Soviet State Capitalism
= the Stalin Regime
and the "Liberalization"
as its "Development" From Within
Written by Hiroyoshi
Hayashi, the chairman of SWP.
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send us your opinion and the impression about this article without reservation!
Contents
Introduction
For the Sake of the Victory of Real Socialism All Over the World!
(1)
People all over the world, whether for or against socialism, have recognized the regimes in the USSR, China, East European countries and so forth as socialist for decades, or, as "workers states" on the ground that the means of production are nationalized or owned in common there and that "planned economy" is carried out on its foundation. What we challenge in this book is this very "common sense" which dominates the world.
Most "New Left" groups in Japan, as well as in the rest of the world, claim that the USSR and China are "degenerate workers' states" or "a distorted form in transitional period" and the like. Their starting point is the theory of "Revolution Betrayed" and "Degenerate workers' state" by Leon Trotsky. According to him, the socio-economic structure in the USSR is more ore less "socialist" because there the means of production are nationalized, and its state power is that of "workers' state" even though it is under the autocracy by the Stalinist bureaucrats, he says. And he claimed that the Stalinist bureaucrats were just parasites of Soviet society or a "degenerate caste of workers". Trotsky and his followers persisted in this view even after it became totally clear that the Stalin regime didn't have any proletarian contents. They narrowly remained inside the barricade against the Stalin regime and the Stalinists by saying that the "workers' state" was "degenerate" and "distorted".
But in reality, to call the Stalinist states "workers' states" is hopelessly to glorify them. First of all, Trotskyists have forgotten that the USSR, needless to say about China, was never a workers' state from its beginning. Trotsky one-sidedly abstracted the state established in the 1917 Revolution as "workers' state". But his view was criticized by Lenin in the Trade Union Debate in 1920 to 1921. By the 7th Congress of the Bolshevik, just before the 1917 Revolution, Lenin had already described the "social content and political character" of the state which they would win as "a republic of the proletariat and peasants" in contrast with a bourgeois parliamentary republic. Lenin criticized Trotsky over and over in respect of his underestimating of the role of the peasants.
The state created in this revolution carried a historical task, not of introducing socialism directly, but of taking the first step toward socialism.
This was never a proletarian state -- not as Trotskyists mean but in an essential sense. This becomes clear if you consider the fact that the revolutionary Russia was not able to directly sift to socialism as the ultimate goal of the proletariat but couldn't help going through the NEP which was but a bourgeois policy for the interest of the peasants. As in the case of the NEP, it is more than clear that the nationalization of the means of production doesn't necessarily have socialist content unless commodity exchange is abolished.
The newborn USSR was compelled to consider and take policies for the interest of the peasants as the country's widespread petty bourgeoisie. It was impossible to directly "jump over" to socialism in the USSR where the peasants had the majority in population. "War Communism", which was an experiment to directly sift to socialism, though not attempted intentionally but forced to take by the objective situation at that time, was obliged to shift to the NEP which admitted commodity exchange, forced by the resistance of the peasants.
Under the condition of generalized commodity economy, the nationalization of the means of production couldn't become a starting point for socialism. Considering this fact, it is more than clear that the state born in the 1917 revolution was not a "workers' state" in content but a revolutionary "people's state", that is, a state of the workers and peasants.
The revolutionary "people's state", not realizing socialism directly, but first had to enforce a policy to form a material foundation for socialism, in other words, a policy for heavy industrialization. The heavy industrialization under general commodity / currency economy definitely meant a rapid formation of national capital. This accumulation of national capital was made possible only by severely exploiting the workers and peasants.
The heavy industrialization, the formation of national capital, at the stage of monopoly capitalism in the 20th century, didn't take the form of a spontaneous accumulation and concentration of private capital. It was achieved by concentrating of all national surplus value to state and transforming it into capital as state capital. Soviet state crushed the resistance of peasants and organized them by force in cooperative associations. They were composed as an organic part of the forcible accumulation in Soviet state capitalism. People were deprived of all their political rights and thrown into a desperate situation of oppression and exploitation. An autocratic, savage Stalinist state appeared, and the "People's state" changed into its opposition.
But as far as the "people's state" was "essentially" -- to use Kan-ichi Kuroda's1 favorite terminology -- a bourgeois state, or exactly speaking, a petty bourgeois state, the Stalinist / state capitalist state is its inevitable transformation or its evolved form, therefore, it is never a result of either "degeneration" or "retrogression" or "distortion" as Trotskyists claim. In this sense, we confirm the bourgeois "essence" of the "people's revolution", that is, of the "workers and peasants' revolution" -- this inevitably includes revolutionary struggles of the peasants as its most important content. Looking at the past revolutions in backward countries, one can easily understand that they, without any exceptions, couldn't directly introduce socialism, but was only able to create the foundation of socialism. They were only able to achieve state capitalist development.
We don't have anything in common with those blaming the Stalin regime just in a moralist fashion, or those ascribing the present condition of the USSR and China to Stalin as an individual (or Stalin's policies).What we need is not a moral but a historical critique, and this is the essence of Marxism . Though the Stalin regime was extremely "uncivilized" and barbaric, it was the most suitable form for Soviet state capitalism. It achieved the forcible formation of national capital by non-economical methods on the foundation of commodity economy. In other words, the Stalin regime was the inevitable superstructure of Soviet state capitalism. But the Japanese "New Left" groups (the "JRCL" 2 , in particular) criticize Stalinism only in a petty bourgeois fashion. They cannot give a historical critique to Stalinism. They only end up in "humanist" or liberalist critiques (critiques which are in themselves ideal and irrational. For instance, a typical one is that "Stalinism lacks theories on men's subjectivity".) This is the core of that notorious "Anti-Stalinism strategy".
But it is never coincidental for Trotsky and his followers not to be able to give a Marxist historical critique. From the very beginning of their tradition, they couldn't realize either the "class character and political content" of the Russian Revolution in 1917 and the state as its product. Instead, they persisted in the one-sided abstraction of "proletarian revolution" and "proletarian state". What prevented them from seeing the truth was a romanticist illusion of which Trotsky's "theory of permanent revolution" is typical. With the abstract dogma that the world had been mature for socialism, they concluded that it was possible to directly (through a "world revolution") realize socialism in Russia and China. If one stands on such a viewpoint, he cannot understand the immanent law and inevitability of the social development in Russia and China and only sticks to abstract arguments such as "workers' state" or "transitional period" (dialectics requires you to study all objects in terms of their immanent "self-movement"). Now the only question left for them is whether it is a "correct" or "degenerate" workers' state, and a "correct" or "distorted" transitional period. This is the logic of "A is A" and "B is B", that is to say, metaphysics.
While the "New left" groups blame Stalinism day and night, they also don't forget to glorify its state as "workers' state". "Sekigun-ha (Red Army Faction)", which is the "farthest left" sect among the "New Left" groups, showed how hopeless is their illusion toward the existing "workers' states". Obsessed by a daydream, they flew to North Korea by high-jacking in order to "transform" the "workers' state" into a "revolutionary base". Against their hope, unfortunately we haven't yet witnessed any "workers' state" changing into a "revolutionary base state". On the contrary, some "workers' states", playing in the world of power politics, have so "degenerated" as to ally with the imperialist bourgeoisie of the US.
Such a poor theoretical standard of the "New Left" groups is tightly connected with their "left" opportunism. They, Kan-ichi Kuroda for example, regard various economical categories in the USSR and China just as contentless forms, outercrusts or residues of these regimes. Such a claim is substantially the same with the Stalinists' "socialist economics".
On top of this, they don't understand at all the great historical significance of state capitalism, which prepares material conditions for socialism in backward countries. It is more than clear that we cannot build socialism in a world-wide scale without a high development of productive force in those countries which share two thirds of the world population (socialist revolution is not a simple question whether the working class can seize political power). And now state capitalism enables those countries to rapidly develop productive force, at least, at the present stage. We shouldn't make light of the huge significance of the development of the national economies in the USSR and China which got out of a feudal semi-colonial condition just half or quarter a century ago.
(2)
The view is widely spread that the USSR and China are socialist or workers' state because the means of production there are nationalized and there production is run based on planning. Then we must speak about this point as well. Certainly, in the existing "socialist" states, the means of production are nationalized and "planned economy" is put into practice. However, neither nationalization or planning exists as an organic element of a socialist production system. In Russia, China and so on, the "nationalization" of the means of production only means the existence of capital as state capital. It was never directly a starting point toward socialism but a method which enables backward countries to achieve a rapid accumulation of national capital in the siege of imperialism, more efficiently, smoothly, and frantically. The "nationalization" and "planned economy" of the existing "socialist" countries have never had any socialist content, and what's more, neither can they have in the future.
However, this is not surprising. The nationalization of the means of production, in other words, the nationalization of basic industries itself doesn't necessarily have socialist content. This becomes clear if you look at the fact that today capital often takes the form of state monopoly capital whether it is in an advanced or backward capitalist country or (Though the functions of state monopoly capital in these two groups of countries are basically different from each other). In these cases, the nationalization of the means of production even promotes the rule and exploitation by capital of the workers and peasants. This is inevitable as long as the ruling classes of those countries are the bourgeoisie.
The same is true of "communization". The collective ownership isn't necessarily identical with socialism. This has been made clear by the historical experiences of the utopian socialists ("New Harmony" by Owen, and so on), the collapse of agricultural communities, the failure of various committees run by farmers or petty-bourgeois intellectuals (in Japan, for example, "New Village", "Ittoen", "Yamagishi-kai", "Shinkyo-buraku", "Ajisai-Village" and so on), etc. Besides, Lenin also have clearly pointed out that cooperative associations based on commodity / capitalist production cannot help having bourgeois content, even though it is a cooperative productive association. And today, capital itself exists as joint capital owned by a number of capitalists at one time, that is, as share capital.
To speak about "planned economy", today's bourgeois countries don't deny it. Particularly after the Russia Revolution, "planned economy" has been recognized as an effective method in order to temporarily control conflictions of the bourgeois production system, or as a method for backward countries to win a rapid development in national economy.
These facts show us that certain historical objective prerequisites are required for "nationalization" and "planning" to have real socialist content or to be a moment for socialist production. Of these conditions, the most fundamental and important is a rich development in labor productivity. As far as this aspect is concerned, we have to say that state capitalism's in the USSR, China and so on are (were) historically progressive.
But state capitalism will neither develop smoothly free from conflictions, nor will it automatically turn into socialism in a peaceful way. We cannot accept the theory of "bureaucratic state capitalism" by Chuko Tsushima 3 , which describes state capitalism as a completed and synthesized system. As opposed to his abstract dogma, we have made it clear that state capitalism has intrinsic contradictions. As far as state capitalism is a form of capitalism, it cannot be free from its essential characters as capitalism ; commodity exchange, anarchic production, market, competition, panic, various kinds of unbalance which capitalism contains within it, and so on (note that even Stalin reluctantly admitted the "objective existence" of the law of value in Soviet economy). On the other hand, in state capitalism, capital takes an abnormal form, that is, the form of state monopoly. Some characteristics of capital are denied there, or, severely limited. Soviet "socialist" economy has been developing in such a contradictory condition, which has led those notorious "zigzag" policies of the Stalinist bureaucrats. Moreover, the "Liberalization" since the mid-60's is an inevitable result which the contradictions within state capitalist economy created. In other words, it is nothing other than a development of these inner contradictions.
The Soviet bureaucrats began to speak about the necessity of an economic reform in the early 1960s, and put it into practice in the latter half. The "Liberalization" in the "socialist" country, to put it in another way, the transformation of this state into an obviously bourgeois state, symbolizes a remarkable stage of development in state capitalism. Until that time, the accumulation of national capital had been the supreme purpose for Soviet economy. But once state capital has been formed, the next thing required is its "efficiency" as capital. The efficiency of capital corresponds to how much capital has self-multiplied by absorbing surplus labor, and it is measured by profit rate. What's more, capital can operate most efficiently, not in a regime where exploitation is based on non-economic, that is, forcible methods, but in a more or less competitive society where enterprises can work "freely" and "voluntarily". Today's economic reforms / "Liberalization" are definitely heading for such a more liberal system. It is quite natural that the essence of the "Liberalization" is bourgeois in itself and that it is tightly connected with the interests of the state capitalist (Stalinist) bureaucrats who are transforming themselves into an obvious bourgeois class. In other words, they are transforming themselves from the "Aparatiks" as a personification of state capital (and, therefore, also of non-economic forces) into the "Technocrats" as more genuine performers of capital functions.
Of course, no matter how "Liberalization" proceeds, in the period of state monopoly capitalism / imperialism in the 20th century, the USSR and other state capitalist states shall not "retreat" to a perfectly "liberal" capitalism like ones in the West and Japan. 4 Probably, before they reach that stage, the inner contradictions of state capitalism will oblige these societies to turn into socialism. The contradictions of state capitalist system, which the existence of capital as state capital inevitably create, are leading the existing "socialist" regimes to "Liberalization". Moreover, this drive makes the collapse of these regimes and their shift to socialism inevitable. The more state capitalist regimes in the USSR , China and so on develop, in other words, the more the "Liberalization" proceeds, the more these inner contradictions will become deeper. At the moment, we cannot exactly tell how and when state capitalism transform itself to socialism (Lenin said there was no any middle stage in-between). But it is clear that this transformation will be possible only by the class struggle of the working class in these countries. In the USSR, at last, the workers have been allowed to organize themselves in trade unions.
The working class is now reviving as a class, not as just a collection of individuals. The workers in the USSR are learning day by day that the relation of production in which they live and work is not real socialist but bourgeois. Now we can declare that the day will not be far when they begin to fight for real socialism.
March 1972
PREFACE
"Economic reform" / Liberalization in the USSR and the East European countries, which was ideologized in the first half of the 60's and carried out in practice in the second half of the 60's, sharply raised again the question what is the essence of "socialism" in the Soviet Bloc. Already in the 1920's, in some countries starting with Germany, some fractions of communists in the farthest left defined Soviet society as state capitalist. They accused Stalin and his followers, who oppressed fractions of Trotskyists and revolutionary workers without any hesitation, as the political carriers of state capitalism. However, Trotsky and the Fourth International were only satisfied with describing the USSR just as "degenerate workers' state" and with calling Stalin and his followers a "degenerate caste of workers". Such a compromised definition was in a striking contrast to their, even emotional, accusation of Stalin -- they even implied that Stalin could have assassinated Lenin. Trotsky's criticism of Stalin was not a historical one but an emotional and moralistic one. He couldn't correctly define the essence of
Stalin's rule, but rather glorified it as "workers' state". Even after the substance of the USSR as a "workers' state" (workers' councils, trade unions, etc.) had totally disappeared, he stuck to his own view on account of the nationalization of means of production. In reality, his dogma was not very different from Stalin's "socialist" view on the nature of the USSR.
As economic reforms in the East proceed, a controversy over the nature of the socio-economic system in the so-called "Socialist" Bloc have become a world-wide one. The "left fraction" within the "International Communist Movement", that is, the Chinese Communist Party and its followers, is attacking the USSR, saying that capitalism is "reviving" there. On the other hand, its "right fraction", that is, Structural-Reformists (Euro-Communists), evaluate the reforms as a process of "market socialism" like that in Yugoslavia. Structural-Reformists, in other words, liberalist intellectuals, don't admit that there are essential differences between capitalism and socialism.
