The Soviet Economy in Danger

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The successes of the first two years of the five-year plan demonstrated to the bourgeoisie of the entire world that the proletarian revolution was a much more serious business than was apparent in the beginning. The interest in the Soviet “experiment” grew apace. Conspicuous groups of eminent bourgeois publications in many countries began printing comparatively objective economic information.

At the same time the international Communist press played up the most optimistic estimates of the Soviet press, exaggerating them crudely, presumably in the interests of propaganda, and transforming them into an economic legend.

Petty-bourgeois democrats, who were not at all in a hurry to form an opinion about so complex a fact as the October Revolution, welcomed with glee the possibility of discovering support for their belated sympathies in the statistics of the five-year plan. Magnanimously, at last, they “recognized” the Soviet republic in reward for its economic and cultural attainments. This act of moral heroism provided many of them with an opportunity to take an interesting trip at reduced rates.

It is infinitely more deserving, indeed, to defend the socialist construction of the first workers’ state than to sustain the pretensions of Wall Street or of the City. But one can take as little stock in the lukewarm sympathies of this gentry toward the Soviet government as in the antipathies of the Amsterdam congress toward militarism.

People after the type of the Webbs (and they are not the worst of this lot) are, naturally, not at all inclined to break their heads over the contradictions of the Soviet economy. Without in any manner committing themselves, they strive chiefly to utilize the conquests of the Soviets in order thus to shame or arouse the ruling circles of their country. A foreign revolution serves them as a subordinate weapon for their reformism. For this purpose, as well as for their personal peace of mind, “the friends of the USSR,” together with the international Communist bureaucracy, require a picture of successes in the USSR as simple, as harmonious, and as comforting as possible. Whoever disturbs this picture is nothing but an enemy and a counter-revolutionist.

A crude and detrimental idealization of the transitional régime has particularly entrenched itself in the international Communist press during the last two years, that is, during that period in which the contradictions and disproportions of the Soviet economy have already found their way into the pages of the official Soviet press.

There is nothing so precarious as sympathies that are based on legends and fiction. There is no depending on people who require fabrications for their sympathies. The impending crisis of the Soviet economy will inevitably, and within the rather near future, dissolve the sugary legend, and, we have no reason to doubt will scatter many philistine friends into the bypaths of indifference, if not enmity.

What is much worse and much more serious is that the Soviet crisis will catch the European workers, and chiefly the Communists, utterly unprepared, and leave them receptive to Social-Democratic criticism, which is absolutely inimical to the Soviets and to socialism.

In this question, as in all others, the proletarian revolution requires the truth, and only the truth. Within the scope of this brief pamphlet I have deemed it necessary to present in all their acuteness the contradictions of the Soviet economy, the incompleteness and the precariousness of many of its conquests, the gross errors of the leadership, and the dangers that stand in the path of socialism. Let our petty-bourgeois friends lavishly apply their pink and baby-blue colorations. We deem it more correct to mark with a heavy black line the weak and indefensible points where the enemy threatens to break through. The clamour about our enmity to the Soviet Union is so absurd as to bear within itself its own antidote. The very near future will bring with it a new confirmation of our correctness. The Left Opposition teaches the workers to foresee dangers and not to lose themselves when they impend.

One who accepts the proletarian revolution only when it is accompanied by all conveniences and lifelong guarantees cannot continue on the road with us. We accept the workers’ state as it is and we assert, “This is our state.” Despite its heritage of backwardness, despite starvation and sluggishness, despite the bureaucratic mistakes and even abominations, the workers of the entire world must defend tooth and nail their future socialist fatherland which this state represents.

First and foremost we serve the Soviet republic in that we tell the workers the truth about it and thereby teach them to lay the road for a better future.

The Art of Planning

The prerequisites for socialist planning were first provided by the October overturn and by the fundamental laws of the Soviet state. In the course of a number of years state institutions for centralized management of the economy were created and put into operation. Great creative work was performed. What was destroyed by the imperialist war and the civil war has been re-established. Grandiose enterprises have been created, new industries, entire branches of industry. The capacity of the proletariat organized into a state to direct the economy by new methods and to create material values in tempos previously unheard of has been demonstrated in life. All this has been achieved against the background of decaying world capitalism. Socialism, as a system, for the first time demonstrated its title to historic victory, not on the pages of Capital, but by the praxis of hydroelectric plants and blast furnaces. Marx, it goes without saying, would have preferred this method of demonstration.

However, light-minded assertions to the effect that the USSR has already entered into socialism are criminal. The achievements are great. But there still remains a very long and arduous road to actual victory over economic anarchy, to the surmounting of disproportions, to the guarantee of the harmonious character of economic life.

Even though the first five-year plan took into consideration all possible aspects, by the very nature of things it could not be anything but a first and rough hypothesis, destined beforehand to fundamental reconstruction in the process of the work. It is impossible to create a priori a complete system of economic harmony. The planning hypothesis could not but include old disproportions and the inevitability of the development of new ones. Centralized management implies not only great advantages but also the danger of centralizing mistakes, that is, of elevating them to an excessively high degree. Only continuous regulation of the plan in the process of its fulfilment, its reconstruction in part and as a whole, can guarantee its economic effectiveness.

The art of socialist planning does not drop from heaven nor is it presented full-blown into one’s hands with the conquest of power. This art may be mastered only by struggle, step by step, not by a few but by millions, as a component part of the new economy and culture. There is nothing either astonishing or disheartening in the fact that at the fifteenth

anniversary of the October Revolution the art of economic management still remains on a very low plane. The newspaper Za Industrializatsiia (ZI) [For the Industrialization] deemed it possible to announce: “Our operative planning has neither hands nor feet” (September 12, 1932). And right now the crux of the matter is precisely in operative planning.

We have stressed more than once that “under incorrect planning or, what is more important, under incorrect regulation of the plan in the process of its fulfilment, a crisis may develop toward the very end of the five-year plan and may create insurmountable difficulties for the utilization and development of its indubitable successes” (New Zigzags and New Dangers, July 15, 1931, Biulleten Oppozitsii, number 23). It is precisely for this reason that we considered that the hastily and purely fortuitous “transformation of the five-year plan into a four-year plan was an act of the most light-minded adventurism” (ibid.). Both our fears and our warnings have been unfortunately fully confirmed.

