Soviet Russia: Anatomy of a Social History

Part V: The Period of Reconstruction

Chapter XVI: The Background of the Piatiletka

I: Overcoming the NEP Dilemma

Obeying the law of inertia, the Soviet power had been drifting into a hopeless situation—but it was hopeless only within the framework of the NEP.

The experiences of state industry, whose leaders viewed with alarm the approaching exhaustion of industrial resources, were reflected in the work of the State Planning Commission (Gosplan). This work passed through different stages before it became the world-famous Piatiletka (Five-Year Plan). The first serious ‘perspective plan’ of 1926 was on principle a projection of NEP tendencies over the next five years. Thus it assumed a gradual slackening of industrial expansion which was unavoidable under NEP conditions but incompatible with the interests of Russian economy and therefore only proved the impossibility of maintaining the NEP for any length of time.

Within the NEP neither the goods famine nor the backwardness of industry could be overcome. The plan, furiously attacked by the Left, did not satisfy the wishes of the government and its draft was rejected; Gosplan was ordered to work out a plan for the fundamental reconstruction of the economic system. The result of this work was the first Piatiletka . After the attainment of the prewar level in industry the free play of economic forces did no longer guarantee the growth of the productive forces and was even dangerous to the Soviet system itself. The psychological basis of the Piatiletka was the spontaneity of the creative will transforming facts and tendencies in the service of great aims in spite of their resistance, whereas the first perspective plan had been trying to rely on the automatism of facts; for this reason its fame is built on firm ground.

This does not, of course, mean that the First Five-Year Plan was just a case of wishful thinking. It was based on exhaustive knowledge of all statistical data and, in spite of serious defects, it was a scientific and practical achievement of great importance.

Nevertheless it was no reliable indication of the real course of events. This may have been partly due to secondary mistakes, but it was first and foremost a consequence of one omission of first-class magnitude: it completely overlooked the titanic struggle between the Soviet power and the peasants which was in full preparation when the Plan was being worked out. Though the impression of acute economic difficulties and the constant criticism of the opposition was strong enough to convince the government of the necessity of a new departure in industrialisation, the Soviet power was still very optimistic in regard to the agrarian question. For this reason the problems of agrarian reorganisation, which were to be the centre of social conflict during the period of reconstruction, were treated by the Plan in an inadequate fashion. Industrialisation was analysed with great care but the treatment of agriculture was distinguished by a surprising and, in the light of experience, ridiculous optimism. Agriculture was viewed from the very limited angle of the requirements of industry which were to be met by a considerable increase in the output of all branches of farming. At the same time the authors of the Plan were apparently unaware that the immediate future was to witness the biggest offensive against an existing agrarian organisation known to history.

In the brains of the Communists the programme of collectivisation was directly connected with the demand for a larger agricultural output—and in the long run this was probably justified. For the time being, however, the decisive problem was not the preparation of future higher yields but the collection of the largest possible quantity of agrarian produce, were it even at the price of abolishing the NEP.

The position during the winter of 1928 was in some respects similar to that of the winter of 1920, but the relations of power were different. The government was infinitely superior to the peasants not only in military strength, but it had also built up an economic organisation which, though defective in other respects, was an efficient instrument of the state power. In spite of its bureaucratic ossification the government was still able to exploit class conflicts for its own purposes. Finally the Soviet power developed forms for the reorganisation of the countryside according to Communist principles, and nobody could reproach the Communists with sentimental weakness in the realisation of their aims—especially when the maintenance of their rule depended on energetic action.

II: The First Stage of Industrialisation

It must remain an open question whether, under the general conditions of Soviet life at the end of the NEP, the Five-Year Plan could be more than a clear and consistent exposition of the most important social and economic aims of the Soviet power; yet it claimed to be much more than that. It gave ‘directives’ for all branches of economic life and most of the cultural activities of the state and the population and prescribed exact figures. This abundance in detail rendered the fulfilment of the plan as a whole highly improbable, whatever the social conditions of the period comprised by it. The First Five-Year Plan, as a description of social and economic processes as a whole, and particularly those parts of it dealing with agricultural production, commodity exchange and living conditions of the people, indeed even its population statistics, was completely falsified by the second agrarian revolution of 1929-32.

The Five-Year Plan was the intellectual expression of the aims and interests of one factor in a gigantic social struggle; it cannot therefore be taken at its face value; only critical analysis can show its essence which need not be the same as its appearance. What were the minimum demands of an economic and social nature on which the Soviet power had to insist at the beginning of the period of reconstruction? The answer to this question will furnish the key to the understanding of the Plan and will make it possible to distinguish between its fundamental parts and the ornamental (or propagandist) superstructure. If the neglect of the agrarian problem by the government is, for the time being, accepted as a fact, the most important task of the Soviet power was the construction of an efficient heavy industry and, particularly, of modern machine construction, and it is this task which forms the basis of the First Five-Year Plan. The political and social declaration of independence of the Russian people in October 1917 had to be supplemented by an economic declaration of independence from the outside world.

The importance of machine construction was further emphasised by internal and international factors of great influence. Machine construction alone could prepare a solution of the grave agrarian problems. In the long run it was the best method of liquidating the famine of consumption goods because it would create a new and stronger light industry. The Socialist sector in agriculture should prove the superiority of large-scale farming over the backward technique of the Russian village; it could do so only with the help of large quantities of agricultural machinery.

During the preparation of the First Five-Year Plan the Communists, and therefore the whole Soviet public, were fully convinced of the imminence of a new wave of military intervention by the Entente Powers, more particularly by France. Whatever may be thought about the reasons for this fear, the fact is undeniable. The technical and therefore the military weakness of the Soviet Union was a very painful fact for the theory of ‘Socialism in One Country’. The iron age of capitalism and still more of the transition to Socialism requires enormous quantities of iron and steel. A large-scale modern army needs a higher output of iron and steel for its equipment and maintenance than the gross production of these commodities in the Soviet Union of 1928. The construction of a powerful armaments industry was the undisguised and, in certain limits, completely justified ‘international’ aim of the First Five-Year Plan. The condition of this development was the reconstruction of the iron and steel industry on a very large scale and the transfer of industrial undertakings according to strategic principles, even in spite of economic disadvantages. Iron and steel was one of the few industrial branches which had not yet recovered their prewar output at the end of the NEP and was in need of enormous capital expenditure; apart from that the opening up of the substantial ore reserves in the wilderness of the Urals encountered great technical difficulties.

These problems were certainly formidable but their existence was a further incentive for the Soviet power to develop heavy industry and, particularly, machine construction as the key industries for the reconstruction of Soviet economy as a whole. They were to furnish the mechanical energy and the technical equipment for a new Socialist industry capable of independent further growth; the tractors and combines for the reconstruction of agriculture; and, last but not least, the arms needed to prevent a repetition of the events of 1918-20 and to protect the Soviet Union from the irruption of capitalist contradictions in their most barbaric and dangerous form into the land of Socialism.

III: The Expenses of Industrial Reconstruction

This aim could not be realised without enormous expenditure. Who was to pay for the expenses of industrial reconstruction? There was no accumulated surplus in existence and the Plan had to pay its way step by step. Where did it find the means for this purpose?

During the later years of the NEP the balance of the exchange between town and country was very unstable and threatening to collapse. It may be helpful, however, to ignore this danger for the time being and to assume that there was a stable economic balance between the various social factors at the end of the NEP period. The natural basis of the social and economic pyramid were the 25 million peasant households working mainly for their own consumption. The bulk of their output, some 75 or 80 per cent, did not enter into the exchange of commodities and into the national division of labour. The remainder left the village and was to all intents and purposes the organic basis of industrial economy. The organisation of this process was at the end of the NEP largely in the hands of the state economic system, although private traders still played a considerable part in supplying the peasants with industrial commodities. Saving was not popular in the village, but it was enforced to the tune of at least 250 million roubles a year by the so-called ‘deficit’ of industrial goods. The state collected by taxation large amounts of agricultural goods without paying for them in kind; these were used for maintaining a large and growing bureaucracy, for improving the living conditions of the workers, or for capital expenditure in industry.

In this manner the government appropriated the surplus of agricultural market produce over and above the value of industrial goods given to the peasants in exchange. As far as the rest is concerned, government action was no less effective. It is clear that all branches of industry could continue to produce on the same level only if they were permitted to replace raw materials and labour used up in the production of their goods—and the government, which wanted to increase production and not to reduce its level, had to give this permission. There remained, however, a considerable part of the proceeds of industrial sales which could be spent in a different manner, corresponding to the category of ‘gross profits’ in capitalist industry. Its main elements were net profits and depreciation reserves for the replacement of fixed capital. Industrial production could be maintained for the time being even if the amounts reserved for replacing worn-out machinery and dilapidated buildings were not immediately used for these purposes, although this was bound to become an important factor in the long run. The profits of industry could be used either for expanding the scale of industrial production or for other purposes.

The government tried to collect the gross profits, which were largely made by light industry selling to the peasants and the urban population, and to spend them on heavy industry which was hardly making any profits at all. This policy may have been justified, and there is good reason to believe that this was actually the case. Nevertheless this policy, which was a completely legitimate one within the framework of the NEP, was bound to destroy the NEP itself. Light industry could not indefinitely increase its output without large capital construction; but there was no money left for this purpose because every available rouble was used for reconstructing heavy industry. The government could choose between different evils—either the reduction of capital expenditure in heavy industry when its increase was particularly necessary for international, political and social reasons, or the compulsion of the peasants by administrative means in order to get increasing quantities of agricultural produce without industrial equivalent, or the reduction of real wages for the workers, although their loyalty was obviously of particular importance at a time of great and growing difficulties. This was the result of an honest and apparently successful application of the NEP and was reached in or before 1927—and the government was then confronted by the awkward choice between grave evils at a time of supposed danger of war.

The choice embodied in the First Five-Year Plan was fundamentally correct. The first thing to do was to reconstruct heavy industry, and according to the Plan, which in this field can probably be accepted without many reservations, this could be done only by trebling the output of Group A (production goods) industries. The capital expenditure required for this purpose was prodigious; of a total of 13 500 million roubles to be spent on large-scale industry during 1928-33, Group A was to receive 9800 million plus 610 million for scientific research. [1] To this total the cost of electrification, valued at 3100 million roubles, should be added. [2] The share of group A industries in the basic capital of industry was to rise from 55.7 per cent to 68.2 per cent. [3]

Who was to pay the piper? The formal answer given to this question by the Plan is comparatively simple: [4]

Industrial profits were not even sufficient to cover the capital outlay in Group A alone, and the rest was to be paid in one form or another by the state. If it is assumed for the moment that the gross income of workers and peasants was to remain stationary, their net income would have had to be reduced by heavier taxation. But industry was not the only economic factor clamouring for more capital. The Five-Year Plan provided for vast expenditure on agriculture, transport, electrification and housing as well. The total of capital expenditure for economic purposes through the budget was to reach the astronomical figure of 17 000 million roubles, [5] and the share of the budget in the national income was to rise from 24 per cent to 32 per cent in 1932-33. [6]

The reconstruction of heavy industry on such a gigantic scale was bound to lead to great difficulties. Particularly the peasants would be hit by new burdens. Thinking in terms of commodities instead of roubles, agricultural exports were almost to be trebled in the course of five years. Imports, on the other hand, would mainly consist of machinery and raw materials for Group A industries, like rubber, non-ferrous metals, etc. The planned increase in the imports of agricultural machinery would not benefit the individual peasant but the collective and state farms. The gap between the demand for agricultural produce by the state and the supply of industrial goods for the peasants was bound to grow, the ‘deficit’ and the goods famine were bound to become worse and worse.

The change in the structure of national economy was to be accompanied by a quick growth of the towns. Additional industrial workers would exert an additional strain on the exchange between towns and villages by demanding more food. The peasants would have to furnish it, although they could not hope for more industrial necessities. Other things remaining equal , the peasants would have to pay a heavy price for industrial reconstruction. Yet this price would not be paid only by them. The deterioration in the state of the market would be expressed by smaller free supplies of foodstuffs and higher prices in the towns which were bound to lower the standard of living of the workers. Not only the barns of the peasants but also the cupboards of the workers would have to be emptied in order to pay for increased imports of machinery, and the increased number of workers would be fed partly by reducing the quantity of foodstuffs available per head of the urban population. Nothing could be said about the share which the workers would have to take upon themselves, but it was clear from the very beginning that they could not hope to get away scot-free. It was clearly impossible to reconstruct heavy industry except at the price of great sacrifices of the whole people. Yet the concentration of effort on heavy industry was essential; was it, then, possible to avoid paying the price?

