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Economic Problems of Transition Epoch (November 1952)

The Soviet Bureaucracy in the Mirror of Stalin’s Latest Work
Ernest Mandel / Ernest Germain Print
From Fourth International, Vol.13, No.6, November-December 1952, pp.179-192.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

"The greatest weakness of scientific activity in the economic sphere is the lack of a systematic course on the political economy of socialism.” This statement was made at the October 1948 enlarged meeting of the Scientific Council of the Economic Institute of the Academy of Sciences of the USSR by K. Ostrovitianov, the principal reporter and one of the outstanding Soviet theoreticians. It indicates one of the major ideological difficulties which confronts the Soviet bureaucracy in its effort to codify its own daily practice in a generalized theoretical form.

The scope of these difficulties is revealed by the suppression of all teaching of political economy in Soviet universities (Leontiev: La pensée économique et l’enseignement politique en USSR, Cahiers de l’Economie sovietique No.4, April-July 1946, p.10)

In a country where the leaders claim to swear only by the name of the author of Capital, and whose every creative effort is concentrated in the economic sphere; in the country which proclaims to the entire world that its economic successes are primarily due to the application of a scientific doctrine of political economy – in this country the teaching of political economy in the universities has for years suffered from the lack of a satisfactory manual of political economy! This is one of the most striking examples of the contradictions of present-day Soviet society.

The Soviet leaders understood the dangers of such a situation – above all the danger that the most talented young Communists in the USSR would seek themselves to create a coherent system of political economy based on the Marxist classics. They have initiated an effort to formulate an “orthodox” conception of the theoretical problems of Soviet economy.

An initial discussion for this purpose was organized in the years 1939-1943. It produced a small manual of political economy which did not deal with the economic questions of the USSR, and a collective article on some of the controversial questions which was edited by a group of economists working under the direction of A. Leontiev.

A second discussion look place in 1947-1948. This discussion, initiated by the criticism of a work by Eugene Varga, quickly extended to the economic problems of Soviet society. Several writings of K. Ostrovitianov seemed to have been the principal products of these debates. N. Vosnessenski’s The War Economy of the USSR During the Patriotic War, a book which contains numerous references to the theoretical questions of Soviet economy, was considered one of the principal sources of revealed truth during this period. Unfortunately, in the meantime the author disappeared without a trace. Embarrassment grew among Soviet economists in their search for infallible, authorities.

A third discussion was carried on in 1951-52. It resulted in a draft manual submitted to the Central Committee of the Russian CP. Stalin’s work, Economic Problems of Socialism in the USSR, consists of remarks on this draft and on the criticisms he encountered from several official Soviet theoreticians. Stalin’s work does not open but closes the discussion. As always in theoretical controversies, Stalin preferred to remain silent for years and to leave the initiative in the debates to minor gods. The sphinx spoke only when the discussion had already led to more or less clear ideas.

There are three major sources of the difficulties which the bureaucracy meets in formulating a coherent theoretical conception of Soviet economy. First, the contradiction between Soviet reality and Marxist norms of Communist policy. This contradiction forces the Stalinist theoreticians into endless mental acrobatics to enable them to claim to be both orthodox Marxists and unconditional apologists of all present phenomena in Soviet economy.

Then, the contradictions between the fundamental thesis of Stalinism on the one hand and Soviet reality as well as Marxist theory on the other band. This second contradiction reinforces and accentuates the first. This obliges the Stalinist theoreticians to proclaim the final triumph of socialism in the USSR, and the possibility of the complete construction of a communist society in one country, despite the writings of Marx and the observable facts in the USSR.

Finally, the contradiction between the pragmatic character of the economic policy of the bureaucracy and the necessity of justifying it a posteriori in the theoretical sphere. This contradiction constantly confronts Stalinist theories with new problems which are the product of the rapid evolution of the economy but which “however were unforeseen, precisely because of the pragmatic character of Stalinist thought.

These are the difficulties which Stalin sought to resolve in his new work. An, analysis of this work demonstrates that this solution was not successful. The above mentioned contradictions continue to break through and represent the essential key to an understanding of Stalin’s document. 

Commodity Production in the Transition Epoch

The commodity is a product of human labor not intended for the direct consumption of the producers but for exchange. Production of commodities, in the history of human society, is counterposed to the production of use-values. The former are produced for the market, the latter for the direct use of the producers. Production of commodities arises in the midst of a society producing mainly use-values. It spreads more and more until, under capitalist production, it becomes general. Then it withers away during a historic period following the abolition of the capitalist mode of production.

Stalin merely repeats fundamental ideas set forth a hundred times in the classics of Marxism when he distinguishes commodity production proper from the capitalist production of commodities. Commodity production emerges at the periphery of economic life (luxury articles) spreading then to artisan and agricultural products for current consumption. It is only the capitalist mode of commodity production which universalizes itself by transforming the whole of the means of production and of labor power into commodities.

The abolition of the capitalist mode of production requires the appropriation of the means of production by society. In the transition epoch between capitalism and socialism the means of production cease to be commodities. The field of production and circulation of commodities is thus restricted in comparison with capitalist society. It is essentially limited to the means of consumption. At the same time, the production and circulation of these means of consumption as commodities is enormously expanded in the transition epoch, as Trotsky explained in detail twenty years before the brilliant discoveries of Stalin. The growth of agricultural production, the restriction of peasant production to family use, the development of peasant wants – all these phenomena of the progress of the economy and of civilization on the morrow of the socialist revolution carry with them not a restriction but an expansion of the circulation of the means of consumption, agricultural and industrial, as commodities.

These are well known truths, and Stalin remains on firm ground so long as he does not discard them. The question becomes knotty when it involves a determination of the conditions of withering away of the production and circulation of commodities in the transition epoch.

In the final analysis commodity production is the result of the development of division of labor and of the relative rise of the productive forces resulting from this division of labor. It is preceded by an epoch of general poverty in which the limited production and consumption of use-values is based on the extreme minimum of human needs and on the weak social productivity of labor. The distribution of goods takes the form of a rationing of poverty.

With the development and then the universalization of the production of commodities, human wants also develop. They are no longer limited to the labor products of each small community of producers. The labor products of the producers of the entire world are then required, for the satisfaction of these wants. A prodigious rise of the productive forces corresponds to this generalization of commodity production. But at the same time, this rise occurs within the framework of an antagonistic society which limits to the utmost the consuming power of the producers. In fact the contradiction between limited incomes and the growing wants of the producers represents the essential mechanism which impels the proletarians into the economic class struggle to augment their share of the product of their labor.

The abolition of the capitalist mode of production does not at once diminish this contradiction but begins by accentuating it. The victory of the socialist revolution means primarily that millions (on the world scale, hundreds of millions) of proletarians and poor peasants become aware of new wants. This is a highly progressive product of the development of consciousness of their own power and their own human dignity. But in most countries – and particularly in the USSR – the productive forces are not immediately suited, not even after a relatively brief lapse of time, to satisfying these suddenly multiplied social wants. The distribution of consumer goods in accordance with the needs of consumers is therefore impossible. How then can this distribution be effectuated?

One might conceive that all goods produced are gathered in a central store, and more or less equally distributed among all consumers, in proportion to the work each provides to society. Thus everyone would receive a fixed quantity of use-values. Such a system, in reality a return to “rationing of poverty,” would meet two major obstacles. By seeking to ignore the differentiation and the universalization of the wants of contemporary man, it would quickly produce a “black market” where exchange of ration “tickets.” then of consumer goods and finally of raw materials and instruments of labor would be reborn, everyone seeking to exploit the situation of general scarcity for his own advantage. In a word, under analogous social conditions this would mean the reproduction of the processes of initial development of small commodity production and the initial forms of private capital. Then, seeking to ignore the interested attitude of man in face of the problems of labor. such as results from centuries of poverty and exploitation, such a system of distribution would rapidly disinterest the producers in state industry and they would turn their productive energy toward “parallel” sectors of production. Having been put out the door, commodity production would return through the window.

Such a development can only be avoided if a system of objective equivalence is established between all consumer products, permitting each producer to divide his income according to his various individual wants. At the same time it requires the establishment of a system of objective equivalence between the labor furnished by each producer to society and the labor which he receives in return for it in the form of consumer goods. Such a system of equivalence, based on the exchange of labor power against an indefinite variety of consumer goods, and governed by an objective criterion, is precisely a system of circulation of commodities. The economy must submit to the play of supply and demand – of prices and wages – to govern the distribution of consumer goods because everyone’s demand cannot yet be satisfied.