The Preliminary Totals of the Five-Year Plan

At the present moment there cannot even be a discussion about the actual completion of the five-year plan in four years (or more exactly, four years and three months). The most frantic lashing and spurring ahead in the course of the final two months will no longer have any effect on the general totals. It is as yet impossible to determine the actual percentage – that is, measured in terms of the economy – of the fulfilment of the preliminary program. The character of the data published in the press is more statistically formal than economically exact. Should the construction of a new plant be accomplished up to 90 percent of its completion and then the work be stopped because of the obvious lack of raw material, from a formal statistical viewpoint one may describe the plan as fulfilled 90 percent. But from the point of view of the economy the expenses accrued must simply be entered under the loss column. The balance sheet of the actual effectiveness (the useful functioning) of plants constructed or in the process of construction, from the viewpoint of the national economic balance, still belongs entirely to the future. But the results obtained, no matter how imposing if taken by themselves – even if considered from the bare quantitative viewpoint – are far short of those sketched in the plan.

The output of coal is maintained at present on the level of last year; therefore it has far from reached the plan figures set for the third year of the five-year plan. “The Donbas lags behind at the tail end of the most backward branches of Soviet industry,” complains Pravda. “The tension in the fuel balance is on the increase,” echoes ZI (October 8, 1932).

In 1931 there were produced 4.9 million tons of cast iron instead of 7.9 million set by the plan; 5.3 million tons of steel instead of 8.8 million; and finally 4 million tons of rolled steel instead of 6.7 million. In comparison with 1930 this signifies a falling off in cast iron of 2 percent; in steel of 6 percent; in rolled steel of 10 percent.

For nine months of 1932 there were produced 4.5 million tons of cast iron, 4.1 million tons of steel, 3.5 million tons of rolled stock. Alongside of the considerable rise in the output of iron (new blast furnaces!) the production of steel and rolled steel in the current year remains approximately on the level of last year. From the viewpoint of the general tasks of the industrialization what decides, of course, is not the raw iron but the rolled stock and steel.

Quantity and Quality

Side by side with these quantitative results, which Ekonomicheskaya Zhizn (EZ) [Economic Life] characterizes as “shocking lapses,” there is to be placed an extremely unfavourable and, because of its consequences, much more dangerous decline in quality. Following the special economic press, Pravda openly confesses that in heavy metallurgy “the situation as regards the indices of quality is impermissible.” “The defective products eat up the steel that is up to quality.” “The technical coefficients in the use of the equipment are taking a sharp turn for the worse.” “The cost of production of commodities is rising sharply.” Two figures will suffice: in 1931 a ton of iron cost 35 rubles; in the first half of the current year the cost came to 60 rubles.

In 1929–30, 47 thousand tons of copper were smelted; in 1931, 48 thousand tons, one-third of the amount set by the plan. For the current year the plan has been lowered to 90 thousand tons but for the first eight months less than 30 thousand tons have been smelted. What this means in the manufacture of machines in general, and of electro-technical equipment in particular, requires no commentaries.

In the sphere of electrification, with all its successes, there is considerable lagging behind; the power plants in August delivered 71 percent of the energy they were supposed to develop. ZI writes about “the inept, illiterate and uncultured exploitation of the constructed power stations.” Great difficulties are being threatened in the winter in the sphere of power production. They have already begun in the Moscow and Leningrad regions.

Light industry, which lagged excessively behind the plan last year, showed a rise in the first half of the current year of 16 percent, but in the third quarter it fell below the figures of last year. The industry providing foodstuffs occupies last place. The supplementary production of products by the plants of heavy industries compose for the eight months only 35 percent of the yearly goal. It is not possible at present to estimate what part of this mass of commodities that are hurriedly improvised really meets the requirements of the market.

The factories are supplied with coal and raw material by means of bursts of telegram lightning. Industry, as EZ puts it, “sits on lightning.” But even bolts of lightning cannot deliver what does not exist.

Coal, hastily mined and poorly sorted, hampers the operation of coke-producing enterprises. Excessively high contents of moisture and cinders in the coke not only reduce the quantity of produced metal by millions of tons but also lower its quality. Machines of poor metal produce inferior products, result in breakdowns, force inactivity upon the workers, and deteriorate rapidly.

In the Urals, the paper informs us, “the blast furnaces are in trouble; because of inadequate supply of fuel they are allowed to cool down from three to twenty days.” Here is a fact illuminating to the highest degree: the metallurgical plants in the Urals had their own horse convoys for the transportation of fuel; in February of this year the horses numbered 27 thousand, the number fell in July to 14 thousand, and in September to 4 thousand. The reason for this is lack of fodder.

Pravda characterizes in the following manner the condition of the Stalingrad tractor factory in which the quantity of annual castings fell from 250 to 140 thousand tons. “The equipment, because of the absence of rudimentary and constant technical supervision ... has excessively deteriorated.” “Defective products have become as high as 35 percent.” “The entire mechanism of the plant is wallowing in dirt.” “In the foundries there is never a thought of the next day.” “Methods of handicraft are swamping continuous-belt production.”

Why is production lowered in light metallurgy in the face of colossal investments? Because, replies Pravda, “the separate branches of a single combine are not co-ordinated with one another according to their capacity.” Yet the task of co-ordinating branches has been solved by capitalist technology. And how much more complex and difficult is the question of the inter-co-ordination of independent enterprises and entire branches of industry!

“The cement factory in Podolsk is in dangerous straits,” writes ZI. “In the first half-year the production program was fulfilled approximately 60 percent, in the last months the fulfilment dropped to 40 percent ... The basic costs are twice as high as those set by the plan.” The characteristics cited above apply in various degrees to all of present industry.

The administrative hue and cry for quantity leads to a frightful lowering of quality; low quality undermines at the next stage the struggle for quantity; the ultimate cost of economically irrational “successes” surpasses as a rule many times the value of these same successes. Every advanced worker is acquainted with this dialectic, not through the books of the Communist academy (alas! more inferior goods), but in practice, through experience in their own mines, factories, railroads, fuel stations, etc.

The consequences of this frenzied chase have entirely permeated the sphere of education. Pravda is compelled to admit that “by lowering the quality of preparation, by skipping scientific subjects, or by passing over them at ’cavalry trot,’ the VTUZI (highest technological educational institutions ] that took this path instead of aiding industry, injured it.” But who is responsible for the “cavalry trot” in the highest educational institutions?

