Andrew rothstein

On the other hand, the Marxist theory, in which the leaders of the Russian revolution were steeped, and by which they were guided in their organisation of Soviet economy, had always assumed both that State planning was essential in a Socialist society and that it involved greater, not less, participation of the individual in the regulation of economic affairs than under capitalism.

Even before Marx and Engels worked out their fundamental ideas in the form of the Communist Manifesto of 1848, a number of their British and French Utopian forerunners, to whom they paid such a warm tribute in its pages, had also assumed that planning in the ideal society would be combined with greater individual freedom for the producer. Robert Owen founded the productive activities of his “villages of unity and co-operation” upon this idea. Charles Fourier, who advocated the formation of an "areopagus”, or representative planning committee, in each of the ideal “phalansteries” of 1800 to 2000 people of future communist society, nevertheless gave it only advisory functions, and the members were to be free to decide their occupations for themselves. John Francis Bray, in Labour's Wrongs and Labour’s Remedy (1839), considered it possible, and even essential, in his anticipation of communist society founded upon joint stock, both to have general and local boards of trade, by which “all matters connected with production and distribution could in a short time be as easily determined for a nation as for an individual company under the present arrangement”, and to allow each individual “liberty to accumulate as much as he pleases, and to enjoy such accumulations when and where he might think proper”. Louis Blanc,¹ in his advocacy of a collectivist society founded upon “social workshops” and State planning, looked forward to a condition in which “emulation is not destroyed, it is purified... we do not claim in the least to sacrifice human personality, the rights of the individual, to the emancipation of the people”. Etienne Cabet saw the future Republic, through its national assembly, planning manufactures, distribution of labour, capital construction, promoting new inventions, training workers and so forth. At the same time, he wrote, “to excite a useful emulation, every worker who through patriotism does more than his duty, or who in his profession makes a useful discovery, obtains particular esteem, or public distinction, or even national honours”.²

Marx and Engels themselves, in the programme of immediate measures for a ruling working class, worked out in the Communist Manifesto—but many of them widely advocated in the democratic and Socialist movements of the years before 1848—made measures of planning play an outstanding part. Centralisation of credit in the hands of the State by means of a national bank, State ownership of transport and communications, equal obligation of all to work, extension of factories owned by the State, expansion of agriculture “in accordance with a common plan”, are all among the “pretty generally applicable” measures of the Communist Manifesto. Yet at the same time the Manifesto looked forward to the establishment by these means of “a vast association of the whole nation... in which the free development of each is the condition for the free development of all”.

Again, in his Civil War in France (1871), Marx drew particular attention to the decree of the Paris Commune (16th April, 1871) under which co-operative societies of workers were to take over closed factories, and were later to be organised in one great union, in order “to regulate national production upon a common plan”, thus “putting an end to the constant anarchy and periodical convulsions which are the fatality of capitalist production”. Marx said this kind of co-operative—i.e., voluntary—activity was nothing else but a practical step to communism; and Engels, in his introduction of 1891, called it “by far the most important decree of the Commune”.

Already in his Anti-Dühring (1878) Engels had foreseen that the ending of the capitalist system by the workers would mean “the replacement of the anarchy of social production by a socially planned regulation of production, in accordance with the needs both of society as a whole and of each individual”. Yet such planned production would not merely not prevent, on the contrary it would guarantee to all members of society, “the completely unrestricted development and exercise of their physical and mental faculties”. At this point, in fact, men would be entering “conditions which are really human” for the first time. It would be “humanity’s leap from the realm of necessity into the realm of freedom”.³

Even more explicit was the combination of planning with industrial democracy in the sketch of Socialist society, The Day After the Revolution, made by Karl Kautsky, the most authoritative exponent of Marxist ideas during the first years of international Socialism after the death of Engels. In this lecture⁴ delivered in 1902, Kautsky on the one hand saw the future Socialist State accomplishing “the systematic regulation and circulation of products, the exchange between industry and industry, between producers and consumers”: with labour power “assigned to the individual branches of production according to a definite plan”. On the other hand, he pointed out that “a Socialist regime would from the beginning seek to organise production democratically”, and that the discipline of the ruling working class would be like that of its trade unions—“democratic discipline, a voluntary submission to leadership chosen by themselves, and to the decisions of the majority of their own comrades.... A democratic factory will take the place of the present aristocratic one.”

