Domestic Trade

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Domestic Trade

 

the sector of the national economy that carries on the selling of commodity products from various sectors of production in a country’s domestic market. It encompasses wholesale and retail trade. The nature and forms of domestic trade, the nature of the relationships it expresses, and the economic laws that control its development are determined by the corresponding mode of production, and as such they change with the transition from one socio-economic system to another.

Domestic trade under capitalism develops on the basis of private ownership of the means of production. It is the sphere of application of commercial capital. Under conditions of monopoly capitalism the dominant role in domestic trade is acquired by large monopolies, which appear in specific organizational forms (such as syndicate associations, chain and branch systems and multiunit systems, and large department-store and mail-order firms). The predominance of the monopolies is the basis for their receiving monopolistic commercial profits, both through high prices on goods sold and through low prices on products bought from small producers. Monopolies capture the wholesale trade area first of all, then spread their influence increasingly to retail trade by the use of such forms of trade as “shopping centers,” self-service stores, and “discount” and “one-price” stores. A special form of control over retail trade is so-called sales assistance, where the producing enterprise or bank takes over the financing of measures related to the retail enterprise’s advertising presentation, the display of the goods at exhibitions, and so on. In this way monopolistic capital subordinates retail businessmen, who without the financial support of the monopolies find themselves helpless in the competitive struggle because of the large expenditures needed for advertising and other competitive requirements. A distinguishing feature of domestic trade in the capitalist countries is its wastefulness, a result of its spontaneous development. An enormous number of various middlemen are found between the producers and the final consumers, a situation which raises distribution costs significantly. Wholesale merchants are the largest group of middlemen. In 1965 there were about 200,000 wholesale enterprises in the United States, and their total turnover was about $120 billion. In addition, there were more than 27,000 wholesale agents working between wholesale and retail businessmen. The costs of the wholesale merchants have reached about 15 percent, and those of the sales agents have averaged about 3.3 percent. Retail merchants also have their own agents who are employed to sell in homes. About 60 percent of all retail commodity turnover in the United States in 1967 involved the sales-agent form of selling. All of this results in rises in the level of retail prices and promotes robbing from the broad masses of people.

Domestic trade under socialism expresses socialist production relations and rests on planned socialist production and a steady increase in the material well-being of the people. The socialist state determines the scope of production, consumption, and accumulation and the ratio of consumption and accumulation. It plans the amount of wages, regulates prices for goods, and determines the volume of commodity resources for the market, the dimensions of circulation, the direction and rate of development of the material-technical base of domestic trade, the organizational forms of this trade, and so on. In this way it regulates the development of domestic trade in a planned manner.

In the USSR, domestic trade encompasses the circulation of the means of production and items for personal consumption on the domestic market. Domestic trade in the means of production takes place in the form of material-technical supply, which consists of wholesale circulation of materials and equipment within the state sector, carried on by selling and distributing materials and equipment among sectors and enterprises and also by selling fertilizers, machinery, and fuel to the kolkhozes through the all-Union Agricultural Equipment and Materials Agency (Sel’khoztekhnika). The sale of agricultural produce is carried on in the form of wholesale circulation by procurement organizations and state purchases from kolkhozes.

Domestic trade in personal consumption items has been singled out in a separate sector of the national economy, a sector that encompasses wholesale circulation in consumer goods and their sale through the retail trade network to the population and to organizations, institutions, and enterprises. Organizationally, Soviet trade includes public catering, the sector that produces and sells cooked food. Proceeds from the sale of such food are included in retail commodity circulation. In 1968 public catering was about 9.5 percent of the country’s retail commodity circulation. In 1969 public catering enterprises turned out 29.1 million different dishes (courses), which was more than triple their 1940 production. Wholesale and retail enterprises in Soviet trade are divided according to form of ownership into state and cooperative enterprises. Along with state and cooperative trade, there is also kolkhoz trade. State trade enterprises are based on state ownership. Wholesale enterprises in state trade supply all the country’s retail trade enterprises with goods; state retail trade enterprises serve the population of cities and worker communities. Their economic activity is managed directly by state bodies; in accordance with the plan for trade development, these bodies determine the volume of retail commodity circulation and the expansion and improvement of the material-technical base, and they establish plans for the economic activity of organizations and enterprises. Cooperative trade enterprises are formed by cooperative organizations, founded by the population on voluntary principles. Cooperative trade organizations receive their goods basically from state production enterprises and wholesale trade organizations. Along with this they sell products which they have produced and purchased directly. Kolkhoz trade is trade by kolkhozes and kolkhoz farmers in the surplus of their own agricultural produce at prices established by the market. Produce from both the public kolkhoz economy and from the kolkhoz farmers’ personal subsidiary economies serve as the trade base for kolkhoz trade. Selling and purchasing are done directly between producers and consumers of the goods, that is, without any kind of middleman. Prices are significantly influenced by supply and demand on the market. The state regulates kolkhoz trade indirectly, using economic measures such as increasing the supply of food products in state and cooperative trade at state retail prices. State trade is the leading and determining form of trade (see Table 1).

