Interview by the Manchester Guardian

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The Five-Year Plan and the World

World opinion on the five-year plan has consisted until recently of two fundamental assertions that are absolutely contradictory: first, that the five-year plan is utopian and that the Soviet state is on the verge of economic failure; secondly, that Soviet export trade involves dumping, which threatens to upset the pillars of the capitalist order. Either of these two assertions can be used as a weapon with which to belabor the Soviet state, but together they have the great disadvantage of being radically opposed to one another. To upset capitalist economy by offering goods at low prices would require an unprecedented development of productive forces. If the five-year plan has suffered a check and Soviet economy is gradually disintegrating, on what economic battlefield can the Soviet Union marshal its ranks to open a dumping offensive against the most powerful capitalistic states in the world?

Which, then, of these two contradictory assertions is correct? Both of them are false. The five-year plan has not suffered a check; this is demonstrated by the efforts to transform it into a four-year plan. Personally I regard this attempt at acceleration as premature and ill-judged. But the mere fact that it is possible, the fact that hundreds of Soviet economists, engineers, works directors, and trade unionists have admitted the possibility of such a transformation, shows that the plan is far from being the failure it is declared to be by those observers in Paris, London, and New York who are accustomed to study Russian affairs through a telescope.

But suppose we admit that this gigantic plan may become a reality, should we not, then, admit the possibility of dumping in the near future? Let us consult statistics. Industrialization in the USSR is increasing at the rate of 20 to 30 percent per annum — a phenomenon unparalleled in economic history. But these percentages indicate a rise from the economic level that the Soviet Union inherited from the former owning class, a level of appalling backwardness. In the most important branches of its economy the Soviet Union will remain, even after the realization of the five-year plan, far behind the more advanced capitalist states. For instance, the average consumption of coal per person in the USSR will be eight times less than it is in the USA today. Other figures are more or less analogous. At the present time — that is, during the third year of the five-year plan — Soviet exports represent about 1 1/2 percent of the world's export trade. What percentage would suffice, in the opinion of those who fear dumping, to upset the balance of world trade? Fifty percent, perhaps, 25 percent, 10 percent? To attain even the last figure Soviet exports would have to increase seven- or eightfold, thereby instantly causing the ruin of the Russian domestic economy. This consideration alone, based as it is on undisputed statistics, demonstrates the falseness of the philippics of such men as the Locker-Lampsons in England and Representative Fish in America. It matters not whether such philippics are the product of bad faith or of sincere panic; in either case, they are deceiving the public when they assert that the Soviet economy is failing and at the same time claim that enough Russian goods can be sold abroad below cost price to menace the world market.

The most recent form of attack called forth by the five-year plan appeared in the French newspaper Le Temps, which pursues the same aims as the British diehards and may without exaggeration be described as one of the most reactionary papers in the world. Not long ago this journal drew attention to the rapid advance being made in the industrialization of the USSR, and called on all the Western states to coordinate their economies for the purpose of boycotting Soviet trade. In this instance there was no question of dumping; rapidity with which economic development is occurring was in itself considered a menace to be opposed by vigorous measures. One point should be emphasized: in order to remain effective, an economic blockade would have to become more and more stringent, and this would eventually lead to war. But even if a blockade were established and war ensued, and even if the Soviet system were overthrown by such a war — which I do not for a moment consider possible — even then the new economic principle of state planning that has proved its efficacy in the Soviet system would not be destroyed. Such a course would merely result in sacrificing many lives and arresting the development of Europe for decades.

But to return to our former question: Will the five-year plan be realized? First we must know just what we mean by "realization," and this is not a matter that can be determined with minute precision, like a sporting record. I see the five-year plan as a working hypothesis used as the basis of a gigantic experiment whose results cannot be expected to coincide exactly with the hypothesis. The relations between the various ramifications of an economy over a period of years cannot be established a priori with any exactitude. Compensatory corrections must be made during the progress of the work itself. However, I am certainly of the opinion that, allowing for necessary corrections and alterations, the five-year plan is realizable.

