The deformation of Value

The problem of the nature of the USSR restated

As we seen, the traditional Marxism of the Second and Third Internationals saw state capitalism as the highest stage of capitalism. As such state capitalism could be seen as the first step in the transition to socialism. As a consequence, Lenin could consistently argue against the Left Communists — from the imposition of one-man management and the reintroduction of Taylorism to the introduction of the New Economic Policy — that the immediate task of the Revolutionary Government, given the backward conditions in Russia, was first and foremost the development of state capitalism.

Of course, for Lenin the nationalization of the means of production and the introduction of state planning introduced by the Revolution marked a decisive advance. Under the control of a Workers’ State, state capitalism would be superseded by socialism. Subsequently, with the introduction of the five year plans and the collectivization of agriculture Stalin could announce that the USSR had at last reached the stage of socialism and was on the way to a communist society. Trotsky was more circumspect. While acknowledging the rapid development of the forces of production that was being made under Stalin, he still saw this as a stage of primitive socialist accumulation that, while being an advance over capitalism, had yet to reach socialism.

To the extent that theorist of the capitalist nature of the USSR have accepted this conception of state capitalism they have been obliged to argue either that Russia never went beyond state capitalism in the first place or that at some point their was a counter-revolution that led to the USSR falling back into state capitalism. Yet, either way, by accepting that state capitalism is the highest stage of capitalism such theorists are led to the position of considering the USSR as an advance over western capitalism. This, as we have seen, is a position that was to become increasingly difficult to defend in the light the chronic economic stagnation of the USSR and its eventual decline and collapse. Indeed, such theories have been unable to explain the contradictions within the USSR that finally led to its downfall.

In contrast, we have argued that state capitalism, far from being the highest stage of capitalism, is a specific form for the late development of capitalism. Yet this presupposes that the USSR was indeed such a form of capitalism. To demonstrate this we must develop a value analysis of the USSR.

As we have seen, state capitalist theorists have argued that the USSR was essentially capitalist in that it was based on wage-labor. The workers in the USSR were divorced from both the means of subsistence and the means of production. As a consequence, in order to live, the Soviet workers had to sell their labor-power to the state enterprises. Having sold their labor-power the workers found themselves put to work. They found themselves external to their own subject activity. They did not work to produce their own needs, nor for the needs of their own families or communities, but for some alien other. While the workers worked as a means to obtain a wage through which they could survive, their labor became independent of them, directed towards aims that were not their own. In producing products that were not their own they served to reproduce their position as workers on an ever expanding scale.

Hence, like their counter-parts in the west, the Russian workers were subordinated to a process of production that was designed and developed to maximize production with scant regard to the living experience of the worker in production. As such the worker was reduced to a mere instrument of production. Like their counter-parts in the West, the Russian workers worked longer than that necessary to reproduce the equivalent of their labor-power. Thus, like the their counter-parts in the West, the Russian workers alienated their labor and were exploited.

If the relations of production were those of self-expanding alienated labor then they were the productive relations of capital. As such, in a fundamental sense the USSR was capitalist. But, as we have seen, the more sophisticated Trotskyist object. Capitalism can not be taken to be simply the apparent predominance of wage-labor. Capitalist production presupposes, both historically and logically, generalized commodity production in which labor-power itself has become a commodity. But, the Trotskyists insist, products did not assume the form of commodities in the USSR since there was no market. But if products did not assume the form of commodities then there can have been no real wage-labor since labor-power, as a commodity, can not be exchanged for other commodities. Wages were merely a means of rationing products.

The problem then can be stated as follows. Production in the USSR would seem to have been essentially a form of capitalist production, being based on waged labor; but capitalist production presupposes general commodity exchange. In the absence of the market it would seem that the exchange and circulation of wealth in the USSR did not assume the commodity-form and as such was distinctly non-capitalist. But if commodities did not exist neither could capital.

To resolve this problem we must first look at the unity of production and exchange that we find in fully developed capitalism. To do this we shall examine the Circuits of Industrial Capital that Marx sets out at the beginning of Volume II of Capital.