In reality, in the history of human society, only three great systems of distribution are possible:

  1. The distribution of use-values based upon a system of rationing of poverty. This system presupposes an extremely limited number of wants corresponding to the low level of the productivity of labor if it is to function adequately.
  2. The distribution of exchange values based on the production of commodities. This system presupposes for adequate functioning a minimum level of social division of labor, the development of the productivity of labor and the differentiation and generalization of wants.
  3. The distribution of use-values in accordance with the needs of consumers. This system presupposes a level of development of the productive forces permitting the production of an abundance of consumer goods which corresponds to the diversification and universalization of human wants. 

The Withering Away of Commodity Production

All these real problems have completely vanished in Stalin’s treatise. Obliged to start with the definition of Soviet society as a socialist society, and to underestimate if not to completelv conceal the crying contradiction which continues in the USSR between consumer wants and the quantity of consumer goods produced to satisfy them, Stalin looks for the origin of the survival of commodity production in the USSR in the fact that two different sectors subsist in Soviet economy: the sector of statified industry and the sector of collective farm agriculture. Violating in passing his own statement that the economic laws “of socialism” (of the transition epoch) like all objective laws are established independent of man’s will, Stalin declares that there is commodity production in the USSR because

“the collective farms are unwilling to alienate their products except in the form of commodities ... do not recognize any other economic relation with the town ...”

But why don’t the collective farms “recognize” any other method of disposing of their products except by selling them on the market? Obviously because they would not receive an abundance of industrial products from the town. If they could freely draw upon an unlimited, stock of industrial consumer goods – and this eventuality is largely independent of the subsistence of the collective farm sector – they would certainly not be so eager to “sell” their products partly to the state, partly on the collective farm market, partly on the “free” market regardless of the high “general overhead” which such a system of distribution imposes on them. Production and circulation of commodities exist because a scarcity of consumer goods subsists, and because the “collective farm sector” takes the form of a distinct economic sector defending its own economic interests. Stalin therefore confounds cause and effect when he writes:

“Comrade Yaroshenko does not understand that neither an abundance of products, capable of covering all the requirements of society, nor the transition to the formula, ‘to each according to his needs,’ can be brought about if such economic factors as collective farm, group, property, commodity circulation, etc., remain in force.”

We would be more than justified in saying that Stalin does not understand that economic facts like the circulation of commodities and also undoubtedly collective farm property cannot be “eliminated” so long as an abundance of consumer goods capable of covering all the requirements of society is not produced.

As against the reasoning above there has several times been invoked the fact that the Marxist masters have many times repeated that with the elimination of the capitalist mode of production commodity production would also be eliminated. It is interesting to note that despite the appearance of Marxist orthodoxy that Stalin seeks to convey, he scarcely refers to Marx and Engels on this question and does not begin to meet these objections. Yet they were the

first to raise the problem of the material base for the withering away of commodities.

Marx writes concerning the first phase of communist society in his Critique of the Gotha Programme:

“Within the cooperative society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labor employed on the products appear here as the value of these products ...” (p.8, International Publishers edition.)

Engels writes on the same subject in Anti-Dühring:

“The seizure of the means of production by society puts an end to commodity production, and therewith to the domination of the product over the producer.” (p.309, International Publishers edition.)

In reality what the Marxist masters have in mind here is the socialist revolution occurring in countries where capitalism has reached its highest development (such as the USA today) and where the development of the productive forces would permit the satisfaction of the fundamental wants of the producers and the elimination of commodity production, that is, if national wants alone were taken into consideration. But in the present epoch of imperialism, the premise for this optimum development of capitalism in some countries is the “under-development,” the stagnation of the productive forces in the rest of the world. To break out of this stagnation the proletariat of other countries is obliged to start the overthrow of capitalism and the building of socialism under conditions where the disproportion between wants and the capacity to satisfy them remains very great. The abolition of commodity production in these countries thus comes into collision with this objective obstacle.

Let us add that Marx, in his extraordinary lucidity, seems to have envisaged such eventualities when he wrote in Capital in the section called The Fetishism of Commodities:

Let us now picture to ourselves ... a community of free individuals, carrying on their work with the means of production in common ... the total product of our community is a social product. One portion serves as fresh means of production and remains social. But another portion is consumed by the members as means of subsistence. A distribution of this portion amongst them is consequently necessary. The mode of this distribution will vary with the productive organization of the community, and the degree of historical development attained by the producers.” (p. 90, Charles H. Kerr edition, – my emphasis, E.G.)

In fact it would not be amiss to indicate the three stages through which the mode of distribution will pass after the socialist revolution:

  1. Continuation of the production of commodities in the entire first period of the transition.
  2. Transition, when the productive forces are sufficiently developed, to the distribution of use-values in proportion to work, this being the remainder of the first phase of communism.
  3. Transition, when the social consciousness of men is sufficiently developed after the withering away of classes and of the state and on the basis of an established abundance, to the formula: “To each according to his needs, from each according to his abilities” in the second phase of communism.

The law of value is first of all only the statement of an objective criterion according to which commodities exchange with each other. This criterion is the quantity of socially necessary labor they embody. When there is production and circulation of commodities, either in limited sectors of the economy or in the entire economy of a given society, the law of value “is applicable” more or less generally, that is, in regulating exchange.

But the law of value is applied in-different ways in accordance with the relations of production, under which the commodities which are involved in the regulation of exchange are produced.

In small commodity production, the producer is generally the owner of his means of production. In general, labor power has not become a commodity. Profit plays only a secondary role in economic life. There are few fluctuations in the level of the average productivity of labor. The law of value therefore applies here directly. Commodities exchange for one another, in general, in proportion to the amount of labor (living and dead) which their production actually necessitated.

Under capitalist production the means of production and labor power have become commodities. The realization and the capitalization of profit have become the principal motor of economic life. Mere the law of value no longer applies directly but indirectly through the competition of commodities and capital. This competition causes a constant fluctuation in the average level of productivity. Whether or not a commodity embodies socially necessary time can only be determined a posteriori according to whether or not its sale returns an average profit to its owner. The sum of the costs of production equals the sum of values of commodities produced but the cost of production of each individual commodity no longer corresponds to its individual value. It is determined by the portion of the total social capital which had to be set into motion to produce this commodity. The formation of the average rate of profit is the indirect mechanism through which the law of value operates in. capitalist society.

In the transition society between capitalism and socialism the means of production have been appropriated by society and cease to be commodities. The law of value is still operative but now in an indirect way. The sum total of “net costs” of all goods is equal to the sum total of the value produced and retained by the producers. But the distribution of this total value among the various categories of products is determined not by the play of the formation of the average rate of profit, but by the goals of the plan. If this plan provides for an increase of the production of machinery “at any cost,” that means that the machinery produced under the least profitable conditions alone embodies the socially necessary labor. This brings about a redistribution of resources and incomes among the different sectors through the play of the law of value.

On the other hand, the law of value does not determine only the objective criterion according to which exchange of commodities takes place. In capitalist society, it also determines the division of productive resources among the different sectors of the economy – since this division results from a circulation of commodities. It determines the division of the total social product into a necessary product, granted to the producers, and the surplus product, the necessary product being the purchase price of labor power by the capitalists.

Under the transition society the plan divides the available material and human resources among the various sectors. But it cannot do so arbitrarily. It is obliged to distribute a strictly fixed mass of value. A rise of the share granted to one sector leads immediately to the reduction of the share granted to another sector. Similarly, the fixing of the portion of the social product to be accumulated (in the broadest sense of the word) adequately determines the portion of this product available for consumption by the producers.

Confronted with all these complex problems, Stalin dodges the bulk of the difficulties and takes refuge in easier questions. His replies to them are no less lacking in clarity.

The Law of Value in the USSR

Stalin begins with the recognized fact that the means of consumption in the USSR are commodities. The law of value therefore determines the value of these goods. But the reservation follows immediately: “The sphere of op-eratiion of the law of value in our country is strictly limited.”

