[1] Emacs-Time-stamp: "2007-05-14 18:25:37" __EMAIL__ webmaster@leninist.biz __OCR__ ABBYY 6 Professional (2007.04.26) __WHERE_PAGE_NUMBERS__ top __FOOTNOTE_MARKER_STYLE__ [0-9]+ __ENDNOTE_MARKER_STYLE__ [0-9]+ [BEGIN] __SERIES__ socialism today 099-1.jpg 099-2.jpg [2] ~ [3] __AUTHOR__ NINEL BAUTINA __TITLE__ CMEA Today: From Economic Co-operation To Economic Integration __TEXTFILE_BORN__ 2007-04-26T05:08:15-0700 __TRANSMARKUP__ "Y. Sverdlov"

PROGRESS PUBLISHERS

MOSCOW

[4]

Translated from the Russian by Yuri Sviridov

Edited by Barry and Joyce Jennings

H. B. BAyTHHA

COBEPIUEHCTBOBAHHE aKOHOMHLIECKHX BSAHMOOTHOIUEHHfl CTPAH-^JIEHOB C3B

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__COPYRIGHT__ First printing 1975
© Ha^aTejibCTBO «nporpecc», c lOMeHeHHHMH, 1975
© Translation into English. Progress Publishers, 1975
Printed in the Union of Soviet Socialist Republics

11103--652 b 014(01)75 "~/b

[5] Page CONTENTS Chapter I. Relations of Production within CMEA and the Laws Governing Their Development........ Chapter II. Internationalisation of Production and International Socialist Division of Labour.......... Chapter III. The Mechanism of Economic Co-operation and Its Structure................ 34 77 Chapter IV. The Distinguishing Features of the CMEA International Market. The Problems of Equivalent Exchange and Mutual Benefit...............112 [6] ~ [7] __NUMERIC_LVL1__ CHAPTER I __ALPHA_LVL1__ RELATIONS OF PRODUCTION WITHIN CMEA
AND THE LAWS GOVERNING THEIR DEVELOPMENT

The emergence of the world socialist system after World War II elevated socialism to a new and higher stage in its development and provided a new environment for the functioning of socialism and new factors of economic growth in the socialist countries.

In this new situation, to combine the current and longterm interests of individual socialist countries with those of the socialist community as a whole is no easy task. The sweeping scientific and technological revolution has posed a series of complex problems not only in the technological, organisational and economic fields, but also in social relations. At present the solution of individual problems facing socialist production is increasingly dependent on the successful tackling of the overall problems affecting the development of world socialism as a whole. Today, Lenin's statement to the effect that, ``who tackles partial problems without having previously settled general problems, will inevitably and at every step 'come up against' those general problems without himself realising it. To come up against them blindly in every individual case means to doom one's politics to the worst vacillation and lack of principle'',^^1^^ has a special relevance and urgency.

Historically, social inter-relationships existing within their national economies precede the establishment of economic relations between socialist countries. The world _-_-_

~^^1^^ V. I. Lenin, Collected Works, Vol. 12, p. 489.

8 socialist system is a community of nations where the socialist relations of production contain more or less developed factors of social reproduction which are primarily situated within the national economies of the countries concerned. In this context the primary fundamental inter-relationships, from the standpoint of the world socialist system as a whole, are the production relations existing within the constituent members' economies. Economic relations between socialist countries are based on their internal relations of production, the latter taking priority over the former.

Marx wrote that it is essential to study not only primary relations of production but also ``secondary, tertiary and non-primary, derivative and transferred relations of production".^^1^^ Although these secondary relations rise above the primary relations of production they do not, however, merge with them. International economic relations, as secondary relations of production have a degree of autonomy and exercise an appreciable influence on the progress of social production within a particular country. In this way they form a new specific socio-economic structure---a community of socialist countries---whose characteristics differ significantly from those of any single national economic system. The development of the world socialist system passes through successive stages each with its own material environment determining how mature production relations are within each socialist country and with it the maturity of the economic relations existing among the socialist countries.

Any socio-economic form of international economic relations is derived from the inter-action of similar internal primary relations of production. While not forming an integral part of the latter the international relations rise above them, feeding back more or less intensive impulses which invoke a response from the primary relations of production. At the same time, one should distinguish international economic relations from international relations of production. International economic relations have a more complex structure and form a specific system of relationships involving specific organisational patterns of co-operation, _-_-_

~^^1^^ K. Marx, Grundrisse der Kritik der Politischen Okonomie, Moskau 1939, S. 29,

9 coordinated management and control over activity exchange and the use of specific material incentives and sanctions. This structure is based on a particular system of production relations that has evolved historically.

The present international relations of production among the socialist countries represent a phase in the continued internationalisation of production and exchange. As such they are a system of exchange of material values between socialist countries. Goods and services produced by a socialist country pass through the spheres of production, distribution, exchange and consumption. A proportion of these goods and services are ascribed to meet internal needs while the rest are ascribed to meet the requirements of other socialist nations. These latter are activity exchanges maintained by socialist countries through their economic co-operation.

The production and distribution of goods and services (including those that are exported) represent links in the chain of national socialist reproduction and are governed by economic laws that are generated by the primary relations of production. The movement of goods and services, within the sphere of international socialist activity exchanges, occurs in a highly specific economic environment created by the international economic relations. In the course of activity exchanges between socialist countries material values are placed at the full disposal of individual countries and subsequently are absorbed by national consumption which is governed by the economic laws of reproduction of the national product. Thus, the movement of material values within the world socialist system first passes through the phase of production and distribution within the framework of the national reproduction cycle. Later, part of the product goes to the sphere of international exchange, which depends in a varying degree on the national socialist production and which at the same time influences national production by supplying it with specified quantities of material values via the channels of foreign trade. No CMEA country is able to develop in isolation from the rest of the socialist community if only because of the special new features distinguishing the development of productive forces today.

The CMEA countries have developed impressive industrial, scientific and technological facilities of inter-state 10 importance. At present, co-operation among the socialist countries in production, finance, science and engineering takes a variety of forms which influence appreciably reproduction within individual socialist countries. In particular, the CMEA countries are joining forces to solve their raw material, fuel and energy problems. Thus, Hungary meets 90 per cent of her iron ore requirements from imports. Czechoslovakia imports all of her oil, while Poland imports 90 per cent of her iron ore and 100 per cent of her oil. The GDR imports all of her oil and iron ore.

The scarcity of economic resources experienced by some socialist countries limits their potential for developing an economically efficient large-scale production system encompassing the entire national economy and particularly its capital-intensive branches. In this situation reproducing the gross national product depends on both available internal resources and possibilities, and on economic co-operation with other socialist countries and the extent of production internationalisation.

Thus, the reproduction of material values within CMEA is effected not only by national, primary, and socialist relations of production, but in the case of some of its individual elements by the secondary relations of production among the socialist countries.

All socialist countries extend reproduction on a national basis. So far there is no single reproduction process common to all the CMEA countries and regulated by a unified plan covering the entire socialist community. Nonetheless, national socialist reproduction is not closed or inward-looking. Its individual phases reach beyond the confines of the national economy into the sphere of production relations between the different socialist countries. One must identify objective trends within the present reproduction cycle towards the formation of a unified pattern of production and distribution governed by a single economic development plan. The presence or absence of a single pattern of production and distribution determines the character of production relations but cannot serve as a criterion of their existence.

Under capitalism, with its principle of private enterprise and private ownership of the means of production, the reproduction cycle is geared to further private economic 11 interests and as such cannot be a uniform structure. In a similar way, distribution under capitalism is subordinated to private economic interests. The absence of any common economic interest is attributable to the private ownership of the means of production and characterises a particular capitalist form of the relations of production under which the interests of the capitalist class oppose the interests of the working class. Under capitalism the pursuit of profit is the driving force of production but it also keeps the capitalist class disunited. Industrial enterprises and business firms joined together by the social division of labour are disunited by divergent private interests in the socio-- economic sense. Each component of social production under capitalism, personified in the capitalist owner or in a group of owners, is geared to making the biggest possible profit, even at the cost of harming the other components of the system. The interaction of the various components of social production is not socially controlled. The society itself is disunited and does not have any common socio-economic interest.

The socialist form of production relations embraces a single unified pattern of production and the possibility of developing it in the interests of society as a whole and achieving a common economic interest. Economic relations between socialist countries are in their essence international production relations. They are the social form of the movement of material values between countries, the social form of the internationalisation of production and exchange. The fact that within the socialist system there is appropriation by individual countries does not imply the absence of genuine relations of production and property relations among the different socialist countries.

In agreeing among themselves on the appropriation of material values sovereign socialist countries further their own economic interests, which, as a reflection of the socialist ownership of the means of production, means common international interest. The community of economic interests between the socialist countries is determined by their similar economic base, that is, the public ownership of the means of production, similar state structure, popular power led by the working class and a common ideology---- MarxismLeninism. In entering into economic relations with one 12 another socialist countries further the economic interests of the socialist society they represent, and these goals and interests are common to other socialist countries. In this sense the economic interest of an individual socialist country is common to the rest of the socialist community. In as far as the prospects of the further development of the world socialist system are based on the internationalisation of production and exchange and the full utilisation of the economic potential of each country, then they are dependent on the close economic co-operation of all socialist countries, and the common economic interest is the supreme form of interest. The vital national interest of each country is essentially common to all the socialist countries. The successful economic development and the continued improvement of social relations within each socialist country further the common cause of socialism.

It would be wrong to look upon the socialist countries' community of economic interests as a kind of ``idyllic harmony" since it contains inherent contradictions. Such objective factors as the discrepancies in their levels of economic development, elements of state and economic isolation, the varying maturity of production relations and national and cultural differences all combined to make certain divergencies between the national and overall international interests inevitable. However, the dialectics of the correlation of national and international interests in the socialist countries consists in the fact that the vital national interest of any socialist country can only be realised if it forms part of the overall interests common to the rest of the socialist countries.

Building socialism and communism in a particular socialist country is a common cause both for its people and for the working people in the whole of the socialist community of nations. To successfully build socialism and communism, to achieve the highest level in the development of productive forces and to ensure a stable growth of the working people's material welfare---these are the internationalist duty of each socialist country.

Common international interest springs from the similar form of ownership in each socialist country and constitutes a common goal for socialist production.

13

The appearance of common interests among the peoples of a number of countries is associated with the elimination of private ownership of the means of production. ``If the peoples are really to unite, they must have common interests. If they are to have common interests, the existing [capitalist.---N.B. ] property relations must be abolished...."^^1^^

Today one may see the common international interests reflected in the co-ordination and dovetailing of national interests and the realisation of mutual economic interests.

As the internationalisation of production develops and the pattern of the international division of labour becomes more diversified and as more and more forms of the means of production become socialised the national isolation of the socialist economies will decrease, allowing a single unified system of production and distribution according to a single plan and forming a unified single system of cooperation among the socialist countries.

