economy to bring about
rapid advances in other br.lDl.:-hcs. Consequently. -."Ie variation
between price lnd v0l1uc is a procl!SS that planned in
advance by the state.
When fixing the prices of con
SUmer goods [
the state takes into ac:count not only th' Or example
ratio of supply to demand. Clr value, but th'
. The socialist state makes use of the law e
stJmulate growth production, to raise labo . of. value to
?nd lower productlon costs, and to cnsu th
1
Pl0ductivity
IS profitable. re at produCtion
4. Trade Under Socialism
Nature and role Sinc th d
ot trade under . c e pro ucts of labour in soci r
socialism arc commoditics, ther h a 1St
IneVItably be con d' . e s auld
an intermediary link between prod /mo Ity CIrculation as
, form which commodity and consumption,
Ism. IS, trade. Through trade, relation . social-
soclahst enterprises betwee t s dIe mamtamed between
socialist productiod and p an country, and behveen
fying ever more fully th u thereby satis-
ing people. e growIng reqUIrements of the work-
There is a fundamental d'ff
and capitalist trade. 1 erence between socialist trade
Socialist trade rests on s . 1 .
production. Because this is OCla . of the means of
countries. The state plans d
t
IS in the socialist
trade turnover the' . etermInes the volume of the
. 1. . pl'lces CIrculation t d
SOCIa Ism is not for th' cos s, etc. Tra e under
ing some people at th purpose of making profits and enrich
rience the marketing e .expense of others; it does not expe-
Trade plays a big common. to capitalist trade.
expanding the Ink developIng socialist production,
the quality of commod'fmar et. promoting improvements in
link both within the t
l
:es, etc. As the intermediary economic
between the state secSt:r e of the nat,ional economy and
trade promotes the pro an thf e Co-operatIve sector socialist
Trade is an import t
C
:
ss
0 socialist
to labou Th an mstrument' d b .
r. rough the mcdiu f ,lStrI ution accordmg
exchange the mone m SOCialIst trade. the working
t c goods they y them for thejr labour for
effect on Under socialism trade has
ucbon. Trade helps to b . consumption as well on pro
nng new c
onsumer goods into cir-
and stimulates the population to put forward neW',
rational demands and to acquire new tastes.
Trade is also a most important factor in strengthening the
country's financial, credit and monetary system.
As experience in the U.S.S.R. shows.
Forms of trade trade under socialism assume; three
under socialism forms; state, co-operative and :ollec'
live-farm trade.
State trade is the highest stage of socialisation of commod-
ity cil:culation. It is conducted by trading organisahons, the
materIal resources and money of which belong to the state.
State trade plays the leading, dominant role in the toding
system under socialism. The greater part of the manufat i
goods produced in state enterprises and a considerable pro
portion of the marketable agricultural produce are handled
by state trading organisations. In 1962. for example state
trade handled 67.3 per cent of the total Soviet retaIl G"lde
turnover. State trading organisations chiefly serve the popu'
lation in towns and industrial centres.
Co-operative trade is conducted mainly by the lradin\.
terprises of the system of consumer co-operative' The lon'
sumer co-operatives account for nearly nine-tenths -f "le
total co-operative trade turnover. They arc engaged tor the
most part in supplying manufactured goods to the ru:-!
population and handling purchases of agricultural produce,
which they sell on a commission basis. Co-operative trade
in the U.S.S.R. in 1962 accounted for 28.l per cent of the
retail trade turnover
The state and co-operative trading sy .. , ms share n
them the public catering establishments'
public dining rooms, restaurants, etc lnd c,'
operative trade were jointly responsible for 95.] per cent
of the country's total trade turnover in 1962. These two kinds
of trade form the organist.?d market. There is in addition an
unorganiscd market. in the shape of collective-farm tradi ng.
Collective-farm trade is conducted by the collective farms
nnd their individual members who sell their surplus produce
to the population at prices detc'-:nincd by supply and demand.
But the level of these pr:ces economically influenced. by
state and co' operative- trade.
As state and co--operative trade expands, the importance
of the unorganised market diminishes. Collective' farm trade
205
accounted l or only 14.3 per cent of th t I
in 1940, 8.7 per cent in 1955 and 43" ota trade tUrno,
' . per cent . er
. There 8 1:C two types of rctail
ln
,
19
62.
Retail prices and rcspondmg to the two f prices
. uJ d ' arms of '
Clfe ahon. costs un cr socIali sm: those of th market
in tradmg market and those of the C
market. unorganistd
,In YS.S.R., organised market pri ces arc t
mdustry and in the trading Wholesal e
prtces In state and co-operative trading ent . s, the retail
purchase prices paid for the marketable and the
state by the collective farms and their rne!b ucts sold to the
State retail prices, i.e., the pri ces at h .c
h
'
goods and food to the Wo Ie state sells
leading part in the socialist trading syst:'m play the
and fixed by the state for each kind of are planned
For the majority of manufactured cd thY' . .
sa?'le throughout the Soviet Union t e IS the
prIces are graded d ' ,U or certaIn foods,
The ret'l . accor mg to zones a nd seasons
al prlces on the 0 . d .
to spontaneous fluctuations . market are not subject
and to what ext ' u ey are altered when, how
to achieve immee;t tthe state it necessary in order
state never fixes lao e and political tasks. But the
value of the It takes into account the
The continuous gro th f . l '
labour productivit 0 l.st producti on, the rise in
possible red m costs make
reductions in retail In prIces. Consecutive
of improving the w 11-b un f
ef
socIalism are one of the ways
Th e eIng a the people
ere can be no trad . h . .
socialist trading tel Wlt .out CIfculation costs; these, in
tion costs. ota Iy dIfferent from capitalist circula-
the trading enterp costs under socialism afe the expenses
rIses and orga ' tj" .
commodities to th Olsa ons Incur when bnngmg
They coen from the place where they are
m trading enterpris:
l
: e wages of the people working
trading establishments' charges, maintenance of
expenses, facilities, packaging costs,
credIt, etc. The level f . Interest on money obtained on
perce ta 0 c1rculati
b n ge of the trade tu costs, measured as a
y the state. rnover, IS planned and laid down
286
Reductions in circulation costs are commOn in socialist
trade. In the U.S.S.R .. for instance, circulation costs in 1928
amounted to 19.1 per cent of the trade turnover. in 1940
9.1 per cent. and in 1962-1.1 per cent.
in circulation costs serve as the overall quali-
mdex of the of work in the trading organisa"
twns; they are also l3.n Important source of socialist accumu"
lation.
In socialist trade, the level of circulation costs is consider-
ably below that in the capitalist countries. In the U.S.A., for
instance. circulation costs are as much as one-th!rd of the
sum total of retail trade prices.
Foreign trade
In socialist countries, foreign trade is
conducted alongside interlaj trade.
Through foreign trade it is possible to make use of the
advantages of the international division of labour
Foreign trade in capitalist countries is chiefly conducted
by the private capitalist monopolies. In the socialist countries
foreign trade is conducted by the state. One of the first
decrees of Soviet power declared foreign trade to be a state
monopoly. Monopoly of foreign trade means that all trade
operations involving the import and export of commodi!ies
are conducted by the state.
The monopoly of foreign trade guarantees that the socialist
countries will be economically independent of the capitalist
world, and their internal markets protected against forE gn
capitaL At the same time foreign trade monopoly helps to
promote economic co-operation among the s,:,cialist countries.
Foreign trade is also an important fonn of economic rela-
tions with the countries of the capitalist world. The socialist
countries do all in their power to extend trade among
themselves on the basis of the international division of labour.
but they also trade with the capitalist countries. The foreign
trade of the socialist countries is carried out on the basis
of respect for national sovereignty. complete equality
between the contracting parties. and mutual advantage
without political conditions or dictation.
The steady development of the national economies the
U.S.S.R. and the other socialist countries leads to a continual
expansion of the foreign trade turnover.
. -
Chap t e r XIV
DISTRIBUTION ACCORDING TO WORK
AND FORMS OF PAYMENT FOR WORK
UNDER SOCIALISM
1. The Law of Distribution
According to Work
Every mode of production h .
The relations in d. a: .lb
ts
mode of
III production. IS rI utlon correspond to those
Under capitalism distributi .
the exploiting class h on proceeds In the interests of
1
es, W 0 appropr," t 1
arge part of the social od a e as surp us value a
workers. Distributio pr uct created by the labour of
d
. n occurs not acco d"
accor Illg to capital. r mg to work done, but
Under socialism the social .
to .the work perform d d IS distributed according
objective necessity : a2 thIs form of distribution is an
that production takes t
S
ue to the fact, on the one hand,
of means of ad the basis of socialist ownership
productive forces at th ' an. ' on the other hand that the
the level where it is e sO.bf
list
stage have not reached
to need In e to distribute material wealth
prIme necessity of life b I.lon,. labour has not yet become a
conseque tl ut IS stlll a f" d
s . r n y, requires the a . means a SubsIstence an ,
basic differences reward. Finally, under
U a and also bet between mental and
SOdcIalism, it is and unskiIled work.
n an well-being in . at solely determines man's
SOcIety A d" "
. CCor mgly, the quantity
288
and. quality of the work contributed by each member of
SOCIety can alone be t?C measure of the distribution of con-
sumer goods under SOCIalism.
according to work is an economic law of
socialIst socIety.
. In distribution according to work we find one of the most
socialism has over capitalism. The
of matenal wealth according to work excludes
uneal'Ded lDcomes and ,Parasitism which drain away vast
resources from and from satisfying the require-
ments of the workmg people. It is an important stimulus for
the development of production, offering boundless scope for
the workers to develop their abilities. Lenin said that the
principle "he who does not work, neither shall he eat" con-
tains "the basis of socialism, the indefeasible source of its
strength, the indestructible pledge of its final victory".!
The law of distl"ibution according to work means that there
should be: 1) distlibution of the fund of commodities avail-
able for personal consumption according to the amount and
quality of the work contributed. This ensures that working
people have a material interest in the fullest and most efficient
use of theil' working hows; 2) higher payment for skilled as
against unskilled work over equal periods of labour-time.
This is an incentive to working people to raise their technical
qualifications; and 3) higher material encouragement for
labour in the more arduous branches of production (iron and
steel industry, coal mining and certain other industries)
as compared with labour under nonnal conditions. This
gives material compensation for additional expenditure of
work.
The economic law of distribution according to work is an
expression of the need to distribute material wealth in direct
relation to the quantity and quality of work contributed by
everyone, and to give equal pay for equal work to all citizens
irrespective of sex, age, race or nationality. .
The economic law of distribution according to work remalDS
in force throughout the period of communist construction.
"In the coming twenty years," the Programme. of the C:F,S.U.
points out, "payment according to work wIll rernalD the
1 Lenin, Selected Works, VoL 2, p. 767.
19-679 289
principal source for sati sfying the material and I
needs of the working people.'" The transiti on to
distribution will come about when an a bundance of m
wealth and cultural values has been attained and whcn
a
cOal
. t f I C work becomes a pnrne nccessl y Ol e,
Only part of the gross social product is di stributed aCCord
ing to work.
When Marx wrote hi s Critique 01 the Gotha Prog
ramm
he pointed out that for soci ety to function
deVelop normally, the follOWIng should be set aside out of
the total social product: a) cover for r eplacement of the
means of production; b) additional portion for expansion of
production; c) reserve or insurance funds ; d) the cost of
administering and maintaining schools, hospitals, etc.; e) funds
for the maintenance of people unable to work.
The part of the gross social product required for the needs
of the country's defence must be deducted as well.
It follows that only that part of the total social product
which forms the personal consumption fund is distributed
according to work.
The part of the product of labour which goes into the
personal consumption fund for the workers engaged in
material production is known as the 11eCessary product, and
the labour which creates it, as necessary labour.
The part of the product of labour which goes into the
public fund, not including expenditure to replace the used-up
means of production (public consumption, accumulation,
etc.), is called the surplus product. and the labour
which creates it-surplus labour. But an increasingly large
part of social product goes to working people through
the pUblic funds, which annually grow absolutely and
relattvely.
product under socialism is not used in the interests
of mdlvlduals, but in order to meet the needs of society as
bewhole and each individually. It is not surplus value,
SOcialIsm there is no exploiting class and no
exploitatIon.
according to work ensures that people have
a materIal lnterest in the results of production, stimulates
I The Road lQ Communism, p. 538.
290
increased labour plodu( tivity, raise.s the skill of
improve Jucti, n It also ',m!
educational side, sinl.:c t ( ... ,hes pe ' pIc soclahst U sClpl me
ilnd makes work univ and compul:tory .
Material incentive is nccc_::.:y undt.: , b;--!usc
work has not yet become a nec !HOlty. of lJ a!l
members of society. Under .QI.;J.hsm, t?e.survv,-ls c . .:a
J
, _:
i<;m in people's minds are not yet ehmmated once ,ano , )1
all. Side by side with the bulk of the who
perform their duty to society, people ean 5 b.e founld ;;,h
arc not conscicnf au 1 their wO] k or who vlolate u ur
discipline. . " 1 d ;
The principle of materta! exc u es .. n
practice any :;ort of equaH. ation in the WSL,11 utI n f matenal
wealth. .bI th odal.
Equal distribution of proju.cts .is e WI ..
ism. The economic law of ng 0
necessitates a decisive st:"UggIe equahsmg Tl.
f 11 the efforts of petty-r,o rgeOJS theoretic. ac::.
purpose 0 a . . ... t r L,. I t<> '
to ascribe to Marxism-Lemrusm the, le.wpo. 1 '- ,
equality is deliberate!y .to di,stort r.e:--.".sm. "
Equality under 1I: the Marx.st-Le:unI t n:am.n'--o.
docs not mean levelling iT! 'ne spnc _ :1: -anal
ments and everyday life of ,.:on u='tion), but Sl.. .aI
equality, i.e., equality in relation t;:- tb .. mons of
equal freedom from exploitatlon of all : eOD c,
abolition (applying equa:1y t? all per:;;)!1s) of pnvate
ship of the n eans of . roductioTl, the .equal r 1ht I..V
to work and 0 i}ave a snare In m;;.tclal we:! .h .n ,.ccOh .... nce
with the hbour . . .
Thus .OClaJ lsn l ut equal-sation, but
.' . h . ,lace :n ' WO ways : In t e accordmg t() worK W JL.I ld<;:CS -" ,. d
form of wages lndustda1 offi ce .and other anI
in the form of paYIDC:1t for work in cooperatl.\e an co-
lcctivc-fdrm cnterprlses. c:.e , '\0 _, _. I- Th . ' . ns of ':1e
tion of the law of distri bution according to work
the difference bctween thc t\,;o fo nns of ownershiP. 0 d
means of oW::lershi;' and co-operatIve an
. .
col e_:..:ve , .1 1"01 OW' t smp.
291
Nature and
organisation
or wages
2" Wages Under Socialism
The existence under soci<llism f
modity production and the law of Com-
determines the need for Wo value
f
ages i
monetary arm. The monetary f n
wages provides for flexibility and differentiation . 0:1 of
mining the share each worker should have of th:
product. depending on the quantity and quality of his soclkal
L b
"t cd" WOr
a aUf power IS no a comm lty under socialism. . .'
neither bought nor sold, and therefore has neither valu' It IS
"" B f h" nor
puce. ecause a t IS, wages arc not a form of the val
the of labour power, but are a form of
materIal wealth according to work.
Wages under socialism arc the proportion, expressed in
money, of social product, which serves to compensate for
the expendIture of n.ecessary labour, and which is paid out
by the accordmg to the quantity and quality of the
contributed, to every worker in state socialist enter'
prIses.
The of wages under socialism is planned by society
the. basIS of the existing level of production. The state
etermmes the size of the fund for distribution accordiDJ
to work, which the people get in the form of wages for
use; the state also determines the rate at which
be h uhn . increase, bearing in mind the interests of
at t e mdlVidual and the public
The socialist state u ". f
'. ses wages as an Important lever or
mcreasmg labour p cd t' . . .
fi t
" f r uc IVIty, ralsmg the technical quali'
ca Ions a the w k d I "
of 1 be or ers, an a so to ensure priority supphes
power to the most important branches of the
the wages it is possible to achieve
interests of between the individual material
{of the peop! e workhm
g
people and the interests of the state
eas aw ole}.
Wages depend on th l' fi
nature and compl .ty C
f
Q
h':1
a
1 cations of the worker and the
eXl 0 IS work
The sy:;tem of calculatin .
be simple and clear th 9 wages under socialism should
The prinCipal <i.
sO
t.:It worker can understand it.
d
men s 1n the '. f
un er <"oclalism are the' organIsatlon 0 wages
system. rating of wOlk and the grading
292
Ratinq of work is the establishment of the standard time
required to fulfil a definite job, or the amount of articles
produced per unit of time.
Rating of work at socialist enterprises differs in principle
from rating of work under capitalism. Under capitalism,
rating of work is a means of increasing plofits by intensifying
the exploitation of workers.
In socialist society rating of work makes for better organ-
isation of labour and production, in line with the latest
scientific and technical achievements.
Correct rating of work is based on technically justified
output standards calculated on the fullest use of technology
and the achievements of leading production workers and
innovators. Technically justified output standards are worked
out as progressive standards which take into account the
achievements of leading workers, but . e 'lot ed n ut-
standing individual achievements.
Progressive, technically jusl ..fied standar-is mark the trend
set by workel's whose labour produc ivity 1 above the
average: but they are within th: 1e!lch of WO.:tprs and
are therefore realistic standard:
Improvement of production re' ults with " ne in previously
proglessive technically justified ... 1 mdard' be "lm'ng "1utdated.
For this rea5('"n, the ne\,; ;sity ari .... to reView the s lIldards.
The object of reVJeWI 19 ;tandaras s to secure a more rapiJ
growth of the ryroductivily of lab u c myaTeU with the
growth of wages and to establish correc" pI 'po. On! In the
payment for lobour
When standards rev' ewed we see public interests
ombine with the p sonal est ""f each .. m;-loyee. which
is typical of SOCla11sm.
An important role in the correct organisation of wages is
played by the grading system. Through the grading system
the socialist state jiff ...... entiates the payment for work
depending on the nature, quality and conditions of work.. thc
branch of p1 U( tion, arc.] of the country. etc. The centra.hsed
regulation of the wales of industrial. and professlC'nal
workers t. ected th ough the system. .
"rhe gradinl. yst" consists of tk ...... elem.cnts 1) the skJ 11
lding hanl.. J k wow '1 is uSl!d ., dctctnune the of
work (according tc :14 w c:>mplkate...! it .Jnd the
tic ns -f the workc:'"': the handbook sphts the work up mto
29
ductlon of
reducld
The
Pol'Dll and "111 FFh.
"_
earnings are
make for a
labour
(higher
In
his own output, but on that of hi s colTceli '
raise the material interest of the worker M it whole, To
labour. collective piece-work is combined le. of his
. Wit Ind'
plcccratc payment. Thus, when calcubti ng th IVldual
by each member of the collecti ve, the 'skill earned
grade in the schedule) is taken into account worker (t he
number of hours worked. as well as the
With time-rates payment for labour is m d
of the hours worked, and the skill of the wo k C ?" the basis
into account. r cr IS also taken
With time-rates there is no di rect connection b
wo!ker' s output and hi s wages. Ti me-rates arc a the
accounting arc not possi ble As aed
sttmulus In time-rate payment th t' . b ddltionai
b
. ' C Ime- onus syst h
een extensIvely used in the US S R H . h' em as
. d . . .. Cl e t c arne t f
epends on the quantity a nd quality of the U\ 0
w
F
e as the time put in and the qualifi cations of the war k as
or example, there is the timc-b wor er.
workers employed in highl eJ'stem for skille<l
sectors of production as su y ",'lec aOlfs and automated
pervlsors 0 the eq . A
comprehensive mechanisaf d . ulpment. s
strides the em I IOn an automatI on make further
. p oyment of th f b
considerably. c tme- onus system increases
Time-rates are extensivel red
prises, engineers tech . . y apPdl t o manager s of enter-
paid fixed an who are
law of distribution d' are fixed In lIne WIth the economic
A . accor Ing to work
n Increased material in . .
is the system of a d centtve for these salaried workers
overfulfilment of These are give? for fulfilment or
range of articles is the stipulated
. an productIon costs are reduced.
wages of the constantly growing
comes and cultural needs of the
in the growth of real wor 109 people is vividly expressed
Real wages.
th wages are the amount of
e worker and his f'l consumer goods and services
W amI y can obt .
ages. am m exchange for their
,SOcialist production d I
ThIS IS seen in the' ev.e ops, real wiJ. ges ri se steadily.
po 1
' mcreasIng
pu abon. purchasing power of the
296
The steady real wages follows fr"Jm the wnole
policy of the .socialLt state- the discontinued to
state loans, reduced ag:lcultural taxes and other measures.
The living standard of working people in socialist society
not only on the amount of their wages. Under
socialism many of the people's needs are satisfied out of the
public consumption funds. Among these are well-appointed
housing communalseNlces, the lumber of children':.
institutions, free n, organisation of recrc tion and
medical services, building' for cultural pc-poses, pensions,
etc.
The public consumption funds increase continuously 10 the
U.S.S.R. They amounted to 14.800 million rubles in 1953. bu'
rose to 36,600 million rubles in 1964. An average of 357 :ub1e's
worth of grants and benefits fell to each person in
the national economy out of the funds in 19(,' 1D
addit ion to wages or incomes.
The sum total of the necessities of life that working peopic
are given both as payment for work according to quantity
and quality and as benefits from the public consumption funds
represents the real income of the !K'pulation. The real inco-nes
of workers and othel employees lD US C;.R keep increar-
ing all the time. In 19'=>4,63, Te",. inCOIf' _> 1- gainfcuv
employed) rose 61 .,er cent
3. Payment for \,,"ork on C3Uecth'c Fdrms
Collective-farm economv s ccnducte .... ..:'n the of: :h
members' work, w'lk':l is planned ar-d JS e c..:--m'
ponent part of the umtc..i lab.;)ur of social:st 6.,'C .. ty 3S a.
whole.
The output of prociucti0n, th ... size of the
income of the falnmd th:. wc(:::-e 01 ',:s depend
on the amount of wo:k hr. ;llmer5 do d.!.ld how
efficiently this work;5 Ol;;.!lll:iM.
Collective far'll incomes take the f(l "m of produce and
money. Thev arc c.:stributcd on the foJ:owLlg line".
Incomes ill kind (-.;)mIS' of products from crop-l'J.ising cmd
live .. tock-breeding. Out of the CNPS harvt"stoo Jnd the produce
from their livestock L'rccding, the collective farms fulfil their
i:'J7
undertakings to the state by selling products to "t
prices, and then selling of a number 0;
products on a volunteer basIs at speciaL highe; C,lPal
Timely fulfilment of undertakings by collcctiv Pt
ces
.
serves to ensure correct combination of the ;-rrns
farms and those of Soviet society as a whole. 0 the
When their undertakings to the state have been fulfill
the collective farms form their commonly-owned funds.
include: 1) seed resources; 2) fodder resources' 3) insur e
(ddfddf
'h ' anee
resources see an 0 er or use In t C event of crop fail
01' fodder shortages); 4) food resources for use after p:e
harvests; 5) the assistance fund to help the disabled or
families of servicemen, and for the upkeep of nurseri:
r
kindergartens and boarding-schools. 5,
fulfilling their obligations to the state and forming
thclr own commonly-owned funds, the collcctive farms
distribute the remainder of their income in kind among
their members according to the number of workday units
they have to their credit.
The collective farms derive most of their cash incomes
the sale of produce to the state and co-operative organ-
Isations and also to the public, on the collective-farm market.
!he first calls on their cash incomes are for income tax.
msurance payments and repayment of bank loan!
After settling these payments to the state, the collective
farm,s put aside a sum of money for the farms' commol"
These include: 1) allocations to the farm's non'
assets; 2) allocations for current production
reqUlremc.nts-mincral fertilisers, spare parts. fuel for machin-
ery, chemicals for pest and plant-disease control. etc,; 3) aUo'
cabo,ns for administration expenses; 4) allocations for cultural
a!1d equipping clubs, libraries, reading-
oms, cInemas, radIO 1l1stallations etc When fixing the
dmou t, . d ' ,
I
,n f 1 equlre for these allocations the state of the col-
ectlVe- arm econo d h '
. . my an t e appropriate relations between
.md accumulation are taken into account. Th'
h;n1am er the coll t' f ' d'
t"b t d ec lve ar:n's resources IS IS'
01 U C among the members,
l'lXl.;d targets ,'1' t'1 ., 0 ..
whk": hJ:0-:-non' - e -'- e of f :lnr. ploducts to the s.ate,
_. lse c 'II t f' 'n
l n -r -"ll w y f' ,,' lve arm Jnt"rest!., a!"c '-
, 0 d 0 mcrc..l.S '10 II . f St ble
s ..... es tarql:, a few v <. c echve 1:1ll incomes. a
e us ahe...:.d give -:mfidence to the
_9t
collective farmers in what they do and in the outlook for
their socialised farming, and stimulate the initiative of crop
and animal breeders_
As in the state enterprises, the amount paid for labour in
collective farm5 depends on the quantity and quality of the
labour contributed by each collective farmer, The economic
law of distribution according to labour is implemented in
collective farms through the system of workday units and
payment in cash. The wot}{day unit is a measure of the work
the collective farmer contributes to the common economy of
the farm; it also determines the share each member is entitled
to out of the farm's income,
Output quotas arc fixed for every type of work fulfilled on
the collective farm. Each type is assessed in terms of workday
units 01' cash, depending on how far the work is complicated
01' arduous, and how important it is for the collective farm.
Since the collective farms arc co-operative entcrpris:::s, the
actual amount of produce and money paid out against woo '{.
day units is finally determined at the end of the year :11,] I!
not the same for all collective farms. The incomes of colIe .... _ ve
far-ners depend, thereforC', not only on :he number of wOlyday
umts t .... the credit. but on the ot p ,r'uc'" mrl :-1..
per uni" that is available in the "'lrtk.llar collective fartn
hcre)singly important is the IJTQ ... ce of uing monthly
advanc'" to .he members, This th_t t 1(' members f
le '011ective farm can receive part of tht: proiuce mt m("n V
due to them for thei- work before he fi laJ distr bution is
nadp For this purpose the :ollectivc farms sel aside spec
funds of produce and ci!.h addition to this basic 'llethOCl
of payment, thcre are other "::.tyments (in k nd tl ld 1 h
to encourage members for wor ... well carried oul
The increasing profitabililv 01 1(. collective "atcs
an "eonomic situation whc ... t Wi' ndually p s:ible
to int'oducc monthly paj-nent fOI worK, P.::I.ymcnt in co '1 IS
a nire 'ldvanccd form: it gl "!atly stimulate' lug-hel labour
p - V ty among the colle.: vc-farn pe:}! antrv. ,'he t md
tion 0 cash payment wHl t'lkc place the e 10mlC l)osl1 on
01 each c ve fd n grow; 51
"The ef'onOJ'J'llt ..-'v')L nent of t'le kolkhozes, po'
qllmmt.: o' tll. ( P." J POll! -ut, "WI'} nakc I. to
p,,'fe I:j lft.'Jj z l;ztr.na, relatWl1S: to t'le d::; 'e to
wh ch ph .. !lUI._On ,ocialisb.. tl r: ng the rdte settin!:j
"
organisation and payment of labour closer to th
the forms employed at state enterprises and b ,f level and
monthly payment for work; to develo nng about
servIces morc broadly (pubHc catering k d P community
nurseries. and other services}."1 ,In ergartens and
The living standard of farmers has been'
establishment of pensions for collective by the
wide scale. rs on a country.
The real incomes of collective farmers ar "
to the growth of gross agricultural rISIng
1 b d
. Ion and hi h
a our UCtIvlty. Between 1913 and 1962 th 9, c.
peasants' Income in kind and cash from th' e working
fanning personal holdings, after
and levIes, and calculated. per collective-fa 9 a taxes
increased 4.9 times over (in comparable :m) member,
allowance .is made for benefits and grants and. if
state. the Increase was aporoximatcly 6 5 t' SoVI"
, lmes over
1 The Road to Communjsm. ). Ijx
Chapter XV
COST ACCOUNTING AND PROFITABILITY.
PRODUCTION COSTS AND PRICE
t Cost Accounting and Profitability
Policy of
economy amI Its
inlportanee
Planned guidance of sociali't e nomy
gives evel)' opportUnity for t.ffic"ent use
)f naterial and manpower
on t;c sc .... c o! SC" .::tv as 'i whole
Everyone wor1c;ing not f,jr C1Plt<lI' St!; Ind land1crds L.ut for
h;msclf anI! hls SOc ety -; .... hr the rat ona1
and cconc rriul 01 .. he wpaJ 1 (If s.:cie'Y ,md for the
'uifty manahcmcn' o. e
'"11e policy '}/ strict ecollomy unde Hf' lise manage-
mcn le 01 JC _ bf"' PlvuLlc.LJOn f vcr growing qL_nl es
or goc..l (.ual. J output with ,'lC smaljest expenditure of
ourc_. and lal our T"te Pro .. lmmc f the C.P.S.\.., oin"
out that "the mm..1table 1 w -f economic devplopmcnt s to
l1r:hlC.e m 'lL lrterc ts of the highest results II the
cvsl' 1
One c4' the nail'" c(lnoitions cn ... u lng 1 r:11 01
cveJoro
1 SOl 1 S1 Jnomy it to olbserve h4 poLey 01 sl-'L"