IV: Painless Accumulation

A Plan proclaiming the necessity of a severe reduction in the standard of living of workers and peasants would have been very unpopular. The alternative chosen by Gosplan as the responsible organ of the government had many advantages in comparison to such a course and solved all problems without asking anybody for sacrifices except the NEP-man and the kulak. But was it possible?

The problem of reconstructing heavy industry has been considered under the assumption of other things remaining equal. But the Five-Year Plan rejected the theory of caeteris paribus ; it did not aim at the reconstruction of heavy industry alone but claimed to be a programme for the development of Russian national economy as a whole. The reconstruction of Group A industry was only a very important part of a larger whole which suffered only from one drawback—it was impossible of realisation.

The food basis of the growing towns had to be extended and large quantities of agricultural produce had to be exported in exchange for machinery, etc; ergo a substantial increase in agricultural output was decreed. The sown area was to increase from 115.6 to 142 million hectares, notwithstanding the fact that the prewar level in this sphere had already been surpassed at the end of the NEP. [7] It was expected to increase the yield per acre in the case of grain by one-fourth, cotton by one-third, flax by one-half. The planned grain harvest in 1932-33 was to amount to not less than 100 million tons (with an exportable surplus of eight million tons) and the various technical crops were expected to rise by 100 to 200 per cent. [8]

The serious market problems were to be solved by the progress of the socialised sector in agriculture. In the course of these five years 20 per cent of the peasant households were to be collected into collective farms, although the Plan emphatically stated that this was the maximum effort which could be safely made in so short a space of time. This change would greatly increase the market supplies of grain, partly for the reason that the Plan hoped to increase grain yields in public farming to about double the average level.

The most devastating criticism of this programme is the history of Russian farming during the years of the First Plan. For the time being it is enough to point out its obvious weaknesses.

a) In view of the absence of unused cultivated land the increase in the sown area was improbably large.

b) The yield estimates are excessively optimistic.

c) The expectation of enormously increasing market supplies was unwarranted by the facts, although it may have been necessary for the agreeing of other parts of the plan.

d)The agrarian plan as a whole was a clear case of wishful thinking without consideration of the hard facts, although in accordance with the orders of the bureaucratic superiors of Gosplan. Above all, it showed no trace of the gigantic struggle between the peasants and the Soviet power which was already at that time overshadowing all other events.

e) Success or failure of the agrarian plan was, however, of the utmost importance for the fate of the Plan as a whole. The planned increase in the output of light industry depended completely on the planned delivery of agricultural raw materials; both these factors together were decisive for the standard of living of the workers. Its failure could, finally, react on the export plan and in this way retard even the reconstruction of heavy industry which depended on large-scale imports of machinery, experts, etc.

f) The plan of painless accumulation was thus based on an increase in agrarian production far above the limits of the probable and this daring Utopia necessitated other flights of economic imagination. The Plan accepted the market as instrument for the distribution of goods; the peasants would increase their market production only in exchange for more industrial goods, ergo a generous development of light industry was decreed by Gosplan. In spite of a generally inconsiderable capital outlay in Group B (consumption goods) industries, the outworn plants of this group were to increase their production by 80 to 150 per cent. On the other hand, imports of raw materials for Group B industries were reduced to a bare minimum in order to make more room for machinery. Thus agrarian production was to depend on larger supplies of industrial consumption goods which could be produced, if at all, only by larger supplies of agricultural market produce…

However, even these untenable suppositions were not enough to produce the merely formal balance between contradictory claims sought by Gosplan. The programme could be fulfilled only by radically reducing the consumption of raw materials per unit of finished goods; the reduction was to be not less than 18 per cent in the case of agricultural raw materials, and as much as 28 per cent in the case of industrial raw materials. [9] The productivity of labour was to increase by 97 per cent in textile industry, by 96 per cent in the leather and boots industry, by 120 per cent in the chemical industry, etc… [10]

Here we meet the deus ex machina of Gosplan, the nostrum against all economic diseases, lavishly used and abused by Gosplan to solve the most intractable problems: the increase in the productivity of labour. This idea was not quite so absurd as may be thought after a merely economic analysis, but its application by Gosplan was based on a procedure which is worse than useless in historical and economic questions—the abuse of analogies: the scissors crisis which was overcome by the rapid increase in the productivity of labour happened at a time when there was no need at all for large-scale capital expenditure because national economy, industry as well as agriculture, disposed of enormous unutilised reserves.

Thus the economic experts of the Soviet Union planned a rise in the productivity of labour of not less than 110 per cent for industry as whole; [11] the whole ‘sacrifice’ to be made by the workers was a rise in real wages of ‘only’ 77 per cent. [12] The Plan was so sure of its provisions that it contained detailed estimates of working-class consumption for 1933; it need not be stressed that these figures had nothing whatever in common with the actual course of events.

All these parts of the Piatiletka —the plans for agriculture, light industry, productivity of labour and living conditions—were neither scientific calculations nor practical estimates. It was very ambitious to assume the possibility of raising grain harvests by one-third and of doubling or trebling the harvests of industrial crops; but it was impermissible to ‘plan’ for such a result at a time when social upheaval in the village was merely a matter of months. After the exhaustion of the prewar reserves of national economy an acceleration of ‘qualitative’ progress (increase in the productivity of labour, reduction of waste, of energy and raw material consumption) was clearly out of the question. All these parts of the Plan may have been important political or psychological symptoms, but they may be simply disregarded as a forecast of economic developments.

On the other hand, it is unnecessary to examine the provisions of the Plan for the reconstruction of Group A industries. The fundamental reconstruction of heavy industry was certainly the main task of these years and it was prepared by Gosplan in a consistent and constructive manner. Only the relations between the Plan as a whole and the ‘minimum plan’ for Group A industries must be considered in detail.

At the end of the NEP Russian agriculture had no very close connection with heavy industry. In the Five-Year Plan, the production of tractors and other agricultural machinery had a very important place but the tractor was not to be bought on the market and mechanisation was planned not as a technical improvement of the existing agrarian organisation but as a social power for its complete transformation.

The peasants, stubbornly concentrating on their immediate financial gain, were not at all interested in the fate of heavy industry. Yet Group A industry wanted the products of agriculture in order to feed its growing army of workers and to buy machinery, metals and the services of technicians abroad. The failure of the agricultural plan threatened the growth of heavy industry by reducing the working capacity of its underfed workers and, particularly, by affecting the available quantities of agricultural export produce. But the export plans had to be fulfilled to a certain extent because imports were normally made against short-term credits.

Heavy industry was to treble its output not only as a result of producing with more machinery and more workers, but also to a very large extent owing to the rising productivity of labour. The tacit condition of this plan was, of course, a steady improvement in the living conditions of the workers. It is true that the productivity of labour was on principle to rise owing to the use of more efficient machinery and not by more intense drudgery; nevertheless it was important to use every available moment for productive work, to maintain strictest discipline and to make the most economical use of raw materials and tools. The lack of substantial food, warm clothes and proper dwelling space was bound to weaken the workers and to reduce their efforts at the benches.

An examination of the Five-Year Plan as a whole must give very unfavourable results. But it was not a connected whole but an amalgamation of different elements. The fundamental conception of industrialisation by developing heavy industry was correct and had to be realised at almost any price if the Soviet regime was to weather the impending storm. The miracle of doing this, and many even more complicated things, without great material hardship to anybody but the kulak and the NEP-man was a gigantic propaganda trick which deservedly failed.

The events accompanying the ‘fulfilment’ of the Plan were tragic enough to discredit the very idea of planned economy in the eyes of superficial observers. This was a consequence of the fact that Soviet Russia was ruled by a bureaucratic dictatorship which could not afford to tell the people the whole truth if, indeed, it understood the truth itself. The Plan did not ask for material sacrifices but only for a ‘great offensive’—the greater was the abyss between plan and reality. It ‘overlooked’ the impending struggle between the government and the peasants—and the whole country was caught unawares by the collectivisation crisis. Its optimism in the question of raising the productivity of labour was hardly short of criminal—the desperate efforts of the Soviet power to solve it without a plan were to become the starting-point for a fateful reorientation of its social policy, the consequences of which can only now be fully understood.

All these serious blunders were not, however, committed by the authors of the Plan alone and on their own responsibility. The preparatory work of Gosplan was, according to the unanimous view of all expert critics, of extraordinary value and partly of a really original character. Gosplan was the bureaucratic organ of a bureaucratic government, but its supreme knowledge of Russian economy sometimes asserted itself even against orders from above. The most important case of this kind was the drafting of two ‘variants’ of the Plan. Actually the Plan was designed to cover a period of six years but the authors believed that it could be realised in five years if the following conditions would be fulfilled: (1) no crop failures; (2) granting of large foreign loans; (3) good realisation of the ‘qualitative’ indices; (4) low defence expenditure.

It was not the fault of Gosplan if, after this lucid and decisive explanation of the points at issue, the Sixteenth Conference of the CPSU in the spring of 1929 resolved to adopt the optimal variant of the plan. The exclusion of crop failures by conference resolution would be a simple device and it was so particularly in this case because the periodical recurrence of crop failures in the course of five or six years was precisely one of the reasons for choosing this period as a basis for planning. It is only fair to add that the authors of the Plan whose warnings were thus disregarded were shortly afterwards stigmatised as bourgeois and traitors.

The bureaucratic machine, once set into motion, soon began its senseless ‘racing’. Partly under the impression of the initial successes of 1929-30, partly urged by the needs of the agrarian front, the most important figures of the Plan were revised; in heavy industry many tasks were doubled and one was even increased by as much as 400 per cent. These changes were incompatible with the very idea of planned economy and after having dangerously disturbed the work of industry they were dropped without much ado.

Chapter XVII: The Reorganisation of Agriculture

I: The Destruction of the Kulak

At the end of the NEP the attempt to balance the interests of the peasants and those of the towns through the market had failed. A violent conflict between the government and the peasants was inevitable and soon the storm broke.

In this conflict the increase of agricultural production and the problem of the productivity of agrarian labour were primarily of no importance whatever. As long as the NEP existed it was much more difficult for the Soviet power to pay with manufactured articles for larger deliveries of agricultural goods than it was for the peasants to increase their market production. The NEP prevented the state from getting what it wanted and the NEP was destroyed; but the abolition of the market by the use of force did not lead very far—a new mechanism for the exchange between towns and country had to be created. The creation of this mechanism was the first and foremost aim of Soviet agrarian policy during the period of agrarian reorganisation. The increase in agricultural output was certainly desirable and in the long run of vital importance, but it was essentially a long-term aim; agrarian reorganisation with the purpose of achieving and maintaining control of the agricultural surplus production, on the other hand, was the most urgent question of social and economic policy. Not the lagging behind of agricultural production in comparison with industry was the root cause of the evil but the increasing power of the kulaks over the village and the incompatibility of their interests with the needs of the Soviet regime.

In their struggle with the kulaks , the government gave much attention to the internal state of the village where the consequences of the NEP made a united stand of the whole peasantry against the state very difficult. The poor peasants were little interested in the state of the market. Ten years after the revolution they were an element of considerable numerical strength which had only to gain by a reorganisation of the village on a new social basis, although not all of them were aware of this fact.

The Soviet power was now much better prepared than eight years ago to break the power of its opponents; this was shown by the first test of strength, the grain collections of 1929, which were again distinguished by kulak resistance against the unsatisfactory market conditions. The government dropped every pretence of the NEP and ordered administrative compulsion against the recalcitrant peasants. Its measures included prohibition of private trade in grain before the delivery of the prescribed quota, sale of industrial goods only against certificates of grain delivery and, finally, naked violence. The success was complete and the plan was fulfilled with 102 per cent. [13] Grain collections rose from 8.0 million tons in 1928 [14] to 9.4 million tons in 1929. [15] The government scored an important initial success which was regarded as an excellent starting-point for a general campaign to ‘liquidate the kulaks as a class’ (Stalin). The recurrence of the annual struggle for the harvest was to be prevented by a complete transformation of the agrarian system.