If we were to introduce a corrective coefficient for quality into the official data, then the indices of the fulfilment of the plan would immediately suffer substantial drops. Even Kuibyshev was forced to admit this more than a year ago. “The figures relating to the tremendous growth of industry become relative,” he announced cautiously at a session of the Supreme Council of National Economy, “when one takes into account the variations in quality.” Rakovsky expressed himself much more lucidly: “If one does not take into account the quality of production then the quantitative indices represent in themselves a statistical fiction.”

Capital Construction

More than two years ago Rakovsky warned that the scope of the plan was beyond the available resources. “Neither the scale of the growth of production specified by the plan,” he wrote, “nor the specified plan of capital construction were prepared for ... The entire preceding policy in the sphere of industry reduced itself in reality to the forced exploitation of old fixed capital ... without the slightest concern for the future.” The attempt to compensate for lags by a single leap ahead is least realistic in the sphere of capital construction. The resources necessary for the fulfilment of the plan “do not obtain in the country and will not obtain in the nearest future.” Hence the warning: “The plan of capital construction will break down to a considerable degree.”

And this prediction also has been completely substantiated. In the sphere of construction the lag was extremely great as early as 1931. It has grown still more in the current year. The transport construction program for nine months was fulfilled 38 percent according to the estimates of the department itself. In other branches the matters relating to construction are as a general rule even less favourable; and worst of all is the sphere of housing construction. The material and monetary resources are divided between altogether too many constructions, which leads to the low effectiveness of the investment.

Sixty-five million rubles were expended on the Balkhashsky copper factory. The expenses continue to grow from day to day – in effect, for nothing; in order to continue work it was necessary to transport in the course of a year 300 thousand tons of freight whereas available transportation can carry all told only 20 thousand tons. Examples of a similar kind, though not so obvious, are too many.

The poor quality of materials and of equipment react most cruelly on capital construction. “Iron for roofing is of such rotten quality,” writes Pravda, “that it cracks when once handled.”

The shocking backlog in the sphere of capital undertakings automatically undermines the foundations of the second five-year plan.

Domestic Disproportions and the World Market

The problem of the proportionality of the elements of production and the branches of the economy constitutes the very heart of socialist economy. The tortuous roads that lead to the solution of this problem are not charted on any map. To discover them, or more correctly to lay them, is the work of a lengthy and arduous future.

All of industry groans from the lack of spare parts. Weavers’ looms remain inactive because a bolt is not to be had. “The assortment of articles produced,” writes EZ, “in the line of commodities of widespread consumption is haphazard and does not correspond to ... the demand.”

“One billion rubles have been immobilized, ‘frozen’ by (heavy] industry, in the course of only the first half of 1932, in the form of stocks of materials, unfinished products, and even finished goods in factory warehouses” (ZI, September 12, 1932). Such are the expressions in terms of money of certain disproportions and discordances according to the official estimate.

Major and minor disproportions make it necessary to turn to the international market. Imported goods to the value of one chervonets (gold monetary unit] can bring domestic production out of its moribund state to the value of hundreds and thousands of chervontsi. The general growth of the economy, on the one hand, and the sprouting up of new demands and new disproportions, on the other, invariably increase the need to link up with the world economy. The program of “independence,” that is, of the self-sufficient character of the Soviet economy, discloses more and more its reactionary and utopian character. Autarchy is the ideal of Hitler, not of Marx and Lenin.

Thus the import of ore from the inception of the five-year plan multiplied five times in volume and four times in value. If within the current year this article of import fell off, it was exclusively on account of foreign exchange. But on this account the import of factory machinery grew excessively.

Kaganovich in a speech on October 8 asserted that the Opposition, Left as well as Right, “proposes to us that we strengthen our dependence upon the capitalist world.” As if the matter concerned some artificial and arbitrary step, and not the automatic logic of economic growth!

At the same time the Soviet press cites with praise the interview given by Sokolnikovi on the eve of his departure from London. “In England there is increasingly spreading the recognition of the fact that the advanced position of the Soviet state in industry and technology will present in itself a much wider market for the products of British industry.” As a sign of the economic progress of the Soviet Union, Sokolnikov considers not the weakening but the strengthening of ties with the foreign market, and consequently the strengthening of dependence upon world economy. Is it possible that the former Oppositionist Sokolnikov is trading in “Trotskyist contraband” But if so, why is he being featured by the official press?

Stalin’s speech with its salutary “six conditions” was directed against the low quality of production, the high basic cost the migration of the labour force, the high percentage of waste, etc. From that time on there has not appeared one article without reference to “the historic speech.” And in the meantime all these ills which were to be cured by the six conditions have become aggravated and have assumed a more malignant character.

The Position of the Workers

From day to day the official press bears witness to the downfall of Stalin’s prescription. In explanation of the falling-off in production Pravda points to “the decrease in labour power at factories, the growing migration, the weakening of labour discipline” (September 23). In the category of reasons for the extremely low productivity of the Red Ural combine ZI, alongside of “the shocking disproportions between the different parts of the combine,” lists the following: (1) “the enormous migration of the labour force”; (2) “the muddle-headed policy of the workers’ wage”; (3) “failure to provide (the mill-workers ] with some manner of livable quarters”; (4) “indescribable food for the mill-workers”; (5) “the catastrophic falling-off of labour discipline.” We have quoted word for word. As regards the migration, which “has grown beyond all bounds,” this paper writes, “the living conditions (of the workers] are ghastly in all the enterprises of nonferrous metallurgy without exception.”

In the locomotive factories, which failed to provide the country with about 250 locomotives for the first three-quarters of the year, “there is to be observed an acute shortage of qualified workers. More than two thousand workers in the course of the summer left from the single Kolomensk factory.” The reasons? “Bad living conditions.” In the Sormovsk factory, “the factory kitchen is a dive of the worst sort” (ZI, September 28). In the privileged tractor factory in Stalingrad, “the factory kitchen has fallen sharply in its work” (Pravda, September 21). To what a pitch the dissatisfaction of the workers must have risen in order to force these facts in the columns of the Stalinist press!

In the textile industry, naturally, conditions are not better. “In the Ivanovsk district alone,” EZ informs us, “about thirty-five thousand qualified weavers left the shops.” According to the words of this same paper, there are to be found shops in the country in which more than 60 percent of the total force changes every month. “The factory is turning into a thoroughfare.”

