Calculation in kind
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Calculation in kind or calculation in natura is a form of resource valuation and method of accounting based on disaggregated physical magnitudes and quantities as opposed to a common unit. Calculation in kind was often described as the method of accounting and form of calculation that would supersede money and financial calculation in a socialist economy.
As a replacement for financial calculation, calculation in kind would embody more accurate information about a particular resource/objects value than valuation in terms of money by dispensing with the exchange value inherent to all commodities in money-based economies so that only an object's use value would remain as the basis for economic accounting. Under such a system, an object would only be desired for its utility without being subject to the distortions of financial calculation - for example, an object would not be desired only for the sake of resale and speculative purposes.1
Calculation in kind is advocated as a method to directly quantify the utility of a resource or object, but is contrasted with other proposed forms of calculation and valuation for socialism, such as calculation in terms of labor-time, energy accounting or financial calculation.
Calculation in kind was strongly supported by the positivist philosopher and political economist Otto Neurath in opposition to advocates of market socialism and Austrian school critics of economic planning.2 Calculation in kind is also advocated by the World Socialist Movement as a characteristic of a fully developed socialist economy.
- The Alternative to Capitalism. Retrieved July 05, 2010, from wspus.org "The disappearance of economic value would mean the end of economic calculation in the sense of calculation in units of value whether measured by money or directly in some unit of labour-time. It would mean that there was no longer any common unit of calculation for making decisions regarding the production of goods...Calculation in kind is an essential aspect of the production of goods in any society, including capitalism. A commodity is, as we saw, a good which by virtue of being produced for sale has acquired in addition to its physical use value a socially-determined exchange value. Correspondingly, the process of production under capitalism is both a process of production of exchange values and a process of production of use values, involving two different kinds of calculation. For the former, the unit of calculation is money, but for the latter there is no single unit but a whole series of different units for measuring the quantity and quality of specific goods used in the process of producing other specific goods (tonnes of steel, kilowatt-hours of electricity, person-hours of work and so on). The disappearance of economic or value calculation in socialism would by no means involve the disappearance of all rational calculation, since the calculations in kind connected with producing specific quantities of goods as physical use values would continue."
- Otto Neurath's concepts of socialization and economic calculation and his socialist critics. Retrieved July 05, 2010: http://www.chaloupek.eu/work/NeurathFin.pdf