I I'1. THE SOVIET ECONOMY UNDER BREZHNEV AND KOSYGIN: THE FULL ESTABLISHMENT OF CAPITALIST RELATIONS OF PRODUCTION

1) Khrushchev The Fall of plagued with inconsistency. As we have seen, he made a brillidnt start towards restoring capitalism While Khrushchev was very effective at wreck- in agriculture during the years 1953-1959. But ing' socialism, his free-wheeling, shoe-banging after the first year or so of the Seven year plan , quite style was actually ineffective at establishing (which began in 1959 only to be interrupted by a functioning capitalist economy. the Brezhnev-Kosygin palace coup), Khr:ushchev -grain Take hip reform of planning, which ptaced ef- reversed himself. Faced with a severe fective direction of the economy in the hands of shortage, he cut back on the amount of land 'regional put Economic Councils. These Councils which could be alloted to private production, and the interests of "their own region" On: 'terprises and its iput pressure on the farmers to sell their livestock above the needs of the national to the collective farms. lnvestment in the economy as a whole. They" hoarded raw materials agricultural secior by the state was slashed, , and industrialgoods produced in their regions. while quotas for deliveries to the state jumped. . Two striking examples of this are found in the Since Khrushchev's earlier agricultural _policies 1963 Pravda. June 6, The article reports tha( the had abandoned socialrst principles and dealt a Uzbekistan Chemical Machinery Plant had failed body blow.to the worker-peasant alliance, it to supply 162 units ordered by what then passed should come as no surprise that his new attempt plan. for the national What was the problem? The to "tighten' up" was met by passive resistahce on pl'ant was6too busy producing for unplanned or- the part of the collective farms. Production- ders placed by its Economic Council. Similarly, 'Combine particularly of meat and dairy products-dropped the Nizhny Tagil Metallurgical shipped severely. ,A series of "get-rich-quick" schemes 33,000 tons of the above-plan metals to its re- , '1962, designed to ease the agricultural crisis-the public chief supply administration in totally Virgin Lands developm"ent in Central Asia (about ignoring the plan for other deliveries. is easy to lt _ which more later) and the s.ubstitution of U.S.- s9e how this sort of thing resulted in chaos hnd style maize for traditional grain cropd-only ag- production a near breakdown of in some areas gravated- the situation. and industries. By 1963, the agricultural crisis had become so Now, while this was a clear triumph of the grave that Khruschev was forced to make bourgeois principle of llMe First", and was a massive grain purchases from .the U.S. land reflection of the fact that capitalist forces had Canada. When Brezhnev, "let who had been been loose", Khruschev's "reform" had not 'Khruschev's right-hand man in the first years of gone proletarian far enough! While ideology and the Virgin Lands scheme, ousted hi's.boss a y-ear centralized plannin.g had been thrown out the later, he condemned Khrushchev's agricultural - window, the capitalist principle of productio'n for. policies as "harebrained." The recourse to the exchang'l at a profit had not beerr f irmly capitalist world market to obtain food figured established in the revamped Soviet economy. prominently in Brezhnev's catalogue of With the further development of capitalist rela- Khrush-chev's incompetence and mismanigement tions, the Economic Councils would have made of the Soviet economy. aggressive attempts not only to assure their own Of course, Brezhnev found hirnself in almost penetrate .supplies, but to and corner the rnarkets -_ exactly the,same position a litile under ten years of other regions as well. Under those conditions, [ater, when the Soviet Union had to Uuy i tutt an economio crisis would have resulted from a quarter of the U.S. grain crop for 1g72. But un- goods glut of oh the market-goods which could like Khrushch'ev, he was able to turn his coun- not be sold profitably, not from the hoarding of try's agricultural failure into a neat commerciai what had been produced. But the bu'reaucrats profit through sharp dealing. "The judged Great Grain and managers continued to be and re- Robbery of 1972" sent the price of wheat warded on the basis of the gross output of their skyrocketing around ihe world-something the region oi plant, regardless of whether it was pro- .:largeSoviets immediately took advantage of by selling fitable and whether it was even sold! quantities at the new; inflated prlce aftei Khrushchev's agricultural policies were also the good harvest the following yeai. And it ,t f;age?f, opened the eyes of a number of people to just Because of the diversion of investment, the ac- what kind of men they were dealing with. As the tual output of consumer goods fell short of the U.S. Department Agriculture's 'port of com'modity ex- low planned targbts. Shortages and inf lation specialist, George E. Shanklin, told Ihe New were the order of the day. Where low planned York Times, "l give them credit for being very prices were maintained, long lines Sprang up and good capitalists." a criminal "black market" flourished. It was not only in questions of the domestic This was certainly not the first time in Sovret economy that Khrushchev failed to adopt a con- history that 'the preduction of producer goods sistent capitalist approach. Although he initiated had outstripped the production of consumer ' the export of capital from the Soviet Union to the goods-this situation was typical of the economy Third World, the degree of economic and during the Stalin era. But at that time this pattern political control (not to speak of the profitability) of investment was decided upon according to .afforded by early deals with lndia and others was central planning. The production of producer not satisfactory to the emergihg Soviet social- goods was emphasized so that the long-term imperialist class. And Khrushchev's tendency to overall productive capacity of the economy could provoke and then back down from confrontation be increased for the benefit of the masses. lnfla- with U.S. imperialism, which was most tionary-pressures generated by the rapid develop- dramatically displayed during the Cuban missile ment of heavy Industry.could be foreseen, as this crisis, alarmed not only other Party leaders, but was planned politically from the center and not the Soviet military brass as well. by rival gangs of regional bureaucrats "doing To sum up, as far as the bourgeois forces in their own thing." Soviet socidty were concerhed, Khruschev had Such pressures could then be held in check by_ not gone far enough in restoring capitalism. But Stalin's proletarian policy of setting and strictly as far'as the Soviet working class was con- maintaining, if need be through rationing, low . cerned, he had gone too far! and stable prices for basic consumer goods. Khruschev had constantly promised to increase Like so much else; Khruschev threw this policy production of consumer goods and help raise out the window. Soviet statistics show that the the living standard of the people. But despite all .retai! prices of flour, cotton textiles, shoes and his talk of "goulash communism", living stan- twelve other major consumer items rose 42b, dards actually declined. For all of. Khrushchev's while the wages of office and factory workers attempts to revise Marxism-Leninism, most Soviet went up by only 18.9% from 1959 t9 1964.2 The workers still remembered what communism is new Soviet bourgeoisie tried to make the supposed to mean: not simply an abundance of workers pay for the results of the wrecking of the good things of life,'but the breakdown of dis- socialism, using every trick in the book short of tinctions between mental and.manual labor and actual layoffs and plant shutdowns. between worker and peasant and town and coun- Things got so bad that riots _broke out in the try; not a "state of the whole peopler', but the industrial cities. The best documented of these withering away of the state. The workers still re- happened in June 1962 in Novocherkassk, an im- membered what goulash tasted like, too-and portant center of machine tool, locomotive; and they knew they weren't getting much of that, mining equipment production. A few days after either. speed-up and a 107o cut in piece rates had been Of course, it was never intended that they instityted ir: the factories, price increases for should. Khrushchev's Seven Year Pl,an actually meat and ciairy products were announced. This called for a lower rate of growth in the consumer sparked a general strike: goods industries than prevailed during the pre- As with similar workers' protests in Poland in ceding seven year period (1952-1958). But with 1971, thousands of workers, housewives and stu- the dismantling of the centralized planning ap- .dents gathergd before the local Party head- paratus, what was bad news on paper turned out quarters, demanding an explanation. They were - to be disaster in practice. met with bullets.- Several children were hit and The frenzied pursuit of self-interest by the killed, and the righteously enraged crowd tore Economic Councils led not only to hoarding, but the headquarters and several other public build- to heavy new investment in the producer goods ings apart. The rioting continued.for several days industries as well, to assure local self-sufficiency. and it was necessary to call in outside troops to Thus, instead of exceeding the rate of growth of restore order. Similar instances are known to consumer production by 14"/o provided in the have occurred the same year in Temir-Tau in Seven Year Plan, the growth rate of the producer Kazakhstan and in Kemerovo in the Siberian goods industries shot ahead by 22/".1 industrialbasin. ; This resulted in a rapid and unplanned ex- Beset by internal contradictions and meeting pansion of the sizp of the national wage fund- with growing resistance from the Soviet pro- not only because new jobs had.been created, but letariat, Khrushchev's attempt to restore capitalism because wage rates in the producer goods sector was also being exposed and attacked within the are much higher than in the consumer goods in- international commuqist movement by the dustries. New purchasing power had been creat- Chinese Communist Party and the Albanian Party ed, but.there was almost nothing to purchase. of Labor. Clearly, things could not be allowed to P-aQe_30 cditinue in this manner for very much longel. nno allowing foreign capital to invest in Soviet re- they were qot. ln October of 1964, Leonid Blezhnev sources. The state must run nation alized in- and Alexei Kosygin, two chairman of the board dustrial enterprises as autonomous "profit ex- types, axed Khrushchev. tracting" units, he said. (The term "profit extragt- ing" izvtechenie pribytlcomes from the Decree bn 2) The "Return to Leninism" Trusts of April 10, 1923.) As we shall see, all of these features of the NEP are key aspects of the This changing ot in" guhrd was hailed as a Brezhnev-Kosygi n "econom ic reforms. " great reti.rrn to Leninist principles by the same By carefully selecting and pruning their quota- hacks who had been praising Khrushchev's tions, the revisionists try to pass off the policies "crehtive development of Marxism-Leninism" on. Lenin pursued during the NEP as his final word ly a few months before. The days of subjectivism, on how a socialist economy should be organized. voluntarism and adventurism were officially an- For example, a whole page of the 1967 Theses of t nounced to be over, and proletarian rule was the Central Committee of the C.P.S.U. gn the'10th ,supposedly back in the saddle again. Centralized Anniversary of the Great October Socialist Revolu- state economic planning and management were fion is devoted to the NEP, stating among other re-established with 'the eliminatidn of the things that "the basic principles underlying the Economic Councils in the fall of i1965, and New Economic Policy are of jnternational value Khrushchev's artificial and extremely unpopular and are being utilized in the process of building division gf the Party into industrial and socialism in other countries." l agricultural sections was abolished almost im- Lenin made no such claims for the NEP. He mediately. saw it as a temporary retreat forced on the dic- Of course, what actyally prompted this reversal tatorship of the proletariat by the urlprecedented of policy was not any' regard for Marxist-Leninist difficult conditions created in Russia by centuries 'r principle and the building of socialism. Cen- of backwardness and the havo.c of civil war. ln all tralized control of the'econcimy was necessary to his writings of the period, Lenin stated with ruth- avoid total ehaos,'and it is not strictly incompati- less honesty that the NEP was "our retreat to the ble with either capitalist relations of production ways, means and methods of sfate capitalism." s or bourgeois dictatorship as both the Nazi (emphasis added) 1 economy and the post-war experlence of West Paradoxically, it was only by a retreat to European countries have demonstrated.. capitalist relations of production-under the Similarly, piecing together the Party was not in- watchful pontrol of. the workers' state; which tended to put proletarian politics in command. continued to control credit and trad.e as well as Calling upon Party members to 'be "political embodying the political' power of the working leaders" rather than, narrow administrative ex- class-that the" dictatorship of the proletariat perts was s0pposed ,to actually expand the could he 'preserved and consolidated. ln cities authority of Party functionaries in practice. ln the breakdown of large-scale industrial produc- restoring the Leninist model of "the party of a tion was forcing the proletariat to turn to petty new type", Kosygin and Brezhnev were trying to ' bourgeois profiteering to 'survive. , ln l-enin's use it as a fig leaf, the politidal representative and words, it was becoming "declassed" and was in organizer for a monopoly capitalist class of a new danger of losing its qbility to wield political type! power. ln the same breath as they heralded their "re- The material basis of proletarian class bon- turn to Leninism" to fool the masses of the Sov- sciousness, industrial production, had to be iet working people, Brezhnev and Kosygin as- regtored, even if it meant putting bourgeois"ele- sured their real social base-the collective farm ments' in charge of the factories. ln the coun- managers, lactory directors; technicians, etC. and tryside, the worker-peasant alliance was being corrupt Party officials-t[at capitalist restoration strained to the breaking polnt by arbitrary state woLild be continuing, but on a "professional" and requisitioning of grain. Lenin saw clearly that , systematic basis this time. - Here, too, "Leninism" was to serve as a "/t is impos,sifile to esfab/rsh a correct relationship smokescreen. Since 1956 revisionist economists, betvveen the proletariat and the peasantry, or an had scrounged around for, quotations from the ' altogether stable form of economic alliance between Marxist-Leninist,classics which, taken out of con- . these ttazo c/asses in ,the period of transition fram text, might seem to justify their attpmpts to rein- capitalism to. socialism, without regular commodity t(oduce capitalist economic methods and rela- exchange or the exchange of products between,in- tibns in the Soviet economy. They hit pay dirt in ' dustry and agriculture." 6 Lenin's writings dating from the introduction of the New Economic Polic! (NEP) in 1921. At the same time, he pointed out with equal ln these texts, Lenin iatfs about the necessity clarity that "cornmodity exchange and freedom of freeing trade and commodity felations, of' trade inevitably imply the appearance 'of strengthening the authority of managers and ex- . capltalists and capitalist relationships." z perts in the factoiies, using material incentive to It'should be quite clear that it is an obscene stimulate production, and last but not least, even . distortion of the theory and practice of Lenin's jrls';i .\