In explanation of the cruel flop of “the six conditions” there was a tendency for a long time to confine the observations to bald accusations against the management and the workers themselves: “incapacity,” “lack of willingness,” “resting on their laurels,” etc. However, for the last few months the papers more and more often point out mostly on the sly, the actual core of the evil, the unbearable living conditions of the workers.

Rakovsky pointed out this reason of reasons more than two years ago. “The reason for the increase in breakdowns, the reason for the fall in labour discipline, the reason for the need to increase the number of workers,” he wrote, “lies in the fact that the worker is physically incapable of bearing up under a load that overtaxes his strength.”

But why are the living conditions bad? In explanation the papers refer to “the contemptuous (!) attitude to the questions relating to the living conditions of the workers and to providing them with the necessities of life” (ZI, September 24). With this single phrase the Stalinist press has said more than it had intended. A “contemptuous attitude” to the needs of the workers in the workers’ state is possible only on the part of an arrogant and uncontrolled bureaucracy.

This risky explanation was made necessary, no doubt, in order to hide the basic fact: the lack of material goods to supply the workers. The national income is incorrectly distributed. Economic tasks are being set without any account being taken of the actual means. An increasingly inhuman load is being dumped on the shoulders of the workers.

References to “breaks” in the supply of foodstuffs are now to be met with in every issue of the Soviet press. Malnutrition plus forced exertions – the combination of these two conditions is enough to do away with the equipment and to exhaust the workers themselves. In consolation, Pravda prints a photograph of a working woman in the act of feeding “her own private pig”. That is precisely the way out “Private domestic economy,” lectures the paper (October 3), “hitherto tied the worker to capitalism, but now it attaches him to the Soviet system.” One cannot believe one’s eyes! Once upon a time we learned that private domestic economy depends upon the enslavement of the woman, the most abominable element of social slavery in general. But now it appears that its “own private” pig attaches the proletariat to socialism. Thus the hypocritical functionaries turn cruel necessity into virtue.

Poor nutrition and nervous fatigue engender an apathy to the surrounding environment. As a result, not only the old factories, but also the new ones that have been built according to the last word in technology fall quickly into a moribund state. Pravda itself issues the following challenge: “Try and find at least one blast furnace that is not wallowing in rubbish!”

As touches on the conditions of morale, they are no better than the physical conditions. “The management of the factory has cut itself away from the masses” (Pravda). Instead of a sensitive approach to the workers, “barefaced bulldozing and domineering prevail.” In every individual instance the matter touches isolated factories. – Pravda cannot guess that the sum of the individual cases constitutes the Stalinist régime.

In the entire nonferrous metal industry “there is not a single factory committee that functions more or less satisfactorily” (ZI, September 13). However, how and why is it that in a workers’ state the factory committees – of the entire industry and not only in the branch of nonferrous metals – function unsatisfactorily? Is it not, perhaps, because they are strangled by the party bureaucracy?

At the Dzerzhinsky locomotive plant, during a single session of the central bureau of the blacksmiths, there were taken up simultaneously eighteen cases of expulsions from the party; in the wheelwrights – nine cases; in the boilermakers – twelve cases. The matter is not restricted to an isolated factory. Commandeering reigns everywhere. And the sole answer of the bureaucracy to the initiative and criticism from below is – repression.

The draft platform [April 1931] of the International Left Opposition proclaims: “The living standards of the workers and their role in the state are the highest criteria of socialist successes.” “If the Stalinist bureaucracy would approach the tasks of planning and of a living regulation of the economy from this standpoint,” we wrote more than a year ago, “it would not misfire so wildly every time, it would not be compelled to conduct a policy of wasteful zigzags, and it would not be confronted by political dangers” (New Zigzags and New Dangers).

The Agricultural Economy

“The agricultural economy of the Soviet Union,” wrote Pravda on September 28, “has become absolutely entrenched on the road to socialism.” Such phrases, bolstered as a rule by bare citations of the number of collectivized homesteads and acres, represent in themselves a hollow mockery of the actual condition of agriculture and of the interrelations between the city and the village.

The headlong race to break records in collectivization, without taking into account the economic and cultural potentialities of agriculture, has led in fact to ruinous consequences. It destroyed the incentive of the small commodity producer long before it was able to replace it by other and much higher economic incentives. Administrative pressure, which exhausts itself quickly in industry, is absolutely powerless in the sphere of agriculture.

“The village of Caucasus,” we are informed by this same Pravda, “was awarded the prize for its spring sowing campaign. At the same time, the tillage turned out to be so poor that the fields were entirely overgrown by weeds.” The village of Caucasus is a symbol of the administrative hullabaloo for quantity in the domain of agriculture. One hundred percent collectivization has resulted in 100 percent overgrowth of weeds on the fields.

The collective farms were allotted more than 100 thousand tractors. A gigantic victory! But as innumerable local newspaper reports show, the effectiveness of the tractors far from corresponds to their number. At the Poltava machine-building station, one of the newest, “out of twenty-seven tractors recently delivered, nineteen are already seriously damaged.” These figures do not apply only to exceptional cases. The station on the Volga Ukraine has fifty-two tractors; of these, two have been out of operation since spring, fourteen were being completely overhauled, and of the remaining thirty-six, less than half are being utilized in sowing, “and even these remain alternately idle.” The coefficient of the useful functioning of the 100 thousand tractors has not been determined as yet?

During the dizziest moment of 100 percent collectivization, Rakovsky made a stern diagnosis: “In the sum total of the results which have been prepared for by the entire preceding policies and which have been aggravated by the period of ultraleft adventurism, the chief result will be the lowering of the productive forces of the rural economy, indubitably evident in the sphere of stock-raising and in part of the cultivation devoted to raising technical raw material, and becoming increasingly evident in the sphere of grain cultivation.”

Was Rakovsky mistaken? Unfortunately, no. Nothing can produce so shocking an impression as the small, quite imperceptible decree issued by the CEC on September 11, 1932, which met with no comments in the Soviet press. Under the signature of Kalinin and Molotov, the individual peasant proprietors are compelled to relinquish, for the needs of the collective farms and at their request all horses at a set price. The collective farms are in turn obliged to return the horses to their owners in “good condition.”