The method adopted for this purpose was the rapid introduction of collective farms. This collectivisation movement was radically different from the process envisaged by the Plan. It was not an economic experiment but a war measure for the destruction of the kulaks and the mobilisation of grain. The government supported the poor peasants and used the internal conflict within the village to break the kulaks once for all. After the serious mistakes of the NEP, these measures were probably necessary and, in spite of many acts of superfluous cruelty, they were infinitely superior to the methods adopted by the peasants themselves in their struggle against the landlords. Although determined by the needs of the Soviet power and not by the interests of the peasants, this policy created the conditions for a technical and economic reorganisation of agriculture on the basis of a more rational agrarian system.

For the kulaks nothing remained but a stubborn fight to the end. From the beginning of the Five-Year Plan, the number of collective farms grew continuously. The number of collectivised households increased during the first year of the Plan (1928-29) from 595 000 households to 2 131 000 [16], but even then it was less than ten per cent of the whole. But during the winter 1929-30 the tempo of collectivisation was intensified and its method radicalised by sending 25 000 picked Communists into the villages. The kulaks were expropriated without much ado and, after a short time of divided counsels, private gains were excluded by permitting kulak expropriation only in the interests of collective farms. Kulaks were forbidden to join the latter and expelled wherever they had been admitted before; the practice of administrative banishment began.

During all the fluctuations of agrarian policy the liquidation of the kulaks as a class was ruthlessly pursued. The Soviet power was notoriously unscrupulous in its definition of a kulak which changed according to circumstances. At first peasants qualified for this negative distinction by their reluctance to give something for nothing, later on by their attitude towards collectivisation.

The liquidation of the kulaks ought to have been achieved, according to the intentions of the government, by simple administrative action. But the resistance of the kulaks had been grossly underestimated; their first confused surprise had been mistaken for calm resignation. But this stage did not last very long. In many cases the kulaks and their supporters instigated and perpetrated small-scale risings, killed Communist officials, etc. Of greater importance was the economic resistance of the kulaks.

Since the war alarums of 1927 the kulaks , as every peasant who could afford it, tried to prepare for the expected lean years by amassing and concealing large grain reserves which were generally discovered and confiscated after the breakdown of the NEP. These initial measures made the more prosperous peasants afraid of wholesale confiscation of their property and, as during War Communism, they slaughtered their most valuable possession—their cattle. Owing to the miserable poverty of the Russian peasants the possession of a few head of cattle was a distinctive sign of prosperity, and a small number of real or alleged kulaks owned a large part of the whole livestock. The consequences of the destruction of livestock by the kulaks were, however, further intensified by the bureaucratic madness of the Communists whose ruthless collectivisation policy induced many middle peasants to follow the same course. [17]

The fall in the number of horses directly reacted on soil cultivation. The fall in the number of large horned cattle, sheep and pigs caused a catastrophic reduction in the food supply of the towns as far as meat, milk and milk products were concerned, and endangered the raw material basis of the wool, leather and food industries.

The fall in the supply of animal foodstuffs directly reduced the standard of living of the urban workers in what may be called, for Russian conditions, semi-luxuries; the decline in the number of horses was not only a stunning blow to the programme of agricultural production, it was an indirect threat to the supply of bread for the masses of the people. Many critics derided an agrarian policy which supplied with unspeakable sacrifices agriculture with one million horse-power in the form of one hundred thousand tractors while causing at the same time an annual loss of fully four million living horses. This criticism is completely valid if directed against the official claims of the Communists which were indeed absurd; nevertheless it does not even touch the fringe of the real problem at issue. The hecatombs of animals slaughtered to the merciless god of collectivisation were, of course, no part of the agrarian plan but, on the contrary, a grave obstacle to its realisation. The power of the kulaks had to be broken if the Soviet regime was to survive; for this reason the government was entirely justified in pushing ahead with tractor production while it was unable to prevent the destruction of millions of horses.

The horses of the kulaks were, amongst other things, a means of stabilising and extending kulak influence over the village. The poor peasants borrowed from the kulak a horse for their field work and paid for it by surrendering part of their harvest which increased the kulak ’s fund of marketable produce. The tractor, on the other hand, was an instrument of Communist reorganisation of the village—particularly when used by the Machine and Tractor Stations. It was a powerful lever of collectivisation, contributing to the abolition of an antiquated agrarian system and to the rational organisation of agricultural work. The payment of the MTS, too, was effected by surrendering part of the harvest, as was the payment of the kulaks before, and the Soviet power thereby increased its grain fund without interference by speculation and the market. Mechanisation, not less than collectivisation, must not be regarded primarily as an economic and technical improvement but as a measure of social reorganisation.

The more stubborn the resistance of the kulaks against their extermination, the more ruthless were the Communists. They could not prevent the wholesale destruction of livestock but this very catastrophe strengthened their conviction that the economic position of the kulaks had to be completely destroyed by confiscation of their houses, implements and land; afterwards they exiled them by tens or hundreds of thousands to the Urals, to Siberia or the inhospitable North, where many of them perished from hunger and cold in concentration camps.

This struggle ended as it was bound to end. But the kulaks had been occupying an important place in Soviet economy. They had been supplying the towns with 20 per cent of their bread and a still larger part of their animal foodstuffs. The kulaks had to be replaced as commodity producers, and the Communists tried to solve this problem by creating and supporting large-scale agricultural enterprises under public control. The fight against the kulaks was accompanied and followed by the complete reorganisation of the agrarian system.

II: Artel and Commune

The incompatibility of kulak agriculture and state economy in the towns made a solution of the agrarian problem possible, the elements of which had been worked out in an abstract manner a great many years ago by Russian Socialists of different shades. Their theories assumed practical importance in the form given them by Lenin during the last period of his public life, when he tried to prove that the creation of peasant cooperative farms would directly lead to Socialism if combined with the nationalisation of industry and foreign trade by the Soviet regime. This theory was justly used by Stalin in his struggle against Trotsky and proved at least that the latter was no orthodox Leninist, whether this meant little or much for the correctness of his assertions.

Lenin’s programme assumed a state of things where the peasants would be convinced of the superiority of large-scale farming by the palpable results of mechanised agriculture and would thereby be induced to join cooperative farms as a direct way to a quick and substantial improvement in their living conditions. He was well aware that this process would need many years for its completion and the whole theory presupposed a level of industrial development which was by no means reached at the end of the NEP. Yet it was at this moment that the government was compelled to try and solve the problem of agrarian reorganisation. The destruction of the kulaks and the discouragement of their supporters was bound to spell economic collapse unless the Soviet power succeeded in creating a new basis for the supply of the towns and the state with agricultural produce. For this purpose state and collective farms were indispensable and their establishment had to be undertaken on the spur of the moment.

A very modest windfall, which in many cases permitted the starting of the experiment, was the property of the kulaks which had been confiscated by the state and was handed over to the newly established collective farms. This was a clever move in the game of power politics between the government and the peasants because it won over many poor peasants to the cause of collective farming. The kulaks had generally lent their horses, and often their ploughs, to the poor peasants and usually extorted enormous tributes for this modest service, whereas now the poor peasants could use the same instruments—theoretically—free of charge.

On the other hand, this policy of confiscation was bound to deter the middle peasant who continued to be the ‘central figure’ of the Russian village. It was neither necessary nor advisable for the government to extend the merciless struggle against the kulaks to the middle peasants, for the towns could not continue to exist without the market production of their farms even if they could manage at least for some time to forgo the supplies coming from the kulaks. The Soviet power was, on the other hand, compelled by the needs of industry to increase its demands on the peasants instead of bearing in mind the grievances of the village which was clamouring for larger supplies of industrial goods. The situation was delicate and fraught with extreme danger because every untoward step could cause a violent conflict between the government and the masses of the peasants.

Thus the Communists had every reason to deal with the middle peasants as cautiously as possible. Being unable to offer palpable advantages to those peasants who were inclined to accept the officially prescribed reorganisation of agriculture of their own free will, the government was reduced to a policy of punishing everybody who dared to resist. In the course of time, the part played by naked violence was nothing short of overwhelming and the inevitable result was the virtual breakdown of relations between the state and the masses of the peasants. The government was in full control of the executive, including the GPU and Red Army, and was determined to break by brutal force every show of resistance by real or alleged kulaks . The middle peasants were, of course, unable to retaliate in kind and their only effective weapon was the reduction of food supplies by producing less grain and other agricultural produce. If the peasants were compelled to part with excessive quantities of goods, in exchange for few industrial articles, or none at all, they could reduce their sown areas; if the officials of the government compelled them to join collective farms and to fulfil a large programme of sowing, they could work lazily or not at all and in this manner frustrate the intentions of the state power. The power of this resistance was certainly formidable; but it was only after a comparatively long time that its full implications became visible and if the enemy did not understand the future dangers threatening him from this passive resistance he would go on and on until catastrophe overtook him and the peasants alike.

However, understanding and foresight are not numbered among the characteristic virtues of a bureaucratic apparatus and the Soviet power was certainly no exception to this rule. Its agrarian policy during the First Five-Year Plan was marked by a fatiguing succession of changes of tactics, by short-lived new courses and by severe mistakes which, it is true, had no catastrophic consequences for the existence of the Soviet regime but which were visited on the innocent heads of the population and delayed for many years the success of economic reconstruction.

The two cardinal problems of Soviet agrarian policy concerned the market relations to the peasants and the technique of collectivisation. In either sphere the Soviet bureaucracy was energetic beyond the limits of brutality and reckless beyond the limits of blindness.

(a) On the market the interests of the state were opposed not only to those of the kulaks but to those of all peasants who had something to sell. The middle peasants, though not so specialised in the grain trade as the kulaks , were far from indifferent to the prices paid by the government for their products. In its attempt to keep the cost of living down, the Soviet power by its price policy reduced already during the later NEP the incentive to cultivate grain for sale instead of for home production, and the share of wheat and rye, the principal market grains, in the total grain production was on the downgrade already as early as 1927. The planned grain purchasing programme completely disregarded this important change and ordered a quick increase in grain collections which was directly responsible for breaking down the last pillars of the NEP. This terrorism could be effective only if the government was able to achieve a monopolistic position in its relations to the village and for this purpose it suppressed private trade in its last stronghold, the food business. In the beginning of 1929 the number of private shops was still 163 900, most of them in this sphere; a year later only 47 100 [18] were left and their importance fell to zero. At the height of this campaign, during the winter of 1929-30, the peasants were even forbidden to sell to private consumers!

This policy destroyed the market as an instrument of exchange between town and village, though not for ever, at least for many years. The state was the only buyer of peasant produce and the only supplier of industrial goods for the village. It is no secret that, in spite of the sanguine expectations of the Plan, the demands of heavy industry and the growth of the towns prevented the increase, perhaps even the maintenance, of industrial supplies for peasant consumption, whereas demand for agricultural produce grew by leaps and bounds. As long as the government succeeded in satisfying this demand by whatever means, its leaders could imagine that they had not only broken kulak resistance but that they had actually trained the peasants to resign themselves to their new position. They had finally suppressed the grain trade with its uncontrollable fluctuations, grain collections were satisfactory and collectivisation made rapid progress.

(b) The necessity of getting control of agricultural production led to a gigantic speed-up of collectivisation. The principles of this policy had nothing in common with the Plan and their application was such that economically satisfactory results were definitely excluded.

Convinced Communists had founded a few collective farms as early as 1918 for the realisation of rather primitive Communist ideals. The members worked for the community and consumed together the product of their work (Communes). Although large-scale collectivisation could not make use of common housing and common eating, the general principle of the Commune underlay the collectivisation campaign of 1928-29. The peasants were ordered to bring their whole productive property into the collective farm and the products of their labour were distributed either according to the number of ‘eaters’ or to that of workers in each family. This arrangement was very favourable for the poor peasants but it was stubbornly resisted by the rest.

This resistance took generally the form of unwillingness to join the collective farms. But the success of the grain collection campaign 1929 and the passions aroused by the struggle against the kulaks made the bureaucracy forget all self-imposed limitations. During January and February 1930 a wave of compulsory collectivisation swept the country and at its end about 40 per cent of all Russian peasant farms were ‘collectivised’. The middle peasants made common front with the kulaks and slaughtered their livestock instead of throwing it into the common pool of the collective farm. The law of dangerous ‘over-success’ had once more been vindicated by the reckless and undiscriminating collectivisation practice of the bureaucracy.