I I,

. Page 31 leadership to claim, as does ,the Soviet January, 1965 to January, 1967, the number of economist, V. MoroTov, in his article 'iThe privatdty owned pigs increased by 13.7"/o, cows by Development of Commodity-Money Relations in 5.6%and sheep and goats by 4.2"/". to the Countryside": ln line with this encouragement of private pro- duction and trade is the break-up of socia{ized "From Lenin's works that are devoted to the production by the system of beznarzhadriie economic problems of building a communiBt socle- zven'ya (unregulated teams), an experimental system production is gaining ty, it follows that the decisive factor in the devetop- of which increasing favor-on The ment of socra/ist Soviet state and collective farms. socra/ relations is lhe use of trade, present day zveno is a refinement on the mini- money, and other instruments of a commodity teams that Khrushchev had pushed as the basic economy. Lenin's theoietical elaborations found unit of collective farm labor back in the late 40s. their practical embodiment in the N.E.P."8 Under this system, collective or state farm land ,J is parceled out to a group of five or six peasants The NEP had very little to do with questions of (generally relatives or neighbors) for an indefinite economic efficiency under socialism. But it had period of tenure. The gioup is provided with everything to do with socialism's fundamental seed, equipment and instructions on what to precondition: the political hegemony of the work- grow, and they continue to receive a monthly ing class. lf the NEP has an "international value", salary., The group is f ree to work when it pleases it is as a brilliant example of putting politics in and how it pleases. The zveno then sells its out- command of economics under the dictatorshlp of put to the collective or state farm for cash. lt is the proletariat. estimated that participants in this scheme get double the income of regular workers in agriculture, zveno members are 3) Restoration ol Capitalism in Agriculture: The and since lhe supposed decide how the revenue from Creation of a New Kulak Class to on their crop is shared out, inequality can emerge -Co. within the bosom of these cozy groups as well. Brezhnev, Kosygin and "returned to The development of the zveno, while not as yet Leninism" to tear out its proletarian and revolu- generalized throughout the state and collective tionary heart. But they. cannot be faulted for not farm system, deali a series of powerf ul blows to learning from Lenin, who had seized oh the coun- the painfully won and relatively fragile socialist tryside as the decisive link in the transition between relations in the Soviet countryside. On the most capitalism and socialism in Russia. And so, iixe tne obvious level, it creates inequality and disunity capitalist roaders within the CPSU before them among the unskilled and semi-skilled workers (Trotsky, Bukharin, and latter-day revisionists like wh.o make up the majority of the members of col- Voznesensky and Khrushchev), they turned their at- leclive and state farrls. This can only serve to tention to the problems of the rural economy. strengthen the rule of the real.capitalisi elements lmmediately upon taking power, Brezhnev rn agriculture-the farm manaEers. moved back in the direction of encouraging the It also represents a penetration oJ full.fledged growth of the private sector commodity relations into the very heart of sup- in agriculture. All of posedly Khrushchev's belated restrictions on private plots socialized or collectivized agricultural production. Here recall saw and livestock ownership were once again removed. we should that Stalin the persistence of the law of value in the Soviet ln line with this, prevent profiteering attem.pts tp in Union stemming from commodity exchange the free markets where the peasants sell their between the collectivized agricultural' sector and privately produced goods by means of publicly the state sector. What is going on with lheizveno posted ceiling prices were abandoned in 1965, is qualitatively different and more serious. This is rnuch to the dismay of the urban consumers who the spread of commodity exchange within collec- 3re forced to rely on sdch markets for virtually all tivized agriculture! fresh produce and dairy products. The indefinite tenure of the zven'ya on na- Not only have the prices on these markets tionalized land can be seen as a step towards the jumped, but so have their volume bf sales and the restoration of private property in land, though, as number of commodities offered as well. Collective Lenin pointed out, private property in land is not and state farms have now been authorized to dis- a necessity for capitalism, and capitalist pose of an increasing percentage of their socially agriculture can exist on the basis of nationalized produqed output on the free market, and are even land. Nevertheless, some Soviet commentators allowed to sell "surplus" seed: fodder and eQuip- have actually come out front and suggested that ment. \ the teams be granted permanent and recognized Today a tremendous private sector continues rights over the land they farm. One enthusiast, to Literaturnaya Gazeta, claimed that loss exist and plays a major role in writing in Sovret agriculture. of personal ownership of the land had caused According to official Soviet figures, 620/o of all the peasant to lose his love for the land, and that potatoesr a staple crop, are grown on private plots this was the root cause of the problems of Soviet and marketed privately. Neqrly half of all egg pro- agriculture! t' duction is private, and the Soviets are proud that The theme of "personal responsibility"-and , per capita egg consumption in the USSR is higher productivity-is developed further in an irnportant than in the U.S. Over a third of all meat and 44o/o ot article by P. Rebrin and Ar Strelianov, which ap- all milk were privately produced in 1972.eFrom peared in the bourgeois liberal magazine Novy Page 32 Mir.Pfhe authors complain that on farms com- practice of farms paying zven'ya for their crops prising thousands of acres and hundreds of fits in nicely with this sort of "control by the ru- workers, the warm personal tie between man and ble", and can be compared with the idcalled his labor has been replaced by plans and state transfer prices that different shops in a giant en- norms, and this teaOd to indiiference and low terprise or different divisions of the same firm productivity. Of course, the warm, personal tie sometimes charge each other in monopolized in- these authors are actually talking about is what dustries in the West. Marx called the cash nexud. For all its Under. Stalin, agricultural were metaphysical experts language, this article actually gets employed by the state and stationed in the MTS. to the heart of lhe zveno scheme as a tboLof Though this arrangement did create some ineffi- capitalist restoration in the countryside - ciency With respect to the deployment of experts The- collectivization of agriculture was an in on-the-spot situations,\one bf its main goals urgent task for the Soviets, not because it was a was to keep such bourgeois pro- way of squeezing peasants elements under more out of the to letarian control, isolated in the MTS and thus in- finqnce industrialization' (the Trotskyite theory of "primitive socialist accumulation" capable of forging a bourgeois political base echoed by so among the more affluent' peasants. When many bourgeois scholars). Nor was its greatest importance Khrushchev abolished the MTS, however, these that it. wab a more eff icient system of bourgeois production than small-scale cultivation (although experts entered directly into the ad- ministrative structures of the collective and state it was certainly was that); nor even that it was a way of rescuing the poor peasants farms. Moreover, in many cases they took on from ruin at positions of Party responsibility the hands of the kulaks. Above all, collectiviza- as well. ln his report to the plenary meeting of the Cen- tion was the first step towards the communist "Urgent goal of eliminating the contradiction tral Committee on March 24, 1965, on between Measures for the Further Development town. and country and the abolition of classes. of Sdviet participating Agriculture", Brezhnev made it. quite clear on By in scientif ically organized, whom planned mechanized agricultural labor in large brigades, the Party to base itself in the peasants on the state and collective farms got countryside, and for whose benefit the urgent their first tastp of, socialized labor. Collectiviza- measures were to be taken: tion involved the labor process as weil as land "The ownership, and paved. Party regards fhese speciallsts as its retiabte thus the way fbr the qualified gradual "collectivization" of, the peasants' con- and supporl in the fight to advance sciousness-the replacement of the individualism agriculture.'We trust our specialists t1lho have been and selfishness of the small producer with pro- reared by the Communist Party. With the active sup- port heads letarian qualities of cooporation and solidarity. of the of enterprises, Party and soviet By attacking socialized labor in the countrySide, organizations, agricultural specra/r'sts will develop lhe- zveno system marked a great step backward. their creative potentialities and ensure the constant But if it hurt the ideological proletarianization grovvth of crop yields and of prodlctivity in animat husbandry. " tt of the peasants, it f urthered their economic ' transformation into a class of rural wage labofers, exploited by a new kulak class. For if of ' cost-accounting under socialisirl ref lects the f act that the lhe zveno represents an individualized basic pro- laws of commodity production. though restricted, still con- duction unit, it is still not a unit of political and tinued to operate. The strengthening ol cost-accounting un- economic control, which rests in the hands of der revisionist rule does not just mean more emphasis on effi- the managers. cient use of funds. but reveals the restoration oi the law of farm value to a regulating posrtion (more on this later). fhe zveno system has to be examined in light of the fact that the mhin thrust of rBrezhnev's Another. more telling comparison can b9 made. one whrch economic policy was not to encourage small-time equates the zveno to receni.experiments by the Swedish auto private producers-though small-scale produc- firm. Volvo. which replaced some assembly tine production with small groups of workers . personally responsible" for tion did expand rapidly as the forces of putting together entire cars. The real pur.y'ose rs not to make capitalism were unleashed-but to transform the the workers feel better. or get a real grasp of auto produc- collective farms and state farms into self- iion. but to make them wor,k harder for the capitalist. So- called enrichment is merely another means of capital prof it-oriented f irms, 1ob supporting, agricultural enflchment. 'linked to the state not so much .by planning or Similarly. the zveno. for all its elements of pnvate obligatory deliveries and sales as by relations of ownershrp and petty productron. is prrmarily an extremely eff i- bank credit (which in the case of the state farms cient way to speedup agricultural laborers. Members of the was to replace grants from the budget). Both in- teams are responsible for the cultivation of almost three time6 the area that members of normal collective brigades are as- stitutions were supposed to operate on the basis signed to work. Sihce the drift of young people oif the collec- of internal cost-accounting (khozrascttot).* The iive farms was coming to resemble a stampede duilng the Khrushchev years, this aspect of ..lhe zveno system has made it doubly usef ui to the rural capitalists. .Under socialism. the term cost-accounting" was used-to But just who are thebe rural capitalists? They are not describe the process whereby enterprises attempted to cover primarily the people with the largest pnvate plots or the most expenditures with income in the most efficient manner possi- cows. nor are they by any means the partrcipants in the zyeno ble according to plan- Today, however, thiF term, along wiih scheme. They are the managers and technical specialists of the synonymous expression, economic Eiccounting", refers the iollective and state farming establishments. Many of them to the process whereby an enterprise atternpts to cut costs are not even of peasant origin. The Sovret revisionist$ have and maximize profit. When Soviet economists refer to efforts removed. many veteran peasani cadre from posilionS o{ made to strengthen cost-accounting". they refer to the leadership in agriculture. replacing them. with a horde of further maximization of profit. The existence of the praitice capitalrst-mrnded experts.' r.:r(:::: i:,.tj

page 33 Under Khrushchev, the coll6ctive and state sociologist K. A. Shaibekov reported in his book, farms' had in most instances been granted a Lav,rful Remuneratiorl on the Collective Farms (note tremendous degree of independence, but at the the "lawful" in the titte;, tnat on 11 out ol 27 col- same time this was consistently infringed upon lective farms investigated in .Kazakhstan,. by arbitrary increases in' state procurement chairmen drew wages 15 and evqn 19 times that quotas. Now Brezhnev promised that there would of ordinary farmers. ln 1965, the chairman of the be no more big state campaigns in agri,culture, Baku Worker Gollective Farm in Azer.baijan re- do more l'preemptory orders and bureaucratic in- ceived an average monthly salary of '1,076 rubles; structions, petty tutelage and usurping of the the chief accountarut was paid 756 r.ubles. On thq functions of the leaders and experts of collective same farm the average member received less and state farms" by the Party. rl than 38 rubles a month,for'arduous labor in the f ields. ,, ln return a decree was issued "on the rncreased , role of the Ministry of Agriculture'of the U.S.S.R. in Some,of this income comes from what is kdown cohtrof ling kolkhoz and sovkev production. ti This as "subsidiary agriculture"-private agriqulturer decree foimalized the relationship between the engaged in "on the side" by many of the nbw state and the collective and state farms. lt was now kufakl. Whilg this is not lhe main form which that the farm managers would as capitalism takes in Soviet agriculture, it does pro- decided serve (ride agents of the stSte bourgeoisie by running the one important base of kulak power and farms according to the demands of the profit reflects the extent to which'the abandonment of , motive. Alohg these ,lines specialization of farms proletarian dictatorship has unleashed all the was stepped up.'Production delivery targets were spontaneous forces of, capitalist ploduction. For now to be planned well ahead of time and could no example, most bf the new kulaks are , into longer be altered arbitrarily by the state. Relations livestock production in a big way, often hiring between the farms hnd central state purchasing members of the collective to tend their private herds or.cultivate their privatg plots; ageng[es werb' also placpd on a commodity ex-- change basis (all allocations and requisitions by the ln 1967, Brezhnev introduced a Decree on the state were now to be determined by contract). Further Developm6nt of Slubsidiary Enterprises in To encourage farm 6hairmen in devdloping Agriculture, which opened up vast new agriculture on a profit-oriented basis, remunera- possibilities for f urther exploitation of the peasantry wage fdr pro- tion of farm off icials was put on a capitalistic basis on a labor basis. and lhe fitable transformation of high manage-rial income in 1966, cutting these officials in on the take in a into private Farms were allowed to''set up manner similar in many respects industrial' capital. to how manufacturing par:ticularly pro- enterprises, , managers were treatdd under the 1965 economic in "reforfn" cessing of agricultural produce (1or example, (see section 7). canneries), building, materials and consumer ln the past, the salaries of collective farm officials goods, provided thls did not come at' the exl had been pased on the socialist principle of "to pense of agricultural. production. each to his,work" first according and determined profits'of on the basis of the size of the sown areas and herds Financing was to Come from retained the farms and from credits from the state bank. , on a farm, later on the basis of the value of gross pro'' output. their salaries are based on the.level of These enterprises can establish their own Now duction plans, which are not subject to higher gross monetary incorne .as {ptermined by the apprgval, and can negoti'ate . prices with eon- farm's production-finance plan. To the basic salary trade (which sumer cooperative and state' retail itself depends on whether'the collective is to industrtal en- poor), networks,'as well as sell directly rich or the managers are entitled to add terprises and on the peasant free markets. They bonuses of up to 50o/o of their annual earnings: 57o are the forerunners of Soviet agribusiness- of the monthly salary for avery percent of prof it'at- merging the new kulaks (as growers and pro- tainbd, 2% of the annual salary for every percent by cessors) with the state finance capitalists (in their which the plan is overfulf illed; bonuses set for the role as bankers). state for putting certain highly profitable ihdustrial Another crops like f lax into cultivation (this one is very big in important step towards the establish- ment was practice!), and bonuses which management can f ix of the new kulaks as a definite class itself for "economizing on outlays of rnaterials and taken in 1969, when. the Council of Kolkhozes labor." was created, grouping tog.ether the ch,airmen of the collective farms and state agricultural func- For many managers, those on the real- especially tionaries. The Council serves as the lobbying or- ly large and rich collective and state farms, even gan of the rural bou:'geoisie this system of payment doesn't go far enough. lnan article which appeared in the scholarly and in- It is clear that the Eeneral trend in Soviet fluential Voprosy Ekonomiki in 1969, the chairrnen agriculture is towards greater autonomy. of the of the Kirov Collective Farm in the Smolensk re- productive units with r,egard to the state. gion called for basing managerial salaries not on However, before we accuse Mr. Brezhnev of local gross revenues, but on the rate of return ,on the completely abandoning the countryside lo ,capital invested in, agricqltural production. rn . bourgeois elements, we should mention the Whatever the basis of distrrbution, the new numerous proposals that the Soviet state, as kulaks are skimming cream off 'the top. The legal owner: of the land, assume its agricultulal I responsibilitiqs once again-by charging the col- economy. lectivdand state farms rent in cash for its use. This economy, now fairly well established, And according to the Western expert, Alec Nove, although still in the process of evolution, is not the establishment of a cadastre-an official re- based on serving the needs of the broad masses of gistration of the quantity, quality and ownership the Soviet working'people. lt is in no respect con- of lahcF-is being contemplated. r8, This would trolled by them. lt is an economy based on the prin: serve as the basis for the state exacting differen- ciple.of the exploitation of man by man; on the ex- tial rent from the farms. This is the- form of traction of surplus value from the workers by a new ground rent specific to the. capitalist mode of ruling class of state monopoly capitalists. / production. lt takes account of the fact that some The main outlines land is more productive than other land, and re- of these reforms were suggest- gulates the apportionment of surplus value to the ed during the famous Liberman OeOate carried out landlord*in th is case the Soviet state- qmong Soviet economists in the early 1960s under accordingly. the auspices of no less a figure than Khrushchev. To sum-up: with respect to the restoration of This high patronage should alert r-rs to the fact,that capitalism in agriculture, Brezhnev and Kosygin the debate was designed to serve as a forum for picked up where Khrushchev lef.t off. bourgeois ideas about economics. lts slogan, in Khiushchev's policy had been ,a contradictory faet, might have been a perversion of Mao one of, on the one hand, encouraging an or:gy of Tsetung's famous call to "let a hundred flowers small-scale private enterprise farming and, o,n the other hand, oJ arbitrary interference by the state bloom, let a hundred schools of thought contend." through increased requisitions. This All one had to do was replace the word "flowers" was aban- "weeds." doned by Brezhnev and Kosygin, who chbse to with solidify the collective and state farm managers But there were other aspects to the debate as and technicians as a new rural bourgeoisie. well. The failures of Khrushbhev's economic Labor intensification and the finat destructlon or policies made the questions debaied of more socialiied production relations was systematically than academic interest-something had to be . cariied out by the introduction of the zveno done wifh the Soviet economy but quick. The system. old'system of planning and management was in Mear(while, the collective and state farmsiwere seriouS need of reform. Managers oI factories set up, as virtually independent firms tied to the persistently resisted innovation and technicat , state bourgeoisie' through the latter's role as change that might result in higher planning in- financd capitalist. (Here it might be instructive, by dexes fOr their enterprise. The quality of goods way of comparison, to recall the example the '. of produced left much to be desired. The system of Bank of America's role in Catifornia agribusiness centralized supply was bogged down in red tape noted in Chapter l.) Finally, the Council of and inefficiency. The most extreme anecdote Kolkhozes was established to provide the ruril about this problem concerns an auto tactory bourgeoisie w-ith its own lobbying agent in the whose'"requisition government. for ball bearings had to be central ln addition, the Communist processed by fourteen different agencies and Party, now based in the countryside mainly on 'the generated some 430 pounds of documents! le new kulaks and their lackeys,,provided the As a result, managers would hoard raw materials, key political link tying the rural,capitalists to the and machinery, put in inflated orders and employ. - predorninant power of .the central state monopoly "blat" (a term wh'ich can , cover anything from capitalists. coat-tail pulling to outright bribery) to make sure their enterprise would suffer no interruption of production due to problems of supply. All of these practices, of course,-were strictly illegal, 4) The Liberman Debate: Enter the profit Motive and subject to the most severe penalties if .dis- covered. The use of the index of gross output as the While all this rurai capitalism is fairly impressive chief gauge of an enterprise's success in fulfilling as an indication of which way the wind was blowing its plan tended to produce some fairly grotesque in the USSR, we should remember that after de- side effects. An article'written by the head of the cades of proletarian rule and socialized produc- Tatar Economic Council, F. Ta6eyev, which ap- tion, the Soviet Union was predominantly an in- peared in lzvestia gives a classic ao€ount of what dustrial'cauntry. For this reason the reorganization tended to go on: 20 and consolidaiion of industrial productlon along At a faCtory producing children's clothes, the fully capitalist lines was even more crucial to the principal plan target was value of gross output. ln completion of capitalist restoration. order to meet and overfulfill the plan,'manage- This occurred in 1965 when Premier Kosygin an- ment had'fancy silk-embroidered and lur collars nounce8 a sweeping "economic reform'-', pat- sewn Onto kid's w:inter coats, thus jacking up'the terned on the NEP and the recomrhendations of his value of each unit produced. first mentor, Voznesensky. This reform made the Measuring gross output in physlcal terms didn't profit motive the major guiding force in the Soviet help much either. Soviet humor magazines economy, and opened a new period, the stage of abound in cartoons showing nail factories whose the conscious construction of a state capitalist entire year's output is one gigantic nail weighing ftrf , j. - hundreds of tons. calculation. Tabeyev reported that after its Now while certain of the problems involved introduction, "clothiers ceased sewing expensive with the old system were indeed technical collars on children's overcoats." However, the (particularly certain problems of suppty). the ma; NVP was such a comptrex index that there was jority of them were basicatly pdlitical questions. virtually no way the workers could \ grasp the For example, in the case of the childr6n's coat principles on which it was basbd, or monitor its factory, the problem could have been resolved by i application. More than ever, it made control over an all-out political struggld by "the workers production a bureaucratic attatr, involving against these phony and wasteful methods of mathematicians and managers,- r not "mere'l .'meeting the plan" and the bourgeois ideology production workers. , behind thenr-by the working class exercising its The conservative economists like Tabeyev werq rights as the true owner of society's pr.oductive mainly cdncerned with rationalizing the system of- resources. centralized planning (particularly in dealing with ' But the Liberman debate never even todched problems of supply) and eliminating managerial on such questions. The argument was conducted hanky-panky and waste in the enterprises. But the almost completely f rom a "praetical" and capitalist roaders who had usurped state power in technical point of view. ln large measure this was 1956 and their academic henchmen had their eyes due to conscious interference by leading political on a different 'set of problems. They were figures up to and including Khrushchev himself. concerned with the Soviet' Union's relative h fact, shortly after the discussibn began strength in so-called "peaceful competition" -with Khrushchev spoke before the November l-gAZ Western imperialism,'soviet with . intensifying the Party.Central Committee plenum where he en- exploitation of the working ,class, and dorsed the notion that under socialism, "in the perfecting the mechanisms by which the new individual enterprise . . .(drof it has) great capitalist class could appropriate the s_urplus significaqce as an'economic index of .the effec- value created by the proletariat. tiveness of its work." 3r Such statements only en- The period of . restoration of 'bourgeois couraged Liberman's opponents to confine their, dictatorship and of Khrushchev's economic criticisms to pragmatic considerations. experimentation was also a period of economic Thus even those economists who opposed the slow-down for the Soviet Un1on..r: Through the wholesale reintroduction of capitalist criteria and mid-50s, growth rates were .high:,GNP rose at.an relations.were infected with the revisionist ap- proach. average annual rate of 7o/o,while industrial oulput Their solutiorl to the problems of the increised by over 10% each yda'r. But by 1959 Soviet econorny was to find fool-proof teehni: these rates were on the decline, although they ques for allocating resources and measuring suc- planning gimmicks 'even continued to be higher than comparable statistics cess, that not the ' for the West. According to U.S. econopists, cleverest and most crooked inanager could dis- durinE 1960-67 Soviet GNP grew al only 5'r/zo/o tort or outwit. All for of their solutrons annually, while the increase in industrial. - straightening out the Soviet economy.called for had fallen ott lo71/zo/o annually. This did . putting technique in .production command. not bode well for,the Soviet bid for internationaf Some extremists planning called'for a plocess economic dominance. virtually untouched / by human hahds. Giant com- Even more roaders were. alarming to the capitalist Buters to survey. the needs of every en- was the fact that not only was growth falling off, terprise and hbusehold in the economy in past, physical terms, but its cost was rising sharply. ln the the draw up a.national plan bhianc- had'achieved maintained its ing expansion production Soviet economy and of with consumption sensationpl growth rate 'npt through the and allocating resources and'production quotas, 'intensification (speed-up) then analyze and of labor but by evaluate the execution of the ploughing back a large percehtage of the product plan. The problem of programming the computer. to achieve the optimum political into new investment in physical Blant. This meant solution to more machines, more factories, and also more economic problems, to take into account the jobs. complexities of class relationships in the socialist By the late 1950s investment third period, was not discussed at absorbed a of all, and of course,, the total output the Soviet Union, its was not possible at all. of but eff iciency-that is, its prof itability-was not Of .course, not all the conservative economists keeping pace. went as far ad these computer freaks. ln'1950-58, each additional ruble of Tabeyev, investment yielded half ruble new product, wholn we mentioned before,. drew up new'in- a o{ a but in 1959-66 each, ruble invested yielded only dex to replace the gross output norm, and ac- about a'third of a ruble's worth of output.:: tually put it into practice in the Tatar Economic Council. Called the "normative value of process- Now, to a capitalist, the purpose of ?conomic ing" (NVP) method, it calcutated standard vatues activity is to obtain the maximum return on every for each line of production on the basis of ex- penny---or kopeck-that he invests. So it should penditures on labor,4uel and a fraction of over-.. come as no surprise to us that the other camp in head costs. the Liberman debate, ' made up of the "variOus The NVP set out to avoid the types of abuses we brands . of more conscious capitalist roaders, ran down earlier by excluding the bulk of material focused a great deal of attention on the problem inputs, and most importantly, profit, from its of "increas.ing,the eff iciency of inveptment."

