Marxist Political Economy and the 'Socialist World'

[p016] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 11 to set out the same problem, concretely, from the point of view of the workers’ movement of the USSR and Eastern Europe. Revisionism and the Revolutions of 1956 For the Hungarian and Polish workers, the organisers and leaders of the Councils, it was im- possible in 1956 to pick up the historical thread, to directly effect the link with Bolshevism and its subsequent enrichment. Jt was—and is—impossible to jump directly and spontaneously from a _ pre- Marx state to the creation of the Marxist party of today. As Just put it: “The formation of revolu- tionary leaders and of a politically homogeneous organisation without bureaucracy cannot result from spontaneous production.’ (La Vérité, Nos. 530-531, p. 15.) The initiative for such an undertaking could and can only come from outside, from the workers of the advanced capitalist countries having realized both the unity and the continuity of the international class struggle. The working-out of the Transitional Programme and the foundation of the Fourth International were, precisely, that reali- sation. This is the historical significance of Trotsky’s work; it is in this way that I understand Just’s comparison between the Manifesto of the Com- munist Party of Marx and Engels and the Transi- tional Programme. This was the preservation of the workers’ movement from degeneration and, con- sequently, its development and enrichment, of which the basis, the centre, was proletarian inter- nationalism. The continual building and strengthen- ing of the International and its parties were and are both the materialisation and the development of this international unity and historical continuity. Without this, degeneration would be inevitable. Now, in his study, Stéphane Just also shows how the revisionists have destroyed the Fourth Interna- tional and how they aimed and aim to liquidate its sections. The great lesson to be drawn from this is that the French and English comrades have been able not only to undertake the struggle against the revisionist liquidators but also to lead it to good advantage, solely because they have leant on the Transitional Programme and the concrete workers’ movement. In this way they have maintained and developed the international unity and the historical continuity of the class struggle. And it is in this way that the liquidationist action of the revisionists has been prevented from going through to com- pletion. But what was possible for the comrades of the advanced capitalist countries presented itself from an entirely different angle for the revolution- aries of Eastern Europe. With regard to the USSR, China and Eastern Europe, Pabio, Frank, Mandel and their consorts have clearly renounced all kind of activity towards the building of parties. As far as they are concerned, the International should come to a halt at their frontiers and politely request an entry visa from the bureaucrats. That is why, at the precise moment when the workers of Eastern Europe were in revolutionary struggle against the bureaucracy, these revisionists chose counter-revolution, though naturally with all ‘due’ reserves and nuances. Instead of bring- ing in the Fourth International and its programme —at least in 1956!—that is to say bringing about the link-up between Marxism and these move- ments, between the working classes of the advanced capitalist countries and of Eastern Europe—the liquidators deepened the gulf while accusing the workers of those countries of not knowing how to and not being able to ‘invent’ the party and its programme. (Why not the International?) They presented this ultimatum to the Hungarian and Polish workers, at the same time recommending to them a ‘gentleman’s agreement’ with the Kremlin! Messrs. Pablo, Frank and Mandel—you have the impertinence of swindlers! You are the servants (unpaid and humiliated, incidentally!) of the ‘marvellous’ and ‘effective’ apparatus of the bureau- cracy which the workers of those countries ‘dare’ to fight— without consulting you. You dare to present yourself under the banner of the Fourth Interna- tional—fighting the working class of the UsSR, China and the Peoples’ Democracies. For this reason you experience an imperious necessity to ‘prove’—cost what may and even ‘scientifically’— the progress of the bureaucracy towards ‘soviet democracy’, and an ever-growing ‘harmony’ between it and the workers. And the greater the clash of contradictions between the working class and the apparatus, the more the crisis shakes the latter, the more you present Soviet society as a happy ensemble marching straight towards the re-estab- lishment of Soviet democracy, under the ever more ‘enlightened’ leadership of the Kremlin.

[p017] 12 FOURTH INTERNATIONAL, JANUARY 1966 Mandel, enemy of Marxist method Ernest Mandel begins his article by saying that the economics of transition from capitalism to socialism can be understood thanks to the work of Preobrazhensky. He writes: ‘. . . the dis- covery of Preobrazhensky remains the key for understanding the economy of these countries’. Because ‘ . what was written before him on this subject was either generalities which did not allow understanding of the problems—and the con- tradictions of this specific society—or false notions which today make one smile.’ (p. 2161) Obviously, I respect the works of Preobrazhensky. But from there to pass over all that was written on this subject by Marx, Lenin and Trotsky makes me think . .. about Mandel. In fact, it is indeed highly probable that—for Mandel—a reading of Marx, Lenin and Trotsky did not allow ‘an under- standing of the problems’. So here we have a person who requires, further, a key, and since Preobrazhensky provides him with such a key, he grasps at it. It should be mentioned in passing that this key would have to be perfect. But as far as Mandel is concerned, he finds it sufficient to believe that he has hold of the perfect key. (At this juncture let us at once point out that during the whole length of his article, this reference to Preobrazhensky serves him absolutely no purpose whatsoever.) A key, plus blind faith. After such an introduc- tion, the reader must pursue the article with re- doubled attention. And lo and behold, he is re- warded on the very next page, in which the author compares an economy ruled by plan and an economy ruled by the market. Concerning the first type, one can never tell whether he is talking about the economy of the USSR or about planned economy in general. In this type of economy he discerns a centralised form and a decentralised form, stating that planning does not necessarily mean centralisation. (Well, that’s very nice. But on this occasion Mandel has no key to enable him to understand that this depends on internal and external conditions.) He then goes on to the capi- talist economy ‘. . . in which the principle of the market predominates widely in economic life... .’ (Very widely, indeed, this . . . principle! p. 2163. Our emphasis.) From all these shallow and false explanations a conception emerges according to which the economy is something in and of itself. Now, for Marxists, the economy is merely the anatomy of class-divided society, in which, so to speak, the social relations between the classes are concen- trated and reflected. Thus capital, for instance, is not a sum of money and material means but the concrete and concentrated relationship between the working class and the bourgeoisie. It is a pity to have to recall such elementary problems but we are obliged to, for Mandel, ‘Marxist’ economist par excellence, presents the economy as the totality of the material life of men and as having an auto- nomous existence. In its autonomy, the economy becomes a sort of administration ruling material life with two different schemas: one for capitalism, another for the epoch of transition to socialism. It is in this way that, throughout the entire length of his article, Mandel carefully avoids mentioning the class struggle or even the classes. This elegant detachment enables him to hover above our very terrestrial existence on a cloud—like a heavenly angel—whence he casts down the living and the dead with immutable ‘economic rules’. He presents the period of transition as if it had nothing to do with a struggle between the proletariat and the bourgeoisie but was something in which ‘. . . the two (economic) principles fight against one another....’ (p. 2164. Our emphasis.) According to him, it was not Soviet society which contained contradictions which were reflected in planning, but ‘... planning . . . contained numerous con- tradictions’ (Ibid). Therefore, it was a bad thing. Mandel says so expressly: “This system was cumber- some, inflexible and basically unrealistic.’ (p. 2167). As he soars over the earth on a cloud of schemas, it becomes evident that everything that is real shows a face of unreality to him. Not for one instant does he suspect that the system of planning under Stalin, far from being unrealistic, was all the more realistic because it reflected the social and political relationships of a degenerated workers’ state. But no!—for Mandel, it is the system of planning which was full of contradictions, so full that it ‘... has basically decomposed, not because of the death of Stalin and a slow “liberalisation” . .. nor because of a revolt by the masses; it has succumbed to its own internal contradictions.’ (p. 2170.) Here we are up to our necks in that idealism which is the principal characteristic of Mandel the ‘Marxist’. Planning, in itself, had its own contradictions—in- ternal, what is more—and it succumbed to them. (Also, Mandel always speaks of an old system, just as one speaks of the 14-18 war!) But he quickly

[p018] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 13 corrects himself—he is a ‘Trotskyist’ after all— and on the following page contradicts himself: ‘... in proportion as the socio-economic context in which the Soviet enterprises are situated became completely altered, the maintenance of the old system risked putting a brake on the development of the productive forces to such an extent that a reform urged itself in a most imperious manner.’ And further on: ‘In proportion as the pressure of the consumers made itself felt. . .’ (p. 2171), it became necessary to modify the ‘old’ system of planning. Planning and the World Market Let us stop for a moment. We can already draw up a preliminary balance sheet of Mandel’s method. First of all, he states that the ‘old’ system of planning succumbed to its ‘internal contradictions’. That is pure idealism. Then he switches round and shows us his ‘materialist’ side, this time presenting the reason for the reform of planning in the ‘socio- economic context’. Has he become a materialist? an astonished reader might ask. Oh, no! Let’s go back to that phrase again, the panoply of Mandel’s method. He speaks of a ‘socio-economic context determining the necessity for the reform. This ex- pression, employed on several occasions, is nothing more than a category, without content and never specified, and therefore idealist with a materialist appearance, used as a necessary brick in his idealis- tic edifice. Mandel is obliged to have recourse to the ‘socio- economic context’. Hiding idealism behind a Marxist appearance—that gives one a certain style. Mandel has to employ the ‘materialist’ categories, but solely to empty them of their class content. Thus the working class disappear into the ‘con- sumers’, and the contradictions between the work- ing class and the bureaucracy, and between the degenerated workers’ state and world imperialism, likewise disappear into the ‘socio-economic con- text’. Our swindling economist can then affirm without flinching that this ‘context . . . became completely altered’ (Our emphasis). Nobody is going to ask him just what he means by ‘com- pletely’, since he ‘forgets’ to give details of what the ‘socio-economic context’ is. But let us con- tinue that sentence: ‘ . the old system risked putting a brake on the development of the pro- ductive forces ...’. This peculiar style—the pro- duct of the amalgam of an idealism and a ‘materialist? mask—is full of mental reservations: ‘risked putting a brake on’. This is doubly false, since the ‘thing’ which Mandel calls the ‘socio- economic context’ has effectively put a brake on 2. this development, and for a very long time too. So this was not a ‘risk’, still less a new factor as Mandel attempts to persuade us. In 1932, Trotsky wrote: ‘. .. the abrupt jumps of industrialisation have dragged the different elements of the plan into menacing contradictions between them... the economy is working without material reserves and without calculations ...a crisis is preparing itself, with all the consequences that follow on... ’ (Trotsky, Ecrits, Vol. 1, p. 130) Here we find no mental reservation. What is new is not the pheno- menon but its aggravation charged with a richer and more explosive class content. But in the same manner as he dilutes the economy of its class content, and makes the Soviet working class disappear, he makes an abstraction of world imperialism. He examines the problems of the Soviet economy not only as an economy in itself, but also as an economy for itself. The USSR appears as a country with a planned economy in a test-tube in which . there are problems. The world imperialist market has completely disappeared under Mandel’s pen, to the point where he does not even mention foreign trade. And this despite the fact that the reform of planning has as an important declared aim the regulation of the relationship to the world market! This is how the different elements of his idealism come together. Inability to understand how the aggravation of the planning crisis springs, in the first place, from the aggravation of dependence on the imperialist world market which exercises a re- doubled pressure on the USSR, is logically trans- formed into ignorance on the question of the planning reform itself, designed precisely, to a large extent, to ‘remedy’ this dependence. But ignorance and inability are here only the concrete forms of his idealism, which raises the economy above its world class content. This imparts a certain style to Mandel, and the whole thing taken together strengthens a basically idealist method and makes it homogeneous. Bourgeois economists become the ‘western econo- mists’, (p. 216), and world imperialism becomes quite simply ‘abroad’ (p. 2169). It is thus that, according to him, under capitalism ‘the principle of the market predominates widely (only) in economic life’-—and only the principle. Capitalism develops ‘... from free competition to monopoly capitalism, then to neo-capitalism’ (p. 2163. Our emphasis). The Hungarian and Polish revo- lutions become ‘explosions’ (p. 2170). We enter a bizarre world where, as in the Tales of Hoffman, mysterious phantoms people the dark corners, fly over us and appear inverted, distorted. ‘Real prices’

