How will money be distributed or abolished in a socialist society?

[CaptainCool309]

This topic has been confusing me and bugging me for a while, and I apologize for the walls of text, but was wondering if you guys could help me out of my ignorance in understanding this better. Here's how it all started...

I go to a Catholic high school, and earlier this year my religion teacher devoted two days of class-time to the Catholic Church's socioeconomic views. She laid out the blueprint that the Catholic Church (with Pope Francis leading the charge) has kind of a "social-democrat" socioeconomic view. We spent the first day in class talking about the problems of Laissez-faire capitalism (we actually got to read some Marx I was happy) and the second day we talked about the problems of "extreme" socialism and how the Catholic wants to find a the right "balance" between the two extremes of capitalism and socialism.

Now when she was critiquing socialism, she claimed that one of the problems with socialism is that in a socialist society everyone would get paid the same amount of Money and that would be unfair to doctors and such and such and it would lead to a lack of incentive which would ultimately lead the the demise of the socialist society, "just as history has shown us."

Now at this time, I was starting to get more interested in Socialism, (In fact a couple weeks after this I made a RevLeft account to get more knowledge about Socialism) but I was still very ignorant about Socialism, and I didn't respond to her attack on Socialism, because I didn't know how to and I didn't want to get embarrassed in front of the class. So I went home after school and asked my Dad (who is a "European Style" social-democrat) if this was true. Will Money be distributed equally in a Socialist Society? He responded by saying that what my religion teacher said was a load of "Egalitarian Crap!" And he followed it up by saying that if I wanted to see how a successful socialist model looks like I should go to France, or Germany, or the Scandinavian countries. "They have a successful socialist model over there, and the Doctors get paid more than the janitors over there, so there's no need for all this Egalitarian talk."

At this point I was really confused about what Socialism really is. But over the past few months I have been learning more and more about Socialism through watching YouTube videos, reading books, or reading RevLeft discussions, I have come to the conclusion that the socialism my Dad believes in isn't a good definition of Socialism, and the same goes for my Religion teacher's definition of it. (Which is the The-State-Owns-Everything definition) And I gained a new but important bit of knowledge, and that was many Socialists want to actually get rid of money altogether, to from a Classless, Stateless, and Moneyless society where the workers control the means of production, distribution, and exchange.

So, that brings me back to the question that given me so much confusion. How will money be distributed in a socialist society, or how will it eventually be abolished? Will everyone get paid the same amount of money as my religion teacher says? Were there "Socialist" countries in History or that still exist today that give everyone the same amount of money for their jobs? And if socialists really want to get rid of Money altogether, how will that happen? Will we just get rid of Money right off the bat? Eventually ween our way away from it? Or replace it with something along the lines of a Labor Credit system? Do Marxists and Anarchists have differing views on this or a similar consensus? I've searched about this topic online, and the best sources of information I could find were a few old similar RevLeft topics, and an article in the Online Newspaper Red Phoenix called: Myths About Socialism: Under Socialism, is Everyone Equal? But I still haven't found a simple answer I can feel confident about explaining to people.

[RedWorker]

First of all, "socialist" is a term taken by a thousand different political tendencies. However, all genuine socialists agree on the definition that socialism means that the means of production are managed by society or workers.

Advancing the proletariat's class interests to their logical extreme - the means and goal of the communists - will result in the end of money. Rather than be abolished, it will be made superfluous; in a manner similar as the withering away of the state.

In short, when the means of productions are managed by society, and are run to benefit society, non-scarce goods will be made of free access. Therefore, money will be rendered useless, although similar concepts may be used administratively, to handle resources - which would be completely different to how we understand our money today.

Once free access to goods is made available, why would someone work for someone else in exchange of money? It would be useless. Why should someone buy something, when he can get it for free?

Some form of barter, perhaps in cases of rare items, may still exist, but it will be unable to harm the system.

Now, what could happen between now and the end of money? A lot of things may happen.


She laid out the blueprint that the Catholic Church (with Pope Francis leading the charge) has kind of a "social-democrat" socioeconomic view.The Church has been one of the most reactionary institutions in history, even if Pope Francis may personally be a social-democrat.

