Production for use

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Production for use is a phrase referring to the principle of economic organization and production taken as a defining criterion for a

production for profit. This criterion is used to distinguish communism from capitalism, and is one of the fundamental defining characteristics of communism.[1]

This principle is broad and can refer to an array of different configurations that vary based on the underlying theory of economics employed. In its classic definition, production for use implied an economic system whereby the

law of accumulation no longer directed economic activity, whereby a direct measure of utility and value is used in place of the abstractions of the price system, money, and capital.[2] Alternative conceptions of socialism that do not use the profit system such as the Lange model, use instead a price system and monetary calculation.[3]

The main socialist critique of the capitalist profit is that the accumulation of capital ("making money") becomes increasingly detached from the process of producing

inefficiency, and social problems. Essentially, it[clarification needed] is a distortion of proper accounting, based on the assertion of the law of value instead of the "real" costs of production, objectively determined
outside of social relations.

Exposition

Production for use refers to an arrangement whereby the production of goods and services is carried out

accumulation of capital, a condition where production is only undertaken if it generates profit, implying an ex post or indirect means of satisfying economic demand. The profits system is oriented toward generating a profit to be reinvested into the economy (and the constant continuation of this process), the result being that society is structured around the need for a perpetual accumulation of capital.[4] In contrast, production for use means that the accumulation of capital is not a compulsory driving force in the economy, and by extension, the core process which society and culture revolves around. Production for profit, in contrast, is the dominant mode of production in the modern world system, equivocates "profitability" and "productivity" and presumes that the former always equates to the latter.[5]

Some thinkers, including the Austrian philosopher and political economist Otto Neurath, have used the phrase "socialization" to refer to the same concept of "production for use". In Neurath's phraseology, "total socialization" involves calculation in kind in place of financial calculation and a system of planning in place of market-based allocation of economic goods.[6] Alternative conceptions exist in the form of market socialism.

Usage

  • Karl Marx referred to the "production of use-values" as a feature of any economic mode of production, but characterized capitalism as a mode of production that subjugated the production of use-value for the self-expansion of capital (i.e., capital accumulation or production for profit). In contrast, socialism was vaguely defined as a system based on the direct production of use-value free of the process of continuous capital accumulation.[7]
  • Eugene V. Debs popularly used the phrase when running for president of the United States in 1912, stating that capitalism is founded upon production for profit, and in contrast, socialism is postulated upon production for use.[8]
  • Norman Thomas, a presidential candidate in the United States for the Socialist Party of America in the six elections from 1928 to 1948, contrasted socialism with capitalism by stating that socialism is based on production for use and an end to the profit system.[9]
  • Upton Sinclair devised an elaborate production-for-use plan, including confiscation and repurposing of idle factories and farms, that was central to his unsuccessful End Poverty in California (EPIC) campaign for governor in 1934.[10]
  • social democrats in post-World War II Europe as a rejection of socialism in the technical sense.[11]

Description

Proponents of socialism argue that production for profit (i.e.,

United States housing bubble resulted in an overproduction
of housing units that could not be sold at a profit, despite there being sufficient demand and need for housing units.

Production for use in some form was the historically dominant modality until the initial primitive accumulation of capital[citation needed].

Economic planning is not synonymous with production for use. Planning is essential in modern globalised production both within enterprises and within states. Planning to maximize profitability (i.e., within industries and private corporations) or to improve the efficiency of capital accumulation in the capitalist macro-economy (i.e. monetary policy, fiscal policy and industrial policy) does not change the fundamental criteria and need to generate a financial profit to be reinvested into the economy. A more recent critique of production for profit is that it fails spectacularly to address issues such as externalities which the board and management of a for profit enterprise are often under a fiduciary responsibility to ignore if they harm or conflict with the shareholders' profit motives[citation needed].

Criticisms of production for profit

Some socialists suggest a number of irrational outcomes occur from capitalism and the need to accumulate capital when capitalist economies reach a point in development whereby investment accumulates at a greater rate than growth of profitable investment opportunities. Many theories, such as the

Appropriate technology, and the Jevons Paradox, have demonstrated that the accumulation of capital due to maximization of profit, detaches Society from the process of producing social and economic value, leading to waste, inefficiency and underlying social issues.[13][14][15]

Planned obsolescence is a strategy used by businesses to generate demand for the continual consumption required for capitalism to sustain itself. The negative effect planned obsolescence has to environment (mainly), is due to constantly increasing natural material extraction to produce the goods and services to satisfy a never ending added demand, linked with a non-caring disposal of end products.[16]

The creation of industries, projects and services comes about for no other purpose than generating profit, economic growth or maintaining employment. The drive to create such industries arises from the need to absorb the savings in the economy, and thus, to maintain the accumulation of capital. This can take the form of corporatization and commercialization of public services, i.e., transforming them into profit-generating industries to absorb investment, or the creation and expansion of sectors of the economy that do not produce any economic value by themselves because they deal only with exchange-related activities, sectors such as financial services. This can contribute to the formation of economic bubbles, crises and recessions.[17]

For socialists, the solution to these problems entails a reorientation of the economic system from production for profit and the need to accumulate capital to a system where production is adjusted to meet individual and social demands directly.

