POLITICAL ECONOMY - TRADE IN SOCIALIST ECONOMY

Part III : THE SOCIALIST MODE OF PRODUCTION

B. THE SOCIALIST ECONOMIC SYSTEM

CHAPTER XXXVI : TRADE IN SOCIALIST ECONOMY

The Nature and Role of Trade in Socialist Society

The need for trade in socialist society arises from the existence of commodity production and the law of value. In so far/as under socialism consumer goods are produced as commodities, the distribution of them, their conveyance to the consumer, inevitably takes place through commodity circulation. The socialist mode of production has its own form of commodity exchange, known in the U.S.S.R. as Soviet trade, which differs fundamentally from capitalist trade. Soviet trade is without capitalists. In the U.S.S.R. commodities are sold by State and co-operative enterprises and organisations, collective farms, and collective farmers. The resources of Soviet trading enterprises are socialist property. With the complete predominance of socialist property in all spheres of the national economy, the conditions for the existence of such categories as commercial capital, commercial profits, etc., have completely disappeared in the economy of the U.S.S.R..

In socialist society trade is carried on in accordance with the requirements of the basic economic law of socialism—the satisfaction of the growing material and cultural needs of the working people—in contrast to capitalist trade which, since it is a function of commercial capital, is carried on for the enrichment of the capitalists.

The bulk of articles of personal consumption produced in socialist society goes to the population through trade. By far the greater part of the incomes of the population is spent on the purchase of articles of personal consumption— foodstuffs, clothing, footwear, cultural and household goods. Only a part of these goods are distributed directly, without making use of trade, as for example the distribution of products in kind to collective farmers on account of work-days earned.

The development of trade is very important in providing the working people of town and country with a personal material interest in the results of their labour and in raising its productivity. Soviet trade is an essential prerequisite for the operation of the economic law of distribution according to work, since the realisation of the money income of the working people takes place through its channels. The various requirements of the working people, according to their incomes, depend for their satisfaction to a large extent on the development of Soviet trade and on the quality of its service to the consumers.

The collective farms acquire goods for use in production through the trading system—agricultural machinery, various implements, electrical equipment, fuel, building materials, automobiles, etc. Trade also includes the compulsory deliveries and voluntary sales of agricultural produce to the State and co-operative organisations by the collective farms and collective farmers.

Soviet trade, as Lenin taught, is a form of economic bond between town and country. It is a vitally important link in the system of economic connections between State industry and collective farm agriculture. The development of the trade bond between town and country is an essential prerequisite for the further strengthening of the alliance of the working class and peasantry, for providing the urban and rural population with articles of consumption, and industry with agricultural raw materials.

The division of labour between production and trade organisations and the assigning of the function of commodity circulation to the trading and procurement organisations constitutes a great economy for socialist society, facilitating the acceleration of the turnover of the social product and a restriction of the resources engaged in the sphere of circulation. This enables the resources going to expand socialist production to be increased.

While itself based on socialist production, Soviet trade is at the same time an essential prerequisite for its further development and consolidation. The growth of industry and agriculture and increased demand of the population for commodities are by themselves still insufficient to secure a steady expansion of the socialist economy.

"If the economic life of the country is to go full steam ahead, and industry and agriculture are to have a stimulus for further increasing their output, one more condition is necessary—namely well-developed trade turnover between town and country, between the various districts and regions of the country, between the various branches of the national economy. The country must be covered with a vast network of wholesale distribution bases, shops and stores. There must be a ceaseless flow of goods through these bases, shops and stores from the producer to the consumer." (Stalin, "Report to the 17th Congress of the C.P.S.U." (B), Works, English edition, Vol. XIII, pp. 347-8.)

Soviet trade links socialist production to national consumption. Under capitalism the connection between production and consumption is brought about through the uncontrolled mechanism of competition and through crises. In socialist economy the operation of the law of planned, proportional development of the national economy makes possible and necessary the utilisation of trade as a means of achieving planned connection between production and consumption.

"The law of balanced, proportional development of the national economy that operates in our society calls for the conscio]nd organised co­ordination of production and consumption.

