POLITICAL ECONOMY - SOCIALIST REPRODUCTION

Political Economy

Part III : THE SOCIALIST MODE OF PRODUCTION

B. THE SOCIALIST ECONOMIC SYSTEM

CHAPTER XXXIX : SOCIALIST REPRODUCTION

The Essence of Socialist Reproduction

Continuous renewal of the production of material wealth, or reproduction, is a condition for the existence and development of all societies, including socialist society.

The basic tenets of the Marxist-Leninist theory of reproduction retain their full force in both socialist and communist society: simple and extended reproduction, the total social product and the national income, the division of social production into the production of means of production and the production of articles of consumption, the priority growth of production of means of production under extended reproduction, accumulation as the only source of extended reproduction, the need for definite proportions between the different parts of the total social product. In planning the national economy, socialist society cannot avoid applying these propositions.

But reproduction in socialist economy is fundamentally different from reproduction under capitalism.

In conformity with the requirements of the basic economic law of socialism, socialist reproduction is subordinated to the purpose of securing the maximum satisfaction of the constantly growing material and cultural requirements of the whole of society, whereas capitalist reproduction is subordinated to the task of obtaining maximum profits for the capitalists.

Capitalist reproduction takes place blindly, and is periodically interrupted by economic crises, whereas development without crises, and continuous extended reproduction, are characteristic features of the socialist mode of production. The Socialist State takes the law of planned development of the national economy as its basis, and conforms in all respects with the requirements of the basic economic law of socialism. From this starting-point, through the planning system, it determines the rate of development of the national economy, the proportions and connections between its various branches, and the volume of accumulation and consumption.

The process of reproduction taken as a whole is primarily the process of reproduction of the social product. In the reproduction of the social product, the leading part is played by the reproduction of the means of production, primarily theinstruments of labour. Continuous augmentation and improvement of the instruments of labour is a necessary condition for technical progress. Socialist reproduction is carried out on the basis of a rising level of technique. In addition to the instruments of labour, other elements of the means of production are also reproduced—thus existing factory buildings are extended and new ones are erected and equipped, new means of transport are brought into being, and the production of raw materials is increased.

Extended reproduction of the means of production is a necessary condition for extending the production of articles of consumption (clothes, footwear, food products, etc.).

A high rate of reproduction of the social product is characteristic of socialist society. This is primarily because exploiting classes and their parasitic hangers— on do not exist in socialist society, there are no crises or unemployment, the labour resources of society are used in a planned and efficient way, and the productivity of labour increases consistently and rapidly. High rates of growth of the social product are made possible by socialist emulation and by socialist methods of economic management—systematic application of the regime of economy, use of national economic funds in a planned way, improvement of economic accounting, and constant reduction of the costs of production.

The following data indicate the high rate of socialist reproduction. The gross output of large-scale industry in the U.S.S.R. was 35 times as large in 1954 as it was in 1913 (in comparable prices)—the production of means of production was nearly 60 times, and of electric power more than 75 times as large. The chemical and engineering industries developed at an even more rapid rate. In the U.S.S.R. the total social product was already 11 times as large in 1954 as in 1928 (in comparable prices).

The rate of growth of industrial production in the U.S.S.R. is many times as great as in the capitalist countries. The average annual rate of growth of industrial output in the U.S.S.R. during the last 25 years (excluding the war years) was 18.2 per cent, while in the U.S.A. it was 2.4, in Britain 3.6 and in France 2.1 per cent.

In the process of socialist reproduction; labour-power is reproduced. The planned supply of labour-power to particular enterprises is one of the basic conditions for extended socialist reproduction. As the national economy expands, the size of the working-class continuously increases. Labour-power is attracted by individual enterprises and economic organisations for all branches of social production in an organised way. Industry, building, transport and agriculture are supplied with skilled labour, in conformity with the needs of the national economy, through the State system for training labour reserves, and through a special network of schools, training courses, technical colleges, and places of higher education. Labour is allocated in a planned way to branches of the national economy and particular enterprises. The continuous improvement of the level of skill and general culture of the mass of workers as a whole is a characteristic feature of the reproduction of the labour force.

In socialist society extended reproduction is also the extended reproduction of socialist relations of production.