What then is this sphere? “The fact that private ownership of the means of production does not exist and that the means of production both in town and country are socialized cannot but restrict the sphere of operation of the law of value and the extent of its influence on production.”

If Stalin merely means to say that the means of production, no longer being commodities, are therefore not exchanged and that a fortiori the law of value cannot regulate these nonexistent “exchanges” he is only expressing a simple truism and we cannot but state our most complete agreement with such a banal truth.

But his conclusions go much further. Stalin declares in his reply to A.I. Notkin

“that in the sphere of domestic economic circulation, means of production lose the properties of commodities, cease to be commodities and pass out of the sphere of operation of the law of value, retaining only the outward integument of commodities (calculation, etc.).”

These outward integuments are filled with a “new content” which has “radically changed in adaptation to the requirements of the development of the national economy, of the socialist economy.”

He puts forth this opinion by stating the following regarding the prices of agricultural raw materials:

“In our country, prices of agricultural raw materials are fixed, established by plan, and are not ‘free’ ... the quantities of agricultural raw materials produced are not determined spontaneously by chance elements, but by plan ... consequently it cannot be denied that the law of value does influence the formation of prices of agricultural raw materials, that it is one of the factors in this process. But still less can it be denied that its influence is not, and cannot be, a regulating one.”

It is obvious that the means of production, including agricultural raw materials, being no longer commodities, retain only the external form of commodities – a calculation of value, in money [1] – and that their social content has changed. But after having enunciated the correct premises, Stalin draws an absolutely unjustified conclusion from them: this change of social content modifies the quantitative determination of the form! For in the end, the sum of prices has nothing to do with the social content. It belongs in the final analysis to the accounting of social expenditure in labor. To say that the means of production in the USSR have retained “the outward integument of commodities (calculation, etc.),” means that accounting of social expenditure in labor is still not effectuated directly in labor hours but indirectly in value. And to deny that the amount of these expenditures is determined by the expenditure in labor (by the law of value), does not prove the different social character of Soviet economy. It throws the theory of labor-value overboard in favor of other theories of value.

On the other hand Stalin confuses the blind play of the law of value – which is only the peculiar form of this law in a certain type of society – with the regulating play of the law of value in its most general form: exchange of equal quantities of labor (dead and living). The first form has naturally been eliminated in the USSR due to planning but the second form has by no means been “eliminated “ and can hardly be eliminated by men’s will, as Stalin himself declared in the beginning of his work.

All this becomes clear when we consider the following passage:

“Totally incorrect, too, is the assertion that under our present economic system ... the law of value regulates the ‘proportions’ of labor distributed among the various branches of production. If this were true, it would be incomprehensible why our light industries which are the most profitable, are not being developed to the utmost, and why preference is given to our heavy industries, which are often less profitable, and are sometimes altogether unprofitable.”

It is clear on the face of it that Stalin here confuses “the law of value” in its most general sense with the capitalist form of this law, the law of the average rate of profit. The fact that unprofitable enterprises can develop and prosper in the USSR undoubtedly proves that the law of the average rate of profit is no longer operating. But that in no way demonstrates that the action of the “law of value” has been eliminated in the distribution of human and material resources among the different branches of Soviet economy.

What meaning do the terms “profitable,” or “non-profitable” enterprises really have? They merely mean that the quantity of socially necessary labor contained in the products an enterprise furnishes to society is compared to the amount of labor actually expended in the process of their production (which it has received from society). If the first amount exceeds the second the enterprise is very profitable. The initial point of profitability is equality between the two quantities. If the second exceeds the first – because of waste of raw materials, idleness of machinery increasing general overhead, excessive administrative expenditures, a too low degree of labor productivity, etc. – the enterprise is unprofitable. The very principled profitability is thus determined by a calculation which is based on the law of value!

Then, if the leading bodies of the economy believe it necessary to keep unprofitable factories running, they are obliged to pump more value into these enterprises than they receive from them. But that is only possible – given the fact that the total sum of values at the disposal of society is not altered by such changes in distribution – if other enterprises in return receive less value from society than they have given it. For example, the plan redistributes social resources in favor of heavy industry and to the disadvantage of light industry. But this redistribution immediately sets into motion the mechanism of the “law of value,” that is, automatically causes a new division of production between the two sectors, corresponding to the new division of productive resources. Thus the plan can alter the conditions in which the law of value operates. From blind conditions under capitalism, they become socially alterable conditions. But this cannot prevent the play of the law itself from continuing so long as commodity production subsists in the consumer goods sector, so long as the determination of the price of labor power results from this, the consequence being the calculation of the “price” of all products as values.

In reality Stalin’s theoretical confusion originates in a real fact of Soviet economy: the dual price system. In principle, cost prices should be calculated as “real prices,” that is, on the basis of the actual value of the product. Sale prices are established by adding to cost prices a “profit” and a “turnover tax” fixed by the government for each product, which is the principal financial source of accumulation and of unproductive expenditures (armaments). But the sale prices of raw materials enter into the cost price of finished products. The sale price of machines in turn becomes part of the cost price of raw materials. In this way, the whole price system becomes artificial and arbitrary, and it is extremely difficult, even for the leading bodies, to estimate the real profitability – that is, disregarding artificial prices – of enterprises. This constitutes an important element of anarchy and inflation in Soviet economy, which is being eliminated very slowly. At the same time it constitutes an important stimulant for the bureaucrats to free themselves from all control, including, as Trotsky said, the control of the law of value. Stalin is obliged to fight the most excessive manifestations of bureaucratic arbitrariness in the fixing of prices. For example he denounces the absurd fixing of the price of cotton by relating it to the price of wheat. But he cannot attack the roots of the evil which reside in the whole of the artificial price system which is intended more to conceal the economic reality than to express it. His “Marxism” remains prisoner of bureaucratic management in the USSR.

Finally, Stalin keeps a discreet silence on the most difficult problem for Stalinist theoreticians, that of the explanation, on the basis of the law of value, of the enormous differences of incomes in the USSR. It is precisely in this sphere that these theoreticians had revised Marxist theory, and especially the theory of labor-value, in the most impudent way, explaining that individual remuneration was based on the social utility of the services each Soviet citizen rendered. Stalin does not raise this curtain. But if we penetrate to the bottom of his price formula, that prices are determined by “the necessities of the development of the national economy,” we find very much in evidence the same theory of value based on utility. In fact, the germs of the three theories of value cohabit in his book: the labor theory of value; the theory of value determined by social utility (that is, use-value); and the vulgar and eclectic theory combining the effects of the law of labor-value with those of “social utility.” 

Proportionality Between Branches of Production in the Transition Epoch Economy

In replying to Yaroshenko, Stalin cites an important passage by Marx and transplants elements of his reproduction schemas to the post-capitalist society. In effect Marx’ reproduction schemas establish, in the external form of commodity and capitalist production, conditions of equilibrium of production and consumption for any society up to the second phase of communism. The simplest of these conditions can be formulated in the following way: for any society to maintain a given level of social wealth. a portion of social labor has to be devoted to the renewing and reproduction of the instruments of labor, and this portion has to be at least equal to the mass of dead labor Used up in the process of current production. This law can also be formulated another way: for any society to maintain its level of social wealth, it is necessary that the quantity of labor crystallized in means of subsistence which society places at the disposal of all those engaged in the production of these means of subsistence, not be greater than the quantity of labor, crystallized as instruments of labor, that it receives in return from them to produce the means of subsistence.

These laws retain their full validity in the transition society between capitalism and socialism. The value of the means of production to be provided to consumer goods industry (including what is needed to increase production) should be equal to the value of consumer goods which the workers and supervisory personnel employed in means of production industry can buy with their money income (this includes additional workers hired during the expansion of this industry). [2] Besides, this is only one of the proportional relations which the plan should seek to establish and maintain to avoid economic dislocations. There are other important proportions, also established by the calculation of labor-value, between industrial and agricultural production; between labor to be siphoned from the countryside and means of production to be provided for agriculture; between means of consumption and the output of labor; etc.

