Socialist Studies Socialist Studies

Socialism: A World without Money

Organising Production and Distribution without Money

Can a social system function efficiently without the use of money? Socialists argue that it can. A social system based upon the common ownership and democratic control of the means of production and distribution by all of society would meet the social needs of society without the use of money. Production and distribution would take place solely and directly to meet human needs. There would be no exchange, no money and no buying and selling of commodities.

When socialists put the socialist proposition to workers that a social system can be organised rationally and efficiently without the need for money and the buying and selling of commodities there is a misplaced incredulity. Socialists are told that there has always been money and is as natural as drinking water or breathing air. The economists go further. They say that a social system without money, markets and private property would not get off the ground. A Socialist alternative, they say, is just idle speculation, mere utopianism.

However, there never seems to be enough money today for everyone. Money is not a problem for the top 1% of the population who have so much disposable cash the world is literally their oyster. For those who do not have enough money to live on, life is hard, oppressive and difficult. For the lack of money there is a housing crisis and the inability of workers to buy homes in which to live. For millions of men, women and children, the lack of money means starvation and death.

Money is a form of rationing. What workers get as wages and salaries only buys sufficient commodities to produce and reproduce themselves as a working class. Most of what workers need to buy with money is way beyond their means. Money may make the world go round as Liza Minnelli and Joel Grey cynically sang in Cabaret, but it is a world in which most of the money is amassed by the capitalist class to the exclusion of everyone else. Yes, under capitalism money does define someone; it defines someone either as a capitalist or a worker. And under capitalism money defines the workers as a class of wage slaves.

Economics and Money

Unlike most workers, economists exist to defend the capitalist class and their system; they are not interested in a socialist alternative to class exploitation, profit-making and the enrichment of a minority class of capitalists. Workers, though, should be interested in a socialist alternative. They should be interested in establishing a social system that does work in their interests and does set out to meet their social needs. And this means not thinking as though capitalism has always existed and always will exist. It means thinking historically and in terms of social systems; social systems that preceded capitalism and a social system that will replace capitalism; socialism.

Economists do not practice economics within a historical context. They do not structure their subject matter within social systems. Capital and money are uncritically taken as a “natural” state of affairs. They erroneously believe that exchange is a necessary characteristic of all social systems. They cannot even conceive of a social system without the need for barter let alone the use of money. As Marx wrote against the economists of his own day:

They all maintain that competition, monopoly, etc., are, in principle—i.e. regarded as abstract thoughts—the only basis for existence, but leave a great deal to be desired in practice. What they all want is competition without the pernicious consequences of competition. They all want the impossible, i.e. the conditions of bourgeois existence without the necessary consequences of those conditions. They all fail to understand that the bourgeois form of production is an historical and transitory form, just as was the feudal form. This mistake is due to the fact that, to them, bourgeois man is the only possible basis for any society, and that they cannot envisage a state of society in which man will have ceased to be bourgeois (Marx to P. V. Annekov, Letters, 1846).

And the economist’s false thinking about exchange derives from an error found in the WEALTH OF NATIONS (1776) written by Adam Smith. Smith claimed that men and women have an innate “propensity to truck, barter, and exchange one thing for another “(Book 1, Chapter 2). To be human, said Smith, is to buy and sell. And not only has this been the case in the past, he went on to say, but it always will be the case well into the future. Smith believed that it is in the nature of human beings to economically behave in this way. Human nature cannot be changed. Human nature is fixed and immutable. History tells us otherwise.

There is a Practical Socialist Alternative to Capitalism

Today, workers are also told that when people do try to impose a social system not based on “human nature” the result is bureaucracy, dictatorship, gulags, firing squads and totalitarianism. As if the period stretching from the publication of the WEALTH OF NATIONS, with its slavery and abject working class poverty, to the start of the Russian Revolution in 1917, was a veritable Garden of Eden. Yet, from the position of the working class there was no difference from being exploited in state capitalist Russia as it was in Britain or the US. Bolshevik Russia had money and exchange. It was not Socialism.

