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Tony Cliff

State Capitalism in Russia

Chapter 1:
Socio-economic relations in Stalinist Russia
(Part 2)

The subordination of consumption to accumulation – the subordination of the workers to the means of production

Under capitalism the consumption of the masses is subordinated to accumulation. Sometimes consumption increases at the same time as accumulation, at other times it decreases while accumulation rises; but always, in every situation, the basic relationship remains.

If we follow the history of Russia from October, we find that until the advent of the Five-Year Plan this subordination did not exist, but from then on expressed itself in unprecedented brutality. This will become clear from the following table [89]:

Even these figures do not tell the whole story, for it is almost certain that this official calculation has not given due weight to the facts that the turnover taxes are imposed mainly on means of consumption and that the subsidies are devoted almost exclusively to the means of production (see below) with consequent distortion of the price system.

The figures available concerning the actual change in the volume of output of consumer goods are very meagre and in their interpretation we meet great difficulties indeed.

It is inadvisable to include products, like bread, whose rise in output is not the reflection of a total increase in production, but simply of a shift from home-processing, not covered by statistics, to industry, which is covered. [90]

This table shows only a very modest increase in the output of consumer goods – except for the case of leather shoes, paper and sugar.

Regarding the interpretation of these figures, it must be pointed out that while the figures for 1913 are adjusted to the reduced territory of USSR after the Revolution, the figures for 1945 and 1949 are not adjusted to the greatly enlarged post-war territory. (Russian annexations from 1939 onwards, included it will be recalled, Lithuania, Latvia, Esthonia, the Eastern part of Poland, etc.) Furthermore, until 1928 at least, very small factories made an important contribution to the production of means of consumption. In 1929, large-scale industrial plants – defined as employing more than thirty people, or having a motive power keeping more than fifteen people occupied – employed 3.2 million persons, while small-scale industry employed 4.5 million persons.

However, goods produced in this way during the Plan era were excluded from the Stalinist statistics. This, perhaps, explains the tremendous increase (on paper) in leather shoe production, an increase that cannot be squared with what is known about available supplies of leather. The number of animals slaughtered annually after the big collectivisation drive could never have reached the number slaughtered previously, as it was not until 1938 that the total number of livestock again approached the 1929 level. (In 1929 cattle numbered 68.1 million, in 1938, 63.2; sheep and goats numbered 147.2 and 102.1 respectively). [91] Furthermore, the surplus of imported hides, skins, and leather over those exported was 45.3 thousand tons in 1927-28, as against only 15.6 thousand tons in 1939. [92] Obviously only a miracle could increase leather shoe production simultaneously with a decreasing supply of leather. In the case of hosiery one overwhelmingly important fact is overlooked: the majority of hose used to be produced by artisans. As regards paper, output has undoubtedly increased enormously due to the propaganda needs of the government, the needs of administration and the cultural needs connected with industrialisation.

The subordination of consumption to production is clear enough if we put side by side the series of targets of output of consumer goods in the different Five-Year Plans and those of production goods. It will be found that the Soviet government, while promising a rise in the production of means of consumption with every Five-Year Plan, fixes the actual target of the Plan at a volume of production which does not exceed the target of former Plans. This is shown clearly by the following table [93]:

However, when the Russian government boasts that “in 1950 we will reach the level of 4.7 milliard metres of cotton goods”, they are not embarrassed by having made the same promise twenty years ago, when the population of the USSR was about fifty million less than now, as their police and propaganda combine to keep memories as short as goods.

