Storage Costs

that part of distribution costs related to storing goods.

Storage costs are included among supplementary distribution costs, are productive in nature, and increase the value of goods insofar as they relate to storing normal-sized stocks necessary for continuity in the reproduction process. If commodity stocks are large because of sales difficulties resulting from overproduction or from the output of products that are not in demand and therefore cannot find a market, the expenditures to store these stocks are considered nonproductive. In the second volume of Das Kapital, Marx emphasized that these expenditures “do not enter into the values of the commodities but constitute deductions, losses of value in the realization of the value” (K. Marx and F. Engels, Soch., 2nd ed., vol. 24, p. 168).

The level and structure of storage costs are to a great extent determined by the method used to produce material goods.

In capitalist society a significant part of the cost of storage is nonproductive because, as a result of the antagonistic contradictions in the capitalist method of production, commodity stocks are formed that do not have a market. These become especially large during economic crises.

In the socialist economy the largest share of the cost of storage is productive. The size of commodity stocks in the distribution sphere is determined on a planned basis according to the real need for them to carry on the process of expanded socialist reproduction without interruption and to ensure continuity in commodity turnover. Storage costs in the socialist economy aimed at preserving products created by society are an important condition for the preservation of socialist property.

Technical progress in all national economic sectors, the appearance of new types of products, increased requirements for product quality, and improvement of service to customers make necessary a further development of the physical facilities of supply-marketing and trade organizations on the latest technical basis, in particular, extensive mechanization and automation of warehousing. This upgrading leads to a certain increase in expenditures for storage, but these are covered by the development of commodity turnover, growth in labor productivity in the distribution sphere, savings from conserving enormous amounts of commodity and material assets, and elimination of losses stemming from shortages at warehouses and storage areas. Thus the development of physical facilities for supply and trade promotes an increase in social wealth.