This signifies reproduction of (a) socialist property in both its State and its co-operative collective farm forms; (b) relations of comradely collaboration and socialist mutual aid by the workers in the process of producing material wealth; (c) mutual relations between workers in the distribution of articles of consumption in conformity with the quantity and quality of the work of each worker.

Socialist relations of production are free from the extremely profound contradictions which are inherent in capitalist production relations. The reproduction of capitalist relations of production involves the increasing exploitation of labour by capital, and the growth and deepening of class contradictions between the exploiters and the exploited; and this inevitably leads to the revolutionary downfall of capitalism. The reproduction of socialist relations of production involves the strengthening of the alliance between the two friendly classes (the working class and the peasantry), and of the intelligentsia integrated with them; the consolidation of the moral and political unity of society; and the gradual effacing of class boundaries and social distinctions between man and man. In the process of extended reproduction there takes place the gradual transition from socialism to communism.

The National Wealth of Socialist Society. The Structure of the Total Social Product

The national wealth of socialist society consists of all the material wealth which is at its disposal.

(1) The first element in the national wealth of socialist society is the production funds of the economy, i.e., the means of production. These are subdivided into (a) the fixed production funds, and (b) the circulating production funds of the national economy. The national wealth of socialist society also includes natural resources which have been involved in the process of reproduction (cultivated land and land suitable for cultivation, mineral deposits, forests, waters, and so on).

The fixed production funds of the national economy are State or co-operative collective farm means of labour which function in all branches of material production (buildings used for production, machines, machine tools, equipment, installations, etc.). The circulating production funds of the national economy are the objects of labour, which are both engaged in the production process itself and held in stock by State enterprises, collective farms and other co-operative bodies (raw materials, fuel, etc.).

(2) The second element in the national wealth is the circulation funds of the national economy. They include stocks of finished output stored by State productive enterprises, collective farms, producers’ co-operatives, and State and co-operative trading enterprises and organisations.

(3) The third element in national wealth is the material reserves of the State and the co­operatives and collective farms, together with emergency stocks.

(4) The fourth element in the national wealth is the non-productive funds of the national economy representing State or co-operative collective farm property which serves the purpose of non-productive consumption over a long period: the housing fund and the buildings of cultural and welfare bodies (schools, theatres, clubs, hospitals, etc., with t]1eir equipment).

Such are the main elements of the national wealth representing social, socialist property. The national wealth also includes the personal property of the population, personal property which increases on the basis of the continuous growth of social, socialist property. An important part in the reproduction of material wealth is played by the accumulated experience in production, the knowledge and skill of the working people of socialist society, and the varied spiritual wealth of the country. "The level of skill of the existing population is always a prerequisite of all production, and is therefore the main accumulated wealth." (Marx, Theories of Surplus-Value, 1936, Russian edition, Vol. III, p. 229.)

During the Soviet Five-Year Plans the national wealth of the U.S.S.R. increased tremendously. The fixed production funds of the economy alone had grown six-fold in comparison with 1913 by the end of 1940, and about twelve-fold by the end of 1954.

Under capitalism by far the larger part of the national wealth belongs to the exploiting classes, and wealth is augmented in the form of the accumulation of capital, leading to the impoverishment of the mass of the people. Capitalist relations give rise to fictitious wealth, represented by shares, the price of land, etc. In socialist society the whole of the national wealth is the property either of the State (i.e., of the whole people), or of the collective farms and other co­operative organisations, or is the personal property of the working people. Socialism knows no such thing as fictitious wealth: all the wealth of socialist society is real wealth. As the national wealth of socialist society grows, the material well-being and the cultural level of the whole people rise.

National wealth includes all the material wealth which is possessed by socialist society at a given moment. In other words, the national wealth reflects the results of the whole preceding development of society. The total social product, on the other hand, represents the material wealth created by society over a particular period, such as a year.

The social product in socialist economy arises in two forms: (a) the physical or material form, and (b) the value or monetary form. The total production of socialist society is divided into two large departments: the production of means of production which are to re-enter the process of production (Department I), and the production of articles of consumption, which are to satisfy the needs of the population (Department II). In conformity with this, the social product in its physical or material form falls under either means of production or articles of consumption.

