ON THE CRITERIA OF EFFICIENCY OF SOCIAL PRODUCTION IN THE SPHERE OF SCIENCE

L. I. SAFONOVA, N. G. SMIRNOV

The rapid flourishing of science and its ever-increasing influence on the development of social production have attracted to it the attention of broad economic circles. Science, as a special sphere in which society’s labor and material resources are applied, occupies an ever greater share among other areas of socially useful activity. Therefore, an economic analysis of the place and role of science in social reproduction is becoming especially urgent. It is necessary to reveal the concrete mechanism by which the product of science enters production, to identify the objective character of those economic forms which the results of scientific activity assume upon entering economic circulation, and, on this basis, to have a more realistic conception of the economic evaluation of labor expenditures in the sphere of science and of their efficiency.

Answers to all these practically very important questions can be obtained only on the basis of a reliable methodological approach and a profound theoretical analysis of the economic relations arising in the interconnection of science with social production.

In the present article an attempt is made to approach the consideration of this broad problem from the standpoint of how the criteria of efficiency of social production affect the economic evaluation of labor expenditures in the sphere of science and impart quantitative definiteness to the economic forms of the product of science. Taking into account the insufficient development of the topic, the article is exploratory in character and pursues the aim of helping to strengthen interest in the theoretical side of the question. Such an approach is explained, among other things, by the fact that fairly active attempts to calculate the measure of efficiency of scientific labor, the “cost” of scientific research, and so forth, from the standpoint of the practical organization of economic ties between science and production have so far not yielded any particularly encouraging results.

The definition of the efficiency of social production may be approached from various sides and different points of view. Most often this is done from the position of the final target orientations of production. In principle, this is a perfectly justified method, since it makes it possible to identify certain general and fundamental foundations that do not depend on the concrete social form of production.

Thus, if production is stripped of its social form and production is theoretically considered outside it, then its efficiency will appear in a twofold manner. First, as the capacity of production

satisfy social needs at one level or another. In this case it will be determined by the mass and productive force of the labor applied. And, secondly, as the ability to produce, per unit of time, a different volume of socially useful goods. Here efficiency is reduced solely to the productive force of the labor applied.

Proceeding from this, the criterion of the efficiency of social production is recognized to be, on the one hand, the degree of growth of the social product in accordance with the need for it, and on the other, the minimization of expenditures for a given volume of product. Both the maximum increase of product and the minimum expenditure per unit of it, as criteria of production efficiency, reflect different aspects of it, but are in close unity. The first presupposes the second, and the second makes possible the realization of the first, since any reduction of expenditures per unit of the product being produced is a freeing of resources for increasing the volumes of production.

Maximization of the volume of production characterizes the measure of satisfaction of needs and therefore has an absolute limit, which makes expansion of the volume of production inexpedient if it goes beyond the limits of society’s need for the products of the given production. For a correct understanding of the question, the notion of the absolute saturation of needs is very important. To suppose a society whose production fully satisfies its needs is practically impossible. One can speak of absolute saturation of needs more or less justifiably not in connection with aggregate social needs, but with respect to needs for certain specific products. But even in that case the economically absolute saturation of the need often occurs long before the physical, one-hundred-percent saturation of consumption of the given product arises. Complete physical saturation of consumption, while remaining a prospective guide for the development of production, cannot in itself serve as a criterion of production efficiency. It cannot be considered that every increase in the volume of production of one product or another is a benefit solely on the grounds that the physical need for it has not been satisfied 100%.

Every production of an individual enterprise or branch occupies a strictly definite place in the system of the social division of labor and, at the same time, in the system of aggregate social needs that it is called upon to satisfy. Therefore an increase in the volume of production in an individual economic link, not coordinated with the development of associated spheres satisfying other needs, may cause either an entirely useless or an inefficient expenditure of resources. In this case the consumer will refuse to reimburse the costs of producing this additional output not because he does not need it at all owing to absolute saturation of consumption, but because his other needs are satisfied to a lesser degree.

Absolute saturation of needs is manifested above all as an economic characteristic. From this point of view it is not some distant guidepost toward the achievement of which production strives, but an optimized expression of needs under the given conditions of their satisfaction. The movement of production toward the physically complete satisfaction of needs is economically justified and expedient only when it is carried out through these optimized quantitative characteristics of needs. The consumer refuses to recognize as economically justified an increase in one product or another, since in the system of his needs this product occupies a smaller relative place. Any shift in

in the structure of national-economic proportions is justified only when it is coordinated with this system of needs.

