The Stalinist System
(The Internal "Evolition" Towards "Liberalization")

Written by Hiroyoshi Hayashi (1972)
Translated by Roy West

1. The Laws of Commodity Exchange and Socialism
2. The Relations of Production Under the Stalinist System
3. The "Socialist" Planned Economy and the Category of Capital
4. Economic Reforms and the Bourgeois “Evolution” of the Stalinist System
5. The “Overall” Development of Commodity Production and the “Shift to Communism”
6. Criticism of ‘Socialist’ Economics

E. The “Overall” Development of Commodity Production
and the “Shift to Communism”
The Development of a “Non Goods In-kind Economy”

With the increasing advance in industrialization and the productive power of labor, why did commodity production develop further and capitalist relations bloom, instead of commodity production being extinguished and “true” socialism achieved? Didn’t “socialist” economists say that commodity production was a remnant of the old society, and would thus become extinct? Didn’t Stalin argue just twenty years ago (1952) that commodity production and socialism are incompatible, and therefore the shift should be made to “products- exchange”? Against the subjective desire of Stalin as well as the wishes of all the “socialist” economists and scholars (in Japan the typical example is Soejima Tanenori), commodity exchange in the Soviet Union did not shift to “products-exchange”, and instead achieved its own particular development. For those who believed in the illusion of Soviet “socialism”, this is totally unexpected (Trotsky was also not completely free from such illusions). At best, they can only close their eyes to the reality of the Soviet Union, and escape by playing around with the ideal of “true” socialism. In fact, however, this historical “evolution” of Soviet society was perfectly natural. Soviet state capitalism reached a stage where it could no longer expect any further development without unfolding capitalist relations more freely. Therefore, “liberalization” is an internal demand of Soviet state capitalism, not simply a mistaken policy.

Under the Stalinist system, commodity production had not fully developed, and often had to be supplemented by an in-kind economy. The economic reforms (“liberalization”) that appeared in the sixties were a manifestation and inevitable outcome of the development of commodity production in the USSR. Consider, for example, the relationship between the state and kolhozy. Under the combination supply system in place until the dissolution of the MTS in 1958, payment in-kind to MTS made up the greatest proportion. For example, in 1953, 25.9 percent of the supply of grain was by means of obligatory delivery, 58.3 percent in payment to the MTS in-kind, and the in-kind economy was dominant. In correspondence to this, the kolhozy workers were also paid wages in-kind. The Soviet Economic Textbook also recognized this:

In comparison with industrial enterprises, relations in-kind play a large role within the kolhozy. In the kolhozy plans and reports, the in-kind indices of production development hold a major position.   [Economic Textbook, p. 852-3.]

However, with the dissolution of MTS and the transfer of the main means of production, such as tractors, to the kolhozy, the system of delivery was united in the form of a system of single-state purchases of agricultural goods, and prices of agricultural goods were raised. This sort of “commodification” of kolhozy products expanded rapidly (in China the ratio of commodified agricultural goods around 1960 was only 25 percent). Along with this change, the payment of workers also rapidly changed from payment in-kind to payment in money. Up to this time, the wage payment fund for workers was formed from the mandatory supplies to the state, but first of all this fund was abolished. All administrative restrictions on individually assisted management were also removed. Now even common citizens are allowed to utilize privately owned land and cattle. Furthermore, a number of supplementary industrial enterprises are now being formed using surplus labor and agricultural resources from the countryside. A certain amount of grain was delivered to the state according to state plans. But it was not enough to feed the whole population. Grain which exceeded the amount for obligatory delivery was freely sold, and this proportion is now rapidly increasing. After the economic reforms, while the system of cost calculation was introduced in the collective farms, the system of “fully independent accounting” came into use in the state farms [sovkozy]. The background of these changes was the overall development of commodity production and the increasing importance of the money economy.

Stalin had claimed that in order for the USSR to shift to real socialism the state enterprises and the collective farms, which had been in the “system of commodity circulation”, should be transferred to the “system of products-exchange” in the near future. However, his “system of products-exchange”, i.e. the system between the collective farms and the MTS or producers, did not turn out to be a transition from commodity production to socialist production, but to one from an in-kind economy to commodity production. “Products-exchange” was the embryo of commodity production, not socialist relations of production. Here we can see the bankruptcy of the modern-day version of the Narodnik fantasy of building socialism on the basis of agricultural collectives. The kolhozy have finally reached the stage of being run according to independent accounting which was only possible by completely subsuming the kolhozy within the commodity=money economy.

