Means of production

In economics and sociology, the means of production (also called capital goods)[1] are physical and non-financial inputs used in the production of economic value. These include raw materials, facilities, machinery and tools used in the production of goods and services.[2][3] In the terminology of classical economics, the means of production are the "factors of production" minus financial and human capital.

The social means of production are capital goods and assets that require organized collective labor effort, as opposed to individual effort, to operate on.[4] The ownership and organization of the social means of production is a key factor in categorizing and defining different types of economic systems.

The means of production includes two broad categories of objects: instruments of labor (tools, factories, infrastructure, etc.) and subjects of labor (natural resources and raw materials). People operate on the subjects of labor using the instruments of labor to create a product; or stated another way, labor acting on the means of production creates a good.[5] In an agrarian society the principal means of production is the soil and the shovel. In an industrial society the means of production become social means of production and include factories and mines. In a knowledge economy, computers and networks are means of production. In a broad sense, the "means of production" also includes the "means of distribution" such as stores, the internet and railroads (Infrastructural capital).[6]

Soviet Union

The analysis of the technological sophistication of the means of production and how they are owned is a central component in the Marxist theoretical framework of historical materialism and in Marxian economics.

In Marx's work and subsequent developments in Marxist theory, the process of socioeconomic evolution is based on the premise of technological improvements in the means of production. As the level of technology improves with respect to productive capabilities, existing forms of social relations become superfluous and unnecessary, creating contradictions between the level of technology in the means of production on the one hand and the organization of society and its economy on the other. These contradictions manifest themselves in the form of class conflicts, which develop to a point where the existing mode of production becomes unsustainable, either collapsing or being overthrown in a social revolution. The contradictions are resolved by the emergence of a new mode of production based on a different set of social relations including, most notably, different patterns of ownership for the means of production.[7]

Ownership of the means of production and control over the surplus product generated by their operation is the fundamental factor in delineating different modes of production. Capitalism is defined as private ownership and control over the means of production, where the surplus product becomes a source of unearned income for its owners. By contrast, socialism is defined as social ownership of the means of production so that the surplus product accrues to society at large.

Determinant of class

Marx's theory of class defines classes in their relation to their ownership and control of the means of production. In a capitalist society, the bourgeoisie, or the capitalist class, is the class that owns the means of production and derives a passive income from their operation. In contrast, the proletariat, or working class, comprises the majority of the population that lacks access to the means of production and are therefore induced to sell their labor power for a wage or salary to gain access to necessities, goods and services.[8]

To the question of why classes exist in human societies in the first place, Karl Marx offered a historical and scientific explanation that it was the cultural practice of ownership of the means of production that gives rise to them. This explanation differs dramatically from other explanations based on "differences in ability" between individuals or on religious or political affiliations giving rise to castes. This explanation is consistent with the bulk of Marxist theory in which Politics and Religion are seen as mere outgrowths (superstructures) of the basic underlying economic reality of a people.[9]

Related terms

Factors of production are defined by German economist Karl Marx in his book Das Kapital as labor, subjects of labor, and instruments of labor: the term is equivalent to means of production plus labor. The factors of production are often listed in economic writings derived from the classical school as "land, labour and capital". Marx sometimes used the term "productive forces" equivalently with "factors of production;" in Kapital, he uses "factors of production", in his famous Preface to the Critique of Political Economy, he uses "productive forces" (that may depend on the translation).

Production relations (German: Produktionsverhältnis) are the relations humans enter into with each other in using the means of production to produce. Examples of such relations are employer/employee, buyer/seller, the technical division of labour in a factory, and property relations.

Mode of production (German: Produktionsweise) means the dominant way in which production is organised in society. For instance, "capitalism" is the name for the capitalist mode of production in which the means of production are owned privately by a small class (the bourgeoisie) who profits off the labor of the working class (the proletariat). Communism is a mode of production in which the means of production are not owned by anyone, but shared in common, without class based exploitation.