Although the tactical turn by 180 degrees, made by Stalin at this moment, did not have the historical importance of Lenin’s transition to the NEP, it was not less necessary. The fear of a sharp reduction in the grain area was responsible for the radical change worked by Stalin’s famous article ‘Dizzy with Success’. He started by blaming the local officials of the government for the excesses of the collectivisation campaign. But Stalin did not confine himself to a feeble defence of the government; he gave definite orders for the future and the most important among these was his clear and sound instruction concerning the methods of collective farming to be adopted in future:

The fundamental form of the collectivisation movement, its prevalent form at the present moment, the form on which we must concentrate, is the agricultural artel . In the agricultural artel the most important means of production, mainly in the cultivation of grain, are socialised labour, use of land, machinery and implements, working stock and farm buildings. Small vegetable gardens and orchards, however, houses, a certain proportion of the cows, poultry and small livestock, etc, are not socialised. [19]

This decision is the basis of Communist agrarian policy up to the present day and it has stood the test of experience, although it has been partly modified by later developments. It was followed up by instructions about the distribution of collective farm incomes which were strongly in favour of the middle peasants. Immediately afterwards the Central Committee of the CPSU decided not to close markets and to reopen those which had been closed before, and to prohibit the interference by the authorities in the sale of goods, particularly of collective farm products (March 1930).

The organisation of the collective farms was changed in accordance with these instructions. Although many peasants used their newly confirmed right to leave the collective farms, there remained on 1 October 1930, only two years after the inauguration of the First Five-Year Plan, 5 565 000 households within the collective farms, that is, 22.2 per cent of the total or more than prescribed by the Plan for 1933. [20] This was, of course, a great success for governmental control, but quite otherwise for agriculture and for industry. In particular, it was the strain on industry which was to supply the collective farms with machinery, fertilisers and finished goods in order to prove the advantages of the new system, which was responsible for the ridiculous upward revisions of the Plan which interfered so dangerously with the working of industry.

The most important concession to the middle peasants within the collective farms was the system of ‘labour days’, replacing the initial primitive equality of income for all members of the cooperative. It was based on a simple form of rate-fixing for different kinds of agricultural work and a labour day was not necessarily identical with the amount of work done by each individual in the course of one day. Every cooperator was credited with a number of labour days corresponding to his or her work and the farm income was divided among the members in proportion to the number of labour days outstanding to their credit.

The division of gross income was, therefore, roughly as follows. At first all seed grain, etc, was deducted from the total real income available and the same was true for payments in kind to the MTS. A similar deduction was made for taxes and insurance premiums, until only the net income remained. The latter was divided into a smaller part for social reserves, common buildings or other social uses, and into a larger part which was divided among the members. For each labour day every member received a certain amount of money, grain, potatoes, etc, according to his total number of labour days. The system is rather clumsy but it stood the test of practice quite well because it was a reflection of real conditions.

The restriction of collective farming to the fundamental branches of agriculture was not simply a concession to the individualistic spirit of the peasants, it was a necessity for national economy as a whole because the collective farms were unable to satisfy all the needs of their members or of the towns. The cultivation of vegetables, the breeding of poultry, etc, were necessary supplements to the mass production of grain, cotton or potatoes. As these goods were a necessary part of the diet of the urban population, some sort of food market had to be re-established where the collective farmers could sell their goods to the individual consumers; it was for this reason that the Soviet power had to reopen the markets, in spite of the difficulties encountered in their control.

But the opening of the markets and the concentration of the millions of farmsteads into a smaller number of collective farms were not in themselves enough to overcome the conflict between the peasants and the state regarding the exchange of agricultural produce for industrial goods. Organisational devices were not sufficient to comfort the peasants for the lack of manufactured necessities, as the Soviet power was soon to find out to the detriment of the Russian people. The government was confronted in the sphere of agricultural production with the same problem which it had been unable to overcome in the sphere of distribution.

III: The Agrarian Crisis 1931-33

Whatever the trend of agricultural production, the industrialisation programme of the Plan and the growth of the towns required yearly increasing quantities of agrarian products: [21]

These figures are far from exact, but they may be taken as an indication of relevant tendencies. The demand for other agricultural products was rising in a similar manner. Between 1928-29 and 1931 collections of grain rose by 236 per cent, cotton 161 per cent, and meat and cattle 158 per cent. [22] It may be safely said that the village had to furnish at least twice as much ‘market’ produce at the end of the First Five-Year Plan as at its beginning.

The first claim on the foodstuffs taken by fair means or foul from the peasants did not rest with the workers but with the People’s Commissariat of Foreign Trade. One of the worst mistakes of the Plan was the reckless optimism of its import and export provisions. The world depression of 1929-34 hit the export trade of the Soviet Union very badly because prices of agricultural produce fell much more than industrial prices. The government had to sell more grain, flax, etc, than the Plan demanded, but the proceeds were much less than expected and, indeed, much less than required for the fulfilment of the import plans. There were practically no grain exports during the years 1928 and 1929. In 1930, however, 4.8 million tons had to be exported and in 1931, despite a catastrophic crop failure, not less than 5.2 million tons left the country in order to fetch some foreign exchange.

Import difficulties and defective agrarian plans also caused acute difficulties in cotton spinning and weaving which was, of course, of great importance for the trade with the peasants. Even in 1930 the cotton mills worked short hours because the reduction in cotton supplies from America could not be completely balanced by increased home production. Cotton goods were even less available than during the last NEP years. If some other consumption goods industries made some headway, this helped either the urban workers or, again, the People’s Commissariat of Foreign Trade (for example, canned goods) but not the peasants.

While the Communists slowly developed the elements of a new agrarian organisation, which was still viewed with grave suspicion by the masses of the peasants, an acute crisis was revealed by the harvest of 1931. In the spring of the previous year a critical situation had been saved at the last moment by the partial retreat of the government and by very favourable weather conditions resulting in an excellent harvest. Weather conditions, however, which had been so favourable in 1930 did not work out to the advantage of the official agrarian policy in 1931. A partial drought intensified the results of rash collectivisation and ruthless market policy and the outcome was a very serious drop in grain production. The tragic history of the following agrarian crisis may be summarised as follows:

Drought ruined the 1931 harvest of five important sections of the Union… The government, therefore, had to provide in addition to the normal domestic and the abnormal export requirements, 1.8 million tons of grain to these regions for seed and food. This was extracted from the Ukraine at the cost of considerable disaffection, and the Ukrainians responded by, in their turn, eating into a part of their seed grain intended for the 1932 sowing. [23]

During the early months of 1932 the government saw again the red light. On 4 May 1932, the agricultural tax was reduced and the ‘free market’ restored which had been actually, though not legally, again abolished. But for the first time since the beginning of the reconstruction period the sown area was smaller than in the preceding year and the harvest was again very bad. Everything seemed to have conspired against the agrarian policy of the Soviet power and the hostility of the peasants assumed ominous dimensions. The reports about badly harvested fields are too numerous to be overlooked. The peasants were either so embittered or so apathetic that they did not care for the consequences of their actions. The winter of 1932-33 witnessed a terrible famine which was even worse because it was not simply a consequence of natural elemental forces but primarily a result of the struggle between the peasants and the Soviet state. The regime cracked in all its hinges, the opposition against Stalin gathered strength—but the dictatorship managed to maintain itself; the whole regime depended too strongly on the fate of the ruling caucus to allow serious political struggles within the Communist Party.

The reorganisation of agriculture ended with a terrific agrarian crisis but it had nevertheless come to stay. The peasants furiously opposed the confiscation of their produce without effectual payment—and it may well be argued that the Soviet power, and particularly the working class, paid more dearly for this doubtful privilege than it was worth. Yet agriculture had been put on a substantially new basis, though at a high price and under conditions which were grimly different from those envisaged by the reckless optimism of the official experts. The contradiction between agriculture with its millions of tiny farms worked by individualistic peasants and nationalised industry was finally overcome. A period of considerable increase in the productivity of agrarian labour and of substantial improvement in the rural standard of living was approaching.

For rural economy the period under examination was essentially not so much a period of rapid progress and powerful enthusiasm as a period of preparation for this progress and this enthusiasm in the near future. [24]

Stalin’s words contain a precious because unconscious avowal of the way by which enthusiasm was prepared under his rule; but in the main his statement is quite correct and is a more devastating criticism of the agrarian Five-Year Plan and all promises dependent on it than the most formidable array of figures and charts.

IV: The Results of Agrarian Reorganisation

The surface of the Russian village was transformed by the storms of the reorganisation period beyond recognition. The kulaks were liquidated; in most parts of the country individual farming was replaced by collective farms and new, vast state farms started grain cultivation in provinces where it had never been attempted before. Not without interruptions and setbacks, but stubbornly and successfully, was the rule of the ‘socialised’ sector in agriculture enlarged from year to year: [25]

Although individual peasants were still a large minority, their economic importance was quickly declining. The average grain acreage of the individual farmer was halved in the course of these five years. The network of MTS grew from year to year and their tractors and machinery increased correspondingly, though their numbers did not reach the figure prescribed by the Plan.

The state farms developed in a very impressive manner but their material results were disappointing. Established in the period of bureaucratic madness when all innovations were made with both eyes on the expected propaganda effect of a new record-breaking achievement, these giant farms with many tens or even hundreds of thousands of acres proved uneconomical and were in the long run untenable. At the beginning of 1934 the Communist Congress was told by Stalin:

By comparing the enormous sums sunk by the state in the work of the state farms with the material results of their work, as it is today, a striking disproportion must be observed. Our state farms are too large… The directors cannot manage these immense state farms, and they themselves are too specialised. [26]

On the other hand, the management of the collective farms was in the end more or less satisfactory to the peasants and to the state. Government supervision and even the use of force remained indispensable as long as the supply of industrial goods was too small but the new organisation was elastic enough to permit the transition to a better system, where the balance between town and country would be maintained by the satisfaction of all needs. The new market organisation was based on a division of agricultural collections in three parts:

1) Compulsory delivery of fixed amounts of basic foodstuffs and raw materials against nominal payment by the government.

2) Contracts between collective farms and the cooperative societies for deliveries at comparatively low prices in exchange for low-priced or otherwise unobtainable industrial goods.

3) ‘Decentralised’ collection by sale on the ‘free’ peasant market at prices which were much higher than those of public trade but without the advantage of receiving ‘deficit’ goods in exchange.

As a transitional solution the system was fairly successful and with the growing importance of (c) it was easily transformed into a normal market organisation.

The still persisting tension between the peasants and the state was now exclusively caused by the lagging behind of consumption goods industries. Thus it was a reasonable hypothesis that the collective farms would be a successful new departure if and when the shortage of industrial goods could be overcome.

In the course of five years the solution of an extremely difficult social problem had been prepared and partly even achieved. The Soviet government departed in everything from the predictions of the Plan—which was right in maintaining that such an achievement could not be attained in an economical manner—but it was forced to adopt a much more dangerous and costly policy by the mistakes of the NEP period. Was the agrarian plan ‘surpassed’, fulfilled or not fulfilled? This question cannot be answered without an estimate of the expenses incurred in the course of agrarian reorganisation.

The underlying motive of the whole process was not the needs of the peasantry nor even that of national economy as a whole but exclusively the interests of the ruling bureaucracy. The human cost of this transformation was appallingly high, for the number of famine victims during 1932-33 alone was estimated at about four millions. Apart from that reorganisation devoured one-half of the insufficient livestock, reduced grain production for some years to starvation level and lowered the yield, the productivity of agricultural labour in all its branches.

In 1930 Stalin was completely right when he called the grain question the fundamental problem of the agrarian system which had to be solved before anything else. The Plan expected an increase in grain output from 73 700 000 tons in 1927-28 to 106 000 000 tons in 1932-33. Total grain production for the five-year period was to amount to 445 000 000 tons. [27] On the basis of the official figures [28] the actual grain output 1928-33 totalled not more than 384 million tons, that is, 60.6 million less than prescribed by the Plan. During the period of the First Five-Year Plan the quantity remaining for home consumption was only 10 per cent higher than during 1923-28, when agriculture was only just recovering from the starvation level of War Communism. In spite of that the export plan could not be permanently fulfilled. Although the price fall on the world market had compelled the Soviet Union to begin with grain exports very early, in 1933 actual exports were only 1.8 million tons compared to 8.0 million according to plan.

In the middle of the deadly grain crisis, between the crop failures of 1931 and 1932, VM Molotov, the president of the Council of People’s Commissars, made the following assertion: ‘… in view of the successful collective farm developments the grain problem is, in the main, already being solved in our country.’ [29]

This utterance, though reckless to an unbelievable degree, contains a certain measure of truth. In spite of all pseudo-scientific theories about the lagging behind of agriculture in comparison with industry, the grain problem was primarily not a problem of production but of distribution, it was a social and not a technical problem although technical progress was bound to solve it in the end. This is quite enough to show the unreal character of the Plan which wanted above all to increase production at once and believed that the worn-out framework of the NEP could continue to serve as the basis for distribution.

