Before considering the fundamental features of the economy of a workers’ state, it is necessary to mention one very important factor. Marx and Engels expected the revolution to begin in the developed countries. They thus assumed that the new society from its inception would be materially and culturally more developed than the most advanced capitalist countries. Every prognosis, however, is conditional. History did not unfold exactly as Marx and Engels had expected. It was in Russia, one of the most backward of capitalist countries, that the revolution first broke out and the workers took power, while the revolutions which followed in the more developed countries failed.
There are two sorts of productive forces: the means of production and labour power. The development of these productive forces under capitalism – the centralisation of capital on the one hand and the socialisation of the labour process on the other – creates the material conditions necessary for socialism.
Of all the relations of production which prevail under capitalism – relations between capitalists and capitalists, between capitalists and workers, between the workers themselves, between technicians and workers, technicians and capitalists, etc. – only one section is carried over into the socialist society, namely the relations obtaining between the workers in the process of production; the workers united through social production become the basis for new relations of production. Some elements in the relations of production existing under capitalism are abolished altogether by socialism through the abolition of the capitalists, while others, such as the “new middle class” (technicians, accountants, etc.) will be fitted into a new context.
This “new middle class” constitutes part of the productive forces, and as such is a necessary element of production. However, its position in the hierarchy of capitalist society is a transitory one, as transitory as capitalism. Socialist will do away entirely with this hierarchical position in the process of production above that of the proletariat. A new relationship will be created between the different elements necessary for the socialist mode of production, between mental and manual labour. The new relationship (to be dealt with more fully later on) begins to take shape with the transition period.
The working class, which constitutes part of the productive forces and a part of the capitalist relations of production at one and the same time, becomes the basis for the new relations of production and the point of departure for the development of the productive forces on the foundation of these relations. In the words of Marx,
Of all the instruments of production, the greatest power is the revolutionary class itself. The organisation of the revolutionary elements as a class pre-supposes the existence of the productive forces which could be engendered in the bosom of the old society. 
In every society in which production has developed spontaneously – and our present society is of this type – it is not the producers who control the means of production, but the means of production which control the producers. In such a society each new lever of production is necessarily transformed into a new means for the subjection of the producers to the means of production. This is most of all true of that lever of production which, prior to the introduction of large-scale industry, was by far the most powerful – the division of labour. 
The division of labour, expressed in the separation of manual from mental labour, is of an historically transitory character; it has its roots in the separation of the workers from the means of production, and in the resultant antagonism of these two elements to each other. In the words of Marx:
Intelligence in production expands in one direction because it vanishes in many others. What is lost by the detail labourers, is concentrated in the capital that employs them. It is a result of the division of labour in manufactures, that the labourer is brought face to face with the intellectual potencies of the material process of production, as the property of another, and as a ruling power. This separation begins in simple co-operation, where the capitalist represents to the single workman, the oneness and the will of the associated labour. It is developed in manufacture which cuts down the labourer into a detail labourer. It is completed in modern industry, which makes science a productive force distinct from labour and presses it into the service of capital. 
The complete victory of socialism means the complete abolition of the separation of mental and manual labour. Clearly it would be impossible to abolish this separation immediately after the socialist revolution, but workers’ control over production will become an immediate bridge between mental and manual labour, and the point of departure for their future synthesis, the total abolition of classes.
Here we come to a problem which is fundamental from the standpoint of the transformation of the relations of production, of the bridge between mental and manual labour.
Technicians constitute a necessary element in the process of production, an important part of the productive forces of society, whether capitalist or communist. At the same time, as we have already said, under capitalism they form a layer in the hierarchy of production. They come into being as part and parcel of this hierarchy. Their monopolist position as regards the “mental process of production” (as Bukharin terms it) is the result of the separation of the workers from the means of production on the one hand, and the socialisation of labour on the other. Socialist will abolish this hierarchy. In the transition period it will continue to exist in one sense, but in another, be abolished. Insofar as mental labour remains the privilege of the few, the hierarchical relations will continue to exist in the factories, railways, etc., even after the proletarian revolution. But seeing that the place of the capitalist in the hierarchy will be taken by the workers’ state, i.e., by the workers as a collective, the technicians being subordinated to the workers, the mental hierarchy in this sense will be abolished. Workers’ control over technicians means the subordination of capitalist elements to socialist ones. The more efficient workers’ control, the higher the material and cultural level of the masses, the more will the monopolist position mental workers by undermined, till it is completely abolished and a full synthesis of mental and manual labour achieved.
