The Socialist Blueprint

4. But no great difficulties arise if we go beyond the precincts of the theory of the stationary process and admit the phenomena incident to industrial change.

So far as economic logic is concerned, it cannot be held that socialism of the kind envisaged, while theoretically capable of coping with the recurrent tasks of the administration of a stationary economy, would necessarily fail in the solution of the problems presented by “progress.” We shall see later why it is nevertheless important for the success of a socialist society that it should embark upon its career not only as richly endowed as possible by its capitalist predecessor—with experience and techniques as well as with resources—but also after the latter has sown its wild oats, done its work and is approaching a stationary state. But the reason for it is not in any inability of ours to devise a rational and uniquely determined course for the socialist society to take whenever the opportunity for an improvement in the industrial apparatus presents itself.

Suppose that a new and more efficient piece of machinery has been designed for the productive process of industry X. In order to exclude the problems incident to the financing of investment—to be considered presently—and to isolate a distinct set of phenomena, we will assume that the new machine can be produced by the same plants which thus far produced the less efficient one and at exactly the same costs in terms of productive resources. The management of industry X, in obedience to the first clause of its instruction—viz., the rule to produce as economically as possible—will adopt the new machine and thus produce the same output with a smaller amount of means of production than heretofore.

Consequently it would henceforth be in a position to transfer to the ministry or central board an amount of consumers’ dollars smaller than the amount received from consumers. Call the difference as you please, for instance D, or a shovel, or “profits.” The management would, it is true, violate the condition set by the third clause of its instruction if it realized that “profit”; and if it obeys that clause and immediately produces the greater amount now required in order to satisfy that condition, those profits will never emerge. But their potential existence in the calculations of the management is quite sufficient to make them fill the only function they would have under our assumption, viz., the function of indicating, in a uniquely determined manner, the direction and extent of the reallocation of resources that it is now rational to carry out.

If, at a time when the available resources of the society are fully employed in the task of providing a given level of consumption, an improvement—such as a new bridge or a new railway—which requires the use of additional factors or, as we may also say, additional investment suggests itself, the comrades would either have to work beyond the hours which so far we have assumed to be fixed by law or to restrict their consumption or both.

In this case our assumptions, framed for the purpose of solving the fundamental problem in the simplest possible way, preclude an “automatic” solution, i.e., a decision at which the central board and the industrial managements could arrive merely by passively following, within the three rules, the guidance of objective indications. But this of course is a disability of our schema and not of the socialist economy. All we have to do if we wish to have such an automatic solution is to repeal the law invalidating all claims to consumers’ goods that are not used during the period for which they are issued, to renounce the principle of absolute equality of incomes and to grant power to the central board to offer premiums for overtime and—what shall we call it?—well, let us say saving. The condition that possible improvements or investments be undertaken to such an extent that the least tempting one of them would yield a “profit” equal to the premiums which have to be offered in order to call forth the amounts of overtime or saving (or both) required for it, then uniquely determines all the new variables that our problem introduces provided overtime and saving are in the relevant interval single- valued functions of the respective premiums. 7 The “dollars” that are handed out in discharge of the latter may conveniently be assumed to be additional to the income dollars issued before. The readjustments this would impose in various directions need not detain us.

But this argument about investment makes it still clearer that the schema which seemed best adapted to our particular purpose is neither the only possible blueprint of a socialist economy, nor necessarily the. one that would recommend itself to a socialist society. Socialism need not be equalitarian but no amount of inequality of incomes that we could reasonably expect a socialist society to tolerate is likely to produce the rate of investment that capitalist society produces in the average of cyclical phases. Even capitalist inequalities are not sufficient for that and they have to be reinforced by corporate accumulation and “created” bank credit, methods which are not particularly automatic or uniquely determined either.

If, therefore, a socialist society desires to achieve a similar or even greater rate of real investment— of course it need not—methods other than saving would have to be resorted to. Accumulation out of “profits” which could be allowed to materialize instead of remaining potential only or, as suggested above, something analogous to credit creation would be quite feasible. It would be much more natural however to leave the matter to the central board and the congress or parliament who between them could settle it as part of the social budget; while the vote on the “automatic” part of the society’s economic operations would be purely formal or perhaps supervisory in character, the vote on the investment item—at least on its amount—would involve a real decision and stand on a par with the vote on army estimates and so on. Coordination of this decision with the “automatic” decisions about the quantities and qualities of individual consumers’ goods would not present any insurmountable difficulties. But in accepting this solution we should renounce allegiance to the basic principle of our schema in a very important point.

Other features of our blueprint can be altered even within its general framework. For example, with a conditional exception as to overtime, I have not left it to the individual comrades to decide how much work they are going to do, though as voters and in other ways they may have as much influence on this decision as they have on the distribution of incomes and so on. Nor have I allowed them more freedom of choice of occupation than the central board, within the requirements of its general plan, may be able and willing to grant them. The arrangement may be visualized by means of the analogy with compulsory military service. Such a plan comes fairly close to the slogan: “to everyone according to his need, everyone to contribute according to his aptitude”—or at all events it could, with only minor modifications, be made to conform to it. But instead we may also leave it to the individual comrades to decide how much and what kind of work they are to do. Rational allocation of the working force would then have to be attempted by a system of inducements—premiums again being offered, in this case not only for overtime but for all work, so as to secure everywhere the “offer” of labor of all types and grades appropriate to the structure of consumers’ demand and to the investment program. These premiums would have to bear an obvious relation to the attractiveness or irksomeness of each job and to the skill that must be acquired in order to fill it, hence also to the wage schedule of capitalist society. Though the analogy between the latter and such a socialist system of premiums should not be pushed too far, we might speak of a “labor market.” Insertion of this piece of mechanism would of course make a great deal of difference to our blueprint. But it would not affect the determinateness of the socialist system. Its formal rationality would in fact stand out still more strongly.