r lr v ex endi:.Ir of '11_:lpowc_ nJI ial and mt',ney
U._C"1 he.' llwc-i been oj import!u C 01
c..:c amy.
1 pul nl- 1 IlC ce 'e :lrJno pl..:>gralt"me
ut .ned ell the
&:11
Twenty-Second Congress of the C.P.S.U. lor the
of the productive forces, for rapid rates of ceon dcycloprnent
for a scale of economic and cuHu' 1 omle grOwth
the basIs of technical progress, demands
?f manpower, material and money rcSOUl' expenditure
Importance of the policy of strict economy he grOWing
of full-scale communist construction is the period.
understandable. erc ore
Implementation of this policy helps to I lfil
plans, reduce expenditure of labour and pU d a?d overfulfil
h
hi' 1'0 uchon co t
W Ie ower prIces of consumer goods b 5 S on
t
l t f .. are ased B tt
u lisa Ion 0 eXlstlllg productive capacitic . C e1'
of raw and other materials fuel clectrlc poS' economical USe
bl " Wel', etc m k .
POSSI e to lllcrease output without addition' I 'J a e It
resources. The more efficiently the not la expendIture of
d d h
"" lona economy i
ucte , t e more economical is the us d f s Con-
t
1 d emaeomanpo
rna ena an money resources th .dl wer.
. , e more rapI y w'n th
lan.d the material and cultural
I
stand:
. or Ing peop e Improve.
SovIet economy is v t d .
od
as, an savmg-even in trifle-
pr uce tremendous resul ts "Lo k ft th scan
pounds will take care of }Aesrmalel .and the
producti . . saVing In every
In every factory and collective farm is
national e In 0 enormous figures when calculated over the
conomy as a whole Th t h
ularly important at th .' a. IS W Y It becomes partie-
strict econom e plcsent tune to pursue a policy of
y.
To campaign now for c
more possibilities of' cO.nomy means finding more and
of achieving mo output and reducing costs;
and other efficient utilisation of raW
and waste of all ue 'de ectrIc po"",'er; of reducing spoilage
s, an unproductIve expenditure.
Cost aCcounting Cost accounting is the most important
economy. Cost ac of practiSing the strictest
ing of the means calculated conduct-
Capitalist r
t
can be of many kinds.
personal enrichment is for private gain, for
of other people's laboll e capltallsts through the exploitation
Cost accounting '.
with capitalist has nothing in common
not the personal self-into on. t hfe. determining factor here is
res 0 mdd 1
IV1 ua s, but the interests
302
of the whole of society. Under socialism, cost accounting
becomes possible in every separate enterprise, the object
being the best rcsults with the lcast expenditure in the man-
agement of the elltire socialist economy.
Cost accounting is a method of planned economic manage-
ment in socialist enterprises; it consists in comparing in
money terms the expenditure of the production of output
and the results of economic activities, in compensating fur
the expenditure of the enterprises out of their own incomes,
and in ensuring profitability of production. The Programme
of the c.P.S.U. proposes the task thus: "To promote cost
accounting in enterprises, to work for the stricte3t economy
and thrift. reduction of losses, lower production cost,; and
increased profitability."l
Money makes it possible to use the same for
measuring production, planning and control of living and
past labour, control of production costs, prk,O':'> and the
profitability of each enterprise. Cost e3tablishe;
the direct dependence of the financial*economic pOSition of
enterprises on the results of their activities.
The socialist state applies cost accounting ZSlD ec:nomic
lever influencing enterprises, keeping a strict .1CCOunt of
expenditures, controlling the result" .:'f t!1.c activ
ities of each enterp:ise, and also 35 an instrument securing
the fulfilment of the ;tate plan. Comistent enforcement and
further development of the profit morve embodied in cost
accounting. facilitates the solution of -nany problem;
of communist construction in the cu _. ent ?er:od.
Cost accounting operates in both :md ve-farm
enterprises.
The introduction of cost accounting at industrial enter--
prises involves providing the conditions required for the
most economical management of production. One of these
is to combine planned guidance by the socialist state with
independence for each enterprise in its economk activities.
The state puts the material and financial resources
for plan fultilmcnt at the disposal of every state enterpl'1SC
and organisation which operate on the cost accounting system.
In thelr relations w;th one ,noL'll':l' these arc
independent juridic;tl Jmi cconomk units. They arc fUl'tnCl'
fhe Road tv C, '1Jn.:.:..nisDJ, p 53u.
303
given the right to recruit personnel to .
advanced training to their workers, anl to a basic and
system of payment for work. PP Y One Or other
Enterprises working on the cost accounting b .
independent reflecting the b d:aw Up
th
. .. .. Th aSlC Indlc
ell' economIc activItIes. cy have current a es of
k
. CCOunts t h
Ban , where they depOSit their money and ate
which they settle accounts with other enterprise ;hroug
h
isations, s an organ-
The overall effect of these provisions is to bl
I
. enaeth
managers 0 state enterprIses and economic organ- t- e
tk td
" . lsa Ions to
a e promp eCl$IOns on questions arising in the
I cd
. Course of
management 0 pr uchon, to show economic inl-t- t-
fI
-b-I- - d- I la Ive and
ex} llty m lsposing 0 their output and financl-al
d h
resources
an to ac leve plan fulfilment with the smallest -hI'
expenditure. poSSI e
. The enterprises have independence of economic opera'
tIon framework of the targets set by the statt
plan. gIvmg these enterprises independence of economic
operation. the state makes them materially responsible for
the safety and the correct and most efficient use of their
res(:mrc.es and for the fulfilment of the plan and of their
oblIgations to the state budget, to their suppliers and
customers.
FUl.filment of the main targets laid down in the plan by the
agencies is a law of every enterprise. Managers of
are responsible for the economic activity of their
enterpnses.
b relations between the enterprises are regulated
Y
f
th nomIC contracts. Contractual relations are a featuft
o e cost accounti E - - th-
sy t b h ng system. nterpnses operatmg on IS
th
s
. em uy t e means of production they require and
elr output to t . h I
relations. cus omers WIt whom they have contractua
Their contracts sf I h h
volum IpU .ate t e conditions of supply, t e
dates quality of output, delivery dates, prices,
sibility for 0 payment, forms and extent of respon-
Strict of the .contractual conditions.
requirements of co esto IS one of the most important
",_ . accountmg.
"'-Nst accounbng im li
economic activity of financial control of the
enterpnses. This means that the

amount of financial resources an enterprise receives depends
directly on the results of its work. Non-fulfilment of the plan
for production and accumulation, or expenditure over and
above that stipulated in the plan creates financial difficulties
for the enterprise when settling accounts with suppliers or
meeting obligations towards finance and credit organs, and
this in turn involves the application of economic sanctions.
Financial control is implemented by the finance and credit
bodies. They make this control effective when providing
money and credit to the enterprise concerned and when
accounts for commodities supplied are settled.
Financial control prompts the enterprise to be more rigid
in its observance of the policy of stric: economy and to
accelerate the turnover of its resources.
Cost accounting presupposes material interest on the part
of the enterprise and the workers, including the managerial
personnel. in the fulfilment of the plan 3.nd n th(.': economh.:
and efficient working of the enterpris-
The material interest of the working per' onnel IS ensured
by the system of wages and bonuses thal z cord.. With the
economic law of distribution according to lab< lr. The
workers' collective and individual naterial ltere)[ in the
way their enterprises function s eT1h_ wed v the es. iblish-
ment of special fund;,.
Three types of funds are set up at ociali t 11 PllSCS ou.
of deductions from their profits
1 A development fund, which, in adl hon ,J dedu," m'
from profits. absorbs part of the depreciation aneys. Th:
enterprises use the development fund 11 their own discretion
for technical improvements and the fill enl vat on of their
fixed assets.
2. An incentives fund, the moneys of which Jre spent on
bonuses to workers for individual accomplishments and good
general production results. Fron l-jis fund factory and office
workers are paid bonuses for 3.1 hieving good production
targets during the veal', as well as special end-oHhe-year
premium wrkh take into account he If 19th 01 mintcrruptcd
sel v ce lt ... ntcrpl'1se ncerned. .
3. A nell cultural and housing iUlld, the moneys of
spenl on house bu. ding (ove] above tle
e.llol.; ati, n fc housl lC \ building mu JJ'laintaining c.!llidren s
-
institutions. Young Pioneer camps, holiday homes d
toria, and on other socia-cultural services. an sana-
Consequently, under the system of cost accOunf
enterprise as a whole and every individual the
inte,rest in the fu.lfilmcnt and ovcrfulfilmcnt a
plan, In makmg the operatIon of the enterprise as CCono .the
and profitable as possible. mlcal
Cost accounting places socialist
.. . . enter
prISCS In a posItIon where they ha
Profitability
of the enterprise
h
" h Ye to
ae lcve t e greatest possible eeon
in the use of resources and be managed profitably. amy
Profitability of the enterprise means that the resourc .
" f h 1 f" h es It
acqUIres rom t e sa e 0 Its output 5 auld show a profit as
well as cover outlays.
If the enterprise spends more on output than the sOciall
expenditure, then it cannot recover its expenses anl
wlll show a loss. B.ut the enterprise that spends the same
amount as the necessary expenditure, or less, is
managed profitably. In lts planned economic activity the state
out from the need for all enterprises and branches of
mdustry to be profitable.
socialism, the increased profitability of certain
does not run counter to the interests of other
e.nterprIses but, on the contrary, creates favourable condi-
tions for the more rapid development of the entire national
for . years to come. The profitability of
enterprises IS not subject to spontaneous, fortuitous
price fluctuations. Planned management of the economy
ensures that the sale of output will be at firm, planned prices.
2. Assets of Enterprises Under Cost Accounting
of
The process requires labour power and means
pro uctIon These cons' t f h " 1 b
(rna h' '. IS 0 t e lDstruments of a our
and factory premises, etc)
manufactures, etc.).a our (raw and other materIals, fuel.
The means of prod t'
Production ass ts f uc I?n. are known as production assets.
fixed assets 0 enterprises are divided into
of the cirCuit. assets In turnover, depending on the nature
806
Fixed aSletl Fixed assets include the means of pro
duction which serve the production
process over a long period. They transfer their value to the
products piecemeal, as they wear out.
Acco:rding to the Soviet classification, fixed production
assets Include: production buildings and installations, power
.and .machmcry, apparatus, transmission gear. transport
facllitlcs, Instruments and tools (with a working life of over
onc year and valued at more than 50 rubles), piping sYstem! ..
roadways and road surfacing, dams, water-supply systems,
installations for irrigation and land improvemc"lt, draught and
productive livestock, etc.
Fixed production assets represent the productive ground
work of socialist society.
One of the most important demands required of enterpnst: .
operating on the cost accounting system is the economic.u
use of fixed assets. Improvement in the use of fixed assets
makes it possible to increase output and redu( e pI ,.Iuction
costs without additional capital investment.
As they are used in production. the Deed !$Scts gl ldually
depreciate. There are two distinct types 0'" depree_tion
physical and moral.
Physical depreciation is the wearing out the fixed lssets
due to physical or chemical action during th.. production
process or due to the influence of natural factor
Moral depreciation is the result of technical proG're"'.I"1ls
form of depreciation means that, with .ole developmem of
technology, it becomes profitable to usc neVi. more prodp_ ::ve
and cheaper machines rather th .. --1 to kee!," old ones. Con-
sequently the machines and other elements of the fixeJ assets
become before they are physically worn out. In
order, therefore. to curtail the losses in\,oh'ed in moral
depreciation of the ixed assets. equipment must be modernised
on planned lines. It must be used to full capaCIty, avoiding
stoppages. etc.
Fixed assets, as they wear out, are replaced out of the
depreciation funds, which are fOimed by including in the
value of the finished output that part of the value of the fixed
assets which corresponds to the value of the parts worn out.
state uses part or the funds of state
cntel'pI iscs to Uxcci assets as they go out of commlS-
sian, while the
enterprises and
assets.
other part is left at the disposal of h
is spent on fully restoring the
The amount of the fixed assets of state enterprises is .
the main enlarged out of the accumulated part of the
income. Between 1928 and 1962 the fixed production asset
of the U.S.S.R. almost over, those
industrial and bUlldlOg concerns lOcreasmg approximately
46 times over.
In Soviet economy there are fixed non-productive assels
as well as fixed production assets, The property of the socialk
state or of the collective farms and co-operatives which serves
non-productive public consumption over a number of years
is called the fixed non-productive assets. These include living
accommodation, the buildings, installations and equipment ..
institutions and organisations connected with educatior
he,lIth services, communal services. administration, :ul lIe E. C
A t i t
Assets in turnover are that pa- f thl
sse s n urnover f d h. .
mellns 0 pro uetJon W leh IS 'lm-
pletcly used up in nrod", on duo ing one production penoc
and tl-te value of WhH.:h is in ful to the fini h
p.oJuct. Mate ially expressed. they include 1l productiol
stock!" in warehouses-raw materials. basic snl lUXUlaly
materIals. bel. scm- m",nufa( .lrcd lruc'cs purchased for
in production. spare parts "or runninr r"'pe. s. tools 'II '
value and little durability. etc.. and 2) unpOi hed outprt.
semi manu: 1C" Jred artic'cs and outlays in later years (fX
pcnditur" il"l;;.;.rred Lltrocucing new tires of pr ..'Iuction
I)repa:-.Itory and other work calculated f .. ,,""'n. lue ('Iver
'onF period).
f ente
l lnc composition .::If the 'as: ets in f\.i.-over
p:- - IS SilOWtl In the schemc on page 309.
Circulatinc asseh Besides fixed ,Sl:ict and ;>1 III
. turnover s( _lalist cn.L"1'risc:. re U Je
,1clJ:tional l"e:;.ource, serv'" In the lSI hel,.; IJf or H ... t n
T .. outp\!:- fr::":l ocia1i!-.t ",.,ter r _es .. 51lc-l accodir.. .0
p '1 aLe: L:.e enter: ris _ lecewe money In exchange F ...
t.:: :t t"'lat.It a 9iv_n mompnt entcplisc_ und!..r rle
",0 t --oantinA'. :n, brsides "laVIng af'd lssets
11 nc. er, :JS _ S e amOlmt of man III l' 1]
\! t We.tU: . tu S 1 a j f d
- - "" n c sum money drea V rc\.._ ""
: t 1 sale .... f au ut .i.h_ ...: 1'tS waiting t be
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sold and the financial resources of the enterprise rc .
for purchasing raw materials, fuel, etc., together
h d mit, assets OIl an .
Assets in turnover and assets on hand expressed in rna
constitute the circulating assets of the enterprise. The
component parts of the means of circulation have differ
ways of serving the process of reproduction: assets in
operate in the. sphere of producti?". and assets on hand-in
that of circulatlon. Both operate withm the framework of the
turnover of the means of the enterprise.
The circulating assets of socialist enterprises are divided
into those of the enterprise and borrowed means.
A state enterprise's own circulating assets arc placed at
its disposal by the state, the amount representing its minimum
necessary requirements for the fulfilment of the production
plan. Any other means the enterprise may require at certain
periods of the year in connection with seasonal purchases of
raw materials and fuel. or because commodities are held up
in transport, etc., are obtained in the form of credits from
the State Bank. Credits from the State Bank are repayable
with interest strictly within the stipulated time (not more than
one year).
The state provides enterprises with only the minimum
means in order to promote their economical spending and to
accelerate their turnover.
The velocity of the turnover of circulat-
ing assets is one of the general char'
acteristics of the activities of enterprises
and economic organisations. Their circulating assets are in
continual motion and pass through three consecutive stages.
This continual motion is called the turnover of thtZ circulating
assets.
At the first stage of the turnover the circulating assets in
state enterprise are transformed from the monetary form
mto the form of production stocks, i.e., become the means
of production intended for production.
At the second stage of the turnover the production stocks
are used up and become finished articles. The circulating
assets are t?en in the sphere of productive consumption.
b At thIrd of the turnover the commodities produced
y t e are sold, and the Circulating
assume t e monetary form. This money is again spent on
810
acquiring pnduction stocks. etc., and the whole turnover i<;
taken by the circulating assets to pass
these consec:.ltive stages is knOW'1 as the complete penod 0
their turnovcr. . l' ts bles
Accelerating the turnover of the .C1TCU atmg th
h entcr rise on the cost accountIng system to curtal . e
t e k lraw and other material values used tn ')roductlon.
it possible to release part of .the assets
in order to expand production at the enteT""'!lse or to
use them in other branches of the national economy. .
The velOCity 01 the turnover of the of any
de ends on the time spent in produchon that srent 1D
(in the form of stocks commodlties r:ady to
Id etc) So the main factors whIch turnove
the c'i;culating assets are to reduce the hme on
o d t nand "eulation and to eliminate stocks m
pro uc 10... . rt to the nation
of the necessary Impo c"r,uating assets
economy of accele-lhng e turnover - -
is truly immense.
3. Production Costs and Prices of '!'tlanufactured Output
The value of 0 l:-:ut in s.ooety
Costs and their f ... 1s into three Pz:...ts: 11 value o!
structure In used-u .... means of productIon; 2) th
socialist eeonom;y l;f the Qu!"ryut created by necessary
vaue - I loom
labour; '3) the value of
The two palts !nterprises. The l!:lIr.i part of
productzon costs in SOC1, 1 . t
the value forms t'le _net. factory costs,
In industry, a dlstmct'on ':. espends to produce its
which include what the factory costs, include
output, and full costs, W :. rise with the
all the expenditure of the in other direc-
sale of output and also .cxpen x 1 of trusts and com-
tions (transport, packagmg, e. personnel on technical
bines on administration, on trtamthm
g
re<e,n'ch
d avmc:lt 0 e . -- d.al
propaganda, lin on P. fh oouction costs of in ustn
What the Sll'Ucture 0 '-' c pr
output 1 on the production of
t
s spends
Everyt;l "lg ',e en er:)n -
sr}
output is grouped according to economic chal"tlctcrist'
.. fthb' I Ie,
according to the composlt,lOn a c aSIC cements of pro:
duction, giving the followmg homogeneous groupings:
1. Wages, and additional charges on wages.
2. Outlay on raw and other materIals, fuel and electric
power, .
3. Depreciation allowance agamst the value of the used-up
means of production.
4. Outlays of the enterprise and its departments On the
managing and servicing of production.
The share of these different elements in production costs
varies, depending on the specific conditions and features of
the branch of industry, and also on its level of technical
equipment and the organisation of production and labour.
The principal ways of reducing production costs to ensure
an economy in the expenditure of social labour in all branches
of the national economy are to raise the labour productivity
of the employed workers, to reduce outlays on raw and other
materials, fuel and electric power per unit of output, and to
cut down expenditure on administration.
Reducing production costs is important, first and foremost.
because on this depends not only the profitability of the
individual enterprise, but the increased accumulation which
is used to expand socialist reproduction and raise the material
and cultural standards of the people. The drive to reduce
production costs is therefore particularly important. Over the
two decades (1961-80), reductions in industrial production
costs should produce an economy of 1,400-1,500 thousand
million rubles, representing almost three-fourths of the total
capital investment in the national economy.
Net income is the expression in
money of the value of the surplus
product created by surplus labour
Net income and
Us two forms
throughout socialist society.
. The net income of society, like the entire national income,
15 o:eated in the branches of material production. Part of the
net inCome created at state enterprises remains at the disposal
of the separate enterprises (in the form of profit), while the
part goes to the state. Net income is also created on
co ectivc farms. Part. of this is disposed of by the collective
fann.s, and the remamder, through the mechanism of prices
mcome tax, goes to the state.
lIow the Centralised Net Income 01 the state Is Formt'd
Oeductions from the
profits anel turnover
taxes paid by stale
entcrpri<;c3 and

Net
incoml;;:
of th

I
Charges for -,
insurance ca1clJ!alE'd I
on "he wz;:::es bili
Port ion of the net Income
coli {dive farms and )thl r
co-operative entE'rprses and