Such is the interrelation between the socialist and petty-bourgeois sections of the rural economy! The collective farms, which cultivate 80-90 percent of the arable lands and which should, in theory, attract the individualists by their achievements, are actually compelled to resort to the legal intervention of the state in order to obtain from individual owners by compulsion the horses for their own needs. Everything here is topsy-turvy. This single decree of September 11 represents a condemnation of the policies of Stalin-Molotov.

The Problem of Establishing the Link

Could the interrelations between the city and the village be improved on a material productive basis?

Let us recall once again: The economic foundation of the dictatorship of the proletariat can be considered fully assured only from that moment when the state is not forced to resort to administrative measures of compulsion against the majority of the peasantry in order to obtain agricultural products; that is, when in return for machines, tools, and objects for personal use, the peasants voluntarily supply the state with the necessary quantity of grain and raw material. Only on this basis – along with other necessary conditions, nationally and internationally – can collectivization acquire a true socialist character.

The correlation between the prices for industrial products and agricultural products has undoubtedly changed in favour of the peasant. Actually it is an impossible task to perform an accounting in this sphere that corresponds to reality. For instance, Pravda writes that “the cost of a quintal of milk ranges in the collective farms from 43 to 206 rubles.” The variation is even greater between state prices and the price on the legalized markets. No less heterogeneous are the prices for industrial products, which all depend on the channel through which they reach the peasant. But without in any way pretending to be exact, it is possible to assert that the price-scissors, in the narrow meaning of the term, have been closed by the peasants. For its own products, the village has begun to obtain such a quantity of monetary equivalents as would assure it industrial goods at fixed state prices – if such goods existed.

But one of the most important disproportions arises from the fact that the availability of commodities does not correspond to the availability of money. In the language of monetary circulation, that is what is called inflation. In the language of planned economy this means exaggerated plans, incorrect division of forces and means, in particular between the production of objects for consumption and the production of means of production.

At the time that the correlation of prices began to turn against the city, the latter safeguarded itself by “freezing” the goods, that is, they were simply not put into circulation, but kept on hand to be distributed bureaucratically. This signified that only the pecuniary shadow of the scissors had closed its blades, while its material disproportion still remained. But the peasant is little interested in shadows. The absence of commodities has pushed him and continues to push him in the direction of a strike: he does not want to part with his grain for money.

Not having become a matter of simple and profitable exchange for both sides, the provision of foodstuffs and agricultural raw material has remained as before “a political campaign,” “a militant drive,” requiring each time the mobilization of the state and party apparatus. “Many collective farms,” Pravda cautiously reports (September 26), “resist the collection of grain, hiding their stocks.” We know what the word “many” signifies in such a context. If the exchange between the village and the city were advantageous, then the peasants would have no cause whatever to “hide their stocks”; but if the exchange is not advantageous, that is, if it takes the form of compulsory transfer, then all the collective farmers and not just “many,” and the individual farmers as well, will strive to hide their grain. The obligation of the peasants to supply meat products is now officially given the character of a natural tax in kind, with all the repressive consequences that flow from it. The economic results of the 100 percent collectivization are expressed much more correctly by these facts than by the bare statistics of collectivized acres.

The fact that severe laws were passed against stealing socialist property sufficiently characterizes the extent of the evil, the gist of which, in the village, consists in the fact that the peasant strives to direct his grain not into socialist but into capitalist channels. The prices on the speculative market are high enough to justify the use of capital punishment. What part of the foodstuffs is diverted into the channels of speculation?

In the Volga-Caspian fish trust, it is reckoned that 20 percent of the catch goes to the private market “And how much really does go?” asks Pravda sceptically. In agriculture the percentage of the drain must be considerably higher. But even 20 percent means hundreds of millions of pounds of bread. Repression may become an inevitable method of self-preservation. But it does not replace the establishment of the link, it does not create the economic foundation for the dictatorship of the proletariat, and it does not even guarantee the provision of food.

The authorities, therefore, could not stop merely at repression alone. In the struggle for grain and raw materials they found themselves compelled to order the city to release industrial products, while in the cities, particularly in the provinces, the state and co-operative stores have become empty.

The balance sheet of “the link” with the village during this year has not as yet been taken. But the trading channels of the cities are exhausted. “We gave more goods to the village,” said Kaganovich in Moscow on October 8, “and, if I may use the expression, we have offended the city.” The expression is absolutely permissible; the cities and industrial districts, that is the workers, have been offended.

Conditions and Methods of Planned Economy

What are the organs of constructing and applying the plan like? What are the methods of checking and regulating it? What are the conditions for its success?

In this connection three systems must be subjected to a brief analysis: (1) special state departments, that is, the hierarchical system of plan commissions, in the centre and locally; (2) trade, as a system of market regulation; (3) Soviet democracy, as a system for the living regulation by the masses of the structure of the economy.

If a universal mind existed, of the kind that projected itself into the scientific fancy of Laplace – a mind that could register simultaneously all the processes of nature and society, that could measure the dynamics of their motion, that could forecast the results of their inter-reactions – such a mind, of course, could a priori draw up a faultless and exhaustive economic plan, beginning with the number of acres of wheat down to the last button for a vest. The bureaucracy often imagines that just such a mind is at its disposal; that is why it so easily frees itself from the control of the market and of Soviet democracy. But, in reality, the bureaucracy errs frightfully in its estimate of its spiritual resources. In its projections it is necessarily obliged, in actual performance, to depend upon the proportions (and with equal justice one may say the disproportions) it has inherited from capitalist Russia, upon the data of the economic structure of contemporary capitalist nations, and finally upon the experience of successes and mistakes of the Soviet economy itself. But even the most correct combination of all these elements will allow only a most imperfect framework of a plan, not more.

The innumerable living participants in the economy, state and private, collective and individual, must serve notice of their needs and of their relative strength not only through the statistical determinations of plan commissions but by the direct pressure of supply and demand. The plan is checked and, to a considerable degree, realized through the market. The regulation of the market itself must depend upon the tendencies that are brought out through its mechanism. The blueprints produced by the departments must demonstrate their economic efficacy through commercial calculation. The system of the transitional economy is unthinkable without the control of the ruble. This presupposes, in its turn, that the ruble is at par. Without a firm monetary unit, commercial accounting can only increase the chaos.

