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OUR analysis of the prospects of economic and cultural development in the U.S.S.R. requires a brief introduction to the general problems of planned economy and perspective planning in theSoviet Union. This is the more necessary because, although the Soviet political and economic system has already been in existence for twelve years in a territory embracing 150 million people and one-sixth of the earth's surface, a true understanding of it is far from being as widespread among foreign readers, even proletarian readers, as might be expected, considering the historical importance of the reconstruction taking place in the U.S.S.R.Still, there is an interest in these questions in Europe, America and the countries of the East -- an interest that cannot be stemmed. The problems of a planned economic system agitate and profoundly interest the modern world on both sides of the Atlantic. It is not merely a theoretical interest. The revolutionary proletariat of the capitalist countries sees in the Soviet economic system, that is, in the system of a planned economy, the prototype of the economic structure to the establishment of which it must devote its efforts on the morrow after the victorious proletarian revolution. On the other hand, the more profound and farsighted minds among the bourgeoisie view with alarm the growing instability of the capitalist system as opposed to the successful unfolding of organized socialist economy; and they endeavor to discover in the Soviet economic organization methods that might prevent, or at least retard, the decline of capitalist society. Unusually interesting in this respect is the admission of Professor Raymond T. Bye, of theUniversity of Pennsylvania, who, after giving a detailed account of the Soviet system of planning and organization, declares:

This is a stupendous conception, which presents a real challenge to capitalism. If socialists can demonstrate the feasibility of a centrally planned and co-ordinated industrial system, we may well question whether capitalism must not find a way to incorporate this feature into its economy, if it is not to give way to socialism.*
Raymond T. Bye, "Central Planning and Co-ordination of Production in Soviet Russia",American Economic Review, Supplement, March, 1929, p. 92. -- Ed.

This, coming from a bourgeois economist of the most powerful capitalist country, is a characteristic and almost tragic admission.To see the only salvation for capitalism in methods borrowed from planned socialist economy -- with what bitter irony these words of this American bourgeois economist must ring in the ears of those "singers" of capitalism who so zealously attempt to present the Soviet economic system to the civilized public of Europe and America as a product of barbarism, ignorance, Asiatic backwardness and despotism. But the attempt to incorporate the methods of organized and planned socialist economy into the economic system of capitalism is a futile venture; it is an attempt to combine incompatible elements based on mutually exclusive principles. Planned economy is as inherent to the socialist system as hopeless anarchy in production and merciless competition, whether among individual capitalists or among capitalist groups and states, are to capitalist society.For, indeed, what are the essential prerequisites, the essential foundations on which the planned organization of Soviet economy develops in spite of colossal difficulties? They are as follows:

1. The establishment of the dictatorship of the proletariat; that is, the destruction of the bourgeois state machine from top to bottom and the concentration of state power in the hands of the proletariat, which then becomes the organizer and leader of the national economy.

2. The nationalization of the land, factories, workshops, railroads, banks, etc., and the organization and systematic extension of the sphere of socialized production.

3. The monopoly of foreign trade and the strict regulation of economic relations with the capitalist economy of the world, with a view of bringing them fully into accord with the plan for the construction of the socialist economy.

4. Undeviating limitation and the final elimination of the capitalist, exploiting elements in the villages -- the kulaks;* the widest scope of development for the small and middle or toilingindividual peasants; the greatest possible stimulation of their productive efforts by the State; and at the same time systematic preparation of the conditions necessary for the progressivetransformation of small and middle peasant husbandry into large-scale socialized agricultural production by means of wholesale collectivization, state farms, tractor and machinery stations, etc.
Literally "fist"; a wealthy peasant exploiting hired labor and acting as the village usurer; represents the remnant of capitalist and antiSoviet element in the village. -- Ed.

5. The essentially different attitude, as compared with capitalist society, of the Soviet economic system, and hence of the Soviet State in general, toward the proletariat, peasantry, national minorities, backward regions, etc.

