FAQs Labour Time Calculation

What is labour time accounting?

Labour time accounting, as conceived by the International Communist Group (Holland) at the beginning of the 20th century, is a planned economy theory for the organisation of a socialist society. It is based on the idea that all human products and services can be compared by the labour time they contain. Its basis is therefore labour time and the average labour time is used as the unit of calculation in all economic planning.

The companies in a labour-time economy are self-managed cooperatives and are under the control of the workers, who plan their production independently and write production plans. The companies therefore have a high degree of planning autonomy. The companies co-operate and network independently. A social accounting department checks the production plans of the companies according to democratically agreed criteria and publishes the ‘prices’ of the products in working hours. These ‘prices’ are derived directly from the plans of the companies. Everyone can see the plans; there are no company secrets.

All workers in the companies receive the same remuneration in labour certificates, regardless of their job, gender or origin. The only difference in earnings results from the number of hours worked. The principle of ‘an hour is an hour’ applies. Those who cannot work are provided for by the public sector. The public sector is a social welfare system and should continue to grow with communism and push back the performance principle of labour certificates.

The workers in the factories are organised in councils. In addition to the workplace councils, there are political councils. The councils join together to form an overall societal council.

Labour time accounting is therefore a democratically planned economy that combines both centralised and decentralised planning and is based on the collective ownership of the means of production. It ensures transparency and prevents exploitation (appropriation of surplus labour). In its councils, society can make decisions on a rational and ethical basis. Since every hour of labour counts the same, the economic basis of patriarchy and racism is broken.

Why are labor certificates not money?

An important difference between labor certificates and money, arising from their different social content, is that certificates do not circulate: they are destroyed when redeemed, for they have thus served their purpose. Marx once compared labor certificates to tickets for the theater, which are cancelled at the entrance. Money, on the other hand, can be reused by the seller of goods, for example, to buy means of production and labor. The money hides in the wage above all the exploitation, since the unpaid part of the extra work is appropriated as profit and pension, while the labor certificates make the relation of the own work to the total work visible.

But under capitalism, everything can become money, even a theater ticket.

Yes, as long as capitalism exists, this is indeed the case: here, money keeps making itself because it is necessary for the exchange of individual producers. It can take the form of gold, silver or paper. In a cooperative economy based on socialized means of production, however, this is not the case: In such a society, labor certificates do not turn into money because there is no exchange of commodities. Abolition of money therefore presupposes socialization of the means of production.

You want every hour of work, whether spent by the surgeon or the cleaner, to be equally remunerated. That is unjust.

We cannot see what is unjust about putting prestigious (e.g., academic) professions, which not infrequently even provide some kind of fulfillment, broadening of horizons, or pleasure, on an equal footing with other professions that are less popular. Moreover, this equality would also make people’s relationships more solidary. Nowadays, for example, migrants or women are often discriminated against because of differences in wages. The same applies to the difference between mental and physical work, such as between engineering and assembly line work. But in the end, all people expend manpower in one hour of work, albeit in very diverse forms. We want to take this into account with the principle of one hour = one hour. This would not only prevent resentment and favoritism, but also the contribution of one’s own work to the total work would be equal, which would make one’s own work appear more meaningful. Within the cooperation of the workers in the company, there would then no longer be any artificial dividing lines.

But who would still want to study if they would not earn more later on?

This argument does not apply in a society in which the costs of studying are borne by society. The decisive factor in choosing a course of study will then be one’s own interests alone, and no longer career prospects.

And who will still want to do the dirty work when more pleasant work is equally remunerated? After all, that leads to labor shortages in these unpopular fields.

One could argue the other way around that unpopular jobs, which are currently very poorly paid and can only be filled by pressure from the employment office, would be revalued by the “an hour is an hour” principle.

Apart from that, society will push to replace unpopular jobs by machines more than before. While this rationalization leads to job loss and unemployment under capitalism, it has positive effects in the scheduled work time economy, namely the saving of time and effort.

You sound like work fetishists. Do you want compulsory work and performance?

There is work that has to be done so that a society can maintain itself at a certain cultural and technological level. That is a factual given. And the question is, who should do the work? An equal distribution of the socially necessary work among all those capable of work would first of all also reduce the amount of work for everyone, especially since many unnecessary jobs that are only “meaningful” under capitalism (advertising, financial services, etc.) would be eliminated. Moreover, there would finally be a sensible motive for the use of technologies. It would no longer be the cost savings (profitability) of a machine that would be the deciding factor for its use, but the actual saving and facilitation of work.

