Whither Russia? Towards Socialism or Capitalism (Reprint)

WHITHER RUSSIA?

Towards Capitalism or Socialism

by Leon Trotsky

The object of this little book is to outline the principal

a sharp line between the two styles of criticism, and

frequently the two modes of attack exchange their arsenal factors in our economic process. The difficulties of such an analysis are apparent when the reader considers the

of arguments in a neighbourly manner, of which act they

are scarcely aware, intoxicated as they are with the sacred sharp turns that have taken place in the course of our

war against communist barbarism

evolution. When a development proceeds along a straight

The present book will, I hope, prove to the unline, two points are sufficient to determine its direction.

prejudiced reader that both camps are lying, not only But when, at a crucial moment, the course of affairs

the outright big bourgeoisic,

describes a complicated curve, it is difficult to judge the various sectors of this curve. And — in a new social order

bourgeoisie who pretend to be socialist. They he when — eight years are but a short period.

they say that the Bolsheviks have ruined Russia. Indisputable facts prove that in Russia - disorganized by

Our opponents and enemies, however, have not hesitated to

deliver themseives — on more than one

imperialist and civil wars— the productive forces in occasion — of their 'infallible" judgments on our economic

industry and agriculture are beginning to approach the

they waited until eight years

pre-war level, which will be reached during the ensuing development, nor have

year. It is a falsehood to state that the evolution of the elapsed after our November Revolution. These judgments

we are told that we

are of two kinds. In the first place,

productive forces is proceeding

are ruining the country by our work of socialist construccapitalism: in industry, transportation, communications,

commerce, finance and credit operations, the part played tion; in the second place, we are told that our developby the national economy is not lessened with the growth ment of the productive forces is in reality carrying us

of the productive forces, but - on the contrary - this into capitalism.

rôle is assuming increasing importance in the total

Criticism of the first type is characteristic of the

economy of the country. Facts and figures prove this mode of thought of the bourgeoisie. The second style of criticism is rather that of Social-Democracy, ie. bourgeois

beyond dispute

The matter is much more complicated in the field thought in a socialist disguise. It would be hard to draw

25

but also

the petty in the direction

of

of agriculture. No Marxist will be surprised by this; the transition from the scattered single peasant establishment to a socialist working of the soil is inconceivable except after passing through a number of stages in technology, economy and culture. The fundamental condition for this transition is the retention of power in the hands of the class which means to lead society to socialism, and which is becoming ever more competent to influence the peasant population by means of the state industry, by the process of raising the technique of agriculture to a higher level, and thus creating the prerequisites for a collectivization of agriculture.

It is hardly necessary to state that we have not yet

only beginning to create the

solved this task; we are

prerequisites for a consistent gradual realization of it. More than this, these achievements will themselves

new contradictions, new dangers. What is the develop

nature of these?

The state today furnishes four-fifths of the industrial production for our domestic marker. About one-fifth is provided by private producers, ie. particularly by the petty establishments of home industry. Railway and marine transportation is one-hundred per cent in the state's hands. The

amounts to almost three-quarters of the trade turnover. state.

ments; the uniting of national and peasant cconomies — the productive forces meanwhile increasing as a whole — thus constitutes the principal social problem of a socialist construction in our country.

Unless the productive forces grow, there can be no question of socialism. On the economic and cultural level which we now occupy, the development of the productive forces can be attained only by involving the personal interest of the producers themselves in the system of the social economy.

This is being done, in the case of the industrial workers, by making their wages depend on the productivity of their labour. Great successes have already been attained in this field. In the case of the peasant, his personal interest is secured if only by the fact that he manages a private establishment and is working for the market. But this condition also involves difficulties. The differences in wage classes, great as they may be, do not introduce a social differentiation among the proletariat: the workers remain workers for

peasantry the case is different. The work of the twentytwo million peasant establishments (of which the Soviet estates,

the peasant collective establishments and land "communes at present constitute bur

minority) for the market leads inevitably to the creation, at one pole of the peasant mass, of wealthy and even exploiting establishments, while at the other pole we have a transformation of a section of our present-day medium peasantry into poor peasants and of poor peasants into farm labourers

When the Soviet Government, under the leadership of the Communist Party, introduced the New Economic Policy (Nep) and then extended the field of its operations to the provinces, it had no illusions either as to these inevitable social consequences of the market system, or as to the political dangers they brought with them. These dangers, however, do not appear as an inescapable fate to us, but as problems which must be studied with attention and solved in practice at every stage of the work.

The difficulty could hardly be eliminated if the state economy in industry, commerce and finance should surrender its positions while the class differentiation of the village was advancing. For in this case, private capital might strengthen its influence on the market, particularly on the peasant market, and thus accelerate the process of differentiation in the village, and hence shunt our entire economic evolution onto the path of capitalism. Preciscly for this reason, it is extremely important for us to determine in the first place what is the direction pursued by the alignment of class forces in the fields of industry, communications, tinance and domestic and foreign trade The increasing predominance of the socialist state in all the fields named (which has been presented in indisputable terms by the State Planning Commission) has created an entirely new relation between city and country. Our state is far too firmly at the helm to enable the increase of the capitalist and semi-capitalist tendencies in agriculture to grow over our heads within any appreciable time. A gain of time in this connection means everything.

In so far as there is a struggle between capitalist and socialist tendencies in our cconomy and the very essence of the Nep constitutes both a collaboration and an opposition between these tendencies), it may be said than the outcome of the struggle depends on the speed of evolution of each of these tendencies. In other words: if the state industry develops more slowly than agriculture, if the latter should proceed to secrete with increasing velocity the two extreme poles above mentioned (capitalist farmers "above", proletarians "below"), this process would, course, lead to a restoration of capitalism. But just let our enemies try to prove the inevitability of this outlook Even though they approach this task far more intelligently than poor Kaursky (or MacDonald), they will burn their fingers. On the other hand, is such a possibility entirely precluded? Theoretically, it is not. If the dominant party should be guilty of one mistake after another, in politics as well as in economics, if it should thus retard the growth of industry, which is now developing so promisingly, if it should relinquish its control over the political and economic processes in the village, of course, the cause of socialism would be lost in our country. But we are not at all obliged to make any such suppositions in our

How power is lost, how the achievements of the proletariat may be surrendered, how one may work for capitalism — all this has been brilliantly demonstrated to the international proletariat by Kautsky and his friends, after 9 November 1918 (German Revolution). Nothing needs to be added to this instruction.

Our tasks, our goals, our methods, are different. We want to show how power, once achieved, may be retained and consolidated, and how the form of the proletarian state may be filled with the economic content of socialism. We have every reason to count on our industry's overtaking and neutralizing the process of differentiation in the village, and thus creating the technical conditions and economic prerequisites for the gradual collectivization of agriculture.

In my present book, I have not at my disposal statistical data for the differentiation in the village, owing to the fact that no figures have been collected which would render possible a general estimate of this process. This absence must be explained not so much by the defects of our social statistics as by the peculiarities of the social process itself, which embraces the 'molecular alterations of twenty-two million peasant establishments The State Planning Commission (Gospian), on whose calculations the present work is based, has entered into 26

of all the phases of its economy in their mutual relations a profound study of the economic differentiation of our

and in their evolution. This is a tremendous achievement. peasantry, and the conclusions which the Commission has

The mere possibility of such a step is a splendid testithus attained will be published at the proper time; they

monial not only to the material achievements of our will be of great importance for national decisions in the

economy, but also to the success of the idea which

embraces this cconomy and dictates its guiding lines. This

se ate the permies c. Be

of the view expressed in this book.

maturitatis,' and the reader must not forget that such cerIt is clear that this general view is closely allied with

tificates are not issued at the time when maturity has been the destinies of the West and of the East, both economically

attained, but at the moment of transition from secondary and politically. Every step made in advance by the world

to higher education. And the tasks which are imposed proletariat, every success attained by the suppressed

upon us by the General Table of the State Planning Comcolonial peoples, will consolidate our position materially

mission are precisely tasks of a higher order; this is the and morally, and bring the hour of general victory so

question which we shall now proceed to analyze. much the nearer.

A glance at the Table at once raises the first question:

I. Trotsky.

to what extent is the Table accurate? There is a broad November 1925.

field for reservations, modifications and even scepticism.

