Lenin On State Capitalism during the transition to Socialism
Lenin demonstrates the suitability and objective economic need for using state capitalism in the period of transition from capitalism to socialism, and defines its basic principles and methods.
Lenin referred to state capitalism even before the victory' of the socialist revolution in Russia. In September and October 1917, he pointed out that state-monopoly capitalism in the setting of revolution, in the conditions of a revolutionary democratic state, was beyond question a step closer to socialism.
Later, in the new conditions created by the October Revolution, the approach to the question of state capitalism, to its nature and the methods of using it, was modified. Under Soviet power, Lenin said then, 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 organise a new, socialist economy.
We find the first and most conclusive exposition of Lenin's ideas on using state capitalism, on its character and features in the economy of the period of transition to socialism, in his report on April 29, 1918 to the All-Russia Central Executive Committee on the immediate tasks of the Soviet government, and in the article "'Left-Wing' Childishness and Petty-Bourgeois Mentality", which he wrote in May 1918. He pointed out that in the conditions prevailing in Soviet Russia, state capitalism would be a step forward and would ease the transition to socialism, because "state capitalism is something centralised, calculated, controlled and socialised, and that is exactly what we lack; we are threatened by the petty-bourgeois slovenliness, which more than anything else has been developed by the whole history of Russia and her economy, and which prevents us from taking the very step on which the success of socialism depends"
He strongly censured the "Left Communists", who were dogmatically opposed to the idea of using state capitalism because in their view it would make for the revival of the capitalist system. For them the main enemy of socialism was state capitalism rather than the petty-bourgeois element. They did not see the distinctiveness and new nature of state capitalism as practiced in the Soviet Republic, and were blind to the possibilities of combining Soviet power with state capitalism. Use of state capitalism was, by and large, one of the main questions in the plan of building socialism worked out by Lenin.
The Civil War and the foreign armed intervention in the latter half of 1918 and until 1920 precluded the use of concessions and other forms of state capitalism. In the grim environment of war, the Communist Party was compelled to abandon the economic policy worked out by Lenin in the spring of 1918, in which use of various form of state capitalism figured prominently. A different kind of economic policy was needed in the conditions created by the Civil War, the foreign intervention, the blockade , dislocation , and hunger. Eventually, that policy came to be known as "War Communism".
The country's limited resources were devoted almost entirely to securing victory over the foreign intervention forces and the domestic counter-revolution. The Soviet government had no choice· but to nationalise not only large-scale but also medium scale industry, and to put small-scale industry under control. That was the only way to secure greater military production and to supply industry with requisite raw materials and fuel, and' besides to ensure rational distribution of manpower.
In late-"1920 and early 1921, on emerging victorious over the forces of international imperialism and whiteguard counter-revolution, the Soviet people began building socialism under the leadership of the Leninist party. 1 T he conversion from war to peace occurred in an exceedingly complicated situation. Some seats of counter-revolution had yet to be stamped out.
The international imperialist forces had not abandoned the hope of destroying the Soviet Republic. The ravages of the imperialist world war and the Civil War had brought the country to the edge of total ruin. A large number of factories and mines, oil fields, and railways were inoperative. Industry suffered acute shortages of fuel and raw material. Agriculture was in a sad state. Food and other consumer commodities were scarce. The peasantry expressed their discontent with the surplus food appropriation system, which went counter to their interests in the new situation, and was undermining peasant fanning.
In these conditions, Lenin drew up the principles of a new economic policy (NEP), one of the chief elements of which was to abolish surplus food appropriation and to introduce in stead a far less onerous tax in kind. On paying .the tax, peasants were free to dispose of their food surpluses in the local market. This was an incentive for them to expand production of food and industrial crops. The economic bonds between town and countryside and the alliance of the working class and peasants grew stronger.
The New Economic Policy projected the economic principles worked out by Lenin in the spring of 1918 to fit the new conditions. It was designed to promote rapid economic rehabilitation and to pave the way for the socialist reconstruction of the economy. It solidified the worker-peasant alliance on an economic foundation, thereby drawing the peasants into socialist construction, and extended the ties between socialist industry and the peasant producer of cash crops. NEP allowed for a moderate development of capitalist elements, with the Soviet state retaining the commanding heights in the economy. The decision to substitute NEP for the policy of "W ar Communism'' was adopted in March 1921 at the Tenth Congress of the Communist Party.