How far has planned Soviet economy conformed to these standards? Does its regime, in fact, resemble the picture drawn by the quoted economists, or that drawn by the writers at whose feet the Russian Marxists—including the leaders of the Soviet State—studied in their early years? The main purpose of this book is to investigate the facts of Soviet economic development, and particularly of recent Soviet planning, with this question in mind.

Before proceeding with that purpose, however, it is desirable to notice a criticism of Soviet planning from another angle—criticism which is important because it made its appearance for the first time, in any quarter commanding attention, after the Second World War.

On 9th May, 1945, Stalin declared in his victory address to the Soviet people: “The period of war in Europe is over. The period of peaceful development has begun.” Ten months later the promise had borne fruit in a characteristic Soviet form, in the shape of the Five Year Plan for the years 1946-50, adopted by the Supreme Soviet of the U.S.S.R. at its first post-war session:

“Having effectively initiated, while the Patriotic War was still on, the economic rehabilitation of the formerly occupied regions, the Soviet Union, now that the war is over, is continuing to rehabilitate and further develop its national economy on the basis of long-range State plans, which determine and direct the economic life of the U.S.S.R.

“The Supreme Soviet of the U.S.S.R. declares that the principal aims of the Five Year Plan for the rehabilitation and development of the national economy of the U.S.S.R. in 1946-50 are to rehabilitate the devastated regions of the country, to recover the pre-war level in industry and agriculture, and then considerably to surpass that level.”¹

The interpretation put upon the new Five Year Plan by many influential writers in Britain and America, however, was very different from its declared purpose. They proclaimed that “Russia has chosen guns instead of butter”; and this assertion played its part in creating distrust of the U.S.S.R. in the post-war years, reinforcing the other criticisms already mentioned. It is therefore of some importance to try to establish whether the main features of the fourth Five Year Plan—which its foreign critics, as a rule, refrained from quoting in detail—do in fact bear out the interpretation they give it. As a preliminary, it will be helpful to examine how far any of the previous Soviet economic plans were compatible with the policy of “guns instead of butter

2. External Relations and Plans, 1920-32

The first plan of any practical effect in Soviet industry was adopted by the VIII All-Russian Congress of Soviets in December, 1920, at the end of the foreign invasions which made possible the post-revolutionary civil war.² The plan was a modest one—little more than a series of co-ordinated targets, affecting about fifteen branches of industry—and it turned on a project for the construction of thirty power-stations distributed among the various economic regions of Soviet Russia. The aim, in the words of Krzhizhanovski, chairman of the State Electrification Commission (GOELRO), who reported to the Congress on the matter, was “approximately in a ten- year period not only to heal the wounds of war, but also to raise our productive forces during the period to 80-100% above the pre-war level”.³

At that time Russian economy, after more than six years of continuous warfare, was in a state of almost complete breakdown. The gross output of industry in 1920 was less than one-seventh of what it had been in 1913. Pig-iron output was barely 2%, cement 3%, cotton yarn 5%, sugar under 7%, ploughs 13%, railway engines under 15% of the pre-war level. More than half of the existing railway engines and nearly a quarter of the railway goods wagons were out of action. As a result, although coal output was still nearly 16% of the 1916 output and oil output nearly 40%, much of this essential fuel could not be moved. The cultivated area was down to 76% of the 1913 level.⁴

Krzhizhanovski said:

“It is clear to all that we must strain every effort to put an end in the speediest possible time to our post-war economic breakdown, with its crises of transport, food supply, fuel, productive equipment, and man-power. All these crises are intermeshed one with another, and sometimes it seems as though there is no way out of this circle which has closed around us. We know that transport cannot be restored if fuel is not supplied to the railways, but on the other hand without transport one cannot overcome the fuel crisis either: and so on.”⁵

To this was added, as he pointed out, the fact that these urgent economic problems were being tackled in a vast country, at a time most complicated for any State, even were it in the most nourishing condition—“a period of transition from the system of private economy, the capitalist system, to a planned publicly-owned economy, a Socialist system ”¹

Although Krzhizhanovski had spoken of an approximate ten-year period, Lenin in his speech at the same Congress spoke more cautiously of “ten to fifteen years”; and in fact the fulfilment of Soviet Russia’s first economic plan showed the need for that caution. It began to be applied in 1921. The fulfilment of its several parts can be shown as follows:²

