State capitalism, Leninism, and the transition to socialism
--part two:

The anarchy of production beneath the

veneer of Soviet revisionist planning

by Joseph Green
(from Communist Voice #12, March 1, 1997)


List of subheads in the article:


The economic soil for socialism
The contradiction between social production and private ownership
The socialization of production doesn't only refer to giant factories
Monopoly, imperialism, & socialization of production

Did the Soviet economy run like a single workshop?
The anti-revisionist critique
The ministry rules!
The ministry doesn't rule!
The anarchy of production
Hoarding, and lack of specialization
Uncompleted and slow construction--dolgostroi
Surreal figures at the ministries
The ministries don't necessarily represent overall interests either
The structure of the economy
Engels on nationalization and socialism
Mysteries of the Western economy



. In part one of this article, I reviewed Marx and Engels's concept of the nature of communist society, and their view of the transitional steps needed to reach such a society. (1) I briefly contrasted Marxist socialism to other views of how to reach socialism, from introducing communism by decree on the day after the revolution, without any transitional period, to looking towards small-scale production and ownership of the individual means of production by each collective and commune separately. I then dwelt in detail on Lenin's views of the economic measures needed, after a proletarian revolution, in order to implement the Marxist idea of a transitional period between capitalism and socialism. Much of the focus was on discussing Lenin's views on the economic role of the state in the transition period. A report on this issue by a former comrade, Jim, was criticized, where Jim equated such transitional measures to the same type of exploitative economy as in the Soviet Union under Stalin or in China today.

. In part two, I return to the theoretical foundation of Marx and Engels's views, rather than dwelling on specific transitional measures. Marx and Engels held that socialism did not spring from some good idea about how to avoid the evils of capitalist exploitation, but was prepared by the progress of large-scale production and the development of the class struggle. So long as small-scale production and small enterprises predominated, the rule of the marketplace was inevitable. But large-scale production not only prepares the material conditions to allow socialism, but also prepares the forces that will support socialism, the modern proletariat, and gives rise to the sharp contradictions that result in socialist revolution. They held that the economic evolution of capitalism itself was preparing conditions for the working class to dispossess the capitalists of their control of an economy built up by the whole population, eliminate the private ownership of the vast productive forces of modern-day society, take over the direction of the entire economy, and end the division of humanity into different classes of people, some who toil and others who rule over them.

. As a transition measure to the classless society, Marx and Engels held that, after a socialist revolution, the workers would build a revolutionary state that would take over the means of production. But when class distinctions have finally disappeared and the population as a whole is really running production, the state itself would wither away.

. The Marxist theory is attacked today on the grounds that the state-capitalist regimes such as Stalinist Russia allegedly developed a full social control of production, and look what a mess resulted in these countries. Such an attack is based, theoretically speaking, on the view that Marxism simply calls for the state, any state, to carry out widespread nationalization. But from the first Marxism held that nationalization alone does not necessarily mean that society as a whole directs production. And an examination of the facts of economic life in China today or the Stalinist Soviet Union yesterday shows that these countries had state-capitalist regimes, where the economy is subject to the conflicting interests of the various power groups among the capitalist ruling classes there. These regimes did not and could not eliminate private interests and run the economy according to a social control by the working people. Thus, far from Marxism being refuted by the experience of these countries, the basic Marxist economic and political theses are verified by the 20th century experience of state-capitalism. The inability of a capitalist ruling class--whether bureaucratic capitalists in a state-capitalist country or market capitalists in a mixed economy--to eliminate the anarchy of capitalist production confirms the Marxist analysis that fundamental change can only come from the social control of production by the working class as a whole.


. What type of society will replace capitalism? It is common to envision socialism as having simply the good features one would like to see in the future. There are as many different "socialisms" of this type as there are different preferences and different theorists. Lenin pointed out that at one time

"socialists thought that to substantiate their views it was enough to show the oppression of the masses under the existing regime, to show the superiority of a system under which every man would receive what he himself had produced, to show that this ideal system harmonized with 'human nature,' with the conception of a rational and moral life, and so forth. Marx found it impossible to content himself with such a socialism. "(2)

Lenin pointed out that Marx, instead of simply judging and condemning the present system, analyzed the economic laws underlying the capitalist system. Instead of arguing about which economic system harmonizes with "human nature", he showed how economic development was undermining the basis of capitalism and creating the necessity for its transformation into socialism. Instead of trying to invent a new utopia, with institutions cleverly devised according to the author's idea of what's good, he looked at the type of economic system whose conditions were being prepared for by the economic evolution of capitalism itself.

. Marx studied the various steps of the process whereby small-scale production by the guild worker in industry or the individual peasant in agriculture was replaced by capitalist large-scale production. He noted that the specific features of capitalism, in which it differed from previous exploiting systems, such as that production was carried on through the cooperation of larger and larger masses of people although the fruits of this cooperation were owned and disposed of by only a handful of capitalists. This contradiction between the social character of production and the private character of ownership was at the base of capitalism. It accounts for the business cycles, the possibility of masses starving while the unsalable goods pile up in the warehouses, etc.

. Some people wish to avoid the evils of capitalism by returning to small-scale production. In essence, they dream of overcoming the social character of production. Marxism on the other hand holds that the capitalist marketplace can only be overcome by a revolution that would remove the private character of the means of production. The increasing socialization of production, rather than being the enemy, points the way forward--to the need to socialize ownership.

The contradiction between social production and private ownership

. Thus the contradiction between social production and private ownership is key to the Marxist critique of capitalism. Engels described the development of this contradiction as follows:

. "In commodity production as it had developed in the Middle Ages, the question could never arise of who should be the owner of the product of labor. The individual producer had produced it, as a rule from raw material which belonged to him and was often produced by himself, with his own instruments of labor, and by his own manual labor or that of his family. .  .  . His ownership of the product was therefore based upon his own labor. Even where outside help was used, it was as a rule subsidiary, and in many cases received other compensation in addition to wages; the guild apprentice and journeyman worked less for the sake of their board and wages than to train themselves to become master craftsmen. Then came the concentration of the means of production in large workshops and manufactories, their transformation into means of production that were in fact social. But the social means of production and the social products were treated as if they were still, as they had been before, the means of production and the products of individuals. Hitherto, the owner of the instruments of labor had appropriated the product because it was as a rule his own product, the auxiliary labor of other persons being the exception; now, the owner of the instruments of labor continued to appropriate the product, although it was no longer his product, but exclusively the product of other's labor.. . .Means of production and production itself had in essence become social. But they were subjected to a form of appropriation which has as its presupposition private production by individuals, with each individual owning his own product and bringing it on the market. The mode of production is subjected to this form of appropriation, although it removes the presuppositions on which the latter was based. In this contradiction, which gives the new mode of production its capitalist character, the whole conflict of today is already present in germ. The more the new mode of production gained the ascendancy .  . . , the more glaring necessarily became the incompatibility of social production with capitalist appropriation. "(3)

. Marx described this contradiction in Capital as follows:

. "The capitalist mode of appropriation, the result of the capitalist mode of production, produces capitalist private property. This is the first negation of individual private property, as founded on the labor of the proprietor. But capitalist production begets, with the inexorability of a law of Nature, its own negation. It is the negation of the negation. This does not re-establish private property for the producer, but gives him individual property based on the acquisitions of the capitalist era: i.e. , on co-operation and the possession in common of the land and of the means of production.
. "The transformation of scattered private property, arising from individual labor, into capitalist private property, is, naturally, a process, incomparably more protracted, violent, and difficult, than the transformation of capitalistic private property, already practically resting on socialized production, into socialized property. In the former case, we had the expropriation of the mass of the people by a few usurpers; in the latter, we have the expropriation of a few usurpers by the mass of the people. "(4)

. Thus Marx and Engels held that large-scale production not only provided more goods, but also opened a path to a social system run by all. The point wasn't to invent a new social system, but to help usher in a system that is being prepared for by economic progress itself.

