23  Who Benefits?


    Who benefits from this "new economic system?" In view of all that has been said, the answer will not be surprising. The "new" setup is not, and cannot be, anything other than a gigantic machinery for generating extremes of wealth on the one side, in the hands of the few, and extremes of poverty on the other side, among the many.

    In a "testament" written shortly before his death and published abroad afterward, the prominent Soviet revisionist academician E. Varga deplored "the contrast between the excessive material well-being of the ruling aristocracy and the extremely low wages of the majority of the workers, employes and collective farmers." He sermonized the "bureaucratic aristocracy" for its "arrogance" and its "conceit," which drive it to "sell off [the French is 'brader' -- literally, to hold a garage or sidewalk sale] and to appropriate for themselves the property of the state, to satisfy unbridled passions which sometimes lead them to crime. . . ."

    At the same time Varga observed that "the precarious material situation of the workers . . . results in all kinds of reprehensible phenomena: drunkenness, ill-treatment of spouses and children, domestic quarrels, the refusal to

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work, delinquency and sometimes crimes of desperation." (Le Monde, 12-13, September 1971, quoted in "Sur la restauration du capitalisme en USSR" by Andre Pommier in Communisme, Paris, September-October 1974, pp. 56, 77.)

    For this revisionist, who on his deathbed is seized by moral scruples, the working class exists only in the role of victim of the system. He does not see their resistance, their fighting spirit, the numerous strikes and other acts of rebellion. Thus he paints an image of the USSR that recalls the bourgeois novelists' depictions of Old Russia, Russia under the Tsars, with the unbridled greed and limitless corruption of the big officials at the top and a vast panorama of suffering, frustration and desperation below. Precisely in this parallel, however, lies the core of truth in Varga's deathbed confession.

    "There are in the USSR about 13,000 millionaires, i.e., top bosses whose bank accounts amount to seven digit sums," according to an estimate, necessarily imprecise, by Roy Medvedev, one of the more prominent members of the petty-bourgeois "dissenter" circles, whose frustrations take a sometimes "left" form, but more frequently an arch-reactionary form as in the case of Solzhenitsyn. (Quoted by Zev Katz, "Insights From Emigres and Sociological Studies on the Soviet Economy," in Soviet Economic Prospects for the Seventies, Joint Economic Committee of the Congress of the United States)

    Is the gap between the rich and the poor in the Soviet Union today growing, as it is in other capitalist countries, or is it being restricted, as it is in socialist countries?

    On the basis of a study of Soviet sociological surveys as well as interviews with Soviet emigres, the U.S. bourgeois sociologist Katz arrives at the following summary:

    "The Brezhnev-Kosygin administration . . . provides various high-cost material incentives to those who can afford them (or gain access to them): private cars, imported goods, tourist trips abroad, luxurious entertainment facilities at home, condominium (cooperative) flats, high-cost modern services (restaurants, hotels). Available now only to a small minority, such items become a mark of status, a Soviet equivalent of conspicuous

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consumption. . . . Some measures such as the economic reform, incentives for technological progress, the campaign for improved business management, the creation of trusts and firms, as well as the 'Shchekino experiment,' the new policies in regard to agriculture, apparently reinforce income differential, benefiting first and foremost those who already have high incomes and better work conditions." (Katz, article cited, p. 112.)

    A prejudiced assessment perhaps, by a source with an obvious axe to grind? Perhaps. But the Soviet economists themselves -- to be sure, in more cautious language -- but tress and confirm this conclusion on every point. Despite official claims of a "progressive equalization" the evidence points plainly and overwhelmingly to the rise and the sharpening of polarization between wealth and poverty.

    Take, for example, the matter of conspicuous consumption -- sheer waste by the rich -- which the economist Thorstein Veblen, decades ago, satirized as a trait of nouveaux riches. The whole of the Soviet bourgeoisie, as a class, is of course of this kind. In this regard, the Soviet economist N. Buzliakov writes:

    "At the present time, families with maximum per capita incomes are consuming certain types of food and nonfood commodities at a level recommended by rational norms or at an even higher level. There is no doubt . . . that with a further rise in incomes, the consumption of such families will grow quantitatively and qualitatively in the next 15 years, and with respect to a number of goods and services will significantly exceed the rational norms. In such a case can there be a discussion of 'irrational consumption'?" ("Rational Long-Range Income and Consumption Norms," Planovoe khoziaistvo, 1974, No. 6, in Problems of Economics, November 1974, p. 84.)