In practical economic activity the division of the total social product into means of production and articles of consumption takes place as a rule in accordance with the actual utilisation of the output. Department I comprises all production devoted to productive needs. It includes the products of heavy industry consisting of means of production, part of the products of the light and food industries, which are used as raw material and are processed, buildings used for production purposes, and also agricultural products used productively—seeds, cattle, fodder and agricultural raw material for use in industry.

Department II comprises all production devoted directly to satisfying the personal needs of the population, including housing, and also that part of the social product expended in institutions and organisations of the non-productive sphere, for instance, construction of schools and hospitals, and the heating and lighting of non-productive buildings, etc.

In Department I it is essential to distinguish between the production of means of production for Department I and the production of means of production for Department II. The production of means of production, and especially the production of instruments of labour for Department I, plays the leading role in the process of reproduction.

Extended socialist reproduction requires the constant renewal and increase of the production of both means of production and articles of consumption, in the definite proportions laid down by the national economic plan.

In its value the social product is divided into: (1) the value of used-up means of production, which has been transferred to the product; (2) the new value which labour has created for itself; (3) the new value which labour has created for society. The social and economic nature of each of these parts of the value of the social product is essentially different from its nature under capitalism. In the process of socialist reproduction, national economic funds function in place of constant and variable capital, and the net income of society takes the place of surplus-value.

The process of socialist reproduction presupposes in the first place that the used-up means of production are replaced according to plan by a definite part of the total social product, in kind and in value. Fixed funds are replaced in kind by partial or complete substitution of new for old machines, buildings and plant. Fixed funds are replaced in value through the depreciation fund. The depreciation fund of the national economy in the U.S.S.R. is set aside to make possible the capital repair of fixed funds during the whole period in which they function, and the replacement of the value of those which have been used up.

The process of socialist reproduction also presupposes that articles of consumption must be newly created by workers in material production to replace those which have been distributed according to work done and used to meet the personal needs of these workers and their families.

Finally, in the process of socialist reproduction the workers in material production create by their labour the product for society, earmarked for socialist accumulation and for the satisfaction of the material and cultural needs of society (education, health, administration, and the defence of the country).

The Relationship between the Two Departments of Social Production

Through the planning system there are established in the process of socialist reproduction’ the necessary proportions between the production of means of production and the production of articles of consumption, between the various branches of the national economy, between production and circulation, between accumulation, consumption, reserves, and so on. These proportions are established in conformity with the requirements of the basic economic1aw of socialism and the law of planned (proportionate) development of the national economy. The most important proportion in socialist reproduction is a correct relationship between Department I and Department II. Department I, producing the means of production, plays the determining role in the whole economy. Without priority for the growth. of production of the means of production, extended reproduction is altogether impossible:

"To expand production (to ‘accumulate’ in the categorical meaning of the term) it is first of all necessary to produce means of production, and for this it is consequently necessary to enlarge that department of social production which manufactures means of production." (Lenin, A Characterization of Economic Romanticism, Moscow, 1951, English edition, p. 44.)

Lenin described priority for the growth of production of the means of production, relative to the production of articles of consumption, as an economic law in conditions of extended reproduction.

The law of priority growth of the production of means of production assumes even greater importance under socialism than under capitalism. A more rapid growth of Department I compared with Department II is a necessary condition for ensuring the uninterrupted advance of socialist production on the basis of higher techniques.

Priority for the growth of the production of means of production (above all, of heavy industry) is a necessary pre-requisite for the extensive introduction of up-to-date technique into all branches of socialist production and the systematic raising of the productivity of labour.

Priority for the growth of production of the means of production means that industry develops more rapidly than agriculture. In socialist economy proportions between industry and agriculture are fixed in such a way as to make possible the continuous growth of agricultural production as well as industrial production.

Only the priority for the growth of production of means of production—and that growth more rapid than under capitalism—can ensure a systematic increase in the production of consumer goods and steady improvement in the people’s welfare. Uninterrupted and rapid growth of heavy industry, running ahead of the growth of the other branches of industry and the national economy, is the indispensable condition for stable progress in agriculture and in the light and food-producing industries which produce consumer goods.