Whereas grain production did not make any progress at all, the output of technical crops was certainly greatly increased. Considerable capital expenditure, particularly on cotton growing, gave results which could be called impressive if the disproportion between costs and successes had been smaller. At the end of the First Five-Year Plan the yield per acre of all technical crops was considerably smaller than in 1913 and in general smaller than in 1929. Even more important, the results achieved were far from sufficient to fulfil the plan and to meet the requirements of industry: [30]

This relative failure was bound to react in a very undesirable manner on the production of cotton and linen goods, sugar, soap and margarine.

The complete failure to raise the incredibly low productivity of agricultural labour is the final test for the economic results of the agrarian plan. Mechanisation, chemical fertilisers, agronomical innovations and better organisation of labour in large-scale farms and a capital outlay of 15 100 million roubles, more than double the planned figure, were of no avail against the damage caused by the destruction of the kulak farms and the consequences of compulsory collectivisation. The Five-Year Plan did not contain predictions for the development of livestock, probably because it remained still outside the sphere of governmental action; but the value of animal products was to rise from 4800 million roubles in 1927-28 to 7100 million roubles in 1932-33, that is, by 47.9 per cent. Instead of rising by one-half, Russian livestock fell roughly by this percentage. This was bound to react on the food, leather and shoe industries, whose plans depended on the orderly progress of livestock breeding.

Actual developments were exactly the opposite of those predicted by the Plan which started from the status quo in social relations and prices and assumed that agricultural production would rapidly increase. Actually agrarian society was rapidly transformed, whereas production experienced at first a rapid fall and later on staged a modest recovery, at least in the sphere of land cultivation. The new agrarian organisation promised good results for the future. For the time being, however, the devastations of reorganisation and the decline in output were bound to react unfavourably on the development of industry and the life of the working class. This was particularly unfortunate because the Russian towns were themselves in a process of rapid and perturbing change.

Chapter XVIII: The Reconstruction of Industry

I: Successes and Failures on the ‘Industrial Front’

Although merely technical in character, the problem of reconstructing industry was a task of tremendous dimensions. Even a superficial view of the more important industrial results of the First Five-Year Plan suggests that the Soviet power made good progress in at least part of the most important branches of industry: [31]

Between the last year of the NEP and the last year of the ‘Five-Year Plan in four years’ production increased by 368 per cent in machine construction, by approximately 165 per cent in the generation of electrical power, by 93 per cent in iron ore mining, by 90 per cent in oil and in peat, by more than 80 per cent in pig iron and in coal, by 47 per cent in steel and by 34 per cent in rolled metal. In the most important consumption goods industries, with the exception of the food industry, trends were much less clear. Factory production of shoes was more than doubled, though from very low initial levels and at the expense of handicraft production, output of cotton and woollen goods remained more or less stationary, the production of linen cloth, on the other hand, fell by more than 25 per cent and sugar production by not less than 38 per cent.

These data are probably not exact but they are in the main reliable. The same cannot be said of the figures ‘in prices 1926-27’, which are becoming increasingly frequent in Soviet statistics. A plan of industrial development is essentially concerned with physical things and not with values. It is a plan only if it really permits the development of industry in accordance with its provisions. If all branches of industry are scheduled to reach certain levels, ‘over-fulfilment’ in one branch does not cancel failure in others and it is, indeed, very likely to increase the ensuing confusion. In a plan of values, on the other hand, fundamental industries with comparatively cheap products (for example, coal, iron, etc) may fail to reach the planned levels while other trades with expensive products (for example, machine construction) may over-fulfil their task and thereby cause the Plan as a whole to be over-fulfilled.

A simple comparison between the volume of production in different industries and the value of industrial production as a whole will prove that this actually happened during the First Five-Year Plan: [32]

During the years 1928-33 the value of Group A production increased by not less than 175 per cent. This rate of growth was considerably surpassed by machine construction—but it was not even reached by any other branch of industry. This average, if it was a true average at all, is not at all representative of real facts and probable trends. The same is, of course, true for the supposed increase by 60 per cent averaged by Group B, where some successes in the production of expensive food products (canned goods, etc) exerted an excessive influence on the average while the available quantities of many essential industrial goods remained unchanged or were actually reduced.

As the reconstruction of heavy industry was the real centre of the Plan it may be assumed that its demands in this field were serious minimum demands. It is, therefore, interesting to find that the development of Group A industries was very different from the Plan.

Officially the Plan was fulfilled after four years and three months, on 31 December 1932, with ‘93.7 per cent’. At this time only two branches of industry produced more than their planned output, two other branches produced between 80 and 90 per cent and the rest less than 80 per cent. Even at the end of 1933 the Plan for Group A industries as a whole was far from being fulfilled, and its predictions for the most important branches of Group B (consumption goods) industries were still far from being realised at the end of the Second Five-Year Plan! As a matter of fact a record expansion in some branches of heavy industry, in particular machine building, took place while the output of consumption goods remained probably just stationary while food supplies actually decreased.

These facts are not at all surprising; the Communists had tried to surround the hard necessities of industrialisation with an ‘ideological’ cloak of bright promises which was torn off piece by piece, the further Soviet economy advanced on its thorny path. The Plan as a whole was already stultified by the bureaucratic blindness of the Soviet power to the impending struggle with the peasants. Furthermore the ‘qualitative’ demands of the Plan were far too ambitious and the quality of manufactured goods was constantly lowered. These inherent weaknesses of the original plan were further emphasised by the upward revision of its most important features wherever a momentary success had been reached. These outgrowths of bureaucratic imagination might be overlooked if they had not exerted a pernicious effect on the day-to-day work of industry, the quality of its products and the health of its workers.

Below the propagandist and ideological superstructure, the First Five-Year Plan contained, as its rational core, the programme of creating a native industry of machine construction as the starting-point for general industrialisation. It is still hardly possible to ascertain the exact state of things in this field at the end of the first Plan period. Machine construction as a whole grew by leaps and bounds. Its share in the total value of industrial output rose from 14.8 per cent in 1929 to 25 per cent in 1932 and 26 per cent in 1933. [33] In spite of our knowledge of these broad facts and of a great number of concrete figures it is practically impossible to get a concrete idea of the all-round increase in machine construction—above all in consequence of the growing importance of military factors which were justifiably kept secret.

After all these reservations, it cannot be denied that machine construction was greatly extended in scope and improved in equipment. New large plants were built and opened in quick succession; after some time, generally much later than officially anticipated, they started with the production of useful instruments which permitted some other branch of industry to go ahead with production. Turbines and generators for electrification, boilers and motors moving Russian machinery of the most varied kind, from motor-car manufacture to cotton weaving, replaced antiquated plants and imported products. The shortage of tools and instruments was still appalling—partly in consequence of the bureaucratic management of industry, which was more concerned with fulfilling its rouble plan than with producing those goods which were most urgently needed—but these defects were mended as were others before and afterwards. The fundamental success of the Soviet power in the reconstruction and creation of a strong machine-building industry, perhaps in engineering as a whole, is a solid achievement.

Thus it must be said that some parts of the industrial Five-Year Plan were fulfilled while others remained untouched. The Plan as a whole was fulfilled neither in four nor in five years, neither to 100, nor to 93.7 nor even to 80 per cent, because it was no plan, no system of rational interdependent orders to be applied in practice by technical experts, but an ideological reflex of the real problems besetting Russian economy and its bureaucratic leaders on the screen of a better future.

What, then, is to be thought about the boasted success of the Five-Year Plan 1928-32; was it merely another propaganda lie of the Communists? However simple this conclusion may be from the obvious contrast between planned and real developments, it is nevertheless wrong. The Five-Year Plan contained many elements of wishful thinking which were refuted without mercy by the course of events. Nevertheless, the Communists could either succeed in overcoming the great obstacles to industrialisation or they could fail to do so. Industrialisation could either be achieved in the teeth of peasant resistance against new deprivations and in spite of the terrible fall in the living standard of the workers, or it could break down. The Soviet regime could either solve its problems or be crushed by them.

This was not a question of ‘liquidating’ the goods famine in two years, of increasing real wages by 60 or 70 per cent and of realising the dreams of the working class; it was a question of bitter death or survival for the bureaucratic regime which had grown up on the basis of the great achievements of the October Revolution. And in this struggle the Soviet power remained victorious. It succeeded in creating a basis for future industrial development—but not more. It compelled the peasants to submit to industrialisation and transformed the market from an elemental force into a submissive servant of its own distribution policy. For this purpose it was compelled to ‘soak the peasants’, rich and poor, and to accept the catastrophic consequences of a sudden fall in food production. It had to renounce for the time being the intention of increasing the output of consumption goods to anything like the necessary minimum and maintained the working class in a state half-way between malnutrition and chronic hunger. These facts did not remain without serious social and political consequences and were a heavy mortgage on Soviet Russia’s future, but the immediate problems of the ‘prewar level’ under NEP conditions were solved. The Five-Year Plan was not fulfilled, but its goal was reached.

II: Planned Economy and the Problem of Money

The Five-Year Plan did not contemplate a fundamental change in the financial system developed during the NEP. National economy was to be reconstructed with subsidies from the budget as well as with its own profits; the remainder was to be raised by more or less orthodox means through the credit system. Relations between the state and the peasants were to be improved by a 20 per cent rise in the purchasing power of money, primarily owing to the expected fall in industrial prices, and the ‘scissors’ were to disappear completely.

This desirable state of affairs was to be reached by reducing production costs, that is by raising the productivity of labour; the savings effected in this way were to be divided between the workers and peasants, in form of higher earnings, and the government. The planned all-round increase in the productivity of industrial labour was not less than 110 per cent. According to the—certainly not over-pessimistic—official data the actual increase was 38 per cent. [34] The yield of agricultural labour actually declined in spite of the lavish capital outlay of these years. The material consequence of this fundamental failure was the under-fulfilment of most production plans and the fall in the standard of living of workers and peasants, often even below the subsistence level. Its formal consequence was the complete breakdown of the financial plans.

In the beginning of the NEP the stabilisation of the currency had been one of the most important economic tasks. During the period of rehabilitation money matters were not always correctly handled but they did not seriously disturb the recovery of industry and agriculture. The period of reconstruction brought financial problems of a new kind because for the second time in ten years Soviet economy departed from the principles of a money economy.

If the special conditions of inflation are disregarded, effective demand, that is, demand backed by money or credit, is, under normal conditions, always able to stimulate the supply of the physical goods required. Investment problems are, therefore, mainly problems of financing. In the Soviet Union the difficulty at the end of the NEP can be compared only with the rare cases of full employment in capitalist countries when the material limits of industrial expansion have been reached and further supply of money or credit does not lead to increasing production but only to rising prices. Normally capitalist industry is ready to satisfy every effective, financially sound demand, however irrational or injurious its satisfaction may appear from the standpoint of society as a whole. The Soviet government could not hope to satisfy the legitimate and urgent demands of Soviet economy except by a material reconstruction of the whole economic system.

Money as known in modern economy, is used for two fundamentally different purposes. It is the immediate aim of ‘business’ in quest of profit but it is at the same time the most important, indeed the sole generally applicable, measure of costs in ‘industry’, to use the simple and clear distinction adopted by T Veblen. In the capitalist system, industry and national economy as a whole is subordinated to business, and the expansion or contraction of the credit system exerts a wholly irrational influence on the volume of physical production. But as far as money is a measure of the amount of energy required for different purposes, and therefore a measure of costs in general, no economic system based on general division of labour can afford to disregard it. At the end of the NEP the Soviet government was more or less independent of money and credit in the capitalist sense because it was directly controlling the activities of urban economy. Nevertheless it could not afford to do without a general measure of costs because the reduction of costs was one of the main needs of the Five-Year Plan. Thus a reorganisation of the credit system, which had been simply an adaptation of ‘orthodox’ finance to Russian circumstances, became necessary.