---=="'--
. wo main form: thf' ,'entralised nct
Net income appearSdlntht t income of entc'pri.;e
income of the state an. e ne
(and also of th.e farm). the state .s that palt of the
The celltral1sed net societ:,' ND-
value of the surplus pro u
f
h tate for .....n the
centrated in the hands 0 t e s
needs of the people as ,a t t budget turnover tax,
This income goe' mto test esocial cakubted
deductions from. .. enterpr:sf's,
on the wages bill. Income tax.O
ctc. . . e of the stale is allocated .for
The centnhsed net mcom _') 1 for fhancing capital
the needs of thC' people as. a "'th 0 eo' un"Y's exoenditure on
. t covenng e c . d.'
construction s'. h alth .:.erv1ces, pensions, a mIDIS'
defence, publtc eduClI.on, e .
tration, etc. . terorise is that part of the
The net illCOllie of the st!..fe 'remains with the enter"
value of the surplus product -;V. on the degree
prise. The amount of. the me overfulfih: its plan .:l11d .on
to which the enterprIse or The betkr Lhc
the :'eduction in productlhon costs. the higher kW1ll
or .. md l lower t e pro 'ure, th tt all the wor ers
.. ". temem ' .. thc
bf> the nel :lle-:"me. Jrus sys ( ... .1 into:rest 10 raiSIng
. T h d mol l.kl.
in the -enterprIse WI . ." '" 'd
pr"fil Jbility of t I enterpno:::e is used on planm
The net 01 tole s a
J/"l
Price
in the state icctor
814
d' h v industry is realised. through
the net income create mpnCcaesYof commodities produced by
the turnover tax. in the
the light industry. , he state is guided by the need
In fixing wholesale pnces enditure of the enterprises
to compensate the
f
utepxJt and to guarantee profit-
on the productIon 0 elr 0
ability. f . es the state promotes the prof.
Through its system 0 t
pnc
. e's stimulates reductions in
. bl cation of en erpns . ty
Ita c rid 'ncreased output of the necessary pes
production ?':1t ays an I inual rowth and improvement of
of commodities., The cOJ?t the gasis for reductions in whole-
are the condition for reducing
sale prices, which. m., )'cally J'ustified price reduc'
'I ' "Systematic econom d t'
retal pnces, h 'f I b ur productivity and re uc Ion
tions based on growt 0 pa 0 e of the CPS U, points
' t "the rogramm ' , ,
of productIon co,s s, d f th rice porcy in the period of
out. "arc the mam "10 e p
communist constructIon.
4. Cost Accounting on Collective Farms
ting comidered above apply
The principles of "F mUng on all collective
basically also on of cost
farms must be bas on ints out. But on collechve
the Programme of ,the different for.:ns fr?m
farms cost accounting ta es s , owing to the specific
T 'n state enterpnses,
those prcval mg 1, d collective-farm property.
features of co-operative an . es that strict accounts,
Cost accounting primarily f the entil'e gross output
expressed in money, fbell produced in the course
of the collective fann, I.e., 0 a of the collective farm. A
of a year in the common old as the marlt.etable
considerable part of this :old to the state at fixed
output of the ,farm, !he bu b Ian for a number of years
basic purchasmg prlces, set yap
ahead, "u S S R. for each variety of
State purchase pnc:s m zones of the country.
output arc fixed accordmg to t
t The Road to communism, p. 5,)'7.
2 Ibid. P 529.
depending on the conditions of production in h
example, the state purchase price for grain i h For
Urals than in the Ukraine, because in the USk Cr In the
penditure of labour is required pcr centner of less ex-
I d
, 1 th ' , graIn,
n or er to revea e profitabIhty or oth '
1 0
' f od'" erwlSe of 1
ec ve- arm pr uchon It IS nccessal"" to d t . co
d t
' h' h ,J e ermIne th
pro uc JOn costs, W Ie Involves certain d'ffi l' e
1 th 11
' f I cutIes F
examp e, . e co ectlve arms do not buy some of their' Or
of productIon (e,g" seed, fodder); they replace what i;nea
ns
by what they themselves produce; payment for 1 bused
farms is in kind as well as in cash. This
to collective-farm production costs It
dIfficultIes can be overcome if calculations and . ut
mg are correctly organised and if labour and mate
properly rated, etc. rIa 5 are
At the present time, collective-farm production costs
on the following lines: the seed, fodder and
materIals produced on the farm are valued at their prod ti
cost; materials are valued at their market
of fixe.d production assets (tractors,
, arm machmery, etc.) is reckoned at the rates
state farms. Payment in kind to members of the
1 b c l:,e arm is calculated in terms of money. Payment for
a Our m money makes it c . t 1 th
method. aSler 0 app y e cost accounting
The collective farm 1
The work c IS a arge-scale economic enterprise.
the be conducted by the old methods used by
that accounts fe modern collective farm demands
is spent on n d err:n
s
0 money should be kept of all that
farms is to uctIon. The task now before the collective
duction costs reduction in collective-farm pro-
productivity fr bo IS t need most of all to raise the
intensification of a 1 which. can grow rapidly through
development of ?c., through chemicalisation,
tion and electrificati;a e
I
cOI?prehensive mechanisa-
the crop yields and will steeply increase
Increased output and p uctIvlty of animal husbandry.
condition if th r uced production costs are the
pnces of agricultural purchase prices and the retail
State purchase pu afle to be reduced.
the I,;-:lllective farms sell .. xed :1 such '1 way that when
elr output to the state .hey can
116
cover their production costs and obtain a net income (profit)
as the difference between the purchase prke and "sts of
production.
The llet income of the collectiue farm is that part of the
value of its gross output which remains after deduction of
all expenditure incurred in its production, i.e., the costs of
production. A comparison of production outlays and incomes
received makes it possible to determine the economic advan-
tage accruing from cultivating one or other crop, and to
assess the results of the economic activity of the collective
farm as a whole.
Part of the collective farm's net income is differential rent.
For the essential condition for agricultural production is the
land. But different plots of land differ in fertility and situa-
tion. Better natural fertility and a bf'ttel situation mean
higher labour productivity on some collective farms, or less
expenditure of labour per unit of outpu:
Therefore, collective farms conducting their economy on
the better or average plots of land, or on land that is close
to the places where output is sold, and so incurring leiS tlav
on transpolt, get an additional net income c<)":11plJ.rcd to
farms working undel relatively ,ess favourable ti, ns.
This part of the net income form diHerent
i
a1 um 1
DiHerential rent 11 is also formed on col' ve' _ ms.
is the net income that leading collective tams recel\"e c:
result of the bette! use of the land-by apply: 19 uptodate
technology, using fer isers and iJTlproved far:n ng method.
etc. This raises labour .-'roductivitv ilT]d 10 \. ')
per unit of output.
Part of the differential rent remains with the
farms. The other part goes to the 51;11 ;udget th ough : 'le
,ystem of prices and income tax
The collective farms have plenty of sc.ope tOr" :'(d,ucing
expenditure per unit of .output. Lowering by
raising labour productivity leads.' p"oductlOn
.... ld higher nct incotr'c') for the collective farns. :,0 : Jrther
tn, rease in the well-bclPS of the collc ... farns.
Chapter XVI
SOCIALIST REPRODUCTION.
NATIONAL INCOME AND THE FINANCE
AND CREDIT SYSTEM UNDER SOCIALISM
1. Socialist Reproduction
Nature or socialist means the uninterrupted,
reproduction continually repeated process of produc-
. . tion, distribution and consumption. In
It, productIon determines everything else. because only what
has been produced can be distributed and used.
can be either simple or extended. Under
there is a constant, uninterrupted, annually expand-
mg scale of production. i.e., extended reproduction. The
of reproduction implies more than the constant
wealth and labour power; it also includes the rela-
tions of production.
In the. period of fullscale communist construction the
reproduction of socialist production relations ensures the
and consolidation of the socialist property of society
'fn forms, the drawing closer and in perspective the
USion f tat d . ,
th' 0 d
S
e an cooperatIve and collectivefarm property,
heir 9ra ual transformation into one communist property of
t e whol: people. the extension and improving of comradely
cooperatlon and mutual . ta
th d 1 aSSlS nee among working people
1 of the communist attitude to labour, and
the good of communist forms of distributing
The chief characteristic of . r . .'
reproduction is that 't . b 1st. as agamst capitahst.
1 IS su ordmated to the aim of satisfying
:JIB
the needs of the people. Under capitalisJ? the aim is
the enrichment of a small group of pnvate owners. SocIalIst
reproduction develops in the of societ;t. as a whole.
and this precludes any POSSibIlIty of competItIon between
enterprises and industries. any possibility of crisis of over
production and the rise of . ..
Another characteristic feature of soclahst reproductIon IS
the continuous growth of production. Production in the
U.S,S.R. has been continually increasing. whereas in the
U.S.A.-the principal country of the capitalist world-growth
of production has been interrupted by economic crises four
times in the post-war years,
Socialist reproduction takes place on planned lines. This
means that the development of every branch of economy and
of social production as a whole proceeds according to a pre-
determined plan.
A high rate of economic growth. a steady expansion of the
productive forces. the creation of the material and technical
basis of communism are characteristic of socialist reproduc
tion.
Socially, the process of reproduction is one which repro
duces the productive forces and the relations of p "ion
but from the point of view of the output. it J5 the
pl'ocess of creating the gross social product
The (ross social
product and its
structure
The result of socialist reproduction is
the creation of the gross social product
and. on that basis. the augmentation
of the wealth of sOClety. By wealth 01
society is meant the sum total of material value!" at the dis'
posal of society. These material values represent the P' ult
of the productive activity of the given generation of people
and of all preceding generations.
The gross social product is the whole mass of material
wealth created by society over a given period, usually one
year (the annual social product). It is created by the labour
of people engaged in the sphere of material production:
industry. agriculture, transport, communications, and of
people working n trade, since the production process is
continued in that sphere (packagmg. SOl ting, storage and
transport).
Apar from the work in material production, part of the
work goes into state administration, cultural work, municipal
319
and services for the. The work of e,
engaged In these sphe.l'es IS not
creating the gross soclCll product, but It IS SOcially
labour which society needs and contributes to the
of the gross social product. ,
In socialist society, the gross social product incre
continuously on planned lines,. and it is distinguished b;'
rapid rate of development. DUrIng the twenty years (1961.
the gross social product in the U.S.S.R. will increase appr
imately fivefold.
The following are the factors which make for its grow.
under socialism.
The most important factor is the growth 01 labour produ,
tivity. The possibilities of increasing the gross social product
through the growth of labour productivity are boundless
under socialism.
Another factor is the rise in the number of people engaged
in material production.
The total social product is reproduced both in the physical
or material form, and in value.
In its physical or material iorm, the gross social product
consists of:
1) articles intended for production, or the means of pro'
duction (machinery, raw and other materials, fuel, etc.);
2) articles of personal consumption (clothing, footwear,
food. housing, household goods, articles for cultural use
etc.).
Articles intended for production arc used to replace the
already consumed means of production and to expand pro'
duction.
Articles of personal consumption may be used to 3atisfy
the personal requirements of the working people. to
state stocks, and to supply consumer goods to addlt10na
groups of people drawn into production. .
Thus, aCcording to the purpose for which the artieles In-
cluded in the gross social product are intended, social pr.:>-
duetion is divided into two main groups: production of the
means 01 production (Department I) and production of con-
sumer goods (Department II).
As regards l1alue, the gross SOcial product falls jnto three
1) the value of the already consumed means of pro-
dUi.:tIon. namely, that part which is transferred to the fin-
320
,
d for the
alue intcndc
I _created v ) the newly of the
roduct; 2) the and
cd P consumption expansIon ocesS of
ecial role in the
consuhO'lP!IOparts playS. a to 0d
f
h
of t es fi t part IS . n 1 C., . ry an
.cac . The rs f productlO , . machtne .1
...."eductiO
n
. d means 0 hne tools, tcrials, fUL.
.... nsum
e
mac 1 d aW ma
eady co installations, consume.r reduction.
uldinf.JS, to rcplact cnts used In p.. ocial prod.uct
ochan1s
ms
, and other e of the gros., s ended. I.e ..
Jectric pO;d' part of labour pro.
f.J The sec
tes
(in value) h" eople workmg 10
Pens
a
dbytep
om 'feles usc . corporatcs
the all. al product 10 h to
ducHon. f the grosS SOCI d is used bot .
The third part surplus product, ar the non-preducl!ve
the value of on the upkeep 0 anding productlon
cover the out the resources for exp
sphere and to. n fund). . roduct is realised on
(
the accumulatlo The annual SOCIal p R lisation takes
. f a plan. ea n
caUsation or the the basts 0 of ex(,,;hange bctwec
,!ss social product place. them.
I d II and wlthm each. [ the output from
Departments an. how realIsatIon 0
Let us first con.slder rtment I takes place. b con-
JI the enterprises In Depa . Department I to e .
a For the productio? proces.s 1
1
r the me,,-ns of production
. 11 renewed, it IS esscntla 0
in it to be continually between the
This is achieved by means I The iron ore and coal lll-
various branches in . material and fuel for the
dustries, for instance, raw l' metal to the engineer-
metallurgical industry, WhIC sU
PP
.le:
s
machinery and equip-
ing industry, and in of Department I there
mcnt, and so on. Between f reduction needed for
is planned exchange of. the means Pthose branches. Thus
continuing the productIon process
t
nt I is realised
IJne part of the output from Dfepar I is intended
Another part of the output rom ed' D
to re lace the means of production already 10 e-
II. And finally. the third part,.
,>urplus labour, goes to expand productIon III both Depart
ml:nt I and Dcp:utmcnt II.
2HI711
321
In Department II, part of the produced output, as in
Department I, is realised through between different
branches within this Department, and IS .used for the per-
sonal consumption of the people In the branches of
this Department. The second part IS mtended for consump_
tion by the workers in Department 1. Part of the output from
Department II also has to go to workers additionally drawn
into production.
A planned exchange of output takes place between De-
partments I and II. Department I supplies the industries of
Department II with machine tools, machinery and mechan-
isms, fuel, materials, etc., to replace the already consumed
means of production and to expand production. Depart-
ment II supplies consumer goods f01" the personal needs of
the people working in Department 1. and also to expand the
consumption fund, since consumption is always increasing,
and all the branches of production in Department I are ex-
panding further, and additional workers are being drawn
into it.
Thus, both in the material and in the money form there is
continuous movement and mutual exchange between the con-
stituent parts of the gross social product.
To ensure the smooth, uninterrupted process of social-
ist extended reproduction, the following conditions are
essential:
First the annual output from Department 1. which con-
sists of the means of production, must be sufficient, both in
value and in the material form, a) to fully replace, both ma-
terially and in value, the production assets already used up
in Departments I and II during the creation of the gross
social product; b) to increase production assets in Depart-
ments I and II to accord with increased social requirements,
i.e" to accumulate the means of production necessary to ex-
pand the scale of production; c) to create the socially neces-
sary stocks and reserves of production assets.
Secondly, the annual output from Department II, which
consists of consumer goods, must be sufficient both mate-
,
rially and in value, a) to supply the workers of both Depart-
ments, including those already employed and those addition-
all,y production, with consumer goods on the
prmclple of to each according to his labour"; b) to supply,
322
on the same principle, the w,orkers in the
ductive spheres (administration, educatIon,
etc,); c) to create the socially necessary stocks and of
consumer goods. " 'bl
Only if these conditions are observed IS ,It POSSI e
to guarantee uninterrupted extended reproduction of the
gross social product. "f . 1
The most essential condltlOn or !iOCla -
Priority growth ist extended reproduction is that the
of production production of the means of
of the (Department I) should have pno.nty
of production 'should grow more rapIdly
over, l.e., I) I
than, the production of goods ;]i
order to expand production, It IS necessary drs 0th '
duce the means of production, and to pro UC? em In
pro ft' sufficient not only to replace the capItal goods
in production, but to the volume of pro-
duction in all the the means
Lenin regarded pnorlt
y
/ grow,. , )ods as an economic
of production ouer that 0 con. uml:!t yt
law of extended . 1.
Let us explain the thpl:O'd:"iVC forces Jnd tech-
Th d clopment 0 soele y s , 'h' 1
e cv . h d 'th the increase 10 t e SOCia
nical progress go h ..:md 111 f an n (pa"t) labour and .n
product of the share 0 labour Manual labour IS
diminution in the machines, which
more and more rep y ; conse t1ence, increase:; the
raises labour product!
vl
1 qde:elopment of pro-
the yolume of is' an expression of the
duction 01 the mean::. 01- 1 b ur of the general prog-
replacement of hand by mIac, me both a consequence
ress of muchine t IS, ,
und a condition of tech,mcal of technical progress
Extended riority development of produc-
, indissolubly hoke WI ,P
of the of capitalism,
Under soclahsm. as . f pital goods IS quahta
t f the productiOn 0 ca l' 1 b t
dcvelopmen a , t ontaneous and cye lca , u
tively different. It naond sfs not for the eOri,chm,eDt of
deliberate and .r
lann
; to guarantee a steady fISC 10 the
capitalists, but 10 or fr
welfare of all the peop e.
".
of full*9C81e communist conatructioa
aDd more to produce diNctIy
the Deeds of the collDtria
4IefeDae. It Ie able, to a far
of production
and other bral'cbes of
po.sible to bring the
,.aductIoa closer to
total personnel in these fields will inc!'c' '
, d ( <-.sc III the t
year peno 1961-80) by approximately 40 Wcnty.
The socialist system of national ceono per cent.
most efficient utilisation of sOciety's my guarantees the
, d . manpower rc
un :1' socialism unemployment has been b . sources,
It IS possible to plan the usc of labeu' a ohshcd and
of society. 1 power to suit the
Fmally, a factor in the growth of the n t" .
in tbe meallS of production. hncomc is
diture of fuel. raw and other materials cr u t e expcn-
and morc efficient use of available mach' p. nIdt of output,
. mCI y an prod t'
premIses create additional resources f . . . . lie Ion
volume of output. and so lead to . ,or the
in the national income. a concspond1Og lIlcrcasc
Distribution of T.he income under socialism is
the national income dIstrIbuted on the basis of a plan f .
production and of socialist
the people. gas ea y nsc 10 the welfare of
The national inca .
the necessar rodu me of two parts. One part is
material among people working in
of their labour This to the quantity and quality
of wages for for oneself the fonn
prises and of . other employees 111 state enter-
f
payments 111 cash ad' k' d f '
armers. n 111 In or collective
The other part of the n l' I' .
uct, or the product I a l?na mcome IS the surplus prod-
or socwty h' h '
production and bu'
l
d ' w IC IS used to expand
tural and welfare 1. up stocks. to build premises for cuI-
fund and to supply .. t? form the public consumption
In line with the needs. .
town and country and t o. expand SOCIalist production in
cialist state carries out 0 the needs of society. the 50-
al income. mainly hut er redistribution of the nation-
population who work . 9 th the state budget. Groups of the
for their In sphere receive
the national income. wor through thIS redistribution of
The entire national income of "
the consumption fund a d h soclaltst society divides into
The consumption IU:d e hccumulation fund.
used to satisfy the needs olt part the national income
population for food, clothing.
326
footwear, household goods and articles for cultural usc, and
to meet the needs of the public. In the U.S.S.R. about 75 per
cent of the national income is spent in this way.
The consumption fund is formed by the products created
by necess.ary labour and by part of the surplus product which
is spent on various social. cultul'al and other public require-
ments.
Under socialism. the consumption fund c;tn again be divid-
ed. according to the way it is used. into thl! fund for pay-
ment of the workers in material production and the public
consumption fund. The latter fund is :.pent on social and
cultural needs. i.e .. to cover requirements in the fields of
science. public educ.1tion. health sen' ices. the arts, etc., on
social security (state assistance to mothers of large families
and unmarried mothers, pension!:, etc.). to cover the cost of
administration and defence of the state apparatus,
the armed and >0 on). T:'le rublic fund
is most important fo;' improving the hl'.o' of the people.
An increasingly larg:: part of whlt Soviet pc.:-ple consume
at the prescnt time paid for out of public
The a('cullllllati{'tn fund is built U1' 0Ut of the surplus prod-
uct. In it'> make-up this fund consists mainly of
the output from Dep.:lrtment I. But a definite part of the
output tram Department II is also accumulated (production
stock!=:. consum('l' '100J.S lccumulatcd for distribution among
workers newly into produt,;,on, etc.). Expressed in
money the accumulation fund ,-'lief]y consi::;ts "f the resources
of the state budget. of co-opel'tltivC' zllld collective-
farm enterprisc5. set aside for the purpose of accumulation.
Roughly 25 pcr ccnt of the national income goes into the
accumulation fund.
According to the W3Y it is used, the accumulation fund may
be divided into three parts, one of which is for the expansion
of production, the second-for financing capital construction
for cultural and welfare purposes (schools, hospitals,
housing. etc.). and the third-for the reserve or insurance
fund, d dth '
The distribution of the gross social pro t.Kt an e nabon-
al income may be expressed as shown 111 the scheme on
page 328.
327
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Socialist
accumulation
Under socialism, there is no antagon-
ism between production and consump-
tion, or consumption and accumulation.
Socialist society starts out from the possibility of so combin-
ing consumption dnd accumulation as to create the conditions
which guarantee the most rapid rate of extended reproduction
and the ever fulier satisfaction of the requirements of social-
ist society.
The relation between consumption and accumulation is
determined according to the current tasks of soci<llist con-
!>truction. on the basis of the law of the planned, propor
tional development of the national economy. The proportions
between consumption and accumulation cannot be immutable;
they chllnge and arc determined for euch given period .
Socinlist accumulation is the source of extended ocialist
roJuction. The result of socialist ac umulation 15 a con-
t,nual incrCJ: in the weJlth of society. in its pl ductive md
pI oduc. . vc funds. which is attained through thE'! system'
at c di .../ t on \.. f part of the surplus pradu\.: nto IlOn'
tcrruj"tcd expansion of rodut. on, the aIm beins te;adHy to
n rov ... t',e wellue of 11': leo1lr,
S04 st lccumuial on take, place through clpital inve t
meDl in the Qati/ nal wh'::h lly g::ows larger.
r XJml Ie in the '1.,>,5 R the s13l" ,ital nvc'Stm_ut
dur ng 11'" 10U of the F t Five Year >1 , 192Q,' was
prroxl n_L 'y (j,ll ... mIl ion r Jhlr' and dW'ing 1(" 4'fth
IlV Vc ... Plan (195 ).) It was 61.261..1 ml(lQn Capital DVeS!
men r 1e Ye'lr .." :t (1959-65) ami unte'" tl"" some
200 thou' _"1(1 nl 'ion r Jble'J.
3
r' and Credit System l nder Soti!1l.ism
. 'lnanco
Me I 'l1po .l],t 10 I. t roduc \,;n 1(' fn 'nc'" dnd
&:/ tern, ' II tpc; Jinks ,;"f wbi'l arc ell C '11 n to:ve
n \.. .,. prodl -;t, ,11 utw;:: \..xch nge l( JI"lUJ tpd
on n the udu( t. F n -rl,.. fJ lre
l",:iv 110 1(' 11 tr !:ml on and L til .11 "1 f t'l( :: 01 p
o tlo put 13: "'. tnc" 1f" rl1 uqh fin ... nc'"
le ere It the )CJ<H t t.-. t. mgI' ,f ucnc th onomic'
,U.;tiVltv c eri p- n -.. the JJ" tarpin'
_ -- I t o':- f v.uJat' _ rescurces.
",f reser e. "';" _. _1 "'r-' 0.&
0'
The "a,tional income created. IS W
The state budget know, JJ1 the sphere of mate-rial PI .. ,.!
(
. I Uc
tion at soew 1st rlltcrl1riscs) and "'
n
sidcrablc part of it goes to the ilCl.:umulation fund. l.C. ',$
used for the further expansion of prodlH..'tion. .
But if the enterprises thl'l11sclvcs were to lISC this part of
the national income to expand their own production, it wauH
not be possible to maintain correct proportions in the dcvc
opmcnt of individual enterprises and branches of the national
economy. For this reason a ccntl'Jliscd accumulation fund is
established in the socialist economy, which is used to finance
capital construction and the reconstruction and expansion
of existing enterprises.
The centralised accumulation fund enters into the state
budget, the most important link in the finance system of the
socialist state. The state budget is the country's basic finan-
cial plan, by means of which a considerable part of the
national income is concentrated and utilised to satisfy social
needs. It is drawn up in accordance with the current economic
plan.
The state budget is split up into revenue and expenditure.
The reuenue side of the state budget chiefly consists of
receipts from the socialist enterprises. These include: the turn-
over tax, deductions from the profits of state enterprises
and economic organisations, income tax from co-operative
organisations and collective farms, timber revenue, 1 etc.
Receipts from the socialist enterprises represent more than
nine-tenths of the revenue side of the budget. The social in-
Surance fund also forms part of the revenue side of the state
state organisations and enterprises pay con-
tnbutlOns mto this fund, on a fixed scale, in the shape
of special charges calculated on the basis of their wages
bills.
A dis.tinctive featurc of the Sovict state budget is that the
proportIon of revenue made up of direct contributions from
the population is small. Thus, in the 1965 budget of the
I The revenue tlmbf"1 procurement payments pel
tree felled, of forest nurseries from the sale of voung trees
and seed to mStitu!lons private perSOns, etc. Iialf of the revenue
from state forests IS aSSigned to thr- Union Judgct and half to local
budgets.
.30
U.S.S.R .. t.1xz.. from !he population amount to only 72 pc
cent o( the tal udg: r VPiUf'
The eotpendit"Tc slcle 0: 'le st:J.tc budge" 'u:lucles the
c . 01 1 'of - 1 C onr"'1V '\1, and cultur ... ! pro)' II 1anCIr" ... 0 _ _.
"c rnai:1teuWl .... th= rgans o! tatc .ldml'1lstraUoll.
COS! of 1e country' b d r :II e I.
The palt of thc Sov, .. t tate .7U\.gct resoure s ,;Jp
to 75 '\er l.:cnl) S IJ C,. tl.. finan! c L e 11 : on I ec_nomy md
" cml and CU
1
tUl I p:-jt t? p:-por.,.J;)n pent'-n maIO-
taining thf' SI ;J.f .. C!Jpar 0 Js 1 bemQ II - d f
Tbc U.S.'5.R. '\L= ucs i: ... on os: pol v c! p""1f'e. an ....
. d t. X 11 :t& . I( COUn! fo. a comraratn: .. y thiS reasl t. :lL _
small proport,c n the hujgt ,...}- w -;, '-"mati!
In ocialist OeiL '{ l.C olL gc S - I
h th b is f.'1 t af'y i n the wftol:lal :m..:.
growt, nTh c
us
as R bud et ah a l-repondell1/'c
economy e ...
of rev- uc ever cxpen'ii .U)I,:. S .... _ nc
f 5 t wer, ir"""Il1;, _
All th: organs 0 0'" e. t Vt' the!1
Soviet Of the U.S.S.R. to the VI_. "I tal:<> a1
indcpencle'1l bur gets. ...'1.... nakc .. It . 9 the irn)Jc
condi! C lS into accou.."t 1l' evel"y lfCl "
mel'll ;!.tlon f P'3.r. 11 J (onn
C er -.,.:- n, 1,.... 1
f "-31" I.obll; tio") ... t. t -n-JOlln y
Credit and banking ':' c n ( ').
undnr soc'3lisrn J-11e r _ 11 n
, 't r.. _t t}-_ .. '-
p .... r. :_... 11 Sf' 0
Ihe na
t un c .. C"lomv h of thl; me -"s
C d
1 S 1" tAl) Wir1 t .. :: 1 ....
1''' IlL t" '. n the
J I D1l111" Th
of socia' t (' 1 - -r -IV dle . I!- I!
find 'Cem eh_ - wi" to .'0' .'. . C 've. 'm
u.' _ r' nCVlrT _ .....
I IL 1 - me 6. 1I. - I h'ch
due 0 the l( .. - - W_L1.., 1C tin! aWl
thc ..:lIp. of docs :,:uire lenl . A _ output
J 0 be spent on pr", C . '.trou.
money 1; <; d --.,n"tlIC ')rgansMhonS1C
. sold t}.c cntcrpll. es;m e .. Ih ", e '''ank wluch will
h, h (':c"'unts ,-t e J _
late IY'I...P n t ell 1 '" "e
r
"T"l 'lpse o( time. The -:1(.:rcase
nee_ ) be j",. .d ntf'an! the
i" ircome ... W t m)O: lr"!v not ,JSC In t c
d
bl.. )) money .
c n - era b, di -"I'it '.
I'll"' ..,1 S '" n ,) d c nomli org:'111 aLan., ma:y
:11 'r SC!; h c a
Whiu:, \. th nancy 'y '19 idle, others may av
find thC"llSt .ve W
temporary need for ready They mny need
it to buy seasonal supplIes of raw materIals, for building
production stocks, for meeting cxpt..'I1diturc on production
transport. etc.
Concentrated in the banks arc all the temporarily idle
monetary resources in the national economy, and out of these.
the banks give credit to economic organisations and
enterprises in need of ready money.
Credits may be either short- of long-term,
Short-term credit is usually given for pcriods less than
one year. The centre for short-term credit in the U.S.S.R. is
the State Bank. Short-term crcdit is given to enterprises and
economic organisations so that they can meet a temporary
need for additional means of circulation.
Long-term credit is made available over a long period and
is chiefly used for capital construction. Nowadays, long-term
credit is issued by the All-Union Bank for Financing Capital
Investments (the U.S.S.R. Stroibank). Long-term credit is
given for capital construction projects, for developing live-
stock breeding, for individual housing construction, for in-
creaSing the output of consumer goods, for improving wel-
fare services, etc. Credit for capital investment of state enter-
prises is also given by the State Bank. It gives loans for
capital investments which will be recouped within a short
period. Among these are: credits earmarked for the introduc-
tion of new technique. and the organisation and expansion
of production of consumer goods. The State Bank of the
U.S.S.R. also gives long-term credit to foreign states, first and
foremost to People's Democracies, on favourable, mutually
advantageous terms.
Institutions giving credit charge a fixed interest on loans
and also pay a fixed interest on deposits. The difference be-
tween interest received and interest paid constitutes the bank's
profit. The profit of the bank is part of the net income of so-
cialist SOciety.
U":der credit promotes efficient use by the en-
terpl'lses of theIr means, increased socialist production and
greater profitability_
redistribution of temporarily idle resources among
val'lOUS branches and enterprises of socialist economy is car-
332
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ried out through the highly developed credit and banking
system.
The Soviet credit and banhjllg system consists of: 1) the
State Bank, 2) the All-Union Bank for Financing Capital
Investments (U.S.S.R. Stroibank), 3) the Foreign Trade Bank
of the U.S.S.R. (Vneshtorgbank) and 4) the state savings
banks.
The State Bank occupies a leading p05ition in this system
and provides short-term credit for the national economy; it
is the country's centre for clearing accounts and making pay-
ments. Payments into the state budget are made through it,
and it is used for the settlement of accounts between economic
organisations and enterprises, and between members of the
public and organisations or institutions. The State Bank is
also the only centre for the issue of currency; it is respon-
sible for putting money into circulation, for planning and
regulating the circulation of money. Lastly, the State Bank
is the one centre in the country that holds foreign currency
and handles all international accounts.
The State Bank of the U.S.S.R. is the largest bank in the
world. It has over 6,000 establishments (republican, terr:'
tory, regional and city offices, district branches and loral
municipal banks) which handle an immense volume 01 ac-
counting and credit operations.
The All-Union BanI? lor Financing Capital Investments
(the U.S.S.R. Stroibank) finances and gives long-term credit
for capital construction by the various enterprises: it also
gives short-term credit to the building organisations which
contract to do the building work, and settles accounts be
tween customers and contractors.
Like the State Bank, the U.S.S.R. Stroibank controls plan
fulfilment of construction work, correct utilisation of Olean:
and measures to lower construction costs .
. The Trade Ba1l1? of the U.S.S.R. (Vneshtorgba
nk
)
15 the credlt .bank for Soviet foreign trade and performs cur-
operatlons, settlement. for CKoorts and imports and for
servIce::::., and other scttkmcnts. It pl'omol:s commercial and
economic ties between the U.S.S.R. and foreign coun-
tnes and domestic trade and related to thc
<::x;oort and Import of commod:t'es.
Savings hanks :lre also I. .'tdit bodies. They l'eceive depo'iits
8.,1
from the public and from collective farms and non-govern
mcnt organisations. They also serve the public in oper,ltions
connected with state loans, letters of credit and other cash
operations.
In socialist society, money that working people are tern
porarily not using, and which they deposit in the savings
banks, is used to finance socialist construction. The saVl'1gs
banks pay their depositors interest in return for th::: of
their savings.
The constant rise in the material welfare of the people
in socialist society has meant an immense development of
savings. In the U .S.S.R., for instance, the total deposits by
the public in savings banks in 1964 figure of
approximately 15,700 million rubles, 31j..!;nsl 700 million
in 1940.
World capitalist economy slowly. experieg. It.
.... and upheavals. World socialist economy groWl at ral'kl.
cn
teady
rates; all the socialist countries experience a 9ener.J.,
I th . .
continuous rise in elr economies.
In the socialist countries people's power has proved Ito
unsbak.able stability. The dominant role in the economy 01
the People's Democracies belongs to the socialist relations
of production.
The People's Democracies, many of which were backward
In the past. have turned Into flourishing socialist otates. It
took an unheard-of short time for them to sunnount thoI!<
economic backwardness and to build up a modem industry.
The planned economy of the socialist countries deve1op*
faster than the economy of the capitalist states.
In 1963 the total volume of industrial output in the social-
ist countries WU about 8 times above the pre war level. Fdf
IDstanoe. industrial output in the U .5.5.R. was 6.8 times higher
ill 1963 thaD ill 1940. In Poland. industrial output inoeaseil:
89 tim:s. C, Fchoslovakia-4.6. the CetDlan Democratic Repu1to
lie a 8. H,mgwy-5.4, Rnmanja-7.4. Bulgaria-17 and that
""!an People', Repub1Ic-U.l times.
ID the People's Democracies. the most difficult problem
lIt"Cialjst cnn-bl1Ction-the voluntary conversion of the
&0'" omall. individual farmillg to large-scale,
iauoing-has been solved or is being
that the result of the
Other countries of the
laying down the b,li.
entered the period 01
society.
The world sociaIiat
in the development of
and features of world
by the world ...... e1
1
1t .,..
against imperialllJD .. tof the
of society.
The cardinal role
the world revolutionary
the working cl the
tries, are a
exploitation. By
of socialism and
deliverillg a blow at
social endeavour.
working people In
of the socialist
ment of Iivillg
2. Co-operation and Mutual Assistance
as the Basis of Economic Reli.ltions Among
the Countries of the \Vorld Socialist System
The fact that member counlries of
The new type ot the world socIalist system arc united
economic and
political relations on t!lC progr?ssivc p?litical. c('o'
nomic and Ideological basIs has given
rise to a new type, hitherto unknown in history, of economic
alld political relations amollg nations. The relations among
the socialist countries arc built on principles of complete
equality, respect for telTitorial integrity, state independence
and sovereignty. and non-interference in internal affairs. But
these important principles do not exhaust the nature of these
relations. An inalienable feature of the l'e1ations between the
socialist countries is fraternal mutual assistance, which is an
expression of the principle of proletarian internationalism,
"The strengthening of the unity of the world socialist
system on the basis of proletarian internationalism," the
Programme of the C.P.S,U, points out, "is an imperative
condition for the further progress of all its member coun-
tries."i
Lenin wrote as far back as 1913: "To the old world, the
world of national oppression. national bickering, and national
isolation the workers counterpose a new world, a world of
unity ?f the working people of all nations, a world in which
there IS no place for any privilege or for the slightest degree
?f oppression of man by man,"2 The world socialist system
IS such a world of unity among working people and of the
fraternal mutual assistance of the socialist countries.
Every socialist country, great or small, is always in need
of all-round co-operation with other socialist states. But now.
when the world is split into two systems the very existence
of th . r '
,e SOcia 1st countries and their successful progress are
Posslbl,e because of the existence of the socialist camp
or, IS th7 same thing, of the world community of the
c0l!ntnes, and because it is possible to rely on its
economic might and political unity.
The fraternal multilateral co-operation of the socialist coun-
! The, Road to Communism p 468
Lemn, Col1ected Works. Vol. '19. p, 92,
340
tries enables them to make the fullest use of the
of the world socialist system in order to accelerate the devel-
opment of the productive forces of each country and to
strengthen the economic might of the socialist camp as a
whole.
The new type of et:;onomic and political Telations is a
natural phenomenon which has a firm socia-economic and
ideological basis. These relations follow from the very essence
of the socialist system, Le., from the predominance of social
ist production rclatio,ns. Because ?f thC":'C is no. des,ire
for economic expanSIOn, no dommatton and subordmatton
in the relations bctween SOCialist countries.
In the world socialist 5ystem economic ties and relati?ns
b twecn states are entered into in accordance with the
e nts of the economic laws of socialism and arc subordl'
to the task of continuously expanding
on advanced technology, for the purpose of Improvmg
the welfare of the peo)lc. ,
Economic co-operation among the so-
Socialist cialist countriC'i develops and 9,rows
international stronger 011 the ;;lsi:-: of mter-
dh.'ision of Jabour national dil1ision ot labour. This divi-
sion of labour is fund.1.mentafy diffcren: fr"m.
labour in ;.be world 23PltaUst 5ystem. Clr::.:t!lst lontha
e

