By NORMAN FREED a PRAGUE ¥ /\ N ANIMATED and interest- , ing debate has been taking 4, place here. It is frank, \ Bae deep-going, creative, It volves fundamental questions .. Organizing and planning the Socialist economy, . . ae debate culminated in 1964 ee the adoption of principles ae implemented gradually in and fully applied in 1966 along with Z “1966-70, a long-term plan for : ue Management and _ plan- , oe methods are expected to Bene € more effective use of sci- Bine and technology, to increase ; Productivity of labor, to SPeed economic growth, to im- we 800ds and services, to 3 t consumer prices to and €n below world prices. Bae cone had the debate Band self than western _ scribes Bae “appointed economic ex- at Talsed the hue and cry pocki em had failed, that ine te Countries were return- § to capitalism. ing Schoslovakia is not plan- it = ‘ return to capitalism. But Bones supine to make socialism ae etter, more efficiently, aa Productively, to better etve the needs of the people. ae new system of manage- aes and Planning aims to cor- See features of the old or mM and to open a new path Tapid economic advance. Up to now, economic plans : ae been elaborated by central : les and enforced from above administrative methods. Developed rapidly At an ear] i i Y period this may have been justified. It enabled Ountrie: iV € underdeveloped areas of wovakia to high levels. It made + Possible to train hundreds of t Ousan 7 ies ds of scienti - nicians. entists and tech Be the central plan, concen- “With 8 On quantitative growth Byori Out due regard to quality, | Bie and availability of pro- / ae! also resulted in bureau- ‘tle eae inflated apparatus, lit- es luative, poor use of science technology, be also produced contradic- ea! ween the interests of Individual enterprise and Soci § “lety, between producers and “onsumers, “is = * example, a producer plant Ot interested in improving Nes Czechoslovakia new When the words ‘profit’ and ‘supply and demand’ have to be used to describe some operations in the socialist economy does it mean the socialist country is on the way back to capitalism? This article explains some basic management and planning changes taking place in Czechoslovakia and other socialist countries. A view of Prague, capital of Czechoslovakia, from Wenceslaus Square. the quality of products if this entails an increase in cost price; but the consumer is interested in quality even if it will cost a bit more. The national economy is in- terested in new types of pro- ducts coming to the market; the individual enterprise is not be- cause it means extra work in- terfering with the quantitative plan. Individual enterprises pile up. big stocks of material in their warehouses to avoid hitches in supply, But the national econ- omy wants to cut down on the quantity of frozen assets and materials required by other en- terprises. Under present methods the worker’s attitude and productiv- ity are tied to ideological work or “moral stimulus’. This is important in the sense that un- der socialism all workers are working in their own interests as well as in the interests of- society. But moral stimulus is not always matched by material in- centive. Sometimes those not working in a socialist way bene- fitted more than those who strived to maintain a socialist attitude. Enterprises did not feel the need to compete with world production costs. Central im- port and export institutions shielded them.from feeling the competitive impact of world prices. Guaranteed and fixed prices, not tied to unit costs of produc- tion, lowered the efficiency and initiative of individual enter- prises. In the last 15 years Czecho- slovakia has carried out several reorganizations of management and planning. But in general the fundamental status quo remain- ed intact. The changes did not bring desired results. — It should be recalled that so- cialist economic management and planning was an uncharted path. It had to be learned by trial and error. Add to this the harm done to social sciences, particularly political economy, by the personality cult. Fundamental changes This time it was proposed to make fundamental changes to meet today’s needs. Proponents of the new plan include eminent social scientists in Czechoslova- kia and other socialist countries. They feel this at this stage of development socialist plan- ning must use mechanisms of a commodity-money economy — the law of value, competition, market relations, profitability, prices, supply and demand and so on. Western commentators interpret this as a return to capitalism. It is true that the terms used to describe the objective econ- omic laws applying to the pre- sent stage of socialism are similar to terms used under. capitalism. But they are funda- mentally different in essence. The difference stems from the social ownership of the means of production under socialism — as contrasted with the private ownership of the means of pro- duction under capitalism. This is a “tiny detail” western ex- perts completely ignore. Under socialism it was once believed there is an antagonism between commodity production and the social structure, bet- ween the objectively regulating function of the law of value and the conscious implementation of state-wide economic aims. The new system is based on the idea that the market mech- anisms and planning are not antagonistic. They complement each other. The long-term plan will still be the basis for future economic development. There will also be annual plans. The new system will consist of three categories of capital investment instead of the pre- sent single category. 1) Capital s January 22, 1965—PACIFIC TRIBUNE—Page 7 investment from the state bud- get. 2) Capital investment for modernization and rationaliza- tion from the income of the enterprise or interest-paid loans from the state bank. 3) The use by the enterprise of a special depreciation fund for overhaul or reconstruction. Capital investment will be regulated through credit. To get a bank loan the enterprise will have to show need and demon- strate the profitability of the proposed modernization or ex- pansion. While the state monopoly of foreign trade will continue, en- terprises will be directly con- nected with foreign concerns, thus will be influenced by world prices and demands for both quantity and quality. A new system of wages will. make the enterprise responsible for deciding on wages above a given national minimuny. Wages will be based on two principles 1) the amount to be paid out from the receipts from products sold; 2) the amount to be paid by the enterprise to the state as part of the national budget will be fixed in advance. This will stimulate the enter- prise to strive to increase its: income and thereby its wage fund. The individual worker will also benefit—the greater his productivity of labor, the greater his income. The enterprise as a whole and the consumer will also benefit. Price fixing The state will continue price- fixing on most essential pro- ducts and services, including rent and products in short sup- ply. It may set a price floor and ceiling between which the en- terprise will have ‘freedom to set its own prices. This will be the incentive to produce new products and to strive for better quality, It will enable the enterprise to put management on a_ scientific basis. It is hoped catch phrases and slogans will give way to social science as a guide to socialist development. On no subject have more brit- tle generalities been uttered than on the subject of political economy under socialism. But the socialist economy is basic- ally healthy and will carry out in life the real aims and pur- poses of socialism — the full, many-sided satisfaction of the material and spiritual needs of the people.