Individual Incomes in a Socialist Economy

Mike Lepore · 29 Redmond Way · Stanfordville, NY 12581 USA


To define this author's interpretation of the criteria for an economic system which would use "labor time vouchers," as frequently described in the Marxist-De Leonist literature published by Socialist Labor Party of America.


2.1. Individual incomes are expressed in units of work time.

2.1.1 The calculation provides for multiple occupations per individual. Capitalism's "all or nothing" system of employment is replaced by the option of the individual person to perform a personally selected amount of time in a personally selected set of occupations.

2.1.2. The algorithm provides for the option that work categories that are more strenuous (stressful, exhaustive, unpleasant, boring, dangerous, etc.), according to any democratically ratified criterion, are compensated with higher rates of incomes.

2.2. Product prices are expressed in units of work time.

2.2.1. Unadjusted product prices are determined by the total work time incurred in all steps of their production.

2.2.2. Prices of products that are charged to individuals are increased by a calculated amount to compensate for two facts: -- that some consumption is not charged to individuals, e.g., free education and medical care, industrial maintenance and expansion, etc. -- that work time credited to all members of society may be enlarged artificially by the optional weighting factors used to provide higher income for strenuous work.


To represent the sum of a series, the word "sum" followed by [index counter] is used as an ascii equivalent for the mathematical symbol, upper case sigma. The underscore character indicates a subscript.


The discussion assumes a common accounting period for the rates of work done and goods produced, e.g., per week, per month, per year, etc. Since this period is assumed throughout, it does not appear in any of the calculations.


The human labor time incurred in each production step is measured where feasible, and estimated where necessary. The time incurred by intermediate products is added to the time incurred by subsequent steps. Each quantified final product or service u (kilogram of a mineral, joule of electrical energy, etc.) represents work time performed through q steps:

t_u = sum [h = 1 to q] t_h

According to product accounting, the work time incurred (inc) for all v quantified goods and services in society's inventory is:

t_inc = sum [g = 1 to v] t_u_g


Each occupation is assigned a factor k, which is arbitrarily defined to be 1 for nominally strenuous work, and greater than 1 for work that is more strenuous. The nominal value of the weighting factors can be arbitrary due to subsequent normalization.

The actual work time incurred by individual n who performs m occupations is:

t_n_inc = sum [j = 1 to m] t_n_j

The work time credited (cr) to individual n who performs m occupations is:

t_n_cr = = sum [j = 1 to m] k_j t_n_j

The actual work time incurred by all members of the population is:

t_inc = sum [n = 1 to p] t_n_inc

The work time credited to all p members of the population is:

t_cr = sum [n = 1 to p] t_n_cr

The previous value can be expressed alternatively by using the time credited and then adjusting for the fact that the time credited is greater than the time incurred. Define a common "incurred time adjustment factor":

ITAF = t_inc / t_cr < 1
(dimensionless ratio)

The actual work time incurred by the entire population is:

t_inc = (ITAF) t_cr


Since the time credited to all individuals in the population exceeds the time incurred by all individuals, the prices of all individual use products must be increased by a "common price adjustment factor":

CPAF1 = 1 / ITAF = t_cr / t_inc > 1
(dimensionless ratio)

Example: If premium compensation for strenuous work has resulted in individual crediting of 15 million hours, where 12 million hours have actually been incurred, normalization requires the prices of individually-charged products to be increased by the multiplier 15/12 = 1.25


Ideally, the total time incurred by all members of the population, as calculated by product accounting, is equal to the same term as calculated by individual accounting:

t_inc_PA = t_inc from part [5]
t_inc_IA = t_inc from part [6]
Ideal condition: t_inc_PA = t_inc_IA

In practice, the two terms may be unequal due to estimations. The discrepancy is to be resolved gradually over multiple accounting periods.

Assume tentatively that, for early accounting periods, the larger value is selected. This has the probable effect of increasing the estimated time to produce each product. This choice is made so that errors would have the effect of producing a temporary inventory surplus of any given product instead of a shortage of that product.

t_inc = max (t_inc_PA , t_inc_IA)


The total inventory of the society's wealth consists of two parts: the amount of incurred time for social use products (soc) and that for individual use products (indiv). Instead of providing resources for social use by requiring individuals to pay back part of their income as taxes, the products allocated to social use are deducted directly from the total inventory. The wealth remaining for individual use, i.e., charged to individual accounts, is:

t_inc_indiv = t_inc - t_inc_soc


Since production for social use has been paid for by increasing the prices of individual use products, the prices of all individual use products must be increased by an additional "common price adjustment factor"

CPAF2 = t_inc / t_inc_indiv > 1
(dimensionless ratio)

Example: If a total product inventory of 120 million hours has been allocated in the proportions of 20 million hours for social administration, and 100 million hours to be charged to individual accounts, then the prices of individually-charged products are increased by the multiplier 120/100 = 1.2


Each quantified product or service u, if and only if it is to be charged to individual accounts, is assigned an adjusted (adj) price by taking its incurred time from product accounting and increasing it with the two multipliers:

t_u_adj = (CPAF1) (CPAF2) t_u