Material Product System refers to the system of national accounts used by 16 Leninist countries for different lengths of time, including the former Soviet Union and the Eastern Bloc countries, Cuba, China and several other Asian countries The MPS has now been replaced by the UNSNA accounts in most countries that used MPS, although some countries such as Cuba and North Korea have continued to use MPS alongside UNSNA-type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.
Differences from SNA
The main structural differences between MPS and UNSNA are attributable to a different interpretation of newly created value, and of the accumulation of stocks of wealth. Consequently, there are differences in grossing and netting procedures for the main aggregates. In MPS, many services are not regarded as value-adding, and therefore excluded from total net output. As the name suggests, the MPS aims to measure the annual output of material goods, in contrast with services. In MPS the economy is divided up into three sectors: productive enterprises, the non-productive sphere, and households. Typically the planning authorities also collected comprehensive data on the physical units of products produced. This is normally not the case in conventional national accounts, which measure only the momentary market value of outputs produced.
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, the Soviet elite in reality kept secret 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 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 "market" 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.