Today Soviet economists call this change “the shift to a non-in-kind economy”. Needless to say, this “non-in-kind economy” is not limited to the agricultural sector. People often wrongly regard the economic reform as the cause of commodity=capitalist production in the USSR. In fact, this is the outcome the products of the kolhozy and state enterprises increasingly becoming produced as exchange-value (as commodities). Stalin said that the means of production in the USSR were not commodities, but only their “outer-crusts”. Obviously the idea that they were not commodities or the value-body, and just a money calculation, is meaningless. The state enterprises do, in fact, produce commodities, and they are not something formal limited to money calculations. Moreover, money calculations (the independent accounting system) necessarily measure efficiency according to “profit”. State enterprises are already producing commodities in the form of “production on-order”, while the supply of raw materials and machinery “distributed” to the enterprises is being reorganized as state businesses. The commodity=capitalist relationship in the Soviet Union, which had appeared to be merely formal, is now acquiring substantial content. This relationship which had seemed to be formal and without content, was distorted by state mediation and direct and forceful “extra-economic” means. But in the early sixties, the capitalist relations in the Soviet Union completely manifested themselves, and their hidden nature became plain to see. Reality has revealed that there is no foundation for the view of the commodity=capitalist relationship, expressed by the categories of value and profit, as simply a “birthmark of the old society”, or something to be “utilized” as an economic stimulus, and this has exposed the bogus nature of “socialist” economics.

After the Russian Revolution, the Soviet Union, as Lenin emphasized, started as a petty bourgeois country (a country of small commodity producers). The commodity exchange of the small peasantry in itself did not directly signify capitalist relations of production. In the case of industry, private capitalists were expropriated and expelled by the 1917 Revolution. These conditions gave birth to the typical Stalinist ideology that although commodity production existed, capitalist production did not exist, and this commodity production was only “utilized” for “socialism”.

NEP, i.e. a “type of capitalism” (Lenin), with freedom of commerce and transactions, was “introduced” as a concession to the peasantry in order to create “normal” and stable economic relations and a solid political coalition between the workers and peasants. But this policy soon affected the industrial sector as well, and state enterprises came to be run according to an economic accounting system [khozraschyot].

Subsequently, the Soviet Union took the path of state capitalist development, appropriating the surplus-value of the peasants, increasing the workers’ production of absolute surplus-value, and turning this into state capital to force heavy industrialization. The peasants were organized into cooperative associations as an organic part of this system. But the accumulation of state capital and exploitation of the peasantry reached a limit and a stage where the production of relative surplus-value, rather than absolute surplus-value, came to hold greater significance. At this point, the Stalinist economic system became a fetter to further development. From the time of Khrushchev, reforms were implemented in the agricultural sector, which had suffered from backwardness and stagnation due to excessive exploitation, to alleviate this exploitation by raising the price of agricultural products, dissolving the MTS, and other methods. In industry, enterprises were given more independence to exploit labor more efficiently. Whereas extra-economic methods had played a central role in the past, under the new stage of “liberalization” the commodity=capitalist principles now penetrated more feely, and therefore “rationally”.

In the Soviet Union, economic necessity manifested itself in the policies of the state (for example NEP). The necessity of commodity production for the peasantry was seen in the state’s official policies recognizing capitalism. Similarly, the necessity of commodity= capitalist relations of production can be seen in the state’s policy of “liberalization”. However, this gives birth to the subjectivistic illusion that the development of the economic relations is the outcome of the state’s policies, and that these relationships can be controlled solely through the will of the state. Those who clutch at outward appearances can only resort to denouncing policy “mistakes” and ideological “revisionism”. However, one of the special qualities of state capitalism is that economic necessity is realized and “accomplished” through the policies of the state. Without the development of the commodity= capitalist relations, there would not have been “liberalization”, the “utilization” of the “law of value” or the “concept of profit”. Some seem to have forgotten this basic truth, and have ended up mistaking an outcome for the cause.

Commodity production and capitalistic production can be theoretically distinguished, but in reality they cannot be separated. Just as no “pure” commodity production can be said to exist totally separate from capitalism and without an intrinsic tendency to develop towards capitalistic production, there is also no such thing as “socialist” commodity production. Historically, even in periods where simple commodity production was the dominant form of commodity production, early forms of capital existed. Moreover, in the modern era of capitalist commodity production, the idea of commodity production for the sake of “socialism”, bearing no relation to capitalism, is merely a fantasy of the Stalinists. They may claim that it is possible for the “socialist” state to always check the development of commodity production from becoming capitalist production, but we would respond by pointing out the inseparable internal connection between commodity production and capitalist production.

Moreover, as can be seen from “liberalization”, the Soviet “proletarian state” is increasingly developing free capitalistic relations on the basis of the overall development of commodity production. Where, exactly, are the checks the Stalinists talk about? This supplies us with a living demonstration of the fact that capitalist relations are inevitably produced when commodity production reaches a certain developmental stage.