6. The fact that the great masses of the proletariat, agricultural laborers and poor peasantry, and the bulk of the intellectuals are deeply and vitally interested in the success of the socialist economy and the resulting increasing self-activity of the people. This radically distinguishes the principle of Soviet economic construction from the economic processes taking placeunder conditions prevailing in antagonistic bourgeois society.

7. Finally, the ability peculiar to the Soviet system, to concentrate at any given moment, under the guidance of a single thought and will, on the most important sectors of the general line of economic construction virtually all the combined resources of the State, the monopolistic political party, the trade unions, the peasant organizations, the state trusts, syndicates, banks, the co-operatives, the press, schools, etc.

In order really to understand the very foundations of the planned organization of Soviet economy and not merely eclectically to select a few individual ways and methods which may allegedly correct the uneven and halting gait of the capitalist machine, it is necessary first of all to fully appreciate these determining social prerequisites of the Soviet economic system. It would, otherwise, be futile to describe the individual elements and links of this system, its forms of organization, its working mechanism, etc. The strength of the system is not in its technique,which is still inadequate, but in its social foundations which open a new epoch in the development of human society.

When a Western European or American observer, especially if he accepts the capitalist viewpoint, proceeds to study Soviet planned economy, his astonishment is immediately aroused by two factors. In the first place, it seems unthinkable to the bourgeois observer that it might be possible, by means of a system of economic planning and without the aid of private initiative, toforesee and regulate the manifold and complex elements which make up a great national economic whole. In the second place, not only bourgeois, but at times even proletarian observers completely fail to understand how in the Soviet economic régime methods can be found to determine and regulate in advance as part of the general economic plan, the production of individual peasant holdings.

The first group of doubts, or rather objections, is clearly expressed by the American economist, Stuart Chase, in an interesting article contributed to the New York Times ( December 11, 1927) after his return from a visit to the Soviet Union in 1927. Appealing to the favorite arguments of the bourgeois public of America, Chase declares:

Sixteen men in Moscow to-day are attempting one of the most audacious economic experiments in history. As the presidium of the State Planning Commission, responsible to the Council of People's

Commissars and popularly known as the Gosplan, they are laying down the industrial future of 146,000,000 people and of one-sixth the land area of the world for fifteen years. They are making a careful and immensely detailed plan for a year in advance, a careful but less detailed plan for the next five years, and are blocking out the general economic development for the next fifteen years. . . . It is an experiment so immense, so novel and so courageous that no student of economics can afford to neglect it. Whether it transcends the limits of human administrative capacity and fails, or whether it meets this challenge and succeeds, it has much to teach us. It is something new in the world.Suppose you were asked to-morrow to take a train to Washington to sit at a desk in a Government bureau, to take pencil and paper and tell the railroads, the power companies, the steel mills, the coal mines, the oil fields, the Secretaxy of the Treasury, the banks, the wholesale houses, the farmers, the ship lines and the automobile factories how to order their capital investments and their raw materials, how to plantheir production and distribution -- for the next five years. One suspects that Henry Ford would quail before the order. For lesser mortals a journey to the moon would seem about as feasible. Yet here are men who have accepted the challange in a larger, though less industrially complicated country.

The drafting of general plans for the national economy may appear equivalent to a flight to the moon to those who believe them to be the work of a handful of people; who do not understand the organizational connection between all the links of the economic system of the U.S.S.R.; and fail to see the guiding red thread of the planning principle and idea that runs through them all. The perspective plans of the U.S.S.R. are not the products of the creative efforts of the Gosplan [ State Planning Commission] heroes and sages who have decided "to take up the challenge." They are developed as a result of the combined efforts of all the economic organizations: industries, trusts, syndicates, co-operatives, banks, the economic commissariats, the regional Soviets, etc., the activities of which, so far as planning is concerned, are directed and consolidated by the Gosplan of the U.S.S.R. Furthermore, the work of drawing up the great economic projects occupies the center of public attention as well as that of scientific institutions, trade unions and other public organizations. It is a social task, upon the solution of which, under conditions admitting of no business or commercial secrets, the efforts of the whole country are concentrated. Let Mr. Chase consider the broad social, one might almost say, national scopeof the work on the Five-Year Plan. It will then not appear so astonishing that, as he himself admits, our real accomplishment is not behind the plans.* 

* All indications are that the Five-Year Plan of economic development will be completed in four years and that in many branches of Soviet industry and particularly in agriculture the program will be surpassed during that period. -- Ed.

