STATE CAPITALISM AND SOCIALISM
While the Trotskyites of all sorts claim to be Leninist, it is well known that they have been attacking Marxism Leninism under the disguise of anti Stalinism. The issue of State Capitalism is another misunderstood, misguided, distorted example of which has been used for these attacks on Marxism Leninism. One can not be both, either be Leninist or Trotskyite. In this sense, to understand the question of state capitalism is vitally important; what does it mean, who introduced, and why, who were against it, and why… Below is only a draft and notes on my study in this subject for which I welcome any constructive comment before I finalize the article.
BRIEF BACKGROUND TO THEORY
THE QUESTION OF NON-CAPITALIST DEVELOPMENT
The theory of non-capitalist development is an important part of the Marxist Leninist doctrine on revolution and building of socialism.
The non-capitalist way, an alternative to capitalist development after the revolution, meant that precapitalist structures of underdeveloped countries would be transformed on socialist ways through various phases and with the use of various forms and methods. It is to cut short the on going capitalist development before it becomes predominant, and rapidly and gradually transfer it to socialist way.
Marx and Engels, who expected revolutions in developed countries of Europe, believed that the non capitalist way was possible, if, first a socialist revolution took place in developed countries of Europe. They believed that a socialist revolution in a developed country can give the required political, economical, and every kind of assistance to the revolutions in under developed countries by which they may be able to by pass the capitalist stage.
As for Lenin, before the October revolution, he criticized the Narodniks’ illusions about the Russian commune being unique and capable of independently by passing the capitalist stage of development.
Similarly, in his article “Democracy and Narodnism in China,” Lenin said that “Sun Yat-Sen’s views, despite their militant and democratic spirit, were those of “a petty bourgeois, socialist reactionary. “.For the idea that capitalism can be “prevented in China and that a “social revolution’ there will be made easier by the country’s backwardness, and so on, is altogether reactionary.
In his article “Narodnism and the class of wage workers”, Lenin wrote that Mikhailovsky’s theory saying that Russia could bypass the capitalist phase was a “theory of utopian, petty bourgeois socialism, i.e., the dream of petty bourgeois intellectuals, who sought a way of escape from capitalism, not in the wage workers’ class struggle against the bourgeoisie, but in appeals to the entire nation, to society, that is, to that very same bourgeoisie..
Lenin’s view was that Russia, like most of the pre-capitalist countries, lacked the necessary material basis for direct transition to socialism. Material basis (large scale industry, high level of large scale production in agriculture etc) is usually established by capitalism in the period before a socialist revolution, or has to be established by the proletarian state itself.
A BRIEF HISTORY = WHOSE THEORY WAS IT?
It was Lenin who, first time in history, introduced the theory of “state capitalism” in transition to socialism and tried to implement after the revolution. However, with the civil war and imperialist interventions during late 1918 and 1920 Communist party had to abandoned the economic policy outlined by Lenin. A new economic policy was required, under the conditions of civil war and foreign interventions, where country’s all resources were devoted to securing victory over foreign interventions and counter-revolution, which came to be known as “War Communism”. This policy which, along others, required the appropriation of grain and other foods from peasants at a fixed price was a temporary economic policy and as Lenin pointed out “was not, and could not be a policy that corresponded to the economic tasks of the proletariat”
After victory over the imperialists and counter revolutionaries, Lenin drew up a new economic policy which abolished the appropriation of grain and food, and introduced “tax in kind”, where paying the tax; peasants were free to sell their surplus food in the local markets, which was an incentive to increase production which country desperately needed.
NEP (new economic policy), replacing “war Communism, was adopted on March 1921. As Lenin state on his pamphlet ‘The tax in Kind”, the use of State Capitalism for building socialism was as valid as it was before the civil war ,because the basic elements of the country’s economy had not changed . For Lenin, state capitalism was not only a period of transition to socialism, but an ECONOMIC DEVICE to further the building of socialism. However, Lenin stressed on the different conditions of every country while he said “..appreciate the need to refrain from our tactics, but thoughtfully vary them in adaptation to different conditions (of your own country)”.
REASONING =BORGEOIS DEMOCRATIC REVOLUTION AND SOCIALIST REVOLUTION
Lenin pointed on two conditions and requirements to guarantee the transition from bourgeois-democratic revolution to socialist revolution: first, the proletariat, led by a party capable of leading it to decisive battles for socialism, had to be politically conscious and organised ,second, the city and peasant semi-proletarian had to be closely united around the proletariat. According to Lenin the socialist revolution could only be successful if the workers were able to make all the exploited masses , particularly the poor peasants, their true and reliable ally.
"to separate them by anything else than the degree of preparedness of the proletariat and the degree of its unity with the poor peasants, means to distort Marxism dreadfully, to vulgarise it, to substitute liberalism in its place". Lenin, The Proletarian Revolution and the Renegade Kautsky
The Leninist theory of the bourgeois-democratic revolution transforming into socialist revolution teaches the revolutionaries to conquer their enemies little by little, first during the bourgeois democratic revolution and then during the socialist revolution. Lenin in his article "Draft Speech on the Agrarian Question in the Duma" explained this by saying:
"Imagine, gentlemen, that I have to remove two heaps of rubbish from my yard. I have only one cart. And no more than one heap can be removed on one cart. What should I do?"
"To begin with, the Russian people have to carry away on their cart all that rubbish that is known as feudal, landed proprietorship, and then come back with the empty cart to a cleaner yard and begin loading the second heap, begin clearing out the rubbish of capitalist exploitation!"