Everyone knows that our statistics and our forms of

accounting are not infrequently defective, not because they

are poorer than the other phases of our economic and

cultural activities, but because such statistics reflect all,

or at least many of, the phases of our backwardness. But

this reflection by no means justifies a general vote of

mistrust, accompanied by the hope that perhaps we may

The language of figures

- after the lapse of a year end a half or two years — be

able to ascertain the erroneousness of such and such figures

and then to play the sage after the fact! It is extremely

The State Planning Commission (Gosplan) has pubprobable that there are a number of errors. But such lished a General Table giving the economic 'control' figures

sagacity after the fact is the cheapest soct of wisdom. For for the year 1925-6. The above sentence may have a

the present moment the figures of the State Planning very dry and even bureaucratic sound; bur these dry

Commission represent the highest possible approximation statistical figures and

almost equally dry and

to truth. There are three reasons for this condition. In the reserved explanations of the figures are the accompanifirst place, because they are based on the most complete ment to the mighty historical music of the progress of

material available, and therefore on material that has not socialism. Here are no mere conjectures, no assumptions,

been gathered at random but has been worked up day by no mere empty hopes, no theoretical reasonings → we

day by the various sections of the State Pianning Comhave here the powerful language of figures which cannot

mission; in the second place, because this material has fail to convince even the New York Stock Exchange. We

been prepared by the most capable and best qualified must dwell for a moment on the most important, most

economists, statisticians and technologists; and, in the fundamental of these figures, for they deserve attention

third place, because this task has been carried out by an

In the first place, the mere circumstance of the

institution that is free from any Government interference publication of this General Table is — economically

and is at any moment permitted to convince the economic speaking — a cause of rejoicing for us. The day of its

authorities by means of direct confrontation. To this we publication (20 August 1925) is a red letter day in the

must add that the State Planning Commission has no Soviet calendar. Agriculture and industry, domestic and

business secrets or any other kind of economic secrets. foreign commerce, money in circulation and prices of

Any process of production and any commercial calculation commodities, credit operations and state budget, have

may be checked up, either directly or through the Workers" found in this table an expression of their development

and Peasants' Inspectorate (the Commissariat of State and their mutual relations. We have before us a clear,

Control). All balance sheets as well as all official calculasimple and readable comparative presentation of all the

tions are available to the Commission even in the rough fundamental data for 1913, for 1924-5, and the prospecdraft. To be sure, certain figures may still be disputed. tive figures for 1925-6. The explanatory text also supplies

Objections may be raised to certain indications by the figures in all cases requiring such for the other years of

various authorities, in one direction or another. The the Soviet economy, so that we now possess a complete

official corrections, whether accepted or not, may be of picture of the stage of our reconstruction and a bird'sgreat importance for certain practical undertakings; for eye view of the work for the next economic year. The

instance, for the volume of exports and imports, for the mere possibility of such a comparative statement is a very

size of the items in the budget, for this economic need important accomplishment.

or that, and the like. But these corrections will not involve

Socialism means accounting. Under the Nep system,

any change in the fundamental data. Better, more mature, the forms of accounting are of course different from those which we attempted to apply in the period of military

See Appendix. Tuble One

communism (1917-21), and from those which will find

This in the name of the certificate formerly received by the their full expression under completely developed socialism

graduate at a Russian zymnasium, which entitled him to enter

1 university. (Translator)

Yet, socialism means accounting, and at present, in the

The accounting reports of the operative economic organs are new stage of the Nep period, socialism probably requires

worse than incomplete:

more accounting than it will require in its completed form;

mentary of the State Planning Commission. This severe judgfor then our reckoning will have only a purely economic

ment is worthy of note The operative economic organs must content, while now it involves also the most intricate

be trained, with the co-operation of the State Planning Compolitical problems. In the General Table of the control

mission and the press, to deliver objective business reports, in

perfect accord with the facts.

figures, the socialist state for the first time gives an account

testimonium

regarded as a kind of

they are biased.'; observes the commore carefully checked figures than those afforded by the Table published by the State Planning Commission cannot be found at the present time. One thing, furthermore, is certain. An inaccurate "control' figure — as our entire economic experience hitherto has shown — is of incomparably greater value than working at random. In the former case, corrections and additions may be made on the basis of experience, in the latter, we are merely "muddling along

The Table covers the period up to 1 October 1926. This means that after a lapse of about twenty months, when we shall have received the annual economic reports for 1925-6, we shall be enabled to compare our actual condition of tomorrow with our statistical assumptions of today. But however great may be the difference, this mere comparison will alone be an indispensable school of planned economy.

Since we are speaking of a greater or less degree of accuracy in prediction, we must attain clarity as to the nature of the prediction in this case. The statisticians of the Harvard Economic Service, when they attempt to determine the trend and velocity of certain branches of economy in their country, are proceeding — to a certain

astronomer; ie. they

extent - after the fashion of the

attempt to grasp the dynamics of processes that are entirely independent of their volition. The difference is mercly in the fact that these statisticians by no means work with the accurate methods that are at the disposal of the astronomer. The Russian statisticians, however, are in an entirely different position; they work as members of institutions which have charge of the economic life. The preliminary plan in our case is not merely a product of passive prediction, but also a lever for active economic forethought. In this case, each figure is not only a photographic copy but also a guiding line. The table of control figures was elaborated by a state organ which controls — to an enormous extent — the dominant economic positions. For instance, when the Table says that our exports in the year 1925-6 must advance to 1,200,000,000 rubles from the export figures of 462,000,000 rubles in 1924-5, ie. by one hundred and sixty per cent, this is not a mere forecast, but a task to be realized! On the basis of what is we are told what shall be. When the Table informs us that the investment of capital in industry (i.e. the outlay for the renewal and extension of fundamental capital must amount to 900,000,000 rubles, we have again not a passive arithmetical presentation, bur a statistically motivated practical problem of the first importance. Such is the character of the Table from beginning to end. It represents a dialectic conjoining of theoretical prediction and practical volition, ie. a union of the calculated objectendencies

with the subjectively

tive conditions and

imposed tasks of the operative Workers" and Peasants' State. Herein lies the difference in principle between the General Review Table of the State Planning Commission and all other statistical

summaries, calculations

and

approximations, in any capitalist state. As we shall have . occasion to see later, we are dealing here with the immense superiority of our, ie. socialist, methods, over those of capitalist states. The view afforded by the General Table of the State Planning Commission does not furnish, however, any estimate of the economic methods of socialism in general, but only of their application under certain conditions, ie, in a specific stage of the so-called New Economic Policy. The elemental economic processes above all may be grasped objectively and statistically. On the one hand, the economic processes conducted by the State go into the marker' at a certain stage and are united by means of the methods of the market with the

28

elemental, so to speak, uncontrollable coonomic processes, particularly by means of the economic methods created by the 'atomized" individual peasant economy that prevails in our country. Planned economy ar present consists in great measure precisely in uniting those economic processes thar are under control and guidance with those that are as yet subject to the operation of their own market laws. In other words, in our economy, socialist tendencies (of various degrees of evolution) are united and intertwined with capitalist tendencies, the latter also of varying degrees of maturity and immaturity. The control figures reflect the combination of one set of processcs with the other set and thus disclose the components of the forces of evolution. Herein lies the fundamental importance for socialism of the perspective plan.

We have always been fully aware of the fact — and have never concealed il - that the economic processes going on in our country have involved these contradictions, since they constitute a struggle between two mutually exclusive systems — socialism and capitalism. On the contrary, it was precisely at the moment of transition to the Nep period that Lenin formulated the historical question in three words, as follows: "Who beats whom?". The Menshevik theoreticians, including in the first place Ono Bauer, condescendingly welcomed Nep as a sober capitulation of the premature, violent, in short, "Bolshevik" methods of the socialist economy to a tried and trusty capitalism. The fears on the one hand and the hopes on the other have been subjected to a very serious examination, the result of which has been precipitated, as it were, in the control figures of our cconomic budget. These figures are important also for that fact that it now becomes impossible to continue operating with commonplaces concerning the socialist and capitalist elements of our economy (concerning the plan fas such' and uncontrollable factors 'as such"). Even though it be only in a

000

* МЕТАНИК»

ВРЕМЕНИ

CONSTERINTER SHOLE BETROSABOT

THE NEW EIGER"

In the top left-hand summer shu sht " nichero

Hubsia Is symbadically snock

wut, behe is the new Rossin if mechania sticism (nic Time League,

Below then is presnt-day Moscow: the old idyllie bouse with by dre

rue rheek by food with the iky wraper

miless churches transformed to suit mendere

needle charitowers as

In the Toerior of a former charch is an ineering shop.

rough and provisional form, we are nevertheless aware of our condition. We have succeeded in setting up a

the mutual relation between

quantitative estimate

socialism and capitalism in our economy, for today and

We have thus attained valuable data required in answering the historical question Who beats

The nep and the peasantry

All of the above serves merely to indicate the methodological significance of the General Table of the State Planning Commission, Le. we have pointed our the enormous importance of the fact that we have at last achieved the possibility of estimating all the fundamental processes of our cconomy in their interconnections and in their development, and have thereby obtained a point of departure for an incomparably more conscious and more perspicacious prediction in our planning (and this not only in the field of economy). But far more important for us is of course the direct material content of the General Table, ie. the actual figures by means of which the Table characterizes our social evolution.

