Edusex Title page

The Normative View of Marxian Theory on Income Distribution under Socialism

The original Marxian view on distributive justice is very far from crude egalitarianism. Marx and Engels never argued for absolutely equal incomes of all people, although they did believe that the capitalist distribution of income is too unequal and unjust and must therefore be replaced by a new socialist or communist form of distribution. The best known reference for Marx's own view on income distribution under socialism and communism can be found in his ‘Critique of the Gotha Program’. There he stated that under socialism, which he defined as a lower stage of communist society, people should be rewarded according to their work or contribution to society, while in the second stage or ‘full communism' people should be rewarded according to their needs. Neither of these principles requires a full equality of incomes.

The Marxian principle ‘equal amount of product for equal amount of labor' must necessarily produce quite considerable income differentials²especially if it is interpreted in the context of the labor theory of value. The ‘contribution to society' must be measured in some way, if it is to he a basis for the distribution of income, and for Marxists it would be natural to measure it -- at least in the case of the so-called productive workers -- by the value created by labor. But according to the labor theory of value the amount of value created depends on the skill of the worker and on the complexity of his labor. More complex labor is supposed to create more value in the same interval of time than simple labor³ The socialist principle of distribution therefore implies that a person with higher skills should receive a higher wage than a less skilled worker. As long as higher skills are obtained by individual effort, schooling or experience such income differentials may be ‘deserved'. But income inequality under socialism may also result from variation in inborn physical and mental abilities. 'One man is superior to another physically or mentally and so supplies more labor in the same time or can labor for longer time.'⁴Socialist equality is therefore only the equality of the right to income and not the equality of income. "It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowments and thus productive capacity as natural privileges"⁵.

The principle 'from everybody according to his abilities to everybody according to his needs' which was designed by Marx for the second stage of communism does not imply full income equality either. As long as people remain physically and intellectually different, they will continue to have different needs so that unequal incomes would be retained even under 'full communism'.

In the section called 'Private Property and Communism' of his 'Economic and philosophical Manuscripts' Marx distinguished two forms of communism:
The first one, which he called a 'crude communism' seems to be a simplistic and spontaneous reaction of the formerly oppressed and under-privileged against the rich and powerful. Marx argued that 'crude communism' called for 'equality of wages only because it was an expression of "envy and the desire to reduce everything to a common level" ⁶.Obviously Marx did not like this kind of crude communism because "it aims to destroy everything which is incapable of being possessed by everyone," because "it wishes to eliminate talent etc. by force" and because it "negates the personality of man in every sphere"⁷- He even compared the crudely egalitarian view on income distribution with a similar crudely communist attitude toward women: 'This tendency is expressed in an animal form, marriage is contrasted with the community of women -- just as women are to pass from marriage to universal prostitution, so the whole world of wealth is to pass from the relation of exclusive marriage with the private owner to the relation of universal prostitution with the community".⁸

In contrast to crude egalitarian communism, Marx developed his vision of true communism which is to be more than a simple negation of private property; it is to be 'a positive abolition' which 'assimilates all the wealth of previous development’. True communism should, of course, bring distributive justice, but Marx's vision goes far beyond that, it is to be a society where man becomes a true human being, free not only from all forms of external, (i.e. economic, political, cultural, etc.) oppression and manipulation, but also free from internal self-oppression and self-manipulation. "Communism is the abolition of human self-alienation, and the real appropriation of human nature through and for man".⁹As Erich Fromm stresses: "For Marx the aim of socialism was the emancipation of man and the emancipation of man was the same as his self-realization … The aim of socialism was the development of the individual personality." Or in Marx's words: 'The suppression of private property is therefore the complete emancipation of all the human qualities and senses."¹⁰

These extensive quotations are intended to demonstrate that although Marx was very critical of the injustices and inequalities of the capitalist income distribution, his view of socialist and communist income distribution did not imply an egalitarian leveling off all incomes. Marx never specified exactly which income inequalities should be eliminated and which should remain, but it may not be difficult to draw some inferences from his views. Generally, Marx would probably argue that all types of income inequality based on artificial, man-made stratification of society into classes, racial or ethnic groups as well as inequalities resulting from the usurpation and exercise of political and social power and from the specific forms of the operation of the capitalist market economy, should be eliminated. On the other hand, the income differentials which are based on natural differences in physical and mental abilities, in acquired skills and knowledge, and possibly also differentials resulting from personal preferences (e.g. between work and leisure) would remain.

It seems clear that Marx would not opt for income equality if it were to limit personal freedom and the full development of individual potential or if it sacrificed talents to barrack type uniformity. Also, ascetic self-deprivation would not be acceptable as a tool for eliminating inequality, because it would almost surely have to be achieved by ideological mass manipulation, rather than by a truly voluntary manifestation of personal preferences.

