June 31, 2011
Dear comrade Yury Shakhin,
I hope the work of your group for a conference of Ukrainian Marxists
that regard the Soviet Union as having been state-capitalist is going
well, and I would be interested in knowing the outcome. It is important
to have anti-revisionist communism develop as a real trend.
About half a year ago you sent me two articles about
state-capitalism. One was "State capitalism and socialism:
continuation of the discussion" by S. Gubanov refuting D. Yakushev. The
other was your article entitled "The theory of state capitalism of S.
S. Gubanov: A critical analysis". It took four months for a CVO comrade
to provide me with a rough translation, and additional time for me to
be able to study this material and reply. I hope it's not too late to
comment.
My comrade did his best to translate these articles, and I am
grateful to him for his efforts, but the translation wasn't very clear.
For this and other reasons, I may have made some mistakes about what is
being said. I kept revising my views about some things in these
articles. But finally I decided just to write you about what I thought
was being said, and to apologize in advance if I have inadvertently
misunderstood what is being said.
I thought that your article on Gubanov was very insightful, and I
hope it had a good reception among activists. It pointed out some of
the basic inadequacies and contradictions in Gubanov's theorizing, as
well as his illusions in the Stalinist period of the 1930s to 1950s. It
also raised the need for a class viewpoint. There is need not just to
deal with technical points of the economic structure, but to see which
class rules, and what struggle between classes has taken place.
There was one side of the issue, however, that I wish you had dealt
with explicitly. That is the issue of the conception of the transition
to socialism, and perhaps of socialism itself. When you and I talk
about the Soviet Union having been state-capitalism, this means
condemning the class nature of the regime. But there are others who
envision the transition to socialism in the form of a special kind of
state-capitalism. And especially these days, there are those who
envision socialism itself in that light -- there are "market
socialists" and even people who deserve to be called "market
communists". Perhaps you had this in mind when you pointed to Gubanov's
illusions in the Stalinist period and that he may even believe that the
regime was a workers' regime at that time. But I think it would be
helpful if the issue of how one conceives of the transition is dealt
with more explicitly.
I would like to elaborate on some of these points.
To begin with, I strongly agree with your emphasis on a class
evaluation of what the Soviet system was. Your article pointed to the
development of a dictatorship of the bourgeoisie in the Soviet Union,
presumably referring to a new bourgeoisie, different from the old
bourgeoisie that was overthrown (although some elements of the old
bourgeoisie were absorbed by it). I also thought you did well in
criticizing Gubanov for regarding the "truly conservative parties" of
Zyuganov, Anpilova and others as communists. This is an important
issue. You sharply pointed out that it is wrong to regard them as
simply "opportunists". These parties are conservative,
social-chauvinist, and even reactionary parties with a hostile class
mission to communism and the working-class.
What interested you and other activists in Gubanov's views is that
he tries to give a firm economic basis to calling the Soviet system
state-capitalism (insofar as he actually does call it
state-capitalist). He seeks to refute Yakushev's argument that the
Soviet economy had features that prove that it had nothing to do with
capitalism. Gubanov refutes this by, for example, discussing how the
turnover tax represented surplus value, even if not in the form of
profit to the enterprise. He also tried to show how the law of
value operated in the Soviet economy. And he stresses that the basic
problems of the Soviet economy come from inside the economy, not from
its relations to other countries. But, as you point out, his views are
inconsistent, and his economic analysis is tailored to prettify the
Stalinist period.
Indeed, Gubanov's economic analysis is often very one-sided, and he
repeatedly oversimplifies economic reality. For example, he refers to
the well-known highly centralized aspects of the Soviet economy, but,
when talking of the anarchy in the Soviet economy, he says that
there was no vertical or horizontal integration of Soviet enterprises.