Because of the double role of technicians in their relation to workers in the process of production, the founders of Marxism pointed out that the subordination of the technicians to the interests of society as a whole will be one of the greatest difficulties experienced by the new society. Thus Engels wrote: “If ... a war brings us to power prematurely, the technicians will be our chief enemies; they will deceive and betray us wherever they can and we shall have to use terror against them but shall get cheated all the same.” 
Every form of social production needs the co-ordination of the different people participating in it; in other words, every form of social production needs discipline. Under capitalism this discipline confronts the worker as an external coercive power, as the power which capital has over him. Under socialism discipline will be the result of consciousness, it will become the habit of a free people. In the transition period it will be the outcome of the unity of the two elements – consciousness and coercion. The state institutions will be the organisation of the masses as a conscious factor. Collective ownership of the means of production by the workers, i.e., the ownership of the workers’ state of the means of production, will be the basis for the conscious element in labour discipline. At the same time the working class as a collective, through its institutions – soviets, trade unions, etc. – will appear as a coercive power as regards the disciplining of the individual workers in production. Individualistic consumption, the “bourgeois right” as regards distribution, will serve as a method of coercive discipline.
The technicians, supervisors, etc., have a special place in labour discipline. Under capitalism, the supervisor is the transmission belt through which capitalist coercion of the worker is exercised. Under communism a supervisor will not fulfil any coercive function. His relations with the workers will be analogous to those between a conductor and his orchestra, as labour discipline will be based on consciousness and habit. In the transition period, whereas the workers, as regards themselves, will be both a disciplining and a disciplined factor, a subject and an object, the technicians will serve in reality only as a transmission belt, this time of the workers’ state, even though they remain formally discipliners of the workers.
The Communist Manifesto says:
In bourgeois society, living labour is but a means to increase accumulated labour. In communist society, accumulated labour is but a means to widen, to enrich, to promote the existence of the labourer.
In bourgeois society, therefore, the past dominates the present; in communist society, the present dominates the past. In bourgeois society, capital is independent and has individuality. 
In communist society accumulation will be conditioned by the needs of consumption of the people. In capitalist society accumulation determines the extent of employment and the rate of wages – i.e. the rate of consumption of the working people. Even as regards the capitalist himself the factor that makes him a capitalist is not consumption but accumulation. As Marx said:
Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth. 
Because the worker is dominated by the product of his labour, the process of capitalist accumulation determines, limits, and undermines consumption. Because the labourer will dominate his product, communist consumption will determine the accumulation of means of production.
In every society, whatever form the relations of production take, rationalisation of production generally involves a more round-about way of production, i.e., an increase in the portion of the total social labour devoted to the production of means of production. This means an increase in the rate of “accumulation” relatively to rate of consumption. Under communism, this increase in the rate of ‘accumulation’ as against the rate of consumption would at the same time mean a large absolute increase in the consumption of the workers. Under capitalism, however, because of the antagonistic way of distribution, the rate of surplus value increases, and thus also the rate of accumulation, while the rate of consumption of the masses is subordinated to them.
Accumulation for accumulation’s sake under capitalism is the result of two factors: one, the separation of workers from the means of production, the other, the existence of competition between the capitalists, whether individual, monopolistic or state capitalists. Socialism abolishes both these aspects of the relations of production. Workers’ control over production and the abolition of national boundaries – these are the two conditions for the full subordination of accumulation to consumption. Under such conditions society will accumulate in order to consume.
