Chapter V

CHAPTER V THE POSSIBILITY OF ECONOMIC CALCULATION IN MARXIST-COMMUNIST COMMUNITIES "I am a communist and think that all should share, but who is to have the caviar?"-The Norwegian author, Gunnar Heiberg. By A marxist-communist society, which from now on we will just call "communist", is meant a more "extreme" form of socialist community. This is a very indefinite term, but it is difficult to find a definition of Marxism and Communism that will be generally acceptable. One or two of the definitions most frequently put forward are purely political in character, e.g. that Communism aims at revolution, while Socialism wants to reach its goal by constitutional means. As political definitions do not touch on the problem of calculation, they will be disregarded here. The criterion that Communism means the abrogation of the right of ownership even of necessaries, is of a more economic character, but of little importance for our problem. That the Communists, in contrast to the Socialists, aim at doing away with the state, l may be of importance for the possibilities of calculation, but this, too, is not a question we shall discuss.

There has, however, been put forward a criterion for Communism which is of great significance for our investigation, namely, that in the communist community money does not function as·a medium of exchange. This is presumably due to Karl Marx's assertion that monetary capital would not exist in the communist community. On the other hand, Marx admits the possibility of consumption warrants, which puts the question in quite a different light, but of these he says that they are not money, as they do not circulate: "Monetary capital disappears when there is communal pro duction. The community distributes the labour power and means of production among the different branches of industry. As far as I am concerned, the producers can be given paper warrants, for which they can get a quantity of the communal stores of necessaries corresponding to their labour strength. These warrants are not money .. They do not circulate." 2 Dr. Otto Leichter writes: lSee, among others, Lenin: The State and Revolution, London, 1917.

2Das Kapital, Vol. 2, Popular Edition, Berlin, 1926, p. 302. 52 CALCULATION IN MARXIST-COMMUNIST COMMUNITIES 53 "Marx does not regard these paper warrants as money, because they do not circulate. If the concept of money is linked with the assumption of the circulation of goods and a general system of barter, then, of course, this labour-money cannot be money in the capitalist sense of the word, for it is, after all, not a commodity like the gold-coinage of capitalism and has no individual existence of its own."! Whether or. not these warrants are to be called money;) is a question of definition of minor interest for our purpose. What is decisive, is whether they are to be made out for an amountor for naturalia. Lenin obviously had the latter in mind when he wrote: "Every member of society, performing a certain part of socially necessary labour, receives a certificate from society that he has done such and such a quantity of work. According to this certificate, he receives from the public. stores of articles of con sumption a corresponding quantity of products."2 If these warrants are made out for natura/ia they can hardly be called· money, but this is of subordinate interest compared with the fact that in such a case we have a socialist society with a moneyless economy, and on this assumption any further investigation of the possibility of calculation in such a communist community is un....

necessary, for, as we have tried to show in the previous chapter, economic calculation cannot be undertaken in that kind of society. We shall therefore assume that our communist community has warrants made out for amounts and that in reality-whatever these claims may be called-it has adopted a monetary economy. This transfers the whole problem of calculation to another plane, for there will now not only be a common unit of accounting, which was found to be essential in order to be able to calculate at all, but also a number of the difficulties which arise in a moneyless economy in connection with the distribution of the .community's goods, will automatically disappear. Where each individual is allotted a certain sum of money or a certain quantity of warrants made out for an amount, he will himselfbe able to decide what he shall get. with them and how he shall satisfy his requirements. (within the limits of the goods available and the purchasing power of the sum at his disposal).

It is not only the existence of a unit of accounting, but its form, which is important for calculation; but before discussing the unit and, .later, the question of money, it will be well to mention some further criteria for a communist society which are important for the problem of calculation. lOp. cit., p. 50. 20p. cit.;) p. 95.