    It is difficult to say which is more striking in this testimony: the coy inquiry whether or to what extent the hoggish living of the rich may be discussed in legal publications or the admission that consumption of food and nonfood commodities "at a level recommended by rational norms" is possible in the present-day USSR only for "families with maximum per capita incomes." The rest

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evidently are restricted to consumption at sub-"rational" levels.

    The growing extremes of poverty and wealth make a touchy subject for the Soviet revisionist writers, for obvious reasons. Like unemployment and anarchy of production, this is not supposed to exist, and therefore cannot be legally discussed in a direct, straightforward way. At the same time, however, the practical work of certain institutions cannot proceed unless the existence of this reality is recognized and taken into account. This is the case in particular with the management of the quantity and speed of monetary circulation in the national economy, which in the USSR as in the Western countries is a responsibility of the state bank. Poor people spend money as quickly as they get it; they have no choice. The wealthier strata tend to spend only part of their income immediately and to put the rest in the bank as savings to be spent later. The speed of monetary circulation is slower in their case than with the poor. Thus, in any economy where the polarization of incomes reaches any considerable extent, the banking authorities charged with management of the quantity of money in circulation must take this fact into account, no matter what the official ideology may say.

    And in fact this is what the Soviet money managers have had to begin doing. As early as 1964, a number of articles appeared stressing the need to know the differentiation of incomes in order to carry out central bank functions. (For example: O. Rogova, "The Effect of the Level and Differentiation of the Population's Incomes on Money Circulation," Dengi i kredit, 1964, No. 11, in Problems of Economics, May 1965; A. Remmenik, "The Material Conditions of Family Life," Ekonomicheskie nauki, 1964, No. 5, in the same; and others.)

    Upon full implementation of the "reform," the problem became more urgent. Thus, in a list of "improvements" called for in the "planning" system, the economists P. Koylov and M. Chistiakov write: "Up until recently, the living standard was planned for two basic groups: for workers, employees and collective farmers. Today it is also necessary to calculate the rise in the standard of living for population groups with different income levels."

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("Problems in Improving the Methods of National Economic Planning," Planovoe khoziaistvo, 1972, No. 1, in Problems of Economics, Aug. 1972, p. 33.) This is a cautious admission, or pale reflection, of the increasing polarization of incomes, a necessary consequence of the restoration of capitalism.

    Here is a direct admission -- though from an oblique angle -- of the widening gap between the higher and lower classes: "The analysis showed that in population groups that differ in terms of income level, the savings norms (vis-a-vis income) are not uniform. As a rule this norm is more important in the more affluent population groups. Analysis of trends in the development of Soviet economy indicates a gradual change in the character of the differentiation of the population with respect to income level. Inevitably there is a rise in the share of those groups that have relatively high incomes. At the same time there is a reduction in the share of families for which a comparatively low savings norm is characteristic." (T. Ivensen, "Problems in Forecasting the Monetary Savings of the Population," Ekonomicheskie nauki, 1973, No. 11, in Problems of Economics, June 1974, p. 66, emphasis added.)

    In other words, inequality is growing; rich and poor have emerged and the rich are becoming richer and the poor poorer.

    Here are some supplementary facts about the economic situation of Soviet workers, compiled from Soviet sources by a recent issue of Peking Review:

    "The revisionist chieftains and their journals have to admit that there are a considerable number of 'families in economic difficulties' in the Soviet Union today. The Soviet journal Socialist Labor interprets the term 'families in economic difficulties' as those whose per capita incomes are below the level required to 'ensure the minimum standard of living.' These 'families in economic difficulties' 'involved 25 million people,' Tass disclosed last November. It can be assumed that the figure is greatly watered down and that, in fact, the situation is far more serious. Soviet press reports estimate that such families make up some one-fifth of the urban population. The

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standard of living of a large number of 'collective farm' members is far below that of low income urban workers and staff. . . .

