Chapter VI

On the contrary, in economics there is a growing tendency to put· an equals-sign between value and the result of exchange-relationships. 3 This is to give the· theory of value a much more modest role than it had before. Reference to price says even less than reference to "supply and demand". Attention is confined to the result of the conflict between the various factors, disregarding the forces behind them, such as (for supply): number of hours worked and scarcity of resources, and (for demand): subjective valuations of needs and sacrifices-to name the most important ones. One is admittedly on safer ground, when sticking to prices with their special faculty of synthesizing a variety of heterogeneous factors. In a barter market prices can be expressed by their relative barter-relationship to other goods, but the machinery of exchange is simplified and improved by the use of a generally accepted means of exchange which makes it possible to express every price in terms of one good or one unit of value. Thus monetary economy represents a perfection of barter economy.

1A monetary economy was also assumed in the previous chapter, so. its implica tions might have been discussed there, but it was natural to concentrate in that chapter on the consequences of the communist-marxist· principles. 2As we shall see later (cf., inter alia, Chapter XIV), an attempt is made in this discussion to extend the concept of price and to let prices represent something more and something else than an expression of exchange-relationships. 3Cf. L. M. Fraser: Economic Thought and Language, London, 1937, p. 351. 65 66 ECONOM:IC CALCULATION IN THE SOCIALIST SOCIETY In Chapter II it was said that we had no right to assume the existence of either value~relationships, markets or prices in a socialist society. However, further examination 1 has shown that a monetary economy is a necessity, since a moneyless one does not provide that common denominator which is essential for calculation; and that claims to consumption (warrants) made out for an amount are better than ones made out for a specific quantity of goods in natura and give their possessor a better opportunity of choosing what needs he will satisfy and to what extent (within the scope of the goods offered and of the purchasing power at his disposal). Finally, the conclusion has been reached that if the central authority is to avoid producing goods in which no one has any interest, it will have to take account of the utility of its products. If not, the goods produced might be said to have a value according to the yardstick used, for example, hours of work, but not necessarily to have one in the eyes of the consumer.

Does acceptance of these conclusions imply that our socialist society is to have a monetary economy similar to that in a capitalist society? Not necessarily. There are essential differences. Seeing that the State is the one and only employer and the sole owner of all goods which may be sold and bought, the socialist society can manage with a giro-or clearing arrangement. In theory it has particularly favourable facilities for carrying this through. Theoretically all payments (whether for raw materials, power, transport or semi~finished products at every stage of production, for wages and consumer goods), can be made. by means of cross book-entries. The common unit of reckoning used may be anything one likes, from hours of work to motor-headlights or tillers, as long as it is used consistently. No sort of cover is necessary and one can imagine that the socialist community can manage with money ofan entirely different kind to that used in the capitalist society.