Chapter 14.1.

👉The table of contents so far is here.

Chapter 14: Planned Economy and Consumer Life

14.1. Mode of production and mode of consumption

In the introduction to the Grundrisse der Kritik der Politischen Ökonomie, Marx states that "consumption creates the desire for new production and is thus the prerequisite for production," and points out that "the manner of consumption is produced not only objectively but also subjectively by production." In other words, the mode of consumption also depends on the mode of production.

In this passage, Marx cites an interesting example contrasting hunger satisfied by eating cooked meat with a fork and knife with hunger satisfied by devouring with one's hands, nails, and teeth. However, this example is somewhat inaccurate. This is because the former presupposes that meat and tableware are products, regardless of their form, while the latter suggests the consumption behavior of hunter-gatherers who do not engage in productive activities.

Even in the former example, there is a significant difference in the mode of consumption between when meat and tableware are self-sufficient and when they are mass-produced as commodities. The former corresponds to the consumption pattern of pre-capitalist agricultural societies, while the latter corresponds to the consumption pattern of commodity production societies.

In today's capitalist mode of production, as is well known, the mass production-mass consumption mode, in which mass-produced goods and services are acquired and consumed in exchange for money, has taken root, and people normally purchase mass-produced meat and tableware.

In contrast, in the communist mode of production, where commodity production is abolished, meat and tableware are not produced as commodities, but are supplied free of charge as non-commodities.

Turning to the method of acquisition of products, in a capitalist market economy, products are, in principle, acquired in exchange for money on the market, and ordinary consumers usually provide the monetary compensation earned through wage labor as a means of exchange.

In contrast, in a communist society, wage labor, which commodifies labor power, is abolished, and so labor and consumption are separated. In slogans, it is "from each according to his ability (work), to each according to his needs (distribute)."

Therefore, regardless of the type of work, everyone can acquire the goods and services they need free of charge. In the previous example, each person would be able to obtain as much meat and tableware as they needed.

However, with this type of consumption pattern, there is no restraint like the amount of money on hand, which in a capitalist market economy is also used to limit consumption, and so there is a risk of falling into a "shortage economy" where shortages of goods become chronic, with people monopolizing everything or high-demand items running out. Therefore, in order to avoid such problems, it is essential to take measures to limit the amount of acquisition at the supply end.

This type of consumption pattern is similar to a rationing system, but unlike a rationing system, which limits the types of goods supplied, there is no limit to the types of goods and services supplied, and everyday necessities and services are generally supplied free of charge. However, for unusual luxury or rare items, barter practices will likely be used.

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

Chapter 13.4.

👉The table of contents so far is here.

Chapter 13: Chapter 13: Planned Economy and Working Life

13.4. Labor disputes

Since labor-management conflicts are sublated in communist enterprises, serious collective labor disputes are generally not expected. However, individual disputes over working conditions and other issues may arise between workers and their respective enterprises. To address such disputes, communist enterprises, which are based on worker participation, must also incorporate a dispute resolution function (in-corporate judicial system).

The third-party organization responsible for such in-corporate judicial system is the "Labor Arbitration Committee." This is an arbitration body composed of external lawyers with no vested interest in the company. It accepts consultations from troubled workers and mediates disputes.

Workers dissatisfied with the arbitration proposal submitted by the committee can file a complaint with the Labor Tribune, a judicial body specializing in the protection of basic labor rights (see my article for more on the Labor Tribune in general).

All enterprises, except for small-scale cooperative labor groups, are required to have a permanent labor arbitration committee. Labor disputes cannot be filed with the Labor Arbitration Commission unless they have first been arbitrated by the company's internal labor arbitration committee (the principle of prior arbitration).

As mentioned above, collective labor disputes that go beyond individual labor disputes are difficult to imagine in communist enterprises, where worker participation in management is fundamental. Wage disputes, which account for almost all labor disputes in capitalist societies, are particularly unthinkable in a communist society where wage labor has been abolished.

Therefore, while collective labor disputes can be considered unimaginable in the first place, if they do arise, the basic approach is to resolve them through consultations with the responsible management body via a workers' participation organization. As mentioned last time, there is no formal labor union system in a communist society.