In order to answer properly the question whether we are tending toward socialism or toward capitalism, we must first of all formulate this question properly. It may be divided logically into three sections. 1. Are the production forces developing in our country? 2. What are the social forms in which this development is proceeding? 3. What is the speed of this development?

The first question is the simplest and also the most important. Neither capitalism nor socialism is conceivable without an evolution of the productive forces. Military communism, the outgrowth of a cast-iron historical necessity, had soon run its course, after it had brought the evolution of the productive forces to a standstill. The most elementary and the most ineluctable significance of the Nep was the evolution of the productive forces as the basis of all social movement in general. The Nep was held by the bourgeoisie and the Mensheviks as the necessary (but, of course,

"insufficient" step for unchaining the

productive forces. The Menshevik theoreticians approved of the Nep as the dawn of a capitalist restoration in Russia. They

added: either Nep will overthrow the Bolshevik dictatorship (the "desirable' outcome) or the Bolshevik dictatorship will ultimately overthrow Nep (a "deplorable event). The Smyena Vekit group* owed its origin at first to the belief that the Nep would facilitate the evolution of the productive forces in a capitalist form - and now the General Table of the State Planning Commission affords us the fundamental data not only for answering the question as to the general productive forces, but also the question as to the nature of the social form in which this evolution is taking place.

Of course, we very well know that the social form the conditions into which our evolution has been placed by the New Economic Policy. Furthermore, the fundamental content of the New Economic Policy is involved in these conditions. Such a general notion of the contradictory nature of our development is no longer sufficient

We now seck and demand extremely precise for us.

criteria for our economic contradictions, ie. we require not only dynamic cofficients of general evolution, but also comparative coefficients for the specific weight of this tendency or that. Too many things depend on the answer to this question; in fact, everything in our domestic and foreign policy depends on it.

In order to answer the question in its most important phase, we shall say: It is impossible to obtain a clear and fully dependable conception of the prospects and the possible dangers of our peasant policy withour having answered the question as to the balance of power between the capitalist and socialist tendencies, the question as to the direction in which the relation of their specific weight is altering with the growth of the productive forces.' As a matter of fact, if it should turn out that — as the

evolve - the capitalist tendencies

productive forces

increase or expand at the expense of the socialist tendencies, this expansion of the volume of commodity capitalist relations in the village might be of cataclysmic importance and might shunt the course of evolution definitely onto the track of capitalism. And vice versa, if the specific weight of the state economy (i.e., in our case, the socialist economy) should inctease in the total economic status of the country, the more or less extensive "liberation' of the commodity capitalist process in the village is then already moving within the limits of a definite alignment of forces, and the question as to how, when, to what extent? will decide itself in a purely objective way. In other words, if the productive forces which are in the hands of the socialist State, and which secure to that State the possession of all the commanding positions, are not only rapidly growing in an absolute way, but also are growing more rapidly than the private capitalist productive forces in city and country; if this has been confirmed by the experience of the hardest period of reconstruction; then it is clear that by expanding to a certain extent the commodity capitalist tendencies growing out of the primitive roots of the peasantry, we are by no means incurring the danger of becoming exposed to any economic crisis, to a sudden shifting from quantity to quality, ie. to sudden transitions to capitalism.

In the third place, we must answer also this question: What is the speed of our evolution when viewed from the standpoint of world economy? At first glance it might appear that this question — in spite of its importance — is nevertheless of a subsidiary nature; that while, to be sure, it is desirable to advance to socialism "as quickly as possible, the velocity of this advance is not extremely important since the forward movement is guaranteed simply by the victorious evalution of socialist tendencies under the Nep conditions. But this reflection would be incorrect. Such a conclusion would be justified (and then only in part) if we were dealing with a closed, selfsufficient economy. Bur this is not the case. Owing precisely to our successes we have gone into the world market, iz. we have entered the system of the universal division of labour. And at the same time, we have remained encircled by capitalists. Under these conditions, the velocity of our economic evolution will determine the strength of our resistance to the economic pressure of world capitalism • Smyuna Vehh: these two Russian words literally mean a "transposition of landmarks". It is the name given to a bourgeois group — consisting for the most part of intellectuals and scientists — Who declared their readiness in 1921 to honestly for the reconstruction of Russia' under the Soviet Government. The members of this group who were thus sceking to readapt themselves were permitted to return to Russia. 29

work

and to the military-political pressure of world imperialism. These factors may not be left out of the account for the

If we now approach the General Table and the commentary of the State Planning Commission with our three "control" questions, we shall easily be convinced that the first two questions — 1. the evolution of the productive forces; and 2 the social forms of this evolution — are not only enswered clearly and distinctly by the Table, but also favourably. And as for the third question — the question of the speed of the process — we have only begun, in the course of our economic evolution, to witness its unfolding on a world-wide scale. But here too we shall find that the favourable answers to the first two questions also provide the necessary preliminaries for the solution of the third question. The latter becomes the highest criterion, the hardest touchstone of our economic evolution in the period that is now beginning

The growth

of the productive forces

The speedy restoration of our productive forces is now generally known and is excellently illustrated by the figures given in the General Table. If we calculate production in pre-war prices, the agricultural production of the year 1923-5 (in which falls the poor harvest of 1924) amounted to seventy-one per cent of the production of the good crop year 1913, The coming fiscal year, that of 1925-6, which includes among its assets our present good crop, promises — according to the latest available data — to exceed the agricultural production of 1913 and almost to attain that of the year 1911. While in the last few years the total yield of grain has never reached

the crops this year are estimated

3,000,000,000 poods,

at about 4,100,000,000 poods."

This year (1924-5) our industry has attained seventyone per cent, as measured by the value of its products, of the production of the same "normal" year of 1913. In the next year it will attain not less than ninety-five per cent of the production of 1913, ie. it will practically have completed its process of reconstruction. If we recall that in 1920 our production had gone down to one-fifth or one-sixth of the normal capacity of cur industries, we shall be in a position fully to appreciate the speed of this process of reconstruction. The production of our largescale industries has more than tripled since 1921. Our exports, which in that year were under 500,000,000 rubles,

to exceed considerably 1,000,000,000 rubles in promise

the coming year. The same development is shown by our imports. The State budger promises to increase from 2,500,000,000 rubles to more than 3,500,000,000 rubles. These are the fundamental control figures. The quality of our products is of course quite imperfect as yet, but has improved considerably when compared with the first and second years of the Nep. We thus obtain, as our answer to the question as to how our productive forces are developing, the extremely convincing

result: the "freeing of the market has given the productive forces an immense impetus.

But the very fact that the impulse came from the market — which is a factor of the capitalist economic order — afforded a malicious pleasure to the bourgeois

as if the

It seemed

theoreticians and politicians.

nationalization of industry (1917-19) and the methods of economic planning were compromised beyond repair by the mere transition to the Nep and by the undoubted economic successes of the latter. And therefore only the answer to the second question put by us — namely, the question as to the social forms of economy — can justify a socialist estimate of our evolution. The productive forces are growing also, for instance, in Canada, which is fructified by the capital of the United States. They are growing also in India in spite of the bonds of colonial slavery. In fact, there is a growth of the productive forces since 1924 — in the form of a reconstruction process — even in Dawesized Germany. But in all these cases we are dealing with a capitalist evolution. Precisely in Germany, the nationalization and socialization plans which flourished so luxuriantly in 1919-20, at least in the massive tomes of the professorial socialists and Kaurskyans, have now been cast aside as old junk" and, under the hard Amrican supervision, the principle of private capiralist initiative is entering — though some of its teeth have fallen out and others have been knocked our — into its second

Now what is the case with us? What is the social form in which the evolution of the productive forces is taking place in our country? Are we proceeding to capitalism or to socialism?