It follows from this that the criterion of the economic efficiency of production, expressed through the maximum increment of product, manifests itself in real economic life as the orientation of production toward an optimal distribution of productive resources among the various spheres of activity in accordance with the system of needs. Production constantly carries out such an orientation, adapting itself to the objectively optimized quantitative characteristics of needs. In this process it becomes apparent that an increment of product by which production has not yet reached the level of optimal magnitudes is accompanied by recognition of the increased efficiency of expenditures. Outwardly this appears as the effect on production of increased demand. If, however, the increment of product is achieved when the preceding volume of production has already reached its optimal magnitude, then these expenditures will prove economically inefficient and, under the given conditions of production, inexpedient. The social evaluation of expenditures not according to their actual magnitude, but according to optimal characteristics, reveals the real economic measure of the efficiency of the increment of the social product.

At first glance it may seem that such an approach to determining the efficiency of production is based on a hypertrophied conception of the role and significance of social needs, on shifting the center of gravity from the sphere of production to the sphere of needs.

In reality this is not so. Emphasizing the significance of social needs in working out the problem of the efficiency of social production does not mean diminishing the determining role of production, both in the formation of the needs themselves and in their formation as a system. But a sufficiently well-founded answer to the doubts that arise can be obtained if the problem of the efficiency of production is also considered from the standpoint of the criterion oriented toward a minimum of expenditures.

The striving for a minimum of expenditures follows, in its essence, from the fact that production is a process of interaction between man and nature. The obviousness of saving expenditures in this process requires no additional proof.

But, as was already indicated above, minimization of expenditures acts as a means of realizing also the target function of maximizing product. By continuously rationalizing the means and methods of labor, production frees up a portion of resources. Thereby it first creates the prerequisites for a more complete satisfaction of needs and then, productively using these resources, expands actual consumption. Such changes in the production of different products do not occur at one and the same time and not to the same degree. Under modern conditions this depends, to a decisive extent, on the rate of development of science in different fields of knowledge.

The reduction of labor expenditures on certain products causes, first, the emergence of new possibilities with respect to the physically complete saturation of needs, bringing production closer to this absolute boundary; and, secondly, as a consequence of the first, leads to certain mutations in the system of needs, changing the relative weight of the socially permissible expenditures of each of the components of this system. This gives grounds for asserting that economic evaluations of needs as optimal characteristics of a product entering into the system of needs are taken not from needs themselves as such and in isolation from production, but are a product of this production, reflect its changes, and are constructed on the basis of these changes.

Such an approach to revealing the content of the criteria of the efficiency of social production is based on an understanding of the dialectical connection between production and needs, which presupposes them as both unity and opposites. It proceeds from the fact that it is wholly insufficient and one-sided to understand the connection between production and needs in the sense that the latter always quantitatively outstrip the possibilities of the former. No concrete economic assessments of the efficiency of labor follow from this fact.

The criteria of production efficiency considered, taken by themselves, lie outside the historically determined social form of production. Applied to the latter, they are transformed through the social goal of production and manifest themselves only in it. The social goal of production is not the satisfaction of needs as such, but the satisfaction of the needs of the subject that owns the means of production. Only these needs are the goal function of production, and only the measure of their satisfaction determines, in real actuality, the efficiency of production.

Proceeding from the goal function of the social form of production, one may describe an entire series of historically specific criteria of efficiency in accordance with the need for it on the part of those who expend material and labor resources. For simple commodity production this criterion is already oriented not toward the needs of the producer himself, but toward social (market) needs for the products of the given production. On this basis, the condition for the efficiency of expenditures becomes their reimbursement through exchange in the form of purchase and sale. Through this exchange the commodity producer gains access to those products whose production he himself does not undertake, and through it the social expediency of his own expenditures is also revealed. Hence there follows a very important conclusion: for production carried out on a commodity basis, the decisive prerequisite for assessing the efficiency of expenditures is the possibility of their equivalent reimbursement through exchange.