See also

Footnotes

  1. ^ Eatwell, John; Milgate, Murray; Newman, Peter (April 19, 1990). Marxian Economics: The New Palgrave. W. W. Norton & Company. p. 76. ISBN 978-0393958607. The conception of capital within orthodox economics. Within orthodox economics, the term ‘capital’ generally refers to the means of production. .
  2. ^ James M. Henslin (2002). Essentials of Sociology. Taylor & Francis US. p. 159.
  3. ^ Oxford Dictionaries. "means of production". Oxford Dictionaries. Retrieved 7 December 2017. the facilities and resources for producing goods.
  4. ^ Karl Kautsky (1983). Selected Political Writings. 978-0333283844. p. 9. Here we encounter a further characteristic of the modern wage proletarian. He works not with individual but with social means of production, means of production so extensive that they can be operated only by a society of workers, not by the individual worker.
  5. ^ Michael Evans, Karl Marx, London, England, 1975. Part II, Chap. 2, sect. a; p. 63.
  6. ^ Flower, B. O. The Arena, Volume 37. The Arena Pub. Co, originally from Princeton University. p. 9
  7. ^ Mode of Production. Marxism.org
  8. ^ Ishiyama, Breuning, John, Marijke (October 22, 2010). 21st Century Political Science: A Reference Handbook. SAGE Publications, Inc. For Marx, class was defined by an individual’s relationship to the means of production...Class is determined by the extent to which people own most, some, or little of the means of production, or by their relationship to the means of production. It is generally conflict over control or access to the means of production that drives history.
  9. ^ Frederick Engels: Socialism: Utopian and Scientific Chapter III Historical Materialism Marx2mao.com. p. 74

References

  • Institute of Economics of the Academy of Sciences of the U.S.S.R. (1957). Political Economy: A Textbook. London: Lawrence and Wishart.
Anti-capitalism

Anti-capitalism encompasses a wide variety of movements, ideas and attitudes that oppose capitalism. Anti-capitalists, in the strict sense of the word, are those who wish to replace capitalism with another type of economic system.

Bourgeoisie

The bourgeoisie (; French: [buʁʒwazi]) is a polysemous French term that can mean:

a sociologically defined class, especially in contemporary times, referring to people with a certain cultural and financial capital belonging to the middle or upper middle class: the upper (haute), middle (moyenne), and petty (petite) bourgeoisie (which are collectively designated "the bourgeoisie"); an affluent and often opulent stratum of the middle class who stand opposite the proletariat class.

originally and generally, "those who live in the borough", that is to say, the people of the city (including merchants and craftsmen), as opposed to those of rural areas; in this sense, the bourgeoisie began to grow in Europe from the 11th century and particularly during the Renaissance of the 12th century (i.e., the onset of the High Middle Ages), with the first developments of rural exodus and urbanization.

a legally defined class of the Middle Ages to the end of the Ancien Régime (Old Regime) in France, that of inhabitants having the rights of citizenship and political rights in a city (comparable to the German term Bürgertum and Bürger; see also "Burgher").The "bourgeoisie" in its original sense is intimately linked to the existence of cities recognized as such by their urban charters (e.g. municipal charter, town privileges, German town law), so there was no bourgeoisie "outside the walls of the city" beyond which the people were "peasants" submitted to the stately courts and manorialism (except for the traveling "fair bourgeoisie" living outside urban territories, who retained their city rights and domicile).

In Marxist philosophy, the bourgeoisie is the social class that came to own the means of production during modern industrialization and whose societal concerns are the value of property and the preservation of capital to ensure the perpetuation of their economic supremacy in society.Joseph Schumpeter saw the incorporation of new elements into an expanding bourgeoisie, particularly entrepreneurs who took risks to bring innovation to industries and the economy through the process of creative destruction, as the driving force behind the capitalist engine.

Capitalist mode of production (Marxist theory)

In Karl Marx's critique of political economy and subsequent Marxian analyses, the capitalist mode of production refers to the systems of organizing production and distribution within capitalist societies. Private money-making in various forms (renting, banking, merchant trade, production for profit and so on) preceded the development of the capitalist mode of production as such. The capitalist mode of production proper, based on wage-labour and private ownership of the means of production and on industrial technology, began to grow rapidly in Western Europe from the Industrial Revolution, later extending to most of the world.The capitalist mode of production is characterized by private ownership of the means of production, extraction of surplus value by the owning class for the purpose of capital accumulation, wage-based labour and—at least as far as commodities are concerned—being market-based.

Collective ownership

Collective ownership is the ownership of means of production by all members of a group for the benefit of all its members. The breadth or narrowness of the group can range from a whole society to a set of coworkers in a particular enterprise (such as one collective farm). In the latter (narrower) sense the term is distinguished from common ownership and the commons, which implies open-access, the holding of assets in common, and the negation of ownership as such.

Collective ownership of the means of production is the defining characteristic of socialism, where "collective ownership" can refer to society-wide ownership or to cooperative ownership by an organization's members. It more commonly refers to group ownership (such as a producer cooperative) as contrasted with public ownership.