The presupposition of the socialist economy is the nationalization of the means of production. How has this presupposition stood the test of the Nep? Has the marker form of the distribution of commodities led to a weakening or a strengthening of chis nationalization? The General Table of the Scate Planning Commission furnishes excellent material for judging the mutual effects of the struggle berween the capitalist and socialist tendencies of our economy. We have altogether reliable "control figures, covering the fundamental capital, the production, the commercial capital, in short, all the most important economic processes of the country.

The most vulnerable figures are perhaps those indicating the distribution of fundamental capital; yet this vulnerability applies rather to the absolute figures than to their mutual relation, and we are now concerned, of course, chiefly with the latter. According to the statements of the State Planning Commission, the most conservative calculations" at the beginning of the current economic

showed capital to the extent of at least 11,700,000,000 gold rubles belonging to the State;

500,000,000

gold rubles to co-operatives; and 7,500,000,000 gold rubles to private — chiefly peasant establishments. In other words, of the means of production, more than sixty-two per cent of the total has been socialized, and this includes the technically best perfected

About thirty-eight per cent remains not

As for agriculture, we find here investigated not so much the results of the nationalization of the soil as those of the liquidation of feudal land holding. The results of this investigation are solid and instructive. The liquidation of feudal — as well as of atmost all large — holdings of land (where they exceeded the proportions of the peasant economy) led to an almost complete liquidation of the large-scale agricultural establishments, including also the model estates. This was one - to be sure not the decisive one — of the causes of the temporary decline in agriculOne pood-36.11 pounds approx. (International) *This is the estimate of 28 August 1925; of course, changes in either direction may he expected.

ture. But we have already seen that the crops of this year will attain the figures of the agricultural production of the pre-war period, and this without large-scale land holdings and withour capitalist "model farms. And add to this the fact that the evolution of agriculture, freed from the great landed proprietors, has only begun! We therefore see that the "liquidation' of the feudal landholding class, together with all its strongholds, is proving itselt to be economically sound. This is our first — and by no means an insignificant — conclusion.

As for the nationalization of the soil, this principle, owing to the extreme smallness of the divided peasant lands, has not yer been capable of separate investigation The populist halo which inevitably was associated with the socialization of the soil in the first period has just as inevitably disintegrated and dropped off. Simultaneously, however, the significance of nationalization, as a measure of essentially socialistic character when applied under the rule of the working class, has been made suffciently clear to prove its immense importance in the further evolution

Thanks to the mationalization of the soil of agriculture.

we have provided the State with unlimited possibilities in the domain of land distribution. No walls crected by individual or collective private property can present any obstacle to us in our task of adapting the forms of utilizing the soil to the demands of the production process. At this moment the agricultural means of production have hardly been socialized four per cent. The remaining ninety-six per cent are still the private property of the peasants. But we must bear in mind that the agricultural means of production, the peasant holdings as well as the State holdings, constitute only a little over one-third of the total means of production of the Soviet Union. It would be a work of supererogation to attempt to prove that the significance of the nationalization of the soil can only become completely evident as the final result of a high stage of development in agricultural rechnique and of the resulting collectivization of agriculture, ie. after a lapse of a number of years. But it is precisely in this direction that we are going.

The soundness of socialized

industry

We Marxists were well aware, even before the Revolution, that the socialist transformation of economy must necessarily begin with industry and with mechanical transportation, and, later, involve also the village. Therefore a study — fortified by figures of rhe activity of the nationalized industry is the fundamental question of the socialist evolution of our transition economy.

In the field of industry, socialization of the means of production is of the order of eighty-nine per cent; together with railroad transportation, ninety-seven per cent; in heavy industry alone, ninety-nine per cent. These figures indicate that the proprietary status which resulted from nationalization has not subsequently suffered any change to the detriment of the State. The mere fact is of the very greatest importance. We are interested, however, chiefly in another matter. What percentage of the annual production falls to the socialized means of production?, Le. how productively is the State applying the means of production appropriated by it? The General Table of

the State Planning Commission affords the following information on this point. The nationalized and co-operative industries in 1923-4 furnished 76,3

per cent of gross

production; this year they have furnished 79.3 per cent; the forecast figures of the State Planning Commission for next year (1925-6) show that they will furnish 79.7 per cent. As far as private industry is concerned, its share of production in 1923-4 was 23.7 per cent; in 1924-5, 20.7 per cent; and for the next year (1925-6) its share will be 20.3 per cent. However cautiously the preliminary figures for next year may have been arrived at, a comparison of the dynamics of nationalized and private production within the toral sum of commodities in the country has an immense significance. We find that in the past year as well as in this year, ie. in the years of emphatic economic progress, the share of nationalized industry has increased by about three per cent, while the share of private industry has decreased by the same figure. This percentage is the measure of the gain made by the preponderance of socialism over capitalism in this short period. The percentage may appear small, but — as we shall see immediately — its symptomatic importance is really very great.

What danger could there have been in the transition to the New Economic Policy and during the first years of that policy? The danger was that the State — by reason of the complete exhaustion of the country — might have turned out to be incapable of lifting with its shoulders the great industrial enterprises in a sufficiently short time. In view of the then quite insufficient activity of the largescale enterprises (they were working at abour ten or twenty per cent of capacity the middle, smaller, and even homeworking establishments might, by virtue of their adaptability, their "clasticity", attain a considerable preponderance. The so-called

"wastefulness" of the first period,

representing a socialist tribute to capitalism in return for starting the opcration of the factories and works confiscated from capitalism, threatened to hand over a great share of the national wealth to all sorts of traders, middlemen and profiteers. The first enterprises to breathe new life from the Nep atmosphere were the home-working industries and small workshops. The combination of private commercial capital with petty private industry — including home industry — might have led to a fairly rapid process of original capitalist accumulation, in the old beaten tracks. Under these circumstances, we were menaced with, such a loss of speed as might tear the reins of economic leadership from the hands of the Workers" State with elemental force. This does not necessarily mean that every passing or even lasting enhancement of the specific gravity of private industry within the framework of the general turnover involves unconditionally catastrophic or even grave consequences. Here also, quality depends on quantity. If the final figures should show that the 'specific weight", the share of capitalist production in the last two or three years had increased by one or two or three per cent, this would not be equivalent to a menacing situation. Nationalized production would still constitute fully threequarters of the total quantity, and to make up for this lost speed would not be an unsolvable task when we consider how much of their capacity has been reached by the large-scale enterprises. If it had turned out that the share of private capitalist production had increased five or ten per cent, the fact might be somewhat more serious, but even this result of the first period — the period of reconstruction — would by no means signify that nationalization was economically unfavourable. The inference could only be that the most significant section of the nationalized industry had not yet developed its necessary evolutionary

In the matter of the co-ordination of the economic dynamic. Far more importance must be assigned to the

activities of city and country, the General Table provides fact that — as a result of the first period of the Nep,

fundamental — and therefore very convincing — data. As which is concerned only with reconstruction and which is

will be seen from the table, the peasantry throws less than most difficult and dangerous for the State — nationalized

one third of its gross production on the market and this industry not only lost nome of its territories to capitalist

mass of commodities constitutes more than one third of industry, but, on the contrary, forced the latter back to the

the total goods turnover.

extent of an additional three per cent. This is the immense

The ratio between the agricultural and industrial symptomatic significance of this little figure!

commodities total fluctuates within very narrow limits

Our inference becomes still clearer when we proceed

about the figure 37: 65

to investigate not only the data concerning production,

This means that if we measure commodities not by but also those concerning the trade turnover. In the first

the picce, the pound and the yard, but in rubles, we shall half of 1923, the private capital concerned in domestic

find that somewhat more than one third of the commodities trade constituted abour fifty per cent of the total, in the

handled on the market are agricultural, and somewhat less second half of 1923 abour thirty-four per cent, while in

than two thirds urban, ie. industrial commodities. This 1924-5, it amounts to about twenty-six per cent. In other

may be explained by the fact that the village satisfies its words, the specific weight of the private capital involved

own requirements to an enormous extent without resorting in domestic commerce has dropped more than fifty per

to the market, while the city throws almost its entire procent (from one-half to one-quarter). This condition was

duction into the market. The much-divided consuming not attained by merely "choking trade", for in the same

of State and co-operative trade

peasant economy is excluded from the market to the extent

the turnover

period

of more than two thirds of its total economic turnover, and increased more than one hundred per cent. We are, thereonly the remaining third has a direct influence on the econfore, witnessing a reduction of the social rôle not only of

omy of the country. Industry, on the other hand, in accorprivate industry, but also of private commerce. And this,

dance with its nature, participates in the total turnover of in both cases, while the productive forces and the trade

the nation with all its production; for the 'internal" turnover turnover are both increasing! As we have seen, the General

within industry, within the trusts and syndicates themselves, Table also provides for a further decrease — to be sure

which reduces the commodity content of production by 11 a small one — of the specific weight of private industry

per cent, not only does not reduce the influence of industry and of private trade. We may await with composure the

The victory of the

realization of this supposition.

on the total economic process (due to the simplification of

the turnover, but, on the contrary, strengthens this nationalized industry over private industry should not be

influence.

interpreted unconditionally as an unbroken ascending line.

