Productive and Unproductive Labour - Material Product Accounts in Soviet-type Societies

Material Product Accounts in Soviet-type Societies

In the Soviet Union and later other socialist countries in Eastern Europe, China and Cuba, a system of social accounts was created based around the notion of the "material product" (Material Product System, or MPS). This was an alternative to GDP based accounts. Behind the MPS was a modernization theory according to which the criterion of progress consisted of the physical quantity of material goods being produced.

This system was, paradoxically, strongly influenced by Marx's critique of wealth creation in capitalist society, and his distinction between capitalistically productive and unproductive labour. The "material product" represented, in price terms, the net new value created annually by the production of tangible material goods. Many service industries were excluded from the material product; a rigorous statistical attempt was made to separate out a productive sector and an unproductive sector. Enterprise managers could be punished by law if they failed to provide accurate information.

Dissident socialists objected to this approach, because they felt that in a socialist society, "productive" labour should really be defined by such things as:

• whether the labour increases tangible wealth
• whether it is socially useful
• whether it is ecologically responsible
• whether it promotes human satisfaction
• whether it promotes human development
• whether it promotes human health and wellbeing

Since the end of communist rule in the USSR and Eastern Europe, however, the material product system has been abandoned, and new GDP-based accounts have been implemented following international standards recommended by the International Monetary Fund, the World Bank and the United Nations System of National Accounts (UNSNA). The advantage of this change is that economic activity is more comprehensively valued and visible in monetary terms; a possible disadvantage is that no national accounting is done anymore of physical product units (e.g., x tons of steel produced, or y number of tractors assembled).