During the NEP the credit system was less concerned with the granting of long-term investments than with bill brokerage. In this manner the actual control of industry remained, of course, outside the sphere of the banking business; only after the commercial transaction had been completed, the bank was called in to give an advance on the proceeds of the sale. The reconstruction period had different material aims and needed a different credit policy. The planning of production was to overcome the growing shortage of all sorts of goods by making the best possible use of them. Every single transaction between the more or less independent parts of state economy had to be scrutinised from this angle, and the credit system was the best instrument for this purpose. On the other hand, lack of working capital was to be no further handicap for a concern which was physically capable of increasing production. All financial shackles had to be broken once for all. The banks were no longer permitted to refuse credits only for financial reasons. The credit system was to become an instrument of governmental control over the transactions and the efficiency of state economy, a central accountancy with disciplinary powers over the economic system.

The first step towards this aim was the concentration of all short-term credit facilities in the hands of Gosbank. After some further measures of minor importance, the whole credit system was reformed by the decree of 30 January 1930. Credits between state and cooperative enterprises were forbidden and all sales were to be made on a cash basis. The buyer had to apply to Gosbank for credit before the transaction, whereas in earlier times the seller tried to rediscount the buyer’s acceptance post festum . Instead of bills of exchange bank overdrafts became the instrument of credit transactions. Gosbank simply debited the account of the buyer and credited that of the seller.

This reform, though sound on principle, had unforeseen economic consequences. The connection between production and sales was completely severed. On principle the advance made by the bank had to flow back regularly after the sale of a corresponding quantity of goods but actually it was impossible to distinguish between repayments for different advances, and the indebtedness of industry to Gosbank grew in a dangerous fashion. The tempo of inflation, which even before these measures had been considerable, was suddenly intensified and the government became slowly aware that it was necessary to weaken, and finally to sever, the connection between money as a source of purchasing power and money as a measure of costs. Industry had to remain subject to the ‘control of the rouble’ after having been freed from its ‘dictatorship’. The banks had to be transformed into a general accountancy department and had to be enabled to exert effective control over the costs of each enterprise. This aim was to be achieved by the establishment of detailed financial plans for each enterprise and the banks—particularly Gosbank—had to prevent deviations from their provisions. The practically most important plan was the plan of wage payments. In this sphere excessive demands by the managers of industry were particularly frequent and particularly dangerous. They were simply a consequence of the non-fulfilment of the Plan for the increase in the productivity of labour and the expansion of the wage fund was bound to create inflationary developments in retail trade where it was more difficult than anywhere else to prevent them.

The organisational measures of the government were at first only moderately successful, but in view of the danger of unlimited inflation the Soviet power soon applied more effective methods. The control of the factory managers by the banks was to be supplemented by the financial self-interest of the managers. Reduction in production costs (mainly realisable only by a strict wages policy) was rewarded by money premiums. The principle of this policy was exactly that of directors’ fees in capitalist industry where these fees are dependent on the size of net profits; although only insignificant fractions of total profits, these amounts are generally very large additions to the salaries of the leading officials. Thus the ‘Socialist’ principle was applied to the manager for his work in keeping costs down and the slogan ‘to each according to his work’ was extended to a sphere where the plausible became absurd. The social position of the Red Director was improved by granting him considerable cash rewards and, most important of all, he became financially interested in keeping the wage bill as low as possible.

The fate of money as a means of circulation offers only minor points of interest. Only the blindest and not very clever propagandists of the Russian regime cared to deny that the currency depreciated from year to year. The actual extent of this inflation cannot be exactly indicated. According to the prices prevailing at the end of 1932 on, the ‘free’ market, the value of the rouble was then hardly one-tenth of what it had been four years earlier; according to ration prices, depreciation was certainly not so strong. The devaluation of February 1936 fixed the rouble at about one-quarter of the official value of the NEP period—and afterwards Soviet Russia remained the most expensive country for tourists.

The consequences of inflation were grave but by no means catastrophic, because the Soviet power had asserted its independence of the ‘free’ market. With the suppression of the NEP the connection between money and investment, never very intimate since the October Revolution, completely disappeared. Money was maintained only as a supplement to rationing, it was again only the ‘sign’ (znak ) assigning to workers and peasants a certain—or uncertain—quantity of necessities. Inflation was therefore primarily felt in the sphere of peasant and working-class consumption and its worst consequences were alleviated by the extension of rationing which was, in its turn, inevitable owing to the clamouring contradiction between the production, price and wages policies of the Soviet government, that is, to the impossible promises of the Plan. The discrepancy between formal and real purchasing power was later on reduced by the new course of economic policy. Since 1931 ration prices were repeatedly and substantially increased and ‘commercial’ shops were opened by the state selling unlimited quantities of goods at astronomical prices. Another method of absorbing the surplus purchasing power in the hands of the people, though mostly at the expense of the poorer groups, was the system of compulsory ‘voluntary’ state loans which may have accounted for three to four weeks’ wages annually.

All these measures were extremely onerous to the individual consumers, and particularly the poorer ones, but they served their economic purpose. The government succeeded in confining the influence of money to the economic sphere of individual consumption and prevented the collapse of the currency and credit system.

III: The Economic Organisation of the First Five-Year Plan

The details of industrial organisation during these years are of no importance for the social development of Russia. Industrial management was one of the organs of the ruling bureaucracy, and the workers were not less impotent in industry than in politics. Their rulers tried to stimulate their efforts by production conferences and by propaganda for workers’ inventions, but relations of power remained unchanged. The Supreme Economic Council was replaced by a normal ministry, the People’s Commissariat of Heavy Industry. The structure of the economic ministries remained more or less unchanged up to the end of the Second Five-Year Plan, when the People’s Commissariat of Heavy Industry was split into three parts—Defence, Machine Construction, and other branches of Heavy Industry.

The technical success of the economic administration was obviously moderate, and innumerable reshuffles went on all the time. The bureaucracy increased in numbers, but, it would seem, its inefficiency was still considerable. At first the independence of the trusts was curtailed and centralisation was once again the watchword. The results were far from satisfactory:

At the end of 1929 we created huge industrial corporations with the object of strengthening the technical and business leadership of the factories. As a matter of fact the very opposite took place in many instances… In 1931 our industries were quickly reconstructed, the huge corporations were decentralised… This produces the desired results. [35]

As far as the desired results are concerned, Ordzhonikidze’s optimism was rather premature. Two years later Stalin found it necessary to say: ‘The bureaucratic method of the People’s Commissariats managing national economy…, is not yet liquidated by a long way…’ [36] Nor was it ever to be ‘liquidated’ at all. However powerful a bureaucracy may be it cannot remain what it is and change at the same time.

Much more important were the changes produced by the government in the organisation of the factories themselves. Owing to the introduction of shift work and the uninterrupted week, the same tools were used by different workers, and the absence of personal responsibility combined with the speeding up of production caused considerable damage. These objective factors and the dangerous fluctuation of labour, caused by intolerable living conditions in many regions, made it impossible to increase the productivity of labour to the prescribed extent.

In view of the failure of propaganda and administrative measures, the government at last applied different methods. Ordzhonikidze proposed and the Communists accepted:

… to advance to the forefront the role of the foreman and brigade instructor as the immediate organisers of labour processes (extending their rights), carefully selecting the staffs of the foremen and brigade leaders, providing them with better material conditions and the necessary prestige in shop and enterprise. [37]

The authorities strengthened the position of the superior official in order to increase the productivity of labour; by giving him cash rewards for the fulfilment of his tasks they made him directly interested in the amount of work done by ‘his’ workers.

The relations between common labour and the powers that be were completely adapted to those of the capitalist system, but minus independent unions and minus some of the rights possessed by labour in many more advanced countries. An even more drastic step was the control over the daily life of the workers exerted by the management through its newly-acquired power to determine their food supply:

The reorganisation of the workers’ supply in the factories had as its direct aim the improvement of supply and the prevention of distribution to loafers and drifters who did not really work in the factories, and the enforcement of the principle: ‘He who does not work, neither shall he eat.’ [38]

Thus the Soviet power assumed complete control of the everyday life of every individual worker. It could reward better achievements—but not only them—by giving better food and more clothes, it could punish incapacity, or refusal to submit to the rising demands of the industrial management, by taking away the right to a warm dinner and to a bedstead in an overcrowded room. The goods famine and the outrageous prices on the free market compelled the workers to accept this slavery without protest, and this system, though provisional, completely broke the remnants of working-class self-respect.

Yet these measures, severe as they were, did not achieve their aim; the disappearance of a free labour market and the intolerable living conditions in many industrial centres induced the government to reintroduce at the beginning of 1933 (when the transition to Socialism was officially almost completed) the labour passport which had been abolished after the revolution as the best hated symbol of working-class slavery.

The shortage of food and manufactured necessities created great difficulties for the system of distribution. The rationing system had quickly to be extended from bread to the most important foodstuffs—with the exception of potatoes—and industrial goods. Before the summer of 1929 bread, sugar, tea, semolina, vegetable oil, butter and textiles were all rationed, and fish and meat soon followed suit. During 1931-32 the cooperatives sold one-half of their turnover of industrial goods and even more foodstuffs against ration cards (talons).

The work of the cooperatives, which were the principal organs of public retail trade, was even worse than before. Already in 1930 Stalin had reproached them for abusing their monopoly against the consumers, and this state of affairs deteriorated even further after the complete destruction of private trade. Their monopoly and the pressure of the surplus purchasing power of the consumers bred corruption and profiteering. Finally, while private trade remained strictly forbidden, the state opened ‘commercial’ shops where unlimited quantities of many articles could be bought at exorbitant prices. The number of these state shops increased rapidly from only 14 700 in January 1931 to 70 700 two years later. [39] Nevertheless the number of selling points for the use of the public remained greatly below the level of the NEP. Although public trade opened 155 700 new shops between 1928 and 1932, this was not enough to replace the 322 824 private shops which were closed by their owners or by the authorities. [40]

A certain supplement to cooperative and state trade may be found in the direct transactions between peasants (or collective farms) and individual consumers. Before 1932 the fate of this free market was very troubled, but in the spring of that year it was definitely recognised under the name of ‘collective farm market’ as one of the concessions to the peasants. Its guiding principle was and is the absence of private middlemen who are strictly persecuted as ‘profiteers’ or ‘speculators’; the object-lesson of NEP trade remained unforgotten by the government.

Whether in a monopolistic position or subject to a modicum of competition, the cooperatives worked miserably badly. It is of course impossible to decide the different degrees of responsibility for the wrecking of supplies of potatoes, vegetables, eggs and other perishable foodstuffs. Though the state of transport and the bureaucratic mismanagement of national economy as a whole, the disadvantages of rationing and the lack of foodstuffs go a long way to explain this state of things, the government’s indifference to the needs of the masses and the manner of their satisfaction is nowhere better expressed than by the careless and callous way in which public trade treated its ‘customers’ as troublesome beggars.

IV: The Mobilisation of the Working Class

The Five-Year Plan provided for an increase in the number of wage-earners from 11 350 000 in 1928 to 15 764 000 in 1933. [41] The number of workers in state industry was to increase by 33 per cent, and, in view of the rising productivity of labour, total industrial production was to rise by 179 per cent. [42] As far as unskilled labour was concerned, the authors of the Plan justly felt that it could not be difficult to find 3 500 000 people among the rural surplus population and the 1 500 000 unemployed.

On the other hand, Gosplan stressed the difficult problem of educating the necessary number of engineers, technicians and skilled workers in so short a time: [43]

With large-scale industry employing not more than 2 632 000 workers in 1927-28, it was practically impossible to educate more than one and a half million of skilled workers in the course of five years.

And here the Plan itself was, for once, too modest. It was satisfied with this comparatively small increase in the number of workers because it hoped that the productivity of their labour would enormously increase owing to the use of modern machinery. This assumption was completely belied by the outcome, and the Plan for the number of workers was ‘over-fulfilled’ by a wide margin, although production lagged behind. In spite of a slight contraction in 1933, the number of wage-earners increased between 1928 and 1933 by 10 300 000 instead of 4 500 000, the number of industrial workers by 92 per cent instead of by 33 per cent. [44] This development was responsible for an acute labour problem completely unknown to the authors of the Five-Year Plan.

Most of the additional ten million workers were peasants who had never before known anything about mechanical industry. Gosplan could not even say how the additional skilled workers required by its too modest estimates were to be educated; it was, therefore, even more difficult to find the hundreds of thousands extra NCOs and officers of industry whose services were necessary in order to compensate industry for the slow increase in the productivity of labour.

The first consequence of this failure was a surprising achievement—the abolition of unemployment, the political advantages of which more than balanced its economic drawbacks. The demand for industrial and building labour was extraordinary and the collectivisation campaign made an end to ‘flight from the land’, and induced many poor peasants to go back to their village and to get their own back on the kulaks .