b ht bout :s; ....ontaneous Y In
division of labour :5. .: m/" for profits, Socialist
course of fie" ,::. comph:tlon anu . e 1. C according to a plan
international div:3ion of of the pro'
on the basis of operatIon 0 C ,.3W
I d I
t of t'le n'lcon" C -,::momy,
portiona eve opmen .. .' t:" cnditions for large
Socialism for the first time crel (;s '-b-' f equality and
, erate cn a .:lSIS 0
and small nations to co--op economic independence
mutual advantage, It socialist system. The
of all the member states tel ment one another and
socialist countries harmoOlouslYd suP
P
: s and this promotes
bl
. e forces an cc , f
arc a e to economlS f their productive orces.
the comprehensive development 0 t Iy of its own resources
Each country is able to make use no . on f the world socialist
but of of the member couhntri
cs
t efficient use of all
. k tt 'nable t e mos f th
sy:;tem. This rna es a al e world socialist system or. e
the economic resour.ces of th it:; development and imprOvlDg
purpose of accelerating econom
the welf al'e of their people.
Ml
Socialist international division of labour enables c
country to devote special attention to the branches of s:c-1
production for the development of which they have the
natural and resoure::
production basIs. mdustrlal workers. eng meers and techni.
cians, etc.
Socialist international division of 1abour harmoniousl
combines the task of developing the national economy
each country with the international task of developing the
world socialist system as a whole.
Socialist international division of labour implies speciali.
sation and co-operation in production in the countries of the
socialist camp. Specialisation in production here means pri-
ority development of those branches of production which pos.
sess the possibility of producing their output with the least
expenditure of labour. Co-operation in production takes the
form of interrelations between specialised industries which
complement one another, the aim being to get the maximum
economic effect in the production of certain kinds of output.
Specialisation and co--operation in production are organised
with an eye to the specific interests of the separate socialist
countries and the common interests of the socialist countries.
They facilitate the exploitation of all the productive capacities
of the socialist countries, the organisation of mass, serial pro-
duction, the lowering of the outlays on production and im-
provement in the quality of output.
In. t?e process of economic co-operation and increasing
production, the industrial profile of the
soclalIs.t is shaped and their place in the
SOCIalIst economiC system is detennined.
Poland, for has become a country with highly
developed. engmeermg, coal-mining and chemical industries,
and no:n-ferrous metallurgy. In Czechoslovakia, priority has
to development of heavy machine-building and
engmeering and to Some branches of the light
ustry. The German Democratic Republic specialises in
plant. precision mechanics optical equipment
an c emlcals In Rum" "I fi"' "f
th 1' d' aOla. 01 -re mng and machmery or
ustry .ha.ve been highly developed, and so on.
the 0. the socialist countries specialise in
which has types of output, the U.S.S.R.,
rntory, varied natural resources and a large
pOpulation, is developing. all the main branches of the
economy. '11" from ruling out exten<;ive participation by
the U.s.S l n the socialisl division of lab..,ur,
th5 crc'lt"'s me t favourablt condItions for developing spe
and co-operation in ?roduttion within the world
socialist system.
In the world capitalist economy international. di.v!sion of
1 b ur led to the emergence of developed tates,
:n h.and, of agrarian the
other. , ...hile in tne: wor.d bo,ocialitannst
d
" " "on of labour brings a ut p e;.r. an nbona
IViSI .1"
bution of production ist coun", .. :'I. ..
Socialist international divlSlon , labour. 'lelps to even
t llze economic levels of the SOCIalIst coururu's:, .
ou
F
" t gradually even out the production of l.:y
ltS, df lti
d agricultural item!'" per hea 0 popu a on: . .
anSecondly, overC,"lle disparitie . .s in th'P.
of roduction. the culturcu and o .......
pe:ple and. cOnseq"lently the of thl proouctlv::ty of
social labour, .J of
Thirdly, gradu:!
1
1y even out the StanL:': _ 0 _
working people.
3. Forms of Economic Co-operation
. ., .,.. .. .. tn t.'1!tf'
Economil s:'-':1,.
the
form 01 mute,,1 eXt:, :tngt; ot 10 t
IJ" f!3.00"
the ;ocia1i: t :V1::::-? o. b::'b'ecn t:,e
The mam fonm of econOIDlC co; " ,0rdin.t;"':1 of
d 'aI't 'ste-"-C: ",)
countries in the W.Ol-J !5 b:adC', gr,Ulting (:If
their plans of n.hor';ti _ . -t3!lce :I":'d "f
credits. ';cientific .md t<.;.;hmlal. in traini.ng
" " om c constrJC IOn. . .
expencnce m c. on .
personnel. . .. of labow' spccialisation
Socialist l.nterr.::ti{'nal t" in production betwecn
cinJ CO-Opel,J. lon tcs imply planned
Co-ordination these
of plans of nath.nal e:onomi.:: relatIOns b ; h the law
e('onomy In .:lxotrd;ili: CCJn-
of the ."l:.:nned. de
ve1
<.';'lllc
th
n. of the so-
. between ....
v.my, e.;onomic
cialist camp develops on the basis of mutually cO-ordinated
plans of natjonal economy.. .
Each country, when plannmg Its economy, Co-ordinates 'tJ
development. with th,at of the of other SOcial;st
countries. This estabhshes a firm baSIS for all-round econo .
th
'l' . mlC
co-operation between C socIa 1St cQuntncs. on which the
economy of each state and of the whole world socialist system
can go forward.
Co-ordination of the planning of the national economies
the socialist countries to the correct pro-
portions between the branches of productIon not just Within
the separate countries, but between countries as well. Thus
rational proportions are established through comradely
arrangement and the conclusion of equal, mutually advan-
tageous agreements.
In the course of co-ordinating economic plans, account is
taken of the interests, productive capacities and requirements
of national economy and each population, of the need
each country's economic strength, to consolidate
Its Independence and raise the material and cultural standards
of its working people.
. By t?eir joint efforts the socialist countries are building
mdustrial and transport enterprises, creating associated power
systems, .. Thus, an electric power grid, Mir, has been
e:ected, hnklng the power system of Poland, Czechoslova'
kia, Hungary, the western regions of the Soviet Union the
Gennan Democratic Republic and Rumania. The Soviet
Poland, Czechoslovakia, the German Democratic Republic
l!iungary have jOintly built the Druzhba (Friendship)
pipe me for transporting oil from the U.S.S.R.
b
For the organisation of planned economic co-operation
etween sOdalist co t' th C ' .
A'd . un nes, e ouncIl for Mutual EconomIC
I was set up In 1949 " I '
f 11 h on prmclp es of complete equahty
E
or
a e member states in it. The Council for Mutual
conomlC Aid is th . t
soc',.I, t . e In er-governmental economic organ of
s countries' its f t, , f
economic and tech' . unc I?n IS to orgamse exchanges 0
ance in rega d t mcal arrange for mutual assist-
ment. and b raw materials, food, machinery and equip'
economic de I
nng
about the planned co-ordination of the
ve opment of . I' f
a rational diviSion fib SOcia 1st countries on the basis 0
o a our between them.
Planned of economic development of
socialist countries Impelled by the very nature of social-
Ism and meets the Vl111 mterests of the working people jn
the countries of the world socialist
Trade between the socialist countries is
Widely developed and is conducted on
the basis of plans. There is no room in it for anarchy of
production, competition. spontaneous price fluctuations, non-
equivalent exchanges and the exploitation lind olundering of
some countries by others.
trade
Foreign trade between the socialist countrie, dfvc10Ds on
mutually advantageous terms st.:'rvc to develop the
economy of ea.::::h country. Trade :s :onducted at fair and
stable prices, fixed by voluntary 19ree:nent for a more or
less long period, taking world price' int:l a:c:>unt. Co-opcn-
tion and fraternal assistance are -:haraltc::=:'ic foreign trade
on the world market.
The world market no dif-
ficulties. Its capacity ex;-,mds be.:ause of gr:>wth
of production and the r';e in the ::n1
standards of the working ,caple in .all t:.:'
states. _ _ . _. -._ b cd
Trade Tf"I,tior.s the,ocC! .. -. are .
on long-term fe:- :c:.::ual ,Jr;<:,;i
The steady rise in :: s:-:lal1st
countries leads to chan(7cs :n .::. ..
d . t Before the war L1e ('Ion'.!_ E', "_ts c. III t e
an Impor s. . ti .... c'" 'ho;;lo,.akia
People's Democracies. wlth the excep on ,-._'- . 1 d
d h G D mocrat
'c Renuh' 'c were raw an
an t e ennan e -. -,., B 1 ..
food. Today the situatiC'n is differen!. thbc
n . I' I prodt:ce ut In ,c
exports were chic!lY agncu ,ur3 f f ctured output
f h
rt consisted 0 manu.l .
grcater I'art 0 er exp.:> s f eC"lnomic co-
An ;mi'oltant orm . ".
Provision ot rredUs and mutu:;l
. 'h lision 01 credIts. When e
the socialist counll'lcS IS t e P!C?aJ' , ,t h'd t .... relv solely
h '):!.' 0-1 15m "... .
Soviet Union was mg s . l' t countries today are
, -os but the socIa.IS diti
on ltS own resour ..... ; 't different con ons.
engaged on the same task aid of the Soviet
They rely on the frat.eroal an 1 assistance of the states
Union. the co-operation mutua
of the other s..-,daIist countnes.
3--IS
During the years: the Soviet Union has granted
credits to the 50Cla115t countrl.cs to the total amount of abo t
8,000 million The were granted on most
able terms. CapItalist countries charge very high intc1'C t
for the credits they give (from 3.5 to 6 per cent per annum)
and .impose political on them; but
the mterest on credIts m the countrles of the socialist com-
munity is usually fixed at the rate of 1-2 per cent per annum
In special cases, credit is given without interest at all. Credit
agreements never contain any unequal conditions, economic
or political. regarding how the credits arc to be used. They
are usually paid off in the form of deliveries of commodities
v ...hich the country concerned traditionally exports.
In the capitalist world the dominating
Scientific and principle is man is a wolf to man, Com-
technical
co-operation peting firms and companies in the dif-
ferent capitalist countries try to shroud
in the deepest secrecy any technical improvements and scien-
tific .discoveries. At the same time, they stop at nothing, in-
cluding blackmail and bribery, in their efforts to discover
their competitors' secrets.
As distinct from capitalism, the countries of the world
ever more extensively exchanging infor-
mabon on sCIentlfic and technical achievements and advanced
experience. Friends have no secrets. The scien.
tlsts of socialist countries work in close co-operation on
the Solution of the most important scientific and technical
problems.
Scientific and technical co-operation takes the form of an
excha.nge of documents and literature on various projects and
techmcal matters, aid in work on deSigning in geological
survey , ,
.. s, expenments and exchange of experience, and help in
training personnel.
The .leading role in organising scientific and technical co-
operatton between the s 'I" ,
U' I . OCla 1st countnes goes to the SovIet
period .1948-60 the U.S.S.R. passed on to the
of various kisnd 29,000 sets of technical documents
this material w:s , with existing agreements,
On the other ree of
in its economy the 'h' e U.S.S.R, IS mOre and more applying
Between 1948 and of socialist countries.
e .S.S.R. reccived over 7.000 sets
346
of scientific and technical documents from the other 1I0cialist
countries. .. .
The outcome of sClenhfic techmcal cO'operation is that
nch socialist state can save hme, energy :md resourCeS on
and technical problems which have already becn
s cccssfully 60lved in other fraternal countries.
su An important aspect of scientific and technical co-operation
assistance in training personnel. Large numbers of young
IScople from the fraternal co.untrie.s
fraining in the higher educational mstItutions the Sov1et
Union, Czechoslovakia, Po.land and at?"" .
The success of economIC co-operation and .. le
, ht of the socialist camp are the pledge tkt $0_: liJl.m wtll
mig .. . th "'I
be victorious in the economIc competition Wt cap ...... Ism,
4 Peaceful Coexistence and Economic Competition
. Between the Two World Systems
The question of peaceful
What does peaceful and economic competition so-
coexistence mean? cialism and capitalism was
ubstantiated by Lenin. He started out Jm
:he socialist rev,0lution cannot be ..
in all the countnes world; ;o'up of socialist
long period one sdClalhst. the ':em will
countries, will be eve opmg, w <
continue to exist in a number of ,lOd clpital1!t.
The presence of two systems, SOC.I . b'
. b t een them lDevlta .c.
peaceful e W t mean the cla<;5
Peaceful coeXistence does no th different economIC
struggle. Coex..istence between socialism and
systems is a form of the not mean reconciliation
capitalism. Peaceful oesitalist. On the contrary,
of two ideologies-soCla!tst and cas 'ts Party should increase
it implies that the working class afn 1 ""l'st and communist
h t
' mph 0 soo,u
the struggle for t e rlU , .
ideas. Ie of the other
The Soviet people and t m The ruling Circles
I
'k th capltahst sys e 'aI' t m
countries do 1 c e I'k the sao 1st sys e .
tridonot
1e
b'
sof
in the capitalisl coun es 1 'ystem is the usmes
The establishment at one or ot ler :,
J47
the people of each state. Therefore the relations bctw
1 d
' h eon
two opposing socia an systems 5 auld be based
on the principle of peaceful coexistence.
In the contemporary epoch, with such weapons of ma
annihilation as atomic and hydrogen bombs. war must
excluded from the life of the peoples. Only one road remains
-the road of the peaceful coexistence and peaceful competi.
tion of socialism and capitalism. At present, recognition and
undeviating implementation of the principle of peaceful
coexistence is a major condition for the preservation and
consolidation of peace and international security.
"Peaceful coexistence of the socialist and capitalist COun-
tries is an objective necessity for the development of human
society," the Programme of the C.P.S.U. points out. "War
cannot and must llot serve as a means oj settling illternalional
disputes. Peaceful coexistence or disastrous war-this is the
alternative offered by history."l
What. then, is peaceful coexistence?
It is rejecting war as a means of settling matters in dispute
between states, their settlement through negotiation. But this
by no means exhausts the concept of peaceful coexistence.
Besides the undertaking of non-aggression, it also implies
that all states undertake not to violate one another's territo-
rial integrity and sovereignty in any form or under any
Peaceful coexistence means rejecting all interference
the affairs of other countries with a view to chang-
mg .theIr state system or way of life, or out of any other
mobve; of the right of e\'ery nation independentlY
to solve concerning its development.
Peaceful coeXIstence implies mutual understanding and
!lllSt among states, recognition of each other's interests. It
Imp that the political and economic relations between
be based on full equality of the parties con-
an . CIr mutual advantage,
The SoVIet Union hi.
policy of peacef 1 a ways conSIstently defended the
SOcial systems and between states with different
The I' I WI continue to do so,
. po Icy 0 peace follows ft- th . 1
15m and corresponds not I am .e very nature of SOCIa -
on y to the Interests of the peoples
t The Road to Communism, p. 506.
".
of th= C_: :tist ,ountrie,s but of all other peoples in the
-d Th M..!:xlt-LentmSl Parties consider consistent strug.
WOI I t' fth "I
Ie 1 r r;::lr.:e, t.:r prcven Ion 0 e extermination 0 peoples
the fi.Jm4 (If a war, not only as their histor-
In s ion to mank:nd. but also as an all-important condi-
for . :'4 :lullding d soc:alism and communism, for the
of the 5.truggle of .the. proletariat in
the opltahsl of the movement
of lC pc pic. OpPI" 'Sed !-Iy the impenall,ts.. .
of th,. present world IS that t.he
f
f"'R truggling to maintain and comohd,ltc pC.1.:::e, for In-
ere> dth II' 'I
I
'on'" c.;-opcrCJ.tion an e remo\"a 0 mtemahona
terna. - - h f I 'I' ,
tension are omiderably supen;-r to t C orees 0 mt ltarlsm,
aggri""'so:ion .:md war.
i!. I.afe'}uardcd by :nighty SoViet. Union
t
' 0 "1St 'amp Workng fer "OC::'(C With the soclahst
.h' .. '. '.1
countrie; ::lver .0: m:lOkmd I.S a arge
I'ou,f countnc:; are !lot
fn Wi::.:. The :lumber :."leutra!:st c?untnes
ing to p:::llect :-r.:om ::-I:2.'.-d In ]Olmng
impcrlalht m] Itary blocs :s dTO ..... n3 .. . .
pc:-oies J.:e mC.e .... ,t"e.l} taking iOto
h
' h ds th the cf ",ar and peace.
t own an . t: ..... \.._.>.'-.1 .
T
' t mcment ... r .... .J'"';Jiar I!:.l;;ses 15 a tremen
:lC an l-W3r .... ........ r. .. int .. mational work-
dous :-1ctor::1 ;;tngg!:! for ... c Ie for
, 1 - "]e 9' ',t force d the strugg
Ing ... a',,; IS... ... -:;0--' ..,
pt: .... c. . _ ". ., '-"'e PrJgramme of
"Jt is t:, ll:'c::rt : . "!'"lu. ,. T.. _ ... ff I th
. t t '.:'y f-e :::c:nbmed e orts 0 e
the c.P.S_t. pom.s au" .. .' DCln-socialist coun-
mighty CJ.mp. the ?eace-l,)\ 109 nd aU the forces
tries, the intemJt:cna! clas:
ri
:
rity
of the socialist
championing peace. T3c .sup of the forces of peace
forces over thl! of possible to banish
OW" of war, WIll make \'en before the complete
wodd W.lf .the life of !ith capHalism extant in
victory of soc13itsm ..:o!l the car ,
a part of the world"] ... not realised by itself.
The possibility of preventing v. ar effort in the struggle
The peace-loving forces mll:st.Jexert eVa?:tst the plotting of the
to] peace and to dispJay Vlgl ance ag
I The Road to coummniSnJ. p. 50S.
349
enemies of peace; of war la!9c1y on the
policy of the countnes, ,on their dcfc?s,IVC potential
and the undevlal1ng Implementation of the Lenlmst principll's
of peaceful coexistence. alter the aggressive
nature of imperialism. But If ImpCrl[!i1sm docs launch anoth,
world war, it wiII thereby sign its death. Warrant. The peoples
will nc\'er again tolerate the system WhICh plunges them into
devastating wars. They will sweep away imperialism and
bury it once and for all.
Economic
competition
between socialism
and capitaLism
Peaceful coexistence between socialism
and capitalism does not simply mean
states with different social systems liv-
ing side by side. Peaceful coexistence
means above all economic competition
between the two systems, a competition in the Course of
which socialism achieves ever greater successes. While con-
sistently pursuing a policy of peaceful coexistence, the social-
ist countries are steadily consolidating the positions of the
world socialist system in its competition against capitalism.
In the final analysis, victory on earth wi1l go to the system
that offers the nations the greatest opportunity of raising
their material and spiritual welfare. That system will be so-
cialism. It is socialism that creates the vast prospects of inex-
haustible creative enthusiasm among the masses of the peo-
ple, of the true flowering of science and culture, the realisa-
tion of mankind's dream of happiness without destitution
and unemployment. of contented childhood and peaceful old
age, of the fulfilment of man's most daring, courageous plans.
?f man's right, on behalf of the people, to work and create
10 true freedom.
But when it is said that in the competition between the
two and socialist-the socialist system will
v1ctonous, this, of course, does not at all mean that it
will. be victorious by means of interference in the internal
the capitalist countries. The Soviet people's con-
I m the victory of communism is of a different kind.
t 1S based on the knowledge of the laws of social develop-
ment. on the advantag f th '.
Just . l' es 0 e SOCialist system of economy.
one t!me replaced feudalism, so a
tably come 't Just system-communism-will jnevl-
a rep ace capltahsm on a world scale.
350
Peaceful e .. onomic competition between socialism nnd C.:lP-
italism does the masses in capitalist count 'es
t a passive waiting and does not abolish the need for class
and national C?n the
the impact .of .socUl.list. vlctones 10 the
mpetition with capItalism hes In the fad that they slimu-
the class struggle of the working people and make them
a scious fighters -':or emancipation. The imperialists know
perfectly well, they dread the successes scored in the
d::elopment of the socialist countre:- and striv to retard
their progress.
Soviet power has existed for less than. fifty years. and
during those years the U.S.s.R. has two m?3t
terrible wars, has fought off the attacks 0. who
to strangle it. In the United States, capltahsm 10
. t nee for morc than '1 century and a half 10 e_ .lhon,
eXlS e . .led Am tt A.n'"
no enemies have ever once lOV'u encan err ?ly .. -
h U 5 5 R
and the U.S.A. u ve devo-lopP.d n 5"':1 i:I
yette.... f
' that the Land of -now has tho )PportU011y 0
the greatesl capital.it state Jl th w" Id to e-:-v-
nomic competition . . d . I
The economic 3.lsm in caplta-
hi h I
""'Ie al md agricul-
ism is a struggle for a g .cr e--c c . t..h
tural output per head of populal..='" a s. Llggle to gl --:., e
people the highest standard li ,,:.0:
the advantages u-e :.learJy on e -- rimarily, In
on the side of soc.", I! m. Proof 01 Ual
f
tb. .. U 5 K l the'
the rate of econO"IllC. icvelopment 0 ....
U.S.A. . . . the U!lite:i tJ-", r.S.S.R.
In the competition. agamst d ' "e dic;tanL':> which
has already substantially cut 0\\0 ..
f
A' econom"
rates it from the level 0 waS 8 times
In 1913, Russi." Union's output was
that of the U.S.A., but In 19.)3 the S d in 1964 about 65 per
33 per cent, in 195]-41 per an 4- years (1918-62) the
cent of the Amcrican unngin.,")the U.S.S.R. was 10.1
rate of increase in industnal I I the r>eriod 1954-
per cent. and in the U.S.A.-3.4 grow::h in the
62, the ave'age annual rate - 'he U.S . .'\,-2.9 per
U.S.S.R. was 10.7 .. :. wJb continuoo
. In recent , t .e A: in the :,Je of econoollC
sidcrable supcnonly ave. the .'
'J:'I
growth, to overtake the U.S.A. aha
absolute lIlcrcasc 10 the production of '. as rcgardllh
The U.S.S.R. is now coming to occupy /mportant itcn (,
for the output of some 11roliucls ",', \11 S P ilrec in the wO/I'd
Th S" . t manu act d
c eYlet Umon has already overtaken Ih Ufe good,
regards the volume of coal and h'cn 0 t C U.S.A a
P
ut '1' I ' rc ex raction k'
'I?aln mc c cctnc and diesel lacomoH . co c Out
tool,S, tractors (in terms of .:I991'C metal-cutting
reinforced concrete, Sawn timb ,9 c POwer),
sugar, ammal fats, milk, fish and so C\ woollen ICletHes,
manufactured goods. me ot cr products and
The outlook of the .
and U.S.A. is given contest between the U.S S R
builds the material and t
e
of the C.P.S.U. As' it
P ec mea asis of co .
rogramme says, the Sov' u' . mmumsm, the
States in industrial and l:t ri Will surpass the United
population, as well as phy ,g I cu tUlal output per head of
Th U S S SIca output
e " .R., together wtl h' "
SOlving the task of ens . I 1 at er socIaltst countries is
ft' urIng economic . t . h '
I Ion with capitalism Th' . ory In t e com pc-
munist and Worker" p e, InternationalIst duty of the Com
develop their artles of .the socialist countries is to
allow, to make the f as rapIdly as existing capacities
cialist system and th u . est use of the advantages of the so
by joint effort e
t
Internal reSOurces of each country in
Ism in the .the complete victory of social
shortest Space of tim petition agamst capitalism in the
e,
B. The Gradual Development
of Socialism into Communism
Chapter XVIII
THE HIGHER PHASE OF COMMUNIST SOCIETY
AND THE LAWS OF THE DEVELOPMENT
OF SOCIALISM INTO COMMUNISM
The Twenty-Second Congress of the Communist Party of
the Soviet Union revealed the clear, bright prospects for
mankind in the victorious march towards the finest society on
earth-communism. The Party Programme adopted by the
Congress and justifiably called the Comm:!lli.st Manifesto of
the Twentieth Century covers all of the development
of socialist society and gives the scientific substantiation of
the transition from socialism to communism.
"Communism," the Programme of the C.P.S.U. P'?ints out.
"is a classless social system with one form of publJc owner-
ship of the means of production and full social of
all members of society; under it. the all-round development
of people will be accompanied by tIle of the produc-
tive forces through continuous progress m sClen,ce and uch
nology; all the springs of cooperative wealth will flow. more
abundantly, and the great principle ac.cordmg to
his ability, to each according to his needs. WIll be Jmplezz:e
nt
-
ed. Communism is a highly organised sonety of free, sOClally
consciolls working people in which. public seU-govzrnmenj
will be established, a society in w}llcb for t /:00 _
of society wilJ become prime, vital reQUlTe;:
one, a necessIty l'ecl)gmsed by one and all. an b fit of the
each person will be employed to the greatest ene
pe,-'ple. - 1
Tl;. R,.:I t,. ComlZ:wu'sm, p. 509 .
... 6711
Communism is the direct of socialism. SOcial
ism and communism arc two phases 111 the dcvelopmc'nl
one and the communist socia-economic ,form.'ltion a;d
50 have features In common and also subst lOtl.1l dlfferenc ...
S,
1. Economic Features Common to Socialism
and Communism and Their Points of Difference
Features common
to socialism
and communism
The economic basis of socialism and
communism is social oWliersl!ip 01tht
means of productioll. This means that
the land, the mineral wealth, the fae
tories, the mines, power stations. transport facilities, com-
munications and the products of the national economy arc
socialised and constitute the property of the whole people,
In both phases of the communist formation the relations
01 production con10nn to the productive forces, i.e., the social
ownership of the means of production corresponds to the so-
cial character of production, The appropriation of material
wealth is in the interests of society as a whole.
Under both socialism and communism there are no exploit
ing classes and no exploitatioll 01 mall by man, there is m
racial and national oppression. In the first and in the higher
phase of communist society, comrade.ly c,,-operation and
mutual assistance between people freed from exploitation are
typical of the relations of production.
Steady growth 01 social production on the basis of rapid
progress in science and technology for the purpose of eve:'
more fully satisfying the material and cultural needs of all
mem.bers of SOciety is also typical of both sodalism and corn-
mUfllsm. Under socialism ano. communism man himseJi with
his material and cultural needs, the at material and
spiritual values, occupies first plnce.
Planned .development 01 the national economy which gUil:'"
ant.ecs rapid rates of growth, rational usc of society's rna-
tcnal reSOurces and steadily increasing labour
IS also typical of both phases of the communist
formation.
Under both - I' ,
lh - SOCia Ism and communism there is no Qtlli-
cZsZ'ab
s
between totun and caul/iz'y, between mental and physi-
ca OUt.
In both phase,; of the communi.t formation Jab;wr is lrc/'
Id aeatilJe. Common to both ph....c. t. the equ<ll duty of
members .:It society to work lccodin j ttl th:::r lbility.
.J Under sociali!.m and communhm __e CXl .. 'S a single
ideology.
These, then, arc the c ilu f feal -J] 5 'mmon'.) so\,.:
and communism. _ ,
That social1sm and commUnism r..... \: fcatur'. In emman
d es not mcanlat no cli. creo 1.:) ,"xi t b ... w(; :l them.
o The baSIC diffl' "cnccs b '--: :nmu
Basic dirrerence!l nism and ,Ql:iaiism ar:;se from tho.: ,In-
between equal degl 'e of CC!1om: an:t c;litural
and socialism .. . . t t-I
matunty In ',':'II Ie '!! a 1 S
lower and higher stages of ". .
Communism differs from ;",r,m.al'l v :n it; :n-
comparably higher level of development the
1orces. Communism t:lVe a
and improved materi<, techmcal t.:l::.S, IIqkmg It p",-
sible to raise labour produc jty !b!;.r and to guar-
antce an abundance of material and spu::ual "l:dth. Und.:r
communism there will a higher level .:.. ;:.:n .. _d
tion of social economy ,cS ,. whole; mo: -.: ':e ::;-.d ralIonal
use of material wealth and m< __:;--:Jy,"cr gl" ....'mg
needs 01 all members of _Ic;.y wiJ: "
Under communism thf' re!3.Lon'S of produ .. :.";':1 \':11 :,nc.e
- .h"lcter po t,:, -: Jall.,m are
matur In. -... - - " .. -n I ,",,1-
two 01 SOCial property-taL ","u c,' .1t .. ;e
lectivc-farm, Lut comm"n";n Ln.C ,. wI .. b", 0, .
_.. . 1I"Y' pA 'pte lhe t\\o torms
munist property, owne.:l Dy - e_e ... : exist-nee of
of social property SOC1: .. v..;na..: cn '" \,;. t,; _
I_ the .:J-"pcr.ltl\":: peasan
twu classes, the wO.rr..;ng c .. ss ., ... st ownership, the
try, With the of ... d duss distinc-
eeoC/amI, b,]:lS 1,'r tlzt" a::'.-tcnle .,1 an, 'elfarc and
, - Z I " rhc . ....
how; uni no oliger eXjs.. _. t will also
cultural distlncl;ons between town and c"un ry
disappear. , h..t dard of education
As production t, anJ t .. t"' there will
d
- kill f h ng p .. "o e tmprc "'.
an technical s ,) t e wo_. 1 h" 1 work in the pro-
be an organic fusion of menta! and p will no longer
ductivc activity of pcopk. The ;f education and
be a special social str.Jtum; t e eve
technical skill of peopJe performing physical work will d
level with that of people engaged in menlallabour. raw
In communist society the very nature of work wJll ell
k d
"J" "t' ange
Wor un er SOCIa J5m IS no yet a prIme necessity of n'
Under communism, free, creative work for the whole of I c.
ciety becomes a prime necessity of life. giving people th .50-
of creation and great pleasure. But communism does e JOy
free members of society from their duty to work; it
incompatible with idleness and parasitism. Everyone capab;s
of working will join in social labour and so ensure e
con.tinuous increase in the material and cultural wealth
SOcIety.
During the transition from socialism to communism the
forms 01 distribution of material and cultural wealth amon
the members of society will develop further. When
communism an abundance of wealth has been created and
work has become. prime necessity of life, it will be possible
to make the tranSition from the socialist principle "From each
according to his ability, to each according to his work" to
the communist principle "From each according to his ability
to each according to his needs". .
. When everyone is equally related to the means of produc-
and to work, there follow equal relations in the distribu'
hon of material wealth in accordance with the rational require
of culturally developed man. "The purpose of com
production is to ensure the uninterrupted progress
of society and to provide all its members with material and
according to their growing needs, their in'
C
lvldual and tastes," the Programme of the
.P.S.U. pomts out.i
In "
society, commodity production and the
economic categorie ty" 1 f
ric spica 0 it-commodity, money,
wages, cost accounting, credit and finance-will di.
Communism represet t th h' h . .
01 public lite As th ls .. e Jg est form of orgamsatlo
ll
with th d "J e tranSItion to communism proceeds and
e eve opment d'
tion re1ations ch Improvement of socialist produc
i.ng will also take place. i.n the
Institutions-and' the sphere of pohbcal and Jurldtcal
'.. In e orms of social consciousness.
I TheR d
OQ to Communism, p. 511.
356
I the higher phase of communist society. where thf>r
s
will
b classes and no class distinctions, where it will n"'t be
C essary to measure the amount of labour and the ratr- of
nec sumption, and the danger of an attack by the imperialist
will no longer. exist.. the as the ,01 polito
. 1 organisation of soctety WIll Wither away. So! lalist state-
will become .
With the transition to nahons Will .d._ lW even
closer together on th.e baSIS of their commo? politl( al.
nomic and spiritual mterests, of fraternal fnendshlP 0-
operation.. .
But in spite of the differences between commUlllSTTt and
cialism there is no wall dividing these two phases ,f SOCial
development. It is speak of the
of communism matunng wlthm soctahsm. Thus. commuOist
methods of work and organisation of production, cnmmunJ.J
methods of satisfying the needs of the working peop}'" -,ubl l:
consumption funds. public catering. boardi.n; kID.""
gartens, nurseries. etc., arise and 10 SOCla]'st t'" lety
Already now many palpable and v1S111 .. feature . ,m
munism exist and lre developing .
2. Objective Laws Governing the
of Socialism into Communism
How socialism
develops
Into communiam
Communism is the l)nd ner
feet society on earth. To buLa - m
munism is the final goal of l'-te Com-
munist and Worker, Panes. .
The development of socialism into communism h histor-
ical process governed by objectwe laws which cannot be ar-
bitrarily violated or ignored. k I
The transition from capitalism t" socialism cs pace
in conditions of class struggle and den.tands c; IdlCll
up of social relations, a profound soctal revolul on In
dictatorship of the proletariat. . . . ,. i, .
It is quite another matter With the transltI( 1 frorn '.
ism to communism. Socialism develops into commuOIsrn
" "I' and commumsm
Without Sot; al revolution, becaue SOCIa Ism . ._
"c just two .,hase!. of ('Ine anu the same co,?mums, s.Oth)
econrmic (ormal on, rhe L. amition to communism take' . ace
in the absence of exploiting classes i" c,, , !.:umstClIl
all members of society-workers reas'lIlt" " I"" ccs where
. II' _...I ' ("' un( tntcll t
are .... Ita y mteresh...-u m bUilding communi cc uals_
Alth h
. sm.
. . aug. It was possible and is still possible'
hlstoncal clrCllmstJnCcs for some peoples t . I In certain
without going through the capitalist
0
re,IC 1 sOcialism
t
.. h ' , '-, no Countr
pass 0 ,communism wit out going through . l' Y Can
after bUlldi.ng can society pass on Ism ..
of communist society. c bUilding
The transition from socialism to com .
gradually and continuollsly. takes place
suddenly, all at once. oes not appear
the transition from socialism to COl .
ma!erlai and spiritual preconditions are .. d nijllmsm. the
which .are required for the second phJS gl<ll ula y prepared
formation. cot Ie communist
The main conditions of the transition f . .
communism are: construction of th socIalism to
basis .of communism, which will c matenal and technical
matenal blessings' the de eJ secure an abundance of
forms of socialist 'pro crt i opment and merging of the two
development of cOJ?ffiunist property; the
eradication of the essenti 1 s necessity of life;
country. and behvcen me:tal between town and
of the socia-economic d. " . d phYSical labour' removal
. I' IS mctions betwe th 'I
SOCIa 1st society and tr . t' en e c asses of
physical and tf a classless society; a11-
society. and the dev I eve opment of all members of
public property and of a communist attitude to
Th t' ur.
e ransition to the h' h
take place until the Ig er phase of communism cannot
until necessary conditi I
an abundance of material ons or it are ready. i.e ..
people are prepared t I' wealth has been created and
"Th a Ive and k
e creation of the mat . I wor on communist lines.
munism, the development o;na technical basis of carn-
ol;;e man of communist s relations. the moulding
tl:e ranting the Party in th oCJety-such are the major tasks
. period ol the full-scale sphere of internal policy during
p 0suut the resolution of communism."!
. . , . e wenty-Second Congress of
I The Road
to COJJUl1l4msm, p. 430.
The gradual transition from socialism to communism does
not mc.)n slow On the contrary. this transition
t<lke
s
place at d rapId, llitherto rate, Typical of it
'$ vigorous of the productive forces and culture.
I evolutionary le.1Vi in the development of science and tech
In the period of communist construction. there is
.: :: .. pid dC'vclopment of modern industry. large-scale mecha-
nised agriculture, of the whole economy and culture. with
millions of working people taking an active part in it.
All is fo<,trr[>d by the continuous growth .,)f social pro-
duction baseJ on sdcntific and technical progress. by
the greater tpchnicill "kill of the workers. and the increased
understanding and dcti .... i,y of working people in the struggle
to build commu'li':1l1.
Communist j; not a spontaneous process. but
the creative work of of working people. their
conscious and active participnti.:m in the .development of so
cial production. culture and science.
Rapid building of communism is based on the knowledge
olnd application of obiective laws which enable socialist so
c:ety to select the shortest and most effective ways and
methods of introducing communist changes.
The first phase of communist society-socialism-has been
built in the U.s.S.R. "The gradual development of socialism
into communism." says the Programme of the C.P.S.U . "is
an objective law; it has been prepared by the development
of Soviet socialist sodet:- thro'.1ghout the preceding period.'"
The great victories of socialism in all
Tbe spheres of economic and socio-politica1
in tb@l perIOd of - . h 5 R h bled th
full.scate communist hfe lD t e U.S.: . ave e
construcUon country to enter mto the penod of full
scale communist construction. The
c{)mplete and final victory of socialism. highly
Juctivc forces and socialist relations of production.
ing of science and culture have produced the ill
which the first shoots of communist so,!ety are dai
1