[p019] 14 chase ‘administrative prices’; the ‘logic’ of profit- ability has an effect on the ‘logic’ of planning— both of them having been stood on their heads; the ‘new elements’. break down planning only ‘in their logic’. There is a ‘social and economic dynamic’ which must be an extremely wicked phantom, for it is a bearer of ‘grave problems’ (p. 2177). Indeed, Mandel himself is so frightened by it that he dares invoke it no further. Evidently he prefers the in- offensive younger brother, the ‘socio-economic context’. We learn that there are several of these, for Mandel adds the words: ‘... of all kinds’. But we see no more of them. Fortunately so, for this is already a nightmare. From out of a murky corner emerge two principles, and one must make an effort to recognise them; these are the market and the plan. All these phantoms want to frighten us, overpowering us with their weight from behind. But deep down they are wandering here in a state of profound sorrow, for they have lost their souls and their identities, void of all human nature. And so they lose their frightening allure. These are not real phantoms like Hoffmann’s, which con- tained reality. Mandel’s ‘phantoms’ are only scarecrows, for they only replace reality. But before proceeding to the actual problems of the present-day Soviet economy and seeing Mandel against this background, let us look at him again quite bare. Mandel offers his Services As such, he is interesting. On page 2165 he writes: ‘... we have even tried to give a Marxist explanation of it (planning and its contradictions)’. (He refers to his book: Treatise of Marxist Econo- mics.) To prove how correct he was, he spends a page and a half reproducing quotations from his book with quotations taken from Soviet economists of the bureaucracy. This deals with a simple description of the functional ills of the planning system. One might imagine him to be lacking in modesty. But not at all! For happily, at the end of the quotations, the reader is put more at ease when Mandel himself writes: ‘We are not drawing this parallel in order to obtain some kind of glory from it.’ (p. 2166). You see—he is modest! He seeks no glory. Faced with such modesty, the reader feels disarmed. All the more so, since the author has an especially developed sense of justice. He informs us that: ‘We are not the only ones to have laid bare these contradictions in the Soviet planning system.’ (Ibid.) Then Mandel straightaway hands out the credits: to the Soviet and Polish economists, to Liberman, to Lange, etc. His modesty bows—I would even say: parades—in all FOURTH INTERNATIONAL, JANUARY 1966 its splendour, giving priority to the bureaucrats. He has quite simply ‘forgotten’ Trotsky, as he has throughout his article. He does not even make any reference to Preobrazhensky who is nevertheless— if we remember rightly—the key to his under- standing. . . . Elsewhere, speaking of the use of material incentives in production, he observes that they have ‘ . corrupting and destructive effects on socialist consciousness, which was so well under- stood by Lenin.’ (p. 2184). Well done, little Lenin! So you are worthy of a compliment from the great Mandel after all. And that despite the fact that you wrote ‘ . either generalities which did not allow an understanding of the problems .. . or false notions which today make one smile.’ This is the naked Mandel, that is to say stripped of the faults with which his idealism lands him objectively. Here is Mandel in the subjective; no longer the personage but the person. Let us see what he is concealing behind this modesty. We shall begin with that quotation in which he speaks of the negative effects of material incentive on consciousness. He scolds the bureau- crats: “To hide and deny these effects . . . to em- bellish them, make a virtue out of necessity, is to definitively remove all means of fighting them and neutralising them, at least in part.’ (Ibid—at least in part, he says.) He improves on this: “This point of view is today shared with much vigour by some Cuban comrades... like Guevara.’ Ah, yes indeed! that is an argument of worth. It is certainly appre- ciated by the Soviet bureaucrats, but they cannot understand Mandel’s indignation. Because they do not hide and do not deny these corrupting effects. Mandel is badly informed. The rub is that they fully recognise these corrupting effects—on con- sciousness—just like Mandel. What they do not recognise—just like Mandel—is that these cor- rupting effects act, first of all, on incomes and, con- sequently, on consciousness. And it was that ‘which was so well understood by Lenin’ who, at the same time, grows far greater in stature and the great Mandel far smaller. So small in fact that he stumbles on the tiniest things. And so, on page 2168, he explains to us how central planning sent out orders to the enterprises, expressed in multiple indices, one of the main ones being that of physical production ‘often simply expressed in weight’. He informs us how the ‘directors of enterprises producing tractors have an interest in making these as heavy(!) as possible in order to ensure the fulfilment . . . of the plan (cal- culated in physical production measured by weight) which implies enormous wastages of metal’. I really do not know where he gets these enormous

[p020] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 15 howlers from. What he says about the index of physical production is true. But unfortunately, our little Mandel made an unhappy choice for his example. In fact, the index for tractor production is not calculated by weight. The central organs of the plan choose and decide upon the model to be made calculating, in units, the number and the horse- power. These units are sent out to the enterprises as the index of the plan. Clearly, one cannot know everything . . . it is enough to say all that one knows, and even that is too much... . For else- where he states also that the Pole Brus was the first to analyse the contradictions in planning, in 1961. But even if one brushes aside the analyses of Trotsky and the Opposition—which is odd, to say the least, for a Trotskyist—Soviet and Eastern European economists have done so, since the death of Stalin: Kantorovitch in the USSR and Kornai in Hungary bear witness to the fact. What has changed, since 1961, is the publicity and encourage- ment given to these examinations by the bureau- cracy. Mandel writes: ‘It is .. . probable that the discussion unleashed by the publication of Liber- man’s article was decided upon by the authorities.’ (p. 2166). First of all, the discussion was not ‘un- leashed by the publication of Liberman’s article’ (ex- cept for the Western bourgeois public); it began much earlier. Secondly, it was the authorities (what a won- derfully neutral title) and not ‘probably’ the authorities who decided upon it (announced in Suslov’s speech to the XXIInd Congress, February, 1962). This casts increasing light on Mandel’s ignorance as to the functioning of the bureaucratic regime. But besides this ignorance, he lets it be understood—particularly in his unhappy example of the tractors—that the bureaucrats are imbeciles. Let us pause for a second. His article is characterised by the presentation of an ‘old’ system of planning which was crazy, obscure and stupid, functioning ‘ . . . with the systematic elimination of the elements that were intelligent, creative and endowed with a spirit of criticism and a spirit of synthesis.’ (p. 2169). In face of this we see the ‘intelligent spirits’, Liberman, Lange, and Co.—Attention, please! We are stepping into the internal thought mechanism of the Great Mandel. For deep down, who are these people, ‘creative and endowed with a spirit of criticism and a spirit of synthesis’? Good Lord—It’s Mandel himself! Why yes, it is he who poses as the counsellor of a regime emerging from ‘the old obscurantism’. It is for this reason that he only scolds the present regime—along with Guevara incidentally; it is for this reason that he draws a demarcation line between the ‘old’, ‘stupid’ and the imagine the despair of the Stalinists. ... new ‘developed’ regime. But it is obvious that he is thinking of himself, of this ‘creator with a spirit of synthesis’. He even offers advice. Anxiously he wonders if the criterion of profitability ‘ .. . is really that most indicated for serving as a global index’. And straightaway he recommends two others, one of which ‘... emanates from my friend Pierre Lammers’ and ‘consists in taking net cost as the synthetic index of accomplishment of the plan. ... (p. 2176). The ‘old’ system was Stalinist, the new one having gradually set itself free from it. That is the basis of his thinking. The system of planning under Stalin he characterises as ‘stupid’ and ‘unreal’, in order indirectly to reduce Stalinism to a general stupidity. Thus released he can frater- nise with the ‘new’, de-Stalinised regime where a ‘creative spirit’ is so much needed. And since the ‘old’ system of planning, of ‘methods of political direction in vogue under Stalin’ (p. 2170) was distin- guished by ‘ . . . the selection of cadres according to criteria of obedience and good memory (to know all the details of what was going on in the factory . . .) ... and with the elimination ... of the creative...’ etc. (p. 2169. Our emphasis)—a system in which all that has disappeared—as Mandel believes—is not at all Stalinist, but new. It must therefore be improved. This curious method of thinking leads him directly to state: ‘At least up to the present, we are not at all convinced that the criterion of profit is technically that most indicated of these three “synthetic” criteria’. (p. 2177.) We can We shall come back to the analysis of Mandel’s method. But to conclude this first section, the reader should be warned already. The real source of Mandel’s method is his basic worry: how best to serve the Kremlin bureaucracy. Starting from this political servility, it is impossible to employ the Marxist method. He is forced to become an idealist; necessarily, he omits to mention Trotsky; he is obliged to render homage to the bureaucrats, and all this with the ardent desire to become the great general counsellor of the bureaucracy freed from its ‘Stalinist stupidity’. We must point out however that he draws a distinction between Liber- man, Lange and Nemchinov and the ruling bureau- crats. In his eyes the latter become more ‘realist’ only to the extent that they lend their ears to the former. Now, the bureaucracy was and is more realist than its counsellors, because it acts from the point of view of its power, and not of abstract intelligence. It is the interest of its power which determines the selection of its cadres (and not the latters’ good memories . . .!). This interest pre- scribed the massacre of the Bolsheviks and also at

