political economy

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political economy

in the 19th century the usual name for the academic discipline of ECONOMICS (see also CLASSICAL ECONOMISTS), the study of economic processes. The term ‘political’ economy reflected the fact that economics was then more directly concerned with the interrelation between economic theory and political action than has been true later. The superseding of the term political economy at the end of the 19th century corresponded with the idea that economics was now a pure ‘science’ and could be discussed apart from politics. Recently, however, the term has enjoyed something of a revival, especially among economists and sociologists wishing to reinstate a recognition that the subject matter of the discipline remains politically charged. The work of the classical political economists had been prompted by the growth of industrial capitalism and free trade, and was mainly directed at a justification of this new system and in furthering economic progress, or staving off disaster. MARX also wrote in part within this tradition, describing his own work on economics as a ‘critique of political economy’, and rejected any suggestions that the capitalist order could be seen as ‘natural’. The revival of the term political economy has been made by economists and sociologists wishing to rejuvenate and reorient modern economic and socioeconomic analysis in a way that returns it to the concerns uppermost in earlier political economy, including the work of Marx. S ee also MARXIAN ECONOMICS.
Collins Dictionary of Sociology, 3rd ed. © HarperCollins Publishers 2000
The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Political Economy


the science devoted to the study of the social relations that take shape in the process of the production, distribution, exchange, and consumption of material goods. In addition, it is the study of the laws governing the development of social relations in the various socioeconomic formations that have succeeded each other historically. The term was introduced by the French mercantilist A. de Montchrétien in his Treatise on Political Economy (1615).

Origin and development. The study of economic processes and phenomena originated in the undifferentiated sciences of antiquity. Political economy took shape as a separate science during the formative period of capitalism. The first attempts to gain an understanding of the phenomena of capitalism and to provide a foundation for government economic policy were made by representatives of the mercantilist school, who reflected the interests of the nascent bourgeoisie, especially the commercial bourgeoisie. The mercantilists studied primarily foreign trade (the circulation of commodities), which they regarded as the main source of wealth, and they substantiated the policy of protectionism. However, the groundwork for political economy as a science was not completed until the emphasis shifted from the analysis of the circulation of commodities to the analysis of commodity production and the study of its inner laws.

Bourgeois political economy reached its highest level in the works of the representatives of classical bourgeois political economy: W. Petty, A. Smith, and D. Ricardo (Great Britain) and P. Boisguillebert and F. Quesnay (France). They endeavored to study the objective laws of the development of capitalism and to explain the economic meaning of the commodity, value, money, wages, profit, and rent. In his Economic Table (1758), Quesnay, the leader of the physiocratic school, was the first to describe capitalist reproduction as a whole. Classical bourgeois political economy made its main contribution by laying the foundation for the labor theory of value, which was developed by Ricardo. On the basis of the labor theory of value, he pointed out the antithesis between profits and wages and between profits and rent.

V. I. Lenin described classical bourgeois political economy as one of the sources of Marxism (Poln. sobr. soch., 5th ed., vol. 23, pp. 40–43). Classical bourgeois political economy directed its criticism primarily at outdated feudal practices, for it expressed the ideology of the bourgeoisie during the 18th century, when the capitalist mode of production was still taking shape and the class struggle of the proletariat had not yet fully developed. The foundation for the rise of vulgar political economy in the 1830’s was laid by the consolidation of the capitalist mode of production and the sharpening of its contradictions, the growing antagonism between wage labor and capital, and the transformation of the bourgeoisie from a progressive class into a reactionary one.

The school of vulgar political economy originated in the works of the British economist T. R. Malthus and the French economists J. B. Say and F. Bastiat. Abandoning the analysis of the objective laws of the development of the capitalist mode of production, the school of vulgar political economy focused on the surface phenomena of economics and rejected the labor theory of value. For example, Say proclaimed that the sources of value are the “three factors of production”: labor, capital, and land. Denying the contradictions in capitalism, the representatives of vulgar political economy preached the “harmony” of class interests. The economic interests and views of the small-scale commodity producers of the cities and the countryside were expressed in petit bourgeois political economy, a school of thought founded by J. C. L. Sismondi (Switzerland) and P. J. Proudhon (France). Although they criticized the contradictions in the capitalist mode of production, Sismondi and Proudhon thought that these contradictions could be escaped not by moving forward toward socialism but by retreating to outdated, archaic economic forms. As capitalism developed, petit bourgeois political economy became increasingly Utopian and reactionary.

