The Economics of 'Socialism in One Country'

[p032] The economics of ‘Socialism in one counity” by Tom Kemp We print below notes on a lecture on the above subject delivered on the occasion of the 50th Annniversary celebra- tions of the October Revolution, held at the Assembly Rooms, The Town Hall, St. Pancras, London, on November 5, 1967. SOVIET ECONOMIC development in the half century since the Revolution of October has to be seen as a profoundly distorted and contradictory his- torical process in which are expressed the critical problems of the epoch. When the Bolsheviks took power they assumed that their success would be followed more or less rapidly by the workers of the more advanced countries. This would have enabled the planned advance to socialism to take place by bringing to- gether the highly industrialized countries with the mainly agrarian regions. Although it was not un- expected that imperialism should break at its weakest link it was not imagined that a single workers’ state would remain isolated for a whole generation and without the overthrow of capital- ism in the advanced countries. Within a year or so the land and most of industry and trade had been nationalized and a monopoly of foreign trade established. The first years of the Revolution, in the aftermath of war and with a bitter civil war raging, saw the economy organized on the lines of a beleaguered fortress. War Communism was based upon the need to hold out until the revolutionary wave advanced into the industrial countries. When that wave receded it became necessary to take steps to revive industry, re-establish links between the town and the countryside and con- sider on what lines the economy should be de- veloped for a number of years ahead. The New Economic Policy adopted in 1920 made conces- sions to private traders and permitted the accumulation of capital and the employment of wage labour by petty capitalists, mainly in agri- culture and in trade. Industry remained national- ized but more scope was left to the ‘trusts’ into which it was divided to work out their own poli- cies. The era of planning, properly speaking, did not begin until 1928. The New Economic Policy The period of NEP saw a vigorous debate on the subject of economic policy. It concerned such central issues as how to find the resources to make possible industrial investment, what tempo of growth should be aimed at, what should be done about peasant farming and the encouragement of petty capitalism in agriculture which had followed upon the NEP. The dominant faction had already determined its general strategy, politically speak- ing, in the policy of ‘Socialism in One Country’, by 1924. The choice of this policy and its triumph over the alternative policy put forward by the Left Opposition did not necessarily commit its ad- herents to a particular economic course. Just as this policy itself represented a revision of Marx- ism arrived at empirically to advance the interests of the Stalinist bureaucracy, so its economic measures involved the same method. Stalin could thus appear to acquiesce in the Bukharin line of ‘socialism at a snail’s pace’ at one moment and, equally apparently, adopt some of the measures proposed by the Opposition at another. Principle was not involved; it was a question of adapting to circumstances. These cir- cumstances were set partly by the conditions which prevailed inside Russia, particularly the growing importance of the kulaks and ths Nepmen, partly 27

[p033] by the continued isolation of Russia in a hostile world with a still weak and backward economy. These dangers, internal and external, were not, of course, merely accidental. They had been made more acute by the practice of ‘Socialism in One Country’, as Trotsky and the Opposition had per- sistently warned, and by the growth of bureau- cracy in Russia. . Policies of the Left Opposition The Opposition presented a considered alterna- tive to the political course and the economic temporizing of the leadership which was based upon a consistent application of Marxism. But it was impossible to separate the economic part of the programme from its international political perspective without doing violence to it. The Opposition called for more rapid industriali- zation, the establishment of national planning, moves towards the substitution of large collective farms for small-scale peasant holdings and so on. It put forward concrete proposals, backed up by worked-out theoretical considerations, to be carried out as part of a general change in policy for the Soviet state and the Comintern. The Stalinist alternative, as actually followed, was an empirical response. Superficially it included some of the Opposition’s proposals but in ways which made them a dangerous caricature. Indus- trialization plans were to be carried through at an entirely unrealistic pace. The drive against the kulaks assumed the character of a military opera- tion. Immense hardships were inflicted on the working class. While admittedly