RESTORATION of CAPITALISM in the USSR - Revolution

RESTORATION of CAPITALISM in the USSR

Martin Nicolaus

Revolution

October 25, 1917, marked the beginning of a new period in Russian and in world history. 

It was the start of the period of Soviet power in the USSR -- a period which came to an end nearly 40 years later with the rise to power of a new bourgeoisie. In order to gain a clearer picture of the present regime, it is useful to trace briefly some of the key aspects of the early period of Soviet development. 

The workers' insurrections in Moscow and Petrograd, the storming of the Winter Palace, the arrest of the old government's ministers and the proclamation of the Soviet Republic put an end to the rule of the bourgeoisie and the landowners in one of the world's largest and most populous countries. 

State power was struck from the hands of the old exploiting classes. The proprietors of near-medieval estates, together with the owners and financial backers of some of the world's most modern factories and their foreign allies were deprived at one blow of the services of Russia's centralized official apparatus for pressing revenues out of the people, suppressing the exploited classes and waging wars of conquest and annexation. 

Moreover, they were deprived in short order of their most important private properties. All the land was nationalized immediately. The banks likewise. The foreign debt was repudiated. The major industries quickly followed. Beginning at first with enterprises whose owners closed down so as to create hardship for the workers and to sabotage their new government, the Soviet authority expropriated more than 800 firms between November 1917 and February the next year. By June of 1918, all large-scale industry and mining became state property along with the major transport facilities and warehouses. All foreign trade was made a state monopoly. 

Thus within a few months of the workers' seizure of state power, the new state held the title and the keys to nearly all the country's major means of production. The commanding heights of economic life were in its hands. The swiftest and one of the most massive transfers of property from one class to another in history up to that time had been achieved. 

The U.S. writer Lincoln Steffens, after a visit to Soviet Russia in 1918, returned to say, "I have been over into the future and it works." This oft-quoted phrase, and similar remarks by other visitors at the time, reflected the enormous inspiration which the victory of the Soviet working class radiated. The new Soviet power was the harbinger of the future emancipation of all exploited and oppressed peoples everywhere. But few leaders of the Bolshevik party in 1918 agreed in the literal sense with Steffen's judgment that "it works." 

Quite the opposite. Very little "worked." In the first place the economy was ravaged by four years of interimperialist world war. Industry suffered from shortages of raw materials. Millions of working-age peasants were at the battlefront. Serious famine threatened the cities. 

In the second place, the new Soviet state had hardly begun the task of transforming its newly acquired properties to make them work in a socialist sense. State power having been seized, the transfer of an enterprise from private to state hands was a relatively uncomplicated matter of issuing a confiscation decree and perhaps sending a contingent of armed workers to take physical possession of the plant and equipment, if the workers on the spot had not already done so. But to continue or to revive production, and above all to transform the relations of production from capitalist into socialist relations -- that was another matter. 

"Yesterday," Lenin wrote in May 1918, "the main task of the moment was, as determinedly as possible, to nationalize, confiscate, beat down and crush the bourgeoisie, and put down sabotage. Today, only a blind man could fail to see that we have nationalized, confiscated, beaten down and put down more than we have had time to count. The difference between socialization and simple confiscation is that confiscation can be carried out by 'determination' alone, without the ability to calculate and distribute properly, whereas socialization cannot be brought about without this ability." (Collected Works, Vol. 27, p. 333.) 

If the new Soviet power could not even keep track of how many enterprises had been confiscated, it could even less take stock of their capabilities and needs so as to draw up an economic plan. The central State Economic Council set up at the end of 1917 for this purpose achieved only the most superficial grip on economic affairs. In May 1921, Lenin wrote, "There is still hardly any evidence of the operation of an integrated state economic plan." (CW Vol. 32, p. 371.) Only the germs of socialist economy existed. 

The working class had seized state power. It controlled the key positions in the political superstructure of society. But the gigantic task of reshaping the economic foundation of Soviet society still lay before it. As Lenin said in May 1918, and repeated three years later, the name "Socialist Soviet Republic implies the determination of Soviet power to achieve the transition to socialism, and not that the new economic system is recognized as socialist order." (CW Vol. 27, p. 335; Vol. 32, p. 330) 

Three years of civil war and invasion by 14 imperialist states, determined to crush the Soviet power in its cradle, compelled the young state to subordinate all other tasks to survival. The intervention, operating in conjunction with the armed counterrevolution led by the overthrown landlords and bourgeoisie, imposed further terrible sacrifices on the Soviet working people between 1918-21. The reactionary armies cut the urban centers of Soviet power off from the sources of fuel, raw materials and above all, grain. Extraordinary economic measures had to be taken -- labor conscription, forced requisition of grain surpluses, emergency rationing among others -- that had nothing in common with a peaceful advance toward socialist economy. 