Several schools of bourgeois political economy developed from the second half of the 19th century through the beginning of the 20th. The Austrian school (C. Menger, E. von Boehm-Bawerk, and F. von Wieser) proposed the theory of the marginal utility of commodities, according to which the value of economic commodities is determined by the usefulness of the last available (or “marginal”) unit of a commodity, as well as by the relative scarcity of commodities (see). A. Marshall, the founder of the Cambridge school (Great Britain), eclectically combined vulgar theories of the costs of production, supply and demand, productivity, and abstention with theories of marginal utility and marginal productivity. The American economist J. B. Clark formulated the theory of marginal productivity and deduced the “universal law” of the diminishing productivity of the factors of production, which asserts that as a particular factor increases, its productivity decreases. This law served not only as a theoretical justification for lowering workers’ wages but also as proof of the necessity of unemployment.

The entry of capitalism into the stage of imperialism and the development of the general crisis of capitalism resulted in profound changes in bourgeois political economy. During this period, the two main functions of bourgeois political economy— the defense of the capitalist system and the proof of its alleged stability and permanence—became more and more evident, in sharply expressed apologies for capitalism and in the elaboration of practical measures for the state-monopoly regulation of production. The beginning of this new stage in bourgeois political economy is associated with the British economist J. M. Keynes and especially with the publication of his principal work, The General Theory of Employment, Interest, and Money (1936). Keynes showed that the mechanism of free competition was unable to cope with the productive forces, and he established the foundation for the concept of regulated capitalism. Keynesian-ism became the main trend in modern bourgeois political economy.

The acceleration principle, which was proposed in 1913 by the French economist A. Aftalion and in 1919 by the American economist J. M. Clark, states that any increase or reduction in income, supply, or demand causes (or requires) a relatively greater (percentage) increase or reduction in “induced” investments (seeACCELERATOR). Subsequently, this principle was worked out in greater detail by the British economists R. Harrod and J. R. Hicks and by the American economist P. Samuelson. It became part of the neo-Keynesian model of economic growth. The economic theory of left Keynesianism was established by the British economist J. Robinson. Econometric theories gained wide acceptance in bourgeois political economy. One of the most common varieties of contemporary bourgeois apologetics is the theory of the “transformation of capitalism,” which includes the “stages of growth” theory proposed by the American economist W. W. Rostow, the theory of “the single industrial society” proposed by R. Aron (France), the “new industrial society” described by the American economist J. K. Galbraith, and the theory of “the postindustrial society” proposed by D. Bell (USA).

Contemporary bourgeois political economy is going through a profound crisis, as is evident in the rise of the convergence theory, which asserts that a gradual rapprochement of the two systems, socialism and capitalism, is taking place. The most prominent representatives of the convergence theory are Galbraith, Aron, and J. Tinbergen (the Netherlands). Abandoning the claim that capitalism is an eternal system and the best form of society, they urge the selection of everything “good” in both the capitalist and socialist systems. Thus, they refer to purely superficial similarities between processes taking place in the immediate material and technical sphere—the development of the contemporary scientific and technological revolution; the growth of large-scale industry; the rise of elements of indicative, or recommendatory, planning in some capitalist countries; and the utilization of commodity-money relations and the categories characteristic of them in the socialist countries. The supporters of the convergence theory ignore the fundamental antithesis between socialism and capitalism, the predominance in each system of radically different property relations in the means of production, fundamental differences in the social structures and in the goals of the development of social production in the two systems, and the existence in the capitalist world of exploitation, which has been completely eliminated under socialism.

