5  Socialist Economy

    In the early 1930s the Soviet Communist party proclaimed that the USSR had entered the period of socialist economic development.

    The country could now call itself the "Union of Soviet Socialist Republics" not in the future sense that Lenin had employed when he said, in 1921, that the name "implies the determination of Soviet power to achieve the transition to socialism, and not that the existing economic system is recognized as a socialist order." It was now socialist rather, in the actual sense.

    What were the theoretical and practical grounds for recognizing the economic order of the 1930s as socialist?

    Though Marx and Engels, as is well known, refrained from drawing up any blueprints for the new society, they drew certain basic deductions from their analysis of the old society which have served Marxists since their time as general guidelines.

    What began in the USSR in the 1930s was not full communism, classless and stateless society in which the antithesis of town and country, of mental and manual labor has been overcome. It was a long way from that. It was rather what Marx called the "lower stage of communist society," a long period of transition between the end of

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capitalism and the beginning of full communism. It contained therefore both the seeds of the distant future and the traces of the recent capitalist past. By common Marxist usage since Marx, this first stage is termed socialism and the term communism is reserved for the classless society.

    According to Marx's "Critique of the Gotha Programme," which served Lenin as text for his chapter five of "State and Revolution," -- the key writings on this question -- the working class during the period of socialism can dispense neither with the state, as an organ of repression by one class against another, nor with certain economic and legal relations taken over from the old bourgeois society.

    As far as the Soviet state was concerned, this was and remained in the period, a dictatorship of the proletariat. After the battles of 1917, of the civil war period, of NEP and collectivization of agriculture, there was no longer any doubt about that. The many hundreds of thousands, perhaps a few million, of defeated, expropriated and embittered former kulaks, NEPmen: unreconciled old-regime officials, managers and privileged intellectuals with their families, offspring and hangers-on who remained in the country might have liked nothing better than the implementation of Trotsky's demand, voiced from exile abroad, for the "freedom" to form political parties rivaling the CPSU. But the party had no intention of allowing the state to "wither away" as a repressive force in this manner.

    "Democracy for the vast majority of people, and suppression by force, i.e. exclusion from democracy, of the exploiters and oppressors of the people," this was the role Lenin, following Marx, laid out for the proletarian state in the period of socialism, and the party stood by that program, though not without making some political errors that proved in the long run very costly.

    As for economic relations, Marx and Lenin, in the abovementioned texts, had laid out plainly that the motto of socialist distribution could not yet be "from each according to his ability, to each according to his need." This was for the communist future, when the progress of

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the productive forces permits the abolition of scarcity, and when social consciousness, ingrained desire and sheer force of habit leads all workers voluntarily to participate according to their ability in everyday production, so that distribution of articles of consumption can be a matter of each one taking freely from the public stores according to need.

    The motto, rather, was ". . . to each according to the amount of labor performed." This meant not taking freely, but paying money in exchange for commodities; and being paid at work not according to need but according to productivity. It was straightforward commodity-money exchange, such as existed not only under capitalism but even earlier. It necessarily resulted in inequality of wages between workers in different kinds and grades of jobs, and between slow and fast workers on the same job. The gap between the lowest and the highest wages even increased during the 1930s, as an enormous influx of new recruits from the countryside more than tripled the ranks of the industrial proletariat between 1929 and 1940. Yet, while a growing inequality of wages was incompatible with the advance toward communism, wage inequality -- and the commodity-exchange relations in distribution of consumer goods on which it rested -- were not in themselves in violation of the theory of socialism. Marx and Lenin were amply clear on this point. Socialism, as Lenin pointed out, does away with the injustice that consists in the means of production having been seized by private owners, but it "is not capable of destroying at once the further injustice consisting in the distribution of the articles of consumption 'according to work performed' (and not according to need)." The socialist order of society, as distinct from the higher, communist order, "does not remove the defects of distribution and the inequality of 'bourgeois right' which continue to rule as long as the products are divided 'according to work performed.'" (State and Revolution, Ch. 5, Sec. 3.)