stronger in the Soviet Union. Communist constrUCtiOD 1D 'et
U.S.s.R. has become the practical concern of everY Sovi of
worker. the immediate task of the present The tasks
communist construction are solved in consecutive stageS.
359
The material and technic,,} basis of communism, which
secures an abundance of materi"l and cultural blessings for
the entire population, will be built up in two dec"dcs (1961
80). Soviet society will cOJ?c .c1os,e to a where it can
introduce the principle of dIstrIbUtion accordmg to needs, and
there will be a gradual transition to single communist
ownership of the whole . .
In the process of bUildlOg commumst soclety. class di"
tinctions will be eliminated, classes will fuse into a classless
society of communist working people. The essential distinc-
tions between town and country and between mental and
physical labour will be eradicated. there will be a greater
economic and ideological community of nations, the features
will develop of the man of communist society. a man harmo-
niously combining ideological integrity. wide education,
moral purity and physical perfection; all citizens will partic-
ipate in the administration of public affairs. As the result
of the broadest development of socialist democracy. society
will prepare itself for the full implementation of the princi-
ples of communist self-government.
Thus, in the course 01 twenty years communist society will
in the main have been built in the U.S.S.R. But the full con-
struction of communist society will be completed in the period
which fo11ows.
Communist construction in the U.S.S.R. is of the greatest
importance. The Soviet Union which paved the
hIgh. road to socialism is now paving mankind's way to com-
mUnIsm. Communist construction in the U.S.S.R. will lead to
further increase in the productive forces. to the country's
Increased economic might. This will strengthen the positions
?f the world socialist system in its competition with capital
Ism. The Soviet Union will have a higher standard of living
any capitalist country. This will be tremendously
Imp0:tant the revolutionary struggle of the working
class 10 capItalist countries.
The more or less
simultaneous
transition
to COmmunism or the
soeiallst countries
The transition from socialism to com-
munism is inevitable for all countries
which have taken the path of socialist
construction. Communist construction
in the U.S.S.R. is a component part of
the building of communist society by
the peoples of the world socialist system.
360
I
"Sine!! the &oclal or..:es-the working cia the - ope t"
d the
'" .. .. - ra tV!!
peasantry an S IOtelhgl!lltsia' and >-"e .)cial forms
of econom:r on the two hrn ... of
proper,lY) In the Soviet and "in otbe:!' socialist
countTiCS "arc of type, states the Pro ;Jramme of the
C.P.S.U .. there common baSIC objecth'e aws for "m-
munist construction 10 the U.S.S.R md in those c.)unl-'cs,
with due allowanc made for the l..norical Uld n.:ltiana]
peculiarities of each country.1
Today the socialist countries are at different stages d
development. The Soviet Union entered the period ,f full
scale communist construction. The other fraternal counmc,
arc cither completing. or have In the main completed, the
building of socialism. Consequently. the countries cf the world
socialist system are not It the samt.. leve' bul ,.t iiffe,.ent
stages of socialist maturi!::r.
In this connection the question arises 15 to :lOW th ..
countries will develop towards communism. Can '''ere arise
a situation where one of the socialist cour.!...-:es has arr:ved
at communism. w'tile the others stiP .... nain far
behind, at the .tages of bti!ding ocial
i
t No.
there cannot!
Because the socialist countr-es heor.
r
tt: ::: c'1 .... alist
and are making U::.t:: 0: :c. th qe-; of that
they are able to curtai. the time ... xv ." bui:J
socialism and 'hey b.-:Te '1e pro:-__ : ot making' "e t-ansitL 'n
to commurusm more or le"s simultane. usly within the same
historical epach.
Though under capitalivn. !,articularly at the imperialist
stage. the uneven economiC and political devf'bpment of
individual countries becomes intensified and more profound.
in the world socialist system, a gradual JevelJing out takes
place in the economic and cultural of all
countries. A country that was formerly back-
ward,. by relying on the ass?sta.nce
expenencc of the other soclahst c:ountl cJ.n gam bled'
bring its economy and culture up to the level of the ea Ing
socialist counbes.
The economic b.;sis of the more or les.; simu't.:mcous
tJ lnsition the ,:,ame historical e7"Och ,,' the socialist
'61
C
ountries to communism is the creation of the mat 'I
, 'I h h . crla
prerequisites for commUn1!;1U t l:ou9 t c crc?hve labour of
the people of each country, theil' constantly. IIlcrcasing COn-
tribution to the common cause of strenglhenmg the SOcial'
h I
'd' f ' 1St
system, and t c conso I 0 and mutual
assistance among all the socialist CQuotncs.
The country that first proceeds to communism facilitat
and accelerates ,the cOIm:nullism of the
socialist countnes. By commUnism, the peoples of
the Soviet Union are blazmg uncharted paths for the whole
of mankind, testing by their own experience the correctness
of these paths. revealing the difficulties. finding means of
overcoming them, selecting the best forms and methods of
building communism.
Communism is the age-old dream of mankind. It is becom-
ing a reality for all the countries of the world socialist system.
In the final analysis, all mankind will arrive at communism.
This will be the inevitable trend of social development.

Chap' T XIX
THE CREATIO:-i OF THE M 'HERIAL
AND TECHNICAL BAS:', OF 'II: \I
Communism primarily diffe" h .. m sorial 'SiU n L le liqh: r
level of development of iti pradu.. ve .l .... , s.
Consequently, the es. ential c\.lnd:tion .. tr"n tiM
from socialism to is the builcling of ':!. .al
and technical basis of commUnIsm. To :10 ti.: .. 0'11'" os ral. iL:,
the productive forces of S\.l\ iety to i m s.:: vlhe '" n
abundance of material .11: lral v ,:,1"1 S r 11 vc_:t, 1P
tran! ition to communist relal on! be -om 'i 1
1. \Vays of C) eating tb 1
and Technitt! Ba!'is 01 Commun:c; n
What the matc1"i:J.
antl technic 11 baSiS
of communism ans
lle main e "' .... :::11 t". Lle P "t
T
.aJ'l4 the C:;Ovir
'
.,,"')le t. .. te e
mat""lill '(;;;..J I: -';1(. I ,.. I
nlual:;::1 w thin t v -. :
Programme of th::- C P :;. U. 'loiJ'lt. ot ..
'he
The material and ... b"e 5 uf ,"oJ! muni '1'! .J
foundation on wnw'! t lC b_ gbt c:'Jfi '" uf core::::JOl.:: ety
will be crccted. Its r.;"cation s 1;'(" key to the ,,,lutlan d
the tasks of commuOl t :on!'trJ(
The material and tecl-nical b:sis of r.;,,:mmu
redominancc in 11 t.ranche oj tJ-e nation:
a highly develol"'ed system of mz' li:les dlld
The R, ::'0 "':"mm'mism. p .
!b'
sm
cc:onamy "f

i" planned to build atomic power stations, particuJa
areas where other sources of paWl'l" ar(' Sl"iII'CC, r\y II
During the twenty-year period a uniJied power sy t
the entire. U.S.S.R. will bt.' l'stablishcd, making it :, c
l11
.
lor
to transmit power from the eastern districts to the ErosSlb e
part of the country. Thi!; power system will also b
up with those of the other socialist countries. C In I
It is of great importance in establishing the material
technical basis of communism to develop machillc'buU/
n1
to press fan ..... ard the production of automatic line m
g
d
,
h
' t' I h' s an
made aU,omatics, tc cmee allles and electronic devices
an preCISion mstl'umcnts.
In the twenty-year period, 2,800 new engineering d
metal-working will be constructed in the U.S.S.R.
old on
7
s WIll be reconstructed. This will make it
posslble to the to.tal output of the machine-building and
10- or ll-fold, including a more
than Increase m the output of automatic and semi-
automatIC hnes.
_mechanisation will spread in industry.
transport, loading and unloading
and" In the public services. Comprehensive
mechamsatl.on ,:",,111 embrace all stages of production, all its
it wlll lead to the elimination of hand labour in
oth baSIC and auxiliary work.
But mechanisation only paves the way for
aulomatlOn In mdustry.
The material and tecl ' I b ' f " '
th I 1I1iCa a515 0 socialIsm only con tams
m:t e .em
l
cntds of automation, but during the building of the
crla an technical bas' f d
systems of } . . IS 0 communism, the automate
mac unery wli! become p d ' t Th t, ty-
year period (l961-80) "n re amman - . e \\cn
tion in industr b cd Wi see. broad, automa'
more autom /ci on alhound. mechanisation. More and
and s and with higher technical
of electronic co echveness Will appeal'. Cybernetics, systems
sively applied and. devices will be extcn-
planning, designin ustry, and transpolt, in research,
Automation a l' accountlO9,. statistics and management.
material basis fo; th cd'ml'fchenSlve mechanisation fOl"m the
lab(H' With au' e. eVe opment of socialist into communist
k
.omatlon the ch t fIb h
wor (rs level of ffi." arac el" 0 a our alters, t e
c (,;Icney and lechnical skill rises. and the
366
. . e csllbli hea r 1"minating the basic 'lisrnc
dltlOns ar d L 1 I
con n nlen! 11 Oln r Y U .._ a
tiJn n'lV mee aarl .1r_ aut _ tJ of
Col1lpre c 5 ""gr;atly promc Ii entific and tee lmc 411
t ."n proccss
c
gre 5
. e nationa1 e onol"'1),.
n 01 tile ec mo"!Y
al
is of ' cat lmp;)rtancc
h
buildin of the mater and. :mical '> ........... of
forte .,
::'Iml1lunisrn. . I d b th
I,; 1 dy nOW the chemu:.a "l 1.:st"n! l cccm.mq""p
A ,tant bran(;hc:; of the e Its roclu_: are
most lroPO f od . anQ d ed
used in all bran(;hes.o rr uC:l0:!0'd oJr. ...
1
ne s.
Production oj &,rnthet. .. mate!" S l S pr __ y.... u tl:
chemical industry I
Synthetic maten<Jls 1.: i no .. an:.J ... _ .ve v
h
Eac
tureof valiaus nL.: hlD_! c.""ld pbances. Ch_."
t c manu ". f d'
technology yields a big a"lmg mat:. la.S in manpov.
It is nol surprising, thl eforc. that It:: n of tl
C.P.S.U. cnvi ages an iccd ... at deve!. p. E hl"u al
, dust1'V lnd the full use (t :tchievem ... 5 C r: "'1 1
" "' h ' 'T1 r
c:lemistry 10 all branc :. 0 .. t e nati('" ec . <;'1 c
these add to the pco])le s wealth. and uce odu
tion of new, Implovcu ip t=._ of _I c... 4
of c')nsumer goods. Metal, v an<:1 oli r ......,. ials
,.ill be increasingly r ... laceu 1::y e .. _ md
.ight-wcight synthel..::: ma 1al
In 20 years the aggreq<:. .. volt":":';_ '"
chemical industry will incrc e
> "
output 01 man-mat::: ana :.y ---
-
, e
t1:
.. -
). llu
dnd the Jutput of pIG!:. cs and resins "\..
lhe e f en nicals ant. 5 tbetic
.1a .1)'
t'. mater 31
radical :thv" 1.1"_ _ t
L
.-
production. Th.ese 1ar.:
r
5 imr _ 1 y:-
improve the quality of roduction nu
saving all capital outlays If reduc" the
TC _ output.
,_Clllyni
f -. u.. lO.
try _ tt. P
ACl.::::leratoo devell pment t
L
t m '
, f rtl ',11(;ll
rise in the rodul on .:. 0l.J1._ C i
Eo I h' cnt .- cu1l..
" pest conl ), pror_ : t e -
Wh
"'ltcnfy'
It out chemil ...
1
aroduc I po 11.... J
a'
mg and ti lC
1
11CVC a ccp IOcre -
alld of thf! DlOOU( '1;n o. Il nll I and t
L
1
'I ....... otr .
le ,'con00111 .... ct of c lical ...,:-:"\, d
h c entifi(.lll
109!. :ie n H' n l-OVCrnL-,t f tr :J r
ot
,
technological level of industry and in an intensifica-
tion of production processes, and m the rlse of labour effi
ciency. Results of that kind cannot be expressed directly in
figures. but this docs not make them less tangible and
weighty.
Greater output of the metals and fuels which constitute
the backbone of modern industry is of great importance in
creating the material and technical basis of communism. The
iron-aod-steel industry will be developed on a grand scale.
The output of light, non-ferrous and rare metals will be
appreciably accelerated and that of aluminiwn will greatly
increase. In the coming years, a steady effort will be made
to ensure the priority development of oil and gas extraction
,
since these items will be used increasingly as raw materials
for the chemical industry. Coal, gas and oil should satisfy
all the requirements of the national economy. In twenty
years, coal output in the U.S.S.R. will increase 2.3-2.4 times,
oil-4.1-4.8 times, and gas-14.4-15.2 times.
Tremendously important in creating the material and
technical basis of communism is the further improvement of
the organisation of production, of specialisation and co-opera-
tion and the appropriate combination of kindred enterprises.
Creating the material and technical basis of communism
implies the most extensive application of the achievements
of science and technology and of progressive experience in
agriculture. Along with a powerful industry, a flourishing
versatile and highly productive agriculture is an imperative
condition for the building of communism.
Intensified development of the productive forces of ag
ri
'
culture will make it possible to accomplish two basic, closely
related tasks: a) to build up an abundance of high-quality
products for the population and of raw materials f01'
mdw:try, .and b) to ensure the gradual transition of social
relatlons in the country to communist relations and eliminate
the essential distinctions between town and' country.
The to these tremendous tasks lies in the intensification
which hinges on extensive chemicalisation of
armmg, all-out. devclopment of irrigated farming, and on
tfhe mechanisation and electrification of
armmg.
Extensive use of ch . 1 . .
It
' emlca methods and products 10 agrl'
cu ure IS 1 revoluti . f .
on in armmg and in its development
368
,
I
through intensification. Chemicalisation sets th ta
. lJ h h e 5 ge for
higher crop Yle s, 19 er productiVity of animal h b d
and higher efficiency of labour. Intensification of"'f an. ry
d
11
' ilrmmg
is boun up very case y With the development of d
. La 1 I'" Irrigate
farmtng. rge-sea e rrlgatlon WIll guarantee large .
. h .. h 11 . gram
harvests, w Ie WI represent a good msurance fund and '
big addition to the country's grain resour\:es. a
Intensive agricult.ural development is impossible without
the broadest pOSSible comprehensive mechanisation and
electrification, if it is sweeping and massive enough,
will secure rapid rates of growth in crop faming and animal
husbandry and help attain a higher level :'If labour pro-
ductivity.
The powerful development of the productive in
agriculture will se" :anning gradually approach industry m
technical equipment and organisation. The dependence )f
farming on nature will de( rease ana ultimatelY brink k a
. .
minimum.
Science plays a tremendous part in the of tb"
material and technical basis of communism. WI" sdentific
and technical progress it is possible to make the fullen c:
of the wealth and forces of n: ture m the iflt"re't5 0
1

people. to discover new type: of pow r ll1d creat!; new
materials, to work out methods for influl ndng c imatic can
ditions and exploring oute1 spa( e. 1" 1:; more and
becoming a decisive faL.OI in le vast ;rrowth of SOCCty s
productive forces. As Marx foresaw, scienc is bening one
of society's direct productive force. .
"The Party will do everything to e!1hanc IIJe f"?le of .t.: ,etl!
in the building of communist s"",ciet:/,' say:; the Programme
of the c.P.S.U, It will encourage research to d!. neW
possibilities tor the development of the produc:.
ve