Thus in conditions of extended socialist reproduction in which rapid technical progress is taking place, it is a characteristic of the development of production that branches producing means of production (Department I) grow more rapidly than branches producing articles of consumption (Department II). At the same time, in socialist society, the production of articles of consumption increases continuously in absolute terms; this is expressed in the growth of the output of agriculture and of the light and food-producing industries, in the expansion of house-building in town and country, and in the extension of commodity turnover.

The proportion of means of production to total industrial output in the U.S.S.R. was 34 per cent in 1924-5, 58 per cent in 1937, and approximately 70 per cent in 1953.

The industrial production of consumer goods in the U.S.S.R. increased fourteen-fold between 1925 and 1954. Home trade in 1954 was more than nine times as great as in 1926 (in comparable prices).

The priority growth of the production of means of production as the economic law of extended reproduction does not exclude the fact that in particular years it may happen to be practically expedient and necessary, in order to put an end to lagging behind in the production of consumer goods, and to overcome the partial disproportions arising from this, to make this production catch up, accelerating the development of certain branches of agriculture or of the light or food-producing industries.

Thus, in recent years the Communist Party and the Soviet State, basing themselves on the uninterruptedly growing might of heavy industry, have worked out and are successfully putting into effect a complete programme for a sharp rise in agricultural production. Fulfilment of this programme will enable the tempo of growth of the production of consumer goods to be accelerated and a further rise in the standard of living of the Soviet people to take place. The carrying out of these tasks demands a steady growth of heavy industry. Without machinery, without all-round mechanisation of arable and livestock farming, a sharp rise in agricultural production cannot be secured. All this testifies to the fact that priority growth of the production of means of production is an indispensable basis for the general line of development of socialist economy.

"The results of industry’s work during the last few years confirm anew the correctness of the general line of our Party on priority development of heavy industry. In steadily carrying out this line, the Party has been guided by the behests of the great Lenin on the need for more rapid development of the production of means of production, as compared with the production of consumer goods, as the indispensable condition of extended socialist reproduction.

"Heavy industry must, as before, develop faster than the other branches of the national economy. The higher the level of development of heavy industry in our country, determining the further advance of all branches of the national economy, the more fully shall we be able to satisfy the continually growing demands of the Soviet people and the more rapidly to create an abundance of consumer goods and effect the transition from socialism to communism." (Decisions of the July, 1955, Plenum of the Central Committee of the C.P.S.U.)

In 1955 industrial production of consumer goods (group B industries) was 72 per cent higher than in 1950 (as against the 65 per cent provided for in the Five-Year Plan). At the same time, the production of means of production (group A industries) was 84 per cent (compared with 80 per cent, the figure laid down in the Plan). The rapid growth of heavy industry has created a firm basis for successful development of the light and food-producing industries and of agriculture.

How does exchange take place in socialist economy between Department I and Department II and within each of these Departments?

In the first place, exchange takes place between the different branches of Department I.

Part of the means of production created in Department I remains in that Department and enables simple reproduction to take place. This part is used to replace means and objects of labour which have been partly or fully used up (replacement of worn-out machines, capital repair of equipment, renewal of consumed stocks of raw materials, and so on). A second part of the means of production ensures extended reproduction in the various branches of the economy which form part of Department I. For example, the coal and oil industries supply fuel to the engineering branches and receive from them the equipment they themselves need; the metallurgical industry supplies the building industry with the metal it needs, and in its turn uses raw materials from the ore-mining industry to increase the quantity of metal smelted, and so on.

Thus exchange takes place according to plan between the branches of Department I, involving those means of production which are used to maintain and extend production in these branches. As was stated above, within the limits of the State production sector the means of production which are produced are not in essence commodities, but are distributed as material and technical supplies, retaining merely the form of commodities.

Secondly, exchange takes place between the different branches of Department II. The output of Department II consists of articles of consumption. Part of this output is transferred to workers in the Department for their personal consumption: it is exchanged, through the channels of commodity circulation, for the wages of workers and employees and for the money incomes of collective farmers. Some of the articles of consumption produced in the collective farms are distributed and consumed in the collective farms themselves, and do not assume the form of commodities or pass through the channels of market circulation.

