INTRODUCTION

THE RESTORATION OF CAPITALISM

IN THE SOVIET UNION.

By W. B. Bland.

Second Edition, 1995; First published Wembley 1980.

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CHAPTER INDEX

FOREWORD

INTRODUCTION

The Abolition of Centralised Economic Planning

Profit as the Regulator of Production

3. The "Socialist Market"

Payment For Production Assets

Credit and Interest

Ownership of the Means of Production

The New Soviet Capitalist

Freedom to Hire and Fire

The Primitive Accumulation of Capital

The Sale of Labour Power

The Value of Labour Power

The Price of Labour Power

Managerial Salaries

14. "Price Control"

The Retention of Profit by the Enterprise

16. "Economic Incentives"

17. "Socialist Profit"

18. The Distribution of "Socialist Profit"

19. "Divide and Rule"

Anti-Semitism

Corporatism

The Social Services

Environmental Pollution

24. "Moral Stimuli"

Economic Coercion

National Discrimination

The International Division of Labour

Investment

Rationalisation and Redundancy

The Concentration and Centralisation of Capital

Soviet Monopoly Capitalism

32. A "Superfluity of Capital"

The Exploitation of the Working Class

The Market Problem

The Class Structure of Soviet Society in the 1970s

The Role of the Communist Party of the Soviet Union

The Character of the Soviet State

Conclusion

Appendices 1 and 2.

Statistics relating to National Discrimination

Appendix 3. The "Leningrad Affair"

Appendix 4. Postscript (1998)

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FOREWORD

This book is an analysis of the economic system which was developed in the USSR after the "economic reforms" of 1965-66 - an analysis made on the basis of a mass of evidence taken almost exclusively from official Soviet economic journals.

Taking into account the virtual abolition of centralised economic planning, the introduction of profit as the regulator of production, the vesting of effective ownership and "hiring and firing" rights in industrial management, and the inequitable distribution of enterprise profit between managerial and shop floor personnel, the author reached the conclusion - as the title indicates - that by the 1970s the soviet economy had become essentially a restored capitalist system masquerading under red flags which are no longer appropriate.

INTRODUCTION

After the Russian Revolution of November 1917, the official ideology of what became the Union of Soviet Socialist Republics was Marxism-Leninism.

According to Marxism-Leninism, a capitalist society is one in which

1) the means of production -- factories, land, etc., -- are owned by individuals or corporate groups of individuals called capitalists;

2) this class of capitalists holds political power by controlling the state apparatus;

3) production is regulated by the profit motive; and

4) exploitation occurs, in that capitalists live, partly or wholly, on the labour of others, i.e., of their employed workers.

On the other hand, according to Marxism-Leninism a socialist society is one in which

1) the means of production are owned collectively by the workers;

2) this class of workers holds political power by controlling the state apparatus;

3) production is planned by the state; and

4) exploitation -- the process of living partly or wholly on the labour of others -- has been eliminated.

On the basis of these definitions, Marxist-Leninists describe the society which was constructed in the Soviet Union in the period following the revolution as a socialist society.

In the years which followed the revolution, the political struggle to prevent the construction of a socialist society and, when such a society had been built, to bring about the restoration of a capitalist society, may be divided into a number of phases.

The First Phase

The first phase, from 1917 to 1921, took the form of an armed civil war, combined with armed intervention on the part of a considerable number of foreign states and political struggle against the Communist Party by openly anti-Soviet political parties, such as the Kadets and Mensheviks.

The Second Phase

With the defeat of the whiteguard armies and the suppression of the openly anti-socialist parties on the grounds of their collaboration with the counter-revolutionary armed forces, the second phase of the struggle began in 1921. In this second phase, the political opposition to the construction of socialism still had an open character, but was now carried on by opposition factions within the sole legal political party, the Communist Party. The form of this phase was, however, necesssarily different from that of the first phase, in that the oppositionists now professed themselves to be "socialists" and "Marxists".

A key point in the line of the opposition in the 1920s, for example, was that it was impossible to construct socialism in a single country -- from which the conclusion followed either that any attempt to transform society in the Soviet Union should be deferred until the advent of socialist revolution in Western Europe, or that the Soviet government should "fulfil its internationalist duty" by ordering the Red Army into Western Europe to "assist" the workers there to overthrow capitalism.

The resistance to these opposition policies was led by Josef Stalin. who held from 1922 to 1952 the important post of General Secretary of the Communist Part of the Soviet Union, and they were eventually rejected by an overwhelming majority of Communist Party members.