and the rapid and extensive applic ltion of the latest sc.eCltJ l
and technical achievements; a deci IV advancemcnt 1II. ex
perimentoll work including research dire.:tly at cnterp:lsesj
and the l;. organisation of scicll.fie
. I t tudYlO9 an I.,
mform<ltion and of the who c system h d .
liicminating progrc sive Soviet and met d s;cchoical
'urther oudook s regards sClentl ili
depends 1t present most of all on t:".
of the leading bra,nches of .natural A. high level in
mathematics. phYSICS, chemu;try and biology an essential
condition for the advancement of the tcchmcal, medical
agricultural and other scicnccs. '
The development of science and the use of scientific
achievements in the national economy is a matter of special
concern to the Communist Party and the socialist state.
The steady, rapid growth of labour productivity is of prime
importance for building communist socicty. "Communism"
Lenin wrote, "is the higher productivity of
with that existing under capitalism-of voluntary, socially
conscious and united workers employing advanced technique."l
Progress in science and technology in all branches of the
national economy, a higher standal'd of culture and technical
skill among workers, improved organisation of production
and labour will lead to a tremendous growth in the productiv-
ity of labour. In twenty years, labour productivity in industry
will increase 4-4.2 times, in agl'iculture-5-6 times. The
U,S,S.R, will then occupy first place in the world in labour
productivity.
Vast resources are required for building the material and
,technical of communism. In 1961-80, capital investments
m, natIOnal economy will reach approximately 2,000,000
mIllion rubles. i.e . will be over 1 times as much as the total
investment made throughout the existence of Soviet power.
The building of the material and
Results of. creating technical basis of communism will
communiSm's k .
material rna e pOSSible the realisation of the
and tecbnical basis following tasks:
First, to create productive forces
of unparall,eled power and to attain first place in the world
for per capIta production;
to ensure the highest productivity of labour to
eqUIp SOVIet p"'ple w'th th . '
tr f I b
1 e most up-to-date techntque to
ansormaourintoa fh' "'d
"
source 0 applOess lOSplratlon an
crea Iveness; ,
Thirdly, to develop th od . .
order to saUsf all th e pr , uchon of material wealth m
secure for th h' reqUIrements of Soviet people, to
e Ig est standard of living, to create the
I Lenin. Selected Worb V 1 3
. 0,
370
d
.,.ons for the transition to distribution according to
con I I
graduallY to ttansform socialist into communist
1 fons of production, to 8 60CJcty without classes,
rC a ladicate the basic distinctions between town and country
mental _ . . .
'[t1l1y, to be victonous In the economic competItion with
ca :talism, to maintain the country's defences at the level
will ensure the defeat of every who
to raise a hand against the U.S.S.R. or agamst the soclahst
camp as a whole.
Does everything necessary exist for creating the material
and technical basis of communism within two decades? Yes,
because the U.S.S.R. has the most advanced social system
in the world. In the U.S.S.R. the working people hold the
reins of power; there ;s an indestructible alliance of,
peasants and intelligentsia; of Soviet ",lu,ltl
national state are bound by ties of f.nends}llp, gwdl,ng
force of Soviet society is the ComrnuDlst Party eqwpped
Marxist-Leninist theory and knowledge of the laws of sooal
development,
There is no country in the world as va!t as the Its
telTitory is three times that of the U.S.A, and four times that
of all the West European countries taken together. The
population of the U,S,S.R. is the third largest in the
after China and India. The Soviet Union bas inexhaustible
natural resources. It holds first place in the
prospected reserves of iron and manganese ore, copper. ea
nickel tungsten bauxite. potassium salts. phosphates.
, ' . d -, large <!epo,,"
coal and oil. Soviet geolO91sts have ISCOVe!"O:U erial
of natural gas. diamonds. rare metals. nuclear
and other minerals. Its rivers and lakes are
sources of cheap power, as well as ::rces and vast
tion. The U,S.S,R. has ver"! large um r resoun;CS
areas of arable land. All thIS forms the raw economy,
for rapid development of the Soviet people
During the years of constru i ed with up-to-date
have built up a powerful Industry eqUiP ed science in the
machinery and have cr:ated has been
world. Besides, a 0 d S t d'ly jmproving on. this
trained.. capable of 'landhng, an s ea I
modern technology .
AlI this has produced the conditions and provided th
opportunities for building the material and technical basis
communism within the span of time indicated in the Pro_
gramme of the c.P.S.U. But the Cl'eation of this basis
implies the further development of society's main
force-man.
2. Development of the Main Productive Force
of Society-Man
The Pro.gramme of c.P.S.y. points out that to create
the. matenal, and techmcal basIs of communism means to
a hIgh cultural and technical standard among th
people which will in itself promote their creativ:
Inltlahve and alter the character of their labour.
of this basis not only calls for highly skilled
speCIalists. of improving and advancing social produc-
tion, but It IS In Itself an important factor in the allround
development of the working people.
Already under socialism. working people have a high
standard of culture, education and professional skilL The
holds first place in the world for the training
an. . o,f specialists, In 1914. there were onl 289
In.stitutions and 10.200 researchers in Russia. 6ut by
d
of
1963
ili
the U.S,S.R. had 4,416 scientific
ma an . an 524,000 researchers. In 1963, as
s million people were studying in higher and
!ere schlools whom almost 3.3 million
B
'd h uca Iona establIshments alone).
eSI es t e schools t h' I
tional institutions th'. ec schools and higher educa-
various fonns of' t e a great extension of the
shape of schools celc
a
mea and professional training in the
, sses Courses .
and evening courses Tod' , s.emmars, correspondence
is studying in some for ay. every thll'd person in the U,S,S,R.
universaL As the other. Education has truly become
cultural level of all of oou:ation rises, the general
, Communist Party
TlSlDg cultural standard of th Soviet Umon considers the
the triumph of communist co e to be a guarantee of
In the next twenty years
. e vast mass of the population
372
. the U.S.S.R. will have 0 full secondary. specialised second-
: or higher By wi,a be million
ry pie attending hlgher educational mshtutlons. I,e., over
times as many a.s in 1960. yarious of
the professional ski .. of working people wIll be applied
cxtcn$lvely, . . . .
With the comprehensive mecbamsatlon and automation of
production, work will be and . mo:e to
functions of controlling. watching. adjusting and Improvmg
automated systems of mach:nery. This will require harmoni
ously developed and highly skilled people to work in all
branches of the national economy.
Technique under communism will change not only man's
degree of skill but also his intellectual outlook. !he necessary
material conditions will be created for the allround
ment of abilities and talents, for a rich intellectual 11'" for
everyone. "The transition to communism," says the PIO
gramme of the C.P.S.U., "implie.s training that will make
people and hl9hly cultured, people fitted
for both physical and mental labour, for lctive wo;k n
various social. governmental, scientific and cultu II spherei. 1
t Tbe Road to couu=-..:mism, p
Chapter XX
SOCIAJJST INTO COl\1l\1UNlST RELATIONS
IN PRODUCTION
,
As the. P!oductive forces develop during the transitio
SOCialIsm to communism, the relations of rod . n
which are closely connected. and equally
by, also develop and are Improved. In this wa . r
of production gradually develop into y. SOCla 1St
relations of production. communist
1. From Socialist to Communist Ownership
As the transition to comm .
together and, in pers e t' a gradual coming
state and co-operativ/f: we. ; takes place between
become one communist rms 0 ownership, and they
The shaping of on owners JP. by all the people.
people is the result e f ownership by all the
and improvement of 0 b he comprehensive development
collective-fann owner-h. at state and co-operative and
;:, 1p.
Stat As socialist prop. t d 1 .
e property commun' r y eve ops mto one
in the period b 1st property. state property
of transition ecomes mor .'
to communism role in h e and Its leadmg
F
. stronger t e national economy groWS
lrst of all state .
th t property inc .
e vas. construction of ne 10 size both through
o.f the mdustrial and ag w1enterpnses and the expansion
hans ahead . ncu tural a d
y 10 operation. With t n transport organisa-
he advance towards com-
there will be a further extension of the scale of
production. with its simultaneous greater efficiency
State property also a1ters in quality. These qualitative
changes arC' connected with the continuous rise in the level
of socialisation. With the advance of communism. there will
be greater concentration of production. large, ful1y automated
enterprises will be built. a unified power grid will be estab-
lished, economic ties between the areas of the countrv will
be extended and strengthened, social division of
specialisation, co-operation and also combinatiCil of
will be developed.
As state property grows. enterprisc<> will be imnrovpd
and expanded into the enterprises of communist society The
Programme of the c.P.S.U. points out that typical of iJs
process will be: new machinery. high standaT'ds of production
organisation and efficiency through increased automation of
production operations a.nd the introde ' on of automation into
management and control: an improvement of . 'le cultural
and technical standards of the workers: the increasmg F'lsion
of physical and mental labour and t,e growing p7'oortion flf
engineers and technicians in everv :ndlsr.-' f'llterpri ..... the
expansion of researh and closC'!' links between C1ltenrises md
research institutes; promoti::m of the emulation mIWMlC"lt:
the application of the achievements of science an:! the best
forms of labour organisation and the best methods of raisin'
labour productivity; the extensive participation of wo,\;cs'
collectives in the management of enterptises. and the spread
of communist forms of labour.
State property will become stU morc in
spheres of science, culture. oublic he::l!th lnd 10 the cornmurutv
services. In the of communist construction the
of influence or state ownenhip will be extended. It Wl.l
increasingly Co\'er the social Corms of organi
safon
of labour
The transition to one communist prop-
erty also implies the fullest dC'vet.oo-
ment and improvement of collectIve-
and living conditiom
Collective-farm and
co-operath'(' prope;b'
tn the p('riod
of transition
to communism
farm and c(roperative property. th
"EconomiC lIdvancement of e
kolkhoz system," the of
. u n points out. crea
Communil t Party of the SOvIet 010 nt and. in the
conditions for l-:te gradual rapprochr.ne
long run, also for the merging of kolkhoz property and
the property of the whole people into one communist
property."
1
During the transition from socialism to communism
socialisation of collective-farm production will reach a bighe;
level. Evidence of this arc the following typical processes
taking place in the U.S.S.R. already now. There is a steady
increase in the non-distributahlc assets of the collective farms
based on which production will further expand:
On January 1, 1963. theIr assets were more than sixty times
greater than in 1932, swelling from 470 million rubles to
28,400 million.
. non-distributable assets continually multiplying, the
qualitatlve aspect of collective-farm and co-operative property
will change more and more. In the early stages of collectivisa-
tioD, the farms obtained their property simply by socialising
peasant property-horses, ploughs, livestock and small
farmyard outhouses. Collective-farm property today consists
of machinery-tractors, combine harvesters, lorries,
etc. It IS now the direct result of the collective labour of
farmers, workers, engineers and scientists.
Soviet state spends hundreds of millions of rubles on
agricultural personnel, advances thousands of
mIllions of rubles, seed, food and other loans on credit to
the. farms. All this indicates that the collective farms derive
their from the work of their members, assisted by all
the Soviet people.
k state policy of furthering the development of the
f
o plays a great part in raising the existing level
o socia Isatlon of collect,' f d
h
. ve- arm an co-operative property
so t at ultimately it will b h " .
the who} 1 T ecome t e soclalIsed property of
e. transfer of machinery to the
growth of I? the U.S.S.R. promotes the steady
closer in structure assets and brings them
facilities owned by th
n
hsocllal character to the production
CoIl
. e woe people
e<:ttve-fann productio . ..
branches of agriculture M n 1S extended to other
farm production of grain aosdt is the collective
n mdustnal crops. Such branches
I The Road .- C '
...., ommumsm. p. 524.
876
livestOCk-breeding and vegetable-growing are less
and nrc still largely concentrated in the person.ll
:ubsidinry fanns of the .. ollective fanners. When agriruitu- I
production has sufficiently dcvc
1
0ped to enable the
collcctivc.farm economy to satisfy the farme:-s' needs in
regard to all prodw t.;>, p...--sonal sub diary fannmg will
have nO meaning, wol offer no economic advantages and will
die out.
As the producbve forces grow, productirn relations between
collective farms will grow closer. and the sodal sation of
production will transcend limits of individual c ...nect.ive
farms. This process will take place through thl": amalqamatlon
of the resourccS of several collective fanns tablishing
joint enterprises, cultural and welfare institutions, state-
kolkhoz power stations and enterprises tor primal v "r.,;=-:sc
ing, storage and transport."'19 of fa:m. 1;. oduce . can'
various structures manufactu."1J"1f 'JulldlDg mlt;:.lals, e __
When seveul collective 11rms own 1( this opertv
n
common, the rropen. comes 1 neuer lD
to public property. ..._
In connection with the dcvelo-:-lDg elecmfi __ or. of
culture and the mechanisation ana 1utom .. of production,
collective-farm means of production are )fOC :n.in::r tn(TC!S
ingly fused with state, public Means c..I' productit..;;; I or EXam-
ple already now there are m.xei!' e and kolkh.O
h

.' . . _.. t-S etc whl( come
prlses-power stations. lrngatio'Q S"i .... " f th
into existence as a result o! pootin the resour_ $ 0 e
state and the collective f.:rrm:.. _ +ic eolk:c''':ve
As the commonly-owned asse
1
s .tcre! - do
farms will participate more and mar:
enterprises and cultur31 and welfare Jtu 0: - .
schools. clubs, t-,osj'itals. holiday ho
m
d
es
, eltc
p
. the:r produc-
A h II
.. ontinue to eve 0, .
s t e co echw' :arms c th local
tion relations with onc another and of organ
enterprises will grow The PJa wherever eeO
ising various cnte: prises :X1
en
hi t will
nomically expedient. agranan-.
1n
us combine organ!
gradually emerge, in which ts produce ThlS will
cally with the industrial 1 and co-ope>:tation of
lead to the appropriate speclahs. t complete and even
agricultural and industrial enterpnses, labour power and
utilisation ,01Toughout the year 0
317
production resources. All these developments will graduall
impart to collective-farm and co-operative property t/
character of public property. e
When the degree of socialisation of the collective-farm
and co-operative property reaches the level of public property
the collective farms will draw level in economic condition'
with the nationally-owned agricultural enterprises. They Wil1
turn into highly developed mechanised farms. High labour
productivity will lead to the collective farms becoming
economically powerful. Their members will be adequately
provided and their requirements fully satisfied out of social-
ised collective farming. All of them will have the services
of catering establishments. bakeries. laundries. kindergartens
and nurseries. clubs. libraries and sports grounds. The
payment of labour for collective-fal"m members will be the
same as at nationally-owned enterprises; the collective
farI?ers will enjoy all types of social security (pensions.
hohdays, etc.).
With the transition to communism, the character of the
p,:operty of working people will alter. Since the
fro,? each according to his ability, to each
accordmg to hIS .needs" ,will triumph in communist society,
the personal pnvate houses, subsidiary farms and
many. other thlDgs W1ll lose all economic meaning and cease
to Personal property under communism will apply
exclUSively to articles of personal usc.
of course of the trans,ition to communism on the basis
. 19. ly pr<>d.ucb ve forces. socio-economic distinc-
tions m SOCiety Will be eradicated.
2. The Elimination of SO" E .... ...10- conomlC DIstmcbons
EIlmlnl&lon Socialism abolishes the antithesis
of .lIUndiODl between town and country. Relations
..
" belween of co-operation and mutual
toWb aDd. of workers free from
town and country T explOitatIon have been forged between
interests, oriented' to and countr1t. now have the same
The essential dilti cti goal-the bUilding of communism.
consisting chiefly of o(nsbUbe)tween and country.
pu c ownership of the means of
378
ductien in the towns, and collective-fann and co-operative
pro ership in the countryside, still remain under socialism.
rwnhnical equipment and labour productivity are lower in
farms than in Cultural and
I
, 'ng conditions arc better In town than In country.
IVI d' th dth .
With the gradual raWIng toge er an e prospective
fusion of state and collective-fann and co-operative
the conditions are created for overcomIng the essential
distinctions between town and country. The ways in which
state, and kolkhoz and co-operative proper? will draw
together and become t?e same time the ways
of eliminating the essential dlstincbons between town and
country.
The basis for this is continued development of the
ductivc forces and an abundance of machinery in agriculture.
The technical re-equipment of agriculture will lead to a
rise in the efficiency and technical level of the popula-
tion. The character of the labour of collective fl1';"'ert,
extensively using the most up-to-date
will become increasingly closer to that of mdustrial
engaged at state indust:ial enterprises. U.nder comm:::i
labour in agriculture wIll become a vanety of ind
labour. . wII1 be
During the gradual transition to there ill
a further improvement in and livlng the
the countryside. As commurust changes take place
of the town will alter as well. 'and cul ol disti,.a;o ..
"Elimination of socio-econouuc. tur'
n
tb ;1 1b1bJtI
between town and country and of differences
conditions will be one of the gr .. -
construction:'1 the Programme of the
SociaJism aboll+"
Elimination of between physical and
distinctions socialist society
between menW and workers have
physical labour do a cOJDJDOI1
good of the whole people. Close tal
mutual assistance betWeen meD
typical of socialism. The worke!'l
---
I The ROtId to CObi" ltd .... P. -
III
gentsia are all vitally interested in the continuous de I
ment and improvement of production. ve op-
The essential distinctions between mental and ph .
labour remain under socialism. As a general rule w
:md peasants engage in physical labour and the
m mental labour. The level of general education and c It a
of people engaged in physical labour is considerably lure
that of the intelligentsia. e ow
. the gradual transition to commWlism, tlze essential
dlstznctlOns between mental and physical labour will b
come. The basis for this will be the continued devel e over-
f od d' opment
o. m .ern pro uctlon through mechanisation and automa-
tlon, With arduous hand being replaced by machine
and the level of general.education and scientific and technic?t
knowledge aI?ong workmg people rising to that of eng
O
and agronomIsts. meers
of the essential distinctions between mental
an phys.lcal l.abour will transform every kind of wo k .
f: orgamc umty ofo both 0 types of labour. Everyone
rf
commumst Irrespective of qualifications win
pe orm work which as M t b
O

physical labour. ' arx wro e, C(lm mes mental and

The labour of working l'
be highly mechanised hi hr
p
society will
technique of commun'is 9 y s I. v.:
ork
to control the
mental labour pred 10 whIch the elements of
increasingly to labour will amount
ery. In substance th . d Justmg the work of machin-
nisation and 10 ro.nuctlon of comprehensive mecha-
a variety of the WI physical labour into
The elimination of h y engmeers and technicians.
in a Simplified man p YSI:lljbour should not be understood
effort. But ::tal abour. can be done without
while the elements of ph . ff'lll become determinative,
minimum. Thus. as the lSJC8 e ort will be reduced to a
out. with the victory of corogra':llme of the C.P.S.U. points
!abo wi! mmunlsm ..
ur I merge organicall' ... and physical
people. The intelligentsia .J In the production activity of
stratum. !'orkers by handwi
no
be a distinct social
tecbnoloQlcal standards to th 11 have nsen in cultural and
e level of workers by brain."1
I TM Road to eo..,m
uWiUnism. p. 510.
Elimination of
cla.ss distinctions
Communist construction leads to the
removal of the dividing lines between
classes. to the establishment of a
ocially homogeneous society.
5 With the elimination of the essential distinctions between
town and country and between mental and physical labour.
there will also disappear the differences in the position of
the twO friendly classes of socialist society, the working class
and peasantry, and their social stratum-the intelligentsia.
Communism will put an end to the division of society into
classes and social strata. Under communism there will be
110 classes. no class distinctions and no social distinctions
between people.
Communism brings complete equality to all people. Under
communism all people will have equal status in society. will
stand in the same relation to the means of production, will
enjoy equal conditions of work and distribution. They will
take a more active part in the management of public affairs.
Harmonious relations will be established between the
individual and society on the basis of the unity of
public and personal interests.
Abolition of classes and class distinc-
tions will be attended by a develop-
ment of the relations between national-
ilies. Obliteration of distinctions between classes and deYel-
opment of communist social relations strengthenS the social
homogeneity of nations and promotes the development of
common communist features in culture, morals, and the way
of life, furthers mutual confidence and friendship.
Under socialism the nations flower and draw closer togIetb I!II'.
Development of
national relations
All peoples and nations are welded by oo ... mOD yjtel iJdSIIII
into one family and advance jointly to the common .--
communism. 1 ...
As communism is built, the exchange of u-lr
spiritual wealth between nations becomes maeu,""
d h
h So
0 t R pub"c to the ,",,"'-
an t c contribution of eae VJe e u
cause of comml1n:ist mere,'::' of the USS,'- ...u
Once commuDlS1D triumphs. the :DAtio . and klf ....
draw still closer together. their ecoDOJDIC ..........
commWlity will increase. and the 00"'=
features of their spiritual c:lev tJ!.",.,-
the obliteration of national diltincUOJl
s
aaY'
.,
of the C.P.S.U., "and especially of language distinctions'
considerably longer process than the obliteration of' is a
distinctions."1 c ass
3. Transformation of Labour into I\lan'5 Prime
Necessity of Life
Labour-man's prime When: labour. has the assistance of
necessity of life eqUipment, when the basic
dlstmctlons between physical and
labour have been eliminated, and people are educated
In the to labour, the labour activity of
every mdwldual wzll become a prime necessity of life a
natural mam,iestalion of the functions of a healthy organi;m.
. Free labour for the good of society as a whole will
give everyone JOY and pleasure.
Under. communism,. where people will have every
opportumty of developmg their abilities and talents to the
full, everyone will be able to select the work he wishes with
the. knowledge. that what he does IS necessary to society and
of mterest to hImself.
.wrote that under communism there should be " ... an
of production in which, on the onc land no
throw on the shoulders of others his share
m. productive . this natural condition of human
7:,1:!:.CC; 1D which. on the other hand. productive labour
, of a means of subjugating men will become
a of their emanci ti' b If' ' . .. .
th . pa on, y 0 crlDg each mdlvldLUu
all his faculties, physical and
whkh.' and them to the fullin
lnstead of a burd P .. labour WIll become a pleasure
en.
In communist society .
(unctions; of both en in every employee wIll perform the
every able-bodied meg :eC":" and .worke!. At the same time,
in politic..al affalTs. AIFthe
r
sOtlety Will take an active part
and wUl appLed In all gU
h
and of man W1 ':lower
sp eres of li:e Labour will enjoy
I
I respect and honour, and will become a yardstick of
genera
an's worth. , .
01 U der socialism the performance by each workmg man of
h' duty-to work to the full of his ability-is stimulated both
I\erially and morally, while in communist society all
m:mbers of society will be induced to work solely by their
:nsdence, It is impossible in communist society for a
c crson not to work. Public opinion and his conscience will
him to work. Labour according to one's ability will
become a habit, a prime, vital necessity for every member
of society.
When labour activity becomes a prime necessity of life,
there follows a new, communist attitude to labour. Describing
labour under communism, Lenin wrote: "Communist labour
in the narrower and stricter sense of the term is labour
perfonned gratis for the benefit of society, labour
not as a definite duty, not for the purpose of obtainlDg a
right to certain products, not according to previously
established and legally fixed quotas, but voluntary labour,
Jrrespective of rates, labour performed without expectation of
reward, without the condition of reward, ,IOOur performed
because it has become a habit to work for the common good.
and because of a conscious realisation (become a habit) of
the necessity of working fOl the common good-labour as
the .. equirement of a healthy orgarusm. '1 1 bo
The new, communist to a. ur
Learn to wor.. beginS to arise in sociah!>t sOCJety.
IUld live The man of communist future
tbe way dId' , e truggle for
eve ops urmg ,..l' ..
communism, in the process of labour and so,?c11 aCb;Jt
Y
i
Communism is built by labour: it is the creative wor 0
millions. The higher their consciousness, the
extensive their activity the more rapid will e t e. ra e 11
, h' I b 's of commuOlsm Wl
wmch the matcr:al .:lOd tee mca aSl I be B work
be built. Communism is from
b
of
and WOI k c:' onf' wit.;, -the. trenwndoUSly
mankinu.- be bU!.t. That IS why Jt bour as man,
.mportdnt to ll"clin i ettple to .i.eve and resped la
prime nec'" sily of lii e.
-
I Lnin '" It ccet loS, Vl J. p .. l63
The development of the communist attitude to labo
u
.
the most task in the period of full-scale
construction. The Party the development of the corn.
munist attitude to labour In all members of society as its
chief educational task," the of. the C.P.S.U. points
out. "Labour for the benefit ot socIety IS the sacred duty
of all."1
The trade unions, the Young Communist League and schools
play a big part in developing the communist attitude to
labour in the U,S,S,R,
To use Lenin's expression, the trade unions are a school
of communism. They work to fortify industrial discipline, act
as organisers of the socialist emulation movement, promote
advanced methods of labour, and conduct extensive cultural
work among the working people.
A big role in instilling the communist attitude to labour
among the youth belongs to the Young Communist League,
The Y.c.L. calls on the youth to perform feats of labour and
instils in the young builders of communism a sense of duty
to society,
The school is highly important in instilling the communist
attitude to labour. It educates people of versatile knowledge.
people capable of working and producing material wealth.
The communist attitude to labour is reflected in the selfless
struggle to fulfil and overfulfil economic plans, in socialist
emulation and particularly emulation for the title of shock
worker and communist work collective, in the Soviet people's
patriotic movements like that to cultivate virgin and disused
lands, etc.
A mass movement to introduce communist labour spread
throughout the country, Hundreds of thousands of collectives-
teams, departments, sectors and enterprises, have joined in
the movement.
In a few mOre than 26 million people have joined in
the I?ovcment. Every second or third worker strives to earn
the tt,tle of shod .. worker of communist labour. The
the slogan: 'Learn to WorK and live the communist
way_
Once they maste th' . b k
k ,. d r eIr)O 5, the communist work shoc
war c... a not ,on their oars. They come out firmly
-
t TM Road to Connnu1USIl1. p. !i6S,
, for the introduction of the
nservatism and stove h' e and organisation of
againS
t
d
CO
ccd techniques, mac m .ry the lead the best of
t a van 'their sectors m "d
[JlOS After puttlOg k d and difficult sectors 10 or cr
labour. t the most bac war
hmmoveo d I'
ehe1p their co:n
ra
eS
k
shock workers want humane r:
The ther people, to conform to teo
h famIly. WIt 0 )'
in t
d
: rds of communist It!. a man of noble ideals and
sta.ne builder, of. defined in the moral
lofty moral princIples., hich consists of the followmg
of the of commUnIsm, W .' .
moral prmcIples: . t cause; love oj the socialIst
. to the commUnlS .
devotion f th ther socialist countnes; d
motherland and 0 e Of th good of society-he who ocs
conscientious labour or e
not work, neither shall he eat, for the preservation and
concern on the part of everyone
growth of public d . intolerance of actions harmful
a high sense of publIc uty
to the public interest; mutual one for all
collectivism and comradely
and all for one; 1 _ ct between individuals-
humane relations and mutua the ...
man is to man a friend, comrade an 1 ro .;y modc3ty. and
honesty and truthfulness, Plufn '
. 'al and pnvate 1 e b . g
unpretentiousness 10 SOCI d concern fo1' the up nn -
mutual respect in the famIly an
ing of children, .. . de to injustice, parasitism.
an uncomprom,lsmg attItu _ bbing;
dishonesty careensm and money gru all peoples of the
, d b th hood among d
fnendshtp an ro er. nd racial hatrc ; ,
U.S.S,R.; intolerance of enemies of commUDlsm,
an uncompromising 0 .
peace and the freedom of natIons; k'ng people of all countrIes
I
'd' 'th the wor 1
fraternal so 1 anty Wl . 1 bour
and with all peoples. onununist attitude to of
The moulding of . the into a prime nc_,es;tstinc_
and the transformation c:>f.1 . of socio-economIc t of
life, coupled with the the
tiom will have the offSthe material blcssmgs.
. d 'bubon 0
the syst"m ,A 1strl
" "11
4. The Transition to the Communist Principle of
Distribution
The dev,elop.ment and improvement ,!f socialist relations
of producuon In the course of also
imply development of the forms of dlstnbutIon of material
and spiritual wealth.
With the transit,ion to the socialist Principle
"from each according to hls abIlIty, to each according to his
work" is replaced by the communist principle "from each
according to his ability, to each according to his needs".
Marx wrote that ". , ,after the enslaving subordination of
the individual to the division of labour, and therewith also
the antithesis between mental and physical labour, has
vanished: after labour has become not only a means of life
but life's prime want; after the productive forces have
also increased with the all-round development 01 "'-e
individuaL and all the springs of ative wealC
flow more abundantly, only then can, .. society insC,be
on its banners: From according to 2.L"mty. to cac)
according to his needs "1
For the transition to the communisl
What is essential principle of distribution, it s necessarY
for tbe trans:iUon first and Foremost to attain a lev... C"
&0 'be communis'
principle productIon which can er}5ure such In
or distribution abundance of material iI cultural
weallh that society will have a suffi"
ciency of everything: consumer goods-food, cloth:,g, fc
wear, as well as everythmg reqw-:-ed l'or culture and welfare'
schools, theatres. fo:U1emas, l'adio. transport, etc
An abundance of the ncccssi: :es ,,! life and realisat on of
L"lc "to each acv"!rding to needs" wi!! mean
that irrespedive of his position, of quartity and
,:plaitty d h1' work lor society, will receive from SOCII ty
he needs. ObViously communist dist ibubL."1
r. i;o Ing to needs muA: be interpreted in the bourgeoi
n.e verything and as much. 5
of the:1 s. .s .. ah,::"l c rdp to needs implies sati tactic
C;UJ",.." nts cf the highly cultured.., highly
, W reipetts the 1 lei or"" community life unde:"
I...,.
:J [-'<!o" ...... d
Worb, II, MoI:OW, P .14.
"
" " of these requirements will enable
SatlSfacllon d "th bt" "
[Jununism. 1 f e from cares cannecte WI 0 alDlDg
:an to be r;or himself and. family.. . ,
th
necesSltleS of h mmunist prmclple of dIstrlbutmg
e "nto
teco
nl
The tranSlUO 'f nnot be carried out, u ess every
.' of h e ca . e
the necessItIeS . . conscientious in the commuDlst
member of Society IS communist attitude to labour. It 15
and ac
qui
:: an ingrained habit of working
essential for p . P b T t .
according to theIr all Y: ed for the transition to communist
Until factors society will control
distribution have been d the amount of conswnphon, and
the amount of lab dour an rding to the quantity and quality
n distribute pro ucts accO
the work contributed: labour stimulates growth of
Distribution . proficiency of workers and
labour productIvlty, h' es and the
development of production to their abilities,
tendency for people to wor ,
speeding the advance to principle of distribution
T e SOCla 1 . l' es the fullest
Public runds- does not exclude, but Imp f rms of
tho way to development of 0 f d'
nbt distribuhon distribution. CommunIst forms 0 fi lSI
" . theU" fully developed, na
tribution will not arise lDb side with socialist fonns
fonn. but will at first eXist SIde The Twenty-Second
of distribution accordmg !o ;- the transition from
Congress of the C.P.S.U. ti according to labour to
the sL,dalist of according to needs
the communist pnnclple a 1St . t Party believes that
d 1 Th
e Communis ..
w...,uld be a gra ua one. 't nstruction the raisIng
f mmUnIS cO I" " 9
11 the present stage 0 co f t ,"n '"mproving the JVID
" "rtant ac 01' I of
of wages 1S the most lmpo d th Leninist pnnclp e
tandard and carrying forwar ti ee in the course of the
mat ial incentives. At the same m,'m an ever-increasing
"I' to communiS , d t-:buted
tran!;ition from socia Ism , . I wealth will be .
p ... t of "le material and CU,.tUI a out 01 consumptif
among the m(,"'lber. of .$OCiety d ... uaIitv of their wer ,
( h
an, "
fUnds, il"especUve 0 t e'i- .
" U S 5.R are given a
.e., . pie in the .. .
Already now, working pee . are
J'reat deal out .. f public 26 million pens
10nert
In the L 5.S, H. t"an
".
87
maintained out of public funds; more than 5 million students
have state scholarships and hostel, acc?mmodation; OVer
12 million working people and theIr chIldren spend the'
annual vacations in sanatoria. holiday and Younl;
Pioneer camps at the expense" socIal Insurance and
collective-farm funds; about 6 mIllIon mothers receive state
benefits.
In 1964, the public consumption funds totalled as much as
36.600 million rubles, which is double the whole State Budget
of 1940. In 1980, 255,000'265,000 million rubles will be
spent in this direction.
With the advance towards communism, society will show
increasing care for everyone, from infancy to old age. The
need for every type of highly skilled medical care will be
fuIly satisfied, The system of institutions for children will
be extended 50 that it will be possible for every family to
have their children, irrespective of their age, put free oi
charge in these institutions. if so de'iircd. Gradually the
state. trade unions and collective fanns will take cue of 111
citizens unable to work due to disablement or old 3gr
At the end of the twenty years (' 96180), public consump'
tiOD funds will total about half the aggregate re31 incornl S
of the population. The Programme of thf' C.P S.U. POI Its oul
L.1at this w:ll make possible, at publIc e
free maintenance o! child;e'l at liltren.'s ana
boardingschools (if parent') w,. hi.
maintenar. ... c of disabled. people'
at cduca1 onal cstablisllIT'en;
,:ee medIcal all cit inc1uring the supply
,:,1 anu the tre11 of sick . rSI ns at sanat' r d
and free COillrnun.:.. servke ,
f ec mUDH pa i..ansport facilihe"
.... use Qf lomt: ty "Ies 0: :)ublic s v ce
st .. dy reductit.n o! c argcs !OJ, and, par Ily use
c,.a
y
homes. "C1,lr:t cam-s j nd fPOl
ncrc:;.ngly brOad provo f th I
ben h -'"1 I ...;on.: e population WIt I
e k-:V.l ... ano -I:tolarilli 'gr4l11 to .Ir.tn ried
" 1... c many 11 d I )
.; -lllal 1:. . '"=t.j f f 1 se 10 arshlps fl,): trIdents;
: entcrpn - d 0 ree publ'- 19 lmlde _y mt-lJS)
work . .... 1. ons and , r colle: ve tarm::- -' at