:t { 'i' 'They were emboldened by: 'tfre fact that a inlo ntoderates ' anq extremists, piecbmeal fundamentalty capitalisticouti6or on questioni oi reformers and .people with a rigorous and economic policy.'had alread,i received'the party's theoretically coherent blueprint for capitalist stamp of dpproval at its 22nd Congress, held in restoration' 1961: The n'ew progiam of the Comniunisi party of .. Th".TSl who lent his name. to thip.great debate, the SovietUnioh, r,ifricfr was adopted then, Statls: Yevsel Liberman, can be clasSified. among the moderates, and was no big name in the Soviet 'his , 'The building of. the materia:l and technicat babis of political or achdemic world. ln fact, relative Comnwnisi catts ior' i-iintiror'i-i;i;;;;;;; i, obscurity has led some observers::to see him as a econunicmanagbmentandplanning inief iipiasis front-man for more famous, and cautious, figures 'at all tevets of filanning and econimic manargement who did not want to go out on a limb by openly must be taid on the mist rationat anA etfeiii:i uii advocating capitalist measures. ,resources ot the material, laber and financiat and _This.makes 9en99:,but we think that there are' natural weatih and on the etimination of extessive other reasons for Libermah's emergence from the eiieiiaiwie ana ot losses iie imiuiroie tai it shadows oj Kharkov. Univerdity's lnstitute of : econbmic'deietopment is to achieve ln the lnterests - E.conomic, FngllegJs (the equivalent of a U.S ' or society the hisiest re"uts ,6 r,' bwest bosr -:" ,ifr3:i; ffii?ffiliiH"ll;,]li_Jll?l :i :ll i3",'#l Of course, communism cannot be built on the Kharkov is in the Ukraine. lt is more than likely basis of waste and economic irrationality. But we that Liberman and his colleagiues had 'canimeasu6e long-standin$. Khrushchev's just how far krrlusncnev and Co. rrao . connections with gone itonj the capltalist road by corhparing their 1 Ukrainian political machine. That would certainly,- iiews on lhe ,,transition to communiim.""wiJtt explain why the pages of the authoritative journal anO io forth with *nat ien'n fliO io-."V a6out tfre Kommunistt were thrown open_'^to Liberman's same questjons, 40 years before. l; A Great capitalistic theses as early as 1956 and 1959, the Besirning, Lenin wirtes: the ffi';33*,y,11"J*rgi:?H?[-,#;&;;,-in"rE-'ii ir:l:,""1 " "Communism begins 'when the rank-and-file i .*"ohO reason which we workers begin to display a self-sacrificing concern think is most important. By virtue of his position that is undaunted.by arduous toil lor increasing the aS a "business economist" and teacher of productivity of labor, hus;banding every pod of managerial cadre, Liberman had. his fingelon the grain, coal, iron dnd other products, which do not ptjtsebf one of the main social'bases oicapitalist accrud to the.workers personally or to their "close" restoration: the managers and technicianS. ln fact, kith and.kin, but to their "distant" kith and kin, i.e. to his reformrpioposals 6rela direct reflection of the society as a whole, to tens and hundreds of millions ' oultoof and demands of this section of the rising . of people united firgt !1 one socialist stafe, and then Soviet bourgeoisie 'intoaUnionof Sg-viet Republics."zs . , .r .. Liberman claimed that the root cauqe pf the

The difference betwben these two pas€ages rs "intereitea' in- thel results of their work. Thi3 not simply one of-style, or an unfortunate choice interest was not, of course, the political of,words by the framers of the new P,rogram. lt cbnsciousnes$ so inovingly"described by Lenin in comes.down to the fact that each represents lhe the passage lrom A Grea{ Beginnrng quofed above. outlook.of oppoSing classes: t-enin speaks for the Liberman-meant ,the ihterest expressed by the aspiration's of the'proletariat, and Khrus[chev for, questibn, "What's in it for me?"-bourgeois the bourgeoisle. Self-inferest expressed'in cash terms. Any lingering doubts 'as to whal direction the Libeiman's "solution" to this problem was for Party program is charting for the Soviet Union are the state planning commission to throw out all but cleared up a fevy lines later in the 1961 Program, the mosi. esseitial binding instructions and' when the capitalist cat is let out of the bag: indexes. fbr the enterprisJ, and t9 restore . profitability to its traditional capitalist position as ,"The Party attaches prirne importance to more ,if,e basic index of economic succe5s. And ellective investments, the choice of the mosf Liberman defined profitability as the ratio of prOfitable and economiCal trends in capital' orofits to investment of constant and variable calstfyctian: achievement of the maximum growth of bapital (for machines, raw materials, etc. and,for. oyttput per invested ruble, and'the reduction-of the wages;,las'(s does Marx in his formula for 1he iate of. timqlapse between invdstment.and return.."t proTit /c+ v). (Liberman, like most bourgeois (gmphasis . , in original) economists;. used the terms f ixed and woiking _ .-. _ -. r .. capital to refer to the categories of constant and David RockEfeller himself could not have summed vaiiable capital.) Further, Liberman urged,-retain the up the requirements of a capitalist investor more riit" sfrouil peirmii ine enteiprise to a 'the Exactly how the restructuring of Soviet th"em as a rorr"l of incentive funds and economy along capitalist lines should proceed managerial bonuses-to cut the managers in on was a subject. of intense debatq' among,!hq I the sirplus value created by the Wortiers under I capitalist roadeis themselves. They'were divided inelr Oiiectionl