The Third Phase

In 1927 the political defeat of the opposition and expulsion from the Soviet Union of its most prominent leader, Leon Trotsky, forced the remaining members of the opposition to the view that open political challenge to the policies of the leadership around Stalin was unlikely to achieve success in the near future. They therefore ceased open opposition, condemned their "former errors" and promised to cease all factional activity. For the first time in its history there appeared to be political unanimity within the Communist Party.

In reality, however, the struggle of the oppositionists had merely entered a new, third phase, in which they worked to secure the appointment of their members to influential positions, while at the same time plotting the elimination of those whom they regarded as their irreconcilable political opponents by methods of terrorism. The opposition had become, as Stalin expressed it, "a conspiratorial and terrorist organisation".

This incontrovertible historical fact has been concealed by the almost universally accepted myth that, at least from this time on, Stalin functioned as a "dictator" with "absolute powers", and this myth was itself the product of the "cult of personality" built up around Stalin by the concealed opposition from 1934.

Roy Medvedev, whose "history" of this period is virulently hostile towards Stalin, points out that the founder of the "cult" was Karl Radek, who admitted to treason against the Soviet state at his public trial in 1937:

"The first issue of 'Pravda' for 1934 carried a huge two page article by Radek, heaping orgiastic praise on Stalin. The former Trotskyite, who had led active opposition to Stalin for many years, now called him 'Lenin's best pupil, the model of the Leninist Party...' This seems to have been the first large article in the press specifically devoted to adulation of Stalin, and it was quickly reissued as a pamphlet in 225,000 copies, an enormous figure for the time". (R. A. Medvedev: "Let History Judge"; London; 1972; p. 148).

And one of the most fervent and sickening exponents of the "cult" was none other than Nikita Khrushchev who was in 1956 allotted the main role in denouncing it:

"Comrades, we have heard at our Eighteenth Party Congress a report of struggle....led by our Party and its Stalinist Central Committee, directed by the genius of our great guide and leader, Comrade Stalin...

Our victory in defeating the fascist agents - all these despicable Trotskyite, Bukharinites and bourgeois nationalists - we owe above all to the personal efforts of our great leader Comrade Stalin..

The Communist Party of the Ukrainian Bolsheviks...stand solid like a wall of steel around the Stalinist Central Committe around its beloved leader -- our great Stalin.

The devotion of the Bolsheviks of the Ukraine to Comrade Stalin reflects the boundless confidence and devotion which he enjoys among the whole Ukrainian people...

The Ukrainian people has...rallied closer than ever around the Bolshevik Party and around our great leader, Comrade Stalin...

Under the leadership of Comrade Stalin, the Bolsheviks of the Ukraine have achieved great successes...

Only as a result..of the special attention paid by Comrade Stalin to the development of Ukrainian culture, have we achieved such momentous victories in the development of culture.

That is why the Ukrainian people proclaim with all their heart and soul, with the utmost affection and devotion:..'Long live our beloved Stalin!'...

Throughout the Soviet Union the Bolshevik ranks are now more firmly welded than ever.. in their loyalty to...their leader and teacher, the friend of the Ukrainian people, Comrade Stalin...

Long live the towering genius of all humanity, the teacher and guide who is leading us victoriously to communism our beloved Comrade Stalin!"

(N. S. Khrushchev: Speech at 18th. Congress CPSU, March 1939, in: "The Land of Socialism Today and Tomorrow"; Moscow; 1939; p.381, 382, 383, 389, 390).

That Stalin's frequently expressed scorn for the "cult of personality" was perfectly genuine -- even though, as a prisoner of the concealed opposition majority, he was unable to stop it -- is illustrated by his shrewd observation to the German author Lion Feuchtwanger in 1937:

"I spoke frankly to him (Stalin - WBB) about the vulgar and excessive cult made of him, and he replied with equal candour... He thinks it is possible...that the 'wreckers' may be behind it in an attempt to discredit him".

(L. Feuchtwanger: "Moscow 1937"; London; 1937;p.93, 94-5).

It was the dissatisfaction openly expressed by Stalin at the inactivity of the state security organs in relation to acts of terrorism which led him to allot to his personal Secretariat, headed by Alexandr Poskrebyshev special investigative functions. And it was the evidence uncovered by this body and passed on to the state security organs which forced the latter to put on trial a number of leading opposition elements in 1936-38, including the former head of state security, Genrikh Yagoda. Following a preconceived plan, the defendants admitted to treason in open court, while their as yet undiscovered fellow conspirators heaped abuse on their heads.

Under their new chief, Nikolai Yezhov, who was also a member of the opposition conspiracy, from the autumn of 1936 the state security organs became extremely "active" instituting a reign of terror which resulted in the arrest of many honest Communists and their imprisonment or execution without trial.