54 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY Marx's "From each according to his ability. To each according to his needs", is generally taken as the chief criterion for communism. Whether, in practice, "each" will render according to his ability irrespective of how the resultant production is divided, is a question of social psychology into which we shall not enter. We still assume that those taking part in production are altruistic, but the reader is reminded that compulsory work is generally made one of the con ditions of the communist social order. "The same compulsion to work for all, the establishment of industrial armies, particularly· for agriculture", so reads point 8 (in the regulations for "advanced countries") in The CommunistManifestol and Professor Laski writes: "Compulsory labour is the road to communism". 2 "To each according to his needs" is a form of distribution of the community's .goods which assumes a superfluity of all goods. It represents a desired end, an ideal state, which one can hardly expect to attain in view of the elasticity of needs and their faculty of re production. If this condition could be fulfilled, Lenin would be right in saying: "There will be no need for any exact calculation by society of the quantity of products to be distributed to each of their members; each will take freely.... "3 However, both Marx and Lenin reckon \vith the possibility that during a period of transition the communist society will have to follow the individualistic and capitalist principle of rewarding accord ing to "the work done", and it is the possibility of calculation in a communist society of this more realistic kind that we shall now investigate.

Let us assume that the central authority has at its disposal a limited, yet continually varying, quantity of resources and will employ these in such a way that the result is greater than the contribution, and will distribute the output "according to the work done". It will use a unit of accounting or a means of exchange which will also serve as a common denominator. The size and the tastes of the population, the methods of production and other factors are taken to be continually changing. The first question to arise is what kind of common denominator is to be used. That most frequently proposed for the marxist-communist community is hours of work. The main theme of the marxist theory of value is that labour is the objectively decisive factor in value, a point which is also insisted upon by those marxist economists who have IDasKommunistische Manifest, loth Edn., Berlin, 1931, p. 45. 2Communism, London, 1927, p. 162.

30p. cit., p. 99.

CALCULATION IN MARXIST-COMMUNIST COMMUNITIES 55 taken part in the discussion on economic calculation. We shall not try here to point out the defects of the marxist theory of value, l but shall confine ourselves to investigating the problems which calculation will create for the central authority, if the unit of accounting and the yardstick are to be "hours of work" . The use of "hours of work" as a yardstick for value will produce results which are obviously absurd. It is quite possible that it will give a pound of some rare metat like platinum or molybdenum, the same value as a pound of potatoes, because the mine worked was so rich that it required no more labour to extract a pound of metal than to cultivate a pound of potatoes. It is also possible that one set of goods will be valued higher than another set of exactly the same size and quality made in the same place at the same time, because more time was taken to make the one than the other. Or, what amounts to the same thing, it is not impossible for two sets of goods of different sizes to be given the.same value, because the number of hours of work spent on them was the same.

That different results may be achieved by working a similar number of hours can be due to one group of producers working with greater intensity and being more. efficient than another, or· to one of them having a more competent leader and one who keeps abreast of technical developments and uses more modern machinery and methods of production. That the number of hours worked is .inadequate as a yardstick of value becomes even more obvious, when it is.applied to rare goods and the efforts of specially gifted individuals, like great artists and scientists. This is self...,evidentand Marx 2 has emphasized that "higher labour" must be reduced· to terms of more ordinary labour. In his opinion this is a simple matter and one which is being done daily throughout the world. He later explained this more precisely by saying that it is competition which decides the question, but, as B6hm-Bawerk points out, Marx is here really referring to supply and demand. In other words, in order that the number of hours worked should not be quite useless as a yardstick for value and as a basis for economic calculation, Marx introduced a factor .

which he otherwise denounces. His contention that throughout the. world higher labour is daily being reduced to lower labour was hardly correct when he put it forward, and grows less and less tenable the more wages are standardized and the more general become union ized wages, "scales of wages" and the system of paying according to seniority. At any rate, Marx's idea is of little practical importance for our lSee, among others, Bohm-Bawerk: Zum Abschluss des Marxschen s.ystems ("Kleinere Abhandlungen iiber Kapital und Zins"), Vienna and Leipzig, 1926. 2Das Kapital, V 01. I.

56 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY central authority, considering that this is the one and only employer and that consequently there can be no real competition for labour. One solution would be for the central authority itself to determine the formulre for reducing higher labour to lower, but this would give rise to great practical difficulties (see Chapter IV) and tend to be arbitrary. Arbitrariness in the judgment-and thus in the employment -of labour-power must be fraught with very grave consequences particularly in a society which has made this factor of production the only one for determining value. Variation in the efficiency of the individual is not the only reason why the use of the number of hours worked as a yardstick for value and unit of accounting will make calculation difficult for the central authority. Even if one assumes that two· groups of workers have exactly the same degree of efficiency, that they both work equally well and are equally competently led, the results of their work may still well be different, for the simple reason that one may be working under more favourable conditions than the other. One group of, let us say, agricultural labourers, may have the advantage in being given more fertile land than the other; one group of factory workers may work in a factory more favourably situated (i.e. nearer to sources of power, raw materials or customers) than the other; or the one group may be given more suitable and modern implements than the other. These examples can be multiplied without difficulty,l and it will suffice to say that even differences in working conditions which, owing to the greater variability of Nature, one can hardly expect to eliminate, will play their part in making a certain number of working hours give very different results in production, both as regards quality and quantity.