Stalin is therefore entirely right when he scolds Yaroshenko for allegedly rejecting the validity (for the transition society) of equilibrium equations and of the proportionality formulas of Marx’s schemas of reproduction. But we don’t know what Yaroshenko actually wrote. Perhaps he merely wanted to say that the equilibrium equation of simple reproduction is somewhat modified in the transition-epoch economy. The hypothesis of simple reproduction – absurd on the face of it – in such an economy would in effect mean the absence of any accumulation. In that case, surplus value, the social surplus product, which was used in simple capitalist reproduction for the unproductive consumption of the capitalist, is greatly reduced and it is practically limited to the reserve and social work fund of the community (for the care of children and the aged). In this case Yaroshenko’s “error” would seem to be an (unconscious?) revolt against the enormous scope of unproductive consumption, consumption by bureaucrats and their retinues in Soviet economy.

On the other hand the same Stalin who on one page speaks in slightly vague terms of “the net product (surplus-product?) considered as the sole source of accumulation” cavalierly proposes on another page to discard “certain ... concepts taken from Marx’s Capital where Marx was concerned with an analysis of capitalism – and artificially pasted onto our socialist relations ... (such as) among others, ‘necessary’ labor and ‘surplus labor’ ...”

Stalin crassly deforms Marxism when he declares that these notions apply exclusively to capitalist society or that they imply “relations of exploitation.” In reality, in any society which is not in the process of withering away, “necessary labor” producing “necessary product,” that is, the means of subsistence of the producers, may be distinguished from the “surplus labor” producing a “surplus product,” that is “a surplus of the products of labor over and above the costs of maintenance of the labor.” (Engels, Anti-Dühring, p.221)

The nature of this surplus product varies with different societies and even with the form of its appropriation. But this surplus product has always existed and will always exist. In the primitive communist society it is broadly reduced to the social reserve fund, as well as a very meager accumulation fund (the slow increase of the stock of instruments of labor), which is socially appropriated. In capitalist society it is divided into an unproductive consumers fund, appropriated by the capitalists and disappearing from circulation, and an accumulation fund, also appropriated by the capitalists but thrown back into production in the form of machines, raw materials, supplementary consumer goods intended for an additional labor force. In the transitional society it is divided into a reserve fund and a social assistance fund, which is withdrawn from production, and an accumulation fund used for the expansion of production, both of which are collectively appropriated by society. In the degenerated bureaucratic transition society in the USSR a third fund arising from the surplus social product, from the surplus labor of workers, is added: the fund of unproductive consumption of the bureaucracy, individually appropriated by the bureaucrats. Was it to conceal the existence of these funds that Stalin fulminated against the “surplus product” and “surplus labor”? 

Planning and Objective Economic Laws

Having admitted that the conditions of equilibrium of Soviet economy are largely the same as Marx established in his schema of reproduction, Stalin suddenly becomes enveloped in a series of new contradictions when he examines the relations between planning and proportionality. For example, he writes:

“The law (?) of balanced development of the national economy makes it possible for our planning bodies to plan social production correctly. But possibility must not be confused with actuality. They are two different things. In order to turn the possibility into actuality, it is necessary to study this economic law, to master it ... and to compile such plans as fully reflect the requirements of this law.”

What Stalin seems to want to say is that knowledge of the relations of proportionality – or if you wish: the laws of proportionality – provides the planning bodies with the possibility of planning correctly, but this possibility becomes a reality only if the plans fully (and not merely partially as is the case in the USSR) reflect the workings of this law.

At first glance, Stalin’s statement appears to be in line with the classics. In Soviet society, as in any society, objective economic laws exist which can be known or utilized by man for his purposes but he cannot eliminate them or transform them fundamentally. Stalin adds that most of these laws are operative only “for a certain historic period” but that they “lose their validity owing to the new economic conditions and depart from the scene in order to give place to new laws ... which arise from the new economic conditions.”

This is a decided step forward from the crassly idealist conceptions which have been fashionable in the USSR up until now. In their works cited above, N. Voznessenski and K. Ostrovitianov seriously declared that the state economic plans in the USSR had “the force of a law of economic development,” and Ostrovitianov had even added: “because they determine and realize the proportion in the distribution of labor and the means of production for the different branches of the economy.” They forgot that the objective law “independent of the will of men,” was the law of proportionality between the two big branches – the branch of means of consumption and the branch of means of production – discovered by Marx. By violating the conditions of equilibrium determined by this law, state plans can very easily cause a disproportionality between the different sectors.

But Stalin undergoes a strange metamorphosis when the application of these excellent principles to Soviet economy is required. We learn no more from him about these laws than that they are operative “for a certain period” and that under “new economic conditions” they will be replaced by “new laws”! In a nut shell, if we study his work attentively we will not discover any specific economic law of “socialism” there – except for his famous “fundamental” law to which we will return later.

The law of value? Evidently this relates to a remnant of the capitalist epoch, the epoch of commodity production in its most general sense, which will disappear with “new economic conditions” – the production of abundance in consumer goods.

The law (?) of price fixing by leading bodies? This will also disappear with the withering away of the state and of all centralized directing bodies, not to mention the fact that where exchange no longer exists neither do prices.

The law (?) of the balanced development of the national economy (more exactly: of the conditions of disproportionality between the different sectors of the economy) ? But it will disappear when humanity has at its disposal a sufficient stock of machines to satisfy all human wants, when the aim of economic “calculation” is no longer to determine equivalents in value but only to save living labor. The law (?) of the uninterrupted development of the productive forces? But it will cease to operate when humanity possesses an abundance of the means of production. [3] Does Stalin presume in his administrative arrogance that there will always be a “need” to expand productive forces of humanity?

We can now understand the origins of the errors of the unhappy Yaroshenko and of all those who undoubtedly went along with him. By taking Stalin’s declarations on the establishment of a socialist society in the USSR seriously; by understanding the historically transitory character of all economic laws, also upheld by Stalin, they prematurely “liquidated” all the laws which really represent remnants of the past in Soviet economy and began the search for new laws. In a society where there is already an abundance of consumer goods it is perfectly correct to say, as Yaroshenko does, that the maintenance of the economic equilibrium depends essentially on a rational organization of given resources keeping growth of population in mind (which in such a society will also be consciously regulated by men). Yaroshenko’s misfortune is that we are still decades and decades removed from such a state of affairs in the USSR. Stalin’s misfortune is that his theory on “the achievement of socialism in the USSR” periodically produces illusions of this kind among the Yaroshenkos who take the definition of a socialist society seriously in the sense of the Marxist classics.

Stalin tells us that in the socialist society which supposedly is fully achieved in the USSR the policy of leading bodies may or may not adequately utilize the economic laws which govern its evolution. Besides we learn in passing

“that our business executives and planners, with few exceptions, are poorly acquainted with the operations of the law of value, do not study them, and are unable to take account of them in their computations.”

The picture then “with few exceptions.” is not particularly brilliant. Then, Stalin continues, if the policy of the leading bodies is not correct, the inherent contradictions in Soviet economy may “degenerate into antagonisms.” and then “our relations of production might become a serious brake on the future development of the productive forces.”

We are stupefied! “The relations of production” are, as every Marxist knows, reciprocal relations in which men engage in the production of their material needs. These productive relationships are socially expressed as social (class) relations, and juridically as property relationships. Now, Stalin has told us thousands of times that the class struggle has been liquidated in the USSR, along with all private antagonistic forms of property in the means of production. According to this thesis, therefore, “relations of production” in the USSR are largely mutual relations of producers working with the means of production which are collective property! And can these relations of production, which according to Marx’s theory represent the end product of all social evolution, become a brake on the development of the productive forces? But then there would be posed the question of their substitution by other relations of production! And what “relations of production” can be envisaged beyond mutual relations of producers on the basis of the socialized ownership of the means of production? This is obviously a complete revision of the fundamental conceptions of Marxism.

The difficulty is resolved only when the absurd hypothesis that there is already a socialist society in the USSR is abandoned. After that we can understand 1.) that beside relations of production, heralding the socialist future, there subsist relations of production, which are survivals of the capitalist past, as well as intermediary relations of production (collective farms); 2.) that the degree of the development of the productive forces in no way guarantees the automatic disappearance of the latter to the advantage of the former; 3.) that on the contrary this degree of development of productive forces implies the survival of bourgeois norms of distribution which, in turn, are the principal source of a constant rebirth of non-socialist relations of production, small commodity production, “markets” and “parallel” sectors of production; 4.) that because of this fact, state constraint particularly in the economic policy of leading bodies is actually the decisive factor in guaranteeing the maintenance, the supremacy, and the generalization of new relations of production; 5.) that an erroneous policy of these guiding bodies becomes the principal factor in sharpening and transforming the social and economic, contradictions that subsist in the transition society of the USSR into violent antagonisms – but which are inexplicable from the hypothesis of an already established socialist society.

