A Stroke in the Brain of Capitalism

In my previous article on this topic, I defended the idea of the centrally planned economy (CPE) on a conceptual level: I attacked the economic calculation problem argument by pointing out that there were infinitely many mechanisms of planning the economy, and thus have shown how the central argument against the CPE is in fact not scientific at all (e.g. Hayek's formulation of the argument assumes the existence of money, which is not something relevant in this debate). I have then claimed that Marxists have a task of taking this further, and developing CPE theory in order to be prepared for running a socialist, centrally planned economy.


I will point out how capitalism itself can be attacked through the very argument used against the CPE: i.e. show how resources are inefficiently allocated under it, and explain why.

I present three arguments, dealing with the financial and administrative sectors, commodity production, and knowledge decomposition: in all three I will show how capitalism leads to an immense waste of labor power. Other topics I will touch upon are subjective preferences of agents in market economies and how the capitalist ideological and institutional superstructure fetishizes them as sacred and some kind of a useful 'freedom', while they are in fact simply products of the economic system in the first place, and can be controlled either by the market or by rational means.

Labor Power

It is important in this context understand the labor theory of value, and its central concept: labor power--the capacity to commit work, the capacity to valorize and create. In Marxist theory, this--not time or just 'labor/work'--is the commodity that the workers sell to the capitalists in order to survive.

In this article, I will look at labor power as an aggregate of the social input: all of the 'work' committed in order to sustain our current economic system. The 'aggregate' part is important, because I will analyze the components, products, and conditions of committed 'work' (primarily in first-world countries), and show how a large portion of it is unnecessary and wasteful. I will refer to work committed, the commodities produced, and the conditions under which this work is committed; and explain how--because of imperialism and capitalism--we are much worse off than we could be under the CPE.

The central theme of this article are extreme amounts of wasted labor power under market economies, and the consequent suffering and social problems; and proving how the CPE could solve those problems.

The Economic Calculation problem

Liberals argue how it is impossibly complicated to plan an entire economy because of something they refer to as 'the economic calculation problem'. In short, the social usefulness of markets lies in the existence of the price system, which synthesizes subjective preferences of market agents with supply and demand, and spontaneously and efficiently calculates the allocation of resources. The argument is that in centralized economies, some bureaucratic apparatus would need to fill in the place of the pricing system, while in fact, the liberals misunderstand the Marxists' intentions. They aren't the creation of a centralized pricing system (e.g. Lange-Lerner theorem), but a centralized production system.

I will show markets are inherently wasteful and inefficient, and explain how the economic calculation problem misses the entire point of a socialist economy by even referring to prices and the concept of 'value'.

Abolishment of Value

The role of the CPE is not to coordinate supply and demand through an artificial pricing system or any kind of valorization at all, but the exact opposite: the removal of the concept of exchange-value and trade completely. Positively speaking, the goal of the CPE is the maximization of utility--access to social goods and services, i.e. use-values. Exactly how that will look, we as communists cannot know, but we can still theorize and create useful mathematical models which would coordinate production in order to eliminate important problems described in my previous article: hunger, housing, medical services, etc.

The Financial-Administrative Sector: A Laugh in the Face of the Calculation Problem

X% of labor power in The West is spent on financial, administrative, and bureaucratic work. If liberals have an issue with too much work being spent on economic coordination, how can they not have a problem with this? Surely it would be preferable if a system could spend more energy on being useful to us instead of coordinating itself! Coordination is important, but we must admit it is not useful to us in the first-order as use-values are: especially when much of this work is merely a parasitic system sustaining itself, and not really helping people. Lobbying, marketing, accounting--nothing of this sort would be needed under the CPE.

Commodity and Service Wastes

When labor power is spent on use-value and not "coordination-value" under capitalism, there is often still a problem of those commodities being simply useless, i.e. their utility is not a product of objective, social needs, but of subjective, capitalism-infused-and-infected ones. Trivial example: if sixth of the planet is starving, we shouldn't be building yachts, but better food preservation and transportation mechanisms.