You ask wherein my opinion on this matter differs from that of the present Soviet government. Let us put aside entirely the political question and the question of the Communist International, since these matters have no bearing on the use of large-scale hypothetical perspectives in economic planning. On the contrary, for several years I defended this method against those who now apply it. I am of the opinion that the five-year plan should have been undertaken earlier. It should be mentioned here that the first projects for the plan envisaged an annual increase starting at 9 percent and gradually dropping to 4 percent. It was against the diminution, which was then sponsored by the Stalin-Rykov group, that the Opposition raised a vehement protest That is why it was accused of superindustrialization. As a result of our criticism, the second project, elaborated in 1927, provided for an average annual increase of 9 percent The Opposition found this figure wholly inadequate in view of the possibilities inherent in a nationalized economy. Capitalist industry in czarist Russia yielded nearly a mean 12 percent of profit of which one-half was consumed by the owners while the other half was used to increase production. Now, under nationalization, almost the entire 12 percent can be used to increase production. To this must be added the savings effected by the absence of competition, the centralization of works according to a unified plan, unity of financing, and other factors. If a well organized trust enjoys an enormous advantage over isolated industrial enterprises, what must be the advantage of a nationalized industry, a veritable trust of trusts? This is why, from 1922 on, I based the possible yearly increase of industry at over 20 percent. This percentage, indeed, finally became accepted as the basis of the five-year plan, and experience has not only proved the soundness of this hypothetical calculation, but shown that it is likely to be exceeded.

Under the influence of this success, for which the present leadership itself was unprepared, there has been a tendency to go to the opposite extreme. Though Russia is not sufficiently prepared for it, the realization of the plan in four years is being attempted, and the task is pursued almost as a problem in sport. I am wholly opposed to this excess of bureaucratic maximalism, which imperils the large-scale increase of nationalized industry. In the course of the last year I have several times issued a warning against speeding up the collectivization of agriculture too much. Thus the roles now seem to be exchanged: the Left Opposition, which for years struggled for industrialization and collectivization, now feels itself duty-bound to apply the brakes. Moreover, I consider the attitude of those officials who talk as if Russia had already entered into socialism with the third year of the five-year plan as false and likely to prejudice their reputations. No, the Russian economy is still in a transitional stage, and conceals within itself wide contradictions that may possibly lead to economic crises and temporary setbacks. To shut one's eyes to this would be unforgivable. I cannot here go more closely into this complex question, but it should be recognized that all those contradictions, difficulties, possible crises, and setbacks in no degree minimize the epoch-making significance of this gigantic experiment in economic planning, which already has proved that a nationalized industry, even in a backward country, can increase at a tempo that none of the old civilized nations could possibly attempt. This alone transforms the lesson of the past and opens up an entirely new perspective.

As an illustration of what I mean, let us take a hypothetical example. In England Mr. Lloyd George is promoting a plan of public undertakings worked out by Liberal economists with the double object of liquidating unemployment and of reorganizing and rationalizing industry. Now let us suppose, for purposes of demonstration, that the British government were to sit at a round table with the government of the USSR in order to work out a plan of economic cooperation over a number of years. Let us suppose that this plan embraced all the most important branches of the economy of the two countries and that the conference, unlike many others, resulted in concrete, cut-and-dried mutual agreements and undertakings: for such and such a number of tractors, electro-technical units, textile machines, and so forth, England would receive an equivalent quantity of grain, timber, perhaps later, raw cotton — all, naturally, according to the prices current on the world market. This plan would begin modestly but would develop like an inverse cone, coming in the course of the years to include an ever-larger number of undertakings so that ultimately the most important economic branches in both countries would dovetail into one another like the bones of the skull. Can one doubt for a moment that, on the one hand, the coefficient of increase now contemplated by the Soviet government would, with the help of British technique, be vastly increased; and that, on the other, the Soviet Union would enable Great Britain to satisfy her most vital importing needs under the most favorable conditions? It is impossible to say under what political auspices such collaboration would be possible But when I take the principle of a centralized economic plan as it is being carried out today in a poor and backward country and apply it in imagination to the mutual relations of the advanced nations with the Soviet Union and with one another, I see therein a spacious outlook for mankind.