It is precisely because, the Soviet man is not yet completely master of his economic destiny that the conscious conduct of the economy, the concrete economic policy, assumes such elemental importance! But think of Stalin understanding such a dialectical truth. He is too busy shuffling the deck, keeping all the contradictory pieces of his system of thought in their place. This is the conscious expression of the contradictory nature of the Soviet bureaucracy. 

The Bureaucracy, Brake Upon the Development of the Productive Forces

One could go further and say: The same causes which determine the preponderant role of economic leadership in the USSR also determine the need to subject this leadership to constant and effective control – the objective control of the market, the subjective, constant control of the workers. From both these sides, the needs of development and consolidation of Soviet economy batter at the arbitrary power, the omnipotence and the irresponsibility of the bureaucracy and its management.

The bureaucracy seeks to justify the enormous share of the national income it receives by stressing the indispensable role it fulfills in all spheres of economic life.

On the one side, the bureaucracy plansall”: the exact amounts of every product of every enterprise; every cost price and every sale price; the exact distribution of consumer goods to every Soviet village. Naturally, such an undertaking is doomed in advance, as Stalin says, to “prattling about approximate figures.” The market would be by far the best “planner” of prices and of the distribution of the various consumer articles, once given the sum total of their value (of the productive resources which society is prepared to devote to their production) and the sum total of revenues to be expended for their purchase. But the bureaucracy refuses to subject itself to this objective control, and its arbitrariness accentuates scarcity of consumer goods and tension on the market to the utmost.

On the other side, it controlsall”: the production of every enterprise and even of every worker, in money and in kind, compared to the goals of the plan; the resources of every enterprise in money and in kind along with its expenditures, etc. An enormous bureaucratic apparatus has thus been created to “control” millions of reference figures out of hundreds of thousands of formularies [4] ... and constantly extends the area of maneuver for waste, embezzlement, theft. Workers’ control would be the cheapest, the most effective and the most natural instrument of such control. But the bureaucracy refuses to subject itself to a control which would mean the end of its privileges, and it thereby accentuates the disequilibrium and disproportions on all levels of economic life.

Soviet economy can only be liberated from bureaucratic arbitrariness by subjecting planning to the dual control of the workers and the market. It is precisely in the transition epoch, when balanced planning is of vital importance for the survival of the new society, that this control becomes a life and death question for planning. But one should not expect to hear such liberating words from Stalin. Among other things, their realization presupposes the overthrow of the absolute political power exercised by the bureaucracy in the Soviet state today. This power is the principal lever of bureaucratic arbitrariness and more and more becomes, as Stalin himself admits, “a serious brake on the development of the productive forces.”

It is possible to list the principal contradictions – not between the relations of production and the productive forces, but between bureaucratic management and the productive forces – which now curb the development of the productive forces in the USSR:

1. The contradiction between the general needs of society (of planning) and the bureaucratic-centralist elaboration of plans. As long as the plan goals were relatively simple (creation of a basic heavy industry), this contradiction was only relatively felt. With the enormous complexity which Soviet economy now possesses, bureaucratic-centralist elaboration of plans leads to an enormous waste of values and to the failure to utilize existing productive resources:

“As paradoxical as it may sound, almost 100,000 tons of metal is annually shipped out of Leningrad, although at least half this metal, and possibly even more with a change of arrangements could be utilized in Leningrad itself. A final example: Leningrad receives 7,000 to 7,500 tons of nails shipped from the South, although a single nail factory in Leningrad produces 7,000 tons of nails but sells its entire production outside the city.” (Pravda, Oct. 10. 1952).

“There are rich reserves of capacity for the production of pig iron, forged and other types of metallurgical products in the electrical equipment factory at Novosibirsk. Nevertheless, the factory cannot accept orders. The matter is carried to the absurd. According to the planning department of the ministry, the funds at the disposal of the factory for the payment of wages are adjusted only on the basis of the production of replacement parts ordered by power stations. But the local power stations have to reduce their expenditures for parts. The factory can only maintain production with orders from very remote power stations ... or it is artificially obliged to reduce production.” (Izvestia, Sept. 23, 1952).

Such absurd situations can be eliminated only if the plans are elaborated from the bottom up, in accordance with the needs and possibilities worked out locally and on a regional basis, and, following integration and centralization on the top, they are again readjusted democratically by control from below.

2. Contradiction between the general needs of society (planning and the personal interests of the bureaucrats, which is the principal lever for the realisation of the plan. Since the time of the establishment of the omnipotence of the factory director, and the prevalence of the principle of individual profitability of enterprises, the bureaucrats’ personal interest represents the principal lever for the realization of Soviet plans. In their constituent parts (wages, bonuses, allocation of part of the “director’s fund”), individual incomes of the bureaucrats fluctuate considerably in accordance with whether the financial plan of the enterprise is realized or not. This had the effect of greatly stimulating production while the new strata of profiteers were accumulating the essentials of their newfound comfort. When this level of well-being was attained, they lost interest in constantly pushing for an increase in production, since consumer privileges cannot be indefinitely extended. On the other hand, since the bureaucrats’ income depends on the achievement of the financial plan, they prefer to divert important portions of productive capacity to products which circulate easier and at a better price, and whose production is not provided for in the plan. All this leads to waste and to considerable disorganization of the economy:

“Some plant directors are trying to fulfill the factory financial plan at the expense of production, which is profitable from the financial point of view but results in the plan not being fulfilled from the point of view of diversity of products.” (Ostrovitianov, in article cited above.)

“Some establishments, in an effort to fulfill the gross output plan, resort to a practice that is inimical to the interests of the state, producing articles of secondary importance above the plan while failing to meet state plan assignments in respect to major items.” (G. Malenkov: Report to the 19th Congress of the Russian C.P.)

“For a number of years, the electrical installations factory at Kharkov has allocated 30-40% of the plant’s capacity to the production of indeterminate goods – that is, of products which are absolutely not provided for (for a factory with such equipment). .. It is particularly busy making window bolts, door handles and other hardware items.” (Izvestia, Sept. 28, 1952.)

Such abuses can only be eliminated by the establishment of the strictest workers’ control over all phases of production and distribution. By learning in practice that every complete fulfillment of the plan automatically improves their living standards, that is, by really participating in the elaboration of plan goals, the masses will learn to jealously guard this fulfillment. 

Problems of Soviet Agriculture

In no sphere of Soviet economy are the dislocations caused by bureaucratic management so strikingly apparent as in agriculture. In no other sphere are the contradictions of Stalinist thought so apparent. Stalin’s hypothesis that a socialist society has already been established in the USSR involves him in inextricable contradictions when he turns to the study of Soviet agriculture.

The first thing to be noted is that Stalin remains completely silent about the problem of the survival of ground rent in the USSR. There are unhappy precedents for him on this point: an academic speech he made in 1929 which aid not shine in serious understanding of this most complex side of Marxist political economy. On the other hand, the division of differential ground rent is the principal source of the antagonism between the collective farm sector and the statified sector in the USSR. (Storage fees for farm machinery go up for collective farms in accordance with greater output.) After having proclaimed the disappearance of this antagonism, Stalin is now obliged to remain silent about everything that would remind his readers of it.

Stalin asserts that agricultural production in the USSR is socialist production. He speaks of the “collective farm form” of socialist production. But agricultural production in the USSR is not only collective farm production. Stalin himself mentions the private property of the “collective farm households” (families comprising the collective farms). His enumeration of their household goods as composed of several “cows, sheep, goats, pigs, ducks, geese, fowl, turkeys” might give the impression that this is a trivial matter in Soviet agriculture taken, as a whole. But this is not the case. On the eve of the war, 50% of Soviet livestock was private property, and even today this figure has not seriously altered. An important sector of private property therefore subsists in agriculture. And the products of this private sector play a growing role as commodities delivered to the collective farm and “free” market.

