E. Varga

Economics

The Reorganization of Russian Industry

(11 November 1921)

From International Press Correspondence, Vol. I No. 7, 11 November 1921, pp. 58–59.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The new economic policy of Russia necessitated a reorganization of Russian industries. The system in use until now, which consisted of a communistic management of all trades all the way down to 5 workers, had shown itself too burdensome and too bureaucratic an obstacle in the path of production. The Russian distances and the poor means of communication brought it about that the central management of the immense number of small industries became too troublesome and an impediment to increased production. The organizing capacity of the Russian proletariat clearly does not suffice for an organized control of all industries with their numerous small trades, besides keeping up the army and state-management.

The changes effected in the system of our food policy made it necessary to enable the peasant to exchange his surplus for manufactured articles. The state-machine however, is not fitted to undertake this exchange with the peasant directly. This situation therefore necessitated several changes in the industrial policy of Russia as applied until now.

The first change consists in the permission to trade in all non-monopolized products, and in the liberty to build up industries and to sell their products in the open market. This liberty was enjoyed only by trades with less than 5 workers. Now this is done away with in the sense that no limit is set on the number of workers to be employed.
The recognition of the fact that the organizing capacity of the Russian proletariat was insufficient for the communistic management of tens of thousands of small trades, led to the elimination of those small industries which were not important to the community, and to the letting of these to private enterprise or companies. For the present no estimate of the importance or number of industries thus let can be given. Judging by the reports from the individual states, it is to be surmised that from 40 to 50 per cent of the industries will in this way be leased. But since these are the small industries which are to be let out, the reduction in the State community production will amount to only about 25 %.

Such changes as the permission to trade in the surplus products of the peasants, the freedom of industrial production and legal trade, and the letting of the small state industries, mean a renewal of private economy, free trade and in the long run—capitalism in Russia. It would be idiotic to deny this. Under the given circumstances, with the small number and the limited organizing capacity of the Russian proletariat, and with the isolation of the proletarian regime in the whole world and the overwhelming peasant-character of the country, a prolongation of the system of war communism would have led to the loss of our agriculture, to the absolute return of the peasantry to a closed household, to an inability to feed the army and the industrial proletariat, and finally to the overthrow of the dictatorship.

The tight grip of the central state control had to be loosened; the latter nad to confine itself to those parts which it actually could control; and the remainder had to be reorganized according to changed circumstances. This made a third change necessary.
Such larger industries as the mining industry, the railroads, and also foreign trade, which remained under the state economic control, had to be adapted to the actuality of an open market. The strict bureaucratic rules of state economic control had to be loosened. The industries were, from a commercial standpoint, organized into trusts which enjoy a greater freedom of management than they have bad until now. In contrast to the system in use until now, these may satisfy certain needs directly in the open market and also place a part of their products on the market. The workers as well as the directors are interested in the prosperity of the undertaking by receiving part of the profits. In this way these industries enter into competition in certain fields, with the newly created private industries, and with the big capitalistic enterprises which are established on the basis of concessions; a competition for markets, for raw material, and working-power.

Due to the new policy, changes are also taking place in other fields. Gold, which until now was constantly losing significance, through the open market now becomes an important factor.

The industries, including state industries, are assuming a money basis; government money institutions and payments in currency are being established. The co-operatives are also being adapted to trade on a money basis, etc. The part played by the labor organisations is also changed somewhat: they again become the defenders of the workers’ interests against the private employers.

No distinct picture of the effects of this new policy in the industrial field can yet be given. In substance, the new policy consists of the confinement of communist state control to the most important industries and the concentration of the best organizing powers in this field. By means of these the following is effected: first of all those industries which remain under direct state control will begin to flourish; secondly, those small industries in the hands of companies and private enterprise will, due to private initiative, also produce more than before and at the same time the millions of peasants will be given an opportunity to satisfy their needs in manufactured articles upon the open market, no longer restricted by the state. Part of our gains are this given up tor the better organization of what remains.

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Last updated on 5 September 2019