The two classes under capitalism, the proletariat and the bourgeoisie, waste dead labor (spent labor power, commodities and services) in different ways, but because of similar reasons: capitalism infuses us with its status-games, it forces us to chase social-productive ranks and signal them, and all of that results in perversion and exploitation. The bourgeoisie specifically has another motivator: freezing their capital in exchange-valuable commodities such as art.

Marketing and Preference Perversion

This section will explain the drive behind some of the wastes, and prove how it is inherent to capitalism. Capitalists are essentially a non-coordinated class which tries, through inter-competition, to increase their own share of the social product. This leads to the use of the mechanisms such as marketing, which infuse (largely) the proletariat with inauthentic wants for goods with no true use-value. This is preference perversion.

Under capitalism, people have a need to signal their social-productive status by wasting their share of social product on status symbols. Is this a problem in and of itself? Well let's assume that the characteristic of status-symbolizing commodities is in the fact that their price disproportionately mismatches their use-value--it is inflated through marketing. Then, the circulation of these commodities is in fact equivalent to throwing labor power of the buyers of these commodities into the trashcan. Thus, status-signalizing, and in general, marketing, cause waste, a reduction in utility of a system, through their mere existence.

The Structure of Waste Under Capitalism

This section is the simplest one to internalize: under capitalism, extreme amounts of labor power are wasted on producing goods for which no objective need exists. There are examples of this both in the commodities associated with the proletariat and with the bourgeoisie, but only a single example is needed to understand the central point: we produce yachts and personal automobiles instead of food and public infrastructure.

Under the CPE we could produce as much consumer goods and services as necessary to sustain normal lives--but also rationally determine what a normal life looks like. No yachts, we'd have different diets, the end of personal transportation as the standard, etc. The criteria would be utility of current and future generations so we would of course have to include labor power spent on science and the impacts of risks such as climate change into our calculations.

Centralized Knowledge

I haven't researched what proper Marxist CPE theory might look like, but there are still some conclusions that can be derived indirectly from the structure of this CPE. One of them is solving the huge waste of "knowledge-value" (similar to the term I previously referred to as "coordination-value").

There exist obvious incentives for companies not to share their knowledge bases with other companies, essentially wasting enormous amounts of labor power. The most obvious example is the existence of intellectual property as law and as a concept. This is a wider problem than just industrial patents, I also wrote about culture under capitalism.

Organizational Knowledge

Another, more obscure example of wasted labor power is the decomposition and reinvention of organizational knowledge between companies. Organizational knowledge is a relatively simple concept: each working unit, be it a section of a firm, a firm, an industry, and so on, builds implicit and explicit protocols and knowledge bases for communication and work in general. The problem with capitalism is that, due to competition, this organizational knowledge is often reinvented, or some of the most useful techniques are never even shared across working units. Another problem is that the content of the knowledge: often, it is there to merely increase productivity, and not for social benefit. So under socialism, we would strive for a type of knowledge that benefits the worker and can be shared across working units.

In Conclusion

Markets, due to competition, inherently imply waste and suffering. The solution is central planning. Only one, not truly Marxist type of central planning failed, and we as communists need to be agile in creating new mathematical systems if we are ever to lead a revolution and successfully build socialism.

In the next article in the series on the centrally planned economy, I will try to further elaborate these points and find empirical proof for my claims.


Either Lenin or Lana
Oh, getting a chance to choose again
Behind the red, emptiness screams
Bourgois decadence and long forgotten dreams
I hate society not the people
Just plan it's that simple

I will refuse and learn learn learn
And build the machines
For the state oh I love them both
When they create our lives
When they crush our dreams
I hate society not the machine
Just plan it will be a dream

State, just one more time
You do it and I will as well
And we'll hang our daddies ha ha ha
I hate the state and I will love it
Just plan it