The crisis of contemporary bourgeois political economy is also evident in the rise of “radical” political economy in the capitalist countries. The representatives of this school, who reject the political dogmas of bourgeois scholars, have done some useful, practical research. Petit bourgeois political economy persists during the period of the general crisis of capitalism, because in many countries substantial strata of the petite bourgeoisie, including peasants, artisans, and small-scale traders, continue to exist. In the developing countries petit bourgeois political economy, which exposes colonialism, neocolonialism, and the rule of the foreign monopolies and supports an independent path of development, is capable of playing a somewhat progressive role.

Founded by K. Marx and F. Engels, proletarian political economy is genuinely scientific and at the same time consistently partisan. It has taken over and developed the finest achievements of previous economic thought. In the development of political economy the work of Marx and Engels represents a revolution, the essence of which includes the application of the materialist conception of history to economics, the discovery of the objective laws of social development, and the establishment of the theory of surplus value, which Lenin referred to as “the cornerstone of Marx’ economic theory” (ibid., p. 45). Marx was the first to demonstrate scientifically the historically limited and transitory character of the capitalist mode of production. He revealed and comprehensively investigated the laws of motion of the capitalist economy. Marx’ economic analysis of capitalism, a work of genius, enabled him to make a discovery of world historical importance—the inevitability of the revolutionary destruction of capitalism and of the transition of society from capitalism to communism, and the historical mission of the proletariat as the gravedigger of capitalism and the builder of a new, communist society.

Marxist, or proletarian, political economy initially emerged as a science that studied the production relations of the capitalist mode of production. This emphasis reflected the narrow definition of “political economy.” Gradually, as knowledge of the modes of production preceding capitalism increased, “political economy” acquired a broader meaning as a science that studies production relations in general, in all the historical modes of production.

A new stage in the development of Marxist political economy is associated with Lenin, who creatively elaborated a general theory of political economy based on the new historical experience of social development. Lenin created the doctrine of monopoly capitalism (imperialism), revealing its economic essence and fundamental attributes. On the basis of his analysis of the operation of the law of the uneven economic and political development of capitalism in the epoch of imperialism, he concluded that the victory of socialism was possible, initially, in several countries or even in a single country, and he applied the Marxist theory of social revolution to the new historical epoch.

Lenin made his greatest contribution to Marxist economic theory by establishing the fundamental principles of the political economy of socialism. He worked out an integrated theory that considers the transitional period from capitalism to socialism, the ways and means of building a socialist economy, socialist industrialization, the socialist transformation of agriculture by combining peasant farms in producers’ cooperatives (seeCOOPERATIVE PLAN OF V. I. LENIN), the economic basis necessary for socialism, and the forms and methods of socialist economic management. Lenin developed Marxist theory on the two phases of communist society; on the transition from the first to the second, or higher, phase; on the essential features of the material and technical basis for communism and the means for establishing it; and on the formation of communist production relations. He defined the contemporary epoch as primarily the epoch of man’s transition from capitalism to socialism, and he predicted the emergence of a world socialist system that would have a decisive effect on the entire course of world development.

Marxist political economy is a creative, constantly developing science, which has been developed further in the theoretical work of the CPSU and the fraternal Marxist-Leninist parties and in the documents worked out jointly by the Communist and workers’ parties at international conferences. The Marxist scholars of the Soviet Union and other countries have made a significant contribution to the solution of problems confronting political economy.

Marxist political economy has been considerably enriched by research on the general crisis of capitalism and on its present stage, by an analysis of the methods and forms of state-monopoly regulation of the capitalist economy, and by the study of the problems of the world capitalist economy and of the international monetary crisis. Important works have been written on the economic problems of the Third World. The theory of the revolutionary transition from capitalism to socialism has been further elaborated, and the analysis of the system of economic laws and categories of socialism has been made more profound. The concept of the developed socialist society and of the particular characteristics of its economy has been proposed and substantiated. Scientific principles have been worked out for the economic policies of the socialist state. The theory of the establishment of the material and technical basis for communism has been made more concrete, and the theory of socialist economic integration has been substantiated and successfully elaborated.

