__NOTOC__ Calculation in kind or calculation in-natura is a way of valuating resources and a system of accounting that uses disaggregated physical magnitudes as opposed to a common unit of calculation. As the basis for a

socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the ...

economy, it was proposed to replace

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...

and financial calculation. Calculation in kind would value each commodity based on its

utility As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosoph ...

, for purposes of economic accounting. By contrast, in money-based economies, a commodity's value includes an exchange value. Calculation in kind would quantify the utility of an object ''directly'' without recourse to a general unit of calculation. This differs from other proposed methods of socialist calculation, such as Taylor-Lange accounting prices, and the use of labor time as a measure of cost. Calculation in kind was strongly advocated by the positivist philosopher and political economist

Otto Neurath Otto Karl Wilhelm Neurath (; 10 December 1882 – 22 December 1945) was an Austrian-born philosopher of science, sociologist, and political economist. He was also the inventor of the ISOTYPE method of pictorial statistics and an innovator in mu ...

when employed by the

Bavarian Soviet Republic The Bavarian Soviet Republic, or Munich Soviet Republic (german: Räterepublik Baiern, Münchner Räterepublik),Hollander, Neil (2013) ''Elusive Dove: The Search for Peace During World War I''. McFarland. p.283, note 269. was a short-lived unre ...

. This led to a discussion in the early 1920s, in which much of the discussion about socialism centered on whether economic planning should be based on physical quantities or monetary accounting. Neurath was the most forceful advocate of ''physical planning'' (economic planning using calculation-in-kind) in contrast to market socialist neoclassical economists who advocated use of notional prices computed by solving simultaneous equations.

Austrian school The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian schoo ...

critics of socialism, particularly

Ludwig von Mises Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...

, based his critique of socialism on the

calculation problem The economic calculation problem (sometimes abbreviated ECP) is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Econ ...

. The most prolific modern proponent of calculation in kind is the Scottish computer scientist

Paul Cockshott William Paul Cockshott (born 16 March 1952) is a Scottish computer scientist, Marxian economist and a reader at the University of Glasgow. Since 1993 he has authored multiple works in the tradition of scientific socialism, most notably '' Towar ...

who differs from Neurath in that he advocates the use of labour vouchers to set a scalar restraint on consumption. Proponents of in-kind calculation argue that the use of a common medium like money distorts information about the utility of an object. Socialists in favor of calculation in kind argued that, in a system of in-kind calculation, waste associated with the monetary system would be eliminated, and in particular objects would no longer be desired for functionally useless purposes like resale and speculation – they would only be desired for their use-value.''The Alternative to Capitalism''. Retrieved July 05, 2010, from wspus.org "The disappearance of economic value would mean the end of economic calculation in the sense of calculation in units of value whether measured by money or directly in some unit of labour-time. It would mean that there was no longer any common unit of calculation for making decisions regarding the production of goods...Calculation in kind is an essential aspect of the production of goods in any society, including capitalism. A commodity is, as we saw, a good which by virtue of being produced for sale has acquired in addition to its physical use value a socially-determined exchange value. Correspondingly, the process of production under capitalism is both a process of production of exchange values and a process of production of use values, involving two different kinds of calculation. For the former, the unit of calculation is money, but for the latter there is no single unit but a whole series of different units for measuring the quantity and quality of specific goods used in the process of producing other specific goods (tonnes of steel, kilowatt-hours of electricity, person-hours of work and so on). The disappearance of economic or value calculation in socialism would by no means involve the disappearance of all rational calculation, since the calculations in kind connected with producing specific quantities of goods as physical use values would continue."

References

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External links

World Socialist Party (US) (the wspus.org quoted above)

Socialism Socialist calculation Economic planning Theory of value (economics) Schools of economic thought

See also

References

Further reading

External links