Contrasted with state capitalism

As an objective criterion for socialism, production for use can be used to evaluate the socialistic content of the composition of former and existing economic systems. For example, an economic system that is dominated by nationalized firms organized around the production of profit, whether this profit is retained by the firm or paid to the government as a dividend payment, would be a

state capitalist economy. In such a system, the organizational structure of the firm remains similar to a private-sector firm; non-financial costs are externalized because profitability is the criterion for production, so that the majority of the economy remains essentially capitalist despite the formal title of public ownership. This has led many socialists to categorize the current Chinese economic system as party-state capitalism.[18][19]

The economy of the Soviet Union was based upon capital accumulation for reinvestment and production for profit; the difference between it and Western capitalism was that the USSR achieved this through nationalized industry and state-directed investment, with the eventual goal of building a socialist society based upon production for use and self-management. Vladimir Lenin described the USSR economy as "state-monopoly capitalism"[20] and did not consider it to be socialism. During the 1965 Liberman Reforms, the USSR re-introduced profitability as a criterion for industrial enterprises. Other views argue the USSR evolved into a non-capitalist and non-socialist system characterized by control and subordination of society by party and government officials who coordinated the economy; this can be called bureaucratic collectivism.

Social production and peer-to-peer processes

See also: Sharing economy

Michel Bauwens identifies the emergence of the open software movement and peer-to-peer production as an emergent alternative mode of production to the capitalist economy that is based on collaborative self-management, common ownership of resources, and the (direct) production of use-values through the free cooperation of producers who have access to distributed capital.[21]

use-value
.

Valuation and calculation

Multiple forms of valuation have been proposed to govern production in a socialist economy, to serve as a unit of account and to quantify the usefulness of an object in socialism. These include valuations based on labor-time, the expenditure of energy in production, or disaggregated units of physical quantities.[22]

Physical quantities

The classic formulation of socialism involved replacing the criteria of value from money (

use-value), to be quantified in terms of physical quantities (Calculation in kind and Input-Output analysis) or some natural unit of accounting, such as energy accounting.[23]

material balances
- balancing the supply of economic inputs with planned output targets.

Marginal cost

Lange Model, the firms would be publicly owned and the managers would be tasked with setting the price of output to its marginal cost, thereby achieving pareto efficiency
through direct allocation.

Cybernetics

See also: Cybernetics

Cybernetics, the use of computers to coordinate production in an optimal fashion, has been suggested for socialist economies. Oskar Lange, rejecting his earlier proposals for market socialism, argued that the computer is more efficient than the market process at solving the multitude of simultaneous equations required for allocating economic inputs efficiently (either in terms of physical quantities or monetary prices).[25]

participative decision-making by the Cyberfolk component. The project was disbanded after the 1973 Chilean coup d'état.[26]

Free market

Based on the perspective that the

free-market economy free of the market-distorting, monopolistic tendencies and antagonistic interests that emerge from private ownership over production.[27]

In popular culture

In the Howard Hawks-directed 1940 film His Girl Friday, written by Charles Lederer based on the 1928 Broadway play The Front Page by Ben Hecht and Charles MacArthur, reporter Hildy Johnson (Rosalind Russell) interviews accused killer Earl Williams (John Qualen) in jail to write his story for her newspaper. Williams is despondent and confused, and easily accepts it when Johnson leads him into an account of the events preceding the killing, which revolves around the desperate out-of-work man's hearing the expression "production for use" and transferring the concept in his mind to the gun he had: it was made for use, and he used it. This is the story about Williams that Johnson writes up, to the admiration of the other reporters covering the case. This version of Earl Williams' motivations differs significantly from that presented in the original stage play and the first film adaptation of it from 1931. In those scripts, the killer was a committed anarchist who had definite political reasons for the shooting, and did not need to be influenced by a stronger personality into a false narrative.[28]

