The Market Problem

Engels held that, by reason of the anarchic character of production in a capitalist society and the fact that, in such a society, the workers receive in wages the money equivalent of only a part of the value they produce, every capitalist society experiences a market problem:

"The extension of the markets (in capitalist society -- WBB) cannot keep pace with the extension of production".

(F. Engels: "Herr Eugen Duhrung's Revolution in Science"; Moscow; 1959; p. 379).

"While the productive power (in a capitalist society - WBB) increases in a geometric, the extension of markets proceeds at best in an arithmetic ratio".

(F. Engels: Preface to the English Edition of: K. Marx: "Capital", Volume 1; London; 1974; p. 16, 17).

Contemporary Soviet economists admit that the Soviet economy is now experiencing such a market problem:

"The market problem exists not only for consumer goods but also for the means of production".

("Pravda" (Truth). June 23rd., 1965, cied in: J.L. Felker: "Soviet Economic Controversies"; Cambridge (USA); 1966; p. 92).

One attempt to alleviate this market problem has been the great extension of credit sales:

"The sale of goods on a deferred-payment basis.... exerts a considerable positive impact on the expansion of production and sale of consumer goods...

Credit sales to the public... are acquiring more and more significance for the development of retail trade in our country....

In the total retail trade of non-food commodities, the share of goods sold on an instalment basis is increasing: from 1.8% in 1960 to 5.7% in 1967".

(V. Ilin & B. Koriagin: "The Sale of Goods to the Public on Credit", in: "Nauchnye vysshei doklady shkoly: Ekonomicheskie nauki" (Scientific Reports of Higher Schools: Economic Science), No. 7, 1969, in: "Problmes of Economics", Volume 12, No. 8; December 1969; p. 68, 69).

Naturally, interest charges are paid on the credit granted, although at present these are not high -- 1% over 6 months, 2% over 12 months.(V. Ilin & B. Koriagin: ibid.; p. 72).

Since it is necessary for these economists to present the Soviet economy as "socialist", they are, therefore, compelled to put forward the view that the market problem, the need to seek foreign markets, is one which is common to both capitalist and socialist economies:

"A situation always emerges when the production of some article... exceeds the purchasing power or the physiological and spiritual requirements of the population of the nation, no matter how large it is...

The development of production evolves the need for the export of output....

The need for exports always arises in both Department (that producing means of production and that producing consumer goods -- WBB) when the volume of production exceeds the limits of the country's requirements. The quicker production outstrips the population growth, the greater becomes the need for sales on foreign markets...

The growth of production leads to the greater requirement for foreign markets".

(M. Senin: "Socialist Integration"; Moscow; 1973; p. 108, 117, 119).

In 1967 the export quota (i.e., the volume of exports expressed as a percentage of national income) of the Soviet Union was 3.9% (M. Senin: ibid.; p. 87).

Contemporary Soviet economists and politicians emphasise that this export quota must be increased, by greater concentration on production for export:

"Soviet scientific and economic thought... increasingly focuses attention on the idea of concentrating export production, of assigning it a special place in the economy".

(M. Senin: ibid.; p. 136).

"We intend to expand the country's export potential systematically....

Since foreign trade has become a major branch of the national economy the problem arises of setting up a number of export-oriented industries to meet the specific requirements of foreign markets"

(A.N. Kosygin: "Guidelines for the Development of the National Economy of the USSR for 1976-1980", 25th. Congress CPSU; Moscow; 1976; p. 45).

But the Soviet Union, they say, has a specific problem also in

"...its export pattern, a problem specific to the USSR. The latter has emerged because at present raw and other materials, fuel and foodstuffs (export items of little effectiveness) account for a large share of the Soviet exports".

(M. Senin: ibid.; p. 136).

In fact, in 1967 fuel, raw and other materials, and foodstuffs constituted 62.5% of Soviet exports.

(M. Senin: ibid.; p. 99).

The low "effectiveness" of these items is to be found in the fact that their production for export is significantly less profitable than that of manufactured goods:

"The problem of the burdensome-ness of the export of raw materials... emerged because in the export field the operation of the extractive industry is less profitable than that of the manufacturing industry.. The difference is due to the fact that manufacture is far ahead of extraction as regard the effectiveness of investments.... An exporter is in a less favourable position.. because he does not primarily export products of the manufacturing industry".

(M. Senin: ibid.; p. 242-3, 247).

Naturally, therefore, contemporary Soviet economists urge that steps be taken to change the pattern of Soviet exports in the direction of manufactured goods:

"The problem of burdensome-ness caused by the relatively low effectiveness of the export of products of the extractive industry and agriculture is inevitably alleviated as the ratio between products of the extractive industry and products of the manufacturing industry changes in favour of the latter".

(M. Senin: ibid.; p. 247).

"The high growth rates in engineering and other manufacturing industries and measures to raise the technical level and product quality create prerequisites for increasing the share of the manufacturing industries' produce in Soviet exports".

("Soviet Economy Forges Ahead: Ninth Five-Year Plan: 1971-1975"; Moscow; 1973; p. 100).

The market problem has, of course, important effects on Soviet foreign policy, but space does not permit treatment of this question here.

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