Chapter 13.1.

👉The table of contents so far is here.

Chapter 13: Planned Economy and Working Life

13.1. Labor allocation

The major difference between capitalist market economies and communist planned economies in terms of labor is the presence or absence of labor allocation. In a capitalist market economy, labor relations are structured along market lines (i.e., the labor market), meaning that labor is "freely" bought and sold as a kind of intangible commodity.

As a result, labor surpluses and shortages are commonplace in response to the business cycles inherent in capitalist market economies. Furthermore, because job seekers essentially conduct their own job search—selling their labor as a commodity—so-called mismatches are inevitable.

Economic plans that do not assume a monetary economy are expressed in terms of production volume rather than monetary standards, and are therefore also, in a sense, labor plans. Labor plans are implemented through planned labor allocation. However, in areas outside the scope of the planned economy, labor plans are not formulated, but labor allocation is applied to prevent labor surpluses and shortages.

Therefore, in a planned economy, there is no labor market that may appear "free" but is unstable and random. Instead, a systematic system of labor allocation that assumes unpaid work is established. A good analogy is to think of the allocation of volunteers.

The actual allocation of labor may change depending on the stage of development of a communist society. In the earliest communist societies, the possibility of some regulated labor allocation in order to ensure an adequate labor force cannot be ruled out, but in a fully developed communist society, work will be completely voluntary and more selectable allocation will be implemented.

In any case, under a planned economy, employment agencies are the central labor allocation institutions. Unlike capitalist employment agencies, communist employment agencies are not simply job placement agencies. Job placement services merely provide an opportunity for workers and managers to meet, assuming the existence of a labor market. On the other hand, employment agencies under a planned economy are a structured system that scientifically matches the aspirations and aptitudes of individual job seekers in light of economic plans and the environmental and economic situation, while also coordinating with educational institutions to introduce and allocate suitable jobs. In that sense, labor allocation equals occupational  allocation.

If this system functions properly, labor shortages and excesses will be resolved, and people will be able to live close to work, eliminating the need for long commutes. Furthermore, by guaranteeing the introduction of suitable jobs through psychological career counseling, rational career choices will be encouraged. 

👉The papers published on this blog are meant to expand upon my On Communism

Chapter 12.5.

👉The table of contents so far is here.

Chapter 12: Planned Economy and Corporate Management

12.5. Three types of audit systems

Corporate audits in a capitalist market economy often tend to be subordinate and lukewarm to profit-driven management bodies, and it is difficult to say that they, including external audits, are fully effective in preventing corporate scandals. Furthermore, there is currently little thought of making environmental audits independent.

Audit work in corporations under a sustainable planned economy can be broadly divided into three types. One is operational audits, which audit the overall status of business operations and compliance with laws and regulations; the other is accounting audits; and the third is environmental audits, which audit the compatibility of business activities with environmental sustainability.

Of these, the second type, accounting audits, are commissioned to external accountants and conducted neutrally. Strictly speaking, accounting audits are divided into general accounting audits and environmental accounting audits, but external accountants handle general accounting audits. Environmental accounting audits will be conducted by a newly established external environmental accountant (a publicly certified professional who quantitatively evaluates business activities with environmental sustainability in mind). 

The first type of audit, operational audits, and the third type of audit, environmental audits, are conducted by an internal organization of the corporation. The nature of the auditing organization of a corporation differs depending on the type of corporation. This was already covered in the previous chapter when discussing the internal structure of corporations, but we will summarize it here:

First, in a production business organization, which is public enterprise subject to a planned economy, separate operational and environmental audit committees are established, each consisting of a large number of auditors. A large private  production business corporation also has parallel operational and environmental audit committees.

The operational audit body is also responsible for auditing the work of the accounting auditor. The environmental audit body audits the work of environmental accountant and also audits daily operations to ensure they are environmentally sustainable. At least two members of the environmental audit body must hold ecolonomist qualifications.

Such audit bodies are loosely collegial bodies, and unlike management organizations, they do not have a chief position. Instead, each audit committee member performs overlapping duties. However, they can make joint audit recommendations to the management organization as needed and can also file lawsuits seeking injunctions against operations.

On the other hand, a small or medium-sized production cooperative is required to have a minimum of three auditors, at least one of whom must be an environmental auditor. In addition, a small cooperative labor group must appoint at least one external auditor, but no distinction is made between operational and environmental audits.

👉The papers published on this blog are meant to expand upon my On Communism

Chapter 12.4.

👉The table of contents so far is here.

Chapter 12: Planned Economy and Corporate Management

12.4. Two types of corporate accounting

In a little-known passage in Volume II of Capital, Marx argued that the more socialized the production process, the greater the need for bookkeeping. He pointed out that "communal production" requires more bookkeeping than capitalist production, but that bookkeeping costs are reduced.

The capitalist market economy developed corporate accounting techniques and systems as a tool for recording corporate revenue activities and further increasing profits. Corporate accounting in a capitalist economy serves as a public record of revenue and expenditures related to revenue-generating activities and as reference data for formulating profit-generating business plans. In other words, whether financial accounting or management accounting, the greatest emphasis is on the calculation of revenue-generating activities, which is accounting in monetary units.