Collectivist anarchism

Collectivist anarchism (also known as anarcho-collectivism) is a revolutionary anarchist doctrine that advocates the abolition of both the state and private ownership of the means of production as it instead envisions the means of production being owned collectively and controlled and managed by the producers themselves.

For the collectivization of the means of production, it was originally envisaged that workers will revolt and forcibly collectivize the means of production. Once collectivization takes place, money would be abolished to be replaced with labour notes and workers' salaries would be determined in democratic organizations of voluntary membership based on job difficulty and the amount of time they contributed to production. These salaries would be used to purchase goods in a communal market. This contrasts with anarcho-communism, where wages would be abolished and where individuals would take freely from a storehouse of goods "to each according to his need". Notwithstanding the title, Mikhail Bakunin's collectivist anarchism is seen as a blend of individualism and collectivism.Collectivist anarchism is most commonly associated with Bakunin, the anti-authoritarian sections of the International Workingmen's Association and the early Spanish anarchist movement.

Common ownership

Common ownership refers to holding the assets of an organization, enterprise or community indivisibly rather than in the names of the individual members or groups of members as common property.

Forms of common ownership exist in every economic system. Common ownership of the means of production is a central goal of communist political movements as it is seen as a necessary democratic mechanism for the creation and continued function of a communist society. Advocates make a distinction between collective ownership and common property as the former refers to property owned jointly by agreement of a set of colleagues, such as producer cooperatives, whereas the latter refers to assets that are completely open for access, such as a public park freely available to everyone.

Communism

In political and social sciences, communism (from Latin communis, "common, universal") is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money, and the state.Communism includes a variety of schools of thought, which broadly include Marxism and anarchism (anarcho-communism), as well as the political ideologies grouped around both. All of these share the analysis that the current order of society stems from its economic system, capitalism; that in this system there are two major social classes; that conflict between these two classes is the root of all problems in society; and that this situation will ultimately be resolved through a social revolution.

The two classes are the working class—who must work to survive and who make up the majority within society—and the capitalist class—a minority who derives profit from employing the working class through private ownership of the means of production.

The revolution will put the working class in power and in turn establish social ownership of the means of production, which according to this analysis is the primary element in the transformation of society towards communism.

Critics of communism can be roughly divided into those concerning themselves with the practical aspects of 20th century communist states and those concerning themselves with communist principles and theory.Marxism-Leninism and democratic socialism were the two dominant forms of socialism in the 20th century; democratic socialism advocates economic reform through gradual democratic legislative action rather than through revolution.

Economic system

An economic system (also economic order) is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes and patterns of consumption that comprise the economic structure of a given community. As such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce and in what quantities and who receives the output of production.

The study of economic systems includes how these various agencies and institutions are linked to one another, how information flows between them and the social relations within the system (including property rights and the structure of management). The analysis of economic systems traditionally focused on the dichotomies and comparisons between market economies and planned economies and on the distinctions between capitalism and socialism. Subsequently, the categorization of economic systems expanded to include other topics and models that do not conform to the traditional dichotomy. Today the dominant form of economic organization at the world level is based on market-oriented mixed economies.

Free association (Marxism and anarchism)

Free association, also known as free association of producers, is a relationship among individuals where there is no state, social class, authority, or private ownership of means of production. Once private property is abolished, individuals are no longer deprived of access to means of production, thus enabling them to freely associate without social constraint to produce and reproduce their own conditions of existence and fulfill their individual and creative needs and desires. The term is used by anarchists and Marxists and is often considered a defining feature of a fully developed communist society.

The concept of free association becomes more clear around the concept of the proletariat. The proletarian is someone who has no property nor any means of production and therefore to survive sells the only thing that they have, namely their abilities (the labour power) to those owning the means of production. The existence of individuals deprived of property and livelihood allows owners (or capitalists) to find in the market an object of consumption that thinks and acts (human abilities), which they use in order to accumulate increasing capital in exchange for the wage that maintains the survival of the proletarians. The relationship between proletarians and owners of the means of production is thereby a forced association in which the proletarian is only free to sell his labor power in order to survive. By selling his productive capacity in exchange for the wage which ensures survival, the proletarian puts his practical activity under the will of the buyer (the owner), becoming alienated from his/her own actions and products, in a relationship of domination and exploitation. Free association would be the form of society created if private property was abolished in order to allow individuals to freely dispose of the means of production, which would bring about an end to class society, i.e. there would be no more owners neither proletarians, nor state, but only freely associated individuals. For instance, Karl Marx often called it a "community of freely associated individuals".