In the backward districts where many of the large new constructions of the Piatiletka were built for technical or strategic reasons, living conditions, and particularly housing, were intolerable. The workers were prone to believe rumours that life was easier in some other place and moved from town to town in order to find better food, better housing and higher wages. This mass movement of labour was a dangerous phenomenon, and during new constructions or in special areas, as for example, the Donets Basin, the problem assumed grave proportions. The government tried to counter it by measures of increasing severity; it advocated and often enforced long-term labour contracts between the workers and the factory management. This policy was the direct outcome of the failure to improve living conditions and thereby to attract and retain the services of the large number of workers required for new construction and factory work. While it sufficed for the maintenance of the supply of unskilled labour it was, of course, incapable of inducing skilled craftsmen to make the highest possible efforts. For this purpose the government found it necessary to offer special material rewards:

In the matter of wages we are still struggling hard to overcome the incubus impending real progress, the unfortunate wage levelling tendency… Such wage levelling has nothing to do with Bolshevism. Who is going to do the heavy and dangerous work in the metal industry or in the mines if his pay is going to be lower than that of the workers employed on lighter jobs? This is one of the causes of the great fluidity of labour, but we are determined to remedy this. [45]

During the early NEP wages rose much more in light industry than in heavy industry. During the period of reconstruction this anomaly was abolished. Between 1928 and 1932 wages in six important branches of heavy industry increased by 65 per cent, while the corresponding increase in four branches of light industry was only 42 per cent. Even more important was the difference in quantity and quality of the rations for workers in important heavy industrial plants as compared to those in textile industry, etc.

The crucial problem of the Plan was the increase in the productivity of labour. The Plan hoped to achieve this aim by rapid mechanisation; actually intensification (speeding up) played by far the most important part. This was only natural because the productivity of labour was scheduled to increase long before the building of more modern factories could be finished. The interruption of the productive process was to be abolished by the introduction of night shifts and the ‘staggering’ of rest-days. Although the workers were—alas, only temporarily—compensated by the transition to the seven-hour working day and the shortening of the working week to five days, the inconveniences caused by this new order were very considerable, and after some years the government had to go back to the principle of a common rest-day for the whole population, leaving the workers with the net gain of one free day every month. All in all, the Communists behaved in this delicate question as tactfully as possible.

On the other hand, the government soon found itself in conflict with the interests of the workers about the question of intensified labour. At first a great propaganda campaign was launched which was to introduce ‘Socialist competition’ among the workers. Starting from competition between districts and enterprises which challenged one another to fulfil their respective plans in a certain time, it was developed into competition between groups of workers within the same plant. These groups were called ‘brigades’, and the best brigades were rewarded by premiums in money or in kind which had the effect of substantial wage increases for these ‘shock’ workers. The best workers did not want to lose their chance in this competition by working together with less efficient colleagues, and formed ‘shock brigades’ working better than the average workmen, receiving higher wages, and in the end raising the ‘norm’ of production to a higher level.

These measures were sound attempts to exploit the positive social feelings of the workers in order to raise the productivity of labour; a much more disputable method was the discrimination against workers who did not reach the results demanded by the Plan. The Udarniki (shock brigaders) were praised and fêted, their photographs could be found in the papers, and their names were well known all over the country—at least for some time—but inefficient workers were not simply left alone with low wages and no consideration. The factory wall papers ridiculed their work; their names and benches were adorned with caricatures, with pictures of the snail, turtle, etc, and sometimes they were even dismissed or transferred to lower positions with smaller wages.

These psychological methods were from the very beginning used together with material incentives which became much more important after the propaganda methods lost their novelty value. The use of piecework was further extended, and it became the dominant wage system of the reconstruction period. The shock brigades received higher basic wages, and were furthermore rewarded by considerable premiums in money and in kind which were distributed among the members of the brigade. The material conditions of the workers were, however, determined not so much by the amount of their cash incomes, but by their position in the hierarchy of rationing. The social and economic consequences of this partial return to wages in kind were extremely important and not a little paradoxical.

On the one hand, it was pointed out by acute observers that the inequality in real incomes was greatly reduced by the rationing system as such and by the fact that the prices of the free market were exorbitant:

A man who gets 200 roubles a month does not, in actual value, get twice as much as a man who gets 100 roubles—and still more, a man who gets 800 roubles does not get eight times as much. [46]

It was especially noted that this system worked to the disadvantage of professional people who may have earned high rouble incomes, but who could not buy in the ‘closed’ cooperatives of the large factories where prices were extraordinarily low.

… another serious drawback of the rationing system was that the nominal amount of his money wage was of less importance to the worker than his ration category. Also, since as a matter of principle manual labour was rated higher than technical skill, there was no great inducement for the worker to improve his qualifications and become engineer or technician… [47]

But this medal had also its reverse. The shortage of food and consumption goods, the reduction of working-class consumption to the subsistence level caused all differences in the manner of satisfaction of these primitive wants to come out in grotesque clearness and force. On the dark background of generally insufficient food and bad clothing, better food and better clothes formed a striking contrast. After some time of irresolution, the social and economic policy of the government consciously exploited these simple psychological facts in order to form the elements of a technical working-class aristocracy which was bound to develop in the course of the progressing industrial revolution.

In view of the low absolute level of the standard of living, propaganda methods, including the incentive of acquiring social honour and avoiding social disgrace, were bound to be ineffective in the long run as compared to material rewards and material punishments. The general shortage of food and consumption goods prevented the creation of a special luxury demand, but the government developed a complicated system of differentiated closed shops and consumer castes which was partly used for the needs of the bureaucracy, but partly for attracting and distinguishing the services of skilled workers who were particularly useful for industrial reconstruction, and whose position was strengthened by the breakdown of the Plan in the sphere of industrial quality and the rise in the productivity of labour.

This energetic and partly successful attempt to overcome the backwardness of Russian industry created new social problems of great importance. In order to create an efficient industrial system the Soviet power established new social privileges and sanctioned the creation of new social groups. This was very dangerous in itself, but it was only by the changes taking place during these years within the ruling bureaucracy itself that this process became permanent and irrevocable.

Chapter XIX: Above the Classes

I: The Role of the Executive Power

In the course of only five years the reorganisation of agriculture and the reconstruction of industry was partly prepared and partly completed. The contradiction between primitive agriculture and backward industry, on the one hand, and the political and social power of the revolutionary forces, on the other, could be finally solved. Russia’s post-revolutionary society was free from the rule of a handful of businessmen, and the ‘wells of social wealth’ could irresistibly flow forth… Now was the time to realise Lenin’s last dream—more than one hundred thousand tractors tilled the soil, more than ten billion kwh of electricity replaced human effort by mechanical energy, and the peasants were no longer bound by their individual farming methods to backwardness and greed, but cultivated the land collectively and with the help of modern machinery…

The real situation in Russia at the end of 1932 was a grim travesty of this flight of imagination of a revolutionary Doctor Faustus. Famine in the Ukraine and the Northern Caucasus was foreshadowed by constantly recurring rumours, the urban population lived in a state of chronic malnutrition and nervous tension, and—the unstable balance of power during the NEP between the Soviet bureaucracy, the workers and the peasants had been replaced by the rigid and complete subordination of the whole people to the despotic rule of the bureaucracy.

This process was probably the most intricate of the dramatic and surprising developments of this period. By deciding to break the NEP dilemma by force, the Soviet power entered a danger zone highly charged with electrical tension. For the new organisation of public distribution replacing the market and controlling the life and work of one hundred and twenty million peasants a huge bureaucratic system had to be created. The struggle against the kulaks confronted the Soviet power with the problem of police supervision of a whole social class, an executive task of unheard-of dimensions. The GPU now became the ultima ratio of the collectivisation campaign. The functions of the police were widened to an extent unimaginable in earlier times. The supervision of the population, the organisation of secret trials for political criminals, the execution of self-despatched death-warrants, and even the management of enormous construction works (White Sea Canal) by hundreds of thousands of political prisoners was undertaken by the Secret Police.

In the towns the tasks of the GPU increased as well, though not to the same extent. The burdens of the ‘Plan’ were sufficiently great to increase the number of grumblers and dissatisfied elements. Especially the ‘intelligentsia’ suffered severely under the lower living conditions and the higher claims on the labour of the ‘experts’. However cautiously the official reports about sabotage and ‘diversion’ must be regarded, it cannot well be doubted that many servants of the Soviets, mostly among those with different social antecedents, worked sceptically, listlessly and badly. The GPU used more refined methods of observation of an increasing number of people in order to discover real delinquencies or to find plausible explanations for failures and breakdowns which were actually a consequence of bureaucratic mistakes. In spite of the prevailing fear of the all-pervading GPU, direct police terror against the workers was comparatively rare during these years, and the government chiefly relied on the work of factory managements, trade unions and local Communist ‘cells’ in its relations to the working class.

The administrative machine grew with the progress of industrialisation and the creation of the collective farm system. The power of the Red Army grew at the same time owing to the progress made by heavy industry and the building of military machines which was an important, though as yet not the most important, branch of machine construction. Police and army, on the one hand, and the economic bureaucracy, on the other, were the body of the bureaucratic dictatorship whose nerve system was the Communist Party which secured its subordination to the orders of the brain, the numerous cells of the Kremlin under Stalin’s direction.

During this period the living conditions of the masses deteriorated sharply. The growing stress and the growing sacrifices demanded from the masses required an absolutely reliable executive power with unimpaired striking force in case of emergency. If the living conditions of the bureaucracy had deteriorated to a similar extent as those of the masses its reliability as an instrument of the government would have been destroyed; for this reason particularly the armed forces had to be supplied much better than the rest of the population. The GPU shops belonged to the best of the country, similar, and partly even better, shops existed for the highest officials of state and party. Although supplies were nowhere excessive or even ample according to Western standards, these facilities raised the standard of living of these privileged groups very high in comparison with the level of subsistence or semi-starvation of the workers and the mass of the peasants.

The government succeeded in maintaining the loyalty of police and army in all difficult situations, but the Soviet Union had to pay a high price for this achievement. From a simple instrument of the Soviet power the executive was transformed into a privileged group which, in its living conditions, had nothing in common with the working class; and which was firmly allied with the ruling bureaucracy which secured its privileged existence. The bureaucratic rulers of the country could be well satisfied with this development, at least as long as they succeeded in preventing the leaders of the army and police from cherishing higher ambitions, but the chances of Socialism in the ‘Socialist country’ fell completely to zero. The executive power, on the other hand, from now on had a vested interest in the maintenance of the existing state of affairs; its struggle against oppositional movements was therefore not only an expression of its professional pride and honour, it was an embittered war against the enemies of its position—a fact that ought to be borne in mind for later use. Originally created to protect a policy essentially independent of police interests, the executive power became an independent force whose activities were themselves determining a certain political line.

The police remained a devoted servant of the Soviet bureaucracy and its interests, but the Soviet state itself was gradually changing into a dictatorship in the service of the police.

II: The New Social Policy

During the first few years of reconstruction ‘wage levelling’ was very much in use, partly owing to the upsurge of primitive popular enthusiasm, partly owing to the still undiscriminating rationing system. After 1931 this tendency was intensely attacked by the government, and a new differentiation of wages and salaries was prescribed from above. The wage level in heavy industry was raised considerably in advance of that in light industry, and at the same time the wages of udarniki , foremen, masters, managers were raised all over the country, the highest officials were granted a share in the profits of their enterprises, and later on the income limit for Communists was altogether abolished.

Was this policy a necessary outcome of economic conditions or was it simply a device of the bureaucratic rulers to reinforce their own position by creating a working-class aristocracy? As usual, the question is far too simple for a simple answer. The Communists, from Stalin down to the last literary propagandist of the Soviet regime, based their policy on Lenin’s interpretation of the important remarks made by Karl Marx in his criticism of the Gotha programme of the German Social Democratic Party (1875). According to Lenin’s irreproachable interpretation in State and Revolution (1917) Marx distinguished between ‘Socialism’ as the lower phase of post-capitalist development, marked by the continued rule of ‘bourgeois law’, that is, by the principle that inequality is just for unequal persons (from each according to his ability, to each according to his work), and between fully-fledged ‘Communism’ (from each according to his ability, to each according to his needs). This distinction is theoretically and practically wise and important, and it remains to be seen whether it really covered the practice of Soviet policy during the First Five-Year Plan.