Co-operation among the socialist countries is part of the emerging international pattern of the socialist division of labour. There is a connection between the social division of labour and relations of production (property). Marx and Engels in their German Ideology wrote: ``The various stages of development in the division of labour are just so many different forms of ownership, i.e., the existing stage in the division of labour determines also the relations of individuals to one another with reference to the material, instrument, and product of labour."^^2^^

In his critique of Proudhon Marx noted that ``the division of labour and all M. Proudhon's other categories are social relations forming in their entirety what is today known as property"^^3^^. Marx referred here to the relations of bourgeois property, but this statement is applicable to an analysis of the content of economic relations in general and to economic relations among the socialist countries, in particular.

International relations of production or property relations, within which the individual states act as counter agents, _-_-_

~^^1^^ Marx, Engels, Werke, Bd. 4, Berlin, 1969, S. 416.

~^^2^^ K. Marx and F. Engels, The German Ideology, Moscow, 1964, pp. 32--33.

~^^3^^ K. Marx and F. Engels, Selected Works, in three volumes, Vol. I, Moscow, 1969, p. 521.

14 represent an historically conditioned type of international division of labour.

Thus, the domination of public ownership in each of the socialist countries, the character of the economic interest which the socialist countries are furthering, the development of mutually advantageous exchange, the formation of stable relationships in key areas of the economy, science and engineering, and the expansion and strengthening of the international market created by the socialist countries make it possible to characterise the totality of economic relations existing among the socialist countries as international production relations of the socialist type.

Establishing a single global working people's co-operative and a world-wide economy is a long process. Lenin wrote: ``Such a union cannot be effected at one stroke; we have to work towards it with the greatest patience and circumspection, so as not to spoil matters and not to arouse distrust, and so that the distrust inherited from centuries of landowner and capitalist oppression, centuries of private property and the enmity caused by its divisions and redivisions may have a chance to wear off."^^1^^

Today Lenin's statement has a particularly topical ring about it. The socialist system gives a great boost to the trend towards unification and consolidation. But it is only a trend that must be further developed and exploited. Elaborating the mechanism of economic co-operation is particularly important in this context. To approach this problem from the right angle, that is to show the role and significance of economics within this mechanism, it is essential to examine how the economic laws which reflect the objective development of economic relations among the socialist countries operate.

The objective laws governing the development of the world system of socialism and their use in the practical work of furthering economic co-operation have been carefully examined by a number of Soviet and foreign economists. Formulating the question of the objective economic laws governing the evolution of the world socialist system depends on the proper interpretation of the structure of socialism as a world system.

_-_-_

~^^1^^ V. I. Lenin, Collected Works, Vol. 30, p. 293.

15

Socialism as a world system represents the dialectical unity of relationships within the national economy of a particular country and of the mutual economic relations existing among the various socialist countries. The laws of the socialist mode of production manifest themselves in a highly specific form within international relations of production while the laws governing the development of economic relations among different socialist countries influence the production cycle within an individual country's economy.

This formulation of the question of the structure of the world socialist system presupposes an analysis of the concrete manifestations of socialist laws and the identification of the common features and national peculiarities in the course of social progress. For instance, the objective laws governing the transition from capitalism to socialism manifested themselves in different ways in the countries forming the world socialist system. That, in turn, determined the diversity of concrete forms and methods of socialist transformation which were dependent on the specific conditions existing in the individual countries. Consequently, the diversity of concrete specific conditions under which individual countries develop modified the operation of the laws of socialism and left an imprint on the specific form of their manifestation.

In the Main Report of the CPSU Central Committee to the 24th Congress Leonid Brezhnev emphasised: ``Not only are we theoretically aware but also have been convinced in practice that the way to socialism and its main features are determined by the general regularities, which are inherent in the development of all socialist countries. We are also aware that the effect of the general regularities is manifested in different forms consistent with concrete historical conditions and national specifics."^^1^^

One other factor that influences the manifestation of the laws of socialism is the existence of the world socialist system which offers additional opportunities for the fuller utilisation of these laws.

Economic laws governing the development of production relations among the socialist countries can be divided into _-_-_

~^^1^^ 24th Congress of the CPSU, Moscow, 1971, p. 9.

16 two types. The first type stems from the socialist mode of production as such, while those of the second type reflect the typical and the most frequently recurring connections among phenomena within international relations of production. As far as the former are concerned it can be said that with the emergence of a world socialist system and the development of economic relations among socialist countries a new sphere for their operation has appeared. The operation of economic laws within this sphere differs from the impact of these laws within individual socialist countries both in terms of scale and in terms of the profundity of socio-economic repercussions. The laws of the socialist mode of production operate within international economic relations to the extent to which the economic relations among different socialist countries have developed. Their operation has a highly specific pattern which is subject to modification.

The extent to which economic relations among different socialist countries grew depends on how far national relations of production have advanced, on the extent to which production is internationalised and also on the maturity of socialist relations of production both within individual countries and within the community of socialist nations as a whole.

Public ownership of the means of production means that production and distribution of material values is expanded in the interests of the whole of socialist society. The law that governs this essential connection is a natural objective incentive for the continued expansion and improvement of socialist production. This law is fundamental as it reflects the basic essential link between members of socialist society; without it socialism is impossible. The basic economic law of socialism reveals the essential link between the mode of production and the social goal of production.

Any type of production is ultimately designed to meet consumer demand. What is produced is eventually consumed, and this simple fact is crucial, for, if it were not so, there would be no production and society would not be able to exist. The social form of this connection between production and consumption may vary significantly. The form and method of connection between production of material values 17 and their consumption depends on the type of ownership of the means of production within a society.

The aim of production is also realised in a particular form of material interest that has been achieved. Public ownership of the means of production means that working people are equally related to them and have equal interests in using them. In this context the association of working people operating the means of production are also their owners. The resulting product thus belongs to the whole of society. Under socialism labour power does not stand in opposition to the means of production as commodity does in relation to capital. Labour power under socialism is part of the productive forces at the disposal of society---the association of working people. Because of this society has a common economic interest in utilising the available productive forces. This common economic interest is the satisfaction of society's needs as a whole and of the needs of its individual members. Engels wrote in this connection that ``the means for existence ... through the planned utilisation and extension of the already existing enormous productive forces of all members of society, and with uniform obligation to work, the means for existence, for enjoying life, for the development and employment of all bodily and mental faculties will be available in an equal measure and in everincreasing fulness".^^1^^

All socialist countries have a similar system of production relations based on the public ownership of the means of production. This being so, their ultimate goal in social production is the fullest possible satisfaction of the growing material and spiritual requirements of all members of society. The existence of similar relations of production and common goals in the development of production combined to promote the formation of a system of international economic relations conducive to achieving the ultimate goal of socialist production, providing incentives for better performance and guaranteeing the successful development of efficient production.

In the modern world, when productive forces are developing at a spectacular rate, it is becoming impossible for _-_-_

~^^1^^ K. Marx and F. Engels, Selected Works, Vol. I, p. 149.

__PRINTERS_P_17_COMMENT__ 2---0516 18 an individual country to produce all it needs from its internal resources alone. In this situation, co-operation among the socialist countries is all-important. The need for cooperation stems firstly from the objective laws governing the development of the productive forces during the current scientific and technological revolution. Secondly, co-- operation is necessitated by the significant changes affecting the structure of societal needs. Thirdly, the need for co-operation is explained by the different countries' extensively differing potentials for further economic growth. Fourthly, it is called for by their widely varying natural resources, and finally, by the existence of the world capitalist system which can only be defeated in the economic field by pooling the efforts of all the socialist countries.

The need for pooling the socialist countries' economic efforts springs from the very nature of socialism, from its internationalism. Hence, it is one of the most essential features of socialism as a world system: co-operation among socialist countries presupposes the meeting of common, mutual economic interests. That is precisely the reason why relations among socialist countries are conducted on the basis of the principles of socialist internationalism, of respect for state sovereignty, independence and national interest, non-interference in the internal affairs, full equality, and mutual benefit and assistance.^^1^^

Economic co-operation is particularly important in achieving common economic interests of mutual advantage, that is, the economic mechanism whereby the advantages of socialism are realised. The pooling of the socialist countries' efforts also stems from the existence of the world socialist system and ensures its normal development as an alliance of socialist countries.

The experience gained over the past quarter of a century allows us to realistically and profoundly assess and find ways to overcome both objective and subjective difficulties that arise in constructing the new society and establishing _-_-_

~^^1^^ See Comprehensive Programme for the Further Extension and Improvement of Co-operation and the Development of Socialist Economic Integration of the CMEA Member-Countries, Moscow, 1971, p. 15.

19 a new socialist form of interstate relations. The common social system, vital interests and objectives of the peoples of the socialist countries allow them, given the correct policy pursued by Marxist-Leninist parties, to overcome these difficulties and to steadily develop and strengthen the world socialist system.^^1^^

The development of economic relations among socialist countries based on the continued internationalisation of production and exchange, involving an increasingly greater part of the national output of different countries, presupposes the maintenance of a satisfactory balance in international economic exchange. Now that the world socialist system is a reality the problem of maintaining a balanced distribution pattern for social labour and of maintaining balance proportions is now acquiring international significance, whereas until recently it was of purely national economic importance.

Proportionality between the different branches of economy and groups of industries is a basic requirement for social production in any form of society. This necessity to maintain proportionality becomes greater the more developed is the division of labour and specialisation and co-operation in production.

Marx in a letter to Ludwig Kugelmann wrote:

``That this necessity of the distribution of social labour in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance is self-evident."^^2^^

Under capitalism, with its private ownership of the means of production, proportions of social production are established spontaneously through the operation of market forces and relations under the influence of the ebb and tide of supply and demand, price fluctuations around value and transfers of capital from one industry to another. In this situation the connection between the different branches of the economy and within each branch takes the form of commodity-money relations and is regulated by the law of _-_-_

~^^1^^ 24th Congress of the CPSU, p. 10.

~^^2^^ K. Marx and F. Engels, Selected Works, in three volumes, Vol. II, Moscow, 1972, pp. 418--19.

20 surplus value. The proportions that result are in fact disproportions because of the crises of overproduction.

The public ownership of the means of production, on which socialism is based, gives labour an immediate social character which is evident directly within the production sphere, where ``individual labour no longer exists in an indirect fashion but directly as a component part in the total labour".^^1^^ This creates objective conditions for changing the way in which proportions are established and indeed changing their very nature, and for modifying the overall pattern of economic relations. Public ownership of the means of production presupposes a deliberate balanced mix of individual industries and groups of industries in the national economy, and that these are based on planned development and growth as the dominant overall economic link.

Since proportionality is a requirement for any material production involving large-scale machine industry, planned development and growth is associated with socialist relations of production and public ownership which alone corresponds to public productive forces. Its degree of maturity depends on the extent of socialist socialisation of production and labour.

The possibility for the planned organisation of social production first arose within the womb of capitalism. Having socialised production in the giant monopolies, capitalism took the social character of labour a stage further, thereby making it necessary to plan the organisation of production. History has fully vindicated Lenin's conclusion that the transition to state monopoly ``capitalism is now evolving directly into the higher, regulated form"^^2^^. At the same time state monopoly regulation sharpens the essential contradictions inherent in capitalist reproduction. The exploitation of the working class is intensified by the use of subtle methods. The non-monopolised part of production is increasingly being ousted and the monopolistic concentration of production capital is accelerated. State monopoly regulation is faced with a situation dominated by cut-throat competition between privately owned capitalist monopolies, trusts and _-_-_

~^^1^^ K. Marx and F. Engels, Selected Works, Vol. I, p. 149.