WHY
Lenin mostly through his speeches defined the basic principles and methods of using state capitalism in the period of transition from capitalism to socialism. As for Lenin, state capitalism was a capitalism condoned within certain limits, under strict control of the socialist state, which held the commanding heights in the economy. State capitalism was called upon to help organize a new, socialist economy.
“….ordinary salesmen have had ten years’ warehouse experience and know the business, whereas the responsible Communists and devoted revolutionaries do not know the business, and do not even realize that they do not know it…… After all, we have not ceased to be revolutionaries (although many say, and not altogether without foundation, that we have become bureaucrats) and can understand this simple thing, that in a new and unusually difficult undertaking we must be prepared to start from the beginning over and over again. If after starting you find yourselves at a dead end, start again, and go on doing it ten times if necessary, until you attain your object. Do not put on airs, do not be conceited because you are a Communist while there is some non-Party salesman, perhaps a white guard—and very likely he is a white guard—who can do things which economically must be done at all costs, but which you cannot do. If you, responsible Communists, who have hundreds of ranks and titles and wear communist and Soviet Orders, realize this, you will attain your object, because this is something that can be learned.” Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
“in the conditions prevailing in Soviet Russia, state capitalism would be a step forward and would ease transition to socialism, because state capitalism is something centralized, calculated, controlled and socialized, and that is exactly what we lack; we are threatened by the petty bourgeois slovenliness, ..and which prevents us from taking the very step on which the success of socialism depends.” ….(in soviets) ”it is not state capitalism that is at war with socialism, but the petty bourgeoisie plus private capitalism fighting together against both state capitalism and socialism.”” Lenin, Left wing childishness and petty bourgeois mentality
HOW SERIOUS LENIN WAS ABOUT THE USE OF STATE CAPITALISM
Lenin’s feelings about those who criticized the party as “retreating to capitalism”..
“”If, during an incredibly difficult retreat, when everything depends on preserving proper order, anyone spreads panic—even from the best of motives—the slightest breach of discipline must be punished severely, sternly, ruthlessly; and this applies not only to certain of our internal Party affairs, but also, and to a greater extent, to such gentry as the Mensheviks, and to all the gentry of the Two-and-a-Half International.
The other day I read an article by Comrade Rakosi in No. 20 of The Communist International on a new book by Otto Bauer, from whom at one time we all learned, but who, like Kautsky, became a miserable petty bourgeois after the war. Bauer now writes: “There, they are now retreating to capitalism! We have always said that it was a bourgeois revolution.””””
And when a Menshevik says, “You are now retreating; I have been advocating retreat all the time, I agree with you, I am your man, let us retreat together,” we say in reply, “For the public manifestations of Menshevism our revolutionary courts must pass the death sentence, otherwise they are not our courts, but God knows what.”
“…the Mensheviks and Socialist-revolutionaries, all of whom preach this sort of thing, are astonished when we declare that we shall shoot people for such things………Otto Bauer, the leader of second and Two-and-a- half internationals, the Mensheviks and socialist revolutionaries preach express their true nature---“the revolution is gone too far. What you are saying now we have been saying all the time; permit us to say it again”. But we say in reply; “permit us to put you before a firing squad for saying that. Either you refrain from your views, or if you insist on expressing your political views publicly in the present circumstances, when our position is far more difficult than it was when the white guard was directly attacking us, then you will have only yourselves to blame if we treat you as the worst and most pernicious white guard elements” ….“””“Political reports of the central committee of the RCP (B) March 27, 1922
WHAT IS STATE CAPITALISM ?
“”“state capitalism is capitalism” said Preobrazhensky. “ and that is the only way it can and should be interpreted”. I say that is pure scholasticism…….state capitalism is the most unexpected and absolutely unforeseen form of capitalism- for no body foresee that the proletariat would achieve power in one of the least developed countries, and would first try to organize large-scale production and distribution….would enlist the service of capitalism. Nobody ever foresaw this; but it is an incontrovertible fact..””” Closing speech on the political report of the CC of RCP (B) March 28 1922
“””The state capitalism discussed in all books on economics is that which exists under the capitalist system, where the state brings under its direct control certain capitalist enterprises. But ours is a proletarian state it rests on the proletariat; it gives the proletariat all political privileges; and through the medium of the proletariat it attracts to itself the lower ranks of the peasantry (you remember that we began this work through the Poor Peasants Committees). That is why very many people are misled by the term state capitalism. To avoid this we must remember the fundamental thing that state capitalism in the form we have here is not dealt with in any theory, or in any books, for the simple reason that all the usual concepts connected with this term are associated with bourgeois rule in capitalist society. Our society is one which has left the rails of capitalism, but has not yet got on to new rails. The state in this society is not ruled by the bourgeoisie, but by the proletariat. We refuse to understand that when we say “state” we mean ourselves, the proletariat, the vanguard of the working class. State capitalism is capitalism which we shall be able to restrain, and the limits of which we shall be able to fix. This state capitalism is connected with the state, and the state is the workers, the advanced section of the workers, the vanguard. We are the state.
