Chapter 1. Father of the Soviet economic miracle

Chapter 1. Father of the Soviet economic miracle
From a revolution against capitalism to “socialist economics”

Stalin wanted to fight “private production” in agriculture and build up large-scale heavy industry and the machine-building industry as fast as possible. He defended this decision vis-à-vis his Party and before the people with the “theory” that it was necessary to build “socialism in one country,” namely, in the revolutionary Soviet country. Where else — after attempted communist takeovers had failed in Hungary, Germany and other states? Why not — now that the Bolshevist Party, after completing a revolution and putting a victorious end to civil wars and wars of intervention, had the country and people of the former czardom under control? Was it not the purpose of the mighty revolutionary effort to create socialist conditions there?

This was apparently not all that clear. The fact that Stalin saw a need to justify this program in principle and had to overcome opposition to it from all sides within his Party reflects a strange contradiction in the self-awareness and the politics of this victorious revolutionary organization. The Bolsheviks had indeed not merely “seized power,” but erected a completely new power —the councils (“soviets”) controlled by them — in place of the old state and the power of property it had put into force. They had broken the private power that capital and the ownership of land had exerted over society’s labor, and had created the freedom to plan production sensibly. They had not let go of this freedom either under the pressure of fellow travelers and opponents who only wanted a bit of progress in the form of reforms under bourgeois conditions, or in view of the lack of understanding for socialist “experiments” on the part of the numerically largest productive class, the rural population whom the Bolsheviks had at first made into independent private peasants.

However, they had derived their aim of a revolution without compromises not least from the idea that no one can ultimately check the course of history, which pushes every society from one “stage of development” into the next one. And in terms of this teleology of history it was not at all time for socialism in Russia, since capitalism, the fashioning of a country and its people into tools of business, was only beginning there. The Bolsheviks were troubled in all seriousness by the question of what kind of revolution was actually “on the agenda” for them. And they reached the conclusion that there was hardly any basis for much more than a “bourgeois” revolution like the French one of 1789, unless the real proletarian revolution soon took place in the countries where it was “due” and pulled backward Russia into socialism at the same time. This fundamental reservation toward their own plans turned out not to be a problem for the Bolsheviks when they decided to carry through the revolution. They never wanted to act as midwives for the bourgeois liberties of business. But they did not really feel called upon to simply go about building up socialist relations of production — “in one country.”

The first form this contradiction took was the “New Economic Policy” (NEP) introduced in 1920, which put the food supply of the cities as well as the supply of industrial consumer goods and of producer goods for the rural economy largely in the hands of private business. On the one hand, this policy was born of the need to make sure people had enough to eat. If that were the only alternative, saving the people would naturally justify every postponement of political plans. But this need had not arisen all by itself. It resulted from the refusal of the fairly independent peasants to hand over their grain, just as in wartime — the Bolsheviks could chalk that up as the repayment for the hardly socialistic “emancipation of the peasantry” that the revolution had brought the country. Scarcity also prevailed on the side of the proletarian state power, which could not make the peasants any material offers to replace the sheer compulsion to deliver. But this was no natural need either. After all, there was a whole class of well-equipped rescuers standing by to enrich themselves from the capitalistic trade and commerce opened up by the state.

The Bolsheviks regretted having to grant liberties to these people and to a minority of peasants skilled in business; they regarded it as a step backwards and a compromise made at the expense of their real program. On the other hand, they found it perfectly all right to give ground like this from the higher point of view of the course of history. They interpreted it as understanding the necessity of first “getting the nation going” with capitalist means. This “state capitalism” was supposed to teach the communists how to carry on trade, do commercial arithmetic, produce profitably, in short “operate an economy” — in order to make the resurrected businessmen superfluous some day and the communists their “heirs.” This was to be socialism’s next “stage of development.”

Thus, the “New Economic Policy” was indeed a program for building “socialism in one country.” And beyond being, or being represented as, a compromise and emergency plan, it certainly indicates what the Bolshevist Party meant by the “socialism” that was to allow for the transition to the more ideal forms of communism. It was a kind of capitalism in which state firms were to take over the supply function of private businessmen and the state would set prices so as to prevent them from endangering the sustenance of the masses. This project involved precious little “antagonistic” opposition to the capitalistic mode of production. It was based instead on considerable respect for the achievements in supplying goods that supposedly come about under a regime of properly controlled profit seeking. It was also based on the certainty that such control can make profit useful for the proletariat — a strange certainty as it conflicted slightly with the insight that a revolution was necessary to abolish capitalistic property and its “objective constraints” on economic activity.

