How would a socialist society coordinate supply to meet needs?

Simple bar codes that we use in supermarkets presently, feeding information into distribution networks is one quick answer. For a lengthier one see below. 🙂

Stock or inventory control systems employing calculation in kind are, absolutely indispensable to any kind of modern production system. While it is true that they operate within a price environment today, that is not the same thing as saying they need such an environment in order to operate. The key to good stock management is the stock turnover rate – how rapidly stock is removed from the shelves – and the point at which it may need to be re-ordered. This will also be affected by considerations such as lead times – how long it takes for fresh stock to arrive – and the need to anticipate possible changes in demand. The Just- In- Time systems are another well tried and trusted method of warehousing and linking up supply chains which can be utilised.

Then there will be the existence of buffer stocks to provide for a period of re-adjustment. It may be argued that this overlooks the problem of opportunity costs. For example, if the supplier of baked beans orders more tin plate from the manufacturers of tin-plate then that will mean other uses for this material being deprived by that amount. However, it must be born in mind in the first place that the systematic overproduction of goods – i.e. a buffer stock – applies to all goods, consumption goods as well as production goods. So increased demand from one consumer/producer, need not necessarily entail a cut in supply to another or at least, not immediately. The existence of buffer stocks provides for a period of re-adjustment. Another point that this argument overlooks the possibility of there being alternative suppliers of this material or indeed, for that matter, more readily available substitutes for containers (say, plastic).

Some kind of “points system” might be used to evaluate different projects facing society – cost-benefit analysis which is not dependent upon dollars and cents calculations. Under capitalism, the balance sheet of the relevant benefits and costs advantages and disadvantages of a particular scheme or rival schemes is drawn up in money terms, but in socialism, a points system for attributing relative importance to the various relevant considerations could be used instead. The points attributed to these considerations would be subjective, in the sense that this would depend on a deliberate social decision rather than on some objective standard.

In the sense that one of the aims of socialism is precisely to rescue humankind from the capitalist fixation with production time/money, cost-benefit type analyses, as a means of taking into account other factors, could, therefore, be said to be more appropriate for use in socialism than under capitalism.

Using points systems to attribute relative importance in this way would not be to recreate some universal unit of evaluation and calculation, but simply to employ a technique to facilitate decision-making in particular concrete cases. The advantages /disadvantages and even the points attributed to them can, and normally would, differ from case to case. So what we are talking about is not a new abstract universal unit of measurement to replace money and economic value but one technique among others for reaching rational decisions in a society where the criterion of rationality is human welfare.

There is the “Law of the Minimum” which was formulated by the agricultural chemist, Justus von Liebig in the 19th century. Liebig’s Law can be applied equally to the problem of resource allocation in any economy. For any given bundle of factors required to produce a given good, one of these will be the limiting factor. That is to say, the output of this good will be restricted by the availability of the factor in question constituting the limiting factor. All things being equal, it makes sense from an economic point of view to economise most on those things that are scarcest and to make greatest use of those things that are abundant.

Priorities can be determined by applying Maslow’s “Hierarchy of Needs” as a guide. It would seem reasonable to suppose that needs that were most pressing and upon which the satisfaction of other needs are dependent would take priority over those other needs. We are talking here about our basic physiological needs for food, water, adequate sanitation and housing and so on. This would be reflected in the allocation of resources: high priority end goals would take precedence over low priority end goals where resources common to both are revealed (via the self-regulating system of stock control) to be in short supply.

To ensure the smooth functioning of the system, statistical offices (and those exist now in a variety of forms) would provide estimates of what would have to be produced to meet people’s likely individual and collective needs. These could be calculated in the light of consumer wants as indicated by returns from local distribution committees and of technical data (productive capacity, production methods, productivity, etc) incorporated in input-output tables.

For, at any given level of technology (reflected in the input-output tables), a given mix of final goods (consumer wants) requires for its production a given mix of intermediate goods and raw materials; it is this latter mix that statistical offices would be calculating. Such calculations would also indicate whether or not productive capacity would need to be expanded and in what branches. The centres would be essentially an information clearing house, processing information communicated to it about production and distribution and passing on the results to industries for them to draw up their production plans so as to be in a position to meet the requests for their products coming from other industries and from local communities.