State capitalism is capitalism that we must confine within certain bounds; but we have not yet learned to confine it within those bounds. That is the whole point. And it rests with us to determine what this state capitalism is to be. We have sufficient, quite sufficient political power; we also have sufficient economic resources at our command, but the vanguard of the working class which has been brought to the forefront to directly supervise, to determine the boundaries, to demarcate, to subordinate and not be subordinated itself, lacks sufficient ability for it. All that is needed here is ability, and that is what we do not have.… “””“Political reports of the central committee of the RCP (B) March 27, 1922
On state capitalism
“”The whole question turns on our understanding that this is the capitalism that we can and must permit, that we can and must confine within certain bounds; for this capitalism is essential for the broad masses of the peasantry and for private capital, which must trade in such a way as to satisfy the needs of the peasantry. We must organize things in such a way as to make possible the customary operation of capitalist economy and capitalist exchange, because this is essential for the people. Without it, existence is impossible. All the rest is not an absolutely vital matter to this camp”” Political reports of the central committee of the RCP (B) March 27, 1922
“The capitalism that we have permitted is essential. If it is ugly and bad, we shall be able to rectify it, because power is in our hands and we have nothing to fear.. …..the state capitalism that we have now is not the state capitalism that Germans wrote about. It is capitalism that we ourselves have permitted…...permitted by the proletarian state…” Closing speech on the political report of the CC of RCP (B) March 28 1922
“How is it that although capitalism is the antithesis of communism, certain circumstances are assets from the two opposite view-points? It is because one possible way to proceed to communism is thru state capitalism, provided the state is controlled by the working class. This is exactly the position in the “present case” …November 5, 1922, Manchester Guardian, interview with Arthur Ransome
“…we are forming mixed companies…resorting commercial, capitalist methods. These mixed companies are also important because through them practical competition is created between capitalist methods and our methods……Mensheviks and the socialists of Second and two-and –a half Internationals have no idea, in general, of the way a revolution develops. We could proceed in no other way.””…Political reports of the central committee of the RCP (B) March 27, 1922
“””The proletarian state may, without changing its own nature, permit freedom of trade and the development of capitalism only within certain bounds, and only on the condition that the state regulates (supervises, controls, determines the forms and methods of, etc.) private trade and private capitalism. The success of such regulation will depend not only on the state authorities, but also, and to a larger extent, on the degree of maturity of the proletariat and of the masses of the working people generally, on their cultural level, etc. But even if this regulation is completely successful, the antagonism of class interests between labor and capital will certainly remain. Consequently, one of the main tasks that will henceforth confront the trade unions is to protect in every way the class interests of the proletariat in its struggle against capital. This task should be openly put in the forefront, and the machinery of the trade unions must be reorganized, modified or supplemented accordingly; strike funds, and so on should be formed, or rather, built up “””V. I. Lenin ,Draft Theses on The Role And Functions Of The Trade Unions under the New Economic Policy, December 30, 1921
On Mensheviks and 2nd internationalist regarding to state capitalism
“”The Mensheviks are shouting that the tax in kind, the freedom to trade, the granting of concessions and state capitalism signify the collapse of communism…To the Menshevik shouters we shall simply point out that as early as the spring of 1918 the Communists proclaimed and advocated the idea of a bloc, an alliance with state capitalism against the petty-bourgeois element. That was three years ago! In the first months of the Bolshevik victory! Even then the Bolsheviks took a sober view of things. And since then nobody has been able to challenge the correctness of our sober calculation of the available forces. “” from NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
“”””…in all bourgeois countries there are trends which might be called pacifist trends, among which should be included the entire Second and Two-and-a-Half Internationals. It is this section of the bourgeoisie which is advocating a number of pacifist proposals and is trying to concoct something in the nature of a pacifist policy. As Communists we have definite views about this pacifism which it would be superfluous to expound here. Needless to say, we are going to Genoa not as Communists, but as merchants. We must trade, and they must trade. We want the trade to benefit us; they want it to benefit them. The course of the issue will be determined, if only to a small degree, by the skill of our diplomats.” Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
On bureaucracy
“The gentlemen of the Two-and-a-Half International pose as revolutionaries; but in every serious situation they prove to be counter-revolutionaries because they shrink from the violent destruction of the old state machine; they have no faith in the forces of the working class. It was not a mere catch-phrase we uttered when we said this about the Socialist-Revolutionaries and Co. Everybody knows that the October Revolution actually brought new forces, a new class, to the forefront, that the best representatives of the proletariat are now governing Russia, built up an army, led that army, set up local government, etc., are running industry, and so on. If there are some bureaucratic distortions in this administration, we do not conceal this evil; we expose it, combat it. Those who allow the struggle against the distortions of the new system to obscure its content and to cause them to forget that the working class has created and is guiding a state of the Soviet type are incapable of thinking, and are merely throwing words to the wind. “” from NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
The difficulties facing the revolution
“”Amidst the colossal ruin of the country and the exhaustion of the forces of the proletariat, by a series of almost superhuman efforts, we are tackling the most difficult job: laying the foundation for a really socialist economy, for the regular exchange of commodities (or, more correctly, exchange of products) between industry and agriculture. The enemy is still far stronger than we are; anarchic, profiteering, individual commodity exchange is undermining our efforts at every step. We clearly see the difficulties and will systematically and perseveringly overcome them. More scope for independent local enterprise; more forces to the localities; more attention to their practical experience. The working class can heal its wounds, its proletarian "class forces" can recuperate, and the confidence of the peasantry in proletarian leadership can be strengthened only as real success is achieved in restoring industry and in bringing about a regular exchange of products through the medium of the state that benefits both the peasant and the worker. And as we achieve this we shall get an influx of new forces, not as quickly as every one of us would like, perhaps, but we shall get it nevertheless..”” NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
“””At any rate we have formed companies jointly with Russian and foreign capitalists. There are only a few of them. But this small but practical start shows that the Communists have been judged by what they do. They have not been judged by such high institutions as the Central Control Commission and the All-Russia Central Executive Committee. The Central Control Commission is a splendid institution, of course, and we shall now give it more power.