"Since our economy is planned, we can directly and not in a roundabout way calculate demand and develop production accordingly. Herein lie the tremendous advantages of our system. But this imposes a tremendous responsibility upon the distributing organisations, for success depends on us alone, on our organisation and ability." (A. I. Mikoyan, Measures for the Further Expansion of Trade and for Improving the Organisation of State Co-operative and Collective Farm Trade. Report delivered at All-Union Conference of Distributive Workers, 17 October 1953. F.L.P.H., p. 19.)

Soviet trade is based, on the one hand, on the continuous expansion of socialist production, and on the other hand on the constant growth of the requirements and purchasing power of the masses. The rising living standards of the population, the growth of money incomes of the working people and the systematic reduction of prices create a constantly growing demand for the products of industry and agriculture. Consequently the sales difficulties and selling crises characteristic of capitalism are unknown to Soviet trade.

The Soviet State and its institutions. prescribe the volume and structure of the output of articles of general consumption, the sources and size of commodity funds and the rational movement of commodities; and they plan the structure and location of the trade network. They distribute commodity resources between different areas, taking account of the purchasing capacity of the population and the pattern of its incomes and expenditures.

Thus, trade under socialism is the form of commodity exchange by which a planned connection between town and country, socialist production and popular consumption, is achieved, for the purpose of satisfying the growing demands of the working people.

The need for all-round assessment of the demand of the population, the developing tastes of the consumers, national and local peculiarities, climatic and seasonal conditions, etc., springs from the very nature of Soviet trade. Only in this way can commodity circulation be correctly planned so that the mass of commodities supplied to each district corresponds not only to the total volume of demand—that is, its total value—but also to the precise range of goods demanded; that is, in accordance with its use-values.

Soviet trade actively influences the formation of consumer-demand and helps to introduce new commodities into daily use. In doing so, it utilises advertising as a means of honest information for the consumer about the quality and uses of different commodities. This contrasts with capitalist advertising, which is for the purpose of making profit at the expense of the consumer. The level and correlation of prices of commodities sold to the public is an important factor in forming demand.

The high level of purchasing power in the U.S.S.R. does not in any way mean that any commodity is automatically assured of sale. With rising living standards, the requirements of the masses of the people are becoming increasingly more varied and there is a growing demand for quality goods. A necessary condition for the more complete satisfaction of the population’s demands is the elimination of defects in the planning of the production of consumer goods and commodity circulation, which often takes place without demand being properly taken into account so that the possibilities that exist for the production and sale of certain commodities are not utilised. Trading organisations must be able quickly to adapt themselves to changes in demand. They must not permit mechanical distribution of commodities or mistakes in their dispatch to different districts. They are required to secure a steady improvement of service to the consumer, serving the convenience of customers and saving their time.

It is the function of Soviet trade to exercise an active influence on production for the purpose of increasing the output of commodities which correspond to the demand of the population. It must seek to improve the quality of commodities, widening and improving their variety. The most important levers at the disposal of Soviet trade for influencing production are: the system of business contracts concluded between trading and industrial organisations for the supply of a definite variety and quality of products; extensive use of the system of advance orders placed with industry by the trade organisations; careful inspection of goods received; and the application of sanctions for violation of terms of the contract—including refusal to accept low-quality products.

Very important in strengthening the active influence of Soviet trade upon production is the widespread practice of direct contracts between local distributive organisations and enterprises on the one hand and productive enterprises on the other.

The correct organisation of community turnover presupposes a combination of centralised supply with a wide development of the initiative of local organs in mobilising commodity resources and increased responsibility for them in supplying the population. The amount of goods which become available in any region through centralised supply depends on how local possibilities for mobilising commodity resources are utilised there. This enhances the incentive of local organs to ensure the growth of local production and procurement.

An increase in the role of the local organs in planning commodity turnover leads to the popular demand being better taken into account, with an improvement in the operative capacity and flexibility of the distributive organisations, which have as their task to facilitate in every way the drawing into commodity circulation of the continually fresh supplies of additional local resources.

The movement of commodities within the country is conditioned by the distribution of production, and by the level and structure of consumer demand in the various districts. In connection with this, well-co-ordinated transport is very important, as upon this largely depends the rapidity of commodity circulation.