~^^2^^ V. I. Lenin, Collected Works, Vol. 24, p. 306.

21 the non-monopolised part of production, and also between the isolated economies of the different capitalist countries. Because of imperialism's inherent contradictions an organically integrated capitalist system organised on a planned basis is impossible. Lenin's conclusion that the trusts were naturally incapable of fully planned activity, still are and cannot be otherwise is still completely valid today. The development of state-monopoly regulation is evidence of the deepening contradictions between capitalist ownership in all forms of its manifestations and the socialisation of production on a vast scale. Only by introducing public ownership of the means of production, based on the socialisation of the whole economy, can one provide a favourable environment for planned development and growth as the overall form of economic relations. This type of planned development and growth allows production to be geared to common societal interests and makes it possible for the immediate producers, whose economic activity affects every phase of social production, to foresee the ultimate result of their efforts.

Maintaining production proportions is a particular factor of planned growth and development. Proportionality on the face of it is a particular ratio of individual components of production within the overall social division of labour. A planned maintenance of these proportions presupposes a distribution of labour and the means of production among the various branches of the economy with a view to achieving a goal common to the whole society, namely the satisfaction of the needs of that society as a whole. Planned development and growth is a way to maintain proportions but only iii a general form. The proportions of social production and its structure's changing characteristics are geared to the achievement of a common social goal. A number of essential characteristics spring from this fundamental fact. Under socialist production the basic economic law of socialism is the chief regulator of economic proportions. Production proportions are geared to achieving the maximum benefit, to be used in the interest of society as a whole. Planned development and growth is one way of maintaining economic proportions which guarantee best results on a minimum outlay of labour.

22

On the face of it the proportions in socialist production are the totality of consumer values necessary for the fullest possible satisfaction of society's needs. Under socialism labour remains qualitatively and economically heterogeneous. This complicates the direct comparison of the labour time expended in different areas of production (within state-owned and co-operative-owned spheres) and within different industries and enterprises in the same industry. Such a comparison can only be made indirectly by comparing the expenditures of socially necessary and abstract labour on the basis of value. This results in the proportions of socialist production or the distribution of social labour among different industries having a value characteristic as well as natural and substantive characteristics. Further a planned maintenance of proportions is organically bound up with the use of commodity-money relations and the law of value. This is the situation prevailing in primary relations of production.

Proportionality within the secondary relations of production under socialism implies a pattern of distribution of social labour among the different branches of the national economy which takes into account the objective internal and external potentialities (resources) as well as the requirements of the national economy and economic co-operation. The distribution of the means of production and of labour power is the internal substance of the prevailing pattern of the social division of labour and in addition presupposes the specialisation of production within the economy and within the international division of labour among socialist countries. Accordingly the social character of labour undergoes constant development and now is recognised as international in character. The changing pattern of the social character of labour depends on the progress of the socialist internationalisation of production.

The distribution of the means of production and of labour among the various industries and branches of the economy in line with the exigencies of the international socialist division of labour and the potentialities of each country affects the economic interests of the state.

All this presupposes the voluntary acceptance of obligations concerning international specialisation of production 23 in full conformity with the principles of equality and independence of the socialist countries involved.

A good balance between the expenditures of socially necessary labour and the actual demand for a particular type of product within the framework of the world socialist system emerges in accordance with the development of international socialist division of labour. It represents the correlation between that part of output which is involved in the international economic exchange and that part of the socialist countries' social demand which falls within the sphere of international economic relations. These proportions manifest themselves partly in a form of the correlation between demand (the necessary volume of imports) and supply (the necessary volume of exports).

Since the social character of labour is the objective basis for planned development and growth within a socialist economy the development of planned growth within secondary relations of production depends on the further development of the social character of labour and the emerging international aspects of their social character which reflect the development of the socialist internationalisation of production.

In international socialist relations of production, the further internationalisation of the productive forces and the growth of production socialisation provide the prerequisite material basis of further planned development and growth.

An essential aspect of production internationalisation is the specialisation of national economies within the international socialist division of labour. The labour occupied in specialised industries and enterprises within a socialist country assumes an international significance in production itself, although the specialised part of the economy remains under the countries' socialist ownership.

Developing planning as a form of implementing economic processes between socialist countries directly depends on the internationalisation of production and the development of the international socialist division of labour. To the extent that socialist socialisation assumes an international significance the objective prerequisites are created for a planned development of the economic process within the world socialist system.

24

Planned development and growth in international economic relations concerns both international specialisation of production and the associated exchange of activity. At the same time the objective material basis of this exchange is the international character of social labour. Planned development and growth, as a form of the progress of economic processes maintained between different socialist countries, springs from the planned nature of socialist relations of production vis-a-vis individual socialist countries.

It is known that as each socialist country develops its economy the reproduction of the gross national social product is not maintained by relying on the internal resources of that country alone. A basic condition for normal reproduction is economic co-operation and mutual exchange of activity both of which are major factors of economic growth. In this situation planning reproduction within a country is possible, given that there are guaranteed markets and provided there is an organised, planned, system of sales within international activity exchanges, including the world socialist market. Since the sales of different socialist countries' products are involved an objective need arises for maintaining proportions in a planned way within this international sphere of activity exchanges, including the world socialist market.

The special character of international socialist relations of production affects the way in which the law of planned balanced development is applied within this highly specific sphere.

The general form of deliberate utilisation of the totality of economic laws is co-operation in planning procedures.

The CMEA countries' comprehensive programme for economic integration emphasises that ``co-operation in activities, especially the co-operation of plans, is the main method for organising co-operation and extending the international socialist division of labour".^^1^^ The co-ordination of national economic development plans stems from the national economic planning procedures and in this sense is affected by the objective laws governing the development of the national economy of different socialist countries. At the same time _-_-_

~^^1^^ Comprehensive Programme..., Moscow, 1971, p. 24.

25 the co-ordination of national economic plans is voluntary and is aimed at co-ordinating the efforts of different socialist countries. It does not impinge on questions of internal planning, finance and the activity of organisations operating on a profit and loss basis within individual socialist countries.

The central planning authorities of the CMEA countries play the leading role in co-ordination of national economic development plans. These planning agencies are responsible for the co-ordination of plans on a bilateral and multilateral basis. They involve in this work the appropriate CMEA agencies, ministries, government departments, economic amalgamations and major industrial units. They also rely in their operations on direct links between government bodies and economic organisations in charge of individual industries in different socialist countries.

The planned development of the international socialist division of labour implies in effect a planned and organised process of production internationalisation.

The involvement of economic organisations and enterprises in social production on a planned basis (the planned inclusion of labour expenditures of individual enterprises in the total labour expenditures of society) provides favourable conditions for a rational and efficient utilisation of social labour and for saving labour time. As Marx put it, ``time economy like the planned distribution of labour time among different branches of production, represents the prime economic law on the basis of collective production".^^1^^

The saving of working time is associated above all with the functioning of public property and with the resultant opportunity for using the available productive forces in the interests of the whole of society. The economy of social labour is a reflection of an essential characteristic of public ownership of the means of production and is directly bound up with the planned character of the progress of economic processes under socialism. The saving of live labour and the reduction of expenditures of embodied labour coupled with the reduction in the rates of material outlays on _-_-_

~^^1^^ Archives of K. Marx and F. Engels, Moscow, 1935, p. 119 (in Russian and German).

26 production represent a saving of labour time and results in a higher labour productivity. Marx considered that rising labour productivity was a universal economic law that operates within all socio-economic formations. Under socialism the social productivity of labour throughout the economy takes priority over individual labour productivity within individual enterprises. This greatly increases the opportunities for using spare capacities for boosting labour productivity and allows a comprehensive approach to the problem of raising labour productivity, to the task of economising at every phase of production, transportation and in the use of the product. The saving of social labour under socialism is helped by society's, the production collective's and the individual producer's vital interest in the steady growth of labour productivity.

Saving labour time is not only a matter of rising labour productivity. It would be a simplification to interpret the law of time economy as resulting in a higher labour productivity alone. The law of time economy under socialism is associated above all with planned development and growth, with the possibility of distributing social labour according to a deliberate well-designed plan. This in itself is tantamount to time economy.

The law governing the saving of labour time operates within international socialist relations of production through savings in the socially necessary expenditures made by individual socialist countries. In each country the resultant savings take the form of freeing quantities of labour from a particular branch of the economy and using this labour more efficiently elsewhere. The savings of national socially necessary expenditures are achieved through foreign trade and take the forms of profit. If we bear in mind that 70 per cent of the foreign trade turnover of socialist countries is accounted for by mutual trade we will see that the realisation of the national socially necessary expenditures saved is a common problem which takes the form of guaranteeing mutual benefit.

Under modern production, when the productive forces are developing rapidly, isolated economic activity cannot ensure production on a mass scale with the maximum efficiency in labour expenditures. The saving in expenditures of social 27 labour requires the socialist countries to draw their economics together on the basis of a rational production specialisation and co-operation in economic resources, on the basis of producing the maximum quantity of goods for a minimum expenditure of labour, in conditions of full co-ordination in the use of the economic resources of all socialist countries.

Today none of the socialist countries is yet prepared to regard its own production resources as being a component of the larger production resources of the whole of the social community of nations. Nonetheless pooling resources is not automatic and it is not based on good intentions alone. Success here wholly depends on the efficient implementation of economic measures which meet, in a flexible way, the national interests of each socialist country as it contributes to the achievement of goals common to the rest of the socialist community.

Summing up the foregoing we might make the following generalisations. The economy of social labour within the sphere of international relations of production is associated, firstly, with the planned character of the development of the international socialist division of labour. Secondly, it is associated with the growth of labour productivity springing from the increasing internationalisation of production and the growing possibilities of exploiting the fruits of the continuing scientific and technological progress, which makes it possible to deploy production facilities of optimal size and capacity. Thirdly, it is associated with the growth of labour productivity springing from the optimisation of the structure of national economies under the impact of external economic relations.

The economy of labour within international relations of production reflects then a complex pattern of secondary and primary relations, reflecting the impact of stimuli which promote the steady growth of labour productivity and stem from both the primary and secondary relations of production.

The division of labour among socialist countries, tho measure of isolation of the national property of individual socialist countries and the nature of social labour within them combine to necessitate the commodity-money form of 28 activity exchanges between the different socialist countries and the operation of the law of value.

The relationships existing in the world socialist market represent on the one hand an extension of internal relationships, while on the other they are characterised by a number of special features associated with the fact that the world socialist market does not absorb national markets but rather coexists with them, and sovereign socialist states or business firms duly authorised by them act in their capacity as agents in the international socialist market.

The commodity-money relations existing among socialist countries differ from those in the world capitalist market and also from the modern commodity-money relations existing within the individual socialist countries. Socialist countries enter into economic relations with one another and with capitalist countries. They trade with other socialist countries and with the capitalist countries.

