21st Centuary Socialism

The Venezuelan revolution marks a strategic departure from 20th Century Socialism and the politics of the former socialist countries.

The new Chavista agenda seeks to combine revolutionary democracy with a socialist economic system. In other words collective social production supported and supervised by the organs of direct democracy.

The two strategic aims of Chavismo in Venezuela: (A) to gradually replace the regulating principle of market economy, price, by the regulating principle of socialist economy, value, understood as time inputs necessary for the creation of a product; and (B) to advance the economic participation of citizens and workers at three levels: 1) at the macroeconomic level (e.g., national budget); 2) at the mesoeconomic level (municipality); and, 3) at the microeconomic level (enterprise).

However, before the triumph of the world revolution over imperialism, we have to assume that the new socialist state and its international allies will be subjected to attempted encirclement and attack by international capital, as a result the socialist economy might even have to retrench and suffer serious economic hardships as well possible sanctions and military aggression.

Especially in times of crisis the socialist regime needs strong political institutions that are trusted and respected by the working masses. In Cuba, for example, the masses could have blamed the revolutionary institutions for the crisis in the 1990s. The fact that the majority of Cubans didn’t blame the regime has more to do with popular trust in state institutions then anti imperialist patriotism. Why would people suffer hardship in silence if they perceive their government as corrupt and incompetent?

One of the lessons of 20th Century socialism is that the socialist states delivered very good social and economic benefits, but without direct democratic participation, those material gains were unsustainable. The absence of popular accountability and transparency in the former socialist states led to bureaucratic abuses of power and corruption. These negative trends aided the emergence of a self selecting political class that eventually took a right turn under imperialist pressure. I don’t think the Chinese workers were ever consulted about privatization and the removal of their welfare rights.

There are many positive and negative examples to learn from 20th Century socialist experiments. But the novel political departure for Chavismo has been how to deal with the problems of bureaucracy in a practical manner, in a way that old Soviet power in the former USSR failed to accomplish.

Hi Antonio. I do want to comment on your main point that "The Venezuelan revolution marks a strategic departure from 20th Century Socialism and the politics of the former socialist countries."

But for now, can I take up your remark that one of the main "strategic aims of Chavismo" is:

"to gradually replace the regulating principle of market economy, price, by the regulating principle of socialist economy, value, understood as time inputs necessary for the creation of a product"

This assertion, which I assume you have taken from a Venezuelan source, derives from a naieve misunderstanding of economics and a confusion between theory and reality.

It is true that a branch of pro-capitalist economic theory called 'marginal economics', developed in the late 19th century and very influential today, regards prices (determined in the imaginary conditions of 'perfect competition', ie where there are no large corporations, there are no economies of scale, and labour and other resources move freely between firms and industrial sectors) as the key aspect of economics. Against this, most socialist theorists have argued that underlying market prices, the 'exchange-value' of products under capitalism is determined by the amount of human labour which is necessarily incurred in production.

But both the 'marginal' and the socialist theories are attempts to describe and explain capitalism, not socialism. The origin of the theory of value, ie that labour is the main source of wealth, is found in the writings of the 'classical political economists', the best-known of whom is Adam Smith (1723-1790). Karl Marx drew on the insights of Smith and other classical political economists to develop the analyses which inspired the socialist and communist movements.

To greatly simplify, Marx improved the classical theory in two ways. Firstly, he pointed out that, in a capitalist market, the labour-time embedded in a product would influence the price to the extent that it is 'socially necessary'- ie, when new, labour-saving technology is introduced, the value of all the goods produced will fall to reflect the amount of labour used in the plants which are using the cutting-edge technology. Secondly, in most industries the cost of the machinery (itself the product of previous labour) and its depreciation are major contributors to the price of the product; but although the amount of machinery used differs between industrial sectors, the rate of profit in all sectors must be about the same, because capitalists can shift their money around, through the stock exchange etc, to where it is most profitable. So prices are determined in the end by the costs of production, plus the average rate of profit.

Anyway, however it was refined, the idea that "value, understood as time inputs necessary for the creation of a product" regulates the economy, is a concept that was discovered and developed to describe and explain capitalism - not socialism.

But the 20th Century socialist societies certainly did not completely dispense with this concept of value.

I will try to post something tomorrow on the issue of value under socialism.

Dear Ahab

I completely take on board your point that price is not the fundamental regulating economic principal under capitalism. My categories of price versus value were metaphorical descriptions of the “market idealism” fallacy of capitalist ideology versus the scientific approach of Marxian political economy. I do appreciate that my metaphors have been misleading in the context of a socialist transition to communism.
I look forwards to your comments on the rest of the issues, outlined in the post.

Thanks
Antonio

Thanks for that Antonio.

I will get round to discussing your main idea that "The Venezuelan revolution marks a strategic departure from 20th Century Socialism and the politics of the former socialist countries". But before that, I'd like to comment very briefly on the role of value & prices in the economy of the 20th Century socialist countries- the USSR, China, East-Central Europe and Cuba.

The communist leaderships of those countries saw socialism as a phase between capitalism and communism; it would retain aspects of capitalism including money: used for the wages of workers, to be exchanged for consumer goods; also as a means of monitoring transactions between different enterprises & sectors of the economy.

However, for the most part, the prices of both industrial and consumer goods under 20th Century socialism were set by the state rather than being determined by market forces. Although profitability was measured to encourage efficiency, there was no requirement for industries requiring high investment in machinery, eg heavy manufacturing, to run at a profit; many basic consumer goods were subsidised while some luxury items, eg televisions and cars, were sold at more than the cost of production.

Although value / price in terms of the amount of labour and machinery used in production was used as an accounting and tracking mechanism, and money was used as an incentive to promote effort and skill, the main regulating principle of the economy was that of meeting social need through planning.

More soon.

For a reference to the theoretical basis behind Antonios remark on value and socialist economy consult the following:

1. The works of the late socialist Geographer Arno Peters ( remember the Peters Map ), and his concept of the Äquivalenzökonomie, see: [de.wikipedia.org]

2. The books by Heinz Dieterich, mainly in Spanish and German again consult Wikepedia [en.wikipedia.org], his most recent book is Hugo Chavez and 21st Century Socialism, recently published in Venezuela. An english translation of one of his articles is at [reality.gn.apc.org]

3. The web site [www.ecn.wfu.edu] where Allin Cottrell has placed the text of the book 'towards a new socialism', this too has been recently published in Venezuela in Spanish.