Basic Economic Laws of Socialism

It is the law that reflects the essential connection between production and consumption in socialist economic activity and governs all major processes and aspects of the development of socialist production. It includes both the aim of production and the means to achieve it.

The aim of production in a certain society is determined by the nature of a certain system of ownership of the means of production. Under the capitalist system, the aim of production of individual capitalists is always the same, i.e., to achieve maximum profit at minimum cost. The establishment of socialist public ownership, on the other hand, makes workers the owners of the means of production, and the products produced become belonging to workers themselves. This determines that the aim of socialist production is to meet the growing material and cultural needs of the entire population. The aim of production thus reflects the essential characteristics of the socialist mode of production. Marx and Engels once pointed out: “In bourgeois society, living labor is but a means to increase accumulated labor. In communist society, accumulated labor is but a means to widen, to enrich, to promote the existence of the laborer.” Later, Stalin introduced the category of the basic economic law of socialism and for the first time elaborated on its content: “the essential features and requirements of the basic economic law of socialism may be roughly formulated as follows: “The securing of the maximum satisfaction of the constantly rising material and cultural requirements of the whole of society by the continuous expansion and perfection of socialist production on the basis of higher techniques.” Stalin’s formulation of the content of the basic economic law of socialism reveals the intrinsic and essential connection between the aim of socialist production and the means of achieving them, reflects the essence of socialist production, and thus indicates the essential difference between socialist and capitalist production.

The dialectical unity of the relationship between socialist production and the means to achieve the aim of production is expressed through the relationship between socialist production and the material and cultural needs of the people. The material and cultural needs of the people, which are related to the aim of socialist production, are ever-growing and unending. But within a certain period of time, the development of social production always has a certain limit. Thus, a certain contradiction must arise between the growing material and cultural needs of the people and the existing level of development of social production. This contradiction can only be gradually solved by the development of social production. Yet, the development of socialist production provides the material basis for improving the material and cultural needs of the people. The improvement of people’s living standards, in turn, puts forward higher requirements for production, which promotes the continuous development of production to depth and breadth. The contradiction between production and needs, which is constantly solved and recreated, is the driving force of the development of socialist production. For example, in China, after the socialist transformation of the private ownership of the means of production was basically completed, the main contradiction in society was between the growing material and cultural needs of the people and the backward social production. Adhering to economic construction as the center and accelerating modernization are not only an effective way to solve such a major contradiction, but also an objective requirement of the basic economic law of socialism.

The basic economic law of socialism is the law that plays a dominant role in the development of socialist economy. It plays a decisive role in all major aspects of social production and in all major processes. By all the main aspects of social production, it is referred to all aspects of production, distribution, exchange, and consumption in the relations of production. Although all these aspects have their own laws of economic operation, the economic laws of these aspects are subject to the constraints and influences of the basic economic law of socialism. At the same time, through the action of these economic laws, the requirements of the basic economic law of socialism is realized. By determining all major processes of social production, it is referred to determining the trends of socialist production processes, circulation processes and social reproduction processes. As a result of the action of the basic economic law of socialism, socialist production and reproduction develop from low to high, from imperfect to perfect, from underdeveloped to developed, and prepare the material and spiritual conditions for entering communism.