Russian Revolution: III State Capitalism

For the other articles in the series, click on the following links: ONE,  TWO, FOUR.

Although modern Leninists expound the myth of ‘Russian Socialism’ as if there was a transformation from capitalism to socialism in the post-October days, it is doubtful whether Lenin seriously had any such illusion. He recognised, and stated on many occasions, that only state capitalism could be established in Russia. Within months of receiving information about the October revolution, the Socialist Party of Great Britain, despite acknowledging the Bolsheviks’ anti-war policy, foresaw the inevitable state capitalist outcome of the coup. The Trotskyists, it should be added, maintain the most absurd position of all: they accept the Leftist myth that Russia became socialist in 1917 and then claim that it reverted to capitalism when Stalin fell out with Trotsky!

The establishment of state capitalism presented a problem for the Bolsheviks. How could a revolution designed to overthrow capitalism be considered successful when it merely initiated a new form of capitalism? The myth of the transition period between state capitalism (referred to as socialism) and socialism (referred to as communism) was created by Lenin in order to disguise the reality. Broken promises, persecution, murder and tyranny were justified because Russia was still in the first, socialist, stage of revolution. Much has been written about the theory of the transition period which need not be repeated here, except to say that the idea that there must be a transition between consciousness and unconsciousness, between oppression and freedom, between property society and common ownership, is both illogical and historical nonsense. Bolsheviks like Bukharin and Preobrazhensky appear to have swallowed the theory:

Communist society will know nothing of money. Every worker will produce goods for the general welfare. He will not receive any certificate to the effect that he has delivered a product to society; in other words, he will receive no money. Likewise, he will pay no money to society when he receives from the common store what he requires . . .
Socialism, however, is communism in the process of construction . . . and in the proportion that the work of construction is successfully carried on the need for money will disappear.

Like the English Fabians, they thought that the system would wither away. Before the Bolshevik seizure of power in September 1917, Lenin predicted the nature of the state capitalist economy: “All citizens become employees and workers of one all national State syndicate.” (State and Revolution)

On 14 November 1917 Lenin presented a draft decree on workers’ control to the Congress of Soviets. This decree, far from meeting the aspirations of the factory committees which wanted direct control of each productive unit by the workers employed in that unit, established a centralised hierarchy of state control. Significantly, the leading Bolshevik trade unionist, Lozovsky, only agreed to vote for the decree on the condition that “. . . the workers in each enterprise should not get the impression that the enterprise belongs to them.” Shortly after the decree was passed a Supreme Council of National Economy (Vesenkha) was set up “. . . to organise the economic activity of the nation and the financial resources of the government.”

For the first five months of the Bolshevik regime, despite the erection of the machinery of State control, the economy was anything but regulated. Anarchy prevailed, born of the frustration and poverty of the masses: before they had been denied the fulfilment of their needs, now they were going to take according to their needs. Money became worthless, production all but ceased, peasant producers resorted to barter. Harry Young, an SPGB member who was in Russia at the time, describes how he had to pay millions of roubles in exchange for the most basic commodities. Economic anarchy resulted in chaos and the short taste of freedom was a prelude to rigid state coercion. In March 1918 the government signed the treaty of Brest-Litovsk, bringing Russia out of the war. The Congress of Soviets which approved the treaty resolved to put an end to the anarchy in the economy. Larin and Milyutin, two dedicated state capitalists, replaced Bukharin, Obolensky and Lomov (with their idealistic thoughts of the future communist society) as leaders of Vesenkha. On 28 June 1918 Sovnarkom (the Council of People’s Commissars) issued a decree nationalising every important category of industry.

Nationalisation is not socialism. The soviet state was increasingly becoming the monopoly of the party leadership. As the control of the economy by the state continued, the pious ideals of fairness and equality dwindled. The party bureaucracy prospered at the expense of the exploitation of the working class. State capitalism is the accumulation of capital by the state officials. Where there is capital there must be wage labour and where there is wage labour there must be capitalism.


In the post Brest-Litovsk period, from 1918 to 1921, often referred to by historians as ‘War Communism’, two main industrial probems prevailed: excessive bureaucratisation and the erosion of the workers’ democracy which had developed in the post-revolutionary days.
A highly centralised economy required a bureaucracy which was removed from the centres of production and was primarily concerned with reaching planning norms. A division between state control and local needs developed. The former predominated.


Immediately after the revolution the workers did have a degree of control over their working lives. Committees were set up at the point of production to allow workers to have a say in the way things were run. Lenin, seeing the need for rapid industrialisation if Russia was to move on from its semi-feudal form of economic organisation, had no time for such democratic niceties as collegial management. In Current Tasks of the Soviet Power he argued that


Unqualified submission to a single will is unconditionally necessary for the success of the process of labour organised on the pattern of large-scale machine industry.


Some Bolsheviks, such as Tomsky, vigorously opposed the transition to one-man management, but their cries of protest were wasted. State capitalism meant the total subordination of the worker to the State. It is estimated that by 1920 one-man management existed in 88 per cent of nationalised enterprises. By then the trade unions had become sterile appendages of the state.


Leninists blame the failure of Bolshevism to make capitalism run in the interest of the working class on to external circumstances, such as the civil war. Certainly, the war did account for falling production levels and the absolute reduction in the size of the working class. But to portray the Bolsheviks as genuine socialists, overcome by unforeseeable events, is a gross distortion. Read what Lenin said before October 1917. It is clear that he advocated state capitalism, not world socialism.

Steve Coleman
(To be continued.)