    As regards the distribution of consumer goods, the advance made by socialism over capitalism therefore does not lie in the abolition of wage inequalities. What it abolishes is rather the class of consumers standing far

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above even the highest-paid workers, who draw stratospheric incomes not deriving from wages but from profits, i.e. not from their own labor but from the labor of others. Such a social layer did not exist under Soviet socialism; it has reappeared today, however, as will be shown.

    There was thus a wide sphere of commodity-exchange relations in the USSR, embracing not only the output of the state consumer-goods factories but also much of the food produced by the collective farms. All this was an objective breeding ground for what Marx and Lenin called "bourgeois right [narrow self-interest] which compels one to calculate with the coldheartedness of a Shylock whether one has not worked half an hour more than somebody else, whether one is not getting less pay than somebody else. . . ." to quote State and Revolution. These were among the traces left over from the past, obstacles in the path toward communism, potential nuclei, among others, of a restoration of capitalism. But, for all that, Soviet economy during this period was not capitalist, it was socialist.

    Marx, in analyzing and comparing different historic forms of production so as to identify the specific characteristics that defined capitalism, noted that money and commodities existed in many other forms of society, to varying degrees, without capitalism arising. "The historic conditions of its existence are by no means given with the mere circulation of money and commodities. It [capitalism] can spring into life only when the owner of the means of production and subsistence meets in the market with the free laborer selling his labor power." (Capital, Vol. I, International ed., p. 170.)

    Or, as Marx writes later in the same work, "In themselves money and commodities are no more capital than are the means of production and of subsistence. They want transforming into capital. But this transformation can only take place under certain circumstances that center in this, viz., that two very different kinds of commodity-possessors must come face to face and into contact; on the one hand, the owners of money, means of production, means of subsistence, who are eager to

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increase the sums of values they possess, by buying other people's labor power; on the other hand, free laborers, the sellers of their own labor power and therefore the sellers of labor. . . . With this polarization of the market for commodities, the fundamental conditions of capitalist production are given. The capitalist system presupposes the complete separation of the laborers from all property in the means by which they can realize their labor. As soon as capitalist production is once on its own legs, it not only maintains this separation, but reproduces it on a continually extending scale." (Capital, p. 714.)

    Lenin likewise, in his study of the "Development of Capitalism in Russia," showed that only "the separation of the direct producer from the means of production, i.e., his expropriation, [signified] the transition from simple commodity production to capitalist production (and [constituted] the necessary condition for this transition). . . . The home market . . . spreads with the extension of commodity production from products to labor power, and only in proportion as the latter is transformed into a commodity does capitalism embrace the entire production of the country, developing mainly on account of means of production. . . ." (Collected Works, Vol. 3, pp. 68-69.)

    Thus in order to demonstrate that a given society was capitalist, in the scientific sense of the term, it would be necessary to show not merely that articles of consumption were commodities (which was true but proves little), but also and principally that commodity exchange, based on expropriation of the direct producers, embraced and governed the means of production and labor power. If the direct producers, the workers, are not divorced from the means of production, and if consequently neither these means nor labor power function as commodities, then no survivals of "bourgeois right," nor any amount of other inequities and injustices, can allow of such a society being properly termed capitalist.

    Inversely, if the direct producers have been separated from the means of production, and consequently both labor power and means of production are exchanged as commodities, then no amount of social welfare benefits, no nationalizations, no statutory curbs on excess profiteering,

no ameliorative measures whatever can conceal or modify the capitalist character of such a society. It is important to keep these elementary, but necessary and sufficient characteristics of capitalism firmly in mind in order to grasp the left and right, the forward and backward of Soviet development. There exists an enormous abundance of superficial definitions, half-truths and irrelevant notions in the literature about what is capitalism and what is socialism, all of which either innocently or with forethought serve to mystify or to distort the historical process and the present situation.