Isaac Deutscher 1959

Communism’s Common Market

Source: New Statesman, 11 July 1959. Scanned and prepared for the Marxist Internet Archive by Paul Flewers.

Since last summer the Council for Mutual Economic Assistance, which supervises trade relations between the Communist states, has entered a new and more exalted phase of its career. It has held three prolonged sessions in the course of 11 months, while previously one session a year was thought to be enough. The machinery and scope of the council has been further expanded.

This is not to say that the conference of the party leaders, which, in May 1958, sought to define the prerogatives of the council, has given any clear-cut answer to the problem posed before it. The party leaders tried to reconcile the conflicting views. Mr Khrushchev, in particular, refused to commit himself too strongly, much though his intellectual advisers may have pressed him for a decision. The issue is one of the greatest delicacy and complexity. However attractive the argument for the merger of the whole of Eastern Europe into a single economic entity, and for its ‘organic’ link-up with the USSR, may be to ‘advanced’ circles in Moscow, official policy must take into consideration the national susceptibilities of the East Europeans. It might be too dangerous to press the latter for a virtual surrender of national sovereignties, be it only in the economic field, soon after all the insults and injuries inflicted on their patriotic sentiments and after national sovereignty had more or less spontaneously reasserted itself within the Communist framework. In addition, the ‘international division of labour’ and the ways and means of achieving it are still novelties; and cautious minds prefer to move warily over untrodden ground.

A survey of the council’s work in the last year indicates, nevertheless, that slowly and gradually the council is developing into something like an international planning authority. True, Moscow has reaffirmed that the member states of the council have the right to veto any decision taken by it. But the party leaders have also jointly and emphatically instructed the council to conduct its work with an eye to the overriding needs of the ‘international division of labour’ and to carry that division into new fields of the economy. For the first time Soviet production, too, is being adjusted to the council’s East European plans; and China’s connection with the council has grown closer. What appears to be coming into existence is not merely a Communist ‘common market’, but an organisation designed to pool, distribute and develop jointly the resources of the USSR and Eastern Europe, and eventually of the entire Soviet bloc.

A few examples may illustrate the kind of work on which the council is engaged. Under the new arrangements Czechoslovakia is to concentrate on the output and export of heavy lorries and tractors, while East Germany is to make only the lighter types. Both countries are to produce enough sugar refineries to satisfy the needs of the USSR and Eastern Europe. The output of certain high-quality steels and of certain types of rolling mills is to be confined to East Germany, while the USSR and Czechoslovakia are to specialise in other types of mills. The USSR and Romania are to be East Europe’s chief suppliers of oil-drilling and petrol-refining machinery. Certain types of excavators for open-cast mining are to be made only in Germany and Czechoslovakia, and others only in Russia. Machine tools for ball-bearing plants are to be standardised; the Russians are to produce 55 types of tools, the Germans 40, the Poles 12, and the Czechs will provide only 10. To avoid overlapping, all new investment in engineering is henceforth to be cleared through the council’s appropriate branch commissions.

The following items show another aspect of the council’s activity: the USSR, Poland and Czechoslovakia are beginning to build jointly an oil pipe from the Volga region to central Europe. Germans, Czechs, Poles and Romanians are to construct a mammoth cellulose plant at Brailov, Romania, which should meet East Europe’s deficit of this commodity. The development of Hungarian aluminium is to be tackled in the same way. (In every case the industrial plant is the property of the nation on whose territory it is situated; and the foreign contributors to the projects are to be paid in goods.) An East European electricity grid is to be connected with the power system of the western regions of the USSR by 1964. Poles and Germans are jointly responsible for the construction of the Oder – Danube canal. Member states cooperate also in developing schemes outside Eastern Europe: Czechs and Germans build power stations in China, UAR, Iraq, etc.

All East European plans are to be adjusted to Soviet planning. Yet, although most of these run, as the present Soviet plan does, up to the year 1965, the adjustment can hardly be more than superficial. Otherwise it might cause another grave upheaval in Eastern Europe. Only by regulating from now on all new industrial investment may the council set the stage for a more thorough integration in the next planning period.