However, many necessary jobs would still occur. Others would be newly added: Let’s just consider how much environmental repair work, how much hitherto invisible care work, mostly performed only by women, will come upon society! Wouldn’t it only be fair to distribute this equally among all? Labor certificates primarily determine the share of one’s own work and consumption in the total work. It is not about labor coercion, but rather about a macroeconomic regulation, because the labor certificates as units of measurement would also avoid strong economic fluctuations between scarcity and abundance of certain goods, as they constantly occur in capitalism.

Ultimately, after all, the FIK is also intended to make certain goods and services freely available to all, which will in any case first provide for all those who are unable to work. Perhaps, at some point, a society can be generous enough to also provide for all those who are unwilling to work. But on the other hand, don’t people want to participate in society’s work if their work seems meaningful and important to them and if they can determine the cooperative processes themselves? In any case, the following applies in principle: The less effort is required for the necessary work, the more time is freely available to everyone.

What is this FIK supposed to be?

The “factor of individual consumption” (FIK) determines the size of the public sector, i.e. the goods that are freely available to everyone. The hours worked by people in the public sector, however, must of course be deducted from or offset against the total work. I.e. the FIK changes according to its height the quantity of distributed work certificates. Example: If the FIK is 0.8, each person receives only “0.8 hours” for each hour worked. In return, however, as already mentioned, certain goods are freely available. But it is up to the people themselves to decide which goods they want for free. It would be welcome in any case, if for all persons at least the housing, energy and health care, education and training as well as some basic food would be accessible without any consideration. However, this is not a matter for experts or theorists to decide, but something that people must negotiate together. The more productive a society is, the more goods and services can potentially be made freely available. On the other hand, there are certain needs that not everyone has. These “private” needs can be satisfied by everyone for himself/herself through the work certificates he/she has acquired.

What happens to niche products or art? Isn’t there a “tyranny of the majority” when society determines which products are useful and which are not?

The only measure of “socially necessary labor” is whether the company’s plan has been fulfilled. That is, it is legitimate for a company to produce very labor-intensive, artistic, or exclusive products, as long as those products are in demand as stated in the plan. Example: An artist collective works on a play for a year or 10,000 hours and expects to sell 100 tickets at the “price” of 100 hours each. As long as this plan is fulfilled, no one can claim on the basis of the labor time calculation that this work was useless labor. Of course, one can still claim that the play is junk, but that is not an argument that follows from the labor-time calculation.

How is abuse actually to be prevented?

What we are proposing is not immune to abuse. Just like all other models. The question is what scale, indeed what character, the abuse might take in the worst case. Of all the non-authoritarian socialism models we know of, the labour time calculation is the one that assumes the worst case most strongly. We do not start from a “good nature of man” but from an objective measure, the average working time. This is the real prevention of abuse – at the basic level.

Even under capitalism, under the most adverse working conditions, workers usually identify with their work, are honest and do not cheat. And if they do, if they indulge in sloppiness, for example, they are only acting in their own interest, since in this way they only reduce the share of their unpaid overtime, not the share of their remunerated work. In the labour time economy, this would no longer be the case, the workers would no longer work one part of the working day for themselves and the other part unpaid for the boss. If everyone were to write down more hours than they actually work, they would ultimately only increase the price of the products they themselves consume. Structurally, therefore, this cannot be in their interest.

On an individual level, it might be different: Someone could, for example, write down more hours than they actually worked and thus obtain more consumption entitlements. But since labor certificates cannot buy means of production and labor, but only individual consumption goods, exploitation would still remain impossible. The cheat would not become a capitalist, but, let us say, a petty criminal. The majority society, which is no longer obsessed with consumption, should actually only pity him.

Moreover, public accounting is a powerful instrument of control: through it, all the economic data of the companies are published. Businesses that cheat themselves out of a particularly high number of hours would immediately appear to be particularly unproductive and would have to justify this to the social committees.

Wait a minute, does that mean that public accounting has dictatorial powers?

No, it does not! First and foremost, the accounting department only collects all the information about the working hours of the individual companies. In this way, it naturally assumes an important control function. Company secrets, as in capitalism, can no longer exist. However, it is true that society must find mechanisms to reject plans as well. In other words, plans require approval for various reasons (e.g. if a company produces goods that are not needed at all, or the like). It is in the nature of things that plan approval is taken over by public accounting.