[p021] 16 times the remeval of ‘counsellors’ in order to maintain and reaffirm its centrist rule. Today, this same interest acts in the direction of bringing back the ‘counsellors’; not because its rule has become ‘more realist’, bui because the realism of its centrist rule today reflects and contains a different class relation- ship.. We are in fact about to see just what is this relationship on the basis of which the bureaucracy continues to fight Bolshevism most vigorously while lending an ear to Lange, Liberman and Co. The change lies in the latter phenomenon. That Mandel should hail this ‘evolution’ and even that he sould aspire to become such a counsellor, gives adequate evidence that he was an anti-Stalinist only while the centrism of the bureaucracy was still too far to the ‘left’ (that is to say ‘stupid’ and ‘unrealistic’). For him Stalinism in no way meant the definite FOURTH INTERNATIONAL, JANUARY 1966 break from the working class as reflected in the massacre of the Bolsheviks, but the elimination of those of ‘creative spirit’. Let us keep this picture of Mandel’s position in mind and examine the real problems of the Soviet economy. We are obliged to confine ourselves to two basic problems, namely: the USSR and the world market and—in close and organic relation to it—the social relationships in the USSR, central problems of this economy and of the reform of planning. It is on this basis that one can understand the present interest of the bureaucratic regime and its class content, as well as that of the return of hose of ‘creative spirit’. And at the same time one will be able to understand why Mandel breathes not a word about it. The world market, the USSR and the peoples’ democracies As our point of departure we could take any of Mandel’s statements or affirmations and show how false it is, for he ignores the fact that the economy of the USSR is determined by world imperialism. We are therefore faced with the difficulty of choosing. But let us follow his tracks. If we remember, Mandel refers to Preobrazhensky. But why him? One might imagine that he wanted in this way to demonstrate his competence, but to us that would seem insufficient explanation. In fact, the works of Preobrazhensky, despite their importance and value, are characterised by a definite weakness; he considered the Soviet economy and its problems abstracted from the world imperialist market. Certainly he opposed the policy of Stalin and Bukharin with the necessity for industrialisation, based on and directed by a plan, controlled by the working class. But, in contrast to Trotsky, he thought that by adopting this policy the USSR could effectively build socialism in a single country. So if Mandel chooses his theory as the ‘key’ for understanding the Soviet economy there is nothing astonishing in the fact that he treats world imperialism as a non-existent quantity, while nevertheless remaining far and away below the level of Preobrazhensky. Our unfortunate author considers that the great weakness of the economy of the USSR lies in a gap between the growth in production of produc- tion goods (Sector A) and that of consumer goods (Sector B). Throughout his article, he designates as a great evil the considerable lag of the latter in relation to the former. If up to now we have seen him up on a cloud, we must now observe that on this occasion he has come down from it, now touching only things on the surface. In reality, the great lag of sector B in relation to sector A is only an index and partial even at that. The principal index lies in a continual drop in the rhythm of growth of gross social production (made up of: industry, 63.2 per cent, agriculture, 16.8 per cent, and commerce, 6.1 per cent) in the course of execution of the seven year plan. Which of course is different, because this approach enables us to penetrate into the real problems. Here is the relevant table, calculated in 1952 prices: Per cent Year growth 1959. . . 83 1960. . . 7.7 1961. . . 6.7 1962. . . 6.3 1963. . . 45 According to the American bourgeois economists (members of the Joint Economic Committee of the United States Congress, and university economists). while in 1958 the annual growth was of 8.5 per cent, in 1963 it fell to 2.6 per cent, the lowest level for many years. (Current Indicators for USSR, Washington, 1965.) These estimates were vigorously

[p022] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 17 criticised by the Soviet economists, but in its January 13, 1964 edition, in an article by Malychev, Pravda itself recognised the fact that in 1963 the rate of growth of production had fallen to 3 per cent. This contraction is general in the European Peoples’ Democracies. Those most affected are Czechoslovakia, East Germany and Poland. The phenomenon reappears in the constant diminution of the growth in national revenue (made up of: industry, 52.2 per cent, agriculture, 22.3 per cent, and commerce, 10.9 per cent). Here is the table of its development, calculated in constant prices: 1958. . .1 1959 . 1960 . 1961 . 1962. . 1963. . (On the basis of: Narodnoye Khoziaystvo, 1962 editions; Communiqué of the Office of Soviet Statistics, January 24, 1964; Pravda, January 13, 1964; Lomakov’s report to the Supreme Soviet, December 17, 1963.) Such a slowing down, in itself, is not disturbing. It all depends on its origin. Now it is here that we have to start worrying; because it results from the unequal development of the sectors of the economy. Trotsky already warned us, in 1932: ‘The problem of the relationship between the elements of pro- duction and the different parts of the economy is the very essence of the socialist economy.’ Ecrits, Vol. 1, p. 117). And further on: “The danger does not lie in a slowing down of growth, but in the discordance of different parts of the economy.’ (p. 129). Let us examine this discordance. On the basis of the publications already quoted, the slowed-down growth is much clearer in the con- sumer goods industry (Sector B) than in that of production goods (Sector A): Nw ® SO ~1] WA 1959 1960 1961 1962 1963 Sector A Plan 8.1 8.8 9.5 8.8 8.5 Accomplishment 12.0 11.0 10.0 10.0 10.0 Sector B Plan 6.6 6.4 6.8 7.0 6.3 Accomplishment 10.3 7.0 6.6 74 5.0 Soviet Agriculture and Industry Now, according to the fantastic ‘theory’ of Stalin, Sectors A and B concern only industry, and the Stalinists, followed by the Soviet economists, today still work out plans and evaluate their execution on the lines of this ‘theory’. In reality, Sector A of production (production goods) also in- cludes agriculture producing primary or semi-finished goods. In the same way, Sector B (consumer goods) comprises agricultural produce destined for consumption. In order therefore to establish a correct relationship between the two sectors, agri- cultural production must be included. A quick glance at certain figures relative to agricultural production will convince us that, correctly cal- culated, the gap between the two sectors must be far greater. The tendency in Soviet agriculture is not even a slowing down in growth but an absolute decline in production. Between 1958 and 1963 the cereal harvest diminished from 141.2 million tons to 120 million and the state purchases from 56.6 million tons to 44.8 million. A drop was registered in total production of milk, butter and eggs as well as swine, ill-compensated by an in- significant growth of cattle and meat production. (Office of Soviet Statistics, [bid.) So, the Stalinists’ arbitrary differentiation between the two sectors conceals a gap of most disquieting importance. It is well known that Soviet agriculture is in re- gression and is becoming more and more incapable of satisfying needs. But this agrarian crisis puts a brake directly on the development of general pro- duction, and therefore on industrial production in Sector A just as much as Sector B. At the same time it is the expression of it. There exists between industry and agriculture a deep relationship, despite the particular character of the latter. Stalinist ‘theory’ (and practice) artificially and arbitrarily breaks this interdependence, or more exactly the unity of the process of production. If one considers agriculture apart, inevitably excluding it from pro- duction sectors A and B, one arrives at the con- clusion that the cause of the lag in agriculture lies in agriculture itself. But one of its pecu- liarities is precisely that, while it is an integral part of the production process, it is nevertheless incapable of ensuring, in itself, the enlargement of reproduction. Naturally, nor can industry, without the concurrence of agriculture, but the initiative does fall upon it. The harmonious development of agriculture consists, paradoxically, in its industrial mutation, in its transformation into a special sort of industry. Only general industrial growth can restore agriculture and resolve this task. But the Stalinists insist on their ‘theory’. In the April, 1965 edition of Voprosy Ekonomiki, an economist complained that between 1928 and 1962 while the basic funds of production in industry had increased by 45 times, and the volume of total production by 36.5 times, these same funds in agriculture had increased only by 3.2 times, and agricultural production, in comparable prices, by

