Socialism, Labour-Notes, and Black Markets: does private currency lead to private capital?

Floating around in socialist headspace there is sometimes the idea of what I’ll call here ‘labour notes’, a form of currency for a society that was socialist but not fully communist (or at least not yet – sometimes this is seen as a ‘transitional stage’ as culture adapts away from capitalist habits of thought).

The essential idea is that if it turns out that material incentives continue to be useful and necessary, then people could be ‘paid wages’ by the commue (whether local, national, whatever) for doing useful work, which they could then spend on buying certain priced goods. Not all work need by paid, and not all goods need be priced – this system could take up a high or a low percentage of the economy, and presumably that percentage would be changed over time as non-material incentives became more effective (e.g. work was re-organised to be more rewarding, or whatever).

The idea is that this isn’t money, i.e. can’t function as capital, because it can’t be used to gain ownership of means of production, i.e. can’t be invested. It just goes to the individual from the commune for work, and then goes back to the community for consumption goods – and the commune need not keep a ‘stock’ of it at all. Indeed, it might even be given a ‘negative interest rate’ so that over a certain period of time it ‘evaporates’ and ceases to be valid.

Now I’m not particularly keen to endorse or recommend such a scheme over proper communism (where goods are generally just freely available, or in some cases rationed with equal rations – i.e. ‘from each according to ability, to each according to need’). But I do think it’s useful to have as a possibility, especially for arguing with people who are convinced of human depravity.

In a recent comment, though, SnowdropExplodes says

“Honestly, I don’t know how you could stop it from circulating and becoming capital. Even if the currency itself is not transferable from one person to another then the goods for which it can be exchanged, are. From there, it is only a short step to a black market economy using a currency of its own devising, for the trade of commodities obtained using the official currency. At that point, official currency will be redeemed not for goods with use-value to the person who earned the points, but for trade-value in the black market system.

A further problem is that it clearly opens up the door to corruption if one person obtains a large amount of this official currency, and uses it to bribe others by obtaining for them goods that those others do not have the currency to buy themselves; this could in turn potentially lead to individuals obtaining control over means of production through bribery.”

This is a common question that I think is provoked by what I’ll call ‘labour-note socialism’ – is it stable? Would it morph back into capitalism? I think that it would be stable, and that black markets wouldn’t morph it into anything, so I wanted to talk a bit about why.

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