An interesting fact related to religious leaders is that the current Dalai Lama labels himself a communist and a Marxist.


the right "balance" between the two extremes of capitalism and socialism.Either capitalism or socialism, there is no balance. She is talking about a balanced amount of left politics within capitalism.


Now when she was critiquing socialism, she claimed that one of the problems with socialism is that in a socialist society everyone would get paid the same amount of MoneyMaybe in the socialist society certain people imagine, that would be so. Rather, however, socialist society would inevitably lead to free access to goods; which would result in the withering away of money.


and that would be unfair to doctors and such and such and it would lead to a lack of incentive which would ultimately lead the the demise of the socialist society, "just as history has shown us."Why? We are at a stage in which we have overcome scarcity. Therefore, goods can be distributed on the basis of free access. Should we limit access to goods merely to "incentive" people? In fact, it is the opposite. In the current system, only a minority can become doctors, for instance. In a socialist society, however, everyone will be able to study and work where he wants. The lack of free access to goods generates inequality, and if you e.g. are born in a poor family, no matter what social-democrat politics are in place, you likely will not be able to study what you want. Even in the case that studying was completely free, you may need to e.g. get a shitty job quickly because you or your family needs money.

History has shown us nothing like that.


socialist model looks like I should go to France, or Germany, or the Scandinavian countries.I assume that you already know that the only thing that exists there is the modern kind of social-democracy.


Which is the The-State-Owns-Everything definitionIn most cares, the state owning everything can be described as state capitalism. However, the state coming to own the means of production can be a means (not a final goal) used when the proletariat takes political power. Engels mentions this in "Socialism: Utopian and Scientific". There, he described that the state, under the control of the bourgeoisie (presumably would also apply for the bureaucracy of a party, such as in the Soviet Union) owning something forms private property. However, when the state is managed by the proletariat, and owns something, it would form public property.


Were there "Socialist" countries in History or that still exist today that give everyone the same amount of money for their jobs?As I understand it, labor vouchers were implemented in certain parts of Spain during the anarchist revolution (commonly named Revolutionary Catalonia though it also involved parts of Aragon, for instance). According to what I read, in certain regions any kind of money was made superfluous, and non-scarce goods were made available on the basis of free access.


Do Marxists and Anarchists have differing views on this or a similar consensusMarxists and anarchists tend to differ on some things, but agree on the final goal of a communist society - without money as we know it today.

[CaptainCool309]

Thank you very much for your post RedWorker. I've learned a lot and now I feel I understand a genuine socialist's viewpoint on how money is to be viewed.


First of all, "socialist" is a term taken by a thousand different political tendencies. However, all genuine socialists agree on the definition that socialism means that the means of production are managed by society or workers.

Yup, I've come to learn that all the different political tendencies (Past and Present) that claim to be socialist are not really socialists until they preach and practice that as one of the central aims of their political goals.


Advancing the proletariat's class interests to their logical extreme - the means and goal of the communists - will result in the end of money. Rather than be abolished, it will be made superfluous

In short, when the means of productions are managed by society, and are run to benefit society, non-scarce goods will be made of free access. Therefore, money will be rendered useless, although similar concepts may be used administratively, to handle resources.

Once free access to goods is made available, why would someone work for someone else in exchange of money? It would be useless. Why should someone buy something, when he can get it for free?

I see now. We don't want to "abolish" money, we want to simply make it obsolete. When the means of production are managed by society, they will be run for the benefit of society, which would lead to free access to most goods. This would make it pointless to work for money anymore, thus making the monetary system "superfluous."


An interesting fact related to religious leaders is that the current Dalai Lama labels himself a communist and a Marxist.

I feel that Pope Francis is a little sympathetic to Marxist/Communist cause because he feels the Marxists are trying to help the poor, just like the Catholic Church is, but the sympathies end there. The 14th Dalai Lama on the other hand is a very interesting religious leader with his take on being "Half Marxist and Half Buddhist." But that's a whole another debate on whether you can be both Marxist and religious at the same time.


In most cares, the state owning everything can be described as state capitalism. However, the state coming to own the means of production can be a means (not a final goal) used when the proletariat takes political power. Engels mentions this in "Socialism: Utopian and Scientific". There, he described that the state, under the control of the bourgeoisie (presumably would also apply for the bureaucracy of a party, such as in the Soviet Union) owning something forms private property. However, when the state is managed by the proletariat, and owns something, it would form public property.