[p023] 18 only 1.9 times. Now the argument should be exactly the opposite: these funds and production in agriculture have increased only feebly pre- cisely because their increase in industry was insufficient. That is to say that what is being shown in the real and very wide gap between the growth of the two sectors—including the component parts of agriculture—is the considerable and growing lag of industry and, but only consequently, of agri- culture. The Stalinists leave out agri- culture because the real image of the growth of production, that is to say the growing lag of in- dustry, would be enough by itself to deal a fatal blow to ‘socialism in one country’. And since it is impossible for it to have recourse to massive importation or to a policy of world revolution, the bureaucracy acts in such a way as to conceal its original sin. But while we may understand the Stalinists, what can we say about our ‘Trotskyist’ Mandel who so easily swallows the bureaucratic pill of a false and mechanical separation of the sectors A and B? For so well does he succeed—despite all his econo- mist’s ‘culture’-—that he does not even speak about agriculture. Nor is it in his case a question of sheer ignorance. He adapts himself to the policy of the Kremlin to such an extent that he adopts the Stalinist formula almost unconsciously. The International Division of Labour We are now passing on concretely to the problem of the isolation of the USSR with regard to the world economy. In the industrial lag, demonstrated in the first instance by the fall of agricultural production, an incontrovertible fact clearly appears: despite its development, unequalled in the capitalist system, soviet industry is incapable of transforming agriculture. What is more, it cannot prevent the actual fall of production, which, with its repercus- sions on industry, brakes in its turn the develop- ment of the latter. The only solution to this problem is the effective concurrence of European industry, or, in other words, the organic liaison of the USSR with the international division of labour. To put it concisely: the permanent crisis of Soviet agriculture and the industrial lag are explained by the pressure of world imperialism which makes it impossible for the USSR to get into the inter- national division of labour. This is what is hidden behind the ‘economic innocence’ of the statistics of sectors A and B. And this is where we find the ‘Trotskyist’ Mandel, whose complete alignment with the Soviet bureau- cracy goes up to and includes the statistics, the ‘scientific’ cover for the betrayal of the world FOURTH INTERNATIONAL, JANUARY 1966 revolution. But there is more. The complete fresco of the situation does not end there. If we go into the details of the Soviet. statistical tables, accepted at face value, the following can be ascertained: a check in production of energy in relation to the forecasts of the plan, marked by a very feeble in- crease in gas production and a perceptible slowing down in coal production; a clearly inadequate result in the timber, paper and cellulose industries. In a branch as important as building materials, the average index of growth was 14.6 per cent in the course of the years 1959 to 1962, but has already been reduced by the plan to 10.7 per cent and fell to 6 per cent in 1963. The situation is cata- strophic in building and especially in housing con- struction. The only ‘classic’ branch in which pro- gress has not flinched, despite the slowing down in 1963, is the transformation of metals, and particularly the construction of machines. This general weakness has been translated into an acute investments crisis. According to the American bourgeois source already quoted the average annual rate of growth of investments between 1951 and 1961 was 10.8 per cent. In contrast, between 1959 and 1963 this rate fell to 7.1 per cent, reaching its lowest level, 4.7 per cent, between 1961 and 1963. According to Soviet sources these rates were fixed by the plan for 1959 and 1960 at 12.8 per cent and 13.5 per cent re- spectively, and the results surpassed the fore- casts: 13.5 per cent and 14 per cent. But in 1961, 1962 and 1963 the forecasts were reduced to 12, 9, and 10 per cent respectively, and the results obtained were below these: 9, 8.1 and 6 per cent. In order to extend our sphere of investigation, let us glance at the development of investments in Czechoslovakia. This is a table—published in Vestnik Statistiki (Moscow), No. 4, 1965—of the sums of investments in thousands of millions of Czechoslovak crowns,. calculated in 1963 prices: 1960 1961 1962 1963 1964 Total investments 42.4 45.5 44.3 39.4 40.3 Including: Industry 17.6 19.0 20.0 18.1 —_ Agriculture 7.1 - 7.7 6.7 5.7 5.6 Construction 1.4 15 1.2 0.8 — Transport and telecommunications 4.1 4.6 4.5 4.1 —_ Local economy 5.9 5.9 6.0 5.8 — The crisis of investments, catalyst of the in- dustrial lag, in the form of the discordance of the economic branches and of their unequal develop- ment, is reflected and concentrated in its turn

[p024] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 19 in the growing tension of the budget. It is there- fore a perceptible thermometer of the planned economy and, as we shall see later, of social rela- tionships and consequently of the political struggle. Up to now we have done no more than approach the deep-rooted cause of the economic crisis in the USSR. We are therefore still on the surface of things, although far deeper than Mandel with his unfortunate two sectors. And even in trying to determine the reason for the ills, our author arrived at the conclusion that this lay in the bad functioning of the planning system. The American bourgeois are far more serious. In the study quoted above, they point out that from 1961 onwards the Kremlin definitely undertook a large-scale re-orientation of the industrial structure, with a drive in favour of the so-called ‘progressive’ branches such as chemistry, petro-chemicals and electronics, and also the huge purchases of in- dustrial equipment and cereals, armaments and the space programme. For the Kremlin this was trans- lated into a change of priority given to such and such a branch or, inside the branches, to certain products. This requires one to‘... slow down a bit, at least temporarily, the rhythm of growth of certain branches and to utilise their production more effec- tively.’ (Pravda, January 13, 1964. Our emphasis.) We said earlier—following Trotsky—that the in- ternational division of labour on which the USSR economy depends made the latter victim to a growing lag because of its isolation. But what is the inter- national division of labour? It means, in the first place, that in the epoch of imperialism concordance between the various branches of the economy can_ only be established on an international scale. Inside any given country (and it does not matter which), there exists no harmonious economic proportion. It is for instance impossible to imagine British industry without the agriculture of the Commonwealth, or the American petro-chemical industry without Venezuelan oil. The economic disproportions of a country, or the national division of labour, ‘fit in’ with the disproportions of other countries, or with other national divisions of labour, to form a whole, the international division of labour, shown in international trade and the circulation of capital. The USSR was obliged to isolate itself from the international division of labour because of the fact that the latter was (and is) ruled by the laws of the market. Its reintegration would require the over- throw, once and for all, of world imperialism. But being isolated does not only necessitate defence against the effects of an international division of labour ruled by the laws of the market, but also suffering the consequences of it. That is to say condemning oneself, along with others, to economic disproportions. In the pre-war years the USSR did not succumb to this contradiction, for several reasons. Firstly, because it had inherited a back- ward economy for which the essential task was the first phase of industrialisation. Secondly, it was able, for the accomplishment of this task, to lean on its enormous resources. Thirdly, because the cost of industrialisation, ‘normally’ covered by the international division of labour, was harshly paid for by the Soviet people themselves, by the de- generation of the workers’ state, and by the betrayal of world revolution. But, like the national, the international division of labour is constantly developing. Trotsky shows that the real problem results from this develop- ment. “The general growth of production on the one hand, and, on the other, the birth of new re- quirements and new disproportions, increase the necessity for a liaison with the world economy. The programme of ‘independence’, that is to say of the character of a Soviet economy meeting its own needs itself, increasingly reveals its reactionary and Utopian character.’ (Ibid, p. 118). The general characteristics of the development of the interna- tional division of labour are the same as those of the development of the production which is its basis. It is a progression composed of a slow and uneven evolution but with rapid jerky and sharp jumps. It proceeds in the direction of a growth in capacity but with ever increasing speciali- sation of production, the simple functioning of which demands that the parties involved should be linked more and more with one another. The more specialisation and capacity—two linked phenomena—of the productive forces are developed, the greater are the national economic disproportions, and the less possible it becomes to remain inside a national framework. The Bureaucracy reacts ... The USSR was incapable of harmoniously developing the different branches of its economy because it was isolated from the international divi- sion of labour. But when, on the basis of technical development, the branches whose development had been forcibly neglected became primordial, the situation turned towards catastrophe. At a terrible cost, the USSR may previously have ‘been able’ to avoid having recourse to the world market in order that its economic disproportions according to the international division of labour might be equalised from without. But this isolation has now become impossible. The disproportions were

[p025] worsened and new ones were born. The bureaucracy had to give in to the evidence. It had to yield to this pressure of the world imperialist market shown in the lengthened economic lag. The hasty alteration of the seven-year plan in the course of its execution gave this eloquent expression. On December 16, 1964 the President of GOSPLAN, Ustinov, pre- sented a special plan for 1964 and 1965. This was the plan for the ‘chemicalisation’ of the Soviet economy, pompously announced by the bureau- cracy, with drums beating, as a miraculous dis- covery for curing the Soviet economy. Besides ‘chemicalisation’, this plan was also characterised by another priority, accorded, naturally, to agri- culture. Here is the table of investments fore- cast for 1964 and 1965, compared with those actually granted during the two preceding years (in thousands of millions of roubles). Average rate of growth Results Altered plan © in percentages 1962 1963 1964 1965 1962 1963 1964 1965 Whole economy 30.8 32.6 365 39.0 — 60 10.4 9.8 including Industry 15.7 16.7 17.7 188 — — 60 — inc. chem. ind. 11 #14 20 2.7 — 8.7 13.415.0 Agriculture (average 2.7) 5.4 61 — — — — This brusque turn towards chemistry and agri- culture could hardly be possible without planning in advance the slowing down of the rhythm of growth of other branches as Pravda announced. The following table presents them with the com- parison of the average annual rates of growth accomplished in the course of the seven-year plan and the rates planned for 1964 and 1965 (in per- centages). Accomplished in Planned for seven-year plan 1964 and 1965 Electrical energy 118 10.9 Coal 2.6—3 15 Cast iron 79 5.8 Steel 13 55 Laminates 6.3 49 Steel tubes 11.7 10.0 Mechanical construction 14.7 9.9 The real worsening of the USSR’s dependence on the world imperialist market lies above all in the fact that*even the alteration of the plan was only possible so long as it turned resolutely towards the world market. According to our illustrious ‘Trotskyist’ author, the reason, or one of them, for the economic reform is that the USSR and the Peoples’ Democracies ‘. . . risk “missing the bus” of the suddenly - FOURTH INTERNATIONAL, JANUARY 1966 third industrial revolution’. (p. 2172). But what is Mandel missing right here? He is missing the problem, which is posed quite differently: the development of the productive forces has made continuous economic reconstruction impossible without active participation in the international division of labour. And of course, what is more, this isolation was at the basis of the necessity for the reconstruction. It is not a question of a simple adaptation of new techniques which one can either ‘miss’ or not. Firstly, because even such an adapta- tion is only possible to the extent that one better integrates oneself in the world market. Besides, the development does not stop, and what would the USSR do if there were a ‘fourth in- dustrial revolution’? For technical development is only made in the framework of the international division of labour. This is what Mandel is missing here, just like the bureaucrats of the Kremlin making a sort of magic wand out of chemistry which as it touched the Soviet economy would achieve their Utopian dream of ‘surpassing capi- talism’. But Mandel misses the essential, particu- larly, that this phenomenon is not one of pure economy but is the expression of the relationship of forces on an international scale. The interna- tional division of labour is not‘at all neutral. It is ruled by the implacable laws of capitalism and is dominated by the international bourgeoisie. The question is to know whether, and on which con- ditions, they would allow the bureaucracy not to ‘miss’ reorganising its economy. This is the capital problem which has been quite simply left in the shadows by Mandel. We however have by no means finished on this point. The Stalinist bureaucracy has been obliged to realise the importance of the international divi- sion of labour, of which Mandel remains in sovereign ignorance. The programme of ‘chemicali- sation’, for instance, depends entirely-on foreign trade, and the Stalinists evidently are well aware of this. The chemical equipment of the Soviet economy depends upon foreign firms, of which the majority are capitalist. Let us examine this foreign trade and in general the concrete relationship of the USSR and the Peoples’ Democracies to the world market. In 1965 more than 50 per cent of Soviet pur- chases of chemical equipment have been made in the capitalist world. The principal partners are the British firms (ICI, Simon Carves, Constructors John Brown, Courtaulds), the French (Air Liquide, Péchinay-St. Gobain), the German firms (UHDE, Hochst, Krupp), the Italian firms (ENI, Montecatini, Pirelli), and the Japanese firms (Mitzui Mitzubishi),