t ks raised at the TwentySecond
fulfilment of the J1S
will
mean that the U.S.S.R. will have
CongreSS of the the practical of the
progressed 1 of distribution accordIng to needs. d
communist prIne1? ,e to communism, the development an
With the trClnSltlod"uction relations make essential changes
. rovement of pr
superstructure too.
Th political Organisation of Society, . d
5. C d Administration in the Peno
State afD Socialism to Communism
of TransItion rom
From proletarian
dictatorship
to tbe state of
the whole people
Marxism-Leninism points out that the
t t
. part of the political super-
s a e 15 . b . When-
structure on the economIC aSl!>. .
ever changes take place in the
basis, changes also occur 10
the U.S.S.R. brought
The establishment. in the life of the country
lbout deep-going polihcal chan.9 . It aNlli};hed ,the
and the class structure of SovIet I ty I and
d f ged the pc' IHea ti
xpioiting classes an or . in tClrn induced altera on
amly the Soviet ThIs.' .
in the funcl ons .,f the SOvIet state. 't I,sm to 10
't' frOM capi a I
1:1. the pedod of tranSI lon, -;:e activities oy non-rro e'
the U,S.S.R., suppressIon of im ortant f:ln4 of
.C:' Jan classes was onc of tht: mos} P weH! abolished ant
Soviet ... tatc. But after root, thl!> function
sodali,st relations of productIon - , ted
,f "he S('vict state Cl:onomic
Su(;h f Jnctio)ns of the
tior and orHani; abon, rotectio
n
of sOCla.llst
defence of the country an f 11 The gener.]l hne 0, for
hav'" "c n developed to the u " 9 conditions of Pj,;.],C'c ,',
- . ,! t securlO S . I Umon .
forelpn pol c'} , : ' almt,;.. ovH' of
building s In] 'm intI of the uOity liberatiOn
wo:k ng fo: the ,trcng e
d
,:in< ft and co'
reo< CQul'trlCS, ren ('ts UPI' and
d
t' v move rUen . "If '>Ia. . t
an rev J Ie dc' 'cnrlel1t stall!S .. f .. ful cae"I!;,
o' wIth ! "lC In I th' p t mg .Ind
. ., rll11ng - ,.J I,; ,
abc Amrnl.l. ,1.' . h different "c. .. -,
.wecn ')1 ",It
J
doing everything possible to foil the plans of im ..
aggressors and eliminate the threat of a new wOrllCl1ahst
How the state will develop in the future Was dceprar.
thoroughly examined at the TwentYSecond Congress
C.P.S.U. e
The Programme of the c.P.S.U. points out that the dictat
ship of the proletariat which was established as the res:
of the victory of the Great October Socialist Revolution On
it had ensured the abolition of exploiting c1asses. the
and final victory of socialism and the transition of SoViet
society to full-scale communist construction, became no longer
indispensable in the U.S.S.R. from the point of view of the
tasks of internal development. The historic mission of the
working class-the building of communism-is now the task
of the whole people. The Soviet socialist state, which arose
as a state of the dictatorship of the working class, is now the
state of the entire people, the organ which expreS$('s the will
of the whole people.
After the complete and final victory of socialism the working
class no longer carries forward its guiding role through
the dictatorship of the pro1etariat. Its advanced role stems
from its economic position and from its being directly
associated with the higher form. of socialist property, coupled
with the fact that it has the steeling of dec.des of class
struggle and posscsses vast revolutionary expenc'lcC' None
but dogmatists will deny that the state of the dictatolslup
of the proletariat inevitably develops into the state of th
whole people, because dogmatists do not understand tle
economic pillars of the unity of socialist society and hi' to
sec that in the life of the working class. the collective farmers
and the welded together by an identity
Inle,.,.", by the MarxistLeninist ideology and the same
the building of communism-the clcmrnts that unite t!1e::o
and those that disunite them f rem each othc" constitute
the tn&ln and determinative factor.
The atate of the Whole people is 3. DCW stagc in the
of the SOcialist state, an aIJ 1m r...!-rtant Dule<::tone
on
d
t e. road from SOcialist statehood to commun;st .... al
a ministration. .
The aocialist .tatr of th h th
gwding role of tb . e wale people. in which e
the dictatonhip 0; tb'orkl
ft
1Q is <"ust3ined, can tint:... w,,:
PTo etariat h ,t-egun.
9()
t n to communism the state of the whole
. thetranSllo 'dthl d
Duong to organise and bUll e materia an
eoplc is cal!cd to ensure th.at .socialist relations
iechnical bas1s 0 nist relations. The SOCialIst state has to
become comrou the amount of work and the amount of
exercise c.ontrol the people's welfare. the
consumption: tti:s of Soviet citizens, maintain SOCialIst law
rights and hber socialist property, instil in the people
and order, d the communist attitude to labour. The
socialist disciplme. an t k is to guarantee the defence
socialist state s co-operation with the.
country. promote and maintain normal relations Wit
countries, of their socio-economic ..
all countries, nd improvement of soclahst
All-round by all citizens in 0e
democracy, active P d the management of economIC
administration of the state rovement of the work of the
and cultural control over its
state apparatus mcr::e main direction in which soclailst
the pcople. all resent conditions,
sutchcod develops lIndc I?]". t democracy in the UoS.S.R,
SOCIa IS one democratic ruls
so\lcb which means .genm eo Ie extends and
and by the workIng
fuh
P by year. In
of dCn1o('rahc dcvelop5 more y Y . t Party and
prindples nt years the Communis t
of ,o\'ernmcnt rece S 'ct Government have
t be ,OVI hO'h indicate a bIg
. t t measures w It:
lrough sevf"ral .Imper an " .
8<.V'nnce in suclalist demol., more rights to the
.4"'DC"ng them are glvmg . d cultural develop,?ent.
L "lion Republics in their in the of
the cUmulation of U.S,S.R., the
,"conomlc on.1 cultural life initiative, .additiOnal
cnc)u' of loca
nd
. of infrmgements 0 urag
e
local Sovicts. and the e ortant measures to enco nd to
legal 'y The Party has taken
f
Imp nd their members tia
, 11 r Jrms a I oduc on.
t"le lltialive of co cc Ife I ning agricultura pr . m the
nodify thf' procedure (l P socialism to
Dur'ng the drawn which
WOl k 19 Wl t affairs. Here. t e Ie as a whole
tI n In ",anaglOg sta he .ntcres
ts
of Soviet peop
rep _nt t e;rcat part.
are 'cd upon to p ay a
J')/
The Soviets combine all the working people in t
country and are an all-inclusive organisation of th OWn and
the embodiment of their unity. e people,
The Programme of the c.P.S.U. stresses that the S .
will have to play an even greater part during the b
of communism. The Soviets combine the features of t UI ding
social structures, but they will operate more ads ate and
bl
.. ' 'hh nmorea
pu IC orgamsations, WIt t e masses participating e t . s
and directly in all their work. x enslvely
In conditions of full-scale communist constru f
administrative bodies which guide the economy C rate
are of especial importance. They have a tremendaonu tture
Under communism they will lose their political ch . StU ure.
self-administrative bodies of the public :rac. er d
and
dIrect comprehensive, multiform processes of to
cultural life. omlc and
Improvements in the work of the state and e .
apparatus are closely linked with more actlve pa
b . k' I . r IClpation
. y peop e In the management of state affairs with
. by them. The Plenary Meeting of C C
. . . . In ecember 1965 decided. to transform the 0 .,
C'ff
trol
into the organs of public
Party and th e echve means used by the Communist
in the enlist ever more
check-up of the Party' tate
d
affairs, to ens,ure
administrative econo . s an Government s duechves bv
, mlC and other .. .
en state discipline and b organisations, to strength
o servance of socialist law
The part In the period of full-scale communist
by.mass construe.tion, mass organisations have
raanlsahons :llmore part to play. Gradu-
many of the functions at y they Will become responsible for
Already now, the fulfilled the state organs.
organlSahons of the wo k. e trade umons, as the largest
the they have to pI r people, their importance and
for Instance. they IL-e nay ave been considerably extended,
P
d ct
ow much m
ro U Ion pro"blems which lore engagcd in resolving
wages. ensuri.ng labou::- ude. rating of work and
l' es, t'lf' organisation of the :1 mdustry health serv-
p:"Ofcsslonal other w '-k .. and recreation of :ndustrial,
r-r l b' o. ers, e>-'" -r
L
_ SI a t:: numL. : of t:-ac c:: . _ :ley arc respnnsible
1tU.1J mshlutionr1C-1l'h
holiday homes and countless sports estab-
resorts. sanatoria,
Jishrllcntsh the trade unions, industrial, office and.
Thraug more and more influencing economiC actlV-
siona! work in industrial enterprises and
ities, he pIng .
tro1 produchon.
to t important to extend the functions of the masS
It rot.oosns to cover the maintenance of public order in
org
aOlSa
1 .' t
d
vlllagcs and to take energetic measures agams
hooliganism. crime and anti-SOCial elen:
ents
.. .
towns an ' .'
M 55 organisations will have a contmually mcrcasmg part
to The Programme of the C.P.S.U. points to the need
to give maSS organisations a greater part In managmg cul-
tural and health institutions, to entrust them the next few
years with the management of theatres, cmemas,
halls, clubs. libraries and other cultural an? educatlOnal
establishments at present state controlled. to gIVe them more
power in promoting law and order, particularly through the
people's volunteer squads and comradely courts.
The aU.round development and improvement of socialist
democracy inevitably implies that the largest possible sec-
tions of the working people should particirate in the manage'-
mcnt of socialist production.
At all state enterprises and on all construction s:tes, 5tand-
ing production c.:lnferences and committees have been set up.
Being a form of attracting people into production manaqc-
ment, they make it possible to combine the one--man manage--
ment principle with mass control from below, to add the ex-
perience of the working masses to that of the managers. Their
strength lies in the fact that their work is done with the full
participation of industrial and office workers, engineers and
technicians, and representatives of the administration, the
Party and Y.C.L. organisations.
Thus during the period of full-scale communist construction
exceptionally favourable conditions arise for the continued
development of socialist statehood.
Communism The development of socialist statehood
and the state gradually leads to its transformation
into communist social administration.
combining 'hI" ROVlctS., trade unions. and other
m<!<:'3 working das3
In .. ' oromlc .1l1d manaqcmcnt, public functions
19,)
similar to those fulfilled by the state today will be preserved
under communism, becomlllg modified and perfected as SQ-
ciety But the character. of the . functions and the
ways in whIch they are fulfilled wIll be dIfferent from those
under socialism. The organs in charge of planning, account-
ing. economic management and cultural advancement, which
at present are government bodies, will lose their political as-
pect and become organs of social administration. Consequently
the withering away of the state does not signify its complete
disappearance, but implies the dialectical development of the
state organs into communist social administration.
When fully developed communist society has been estab-
lished. the state will no longer be necessary from the point
of view of internal conditions. But from the point of view
of the external situation, the state can only wither away com-
pletely when communism is victorious on a world scale. As
long as imperialism remains and imperialist countries exist.
state organs such as the armed forces should be strengthened
to the full. The state will be retained, therefore, even under
conu:nunism as long as the menace of imperialist aggression
persists. It follows that the complete withering away of the
state .both the internal conditions-the building of
society, and the appropriate external conditions-
the vIctOry and consolidation of socialism in the world arena.
The state will remain long after the victory of the first
phase of communism. The process of its withering away will
be a long one; it will cover an entire historical epoch
. W:111 n?t end until society is completely ripe for self-
a For some time, the features of state adminis-
tr:hon and social administration will intermingle. In this
Ph ocess the domestic functions of the state will develop and
c f ange, and gradually lose their political character. It is only
a society is built in the U.S.S.R"
ti
. Plrovl soClaitsm wms and consolidates in the interna-
ona arena that th '11
state and it w' 11 th
erc
WI no longer be any need for the
, 1 WI er away.
The Party In the With the advance towards communism
or r:o!e and importance of the Marxist-
constnu:tlon mlUst Party increases.
Union which arose as th;he Communist of the Soviet
come the party of the h farty of the workmg class has be'
WOe people. The activity of the Com-
894
. t Party is based on the scientific programme for build-
society. The party shows the people SClen-
1?9
call
substantiated ways of advance, awakens the vast
tlfi Y of the masses and leads them in the accomplishment
energIes
of great tasks. .
The increased role and importance of the CommunIst Party
as the leading force in Soviet society follows from the
scale and comprehensive nature of the tasks of
tru
ction which require a higher level of politIcal and
cons ' ed t't f th
ganisational leadership; from the mcreas ac IVI yo. e
:asses; from the fact that additional millions of
people have been drawn into the management of state
and production; from the further development of
democracy, the greater part played by .mass
the increased rights of the Union RepublIcs and local orgam-
sations; from the ever-growing importance of the theory of
scientific communism and its creative development and prop-
aganda; from the need to extend communist education
among the working people and the struggle to overcome the
survivals of the past in the minds of people.. .. .
For the successful building of commUnIsm It IS essential
that the fonus and methods of the Communist Party's
political, ideological and organisational leadership of all
and mass organisations should improve. the s
political and organisational work. ensures the wIll and
co-ordinated action of the working people, It 15 the party
alone that can unite the efforts of all these organisations and
direct them towards one single end.
The Communist Party with its knowledge of the laws of
social development ensures correct leadership throughout the
entire work of communist construction and sees that the work
is organised and planned on a scientific basis.

Under the leadership of the Communist Party the Soviet
people are successfully building their bright future-com-

mumsm.
More than a hundred years ago the great teachers of the
prolet.J.riat, Marx and Engels, wrote in the Manifesto 01 the
Communist Party: "A spectre is haunting Europe-the spectre
of communism." The courageous, selfless struggle of the work-
895
ing people of all countries has mankind closer to
communism. A long road, drenched In the blood of those who
fought for the happiness of the people. had to be travelIed
before communism, once only a dream, becilme the greatest
force of our day, a society which is being built OVer Vast
expanses of the earth.
At its historic Twenty-Second Congress, the CommUnist
Party of the Soviet Union triumphantly proclaimed: "The
present generation of Soviet people. will live under COlll-
munism!" The complete building of communism in the
U.S.S.R. will be the greatest achievement of mankind
throughout its long history.
Every stride the Soviet people take towards communism is
an inspiration to the working masses of the capitalist COun-
tries in their struggle for emancipation from social and
national oppression, and brings nearer the triumph of the
ideas of Marxism-Leninism, the ideas of communism on a
world scale.
The communist road is the road of the peoples of the world.
The road from capitalism to communism is the road of human
progress.
I
I
INDEX
A
Abs, Hermann J. (b. l?Ol)-l59
Abundance of matenal and
cultural wealth under com-
munism-290
Accumulation, socialist-281, 329
Accumulation fund-321, 330
Agrarian-industrial associatiolls
-311
Agricultural artel-221.
Agricultural co-operatives, tran.
fer of machinery to-316
Agricultural proletariat-91
Agriculture
-capitalist-121
-rise of-24
-socialist transformation of
208, 216, 211, 219, 220. 222,
224
-tv.ro paths of development ,,'
127 kl
Alliance betv.rcen the wor :'Q
class and the peasantry-
129, 205, 201, 214, 225
Aluminium Fran9ais-155
Anarchy of capitalist produ(
tion-54, 55, 69, 120.
143, 149
Angara - 255 " d
Anti-Duhring by Engels, Qu ... :e
-242, 382
Anti-labour laws' 11!i
Aristotle (384-322 B.C.) 39
Assets
-circuiating-308. 310
397
fixed 261, 294, W 3QIj, )1,
we
fixed non-produche
fixcd production301, 30'3
in lB, 309, 310
-on .od-310
Atomic energy. lSe ... .om
Automation
_comprehensive-364, 365,
171
under capitahS.l . 2, . 1
-under socia
1
:;n. L:.' .0.30
B
, f n '_ w-Jrld
BlliT.ce o. ore;; 1 ,!;
: 71)
th
' _I .. ":ly
of e oa. - :u
-260
B,J.ltimore-76
B"nk of Americ.. 160 40
&nke:rs- 108, 119, 1
Banking, ;,tiO!l
cC:1tralisation . - 158
Banking rnonoJY.Ilies-
J
-'.,
Bank-note _
_definitior.
Banks . ,. '19 120
_under caplta.ISJ?-' I 169
..... ""
_under UDy- : .. el des Pay!':
IJanque de Pa. ,S
. 8as-159 ,.
. nomic law -
S.'''lC -69 16:', 168
-of caplta.lis]]]: 20 . "43 245
soci.l1lsm- ,-"-
-of f wa,""c,,':Z!H
HaSl-C: rate 0 ,.
Basis of society-18
Basis of socialist society-19
Belgium, monopolies in-l56
Bessemer. Henry (1813-1898)-
148
Bethlehem Steel Corporation-l54
Bill of exchange-54
Boom
-definition of-145
BOUfgeoisie-l0
-commercial-loo
-formation of-37
-rural-32
Bourgeois society, division into
antagonistic classes in -70
Bow and arrow. invention of-23
Britain
-banks in-1S7, 158
-class struggle in-76, 87
-cost of living in-l01
-aises in-l46
-military expenditure in 192
-money units in-SO
-monopoly associations in-lS4
-national income in-243
-paper money in-193
-pre-monopoly capitalism m.
34
-Ihare in world industrial pro-
duction-l94
-taxel in-141
-wages in-81
Brttilh Petroleum- 159
Bulgaria-338,345
Burma-186
c
Capll41 Marx. quoted and
mentioned, 19, 27. 61 65,
.fIJ, t;l3. 00, 110. 269 211
Ca",tal-60. 62, 71 .
aa:wnulation 0: -89 511 g
93. 114. 95. 98 99: 104 2.
centralisation of 152
Circuit of 101
.:l.r 111ar movemen of
.rculating _ 73 106. 101
COD1merc:ial-l06. 108. 1
15. 116
co
lll
m
oc
lity-lOO. 108
toacentrabon 01 .. 157
- C'OTI"'nt -72, 73, 511 D4 108
11 L tt3. 132. 134
-division of-13
-export of-ISO 161
-fictitious-121' ,162, 163
-general formula of-62
-individual-131 63
-industrial-32, 101, 108
-loan-l08 117 118 ,115
-merchant-31' ,119, 162
-money-l0l, 117. 119
-movement of-63
-organic composition of-94 9-
111, 112, 113, 126' ::>,
-pnmltive accumulation of-50
61. 62. 104
107
-techmcal composition of-94
-theory of "democratisation" of
-121
-total social-132 133
-variable-n, 73, 91. 94
132. 134 101
Capital investment
-spberes of-161, 172. 187
Capitalism
. abolition of-lOS
contradictions of-l72 ]11 176
-decaying-l73, 174
definition of 185
- economic laWi of . 27 149,
211. 241
general crisis of 181 1;2 J 3
1 ,
.88. 189. 194
.aw of uneven econc-nh. an':l.
political devclopme lt of
19. 1BO. 331
monopoly stage of 150 1,
-moribund-111. 175. 176, 177
- .. tate-monopoly 11'} 178. l' )
Capltalis: accumulation
-general law of-99 100 149
historical tendency' of 104 105
Capitalist economy .
-militarisation cr 10 190 191,
192
Capitalist formation-17
Capitalist labour co-operatioo
266
UPltaHst law populatior.
essence of-95
Capitaliit production
:ments of 132 133. 134.
13! 136. 137
Capitalist society
the fundamental contradiction
- of-80. 81. 130. 143. 144. 172.
196. 210. 236. 260
Capitalist wo_r1d
_arms race 10 -186. 191. 192
_unemployment in-l86. 181
Capitalists. agricultural-loo
Cartel
_definition of-153
carver. Thomas Nixon (b. 1865)
-93
central Asia-2S5
Ceylon-186 _ _
Chemicalisatlon of production-
229. 231, 273, 316, 361
Chcrepovcts Iron and Steel
works-254
Chernyshevsky. Nikolai Gavrilo
vich (1828-1889) -98
Chicago Bank-1oo
Chief contradiction of the
present epoch-196
China
anti-imperialist. enti-fcudal
revolution in-18S
-feudal system in-31. 32
People-, Republic of 18:;. 210,
212
thrysler-155
Circulation costs
undc'l' capitalism-116
-\lndcr socialism 255
Crculation of money, the I.aw
of -52
f... :ulation, net costs 11.6
C18n-24
laturai divlHon 0" labour In
24
CIa!
defimtJl :1 oJf 70
( a'-s distin< tions
e"iminal "'n-' .;:.;., ..;,'9
'( a pelc'
:"e" 17';
(AJ S .. Jgglc 'L.7, '30. 71, &5.
.137. 102. 113, 152, 115_ 191.
194, 3.:.) 103
_ Marost theory cf
Cleve and Bank 160
CoelOD
rev "utionary 203. 206
I'}9
Coin
-definition of-SO, 53
Collective farms-22t, 238. 239.
291. 298. 299
-cash incomes of-298
-funds of 296, 297, 299
-incomes in kind in-298
-monthly advances in-299
-non-distributablc aS$Cts of-
238, 298, 376
-payment in-296, 291, 299, 376
-real incomes of-298
Collectivc-farm and co-operative
property-237, 238. 239, 371.
372, 373. 375
Colonies
-raw material appendage of im-
perialism -161
Colonus-28
Combination in industry -233
Commanding heigbts in the na-
tional economy-209, 246
Commodity
-as universal eqdvalent 47, 48
-definition of-J9
-dual nature of-C, 218
market ,,alut ()f-1l0
-price of-40, 50. 110
-rarity of-39, 40
utility of 39 .. ",
.. value of. . 108
CJmmodity circulation -51)
-under OIpilil !ism-oW
_under socLaliSm-234
commodity I;;c,,"l'1,;;my .'
_simple, majJ! contr,ldicb"n
of-44 7
Commodity exchange -31. 39,.11
commodity-mOney reJattons
under 276 d
C
odify production an
('lmm d so ial!sm'-
exchange un cr '
275. 2]9, 291 .
commodity productiJft
_de/inition 0(-36
_dilOappearance of 43
_ .implc-3-4,. 38, 39 -on
_under caplbUsm _. 31, ;y:o,
-43, I tioM undc-r cAP
Commodity "a
j tali"" - 31
OIl M3rket-
165
2$
oJWl1tn:h
i
P 23,
Commune
_common labour in-24
_equal distribution of labour
products in-24. 25
communism
_definition of-355
_material and technical basis
of-20, 232, 253, 258. 318,
363, 364, 365, 366, 367, 368,
369, 310, 384
-shoots of-359
-two phases of-19, 199, 200,
354, 355
Communist and Workers' Parties
-193. 194, 203, 206, 208.
214, 222, 232, 247, 331, 352,
357
Communist formation-14
Communist Party of the Soviet
Union-lSI
-14th Congress of-217
-20th Congress of-294
-22nd Congress of - 232. 241,
256, 271, 299, 349. 353, 380,
387, 389, 390, 392. 393
- plenary meetings of-248 257
392 ,
Communist principle of distribu-
tion-25, 241, 217, 288. 355,
356. 358, 368, 381, 382 383
384 '
Communist property-239 240
275. 316, 354, 358, 314, 315
Communist social administration
- 392. 394
Communist social relations-20
384. 385 '
Communist work-2OO
Compagnie Franl13.ise de Matiere
Colcrantc-155

among (apitalists--69, 78, 92
108, 114. 120. 152 153 '-5'
156 ".)'
between branches of industry
110
f: l e ': -is, 1 156. 167
on market-S5 56
- -
one branen of industry
-110
Competition and ana
production-l38 of
261 " 250,
Concentration in industry_
Concern, of-ISS 232
Consumpbon fund-326 321
Contractual relations
cialism-292,293 cr so-
Contradictions. inter-imperialist
-196, 197
interest-121. 156,
Cook. Robert Carter (b. 1898)_
98
Co-operation
-in industry-231
-in production-342
and technical-343
-slmple-7B, 268
Co-operative farms, transitional
forms of-222
Co-operative sector-266
Co-operatives
-consumer-211.220
-producer-211. 220. 242
-supply and marketing-211
220 '
Co-operative societies of the
socialist type-211 220 238
Co-ordination of plans
-343. 344, 345
Corvce. See also labour-rent-26
Cost accounting-311, 312. 313,
314, 315, 316, 317
Cost-price-l0B. 109. 112
Council for Mutual EconomiC
Aid-344
Crafts under feudalism-29
Credit
bankers-119
. commercial-119
-under socialism-332 333, 335
CriSIS
.19r arian-146
-definition of-l46
--world economic-142 148
C - '
nSes of over-production -131.
C "t 142. 146. 147. 149. 188. 249
rJ Ique 01 the Cotha
Marx. quoted or men"
tioned" 200 290 '380.
166 186, 337
Cllb3- I 223
Cultura r'tnlist
cycle. caPlin_186. 189, 190
_changes f 145 146 189
haSes 0 - , '42 344
-PecliOslovakia-338. 3. .
CZ 345, 347
D
.'Decolonisation" theory-163
Deductions from p:ofits-313
Democratic centrahsm
-in economy-248. 249
-in planning-257
Deposit
_definition of-119
Depreciation funds-307
Depreciation
_moral-301
_physical-301
Depression-145
Deutsch Bank-159
Devaluation-55
Dictatorship of the bourgeoisie-
71
Dictatorship of the proletariat
18, 20, 205, 206, 207, 208,
214. 220, 391
-forms of-206. 201, 208
Dictatorship of the proletarial
ceases to be necessary- 214
Differential rent
-1-311
-U-311
-under socialism-318
Disarmament. general and com-
plete-192
Distinctions between mental and
physical labour
-elimination of-230. 37B, 319
Distribution according to work
(see also socialist principle
of distribution) -288, 289.
290. 291. 294, 296, 314, 386
Dividend-120, 121
Division of labour- 253
-territorial-254
Division of the world
-economic-163. 166. 162
-territorial-1SO. 161
Dni.epel 255
211-619
Dniestcr-255
Druzhba Oil Pipeline-344
Dudinka-254
Dulles, John Foster (1888-1959)
171
Dumping. definition of-l64
Dunning T. J. (1799-1873)-109
Dupont-110. 155. 160, 171
DynamO
invention of-l48
E
Economic competition between
two social systems-lB4. 261,
343, 344, 345, 346, 352
Economic co-operation between
socialist countnes MI. 342.
343
Economic crisit -173. 118. 182,
183, 188, 189, 190, 26.: 262
Economic laws of socie':y- 14. 15,
16, 17
401
Economic law that production
relations corre,'1()orl to the
character of the ::;: oduc'"ve
forces-12, 15, 16
Economics and Politics in the
Era of the Dicta/,,:'ship 01
the Proletariat by Lenin.
quoted-214
Economic sectors
-multiplicity of-211 2 2. 21."
214, 216
Effective demand of the popula
tion-142. 143. 144. 145
Electrification under socialism-
229. 230. 365
Engels, Frederick (1820-1895).
quoted or mentioned-B. 19.
28. 56, 10. 151. 199. 205.
235. 241. 242. 282, 386
-on free competition under cap-
italism,--151
-on laboW' under communism-
283
England-29
-bloody laws in-62
. first industrial crisis in -144
Europe
-Central-8
_Eastern-8
-social systems in-8
_Western. feudalism in-29
European Coal and Steel Com
munity-156.165
European EconomiC Community.
See also Common Market
European Free Trade Assoda-
tion-165
Exchange-value
-definition of-36
_ rrimitive accumulation of cap-
ital in-62
(See alsi) Britain)
Equality under socialism
-essence of-291
Exploitation
-of man by man-25
-of the workers, the degree of
-70. 74, 75. 77, 93, 114. 144
,
of the working class by capital
35. 66, 68. 69. 70.
1Kl.93
p
Fadory-atpitalist-80
FetIshism of commodities 59
-disappearance of-59
Fe: ..1:11 fornn.tion-14
Feudal lord "29. 32, 68
Feudal mode of produC""lon ....,
""I,
wdal property 1.9
capital 150, 1"]2
_ Inanoal oligarchy l,)V ..
160. 16:' 171 d,
F re "' e dl overy of . .21
F - 'nt rnal ional
\.. gre .,
Fu'St National City Sank ' .)
'
:-:'l of '<t, l' 8
I of 100
"Flow r:: of pradut.
84
F=
Food tax-215
Fordism-84
Motors-155. 171
Fourier. Fran<;ois Marie Cha.
(1712-1837)-142 rles
France
--capitalist development in-
-class struggle in-87 35
-money units in-SO
-monopolies in-ISS
in 243
-rlsmg prices in-56
share in world indusb ial
duction _ 194 p,o-
. taxes in-141
wages in-87
Funds of the enterprise305. H3
G
General crish d capitalism
basic features of-tS2
stages of -182. 184, 181
General E ectric' C )mp"ny
(A. E.G.) 165
Ge"lcral E e tric C TP .... !tiOD
155. 160 b')
General Mot . s t '55. '77
Ceneva 16
Gernan De:"110 Tati; Rep1 bUc
338. 342, 344, ::'45
(;ermanv
Clpitalist :it"Velopme'!nt gn
C lltw c in ""]
Cl,.:nnun Stcc Tru t 1 5
plan 258
Gold
as ur::ve- 11 equiVl.lent 41 48.
4g
n c r(uiation-52
lnc:1e so ia1i:-:n - 28C 281
(rading system 2Q4
G .at 9('09. Ipbic II di ove' e.
Oil
n-! r upito 1
n-