1,, . .,pege?7 Liberman came out frdnt in a number of Not all :the capitalist roaders so blatantly speeches and articles about the implications of ignored Marx as Liberman, llowever.. ln lheir his proposal. To a discussion group organized by article; "Payment for Produgtion Assets and' Ekonomicheskaya Gazeta, the Party Central Enterprise Profits," L. Vaag ahd S. Zakharov (the Committee's weekly newspaper, he said: _lt is f irst extremists of the profit-or:iented school) cam€ up of all necessary that everyone be clear on one with a proposal for a "self-regulating" system of point: the new systern does not involve the simple economic management that matches Marx's substitution of one index for another-the model of a eapitalist economy outlined in Volume - replacement of gross production by lll ol Capital point for point. profitability.":3 What is reallv at stake in makino. They called for a reform of the pricing'system profitability the_chief planned index is "a refcirm.of which would replace the old, politically the enterprises' relations with the national determined prices with 'prices of production" (tl.le economy." :"(emphasis in origi nal) term is even taken from Mdrx), including a uniform ln line with this,. centralized planning must rental charge of 2}"/"on the value of f ixed capital, proceed from the principle thal "what is plafitabte to be paid to the state. (The authors estimate that for society should be profitable for every if consumer prrces were maintained at their enterprise. "r (emphasis,in original) ln other words, existing levels; this would result in an 807o increase the state must see to it that not only profits, but in the prices of producer goodsl One can imagine the economic power and privileges of .the what sort, of result that would have on any managers are maximized. The enterprises, extensive approach to the development . of operating under a regime of profit maximization, production-the intensif ication of labor would must regain autonomy in planning and, become the only economical way to .expand management relative to the state, and they must output because firms could not afford to purchase be able to appropriate a portion of the surplus new machines, etc., in order to develop production, product they produce. Vaag and Zakharov echo Liberman in calling for ln reply to critics of his proposal, who correctly. more planning dutonomy for the enterprises, a4d pointOd out that putting profit in command of basing managerial bonuses on profit. But the real production was a step backward to c.apitalism, interest of their scheme, aside from its classical Liberman engages in a revision of Marxism that " inspiration and rigor, lies in the proposal that'the pqts even Khrushchev to shame. ,ln an article state begin to treat the means of . production as called "Are We Flirting with Capitalism? Profits capital, that iS, ras a means of appr"opriating and 'Profits,'" which appeared in the English siirplus value for a non-productive mindrity, language Sovlet Llfe, Liberman lets us in on a little extracting interest from the enterprises for its use. secret: "ln essence and origin prof it under Of course, with their emphasis on the extraction socialism bears only,a superf icial resemblance to of surplus value by the state rather than by the en- p!:efit under private enterprise, while by its nature terprise, Vaag and Zakharov were able to con- and by the factors which is any to it testifies it struct a much ' more elegant defense against fundamentally'different from-capitalist profit." He charges that they wdre seeking to restore explains that "Behind Soviet prof its there is capitalism. While Liberman had imitated nothing except hours of working time, tons of raw Khr:ushchev's outright tlistortion of the basic and other materials and fuel, and kilowatt-heurs of truths of Marxism-Leninism, Vaag and Zakharov electrical energy that have been saved," while prefigured the "return to Leninisrn" of Brezhnev "the main part of the profit under the private enterprise system comes not so much , from production, as from the process of exchange." rt "This kind of scornful attitude toward profit, which on- This would have come as big news to Karl Marx, ce appeared in a book by Bukharin, is known to who repeatedly stressed as the most fundamental have been sharply criticized by V.l. Lenin. Bukharin's principle of capitalist political eQonomy that formula was: 'Production in aondttions of capitalist whatever form profit might take (whether the rule is the'production of surplus value, production tor industrial profit that Liberman claims is "now" the sake of profit. Production under protetarian rule is virtually unique to socialism, commercial profit, or . production for meeting the needs of society.' Object- interest and rent), it had one source and one ing to this kind of assessment of the si.gnificance of source alone: surplus labor extracted in the profit, Lenin wrote: 'That won:t do. Profil a/so satlslies process of production. lt would also have been 'social' needs. What should be said is this; where thg quite an eye:opener for Lenin who, following surplus product does not go to the owner class, bitt Marx, stressed that "Surplus value cannot arise. to ail the working people, and to them alone.' "'1 out of the circulation of commodities, for this represents dnly the exchange of equivalents," j: This is quite slick, but our capitalist roaders , However, if we are to believe Liberman, since have picked up a rock only to drop it on their own "there is neither private (i.e., individual--Ed.) feet. The main thrust of Lenin's criticism 'of ownership of the means of production nor stock' Bukharin's book, Economics of the Transformation capital and, consequently, no stock market" in the Period, was that it approached socialisteconomic Soviet Union, there can be no capitalist policy in exactly the sarhe way the.Vaag and . exploitation in production, either. Putting profit in Zakharov article does: divorcing economics from command of production through this feeble politics under the cover of rhetoric about pro- sleight of hand becomes the essence of socialism! letarian rule, treating it as though it were a simple question of the most rationa] and efficient utiliza- market. Under the old system, orders for the gar- tion of .the prodqctive force's. ment industry were channeled throu$h the state When Lenin reminded Bukharrn that "profit also Retail Clothing Trade Organization, whieh not on-, satisfies 'social' needs", he meant that under ly took care of making wholesale, marketing ar_: capitalism use values are produced-for profit- rangements bgt finalized and checked up on the and profit did serve as a measure and spur of fulfillment gf centrally-set production plans. Undqr economic eff iciency and the development of the terms of the experiment; this ofganization was society's productive forces. lf the categories of to be bypassed. lnstead, Bolshevichka and Mayak capitalist exploitation served no economic func- established direct, contractual, relations with a tion, and if the capitalist system consisterrtly failed select group of large retail stores around the td assure the working class even a miserable liv- USSFI. . ' ing (hs a c/ass, because there is always the ruin Contracts were drawn up between the factories and starvation of individual workers), the profit and stores, establishing the quantity and quality of system would have passed off the face of the goods to be delivered (in extreme detail as to col- earth long'ago. or, style, etc.), setting prices and delivery The real question certainly ls which class owns schedules. On the basis of these orders, the en- the means qf production, organizes their utiliza- terprises were tq draw up their own production tion,Fnd appropriates the surplus product. When plans. The rationale behind this should'be familiar the means of production are nationalized, we to anyone who has suffered through a senior must also ask which class rules the. state. The economics class in hi.gh school-on the basis of policies and methods pursued by the state in or- their sales, the retailers were supposed to have a ganizing production provide partial can a answer better grasp than either Party or state of what'rela. the to this Question. Vaag and'Zakharov's version of Soviet people want and need. Contractual putting profit in'command, having the state relate tions between manufacturer and seller were to to the meana of production in exactly the same serve as ihe instrument througjh which capitalist- manner as a capitalist,'should servrj as a signal style "consumer sovereignty" could be exercised, that bourgeois forces had ,usurped state power. As Liberman had recpmmended, the enterprises We witl go much deeper into these problems when par,ticipating in the experiment enjoyed un- we discuss the actual "reform" of the Soviet precedented autonomy. Productivity, materials to economy. be employed in produbtion, costs, the wage fund The openly capitalistic character of Vaag and and rnethods of paying the workers (piece rate or Zakharov's'proposal to restore prices of produc- hourty) were all left up to the discretion of tion drew fire from even members of the re' management. Bolshevichka and Mayak had the visionist camp. lt can be seen as providing a con- liberty of setting the size of their inventories and if venient cover for less blatant proposals, and we they exceeded their planned working capital, they' should note that most of the criticisms did not were guaranteed credit from the state bank. focus on the relations they sketch out between the The only centrally planned indices were the state, the enterprise, and the worker. However, as volume of sales to be realized (measurdd in rubles) the debate intensified, at least a few participants and total profit (figured in the old way, as dif- raised objections to its class character. The Soviet ference between cost and wholesale price of pr0- economist Chakhurin openly stated that "Some of duction rather than as per cent of capital as those engaged in the discussion are, obstinately Liberman recommended). Prices for goods sold trying to produce a system that rivould . work were also to be set according to plan. However, automatically and be managed by engineers the experimental enterprises were permitted to technicians and economic leaders." :{ bargain directly in the sale of completely new Whether out of sincere opposition to what were items, and special markups, to be determined by overtly capitalist proposals, or conservatism, the enterprise management, were authorized for the majority of the economists involved in the addition of new features and trimming. Liberman debate rejected the various proposals to lntroduction of the experiment in the retail run the Soviet economy on a more or less com- clothing trade was conditioned by an outstandirtg petitive capitalistic basis, and instead called for problerh. The growth o-f revisionist attitudes the general introduction of .the NVP index. among the planners in th6 1950s created a situa- ' However, Khrushchev publicly intervened in tion in wnifh garment production strayed com- favor of the Liberman proposals. ln May 1964, pletely out of line with people's needs. Looking to Ekonomicheskaya Gazeta announced that the Cen- develop and ftrlfill the plan as "conveniently" ps tral Committee was sponsoring an experiment pos.sible, the' enterprises, guided by their putting Libermanism into practice at two clothing superiors in the planning agencies, turned out factories: Bolshevichkq in Moscow, and Mayak in millions of items of clothing which the Soviet peo- Gorky. ple simply refused to buy. As a result, stocks,,.of unsold,'s-hoddy or otherwise undesirable appalel . . 1,485 million rubles worth 5) Testing the Water: Experiments with rose dramatically from ion Capitalism on January t, igsg to, 4,133 million r,ubles The basic idea behind the Bolshevichka-Mayak January 1, 1964. ri experiment was replacing what little was left of ln solving this problem, the experiment at flrst the drscrpline of the plan with the discipline of the seerned slccessiul. At Bolshevichka '"y1ras' ', ,o"J..rb estimated that had the original plan drawn up been the case under planned production. A bar- from above been kept to, ab"out gci7. of stipulated rage of small batch orders led to a sharp increase production would have been unsaleqble. in production costs, decreased efficiency and Moreover, stocks of unsold f inished goods lower total output. decreased drastically-at Bolshevichka by over For plant,wor.kers this led to speed-up 50% in two years and in retail outlets contracted and "productivity" campaigns designed to make to the experimenting plants by an equivalent up for small difficulties created by continuous dis- margin. r" ruption of production by.small orders. Managers Based primarily on this progress in decreasing took advantage of their newly granted control accumulated inventory, the experiment was over wages to set up elaborate bonus systems deembd successful. ln October 1964-even as aimed at pitting the workers agdinst each other in Brezhney and Kosygin were putting Khrushchev the competition for monetary rewards. As a result, out to pasture-it was proposed lhat the new re- for example. during the third quarter of 1965 gulations be extended to 31% of garment,fac- growth in labor productivity exceeded that of tories, 17o/o ol textile mills, 33% of footwear lac- wages by 3.8o/o in the cotton industry and 3.2/" in tories and 18"/" of leather plants in Gorky, Lenin- silk. o Summing up the situation, one bourgeois grad, Moscow and elsewhere. Altogether, about , economist has aptly noted that uncler the experi- 400 enterprises went under the Bolshevichka- ment, 'Large mass production enterprises arb Mayak system beginning in the second quarter of turned into custom sewing shops." 1965. This widespread experiment in the garment The introduction of those experiments was only a industry was paralleled by similar projects un- step, and not the whole process, in restoring fully dertaken on a much smaller scale in transport. a capitalislrelations, but given the political line being machirle-building'plant, lumber and mining. followed, such a transition was surely inevitable. With the extension of this experiment in The difficulties which a socialist economy may "market planning", its real deficiencies became confront can only be solved by building on previ- clear. ln the garment industry sales volume for achievements, consciously summing up lessons, 1965 rose by 4.5/" over the previous year. and moving forward towards communism by However, this increase was due largely to an 8.9% mobilizing the masses of people collectively, con- iump in the luxury silk trade. Cotton goods sales, sciously and scientilically to solve the problems in on the other hand, fell by 0.9olo, woolens by 8.5% the interests of the entire working class. Once the and footwear by 2.5i". '' Soviet economy' was steered backwards in a These f reveal igures that the new system, capital ist d i recti on--eve n ex peri mental ly-it had to though ostensibly designed to rescue consumers continue on this path in the absence of shar-p class from the whims of arrogant, bureaucratic plan- struqole to reverse the backward movement. ners, was, in fact, a scheme directly opposed to ThiS pornt became clear when the 400 ex- the interests of Soviet workers. The system of perimental firms entered into economic relations "direct ties" eslablished between the experimen- with the rest of the economy. Though by this time tal firms and cooperating retail outlets was based the.new bourgeoisie was firmly in command; mos! upon the principle that "money talks." ln other of the econorny was' still formally organized words, stores would contract for those goods (though not managed) acbording to socialist prin- which would br:ing in the most rubles, and as in ciplps. Thus, when a clothing firm would contract any capitalist economy, those individuals with with a store to produce a certain number of more rubles had more say as to what was sold and Dacron slacks, it had to obtain the needed Dacron whdrt pr.oduced. As a result, output of luxury items from a chemical firm not participating in the ex- tended to increase while inexpensive popular periment whose output had been already planned wear was shortchanged. from above. Thus, ser'ious difficulties arose in sup- ,This problem was made even worse by the pric- ply and many contracted orders could simply not ing system. To increase both sales volume and be met. profit indices, managers would routinely add trim- ln addition, the existence of this experimentdl mings and other features to items, thus gaining market island within the overall planned economy the right to raise prices. Mereover, the planned led to continual bickering between planning $rice system was still structured somewhat ac- authorities and enterprise man,agers. The case of Cording to political and social considerations. the Glushkovo Cotton Combine is typical. This Thus, those items which were in high demand by f irm'entered the experiment in the second quarter the masses were precisely those which were ' of 1965. ln preparing its 1966 plan, it concluded cheaply priced and less profitable to the produc- direct contracts with a number of suppliers and ing firms and the sales outlets. For example, wholesale outlets at the inter-republic textile fair children's clothing remained extremely unprofita- August .high-fashion of 1965. Yet by December, these contracts b1e while women's clothing was ex- were administratively preempted by Moscow pensive and prof itable. Economic Council which ordered'the firm to de- This situation created an additional problem liver its t'otat ouiput to the Moscow Central Cotton which actually served to cut profits. Since luxury Storage Base. Specified orders were almost com- .glothing items could be purchased by a relatively pletely different from those originally'contracted small segment of the population, negotiated or- f or. ders.were generally much smaller in size than had lncidents l.ike this reveal that even at this stlge, Page 40 a sharp struggle was still going on over who Mayak experiment, the new capitalists got their should control production. The planners, deprived feet wet in the waters of "Lake Profit." But it was of proletarian party leadership bolstered by mass not until the fall of 1965, having learned support and criticism, could no longer lead the something about the water, that they finally took a economy forward. But conditioned by their train= realdive. ing and experience, many among these forces continued to tight for at least the form ol cen- 6) The Economic "Reforms": Profit in Command tralized planning. Here they came into conflict nqt On Sgptember 27,1965 Premier Alexei Kosygin only with the enterprise managers but, most im- spoke before a plenum of the Central Committee portant, with their state and Party superiors. This of the CPSU. The purpose of ,his talk was to an- is the political content behind the "bureaucratic nounce a widespread "reforrn" of the economy sabotage" which has plagued all Soviet economic designed to put enterprises on a more self- "reforms'' down to the Present. governing basis and to restore profit and other One other aspect of the experiments worth "ecionomic regulators" to the,command post of the noting is the effect they had on income distribu- economy. tion within affebted enterprises. ln nearly all firms, KosyEin began by outlining briefly some of the the experiments led to a general increase in problems faced by the Soviet economy. He point- wages, due largely to the special treatment ex- ed specifically to the degline in industrial output perimental firms enjoyed. But because manage- per ruble of fixed assets, a disappointing rate of ment was given full control over the wage fund, growth in labor productivity and a lag in the lion's share of the increases did not go to the agricultural development. workers. ln his view, these problems and others'stemmed This is most clearly illustrated by the experience from insufficient development of management of five Moscow and Leningrad trucking firms skills and techniques. For the economy to function placed on an experim,ental basis substantially well, he claimed, it would have to be managed ef- similar to the Bolshevichka-Mayak system in the fectively and this could only come about through second quarter of 1965, ln the th,ree Moscow the' introduction of material encouragernents to firms, total wages for 1965 rose by 1,5.6%, 23.6oh managerial initiative within both the individual firm and 23.4o/o over 1964. For driver6 the ligures were and the economy as a whole. 13.6/", 18.3"/" and 24.9"/" respectively, but for off ice According to Kosygin: staff (ineluding top management) they were 26.2h, . "The on improv- 38.3,0/" and a whopping 61 .9%! greatest attention should be focused ln Leningrad, where the entry of technocrats in- ing the nethods and torms of industrial management. to high management was more advanced than in The existing forms of management, planning and Moscow, management were counted together stimuli in industry are no longer in conformity, with' top pre- with enqineers. ln these two lirms drivers' wages modern technical-economic conditions and the rose by 197" and 307o anld wages of maintenance sent level of the productive forces. men by 13% and 25%. Auxiliary workers saw wages "The economic initiative and rights of enterprses responsibility is in- rise by 33% in one f irm but.drop by 9% in the other., are too narrow and their area of However, for ehgineering staff (including top) sufficient. The cost-accounting system is in many management) wages in the two firms rose by 48?/dc' ways a formality. The existing systerz, of material en- couragement to industrial personnel'does little to in- and 40o/o respectively. "' These figures indicate that one of the political terest them in improving the overall results ol the purposes of the experiment was to solidify the work of their enterpnses and often operates in con' social-imperialist " base among th'e enterprise tradiction to the interesfs of the national economy as managers. As we shall see, this was'also a major a whole."tl goal of Kosygin's general economic""reform" of Accordingly, Kosygin offered several proposals 1 965. to stimulate the economy. First, but least impor- The Bolshevichka-Mayak and si mi lar experi ments tant, was an appeal to increase efforts at improv- began under Khrushchev but wer€ completed un- ing scientific and technical standards: "ln condi- der Brezhnev and Kosygin. This is appropriate as tions of the present-day scientific-technological they mark in effect a transition lrom the destruc- revolution, the task of planning is to provide for a tion of socialism characteristic of Khrushchev's re- rapid rate of industrial application of the latest ign to the systematic reconstruction of capitalism achievements of science, and technology." r: This by Brezhnev and Kosyg'in. (We should note, was in essehce a call to further develop reliance however, that no brick wall separates these two on experts and to increase the employment of periods. Each "task" is, intimately connected with automation techniques the other.) More important was a proposal for the decen- Having firmly established bourgeois political tralization of planning. Kosygin proposed to rule and having created a situation where real "expand the economic independence and initiative economic' problems could no longer be solved of enterprises and associations, and to enhance the wjthin the context of prdletarian,socialist plan- importance of the enterprise as the main economic ning, the social-imperialists were forced by the in- .unit in our economy . . .To this end it rs necessary to ternal logic and necessity of their pqlitical line to abolish excessive regulation of the economic activity turn,to capitalist methods. With the Bolshevichka- of enterprises, fo provide them with the necessary \ ,. :' ) ' . page41 I :i \ means for developing production, and to establish a price tag: firm legislative guaiantees for ttje expanding rights of "The financing of capital 'investment .is currently the enterprises."'t' handled bl free grants from the statg budget.. En- Also in ionnection with this,, Kosy(in promised terprise managers show little concern as ta the cost to "strengthen and develop the system of cost- of the reconstruction of the enterprise or how effed- accounting, to intensify the economic stimulation tive the additional capital investment wilt be,because of production with. the help of such means as their enterprises are not obliged to refund fhe sums price, profit, r+ ' bonuses and credit.'' granted thiiim .,.:One way oi tackling this problem is This' was actr.Ially the key to the "reform." to switch from.the ffee altocation of means for capitat ,Kosygin was proposing that some of the methods construction to long-term crdditing of the en- tried out in the experiments of 1964-65 be terprse,$, . ../t ls proposed to abolish the practipe ot generalized throughout the, economy:,.Where in providing free supplements lo the circulating assets I the past control over the economy by' the state of enterprises from the sfafe budge.t and'instead, was political-administrative, Kosygin proposed the wherq necessary, to grant them credits for this broader use of "economic levels." Specifically, PUrpose."'r: the index ol gross oulput, previously the principal ln'addition to supporting increased use of state measure of enterprise success, was repleiced by bank credit, Kosygin also announced institution of the index of .volurye sold as had been done in the the system of Charges on capital whereby en- Bolshevichka-Mavak experiment. Moreover, terprises would- pay sums .Kosygin to lhe state fixed noted'that "ln order to orientate en- amounting in essence to "government rental laxa- terprises toward raising.efficiency, it is best to use tion on fixed capital", to Use the terminology the profit index."'ls Here, he cautio4ed that orofit co'ined by the:' leading Soviet economist should not be seen merely as ah acc0unting Nemchinov: As wb shall see, this was one of the categjory but that "amount of profit per iuble of most important provisions of the 'reform." Put f,ixed assets" (i.e, profit) ' rate of m,ust.also be eon- briefly, its political-economic effegt was to.lreStore sidered. ' to the means of production the character of ln planning, all but f ive indices previously set by capital:the state would now employ the means of higher authorities were no\/ to be set at the en- production to extract a maximum profit in the terprise level. According to the "reform:', only -form of'capital charges-and this would establish volume of sales, basic assortment of product, total the state as finance capitalist vis-a-vis th€ en- size.of wage fund, profit and profitability (rate on terprise. capifal), payments and into and allocations from . Finafly, as a dir:ect result of the previous the state budget were still to bq centrally de- rneasures Kosygih ann,ounced that a sweeping re- termined. All -other factors including productivity vision of the Soviet price structure would be un-, rates, nut.nber of 'personnel, and tevlt of arerage dertaken- in 'the interest of pirtting as many f irm's wages were now to be set by the enterprise as possible sn a strict cost-accounting basis;.that management according to it6 needs. However, is, on the basis of: maximizing prof it. (For a more major investment in additional plant capacity or complete explana'tion of "cost-accounting'l see major technical modernizalion projects were still section 3 of this chapter.) Here Kosygin 'ap- to be centrally conceived or approved. proached to gqrne degree the ideas of the prices Under the new'system a larger share of profit of pioduction 'school of economists (men like r{ould Stay at the enterprise lev_el. ln the past near- Vaag and Zakharov). p,rofit ,state ly all such went (irectly.into the ln this vein he remarked that "Prices must in- : budget whdre it could be allocated according to creasingly reflect socially necessary outlays of planndd social decision. Kosygin now 'proposed labor, and : they nrust coyer production. and that "p.rofits to be left to the enterpiise should be turnover outlays and secur'e pr:ofit for each proportion "a in direct to the effectiveness with normally f u nction 1ng enterprise.'' \4oreoVer, which it utilizes the fixed assets assigned,to it, the "The existing neglect of economic methods in plan- i,ncrease in volume of the goods it sells, the im- nlng and rnanaging the national economy and the provement in the quality of its goods, and the in- weakdning of the system of cost-accounting are to crease in profi'tability." r" a great extent connected with the considerable , Fletained profits would thus act as a material in- shortcomings in: the systern of priee formation. lf centive to the enierorise as a whole and to' its prices are nat substantiated then economic calcula- mdnage[rn particular. Profits would go rnto a pro- tion's /ose their .dependability and this, in turn, en- duction development fund out of which mana(;e- courages the adoption of subjective declsions. "{s ment could set up incentive and technological de- We shall have occasion to probe beneath the sur- velopment programs. face of such abstruse statements shortly. But ther"o was no effort to make the individual The "reform" was put into effect slowly. The enterprises self-financing and thus truly "indepen- oiiginal time-table, envisioned all indqstrial en- dent." After all, this would amount to little more terprises under the new rules by the end of 1968 than'a utopian step backward to competitive and all other state enterprises (except state farms) capitalism. Capital, under the new system, was by 1970., Howbver, 1966rsaw just slightly over one still to come overwhelmingly from the state. per cent of. the Soviet Union's appioxirlrately However, in good banking tiadition Kosygin an- 45,000 industrial enterprises converted to the new nounced that capital,grants would begin carrying system. This.inclirded a pilot group of 43 selec,t in- Page42 ' , dustrial enterprises from 17 industries with a total ferpn'ses; The size of the profit and the rate of its of 300,000 employees converted on January 1. grovvth will indicate'the contribution made by their This group was followed by a second batch of 200 wotrkers to the national income,. to expanding pro- firms on April 1 and by a third group of 430 in - duction and impro.ving the people's well-being."st August. ln addition, some communications and The decision to make prof it the principal transport networks were also operating under the measure of enterprise success marks a clear step year's +e new co4ditiorrs by end. backward toward regulation of the economy by ln the following years the pace of conversion the blihd law of'v'alue. As we pointed out in a pre- continued to be slow as illustrated in the table vious chapter, Stalin had stressed that the law of below. value continues to apply under socialism. This is Commenting on the achievements of the first true because under socialism there is still com- 704 enterprises during 1966, A. Bachurin, Deputy modity production and the law of value is that law Chairman of Gosplan, reported that sales had in- regulating aMl commodity production. Socialism creased by 117gprof its by more lhan24/o and labor marks.a transition period between capitalism, the productivity by 8% as compared to the 1965 plans. highest and most developed form of commodity These i.ncreases were substantially above growth production, and communism which is the com- rates in the unconverted sectors of the economy.50 plete elimination of commodity produgtion. As the chart below indicates, however, such Thus, Stalin argued that it was essential for Sov- f igures afe deceiving. Those enterprises,placed iet planners to take into account the conti.nued under the "reform" represented the "cream" of operation of the law of value. This meant that in- the Soviet economy. Thus, the 15o/o of _all .en- dicators such as "profit" were important and that terprises operating 0nder the new sys]em by 1967 strlct cost-accounting procedures .lrad to be earned 50% of all industrial profit, and employed followed. However, Stalin argued that it was 32o/o of all workers. More than half the 242 en- necessary to increasingly limit the sphere of terprises transferred to the new rules in the first operation of pr.ofit and the law of value. This could half of 1966 had previously registered a.rate of pro- happen as the workqrs more and more seized f it of over 407o. control of'the economy, breaking down the. in- Clearly, to get a more accurate assessment of the : herited commod ity systgm. rdform's success", one would need to know To the revisionist economists, howeyer, it is the the figures for participati6g enterprises in 1964 law of value which must predominate over "ad- and 1965. No such data has been made available, ministrative control." Let trs take, for example, the a fact bemoaned even by revisionist econqmists, arguments of Soviet economist A.,Birman in his What is kpown is that as-the "reform" spr'e'ao, lts 1967 article "Profit Today." Birman notes that "successes" were less outstanding. "The experience of recent decades has convincingty Revision .of the price system also proceeded shown that it is impossible to attain real centralization slowly. New price lists were estallished for the of :economic planning withou.t freeing planning or- light and food industries as October 1, 1966, of gans from regulating each of the millions of rela- and on January 1, 1967 for products heavy in- ol fionshps among economic organizations and build' dustry effective.July 1, 1967. This sweeping re- ing these relationships on the basis of economic ac' vision resulted in a general increase.of .wholesale countabiltly. The more planning stnves to be p i i i r ces of 8olo, 1 5"h i n h eavy i n d ust ry. F u rt h e r re v s o n s "concrete", scrupulous, encompassing, all details, pushed wholesale prices up even further on the nnre difficult it ls fo maintain genuine planned January 1, 1969 and JanuarV 1, 1970..it developm6nt o,f the nationat e5onony as a whole."53 , Key to the Kosygin "reform" is the expansion of ' profit as an economic regulator. According to V.' What Biiman is getting at here iri the sirnple fact Garbuzov, USSR Minister of Finance, that the planning of a complex economy calls for 'the role of profit as a stimulus becomes sub- a multitude of administrative and political de- stantially greater under the new conditions . . . Along cisions. lf the planners rely only on themselves with other plan indices, profit will become a major theyxill become bogged down in such decisions, economic criterion in the evaluatian of the woik of en- with hopelessly entangled bureaucracy the pro-

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Bythe no. converted' total ents. output employees prolits endol t 16 1966 704 1 I 8 1967 7,2\8 15 37 32 50 1968 26,850 54 72 71 81 1959 36,049 72 84 81 91 1970 44,300 90 92 (?) 95