In addition to the function of commodity circulation, the trading and procurement organisations also undertake the transport, storage, sorting and packaging of goods. These constitute a continuation of the production process in the sphere of circulation.

Trade ensures a regular flow of financial resources required for renewal and extension of production in the State and collective farm sectors. The velocity of turnover of resources throughout the national economy depends to a large extent in the rapidity with which commodities are sold. Through Soviet trade, that branch of socialist industry which produces consumer goods receives the financial resources which reimburse it for its expenditures and also provide both the net income of the enterprises and the centralised net income of the State. Part of the cash income obtained by the light and food-producing industries from the sale of commodities passes to heavy industry as payment for means of production. Uninterrupted sale of commodities through the channels of Soviet trade secures the timely flow into the State funds of the financial resources earmarked for utilisation throughout the national economy. The sale of their marketed output by the collective farms and the collective farmers is a source of monetary income used both to strengthen and develop the socially-owned economy of the collective farms and to satisfy the. personal requirements of the collective farmers.

The expansion of Soviet trade, with an increasing quantity of commodities sold at stable planned prices, is a most important condition for strengthening the stability of Soviet currency.

With the development of socialist production and the increasing welfare of the people, trade turnover is growing, and its structure is being improved; the proportion of higher quality commodities and more valuable grades is increasing, and their variety is being enlarged.

The volume of State and co-operative retail trade in the U.S.S.R. increased 2.3-fold between 1928 and 1940 (in comparable prices), whereas in the capitalist countries in the same period, trade not only failed to increase, but was below the 1929 level on the eve of the second world war. In 1954 retail trade in the U.S.S.R. (in comparable prices) had increased two-fold compared with 1940, and 1.8-fold compared with 1950; while in the U.S.A. the 1954 volume of trade had risen only slightly above the 1950 level, and in Great Britain it remained approximately at that level.

In 1954 sales in State and co-operative shops had increased, compared with 1940, as follows: meat 2.8-fold, fish and fish products more than 2-fold, butter 2.6-fold, vegetable oil and other fats more than 3-fold, sugar 2.8-fold, textiles 2.5-fold (including woollen textiles nearly 3­fold and silks 6-fold), footwear more than 2-fold, watches more than 6-fold, sewing machines more than 7.5-fold, bicycles 12-fold and radio sets 18-fold.

The targets in the fifth Five-Year Plan for volume of trade turnover were fulfilled in four years. Between 1950 and 1955 the volume of commodities flowing to the population from the State and co-operative trade network grew about 1.9 times.

However, the level of commodity turnover which has been attained still lags considerably behind the growing purchasing power of the working masses. The group of measures introduced by the Communist Party and the Soviet State to secure a sharp increase in agricultural production and in the production of consumer goods creates the conditions necessary for a considerable development of the commodity turnover in town and country corresponding to the increased demand. The material and technical base of Soviet trade is being strengthened and the network of warehouses and shops is being extended, especially specialised shops. The fundamental tasks of gradual transition from socialism to communism demand an all-round development of Soviet trade.

Forms of Trade under Socialism

Owing to the existence of the State and the co-operative collective farm sectors of production, trade under socialism is carried on in the following forms: (1) State, (2) co-operative, and (3) collective farm.

State trade plays the leading role and occupies a decisive place in both the wholesale and the retail turnover of the U.S.S.R. The overwhelming mass of commodity resources in the country which flow into Soviet trade are concentrated in the hands of the Socialist State. Trading organisations receive the bulk of their commodities from State industry. Passing mainly through State wholesale trade, these commodities subsequently enter retail trade and are sold to the population.

State purchases, compulsory and voluntary, of agricultural produce from the collective farms is industry’s chief supply source for the raw materials which are made into articles of personal consumption, and also are the basis of the population’s food supplies. State farm production and payment-in-kind for the work of the M.T.S. are also large sources of foodstuffs and agricultural raw materials. In 1954, State retail trade embraced 63 per cent of the total retail trade of the country. It caters primarily for the inhabitants of towns and industrial districts.

State retail trade in personal consumer goods is carried on through: (i) the trade network (shops, stores, wholesale bases, etc.) of the All-Union and Republican Ministries of Trade, (ii) the departments of workers’ supplies in the transport system and in the coal, oil, metallurgical and some other branches of industry, and (iii) the specialised trade network of certain Ministries, through which the products of their particular factories are sold.