The socialization of production doesn't only refer to giant factories

. Some people have suggested that the Marxist view is outdated, and the socialization of production is no longer proceeding, because factories aren't growing ever larger. For example, in the last issue of the Communist Voice I discussed the views of Sarah, of the Chicago Workers' Voice group. In essence, she presented the Marxist view of the growing socialization of production as being supposedly "bigger is automatically better". In opposition to this, she wrote that "the current level of technology and new developments in manufacturing techniques and organization have brought capitalism from an era where gigantic factories ruled to an era where merely large factories rule. " This, she believed, provided a basis to believe that "'small-scale non-modernized farming' .  .  . should have at least some place in socialism. "(5) I pointed out that she confused the size of individual factories and workgroups, with whether large-scale or small-scale production was being carried out. The modern auto factory may not be near as large as Ford's giant River Rouge complex of the 1930s, but it is generally part of even larger auto companies and the individual workplace is in contact through fiber optic cables or satellite links or computer technology with an entire global network. The size of the individual workteams, factories, etc. will grow and shrink according to technology and circumstance, but they will get further and further away from the "small-scale non-modernized" production of the past.

. In fact, Marxism has never identified the socialization of labor as only referring to the size of the individual workplace. That is only one aspect of the socialization of labor, which is why the continuing progress of large-scale production and the socialization of labor cannot be judged simply by the size of factories. A century ago, in 1894, Lenin wrote that

"The socialization of labor by capitalist production does not at all consist in people working under one roof (that is only a small part of the process), but in the concentration of capital being accompanied by the specialization of social labor, by a decrease in the number of capitalists in each given branch of industry and an increase in the number of separate branches of industry--in many separate production processes being merged into one social production process. When, in the days of handicraft weaving, for example, the small producers themselves spun the yarn and made it into cloth, we had a few branches of industry (spinning and weaving were merged). But when production becomes socialized by capitalism, the number of separate branches of industry increases: cotton spinning is done separately and so is weaving; this very division and the concentration of production give rise to new branches--machine building, coal mining, and so forth. In each branch of industry, which has now become more specialized, the number of capitalists steadily decreases. This means that the social tie between the producers becomes increasingly stronger, the producers become welded into a single whole. The isolated small producers each performed several operations simultaneously, and were therefore relatively independent of each other: when, for instance, the handicraftsman himself sowed flax, and himself spun and wove, he was almost independent of others. .  .  . The manufacturer who produces fabrics depends on the cotton-yarn manufacturer; the latter depends on the capitalist planter who grows cotton, on the owner of the engineering works, the coal mine, and so on and so forth. The result is that no capitalist can get along without others. .  .   .The character of the regime changes completely. When, during the regime of small, isolated enterprises, work came to a standstill in any one of them, this affected only a few members of society, it did not cause any general confusion, and therefore did not attract general attention and did not provoke public interference. But when work comes to a standstill in a large enterprise, one engaged in a highly specialized branch of industry and therefore working almost for the whole of society and, in its turn, dependent on the whole of society (for the sake of simplicity I take a cause where socialization has reached the culminating point), work is bound to come to a standstill in all the other enterprises of society. .  .  . All production processes thus merge into a single social production process; yet each branch is conducted by a separate capitalist, it depends on him and the social products are his private property. Is it not clear that the form of production comes into irreconcilable contradiction with the form of appropriation? Is it not evident that the latter must adapt itself to the former and must become social, that is, socialist?"(6)

. Today this socialization has proceeded quite far. Several years ago, an accidental fire in a single factory in Japan producing a specialized electronic component caused quivers through the world personal computer industry. And meanwhile, while individual factories may not be the giants they once were, multinational corporations comprising a network of factories and corporate centers continue to grow in size and influence. A couple of years ago, in 1994, Richard Barnet and John Cavanagh wrote that the corporate giants of today are even larger and more influential than they were 20 years ago:

"The emerging global order is spearheaded by a few hundred corporate giants, many of them bigger than most sovereign nations. Ford's economy is larger than Saudi Arabia's and Norway's. Philip Morris's annual sales exceed New Zealand's gross domestic product. The multinational corporation of twenty years ago carried on separate operations in many different countries and tailored its operations to local conditions. In the 1990s large business enterprises, even some smaller ones, have the technological means and strategic vision to burst old limits--of time, space, national boundaries, language, custom, and ideology. "(7)

. Barnet and Cavanagh are not Marxists, sometimes pass over from description to glorification of these giants, and have no interest in trying to prove Marxist theses correct, yet that is what their work does. They even show how the growing socialization of capitalist enterprise has extended to popular music, which one might have supposed immune from standardization and monopolization due to its individualistic nature. They state that:

"Six global corporations dominate the popular-music industry, not only in the United States but across the world. These 'six sovereign states of pop music,' as one student of the industry puts it, supply almost every record in music stores in the United States, and 'there is virtually no American pop singer or rock band of national stature that a major does not, in one way or another, have a piece of. '"(8)

They list these six corporations as the American firm Warner; the German media company Bertelsmann; the well-known Japanese firm Sony; the British defense contractor (!) and electronics firm Thorn-EMI; the British firm Polygram (owned by the Dutch electronics firm Philipps); and MCA (owned by the Japanese electronics firm Matsushita). A number of former large music companies have been swallowed by these six: for example, CBS Records is now Sony Music, and Bertelsman now owns the RCA and Arista labels. (9)

. Indeed, music provides an interesting example of monopolization. The songs are written and produced by a multitude of individual artists and bands, and yet the industry is dominated by a few major multinational corporations. It is common among bourgeois economists to point to the continuing existence of a multitude of small firms and individual entrepreneurs as proof that monopolization is not taking place or is not important. But the domination of an industry by a handful of giant firms is not impeded in the slightest by the existence of a large number of dwarf enterprises who cannot threaten the giants and who are dependent on the giants. Still less does the existence of the small firms prove that the socialization of labor has been eliminated. Small firms still exist, but they are subordinate to large corporations and the forces unleashed by the socialization of production; their fate depends mainly on factors they cannot control.

Monopoly, imperialism, and the socialization of production

. Engels points out that: "The contradiction between social production and capitalist appropriation reproduces itself as the antithesis between the organization of production in the individual factory and the anarchy of production in society as a whole. "(10) As giant firms and monopolies developed, they sought to plan production in wider and wider spheres of the economy. Does this eliminate the anarchy of production and thus overcome one of the chief features of the contradiction between social production and private appropriation? As we shall see later, Engels thought that neither joint-stock companies (the giant firms of his day) or nationalization by a capitalist government could actually provide social direction of the economy.