The processes of economic construction are not yet taking place within a classless society. The questions relating to the allotment of the national income compose the central focus of the plan. It shifts with the direct development of the class struggle and that of social groups, and among them, the various strata of the proletariat itself. These are the most important social and economic questions: the link between the city and the village, that is, the balance between that which industry obtains from agriculture and that which it supplies to it; the interrelation between accumulation and consumption, between the fund for capital construction and the fund for wages; the regulation of wages for various categories of labour (skilled and unskilled workers, government employees, specialists, the managing bureaucracy); and finally the allotment of that share of national income which falls to the village, between the various strata of the peasantry. All these questions by their very nature do not allow for a priori decisions by the bureaucracy, which has fenced itself off from intervention by concerned millions.

The struggle between living interests, as the fundamental factor of planning, leads us into the domain of politics, which is concentrated economics. The instruments of the social groups of Soviet society are – should be: the Soviets, the trade unions, the co-operatives, and in first place the ruling party. Only through the inter-reaction of these three elements, state planning, the market and Soviet democracy, can the correct direction of the economy of the transitional epoch be attained. Only thus can be assured, not the complete surmounting of contradictions and disproportions within a few years (this is utopian!), but their mitigation, and through that the strengthening of the material bases of the dictatorship of the proletariat until the moment when a new and victorious revolution will widen the arena of socialist planning and will reconstruct the system.

==== Suppression of the NEP, Monetary Inflation,

and Liquidation of Soviet Democracy ====

The need to introduce the NEP, to restore market relationships, was determined first of all by the existence of 25 million independent peasant proprietors. This does not mean, however, that collectivization even in its first stage leads to the liquidation of the market. Collectivization becomes a viable factor only to the extent to which it involves the personal interest of the members of the collective farms, by shaping their mutual relations, and the relations between the collective farms and the outside world, on the basis of commercial calculation. This means that correct and economically sound collectivization at this stage should lead not to the elimination of the NEP but to a gradual reorganization of its methods.

The bureaucracy, however, went the whole way. At first it might have thought that it was taking the road of least resistance. The genuine and unquestionable successes of the centralized efforts of the proletariat were identified by the bureaucracy with the successes of its a priori planning. Or to put it differently: it identified the socialist revolution with itself. By administrative collectivization it masked the unsolved problem of establishing a link with the village. Confronting the disproportions of the NEP, it liquidated the NEP. In place of market methods, it enlarged the methods of compulsion.

The stable currency unit, in the form of the chervonets, constituted the most important weapon of the NEP. While in its state of dizziness, the bureaucracy decided that it was already standing firmly with both feet on the soil of economic harmony, that the successes of today automatically guaranteed the progression of subsequent successes, that the chervonets was not a bridle that checked the scope of the plan but on the contrary provided an independent source of capital funds. Instead of regulating the material elements of the economic process the bureaucracy began to plug up the holes by means of printing presses. In other words, it took to the road of “optimistic” inflation.

After the administrative suppression of the NEP, the celebrated “six conditions of Stalin” – economic accounting, piecework wages, etc. – became transformed into an empty collection of words. Economic accounting is unthinkable without market relations. The chervonets is the yardstick of the link. Of what possible use for the worker can a few extra rubles a month be if he is compelled to purchase the necessities of life in the open market at ten times their former price?

The restoration of open markets came as an admission of the inopportune liquidation of the NEP, but an admission that was empirical, partial, thoughtless, and contradictory. To label the open markets as a form of “Soviet” (socialist?) trade, in contrast to private trade and speculation, is to practice self-deception. Open-market trading even on the part of the collective farm as a whole ends up as speculation on the necessities required in the nearest city, and as a result leads to social differentiation, that is, to the enrichment of the minority of the more fortunately situated collective farms. But the chief place in the open market is occupied not by the collectives but by individual members of the collectives and by the independent peasants. The trading of the members of the collective farms, who sell their surplus at speculative prices, leads to differentiation within the collectives. Thus the open market develops centrifugal forces within the “socialist” village.

By eliminating the market and by installing Asiatic bazaars in its place the bureaucracy has created, to consummate everything, the conditions for the wildest gyration of prices, and consequently has placed a mine both under the plan and under commercial calculation. As a result, economic chaos has been redoubled.

Parallel to this the ossification of the trade unions, the Soviets, and the party, which didn’t start yesterday, continues. Coming up against the friction between the city and the village, against the demands from various sections within the peasantry, from the peasantry as a whole, and from the proletariat, the bureaucracy more and more resolutely ruled out any demands, protests, and criticism whatsoever. The only prerogative which it ultimately left to the workers was the right to exceed production limits. Any attempt to influence economic management from below is immediately described as a right or a left deviation, that is, practically made a capital offence. The bureaucratic upper crust in the last analysis, has pronounced itself infallible in the sphere of socialist planning (disregarding the fact that its collaborators and inspirers have turned out often to be criminal plotters and saboteurs). Thus the basic mechanism of socialist construction – the adaptable and elastic system of Soviet democracy – was liquidated. Face to face with the economic reality and its difficulties, the bureaucracy turned out to be armed only with the twisted and collapsed carcass of the plan, with its own administrative will also considerably deflated.

The Crisis of the Soviet Economy

Had the general economic level set by the first five-year plan been realized only 50 percent, this in itself could have given no cause as yet for alarm. The danger lies not in the slowdown of growth, but in the growing disparity between the various branches of the economy. Even if all the integral elements of the plan had been fully co-ordinated a priori, the lowering of the coefficient of growth by 50 percent would have in itself engendered great difficulties because of the consequences: it is one thing to produce one million pairs of shoes instead of two million, but it is quite another thing to finish building one-half of a shoe factory. But reality is much more complex and contradictory than our hypothetical example. Disproportions are inherited from the past. Targets which are set by plan include in themselves inevitable mistakes and miscalculations. The nonfulfillment of the plan does not occur proportionately, due to the particular causes in each individual instance. The average growth of 50 percent in the economy may mean that in sphere A the plan is filled 90 percent, whereas in sphere B, only 10 percent; if A depends on B, then in the subsequent cycle of production, branch A may be reduced below 10 percent.

Consequently the misfortune does not lie in the fact that the impossibility of adventuristic tempos has been revealed. The whole trouble is that the wild leaps in industrialization have brought the various elements of the plan into dire contradiction with each other. The trouble is that the economy functions without material reserves and without calculation. The trouble is that the social and political instruments for the determination of the effectiveness of the plan have been broken or mangled. The trouble is that the accrued disproportions threaten more and greater surprises. The trouble is that the uncontrolled bureaucracy has tied up its prestige with the subsequent accumulation of errors. The trouble is that a crisis is impending with a chain of consequences such as the enforced shutting down of factories and unemployment.

