Prices in a Socialist Economy

[the last donut of the night]

In today´s capitalist economy, prices are set according to (and correct me if I´m wrong) the value of the various commodities going into the product -- and that includes the value of labour as well. Prices are set to make a profit for the capitalist (again, correct me if I´m wrong here as well). So when capitalism is abolished, how would the price of products be set?

For example, if it takes a worker´s factory to make a car for 5,000 dollars (or whatever currency we might have -- Marx bucks :D), will it be sold to another worker´s collective for the same price?

Thanks. I kinda have a feeling I´m completely wrong here -- because I´m a novice to Marxism and its economics still confuse me --, so I´d really appreciate concise, well argumented responses. Thanks.:)

[Nwoye]

the very existence of a price system depends on the existence of a market - if markets are abolished, then with it goes the price system. Ideally, production would be coordinated between firms and municipal and regional councils where delegates planned productive output based on communication between different industries. So the delegate would come back to a factory and say "alright we need to make X amount of widgets and in return we're being reimbursed with Y amount of raw material etc etc." There are no prices.

Of course, if you believe in market socialism that's cool too, but most socialists and communists share the goal of abolishing the market.

[SocialismOrBarbarism]

The abolition of the market doesn't mean the abolition of "prices," it means the abolition of market prices. Prices could be based on labor values or energy accounting.


For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.

[Blake's Baby]

"From each according to their ability, to each according to their need".

Where do labour time vouchers, or any other system of accounting, come into that?

[Gustav HK]

"From each according to their ability, to each according to their need".

Where do labour time vouchers, or any other system of accounting, come into that?

I think that RedManatee meant the 1. state of communism or the Dictatorship of the Proletariat.

[Blake's Baby]

I'm not sure about that at all; "... when capitalism is abolished..." in RedManatee's post is a bit ambiguous, and sounds to me like the end result, not the process.

There would be no '5,000 marx dollars' or anything like. There would be no 'exchange' between factories or anything else. There would just be distribution of socially-useful goods. The Marx Engineering Works would produce buses (probably not cars comrade). The Engels Shoe Factory would produce shoes. The Malatesta Power Station would produce electricity. The Bakunin Bakery would produce sandwiches. They'd all pass them round until every community/soviet/factory committee etc had what it needed. No 'prices' necessary.

But I'll assume I misunderstood the question, and SocialismOrBarbarism's answer, which also to me looks like a retention of some sort of prices in post-capitalist society.

I think that in the transition to communism, there wouldn't be prices either, but there would be rationing, set by the soviets. But not 'prices' in any way.

[SocialismOrBarbarism]

I'm not sure why it's so surprising...that's straight out of Marx, the same work where he uses "From each according to their ability, to each according to their need." I don't view it as a goal at all.

Some of the posts above are what seem to give the economic calculation problem a semblance of accuracy.

[the last donut of the night]

Sorry guys about the ambiguity of the post. It´s what happens when one is confused. But I meant a socialist economy, seeing that we´ll have to take care of that before the communist stage. But my basic question is just how prices would be established. Or, as some of you said, there wouldn´t be prices? To Sedrox: no, I´m not a market socialist.

[JJM 777]

I personally don't believe that abolishing prices would be a good idea under any circumstances whatsoever, only excluding a Paradise where a very small population has infinite natural resources and commodities in their perusal.

In Socialism the price of everything would be set nearly in the same way as now happens, calculating the costs of human work, raw materials, as well as some kind of interest rate for the money invested in offices, factory building, tools etc.

[Yes this may sound un-Socialistic to talk about "interest rates" and "investments", but go try to arrange work for a nation of millions of people, you will soon notice that offices and factory buildings and tools are limited resources, so you must get some economical sense in where and how to invest them. Productivity comes from carefully calculated investments, otherwise we end up investing huge and expensive tools or buildings to work that produces little compared to the investment.]

The big differences between pricing in Socialism vs. Capitalism are:
- in Socialism the profit margins would be smaller than in Capitalism, covering only the planned future development of the trade (such as saving money for buying new tools or building a new factory after X years, etc.), without any artificial extra win margin going to the pockets of the "company owner" (or anyway the "owner" is the state, so all such extra win margins would go to the entire population generally)
- in Socialism you don't need to charge anything for making extra copies of music or computer games, also admission to sport events and music concerts etc. would be free, or anyway not punishing mass consumption as happens in free market style pricing