The Development of the Soviet Budgetary System, by R.W. Davies

[p020] The Development of the Soviet Budgetary System, by R. W. Davies (Cambridge University .Press, 1958. 45s.) The ramifications of the Russian budgetary system are practically co-extensive with that of the entire economy. There is no question of budgetary policy guiding the economy, as in modern capitalism, for it is the handmaiden of the plan, its financial reflection. With rapid industrialization the main objective, the budget thus became an instrument for capital formation, holding back, or pressing down, consumption and making resources available for this purpose by the ‘appropriate’ financial measures. The conditions under which this systern grew up, and its fully-fledged operation, are studied in im- pressive detail by R. W. Davies in this valuable addition to — the all-too-few studies of the Russian economy made in this country. Since this is the best available book in English on the subject, it may seem churlish to lay stress on its deficiencies.” But the manner and method of this scholarly apology for Stalin’s economic policies invites a forthright retort. This, of course, is no. starry-eyed, propaganda version obviously tailored to a standard orthodoxy: it is a factual, documented _study on a high academic level. All the more reason, there- fore, for dissecting carefully both whai it contains and what it leaves out. Necessarily, only the elements of such a task can be attempted here. Let us begin with the documentation, which is the necessary ground-work for any work of this kind. It is derived, inevitably, mainly from the reports, articles and speeches. in which the top bureaucrats give an account of their stewardship, and the specialist works which do much the same thing with the usual apparatus of learning. Of course a due measure of criticism of errors, bureaucratism and the like will be found therein. Davies too frequently takes his sources at their face value without regard to the context of the entire situation. Who would know that behind this economic policy stood an all-pervading apparatus of repression? Admittedly it is objectively stated, in a footnote, that all but one of the. People’ s Commissars for Finance in the period 1918-1937 perished’ in the purges, including G. F. Grinko, who held the post during 81