A more complex social form of production, in which the increase of property becomes its goal, turns the criterion of efficiency in another direction, moving it away from the natural material basis which, for it, is the degree of satisfaction of needs. Now this criterion of efficiency rests directly on the production relation that leads to the division of labor into necessary and surplus labor. The degree of exploitation of wage labor under capitalism is at the same time also the degree of efficiency of the capital employed.

However, the separation of the efficiency of capital from actual social needs cannot, by its nature, be absolute. In that case it would come into complete contradiction with the commodity form of the existence of capital. Capital not recognized by society as a commodity ceases to exist. Therefore the unsatisfied needs of society impart vital force to capital, ensuring its movement as a commodity, while its striving continuously to increase itself can exist only on this basis.

Thus, the necessity for production each time to arrive at an optimized structure of needs ultimately manifests itself in this social form as well. The general foundations of production, in one way or another, find their manifestation in the specific forms of production relations. Otherwise the possibility of production itself is destroyed.

The greatest difficulty is presented by identifying the criteria of production efficiency while taking into account its social form, when this

the form is characterized by nationwide ownership of the means of production while preserving elements of economic separateness and, consequently, preserving commodity-money relations. The complexity of the structure of socialist relations of production reflects the state of the productive forces, which have not yet matured to the level of communism but which already negate the capitalist form of their application. This provides a well-known objective justification for the difficulties encountered by economic science in analyzing the problem of the efficiency of socialist production and the ways of expressing it that are adequate to socialism.

Nationwide ownership, being the determining principle in the system of socialist relations of production, once again—now already at the level of society as a whole—puts forward, as the immediate goal of production, the satisfaction of the needs of the members of society for the means of life. Here there arises a fusion of the goal functions that follow both from the labor process itself as the interaction of man with nature and from the social form of this labor.

However, such a fusion must not be conceived in a simplified way. The point is that the national-economic criterion of efficiency, expressed through the maximization of the socially necessary product, cannot be applied directly at the level of an individual enterprise. Such a target orientation of production under socialism cannot proceed from an individual enterprise. In relation to it, it appears as externally assigned by a higher economic level. Moreover, this assignment is transformed from a relatively indeterminate quantitative orientation toward a maximum into a strictly definite magnitude of the planned task. From the standpoint of the national-economic level, timely and precise fulfillment of the planned task is the economically most meaningful form of evaluating the activity of a socialist enterprise.

The persistent orientation of a cost-accounting enterprise toward overfulfillment of the plan for the production and sale of output often does not correspond to the objective requirements of increasing production efficiency. It only purely externally coordinates the behavior of the enterprise with the national-economic criterion of efficiency.

The reduction of the goal function of the socialist enterprise to the precise and timely fulfillment of the plan is internally contradictory. It limits the use of newly opened possibilities for expanding production until information about them has reached the superior level and has taken the form of a planned task for the enterprise. However, this contradiction belongs to the category of those that are generated by objective conditions and cannot be removed by changes in organizational forms.

The task of the enterprise’s “hitting” the circle of socially necessary needs is of the utmost importance for any production. Whether it will grope for this “hitting” spontaneously, through market connections, and lose part of its resources along the way, or whether it will receive in advance from society the quantitative characteristics of the volumes of its production, and society as a whole will bear losses from incomplete utilization of available resources—all this depends on the specific character of the social form of production. But it is perfectly clear that no social form of production eliminates this contradiction.

The social character of ownership removes from each enterprise the necessity of resolving the question of the volume of its production. This does not mean that the socialist enterprise is altogether eliminated from participation in the development of the social production program. The question cannot be posed in that way. The role of the enterprise here remains, as before,

very substantial. But the nature of its behavior is fundamentally different. Any decision at the enterprise level concerning changes in the output of products must presuppose its coordination with a higher body of economic administration. This is an objective property of the planned organization of social production. Only in this way is it possible to attune the behavior of enterprises to the needs of the national economy.

Planning will prove sufficiently effective if it rests on the enterprise’s striving to undertake a demanding plan, and to involve fully and with the greatest return all the resources at its disposal in economic circulation. But evaluating the effectiveness of an enterprise’s work by the criterion of its fulfillment of the plan target inevitably gives rise to a certain contradiction between the interests of society and the interests of its individual enterprise. In adapting itself to this evaluation, the enterprise, in one way or another, remains to some extent interested either in minimizing the volume of the plan target under the resources it has, or, conversely, in maximizing the resources for a given plan. A negative evaluation of its activity in the event of nonfulfillment of the plan prompts it toward such behavior.