There are three basic reasons why Marxist justify income inequality:
1.Personal differences in the quantity of work measured either by its duration or by energy expenditures that each individual contributes to society. These differences may result from different physical endowments of individuals i.e. from biological or genetic factors, as well as from differences in attitudes toward work and preferences between work and leisure, i.e. primarily from cultural or 'social environment’ factors.

2Personal differences in the quality or complexity of work. These may result from different mental endowments of individuals, which may be due both to biological or genetic factors as well as differences in skills and knowledge acquired by experience or education.

3.Differences in the costs of reproducing labor power of a particular kind. According to the Marxian theory, labor which creates value is divided into two parts: necessary and surplus labor. Necessary labor is used to cover the reproduction costs of labor power and as such should be the main determinant of wages. This is relevant especially for income differentials of workers with different levels of education. It is more costly to reproduce more educated labor power therefore wages and salaries of people with more years of schooling should be higher. However, the fact, that a considerable part of the cost of education in socialist countries is paid by the government rather than by individuals, may weaken this line of reasoning. It may seem surprising, but probably fair to conclude, that the Marxian normative view on income distribution under socialism, although based on totally different theoretical and ideological postulates, leads to conclusions very similar to those reached in human capital theory.

Let us now turn to those sources of income inequality, which according to Marxian theory should not exist in socialism.
1.Probably most objectionable to Marxists is income inequality based on unequal distribution of wealth. First, Marxists regard the income from owning property as a truly undeserved, exploitative return. Second, for functional reasons Marxists believe that under socialism private property should not exist. Third, they object to private property as a source of income because it tends to maintain or increase income inequality. Wealthier people have access to better schools and to jobs which bring them higher incomes, and people with higher incomes accumulate wealth faster than those with lower incomes.

2It seems that Marxists would object to income inequality which results from the power structure of society. The communist party apparatchik, government official or central planner may deserve higher incomes than average workers if their jobs require more experience and higher level of education, but they should not earn more simply because they belong to the upper layers of the power hierarchy.

3.Marxists should also find objectionable income inequality based purely on sex, race or ethnicity. Such income differentials are discriminatory, and have nothing to do with a person's contribution to society.

4.Finally Marxists would probably object to income differentials resulting from persistent disequilibrium between supply and demand in the labor market. According to the original Marxist view all parts of a socialist economy should be rationally planned ex ante so that supply and demand for individual categories of labor should always be in equilibrium.

Empirical Evidence from Czechoslovakia and Poland

It would be beyond the scope of this paper to attempt an exhaustive study of all aspects of income distribution. In any case, such a task could not be accomplished because the original source data on personal income in Poland and Czechoslovakia are not available to Western scholars. The only source of information available to us are data already processed by simple statistical routines, i.e. averages, frequency tables or cross-tabulations. For these reasons we shall concentrate our attention only on a few selected aspects of economic inequality, while other aspects may be mentioned only casually, if at all.

Although we have almost no data on the distribution of personal wealth in Poland and Czechoslovakia, we may quite safely conclude that this source of income inequality has been almost totally eliminated. This does not mean that wealth is distributed equally - we know that considerable inequalities in this area still persist - it simply means that most of the privately owned property is 'unproductive’ and as such cannot generate income. There are a few exceptions. such as private farming in Poland for instance, or interest paid on personal savings, but private farmers are not very rich, and the interest rate on personal savings is only nominal.

Poland and Czechoslovakia also seem to have very few problems with income inequality based on race and ethnicity, and this is of course mostly due to the fact that both countries are in this respect relatively homogeneous. There are some indications that Czechoslovakia's policy of assimilating the gypsy population has not been very effective, but unfortunately no data on the current situation of the gypsies are available.

Somewhat more serious is the discrepancy which still exists between incomes of Czechs and Slovaks. This is an outcome of the historically lower level of economic development in Slovakia, rather then of a deliberate discrimination of Slovaks. Actually the preferential treatment of Slovakia, especially in the allocation of investment, has led to an apparent closing of the gap between the two nationalities.

For example, a comparison of average monthly wages in the two Republics¹¹ shows that in 1955 Czech wages were 6.1 % higher than Slovak wages, in 1960 -3.4%, in 1970 - 1.9 %, and by 1974 only 1.2% higher.

However, the comparison of average monthly wages may lead to an underestimation of income inequality between Czechs and Slovaks. The micro-census data (family budgets) indicate, that the per capita income in Slovakia is still almost 20 per cent lower than in Bohemia and Moravia.