From another perspective, because corporate accounting under capitalism is an indirect calculation record that evaluates production activities in monetary terms, it is extremely complex and systematized. This not only requires costly bookkeeping but also makes it prone to fraud, such as window dressing, that often deviates from reality.

In contrast, because a sustainable planned economy is based on the premise of the abolition of a monetary exchange economy, corporate accounting eliminates the element of monetary calculation and becomes a direct record of production activities themselves, which are not evaluated in monetary terms.

For this reason, corporate accounting under a sustainable planned economy basically relies on asset tables, which record the state of inventory, and material receipts, which simply record the input and output of materials in physical units, thereby reducing the effort required for bookkeeping.

However, there are differences between the accounting of public enterprises that are subject to planned economy and the accounting of private enterprises that are not. In the case of public enterprises, the emphasis is on their significance as publicly certified records of production activities within the scope of economic plans, which form the broad framework for production activities, whereas private enterprises engage to a certain extent in barter, and to that extent they also engage in profit-making activities and a calculative element is recognized.

However, the most distinctive feature of corporate accounting under a sustainable planned economy is the highly developed technology and systems of environmental accounting. Environmental accounting has also been introduced in market economies that take environmental sustainability into consideration, but as long as the emphasis remains on profit-making activities, it is given a lower priority than calculation accounting and only plays a complementary role.

In contrast, environmental accounting in a sustainable planned economy is a form of accounting that takes precedence over production accounting, providing an environmental framework, and the two together form a record of environmentally sustainable production activities.

👉The papers published on this blog are meant to expand upon my On Communism

Chapter 12.3.

👉The table of contents so far is here.

Chapter 12: Planned Economy and Corporate Management

12.3. Autonomous labor management

As we saw, worker self-management or co-determination is the basis of corporate management under a planned economy. This means that labor management is carried out autonomously by the workers themselves.

Labor management in corporate activities under a market economy is essentially commanding and controlling, since it is based on the separation of labor and management and is a management policy allowing management to use workers as human resources to generate profits for the company.

To counter this, democratic countries allow workers to form labor unions. However, labor unions are merely external labor organizations and cannot directly participate in internal company decision-making. Furthermore, there are various legal and practical restrictions on union activities, limiting their ability to counter corporate labor management.

In contrast, self-management and co-determination under a planned economy are systems in which workers directly participate in corporate management through internal labor organizations, making labor management essentially autonomous. On the other hand, since the need for external organizations such as labor unions is diminishing, there is no problem with abolishing the labor union system. If "abolishing labor unions" is not the right term, it can also be understood as meaning that in communist companies, the capitalist labor union system is gradually dissolved in the form of a general employees' meeting, an internal body that acts as the company's overall supervisory body.

In regards to individual labor disputes that may still arise despite this type of autonomous labor management, one possibility is to deal with them individually, such as by establishing an internal labor arbitration committee composed of external experts.

Incidentally, labor management in a broad sense also extends to personnel management, including junior executive-level workers, but the treatment of such executive-level personnel management requires separate consideration. In principle, personnel matters are included within the scope of autonomous labor management, and at least executive personnel matters are considered to be subject to self-management or co-determination.

However, in the case of a large-scale production business organization and a production business corporation, taking into consideration the efficiency of personnel management, it may be permissible to delegate the authority of executive personnel matters below a certain level to the responsible management body in the articles of incorporation.

👉The papers published on this blog are meant to expand upon my On Communism

Chapter 12.2.

👉The table of contents so far is here.

Chapter 12: Planned Economy and Corporate Management

12.2. Democratic corporate governance

Corporate governance in planned economies sees significant progress in the democratization of corporate governance. As the saying goes, "Democracy ends at the factory gates" in market economies, market-based corporate management, including joint-stock companies, tends to be top-down, led by the CEO or through consensus among a small number of executives.

This is because profit generation is the primary goal of market-based corporate management, and competitive relationships with competitors necessitate quick decision-making.

In contrast, as discussed last time, decision-making based on democratic deliberation—democratic corporate governance—is both possible and necessary in planned-economy corporate management, which aims to promote the public interest.

While this approach can vary depending on the various corporate structures discussed in the previous chapter, what they all have in common is that employee organizations serve as the primary decision-making body. In this respect, there are similarities to the general shareholders' meeting system in joint-stock companies. However, the general shareholders' meeting is merely a management oversight body for investors. Employee organizations in joint-stock companies are not sufficiently internalized, with labor unions as external organizations effectively substituting for it. 

The ultimate form of democratic corporate governance based on employee organizations is self-management, in which the workers themselves are directly involved in management. In this respect, a production cooperative, as self-managed enterprise equivalent to communist private enterprise, is model company for democratic corporate governance.

However, this is a company outside the scope of a planned economy, and for a production business organization as a public enterprise subject to a planned economy, literal self-management is not possible given the company's size. Therefore, in this case, a labor-management co-determination system is appropriate.