Unfortunately my teacher was talking about the classic State Capitalism definition, as most people do, confusing it with genuine socialism. That's why she threw in the "Just like History has shown us" quote to show us that because many of the old-school State Capitalist systems collapsed all over the world, Socialism will probably never work. In reality what we can definitely learn from the failures of many "socialist" countries in the 20th century, is that State Capitalism rarely works, and genuine socialism (where the workers control the means of production) hasn't been tried very often in comparison to "state capitalism" socialism.


As I understand it, labor vouchers were implemented in certain parts of Spain during the anarchist revolution (commonly named Revolutionary Catalonia though it also involved parts of Aragon, for instance). According to what I read, in certain regions any kind of money was made superfluous, and non-scarce goods were made available on the basis of free access.

Yup I recall reading something along those lines as well. That's probably about as close to genuine socialism as we've gotten in the 20th century (correct me if I'm wrong there) But one final question here, how did the State Capitalist Countries of old handle money distribution? Were Doctors and Janitors paid the same universal salary in most State Capitalist countries like I hear from so many people? Presently, I know China and Vietnam don't do that, but what about Cuba?

[Tim Cornelis]

We obviously don't consider Europe socialist. To us, the socialist mode of production is based on common ownership and associated labour. All socialist positions consider themselves to be "genuine". So saying "all genuine socialists agree" is self-referential and circular.
If we, as idealist socialists do, like workers' self-management, we can define socialism as synonymous with a system based on workers' self-management. If we like welfare states, we can define socialism as such. Anything can be embraced and denounced as socialism if there is some remote historical continuity between the classical socialism of the nineteenth century and some political movement today. Marxism takes a different approach determining what socialism is, not as abstract ideological concept, but as prospective future society. We begin with what socialism is, and not what we would want it to be like. Marxism begins by analysing the social development as it plays out through history, which is the result of the objective factor of the development of productive forces. We covered how capitalism came about, and revealed it was not by argument of great philosophers or thinkers like Adam Smith. Similarly, the basis for socialism is not arguments, philosophy, rationality, or persuasion but capitalism. This is summarised by Marx as: “Communism is for us not a state of affairs which is to be established, an ideal to which reality [will] have to adjust itself. We call communism the real movement which abolishes the present state of things. The conditions of this movement result from the premises now in existence.” (German Ideology by Karl Marx). We see the social development of the socialisation of the productive and labour process, the concentration of capital which furthers planning (though still constrained by the 'anarchy of the market'), and we observe class antagonisms giving rise to class struggle. Social ownership comes about through socialised production being confronted with class struggle, which, as consequence (once class struggle culminates in a social revolution) has the socialised production process slipped into the hands of public property. It is "slipping from the hands of the bourgeoisie, into public property. By this act, the proletariat frees the means of production from the character of capital they have thus far borne, and gives their socialized character complete freedom to work itself out. Socialized production upon a predetermined plan becomes henceforth possible." Then, associations assume control of production, the logical consequence of workers overthrowing bourgeois class rule. They replace the bourgeois management. Associated labour replaces wage-labour not because we prefer it (although we do), but because of social progress. And commodity production is "entirely inconsistent with" associated labour.

In other words, we define socialism not by what we like (a subjective definition), but why what objective tendencies we can observe (a more objective definition), and put socialism and its realisation "in relationship to the real development of history" (Bordiga).