They define the USSR and China as "bourgeois societies / economies without the bourgeoisie" and so on. They try to wipe out fundamental differences between capitalism and socialism by calling these societies "socialist". On the other hand, the bourgeoisie is now thrilled to witness the economic reforms / Liberalization proceeding in the USSR. Declaring that their ever claim, (the claim that socialism is "unproductive" and "inefficient" because it oppresses individuals' creativity and voluntarily) was vindicated by the Liberalization, they conclude that the bourgeois mode of production exceeds the socialist one and that "socialism" is deemed to be capitalized in the end. They are dreaming of a future world re-united based on capitalism.
On the other hand, our "independent socialist", Japan Communist Party (JCP) hasn't yet publicized any official party view on the economic reforms. They seem thinking that the current changes in the USSR are not very important. But intellectuals hanging around the JCP -- though there is no agreement among them either -- are playing with socialism as an abstract goal, closing their eyes to the reality so as to save the tottering Soviet "socialism". The JCP cannot embrace the official Stalinist economics as it is, for it claims that "communism" can be built by an overall development of the relationship of commodity / value. The JCP, on the contrary, claims that it is necessary to lead the relationship of commodity / value to "gradually" disappear. This means all they can do is to close their eyes to the reality and to talk about socialism as an goal which lies far in the future. By doing this, the JCP prevents the masses from understanding the nature of Soviet society.
Today a specter of capitalism is haunting in the existing "socialist" countries. This is nothing but the reality, from which no one can escape. However, this "specter" is never an opposite of the Stalin regime but a product which it inevitably has created from within. The Liberalization in the USSR is unveiling the nature of the Stalin regime which has been hidden deep inside. In this sense, the Maoists are fatally wrong ; they are hysterically accusing of the "revival" of capitalism in the Soviet Bloc. On the contrary, we have to define it as an inevitable "development" of the Stalin regime. This is the only dialectical position for Marxists.
CHAPTER 1: COMMODITY VALUE AND SOCIALISM
1.THE LAW OF VALUE AND SOCIALISM
"The law of commodity exchange itself is never a definitive law of capitalism, thereby, it is not unnatural that the law of commodity production, that is, the law of value exists in a socialist society". It was in the early 1940's that such a thesis openly appeared in the USSR. Also it was in Stalin's essay written in 1952, "Economic Problems of Socialism in the USSR" ("EPS", below onwards) that it was made up into a "theory" for the first time. Since then, some of Stalin's theses in this essay were furthermore "developed" and the present "socialist" economics has so "evolved" as to claim an "inevitable" connection between socialism and commodity production. Therefore, first of all, let us start with the mutual relationship between commodity production and socialism. This is the most abstract theoretical question. We need to understand it in order to prepare for the practical analysis of the USSR. It is also a theoretical starting point which defines today's reality in the USSR.
The official view of "socialist" economics on this matter goes as follows. First, let me quote from Vol.3 of "Economics Textbook".
Commodity production under socialism is a special kind of it. It is commodity production without private ownership of the means of production, and without the capitalist.
Now, from Volume 4. It says,
As far as commodity production and commodity circulation exist under socialism, the law of value continues to operate.
Money expresses socialist relations of production.
However, is the law of commodity / value and a socialist society compatible ? What does it mean that the product takes the form of commodity and the labor takes the form of value ? We must first answer this question, which is the very theme that Marx attempted to make clear in the opening of his Capital.
The commodity form of products itself expresses a certain historical relation of production. It expresses the relation of production in which individuals cannot make mutual social contacts without exchanging their own products as commodities. Its starting point is private labor, which private individuals expend independently of each other. Private labor is solidified as value into each commodity and relates to other private labors. Only this way can a private labor be part of the total social labor. Thus, the relationship between men is expressed as the relationship between things, in other words, between commodities.
Therefore, the product take the form of commodity only at a certain stage of development in the human history which is based on the division of labor and private ownership. As Marx says,
Objects of utility become commodities only because they are the products of labor of private individuals who work independently of each other. The sum total of the labor of all these private individuals forms the aggregate labor of society. Since the products do not come into social contact until they exchange the products of their labor, the specific social characteristics of their private labors appear only within this exchange. In other words, the labor of the private individual manifests itself as an element of the total labor of society only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers. To the producers, therefore, the social relations between their private labors appear as what they are, i.e. they don't appear as direct social relations between persons in their work, but rather as material [dinglich] relations between things.
Under a socialist system where the labor of each private individual is directly expended as social labor, or as part of it, and the social interconnection of individual labors appear as "people's direct social relations in their work", neither do labor products become commodities nor is there necessity for that.
Marx defines commodity producers and their historical relation of production as follows;
For a society of commodity producers, whose general social relation of production consists in the fact that they treat their products as commodities, hence as values, and this material [ sachlich ] form bring their individual, private labors into relation with each other as homogeneous human labor...
There is only one Marxist answer to the question whether "value" exists in socialist society. Needless to say, the law of value is the law in commodity / capitalist society, the opposite of socialist relations of production. Only in a society in which objects of utility are the products of "the labor of private individuals who work independently of each other" do labor products become values. In a society based on the division of labor and private property, people can make social relations with each other only by exchanging their products (i.e., in a material form). It is in the exchange of commodities that the social character of private producers first appear. There it is shown that each individual act of labor is part of the total labor of society. Value, that is, the commodity form of labor products itself expresses a historical relation of production. In a society where each labor of private individuals directly become part of the total labor of society, labor doesn't appear as exchange value. There labor products don't take the form of commodities. Value is a concept which is only specific to the historical society based on commodity production. In this sense, socialist society can be won only by the abolishing the particular relation of production which is represented by value (though the significance of socialism cannot be reduced to this).
The question whether value, or the law of value, exists under socialism gave rise to a world-wide controversy in the 1940's. It meant, after all, a controversy over the evaluation of the socio-economic system in the USSR. The Stalinists justified the existence of value / commodity-relation there on the pretext that it was "essentially different" to that in bourgeois societies or that it was "something totally new". They couldn't explain the reality that labor products took the form of commodity in the USSR though the means of production had been transferred to "socialist ownership". Then they had to invent a strange "theory": there are two forms of ownership -- the higher one and the lower one. On the other hand, the social democrats and "left" intellectuals offered various questions and critiques to the official view by the Stalinists. However, they too concluded that what was most essential for socialism was not whether commodity production existed but whether the means of production were nationalized -- "in the USSR, though commodity production actually exists, the means of production are nationalized. We should define the USSR as socialist" (Trotsky's view was close to this claim in essence). Only Raya Dunayevskaya, an American socialist who had been a secretary of Trotsky in Mexico, denied that the USSR was socialist. She criticized all the apologists of the USSR. She correctly pointed out that to admit the law of value was to admit capitalist exploitation. However, she couldn't clarify the difference in concept between commodity production and capitalist production. Consequently, she couldn't explain the mutual relationship of the two modes of production.
2.VALUE AND "THE CONTENT OF THE DEFINITIONS OF VALUE"
Marx and Engels often wrote that in socialist society "the content of definitions of value" would remain. Stalinists make use of their words and phrases in order to justify the existence of the relation of commodity production in the USSR. Of course, you can extract many quotations like that from Marx and Engels. Here we put a few examples.
All the relations between Robinson and these objects that formed his self-created wealth are here so simple and transparent....And yet those relations contain all the essential determinants of value.
Marx also wrote as follows in his Critique of the Gotha Programme.
What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society -- after the deductions have been made -- exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such and such an amount of labor (after deducting his labor for the common funds), and with this certificate he draws from the social stock of means of consumption as much as costs the same amount of labor. The same amount of labor which he has given to society in one form he receives back in another.
Here obviously the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed because under the altered circumstances no one can give anything except his labor, and because, on the other hand, nothing can pass to the ownership of individuals except individual means of consumption. But as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labor in one form is exchanged for an equal amount of labor in another form.
Engels also says,
...this balancing of useful effects and expenditures of labor on making decisions concerning production was all that would left of the politico-economic concept of value in a communist society.
As we have seen, Marx and Engels admit that "the content of the definitions of value" would remain after the abolition of capitalist society. However, does this mean that value, that is, commodity production will remain in socialist society ? Of course not. What will remain is not value but the content of the definitions of value. If each labor of private individuals directly become part of the total labor of society, it doesn't take the form of value. The fact that the content of the definitions of value remains is one thing, but that value itself remains is another. If exchange is regulated by labor time, why do we still need the concept of value ? No one can answer this question. "Value" is a category which expresses a historical relation of production. Its substance is abstract human labor. But Value itself is not human labor. Labor takes the form of value only in a specific historical condition. Therefore, value is human labor in a historical form. Moreover, value disappears if human labor ceases to exist in this historical form.
For instance, let us suppose that there is a goods whose value is 10, 000 yen. In this case, the goods is 10, 000 yen because the goods contains an amount of abstract labor corresponding to 10, 000 yen in price. However, value is not human labor itself which is objectified in labor products. Value is human labor in a specific, historical form. It is expressed, not as labor itself, in the form of price (i.e. in the amount of another commodity).
To repeat, that the content of the definitions of value remains is one thing, that value itself remains another. While the former means that production and distribution are regulated by labor time, the latter means that commodity production and a historical (i.e. bourgeois) relation of production which necessitates it exist. Under socialism labor products can clearly show their relations with labor time, i.e. the content of the definition of labor. So neither "value" nor its necessity will exist under socialism.
We will examine Stalin's view as the "shining" founder of "socialist" economics. Although many of his propositions are criticized today, he still holds the "honor" as the founder of "socialist" economics. Before everything, some essential propositions in his theory have been kept untouched and been even further "developed". From the next chapter onwards, we will often take up his view as the starting point of "socialist" economics.
3.STALIN'S VIEW
In his EPS Stalin wrote,
It is said that commodity production must lead, is bound to lead, to capitalism all the same, under all conditions. That is not true. Not always and not under all conditions ! Commodity production must not be identified with capitalist production. They are two different things.
According to him, commodity production doesn't necessarily lead to capitalist production in a society like the USSR "where private ownership of the means of production, the system of wage labor, and the system of exploitation have long ceased to exist". He continues to argue as follows,
Commodity production is older than capitalist production. It existed in slave-owning society, and served it, but did not lead to capitalism. It existed in feudal society and served it, yet, although it prepared some of the conditions for capitalist production, it did not lead to capitalism. Why then, one asks, cannot commodity production similarly serve our socialist society for a certain period without leading to capitalism.....
Then he called commodity production in the USSR "a special kind of commodity production" and "commodity production without capitalists".
Stalin also wrote in Chapter 7 of the same book as follows.
Is the law of value the basic economic law of capitalism ? No. The law of value is primarily a law of commodity production. It existed before capitalism, and, like commodity production, will continue to exist after the overthrow of capitalism, as it does, for instance, in our country, although, it is true, with a restricted sphere of operation. Having a wide sphere of operation in capitalist conditions, the law of value, of course, plays a big part in the development of capitalist production. But not only does it not determine the essence of capitalist production and the principles of capitalist profit; it does not even pose these problems. Therefore, it cannot be the basic economic law of modern capitalism.
First of all, Stalin is wrong in saying that the basic law of capitalism is not the law of value but the law of profit. Certainly, capitalism is motivated by the production of surplus value. However, that does not deny the fact that capitalist production is commodity production, in other words, that it is regulated by the law of value. On the contrary, capitalism treats even human labor as commodity, produce all goods as commodities. Capitalism develops the law of value into a law that prevails the whole historical society. So Lenin defined capitalism as a society of "commodity production in the most developed form". Capitalism is dominated by the law of commodity economy, that is, the law of value -- though when labor powers are sold and bought as commodities, the law of value as equivalent exchange turns into its opposite. But even in this case, it is still regulated by the law of value as long as surplus labor takes the form of value, that is, the form of surplus value / profit.
Needless to say, capitalism is distinguished from other modes of production in the point that there surplus labor is realized (= exploitation) in the form of surplus value. But it is because products in general take the form of commodity / value that surplus labor takes the form of surplus value. This fact tells us that the historical or actual foundation of capitalist production is commodity production, and that, thereby, we can never understand the essence of capitalism without correctly understanding the law of value. In comparison with commodity production, capitalist production is a category which needs more complex and more in number definitions, therefore it is a more concrete category. On the other hand, commodity production is a more fundamental, therefore, a more essential category in an aspect. For capitalist production, the law of value is a crucial element, and it relates to the essence of capitalism.
As Marx says,
The value-form of the product of lobar is the most abstract, but also the most universal form of the bourgeois mode of production; by that fact it stamps the bourgeois mode of production as a particular kind of social production of a historical and transitory character. If then we make the mistake of treating it as the eternal natural form of social production, we necessarily overlook the specificity of the value-form, and consequently of the commodity-form together with its further developments, the money form, the capital form, etc.
Marx even wrote that capitalist production is, by being commodity production, "stamped as a particular kind of social production of a historical character" ! This is exactly the opposite of Stalin's claim. While Marx tells us that commodity production is inseparable from capitalist production, Stalin mechanically detached these two from each other. The category of commodity production is different from that of capitalist production (incidentally, in this point the Uno school, who mingles the them, is fatally wrong).
But on the other hand commodity production contains an intrinsic tendency which inevitably develops into capitalism. Only by this development can commodity production become a relation of production which dominates a whole society. As Engels also says,
The value form of products therefore already contains in embryo the whole capitalist form of production, the antagonism between capitalists and wage workers, the industrial reserve army and crisis.
In Stalin's theory, commodity and capitalist productions are mechanically detached from each other and their unity is ignored. The fact is intentionally missed out : that commodity production contains an intrinsic moment for development toward capitalist production. Stalin's view has nothing to do with Marxism. Furthermore, he even claims that because commodity production is "something different" to capitalist production commodity production can exist in a "socialist society". According to him, a "proletarian state" should "make use of" commodity production for its own sake !
Socialism is a product of the abolition of capitalist production, thereby, necessarily the opposite of commodity / value production. This is an absolutely clear proposition for Marxists. But today's "socialist" economics denies it as a "dogma". Instead, it claims that socialism is the denial of capitalist production, but not necessarily the denial of commodity production.
The division of labor and private property necessitate commodity production. So it is the foundation or the starting point of capitalist relation of production. Capitalist relation of production doesn't abolish commodity production. On the contrary, it develops its immanent nature to the full.
Therefore, capitalist relation of production is the logical result of commodity production (we will fully examine this in Chapter 5 in terms of its relation with the reality in the USSR).
Too many people are satisfied with the conclusion that the USSR and China are "socialist" and that their commodities are something different to those in bourgeois states. But they have forgotten a simple but crucial thing ; socialist society does not need to produce commodities. Or they simply think that commodities are the remains of bourgeois society (Even if this claim was true, they are contradictory. For, then, the USSR and China would still be in a transitional period, not at a stage toward communism after "completing" the building of socialism).