. The corporations have grown considerably larger since Engels's day. Lenin who lived later and saw the development of monopoly into imperialism, argued that the huge strides made in capitalist planning did not eliminate the contradiction between social production and private appropriation, but intensified it. He wrote:

. "Competition becomes transformed into monopoly. The result is immense progress in the socialization of production. In particular, the process of technical invention and improvement becomes socialized.
. "This is something quite different from the old free competition between manufacturers, scattered and out of touch with one another, and producing for an unknown market.. . .Capitalism in its imperialist stage leads directly to the most comprehensive socialization of production; it, so to speak, drags the capitalists, against their will and consciousness, into some sort of a new social order, a transitional one from complete free competition to complete socialization.
. "Production becomes social, but appropriation remains private. The social means of production remain the private property of a few. The general framework of formally recognized free competition remains and the yoke of a few monopolists on the rest of the population becomes a hundred times heavier, more burdensome and intolerable. "(11)

He added that:

. ".  .  . the monopoly created in certain branches of industry increases and intensifies the anarchy inherent in capitalist production as a whole. "(12)


. How has this Marxist theory stood up to the test of the 20th century? One of the key questions is evaluating the nature of the revisionist countries such as the late Soviet Union, China, Cuba, etc. These countries have carried out extensive nationalization and claimed to be "socialist" or "communist", and yet the working class remains oppressed. If they really are socialist, then it looks like socialism is undesirable and Marxism is just one of many plausible theories that turned out to be false. But if these countries are state-capitalist countries which are forced to falsify Marxism in order to present their economies as "socialist", then Marxism turns out to be an invaluable tool for mobilizing the working class to fight for its true interests. Moreover, a closer look at these regimes will show that not only aren't they socialist, but their economies have some notable features that provide a dramatic confirmation of Marxism that is more powerful for occurring in some unexpected places.

. The main bourgeois theory equates extensive nationalization with Marxist socialism, and points to the government ministries and "command economy" in the revisionist countries. It basically presents that the Soviet Union was run from a single center, and this is the root of all evil. One source puts it: "Soviet-style nationalization changes the economy into 'one big factory.'"(13)Before showing how far from the truth this is, let's note that a variety of views accept this bourgeois view that nationalization is socialism and present that the revisionist countries were essentially run like a single workshop, spread across an entire country.

* The Stalinist and other fake "socialist" regimes claimed that the widespread nationalization in their countries was equivalent to socialism. They claimed that the managers and bureaucrats can't really be a new bourgeois class, replacing the former ones, because they don't individually own the factories.

* Trotsky's view on this is similar to that of Stalin's. While he denounced Stalin and wanted a change of leadership in the Soviet Union, he held that so long as the nationalized property wasn't privatized, the Soviet Union was still a "workers' state", albeit a "degenerated workers' state".The main Trotskyist trends still follow Trotsky's view. If a country has nationalized industry and replaced the former owners with a new ruling class claiming to speak on behalf of the workers, this suffices for them to regard it as at least a "degenerated" or "deformed workers' state". (14) It doesn't matter who actually ruled these countries and whether they oppressed the workers, so long as the factories were still nationalized and a certain rhetoric was used. Despite their preaching against Stalinism, the Trotskyists would support the Stalinist regimes even as these regimes committed crimes against the working people. Thus various of these groupings supported the Soviet invasion of Afghanistan, or said in the 1980s that they would support a Soviet invasion of Poland, or even pledged support in general to Soviet military actions. Some of these groups still think that the Russian economy is basically socialist, because privatization hasn't yet been completed. They may call for a "political revolution" in the Stalinist countries, but in their terminology, this means that they don't see the need for an economic or social revolution (since the economic base was supposedly already socialist), just a change in leadership. Some Trotskyists groups no longer even call for a "political revolution" in certain revisionist countries. For example, the Socialist Workers' Party glorifies today's Cuba as basically socialist, on the same Trotskyist basis that the nationalized economy means socialism.(15)

* Another section of Trotskyist groups, that allied with the SWP of Britain, follows the trend of Tony Cliff. They correctly call the Stalinist regimes not workers' but state-capitalist regimes, and they do not identify socialism with nationalization. Nevertheless, Cliff's picture of the Soviet economy, as presented in his book State Capitalism in Russia, has some striking similarities to that of the orthodox Trotskyist trends. Although Cliff denounced the Stalinist regime in the most extreme terms he could think of, he pictured it as having overcome commodity production and the anarchy of production and pictured Russia as if it were simply one large workshop. He referred to the difference in a capitalist country between the planned nature of production in a single workshop and the blind forces that work in the economy as a whole, and wrote:

"No such distinction exists in Russia. Both individual enterprises and the economy as a whole are subordinated to the planned regulation of production. The difference between the division of labour within, say, a tractor factory and the division of labour between it and the steel plant which supplies it, is a difference in degree only. The division of labor with Russian society is in essence a species of the division of labor within a single workshop."(16)

Continuing on to a particular example, he discussed the relations between the Soviet workers and the enterprises where they work as follows: "In essence, the laws prevailing in the relations between the enterprises and between the labourers and the employer-state would be no different if Russia were one big factory managed directly from one centre, and if all the labourers received the goods they consumed directly, in kind. "(17)

. Thus Cliff believed that the "the Russian economy is directed towards the production of use values"(18) and that the law of value and the manifestations of production for profit only affected Russia due to its relations with its trade and competition with other countries. After discussing this, he wrote that: "The law of value is thus seen to be the arbiter of the Russian economic structure as soon as it is seen in the concrete historical situation of today--the anarchic world market. "(19) And he held that

".   .   . the division of labor is planned. But what is it that determines the actual division of the total labour time of Russian society? If Russia had not to compete with other countries, this division would be absolutely arbitrary. But as it is, Stalinist decisions are based on factors outside of control, namely the world economy, world competition. From this point of view the Russian state is in a similar position to the owner of a single capitalist enterprise competing with other enterprises. "(20)

* An earlier article of mine on the question of the structure of the revisionist economy was written in part against the views of a former comrade who was in the process of abandoning anti-revisionist Marxism-Leninism. (21) He began to denounce Marxism as disproved by the experience of Stalinism. To do so, this person claimed that the Stalinist nationalized economy had in fact overcome all forms of private ownership and private appropriation, and thus implemented Marx's idea of socialism. He said that there were no "distinct asset-owning property units" in the Soviet Union, although it is well-known that the Soviet nationalized industry was divided into separate and distinct enterprises, each with its own legal status, which in fact own their machinery, stockpiles, buildings etc. , maintain their own financial balances, and within certain limits can enter into relations with each other. Thus, basically, he too presented the Soviet economy as basically like one large workshop. (22)

* Another former comrade, Jim, whose article "Lenin's views on state capitalism--review" was discussed in a previous issue of CV(23), claimed in discussion with me that even if the Soviet economy didn't run like a single workshop, Cuba's did. Later he briefly visited Cuba in Jan.1993, while apparently still maintaining this view. But the series of articles by Mark in CV shows that Cuba has not overcome the anarchy of production, and that its economic organization is quite similar to that of the Soviet Union.