The abolition of private property by a free association of producers is the original goal of the communists and anarchists and it is identified with anarchy and communism itself. However, the evolution of various trends have led some to virtually abandon the goal or to put it in the background in face of other tasks while others believe free association should guide all challenges to the status quo. Advocates of anarchism and council communism promote free association as the practical basis for the fundamental transformation of society at all levels, from the everyday level (such as the search of a libertarian interpersonal relationship, critique of the family, consumerism, criticism of conformist and obedient behavior) to the level of world society as a whole (such as the fight against the state and against the ruling class in all countries, the destruction of national borders, support for self-organized struggle of the oppressed, attacks on property, support to wildcat strikes and to workers and unemployed autonomous struggles).

Market economy

A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.Market economies range from minimally regulated free market and laissez-faire systems where state activity is restricted to providing public goods and services and safeguarding private ownership, to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare. State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides yet does does substitute the market for economic planning—a form sometimes referred to as a mixed economy.Market economies are contrasted with planned economies where investment and production decisions are embodied in an integrated economy-wide economic plan. In a planned economy, economic planning is the principal allocation mechanism between firms rather than markets, with the economy’s means of production being owned and operated by a single organizational body.

Marx's theory of alienation

Karl Marx's theory of alienation describes the estrangement (Entfremdung) of people from aspects of their Gattungswesen ("species-essence") as a consequence of living in a society of stratified social classes. The alienation from the self is a consequence of being a mechanistic part of a social class, the condition of which estranges a person from their humanity.

The theoretical basis of alienation within the capitalist mode of production is that the worker invariably loses the ability to determine life and destiny when deprived of the right to think (conceive) of themselves as the director of their own actions; to determine the character of said actions; to define relationships with other people; and to own those items of value from goods and services, produced by their own labour. Although the worker is an autonomous, self-realized human being, as an economic entity this worker is directed to goals and diverted to activities that are dictated by the bourgeoisie—who own the means of production—in order to extract from the worker the maximum amount of surplus value in the course of business competition among industrialists.

In the Economic and Philosophic Manuscripts of 1844 (1932), Karl Marx expressed the Entfremdung theory—of estrangement from the self. Philosophically, the theory of Entfremdung relies upon The Essence of Christianity (1841) by Ludwig Feuerbach which states that the idea of a supernatural god has alienated the natural characteristics of the human being. Moreover, Max Stirner extended Feuerbach's analysis in The Ego and its Own (1845) that even the idea of "humanity" is an alienating concept for individuals to intellectually consider in its full philosophic implication. Marx and Friedrich Engels responded to these philosophic propositions in The German Ideology (1845).

Marxism

Marxism is a theory and method of working-class self-emancipation. As a theory, it relies on a method of socioeconomic analysis that views class relations and social conflict using a materialist interpretation of historical development and takes a dialectical view of social transformation. It originates from the works of 19th-century German philosophers Karl Marx and Friedrich Engels.

Marxism uses a methodology, now known as historical materialism, to analyze and critique the development of class society and especially of capitalism as well as the role of class struggles in systemic economic, social, and political change. According to Marxist theory, in capitalist societies, class conflict arises due to contradictions between the material interests of the oppressed and exploited proletariat—a class of wage labourers employed to produce goods and services—and the bourgeoisie—the ruling class that owns the means of production and extracts its wealth through appropriation of the surplus product produced by the proletariat in the form of profit.

This class struggle that is commonly expressed as the revolt of a society's productive forces against its relations of production, results in a period of short-term crises as the bourgeoisie struggle to manage the intensifying alienation of labor experienced by the proletariat, albeit with varying degrees of class consciousness. In periods of deep crisis, the resistance of the oppressed can culminate in a proletarian revolution which, if victorious, leads to the establishment of socialism—a socioeconomic system based on social ownership of the means of production, distribution based on one's contribution and production organized directly for use. As the productive forces continued to advance, Marx hypothesized that socialism would ultimately be transformed into a communist society: a classless, stateless, humane society based on common ownership and the underlying principle: "From each according to his ability, to each according to his needs".

Marxism has developed into many different branches and schools of thought, with the result that there is now no single definitive Marxist theory. Different Marxian schools place a greater emphasis on certain aspects of classical Marxism while rejecting or modifying other aspects. Many schools of thought have sought to combine Marxian concepts and non-Marxian concepts, which has then led to contradicting conclusions. However, lately there is movement toward the recognition that historical materialism and dialectical materialism remains the fundamental aspect of all Marxist schools of thought. Marxism has had a profound impact on global academia and has influenced many fields such as archaeology, anthropology, media studies, political science, theater, history, sociology, art history and theory, cultural studies, education, economics, ethics, criminology, geography, literary criticism, aesthetics, film theory, critical psychology and philosophy.