When it comes to the most consistent apologists -- needless to say, they form the main stream in today's "socialist" economics -- , they don't even hesitate to clearly state that socialist society is a society of commodity production ! The confusion and degeneration of today's "socialist" economics is extremely
deep. It has already turned into a new kind of bourgeois economics. Such a "development" of "socialist" economics exactly corresponds to the "development" of the USSR toward a bourgeois society. These two facts are unseparable and go along with each other.
CHAPTER 2. THE RELATIONS OF PRODUCTION UNDER THE STALIN REGIME
1.THE RELATION OF PRODUCTION REPRESENTED BY THE COLLECTIVE FARMS
In the last chapter, we examined the relationship between commodity production and socialism, which is the most abstract theoretical issue. We also explained that real socialism is not compatible with commodity production and that socialism is the opposite not only of capitalist production but also of commodity production. However, the fact that commodity / value production exists in the USSR only tells us that the USSR is not a socialist society. This is not enough to clarify essential characters of its socio-economic system. So one may well say that commodity production there is just a form without substance in transitional society. Then we must concretely analyze the relation of production the USSR.
"Socialist" economics often explains the existence of value / commodity production in the existing "socialist" countries in terms of two particular facts. One is that there "remain" unadvanced forms of ownership, the other that they need to "make use of" the law of value for the sake of economic calculation.
Stalin explained why commodity production exists in the USSR as follows.
It is said that, since the domination of social ownership of the means of production has been established in our country, and the system of wage labor and exploitation has been abolished, commodity production has lost all meaning and should therefore be done away with.
That is also untrue. Today there are two basic forms of socialist production in our country: state, or publicly-owned production, and collective farm production, which cannot be said to be publicly owned. In the state enterprises, the means of production and the product of production are national property. In the collective farm, although the means of production (land, machine) do belong to the state, the product of production is the property of the different collective farms, since the labor, as well as the seed, is their own, while the land, which has been turned over to the collective farms in perpetual tenure, is used by them virtually as their own property, in spite of the fact that they cannot sell, buy, lease or mortgage it.
The effect of this is that the state disposes only of the product of the state enterprises, while the product of the collective farms, being their property, is disposed of only by them. But the collective farms are unwilling to alienate their products except in the form of commodities, in exchange for which they desire to receive the commodities they need. At present the collective farms will not recognize any other economic relation with the town except the commodity relation -- exchange through purchase and sale. Because of this, commodity production and trade are as much a necessity with us today as they were, say, thirty years ago, when Lenin spoke of the necessity of developing trade to the utmost.
But at the same time, Stalin opposed regarding as commodities the means of production produced in the state enterprise. He said that the categories of value in the USSR include the means of production. According to him, it was necessary for economic calculation. He wrote,
Can means of production be regarded as commodities in our socialist system ? In my opinion they certainly cannot.
A commodity is a product which may be sold to any purchaser, and when its owner sells it, he loses ownership of it and the purchaser becomes the owner of the commodity, which he may resell, pledge, or allow to rot. Do means of production come within this category ? They obviously do not. In the first place, means of production are not "sold" to any purchaser, they are not "sold" even to collective farms; they are only allocated by the state to its enterprises. In the second place, when transferring means of production to any enterprise, their owner -- the state -- does not at all lose the ownership of them; on the contrary, it retains it fully. In the third place, directors of enterprises who receive means of production from the Soviet state, far from becoming their owners, are deemed to be the agents of the state in the utilization of the means of production in accordance with the plans established by the state.
It will be seen, then, that under our system means of production can certainly not be classed in the category of commodities.
Why, in the case, do we speak of the value of means of production, their cost of production, their price, etc. ?
For two reasons.
Firstly, this is needed for purposes of calculation and settlement, for determining whether enterprises are paying or running at a loss, for checking and controlling the enterprises. But that is only the formal aspect of the matter. Secondly, it is needed in order, in the interests of our foreign trade, to conduct sales of means of production to foreign countries. Here, in the sphere of foreign trade, but only in this sphere, our means of production really are commodities, and really are sold (in the direct meaning of the term).
This Stalin's view is very symbolic and, in a sense, typically reflected the relation of production in the USSR before the Liberalization. He thought that commodity production existed in the USSR because in the section of agriculture the sector of collective farms existed which were not "publicly owned" (i.e. not nationalized). This was an undoubtful reality. It is clear that the ownership of the means of production by cooperative associations, that is, collective ownership, isn't necessarily identical with real socialist ownership. Under the general condition of commodity / state capitalist production, it can only be part of state capitalist regime as a whole.
Before the reforms (or before 1958, to put it exactly), while the means of production small in size, agricultural instruments, cattle, facilities and so forth were owned by the collective farms, large agricultural machines were owned by the Tractor Stations (MTS). They were rented to the collective farms in exchange of products. This fact enabled Stalin to claim that "the means of production in the collective farms belonged to the state" and that that was an evidence of the "socialist" character of the collective farms.
On the other hand, although land was nationalized, the collective farms had the right to exclusively own and permanently use it. Needless to say, land is the most fundamental means of production for agriculture. Therefore, as long as the collective farms possess land, farmers are private producers even if they engage in collective labor, and they exchange their products as commodities. In addition, the MTS were dissolved in 1958, all means of production such as tractors were sold off to the collective farms. Thus, the collective farms came to share or exclusively possess all means of production. Stalin strongly opposed the dissolution of the MTS on the grounds that it would intensify the character of the collective farms as private producers. But what he had worried about came true just a few years after he died. This tells us something important, which is the very theme we are going to make clear. The dissolution of the MTS had a historical meaning as the starting point of the Liberalization which we are analyzing in detail later.
We should pay a great attention to another point. It is that in the production of the collective farms, the weight of the private management of farmers was never small. One may think that, in terms of scale, it is not very significant to own just 0.5 or 0.25 hectare of land as "curtilage". However, this ownership of land, at the same time, meant private ownership of small farm-tools and cattle. This was exactly a form of self-management. The proportions of outputs from such "individual subsidiary management" sector were very high in potato, vegetable, meat, milk, egg, wool, and so on (in 1950, in percentage, 73, 44, 67, 75, 89, 21, in the order named). On the other hand, the proportions from the collective farms were overwhelming in grain, cotton, rootcrop (in 1950, in percentage, 82, 96, 97 in the order named). As you see, what is produced in the individual management sector are commercial and cash crops.
Under the Stalin regime, direct producers were organized in cooperative associations and engaged in collective labor. They were paid by the collective farms "according to working day". They had been paid in kind until recently. Therefore, farmers couldn't help relying on "side job" in order to get money income. Farmers were given foods and other necessaries, which were just enough to live on, by the collective farms. They were forced to survive with a little money income by their "side jobs". Now clear is the role of the "side job" under state capitalism. It helps state to exploit the farmers more smoothly. Resources and foods necessary for industrialization were mainly produced in the collective farms -- this tells us that the collectivization of farmers (= the formation of the collective farms) was a intrinsic necessity of state capitalism. On the other hand, farmers were required to look after themselves on "side job". In history, we can only find a similar system in feudal societies. Under feudal system, peasants worked, for instance, on their own lands three days of the week and on their lords' the rest of the week. It is correct to some degrees to say that, similarly, under the Stalin regime, farmers virtually worked on the collective farms for the state and engaged in their side jobs for their owns sake. Of course, they did not work on the collective farms only for the state. However, there are plenty of evidence to prove how harsh the farmers of the collective farms were exploited by the state. "Individual side job" was, so to call it, a supplementary system, which helped such exploitation to operate well. Without this "individual side job", farmers would hardly have been able to put up with such a severe exploitation by state capital. Here again, we can see the deceptive reality of "the utilization of the law of value".
State capitalist exploitation of the farmers mainly took the form of obligatory deliver of products. Farmers were forced to deliver products of the collective farms to the state. Prices of agricultural products were set very low. The state was able to gain a huge amount of income by selling them at a very high rate (through the "turnover tax"). For example, it is said that in 1936 Soviet government bought wheat from the collective farms for 15 roubres per ton and sold it to flour factories for 107 roubles per ton. This meant the "turnover tax" of 92 roubles per ton, 600 percent of the rate of return ! As we can see clearly, this was a severe exploitation of the farmers. We should say that the state bought products from the farmers at a price well below their value, rather than saying that the state simply turned the burden on the consumers by raising price.
Income and expenditure of state income of the USSR.
1928 1932 1937 1945
TOTAL INCOME 0.9(100 3.8(100) 10.9(100) 30.2(100)
turnover tax 0.3(36) 2.0(52) 7.6(69) 12.3(41)
profit deduction 0.1(6) 0.2(5) 0.9(8) 1.7(6)
other taxes 0.1(12) 0.3(7) 0.4(4) 4.0(13)
others 0.4(46) 1.3(36) 2.0(19) 12.2(40)
TOTAL EXPENDITURE 0.9(100) 3.8(100) 11.7(100) 29.9(100)
economic building 0.4(42) 2.5(65) 4.3(37) 7.4(25)
society / culture 0.3(30) 0.8(20) 3.1(26) 6.3(21)
military 0.1(9) 0.1(3) 1.8(15) 12.8(43)
others 0.1(19) 0.4(12) 2.5(22) 3.4(11)
1950 1955 1960 1965
TOTAL INCOME 42.3(100) 56.4(100) 77.1(100) 102.3(100)
turnover tax 23.6(56) 24.2(43) 31.3(41) 38.7(38)
profit deduction 4.0(10) 10.3(18) 18.6(24) 30.9(30)
other taxes 3.6(8) 4.8(9) 5.6(7) 7.7(8)
others 11.1(26) 17.1(30) 21.6(28) 25.0(24)
TOTAL EXPENDITURE 41.3(100) 54.0(100) 73.1(100) 101.6(100)
economic building 15.8(38) 23.3(43) 34.1(47) 44.9(44)
society / culture 11.7(28) 14.4(27) 24.9(34) 38.2(38)
military 8.3(20) 10.7(20) 9.3(13) 12.8(13)
others 5.5(14) 5.3(10) 4.8(6) 5.7(5)
(billion roubles, calculated at the price of each year)
The "turnover tax" constantly shared 50 to 70 percent of state income through the Stalin period. On the other hand, the so-called "profit deduction" (the state enterprises paid to the state the bulk of the gap between sales and expenditure) was usually several percent, at highest 10 percent. It is only after the late 1960's that "profit deduction" exceeded "turnover tax" for the first time, which corresponded to the period of the Liberalization. Of course, this correspondence was not accidental. We will examine this in detail later on. Under the Stalin regime the farmers were exploited most severely, as well as the workers in forced labor camps [which is said to have amounted up to 10 million]. But only by severe exploitation was Soviet state able to accumulate capital for heavy industrialization. It was a practice of the theory of "socialist primitive accumulation" which had been advocated by the Trotskyists in the 1920's. But It had nothing "socialist" in content. The alleged "socialist" accumulation was in reality nothing but state capitalist accumulation. "Allocating" state capital to the state enterprises, the state, from above, carried out the industrialization of Soviet economy. Both the Stalinists and the Trotskyists were wrong in calling state capitalist accumulation "socialist". Despite that, their theory corresponded to the inner motive of Russian society of the time for national economic development. This is why the theory advocated by a Trotskyist economist, Preobrazhenski, was put into practice by no one other than Stalin himself.
2.THE SIGNIFICANCE OF THE COLLECTIVISATION IN AGRICULTURE
The significance of the collectivization in Soviet agriculture becomes clear if you see it from the above viewpoint. It is usually explained that the collectivization was a "correct" socialist policy, which swept away the kulaks and created a collective management of farms. But in reality, it only helped to complete Soviet state capitalist regime. Objectively speaking, the purpose of the collectivization was to crush the petty peasants / the kulaks. They resisted the forceful state capitalist system which was trying to reorganize agriculture as its organic part. In the late 1920's, the kulaks went on the so-called "grain strikes" to express their opposition to heavy industrialization. Without crushing such a resistance of the kulaks, the state would have been unable to exploit the farmers smoothly and to accumulate state capital rapidly. Such a forcible collectivization of the farmers temporarily destroyed the productivity in agriculture. Moreover, the severe exploitation of the farmers by the state arrested the growth of Soviet agriculture for a long time. Despite that, these were the expression of the inner necessity of Soviet state capitalism. Crucially, we have to note that these were never results of a failure in such and such a policy or a theory.
The state capitalist development in the USSR, described above, inevitably bred an illusion that the "law of value" had ceased to operate in the USSR. There, the price of products were, not through market mechanism, but set "subjectively" by the state. The state was almighty. The "law of value" was subordinated to the state. In this sense, the illusion of the Stalinists that the "law of value" was "made use of" by the state certainly had an objective ground.
Without private ownership and private labor, there cannot be commodities. Only in the social, historical condition of private ownership and the division of labor are commodities inevitable. Therefore, it was natural that the Russian Revolution, which created dozens of millions of petty land owners, couldn't overcome commodity production, that is, some element of capitalism. The collectivization in agriculture, that is, the formation of the collective farms couldn't abolish commodity production either. For it didn't mean a socialist ownership of means of production but just a collective ownership. In other words, the collectivization was not the abolition of private ownership but just a variant of it. As opposed to Stalin, Lenin didn't regard as socialist the organization of the farmers into cooperative associations under commodity production. On the contrary, he stressed the limited significance of the collectivization under commodity production.
Through the New Economic Policy (NEP) an economic system based on commercial and economic calculations was introduced not only in the branch of agriculture but also in that of industry. The enterprises were run according to bourgeois principles. In the first place, the NEP allowed the peasants (petty bourgeoisie) to exchange their commodities. It was a concession to the peasants. The NEP soon involved industrial production, which had been extremely fragile after the Civil War. Despite under a strong state control, each enterprise became an independent unit of production. This meant that the enterprises were run on self-accountability, in other words, they were responsible for their own management. The state capitalist Russia emerged from the NEP.
It is often believed that the collectivization in agriculture marked the shift from the NEP, in other words, from a policy in a transitional period to socialist production. But in reality it symbolized the triumph of the state capitalist regime.
A huge number of petty bourgeoisie in Russia, that is, petty peasants who sold their products as commodities, resisted not only socialism, but also state capitalism, i.e. capitalism under state control. As a consistent opposition inside the regime, they, gradually developing into the kulaks (the large peasants), tried to dig down the base of Soviet state capitalist regime. They represented a tendency in favor of the "liberal" capitalism developing spontaneously in the Russia in those days. The collectivization in agriculture, in reality, was a policy to crush petty bourgeois capitalism of the kulaks. It never created socialism but completed state capitalism in Russia. The objective significance of the collectivization in agriculture -- it started in 1929 -- was that it organized the petty bourgeois peasants, who represented a spontaneous capitalist tendency, into cooperative associations as an organic part of state capitalist production.
The collectivization is often (mainly by the bourgeoisie) evaluated as a failure because it after all didn't bring development to agriculture. But we cannot overlook the following fact : only by this collectivization was the USSR able to take the path of state capitalist development. As Lenin wrote, a "cooperative association capitalism" is, ...a variant of state capitalism under the Soviet power, and is, as it is, advantageous and useful for us at the present moment -- of course, only to a certain degree.