[p026] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 21 etc. During the preparation for the international chemical exhibition in Moscow, September, 1965, several capitalist firms asked for a guaranteed minimum quota of Soviet purchases of one million roubles. The reply pointed out that a guarantee would be useless, for on the occasion of the first exhibition in Moscow the value of the contracts exceeded 20 million roubles (Ekonomicheskaya Gazeta, Moscow, April 28, 1964). The world press is full of news about Soviet or Eastern European orders to capitalist firms running into millions of dollars for chemical products and equipment alone. Since May, 1962, the~value of exports of complete factories from Engjand alone has reached £58.1 million sterling for the USSR and 69.9 million for the European Peoples’ Demo-. cracies. (Le Courrier des Pays de l'Est, Paris, Sep- tember 2, 1965.) Increased Dependence on Capitalist Market Foreign trade is not confined to chemical pro- ducts and equipment. The Soviet purchases of grain and other agricultural produce (barley, flour, etc.) from the USA, Canada, Argentina, Australia and France are well known. Since 1962, these massive purchases have become regular to such an extent that the big grain-producing capitalist countries are increasingly making them one of the .permanent factors of their economic policy. In the course of the first seven months alone of 1965, the USSR ordered about 12 million tons of grain from producing countries. Equal mention must be made of the Peoples’ Democracies, which follow the broad lines of the development of the Soviet economy. They there- fore encounter the same difficulties. Despite the situation of some of them, like Poland which is capable of exporting equipment, indeed even complete chemical factories, to the USSR, each one is in fact tributary to the world market. They follow the same policy of purchases from capitalist firms as the USSR. And because of the fact that their agriculture has in part been planned and, in conformity with the orders of the Economic Council for Mutual Assistance, has been specialised on the basis of massive Soviet grain deliveries, the USSR’s agricultural crisis has pushed them strongly towards the capitalist grain market. With the exception of Rumania, they offer a comfortable and permanent market for the agricultural surpluses of the world imperialist market. On February 3, 1964, for example, Poland concluded an agree- ment with the United States for the purchase of agricultural surplus produce to the value of 90 million dollars with 18 months credit for payment, which Poland has not yet repaid (Bulletin Inos- tranoy Komercheskoy Informatsii (BIKI), Moscow February 25, 1964). . 1964 saw a new phenomenon: the USSR and the Peoples’ Democracies began in a generalised way to purchase licences and patents. On July 1, 1965, the USSR shook the world by adhering to the international convention on patents. Czechoslova- kia and East Germany, being more industrialised, are the larger purchasers of licences. According to the ‘Frankfurter Allgemeine Zeitung’ (April, 1965), in 1964 Eastern Germany sold licences to Western Germany for 199 million DM but bought others from her for 541 million. Balkow, East German minister for foreign trade, stated that his country had concluded 400 contracts of purchase or sale of licences with capitalist firms including 100 West German firms. These patents are expen- sive: for example, the East German republic bought a patent for the manufacture of synthetic fibre from the USA for the sum of 12 million dollars, a purchase financed by European and Japanese banks. Given the fact that she can only settle these massive purchases in currency or in gold, the USSR has become the permanent supplier of gold to the world market. As in many others, it is impossible to obtain statistics established by the Stalinists in this field. According to Ezhednevnii Informatsionnii Bulletin (EIB, published in Munich, August 17, 1965), the development of extraction, reserve and sales of Soviet gold was as follows (in millions of dollars, calculated on the basis that 1 quintal of gold is worth 1,125.276 dollars): Extracted Sold Reserve 1961 200 315 2,400 1962 210 215 2,395 1963 210 560 2,045 1964 220 450 1,815 1965 240 500 1,600 (Provisional estimate) According to the annual report of Samuel Montagu & Co. (March, 1965), sales of Soviet gold in 1964 reached 283.5 tons for 120 million dollars. These deliveries of gold constitute a sure and per- manent factor in the maintenance of the price of gold on the world market and, consequently, a support for the capitalist monetary system. The development of the foreign trade of the USSR and the Peoples’ Democracies unfolds generally so as to take in the entire economy. In this field, we observe that the Stalinist bureaucrats act so as to revise their ‘theory’. For them the role and function of foreign trade have become the key factor of the economy. Before the Stalinis*

[p027] 22 Party congress (June, 1964) the Polish press con- ducted a whole campaign on the question of economic problems, arguing that the key sector was foreign trade. Trompchinsky, Polish minister of foreign trade, stated that the principal task was to develop foreign trade, the rate of growth of which with capitalist countries was 14 per cent in 1964 (BIKI, Moscow, July 31, 1964). The Hungarian delegate to the East-West Economic Round Table (held in Belgrade, June 5/7, 1965) underlined the fact that the Hungarian national revenue equalled one tenth of France’s, but that the part played by foreign trade in this revenue was 2.5 times greater than in France. And after specifying that the part played by exchanges with capitalist countries constituted 10 per cent (!) of the national revenue, he pathetically cried: ‘The existence of normal conditions in international com- merce allowing participation . .. in the inter- national division of labour is, for us, a vital question.” Czechoslovakian foreign trade under- went an increase of 8.3 per cent in 1964; 4.6 per cent for exports (from 17.8 million crowns to 18.5 million) and 12.4 per cent for imports (from 15.5 million crowns to 17.4 million). (BIKI, Moscow, July 15, 1965). The New York Times has estimated (December 7, 1963) that the annual value of East- West exchanges now reaches several hundred million dollars. This is the table of the develop- ment of foreign trade for four ‘socialist’ countries, published in BIKI, March 25, 1965 (in thousand millions of roubles). 1960 1961 1962 1963 1964 All ‘socialist’ countries 30.9 31.9 35.0 37.4 40.4 Exports 148 154 17.2 183 19.8 Imports 16.1 165 178 191 20.6 USSR, total 10.0 105 121 128 . — Exports 5.0 5.3 6.3 6.5 — Imports 5.0 5.2 5.8 63 -— East Germany, total 3.8 3.9 4.2 4.4 4.6 Exports 1.9 2.0 2.1 2.4 2.6 Imports 1.9 1.9 2.1 2.0 2.1 Czechoslovakia, total 3.3 3.6 3.7 41 4.6 Exports 1.7 1.8 1.9 2.2 2.4 Imports 1.6 1.8 1.8 1.9 2.2 Poland, total 2.4 2.8 3.0 3.2 3.7 Exports 1.1 13 861.4 1.5 1.9 Imports 13 15 1.6 1.7 1.8 We can see here a considerable annual growth, but we also notice a negative balance: 1960 1961 1962 1963 1964 USSR, E.Ger., Czech., Pol. 6.1 0 +04 +0.7 +08 The other ‘socialist’ countries —12 —11 —10 —15 —1.6 All of themtogether —13 —11 —0.6 —0.8 —0.8 FOURTH INTERNATIONAL, JANUARY 1966 The Meaning of ‘Peaceful Competition’ On the basis of these statistics, one has to declare that the trade balance is negative for all the ‘socialist’ countries together. The Stalinists, however, would have us believe that this negative balance does not affect the USSR, East Germany and Czechoslovakia. It is unlikely that the other countries on their own bear the deficit of the general trade balance, and we shall see that in reality this is not the case. One year later the same Soviet journal, speaking in this instance of Czechoslovakia, wrote that its trade balance with the capitalist countries came out in 1963 at +225 million crowns, but that, for 1964, this positive balance dropped to 59 million. The journal added that the balance was favourable to the ‘socialist’ countries, but unfavourable for the UK (—244 million), Canada (—349 million), Austria (—11 million), Italy (—12 million) and Australia (—98 million). (BIKI, Moscow, July 15, 1965). In 1964, Polish foreign trade was characterised by a decrease in imports from the ‘socialist’ countries and an increase of 17.5 per cent in imports from the capitalist countries, the value of which for the first time exceeded 3,000 million exchange-zlotys. The exchange deficit with the United States and Canada reached the sum of 215 million zlotys in 1963, and rose to 381.3 million in 1964. (Handel Zagraniczny, Warsaw, no. 3, 1965.) A government communiqué from Warsaw on January 3, 1965 stated that, despite all this, the trade balance in 1964 was positive for the first time in years, thanks to brutal reduction of imports. However, the com- muniqué added: ‘Since it is not possible to reduce imports, as in 1964, the foreign trade situation cannot be considered as satisfactory.’ Bulgaria’s trade balance with the eight capitalist countries of EFTA, for example, also shows a nega- tive balance (in millions of Bulgarian levas): 1960 1962 1963 1964 Exports 30.512 27.846 32.580 52.804 Imports 29.111 47.962 65.096 60.410 Balance +1401 —20.116 —32.516 —7.606 (Vnchna Trgoviia, Sofia, No. 8, 1965.) According to the magazine Kiilkereskedelem (Budapest, No. 4, 1965), Hungary is deeply in deficit towards the capitalist countries, particularly those of the Common Market. (See also BIKI, September 4, 1965.) This is not really surprising, for, whilst in 1955 imported machinery constituted 7.5 per cent of total investments in Hungary, during the years 1961-1965 this proportion rose to 50 per cent (Figyelé, Budapest, July 14, 1965). Rumania had a negative balance of 85 million DM with Western Germany in 1964, and its trade balance