Of course, Gubanov is aware that the plan, the ministries, and other
economic bodies sought to provide such a vertical integration of Soviet
enterprises. Nevertheless, Gubanov says that, since the individual
workplaces didn't take part in national economic calculation, there was
no economic integration. This is a surprising argument, especially as
he contrasts the lack of integration in the Soviet economy to the
integration that exists in "corporate capitalism". But Western
capitalism definitely suffers from the anarchy of production. It
combines anarchy with monopolies and other forms of economic
integration. (Indeed, even inside conglomerate corporations, managers
are concerned mainly with their own interests and those of their
department, and not those of the overall corporation. This is not the
main source of anarchy in private-capitalism, but it is enough of a
problem that bourgeois economics even has a name for it: it is one
aspect of the so-called "principal-agent problem".)
True, as we have discussed [in previous letters], it's important
that the Soviet economy did not operate as a single factory or
workplace. But it also had a certain economic integration. In modern
capitalism, a brutal anarchy of production exists side-by-side with
monopolization, centralization, and socialization of production;
monopolization and centralization, while suppressing some features of
anarchy, intensify others.
Gubanov's one-sided view of economic integration is not simply a
minor error, but a key part of his economic theorizing. This is what
allows him to advocate that nationalization in the Soviet Union was
only "formal", and not "real" nationalization. He regards that the
centralization and integration of enterprises had no economic basis in
the Soviet Union. Indeed, he apparently thinks that, until recently,
they didn't have much of a economic basis elsewhere in the world
either. Hence Gubanov — according to your summary — presents
"corporate capitalism" and "state-monopoly capitalism" as developing
only in the late 20th century.
Besides being one-sided, such theorizing tramples on the real
economic history of the last century. Monopolization and
state-capitalism have a much longer history than Gubanov says. Indeed,
while Gubanov says that the lack of integration in the Soviet economy
was inherited from the pre-revolutionary economy, the Tsarist economy,
while backward, had a highly concentrated industry and finance. He
undoubtedly knows that. But he seems to give phenomena his own special
definitions, and then theorize on the basis of his idealized picture of
economic phenomena, rather than what they actually are.
I think that what is behind Gubanov's inconsistencies and
exaggerations is that he has a glorified view of the economic
integration of enterprises, and especially of nationalization. It's not
that integration and nationalization didn't exist in the Soviet Union;
it's that they don't live up to Gubanov's conceptions of them. He seems
to regard them as simply good things, without their own internal
contradictions, and without relation to the ongoing class relations.
So, according to Gubanov's way of thinking, when the Soviet economy
shows really ugly features, it must be because of sham or formal
nationalization, not true nationalization. This is a really unfortunate
position, because its ultimate result would be to preserve the idea,
common to reformism, Stalinism and Trotskyism, that nationalization is
pro-working class and socialistic in itself. The class-conscious
working class has to be able to fight, not only against private
capitalism, but against oppressive and heartless forms of government
regulation and nationalization; it has to distinguish different ways of
carrying out nationalization even when it is demanding nationalization;
and it will be hamstrung in these fights if it has to be pretend that
bad forms and uses of nationalization are really only a matter of the
nationalization supposedly being a "sham".
This brings us to the question of whether Gubanov distinguished true
nationalization and "Soviet state-capitalism" from the transition to
socialism. You pointed out in your article that Gubanov still has
illusions about the Stalinist period of the 1930s-1950s. Does his
picture of an economy in transition to socialism, or of socialism
itself, differ much from what existed in the 1930s-50s, but carried out
in a "real" rather than "formal" way? Is this the meaning of his views
about "incomplete transition to socialism" and about there being
"Soviet state-capitalism" in the Stalinist period?
In the article you sent me, while Gubanov has economic analysis of what constitutes state-capitalism, he does not give an analysis of the transition economy. Maybe he has it in other articles. But I think it would be important for the discussion of state-capitalism to include an explicit comparison of what state-capitalism is, and what a transitional economy should be. As it is, the relation between state-capitalism, the transitional economy, and socialism is left unclear in his article and your comment on it. But I presume that the Russian, Ukrainian and other activists who are participating in the discussion about state-capitalism differ not only on their assessment of the Soviet Union, but in their very conception of what socialism is, as well as of what the transitional period would be like. It's not a matter of laying down a complete recipe for everything that will happen in the transitional period. It's that there needs to be a general conception of the nature of the transitional economy.