Although the "cult of personality" enabled the blame for the crimes of the "Yezhovshchina" to be laid upon Stalin's "psychopathological suspiciousness", when historical fact is dissected from propaganda it reveals that Stalin carried on a long struggle against the conduct of the state security organs under Yezhov which resulted in the latter's dismissal in late 1938 (and later arrest) together with his replacement by a trusted colleague of Stalin's, Lavrenti Beria. Contrary to the allegations later made by Khrushchov and others, during the whole period in which Beria was People's Commissar for Internal Affairs and in charge of state security -- from December 1938 to January 1946 -- not one Communist of any prominence was arrested by the NKVD. On the contrary, under Beria the NKVD was purged of the officials responsible for the "Yezhovshchina", was reorganised, and carried out a review of the cases of political prisoners sentenced under Yezhov, as a result of which large numbers were rehabilitated and released:

"Beria soon made almost a clean sweep of the old NKVD. The few who had survived from Yagoda's time...now followed their colleagues to execution...

By March 1939 Beria's men were everywhere in power; his own Georgian following held many of the major posts....

The appointment of Beria is usually taken as a convenient date to mark the end of the Great Purge....

The gross result of Beria's assumption of the NKVD was that a proportion of those in prison awaiting trial were released....

In the towns and villages of the Soviet Union, the pressure of haphazard mass arrests greatly eased."

(R. Conquest: "The Great Terror"; Harmondsworth; 1971; p.623-4, 626, 627).

"The purge is really ended at last, as has already been indicated by the replacement of Yezhov by Beria at the Ministry of Internal Affairs, by the execution of five GPU officials at Kiev for gross abuse of power..., by the present trial in a mid-Siberian town of four GPU officials for arresting over 150 children, some under 12, as terrorists, etc., under Article 58, by a play now on in Moscow exposing the abuses of the purge to enthusiastic audiences, and, finally, by the return of political prisoners in hundreds, if not in thousands".

("The Times", February 27th., 1939; p.11).

Although the "cult of personality" which they had built up around Stalin had many advantages for the conspirators, it also had serious disadvantages. Although in a minority, Stalin and his political allies utilised every "harmless" task allotted to them by the majority to castigate any proposals for the modification of socialist society in what they regarded as a capitalist direction:

"In proposing that the MTSs (Machine and Tractor Stations - WBB) should be sold to the collective farms as their property, Comrades Sanina and Venzher are suggesting a step in reversion to the old backwardness and are trying to turn back the wheel of history....

The outcome would be, first, that the collective farms would become the owners of the basic instruments of production; that is, their status would be an exceptional one, such as is not shared by any other enterprise in our country, for, as we know, even the nationalised enterprises do not own their instruments of production... Such a status could only dig a deeper gulf between collective-farm property and public property, and would not bring us any nearer to communism, but, on the contrary, move us farther from it.

The outcome would be, secondly, an extension of the sphere of commodity circulation, because a gigantic quantity of instruments of production would come within its orbit....Is the extension of the sphere of commodity circulation calculated to promote our advance towards communism? Would it not be truer to say that our advance towards communism would only be retarded by it?...

Engels, in his 'Anti-Duhrung', convincingly shows that the existence of commodity circulation was inevitably bound to lead... to the regeneration of capitalism."

(J. V. Stalin: "Economic Problems of Socialism in the USSR"; Moscow; 1952; p.100-2).

And the existence of the "cult of personality" made it necessary for the oposition majority to give the fullest and most favourable publicity to such attacks on their programme!

Furthermore, while the opposition majority could rely on the minority around Stalin adhering to the Communist Party principle that a decision of the majority was binding on the minority, who were prohibited from expressing public disagreement with it, this principle of "democratic centralism" is held by Marxist-Leninists to be valid only so long as they recognise the Communist Party as one based essentially on Marxism-Leninism, as one continuing to apply Marxist-Leninist principles to the construction of socialism. Had the opposition used, during Stalin's lifetime, their majority on the leading organs of the Communist Party to initiate measures which clearly undermined the basis of socialist society in the Soviet Union -- measures of the kind undertaken after Stalin's death, that is -- then the danger arose of the minority headed by Stalin saying: "The CPSU is no longer a Marxist-Leninist Party, but a revisionist party dominated by traitors to socialism; therefore, loyalty to Marxism-Leninism compels us to denouce publicly its majority leadership and to appeal to the rank-and-file of the Party and the working class to save socialism by repudiating these revisionist leaders". This danger to the opposition programme -- a danger greatly enhanced by the "cult of personality" around Stalin -- prevented them from using their majority, during Stalin's lifetime - to do much more to undermine the basis of socialism than to increase the economic and social differentials between management, official and intellectual workers on the one hand and the mass of workers on the other, so creating a privileged stratum which could provide in future a social basis of support for the restoration of capitalism.