Of course, they will cheat us in these companies, cheat us so that it will take several years before matters are straightened out. But that does not matter. I do not say that that is a victory; it is a reconnaissance, which shows that we have an arena, we have a terrain, and can now stop the retreat.
The reconnaissance has revealed that we have concluded an insignificant number of agreements with capitalists; but we have concluded them for all that. We must learn from that and continue our operations. In this sense we must put a stop to nervousness, screaming and fuss.
The merchants are laughing at us Communists, and in all probability are saying, “Formerly there were Persuaders-in-Chief now we have Talkers-in-Chief.” That the capitalists gloated over the fact that we started late, that we were not sharp enough—of that there need not be the slightest doubt..”“ Political reports of the central committee of the RCP (B) March 27, 1922
The task, economic development
“”Our last, but most important and most difficult task, the one we have done least about, is economic development, the laying of economic foundations for the new, socialist edifice on the site of the demolished feudal edifice and the semi-demolished capitalist edifice. It is in this most important and most difficult task that we have sustained the greatest number of reverses and have made most mistakes. How could anyone expect that a task so new to the world could be begun without reverses and without mistakes! But we have begun it. We shall continue it. At this very moment we are, by our New Economic Policy, committing a number of our mistakes. We are learning how to continue erecting the socialist edifice in a small-peasant country without committing such mistakes.
The difficulties are immense. But we are accustomed to grappling with immense difficulties. Not for nothing do our enemies call us "stone-hard" and exponents of a "firm line policy". But we have also learned, at least to some extent, another art that is essential in revolution, namely, flexibility, the ability to effect swift and sudden changes of tactics if changes in objective conditions demand them, and to choose another path for the achievement of our goal if the former path proves to be inexpedient or impossible at the given moment.
“”And we, who during these three or four years have learned a little to make abrupt changes of front (when abrupt changes of front are needed), have begun zealously, attentively and sedulously (although still not zealously, attentively and sedulously enough) to learn to make a new change of front, namely, the New Economic Policy. The proletarian state must become a cautious, assiduous and shrewd "businessman", a punctilious wholesale merchant -- otherwise it will never succeed in putting this small-peasant country economically on its feet. Under existing conditions, living as we are side by side with the capitalist (for the time being capitalist) West, there is no other way of progressing to communism. A wholesale merchant seems to be an economic type as remote from communism as heaven from earth. But that is one of the contradictions which, in actual life, lead from a small-peasant economy via state capitalism to socialism. Personal incentive will step up production; we must increase production first and foremost and at all costs.”” “”V. I. Lenin, Fourth Anniversary of the October Revolution, October 18, 1921
“””That is why we shall strive to formulate our tasks in this new, higher stage of the struggle with the greatest, with treble caution. We shall formulate them as moderately as possible. We shall make as many concessions as possible within the limits, of course, of what the proletariat can concede and yet remain the ruling class. We shall collect the moderate tax in kind as quickly as possible and allow the greatest possible scope for the development, strengthening and revival of peasant farming. We shall lease the enterprises that are not absolutely essential for us to lessees, including private capitalists and foreign concessionaires. We need a bloc, or alliance, between the proletarian state and state capitalism against the petty-bourgeois element. We must achieve this alliance skillfully, following the rule: "Measure your cloth seven times before you cut." We shall leave ourselves a smaller field of work, only what is absolutely necessary. We shall concentrate the enfeebled forces of the working class on something less, but we shall consolidate ourselves all the more and put ourselves to the test of practical experience not once or twice, but over and over again. Step by step, inch by inch -- for at present the "troops" we have at our command cannot advance any other way on the difficult road we have to travel, in the stern conditions under which we are living, and amidst the dangers we have to face. Those who find this work "dull", "uninteresting" and "unintelligible", those who turn up their noses or become panic-stricken, or who become intoxicated with their own declamations about the absence of the "previous elation", the "previous enthusiasm", etc., had better be "relieved of their jobs" and given a back seat, so as to prevent them from causing harm; for they will not or cannot understand the specific features of the present stage, the present phase of the struggle. “”NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
We are now forming mixed companies—I shall have something to say about these later on—which, like our state trade and our New Economic Policy as a whole, mean that we Communists are resorting to commercial, capitalist methods. These mixed companies are also important because through them practical competition is created between capitalist methods and our methods. Consider it practically. Up to now we have been writing a programme and making promises. In its time this was absolutely necessary. It is impossible to launch on a world revolution without a programme and without promises. If the white guards, including the Mensheviks, jeer at us for this, it only shows that the Mensheviks and the socialists of the Second and Two-and-a-Half Internationals have no idea, in general, of the way a revolution develops. We could proceed in no other way.
The mixed companies that we have begun to form, in which private capitalists, Russian and foreign, and Communists participate, provide one of the means by which we can learn to organize competition properly and show that we are no less able to establish a link with the peasant economy than the capitalists; that we can meet its requirements; that we can help the peasant make progress even at his present level, in spite of his backwardness; for it is impossible to change him in a brief span of time.” Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
state capitalism vs private capitalism
“”Permit me to say this to you without exaggeration, because in this respect it is really “the last and decisive battle”, not against international capitalism—against that we shall yet have many “last and decisive battles”—but against Russian capitalism, against the capitalism that is growing out of the small peasant economy, the capitalism that is fostered by the latter. Here we shall have a fight on our hands in the immediate future, and the date of it cannot be fixed exactly. Here the “last and decisive battle” is impending; here there are no political or any other flanking movements that we can undertake, because this is a test in competition with private capital. Either we pass this test in competition with private capital, or we fail completely.”’ Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
prepared by
EA
BRIEF BACKGROUND TO THEORY
THE QUESTION OF NON-CAPITALIST DEVELOPMENT
The theory of non-capitalist development is an important part of the Marxist Leninist doctrine on revolution and building of socialism.