To turn to actual production, we find that not only are the targets for consumer goods much more modest than those for consumer goods, but also (still according to official figures) the rate of realisation of these targets is much lower for the former than for the latter:

Chapter 1 Index

The accumulation of capital on the one hand and poverty on the other

Until 1928, notwithstanding the increasing bureaucratisation, the slow accumulation of wealth in the statified economy was not accompanied by a growth of poverty, as the following table shows:

Thus, even according to the calculations of Professor Prokopovicz, ex-Minister of the Kerensky government whom no-one would suspect of partiality towards the Bolsheviks, real wages of Russian workers in 1928-29 were 15.6 per cent higher than before the war. At the same time working hours were cut by 22.3 per cent. If we also took social services into account the rise in real wages would be even more pronounced. Another point that comes to light from this table is that the last few years before the inauguration of the Five-Year Plan, as the bureaucracy strengthened itself, real wages almost ceased to rise, and the rate of the rise lagged a little behind the rate of accumulation.

The situation changed radically with the inauguration of the Plan. From then on accumulation leaped ahead tremendously, while the standard of living of the masses not only lagged far behind, but even declined absolutely compared with 1928. The following table gives an indication of the rate of accumulation [97]:

Even making due mental allowance for the decline in the value of the rouble in these years, it is clear from a glance at this table that a tremendous accumulation of capital took place. In 1933 prices, the fixed capital of Russian industry was 10.3 milliard roubles in 1928 and rose to 22.6 milliard roubles in 1932 and to 59.9 milliard roubles in 1937. [98]

From 1928 the Russian authorities stopped publishing the index of real wages and of the cost of living and, from 1931, wholesale or retail prices. It is, therefore, very difficult to calculate changes in the level of real wages. All the available evidence shows, however, that, on the whole, the level has not risen since the introduction of the Plans. Thus, for instance, the purchasing power of average wages measured in food changes as follows [99]:

This calculation of the changes in the purchasing power of wages expressed in food is confirmed by statistics of the actual consumption of some foodstuffs per head of the population.

A comparison of the consumption of, say, meat, in the USSR in 1937 with that of Germany and France during the last decades of the nineteenth century shows how abysmally low the level of food consumption in the USSR has fallen. In 1898 meat consumption in Berlin fluctuated between 130 and 150 pounds (61 and 68 kilograms) per head, and in Breslau it averaged 86 pounds (39 kilograms) per head, in 1880-89. France showed the following position in 1852: in Paris consumption was 79.31 kilograms, in other towns 58.87 kilograms, in the villages 21.89 kilograms, France as a whole, 33.05 kilograms. [101]

As regards the consumption of some industrial consumer goods, the following information has been culled from Soviet sources.

Basing his calculations on the official figures of the output of cotton goods and shoes, and on Voznessensky’s statement of the portion taken by the army, occupational clothing, and so on [102], Jasny comes to the following conclusion regarding the civilian consumption of these goods:

“The quantity of cotton goods available for private consumption fell from 15.2 metres per capita in 1927-28, to less than 10 metres in 1940.” [103] Although the number of shoes available per person increased from 0.40 pairs in 1927-28, to 0.83 pairs in 1940; there was during the same period “a great deterioration in the quality of shoes owing to the shortage of leather”. [104] The per capita consumption of woollen goods, excluding the portion taken by the army, occupational clothing, etc., was 0.66 metres in 1929, and 0.65 metres in 1937; or sugar (raw), 8.5 kilograms in 1929 and 14.7 kilograms in 1937. [105]

One can see how low these figures are by glancing at the figures of the output of consumers’ goods in other countries: in Britain, in the same year, 1937, 60 square metres of cotton goods, 7.4 metres of woollen goods, and 2.2 pairs of leather shoes per produced, per capita. In the face of stubborn facts like these, one might assume that Kuibyshev, the late chairman of Gosplan, had a fine sense of humour when he declared to the Seventeenth Conference of the Party (January 1932):

[We think it absolutely necessary to ensure, in the Second Five-Year Plan, such an expansion of the output and food and light industries and agriculture as will secure an increase in the level of consumption of not less than 2-3 times ... An approximate calculation of the consumption level in 1937 allows us to assert that in this year the Soviet Union will be, as regards the level of consumption, the most advanced country in the world. [106]

But the most extreme expression of the subordination of workers’ standards to the needs of capital accumulation is to be seen in the housing conditions of the Russian people.