However unreasonable for agriculture itself and although it actually threw agricultural production into stagnation, the collectivization was "advantageous and useful" for state capitalist regime whose supreme purpose was the heavy industrialization of the national economy. Only by crushing private capitalism and spontaneous capitalism, and by exploiting the farmers was Soviet industry able to win a rapid development.
3.STATE ENTERPRISES AND COMMODITY PRODUCTION
We have already looked at the collective farms in agriculture, so we must go onto analyzing state enterprise next. The features of each "enterprise" as state capital is clear. The Directors of enterprise are nominated by the state machinery. And each enterprise has to work to directives set by the state machinery. About 70 to 80 percent of the "profit" in enterprises is paid to the state, and the fixed funds of enterprise, that is, capital, increase by free distribution mainly by the state. The state also had a right to deprive enterprises of any kind of means of production.
But at the same time each "enterprise" was run on self-accountability. In other words, it was not part of a socialist factory system, but a enterprise run on bourgeois principles. It is self-evident that the system of enterprises run on commercial accounts is not a socialist relation of production. Certainly enterprises in Stalin's period (before the Liberalization) didn't take "profitability" as an absolute principle. Aren't these words by Stalin very characteristic ?
When speaking, in my "Remarks", of the profitableness of the socialist national economy, I was controverting certain comrades who alleges that, by not giving great preference to profitable enterprises, and by tolerating the existence side by side with them of unprofitable enterprises, our planned economy is killing the very principle of profitableness of economic undertakings. The "Remarks" say that profitability considered from the standpoint of individual plants or industries is beneath all comparison with that higher form of profitableness which we get from our socialist mode of production, which saves us from crises of overproduction and ensures us a continuous expansion of production.
As he himself says, enterprises in the Stalin period were not "free enterprise" and there the profit was not the supreme purpose (or "indication" as is the word they prefer to use these days) either. They were operated on "the higher form of profitability", to use Stalin's words. The prices of products from state enterprises didn't reflect on their "values". In other words, they were often sold (or "taken over") by the state at prices under their "values" -- State capitalist bureaucrats regard this in the same light as "socially necessary expenses". But this is virtually the same as the theory of cost price in bourgeois economics -- and didn't bring "profits" to the enterprises. Such enterprises were supported by grants from national finance, but these grants were originally surplus value siphoned over as turnover tax from the society, mainly from the peasants. Such sales of industrial producers' goods under their "value" was justified by the logic that means of production should be offered cheap in order to rapidly achieve heavy industrialization.
In addition, the prices of goods from these state enterprises were totally left to the state's decision. Each enterprise was allowed its activity as "enterprise" within this framework. In other words, they were required to reduce "cost" and raise profitability. Then it is clear that the enterprises try to achieve it by reducing the "wage fund", that is, by making wage cuts under such a system. Industrial targets were described in terms of achieving state directives, rather than in terms of profitability, and to fully accomplish the administrative production plans by the state, which first appeared as spot plans, was the overall goal. The system had the form of commodity / capitalist production, but the overall development of its nature was hidden, oppressed and deflected. Under this regime, the value and the price are constantly detached from each other, free exchange of goods doesn't exist, "enterprises" don't give full play to their capitalist nature, capital only appears as state capital, and only state "plan" can go unchallenged as if it was the only thing that mattered. We call such a regime "state capitalist".
Is commodity / capitalist production in the USSR just a remnant, or "form / outercrust" of capitalist society ? If so, then why doesn't it gradually wither away ? Now let Stalin explain this.
If the matter is approached from the formal angle, from the angle of the processes taking place on the surface of phenomena, one may arrive at the incorrect conclusion that the categories of capitalism retain their validity under our economy. If, however, the matter is approached from the standpoint of Marxist analysis, which strictly distinguishes between the deep process of development and the surface phenomena, one comes to the only correct conclusion, namely, that it is chiefly the form, the outward appearance, of the old categories of capitalism that have remained in our country, but that their essence has radically changed in adaptation to the requirements of the development of the socialist economy.
According to Stalin's "Marxist analysis", it is supposed that though the phenomena of commodity production still remain, but it is not really commodity production, for the USSR is supposedly already a socialist society. No way is this an "analysis" but only playing with words.
It is evident that the nature of commodity production was suppressed in its nature under the Stalin regime. At the same time, however, enterprises employed workers and produced commodities. Are we to be satisfied with saying that it is actually not commodity because it is under "socialist" society when we should analyze why the products of state enterprises appeared in the form of commodities ? It doesn't explain anything to say that it is simply a necessity for economic calculation since economic calculation is needed when products are produced as commodities. You cannot take the result for the reason. It is also irrational not to look for the existence of commodities in the relations of production but to dissolve it into a question of function.
Why do enterprises in the USSR produce commodities even though they are "stateenterprises" and "publicly owned" ? Needless to say, it is because "the units of production" exist as enterprises. Certainly, in the USSR, private ownership was abolished and the means of production were nationalized after the 1917 revolution. But the level of the socialization of labor and of productivity in the USSR made it impossible to carry out the direct socialization of the means of production, and they were transferred to enterprises' possession, which also couldn't be helped. Enterprises, in the eye of the law, had "legal personalities", were responsible for the achievement of orders and "profitability", and made "contracts" with the state and other enterprises for the "sales" of resources and products. Enterprises had their own rights as to the possession, use and disposal of funds allocated by the state. Therefore the enterprises were never just units of production but were "enterprises", that is to say, independent managerial organizations. The executive managers including Directors -- they were at the same time state bureaucrats under the Stalin regime -- possessed state-owned funds and they had individual responsibility for the execution of these funds to certain extents. And the enterprises could thereby gain part of the profits and use them for the expansion of production and compensation. The economic reforms in the second half of 1960's, revealed even further enterprises' character as enterprises. But we will look at this in detail later.
Moreover, enterprises are autocratically ruled by the Directors of each enterprise. Along with the establishment of Stalin regime, the troika system, where the party and trade unions had propped up part of the management of enterprise, was denied (though the party and trade unions as part of the ruling system were in reality not excluded), and "one man management" of the Directors was established. The workers were deprived of any kind of rights -- they even didn't have the rights to organize in trade unions and to struggle for economic demands, which the workers in bourgeois countries had. They were isolated and kept silent by administrative controls and wage policies which deviled them. Enterprise funds were distributed by the Directors, but the large part went to the pockets of the Directors and executive managers. Just thinking over this fact, one can easily see that this society is far away from real social ownership (socialism), even if "the means of production" have been transferred to "national ownership" or "people's ownership". If means of production are owned and used by enterprises, the enterprises evidently produce commodities. And irrespective of how it appears, commodities are never just a "form / outercrust". Stalin only declares that the phenomenon is groundless instead of explaining it. What a "Marxist analysis"!
It is evident that under general conditions of commodity production (Russia under the NEP, for instance) state owned enterprises cannot become anything other than a form of state capital. Even if "nationalized" in form, as long as the starting point of production is not society as a whole but "enterprise", and each enterprise is run on self-accountability (though self-accountability couldn't fully operate before the reforms), the products of state enterprises are commodities and are exchanged as commodities. The view by "socialist" economics which claims them to be commodities is not just a theoretical mistake but a theoretical expression which reflects actual relationships in the USSR. In the present USSR the free purchase of means of production and substantial materials has already been partly allowed, and, therefore, wholesale commerce has started. Order production has been widely introduced and the face as private enterprise is gradually appearing. It is because commodity production has been introduced not just as a "stimulation function" or a "calculation function" but commodity production is being carried out more and more thoroughly that "material stimulation" and "economic calculation" gain their real meaning. In other words, the nature of commodity production is now gradually appearing from under the surface. It is becoming more and more consistent with itself.
Stalin, who was the last survivor of the Bolsheviks, couldn't help feeling a theoretical hesitation in directly identifying socialism with commodity production. So he evaluated commodity production in the USSR as a vestige of the backwardness of Soviet "socialism", therefore as something which should shift to direct "products-exchange" and disappear as socialism developed (his undialectical way of thinking is typical in such a claim). In his work written in 1952, quoted earlier, Stalin wrote this. Under Soviet "socialism", the mode of production as commodity production "fully conform to the growth of the productive forces and help to advance them at seven-league strides", "are being successfully utilized by us for the promotion of the socialist economy, and they are of undeniable benefit to our society". However, he continues, the time will come when the relations of production will "lag behind the productive forces". And he concluded like this.
There is no doubt that these factors will hamper the continued growth of the productive forces of our country more and more as time goes on. The task, therefore, is to eliminate these contradictions by gradually converting collective-farm property into public property, and by introducing -- also gradually -- products-exchange in place of commodity circulation.
But Stalin's prospect was proved completely wrong. What developed in the USSR was not "products-exchange" but "commodity circulation". "Commodity circulation" permeated other areas where it had not operated so far. To take an example, the wages of staff of the collective farms, which had been mainly paid in kind, came to be paid in money. "Products-exchange" between state enterprises, the character of which as commodities Stalin had denied, became recognized as commodity circulation. The collective farms released more and more products for commodity exchange. Today it is evident that what Stalin mistook for "socialism" was in reality various economic relations of a stage in which even commodity production hadn't developed enough. Those who blame Stalin for his "wrong" analysis should consider why his earlier "correct" analysis collapsed in such a miserable way.
4.WAGE LABOUR IN THE USSR
To prove the USSR is a capitalist society in one way or another, of course we must examine the relation between capital and wage labor there. But as one can see at a glance, the labor in the USSR doesn't exist but as wage labor. (though the workers in the collective farms used to be largely paid in kind until recently). Therefore the question is whether this is just a form / outercrust, and whether socialist distribution (distribution according to labor) is actually carried out.
But the Soviet workers are paid in the wage-form. In addition, it was introduced from the beginning based not on socialist principles but on the bourgeois principle of "material stimulation" to experts and workers. Lenin said in the Eighth Congress of the CPSU held in 1921 that experts should be paid five times as worker's wage though they had been paid twenty times before the revolution. In addition, in 1921, during the period of the NEP he explained the wage system in the USSR as follows.
...thus the question was raised of transferring our activities from the task of expropriating, of smashing the power of the exploiters and expropriators, to that of organizing accounting and control, to the, so to speak, prosaic tasks of actual economic development. Even at the time we had to retreat on a number of points. For example, in March and April 1918, the question was raised of remunerating at rates that conformed, not to socialist, but to bourgeois relationships, i.e., at rates that corresponded, not to the difficulty or arduousness of the work performed, but to bourgeois customs and to the conditions of the bourgeois society. Such exceptionally high -- in the bourgeois manner -- remuneration for specialists did not originally enter into the plans of the Soviet government, and even ran counter to a number of decree issued at the end of 1917. But at the beginning of 1918 our party gave direct instructions to the effect that we must step back a bit on this point and agree to a "compromise" (I employ the term then in use). On April 29, 1918, the All-Russia Central Executive Committee adopted a decision to the effect that it was necessary to make this change in the general system of payment.
(the stress is by Hayashi)
According to the solo-class-wage system introduced in this period, most skilled workers were admitted to get, at highest, 3.5 times as much wage as least skilled workers got. Samely, specialists were admitted to get 8 times to least skilled workers. Considering the fact that the number of specialists was small in those days, it can be said that the wage gap was far smaller than in ordinary bourgeois states. This was never of socialism, however, it was a wage system suitable to the "people's state" of the workers and peasants.
This wage system, however, though suitable to the state of the workers and peasants, was abolished under the Five-Year Plan, as Stalin came to power. Even the wage system in the 1920's was, as Lenin admitted, "at rates that corresponded to bourgeois relationships". But under the Stalin regime, even this system was discarded as "petty bourgeois egalitarianism which didn't have anything common with Marxism". And all the regulations which limited the inequality in income were removed, and on the contrary its gaps were expanded. It was the case both in the gap in income between the ruling elites and workers, and between workers themselves.
Under the Stalin regime, the "wage" paid to the ruling bureaucrats was about ten to twenty times that of the workers. In addition, they were insured to get income from enterprise funds. For example, Tony Cliff extracts from an official Soviet newspaper the quotation as follows. According to it, at a Soviet enterprise,
Of the 60, 000 roubles constituting the Director's Fund, the Director appropriated 22, 000 for himself, the secretary of the Party Committee 10, 000, the chief of the production office 8, 000, the chief accountant 6, 000, the president of the trade union committee 4, 000, the head of the workshop 5, 000.
On the other hand, under the Stalin regime, the former wage system for the workers was abolished. Each department of factory came to have its own wage system. Wage gaps were expanded according to the difference in departments, types of occupation, qualifications, and so forth. The gap was particularly big in heavy industry. The dominating wage form was the piece wage, which Marx described as "the form of wage most appropriate to the capitalist mode of production". It also "served as a lever for the lengthening of the working time and the lowering of wages...in the stormy youth of large-scale industry".
Marx stressed its nature as most hostile and exploitative to workers, calling it "the most fruitful source of reductions in wages, and of frauds committed by the capitalists", and also "the basis for a hierarchically organized system of exploitation and oppression".
Besides, in some important workshops workers were paid in a severer form, that is, in the cumulative piece wage rates. Under such conditions no less than ten million prisoners were forced to work in labor camps and the Stakhanovism was enforced, which were a lever to impose labor intensification on workers. Compare this fact with the alleged "distribution according to labor" of the Stalinists ! It is clear how deceptive their claim was. They insisted that it was a "distribution according to labor" on the grounds that they were paid according to how much workers produced under the piece wage systems. But, needless to say, such a claim is "irrational" as Marx has exposed.
It was neither just a coincidence nor a political, ideological mistake by the Soviet bureaucrats that the payment to the workers was in wage-form and in piece-wages under the Stalin regime. The wage form was decided by the fact that the USSR was capitalist, and samely the system of piece-wages was necessitated by the level of industrial development in the Stalin era in the USSR. Under the level of capitalist development in the USSR, where not automatic production by machines but manual labor or labor which relied much on skill and perception were dominant, the system of piece-wages was the most suitable form for the controlling and exploiting of workers. The system of piece-wages under the Stalin regime tells us much about the essence of capitalist production in the USSR.
The Soviet officials claimed that the wages paid to workers in state enterprises didn't correspond to the values of labor power commodities in the money-form and that workers were paid "according to labor". This claim was completely nonsense. In fact, such a socialist principle, "according to labor" was identified with petty bourgeois demands for "all returns for labor", and regarded as a taboo under Stalin. When they spoke of "distribution according to labor", it only meant "wages in proportion to labor". And under the concrete condition of those days, it practically meant the system of piece-wages, or payment by the hour, and in today's case it means the system of wage-compensation. But when in Marxism "distribution according to labor" is spoken about, it is not just something relative such as "in proportion to labor (that is, the system of piece-wages), but is premised on the abolition of direct "social contacts" (--Marx) between men's labor and various objects of utility which it produces, that is to say, the value form of labor, therefore, the commodity form of products. For this to be achieved, above all, the form of putting a price on the value of labor power (wage form) should be eliminated. It becomes possible only under the establishment of the direct social connection of products and labor (the abolition of commodity production). Only under such a condition can men receive back from society what they have given (after deducting his labor for the common funds).