    "Inflation and soaring prices have brought more difficulties to working people in the lower income category. According to the obviously understated figures in the yearbooks of Soviet national economic statistics, state retail prices of meat and poultry rose 29% in the 1960-73 period, animal oils 28% and vegetables 23%. In this period, the retail price of flour went up 48% in Moscow's state-run shops, beef 33% and cabbage 66%. There are also concealed increases in prices of many goods. . . .

    "Prices on the free market rocketed even faster. Free market retail food prices were 35% higher than in the state-run market in 1960 and 63% higher in 1972.

    "Living standards among the non-Russian working people in the Soviet Union are still lower owing to the Great-Russian chauvinist policy of national oppression pursued by the Soviet revisionist renegade clique. [The publication titled] "The Soviet Union and the Union Republics in 1973" disclosed that the average monthly wage of the workers and staff in most non-Russian republics is lower than that in the Russian Federated Republic. For instance, it is lower by 16% in Byelorussia, 20% in Georgia and 21% in Moldavia. The non-Russian republics are also discriminated against in consumer goods supply, housing, culture and education and medical and health services. The 1973 "Yearbook of Soviet National Economic Statistics" revealed that the 1973 per capita retail sales of consumer goods in Uzbek, Azerbaizhan and Tajik Republics were less than 60% of those in the Russian Federated Republic. The number of doctors for every 10,000 people in the central Asian republics was one-third less than in the Russian Federated Republic." ("Soviet Working People's Plight Under Revisionist Clique's Rule," Peking Review, May 16, 1975, p. 19.)

    This data is entirely consistent with the general trend of growing polarization. Following the old maxim of "divide and rule," the Soviet state-monopoly capitalist

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bourgeoisie has done everything in its power to try to break the unity of the different nationalities, particularly between the Great-Russian plurality and the minorities and has concentrated its forces of oppression and exploitation with special force against the latter so as to try to deprive the Russian workers of their nearest allies.

    The tactic of "divide and rule," of setting one worker against another, in fact, is applied rather consciously, in all the "new" management methods. This is not only implicit in the enterprise director's arbitrary power to hire, fire, promote and demote workers, which opens every opportunity for playing favorites and practicing discrimination. It is raised to the explicit level of theory in the Soviet policy for distributing the petty "bonuses" which workers receive al the director's whim. The "efficiency specialist" Gubin gives the whole philosophy away by writing:

    "The efficiency of any system of incentives largely depends on differentiation between the workers encouraged. Therefore, the decisive factor is not the absolute size of incentives funds but the relative size per worker." (Raising the Efficiency . . . , p. 79.)

    In other words, "efficiency" is achieved not by paying all workers equally a ruble more, but by dispensing 10 kopeks (cents) as a "bonus" to this individual, seven kopeks to another, 12 kopeks to a third and no kopeks to the rest, hoping in this way to arouse mutual jealousies and to prevent the workers from uniting in common resistance. This is the essence of "efficiency" -- from the capitalist standpoint.

    It would be an error to imagine that the growing polarization between wealth and poverty in the USSR mainly arises from this sort of "bonuses" or from inequality of wages between different grades or skill levels of workers. Its chief source, rather, lies in the gap between the wages of the workers, on the one side, and income received by nonworkers -- income which is not wages -- on the other side. This is disguised in the form, also, of "bonuses," but at least the Soviet revisionist writers no longer pretend that the bonuses paid to the directors and their immediate underlings are a form of wages. The fact

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that they are a share of the profits is routinely admitted; indeed, it was proclaimed as a principle in Kosygin's 1965 speech.

    Who gets the "bonuses"? From the earliest beginnings of the 1965 "reforms," the lion's share of this income, all sources agree, has gone to the handful of top personnel in each enterprise or combine. Already, in the Moscow Transport experiment, the pilot project mentioned earlier, it was admitted that "inequitable differentials" in payments arose, with "large increases for top management." (Kaledinova & Tomsky, in Voprosy ekonomiki, 1965, No. 12, quoted by Feiwel, The Soviet Quest . . . , p. 243.) So large were the increases for the directors that something of a scandal was raised and the authorities had to promise to exercise restraint, as Feiwel reports.

