SOCIALISM (Economic Sociology Presentation)

Katherine Verdery

Socialism as an ideology has remained in focus of theoretical discourse among the sections of social
sciences. It is a political and economic theory of social organisation which advocates that the means of
production, distribution and exchange should be owned or regulated by the state to be benefitted by
the community as a whole. This theory was first proposed by Karl Marx and adopted by multiple
countries(like USSR, Eastern countries).

Production under Socialism: The popular perception about ‘communism’ in America and many parts of
the Western world was of – an autocratic, all powerful states, a totalitarian autocracy – the ‘totalitarian’
model. Yet this was a false image. These Communist Party ruled states were comparatively weak –‘non-
totalitarian’. The reason being- leaders did not have a positive support of their citizens, internal
resistance, hidden forms of sabotage at all system levels.

Katherine Verdery wanted to stimulate discussion on the fall of socialism particularly Soviet style
socialism through her work. However, one has to first have a comprehensive understanding of Socialism
before discussing about its subsequent fall. The two main features of Soviet style socialism were
centralised planning and redistribution.

Centralised Planning: This was a top down approach to production where the state at centre would
decide and draw up plans with quantities of everything that they wanted factories to produce. These are
known as ‘targets’. The centre would then segregate the plan into portions appropriate for execution
and calculate and estimate the amount of raw material and investment required for the managers of
firms to fill the target.

However faultless the plan appears, there are multiple loopholes in its implementation. The targets
keep on annually increasing and the investments or raw materials are rarely delivered on time. Due to
this managers began to hoard more materials to meet their targets. They also started bargaining with
other firms the excess in exchange for what one’s own firm lacked. These methods of ‘hoarding’ and
‘bargaining’ are traits uniquely belonging to capitalism. Them being implemented in the Soviet style
socialism makes one feel that this version of socialism was actually capitalism in disguise.

In a capitalist economy being unable to meet one’s annual target makes a company go under due to
losses and steep competition. In Socialist economy, a company pays no penalty of this sort and thus runs
away scot-free even after demanding more investment or raw materials. For example – In a shoe
factory, the centralised planning has set a certain target and has agreed to provide the factory with ten
tonnes of raw materials. The manager will estimate that a certain portion (say 30%) of the raw materials
with go to waste (due to ill produced items, stealing, technical glitches etc) and hence, ask for 13 tonnes
of raw material instead. These managers use the dearth of specialised knowledge of the centralised
planner and the vulnerability due to low competition to bargain with them. So the manager would
demand special German machinery, fine Italian leather and so on, claiming that shoes cannot be made
without it. This bargaining and hoarding led to a vicious cycle of constant shortages of raw material and
capital leading to more hoarding. The competition between firms became less about producing
customer satisfying producing customer satisfying products and more about who can acquire more raw
materials. To succeed at this, one needed to befriend the clerk in charge for distribution and this nexus
between the economic and bureaucracy led to corruption.

Redistribution: In each Socialist country it was important for people to have faith in the regime and it
was often imposed upon the citizens. There were always secret police who produces files for history of
the people over whom the party ruled. If there was any suspicion on a person or accusation the detail
was promptly entered into the file without verification. This level of surveillance spread a tinge of
distrust among the citizens and fuelled the paternalistic redistribution problems.

Socialist parties claimed to be the exclusive provider satisfying the people’s needs in the country, it did
so by collecting all the produce for the year and then redistributing it. The party discouraged its citizens
from taking initiatives to satisfy their own needs. The social contract required them for fulfilling the basic
needs(eg – food, clothes, education). However this became increasingly difficult due to the previously
discussed problem of centralised planning. Moreover, socialist regimes had to have control on a large
amount of resources to be able to redistribute the produce to everybody. For this, it began trying to
acquire resources. Thus, instead of acquiring a fruit tree, it would now acquire the well which provided
water to it, the soil on which it grew and so on. The increasing fertilisation led to acquiring resources and
was prioritised over attaining profits in socialist nations.
 Decreased priority given to profits meant that firms did not need to produce quality products because
satisfying customers were no longer important. They were not ‘selling’ but rather ‘giving away’ products.
Although, efficiency was also required in capitalism, it came along with seeing end product, customer
and staff satisfaction and so on. All the mentioned externalities were missing in socialism. There was
focus on heavy industry over consumer industry for the same maximisation of output.

The Socialist social contract had however promised to fulfil the citizens needs. However, a question
soon arose regarding what were these ‘needs’ and who decided that for the consumers. It is said that,
the capitalism satisfied one’s greed and socialism satisfied one’s needs but the fine line between the two
keeps shifting. Need is dynamic, ever changing and expanding as seen by the advent of advertisements.
Thus, consumption itself was politicised as to whether it was on stat’s terms or not.

