Article 2
August 6, 1987



Loosening of Soviet monopoly of foreign trade. Senator Mathias on U.S.-USSR joint ventures. Centralized control over foreign trade in Lenin period. Main elements of New Economic Policy. Success and new problems. Growth of bourgeois elements in twenties. Kulaks and "scissors" crisis. Collectivization of agriculture. Today's high-tech revolution and capitalist expansion. Is another 1929 coming?

The crucial issue we are considering in these articles is not the scope and magnitude of the proposed technological restructuring of Soviet industry. Among socialists and communists it is a given that, consistent with its ability, the USSR must develop or, where it can, import the highest forms of technology in order to advance socialist construction and avoid falling far behind the capitalist countries in such a critical area.

The question is, what is the economic content in the evolution of some of these reforms and what are their social consequences? Let's examine some of the peripheral issues that loom large as far as the Western capitalist countries are concerned, for example, some of the reforms that pertain to the monopoly of foreign trade.

As we have observed, Professor Marshall Goldman, one of the many bourgeois analysts who study the Soviet Union, has already flatly asserted that the "monopoly of foreign trade is broken and selected enterprises and industries can now arrange their own export and import." 1 Undoubtedly there has been a breach of the monopoly of foreign trade. Whether this represents the beginning of a long-term process of development cannot at the present time be determined. Suffice it to say that as of January 1987, as many as 20 individual and 70 industrial enterprises were authorized to negotiate export and import arrangements on their own with foreign buyers and sellers.2 By no means, however, can one say that the USSR has opened the flood gates to capitalist penetration.

In fact, the bourgeoisie as a whole takes a far more cautious, more cunning view of it than does the professor. Take the approach of former Republican Senator Charles McC. Mathias of Maryland, who visited Moscow in February 1987 and wrote an Op-Ed piece on the Soviet trade reforms for the New York Times of July 20, 1987. Mathias was one of a high-level delegation from the Council on Foreign Relations that included former U.S. Secretaries of State Henry Kissinger and Cyrus Vance as well as other senators and representatives. They met with Soviet authorities, including General Secretary Gorbachev. Mathias offers no judgment on whether the reforms will bring about "enduring relationships" between the U.S. and the USSR or are "simply a revisiting of Lenin's `necessary retreat' to capitalism" (a reference to the New Economic Policy inaugurated in 1921). He finds "promising for American business" the Soviet Union's "developing interest in joint ventures with the West. . . . A typical joint venture will be structured with a 51 percent Soviet share and 49 percent foreign participation. Foreign capital contributions may include know-how, equipment, technology and similar assets. The Soviet capital contribution may include real estate, buildings and the labor force."

Of course, joint ventures have been a typical technique used by the imperialist multinational corporations in the oppressed countries to the great advantage of themselves and to the great detriment of the workers. These joint ventures or partnerships, as they are called here, are an instrumentality by which the imperialists gain control over the economy of a country. We reserve for later articles an analysis of how this may operate in the USSR. Nevertheless, suffice it to say that in the purely formal sense these joint ventures or partnerships subject Soviet workers, just like workers everywhere in the capitalist countries, to the process of capitalist exploitation in that the profit derived from such a joint undertaking represents the subjugation of wage labor to capital. It is the unpaid labor of the workers that constitutes the profit for the capitalists. This is so despite the fact that the venture may have an overall beneficial effect on the Soviet economy.

Mathias confines himself to the conclusion that the reform program "may not be a guarantee of quick profits but it justifies cranking up the corporate jet for a flight to Moscow to assess the potential for doing business in a new environment." That in substance is the view of the bourgeoisie. They see themselves as embarking on a new era of testing out the significance of the reforms, particularly as they refer to the delicate matter of foreign trade and, in a broader sense, to the whole scope of the relations between socialism and capitalism.

Just what is the monopoly of foreign trade, and how significant is it in a socialist republic? In particular, what did it mean in the 1920s for the young workers' and peasants' government in the USSR?