    At another early group of enterprises transferred to the "new system," according to the same source, it was found that 46.6% of the "material incentives fund" went for monthly managerial premiums, 15.5% for monthly workers' premiums and the rest was distributed as end-of-year "bonuses." The directors and their immediate staff received bonuses from the "material incentives fund" amounting to 22.7% of their base salaries.

    The same source notes also that the size of the bonuses from this fund is keyed directly to base salaries; the higher the base pay, the bigger the bonus.

    Thus in sum, the average income of industrial workers at a sample of the first enterprises under the "new system" increased by the pittance of 4.7%, considerably less than their productivity rise under the impact of the new speedup methods. Managerial bonuses from the "material incentives fund" increased by 35%. (Feiwel, pp. 298, 300, 313.)

    The following figures are given by Drogichinsky for all enterprises shifted to the "new system" in 1966. The material incentive fund was split almost exactly "evenly" between workers and those classified as "engineers, technicians and other employees," with the former getting 50.7% and the latter 49.3% of this fund. The workers, however, made up at least 85% of the total personnel at

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the enterprises. An "even" split of the material incentives fund is thus already a gross inequity.

    If the scope is narrowed to the category of "current bonuses," i.e., extra payments on a weekly and monthly basis, the breakdown is this: 15.7 million rubles went to the workers and 72.7 million rubles to the engineers, technicians and "others." Of the bonuses proper, in other words, 18% went to the 85% majority of the workers, while the 15% minority of the top personnel took 82% of the money. ("Economic Reform in Action," in Soviet Economic Reform . . . , p. 194.)

    To round out the discussion of the role of bonuses, however, it must be noted that the material incentives fund at each enterprise is merely one among scores of sources of bonuses which, as a result of the 1965 "Kosygin reforms," is controlled by the directors.

    According to Manevich, who as a Shchekinoite has a special interest in the subject, the material incentives fund is not even the most important of the bonus sources. In a 1973 article, he writes:

    "At the majority of enterprises, the material incentives fund has not yet become the basic source of bonuses for personnel, since there are more than 30 bonus systems in operation simultaneously. Frequently the so-called special bonuses are considerably higher than the total bonuses that personnel receive on the overall performance of the enterprise, i.e., from the material incentive fund." (Ways of Improving . . . ," p. 13.)

    Unfortunately, after the early stages of transfer to the "new system," the legal Soviet economic literature simply clams up on the matter of more or less exact statistics of who appropriates how much of the profits left at the enterprises and combines. Even general hints, such as Manevich's, are infrequent. It is as if a lid of censorship had been clamped on the question, perhaps for reasons of state security. With the successive waves of concentration of capital and of trustification, the "bonuses" pocketed at the very top by the chiefs of the various industrial-financial empires must have risen to truly obscene dimensions, whose publication might well constitute incitement to riot.

    To round out this brief survey of the distribution of

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incomes under the "new economic system," it is necessary to look at the main trends in the sphere of social services, inasmuch as these can represent a form of income which is consumed collectively rather than individually.

    Static comparisons on this question, for example comparison of the availability of medical care in the USSR and in the U.S. today, prove nothing. The existing level and scope of public services in the USSR is very largely an inheritance taken over by the Soviet bourgeoisie from the previous, socialist era, during which the Soviet working class, led by the Bolshevik Party, built itself the finest and most comprehensive public service system in the world at that time.

    Static comparisons also have a way of backfiring on those who press them. Those who argue, for example, that the existence of a comprehensive free medical care system is proof that a country is socialist thereby shoulder the burden of proving that contemporary England for example is a socialist country. It is obviously nothing of the sort, despite the vast superiority of the British public medical care system to that of the U.S. The level and scope of public services in a capitalist country reflects chiefly the history of organized working-class struggle in that country and is a fruit of that struggle -- albeit not always the fruit that was aimed at, but more often a "bone" tossed to the movement to delay its advance toward political power.

    What has the new Soviet bourgeoisie done with the magnificent inheritance of social services which it usurped?