The non-capitalist way, an alternative to capitalist development after the revolution, meant that precapitalist structures of underdeveloped countries would be transformed on socialist ways through various phases and with the use of various forms and methods. It is to cut short the on going capitalist development before it becomes predominant, and rapidly and gradually transfer it to socialist way.
Marx and Engels, who expected revolutions in developed countries of Europe, believed that the non capitalist way was possible, if, first a socialist revolution took place in developed countries of Europe. They believed that a socialist revolution in a developed country can give the required political, economical, and every kind of assistance to the revolutions in under developed countries by which they may be able to by pass the capitalist stage.
As for Lenin, before the October revolution, he criticized the Narodniks’ illusions about the Russian commune being unique and capable of independently by passing the capitalist stage of development.
Similarly, in his article “Democracy and Narodnism in China,” Lenin said that “Sun Yat-Sen’s views, despite their militant and democratic spirit, were those of “a petty bourgeois, socialist reactionary. “.For the idea that capitalism can be “prevented in China and that a “social revolution’ there will be made easier by the country’s backwardness, and so on, is altogether reactionary.
In his article “Narodnism and the class of wage workers”, Lenin wrote that Mikhailovsky’s theory saying that Russia could bypass the capitalist phase was a “theory of utopian, petty bourgeois socialism, i.e., the dream of petty bourgeois intellectuals, who sought a way of escape from capitalism, not in the wage workers’ class struggle against the bourgeoisie, but in appeals to the entire nation, to society, that is, to that very same bourgeoisie..
Lenin’s view was that Russia, like most of the pre-capitalist countries, lacked the necessary material basis for direct transition to socialism. Material basis (large scale industry, high level of large scale production in agriculture etc) is usually established by capitalism in the period before a socialist revolution, or has to be established by the proletarian state itself.
A BRIEF HISTORY = WHOSE THEORY WAS IT?
It was Lenin who, first time in history, introduced the theory of “state capitalism” in transition to socialism and tried to implement after the revolution. However, with the civil war and imperialist interventions during late 1918 and 1920 Communist party had to abandoned the economic policy outlined by Lenin. A new economic policy was required, under the conditions of civil war and foreign interventions, where country’s all resources were devoted to securing victory over foreign interventions and counter-revolution, which came to be known as “War Communism”. This policy which, along others, required the appropriation of grain and other foods from peasants at a fixed price was a temporary economic policy and as Lenin pointed out “was not, and could not be a policy that corresponded to the economic tasks of the proletariat”
After victory over the imperialists and counter revolutionaries, Lenin drew up a new economic policy which abolished the appropriation of grain and food, and introduced “tax in kind”, where paying the tax; peasants were free to sell their surplus food in the local markets, which was an incentive to increase production which country desperately needed.
NEP (new economic policy), replacing “war Communism, was adopted on March 1921. As Lenin state on his pamphlet ‘The tax in Kind”, the use of State Capitalism for building socialism was as valid as it was before the civil war ,because the basic elements of the country’s economy had not changed . For Lenin, state capitalism was not only a period of transition to socialism, but an ECONOMIC DEVICE to further the building of socialism. However, Lenin stressed on the different conditions of every country while he said “..appreciate the need to refrain from our tactics, but thoughtfully vary them in adaptation to different conditions (of your own country)”.
REASONING =BORGEOIS DEMOCRATIC REVOLUTION AND SOCIALIST REVOLUTION
Lenin pointed on two conditions and requirements to guarantee the transition from bourgeois-democratic revolution to socialist revolution: first, the proletariat, led by a party capable of leading it to decisive battles for socialism, had to be politically conscious and organised ,second, the city and peasant semi-proletarian had to be closely united around the proletariat. According to Lenin the socialist revolution could only be successful if the workers were able to make all the exploited masses , particularly the poor peasants, their true and reliable ally.
"to separate them by anything else than the degree of preparedness of the proletariat and the degree of its unity with the poor peasants, means to distort Marxism dreadfully, to vulgarise it, to substitute liberalism in its place". Lenin, The Proletarian Revolution and the Renegade Kautsky
The Leninist theory of the bourgeois-democratic revolution transforming into socialist revolution teaches the revolutionaries to conquer their enemies little by little, first during the bourgeois democratic revolution and then during the socialist revolution. Lenin in his article "Draft Speech on the Agrarian Question in the Duma" explained this by saying:
"Imagine, gentlemen, that I have to remove two heaps of rubbish from my yard. I have only one cart. And no more than one heap can be removed on one cart. What should I do?"
"To begin with, the Russian people have to carry away on their cart all that rubbish that is known as feudal, landed proprietorship, and then come back with the empty cart to a cleaner yard and begin loading the second heap, begin clearing out the rubbish of capitalist exploitation!"
WHY
Lenin mostly through his speeches defined the basic principles and methods of using state capitalism in the period of transition from capitalism to socialism. As for Lenin, state capitalism was a capitalism condoned within certain limits, under strict control of the socialist state, which held the commanding heights in the economy. State capitalism was called upon to help organize a new, socialist economy.