Subject matter and methodology of Marxist political economy. Political economy, like philosophy and scientific communism, is part of Marxism-Leninism. Lenin wrote: “Marx’ economic doctrine is the most profound, comprehensive, and detailed confirmation and application of his theory” (ibid., vol. 26, p. 60).

The subject of investigation in Marxist (proletarian) political economy is the production relations typical of the various modes of production that succeed each other historically. Economic categories are theoretical expressions of objectively existing production relations. The most general, recurrent, and intrinsic causal links between economic processes and phenomena are expressed in economic laws.

In the system of production relations as a whole, property relations associated with the means of production are the basis for all other economic relations. Political economy investigates production relations in their organic unity with the productive forces that determine them and with the superstructure of a particular society. As social production develops and economic relations become increasingly complex, the subject matter of political economy expands. Under contemporary conditions, political economy cannot limit itself to the study of production relations in only one mode of production. A number of factors have made it necessary to work out problems related to the world economy as a whole: the deepening of the worldwide division of labor, the development of economic and political relations between countries with different socioeconomic systems, the economic competition between socialism and capitalism, and the expansion of international economic cooperation. Among the problems related to the world economy are the forms and avenues by which world socialism influences the development of the nonsocialist world, the character of the economic relations between countries with different systems and the prospects for the development of these relations, and the description of the structure and social character of the economic relations and economic laws operating in the world economy. One of the main directions for the further creative development of Marxist-Leninist political economy consists in dealing with these problems.

One of Marxism’s greatest contributions was the definition of production relations as the subject matter of political economy. Unable to rise to the level of understanding attained by Marxism, bourgeois political economy studied production, distribution, exchange, and consumption in isolation from each other and replaced the analysis of economic relations with research into the technical aspects of social production, as well as into legal institutions and psychological factors.

Marxism also introduced a genuinely scientific method of cognition—dialectical materialism—and applied it to the study of production relations in society. The single criterion of truth recognized by dialectical materialism—the correspondence between the findings of science and objective reality—is responsible for the creative character of Marxist political economy. In the process of cognition, political economy takes as its point of departure the concrete economic phenomenon. By means of scientific abstraction, political economy strips away everything that is secondary or accidental and everything that is associated with the outward appearances of the phenomenon and gradually reveals the essence of economic processes. As the process of scientific thinking progresses, it ascends from the abstract to the concrete, from the simple to the complex, and the system of economic laws and categories is presented and analyzed. The method of scientific abstraction requires a study of economic relations in their most developed form—that is, at their highest degree of maturity. At the same time, it assumes that economic processes are examined in the process of development and in motion and that they are not regarded as static or frozen.

The method of political economy makes use of the general philosophical techniques of scientific cognition: analysis and synthesis, induction and deduction, and the unity of the logical and historical approaches.

The Marxist dialectical method requires the unity of the qualitative and quantitative analysis of economic processes, with qualitative socioeconomic analysis retaining its primacy. The consistent use of the dialectical method also assumes that the process of research has been enriched by modern scientific advances, such as systems analysis and mathematical models.

Political economy as a science has a partisan, class character, because it studies production relations that are closely linked with the economic interests of classes (the proletariat, the bourgeoisie, and the petite bourgeoisie). Because the interests of the working class coincide with those of the majority of the population and correspond to the requirements for the progressive development of the productive forces, it is posssible for Marxist political economy to combine scientific objectivity with party-mindedness (partinost\ that is, with the direct, open defense of proletarian interests. Political economy is an ideological weapon of the working class in its struggle to overthrow capitalism and build a communist society.

Precapitalist formations. In investigating the capitalist mode of production and revealing its historically transitory character, Marx and Engels also laid the foundation for the political economy of precapitalist formations, drawing on the knowledge accumulated by science, especially the work of L. H. Morgan (USA). The political economy of precapitalist formations is the subject of Marx’ essay “The Forms Preceding the Capitalist Mode of Production” (part of his economic manuscripts of 1858–59) and of Engels’ The Origin of the Family, Private Property, and the State. Lenin made an important contribution to the political economy of precapitalist formations with his Development of Capitalism in Russia.

