The Capitalist world and Soviet Russia

Karl Radek

Looked at chronologically, the winding-up of the Versailles Peace set in, as already mentioned, not in Germany, but in Russia. When the Allies drafted that diplomatic instrument, in which Russia was mentioned only in some of its supplementary clauses, their deliberate intention was not only to destroy Soviet Russia, but also to destroy Russia as a great Power.

The policy of throttling Germany, her destruction as an international factor, implied, as a matter of fact, the destruction of Russia as a great Power, for no matter how Russia is governed, it is always her interest to see that Germany exists, even a non-revolutionary Russia could not be indifferent to a destruction of Germany. A Russia which has been weakened to the utmost by the war, could neither have continued as a great Power nor acquired the economic and technical means to her industrial reconstruction, unless she had in the existence of Germany a counterbalance against the supremacy of the Allies. Should a non-revolutionary Russia replace Soviet Russia, she would likewise be interested in the existence of Germany as a prospective ally, even if such a non-revolutionary Russia were inclined to maintain the old alliance with the Western Powers. Moreover, not only the policy of the Allies towards Germany, but also their decisions concerning the question of the Near East implied the elimination of Russia. It is but necessary to recall the efforts and struggles which Russian Tsarism had to make in 1915, in order to get the British consent to the surrender of Constantinople and the Straits into the hands of the Russian bourgeoisie. And even if the thoroughly worsted Russian middle classes had had to forego its demand for Constantinople and the Straits, they would not have liked to see the key to the Black Sea wrested from the weak hands of Turkey and put into the mailed fist of Great Britain. Finally, the treaty that Great Britain entered into with Persia, behind the back of the Allies, during the Versailles transactions – a treaty which turned Persia into a British colony, implied also the elimination of Russia.
The victorious Allies looked upon Russia as a sphere of expansion, that is, they regarded her as a country like Turkey or Persia, as their prospective colony. The struggle of the Allies against Soviet Russia meant not only war against the first proletarian Commonwealth, but an attempt to destroy Russia as an independent Power which could have reminded them of their obligations to her. The aim and end to the Allies was to crush Soviet Russia and to put in her place a weak white Russia. During the Versailles transactions, Mr. Lloyd George submitted to M. Clemenceau and the representatives of the other Allies a secret memorandum. It was lately published (for the first time) in the book “Peaceless Europe” by the former Italian Minister Nitti; it relates of the enormous fear which Soviet Russia at that time evoked among the Allies. Mr. Lloyd George said, “the whole of Europe is saturated with revolutionary ideas”. He referred to Hungary which at that time turned into a Soviet Government and to the Spartacus rising in Germany, and in stating that also the masses of the French and British people were deeply disaffected, he remarked that the masses did no more fight for an improvement of their condition, but, consciously or unconsciously, for a social transformation. Pointing to Soviet Russia, Mr. Lloyd George continued to say that Soviet Russia had not effected a new social order, her industries were shattered, her railways were a standstill. None the less, she had performed the miracle of forming an army, and even a disciplined army, the only army in the world, which was ready to fight for ideas. All that is taken literally from Mr. Lloyd George’s memorandum. From all those considerations he drew the inference that Germany must be spared in order to prevent her entering into an alliance with revolutionary Russia, while the struggle must be directed against the latter.

The two years’ war of the Allies against Soviet Russia terminated with a defeat of the former. Russia took finally the offensive and after having defeated the Poles at Kiev, marched upon Warsaw. At that moment a sharp change took place in the attitude of the Allies towards Soviet Russia. The Allies were then not only convinced that they were unable to overthrow the Soviet power, but even took into account a victory of the Red Army in Poland and the consequences which flowed from such a victory, namely, an upheaval in Germany. At the conference of Boulogne which took place at that time, not only Great Britain, but also France were prepared to recognise Soviet Russia, in order to stop the victorious advance of the Red Army. However, Soviet Russia suffered a defeat before Warsaw, and this was the signal for the Allies to refuse recognition to the Soviet Government, while France went to the lengths of recognising Wrangel. This buoyant mood continued. Even after the crushing defeat of Wrangel, even at the beginning of 1921 the Allies cherished the hope that Soviet Russia would soon breathe her last. None the less, Great Britain entered into a commercial treaty with Soviet Russia.