However, public accounting is not a state, but an ordinary public enterprise such as a hospital or a school. It is under the control of the general council, that is, the workers themselves. In our model, the public accounting department is not allowed, or rather cannot, check the content of the plans. The only criterion for the acceptance of a plan is whether the enterprise has planned reasonably well in the past. What this “reasonably” means and how strict the audit is must be decided democratically. Example: a plant that has never submitted a plan and is completely unknown will have difficulty getting a plan approved that requires thousands of hours of raw materials and machinery. Because that would allow fraud or waste. So there are democratically decided and public rules that apply equally to everyone as to when a plan gets approved. So plan approval is not a “matter of taste” or springs from the whim of public accounting. After all, the public does see what the economic data is that was used to make the decision. Important control functions could then also be assumed by free media.

But how do you regulate where and what people should work?

People regulate that among themselves. On the one hand, very large companies in particular must always provide information about whether they need additional workers; on the other hand, it should be possible for everyone to change jobs and places of residence at any time. Conceivable and perhaps desirable would also be the possibility to work at several workplaces – depending on interest and demand. In principle, there is nothing to be said against someone working ten hours in this company and ten hours in that company in one week, as long as it is logistically possible. In addition, there should always be the possibility for all people to continue their education alongside their whole life, i.e. to expand their skills and knowledge.

On the other hand, there will of course always be jobs that require a high degree of specialization. And there are certainly also people who are satisfied with pursuing a single activity over a long period of time. But in any case, the annoying fears of losing one’s job would be eliminated. People would be able to make their professional decisions much more freely and impartially.

Isn’t this society far too complex to plan everything through?

Such a society would be far less complex than today’s is. And yet, today’s society also functions somehow. It doesn’t work well, because the companies are in competition with each other and everyone wants to earn money from the others, but different companies and businesses get in contact with each other, make agreements, conclude contracts and supply each other, so that in a global system everything goes where it is needed (at least if the corresponding money is available and there is no crisis). Within the labour time economy, the distribution of goods would become much more efficient, because the existence of a company is not determined by its ability to pay or its profitability, but only by the question whether it produces useful things that are also needed. If it is, its plans would also be approved by public accounting. The individual companies would thus continue to make agreements with each other, only these would no longer be limited by non-need-based purposes (such as profit maximization) – everything would still be very complex, but much more rational and transparent for all involved.

All well and good, but isn’t this plan control a huge bureaucratic challenge?

If a central administrative body had to plan overall economic traffic, that would certainly be a disaster, because a central authority cannot have any reliable information about the hours actually worked by the companies. Such abuses abounded under state socialism. But the advantage of the working time economy is that the individual companies plan largely independently. Each worker knows very well how much time a certain activity takes and is able to measure and indicate this time. From these individual times, companies can calculate averages, and companies that cooperate with each other can in turn calculate an industry average. Via public accounting, all schedules are put in relation to each other. Thus, the overall social planning results “from below”, which is based on the concrete information situation and the experiences of the workers themselves. Therefore, it can well do without abstract plan specifications or the claims of some clueless management.

Moreover, in large societies, plan control could be carried out with the help of statistical methods. For example, plans of companies that have planned well in the past could be approved (semi-)automatically – not unlike the procedures for granting credit or insurance in banks or insurance corporations.

The model that you are promoting maintains private labor and therefore capitalism.

In our model, work is planned, not private. The fact that the companies largely plan themselves and that there is no state may perhaps give the appearance of private work. But the many plans must be approved. The approval of a plan is the moment when society confirms that the planned work is also social work. Thus, ultimately, the means of labor also become truly social; for this reason, too, labor can no longer be private.

So can labour time calculation only be applied in a fully socialized economy?

No, we think that labour time calculation can already serve as a cooperation and planning tool in a cooperative parallel economy. The labour time economy can use labor certificates, while the capitalist sector, as long as it exists, continues to use money. Even if the capitalist sector were to speculate with the labor certificates: it would remain true that within the labour time economy one receives a product of one hour for a certificate of one hour of labor, no matter what the current monetary value of this certificate is.

But concretely: What happens if capitalist investors buy their certificates from the workers at high prices?

If this were to happen, it would be a sign of the superiority of the labour time economy. On the other hand, the investors would drive the workers into the cooperative sector, where they can earn the “valuable” certificates. In this way, the capitalist sector would promote its own demise.