What does the acronym MPS stand for, and what was its primary function?

MPS stands for the Material Product System. It served as a system of national accounts primarily designed to measure the annual output of material goods within the economies of countries that adopted it.

Which types of countries historically utilized the Material Product System (MPS)?

The Material Product System was employed by 16 Communist countries for varying durations. Notable users included the former Soviet Union and the Eastern Bloc nations until approximately 1990, as well as China from 1952 to 1992, Cuba, and several other Asian countries.

What system has largely replaced the Material Product System (MPS) in most countries?

The United Nations System of National Accounts (UNSNA) has now replaced the Material Product System (MPS) in the majority of countries that previously utilized MPS for their national accounting.

Are there any countries that continue to use the Material Product System (MPS) today, potentially alongside other systems?

Yes, some countries, including Cuba and North Korea, continue to use the Material Product System (MPS) in parallel with accounts based on the UNSNA framework.

Why might it be challenging to find detailed information about alternative accounting systems like MPS?

Detailed information regarding accounting systems that serve as alternatives to the UNSNA, such as the MPS, is often difficult to obtain. This scarcity contributes to a general lack of awareness about these systems and their historical usage by various nations.

What is a fundamental conceptual difference between the Material Product System (MPS) and the System of National Accounts (SNA)?

The core structural differences between MPS and UNSNA arise from distinct interpretations of how new value is created and how wealth stocks are accumulated. These differing viewpoints lead to variations in the methods used for grossing and netting the main economic aggregates.

How does the MPS approach the classification of services compared to the UNSNA?

Within the MPS framework, many services are not considered value-adding activities and are consequently excluded from the calculation of total net output. This contrasts with the UNSNA, which generally incorporates services into its measure of economic output.

What is the primary focus of measurement within the Material Product System (MPS), as indicated by its name?

As its name implies, the Material Product System (MPS) is primarily focused on measuring the annual output of material goods, distinguishing it from systems that aim for a broader measure of economic activity including services.

How did the MPS categorize the economy for accounting purposes?

The MPS divided the economy into three main sectors: the productive enterprises, the non-productive sphere, and households. This sectoral division guided its measurement and analysis of economic activity.

What type of data collection was characteristic of MPS that is typically absent in conventional national accounts?

A common practice within the MPS was the collection of comprehensive data detailing the physical units of products produced. Conventional national accounts, conversely, usually focus on measuring the monetary value of outputs at a given point in time rather than physical quantities.

In which country did the Material Product System (MPS) accounts originate?

The Material Product System (MPS) accounts originated in the Soviet Union.

What intellectual currents influenced the development of the MPS?

The development of MPS accounts was influenced by the economic ideas of Karl Marx, particularly his theories on the creation and accumulation of wealth and his concepts of productive versus unproductive labor within capitalist societies.

Did Karl Marx himself devise a system of social accounts for socialist economies?

No, Karl Marx did not personally create any system of social accounts specifically for socialist economies. His own economic theories were primarily focused on analyzing the capitalist mode of production.

Whose definition of unproductive labor did the MPS definition more closely resemble: Marx's or Adam Smith's?

The definition of unproductive labor used within the MPS framework was found to be closer to the concept articulated by Adam Smith than to Karl Marx's definition.

When did the Council for Mutual Economic Assistance (CMEA) countries formally adopt the MPS standard accounting system?

The MPS standard accounting system was officially adopted by the member countries of the Council for Mutual Economic Assistance (CMEA) in 1969.

What significant criticism has been leveled against MPS accounts regarding transparency of wealth distribution?

A major criticism of MPS accounts is that while they provided extensive details on the value and physical quantity of tangible products, they offered very limited insight into the actual distribution of income, consumer goods, and capital wealth within the economy, such as in the USSR.

What argument did proponents of the MPS make regarding the valuation of goods and services provided below cost to consumers?

Proponents argued that when goods and services were supplied to consumers free of charge or at prices below cost—considered a 'socialized' component of household income—valuing consumption solely in monetary terms became difficult and potentially meaningless. They advocated for measuring physical consumption instead.

How did the pricing mechanisms typically employed in MPS differ from those used in UNSNA?

The MPS largely operated using administered prices, which were set by state authorities. In contrast, the UNSNA primarily relies on market prices, whether real or imputed, for valuation.

Does the UNSNA exclusively utilize free market prices for its valuations?

No, the market prices used within the UNSNA framework are not necessarily 'free market prices.' Economic analysis, such as that from Post-Keynesian economics, indicates that a substantial portion of prices in Western economies are also administered or regulated.