The reasons which compelled Great Britain to sign that treaty were twofold. First, the unemployment which had set in in the second half of 1920. This unemployment proved to the Allies, in the first place to the British capitalists, that it was impossible to continue the policy of Versailles; it proved to them that it was absolutely necessary to open up new markets, and this not only for Great Britain, but likewise for Germany; at that time the idea arose in British capitalist circles that there was only one way-out of the Reparation maze, namely, if Germany got the possibility of developing the Russian economic resources and to reconstruct her economic life at the expense of the Russian peasantry and proletariat. Besides this, there manifested itself another tendency in Great Britain, which had longer views for the, future of both countries. When in 1921 the Reparation problem and, the Near Eastern question resulted in an aggravation of the rivalry between Great Britain and France, people in London began to ask themselves whether France in her intoxication with victory was not presuming too much. In some circles of British capitalism, where sober views of the future prevailed, the idea was advanced that it was good policy to find a counterbalance against France in Russian and German power or to make use of a Germany based on Russian resources.

The new economic policy of Russia produced in Great Britain, the conviction of the complete bankruptcy of communism in Russia: the conviction that the policy of the Soviet Government and Soviet Russia would develop along the line of a reconstruction of capitalism. Mr. Lloyd George, after the Genoa Conference, spoke in the House of Commons in this sense, and his conception of the Russian situation was that of the capitalist powers. He pointed out that Soviet Russia needed credits, that without credits no economic renaissance of Russia was possible, and he continued to declare, that the leading men of Soviet Russia who understood the international situation, saw the impossibility of translating communism into practice, but that they found, the pressure of the proletarian oligarchy too strong for them. The Soviet Government could therefore not be expected to break away all at once from a system they had so long pursued, but earlier or later they would turn their back upon it and would take the road to capitalism. There is no doubt that was the general view of the bourgeois politicians who convened the Genoa Conference. They were convinced that it was but necessary to mask the demand for a restoration of capitalism, in order to induce the Soviet Government to restore all property to the expropriated foreign capitalists. Then there would develop a private capitalist order based on foreign capital, while the miserable residue of nationalised industries, which were in the hands, of the Soviet Government, would be utterly incapable of competing with private industry. And then of course they would be transferred to the Russian bourgeoisie. From the height of such an alluring perspective, Mr. Lloyd George looked down upon the dogmatic French men, who, with their inelastic, legalist mind, simply demanded from the Soviet representatives a written statement of their renunciation of communism. The practical mind of the British politician was prepared to acquiesce in the Russian Government calling itself a Soviet, also in the continued teaching of communism in Russian schools, if, only Soviet Russia would declare herself prepared to surrender her industries into the hands of foreign capitalists. At the same moment, when the Allies were discussing the suggestion of reducing the Reparation payments of Germany, they presented the Soviet representatives with a tremendously long list of money claims alleged to be due them from the pre-war period, as well as war debts. The meaning of that list was only to compel Soviet Russia, who is not able to pay, to hand over to the Allies the income from the custom duties as security for a reimbursement at a later date. With this plan in their portfolio the Allies went to Genoa, where they virtually declared to Soviet Russia. “While we have proved unable to conquer you with the sword and have let you therefore remain in power, we want to turn you into a colony of the Allies.”

Soviet Russia flatly rejected that proposal. She refused to hand over her industry as private property to the former foreign private owners or to farm out her manufactures to private capitalism. The Soviet Government, who, owing to the rather slow development of the world revolution was compelled to make concessions in the interest of the reconstruction of the devastated economic life, is still prepared for a compromise, subject to the condition that it should be granted the possibility of consolidating and extending the achievements of the October Revolution. Therefore, the Soviet Government refuses to restore the private property. At the first glance the whole question might appear as a mere formality, but in essence it is not so. The surrender of the former private possessions as private property to the foreign capitalists would mean the loss of the possibility of influencing the line of the economic activities of the employers. It is different if the Government reserves to itself the right of possession, for in this case it gets the possibility of bringing its influence to bear upon the course of economic development. It is sufficient to point to the Urquhart-Treaty, which the Soviet has lately rejected, and in which Mr. Urquhart bound himself to extract, in the concession regions, copper-ores and lead-ores in rigidly fixed quantities only and within fixed periods. Soviet Russia is prepared to put at the disposal of foreign capital that part of industry only which she herself, according to her calculations, has no hope of taking in hand in the near future. Guided by the idea of keeping firmly in its hands the most important part of the industry, in the first place the heavy industry, as the principal means to an independent reconstruction of the railways, and influencing the further development of agriculture, the Soviet Government rejected the demand for restoring the whole former foreign industrial undertaking to their former possessors. The question concerning the debt involves no principle. Communism knows no principle which prohibits the payment of debts. If Soviet Russia one time refused to acknowledge the debt of the pre-war periods and those contracted during the war, she acted, on the one hand, in defence against world capitalism which declined to stop the war, while on the other hand it was an attempt to set the petty bourgeoisie, as far as it was in possession of Russian bonds, in motion against its Governments who prolonged the war. Besides this it was an attempt to rid the country of an excessively heavy burden. The present refusal of Soviet Russia to acknowledge the debts does not turn, in essence, upon principle, but on the claim of the Allies that, considering the inability of Russia to pay her debts, she should hand over to them the control of the finances and railways, and should, besides, grant them enormous concessions.