The combined experience of scientificeconomic thought and of hundreds of thousands, and even millions, of practical workers in the field leaves no doubt of the successful development of the planning system.

The second group of doubts, which frequently exercises and agitates even foreign proletarian observers of the Soviet economic system, concerns the problems of individual peasant economy, the possibility of planning its development, and consequently of planning the economic development of the country as a whole. It is this particular sphere that has apparently puzzledmany of the foreign observers and investigators with whom I have had opportunities of discussing this question. For, indeed, how is it possible to plan in advance for a year, not to speak of five years, the economic activities of 26 million small peasant holdings, including a great number of very small farms, each of which is a petty producer of marketable goods? Doubts of this kind deserve greater consideration than all others which are merely based on a general misconception of the nature of the Soviet economic planning system. We shall return to this phase of the question in the chapter devoted to agriculture. However, a few observations on the basic questions of methodology are in place here.

In the first place, each economic project of the Soviet Union embodied in the general plan of national economy is a synthesis of scientific prognostication on the one hand and economicplanning on the other hand. Needless to say, this synthesis is based on the consideration of the purpose ahead, or on a teleological principle. While there is a great field for direct planning and the assignment of definite tasks in the socialized sector of Soviet economy, in large scale industry, transportation and banking, much must still be done on the basis of scientific prognosisin atomized, and still extremely backward agriculture. This requires considerable caution and forethought. For it is backward agriculture, subject as it is to fluctuations of elemental forces,that presents the most serious dangers to the system of economic planning in the U.S.S.R. It should further be borne in mind that agricultural planning is supported by a century's experience and observation, which permits comparatively exact estimates of possible fluctuations. It is worth noting that the estimates of the provisional grain and fodder crops, prepared annually by a special government committee of experts, supply, as a rule, quite reliable data for this section of the general planning system. Finally, and this is really the determining factor, the Soviet State possesses such powerful levers, as the nationalization of the land, the resources of state industry, the budget, the credit system, and the policy of determining prices, which enable it to give the necessary direction to the course of agricultural production of the country. Furthermore, these levers are growing more powerful and accordingly make it possible also to predetermine the course of agricultural development as part of the general economic plan.

There can be no question that agriculture, consisting as it did, until the fall of 1929 when the collectivization movement began to gain momentum, of 26 million individual peasant holdings,represents the most difficult sector of the economic planning system of the U.S.S.R. It is this agricultural sector that in a large measure made the entire system of economic planning assume to a certain degree a provisional character serving the purposes of orientation only. But it would be erroneous to exaggerate these difficulties, for how can one fail to see that from year to year the scope of the planning system of the U.S.S.R. embraces more and more widely and firmly the whole national economy, including agricultural production? As indicated later, agriculture in theSoviet Union is undergoing a profound change; within it has begun the process of socialization, the building up of mechanized state farms and peasant collective farms on a large scale. It is easy to see how greatly this process will increasethe possibilities for planned forecast and control of agricultural production, and consequently of the national economy of the U.S.S.R. as a whole.

It is not our intention here, however, to represent the planning work and the planning system of the U.S.S.R. as finally conquered positions of the socialist economy. On the contrary, literally from the first days of the Soviet Government there has been going on an intense and difficult struggle for the planning principle and for a planned economic system. Certain stages andepisodes in this struggle are of great theoretical and practical interest, and have attracted the attention of scientific investigators, both within the Soviet Union and abroad. It is enough to mention the publication of such substantial works as Russian Economic Development since the Revolution, by Maurice Dobb ( London, 1928), and Die planwirtschaftliche Versuche in derSowjetunion, 1917-1927, by Friedrich Pollock ( Leipzig, 1929), not to mention numerous articles in the periodical press. The publication of such serious books coming from the pen of competent foreign authors makes it unnecessary to relate in detail the history of the planning and planning organization of the U.S.S.R. Both Dobb and Pollock give a careful and systematic account, based on extensive study of Soviet sources and material.