Sriurce: Gertrude Schroeder, "So{riet Economic Reform at an lmpasse" Page rB duct. Seeing this as inevitable, Birman proposes This is exactly the opposite of the revisionist ap- the law of value ("economic accountability") as a proach. The revisionists'despair of increasing the rescue from the administration of detail. / domination of humanity over society and nature What he fails to see, of course, is that socialism because as a class they do not represent the in- is not based on administration of the economy by terests of all humanity. Only the working'class can a few experts and managers, but rather by the carry on its banner the liberation of all pdople, foi- masses of working people. in liberating itseif the working class must make It is true that centralized planning calls for mak- everyone a proletarian ancl- thereby eliminate all : ing millions of conscious decisiohs each day- classes. The social-imperialists are eager to bow decisions which under capitalism are made down before the "oblective" Iaws of commo!ity "spontaneously" in the market. But under production since these are based precisely orl the, socialism there are many more millions of con- continued subseqvience of humanity to nature, scious workers to help make such decisions. This and rnore important, on the subservience of the is why central planning can only be and must be a masses of people to:a few exploiters. rnass process. And this is also why the failure to Starting from the notion of profit as an index of apply a correct proletarian political line must in- production eff iciency, it is but a brief journey evitably lead to the restoration of capitalist r.ela- toward the notion of profit aF the very ,center of tions of production. \ production itselfl Thus, we read in Birman's arti- , Not basing himself ori this crucial politicai prin- cle: 'Profit is the source of expanded reproduc- ciple, Birman must conclude that "there are no tion not only at the given enterprise, but in society groundd to deny the def inite regulating role of the as a whole . . . " ':lemphasis in original) This clearly law of value under socialism.r" ln his view, meanS that the basis of economrc growth (ex- "it rs not the law of value b'ut the fbrms of its action, panded reproduction-that' is, not simply the its manrfestation, that are specifically capitalist in replacemgnt of the used up productive forces, but nature. ..So fhe trouble is not the "regulating role'of , their expansion) is not the continued efforts of liv- the law of value" in general, but the uncontrolled ing labor, b0t employment of 'living labo"r by ac- ndture of this regulatbn, its economic,, social and cumulated labor, i.e., by ca'pital. political consequences under capitalism and the The revisionists now define profit as a percen- private ownership of the means of production."''l tage of invested capital. On this basis profit can This is a thoroughly ass-backwards approach. only mark the source of expanded reproduction The law of value is precisely the regulator of private through the primacy of capital over labor and comnadity exchange whose highest form is the this means that profit must represent not just priVate control of the means of production surplus product but surplus value, too. We shall themselves, marked by the complete separation have more tb say on this in section 7, when we' (al(enation) of the direct producers f rom the discuss the Soviet drive for increased labor pro- mehns of production. To-say that the "trouble" is ductivity. the uncontrolled nature of this regulation is to ac- With respect to the reform of prices, .Birman cept such regulgtion and thus accept. in some" hits the nail on -the head in defining its'source. f.orm or another the continuation of private cgm- He says: "The practical conversion of profit into modity production. one of the leading economic indices brings the Tnis has revolu- problem of improving price formation to the nothing in common with the i^ tionary approach of Karl Marx who foresaw the forefront." complete elimination of commodity production. lt This was because previously, prices were not is much more similar to the.reformist stand of J.M. set to reflec't the deriiands of ,the law of value, Keynes who sought to better "regulate" the although these were of necessity taken into ac- production count. As much as possible, prices were set ac- anarchy of capitalist through politically bourgeois government intervention designed to cording to conscious, determined criteria; in other words, with the best interest of keep under control the consequences such of masses However, profit mean- anarchy. the in mind, is a ingless prices permit de- According to the revisionists, principle func- indicator unless the a termination average rate profit; i.e., un- tion profit under "an important of an of of socialism is as less prices'reflect "values": necessary synoptic for evaluating an enterprise's socially index cost- labor time. Thus; according to Garbuzov, "Prices accountin$ activity." By this they mean that en- must be as close ,as possible to the socially terprise success vis-a-vis the economy as a'whole necessary labor ex$endltures; they. must create is most fruitfully measured through the profit in- conditions for the operation of enterprises with dex. This is because "the main virtue'of profit as normal profits..."i: an index is its objectivity." , This marks a repudiation of conscious collec- This gets right to the root of the matter. "Objec- tive control of the economy by the proletarian tivityl" What does this mean? Precisely it means state characteristic of socialist planning and in- the domination of objective reality (nature) over stead puts forth the "regulated anarchy" of state- man and not the domination of man over his capitalist "planning." Under socialism the most world. Yet the essence of socialism is not this "ob- important coordinating agent between the in- jectivity." lt is the growth of man's conscious terests of the individual enterpriqe and the domination over his own. society and the condi- economy as a whole is political /lne. This means tions of human existence. that, increasingly, the development of production :Fage rl4 ... i ' is governed by the conscious will of the working The reintroductiort of bank creoit acts to class: that the workers organize the economy restore to some extent the existence of a capital through planning and th4t in the process of do- "market" within the confines of the state. monopo- ing this the lessons learned are sumrned up'by ly. By this we certainly do not mean thai the state the workers' own Communist Party on the basis revisionists have reintroduced'a stock exchange of Marxism-Leninism. The pollticil line of the where trade in capital (and thus in'surptus value) Party represents this Summation which is then re- takes on an open, brazen form. This is hardly the , turned to the workers so that the whole process I '.can case. be strengthened, deepened and raisbd to a However, to treat capital as a commodity it is higher level. ,not necessary to sell it in the marketplace. The ' However. under the. conditions of "reforml', assignment of capital over to another in the ex- '"price is the basic economic point of orientatibn ' pectation of , repeiving, a predetermined return, for the enterprise", and it is "the most important generally in the form of interest, is also a type of . instrument of coordination of the interests of the commodity exchange. national economy and the individual' This can be seen most clearly when a U.S. enterprises . . . " 58 This means that the conscious capitalist goes "shopping" on the money market Summing up of eiperience which places politics in to different banks for a loan. Here he seeks to command has been abandoned. Thus, shortly after , pay the lowest interest on his capital reqr"lire- ' thg enactment of the "reform" we find influential ments. He wants to .share with the bank the economists like N. Fedorenko demanding thpt "on- smallest portion he can of the surplus value ly the prices of the most important products should which the workers he hires will produce. This is be set by the central authorities . . . Much wider true as well for big firms enjoying a steady powers should be given to the enterprises to set monopoly relationshfp with a single banking contract Pfices.":' group. The ec,onomic essence of this procedure is for all intents and purposes duplicated when a While the reintroduction of profit as the central goes regulator,of the economy marks Soviet firm to the state to negotiate credit. a decisive step ln both cases the industrial capitalist "bargains" in the reinstitution of capitalist production rela- ' tiohs, practical for a price-the interest rate-on the commodity: its function was mainly to re- capital (i.e., ,gulate the decentJalization of economic the right to exploit and control the decision- surplus value produced by wage laborers). Thus, making. However, as we shall explain'more fully 'ireform" in section 8, the "re- with the economic capital reappears as decentralizing thrust of the a'comrnodity form" disguises ils reatty capnafist to be bought and sold, though this 'no essence. . takes on a new and "hidden" form. For Kosygin had intention of reviving a Yet market econorny the' we should also note that the instrtution of in Solet Unlon. Rather he mechanisms proper wBS interested in harnessing credit could, under- condi- ,. spontaneous market tions--including, first and foremost, proletarian ' forces (commodity relations) to better serve the . interests of the rule---serve a certain useful function, and it is cpntralized state-finance this which the r'evisionists use when justifying bourgeoisie. Thus, whi'le bringing the category of "refor-rn." enterprise profit to center stage, the,same ' this aspect of the Specifically, under , at time the old possible he instituted measures which placed control of system it was for a corrupt or in- efficient manager waste otherwise im- ' this profit-and, more important-control of the to or properly utilize gr,anted funds. ln was a lqbor power which produced it-in the hands of fact, this the state. common occurrence in Soviet industry. ' Managers This was most clearly done through the institu- Would pull strings to get capitai tion relationships,. past, gr'eater than their real needs so that little atten- of credi.t ln the under tion would socialism, the Soviet state treated the capital un- havs to be paid to efficiency and '. der its control as a resource for the whole economy. After all, such funds came at no cost to the enterprise! The most effective way to fight population. Thus, when an enterprise needed , more capital to expand, it reoeived this the such abuses was to mobilize the vigilance of the' in workers patient form of a lree grant. The distribution of such and to wage vigorous and grants was decrded by the- planning authorities ideological struggle against the kind of "me-first" (funder Party direction) according to the overall ideology which lay behind this. Hdwever, it is needs of the economy and of,the, working class. clear that the institution of interest payments for capital could This is very different from the capitalist irethoiJ also help. _ of seeking.the highest "return" on your "invest- It is for this reason that the Chinese rarely grant funds freely. ment." - r ln their economy the existence . Under the "reform", this system was aban- of credit relationships between the state and the doned. Enterprises were now to finance' their enterprises is widespread. However, we must capital expansion either from their own profits or point out that here credit plays a very different ' by means of loan capital obtained at interest role than in the Soviet Union today. from the state. Clearly under.this latter arrange- While the aggressive design! of the two ment, the state represents the finance capitalist superpowers have forced China to divert signifi- while the enterprise management plays the part cant production to strengthening the national de- of industrial capitalist. Moreover, under this fense, this has not placed quite the same kind of system the means of production come to be burden on the economy as did imperialist en- treated as "income-producing" capital. circlement in the Soviet Union. This is one re- page 45 ason why the pace of industrialization has not permost in the economic substantiation of in- seemed so forced in China and why economic terest rates." 6' This means that the rate of in- development has been somewhat more balanced terest will be established not according to how than in the Soviet Union. effectively this will regulate the efficient use of Because the Chinese have been able to place investment by enterprise management; but in- relatively more investment in agriculture and light stead according to how effectively such loans industry than did the Soviets, the Chinese 'will yield financial returns. One economist, S. Sh- eionomy has a much larger collectrve-not state- teinshlgiger, went straight to 'rhe essence of owned-+ector. The Chinese population is still things when he declared that 'interest is a 80% peasants, while in the Soviet Union today planned measure for increasing the value of only 41o/" of the population is rural. This means sums loaned by the bank." ":Can there be a more that the persistence of commodity relations is concise description of income earned by loan greater in China than in the Soviet Union and capitaP this was even true when ,the Soviet Union was at According to one Soviet source, "over 65Yo of a more comparable level of economic develop- the circulating assets in trade are borrowed'"r and ment.,l.n addition, investable resources are much interest is paid for the use of them. Under the more searce in China than in the Soviet Union "reform", the relationship between the enterprise today, and economy in their social use is a more and the state is not solely one of firm'to banker. pressrng concern. Thqre is also an element here of the relationship As we noted previously, in summing up both between a monopoly capitalist corporation and their own ex.perience and the lessons of the Sov- one of its subsidiaries. Despite decentralization, iet past, the Chinese have chosen to place the state r.emains the legal and actual o,wner ot somewhat greater emphasis on the step-by-step the enterprise. resolution of the mental 7 mahual and Thus an additional financial link was created to townTcountry contradictions than did the Soviet express this. lt is known as the capital charge, Union under Stalin. ln connection with: this, they whereby, according to a complicated scheme, have tended to proceed more slowly in restrict- each firm must pay to the state a yearly charge ing the sphere of operation of the law'of value. on its productive capital. The need to justify this Nevertheless, thb- Chinese have worked from new category has forced Soviet economists into the beginning toward the gradual elimination of some rev:ealing rationalizationi and it will be all commodity relationships, including state- useful to examine the debate which developed enterprise credit relationg. As progress is made 'over this question. in this direction, the role , of credit in the One faction arnong Soviet economiSts views economy is decreasing. lnterest rates are the basic function of the charges on capital as established to ensure that enterprises, both state- an economizing incentive. As such their "content owned and collective, maintain the efficient and as an economic category lres in the fact that economical use of invested funds. Such rates are (they) appear as an economic stimulus to the bet- not set to ensure an effective return on invest- ter use'of productive capital." hr This is' the view ment, and in Eome cases funds may be freely of V. Sitnin, in charge of Soviet price policy. granted. However, as another economist succinctly noted: ln China the interest rate on state credit acts as an additional check on enterprise managd- "the advancement of the stimulating function of ment, supplepentary to the ideological and capital charges as a factor determining fhe essence political mobilization of the working class.. Today of the charges is tantamount to 'confusing cause these rates are very low and do not play a re- with effect. Capital charges stimulate expedient gulating role. Nonetheless, the continued ex- utilization of fixed and working capital insofar .as istence of state-enterprise credit relations still they express a certain objective economic content. r represents an inheritance from capitalisnt which The interpretation of capital chargeS solely as an must be (and is being) overcome in the course of economizing incentive is superficial, since it does building socialism. not.explain why capitaf should Qe saved nor pro- ln the Soviet Union, however, according to vide substantial principles for calqulating the size of spokesmen for the social-imperialists, "the role the charges."n; \ of interest in assuring a system of planned pro- portions in socialist expanded reproduction is growing."60ln other words, profit, including profit ln other words, capital charges may' be in- in the form of interest for the state finance troduced in part because they act as an capitalists, is the commanding principle of the economi2ing incentive, but this does not ade- economy in deteimining where (in what area of prq- quately explain what this,particular form of rn- duction) funds are invested. At this stage, after centive means objectively for the economy.' several decades of the state granting free use of To get around this problem, Liberman and funds, the new creidit policy is clearly a step others proposed that the charges be considered gbveinment tax on productive frjnds. But backward i nto capital ism. as a this, too, must be rejected becau5e "any tqx is According to a 1971 article in Finansy SSSB, based on'some specific type of income. Taxes do most Soviet economis-ts "adhere to the vieW that not produce income butr only redistribute it." 66 the effectiveness of bank loans shbuld be up- Since the state owns the enterprises it Would be

I ,- Page,t6' absurd to view this payment as a tax. For how Along these lines, the nature of capital charges canthe state tax itself?. is further exposed when we find that the institu- .True to forrp, members of the prices of produc- tion of capital charges inspired at least one tion school proposed that capital charges be economist, B. Flakitskii, to propose a similar ren- considered as part of enterprise production costs tal charge on manpower resources: Starting from repreSenting in essence depreciation on invest- the premise, that the state as ownei of all capital ment. Unlike the. two previous definitions, this is had a right'to charge its subordinate enterprises not just an attempt to fudge over the t'rue "rent" on funds furnished, Rakitskii suggested economic content of the charges with sleight of that the state could also rent out workers! Sup- hand book-keeping methods. However, this de- posedly this would assure a mord "rational" finition presupposes the independence of the en- deployment of manpower. Whereas the institu. terprise from the state, implying that oyvnership tion of capital chargeb marked d decisive step in ahd control rests with the individual firm. capitalist restoration, Flakitskiirs proposal would This is fully in tune with the production price indicate a move toward "state-feudalism" or even school's apparent aim of making the Soviet plan slavery, since it would actually deprive the into a full reconstruction of Marx's model of a ,worker qven of. ownership of his own labor competitive capitalist economy with the state power. benignly supervising from above. But it is not in Ftakitskii's proposal has not yet been serioysly line with the intentions of the social-imperialist considered by the social-,imperialists. Howevek, it bosses or with the realities of the Soviet does reflect in gross form the essential character econgmy at its actual stage of development. of the "reform." This has been to systematically Firms co4tinue to be controlled by the state and reintroduce and markedly increase the expl,oita- this control is not just a paper thing. r tion of the working class-the theft of surplus lf the capital charges .really represented the value produced by the workers for the use of an costs of depreciation-and were not part of the alien class. To better comprehend this fact, we surplus value newly created in production-these must analyze the social-imperialists' much- costs would ultimately have to be paid out in re- publicized drive for increased "productivity." turn for something concrete needed for produc- tion. ln other words, were thdy really deprecration 7) Exploitation of the Working Class costs this.would mean that the enterprise had ac- tually purchased the depreciating plant and Under socialism the Soviet economy was de- machinery from the state. veloped mainly on the basis of "extensive" rather The only remaining explanation offered by Sov- than "intensive" investment. This is an important iet economists is that "capital charges are the distinction. Any economy, of course, must strive to rental assessment of equipment and other ele- develop production to the fullest extent. And ments of productive capital." tzThis finally gets to within the 9um total of goods produced, a sec- the heart of the matter. For what is precisely at tion-the surplus-must be reinvested in order to issue here is lhe employment of capital in order to maintain the dynamism of gr6wth. Under gain a financial return. ln this case it is a return on socialism such reinVestment can serve the addi- capital invested by the state-monopoly capitalists. tional purpose of easing the burden of labor for' This means that the goal of production has now the workers. Such socialist investment is termed become the creation of surplus value and the rip- "extensiv6" because it extends production on the ping off of that value by the capitalist class. For basis.of the achievements of previous produetion state income to reflect this change and for the and not at the expense of the working class. state-monopoly capitalists to get a cut of the "lntensive" investment is instead based upon in- loot, reflecting their predominant role as owners tensification of the labor process itself. Here rein- of the means of production, it is essential that ' vested product takes the form of surplus value state income be based upon capital invbstm_ent and it does not serve to ease the burden on the and on this alone. wbrker bui to increase that burden. This means And sure enough, Soviet economists admit that an increasingly substantial segment of growth "that, in time, this irdyment will become the basic comes from speed-up and similar labor- form of payments to the budget"!oe ln the past, of intensifying measures. The introduction of new i course, the state budget was financed mainly capital is not an added resource for the worker through income obtained from state-owned pro- but is yet another mechanism for strengthening 'ductive enterprises. But this income did not take the worker's subjugation by capital. Extensive de- the form of capitalist profit because'it 'did not velopment would mean the construction of new vary according to how such cirpital was invested. plant and machinery. lntensive development might The capital charge amounti in essence to a ,also mean thb improvement of machinery, but on- rental-type form of distribution of s,urplus value ly insofar as this facilitates a faster production designed ,mainly to give the state its-share of the line. surplus value produced in industry. Secondarily, Since capitalism is based upon the extraction of by means of a cornplex formula the capital surplus value through the employment of living charge attempts to equalize the rate of profit in labor by capital, it is obvious that intensive de- different industries, without success, as this is not velopment must be primary ,under this system. possible under conditions of monopoly.. Socialism, of course, does not stand for anything Paee47: less than the most efficient and productive use of jobs were supplemented, Similarly some skilled labor.' But under socialism such efficiency does positions were better paid as an incentive to ad- not stem from the need to maximize,the extraction vancement, but at the same time political motiva: of surplus value. Flather, since the products of tion was also used. work under socialism aie controlled by the The transfer of wage determination to the en. workers themselves through the proletarian state, terprise management changed all this. Now developing the efficiency and productivity of labor motivated by the need to achieve ever higher pro- becomes a social responsibility. This is because fits, the managers abandoned all political con- production serves the people and, not the other. siderations in wage policy. The new practice was way around. to set the wages of highly productive, skilled posi- Under socialism the creative initiative of the tions higher, and unskilled, lgss productive work workers themselves is liberated to devise new lowelr. This reflected the fact that once agai7, as methods and techniques. We have seen how this under capitalism before, labor power had become can happen in our discussion of the Stakhanov a commodity bought and sold according to its movement. While this serves to stimulate value. , ecohomic growth, it cannot provide th6 basis for Even more important than \he change in wage that growth since any retreat from extensive in- determination was the incentive system adopted vestment will result only in the workers losing ihe under the "'reform." This was designed to get the motivation to improve efficiency. Thus, again, bx- workers to work harder and to increase labor pro: tensive development of production was the foun- ductivity. dation of increased labor productivity under ln theory the system resembles a corporate socialism in the Soviet Union. "profit-sharing'' plan. For the first time profits With the intioduction of the "reform", the originating with the enterprise were placed at the social-imperialists turned from extensive to in- disposal of enterprise management. A good chUnk tensive developmertt of the economy. According of this was to be plowed back into productive in- to Birman, 'ithe growth of social production vestment througI a "production development" should proceed not on an extensive, but on an in- fund controlled by enterprise management (and tensive basis, that is, in such a way that the expen- thus representing totally unplanned growth.) ditures of social labor per unit of output decrease However. another-of ten larger-portion was and the additional return from the application of placed in incentive funds designed to reward pro- this labor increases." neAnd in Brezhnev's announ- ductive workers, technicians and management cetnent of the 1971-75 Five Year Plan, it was re- with bonuses. These are mainly keyed'to fulfill- vealed that over 807" of all industrial growth would ment and overfulfillment of the profit plan. By come from increases in labor productivity. 70 1970 such incentive funds amounted to an We have seen how in agriculture the decen- average of 1O/oof the total Soviet wage f und. 7r tralizing aspect of the zveno system masked an in- It is beyond our scope here to attempt an creased intensrfication of agricultural labor (see analysis of the complete workings of the incentive section 3 above). Similarly, in industry the decen- system, as this is extremely complex. According to tralizing thrust of the "reform" worked to facilitate the bourgeois economist Gertrude Schroeder, greater exploitation of the industrial workers. "The ministries establish nprms for the formation Specifically, the main vehicle for achieving this of these funds based on a complicated set of was the wage and bonus system. formulas. Although standard and stable norms Before the "reform" all wages were set accord- were supposed to be fixed for various categories ing to plan. However, under the "reform" only the of enterprises, the ministries have in the main total size of the enterprise wage fund. was pre- fixed separate norms for each enterprise and determined. Managers were given free rein to changed them at least annually.";: Moreover, in establish€ wage hierarchy according to their own 1968 for example, at least 30 additional special desires. bonus plans existed as supplemeirts to the basic Under socialism where the general principle is, incentive program..' '"from each according to his ability, to each ac- Such complexity is not accidental. lt exi5ts to cording to his work", of wages is dp- some equalization cover up the fact that the inbentive'into system did occur but full equality was not yet possible. signed to fool the workers harder'work. lts