Had it been possible to come to an understanding with regard to the amount of the debts and the terms of payment, without exposing Russia to the danger of being turned into a foreign colony, the interest of the working class would have demanded a compromise. For, we repeat, no communist principle prohibits the payment of debts. The Allies, in their conversations behind the scenes, maintained then contrary view. They asserted that it all turned on a principle and on nothing else but a principle. And Mr. Lloyd George, in a speech in the House of Commons, actually reproached Soviet Russia with the illogical procedure of applying to capitalists for a loan and at the same time denying the principle of honouring financial obligations. But as the Allies refused to make any precise statement as to the amount of their claims and the terms of payment, it was altogether impossible to arrive at any compromise. The Conferences at Genoa and The Hague proved failures, for the Allies have evidently not been in any mood to accept as an accomplished fact the existence of Russia as a country in which socialism is making the first steps towards realisation.

The failure of Genoa and The Hague which in essence was due to the refusal of the Allies to recognise the plain fact of existence of a proletarian state whose aspiration it is to realise socialism, was accelerated through the struggle of oil capital about Russia. The rivalry among the oil trusts which helped to blow up both Genoa and The Hague, found occasional expression in the Press during the Conference proceedings. The real dimensions of that struggle were not only unknown to the public, but also to nine-tenths of the direct participators of those Conferences. Only a belated, but thorough study of the oil Press yielded certain clues which, by their being followed up, rendered it possible to reveal the true part which oil capital played in the failure of the Genoa and The Hague Conferences. When at the beginning of May the international oil Press intimated that the negotiations between Mr. Lloyd George and M. Chicherin had prepared the ground for a possible compromise, there appeared suddenly in the newspapers the information that an agreement had been come to between the Soviet Government and the British Royal Dutch-Shell (the well-known British oil-trust). This information, the meaning of which was for the moment not easily grasped, was the bomb that blew up the Genoa Conference. The contest between the Standard Oil and the Shell, to which we shall have to refer later on when dealing with the Near East, led, prior to the Genoa Conference, to a provisional agreement between Great Britain and USA, at which the British Government promised to pay due regard, in its negotiations with Russia, to American oil interests. While it was not a binding agreement, it made USA expect that in the question of Baku oil a united front would be maintained; the British and American oil syndicates therefore acquired shares in the Russian oil works, by which they thought to have acquired certain legal rights of the former owners. The news concerning the agreement between Russia and the Dutch-Royal-Shell was given to the Press by the Standard Oil people who suspected behind the formula on the question of private property which Mr. Lloyd George accepted, on March 30, in his compromise proposal, there lurked a definite agreement with regard to Russian oil. Mr. Lloyd George was prepared to acknowledge that Russia has the right, in case of her unwillingness or inability to restore certain factories or mines to their former owners, to pay them compensation. From this the Standard Oil people inferred that Mr. Lloyd George had made it possible for Russia to hand over to the Royal-Dutch-Shell certain oil regions which are now under the control of Americans, but which were originally the properties of Russians. This induced the Standard Oil to blow up the Genoa Conference. As to the supply of oil, France is in a miserable position. In addition to this, in negotiations with the Soviet, her position is most precarious, owing to the fact that she possesses the greatest part of the pre-war debts of Russia. Prior to the war, Tsarism got most of its loans not in London or New York, but in Paris. The outstanding debts of Russia to France are therefore very considerable. At present, Russia can get very little economic help from France, since she is herself economically weak. This condition of France, which owing to her want of equivalents is of little importance as a negotiator, involves great dangers for her, but is very favourable to Great Britain. Not reasons of principle, but very sober considerations made her refuse to approve Mr. Lloyd George’s Memorandum of March 30, although the French representative, M. Barthou, was personally in favour of it. In the same condition was the Belgian Government. Shortly after the Genoa Conference, France and Belgium established a Franco-Belgian oil syndicate, which played a decisive role at the Hague. Before the opening of the Hague Conference a confabulation took place at the Hague between the representatives of the Standard Oil, Royal-Dutch-Shell, and the Franco-Belgian Oil Syndicate, in the course of which France and Great Britain bound themselves to act together in the negotiations with Soviet Russia.

