• The Left Chapter

Socialism and profit

Updated: Nov 25, 2020

An excerpt from Profit and "Profits", article by Soviet economist Evsei Liberman, Soviet Union Today 1966

Profit is the difference between the sale price of articles and their cost. But since our prices, in principle, express the norms of expenditure of socially-necessary labour, the difference is an indicator of relative economy in production. Behind Soviet profits there is nothing except hours of working time, tons of raw and other materials and fuel, and kilowatt-hours of electric energy that have been saved...We do not justify profits obtained through accidental circumstances, for example, through excessive prices, and we do not regard such profits as a merit of the factory or other enterprise. We regard such profits, rather, as the result of an insufficiently flexible practice of price fixing. All such profits go into the state budget, without any bonus to the enterprise from them.

Surely it must be clear that in essence and origin profit under socialism bears only a superficial resemblance to profit under private enterprise, while by its nature and by the factors to which it testifies it is fundamentally different from capitalist profit.

Where do profits go in the Soviet Union? Profits belong to those to whom the means of production belong, that is, to all citizens as a whole, to society. Profits go, first and foremost, for the planned expansion and improvement of production, and to provide free social services for the population: education and science, health, pensions, scholarships. Part is spent on the management apparatus and, unfortunately, a rather large part on defence needs. We would gladly give up the latter expenditures if a programme of general disarmament were adopted...

Under socialism, profits can be a yardstick of production efficiency to a far greater degree than in the West, for in the Soviet Union profits follow, in principle, only from technological and organizational improvement. This also means that profits here will play an important but subsidiary role, and not the main role. Like money in general, for that matter. After providing a yardstick of production achievement and serving as a means of encouraging such achievement, profits in the Soviet Union go wholly for the needs of society. Consequently, they are returned to the population in the form of social services and expanded production, which ensures full employment and better and lighter working conditions for all.

In the Soviet Union nobody accumulates profits in the money form — neither the state nor enterprises. This is an important point to grasp. If, for instance, at the end of the year the state as a whole has a surplus of budget revenue over expenditure, the surplus does not lie in the form of accumulated currency but is immediately used.

Consequently, profits cannot become either capital or hoarded treasure in the Soviet Union. They are not, therefore, a social goal or a motive force in production as a whole. The motive force in production under socialism is satisfaction of the steadily growing material and cultural needs of the population. - Excerpt from Profit and "Profits", article by Soviet economist Evsei Liberman, Soviet Union Today 1966

Liberman (1897-1981) was a famed and influential economist who lived in Kharkiv, Ukrainian SSR.