In extreme conflict situations that cannot be resolved even through workers' participation organizations, it is not necessarily prohibited for willing workers to form a union and take industrial action such as a strike. That said, the "right to strike" is not openly recognized as in a capitalist society, and dismissal for industrial action is possible, although the appropriateness of such disciplinary action will be left to the discretion of the Labor Tribune on a case-by-case basis.

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

Chapter 13.3.

👉The table of contents so far is here.

Chapter 13: Planned Economy and Working Life

13.3. Management participation

In capitalist enterprises, management and labor are generally strictly separated. Even if labor unions have the right to negotiate, they cannot intervene in management itself. This is because capitalist enterprises are based on strict class distinctions and superiority-subordinate relationships between labor and management.

In contrast, in communist enterprises, worker participation in management is a common element, although the degree and method vary depending on the type of enterprise. This issue has already been discussed in Chapter 11, but I would like to summarize it again here from a labor perspective.

In communist enterprises, worker participation in management is roughly divided into indirect participation through worker representative committee in large enterprises where management and labor are inevitably separated, and direct participation through general staff assembly in small and medium-sized enterprises where management and labor are integrated. However, in either case, these worker participation bodies retain the right to co-decision-making with the management body regarding issues related to working conditions and benefits. 

Co-determination means that matters relating to working conditions and employee benefits must be decided based on agreement between the management body and the worker participation body. It also means that worker participation bodies have the right to make proposals to the management body regarding these issues, and can request that specific management issues that affect working conditions and employee benefits be taken up as matters for co-determination with the management body.

Applying this analogy to a capitalist enterprise, issues relating to working conditions and employee benefits are essentially matters for co-determination between the management body and the in-house labor union. However, since labor unions in capitalist enterprises are ultimately organizations outside the company, true co-determination between labor and management is not possible.

In a communist enterprise, there is no need for external labor union organizations. This is because in-house worker participation bodies are, so to speak, labor unions that have been internalized within the company.

However, this does not mean that the formation of labor unions is prohibited. However, since workers generally act through internal company participation organizations and labor unions are merely external, informal organizations, companies are not obligated to consider labor unions as official negotiating partners.

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

Chapter 13.2.

👉The table of contents so far is here.

Chapter 13: Planned Economy and Working Life

13.2. Labor standards

Labor standards in a capitalist market economy are governed by the correlation between wages, which are the compensation for working (i.e., the price of labor as a commodity), and working hours. In other words, the basic principle is to guarantee wages commensurate with the hours worked and to regulate working hours commensurate with wages. However, in reality, this includes a large amount of unpaid work time, which is the source of "surplus value" in the Marxian sense.

Labor standards under a communist planned economy based on unpaid labor lack a compensation system known as wages, so labor standards are governed solely by working hours. While the determination of legal working hours is a policy decision, if a planned labor allocation system is established, so-called work-life balance can be implemented uniformly as part of a labor plan, rather than simply a matter of slogan or corporate effort.

For example, it would not be impossible to make a four-hour workday (half-day work), half the current number, the norm, in combination with planned work sharing. When it comes to unpaid work, discretionary work systems become easier to introduce and expand, and one might wonder whether regulations on statutory working hours will become meaningless. However, when it comes to unpaid work, time is the only absolute regulatory framework.

Furthermore, unlike labor standards in a market economy, which tend to focus on wage issues, a planned economy will likely cover a wide range of labor issues that cannot be resolved through wage issues, such as work environment issues, measures to prevent workplace harassment, and employment discrimination based on gender or other attributes.

Because capitalist labor standards are a type of economic regulation that is  late-coming and external to capital's activities, profit-seeking businesses have a hidden intention to circumvent these regulations as much as possible. This necessitates a labor standards inspection system backed by penalties, but even this often does not function effectively.

Communist labor standards are fundamental and inherent value standards, and businesses that do not need to consider profits have no incentive to circumvent them. Therefore, although it is not true that a labor standards inspection system will no longer be necessary, a system such as labor standards inspectors with police powers will no longer be necessary, and labor standards will likely be guaranteed through something like an internal arbitration system within companies (as will be discussed later in Section 4 of this chapter.).

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

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.