Titlepage book Entwicklungsproportionen und Befriedigung der Bedürfnisse

Entwicklungsproportionen und Befriedigung der Bedürfnisse --- Worth to be remembered

Publication: Verlag Die Wirtschaft (1972, Berlijn)

First insertion on Heterodoxe Gazet Sam de Wolff: 10 maart 2014

E.A. Bakkum is a blogger for the Sociaal Consultatiekantoor. He loves to reflect on the labour movement.

Entwicklungsproportionen und Befriedigung der Bedürfnisse is the second book from the former Leninist bloc, which is reviewed on this portal1. The writer of this book is the Russian economist K.K. Valtukh (in the German language Waltuch). Due to the peculiarities of the Leninist culture it is difficult to judge this type of publications. In order to clarify the dilemma, it is helpful to first contemplate some comments of A. Aganbegian, a colleague of Val'tukh. They are taken from his book De toekomst van de Perestroika2.

Aganbegian describes how under the Stalinist regime in the thirties and forties of the last century the Russian science was almost wiped out by the perpetuating ideological purges. Famous Russian economists such as Bukharin, Kondratiev, Preobrazhenzky en Tziaianov were simply liquidated. At the same time all sorts of pseudo scientists were installed, who were instructed to propagate the Leninist ideology, and to stifle deviating opinions. This terror ended only in 1953, when Stalin died, and was succeeded by Khrushchev. Then the dictature was supplemented by a limited form of democracy.

Obviously in the mean time the Soviet science had fallen to a miserable level. Unfortunately twenty years of cruel repression can not be simply undone, and perhaps Khrushchev did not even desire this. Moreover even in the sixties the pseudo scientists remained active and guarded the dominance of the Leninist dogma3. It is true that economists with deviating opinions were no longer sent to the penal camps, but they did lose their academic privileges. Besides, the contacts with the western science remained frugal, so that the Russian science did not make up arrears. Still now and then a Leninist talent emerged, and excelled due to his own strength. For instance, Leonid Kantorovich was rewarded with the Nobel price for economics.

Each Leninist economist wass obliged to found his arguments with citations of V.I. Ulianov (Lenin), if necessary supplemented with those of Marx and Engels. Even though nowadays this looks bizarre, it does not prove a poor quality. Still worse was the habit to keep out mathematics for many decades, because economics was supposed to be a qualitative, ideological science. The use of mathematics would indicate an affinity with the bourgeois enemy. Only in the second part of the sixties the application of mathematics was condoned. The reader can imagine what such an atmosphere does with the quality of science, and with the people that work there. Or perhaps not4.

Against this background it must now be assessed whether the ideas of Valtukh in Entwicklungsproportionen und Befriedigung der Bedürfnisse are valuable. Indeed measured by the Leninist standard he engages in a revolutionary approach, since he employs utility functions. The concept of utility originates from the neoclassical theory, which was still seen as hostile in the ideological sense. For she explains the economy by means of subjective preferences, whereas Leninism adheres to the objective historical development. For Leninists the idea of the isolated individual is a taboo.

But Valtukh also attacks the neoclassical theory. For he assumes that at a given time there are historically determined preferences. The utility is bounded by social minimum and maximum values. On the one hand, nobody must live below the subsistence minimum, and on the other hand the preferences are limited in the upward direction by the human inability to imagine future prosperity. Especially this maximum conflicts with the neoclassical idea, that all present-day and future goods are known and can be evaluated. Only in the last decades the notion rises, that the human imagination is always bounded. This causes the phenomenon of the preference drift. For instance, when the individual wealth increases, then soon new preferences emerge. New possibilities are seen, which were previously unsuspected, and they cause dissatisfaction.

It is meritorious that forty years ago Valtukh called attention to this misconception of the neoclassical model. Completely informed individuals are a caricature. The reality consists to a significant degree of distorted expectations and of a dynamic social tension. Furthermore, the consumption is a driving force towards new needs. The people develop their own life style. Indeed wealth increases the satisfaction, but less than the neoclassical theory suggests. In this regard Valtukh adheres to the sociological theories of the mass consumption in the twentieth century (although the book does not contain any references to Durkheim, Weber, Simmel, Veblen or Maslow5).

Entwicklungsproportionen und Befriedigung der Bedürfnisse contains the well-known sociological topics, such as the division of labour and the social differentiation. Needs that are luxury in the present are the forerunners of the future way of life (Simmel). Valtukh calls this the perspective needs, which shift towards services. He disapproves of calculations with individual utility functions, but endorses a central utility function, which must be determined by a planning agency. The central planning agency develops the perspective, and anticipates on the yet dormant needs. The plan takes into account the composition of the population, that is to say, there is a differentiation with respect to groups.

Just like Toms and Van Praag, Valtukh also classifies the goods according to functional categories (based on a characteristic or quality). Subsequently Valtukh presents an elegant method for the calculation of the indifference curves. The perspective can be realized by a continuous expansion of the resources. The ambitions of the perspective can rise with the progression of time. Apparently the optimal growth path is dynamic. Valtukh insists on more market research in the Leninist planned economies. This is the only way for the planning agency to obtain information about the preferences of the people. Besides, the people can be guided by means of advertising6.