The subordination of accumulation to consumption, by raising the material and cultural conditions of the masses will at the same time undermine the monopoly of the technicians over the “mental means of production”, and thus strengthen the workers’ control over production.
The most exact and concise analysis of this question was given by Marx in his Critique of the Gotha Programme:
What we have to deal with here is a communist society, not as it has developed on its own foundation, but, on the contrary, as it emerges from capitalist society; which is thus in every respect, economically, morally and intellectually, still stamped with the birth-marks of the old society from whose womb it emerges. Accordingly the individual producer receives back from society – after the deductions have been made [deductions in the interests of society as a whole] – exactly what he gives to it. What he has given to it is his individual amount of labour. For example, the social working day consists of the sum of the individual labour hours; the individual labour time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such and such an amount of labour (after deducting his labour for the common fund) and with this certificate, he draws from the social stock of means of consumption as much as costs the same amount of labour. The same amount of labour which he has given to society in one form, he receives back in another.
Here obviously the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered circumstances no one can give anything except his labour, and because, on the other hand, nothing can pass to the ownership of individuals except individual means of consumption. But, as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity-equivalents, so much labour in one form is exchanged for an equal amount of labour in another form.
Hence, equal right here is still in principle – bourgeois right, although principle and practice are no longer in conflict, while the exchange of equivalents in commodity exchange only exists on the average and not in the individual case.
In spite of this advance, this equal right is still constantly stigmatised by a bourgeois limitation. The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour.
But one man is superior to another physically, or mentally, and supplies more labour in the same time, or can labour for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labour. It recognises no class differences, because everyone is only a worker like everyone else; but it tacitly recognises unequal individual endowment and thus productive capacity as natural privileges. It is therefore a right of inequality in its content like every right. Right by its very nature can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard in so far as they are brought under an equal point of view, are taken from one definite side only, e.g., in the present case, are regarded only as workers, and nothing more seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another and so on and so forth. Thus with an equal capacity to work, and hence an equal share in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right instead of being equal would have to be unequal.
But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development thereby determined.
In a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and therewith also the antithesis between mental and physical labour, has vanished, after labour has become not merely a means to live but has become itself the prime necessity of life, after the productive forces have also increased with the all-round development of the individual, and all the springs of co-operative wealth flow more abundantly – only then then can the narrow horizon of bourgeois right be fully left behind and society inscribe on its banners: from each according to his ability, to each according to his needs. 
Even though the workers differ from one another in skill, in their needs and those of their families, etc., in one thing they must be absolutely equal in order that the same amount of labour which every worker gives to society in one form be received back in another: in the ownership of the means of production. The growth of production, the increase of the amount of means of production belonging to society, i.e., owned equally by all the workers, will progressively undermine equal rights in the distribution of the products. This in turn will progressively increase equality among the people. And thus does the bourgeois right of the transition period include its own negation.
Bourgeois right in the transition period, while it lays down that every worker will receive means of consumption from society according to the labour he gives it, is based on social equality as regards the means of production, and thereby will wither away of itself.
The October Revolution was the fusion of two revolutions: that of the socialist working class, the product of mature capitalism, and that of the peasants, the product of the conflict between rising capitalism and the old feudal institutions. As at all times, the peasants were ready enough to expropriate the private property of the large estate owners, but they wanted their own small private properties. Whilst they were prepared to revolt against feudalism, they were not for that reason in favour of socialism. French history shows the same attitude on the part of the French peasantry. After 1789, they always supported reactionary governments against the “red menace” of the Parisian working class. It was they who formed the solid backing for Bonaparte, and later, for his nephew, Napoleon III, for Cavaignac and for Thiers. In Western Europe (excluding Spain and Italy), where large estates have been abolished, the villages rarely return a socialist or communist member of parliament. Hence it is not surprising that the victorious alliance of the workers and peasants in the October revolution was immediately followed by very strained relations. Once the White armies, and with them the danger of the restoration of landlordism, had been overcome, very little remained of the peasants’ loyalty toward the workers. It had been one thing for the peasant to support a government which distributed land, but it was quite another matter when the same government began to requisition his produce to feed the hungry populations of the cities. This duality in the attitude of the peasants towards the Soviet government was expressed by a number of provincial delegates to the Twelfth Congress of the Communist Party, in April 1923. Their reports showed that the peasants thought of the Bolsheviks and the Communists as quite different people: the former gave them land, the latter imposed the yoke of the state upon them. (This misunderstanding was facilitated by the fact that it was only at the Seventh Congress of the Party – 1918 – that the name Communist Party was adopted).