America Discovers the World

The most striking feature of American life during the last quarter century has been the unprecedented growth of economic power and the equally unprecedented weakening of the political mechanism in the face of that power. Two episodes — one from the past, the other from the present — will illustrate what I mean. Perhaps the most important, and certainly the most vigorous activity of Theodore Roosevelt,who ranks as the most noteworthy of recent presidents, was his struggle against the trusts. What remains of that activity today? Vague memories among the older generation. The struggles of Roosevelt and the enactment of restrictive legislation were followed by the present formidable expansion of the trusts.

Now consider President Hoover. To him the trusts form almost as natural a part of the social system as material production itself. Hoover, who is credited with the possession of an engineering mind, believed that the powerful trusts, on the one hand, and the standardization of production, on the other, would be instruments capable of assuring uninterrupted economic development, free from any crisis. His spirit of engineering optimism pervaded, as is well known, the Hoover Commission's investigation of recent economic changes in the United States. The report of the commission, which was signed by seventeen apparently competent American economists, including Hoover himself, appeared in 1929. But a few months before the greatest crisis in American history Hoover's report painted a picture of untroubled economic progress.

Roosevelt sought to dominate the trusts; Hoover sought to dominate the crisis by giving rein to the trusts, which he considered the highest expression of American individualism. The significance of these two failures differs, but both the engineering prudence of Hoover and the obstreperous impulsiveness of Roosevelt reveal a helpless empiricism in the fundamental problems of social life

The approach of an acute crisis was for long easily perceptible. The Hoover Commission might have found weighty economic advice in the Russian press had it not been so laden with self-sufficiency. I myself wrote in the summer of 1928: "It goes without saying that in our opinion the inevitability of a crisis is entirely beyond doubt; nor, considering the present world scope of American capitalism, do we think it is out of the question that the very next crisis will attain extremely great depth and sharpness. But there is no justification whatsoever for the attempt to conclude from this that the hegemony of North America will be restricted or weakened. Such a conclusion can lead only to the grossest strategical errors.

"Just the contrary is the case. In the period of crisis the hegemony of the United States will operate more completely, more openly, and more ruthlessly than in the period of boom. The United States will seek to overcome and extricate herself from her difficulties and maladies primarily at the expense of Europe …" [ The Third International After Lenin, p. 9].

It must be admitted that only that part of this forecast has been fulfilled which deals with the imminence of a crisis, and not that part which prophesies an aggressive economic policy toward Europe on the part of the United States. In regard to this I can only say that the transatlantic empire is reacting more slowly than I anticipated in 1928. I remember, during a meeting of the Council of Labor and Defense in July 1924, exchanging some short notes with the late Leonid Krasin, who had just then returned from England. I wrote him that in no case should I have confidence in so-called Anglo-Saxon solidarity, which was merely a verbal remnant of war cooperation, and would shortly be torn to shreds by economic reality. He answered me as follows (I have the note still — a leaf torn out of a notebook): "I regard increasing friction between England and America in the immediate future as improbable. You cannot imagine how provincial the Americans are in regard to world politics. Not for years yet will they dare to quarrel with England." I replied: "With a checkbook in his pocket even a provincial will soon enough find occasion to behave like a man of the world."