Thirdly, exchange takes place between Department I and Department II. Part of the means of production produced in Department I have to be used to replace means of labour which have been partly or fully used up in Department II, to renew stocks of raw and other materials, and of fuel, which have been consumed in that Department, and to enlarge the means of labour and stocks of raw and other materials and fuel which Department II needs for extended reproduction. Part of the output of articles of consumption in Department II is exchanged through the trade network for the wages of workers in Department I. The rate at which production is extended and technical progress advances in the branches of Department II depends primarily on the quantity and quality of the means of production which they receive from Department I. The leading role of Department I in relation to Department II is determined by this fact.

Lenin pointed out that Marx’s formula on the relationship between Departments I and II of social production—the relationship of I (v +s) to Ilc— remains in force for socialism and communism. However, the social and economic relations concealed behind this formula are radically changed.

Under extended socialist reproduction Department I must produce sufficient means of production to make possible the continuous growth of production, on the basis of a rising technical level in both Departments, with a more rapid growth in Department I. On the other hand, Department II must produce sufficient articles of consumption to satisfy the continuously growing needs of workers in both Departments (both those who were working previously, and new workers who have been drawn into production), and of workers employed in non­productive branches. In each particular period part of the means of production and articles of consumption which are produced is used to increase reserves.

In the anarchical conditions of capitalist production, in which the demand of the mass of the working people is restricted in terms of available purchasing power, the most difficult problem for capitalist reproduction is that of the realisation of the social product. Socialist production develops according to plan and without crises, and does not come up against the difficulties of realisation, which are inherent in capitalism. This is because the uninterrupted growth of the purchasing power of the population creates a constantly expanding demand for the output of industry and agriculture.

However, this does not mean that in the course of extended socialist reproduction particular proportions in the national economy may not sometimes be disturbed; for example, through miscalculations in planning, as a result of not taking the requirements of the law of planned development of the national economy sufficiently into account; or natural calamities may occur, such as droughts, which have a harmful influence on production. The Socialist State sets aside the necessary reserves to forestall or eliminate the individual disproportions in the economy which arise from such causes.

The Formation and Function of Social Funds in Socialist Economy

The socialist mode of production also determines the forms of distribution of the total social product appropriate to it. Society, in the person of the Socialist State, distributes the social product in a planned way in conformity with the requirements of the basic economic law of socialism.

As stated earlier, the total social product, after subtraction of the part which is used to replace means of production which have been consumed, forms the national income of socialist society. The national income is divided into two large funds, the accumulation fund, which is used to bring about the continuous growth and improvement of socialist production, and the consumption fund, which is used to satisfy the continuously growing material and cultural needs of the whole of society.

The bulk of the accumulation fund is allocated to the extension of production. The scale of production in socialist society grows regularly from year to year, and at rates which the capitalist world has never achieved.

A second part of the accumulation fund is allocated to capital construction in the cultural and welfare field. This includes carrying out capital work on a vast and increasing scale in the building of schools, hospitals, and municipal institutions.

Finally, a third part of the accumulation fund forms the reserve or insurance fund of society. State reserves of raw materials, fuel and foodstuffs, and reserve funds in the collective farms, make it possible to avoid hold-ups in the process of reproduction.

The consumption fund in its turn consists of two parts. The basic part of this fund is the fund for the payment according to work done of workers in socialist production, which is used, in accordance with the economic law of distribution according to work done, to pay wages to the manual and clerical workers employed in production, to pay for the work of collective farmers, etc. A second part is the fund of social consumption, used to cover the varied needs of socialist society as a whole.

Part of the fund of social consumption is expended on social and cultural purposes: it covers the growing needs of socialist society in science, education, health, the arts, and other branches of culture and welfare. It is from this fund that, in conformity with the economic law of distribution according to work done, the workers in the cultural and welfare services receive their wages.

Chart of the Distribution of the Total Product in Socialist Society

Part of the fund of social consumption forms the social security fund, which provides State assistance to mothers with many children, and those without a breadwinner, to children, old people and invalids, in conformity with the right, recognised by the Soviet State, to material security when incapable of work and in old age.

Part of the fund of social consumption is used to cover outlays on administration—to pay workers in the machinery of government, etc.