“….ordinary salesmen have had ten years’ warehouse experience and know the business, whereas the responsible Communists and devoted revolutionaries do not know the business, and do not even realize that they do not know it…… After all, we have not ceased to be revolutionaries (although many say, and not altogether without foundation, that we have become bureaucrats) and can understand this simple thing, that in a new and unusually difficult undertaking we must be prepared to start from the beginning over and over again. If after starting you find yourselves at a dead end, start again, and go on doing it ten times if necessary, until you attain your object. Do not put on airs, do not be conceited because you are a Communist while there is some non-Party salesman, perhaps a white guard—and very likely he is a white guard—who can do things which economically must be done at all costs, but which you cannot do. If you, responsible Communists, who have hundreds of ranks and titles and wear communist and Soviet Orders, realize this, you will attain your object, because this is something that can be learned.” Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
“in the conditions prevailing in Soviet Russia, state capitalism would be a step forward and would ease transition to socialism, because state capitalism is something centralized, calculated, controlled and socialized, and that is exactly what we lack; we are threatened by the petty bourgeois slovenliness, ..and which prevents us from taking the very step on which the success of socialism depends.” ….(in soviets) ”it is not state capitalism that is at war with socialism, but the petty bourgeoisie plus private capitalism fighting together against both state capitalism and socialism.”” Lenin, Left wing childishness and petty bourgeois mentality
HOW SERIOUS LENIN WAS ABOUT THE USE OF STATE CAPITALISM
Lenin’s feelings about those who criticized the party as “retreating to capitalism”..
“”If, during an incredibly difficult retreat, when everything depends on preserving proper order, anyone spreads panic—even from the best of motives—the slightest breach of discipline must be punished severely, sternly, ruthlessly; and this applies not only to certain of our internal Party affairs, but also, and to a greater extent, to such gentry as the Mensheviks, and to all the gentry of the Two-and-a-Half International.
The other day I read an article by Comrade Rakosi in No. 20 of The Communist International on a new book by Otto Bauer, from whom at one time we all learned, but who, like Kautsky, became a miserable petty bourgeois after the war. Bauer now writes: “There, they are now retreating to capitalism! We have always said that it was a bourgeois revolution.””””
And when a Menshevik says, “You are now retreating; I have been advocating retreat all the time, I agree with you, I am your man, let us retreat together,” we say in reply, “For the public manifestations of Menshevism our revolutionary courts must pass the death sentence, otherwise they are not our courts, but God knows what.”
“…the Mensheviks and Socialist-revolutionaries, all of whom preach this sort of thing, are astonished when we declare that we shall shoot people for such things………Otto Bauer, the leader of second and Two-and-a- half internationals, the Mensheviks and socialist revolutionaries preach express their true nature---“the revolution is gone too far. What you are saying now we have been saying all the time; permit us to say it again”. But we say in reply; “permit us to put you before a firing squad for saying that. Either you refrain from your views, or if you insist on expressing your political views publicly in the present circumstances, when our position is far more difficult than it was when the white guard was directly attacking us, then you will have only yourselves to blame if we treat you as the worst and most pernicious white guard elements” ….“””“Political reports of the central committee of the RCP (B) March 27, 1922
WHAT IS STATE CAPITALISM ?
“”“state capitalism is capitalism” said Preobrazhensky. “ and that is the only way it can and should be interpreted”. I say that is pure scholasticism…….state capitalism is the most unexpected and absolutely unforeseen form of capitalism- for no body foresee that the proletariat would achieve power in one of the least developed countries, and would first try to organize large-scale production and distribution….would enlist the service of capitalism. Nobody ever foresaw this; but it is an incontrovertible fact..””” Closing speech on the political report of the CC of RCP (B) March 28 1922
“””The state capitalism discussed in all books on economics is that which exists under the capitalist system, where the state brings under its direct control certain capitalist enterprises. But ours is a proletarian state it rests on the proletariat; it gives the proletariat all political privileges; and through the medium of the proletariat it attracts to itself the lower ranks of the peasantry (you remember that we began this work through the Poor Peasants Committees). That is why very many people are misled by the term state capitalism. To avoid this we must remember the fundamental thing that state capitalism in the form we have here is not dealt with in any theory, or in any books, for the simple reason that all the usual concepts connected with this term are associated with bourgeois rule in capitalist society. Our society is one which has left the rails of capitalism, but has not yet got on to new rails. The state in this society is not ruled by the bourgeoisie, but by the proletariat. We refuse to understand that when we say “state” we mean ourselves, the proletariat, the vanguard of the working class. State capitalism is capitalism which we shall be able to restrain, and the limits of which we shall be able to fix. This state capitalism is connected with the state, and the state is the workers, the advanced section of the workers, the vanguard. We are the state.