The attitude of the Standard Oil in this affair finds practically its explanation in the attitude of USA towards Russia. USA is not only the most powerful capitalist organism of to-day, but is also the representative of the most pronounced bourgeois individualism, – a country, in which a few decades ago every workman could have turned to farming, and every petty trader or craftsman cherished the hope of getting rich. This country is the champion of capitalism, not only on account of its interests, but of its bourgeois mentality, and there is surely no country in which the hatred of Soviet Russia was stronger or the anti-bolshevist Press propaganda so comprehensive as in America. The Central European markets for agricultural produce are thoroughly destroyed; they only buy at present what is absolutely indispensable to them. The prices of the produce of American agriculture have been falling, and the American farmers have a presentiment of the danger that might threaten them in the near future from a revival of Russian agriculture. When a few weeks ago the American Press brought from some spurious source the news that the Soviet Government intended to start this year the export of grain, the American farmers were soon at hand to call for a boycott of Russian cereals. The possibilities for American export of manufactured goods to Russia are potentially limitless. But the preliminary condition is granting of long-term credits. American capital, however, has still enormous possibilities for developing the home markets. Only a small part of it is producing for export. Moreover, at the present juncture, when American capital is supplanting British capital in Central and South America, and, in addition to this, has the prospect of buying up the German industry, it is in no hurry to enter into business relations with Russia. Standard Oil would undoubtedly be pleased to get hold of the Baku oil. But this desire arises only from the fact that so strong a competitor as Royal Dutch-Shell threatens to snatch away the Baku oil. American capital, may come to some agreement with Russia from competitive reasons: in order to prevent other capitalist countries increasing their strength` by exploiting Soviet Russia. The policy of Standard Oil at Genoa and the Hague had for its object to prevent Russia and the British Shell, coming to any agreement. As soon as this manoeuvre proved effective, the burning zeal of Standard Oil in this matter disappeared.

The failure at Genoa and the Hague does by no means prove that, an agreement between Soviet Russia and the capitalist world is, impossible, but only that the time has not arrived yet for such an, agreement. If certain people are discussing the question whether a modus vivendi is altogether possible between capitalism and proletarian, dictatorship or between capitalism and socialism, we can only say that, this question is wrongly formulated. There exists a modus vivendi, already for the last five years, it exists as an unstable equilibrium, which is characterised by a series of compromises. The whole question is as to the sort of basis on which these compromises are effected.

For the time being, the capitalist world is still convinced that Soviet Russia, owing to economic pressure, will eventually capitulate, and that it will but endeavour to mask its compromises. The continued, existence of Soviet Russia, the growth, even at a slow pace, of the productive forces, and an attitude of expectation, are the preliminary, conditions of further compromises. On the whole we may say that the; Versailles Treaty, as far as it relates to Russia, is wound-up.

A definite compromise between the old capitalist world and the new proletarian world has not been effected as yet. The capitalist world sticks to the view that it will still be able to dictate terms to Soviet Russia. However, the time, in the course of which Soviet Russia, will not be alone in her sufferings, but will threaten the objects of the struggle themselves, that time works for Russia. The whole international situation, in creating new groupings of forces and aggravating the strained international relations, increases the specific gravity of Russia. It will result in compromises based not on purely capitalist interests, but on mutual concessions. The measure of those concessions will be determined by Russia as a working class and peasant State on the one hand, and by the international situation on the other. At the arrival of the Soviet delegates at Genoa, the British Government was convinced that it will succeed in bringing about their capitulation. Our crops, though not of first-rate quality, allow us to breathe freely for a year and open up new perspectives for our reconstructive activities. This year, the year of liquidation of the Versailles Peace, a year of profound convulsions, will be the year in which we shall be face to face with re-groupings of all political factors; it will be the year in which much will depend on the attitude of Soviet Russia in this or that question. Without swashbuckling, without embarking in any adventurous enterprises, Russia may, in this phase of the rise of new antagonisms and re-groupings, safely assume a watching attitude in the firm conviction that every week of her existence will add to her international weight.

Hardly a few weeks have passed, since in glaring day-light the fact has become manifest that, owing to the impossibility of complying with the provisions of the Versailles Peace, the German “fulfilling policy” is on the point of collapsing, and still shorter is the space of time since the news of the Turkish victory – a victory pregnant with consequences – has taken the world by surprise. No matter what sort of peace will be imposed upon Turkey and which group will secure control of Turkey, the Near Eastern question has secured for Russia a place in the center of international politics, and the course of things in the Far East is taking the same direction.