The difference between socialist and capitalist tempos of industrial development – even if one takes for comparison capitalism in its progressive stage – astonishes one by its sweep. But it would be a mistake to consider the Soviet tempos of the last few years as final. The average coefficient of capitalist growth results not only from periods of expansion but also of crisis. This has not been the case with the Soviet economy. In the course of the last eight to nine years it has experienced a period of uninterrupted growth; it has not yet succeeded in working out its average indices.

Of course we shall be told in refutation that we are transferring the laws of capitalism to the socialist economy, that a planned economy does not require regulation by means of crises or even by means of predetermined lowering of tempos. The repertory of proofs at the disposal of the Stalinist bureaucracy and its theoreticians is so restricted that it is always possible to forecast beforehand the particular generalization they will resort to. In this case, a pure tautology: we have entered socialism and therefore we must always act “socialistically,” that is, we must regulate the economy so as to obtain ever-increasing planned expansion. But the gist of the matter is that we have not entered into socialism. We have far from attained mastery of the methods of planned regulation. We are fulfilling only the first rough hypothesis, fulfilling it poorly, and with our headlights not yet on. Crises are not only possible, they are inevitable. And an impending crisis has already been prepared by the bureaucracy.

The laws that govern the transitional society are quite different from those that govern capitalism. But no less do they differ from the future laws of socialism, that is, of a harmonious economy growing on the basis of tried, proven, and guaranteed dynamic equilibrium. The productive advantages of socialism, centralization, concentration, the unified spirit of management are incalculable. But under faulty application, particularly under bureaucratic misuse, they may turn into their opposites. And in part they have already become transformed, for the crisis now impends. Any attempt to force the economy by further lashing and spurring ahead is an attempt to redouble the misfortunes in the future. It is impossible to foretell the extent that the crisis will assume. The advantages of planned economy remain during crises as well, and one may say they show themselves with special clarity precisely in a crisis. Capitalist governments are compelled to wait passively until the crisis spends itself on the backs of the people, or to resort to financial hocus-pocus in the manner of von Papen. The workers’ state meets the crisis with all its resources. All the dominant levers – the budget credit, industry, trade – are concentrated in a single hand. The crisis may be mitigated and afterwards overcome not by strident command but by measures of economic regulation. After the adventuristic offensive, it is necessary to execute a planned retreat, thought-out as fully as possible. This is the task of the coming year, the sixteenth year of the proletarian dictatorship. Il faut reculer pour mieux sauter: Let us retreat in order the better to advance.

The Soviet Economy in Danger

The official press now prints from issue to issue an endless list of accusations against the workers, the directors, the technicians, the managers, the co-operative personnel, and the trade unionists: all guilty of not fulfilling the plans, the instructions, and “the six conditions.” But what are the causes for this? Objective causes do not exist. To blame for it all is the in will of those entrusted with the fulfilling. And that is just what Pravda writes: “Do there exist any objective causes whatever for this deterioration in the work? None whatever!” (October 2, 1932). People simply do not want to work as they should – and that’s all there is to it. The October plenum of the CEC has ascertained that “there is unsatisfactory management in every link down the line.” Except of course that link which is called the Central Executive Committee.

But are there really no objective causes for the poor quality of the workmanship? A specified amount of time is required not only for the ripening of wheat but also for the familiarization with complex technological processes. Psychological processes, it is true, are more pliable than those of vegetation, but this pliability has its limits. One cannot skip over them. And in addition – and this is no less important – one cannot demand a maximum of intensity and supply a minimum of nutrition.

The resolution of the October plenum of the CEC accuses the workers and the administrators of their inability “to clinch” their highest achievements, and of their continual falling behind the targets they had set. In reality the breakdowns were inherent in the character of the achievements themselves. By virtue of an exceptional effort a man can lift a weight that is far above his “average” strength. But he cannot long sustain such a load over his head. It is absurd to accuse him of his inability “to clinch” his effort.

The Soviet economy is in danger! It is not difficult to determine its ailment. It springs from the nature of the successes themselves. The economy has suffered a rupture from excessive and poorly calculated exertion. One must proceed to cure it, painstakingly and perseveringly. Rakovsky warned us as early as 1930: “We are entering an entire epoch, one which will pass under the heading of payment in full for the entire past.”

The Second Five-Year Plan

The second five-year plan was fashioned on the scale of “gigantism.” It is difficult, to be more correct, it is impossible to judge “on sight” the extent to which the final indices of the second five-year plan are exaggerated. But the question now concerns not the balance of the second five-year plan, but its points of departure, the line of its connection with the first five-year plan. The first year of the second five-year plan has received an onerous inheritance from the last year of the first five-year plan.

The second plan, according to the design, is the spiral continuation of the first plan. But the first plan has not been brought to completion. The second plan from the very beginning is left suspended in midair. If one allows things to continue as they have, then the second five-year plan will begin by plugging up the holes of the first, under the administrative whip. This means that the crisis will be aggravated. In this way one heads for catastrophe.

There is only one way out: the inauguration of the second five-year plan must be put off for one year. Nineteen thirty-three must be made a buffer between the first five-year plan and the second. In the course of this period it is necessary, on the one hand, to verify the legacy left by the first five-year plan, to fill in the most yawning gaps, to mitigate the unbearable disproportions, and to straighten out the economic front; and, on the other hand, to reconstruct the second five-year plan, so designing it as to make its points of departure mesh with the actual and not imaginary results of the first five-year plan.

Doesn’t this simply mean that the period for the completion of the first plan will be prolonged another year? No, unfortunately that is not the case. The material consequences of four years’ uproar cannot be stricken out from reality by one stroke of a pen. A careful rechecking is necessary, a regulation, and a determination of the coefficients of growth actually achieved. The present condition of the economy excludes in general any possibility of planned work. Nineteen thirty-three cannot be a supplementary year of the first five-year plan, nor the first year of the second. It must occupy an independent position between the two, in order to assure the mitigation of the consequences of adventurism and the preparation of the material and moral prerequisites for planned expansion.