A key NEP principle was to use state capitalism for building socialism in the conditions of that time. The idea was set forth and argued by Lenin in his report on the tax in kind at a meeting of secretaries and representatives of Party cells of Moscow and Moscow gubernia on April 9, 1921, and in the pamphlet The Tax in Kind, written at that time.
For Lenin, state capitalism was not merely a structure of the period of transition to socialism, but an economic device for using capitalism controlled by the proletarian state to further the building of socialism. He saw the most important task of all Party and government functionaries in ap plying the principles of the policy of state capitalism "to the other forms of capitalism-unrestricted trade, local exchange, etc."
Lenin stressed that the policy of concessions, if carried out cautiously and within limits, would despite some sacrifices, specifically that of giving up some valuable resources to capitalists, speed 1:1.p the growth of the productive forces and help attract foreign technical facilities for the rehabilitation and development of industry, raising output of food and manufactured goods, and improving the material condition of the working people. Soviet workers employed at concession enterprises would learn from the capitalists' scientific-technical and managerial experience. Besides, concessions would promote business relations with the capitalist countries. Furthering the concessions policy was, indeed, an important aspect of the Soviet Government's activity in the field of foreign relations.
Lenin devoted most of his attention precisely to concessions. On October 26, 1920, the Council of People's Commissars discussed Lenin's report on the question of concessions in Siberia. On November 23, 1920, the CPC adopted a pertinent decree, "The General Economic and Legal Terms of Concessions". "The Basic Principles of Concession Agreements" drafted by Lenin and adopted on March 29, 1921, contributed importantly to the theoretical elaboration of the concessions policy and furthered its concrete implementation.
Lenin stressed that concessions were important not only for raising production, but also in view of their political effect. Concession agreements with people from the capitalist world benefited the policy of the peaceful coexistence of states with different social systems. As Lenin stressed, "those who want to go to war will not agree to take concessions. The existence of concessions is an economic and political argument against war. States that might go to war with us will not be able to do so if they take concessions"
By and large, however, concessions did not become widespread.. In all those years, their share in the country's total industrial output never exceeded 0.6 per cent. Contracts of lease, which, in effect, were a variety of concession agreements .
The most widespread form of state capitalism was the institution of private middlemen and agents working on a commission hasis. Middlemen (supply agents, contractors, travelling salesmen, commission _merchants, and so on) handled nearly all the supplying and marketing for state enterprises. Firms and entrepreneurs often acted as contractors, performing various jobs for building, timbering, transport, and other state enterprises.
Producer co-operatives proliferated during the NEP period. Co-operative capitalism, as Lenin said, facilitated accounting, control, and supervision, and made for contractual relations between the state and the capitalist elements. Through co-operatives, private capital was drawn into economic cooperation 'with the Soviet state and was, in effect, made to fulfill state assignments.
Lenin's ideas of what ·co-operatives meant in the general plan of socialist construction were presented in final form in an article, "On Co-operation", published in early 1923. Here Lenin set forth a program for using producer co-operatives to convert individual small-scale peasant cash cropping into large-scale socialist farming.
Alongside the listed forms of state capitalism, there were also the following: employment of bourgeois specialists in the managerial mechanism and at state-controlled industrial and commercial enterprises and trusts, use of private tradesmen as middle men or commission agents in procurement and marketing, use of foreign capital for technical assistance and aid in designing and building large new enterprises, and for technical consultation in organising large-scale production, and so on.
Lenin vigorously promoted the idea of using state capitalism in building socialism. He did all he could to bring home the need for this to all members of the Party and to the mass of the working people. And he censured those who identified state capitalism in the setting of a proletarian state with state capitalism in a bourgeois society. Criticising them for following the interpretation of state capitalism as given in "old books", Lenin pointed out in the political report of the Central Committee to the Eleventh Congress of the Party in March 1922 that "they deal with the state capitalism that exists under capitalism. Not a single book has been written about state capitalism under communism. It did .not occur even to Marx to write a word on this subject; and he died without leaving a single· precise statement or definite instruction on it. That is why we must overcome the difficulties entirely by .ourselves" .