See also

References

  1. market forces
    , production for use instead of for profit."
  2. ISBN 978-0-8047-7566-3
    . According to nineteenth-century socialist views, socialism would function without capitalist economic categories - such as money, prices, interest, profits and rent - and thus would function according to laws other than those described by current economic science. While some socialists recognized the need for money and prices at least during the transition from capitalism to socialism, socialists more commonly believed that the socialist economy would soon administratively mobilize the economy in physical units without the use of prices or money.
  3. ^ Loeb, Harold (2010). Production for Use. Nabu Press.
  4. ^ "Production for Use", The Western Socialist (1967), Vol.36. Retrieved February 19, 2011: http://www.worldsocialism.org/canada/production.for.use.1969.v36n268.htm
  5. ^ Lawrence, Pieter (1983). "Production for use". Socialist Standard.
  6. ISBN 978-1-4020-6904-8.{{cite book}}: CS1 maint: multiple names: authors list (link
    )
  7. ^ Karl Marx. "Capital, Volume 1; Chapter Seven: The Labour-Process and the Process of Producing Surplus-Value". Marxists.org. Retrieved 9 December 2012.
  8. ^ Debs, Eugene V. (1912) The Socialist Party’s Appeal. The Independent
  9. ^ Thomas, Norman (1936) Is the New Deal Socialism?. Democratic Socialists of America. Retrieved March 23, 2012: "Is the New Deal Socialism? - Chicago Democratic Socialists of America". Archived from the original on 2010-07-12. Retrieved 2010-07-12.
  10. ^ Gregory, James. "The Epic Campaign Story". Upton Sinclair's End Poverty in California Campaign. University of Washington. Retrieved 21 July 2022.
  11. ^ Hayek, Friedrich (1960). "The Decline of Socialism and the Rise of the Welfare State". Chicago: University of Chicago Press. Archived from the original on 17 November 2011. Retrieved 20 January 2013.
  12. ^ "Let's produce for use, not profit", Socialist Standard, May 2010. Retrieved August 07, 2010: "Let's produce for use, not profit Article page Socialist Standard May 2010 Vol.106 Issue No.1269". Archived from the original on 2010-07-16. Retrieved 2015-08-18.
  13. ^ "Schumacher on Buddhist Economics - YouTube". www.youtube.com. Archived from the original on 2021-12-21. Retrieved 2020-12-22.
  14. ^ "Buddhist Economics in three minutes (feat. Prof. Wolfgang Drechsler) - YouTube". www.youtube.com. Archived from the original on 2021-12-21. Retrieved 2020-12-22.
  15. S2CID 144259655
    .
  16. ISSN 2210-4224
    .
  17. ^ Economic Crisis from a Socialist Perspective. Retrieved June 23, 2011, from rdwolff.com: "Economic Crisis from a Socialist Perspective | Professor Richard D. Wolff". Archived from the original on 2014-02-28. Retrieved 2014-02-23.
  18. ^ "China - 'Socialist market economy' or just plain capitalism?", Retrieved February 19, 2011: http://www.marxist.com/china-socialist-market-economy200106.htm
  19. ^ Ellman, Michael (2014) [1989] "The Rise and Fall of Socialist Planning" in Socialist Planning. Cambridge, England: Cambridge University Press. p.23. Quote: "In fact, the central authorities are partially ignorant of the situation throughout the economy, and this is a major factor causing such phenomena as the dictatorship over needs, bureaucratization, production for plan rather than use..."
  20. ^ Lenin's Collected Works Vol. 27, p. 293, quoted by Aufheben Archived 2004-03-18 at the Wayback Machine
  21. ^ "The Political Economy of Peer Production". CTheory. 2005-01-12. Archived from the original on 2019-04-14. Retrieved 2011-07-14.
  22. ^ "The Economics of Feasible Socialism Revisited" by Nove, Alec. 1991. (P.22)
  23. ^ "The Alternative to Capitalism", World Socialist Party USA. Retrieved March 17, 2011: http://wspus.org/in-depth/the-alternative-to-capitalism/: "Wealth in socialism would be produced directly as such, i. e. as useful articles needed for human survival and enjoyment; resources and labour would be allocated for this purpose by conscious decisions, not through the operation of economic laws acting with the same coercive force as laws of nature. Although their effect is similar, the economic laws which come into operation in an exchange economy such as capitalism are not natural laws, since they arise out of a specific set of social relationships existing between human beings."
  24. ^ "Quantity-Directed Socialism, Socialist Economics", Retrieved March 16, 2011: http://www.economictheories.org/2009/06/quantity-directed-socialism.html
  25. ^ "The Computer and the market", Lange, Oskar. Retrieved March 16, 2011: http://www.calculemus.org/lect/L-I-MNS/12/ekon-i-modele/lange-comp-market.htm
  26. S2CID 26484124
    .
  27. ^ Perkins, Albert (ndg) "Cooperative Economics: An Interview with Jaroslav Vanek" New Renaissance magazine, v.5 n.1 Retrieved March 17, 2011
  28. ^ Jukić, Tatjana (May 18, 2016) "The Awful Truth: On Metonymic Ratonality in Hawks and Cavell"

Further reading

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