Part of the national income is used for the defence needs of the country. While the danger exists of military attacks on the U.S.S.R. by imperialist aggressors, it is of extremely great importance to strengthen the defensive capacity of the land of socialism.

As pointed out earlier, the greater part of the national income (about three-quarters) is expended on satisfying the personal material and cultural needs of the working people in the U.S.S.R.

Socialist Accumulation. Accumulation and Consumption in Socialist Society

The source of extended socialist reproduction is socialist accumulation. Socialist accumulation is the utilisation of part of the net income of society, consisting of means of production and articles of consumption, to extend production, and also to constitute material reserves and increase the non­productive social and cultural funds.

As a result of socialist accumulation there is a growth of material values owned by the State, the co-operatives and the collective farms. This means an increase in the national wealth of socialist society. The accumulated part of national income is also expressed in money terms. The major part of the monetary accumulations of all branches of the national economy, and part of the money in the hands of the population, is mobilised through the State Budget for public needs.

Socialist accumulation takes place by means of capital investments in the national economy. Capital investments are the total outlays used over a particular period to create new productive and non-productive fixed funds and to reconstruct those already in existence. A certain part of the capital investments in the national economy is used to replace fixed funds which have been consumed. In a planned and systematic way the Socialist State carries out capital works on a vast scale, such as the building of new factories, works, power-stations and mines, and the extension of existing ones, and the building of State farms, machine and tractor stations, means of transport and communications, housing, schools, hospitals and. children’s institutions.

The volume of State capital investments in the national economy of the U.S.S.R. was as follows (in present prices):

1929-32 68 milliard roubles.

1933-37 158 milliard roubles.

1946-54 over 900 milliard roubles.

Capital investments are mainly allocated to the extension of socialist industry. From capital investments more than 1,500 large-scale industrial enterprises were built and put into operation during the first Five-Year Plan, 4,500 during the second, and approximately 3,000 during the 31/2 years of the third Five-Year Plan. In 1946-54 more than 8,000 State industrial enterprises were constructed or rebuilt. Many thousands of cultural and welfare institutions were set up in addition to industrial and agricultural enterprises.

Socialist accumulation is based on continuously increasing the productivity of social labour and systematically reducing the costs of production.

In socialist economy there is a high rate of accumulation, such as capitalism has not achieved even in the most favourable periods of its development. This is because socialist economy is planned and free from crises, the level of capital investment in the national economy is high; means of production and labour resources are used in social production in a planned and rational way, and parasitic consumption is absent.

In the U.S.A. in 1919-28 the proportion of the national income allocated to accumulation averaged IO per cent, and in the decade from 1929 to 1938 it averaged only 2 per cent. In the U.S.S.R. the fund of accumulation (including reserves) is approximately one-quarter of the national income.

Socialism has abolished the antagonistic contradiction between production and consumption which is characteristic of capitalism. Extended socialist reproduction is based on priority growth of the production of means of production, and along with this presupposes a steady increase in production of consumer goods.

Under capitalism articles of consumption are divided into the necessary means of consumption of the working masses and luxury goods which form part of the consumption fund only of the exploiting classes. This division is inherent in capitalism and is caused by the existence of antagonistic classes. In socialist society it does not exist; the whole consumption fund is allocated to the’ working people.

With the development of production, the growth of the national income, and the increase in the volume of socialist accumulation, the consumption funds also increase, and the social and personal needs of the working people are satisfied more and more fully.

The growth of consumption by the people is accompanied by an improvement in its structure: the proportion of high quality goods and products in the consumption funds continuously increases. From 1947 to 1954 the sale of white bread to the population increased by more than 600 per cent, of meat products 150 per cent of animal and vegetable fats more than 100 per cent, of sugar almost 500 per cent, and of fruits more than 250 per cent. In 1940 manufactured commodities constituted 36.9 per cent of trade turnover, and in 1954 45.2 per cent.

All this means that socialism has an economic law of accumulation which is characteristic of it. The law of socialist accumulation involves the continuous growth of national wealth by means of the consistent utilisation of part of net income to extend production, so that the growing needs of the whole of society may be satisfied. As a result of the general law of capitalist accumulation, increases in the wealth of the exploiting classes are inevitably accompanied by the impoverishment of the mass of the working people. In contrast to this, the operation of the law of socialist accumulation has the result that, as the national wealth increases, so the material and cultural level of the people consistently rises.

