Market Capacity

the potential volume of sale of goods and services, determined by the size and structure of actually demonstrated or future demand. It characterizes that part of aggregate social wants that is demonstrated in the market, secured by monetary equivalents, and satisfied through buying and selling.

A distinction is made between the capacity of the market for the means of production and the capacity of the market for consumer goods. The former is the real or potential demand of the national economy for machinery, raw materials, fuel and energy, and production services, the dimensions of which depend on rates of development and specializations of various sectors of public production, the growth of labor productivity, and other factors associated with the creation and development of the material-technical base of production. Market capacity for consumer goods is the actual or future demand for consumer goods and services. Speaking of the limits within which social wants for consumer goods and services as demonstrated in the market deviate from the actual dimensions of aggregate public demand, K. Marx pointed out that “quantitatively, the definite social wants are very elastic and changing. Their fixedness is only apparent. If the means of subsistence were cheaper or money wages higher, the laborers would buy more of them” (K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 1, p. 206).

Market capacity of consumer goods has an objective tendency to expand. As V. I. Lenin pointed out, the material basis for this expansion is the process of growth in the level of demand of the population. The dimensions of market capacity expansion depend on such socioeconomic factors as the degrees and levels of development of commodity production and productive forces in society; the growth of national income and the interrelationship between consumption and saving; the proportion between the manufacture of the means of production and the manufacture of objects of consumption; and income levels and price policy. In the final analysis these factors determine the volume and structure of popular demand and that of organizations, enterprises, and institutions for goods and services.

The nature and rates of the expansion of market capacity depend primarily on social structure. In capitalist society a large share of the gross national product is appropriated by the exploiter classes. The desire for maximum profits and the competitive struggles drive capitalists to unlimited expansion of production. However, the tendencies inherent in capitalism toward the absolute and relative deterioration of the working people’s situation lead to concurrent limitations on consumption of goods by the popular masses and, consequently, restrain expansion of market capacity, thereby extremely aggravating the problems of the market. “Imperialism,” it is written in the Program of the CPSU, “is powerless to solve this problem, since it is a natural development of capitalist society that the working masses’ ability to pay lags behind the growth of production” (1971, p. 28).

The case is altogether different in socialist society, the basic law of which is the ever more complete satisfaction of the continually increasing demands of the working masses. Socialism creates the most favorable conditions for the continual, planned expansion of market capacity. The growth of market capacity in socialist society is determined by planned changes in proportions between spheres and sectors of the economy, in personal consumption funds, and in monetary incomes of the population, and the structure of commodity manufacture, the latter taking into account social wants for each type of commodity. By determining in national-economic plans the rates of growth of these indexes and by conducting corresponding price policies, the socialist state regulates the expansion of market capacity in the interests of all the people. The dimensions of this expansion in the USSR may be assessed by looking at rates of growth of retail commodity turnover. In 1970 retail commodity turnover amounted to 155.2 billion rubles, which is almost three times greater than the entire personal consumption fund was in 1950. High rates of growth of retail commodity turnover will be maintained during the ninth five-year plan as well. In 1975 such turnover will be 1.4 times greater than it was in 1970.