It is quite obvious that such behavior of an enterprise is a form of manifestation of the contradiction between the criterion of efficiency stemming from the social form of production and the criterion of efficiency arising from the labor process itself, from the general conditions of the interrelation between production and needs. The objectivity of this contradiction makes it an indispensable attribute of any system of production relations from the standpoint of which the question of criteria for the efficiency of production is resolved.

The greatest interest—and consequently concern and anxiety—about the minimization of costs is shown by the immediate owner of economic resources, or, in other words, the subject that appropriates the products of production. Taking into account that under socialism this subject is the whole of society, and that the contradiction considered exists not as a contradiction between different subjects of appropriation, but as a contradiction between different levels of a planned, organized system, one must arrive at the conclusion that additional criteria of production efficiency are necessary at the level of the individual enterprise.

It follows from the plan that, above all, the enterprise is evaluated by the extent to which fully and punctually it has supplied society with the products of its production. At the same time, the plan must record, on the basis of national-economic criteria of efficiency, the norms of socially permissible costs and incentives inducing the enterprise to reduce individual costs in comparison with the norms established by society.

The norm of socially permissible costs follows from the optimal distribution of society’s productive resources in accordance with social needs. For the enterprise it serves as an economic criterion carrying information about the costs at which society recognizes the production of the given product as expedient. Therefore, deviation from such a cost norm may serve, and does serve, as one more criterion of efficiency. Theoretically, within the conditions considered, it may be either the level of cost-price reduction or the level of profitability. The latter, unquestionably, is an economically more complex form, but at the same time it is also more capacious and purposeful.

The evaluation of production efficiency through the level of profitability takes place, as already considered, in the capitalist social form of production. There it appeared as a virtually uni-

...form of ownership. In the mass and rate of profit, the effectiveness of the application of capital finds its full expression. For socialism, the profitability indicator reflects other, from this point of view more complex, relations of production. Therefore it appears only as one of the elements in the system of criteria for evaluating the efficiency of social production. Its main orientation consists in inducing the producer continuously to reduce production costs. But, guided only by it, a socialist enterprise must not, apart from the national-economic plan, determine the directions in which it uses its resources, or change the volumes and nomenclature of its production.

The system of criteria for the efficiency of social production plays a decisive role in clarifying the economic content of the interconnection between science and production. It creates all the necessary conditions for a value orientation in resolving questions of the productive application of the results of scientific labor.

The concrete manifestations of the effect of applying science in production are infinitely varied, but in the final analysis, economically, they reduce chiefly to two. First, production gains the possibility of mastering the output of new products; and second, of reducing its costs per unit of product. This effect appears as the use value of the product of science for production.

Production can reveal the economic expediency of expenditures for acquiring use value in the form of a product of science only on the basis of its own criteria, its own target orientations. From this point of view it has no concern with the actual expenditures in the sphere of science. It recognizes them as socially normal within the limits dictated to it by the laws of its own functioning.

Let us now consider the economic interconnection between production and science with respect to each of the two possible manifestations of the useful effect of science.

When the issue is that the use value of a product of science makes it possible to master the output of new products, production must above all know that this new product corresponds to actual social needs and will have its consumer, economically capable of reimbursing the labor expended by production. The real need for a new product is determined, in turn, by two factors: the useful properties of this product and the expenditures for its production. The latter, obviously, presuppose the inclusion within them, as one of their components, of the expenditures on science, thanks to which the possibility arose of opening up this new production.

As we see, the problem of the economic expediency of the expenditures borne by production in acquiring a product of science is transformed into the more general problem of the economic justification of the production of new products. Without disclosing the specific content of this new task, it is already possible at this level to obtain certain positive conclusions applicable to the formulation of the question that interests us. Among them, decisive significance attaches to the thesis that production will regard expenditures on science as expedient up to the point at which they, together with the others, do not amount to such a magnitude after which the consumer refuses to satisfy his needs for the new product. It follows from this that any scientific labor, if it presupposes the discovery of new knowledge and its productive application through the creation of production of new products, can enter economic circulation only by that part of itself which production considers expedient.

