Social Consumption Funds

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Social Consumption Funds


that part of the personal consumption fund of socialist society, the allocation of which provides the state with a planned means of influencing the spending and consumption pattern of the population for the purpose of achieving a convergence and equalization of the socioeconomic condition of all members of society, all social groups, strata, and classes. This convergence is to be a gradual process, but one which will be accelerated as circumstances permit. Payments and benefits from the social consumption funds are one of the main forms of socialist distribution, along with wages, bonuses, and supplementary income from personal economic activities.

Payments and benefits from the social consumption funds take the form of outlays from the state budget for such items as education, health, physical culture, and social security. Outlays by enterprises and production associations from their funds for social and cultural purposes and housing construction are social consumption fund expenditures, as are payments from centralized funds for social insurance and social security for kolkhoz members and others. Payments from social consumption funds are made either in the form of free (or partly subsidized) goods and services or in the form of cash allowances. (In the early 1970’s both forms were approximately equal in size.)

The basic economic function of the social consumption funds is the allocation of part of the personal consumption fund in such a way as to create conditions for the satisfaction of a certain series of important needs that are common to members of different social groups, strata, and classes and to meet these needs in a fashion that is sufficiently egalitarian from the point of view of society as a whole. Under socialism, complete social and economic equality does not yet exist; the degree to which one and the same need must be satisfied varies, both within society as a whole and among members of different social groups, strata, and classes. This is especially true of such nonmaterial and social needs as the need for education and cultural development and the need to establish a reserve for disability insurance. In the established system of family needs to which the members of society have oriented their spending patterns, these nonmaterial and social needs are not, as a rule, assigned as much importance as they should have to secure society’s fundamental economic interest, which is the gradual achievement of social and economic equality. Society, represented by the socialist state, actively intervenes in the formation of a structure of gratifiable needs so as to ensure a planned consumption pattern in which the material conditions for the development of employment capabilities will be relatively equal for members of different social groups, strata, and classes.

The socialist state fulfills this function if, by distributing material and cultural benefits from the social consumption funds, it provides members of any social group with access to education (including higher education) and to all cultural assets. The funds must provide opportunities for individuals to develop their abilities and to take a place in socialist production and society congruent with their abilities. As a result of this expansion of opportunity, social groups and strata involved in mental labor and creative work cease to be closed-off and exclusive. These strata will thus be reproduced, not from their own narrow social base but out of society as a whole. It is precisely in this way that the working intelligentsia develops under socialism, with its ranks being replenished by people of differing social backgrounds.

The social consumption funds have several other economic functions. In particular it is through these funds that society more easily introduces what Lenin called “shoots of communism”: progressive ways of satisfying social needs (see Poln. sobr. soch., 5th ed., vol. 39, p. 25). Social consumption funds also facilitate the spread of more economical ways of meeting collective needs. The size of payments and benefits from social consumption funds is determined by the level of development and rate of growth of socialist production, as well as by the rapidity of the transformations that result from the social policies of the socialist state.

For industrial workers’ families in the USSR, payments and benefits from the social consumption funds accounted for 14.5 percent of total income in 1940 and 22.3 percent in 1972; the corresponding figures for kolkhoz families were 14.9 percent and 20.0 percent, respectively. (See Table 1 for growth of social consumption funds.)

Table 1. Payments and benefits from social consumption funds in the USSR
 Total volume (millions of rubles)Per capita outlay (rubles)
1927–28 ............... 0.21.3
1940 ................. 4.624
1950 ................. 13.072
1960 ................. 27.3127
1965 ................. 41.9182
1970 ................. 63.9263
1975 ................. 90.1354

The social consumption funds pay for free education, including higher education, and for stipends provided to students. They cover the costs of free medical aid and make possible reduced rates at sanatoriums and health resorts. They also pay for state pensions, temporary disability benefits, and pregnancy benefits and maternity leave. Recreational activities for industrial workers, clerical and professional employees, and kolkhoz members are social consumption fund items. The funds pay for mass participation in physical culture and sports. They cover the expenses of annual vacations, keep apartment rentals at a low level, and pay for preschool facilities. (See Table 2.)

Table 2. Structure of expenditures from social consumption funds in the USSR (percentage)
stipends .........................4.02.1
Health and physical culture ...............21.714.8
Social security.......................19.636.8
special allowances...................10.98.9
temporary disability benefits............ 5.5
pregnancy and maternity leave, care and feeding of infants ................. 1.5
State subsidies for housing ............... 5.1
Vacation pay for industrial workers, clerical and professional employees, and kolkhoz members . . 11.9
Other expenditures.................... 2.4

Under present conditions, when a high priority has been assigned to the task of significantly raising the material and cultural living standards of the people, the role of the social consumption funds becomes substantially greater. They are used by the state to create more favorable conditions for the comprehensive development of each individual, for more complete satisfaction of a broad range of intellectual and social needs, and for increasing the size of pensions, stipends, and other benefits. The introduction (as of Nov. 1, 1974) of cash allowances for children from low-income families provides the state with an additional instrument for the abolition of conditions of inadequate material security. Some payments and benefits from social consumption funds (vacation pay, pensions, and temporary disability payments, for example) are linked to the size of wage earnings. This helps to provide greater material incentives for the workers. However, unjustified and highly accelerated expansion of the social consumption funds could lead to their inefficient use. An unbalanced expansion could divert resources beyond what is objectively necessary, thereby reducing the resources that could otherwise be used to strengthen the system of material incentives.

In the course of socialist and communist construction the range of needs fully or partly met by the social consumption funds varies, and the forms in which these funds are distributed vary also. These changes reflect the process whereby certain social and economic goals replace those goals that have been achieved. They also reflect the increased possibilities in socialist society as it develops. In the long run, the social consumption funds will evolve into means of communist distribution, fundamentally changing their functions, structures, and forms.

The capitalist countries have social and cultural funds to provide protection against material insecurity in old age, unemployment and medical insurance, and free or inexpensive education in public, schools. These funds may also cover the costs of a number of free or partly subsidized medical services. However, these funds bear only a superficial similarity to social consumption funds under socialism. The fundamental difference between social consumption funds as a form of socialist distribution and social and cultural funds under capitalism consists in their diametrically opposed social purposes. The chief economic function of the social and cultural funds under capitalism is reduction of the cost of labor power in the interests of the capitalists by providing mass collective means of satisfying certain needs of workers at a level consistent with the demands of modern industry. The decisive factors influencing the development of these funds are the class struggle of the workers under capitalism and the successes of the socialist countries in the economic competition between the two world systems. Bourgeois ideologists play on the external similarity between these funds and the social consumption funds under socialism and try in every way to get around the fact that their basic economic functions are different.


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B. V. RAKITSKII [18–723–1; updated]

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.