The political economy of precapitalist formations studies primitive communal society, slaveholding society, and feudalism. Above all, it studies the rise and development of production and exchange, private property and classes, the necessary product, and the surplus product. The political economy of precapitalist formations investigates the economic laws governing the development of production, distribution, exchange, and consumption in the historical stages of the precapitalist development of human society. Moreover, it shows the decisive role played in the system of production relations by the pattern of ownership of the means of production, or the worker. This analysis reveals the historically relative quality of economic categories and laws, especially with regard to the origin and existence of private property.

In primitive communal society the primitive level of development of the productive forces was the basis for social (clan or tribal) ownership of the means of production, as well as for equalizing distribution. With the improvement of the instruments of labor, the increase in the workers’ skills and experience, and the development of the social division of labor, the productivity of labor gradually increased, and a surplus product appeared, at first sporadically and later, more regularly. The primitive communal system began to disintegrate, private property appeared, society was divided into antagonistic classes, and the state emerged as an apparatus of coercion, oppression, and force controlled by the ruling class.

In slaveholding society, the basis of production relations was the slaveholders’ ownership of the means of production and their unrestricted ownership of the workers, or slaves. Labor power was united with the means of production on the basis of extra-economic constraint. The production of a product by means of the exploitation of slave labor became a regular, systematized phenomenon. The entire surplus product, as well as a substantial part of the necessary product, was appropriated without compensation by the class of slaveholders. The gradual improvement of the instruments of labor increasingly conflicted with the slaveholding form of property and with the total absence of any interest for the worker in the product of his labor. The period of the disintegration of the slaveholding system was characterized by the emergence of transitional economic units in which the workers, although still the property of the master, gained autonomy in the use of the means of production. The feudal form of dependence began to replace the dependence of slavery.

Under feudalism, the basis of production relations was feudal ownership of the means of production and partial ownership of the worker (the peasant). The feudal mode of production was also based on relatively simple technology. The surplus product, which was obtained through the exploitation of the feudally dependent peasants, took the form of feudal rent in labor, in kind, or in money. The development of commodity-money relations and the growth of workshop production in the cities gradually undermined the foundations of the feudal mode of production. The developing productive forces were cramped by the framework of feudal production relations.

The period of the disintegration of the feudal mode of production coincided with the stage of the primitive accumulation of capital, during which the main prerequisites for the capitalist mode of production emerged: money capital accumulated by a few people, and an army of wage workers who were legally free but who were deprived of the means of production. Because feudal and capitalist private property were similar, it was possible for capitalist property to take shape, initially, within the feudal mode of production.

The political economy of precapitalist modes of production deals with more than mankind’s distant past. Even in the 20th century there are vestiges of feudal and earlier economic relations in many parts of the world. Thus, the task of working out the problems of the economics of precapitalist modes of production is both urgent and timely.

Capitalism. The political economy of capitalism studies the laws of the rise, development, and inevitable collapse of the capitalist mode of production.

The system of laws and categories characteristic of the capitalist mode of production was revealed by Marx in DasKapital. The investigation of bourgeois production relations begins with the analysis of the commodity, inasmuch as the commodity precedes capital, both historically and logically. The commodity has two properties: value and use-value. These two properties express the dual character of labor, which produces commodities. Marx’ discovery of the dual character of labor (abstract labor and concrete labor) is the basis for understanding the political economy of capitalism in general.

Bourgeois economists saw a relation between things (the exchange of a commodity for a commodity). Behind the veil of things Marx discovered a relation between people. He showed that the magnitude of a commodity’s value is determined by the socially necessary labor expended on it, and that the use value of an object is derived from its utility, or its capacity to satisfy a particular human need.

The analysis of the dual character of labor made it possible for Marx to explain the development of the different forms of value, as well as to clarify the origin of money, to reveal its essence as the universal equivalent, and to analyze its functions.