What is transfer pricing, and how does it relate to the valuation of goods in international corporate transactions?

Transfer pricing involves setting prices for goods and assets exchanged between different corporate branches, often across international borders. Companies may use this practice to minimize taxes and levies, leading governments to establish specific rules for valuation, demonstrating how administered pricing can influence even market-oriented systems.

What specific types of organizations related to Soviet economics are listed in the sidebar navigation?

The sidebar lists organizations such as the STO (Council of Labor and Defense), Gosplan, Gossnab, Gosbank (State Bank of the USSR), the Supreme Soviet of the National Economy, economic ministries, and business group types including the Combine, Production association, and Scientific production association.

Which planning methods related to Soviet economics are highlighted in the sidebar?

The sidebar mentions Material balances planning, Linear optimization, and the Five-year plans as key planning methods associated with Soviet economics.

What statistical measures are featured in the sidebar concerning Soviet economic systems?

The statistical measures highlighted in the sidebar are the Material Product System itself and the Net material product.

What range of topics are presented as related to Soviet economics in the sidebar?

Related topics include Hyperinflation in early Soviet Russia, Cybernetics, the Eastern Bloc, Economic planning, Marxism–Leninism, Socialism, and State capitalism, providing a broader context for understanding Soviet economic structures.

What is the general purpose of national accounting systems like MPS and UNSNA?

National accounting systems like MPS and UNSNA are designed to provide a structured and comprehensive measurement of a nation's economic activity. They help track production, distribution, and consumption, offering insights into the economy's overall performance and structure.

What challenges does the difference between MPS and UNSNA present for comparing economic data across countries?

Comparing economic data between countries using MPS and those using UNSNA is challenging due to fundamental methodological differences. These include variations in defining value, the scope of included activities (material goods vs. services), and distinct pricing mechanisms, requiring careful adjustments for meaningful comparison.

How did the MPS framework account for the 'socialized' provision of goods and services to households?

Advocates of the MPS suggested that when goods and services were provided free or below cost, this constituted a 'socialized' component of household income. They proposed that measuring the physical quantity of these consumed items was a more appropriate valuation method than using monetary prices in such instances.

During what historical period was the MPS widely used in the Soviet Union and the Eastern Bloc?

The Material Product System was utilized in the Soviet Union and Eastern Bloc countries until approximately 1990. China employed the system from 1952 to 1992.

What does the 'See also' section suggest about the conceptual landscape surrounding the Material Product System?

The 'See also' section lists related concepts such as China GDP, Material product, Net material product, Productive and unproductive labour, Soviet-type economic planning, UNSNA, Value product, and Socialist economics. This indicates that MPS operated within a broader framework of socialist economic theory and practice.

What kind of educational material is referenced in the 'Further reading' section concerning Soviet economics?

The 'Further reading' section includes a reference to a 1967 Soviet textbook titled Planned economies. A guide to the data, which originated from Moscow State University, offering a glimpse into educational resources of the era.

What specific aspect of Cuba's economic accounting practices is mentioned in the 'Further reading' section?

A World Bank staff working paper from 1985 is listed, focusing on Cuba's material product system, its transition to the System of National Accounts, and estimations of its gross domestic product per capita and growth rates.

What is the significance of the 'More footnotes needed' template at the beginning of the article?

The 'More footnotes needed' template signifies that the article, while containing general references, lacks sufficient inline citations to support specific claims. This suggests that the precise sourcing and verification of certain information points may require further attention.

How did the MPS approach the accounting for the accumulation of wealth stocks in comparison to the UNSNA?

The article identifies the accumulation of wealth stocks as one of the key structural differences between the MPS and UNSNA, implying that distinct methodologies were used by each system to account for changes in national wealth.

What does the article suggest about the complexity involved in reconciling data between MPS and UNSNA?

The article implies that reconciling data between the MPS and UNSNA is complex due to their fundamental differences in definitions, methodologies, and pricing structures. A reference to 'Possibilities and problems of reconciliation' further underscores this difficulty.

What is the 'short description' provided for the Material Product System article?

The short description accompanying the Material Product System article identifies it as a 'System of national accounts used by Eastern Bloc countries'.

What role did Gosplan likely play within the context of Soviet economics and the MPS?

Gosplan, the State Planning Committee of the Soviet Union, was a key organization in economic planning. It likely utilized the data and frameworks provided by the Material Product System to formulate and manage the nation's economic plans.