This was because with the limited technical base more important goal, as a study of the system's . of the economy, jobs were not equally productive. operation in Kiev revealed, is "chiefly to improve For example, a steelworker at Magnitogorsk the earnings of engineering and technical staff might produce far more actual value than did a and white-collar employees." ;r textile worker sewing garments at a single For the social-imperialists to be successful in machine. establishing profit as the qoal of production, it Wages under socialism did not fully reflect this was necessary for them to cut the enterprise discrepancy, however, because the proletarian managers in on the action. And this had to be policy was to push forward toward greater unity done in a way'which tied the growth of managerial and equality wherever this was possible. Hence, income to enterprise profit success. As much as though differences-sometimes quite large-did anything else, the "reform" aimed'at spreading the exist, in general skilled, productive work was, in capitalist outlook of the social-imperialist effect, underpaid while wages for less productive lqadership throughout lower and intermediate Page 48

levels of economic management. "not infrequently there arc many people employed at The incentive system really involves only the enterprlses who are not needed at all. They do not state and itS managerial staff in the prof it-sharing. have an adequate work load and often perform func- For instance, within one month the manager of tions that have nothing to do with production. A sur- the Lipetsk lndustrial Engineering Trust got .plus of workers at industrial enterprises is not con- . bonuses (amounting to 1,300 rubles) seven times ducive to the strengthening of labor discipline and to rnore than an ordinary worker's wage for two the rational use of labor time."iu years. 75 ln enterprises placed under the new system in 1966, white-collar managerial employ'ees The "reform" acted to "solve" tnis pro6lem. As increased their ihcome by 10.3%, engineering- N. Fedorenko notes: technical personnel by 8.2'/" but workers by only 4'17". Bonuses paid out of profits for the fourth "Arnong the other factors making for higher profit is quarter of 1967 amounted to more than 20"h of' improved employment of manpower .. . This was average wages of two privileged groups, but to facilitated in many ways by the fact that the en- only 3.3% of the average wage of workers. 7^ terpnses have been relieved of the duty to plan the ln three Kiev enterprises bonuses as a percen- 'number of workers and their distribution by functions tage of earnings rose for workers from 4.2"h to as directed from above. For the first time in many 6.4%. But for engineers and technicians they in- years of economic activity, employment in the en- creased trom 20.3k to 28.1o/", and for white collar terprses working under the new s'ystem was 0.8o/" staff from 2O.8"h lo 23/" following introduction of below the planned figure. ln some of the enterprises people f,as ac- the "reform." ln the words of this study, "Not very the absolute number of employed much was disbursed to workers from ihe Material tually decreased., although up to 1966 it invariably in- lngentive Fund in the form of bonuses." 7z creased. The redundant workers have fourtd employ- ment'at enterprises continuing to work the old tsut this should not be taken to indicate that the under SlzSte47. "stt incentive scheme was merely a managerial ripjoff . Of course, this it was. Yet it was still also aimed at solving the problem increasing productivity We can only ask here what has happened now of on when there are any "un- the basis of intensive investment. no longer enterprises left ln doing thia the der the old system"l Of course, under socialism it main goal was to tie the managers -into the was also sometimes necessary to "lay off " system, creating in them the "need" to maximize productivity and thus profits workers, and it is probably also to some extent and bonuses. The true that Soviet enterprises today have more than workers'shqre of the bonuses existed mainly as a their fair share of extraneous employees. The lat- disguise. The real way the system gets the workers to work harder is by ter is not surprising considering that since 1956, encouraging management to to force them to. managers have been increasingly encouraged look easy way However, under All this means that with the reform's for the out. introduc- socialism such abuses were lought ideologically, tion, conditions in the factories changed drastical- and managers found that padding the payroll could ly for the worse. With the maximization ol profit as punished. the goal of production, intensive be severely Moreover, workers who deveiopment were no'longer needed in one enterprise, con- came to the fore. On the basis of its capital invest- project, planned ment, the state extracted its share struction etc. were shifted in a of ine surplus way to new endeavors which were the product of value produced by means of interest and capital extensive development. So the term "lay in charges. On the basis of their success off" in fulfilling the capitalist sense-workers cut loose with no the profit plan, the managers and technicians gel (They guarantee,of other employment, able to find work bonuses. can also act as, junior independent . capitalists.in only if they can sell their labor power to a different their own right through their control capitalist to make profit does reinvested production for! himithis not ex- of p,rofit in the Develop- ist under ment Fund.) As'for the workers produce socialism. who all Under the "reform", the Soviet workers are re- this wealth, the "reform" gave them nothing but trouble. duced exactly to the position of sellers of their We have already spoken labor power to capitalist exploiters. lncreasingly briefly of speed-up, investible from intensive ex- which now characierizes Soviet industry surplus is derived as muih ploitation of fne workers. And as Federenko in- as it does industry in the U.S. ln addition, the need, to exploit cheap labor dicates, this means a decrease in the work force. has led some firms to Hence, for example, to increase their rate of profit employ children at long hours and low wages. five truck This was the case, ,,Mjtal- and auto companies in Moscow and for example, at the Leningrad discharged 239 workers, 4h of total Worker" Factory and the Aurora State Farm in Sverdlovsk.:E staff, in five months. And the Fled October lron Steel Works implemented "reform" by However, one of the most and the important methods of closing down two older workshops, throiv- increasingj prod,uctivity, iptensifying of its labor and ing 730 workers.onto the streets. sL thus raising profits is the outright sattOctober 1969, the Party Centr:al When these workers do not control the product of their work, tlirough a proletarian state, Committee endorsed the scheme. ln late 1970 the' . collectively Shchekino "experiment" was formalized with a that section of the product they produce whrch 'decree on tlle matter issued by the Council of goes beyond what they need to.live and reproduce Ministers. This included,detailed regulations for confronts them as surplus valqe in the hands of systematically applying the program elsewhere. By the capitalists. This is the fundamental law of Januaiy 1921, 121 enterprises with a total work capitalist society and it is therefore the fundarnen- force of nearly 3/t of a million workers were report- tal law of social-imperialis6n, too., ed to be trying the scheme. The plan was to re-- l duce the work force of thes'e firms by some 65,000 8) Willth6 Reat Bourgeoisie Please Stand Up? ' within two or three years.'1 After a yearof such experimentation. throughout ' So far we hdve spoken e"x,tensively of the in- - the economy,'labor productivity,increases-were creased role played by managers and technicians double the average for the econorny as'a whole. under the "reform." But though they have always "While. the volume of production grew con- been and remain today an im,portant segment of siderably, the perionhel at these enterpris'es was the Soviet bourgeoisie, these managers and ex- reduced by 23 thous?nd .. ."tr't perts are not the real power holders. The redl The social-imperialists pose the Shchekino plan state-finance capitalists are those high ' as a model to be emulated throughout the bureaucrats and Party officials who controi tfre economy and they trumpet its results in atl their central state apparatui. For purposes of clarity, it propaganda. The booklet, "Labor Remuneration, is useful to view the lower level managers as in- Labor lncentive Funds. and Soviet Trade Unions'.' dustrial capitalists subordinate to the state by l. Lazarenko, brags that "the 3-year experierlce bureaucrats and high Party officials. the top dogs of the Shbhekino Chemical Combine has yielded of the Soviet ruling class whose power is based good results." Such results include a 108,'16/o in- upon state-mon<.,poly control of the econorny. crease in labor productivity with only a 30.7"/" in- , The introduction of a coriipetitive market crease in average wages (for those lucky enough economy is,'not the m.eans through, which to still have work). " capitalism has been restored in the Soviet Union. At the Shchekino'Combine itself, where the Under the "reform", central planning was retained number of workers so far has been cut by a and control of the economy continues to .rest in thousand, management is still trying to work out the hands of the Party and state leaders who, in provisions those unfortunate be the final analysis, direct the pf anning process. Of for enoigh to r'reform"-did "displaced by:technical progress." Letters lo Prav- course, as we have noted, the initiate da and lzvestia have indicated "a popular uneasi- certain concessions to managerial control and en- ness about the prospects of unemployment." s" !erprise independence, arid, financidlly,'thq, 'Such uneasiness is indeed welI Erounded; for managers wgre among the chief beneficiaries of unemploym.qnt is the only pgssible result as this the changes. But we cannot stress enough that plan is extended to all enterprises: Even Soviet such "decentralizing" aspects of the reform were economists admit that "With the growth of the only intended to firm up the alliance between the .number of enterprises adopting the new systerri, cerltral state capitalists and their underlings. the scope of dismissals in the labor foyce will also All this was clearly indicated by Kosygin in his grow . . . "':This has led to the necessity of open- speech announcing the "reform". Here he stated. ing 80 unemployment offrces with the task of that

i ::i I :\ t Fage 50 "The proposals'put forward for consideration at the make any sighificant investment on its own. ln plenary meeting have as their point of departure the ' 1969,an average of only 15o/o of all profit was re- leading role played by centralized planned manage- tdined at the enterprise for investment and incbn- ment in developing our economy. Deviation from this tive payment purposes. "r principle would inevitably lead to the /oss of the ad- To a certiin extent, the "ieforml'also vantagqs offered by a planned sociallst economy."sl established free trade i6 producer goods which mmnt in effect the establishntent of a wholesale By this Kosygin meant that any independence market for the means of producJion. Some have granted to the individual enterprises was designed seen in this the key to capitalist restoration and only to strengthen the overall position of the state. the're-emergenbe of the anarchy of production. Though in many respects formally "set loose" Horivever, in reality this was a relatively insignifi- from the restrictions of planning, the "reformed" .c_ant development. ln late 1969 only 460 small enterprises continued to be subordinate to central wholesale stores were in ope;'ation with a total authority. Itu.rnover of'800 million rubles. T[is amounted to This was stressed also by A. Bachurin, head of less than 1o/o of total exchanEe in producer goods. Gosplan, in a 1968 article In the authoritative The remaining 99% was allocated and paid for economic journal Planovoe Khoziastvo (Ptanned centrally, according to plan.'l Economy). He states: ln our view, the key aspects of the "reform" are ,those we discussed in section 6 of this chapter. ;'The question comes to esfab/lsh ing an optima! reta- These are the intrbduction of profit maximizatio as tionship between planning and initiative, under which the goal of production and th6 consequent re- there will be a maximurn coordination of the interests alignment of the economy according to the dic- of each enterprise and its.cqllective with those of tates of the law of value, and also the institution of society as a whole, /t ls fhrs ihat constitutep one of capital charges and interest leading to the treat- the principal tasks of the reform, and by no means ment of the means of production as capital. While abandonment of the methods of planned economy certainly restoring market categories to a place of with conversion to the techniques of a'free market prominence, these measures are not dependent mechanism as the principal regulator , of the upon or even indicative of the abandonment of economy. planning and central state control. They indicate only that such conirol is no longer "conscioris" in This was very quickly recognized by those few the sense of the working class taking the managers who were under the illusion that power economy in hand and running it for the benefit of had passed to.them. Complaints by managers df the broad masses. "petty tutelage" by the central ministries have Thus, the position whiqh stateg that "whatever -bben quite common since the "reform's" enact- strengthens the market strengthens capitalism" ment. ln a 1970 survey ol 241 directors of en- really misses the point. The Soviet Union as an im- terprises in Siberia and the Far Eqst, 56% oI those perialist country haS a state-monopoly economy. polled stated that the reform was insignificant in Within this' economy, anarch! of production expanding enterprise . independence .and the r_eigns because the'production of gooQs is sub- p.owqr of the factory director; 34% com6ilained ordinate to the production of profit. Thi5, in turn, that ihsufficient enterprise indepe_ndence was the stems directly from the loss of state qgwer by the main difficulty faced by their firm under condi- proletariat. However,this economy is of a different tionsof "reform.",', type than, 'for example, the so-called.. "market it is necessary, then, to stress once nrore that qocialism" which characterizes the Yugoslav the Soviet Union is not in the stage of competitive economy. capitalism, but is an imperialist country. Moreover, Yuloslavia abandoned the construction of the development.of competitive capitalism, that is, socialism almost immediately after the seizure of of an unregulatqd market bconomy, wguld not , state power by Tito's "COmmunists." Thus a'real r mark a further degeneration into capitalism' as socialist economy had no chance to develop some would have it. ln fact; the kind of "planned" there. lnsteatJ, the Yugoslavs have built up a com- state capitalism which characterizes the Soviet petitive capitalist economy which may be one of economy today is a higher stage of capita{ist de- the last examples of such an economy left. Under velopment than pure competition on the market. state supgrvision, monopoly, both foreign and This is why we have not placed much emphasis domestic, has been kept under control and a on certain aspects of the "reforml' which do in- [yriad of small to medium-size businesses, sup. troduce elements of the market, even though posedly managed under "workers' control", com- 'some analysts have seen in these key links in the ' pete in relative freedom (and absolute anarchy) on re-establishment of a fully capitalist economy in the open market. The regulating roles of both the Soviet Union. For example, we'have not state and'Party are minimal hnd the plan means stressed the introduction of the Production verv little. Development Fund whereby enterprises can invest ,This is not, as some - would have it, more profit independently of the plan. Jhough of some capftalist than the kind . oJ centralized state-' significance, this fund in most firms amounts to monopoly found in the Soviet Union. lt is a dif- onfy between 2k and 5% of the value of fixed fereht form of capitalism indicating Yugoslavia eapital. This is not enough for the enterprise to is at a much lower stage of development than.is ,,|' :