Capital is a particular, historically determined production relation. The exploitation of wage labor by capital is the source of surplus value. On the labor market, in accordance with its laws, the capitalist buys a specific commodity—labor power, the use of which (labor) creates value. Capital is subdivided into constant capital and variable capital. Constant capital is used to acquire the means of production. Its value is transferred, unchanged, to the finished commodity. Variable capital is used to purchase labor power. Its value fluctuates, increasing in the process of labor in proportion to the magnitude of surplus value. The relation between surplus value and variable capital is determined by the intensity of the exploitation of wage labor by capital.

According to Marxist political economy, surplus value can be produced as absolute surplus value or as relative surplus value. In the production of absolute surplus value, an increase in surplus value is produced by lengthening the workday. In the production of relative surplus value, the length of the workday remains the same, but an increased surplus value is produced by reducing the time necessary for the reproduction of labor power, thus increasing surplus labor time. Necessary labor time is reduced by increasing the productivity of labor. Historically, this process goes through three stages: simple cooperation under capitalism, capitalist manufacture, and machine production. During the transition from cooperation to manufacture and from manufacture to the capitalist factory, the formal subordination of labor to capital gives way to actual subordination.

The transformation of part of the surplus value into capital constitutes the accumulation of capital. The more rapid growth of constant capital than of variable capital (that is, the growth of the organic composition of capital) leads to an accumulation of wealth at one pole of capitalist society and an increase in poverty at the other. It also gives rise to the reserve army of labor, the unemployed. The production of surplus value is the fundamental economic law of capitalism.

Surplus value, which is created by the labor of wage workers, is distributed among the various groups of capitalists in the form of profits (the owner’s or employer’s income), commercial profits and interest on loans. In agriculture, the specific form of surplus value is land rent, and in the mining industries, mine rent.

The capitalist mode of production leads to a significant expansion of the productive forces, based on the use of machine technology. Enterprises grow larger, and the social division of labor becomes deeper. The historical mission of capitalism is to bring about an increase in the socialization of production and an expansion of the productive forces. At the same time, private capitalist ownership of the means of production acts as a brake on the further development of the productive forces. The basic contradiction of capitalism—the contradiction between the social character of production and the private capitalist form of appropriation—grows more intense. The objective laws of development demand the resolution of this contradiction by replacing the capitalist mode of production with the communist mode, which is based on the social ownership of the means of production. The working class—the force capable of making this replacement—develops within bourgeois society.

At the turn of the 20th century, capitalism entered the epoch of imperialism, a new stage in its development. Lenin analyzed the economic essence and main features of imperialism (monopoly capitalism) in Imperialism, the Highest Stage of Capitalism. In his study of the laws of development of imperialism, Lenin drew heavily on the abundant information collected by J. A. Hobson (Great Britain) and a number of other bourgeois scholars. The fundamental traits of imperialism are the concentration of production and the formation of monopolies, finance capital, and a financial oligarchy; the export of capital; and the partition of the world economically among groups of monopolies and territorially among the imperialist powers. Imperialism’s place in history is determined by three of its characteristics: imperialism is monopoly capitalism, a parasitic and decaying capitalism, and capitalism in its dying phase—the eve of socialist revolution. Having elaborated the Marxist theory of imperialism, Lenin criticized bourgeois and reformist conceptions of imperialism.

In the second decade of the 20th century, in connection with World War I (1914–18) and the victory of the Great October Socialist Revolution, the general crisis of capitalism emerged, engulfing the entire capitalist system—its economy, its politics, and its ideology. The general crisis of capitalism reflects the continued growth of the contradictions of capitalism. In addition, it reflects the process by which more and more countries are breaking away from the world capitalist system, as well as the formation and growth of the world socialist system. The colonial system of imperialism has collapsed during the epoch of the general crisis of capitalism.

The present stage in the development of the capitalist mode of production is characterized by an increase in state-monopoly capitalism, which unites the power of the state with that of the monopolies. State-monopoly regulation of the economy has developed, as have the forecasting and programming of economic growth. A new stage in the socialization of production, state-monopoly capitalism further exacerbates the basic contradiction of capitalism.

