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The Russian 'Planned Economy' – What Was It?

How can we define in Marxian terms the system of 'planned' or 'administrative' economy that emerged in Russia at the end of the 1920s?

One approach to this question is to examine relevant works written by Bolshevik theorists during the first decade after the Revolution, when freedom of debate within certain limits still existed in Russia. Two of these works are available in English translation:

(1) Nikolai Bukharin, The Politics and Economics of the Transition Period (published in Russia in 1920, in the UK by Routledge & Kegan Paul in 1979 – on internet at;

(2) E. Preobrazhensky, The New Economics (published in Russia in 1926, in the UK by Oxford University Press and Clarendon Press in 1965 – on internet at

These theorists took it for granted that since November 1917 the country had been embarking upon a more or less prolonged transition to socialism. (In 1936 Stalin declared that the transition was complete.) They acknowledged, however, that what was being built in Russia did not correspond to 'our old familiar ideas about socialism' (Preobrazhensky's phrase).

Logically there were two possible methods of dealing with such discrepancies. One method – the one that was adopted – was to change the meaning of 'socialism' to conform with the emerging Russian reality. The other method would have been to retain the original meaning of 'socialism' and choose another descriptive term for Russian society. But this was politically unacceptable, even in the 'liberal' 1920s, as it would have undermined the legitimacy of the Bolshevik regime.

A substitute for capitalism

The key discrepancy concerns the place occupied by 'socialism' in the Marxian schema of historical evolution.

According to 'the old familiar ideas', it is the function of capitalism to accumulate technologically advanced productive capacities that socialist society then uses to satisfy human needs. Thus capitalist development must precede the establishment of socialism.

In the new Bolshevik conception, by contrast, 'socialism' performs the same function as capitalism – the accumulation of productive capacities. 'Socialism' is now not so much the successor to capitalism as a substitute for it.

Accumulation was required in Bolshevik Russia not just because capitalist development had still been at quite an early stage in 1913 but also in order to restore the huge losses in productive capacity during World War One and the Civil War. Bukharin regarded such losses as inevitable even in the advanced countries, on the grounds that imperialist war causes capitalism to collapse and proletarian revolution leads to further civil and interstate wars. Thus the new society has to cope with a 'regression of the productive forces'.

Russia was the first country in which 'socialism' served as a substitute for capitalism but by no means the last. Almost all the other countries that later borrowed the Stalinist model, including China, North Korea and North Vietnam, were underdeveloped and ravaged by war.

Primitive accumulation

Capitalism in its mature form extracts the surplus it needs for accumulation in the course of production for market exchange. In its initial phase, however, capitalism jump-started the accumulation process by forcibly plundering resources from the peasantry at home and from colonial populations abroad. Marx calls this phase 'primitive accumulation' (Chapters 26-28 of Volume 1 of Capital).

Bolshevik theorists disagreed over whether their regime would have to engage in primitive accumulation. Bukharin argued that accumulation could and should be achieved on the basis of market exchange with the peasantry under the New Economic Policy, even though it would be a slow process ('riding into socialism on a peasant nag'). Preobrazhensky and others demanded a faster pace and considered primitive accumulation unavoidable. Stalin finally implemented the second strategy by means of collectivisation, which enabled the state forcibly to procure resources for rapid industrialisation from agriculture.

In an attempt to distance Russian practice from capitalism, the theorists stressed a distinction between 'primitive capitalist accumulation' and 'primitive socialist accumulation'. Clearly, however, there is no real distinction here. The whole debate bears witness to the close parallelism between Stalinist development and its classical capitalist prototype. 

Extending the concept of 'capitalism'

If we deny that the Russian 'planned economy' was socialism, what can we call it? Can we call it 'capitalism' – or, more specifically, a form of state capitalism?

The 'planned economy' did not function in exactly the same way as the capitalism that Marx had analysed in Capital and other works.

In particular, the Russian economy did not contain major units that operated as separate capitals, competing with one another to sell their products in the market. Enterprises of any size or significance were subordinate to industrial ministries and 'planning' agencies, all of which constituted a single bureaucratic apparatus. Who was to supply how much of what to whom was specified in advance by the state plan, so in most spheres of activity there could be no competition for customers.

The cycles of boom and slump so characteristic of ‘classical’ capitalism had no direct equivalent in the Russian economy.

Nevertheless, there is a strong case for calling the Russian 'planned economy' a form of capitalism despite these differences, even if this can be seen as extending the concept of 'capitalism'. The justification for such an extension is the role that the Russian system played as an alternative regime of accumulation that substituted for capitalism under certain conditions and occupied the same place as capitalism in the schema of historical evolution.