_\ pageS1 the Soviet Union. And the Yugoslavs have been centralization of power which state-monopoly im- "successful" only because' ihey have so tar plies stands in direct contradiction to the mahaged to skillfully maintain a degree of in- "natural" gravitation of restored capitalism toward dependence vis-a-vis the two superpowers. spontaneity, anarchy of production and ultimately ln fact, the Soviet economy bears a lot stronger the market. resemblance to the fas'bist economy of Ndzi This contradiction is what lies behind the conti- Germany.-And thjs is why Marxist-Leninists like the nuing flip-flop which the social-imperialists are Chinese'and Albanians often label the Soviet forced to execute as they switch'back and forth Union "social fascist." Under the Nazis all sec- from decentralizing to'centralizing measures. For tions of German imperialism were subordinated to if the 1965 "r-eform" can be viewed as a partial the state bureaucracy run by the Nazi party. ln re- concessioh to centrifugal forces, policy since then turn for abandoning a certain amount. of "in- has been marked'by re-irpposition of central con- .dependence", the big'corporations were, rewaided trol on the now Supposedly "independent" en- in a number of ways. Primary, of cours6, was the terprises. vicious repression directed against the working This all came to a head with the 1973 re- class and other mass movements. But also impor- organization of industry. This latest measure tant was the "corporatization" of the econqmy marks an attempt by the social-imperialists to or- which saw tlre destrubtion of tens of thousands of ganizationally deal With the problem. Their solu- smaller competitive firms. e: tion is to make the "Produ6tion Association", an' ' ln the Nazi competition - Aetween entity fundamentally similar to the traditional monopolies was ""ono*V,held in check by the state which capitalist corporation, the basic unit of the used its control over military spending as one key economy. This Only more openly reveals the true level of authority and influence. The economy, of monopoly capitalist nature of the Soviet econorny. course, remained thoroughly capitalist but the The merging of several enterprises into larger conglomerates began tentatively in the Soviet But this situation was fraught with contradiction Union in 1961. The first two firms were formed in- apd within 12 years led to disaster for German im- the shoe and leather industry in Lvov in the perialisrn. These same contradictions wrack the western Ukraine on the initiative of the merging Soviet economy today and no "reform" can ever enterprises. By 1965 there were 592 such con- alter the situation. glomerates throughout the country, and though ln any capitalist economy, the fundamental con- the movement slowed as enterprises were tradiction is between the social nature of produc- transferred under the "reform" after 1965, by 1971 tion and the private nature of appropriation. This approximately 650 associations were in operation must lead to a "tension".between centrifugal (de- merQing2,700 enterprises, or 5.5% of all industrial centralizing) and centrlpdtat (centralizingl lories: enterprises. 'r On the one hand, the anarchy of production and ' Experience gained in such firms quickly re- the spontaneity of the market, on the other hand, vealed to the Soviet leadership that such com- the tendency toward concentration and mpnopoly. bined corporate units were far more managehnte , These two tendencies exist together and the de- under the new conditions. When small and middle velopment of one does not mean the elimir'rdtion of size firms were eliminated through .merger, it was the other. ln fact, as Lenin noted, the development found that a tighter r:ein could be kept on things of monopoly increases competition; and exi5ts while still operating on/a profit-oriented basis. For together with it. example, Fedoren.ko argued as early as 1967 that The social-imperialists are faced with this con- t tradiction as are all capitalists. ln pursuit of profit "'Big amalgamations are in a better position than they have become increasingly enslaved to the small enterprlses to keep track of public-demand; spontaneous law of value. This means that their concentrate funds for the estab/ishme nt of new economy develops unevenly and anarchically and shops, enterprises, and industrie9; redistribute ex- that competition between different groupings penditures connected with the production of new within the economy is inevitable. Unable arid un- types of output; summarize advan'ced know-how; willing tb rely on"ihe masses, the Soviet rulers technology, alnd the introduction of new techniques must turn to the law of value to regulate produc- within the framework of this combine; maneuver re- tion. But this implies the unshackling of markbt serves; set internat (transfer) prices; centralize'part ot forces and, to a certain degree, restoration of "in- the supply and sales operations."es. dependence" to the individual enterprises. ln one sense, the 1965 "reform" marked a concession to This was really'quite logical and reflects the fact the demands of this centrif ugal tendency. that the competitive capitalist "individual en- On the other hand, however, stands the cen- terprise as the basis". notion was only a veneer tralizing force of sta(e power-the concentration and was out of line with and impossible under the of economic and political power in the hands of actual condjtions,,and level of development of the the boqrgeois state and its monopoly P.arty. This Soviet economy. As^ the British economist, Alec centripetal force is the force of monopoly, but Nove, pointed out: - " monopoly far more highly developed than under "traditional" imperialism because it is the in- "tt stwutd be absurd to expect the necess ary de- heritor of socialist,., state ownership. The extreme clslons to be made at .the level of qn enterprise, PageS;2 which corresponds to a Weltern plant. What de- dicates clearly, however, that the social- clsrbns are made by the manager of a plant which is imperialists have not solved the contradietions pari of Dupont, U.S: Stee/ or General Etectric? ihese they face. This, of course, they can never do. As giants are bigggr than many a Sovlet ministry and the Chinese stress, "The economic base of sobial- p.erhaps no /ess centralized. "?6 . imper,ialism is monopoly 'capitalism", which is "sub.iect to the. same objective laws of im- Once they r1.'cognized the situation, the social- perialism." lmperialists wer,e quick to pick up on this crucial point. On April 2,1973 they announced that all in- dustrial enterprises would be combined into as- sociations. The,powers given to the enterprises by the 1965 "reform" were now handed over to the Map Symbols indicating foreign gas fields supplying the Sov- associations. Amalgamat'ions are to be formed on iet Unibn (c), pipeline routes (-). and countries receiuinq nation-wid'e, regional and local bases depending or destined to receive Soviet natural gas exports ( * ) , up,on.conditions. According to the announcement represent general rather than exact locations. The actual route the pipeline yet the new scheme is to be operative by the end of of into France has not been announced. (France was originally insisting that the line bypass West 1 975. Germany.) Most of the extensive natural gas pipeline network ' lt r6mains to be seen how this manbuvelwill af; inside the Soviet Union iqnot indicated. fect the workings of.the Soviet economy. lt in-

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i.",;:*/' page53 9) Summary: The Soviet Economy as a State- forces of capitalism. Capitalist Economy But Khrushchev's negation of socialism in turn called forth its dialectical o_pposite-the negation ln the preceding sections we have gone to of the negation. This can be seen in the considerable detail in explaining how the social- thoroughgoing reordering of the economy along imperialists sections we have gone to considera- state-capitalist lines carried out undet the ble detail in explaining how the social- leadership of Brezhnev and Kosygin, l imperialists have restored capitalism in the Soviet This, too, had its political aird econorhic Union. At times this account has been necessarily aspects. ln the pbtiticat sphere Brezhnev and quite complicated, ref lecting the complex process Kosygin moved to reassert centralized state and , of class struggle and capitalist restoration, and Party control-but this time on a new basis: on sornereaders may have found parts a bit.confusing. the basis of consolidating the political power of a ln the course of examining all this, it is easy to lose new state-finance bourgeoisie consisting of high "re- sight of the forest for the trees. . Party and state officials. Here the suppo$ed To summarize briefly what we have turn to Leninism" provided a convenient cover. described 'and up to this point: The restoration of capitalism in The Party was pieced back together even the Soviet Union had its roots in the class strrug- strengthened as the organized reipresentative of gle waged between the proletariat and the the new ruling class. bourgeoisie under socialism. With the ris-e to With respect. to the economy, decentralization power of Khrushchev, the bourgeoisie managed appeared to continue,'as the economic "reform" to,seize control of the pommunist Party,,the:, !granted wide leeway to individual enterpirises. political vanguard of the working class, and from However, the "reform's" real purpose was to this position turn the state into an Instrument of systematize control by the state monopoly clique bourgeois dictatorship and begin the restoration along well-ordered capitalist lines. ln practice it of,capitalism. Ihis was the crucial turning point in only strengthened the hand of the central state th e restoration process. capitalists, This can be seen quite clearly from Under Khrushchev's ldadership, the Soviet the fact that after remaining essentially stable in bourgeoisie proceeded f irst to negate the numbers during the KhrushLhev period, employ- achievements of socialism by breaking up the ment in the state administration grew each year centralized rule of the working class and dis- during 1964-1970. with a total increaSe of mantling socialist institutions. Centrali.zed direc- 516,000, or38.3%l?Decentralizationhas since been tion of collective agriculture was babotdged when further strengthened with the introduction of the Khrushchev sold the Machine Tractor Stations to Production Associations in 1973. the collective farms. ln the industrial sector the Where Khrushchev's negation of socialism planning administration was broken up into a brought.only chaos to the economy, Brezhnev series of regional economic Councils. Discussion and Kosygin's systematic "reform" succeeded- centeri-ng around reintroduction of the prof it as much as is possible under the capitalist motive and reorganization. of the economy ac- sytern-in stabilizing and restructuring the cording to the fundqmental law gf commodity economy according to consistent monopoly production, the law of value, was begun with capitalist pri nciples. open encouragement by'the Comrnunist Party This negation of the negation must be firmly leadership. Exper:iments in this direction were grasped. There is the first negation: Under also initiated. . Khrushchev's leadership the bourgeoisie attacks Politically, too, Khnushchev worked to destroy Marxism-Leninism, begins the wrecking of the centratized power of the proletarian state. He socialism. Chaos reigns in the economy and launctred a systematic attack on the most fun.', liberalism is dominant in politics. But then there damental principles of Marxism-Leninism and his is a second negation, in a sense symbolized by diatribes against - Stalin served only as 'a the coming to power of Brezhnev and Kosygin smokescreen for attacks on the dictatorship of (though there is no brick wall politically dividing the p;oletariat. Under his leadership bourgeots their reign from that of Khrushchev). Khrushchev liberal forces emerged in all areas of social life. and Khrushchevism come under attack. "Dis- By expelling large numbers of tested pro- cipline" and "control" r1e-emerge as watchwords letarian fighters from the Communist Party, of the day. The economy is systematically Khrushchev further weakened the working class. restored to working capitalist order. These fighters were then replaced by boqrrgeois But all this takes place on an entirely new anq petty bourgeois elements at all levels. asis, under completely transfornlgd conditions.. Khrushchev finally went so far as to divide the Negating the negation of socialism does not re- Party into "industrial" and "agricultural" sections turn us to socialism once more but marks in- which immobilized ahd demoralized honest Party ;tdbd tne systematic restructuring of a function- cadres, effectively limiting their political role by ing capita[ist society, a capitalist society based saddling them with administrative chores. on an historical foundation heletofore completely Khrushchev's role was to launch the attack on unprecedented. -to the proletariat, carry out the wrecking of Combining "two into one" and failing re- socialism, and thereby unleash the spontaneous cognize the two stages in the restoration pro- i'

Page 54 cess, failing to see tIis dialectical process as not However, under capitalism the "lever" which just the negation of socialism but as the negation regulates the appropriation and distribution of of the negation, can lead to at least two seribus the surplus is the system of commodity produc- errors. One would be the error of mistaking tion and eirculation, regulated by the law of Brezhnev and Kosygin's show of centralism for a value. ln this system workers must a/ienate their return to socialist principles. This line is put out labor power-give it over to another, a capitalist, by those bourgeois and petty bourgeois corir- in exchange for another commodity, money- mentators who label the present Soviet rulers wages-because, under capitalism, labor power "Stalinists." is itself a commodity anfl the means of produc- A second error is to see Khrushchevism as a// tion are monopolized by the capitalist class. Only there is to'ihe process of capitalist restoration. by selling their labor power can the workers gain From this point of view, capitalist restoration even the barest means of subsistence. ln short, becomes only the breaking apart'ot socialist the way people are mobilized to produce 'society and not also the reconstruction ol plus under capitalism is expressed succinctly by capitalism. Such a.n analysis views the market as the slogan "work for me or starve", which might the key factor in capitalist restoration and fails to well be the motto of the'bourgeoisie. recognize that capitalism can also exist in con- . Under capitalism the distribution of goods and junction with centralism (as shown in the past by services, too, can only take place with the "lever" the example of Nazi Germany). of commodity exchange and the law of value. This view implies that a country like,Yugoslavia The capitalists, who appropriate to themselves is more capitalist than the Soviet Union. lt im- the products of production, will only alienate plies also that under Dubcek's "Market these products on the basis of receiving Socialism", Czechoslovakia was attempting to something of equal value in returh. The surplus break loose of Soviet domination in order to (in the form of surp/us .value-value exiracted move more rapidly down the capitalist road. from the unpaid labor of others) that is created in Taken to its logical conclusion, such a view sees the process of production, is realized by the the rise of capitalism in the Soviet Union as a capitalist in the sale of commodities. By selling simple reversal of historical motion. One might comniodities produced by the workers, the as well argue that the Soviet Union has simply capitalist ends up witl; more money than he turned around in history and is now heading spent in his original investment, reflecting his f rom socialism through monopoly capitalisrn control of the surplus created by the workers and ba'ct< to competitive capitalism and thence, appropriated by him in the process of commodity perhaps, to feudalism. While this may be what is produqlion. ln this way each capitalist ac- desired by some idealistic, "dissident" Soviet in- cumulates the surplus and decides, on the basis .to .tellectuals, the absurdity of such reasoning is of how repeat the process on an extended certainly obvious. scale, how to invest this new sum of money once How are we to explain the restoration of again to end up with still mor+-how and where capitalism in the Soviet Union? the surplus will be distributed and utilized. Any society is basically an organized way that Thus, under capitalism, -the sumi total of its members produce and distribute the material society;s surplus is accumlated ''in fieces" Oy requirements of life. At every level of social de- various capitalists, who not only (tand above the velopment, people enter into definite relations working class, but are isolated from and in com- with each other and with the productive forces to petition with each other. As a result, it is impossi- carry out this task. ble for capitalist society as a whole to collectively ln all societies a surplus, above and beyond appropriate and utilize the surplus, and it is im- what people need to live and reproduce, must be possible for society lo conscious/y undertake the and is produced; accumulated and utilized to ex- struggle to produce and distribute the material re- pand future production as well as provide for the quirements of life. As Marx put it, under capitalism educatiohal, 'cultural and other social require- the relations between man and man, and between ments of life. For this to .happen some "lever" man and nature, are disguised as the relations must operate in society, some force or law must between things, between the various commodities regulate the process whereby this surplus is ap- that different individuals and groups in society propriated, distributed and re-invested in society. OWn. 'i Under slavery this "lever" was the whip which What is more, there is no way under capitalism forced the slave to produce a surplus which was for the capitalists to get togethei, sit down and ra- then appropriated by the slave-owner. Under tionally and peacefully divide up the take. The.in- feudalism the landlord's control of the land ternal logic of the capitalist syslem forces eac,h enabled him to extract a surplus, generally in the capitalist to re-invest his own share of the surplus form of a share of the crop, from the peasant. ln in order that this share will increase in size relative both these societies the actual producers-the to the ,shares of all the other capitalists. lf the slaves and the peasantS-did not themselves capitalist d,oes not do this he will perish as, a participate in the commodity (exhange) economy capitalist. to any great degree. Their minimum needs were The entire.development of commodity produc- provided mainly through natural production. tion takes'pta'ie spontaneously, independ-ent of the \ I Page55 Consciousnbss and will of man. But as the com- This is why we emphasize that the struggle of ,.qoOity system develops its laws are also revealed. the working class must be based upon mass ln the highest stage of commodity production- mobilization and education of the workers. To under capitalism-the laws governing the system wrest control of society from the spontaneous can be fully comptehended. With this knowledge forces of commodity production, the collective ef- the proletariat can set out-for the first time in the forts of the whole c/ass are necessary. As Marx history of class society-to consciously reshape said "the liberation of the working class must be and remold the World. This is precisely what Marx the work of the working class itself."'eThis is not ineant in his famous thesis: "Tne phitosophers merely a moral stricture, but a fundamental law of have only interpreted the world differenily, the socialism. Without the growing partic.ipation and point, however, is to change it." "u mobilization of the masses of workers there can be . The struggle for socialism must be and is a no socialism. struggle for the consclous control of society by the working class. This is why socialism can never ''Once the leadership of thq working c/ass strugg/e grow up spontaneously within capitalism as did abandons lhe mass line and fails to mobilize and rely capitalism within the bowels of feudal society. This on the masses in the consclous struggle -to is why socialism is a radically different form of re- strengthen the dictatorship of the proletariat and volution from all previous upheavals in society build socialism; in other words, onc,e the leadership which simply brought forward a new system of ex- of the Communist Pafty abandons Marxism-Leninism ploitation. and consolldafes revisionism, no matter what their Io build socialism and advance to communisrn, subjective intentions or desires rnay be, capitalist the "lever" that makes possible the production, restoration is then inevitable. As the Chinese com- accumulation and utilization of the surplus cannot rades slate: "The rise to power of revisionism means be commodit! production and the law of value, the rise to power of the bourgeoisie. " r00 but can only be ideological and political line. Thal \ is, socialism, and even more fully cornmunism, lf under socialism the production plan is not can only be built by the workers in society (under based on the experience and felt needs of the socialism the working class through its state masses--on what they collectively and ever-more power and under co'mmunism the whole popula- consciously see as necessary and possible to pro- tion, no longer, divided in.!o classes, and all acting duce, not in their individual interests but in the in- as both workers and administrators) consciously , terests of society as a whole (and ultimately the and collectively determining a plan tor producing world struggle for communi$m|-and if, in turn, and distributing the material requirements of life. this plan is not taken back to'the masses, as a This in turn can only be accomplished by first concentrated expression of their collective drawing on the'experience and collectiye wisdom wisdom (through the application of Marxism- of the masses of people, and applying the scien- Leninism); and if they are not, on this basis, tific principles of Marxism-Leninism to summing mobilized to carry out this plan, taking the in- these up. Under socialism this is accomplished by tiative into their own hands, to fulf ill and even the Party, through the applicatio.n of the mass line. overfulfill this plan; then some other way must be Under communism it is done by the whole of found lo induce, an(. ultimately to force, the society,'since by then everyone will have reached nlasses into production of a surplus. the stage of consciously striving to apply com- It is impossible for some classless group of munist principles to all phases of life. "bureaucrats" to rule society in the name of the Even under socialism, the dictatorship of the proletariat, because in order to maintain such rule proletariat, commodity production continues and these "bureaucrats" must organize the production there is some scope for the law of value. As and distribution of goods and services. lf Lenin pointed out, this provides the material bureaucratic methods of doing this prevail and basis for capitalist relations, even in socialism, come to potiticalty characterize'the planning pro- and provides the material basis for capitalist cess under socialism; and if a group of restoration. Class struggle in socialism continues bureaucrats, divorced from and not relying upon between those who want the law of value and the masses, makes the decisions on how to carry blind market forces to regulate production, and out this process, then inevitably this will be done those who'want to subjelt production to class along capitalist lines. conscious control of the proletariat. lncreasing the ln the final analysis, the revisionsts can only fall power of subjective class conscious forces over back on the law of value as the "lever" which or- production, narrowing and finally eliminating the ganize's production. They must reduce the law of value, is the ,task- of socialism as the workers to propertyless proletarians, competing in transition from capitalism to communism. This is the sale of their single commcdity-fheir labor why it is not idealist to stress the importance of power-to live. They must appeal to the narrow proletarian ideology as the leading blow against self-interest of the worker in this competition, capitalism, and why it was essential that Stalin's backing this up with the power of the state, as a and Lenin's proletarian line be smashed f,rst to force standing above and oppressing the workers, disarm the working class and make possible the a weapon in the hands of the owners of the means extension of the law of value instead of its constric: of production. They must do this because they tion. must find some way to organize production which Rage56

