economic surplus

economic surplus

the difference between what a country produces and what it consumes. This is a key concept in the work of the US Marxist economist, Paul Baran, and was developed by Baran and Paul Sweezy in their theory of MONOPOLY CAPITALISM (1966) and taken up by FRANK in UNDERDEVELOPMENT theory. Baran (1957) distinguished between three forms of economic surplus:

1. actual economic surplus, which occurs in all societies, and is ‘the difference between society's actual current output and actual current consumption’. Thus, the surplus is accumulated in savings and investments;
2. potential economic surplus, being the difference between what could be produced in a given environment and ‘what might be regarded as essential consumption’. This applies mainly to capitalist economies and is only realizable under reorganization of social arrangements. Economic surplus is lost because of excessive consumption, the existence of unproductive workers, poor organization of existing production processes and labour unemployment. In the THIRD WORLD, excessive consumption by élite groups eats up economic surplus, and in the monopoly capitalist countries, arms expenditure acts similarly;
3. planned economic surplus, which applies to economic planning under socialism. (Baran's definition is, ‘the difference between society's “optimum” output obtainable in a historically given natural and technological environment under conditions of planned “optimal” utilization of all available productive resources, and some chosen “optimal” volume of consumption’.) This assumes both a completely efficient use of resources, and control over consumption such that decisions can be made to produce whatever economic surplus is desired.

Many problems have been identified with this usage. Baran recognized that there were problems with measurement, but, despite his optimism, these have not been resolved, so that the OPERATIONALIZATION of the concept remains problematic. It is especially unclear how potential economic surplus can be measured. The notion has an intuitive appeal, but quantifying this is probably impossible. His concept of planned economic surplus seems utopian in the light of the experience of existing socialist societies, whose planning has been associated with excessive wastage and inefficient usage of resources. Further, whilst Baran claims to build on Marxian concepts, the relationship of this concept to those of SURPLUS VALUE and the LABOUR THEORY OF VALUE are tenuous.

Collins Dictionary of Sociology, 3rd ed. © HarperCollins Publishers 2000