Co-operative trade is carried on by the trading enterprises of consumer and producer co-operatives. The resources of the co-operative organisations are the co-operative property of their member-shareholders. Co-operative trading organisations have large credits from the Soviet State. Co-operative trade in 1954 embraced 27 per cent of all retail trade. By far the greater part of co-operative trade falls to the consumer co-operatives, while the rest is done by the producer co-operatives. Consumer co-operation mainly serves the rural population, and is the main trading organisation in the countryside. In addition, however, the rural population purchases a part of its commodities in the towns. Consumer co­operation is allotted an important role in the State purchases of agricultural produce. It is called upon to supply the rural population with consumer goods, to give every possible assistance to the collective farms and the collective farmers in the sale of their produce, and in this way to promote the growth of all branches of agriculture and the material welfare of the collective farmers and all the working people of the countryside.

State and co-operative trade also includes the turnover of public catering establishments—cooked food factories, canteens, restaurants, buffets, etc.—which sell their products to the population. The extension of public catering economises much working time in the national economy; it replaces not very productive domestic labour by more productive socialised labour and considerably improves the living conditions of the population. Public catering frees millions of women occupied in housekeeping for participation in socialist production and public life. Food resources can be utilised more rationally and economically by public catering, while nutrition can be organised on scientific lines.

State and co-operative trade constitutes an organised market, directly planned by the Socialist State. The organised market holds a predominant position in the trade turnover of the U.S.S.R. In addition to the organised market, however, there exists an unorganised market in the form of collective farm trade.

Collective farm trade is a form of Soviet retail trade in which the collective farms and the collective farmers are the sellers, supplying agricultural commodities to the population at market prices formed under the influence. of supply and demand. The collective farmers sell on the market part of the produce which they obtain from their individual holdings and for work-days put in on the socialised sector of the collective farms. The need for collective farm trade arises from the nature of collective farm group ownership and the existence of the collective farmers’ individual holdings. The collective farms and farmers are the owners of their own produce and dispose of it; they can sell it not only by way of procurements and sales to the State but also on the market. Collective farm trade is not directly planned by the State: the State does not lay down for the collective farms and the collective farmers any planned targets for sale of their produce in the collective farm markets, nor does it fix prices for the agricultural commodities they sell. Collective farm trade is, however, under the economic influence of State and co-operative trade. Increased turnover and retail price reductions in State and co-operative trade bring in their wake reduced prices on the collective farm market too.

In the collective farm markets, a free market is to a certain extent at work. If the economic regulating influence of the State is weakened in particular collective farm markets, speculative elements may come to life. By taking advantage of a temporary shortage of particular commodities at a given market, speculative elements force up market prices. But the economic influence of the State on the unorganised market is constantly increasing. This is due to the growth in marketed output of collective farms sold to the State as compulsory deliveries and by voluntary sale: to the expansion of State farm production; and to increasing quantities of foodstuffs available in the State and co-operative shops.

Collective farm trade is an important means of encouraging agricultural production and of supplying towns and industrial settlements with foodstuffs. It supplies the population with a considerable proportion of such products as potatoes and other vegetables, meat, dairy produce, etc. Collective farm trade in 1954 amounted to about 10 per cent of total retail turnover, and to about 16 percent in the case of foodstuffs.

The collective farms and the collective farmers also sell part of their agricultural produce on a commission basis through the consumer co-operatives. They hand over their produce to the co-operative, receive from it the sum obtained from the sale of this produce, less commission. This has definite advantages for the collective farms and farmers, sparing them as it does the outlay they would otherwise have to incur to sell their goods. The extensive development of commission trade in agricultural produce carried out by the co­operatives is very important. Commission trade frees the collective farmers’ time for agricultural work, draws into commodity turnover an additional amount of food products, and influences prices on the collective farm market in a downward direction.