Cuba had the highest rate of doctors per 1000 residents between 2005 and 2010 (1), yet the wages of doctors are exceptionally low. In 2006 Cuban physicians went to Guatemala to aid the people there. Their monthly salary while in Guatemala was 400 US dollars a month while Guatemalan physicians make 800 US dollars a month. “Yet that $400 is also about 16 times the average salary of a doctor in Cuba.”(2) The average salary of a Cuban physician is roughly 25 dollars a month according to this and another source (WSJ).(3) Carmelo Mesa-Lago “estimated monthly incomes in several occupations in Cuba as follows: average wage earner, $6; teacher, $8 to $9; surgeon or university professor, $11 to $12; tourist taxi driver, $100 to $467; private farmer, $187 to $311; owner of small restaurant, $2,500 to $5,000.”(4) This is the situation as it developed form the 1990s onward in the face of continued liberalisation. And, “in 1989, the maximum wage differential was 4.5 to 1.”(5) For 2002, Mesa-Lago estimated that in the state sector the lowest salary and pension was $4; a teacher earned 8-15; a university professor $12-22; a garbage collector $12-19; and an engineer and physician $12-25.”(6)
Similarly, Belarusian doctors earn very little in comparison to doctors in surrounding countries. Physicians in Belarus earn a mere 330$ per month while the estimated 2011 nominal per capita income was $490, though some sources state $200. In 2011, the president of Belarus promised to raise the salary of doctors by 25%.(7) Despite this low doctor's income, Belarus has the fourth highest rate of doctors per 1000 residents.(8) Similarly, the average Swedish doctor (general practitioner) earns not even half of the income of an average US doctor. A Swedish general practitioner earned $66,000 per year, while a US general practitioner earned $161,000,(9) yet the US is ranked 53rd (24 per 10,000) highest in rate of doctors, and Sweden 38th (38 per 10,000).(10) In Cuba or Belarus, a doctor's income is average and is more telling than Sweden's and US' inter-country comparison.

http://www.revleft.com/vb/picture.php?albumid=1364&pictureid=11797

Cuba, in the heyday of its egalitarian income distribution, had an excess of skilled and professional workers, and a shortage of manual workers. Skilled workers made only a little bit more money than non-skilled workers. In fact, this caused problems in Cuba.

"In a society where education was free, young people tried, quite correctly and
understandably, to attain the highest education possible, but someone still had to
take out the garbage, grow the crops, harvest the sugar cane and build houses and
roads. Some measures, like the use of secondary students' work-study program to
increase the citrus crop, showed impressive results. But the basic shortage of
manual labor remained a serious problem leading to an unbalanced division of labor
with shortages of (skilled and unskilled) construction workers and an
, over-abundance of trained professionals and technical workers, according to lecturers
at the University of Havana's Equipo de Investigaciones Sobre el Desarrollo
(Institute of Development Studies, 1990).
In spite of its avowed and demonstrated concern for human needs, the central
state was faced with a bureaucracy that clearly had not prioritized social needs and
with a planned economy with so few construction workers it could not address the
most elementary housing and other needs of the population. The construction labor
shortage was made worse by an attitude that manual labor or getting one's hands
dirty somehow was not as dignified or rewarding a way to spend one's lifetime as
working in an office; to some extent, pay scales reinforced this attitude (Brundenius,
1984). This prEtiudice against manual labor (and those who perform it) is a
theoretical, political and practical consideration that exacerbated problems in Cuba's
division of labor and in workplace practices (Smith & Padula, 1990; also see
Carchedi, 1991, for a theoretical discussion of mental and material labor)."

(COMBINING MORAL AND MATERIAL INCENTIVES IN CUBA, by Eloise Linger
New School for Social Research, Behavior and SociJJ/lssl=, Fall/Winter 1992, Vol. 2, Number 2)

http://www.revleft.com/vb/picture.php?albumid=1364&pictureid=11798
Source: GROWING ECONOMIC AND SOCIAL DISPARITIES IN CUBA: IMPACT AND RECOMMENDATIONS FOR CHANGE, By Carmelo Mesa-Lago, page 5)

1 = http://www.globalhealthfacts.org/data/topic/map.aspx?ind=74
2 = The Miami Herald, Sunday, March 05, 2006
3 = January 15, 2011, New Prize in Cold War: Cuban Doctors, Wall Street Journal
4 = Growing Economic and Social Disparities in Cuba, p. 3
5 = Growing Economic and Social Disparities in Cuba, p. 3
6 = Growing Economic and Social Disparities in Cuba, p. 5
7 = http://telegraf.by/en/2011/09/lukashenko-obeschaet-na-chetvert-podnyat-zarplati-vracham Lukashenko Promises to Raise Salaries to Doctors Fourfold, 30 September 2011
8 = http://www.globalhealthfacts.org/data/topic/map.aspx?ind=74
9 = p. 23, CRS Report for Congress, U.S. Health Care Spending: Comparison with other OECD countries
10 = http://www.globalhealthfacts.org/data/topic/map.aspx?ind=74

[Five Year Plan]

You have to understand the function that money places in a capitalist society. As the so-called "universal equivalent," it bears the stamp of a definite amount of labor time expended. The exchange of commodities, including money, is the means by which a society without a democratically determined economic plan for society carries out its reproduction, determines who gets how much of what, and all the rest. Money, as the bearer of abstract labor, and its passing hands through millions of asocial individual decisions determine these answers to these vital economic questions, not people who come together cooperatively as a society.

