The socialist mode of production, also known as socialism, is a specific historical phase of base and superstructural development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism within Marxist theory. Communist states that claimed to have established socialist material relations claimed to have established socialist states. The Marxist definition of socialism is that of production for use-value (i.e., abolition of commodity production, direct satisfaction of human needs, or economic demands), therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning. According to Marx, distribution of products is based on the principle of "to each according to his needs"; Soviet models often distributed products based on the principle of "to each according to his contribution". Marx characterized the social relations of communism, the first stage of which is now called socialism, by the abolition of class distinctions and the common ownership of the means of production. As classes are abolished, the state withers away. Later self-titled socialist states revised this definition of socialism and used the term more loosely as a rough equivalent to the dictatorship of the proletariat. The Marxian conception of socialism stands in contrast to other early conceptions of socialism, most notably early forms of market socialism based on classical economics such as mutualism and Ricardian socialism. Unlike the Marxian conception, these conceptions of socialism retained commodity exchange (markets) for labour and the means of production seeking to perfect the market process. The Marxist idea of socialism was also heavily opposed to utopian socialism. Although Marx and Engels wrote very little on socialism and neglected to provide any details on how it might be organized, numerous social scientists and neoclassical economists have used Marx's theory as a basis for developing their own models of socialist economic systems. The Marxist view of socialism served as a point of reference during the socialist calculation debate. Marx himself did not use the term socialism to refer to this development. Instead, Marx called it a communist society that has not yet reached its higher-stage. The term socialism was popularized during the Russian Revolution by Vladimir Lenin. This view is consistent with and helped to inform early concepts of socialism in which the law of value no longer directs economic activity. Monetary relations in the form of exchange-value, profit, interest and wage labour would not operate and apply to Marxist socialism.
Mode of production
Karl Marx described a socialist society as such:
What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society – after the deductions have been made – exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another. In Marxist theory, Socialism, referred to by Marx as the first stage of communism, is a classless, post-commodity economic system in which production is carried out to directly produce use-value rather than to generate profit. According to Marx and Engels, it is what follows after the transitionary period of the Dictatorship of the Proletariat. Private ownership and accumulation of capital have been abolished along with class distinctions as a whole and production is carried out in a planned fashion according to the needs of society. In his Critique of the Gotha Programme, Marx suggested that in the first stage of communism people would receive labor vouchers according to the hours they work, but with subtractions, a sort of taxation, made for social services. With these vouchers one would be able to "buy" the goods produced by society (i.e. produced using the commonly owned means of production) valued according to the labor hours needed for their production, so that one only takes as much as one has contributed. There is no extraction of surplus value and thus no exploitation in such a system. The higher stage of communism differs from the lower stage of communism in some aspects. To quote Marx:
In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly – only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs! The prerequisite of the higher phase of communism is a long period of growth within the first phase, during which all imprints left from the old capitalist society gradually disappear. Tremendous development of technology and productive capacity allow for fully automated production, resulting in a superabundance of goods and services. This post-scarcity economy, along with the cultural development resulting in the widespread disappearance of individualism and exploitation, allow for goods to be distributed based on need rather than merit.
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