Prices and Costs of Circulation in State and Co-operative Trade

The undivided sway of socialised property and the predominance of State public property in both production and commodity circulation enables the Socialist State to plan prices in all sectors of the national economy. In the U.S.S.R. the prices of the organised market are determined in a planned way: the State procurement and purchase prices for the marketed output of the collective farms and collective farmers sold by them to the State and co-operative organisations; industrial and trade wholesale prices; State and co-operative retail prices, that is, the final prices at which the people buy consumer goods.

As already mentioned, the law of value exercises through prices a regulating influence on the sphere of commodity circulation. In planning prices the Socialist State cannot but reckon with the operation of the law of value. It takes into account the value of the commodity, the state of supply and demand, the importance of the commodity for popular consumption, and the need to use prices as an instrument in the redistribution of resources in the national economy. For the majority of commodities all-Union retail prices, uniform for the whole country, are laid down. With a view to ensuring a greater taking into account of conditions of production and marketing, the State fixes for a number of commodities (mostly foodstuffs) zonal retail prices, which differ from district to district, and for a few it fixes seasonal retail prices. State procurement and purchase prices differ from district to district, and for certain types of commodity also from season to season.

The systematic reduction of retail prices is one of the main means of raising the living standards of the mass of the people. The seven price reductions carried out since 1947 have considerably increased the purchasing power and real incomes of the working people in town and country. Price reductions are an important means of exerting planned influence on demand and are utilised as a means of increasing the consumption of particular products. Retail price reductions are based on reductions in production and. trading expenses as well as on the increasing volume of commodities made available by the State for sale to the population.

As a result of the systematic reduction of State retail prices in the U.S.S.R., a quantity of commodities which cost 1,000 roubles in 1947 could be purchased for 433 roubles in 1954. In 1954 retail prices of bread and of butter were three times lower than at the end of 1947, meat nearly three times lower, and sugar 2.3 times lower. The targets laid down in the fifth Five-Year Plan for price reductions were fulfilled ahead of time. At the same time in the U.S.A., Great Britain, France, and the majority of other bourgeois countries prices of these commodities had considerably increased, compared with 1947.

Commodities enter the trade network at wholesale prices. The trade organisations sell these commodities to the population at retail prices. The difference between the retail and the wholesale price constitutes the trade margin. This trade margin covers the circulation costs of the trading organisations and their net income. In this way the retail price of the trade organisations is equal to the wholesale price plus the trade margin. The trade margin is usually assessed by deducting a fixed percentage discount from the retail price. Trade margins are planned by the State, and their reduction obliges trade organisations to improve their work and reduce costs of circulation.

Costs of circulation in Soviet trade are the money expression of the expenses of the trading undertakings in bringing commodities to the consumer. In State and co-operative trade these costs are planned by the State. Costs of circulation include expenditure on depreciation (premises, stocks), expenses of storage, sorting and packaging of goods, transport, wages of trade workers, etc.

There are two forms of circulation costs in Soviet trade. In the first place, there are costs connected with the continuation of the production process in the sphere of circulation (transporting, storage and packaging of goods); in contrast to capitalist trade, these costs are the major item in Soviet trade. In the second place, there are costs connected with the commodity form of production (the conduct of purchasing and selling operations, handling the cash accounts of the trading enterprises, etc.). These two forms of circulation costs are made good in different ways.

The first form of circulation costs is made good by the labour of the trade workers connected with continuing the production process in the sphere of circulation. This labour increases the value of the commodities, which covers expenditure on transporting, storage, packaging and other productive functions performed by the trade organisations. The second form of circulation costs, i.e., the costs connected with the commodity form of production, is made good out of the net income created in the productive branches of the economy. The level of wholesale industrial prices is determined in such a way that a part of the net income of industry flows into the trade organisations.

As a result of the advantages of the planned socialist economic system, the level of costs of circulation—that is, circulation costs as a proportion of turnover— is a fraction of the level in the capitalist countries. Soviet trade is free from the enormous unproductive expenditures which constitute the lion’s share of capitalist costs of circulation, and which are brought about by the anarchy of production, crises, competition, speculation, and colossal excesses in advertising. In socialist society the flow of commodities bears a planned character, and production is provided with a constantly growing internal market. Hence the great reduction in the U.S.S.R. compared with bourgeois countries, of the time of circulation and of the number of stages through which commodities pass on their way from producer to consumer. The speed of turnover in the U.S.S.R. is considerably higher than in the capitalist countries, which means a very great economy of resources.