The monopoly of trade has always meant the centralized control by the Soviet government of trade relations, especially with the advanced capitalist countries. It has been intimately connected to the socialist planning principle and, together with the public ownership of the means of production, was indispensable to building socialism. It was designed to protect the USSR from the ravages of penetration by the capitalist countries. It was necessary to guard against attempts to weaken the sovereignty and independence of the USSR and to make sure that the unbridled forces of the capitalist world market did not overwhelm the country, particularly at a time when it was weakest and was just barely emerging from the cruelty and destructiveness of civil war and imperialist invasions.

How it was regarded by the Bolsheviks and by Lenin in particular is shown by the fact that while the New Economic Policy (NEP) restored the capitalist market on an internal basis and denationalized many small enterprises, at the same time it made sure to preserve state ownership of the basic means of production and retained complete control and sovereignty over foreign trade. Only the central government was permitted to engage in export and import. The Soviet government from its very beginning was of course interested in continuing commerce and trade with the capitalist world as an urgent economic necessity. But while the New Economic Policy is widely regarded, and correctly so, as a partial restoration of capitalism and especially of the free market, it nevertheless made sure to maintain centralized control over foreign trade along with the state ownership of the basic means of production.

Here it is necessary, in the interest of seeing the recent developments in the USSR in historical perspective, to briefly review the main elements of the New Economic Policy. This will give us a better understanding of the real meaning of the monopoly of foreign trade, so as to be able to discuss whether it is still necessary or whether the new regulations concerning trade are not really that important.

The clearest, most lucid exposition of Lenin's view on the NEP was given in his report to the Second All-Russian Congress of Political Education Departments on October 17, 1921.3 This was several months after he had first proposed the New Economic Policy and had had plenty of time to listen to many debates and discussions on it. Lenin was very frank about the disastrous economic situation facing the Soviet state. He made no attempt to minimize or evade the problems. He spoke about the urgent need for state capitalism without in any way trying to embellish or prettify it.

Partly owing to the war problems that overwhelmed us and partly owing to the desperate position in which the Republic found itself when the imperialist war ended . . . we made the mistake of deciding to go over directly to communist production and distribution. We thought that under the surplus-food appropriation system the peasants would provide us with the required quantity of grain, which we could distribute among the factories and thus achieve communist production and distribution.4

Feeding the people after so much havoc and ruin was thus the top priority. Food for the workers and the mass of the population came to be the overriding problem as hunger and even famine took their toll. Hence, the requisition from the peasants of the surplus food. But this turned out to be disastrous. Lenin continues:

In attempting to go over straight to communism we, in the spring of 1921, sustained a more serious defeat on the economic front than any defeat inflicted upon us by Kolchak, Denikin or Pilsudski.5

The surplus-food appropriation system in the rural districts, this direct communist approach to the problem of urban development, hindered the growth of the productive forces and proved to be the main cause of the profound economic and political crisis that we experienced. . . . That was why we had to take a step which from the point of view of our line, of our policy, cannot be called anything else than a very severe defeat and retreat.6

What was this retreat?

The New Economic Policy means substituting a tax for the requisitioning of food; it means reverting to capitalism to a considerable extent--to what extent we do not know. Concessions to foreign capitalists (true, only very few have been accepted, especially when compared with the number we have offered) and leasing enterprises to private capitalists definitely mean restoring capitalism, and this is part and parcel of the New Economic Policy. . . .

The issue in the present war is, who will win, who will first take advantage of the situation: the capitalist, whom we are allowing to come in by the door, and even by several doors (and by many doors we are not aware of, and which open without us, and in spite of us), or proletarian state power? 7

The whole question, says Lenin, is the survival of the Revolution. It is "who will take the lead." The lead in what? In restoring the capitalist market.

We must face this issue squarely--who will come out on top? Either the capitalists succeed in organizing first--in which case they will drive out the Communists and that will be the end of it. Or the proletarian state power, with the support of the peasantry, will prove capable of keeping a proper rein on these gentlemen, the capitalists, so as to direct capitalism along state channels and to create a capitalism that will be subordinate to the state and serve the state.8

But Lenin is not for prettifying this move to the masses.

Our Party must make the masses realize that the enemy in our midst is anarchic capitalism and anarchic commodity exchange. We ourselves must see clearly that the issue in this struggle is: Who will win? Who will gain the upper hand? and we must make the broadest masses of workers and peasants see it clearly.9

Despite the many factions and groupings in the Party, they all went along with this fundamental change in policy--not only because of the prestige of Lenin but because they felt it was correct.