The principle ‘from each according to his ability, to each according to his work’ certainly covers the general use of piecework. Although trade unions all over the world reject at least some of the typical characteristics of this system, conditions in Soviet Russia were fundamentally different from those in capitalist countries, and there was much more scope for raising the intensity of labour without grave consequences for the health of the workers. It appears, however, that these limits were soon passed and, in spite of its theoretical justification, piecework was hardly less burdensome to workers in Soviet industry than in other countries where the trade unions are too weak to protect the workers.

But the importance of money wages was strongly modified by the widespread rationing of necessities. The workers were, again, mainly interested in their ‘payok’, their ration, the quality and quantity of their warm dinner in the factory dining-room, occasional grants of clothing, stay in a rest-home or sanatorium, and, in larger towns, cultural benefits. The rationing system of the Piatiletka was distinguished from that of War Communism by its carefully weighted differences for different workers. Apart from ‘closed’ shops for party and state officials, etc, even within the ‘closed’ shop of an individual enterprise the distribution of goods was by no means equal. Deficit goods were sold only by special permission of the management to workers with good records. The skilled artisan or the udarnik could hope to get his great-coat or his boots much earlier than the labourer. In view of the insufficient supplies of these goods, ‘earlier’ was in many cases equivalent with ‘exclusively’. The holder of an udarnik ration book could enter a shop without waiting in a queue—unless supplies did not even suffice for the privileged customers. In the factory dining-rooms the management, higher officials and udarniki received more and better food in better surroundings than common labourers. The difference between rich and poor, in a money system certainly much greater but fluid and shapeless, was fixed into a rigid system of preference and precedence. The actual privilege of the wealthier person on the market was replaced by the legal claim of the political leader, the secret policeman, the skilled workman and administrator, to better food and other supplies. This development may have been inevitable, but it created new groups of privileged persons, and there was no guarantee for the abolition of these privileges in better times.

How far did these privileges really reflect differences in social value and social importance? The social location of two important privileged groups is easy to determine. The GPU had certainly decisive social tasks—but they were of great importance only to the ruling bureaucracy and not at all justified by the ‘Socialist principle’. On the other hand, the use of foreign specialists was unavoidable for the time being—however strongly certain personal selections and salaries may be criticised. Their privileges were generally a consequence of differences in the national living conditions and justified by their work.

Apart from the ruling bureaucracy and these two groups, privileges were granted to the skilled workmen and the executive and administrative personnel of national economy. In the beginning these privileges were granted to urgently needed workers in key positions who had to be protected from the consequences of the general fall in the standard of living, and as a general rule it may be fairly assumed that at the beginning of this policy the remuneration of the workers was roughly proportionate to the quantity of their work. But the upper millstone of rising intensity of labour and the lower millstone of deteriorating living conditions caught the working class and tormented it without mercy. The food of the worker was lacking in vitamins, fats and protein, and did not yield enough energy for a day of strenuous work. He lived in overcrowded rooms, and used many of his free hours standing in queues before empty shops, and his work became thoughtless and defective. The means of transport were pathetically insufficient for the needs of the masses who arrived late in the factories and broke the strictly enforced rules of labour discipline. Unjustified absence from work, slow and defective work was punished by the management by reducing food rations below the normal; thus the evils which ought to have been prevented were created on an even larger scale. The results of the disciplinary action taken against ‘lazy’ workers and ‘loafers’ were disappointing because these delinquencies were caused not by malevolence but by poverty and exhaustion.

On the other hand, a thin layer of workers was partly exempted from these privations—in the beginning undoubtedly owing to their better work. Thus they were able to work better than the rest of the workers who lived in conditions which were simply too bad to enable them to work properly. Whatever may have been the initial intention of the Communists, during the years 1931 to 1933 a vicious circle developed where the condition for better work was better living conditions, while the latter could be had only by better work. Thus better work no longer depended on higher personal sacrifice; on the contrary, the worst paid and worst treated workers may have suffered incomparably more than their more successful udarnik colleagues. In spite of that, the aristocracy of workers remained up to the end of this period an aristocracy of merit, and was still widely different from a mere bodyguard of the bureaucracy. Nevertheless it was a privileged group and, for the time being, quite effectively closed to additions from below. Although, in spite of the general exhaustion, many individuals succeeded in improving their qualifications and joining the better treated working-class élite , the masses were excluded from this possibility above all by their miserable conditions.

The answer to our question is, therefore, at least threefold. Some privileges, for example, those of the foreign specialists, were roughly an expression of the ‘Socialist principle’, and therefore transitory. Others, as the privileges accorded to the bureaucracy and its repressive organs, had nothing whatever to do with this principle. Others again, as those of the skilled workers and of the executive and administrative personnel, were the effects of economic necessity but the cause of a new social differentiation. An alliance between the ruling bureaucracy and these privileged groups of the working class may have been in preparation, but it was not yet an important political factor. But it is true that the ruling bureaucracy which before had been distinguished from the rest of the people much more by its power than by its material position now became for the first time the main privileged group in the country—a fact which caused many old Bolsheviks serious heartburnings and created a psychological stimulus for the formation of a working-class aristocracy.

III: The Bureaucracy and the Progress of Soviet Society

No judgement about official Soviet policy during these years must neglect the fundamental fact that the Soviet power acted in a grave emergency situation whose elements, though partly the results of past mistakes, were independent of its will. The two most important objections to Soviet policy may be summarised as follows.

1. In agriculture the government delayed energetic action against the kulaks until their resistance could be broken only by brutal force; its bureaucratic blindness caused the application of similar coercive measures to the mass of the peasantry, and thereby was responsible for terrific injuries to Russian economy.

2. In industry the Communists were afraid to put the facts before the workers, and therefore created a totally unsuitable atmosphere for the solution of the real, though unpalatable, problems.

3. As a direct consequence of this moral and political cowardice, the great advantages of planning were completely lost because the Five-Year Plan was no real plan at all.

4. Minor avoidable mistakes were caused by the bureaucratic organisation of the economic system. Saving in the wrong place was matched by stupendous prodigality. Foreign specialists with high dollar salaries were idly sitting in Moscow hotels because the factories were not yet built which they had been asked to organise. Complicated machinery, imported for badly needed foreign exchange, was rusting in barns or in the open air, because it had been sent to the wrong place or without some essential parts which had been overlooked. Newly-installed plants had to be stopped owing to minor breakdowns which could not be repaired within the Soviet Union. These consequences of bureaucratic planning show the indifference towards the property of the people which contrasts badly with the jealous care of the bureaucrats for their own position.

It is an open question whether the deficiencies of bureaucratic reconstruction were inevitable ‘faux frais ’ of Russia’s political development or signs of the incompatibility of bureaucratic dictatorship with the further growth of the productive forces of the country. The terrible fall in the living standard of the people, culminating in the famine of 1932-33, almost suggests the latter conclusion. On the other hand, it is a fact that the expenses of economic reconstruction had to be paid for by the workers and the peasants, whatever the political system of the country. And it would be completely wrong to assert that the bulk of these sacrifices was unnecessary or in vain. Fifteen hundred new factories, canals, electric stations, model farms and MTS were the result of these years. It is true that breakdowns occurred very frequently, and that the wear and tear of the new fixed capital was excessive, that production costs were rising, or that quality was sacrificed to quantity, and that in general a serious disproportion between expenses and results could be observed. These faults may have reduced the value of those achievements, but they certainly did not destroy it.

After all is said and done, it is certain that for the period under consideration the positive achievements were still great enough to indemnify Russian society for the sacrifices demanded by the government. But important new problems were rising on the horizon. With the completion of the technical basis of the new economic system the importance of the human factor was bound to grow, particularly in industry, and nowhere did Soviet policy produce more questionable results than in the sphere of the productivity of labour. All the difficulties of reconstruction, whether planned or unplanned, had been solved at the expense of the masses. Wherever the Soviet power knocked itself against the inelastic walls of material impossibilities, new exertions by workers and peasants had to repair the damage done by elemental forces or by bureaucratic stupidity. In the beginning the peasants had to bear the brunt of these demands, but later on the workers were called upon to bear the lion’s share of the costs of reconstruction.

The bureaucratic Soviet power did not really care for the human costs of this process. Every piece of machinery, the services of every foreign specialist had to be paid for in foreign exchange and were therefore valuable; the workers, on the other hand, could always be induced or compelled to increase their efforts. But the defective organisation of production and the deterioration of living conditions were soon expressed in the failure of most production plans. The indifference of the Soviet bureaucracy to merely ‘sentimental’ considerations was the direct reason for surprising defeats on the industrial front. The most important remedy evolved by the government was itself a sign that it despaired of improving the situation as a whole.

At the end of the First Five-Year Plan it was already completely clear that the problem of raising the productivity of labour was the most important issue determining the further course of Soviet economy. Mechanisation was not the end but only the beginning. Hunger and exhaustion had been stronger than propaganda and enthusiasm. The new social policy of the Soviet power was fundamentally similar to the old social policy of capitalist industry, though more ruthlessly applied than in capitalist countries. Its further history must be regarded as the shibboleth of the Soviet power in its bureaucratic form.

Notes

1. The Soviet Union Looks Ahead: The Five-Year Plan of Economic Reconstruction (London, 1930), p 80.

2. Ibid, p 19.

3. Dr R Schweitzer, Das Experiment der Industrieplanung in der Sowjet Union (Berlin, 1934), p 42.

4. The Soviet Union Looks Ahead , p 191.

5. Ibid.

6. Ibid, p 173.

7. Ibid, p 250.

8. Ibid, pp 134ff.

9. Ibid, p 130.

10. Ibid, p 150.

11. Ibid, p 149.

12. Ibid, p 194.

13. CB Hoover, Economic Life in Soviet Russia (London, 1931), pp 95ff.

14. The Soviet Union Looks Ahead , p 251.

15. K Elster, Der Rubel beim Aufbau des Sozialismus (Jena, 1933), p 29.

16. TD Campbell, Russia: Market or Menace? (London, 1932), p 63.

17. Stalin, cited in USSR: Bilan 1934 (Paris, 1934), p 49.

18. W Nodel, Supply and Trade in the USSR (London, 1934), p 46.

19. J Stalin, Golovocroozhenie ot uspiekhov (Moscow, 1930), p 6

20. Nodel, Supply and Trade in the USSR , p 46.

21. ‘Grain Collections’, A Yugoff, Economic Trends in Soviet Russia (London, 1930), p 129; Elster, Der Rubel beim Aufbau des Sozialismus , p 31; ‘Grain Production’, Stalin, cited in USSR: Bilan 1934 , p 47.

22. Nodel, Supply and Trade in the USSR , p 109.

23. J Morgan, ‘Agriculture’, in MD Cole (ed), Twelve Studies in Soviet Russia (London, 1933), p 119.

24. Stalin, cited in USSR: Bilan 1934 , p 51.

25. Ibid, p 51.

26. Ibid, pp 58ff.

27. The Soviet Union Looks Ahead , p 251.

28. The harvest of 1933 was much better than those of 1931 and 1932, but the difference was artificially increased by the adoption of a new statistical method (Samuel Caplan, The Great Experiment (London, 1935), pp 33ff).

29. VM Molotov, The Fulfilment of the First Five-Year Plan , (London, 1932), p 27.

30. Stalin, cited in USSR: Bilan 1934 , pp 46ff.

31. Figures partly from The Soviet Union Looks Ahead , pp 643, partly from USSR Handbook (London, 1936), pp 146ff.

32. Stalin, cited in USSR: Bilan 1934 , p 37.

33. Ibid, p 38.

34. Stalin and others, Vom ersten zum zweiten Fuenfjahrplan (Moskau, 1933), p 563.

35. S Ordzhonikidze, Industrial Development in 1931 and Tasks for 1932 (Moscow, 1932), p 32.

36. Stalin, cited in USSR: Bilan 1934 , p 41.

37. Ordzhonikidze, Industrial Development , p 78.

38. Nodel, Supply and Trade in the USSR , p 84.

39. Ibid, pp 30ff.

40. Ibid, pp 45, 47.

41. The Soviet Union Looks Ahead , p 146.

42. Ibid, p 130.

43. Ibid, pp 112ff.

44. WP Coates, The Second Five-Year Plan (London, 1934), p 121.

45. Ordzhonikidze, Industrial Development , pp 22ff.

46. GR Mitchison, ‘The Russian Workers’, in MD Cole (ed), Twelve Studies in Soviet Russia , p 97.

47. LE Hubbard, Soviet Money and Finance (London, 1936), p 142.

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