Politics of Fidel Castro

Fidel Castro proclaimed himself to be "a socialist, a Marxist, and a Leninist". As a Marxist and Leninist, Castro believed strongly in converting Cuba and the wider world from a capitalist system in which individuals own the means of production into a socialist system in which the means of production are owned by the workers. In the former, there is a class divide between the wealthy classes who control the means of production (i. e., the factories, farms, media, etc.) and the poorer working classes who labor on them, whilst in the latter, there is a decreasing class divide as the government redistributes the means of production leading to communism.

Marxism is the socio-political theory developed by German philosophers Karl Marx and Friedrich Engels in the mid-19th century. It holds as its foundation the idea of class struggle, i. e., that society mainly changes and progresses as one socio-economic class takes power from another. Thus, Marxists believe that capitalism replaced feudalism in the early modern period as the wealthy industrial class, or bourgeoisie, took political and economic power from the traditional land-owning class - the aristocracy and monarchy. In the same process, Marxists predict that socialism will replace capitalism as the industrial working class, or proletariat, seize power from the bourgeoisie through revolutionary action. In this way, Marxism is believed by its supporters to provide a scientific explanation for why socialism should, and will, replace capitalism in human society.

Leninism refers to the theories put forward by Russian revolutionary, political theorist, and politician Vladimir Lenin, the leader of the Bolshevik Party, who was a leading figure in the October Revolution that overthrew the Russian Provisional Government and replaced it with the Russian Soviet Federative Socialist Republic under the rule of the Communist Party. Taking Marxism as its basis, Leninism revolves around putting forward ideas for how to convert a capitalist state into a socialist one. Castro used Leninist thought as a model upon which to convert the Cuban state and society into a socialist form.

Proletariat

The proletariat ( from Latin proletarius "producing offspring") is the class of wage-earners in an economic society whose only possession of significant material value is their labour-power (how much work they can do). A member of such a class is a proletarian.

In Marxist theory, a dictatorship of the proletariat is for the proletariat, of the proletariat, and by the proletariat. On the Marxist view, this will endow the proletarian with the power to abolish the conditions that make a person a proletarian and, thus, build communism.

Social class

A social class is a set of subjectively defined concepts in the social sciences and political theory centered on models of social stratification in which people are grouped into a set of hierarchical social categories, the most common being the upper, middle and lower classes.

"Class" is a subject of analysis for sociologists, political scientists, anthropologists and social historians. However, there is not a consensus on a definition of "class" and the term has a wide range of sometimes conflicting meanings. In common parlance, the term "social class" is usually synonymous with "socio-economic class", defined as "people having the same social, economic, cultural, political or educational status", e.g., "the working class"; "an emerging professional class". However, academics distinguish social class and socioeconomic status, with the former referring to one's relatively stable sociocultural background and the latter referring to one's current social and economic situation and consequently being more changeable over time.The precise measurements of what determines social class in society has varied over time. Karl Marx thought "class" was defined by one's relationship to the means of production (their relations of production). His simple understanding of classes in modern capitalist society are the proletariat, those who work but do not own the means of production; and the bourgeoisie, those who invest and live off the surplus generated by the proletariat's operation of the means of production. This contrasts with the view of the sociologist Max Weber, who argued "class" is determined by economic position, in contrast to "social status" or "Stand" which is determined by social prestige rather than simply just relations of production. The term "class" is etymologically derived from the Latin classis, which was used by census takers to categorize citizens by wealth in order to determine military service obligations.In the late 18th century, the term "class" began to replace classifications such as estates, rank and orders as the primary means of organizing society into hierarchical divisions. This corresponded to a general decrease in significance ascribed to hereditary characteristics and increase in the significance of wealth and income as indicators of position in the social hierarchy.