In this talk, Lenin spoke in the same vein as always about the proletariat and peasantry. Profound class irreconcilability against the bourgeoisie was in every line. He wasn't afraid that the imperialist bourgeoisie, to whom he was offering enormous concessions, would be antagonized by the way he was presenting his views, because he was supremely aware that whatever they decided to do would be based on their greedy, predatory self-interest and not on any attempt on his part to propitiate them. He was, after all, the supreme tactician and strategist of the proletarian revolution.

So what was the result of the NEP? It was a resounding success. In the first place, the economy was restored to its pre-war level after having virtually collapsed during the intervention and Civil War. Before the NEP the output of large-scale industry had fallen to only 14 percent of what it had been before the war. It rose to 46 percent in 1924 and 75 percent in 1925.10 Now the Bolsheviks could say to the imperialists, "See, we did it, notwithstanding your hope that we would collapse, and without any assistance from you."

The next phase of the struggle in the Soviet Union concerned itself with how to proceed from the restoration of industry to the construction of socialism. But the very success of the NEP had brought with it acute problems. Some were familiar phenomena that usually accompany the revival of the capitalist market and commodity production. The phenomenon of unemployment, while not enormous, was already making itself felt. More serious was the growing differentiation between the rich and middle peasants and the poor. It brought into prominence speculators plus a sharp increase in merchants and small-scale industry, which, as Lenin was to say later, develops capitalism daily and hourly. It rekindled the confidence of the surviving members of the bourgeoisie, the bourgeois intelligentsia and the old officialdom. All were for pushing the NEP program further and further in the direction of expanding the bourgeois free market. Either the country had to go forward and open up the era of socialist planning or it would fast develop into a capitalist economy. The question was still, who would prevail?

In a sense, what we see happening today so far as world capitalist development goes was happening then. The world capitalist economy, after a brief recession from about 1921 to 1923, had gone into a phase of relative stability, that is, capitalist expansion. Having broken the back of revolutionary struggles in Germany and Hungary (and later the British general strike in 1926), the bourgeoisie had stabilized its rule and the imperialist economies were headed for what then seemed to them dizzying heights, especially in the United States.

The attraction of the world capitalist market in a period of expansion had its repercussions in the Soviet Union. Completely shelved was the historical experience of the capitalist cycle of development showing that the greater the capitalist expansion, and often the longer it lasted, the greater and more universal would be the collapse that was sure to follow.

In 1924, immediately after Lenin's death, when the Soviet economy had been restored to its pre-war level, the question was how to proceed. Leaving inner-party issues aside for the moment, the struggle outside the Party was between those who were for taking resolute steps to develop the country along socialist lines with a planned economy, and those who wanted to continue with the capitalist market economy.

It should be mentioned that during the entire period of the NEP, government economic plans on one scale or another were drawn up and discussed. The principle of planning had not been abandoned by anyone in the party. The issue was when and at what tempo should it begin, and what time span would be most practical for an overall, comprehensive economic plan. During that whole period, Lenin had vigorously fought for an electrification project as a fundamental element of socialist construction. The way he put it was that electrification plus Soviets would equal socialism.

The outright bourgeois elements were of course opposed to socialist planning. They viciously attacked Gosplan, the data-collecting agency which at that time was the embryonic form of what was later to become the central planning agency. All the bourgeois elements--former landlords, merchants, speculators, former czarist officials, old bureaucrats, bourgeois technical and economic experts--concentrated their attacks on Gosplan and also on the Ministry of Foreign Trade, which had the responsibility for maintaining the monopoly of foreign trade. Inefficiency, bureaucratism, overcentralization, and so forth--these were the labels behind which the attacks were made. This bore strong resemblance to the way big business here attacks federal agencies like the Occupational Safety and Health Administration (OSHA), the Social Security Administration, and the Department of Human Services. In reality, the attacks weren't against inefficiency, bureaucratism and overcentralization. They were attempts to abolish these agencies.