they cannot do consciously in a planned way by Basically similar things are going on within the themselves. They have no choice but to become a Soviet Union, although the particular forms'this is new bourgeoisle. (The law of value is modified by taking, and the specific individuals and firms in- monopoly in the sense that monopolies can raise volved, have ncit as yet been clearly exposed. But the prices of their commodities above their actuatr once profit comes to regulate the relationship value. Bu{ this does not eliminate the regulating between different areas of the' ebonomy, and rule of the law of value; in fact it intensifies the between them and the state credit institutions, it is contradictions of capitalism.) inevitable that, for example, those whose profit Once this road is taken, the ptanned rela- comes from steel production primarily will battle it tionship between various sectors of the economy, ou.trwith those who supply means of production- according to the socialist principle of subordinat- coal, oil, iron ore-for the production of steel; as ing profitability-at the enterprise level, and in well as with those who purchase steel products. society generally-to the objectiVe of alFround The creation of . the large-scale Production As- and constantly rising development must also sociations reveals that this is der,reloping rapidly in come under the regulation of the, law of value. the,Soviet Union. These Production Associations And this means that profit must be put in corn. will.inevitably compete with'each' other in pursuit 'mand. Profit must act as the regulator of rela- of protit. An association centered around the pro- tionships between different enterprises and duction of steel, for example, will attempt to spheres of the economy and determine the'basis branch into coal mining. Soon the Production As- on which they exchange their products, as com- sociations will not only be set up according to in- modities, with each other. Moreover, profit, for dif- dustry 6ut wilt-and to some degree, no doubt, ferent individual capitalists, or groups of they already do-come to represent competing capitalists, must act as. the regulator of how the groups of capitalists whose interests are quire surplus of sbciety is appropriated and utilized (re- varied; equivalent, say, to the Morgan or - invested). Rockefeller groups in the U.S. These competing , Once production is no longer regulated by a groups, will in turn fight it out for political in- true socialist plan based upon the summation of fluence and control in the Communist Party. the needs and desires of the masses of working It will be impossible for these competing people determined by a revolutionary Mar.xist- capitalists to peacefully divide the wealth. They n Leninist party with close ties to the masses, then it will try, but their eternal guest for ever-greater can only be regulated by a capitalist market-by profit. will always create new contradictions for what will bring the most profit. Even where a them. lt will always smash' to smithereens capitalist "plan":for development exists, including whatever agreements they succeed in reaching a state "'plan" designed to ensure the pr.of itability among themselves. This is directly due to the fun- gf key.monopolized industries, the laws of com- damental contradiction of capitalism and im- ' modity production /exchange, including especially perialism everywhere-the contrbdiction between the law of value*the blind force of the market* private appropriation and social production of will still remain dominant. This means that com- wealth. petition between various capitalists, controlling I lt is this contradiction which is already wreaking different sectors of the economy and different havoc in the Soviet economy. With profit in com- "pieces" of the surplus will inevitably develop, mand, the Soviet bourgeoisie, like the bourgeoisie too. everywhere, cannot possibly develop the Soviet Thi6 is what is happening in.the Soviet Union to- economy efficiently, rapidly and in a balanced, all- day. Competition takes place not primarily round way. One example of this is revealing: ln between the industrial capitalists-enterprise and 1972, when poor planning: and bad weather com- farm directors and managers, etc. (although it cer- bined to create.one of the worst agricultur:al dis- tainly does take place on this level also|-but prin- asters in Soviet history, the SOviet Union urgently cipally'"between different high Party and state of- needed large numbers of harvesters,'trrjcks and ficials who control different ministries, regions, in- driers for an emergency harvest. Howevbr, many dustries, etc. 'b" were out cif use due to a shortage of spare parts. As we have noted, the soviet economy-ot This Was because the production of spare parts is compared in rnany ways with inat ""nNazi not as profitable as the production of machines. Germany, and under the Nazis different sectors of The same problem reappeaied in 1973 when the the economy-steel, coal, etc.-were organized Soviet authorities bragged of an "unprecedented into trusts or syndicates under the control of the bumper harvest" amounting lo 222,5 million tons state which used credit as a key regulator.,But of grain. At the December 1973 plenum of the there was also very fierce competition between Central Committeel Brezhnev adm!tted that the conflicting capitalists within these various trusts shortage of farm equipment caused large quan- aqp syndicates, and between capitalists'whose tities of this "bumper crop" to rot in the fields. wealth and power was concentrated in one or Some Western observers estimate that the usable several different trusts and syndicates. And there crop amounted to only about 165 million tons. rtrr was fierce competition within the ministries con- Because under capitalism there is no way for trolling credit between capitalists mirre closely in- the overall needs of the ecoriomy to be fully taken volved in or aligned with these various different into account, such anarchy is inevitable. trusts; syndicates, etc. Moreover, capitalism cannot succeed- :\' ' partlcularly as it develops into the stage of ifn- ec,onomic life. perialisrn-iri developing the productive forces to Whereas under socialism, Soviet plan quotas ' their,maximum. The anarchic, disorganized com- n were nearly always fulfilled and even overfulfilled, petitiv6 appropriation of the surplus, and its reln- today these are, more often revised,and marked vestment accor:ding to the profit motive, ;rot only down in 'mid-plan. Even so, many important distorts what is produced but affects also how economic ddpartments do not even meet the re- much is'produced, This is what Marxists mean vised quotas. The sorry, crisis-ridden state of the when we say that capital becombs a felter on the Soviet economy today is'illustrated most clearly in' development of production. the followinE statistics which describe the results' -Since , 1928, the Soviet Union has ca'rried out of the 8th Five Year Plan which was concluded in nine Five Year Plans for. economic development, 1970. (See Table Below.) jncluding the current 1971-75 Plan. Up to,the Sth This'stagnant economy ref lects the moribund, Five Year Plan (1951-55), the gross value of,'in- dying nature of Soviet social-imperialism and all dustrial output grew at.an average annual.tate of imperialism. lmper:iatism cannot fully develop the more than 13ol", tne highest growth rate in.the productive forces becauss as more and more sur- world. rtrs flevygvsr', in the period 1966-70, output plus value is ripped off f rom the working class and grew by only 8.4% a slight decline from the 8.6/" is transfor'med into capital, subjuEating and op growth rate of 1961-65:r03 Moreover, according to pressing the.Workers, it becomes increasingly dif- U.S. government estimates, there has been a ficult for the imperialists togain maximum profit somewhat steeper decline in non-military produc- in their own'market. Profit must be realized in the tion growth-during 1966-69 this grew at' an sale of commo.dities produced, and the principal ' estimated rate of 6.2% compared with 6.87" in market for all commodities is the working'cfass, 1961-65 and nearly 10% in the 1950:s.,ro+ According which makes up the maloiity of the,populatlon. to statistics released by the Soviet. Central Moreover, the anar:chic development of prgduc- 'Statistical Board, growth of total industrial pro- . tion under capitalism means that s-ome products duction in the first three years of the 9th Fivb Year are always, i,n effect, overproduced while others Plan slid further to only 7,.8o/o in 1971,6.5o/o in 1972 are shortohanged. Not only do these factors pro- afid7.4o/o in 1973. ros duce the periodic crises of capitalism, they also Bbcause the Sor4iet Union is a state-capitalist tend to perrnanently depress the rate of profit, society, the effects of capitalist anarehy can be! " stagnating economic development. Thus,.all im- ameliorated to some degree through the working perialists are driven by the internal logic-the fun- out of the central state plan: This plan is designed datnental laws 'of their systemr-to seek new to balance out the needs of different industries, markets for their commodities, ;put, more impor. guhranteeing a "fair" profit to each,'But the plan tant, for the investment of their capital. cannot resolve the contradictions of the systbrn, The drive for t}re highest profit forces the com- and in fact lhese contradiotions are no doubt ex- peting Soviet capitalist-s to invest increasing :,am'ounts pressed in vieious in-fighling when the plan is of the surplus whereler it wilt bring the ' drawn up..As a result, the plan itself has become highest return (rate ot. prof it). ln other'words, the increasingly divorc.ed- from ,h? realities of social-imperialists, like imperialistS everlwhere;

lrom Afro-Asian Journal, No' 2, 1974'

BESULTSOFTHESTHFTVEYEARPLAN (196e1970), Original Revised . Actual . Target Target Output. .i Electrhity (thousand million KWH) 830-850 807 740 Natura! Gas (thousandmillion cubic meters[ 225-240 215 200 Coal (million tons) 665.675 624 Steel (million tons) 124-'.t29 't24' 116 Rolled Steel (million tons) 95-99 96 92 Chemical Fertilizer (million tons) 62-65 62 ' 55.4 Synthetic Fibre (thousand tons) 780.830 707 623 Automobile (thousands) 1 360-1 510 1360 916 Agrieultural Machinery Ithousand million ruLbs) 2.5 -:- 2.1 I s6.z Cement (million tons)' 100{0s Paper (million tons) s.0-5.3 5.0 4.2', Textile (lhqusand riil. sq. melers) , 9.5-9;8 8.6 Synthetic Resin and Plastic (million tons) 2.1-2.3 1.8 ,1.7 '" t" "'"; " ..1..,.. must export capitat.lo other countries-and along ln this way, the contradictions of tmperialism with this they must station armies abroad and do "spill over': and become world contradictions in a other things to "guarantee" a pr.ofitable return on very real and profound sense. All this is'why the these investments. They are forced to enter into Sovibt Union is indeed an imperialist country, competition with rival imperialists, to fight for a re-. operating under the cover of socialism, but gov. division of the world and of the markets for erned by the same objective laws as all otheaim- capital. perialist countrieS. / 1. Source not available. 39. Feiwel. p.234. 2. How the Soviel Revislonists Carry Out Alt-Round Restoration 40. Feiwel. p. 242. of Capitalism ln the USSF. p. 29 41 . A. Kosygin. On lmproving lndustrial Management. 3. Michael Talu, Powei in the Kremlin lrom Khr.ushchev to Perfecting Planning and Enhancing Economic lncentives Kosygin, New York, 1968, p.219n. 115. in lndustrial Production . lzvestia. September 28. 1965. 4. 50th Anniversary lheses, p. 84. 42. Ko\ygin speech. i Kosygin 5. V.l. Lenin, Fleport on the NEP to the Tth Moscow 43. speech. 44. Kosflgrn Gubernia Conferende of the Russian Communist Party,. speech. 45. Kosygin speech. October 29. 1921". Collected Works. Vol. 33. p. 95. Lenin, Draft Besolutibn on Questions ol-the NEP. l0th 46. Kosygin speech. Kosygin All-Russian Conference of Fi.C.P. (b),' Collected Works. 47 speech. Vol.33. p. 433. / 48 xosy[in speech. Feiwel. pp. 7. Lenin, lnstructions of the Councrl of Labor and Defense 49, 256-62.. to Local Soviet Bodies", Collected Works, Vol. 33. p. 385. 50. A. Qachurin. The Econoinib Refbrm in Operation". :7. / Planovoe Khoziaistvo, 1968. =9. 8. Voprosy Ekonomiki,1965. "soviet 9. lnterview with agricultural experts at the Pavillion of 51. Gertrude Schroeder. Economic Reform at an lm- Agricullural Management. Moscow Permanent Exhibit of passe . Problens af Communisn July-August 1971. 10. ''Policy and Economic Trends in A. Dallin and T.B. 52. V. Garbuzbv. Finances and lncentives . Ekononicheskaya 1 :41. Larsen, eds., Sovlet Pollllcs Since Khrushchev, Englewood Gazeta. 965. Cliffs. N.J.. 1968, p 85. 53. A. Birman. Prof it Today". Kommunist. 1967. :10. 54. Birman article. 11. Literaturnaya Gaze'ta, 1968. =6. 55. Brrman article 12. Novy Mlr, 1968. =3. 'Urgent 56. Birman article. 13. Leoni.d Brezhnev, .Measures for'the Furlher 57. Garbuzov. [:inances and lncentives . Dev-elopment of Soviet Agiiculture". March 24. 1965 58. N.'Fedorenko. The Reforms in lndustry: lnitial Fiesults. reprinted in U.S. iournal Problems of Economics. May. . 1965. I Problems oi Baising Efficiency". Planovoe Khoziastvo. 14. Same source. 1967 =4. 59: Fedorenko article. 15. Nove, "Economic Policy and Economic Trends . p. 84. 16. Voprosy Ekonomiki, 1969, :2. 60. V,- Palshkovikii and B. Koriagin. Problems in the Economic Subsiantiation of lnterest Rates . Finansy 17. How the Soviet fievlslonists . p 18 SSSF. 1971. =6. 18. Nove, Economic Policy and Economic Trends . Pashkovskii Koriagin 19. .,Ekonomicheskaya Gazeta, March 30, 1963. For more on 61. and article. 62. Cited in Pashkovskii and Koriagin. the problems of Soviet planning before the reform" See Leon Smolinski and Peter Wiles, The Soviet Planning 69 l. Lazarenkb. Labor Rernunbration. Labor lncentive I Pendulum" in','Problems of Comnunism. Novemberl Funbs and Soviet Trade Unions . p. 26. 64. V. Sitnrn. Payment for Funds and Economic Stimuli . December 1963. . 24. tzvestia, August 24, 1962. Planovoe Khoziastvo. 1966. =.1 1. 65. E.G: Frirn0va. the Econemic Content of C6pital 21 . Pravda, November 20, 1962. On 22. Figures from Gertrude Schroeder. ',The Soviet Eqonomic Charges . l2vestiia Slblrskbgo otdeleniia Adademii\ nauk SSSR. Seriia obshchestoe1hykh nauk.1971. Reform: A Study .in ContradiQtion', Sovlet Studles, =1. January 1968. 66. Efimova'arti6le. l-or Lrberman s views see Y. Liberman'. . Payments Cost- 23. $ame source. for Funds: Their Budgetary and Aicounting Functions . Pldnovoe Kh.oziastvo. 1967. =2. ' 24. New Program of the Comminist Party of the Soviet Llnion, '. p87 67. Efiiirqva. . On the Economic Content ol Capital Charges Budgetary and 25. Lenin, A Great Beginning", Qollected Works: Vol, 29, p. 68. Liberman. Payments for Funds: Their 427. C\csi-Accounting Functions . zo. 69. Birman. Profitioday . - 27. For example, Vladimir Treml in an article for Soviiil 70, , L" Brezhnev. A Speech to the 24th Congress of the Sfudies, April 1968 sees Academician Nemchihov and his CPSU - 197t . '=b, '28. group as the shadowy forces behind Liberman. tl. naiiuoe Khoziastvb. Ekonomicheskaya Gazeta, November 10, 1962. 72. G. Schroeder. soviet Economio Refor-m at an lm- 29. Y. Libermqn, 'Once Again on the Plan, Prof its and passee", Problems al Communisn July-Aug'qst 1971. Bonuses", Pravda, Seplember 20, 1964. 73. Schroeder. 30. Liberman. Plan. Protits. Bonuses , Pravda, September 9. 74. G.D. Soboleva. The New Soviet lncentive System: a 1962. ' gtudy of its operation. in, Kiev . lnternational Labout 31 . Sovlet Llfe, July, 1965, Review. January 1970. 32. Voprosy Ekonomiki, 1963, t4. 75 How thd Soviet Revisionisls . . . p. 15. 33. Vaag & Zakharov are quoting from Nikholar l. Bukharin, to. Stephen White. Contradiction and Change ih State Scoromics of the Transition Period and from Lenin's Socialism", Soviet Sludles, January 1974. "Critical Remarks" on this erroneous work on pp 122 77. Soboleva, The New Soviet lncentive Syst'em , and'218 from the 1971 New York (Bergman Pubt.) edi- 78. How the Soviet Revisionists . . ., p. 14. / tion. 79. E. Manevich. Problems in the Reproduction of Labor 34. Voprosy Ekononiki, 1963, t l 1. Power and Ways 35. Plainovoe Khoziastvo, 1965, ris. 80. Fedorenko, The Reforms in Industry"' 36. George Feiwel, for Economic Efficiency, Ihe Sovlet Ouest 81 . How the Soyiet Fevrsrbajsts..., p. 13. New York, 1967, p.228 82. Fddorenko, "The'fieforms in lndustry" 37. Feiwel, p. 232. Also Eugene Zaleski, Ptanning Reform in 83. White, Contradiction and Change in State Socialisrn". lhe Sovlet Union, 1962-66. Chapel Hill, 1967, p. 133-4. 84. l. lazarenko, .Labor Remuneration. Labor lncentive Feiwel. p. 38. 234. Funds and Soviet Trade Unions" p, 48. :-, Page59 i 85. Lazarenko. p. 49. 96; Alec Nove, Economic Policy and. Econ6mic 'Contradiction Trends" in 86. Quoted in LWhite, and Change in State Dallin and Larson eds.. Soylet Polltlcs Since Khrushchev, Socialism' p 105. 87. Fedorenko, The Fleforms in lndudtry". 97. Schroeder. Sovtet Economic Fieform at an lmpasse . 88. Kosygin speech, lzvestia, September 28. 1965. 98. Karl Marx,. Theses on Feuerbach 89, A. Bachurin, The Economic Fieform in Operation" 99. Quoted by Engels in Preface to EnEtish edition of 1888, Planovoe Khoziastvo,1968, :9. , -r Communist Manilesto. 90 Ekonomika i organizatsiia promilsitenhogo prozvodslva 100. Quoted from a talk by Mao Tse-tunQ in Leninism or (Novosibirsk) 1970. =1 . Social-lmperialisn? p 14. '101. 91 . Schroeder. Sovie| Economic Reform at an lmpasse Wen Hsun. Truth About Fast and Steady Development' 92. Schroeder. of Soviet Economy . The Afro-Asian Journalist, July 1974. 93. For more on the Nazl economy. see Franz. Neumann. 102. Wen Hsun. Behemoth and the essay by Tim Mason in the paperback 103. Schroeder. Soviet Economic Reform at an lmpasse '. symposrum edited by S.J. Woolf. The Nature'of Fascism. 104.Joint Economic Committee. Economic Performance and 94 A.lice C. Gorlin. 'The Sov.iet Economic Associations ' tlte Military Burden in the Soviet union. lJ.S. Govt. Printing Sovief Sludies Januaiy 1974. Office. 1970 p. 18 95. l-:edorenko, The Fieforms in lndustry" 105. Schroeder. "

Exampllof hovi So.viet revisionists.try tg put acras capitalist ideq that money, rather ,than the working nYfes., is-what ryafes,things go. lllustration is fpm.Soviet journal; entitled ';in, poirrul Lociomotive ,, with the front of the engine reading "One Ruble.,