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CHAPTER EIGHT Economic Policy and Development population still lived off the land in a primitive subsistence economy. The Bolsheviks, having seized political power during a war and later having to defend themselves against foreign invaders, were forced to take emergency measures including the nationalisation of most of the capitalist concerns. These state capitalist enterprises became the economic basis of the Bolshevik dictatorship. In 1921, with the threat of foreign invasion gone, a new policy was adopted known as the New Economic Policy or NEP. This policy was described by Lenin as the “development of capitalism under the control and regulation of the proletarian state.” (Theses on the Tactics of the Russian Communist Party, adopted at the 17th Session, 5 July 1921.) Many of the smaller factories which were not ripe for central State management were handed back to private enterprise; foreign capitalists were invited to invest in Russia; State bonds were issued which wealthy Russians could buy; State control in agriculture was also relaxed. The government claimed that NEP was economically a success and by 1926 the pre-war level of industrial production had been reached. One of the aims of NEP had been to develop capitalist large-scale production at the expense of the isolated peasant family production. In the towns a class of wealthy traders and contractors known as ‘nepmen’ appeared and in the country a class of wealthy peasants or ‘kulaks.’ At the same time it was not clear what would be the future course of the development in Russia; many observers suggested that the new wealthy classes would grow in strength and eventually overthrow the Bolshevik dictatorship. The results of NEP, however, led to a discontent and arguments inside the Bolshevik Party; demands were made for strict measures against the private capitalists and rich peasants and for a policy of rapid industrial development. After much wavering the dominant section of the party led by Stalin adopted this policy in 1928 with the beginning of the first Five Year Plan and the ‘dekulakisation’ campaign. As the capital required for rapid industrial development could not be obtained from foreign loans it had to be obtained internally: from plundering the peasantry, poor as well as rich, and from intensifying the exploitation of the working class. In this way the economic basis of the Bolshevik dictatorship, the State capitalist sector, was strengthened at the expense of the private capitalist and peasant sectors. So also was the political rule of the Bolsheviks. The policy of taxing and plundering the peasantry to get funds for capital expansion was not new. It had been pursued by Tsarist governments. It has the one great defect: if carried beyond a certain point it defeats its own purpose by preventing agricultural accumulation and the growth of food supplies and raw materials. This was what happened in Russia as a result of the policy of the forced collectivisation of peasant farms. And worse, in fact, for not only did agricultural accumulation stop, it decreased as peasants destroyed their crops ands livestock. Between 1929 and 1932 the number of cattle fell by a third, sheep and goats by a half, and horses by a quarter. Not until 1939 was the loss made good. (Maurice Dobb, ‘Soviet Economic Development since 1917’, Routledge and Keegan Paul, 1960, page 246.) One result of this policy was the advent of an artificial famine in 1932-3. The disastrous results of this policy which was immediately evident forced the Bolsheviks to retreat a little, but the essentials their policy remained the same and the collective farms were compelled to sell their produce to the State at artificially low prices. GOVERNMENT CONTROL OF THE TRADE UNIONS With the implementation of the first Five Year Plan the position of the working class also grew worse. During the period of NEP the trade unions, though under Bolshevik control, had done something to protect the interests of their members. In 1929, however, the Stalin government removed the old leadership and purged many of the lesser officials as a prelude to bringing the unions under complete State control. In the 1930s the unions became organs of the State whose function was not to try to improve wages and working conditions but rather to reduce cost., keep wages down and increase production. As a result wages began to fall and working conditions to deteriorate. Some workers did try to resist but their position was weakened by the high unemployment of the time. In 1926 the Commissar of Labour estimated the number of unemployed as probably reaching two million, which included one million members of the trade unions. Two years later the Central Council of the Trade Unions reported two million of their members unemployed. (Maurice Dobb, ‘Soviet Economic Development since 1917’, p.190.) Workers who protested were denounced as ‘grabbers’ and ‘agents of the class enemy’ and blacklisted. In the years that followed the working class became completely subjected to the domination of the Bolshevik dictatorship. Their wages were fixed by the management alone; they were required to carry