Essay 3: Two types of the social product (Ivan Potapenkov)

Essay 3: Two types of the social product
Author	Ivan Potapenkov
Translated by	Anastasia S.
Original language	Russian
First published	July 14, 2023
Type	Essay
Source	https://telegra.ph/Ivan-Potapenkov-Essay-3-Two-types-of-the-social-product-07-25

In the third essay Potapenkov gives a brief historical review of the formation of planned organization of social production in the initial period of 1918-1924. However, these are not just historical facts, but logical summary made from them. Here you will learn that the planned organization of social production had two stages, which gave rise to two types of social product belonging to the same planning period. You will see how its dual nature influenced it, and whether it was possible for a new form of commodity relations to emerge within the planned organization of social production. In spite of the fact that we will be talking here only about the simplest categories of the commodity-planned mode of production, their understanding helps to uncover the whole structure of the Soviet economy. Since the relations between the two types (planned and produced) of social production already contained, like a fetus, the entire future organism, there was that duality of the aim of production which led to all those contradictions and paradoxes of the Soviet economy, about which we shall speak further on.

The existence of the commodity form of labor products did not cancel the planned organization of social production, only the approach to its implementation changed.

When it comes to how the planned organisation of social production was formed, and between whom the relations in this organisation arose, it is worth noting the fact that in the conditions of the transition from capitalism to socialism, a significant role is played by the state. The state became the owner of the means of production, and due to this circumstance it was no longer just a political superstructure standing outside of production, it became the subject of relations of production, and the state budget became the budget of the entire Soviet national economy.

By the time the Russian Civil War was over, the structure of governing bodies for social production was already formed. The following governing bodies have been established:

1. The Council of People's Commissars (Sovet narodnykh kommissarov, CPC), which included the Commissars of Transport, Agriculture, Trade;

2.The Supreme Council of the National Economy (Vysshiy sovet narodnogo khozyaystva, VSNKh), which united large industrial enterprises. It was also part of the CPC. It created chief departments (glavki), which subordinated the trusts;

3. The Council of Labor and Defense (Sovet truda i oborony, STO), which was responsible for coordinating the activities of military and civilian production.

Enterprises, homogeneous by type of production, were united into trusts. Later, syndicates were set up, which were entrusted with the sale of industrial products. As relations between the trusts and syndicates developed, the latter were not only engaged in the sale of the trusts' products, but also carried out the material and technical supply of the trusts and their enterprises. Moreover, syndicates were able to lend to enterprises and trusts.

The first plans predate the outbreak of the Russian Civil War. For example, in the summer of 1918, 70 enterprises of the Northwest Council of the National Economy drew up a plan to coordinate their co-operation, but the outbreak of the civil war prevented the plan from being implemented. By the end of the civil war in 1920, the GOELRO (State Commission for the Electrification of Russia) plan was developed. It was a promising 10-15 year plan. The purpose of it was to renovate the industrial production, transferring it to electric power.

But at the end of the civil war, it was necessary to develop a state plan for the organization of social production, so in 1921, the State Planning Commission under the Council of Labor and Defense was formed.

World history has not yet had examples of developing plans for the entire national economy, so everything was done through experimentation, by trial and error. Initially, plans were formed by the trusts independently, and with the creation of syndicates — in cooperation with them, in the form of production programs. The developed programs were submitted to the chief departments of the Supreme Council of the National Economy. Based on the plans of the trusts, chief departments made industry plans, then the consolidated department of the Supreme Council of the National Economy summarized all the industry plans together, thus forming a plan for the entire industry. The consolidated plan of the Supreme Council of the National Economy together with sectoral plans was submitted to the Gosplan, which made conclusions on each production program and a summary conclusion on all programs in general, after which all documents were submitted to The Council of Labor and Defense and The Council of People's Commissars for approval.

The first programs were unsuccessful; they were not fulfilled. But gradually the trusts, having gained experience, began to develop production programs more or less achievable. The successfully completed plan for the year of 1923-1924 served as a basis for the development of balances of branches and other parts of the national economy, which were subsequently used extensively in the process of developing plans.

After the civil war, due to the lack of raw material reserves, the trusts started production only at some enterprises, while the rest were shut down. As production of raw materials increased, previously closed enterprises were launched once again, but it required money to purchase raw materials. However, the state budget after the civil war had a huge deficit, expenditures exceeded revenues, so financing was carried out through emission, which led to inflation, manifested in a constant rise in prices. The normal operation of social production required monetary reform, which was successfully carried out during the year of 1922-1924.

The implementation of monetary reform and stable profitable industrial production allowed to normalize financial activity. The state budget deficit was eliminated, after which budget financing of the trusts was based on available budget revenues. This made it possible to unite the planned activities of the trusts into one; the development of a particular industry was already determined by the amounts of money allocated to the trusts from the budget.

How did the planned organization of social production work? It included two stages:

The first stage is the process of developing plans; the second stage is the process of executing the plans. The result of the first stage is the planned social product existing ideally; the result of the second stage is the actually produced social product. Thus, the planned organization of social production generates two types of the social product: planned and produced. Both products are from the same plan period. Planned product existed already at the beginning of the planning period, the produced one was finally formed at the end of the planning period; the planned product preceded the planning period, the produced one completed it; the planned product acted as an aim of production, the produced one was the result of achieving the aim.

However, due to the fact that the commodity form of the products of labor is preserved, any social product, regardless of whether it is planned or produced, exists dually, i.e. in two forms — as total product and as total output in monetary form. The dual nature of the planned social product gave rise to a duality of the aim as well. Along with the declared aim to produce the total product, providing satisfaction of society's wants, there appeared another aim — the creation of the total value of the social product in the form of total output.

So, let's briefly summarize:

The preservation of the commodity form of labor products due to the insufficient development of productive forces led to the fact that the social product acquired two forms of its being. It is the total product, i.e. the totality of commodities, i.e. the totality of use value, and it is also the total output, i.e. the monetary expression of the total value of the social product. The monetary form of the social product gives it a quantitative certainty expressed in a specific amount of money, which makes it possible to use the total output as a measure of the volume of production. In addition, the monetary form has given qualitative homogeneity to the social products related to different years, which makes it possible to compare them in order to determine the vector of development of social production.

The planned organization of social production has given rise to two types of social product: planned and produced — belonging to the same planned period. The planned product is the result of the development of the plan, the produced product is the result of the fulfillment of the plan. Both social products appear in two forms of their being.

The planned social product precedes production activity and acts as the aim of production in a particular planning period. The social product produced completes the planning period and is the result of achieving the aims. The dual nature of the planned social product gave rise to a duality of aims: the creation of a total product to satisfy wants and the creation of total value. Due to qualitative homogeneity, monetary forms of planned and produced social products can be compared, which makes it possible to assess the extent to which in the process of fulfillment of plans the set aims have been achieved in quantitative terms.