considerable en- thusiasm was generated for the Five Year Plans, this period also saw the massive growth of the bureaucracy and a reign of terror directed against the Oppositionists and real or imaginary critics and enemies of the regime in an atmosphere of veritable hysteria. Historic ‘inevitability’ Yes, some will say, but all this was historically necessary. It was the only way in which a great modern industry could have been built in back- ward Russia. The liquidation of the kulaks and the oppression of many other peasants who were not kulaks at all was the only way in which agri- culture could be transformed and a surplus col- lected to feed the workers who were building the new power plants and factories. Living standards had to be held down, there was bound to be suf- fering and hardship; even the police terror was part of the price which had to be paid to indus- trialize a backward country. 28 With some apologies for the way in which Stalin carried things too far, this remains the staple theme of the supporters of the bureaucracy to this day. It is echoed by quite a few bourgeois historians and economists anxious as ever to worship the accomplished fact. Russia did industrialize and withstand the on- slaught of the most highly advanced industrial state in Europe in 1941, contrary to many predic- tions in the West. On the basis laid by the Plans in the 1930s the second largest industry in the world has been built in once-backward Russia. Russia has produced scientific and technological achievements second to none. In all this there is a great deal of truth, but some important qualifications have to be added before the picture is really completed. We have already seen that an alternative economic policy had been put forward for a number of years before _1928. In the sharp about-turn of that year Stalin merely lifted parts of this policy and applied them in a distorted form. The result was that the country was brought to the brink of disaster. Stalin’s policy meanwhile led to disastrous defeats for the working class in a number of other coun- tries, thus prolonging Russia’s isolation and mak- ing it more dangerous. ‘Capitalist encirclement’ was not something which was inevitable; the policy of ‘Socialism in One Country’ made it certain. The forced-draught industrialization of the thirties was thus carried through without aid from abroad which the bour- geoisie would not and the proletariat could not give. Industrialization Industrialization in a country which had disposed of its bourgeoisie and landlords but was still pre- dominantly peasant, and which had to depend on its own resources, was something new in history. It meant, in any case, tremendous sacrifices and hardships for the masses. Stalin’s methods, as the representative of the bureaucracy, made them in- finitely harsher and more capricious than they need have been. The question was that the un- avoidable difficulties of industrialization under such conditions were intensified by the repression of all opponents and critics of the bureaucracy and the police measures which this usurping caste employed to maintain its rule and ensure its pri- vileges at a time when the majority were con- demned to a life of material penury. It is, therefore, a mistake to blame the purges on to the industrialization policy as such. It was the way in which it was carried out and the social Fourth International, February 1968

[p034] and political conflicts. generated by the rule of © the bureaucracy which were most to blame. Ad- mitting that a measure like collectivization would have encountered resistance, it is still true that Stalin’s sharp about-face, after a periiod of en- couraging the kulak, and the sudden and repres- sive manner in which it was carried out, immeasur- ably increased the social antagonisms and did almost irreparable harm to the economy. The peasants slaughtered their animals by the million and a whole apparatus of military and police repression was brought into play against them. Millions of peasants were imprisoned and de- ported, many of whom were to die in the camps. The economic results of enforced collectiviza- tion were almost entirely negative. The loss of animal ‘manure was appreciable and the chemical industry was simply not equipped to make good the loss. The much-vaunted tractors of the Plans were, to a very large extent, making up for the horses killed by the peasants and not adding to the productive forces of agriculture. In any case, the farm machinery industry was not sufficiently developed to enable the collective farms, as a whole, to start off at a higher level of technique than the small peasant holdings which they re- placed. The state was able, it is true, to scoop up the peasants’ surplus more readily than before, but the net gain was probably small. For over a quarter of a century, by official admission, farm statistics were carefully falsified to conceal the big decline in farm output and the continuing agrarian crisis which followed