[p021] LABOUR REVIEW the critical plan years 1930-37. Surely some appraisal should be made of the consequences of having ‘wreckers and spies’ in the top position in the financial apparatus. As it is, while the mistakes, and the victims, are not concealed altoge ther, cracks are papered,over and dissentient voices are hushed just as thoroughly in these scholarly pages as they were snuffed out in the condemned cells of the Lubianka. If we turn to the decision to industrialize, similar criticisms can be made. It is presented as having been correct when taken by Stalin but foolhardy when suggested by his opponents. No evidence is offered for the assumption upon which such a view necessarily rests. While mentioning that industrialization had been advocated by the Left Opposition in 1923, 1925 and 1927, their case is brushed aside on the grounds that ‘any appreciably greater rate of investment would have antagonized the peasantry’. Of course a large part of the peasantry was antagonized (if that is the right word) by the dangerous gamble of enforced collectivization as actually carried out. On the following page we learn, too, that Stalin admitted, though not in a public statement, that the adverse price ratio for agricul- tural commodities was ‘super-profit? and ‘tribute’ from the peasantry. Yet for putting forward the theory of ‘primitive socialist accumulation’-—partly at the expense of the peasantry —as a possible road to industrialization, Preobrazhensky, one - of the most brilliant members of the Opposition, was hounded and. eventually liquidated. And why is no mention made of Preobrazhensky, one of the fathers of the ‘turnover tax’, though facts are twice quoted from his works? The truth is Davies accepts.as necessary everything that was done and pays little or no attention ‘to the feasibility of alternative policies at this time. Partly this is based on the convenient theory that the measures actually taken were part of ‘a specific system, emerging from Russian historical con- ditions and adapted to the task of turning an undeveloped peasant country into an advanced industrial nation’ (and the fromer characterization hardly accords fully with the set up in pre-Revolutionary Russia, even on his own showing). Broadly this is true, indeed it is a truism—but it becomes specious. as well as being spurious Marxism, if it is taken io imply that only the methods which were used could have done the job. But such is a necessary part of Davies’s argument, which evades the international political issues and gives the Stalin leadership an historically valid passport despite a few mis- demeanours. Untoward events are accounted for in the balance sheet as ‘the price that had to be paid for industrial development? and it is complacently observed, for example, that ‘the drastic collectivization drive .... actually resulted in a simplification of the budgetary system’, i.e. compulsory deliveries at low fixed prices took the place of taxes. v Forced collectivization is the Achilles’ heel of this type of - _ ‘thinking, and it is not surprising that its exponents find it - cembarrassing. As well they might, for a cursory study of ‘texts and facts will show that Stalin’s methods were far _ removed from the prescriptions of Engels and Lenin, though ‘hypocritically paying lip-service to them. It becomes necessary ‘to assume—without proof—as Davies does, in a footnote (this book contains some interesting footnotes) that ‘large-scale collectivization was impracticable in the 1925-29 period’. As ‘with industrial planning, it became ‘practicable’ when Stalin decided that the moment was ripe. And to throw into greater relief the wisdom of the great teacher, Davies adds knowingly, “such a course was not openly advocated by any of the main political groupings’. We will leave aside the possibility that his researches have brought evidence that some of them _advocated it in secret, or that it was the cherished creed of some tiny sect; that will be a valuable sideline for further study. ‘ What he. really omits is that a series of practical propo- sitions, including an increased tempo of collectivization in the _ . Engels ‘style, were put forward in the Platform of 1927, and were advocated for a number of years before that. Although October-November 1959 a different kind of collectivization might: have added com- plications to the budgetary system, that would have been a small price to pay compared with the impairment of agricul- tural production, the intense social crisis and chronic hardships which actuaily ensued. *‘Might-have-beens’ have no historical value: but they do serve as a necessary corrective to the interpretation which accepts and excuses everything which happened and assumes, by underrating the subjective factor, that it could not have happened otherwise. In fairness to Davies, it should be added that some of his.own judgements would have qualified as ‘Trotskyist calumny’ a few years ago, and perhaps still do in some circles. For example, though suggesting the need for ‘further study, he accepts that capital accumulation was to a large extent carried through at the expense of the peasants. He argues that in the post-war plans ‘the actual powers of the planners to intervene in agricultural matters was greater than their knowledge warran‘ed’ (and one is curious to know whether Khrushchev is also to be reckoned - among the ignorant). And he accepts the existence of ‘contact men’ and other personalities existing on the fringes of society (though no doubt handsomely rewarded) as an outcome of the imperfections in the planning system (and it is to be noted that he carried this matter into the holy pages of a recent number of ‘Marxism To-day’). v How well did the budget fulfil its main task of securing the means for accumulation? With the introduction of the ‘turn- over tax’ in its finished form in 1930, considerable reliance ‘was placed upon it to obtain the required resources. Goods, especially the products of the peasantry, procured by the State at low fixed prices, were sold at price of production, or pro- curement, plus tax. The steep indirect tax, while helping to ‘equate supply and demand (rationing through the purse) scooped up an important part of the money incomes paid out to the industrial workers. In other words, the compulsory deliveries of the peasants fed the workers who built up industry, partly through the surplus product acquired directly (excess of surplus over necessary labour) or indirectly by ‘scooping back In tax what had been paid out in wages. In addition, and this is also dealt with very complacently, pressure was exerted on the workers so that they paid back part of their “wages (2+ 3 weeks, Davies says; some put it higher) in the form -of forced loans. The rest of accumulation came from increases in productivity and production, but since in the °30s these increased more slowly than the labour force, while money incomes paid out rose, there was inflation. Fortunately, while ‘under capitalism socialists have been known to denounce the pernicious effects of inflation, in the Five-Year Plans it did not matter very much, being ‘nothing more than a painful adjustment to the new level of accumulation and direction of investment’. At whose expense were such adjustments made? ‘Certainly not at the bureaucracy’s, since added inducements ‘were being given to them in order to speed up the tempo of production and realise planned output. All this process not only tends to be wrapped up by Davies in the economist’s private language but put in such a way as to obscure the realities of it. Yet budgetary systems do not exist in a vacuum: and the context is visible to some extent, although he never draws the necessary conclusions. For example, the system contained in fact a series of elaborate artifices and a high degree of pressure and compulsion. These characteristics did not arise exclusively from conditions of rapid accumulation, goods shortage and the rawness of much of the labour force. They arose in large part from lack of confidence between the masses and the leadership and the explosive social antagonisms which were inherent in the situation.. Hence the elaborate pretence, and the operation of the ‘money illusion’: with (depreciating) currency being pushed out on one side and an exceptionally high proportion being pulled back in taxation on the other. If this is admitted it is difficult to accept the view that ‘socialism’ came into existence in the mid-1930s, and con-

[p022] AUTUMN sequently to defend the theory of ‘socialism in one country’. Perhaps knowing this Davies does not openly try. Though speaking glibly of ‘socialism in one country’ in one place he later on identifies ‘socialism’ merely with an unspecified degree of public ownership. In fact, therefore, he evades the con- sideration of the Soviet budgetary system in terms of its consistency with socialism. Instead he discusses it in terms of the requirements of a planned, as distinct from a market- controlled, economy—which is not the same thing. His view that it ‘is inapplicable as a general model for ali direct planning’ once again reflects, perhaps, some uneasiness. While his use of the term ‘a planning system of the Soviet type (soviet? here. having departed from its original sense) to describe the Russian economy, reveals some unwillingness to define it as ‘socialist’ at all. The sophisticated apologetics which have been displayed are therfore left hanging in an un- satisfactory manner: which perhaps augurs well for Davies's future political development. TOM KEMP Scholarly Centrist?