This picture of “socialism” thus corresponded exactly to the Bolsheviks’ notion that the revolution they had achieved was not yet really proletarian, but rather could only be valid and an irreversible step toward communism as a prelude to world revolution. They never thought it impossible that there might be a “relapse” into the rule of capitalistic property that could no longer be restricted — especially in view of how the licensed business world was frolicking under the “New Economic Policy.”

This is why Stalin’s decision to strive for “socialism in one country” was by no means self-understood. After all, he was thereby rejecting the Party doctrine with its teleological view of history according to which the most one could do was to put a regulated state capitalism on the “agenda.” However, he did not at all reject the false historical idea contained in this doctrine — so that his decision on how to build socialism was no freer. If “blood, sweat, and tears” had to be, they could have been put to better use. Thus, Stalin declared that the “apprenticeship” in “economics” Lenin had recommended to his communist troopers was over after eight years; and not because the socialist firms and socialist trade had supplanted capitalistic competition, but for the opposite reason. The growing dependency of the proletariat’s subsistence on businessmen and a private peasantry was becoming a danger for the urban masses and for their state. The finances available to the state were also increasingly dependent on the “nepmen’s” business success and the private peasants’ surpluses, and this was inhibiting the progress of the state sector in economic life.

So Stalin inspired his Party, that was nevertheless still ruling, to remember its power over the economy and, without waiting for the state economy to achieve its gradual competitive successes, abolish the private power of money, replace capitalistic business life by a communist commercial system, and emancipate the construction of state industry from the limits of the state’s tax revenue. In this way, Stalin was actually going about liberating society from the restraints capital imposes on the economy, as the October Revolution had intended.

It is all the more striking that this freedom was not at all the point of view Stalin took in building his “socialism in one country.” Being a loyal disciple of the socialist program contained in the “New Economic Policy,” he took it for granted that, for the revolutionary Soviet power, “socialism” could mean nothing but the task of providing all of capital’s achievements in terms of supply and development without allowing progress to be impeded by private property! He defined his project as the historical task of bringing about no more and .no less than the accumulation of wealth and productive forces according to the capitalists’ example but without any capitalists.

Thus, Stalin utilized the freedom of the revolutionary power, that had gained control of all social relations, to expropriate the businessmen and peasants and take command of the workers, many of whom had not found any work at all under the “New Economic Policy.” However, the reorganization plan initiated at the Party’s command was based only very generally on the notion that large agricultural estates are more productive than many small farms and that the first thing a progressive country needs is industry for producing industrial facilities. It was not the task Stalin assigned to his supreme planning authority to work out what goods were required, calculate the optimum division and distribution of labor necessary for producing them and organize cooperation throughout society to this effect. Gosplan had to calculate on the basis of available funds. It tried its hand at “global control” by allocating funds to the firms and by setting prices, and thereby burdened the individual (large) firms with the task of using the allocated funds to set up a business in which technology and operating teams, raw material supplies and production equipment had to harmonize materially.

It was basically stipulated and planned that the firms should work together and the workers be supplied with the necessities of life, but in actual practice this was left to the firms’ “self-initiative” and their budgeting and use of the allocated funds or the proceeds from the sale of goods. And the use of money was subject above all to the dictate of “cost accounting,” i.e., the directive to achieve a constant surplus of funds to hand over from production and sale at state-administered prices. For the first time, the contradiction of planning with money was put into practice on a large scale — as if an allocated fund of fine new “red” rubles were the same thing as the means of production a firm was to procure with it; as if means of production and manpower were the same thing as sale proceeds out of which the firm and state funds were supposed to be renewed and expand all by themselves; and as if the overall relations of society’s production with its division of labor as projected by Gosplan and ordered by the state had to come about quite automatically by means of sums of money and the compulsion to make a profit.

The de facto result was a gigantic construction effort that was obstructed by shortages at every link between firms and branches of industry because “planning” was based on finances instead of on the actual articles needed. The only reason it came about at all was that there was one production factor which was highly flexible in terms of cost and could be used again and again to make the prescribed “cost accounting” work out right in spite of everything: labor-power and its payment in wages. Those who were supposed to become the beneficiaries of all this building-up first became its stopgaps, and this was by no means a voluntary matter. A system of premiums and penalties — going as far as unpaid forced labor — provided the socialist firms with labor in the form they needed it to fulfil the given financial and production plans: as a means of compensating the lack of production equipment, on the one hand, and as a flexible residual item in their “economic” calculation, on the other.