How did the MPS measure the economy's output in a way that differed from conventional accounting approaches?

The MPS focused its measurement primarily on material goods, excluding many services that were deemed non-productive. This contrasts with conventional national accounts, which aim for a broader measure encompassing services and other non-material economic activities.

What was the significance of distinguishing between 'productive' and 'unproductive' labor within the MPS framework?

The distinction between productive and unproductive labor was fundamental to the MPS, as only activities classified as 'productive' contributed to the net material product calculation. This classification reflected specific ideological and economic priorities of the systems using MPS.

What does the article suggest about the relationship between the MPS and classical Marxist economic theory?

While influenced by Marxist ideas concerning wealth creation and labor, the MPS was not directly developed by Marx himself. Notably, its definition of 'unproductive labor' aligned more closely with Adam Smith's views than Marx's, indicating a practical adaptation or divergence from strict Marxist doctrine.

What difficulties arise when attempting to compare the economic performance of countries using MPS versus those using UNSNA?

Comparisons are difficult because MPS emphasizes material goods and employs different valuation methods, such as administered prices, whereas UNSNA includes services and typically relies more on market prices. These foundational differences complicate direct data correlation.

What does the inclusion of 'Value product' in the 'See also' section imply about the MPS?

The mention of 'Value product' suggests it is a related concept within Marxist or socialist economics that intersects with or differs from the measures used in MPS. It points to alternative ways of conceptualizing and quantifying economic output within similar ideological contexts.

What might the inclusion of 'Cybernetics' as a related topic suggest about the MPS?

The connection to Cybernetics may imply that the complex planning and data management required for systems like MPS potentially involved or were influenced by the mathematical and systemic approaches characteristic of cybernetics, possibly hinting at early computational economic planning efforts.

What does the article indicate about the historical timing of MPS development relative to Western accounting systems?

The article notes that MPS accounts emerged in the Soviet Union during the late 1920s and 1930s, coinciding with the initial Western efforts to establish systematic social accounts. This suggests parallel, yet distinct, developments in national accounting driven by differing economic systems.

How did the MPS handle the valuation of goods transferred between different corporate branches, particularly internationally?

The article points out that corporations might value goods transferred between international branches using prices designed to minimize taxes and levies, rather than market prices. This practice, known as transfer pricing, necessitates government regulations on valuation, illustrating how administered pricing can occur even in systems aiming for market-based valuations.

What is the significance of the date January 2024 mentioned in the 'More footnotes needed' template?

The date January 2024 indicates when the maintenance template requesting additional inline citations was added to the article. It serves as a timestamp signifying that the article's sourcing was considered insufficient as of that point.

What does the sidebar entry 'Combine (enterprise)' represent within the context of Soviet economics?

Combine is listed as a type of business group within the organizations section related to Soviet economics. This signifies a specific organizational structure employed in centrally planned economies for the management and integration of industrial production units.

How did the MPS likely differ from UNSNA in its treatment of the non-productive sphere?

While the text doesn't provide exhaustive detail, the MPS's focus on excluding many services from its primary measure of output suggests that activities within the non-productive sphere might have been treated differently or excluded from core MPS aggregates compared to how they are accounted for in the UNSNA.

What does the repeated mention of 'Net material product' signify within the context of the MPS?

The repeated reference to Net material product highlights its role as a key aggregate measure within the Material Product System. It likely represents the total value of goods and services produced after deducting intermediate consumption, serving as a core indicator analogous to GDP but specific to the MPS framework.

What does the article imply about the ideological foundations of the MPS?

The article suggests that the MPS is rooted in Marxist economic principles, particularly concerning the definition of productive labor and the emphasis on material output. However, its adaptation, such as aligning the definition of unproductive labor more with Adam Smith, indicates a pragmatic evolution of theory within the context of planned economies.

What is the purpose of the 'Further reading' and 'External links' sections in relation to the MPS article?

These sections are intended to guide readers toward additional resources for in-depth study on the Material Product System and associated topics. They offer access to academic works, official documents, and online archives, facilitating further research beyond the main article's content.

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The Material Product System (MPS)

Definition and Scope

The Material Product System (MPS) denotes a framework for national accounts utilized by sixteen Communist countries for varying durations. Prominently, it was employed by the Soviet Union and other Eastern Bloc nations until approximately 1990. While most countries have since transitioned to the United Nations System of National Accounts (UNSNA), nations like Cuba and North Korea continue to use MPS, sometimes in conjunction with UNSNA-type accounts. Detailed information on non-UNSNA accounting systems remains scarce, making MPS a less commonly understood methodology.