The measure of state capitalism and the terms on which it would not endanger and would benefit the proletarian state depended on the relation of strength, since the policy of state capitalism was, in effect, a projection of the class struggle in a new form, a war in the economic field with, however, the difference that it did not destroy but rather helped to build up the country's productive forces. The policy of state capitalism amounted, indeed, to a competition between two economic systems, the socialist and the capitalist.
Use of state capitalism during the transition from capitalism to socialism, necessitated by the prevailing situation and the concrete conditions of building socialism, was a new question that the founders of scientific communism had never raised nor could have raised. Lenin was the first to consider it, and his studies of the subject have enriched Marxist theory, contributing conspicuously to the science of building socialist society.
The policy of using state capitalism was also instrumental in overcoming the economic and political isolation of the Soviet Republic and in creating conditions for peaceful socialist construction despite the country's encirclement by capitalist states.
The experience of using state capitalism in the USSR, the first in history, is of great international relevance.
Countries that have flung off the colonial yoke are devoid of a ramified large-scale industry in the early period of independence. So, state capitalism begins to develop there as a means of building large-scale production, as a basis for independent economic development and for stimulating the productive forces. Though anti-imperialist and anti-colonialist by nature, its social and economic character depends on the class character of the state and the social-economic policy of the forces that hold power. That is why the essence of state capitalism in the socialist- and capitalist-oriented developing countries is not the same.
In the socialist-oriented countries, state capitalism is called upon to combat neocolonialism, to enhance the rate of growth of the productive forces, and, indeed, to serve through a series of mediate links as a form and method of preparing the way for socialist reconstruction. There, state capitalism gradually acquires some of the features seen in the setting of socialist construction. State capitalism's role in the capitalist-oriented developing countries is also by and large progressive, for it is aimed at eliminating the aftermaths of colonial rule, as well as '.archaic economic patterns (patriarchal, feudal, and so on).
The countries of the socialist community, and notably the Soviet Union, are natural allies of the socialist-oriented countries and render them all-round support and aid. For countries that have opted for the socialist road, Lenin's theory of state capitalism thoroughly tested in the USSR and the other socialist states, retains all its relevance in the present conditions.
From REPORT ON THE IMMEDIATE TASKS OF THE SOVIET GOVERNMENT TO THE SESSION OF THE ALL-RUSSIA C.E.C
APRIL 29, 1918
From "LEFT-WING" CHILDISHNESS AND THE PETTY-BOURGEOIS MENTALITY
A CONCESSION ON THE GREAT NORTHERN RAILWAY
A CONCESSION ON THE GREAT NORTHERN RAILWAY
From a letter TO THE AMERICAN WORKERS
From INTERVIEW WITH LINCOLN EYRE, CORRESPONDENT OF THE AMERICAN NEWSPAPER "THE WORLD"
From REPORT ON CONCESSIONS
Reply to the Debate on Concessions at a Meeting of Activists of the Moscow Organisation of the R.C.P.(B.) - REPLY TO THE DEBATE ON CONCESSIONS
Report On Concessions Delivered To The R C.P.(B.) Group At The Eighth Congress Of Soviets
From REPLY TO THE DEBATE ON THE REPORT ON CONCESSIONS DELIVERED TO THE R.C.P.(B.) GROUP AT THE EIGHTH CONGRESS OF SOVIETS DECEMBER 21
Report On Concessions Delivered To The R C.P.(B.) Group At The Eighth Congress Of Soviets
From REPLY TO THE DEBATE ON THE REPORT ON CONCESSIONS DELIVERED TO THE R.C.P.(B.) GROUP AT THE EIGHTH CONGRESS OF SOVIETS DECEMBER 21
From REPORT OF THE ALL-RUSSIA CENTRAL EXECUTIVE COMMITTEE AND THE COUNCIL OF PEOPLE'S COMMISSARS ON FOREIGN AND HOME POLICY DECEMBER 22
From REPORT OF THE ALL-RUSSIA CENTRAL EXECUTIVE COMMITTEE AND THE COUNCIL OF PEOPLE'S COMMISSARS ON FOREIGN AND HOME POLICY DECEMBER 22
TO WASHINGTON VANDERLIP
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