For instance, under capitalism, if a worker works for eight hours, yet the value of the labor power is equivalent to labor of four hours, (now we assume this amounts to 5000 yen in money-form) his boss will only pay for his four hours of labor. Under socialism, workers may work for six hours and get consumption goods for their four hours. But these goods for four hours are never decided by the value of labor power. It means a worker receives back virtually what he has given to society for his own use. Social deduction will be used for social accumulation, people unable to work, social welfare and so on. But social deduction will never turn into his oppressor. Under capitalist society, the four hours of exploited labor later appears as capital, that is to say, as a social relation which stands against the workers. It further strongly governs and exploits the workers.
If "distribution according to labor" which "socialist" economics speaks about is explained in the above example, it goes like this. "Labor for eight hours makes 5000 yen, so labor for 12 hours 7500 yen". Such a "distribution according to labor" is not in reality socialist distribution but just payment for labor power commodity. In this case the labor for 12 hours is as much an exploitation by capital as the labor for 8 hours. This never means "to make labor a scale" (-- Marx). Capital pays that higher wage by 50 percent or more for 12 hours of labor, only because it can extract that more surplus value. Therefore it is no doubt that "distribution according to labor" is totally different from the system of piece-wages or payment by the hour. What's more, "distribution according to labor" can be put into practice only when the value-form of human labor, thereby, the commodity-form of human labor is abolished.
In this point, nothing can be so deceptive and wrong as what "socialist" economics says about Marx's so-called "birthmarks of the old society". "Socialist" economics regards the existence of the relation of commodity / money in Soviet "socialist society" as a "birthmark of the old society". But Marx and Engels never even once called the relation of commodity / money the "birthmark of the old society". What Marx claimed in his "Critique of the Gotha Programme" is the fact that as long as "distribution according to labor" is performed, that is, as "labor becomes a scale", they will in reality be unequally distributed because of discrepancy in ability, of whether they are married or have children and so on. In socialism a private individual is "observed only as a worker" and distributed only according to his labor. Socialism is deferent from a fully-developed communist society in this point. Distribution according to labor only means receiving back "exactly" what a private individual gives to society. Crucially, only in this sense, distribution under socialism is regulated by the same principle as commodity exchange. Marx called such a system of distribution the "birthmark of the old society". For this system to operate, the relations of commodity / money and capital have to be abolished. So Marx himself clearly wrote as follows.
Here obviously the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are exchanged...
As long as the relation of commodity / money remains and labor power becomes a commodity (that is, as long as the workers are paid in wage-form), the socialist principle of "distribution according to labor" cannot exist. Soviet "socialism" vindicates this Marxist proposition by the reality there. It is totally wrong to claim that wages paid to workers in the USSR are not in the value-form of labor power and that labor power doesn't turn into commodities. In Soviet "planned" economy, certainly funds (i.e. "state capital") are allocated by the state. But note that labor power was purchased on the labor market by enterprises themselves on their own decision even under the Stalin regime ! In that "planning", each enterprise only had to achieve the state instructions such as the fixed number of workers, wage fund, and so on. Each enterprise employed workers according to them. Of course, from the early 1930's, organizational enlistment (so-called "orgnavol") was widely practiced, besides that, in 1940, when the Second World War broke out, the requisition of labor became dominant and changing occupation was prohibited. However, as early as in 1956 after the war, it became allowed by law freely to change jobs. Each enterprise gained considerable independence over the employment of workers. For instance, in the process of the Liberalization, the number of obligatory indications, which had been four until then, was reduced to one, "wage fund". It is also due to be abolished in the future. If it is actually abolished, the enterprises will have complete "independency" over the employment of workers. No doubt labor power is purchased as commodity and Soviet workers are paid in the wage form of the value of labor power commodity. Needless to say, in the USSR workers are exploited and labor power is realized in the form of commodity.
However, under the Stalin regime such relations were hidden and carried out in a deflected way. These facts show us the peculiarity of state capitalist system. The peculiarity of (normal) capitalist exploitation is that it takes place behind contracts based on "equal" rights of "free" individuals under the fabricated economic relation of "fair" transactions (equal exchanges). But under the Stalin regime, the workers were not exploited within the free development of economic relations (like the case in Western capitalism). Because of this, people couldn't see the existence of exploitative relations and the capitalist essence of the regime. Instead, they even intentionally missed the fact making every kind of apologies. Such people found it comfortable to doze in the illusion of Soviet "socialism". While they blindly appreciated it, they neglected and abandoned the struggle for socialist change in their own countries.
5.HISTORICAL SIGNIFICANCE OF STATE CAPITALISM
The specific character of state capitalism in the USSR is that its purpose was to form national capital rather than the multiplication of capital itself, Not only workers but also peasants were objects of severe exploitation. It often relied on forcible and direct methods of exploitation rather than economic ones. Compulsory labor which is said to have involved 10 million people symbolizes the Stalin regime. So we can't simply say that such and such a "wrong policy" caused this.
Under such a regime various bourgeois economic relations cannot develop "freely" and in full measure. Various economic categories don't have suitable practical contents, so they only look like forms / outercrusts made use of by the society. So there was some space for people to chat foolishly about Soviet "socialism".
For instance, the categories of "profit" and "profitableness" are as old as the history of Soviet "socialist" economics, these concepts existed since the NEP in 1921 (just as they exist in China today). But under the Stalin regime relations of production hadn't yet developed enough for these bourgeois economic categories. Stalin required each enterprise, not to raise "profitability" of its enterprise, but to fully achieve the "plans" made by the state.
In fact, as long as each enterprise achieved these norms, profitability didn't matter so much. This actually made it possible to achieve a higher profitability for the economy as a whole. This was really a suitable method for the Stalin regime. In the section of "primitive accumulation" of his "Capital", Marx wrote,
...they all employ the power of the state, the concentrated and organized force of society, to hasten, as in a hothouse, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society which is pregnant with a new one. It is itself an economic power.
It is no coincidence that the capitalist society in the period of primitive accumulation, which Marx described in chapter 24, and Russia under the Stalin regime shares many common essential points. In the imperialist stage in the 20thcentury, semi-feudal Russia, which needed the primitive accumulation of capital, in other words, the rapid formation of national capital, made the Stalinist regime inevitable. In this respect state capitalism in Russia was a typical example of primitive accumulation and not a special or unique case.
Our view has nothing to do with the theory of "bureaucratic state capitalism" by Chuko Tsushima and others. They just play with the concept of "single state capital" described by Marx and Engels. Tsushima claims that Soviet state capitalism is the ultimate form of capital accumulation. But state capital in the USSR didn't appear as the final stage of capitalist development. It was a form of capital in a backward country under capitalist-imperialist siege, seeking to meet the historical demand for a rapid formation of national capital.
Also, the vacant abstraction of "single total capital" doesn't explain the reality in the USSR at all. In particular, these theoreticians cannot explain the inevitability of "Liberalization". What they can do is, at best, to temporize their arguments with such explanations as readjustments by the bureaucracy, zigzag policies, confusions and so forth. They can't explain the nature of Soviet enterprises, collective farms, and their independency -- though their nature was hidden under the Stalin regime. Then they had better not to talk about commodity / capitalist production in the USSR in an abstract fashion. In this respect, the theory of "bureaucratic state capitalism", claimed by Tsushima and others, is an abstract dogma, and doesn't have anything to do with our view. It, at best, stands on a Trotskyist (and of the Chinese Communist Party's) concept of "retreat" to capitalism. For example, Tsushima claims that the USSR turned back from a transitional period to the form of "single total capital" as a theoretical goal. And according to him, "here lies the essence of the case for the USSR". However, there was no "retreat" in Soviet state capitalism. This expression, "retreat", is nothing but an expression of the disillusionment of today's petty bourgeois intellectuals who felt "betrayed" by Stalinism.
But national economic development in the USSR (and in China), in whatever barbaric form it was carried through, had a colossal human-historic significance in terms of the realization of world socialism. Idealistic intellectuals are obsessed by the illusion that socialism should have been constructed in the USSR from 1917. They cry about its "retreat" or some such rubbish. Moreover, they "raise" their disillusionment to the level of theory. The economic systems in the USSR and China are capitalist not just because there is the pressure of the world capitalism, or the world capitalist market. The USSR and China shut themselves out from the capitalist world market -- from commodity and capital markets. This was theoretically expressed in "socialism in one country", "self-rescue" and so forth. The socio-economic systems in the USSR and China aren't determined as capitalist by the pressure of world capitalism, in other words, by external factors. They are intrinsically of capitalist. Trotskyists on one hand are spreading an undialectical dogma that the USSR and China cannot help being capitalist because of the pressure of world capitalism -- they cannot evaluate national development in the USSR and China as "self-motivated movement"--, and on the other hand they insist that the world was already completely mature for socialism in the early 20th century. Standing on this dogma, they emphasize that if the proletarian revolution had succeeded in the West, Stalin's USSR and Mao's China wouldn't have appeared and, instead, the USSR and China would have become socialist directly.
However, the thesis that the world was matured enough for socialism was only true when they identified the "world" with the "West". This is, in other words, nothing but a Euro-centrist view of history. It reflects the fact that the West actually got on the road of capitalist development much earlier than other nations and regions. But today it is quite obvious that it was only in one stage of history that the West preceded others. Those Euro-Trotskyists shouldn't ignore the existence of two billion people in the non-Western world, which share more than a half of the world population. They may say that it is not just a question of quantitative weight. But quantity turns into quality. Today, superpowers such as the USSR, China, India, despite their different form in development to western advanced countries, are now making their way of capitalist development by forming state capital. This very fact is a best reply to the Trotskyists.
The regime in the USSR didn't come into being coincidentally, or pop out from Stalin's arbitrary policies. It was historically inevitable. Certainly today, the USSR is denying its own historical stage of development and shifting toward "liberalization". Today many people blame the Stalin regime for having let bureaucratism thrive and for bringing about inefficient production and stagnation by an excess of centralized, administrative controls. Under a system where "fixed funds" are unconditionally allocated and workers are urged only to achieve production norms, each enterprise would naturally try to obtain and hoard as much of these "fixed funds" as possible. Workers have to produce a given amount of goods within a certain period. There while only the amount of goods matters, the quality of goods is virtually ignored. So each enterprise doesn't have to produce goods of a superior quality, for they are not responsible for selling them. This is one reason which necessitated the "Liberalization". These were dreadful "defects" in terms of bourgeois rationality. But despite this the Stalin regime had a historical significance.
It is summed up as the necessity for a rapid development of the national economy and the formation of national capital in a short period. Under the conditions of the capitalist imperialist siege at that time, for backward Russia to accomplish a rapid accumulation of national capital, that is, heavy industrialization, it was necessary for state machinery to play a decisive role. It was necessary to transform all national surplus value into capital and accumulate it as capital. The country's national productivity was far from being able to transform the commodity / capitalist relation of production into a socialist one. In this sense, there is no difference between the past national economic development in the West and in today's Russia. In both cases there is the same relation of production in the economic foundation of society. But in the necessity of concentrating and accumulating capital as state capital, a non-economic factor, state machinery played a decisive role. This was a distinctive peculiarity in the formation of state capital in the USSR. Moreover, this was also the factor which made people mistake the USSR for a "socialist" society.
In a society like the USSR, it goes without saying that "the law of value" doesn't appear openly. Even when its operation is admitted, it is only seen as a form which has lost its original character according to its historical definition. Instead, they declare that the law of value can be just "made use of" for society. However, if an economic category can be "made used of", it inevitably means that there actually exists the relation of production which corresponds to it. State can subjectively manipulate prices only when it has a relation of production that can be expressed within the category of prices. It should be said that the law of value was "made use of" not to do away with but to realize and develop itself.
The Stalin regime / state capitalism is in itself a self-contradictory regime and, therefore, this concept itself is nothing but a self-contradiction. While an enterprise as state capital must have the character of capital, the very same enterprise as state capital is forced to deny its own character as capital. While each capital takes the form of state capital, it contains within itself a contradiction that the more completed it tried to be as state capital, the more it contradicts its own existence as an enterprise. This contradiction inevitably has created the necessity for "liberalization". In other words, it needed a new regime where the enterprises can fully develop their nature as enterprise. In this very sense, the "Liberalization" was an inevitable result of the immanent development of contradictions in Soviet state capitalism. So it is not a coincidence that supporters of the theory of "bureaucratic state capitalism "cannot see this immanent contradiction in the Stalin regime and are unable to explain the inevitability of the "liberalization" taking place in the USSR today.
CHAPTER 3 :"SOCIALIST" PLANNED ECONOMY IN THE USSR AND THE CATEGORIES OF CAPITAL
1.THE REALITY OF "PLANNED ECONOMY"
Though it has already been officially recognized that the law of value is actually operating in the "socialist" USSR, on the other hand, "socialist" economists emphasize that the fundamental economic law in the USSR is not the law of value but planned economy. According to them, despite the fact that the law of value "objectively" exists, it is consciously "made use of" for the sake of the socialist planned economy and its development, and the principle of Soviet economy is nothing but planned economy. Such a view was smoothly accepted particularly before the economic reforms in the 60's because it seemed to fit various backgrounds of the Soviet economy of the time. However, now we must analyze the real figure of Soviet "socialist" planned economy. Here we will examine its concrete content in the first place, and go on to the theoretical analysis of the alleged planned economy which is based on commodity production in the USSR.
The foundation of "planning" is, the existence of capital as state capital. The state machinery makes plans over the production and allocation of state capital. Social surplus values are absorbed in state finance and turned into state capital. When it comes to the circulation of means of production within state capital, that is between state enterprises, which Stalin stressed was not "commodity" exchange, the state machinery determines the "goods balance" and the allocation of important means of production. Samely, lower state apparatuses made plans for a large part of other means of production. In the period shortly before the economic reforms, "goods balance" was made for about twelve thousand means of labor and six thousand objects of labor. The state controlled the whole economy with administrative orders, which formed the center of the "planned economy". In addition, new enterprises were created, the existing enterprises expanded and reformed, and "enterprise funds" increased. The cost for these were included in state budget.
In the relation between the collective farms and the state, products were obliged to be delivered without compensation to the state. Likewise, they were paid in kind to the MTS (Tractor Station) for its work, or forced to be sold. Either way, each producer was forced to obey the state's decisions. (At the present, the state buys products from the collective farms by subscription. But the price is still decided by the state.)
When it comes to the sale of consumption goods to consumers, it is also under state control. The sale in the state sector shares two thirds of the total sales amount, and the cooperative associations and collective farms shares the rest.
As "socialist" economics itself emphasizes, barter economy is dominant in this "planned economy". However, its operation isn't based on "the social combination of people's labor and their labor products" as Marx described, but on the "making use of the forms of value".
Soviet "planned economy" looked as if it was "socialist economy" based on barter economy. But that never meant it was socialism. In reality it was just a characteristic of statist economy. To take an instance, in bourgeois states under a controlled economy in war time, the amount of use values, or useful products was the most important concern. In other words, it was not exchange values but the amount of use values that mattered for these states. As a whole, "profit" didn't matter for the states as it did for each enterprise. Stalin claimed that it was possible to advance toward real socialism by replacing commodity exchange with "product exchange", which he thought had been realized within the state enterprise sector. However, we cannot speak about socialism and "product exchange" on a same level. We should rather say that "product exchange" is the embryo or starting point of commodity production.