State capitalism is capitalism that we must confine within certain bounds; but we have not yet learned to confine it within those bounds. That is the whole point. And it rests with us to determine what this state capitalism is to be. We have sufficient, quite sufficient political power; we also have sufficient economic resources at our command, but the vanguard of the working class which has been brought to the forefront to directly supervise, to determine the boundaries, to demarcate, to subordinate and not be subordinated itself, lacks sufficient ability for it. All that is needed here is ability, and that is what we do not have.… “””“Political reports of the central committee of the RCP (B) March 27, 1922
On state capitalism
“”The whole question turns on our understanding that this is the capitalism that we can and must permit, that we can and must confine within certain bounds; for this capitalism is essential for the broad masses of the peasantry and for private capital, which must trade in such a way as to satisfy the needs of the peasantry. We must organize things in such a way as to make possible the customary operation of capitalist economy and capitalist exchange, because this is essential for the people. Without it, existence is impossible. All the rest is not an absolutely vital matter to this camp”” Political reports of the central committee of the RCP (B) March 27, 1922
“The capitalism that we have permitted is essential. If it is ugly and bad, we shall be able to rectify it, because power is in our hands and we have nothing to fear.. …..the state capitalism that we have now is not the state capitalism that Germans wrote about. It is capitalism that we ourselves have permitted…...permitted by the proletarian state…” Closing speech on the political report of the CC of RCP (B) March 28 1922
“How is it that although capitalism is the antithesis of communism, certain circumstances are assets from the two opposite view-points? It is because one possible way to proceed to communism is thru state capitalism, provided the state is controlled by the working class. This is exactly the position in the “present case” …November 5, 1922, Manchester Guardian, interview with Arthur Ransome
“…we are forming mixed companies…resorting commercial, capitalist methods. These mixed companies are also important because through them practical competition is created between capitalist methods and our methods……Mensheviks and the socialists of Second and two-and –a half Internationals have no idea, in general, of the way a revolution develops. We could proceed in no other way.””…Political reports of the central committee of the RCP (B) March 27, 1922
“””The proletarian state may, without changing its own nature, permit freedom of trade and the development of capitalism only within certain bounds, and only on the condition that the state regulates (supervises, controls, determines the forms and methods of, etc.) private trade and private capitalism. The success of such regulation will depend not only on the state authorities, but also, and to a larger extent, on the degree of maturity of the proletariat and of the masses of the working people generally, on their cultural level, etc. But even if this regulation is completely successful, the antagonism of class interests between labor and capital will certainly remain. Consequently, one of the main tasks that will henceforth confront the trade unions is to protect in every way the class interests of the proletariat in its struggle against capital. This task should be openly put in the forefront, and the machinery of the trade unions must be reorganized, modified or supplemented accordingly; strike funds, and so on should be formed, or rather, built up “””V. I. Lenin ,Draft Theses on The Role And Functions Of The Trade Unions under the New Economic Policy, December 30, 1921
On Mensheviks and 2nd internationalist regarding to state capitalism
“”The Mensheviks are shouting that the tax in kind, the freedom to trade, the granting of concessions and state capitalism signify the collapse of communism…To the Menshevik shouters we shall simply point out that as early as the spring of 1918 the Communists proclaimed and advocated the idea of a bloc, an alliance with state capitalism against the petty-bourgeois element. That was three years ago! In the first months of the Bolshevik victory! Even then the Bolsheviks took a sober view of things. And since then nobody has been able to challenge the correctness of our sober calculation of the available forces. “” from NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
“”””…in all bourgeois countries there are trends which might be called pacifist trends, among which should be included the entire Second and Two-and-a-Half Internationals. It is this section of the bourgeoisie which is advocating a number of pacifist proposals and is trying to concoct something in the nature of a pacifist policy. As Communists we have definite views about this pacifism which it would be superfluous to expound here. Needless to say, we are going to Genoa not as Communists, but as merchants. We must trade, and they must trade. We want the trade to benefit us; they want it to benefit them. The course of the issue will be determined, if only to a small degree, by the skill of our diplomats.” Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
On bureaucracy
“The gentlemen of the Two-and-a-Half International pose as revolutionaries; but in every serious situation they prove to be counter-revolutionaries because they shrink from the violent destruction of the old state machine; they have no faith in the forces of the working class. It was not a mere catch-phrase we uttered when we said this about the Socialist-Revolutionaries and Co. Everybody knows that the October Revolution actually brought new forces, a new class, to the forefront, that the best representatives of the proletariat are now governing Russia, built up an army, led that army, set up local government, etc., are running industry, and so on. If there are some bureaucratic distortions in this administration, we do not conceal this evil; we expose it, combat it. Those who allow the struggle against the distortions of the new system to obscure its content and to cause them to forget that the working class has created and is guiding a state of the Soviet type are incapable of thinking, and are merely throwing words to the wind. “” from NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
The difficulties facing the revolution
“”Amidst the colossal ruin of the country and the exhaustion of the forces of the proletariat, by a series of almost superhuman efforts, we are tackling the most difficult job: laying the foundation for a really socialist economy, for the regular exchange of commodities (or, more correctly, exchange of products) between industry and agriculture. The enemy is still far stronger than we are; anarchic, profiteering, individual commodity exchange is undermining our efforts at every step. We clearly see the difficulties and will systematically and perseveringly overcome them. More scope for independent local enterprise; more forces to the localities; more attention to their practical experience. The working class can heal its wounds, its proletarian "class forces" can recuperate, and the confidence of the peasantry in proletarian leadership can be strengthened only as real success is achieved in restoring industry and in bringing about a regular exchange of products through the medium of the state that benefits both the peasant and the worker. And as we achieve this we shall get an influx of new forces, not as quickly as every one of us would like, perhaps, but we shall get it nevertheless..”” NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
“””At any rate we have formed companies jointly with Russian and foreign capitalists. There are only a few of them. But this small but practical start shows that the Communists have been judged by what they do. They have not been judged by such high institutions as the Central Control Commission and the All-Russia Central Executive Committee. The Central Control Commission is a splendid institution, of course, and we shall now give it more power.
Of course, they will cheat us in these companies, cheat us so that it will take several years before matters are straightened out. But that does not matter. I do not say that that is a victory; it is a reconnaissance, which shows that we have an arena, we have a terrain, and can now stop the retreat.