Core Objective: Measuring Material Output

A fundamental characteristic of MPS is its focus on measuring the annual output of material goods, explicitly distinguishing it from services. This contrasts with conventional national accounts that aim for a broader measure of economic activity. In the MPS framework, the economy is delineated into three primary sectors: (1) productive enterprises, (2) the non-productive sphere, and (3) households. This structure reflects a specific ideological and economic perspective on value creation.

Historical Context and Origins

The genesis of MPS accounts can be traced to the Soviet Union during the late 1920s and 1930s. Its theoretical underpinnings were influenced by Karl Marx's concepts concerning the creation and accumulation of wealth, and the distinction between productive and unproductive labor within capitalist societies. However, Marx himself did not formulate social accounting systems for socialist economies. The MPS definition of "unproductive labor" also bore closer resemblance to Adam Smith's classifications than Marx's.

Divergence from the System of National Accounts (SNA)

Conceptual Differences

The primary structural distinctions between MPS and the SNA stem from differing interpretations of value creation and the accumulation of wealth. Consequently, significant variations exist in the grossing and netting procedures applied to key economic aggregates. MPS often excludes many services from its calculation of total net output, focusing instead on tangible goods.

Sectoral Focus and Service Exclusion

MPS specifically aims to quantify the output of material goods, thereby excluding services from its core calculations. This contrasts sharply with the SNA, which encompasses both goods and services. The MPS framework categorizes the economy into three sectors: productive enterprises, the non-productive sphere, and households, reflecting a distinct approach to economic classification.

Physical Units vs. Market Value

A notable feature of MPS is its emphasis on collecting comprehensive data in the physical units of products produced. This contrasts with conventional national accounts, which primarily measure the monetary value of outputs. While SNA relies on market prices (or imputed market prices), MPS often operates with administered prices set by the state, reflecting the centrally planned nature of the economies that employed it.

Ideological Underpinnings

Marxist Foundations and Smithian Parallels

While influenced by Karl Marx's theories on wealth creation and labor, the MPS system's definition of "unproductive labor" aligned more closely with Adam Smith's perspective than Marx's original framework. Marx's economic categories were primarily concerned with the capitalist mode of production, not socialist economies. The MPS adapted these concepts to fit the context of planned economies.

CMEA Standardization

The Material Product System was formally adopted as a standard accounting system by the Council for Mutual Economic Assistance (CMEA) countries in 1969. This standardization facilitated inter-country comparisons and coordination within the Soviet economic bloc, reinforcing the unified approach to economic measurement across member states.

Pricing Methodologies and Critiques

Criticisms and Supporters' Rationale

Critics argue that MPS accounts, by detailing tangible products but offering limited insight into consumption and distribution, obscure the true economic realities. Supporters, however, contend that when many goods and services are provided below cost or free of charge (a "socialized" component of household income), valuation based solely on monetary prices becomes less meaningful. They advocate for measuring actual physical consumption and entitlements as a more appropriate strategy.

Administered vs. Market Pricing

A significant difference lies in valuation methods. MPS largely employed administered prices set by the state. In contrast, the SNA primarily uses market prices (or imputed market prices). It is important to note that even in Western economies, many prices are regulated or administered, not purely "free market." Furthermore, issues like transfer pricing, where corporations set internal prices for goods and assets exchanged between branches, can deviate from market values, prompting governmental regulation.

Related Economic Concepts

Key Terminology and Systems

Understanding the Material Product System often involves familiarity with related economic concepts and alternative accounting frameworks:

Material Product: The core output measured by MPS.
Net Material Product (NMP): A key aggregate within MPS, representing the net value of material production.
Value Product: Another measure within MPS, related to the value added in material production.
Soviet-type economic planning: The broader system within which MPS operated.
Socialist economics: The underlying economic ideology.
UNSNA: The international standard system of national accounts that largely replaced MPS.
Productive and unproductive labour: A distinction central to Marxist economic theory and adapted by MPS.

Source Citations

Inline References

The following citations are derived directly from the source text, indicating the origin of specific statements and data points. The complete list of references is available in the dedicated section below.