Socialist workers stand for socialised labour, state ownership and socialist planning; the peasantry for individual small-scale production, private property and freedom to trade. It is impossible to avoid permanent conflict between the two systems of production. “Small-scale production gives birth to capitalism and the bourgeoisie, constantly, daily, hourly, elementally and in vast proportions.”  Backwardness of agricultural production and its individual character are a serious impediment to the development of planned industrial production. To paraphrase Abraham Lincoln: “You cannot have half your house based on collectivist, planned labour, and the other half anarchic and individualistic.”
The conservatism of the Russian peasantry was accentuated after the October revolution by the fact that the agrarian revolution not only took the revolutionary wind from the peasantry by abolishing feudal land ownership, but also by the fact that it also greatly diminished the class differences within the peasantry itself. The number of proletarian and semi-proletarian agriculturalists, the natural allies of the urban working class, was drastically reduced by the agrarian revolution, which was more consistently democratic and went much farther in Russia than it had done in France, in 1789. In the French Revolution the large estates were generally sold and so fell into the hands of people who had money – the urban and rural rich. In Russia not only the large estates, but many of the rich peasant farms too, were seized by the peasants and the land freely distributed.
It is an extremely difficult matter to apply social methods of production to agriculture. Unlike industry, agriculture, even in the most advanced countries, is based predominantly on small-scale production units. Many industrial plants employ hundreds of thousands of workers, but even in the United States the small farm is predominant. Thus of all labour engaged in US agriculture in 1944, 77 per cent was family labour. 
That the survival of the small farm may in many cases be due to the fact that the small farmer, who is worker, capitalist and land-owner combined, is prepared to work very hard indeed – harder than the industrial worker – renouncing rent and profit, and even then getting an income below that of the urban worker, is irrelevant to our argument.
The decisive factor is that the technical superiority of large-scale over small-scale production is incomparably smaller in agriculture than in industry. This applies even more to intensive mixed farming than to grain production. (And, by the way, we must not forget that, as the population in the town increases and the standard of living rises, the importance of cereal production declines relatively to that of intensive agriculture –l the production of milk, vegetables, fruit, meat and so on.) In many countries, large farms came into existence less as the result of small farmers being outdone in the course of free competition, than as the result of extra-economic factors – enclosures, as survivals of the feudal estates, and the like.
Engels’ view of the attitude to be adopted towards the peasants after the socialist revolution was as follows:
it is ... clear to us that if we were in possession of state power, we would not think of forcefully expropriating the small peasant (with compensation or without is immaterial) ... Our aim in regard to the small peasant consists first of all in leading his small-scale production and private enterprise into co-operative lines, though not by force, but by example and granting public assistance for that purpose. And, of course, we shall have ample means of showing the small peasant all the advantages connected with such a transformation ...
We stand decisively on the side of the small peasant: we will do everything possible to make his lot more tolerable and facilitate his transition to the co-operative, if he decides to take this step. If he cannot as yet bring himself to this decision, we will give him plenty of time to ponder over it on his holding. 
He believed that it would take generations for the peasantry of Western and Central Europe to decide voluntarily to join co-operative farms. Obviously, in a country where the vast majority of the population are engaged in agriculture and where industry is much less able to supply the needs of the peasants and thus attract them to collective production – as in Russia, in 1917 – the obstacles to the voluntary enlistment of the peasants in producers’ co-operatives are even greater. Voluntary co-operation demands a highly mechanised agriculture, good prices for agricultural products, paid by the state, a plentiful supply of cheap industrial goods for the peasantry and very low taxes for them. In short, general plenty.