To answer the economists working within the straitjacket of Smith’s view of human behaviour requires workers to think in terms of social systems. There have not always been workers and capitalists, labour markets, the buying and selling of labour power and generalised wages and salaries defining a whole class. Yes, for a social system like capitalism money is important, but only because the product of labour is privately owned. And this has not always been the case.

Marx showed in the first chapters of CAPITAL that in simple commodity production, the commodity is directly owned by the individual and is sold to purchase commodities for their immediate use. This is not the case with capitalism. In capitalism an exploited working class produces commodities for a wage and a salary which are then owned by capitalists who then sell these commodities on the market for a profit.

We therefore have two different types of exchange suited to two different social systems at particular levels of production in human history. A feudal system would have property relations and commodity exchange peculiar to the historical level it had reached. Capitalism, on the other hand, with its complex process of buying and selling, advertising, credit and so on, has property relations and a form of exchange peculiar to its own historical development.

Not all social systems are the same. Different social systems have different social characteristics. A barter economy would be a very basic social system in which families would produce as much as they could for themselves in order to minimise having to sell. Production levels would be low and human existence at a subsistence level. A chattel slave economy would also be a different type of social system. What slaves produced would just be taken from them by their owners although the slaves would still have to be fed and housed to produce and reproduce their condition of slavery. In chattel slavery production conditions were largely agricultural not industrial.

And there have been communities where there has been no barter, no money and no exchange. The Awa people, also known as the Guaja, are an endangered, indigenous tribal group of hunter-gatherers in the Amazon. They stand in the way of logging companies and land clearance for farming and have been hunted to death. Only 350 remain alive today. They don’t use any system of money or barter at all, but live completely off the land. Such a social system Marx and Engels wrote of as “primitive communism” which pre-dated class society and class exploitation. Socialists do not want to go back to hunter-gatherer societies. There is no need. It is just that the development in the forces of production means socialism/communism is possible now. We illustrate examples of primitive communism because it shows that money and barter have not always existed and it is not innate to “truck, barter and exchange”.

Marx drew attention to different social systems and why they changed. In a famous passage, he pointed out:

Social relations are closely bound up with productive forces. In acquiring new productive forces men change their mode of production; and in changing their mode of production, in changing the way of earning their living, they change all their social relations. The hand-mill gives you society with the feudal lord; the steam-mill society with the individual capitalist (THE POVERTY OF PHILOSOPHYy, Chapter 2, Collected Works, Vol. 6, p.166)

Some superficial readers of Marx believe he advocated an economic determinism where one social system is replaced by another only through technological change rather than by human agency. This ignores Marx’s opening sentence where he stated that social relations are “closely bound up with productive forces”. The productive forces also contain co-operative and social labour. And it also ignores the second sentence where he stated that men and women change their mode of production and thereby change themselves. Hardly the ideas and beliefs held by an economic determinist.

Similarly, Engels argued:

…the final cause of all social changes and political revolutions are to be sought, not in men’s brains….but in changes in the modes of production and exchange. They are to be sought not in the philosophy, but in the economics of each particular epoch (SOCIALISM: UTOPIAN AND SIENTIFIC, Selected Works, p. 136)

Equally for Engels as for Marx, the change from one social system to another is revolutionary and made by the actions of men and women. History does nothing. It is men and women who make history.

Socialism: A World without Money

This brings us on to the question of socialism. Socialism is a social system that has never existed. In socialism there will be no property; that is, private, corporate or state property ownership. Common property ownership means no property ownership acting as a barrier to take freely what people need in order to live worthwhile lives and to take part in the democratic affairs of society. There will be no private property relations, no buying and selling, no exchange and no markets. As a consequence of there being no exchange in socialism there will be no money.

The establishment of socialism is not grounded in the interst of the capitalist class but the working class. Economists structure their theory of economics with a defence of capitalism and the capitalist class. Marx and socialists after him began their critique of capitalism from the starting point of the buying and selling of the commodity labour power, the exploitation of the working class within the productive process and the enforced rationing caused by the wages system and wage slavery. The forces of production have developed to such a level that not only could men and women directly participate in production and distribution of goods and services but they could also have direct access to what has been produced.