collectivization. Permanent Agrarian crisis Moreover, the Stalinist method did not win the peasants over to understand collectivization. Stalin himself, in fact, in a famous speech, Dizzy With Success, had to call a halt to the reckless pace of collectivization. But the damage was done. By an unhappy irony much of the food supply for the towns (apart from cereals) had to come, and still does, from the tiny dwarf holdings, the. ‘pri- vate plots’, of the collective farm peasantry. These plots, the stronghold of peasant individualism, are cultivated with a care seldom matched on the collective farm lands. Far from being solved, therefore, the agrarian problem remains an urgent one to this day. Far too high a proportion of the population of the Soviet Union is still engaged in food pro-. duction. Productivity in all branches of agricul- ture is a long way behind that in the United States. Krushchev’s boastful promises of catching up with the USA in the consumption of meat, The economics of ‘Socialism In One Country) butter, eggs and so on are still far from being realised. Instead there have, in recent years, been heavy imports of cereals from the capitalist coun- tries without which famine would have swept large areas of Russia as it did in the time of the Tsar. Bureaucratic management of the collectives helps to account for the poor response of the peasantry, whose standards of living, housing, opportunities for education, pensions and welfare benefits lagged a long way behind those of city workers. The antithesis between town and country is thus far from having been overcome. At times, too, the bureaucracy tries to play the peasants off against the working class or vice versa. But if the village remains backward the reason is to be found in the continued weaknesses of Soviet industry. In the aggregate, it is true, Soviet industry stands second in the world, if still a very long way behind the USA. However, despite the rapid rates of growth attained since planning began, in terms of productivity the gap is much wider and adverse comparisons have to be made not only with the USA but also with the other advanced capitalist countries. The structure of Soviet in- dustry reflects the fact that it has been deter- mined by the exceptionally rapid construction of the basic industries of a country which began at a low level of per capita output. In other words, a high proportion of Soviet industry incorporates the kind of technology which reflects the early stages of industrialization. This is shown both in that industries based on the most modern de- velopments in technology are under-represented and also in the fact that much of the equipment in industries such as textiles is long in the tooth. What Marx called ‘moral obsolescence’ is thus quite a problem in Soviet industry. The Liberman controversy As Trotsky pointed out, bureaucratic methods of planning which may enable the basic industries to be laid down with speed in a backward country —with all sorts of wastes and inefficiences—re- veal their weaknesses when the need is to satisfy the more sophisticated wants of the consumer. Rising purchasing power in the hands of the masses has thus resulted in the searchlight of criticism being turned on the established planning methods inherited from the Stalin era. This is the basis of the Liberman controversy of recent years. It is widely recognised that the old methods were crude and arbitrary and needed to be changed. ~ Hence a turn to the market and the reform now in progress which places greater initiative in the 29

[p035] hands of plant managements in deciding what in- puts to employ and encourages them to produce more closely to the specifications of the selling agencies. These changes, although they emphasize the profitability of the enterprise, do not mark any fundamental differences from the old planning system. As before, the general conception of the plan is determined by the bureaucracy and, as before, the plant management, as part of the bureaucracy, is responsible to its superiors in the hierarchy, not to the workers in the enterprise or to the working class as a whole. The working class plays no part in the drawing up of the plan nor does it exercise any control over the way in which it is carried out at any level. To make the enterprise more responsive to market price does not change this in any way since the composition of the market, whether for means of production or means of consumption, results also from deci- sions taken by the bureaucracy regarding wages, salaries, payments for agricultural produce and social expenditure. Profit, in the Soviet economy, does not desig- nate a category of income accruing to the owners of means of production but remains an account- ing concept, at least at present. It is not so much in this field that the bureaucracy manifests restorationist tendencies but rather in the manner in which it seeks to safeguard its privileges and pass them on to members of its families. Thus private property in housing, a