CHAPTER 6

PART 2

Leichter's Price Policy

The first to have brought this problem closer to its solution was Otto Leichter, for the simple reason that he was the first to have placed the communist economy upon the material foundation of "cost accounting". Nevertheless his work did not reach a satisfactory conclusion, because in the final outcome he did not know how to apply consistently the category of average social labour-time to both production and distribution. Leichter's conception of the whole economy is that of a giant trust, Hilferding's "universal cartel". For him the question then resolved itself into that of deciding wherein the source from which he might derive the general public accounts (what we have termed the GSU services) might lie. He turned his face against the method of indirect taxes and sought other means. He even found them ... but, in doing so, he let fall the category of average social labour-time. When Kautsky failed, having placed himself in an anomalous situation through being unable to perceive the difference between the factory average and the social average, Leichter also failed to solve this same problem. But, in his case, he did not permit this to lure him away from the method of labour-time computation completely. Instead of calculating the social average for the entire "guild" or sector of production, he determined a "price" for each product according to the productivity of the least efficient (or most expensive) establishments, thus compelling the remaining industrial establishments to operate at a profit, which profit then flows into the general treasury of the whole of society. Concerning these profit-making installations he writes:

"These will then throw up a differential plus amount, or - expressed in capitalist terms - a surplus profit which, of course, should not be left to accrue to this or that individual factory alone but - once again expressed in capitalist terms - must be eliminated through taxation." (1)

Although Leichter finds that it is most frequently convenient to apply a method of control over the stream of products according to "the socially necessary labour-time therein specifically expended" (page 38), he does not, as we have already noted, carry this through to its logical conclusion. Above all, he does not recognise the crucial role played by the category of average social labour-time. As we shall see, he attempts to compensate for this later, but nevertheless he has in this way drawn the first veil of confusion and obscurity over his analysis.

...In the meantime, this "source of income" is found to be an inadequate device and, to be quite blunt, not fundamentally essential to Leichter's system. In the course of his later examination of the problem, he attempts to formulate it more exactly and in doing so achieves a fundamental advance over and against all other work in this field of which we know. The first step in his scheme is to combine all public costs under one heading and then to determine how many labour-hours per year have been expended by all producers to achieve this (it is obvious that this requires a general system of social book-keeping). In this way he obtains two values which, when brought into relation with one another, produce a difference-amount. Since the entire calculation rests upon the computation of labour-time, he has by this means uncovered an integer which indicates how many labour-hours must be contributed per head of population on account of GSU or public works. And thus he has also uncovered how much of the labour-power directly expended in the productive establishments must be added to the prices of products in order to cover the "costs" of these GSU (public) social expenditures:

"Each productive establishment will thus have responsibility, each year when the overall production budget for society as a whole is drawn up, for introducing into its specific works or factory budget a category relating to the entire social production system (p.65). The total sum thus arrived at for all the various economic headings - which then become, of course, a charge upon the entire production system - is then aggregated to form some final amount, presumably one related to the total number of labour-hours performed in the spheres of both production and distribution. The difference-amount thus arrived at is then added to the sums paid out for individual remuneration of labour ("wages") when the origination costs of all social ("public") expenditures are summated, so that an element representing the general costs of society is included in the costs of goods. It would, of course be equivalent to an injustice, and would have almost the same effect as an indirect tax, were one to add the same increment for general social costs to all commodities, to the most staple as to the most luxurious, to the most necessary as to the most esoteric. Amongst the important tasks of the Economic Parliament or Supreme Economic Administration will therefore be that of determining for each branch of industry or for each individual product the correct increment category to be applied for general social costs, always fixing these in such a way that the total non-productive costs of society are included. In this way the possibility is also obtained of influencing price policy in accordance with the viewpoint of a central authority ..." (O. Leichter: ibid.; p.66)

This conception of Leichter's is remarkable indeed. In order to avoid the accusation of adopting the method of indirect taxes, he proposes that the costs of education, the health service, distribution, etc. not be borne equally by all members of society. It is apparently his intention that a comparatively heavier burden should be borne by those with larger incomes, as compared with those "poorer" workers whom the statisticians and subsistence physiologists consider should be advantaged. We, however, must openly declare our view; namely, that such measures would, by precisely these means, acquire the character of indirect taxation. What we are considering here is precisely the category of those costs needed to maintain the GSU establishments. Why should it be considered necessary that the "rich" should contribute more in this respect than the "subsistence workers" whose needs have been assessed according to so-called "scientific" sociological methods based on the statistical art? Could it be the case here that it is Leichter's guilty conscience which here speaks up on behalf of an antagonistic mode of distribution of the social product?

Let us however now delete from his analyses everything which is in any way superfluous and pose concretely the question: how does Leichter arrive at his figure for general social costs? We then see that there can only be one answer: On the one hand from the surplus produced by the productive establishments and on the other hand from indirect taxes. Indeed, he evokes the appearance of wishing to add a specific increment to the prices of all products, but in practice his solution resolves itself into one in which the specific amount is fixed "for each sector of industry or for each product". Precisely which products those are to be can be determined only through the antagonistic power-relations underlying the Leichterian class society. And this, in its turn, can be determined only by the degree of force which the workers are able to bring to bear in their struggle against "their" supreme administration. It is for this reason that we arrive at the conclusion that Leichter is unable to solve the problem. His "exact relationship" finds its practical end in total bankruptcy.

References

1. O. Leichter: Die Wirtschaftsrechnung in der sozialistischen Gesellschaft. return to text
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