Of special importance and great interest in the history of planned economy in the U.S.S.R. is the War Communism period, when the Soviet Government was engaged in stamping out the reckless opposition of the overthrown social classes, the landlords, capitalists and kulaks, while heroically resisting the armed intervention of the capitalist states. Although in those years of civil war and War Communism ( 1918-1921) economic activities were entirely subordinated to the tasks of consolidating the Soviet power and defending the country against the forces of internal and external counter-revolution, and although extensive recreation of wealth did not, and could not, take place in the national economy of the U.S.S.R., nevertheless that period afforded tremendous experience in planned economic organization, an experience which had an exceptionally great influence on thesubsequent development of the economic thought and the economic institutions of Soviet society.

It is not our intention here to give a description and analysis of the economic organization and activities of the Soviet Union during the period of War Communism; that is not necessary to our purpose. Those who are interested in this period will find adequate material in the works of Dobb and Pollock referred to above, as well as in the classic work of L. Kritsman, The Heroic Period of the Great Russian Revolution, devoted to the epoch of War Communism. Under the great pressure of the exigencies of the situation of that time, that period served as a great school in the drafting of urgent economic plans and in carrying them into remarkably speedy execution. Vast cadres of war-economy organizers and workers received their experience and training during this period, and later under changed economic conditions and the New Economic Policy (NEP) theyplayed, as they still do, an important part in the work of economic planning.

Let it be emphasized that it was at the end of this period of War Communism that, at the initiative of Lenin, the remarkable ten-year plan for the electrification of the country, the firstperspective plan in the economic development of the U.S.S.R., was drawn up. Those were difficult days. The fires of civil war were still smoldering, and the territory of the Soviet Republichad not yet been entirely freed either from the bands of White Guards or the detachments of the interventionist armies of international capital. The productive forces of the country were at their lowest ebb; industry yielded no more than 20 per cent of its pre-war production; agriculture not over 50 per cent; no coal was mined; mineral fuels had practically disappeared from the market; communication between the various economic regions had broken down, and a crippled transportation system labored only in the interests of national defense. Everything was subordi- nated to the elemental concern for fuel, bread, transportation and defense.

And at this moment, when the country was just returning to the paths of peaceful development, no less a man than Lenin, himself the greatest of realists, brought forward a ten-year program of electrification, a plan for the construction over a period of a decade, of thirty great regional electric stations, which, in addition to serving as the fulcrums for the levers of Soviet technical development were to mark a determined step toward the accomplishment of the great slogan of the Communist Party of the Soviet Union, which expects within this short historical period to attain and surpass the advanced capitalist countries in the economic-technical field. The contrast between the level of productive forces and the economic situation of 1920 and this plan of electrification was colossal, and numerous enemies within and without met it with mockery and scorn. The plan of electrification was dubbed the plan of electro-fiction. With all that, the steady hand of the leader of the October Revolution boldly laid out these regional electric stations, milestones marking the road toward the economic and technical development of the U.S.S.R.

He who laughs last laughs best. In spite of the calamitous failure of the 1921 harvest and the terrible famine that followed, in spite of the serious partial crop failure in 1924, in spite ofwithheld foreign credits and the direct hindrances put in the way of Soviet development by international capitalism, the land of the Soviets moved faster along the path of economic reconstruction than could possibly have been foreseen in 1920.

Lenin's electrification plan has been exceeded. A number of state regional power stations, such as the Volkhov near Lenin grad, the Shatura and Kashira near Moscow, the Zemo-vehali station near Tiflis, the Balakhna at Nizhni-Novgorod, the Shterovka in the Donetz Basin, and others, have already been added to the chain of great power plants of the socialist industrialization of theSoviet Union. Many others, still more powerful, such as the Dnieprostroy in the Ukraine, with 650,000 horse-power, Svirstroy near Leningrad with 150,000 horse-power, Bobriki near...

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