Under capitalism the accumulation of enormous stocks of surplus commodities is a characteristic phenomenon. In contrast, the volume of commodity stocks in socialist economy is planned, in accordance with the requirements of trade and the need for an even and uninterrupted flow of commodities into the trade network. This enables the formation of surplus stocks of commodities to be averted.

As Soviet trade increases, circulation costs are still further reduced. This reduction is in socialist society combined with improvement in the organisation and technique of trade, increasing the quality of service to the customer and is an important way of economising social labour. It enables supplementary resources to be switched over to increasing material production, expanding turnover and improving trade standards. Fundamental factors in the reduction of costs of circulation are the mechanisation of labour processes, increased productivity, the development of socialist emulation among the trade workers to secure improved working of the trade network, and better utilisation of labour-power. With the help of piece-rate and bonus systems of wages, the Soviet State gives material incentives to trade workers to achieve higher indices of work. Important sources for the further reduction of circulation costs are improvement in the planning of commodity turnover and study of the popular demand, correct organisation of the delivery of goods to the distributive network, extension of trade in ready-packed goods, struggle against losses in trade and procurement, rationalisation of the transport and warehousing of goods and more effective utilisation of transport. Of essential importance for the reduction of costs of circulation is a further shortening of the channels of movement of goods, a cutting-down of the number of links in the trade network.

On the eve of the second world war, costs of circulation in wholesale and retail trade of the U.S.S.R. amounted to approximately 10 per cent of the retail turnover. In 1954, in State and co­operative trade, they amounted to about 8 per cent of retail turnover.

The reduction of costs of circulation is inseparably bound up with the improvement of economic accounting in trade enterprises. Economic accounting requires that trade enterprises operate profitably; that is, have a net income (profit) while strictly observing fixed prices. The net income of socialist trading enterprises differs fundamentally from capitalist trading profits; it is created by the labour of trade workers freed from exploitation (in so far as their labour is a continuation of the process of material production in the sphere of circulation) and also of workers of socialist production (a portion of the trade margin is covered at the expense of the productive branches). This income is used for general State requirements (by means of allocations to the Budget), for extending the trade network, increasing the resources of the trading organisations and improving the material and cultural position of the workers in Soviet trade.

Foreign Trade

Socialist economy requires a broad development of foreign trade— commodity exchange with foreign countries, which makes possible utilisation of the advantages of international division of labour. All products of socialist production which enter into foreign trade turnover are, as has been mentioned, commodities. Under conditions of socialist society the development of foreign trade is subordinated to the basic economic law and other economic laws of socialism and is carried out in a planned way, the operation of the law of value being taken into account. Foreign trade of a society based on socialism is used to satisfy more fully that society’s growing requirements. It serves as an additional source of means for the development of production, use of the achievements of peaceful technique and improvement of the supply of consumer goods to the population.

Foreign trade under socialism is a monopoly of the State. In the U.S.S.R. all foreign trade transactions are in the hands of a special State organisation-the Ministry of Foreign Trade. They are subordinated to the tasks of socialist construction, and are based on State export and import plans which are an integral part of the national economic plan. The monopoly of foreign trade is an essential condition for the existence and development of socialist economy.

The monopoly of foreign trade in the U.S.S.R. serves as an instrument of planned extension of commodity turnover with foreign countries, and at the present time performs two important functions. First, it guarantees the economic independence of the land of socialism from the capitalist world; it protects the national economy and internal market from penetration by foreign capital and from the pernicious effects of economic crises and the uncertainties of the world capitalist market. Secondly, it is directed to strengthening economic co-operation between the U.S.S.R. and the People’s Democracies, to the rendering by the Soviet Union of aid for the economic development of these countries. This new function of the monopoly of foreign trade has arisen with the formation of the world market of countries in the democratic camp. In place of the competitive struggle these countries build their commercial relations on fraternal mutual assistance.