In Economic Problems, Stalin quotes the following passage from Engels: “With the seizing of the means of production by society, production of commodities is done away with, and, simultaneously, the mastery of the product over the producer.”(*) Stalin claims that this does not apply to the Soviet Union because Engels is referring to a society where all the means of production were nationalized. For Stalin, commodity production remained in the Soviet Union because the sector of agriculture had not yet been nationalized. It follows from this that he should have concluded that the Soviet Union had yet to reach the level of socialist society? Stalin instead said that socialism and commodity production are compatible according to the peculiar logic that commodity production and capitalist production are “two different things”. 

[(*) Stalin, Economic Problems, p. 9.]

However, commodity production and capitalist production are not necessarily “two different things”. Marxists emphasize that capitalism is nothing but the highest form of commodity production, and that petty commodity production naturally generates and turns into capitalism. It is incorrect to mechanically separate commodity production and capitalist production in the manner of Stalin. Moreover, he did this in order to connect commodity production to “socialism”. There should be no disagreement among Marxists that fundamentally this is a bourgeois theory. The development of commodity production and the transition from an “in-kind economy” in the Soviet Union is the most profound basis of “liberalization” and the emergence of the capital=wage-labor relationship (i.e. the “concept of profit” being substantialized).

Since the time of Khrushchev, the Soviet ruling class has often talked about the transition of Soviet society to communism, and said that the greatest possible development of commodity production was needed to accomplish this. Their representative ideologue Ostrovityanov has advanced the “dialectic of development” according to which only the highest development of commodity and money relations will lead to their extinction, thereby paving the way to communism. The Soviet Economics Textbook, moreover, says:

Throughout the entire period of the overall building of communism, rather than being diminished or replaced by the exchange of products (this was meant to be a criticism of Stalin?Hayashi), commodity and money relations must be fully developed and utilized for the construction of communist society.  [Economic Textbook, p. 1016.]

Of course, this is total nonsense. Regardless of what the Stalinists subjectively think, one cannot envisage communist society through the overall development of the commodity=money relationship in the future because this is nothing but capitalism. The state bureaucrats and directors of enterprises and the kolhozy, increasingly have a special interests in this system. They feel that it is beneficial to maintain and defend this new capitalist system. If one abstractly looks at the issue of productive power, the “overall” development of commodity production is a step towards communist society in terms of raising productive power. But Marxists have never taken, and never will take the “objectivistic” (or bourgeois determinist) position that capitalism will automatically shift to communism without class struggle. The development of productive power under capitalist relations is only a step towards communism in terms of external form, not in content. In terms of content, as the reality of the USSR shows, this will increasingly lead in a direction opposite from communism, and the bourgeois capital=wage-labor class relationship will become clearer. Here we need to recall the words of Marx.

However long a series of periodical reproductions and preceding accumulations the capital functioning today may have passed through, it always preserves its original virginity. As long as the laws of exchange are observed in every single act of exchange?taken in isolation?the mode of appropriation can be completely revolutionized without in any way affecting the property rights which correspond to commodity production. The same rights remain in force both at the outset, when the product belongs to its producer, who, exchanging equivalent for equivalent, can enrich himself only by his own labour, and also in the period of capitalism, when social wealth becomes to an ever-increasing degree the property of those who are in a position to appropriate the unpaid labour of others over and over again. This result becomes inevitable from the moment there is a free sale, by the worker himself, of labour-power as a commodity. But it is also only from then onwards that commodity production is generalized and becomes the typical form of production; it is only from then onwards that every product is produced for sale from the outset and all wealth produced goes through the sphere of circulation. Only where wage-labour is its basis does commodity production impose itself upon society as a whole; but it is also true that only there does it unfold all its hidden potentialities. To say that the intervention of wage-labour adulterates commodity production is to say that commodity production must not develop if it is to remain unadulterated. To the extent that commodity production, in accordance with its own inherent laws, develops further, into capitalist production, the property laws of commodity production must undergo a dialectical inversion so that they become the laws of capitalist appropriation. change into the law of capitalist appropriation.* [Marx’s footnote] *We may well, therefore, feel astonished at the cleverness of Proudhon, who would abolish capitalistic property?by enforcing the eternal laws of property which are themselves based on commodity production!   [Marx, Capital vol. 1, p. 733-4.]

The Soviet “socialist” economists are at least as “clever” as Proudhon when they attempt to construct “communism” in opposition to capitalism through the “overall” development commodity production. For us, however, it is enough to know that this type of economics is an ideology that represents the interests of the Soviet bureaucrats who are becoming a bourgeoisie. The development of commodity production is an internal demand for them, but they strive to show that this bears absolutely no relation to capitalism and call for the building of “communism” in order to conceal their own class standpoint. This is essentially the same as the contemporary bourgeoisie talking about the “welfare state”, while maintaining a system of exploitation.