Though the mass of agricultural products which are There may be periods in which the State, depending upon

desirous

consumed in kind does not influence the market, this its

economically protected forces,

should not be taken to mean that it does not influence the accelerating the speed of development, will consciously

economy. In the given economic situation, this mass reppermit a provisional increase of the "specific weight"

resents the necessary natural "hinterland' of that one third private enterprises: in agriculture, in the form of 'strong',

of peasant production that goes on the market. This one i.e. farmer capitalist establishments; in industry, and again

third is the value in exchange for which the village requires in agriculture, in the form of concessions. If we consider

dwarf-like character of the

an equivalent value from the city. From this fact the the extremely "atomized"

enormous importance of village production in general (and greater part of our industry, it would be naive to suppose

of its one third that goes to market in particular, for the that any increase of the specific weight of private producentire economy, becomes quite apparent. Realizing our tion beyond the present 20.7 percent would necessarily

crops and, particularly, carrying out export operations, is be equivalent to a menace to a socialist reconstruction. In

one of the most important factors in our annual economic fact, it would be erroneous to attempt to set any rigid limits in this field. The question will be determined not

balance sheet. The mechanism of co-operation between

city and country will become more and more complicated.

but by the general dynamics of

by a formal barrier,

We have long been unable to say that we are dealing evolution, and the study of these dynamics shows that in

merely with the case of exchanging so many pounds of the most difficult period, when the large-scale enterprises

peasant grain for so many yards of calico. Our economy showed rather their negative than their positive qualities,

has entered the world arena, and has thus added new the State was able to resist the first attack of private

links to the chain uniting city and country. The peasants' capital. In the time of the most rapid progress, in the last

grain is exchanged for foreign gold; the gold, in turn, is two years, the relation of the economic forces brought

transformed into machinery, agricultural implements, and about by the revolutionary coup d'étar has been syatereplacement plant for city and country. Textile machinery matically shifted in favour of the State! Now that the

obtained with the gold realized on exports of grain mainchief positions have been far more securely occupied — if

tains the equipment of the textile industry and thus lowers only by reason of the fact that the large-scale enterprises

the prices of textiles passing into the village. This process are approaching one hundred per cent production — there

of circulation becomes quite complicated, but its basis is no reason to fear any surprises as far as the internal

remains a certain mutual economic relation between city factors of our economy are concerned.

and country.

But it must not be forgotten for a moment that this

mutual relation is a dynamic relation

dominant principle in these complicated dynamics is

I do not maintain here nor in the other cases that may

arise — that all the figures of the table are new, but they have

Coordination

been checked, supplemented and systematized; they now embrace

our entire economy. It is to this that they owe their extreme

of city and country

importance

32

and that the

industry, In other words, if agricultural production and, more particularly, the commodity portion of this production sets certain definite limits for the evolution of industry, these limits are not altogether rigid and immovable. The development of industry cannot be limited only by the amount by which the harvest has increased, for the mutual interdependence is here far more complicated. Industry, to be sure, rests on the village, particularly as far as finished goods are concerned, but the growth of the village is paralleled by the development of a larger and larger market within industry itself.

Now thar agriculture and industry are approaching the culmination of the process of reconstruction, industry is assuming the character of the stimulating element to an incomparably higher degree than hitherto. The problem of a socialist influence on the village by the city-not only through cheap commodities but also through more and more perfected implements for agricultural production, which forces the introduction of a collective exploitation of land-this problem now faces our industry in all its concreteness and immensity

The socialist reconstruction of agriculture will of course be achieved not only by the co-operatives as a mere form of organization, but also by means of co-operatives that are based on the mechanization of agriculture, on its clectrification, on its general industrialization. This means that the technical and socialist progress of agriculture cannot be separated from an increasing predominance of industry in the total economy of the nation. And this, in turn, involves in our subsequent economic development, an at first slow-but later faster and faster—overtaking of the dynamic cocfficient of agriculture by the dynamic coefficient of industry, until this opposition shall have entirely disappeared.

Accomplishments

of socialism in industry

The production of all our industries in 1924-5 exceeded the production of the preceding year by 48 percent. Next ycar an increase of 33 per cent may be expected as compared with this year (ignoring the lowering of prices). But the various categories of our industrial enterprises are by no means developing uniformly

The large-scale enterprises in the current year showed an increase in production of 64 per cent. The second group, which we may provisionally designate as the medium enterprises, showed an increase of 55 per cent. The petty enterprises increased their production by only 30 per cent. In consequence, we have reached a position in which the advantages of the large-scale enterprises as compared with the petty and medium enterprises are already quite evident. But we cannot yet assert that we have already fully and completely realized the possibilities involved in a socialist economy. As far as we are concerned with the predominance of the large-scale enterprises in production, over the medium and petty enterprises, we are at present enjoying only those advantages which inhere in large-scale enterprises even under capitalism. As for the standardization of products on a national scale, the normalization of the processes of production, the specialization of establishments, the transformation of entire industrial plants into mighty consolidated "works" of an organization embracing

the entire Soviet Union, the planned material association of the production processes of heavy industry and of the finishing industries — these fundamental tasks of production under socialism are only beginning to receive our attention. Boundless prospects here open before us, affording possibilities that we shall far exceed our former proportions. But this is a matter of the future and will receive attention in due time

Up to now, the advantages afforded by a national conduct of the economy have not been utilized in the field of production itself, Le. the field of the organization and co-ordination of the material processes of production, but in that of the distribution of production; the providing of substances, raw materials, utensils, coc. to individual branches of industry, or, to use the language of the market, the investment of operating capital and, partly, of original capital. Freed from the fetters of private property, the State — by means of the pump of the State budget, by means of the State Bank, by means of the Industrial Bank, etc. — could at any moment pump cash resources to the point where they were most needed for the preservation or the rebuilding or development of the economic process This advantage of a socialist economic method has played a rôle of true redemption in the last few years. In spite of not infrequent crude mistakes and errors in the distribution of resources, we have nevertheless handled them far more economically and practically than would have been possible in an clemental capitalist process of reconstruction of the productive forces, It is only by reason of this circumstance that we have been able to attain our present stage in so short a time without resorting to foreign loans

But this does not exhaust the question. The economics and, consequently, the social feasibility of socialism are apparent also in the fact that socialism has liberated the process of reconstruction of the economy from all the superfluous outlay in favour of the parasitic classes. It remains a fact that we are approaching the production level of 1913, although the country is considerably poorer than before the war. This means that we are able to attain the same production results by means of smaller social overhead expenses. We no longer spend money on the monarchy, the nobility, the bourgenisie, excessively privileged intellectual strata, or, finally, for the insane frictions within the capitalist machinery itself." Having approached the task socialistically, it was made possible for us to mobilize directly for purposes of production a far greater section of our as yet limited material resources, and thus to prepare for a more rapid rise of the material standard of living of the population in its next stage

We are dealing therefore — on our nationalized sail - with a scattered peasant economy whose commodity production amounts to somewhat more than one third of Deposits and current accounts amounted in 1924-5 to not more than cleven per cent, on the avcrags, of the deposits in 1913. By the end of next year, it is expected that this item will rise to about thirty-sis per cent of the 1913 Jevel. This is one of the striking indications of the meagrencis of our savings. But the very fact that although we have attained a deposit figure amounting to only about eleven per cent of the pre-war figure, our cconomy has mevertheless been raised to about seventy-five per cent of the pro-war level, is the most striking proof of the fact that the Workers" and Peasants'

resources it i way that is incomparahly more economical. systematic and practical than is the case in a bourgeois system

The compatative slowness of the development of transportation eificiency, an compared with that of agriculture industry, may be in part explained by the fact that in the pre wur period the specific weight" of Imports and exports considerably higher than now, This is a further indication pointing to our having attained the pre-war level of industry in spite of our far more modest resources and social overhead expenses than obtained in 1913

33

State applies its social

and

was

the values handled on the market. Of the capital employed in agriculture, barely four per cent represents socialized

We have an industry whose fundamental capital is socialized to the extent of 89 per cent, and this socialized industry furnishes more than 79 per cent of the gross raw production of industry. The 11 per cent of non-socialized means of production consequently yields more than 20 per cent of the gross production." The share held by the State production is increasing.