The anti-revisionist critique

. Thus the above-mentioned views hold that the Soviet Union did basically overcome the anarchy of production and resolve the contradiction between social production and private appropriation. Anti-revisionist Marxism (Marxism freed of the distortions introduced by the state-capitalist apologists) holds, to the contrary, that private appropriation remained in the Soviet Union. It turns out this is true in two different ways:

. a) The Soviet ministries planned production in the interests of the ruling class, which was a new bourgeoisie. Marxism has never held that nationalization necessarily means planning on behalf of all society--it means planning on behalf of the class that controls the state. Appropriation on behalf of a minority of bureaucrats is not social appropriation on behalf of all.

. b) Moreover, the individual and small-group interests of the members of the new revisionist bourgeoisie(24) played a crucial role in how the revisionist economies work. The various bureaucrats and groupings fought for their own enrichment, their own power, and their own interests. This didn't just introduce some minor corruption or deviations that were secondary to the planning on behalf of the government as a whole (representing the interests of the bureaucrats, the new bourgeoisie, as a whole). On the contrary, as we shall see, these private interests of the new bourgeoisie were responsible for major features of the revisionist economy which cannot otherwise be understood. The revisionist economy can only be explained through recognizing the class interests involved in it; and the class interests of the new bourgeoisie comprise the mass of its individual interests as well as its overall interests. (25) Anarchy of production remained in the Soviet economy and other revisionist economies, although it manifested itself in ways different from how it would in a mainly market economy. Just as competition between capitalists, however transformed by the existence of monopolies and state regulation, remains a fundamental feature of the western market economies, so cloaked forms of competition and jockeying between the members of the revisionist new bourgeoisie were key parts of the revisionist system. They can be seen whenever the system lasted for any period of time. This is a vivid reflection of the fact that the revisionist economy did not overcome the contradiction between social production and private appropriation.

, Nationalized production on behalf of a new ruling elite does not abolish private appropriation--such an abolition would require the working masses themselves learning how to run production. It does not mean the social ownership and control of production. From the point of view of empty generalities, which bourgeois economics is full of, nationalization and socialization are the same--control by a single center, the state. From the point of view of Marxism, they are not. The control of the entire economy on behalf of society as a whole can only be achieved through the emancipation of the working class. Indeed, Marxism holds that the state will wither away after the achievement of the full social ownership and control of production. Marx and Engels did not live long enough to see the temporary flourishing of the revisionist regimes, and their theory about the contradiction between social production and private appropriation was developed decades before such regimes ever existed. They did not even conceive of these regimes. And yet the inability of the revisionist bourgeoisie to eliminate the anarchy of production confirms their theory and its distinction between nationalization and the social ownership and control of production. This shows that the Marxist theory isn't simply a description of current events, made out to look like a general theory. Instead this theory does in fact describe general economic laws that have continued to work themselves out in situations far removed from those existing at the time the theory was first formulated. This is a confirmation of Marxism from an unexpected source, and is therefore all the more important and decisive.

. Now let's turn to some facts about the revisionist economies, concentrating on that of the late Soviet Union.

The ministry rules!

. The most obvious feature of the Soviet economy was the large Moscow ministries which controlled everything and interfered in everything, not simply directing the overall economy but stifling the initiative of everyone else. And when one has little personal knowledge of the late Soviet Union and of the other features of its economic life, it is tempting to reason about the Soviet Union simply from the idea of overbloated Moscow ministries running everything. For that matter, no matter how much information they have about the Soviet Union, many people and political trends do reason about the Soviet economy this way. It is such a simple picture, does reflect a bit of the truth, and is basically in accord with both the revisionist and western views of the Soviet economy, so that it has a certain persuasive power. The idea is that the revisionist economy was simply a "command economy" where the Moscow ministry commands and everyone else either obeys, or pretends to obey (i. e. , slacks off). Thus everything is to be explained by the decrees of the center, with the action of subordinates and localities simply introducing inefficiency into the system (beyond the inefficiency that comes from inaccurate decrees).

. The ministries certainly were an important feature of the Soviet economy. There are obvious major differences between the bureaucratic revisionist economy and western capitalism. It is not the point of this analysis to deny these differences. Quite the contrary, it is show how bourgeois class interests manifest themselves in economies that are outwardly quite different. This helps provide an understanding of what is necessary to overcome capitalism in general, and not just this or that particular style of capitalism.

The ministry doesn't rule!

. But however important the ministries, however much they could allocate massive resources to one sphere of the economy or starve other spheres, there were other factors in the Soviet economy whose power the ministries never succeeded in overcoming. And there were also apparently irrational decisions that were made over and over by the ministries and can't be explained by any overall interest of the Soviet bourgeoisie. All these things make a mockery of the idea that the ministries could simply do what they pleased.

The anarchy of production

. For one thing, when one looks closely at the Soviet system, one finds a swirling struggle of manager against manager and factory against factory underneath the overall planning by the ministries. A former comrade involved with others in an intensive study of the First Five Year Plan in the Soviet Union (1928-1933) claimed that ".  .  . what resulted could not really be characterized as the abolition of planlessness. It was not infrequently closer to giving new insight into the term 'anarchy of production'. "(26) The first five-year plan specified incredibly rapid growth, but the enterprises were often on their own in finding raw materials and supplies needed to produce what was required. They couldn't rely on the general plan or the decisions of the ministry, but were desperate to obtain supplies at all costs.

. In one form or another, this continued after the First Five Year Plan. It was so widely recognized that managers openly wrote about it in the Soviet trade journals and newspapers. They said that they had to violate the law and the planning directives in order to fulfill their obligations under the plan. Even during the height of the bloody repression of the mid-1930s, when economic managers were among those most vulnerable to arrest, imprisonment, or even execution, they continued to write about how they flouted the law. One professor, David Granick, who has studied Soviet management extensively, wrote that:

. "In actual fact, plant directors have possessed great authority. But in theory, they have not; and so they have constantly struggled to legitimize their power. During the course of this perennial battle, they have often felt sufficiently self-confident to ridicule publicly the laws they were violating. Even at the height of the 1930's purges, there were some plant directors who went out of their way to write signed articles in the national press describing how, in their own work, they had been violating both the law and instructions from superiors, announcing that they considered these violations to be quite proper, and stating flatly that in the future they had every intention of continuing and even extending the violations. "(27)

. It might be said that this shows the extreme pressure to fulfill the mandated plan. And indeed, it was one thing to write in the Soviet press about how one moved mountains to fulfill the plan, and another to make excuses about why the plan wasn't fulfilled. (28) However, if an enterprise fulfilled the plan by obtaining supplies outside the plan, it thereby disrupted the planned supply of other enterprises. If this became commonplace, which it did, then it made a mockery of the planned flow of producer goods from one factory to another. This type of plan fulfillment resembles the push of Western firms to make a profit no matter what the effect on other firms. Moreover, the comparison extends even further. The payment or prestige of the Soviet manager was just as dependent on plan fulfillment as that of the Western manager is on profitability.

. This problem was never overcome right up to the dissolution of the Soviet Union. The lack of guaranteed supply gave rise to a special type of executive, the "expediter", whose job was to actually obtain the raw materials and supplies that the enterprise was supposed to receive under the plan. The "expediter" remained a part of the Soviet economy right up to the end. The historian Alec Nove, writing in the 1980s about the Soviet economy, said that:

".  .  . We will be repeatedly examining the causes of persistent supply shortages in subsequent chapters. Their existence gives rise to the phenomenon of the tolkach, the 'pusher,' expediter, unofficial supply agent, who nags, begs, borrows, bribes, to ensure that the needed supplies actually arrive. "(29)

Hoarding, and lack of specialization

. The individual enterprises and ministries were quite aware of this anarchy of production, and took a certain account of it in their plans. Thus stocks of needed materials and equipment were hoarded by enterprises and ministries. Instead of the economy running as single workshop, each division of the economy sought to be as independent of the rest as possible. This went to the point that much equipment and a good deal of supplies weren't produced in the appropriate factory, but in makeshift arrangements in other plants. And the ministries were no better than the factory, each ministry competing with the other.