Such a conclusion, among other things, is based on the special position of science among other spheres of activity. The product of scientific activity is new knowledge. The productive consumption of this new knowledge is only one aspect of its usefulness. From a certain point of view, new knowledge has significance and a value of another, cognitive order even without its productive consumption. Of course, in every case one may assert with complete justification that the discovery of new knowledge is dictated by the needs of its productive application. But this in no way diminishes the correctness of the proposition concerning the independent cognitive and productive value of the product of science.^1

The separateness of these two functions of science leads to the fact that the product of science often arises independently of how, where, and when it will be productively consumed. Even if production formulates in advance a more or less precise order to science for a definite effect of its result, this remains only a special case of the general proposition. Production deals with an already completed result, with already obtained new knowledge and, consequently, with labor expenditures in the sphere of science that have already taken place. Moreover, these are expenditures conditioned by the production of new knowledge, which in themselves are determined not by the economic effect of their productive consumption but by the method, the “technology,” of producing knowledge itself.

Production as consumer, in evaluating these expenditures of scientific labor, proceeds from the social expediency of releasing new products. Therefore it either gives a zero valuation or recognizes them only to the extent that their volume does not exceed the level beyond which society refuses to satisfy its needs for the given new product.

It might seem that such a procedure, detached from the actual expenditures in the sphere of science, should lead to a constant zero valuation. In fact this is not so. But a zero economic valuation of the effect of scientific labor actually exists when scientific labor is not accompanied by a separate appropriation of its result, and the result itself appears in the form of a universal asset. In this case the effect of science appears as the effect of the social productive forces and is appropriated in the form of a gift of nature. On this point K. Marx directly observed: “...the productive force which costs capital nothing is the power of science.”^1

However, the effect of science will cost production nothing if the labor of the scientist or of the scientific organization does not appear, from the standpoint of production relations, as an economically separate activity, as an activity that is accompanied by the separate appropriation of the product of labor. Consequently, in the social form of scientific labor there is embedded the initial premise for the emergence of an economic valuation of the product of this labor. The producer of the scientific product, acting as a separate agent of the exchange relation, may restrict access to it on the part of production. This is disadvantageous to production, since it hinders the provision of its own functions. Hence it follows that a zero economic valuation of the product of science does not ensure agreement between the interests of the agents of the relation under consideration.

Thus, the value characteristics of the product of science acquire opposite expressions depending on the subject that realizes them. Production strives for its zero valuation, since new knowledge has already been obtained and exists independently of production. It therefore claims to utilize it just as it would any other substrate given by nature in ready-made form before production and independently of production itself. The sphere of science, however, if it enters—

^1 K. Marx and F. Engels, Works, vol. 46, pt. II, p. 280.

enters into economic circulation in the form of an economically separate activity, regards its product not as one of the forms of universal knowledge of society’s productive possibilities, but as a concrete product whose economic circulation ensures for it an economically independent, separate existence. Therefore, the greater the compensation the sphere of science receives from production for the productive consumption of its product, the more this will correspond to the social form of scientific labor as economically separate. At first glance, given such an opposition of economic interests, the normal economic link between science and production should be effected through equivalent exchange. Production must reimburse the scientific sphere for its costs. Otherwise, this will limit the inflow of the resources necessary for the reproduction of scientific activity; it will cease to be economically expedient for the subject of the relation representing science.

Let us suppose that, in actual reality, commodity exchange between production and science is carried out on the basis of labor equivalence. Obviously, it should immediately be stipulated that labor equivalence here cannot be understood as based on socially necessary labor time in the usual sense of this term. Socially necessary time as an average of individual expenditures is not applicable to the product of scientific labor, owing to the specificity of the process of producing new knowledge. This specificity consists in the fact that the production of new knowledge rests on knowledge obtained earlier. But the labor expended on the production of previous knowledge is not economically transferred as a component into the labor costs of new knowledge. There is no depreciation here in the usual sense. Past labor, in practice, finds expression in this process only through the concomitant costs connected with the material provision of scientific labor—with buildings, structures, installations, and other equipment. Further, production enters into an economic relation only with the scientific institution or scientist who has already obtained the product needed by production. It does not enter into a relation with others for the simple reason that they do not have this product, even if they have worked in the corresponding direction. By virtue of this, whatever costs other representatives may have incurred in developing the given problem, they cannot in any way affect the magnitude of the necessary costs in the assessment of each concrete case.