The socialist character of the mutual economic relations among CMEA member-countries is so far less mature than it is in the economic relations at the level of the primary relations of production. This explains the specific character of relations existing in the world socialist market ( specifically in the international market involving the CMEA countries) as distinct from relations existing in the socialist market of individual socialist countries. But there is one common dominant factor and that is the planned functioning of the market both in the world socialist economy and in the purely national economy. This unique property of the socialist market, springing from the various special conditions dominating production relations among socialist countries, has been duly noted in the CMEA countries' Comprehensive Programme of economic integration: ``...the systematic extension and increase in the effectiveness of mutual trade, the improvement of its organisational forms on the basis of a state monopoly."^^1^^

The law of value operates both in the world socialist market and in the internal markets of individual socialist countries. The essence of this law remains unchanged and is exemplified in the reduction of various types of labour _-_-_

~^^1^^ Comprehensive Programme..., p. 17.

29 expenditures to a unified criterion. However, the mechanism for the operation of the law of value---deviations of price from social value---has varying socio-economic repercussions in the socialist world market and in the internal markets. Within a country the law of value operates in conditions of a single economic organism and society as a whole, by using the entire system of economic laws in a planned way, is able to regulate production exchange and consumption more or less successfully. A different situation prevails within the world socialist system where as yet there is no common international property and each socialist country having economic relations with other socialist countries pursues its own national economic interest.

The existence of a system of socialist countries and the development of political, economic, scientific and technological co-operation and mutual assistance among them underlies their gradual drawing together and the levelling-up of their economic development.

The gradual overcoming of disparities in the levels of economic development in the individual socialist countries is an objective historical process. There is an added urgency in levelling up economic development because of the demands made by the current scientific and technological revolution and the further development of co-operation and economic integration. Both industrially advanced and less advanced members of CMEA have an equal vital stake in levelling up economic development. The experience of socialist construction in the European socialist countries has demonstrated that levelling up economic development through the proper use of the chief laws governing socialist construction is achieved through the proper use of these laws in all countries embarking on the socialist path of development. The socialisation of industry and agriculture played the main role in the efforts aimed at boosting the level of economic development.

The levelling-up of economic development is a long process and its effectiveness increases with the improvement in the international socialist division of labour.

Levelling up economic development in the different countries does not mean that advanced industrialised countries should slow down their development and wait for other 30 countries to catch up or transfer part of their accumulation fund to other countries. Levelling up overall economic development in socialist countries is achieved mainly by eacJi socialist country fully using its internal resources. Other ways include the continuous improvement of economic management techniques, the consistent implementation of Leninist principles and methods of socialist economic management and the efficient exploitation of the advantages offered by the world socialist system.

Thanks to the progress of industrialisation, all the European socialist countries, who are members of the GMEA have been able to significantly level up their economic development. This is shown among other things by bridging the gap in the levels of industrial output per capita (see Table 1).

Table 1 Industrial Output Per Capita (USSR = 100 per cent) Country 1950 1955 I960 I'.IG.I Bulgaria 40 50 60 70 Hungary 80 80 80 80 GDR --- 150 160 150 Poland 70 80 70 80 Rumania 30 40 40 50 USSR 100 100 100 100 Czechoslovakia 150 140 140 120

Rapid industrial progress has created conditions for boosting labour productivity. The levelling-up of economic development is not an end in itself. The countries building socialism had widely varying levels of economic development and an unsatisfactory economic structure from the standpoint of socialism. They faced the task of overcoming their economic backwardness by socialist methods and of tackling the problem of levelling up their economic development.

The gradual levelling-up of economic development within the CMEA is organically linked with the achievement of a 31 higher labour productivity compared to the capitalist countries. This is a major task of socialist and communist construction.

The levelling-up of economic development within CMEA is the material basis for a greater community of national interests and for making co-operation within the community ever more effective. This goal determines the ways and means of levelling up economic development.

The Comprehensive Programme of co-operation and integration within the CMEA states in this connection: ``Among the main ways for a gradual drawing closer together and evening-out of the economic development levels of the CMEA member-countries are, first and foremost, the maximum mobilisation and utilisation of the efforts and resources of the countries concerned, and the utilisation of the advantages offered by the international socialist division of labour."^^1^^

The levelling-up of economic development is a problem facing all the socialist countries, therefore it should be regarded from the standpoint of the common goals and objectives in the development of the community of socialist countries.

The world socialist system as a whole will gain if the socialist countries have similar levels of labour productivity in the same industries and a similar standard of living. For all CMEA countries and particularly for those less advanced industrially than others the determination of the long-term trends in the formation of a national economic complex is of great importance. During the current scientific and technological revolution setting up such a complex presupposes the development and deepening of international production specialisation. The economic integration of the CMEA countries calls for a comprehensive approach to the job of levelling up economic development, and a full account must be taken of all forms and areas of co-operation. The Comprehensive Programme for the CMEA countries' economic integration outlines concrete ways and means to gradually draw together and level up their economic development, as well as outlining methods of extending all-round _-_-_

~^^1^^ Comprehensive Programme..., p. 19.

32 help and assistance to less developed socialist countries. For instance, less developed countries have been given every opportunity for participating in international production specialisation, including the development of new industries, provided these countries guarantee the high technological level and quality of the resultant products. At the same time guarantees have been provided for a steadily expanding market for the sales of specialised products. Less developed socialist countries will receive effective help and assistance in their efforts to achieve a high technical standard and quality for their specialised products.

The provision of effective technical assistance covering the entire range of the production cycle from designing to the launching of mass production is of great importance to solving the problem of levelling up economic development. The problem of levelling up economic development may be solved through enlisting the services of less developed countries in scientific research and development projects and through co-ordination, co-operation and joint implementation of projects. Less developed countries will also be involved in the work of scientific and technical organisations set up by the CMEA countries for joint research and development.

The Comprehensive Programme for economic integration outlines measures to provide a proper material base for levelling up economic development by extending credits through International Bank for Economic Co-operation and the International Investment Bank and also by maintaining the current soft terms under which certain types of products of a seasonal character are exported.

Accelerating economic growth and economic efficiency in the Mongolian People's Republic is no mean task in a larger context of levelling up economic development within the CMEA countries.

The development of an efficient economy in the Mongolian People's Republic is looked upon as a common cause of the rest of the CMEA countries. The measures aimed at stepping up economic development in Mongolia include among other things the joint construction and operation of industrial units, assistance in launching industrial capacities, the granting of credits on easy terms, preferential prices for 33 agricultural produce whenever necessary and in addition free aid to the Mongolian People's Republic in appropriate cases following consultations with its government.

The record of economic development in Mongolia, a country building socialism and by-passing the capitalist stage of development, is a good example of what socialism can do for a once backward country. In the recent past Mongolia was a country where nomadic stock-farming was the only economic activity. Today, industry and building in the republic account for one-third of the national income.

Another example of the effectiveness of socialist countries' economic integration has been provided by the Republic of Cuba which joined the Council of Mutual Economic Assistance in 1972. Explaining the reason why the government of Cuba decided to enter CMEA Carlos Rodriguez, member of the Secretariat of the Central Committee of the Communist Party of Cuba, said that today it is unthinkable to develop Cuba's economy without close economic cooperation with the rest of the CMEA countries, without involving Cuba in the process of socialist economic integration. Cuba's participation in the economic integration would be a further contribution to the strengthening of the unity and cohesion of the socialist countries and it would bolster socialist construction in Cuba itself.

Cuba's economy in conditions of economic integration with the rest of the CMEA countries is better placed to develop in a balanced way making full use of the advantages of the international socialist division of labour. Besides, Cuba now has a large socialist world market for its products. The development of a diversified economy comprising ferrous and non-ferrous metallurgy, certain types of engineering industries, chemical, textile and food industries began when Cuba embarked on the socialist path of development.

Each socialist country, guided by the principles of socialist internationalism, makes its contribution to the achievement of the goals and objectives common to the entire socialist community of nations. Herein lies the main strength of socialist economic integration.

__PRINTERS_P_33_COMMENT__ 3---0516 [34] __NUMERIC_LVL1__ CHAPTER II __ALPHA_LVL1__ INTERNATIONALISATION OF PRODUCTION
AND INTERNATIONAL SOCIALIST DIVISION
OF LABOUR

The world system of socialism has entered upon a new stage of its development---economic integration. The objective basis for the economic integration of the socialist countries is the internationalisation of production and exchange which are intimately bound up with the development of the national productive forces and the social division of labour.

The necessity for economic integration for the GMEA countries springs from the maturity of socialist production relations, from the level of the socialisation of productive forces achieved by the socialist countries and from the structural changes that have occurred within the economies of socialist countries.

The final communique of the 25th Session of the Council for Mutual Economic Assistance stated: ``The Communist and Workers' Parties and Governments of the CMEA countries work to improve and develop co-operation and socialist economic integration with a view to solving with greater success the major socio-economic problems facing socialist countries, to advancing productive forces further, achieving the heights of scientific and technological development, improving the standard of living and to building up the defence potential of the CMEA countries.'' The development of socialist economic integration in the CMEA countries is the regulation in a planned way by their communist and workers' parties and governments of the further progress of the international socialist division of labour, the 35 levelling-up of economic development, the formation of modern and highly efficient national economic structures and the gradual overcoming of discrepancies in the levels of economic development.

The CMEA countries' economic integration is based on the implementation of Leninist principles for relations among the working people of countries that have embarked on the road of communist and socialist construction.

Lenin stressed the need for a voluntary alliance of nations that excludes any coercion by one country against another, an alliance based on concrete tasks and a clear realisation of unity and a completely voluntary agreement in the spirit of brotherhood.

At a time when discrepancies in economic development are still important, when national distinctions and differences in state structure are still a factor to reckon with Lenin's proposition about the need for a careful account to be taken of the national differences when working out general methods and forms of joint activity acquire a special urgency. Lenin wrote: ``As long as national and state distinctions exist among peoples and countries---these will continue to exist for a very long time to come, even after the dictatorship of the proletariat has been established on a world-wide scale---the unity of the international tactics of the communist working-class movement in all countries demands, not the elimination of variety or the suppression of national distinctions (which is a pipe dream at present), but the application of the fundamental principles of communism (Soviet power and the dictatorship of the proletariat), which will correctly modify these principles in certain particulars, correctly adapt and apply them to national and nationalstate distinctions."^^1^^

In stressing the need for respect for state sovereignty Lenin, at the same time, warned against national aloofness and isolation against a tendency ``to erect a Chinese Wall around his nationality, his national working-class movement".^^2^^

Historical experience has fully confirmed the validity of Lenin's ideas. The Comprehensive Programme incorporates _-_-_

~^^1^^ V. I. Lenin, Collected Works, Vol. 31, p. 92.

~^^2^^ Ibid. Vol. 6, p. 521.

__PRINTERS_P_35_COMMENT__ 3* 36 Marxist-Leninist principles governing relations among socialist countries, such as socialist internationalism, respect for slate sovereignty, independence and national interests, n on-interference in the internal affairs of other countries, complete equality, mutual benefit and mutual assistance in a comradely spirit.

Socialism as a world system implies internationalisation of the productive forces. The development of the productive forces at the present stage calls for concentration of production on an international scale. Socialist countries have developed a variety of forms of economic co-operation which facilitate the process of production internationalisation and economic consolidation of socialist countries. Economic integration of socialist countries takes shape under the impact of production internationalisation and in the course of economic consolidation. Economic integration is a phase on the way to the formation of a single world economy run according to a single unified plan.