In any case, the exchange between state enterprises was not simply "product exchange". The "products" from state enterprises definitely existed in the form of value. According to Stalin, "products" had prices because of the necessity of economic calculation. Price was just the "outercrust" of a commodity. However, state enterprises were run on self-accountability. Each enterprise was provided with "funds", in other words, capital, by the state. When an enterprise was in the red, the enterprise was supported by subsidies as long as it could carry out the given state plan. But at the same time, each enterprise was required to reduce "cost" as much as possible and keep a certain level of "profitability". It is only in bourgeois societies that the necessity for raising productivity is identified with keeping up "profitability" to a certain level. Each enterprise owned means of production and funds for their operation, which enabled the enterprise to buy resource and subsidiary materials. The economic reforms in the 60's promoted this system. What's more, each enterprise had owned "enterprise funds" before the economic reforms. These belonged to the enterprise, not to the state. Thus state enterprises had an independent character as capitalist enterprise over many aspects. But these real character was hidden under the Stalin regime.
However, these characteristics have inevitably begun to take off their veils as the economic reforms proceeded. The economic reforms were the inevitable result of the development of state enterprises as "enterprises", and the legal expression of the development.
"Planning" in the USSR was not socialist "planning" but a forcible method for heavy industrialization, that is, state capitalist accumulation. There, the state squeezed surplus value both from the peasants, as the transaction tax, and from the workers as "profit deduction", which were concentrated and turned into state capital. This expressed the very necessity of Soviet society to carry out a rapid industrialization. In the backward Russia capital accumulation couldn't necessarily depend on the normal exploitation of industrial workers. That necessitated capital accumulation by the state, that is, the "planning". "Planning" as a "socialist" method was in fact a method for forcible development of national economy.
2."PLANNED ECONOMY" AS A METHOD FOR STATE CAPITALIST ACCUMULATION
The "socialist" planned economy in the USSR was a reflection of the forcible accumulation of national capital. It contained no socialist substance. In this period, the regime had to pursue the primitive accumulation of state capital, rather than introduce a system in which state capital could operate "efficiently". The "Stalin regime" ensured such a forcible accumulation and its method was the "planned economy", the accumulation of national capital as state capital. Without such brutal "non-economic forcible methods" using the state as its medium, backward Russia couldn't have rapidly formed national capital and appeared as a bourgeois "superpower" in the imperialist epoch. Each enterprise was forced by the state to produce and produce -- this becomes clear, if you look at the fact that "total output" was the most important state directive. This was a reflection of what the epoch required for the USSR, a forcible accumulation of national capital by state capitalist method.
For such a state capital, it was more important to produce goods "in kind" than as "values". This is why today they say the Stalin regime was a barter economy. If capital indirectly allocated "according to plans" by the state, they are naturally dealt with as use values rather than as (exchange) values. In this case, the formation of national capital is expressed as "heavy industrialization". If capitalist development is observed, not from the viewpoint of each capital, but of the state, it can be called "heavy industrialization" or "heavy chemical industrialization" (the Japanese bourgeoisie evaluate the development of Japanese capitalism after the Second World War in these terms). In the USSR the formation of national capital directly took the form of state capital, allocated according to state plans. Therefore, it was quite natural that Stalin put more emphasis on use value than on exchange value. What Stalin did was not the direct socialist allocation of means of production but the allocation of state capital.
We can not say that Soviet "planned economy" has some socialist content. Even in the Stalin period before the economic reforms, when "planned economy" was carried out in an extremely forcible fashion, it had nothing to do with socialism. Because socialism is neither a system of non-economic compulsion, nor the question of a "utilization" of the law of value as Stalin claimed, but a question of the direct realization of the definitions of value (see Chapter?, section 2). In other words, socialism is a system where production and distribution are organized based on labor-expenditure.
Our thesis that Soviet "socialism" is in fact state capitalism. Various "socialist" methods carried out there are for the forcible accumulation of state capital. Our opponents may ask, "where and how on earth do the capital and the capital / wage labor relationship exist in the USSR !?"
They have to understand the following. In the USSR, money (rouble) is invested so that it can raise "profitability". It is value which self-multiplies. It doesn't matter whether each state enterprise actually accepts money when it delivers its products to the state. The crucial point is that products are realized as values (moreover, as values which include profits). Now these self-multiplying values are nothing but capital. They are absolutely capitals in terms of the most generalized, abstract definition of capital. For industrial capital, capital multiplies itself by exploiting the proletariat. However, for other forms of capital, the multiplication of capital doesn't necessarily depend on the exploitation of the proletariat in production. In the USSR, state capital was formed and multiplied not only through the exploitation of the proletariat but also through the peasants, via the circulation of products. This fact shows, not that these are not capital, but that "fixed fund (capital)" and "liquid capital" are specific forms of capital.
The so-called "fixed fund" is allocated by the state. A large part of the "profit" of the enterprise is taken over by the state. It becomes part of state finance along with transaction tax. Isn't this multiplying "fixed fund" capital ? Can we deny its essence as self-multiplying value because it is called a "fund"? The Soviet ruling class wrongly regards any kind of money as a "fund", just as the Western bourgeoisie calls a "fund", both "money as money" and "money as money capital. This concept is totally wrong. Of course, in the USSR the accumulation of capital takes the form of accumulation of state capital, not of individual capital. But this doesn't show that Soviet economy has "socialist" content but a peculiarity in the development of the national economy there. We will examine in the next chapter the contradictions which such a unique national economy intrinsically owns. We will examine in the next chapter the conflictions which this peculiar form of development in national economy (i.e. capital accumulation) accompanies.
What is the historical significance of this form of capital accumulation ? We have to find it in the historical context of the development of capitalism. Industrial capitalism had already appeared in the early nineteenth century, taking a clear form, particularly in England. It first developed in textile industry where mechanization and factory system had most advanced. Capitalism, which was fist established in England, spread to other western countries and Japan. But as early as in the late nineteenth century it went into the era of imperialism, with the foundation of the concentration of capital and the formation of monopoly capital. Now the crucial point is that the concentration of capital and the formation of monopoly capital took their extreme form not in England as an old capitalism but in Germany, America, etc. and remarkably, in the backward Russia. The reason is this. These late developing capitalism's had not have the foundation of capital which was accumulated by individual capital through a long process like in England. Therefore, in order to meet the increasing demand of capital accumulation, they had to take a different method for rapid capital accumulation. Small capital was concentrated into big capital through the systems of joint stock company and bank. Otherwise, all national surplus value was absorbed by state and transformed into capital. This created enormously large concentrated capital very quickly.
However, in the twentieth century, when a number of imperialist forces competed with each other in exploiting and oppressing the nations in their colonies and semi-colonies, even the method of capital accumulation took in Germany and so forth was not enough any longer for those nations. Today (in the early 1970's), whether in so-called "socialist" countries or not, almost all backward countries are resorting to state capitalist method for their economic development. In this respect there is no fundamental deference between the "socialist" countries (the USSR, China, etc.) and the "non-socialist" countries (India, Egypt, etc.) However, there is also a big difference. In the "socialist" countries, "national democratic" revolutions have been won and agriculture has been composed in state capitalist economy (by collectivization). On the other hand, in the "non-socialist" countries, feudal relations in agriculture are largely kept untouched. This is why there is a decisive deference in the efficiency of state capitalism between the two groups. While the former depend on the accumulation of domestic capital ("socialism in one country" and "self-surviving") and its capitalist accumulation is more forcible and therefore quicker, the latter largely depend on foreign capital from western developed countries and its development is slow and often faces crisis.
Countries such as India and Egypt often call their state capitalist systems "socialist". In this meaning "socialism" in backward countries is another name for state capitalism. Despite this deceptive reality, however, state capitalism of those backward nations is an expression of their intrinsic demand for their national development maintaining their national independency. Here lies the great historical significance of state capitalism. Without a high national economic development in large countries such as the USSR, China, India and so on, world socialism would surely end up in a vacant day dream. We have to confirm that socialism in these countries is not such an easy human historical question as many idealistic socialists imagine. The real history of the world has been disproving their thoughtless idea that the victory of socialism in the western advanced countries automatically would bring socialism to backward countries.
3."PLANNED ECONOMY" AND COMMODITY PRODUCTION
Unless the law of value, that is, commodity production is abolished, there is no point in talking about "planning" in a real socialist sense. This should be obvious for Marxists. The existence of the law of value means that the distribution of total labor of society, which should be according to needs of society, is not yet under men's conscious control. On the contrary, the total labor of society is distributed according to a "spontaneous" law, which is formed through actions of private producers or capitalist enterprises performed independently of each other. Therefore, the existence of categories of values means that "the process of production has mastery over man, instead of the opposite". The fact that labor takes the form of value clearly shows that Soviet society lacks a prerequisite for socialist "planning". If one claims that it is possible to have a "planned" economy on the foundation of commodity production, then we only say that such a "planned" economy has nothing but bourgeois content. This sort of "planning" has been carried out for many years by today's state monopoly bourgeoisie for business adjustment and by the national bourgeoisie for national economic development. To say that commodity production and "planning" are compatible is the same as saying that a capitalist economy also can be "planned" in a "socialist" fashion. This claim is nothing but social reformism to deceive the proletariat.
It is completely wrong to reduce the essence of socialism to "planning". "Planning" can have a socialist content only in the following sense. Marx clarified the basic concept of socialist society. The historical character of the forms of commodity values become clear if they are transported from commodity society. He wrote,
Let us finally imagine, for a change, an association of free men, working with the means of production held in common, and expending their many different forms of labor-power in full self-awareness as one single social labor force. All the characteristics of Robinson's labor are repeated here, but with the difference that they are social instead of individual. All Robinson's products were exclusively the result of his own personal labor and they were therefore directly objects of utility for him personally. The total product of our imagined association is a social product. One part of this product serves as fresh means of production and remains social. But another part is consumed by the members of the association as means of subsistence. This part must therefore be divided amongst them. The way this division is made will vary with the particular kind of social organization of production and the corresponding level of social development attained by the producers. We shall assume, but only for the sake of a parallel with the production of commodities, that the share of each individual producer in the means of subsistence is determined by his labor time. Labor time would in that case play a double part. Its apportionment in accordance with a definite social plan maintains the correct proportion between the different functions of labor and the various needs of associations. On the other hand, labor time also serves as a measure of the part taken by each individual in the common labor, and of his share in the part of the total product destined for individual consumption. The social relations of the individual producers, both towards their labor and the products of their labor, are here transparent in their simplicity, in production as well as in distribution.
Here Marx clearly wrote "apportionment in accordance with a definite social plan". This is the essence of real socialist "planning". In a real planned economy, all nonsense such as the "utilization of the law of value" is out of the question. This planned economy is premised on the abolition of the law of value, as the starting point of socialist production.
Since Stalinist "socialism" appeared, socialism has been identified with "planning" and "nationalization". This is bloody nonsense. Certainly, socialism would start with the nationalization of the means of production. However, it cannot have any real socialist contents if the class character of the state is ignored. Only "nationalization" under real a proletarian state can have significance as real socialization of the means of production with a socialist character. The nationalization of the means of production and a "planned economy" in bourgeois states has never had socialist significance as all preceding experiences has clearly showed (for example, in Britain, France as "advanced countries" and India, Egypt as "backward countries"). On the contrary, nationalization even intensified bourgeois rule in those countries. The same is true of "the workers and peasants' state " or "people's states". The living experiences of the USSR and China clearly shows this fact.
It is correct to say that "planning" under a certain condition can be an essential expression of socialism. Socialism cannot exist without a planned economy. However, planning under socialism is nothing but a result of man's conscious control of social production. We can never reduce socialism to planned economy. Socialism is, before everything, a matter of social relationship between the working people in the society. It is not just a question of social function. If we look at the fact that almost all today's bourgeois states talk about the necessity of a planned economy more or less, it becomes clear that socialism cannot be reduced to a planned economy. To identify socialism with a planned economy, still more, with that under commodity society, inevitably causes great confusion and damage to advanced workers struggling for socialism. Such a claim is in essence bourgeois and reactionary.
But Stalinists -- and Trotskyists to a great degree -- identify "nationalization" and "socialization" with socialism. They forget or ignore the class character of the nationalization in the existing "socialist" countries. On the contrary, they declare them "socialist" because of their nationalized economy. Stalinists claim that the USSR and China are socialist as long as they have a "planned" economy even though production for profit, based on commodity production, are developing there. But as we have already made clear, a "planned economy" in the USSR and others has never had socialist contents, nor will it have in the future either.
CHAPTER 4: ECONOMIC REFORMS AND THE BOURGEOIS DEVELOPMENT OF THE STALIN REGIME
1.THE CONTENT OF THE ECONOMIC REFORMS
The so-called Liberalization in the USSR started with introducing a new economic system in 1965. The Liberalization reflected the controversy among Soviet economists over the essence of value, price, profit and so on. This controversy had been carried on for over ten years since Stalin's death. However, it had more meanings beyond that. The Liberalization was carried out as a result of this controversy. At the same time, we should not miss the point that the controversy itself was an reflection of the "development" of the economic system in the USSR.
At that time a lot of reforms had already been made since the death of Stalin : Authority in the control and management of state apparatuses was decentralized ; The prices of agricultural products were raised ; The MTS was discomposed ; State enterprises and collective farms were given more autonomy ; It was allowed to give workers and staffs more material incentives, etc.
A new economic policy was introduced in 1965 with the ardent support of Khrushchev. It was based on the proposes made by Liberman in 1962. Developing the ever piece-meal reforms, it also became a turning point for Soviet economic policies in quality. At the stage of July 1st, 1970, about for hundred thousand enterprises had been transferred under the new system. These enterprises produced more than 90 percent of industrial products and more than 95 percent of profit. Now in the first place we should look at the content of the new policy. The basic idea of the new policy was to increase "efficiency" in the management of enterprises by allowing each enterprise to have more autonomy. First of all, we can see the most obvious change in the fact that the number of instructions for enterprises, which were given by upper state machinery, was remarkably reduced (from thirty to nine). Now let us look at the new nine instructions: (1) total realized output (sales amount) ; (2) output of important items expressed in amount ; (3) total profit and the rate of return as its ratio to production funds ; (4) deliver to state treasury and subsidiary from it ; (5) total sum of wage funds ; (6) total sum of basic investment to state ; and three other indications.
Out of these nine new indications, (1) and (3) are particularly important. Before the reforms, "total output" and "cost" were two of the thirty obligatory indications. But the former was replaced by (1), "total realized output" and the latter by (3), "profit in amount and ratio". Now each enterprise got the right to "hoard" (accumulate) money income for enterprise funds according to the amount and ratio of profit it raised. We should also pay attention to the fact that the indication of "fees for the use of production funds" was added to the indications, replacing the former "free funds". Enterprises now got to pay fees to state treasury when they borrowed fixed or liquid funds. Next, let us look at the indication (5). Out of the former four indications concerning employees (the number of employees, labor productivity, standard wage and wage funds), only this indication was kept untouched. But it is also due to be rid of in the near future.