various passes and work-books; they had to suffer the vicious sweating system associated with the name of Stakhanov; the Labour code made strikes, absenteeism, lateness and even lax work criminal offences subject to harsh punishments. In addition, expropriated peasants and political and criminal prisoners were used as forced labour to construct dams and roads and to mine gold and other minerals. The heavy industries of Russia were built up at terrific human cost. During the 1950s the discipline and penalties imposed on workers were relaxed and at the same time the majority of occupants of the labour camps were released and the conditions of the remainder improved. Passive and sometimes active organised resistance played its part and also no doubt realisation by the authorities that with the growing complexity of production, such methods become less effective as means of promoting efficiency. Capitalist development in Russia under the Bolsheviks took the form of expanding the State capitalist enterprises; private enterprise played practically no part after the end of NEP, at least legally. A measure of the extent of the development can be seen by comparing the census figures of 1939 and 1959:
The industrial and office workers are all wage and salary earners while the collective farmers do not get their income in the form of wages as the price of their labour power. By comparison with Britain where the great majority of occupied persons are wage or salary earners, the figure for those in Russia not yet subject to the wages system is still high at more than 30 per cent though it should be remembered that in 1917 it was about 80 per cent. The working class in Russia in fact is still being recruited from the peasantry. The system of industrial control over the State capitalist enterprises was extremely centralised during the lifetime of Stalin. Ministries in Moscow set targets of how much each industry and factory should produce. The State directed what should be produced; the factory managers merely had to carry out these orders. The State also fixed the prices at which goods were to be sold to the consumer. As in all systems of rationing (which the State-directed system resembled) a black market appeared. Industrial agents or ‘pushers’ made a living by getting scarce supplies for a price. Indeed they became an essential part of the system. As time went on the defects and inefficiencies of the system became more and more evident. Yet when one economist, Voznessensky, suggested decentralisation in 1950 he was accused by Stalin of “seeking to restore capitalism” and shot. But by the end of Stalin’s life it was being realised that such crude methods had become a hindrance to further economic development. After his death changes were made both in agriculture and in industry. AFTER STALIN In agriculture the new government was faced with the legacy of the forced collectivisation programme. The policy they adopted involved making concessions to the peasantry to get them to produce more. Compulsory deliveries to the State were reduced and purchase prices raised. In 1958 the machine and tractor stations, through which the State had exercised control, were denationalised and sold to the collective farms. Since the fall of Khrushchev the government has pursued an even more conciliatory policy: at the end of 1964, all restrictions on peasants selling the produce of their own family plots were removed. These family plots play an important part in agricultural production. At one time the policy was to try and incorporate them into the collective farms but this proved impossible. Unlike those who work on State farms the collective farmer is not a wage worker; he receives his income partly in cash and partly in kind and supplements this from working his own plot. The aim of the government policy still is to introduce the wages system into the collective farms but many of these farms are too poor to pay a regular living wage to their members. Indeed many collective farmers are unemployed for a part of the year and if it were not for their family plots they would starve. Industry was decentralised in a reform of 1957 which set up regional economic councils. This was a concession to pressure for managerial independence which demanded that the mangers be given more freedom in fulfilling the targets set by the State. In recent years this pressure has been mounting; prominent Russian economists have been suggesting a relaxation of State control and a move towards a system which places more reliance on the market to fix output, prices and profits. Already controls have been relaxed in the retail trade where the old system led to periodic gluts and shortages. As supplies of shoddy goods began to mount up in the shops, the government allowed advertising, price-cutting, credit and hire-purchase to be used. Experiments in direct buying by the shops from the factories and farms has proved a commercial success and this method is being extended. In the field of service industries private enterprise, though nominally illegal, has been allowed to flourish again. It is only when businesses get too big (such as building contactors and largescale market