A socialist or communist society can't come into existence right
after the overthrow of the old bourgeoisie. I would expect that there
would be a protracted transitional period, during which the economy
still had many capitalist features. It would have a capitalist shell,
so to speak, including money, commodity production, and financial
categories of various types. The fundamental new feature in the economy
would be the growing control of the economy by the working class -- not
just in taking over from the private capitalists but also in the
working class being able to actually control those institutions that
speak in its name; in determining the overall priorities and planning
of the economy; in directing its operations workplace by workplace; in
having management gradually lose its distinctiveness from the mass of
workers themselves; etc. This new feature of the transitional economy
is incompatible with capitalism. And yet the transitional economy
combines this new feature with the capitalist (or state-capitalist)
shell. This is one of the deepest and most profound contradictions of
the transitional economy, and it would last until there is a
socialist economy, socialist in the Marxist sense, in which commodity
production has been done away with. According to this conception, the
main indicator of progress towards socialism isn't the exact level of
vertical and horizontal integration of enterprises nor the precise
financial systems that still exist, but whether the working class is
actually gaining the ability to consciously and collectively control
the economy and direct it according to its aims and according to the
material circumstances that the society faces.
But it seems that the conceptions of both Yakushev and Gubanov are different from that. Yakushev, if he refers to the ability of the workers to run the economy, probably repeats the old revisionist myths. I presume he not only regards that the old Soviet economy operated like a single enterprise, but holds that the workers were in command. Meanwhile Gubanov, as you point out, neglects the class struggle of the workers against the old revisionist system, and perhaps even thinks that the 1930-50s were a period where the revisionists represented the working class. That is a very important point. Similarly Gubanov misses the key class criterion of whether the workers actually run the economic system or not. He doesn't even raise it. Instead Gubanov exaggerates the significance of certain changes of detail in how the state-capitalist system worked, and in its changes after the Stalinist period. He misses the forest for the trees, and in this sense, his detailed economic analysis of details clouds the actual class relations involved.
Of course, a transitional economy will rapidly develop a dominant state sector. And since this transitional economy still has money, commodity production, and so on, it will formally resemble state-capitalism in a number of ways. Nevertheless, I don't believe that a real transitional economy, where the workers have not been brought back under the control of the old bourgeoisie, nor subjugated to a new one, can be described as state-capitalist. The growing direction of the economy by the working-class control is not consistent with capitalism, and it doesn't make sense to theorize that there is a "good" capitalism that serves the workers' will. (If Gubanov thinks that he has found this supposedly good capitalism in capitalism "without profit but with surplus-value", then he is profoundly mistaken. This type of theorizing is very common with market socialists and market communists. Each has their own scheme for producing the good capitalism, but they all share the belief that they have discovered the way to civilize marketplace forces.) At the same time, the capitalist shell of the transitional economy is not consistent with socialism. Thus the transitional economy has deep class and economic contradictions, as all such revolutionary periods do. As I have mentioned before, I think the transitional economy is not simply a mixture of capitalism and socialism, but an economic phase of its own, with some features that are distinct from either capitalism or socialism. On the other hand, an economy with a dominant state-sector which is also the dictatorship of a bourgeois ruling class, as happened in the Soviet Union, really is state-capitalism; it is not a transitional economy.
Gubanov, however, seems to believe that the transitional economy can
be defined as "true state-capitalism" and has "actual nationalization".