Branch of production.	Target.	When first reached.
Coal	62.3 million tons	1932	64.4 million tons
Iron ore	19.6 ” ”	1934	21.7 ” ”
Pig iron	8.2 ” ”	1934	10.4 ” ”
Steel	6.5 ” ”	1933	6.9 ” ”
Oil	1o.8 ” ”	1927/8	11.6 ” ”
Manganese ore	1.6 ” ”	1934	1.8 ” ”
Peat	16.4 ” ”	1934	17.2 ” ”
Copper	81.9 ” ”	1937	99.8 ” ”
Electric power (produced by regional stations)	1.75 mill. kw.h.	1931	2.4 mill. kw.h.
Railways	80,000-90,000 km.	1930	80,200 km.
All industry	80-100% above pre-war level	1929	94.3% above 1913

What was the reason for this unevenness in fulfilment? The question is all the more important when we remember that the last few years (after 1929) fell in the first period of the first Five Year Plan, in which the rate of progress was much more speedy than before.

In his report Krzhizhanovski had shown that great hopes had been pinned upon a development of peaceful economic relations with other countries.³

“In spite of the world crisis at present gripping industry in all countries, we still have the right to reckon on a growth of foreign trade, and the significance of the Russian market and the necessity of large-scale electrification in our country is adequately understood at present abroad.... Both the Germans and the Americans must realise the coming importance of the Russian market and the unquestionable necessity that Russia should outlive her present economic collapse....”⁴

Seven years later, at the XV Congress of the Communist Party of the Soviet Union (December, 1927), he estimated that expenditure on power-stations, industry and transport under the 1920 plan would have been about 17 milliard roubles.⁵

“We then clearly realised that the accumulation of our own resources in industry would hardly be enough to enable us to overcome economic breakdown in industry, and we thought that for all this vast construction we should be able to take advantage of the consumption demand in Europe, rapidly expanding our export items, and particularly to rely on the post-revolutionary revival of the peasantry. And we reckoned then that in 10-15 years we should be able to build up a positive trade balance of about 11 milliard roubles. This meant a deficit of 6 milliards. But further we said that probably the West would be obliged to enter into definite business contact with us. We reckoned then on a wide programme of concessions, hoped for credits, and thought that with the help of credit operations and concessions we should manage to wipe out the deficit; and we boldly set sail.”

It is important at this point not to be deflected from the examination of Soviet experience in planning by one’s approval or disapproval of Socialism, by doubts whether the Bolsheviks had the right to expect that capitalist States would help them to carry out constructive plans, even by mutually profitable trade, and so forth. The point is that in their planning the Soviet leaders did make normal and peaceful relations with the capitalist world an essential part of their long-range programme. And in this respect they were disappointed. For one thing, as Krzhizhanovski himself remarked, “The blow we suffered from the famine of 1921 showed us at once how incorrect it was to count on export surpluses with the help mainly of our agriculture.”¹ The following year, at the International Economic Conference of Genoa, when the Soviet leaders offered, with the help of credits from abroad, to use Siberia “to enlarge the basis of European industry so far as concerns raw materials, grain and fuel, in proportions far exceeding the pre-war level”,² they learned that the condition for any assistance at all was the denationalisation of industry and the placing of Soviet economy under foreign control. Until the end of 1923 they were not even allowed diplomatic relations with the principal European countries. At the end of 1924 trade treaties which they had concluded with Great Britain in application of the principles put forward at Genoa—with financial risks to Britain which must seem incredibly modest today—were refused ratification by the new Government formed after the General Election. In 1925 the Western Powers concluded the Locarno Pact, which temporarily, at least, bolted the door to war in the West while leaving it wide open in the East—against the Power which the Under-Secretary for the Colonies at the time, justifying the Locarno Pact, described as “ the most sinister force that has ever arisen in European civilisation”.³ These and similar obstacles to tranquil and normal development of economic relations with capitalist countries succeeded one another throughout the period of the GOELRO Plan; and even the system of guaranteeing export credits was not extended to Russia by the British Government (even partially) until the world was struck by the “economic blizzard” which began in 1929.

In this way, not only did Soviet leaders make the full development of their constructive work depend from the first upon normal relations with other countries, but they had impressive and far-reaching proof of how injurious it was not to have such relations. The Soviet leaders proved, still more impressively, that they could successfully overcome such barriers; but they never failed to deplore the necessity.