Table 1 Distribution of Czechoslovak Households According to Net Money Income per Capita (%)
	1970		1973
Income Bracket	Czech Republic	Slovak Republic	Czech Republic	Slovak Republic
-7201	12.5	23.3	6.6	15.2
7201-9600	15.2	19.8	12.6	17.9
9601-12000	18.8	20.4	16.9	18.9
12000-14400	17.8	14.8	17.9	17.7
14401-16800	12.9	9.0	14.6	12.2
16801-19700	9.0	5.3	10.5	7.6
19201-	13.8	7.4	20.9	10.5
	100.0	100.0	100.0	100.0
Mean annual per capita income in Kcs	12,936	10,701	14,463	12,102

Table 2 Sectoral Monthly Average Wages in Czechoslovakia
	Average wages in Kcs		Ranking of Sectors
	1948	1970	1948	1970
Education and Culture	1022	1832	1	4
Health and Welfare	990	1776	2	7
Transportation	896	2239	3	1
Trade	840	1654	4	8
Construction	829	2195	5	2
Industry	759	1967	6	3
Agriculture	657	1806	7	5
Communication	656	1786	8	6

Table 3 Average Wages of Blue Collar Workers in Selected Branches of Czechoslovak Industry
	Average wages in Kcs		Ranking of Sectors
	1950	1970	1950	1970
Electric power	1038	2109	3	3
Fuels	1093	2668	2	1
Ferrous metallurgy	1126	2251	1	2
Machine building	940	1936	4	4
chemicals	894	1893	5	5
Wood working	836	1747	7	7
Glass porcelain and ceramics	755	1661	8	8
Textile	609	1485	9	9
Food	880	1816	6	6

Table 4 Average Wages of Main Categories of Workers in Czechoslovak Industry
	1948	1960	1970
(1) Blue collar workers	734	1406	1902
(2) Engineering-technical personnel	1214	1868	2569
(3) Administrative staff	914	1225	1626
Ratio 2:1 in %	165	133	135
Ratio 3:l in %	125	87	86

Table 5 Average Monthly income of Men and Women in Czechoslovakia
May of the Respective Year in Kcs	socialist sector			industry
May of the Respective Year in Kcs	1959	1968	1970	1959	1968
1) men	1596	2106	2338	1689	2140
2) women	1046	11400	1565	1054	1350
Ratio 2.1 in %	65.5	66.5	66.9	62.4	63.3

Table 6 Monthly Average Wages in Sectors of Czechoslovak Economy
May 1963 in Kcs	Average Wages		Women’s Wage as % of Men’s Wage	Women’s Participation Ratio
May 1963 in Kcs	Men	Women	Women’s Wage as % of Men’s Wage	Women’s Participation Ratio
Construction	1787	1161	65.0	12.0
Railway'	1778	1218	68.5	18.2
Bus transportation	1757	1198	68.2	14.4
Industry	1903	1192	62.6	36.4
Administration	1867	1218	65.2	45.7
Education and Culture	1759	1236	70.3	65.4
Forestry	1584	1061	67.0	33.0
Communication	1589	1179	74.2	47.2
State farms	1449	1123	77.3	40.9
Health and welfare	1824	1123	61.6	74.2
Retail trade	1565	1150	73.5	71.5
Municipal service	1463	1042	71.2	47.6
Public catering	1437	1076	74.9	67.8

Year	WT	UN	SP	SG	EP	WOM	R²	F
1970	W1	232 (7.48)	123 (4.92)	-33 (-.68)	79 (1.94)	-126 (-5.28)	.898	53.2
1971	W1	283 (8.73)	143 (5.62)	-45 (-.88)	103 (2.46)	-66 (-3.59)	.897	52.6
1970	W2	350 (9.32)	149 (4.92)	91 (1.54)	34 (.69)	-194 (-6.70)	.91	61.5
1971	W2	450 (10.06)	156 (4.46)	47 (.68)	115 (2.00)	-85 (-3.36)	.905	57.2

Source of variation	df	Sum of Squares	Mean Square	F statistic
Education	4	2.2030 E9	550.75 E6	232.94
Sex	1	.8591 E9	859.10 E6	363.35
Education and sex	5	3.0621 E9	612.42 E6	249.02
Corrective variable	1	.6609 E9	660.09 E6	279.52
Sectors	12	81098 E9	67.58E6	28.58
Regions	21	.373068 E9	17.76E6	7.51
Sub total	39	4.90705 E9	125.82 E6	53.22
Residual	236	.55799 E9	2.36 E6
Total	275	5.465 E9	19.87 E6