To persist in retaining hours of work as the only factor for deter mining value throughout every branch of industry, may result in the consumers being able to get 2 lb. of flour of the best quality in one shop for an amount which in another will only buy I lb. of medium quality flour. To put it another way, the consumers will find that the same quantity of goods of exactly similar quality will have different prices in different shops. Even the one and the same shop· might on the same day have to ask different prices for goods of the same quality, if they were produced in different places where a different number of working hours was necessary to produce the same quantities. Such a result would, of course, appear most incongruous. Another probable result would· be that the consumers would have to spend a large proportion of their time in finding out in which shop they could on that day buy to the best advantage.

IIn CollectivistEconomic Planning, Professor N. C. Pierson gives a number of examples of how heterogeneous conditions cause value-problems in the socialist community as well.

School Library CALCULATION IN MARXIST-COMMUNIST COMMUNITIES 57 One possible way of avoiding these consequences would be to give consumers not money, but claims to consumption (warrants) made out for quantities, but this brings us back to a moneyless economy and so must be rejected. There is, however, one possible solution (of the distribution side of the problem) and this is that the central authority should retain the number of hours worked as the unit of accounting and yardstick of value throughout every phase of pro duction and trading until the last, and that the sellingprices should be determined on another principle, for example, that of the consumers' preferences. It might possibly. be maintained-and with a certain formal justification-that the prihciple of working hours as the factor which determines value had been preserved in as far as the final sum of all -selling prices would correspond to the. total sum calculated (on the basis of working hours as the unit for accounting). Actually this would only be a sham solution, as the yardstick for value would be abandoned. the moment the final products were priced on a different basis. Besides, a principle would be needed for determining what was to be asked for necessaries. Consumers' preferences are not enough, as they will be influenced by what is asked for the different goods.

(See Chapter VI.) Dr. Lange has discussed, though in another con nection, the possibility of having two sets of prices for necessaries, but dismissed the idea on the grounds that the consumers would get to know of it and that it "would scarcely be tolerated by any civilised people".! The incongruities and difficulties which the use of working hours as the sole yardstick for value creates for the distribution ofnecessaries are small compared with the difficulties it will put in the way of calculation for production. In the first place, the adoption of working hours as the sole yardstick of value will eo Ipso prevent the central authority· from being able to measure the significance of other factors of production in achieving the result. For instance, it will have no data for calculating with a production factor like land, as this is not the result of any work. Against this it may be argued that, as. it has been assumed that the number of hours worked is the only factor of value, there is no reason to take other factors into consideration.

This objection is logically tenable, but conflicts with the factual condition (which is one of our assumptions) that there is scarcity of resources and that therefore a choice must be made between alternative uses. It is unnecessary to advance detailed proofs to show that this last assumption is the one closest to reality. Apart from certain sources of power, such as water, sun and wind, natural resources gradually l"On the Economic Theory of Socialism", in ReviewofEconomicStudies-, October, 1936, p. 71. E 58 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY become exhausted. This is also true of soil, which becomes impaired with intensive cultivation; it is obviously the case with minerals, coal and oil, and partly so with timber. One possible objection to taking natural resources into account in economic calculation, is the allegation that in the capitalist society, too, there is indiscriminate exploitation of natural resources, for example, of coal and oil. Though this capitalist exploitation may possibly be called indiscriminate, it is a fact that these commodities are to a certain extent rationed inasmuch as the individual mining and oil companies take the scarcity of the commodity into account when fixing their prices. These are determined with reference to the length of time the mine or oil well is expected to be productive, so that scarcity is included in their calculations. Were the central authority in a communist society to do the same, it would be a breach of the principle that working hours was the only factor for determining value. Also in the case of means of production the use of working hours might lead to factors of production not being employed to the best advantage. There is a risk that the central authority will value a produced capital good so low that it will be put to so many uses that there will not be enough to go round, and that it will not be used in those places, where the result would have been greatest. Molybdenum can,as we have said, come from a mine so rich that it does not require much time to extract the metal, which means that a low price is put on it. This might result in a toy factory using molybdenum to make toy swords, with the result that there was less of this metal available for the production of hard steel. If the community in question conducts any foreign trade, there is the further risk that the central authority will export raw materials (and products made from them) which are only available in limited quantities, if, when determining prices, it only takes into account the number of working hours taken and not the scarcity of the materials in question.