The meanings of these reforms are the followings. First, the fact that "sales amount" replaced "total output" shows that commodities from enterprises now have to be "realized", in other words, to be sold. Production cannot be the only concern for each enterprise any more. In order to achieve the indication, each enterprise cannot stock its unsold products as it used to do. Now it is responsible to sell them.
We need a more specific analysis for the second point -- the fact that "cost" was replaced by "profit". Actually, this is said to be the core of the economic reforms. The examination of this will tell us the essence of the Liberalization. Now let us look into it in detail.
2.PROFIT AS THE RATIO TO TOTAL SUM OF INVESTMENT -- FIXATION OF A TYPICALLY BOURGEOIS CONCEPT
"Profit (sum)" and "the rate of return" existed as indications before the economic reforms. But there was a great change in the content of the latter, "the rate of return". Until the reforms, "the rate of return" had used to be calculated as the ratio of profit to "cost". But now after the reforms, it was calculated as the ratio to "total production funds" (fixed funds plus liquid funds). What is the difference between these two ways ?
To use Marx's terminology, "cost" is identical with "cost price". If here is a capitalist commodity, its value is composed like this : value (v) = constant capital (c) + variable capital (v) + surplus value (m). Here (c) plus (v), that is the expense the capitalist has to bear, is called "cost". The capitalist only bears the part expended for the production of the commodity. Therefore, the concept of "cost" obviously belongs to the capitalist. There, the scientific concept of "constant capital and variable capital" disappears, and instead only the concept of "fixed capital and liquid capital" is left. This means that "variable capital" is identified with the liquid part of "constant capital" and these are mingled to form the part of "liquid capital". (It is not accidental that in the Soviet "socialist" economics "fixed fund", instead of "constant capital", is given a priority to other kinds of fund.)
As a part of commodity value enters into "cost price", surplus value transforms itself into profit. In other words, surplus value is a concept relating to "cost price (k)", not to (v). Here as surplus value transforms itself into profit, the resource of surplus value is hidden. It appears that surplus value comes from the whole part of capital. It appears that the whole part of capital contributes to the creation of profit.
In the economic reforms, the "rate of return as the ratio of increased part to cost" was replaced by the "rate of return as the ratio of increased part to total invested capital". What is the difference between these two ? While the former means the ratio of (m) to (c) plus (v) in commodity value, the latter the ratio of (m) to the total invested capital of the commodity, which doesn't directly relate to the value of the commodity. In this case, the total invested value only partly contributes to the formation of the cost price of the commodity, since only a part of the fixed capital is transferred into the cost price. But it is supposed to thoroughly contribute to the formation of (m). Let's take an example. Here are two kinds of capital, A and B. Both are 100 million Yen in price. The proportion of constant capital and variable capital, that is, the organic a enterpr managed based on bourgeois principles. It is clear that the systems of enterprise managed based on a commercial calculation are not the socialistic relations of production. It is sure that the enterprise in the age of Stalin (before the reform) did not assume gProfit" to be a principle of supremacy. Were Stalin's following
When speaking, in my "Remarks", of the profitableness of the socialist national economy, I was controverting certain comrades who alleges that, by not giving great preference to profitable enterprises, and by tolerating the existence side by side with them of unprofitable enterprises, our planned economy is killing the very principle of profitableness of economic undertakings. The "Remarks" say that profitability considered from t
The capitalist may calculate, in the first place, the rate of profit in the relation to capital expense, or "cost", that is, the value of the product minus surplus value. For him, "cost" is something which he expenses and identified with cost price (k). However, later he naturally comes to calculate the rate of profit in the relation to total invested capital, for it appears to him that profit comes, not from the capital that is realized in cost price (k), but from total invested capital -- which includes the part which operates in labor process but has not been realized in (k). Marx says,
So far as the individual capitalist is concerned, it is evident that he is only interested in the relation of the surplus-value, or the excess value at which he sells his commodities, to the total capital advanced for the production of the commodities, while the specific relationship and inner connection of this surplus with the various components of capital fail to interest him, and it is, moreover, rather in his interests to draw the veil over this specific relationship and this intrinsic connection.
There is no mutual absolute relation either between (c) and (m) or between total capital and (m). There is a mutual relation only between (v) and (m). The capitalist can express the "rate of return" in the relation either to "cost" or to "total invested capital" (For example, in Japan the capitalists usually use, to show the efficiency of capital, the concepts of "the rate of profit in sales amount" and "the rate of profit in total invested capital") However, the capitalist is particularly concerned to the rate of profit in the relation to capital which he has invested, but not in the relation to capital which has already been consumed in production process. For, the "efficiency" of capital as value is a not question that only concerns to the consumed part of capital. It also concerns to the whole capital which the capitalist invests. Thus the ratio of profit to total invested capital appears as the rate of profit. The foundation of this concept is a bourgeois illusion that "total invested capital contributes to the creation of surplus value (m)". Though this concept is totally nonsense in essence, it inevitably become dominant in bourgeois society. This illusion forms the foundation of a typical concept in bourgeois society, that is, the Trinity of "capital -- profit (interest)", "land -- rent" and "labor -- wage".
Now we have made clear that there is a big difference between the two ways of calculation of the rate of profit -- as the ratio either to "cost" or to "total invested capital". There is no difference in the points that in both fashions surplus value is created and, besides, it is expressed in the rate of profit, a typically bourgeois concept. This also tells us that the economic reforms were never a "revival of capitalism" as the Chinese Communist Party and the Maoists claim, but a product of the development of the Stalin regime from within. Those who claim that the Stalin regime was not a bourgeois society and that a bourgeois relation of production has been "reviving" since the Khrushchev regime or the new system of 1965, should consider the fact that even under the Stalin regime surplus value was expressed as the "rate of return" which meant the ratio to "cost" (though it was very formal without having an adequate content -- however, this form didn't disappear but, on the contrary, is now requiring a suitable content).
The difference between the two fashions seems merely what they are based on in calculation. However, they are same in the sense that in both fashions the relation between (m) and (v), (that is, the rate of surplus value), is ignored and the essence of capitalist production is hidden. In the relation to "cost", fixed capital only transfers a part of itself, as value, into commodity and only the transferred part joins the calculation of the rate of profit. On the other hand, in the relation to "total invested capital", fixed capital joins, as a whole, the calculation of the rate of profit. Here it appears that even the part of fixed capital which doesn't consist of the value of commodity contributes to the creation of surplus value. So we can say that this is a more developed form of the bourgeois concept that the whole of capital creates surplus value. The fact that in the USSR "profitability", the most bourgeois concept, was introduced as the scale to calculate the "efficiency" of capital clearly tells us something : now in the USSR not only the law of value but also other capitalist relations, which have been hidden so far, are emerging, taking a clear form, from under the surface. Is it just coincidental that in the Soviet academic field the concept of "production cost", as a base to form "price" in production, has been dominant since the concept of "profit" was introduced there ? Surely not ! Moreover, "production cost" is a category specific to bourgeois society. It cannot exist neither in a simple form of commodity production nor in a socialist society. However, the Soviet economists dare to claim that "production cost" should be given priority over "the formation of price based on value". They claim that their "socialism" is closer, not to commodity production, rather to capitalism. Therefore, socialism and capitalism share something in common ! What a surprising logic !
3.WHAT DEFINES THE STAGE OF "LIBERALISATION" IN STATE CAPITALISM ?
As we have examined, the "rate of return" is now calculated based, not on "cost" but on invested capital. This change had a big practical meaning in the Soviet economy. When capital cannot give full play to its nature as self-multiplying value (under the Stalin regime capital was under strong state control and management and its nature was so suppressed that it couldn't develop freely), it necessarily accumulated its inherent contradictions. These contradictions emerged taking the shapes of low efficiency of capital and "locked-in capital"-- that is, the hoarding of resources, machinery, and facilities. This led to a general stagnation of production. There is a rich evidence to show how low the "efficiency" of state capital was at that time. To take a few examples, the excess stock of "liquid funds" of state enterprises amounted up to 16.6 billion roubles in the late 1950's. State enterprises often hoarded or concealed excess stock under the system of "free funds". Just before the reforms in the Liberalization over one third of fixed capital, which was to be concentrated and invested according to state plan, was spent just for the repair of existing facilities. Although no less than two million workers were engaged in repairing jobs, the quality of goods was hardly improved !
The rate of increase in production in industry and agriculture
year industry agriculture (to the previous year)
1959 11.4 0.4
1960 9.5 3
1961 9.1 3
1962 9.7 1
1963 8.1 -8
1964 7.3 14
1965 3.6 1
(according to a state statistic of the USSR)]
A series of economic reforms started in 1965. It greatly changed the relationship between the state and enterprises, and there "administrative" relations, which had been dominant until then, were replaced by "economic" relations. The greatest change was the abolition of the system of "free funds". Importantly, this change was in accordance with the main purpose of the reforms in through the 1960's -- it was to give more autonomy to enterprises and to achieve a greater "efficiency" of funds.
Before the reforms, the state used to set up and expand enterprises by providing the managers of the enterprises with funds "without compensation". In fact, this can be said a typical "method of accumulation" in underdeveloped capitalist countries in the period of imperialism : all surplus value is concentrated to state, and state invest surplus according to its own plans. The necessity of national economy for a rapid industrialization and the creation of arm economy made such a way of accumulation inevitable. It was quite natural that the Soviet state was first interested in forming capital itself, rather than in achieving a high "economic efficiency". This tells you something : you cannot talk about the efficiency of national capital before it is accumulated and formed. Accumulate first ! Forget about its efficiency for a while !
But now once national capital is formed, now you are obliged to care about how efficiently it is operating. In the Meiji Era of Japan, a certain level of efficiency of capital was made possible by privatization of state capital. Likewise, the Liberalization is gradually proceeding in today's USSR. There the "rate of return" is now calculated in the relation to the whole invested capital and national capital takes the form of money capital. When it comes to the relationship between the state and enterprises, a kind of "credit relation" is gaining more weight replacing administrative relations. By introducing these new systems the state tries to keep a certain level of "efficiency" of national capital. The system of "free funds" was abolished. Now the enterprise was not completely state capital anymore. Capital, which used to be allocated by the state without compensation, is now loaned with the interest of six percent. Each enterprise has to pay fees to the state for borrowing fixed and liquid funds. It is prospected that this interest through loaning state capital will replace "profit deduction" and "transaction tax" as the main resource of state finance. Thus obviously "administrative" systems such as the allocation of capital by state and deducting tax are being replaced by "economic", that is, capitalist systems such as capital-loaning with interest. Various bourgeois categories, which have been hidden, are now emerging from under the surface. They are not simply forms without substance as Stalin claimed.
The apologists of the USSR say that the essence of Soviet "socialism" has never been changed and that new policies were introduced for technical reasons. Certainly, as they say, under the new systems a higher efficiency of funds will be achieved. The state will stop investing in the sectors of production which cannot pay fees or interest for borrowing funds and others. Funds will be concentrated to the sectors of production which can achieve "high efficiency". This will enable the state to allocate funds more effectively. Everything seems all right. But here is only one problem -- this is nothing but the general law of capitalism (the law of average profit / production cost, etc.) ! Now almost all Soviet economists are claiming that the price of commodity should be related to production cost (i.e. price which can keep average profit). This is neither an accident nor a theoretical mistake. It is exactly a reflection of the maturity of capitalist economy in the USSR.
The economic reforms / Liberalization in the 1960's symbolizes a stage of development in Soviet state capitalism, its maturity and its turning point. The essence and necessity of these reforms is this -- Soviet state capitalism is now shifting toward a system where capital can operate more freely, finishing the formation of national capital by "primitive" accumulation. So in fact it is not completely groundless for the Chinese Communist Party and its followers to cry that it is a "revival" of capitalism (though they one-sidely reduce the essence of capitalist production in the USSR to "speculation", etc.) The Stalin regime started with the backwardness of its national economy and its overwhelming weight of agriculture. It carried out the historical task of the "primitive accumulation" by the usurpation of the peasants and the exploitation of the working class through forced labor. On the other hand, the task of the Liberalization is to achieve a higher "efficiency" of the national capital. While the former relied on the direct intensification of labor (i.e. production of absolute surplus value), the latter on the increase of productive force (i.e. production of relative surplus value). From the capitalist point of view, labor power should be exploited as effectively as possible. For it to be done, labor power should be maintained and reproduced in a good condition. Therefore, consumer goods, foods, etc. have to be improved to some extent in quality and increased in quantity. For this reason, the ever harsh exploitation of the farmers had to be relaxed. The prices of agricultural products were greatly pulled up. More autonomy was given to the collective farms. On the other hand, the Soviet state enterprises gradually revealed their nature as bourgeois enterprises. Who rules this new kind of bourgeois society ? Managers (directors), technicians, economists, in other words, various kinds of the so-called "technocrats" as well as Stalinist bureaucrats. Crucially, in a state capitalist country which hasn't reached this historical stage, such a liberalization policy is pulled back, and those who support it are oppressed as "revisionists" (see the USSR under Stalin and China during the Great Cultural Revolution).
The economic reforms / Liberalization in the USSR is also unveiling the relationship of capital and wage labor. Under the Stalin regime, the character of the state enterprise as enterprise was oppressed and the directors of the enterprise existed not as managers but rather as state bureaucrats. There the class relationship between capital and wage labor didn't appear in a clear shape. However, today the economic reforms are drastically unveiling an important fact : the relationship between the director and the worker is never one as "comrades within a community" (needless to say, such a thing never existed from the beginning) but one as a class antagonism. Now we will look at this fact in terms of the changes in wage system.
4.THE RESULT OF THE ECONOMIC REFORMS -- THE EMERGE OF BOURGEOIS CLASS RELATIONS
In the late 50's there were already some reforms to reduce wage gaps. A system of wage with incentives was introduced. Accumulative piece work systems, which had shared 35 percent of the whole wage systems until 1956, decreased to 0.4 percent in 1962. On the other hand, the system of wage with incentives rapidly increased up to 65 - 80 percent. The proportion of piece work systems and time work systems also changed from (77 -- 23 percent) in 1956 to (60 -- 40) in 1962. The series of economic reforms, initiated in 1965, accelerated such a trend also in quality.
In the new system the efficiency of "production funds" was calculated by profit. By this, it was attempted to give material stimulation to the activity of the enterprises. The better business showings each enterprise marked, the better wages it was able to receive. Systems of incentives had existed even before then. But now the enterprises were openly allowed to pursue profit. They were given incentives from profit according to their business showings. In addition, the amount of incentives was much greater than ever. In this sense the new system was totally a new one (though it was quite common in other bourgeois countries).