The housing construction plans of the government and the co-operatives have never been realised since the Five-Year Plans were inaugurated, as the following table shows [107]:

The Third Five-Year Plan was interrupted by the war, and so it is difficult to estimate the extent to which its housing target was realised.

At the same time the urban population grew very quickly. Unavoidably, therefore, this failure to achieve housing construction targets has meant that housing space per capita of the urban population declined even below the meagre standards of 1928 [108]:

The living space available throughout the period covered by the table was far below the minimum sanitary norm, which according to a 1947 official statement, was 8.25 square metres. [109]

The housing area per person in 1949 in some other countries was: Denmark, 21 square metres; Ireland, 17; Sweden, 23; Belgium, 15; France, 23; Greece (estimated), 16; Italy, 12. [110]

Some idea of what a living space of four square metres means may be gained by considering that in Britain the minimum allowed in new buildings is from 550 to 950 square feet per dwelling [111], or about 51-88 square metres.

The decrease in the average floor space per person is more pronounced in Moscow and Leningrad and in the newly established industrial centres than elsewhere.

An article in Soviet News praising Soviet housing conditions, says of Moscow: “An idea of the Soviet Union’s progress in housing may be obtained from the example of Moscow, which is a model in modern town development for all other capitals of the world. Since the advent of Soviet power, 65 million square feet of housing have been built in Moscow, or half as much as was built in the city during its whole existence before the Revolution. Every year Moscow is building on an increasing scale.” [112] The fly in the ointment, one that the official handout delicately ignores, is that the population of Moscow has increased to an even greater extent than have the housing facilities. In 1912 there were 1,600,000 inhabitants, and 11,900,000 square metres of housing space, an average of 7.4 square metres per head; in 1939, 4,137,000 inhabitants and 17,400,000 square metres of housing space, an average of only 4.2 square metres per head; and by 1950 the number of inhabitants had risen to 5,100,000, and the housing space to only 18,600,000 square metres, an average of a mere 3.65 square metres per head.

Houses built under the plans were most primitive. For example, of all urban houses built in 1935, 32 per cent had no water supply, 39 per cent had no sewerage, 92.7 per cent had no gas supply, and 54.7 per cent had no central heating. [113] In 1939, in new houses controlled by town Soviets in the RSFSR (which included most of the best residential buildings), the percentage of housing space with the following amenities was: piped water supply, 60.5 per cent; sewerage, 43.7 per cent; central heating, 17.5 per cent; electric light, 93.8 per cent; baths, 11.7 per cent. [114] Whole towns are entirely lacking in the most elementary communal necessities. It is rather shocking, for instance, to discover that the Fourth Five-Year Plan undertook to instal sewerage in thirteen cities, among them Archangelsk (with a population of 281,091 in 1939), Tomsk (with a population of 141,215 in the same year), Irkutsk (with 243,380), Kherson (with 97,186). [115] Out of 2,354 towns and workers’ settlements only 460 had a piped water supply, 140 had sewerage, and 6 a gas supply. [116]

These are the facts on which the following official declaration is “based”. “The tempo and scale of housing construction in the USSR has no parallel anywhere in the world,” as is a similar one made some fifteen years later, that “The housing conditions of the workers in the Soviet Union are incomparably better than in any capitalist state.” [117]

The claim in Soviet News, that house-building in Russia outstripped that of any other country, is quite ridiculous, as the following figures show. In the sixteen years between 1923 and 1939 there was an increase of only 106.6 million square metres in housing accommodation in Russian towns, whereas in England and Wales, in the four years 1925-1928 alone, a total floor space of not less than 70 million square metres was built. [118]

Is it necessary to give additional proof that the accumulation of wealth on the one hand means the accumulation of poverty on the other?

