2. Planning
or
accounting?
Material Balance System
The main instrument of
economic planning in the
Soviet Union
In modified forms, in the
centrally planned economies
of Eastern Europe
Western economists treat it
as source of data
But it is best understood as a
planning instrument
3. Where
do the data
come from?
Targets or achievements?
Are the data distorted?
02
01
Production or consumption-based?
03
Do they measure what is intended, or what are the results?
Pressure on management to report success
How do the accounts reconcile data on what is produced,
and what is ‘sold’?
4. How is output measured?
What does it cost?
How are prices set?
Administered prices are in theory not ‘market’ prices
But in a mixed economy, everthing is mixed.
We need to delve deeper.
If inputs are given in money, the planners
can calculate the cost of production
Use-value or money? Tons or Rubles?
5. A surplus is inevitable
The co-operative proceeds of labor are the total social
product. From this must now be deducted:
First, replacement of the means of production used up.
Second, additional portion for expansion of production.
Third, reserve or insurance funds
These deductions are an economic
necessity, and their magnitude is to be
determined according to available means
and forces, and partly by computation of
probabilities, but they are in no way
calculable by equity.
Marx, Critique of the Gotha Programme
6. The state still needs to allocate the surplus. It
transfer the balance to planning agencies, local
authorities, banks, or whatever. But allocation is a
distinct process..
The price of the product is greater than
its cost, because the price of each
product is set independently
It can simply transfer it from
the enterprises. This is just
an accounting transaction
How
is
the
surplus
disposed
of?
But the enterprise is not
free to choose how to
spend it. It has to abide
by the plan, so it has to
use the balance to meet
its targets.
01
02
03
04
How tocontrolitsuse?
Thestatecanleaveitinthe enterprises
Surplusesinthe accounts
Thestatecantransfer thebalance
7. The external and
commodity sectors
The
interface
with
commodities
Labour is a
commodity!
The concept of final
demand
8. Is
consumption
planned?
Consumption is NOT part of the Material Balance system
It is a decision of the state, but interfaces with the
commodity sector.
Rationing or pricing? The meaning of ‘Scarcity’
9. Class
and
the
accumulation
of
privilege
Pricing
The privileged person has to acquire
money.
Money must then be converted into a
universal means of purchase
Privilege is then alienable and
transferable.
This requires a transition to capitalism
The privileged person has to acquire a
disproportionate share of the rationed
resource.
This is not universal, and not
transferable
Rationing