Then, it is absurd to characterize the collective farm sector as a socialist sector. It is even more absurd to say that “collective farm properly is socialist property.” This would lead us to the conclusion that there are two “socialist” forms of property: socialist property, “belonging ,to all the people,” as Stalin says, and collective farm property, belonging to the producers’ cooperatives. Since these two forms of property are in economic conflict with each other – otherwise there is no explanation for their coexistence, but that would be too dialectical for Stalin to understand – the economic antagonism, the social conflicts, would be perpetuated under socialism, which is the negation of one of the fundamentals of Marxist theory.

One would arrive at a similar revisionist conclusion by taking seriously Stalin’s thesis that “the workers and the collective farm peasantry ... represent two classes differing from one another in status.” Classes are defined, according to Marxist theory, by their particular position in the process of production; in the final analysis by a characteristic relationship toward the means of production. For example, the different technical position of the industrial worker and the worker employed by the state for highway maintenance does not make a distinct social class of highway maintenance personnel. But if there is a difference of relation toward the means of production – therefore a difference of position in the process of production – there is inevitably a historic difference of interest between two social classes. When Marxism speaks of the particular interests and social consciousness of each class it is not a turn of phrase. To say that there is socialism in the USSR and to admit at the same time that two different classes subsist, is to assert that the class struggle continues under socialism!

All of Stalin’s reservations on the “friendship” between the working class and the collective farm peasantry, on the fact that these two classes have a common interest in “the consolidation of the socialist system” do not in any way lessen the force of this reasoning.

Besides, Soviet reality confirms Marxist theory point for point. The workers’ state and the working class have an interest in developing agricultural production as rapidly as possible in the transition epoch. But the maintenance of the collective farm sector of production can become a brake on the development of the productive forces in agriculture. Stalin recognizes that they are already beginning to play this role of a brake “by preventing the state from fully planning the national economy and especially agriculture.” The collective farm peasantry however, remains attached to the collective farm ownership of their products because under present conditions of supplying the countryside with industrial consumer goods this ownership represents a kind of guarantee that their share of the national income will not be further diminished. There is therefore, a conflict of .interests, an apparent social and economic conflict. And this in a socialist society?

Another example: The workers’ state seeks to develop agricultural production to the utmost while constantly drawing from the village the additional labor required for the expansion of industrial production. It is therefore interested in pursuing a vigorous policy of agricultural .mechanization. The collective farm peasantry is also interested in employing agricultural machinery because it lightens their labor and permits an increase of output and therefore of the quantity of available commodities, which can be exchanged for industrial consumer goods. But for the working class and the state the increase of agricultural production should primarily result in the improvement of supply for the city and in the lowering of foodstuff prices. For the collective farm peasantry, the increase of agricultural production should primarily result in the improvement of supply for the countryside and the lowering of prices of industrial products. In the present state of things in the USSR, these two interests are therefore in conflict. Although latent, this conflict is so real that the state retains the means of decisive pressure by retaining ownership of agricultural machinery. To utilize these machines, the collective farms have to pay a price which absorbs an important part of the greater output obtained from this mechanization (category II of differential rent).

Naturally, classes with different interests do not thereby have to carry on a violent class struggle constantly. The workers’ state, in the interest of as balanced a social and economic development as possible, can and should find a common denominator between the immediate interests of the proletariat and those of the working peasantry. But at the same time it should be clearly aware of their difference of historic interest. Otherwise it would be disarmed when confronted with the periodically inevitable outbursts of these conflicts. Even more, it would be incapable of projecting a clear road toward the real withering away of the classes and their different interests. 

The Withering Away of the Collective Farms

This is demonstrated by the example of Stalin himself. A.V. Sanina and V.G. Venger propose to eliminate the collective farm sector as a “distinct” sector by remitting ownership of agricultural machinery to the collective farms. Stalin correctly combats this “right wing” thesis but with entirely inadequate arguments. [5] The only reply such a proposal requires is that it would accentuate the conflict of interests between cooperative agriculture and socialist industry instead of diminishing it. It would shift the struggle of economic competition between these two sectors, which today prevails .essentially in the sphere of the distribution of the means of consumption (division of income), to the sphere of the means of production, driving a wedge into the socialized sector of industry and trade. But such a clear reply would require a frank analysis of the opposition of interests which separates the collective farm peasantry from the proletariat and from the workers’ state – not to speak of the workers’ bureaucracy – and Stalin deliberately seeks to disguise this opposition which refutes the essence of his contention that socialism has been achieved in the USSR.

On the other hand Stalin is also right in fighting the thesis that the nationalization of the collective farms is the indicated road for “reabsorbing” the collective farm sector. At the present time, and undoubtedly for a considerable period ahead, such nationalization would meet fierce opposition from the peasantry. As in 1928-1933, the years of forced collectivization, it would threaten to unloose a veritable civil war on the countryside with the most disastrous consequences for the country.

But if these two extreme “right wing” and “leftist” answers are obviously erroneous, what correct answers are given by Stalin? Here again, the sphinx is practically silent. He advances one thought only, and with a great deal of hesitation. This is all the more astonishing because recent experience in the USSR allows for the determination of many of the elements needed for a coherent answer to this question.

Stalin limits himself to repeating several times: The distribution of agricultural and industrial production in the form of the exchange of products is replacing the production and circulation of commodities, which solution is made possible by “the setting up of a single national economic body (comprising representatives of state industry and of the collective farms) with the right ... eventually, to distribute production.” He already finds the seeds of such a solution in the payment in kind which the collective farms now receive for producing industrial raw materials and not foodstuff crops.

This idea is false and dangerous. First, Stalin confuses the elimination of the circulation of commodities with the elimination of money. Production and circulation of commodities existed before the appearance of money, and one can well imagine that the production and circulation of commodities – exchange in kind – will subsist in some sectors for a period after the disappearance of money. Furthermore payment in kind to collective farms producing industrial raw materials does not herald a better future but is the survival of a very dark past. It is a reminder of the scarcity and the bad provisioning of the country in foodstuff products which obliges the state to guarantee regular provisioning to these peasants at the peril of abandoning industrial crops which are indispensable to Soviet economy, in favor of foodstuff crops. But insofar as the production and distribution of foodstuff products is stabilized and extends over all Soviet territory; insofar as the standard of living of the peasantry rises and their wants become more diversified, they prefer to be paid in money which permits them to obtain a much wider range of consumer goods than they receive from the state. In fact, the Soviet economists have recently insisted correctly on the increase of money income as against income in kind to the collective farm peasantry, which they see as a sign of progress in Soviet economy.

The last echoes of the discussion which opened at the time of the merging of the collective farms was heard in Malenkov’s report to the 19th Congress of the Russian CP, That discussion clearly demonstrated that the collective farm peasants are beginning to have the same wants as the Soviet proletariat. What they were demanding when they put forth the idea of “agro-cities” was the comforts of the big cities, running water, gas, electricity, a modern and adequate sanitary system, medicine, education, recreation. Soviet society, in Malenkov’s own admission, is still very far from the ability to assure them such comforts. So long as it remains that way, the maintenance of exchange of. commodities between the city and the country is the only effective means of interesting the peasant in increasing production. With each new increase in the volume of consumer goods that the city is able to deliver to the country; with each new increase in the reserve of farm machines, measures of technical reorganization of agriculture – such as the absorption of the small collective farms, regional, local and then individual farm planning of areas planted with wheat with different products to be purchased by the state at attractive prices – such measures would appear acceptable to the peasantry as being to their interests. The progress of this industrialisation of agriculture will conclude after several generations by completely upsetting the now still predominant peasant mentality. The inhabitants of the genuine “agro-cities” of the future will live under conditions not unlike those of the industrial workers. Thus all the conditions will be joined so that when the city places an abundance of industrial consumer goods at the disposal of the “agro-city,” the latter will voluntarily give up the “ownership” of the products of their labor, an ownership which is no longer an advantage to them. It is on this road of the withering away of the collective farm sector, of fusion between agriculture and industry in a socialist economy, conjointly with the withering away of classes and of the state, that the withering away of the “two sectors” in Soviet economy can be envisaged. 

The Stages Toward the Communist Society

The vigorous development of the productive forces in the USSR poses a number of new problems which become completely incomprehensible if they are approached from the point of view that a socialist society has already been completed in that country. Moreover their comprehension is further obscured by prejudices peculiar to the bureaucracy – which is doomed to extinction. But it clings to life and even now is seeking to carve out a place for itself in the socialist society of tomorrow.