Defying all the predictions of the world's bourgeoisies, the Soviet state survived the onslaught. But it suffered staggering losses. Contemporary Soviet historians estimate that in 1917 there were just under 3 million factory workers in the Soviet Republic. About 800,000 of them fought in the civil war. Around 180,000 were killed in action. From 10-15 percent of the whole factory proletariat died of hunger and epidemics. As a result the Soviet power counted only 1.7 million factory workers in August 1920 when the main body of the reactionary armies had been beaten. 

More dangerous than the physical losses suffered by the proletariat was its economic degeneration as a result of the paralysis of industry. 

"Owing to our present deplorable conditions," Lenin wrote in May 1921 "proletarians are obliged to earn a living by methods which are not proletarian and are not connected with large-scale industry. They are obliged to procure goods by petty bourgeois profiteering methods either by stealing, or by making them for themselves in a publicly owned factory, in order to barter them for agricultural produce -- and that is the main economic danger, jeopardizing the existence of the Soviet system." (CW Vol. 32, p. 411.) 

So widespread and general was the ruin of large-scale industry, Lenin wrote in October 1921, that the proletariat has become declassed, i.e., dislodged from its class groove, and has ceased to exist as a proletariat. The proletariat is the class which is engaged in the production of material values in large-scale industry. Since large-scale capitalist industry has been destroyed, since the factories are at a standstill, the proletariat has disappeared. It has sometimes figured in statistics, but it has not been held together economically." (CW Vol. 33, p. 65.) 

Such a situation posed special dangers for the Soviet power, since the proletariat was not only the working class but the ruling class as well. Unless industry was revived, Soviet power would lose its footing and be overthrown. It was in the midst of this grave emergency, more dangerous than intervention snd civil war, that Lenin proposed to the party and the country in early 1921 the New Economic Policy (NEP). 

When the Bolsheviks first took power -- as Lenin put it -- "we assumed that we could proceed straight to socialism without a preliminary period in which the old economy would be adapted to socialist economy. We assumed that by introducing state production and state distribution we had established an economic system of production and distribution that differed from the previous one." (CW Vol. 33, p. 88.) 

Three years later, experience had proved that this was not possible. The "attempt to introduce the socialist principles of production and distribution by 'direct assault,' i.e. in the shortest, quickest and most direct way," had suffered defeat. 

The NEP meant a change in strategy based on the clear recognition of this defeat. Instead of immediate transition to socialist economy, there would have to be a fairly long transitional period -- perhaps five to 10 years by Lenin's estimate -- during which the groundwork for socialist economy was carefully prepared. Instead of an all-out assault, there would be a period of strategic retreat, regroupment and consolidation. Instead of merciless blows against the capitalists, the Soviet power would offer them concessions and encouragement within definite limits to get the economy going again. 

The plain fact, as Lenin put it in 1920, is that "there is a firmer economic basis for capitalism in Russia than for communism." (CW Vol. 31, p. 516.) Some 80 percent af the country were peasants, and of these the great majority were small-holders working an individual plot in an individualist way. There was a large stratum also of small workshops and manufacturers likewise engaged in petty-capitalist production and exchange. Even in the most advanced sectors of large-scale industry -- which in Russia at the time was more concentrated than anywhere else in the world -- the foundations for socialism were not yet ripe, 

The proletariat lacked organizational, cultural and technological skills in sufficient quantity even to run them on the old capitalist basis, much less to operate them in a coordinated, planned, socialist way. A period of "schooling" -- under the tutelage of the capitalists and their experts -- was required even in this core of the state sector of the economy. 

The analysis of Lenin's New Economic Policy and of the circumstance under which it was adopted sheds important light on the transformations in the Soviet mode of production carried out several decades later under Khrushchev, Brezhnev and Kosygin. The two sets of measures, as will be seen, have many crucial features in common, including the commanding role given to profits, the freedom given managers to engage in commodity exchange and others. In a number of respects, the latter even consciously copied from the former and drew on quotations from Lenin's speeches of the period to give their work a mantle of legitimacy. A crucial difference, however, was that Khrushchev and his followers portrayed their policies as an irreversible advance to communism while Lenin, with the frankness and truthfulness of a Bolshevik, proclaimed openly that NEP was a temporary retreat to state capitalism.