Certainly it cannot be disputed that the Americans have no experience or training in "Weltpolitik"; they have grown too quickly, and their views have not kept up with their bank accounts. But the history of humanity, and especially English history, has amply illustrated how world hegemony is attained. The provincial visits the capitals of the Old World, and he reflects. Now the material basis of the United States is on a scale heretofore unknown. The potential preponderance of the United States in the world market is far greater than was the actual preponderance of Great Britain in the most flourishing days of her world hegemony — let us say the third quarter of the nineteenth century. This potential strength must inevitably transfer itself into kinetic form, and the world will one day witness a great outburst of Yankee truculence in every sector of our planet. The historian of the future will inscribe in his books: "The famous crisis of 1930-3-? was a turning point in the whole history of the United States in that it evoked such a reorientation of spiritual and political aims that the old Monroe Doctrine, 'America for the Americans,' came to be superseded by a new doctrine, 'The Whole World for the Americans.'"

The blustering militarism of the German Hohenzollerns at the end of the nineteenth and the beginning of the twentieth centuries, which rose with the yeast of the rapid development of capitalism, will appear as child's play before that accompanying the growing capitalist activity of the United States. Of Wilson's Fourteen Points, which even at the moment of their formulation possessed no real content, there will remain still less, if that be possible, than remains of Roosevelt's fight against the trusts. Today dominant America has not yet extricated herself from the perplexing situation caused by the crisis, but this state of affairs will pass. It will be followed by an effort on her part to safeguard in every corner of the world positions that will act as safety valves against a new crisis. The chapter of her economic expansion may, perhaps, begin with China, but this will in no way hinder her from expanding in other directions.

The so-called "limitation of armaments" stands in no sort of contradiction to the forecasts outlined above, certainly not in contradiction to the direct interests of America. It is entirely obvious that a reduction of armaments prior to a conflict between two nations benefits the stronger far more than the weaker. The last war showed that hostilities between industrial nations last not months but years, and that war is waged not so much with weapons prepared beforehand as with those forged during combat. Consequently, the economically stronger of two nations has an interest in limiting the military preparedness of its prospective opponent. The preponderance of standardized and "trustified" industry in the United States is capable, when deflected to war production, of endowing that country during a war with such a preeminence as we can today scarcely imagine

From this standpoint parity of navies is in fact no parity. It is a predominance assured beforehand to the one backed by the stronger industry. Quite apart from all possible doctrines, political programs, sympathies, and antipathies, I believe that the naked facts and cold logic keep us from considering accords over parity of fleets or any agreements of a like kind as guarantees of peace, or, indeed, as even any lessening of war danger. If a pair of duelists or their seconds agree beforehand on the caliber of the revolvers, it in no way prevents one of them from being killed.

Mr. MacDonald esteems the results achieved on his American journey as the loftiest triumph of peace politics. As I am speaking here in an interview, wherein one does not so much explain one's opinion as proclaim it, I shall allow myself to turn to a speech that I made in 1924 about the relations between America and Europe. At that time, if I remember aright, Curzon was foreign minister and was engaging in saber-rattling against Soviet Russia. In a polemic against Lord Curzon (which now, of course, has lost all political interest) I observed that he was only treading on Russia's heels in consequence of the unsatisfactory position in which England was being placed by the growing power of the United States and by the world situation generally. His protests against Soviet Russia were to be interpreted as the result of his dissatisfaction at having to negotiate accords with the United States that were not of equal advantage to both parties. "When it comes to the point," I said, "it will not be Lord Curzon who will execute this unpleasant task; he is too spirited. No, it will be entrusted to MacDonald. All the pious eloquence of MacDonald, Henderson, and the Fabians will be needed to make that capitulation acceptable."

You ask me what my conclusions are? But I do not feel obliged to draw any in this interview. Conclusions are a matter of practical politics and therefore depend upon one's program and the social interests behind it. In these respects your newspaper and I differ very much. That is why I have confined myself scrupulously to facts and processes, which, since they are indisputable, must be taken into account by any and every program that is realistic and not fantastical. These facts and processes tell us that the next epoch will develop beneath the shadow of powerful capitalist aggression on the part of the United States. In the third quarter of the fifteenth century Europe discovered America; in the second quarter of the twentieth century America will discover the world. Her policy will be that of the open door, which, as is well known, opens not inward but only outward in America.