The change in the proportion of incentives
kinds of incentives '1965 1967
for workers (to wage, percent)
payment for exceeding norms 16.7 18.7
incentives from wage funds 15.5 17.0
incentives from material subsidy funds 0.1 3.4
year-end bonus -- 4.8
for managerial and technical staffs
(to fixed salary, percent)
incentives from wage funds 19.9 0.4
incentives from material subsidy funds 0.4 30.5
year-end bonus -- 5.2
* before the new systems were introduced
The new system of incentives was apparently a class politics. After the reforms, wage gaps between enterprises were expanded. The crucial point is that the salaries of managers and technical staffs were more tightly combined with the "business showings" of their enterprises. Under the new system, while there was not a big change in the incentives for workers, there was a decisive increase in those for managerial and technical staffs. Before the new system was introduced, incentives for them were mostly paid from wage funds. But now they were mostly paid from "material stimulation funds", which were made up of profit of the enterprise. The ratio of incentives to the whole salary of managers nearly became double. Managers of the enterprise naturally became more interested in raising the rate of profit. In order to do it, they transform themselves into the personification of capital. They are now able to increase their own income by exploiting workers as "efficiently" as possible, in other words, by increasing profit. As personalities which represent capitalist functions, in other words, as functional capitalists, they inevitably develop their nature. They surely don't own the funds of the state enterprise, that is, the means of production. However, this tells us, not that they are not capitalists, but that they are functional capitalists. Now the more efficiently they exploit workers, the more profit they can put in their pockets. The above diagram clearly shows that the managers and staffs in the enterprise have great interests in the Liberalization. And here lies the real class character of the Liberalization / economic reforms in the USSR.
Thus in the USSR the class antagonism between capital and wage labor, which had been hidden is now emerging taking a clear shape. Commodity economy in the USSR is now "evolving" and turning into the class relation of capital / wage labor. Direct producers in the USSR are now dissolving into different classes. The "people's state", or the "state of the workers and peasants" are losing its substance suitable to its name and transforming itself into a bourgeois state. This definitely indicates the level of development which the Stalin regime / Soviet state capitalist regime has reached. Today the USSR is exposing its real class character -- as an enemy of the proletariat and as a society which should be overthrown by them.
CHAPTER 5 : "FULL SCALL" DEVELOPMENT OF COMMODITY PRODUCTION AND "SHIFT TOWARD COMMUNISM"
1.HOW DID "NON-BARTER ECONOMY" IN THE USSR "DEVELOP" ?
The Soviet economy was more and more industrialized and the productivity of labor rapidly increased. But commodity production in the USSR didn't disappear. On the contrary, commodity production further developed its nature and, along with it, the capitalist character of the relation of production in the USSR became clearer and clearer. Stalin claimed just twenty years ago (in 1952) that commodity production was incompatible with socialism and that therefore it should gradually shift toward "products-exchange (barter-system)". However, against Stalin's prospect, as well as against all the "socialist" economists' prospect (in Japan a typical example is Tanenori Soejima), commodity production in the USSR didn't shift toward "products-exchange" but it only developed its nature. Nothing can be more surprising than this to those who have believed in the illusion of "Soviet socialism" (Trotsky was not totally free from such an illusion either). They only close their eyes to the reality of the USSR and play with the ideal of "real socialism". But such a historical "development" of the Soviet society was a natural event. Soviet state capitalism have reached a stage in which it cannot make any further progress without developing capitalist relations more freely. In this sense the Liberalization is an expression of the intrinsic requirement of Soviet state capitalism. It is never a result of "wrong policies", "mistakes" of the Stalinist bureaucrats.
Under the Stalin regime even commodity production had not fully developed. So it had to be supplemented by barter-economy. First let us take the relation between the state and the collective farms. Under the system kept until the discomposition of the MTS in 1958 -- it was a combination of the following four systems : obligatory delivery, payment in kind to the MTS for its work, complex purchase and reserved purchase -- the payment in kind to the MTS shared the largest proportion in the four. For example, in the case of 1953, 25.9 percent of grain was in obligatory delivery and 58.3 percent in the payment to the MTS in kind, that is, barter-economy was dominant. In parallel with this, the workers in the collective farms were paid in kind. According to "Economic Textbook", "in comparison with the industrial enterprises, barter-system play a significant role in the economy of the collective farms", and "indexes expressed in kind share a large part in plans and reports of the collective farms".
But as soon as the MTS was discomposed in 1958, transferring main means of production, such as tractors, to the collective farms, the ever delivery systems were all abolished. Now agricultural products came to be bought up by the state under the single-price system. The prices were also raised than ever. Thus the proportion of agricultural products to be released as "commodities" rapidly increased (cf. in the case of China, in the years around 1960, the proportion of commoditised agricultural products was no more than 25 percent). Along with this change, the workers, who had used to be paid in kind, came to be paid in money-form. All administrative restrictions in private management were abolished. Now everyone was allowed to own private land for agriculture 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 "full self-accountability" in the state farms. The background of these changes was the overall development of commodity production and the increasing weight of 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" -- that is, 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 be one from barter-economy to commodity production. "Products-exchange" was not an embryo of socialist relation of production but one of commodity production. Here we can see the bankruptcy of a Populist utopia of the Stalinists which dreamt of a "socialism" based on agricultural communities. Commodity / money economy swallowed up the whole economy of the collective farms. This made it possible for the collective farms to run themselves on self-accountability. The collective farms became independent units of production.
Today Soviet economists call this change "the shift toward non-barter economy". Needless to say, this "non-barter economisation" isn't restricted to the agricultural sector. People often wrongly regard the Liberalization as the starting point of commodity / capitalist production in the USSR. But in fact, on the contrary, it is a "result" of the development of capitalist production in the USSR. The collective farms and state enterprises have produced more and more goods as commodities, or as exchange values. This led the Liberalization.
Stalin said that the means of production in the USSR were not commodities. According to him, they only had "outercrusts" of commodity. His claim is nonsense. If they were not commodities, they couldn't be value-objects,
therefore the Soviet economy wouldn't need either money or money calculation. As a matter of fact, however, the state enterprises do produce commodities, which are sold and bought based on money calculation. There money cannot be maintained as a "form" without its substance. What's more, money calculation, in other words, the system of self-accountability in the state enterprise necessarily means the calculation of "efficiency" in terms of profit. The state enterprises have already started order-production, that is, producing goods according to demands. On the other hand, the sector which supplies resources and machinery to the enterprises is now being reorganized into state commerce. The "form" of commodity / capitalist production in the USSR is now gaining its substantial content.
Stalinists claim that commodity / capitalist relation of production exists in the USSR just as "birthmarks of old society" and it is "made use of" for economic stimulation. This claim has proved to be nonsense by the reality. The USSR after the revolution, as Lenin also emphasized, started as a petty bourgeois state (the NEP was a concession to the peasants as petty commodity producers). The commodity exchange of the petty peasants itself did not directly mean a capitalist relation of production. In industry, private capitalists were expropriated and expelled by the Revolution in 1917. This very fact produced the following Stalinist ideology : in the USSR, despite the existence of commodity production, capitalist production didn't exist, and ; commodity production was just "made use of" for "socialism".
The NEP, that was a "kind of capitalism" (Lenin) and a policy for free commerce and trade, was introduced as a concession to the peasants. It was in order to create a "fraternal", stable economic relation and a tight political alliance between the workers and peasants. This is the official explanation of the NEP. But it soon prevailed the industrial sectors. The state enterprises were run based on economic calculation and self-accountability.
Later the USSR took the path of state capitalist development, exploiting the farmers, forcing the workers to produce more and more absolute surplus value. The state rapidly formed state capital and carried out an industrialization from above. The farmers were organized in cooperative productive associations to be an organic part of this system.
But Soviet state capitalism came to a turning point in the 1960's. It had basically finished creating the foundation of industry. The severe exploitation of the farmers had faced a limit. The Soviet economy had reached a stage where relative surplus value was more important than absolute surplus value. It was now that the old economic system under Stalin turned into an obstacle for a further development for Soviet state capitalism. Here appeared a necessity for economic reforms.
The branch of agriculture was suffering from stagnation caused by an excessive exploitation and backwardness. After Krushchev came to power, the exploitation was relaxed by frequently raising the prices of agricultural products, discomposing the MTS. In the branch of industry, the enterprises were given more autonomy so that they could exploit labor more efficiently. While non-economic methods (political enforcement, etc.) were mainly employed under the former system, more economic methods were introduced under the new system. The Liberalization was an expression of this change, which meant the introduction of a freer (therefore, more rational) and more consistent commodity / capitalist law.
The economic necessity in the USSR ruled its state policies -- the NEP was a good example. The necessity of commodity economy decided official economic policies in the USSR. Likewise, the necessity of commodity / capitalist production expressed itself in the Liberalization. Consequently, this created the illusion that the development of economic relations was a result of state policies. It also created a "subjectivism" that economic relations were totally subordinated to state policies. So those who only see these external appearances only criticize "wrong" policies and ideological "revisionism" of the Stalinists. At a glance, it appears that state is the subject of the Soviet society and that its policies are much more consistent than those by the bourgeoisie in Western capitalism. However, without the development of commodity / capitalist relations, neither the Liberalization in the USSR could have taken place nor the "law of value" and the "concept of profit" could have been "made use of". We shouldn't forget this simple fact and mistake results for reasons.
2.THE DEVELOPMENT OF COMMODITY PRODUCTION AND THE "FULL SCALE BUILDING OF COMMUNISM"
While theoretically it is possible to discriminate commodity production and capitalist production from each other, it is impossible in reality. Neither "genuine" commodity production nor "socialist" commodity production is able to exist -- any commodity production contains intrinsic moments for capitalist relation of production. Historically, even in the period when simple commodity production was the dominant form of commodity production, embryos of capital existed taking various forms. Let alone our time of capitalist commodity production. "Commodity production which has nothing to do with capitalism and serves socialism" -- this is just a Stalinist illusion. Stalinists claim that such a "socialist commodity production" is possible by the "socialist" state ensuring uninterruptedly that it doesn't develop into capitalist production. But this claim only shows their contradiction -- it proves the existence of undetachable, intrinsic relations between commodity production and capitalist production. But in reality, as we are witnessing in the Liberalization, Soviet "proletarian" state is now developing capitalist relations more and more freely with the background of an overall development of commodity production. Offering us a lot of living realities, the USSR is proving that commodity production inevitably produces a capitalist relation of production when it reaches its certain stage of development.
In his "Economics Textbook" Stalin quoted the following passage from Engels. "When society comes to own the means of production, commodity production disappears and, along with it, the rule of products to the producers also disappears." Stalin claimed that this didn't apply to the USSR because Engels argued about a society where all the means of production were nationalized. And Stalin claimed that commodity production remained in the USSR because the sector of agriculture had not been nationalized yet. Then shouldn't he have concluded that the USSR was not socialist ? Instead of doing so, he employed a deceptive logic : "socialism was compatible with commodity production and commodity and capitalist productions were two different things."
As opposed to Stalin's claim, 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 uninterruptedly produces embryos of capitalism spontaneously. We cannot mechanically detach commodity production and capitalist production as Stalin did. Moreover, he did so in order to justify commodity production in a "socialist society" ! This is completely a bourgeois theory. The development of commodity production and the shift to "non-barter economy" in the USSR is the foundation of the Liberalization and thereby the more apparent emerging of capital / wage labor relations (that is, the introduction and practice of the concept of "profit").
Since the Khrushchev period, Soviet bureaucrats have often talked about the transition of the USSR to communism. They say that for it to be done they need to develop commodity production as much as possible. As one of their remarkable ideologues, Osrotovichanov has "invented" the theory of "the dialectics of development". According to it, commodity / money relation can wither away and reach communism only by developing itself to the end. "Economics Textbook" also says,
Through the whole period of the full-scale building of communism, we must develop commodity / money relation to the full and make use of it for the building of a communist society, instead of reducing and replacing it with products-exchange (NB. This was meant to be a critique of Stalin. -- Hayashi).
Needless to say, these claims are totally nonsense. Irrespective of their subjective dream, communist society cannot be built on the overall development of the relation of commodity and money -- because it cannot be anything but a capitalism.
The state bureaucrats, directors of the enterprise and the collective farms will have more interest in this system. They will find that it is beneficial for them to maintain and defend the new capitalist system. As far as productive forces are concerned, you may be able to say that this is one step forward to communism -- for the system will raise productive forces by the "full-scale development" of commodity production. But Marxists have never taken, and never will, the position that capitalism automatically shifts to communism without class struggle -- this is so-called "objectivism" or bourgeois determinism. The development of productive forces under capitalist relations means a step toward communism not in content but just in form. In content, just as the reality of the USSR is showing, it goes toward the opposite of communism and there the bourgeois relation of capital / wage labor takes more and more hostile form to the workers. Marx has clearly explained this.
However long a series of periodical reproductions and preceding accumulations the capital functioning to-day may have passed through, it always preserves its original virginity. So long as the laws of exchange are observed in every single act of exchange the mode of appropriation can be completely revolutionized without in any way affecting the property rights which correspond to commodity production. These 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 labor, 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 continually and ever afresh the unpaid labor of others.
This result becomes inevitable from the moment there is a free sale, by the laborer himself, of labor-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, from the first, every product is produced for sale and all wealth produced goes through the sphere of circulation. Only when and where wage labor with its basis does commodity production impose itself upon society as a whole ; but only then and there also does it unfold all its hidden potentialities. To say that supervention of wage-labor 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 change into the law of capitalist appropriation -- We may well, therefore, feel astonished at the cleverness of Proudhon, who would abolish capitalistic property by enforcing the eternal laws of property that are based on commodity production !
The Soviet "socialist" economists are as "clever" as Proudhon. It claims the building of "communism" by a "full-scale development" of commodity production. But we know this deceptive economics is an ideology which expresses the interests of the Soviet state bureaucrats who are gradually turning into the bourgeoisie. The development of commodity production accords to their intrinsic demand. But they have to prove that their policy has nothing to do with capitalism. While they are calling for the building of "communism", today's western bourgeoisie are chattering about "welfare state". Both are essentially same in trying to hide their class natures.
Notes
1. The founder of the 14.Ibid, vol.3, sec.49. JCRL. He puts a 15.Marx and Engels, great emphasis on Selected Works, men's subjective vol.12. activity. 16.Engels, Anti-During,
2. The "Revolutionary sec.3, chap.4. Communist League of 17.Economic Textbook, Japan". chap.2.
3. They flew to North Korea by high-jacking in 1971.
4. He is the first Japanese theoretician who defined the USSR as state capitalist.
He also played a significant role in the creation of Japanese far left movement in the 1950's and 1960's.
5.
6.
7.So-called "Euro-communist"
8.The JCP put an end to their "fraternal relationship" with the CPSU and the CCP in the mid-1960's. However, it is definitely a Stalinist organization ideologically and practically. As an extreme nationalist, it claims that the immediate task of the Japanese working class is "to win real independence from the US".
9.
10.
11.Marx, Capital, vol.1, sec.1.
12.Ibid.
13.Ibid.
Socialist Workers Party of Japan
Established in 1984, renaming the forerunning organization, the Marxist Workers League. It derives from the Communist League formed in 1958 by expelled ex-Japan Communist Party members. As the pioneering far left organization in Japan, the CL led the Anti-AMPO Struggle or the struggle against the Japan-US Security Treaty in 1960, with its rank-and-file student organization, Zengakuren. The standpoint of the SWP is the rejection of any kind of opportunism, i.e. reformism, Stalinism, Trotskyism, petty-bourgeois radicalism which is especially dominant among the Japanese "New Left", etc., and the creation of a new perspective of the socialist revolution in Japan as a highly developed advanced capitalist country.