Abstracting from all the peculiarities of the formation of costs for scientific research, let us suppose that in commodity exchange the scientific institution fully compensates all its actual expenditures incurred in obtaining the given product of science. Even in this case, science, as a special sphere of activity, does not receive a reliable source for its normal functioning. Continuing its activity as a scientific institution, it cannot rely only on that mass of labor and material resources which were used in the preceding work. The discovery of other, new knowledge—only from the standpoint of knowledge itself—rests on preceding knowledge, but is in no way conditioned by the labor costs expended on it. The need for resources for new work will be determined only by the conditions of production of these works themselves. Taking into account the growing need of the sphere of science for additional resources for the conduct of scientific research, one must draw the most decisive conclusion: commodity exchange, even at the very highest valuations (full reimbursement of the costs of the product of science), does not provide a normal source for the formation of the resources of a scientific institution.

Of course, it is entirely reasonable to consider that labor in the sphere of science also divides into necessary and surplus labor. Then the surplus

its part will appear as that economic form which will make it possible to attract into this sphere a large mass of material resources and the living labor of new scientists. Consequently, in this sphere too there is its own source of economic development. But it must be borne in mind that the appropriation by the sphere of science of its own surplus labor cannot remove the problem as a whole.

All this leads to the conviction that science is one of those spheres of activity which, by its very nature, cannot be regulated entirely by the economic laws of commodity relations. These relations do not here have a sufficiently firm and reliable basis in the material conditions of the reproduction of scientific labor.

The subordination of the possibilities for the development of science to commercial evaluations of the product of its labor, under a definite socio-economic system in which profit is the sole motive of economic life, can acquire, and does acquire, a hypertrophied significance. But at the same time the entire world practice of the development of science testifies that society always, to a greater or lesser extent, strives to create additional favorable conditions for it through the non-market redistribution of the incomes of its members, using the budget and other channels for this purpose.

The manifestation of the sphere of science as economically distinct, entering into relations with other fields through a commodity-money connection, is only one of the forms of its existence. Moreover, this commercial form of it, apparently, can never be the only and universal one for the sphere of science and its institutions. Of course, within the structure of division inside the sphere of science itself there may be independent subdivisions that stand nearer to or farther from the possibility of manifesting themselves as commercial organizations. But on the whole science cannot base its connection with production only on commodity relations. Therefore the value characteristics of the assessment of the efficiency of scientific labor can have only relative significance.

The general principled approaches considered to the problem of the commodity form of the product of scientific labor also have a certain significance for the case in which the useful effect of this product allows society to reduce production costs per unit of product. But here there are specific features of its own, among which one should above all include the change in the criterion of the efficiency of applying the product of science in the sphere of production. If in the first case decisive importance was attached to a fuller and more many-sided satisfaction of needs by means of new products, then in the second the emphases are entirely different, since the effect of science on production is manifested differently. Its application leads to changes in the technique and technology of production that reduce production costs. The criterion for production is this reduction of costs. A reduction of outlays by the amount of expenditures on science will be the absolute limit beyond which production becomes indifferent to the scientific product, if it does not possess certain properties that cannot be reflected in the cost accounts but are of definite interest.

As we see, in this case as well we inevitably arrive at such ways of social recognition of scientific labor that are based not on the actual mass of labor applied in the sphere of science, but rest on the social conditions of the productive consumption of the product of science. All this also makes it possible to draw a general conclusion. It consists in the fact that the social evaluation of the efficiency of scientific labor is based economically on those criteria which are characteristic of production and proceed from production itself. But, taking into account that the sphere of science is not a direct branch of production and only one of its sto-

...it enters into contact with production, while at the same time remaining an area in which new knowledge is obtained, regardless of the present-day needs of production; these criteria are insufficient. They must be supplemented by expert assessments in order to create favorable conditions for the accelerated development of science even in those cases when the possible productive effect of the product of science is not obvious today.

Such a conclusion makes it possible to speak of the need to observe moderation and caution in developing the cost-accounting form of the connection between science and production. Orienting a cost-accounting scientific institution solely toward profit, which inevitably arises under such economic conditions of its functioning, may impede the solution of complex and major scientific problems, disperse attention and resources among minor topics, and have an adverse effect both on the development of production and on science itself.