He regards "real state-capitalism" in an absurdly idealized form, with
100% state ownership, with gigantic enterprises that are vertically
integrated, and without anarchy. If I understand his article right,
near the end he even states that "actual nationalization" would do away
with the division of labor! I was astonished by this assertion. Either
Gubanov simply identifies nationalization and communist economy, or his
"real state-capitalism" is a mythic state-capitalism that has never
existed and never will exist. Such concepts also put much too great a
separation between state capitalism in the USSR and the type of
state capitalism that has developed in the Western countries, or
in various developing countries.
It seems to me that, even if Gubanov and other activists aren't
using this formula explicitly, still his views about nationalization
may be inspired by the formula that the transitional economy is
"state-capitalism under workers' rule". In any case, the formula
"state-capitalism under workers' rule" is widely taken to be Lenin's
formula. Nevertheless, I don't actually think Lenin equated
"state-capitalism under workers' rule" with the transitional economy:
when he used this formula, he would usually be careful to say that he
didn't mean state-capitalism in the usual sense. He was stressing the
need for a transitional period with what I have called above a
"capitalist shell", which is described elsewhere in CVO literature as
"capitalist methods". But whether Lenin really defined the transitional
economy as "state-capitalism under workers' rule" or not, I don't think
that we should. Lenin and the Bolsheviks dramatically advanced
communist theory concerning the transition to socialism. There is
simply no comparison between what this theory was prior to 1917
(Kautsky's essay of 1902, The Day After the Revolution, can
probably be taken as representative of this), and what it was after the
Bolshevik revolution. Nevertheless, we have to go further in the
analysis of the transitional economy and of state-capitalism than the
Bolsheviks went, and take account of the subsequent experience since
then, and years ago I wrote an article explaining what I think is wrong
with the term "state-capitalism under workers' rule".
Gubanov used his formula about real versus formal nationalization
both to refute Yakushev and to deny the fundamental continuity in the
structure of the Soviet economy between the Stalinist period and the
period after Stalin's death. Gubanov stressed that Yakushev just
repeated old myths about the Soviet economy operating as a single
corporation or enterprise, but, as you so rightly say, he seems to
retain various of his own illusions about the Stalinist period.
In fact, the anarchy of production in the Soviet economy was just as
strong in the 1930s-1950s as afterwards. The forms of struggle between
enterprises in the 1930s often took on a very blatant form. Nor did the
enterprise managers, in their struggle to make their quotas, show great
respect to their general instructions. One professor who studied Soviet
management wrote that "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." [David 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.]
Gubanov's description of the reason for the anarchy of production in
the Soviet economy seems to differ from passage to passage. In some
places, he seems to relate the anarchy of production in the Soviet
Union simply to the structure of the state sector. For example, he
makes a point that, even at its peak, the state sector didn't embrace
the whole economy. But in fact, the state sector dominated the Soviet
economy.
He makes a major point of claiming that Soviet enterprises didn't
have horizontal and vertical links, unlike the situation in "corporate
capitalism". But the Soviet ministries did, in fact, link the state
economy together. They linked it together in the capitalist way, which
differs in form between capitalism and state-capitalism, but which has
in common that integration is combined with anarchy.
Gubanov stresses the important point that "Not the arms race, not the 'cold war' exhausted the Soviet Union. The Soviet economy ... was undermined by the race to [self-financing] cost balance".
It is probably one of the most attractive features of his article that
he points strongly to the internal features of the Soviet economy as
the means reasons for its weakness. And it's true that the drive of
each Soviet director for himself helped tear the Soviet economy apart,
as did the fight between rival factions in the ministries. And it's
also true that the Soviet revisionists repeatedly tried to get out of
their problems by economic reforms that gave more scope to enterprise
profit-seeking, and this continually deepened the problems.