Chapter 1 Index

Industry subordinated to war

It is very difficult to get a clear picture of the extent of the war industries. The budget figures on defence mean very little as is shown in the following comparison of the amounts devoted to defence and “social-cultural welfare” (education, health, physical training, pensions, etc.) [119]:

Note that in 1940, on the eve of the Nazi invasion, the defence budget was only very slightly more than that devoted to social and cultural welfare, and in 1949, when the “cold war” was already raging fiercely, it was less. This is indeed strange.

Some factors contributing to this purely statistical phenomenon are; (1) Part of the expenditure of the Ministry of the Interior (NKVD or MVD) serve military purposes; (2) Expenditure on building munitions factories, military installations, barracks, etc., is included in the budget of ministries other than that of defence; (3) Expenditure on military schools is included in the budget of the Ministry of Education. But all these factors, and other similar ones, go only a short way towards explaining the small defence budget. The main explanation lies in the extreme cheapness – artificially induced – of armaments. As a result of heavy turnover taxes on means of consumption and huge subsidies to heavy industries, especially armaments, the price relationships between the products of heavy industry and those of the rest of the economy is drastically distorted. The coal and steel that go into the production of the machine tools which produce the armaments, the coal and steel that go into the direct production of armaments themselves, are heavily subsidised. Thus the prices of armaments are cumulatively reduced by the subsidy system. Insofar as turnover taxes made up about two-thirds of the prices of consumers’ goods, and as subsidies, directly and indirectly, probably reduce the price of armaments to about one-third of the actual cost of their production, one should, to obtain a true picture, multiply their price by nine, and compare this figure with that of the total price of consumers’ goods (including social and cultural services). Unless this is done, the picture remains quite out of touch with reality. For instance, the plan for 1941 stipulated that the total price of the products of all defence industries would be 40,300 million roubles, while that of the textile industry, at 46,000 million roubles, would be higher. [120]

Despite all these difficulties, however, we have, thanks to Professor M. Gardner Clark, of Cornell University, a reasonably accurate picture of the weight of armaments production in the Russian economy.

Relying solely on official sources he calculated the portion of all the iron and steel output of Russia which was used in the production of munitions, as well as the portion of all iron and steel utilised for the construction of munitions factories. The results of his research are summed up in the following table [121]:

Thus, as early as 1932, munitions accounted for 21.8 per cent of all iron and steel – a very high percentage, as may be seen by comparison with the percentage of 29.2 in 1938, a year when war preparations were in full swing. Munitions plants accounted for nearly half of all iron and steel used in the construction of machine-building plants, and by 1938 nearly all other machinery plant construction had ceased, munitions construction accounting for 94.3 per cent of all iron and steel consumed in machine-building construction.

The armed forces also took a large part of the output of consumers’ goods. Thus N.A. Voznessensky, writing as chairman of the Planning Commission (Gosplan), stated that in 1940 only 46 per cent of the cotton goods produced and 79 per cent of the shoes were sold “on the broad market”, the rest presumably going almost entirely to the army (except for a small portion given over to the production of working clothes for factories, transport, etc.). [122]

During the whole Plan era, the armament industry occupies a decisive place in Russia’s economic system.

Chapter 1 Index

The productivity of labour and the worker

In a workers’ state a rise in the productivity of labour is accompanied by an improvement in the conditions of the workers. As Trotsky said in 1928, real wages “must become the main criterion for measuring the success of socialist evolution”. The “criterion of socialist upswing is constant improvement of labour standards”. Let us see what the relations between the rise in the productivity of labour and the standard of living of the workers was in Russia. The following table gives an indication of this:

Thus till 1928 not only were wages above pre-war, but they rose much more than the productivity of labour. Between 1928 and 1936, while the productivity of labour more than trebled, real wages were actually cut by more than 50 per cent.

The same conclusion can be reached in another way by comparing the level of productivity in Russia with that of other countries on the one hand, and the standard of living of the Russian workers with that of workers in other countries on the other.