There is a further objection to this method of appraising value, namely, that it will make it more difficult for the central authority to determine which piece of land is the more fertile and which factories have the most favourable situation in regard to markets and sources of power, with the result that it will not know which units of pro duction should expand and which restrict their activity. It may perhaps be objected that the central authority has other means of making these decisions: the fertility of a piece of land can be determined by agri cultural experts, and the advantages of a factory site may be decided without taking into account the size of its output in natura. This objection is supported by the fact that even in the private monetary economy reckoning in natural units is general. As Max Weber points out, l units of time are taken into account, for example, in calculating ITheory of SocialandEconomicOrganisation,p. I88.

CALCULATION IN MARXIST-COMMUNIST COMMUNITIES 59 wages; factories reckon with quantities of metals, coal, lubricating oil, the humidity of the atmosphere and with the productive capacity of machinery measured in bobbins, etc. Nevertheless, these moneyless data of different denominations are insufficient for calculation. In order to calculate, one must, as we.have tried to show in the previous chapter, have commensurability. Another serious consequence of adopting the principle that working hours are the only determinant factor for value, is that the central authority will have no indication of what and how much of the various goods is to be produced, and without this it may produce things which are of little or no interest to the members of the community. It is obvious that the result of a million working hours spent in producing horse-carriages will not be of the same interesf in a modern society, as if they had been devoted to the manufacture of motor cars, nor would the result of a million working hours in the clothing industry be valued as much by the public if they had been concentrated exclusively on making men's shirts, as if the production had been spread over various kinds of garments.

These objections amount in reality only to a simple demonstration of the fact that the assessment of value also depends on scarcity of capital goods and the subjective value-judgment of the consumer. Even students of Marx have admitted-more or less explicitly that these factors do play a part. Marx himself suggested that higher labour .can be reduced to more ordinary labour via a market where there is competition (there is no such competition in the communist community). He also admitted the importance of subjective value judgment. Already in Das Kapital I he wrote: "Finally, nothing can have value, unless it is a thing which can be used. If it is useless, then the work entailed in it is useless, does not count as work, and thus has no value." This obviously introduced a factor which is as decisive for value as the number of hours worked. Yet this is still not a clear admission, as it can be objected that it is self-evident that articles which have no use' whatsoever are worthless. However, if one starts discussing whether or not an article has any use or value at all, one must also discuss whether it has greater or less use and·value. In Das Kapital II this is done, in. as far as Marx speaks of "social necessity", and so introduces an entirely new factor in judging. value. He is also using a subjective utilitarian value when he writes: "In direct exchange of products each .article is a direct means 60 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY of exchange for its owner, and the same for him who is not the owner, but only in so far as it has a usable value for him."!

Friedrich Engels also introduces the factor of utility: "The effective utility of the various consumption articles, compared to each other and against the amount of work necessary for their production, will in the end determine the plan. Every thing is very simply settled without the intermediary of the much-famed value."2 and in a footnote is added: "1 have already in 1844 said that this weighing up of effective utility and expenditure of labour when deciding on production, is all that remains in a communist society of the economist's concept of value." Even Strumilin, a follower of Marx who has made a close study of the problem of economic calculation in the socialist community and who insists on the objective importance of hours of work as a basis for calculation, has been forced to admit that hours of work do not suffice for regulating production in the socialist community. Strumilin admits that the utility of economic goods must be taken into account: labour must be distributed in conformity with the utility of the goods, he says, and arrives at the conclusion that the utility of an economic good is reduced as its quantity is increased. Strumilin recalls Fechner's psycho-physical law of the decreasing intensity of reaction with the repeated application of the stimulus. Strumilin's exposition has im pelled Professor Brutzkus to express amazement that an esteemed economist like Strumilin has forgotten the doctrine of marginal utility, "which represents, after all, an application of this psycho physical law to the phenomena of economics". 3 Brutzkus reproaches Strumilin for being able to believe that the utility of economic goods can be computed a priori with the aid of Bernoulli's theory of so-called moral expectation and that he overlooks the fact that this formula refers to money, that is to say, to an abstract equivalent of all economic goods. Brutzkus also reminds him that the intensity of need for the various economic goods is more or less elastic, and says that the connection between the quality of such goods cannot be expressed in any simple formula. (See Chapter IV.) The chief objection to Strumilin's proposal is, as Professor Brutzkus also points out, that he has neglected to show how the utility of the various economic goods may be reduced to a unit and brought into the calculation. He talks IDas KapitalI.