To answer your question, then, money is abolished by replacing those mechanisms for economic reproduction with new mechanisms: democratically executed deliberation among the whole of society.

[The Idler]

best article on the matter is
http://theoryandpractice.org.uk/library/how-socialism-can-organise-production-without-money-adam-buick-pieter-lawrence-1984

[Red Star Rising]

I think that a big problem with the current economic system is that money itself is treated as a commodity in its own right. As a result I've always supported a labour token system in a lower stage Socialist society before the total abolition of money in a Communist society. Money would be replaced by labour tokens (probably would be digital and stored in a personal account, this way it would not be a physical thing that can be traded). The amount of labour tokens would be dependent on the amount of labour that an individual does - to each according to his deed. This would encourage local labour and maximum productivity rather than keeping production low and prices high as happens under capitalism. Eventually productivity would be high enough that exchange rates approach zero and at this point any money system would become obsolete.

[exeexe]

You should stop searching for the clear answer,for what is socialism because you will never find it. Instead you should ask yourself if you could decide how socialism would be, how would you like it to be.

If you understand how capitalism works i think you are qualified to make your own socialist distinction.

[CaptainCool309]

Thanks for the feedback everybody! I really appreciate all of it.

First off I would like to thank Tim Cornelis for that great post. Not only did you give me an awesome lecture in Marxism and a new way of looking at socialism, but all of that Cuba information was very informative. It cleared up a lot of questions and assumptions I had about how Cuban workers and wages.


You have to understand the function that money places in a capitalist society. As the so-called "universal equivalent," it bears the stamp of a definite amount of labor time expended. The exchange of commodities, including money, is the means by which a society without a democratically determined economic plan for society carries out its reproduction, determines who gets how much of what, and all the rest. Money, as the bearer of abstract labor, and its passing hands through millions of asocial individual decisions determine these answers to these vital economic questions, not people who come together cooperatively as a society.

To answer your question, then, money is abolished by replacing those mechanisms for economic reproduction with new mechanisms: democratically executed deliberation among the whole of society.

Ok that sounds good to me. The first step to money becoming superfluous is a society that has a "democratically determined economic plan that carries out its reproduction, determines who gets how much of what, and all the rest."


best article on the matter is: theoryandpractice.org.uk/library/how-socialism-can-organise-production-without-money-adam-buick-pieter-lawrence-1984

Thanks for the article! It's pretty long, but it looks very interesting and informative. When I have the time I will read through it.


I think that a big problem with the current economic system is that money itself is treated as a commodity in its own right. As a result I've always supported a labour token system in a lower stage Socialist society before the total abolition of money in a Communist society. Money would be replaced by labour tokens (probably would be digital and stored in a personal account, this way it would not be a physical thing that can be traded). The amount of labour tokens would be dependent on the amount of labour that an individual does - to each according to his deed. This would encourage local labour and maximum productivity rather than keeping production low and prices high as happens under capitalism. Eventually productivity would be high enough that exchange rates approach zero and at this point any money system would become obsolete.

Yeah I think this goes along the lines of what's called the "Labour Voucher" system. According to Wikipedia, Marx seemed to like the idea as a potential socialist transition into the eventual disappearance of money in a communist society, just as you say, but a lot of Anarcho-Communist/Libertarian socialists don't seem to like the idea, claiming that an economy based on free access would no longer have scarcity as an issue, therefore making Labor Vouchers a "waste of human labor in socialism."


You should stop searching for the clear answer,for what is socialism because you will never find it. Instead you should ask yourself if you could decide how socialism would be, how would you like it to be.