The circuits of industrial capital

As self-expanding value capital passes successively through three distinct forms: the money-capital, commodity-capital and productive-capital. Depending on which form of capital is taken as the starting point in analyzing the overall circulation of capital we can identify three distinct circuits of capital each of which reveals different aspects of the circulation of capital.

The first circuit is that of money-capital (M...M’):

M — Cmop + Clp ...P...C’- M’

Here capital in the form of money (M) is used to buy means of production (Cmop) and labor-power (Clp) necessary to commence production. Hence with the exchange M — C capital is transformed from money into the form of commodities. These commodities (labor-power and the means of production) are then used in the process of production. As such they become productive capital, (P) which produces commodities of a greater value C’. These commodities are then sold for a sum of money M’ which is greater than the original capital advanced M.

With this circuit capitalism appears clearly as a system based driven by profit. The circuit begins and ends with capital as money, and since money is homogenous, the only aim of this circuit is the quantitative expansion of capital as money, that is the making of a profit.

But this circuit not only shows how capitalist production is merely a means through which ‘money makes more money’, it also shows how capitalist production necessarily both presupposes commodity exchange and reproduces commodity-exchange. The circuit begins with the commodity exchange M — C, the purchase of means of production and labor-power (which of course is at the same time the sale of labor-power and means of production by their owners) and ends with a the commodity exchange C’ — M’, in which the sale of the commodities produced realizes the capital’s profit.

However, the process of ‘money making more money’ can only become self-sustaining if it at the same time involves the expansion of real wealth. This becomes apparent if we examine the circulation of capital from the perspective of the circuit of productive-capital (P...P’).

P...C’ — M’ — C’ ...P’

Here capital in production produces an expanded value of commodities C’ which are then sold for an expand sum of money M’ that can then be used to buy more means of production and labor-power in the commodity-form C’. This then allows an expanded productive capital P’ to be set in motion in the following period of production From the perspective of productive capital, the circulation of capital appears as the self-expansion of productive capacity of capital — the self-expansion of the productive forces.

Capitalism now appears not so much as ‘production of profit’ but ‘production for production’s sake’. Capitalist production is both the beginning and the end of the process whose aim is the reproduction of capitalist production on an expanded scale. The commodity circulation (C’ — M’ — C’) now appears as a mere mediation. A mere means to the end of the relentless expansion capitalist production.

The final circuit that Marx identifies is that of commodity-capital (C’...C’).

C’ — M’ — C ...P ...C’

With this circuit we can see the unity of capital in circulation and capital in production. Capital as the circulation of commodities C’ — M’ — C appears side by side with the production of ‘commodities by means of commodities’. The overall process of capitalist circulation therefore appears as both the production and the circulation of commodities.

An analysis of these three circuits of industrial capital would seem at first to confirm the Trotskyist position that capitalist production necessarily presupposes generalized commodity exchange. However, these circuits describe the fully developed capitalist mode of production not its historical emergence.

As we have argued, the national development of Russian capitalism had been impeded by its subordinate position in the world economic order. The independent development of capital in its cosmopolitan forms of merchant capital and moneyed-capital had acted to block the development of industrial capital. National capitalist development demanded capital in the real productive forms of factories, plant and machinery and the labor of a growing industrial proletariat. As a consequence, if Russia was to break free from its underdeveloped position imposed through the world market, productive-capital had to be developed over and against the independent development of capital-in-circulation i.e. money-capital and commodity-capital. The free exchange of money-capital and commodity-capital through the free operation of the market had to be restricted to allow for the development of productive-capital. Hence the free market was replaced by the central plan.

Hence, in taking up the ‘historic tasks of the bourgeoisie’ the state-party bureaucracy adopted the perspective of productive-capital. The more productivist elements of the Marxism of the Second International were adapted to the ideology of productive-capital. The imperative for the relentless drive to develop the productive forces over and against the immediate needs of the Russian working class was one that was not merely voiced by Stalin and his followers. Trotsky was even more of a superindustrialiser than Stalin. Indeed he criticized Stalin for not introducing planning and collectivization of agriculture earlier.

The question that now arises where what were the implications of this subordination of capital-in-circulation to the development of productive-capital? We shall argue that these value-forms existed in the USSR, not as ‘husks’ as those in the Trotskyist tradition maintain, but rather as repressed and undeveloped forms.