- I II"' ':1;-
3:)."42,' ,
"7 ..... ""'"
1 ,2', I 3,
318 !l9.
325, 3:5.
_capitalist-lOB. 123. 124
_fcudal-30. 123
Guam 166
H
Hand-loom
invention of 24
Hawaii-1OO
Heavy industry
. priority development of -217.
253. 324
lIilferding. Rudolf (18"7:1-1941)
149
Holding system-159. 160
Humo.n fertility: TlIe Modern
DilemlJla by R. Cook-98
I
J. G. Farbenindustrie 156
Impc: Chemical Industries
155
Iml-_rialism -33, 148
aggresSIve natUl e of lSO
collapse of-110
colonial policy of -1 72
..:olonial system of 166. "67.
182. 184. 185. ISb. 81
202
!ace In history-l11, 112. 1'3
Impc-iaUSl11, the Highest SUlge
of capitalism by
quoteo C\ mentiC:,j 0- 149.
150. 15S
1m,: rJalism and HJj pUt llJ Su-
1aiism \ly Unm 171
Impovershmcnt
bsolute lOll, 101
_!ativf" DO
lativt. !ad at )lute, MarLst
'.e,inzst doctrine c. -le:i
In -me revOlution" 103
:,.1, 31J
I dia 18!i. 31'
_ ldonesu.- I 186
Ildusu:"alisat :l unaer c ...-Itl
l.m -191
Indu' Cllists" 10 11 122 1,g
Indust:'ial re OC" ve army 99
Inflation-53
Instruments of labour 23 27 11
306 . .
Instruments of production 8 9
Intelligentsia under
223. 225
Intensification of Soviet agricul-
ture-368
Interest
-on loans-lOB. 117, 127
-rate of-11S
-tendency to faU-119
In.ternal. combustion engine.
mvcnhon of-l48
International division of labour
capitalist - 341
-sodalist-341. W2. M3
Ireland
-wages inS1
Italy-S1
-capitalist development of lqri
culture in -121
'OJ
c:ass struggle in-88
monopolies in 150
J
japan "'-6
c.la ... <; struggle n 8&
- monopolies in 156
. wages in-8)
joint-stock company '2(1, 121
-"daugbte" 161
'parent' 61
'obnson Ly ldon B. (h. IOC'3)
IT'
\{
Kautsky. Karl jobann (1854-
1938)-149
Kazakhstan-254,255
Kola Peninsuia-254
Kcnsomol- 246, 394
K"" People's' c noeratic Re
put'14 i."':
Kr .'0" S6
K u:tklo- L
L
l.aoo",
app-'".aranl _ of
abstract .oil 2 45
-concrete-42, 43
-compiex-45
-contradiction between concrete
and abstract labour-43
-definition of-1O
-degree of complexity of-45
-female and child. under cap-
italism-96
-forced-170
-intensification of-83
-intensity of-44, 85. 101
-new attitude to under socialism
-267. 269. 271. 272, 318, 382.
383, 384
-personal-30. 37. 38. 278
-private-43. 44, 58
-simple-45
-social-43. 44. 55, 278
-socialisation of-81. 120
-socially necessary-55, 75, 290.
32.
-surplus-74
-two-fold nature of-42. 66. 278
-under capitalism-261
-under socialism-261. 263. 264.
265. 282. 289
-under communism-354. 355,
379. 381
Labour aristocracy-175
Labour Congrcss--76
Labour power
-as commodity-31. 32. 64
- dcfinition of-64
of-65, 81
-II,e value of -65, 66
-value of-64, 65, 82
Labour process under capitalism
-66
'abour productivity
-definition of-44, 269
under capitalism-75, 76, 77,
78, 79. 81. 82. 90
under feudalism-29
-under socialism-224, 228, 229,
230, 232, 233, 235, 270, 273,
275, 276. 277, 278, 281, 324.
.,25, 354
Lab)ur-rent 30, 123
Lab)ur time
de"'inltic-, of-69
nef. asary 74. 75, 82
SOCially nee. ssary_ 44, 64
-surplus-68, 75, 76. 83
-under socialism--277. 278
Land
-monopoly of pri\";Jtc ownership
of-123, 126, 121
-nationalisation of-I29, 210. 219
-price of-127
-private ownership of-123. 126.
127. 130
Land reform-219
Landowner-l()6, 108. 122, 126.
l27
Latifundia
-description of-26
-slave labour in-28
Law
-of competition and anarchy of
production-16. 54
-of dish'ibution according to
work, essence of - 290
-of money circulation under so-
cialism - 281
-of planned, proportional devel-
opment of the national
economy--16. 241. 251. 283.
287. 329
-of the steady rise of labour
productivity-271
-of surplus value-IS
-of value under sociali!m-282
283. 290
Loans
-government
Loan societies j7
T M'al"Us-laycrs.-99
Lenin. Vladimir I1yich (1870-
1924). quoted snd mentioned
18, 19. 38. 41, 60, 105. 138.
149. 157. 158, 164. 171. 173,
180. 181, 197, 199. 200. 203.
205. 206. 213. 216. 219, 220.
222, 223, 227. 242, 243. 246.
248. 264. 265. 268. 270, 289.
340. 347, 370. 383
-On basic cconomic features of
imperialism -150
c0mmunism-365
on contradic ior. 96
011 exchange_,,3
on commodity pro :luction _
,

-on differential and absolute
rcnt-123
-on finance capital-lS8
_on labour under socialism -264.
265. 267
-on labour productivity undel'
socialism-270
-on labour under commun
ism-37g
-on monopoly capitalism-170
-on peaceful and
economic competition be-
tween socialism and capital.
ism-341
-on national liberation move-
ment-184
-on planning of socialist econ-
omy-248. 259 . .
-on possibility of socialism
triumphing in separate cap-
italist countrics-179. 181,
347
-on principle of socialist emula
tion-267
-on principle of voluntary asso-
ciation in the co-operative
movement-220
-on proletarian dictatorship-
206, 207. 208
-on substanee of value4Q
-on subject-mattci of polir:al
economy-17
-on \'.1permonopoly 64
on uneven economic md polit-
leal development )f capital
ism-ISO
. his co-operative pI n r" "1
222
'lis defimtH;.l of capitalism 60
his plan fer building sOCial
ism-216
-his principle .. I democ Itlt:
centralism-246
. .. his theory of proletar an revo-
lution-19.180
Lloyd's Bank 159
M
production 1&. "g. 80
-large sc;).1e-29, 234
Ma:rnH-..'g"e-.;k
4. 33
Malthus. Thomas Robert (1766-
1834) -97. 98
Malthus' theory-97. 98
ManUesto of the Communist
Party by Marx and Engels
-23S. 296
Manpower balances-2S9. 260
Manufactory-79
Manufacture-79, SO. 266
Market circulation-31
Market
-organised-284, 285
-unorganised-286. U4
Market prices-40
Markets
-foreign. struggle for 138. 196
-aggravation of the pi ,blem )f
-187. 188
Marshall. Alfred (1842-1924)-93
Martin, Pierre (1824-1915)-148
Marx, Karl (1818-1883). quoted
or mentioned-So 9, 12, 19.
27. 49. 52. 59. 61, 63. 65,
70. 72. 83. 93, 94. 95. 99.130_
180. 198, 199. 200. 202. 203.
205, 227, 2 . :59, ?7'). 77',
290, 380. 3f:6 :. 39. 39b
-on basic econl;. nl( law of Ip-
italist nodI. ,f 1- )du ..:tion
69
-on commodity 36
--on complex Iabeu; 4.)
-on communist pnnc pI/,;
distribution- 385
-on differ'1tial rent 1",
- on economIC epochs .13
-on fetishism of commoditie
58, 59
_.

-on labour producc'vlty
270. 271. 27:-
-on labour unde c)mmuni!'n-
379
-on movement of money under
capitalist conditions-63
-on nature of capitalist exploi
tation-14
-on primitive accumulation of
capital-61
011 production of rnlterl.l
wealth- 8
-on proletarian dictatorship-
205
-on property under communism
235
-on role of science-369
-on socialism-200. 201
-on socialist revolutioll-202
-on substance of value-40
-on two phases of communism-
200
-on universal law of capitalist
accumulation-99
-on wages-8t. 82. 83
_ his discovery of capitalist Jaw
of population-95
-his theory of average profit-
113
-his theory of organic composi-
tion of capital-94
MarxismLeninism-7, 88, 98,
122, 193, 200, 201, 205, 206,
208, 222, 227, 246, 291, 371,
389, 395, 396
MarxisHeninist ideology-355
Marxist-Leninist Party, it5 lead-
ing role--208, 243, 246, 289,
290
Material bala.nces-259
Material incc,tivcs under social-
Ism-23!), 269, 272, 289
Material wea.lth
-reproducjon of.-90
- definition 89
McNamal , RO\>ert S. (b- 1916)
'71
MUllS "f tab.:ul
. universal 8
Mc'!n. of produc ion -9
y .... ty growth of 232, 25'::'
32.1_ t
prvate ownership of 11, 23,
37, 43, 71, 104, 120, 149,
212 224, 253, 266
t of 209
Ii:t (\Wner.hip of '11, ' 2,
105, 200, 20 , 21' 221, 124,
23';, 2.19, 240. 242 24. 249,
251. 26;, 2M, "31, 355
nihltion under 5OI.:iatism
, 230 132
Mechanisation, comprehensi
229, 271, 367. 373 ve_
Merchants-25, 108, 115
1<0 '
Mellon-l60
Metals
-smelting of 24. 31
Middle East-162, 168
Midland Bank-159
Militarism-I73, 178, 187
118,
Mir, an electric power grid ..
344
Mode of production-H, 12
-capitalist-51, 87
-primitive-communal-23
-role of its clements-12
Modernisation of labour proc
esses-229
Money-48
-appearance of-26
-as medium-50, 51,
-as mcans of accumulatiul"51
-as means of paymcnt-51
-as measure of value-49
-as universal means of pUrcl13'.c
and payment 52
-credit-53
-fetishism of 58
-functions 01 49, ... l, 1;,1. 1)2
-metallic-!"""t
-under capitalism -(9, !"I
52, 53, 54, 65, 06 107
-under ao-:ialism 273, .,
282,
Money drcul4tion
- undcr C4pitalism 5.
-undcr socialism 281 2.3
51,
Ol,
Money relntions under fc ldal
ism-30
Moncyrent-30, 12:
Mongolian Pcople s Republic
203, 338
Monopoly
definition of 153
-basic forms . J
fOI'mation of 150 157
Monop,.,ly assec alions 3, t'7,
1M
M...l0pol}' of private I.
ship 46
M. 11 code of b'lildcr ... "- l'
munism J8b

Moral stimuli under socialism
212
Mon:lln-1l0, 160
N
Natural economy under slavery
and feudalism35, 46
National incon1c
_under capitalismI3B. 139
140, 141, 142
_under socialism-323, 324. 325,
326, 327, 329. 338
National Provincial Bank 159
Nationalism --203
Net income
-of collectivc farm 315
-of enterprise-311
-of socicty- 311 , 312, 313
-of the (centralised),-313
New Economic Policy--2
1
4
Nominal '3-85
Non-productivc sphC!re 139. 140,
, :' ,
NI.:l: .. k ?..5!l
"iorth CaU-<1!i.':s 2t5
1')1:.'; "0 of 1. e
8
C" tl ber r. V,IU";_II' 11..5, 181,
lW 202.
0'1. stru;rglc X'
)n BrJt in t-v M:-:'!: =t -.:- 191 I.
)n "wJ c II:; L rin QU .... :l
11
'ne -17-r
).gin JI the Family. P il'ale
J.'ro,:,<>rt.v :mc' em: Slale r"e
bv rng(.:l! Quote:l 2
Outout s:and. ra
Out idc 1->
0".-n I; '1i p
lpit liS. tx. .. .:_11 C ), 91
1C'
pri1 .= 81, 101, ,0_
soc 1 81
p
Paper money-48, 49. SQ, 51, 52.
devaluation of-1OO
-purchasing power ofSQ, 51
Parliament. use of-2oo
Party and state control- 292
Party and State Control Commit
tees-292
Patriarchal peasant economy-
212
Payment in kind-8S
Peaceful coexistence between
two world sy. tcms- 181,
347, 348, 350
Pcasant holding- 29
Pcasant revolts--32
Peasantry,
-exploitation of-168
"People's capitalism" -103
People's democracy. a form of
proJetari, n iic :atorshtp
206, 207
People'" Democrac '"'4, 275,
260 .. 338, 145
property
1 communi-m -1'l
-unde" socialism 239. ?' 171)
Person'l1 sub"idiary farm 71
PeT"onal u'!1jon -160, 172
Philipp es 166
Piece-rates under '\(
Piece-wages. definition .. I s:,
"hnning of the national e -,-
omy-2 8. 2:;'5. 21)0. 57
? .. t 260 #. 51
Phnninq
b.1.lnnce i 7';9, 2(.'
P:sarev. Dmitri 1 anovl< h ( :to.
1368)
338. 342. '\0: t. 347
Pl1i(V of strict economy e' erc
.. I _ 301, 302, 304
Politic I
_bourgc-ls--18, 9:-
Manti !" T ninist 7 1. 20, 21
ubiect-mi ttcr of 1 J 18
Pr;:. tical 1l1del' mper-
alism- 175. 1821
Pcverty ,I PlJiIosop?=y, Tle by
Marx, ntioned 1:')
Price of a commodity-55, 56
-under socialism-276, 2:17, 314
Price formation under socialism
-286,300
Price monopoly-1OO, 174
Price, purchase-286, 298, 314.
315
prices
-fluctuation of-58
-under socialism, planning of-
278
Primitive accumulation-50, 6L
62
Primitive commune-23, 24
-division of labour in-36
-labour productivity in-23
-personal property in-23
Primilive.communal formation-
14, 22, 23, 27
Primitive-communal system, dis-
integration of-23
Primitive man-22, 23
Product under socialism
-necessary-290. 322
-surplus-290
-realisation of-l36
Production
-average conditions of-l23
- concentration of-lSI, 1S2, 153.
m
-price of-112, 115, 123. 124,
127
-lmall-<:ommodity-211.212.
sodal character of-lS. 142
-socialisation of-104. 171.
118, 238
Produ( tion costs-312. 313
under toeialism H t. 312
t.z lcture of - 311
Puow tive capacity. under ltili
tion of -113. 183, 181.
191
Productive forccs9
distribution of under so:ialism
2''i3. 254. 255, 273
Puerto Rico-l66
0urc"lase and sale 35. 54
Q
Quit nt )
o otation ,hu 120
Rating of work
-definition of-293
Realisation
-theory of-l36
Real income of the population-
297
Real wagcs. definition of-85
-in capitalist countries-86
Recovery-145
Relative surplus population-96.
408
97
-forms of-96
Rent-126, 133
-absolutc-123. 129, 130
-capitalised-127
-differential, under capitalism-
123
-differential I-124, 125
_ differential II -125
Rent in kind-123
Reproduction-318
-extended-91. 132. 135. 137,
318
- Marxist-Leninist thcory of-133
simple-90. 133
socialist- 319
Retail price 315. 316
-state-286
Revolutions. libe' ltion
-177. 181
Rockefeller 1
'
0, 160 177
Rockdeller Laurenc\; (b 1910)
159
Roman Empire 29
R()(ld to Survival by w_ 98
Royal Dutch She11165
Rl'blc. S("Ovirt 'lSO
Rumania '"35. B8, H2, H4
RU!>5Ja
-Civil War in-215
foreiqn armed intervention In
- '15
-t.sanst. lbolition of erfdc-rn in
29
capitalist deveil""'''roent
agnculture- 126
lS8r1st: point )f c t
c 2
'1,
.. rrr;;. .... 'rin5"
s
Samoa-
l66
Savings banks
_under capitalism-I51
_under socialism-281, 332
schedule of grades-294
Schneider-Creusot-165
Scientific and technical progrcss
under capitalism-148, 174,
189
Sector
_capitalist-211, 212
_small-commodity-2Il. 212
_socialist-2OO. 210. 211, 212.
251. 2S4
Securities-12I
Senior, Nassau William (1790-
1864)-93
Serf labour-67
Serfs, medieval-32, 10
Seven-Year plan (1959-65)-258
Share-120. 121. 122, 154. 158.
162
-price of-120
-sale of-162
Share capital-120, 121, 122
Siberia - 254. 255
Silver. as universal equivalent-
48, 49. SO, 51
Skill grading handbook - 293
Slave-26. 27. 28, 29
. formation -14
. mode of production -26. 28 -)
-labour-25. 26, 28, 29, 68
uprisings-29
Slave-owners-27, 28. 29, 36
Slavery, patriarchal-25
Small peasant economy-29
Social consciousness, forms 01
356
Social division of labour
-first major-24, 46
ma;or-26. 48
third ma;or-26
-under capitalism 35, J8
58 142
unde. soc alism 2):
Socialism
-economic laws of-211 241
242. 245, 255. 341 ' ,
-essence of-270. 271
-loweryhase of communism-14
-rnatenal and technical basis of
- 204, 232, 234
-preconditions of-204
of-224. 225, 226, 227
Socialist co-operation of labour
-266, 267
Socialist emulation -268, 269
272, 375 '
Socialist industrialisatior 216.
217. 218, 226
Socialist international division of
labour-341, 342
Socialist labour discipline-268
Socialist nationalisation-209
Socialist principle of distribu-
tion-224. 235, 238. 241, 284,
290. 323. 348, 356. 376
Socialist production
-departments of -3:"),321 32:.
323, 324
Socialist property
-origin of-236, 231
-two forms of-20
Socialist revolution- n. l"7ti. 181.
201, 2O'L. 20',. 2"' }6 207,
208
-chief laws of dev lopmel 1- 2)7
208
-in ideology and cult-'re-2OB
Socialist society class !lib lctul
of-224, Z 5
Socialist state its funnons- .:<)7
246, 241
Society
-chief productive forces of-l
-first class division of-25. 70
Socio-economic distinctions
_elimination of-378. 379, 380
Socio-economic formation -14
socio-political and ideological
unity of the people-225
Spartacus (d. it B. C.) 29
Specialisation
- in industry -233
-- in production 218
South Vietnam 196
Soviet power. a form or prole-
tarian dictatorship-207
Soviets-207. 225. 332, 390. 394
Soviet system of general educa-
tion. reorganisation of - 234
Standard OU-loo. 165
Standing production conferences
and commiUees-393-94
"Stability of small peasant farm-
ing". doc:rine of-128
Stlite
-of all the people-207, 389
_bourgeois-7l, 149. 169. 171.
194. 195
-.organ of suppression of the ex-
ploited cla!':& by the exploi
teu-- 25
-under communism-395
.. withering away of .. 207, 394.
395
State apparatus under capital-
ilm-I39, 141. 142. 173. 176.
111
State bank of the U.S.S.R.--282.
304.110. 332. 333
State )udget 329 '-1
- under capitalism 139, 141
-undt" IQI ialism 303, 311. "317
321
State l.lpltalism
-during tranliticn period 213
-In countries
179
State control unde tmperialil m
-171
!illite farm!l 221. 22:'.1:
4"tate monopoly capiblism lbl,
171, 118, \79. 190
State (public) pr.:pcrty. 237,
'38 239. 374. 375
:.a ystem of trade and tec"ml
,,::;.:tal Ichools 234
.
;tvcotion of .130
O<:"m rbt ..
mn bon of- 148
Stock n hange 120
toq 01 ere It Plan by
M 11)'1n
ti n of tommodlty prQ-
en .61
Strik mov in capital is
, 103 192
/,
Stroibank-333, 334
subbotnjks - 269
Superstructure-H. 356, 189
Supennonopoly-l64
supcrprofit-l10
Supply and demand 4(1. 119
Surplus population
-floating-96
-latcnt-97
-stagnant-91
Surplus product-3D, 35. 68
-under socialism-259. 329
Surplus value 63
-absolute-75
_appropriation of 90. 91
-conversirm into r- ofit .. 106.
122
extra -77. 78
-the law of 69, 99. 104. 143,
149.168
the mass of-N. 113. '69
_ production of -66, 67 68. 11,
72. 73, 81. 83. R9, 90
107. 108 122, 123. 1;\(), lf2.
266
rate of 74. 15 n. 109
relative i7
Sweating Iystems 84, IF?
Syndicate 15"3
T
'J. lX in Kind, T'1c
:Juote:l
Taxes und4 r
69. 178
T.1.ylc. Frederitk
(1856 1915) 84
Taylo srn W
Tc_ 'tr.! al P :>'}h;S'I

>y Le.n,
main trend!> under SI"' at
u:m -229, 231, J63
undc capitalism 172
mder odalism 2 3. 22Q ,,1.. ..
'i31. .234. 2t\ 4.1 307
3: 5. 368
Te hnlral .-,,;quip-:n of c tel'
prt el .:.. 1
Te hni(al qualifkati 'no: 2.:'2
Ten nt fanner c pllati,t .")
12 . 1:2 12'5
Time
_necessary-JO
_surplus-30
Time-rates under socialism 296.
291
Time-bonus system 84. 296
Timewages 82. 83
Tomsk-254
Thomas, Sidney Gilchrist (1850-
1885)-148
Thyssen -156
Timber revenue-331
Towns
formation of-26
-decay of under slavery-28
--growth of-30
.their separation from country
26
Trade exchange
--unequal 110
rrade
balance of 11 '7
,'0 .Jperative2B5. 28G
forcign-117. 256. 2a. 281, l45
intcrnal-287
retail. detinition of 117
state 285. 286
unde: socialism- 284. 2AS
wh ltsale :1etinition c
l
117
T !dc u'lion.
under opitatism -87
under lail!:n 225 Z46. 38?
.)2, :sa3. 39 t
T m"i -,p rud
(rom I .... pit.llism to -v I.lisrn
201. 202 ""'3, 204, "-:;,
211. 212, 213, 215, 16
211 224. 226. 236
-.tJ ue ture in -212, 213
contradie on of 2h
meth :1',:1 ")2, 20:
ransition from soc alism t(\
c-JmmunL m 2n, t;3,
36".30.
T 'ibes, storal 21
T W!tn. Jury S. 'b. 884)' 141
Trut13,1j.4
T linny rc .itory 227 2-"'5
T' love drculating a ....
311
, urn"lvtr tax 314
Twenty-Second Congress of the
C.P.S.U. on theoretical problems
-20
u
Ukraine-255.315
working of enter-
pnses-183
Underdeveloped countries
-economy of-162
Unemployment under capitalism
-96. 91. 98, 99. 101 139
144. 145. 149. 18"3: 188:
189. 191, 261. 265
Urals-255. 315
U.S.A .. advertising in 117
--banks in-ISS
-capitalist developr:11 nt if ay! 1-
culture-128
-circulation costs n R6
class struggle in $31
-- concentration of r ti=., in
-151. 152, l .. J
--cost of living in' 0]
-distribution of tnd 1.. 28
-economu. crises n 144, 146
189. 190
-export of cap tal , )m' 167"
farms in- 194
finance capital in 158
finandal groups in 11:''1
industrial accidents in 101
labour productivity in 26:?
mainstay of col"'"\ialism 187
Malthusllnism in QR
m:lSS .me nployment n 01,
Hill
military in !.}O
191,19:'
.money units in 50
monopoly assoC aHons n )4
national int orne 2 1-
.. :J' me compc itiCl of c.1pital
in 95
paper money in 54, 193
pre monopoly clpiblism in 34
"trie,'s in -194
di"lcrimination in-86
,te .. I lee )Domic growth in
lSI
rate of sunlc value In 74
_relative impoverishment of the
working class in-l00
-share in world industrial pro-
duction-194
-strike movement in-l02
-taxes in-86, 141
-time wages in-83
-use of productive capacity in
-188
-wages in-85, 86
U.S.-Spain war-l66
U.S. Steel Corporation-154, 160
Usury
-rise of-21
Use-value-38, 39, 40, 41, 42, 63,
66
-definition of-39
-under socialism-276, 277, 278
U.S.S.B.
-capital invesbnent in-329
-chemical industry in-231
-collcctivisation in-220, 221
-Constitution of-225
-educational facilities in-373
-electrification in-357
-five-year plans in - 218, 246,
256, 257, 258, 259
_ housing accommodation in-
244
-labour productivity in-273, 370
-living standard ;n-243, 244,
245
-mass media in-223
-national income in-324, 325
-nationalisation of the land in
-129-130
-output of electric power in-
230, 231
-price formation in-314
-rate of economic growth in-
351, 352
-real wages in-296
-real incomes in-244, 297
-reorganisation of agricultural
administration-246, 257
-reorganisation of management
in industry and construction
-247, 257
- its share in world industrial
production -183
-state budget in-331, 332
-unifil'd power system in - 366
-wage system in-293
-working class in -234, 235
V
Value of commodilies--38 39
40, 41, 42, 43. 44, 45. 46:
55, 56, 58
Value-42
-balances-259,260
-elementary or accidental form
of-46, 41
-equivalent form of-47
-the law of-55, 56, 113
-magnitude of-44, 45, 46
-money form of-48
-total or expanded form of-41
-un?cr socialism-275, 276, 277
-umversal form of-47
Vereinigte Stahlwerke A. G.-ISS
Armstrong-ISS, 165
Vietnam, Democratic Republic of
-185
Vneshtorgbank-333, 334
Vogt. William (b. 1902)-98
Volga-255
1/1
Vologda-254
W
Wage labour-69, 70
Wages-65
-fund-294
-under capitalism-81, 82, 83,
84, 85, 86
-under socialism-292 293 294 , , ,
295, 296, 297
War Communism, policy of-215
War
-First World-165, 166, 174, 182,
183, 185, 189
-Second World-lOS, 155, 163,
165, 166, 168, 170, 174, 181,
182, 183, 185, 190, 194, 197,
201, 226, 336
Wars between capitalist states-
150, 170, 174, 178
West Germany
-class struggle in-88
-concentration of production 10
-151
-monopolies in-153, 155
westinghouse-155
Wholesalc price-2B6, 314
Wilson, Charles E (b 1890) 111
,
I
,
work r:
right to ..
workday umt 299
Working day
_mora\limits of 76
.physical limit of 76
working class _
_ historic task of ,1)U
working people
. purchasing pOWC1
of .
142, 143
world capitalist market .1.a3
world capitalist system- 33i
World economic crb i!
33-191
World Federation
Unions .. S7
of
Wor'd scx,-;atist market 188
Wor1d sOCialist syster':'! 228.
251. 336 337 .. 39.
J40, 341, JOO, 361. 5:;
dc- isivc factor of world il v I
opment -184, 198, 202
share in w." d r )du tion
184, 352
Wcrld war
possibility of avertinJ W9
pc ibility )f exduding Q-r
l4lI
y
UNivtk ,
Of BkAOrvd
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