[p028] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 23 with the other capitalist countries also tends towards deficit. Such is the general situation with regard to the Peoples’ Democracies. Only the USSR seems to escape from this tendency, its trade balance show- ing a general equilibrium while from year to year undergoing sharp variations, depending on the massive purchases. So we come to the problem of an East-West trade characterised by a particular growth. The greater part of the deliveries from the capitalist world consists of equipment, machinery and in- dustrial consumer goods, as against primary materials, agricultural and food produce and semi- finished products. This phenomenon is particularly unfavourable to the so-called socialist countries, as the East-West Economic Round Table in Belgrade adequately demonstrated. There, the Polish delegate developed the point of view which is today generally accepted by the Stalinist bureau- crats. According to this delegate, the Peoples’ Democracies and the USSR, having become indus- trial countries and having developed their pro- ductive forces, a new international division of labour was being established. However, the forms and structure of East-West exchanges had stayed the same as they had been when these countries had not yet reached the degree of their present, modern industrialisation. ‘The fact is,’ the Polish delegate considered, ‘that the majority of the problems . . . spring from the difficulties encountered by the economies of Eastern Europe in obtaining an assurance from the West as to the continuation of their exports and the possibility of expanding these.’ Because ‘. . . the problem of financing a growing amount .. . of imports in Eastern Europe constitutes the key problem of East-West trade.’ And that is why ‘... a certain place must be made for exports from Eastern Europe designed to repay the credit given by Western Europe.’ The absence of such a guarantee, said the Polish delegate as he continued his pleadings, ‘. . . for a planned economy means the practical impossibility of adapting its production to the exact needs of a given Western market.’ We have quoted this speech at length because it sets out so well the Stalinists’ fundamental prob- lems and at the same time expresses their position. First of all there is full recognition of the fact and of the importance of the international division of labour, an importance redoubled by the indus- trial development of the USSR and Eastern Europe. That is, concretely, open admission of the fact that these countries have a need, an ever-growing need, for the assistance of the world market. But for the Stalinist bureaucracy, recognition of this fact raises in no way the necessity of overthrowing capitalism but rather the need to re-cast the international division of labour . . . with capitalism. Conse- quently, since the bourgeoisie ‘causes difficulties’ (the deficient trade balances!) they ask it to be nice and gallant towards these poor countries and to buy their products. The meaning of the Polish delegate’s intervention was: ‘Guarantee us a stable market, or otherwise we’ll go bankrupt.’ This is no joke. The Stalinist bureaucracy goes begging to the bourgeoisie, specifying its demand: the Western countries must import more from Eastern Europe in general and far more industrial goods in particular. The bureaucracy’s spokesmen invariably present the same demand, most often in this sickening form of pleading. The Hungarian delegate to the Round Table even invoked the example of Great Britain, which widely liberalised her import quotas from Eastern countries; it was however a great pity, he added idiotically, that she had taxed the imports at 15 per cent, and then 10 per cent, cancelling the effects of this liberali- sation. Characteristically, in this zoological garden of bureaucrats, no one apparently noticed this on-the-spot execution, involuntary but unrelenting, of the plea for a guaranteed market! Concessions to Imperialism For the international bourgeoisie is opposed to serving the degenerated workers’ states and the Peoples’ Democracies: by its very mature it is unable to control its ‘own’ market; and in any case it consciously opposes such a policy. The first aspect is not only shown in the case of the liberalisation of British imports when, through the extra tax on imports, the vital interests of the British bourgeoisie prevailed. It is far more significant in the contrast between the Soviet policy towards world trade and the reality of that trade. In the course of the preparations for the world conference on trade in Geneva, in 1964, Patolichev, Soviet minister for foreign trade, defined the aims of the Soviet bureaucracy in an interview given to Vnechnyaya Torgovlya (Moscow, No. 2, 1964). According to him, an international trade organisa- tion must be set up, taking in all the others, like GATT, the FAO, the international agreements on primary materials, regional commissions of economies, etc. His argument was—and make sure we listen to this properly—that GATT is not repre- sentative enough and for this reason (!) it cannot fight effectively against inauspicious regroupments such as the Common Market. It would be difficult to imagine a more idealist ‘argument’ and position.

[p029] 24 For even if the internatidiiai DUULyeUISIe Were at all likely to grant a favourable conclusion to the Soviet demand—a hypothesis absolutely ruled out under existing circumstances—it would still be incapable of resolving its own contradictions, Common Market included. Unless, of course, one assumes (like Kautsky) the existence of some ultra-imperialism. But the bureaucrats are in- corrigible. The economic weekly of the Central Committee of the Soviet Communist Party, Ekonomicheskaya Gazeta (March 28, 1964), speaking of the international trade conference at Geneva, wrote: ‘. . . the simple fact of the calling of this conference shows the pointlessness of discrimina- tions against the socialist countries’. As everyone knows, it showed nothing at all, unless it was the Opposite. Now, this position is all the more false since the world bourgeoisie governs ‘its con- tribution to the building of socialism’ in con- formity with the ‘degree of maturity’ of the Eastern countries, that is to say with the degree of compromise of the Stalinist bureaucracy. It has inaugurated restrictive quotas on imports and exports relative to these countries, as well as conditions and norms of credit. The position and practice in relation to these problems, of the bureaucrats, of the bourgeoisie as a whole, and then of its different sections, remain the important index of the ‘degree of maturity’ of the Stalinists. An ever-growing section of the bourgeoisie is prepared to grant long-term credits exceeding the five-year limit, because the bureaucracy is showing ‘en- couraging’ signs. The bureaucracy feels a growing need for it. The Hungarian delegate to the Round Table in Belgrade stated that 50 per cent of Hungarian exports to the countries of OECD was made up of agricultural and food produce, but that the pre- ferential tariffs of the Common Market caused them a considerable loss. Given that, owing to the restrictions, finished and semi-finished products constituted only 15 per cent and machines only 4 per cent of these exports, the structure of the exchanges was unfavourable. His Polish colleague also argued in favour of wider possibilities for exporting, for ‘. . . in 1964, imports constituted almost 17 per cent of the value of the national revenue. The majority of our economists think that this percentage is still too weak.’ Consequently, the goodwill of the bourgeoisie is much sought after. This is demonstrated in, amongst other things, the payment of compen- sation for nationalized property. At the end of May 1964 a Czech government decree stipulated that all demands for compensation should be pre- FOURTH INTERNATIONAL, JANUARY 1966 sented w tue Commission on Foreign Compensa- tion created for this purpose, up to November 30, 1964. In 1954, Czechoslovakia abandoned negotiations about a British demand for £20 million sterling, considering the sum to be too high. But she has been obliged to resume them, since one of the conditions of British long-term credit is payment of compensation. On May 14, 1965 an agreement was made between France and Hungary on the indemnification of nationalized goods: Hungary is to pay 1,150,000 francs by July 15, 1966. (Official Monitor of International Com- merce (MOCI), Paris, July 24, 1965.) At present we do not possess any other exact facts about the redemptions. But if it is clear that the trade balance of these countries is deficient in respect of the capitalist countries, their balance of payments must be far worse. The trade balances are now increasingly published, with a certain amount of make-up from the bureaucrats. It is impossible to conceal their negative showing. But as far as the balances of payments are concerned, the Stalinists make sure not to publish them. They must be very unfavourable to the ‘socialist’ coun- tries in general and to the Peoples’ Democracies in particular, in their relationship with the indus- trial capitalist countries. Poland has gone further than the other countries because, following Yugoslavia, she presented her request to join GATT, as a member with full rights. As a counterpart the Polish bureaucrats proposed authorisation for capitalist companies to set up offices to represent them in Poland and to advertise there. However, at the same time a duel is going on between world imperialism and the Stalinist bureaucracy. The latter yields step by step to ensure the concurrence of the international division of labour, which today it recognises. It has to make concessions, the principal of which is that in the economic reorientation these countries have become tributary to and more and more indebted to the capitalist world market. But the bureau- cracy does not want to make the leap to a complete capitulation. That is why it tries with all its strength to counterbalance imperialist pressure. One of the economic methods is the pursuit of ‘strong’ Western currencies. Anything goes; no method, however dirty and low, is neglected in order order to obtain such currency. Begin, like a usurer from the Middle Ages, by taxing (generally 30-50 per cent above the real tax) transfers of money by private individuals. Con- tinue by sending delegates to scientific congresses and granting them only an inadequate amount of

