The Basis for Socialist Production Price: A Reassessment

Discussions on the issue of whether production price remains a fact in the socialist economy started as early as the 1960s. Proponents of the theory at that time contended that the department with access to more funds would have a higher organic composition of capital. The department with a higher organic composition of capital would have a higher growth rate of labor productivity. And the department with a higher growth rate of labor productivity should have a higher rate of surplus products and its contribution to the state would be greater. Thus, the proponents maintained that the value of surplus products should be redistributed in proportion to the funds each department possessed. This raised the question of the average rate of return on funds and the question of production price. I, too, was a proponent of this view. Judging by how things stand now, this exposition, though basically correct, did not measure up to a rigorous scientific principle. The following is a reassessment of the basis of production price.