But what follows from this? Does Gubanov believe that if only there
hadn't been enterprise financial balances, that there wouldn't have
been any anarchy of production? Is it all simply a mistake on the part
of the political leaders of the state sector? We both seem to get this
impression of what Gubanov is saying. You raise the possibility that
Gubanov is thinking along these lines, and your article says that
Gubanov "also directly writes that the Soviet leaders did not
understand what they were doing" and that Gubanov believed the Soviet
society fell because "because nobody in the leadership of the USSR
understood [the lack of economic integration] and they couldn't take
the conscious actions recommended by Gubanov." Such ideas by
Gubanov would correspond to his view that nationalization was simply
superstructural and political.
But what really happens during the transitional period? There will
be commodity production and the use of some type of financial measures.
They will exert a continual pull backwards on the economy towards
capitalism; the working class will have to use its growing
organization, class-consciousness, and activity to oppose this. True,
the way the revisionists carry out financial balances will become
uglier and uglier. But there is no "good" form of commodity production
which in itself is inherently socialist or pro-working class. There is
no perfect form of transitional institutions which can avoid a
protracted struggle between the working class and the negative
tendencies resulting from commodity production and capitalist financial
methods -- a pull stemming not just from outside the state sector, but
manifested inside the state sector itself. The issue of class
relations, of working class action and organization -- not in name, but
in reality -- is not just a political question, or a superstructural
issue. It is a fundamental part of the economy during the transitional
period. This is one of the most basic characteristic features of that
economy. Yes, the working class will create and make use of a dominant
state sector in the economy. Nevertheless, it's not perfect
nationalization or perfect integration of the economy that moves things
forward by itself. It's working-class control of the economy that
pushes towards socialism and creates the conditions to eliminate
commodity production itself.
Gubanov doesn't talk about this struggle depending on the working
class. Nor does he make clear what measures he would recommend as
opposed to what was done. He does repeatedly raise that the problem is
that the individual workplaces or enterprises are not taking part in
the national-economic balances, but he doesn't specify how he would
avoid this. How would his "real nationalization" avoid this problem? He
does mention the issue of the division of labor, but only to say that
"real nationalization" would eliminate it. That is absurd.
Far from "real nationalization" being the solution to all the Soviet
Union's problems,, the anarchy of production in the Soviet economy
followed from the economic nature of nationalization in capitalist and
state-capitalist economics. In the absence of the working class being able to unite as a class and to direct the economy consciously, in the presence
of the dictatorship of a bourgeois ruling class, the state sector will
inevitably develop deeper and deeper private and conflicting interests
right inside itself. The bureaucratic bourgeoisie, while ruling the
country as a class, will be split by private interests and rivalries.
These rivalries will act at the enterprise level, and they will also
act within the ministries, and elsewhere throughout society. This is
why there will never be the glorified state-capitalism that Gubanov
imagines, and this is also the main source of anarchy inside the Soviet
economy. This rivalry doesn't spring from nationalization only being a
formality: Soviet nationalization was real; the old bourgeoisie was
displaced as a class; the new managers owed their positions in their
enterprises to their place in the bureaucracy; and so forth. The
anarchy of production springs from state-capitalism as well as from
private-capitalism. The way the anarchy of production manifests itself
under private and state-capitalism varies, but the same basic economic
law of capitalism operates in both capitalist forms.
This has been a long note, but there's one additional issue I want
to raise. At the end of his article, Gubanov puts forward another
seriously mistaken point. He is seeking to refute Yakushev, who
apparently pretends that great steps to communism would have been
achieved in the Soviet Union if only they had had different forms of
economic calculation. Yakushev lives in a fantasy world, which ignores
the basic economic and class contradictions in the Soviet Union, and
sees only different ways in which the ministry could make decisions. So
Yakushev dreams of replacing financial calculation with a "new system
of assessment of efficiency of the national economy". This is, in
Yakushev's view, apparently a mere technical matter of devising a
new index for use by the bureaucrats and ministries. And, it seems, he
indulges in the time-worn revisionist dream that better computing power
would have solved the problems of the Soviet economy.