gardeners) or are patently illegal that the State now acts against private enterprise. There is talk of extending the market system to the State and collective farms. Whether it will be extended also to industry and foreign trade, as in Yugoslavia, remains to be seen. Relaxation of State control causes new problems of its own such as growth of urban as well as rural unemployment and an accelerated drift to the towns making the housing problem more acute. These problems are already acute in Russia. Since the end of the last war and since the death of Stalin, the lot of the working class has been improving. The labour shortage which the slaughter of the war produced prevented the vicious Labour Code from being rigidly enforced. It had to be revised in 1951 and was finally abandoned in 1956. Despite this and despite increases in wages and consumption the working class still have no free and independent economic organisations with which to further their interests as the workers in some other capitalist countries have. The trade unions remain a part of the State machine concerned with such matters as insurance, safety and housing as well as with production. Many workers are gaining experience in organisation and administration in these social activities of the trade unions. The experience will prove invaluable when the workers in Russia become strong enough to form their own independent economic and political organisations. Capitalism in Russia, as elsewhere, supplies and trains its own grave-diggers. RUSSIA INVADING WORLD MARKETS In the field of foreign trade the building up of Russian industry has brought about a striking change in the attitude of the government towards the export market. The early attitude towards foreign trade was dealt with in ‘Soviet Export’, a book published in Moscow in 1936, in which the author, M. Zhirmunski, claimed that Russian trade policy is quite different from that of ‘ the capitalist countries’. Quoting from Lenin’s ‘Development of Capitalism in Russia’ he explained that the ‘capitalist’ countries move into the export market because “capitalist enterprise inevitably grows beyond the confines of the community, the local market, the region, and subsequently even of the state.” Russia, the author said, had no such problem: it exported according to plan and only in order to obtain from abroad the modern machinery needed to speed up industrial development. Because Russia was industrially far behind America, Germany and Britain, the Russian government decided in 1918 to make all foreign trade a state monopoly in order to control the nature and direction of all exports and at the same time prevent a flood of cheap imports from abroad which would have ruined the industries being built up. In the mind of the author of ‘Soviet Export’, this arrangement was not just a matter of convenience but a direct consequence of the difference between a ‘capitalist’ country and Russia where ‘the first Socialist revolution in the world’ had taken place. Many years later Stalin, in his ‘Economic Problems of Socialism in the USSR’ (Moscow, 1952), had another look at Russian foreign trade. He described the rapid growth of industries in Russia and in the countries of Eastern Europe in the Russian economic orbit and concluded: “It may be confidently said that, with this pace of industrial development, it will soon come to pass that these countries will not only be in no need of imports from capitalist countries, but will themselves feel the necessity of finding an outside market for their surplus products” (page 36). The state trade monopoly still exists but, as Stalin foresaw, it is now more and more concerned with finding markets abroad for Russian heavy and light engineering products, steel, aircraft, watches, cameras and diamonds, as well as for traditional exports of furs and timber. By the 1960s the volume of Russian foreign trade was approaching three times what it had been in 1913, but whereas then two-thirds of the exports were of fuel, raw materials and consumer goods, with negligible exports of machinery, the position in the sixties was that the first group had dropped to less than half, and the exports of machinery and equipment were more than 20 per cent (Statesman’s Year Book, 1965-66). One ironical and quite unplanned feature of recent years has been that Russia, formerly an exporter, has had to import great quantities of wheat and other foodstuffs (including much from Canada and USA), paid for by the export of gold. With its eye on world markets the Russian government has increasingly joined in international banking, monetary, shipping and other conferences, and introduced currency changes designed to make the rouble acceptable as a world trading medium. The Russian merchant marine has been greatly expanded “to meet the needs of our growing foreign trade” and, as the Minister of Marine said, freight rates are fixed “with an eye to profit”. (The Times, 10 September 1966.) Thus has the development of Russia as a great capitalist state made nonsense of the early claims that their foreign trade policy was quite unlike that of the ‘capitalist’ countries. |
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