It is a favorite anticommunist line of argument to criticize the severity of the economic construction commanded by Stalin as being the necessary consequence of the “voluntarism” typical of a planned economy. Benevolent economic experts then like to add the compliment that this at least allowed Russia to catch up on “primitive accumulation” with its unavoidable privations. Both ideas are ridiculous. The brutalities of Stalin’s command economy are without exception due to the fact that the “language” of command was money. This was what made the “planning” so resolutely and consistently neglect all the material and technical requirements of a sensible division of labor. This was what defined labor-power from the start as that variable which could be sacrificed to make this “planning” work out somehow in accordance with the profit directives. This was what necessitated that degree of terrorization of the workers which the hypocritical friends of capitalist exploitation accuse Stalin of so excitedly.

The model case of anticommunist agitation when it comes to Stalin is the collectivization of agriculture under the pressure of Soviet power. It reveals most clearly this congenital defect of ‘socialism in one country” inspired by a “market economy.” Those in charge did not integrate the peasants — either as a whole or locally — to a new division of labor thoroughly organized in terms of the technology and goods required. Instead, they were “confident” that it was sufficient to concentrate the bit of money made available for agriculture on the big farms. Of course, this did not do the job. It brought about the very opposite of a technically expedient large-scale agricultural production, the state tractor stations being no real help either. Thus, the only “lever” left to use was the purely negative side of socialist construction, expropriation — which was ineffective, because extortion with the threat of hardship is a pretty poor productive force and did not impress the hard-boiled Russian peasants in the least.

So if there was anything about Stalin’s building of socialism that deserves to be called “voluntaristic,” it was certainly not the decision as such to “conjure up” an industry and quasi-industrial agriculture. And it was even less the concomitant decision not to wait for foreign “aid” in the form of credit. And it was not the attitude that everything is possible for communists, with which whole teams of workers marched enthusiastically into the “construction battle” in those days — that was definitely an echo of the revolutionary victory over the “objective constraints” that money and business impose on productive labor. What was “voluntaristic” in the worst sense was Stalin’s tacit understanding — which his Party never doubted! — that the proper way to conjure up a rational new production was for officials to juggle financial sums in conformity with indicators of the national economic accounts (which, honor to whom honor is due, the Gosplan experts already concocted before Keynes and in more detail!). It was “voluntaristic” and not a bit Marxist to trust in exchange-values and their “laws” unfailingly paving the way for the production and supply of useful articles to satisfy every wish..

Finally, the irony of the expert bourgeois accusation of “voluntarism” is that none other than Stalin himself brought it up and defended his project against it by insisting that his socialism complied with all the laws of economics — exactly because of its respect for the criteria of profitability learned from capitalism. This strange communist was bent on denying the standpoint of revolutionary freedom when creating relations of production. And he did this the way he had learned: in the form of general philosophical reflections on the problem of whether a socialist economy should be regarded fundamentally as the execution of given objective laws. Stalin’s answer is a boundless yes, and his reasons are apt.

“Hence the laws of political economy under socialism are objective laws, which reflect the fact that the processes of economic life are law-governed and operate independently of our will. People who deny this postulate are in point of fact denying science, and, by denying science, they are denying all possibility of prognostication — and, consequently, are denying the possibility of directing economic activity.” (from “Remarks on Economic Questions Connected with the November 1951 Discussion,” p. 320)

What Marx and Engels criticized about capitalism — the reification of the social relations of production, which makes exploitation seem to be an objective necessity — is for Stalin the ultimate truth even about the mode of production he himself initiated with his powerful command over workers, peasants and property. It is more or less irrelevant beside this “postulate” what laws are supposed to be holding ‘‘behind the back” of even the revolutionary Party and waiting to be “scientifically” deciphered. In any case, one of the main laws is supposed to be “the economic law that the relations of production must necessarily conform with the character of the productive forces” — which has no economic content at all but summarises, in a scholastic formula, the Bolsheviks’ basic belief that their own revolutionary program was nothing but a historical necessity. In formulating this pseudo-law they were announcing quite methodically their intention to pass off their command activity as a kind of natural necessity, in particular at all the points where this activity was devoid of any effort to organize production in a systematically expedient way.