Till now we have been Talking about the formally organised economy, the first or ‘official’ economy.
However, when the state absolutely failed at providing the quality or products, the citizens had to take
the matter up in their own hands. These ranged from quasi legal to 100% illegal, workers would
moonlight products from their workplace to produce new, good quality products for an extra pay. For
example – A carpenter would take wood provided by the state and produce good quality products for
the black market. Private plots were small portions of land, a farmer was permitted to have but he could
not use state resources for agriculture in it and profit was not made from it. Farmers stole resources(eg
– seeds, fertilisers etc) from the e sources provided for the collectivisation farms and used that in the
private plot and sell the produce for profits. The relationship is surprisingly not of hatred and the
informal economy didn’t want to dismantle state structure. It was more of dependence because the
informal economies thrived on the state’s resources to flourish.

All of this cumulatively contributed to one of the greatest paradoxes of Socialism. The socialist regime
claimed to exponentially keep increasing the quality and range of produce and merchandise. This raised
the hopes of the consumers because they were told that consumption was a ‘right’. However, in reality
this never happened and the citizens felt alienated from Socialism.

Lastly, there was also a problematic issue of bureaucratic factions and market — increasing politicians
in the party bureaucracy. There was a segregation of the party. The different factions were named in
multiple fashions but the three main were —
 Globalisation

In-house party workers and

Out-of-house party workers

Tension grew due to their clash of interests and shift in balance among them. The in-house elite were
the higher most officials who does the paperwork. They created major policies without taking into
account the on-site implementation. The out-of-house workers were the ones who had to focus on the
implementation, as to whether raw material is being delivered to all, whether targets are achievable etc.
they were usually against the ‘overload ministeration’ that stifled production. This stifling of production
gave rise to pressure to shift the balance of the party. This pressure was from the wider society (who
were not getting the required raw materials) and the bureaucrats ( because their power depended on
how much raw materials they could provide. The globalists added pressure for profitability criteria and
freer markets).

INTERNATIONAL SOLUTIONS TO INTERNAL PROBLEMS: It had become very difficult for socialist regimes
to sustain themselves in the light of tensions which were generated systematically.

Production for accumulation VS Production for redistribution

Central planners VS Bureaucrats

Clientism VS Bargaining

Consumer desires VS Deprivation of desires

Claim VS Reality

Resistance VS Oppositional strategies for workers

 They needed to manage these tensions managing these tensions required them to open their political
economies to Western Capital.

Borrowing from capitalist countries: It was one way party leaders attempted to solve their structural
problems without bringing about structural reforms in their economies.

Borrowing the substituted for the internal structural changes  would have threatened the Communist

Party’s monopoly of control over society economy and quality as well hence the conjuncture off the
internal cycles of two contrasting systems.

Markets were suppressed because production moved horizontally instead of vertically as traditional
markets demand and because it challenged the ‘guiding hand of the party’ over the ‘invisible hand’ of
the individual. Anyone trying to reform this was purged.

The entire discussion does actually provide a detailed analysis on why the soviet socialist regime was
unable to implement its plans or policies( such as centralised planning, redistribution etc). However,
these loopholes would not have come into the limelight had it not been for certain historic events. The
infiltration of the capitalist open economy into the eastern bloc just made the citizens realise their
shortcomings and lack of good standard of life. Mikhail Gorbachev trying to slightly loosen up the
economy through his policies of glassuost majorly failed and the loss of USSR in the war due to its
crippling economy just was the ultimate domino of its fall.

The creator of the socialist paradigm, Karl Marx died before completing his last work ‘Capital’ volume 3
and hence wasn’t explained in detail regarding how a socialist state should not function. This dearth of a
framework lead countries to adopt their own versions of regime and thus, we have to study them
separately as we did with the soviet socialist regime.
 Therefore, the two main characteristics of this were Centralised planning and Redistribution and failure
at these two led to its ultimate demise. We have to understand that despite having a lot of difference
between Socialism and Capitalism such as open and closed economy, lack of centralised planning and
redistribution in the latter, the need vs greed scenario and so on. Despite all these differences Soviet
Socialism did indeed have a very strong capitalist colour in its working (eg – hoarding and bargaining).

Conclusion: Fall of Socialism may be attributed to Massive rupture produced be its collision with
capitalism’s speed up (i.e., collision between socialism “fordist modernity and capitalism

‘flexible specialisation.) – two different Temporal cycles. Collision of two differently

Constructed Temporal orders. i.e., collision of two different ways in their societies were politically and
economically organised. Therefore, Verdery’s point is that the fall of socialism lies not only simply in the
intersection of two systems’ temporal cycles but rather in the collision of two differently constituted
temporal orders, together with the notions of person and activity proper to them.

GROUP MEMBERS:

Bharat

Deepanshu

Eshitva

Jahnavi

Mohit
Nidhi

Ria

Sarthak

Sivabhanu Sahasra