The problem of mutually adjusting and dovetailing the national economies of different countries has a direct bearing on international specialisation of production and the development of the international division of labour. The problem of integration in itself is organically linked with the internationalisation of the productive forces and the international division of labour.

The structure of a socialist country's national economy should develop in such a way as to ensure the dovetailing of the economy with the integrational economic links and to achieve the optimum economic mutual adaptability.

Internationalisation of production and exchange first arose in the machine-industry period of capitalism. Lenin wrote: ``The development of the productive forces of social labour is to be observed in full relief only in the epoch of large-scale machine industry."^^1^^

Since the machine system first became the technical base of capitalist production and a large-scale machine industry took shape the natural isolation of different countries has come to an end.^^2^^ Lenin wrote: ``...characteristic features _-_-_

~^^1^^ V. I. Lenin, Collected Works, Vol. 3, pp. 595--96.

~^^2^^ See K. Marx and F. Engels, The German Ideology, p. 76.

37 which distinguish large-scale machine industry from the preceding forms of industry may be summed up in the words--- socialisation of labour. Indeed, production for an enormous national and international market, development of close commercial ties with various parts of the country and with different countries for the purchase of raw and auxiliary materials, enormous technical progress, concentration of production and the population in colossal enterprises, demolition of worn-out traditions of patriarchal life, creation of mobility of the population, and improvement of the worker's standard of requirements and his developmental 1 these are elements of the capitalist process which is increasingly socialising production in the country, and with it those who participate in production."^^1^^

Lenin emphasised that capitalist development meant ``the rapid expansion of a close network of channels which cover the whole country, centralising all capital and all revenues, transforming thousands and thousands of scattered economic enterprises into a single national capitalist, and then into a world capitalist economy".^^2^^

The expanding scale of production and the constant transformation of the capitalist mode of production combined to make the capacity of the national market inadequate for a particular type of products turned out in vast quantities. This is one of the essential distinctions and the advantage of the capitalist development of the productive forces compared to feudalism where, ``economic units could exist for centuries without undergoing any change either in character or in size, and without extending beyond the landlords' manor, the peasant village or the small neighbouring market for the rural artisans and small industrialists (the so-called handicraftsmen). The capitalist enterprise, on the contrary, inevitably outgrows the bounds of the village community, the local market, the region, and then the state."^^3^^

The development of productive forces is accompanied by the further growth of the social division of labour which _-_-_

~^^1^^ V. I. Lenin, Collected Works, Vol. 3, pp. 548--49.

~^^2^^ Ibid., Vol. 22, p. 213.

~^^3^^ Ibid., Vol. 3, p. 60.

38 at any given time is dormant within a particular structure of the economy. This economic structure just like the social division of labour, which is the determining basis of that structure, changes under the impact of the developing productive forces and the dominant form of the relations of production.

Marx and Engels define the division of labour as ``the totality of the physical aspects of social labour,"^^1^^ ``a definite organisation of the labour of society".^^2^^

The social division of labour is the system of the division of labour among national economies, within the individual national economies and also within particular industrial units. With the basis of each structure level being the same, each level of the social division of labour is characterised by its own special features while at the same time being in a dialectical unity with the other structural levels. In certain periods of the development of social production a particular structural level begins to have a dominant impact on the entire social division of labour. Under certain conditions the international division of labour may have a similarly dominant impact on the structure and efficiency of social production as a whole.

The social division of labour presupposes a mutual interdependence, within a single economic organism, of the different forms of social activity. Specialisation and co-operation are two aspects of the process of the social division of labour. The social division of labour develops through ``specialisation of the instruments of labour, by the formation of detail labourers, and by grouping and combining the latter into a single mechanism, division of labour in manufacture creates a qualitative gradation, and a quantitative proportion in the social process of production; it consequently creates a definite organisation of the labour of society, and thereby develops at the same time new productive forces in the society".^^3^^

The productive forces of a society develop and improve through the individual worker's growing labour productivity. _-_-_

~^^1^^ K. Marx, A Contribution to the Critique of Political Economy, London, 1971, p. 51.

~^^2^^ K. Marx, Capital, Vol. I, Moscow, 1958, p. 364.

~^^3^^ Ibid.

39 That in turn is made possible by the specialisation of instruments and subjects of labour. Other contributing factors include the worker's steadily rising skill and the reduction in the number of operations he has to perform and time economy. The productive power of social labour rises in response to the cumulative effect resulting from the sum total of the productive power of individual producers. The productive power of social labour also rises as a result of labour co-operation, the changing pattern of production and the increasing application of science as an immediate productive force.

In identifying the productive forces of society as the basis of the social division of labour Marx stressed that the division of labour is both a form of social relations, implying the specialisation of producers in a given sphere of material production, and the inevitable exchange of activity between specialised collectives of workers.

Division of labour presupposes the distribution of the means of production and labour power among the different fields of activity. The nature of this distribution determines the transition from one stage of the division of labour to another and is ultimately expressed in a changed form of property. Marx wrote: ``The various stages of development in the division of labour are just so many different forms of ownership, i.e., the existing stage in the division of labour determines also the relations of individuals to one another with reference to the material, instrument, and product of labour."^^1^^

Marx pointed out that the division of labour and property are identical in the sense that ``in the one the same thing is affirmed with reference to activity as is affirmed in the other with reference to the product of the activity".^^2^^

Social division of labour is exemplified in activity exchange, in other words, it is identical with the exchange of activity. Differences in the consumer properties of different products manufactured by different producers or groups of producers create the natural need for exchange. If these specialised producers or groups of producers are isolated _-_-_

~^^1^^ K. Marx and V. Kngcls, The German Ideology, pp. 32--33.

~^^2^^ Ibid., p. 44.

40 owners then what we have is not exchange of products but rather an exchange involving consumer values, commodities. This type of exchange takes place through commoditymoney relations.

As the productive forces develop and the social division of labour becomes more diversified the national confines of exchange prove to be increasingly too narrow. The productive forces gradually transcend national boundaries. They are followed by the division of labour. Just as the social division of labour within a particular country manifests itself on the national internal market, the division of labour among the economies of different countries manifests itself on the world market. The material basis of the international division of labour is provided by the internationalisation of the productive forces and in the final count the development of the national productive forces.

The internationalisation of production reflects an objective process of the socialisation of the productive forces. To enable the productive forces to cut across the confines of national economies three things are essential: (a) a high concentration of the means of production and labour power within individual enterprises; (b) production specialisation allowing mass production of particular items, and (c) the saturation of the internal market with particular types of product. Thus national production, which develops a particular pattern of specialisation through the social division of labour within the national economy, proceeds to supply its goods to the external market---herein lies its international significance.

National production supplies certain types of goods to the external market, thereby consolidating the pattern of specialisation that has taken shape within the national economy. From the standpoint of the external or international exchange of activity, this appears as a form of the international specialisation of production.

International specialisation is not an isolated entity standing in opposition to the national productive forces and the national structure of production; rather it is the specialisation of individual branches of national production and the specialisation of individual enterprises. The specialisation of national economies, national industries, 41 production units and production amalgamations which supply a steady flow of goods to the external market forms a particular structure of the international division of labour whose character is determined by the dominant type of production relations.

Historically, the international division of labour dates back to the early stages of the world capitalist economy.

The emergence of the world capitalist economy and the development of its division of labour represented a single interdependent process. As capitalism developed and spread throughout the world more and more economic territories were sucked into the orbit of its domination. This facilitated the international division of labour and the emergence of a world market. The emergence of the world market prepared the ground for expanding production and accelerating the development of large-scale industry.

Thanks to the use of machines and steam, the division of labour assumed such vast proportions that the development of large-scale industry became solely dependent on the state of the world market, on international exchange and the division of labour.^^1^^

When capitalism determined the principal trends in social development arid in this sense was the dominant mode of production the social division of labour among different countries was capitalist in character. The international capitalist division of labour is a spontaneous and uncontrolled process. Just as the main stimulus for capitalist production is profit so the object of the international capitalist division of labour is also to make the highest possible profits.

The capitalist mode of production, with its inherent economic laws, determined the forms and methods of the given division of labour among countries in the capitalist economy. The pursuit of profit and competition determined the coercive methods of drawing economic areas into the world capitalist market. The capitalist class in the industrially advanced countries had little difficulty in ousting commodities from economically backward countries from the world market and in gaining control of the backward economies, turning them into a lucrative sphere for their capital.

_-_-_

~^^1^^ See K. Marx, The Poverty of Philosophy, iVIoscow, 19(52, p. 134.

42

The British Empire was a typical example of this. Britain sucked East India into the world economy. Marx wrote in this connection: ``By ruining handicraft production in other countries, machinery forcibly converts them into fields for the supply of its raw material. In this way East India was compelled to produce cotton, wool, hemp, jute, and indigo for Great Britain. ...A new and international division of labour, a division suited to the requirements of the chief centres of modern industry springs up, and converts one part of the globe into a chiefly agricultural field of production, for supplying the other part which remains a chiefly industrial field. This revolution hangs together with radical changes in agriculture which we need not here further inquire into."^^1^^

The specialisation of national production during the formation of a world capitalist economy developed in such a way that international activity exchanges occurred between the products of machine industry and agricultural products and raw materials. This pattern corresponded to the general division of laboiir according to the types of goods involved.

The international capitalist division of labour developed as a specialisation that was imposed by capitalism. This sprung from the need to develop national productive forces, a need dictated by the law of concentration of large-scale machine production. The international capitalist division of labour is associated directly with the internationalisation of production and exchange.

Marx and Engels wrote in the Manifesto of the Communist Pary: ``National differences and antagonisms between peoples are daily more and more vanishing, owing to the development of the bourgeoisie, to freedom of commerce, to the world market, to uniformity in the mode of production and in the conditions of life corresponding thereto."^^2^^

The internationalisation of production is essentially a process involving the socialisation of the national productive forces represented by individual industries, individual industrial units or groups of units supplying their products to the world market in their capacity of specialised producers.

_-_-_

~^^1^^ K. Marx, Capital, Vol. I, p. 451.

~^^2^^ K. Marx and F. Engels, Selected Works, Vol. I, pp. 124--25.

43

Capitalist relations of production impart specific features to production internationalisation. First, production internationalisation under capitalism develops spontaneously and is geared to the aim of extracting maximum profits. Secondly, as long as capitalism was able to develop extensively, let us say as long as the products of national capitalist production found free markets, the process of internationalisation proceeded smoothly, encountering few or no obstacles. Factors such as the division of markets between different groups of monopolies, the creation of international monopolies and the uneven development of capitalism in the imperialist era combine to give capitalist internationalisation of production a particular nature. In the era of imperialism, when the formation of the world capitalist economy has been completed, the giant monopolies unify production, thereby increasing its socialisation. The progress of the productive forces, the character of the instruments of labour employed and the vastly increased concentration of production combined to necessitate specialisation in the production of individual parts and components and individual items and thus serve to enhance the internationalisation of production.

The contemporary stage in the development of the capitalist internationalisation of production is reflected in the emergence of a wide variety of international monopoly capitalist alliances. These have divided markets and sources of raw materials among themselves. It is also reflected in the changing structure of world trade which is now being supplemented by the exchange of machinery and machinery for primary products and agricultural produce.