Soon after the revolution, it became clear to a number of Bolshevik theoreticians – and primarily to the economist Evegni Preobrazhensky – that the surplus produced in industry would not by itself be enough for capital accumulation, especially as “from the moment of its victory the working class ... cannot treat its own labour power, it health and working conditions in the same way as the capitalist did. This is a decisive impediment to the tempo of socialist accumulation, as impediment which capitalist industry did not know in the first period of its development.”  In opposition to “socialist accumulation” (defined as an addition to the functioning means of production as a result of the surplus product produced in the socialist economy itself) Preobrazhensky postulated the §primitive socialist accumulation” [A], which he defined as “the accumulation in the hands of the state of material resources obtained chiefly from sources lying outside the state economic system”. “This accumulation will, necessarily, in a backward agrarian country, play a colossal role ... Primitive accumulation will predominate during the period of industrialisation ... We must, therefore, term this whole stage as the period of primitive or preparatory socialist accumulation.”  This “source lying outside the state economic system” was agriculture. Just as in the mercantilist period in Western Europe, early merchant-capitalists amassed wealth by colonial exploitation, so the socialist industry would draw on internal “colonies” (to use a term Preobrazhensky vehemently opposed) – small individualistic agriculture. Preobrazhensky did not advocate following the mercantilist merchants in the use of violence against the peasants nor raising any class – in this case the working class – to the position of an exploiting class. He propounded measures which were far milder than those used by the mercantilist bourgeoisie. He proposed the partial suppression of the law of value by changing the terms of exchange between industry and agriculture in favour of the former and against the latter, so that a unit of labour in state industry would be exchanged for more than a unit of labour in agriculture. He assumed that these terms of exchange would soon lead to such a quick rise in the general level of production in society, that not only would the income of society as a whole rise, but also the income, in absolute terms, of the peasantry.
Actually the implementation of Preobrazhensky’s “socialist primitive accumulation” would logically have led to a very different state of affairs from that which he visualised. Any attempt to “squeeze” the peasants would be likely to be met by a deliberate reduction in production, so that if the “terms of trade” between agriculture and industry were in favour of the latter, the amount of trade would fall. There would be only one way to deal with such a “strike”, and that would be to use violence against the peasants, to expropriate them, and to concentrate them on such large farms that it would be possible for the state to control their work and output. If the state used these methods, it would also be faced with serious opposition from the workers, many of whom, in a backward country such as is under construction, being newly recruited to industry, would, naturally, still have close family ties with the villages. Moreover, if the state, imposing a “primitive socialist accumulation”, resorted to oppression, what would there be to stop it from doing the same as regards “socialist accumulation” proper, as regards the extortion of surplus value from the workers in state industry itself?
One solution to the conflict between state industry and individualist agriculture in a backward country would have been to make the rate of development of industry depend upon the rate at which agricultural surpluses increased. As a result of the agrarian revolution there was a great decline in the surpluses of agriculture coming on to the market, because the large landowners and the kulaks had been the main contributors of those surpluses. The distribution of the land, by increasing the share of the middle peasant, who worked mainly for subsistence, reduced the sources of marketable agricultural produce.
Larger surpluses could certainly have been obtained by increasing the proportion of land held by the rich peasants, termed in Russia kulaks. But to make the development of state industry dependent upon that of kulak agriculture it would have been necessary to have held the tempo of industrial development down to a snail’s pace, and thus to have weakened the industrial working class in relation to the kulaks. It would inevitably have led to a victory of private capitalism throughout the economy.
Alternatively, the conflict between industry and agriculture might have been resolved by rapid industrialisation based on “primitive accumulation” – by expropriating the peasants and forcing them into large mechanised farms, thus releasing labour power for industry and making agricultural surpluses available for the urban population. Such a method of “primitive accumulation” must also, ultimately, lead to the subordination of the industrial workers to the needs of capital accumulation. It is the path of the submersion of individual agricultural production in a state capitalist economy.