[p030] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 25 currency. This hunt for currency leads to pheno- mena which are contradictory but perfectly com- plementary: the chemist sent to a congress in a Western capital, eating pickles in his hotel room, ‘harmonises’ with the night clubs of Prague and Budapest wide open to bourgeois tourists bear- ing currency. The money of a young emigré worker harshly taxed and ridiculously reduced before it is received by his mother, complements our knowledge about the gifts offered to the capi- talists in the form of compensation. These (for some!) ‘secondary’ aspects further emphasise the importance the Stalinists have attached to tourism and the efforts they expend to develop it. Mention should also be made of the varying and arbitrary rates of exchange, depending on the country and on whether it is a question of a native or a foreign tourist. Evidence shows that on such fertile ground all kinds of parasitism, speculation and contra- band mushroom, against which the bureaucracy fights as fervently as it encourages ‘honest private initiative’ in the tourist industry. (Hotels, restaurants, garages, laying out of beaches, etc.) We shall return later to the social problems, while simply pointing out that tourism is an aspect, more or less secondary, of direct liaison between im- perialist pressure and internal social problems. Danger of Capitalist Penetration But before we continue our examination, it is necessary to clear up a misunderstanding. We do not wish in any way to present trade by the USSR and the Peoples’ Democracies with capi- talist countries as a bad thing in itself. However, if we recapitulate what we have said up to now, it follows that trade is not a simple and innocent act of exchanging products. After the Second World War, we witnessed rapid progress in technique and, on the basis of this, an economic re-orientation taking the international division of labour to a higher stage. The earlier economic disproportions of the USSR (and of the Peoples’ Democracies) were worsened, and at the same time new ones developed. The sign of this worsening was that the economic lag was doubled, almost at one fell swoop. The USSR and the Peoples’ Democracies are unable to over- come this lag by themselves, because in reality it is but the reflection of disproportions which can only be evened out in the inter- national division of labour. So, in this sense, the development of the international division of labour and the planned economies’ own progress have made these countries more dependent on the world market. The considerable growth of their trade among themselves and with capitalist countries bears witness to this. In the national revenue of the USSR and the Peoples’ Democracies, the part played by foreign trade increases ceaselessly, some- times giddily. In this trade, the proportion of exchanges with capitalist countries also increases ceaselessly. But the structure of the latter makes them proportionally far more important than their numerical percentage. The increase of this com- merce signifies that the direct influence of the world market over the economy of these countries is becoming greater and greater. The development of the exchanges and the influence of the world market are unfavourable to the USSR and the Peoples’ Democracies in the sense that the world market is imperialist; it rules this commerce according to its needs, in no way bothered by the Stalinist parties or movements. These needs can be formulated in the following manner: in order to resolve its own crisis, which is deepening, im- perialism experiences the urgent necessity to extend its markets in the USSR and the Peoples’ Demo- cracies. But this ‘economic’ need is subordinated to the complete capitulation of the Stalinist bureaucracy. This is why the bourgeoisie has a rope around the neck of the bureaucracy. How? Principally, by ruling over the degree of partic- pation of these countries in the international divi- sion of labour, depending on the real possibilities _for its own infiltration behind the ‘iron curtain’. And the bureaucracy cannot manage to counter- balance this pressure, although it may try to resist. At the end of 1964, its retreat was demonstrated in a particularly dangerous form. The representa- tive of the German monopoly Krupp negotiated with Poland possible collaboration in production within the framework of common enterprises. According to the agreement that was reached for the construction of a factory for lorries and agricul- _ tural machinery, Poland would supply the land, workers and employees and would concern itself with the sale of the products, while Krupp would provide the plans, equipment and installations and also specialists. A good while after this spectacular piece of news became known, the Polish Stalinists denied it. On February 21, 1965 Tribuna Ludu wrote: “The Western press lets it be understood that Krupp has concluded an agreement with Poland containing nothing less than the building of factories in Poland which would be the property of West German capital. All those who believe these allegations to be true have lost all sense of reality, for the principle of the socialist ownership of the means of production is at the basis of the

[p031] 26 social system of Poland.’ The paper added that Poland was co-operating with different countries in certain branches of production in order to stimulate technical progress and trade. The denial aimed to refute the hypothesis of capitalist owner- ship of the factory to be built, a hypothesis which had never been advanced. Reading it, one thinks inevitably of the political dictum: two denials equal confirmation. For, at the beginning of 1965, Beitz, the Krupp representative, also visited Hungary and then Rumania, negotiating on the construction of common enterprises. But unlike the Polish example, nothing precise filtered out into daylight, except a few vague declarations. Nevertheless, a few months later, Krupp came by some publicity in the Hungarian economic weekly Figyelé, which, in its eloquence, deserves to be quoted: ‘Neigh- bours are complementary and their existences ave interdependent. It would therefore appear desir- able that they should co-operate, that they should tie between them links of friendship and that they should draw up a mutual project from this attitude. To live together and co-operate is better than to simply exist side by side. The world has become small. All the world’s nations are tributary to peaceful co-existence and to constructive work carried out in common. The peoples of Europe live in very close neighbourhood. The countries of our continent are linked to one another by trade, tourism and cultural exchanges. We have as much to give one another as we have to give to others. The industries of the Hungarian Peoples’ Republic and of the Federal German Republic can make a great contribution, through close co-operation, to the building of a peaceful future for the whole world.’ Sing on, raven!—you have the most beautiful voice in the world! . . —And the ravens keep their beaks half-open.... At the beginning of June 1965, a delegation of leaders of Rheinische Stahlwerke went to Budapest to negotiate over industrial co-operation and the exchange of licences ‘. . . as well as about mutual exporting to the third market, in the first place, to the African countries and to the Far East... .’ (Nepszabadsag, Budapest, June 6, 1965). This is the generally widespread form: exporting to the market in the ‘third world’. There already exists close co-operation between the Austrian enterprise ‘Oesterreichische Alpine Montangesellschaft’ and Hungarian industry for the co-production of mechanical cutters for mines. Documentation and technical assistance are provided by Hungary and the Austrian firm makes the machines, assured of an exclusive sale on the Western European market. FOURTH INTERNATIONAL, JANUARY 1966 As a ‘third world’ country, Morocco has already ordered 100 mechanical cutters for its phosphate mines. (Figyel6, Budapest, May 5, 1965). As for the Polish Stalinists, they fell in step with their Hungarian colleagues. On July 14, 1965, a Polish-Italian agreement was signed concerning economic and technical co-operation in the field of electrical power, building, transport and especially agriculture (BIKI, Moscow, August 3, 1965). On the same day, the Poles signed another agreement with France for ‘ the joint construction of complete industrial installations destined for third countries . . .’; other agreements concerned collaboration between engineering enterprises, the exchange of scientific information, and mutual terms of education of technical cadres. (MOCTI, Paris, August 18, 1965). During a stay in Warsaw, the Italian minister of foreign trade stated to the Polish press (July 14, 1965) that negotiations were under way about the possibility of production, under licence, of the Fiat 600 and the Fiat 1300 in the Zeran factories in Warsaw. If the agreement is finalised, starting from 1970 Poland will produce 50,000 Fiats per year. Even the USSR is getting into the running: there Fiat put negotiations under way which resulted, on July 1, 1965, in an agree- ment being reached in the field of car production. This agreement plans for Italian assistance in the co-ordination of the car industry and also for the common production of 400,000 cars per year. (Le Courrier, Paris, July 29, 1965). Quite naturally, no specifications or details have been given concerning agreements for co- operation in production. We would like to know the niceties in order to judge, for instance, to what extent these agreements with Fiat signify a com- petition for the Soviet and Polish car industries aiming eventually to colonise these countries’ car markets. Such silence from the bureaucrats’ quarter is more than suspect. There is a whole series of such collaborations, of which we have mentioned only a tiny minority. What are their financial clauses, to determine the share of the profits? How do they set about establishing prices on the home as well as the foreign markets? A whole series of questions is left unanswered. What about information from the Stalinist bureaucrats? Here is a good example: at the beginning of May 1965, a conference took place in Bonn between economists from the Peoples’ Democracies and West German capitalists. The Hungarian delegate stressed, amongst other things, the possibility of agreements on immediate co-operation in produc- tion. (The Times, London, May 8, 1965). In the May 7, 1965, edition of Nepszabadsag (Budapest)

[p032] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ ; 27 in which the conference was reported, there was no reference to the interventions of the ‘socialist’ delegates at all. On the other hand, the paper loudly echoed the criticism of the West German government by the German capitalists, demanding the liberalisation of East-West trade. The Case of Yugoslavia In order to emphasise the gravity of the loading of the Peoples’ Democracies’ trade balance to- wards the industrial capitalist countries, we quote the case of Yugoslavia, whose situation fore- shadows, to a certain extent, that of the Peoples’ Democracies. The proportion of foreign trade in Yugoslavia’s national revenue has increased rapidly: 18 per cent in 1959 and 25 per cent in 1963. Parallel to this, the debt increased (in millions of dollars) as follows: 1960 . - 386 1962 . - 778 1963 . - 910 We should point out that in this figure of 910 million dollars’ debt, indemnities represented 14 million dollars and pre-war (!) debts 9 millions. On the other hand, it does not include 624 million dollars, the cost of U.S. agricultural deliveries (July 1963) which the USA can use for its pur- chases in Yugoslavia. (Dengi i Kredit, Moscow, No. 12, 1964). We should also add that, at the end of January 1963, the Yugoslav General Office of Statistics announced that the value of imports had increased to 396.4 million dinars in 1964 as against 316.9 million in 1963, and the balance of payments deficit from 79.8 thousand million dinars to 127.9 thousand million, respectively. Now, the ‘socialist’ countries have to cover their imports by exports. In order to avoid the bank- ruptcy clearly represented by the recent measures of Yugoslavia, they want to develop exports at all costs. In his report to the Central Committee, Gomulka specified that the next five year plan (1966-1970) must increase exports-60 per cent. In Hungary, enterprises are entitled to supplementary credit for their purchases aboad if they guarantee that with the aid of the imported equipment their exports will exceed the value of these purchases by 12 per cent. (Ekonomicheskaya Gazeta, Moscow, August 11, 1965.) This practice is general in the so-called socialist countries. One can understand better the pleadings and attacks by the bureau- crats against the barrier put up by the world bour- geoisie restraining these exports. To out-manoeuvre it, they carefully go into every possibility of in- creasing exports. This is why they are developing with all haste secondary industrial branches, especially with the aid of the artisan co-operatives, such as sewing, toy industries, manufacture of musical instruments, etc. The growth of this commercial activity is re- flected in the establishment and progress of the banks. Mentioning only banks such as the ‘Moscow Narodni Bank’ in London set up for the financial operations of East-West trade, and its large offshoot in Beirut opened in October 1964, we shall deal with the specialised banks founded at home in order to centralise the whole financial activity con- cerning foreign trade. In fact, following the USSR, Poland, Hungary and Czechoslovakia, on April 1, 1964, Bulgaria also opened a bank of foreign trade, detached from the National Bank. These banks carry out all payment operations with foreign countries, and all the contracts of the National Bank with foreign countries (‘socialist’ and capi- talist) have been transferred to them. In Czechoslo- vakia, 35 shareholders, representatives of state organisations for foreign trade and enterprises work- ing particularly for exports, founded this bank with 500 million crowns. Its task is to serve as an intermediary between the foreign trade organi- sations and the enterprises, to advance bank credits and the payment of premiums in the form of credit for purchases abroad. (Ekonomicheskaya Gazeta, Moscow, June 16, 1965.) For the moment, we shall not make a complete analysis of the significance of these banks (that belongs to the problems of internal social relations). We would only point out the importance the bureaucrats attach to foreign trade and, more especially, to exports. But the desire to rid themselves through exports of the dangerous burden of the increase in imports from the capitalist countries, is a utopian attitude, worthy of the Stalinists. Not only because the volume and structure of their exports are limited by the bourgeoisie while the bureaucrats have need of imports, but especially because, whatever else may happen, the role of the world market is in- creasing in their economy. And that is the deci- sive question. The increase of this role, the enlarged liaison of the planned economies with the capitalist world market, in fact determines their whole economic reform, and our account shows this. This liaison is established first of all through prices. As far as exports are concerned, because of the low level of productivity, production costs are clearly higher than world prices. Add to this their bad quality and we can imagine the difficulties involved. The first is the gap between export (and import) prices and prices on the home market. For exports, they have to fight sale prices at the world-market level, in the majority of cases below the net cost. As Gligorov, Yugoslav finance minister, declared at