In 1913 the average productivity of labour in Russian industry was about 25 per cent of that in the USA, 35 per cent of that in Germany, and 40 per cent of that in Britain. A committee of the Gosplan, appointed in 1937 to investigate the productivity of labour in Russian industry, found that it was 40.5 per cent of productivity in US industry, and 97 per cent of that in Germany. [125] There is ground for the assumption that this calculation is exaggerated, and that the productivity of labour in Russian industry in 1937 was about 30 per cent of that in the USA, 70 per cent of that in Germany, and about the same percentage of that in Britain. A detailed explanation of how we arrived at this conclusion would be too lengthy. But as the conclusions of the Gosplan committee do not invalidate our argument, and on the contrary only strengthen it, the exact figure is of minor importance. To resume, while the Russian worker produces about 70 per cent as much as a British worker, his standard of living is very much lower.

In the following table we assume that the Russian worker earns 500 roubles a month, which is the average wage of all state employees (the bureaucracy included), planned for the end of the Fourth Five-Year Plan in 1950. On the other hand, we have taken as the basis of the price calculation prices from Zone 1, where prices are lowest in Russia. [126] For Britain we have taken the workers’ average weekly earnings of £5 3s. 6d. [127] The basis of the price calculation is the official figures published by the Board of Trade.

If the productivity of labour of a worker in Russian industry is about four-fifths of that of a worker in Britain, while his standard of living is a quarter or a third of that of the British worker, can we conclude otherwise than that if the British worker is exploited, his Russian brother is much more so? [D]

Chapter 1 (cont’d)

Chapter 1 Index

Footnotes

C. Kitchen, bathroom, hall, etc., space not included.

D. That the Russian worker today compared to the British worker today is worse off than the Russian worker under the Tsar compared with the British worker of that time is clear if we compare the above table with the following remark of M. Dobb: “In Tsarist Russia ... the average wage in mines and factories in 1913 is usually estimated to have been between 20 and 25 roubles per month, or the equivalent of between 40 shillings and 50 shillings in English money at its purchasing power at the time (i.e., about 10 to 13 shillings a week). This represents a figure rather less than a half the level in Britain at that date.” (M. Dobb, Soviet Economic Development Since 1917, London, 1948, p.59).

References

89. Five-Year Plan of National Economic Construction of USSR, 3rd ed. (hereafter referred to as I Plan) (Russian), Moscow 1930, Vol.I, p.132; The Second Five-Year Plan for the Development of the National Economy of USSR (hereafter referred to as II Plan) (Russian), Moscow 1934, Vol.I, p.429.

90. I Plan, Vol.II, Part I p.250; II Plan, Vol.I pp.172, 522, Vol.II pp.291-292, 296; Pravda, 19 February 1941; Socialist Construction of the USSR, Statistical Yearbook 1936 (hereafter referred to as Socialist Construction 1936) (Russian), Moscow 1936, pp.192, 195, 201, 204, 206; Socialist Construction of the USSR (1933-1938) (hereafter referred to as Socialist Construction 1933-1938) (Russian), Moscow 1938, p.73; Pravda, 10 March 1950; Izvestia, 17 April 1951.

91. Socialist Construction (1933-1938), pp.xxiv-xxv.

92. A. Baykov, Soviet Foreign Trade, Princeton 1946, Appendix Tables IV and VI.

93. I Plan, Vol.I, pp.145, 147; Vol.II, Part I, pp.248-251; II Plan, Vol.I, pp.172, 522; Vol.II, pp.276, 278-280. 291-292, 296; Law on the Five-Year Plan for the Reconstruction and Development of the National Economy of USSR for 1946-50 (hereafter referred to as IV Plan) (Russian), Moscow 1946, pp.11-13; Pravda, 6 October 1952.

94. Calculated from: I Plan, Vol.I, pp.145, 147; Vol.II, Part I, pp.248-251; Summary of the Fulfilment of the First Five-Year Plan of Development of the National Economy of USSR (hereafter referred to as Ful. I Plan) (Russian), Moscow 1933, pp.83, 95, 105, 121; II Plan, Vol.I, pp.172, 522; Vol.II, pp.276, 278-280, 291-293, 296; IV Plan, pp.11-13; Izvestia, 17 April 1951. (There is no reference to the fulfilment of the Third Five-Year Plan (1938-42) because the war interrupted it and no fulfilment figures were published.)