The severest critic of real bureaucratism and inefficiency was Lenin himself, but from a wholly different class point of view--that of strengthening the young Soviet republic. The bourgeois attacks were always from the viewpoint of abolishing the early beginnings of planning and the monopoly of foreign trade. The speculators were all anxious to stretch out on their own to the world capitalist market, but the monopoly of foreign trade stood in their way, as did the beginning of planning. These bourgeois elements never tired of singing about the glories of the capitalist expansion abroad. If only the Bolsheviks would permit them to trade freely, the USSR would once again become an exporter of grain and agricultural products as it had been in czarist times, they said, and would make great headway--forgetting that this was precisely what had made czarist Russia a semi-colony of Western imperialism. In return, they were saying, the imperialist bourgeoisie would be willing to sell industrial equipment, if only the market mechanisms were expanded and allowed to take their course. If Russia returned to its traditional role as an exporter of raw materials, then it would develop spontaneously through the free market, as had happened in the capitalist West. (You see, the remedies of Reagan and Thatcher are just old poison in new bottles!)

The bourgeois elements were fearful, however, of the workers. They didn't dare attack the state ownership of heavy industry because that would expose their role very clearly, so they made Gosplan and the Ministry of Foreign Trade the butt of their criticism. They couldn't in any case try to dislodge the workers from the ownership and control of metals, oil, mining, etc., where they were firmly in command.

In October 1922, when Lenin was already ill from his first stroke and could not attend many meetings, the Central Committee in his absence unfortunately made a decision that relaxed the monopoly of foreign trade.11 The Soviet Republic had until then always maintained its exclusive role in the field of foreign trade. When Lenin learned about this decision, he protested. Soon enough, in December, the Central Committee rescinded its decision. All of this showed how great the pressure from outside the party had become with the revival of the capitalist market. It caused severe divisions within the party. The axis of the struggle became how to deal with the enormous problems arising out of the market economy.

In economic terms, it appeared a crisis was developing as a result of a lack of correspondence between agricultural and industrial prices. The peasants now had the right to dispose of their produce. The government no longer requisitioned it as during the period of War Communism, although it did collect a tax in kind. The well-to-do peasants, popularly known as the kulaks, led what amounted to a sitdown strike on a nationwide level in an effort to get higher prices for their products at a time when the government needed to lower them in order to finance industry. The government authorities felt these price demands were utterly unacceptable under the circumstances of the urgent necessity to retool industry and set the stage for socialist construction.

This became known as the scissors crisis, since the prices of industrial goods and agricultural goods were going in opposite directions. The Soviet government had to shift prices in favor of industry. The problem was that the well-to-do peasants who possessed vast marketable surpluses of grain and other commodities refused to sell them on the basis of the Soviet government's proposals. The kulaks therefore tried to sabotage the government's plans and tried to reduce their output, leaving the government unable to utilize the revenue to develop industry. What the kulak attempt amounted to was the wholesale national obstruction of the development of socialist planning. Viewed in historical perspective, the stubbornness of the rich peasants, their determination to hold the Soviet government by the throat, was bound to get a rude reaction. It was not long before the idea of collectivizing the peasantry by means of restricting the capitalist market began to appear on the agenda.

The Soviet government in its earlier days, as well as Marx and Engels, had conceived of the collectivization of the peasantry as a gradual process. Building cooperatives, showing the superiority of socialist industry, offering the collectives the incentives of modern industrial equipment such as tractors, showing the superiority of state farms over both individual and collective farming, would over a period slowly and gradually reduce the domination of the kulak element over the peasantry and their challenge to the Soviet government. But especially after the beginning of comprehensive planning, it became impermissible to let the situation go on or to capitulate to the kulaks. One may differ as to whether the collectivization had to take the road it did, whether the method of rapid, compulsory collectivizing was not altogether excessive, an overkill which also did a great deal of harm and took an enormous toll on the peasantry, creating problems which have their echoes even today. Nevertheless, the collectivization of agriculture, that is, a change in the mode of production from private to collective ownership, was a profoundly revolutionary development.

The very dimensions of the crisis, in which agricultural and industrial prices were moving in opposite directions, showed there was a broader problem: the existence of an enormous private sector in the economy. Agriculture, with its millions upon millions of peasants, stood in contradiction to the sector in the hands of the Soviet state. Such a crisis was bound to have a severe and wrenching effect in the Party and would grow sharper the longer the Party delayed making a firm choice.