The MPS has now been replaced by the UNSNA accounts in most countries that used MPS, although some countries such as Cuba and North Korea have continued to use MPS alongside UNSNA-type accounts. Today it is difficult to obtain detailed information about accounting systems which are an alternative to UNSNA, and therefore few people know that such systems exist and have been used by various countries.^[2]

The MPS accounts originated in the Soviet Union, around the same time that the first Western attempts were also made to create systematic social accounts (i.e. in the later 1920s and 1930s). They were influenced by the ideas Karl Marx had about the creation and accumulation of wealth, and about productive and unproductive labour in capitalist society. However, Marx himself never attempted to create any system of social accounts for socialist economies; his own economic categories concerned the capitalist mode of production, and not a socialist economy. Further, the MPS accounts used a definition of "unproductive labor" which was closer to that of Adam Smith than to that of Marx. The MPS standard accounting system was adopted by CMEA countries in 1969.^[3]

Critics of MPS accounts argue that by providing a lot of detail about the value and physical quantity of tangible products produced, but very little detail about those who depended on that production as consumers, how income, consumer items and capital wealth were truly distributed in the USSR. However, supporters of the system argued that, if many goods and services are supplied to ordinary consumers free of charge, or below cost (a "socialized" component of household income) then valuing consumption expenditures in money prices becomes both difficult and rather meaningless. In that case, it is argued, a more appropriate strategy is to measure what physical goods and services people actually consume, and to what benefits they are entitled. Whatever the case, it is clear that there is a big difference in valuation methods between MPS and UNSNA, since MPS in large part works with administered prices set by the state, whereas UNSNA largely uses (real or imputed) "market" prices (these market prices should not be understood as being necessarily "free market prices" – Post-Keynesian economics has shown that a large proportion of prices in Western countries are in reality also a type of administered prices or regulated prices). For example, if corporations transfer goods and assets between their corporate branches in different countries, they may not value them at market prices at all, but at prices which incur less tax and levies – prompting governments to set rules for how the goods must be valued and priced (see transfer pricing).

Further Study

External Resources

Explore these external links for additional context and data:

Dr. Fengbo Zhang's contributions to economic systems analysis.
World Bank documents and reports, offering insights into global economic data and methodologies.

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References

Yoshiko M. Herrera, Mirrors of the economy: national accounts and international norms in Russia and beyond. Ithaca: Cornell University Press, 2010.

Janos Arvay, "The material Product System (MPS): A Retrospective," The Accounts of Nations, edited by Zoltan Kenessey, IOS Press, 1994, pp. 218

A full list of references for this article are available at the Material Product System Wikipedia page

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This page was generated by an Artificial Intelligence and is intended for informational and educational purposes only. The content is based on a snapshot of publicly available data from Wikipedia and may not be entirely accurate, complete, or up-to-date.

This is not professional economic or accounting advice. The information provided on this website is not a substitute for professional consultation regarding national accounting systems, economic policy, or historical analysis. Always consult with qualified experts and refer to official documentation for specific applications or interpretations.

The creators of this page are not responsible for any errors or omissions, or for any actions taken based on the information provided herein.

Unpacking the Material Product System

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The Material Product System (MPS) 📊

🏛️ Definition and Scope

⚙️ Core Objective: Measuring Material Output

📜 Historical Context and Origins

Divergence from the System of National Accounts (SNA) ⚖️

↔️ Conceptual Differences

🏭 Sectoral Focus and Service Exclusion

📏 Physical Units vs. Market Value

Ideological Underpinnings 🧠

📜 Marxist Foundations and Smithian Parallels

🤝 CMEA Standardization

Pricing Methodologies and Critiques 💰

🤔 Criticisms and Supporters' Rationale

⚖️ Administered vs. Market Pricing

Related Economic Concepts 🔗

📚 Key Terminology and Systems

Source Citations 📌

📝 Inline References

Further Study 📚

📖 Further Reading

🌐 External Resources

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📜 Important Notice

Dive in with Flashcard Learning!

The Material Product System (MPS)

Definition and Scope

Core Objective: Measuring Material Output

Historical Context and Origins

Divergence from the System of National Accounts (SNA)

Conceptual Differences

Sectoral Focus and Service Exclusion

Physical Units vs. Market Value

Ideological Underpinnings

Marxist Foundations and Smithian Parallels

CMEA Standardization

Pricing Methodologies and Critiques

Criticisms and Supporters' Rationale

Administered vs. Market Pricing

Related Economic Concepts

Key Terminology and Systems

Source Citations

Inline References

Further Study

Further Reading

External Resources

Teacher's Corner

True or False?

Test Your Knowledge!

Gamer's Corner

Discover other topics to study!

References

Feedback & Support

Disclaimer

Important Notice