Stalin is obliged to speak more concretely of the withering away of the state “with the extension of the sphere of action of socialism to most of the countries of the world,” thus in passing admitting the falsity of his theory of “the possibility of completing the construction of socialism and of communism in one country alone.” He is obliged for the first time to recognize that statified property is not the highest but only the initial form of the socialization of the means of production. When the Yugoslav communist leaders revived this elementary Marxist truth in 1950, the Stalinist theoreticians fulminated against this “service for capitalism.” Stalin himself is now very quietly reminding them of the same thing.

However, what form will socialist ownership of the means of production assume after the withering away of the state? In several instances Stalin speaks of “a central directing economic body” which will be the heir of the state. The bureaucracy excluded, it returns posthaste. It is comical to observe how incapable Stalin is of conceiving a society otherwise than crowned by “bodies” which “direct” and “centralize.”

In reality the two phases of communist society should be clearly demarcated in this connection. The first phase of communist society, when the classes wither away, is also marked by a withering away of the state. Differences between manual and intellectual labor diminish as this process progresses. At the same time society will still require a strict accounting of resources and of social expenditures in labor, and will therefore require, as Trotsky pointed out many times, an increase of “the central organizing functions” of society. Nevertheless, the withering away of the state in this first phase of communism will express itself in the disappearance of the personnel distinction between producers and administrators, between directors and directed. All citizens will take their turn at “the central organizational functions” which are basically functions of accounting and rational distribution rather than functions of “direction” proper.

In the second stage of communist society, when the classes and the state have already disappeared, all difference between manual work and intellectual work will disappear to the degree that customary abundance and extreme wealth of society creates so high a social consciousness among men that all central accounting becomes superfluous. There will no longer be any justification for “central organizing “functions.” This will be the epoch of the decentralisation of all spheres of social life, the epoch of the formation of “free communes of producers and consumers,” to use the words of Fredrick Engels.

By labeling the transition society a “completed socialist society,” Stalin in reality is substituting the picture of the first stage of communism for what he calls “the communist society.”

This is particularly apparent in his conception of the withering away of commodity production. In reality, what he has in mind is the replacement of a monetary commodity economy by a natural commodity economy, since according to him there will still be exchange of products – and therefore relations of equivalents, therefore the persistence of value – which will be substituted for the circulation of commodities. But, according to the famous passage by Marx in The Critique of the Gotha Program, when the formula “to each according to his needs” is realized all notions of equivalents and consequently all notions of exchange will have disappeared from economic life. Men will draw freely from the existing store of consumer goods and will freely give in return their labor power to society, without any exchange between these two categories, that is, without measurement or limitation.

The preparation, the seeds of the economy of abundance, are to be found today in the free public services (social wage, social dividend). It is in the development of this “social wage” in relation to the individual wage, in the inclusion of consumer goods staples in this category (bread, milk, school books, salt, soap, medicines, etc.) that the withering away of commodities is to be measured. It is significant that Stalin is completely silent on this point although until very recently Soviet propaganda assigned a leading place to these problems!

The same transposition is even manifested when Stalin raises the question of the disappearance of all opposition and of all difference between the city and the country, between intellectual labor and manual labor. It is in the first stage of communism that the opposition, the antagonism between these different forms of social activity should disappear with the withering away of classes and of the state. We won’t dwell on the fact that this opposition, contrary to Stalin’s assertion, still persists in the USSR. We have already pointed this out as regards agriculture. Insofar as intellectual labor is concerned, the “strata of progressive intelligentsia” represents the “ideal” incarnation of the bureaucracy in the USSR. Its antagonism to the proletariat is manifested, to speak only of what is most obvious, in the enormous privileges of compensation enjoyed by intellectual labor as against manual labor.

But Stalin distorts the wisdom of our teachers when he asserts that the problem of the disappearance of differences between the city and the country, between manual labor and intellectual labor was not posed in the Marxist classics. It. is posed by Engels in Anti-Dühring, as well as by Marx in The German Ideology and in Capital, and by Lenin.

It is the problem of the second stage of communism that Stalin is again incapable of comprehending. The first stage of communism, the disappearance of opposition between the city and the country leads in effect, as Stalin says, not to the death but to the extension of the big cities. But the second stage of communism, the stage of great decentralization of “free communes of production and consumption,” will bring with it the disappearance of the metropolises which are far from ideal centers for man’s balanced development. Stalin’s attempt to “correct” Engels only highlights the imaginative power of our teachers and demonstrates the wretched narrow-mindedness of “the father of the peoples.”

The same can be said of the elimination of all differences between manual labor and intellectual labor. “Some distinction,” Stalin says, “... will remain, if only because the conditions of labor of the managerial staffs and those of the workers are not identical.” You almost lose the relish for communist society – the second stage of communism, if you please! – when it is presented as a carefully stratified society (workers at their machines and “managerial staffs” in their offices) like present day Soviet society! That Lenin believed it possible to begin the rotation of the functions of management by the workers from the outset of the socialist revolution (see State and Revolution); that the social division of labor between producers and administrators will disappear with the completion of the first stage of communism; that in any case the functional division of labor will certainly disappear in the second stage of communism – this is what Stalin seems incapable even of perceiving. But how can the bureaucracy perceive its own negation! [6]

Stalin hypocritically attacks Yaroshenko because he declares the primacy of production over consumption in socialist society (meaning the transition society as it now exists in the USSR). This, Stalin says, leads to “an increase of production for the increase of production,” to “production as an end in itself ... Comrade Yaroshenko loses sight of man and his wants.” This is just right but Yaroshenko is merely awkwardly expressing what Stalin himself asserts in his article, namely, “the primacy of the production of the means of production over the production of the means of consumption.” But, according to him this “primacy” is inherent in his “fundamental economic law of socialism.” [7] “the securing of the maximum satisfaction of the constantly growing material and cultural requirements of the whole of society through the continuous expansion and perfection of socialist production on the basis of higher techniques.” Yet Stalin adds to the exposition of his “fundamental law”: “uninterrupted growth of production” – “continuous expansion and perfecting of socialist production.”

It is true that he declares that this growth of production is a means, not an end. But the young workers and Soviet theoreticians, who dream of a better future, do not seem to be greatly impressed with such statements. Is Stalin unaware of the fact that the assertion of “the primacy of the production of the means of production over the production of the means of consumption” means that the major portion of human labor is devoted to this production and not to that of the means of consumption? That, in other words, man is devoting more effort to producing “means” than to attaining the “aim”?

We understand that such a state of affairs is unfortunately inevitable for a certain period. Without it, the creation of genuine abundance, of a real classless society, of an actual withering away of commodities and exchange would be impossible. But if it is agreed that we are dealing here with means, then it must also be granted that we are dealing with a transitory situation. The particular end to be attained is the creation of so vast a reserve of machines that the “constantly growing material and cultural requirements of the whole of society” can be satisfied with a minimum of human labor without the need of continuing to divert a major portion of human labor to the manufacture of the instruments of labor. In other words, Stalin’s “fundamental law of socialism” is revealed as a typically transition law, a law of the transition epoch which will undoubtedly cease to operate with the completion of the first phase of communism and certainly during its second phase.

Stalin’s narrow-mindedness, which seems to make him incapable of imagining the possibility of fully satisfying all the growing wants of society without devoting its major effort to the production of the instruments of labor, is another reflection of the narrow interests of the bureaucracy. The bureaucracy derives its main justification for its role as policeman and overseer in Soviet society from the “primacy” of the production of the means of production in relation to the production of the means of consumption. The abolition of this “primacy,” the establishment of the “primacy” of the production of the means of consumption, will eliminate the material base of any preponderant role of the administrators, and will give central place in economic activity to the aspirations and desires of the consumers, that is, of the masses of the people. At present workers’ control of planning on all levels would represent a transitory stage toward this future transformation. It would embody in embryo this directing function of the consumers. But when Stalin speaks of the second phase of communist society and of production for needs, he adds immediately: “and computation of the requirements of society will acquire paramount importance for the planning bodies.” Even when he tacitly admits the “primacy” of the means of consumption in such an epoch, the “planning bodies” continue to retain unaltered their “primacy” over society!