The Left Opposition was the first to demand the inauguration of the five-year plan. Now it is duty-bound to say: It is necessary to put off the second five-year plan. Away with shrill enthusiasm! Away with speculation! They cannot be reconciled with planned activity. Then you are for retreat? Yes, for a temporary retreat. And what about the prestige of the infallible leadership? The fate of the dictatorship of the proletariat is more important than inflated prestige.

The Year of Capital Reconstruction

Having been knocked off balance, the Soviet economy is in need of serious reconstruction. Under capitalism the disrupted equilibrium is restored by the blind forces of the crisis. The socialist republic allows the application of conscious and rational cures.

It is impossible, of course, to halt production in the whole country as it is halted during repairs in a factory or in an enterprise. But there is also no need to do that. It is enough to lower the tempos. The current productive labour for 1933 cannot be carried on without a plan, but this plan must be one for a single year, worked out on the basis of moderate, quality quotas.

Improvements in quality must be given first place. Inopportune construction should be eliminated; all forces and resources must be concentrated upon construction of the first rank; the interrelations between the various branches of industry must be balanced on the basis of experience; factories must be put in order; equipment must be restored.

Let there be an end to driving and spurring and establishing records; let the productivity of each enterprise be subject to its own technological rhythm. Return to the laboratories whatever has too soon been taken away. Finish building whatever still remains unfinished. Straighten out whatever has been bent. Repair that which has been damaged. Prepare the factory for a transition to a higher stage. Quality quotas must be given a character both supple and conditional in order that they may not interfere with achievements in quantity.

Nineteen thirty-three must gain complete mastery over the labour turnover, by bettering the conditions of the workers; that’s where the beginning must be made, for herein is to be found the key to everything else. Workers and their families must be assured of food, shelter, and clothing. No matter at what cost!

The management and the proletarian cadres of factories should be freed of supplementary burdens, such as the planting of potatoes, breeding rabbits, etc. All questions relating to supplying factories with necessities must be regulated as independent and not supplementary tasks.

Order must be brought into the production of consumer goods. Commodities must be adapted to human needs and not to the raw by-products of heavy industry.

The process of inflation must be stopped with an iron hand and the stable monetary unit must be restored. This difficult and painful operation cannot be undertaken without boldly curtailing capital investments, without sacrificing the hundreds of millions that have been inefficiently or inopportunely sunk into new construction, in order to forestall losses in the billions in the future.

A temporary retreat is urgent both in industry and in agriculture. The extent of the retreat cannot be determined beforehand. It will be revealed only by the experience of the capital reconstruction.

The managing organs must control, assist, and pick out everything that is viable and functioning, but they should stop driving enterprises to the limit, as is the case now. The economy and the people need a breathing spell from administrative violence and adventurism.

Many managers, as is shown by the papers, have arrived independently at the opinion that 1933 must differ in some essential way from this year. But they do not draw their ideas to the conclusion, in order not to expose themselves to danger.

In regard to rail transport, EZ writes: “One of the most important tasks of 1933 must be the task of a full and final liquidation of each and every imperfection, non-completion, poor tie-up, and disproportion in the functioning of the different integral parts of the transport mechanism.” Well spoken! This formula should be accepted in full, and be expanded to apply to the economy as a whole.

In regard to the tractor plant in Stalingrad, Pravda writes: “We must decisively dispense with defective methods of workmanship, we must put an end to fever along the conveyor in order to guarantee a regulated output of production.” That is absolutely correct! Planned economy, taken as a whole, represents in its class a conveyor on a state scale. The method of plugging up holes is incompatible with planned production. Nineteen thirty-three must “put an end to fever along the conveyor,” or at least we must considerably lower the temperature.

The Soviet government itself has proclaimed a “turn” from quantity to quality in agriculture. That is correct but the question must be approached on a much wider scale. The matter concerns not only the quality of the cultivation of the soil, but the entire collective- and state-farm policy and practice. The turn from quantity to quality must be carried over into the functioning of the administration itself.

First of all, a retreat is inevitable in the sphere of collectivization. Here more than anywhere else the administration is the captive of its own mistakes. While on the surface continuing to autocratically command, to specify under the signature of Stalin and Molotov the precise number of acres for grain tillage, the bureaucracy in reality is now being carried along by the stream of events

In the villages, in the meantime, a new stratum of the so-called “retired,” that is, former collective farmers, has appeared. Their number is growing. It is utter insanity to forcibly keep within the collectives peasants who pilfer the crops, who sell the seed in bazaars and then demand it from the government for sowing. It is no less criminal, however, to let the process of disintegration take its own course. The tendency to downgrade the collectivization movement is evidently now raising its head even within the party ranks. To allow this would be to throw out the baby with the bath water.

Nineteen thirty-three must serve to bring the collectivized agriculture into line with the technical, economic, and cultural resources. This means the selection of the most viable collectives and their reorganization in correspondence with the experience and wishes of the peasant masses, first of all the peasant poor. And, at the same time, conditions for leaving the collective farms must be formulated so as to reduce to a minimum the disruption of the rural economy, not to speak of the danger of civil war.

The policy of mechanically “liquidating the kulak” is now in effect discarded. A cross should be placed over it officially. And simultaneously it is necessary to establish the policy of severely restricting the exploiting tendencies of the kulak. With this goal in mind, the lowest strata of the villages must be welded together into a union of the peasant poor.

In 1933 the farmers will till the land, the textile workers will produce cloth, the blast furnaces will smelt metal, and the railroads will transport people and the products of labour. But the highest criterion of this year will lie not in producing as much as possible as fast as possible but in putting the economy in order; in checking over the inventories, separating the healthy from the sick and the good from the bad; in clearing away the rubbish and the mud; in building the needed houses and dining rooms, finishing the roofs, installing sanitary ventilation. For in order to work well, people must first of all live like human beings and satisfy their human needs.

To set aside a special year of capital reconstruction is a measure which of course solves nothing whatever by itself. It can attain its major significance only by a change in the very approach to the economy, and, first of all, to its living protagonists, the workers and peasants. The approach to the economy belongs to the domain of politics. The weapon of politics is the party.

Our task of tasks is to resurrect the party. Here as well we must take an inventory of the onerous inheritance of the post-Lenin period. We must separate the healthy from the sick, the good from the bad; we must clear away the rubbish and the mud; we must air and disinfect all the offices of the bureaucracy. After the party come the Soviets and the trade unions. Capital reconstruction of all Soviet organizations is the most important and most urgent task of 1933.