. Such inefficient production and such hoarding throughout industry harmed the overall position of the ruling bureaucratic bourgeoisie. It was not some sophisticated scheme by Moscow, but occurred in direct opposition to official pious statements and repeated denunciations. It cannot be explained on the basis of accidental requests for too many resources or mistaken plans that simply contained wrong estimates. It was not a momentary aberration. It took place because of the individual and small-group interests of the managers in their own plants and of the ministry bureaucrats in their own sectors, let the devil take the rest of the economy. Moreover, since each manager knew that others felt the same way, there was no other way to act.

. Since this is such a dramatic illustration of the way anarchy manifested itself in the revisionist economy, I will give a long extract from Granick about it:

".  .  . Probably the main area in which central policy has been steadily ignored for thirty years is that of organizational autarchy, or self-sufficiency of supply. Central authorities in Moscow are quite aware of the cost advantages to be gained through the specialization of individual factories on particular products. Each separate industrial organization, however, is anxious to be as self-sufficient as possible, and thus achieve independence of its neighbors and of an often whimsical national system of allotting necessary supplies.
. "Since no ministry could be sure of getting the materials, parts, and equipment needed for its operations, the natural tendency was for each to try to expand the coverage of its production so as to supply its own needs. Each ministry was quite willing to pay the price of high-cost production in order to achieve independence. Thirty years of denunciation from Moscow, accompanied by reasoned explanations of the advantages of division of labor, had absolutely no effect.
. "In 1951, only 47 percent of the brick production of the Soviet Union was accounted for by the Ministry of the Industry of Construction Materials. .  .  . In 1955, 390 units of a particular type of excavator were produced. Two thirds were produced within the appropriate ministry, but the rest were produced elsewhere at a cost 50 to 100 per cent greater. Of the 171 plants in 1957 which specialized in machine-tool production, only 55 were under the appropriate ministry. The other plants were organized within ministries which used their machine tools.
. "Each ministry, in fact, seemed to act much like an independent nation engaging in foreign trade. Each inevitably dealt with other ministries, but cautiously, jealously safeguarding its independence. .  .  .
. "What made this situation even more difficult is that each individual plant copied the example of its ministry, and strove to become an autarchic principality within an autarchic nation. .  .   .
. "In 1957, no more than half of the nation's standard tooling, nuts and bolts, and electrodes were produced in specialized plants. Yet it was officially recognized that the cost of producing such items in the consuming plants was several times as great as the cost of production in factories where economies of scale could be achieved. "(30)

. Several decades later, the same problem still existed. Writing in 1986, Nove refers to "a vast and growing Soviet literature on the subject of the scattering of production among a very large number of ministries and enterprises. "(31)

Uncompleted and slow construction--dolgostroi

. Another dramatic feature of Soviet economic problems was the growing mass of uncompleted construction that made a mockery of one Soviet plan after another. It took ever-longer periods to complete construction projects. This problem was continually denounced, and continually worsened. The Russians gave it its own name: "'dolgostroi' ('long-build'), the long delays in completing construction of all but the topmost priority projects. "(32)

. The problem was not that construction workers dawdled or refused to work. Instead, it was pretty universally attributed to the plans containing an impossibly large number of projects. As Nove says,

"In virtually every year since 1930 a Soviet leader has deplored what is called raspylenie sredstv, the 'scattering' of investment resources among too many projects. Measures are taken to prevent this, to concentrate on completing what is already started, but the ineffectiveness of these measures is attested by the fact that they have to repeated, while the percentage of uncompleted investments rises. .   .   . It is plainly in the interest of sectoral and local officials to start as much as possible, and to try to divert resources to projects of particular interest to them, and it is equally plain that the central co-ordinating power is unable to combat this tendency effectively. As is so often the case, the centre is able to ensure that a few key activities are given priority, but cannot cope with the task of controlling everything. "(33)

The plan calls for investment that exceeds what the ministries know is the total of resources available. (34)

. Meanwhile the length of time for a project extended further and further. Some Soviet economists claimed that the plans allotted twice as long for construction as in the West, and yet the construction took twice as long as the plan allowed. Combined with other delays, this might result in it taking 10 to 15 years between when a project is conceived to when it is finished, giving rise to the possibility that the machines in a new factory were obsolete on the day the plant opened. (35)

. The overextension of resources was repeated over and over. It wasn't just a mistake in this or that plan, but something which occurred repeatedly. Western economists often smugly claim that this took place because the revisionists were prejudiced against the concept of calculating "interest" on the use of capital, and hence couldn't calculate the real cost of investments. However, the revisionist economists had debated such an interest charge, and it was in fact introduced into various revisionist countries. (36)

. It's not clear that these charges had much of any effect on the system, and in any case, they didn't stop "dolgostroi" in the Soviet Union, which continued to intensify. Nor is there any reason to suppose these charges could fundamentally solve the issue, since the proposal of too many construction projects for the available resources was already irrational under any system of calculation whatsoever.

. "Dolgostroi" didn't spring from wrong indices used to calculate fulfillment of the plan or inaccurate formulae in the ministries. The construction projects were profitable to the managers and officials, and it was the pressure from the various groupings of the revisionist bourgeoisie that stood behind the inability of the ministries to set realistic plans. The irrational construction policy hurt the status of the Soviet bourgeoisie as a whole, undermined the economy, and weakened the revisionist grasp on power. But the drive for individual and small-group aggrandize among this bourgeoisie was more powerful than its worry about long-range problems. So year after year, there was lip-service to the general problem and the trying out of one new planning index after another, while the bulk of members of the ruling bourgeoisie continued with business as usual.

Surreal figures at the ministries

. Indeed, there must of been something of a surrealistic aspect to much of the juggling with indices done in the ministries when everyone knew that the figures provided them by the enterprises were inaccurate. Soviet managers routinely sent in reports to the ministries that overestimated the difficulties facing them and minimized the resources they had on hand. They hoped to avoid excessive demands on them in the next state plan, and thus to be able to collect bonuses for fulfilling or overfulfilling the state plan. The ministries knew this, and so routinely demanded that the enterprises produce more than would seem to be possible. They hoped to soak up the hoarded or unreported resources and to force the enterprises to work up to their potential. As Nove puts it, the knowledge that the managers are not telling the whole truth

"helps to explain the apparently irrational behavior of planners who seem to allocate more than there is to allocate: there must be something hidden, they reason, and pressure will compel it to emerge. Speeches and article often refer to the need to vyyavlat' reservy--cause reserves to appear. "(37)

. Naturally, once the manager of an enterprise knew that the ministry would set the plan on the assumption that the figures sent in had been minimized, he had little choice but to ensure that these figures really were minimized, or else he would end up with an unrealistic burden. And so deception went back and forth between the enterprise and the ministry, with anarchy flourishing under the banner of planning. The separation of the revisionist bourgeoisie from the mass of workers, and its self-seeking actions. resulted in that the ministries were separated from full knowledge of the enterprises.