Division of labour and specialisation, promoted on so vast a scale and in a rapidly expanding economy, presupposes an enormous volume of trade. Yet, if one were to judge from the official Soviet trade forecasts, the directors of Soviet trade have either not yet caught up with the Council of Economic Mutual Assistance, or treat the council’s ideas rather sceptically. Here, too, lip-service is being paid to the new internationalism; and ‘autarchy’ is out of fashion. The Soviet Union has indeed moved far since the days when its share total in world trade was not more than one per cent – and this in the shrunken trade of the 1930s. But habits of autarchy seem to be dying much harder among the Soviet bureaucrat-merchants than among the planners and producers. The share in world trade which the entire Soviet bloc holds at present is, according to official Soviet sources, not more than ten per cent. (Three-quarters of this consists of trade within the Soviet bloc, which is still conducted, as it was in Stalin’s time, by means of bilateral agreements and a clearing system.)

As the Soviet bloc claims to be producing about one-third of the world’s total industrial output, the disproportion between production and trade is striking. The USSR and its partners would have to sell and buy at least three times as much as they do in order to approach relatively, not absolutely, the present level of capitalist trade. By 1965 Moscow expects the Soviet bloc to produce just over half of the world’s industrial output. The forecasts about trade, however, are timid: they suggest that, given an unchanged volume of world trade, the share of the Soviet bloc would rise at the most to about 20 per cent, three-quarters of the rise occurring within the Soviet orbit. An international division of labour as intensive as that prevailing in the West at present would require the trade of the Soviet bloc to increase at the very least five-fold between now and 1965.

It is, I think, a safe bet that events will compel the directors of Soviet foreign trade to set their sights much higher than they have set them and to remove some further disproportions at which even Soviet analysts hint. Thus, the East Germans already trade four times and the Czechs five times as intensively as the Russians do, if their trade is related to population. Trade between the USSR and China, with its 600 million people, is not larger than that between the USSR and East Germany, a fact which has already brought forth some bitter Chinese comments. Yet, to a large extent this state of affairs is normal. It is far easier for an industrial nation to trade with another developed nation than it is to trade with an underdeveloped one which is not in a position to pay for large-scale imports. Although the USSR has given China considerable industrial aid without payment and has exported much on credit, Chinese poverty has set narrow limits to economic exchange. However, China’s rapid industrialisation and its emergence this year as the world’s greatest wheat producer – China is now said to produce more rice than do all other nations of the globe together! – are bound to make China’s weight increasingly felt within the Communist common market.

China’s presence at the Council for Economic Mutual Assistance, be it in the role of an observer, has already presented the council with a special problem. The Peking delegates have claimed for their country ‘exemption from the processes of coordination and specialisation’ with which the council is busy. On grounds of size and population, China is claiming the right to complete self-sufficiency. Moscow has somewhat over-emphatically accepted the claim. For the time being no one indeed thinks of extending to China the methods of work that are now undergoing trial in Eastern Europe. But some Soviet economists, freshly emerged from their own autarchy, hardly believe that the Chinese will maintain their claim when they have advanced further on the road of industrialisation.

It will be seen from all this that six years after Stalin’s death Moscow has turned into a hotbed of experimental economics. Sets of ‘maximalists’ and ‘minimalists’, internationalists and shame-faced isolationists are fighting somewhat confused battles, the significance of which transcends the boundaries of the Soviet bloc. The ‘maximalists’ preceded the council’s Tirana conference in May with a whole barrage of new demands. They asked for uniform price-fixing procedures and methods of accountancy throughout the Soviet zone; for stricter and more extensive international standardisation of engineering and other manufactures; for the replacement of the present bilateral trade by a multilateral organisation embracing all Communist governments; and for more trade and even more aid. The published decisions of the Tirana conference suggest that these demands have not been accepted; but their initiators are certain to press on with them, even if they offend some East European susceptibilities. No matter how much political obeisance Communists find it wise to pay to the nation-state, economic integration is on and is gaining momentum.

The internationalists, in Moscow and elsewhere, see the whole Soviet bloc, including China, as, potentially, a single economic entity and a common market, five or six times larger than the North American market and twice as large as would be a common American and Western European market. Within such an economic entity, they argue, where even now there are no tariff walls, few protectionist interests and no fear of commercial competition, standardisation, technological progress, productivity and mass production can develop on a scale hitherto unseen and undreamt of.

The ‘minimalists’, the older bureaucrats, the ‘highly practical’ business managers, the trade directors and some of the political leaders view this sweeping prospect with shoulder-shrugging and at times are alarmed at so much ‘utopian scheming’. In the ruling group the balance of opinion is uncertain and shifting; but it is not difficult to feel the way the wind is blowing.