tendency for here- ditary position to determine opportunities for education, higher posts in the state and the army, privileged access to goods which are in short supply, income differentials as great if not greater than those in capitalist countries, are probably much more significant. The emphasis on so-called material incentives perpetuates social differences and poses individual possessiveness against the in- terests of the collective. The soil is thus prepared for a trend back to private ownership and indi- vidual enteprise. The occasional revelation of large scale private trading, and even the existence of illicit manufacture for profit of goods otherwise unobtainable or in short supply, is an indication that there is still a breeding ground for capitalism. In agriculture, for instance, it would not take Dangerous trend in agriculture long to carve up the collective farms, with the present farm management getting the lion’s share of the land and other peasants becoming wage workers. In agriculture private plots and a private market already exist. Some peasants already ship 30 their produce long distances, even travelling by air to dispose of it in urban markets. After all, decollectivization was carried out, after 1956, in all the East European countries. In retail trade, too, it is possible to envisage a trend back to private trading. In industry it would be technic- ally more difficult to split up the vast industrial complexes and form private trusts and it would be necessary to break the opposition of the work- ers which any such moves would evoke. The introduction of foreign capital into Russia in industries which are particularly backward by comparison with the West is a development which has to be watched very closely. On the whole, it is still true that the bureau- cracy has to defend nationalized property, although by its own methods, because its own social existence is bound up with the social rela- tions established by the October Revolution. To move towards capitalism, whether on the basis of giant trusts—there is no other form of capitalism possible in an industrial country today—or as some form of ‘state capitalism’ is out of the question without a counter-revolution. There is no evidence that such a counter-revolution has taken place or is beginning. However, the an- nouncement that a counter-revolution has actu- ally taken place and has succeeded has often been made by those who mistake the counter- revolutionary role and policy of the bureaucracy as played out on the international scene for the defeat of the Soviet working class and the over- throw of the conquests of October. The basic contribution In defending the October conquests in its own way, the bureaucracy seeks primarily to safeguard its own privileges. By doing so it sets itself against revolution anywhere else and pursues the policy of ‘peaceful co-existence’, which is the com- plement of ‘Socialism in One Country’. These policies, in practice, not only lead to betrayals of the working class but they jeopardize the con- quests of the Revolution of 1917. This is the basic contradiction in the policy of the bureaucracy which leads it to a narrow national outlook, a constant endeavour to reach a permanent modus vivendi with capitalism and, in the last resort, dependence on military power, not the interna- tional working class, to defend the workers’ state. The consequences of this policy are written in the history of the workers’ movement in the last few decades: a history of lost opportunities, de- feats and confusion. Because the policies of the Fourth International, February 1968

[p036] bureaucracy have prevented the spread of revolu- tion into the advanced countries of Europe and North America its own position has been weak- ened. On the other hand, its very survival has been an outcome of the failure of the revolution to spread into these areas. More specifically, the survival of capitalism and its continued expansion has placed a great pres- sure on the Soviet economy. In the first place, this takes the form of the arms race which obliges great resources, which could otherwise have been used to raise living standards, to be devoted to means of destruction. Secondly, it still imposes on the Soviet economy a permanent and irrealiz- able goal—to catch up with and outstrip the major capitalist countries. It is permanent because as long as the Soviet Union remains economically inferior it is unable to face up to competition on the world market or to provide for its population a standard of living equal or superior to that in the advanced capitalist countries. It is irrealiz- able not primarily because the bureaucracy wastes resources or distorts the economy, but because it is impossible for the Russian economy, still in enforced isolation, and despite large under- utilized resources, to measure up, in an all-round way, to the productivity of US capitalism. From time to time the bureaucracy shows that it is clearly counting on a renewed depression in