    Two main trends clearly stand out from the Soviet literature on the subject. They are:

    One: the "services" which make a profit are being strongly developed. Two: free services, those which do not show a profit, are being neglected and let slide.

    The Soviet revisionist writers always distinguish between the "paid" services and the "free," i.e., those for which the user does not pay directly. Among the "free" services are education and culture -- which however serves the Soviet bourgeoisie as a weapon of

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indoctrination in reactionary ideas -- as well as health, medical and physical services, and subsidies for housing construction and maintenance.

    The relative importance assigned to the "free" services by the Soviet bourgeoisie may be clearly read from the following figures on the growth of enterprise funds 1966-70, supplied by Drogichinsky:

    The enterprise funds "for the development of production" -- i.e., funds for capital investment, for increasing the intensity and expanding the scope of the exploitation of the working class -- increased sixfold. The "material incentives fund" -- i.e., the elementary fund for personal enrichment of the directors and their cohorts -- rose fourfold. The fund for free services, titled "socio-cultural measures and housing construction" (which includes factory-built hospitals, child care facilities and other such services increased only two-fold.) ("The Economic Reform in Action," in Soviet Economic Reform . . . , p. 207.)

    The distribution of enterprise revenues, in other words, shows a marked uneven development to the detriment of the free services. An ever greater proportion of enterprise profits is being diverted for padding the personal pockets of the director and top staff, and for ensuring an expanded flow of profits into their pockets in future years. An ever smaller proportion of enterprise profits serves the needs of the workers.

    The lag in the development of the free services is clearly recognized in the Soviet literature and is expected to continue. (B. Khomelianskii, "The Sphere of Social and Economic Services and the Reproduction of Aggregate Labor Power," Ekonomicheskie nauki, 1972, No. 4, Problems of Economics, June 1973, p. 55.) The 1972-75 "plan" in the euphemistic words of the economist Komarov "calls for the relatively more rapid growth rate of paid services."

    The paid services include passenger transport and communications, entertainment, organized recreation, tourism and others. The reason why their "development" is proceeding at a brisk clip may be easily deduced from Komarov's observation that "as a rule, all basic branches

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of paid services . . . are highly profitable and there is an early return on investment in their development." They are for the state, and for their directors, "an additional source of accumulations." ("The Service Sphere and Its Structure," Voprosy ekonomiki, 1973, No. 3, in Problems of Economics, July 1973, p. 9.)

    In other words: Profits in command! -- including in the sphere of "services." Such "services," however, are plainly nothing more than additional means for pressing surplus value out of the workers. They are "services" that most of all serve the bourgeoisie to get richer.

    A significant new development within the sphere of services in general is the appearance of new "paid" facilities parallel to the lagging free sector. The economist Rutgaizer, in this regard, points to the growth of "paid polyclinics operating on a cost-accounting basis," i.e., hospitals that charge fees and on this basis make a profit. Rutgaizer does not go into details; but these can only be hospitals that serve bourgeois patients. Workers could not afford them. ("A Comprehensive Plan for the Development of the Service Sector." Planovoe khoziaistvo, 1973, No. 2, in Problems of Economics, Sept. 1973, p. 49.)

    There is thus a definite emergence in the USSR of "class medicine," of one health care system for the bourgeoisie and another for the workers. Since the number of doctors and other medical personnel and equipment is limited, the establishment of a hospital to serve the bourgeoisie is tantamount to a relative reduction in medical services for the people. It is another form of robbing the working class.

    Viewing this trend, which characterizes the development of services in the USSR as a whole under the "new system," Rutgaizer is struck, however dimly, by the inequity it represents:

    "The reduction of the sphere of free services and the satisfaction of the expanding range of the needs of people in paid form are possible only up to a certain limit, beyond which the undesirable differentiation of the enjoyment of services by individual groups of the population with a different level of per capital income in the family may take place." (p. 49.)

    This pale, sickly anxiety about "the undesirable

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differentiation" which "may take place" -- when it has taken place and is increasingly glaring -- is all that remains, within the authorized thinking of the USSR, of the great principles of scientific socialism.