Table 2 Commodity Structure of Exports by Capitalist Countries (in per cent to the total annual output) 1 3 5 5 1968 111 Oil Fuel, food, raw materials 49.4 35.4 33.7 Finished industrial goods, inclusive machinery and equipment 49.2 63.2 64.5 18.4 27.3 28.3 44

The share of finished industrial goods in world capitalist trade is growing while the share of raw materials, fuel and food is declining.

Two tendencies noted by Lenin can now be clearly seen: ``The first is the awakening of national movements, the struggle against all national oppression, and the creation of national states. The second is the development and growing frequency of international intercourse in every form, the break-down of national barriers, the creation of the international unity of capital, of economic life in general, of politics, science, etc."^^1^^

These two tendencies have found expression in the increased interpenetration of capital, in a greater degree of internationalisation of economic activity, in a measure of integration of the national economies and in the widening gulf between the major capitalist countries and their former colonies and semi-colonies. Before World War II, developing countries lagged behind the major capitalist countries in every respect. In particular their per capita national income was only 12.5 per cent of that of developed capitalist countries. By comparison, today their national income is about 8 per cent of the advanced capitalist countries and by the year 2000 it is expected to shrink to almost 5 per cent.

The development of the internationalisation of production naturally leads to a closer economic unification of individual branches of the economy of different countries. Based on capitalist property this unification takes the form of international unions of monopolies.

Table 3 The Gross National Product 1'er Capita in Developing and Industrialised Capitalist Countries (in US dollars, 1963 prices) 1950 1960 1. Industrialised countries 1,110 2,040 2. Developing countries :i. Ratio 2:1 11:5 1 :8.9 17cS 1 :11.4 _-_-_

~^^1^^ V. I. Lenin, Collected Works, Vol. 20, p. 27.

45

The integration of the capitalist countries' economies (or parts thereof) springing from the interiialionalisation of production and exchange is particularly intense wilhin the European Economic Community (EEC).

The record of capitalist integration so far has demonstrated that it is the interaction of economic factors arising from the present state of the scientific and technological revolution, from the increased state-monopoly character of capitalism, from political factors associated with the struggle between the two opposing world systems and the intensification of the class struggle within the capitalist countries.

Capitalist integration is, on the one hand, a qualitatively new stage in production internationalisation, while, on the other, a new form of the monopolistic concentration of production. Herein lies its contradictory nature and reactionary socio-economic essence.

The intensive development of capitalist integration is associated with qualitative changes in the available productive forces, the increasing state-monopoly character of capitalism and the intensification of the struggle between the two world systems.

Integration as a stage in the development of production internationalisation is characterised by a deepening and more diversified international division of labour. The dominant forms include intra-sectoral specialisation and specialisation based on the manufacture of a single item or component. Capitalist enterprises specialise in the manufacture of units and components of a specified type in response to the demand for these components in many different countries. Major engineering companies in different countries agree to divide the production programme into specialised components, with each company undertaking to manufacture a particular type of machinery, sets of machinery, components or items. Such agreements result in a more intensified international exchange of machinery and equipment.

In 1969 the capitalist countries as a whole exported a total of 66,000 million dollars' worth of machinery and equipment compared to 53,000 million dollars in 1968. The export of parts and components accounted for about one quarter of the total.

46 Export of Machinery and Equipment from the Developed Capitalist Countries (in million dollars) 1960 1965 1969 All capitalist countries (thousand million dollars) 23.8 49.3 66.0 USA 6,988 10,015 16,500 Franco 1,694 2,660 4,800 West Gorman y 4,996 8,269 13,200 Britain 4,266 5,561 7,100 Italy 1,011 2,230 4,550 Japan 936 2,642 6,200

A salient feature of the intensification in the foreign trade turnover of machinery and equipment is the fact that 85 per cent of the total (99 per cent of exports and 76 per cent of imports) is accounted for by industrially advanced capitalist countries. Exports of machinery and equipment from major industrialised capitalist countries are growing rapidly compared to developing countries.

In 1960 21 per cent of the US imports and exports was equipment. In 1969 the percentage went up to 59 per cent. The import of machinery and equipment is on the up and up in other industrialised capitalist countries. Between 1960 and 1970 there was a growing tendency towards exchanging machinery for machinery in trade between the developed capitalist countries. According to data supplied by the Market Research Institute, exports of machinery and equipment from industrialised capitalist countries to developing countries advanced more slowly compared to exports of machinery and equipment in the industrialised capitalist countries although it grew by 14 per cent in 1969 compared to 1968. Therefore the developing countries' share of the capitalist exports of engineering products declined to 24 per cent in 1969 from 28 per cent in 1966 and 35 per cent in 1960.

47 Table 5 Imports of Machinery and Equipment by Major Capitalist Countries (in million dollars) 1960 1965 1969 USA 1,460 2,940 9,750 France 905 2,068 4,400 West Germany 974 2,302 3,850 Britain 962 1,697 3,300 Italy 614 1,092 2,400 Japan 405 711 1,500

Economically backward capitalist countries continue to exchange agricultural produce and industrial raw materials for finished engineering products (see Table 6).

Table 6 19611 19C7 1UIJ9 Food, beverages and tobacco Non-food primary products, vegetable oils and fats 29.3 24.5 25.6 20.2 23.7 19.5 Mineral fuels 30.3 33.2 32.7 Chemical products, equipment and other finished goods 15.5 20.2 23.7 Total 100% lOQo/o 100%

The bulk of the developing countries' exports are still agricultural produce and primary products. Their chief exports and principal foreign exchange earners include oil, cotton, rubber, tin, copper, rice, sugar, iron ore, grain, meat, cacao, coffee and some other crops.

The above analysis of the structure of commodity exchange between the industrialised capitalist countries and developing countries as well as within the industrialised area of 48 the world capitalist economy gives an idea of the prevailing forms of international capitalist specialisation in production.

The international division of labour, from the point of view of the entire world capitalist economy, involves, on the one hand, the industrially developed countries where a single type of specialisation prevails and, on the other, the economically backward countries which participate in the general type of specialisation. This pattern of specialisation underlies the economic inequality of capitalist countries in the world capitalist economy.

Generations of bourgeois economists from the classical period of bourgeois economics down to the present day have been pointing to discrepancies and variations in the natural conditions as the chief reason for the present pattern of specialisation within the world capitalist economy. The specialisation of an economic territory, according to bourgeois economists, is determined exclusively by the advantages arising from its natural conditions. Such an approach to world trade and the international capitalist division of labour is advocated in the works of Adam Smith and David Ricardo, the founders of political economy. This approach stemmed from their views of capitalism as an eternal, natural and immutable form of society in the best accord with human nature.

Modern bourgeois economists base themselves on the views of Smith and particularly those of Ricardo when they work out their concepts of world trade. The theory of comparative advantage or comparative production cost was evolved over 150 years ago by David Ricardo, who followed in the train of Adam Smith; this theory is now receiving a lot of attention.

The American professor Paul Samuelson is an ardent advocate of the theory of comparative costs. He rightly observes that the differences in the production conditions in different countries constitute the first link in the sequence of arguments on which the theory of comparative costs is based. Specifically, this means that the production capabilities of different countries vary considerably. Developing his thesis about the production potential of different countries Samuelson reduces it to the natural conditions of production. It is beyond doubt, in his view, that equatorial 49 regions are better adapted to growing bananas and northern regions to producing wheat. This assessment underlies the overall concept of international trade which proclaims as profitable any country's participation in world trade, irrespective of her economic development level providing that she exports products that are relatively efficiently produced.

Paul Samuelson, like Adam Smith and David Ricardo, does not bother to look into the consequences that the principle of comparative advantage has for countries with varying levels of economic development and different levels of labour productivity. The practice of world capitalist trade indicates, however, that even in the case of equivalent exchange a more productive labour is a more intensive labour and this is exchanged for a greater quantity of labour of a lower productivity. The difference is appropriated by the country with the higher labour productivity. This provides a material basis for consolidating the economic advantage mentioned above.

The theory of comparative cost represents an attempt to unite the labour theory of value with natural conditions as a factor of production (the ``factor of production" theory came on the scene at a far later period, true, but already Smith and Ricardo had spoken about some of its elements). Herein lies the essence of this theory's methodology which allows its use in defending and justifying the present polarisation of countries within the world capitalist economy.

Using the favourable pattern of the division of labour within the capitalist economy, a group of highly industrialised imperialist countries, such as the USA, Britain, the FRG, France, Italy and Japan, are able to produce 76.53 per cent of the capitalist world's total industrial output, while the economically backward countries, containing about 70 per cent of the capitalist world's total population, account for a mere 10 per cent of total industrial output and have been relegated to the status of suppliers of cheap agricultural commodities to the world market.

The pattern of specialisation within the capitalist economy is clearly reflected in the structure of capitalist countries' foreign trade. Thus, raw materials and food account for 80 per cent of the total exports from countries of Africa and

__PRINTERS_P_49_COMMENT__ 4---0516 50 the Middle East, and for 65 per cent from Asian countries. Using their dominant positions within the capitalist world economy, imperialist monopolies pump an estimated 20,000 million dollars a year out of the economically backward countries through non-equivalent exchange and the export of capital. This compares with 16,000 million dollars which is the total spent by the deueloping countries on expanding domestic production.

The specialisation of countries within the world capitalist economy adversely affects their national per capita income which is a key index of the level of economic development. Thus, national per capita income between 1967 and 1968 was 1,560 dollars in Britain, 1,738 dollars in France and 3,303 dollars in the USA (at 1958 prices). By contrast Burma had 59 dollars, Nepal 66, Nigeria 68, India 77 and the Congo 87 dollars per capita.

The Soviet economist, L. Lukin has estimated that in 1850 the national per capita income in the European capitalist countries and in North America was approximately 80 per cent higher than in the colonies (145 and 80 dollars respectively in terms of 1960 prices). In the next 110 years the national income of the imperialist countries increased by 20 times while their population went up by 180 per cent. In the colonies and dependent countries in the corresponding period the national income rose by 160 per cent and the population by about the same percentage. The widening gap in the levels of economic development stems from the gulf in the rates of industrial productivity per capita of population between the developing countries and the highly industrialised ones. According to UN statistics, between 1950 and 1966 industrial production per capita went up in Western Europe by 76 per cent while in the developing countries by 41 per cent.

Power consumption per capita in the countries of Southern Asia, the Middle East and Africa averages about 50 kwh a year. By contrast the United States consumes 6,500 kwh per capita of population while the four most advanced countries of Western Europe consume 3,000 kwh. Similarly steel production per capita is a mere 10 kilos a year in the first group of countries while in the United States it is as high as 600 kilos and in Western Europe---450 kilos a year.

51

These statistics provide a striking demonstration of the gigantic gap in the levels of economic development between the industrialised capitalist countries and the developing nations of the Third World. This gap makes nonsense of any talk of equitable fair competition or of mutual or equal benefit from trade.