95. Socialist Construction 1936, p.3.

96. S.N. Prokopovicz, Russlands Volkswirtschaft unter den Sowjets, Zurich 1944, p.302.

97. I Plan, Vol.I, p.20; V.P. Diachenko (ed.) Finance and Credit in USSR (Russian), Moscow 1938, p.184; IV Plan, p.9; National Economy of USSR (Russian), Moscow 1948, Vol.II, p.185.

98. National Economy of USSR (Russian), Moscow 1948, Vol.II, p.129.

99. Prokopovicz, op. cit., p.306.

100. N. Jasny, The Socialised Agriculture of USSR, Stanford 1949, pp.777-778.

101. K. Kautsky, Die Agrarfrage, Stuttgart 1899, pp.24, 31.

102. N.A. Voznessensky, The War Economy of the USSR in the Period of the Patriotic War (Russian), Moscow 1948, p.126.

103. N. Jasny, The Soviet Economy During the Plan Era, Stanford 1951, p.74.

104. Ibid., p.76.

105. Calculated from figures of the output of consumers’ goods in this chart.

106. V.V. Kuibyshev, Articles and Speeches, 1930-1935 (Russian), Moscow 1935, p.131.

107. I Plan, Vol.II, Part 2, pp.292-293; Ful. I Plan, p.186; II Plan, Vol.I, p.533.

108. Workers’ and Employees’ Budget, Vol.I. The Budget of a Worker’s Family in 1922-1927 (Russian), Moscow 1929, p.55; II Plan, Vol.I p.533; B.B. Veselovsky, Course of Economics and Planning of Communal Economy (Russian), Moscow 1945, p.174.

109. United Nations, The European Housing Problem, Geneva 1949, p.41.

110. United Nations, Economic Survey of Europe in 1949, Geneva 1950, p.31.

111. International Labour Review, May 1932, p.627.

112. Soviet News, 23 January 1952.

113. V.L. Kobalevsky, Organisation and Economics of Housing in USSR (Russian), Moscow-Leningrad 1940, p.109.

114. Veselovsky, op. cit. p.176.

115. IV Plan, p.55.

116. Veselovsky, op. cit. pp.132, 473.

117. Soviet News, 23 January 1952; Pravda, 18 October 1937.

118. International Labour Review, May 1932, p.627.

119. A.G. Zverev, State Budgets of the USSR, 1938/1945 (Russian), Moscow 1946, pp.15, 22, 47, 104; K.N. Plotnikov, Budget of a Socialist State (Russian), Moscow 1948, pp.142, 146, 216, 218; The National Economy of the USSR (Russian), Moscow 1951, Vol.IV, pp.127, 340; Planovoe Khoziaistvo (monthly organ of the State Planning Commission), Moscow 1952, No.2, p.24.

120. These figures are taken from State Plan of Development of National Economy of the USSR for 1941, No.127, 17 January 1941, op. cit., p.11.

121. L.P.Shulkin, Consumption of Iron and Steel in the USSR (Russian), Moscow-Leningrad 1940, pp.20ff; M. Gardner Clark, Some Economic Problems of the Soviet Iron and Steel Industry (unpublished dissertation), Cornell University 1950, p.42.

122. Voznessensky, op. cit. p.126.

123. Arutinian and Markus, op. cit. p.484.

124. Prokopovicz, op. cit. p.306.

125. USSR and the Capitalist Countries; Statistic Handbook (Russian), Moscow 1939, pp.75-80.

126. Soviet Weekly, Supplement, 18 December 1947.

127. Ministry of Labour, Labour Survey of British Workers, April 1947.

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Last updated on 13.9.2002