. This resulted in a "method of planning [which] is known in Russian as po dostignutomu urovnyu ('on the achieved basis'), which is sometimes rendered as the 'ratchet principle'. "(38) The ministry takes last year's performance ('the achieved basis') as the base, and simply steps it up. Production should go up from last year, waste should go down. However much the revisionists might renounce this method and beat their breast about its prevalence, it persisted.

The ministries don't necessarily represent overall interests either

. Moreover, as we have seen, the ministries themselves looked after their own interests and not necessarily those of the Soviet bourgeoisie as a whole. For example, they often colluded with the enterprises in covering up failures to live up to the ministry's own plan. The ministry wanted to look good and to report that most of the enterprises under its control fulfilled the plan. Therefore, provided the product the ministry was responsible for was produced in sufficient quantity, it often rearranged the plan. If one enterprise overfulfilled the plan and another fell short, the plan might be readjusted at the last minute so that it looked like both enterprises fulfilled the plan.(39) This practice, of course, helped undermine pressure on the enterprises to live up to the various indices and formulae in the plan.

. So the overbloated ministries don't turn out to be what they might appear to have been at first sight. They didn't simply enforce a unified general control over the enterprises, but shielded their enterprises, squabbled with other ministries, and reflected the balance of power among a series of conflicting local, regional and sectoral interests of the Soviet bourgeoisie.

. No matter what the problem in the economy, there was a proposal to solve it by changing the incentives that the ministries offered the plants or changing the formulae that show whether the enterprise had fulfilled the state plan. But by now it may be apparent why the juggling of indices and formulae didn't prove an effective way for the revisionist economies to solve the most serious problems. Whenever a problem sprung from the class relations of the Soviet or other revisionist economy, the juggling of indices could not really solve it. The problem wasn't that these indices weren't as sophisticated as Western market indices, but that there were underlying class realities at stake.

. This does not mean that the Soviet ministries were unimportant. Their approval was required for a wide variety of management decisions. They also decided where the mass of investment went. They set the plan, and the indices that showed whether it had been fulfilled. Even if the enterprises used an army of "expediters" to make up for the gap in supplies allocated to them by the ministries, the enterprises were intensely concerned with the official allocations. And even if juggling ministerial indices couldn't eliminate such problems as "dolgostroi" and the anarchy of production, they could affect the profitability of individual enterprises and the fate of various managers. But they couldn't turn a system based on an exploiting bureaucratic bourgeoisie and an exploited mass into a "rational" system that works for the benefit of all. The state-capitalist nature of the revisionist system would manifest itself no matter what indices are used.

The structure of the economy

. More could be said about the Soviet economy, such as the disproportions between industry and agriculture and between the military and the rest of the economy, or about the factors in addition to the ministries that determined the wages of Soviet workers, etc. But enough has been said to show that Soviet industry did not run like one huge workshop. Soviet enterprises ran on the basis of "khozraschet" (business accounting), in which each enterprise (or grouping of enterprises) had separate accounts and had to make a profit. This was not just a minor matter of bookkeeping, but affected every aspect of enterprise management and reflected the struggle of each member or grouping of the Soviet bourgeoisie in its own interest, independent of the interests of others. The enterprises had their own interests separate from that of the Soviet bourgeoisie as a whole, and so did the ministries. This was not just a matter of some corrupt administrators, but was fundamental to the overall working of the system. The fight between and among Soviet enterprises and ministries took place in a somewhat different fashion than that of Western businesses among themselves, but take place it did.

. Moreover, I have dealt intentionally with Soviet industry, which is state-owned. Agriculture in the Soviet Union, and in the revisionist countries in general, represented a more complicated picture. But if the performance of Soviet nationalized industry cannot be understood until it is realized that it is not like one big workshop, how much more must this apply to agriculture, where several different types of ownership and of marketing arrangements existed.

. And beyond the official spheres of the economies, most revisionist economies have important black and grey markets. They are sometimes even institutionalized, as in the case of the Cuban "parallel markets".

. It's not an accident that the revisionist societies could not model everything after state-run industry, and that the black markets sprung up. It is a sign that they did not in fact achieve unified control of the economy. Those who advocate that the Soviet economy looked like a single workshop have to admit a series of exceptions: there is the countryside, but that supposedly is not as important as industry; there is the black market, but that's unofficial; there's the "khozraschet" organization of industry, but that leaves the state in ownership of the enterprises; there's the violations of the state plan and even of the law, but that's supposedly just corruption; there's the ministries throwing up their hands and planning on the "ratchet" principle; and on and on. The exceptions in fact cover the whole economy, including its "commanding heights".

Engels on nationalization and socialism

. Thus the Soviet and other revisionist "command" economies didn't in fact achieve social control of production, or even a unified control on behalf of the revisionist bourgeoisie. They certainly aren't a model of Marxist socialism. The class reality of a country split into a ruling class and an exploited majority prevents the social control of production. No matter how many indices are changed, no matter how the ministries juggle the criteria of profitability, they cannot change this reality.

. Engels had long ago pointed out that nationalization did not in itself make a bourgeois government into a socialist one or provide social control of production. He wrote:

. "But neither the conversion into joint-stock companies nor into state property [nationalization--JG] deprives the productive forces of their character as capital. In the case of joint-stock companies this is obvious. And the modern state, too, is only the organization with which bourgeois society provides itself in order to maintain the general external conditions of the capitalist mode of production against encroachments either by the workers or by individual capitalists. The modern state, whatever its form, is an essentially capitalist machine; it is the state of the capitalists, the ideal collective body of all capitalists. The more productive forces it takes over as its property, the more it becomes the real collective body of all the capitalists, the more citizens it exploits. The workers remain wage-earners, proletarians. The capitalist relation is not abolished; it is rather pushed to an extreme. But at this extreme it is transformed into its opposite. State ownership of the productive forces is not the solution of the conflict, but it contains within itself the formal means, the key to the solution.
. "This solution can only consist in the recognition in practice of the social nature of the modern productive forces, in bringing, therefore, the mode of production, appropriation and exchange into accord with the social character of the means of production. "(40)

. Engels was at such pains to show that nationalization by a bourgeois government was not the same as the social control of production that he pointed out that it did not even show the increasingly social nature of production or the nearness to socialist revolution unless there was an economic necessity behind the nationalization. He wrote that:

".  .  . Many of these means of production are from the outset so colossal that, like the railways, they exclude all other forms of capitalist exploitation [than joint-stock companies, the giant private firms of his day--JG] At a certain stage of development .   . .the official representative of capitalist society, the state, is constrained to take over their management. "(41)

He gave the examples of postal service, telegraphs and railways, but added in a footnote:

. "I say is constrained to. For it is only when the means of production or communication have actually outgrown management by share companies, and therefore their transfer to the state has become inevitable from an economic standpoint--it is only then than this transfer to the state, even when carried out by the state of today, represents an economic advance, the attainment of another preliminary step towards the taking over of all productive forces by society itself. Recently, however, since Bismarck adopted state ownership, a certain spurious socialism has made its appearance--her and there even degenerating into a kind of flunkeyism-which declares that all taking over by the state, even the Bismarckian kind, is in itself socialistic. If, however, the taking over of the tobacco trade by the state was socialistic, Napoleon and Metternich would rank among the founders of socialism. If the Belgian state, for quite ordinary political and financial reasons, constructed its own main railway lines; if Bismarck, without any economic compulsion, took over the main railway lines in Prussia, simply in order to be better able to organise and use them for war, to train the railway officials as the government's voting cattle, and especially to secure a new source of revenue independent of Parliamentary votes--such actions were in no sense socialist measures, whether direct or indirect, conscious or unconscious. Otherwise, the Royal Maritime Company, the Royal Porcelain Manufacture, and even the regimental tailors in the army, would be socialist institutions. "