The theory of comparative cost is based on the permanence and the immutability of the production structure and on the consolidation of economic specialisation. This represents its chief methodological flaw. If we were to accept the thesis about the immutability of comparative advantage (which forms the key plank of the theory) then we would have to agree that the present economic structure is here to stay, and a very rich country would continue to be rich, and a poor country would continue to be poor. No such approach can be acceptable in economic relations within the socialist community of nations because such an approach implies the permanence and immutability of the present structure and the present pattern of specialisation and it freezes the present level of economic development. The theory of comparative advantage has its inherent contradictions. Firstly, it is clear that it reduces variations and differing conditions of production to variations of nature. Secondly, in proclaiming equal benefit supposedly accruing to all participants in world trade it ignores disparities in the productivity levels within individual nations. And lastly, in attaching overriding importance to the comparison of production cost, this theory ignores the differences and disparities existing between its constituent parts and limits them to the rate of the capitalist costs of production, leaving out a comparison of the social costs of production.

Conclusions such as the alleged equal opportunity to obtain profit in countries with widely varying economic development levels and the possibility to benefit even in the absence of any advantages in production, all these serve to obscure the true pattern of relationships existing in the world capitalist market.

Taking advantage of the concept's contradictory nature, contemporary bourgeois economists have placed it in the service of the monopolies and are using it to justify the

__PRINTERS_P_51_COMMENT__ 4* 52 Table 7 Some of the Indices of Economic Development in Countries of the Non-Socialist World in 19701 Non-- socialist Electric-- Steel Automo-- world's share of world industrial ity generation, thousand mil. kwh production mil. tons bile -6 production, mil. pieces Exports (thousand mil. $) output, % USA and Canada 46 1,950 130 10 58 Western Europe 34 1,200 160 11 135 Japan and Australia 10 400 100 6 24 Developing coun-- tries 10 270 20 1 58 The non-socialist world as a whole 100 3,900 420 28 280

1 ``Mirovaya efconomika i mezhdunarodniye otnosheniya'', Economic survey, 1969, pp. 25,26; ``Mezhdunarodnaya zhizn'', 1970, No. 6, p. 44; I. A. Sokolov, The World. Economy and Revolutionary Process, Moscow, 1971, p. 101.

plunder of economically backward countries by the imperialist countries. At the same time the theory of comparative advantage is not all wrong. If one discards the thesis about the immutability of the comparative advantages and takes up the stand for changing conditions of production in response to the impact of socio-economic factors then it transpires that the principle of the comparison of the national cost of production for different kinds of goods and the determination, on this basis, of the most lucrative export industries has much to recommend itself.

On balance, the theory of comparative advantages and its contemporary modification is strongly apologetic. It is designed in essence to justify and safeguard the present pattern of the international capitalist division of labour which accurately reflects and maintains relations of hostility and rivalry stemming from the domination of some and the subjugation and submission of others. The international capitalist division of labour facilitates the reproduction 53 of capitalist property and strengthens the antagonistic relations between classes and between countries that have been sucked into its orbit.

The division of labour among the socialist countries is based on the development of their national economies. Its essence and main thrust are determined by the laws governing the evolution of world socialism. The objective necessity for an ever fuller satisfaction of the socialist society's requirements, the efficient utilisation of the fruits of scientific and technological progress, the maintenance of sensible economic proportions on a planned basis as well as giving assistance to countries who are relatively backward industrially, all these and other factors underlie the main trends, pace and diversification of the development of the socialist division of labour. Unlike the capitalist division of labour which, to use Marx's phrase, is ``a system of production which has grown up spontaneously and continues to grow behind the backs of the producers'',^^1^^ the international socialist division of labour develops according to plan based on an intimate knowledge and exploitation of the objective economic laws.

The division of labour existing among the socialist countries is linked with the internationalisation of production and exchange. The further development of socialist internationalisation of production is the direct extension and development of the tendency which, as Lenin put it, ``has already revealed itself quite clearly under capitalism and is bound to be further developed and consummated under socialism".^^2^^

When characterised from the standpoint of the productive forces the internationalisation of production and its present integration phase possess features which are in evidence both under socialism and under capitalism. At the same time it has essential distinctions which arise from the nature of the relations of production among socialist countries. The internationalisation of production acquires a definite social trend which depends on the degree of the maturity of similar relations of production that are dominant in the socialist _-_-_

~^^1^^ K. Marx, Capital, Vol. I, p. 106.

~^^2^^ V. I. Lenin, Collected Works, Vol. 31, p. 147.

54 countries and on the nature of international economic relations.

The emergence of the world socialist system created a new environment for the development of production internationalisation. Socialist relations of production have made possible the establishment of new types of relations among countries, relations based on full equality and mutually advantageous co-operation. The common goals of production in the socialist countries make it possible to develop and utilise in a planned way the advantages offered by the internationalisation of production.

The socialist type of production internationalisation prepares the ground for the socialist countries' close alliance and allows them to pool their efforts to build socialism and communism.

The socialist internationalisation of production is the material basis for the development of the international socialist division of labour. This, in turn, provides the essential foundation for combining national interests and for improving the efficiency of social production. It actively moulds a rational economic structure in each socialist country. There is a dialectical connection between the internationalisation of production and the international division of labour. Overriding importance in this context is attached to the process of production internationalisation. The need for a division of labour among national economies, which is the essence of international production specialisation, arises from the widening scope of production and the diversifying pattern of production specialisation as the national productive forces develop. On the other hand, the specialisation of national productive forces, which is the intrinsic content of an international division of labour, facilitates a growing concentration of production because now products are manufactured both for the home market and the external market. Production specialisation presupposes co-operation and close links between national economies of the entire socialist community.

As a form of the social division of labour, the international socialist division of labour is designed to overcome the lopsided economic specialisation inherited from the international capitalist division of labour. The progress of the 55 division of labour among socialist countries creates favourable conditions for building up the material and technical basis of socialism and for the development of the socialist relations of production.

In the course of building up the material and technical foundation of socialism some countries, which were formerly dependent economically on foreign capital, sought to diversify their industries and to achieve a measure of economic self-reliance to develop industries sufficiently powerful to meet their needs and to make possible the application of advanced and highly efficient types of plant and equipment.

The trend towards autarchy was inherited by the socialist countries from the preceding stage of their economic development, from the role these countries played within the international capitalist division of labour. The instability of world political relations and the striving of the big national bourgeoisie to dominate their home markets combined to accelerate the trend towards the diversification of production.

The international socialist division of labour is primarily inter-state specialisation and co-operation of production. This division of labour affects the specialisation of industries and sub-industries within national economies and in the final analysis is based on individual enterprises whose rational employment of their production facilities is geared to the world socialist market. The international division of labour, relying as it does on the specialisation of production units and industries, gradually forms a socialist national economic complex with each socialist country being allotted its own position within the world socialist system.

This complex, as an element of the international division of labour, cannot develop as an inward-looking closed economic entity because of the combined impact of a variety of factors, i.e., the disparities in natural resources, manpower availability, production opportunities, etc. This is true particularly in connection with the ever-growing international significance of the productive forces being used. The socialist national economic complex is incompatible with lopsided international production specialisation. The 56 structure of this complex is a well-developed industry, including engineering industries as the bedrock of technological progress and the foundation for the equality of socialist countries and their independence from the western industrialised capitalist countries.

Socialist industrialisation helped the productive forces of the CMEA countries to develop at a high rate and thereby contributed directly to their efforts to overcome the economic backwardness some of them had inherited from their capitalist past. Industrialisation has transformed the economies of the socialist countries and enabled them to gain secure positions in world economy.

The CMEA countries (minus the USSR) have developed an impressive industrial potential which is equivalent to 40 per cent of the Soviet Union's.

Before World War II, the economies of'what are now the CMEA countries were dominated by agricultural production for consumer purposes. Their agriculture-oriented economic structure was reflected in the make-up of their foreign trade turnover. The exports of these countries, with the sole exception of Czechoslovakia, were dominated by raw materials and foodstuffs. This economic structure was in line with the interests of the monopolies in the imperialist countries. Despite their geographical proximity to the main world markets and their generally satisfactory communication networks the European countries who are now members of CMEA had few mutual economic ties; instead they were geared to the markets of Britain, France, Italy, Germany and the USA. Thus, 86 per cent of the total foreign trade turnover of Bulgaria, Hungary, Poland, Rumania and Czechoslovakia went to the industrialised capitalist countries with only 12 to 13 per cent being accounted for by mutual trade. A mere 1 per cent of their trade went to the USSR.

These figures, which relate to the situation in 1938, help one to appreciate more fully the economic evolution of these countries over the past quarter of a century. At p-esent, their economic situation has been strikingly transformed thanks to the changes that socialism brought with it.' All these countries now have developed industries and manufacture industrial plant and equipment. Indeed 57 manufacturing and engineering are the key branches of their economies.

The analysis of the branch structure of an economy presented in the present work acquires special importance primarily because this structure reflects the level of development of the social division of labour and the structure of a socialist country's foreign trade turnover. The structure of the economy influences the achievement of mutual benefit in the economic co-operation among socialist countries. It is also very important as a prerequisite and condition for mutual economic adaptation and for integrating reproduction processes in individual socialist countries. Marx and Engels wrote: ``How far the productive forces of a nation are developed is shown most manifestly by the degree to which the division of labour has been carried. Each new productive force, insofar as it is not merely a quantitative extention of productive forces already known (for instance the bringing into cultivation of fresh land), causes a further development of the division of labour."^^1^^

The development of the social division of labour is reflected above all in the trend towards the industrialisation of production. As early as the late 19th century Lenin noted that the social division of labour ``consists of various forms of processing raw materials (and various operations in this processing)".^^2^^

This process has acquired a massive scale at present. Modern agriculture is progressively losing jobs such as fruit, vegetable, meat and milk processing, etc.

Today efficient agricultural production is unthinkable without the intensive use of industrial products, i.e., farm machinery and implements. Equally it is unthinkable without the application of chemical products that improve the very object of agriculture, the soil. The increasing application of industrial methods to agricultural production gives many farming operations a distinct industrial character. In other words, there is a progressive contraction of agricultural labour and a compensating expansion of industrial labour.

_-_-_

~^^1^^ K. Marx and F. Engels, The German Ideology, p. 32.

~^^2^^ V. I. Lenin, Collected Works, Vol. 3, p. 67.

58

The steady increase in the number of agricultural machines and the expansion in the labour force occupied in the industrial servicing of agriculture in one form or another results in a shrinking agricultural labour force. Marx wrote that, ``a greater part of the non-agricultural population assist in agriculture, supplying constant capital---which grows with the advance in cultivation---such as mineral fertilisers, seeds from other countries, machinery of every sort".^^1^^

Today this process has acquired a vast scope. In Czechoslovakia, to take one example, between 1950 and 1970 the number of persons employed in the country's entire economy grew by 1,229,000 (from 5,777,000 to 7,006,000). The country's industrial labour force grew from 1,674,000 to 2,609,000, an increase of 935,000. The industrial workforce was expanded both by an influx of fresh workers into the country's economy and by a re-distribution of the workforce among the various branches of the economy, including a curtailment in the agricultural work-force. In Bulgaria the intensification of production and the growth in labour productivity in agriculture have meant a reduction in the agricultural work-force. The agricultural workers thus released went into industry. Exports of agricultural produce yielded additional foreign exchange and were used to promote industrial development. The volume of industrial production in 1966 increased by 23.6 times compared to 1939, while the country's gross agricultural output in that year was more than double the average annual agricultural output in the years before World War II. Between 1966 and 1970 Bulgaria's industrial output expanded by 68 per cent.