Railway transportation has been socialized 100 per cent. The use of transportation is increasing constantly. In 1921-2 it was abour 25 per cent of the pre-war efficiency: in 1922-3, 37 per cent; in 1923-4, 44 per cent; and in the year 1924-5 it will exceed 50 per cent of the pre-war figure. For next year, we expect to attain 75 per cent of our freight transportation in the pre-war period

In the domain of trade, the socialized — i.e. state and co-operative → resources of production constituted 70 per cent of the total capital involved in the turnover, and this percentage is constantly increasing. Foreign trade has been entirely socialized; the state monopoly of foreign trade remains an immutable principle of our economic policy. The whole turnover of foreign trade will rise to 2,200,000,000 gold rubles next year. The share of private capital in this turnover — even adding contraband goods, which addition is perfecily justifiable — can hardly be more than 5 per cent of the total.

The banks — in fact, the entire credit system — have been socialized almost 100 per cent. And this tremendouslyincreasing apparatus is now discharging, with more and more clasticity and efficiency, its task, which is that of mobilizing cash resources

The state budget is rising to 3,700,000,000 gold rubles, now amounting to 13 per cent of the national gross income (29,000,000,000 rubles) or 24 per cent of its total commodities (15,200,000,000 rubles).

The budget is becoming a powerful internal lever for the nation's economic and cultural advance. Such are the figures in the General Table.

These figures are of world historic importance. For the first time, the activity of socialists — now more than a century old — which began with the Utopias and later developed into a scientific theory, has been put to a powerful economic "test', a test which is already entering its ninth year. All that has been written on socialism and capitalism, freedom and tyranny, dictatorship and democracy, has been subjected to the acid test of the November Revolution and has acquired a new, incomparably more concrete form. The figures of the State Planning Commission make up the first — though as yer imperfect balance sheet of the first chapter of the great experiment of transforming bourgeois society into socialist society. And this balance sheet is entirely favourable to socialism.

War after war had reduced Soviet Russia to a state of devastation and exhaustion such as had hardly ever been reached by any other country. All those capitalist countries that had suffered most in the war rehabilitated themselves chiefly with the aid of foreign capital. Only the land of the Soviets, once the most backward of all, and the most devastated and exhausted by wars and revolutionary convulsions, was able to rise out of absolute poverty through its own power alone, with the active hostile intervention of the entire capitalist world. It is only owing to the complete abolition of feudal land-holding and of bourgeois property, only owing to the nationalization of all the fundamental resources of production, to the State socialist methods and

for feeding the process of

the mobilization and allotment distribution of the necessary resources, that the Soviet Union has risen out of the dust and is now forcing its way into the system of world economy as a factor of increasing importance. The General Table of the Scate Planning Commission is connected by means of unbroken threads running all the way back to the Communist Manifesto of Marx and Engels, which appeared in 1847, and reaching all the way our into the socialist future of mankind. The spirit of Lenin hovers over these dry columns of figures.

Russia and the capitalist world We shall have accomplished a huge task — not only quantitatively, bur also qualitatively — when we attain the pre-war level, given the present historical conditions. The preceding chapters have been devoted to this question. But only the realization of this accomplishment will bring us to the starting-point from which our real economic race with

The final lines of the commentary by the State Planning Commission formulated the total task as follows: "To retain the conquered positions and to advance, at every point where such is permitted by the economic sitantion, consistently year by year, toward socialism — though it be only step by step? Taken too literally, these lines might give rise to false conclusions. The words 'though it be only step by step", each year, in the advance toward socialism, might be interpreted as implying that the rate of speed is more or less a matter of indifference; if only the diagonal of the parallelogram of forces tends toward socialism, we must ultimately attain the goal. Such an inference would be entirely wrong, and the State Planning Commission never intended to say any such thing. For, as a matter of fact, the rate of speed is precisely the decisive element! It is only the higher speed of State industry and State trade, as compared with private capital, that enabled them to secure a 'socialistic' diagonal of the parallelogram of forces for the period we have covered. But far more important is the relation of the speed of our total development to the speed of the world economy. This question is not touched upon directly in the memorandum of the State Planning Commission. We therefore consider it all the more important to discuss the matter very fully, since this new criterion will serve to the same extent for determining our successes and failures in the next effort, as the criterion of the 'prewar level" has served to measure the successes of our reconstruction period

It is quite evident that as we adapt ourselves to the world market, not only our prospects but also our dangers will increase. The basis, as of so many other conditions, is here again the dispersed form of our peasant economy, our technical backwardness, and the present immense production superiority of world capitalism as compared with us. * This disparity between the instruments of production and production itself may be explained chiefly by the varying organic composition of capital: it is natural for the instalment plant to be extremely small as compared with the living human force

expended without due record. At the other extreme, which is

we must also consider the fact that the efficiency of our greatest establishments, for instance, our huge metallurgical establishments, is still very far from one hundred per cent of capacity. 34

This plain statement of the case by no means contradicts

produces 21 per cent of the cereals, 32 per cent of other

food plants, 52 per cent of the cotton, 53 per cent of the the fact that the socialist mode of production - in its methods, rendencies and

forestry products, 62 per cent of the pig iron, 60 per cent

possibilities — is incomparably

stronger than the capitalist mode of production.

of the steel, 57 per cent of the paper, 60 per cent of the

The lion

copper, 46 per cent of the lead, and 72 per cent of the is stronger than the lion's cub. The young lion's best

petroleum of the entire world. The United States owns chances of survival are in his adolescence, in the strengthone third of the world's wealth. It possesses 38 per cent of ening of his teeth and claws, which is merely a matter of time.

the world's water power, 59 per cent of its telegraph and

telephone lines, 40 per cent of the railroad mileage, and

What constitutes the most powerful point of superior90 per cent of the automobiles.

ity of aged capitalism as compared with youthful socialism,

The strength of current produced by the public power at least for the present? Not the values available, the vaults

stations of the Sovict Union will rise to 775,000 kilowatts full of gold, not the total mass of accumulated and appronext year. In the United States, the amount of current priated wealth. The accumulated resources of the past are

produced last year was already 15,000,000 kilowatts. As for not without their importance, but they are not the decisive

the power stations of the factories, our census of the year factor. A living society cannot live for long on its old stock;

1920 shows their total current strength to be almost it must cover its needs with the products of living labour.

1,000,000 kilowatts. In the United States, abour 10,500,000 In spite of its wealth, ancient Rome could not fesist the

kilowatts were recorded in the same period advancing 'barbarians" when the latter became the bearers

A general expression of the productivity of labour is of a labour productivity that was higher than that of the

found in the national income, the calculation of which is, decaying slave economy. The bourgeois society of France,

as is well known, a marter of great difficulty. According to awakened by the Great Revolution, simply took away the

the data of our Central Statistical Department, the national riches that had been accumulated by the Italian cityincome of the Saviet Union in 1923-4 was abour 100 rubles republics since the Middle Ages. If America's labour

per capita; *that of the United States, on the other hand productivity should drop below the European level,

assistance

in the

America

about 550 rubles per capita. Forcign statisticians, however,

but little

would find

give the figure of the national income of the United States $4,500,000,000 in gold that she has stored in her bank

not as 550, but as 1,000 rubles per head. This shows that vaults. The fundamental cconomic superiority of bourthe average productivity of labour, conditioned by the geois states consists in the fact that capitalism, for the

available machinery, organization, working routine, etc., present, still produces cheaper and better goods than

may be as high as ten times, and surely not less than six socialism. In other words, the productivity of labour in the

times, as great as in our country

countries that are still living in accordance with the law of

These figures, important though they may be, by no inertia of the old capitalist civilization is for the present

means make it cercain that we shall be defeated in this still considerably higher than in that country which is

historical struggle; not only because the capitalist world beginning to apply socialist methods under conditions of

does nor consist of

America alone; not only because

inherited barbarism.

We are acquainted with the fundamental law of history: the victory ultimately falls to that system which provides human society with the higher economic plane.

The historical dispute will be decided — and of course

ВОЗЬМЕМ. -%

not af once — by the comparative coefficients of labour productivity.