The same narrow-mindedness is demonstrated when Stalin enumerates the material conditions required for going over to this second phase of communism. He is obliged to promise an improvement of living conditions to the workers. Otherwise the whole business would hardly be worth the trouble. At the same time he has to minimize the enormous gulf between the Soviet worker’s standard of living and that of a present day American worker, not to speak of the gulf between the standard of living of the present Soviet worker and that of a member of the socialist society of the future. “To at least double real wages of the workers and employees” – what a paltry wretched aim compared to what the communist society was to have been in the minds of our teachers, although this aim may appear alluring to the workers of the USSR. Even so, each worker would have only two pairs of shoes a year! The annual production of automobiles would allow for one automobile for every 60 families! That would be a long way even from the condition of the worker in the United States. [8] Would that be the “full flowering of all man’s physical and intellectual faculties” of which Engeis speaks?

It is impossible to conceive of communist society outside of the world victory of socialism, if only because the universal, world relations of men alone allow for the full development of human wants and capacities. The possibility of building the communist society only on a world scale is explicitly stated in the Marxist classics. The fact that the Stalinist thesis on “the possibility of building socialism in one country” is in flagrant contradiction with all classical Marxist theory on this question is not the least of the causes for the mean and dismal picture that Stalin paints of the communism of tomorrow! 

The Meaning of Stalin’s Article

All these contradictions of Stalinist thought are visible not only to the handful of authentic Leninists who still survive in the USSR. The rising young generation which is “ardently desirous of proving their worth” never loses sight of these contradictions. It is able to see, to listen, to compare, to draw its conclusions. Its critical spirit is alive. It poses indiscreet questions. It puts its finger on the sore spots. It, unconsciously at first – is it always unconscious? – unveils the most flagrant contradictions in the thinking of the chief. Its Marxism is distorted, it is awkward, it is often in error – so be it! But a Yaroshenko calmly explained to Stalin that he was wrong. This is not an isolated case. Stalin’s entire article proves that a genuine discussion occurred around the questions with which he dealt. It will not be the last theoretical discussion posed by the young Soviet generation. It will be one of the last manifestations of the efforts of the bureaucracy to maintain the monolithism of official thinking at any price.

It is significant that the principal defects of Soviet economy which its leaders are revealing every day are defects which no longer reflect the poverty but the wealth of the economy! To be sure, the opposition between the enormous productive apparatus created in the USSR and the living standard of the masses is greater than ever. But this opposition assumes a new meaning in an epoch when Soviet industry has become the second in the world, when steel production has reached the combined total of British and German production! This opposition is one of the numerous manifestations of the same fact. The level of development of the productive forces has reached a point where it has become incompatible with bureaucratic management.

The role of the bureaucracy as a brake on this development is revealed more clearly than ever in the eyes of the entire youth, the entire worker and communist elite. The problem of the struggle against the supremacy of this bureaucracy is more and more posed as a practical, realistic task within the framework of a “rational organization of the economy.” Entire layers of Soviet society are demanding this struggle – some for selfish social reasons, others from the point of view of the interests of communism. Stalin’s theoretical polemic expresses a practical attempt to defend the status quo against the forces of social transformation set loose by the economic and social evolution of the USSR.

Stalin can no longer defend the privileges of the bureaucracy with the same arguments he did in the past. He has to get rid of the ballast. At the same time, and precisely because the immediate possibilities of satisfying the consumers are greater than ever, he is obliged to withdraw indefinitely if not to completely suppress the millennial visions of the future with which the agitators once appeased the impatience of the masses. Today 35 million industrial workers would reply to such visionary projections: “Don’t speak to us about free bread 25 years from now. Tell us rather why we lack decent housing today despite our powerful industry!”

Stalin has lost the argument of the future just as he lost the argument of the past. The less he is able to reply to questions and criticisms which converge from all sides, the more he is tangled in his numerous contradictions, the more he is obliged to cling to the present.

There is a new generation now in the USSR which does not bear the marks of the trauma of the famine years of 1929-1933 and of the bloody epoch of the purges from 1935-1937. It is a generation that has grown up in the feverish development of an industrial society, in which millions of workers have received high school or first-rate technical education. This generation will be the gravedigger of the bureaucratic dictatorship. Like the Western proletariat it plays the dominant role in the nation’s economy. It is conscious of its strength and its worth. It no longer accepts the arbitrariness of the bureaucracy without grumblings. Its grumblings prompted Stalin’s article. They can be heard in the background as an accompaniment to the unchanging monotone style of the former theological student from Tiflis. But these grumblings herald a storm. In the tumultuous struggles for socialism which are in development and in preparation on a world scale, the Soviet proletariat will occupy the outstanding place which belongs to it. The re-establishment of Soviet democracy on a higher economic level – that is the program demanded by Soviet economy as its bureaucratic leaders have shown it to us. That is what the young workers and the Soviet communists will realize in practice after having tested the ground in the field of theory, as we can see from Stalin’s article.


1. Besides, it is characteristic that while bank notes are used for the payment of wages and the circulation of consumer goods in the USSR, the entire circulation of production goods – leaving aside thefts, abuses, etc. – requires no issuance of paper money, and is carried on as a written transaction in the banks. Nothing but nominal money is involved.

2. In any money economy, this question embodies two realities: the equation between the value of two categories of commodities, and the equation between the given value of commodities and of distributed income. If the first does not correspond with the second, there will be inflation, price increases, fall of real incomes, and the re-establishment of the equilibrium on a new basis. This is exactly what happened in the USSR.

3. As of the time that humanity possesses so vast a supply of machines that all its growing needs can be satisfied by merely a part of this supply, and by reducing living labor to an insignificant quantity, the development of the productive forces will have ceased to be a necessity, an economic law. Undoubtedly mankind will continue to develop these forces even in such an epoch, but for disinterested, esthetic aims, for the exploration of the universe, etc. This is the famous “leap from the realm of necessity” – the necessity to develop the productive forces to provide for human wants, to assure the full flowering of man – to “the kingdom of freedom” – the freedom to develop the productive forces outside of human necessity in the pursuit of disinterested knowledge or other motives actuating fully flowered humanity.

4. The above-mentioned Soviet journalist, V. Koroteyev, who seems to have a marked talent for “socialist realism,” depicts the activities of many bureaucratic functionaries as follows:

“They lose infinite time doing nothing ... and in preparing documentation to this effect.”

5. As unlikely as it may sound, he asserts that such a measure would impoverish the collective farms, obliging them to find the necessary funds for the replacement of agricultural machinery. As if this replacement had to occur all at once and as if long term credit did not exist!

6. As early as the end of 1948 – in the October 17th issue of Krasnaya Zvezda – the young Soviet theoretician Kuropatkin says in speaking of the conditions required for going over to the second phase of communism: “The cultural and technical level of the workers and the peasants must be continually raised if the development of the working class is to equal that of the engineer-technicians and the technical and cultural level of the peasantry is to equal that of the agronomists.” If the cultural level of the workers is on a par with that of the engineers, why then is a “directing personnel” necessary?

7. Stalin covers himself with ridicule when he claims to have discovered “the fundamental law of capitalism,” – and thousands of parrots slavishly repeat his discovery by singing his praises. What use was there for poor Marx to wear himself out for decades working on Capital if all that was needed was to wait for Josef Vissarianovich to reveal the “fundamental law of capitalism” to us? Stalin does not appear to understand that the pursuit of the “maximum profit” by thousands of capitalist entrepreneurs is precisely the mechanism which leads to the formation of the average rate of profit! At the most, it should be added that in the monopoly capitalist epoch this averaging is no longer uniform, but differentiated: an average rate of profit in the monopoly sectors; a lower rate in the semi-monopoly sectors; an even lower rate in the non-monopoly sectors.

8. In the above-mentioned article by Kuropatkin, it is said that Stalin declared at the 18th Congress of the CP of the USSR that capitalist production per capita would have to be surpassed in order to go over to the second phase of communism. That would require not doubling but, in terms of products, tripling or quadrupling the present living standards of the Soviet worker – at any rate, if the standard of comparison taken is consumption per capita in countries like the USA, Canada, Australia, etc. This should indicate how far away this goal appears if the USSR has to attain it alone.


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