The monopoly of foreign trade has reliably protected the economy of the U.S.S.R. from the economic aggression of the imperialist countries. It played an important part in the industrialisation of the Soviet national economy, ensuring the supply to industrial establishments of a considerable quantity of imported machinery. Since the conversion of the U.S.S.R. into an industrial Power, the structure of its foreign trade has substantially changed: industrial goods have begun to predominate in Soviet exports, whereas in the exports of pre-revolutionary Russia agricultural raw materials predominated. During the fourth and fifth Five-Year Plans the U.S.S.R. has still further increased its exports of heavy industrial products. The export of equipment from the U.S.S.R. was in 1954 16.5 times (in comparable prices) what it had been in 1938.

In its foreign trade the Soviet Union consistently adheres to the principles of respect for the national sovereignty of all countries, and the complete equality and mutual advantage of both parties. Basing itself on the possibility of peaceful co-existence of the two systems—the socialist and the capitalist—the Soviet State regards the extension of foreign trade relations as one of the most important ways of drawing the peoples together, reducing international tension and strengthening the cause of peace.

As a result of the tremendous growth of socialist production in the U.S.S.R., and the rise of the new world market of the democratic camp, the foreign trade of the Soviet Union is steadily increasing from year to year. Its trade with the countries of the democratic camp is growing rapidly, and accounts for the major share of the Soviet Union’s total foreign trade. In 1954 trade with the capitalist countries accounted for one-fifth, and trade with the countries of the democratic camp for four-fifths, of the U.S.S.R.’s total foreign trade.

The Soviet Union steadfastly steers a course of developing businesslike economic relations with the capitalist countries on mutually advantageous conditions. However, the policy of discrimination pursued under the pressure of aggressive circles in the U.S.A. is hindering the development of trade between the U.S.S.R. and the capitalist countries. This policy is expressed in the rejection of trade relations with the U.S.S.R. and the People’s Democracies, and compelling all dependent bourgeois countries to adhere to this policy. This policy seriously injures the interests of the States which pursue it and is consequently meeting with failure. In the course of 1953-4, a tendency to extend their trade relations with the Soviet Union and the People’s Democracies appeared in a number of bourgeois countries.

In 1953 the U.S.S.R. traded with 51 foreign States, while trade with 25 of these countries was based on trade agreements of one year’s or several years’ duration. The U.S.S.R.’s foreign trade turnover in 1953 reached 23 milliard roubles, exceeding the pre-war level (in comparable prices) almost 4-fold. Alongside the U.S.S.R.’s increasing trade turnover with the countries of the democratic camp, trade increased considerably with a number of countries in Western Europe and the Near and Middle East. At the same time, there was a further enlargement of the list of exported and imported commodities. In 1954 the Soviet Union continued to extend its economic ties with foreign countries. The U.S.S.R. had trade relations with 56 foreign States.

BRIEF CONCLUSIONS

(1) The socialist mode of production has its own form of commodity exchange in the form of trade by socialist enterprises with the aim of satisfying the growing demands of the working people. Trade under socialism is conducted in a planned way, linking growing socialist production with increasing consumption by the people; linking town and country, the various sectors of the national economy, and the districts of the country.

(2) There are two markets in the U.S.S.R.: the organised market in the form of State and co-operative trade, and the unorganised market which involves collective farm trade. The organised market is directly planned by the State. It plays the decisive role in trade turnover. The unorganised market is not directly planned, but is regulated by the State through economic channels.

(3) Prices in State and co-operative trade are determined in a planned way. Prices in the collective farm markets are formed under the influence of supply and demand, and are subject to the regulating influence of State prices. The Soviet State effects the reduction of retail prices. This is bringing about an increase in the purchasing power of the workers employees and peasants, and the growth of consumption by the people.

(4) Soviet trade is based on the system of economic accounting and is considerably more economical than capitalist trade, being freed from the enormous unproductive expenses which are engendered under capitalism by private property, competition and anarchy of production.

(5) In a socialist economy, foreign trade is a State monopoly and serves the ends of strengthening and further developing that economy through making use of the advantages of the international division of labour. The monopoly of foreign trade is a means of planned extension of the foreign trade turnover of the U.S.S.R. with all foreign countries regardless of their social system, on the basis of complete equality and mutual advantage. It ensures the protection of the socialist economy against penetration by foreign capital and is directed to strengthening economic collaboration between the Soviet Union and the other countries of the socialist camp.