The whole question at present is this: in what direction, and at what speed, will the mutual relation

АБУРАН»

berween our economy and that of the capitalist world alter in the nest few years?

Our economy may be compared with the capitalist

пулу

Вложим:

moment; or, it may be a dynamic comparison, fe. it may be based on a comparison of the speeds of evolution. We may compare the national income of the capitalist countries with

our national income. Or, we may compare the

-АМЕРИКИ

coefficients of the expansion of production. All such comparisons and contrasts have their point — some more,

as their relation and their mutual

others less — so long

РАБОТУ

СДЕЛАЕМ:

dependence are borne in mind. We shall take the liberty to give a number of examples below in order to illustrate our

ВЫВЕРЕНКАК ХРОНО

thought more fully.

МЕТР

НУЮ

States of America, the capitalist

process has teached a culminating point. The present material superiority of capitalism over socialism may be excellently formulated by studying this superiority at the

'IET LSTARE THE STHEN OE THE NE COLLIOX IS HOVIKE KESSL, U'SERK I Do HIE

PECE OF ABRICA LHE, AARSCENOEK BIE A DROSSENDE T' point at which it is most marked.

Koote sappell for Amethanii

The Council of American

Industrial Committees

recently published a table from which we take a few figures. The population of the United States amounts to about 6 per cent of the total population of the carth and

35

immense political forces are concerned in the historical struggle, which have been created by the entire preceding economic development; but particularly for the reason that the further course of the economic evolution of North America itself is a huge unknown quantity. The productive farces of the United States are by no means fully employed and the lowering of the percentage of employment signifies simultaneously a lowering of the productive forces. The United States is by no means adequately supplied with sales markets. The problem of sales is becoming daily a more and more disturbing one. It is not at all impossible that in the near future the comparison coefficient of the productivity of labour may tend to adjust iself by reason of two causes: by our figure going up, and by the American figure going down. This, of course, applies far more emphatically to Europe, whose production level is already far below that of the United States.

One thing is evident: the superiority of the capicalist technique and economy is as yet a mighty one; a steep ascent confronts us; the tasks and difficulties are truly colossal. A path of safety can be found only with the aid of the measuring-sticks of world conomy.

The comparison coefficients

of world economy

The dynamic equilibrium of the Soviet economy should by no means be considered as the equilibrium of a closed and self-sufficient unir. On the contrary, as time goes on, our internal economic equilibrium will be maintained more and more by the accomplishments of our imports and exports. This circumstance deserves to be traced to its logical conclusion, with every inference drawn. The more we are drawn into the system of the international division of labour, the more openly and directly are such elements of our domestic economy as the price and quality of our goods made to depend on the corresponding elements in the world market.

Our industry has hitherto been developed by keeping an eye on its pre-war level. In order to compare or determine the values of production, we are making use of the catalogue prices of 1913, But our first rehabilication period, in which such comparisons — rather imperfect ones, we may add — were in place, is approaching its conclusion, and the whole question of a criterion for our economic development is being shifted to another plane. From now on, we shall need to know at every moment to what extent our production lags behind that of the European or the world market in quantity, quality, and price. The end of our reconstruction period will permit us finally to cast aside our 1913 catalogues and to lay in a supply of catalogues of German, English, American and other firms. We shall have to concentrate our attention on new index figures which - both in quality and in price — will present a comparison between our production and that of the world market. Only these new yardsticks, these comparison coefficients no longer taken from our own country alone, but now having universal application, will be justified in the future as a measure of the various stages of the process expressed in Lenin's formula: "Who beats whom?

conditions in world

Among the opposing

and world politics, decisive importance must be assigned to the speed of our advance, i.e. the speed of the quantitative

and qualitative growth of our labour performance

At present, our backwardness and poverty are undoubted facts; we do not dispute them, on the contrary, we constantly emphasize them. Systematic parallels with world cconomy may only serve as a statistical expression of this fact. Is there not a danger that precisely in the immediare future, which will not see a sufficient advance on our part, the world market may crush us by reason of its tremendous material supcriority? If we put the question thus, no infallible answer — and certainly not a statistical answer — can be given, just as it is impossible to give such an answer to the question of whether the farmer-capitalist tendencies (the kulak tendencies) do not involve a danger of absorbing the medium peasants, of crippling the influence of the proletariat on the village, and of providing political obstacles to a socialist construction. Nor can we answer categorically the question

present extremely relative stabilisation process should continue — will not succeed in mobilizing considerable armed forces against us and thus retard our cconomic advance by means of a new war.

Such questions cannot be answered by means of passive prognosis. We are dealing here with a struggle, in which the factor of creation, of manoeuvring, of energy, cic., plays an important, sometimes even a decisive, rble. The investigation of these questions is not the rask of the present work, in which we are aiming to determine the internal tendencies of economic evolution, and to exclude other factors as far as possible

At any rate, we must make the following reply to the question as to whether the world marker will not succeed in crushing us by reason of its economic superiority alone. We do not stand defenceless before the world market; our economy is protected by specific state institutions, which are applying a versatile system of socialist protectionism. But how great is its effectiveness? The history of capitalist evolution may furnish an answer to this question. For long periods Germany and the United States were far behind England from the industrial standpoint; their backwardness may have appeared insurmountable. But the utilization of natural and historical circumstances later permitted these backward countries, with the support of a protective tariff, not only to catch up with their more successful rival, but far to out-distance her. National boundaries, the national authority, the tariff system, all these were powerful factors in the history of capitalist evolution, and they are far more effective in the case of a socialist country. A profoundly planned, persistent and yet flexible system of socialist protectionism is the more important for us, the more extensive and the more complicated our connection with the capitalist market may become.

But it is self-evident that protectionism, the highest expression of which is the monopoly of foreign trade, 15 D no means omnipotent. It may force back the flood of the capitalist mass of commodities and regulate it in accordance with the influence of our domestic production and consumption. In this way, protectionism may secure the necessary reprieves for socialist industry in elevating its level of production. Our process of construction would be impossible without the foreign trade monopoly. On the other hand, however, our real production successes alone permit us to retain our socialist protectionism; and in the future also, the foreign trade monopoly may, to be sure, protect our domestic industry against blows from without, but it cannot, of course, serve as a substitute for the development of industry itself. This development must from now on be measured by the coefficients of the world market.

Our present comparison with the pre-war level is

whether capitalism — if its

made entirely from the point of view of quantity and price. We are considering the product not from the standpoint of its composition, but from that of its nomenclature, which is, of course, wrong. The comparative production coefficients must also include quality; otherwise they may become merely a source, or instrument, of self-delusion. We have had some experience in this matter in connection with prices that went down while quality also declined in certain cases. When the quality of one and the same com modity is the same both in our country and abroad, the comparison coefficient will vary with the cost of production. Cost being the same in both domains, the coefficient will vary according to quality. Costs being different, and quality also different, a combined estimate based on both criteria becomes necessary. The determination of cost is a portion of the arithmetic of production. But the quality of the product can for the most part be determined only with the aid of a number of criteria. A classical example is the electric light bulb; the quality of the bulb is measured according to the length of its life, the quantity of energy consumed per candle-power, the uniformity of its distribution of light, etc. The fixing of certain technical norms and standards of perfection, including also the 'qualitative" standards, immensely facilitares the derivation of comparison coethcients. The relation between our standards and the standards of the world market will be a fixed quantity for each specific period. We need only to know whethér our product is up to the accepted standard. As for comparisons of values, this question will be very simple of solution when the qualitative relation has been fixed. The cambined coefficient is obtained by a simple process of multiplication. For example, if a certain commodity is twice as poor as the foreign commodity and one and a half times as dear, the comparison coefficient is one third.

If it be objected that we do not know how high foreign production costs are, this objection may be correct, to be sure, bur it is of subordinate importance from a practical standpoint. It is sufficient to know the price — it is indicated in the catalogues. The difference between cost and price is the profit. A lowering of our costs will permit us to meet the prices on the world market independently of the foreign costs of manufacture. We shall then have achieved, at least in outline, a basis for the next period This period will be followed - perhaps not so soon - by the third period, which will face the task of defeating capitalist production on the world market by means of the products of the socialist economy.

The obiection is sometimes made that the number of commodities is altogether too great, and that the derivation of the comparison coefficient is a task transcending human energy'. Two different answers may be made to this objection. In the first place, all the available commodities are subject to arithmetical calculation, are recorded in books and catalogues, and the great variety of commodities seems to involve no element transcending human power. In the second place, the student may for the time being content himself with a discussion of the most important articles of mass consumption, the so-called key commodities in each branch of production, and assume that the other commodities occupy an intermediate position in the system of comparative evaluations.