Gubanov, for his part, doesn't think that such a new method of
calculation would have anything to do with the basic ills of the Soviet
economy, and that's true. Unfortunately, Gubanov goes further and ruins
the point. He ridicules the idea of economic calculation that takes
account of the natural properties of product as "feudalism" and only
good for a "subsistence economy". And he presents calculation via
labor-hours as something which is Marxist, socialist, and liberating,
by presenting it as concern for the workers' free-time.
But in actual fact, calculation by the labor-hour is the underlying
basis of capitalist value, and an economy run via these calculations is
an economy dominated by the capitalist law of value. By presenting
calculation via the labor-hour as the only form of economic
calculation, Gubanov inadvertently takes bourgeois calculation to be
eternal.
It's true that some left communists, in thinking about the future
society, not only throw out financial calculation, but any economic
calculation at all. They can't imagine economic calculation except in
the form of money; so they can't imagine socialism, the elimination of
commodity production, and the fading away of the law of value except as
the end of all economic calculation. But Gubanov makes the opposite
error, regarding labor-hour calculation as inevitable if there is to be
economic calculation. He think that this is a serious blow at
Yakushev's views. Actually, I suspect that most economists who uphold
calculation via the labor-hour are close to Yakushev in their
assessment of Soviet society.
I presume that Yakushev pointed out that the Soviet Union pioneered
the method of material balances, which takes account of goods being
materially distinct products. Yakushev probably tried to conclude from
this that the Soviet Union wasn't capitalist, since it used material
balances in the five-year plans. But this would be a shallow argument.
All systems, even capitalist ones, take a certain account of the
material qualities of goods. During war-time, for example, the most
diehard capitalist governments seek to ensure that they have sufficient
goods to produce war goods. And after World War II, some Western
capitalist countries themselves made use of a certain amount of
"material balances" in the form of input-output analysis. And, for
example, until the rise of neo-liberalism and deregulation, American
state governments would generally regulate the supply of energy to
ensure that there would be sufficient electricity, natural gas and
heating oil to supply both businesses and homes: the capitalist
utilities would be given extravagant financial guarantees for living up
to this plan, but the state would ensure that a certain material amount
of energy was available. True, under capitalism and state-capitalism,
planning according to "natural units" will always run into
contradiction with financial planning. But a certain amount of material
planning is carried out by both corporations and capitalist governments.
I wrote a series of four articles arguing that the labor-hour is not
the natural unit of socialist economic calculation. In it, I both dealt
with Marx's statements about economic calculation, and the
experience of the last century on this issue. I think the hardest
part of this issue is imagining how it is possible to have economic
calculation without assigning to every economic product a "value" of
some type. So, among other things, I tried to give at least some
indication of what economic calculation without either money or a
labor-value would be like. This issue of the technical method of
economic calculation is, of course, only a side point with respect to
the ongoing discussion of state-capitalism. But it has some value in
its own right. It gives some idea of the radical difference of
socialism from capitalism; it debunks the financial craziness of the
way market fundamentalists think; material calculation also comes
to the fore whenever a regime is taking serious account of social
needs; and finally the issue of calculation via natural units will come
to the fore as soon as serious environmental measures are taken. The
market measures for dealing with the environment (such as carbon
trading, the carbon tax, the establishment of "true costs", etc.) are a
fraud: there will instead have to be direct regulation and control of
carbon emissions and other environmental substances.
So these are some considerations that I hope are relevant to the
issues raised in you article and that of Gubanov's. I think the
discussion of Gubanov's theories, and the contrast between your and
Gubanov's standpoint, would be strengthened, if there was a more
explicit discussion of what the transitional economy is conceived of,
and how it compares to state-capitalism. But I thought your article on
Gubanov was very good. Aside from pointing out many of Gubanov's
inconsistencies, you also raised important class issues that Gubanov
ignores, and you pointed out that he ignores the history of
working-class struggle in the Soviet Union. These are crucial issues,
both from the theoretical standpoint and with respect to political
practice.
Comradely regards,
Joseph Green <>
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