Between 1956 and 1970 Bulgaria's agricultural production grew more slowly than the country's industrial output.

The faster progress of industrial production changed the branch structure of the country's national income increasing industry's contribution. In 1971 industry's contribution to the Bulgarian national income was 51 per cent; this was 41.7 per cent for Hungary, 61.4 per cent for the GDR, _-_-_

~^^1^^ K. Marx, Theories of Surplus-Value, Moscow, 1968, p. 159.

59 21.2 per cent for Mongolia, 58.5 per cent for Poland, 57.4 per cent for Rumania, 52.4 per cent for the USSR and 62.9 per cent for Czechoslovakia.^^1^^

The change in the contribution of industrial and agricultural production to the national income indicates a progressive trend in the evolution of the economic structure of socialist countries.

Nonetheless agriculture continues to hold an important place in the economics of the CMEA countries even though by and large its contribution to their national incomes has declined.

Table 8 Average Annual Growth Rates Country Industry Agriculture 1956-- 1960 1961-- 1965 1966-- 1970 1956-- 1960 1961-- 1965 1966-- 1970 Bulgaria 16.5 11.3 10.9 5.7 2.9 3.7 Hungary 7.8 7.2 6.2 0.5 1.3 1.5 GDR 8.9 5.4 6.5 2.6 1.3 --- Poland 9.9 8.5 8.4 3.7 2.8 --- Rumania 11.3 13.8 11.8 1.1 2.5 2.0 USSR 10.3 8.6 8.4 6.0 2.1 2.5 Czechoslovakia 10.6 5.3 6.7 2.1 0.4 4.9 All countries 4.8 2.0

In the socialist countries all social production is divided into two parts---the production of producer goods and the production of consumer goods. The separation of industrial output from the overall social product and an analysis of the correlations between industrial producer goods (Group A) and consumer goods (Group B) make it possible to analyse the basic proportions in industry, the leading branch of the national economy (see Table 9).

The correlation between groups A and B gives an idea _-_-_

~^^1^^ See CMEA Statistical yearbook 1972, Moscow, 1973, pp. 48, 327 (in Russian).

60 The Shares of Industrial Groups ``A''~and ``B'' of Total Industrial Production (%) Group A Group B Country Pre-war leveli 1966 1970 Pre-war level 1966 1970 Bulgaria 22.6 51.0 54.7 77.4 49.0 45.3 Hungary 44.8 70.0 63.9 55.2 30.0 36.1 GDR --- 71.0 70.2 --- 29.0 29.8 Poland 47.1 60.0 66.3 52.9 40.0 33.7 Rumania 45.5 60.0 70.4 54.5 40.0 29.6 Czechoslovakia 49.3 61.0 61.6 50.7 39.0 38.4 USSR 61.2 75.0 73.4 38.8 25.0 26.6

1 The pre-war year for Poland and Czechoslovakia is 1937, for Hungary and Rumania-1938, and for Bulgaria---1939.

of the structural shifts within the industry of each socialist country. Group A is made up of several major industries encompassing hundreds of manufacturing and mining units. An expansion in Group A's output can be achieved through both the mining industries and through the manufacturing industries, including engineering. That is why when noting the shift in favour of Group A we should look to see which industries have accelerated their development whereby the preponderance of Group A over Group B has been achieved. In all CMEA countries the share of electrical power generation and the raw materials industry has grown significantly within Group A. Also within Group A the manufacturing industries, above all engineering, are of decisive importance in boosting labour productivity. Engineering in all the CMEA countries has expanded in a spectacular way (see Table 10). In some CMEA countries engineering industries have been built up almost from scratch. In 1945 Rumania, for instance, was able to meet only 1 per cent of her needs for engineering products from domestic production.

As Table 10 indicates there has been a noticeable coming together of the CMEA countries' economic structures.

61 Table 10 The Share of Engineering and Metal Working of Industrial Output (%) Country 1950 1955 1966 Bulgaria 9.3 11.7 18.2 Hungary 21.6 --- 30.5 GDR --- 30.0 39.0 Poland 8.0 17.1 26.1 Rumania 13.3 18.8 29.2 Czechoslovakia 20.8 28.8 32.2 This is based on the structural changes in industry and the increased share of engineering in industrial production.

All of the socialist countries have become manufacturers of machinery and plant and are participating in the division of labour between engineering enterprises. The existence of developed engineering in most CMEA countries is the real basis for the levelling-up of economic development and this offers opportunities for a more radical drawing together of the national economic structures through international intra-sectoral specialisation.

The further progress of engineering, consistent with steadily rising efficiency, poses a series of problems. Being the manufacturer of the instruments of labour, engineering industries serve all the branches of the economy. Therefore, to promote technological progress, and to deepen and diversify the social division of labour primarily affects engineering industries and their products. The deepening of the social division of labour in engineering means a rapid expansion of the product range. Industrially developed countries often have a very wide product range in their engineering industries running into 130,000 different items. The further deepening and diversification of the division of labour within engineering is part of the general trend in the development of the national economy, i.e., the trend towards converting each industry into the manufacturer not only of individual products but also even individual components of a product.

62

The engineering industries in the CMEA countries today display a clear tendency towards standardisation. The pattern of standardisation in the engineering industry so far has kept the costs of production at a high level and impeded technological progress. Each socialist country individually is unable to organise a large-scale production of every product it needs; therefore, greater concentration of production inevitably presupposes a more meaningful and precise definition of the intra-sectoral specialisation within the CMEA countries.

The socialist countries who are members of CMEA produce almost the entire range of engineering products known in the world today, they also produce one-third of the world output of machine tools and equipment. Some countries produce more engineering goods than they need and so they export the surplus. Thus, the GDR exports 70 per cent of her ships and vessels, 65 per cent of her machine tools, 60 per cent of optical goods and products of precision engineering. Hungary exports 67 per cent of her total output of machine tools, 80 per cent of her instruments, 35--40 per cent of her communications equipment, 65 per cent of her rolling stock and 87 per cent of her diesel engines.

In Czechoslovakia the share of machinery and industrial equipment in the overall volume of exports has increased from 20 per cent in 1948 to 48.5 per cent in 1965 and reached 49.6 per cent in 1970. Bulgaria provides a striking example of rapid progress in this area. There the share of engineering products in the overall volume of exports has been growing at a brisk rate. In 1960 the proportion was 13.6 per cent and rose to 30.5 per cent in 1971.

In Poland machinery and equipment formed 34.4 per cent of the country's total exports in 1965. In 1971 the proportion was 39.8 per cent. In Hungary machinery and equipment accounted for 31.9 per cent of the total exports in 1971. In the GDR the proportion was 51.8 per cent. Exports of machinery and equipment go primarily to other CMEA countries.

The rising trend in exports of engineering products testifies to a highly developed internationalisation of production and to closer interrelationships between national production and the external market. At the same time the level of 63 development achieved by the engineering industry in the CMEA countries makes the development of intra-sectoral specialisation a top priority task at present.

Under the current scientific and technological revolution the product range of engineering industries is constantly expanding. This calls for extending the division of labour further so as to concentrate economic and labour resources on the production of the optimal range of products. Only through intra-sectoral specialisation, involving the whole of engineering, is it now possible to develop production units of the optimal size and to introduce efficiently the latest developments of science and engineering, thereby boosting the efficiency of overall social production.

International intra-sectoral specialisation of production is not only a means of raising the technical standard and rationalising industry, it is also a means for improving the structure of a country's social production. It also allows one to use the available scientific, research and development personnel and the material resources more effectively. This type of specialisation implies concentration on the production of the same type of products in one or a few countries to meet the requirements of the interested countries. It also implies an improvement in the engineering and technical level and the organisation of production and in addition promotes the establishment of stable economic links and production co-operation among countries. However, the level of specialisation achieved to date in the CMEA countries does not yet correspond to the available economic potential.

Apart from engineering the development of the fuel and raw material industries are of great importance in promoting scientific and technological progress and in creating an optimal economic structure. Balanced economic development calls for co-ordination and interaction between the power and fuel industries and manufacturing.

On the whole, the world socialist system possesses sufficient quantities of all types of energy resources and impressive raw material resources. The socialist countries have over 50 per cent of the known deposits of iron ore and bauxites, 85 per cent of potassium salts, about 90 per cent of manganese ore, over 80 per cent of oil, substantial 64 stocks of nonferrous metals, gas and different types of chemical raw materials.

But the socialist countries vary widely in self-sufficiency in energy resources. For instance, most of the coal deposits are situated in Poland, Czechoslovakia and the GDR. The resources of coking coal and common coal are concentrated only in Poland and Czechoslovakia while other socialist countries have modest deposits of lignites. The distribution of oil resources is even more uneven, with 80 per cent of the total known deposits of oil being in Rumania (excepting the Soviet Union).

Since the end of the last war, when the East-European countries went socialist, prospecting for energy resources has been stepped up and as a result the output of the available types of fuel has gone up substantially.

In 1970 the CMEA countries produced over 613 million tons of coal, 365 million tons of oil and 202 million tons of iron ore (see Table 11).

Table 11 Country Coal output mln. tons Oil output mln. tons Electricity generation thousand mln. kwh 1950 1968 1970 1950 1968 1970 1950 1968 1970 Bulgaria Hungary GDR 6.0 13.3 139.9 30.9 27.2 243.0 31.2 27.8 256.5 0.5 0.5 1.8 0.3 1.9 0.8 3.0 19.5 15.4 13.2 63.0 19.5 14.5 67.7 Poland 82.8 155.5 165.9 0.16 0.5 0.4 9.4 55.5 64.5 Rumania 3.1 14.8 22.8 5.0 13.3 13.4 2.1 27.8 35.0 USSR 261.0 594.0 624.0 0.37 307.0 353.0 91.2 638.0 740.4 Czechoslovakia 46.0 100.4 105.9 0.06 0.2 0.2 9.3 41.4 45.2

Because of the rapid increase in the consumption of fuel and other energy resources and in view of the uneven distribution of these resources among the socialist countries there is an urgent need to improve the efficiency of the utilisation and structure of the CMEA countries' fuel and energy supplies.

65

The Comprehensive Programme of integration calls for a unified single concept of the structure of energy and fuel supplies lo be worked out for the CMEA countries by 1980 and for increasing efforts to be made to use the different, types of energy-yielding resources in such a way as to boost the efficiency of the CMEA countries' energy industries.

As the productive forces continue to expand, the utilisation of fuel and raw material resources acquires an increasingly greater international significance. An analysis of the foreign external economic links of the CMEA countries shows that in some countries the raw material and fuel requirements are almost completely satisfied from mutual deliveries. Thanks to mutual deliveries, the CMEA countries cover 98 per cent of their exports of coal, up to 96 per cent of their oil and petroleum products requirements, some 80 per cent of their iron ore needs and the bulk of their needs for nonferrous metals, sawn limber and cotton. The mutual deliveries of fuel an