A further objection calls attention to the difficulties involved in the measurement or even in the mere definition of quality. In fact, what is the quality of calico? Its durability, its cotton content per square yard, the fastness of its colour, or its attractiveness to the eye? There is no doubt that the determination of quality is very difficult in most commodities; but the task is none the less not insoluble. It must not, however, be approached from the standpoint

of fictitious or absolute criteria. In the case of calico Intended for the peasant market or the workers" market, the durability of the material will stand first, the permanence of the colour second. In evaluating these two factors — and this is quite possible if strictly objective methods be pursued — we may obtain a fundamental definition of quality numerically expressed. It is far easier to obtain a precise, i.e. numerical, comparison coefficient of our plough, our threshing machine, our tractor, as compared with the same machines of American manufacture. This question will play the same part in the agriculture of the next few years as the renewal of the fundamental capital did in industry. In the purchase of a horse or a cow, the peasant himself determines all the necessary "coefficients", and with astonishing precision, too. But he is almost helpless when abour to purchase a machine; if he has been duped in the purchase of a poor power transmission, he will infect his neighbour with his timidity to purchase more machinery. We must succeed in getting the peasant to know what machine he is buying. The Sovier threshing machines must become a current commodity on which the comparison coefficient may be based. The peasant will know precisely what he is buying, and the State will know precisely what is the relation berween our production and the production of the United States of America.**

The idea of comparison coefficients, which at first blush may appear an abstraction, a product of specialist's study, is in reality deeply rooted in life and literally cries out from all the cconomic relations and oozes from all the pores of daily life. Even our present comparison coefficients, based on the pre-war standard, were not a result merely of a theoretical understanding of the matter, but also of the needs of daily life. The average consumer, who has no access to statistical tables and price curves, makes use of his consumer's memory, his own memory as well as his family's. The statistical table tells us of a certain percentage of the pre-war level, calculated almost exclusively from the point of view of quantity, but the consumer's memory adds: "In peace time (ie. before the imperialist war) boots cost so many rubles and could be worn so many months." Whenever he bought boots, the consumer always worked out a comparison coefficient for himself. And the same operation has always been performed by every purchaser: whether it was the Leather Trust buying machinery from the Voronezh or Kiev Machine Works, or the peasant woman buying three yards of calico at the weekly village market. The only difference has been that the Trust made its comparisons on the basis of catalogues and office records, while the peasant woman worked from her memory. And we must admit that in these two cases, the comparison coefficients of the peasant woman, based as they were on actual experience, were far more real than the coefficients of the Trust, which were compiled hastily and almost always without any regard to quality, being sometimes even biased. However this may be, the statistical economic analysis and the daily work of the consumer's memory have been in agreement in that both sought a point of departure in the conditions of the pre-war economy.

This peculiar national limitation, which secks for

Our adducing a number of objections above should not be interpreted as equivalent to a statement on our part that the idea of comparison coefficients is encountering the resistance of interested parties. On the contrary, the specialists active in production, in the state commerce, in the co-operative system, and in the technical scientifie institutes, are very sympathetic to this ides, arising, as it does, out of our own economic evolution. The necessary preliminary investigations have been begun, both in the special conference for quality of production" and in the technical-scientific institutes.

37

the

comparisons with the national past, is approaching its end. Our connection with the world market is already sufficiently voluminous to oblige us at every step to compare our wares with those of foreign origin. And as the old comparisons weaken and disappear (for the memory of pre-war products is becoming weaker, particularly in the younger generation), the new comparisons become more and more illuminating, being based not on memory, but on the living facts of today. Our economic specialists bring us from abroad the offers of specific firms, holding specific goods, many kinds of catalogues, and also their own consumers experience. The questions which we had ceased asking in past years are now heard more and more, namely: What does this thing cost abroad? How does its quality differ abroad from the quality here? Assignments to foreign travel will become more frequent; we must acquaint the managers of our trusts, our factory directors, our best technical students, our foremen, mechanics, specialists, in one way or another, with foreign industry, of course not all of them at once, but in a certain reasonable rotation. The purpose of such foreign travel is to enable the shock troops of our production leaders to judge any unfavourable comparison coefficient from every possible angle, and to alter such a cocflicient in a favourable manner with the greatest certainty. It would be an evidence of bureaucratic narrow-mindedness to imagine that our orientation toward Western countries should include only the heads of our economy. On the contrary, this orientation to the West is of a profoundly general character and is trickling downward in many ways.

Contraband plays a fairly considerable rôle in this connection, a rôle that should not be underestimated Contraband, while not a laudable section of our economic life, is nevertheless an important section, and besides, it is still based absolutely on the comparison coefficients of the world market, for the contraband trader only imports such foreign products as are considerably better and cheaper than our own. By the way, for just this reason, the struggle for quality in production is the best mode of combating contraband trade, which at the present time is draining dozens and dozens of millions of rubies in actual money from the country. Contraband is active particularly in small articles that enter into every phase of our daily life."

There is another field in which a comparison with foreign countries has really never ceased to be made; namely, that of agricultural implements and machinery The peasant was acquainted with the Austrian scythe and always compared it with our own. He knew the American McCormick, the Canadian Harris, the Austrian Heydt, etc. Now all these comparisons, as our industry advances toward a higher level, again become quite serious and animportant comparison arises:

comparison between the American Fordson and our tractor. When a peasant who has bought a threshing machine operated by horse-power sees a defective cast-iron rod go to pieces before his very eyes after two or three hours of work, his comment on this incident is couched in terms that exceed all our literary talents.

As for the worker, we find him not so much interested in comparison coefficients in the case of the products produced by himself, as in the case of those serving him as tools or as articles of consumption. He is very well acquainted with the quality of the American and Russian lathes, tools, tempering processes, instruments of precision, etc. It is hardly necessary to point out that the skilled worker is very sensitive to these differences and that one of the tasks of education in production in our country consists precisely in enhancing this delicacy of feeling toward the instruments of production..

What has been said should be sufficient to prove that the comparison coefficients of world production are not a mere figment of our imagination, but a matter of extreme practical importance, reflecting, as they do, the new tasks of our economic evolution.

Such a system of conparison coefficients furnishes us also with a cross-section of our present-day economy in the light of the level attained by world economy. The properly weighted average coefficient for our total production will indicate the degree of our backwardness in production in a precise numerical figure. Measured at periodic intervals, the commodities figures and the above-mentioned weighted average coefficient together will afford us a picture of what we have attained and will indicate for us the speed of our progress in individual branches of industry, as well as in industry as a whole

A man driving a wagon estimates the distance he has covered by his eye and by his hearing: but the automobile has its automatic speedometer for this purpose. Our industry will, in the future, not be permitted to proceed in its onward course without the use of its international measurements of velocity, and the data obtained by these measurements will give us a point of departure not only in our most important economic measures, bur also in many of our political decisions

If it be true that the victory of any order of socicty depends on the superiority of the productivity of labour inherent in it — and no Marxist will dispute this statement - we need i correct quantitative and qualitative mode of measuring the production of the Soviet economy borh for our current marker operations as well as for the judgment of the given stage in our world-historic course Material limits and possibilities

of the rate of

economic development

In the years 1922-4, the general industrial advance in our country was due chiefly to the advance in light industry. In the current economic year (1924-5), the primacy is beginning to pass to the industrial branches producing instruments of production. But the latter also will for the present continue to be restored on the basis of the old basic capital. In the impending fiscal year, in which the fixed investment capital taken over from the bourgeoisie will be exploited 100 per cent, we shall already begin to undertake a renewal of our basic capital. Altogether, the State Planning Commission is providing for 880,000,000 rubles to be expended in capital expenditures for industry (including electrification); 236,000,000 rubles for transportation; 375,000,000 rubles for the construction of dwellings and other edifices; 300,000,000 rubles for agriculture, Altogether almost 1,800,000,000 rubles, of which more than 900,000,000 rubles represent new investments, i.e. those provided by new accumulations in all of the economy. This plan, as yet only outlined and by no means officially checked up, constitutes a tremendous step forward in the distribution of the material resources of the country; hitherto we have been working with an available basic capital, occasionally supplemented and renewed by us. From now on, we shall have to create our basic capital de novo. Herein " The study of contraband commodities is extremely important both from the specialized production standpoint as well as from the general economic standpoint.