Despite the frustrations experienced by the opposition during Stalin's lifetime -- frustrations which were virulently expressed in Khrushchev's "secret speech" to the 20th. Congress of the CPSU in 1956 - the organisation of a terrorist attack upon Stalin was rendered extremely difficult by his loyal bodyguard. A carefully laid plan was elaborated in conjunction with the German intelligence service to take advantage of the German invasion of 1941 by removing Stalin from office on the grounds that the initial Soviet military reverses were due to his "incompetence"; but here again the opposition was out-manoevred and compelled to recognise Stalin, at least for the rest of his life, as "the architect of Soviet victory".

The Fourth Phase

The fourth phase of the political struggle to destroy socialism in the Soviet Union opened with the death of Stalin in March 1953. Shortly afterwards Nikita Khrushchev was appointed First Secretary of the Communist Party, and in 1955 also Chairman of the Council of Ministers ("Prime Minister").

From one point of view the Khrushchev regime must be seen as an intermediate between the socialist society which existed in the Soviet Union prior to this period and the "economic reforms" introduced under the later Brezhnev regime. Thus it was responsible for a series of preparatory measures which were politically necessary before these "economic reforms" could be initiated. These were:

1) the denigration of Stalin, which allowed measures to be taken, in the name of "creative Marxism-Leninism", which were in direct conflict with Stalin's expressed political positions;

2) the removal from positions of influence -- or, in the case of Lavrenti Beria, the physical elimination -- of Stalin's remaining political allies: Vyacheslav Molotov, Lazar Kaganovich, Lavrenti Beria;

3) the introduction of a degree of liberalism, associated with the attacks on the "dictatorship of Stalin", permitting Evsei Liberman and other economists to organise a campaign for "economic reforms" which received official endorsement in 1962; and

4) the introduction in 1964 of a pilot scheme for the "experimental" application of the economic reform in limited fields.

That the Khrushchev regime was not merely a preparation for the Brezhnev regime, however, is demonstrated by the fact that Khrushchev's successors were compelled to wage a fierce political struggle against him and his supporters and, when this had been victorious, make him an "unperson".

This conflict of interest was basically between two groups of embryonic capitalists: one group, centred mainly in the Russian Republic and composed mainly of high managerial personnel involved in heavy industry, was represented politically by the faction around Brezhnev; the other group, composed mainly of high managerial personnel involved in light industry, was represented politically by the faction around Krushchev.

The policy differences on the degree to which resources should be directed respectively to the heavy goods industries and the consumer goods industries, were accompanied by foreign policy differences. The Khrushchev faction, representing the economically less powerful embryonic capitalists involved in light industry, felt it necessary for the Soviet Union to follow a foreign policy which amounted in fact to subservience to the United States, while the Brezhnev faction stood for an "independent" foreign policy.

In October 1964 the embryonic capitalists involved in heavy industry in alliance with the military felt their position strong enough to jettison the internal and foreign policies of the Khrushchev regime, together with their author.

The Fifth Phase

The fifth phase of the struggle against socialism in the Soviet Union thus began with the appointment of Leonid Brezhnev as General Secretary of the Communist Party of the Soviet Union in 1964 (to which was added, in June 1977, the post of Head of State).

This phase represented the culmination of the long struggle against socialism in the Soviet Union: the introduction of "economic reforms" which, while claiming to "carry forward the development of socialism", in fact dismantled the basis of socialist society and replaced it by a basis which was essentially one of capitalism, although differing in form from that of older capitalist countries in the West.

Space prevents the documentation of the brief history of the struggle against socialism made in this introduction, which is intended merely to make more intelligible the analysis which follows. An exception has been made of the "Leningrad Affair" of 1949, which is analysed in the appendix Number 3, since this has a special relevance in that it represented an abortive attempt during Stalin's lifetime to introduce the "economic reforms" adopted after his death.

It is the main aim of this book to analyse the character of the "reformed" economic system, doing so on the basis of the ideology of Marxism-Leninism (to which, as has been said, the "Soviet" leaders continued to claim adherence) and by drawing on material from official Soviet sources -- principally economic journals which, having a restricted and specialised readership, are frequently more frank than the mass media.

It is regretted that the extensive documentation which has been included does not make for easy reading, but without it the book would be no more than a valueless personal opinion. A postscript brings events up to the 1990s -- the throwing off of the "socialist" mask and the liquidation of the Soviet Union itself.

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