. Moreover, in letters to Kautsky, Engels used the example of Java to denounce what he called "state socialism". He pointed out that the Dutch exploited Java through an economy consisting of Dutch state ownership on top of primitive communistic villages of the indigenous population.(42)

. Engels held that nationalization would be one of the steps taken in the proletarian revolution that would help the proletariat take control of the economy. But if the socialist transformation succeeds, it meant the end of the state as well as of capitalism. The social control of production would endure, but the state would not. He wrote:

. "The proletariat seizes the state power, and transforms the means of production in the first instance into state property. But in so doing, it puts an end to itself as the proletariat, it puts an end also to the state as the state. "(43)

In fact, this process of ending class antagonisms and providing true social control of production is a lengthy process. In part one, I outlined some of the transitional measures Lenin proposed for this process. Over and over, Lenin pointed to the need for measures that increase the actual organizational ability of the masses and their ability to control production. This is the Marxist measure for how far socialist transformation has proceeded.

. Nove and other bourgeois ideologists regard it as impossible for the population as a whole to control or plan production, counterposing to it the need for an administrative apparatus. He waxes lyrical on how the abstraction "the people" cannot perform this, much as a monarchist would lax lyrical on how "the people" cannot decide the myriad questions of state policy. (44) For such ideologists, any administration must resemble that in a class-divided society. And hence their ideal society can only be some variant of capitalism, even if reformists such as the historian Nove present an idealized form of capitalist mixed-economy as "feasible socialism". I hope to return to the issue of whether social planning is possible, and what it would look like, at a later date. For the purposes of this article, it suffices to note that the basic issue of Marxist socialism is precisely social control of production, and that there can be no doubt that the revisionist countries did not and do not have such control.

Mysteries of the Western economy

. One final objection to the view that private interests exist and determine the basic class features in the revisionist economies should be briefly mentioned. This view identifies private ownership or appropriation solely with the model of an individual capitalist owning his plant. In revisionist countries, where the bureaucrats did not own the factories (at least, not until the current wave of privatizations), where there was no stock market (again, not until recently), and where there was rule by a revisionist bureaucracy, it is held that this cannot be state-capitalism, for where are the capitalists?

. Much of this objection stems in essence from viewing capitalism on the model of the mid-19th century British bourgeoisie. Monopoly-capitalism in the U. S. , Western Europe (including Britain), and elsewhere has however progressed quite far since then. The Western bourgeoisie contains some capitalists (like Bill Gates) who individually own their firm, or whose family owns the firm, but it also contains large numbers of executives who do not own the firms they direct. (Such executives may get a good deal of stock in the firm as payment for their services, but they were not appointed on the basis of owning stock in the company, and might not have owned such stock until they were appointed. The stock they own in various companies is important for their status as a member of the bourgeoisie, but is not how they got their position in this or that firm. ) Indeed, the "separation of management and ownership" that is typical in most large "publicly-owned" corporations has called forth a massive literature, and some reformists have held that this process showed that the advanced bourgeois countries were transcending capitalism. As well, the state bureaucracy of the market capitalist countries is related to the private capitalist elite and overlaps with it, but is surely not identical with it. The question of who constitutes the bourgeoisie in the West has become considerably more complex since the mid-19th century.

. A better picture of the bourgeoisie in monopoly capitalist countries would show in embryo many features that are more accentuated in the Soviet bourgeoisie. The revisionist bourgeoisie has particular features compared to western bourgeoisie, but it isn't an entirely separate species.

. Marx in his work set a model of paying attention to the evolution of the forms of the bourgeoisie. He not only studied the preliminary forms that led to the modern bourgeoisie, but he held that this form didn't ossify and become fixed in the mid-19th century. A number of remarks in volume III of Capital show the keen interest he had in the evolution of the giant firms of his day, the joint-stock companies that were just appearing.

. Discussing the significance of the emergence of joint-stock companies, he referred to various features and dramatically concludes that this is the abolition of the mid-19th century capitalism, but within the framework of capitalism itself:

. "1) An enormous expansion of the scale of production and of enterprises, that was impossible for individual capitals.
. "2) The capital, which in itself rests on a social mode of production and presupposes a social concentration of means of production and labor-power, is here directly endowed with the form of social capital (capital of directly associated individuals) as distinct from private capital, and its undertakings assume the form of social undertakings as distinct from private undertakings. It is the abolition of capital as private property within the framework of capitalist production itself.
. "3) Transformation of the actually functioning capitalist into a mere manager, administrator of other people's capital, and of the owner of capital into a mere owner, a mere money-capital. .  .  . In stock companies the function [management] is divorced from capital ownership, hence also labor is entirely divorced from ownership of means of production and surplus-labor.
.  .  .  .  .  .  .  .  .   .  .  .  .  .  .  .  .  .   .  .  .  .  .  .  .  .  .
. "This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, .  .  . a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property. "(45)

. Thus Marx didn't see the growth of these large firms as merely a change in size from the old capitalism, but as illustrating new features. He noted the dissolution of the old type of capitalism, and the huge step towards social control of production that the larger forms of planning and control in a big corporation represented. But he maintained that this was still capitalism itself. He wrote that "instead of overcoming the antithesis between the character of wealth as social and as private wealth, the stock companies merely develop it in a new form. "(46)

. Similarly, the development of bureaucratic state-capitalism regimes by the revisionists didn't overcome the antithesis between social production and private wealth, as our analysis has shown, but simply developed it in a new form. It provides yet more examples of the separation of management and direct ownership, as well as of the abolition of the form of private production within the capitalist system itself. And the history of the revisionist regimes also shows that the class contradiction between the new bourgeois ruling classes and any independent action by the proletariat is just as strong as that between the Western bourgeoisie and the proletariat. The study of this new form of bourgeoisie is of importance in emancipating the proletariat from any illusions in the revisionist bourgeoisie and from the propaganda of market capitalism that presents the failures of state-capitalism as the failure of socialism, not capitalism.