In studying the political economy of contemporary capitalism, Marxist scholars and theoreticians face a number of tasks associated with the need for a profound analysis of new phenomena and processes that are characteristic of the development of the contemporary capitalist economy and that are affected particularly by the contemporary scientific and technological revolution. In addition, the study of the political economy of contemporary capitalism presents Marxist scholars with tasks related to the mechanism by which the bourgeois state influences the processes of social reproduction, the modification of the economic cycle, price changes, inflation, and international currency relations.

Socialism. The political economy of socialism—part of the political economy of the communist mode of production in general—deals with the study of the production relations of the multisector economy of the transition period between capitalism and socialism. It discloses the laws of development of social production inherent in the first phase of the communist mode of production (the system of socialist production relations, the operation of economic laws, and the application of these laws in the planned management of the national economy). Moreover, the political economy of socialism investigates the specific ways in which these economic laws are manifested at a particular stage in the development of socialism. The building of a developed socialist society in the USSR—a society developing on its own bases and characterized by a high level of maturity in the material and technical basis and in the system of production relations—creates the conditions for the more thorough and consistent study and utilization of the advantages of socialism. The maturity of socialist production relations (their achievement of the highest level of development) is an important precondition for making a more profound analysis of their essence and of the forms in which they are manifested.

In the political economy of socialism the main objects of investigation are production relations under socialism and, above all, the social ownership of the means of production, which underlies socialist production relations and characterizes the mode of appropriation of material and cultural values in the interests of the toiling masses. In the USSR and other socialist countries there are two forms of socialist public property: state property and cooperative property.

The predominance of socialist public ownership, which serves as the basis for the creation of interests shared by all the people, determines the direction in which socialist production develops, in subordination to the aims of satisfying the material and cultural needs of the people more and more fully and comprehensively developing all members of society. These phenomena and goals are expressed as the fundamental economic law of socialism.

Social ownership of the means of production also creates the conditions for the rise and operation of the planned proportional development of the national economy. This law necessitates and makes possible the coordinated functioning of society, the prediction of the results of its functioning, and the planned management of social production, which includes the conscious elaboration of the goals of economic development and the means of achieving them.

The political economy of socialism studies the specific features of the ways in which the economic laws characteristic of some or all socioeconomic formations operate under socialist conditions. Among these laws are the law of economies of time, the law of increasing requirements, and the law of the more rapid growth of the production of the means of production.

Of importance in the political economy of socialism is the study of commodity-money relations and the economic laws inherent in them, including the law of value and the laws of monetary circulation. Commodity-money relations have a new, socialist content during the first phase of communist society. The socialist state uses commodity-money relations, in conformity with a plan, in all phases and stages of expanded socialist reproduction, both within the national economy and in economic relations between countries in the world socialist system. The planned utilization of the categories of commodity production is the basis for economic accounting.

The political economy of socialism studies the categories and laws characteristic of social reproduction in general and its particular spheres (production, distribution, exchange, and consumption). At the present stage of socialist construction, special attention is paid to analyzing the interconnections between subdivision I (the production of the means of production) and subdivision II (the production of consumer goods) and the relations between the extensive and intensive factors in economic growth. In addition, the emphasis is placed on analyzing the problems of increasing the efficiency of production and of the entire economy on the basis of more rapid scientific and technological progress, improving the organization of production, and improving management and planning techniques throughout the economic mechanism. The political economy of socialism elucidates the socioeconomic aspects of the modern scientific and technological revolution under socialist conditions.

The planned management of the national economy under socialism is based on the knowledge and use of a system of objective economic laws, which provide for organic unity between theory and practice and for the elaboration of a scientific foundation for the economic policies of the party and the state.

The political economy of socialism studies the system of the planned management of the socialist economy—a system that organically combines targets assigned by planning bodies with other economic levers for influencing production, including prices, credit, wages and profits. The comprehensive study of the management of social production is made possible by close cooperation among specialists in economics and other sciences, such as law and sociology.