Valtukh argues that the planning agency has more knowledge than the individuals, and therefore its expectations are extremely rational. The utility function of the planning agency is fairly reliable and objective. And the plan can correct the existing social disproportions in the consumption, in accordance with the general interest. For this purpose all kinds of norms are developed. Valtukh has actually done realistic calculations with his utility- or target-function, albeit for only nine economic branches, and he presents his results. They show that structural changes are necessary.

Finally Valtukh recommends again the application of utility calculations, which have been a taboo in Leninism for such a long time. He describes how the Leninist economists still have a difficulty in distinghuishing between the exchange value (production costs) and the social use value. Here an additional problem is that the product prices themselves are determined in the plan. Even though the western reader is surprised by the peculiar Leninist approach, Entwicklungsproportionen und Befriedigung der Bedürfnisse does present a well-considered and original theory.

Valtukh argues in a convincing way in favour of the central utility function and of central planning. Indeed it was not clear from the start that the planned economy would lose the system race with capitalism, even in East-Germany, where the conditions for planning were quite favourable7. In some branches planning may still be superior to competitive markets. Besides, it has already been said, the book draws the attention to several deficiencies in the neoclassical utility theory. Also this aspect adds to its merits and value. An English edition may be worthwhile.

  1. The loyal reader may remember that the first review concerns Volkswirtschaftlicher Reproduktionsprozeß und dynamische Modelle is, by Eva Müller. (back)
  2. See De toekomst van de Perestroika (1989, Anthos/Bos en Keuning NV) by A. Aganbegian. (back)
  3. Henriëtte Roland Holst - van der Schalk writes poetry in Heldensage (p.44, in translation): Many had forged on it, / many diligent loyal companions, / but they had one Master / in order to lead the enormous task, / Lenin was the name of the great forger / who forged the firm flexible chain / so that the power of central ideas / spread its light over the dark multitude. / Thus he learned them , thus he spoke: / thus Lenin speaks to us, the great forger, / the creator of the fine strong tool / that is indispensable for the workers / in order to win their struggle. ... (back)
  4. Incidentally De toekomst van de Perestroika must be read with some suspicion, because criticism of a poor system is not a guarantee for the integrity of the messenger. It is interesting that according to Aganbegian the Soviet Union had a political conjuncture, since the continuous changes in policy caused growth fluctuations. There were even periods of recession. Moreover the official statistics were manipulated, so that they present a distorted picture. The numbers were artificially increased. This is difficult to verify in retrospect. Aganbegian complains about the periods where, in his own words, the socialist market was replaced by command methods. This means that the enterprises obtained incentives from the central authority, that created moral hazards. Economists who criticized these incentives, are harassed: they lose their positions, they do not get a permit to travel, and they can no longer publish. For instance, the economists often insist on a more efficient production, which allocates the equipment in an optimal manner. In the beginning this was countered by means of the slander, that they glorify the capitalist desire for profit. At the end of the fifties it still happens, that a party official gives a physical spank (!) to economists. Or the official throws with stationary (there is the illustrious incident when during a meeting in the United Nations even Khrushchev pounded on the table with his shoe!). It is alarming that everybody is contaminated and frustrated by that political-cultural atmosphere. For instance, Aganbegian himself once shouted against prime minister Kosygin (!), that he "really did not understand anything". And Aganbegian "thinks that several ministers are idiots". In short, sometimes the economists have difficult personalities, and keep exclaiming their own right. These human peculiarities suggest that the criticism of Aganbegian must be moderated. It is understandable that "crazy professors" are teased. It is not surprising, that the party officials are not eager to try out wild scientific experiments. The Leninist regime was and is very repressive, but since the era of Khrushchev the controversies are determined mainly by normal human peculiarities. (back)
  5. On the other hand, the name of Valtukh is hardly found in the western publications. The science is screened, and authors are cited mainly by their own inner circle. (back)
  6. A. van Collem writes poetry in Liederen der gemeenschap (p.60, in translation): Take her, human being, and swallow her / With all senses and nerves, / And turn your renewal into a new start. / Look around you, Earth and Heaven wait. / The labour, all art, the science, / Henceforth let Communism (EB: Leninism) be in them. / Then you will hear, serf, who becomes / The servant, of the shining new god, / All music that plays on earth, / From flower, and spice, and light crops, / Then you will be, a serf, / Of all people on the whole earth, / And you will become, ruler, who now is a servant / In truth, the ruler of the planets. (EB: Van Collem likes mysticism. Nowadays he sounds somewhat gushing) (back)
  7. Time after time the new leaders are confronted with the failure to realize the plans. Their frustration becomes apparent even in the satirical East-German magazine Eulenspiegel. It contains cartoons with jokes such as: "Say, how many people work in your department?" "About two-thirds". Or: a farm worker works on the fields. His colleagues in the meeting room complain: "That colleague always shuns his social obligations. I ask you: how would it be when all would act so irresponsibly?" Or a student: "You know, Rita, my study does help. Nowadays I only listen with suspicion to Radio Luxemburg". Or the waiter in the restaurant points to a visitor at an empty table, and whispers to his colleague: "That guy believes that I do not see him. But I observe him already since half an hour". Shortly after the ideological dismantling of Stalin the freedom increased. A politician looks at a faded rectangle on the wall of his office, and ponders: "A pity. He would have been such an inspiration for my lecture against the glorification of leaders". (back)