1. See Communist Voice vol. 2, #3 June 1, 1996. (Return to text)

2. What the 'Friends of the People' Are and How They Fight the Social-Democrats (A Reply to Articles in 'Russkoye Bogatstvo' Opposing the Marxists), Part I, pp. 30-31, Progress Publishers.(Text)

3. Engels, Herr Eugen Dühring's Revolution in Science (Anti-Dühring), Part III. 'Socialism', a few pages into Chapter II. 'Theoretical', emphasis as in the original. (Text)

4. Capital, vol. 1, the last two paragraphs of Part VIII, chapter XXXII "Historical Tendency of Capitalist Accumulation".(Text)

5. See "Once again on peasant socialism" in CV vol. 2, #6, p. 24, col. 2. (Text)

6. Lenin, What the 'Friends of the People' Are, pp. 48-9. (Text)

7. Richard J. Barnet and John Cavanagh, Global Dreams: Imperial Corporations and the New World Order, p. 14. (Text)

8. Barnet and Cavanagh, p. 26. (Text)

9. Ibid. (Text)

10. Engels, Herr Eugen Dühring's Revolution in Science (Anti-Dühring), Part III. 'Socialism', a third of the way into Chapter II. 'Theoretical', emphasis as in the original. International Publishers, p. 299. (Text)

11. Imperialism, The Highest Stage of Capitalism, midway in Chapter 1 or Collected Works, vol.22, p. 205. (Text)

12. Ibid. , a few pages further on, or Collected Works, vol. 22, p. 208, emphasis as in the original. (Text)

13. For example, Stanislaw Wellisz, The Economies of the Soviet Bloc: A Study of Decision Making and Resource Allocation, 1964, p. 47. Wellisz distinguishes between the "Soviet-type system" in the USSR and Eastern Europe and the system in China, Yugoslavia, etc. as well as mixed economies such as Norway or Sweden (which he regards as "socialist", see p. 9). (Text)

14. The term "degenerated" is used if the Trotskyists feel that the country had at one time had a proletarian revolution, "deformed" if it hadn't. Thus, the Trotskyists feel that a regime which had nationalized industry could be a "workers' state" even if there hadn't even been an attempt at socialist revolution. (Text)

15. See the articles in the last issue of CV on the SWP and Cuba. (Text)

16. Tony Cliff, State Capitalism in Russia, Pluto Press, 1974, Chapter 7, subsection entitled "The marxian law of value and the Russian economy, viewed in isolation from world capitalism", p.203. (Text)

17. Ibid, p. 209, emphasis as in the original. (Text)

18. Cliff, Ch. 7, the subsection entitled "The marxian law of value and the Russian economy viewed in its relations with world capitalism, p. 212. (Text)

19. Ibid. (Text)

20. Ibid. , p. 209. (Text)

21. See "Some notes on theory (2)" in the Workers' Advocate Supplement for 25 July 1992 (vol.8, #6). (Text)

22. Interestingly enough, after having denounced Marxism as responsible for Stalinism and reached the point of opposing the theory of the proletarian class struggle, he then began presenting Stalinism in a positive light. He held that it was part of a "progressive" stage of "human social development" and something that "advance[d] the civilizations of various peoples", although he admitted it was built "on the basis of the oppression of the majority". This is commented on in my letter "Is revisionism progressive?" (Detroit #32, March 24, 1994) which appeared in a debate conducted by e-mail among a network of former members and supporters of the late Marxist-Leninist Party. Some defenders of his in Boston suggested that the implication of all this was that the next step forward, the "next stage of social development", might be "less glorious than socialism" and "exploit the lower mass in a more refined way", something like "Stalin's state capitalist model". (See Boston #8, an open letter from Joe in Boston. ) (Text)

23. See CV, vol. 2, #3 for Jim's article, and for part one of this article, which replies to it. (Text)

24. The term "small-group" interests is being used here to refer to the interests of individual groupings of the bourgeoisie to enrich themselves, as distinct from the overall interests of the bourgeoisie. (Text)

25. For that matter, the overall interests of the new bourgeoisie consist in maintaining the political and social conditions that allow its members to pursue their own personal interests. Of course, some members of the revisionist bureaucracy may sincerely believe in their system and think that they are upholding the interests of the working masses, just as some capitalist ideologists may genuinely believe that the dog-eat-dog world of the marketplace is the best system for the people. This doesn't change the fact that the actual class-wide interests of the bourgeoisie--whether the Western bourgeoisie or the revisionist bureaucratic bourgeoisie--consist in maintaining a system that permits the continuation of exploitation. (Text)

26. From Manny's speech to the Fourth National Conference of the Marxist-Leninist Party, USA in Fall, 1990, which appeared under the title "From the October Revolution to the first five-year plan: Some questions of Soviet history" in the Workers' Advocate Supplement, 20 July 1991, vol.7 #6, p. 14, col. 1. Manny, however, may have derived the conclusion that this issue showed the importance of utilizing more sophisticated mathematical methods in planning and in economics, rather than seeing the class basis underlying the phenomenon. (Text)

27. Granick, The Red Executive/A study of the Organization Man in Russian Industry, 1960, Ch.10, "Bureaucracy and how to live with it", pp. 134-5. (Text)

28. Granick, Management of the Industrial Firm in the USSR/A Study in Economic Planning, 1954, p. 117. (Text)

29. Alec Nove, The Soviet Economic System, third edition, 1986, ch. IV "Industrial Management and Microeconomic Problems", p. 95. Professor Nove attributes this problem to the supposed impossibility of the social planning of production as a whole, a theme which he returns to repeatedly not just in this book but in other ones as well, whereas I attribute it to the class structure in the Soviet economy. Bourgeois ideologists, including serious historians of a reformist bent, such as Nove, attribute to "planning" in the abstract the specific features that flow from state-capitalism. I hope to deal with this issue in the future. (Text)

30. Granick, The Red Executive, 1960, pp. 135-6. (Text)

31. Nove, The Soviet Economic System, 1986, Ch. 6 "Investment and technical progress," p.163.(Text)

32. Nove, An Economic History of the USSR, 1917-1991, p. 389. (Text)

33. Alec Nove, The Economics of Feasible Socialism Revisited, 1991, Part 2, "Socialism and the Soviet Experience", p. 103. (Text)

34. Nove, The Soviet Economic System, p. 158. (Text)

35. Nove, The Soviet Economic System, Ch. 6, "Investment and Technical Progress", pp.155-6.(Text)

36. See Gregory Grossman, "Scarce Capital and Soviet Doctrine" in Readings on the Soviet Economy, edited by Franklyn D. Holzman, 1962, for a description of some debates. A 6% charge on capital was introduced in the Soviet Union in 1965 (Nove, An Economic History of the USSR, 1917-1991, p. 383). Charges on capital were introduced into various other Soviet Bloc countries, reaching Romania for example at the end of 1971 (Granick, Enterprise Guidance in Eastern Europe/A Comparison of Four Socialist Economies, 1975, p. 50) . (Text)

37. Nove, The Soviet Economic System, Ch. 4, "Industrial Management and Microeconomic Problems", p. 97. (Text)

38. Ibid. p. 100. (Text)

39. Nove, The Soviet Economic System, p. 99. (Text)

40. Engels, Herr Eugen Dühring's Revolution in Science (Anti-Dühring), Part III. 'Socialism', two-thirds of the way through Chapter II. 'Theoretical', pp. 304-5. (Text)

41. Ibid. (Text)

42. Letters to Kautsky of January 18 and February 16, 1884, in Marx and Engels, On Colonialism, pp. 344-5. (Text)

43. Anti-Dühring, p. 306, emph. as in the original. (Text)

44. See for example Nove, The Economics of Feasible Socialism Revisited, Second Edition, p.256. (Text)

45. Marx, Capital, vol. III, Ch. XXVII 'The Role of Credit in Capitalist Production', pp. 437-8, emphasis added. Engels adds a note to Marx's text and discusses the developing of "new forms of industrial enterprises .  .  . representing the second and third degree of stock companies" and even, in some branches of the economy, to monopoly. (Text)

46. Ibid. , p. 440. (Text)

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