POL309 – 13.

Origins of Soviet Planning

Communism According to Marx

 Marx thought capitalism would be the final form of economic exploitation. It started to
replace living labour with machinery, but the consequence was not leisure time but forced
idleness on workers.
 Marx thought in a communist society the production would be leisure time and workers
would be watchmen and regulators of advanced systems of machinery. This would result in a
reduction of labour time for society and to thus free everyone’s time for their own
development.
 Political issues in communist society would be replaced by the technology of planning.
 None of this would exist the day after the revolution, there would be some transition period
for a society that would culminate in communism – called socialism. There would be a
dictatorship of the proletariat.
 Police stripped of political attributes; normal police forces subject to service. All public
service done at workman ages, education access to all, church disestablished.
 Marx said a reserve of resources during the transition, provision for schools, and for those
who are not able to work.
 Marx did know it would be hard to remove all money immediately, and socialism would not
bring immediate equality. In fact, Marx said the idea of socialism as a society of economy is
a French one side deriving from liberty, equality, and fraternity.
 Marx thought that society became wealthier towards communist abundance, more and more
goods would take on the elacisity we see in table salt. Increasing number of goods would be
distributed through cooperative network and people would drawn on them according to their
needs.
 No immediate socialist equality, higher skill labour would be paid more. Equality consists
that measurement is made in an equal standard – labour. Owning wealth does not provide a
share.

Changes With Time and Lenin

 By the stages of World War I, economists had believed that the conditions for a communist
revolution had changed.
 In the early twentieth century industrial Europe had to export goods to afford the import of
food and raw materials. This changed revolutionary expectations.
 Marx never expected a revolution in a backwards state, but Russia would import European
machinery and export food and materials.
 Lenin believed imperialism radically changed revolution prospects, he explained imperialism
as the wall of uneven development.
 Lenin believed the banking system was vitally important because if you control the banking
system, you can institute centralized booking of and coordination of factory accounts – the
beginning of economic planning. You know who has assets, need assets, etcetera.
 Lenin said this will be country wide book keeping, something of the nature of the skeleton of
socialist society. Believed if you control banks you control much of the industrial sector, the
starting point for a planned economy.
 The Russian economy was collapsing by the time of the revolution, they had been at war, the
economy was ruined, tax system was destroyed, the printing presses made a stream of new
currency hoping to feed and equip the new army to fight of foreign inflation. This meant the
banking system became irrelevant, if currency loses its value then the banking system
becomes of no consequence. Important because Lenin thought bank would provide control to
make planned economy.
 Government had to rapidly expand control over the economy or risk being overthrown by
counterrevolution, by the Spring of 1918 all industry was nationalized – Lenin did not expect
this.
 Lenin said trade unions had to be organs of the state, Trotsky calling for work discipline in
order – despite socialism being emancipation but now there was work discipline and order,
 In agriculture Lenin hoped to pacify the peasantry, first decree was the nationalization of the
land. Land had been with landlords, but the Bolsheviks only controlled the capital city. What
happened is that the peasants ceased the land themselves, they killed the landlords and
divided the land amongst themselves. Happy to Bolsheviks because if the peasants had the
land they would defend it.
 One economists said that the collapse of the money system was inconsequential because the
communist meant a moneyless society, thus he said they didn’t expect it this way but it
showed being in a right direction. The collapse of the money system expropriated the wealth
of the ruling class who was financing the counterrevolution.
 In place of money, workers would have products distributed based upon their amount of
labour. As economy recovered some would be repaired with services.
 Trotsky said eventually the value of every good will be expressed as a certain amount of
hours of labour.
 Marx said commodities would be distributed according to need, but the problem in Soviet
Russia was that commodities had literally disappeared. The vital necessities vanished.
Trotksy demanded military discipline for those that fleed for the countryside to find food.
Trade unions have to be operated like the military.
 Trotsky said before the state can wither way it must become a mercilessly entity impeding on
all trots of life.

The Replacement with New Economic Policy

 In 1921 the Soviets renamed state capitalism to the new economic policy. They attempted to
reestablish the markets, reopen to international trade with the capitalist country, and it
involved a tax in kind on the peasants. Peasant villages were required to deliver taxes with a
part of their product.
 The role of trader within the villages would be reestablished with its named that was used in
the Russian Empire.
 State enterprises that would get orders from the planned government were told to rely on the
market, money wages restored along with collective agreements, deposit banking resumed,
By August the official state budget was bank, November of 1921 a state bank was formed.
 After the revolution, peasants got their own land and controlled their own parcel. They would
also eat more due to owning it. What resulted is the change between trade between town and
country. The amount industrialists could buy in 1914 was smaller than by 1925, the peasants
had more power to eat the food.
 Economists said wealthy farmers, better farmers should be encouraged to expand their
enterprise, and then be swayed into opening into a cooperative – which would then cooperate
with the state bank, with the bank being able to lend out these voluntary deposits to finance
the construction of new industries.
 Trotsky said this is nonsense, the wealthy peasants are the enemy. Trotsky said no peasant
will have incentive to expand agriculture output unless provided with industrial goods. But
what the peasants want is not money but goods. Where would industry get the capital? The
peasantry needs to be taxed more; industrialism has to be the top priority.

Stalin’s Prescription
 Stalin also favored an industry first policy, but not for material goods to be traded with the
peasants. Stalin wanted heavy industry, the foundations of an industrial country. Heavy
industry the best guarantee for independent from the capitalist world.
 Stalin’s plans entailed a head on collision with the peasantry as one of its necessary
consequences. Bukharin hoped to give the agricultural sector priority, Trotsky believed
peasants needed material goods as a stimulus, Stalin said steel mills, railways, factories. No
expansion of consumer goods to supply the agricultural economy.
 The consequence of this was the peasants withholding grain in 1928, the response was the
Siberian method of grain collection. Stalin sends troops down the Volga river to cease any
grain from the peasants they could fine.
 Five year plan eventually wanted modest collectivization, but pressure grew and grew –
Stalin eliminates Kulaks as a class. By 1935 85% of land was collectivized.
 25% of the country’s agricultural potential was destroyed under these plans, livestock
numbers collapsed. The result was famine, no motive power to allow these plans to be seen
through. Famine was partly caused by government intervention.
 Five year plans concentrated on heavy manufacturing, and by the mid-1930s they were
importing essentially nothing – they were essentially self-efficient.
 Despite this, in this period the food was scarce, rationing was reimposed in the early 30s,
inflation resumed, the compulsory allocation of labour restored, workers carried labour book,
internal passports restored to prevent people from moving to look for better conditions, and
in the new labour code there were penalties for the violation of labour offenses.
 Searching for another job or being late for work could mean months of hard labour, gulags
imprisoned workers who broke labour rules.
 By 1937, real wages for industrial workers were at 85% for what they had been under the
Tsar.
 Conclusion: folly to think socialism could be built in a backwards country that deliberately
isolates itself from the world economy. Stalin amplified the scarcity of consumer goods, the
result was not a dictatorship of the proletariat but over the proletariat.