2DuringsUmwalzungder Wissenschaft, 5th Edn., Stuttgart, 1934, pp. 335-336. 30p. cit., p. 79.

CALCULATION IN MARXIST-COMMUNIST COMMUNITIES 61 of using "certain coefficients", but should, in Brutzkus' opinion, have called them "uncertain". Dr. Otto Leichter l has also put forward a proposal for a communist marxist solution of the problem of calculation. It is, he himself says, based on a system of guilds. As such it does not, strictly speaking, come within the scope of a treatise on the socialist community. In spite of Leichter~s assertion, however, his solution seems to be more suitable for a community with a central authority, and there are other things which recommend it to our attention. It is noteworthy that as early as 192.3 Dr. Leichter singled out the problem of economic calculation in the socialist society for special treatment in one of his books. It is equally remarkable that he, a declared Marxist, should have chosen to discuss the conditions under which socialism can function (which, by the way, exposed him to much criticism from the Communists). Dr. Leichter's perception of the necessity for economic calculation (see the quotation on p. 9) is also worthy of attention, and, finally, it must be mentioned that he clearly realizes the necessity for a socialist society to use money for accounting (but not for ex change). All in all, Dr. Leichter~s book is a very severe criticism of everything calling itself moneyless accounting and moneyless economy (see, inter alia, the quotation on p. 5I).

It is, however, difficult to agree with Dr. Leichter's assertion that he has proved that "a socialist economy can undertake accounting and so be rational in this sense too". 2 His own solution-as might be expected from an exponent of the marxist theory of value-is that the number of hours worked shall be the yardstick for judging value and the basis for calculation. As the above review has shown, a solution on this basis cannot be accepted. Actually, even Dr. Leichter admits this, though indirectly, in that he makes reservations which really undermine his solution, for, when it comes to the point, he wants to take other factors into account. In the first place Dr. Leichter admits the existence of scarce goods and the necessity of calculating with ground rents and rents for mines. To defend this inconsistency he alleges that these scarce rents lose their capitalist character the moment they benefit not the individual, but the community. This point of view is as interesting as it is characteristic, and is often met with in discussing the economic theory of socialism. Whenever an argument is logically or actually weak refuge is taken behind the plea that it is the community and not the individual which benefits from the income. This, of course, is comIDie Wirtschaftsrechnungin der SozialistischenGesellschaft,Vienna, 1923.

21bid., p. 107.

62 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY pletely irrelevant. The point is, has Dr. Leichter, by admitting and taking into account the existence of scarce goods and the necessity of calculating with ground and mine rents, abandoned the principle of labour bein'g the yardstick for value? This is obviously the case.' Who is to receive the income and how is it to be distributed, are questions without significance in this connection. Instead of intro ducing the factor of distribution, Dr. Leichter should have gone closer into the decisive and central question of how such ground and mine rents are to be fixed in the socialist society. That is the problem to be solved. In this connection it may be opportune to draw attention to a misunderstanding for which Dr. Leichter is responsible. He says that Professor Maurice Bourguin in the second chapter of his Les Systemes Sociatistes gives a solution of the problem which corresponds "in every detail" with his own.! It is natural that Dr. Leichter finds points of similarity between that chapter and his own solution, considering that it is there that Professor Bourguindescribes the marxist theory of value. Dr. Leichter must have overlooked the fact that Professor Bourguin ends his chapter with the following statement: "Will value based on labour be able in the collectivist world to fill the dual role played by price, that of equilibrium-factor and factor of progress? If not, what forces will be able to take its place? The whole problem of collectivism is contained in these two questions of equilibrium and progress." 2 Dr. Leichter must also have overlooked the fact that a few pages further on Professor Bourguin writes: "In default of a value which freely follows supply and demand, in the absence of a price giving quantitatively comparable ex pression to the various collective needs, it seems that even with the best statistics at its disposal, the management will have to act blindly." 3 In a footnote Bourguin criticizes Rodbertus for not seizing on this difficulty ana, instead, of suppressing the problem by maintaining that human needs are the same, "en supposant cette serie connue". Finally Dr. Leichter seems to have overlooked the fact that in his profound and comprehensive book Professor Bourguin makes many analogous statements on the importance of price mechanism, and that con sequently he can not quote him in his own support, but should rather give him the name he so often uses: "market-fetishist".