Table 1. Share of state, cooperative, and kolkhoz trade in the total volume of commodity circulation(in percentages, based on state retail prices)
 194019601965196619671969
State trade...............66.867.968.868.668.569.1
Cooperative trade...............24.529.128.929.229.329.1
Kolkhoz market...............8.73.02.32.22.21.8
Total retail commodity circulation...............100100100100100100

The volume of retail commodity circulation for USSR state and cooperative trade, including public catering, reached 153.6 billion rubles in 1970, an increase of 48.4 percent over 1965. The Directives of the Twenty-fourth Congress of the CPSU on the Five-year Plan for Development of the National Economy (1971-75) envision a 40 percent increase in retail commodity circulation, which will reach a total of more than 210 billion rubles.

After the Great Patriotic War (1941-45) the expansion in volume of retail commodity circulations was accompanied by an improvement in the material-technical base of Soviet trade. There are hundreds of thousands of retail trade and public catering enterprises and an extensive warehouse network; the levels are given in Table 2.

Table 2. Number of enterprises and warehouse network of state and cooperative organizations1
 Number of enterprisesWarehouse network
YearRetail tradePublic cateringGeneral warehousesSpecialized warehousesTotal
1End of year figures
1940...............407,20087,60054,60050,500105,100
1960...............567,300147,20066,10062,300128,500
1965...............643,300192,70069,40060,200129,600
1966...............654,000200,50070,10064,000134,100
1967...............663,300211,30074,70074,600149,300
1969...............677,700229,80075,50080,800156,300

The commodity structure of retail commodity circulation has improved significantly. In 1969 the retail commodity circulation of USSR state and cooperative trade (including public catering) per capita of population had increased 4.7 times over 1940. An increase of 3.9 times for food products and of 6.5 times for nonfood products is included in the overall rise.

The number of workers in retail trade and public catering in 1969 was 2.5 times, that of 1940.

Domestic trade in consumption items, based on socialist public ownership of the means of production, makes it possible to use physical, monetary, and labor resources more efficiently. As retail commodity circulation increases, distribution costs show an absolute rise, although they decrease in relative terms (as a percentage of the sum of retail commodity circulation). Thus, in 1969 these costs were 13,509,000,000 rubles (in 1940 they were 1,933,000,000 rubles); in relative terms the costs were 9.62 percent of the total sum of retail commodity circulation in 1969, whereas in 1940 they were 11.04 percent.

In the other socialist countries domestic trade in consumption items is also developing on the basis of public ownership of the means of production in the form of state and cooperative trade. Participation by private capital is permitted in some of them. The sphere of its activity is limited to retail trade and is controlled by the state, which is the supplier of goods. State trade plays a leading and determining role in these countries (see Table 3).

Table 3. Retail commodity circulation, including public catering, in some socialist countries by forms of trade (%)
 19601969
 State tradeCooperative tradePrivate tradeState tradeCooperative tradePrivate trade
Bulgaria...............57.742.20.162.237.70.1
Czechoslovakia...............73.926.175.224.8
German Democratic Republic...............44.033.422.743.936.119.9
Hungary...............69.729.11.266.432.80.8
Mongolia...............90.39.790.19.9
Poland48.049.42.648.849.91.3
Rumania...............64.035.90.166.833.2

Domestic trade in consumption items in the socialist countries is characterized by high growth rates in retail commodity circulation, as shown in Table 4.

Table 4. Indexes of the volume of retail commodity circulation, including public catering, in some socialist countries (1960 = 100)
 196519681969
Bulgaria...............139181195
Czechoslovakia...............118155158
German Democratic Republic...............115129136
Hungary...............129162175
Mongolia...............146157163
Polan...............134164174
Rumania...............160209219

REFERENCES

Marx, K. “K kritike politicheskoi ekonomii.” K. Marx and F. Engels, Soch., 2nd ed., vol. 13.
Marx, K. Kapital, vol. 2. Ibid., vol. 24.
Lenin, V. I. “Ocherednye zadachi sovetskoi vlasti.” Poln. sobr. soch., 5th ed., vol. 36.
Lenin, V. I. “O znachenii zolota teper’ i posle polnoi pobedy sotsializma.” Ibid., vol. 44.
Lenin, V. I. “O kooperatsii.” Ibid., vol. 45.
Ekonomika torgovli. Moscow, 1968.
Dikhtiar, G. A. Sovetskaia torgovlia v period sotsializma i razvernutogo stroitel’stva kommunizma. Moscow, 1965.
Tiukov, V., and R. Lokshin. Sovetskaia torgovlia v period perekhoda k kommunizmu. Moscow, 1964.

F. A. KRUTIKOV

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