The reconnaissance has revealed that we have concluded an insignificant number of agreements with capitalists; but we have concluded them for all that. We must learn from that and continue our operations. In this sense we must put a stop to nervousness, screaming and fuss.
The merchants are laughing at us Communists, and in all probability are saying, “Formerly there were Persuaders-in-Chief now we have Talkers-in-Chief.” That the capitalists gloated over the fact that we started late, that we were not sharp enough—of that there need not be the slightest doubt..”“ Political reports of the central committee of the RCP (B) March 27, 1922
The task, economic development
“”Our last, but most important and most difficult task, the one we have done least about, is economic development, the laying of economic foundations for the new, socialist edifice on the site of the demolished feudal edifice and the semi-demolished capitalist edifice. It is in this most important and most difficult task that we have sustained the greatest number of reverses and have made most mistakes. How could anyone expect that a task so new to the world could be begun without reverses and without mistakes! But we have begun it. We shall continue it. At this very moment we are, by our New Economic Policy, committing a number of our mistakes. We are learning how to continue erecting the socialist edifice in a small-peasant country without committing such mistakes.
The difficulties are immense. But we are accustomed to grappling with immense difficulties. Not for nothing do our enemies call us "stone-hard" and exponents of a "firm line policy". But we have also learned, at least to some extent, another art that is essential in revolution, namely, flexibility, the ability to effect swift and sudden changes of tactics if changes in objective conditions demand them, and to choose another path for the achievement of our goal if the former path proves to be inexpedient or impossible at the given moment.
“”And we, who during these three or four years have learned a little to make abrupt changes of front (when abrupt changes of front are needed), have begun zealously, attentively and sedulously (although still not zealously, attentively and sedulously enough) to learn to make a new change of front, namely, the New Economic Policy. The proletarian state must become a cautious, assiduous and shrewd "businessman", a punctilious wholesale merchant -- otherwise it will never succeed in putting this small-peasant country economically on its feet. Under existing conditions, living as we are side by side with the capitalist (for the time being capitalist) West, there is no other way of progressing to communism. A wholesale merchant seems to be an economic type as remote from communism as heaven from earth. But that is one of the contradictions which, in actual life, lead from a small-peasant economy via state capitalism to socialism. Personal incentive will step up production; we must increase production first and foremost and at all costs.”” “”V. I. Lenin, Fourth Anniversary of the October Revolution, October 18, 1921
“””That is why we shall strive to formulate our tasks in this new, higher stage of the struggle with the greatest, with treble caution. We shall formulate them as moderately as possible. We shall make as many concessions as possible within the limits, of course, of what the proletariat can concede and yet remain the ruling class. We shall collect the moderate tax in kind as quickly as possible and allow the greatest possible scope for the development, strengthening and revival of peasant farming. We shall lease the enterprises that are not absolutely essential for us to lessees, including private capitalists and foreign concessionaires. We need a bloc, or alliance, between the proletarian state and state capitalism against the petty-bourgeois element. We must achieve this alliance skillfully, following the rule: "Measure your cloth seven times before you cut." We shall leave ourselves a smaller field of work, only what is absolutely necessary. We shall concentrate the enfeebled forces of the working class on something less, but we shall consolidate ourselves all the more and put ourselves to the test of practical experience not once or twice, but over and over again. Step by step, inch by inch -- for at present the "troops" we have at our command cannot advance any other way on the difficult road we have to travel, in the stern conditions under which we are living, and amidst the dangers we have to face. Those who find this work "dull", "uninteresting" and "unintelligible", those who turn up their noses or become panic-stricken, or who become intoxicated with their own declamations about the absence of the "previous elation", the "previous enthusiasm", etc., had better be "relieved of their jobs" and given a back seat, so as to prevent them from causing harm; for they will not or cannot understand the specific features of the present stage, the present phase of the struggle. “”NEW TIMES AND OLD MISTAKES IN A NEW GUISE V. I. Lenin
We are now forming mixed companies—I shall have something to say about these later on—which, like our state trade and our New Economic Policy as a whole, mean that we Communists are resorting to commercial, capitalist methods. These mixed companies are also important because through them practical competition is created between capitalist methods and our methods. Consider it practically. Up to now we have been writing a programme and making promises. In its time this was absolutely necessary. It is impossible to launch on a world revolution without a programme and without promises. If the white guards, including the Mensheviks, jeer at us for this, it only shows that the Mensheviks and the socialists of the Second and Two-and-a-Half Internationals have no idea, in general, of the way a revolution develops. We could proceed in no other way.
The mixed companies that we have begun to form, in which private capitalists, Russian and foreign, and Communists participate, provide one of the means by which we can learn to organize competition properly and show that we are no less able to establish a link with the peasant economy than the capitalists; that we can meet its requirements; that we can help the peasant make progress even at his present level, in spite of his backwardness; for it is impossible to change him in a brief span of time.” Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
state capitalism vs private capitalism
“”Permit me to say this to you without exaggeration, because in this respect it is really “the last and decisive battle”, not against international capitalism—against that we shall yet have many “last and decisive battles”—but against Russian capitalism, against the capitalism that is growing out of the small peasant economy, the capitalism that is fostered by the latter. Here we shall have a fight on our hands in the immediate future, and the date of it cannot be fixed exactly. Here the “last and decisive battle” is impending; here there are no political or any other flanking movements that we can undertake, because this is a test in competition with private capital. Either we pass this test in competition with private capital, or we fail completely.”’ Lenin, Political Report of the Central Committee of the R.C.P. (B.) March 27
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