The details of this were already mentioned in the previous chapter when discussing corporate forms, but to reiterate, it is a system of co-determination between a management committee and a workers' representative committee. In particular, matters related to working conditions and benefits cannot be decided without the consent of the workers' representative committee.

Furthermore, another key to democratic corporate governance is the consensus system of the management body. In either corporate form, there is no top person given great authority. Whether it is the chairperson of the management committee of a production organization or the president of a production cooperative, they are merely chaipersons who bring together the management bodies, and there is no room for so-called one-man management.

In order to thoroughly implement this type of consensus system, it may be worth considering a system in which the management body does not have a chairman of the board of directors, chairman of the board, or other representative positions, but rather each member of the management body shares their respective duties and shoulders management responsibilities on a completely equal basis.

👉The papers published on this blog are meant to expand upon my On Communism

Chapter 12.1.

👉The table of contents so far is here.

Chapter 12: Planned Economy and Corporate Management

12.1 Public interest-oriented management decisions

Corporate management in a planned economy naturally differs significantly from that in a market economy. As already mentioned, a true planned economy does not presuppose monetary exchange, and therefore corporate activities are not intended to generate monetary revenue. For public enterprises, which are subject to a planned economy, serving the public interest is essential to their business activities.

Since such public enterprises are managed in accordance with the common plan formulated by the Economic Planning Conference, the discretion of the management body is limited. Business decisions are made within the common plan, focusing on how to produce environmentally sustainable, safe, and high-quality products and services and contribute to the promotion of the public interest.

This does not mean that management decisions are simply based on a "central plan," as occurred under the Soviet-style planned economy, and are therefore mechanical and bureaucratic. In a sustainable planned economy, voluntary "joint planning" (not "central planning") by enterprises themselves through the Economic Planning Conference, serves as the common management guideline, and therefore foresight and preparation for the formulation of this joint plan (three-year plan) also become important management decisions.

Such non-profit-making management decisions can be called public interest management decisions. However, such management decisions are primarily applicable to public enterprises (Production Business Organizations) that are subject to a planned economy, and are not entirely applicable to private enterprises that are outside the scope of a planned economy.

However, private enterprises are similar to public enterprises in that, unlike in a market economy, they do not earn revenue through monetary exchange. And to the extent that they receive products, services, etc. from public enterprises, given that economic planning extends to them indirectly, their management decisions will likely take on a public interest nature to a considerable extent.

However, private enterprises are permitted to engage in certain exchange transactions in the form of barter, and in that respect they have the freedom to engage in profit-making activities. To that extent, private companies are required to make profit-oriented business decisions, but these will naturally be different from the profit-making decisions made in a monetary economy where financial profit is the supreme goal.

Generally speaking, business decisions in a planned economy are not based on "how to make a profit" but on the public interest of "how to contribute to society." In this sense, "corporate social responsibility (CSR)," which in a market economy is at best a secondary responsibility of companies and is ultimately nothing more than an aid to PR, is thought to be embedded so much in the essence of corporate management that there is no need for such a specialized term.

👉The papers published on this blog are meant to expand upon my On Communism.

Chapter 11.5.

👉The table of contents so far is here.

Chapter 11: Planned Economy and Corporate Forms

11.5. Corporate internal structure -part 3-

The corporate forms we have looked at in the previous article were all examples of production organizations for general production activities. This time, we will overview special corporate structures in other fields.

First, primary industries such as agriculture and fisheries, which operate under a planned economy and based on production plan Divison B, are managed by socially owned production enterprises (Agricultural Production Organization and Fishery Production Organization). However, their internal structure differs from that of ordinary production organizations.

Because primary industries are highly regional, it makes sense to adopt a decentralized, regionally-based structure. The level of this structure is a matter of policy discretion, but to achieve a higher degree of intensiveness, a fairly extensive regional subsidiary structure would likely be required. 

While each of these local branches of production organizations has its own production organization structure, the central headquarters also has a management committee and a workers' representative committee composed of members elected from each branch.

Meanwhile, consumer business cooperatives are responsible for consumer activities based on local consumption plans. Unlike self-managed production cooperatives, these are a type of consumer cooperative organization in which all residents of each region are automatically enrolled.

As a result, their operations are based on a members' general meeting made up of member representatives, with joint decisions made by a board of directors responsible for management and a workers' representative committee made up of union employee representatives.

Another issue is the nature of public utility organizations involved in public services such as welfare, medical care, and education. Under capitalism, such public utility organizations are often given special legal personality as non-profit entities, but in a communist economy, since profit-making businesses disappear altogether, the distinction between profit and non-profit becomes unclear.

Therefore, it may be possible to consider that such public utility organizations could also be self-managed production cooperatives, but because they are different from simple production activities, they should be organized as special public utility associations/corporations, and in order to ensure the public interest in particular, in addition to a board of directors that is responsible for day-to-day operations, a permanent board of supervisors should be established as a supervisory and advisory body made up of external experts and citizens.

👉The papers published on this blog are meant to expand upon my On Communism.