With the establishment of socialist property, the state is transformed into a body that regulates the development of the economy in conformity with a plan. The political economy of socialism studies the economic role and function of the state and the forms and methods of socialist economic management.

The formation of the world socialist economy results in the creation of a new sphere of production relations—international socialist economic relations. The political economy of socialism has been substantially enriched by the study of international socialist economic relations and the laws characteristic of them, as well as by the study of socialist economic integration and the internationalization of production.

In addition to political economy, a highly ramified system of economic sciences has developed: general economics, which covers national economic planning, the theory of economic management, and statistics; functional economics, which includes finance and credit, labor economics, and price formation; and the economics of sectors, which focuses on industry, agriculture, and transportation, for example. The political economy of socialism constitutes the theoretical and methodological foundation for the entire system of economic sciences. Each economic science can only develop successfully if it is based on the theoretical conclusions and foundations of Marxist-Leninist political economy. Socialist political economy is, in turn, enriched by the factual material accumulated as the various economic sciences develop.

The practical function of the political economy of socialism is to elaborate scientific principles for economic policies and for the planned management of the national economy. As science penetrates the essence of socialist production relations and laws more deeply and reveals their operation as a system more fully, political economy achieves greater success in elaborating scientific principles. The political economy of socialism also performs important ideological functions. One of the primary means by which the communist world view is formed, it arms the toiling people with knowledge of the fundamental distinctive features of the socialist economic system and its advantages over the capitalist system. Moreover, the political economy of socialism provides a clear orientation in the welter of events of economic and political life, and it inspires confidence in the inevitable triumph of communism. The study of socialist political economy occupies a central place in the economic education of the toiling people. The practical and ideological functions of the political economy of socialism constitute an organic whole and are complementary.

Because of the important and ever-increasing role of political economy in socialist and communist construction, its further development is a matter of continual interest to the CPSU. The party focuses the attention of economic scholars on the elaboration of the most efficient forms and methods for utilizing objective economic laws in the planned management of the national economy. In addition, the party encourages economic scholars to concentrate on improving long-term planning, on accelerating scientific and technological progress, on intensifying and maximizing the efficiency of social production, and on solving the most important problems in the development of socialist economic integration.


Marx, K. “K kritike politicheskoi ekonomii.” In K. Marx and F. Engels, Soch., 2nd ed., vol. 13.
Marx, K. Kapital. Ibid., vols. 23–25.
Marx, K. “Teorii pribavochnoi stoimosti” (vol. 4 of Kapital). Ibid., vol. 26.
Marx, K. Kritika Gotskoi programmy. Ibid., vol. 19.
Engels, F. Proiskhozhdenie sem’i, chastnoi sobstvennosti i gosudarstva. Ibid, vol. 21.
Engels, F. Anti-Dühring. Ibid., vol. 20.
Lenin, V. I. “Po povodu tak nazyvaemogo voprosa o rynkakh.” Poln. sobr. soch., 5th ed., vol. 1.
Lenin, V. I. Razvitie kapitalizma v Rossii Ibid., vol. 3.
Lenin, V. I. “Karl Marks.” Ibid., vol. 26.
Lenin, V. I. Imperializm, kak vysshaia stadiia kapitalizma. Ibid., vol. 27.
Lenin, V. I. Gosudarstvo i revoliutsiia. Ibid., vol. 33.
Lenin, V. I. Ocherednye zadachi Sovetskoi vlasti. Ibid., vol. 36.
Lenin, V. I. “Velikii pochin.” Ibid, vol. 39.
Lenin, V. I. “Ekonomika i politika v epokhu diktatury proletariata.” Ibid, vol. 39.
Lenin, V. I. “Ob edinom khoziaistvennom plane.” Ibid., vol. 42.
Lenin, V. I. “O prodovol’stvennom naloge.” Ibid., vol. 43.
Lenin, V. I. “O znachenii zolota teper’ i posle polnoi pobedy sotsializma.” Ibid., vol. 44.
Lenin, V. I. O kooperatsii. Ibid., vol. 45.
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The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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