Through the planning system the Socialist State fixes for each period definite proportions between the accumulation and consumption funds, taking as its starting point the fundamental tasks of the construction of communism. The Communist Party and the Soviet Government by carrying out far-reaching measures to secure a sharp advance in agriculture and the development of industries producing consumer goods are ensuring an increase in the production of food and manufactured consumer goods.

All aspects of extended socialist reproduction—production, distribution, circulation and consumption—in their unity and inter-connection, are covered by the balance-sheet of the national economy of the U.S.S..R. This balance-sheet, embodied in the national economic plan, expresses the whole process and results of extended socialist reproduction.

In socialist society the capitalist law of population has completely lost its validity. As a result of the operation of that law, parallel with the growth of social wealth, an increasing part of the working population becomes surplus and is driven out of production into the ranks of the unemployed. The socialist system ensures full employment to the whole able-bodied population, and therefore surplus population does not and cannot exist. The population grows continuously and rapidly; the level of material welfare of the people is high; the morbidity and death rates are low, while the able-bodied section of the population is employed fully and rationally. These features together constitute the essence of the socialist law of population.

The average annual net growth of the U.S.S.R. population from 1926 to 1939 was approximately 2 millions, or 1.23 per cent. Over the same period the average annual net growth of the population was 0.08 per cent in France, 0.62 per cent in Germany, 0.36 per cent in Great Britain, and 0.67 per cent in the U.S.A. In recent years the average annual net growth of the U.S.S.R. population has been more than 3 millions. In 1954 the death-rate in the U.S.S.R. was less than half that in 1927, and less than one-third that in 1913. The death-rate is lower in the U.S.S.R. than in the U.S.A., Great Britain or France.

Thus the characteristic features of socialist reproduction are as follows: the whole of social production expands continuously and in a planned way, at a high rate which capitalism is unable to achieve; the size of the population as a whole, including the working class and the intellectual workers, increases consistently and rapidly; the material welfare and cultural level of the mass of the people increases continuously.

BRIEF CONCLUSIONS

(1) Socialist reproduction is the continuous extended reproduction of the total social product, of labour-power, and of socialist relations of production. The advantages of socialist national economy, its planned development without crises, make possible its continuous growth and a. high rate of extended socialist reproduction.

(2) The national wealth includes all the. material goods which are at the disposal of socialist society. National wealth is made up of the following constituent parts: fixed and circulating production funds of the national economy; funds of circulation; State and co-operative collective farm material reserves and insurance stocks; non-productive funds; and the personal property of the population.

(3) The social product under socialism has two forms, the physical form and the form of value. All of the production of the social product in socialist economy is divided into the production of means of production (Department I) and the production of articles of consumption (Department II). The social product in terms of value includes: the value of means of production which have been consumed; the newly-created value produced by labour for itself; and the newly-created value produced by labour for society. Extended socialist reproduction presupposes that the necessary conformity (proportionality) is maintained between all parts of the social product both in its physical and its value forms. Extended socialist reproduction takes place on the basis of the economic law of priority; that is, more rapid growth of production of means of production (and, first and foremost, of heavy industry), compared with production of consumer goods.

(4) In socialist society the social product is distributed so as to make possible a continuous increase in socialist production in town and country, the satisfaction of the continuously growing material and cultural needs of socialist society, and the growth of the economic power and defensive capacity of the country.

(5) Socialist accumulation is the utilisation of a part of the net income of society, consisting of means of production and articles of consumption, for the extension of production, the formation of social reserves, and the enlargement of non-productive social and cultural funds. Socialism is free from the antagonistic contradiction between production and consumption which is inherent in capitalism. In contrast to the general law of capitalist accumulation, in virtue of which increases in the wealth of the exploiting classes are inevitably accompanied by the impoverishment of the mass of the working people, the operation of the law of socialist accumulation leads to a consistent rise in the material and cultural level of the people side by side with the growth of national wealth.

(6) In the socialist system the capitalist law of population has lost its validity. The socialist law of population is expressed in the continuous and rapid increase of the population, and in the rational and full employment of the able-bodied section of the population in the interests of society as a whole.