the US to assist it to catch up. It has long ceased to think in terms of an extension of the revolution to make possible the achievement of a socialist planned economy which would leave the norms of American capitalism far behind and open up a goal of abundance and real communism; it deals principally in broken promises. At the same time even the existence of the bureaucracy does not prevent the nationalizea property relations and planned economy from having to their credit enormous achievements. A gigantic programme of industrialization has been carried through at an unprecedented tempo which has lifted Russia to the rank of second industrial power in the world. A country which was once the tributary of foreign capitalism, without an advanced engineering or machine- making industry of its own, now leads the way in many fields. A country of ignorant moujiks has been transformed into a land of educated prole- tarians. Regions once plunged into primeval back- wardness and superstition now have modern power plants, factories, scientific institutes and universities. The possibilities of planned economic growth have been demonstrated for all to see. No one can now say that a planned economy can- not work. But Russian economy gives only a foretaste of what socialist planning on an international scale could achieve, really only a small and poor sample at that. Often the methods of Stalinism are taken to be integral to such planning in a backward country instead of something alien to it. The application of the lessons of Soviet economic de- velopment over the past fifty years, both negative and positive, will enable mankind to advance by centuries in a matter of a few decades. The economic questions can thus not be separated from the internationally posed political questions of the epoch. The fate of the first workers’ state has not yet been settled nor will it be determined by what happens in Russia alone or purely by developments in the economic arena. Two pamphlets by Leon Trotsky Radio, Science, Technique and Society A speech delivered on March I, 1926, as the inaugural address at the First All-Union Congress of the Society of Friends of Radio. A brilliant anticipation of the major advances of nuclear science and inter-planetary flight. Price: One shilling NEW PARK PUBLICATIONS LTD. The economics of Socialism In One Country 186a CLAPHAM HIGH STREET, Culture and Socialism and a Manifesto Art and Revolution An article compiled by the author from a talk he gave to a Moscow club on February 3, 1926, and a number of other addresses. The Manifesto, appearing in 1938 under the signatures of Andre Breton and Diego Rivera, was in fact drawn up in collabora- tion with Trotsky. Price: Two shillings and sixpence LONDON SW4 31

[p037] Books Meek’s ideology Economics and Ideology and other Essays by Ronald L. Meek Chapman & Hail, London. 40s. THE EVOLUTION of R. L. Meek, as demonstrated in this book of essays, is typical of the path pursued by many intellectuals of his genera- tion who, in breaking with Marx- ism in its deformed Stalinist guise, moved several steps towards a com- promise with bourgeois ideology. It is true that Meek has not ex- plicitly broken with Marxism and makes some show of defending as- pects of Marx’s method and analysis from his critics. He shows, as well he might, some distaste for an open and complete orthodox academic theories whose ideological elements have not es- caped him. At the same time he has assumed the role of the accomplished emasculator who has stripped Marxism of any offence which it might give to his academic friends and has made it no more than an ideology for advanced re- formism. Of course, this is not a surpris- ing evolution but one for which Stalinism had prepared the ground over many years. Marxist political economy was always taught in re- lation to the needs of the Com- munist Party as determined by the Soviet bureaucracy. At times, there- fore, Party economists were able to find some grounds for agreement with progressive Keynesians. Meek himself undertook the task of writ- ing about Malthus in the light of Soviet policy on population and birth control at a particular period. He also found himself writing a learned commentary on the absurd and purportedly new ‘economic law of capitalism’ as discovered by the late-lamented Joseph Stalin—a piece of writing mercifully excluded from this volume. Meek, of course, does not settle accounts with this past and seems .32 espousal of - unable to explain it, although one would think that in a volume en-. titled Economics and Ideology it would merit at least a mention. After all, the fate of Marxist eco- nomics in the hands of the epi- gones is an important theoretical problem of our time, but one which cannot be investigated without reference to the development of the Soviet Union and the interna- tional Communist movement. As it is, Meek not only does not men- tion the actual fate of Marxist theory in Stalinist hands, but noth- ing in this book could give