Beneath this ‘‘fundamental law,” the Bolsheviks resurrected in particular capitalism’s “law of value,” along with a theory which reduces the value of labor-power as a commodity to an energetically defined minimum subsistence level. It is almost as if a bourgeois economist were voicing his elementary dogmas about correct management:

“As a matter of fact, consumer goods, which are needed to compensate the labor power (sic!) expended in the process of production, are produced and realized in our country as commodities coming under the operation of the law of value. It is precisely here that the law of value exercises its influence on production. In this connection, such things as cost accounting and profitableness, production costs, prices, etc., are of actual importance in our enterprises. Consequently, our enterprises cannot, and must not, function without taking the law of value into account.

“Is this a good thing? It is not a bad thing. Under present conditions, it really is not a bad thing, since it trains our business executives to conduct production on rational lines and disciplines them …The trouble is not that production in our country is influenced by the law of value. The trouble is that our business executives and planners, with few exceptions, are poorly acquainted with the operations of the law of value, do not study them, and are unable to take account of them in their computations. This, in fact, explains the confusion that still reigns in the sphere of price-fixing policy.” (ibid., pp. 326–7)

Lenin had wanted to apprentice his cadres to real capitalists. Stalin abolished the capitalists — and wanted to have his planners study “the law of value” itself. It was as if the forced relations of exchange resulting from private, capitalistic production — the very antithesis to a planned division of labor throughout society — were not merely still valid, but actually had a chance to come to full bloom due to the abolition of competition. The small contradiction between the law of value “operating” and the planners having to “take account of it” proves this “law” to be a self-created fetish of “socialist economics” — and this is just how Stalin wanted it. “Behind everyone’s back” he wanted to make profitability the leading force for “rational management.” Of course, with prices fixed by the state this inevitably brings about tremendous “confusion” in the production system both within the firms and throughout society! In the spirit of this “rationality” he was forever attacking the last comrades who still had any sense in this matter:

“He (Comrade Yaroshenko) plainly declares that in his Political Economy of Socialism ‘disputes as to the role of any particular category of socialist political economy — value, commodity, money, credit, etc. — which very often with us are of a scholastic character, are replaced by a healthy discussion of the rational organization of the productive forces in social production, by a scientific demonstration of the validity of such organization.’” (Concerning the Errors of Comrade L. D. Yaroshenko, May, 1952, p. 352)

Against such refreshing suggestions that exchange value as a principle of pseudo-planning should be dumped, Stalin usually presented the profound “argument” from Marx and Engels that productive forces and relations of production are two different things, attributed to the latter an inviolable autonomy and triumphantly declared nonsense of the following caliber:

“Comrade Yaroshenko has already done away with relations of production under socialism as a more or less independent sphere, and has included the little that remains of them in the organization of the productive forces. Has the socialist system, one asks, its own economic foundation? Obviously, seeing that the relations of production have disappeared as a more or less independent factor under socialism, the socialist system is left without an economic foundation … A rather funny situation …” (ibid., p. 355)

“If we followed Comrade Yaroshenko, therefore, what we would get is, instead of a Marxian Political Economy, something in the nature of Bogdanov’s ‘Universal Organizing Science’.” (ibid., p. 354)

And that would be bad because Stalin advocated a kind a socialism in which the producers were not to organize their social relations themselves, but to let them operate as an “independent factor,” just as under capitalism —a rather counterrevolutionary situation.

Nowadays there are whole libraries about the “role” of every single “category of socialist political economy,” testifying to the fruitfulness of Stalin’s dogma of the economic autonomy of the socialist planning business. The base corresponding to this superstructure in de-Stalinized Russia is an economic policy that has developed Stalin’s invention — state control of an economy without private property by means of money and profit from its crude initial forms — when the managers of unprofitable firms were still being shot and “wage differentials” ranged from labor camps to Stakhanov premiums —into a truly “complex” system of “planning and control.” Soviet industry was brought about by state-controlled workers and engineers; the strange mode of production that controlled them and made their life difficult is Stalin’s doing. He used all his power to make “socialism in one country” out of the Bolshevist critique of capitalism, that contained so little rejection of the capitalistic mode of production but nevertheless deprived it of its base.

The way this translation of a false critique into a real economic system functions is what annoys communists. The fact that it functions is what annoys bourgeois adversaries. The fact that the thing does not function better is what annoys Stalin’s successors. That makes one right and two wrong ways of looking at it.