Economic Theory of Socialism
In the field of the economic theory of socialism, Tugan-Baranovsky addressed two essential problems: the problem of the value of goods under socialism and the problem of achieving a social optimum, that is, of determining how the planning authorities should act in order to guarantee the corresponding allocation of resources that would lead to “the maximum of public benefit”.
As he saw it, direct accounting in terms of labour inputs not through wages but in working hours - was possible, though not easy, under socialism; it was a way to avoid treating labour as a commodity and so to follow the Kantian ethical principle. In addressing the second task, he referred to his very first published work - the article entitled “A doctrine of marginal utility of economic goods, as a cause of their value” (1890). In this paper, he tried to combine a labour theory of value explaining the objective factor of value and a marginal utility theory dealing with the subjective factor of value. On the basis of his arguments N. Stolyarov formulated in 1902 a “theorem” which purported to prove quantitative correlations of labour inputs and marginal utilities for freely reproducible goods in the case of an optimal allocation of resources: “the relations of marginal utilities of freely reproduced products and their labour costs are equal” (Stolyarov 1902: 4). Tugan-Baranovsky believed that the government could reveal individual preferences by using a price mechanism similar to the Walrasian auctioneer. Characteristically, Walrasian relative prices turn out to be genuine prices of the socialist economy, while the medium of accounting - the Walrasian numeraire - reflects the essence of money under socialism: “a mere symbol with no value at all”. So, in the economic theory of socialism Tugan-Baranovsky was to a certain extent a predecessor of the theory of market socialism.