offence in King Street or Moscow even to- day. It is all, in fact, in line with The British Road to Socialism. * Meek is a very erudite writer on past economists and his academic contemporaries. He has, over most of the latter, the considerable ad- vantage of genuine familiarity with Marx’s writings and an ability to understand much of Marx’s mean- ing; thus he does not distort Marx but emasculates him. He has be- come, in fact, a Marxologist; that is, not a Marxist, but one learned in Marx’s writings who does not derive from them a class position or a connection with any living movement. Even his attitude to Marx has undergone a subtle change. Marx's theories are no loger ‘in- dividual’ but ‘idiosyncratic’: the man who leant over backwards to put the best possible interpretation on the theories attributed to Stalin is stern and severe in scrutinizing the statements of Marx today. If a position can be gleaned from Meek’s essays it is clearly one of academic detachment and. for all his disclaimers, the ground is pre- pared for a reconciliation with bour- geois ‘science’. What Meek has abandoned ; is the lesson that the laws of motion of capitalism operate through contra- diction and crisis and that know- ledge of them offers to the work- ing class the opportunity to replace it by a socialist planned economy. As he puts it, plainly and frankly: ‘It is obvious that the particular ‘laws of motion’ developed by Marx can no longer be used as a guide to what is actually going to happen as capitalism develops further. This does not mean, however, that they may not still be useful, even as they stand, for other and more modest pur- poses. They may still be useful in some of the less advanced countries as a guide to the actual situation there. And even in the more advanced countries . . they may still be useful as a sort of awful warning of what might happen if the tempo of social legislation and trade union acti- vity were allowed to slacken... all that really remains of Marxian economics today is the body of general methods and tools of analysis which Marx employed to analyse the facts of his time.’ (pp. 109-110.) With this approach it is obvious that the erstwhile ‘Marxist’ comes to the feasts offered by bourgeois economic science with a renewed appetite.. Either nothing has been learned about the behaviour of _ capitalism by anyone, or it has been learned, presumably, by Schum- peter, Keynes and company (but what about Joseph Stalin’s new economic laws, Professor Meek?). Of course, Meek does conclude that bourgeois theory has made a definite objective advance in the under- standing of capitalism, that it now contains non-ideological elements. These include what is known as micro-economics — because Meek now attaches some importance to the determination of prices through the operation of the forces of supply and demand. What use, after all, is the labour theory of value to the manufacturer who wants to sell his soap? But it includes, also, questions of macro-economics Fourth International, February 1968

[p038] which concern the behaviour of the large aggregates of the system, where the influence of Keynes, the monopoly theorists, the econometri- cians and the mathematical econo- mists has created a feeling of theoretical achievement and a cer- tain prestige. It is true that Marxist economics, subject overwhelmingly to the dead hand of Stalinism, has, by com- parison, undergone a process of sterility and degeneration and that little fresh or independent work has been done. But Meek’s recipe for those who have turned away from this past must be decisively re- jected. It is true that there is no objection to ‘a new Marxian model of modern capitalism’, but it must be based upon a proper apprecia- tion of Marxist dialectics which Meek obviously does not possess, and it certainly must not resign itself, in the period while such a job is being done, to the position he adopts: ‘all we can really do is to attempt to introduce certain basic Marxian ideas into orthodox economic theory’ (p. 110). This seems to be the Fabian adventure upon which Professor Meek is now embarked: the infiltration of some methods and techniques of Marxian derivation into academic economics which employs quite different con- cepts and sets an opposing aim. But what now is Professor Meek’s aim? At various points he suggests that in the last thirty years capital- ism has not behaved as Marxism would have led us to. believe (although it is still ‘not so very different’ from the capitalism Marx knew). Therefore a number of Marx’s laws have to be abandoned or radically revised. When we look for what has changed the list seems to be broadly fas follows: (i) ‘The general laws which Marx himself formulated concern- ing long-term trends in wages have been largely invalidated by the unexpected concurrence and increase in intensity of certain “counteracting influences” ’; (ii) Mass unemployment has been eradicated under capitalism contrary to Marxist expectations (p. 128, footnote 38);