I now understand that I will never find "One clear answer/definition for socialism," but I still consider myself a "noob" to socialism. And because of this I value the input of people who understand socialism better than I do, because their knowledge will enlighten me and ultimately help me find my own unique perspective on all the different aspects socialism has to offer.


If you understand how capitalism works i think you are qualified to make your own socialist distinction.

I agree.

[Thrasymachus]

You guys need to read Debt the First 5000 years by anarchist anthropologist David Graeber. My favorite podcast even turned it into a free audiobook(search for "debt first five thousand years unwelcome guests" since I cannot give links).

Before money according to Graeber no one really went around bartering and say trading 20 chickens for a certain amount of bread, as Adam Smith supposed out of his ass. Infact according to the research of historian Dr Craig Muldrew who has done primary research on this time period, even during the time of Smith, a very, very tiny and wealthy minority of British used money instead of the dominant local credit systems for their daily needs. Smith knew this, he just invented the myth of barter exchange, but Graeber says that anthropologists always knew that economists were full of it on this, because they never found examples of barter being used to circulate goods on a large scale, the way we use money. What societies before money was used is local credit systems. Money and coinage arose according to historical evidence where large numbers of soldiers, especially mercenaries were. To field and provision 10,000 soldiers you would need just as many or more people on the back-end producing their gear, their tents/shelter, farming their food, transporting it all, etc. In pre-modern times, remember, it was not like today where only 1% of the population is actually engaged in agriculture by trade, they didn't have the manpower to spare to have a huge standing army and just as many or more, supporting this army full-time. Rulers learned the best way to provision their armies, was to circulate a currency and demand that everyone in their state pay back a certain portion as taxes, that way essentially everyone is doing their small part to help keep the army maintained. Graeber points out that in one podcast or talk that it would not have been a good idea to use the traditional method of extending local credit to anywhere large number of heavily armed soldiers are temporarily staying. How could the local merchants, shop-keepers or farmer enforce that they stick to the credit arrangement and pay it back, before they left?

More on why money is a negative force in the world, unlike some above naively suppose:


Suppose I have twelve loaves of bread, and you are hungry. I cannot eat so much bread before it goes stale, so I am happy to lend some of it to you. “Here, take these six loaves,” I say, “and when you have bread in the future, you can give me six loaves back again.” I give you six fresh loaves now, and you give me six fresh loaves sometime in the future.

In a world where the things we need and use go bad, sharing comes naturally. The hoarder ends up sitting alone atop a pile of stale bread, rusty tools, and spoiled fruit, and no one wants to help him, for he has helped no one. Money today, however, is not like bread, fruit, or indeed any natural object. It is the lone exception to nature’s law of return, the law of life, death, and rebirth, which says that all things ultimately return to their source. Money does not decay over time, but in its abstraction from physicality, it remains changeless or even grows with time, exponentially, thanks to the power of interest.

source:
Sacred Economics: Chapter 12, Negative-Interest Economics
(this book is made freely available online by the author as a gift, search for it)


The only reason why people can dumpster dive reliably is because live in a money based society and so in the United States almost 50% of food is wasted somehow or other before being eaten. Often times when riding my bicycle, I will snoop into the local electronics recycling trailers of my town or neighboring municipalities. Often you can find perfectly good laptops, GPSs, video game systems, mice, etc. Why? Because our society only really values money over and against everything else. In a society that had other values the scale of waste we think is normal would be morally repugnant. But things in themselves are not valuable, even the environment or human life, in a money based society -- only money is truly valorized at the expense of everything else. And it is not just worth it monetarily for stores to not waste food they cannot turn into money, just like it is not worth it monetarily for many middle class families to rehome the obsolete but often otherwise working and functional electronics instead of chucking it.

The structure and goal of a money-based society is to liquidate everything: the lived environment, the living eco-system, and even human life as expressed in wage hours, which are in the process de-valued, into this fetishized representative of themselves. We call this ghostly, and deadly symbol -- money.

[tuwix]

Will Money be distributed equally in a Socialist Society?

I don't think so. Certainly in the first phase there will much more greater equality in wages but it is impossible to distribute money equally. In game with money there are always losers and winners.

But abolition of money will be possible, as higher phase of communism, sue to abundance of products and services.