[p033] 28 the time of the devaluation of the dinar, Yugo- slavia paid for its imports at the rate of 800-900 dinars to the dollar and sold for export at the rate of 1,055 dinars to the dollar, the difference being paid for by subsidies. (MOCI, Paris, August 4, 1965.) The general practice was also explained by the Hungarian delegate to the Belgrade Round Table. Given that in a planned economy, prices were fixed by the state, he said, they could not follow immediately any changes in world prices. There exists therefore an auxiliary system of prices: starting from world prices, a rate of compensation and prior deduction is established between home prices and export prices. If it is impossible to improve upon an export price, the special Com- mission decides to stop its manufacture. (!) To this tension in prices is added the gap between the real and fluctuating prices of imported products and the fixed internal prices. The increase of the role of foreign trade amplifies the pressure of world prices on internal prices, in the sense of a continual overturn of the state system of prices. Mandel revises Marx But let us not, in the course of our investigations, forget Mandel, the man who ‘forgets’ the world market. He writes: ‘In the epoch of transition from capitalism to socialism it is the relative dearth of use-values which prolongs the life of exchange values, at least in the sphere of consumer goods’. (Note on p. 2171.) Here is a true pearl of Mandel’s ‘scientific’ wisdom. It even includes the automatic mental reservations: ‘ . at least in the sphere of con- sumer goods’, which one can understand all the less since it has no meaning. And then.... And then!—he makes a gross revision of Marx. Between use-value and exchange-value there is no such cause-and-effect link such as that referred to by Mandel. The first is of a natural chargeter, the second of a social character, appearing only when the products are exchanged as merchandise. As if he had foreseen Mandel, Marx wrote: “The quantity of these products can change nothing in their quality of being commodities or representing an exchange value or having a definite price. Whether a tree is large or small it is a tree. Whether we exchange iron for other products in ounces or in hundredweights, does this make any difference in its character as commodity, as exchange value?’ (Marx, ‘Wage Labour and Capital’, Foreign Languages Publishing House 1954 p. 46—emphasis in original.) If the exchange values have a ‘prolonged life’, it is not the fault of the poor use-values which Mandel so unjustly accuses. Exchange value is determined by the labour socially necessary for its production, but FOURTH INTERNATIONAL, JANUARY 1966 labour is not the cause of its existence. As Marx wrote: ‘Useful labour becomes . . . a more or less abundant source of products, in proportion to the rise or fall of its productiveness. On the other hand, no change in this productiveness affects the labour represented by value. ... The same change in productive power, which increases the fruitful- ness of labour, and, in consequence, the quantity of use-values produced by that labour, will diminish the total value of this increased quantity of use- values, provided such change shorten the total labour-time necessary for their production... .’ (Marx, Capital, Vol. I, pp. 13-14, Allen and Unwin edition.) This flows from the double character of labour: the latter produces a varied quantity of use-values which, under certain social conditions, and solely in this case, are bearers of exchange values. These conditions are those of commodity production. The products of labour become commodities indepen- dently of their quantity. It is true that their elimi- nation will only be possible on the basis of abundance of use-values. However, this abundance will not determine the elimination; it will only condition it. Why this distinction? Is it not true that under the conditions of the definitive victory of world revolution the transitional society of humanity will replace the production of commodities by that of products in proportion as it ensures abun- dance? Why yes. All that is true. The distinction made by Marx however takes on today its whole sig- nificance since there exists in the USSR and the Peoples’ Democracies a transitional society. The question is to know why production of com- modities exists in the USSR. According to Mandel the reason is the relative dearth of products. But according to Marx, use-values become commodities because they are the products of independent pri-. vate labour, i.e., the social production of producers isolated by the division of labour is realised only in the exchange of the products, which have an exchange value because they are products of private labour. Private, because in this sense they are determined by the nature of ownership which, in its turn, defines their relationships to the pro- ducts. In examining social production in the USSR and the Peoples’ Democracies, several considera- tions must be borne in mind. Firstly, that this production also takes place in a division of labour. But the distribution of the products still cannot replace their exchange, for even this national division of labour is based upon different kinds of ownership —state, co-operative and private. Secondly, that this national division of labour is linked to the world market based on the production of com- modities. And this is the most important factor, +

[p034] MARXIST POLITICAL ECONOMY AND THE ‘SOCIALIST WORLD’ 29 for, despite the relative isolation of the USSR, its cycle of social production must always take in a fraction of the world market, otherwise it would be disturbed. Thus, while maintaining the isolation, these disturbances grow and become more violent in proportion as production and the national divi- sion of labour develop. But. participation by the USSR and the Peoples’ Democracies in the interna- tional division of labour can only be made through exchange. That means that the products exchanged, products of which the ‘national’ cycle has an in- creasing need ‘for its health’, participate in the accomplishment of this cycle as exchange values. This takes place independently of the fact that anyone’s intentions are opposed to it. The relations between producers in the USSR and the Peoples’ Democracies is brought about then on the market, in which the world market is more and more a par- ticipant, since social production increasingly demands the exchange of products manufactured in the in- ternational division of labour. And inversely, it also demands the manufacture of products destined ‘for this market. Soviet Economy and the Labour Theory of Value In reality, this is what is expressed in the grow- ing proportion of foreign trade in the national revenue. Contrary to Mandel’s assertion, it would be correct to say that the existence of exchange values is dependent on the existence of private and group ownership. But their maintenance or ‘pro- longed life’ depends far more on the world capitalist market than on the home market. That is to say that the existence of varied types of ownership and labour in the USSR and in the Peoples’ Democracies is dependent not on the dearth or abundance of products but on the influence of the world capitalist market, since the home market is subordinate to it. Why? Because we must also take into account the full significance of Marx’s analysis. Let us recall what he said: “The same change in productive power, which increases the fruitfulness of labour, and, in consequence, the quantity of use-values produced by that labour, will diminish the total value of this increased quantity of use values, provided such change shorten the total labour-time necessary for their produc- tion....’ (Ibid.) Exchange value (X) is determined by the labour (T) socially necessary for its production, together with previous labour for raw materials, machines, etc., giving the following equation: X=T+T1+T2. But in the USSR and the Peoples’ Democracies there is a supplementary element in the products determined by the difference between external and internal conditions; and this element is an exchange value. So the equation becomes the following: X=(T+x) plus (T1+x) plus (12+x), or, replacing the x by t: X=(T+t) plus (T1+t) plus (T2+t). Whence comes this difference and what is its explanation? Value is determined by the labour socially neces- sary for its production. Now, what is ‘socially necessary’ differs tangibly from what is necessary in a society limited by national frontiers. The criterion of ‘socially necessary’ is determined in the international division of labour, on the basis of the productivity of the world productive forces. In the so-called socialist countries, one allows more labour for the manufacture of products than is socially necessary, for productivity there is lower than that established internationally. In our equa- tion, the ‘t’ represents this supplement which the low productivity of the USSR and the Peoples’ Democracies has to bear in their exchange values. This means to say that exchange value would not disappear in the USSR and in the Peoples’ Democracies even if one managed to completely liquidate private and group property and to bring about complete industrialisation—a hypothesis which is excluded because, from the fact of the growing participation of the exchange values of the world market, the process is exactly the opposite. . So we have arrived, this time by way of the theory of value, at the same point as we reached before by way of the problems of foreign trade. That is, we realise that world prices exert pressure on home prices and the more their influence in- creases, the more they disrupt the system of home prices, forcing them to conform to reality. And since, in order to ensure the greatest quantity of . products and the greatest degree of industrialisa- tion, the USSR is integrating itself more closely into the international division of labour, this in- fluence is strengthened. So, in reality, exactly the opposite of what Mandel said is actually happening. The real process is that the more use-values there are, the more solid become the exchange values. Not because the first determine the second, but because their growth is linked to the strengthening of the role of the foreign market and, thereby, of the home market. Marx’s genius lies, amongst other things, in the fact that by proceeding from the theory of value alone, one succeeds in posing all the fundamental problems of the USSR and, in this way, in un- masking the revisionists. Nor is it by accident that the latter sooner or later end up by smashing their heads against the Marxist theory of value. (To be concluded.)

[p035] THE FIGHT FOR MARXISM An introduction