In both cases it is ridiculous to expect socialist democracy to flourish. On the contrary, in the first case, the state must necessarily come under increasing pressure from the kulaks and therefore must become more and more divorced from the workers. In the second case, the state must become omnipotent, and, it follows, its officials will become autocratic in their relations with both workers and peasants.
(These two methods of dealing with the problem were actually tried out, the first during the period of the “New Economic Policy” (NEP) – 1921-28 – and the second with the Five Year Plans.)
The economy of a workers’ state and a capitalist economy have many common characteristics. The workers’ state – a transition stage between capitalism and communism – inevitably includes some of the features of the society from whose ruins it rises, and some of the nuclei of the future society. These antagonistic elements are, however, bound together in the transition period, the former being subordinated to the latter, the past to the future. Common to both a workers’ state and capitalism is the division of labour, primarily the division between mental and manual labour. The distinguishing feature is the existence or non-existence of workers’ control over production. Workers’ control forms the bridge, albeit a narrow bridge, to the abolition of the separation of manual and mental labour, which will be completely realised with the establishment of communist society. Common to both a workers’ state and capitalism is the fact that the technicians form a hierarchy above the workers (although in a workers’ state it is not in essence a hierarchy). The distinguishing feature lies in the fact that in a workers’ state the technicians are not subordinated to capital, but to the will of the workers’ state, to the collective of producers. This is the point of departure to the abolition of any social hierarchy in production. Elements of coercion in labour discipline will exist in a workers’ state, as they do in capitalism. But in a workers’ state, as opposed to what obtains under capitalism, they will not be the only elements, and they will be more and more subordinated to elements of consciousness until such time as social solidarity, harmonious relations between people and education will render coercion in the process of production completely superfluous. In a workers’ state as well as in the capitalist commodity economy, equivalents are exchanged, a product containing a certain quantity of socially necessary labour is exchanged for another product containing an equivalent amount. But in a workers’ state this result is achieved firstly through the conscious direction of the economy and not through the action of blind forces, and secondly – and this is of fundamental importance – the exchange of equivalents is based on the equality of rights of all direct producers as regards the ownership of the means of production. Bourgeois right under the bourgeoisie means exploitation; the bourgeois right of distribution in a workers’ state “tacitly recognises unequal individual endowment and this productive capacity as natural privileges”, but at the same time it declared the equality of producers with regard to the means of production. The prerequisites for the bourgeois right of distribution in a workers’ state are the absence of any exploitation whatsoever, and the development towards the complete abolition of all economic inequality, including that resulting from natural individual endowment.
A. The first to coin this term seems to have been the Bolshevik economist V.M. Smirnov. 
1. K. Marx, The Poverty of Philosophy, London n.d., p.146.
2. F. Engels, Herr Eugen Dühring’s Revolution in Science (Anti-Dühring), London n.d., p.320.
3. K. Marx, Capital, Vol.I, pp.396-397.
4. K. Marx and F. Engels, Selected Correspondence, London 1942, p.493.
5. K. Marx, Selected Works, op. cit. Vol.I, p.652.
6. K. Marx, Capital, op. cit., Vol.I, p.652.
7. K. Marx, Selected Works, op. cit., Vol.I, pp.563-566.
8. V.I. Lenin, Works (Russian), 4th. ed. Vol.XXXI, pp.7-8.
9. C. Clark, The Conditions of Economic Progress, 2nd ed., London 1951, p.268.
10. F. Engels, The Peasant Question in France and Germany (Russian), St. Petersburg 1920, pp.37, 39.
11. E.A. Preobrazhensky, The Law of Primitive Socialist Accumulation, an article published in 1924 and then included as a chapter in his New Economics (Russian), Moscow 1926, Vol.I, Part 1, p.100.
12. See Trotsky’s Speech to the Twelfth Party Congress, Twelfth Congress of the Russian Communist Party [Bolsheviks] Stenographic Report (Russian), Moscow 1923, p.321.
13. Preobrazhensky, op. cit., pp.57-58.
Last updated on 29.8.2002