On the one side would be recorded the resources (materials, energy, equipment, labour) used up in production and on the other side the amount of the good produced, together with any by-products. Each part of production would know its position. If requirements are low in relation to a build-up of stock, then this would an automatic indication to a production unit that its production should be reduced. The supply of some needs will take place within the local community and in these cases, production would not extent beyond this , as for example with local food production for local consumption .Other needs could be communicated as required things to the regional organisation of production. Regional manufacture would produce and assemble required goods for distribution to local communities.

A socialist economy is not a command economy but a responsive one to provide for a self -sustaining steady state society. There would be a marked degree of automaticity in the way the system operated. What decisions that may be required will be made at different levels of organisation: global, regional and local but with the bulk of decision-making being made at the local level.

By the replacement of exchange economy by money-less common ownership basically what would happen is that wealth would cease to take the form of exchange value, so that all the expressions of this social relationship peculiar to an exchange economy, such as money and prices, would automatically disappear. In other words, goods would cease to have an economic value and would become simply physical objects which human beings could use to satisfy some want or other.

The disappearance of economic value would mean the end of economic calculation in the sense of calculation in units of value whether measured by money or directly in some unit of labour-time. It would mean that there was no longer any common unit of calculation for making decisions regarding the production of goods.

Socialist production is self-adjusting production for use. It will be a self-regulating, decentralised inter-linked system to provide for a self-sustaining steady state society. Socialism is self-correcting, from below and not from the top . Planning in socialism is essentially a question of industrial organisation, of organising productive units into a productive system functioning smoothly to supply the useful things which people had indicated they needed, both for their individual and for their collective consumption.

What socialism would establish would be a rationalised network of planned links between users and suppliers; between final users and their immediate suppliers, between these latter and their suppliers, and so on down the line to those who extract the raw materials from nature.

The responsibility of these industries would be to ensure the supply of a particular kind of product either, in the case of consumer goods, to distribution centres or, in the case of goods used to produce other goods, to productive units or other industries. Planning is indeed central to the idea of socialism, but socialism is the planned, but not Central Planning.

Needs would arise in local communities expressed as required quantities such as kilos, tonnes, cubic litres, or whatever, of various materials and quantities of goods. These would then be communicated according to necessity. Each particular part of production would be responding to the material requirements communicated to it through the connected lines of social production.

It would be self-correcting, because each element of production would be adjusting to the communication of these material requirements. Each part of production would know its position. Stocks of goods held at distribution points would be monitored, their rate of depletion providing vital data about the future demand for such goods, information which will be conveyed to the units producing these goods. The units would, in turn, draw upon the relevant factors of production and the depletion of these would activate yet other production units further back along the production chain. There would thus be a marked degree of automaticity in the way the system operated.

A maintenance of a surplus reserve would provide a buffer against unforeseen fluctuations in demand .The regional production units would, in turn, communicate its own manufacturing needs to their own suppliers, and this would extend to world production units extracting and processing the necessary raw materials.

In a socialist world, the notion of status based upon the conspicuous consumption of wealth would be devoid of meaning because individuals would stand in equal relation to the means of production and have free access to goods and services. The only way in which individuals can command the esteem of others is through their contribution to society, and the stronger the movement for socialism grows the more will it subvert the prevailing capitalist ethos, in general, and its notion of status, in particular.

In socialism, we will use the tools and systems that capitalism bequeaths us, which will be suitably modified and adapted and transformed for the new conditions. There are countless professional and trade associations and marketing boards and government departments which have the research and diagnostic tools available, not to mention the trade union movement. All those bodies may be at present based on commerce but can be quite easily democratised, socialised and integrated organisationally.

Socialism will be a priceless society to satisfy human needs, as opposed to capitalism which knows the price of everything and the value of nothing save accruing a profit for a parasitic class.

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