In socialism where society has freed itself from property and exchange relationships, there will be no social barrier impeding the development of the forces of production directly to meet human need. There will be, of course, considerations around maintaining levels of raw resources and environmental factors but there will not be inadequate housing, food, clothes, health, transport and education. In other words, socialism will be a social system of abundance not one of deliberate scarcity.

Economists cannot conceive a future socialist society freed from the dead-hand of capital because mentally they are locked within Adam Smith’s economic strait jacket which theoretically accepts, without criticism, his fiction of innate and fixed human economic behaviour.

Money will have no function in socialism

Money will have no function in socialism. Yet the economists still claim that money carries a role no sophisticated social system could be without. Under capitalism money not only acts as a medium of exchange but also as a store of wealth and a unit of account. Money is not only used for immediate exchange but exchange in the future. However, in both cases socialism would still be able to function without money. Socialist production and distribution will meet social needs on a daily basis wherever these needs exist and plan and store for needs in the future whatever they happen to be.

What about money as a unit of account? Under capitalism, money as a unit of account is useful to individual capitalists and to the capitalist state and its statisticians. Individual capitalists can assess the production process over time against investment. Government statisticians can use money as a unit of account to assess a range of economies in the aggregate over a range of industrial and commercial sectors of the economy.

However a socialist society is not tied to this form of measurement of production. There is no need for a system of prices to act as framework to efficiently guide production and distribution in a socialist society. The production and distribution of goods and services can be rationally assessed by reference to energy use, labour inputs, health and safety considerations, impact on the environment, time and energy use and so on. A socialist society just will not need a system of price information to make informed, efficient and rational choices over the range of production and distribution techniques and alternatives to meet the needs of a socialist society. A price mechanism might be a necessary system to ensure efficient use of capital investment but the concept of efficiency in socialism will not be the market driven “efficiency” found in capitalism. Efficiency in socialism will be determined by successfully meeting human needs not adequate returns of profit on capital investment.

Economists also tell us that the price system serves as a system of communication over markets. It allows capitalists to sell their commodities to whoever wants to buy them no matter where they happen to live. A price system allows capitalists to estimate the level of production against demand for their commodities. The price system ensures that only profitable goods are produced to buyers having the ability to pay for them. Yet this market communication periodically breaks down. Commodities are sometimes produced in industrial sectors which find no buyers and profits cannot be made. The price mechanism and the market periodically fail.

This brings us on to planning production and distribution in a socialist society. Planning does not have to be centralised but can and should be dispersed. Planners do not have to have a damp-proof membrane inserted between planning production and distribution and the rest of society. Socialist production would be regulated by people’s needs and distribution secured by free access. Stock control, computing systems, input and output analysis would all ensure planned production meets social needs.

And it is also conveniently forgotten by our opponents that socialism will not have passive consumers leading isolated lives and detached central planners holding all the information and dictating what people will and will not require. In socialism information will be transparent and democratically controlled by all of society. Drawing up plans, the process of planning and ensuring the plans are met will be active and interrelated components of a democratic social system in which a world-wide socialist majority prevails.

Advocates of the market, the price mechanism and money begin their attack on the socialist alternative from their partisan position serving the interests of the capitalist class, from their groundless assumptions about human beings and from their fictional world-view which sees no possible change in the society organises production and distribution.

And it is a dogmatic position; a market fundamentalism that cannot contemplate any rational and practical alternative. Socialists do not have to accept any of this dogmatism. We do not deal with isolated individuals with infinite demands and innate characteristics weighted towards “truck, barter and exchange”. Instead, socialists work within a scientific paradigm of changing social systems, changing social relationship to the means of production and distribution and where the development of the forces of production has reached a point within human history to make capitalism, exchange, the price mechanism, markets and money historically superfluous.

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