Editorial: Russia also juggles with finance
The more the Communists proclaim how different everything is in Russia the more events disclose how much that country resembles the other Capitalist States. The latest example is the decision of the Russian Government to issue a new currency in place of the old, thus doing what Belgium did in 1944 and what rumour says the British Government has been contemplating for some time past.
The Russian Government’s scheme, though rather complicated in detail, is simple enough in its broad intention. Wherever there is rationing and the sale of rationed goods at controlled prices a “black market” is bound to arise as those with enough money try to supplement their rations and get scarce high-priced luxuries. Russia was no exception though the “free” market in that country was officially recognised and anyone rich enough could buy what was offered at the enormous prices ruling there. The government’s scheme is to abolish rationing, reduce the prices of a few foodstuffs while raising the prices of other goods so that the new price level as a whole is raised to a point somewhere between the present low “rationed” prices and the present very high “free”market prices. At the same time they aim at a drastic reduction of the amount of money available to be spent, by the simple device of giving fewer new rouble notes in exchange for the old ones. If you have 100 roubles in cash in your pocket or at home you get only 10 in exchange. If you have 10,000 roubles deposited in a savings bank you get the full rate for the first 3,000 and two-thirds for the remaining 7,000 roubles. We can illustrate the effect by putting 10,000 roubles into pounds at the rate of exchange (32 to the pound) allowed to foreign diplomats in Russia. It means that a. man with £312 in a savings bank will find it reduced to £240. If his £312 was invested in a State Loan (except the most recent loan in 1947) he will have it cut to one-third of its value, £104. Wages are not being reduced but the workers, in addition to losing some of their cash and savings will be hit by the higher prices.
Of course the Daily Worker had to rush in and say what a fine thing it all is—”a step forward,” “a triumph for the Socialist economic system,” but the article (published on December 16th) indicated a certain amount of uneasiness. The writer, Mr. Andrew Rothstein, had to admit that “everyone will inevitably be affected to some extent because the new prices must lie somewhere between the ‘rationed’ and ‘off-rationed’ prices.”
Some other interesting points are thrown up by the new policy and by the Daily Worker comment on it. Just as Sir Stafford Cripps, at a time when prices are rising, tells the workers it will soon be all right because harder work will increase supplies and bring down prices, so the Daily Worker says “the existence of ample supplies . . . will soon more than compensate for the temporary difficulties.” This is printed in the “Worker” alongside the reproduction of a Russian “plenty to eat” poster which tells how much meat, fats, sugar, etc., etc. will be produced “in the five-year plan to be completed in 1950.”
During the war when news came out of Russia about the rouble-millionaires the Communists hastened to explain that this was a good thing and natural to a “socialist” country, and that we should note that it was all earned money and there were no speculators able to accumulate fortunes by speculation and black market operations as in Britain and U.S.A. Now we learn that the new policy is designed to hit “speculators, who amassed considerable sums ” and were, able to “buy up stocks, create artificial shortages and lower the purchasing power of the rouble.” (Daily Worker, 16/12/47).
It should be observed incidentally that the new policy, while reducing the big fortunes, does not by any means wipe them out. The speculator or other wealthy person with 1,000,000 roubles in State loans will still possess 333,000 roubles of investments and will, of course, gain to the extent that he can now buy goods at much lower prices than he formerly had to pay in the “free” market, prices which ranged up to ten and fifteen times pre-war prices. (Manchester Guardian, 15/12/47).
One wonders, too, how the Communists are going to wriggle out of their claim that the Russian Government, unlike other governments, does not descend to slick tricks in its dealings with workers’ savings. It is going to be very difficult to square what has just been done, with the claim made in 1946 that “money put into the State loan is, of course, absolutely secure” and that holders of bonds “can redeem them at their nominal value at any time within the 20-year period.” (Article by S. Grigoryev in Soviet News, published by the Soviet Embassy in London, 16/5/46.)
Readers of the Daily Worker (15/12/47) who read that “the new rouble of full value will be much istronger that the old,” will perhaps recall how the Communists jeered at the late Lord Snowden when he defended the economy cuts of 1931 on ttie ground that they would enable the pound to be strengthened and “look the world in the face.”
Doubtless one of the reasons for the new policy in Russia is to back up the campaign to capture the support of the European workers by pointing out that the West European governments, notwithstanding loans from U.S.A., are behind Russia in abolishing rationing. If the British Communists try to push the Maine policy over here they will be in the same position as those Conservatives who press for the abolition of controls and who argue thai it would be better for the workers in the long run even though it would mean higher prices immediately. The truth is that for the workers it would be merely a choice of evils and so far, judging by results of by-elections, the majority of workers prefer the evil of rationing that they have got used to and are not enamoured of the Conservative alternative.
Socialists, of course, are not in favour of Capitalism anyway, whether with or without controls.