Social ownership

Social ownership is any of various forms of ownership for the means of production in socialist economic systems, encompassing public ownership, employee ownership, cooperative ownership, citizen ownership of equity, common ownership and collective ownership. Historically social ownership implied that capital and factor markets would cease to exist under the assumption that market exchanges within the production process would be made redundant if capital goods were owned by a single entity or network of entities representing society, but the articulation of models of market socialism where factor markets are utilized for allocating capital goods between socially owned enterprises broadened the definition to include autonomous entities within a market economy. Social ownership of the means of production is the common defining characteristic of all the various forms of socialism.The two major forms of social ownership are society-wide public ownership and cooperative ownership. The distinction between these two forms lies in the distribution of the surplus product. With society-wide public ownership, the surplus is distributed to all members of the public through a social dividend, whereas with co-operative ownership the economic surplus of an enterprise is controlled by all the worker-members of that specific enterprise.The goal of social ownership is to eliminate the distinction between the class of private owners who are the recipients of passive property income and workers who are the recipients of labor income (wages, salaries and commissions), so that the surplus product (or economic profits in the case of market socialism) belong either to society as a whole or to the members of a given enterprise. Social ownership would enable productivity gains from labor automation to progressively reduce the average length of the working day instead of creating job insecurity and unemployment. Reduction of necessary work time is central to the Marxist concept of human freedom and overcoming alienation, a concept widely shared by Marxist and non-Marxist socialists alike.The term "socialization" refers to the process of restructuring the economic framework, organizational structure and institutions of an economy on a socialist basis. The comprehensive notion of socialization and the public ownership form of social ownership implies an end to the operation of the laws of capitalism, capital accumulation and the use of money and financial valuation in the production process, along with a restructuring of workplace-level organization.

Socialist economics

Socialist economics comprises the economic theories, practices, and norms of hypothetical and existing socialist economic systems.

A socialist economic system is characterised by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use. Socialist systems that utilize markets for allocating inputs and capital goods among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.The term "socialist economics" may also be applied to the analysis of former and existing economic systems that were implemented in socialist states, such as in the works of Hungarian economist János Kornai.Socialist economics has been associated with different schools of economic thought. Marxian economics provided a foundation for socialism based on analysis of capitalism, while neoclassical economics and evolutionary economics provided comprehensive models of socialism. During the 20th century, proposals and models for both planned economies and market socialism were based heavily on neoclassical economics or a synthesis of neoclassical economics with Marxian or institutional economics.

Socialist mode of production

In Marxist theory, the socialist mode of production, also referred to as lower-stage of communism or simply socialism as Karl Marx and Friedrich Engels used the terms socialism and communism interchangeably, refers to a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism. The Marxist definition of socialism is an economic transition where the sole criterion for production is use-value and therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning while distribution of products is based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management so that social surplus goes to the working class and hence society as a whole.The Marxian conception of socialism stands in contrast to other early conceptions of socialism, most notably early forms of market socialism based on classical economics such as mutualism and Ricardian socialism. Unlike the Marxian conception, these conceptions of socialism retained commodity exchange (markets) for labour and the means of production seeking to perfect the market process. The Marxist idea of socialism was also heavily opposed to utopian socialism. Although Marx and Engels wrote very little on socialism and neglected to provide any details on how it might be organized, numerous social scientists and neoclassical economists have used Marx's theory as a basis for developing their own models of socialist economic systems. The Marxist view of socialism served as a point of reference during the socialist calculation debate.

Marx himself did not use the term socialism to refer to this development, but he rather called it a communist society that has not yet reached its higher-stage. The term socialism in reference to this societal organization was popularized during the Russian Revolution by Vladimir Lenin. This view is consistent with and helped to inform early conceptions of socialism where the law of value no longer directs economic activity and therefore monetary relations in the form of exchange-value, profit, interest and wage labour would not operate and apply to Marxist socialism.

State socialism

State socialism is a classification for any socialist political and economic perspective advocating state ownership of the means of production either as a temporary measure in the transition from capitalism to socialism, or as characteristic of socialism itself. It is often used interchangeably with state capitalism in reference to the economic systems of Marxist–Leninist states such as the Soviet Union to highlight the role of state planning in these economies, with the critics of said system referring to it more commonly as "state capitalism". Libertarian and democratic socialists claim that these states had only a limited number of socialist characteristics. However, Marxist–Leninists maintain that workers in the Soviet Union and other Marxist–Leninist states had genuine control over the means of production through institutions such as trade unions.State socialism is held in contrast with libertarian socialism, which rejects the view that socialism can be constructed by using existing state institutions or by governmental policies. By contrast, proponents of state socialism claim that the state—through practical considerations of governing—must play at least a temporary part in building socialism. It is possible to conceive of a democratic state that owns the means of production, but it is internally organized in a participatory, cooperative fashion, thereby achieving both social ownership of productive property and workplace democracy in day-to-day operations.

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