Thus began in earnest the choice for the planned socialist economy and the launching at last of the first five-year plan in 1929. It was a watershed, a real turning point for the Soviet economy and for the destiny of the Soviet Union itself, and it constituted a world historic triumph for socialist construction.

Regardless of how developed technology may be in the Soviet Union today, the world capitalist economy still holds attraction in its present phase of relative capitalist expansion. In the field of high technology it seems to be growing by leaps and bounds, exploiting the whole world in its acquisition of technological knowledge, often robbing even the less-developed countries of their trained experts through the "brain drain," which seems to continue unabated. The USSR, on the other hand, is still faced with a technology blockade imposed by the imperialists, who have set various restrictions on its export.

Those without a historical approach see the Soviet Union at a very great disadvantage, particularly because the rapid scientific-technological revolution in the principal imperialist countries seems to outdistance the USSR, leading to a call for drastic measures within the Soviet Union to overhaul its economy. Often forgotten is the havoc being unloaded in the capitalist countries on the backs of millions and millions of workers, for whom the high-tech revolution has brought nothing but unemployment and a cut in living standards.

But the present capitalist expansion is only part of a phase in world capitalist development. A repetition of capitalist collapse on a more enormous and destructive scale than in 1929 is just as possible if not probable. This in turn would lead to contraction of the capitalist market and a slowdown in the development and acquisition of high technology, enabling the Soviet Union to once more take advantage of the capitalist crisis as it did during the period following the 1929 economic collapse. An enormous drop in the price of raw materials and then industrial goods enabled the Soviet Union to purchase the latter from the West at a time when the capitalists were more hard up for sales than they had been during the previous expansion of the capitalist world market. Overall this helped the Soviet economy which was just starting to operate under a five-year plan, even though it also affected the price of their exports of agricultural products and raw materials.

Today the imperialists can demand and get extortionate prices in some high-tech commodities because of the relative economic expansion. But this growth is by no means even. In industries like agriculture, petroleum and coal, the capitalist market is still depressed. With the development of what's now called the global economy, capitalism is even more vulnerable to collapse; its anarchic forces are bound to manifest themselves independently of the will or desire of the capitalists.

The Soviet reforms, which permit individual ministries and enterprises to trade independently and which promote joint ventures or partnerships with imperialist companies, have their parallels in the early reforms during the period of the New Economic Policy. However, there has been a virtual transformation of the Soviet Union since then. Instead of being on the verge of collapse, the USSR is now the second largest industrial power in the world. Some of its scientific achievements even outdo the bourgeoisie, as in outer space, where the USSR opened the way as long ago as 1957 and has consistently maintained its lead.

As in that earlier period of the NEP, however, the problems with the monopoly of foreign trade and the significance of the world capitalist market are merely manifestations of domestic issues, rather than independent initiatives not related to the internal situation. Sooner or later, when the capitalist crisis breaks out in full force, which it is sure to do with an accompanying contraction of the capitalist market, the firm pillars of Soviet state ownership of the means of production, of the planned economy and of the monopoly of foreign trade will be seen as more formidable levers in dealing with the capitalist world economy than any kind of dangerous opening to the capitalist market can ever be.


1. Marshall I. Goldman, Gorbachev's Challenge (New York: W.W. Norton and Co., 1987), p. 264.

2. Ibid., p. 84.

3. V.I. Lenin, "The New Economic Policy and the Tasks of the Political Education Departments," Collected Works, Vol. 33, pp. 60-79.

4. Ibid., p. 62.

5. These were the leaders of the counterrevolutionary armies supported by the imperialist countries.

6. Ibid., pp. 63-64.

7. Ibid., pp. 64-65.

8. Ibid., p. 66.

9. Ibid., p. 67.

10. Alexander Erlich, The Soviet Industrialization Debate, 1924-28 (Cambridge: Harvard University Press, 1960), p. xvi.

11. E.H. Carr, The Bolshevik Revolution (Harmondsworth, England: Penguin, 1966), Vol. 3, p. 459.

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