lOp. cit., p. 74. 20,D. tit. (Third Edition, Paris, 1933), p. 23. 30p. cit., p. 49.

CALCULATION IN MARXIST-COMMUNIST COMMUNITIES 63 The second point in which Dr. Leichter departs from the principle of labour being the yardstick of value is that he does not entirely succeed in disregarding the value-judgments of the consumers. To be sure he mocks long and often at the "market-fetishists" and expressly says that the socialist society is absolutely capable of doing without price fluctuations as "warning signals" for regulating pro duction.! Yet, when it comes to the point, these are to be taken into account to a certain extent. No increase in price may take place (not even in the case of scarce goods), but "it is. different with decreases in price occasioned by small demand". 2 Here, presumably, the market, the tastes of the consumer and demand are to make themselves felt. Professor Mises3 and Dr. Tisch,4 both of whom have criticized Dr. Leichter's solution-though on other premises-take him to task for not knowing the subjective doctrine of value. Actually, he knows it well, for not only does he criticize it in so many words, but he seems unable to get away from it. Thus he writes: "A business will be particularly productive, if it produces a great quantity of goods of high value with the least possible expenditure, that is, as cheaply as possible."5 Here it obviously must be subjective value he"isthinking of (whether based on the consumers' or the central authority's value-judgment), for if the value is to be judged exclusively by the number of working hours, the products can hardly be both "cheap" and "of high value"

at the same time. In support of the use of the number of working hours as a yardstick for judging value Dr. Leichter alleges, inter alia, that producers in a capitalist society make use of economic calculation, and from this he draws the astounding conclusion that the costs of production are the decisive ones and that supply and demand have no influence. If this were not so, calculation would, in his opinion, be pure humbug. 6 After such an argument one can-in spite of everything-understand that Dr. Leichter's acquaintance with the subjective theory of value maybe questioned, for, as is well known, calculation and a knowledge of the costs do not mean that the costs alone decide the price. (It is worth noting that, like Max Weber, Dr. Leichter is already making use of the concepts of an ante-and post-calculation.) To justify the use of scarce rents Dr. Leichter alleges that such lOp. cit., p. 83.

21bid., p. 83. 3See "Neue Beitrage zum Problem cler sozialistischen Wirtschaftsrechnung", in Archiv fur SoziabJ)issenschaftund Socia/politi/(,1926, especially pp. 497-500. 40p. cit., pp. 142, 158. 5Ibid., p. 106. 6Ibid., p. 22.

64 ECONOMIC CALCULATION IN THE SOCIALIST SOCIETY goods are few and that "most goods" are not scarce, which has led Professor Mises1 to ask him to name an economic good, where economizing is unnecessary-and that is, indeed, all that needs to be said. All this leads up to the conclusion that the marxist-communist principle of working hours does not give a sufficient foundation for calculation to enable "the economic principle" to be followed. Con sequently it is, for our purpose, unnecessary to occupy ourselves further with solutions which presuppose such a yardstick for judging value as is assumed in these societies. lap. cit., p. 500 • CHAPTER VI MONEY AND THE FORMATION OF PRICES OF CONSUMER GOODS IN A SOCIALIST SOCIETY WITH FREE CHOICE OF GOODS AND OCCUPATIONl WHAT IS to be understood by money has been the subject of much argument in economic theory. We shall not enter into that discussion here. When comparing money in capitalist and socialist communities the most important thing to settle is what its functions in the respective societies are to be. Without pretending to give any definition, one is presumably justified in saying that the chief function of money in a capitalist society is that of a medium of exchange, a medium of fulfilling payment (legal discharging of debts), a medium of storing value, and a measure of value (at a given moment and in anticipation of future values). In the capitalist community the monetary expression of value is price. From another point of view price is the expression of exchange-relationship.2 There is no contradiction in these two dicta.